BusinessDay 12 Feb 2020 by BusinessDay

Why Nigeria must focus on education, health, economic reforms to curb poverty Segun Adams & Bunmi Bailey

h i l e ha l f o f t h e world’s countries have poverty rates below 3 percent, almost one in two Nigerians live on less than $1.9 a day. But the

wide regional disparity of poverty across the country suggests that a successful anti-poverty campaign will largely depend on Nigeria’s plans for the North. According to the World Bank, 87 percent of all the poor in Nigeria as of 2016 are concentrated in

the Northern region compared to 12 percent in the South. Mo re w o r r i s o m e i s t h e emerging trend of a growing disparity between the Northern and Southern parts of the country which has seen income levels, poverty rate and critical

development measures diverge significantly. Between 2011 and 2016, poverty rate saw a sharp increase in North West, North Central and North East while all three Southern regions noted decline. The number of poor in the

North East rose from around 23 million in 2011 to nearly 35 million in 2016. In North Central and North East, the number rose by nearly 5 million. By contrast, the number of poor dropped from around 5 Continues on page 39

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Only Nestle, WAMCO, Chi, 3 others can access FX for milk T

N1.2bn British grant coming for 3 polytechnics Mark Mayah

ODINAKA ANUDU& OLUFIKAYO OWOEYE

he Central Bank of Nigeria (CBN) has wielded its big stick on milk importers with the announcement that only six milk makers in the country can process form ‘M’ to access foreign exchange in the market. “For the avoidance of doubts, all established form ‘M’ for the importation of milk and its derivatives for companies other than the above for which shipment has not taken place should be cancelled immediately,” the CBN said in a circular on Tuesday. The move, according to the apex bank, is to boost local production and create employment in the milk value chain. The beneficiaries are Nestle Nigeria plc, FrieslandCampina WAPCO Nigeria, Chi Limited, TG Arla Dairy Product Limited, Promasidor Nigeria, and Integrated Dairies Limited. Continues on page 39

As CBN unveils backward integration for dairy What new rules mean for Nigerian economy

Babatunde Fashola (r), minister of works & housing; Yemi Oguntominiyi (l), director, highways, construction and rehabilitation; Oke Owhe (2nd l), federal controller of works, Edo State; Naor Narleisi (2nd r), project manager, RCC, and others at the minister’s inspection of ongoing dualisation of Lokoja–Benin Road Section IV, Phase ll, Ehor–Benin, Edo State as part of the minister’s tour of Federal Government Highway and Housing Projects in the South-South.

hree polytechnics in the country are to benefit from a £300 million (about N1.2bn) British Government aid under the Overseas Development Association (ODA) programme. The money will be used in funding some research and training projects in the institutions, namely, Yaba College of Technology (YABATECH), Kaduna Polytechnic (KADPOLY) and the Institute of Management Technology (IMT) Enugu. Continues on page 39

Inside

Imo financial advisory committee writes Uzodinma, claims nine banks owe state N112.8bn P. 37 Transcorp Group announces significant new Executive, Non-Executive board P. 38 appointments

Wednesday 12 February 2020

BUSINESS DAY

news Nigerians defy Coronavirus scare, demand for Chinese visas

L-R: Charmaine Williams, councillor, City of Brampton; Patrick Brown, Mayor of Brampton, Canada, and Babajide SanwoOlu, Lagos State governor, at a courtesy visit to the governor at Lagos House, Alausa, Ikeja, yesterday.

… as death toll hits over 1,000, confirmed cases exceed 42,000 Innocent Odoh, Abuja

espite the outbreak of the Coronavirus epidemic in China, Nigerian businessmen and others have maintained their steady demand for Chinese visas for business trips and other visits to China as the virus appears not to deter them. There are now more than 42,200 confirmed cases across China, according to a BBC report. The number of deaths, at over 1,000, has overtaken that of the Sars epidemic in 2003. Sun Saixiong, political and information officer of the Chinese Embassy, who made this known to BusinessDay on Monday, said visa applications and issuance of visas by the embassy have not changed. “We have not noticed anything abnormal taking place, everything is going normal as before and according to the information provided by our consular section, we have not noticed any decline in the number of applications for visas,” he said. Saixiong said trade between Nigeria and China has not in any way been affected by the virus. “So far so good; every-

thing remains normal in terms of China-Nigeria trade relations,” he said. Trade between Nigeria and China reached $8.6 billion in the first half of 2019, according to data released by Chinese Consul-General in Nigeria, Chu Maoming. Saixiong disclosed that although some 60 Nigerians living in the epicentre of the disease (Wuhan) had requested the Nigerian government to evacuate them, the Nigerian government after consulting with the House of Representatives turned down the proposal. This, according to him, is because they think the medical situation is much better in China as the Chinese doctors have more experience in treating the virus. He said bringing the Nigerians back home carries a risk that they might bring the virus into Nigeria where it has not been discovered yet. He said the best way to control the disease is for people to stay where they are and to take proper protection, according to World Health Organisation recommendation.

•Continues online at www.businessday.ng

USTDA, NNPC sign $1.1m partnership for 1,350MW IPP Abuja project OLUSOLA BELLO & HARRISON EDEH , Abuja

he Nigerian National Petroleum Corporation (NNPC) and the United States Trade and Development Agency (USTDA) have signed a $1.1 million grant as part funding for the NNPC-Abuja Independent Power Project (IPP) modelled to generate 1,350 megawatts (MW) of electricity to alleviate the power challenge in the country. The signing between the NNPC, the USTDA and General Electric (GE) took place on Tuesday at the ongoing Nigeria International Petroleum Summit (NIPS) in Abuja. Mele Kyari, group managing director of the NNPC, signed on behalf of the NNPC while Mary Beth Leonard, United States ambassador to Nigeria, signed for the US agency. Kyari said the plan by the corporation to build the 1,350MW power plant in Abuja was part of the national strategy to monetise the abundant natural gas resources in the country. Thomas Hardy, acting director, USTDA, said the $1.1m is the investment of the USDTA for the feasibility studies that will drive and make case for the bankability of the project. “The goal of USTDA is

to make sure the project is viable and in a way that will increase the likelihood of implementation financing whether it’s from World Bank or the Export Import Bank,” Hardy said. He said the fund the USTDA is investing in the project does not require counterpart funding from Nigeria as the agency has made a 100 percent commitment to the project. BusinessDay findings show that the Abuja 1,350MW Independent Power Plant (IPP) would leverage on the existing huge natural gas resources from the NNPC Upstream and the proposed Ajaokuta-Kaduna-Kano (AKK) gas pipeline to boost the nation’s revenue base and generate employment opportunities for the youth. The project would sit on a 54.7-hectare land in Dukpa, GwagwaladaAreaCouncilofthe Federal Capital Territory (FCT). Apart from generating 1,350MW into the national grid, the project would help to decongest the over-voltage on transmission network coming from closely located power generating companies in the gas producing areas. It was also gathered that the project would be co-financed by the NNPC and its strategic partner, GE/CMEC, with a combination of debtequity sharing ratio of 70 percent:30 percent. www.businessday.ng

MARKETS

Consumer firms’ beloved dividends are on shaky grounds BALA AUGIE

onsumer goods firms in Africa’s largest economy, whose shares have been under pressure due to a confluence of factors, may have to slash dividend as their financial conditions deteriorate. Because dividends are a distribution out of profit to shareholders, an increase in earnings means investors will be rewarded more for taking risk in the entity. For instance, the largest consumer goods firms quoted on the Nigerian Stock Exchange paid a combined N85.19 billion in dividend in 2018, which represents a 10 percent increase from the 2017 figure. “Seventy percent of them will still maintain a steady payout this year but it won’t be as high as other years as they are struggling to surmount the headwinds,” said Abiola Gbemisola, equity research analyst at Chapel Hill Denham Limited. “International Breweries

may not pay dividends this year and it may not pay even next year if it turns a profit,” said Gbemisola. Ayodeji Ebo, managing director and CEO of Afrivest Securities Limited, said dividend payment would be challenging in 2019 due to challenging business environment and higher cost of production. “The hike in Value Added Tax (VAT) and excise duties means higher costs and lower profit margins as firms are finding it difficult to pass on rising cost to the final consumer,” said Ebo. Companies in the industry had been very popular with investors because of their steady dividend payment regardless of performance. Some companies have a 100 percent pay-out ratio, which means they distribute nearly all their earnings as dividend. In 2018, Nigerian Breweries Nigeria plc paid N14.64 billion in dividend to its owners out of a profit of N7.51 billion, which translated to 195

percent payout ratio, even as the largest brewer recorded a sharp drop in the bottom line. That same year, Nestle Nigeria plc, the most capitalised consumer goods firm, paid its owners N37.06 billion in dividends out a profit of N43 billion, which translated to a payout ratio of 86.17 percent. The recent stumbles in companies’ earnings suggest they are more out of favour with investors than their peers in other sectors. The industry has been beset by weak consumer spending, poor job creation, border closure, and eroding impact of double-digit inflation which hurts margins. Analysts at CSL Stock Brokers say FMCGs, particularly businesses with product portfolio skewed towards personal care, will continue to struggle with volume growth in 2020 as familiar challenges continue to bite. The research house added that beverage producers, particularly cocoa related), would witness significant pressure on margins in 2020

as the cartel formed between Ghana and Ivory Coast (both of whom control 60 percent of world cocoa output) would keep cocoa prices high, hence significantly impacting material costs. Nigerians are getting poorer as over 50 percent of a population of 200 million live on less than $1.98 a day, which means they have little in their pockets to go shopping. Inflationary pressures and the hike in fuel price continue to hurt consumers’ ability to increase expenditure which in turn continues to pressure consumer companies’ revenue. Inflation for the month of December accelerated to 11.98 percent, the highest in seven months, as price of basic food stuffs skyrocketed on the back of border closure. High level of unemployment at 23.1 percent as at September 2018 and poor job creation continue to pressure expenditure levels. Only one out of five of new entrants to the labour force can get a job.

•Continues online at www.businessday.ng

Dangote remains Africa’s wealthiest person for 9th consecutive year … Adenuga, BUA founder make top 20 list

ortheninthyearinarow, AlikoDangoteofNigeria has been declared as the wealthiest person in Africa, with an estimated net worth of $10.1 billion. In the latest ranking of the world’s billionaires by Forbes, the American global media company focusing on business, investment, technology, entrepreneurship and leadership, Dangote’s present worth is down from his estimate of $10.3 billion a year ago. This is attributed to possibly a slightly lower stock price for Dangote Cement, his flagship company. Dangote founded and chairs Dangote Cement, the

continent’s largest cement producer. He owns nearly 85 percent of publicly-traded Dangote Cement through a holding company. Dangote Cement produces 45.6 million metric tonnes annually and has operations in 10 countries across Africa. Dangote also owns stakes in publiclytraded salt, sugar and flour manufacturing companies. Dangote Refinery has been under construction for three years and is expected to be one of the world’s largest oil refineries once complete. Africa has 54 nations, but only eight countries have billionaires, according to Forbes,

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with South Africa and Egypt dominating not only the top 10 richest people in Africa list, but in the rankings overall with five billionaires each. Nigeria comes second with four billionaires, including Africa’s richest man, Aliko Dangote. Nassef Sawiris of Egypt is the new number two richest, worth $8 billion, up from $6.3 billion last year. Sawiris’ most valuable asset is a stake in shoemaker Adidas worth a recent $4 billion. The increase in Adidas’ share price alone added nearly $1.5 billion to his fortune since January 2019. He also owns a significant stake in fertiliser producer OCI N.V. @Businessdayng

In 2019, Sawiris and US investor Wes Edens purchased the remaining stake they didn’t own in UK Premier League team Aston Villa Football Club. Number three on the list is Nigeria’s Mike Adenuga, worth $7.7 billion. He owns mobile phone network, GloMobile, as well as oil producer Conoil and extensive real estate holdings. His mobile phone network, Globacom, is the third largest operator in Nigeria, with 43 million subscribers, while his oil exploration outfit, Conoil Producing, operates six oil blocks in the Niger Delta.

•Continues online at www.businessday.ng

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Revisiting key issues in loan delinquency governance Small Business handbook

Emeka Osuji

oan delinquency is still an issue in the banking sector; especially in the microfinance subsector. The concept of governance has a checkered history. With a Greek origin and a meaning that conveys the idea of steering or piloting, Plato amplified its metaphorical connotations and use in his early works. It was then up to William Tyndale, the English scholar and champion of the Protestant Reform, and the Royals of Scotland and England, to occasionally apply the concept of governance to the specific activity of ruling a country. Overtime, governance has become a very general term applicable in a wide variety of phenomena, including public governance, corporate governance and even project governance. From an abstract conceptual viewpoint, governance may refer to all the actions and processes that coalesce to create and institutionalize stable entities and practices. This is why we can talk of risk governance, crisis governance, project governance and for those interested in the health of financial institutions, credit risk governance, and such. Delinquency governance is a generic economic term, designating the aggregate of rules, regulations, processes and procedures that seek to

control and minimize bad loans in any financial institution. As economic conditions change, and they do so more often now than ever, many of the underlying variables that guide lenders in the creation of risk assets also change. And that’s not the only thing that happens at times like these. The changing times have also introduced new variables in the equation of loans contracted before it. Among such new variables is what we call loan shortage. Many lending institutions, apart from delaying disbursement of loans, which has its own complications in the life of a credit, sometimes find that they are no longer in a position to continue funding some projects, part of which loans the clients have already drawn down. This is usually a recipe for loan delinquency, which is now one of the real and present dangers of our current predicament. Uncompleted projects cannot yield the projected revenue requisite for loan repayment. Furthermore, every transaction with foreign exchange component is thwarted once the exchange rate goes against the local currency. The recent devaluation of the naira had this effect. Most corporate consumers of the services of MSMEs have also either shut down (a technical term used by economists to designate the stoppage of production when revenues barely cover average variable costs and there is no motivation for continuing production) or contemplating outright exit of their industries to cut their losses. The combination of a deteriorating exchange rate, high and rising inflation and a contracting national output is one of the acknowledged “clusters of disability” that cause loan default around the world. It has led to a further serious

deterioration of the already poor loan portfolio quality in the microlenders’ books. Realising that our microfinance institutions are not famous for their ability to effectively manage loans, we see the need to return to the subject of effective delinquency governance. Without doubt, the present situation calls for the stepping up of delinquency management and risk control capabilities of all lenders. It is therefore important for operators in the microfinance sector to stop for one moment and analyse key aspects of their operations. In particular, such analysis should establish the extent of deterioration in their loan portfolios, since the present crisis. It should also analyse the rate of loan collection over the same period, and assess the general health of their loan portfolios. I believe this is not the time to pursue new interest income. They should use this period to sharpen their skills and improve their understanding, particularly of effective risk and delinquency governance. These skills will become more important as the economy grinds slowly along, and hopefully, ultimately bounces back. Delinquency is like a pregnancy. It takes a process to happen. Loans do not just go bad. It is like child birth. Nobody around a pregnant woman can claim not to be aware that “somebody is on the way”, as one Nigerian musician put it. It is never a sudden flight. Loan delinquency follows a process. Indeed, it does not just follow a process, it follows a due process; one of the abundantly scarce attributes of our polity. The first challenge in delinquency management is that some operators hardly know what the best practice demands in this matter. It may be

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A clear understanding of clients’ cash flow pattern is one of the first delinquency governance measures in a credit good process. Unfortunately, cash flow analysis skills are not exactly common these days

Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Collaborate or die

ollaboration and cooperation amongst people has always been the way to go. After all, what transforms a collection of individuals with disparate views and often competing personal interests into a cohesive group commonly known as a society is the implied agreement and cooperation among members of same group to live together as one. But of course, not all motives to collaborate or cooperate are entirely noble though. Two of my elder brothers in their younger days were experts at sneaking out of the house at night, after successfully deceiving our parents that they were going straight to bed with their excessive yawning and stretches. That part of the plan had been perfected to an art and seemed to work every time but there was just one snag; the return. Abdullahi, the maiguard would always fall asleep, so instead of sneaking back in quietly, as that God forsaken hour quite naturally dictates, they were left with no choice but to bang with increasing desperation as Abdullahi always failed to wake up on time. Result? They always got caught by dad. So these smart boys devised a foolproof way to induce Abdullahi’s “cooperation”. They gave him an extra strong mug of coffee as thick as treacle before they went out. Did it work? It certainly did. The poor chap didn’t know what hit him as he couldn’t get a wink of sleep for three very long days! Of course, after that experience, they could never convince him to drink it again. Would you? Numerous studies conducted have provided incontrovertible evidence that there is a link between character development on one side and both individual and societal success on the other. One such study, the Relationship of Character Education Implementation and Academic Achievement in Elementary Schools (Journal of Research in Character Education, Volume 1, number 1) which was carried out by J. Benninga et aL at 651 Elementary schools found that, “

Schools with higher evidence of character education overall tended to have higher academic scores in all the measures used”. So even from an academic point of view, which is often our primary concern, it’s a big plus. John Dewey, the revered American Educationist and Philosopher, put forward a position that “a successful society requires moral individuals who are more interested in working together and less interested in outdoing their fellow citizens. He argued that citizens with morals are action-oriented individuals who carry out wellintentioned plans. He believed that individuals should still strive to better themselves in an attempt to incrementally reach their individual potential. However, he reasoned that people should also have the betterment of their society as a goal in mind and not be simply motivated by being able to claim superiority over others.” Let me give you what I believe might be a somewhat familiar illustration. A lower middle income neighbourhood is traumatised by epileptic electric supply which eventually brings the residents together to do something about it, as the cost of “forming” not to feel it, had become too much to bear. One of the residents, whose turn had finally come for God to smile on and change his level suddenly stops attending the residents meetings. The company he works for has provided him with a big and brand new generator which the company is also kind enough to fuel with more than enough diesel every week. As you can imagine, this new level means he’s no longer perturbed by such mundane issues as electricity supply. The electricity providers can do whatever they like. He couldn’t care less. Fact is, he has risen above all that and the sooner his neighbours know that too, the better. So he carelessly throws “collaboration” to the dogs as his personal interest has already been served. Tell me, how can a community where the majority of individuals look out for No. 1 only, possibly work?

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A research carried out by Johnson and Johnson(2008) concluded that in educational systems which focus more on teaching pupils to collaborate than to compete, the children’s grades not only improved but the pupils grew up to become better citizens and more conscientious leaders, subsequently leading to progressive, more functional, fairer and far more successful societies. That’s why in a country like Japan, where the state policy is to ensure low income areas boast of schools of equal standard, in both facilities and quality of teachers, as schools in high income vicinities, there’s a more even level of development and progress across the different economic groups and there’s a greater willingness to cooperate with each other. In such a place, you’re far less likely to find a huge section of society, who for all intents and purposes, feels disenfranchised. In Japan, they are very deliberate about making sure there’s no obvious discrimination, which is why according to Andreas Schleicher, who oversees the Organisation for Economic Cooperation and Development’s (OECD) work on education and skills development, the world view of the typical Japanese is that, “disadvantage is really seen as a collective responsibility”. This quite clearly explains why the country’s school graduation rate is 96.7 percent and according to a survey conducted by the OECD in 2017, it was found that in Japan, only about 9 percent of the variation of student performance is explained by student’s socioeconomic background compared to the OECD average of 14 percent and even higher at 17 percent in the United States. Of course, if we ran a country which paid attention to providing valuable statistics we would find the variation to be so much higher here. It’s therefore no surprise that Japan is the number one country in the world where poorer children are most likely to grow up to be better off in adulthood. The late US First Lady, Barbara Bush spoke

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necessary to refresh our minds as to the meaning of these related words delinquency and default. As a result of this weakness, what some operators call delinquency is actually a default - a higher degree of the failure to keep to loan repayment terms. A loan becomes delinquent when the borrower fails to bring in the money on due date. If a payment is due today and fails to come, the loan is delinquent by tomorrow. Default is when delinquency persists on the subsequent due dates. Owing to the close connection between delinquency and default, and by extension, loan loss, effective delinquency governance is an antidote to bad loans. Precisely, by best practice, a borrower who has not made three consecutive principal payments has defaulted on the loan. It does not matter that he is meeting interest payments, provided these three principal repayments remain outstanding, either in part or in full. In microfinancing, the principal amount of loans outstanding is usually the most important and largest asset of the organization. It is the main product on sale and the most important income stream, hence the need to protect it. Besides, delinquency can unravel a lending programme. First, it postpones earnings and eventually reduces them. Second, it affects the lender’s cash flow and may damage reputation when lenders can no longer serve clients. These may ultimately damage sustainability and outreach potentials.

Character Matters with Daps

Dapo Akande to this when she once said, “If human beings are perceived as potentials rather than problems, as possessing strengths instead of weaknesses, as unlimited rather than dull and unresponsive, then they thrive and grow to their capabilities.” As the feeder system to the larger society, which is what educational institutions represent, the schooling system should have a more robust pro social, collaborative focus because the critical role it plays in developing a society’s future leaders cannot be overemphasised. There are no two ways about it; collaboration is the way to go. The National Policy of Education (1981) outlines five national objectives which also double as the philosophy of Nigerian education. These objectives summarise the world view which the national educational policy is meant to project and they are: A free and democratic society; a just and egalitarian society; a united, strong and self-reliant nation, a great and dynamic economy; a land of bright and full opportunities for all citizens. Sounds wonderful doesn’t it? But let’s be honest with ourselves; how many of these rings true today? So how effective has our educational system been? I’ll leave you to answer that. Changing the nation...one at a time. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

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Innovation and gas infrastructure financing FOLA FAGBULE

arly in the last decade, AFC was privileged to serve as one of several Financial Advisers who assisted in the raising of more than a billion dollars in financing for the most important gas export project in Africa. Our client was a company known as Bonny Gas Transport, a wholly owned subsidiary of the hugely successful Nigeria Liquified Natural Gas (NLNG) Limited. Our assignment at the time was to support the financing of specialised transport vessels used in ferrying the precious liquid cargo from Bonny Island to delivery points in Europe and Asia for regasification. So, it was with a sense of extra pride in their latest accomplishment that I received the news of the parent company and its shareholders finally achieving attaining so-called Final Investment Decision (FID) on their huge (more than $10bn) expansion plan. For the uninitiated, FID essentially describes the point when definitive capital commitments are made by the sponsors of a large project. In normal circumstances, getting across the FID line is a big deal for everyone involved. In this particular instance (for reasons I will get into presently) it was an even more remarkable achievement. Thanks to technical and financial innovations, the international market for liquified natural gas has been radically transformed in the last decade. Global average unit prices (typically expressed in dollars per standard cubic feet or British term units) for this

increasingly plentiful commodity have nearly halved between January 2017 and today. In simple terms, there is a global glut in sea-borne gas, because multiple new sources of supply have flooded the market. Not the least important of these sources is of course the gigantic United States of America shale export trade. But several other geographically advantageous supply sources (relative to major demand centres) have also emerged. In these conditions, new capacity additions targeted at the global market are subject to even more intense scrutiny and due diligence than usual. This is the difficult context within which the folks at NLNG and their shareholders managed to secure the committed export contracts and investment capital to add about eight million tonnes per annum in capacity (or more than 35 percent of their current nameplate). Through their work, another chapter in the impressive success story of NLNG is being written, and as always, it is important to learn a few lessons. Firstly, a buoyant long-term price environment for gas exports can no longer be taken for granted by producing countries. In fact, my preceding sentence may prove to be a ridiculous understatement of the future price trajectory for sea-borne natural gas. What does this mean for African countries like Nigeria (alongside Mozambique, Senegal and Equatorial Guinea) in possession of world-class proved gas reserves, but located at a distinct geographic disadvantage from the major energy consuming markets? Secondly, what message can be gleaned from the curious coincidence that the most successful historical attempts to monetize Nigerian gas (whether via piping, liquefaction, or conversion to fertilizer and industrial chemicals) have been export-oriented, private sector-led, and beneficiaries of limited pricing regulations? You

may have observed that my second query is in fact a trick question which contains its own answers, which I will return to shortly. Finally, what lessons can be taken by policy makers interested in stimulating a similar supply glut (and consequential price collapse) in the domestic gas market, as we have seen internationally? One interesting and worth-reading document which does a quite good job of presaging these difficult questions is the Nigerian National Gas Policy, approved by the country’s Federal Executive Council in 2017. It suggests that a good amount of thinking has gone into the issue, and into possible solutions. From the perspective of someone engaged in providing infrastructure financing solutions, a few implications are immediately clear. To start with, it is important to accept that (barring changes in market conditions) the opportunities for additional large scale, sea-borne gas export projects from Africa may be limited. On the contrary, several gas derivatives like ammonia, urea, polyolefins, industrial chemicals and other petrochemicals are affected by very different global market characteristics and remain rich with potential (and AFC remains very active with several sponsors in this regard). Apart from global market conditions, the key requirements for success with such projects however are (as always) industrial expertise, a favourable local business and legislative environment, attractive investment incentives and ultimately, international capital. Nigeria and its sister gas provinces in Africa will need to work harder at creating these conditions for success, with the structural characteristics of investments like NLNG being near-perfect case studies available for emulation. Beyond export markets (important as they are), domestic gas consumption within Africa remains

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For one thing, the insolvent gridbased electricity market is patently unable to serve (by itself) as a credible basis for major upstream investments in gas infrastructure. Clearly, other more attractive gas utilisation options within the local market are needed

Fagbule, is Senior Vice President, Africa Finance Corporation. His Twitter handle is @ folafagbule

Restoring hope back to the Imo citizens

ccording to Narendra Modi, an Indian politician, the strength of democracy lies in criticism, and if there is no criticism, that means there is no democracy. And if you want to grow, you must invite criticism. Imo state the Eastern Heartland is a blessed state with abundant human capital and natural resources. Our dear state has produced great men and women alike to the admiration of our sister states in the south eastern zone and Nigeria at large. The political situation in the state is one every Imo person should be happy about considering that power has still remained to the people rather than to anyone’s political dynasty as against their wish. Howbeit, the pronouncement of His Excellency, Distinguished Senator Hope Uzodinma as the Executive Governor of Imo state by the Supreme Court unanimous judgment on the 14th January, 2020 has been greeted with unprecedented acceptance by almost all parts of the state. Consequently, in his two weeks in office as the executive governor of Imo state, Hope Uzodinma has shown Imo people that there is still hope of returning the state to its past glory. He has continued to assure all ndi Imo of his commitment to make Imo state a model among the comity of states in the country and his readiness to embark on people oriented

projects to prosper Imo. During his maiden broadcast on the 21st January, 2020, Hope Uzodinma urged every true man, woman and youth of Imo state to put the past behind us without throwing away the lessons learnt, as we forge ahead to the great task of making a New Imo state work again. This timely and compassionate broadcast also, gave ndi Imo a good and purposeful trajectory of development in the state under his administration that the time is now. The fact that Hope Uzodinma has come fully prepared and has offered himself to create a new Imo is good for Imo people on the already laid foundation of his predecessors is good for Imo people, who are asking for good governance. One thing that I know and I feel is that Imo people want to celebrate continuity and peace. The administration of Hope Uzodinma which centres on the 3Rs of Reconstruction, Rehabilitation and Recovery is cardinal as Imo people can testify of substandard and inferior projects embarked on by past administrations in the state. It takes only a servant leader with the courage and boldness to complete whatever that is unfinished good business that any previous administration had left as he embarks on new projects as well. During Governor Uzodinma’s two weeks in office, he has approved extension of tenure

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Baron Ikechukwu

and support to different panels of enquiries as set up by his predecessor in order to give a detailed report and recommendation for further implementation by the state government. He has also, ordered contractors to move to their different construction sites within 72hrs without revoking anyone as they have all been mobilised by the government during the last administration, all in the spirit of continuity of good governance. Again, the Governor, during his maiden visit to the workers in the state at the Imo state secretariat on Wednesday, January 29, 2020 assured them of his commitment to improved services, and on the 4th of February, 2020 he fulfilled part of his promise by presenting brand new vehicles to all the permanent Secretaries in the state at the Government House in Owerri. On February 6, 2020 Uzodinma approved the implementation of the N30,000 minimum wage in the state public service for junior workers and consequential adjustments on other levels to be implemented as soon as the on-going government-labour negotiations are concluded. On infrastructure, the Governor ordered the temporary shutdown of Otamiri Head works for Repairs and maintenance as part of the measures to guarantee constant supply of portable water to residents of Owerri metropolis. I see it that the administration of Governor

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an obvious opportunity for growth. Driven by Algeria, Egypt and Nigeria, the decade from 2010 saw a nearly twofold increase in local gas utilisation (according to data from the U.S. Energy Information Administration), with Africa-wide local consumption exceeding exports for the first time in 2011. But the growth is not nearly fast enough relative to the development needs of the continent. Nigeria in particular (with its large population and crippling electricity deficit) should ideally be positioned to create a leading domestic gas sales market. There are a number of reasons why this has not happened. For one thing, the insolvent gridbased electricity market is patently unable to serve (by itself) as a credible basis for major upstream investments in gas infrastructure. Clearly, other more attractive gas utilisation options within the local market are needed. Yet (and perhaps most importantly), the governments good-intention attempts to maintain tight policy-based control of domestic gas prices at every stage (from well-head to plant gate) might be perversely serving to limit innovation into alternative use cases that can motivate the needed infrastructure investment. Ultimately, (as we have seen globally) technical and financial innovations are critical to rapid market growth. Therefore, my free advice to policy makers interested to replicate the international gas glut and price collapse in their domestic markets would be to err on the side of flexibility in all economic regulatory matters, particularly pricing. Human enterprise and initiative are the greatest forces available for development and very little can be achieved when these are prematurely limited.

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Hope Uzodinma wants to grow and has invited constructive criticism rather than fabricated lies and distractions by past administrations. On the other hand, the era of abandoned projects is now over in the new Imo state. I recall with every sense of disappointment and reckless abandonment of projects by previous administrations. One pathetic case is the pipe borne water project that the Sam Mbakwe regime left uncompleted and till date has remained the same state. Government as a continuum must be allowed to thrive by opposition groups and detractors alike. To that end, the mandate that our new Governor, Senator Hope Uzodinma has is about continuity and sustainability as against disruption, stagnation, and all of such. Ndi Imo, you must have to safeguard what you already have as a servant leader. Recently, he showed this by sacrificing his security vote for the payment of salaries and pensions. Imo cannot afford to put at risk their God sent Governor and gamble away their future. Ikechukwu is a public affairs analyst, who writes from Abuja Email: iykebaron@yahoo.com

Wednesday 12 February 2020

BUSINESS DAY

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Infusing democracy into Nigeria’s civil rule

editor Patrick Atuanya

Need to re-erect the pillars of democracy

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

wenty years later, it is clear as day to most Nigerians who think about the matter that the country runs a civilian regime but not a democracy. On the surface, the country parades all the paraphernalia of democracy. There are elections at intervals. Persons get into the executive and legislative arms of government based on such polls. In practice, however, those elected on the platform of democracy have reduced governance and its processes to mere civil rule. At Federal and State levels, Mr President and the Governors act in the manner of the military rulers of our recent past. There is growing intolerance of dissent, as exemplified by incarceration of journalists on holding charges for upwards of six months and more without trial or attempts to smuggle in legislation to stifle free expression of opinion. There is blackmail of opposition. It is worse in the states where the governors act as Lords of the Manor. One consequence is the closing of the public space and increasing citizen apathy. The voice

of civil society has gone mute on various issues on which individuals and groups sailed forth with loud and reasoned opinions, even under military rule. Timidity born of dread of the intolerance of government at all levels walks the land. As classical political science theory, the four critical elements of democracy include the active participation of the people, as citizens, in politics and civic life; upholding and protection of the human rights of all citizens; observance of the rule of law; and a political system for choosing and replacing the government through free and fair elections. Ancillary pillars are the freedom of assembly and speech; inclusiveness and equality; membership; consent of citizens; voting; observance of fundamental rights. It is saddening to note that participants in the current government are rolling back the progress of democracy in Nigeria. They have pulled down the ladder they climbed on their way to the Presidential Villa and various government houses. They rode on the wings of an enabling democratic environment where they could

oppose the sitting government sometimes with outlandish claims and in very obtuse language. The then-candidate Muhammadu Buhari called on President Goodluck Jonathan to resign on account of perceived failures. On the contrary, the call by Senator Enyi Abaribe on President Buhari to resign over the admission of inability to manage the country’ security situation elicited extreme hostility from federal government officials. The treatment came even though the speech had the protection of legislative immunity for being spoken on the floor of the Senate. Ango Abdullahi of the Northern Elders Forum received worse dismissal from the Presidency because his group spoke against the performance of the presidency. Increasingly, therefore, in Nigeria, there is the absence of opposition critical to the sustenance of democracy. Citizen apathy means we do not have Political Action Committees that aggregate the views of citizens that they channel through political parties. No groups or associations are leading advocacy on critical issues at

federal or state levels. Nigeria still runs bureaucracies based on and supportive of the structures of the military-era governments with a veneer of civilian dressing. Rather than grow, democracy is shrinking and stultifying. Debate and discussion are muted and not focused on the pursuit of egalitarian principles. The Nigerian public space has now reverted to the analysis of ethnicity, nepotism, corruption and all the issues that groups and individuals fought against many years ago under military rule. The Diaspora is conflicted. President Donald Trump has sown confusion in the minds of those in the United States with his visa restrictions. They and the others need to contribute to the debate, discussion and advocacy on Nigerian democracy to save it from dying. Professional associations are the bastions of the middle class everywhere. Their views count. Nigeria’s professional associations must rise and speak up to ensure the infusion of democracy into our current civil rule. It is a socially responsible and professional call to duty.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

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BUSINESS DAY

Wednesday 12 February 2020

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The judiciary, morality and leadership: Is there hope?

Franklin Ngwu

ith the increasing reliance on muted technicalities of law to make decisions especially on matters of immense public importance, the judiciary is arguably, knowingly or unknowingly contributing to the challenges of our dear Nation. While technicalities are important, the role of the judiciary in a developing and plural society as Nigeria is beyond technicalities. There is a reason why they are called the ‘last hope of the common man’. It is to ensure that as final arbiter before God Almighty, that they (the judiciary) examine and judge cases mainly in the interest of the common good. This demand in the interest of the common good places a huge moral responsibility on the judiciary to see themselves not only from their knowledge of the law and its intricacies, but mainly from their unique roles as islands of moral rectitude in a sea of moral turpitude. As guardians for a moral oriented society, all hands must be on deck to ensure that this unique

task is preserved and sustained. The economy is in crisis, security in crisis, agriculture and food production in crisis, unemployment unbelievably high and in crisis, election and governance in crisis! The last hope of the common man should not be allowed to be in crisis also! That we adopted the English legal system is not a reason for the seeming over-reliance on the letter of the law (technicalities) and gradual relegation of morality by our judiciary. The effectiveness of a law (stating the obligation, justifying it and punishing offenders) depends on the extent to which the law is accepted, understood, internalized and complied with. The success or usefulness of a law therefore starts from the way the law is stated or expressed, its believability and amenability with informal norms and values (social norms) of the society. As social norms are rules that are not officially stated or enforced by formal legal actions but complied with, the efficacy of the formal law to serve as a good deterrent mechanism immensely improves when it is used to complement social sanctions (informal norms and values). The helpfulness of informal norms and values is due to their alignment with morality which starts at birth and families. What the above shows is that Law and Morality are two sides of the same coin. It is therefore important that our judicial officers deeply appreciate the inherent link and its alignment with who we are as a people in terms of our

‘

The helpfulness of informal norms and values is due to their alignment with morality which starts at birth and families. What the above shows is that Law and Morality are two sides of the same coin

informal norms and values. Recalling that our respective tribes were governed by these moral oriented informal norms and values before the adoption of the English legal system suggests that morality should not loose its relevance in our present judiciary. Even in the United Kingdom where we adopted our present legal system from, the importance of their informal norms and values in their present judiciary is undeniable. In explaining the origin of the English legal system and the relevance of the informal norms and values, it is stated in that ‘English legal development appears as a historical continuum. There is no obvious rupture, no wholesale wiping out of legal wisdom of centuries and no division of the law into a pre-and postrevolutionary era. In English law the present is never completely shut off from the past and its historical roots are easily perceived. Out of hard and bitter experience, Englishmen had come to learn that the remorseless, incalculable power of the past over the present was not to be dispelled by the strivings of a single generation. From 1660 onwards, England was never again entirely to forget that the secret of a nation’s strength is to have the power of the historic past behind it, not against it (Caenegem 1986: 8 & 158). Lamentably for Nigeria, we did the opposite of what the British whom we adopted their law did. In our case, we have consistently relegated our informal norms and values (morality) pre-

ferring to rely more on the letter of the law (technicalities) to which we lack deep understanding, acceptance, internalization and compliance. As such our dear nation seems to be in continuous decline with little hope for a rescue. Just as we are talking about the judiciary today, so it is in almost every sector of the country. And the most disturbing aspect is the somewhat collective silence of our leaders even with the glaring decadence of our dear country! Do we still have good leaders in Nigeria? a friend asked. We cannot continue to claim to be leaders when in brazen atrocities and irregularities, we maintain a debauched unconsciousness and sometimes even collude and affirm immorality with our revered credibility and moral fortitude. In the absence of good leadership and collaboration, our social problems and challenges will only escalate to nobody’s benefit! It is important that our judiciary remember that injustice to one is injustice to all. With the opportunity for the Supreme Court to review cases that it has decided upon, we implore them to remember that the future of our dear nation is in their hands and in agreement with our national anthem, may the labour of our heroes past not be in vain and may the God of creation, guide our leaders right! Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

Risk retention vs. risk avoidance

o you recall the risk management technique options available to financial institutions that interact with different level of risk in their operations? Let’s build a recap as a foundation for today’s focus. Financial institutions in practice of risk management technique are concerned with approaches to manage their risk exposures. The options available to them are loss control, loss financing and risk reduction Let’s shed a light on a loss control and a loss financing technique under the headlines: risk retention and risk avoidance. Risk retention This risk management approach is an extreme opposite on the Risk Transfer approach in that it upholds the principle of taking responsibility for one’s action. Risk Retention technique is the intentional decision of organisations to handle opposing risk of a firm internally rather than transferring them to insurance or any other third party. By so doing, the risk of the organization is self-financed and managed. In accounting perspective, this is done by setting an amount/ account aside called Provisioning. The provisioning account is used to service bad debts (defaulting loans). The provision account is a loss financing (reserve funds) account that pays for the potential losses arising from client’s loan defaults. Organizations make decisions to retain risk when a cost analysis review shows that it is cost effective to handle the risk internally as opposed to the cost of fully or partially insuring against it. Companies choose to retain

risk when the premium of transferring them is substantially high. You could rename the risk retention approach as self-insurance. What financial institutions actually do The Risk Management Committee strikes a balance in determining the appropriate level of risk transfer or risk retention for their organization. It is unwise to completely transfer your risk and foolhardier to totally retain them. Experience has it that organizations choose to transfer high risk options and retain lower risk. By so doing, they partially retain the risk of their business. There is however no best brilliant way to handle risk. Organizations should work with their risk advisor to determine which risk-financing option is most appropriate for them. The role of risk advisors in this balancing act is crucial. Experienced risk advisors can help organizations determine the best riskfinancing program or strategy by conducting a detailed analysis of their risk management profile, risk-taking philosophy and appetite. Risk avoidance Risk avoidance is most times misinterpreted as risk acceptance. On the contrary, it is an approach of risk management that refuses to accept a risk. When the risk exposure is not permitted to come into existence or the causative of a loss is totally eliminated-then this is an avoidance technique. It is simply avoiding the activity that leads to a loss; it is the approach of not engaging in an action that gives rise to risk. This technique is usually not the best for financial institutions as it deprives them of the profits and opportunities of doing busi-

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ness; so it is the most extreme decision to be taken when the risk level of doing business is also extreme. Certain risk management scholars do not view avoidance as a risk management tool since it does not entail control of an unwanted event but rather avoid the compromising events entirely. Opposing scholars see it as a tool by distinguishing risk avoidance from risk ignorance. In their view, risk avoidance becomes an option when the extent of risk of a business is known. For example, during the assessment of a client’s credit worthiness, the credit analyst would have observed some high-risk concerns like- low level of turnover, high credit exposure of the client to other institutions, low credit score and inadequate documentations. This concerns raises high level risk of default and the best option opened to a firm is to avoid this business rather than employing another tool which might be costly to the firm. Another example can arise when a bank plans to expand its product to accommodate a certain class of the economy. After completing the business plan and proposition, the bank determines that the plan is risky and decides not to pursue this strategy/product. They have strategically avoided the activity, so the loss does not arise. Risk avoidance is a loss control technique and most times saves the firm from employing loss financing tools. This technique might not totally sway you from a business opportunity but suggest a better approach or timing for a business. Risk avoidance is the

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Akinyomi Timothy

least expensive control tool if it turns out to be the best decision and it could also be the most expensive if the outcome differs. Financial institutions employ a combination of techniques to manage their risk and choosing strategies that best suits their line of business. Whichever the decision taken from time to time, it is imperative to be intentional about this and keeping a log (register) of these decisions for reference to guide future decisions. Professional advice “All transactions are not compulsorily approved. A decline (risk avoidance) might be your best bet” – CEO Tatoni Consultant Today’s Challenge: When there is risk, there is gain. Does risk avoidance hinder a business more than it helps the survival of a business? Akinyomi an expert and well trained individual in the field of credit risk management. He is the CEO of Tatoni Consults

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Wednesday 12 February 2020

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

Financial Services

Noddles-maker, Tolaram mulls digital banking license in some African countries OLUFIKAYO OWOEYE

ollowing the success recorded in its cereals and noodles b ra n d s o n t h e c o n tinent which generated about $1 billion in 2019, Tolaram Group is planning to leverage its global and local relationships to move into the budding digital banking space. The group already has Indonesia-based Amar Bank which is largely a digital institution, with loans and deposits for consumers handled over mobile phones. Under the brand name Tunaiku, the fintech product offers individual unsecured loans for the middle-class segment in Indonesia. Through a website, customers can apply for loans at their convenience. The company has also developed its own algorithm that allows speedy responses to assess applications and disperse loans.

According to Kunal Adnani, who also leads Tolaram’s mergers and acquisitions team, company is looking to do is take the same technolo-

gy, the same systems, and the same learning into African markets where it has a presence, albeit in a very different area. “We have access to

thousands of distributors in these markets and that then can also have a knock-on effect to our business, the more credit we can give them, the

more they can increase volumes,” he said. While the Afr ican countries have not been finalized, Nigeria, Ghana, Egypt, and South-Africa

are likely destinations. If granted the license, this will pitch Tolaram against the likes of Wema Bank’s ALAT which was launched in 2017.

L-R: Chris Udemba, head, business development and strategy, Applied Engineering Technology Institute, (AETI); Bamidele Chinedu, executive secretary, IFMA Nigeria Chapter; Francis Kudayah, chairman, AETI; Segun Adebayo, acting president, IFMA Nigeria Chapter, and Pius Iwundu, immediate past president, IFMA Nigeria Chapter, after the MOU signing between IFMA Nigeria Chapter and AETI in Lagos.

Logistics

Rapid Delivery set to tackle Nigeria’s logistics challenge R Josephine Okojie

apid Delivery, an e-logistics start-up has debut into the Nigerian market to seamlessly connect clients and cargo owners making use of its mobile application to transport. “As one of the emerging players in the mobile transportation network space, we ensure convenient, transparent and quick service fulfillment using technology to make logistics and delivery hassle-free for everyone,” Kehinde Olagbenjo, founder and chief executive officer, Rapid Delivery said. “What we want is to create a smarter, faster, and more effective deliv-

ery platform for all. We invest in two main areas: technology and customer support,” Olagbenjo said.

He says that the organisation provides clients and users with quality transportation services for

their everyday delivery of goods. He noted that the Rapid Delivery app connects

L-R: Isreal Amuzie, co-founder, Isrina Schools; Okewole Lawal, PTA chairman, Isrina Schools; Nwamaka Onyemelukwe, public affairs, communications and sustainability manager, Coca-Cola Nigeria Limited; Alexander Akhigbe, chief environmental officer, African Clean Up Initiative; and Emeka Mbah, community affairs manager, Coca-Cola Nigeria Limited; at the Recycles Pay Launch, sponsored by The Coca-Cola Foundation at Ajegunle, Lagos.

customers to safe, reliable drivers across the country. Speaking on the application, Olagbenjo says it is very easy to download the app on the google play store, adding that users can track their cargo to confirm the arrival point and time. “The rider will accept your order and your goods will be picked up at your location. Our reliable riders will get your goods delivered to your desired location. You can track the goods and the movement of the rider from your phone,” he explained. “When goods are delivered, the receiver (clients) either pays with cash or transfer using the rapid

delivery wallet. Rate your rider through your phone to help our riders improve. Your feedback is super important to us,” he added. He noted that the wallet is one of the benefits users get to enjoy using the Rapid Delivery platform. He added that bikes, vans, and trucks on the platform are audited for cleanliness, safety, and comfort regularly, saying that drivers are well trained and reliable. “We have clear and transparent pricing listed online. No more argument with riders again on payments and be confident and assured of what you are being charged,” he said.

Wednesday 12 February 2020

BUSINESS DAY

COMPANIES&MARKETS Financial Services

Emerging Africa Capital Group Unveils Exciting Investment Opportunities Bala Augie

merging Africa Capital Group (Emerging Africa), a leading financial services provider, recently unveiled exciting investment opportunities in line with its commitment to advancing the development of Africa through diverse investment and financing solutions. At an event in Lagos themed: ‘Lifestyle, Investment & Global Mobility,’ Emerging Africa in partnership with Citrine Estates & the Cyprus Investment Promotion Agency(CIPA),introduced its discerning clients and invited guests to exciting real estate linked investment opportunities. Driven by the growth in global demand for luxury residential properties, Citrine Estates, presented by the CNS group, offers a premium investment opportunity inan exclusive development in Limassol. The Citrine Estate project is in close proximity to the

highly anticipated casino resort, the ‘City of Dreams Mediterranean,’ Limassol Marina & the Paphos airport. It therefore promises to be a key international destination & hotspot for a luxury lifestyle and keen real estate investors. This investment opportunity is fully supported by Invest Cyprus, the dedicated partner of the government of Cyprus which works in close collaboration with all government authorities, public institutions and the private sector, as an investor’s initial point of contact. This investment opportunity is fully supported by Invest Cyprus, the dedicated partner of the government of Cyprus which works in close collaboration with all government authorities, public institutions and the private sector, as an investor’s initial point of contact. Speaking at the event, the Chief Executive Officer, EAC Group, Toyin Sanni said:“We at Emerging Africa will continue to collaborate with the best institutions across

the globe in order to bring the most attractive investment opportunities to our clients towards the fulfilment of our vision to be the leading catalyst for Africa’s emergence as a key global investment origin and destination.” Emerging Africa Capital Group is a provider of financial services aimed to facilitate optimum financing and investment opportunities for African governments, entities and individuals and for investors interested in Africa’s attractive opportunities. Its subsidiaries, EAC Advisory Limited, EAC Trustees Limited, and Emerging Africa Asset Management Limited offer various financial services including equity and debt capital raising, project finance, mergers and acquisitions, loan syndications, asset holding, investor representation, estate planning, trusts and fiduciary services as well as funds & portfolio management, amongst others, to individuals, corporate entities and institutional clients.

Business Event

L-R: Bade Akintunde-Johnson, country manager for Nigeria at ViacomCBS Networks Africa, EVP/MD ViacomCBS Networks Africa; Alex Okosi, co-general manager, ViacomCBS Networks Africa; Craig Paterson, and Monde Twala, co-general manager ViacomCBS Networks Africa, at Africa Reimagined: Celebrating Alex Okosi.

L-R: OAP Hypeman DOT2UN, MD, Maxima Media Group; Oluwafemi Ogundoro, category development and activation manager, PZ Wilmar Foods Limited; Toyin Popoola-Dania, winner, King of Street Foodz Naija; Olukayode Christopher Omowa, celebrity Judge; Adedamola Ladejobi a.k.a Askdamz, Celebrity Judge; Chef Ette, and Show host Soliat Bada, at the Street Foodz Naija Finale in Lagos. Pic by Pius Okeosisi

Company Release

SUNU Assurances Nigeria Promotes Staff for Optimal Productivity

UNU Assurances Nigeria Plc., a member of SUNU Group which has the vision to be a leading African Insurance Company as it is on a mission to be an insurance company recognized for excellent client services, using cutting edge technology, motivated workforce and good business ethics to meet stakeholders’ expectations has announced the promotion of 37 members of staff for their hard work and dedication. The promotions, which took effect as from January 2020, is part of efforts to encourage outstanding members of staff to keep up the hard work and remain

dedicated and focused on the organisation’s goals. The promotions which cut across various levels ranged from Executive to Senior Manager Level, in different departments of the company. Speaking about the promotions, the Managing Director / Chief Executive Officer; Mr. Samuel Ogbodu said “This is a necessary step in rewarding high-performing employees who are have been the backbone of SUNU Assurances Nigeria through the years. These promotions reflect SUNU Assurances’ commitment to excellence as we strive to build a high performing team that re-

quires we recruit, retain and recognize individuals for their sterling contributions. The members of staff who were promoted exemplify our highest standards of integrity. They’re passionate team players who consistently develop new strategies that exceed clients’ expectations while growing our business.” The company is currently in the process of finalizing its recapitalization as mandated by the National Insurance Commission. Although the deadline for the recapitalization exercise has been extended to December 2020, the company aims to hit its target before the set deadline.

L-R: Aishatu Alkali, board of trustees, Tabitha Cum Foundation (TCF); Joy Aderele, programme director, Engine 2; Mariam Katagum, minister of state for Industry, Trade and Investment, and Tayo Erinle, executive director, Tabitha Cum. Foundation, at a visit by Tabitha Cum Foundation to the minister in Abuja. Pic by TundeAdeniyi.

L-R: Kelechi Nwosu, MD, TBWA/Concept Unit and Fuse Communication; Kingsley Moghalu, former deputy governor, Central Bank of Nigeria (CBN), and Obiora Obiabunmo, senior special assistant to Anambra State governor on economic planning, budget and development partners, at the 2020 Nnewi Investment Summit in Nnewi, Anambra State.

Wednesday 12 February 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Nigeria records 11% increase in active bank accounts but 45m remain dormant Endurance Okafor

igeria’s active bank accounts increas e d to 79.28 million in December 2019, thanks to the additional 8.1 million accounts that became active, data from Nigeria Inter-Bank Settlement System Plc (NIBSS) shows. Despite the 11.33 percent surge in active banks a c c o u n t s l a s t y e a r, t h e countr y with 40 million unbanked population reported 45.57 million dormant accounts. While Nigeria recorded a total of 124.85 million bank accounts in the year under review 36.5 percent of the accounts were inactive. BusinessDay analysis of the NIBSS data revealed that the dormant bank accounts reported last year reduced slightly by 1.32 million compared to the 46.89 million the previous year. According to the World Bank access to a transaction account is the first step to-

ward broader financial inclusion “since it allows people to store money, and send and receive.” Latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent adults still lack access. The Central Bank of Nigeria (CBN) through its National Financial Inclusion Strategy

(NFIS) plans to ensure that 80 percent of Nigerian adults are included in the financial net by the year 2020. If the apex bank is to achieve its objective through the strategy launched seven years ago, it would have to bridge the 16.8 percent inclusion gap before year-end. But the CBN had in a circular on July 2018, lamented

that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy. Not only was the country not meeting its targets, but it was also declining in growth. For instance, while Nigeria achieved 60.3 percent in 2012, it declined to 58.4 percent in 2016 against a target of 69.5

The rise of Nigeria’s invisible bank David Idoru, Head of Retail Banking, SCB, (guest writer)

n a world of digital banking and with innovation and technology positioning itself as the future of payments, there are several opportunities for organisations to solve some of the world’s biggest challenges and enhance large scale production. Digital banking in Nigeria has evolved significantly and have become an important part of our daily activities, driving e-commerce, utilities and effective everyday solutions. On innovation around digital banking, it is a common perception that this solution is the brainchild of Fintech firms, generally because while traditional banks in Nigeria stood and watched from the sidelines, Fintech firms (most of which are strictly neobanks) began to swiftly launch investments and savings products that appealed to everyone. What the traditional banks began to learn from this is that individuals are constantly looking for the most convenient ways to carry out transactions and will eliminate the time spent in physical banks if they have the power to do so. Once this existing gap was identified, traditional

David Idoru

banks became challenged to penetrate the digital banking space tailored to the needs of the everyday consumer and also as a means to encourage the financial inclusion mandate from the CBN. When we looked at the recent NIBSS report, the total number of bank accounts as at September 2019 was 123.9 Million; with the total number of active accounts at 74.7 Million, and the total number of active bank customers (individuals) at 69.0 Million. The importance of quick access to finance cannot be undervalued and with financial exclusion still, a barrier in Nigeria - only a digital innovation in banking can influence growth in the sector. While the obvious financial

inclusion challenge is something we are keen to address, we ask ourselves, is this a problem that digital banking and innovation can solve? Yes, it certainly is. To buttress this, a report demonstrated that 59percent of Nigerian customers prefer digital methods of banking, with only about 15percent still fixed on the traditional form. In the payments ecosystem, we decided at Standard Chartered Bank that it was important to drive this digital innovation with a completely virtual type of retail banking that is both efficient and convenient. In December of 2019, we launched Nigeria’s first digital bank to address everyday payment problems without the need for customers to walk into a physical bank. Unlike other neobanks, our digital bank communicates an ‘unstoppable and banking everywhere’ message to customers and for the first time, Nigerians are experiencing a branchless, digital bank that offers savings accounts, current accounts, fixed deposits (with the option of joint accounts) along with Lending and Wealth Management solutions and a client onboarding process that takes only 10 minutes. This kind of innovation is possible due to the level of investments we have made to

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ensure that it delivers digital banking comparable to none. In the last 3-5 years, Standard Chartered has invested over $3 billion in technology. We have also taken a ‘Capturing the Digital Initiative’ approach that ensures that about 70percent of the most common service requests can be handled by our digital bank with distinct benefits such as a zero charge on all interbank transactions, zero charges on SMS notifications and free delivery of cards to customers regardless of location. For us, our sense and definition of a digital bank would resonate more with one that serves its clients without them ever needing to come to the branch if they don’t want to, not even to open an account - It means giving people the choice to do everything digitally from their mobile phones. While most banks might feel threatened by Fintech who wants a piece of the pie, it is also important that banks realize that collaboration will push the industry further. A good number of Fintechs come with a great source of talent, ideas and new technologies that banks as stand-alone may not possess in good capacity. David Idoru is the Head of Retail Banking, Standard Chartered Bank Nigeria.

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percent translating to financial exclusion of about 41.6 percent. To achieve a more inclusive financial inclusion at an affordable rate, industry experts have advised that Nigeria would need to leverage technology to give access to its excluded population. “The roll-out of Payment Service Banks guidelines that allows licensing of telco subsidiaries is welcome and should be implemented,” International Monetary Fund (IMF) said in April 2019. Telecommunication operators’ push to offer mobile money services in Nigeria received the official nod of the regulator, the Central Bank with the issuance of guidelines for players to apply for the licence. But a year and two months after the Central Bank loosened its policy to accommodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear. Since October 2018 when the apex bank requested that

industry players should apply for the licence to operate as a Payment Service Bank (PSB), only three firms; Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB have been issued Approvalin-Principle (AIP). A PSB license will allow the companies to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet. According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs).

Aella Credit bags $10m debt financing to serve West Africa’s underbanked population Endurance Okafor

Nigerian Fintech startup, Aella said it has raised a $10m debt financing round from HQ Financial Group (HQF), Singapore-based private company specializing in new material science, semiconductor and blockchain financial investments. Focused on improving financial inclusion for West Africa’s low-income segment, Aella said the investment from HQF will bolster its commitment to serve the underbanked population in the region. “Lack of access to credit and a financial service has been the main impediment to MSME growth and poverty reduction in several emerging economies. Aella’s commitment to providing trustworthy credit to millions of people in the world’s emerging markets is improving financial inclusion, enabling MSME expansion and accelerating economic growth and this raise will allow us to scale our expansion across Africa quickly,” Akin Jones, CEO of Aella said. The debt financing round from HQF is Aella’s second raise and the Lagos-based Fintech Company said it has made a visible impact on the lives of more than 300,000 borrowers @Businessdayng

across its Employer Backed and Direct to Consumer Verticals, who now have access to simple financial products. Aella previously raised $2million seed funding at the US start-up program, Y Combinator from seed investors including Micheal Seibel of Y Combinator, Brian Armstrong of Coinbase, Bill Paladino (former head of Naspers eCommerce), Tae Oh, Shawntae Spencer (former San Francisco 49ers Cornerback), VY Capital, 500 Startups, Gluwa and others, which enabled it invest in digitalization and technology. Over the last two years, the company has achieved significant growth with a 2-year compound annual user growth rate of 674%, over 193% increase in revenue and maintained a single-digit default rate. Aella was also recognized by Amazon as one of the world’s leading financial organizations pioneering the use of facial recognition technology for customer authentication and credit scoring. Commenting on the investment, Sun Han Gyu, Chief Executive Officer of HQ Financial Group said they are excited to announce the partnership with Aella as it will significantly aid in the proliferation of micro-loan services to the underserved African populations who are unable to access banking services.

Wednesday 12 February 2020

BUSINESS DAY

PrivateEquity &fundraising

Nigerian stock market outperforms African peers as Emefiele’s gambit pays off Stories by MICHAEL ANI

o far into the year 2020, the Nigerian stock exchange is taking an early lead in terms of returns when compared to counterparts on the continent, thanks to a Central Bank policy that triggered funds to spill into equities. The main-board index of the market has gained about 3.5 per cent closing at 27,773.20 points from the start of the year till the close of trading Monday, making it the best and beating peers of other African markets, including the Johannesburg, the Nairobi and the Egyptian stock exchange. Tanzanian stock exchange came next returning the second most at 2.85 per cent while the stock exchanges of Mauritius, Rwanda and Botswana completed the league of the top five with a year-to-date return of 2.14 per cent, 1.66 per cent and 1.37 per cent respectively. The Namibian stock exchange, the Ghanaian stock exchange and the Johannesburg stock exchange are the worst performers, rewarding

investors with negative returns at (-3.88), (-1.66), and (-0.18) per cents respectively. Since the Central Bank in October last year placed a ban on pension fund administrators, insurance companies and asset managers from partaking in its Open Market Operation (OMO) bills, the equity market has gotten a facelift. The directive by the apex bank made non-banks foreign investors channel liquidity

to other classes particularly Treasury bills and equities. Yields in treasur y bills crashed to an average of 4 per cent as investors jostle for the short term instruments. When adjusted for inflation of 11.98 per cent, investors are left with a real yield of (-7 per cent). The Nigerian equity market which was among the worst performer last year has been one of the biggest beneficiaries

of the policy, rallying as much as 10 per cent before it started falling. Pension Fund Administrators (PFAs) have increased their exposure in the market. Data from pension regulator, PENCOM show that as at 31st December 2019, the industry has increased its weigh to N552.9 billion, about 5.41 per cent of its N10.22 trillion Asset under Management (AuM).

This was up from the 4.85 per cent of the total N9.8 trillion that was allocated to the asset class as at end of October 2019, immediately the directive was made. The Nigerian stock exchange market could have continued its rallying spree but for the CBN’s directive, increasing the amount of money in which commercial banks park in its coffer at a zero per cent interest. The Central Bank in its last monetary policy meeting and the first for the year raised the Cash Reserve Ratio (CRR) of commercial banks from 22.5 per cent to 27.5 per cent. This halts a 10-day winning streak which the market started within the year as investors are left stranded over what the bank regulator would come up with next. Aside from the hike in CRR, there is also the case of disappointing performance from the full-year financial of listed companies on the exchange. This has culminated into dampening investor’s sentiments further.

Leap Frog invests N5.3bn in AIICO insurance

nsurance firm AIICO Plc has received a N5.38 investment from Leap Frog and AIICO Bahamas. The amount was classified under deposit for shares in the company’s 2019 interim annual report published on the website of the Nigerian Stock Exchange. Deposit for shares represents amounts received by the company from its recent private placement, in which Leap Frog Investment Limited and AIICO Bahamas Limited invested a combined amount of N5.38 billion into the company on 12 December 2019. The amount received is

kept in a dedicated account with the issuing house, Stanbic Capital pending the receipt of the final approval by the Securities and Exchange Commission (SEC). No official announcement or press release was issued by AIICO on the website of the Nigerian Stock Exchange as that is typically the case. The NSE rule mandates listed companies to disclose such transactions via a press release on the website of the Nigerian Stock Exchange. In 2019, AIICO said it was considering a N5.28 billion investment. The company reported same on the Ni-

gerian Stock Exchange. It reported it planned to raise 4.4 billion ordinary shares of N0.50 each at N1.20 per share by way of a special/ private placement. Shareholders had in May 2016, given the directors’ approval to raise additional capital up to N25 billion. In June 2018, LeapFrog Investments, an emerging market (EM) focused private equity fund, took up a stake in ARM Pension managers. LeapFrog Investments recently announced it now has about $700 million in the “largest-ever private equity fund by a dedicated impact fund manager” with the

funds targeted at emerging market countries including Nigeria. The fund will be targeted at insurers, pensions and asset managers, development finance institutions, foundations and family offices. The National Insurance Commission (NAICOM), the nation’s regulatory body for insurance firms in the country, last month, released the new capitalization requirements for insurance firms in the country. Under the risk based capitalisation requirements, each cadre namely life, nonlife and composite insurance firms have had their

capital base divided into three tiers. Insurance companies operating in the composite segment, that is all classes of insurance now have three tiers. Companies operating in tier one will be required to have a capital base of N15 billion. Tier two firms will need to have a capital base of N7.5 billion, while those in tier 3 will maintain the current capital base of N5 billion. AIICO also announced plans to raise another N3.5 billion in rights issue and will seek shareholder approval at an EGM slated for March 2020.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: SAMUEL IDUH ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 12 February 2020

BUSINESS DAY

AGRIBUSINESS

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Nigeria’s 2019 palm oil import from Malaysia rises 18.4% amid border closure Josephine Okojie

igeria’s Crude Palm Oil (CPO) imports from top global producer – Malaysia has risen by 18.4 percent in 2019 amid border closure, data from Malaysian Palm Oil Council (MPOC) shows. T h e c o u n t r y ’s C P O i mp o r t f ro m Ma l ay s i a increased to 286,964 metric tons (MT) in 2019 from 242, 388MT in 2018, up by 44,576MT on a year-on-year basis, the data states. In a bid to tackle smuggling and boost local production of agricultural produce in the country, the government had since August 2019, shut the Nigerian borders with neighbouring West African countries. Experts say that the border closure is having an impact on the oil palm industry as importers who would normally import to neighbouring countries and bring it into Nigeria through the land borders are now importing directly into the

country. They also stated that palm oil imports have continued to rise because Nigeria’s CPO has remained less competitive to the imported ones owing to high production cost among others. According to them, this makes local manufacturers who use CPO as raw material for production result to importing rather

than patronising local producers. This is evident in Presco and Okomu’s – Nigeria’s two largest oil palm producers’ full-year 2019 financial statements. Okomu Oil posted its biggest profit decline in over five years as profit hit a four year low while Presco saw its profit hit the lowest since 2015. Okomu Oil posted a

profit of N5.5billion for 2019, 35.3percent lower than what it raked in 2018 while Presco made 8.16 percent less as profit at 3.9billlion. Similarly, to protect the country’s palm oil industry and spur the industr y growth, the Nigerian government had imported a 35 percent tariff (10 percent duty and 25 percent levy) on palm oil imports into the

country. Crude palm oil is also l i s t e d o n t h e Fe d e r a l G ov e r n m e n t 4 1 i t e m s restricted from forex access. Despite this, oil palm imports into the country are still on the rise owing to the huge demand-supply gap. Nigeria’s palm oil output is estimated at 900,000-1.3 million MT, experts say. Import is estimated at over N500 billion annually. With national demand of 2.1 million MT, the supply gap is around 800,000MT. “Since the inclusion of CPO in the country’s import prohibition list, Nigeria has significantly increased its production i n t h e l a s t 1 0 y e a r s,” Fatai Afolabi, executive secretary, POFON said in a statement last year. “But Niger ia is still importing a lot of CPO into the country and many are smuggled through the land borders,” Afolabi said. Last year, the Nigerian government also announced the provision of financial support to smallholder farmers which currently produces 80percent of the

country’s total oil palm production. Nigeria’s apex bank says it has disbursed over N30 billion to the oil palm sector. Oil palm can produce more oil than any other oilseed crop. About 90 percent of palm oil is used in the production of foods, while the remaining 10 percent is used by the nonfoods industry, industry players say. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents, and even cosmetics are made from palm oil. Since losing its position as one of the world’s largest palm oil producers, Nigeria is yet to recover and take its proper place in the comity of crude palm oilproducing nations owing to the discovery of oil, which changed the country’s palm oil narrative of the 60’s. As a result, Indonesia and Malaysia have now s u r p a s s e d N i g e r i a’s production becoming the global leaders in oil palm production.

Kwara to distribute 50,000 cocoa seedlings to farmers Kogi to enlist cashew into Anchor Borrowers Programme SIKIRAT SHEHU, Ilorin

bdulrahman Abdulrazaq, Kwara State Governor has disclosed that his administration has raised about 50,000 hybrid cocoa seedlings, which will be distributed to farmers at affordable prices once they mature in 18 months. Yusuf Ganiyu Adebisi, press secretary, Kwara State Ministry of Agric,in a statement said the governor had disclosed that the distribution of cocoa seedling in the state is to boost farmers’ productivity of the crop. “This is being done with a view to ensuring the prompt and effective rehabilitation and regeneration of the aged Cocoa plantations or farms existing in the state,” he said. Represented by Adenike Afolabi-Oshatimehin, Commissioner for Agricultural, Abdulrazaq revealed that the government would establish a cocoa nursery in the state to serve as the genuine source of planting materials for the farmers. “In this fiscal year, we plan to resuscitate the training and retraining of cocoa farmers on good agricultural practices through the Farmers Field

School (FFS) and Farmers Business School (FBS) respectively,” he said. “This is being done with a view to enhancing the quality of the cocoa beans being produced in the State. In addition, we also intend to look into prospects of being able to possibly address extant challenges associated with some of the critical input requirements of cocoa farmers in the state,” he added. The governor further explained that the present administration understands that lack of basic social amenities and infrastructure among others could constitute disincentives for farming in agrarian communities in the state. “It is for this reason and more that we are committing significant resources to road construction, healthcare, water and basic education in the 2020 budget, which has just been passed and assented to,” he said. “Agriculture occupies a vantage position under this administration. We have invested a lot of money to reposition the sector, beginning with the N200million counterpart fund for RAAMP III and another N49.78million www.businessday.ng

FADAMA counterpart fund, among others. “We have also made appreciable budgetar y provisions for agriculture this year, while also engaging the Federal Government and private investors on how to grow the sector in the State,” he added. Abdulrazaq assured the farmers that his administration remains firmly committed to rebuilding and reconstructing the state for the good of all and for the benefit of children yet unborn, promising the farmers that his administration would work with them to develop the cocoa subsector in the state. “Since we came on board, our administration has given so much attention to Cocoa because of its extensive value chain — just as we are doing with sugarcane and other essential crops and agricultural produce that can be successfully cultivated in the state. “ Kw a r a i s c u r r e n t l y grouped as a minor Cocoa state in Nigeria, owing in part to the perennial migration of cocoa farmers to other states and the seemingly unabated trend of rural-urban migration. This is a narrative that we want to change and as soon as possible.”

Victoria Nnakaike, Lokoja

ogi state has said it would enlist cashew farming into its Anchor Borrowers Programme to assist farmers in boosting the production of highquality nuts for export. In a courtesy visit to the state Ministry of Agriculture by the National Cashew Association of Nigeria, Kogi state chapter, David Apeh, the state Commissioner of Agriculture said in his office that the state has a comparative advantage in the production of the crop. He said that Kogi produces 54 percent of Nigeria’s total cashew production of about 200,000 tons while other states cumulatively produce the remaining 46 percent. Apeh equally hinted that, that there was the need for the state government to intervene and ensure the listing of cashew as one of the crops to benefit from the Anchor Borrowers Scheme which currently supports

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rice farming. “With the Anchor Borrowers intervention, issues of fertilizers, even credit facilities will be addressed because under Anchor Borrowers scheme, farmers have money for labour and a lot of other things”, he said. The commissioner also pledged to look into the timely distribution of fertilizers with other growthenhancing chemicals and nutrients as well as the distribution of hybrid seeds to the farmers. Earlier in his address, Ibrahim Siaka (Duche), state chairman of the NCAN said the association was solidly behind the government to ensure that its policies and programmes in the agriculture sector were not sabotaged. Ibrahim Siaka sought the state government’s assistance in the provision of improved seedlings, storage (warehousing), logistics, and vehicles for the Cashew Task Force to monitor and discourage the influx of lowquality nuts into the state. @Businessdayng

He added that government intervention on issues of double taxation and exploitation by security agencies, ‘invisible market’ sale of wet nuts and mechanisation of the farming processes would go a long way to correct all the anomalies in the cashew business. “Our major problem is the quality of our cashew seedlings,” he said. “Despite being the largest producer of the nuts, we are not the major beneficiaries of cashew. Cote d’Ivoire is a small country but produces 800,000 tons and the quality of their cashew is better than ours,” he added. He stated that Cote d’ Ivoire was able to increase its cashew production owing to the adoption of mechanised farming which Nigeria is yet to adopt. “Cashew has something called Kernel Output Ratio (KOR). Our kernel is good but our size of cashew is not jumbo. We need the jumbo size because it sells better at the international market,” he said.

Wednesday 12 February 2020

BUSINESS DAY

AGRIBUSINESS ag@businessdayonline.com

‘Nigerians need Indian, Chinese mindset to harness opportunities in agriculture’ AfricanFarmer Mogaji is the chief executive officer of FarmCredit.Ng. In this interview with Josephine Okojie, he spoke about how FarmCredit is providing finance for smallholder farmers and investment opportunities in agric sector. Can you tell us what Farmcredit.Ng is all about and what birthed the initiative? armCredit.NG was b i r t h e d f ro m a challenge. We did some analysis on the agribusiness sector about 20 years ago and realise that many people/ practitioners who have Small and Medium Enterprise (SMEs) find it difficult to access credit, and when they need it; the industry has a different package for them. For instance, a farmer needs 10 bags of fertilizer but there’s nowhere in the country where you get just fertilizers as loan. The farmer might request for N400, 000, when he needs N100,000 worth of fertilizers to complete the cycle and so the farmer takes more than is needed and eventually spend the remaining on other things. In other sectors of the economy, you will find people who take vacation loan, salary advance, school fees loan, car loans, none of this exists in the agric sector so when we identified this challenge with farmers and processors we decided to create a solution that we call intelligent finance; where they can access what they want specifically and utilize it and we will now share the rewards.

There are numerous agribusinesses currently rendering similar services that Farmcredit provides, so, what are you doing differently? There’s a general notion that we have numerous agribusinesses that have similar services, and it looks like there’s more than enough. When you do research, you find most of the platforms are not providing the exact services we are offering. Many of them are not touching the lives of even 500,000 farmers out of the 14 million smallholder farmers we have in the country, so if all the platforms are just doing 500,000 it means there’s still room to accommodate more, however, what we’re doing differently is; While targeting, the average person that comes on our platform has to have an O’level certificate. It’s easier to engage them in production than to engage

government. We work with youths and old farmers who need credit and who have a tractorable cleared land and are in clusters.

urban youths who don’t know anything about production or rural life. We must train them and the capital we give comes in the form of inputs. We give the best quality inputs which you do not find most interventions and platforms. This will help them increase their productivity, efficiency, and effectiveness which eventually translate to having higher profits, we then take the output as payment, so you can call it another repackaged Anchor Borrowers Scheme which is a brilliant intervention by CBN that the private sector also needs to embrace, that’s one of the things unique about what we do. How is Farmcredit supporting farmers with finance and how many have benefitted from the support so far? Well, as a company policy we’ve decided not to throw around numbers because it seems to be the in-thing where everybody is talking about some huge numbers to make it look appealing to the audience as against impact, so we focus on impact from credit. We started this initiative about 6 to 7 years back but effectively this model was finalized about 2 years ago where we came to some agreement after tweaking various models presented by us and finetuned by the farmers. We have had to support farmers in Ogun, Oyo, and Ekiti states. We have also explored the north-east region - Niger, Gombe, and Kano. We have collaborated with a lot of organisations who have projects. So, we have several farmers in at least nine states, but the initial concept was to introduce it to southwest where most of the youths are not looking into agriculture and that was the original intent but when we started, we realize that many farmers are interested, currently we have about 3,000 farmers reaching out to us. Who is your target audience for your range of services? We have four major target audiences with our services, we have improved sales where we sell premium top-notch quality inputs to farmers and we also provide consulting www.businessday.ng

Ho w ea s i ly a c c e s s i b l e is Farmcre dit to the indigenous farmers in the rural areas? It’s very accessible because we are not just compiling names. We have operated on different farms for10 to 15 years.

AfricanFarmer Mogaji

and advisory to new entrants, agric enthusiasts, financial institutions and the best is the government who are looking into agriculture now and they want to get it right with their policies and Investment. We also provide a lot of training, because it’s this training that shows how to get your hands dirty in the job and finally, we do monitoring and evaluation. In Nigeria’s agriculture you find an investor who probably is an executive director or an individual that has a 5 to 9-hour job, set up a farm maybe three to five hours away and doesn’t even know what’s happening. The staff may falsify report and this may affect productivity. This said entrepreneur can engage us to monitor their staff or their business operations and write an evaluation report which looks through the system like an audit and we advise either the business owner or the investor on the situation of the business now and how they can improve it and this happens from time to time so this is a very crucial service that we provide. Inadequate access to finance has been a major challenge in Nigeria’s agriculture. How would the credit provided by Farmcre dit help in addressing this issue? We give farm input as credit;

we don’t give cash. We give the best input that money can buy in the market, the ones that most multinationals use in the countries, our farmers use the same seeds irrespective of your background and so we teach you how to apply them to guarantee your bumper yield. We help the farmers maximize profit with our strategy. Many Farmers who need credit are frustrated because the financial institutions that they go to don’t understand the timeliness involved in productivity and profitability of the farmers while you cannot blame them for doing their due diligence before disbursement, so they either give credit late or they give too early. What are your criteria for selecting farmers that benefit from your credit services? Our work is core to bridging the gap between experienced farmers and the new entrants coming into the agribusiness value chain, therefore we work with farmers in clusters. We do not deal with a single farmer. You may apply as a single farmer but you will have to work and operate with farmers in clusters. Farmers must have up to 1 hectares and guarantors to access our credit. We partner and collaborate with the

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What lessons have you learned in your journey of supporting both livestock and crop farmers with credit input thus far? We have learned lots of lessons. There are lots of committed youth who are hungry for knowledge who want to learn and are also willing to serve and even though many of them are a bit discouraged they still have hope and are willing to try new things. A lot of urban youths are willing to go back to the rural communities and rural youths want to migrate to urban centers. The rural youth are loyal and they are committed to improving their productivity and there are lots of opportunities in the rural communities. Does Farmcredit have any measures or provisions in place to help bridge the knowledge and information gap in the industry? We are high on knowledge transfer capacity development, so we have 3 schemes; Triple 3 scheme is a 9 months training programme, we take fresh graduates and youths with a least O ’le vel and w e attach them to an SME in the agribusiness value chain for three months after three months. Afterward, we place them on a monitoring and evaluation program for a production cycle. We then support them in registering their business to have a legal entity and then monitor up to a year after the completion of our nine months program so that their businesses can be well established. Are there any plans to leverage technology in helping farmers become profitable? We are leveraging technology @Businessdayng

especially in climate-smart farming, irrigation is a core component of what we do is to address water wastage especially as regards agricultural climate-smart farming. We use technology for geo sur veying, geomapping, testing the soils we do this with the help of drones. How can investors get involved in Farmcredit, or what other opportunities are th ere available to leverage in the agribusiness sector? L i k e I s a i d e a r l i e r, collaboration is ke y in agribusiness sustainability so investors can come with their resources and do not have to primarily be money resources, it could be their expertise. Where are the challenges in Nigeria’s agriculture and what support would be necessary for accelerating its potentials? Nigeria has opportunities, what people see as a challenge is supposed to economically d e v e l o p Ni g e r i a n s. My favourite quote is from the book ‘Think and Grow Rich by Napoleon Hill’ which says ‘Out of every adversity comes a greater or equal opportunity provided we can find it.’ We can talk about the road infrastructure, electricity but they are all opportunities for all of us to embrace alternative power source. Solar can be leveraged everywhere in the country. We need the mindset of Indians and Chinese. They don’t come to Nigeria to talk about challenges, they fix it, make money and we carry certificates with many degrees to seek employment. Our paradigms must change now; oppor tunities are begging to be embraced. What is your 2020 outlook for the agricultural sector? The year 2020 is the promise year for anybody planning to look into agriculture, the recent policies have made it appealing, and anyone looking to leverage the agric sector might be profitable, however, a lot of caution also has to be taken because it has a lot to do with specialised knowledge and if you don’t have it, you may lose money.

Wednesday 12 February 2020

BUSINESS DAY

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Wednesday 12 February 2020

BUSINESS DAY

INTERVIEW

‘With LiveVend platform, Nigeria will go far in closing its housing gap’ John Oamen, a real estate and construction expert with over a decade experience, recently ventured into property-technology by co-founding LiveVend, arguably Nigeria’s first real estate and construction price delivery platform. In this interview with Modestus Anaesoronye, Oamen shares his career journey, the technology platform, opportunities in real estate and what is there for diaspora Nigerians. Excerpts:

Tell us about your career journey. or many years I have been associated with Construction Finishing and my first personally owned company is Faultless Finish Limited. This is the segment of the construction industry where I made a name and carved out a niche. Most clients engaged our services counting on meto deliverprecision detailing with an understanding of international standards. Since November 2019, I have come to be more closely associated with LiveVend and CutStruct Technology. I bring 10+ years of experience in Construction, Home Improvement and Estate Management. I am Co-Founder of the LiveVend App and Co-Founder/ CEO of CutStruct Technology Limited. What is the one major mantra you live and work by? For many years, business was mostly about delivering what the client wants and generating profit. I have had to challenge this thinking and elevate my position of what business means. I found like minds with similar mindsets on business during my time at Lagos Business School, people committed to problem-solving much more than profit-taking. A business that would stand the test of time must be truly solving a welldefined and properly articulated problem. This forms my core and drive today in business. Leading a team of brilliant minds, we are solving big problems, delivering value and yet still making a profit. Tell us about LiveVend real estate platform. LiveVend is the flagship product from the team at CutStruct Technology Limited, a company committed to solving construction needs the “Technology-Way”. LiveVend is extending the value of every naira spent on a real estate project. Every project, no matter how small, is threatened by price inflations by middle-men and fraudulent vendors. LiveVend provides for the safety of budgets and the sanity of planning knowing that you are getting value with every expense. LiveVend is demystifying project planning, opening it up, enhancing transparency on every project. LiveVend is the first purposebuilt Price Discovery platform on the continent of Africa offering daily

larly for purchases to be made for those projects to be completed. They do these blindly, unable to confirm pricing for building materials given to them by those they trust. There are many more in the Diaspora who have similar plans to build in Nigeria but are yet to start for fear of being cheated. LiveVend caters to these groups, providing them with access to real-time data for accurate pricing of the various stages of disbursement of funds. So, how long have you been in operations now, and what impact have you made so far? We have been in operation for 2 months now as a company. Ordinary home users have sent us a lot of positive feedback of saving money and getting direction from LiveVend for renovation projects. Some have mentioned that LiveVend has made planning easier for them to prepare for their building project. Industry experts have embraced LiveVend as a valuable tool to help them extract pricing rather than be bothered with market surveys.

John Oamen

price updates for Real Estate and Construction products. It isn’t just about pricing but also about price movement and the actionable intelligence we are able to gather and share with our subscribers which include: Private Home Developers; Real Estate Professionals; Commercial Home Developers; Government Agencies; International and Local Investors in the Construction and Real Estate Industry. What gap did you see in the real estate and construction industry that you think this platform will try to close? I found that there were so many loopholes in the procurement of building materials for projects. Regardless of project size, money is lost daily on procurement price padding and related issues. Therefore, part of our objective at LiveVend is to foster transparency in the construction industry by providing the daily pricing of construction materials to www.businessday.ng

different stakeholders in the value chain and the diaspora community is a major beneficiary. You no longer have to fall victims of being cheated by friends, family and contractors while working on your real estate projects. Another gap is data. We have a lot of plans around building a more data-driven sector that is beneficial to all stakeholders in and around the sector. Data provides construction companies with knowledge that can be used to improve planning. Better planning means more accurate budget estimates and a better understanding of timelines and costs. We are tackling these and this is just the beginning, as so much more is planned to roll-out within the year. How will this help in reducing the housing deficit in Nigeria? How far can each Naira go? I am confident to say that without LiveVend not very far. We are at the centre of sustainable project de-

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livery. By improving the reach of every budget as we eliminate the influence of fraudsters and those who inflate purchase orders, people are able to build more, build better and build with less strain. We are solving a procurement gap and in-turn answering a sustainability question. Every budget created for a construction build or renovation project can only achieve so much if it is constantly buffeted by losses from procurement loopholes. We are addressing this in part with LiveVend. You said during the launch of this platform that it would help diaspora Nigerians invest in the real estate industry. How does it work? Our Diaspora brothers and sisters are a key part of solving our housing deficit as a Nation. Many of them have projects they have started in absentia here in the country, building country-homes in their communities as well as commercial projects in the cities. They send money regu@Businessdayng

We do know that no one institution does business alone, who are your partners in this project? We have an extensive team of experts working on the LiveVend app and supporting the parent company. Externally we have a few research companies who help us with data mining and aggregation. As an expert in the field, how would you recommend that people approach real estate and construction in this new year? Real estate is looking like the way to go this year. Portfolio investments are yielding less profit this year and so people are looking for other creative ways to make profit. Real estate is a viable option to venture into. However, I would advise that they do their feasibility studies and understand the terrain they are venturing into so that they can ensure that their objectives are met. LiveVend is here to help them meet their needs and we are developing more innovative solutions this year to ensure that the real estate sector is supported towards the growth it is about to have. For those who want to invest in real estate this year with less hassles, rest assured that they have a dependable ally in LiveVend.

Wednesday 12 February 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Local content: NLNG targets 100% Nigerianisation of fleets by 2022 amaka Anagor-Ewuzie

he Nigeria LNG said it ’s on course to achieving its target of ensuring that its workforce including seafarers onboard its vessels are 100 percent Nigerians in line with the provisions of the Nigerian Content Act of 2010. Currently, NLNG Ship Management Limited (NSML), a subsidiary of the NLNG, has achieved 83 percent of its Nigerianisation target, according to NLNG. Local content is a regulatory act known as the Nigerian Oil and Gas Industry Content Development Act, which was introduced in 2010. The policy was designed to build the capacity of indigenous firms and to provide more opportunities for indigenous participation in business and value addition. Speaking to newsmen in Lagos on Friday, Eyono Fatayi-Williams, general manager, External Rela-

tions and Sustainable Development of NLNG, said that as at December 2019 that the company has in its employment list, 661 competent and professional employees. She said the number spreads across 297 officers, 329 ratings and 35 sharebased personnel. According to her, NLNG has two subsidiaries, Bonny Gas Transport Limited

(BGT) and NSML, adding that NLNG has a total of 23 vessels in its fleet, 13 of which are owned by BGT, its subsidiary. “NSML is the biggest employer of Nigerian seafarers on board its 13 NLNG directly-owned carrier ships. We have trained hundreds of seagoing officers, some to the level of captains and chief engineers,” FatayiWilliams disclosed.

We’re not stopping our services to ports in Lagos, says Maersk, Safmarine amaka Anagor-Ewuzie

ontrary to media reports that w o r l d ’s l a r g e s t container carrier, Maersk Line and its sister company, Safmarine would be stopping their services to ports in Lagos both companies have denied the reports. According to Customer Advisory note issued separately last week, both shipping lines said calls to Lagos ports will continue across their global network despite challenges facing operations at the ports in Lagos. “The West African market continues to be dynamic and market demand fluctuates significantly from quarter to quarter. Currently, we are experiencing severe delays in Lagos due to highly utilised terminal yards, crane break-downs and long truck queues. We continue to work proactively with all our terminal partners across West Africa and specifically with the Nigerian Ports Au-

thority (NPA) to assist where possible in mitigating the congestion currently being experienced in Lagos,” the Customer Advisory notes issued separately by both companies, stated. One of the notes further pointed out that Maersk has adjusted its various services across Far East to West Africa network in order to deliver a stable and reliable product to customers. The ser vice rotations within West Africa before returning to the Far East were listed as follow: “FEW1 will serve Cotonou, Abidjan, Tin-Can and Lome; FEW2 will serve Walvis Bay, Apapa, Tema, Apapa and Pointe Noire and FEW3 will serve Tema, Lome, Cotonou, Onne and Walvis Bay.” Ma e r s k h o w e v e r e xplained that changes to its service rotation were to ensure it continues to call at all West African ports while ensuring that it limits the impact of delays on customers’ cargo. “Additional to the above, we will continue to call in www.businessday.ng

Lagos with our Middle East product (MESAWA) and our Europe ser vice (WAF6),” Maersk stated further. It also said it would continue to monitor the situation and will communicate any future changes to its vessel schedules, ‘as is the norm across our global network’. Safmarine, on its own Customer Advisory, said its service rotations within West Africa before returning to the Far East include FEW1 serving Cotonou, Abidjan, Tin-Can and Lome; FEW2 serving Walvis Bay, Apapa, Tema, Apapa and Pointe Noire; and FEW3 serving Tema, Lome, Cotonou, Onne and Walvis Bay. Maersk is the world’s largest container shipping company by both fleet size and cargo capacity, serving 116 countries. It has more than 31,000 employees. Maersk operates over 786 vessels and has capacity of 4.1 million while Safmarine is present in more than 85 countries and has more than 1200 sailors selling its services.

Continuing, she stated: “NSML, which initially was set up as a manning outfit in 2010, metamorphosed into an international maritime service company that is providing world-class services in vessel management, crew management, administration, terminal management and maritime training including projects and consultancy.” Given insight, she stated

that NLNG and its shareholders agreed on a Nigerianisation scheme in 1997, and the agreement was revisited and updated in 2004. “The objective of the scheme which was to Nigeranise the company’s workforce was achieved in 2012. It started by recruiting Higher National Diploma graduates and training them as technicians and operators. This was a deliberate policy to enable the relatively young minds imbibe the skills, work culture, discipline and professionalism that the business requires,” he stated. NLNG, she said, also instituted a staff training and development drive for different cadres of technical staff to help them acquire the requisite skills and competence for management, supervisory and to hold operational positions in the company. “The company continues to recruit young engineers and other technical staff, as part of this initiative. On the economic impact of NLNG’s operations

on Nigeria, she pointed out that NLNG provided more than 2,000 jobs each construction year. “Overall, the major sub-contractors employed about 18,000 Nigerians in technical jobs in the Base Project. “Through each Nigerian Content plan for its contracts, NLNG has promoted the development and employment of Nigerian manpower. For instance, 600 Nigerians were trained in Nigeria and at the contractors’ (Hyundai and Samsung) shipyards in Korea as part of the Nigerian Content deliverables tied to the construction of six new LNG vessels by BGT, a wholly owned subsidiary of NLNG,” she stated. At the end, those 600 Nigerians, with enhanced skills in welding, hull assembly, pipe fitting, electrical, mechanical, painting and ship design joined the nation’s workforce, providing a support base for technology transfer and industrialisation.

NSC gives out land for establishment of Tin-Smelting Plant in Jos ...Action to promote non-oil sector amaka Anagor-Ewuzie

etermined to promote the non-oil sector in line with the economic diversification agenda of the Federal Government, the Nigerian Shippers Council (NSC) said it has officially handed over 10 hectares of land behind Heipang Jos Inland Container Depot

(ICD), Jos in Plateau State, to Messrs Topwide Ventures Limited for the establishment of a Tin-Smelting plant. According to a statement that was sent to BusinessDay, the handover ceremony took place at the NSC corporate headquarters in Lagos at weekend. The Council stated that the move will add value to the Heipaing-Jos Inland Con-

tainer Depot and generate revenue for the government, promote employment within the vicinity of the project and provide ready export cargo for the depot on a sustainable basis. The handing over ceremony was performed by Hassan Bello, executive secretary of the Council, who was represented by Akintunde Makinde, director Inland Transport services.

Tony Okonkwo, general manager, Topwide Ventures Limited in handshake with Akintunde Makinde, director, Inland Transport Services, Nigerian Shippers’ Council after receiving the letter of lease of 10 hectares of land for Tin-smelting Plant in Heipang, Jos.

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Wednesday 12 February 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Coronavirus: Maersk applies congestion surcharge on reefer cargoes in China …As South Korean ports secure additional storage sites for containers amaka Anagor-Ewuzie

ollowing the extended Chinese New Year holidays and Coronavirus situation, congestion has reached critical levels and shipping liners such as Maersk says its now forced to divert cargo due to shortage of reefer plugs at terminals in Xingang and Shanghai Ports. To deal with extra cost of diverting cargoes, Maersk will apply congestion surcharge on reefer containers meant for these terminals. Maersk also recommended to customers, when possible, to ship to other Chinese destinations or other markets in order to avoid the congested ports especially for transit of time-sensitive, perishable, chilled commodities with a limited/ short shelf life such as fruit/ vegetables and frozen meat. For cargo already in transit, Maersk said it will offer a free change of destination for those customers who decide to divert the cargo to other Chinese destinations. Also, Maersk will, until further notice, accept reefer

bookings into Shanghai and Xingang strictly on the following conditions, which the customer is deemed to have accepted: “Maersk does not guarantee the cargo routing nor take any responsibility for the delivery time. Cargo arriving in the ports of Shanghai and Xingang is being diverted to alternative locations until the ports are able to receive reefers again. This situation is outside of our control and is also affecting cargo already in transit to mentioned destination ports,” the company said. It further stated: “Maersk will apply effective from 7 February 2020 a congestion surcharge of US$1,000 per container for all reefer cargo arriving into Shanghai and Xingang to cover for the additional cost of rerouting. We are monitoring the situation and depending on developments we will determine if further measures need to be taken.” In a related development, the Ministry of Oceans and Fisheries (MOF) of South Korea said on 7 February 2020 that alternative container storage sites have been secured, alleviating

the increasing burden on the country’s ports, amid the novel coronavirus outbreak. This was because anxious governments have taken drastic action by quarantining ships arriving from China while the usual post-Lunar New Year lull has also seen liner operators reducing their sailings. This has resulted in shipments to and from China being delayed.

Currently, Busan, Incheon and Yeosu-Gwangyang, the three busiest container ports in South Korea, have perfected plans to use unused berths and empty container yards in their hinterlands, as makeshift storage sites. These sites will be used if the storage utilisation at the ports exceeds 90 percent. The makeshift sites are

berth three in Gamman Port and one in Sinseondae Port in Busan North Port, Ungdong hinterland in Busan North Port, Incheon South Port’s Aam Logistics two Complexes, the hinterland of Incheon’s coal discharge terminal, an empty yard in Incheon New Port, three land plots in Gwangyang Port and berth 4 in Gwangyang’s container port.

The ministry however said that it is working with shipping companies, liner operators and port authorities to review various support measures that can minimise the impact on shipping companies. In addition, the storage at the ports is continuously monitored to prevent any disruption to port operations. For instance, as of 5 February 2020, the storage facilities in Busan were 76 percent utilised, down from 82 percent on 31 January. Incheon’s storage facilities were 81 percent utilised, slightly down from 83 percent on 31 January. Storage facilities in Yeosu-Gwangyang, 67 percent full, down from 71 percent on 31 January. However, the MOF and port authorities remain concerned as the utilisation rate is still higher than the respective average utilisation of 70 percent, 75 percent and 69 percent in 2019, necessitating contingency plans. Industry consultancy Alphaliner has estimated that the epidemic could wipe 6 million TEU off China’s container throughput in the first quarter of 2020.

Chamber to support Nigeria in fight against piracy on W/African waters amaka Anagor-Ewuzie

orried by increasing number of attacks on ships and crew kidnapped in the Gulf of Guinea (GoG), which grew by more than 50 percent in 2019, the International Chamber of Shipping (ICS)

said its ready and willing to work in close partnership with Nigerian government, and other international community to protect ships and crews on legitimate business in the region. Esben Poulsson, ICS chairman, who stated this during ICS Board meeting held in London, also said its priority will always be for the

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safety and welfare of crew. According to him, this year has begun with a further escalation of violence, armed robbery and kidnapping. “The crisis is deepening – pirates are bolder and taking greater number of hostages. He stated that the levels of violence are high, and deaths have occurred both

during attacks and captivity of seafarers as well as military personnel, emphasising that ‘this is not business as usual.’ “For example, 20 crew members were kidnapped from the tanker ‘MT Duke’ on 15 December last year with one of those crew members dying in captivity. Over 90 percent of global kidnappings reported at sea in

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2019 took place in the Gulf of Guinea and it remains an uncomfortable fact that the vast majority of attacks were launched on shipping from within Nigerian territorial waters,” added ICS. Meanwhile, Poulsson urged the International Community to respond to this threat to lives and wellbeing of seafarers by sup-

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porting Nigeria in bringing a swift resolution to this intolerable situation. According to ICS, practical and effective assistance should be provided to coastal states to improve their maritime security in a meaningful way, and naval assets in the region need to be prepared to respond to piracy incidents.

Wednesday 12 February 2020

BUSINESS DAY

cityfile

GSTC to provide vehicle maintenance services in Edo

he newly revamped Government Science and Technical College (GSTC), formerly Benin Technical College, will offer vehicle maintenance services to members of the public, in a renewed mandate to leverage reallife practical as a key instruction component. According to the project supervisor, Omotayo Awonusi, who spoke with journalists in Benin City, the services will be offered at the maintenance building in the service yard of the college. He noted that the service yard was undergoing construction after the delivery of the first phase of the college’s reconstruction project. The phase 1 of the project handed over to the state government, last year consists of two new state-of-the-art classroom blocks, laboratories, libraries and workshops, adding that the modern library at school has up-to-date books and a full complement of Information Communication Technology (ICT) gadgets. Awonusi said the service yard was being constructed to provide space for water treatment plant, which will provide water for use at the school and staff quarters. He noted that the maintenance building is targeted at generating funds for the school adding that, “Members of the public can visit the school for their vehicle repairs ranging from fixing of tyres, wheel alignment, electrical works and other services.” He said, “The plant will provide a steady supply of water. It will house the power plant equipped with two electricity generating sets of 250 KVA each and a transformer of 132KVA powerline connected to the school.

Sacked workers of Adamawa State government protest alleged non-payment of their 10 months’ salary in Yola.

FGM: Two EBSU students battle for life in Enugu

Oyo reunites rehabilitated mentally challenged woman with family

NKECHINYERE OGINYI, Abakaliki

REMI FEYISIPO, Ibadan

NAN

ne of the mentally-challenged persons recently evacuated from Mokola, Ibadan, Oyo State, Sadia Adeyemo has been reunited with her family after being certified mentally balance. The 53-year woman, who was a petty trader before her illness, was reunited with her aged father, Afolabi Adeyemo and her first child, Afeez Nurudeen at the state secretariat in Ibadan, on Monday. About two weeks ago, the ministry of women affairs and social inclusion, together with relevant agencies, non- governmental organisation and security agencies embarked on routine evacuation exercise. Several beggars and destitute, among them, nine mentally deranged persons were taken off the street at the Mokola under bridge and handed over to a non-governmental partners, Emmanuel Rehabilitation Centre, for treatment. Speaking at the reunion, state commissioner for women affairs and social inclusion, Faosat Sanni said the state government would not relent in creating a conducive atmosphere for all categories of persons in the state. Sanni, who expressed her joy at the quick recovery of the victim, said it was good to identify with people that have challenges. “Today,IamdelightedthatAdeyemo,amother of seven children who has been battling with the challenge in the past eight years has been reunited with her family through the state government.” She encouraged people with relations who have similar challenges to come out of their shell and report appropriately. “Though the situation is disheartening, but it is better to identify and report on time before it degenerates and with the help of God, things would be normal,” she added. Receiving his daughter, Afolabi Adeyemo who could not controlled his emotions thanked Governor Seyi Makinde-led administration for contributing to humanity and not neglecting the less privileged.

wo students of Ebonyi State University, Abakaliki (EBSU) are battling for survival at the National Obstetric Fistula Centre (NOFIC), Abakaliki after undergoing Female Genital Mutilation (FGM). The state Violence Against Persons Prohibition (VAPP) Law stipulates four years imprisonment with or without N200,000 fine option against perpetrators of FGM in the state. The enactment of the law notwithstanding, some families in the state still carry out the ancient harmful practice. This is also as the police in the state have arrested three persons in Ohaukwu local government area for mutilating a 16-year girl (name withheld). The suspects are Onwe Oluchi, the patent

medicine dealer who mutilated the girl, as well as Agbo Ekpa, and Mary Ekpa, the victim’s parents. The director of National Orientation Agency (NOA) in Ebonyi State, Emma Abah confirmed the development while addressing students of Urban Model Comprehensive Girls Secondary School, Ugwuachara, in Ebonyi local government area of the state last weekend. The NOA director stated that two female students of EBSU were battling for their lives at NOFIC after they were mutilated. Abah advised the students to resist mutilation and rather become the champions to end the harmful practice. “The victims are being treated. They were mutilated when they were young and now they have developed complication ten years after. If you know any FGM persons who have any complication, send them to us quickly,” she said.

Head of the legal department of the state NOA, Thresa Ama said that a recent mutilation in Ohaukwu was reported by the traditional ruler of Ohaukwu, a local government where 11 communities had denounced female genital mutilation. “Last week, we were called by a traditional ruler in Ohaukwu that some persons mutilated a child of 16 years. When we rushed there, we met the persons but the police didn’t give us good response because they were not aware of it. But when we went back there and fully explained, the next day the suspects were arrested. We arrested the parents and the cutter; she is a patent medicine dealer, she sells drugs and she cuts in her store Police public relations officer in the state, Loveth Odah said that the matter was under investigation and would be charged to court at the end.

Oyo suspends 13 head teachers, others over illegal fees REMI FEYISIPO, Ibadan

or engaging in extortion and other unauthorised conducts, the Oyo State government has ordered the immediate suspension of 13 primary school head teachers, two assistant head teachers and a classroom teacher. Apart from illegal collection of fees from pupils, the suspended teachers were also found culpable of insubordination and refusal to comply with posting instructions. Executive chairman, Oyo State Universal Basic Education Board, Nureni Adeniran, took the action following an inspection tour to some schools in Ibadan, the state capital, on Monday. According to Adeniran, the government would not tolerate what he described as gross indiscipline among teachers in the state. He noted that the board suspended the erring teachers due to established facts met on ground at the various schools visited, and would be made to face a disciplinary committee set up the government. The committee, he explained, has been

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mandated to ensure a thorough investigation into the allegations and give all concerned fair hearing. It would be recalled that the Oyo State government, after announcing free education in May 2019, approved the payment of N526 million as running grants to primary and secondary schools for the first term of 2019/2020 session. The schools are expected to submit records of disbursements to the state government at the end of each term. The SUBEB chairman said: “It was during our tour of schools that we discovered failure of some teachers to comply with posting instructions, while some of them were collecting illegal money from the pupils, despite reiteration of the free education policy of this administration.” “So far, we have discovered that some saboteurs are among the teachers, who are flouting the state government’s directives and pulling down our efforts to sanitise the teaching system in the state.” Adeniran described the acts of the teachers as unruly, adding that the government will

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constitute a standing disciplinary committee to handle such misdemeanours. “We discovered that the absence of supervision and monitoring of education activities in the state has given so much room for impunity and indiscipline. We will not allow this to happen henceforth,” he added. Speaking further, he said: “This would serve as a deterrent to saboteurs among the head teachers. They should know henceforth, that the state government will not tolerate indiscipline.” According to him, the government’s decision to put a stop to quackery and indiscipline in the teaching profession still stands, adding that recalcitrant teachers must desist from illegal acts. He assured that the Governor Seyi Makinde-led government would not relent in creating conducive teaching environment for teachers, through the provision of infrastructure, prompt payment of running grants and salaries. Adeniran warned the teachers not to take the administration’s compassion for timidity.

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Wednesday 12 February 2020

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Recapitalisation tops insurer’s agenda, as other activities suffer Modestus Anaesoronye

he ongoing recapitalisation exercise in the insurance industry is taking a major toll on the budget and attention of operating companies. At the moment, the focus is on complying with the new minimum capital requirement set for the companies, just as other activities have been put on hold, if not totally forgotten this year. This year might not see much of product launches, new technological acquisitions as well as rebranding and new campaigns as a result of the ongoing exercise. Industry watchers say these may not be in the best interest of the market, as any slack in terms of engagements with potential consumers will make them forget the little attention and knowledge they have about insurance and risk management. Insuring public needs continuous engagement,

either by way of new product development, media awareness, and advertising or in the form of innovation so that consistently and gradually the consciousness is sustained. One of the market watchers said the recent

suspension of the rebranding campaign, being handled by a media consultant was not too good, even though the strategy was false in the first place. He said, what could have been done is to redefine the strategy, give it

more bite with grassroots touch and by those who understand insurance journalism. “It must be the people that understand by their daily engagement with the industry what consumers need and complaints are.

By that, you would have been addressing the key issues rather than playing to the gallery without a direct focus on the key issues and people (consumers). However, as the recapitalisations exercise goes on, companies with clear

strategy of continues engagement through different formats and channels will be the beneficiaries and would have succeeded at the end of the day to find more usefulness for the new injected funds. The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion. According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020, before the recent extension in date to December 31 2020.

AIICO partners EdFin MFB on sustainable education for Nigerians Modestus Anaesoronye

IICO Insurance Plc, a leading insurer in Nigeria has partnered with EdFin Microfinance Bank to provide support on sustainable education in Nigeria. Over 400 schools were represented at EdFin’s Stakeholder Forum on Education which held recently in Lagos. At the event, participants which include school owners, PTA representatives among others, deliberated on issues affecting education with the aim of proffering solutions for the growth of the sector and sustainable future for the Nigerian students. The event featured several information sessions such as financial literacy training which was facilitated by Fate Foundation followed by an exhaustive interactive session

between the company’s Board of Directors and all the participants. Other sessions included live demos on Google Bolo (a speech-based reading tutor app to help children in rural regions with the reading skills) by Google Nigeria and Wowbii Tap – a world-class interactive

board preloaded with intelligent educational content to help teachers improve the quality of instruction in schools and enhance subject-matter understanding among students/pupils.In her remarks, Bunmi Lawson, MD/ CEO, EdFinMfB, expressed her heartfelt gratitude to

the major sponsors of the event - AIICO Insurance (who are providing life insurance for all students in the bank’s network of schools) and FlexiSAF (a software development company provided school management system for schools) - for their support towards making the event a

Gbenga Ilori, head, Non-Life Retail Business, AIICO Bunmi Lawson, MD/CEO, EdFinMfB Insurance Plc. www.businessday.ng

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success. In demonstration of its passionate commitment for education, AIICO has several innovative product offerings targeted at risk protection for sustainable education of the Nigerian child. According to Olusola Ajayi, executive director/ head of Retail Business at AIICO, “Education is a key area of focus in the company’s Corporate Responsibility and Sustainability function. We contribute our quota to the development of education through diverse initiatives and form strategic alliances with relevant stakeholders like EdFin to meet our objectives.” The partnership with EdFin Microfinance Bank is strategic, given their niche, their reach and positioning within the Nigerian educational sector. Founded in collaboration with Gray Matter Capital (GMC) USA; @Businessdayng

a US-based impact investor concerned with improving the quality of education for underserved children in developing countries, EdFin was birthed out of the need to improve the quality of education in Nigeria. The bank which is dedicated solely to funding the education eco-space in Nigeria aims to positively disrupt the standard and quality of education in Nigeria, by providing the much-needed financial resources and services to the education sector. AIICO Insurance Plc., a leading life insurer in Nigeria, commenced operations in 1963. It provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

Wednesday 12 February 2020

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Group life, motor benefiting from regulatory guided rates, but still… Modestus Anaesoronye

roup Life Insurance and Motor Third Party policy have enjoyed the benefit of contributing more positively to insurance companies’ growth since the regulator enforcement of rating guide for the compulsory insurances. While group life has key in properly to the rating guide, motor is still have a lot of gaps particularly from the faking of the product. The other compulsory insurance like the Occupiers Liability; Professional Indemnity Insurance and Builder’s Liability Insurance, have yet not picked up , calling for effective enforcement. The National Insurance Commission (NAICOM) had in 2017 released a price guide for compulsory insurances, in a bid to end rate cutting, unhealthy competition and inability of operating companies to meet claims obligation to policy holders. NAICOM, whose core responsibility is to protect insurance consumers that

pass their risks to insurance companies, warned operators of strict compliance, assuring that the Commission was going to monitor it. Affected policies include statutory Group Life Insurance, Builder’s Liability Insurance, Occupier’s Liability (public building) Insurance, Healthcare Professional Indemnity Insurance and motor third party. In a circular signed by Leonard Akah, at that time on behalf of the Commissioner for Insurance reads

“Insurance operators are directed to henceforth adhere and comply with existing approved premium rates for all Compulsory classes of Insurance.” According to the circular, Statutory Group Life Insurance, which is a fallout of the Pension Reform Act 2004 as amended in 2014, shall be 6.8 per mile. Section 4 (5) of the Pension Reform Act 2014 stipulates that every employer to which the Act applies, shall maintain a group life insurance policy in favour of the

IGI received regulatory approvals for public listing Modestus Anaesoronye

nternational General Insurance Holdings (IGI), the specialist commercial re/insurer, has gained further regulatory approvals for its planned business combination with Tiberius Acquisition Corp., which will result in the public listing of IGI. IGI, the Dubai Financial Services Authority is the latest regulator to give the transaction the green light, following approval from the Bermuda Monetary Authority (BMA) last week.

First announced back in October 2019, this deal will see IGI and Tiberius combine under a new holding company to be domiciled in Bermuda, called International General Insurance Holdings Limited, Bermuda (IGI Holdings). Following the transaction, IGI Holdings will be listed on the Nasdaq Capital Market under the symbol IGIC, with expected pro forma market capitalisation of $550 million. Approvals from the Dubai and Bermuda regulators represent necessary steps towards the successful completion of the transaction, but IGI www.businessday.ng

is still awaiting approval from the Prudential Regulation Authority in the UK. Separately, IGI has announced that it received Share Exchange Agreements from existing shareholders holding 100 percent of the issued and outstanding IGI common shares. This is in excess of the 90 percent threshold as set out in the business combination agreement between IGI and Tiberius. IGI said that it intends to close the transaction two business days after the conditions of the agreement have been satisfied.

employees for a minimum of three times the annual total emolument of the employee. Also Occupiers Liability, which is a provision of Section 64 of the Insurance Act 2003, according to NAICOM will be – sum assured between 10-50 million naira will be charged 0.30 percent for federal and private buildings, 0.35 percent for state and federal capital territory and 0.40 percent for local governments, among others. The policy provides that

“No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer his liability in respect of construction risks caused by his negligence or the negligence of his servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public. In the new circular For Professional Indemnity Insurance according to the circular, rate for less than 20 bed spaces of N10 million sum assured will be N50,000.00; while 21 to 50 bed spaces of N15 million sum assured shall be N60,000; while 51 to 100 bed spaces of N40 million sum assured shall be 120,000.00, among others. This is a form of liability insurance that helps protect professional adviceand service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit. Rate for Motor Third

Party, which incidentally has been the most abused shall be for private motors N5,000.00; Commercial motor (own goods) N7,500.00; commercial motor (staff bus) N7,500.00; commercial Motor ( Trucks/general cartage) N25,000.00.; motor trade(road/premises risks) N5,000.00; special types (Ambulance/Hearses) N5,000.00; Motor Cycle (power bike) N1,500; and official ride N1,500.00. As provided in the Insurance Act 2003, motor third party insurance policy protects against third party damage. This means that in the event of an accident occurring, the policy holder has a third party property damage limit up to N1 million and no limit to life, in the case of death or permanent disability. Some operators who reacted to the release of the circular though preferred not to be mentioned hopes this effort we will help the industry achieve common rates, discourage de-marketing, build capacity to meet claims obligation, make profit, increase shareholder value and also ward off fake operators.

Africa Re moves to identify best insurance players, companies for 2020

he African Reinsurance Corporation (Africa Re) has called for entries for the 6th edition of the African Insurance Awards. The objective of the Awards is to reward and celebrate innovation, good corporate management and good leadership in the African insurance industry. The 2020 edition will take place on Monday 1 June 2020 in Lagos, Nigeria. There are four categories of Awards in this year’s edition: Insurance Company of the Year. This prize is open to all insurance companies registered in Africa and focusing on performance in

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the last 2 years. CEO of the Year: This special award is given to the CEO of an insurance company, who has made an outstanding contribution over the past 12 months or more, either through the advancement of his/her company or the insurance industry in Africa. Innovation of the Year: This prize is awarded to an insurance company for the best use of technology, for launching a breakthrough product / service or a new and innovative distribution channel or method. InsurTech of the Year: This prize targets noninsurers that are collaborating with insurers to improve customer service @Businessdayng

delivery, product development and overall innovation in the insurance value chain. For this category, Africa Re will provide a platform for the winner to meet the insurance industry. Cash prizes, plaques and certificates will be awarded to winners. Deadline for submission of nominees 31 March 2020, while review of nominations and selection of winners by Panelists will take place in April & May 2020 And the Awards ceremony on will be on 1 June 2020 in Lagos, Nigeria, at the African Insurance Organisation Conference and General Assembly to be hosted in Nigeria.

Wednesday 12 February 2020

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

How technology, data and digitalisation are changing the face of insurance industry Modestus Anaesoronye

he face of insurance is changing and this is driven by data, digitalisation and a need to engage the customer, Swiss Re 2020 Sigma report reveals. “This current round of technology-driven change differs from those of the past, not least because of the speed and scale involved. Harnessed properly, these powerful forces offer new hope for the insurance industry to remain central to the lives of its customers”. “Everybody wants to be customer-centric,” says Evangelos Avramakis, head Digital Ecosystems R&D, Swiss Re Institute. “Digital technology provides an opportunity to really see things from the customer’s perspective when designing new products and services, Avramakis said. Customer expectations are setting the pace One of the clearest ways to visualise how digital tech-

nology is impacting insurance is to think of the customer journey. At every stage – assessing their needs, researching the options, interacting with insurers and making a choice – customers are evaluating potential providers, and making comparisons that go much further than a simple assessment of Insurer

As Avramakis explains: “Customer expectations are rising fast because insurance companies’ customers may already be using multinational ride-hailing or e-commerce companies – businesses that go to great lengths to ensure fast, effective consumer-focused experiences.” Jonathan Anchen, head

of Swiss Re Institute Research & Data Support, wonders how the insurance industry could be affected by customers’ interactions with this kind of forwardlooking digital experience. “If you have a problem with a property you’ve rented, you take a photo with your phone and upload it. It’s kept simple for the cus-

tomer.” “It’s not a direct comparison, of course. But that emphasis on a frictionless customer experience is shaping the way people expect to interact in the digital sphere.” As customer interactions broaden out into this constantly evolving ecosystem of digital touch points, there will be more opportunities

for insurers with innovative products to find suitable ecosystem partners. A customer renting a property may have an insurance requirement – perhaps in case their over-excitable dog damages something and they lose their security deposit. Where would they be likely to purchase their additional cover? If they could bundle it with their rental transaction, they might appreciate the ease that offers. Automation and the human touch If it wants to provide the kind of seamless, frictionless customer service people expect, the insurance company of the future will need to be hyper-aware of what people want and when. One option will be to map customers’ life events. Buying a home, starting a family, setting up in business – these and many other milestones often trigger a reassessment of insurance needs. Gaining insight into them will offer an insurer a deeper understanding of a customer’s risk exposure and the way it changes over time.

Anchor Insurance targets N10bn premium in 2020 …as firm targets market expansion Modestus Anaesoronye

nderwriting firm, Anchor Insurance Company Limited is hoping to grow its premium income to N10 billion this year, with plan to spread operations across different parts of the country. Ebose Augustine, managing director/CEO of the Company who disclosed this during an interactive session with insurance journalists in Lagos, noted that the firm grew its premium income to N5 billion in 2019. He stated that to achieve the set target for 2020, the general business firm has concluded plans to increase its branch network across the country; leverage the use of technology

Ebose Augustine, managing director/CEO, Anchor Insurance LTD www.businessday.ng

for products distribution and improve on its agency system to reach esteemed customers. According to him, the firm is poised to play big post recapitalisation, adding that the company has so far achieved about 85 per cent of the new minimum capital requirement sect for companies its its category. Ebose noted that Akwa Ibom State Government which own 61 per cent stake in the company has through right issues, injected N9.6 billion to the firm, stressing that the company hopes to raise its capital to N11.6 billion post recapitalisation. The Anchor Insurance boss said the firm paid N1.3 billion claims in 2019, stating that the firm has automated its claims system

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making it possible for clients to access their claims without coming to the firm. According to him, the firm has marshaled plans on how to deploy its post recapitalisation funds to enable it remain top in the sphere of underwriting business. Anchor Insurance Company Limited was registered and licensed by the National Insurance Commission (NAICOM) in October 1989 as a general business (non-life) insurance outfit and started business in November of the same year. The Company commenced operations at its registered office in Uyo, Akwa Ibom State and later, for business reasons, joined its fellow underwriting outfits in Lagos. While it has its Victoria @Businessdayng

Island office in Lagos as its Corporate Head Office, its Uyo office remains its registered office. At the moment, Anchor Insurance Company Limited has expanded to not less than nineteen branch office network located at strategic cities across the country. The Company has constantly been showing strength and innovation in product and customer service delivery, yearly bottom line performance and timely claims administration. The company’s audited accounts for year ended 31st December, 2018 shows a gross written premium of N3.4bn from N2.2bn written in 2017, total assets standing at N6.6bn, shareholders’ funds amounting to N5.2bn and solvency margin of N5.1bn.

Wednesday 12 February 2020

BUSINESS DAY

Harvard Business Review

ManagementDigest

Balancing competing loyalties Maxim Sytch and Yong H. Kim

an you recall a time when you competed against a former colleague for a deal, or faced a tricky hiring decision with a former co-worker among the candidates? Or, maybe you’ve advised clients on an acquisition or a lawsuit while former collaborators were advising the counterparty? These scenarios share a common thread: they may raise questions about your loyalty to current clients and stakeholders. Will you negotiate a deal that helps the former colleague at the expense of current stakeholders? Will you favor a former co-worker in a hiring decision at the expense of your current employer’s interests? Will you be an uncompromising advocate for your client when a former partner is advising the opposing party? How do professionals behave when trying to quell such concerns? What are the consequences of such behaviors? These questions motivated our research, to be published in a forthcoming issue of Administrative Science Quarterly. We found that to maintain the perception of uncompromising loyalty to their current role, professionals often become contentious and aggressive toward former collaborators. They demonstrate their loyalty to current stakeholders by being combative negotiators, belligerent interviewers or hostile advisers. The problem is, such behaviors can hurt the same stakeholders they’re trying to win over. The paradox of pursuing wellconnected individuals with rich professional networks is that organizations also want such individuals to be exclusively loyal. When people compete against former colleagues, however, these two desires are inherently in tension. The same relationships that offer inside information and facilitate collaborative resolutions can compromise perceptions of loyalty. THE LIABILITY OF PAST COLLABORATION Using data from the Public Access to Court Electronic Records and LexisNexis’s Lex Machina databases, we tracked the professional histories of more than 20,000 external legal counsellors. These were lawyers from U.S.based offices of law firms that represented companies in lawsuits over infringement of patents, copyrights or trademarks in U.S. federal district courts. Some of these lawyers had collaborated with one another on prior cases (as co-plaintiffs or co-defendants) only to face one another

when representing counterparties in a different lawsuit. This dynamic appeared frequently in intellectual property lawsuits — we observed that one in three lawsuits featured lawyers on opposite sides who were former collaborators. We examined how these lawyers behaved toward one another when faced with the loyalty concerns of their clients, as well as how these behaviors affected the outcomes they secured for their clients in litigation. We found that lawyers responded to loyalty concerns by distancing themselves from their former collaborators through excessive conflict. Rather than leveraging past familiarity to pursue rapprochement, lawyers on opposite sides who were former collaborators were contentious and aggressive in the courtroom. And this behavior dominated when the clients themselves were fiercely competitive. We uncovered this dynamic by examining the details of nearly 5,000 intellectual property lawsuits. Even the most trivial situations, such as rescheduling hearings due to sickness or delaying filings because someone’s daughter had a recital, were met with vigorous opposition. Lawyers concerned with demonstrating loyalty were less likely to reach agreements about these issues on their own and consistently required the judge’s intervention. With increased acrimony in the courtroom, litigation was prolonged, and lawsuits were significantly more likely to go to trial rather than be settled out of www.businessday.ng

court. This conflict escalation, on average, ended up hurting clients’ pocketbooks. Furthermore, the clients’ stock prices declined upon the completion of such lawsuits. We dub this the “liability of past collaboration.” Hostility toward former collaborators rears its head when the respective stakeholders are strong rivals themselves. Most likely, these rival companies are watching the process carefully and may, perhaps inadvertently, apply undue pressure on their advisers to be loyal. In our data, when rival clients were involved closely in litigation, their lawyers’ aggressive behaviors across the aisle spiked. It is also conceivable that by being aggressive toward past collaborators, lawyers attempt to convince themselves that they will maintain the highest levels of professional conduct and integrity, regardless of the pressure for loyalty. Fearing that they could be playing favorites, lawyers may overcompensate, despite the risk of compromising past relationships. This dynamic extends beyond the legal context. When faced with situations that divide our loyalties, we strive to avoid playing favorites or even giving the impression that we may do so. These situations are ever-present in business. For example, in recent years, multiple executives have moved between Amazon and Microsoft. As competition in the cloud-computing market between these two companies heats up, one might wonder how these executives will behave toward

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former colleagues. Our research shows that a powerful way to establish where current loyalties lie is to create distance from former collaborators using visible, salient and aggressive interactions. Sadly, we seem likely to take this behavior too far, potentially hurting the relationships and the bottom line. MITIGATING THE LIABILITY OF PAST COLLABORATION Our findings suggest several solutions for managers. First, when it comes to competing against your fiercest rivals, don’t get carried away by the promise of an “in” via consultants, bankers, lawyers or ex-employees who can potentially offer insight. The same relationships that allow these advisers to strike collaborative deals may raise loyalty concerns. If you do opt to engage someone connected to your rivals, beware of the steep costs of suspicion and excessive monitoring. This is where selecting advisers you know directly or come from trusted referrals could be critical. Furthermore, recall that the liability of past collaboration was greater when former collaborators represented clients who were antagonistic toward each other. When engaging former collaborators as agents, it is thus important for competing clients to step back and focus on the matter at hand, without letting their rivalry block possible mutual gains in a specific transaction. Second, as an adviser, recognize the situations in which your previous relationships can cast a @Businessdayng

shadow of doubt over your loyalty to current clients and stakeholders. Seek less conflictual ways to affirm your loyalty. It’s possible that being extra thorough and diligent in exercising your duties on behalf of your client can help ease loyalty suspicions. More experienced advisers can try to address the situation head on with a client, by referencing the ubiquity of such occurrences and their prior experience in handling them. Paulo Coelho once famously quipped, “Where there is loyalty, weapons are of no use.” Our research suggests that this quote rings true in multiple ways. Loyalty can indeed eliminate the need for coercion with power. Yet in situations where there are divided loyalties, the quest to be and appear loyal can itself lead to unintended consequences. Loyalty can be a double-edged sword. Don’t overlook its downsides.

Maxim Sytch is an associate professor of management and organizations at the University of Michigan’s Stephen M. Ross School of Business, where Jose Uribe is an assistant professor of management and organizations. Yong H. Kim is an assistant professor of management at Hong Kong University of Science and Technology’s School of Business and Management.

Wednesday 12 February 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Passenger traffic upbeat on Iju-Ibadan SGR service …2 DMU locomotives, coaches to be deployed

MIKE OCHONMA

MIKE OCHONMA Transport Editor

ith the track laying and ongoing construction of station buildings on the $1.53bn standard gauge rail project handled by the China Civil Engineering Construction Corporation (CCECC) from Iju in Lagos to Ibadan, the Oyo State capital now in advanced state of completion, there is excitement among the traveling public using the new standard gauge rail tracks being handled by the Chinese firm. While on a train ride from Iju in Lagos to Ibadan, the Oyo State capital, interactions between BusinessDay reporter and some of the the passengers on the airconditioned train service last weekend commended the federal government and the CCECC for the seriousness and commitment shown on the projectfrom its inception on March 7, 2017, despite a plethora of barriers and other complexities posed by properties and infrastructures on the raight od way (Row) while the project lasted. During the train ride on the 157 kilometer Lagos-Ibadan corridor, massive works were still ongoing on some of the stations at different location where the structures are to be located. For the Apapa seaport which is an extenstion of the project, BusinessDay findings reveal that, excavation works and minimal work inside the port have already started. Speaking on the project, Xia Lijun, CCECC’s project manager of the standard gauge rail project commended the host communities for their tolerance and co-operation and added that, the understanding shown by them will in no small measure open up windows of economic and social opportunities.

CFAO’s Suzuki trade-in-scheme offers new car for old

As at the time of filing this report, excavation works and minimal work inside the port on the Lagos end have already started inside the port with excavation works of about 200 meters completed and tracks laid. Lijun said that CCECC is working to complete the work as soon as possible to meet the deadline set by the federal government with the track laying and stations that has advanced appreciably. Many Nigerians he said have been making use of the train on the completed section of the corridor from Iju, in Lagos and Moniya in Ibadan. Rotimi Amaechi, Nigeria’s transport minister has on many of his inspection visits harped on the need to finish the Lagos-Ibadan rail project by April or May this year to pave way for the commencement of the second segment of the project. Well completed, there are positive signals on how the railway will unlock the economic potential of the region as travel times by rail will be substantially quicker than the existing road mode thus resulting in greater economic productivity. Faster journey times will no doubt influence travel behaviour which will have an effect on the type of developments that may occur along the corridor.

L-R: John Julius, construction worker, Lagos-Ibadan railway project; Yakubu Adogie, business and contract officer, Lagos section; Allan Chen, business and contract manager; Abdulrauf Akinwoye, PR Consultant; Vincent Liu, director of communication and corporate culture and Xia Lijun, project coordinator, Lagos-Ibadan standard gauge railway project CCECC, during the media trial running of Lagos-Ibadan railway project last weekend.

The Lagos-Ibadan rail project being the first phase of the 2,733 km Lagos-Kano standard gauge rail line follows a similar alignment to the existing Lagos-Kano narrow gauge line running through Abeokuta. Trains will be able to reach a speed of 150 kilometers per hour on the line and will have nine passenger station stops comprising Ebute Metta, Agege within the Lagos state axis to Agbado, Kajola, Papalanto, Abeokuta, Olodo in Ogun state and terminating at Omi-Adio and Ibadan in Oyo state. Meanwhile, CCECC sources has hinted on the deployment of two Diesel Multiple Units (DMUs) of locomotives with two eight

coaches along the Lagos-Ibadan standard gauge rail track. Spokesman for CCECC Nigeria, Akinwoye Abdularauf had told transport reporters during a trail train ride recently that the good news, for now, is that two DMUs for the standard gauge rail has arrived into the country and will soon be deployed upon ministerial approval. ‘’By the grace of God, if we are lucky, we will use those two new DMUs in our next ministerial inspection. Their deployment will be subject to the minister’s directive, whether we use both here, on the Lagos-Ibadan rail or we deploy one for the Abuja-Kaduna rail services”. He concluded.

n a bid to ease new car ownership for prospective consumers, CFAO Motors, the new sole distributor of Suzuki cars in Nigeria barely few months of brining back the Suzuki franchiseship back to the country has unveiled a vehicle trade-in scheme. Interestingly, the Trade is non-restrictive to car brands or models, even if it was bought as a tokunbo (used) car. According to the Managing Director of CFAO Motors, Mr. Thomas Pelletier, the process is as simple as bringing in your current car for valuation and choosing to pay the balance for a brand new car up-front or through financing. For example, a Brand new Suzuki Dzire sold at N6 million, can be traded in with a Toyota Corolla 2013 valued at N1.7 million. Balance due: N4.3 million upfront or 109,000 naira/monthly (up to 60 months). So, only 20% equity is needed for the financing. Pelletier said the valuation of the car will be carried out only at the company’s showroom in Victoria Island, Lagos while financing options are also available in CFAO Motors offices in Abuja and Port Harcourt.” For instance, with as little as N3.7m or N85,000 monthly, anyone can own a brand new Suzuki car and the models cut across compact cars, sedans and Sport Utility Vehicles with the Alto, Dzire, Swift, Baleno, Ciaz, Ertiga, Vitara and Jimny. Suzuki Motor Corporation is a Japanese multinational founded in 1909, known for manufacturing a wide range of products which include automobiles, motorcycles and outboard marine engines. With three million cars sold globally every year, the brand is recognised for its lineup of affordable compact cars. As a leader in specialized distribution in Africa with 117 years of existence in Nigeria, the CFAO group has built a solid relationship with Suzuki distribution network in 26 African countries, offering quality technical expertise and reliable after-sales service.

Mitsubishi L200 emerges Pick-Up of the year MIKE OCHONMA

ess than one year after the latest model of the Mitsubishi L200 pick-up was unveiled by Massilia Motors in an impressive event on the Landmark beach in Oniru, Lagos, it has been named Pick-up of the Year. The L200 model which was nominated alongside the Toyota Hilux and the Ford Ranger was voted the winner by the Nigeria Auto Journalists Association (NAJA) at the 2019 NAJA Awards held at Eko Hotel, Victoria Island, Lagos. Managing director of Massilia Motors and Country delegate of CFAO Group in Nigeria, Thomas Pelletier stated that his company is elated by the recognition given to the pick-up, which has over the years

L-R: Oscar Odiboh, auto industry analyst and university don; Funmi Abiola, head of marketing; Tunji Itiola, general manager, sales, all of Massilia Motors and Kunle Jaiyesimi, deputy managing director of CFAO Motors at the Nigeria Auto Journalists Awards held recently where the Mitsubishi L 200 won the Pick-Up of the Year award.

been a key player across various Nigerian industries. It would be recalled that during the launch of the latest model last www.businessday.ng

year, Pelletier had said “Mitsubishi L200 is very important to us because it represents 80 percent of our sales, and I am optimistic that customers

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will like the new generation L200”. At the same awards night, Thomas Pelletier, who was also recognised as the Most Innovative CEO of the Year maintained that “in terms of value for money, we are the best because we do not compromise in quality delivery and our Mitsubishi cars have been tried and tested over the years”. Our after-sales support is backed by qualified technicians who have been adequately trained by the Japanese manufacturer.” On his part, Tunji Itiola, general manager in charge of sales of Massilia Motors explained that the enhanced rugged exterior features and advanced safety features are prominent inclusions in the new vehicle which comes in three variants of single/double cabins 4x2 and double cabin 4x4 powered by a @Businessdayng

2.4-litre engine. The new pick-up is available in Massilia and CFAO Motors showrooms nationwide. The Pick-up gained popularity through its constant evolution in the last 40 years thanks to its driving dynamics, running costs, standard kit and attractive prices. It is used as a utility vehicle in a wide variety of applications such as construction sites, fast moving consumer goods distribution, and oil field sites, among others. Massilia Motors is the joint venture of the CFAO Group and the Chanrai Group uniting forces to deliver customer satisfaction. With operations run by the CFAO group and the sole distributor of Mitsubishi Motors in Nigeria that comprises of the ASX, Eclipse Cross, Outlander, Pajero, Pajero Sport, and L200 Pick-up.

Wednesday 12 February 2020

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Dealership offers compelling Valentine discount package ith love in the air having Valentine’s Day just around the corner, Coscharis Motors Plc is set to delight customers and prospects with special gifts of love across its entire line up of iconic automobile brands including BMW, Jaguar Land Rover and Ford from now till end of February, 2020 across her dealerships nationwide. With the theme “Gifting Your Partner Something Truly Special”, Coscharis Motors is offering compel-

that resonates with a special day like the Valentine day, we are throwing open our showrooms in both Lagos and Abuja to our loyal customers and prospects alike to come and celebrate their love in style and immerse themselves into a world of automobile luxury on the 14th of February 2020 while they have drinks in the house”. A special couple’s drive experience is available to first four customers in Abuja for a memorable test drive to have a feel of our iconic cars amongst other offerings for possible purchase.

ling discounts on these brands with an all inclusive minimum 3-5 years free service on the BMW and Land Rover brands respectively. For instance, a brand new BMW from can be sold for a discounted price of N15million. Additional offers include free registration, trade-in options together with complimentary first year insurance package. Abiona Babarinde, general manager in charge of marketing and corporate communications, Coscharis Group, “in order to further deliver the excitement

Furthermore, joining us at our open day on February 14 offers the customer the opportunity to seat with the dealer’s sales team to request for any the customer’s preferred vehicle with special rebate on accessories and lifestyles requested amongst other offerings. Coscharis Motors is a multi-automobile dealership with exclusive franchise for BMW, Jaguar Land Rover, Ford, Rolls Royce and Renault vehicles in Nigeria with presence in Lagos, Abuja, Kano, Akwa Ibom, Rivers and Cross River states.

MIKE OCHONMA

W Fears over auto parts scarcity as Coronavirus rages MIKE OCHONMA Transport Editor

he global auto industry has begun to feel the impact of the coronavirus outbreak as factory shutdowns in China threaten a vital source of parts. With the factories of spare parts shut down as part of the severe measures taken to combat the coronavirus holocaust, there are fears that the global scarcity of supplies of parts may set and prices of it looking northwards. The shutdown reportedly is to extend at least a week, though labour and management are still negotiating the duration. Facing parts shortages, South Korea’s Hyundai Motor is suspending operations at its three domestic auto assembly plants. South Korea may have suffered the first blow, but U.S. and Japanese automakers face similar risks to their supply chains, to varying degrees, industry insiders say. China, on top of its status as the world’s largest car market, has become an important supplier of auto parts. Wuhan, the source of the coronavirus outbreak, is a key hub for this activity.

As Chinese production of finished vehicles has grown and nearly doubling over a decade to 25.7 million last year, auto parts factories have popped up around assembly plants. Much of their output goes to other markets. One-quarter of China’s auto parts exports in 2017 went to the U.S., with 10 percent going to Japan, 5 percent to South Korea and 5 percent to Germany. The U.S. imported $11 billion in auto parts from China in 2018 and second only to its imports from Mexico spanning a wide range of products including engine and drive components. American companies also often import Chinese parts indirectly, via Japan or Mexico. Japan imported about 347 billion yen ($3.2 billion) worth of auto parts from China in 2018, Japan External Trade Organization data shows which is a roughly tenfold increase from when the outbreak of severe acute respiratory syndrome, or SARS, occurred in 2002 and 2003. As the quality of local labour has improved, Toyota, Honda and Nissan have increased their use of Chinesemade components even at domestic plants. A pro-

longed supply interruption could leave their operations in limbo. Toyota supplier Toyota Boshoku imports seat covers from Zhejiang Province into Japan, and it supplies seat belt webbing produced in Shanghai to compatriot Tokai Rika. Toyota-affiliated CHK Spring Industry sells made-in-China cables for auto door locks to Japanese customers. “There are parts that we can’t make elsewhere right away,” a CHK representative said. Auto parts manufacturers on average keep a month’s supply of inventory on hand, and many maintain an additional cushion when cross-border transactions are involved. Given stockpiling ahead of the recent Lunar New Year holiday, any disruption from the virus would take about two months to hit Japanese auto production, a securities analyst predicts. But “there’s only a week’s supply of items for which we’re short on stock,” said Masaki Oka, a director at Toyota-affiliated parts maker Toyoda Gosei. The company, which ships Chinese-made products such as car grilles and air bag components to Japan and the U.S., is

checking its inventories and considering alternative production plans. A company that makes parts for vehicle interiors has issued a warning to customers. “If the shutdowns in China go on for too long and parts don’t come in, we may not be able to keep up production in Japan,” said a representative from the manufacturer. Stoppages at Hyundai, South Korea’s biggest automaker, intensify the stress on a slowing industry that accounts for around onefifth of the country’s gross domestic product, including related sectors. Hyundai affiliate Kia Motors is considering a hold on production, depending on supplies. Midtier South Korean automaker SsangYong Motor, owned by Indian group Mahindra & Mahindra, has suspended factory operations as well. Many Chinese cities besides Wuhan have extended their Lunar New Year holidays through Sunday in an effort to curb the spread of the virus. Even after production resumes, exports might not pick up immediately, as transportation companies and customs offices may be short-staffed.

Toyota-Panasonic’s EV battery project alters automotive narratives MIKE OCHONMA

oyota Motor Corp and Panasonic Corp have agreed to set up a joint venture that will begin developing electric vehicle (EV) batteries from April, as the Japanese companies gear up for an expected surge in demand. The new company, called Prime Planet Energy and Solutions, will develop prismatic - or square-shaped - batteries that will be available to any automaker, the two companies said in a statement on

Toyota and Panasonic partnership that works www.businessday.ng

Monday. It will begin operations on April 1 with more than 5,000 employees, with Toyota owning 51 percent and Panasonic holding the remainder, the pair said. The venture reflects the aim of the Japanese companies to become bigger global players in the automotive battery industry, which is vital for the development of affordable EVs, as stricter environmental regulations worldwide accelerate a shift toward environmentally friendlier cars. “Batteries - as solutions

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for providing energy for automobiles and various other forms of mobility, and as solutions for various kinds of environmental issues - are expected to fulfill a central role in society going forward,” the companies said in the statement. Panasonic has been the exclusive supplier of cylindrical batteries for US EV maker Tesla, but has been looking to expand its list of customers by stepping up development of the prismatic batteries more widely used in the industry. Tesla last month announced @Businessdayng

it would also source batteries from South Korea’s LG Chem Ltd and China’s CATL. Toyota, which pioneered the petrol-electric hybrid Prius in 1997, aims to get half of its sales from electrified vehicles by 2025, and is both developing its own batteries and tapping new suppliers to avoid a shortfall. The two Japanese companies have been cooperating on battery research since at least 1996 when they set up a joint venture to make hybrid car batteries, called Primearth EV Energy.

Wednesday 05 February 2020

BUSINESS DAY

tax issues Addressing tax challenges from digitalisation: International community renews commitment to multilateral efforts Iheanyi Nwachukwu

he Inclusive Framework’s tax work on the digitalisation of the economy is part of wider efforts to restore stability and increase certainty in the international tax system, address possible overlaps with existing rules and mitigate the risks of double taxation. Taking a cue from the aforementioned, the international community has reaffirmed its commitment to reach a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy. According to statement by the Inclusive Framework on base erosion and profit shifting (BEPS) released by the Organisation for Economic Cooperation and Development (OECD), international community will continue working toward an agreement by the end of 2020. The Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, decided during its January 29-30 meeting to move ahead with a two-pillar negotiation to address the tax challenges of digitalisation. Participants agreed to pursue the negotiation of new rules on where tax should be paid (“nexus” rules) and on what portion of profits they should be taxed (“profit allocation” rules), on the basis of a

“Unified Approach” on Pillar One, to ensure that MNEs conducting sustained and significant business in places where they may not have a physical presence can be taxed in such jurisdictions. The Unified Approach agreed by the Inclusive Framework draws heavily on the Unified Approach released by the OECD Secretariat in October 2019. Endorsement of the Unified Approach is a significant step, as until now Inclusive Framework members have been considering three competing proposals to address the tax challenges of digitalisation. A Programme of Work agreed in May 2019 has been replaced with a revised Programme of Work under Pillar One, which outlines the remaining technical work and political challenges to deliver a consensus-based solution by the end of 2020, as mandated by the G20. Inclusive Framework members will next meet in July in Berlin, at which time political agreement will be sought on the detailed architecture of this proposal.

The Statement by the Inclusive Framework on BEPS takes note of a proposal to implement Pillar One on a “safe harbour” basis, as proposed in a December 3, 2019 letter from US Treasury Secretary Steven Mnuchin to OECD Secretary-General Angel Gurría. It recognises that many Inclusive Framework members have expressed concerns about the proposed “safe harbour” approach. The Statement also highlights other critical policy issues that must be agreed under Pillar One before a decision can be taken. The “safe harbour” issue is included in the list of remaining work, but a final decision on this issue will be deferred until the architecture of Pillar One has been agreed upon. The Inclusive Framework also welcomed the significant progress made on the technical design of Pillar Two, which aims to address remaining BEPS issues and ensure that international businesses pay a minimum level of tax. They noted the further work that needs to be done on Pillar Two.

As VAT rate of 7.5% commences

he implementation of the 7.5 percent Value Added Tax (VAT) rate under the new Finance Act commenced since February 1, 2020. The VAT increase to 7.5percent is one of the few changes made to the country’s 2019 Finance Act to help the Federal Government raise additional revenues to meet its 2020 budget targets. The Federal Government’s share of the VAT pool is 15percent, while the balance goes to the 36 states. Currently, some states are in need of the additional revenue to be able to meet the obligations of the minimum wage. Like other VATable goods and services, the Value Added Tax charged on commissions related to capital market transactions has increased from 5percent to 7.5percent. This change in VAT charged impacts commissions applicable to the capital market transactions – such as those earned by Dealing Members on the traded value of shares, payable to the Nigerian Stock Exchange, and payable to the Central Securities Clearing Systems Plc. While the upward review of the VAT could help the government reduce deficit spending and fund the new minimum wage, it will result in higher production costs which will be passed on to

consumers. To reduce the tax burden on vulnerable segments, the VAT exemptions have been expanded to include more items under the basic food items, pharmaceuticals and education categories. Basic food items generally refer to unprocessed and aqua-based staple foods and include bread, cereals, fruits & vegetables among other items. In addition locally manufactured sanitary items and services provided by microfinance banks have been included in the exemption list. Tuition paid for nursery, primary and secondary education have also been classified as VAT exempt. Consumers will unfortunately have to pay more in power charges due to higher VAT charges on meter costs and electricity tariffs. Investors in the stock market will also have to bear the increase in transaction costs as VAT charged on commissions applicable to capital market transactions will increase. Under the current law, companies with a turnover below the N25 million threshold are not liable to file VAT returns. However, this also disqualifies them from reclaiming input VAT incurred on their purchases especially those involved in the supply of products that attract VAT.

How to make the international tax system fairer Barbara Angus

nder the French presidency of the G7, the theme for the Biarritz Summit in 2019 was combating inequality. In the area of economic policy, which has long been a major focus for the G7, the French presidency has identified as its priority the promotion of more fair and equitable trade, tax and development policies. Consistent with this prioritisation, an important part of the discussion at the meeting of the G7 finance ministers and central bank governors in June was centered on making the international tax system fairer. The focus of the finance ministers was the OECD-led initiative launched in 2019 with the aim of achieving consensus on significant alterations to the global framework for taxing international business income. The impetus for the project is the tax challenges created by the growing digitalization of the global economy. However, the changes contemplated will have implications well beyond technology companies and digital business models, and will affect the broad spectrum of businesses, both large and small, whose economic reach extends across national bor-

ders. The first element involves revisions to the historical approaches for determining nexus and allocating business income among countries, with a particular focus on enhancing the share of income and corresponding taxing rights assigned to countries where customers or users are located. The second element involves the establishment of a new system of global minimum tax rules for business income. To avoid creating barriers to the cross-border trade and investment that fuels the global

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economy, these changes must be made without giving rise to double taxation or increased uncertainty. Three key factors are essential to the success of this initiative: Broad global consensus Both the G7 and the G20 have endorsed the OECD project. Currently, 132 jurisdictions are engaged in the work through the OECD’s Inclusive Framework. It is important that all parties are at the table and all perspectives are considered. Active participation in the dialogue is vital. Not only must there be full consensus around the globe, but that consensus

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also must be fully informed. High-level political commitment The stakes are high. Countries must accept changes in their rights to tax business income and in their ability to control the taxation of income earned within their borders. For every country that will gain additional tax base in the application of the new rules to any given business, there will be at least one country that sees a corresponding reduction in its tax base from that business. Equal commitment is required from both categories of countries. Commitment will require that countries make changes to their domestic tax laws and amend their bilateral tax treaties to incorporate the new rules. For some countries, this will require modifying or eliminating existing measures that are inconsistent with the new rules. And commitment also will require good faith participation in robust new dispute resolution mechanisms. Sound technical foundation Consensus and commitment must be built on a strong foundation. The new rules should be principled. They should be even-handed in their impact across industries and business models. The new rules need to @Businessdayng

be smoothly integrated into the overall global tax framework. Companies need to be able to apply the new rules with confidence, and tax authorities need to be able to administer them effectively. Given the diversity of businesses that operate globally today, it is unlikely that one single formula could deliver appropriate results in all cases. Agreement on the new rules must be grounded in the technical detail developed by the tax policy experts working together through the OECD’s Inclusive Framework process. This initiative to change the global tax framework is an ambitious undertaking. Tax policy is a fundamental matter of national sovereignty. At the same time, coordination on the taxation of international business income is central to a global environment that is hospitable to cross-border trade and investment. Collective action is difficult under any circumstance, and it is especially difficult when it involves fiscal matters. Seeking consensus, fostering high-level political commitment and ensuring a sound technical foundation will require the devotion of time and resources, and all are essential to achieving a lasting global solution. Angus is EY Global Tax Policy Leader

Wednesday 12 February 2020

BUSINESS DAY

BANKING

How bank lending rates are trending downwards Stories by HOPE MOSES-ASHIKE

he Nigerian banking industry lending rates have been on a downward trend since 2017, as seen in the economic report of the Central Bank of Nigeria (CBN). Prime lending rate for instance, declined by 2.67 percentage point to 14.99 percent in the fourth quarter of 2019 compared with 17.60 percent in the fourth quarter of 2017. It stood at 16.45 percent in the fourth quarter of 2018, declining by 1.46 percentage point over the Q4 2019 numbers. A prime lending rate is the interest rate that commercial banks charge their most creditworthy customers. The maximum lending rate, which is the rate at which banks extend credit to perceived risky customers, fell by 1.32 percentage point to 29.98 prcent at the end of fourth quarter of 2019 as against 31.30 percent in Q4 2017. The rate, which stood at 30.60 percent in the fourth quarter of 2018, declined by 0.62

percentage points when compared with the Q4 2019 numbers. Credit conditions in the banking system have improved supported by the CBN’s new policy measures announced in June 2019, which requires banks to maintain a minimum 65 percent loan to deposit ratio. The Monetary Policy Committee (MPC), at its November 2019 meeting said it was hopeful that the Loan to Deposit Ratio (LDR) initiative must be sustained as interest rates being paid by borrowers have so far dropped by

up to 400 basis points between June and October 2019. These have happened with corresponding decline in Non-Performing Loans (NPLs) to 6.5 per cent at the end of October 2019. “These measures have placed our banks in a much better position towards supporting a stronger economic recovery,” Godwin Emefiele, governor of CBN said in December 2019. Consequently, the spread between the weighted average term deposit and maximum lending rates narrowed by 0.91 percentage point to 21.91

percentage points at the end of fourth quarter 2019. Similarly, the margin between the average savings and maximum lending rates narrowed by 1.44 percentage point to 26.05 percentage points at the end of December 2019. At the inter-bank segment, the weighted average inter-bank call rate, which stood at 8.80 per cent at end-September 2019, fell significantly by 5.4 percentage points to 3.40 per cent at end-December 2019. Similarly, the Nigeria inter-bank offered rate (NIBOR), for the 30day tenor, fell from 12.60

per cent in the preceding quarter to 12.31 per cent at end-December 2019. Also, the weighted average rate at the Open-BuyBack (OBB) segment fell significantly by 4.5 percentage points to 5.77 percent. Interest rates moved in tandem with the level of banking system liquidity during the fourth quarter of 2019 with developments in banks’ deposit rates mixed. At its meeting last month, the Monetary Policy Committee noted that gross credit in the industry grew by N2 trillion

between May 2019 and December 2019; channelled primarily to the employment-stimulating sectors such as agriculture and manufacturing, in addition to increased lending to the retail and Small and Medium Enterprises (SME) segments, which is expected to help boost domestic output growth in the short to medium term. To retain the gains from credit expansion and current industry focus on lending, the committee advised the Bank to sustain its LDR policy and in addition continue to deploy its Differentiated Cash Reserves Requirement (DCRR) policy which directs new funding for greenfield projects and expansion to critical sectors of the economy. The CBN at the last MPC meeting in January retained the Monetary Policy Rate (MPR) at 13.5 percent, citing comfort with its policies so far and the need to yet again, allow time to understand growth trend for the year. In consideration of rising inflation and surging liquidity, the CBN last month raised the Cash Reserve Ratio (CRR) by 500 basis points to 27.5 percent from 22.5 percent since 2016.

Ecobank trains female entrepreneurs on digital marketing

s part of its initiative to continuously encourage female entrepreneurs in the country, Ecobank Nigeria last week in Lagos trained over 140 female business owners on digital marketing skills in its state-of-the-art academy. The emp ow er ment programme organized by Ecobank Female Entrepreneurs’ Initiative (EFEI) drew participants from Lagos and its environs. EFEI program which was launched by Ecobank last year is designed to recognize women as a separate market segment. The program bundles empowerment and capacity building in form of trainings and seminars, networking events, loans, trade fairs and exhibition of customers’

products. Speaking at the event, Daberechi Effiong, head, consumer asset product,

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Ecobank Nigeria, said the training which focused on building participants’ digital marketing skills to boost

their businesses online. She stressed that apart from growing their businesses, the training would positioned them for increased participation, validation and contribution to their communities. Effiong who is also the coordinator of Ecobank female entrepreneurs initiative, explained that “the training focused on social media marketing, search engine optimization, content building and the Ecobank female entrepreneurs’ opportunities. This is designed to provide them with the necessary support to excel in their endeavours, promote and grow their businesses,” she said. She pointed out that the objectives of EFEI initiative is to foster deeper and

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longer relationships with women in business by providing a profitable banking platform for their growth and success and making Ecobank the first choice Bank for women across the country. “In line with the Initiative’s value proposition, women across Nigeria are meant to be trained on skills that will enhance the growth and expansion of their businesses. This is the first tranche of the capacity building training for 2020. We will take the empowerment to other parts of the country during the year,” she stated. She advised the women business owners to put the training to good use to boost their business, assuring them of Ecobank’s support @Businessdayng

to grow their business. Cross section of participants gave feedback on how the training has given them the needed exposure to boost their businesses online and steps they will take using all the information received. A participant,who is the managing director/Chief Executive, Decency-Ella Media Solution, Stella Ezeh, said, “ Thank you, it is my pleasure. Looking forward to be contacted in the future training.” The speakers at the event include Rejoice Chukwuma, programs manager/trainer at Haptics Nigeria for Digital skills training; Mercy Igbafe, digital consultant and founder of Learntor Nigeria and Daberechi Effiong, coordinator, EFEI.

Wednesday 12 February 2020

BUSINESS DAY

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Wednesday 12 February 2020

BUSINESS DAY

NEWS

Admission outside CAPS is null, void, JAMB warns candidates

L-R: Godwin Obaseki, Edo State governor; Amaju Pinnick, president of the Nigeria Football Federation (NFF); Sunday Dare, minister of sports and youth development, and Philip Shaibu, Edo State deputy governor, at the inspection of Samuel Ogbemudia Stadium, in Benin City.

...reverses hundreds of illegal admissions GODSGIFT ONYEDINEFU, Abuja

Why Nigeria’s environment must be investment-friendly - Sanwo-Olu JOSHUA BASSEY

agos State governor, Babajide Sanwo-Olu, says until the Nigerian environment is made investment-friendly through deliberate investment in key infrastructure, it will be difficult to attract diasporan Nigerians and foreigners to invest in the local economy. This, according to SanwoOlu, is the reason the Lagos government is embarking on its ongoing infrastructure development programme. This is also as the state executive council has passed a resolution approving the development of 3,000-kilometre metropolitan fibre project. The project when done will enable the state build several capabilities us-

… as Lagos approves 3,000km metro fibre project ing technology. It will also facilitate state’s quest to become a smart city of the future driven by technology, and enhance Ease of Doing Business, which foreign investors can tap into. Meanwhile, the state government, on Tuesday, opened bilateral talks with the Canadian government, and would be seeking cooperation from the Canadian authorities in the areas of cyber security, food security and technology, among others. According to SanwoOlu, investment towards bridging the infrastructure gap in Lagos is a deliberate decision by the state government, because it would amount to a wasted effort

AIB releases preliminary reports on Air Peace, Max Air incidents IFEOMA OKEKE

ccident Investigation Bureau, Nigeria (AIB-N) has released two preliminary reports on incidents involving aircraft owned and operated by Air Peace Limited and Max Air. Air Peace Boeing 737500 aircraft with nationality and registration marks 5N-BUJ was en-route Sam Mbakwe Airport, Owerri on November 5, 2019, when the incident occurred at about 23,000 feet above Mean Sea Level (FL230). On the other hand, Max Air Boeing 747-400 aircraft with nationality and registration marks 5N-DBK occurred at Runway 05, Minna International Airport on 7th September, 2019. The reports are already on the Bureau’s website. For Air Peace incident, the bureau listed the following findings: the pilots were qualified and licensed to fly the aircraft, the first officer was the Pilot Flying (PF) and the captain was the pilot monitoring,

the captain took control of the aircraft at FL230 after the loud bang and yaw, the aircraft had a valid Certificate of Airworthiness and metal debris were found around the tail cone of No. 2 engine during post-occurrence inspection. For Max Air incident, the bureau stated during the incident, the aircraft crossed the threshold right of centre line, was in a left bank, the left main wheels touched down and the number one engine nacelle contacted the runway on the centre line, 203 m from the threshold, and was dragged on the runway along the centre line for approximately 44m. AIB further explained that the body wheels touched down, followed by the right main wheels and the aircraft gradually steered to the centre line. “On examining the number one engine, the bottom surface of the nacelle was abraded, thereby releasing the cowl latches resulting in the fan cowls being blown off the engine by the slipstream.” www.businessday.ng

to continue to request Nigerians abroad to return home to invest if the local environment is not made business-friendly. Lagos, Nigeria’s economic hub, according to its immediate past governor, Akinwunmi Ambode, is in infrastructure deficit that would require about $50 billion over five years to bridge. Sanwo-Olu, while receiving Patrick Brown, the mayor of Brampton City in Ontario, Canada, who led a delegation to the State House at Alausa, said the Canadian city shared similar history with Lagos, stressing that both cities had grown over the decades to become the hubs of commerce and information and communi-

cation technology (ICT). The governor acknowledged the efforts made by the mayor to accelerate development in Brampton, which hosts a large population of Nigerians. He said Lagos would be seeking bilateral cooperation with the political leadership of the Canadian city to address cybercrime and increased food production. “It feels great to know how much effort you, as a mayor of Brampton, you’re investing in driving development in your city and this is similar to what we have been doing in Lagos. We have embarked on intensive infrastructure to make Lagos more attractive to people in the diaspora to invest in.

Supreme Court throws out Lokpobiri’s appeal against Lyon FELIX OMOHOMHION, Abuja

he Supreme Court on Tuesday dismissed the appeal filed by Heineken Lokpobiri, a former minister of state for agriculture, against the candidacy of Bayelsa State governor-elect, David Lyon. They are both members of Bayelsa’s All Progressives Congress (APC). The five-member panel of justices, presided over by Justice Mary Peter-Odili, held the appeal was stature bar. The panel held that it was filed outside the time limit,14 days, for such application which is against provisions of the Electoral Act and the Constitution. Lokpoberi had alleged that he won the September 4 governorship primary election of the party. Two days to the governorship election, Jane Inyang, judge of a Federal High Court in Yenagoa, the state capital, on November 14, 2019, ruled in favour of

Lokpobiri, nullifying the primary election that produced Lyon as governorship candidate of the APC. However, the APC obtained an interim order from the court of appeal staying the order of the lower court that barred them from participating in the November 16 governorship poll. Lyon eventually emerged winner of the election with 352,552 votes, defeating the People’s Democratic Party candidate. In the judgment, Justice Isaiah Olufemi of the Appeal Court held that Lokpobiri failed to comply with the statutory 14 days period, saying that he ought to have filed the case not later than September 17, 2019. “The matter was filed on Sept. 18, outside the 14 days statutory period. The petition was not filed within time,’’ he said. Unsatisfied with the judgment, Lokpobiri had approached the Supreme Court for redress.

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oint Admissions and Matriculation Board (JAMB) has warned that any admission into First Degree, National Certificate of Education, National Diploma and National Innovative Diploma outside the automated Central Admissions Processing System (CAPS) or not on the official letter headed paper of the Board is null, void and candidates who accept such admissions do so at their own risk. The Board also warned institutions that admission made outside CAPS would jeopardise the participation of the innocent candidates in the compulsory National Youth Service Corps (NYSC) mobilisation exercise or any job placement, which requires the certification or endorsement of the Board. “The most unethical and wicked excuse that many of the candidates would drop

out within the first year compounds the immorality of the whole exercise,” the Board said in its weekly bulletin. The CAPS is the only credible avenue for admission into undergraduate programmes of all tertiary institutions in the country, JAMB noted, but it has found that institutions offer admissions to candidates through their portals. The Board said publishing an admission list prior to its processing on CAPS was improper and a source of confusion, and many of such admissions had to be reversed. “A case in hand is a university which has a quota of 50 for LL.B Programme but went ahead to offer admission and received acceptance fee from 350 LL.B candidates. If the offer had been processed on CAPS, it would not have allowed the abused of quota issued by the Council of Legal Education.

Slow internet, foreign hosting bane of POS, ATM services – analysts

ver the past few weeks, the fluctuating nature of local internet services has left several subscribers and business owners at their wits end, due to the disruptions to their business operations or their E-commerce activities. The biggest casualties of the down time due to some offshore submarine cable cuts have been Nigerian banks, E-commerce businesses and Small and Medium Scale Enterprises (SMES). The banks have seen a notable increase in the number of failed transactions and some platforms have been off-line intermittently as a result. Experts suggest that the failure to develop our local Internet ecosystem and foreign hosting of payment platforms or critical services are the two major factors affecting the ability to complete online transactions in Nigeria and if care is not taken, the situation may get worse. While some banks and retail consumers were affected by the down time due to the recorded submarine cable cuts of SAT3 and WACS, other global organisations such as Google and Facebook amongst others were still able to provide their Nigeria customers content, simply because they had localised their data in local data centres while also connecting to local internet exchanges like IXPN and WAFIX. While their links to their major nodes were also im@Businessdayng

pacted by the submarine cuts, they were able to quickly recover based on diverse routes to which they subscribed or by routing traffic to other cables. Though connectivity played a big part in customers’ irritation due to limited access to certain services or delayed transactions, businesses in a country as large as Nigeria cannot underestimate the crucial benefit of local hosting and proximity of their data and transaction engines to the customers they serve. This is especially so for banks, e-commerce businesses and government agencies which increasingly rely on online engines to deliver services. There is the need to enable disaster recovery and seamless business continuity in the face of service disruptions in and outside the country, which would have been hugely beneficial to their business operations. In addition, the failures also expose the threat to user data given that every POS transaction contains a bounty of users’ data, from spend habits to location, to secure identification numbers, to card owners’ full profile. These failures suggest Nigerian consumer data is transmitted around the globe through foreign countries and foreign servers without full control of how the data is accessed or what legal rights governments have to access that data at those locations.

Wednesday 12 February 2020

BUSINESS DAY

NEWS

Hogan Guards names Paul Ibirogba as new CEO KELECHI EWUZIE

H L-R: John Osuoha, country representative, Chartered Institute of Securities and Investment (CISI), UK; Adedeji Ajadi, registrar and chief executive, Chartered Institute of Stockbrokers (CIS); Oscar Onyema, CEO, The Nigerian Stock Exchange (NSE); Bola Ajomale, president, National Advisory Council, CISI Nigeria, and Toyin Sanni, group CEO, Emerging Africa Capital Group, at the CISI’s Breakfast Meeting on 2020 Global Economic Outlook in Lagos.

Explosion rocks Edo APC secretary’s residence in Benin City IDRIS UMAR MOMOH, Benin

... as governor, Ize-Iyamu, Okah trade blames

uspected assailants in the early hours of Tuesday attacked the house of Lawrence Okah, the factional state secretary of the All Progressives Congress (APC) in Edo State with explosives. The explosion, said to have occurred around 12.30am, shattered the kitchen side on the ground floor of the building and dug a hole in the ground. The kitchen window, mower, cooking gas and veranda were also shattered as well as the ceiling. It was gathered that one of the explosives, which failed to detonate, hung on the veranda rail of the top floor of the house. The undetonated explosive, which was alleged to have been targeted at the bedroom of the APC chief-

tain, was later removed by a team of police anti-bomb squad at about 8am. The attacked on the APC scribe’ residence came a few weeks after a similar attack was launched at the house of another chieftain of the party, Francis Inegbeniki. Lawrence Okah, who conducted newsmen round the affected part of the building, said gunmen had last week Tuesday fired at his bedroom. He alleged that Governor Obaseki had earlier threatened him, which he had allegedly carried out with the attacks, saying, “On Tuesday last week, I heard gunshots. They shot at my bedroom. The police came and picked 52 bullets here. “Yesterday at about 12:30am, I heard a noise like “boom.” I called my security

UI ASUU gets new chairman, as Omole bows out REMI FEYISIPO, Ibadan

niversity of Ibadan chapter of the Academic Staff Union of the Universities (ASUU) has elected Ayo Akinwole as its new chairman. Akinwole, a professor of Aquaculture Engineering and Water Resources, is taking over from Deji Omole, another professor who had served two terms. Akinwole was elected unopposed at the premier University congress on Tuesday. Also elected unopposed were Femi Afolabi (vice chairman), Chris Omoregie (secretary), Seun Garba (ass. secretary), Kazeem Olaniyan (ass. secretary), Sarah Akintola (treasurer), Femi Akewula (financial secretary), Kehinde Soetan (investment),

Funke Adegoke (welfare), Ajibade Tayo (publicity), and Dapo Okareh (internal auditor). The new executives were unveiled at the Biennial Congress of the Union held at ASUU Secretariat, Ajibode extension by the chairman, electoral committee Akin Alada,a professor. According to him, the elected satisfied all the provisions of ASUU constitution and were returned elected. The zonal coordinator, Ade Adejumo, who inaugurated the new exco tasked them to be ready to fight executive tyranny in Nigeria and ensure that the children of the masses are not sidelined. The new chairman, Akinwole stated that the Union would continue to stand with the masses and fight for publicly funded education.

and they said it looked like a bomb. The one they threw at my bedroom did not detonate. If that one had detonated, you would not have seen me to be talking to. “If the undetonated bomb that was targeted to my room had exploded, it would have been a different story. I just want to advise the Governor. He has threatened me before and he has carried out the threat.” Also speaking, Osagie Ize-Iyamu, a chieftain of the party and a governorship c‎ andidate, warned that Edo should not be turned to a war zone. Ize-Iyamu, who was on a solidarity visit to the party scribe, drew the attention of the Inspector-General of Police, Muhammed Adamu, and President Muhammadu Buhari to the attacks in Edo State. He however

wondered why no arrest had been made so far. “Since the beginning of these series of attacks on our members in the state, we are surprised that no arrest has been. “Will the Police say they don’t know about it? We know that if the police want to do their jobs they can do it perfectly. So, we are calling on them to do their job and save our lives. “There is no doubt that this action was politically motivated. This cannot be the work of armed robbers. It’s not the work of kidnappers, nor the handiwork of children. It was a deliberate act of political wickedness. “We are appealing to security agencies that they must not allow the situation to degenerate to the level where people will take laws onto their hands.

CIPE, NACCIMA to organise private sector on AfCFTA implementation OBINNA EMELIKE

entre for International Private Enterprise (CIPE) has partnered the Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) and other MSME associations in Nigeria to strengthen the voice of MSMEs to participate in ongoing national policy dialogue around the Africa Continental Free Trade Area (AfCFTA) agreement. The partnership is aimed at supporting MSMEs in Nigeria to articulate policy positions needed to maximise the opportunities presented by an Africa free trade area and to implement vital economic reforms to harness benefits to MSMEs. NACCIMA will work

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with Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME), Nigerian Association of Small Scale Industrialists (NASSI), National Association of Nigerian Traders (NANTS) and Federation of Agricultural Commodities Association of Nigeria (FACAN) to formulate a research-backed policy position reflective of the views of the Nigerian private sector, with recommendations for the national government to consider. The partnership will address one of CIPE’s objectives, which is strengthening the private sector to participate in democratic governance, for inclusive growth through market-led solutions.

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ogan Guards Limited, formerly Guardsmark Nigeria Limited, has announced the appointment of Paul Ibirogba as the new CEO. This was disclosed in statement made available to BusinessDay, adding that in his role as the new CEO, Ibirogba will oversee the company comprising over 8,000 employees, currently being transformed into a holding conglomerate with five new subsidiaries. Ibirogba is a marketing and HR expert with vast experience in organisational management, cost control and business development. He has also been involved in community outreach and education coaching. Ibirogba as an experienced Vector Marketing agent in Maryland, US, and has also been involved in outreach coordination in Houston. He is a former employee of the City of Fargo, North Dakota, where he provided social services for vulnerable individuals and organisations. A graduate of University of Houston, Texas, where he studied communications, Ibirogba also majored in Business Administration at the Morgan State University. His working experience traverses North America and Asia where he has had leading

roles in education business engagement, especially in China, South Korea and the Philippines. He was the editor of Vegan World News, United States, between 2018 and 2019. Hogan Guards Limited has for over two decades been providing security surveillance for major oil companies, diplomatic missions, banks and various industrial and residential concerns. It began operation on August 18, 1981 and has won 29 awards in the course of its four decades of operation. The company currently operates offices in most major capital cities of Nigeria including Lagos, Abuja, Port Harcourt, Ibadan, Akure, Abeokuta, Aba, Asaba, AdoEkiti, Ondo, Ore, Ijebu-Ode, Ile-Ife, Calabar, Kano and Enugu; with plans for other cities in Nigeria as well as offices in the ECOWAS/West African sub-region.

HYPO launches nationwide campaign against Lassa fever

hile sticking to its core values and establishing market leadership in the environmental hygiene and homecare space, Hypo, maker of bleach washing solution, has formally launched a nationwide sanitisation campaign in open markets to curb the prevalence of Lassa fever, especially in the most affected states in Nigeria. The sanitisation campaign is in collaboration with the Nigeria Centre for Disease Control (NCDC) to visit major open markets across 11 states in Nigeria to enlighten market women and the entire public on the Lassa fever epidemic and steps to keep their environment clean and effectively sanitised towards curbing the spread. Nigeria has registered an upsurge in the number of Lassa fever cases since the beginning of the year, with 365 positive cases and 47 deaths reported from 23 states across the country. According to week five situation report on the disease released by the NCDC last Wednesday, the @Businessdayng

number of states reporting at least a case of the disease rose to 23 from 19 in the previous week. Speaking at the event at Oke Arin Market, Lagos, Omotunde Bamigbaiye, brand manager, Hypo Bleach, says the need to embark on this nature of campaign became apparent as it is a common knowledge that women remain the custodians of the family and managers of house affairs, which is why catching up with them at the market square remains a strategic touch point to disseminate the message. “It is not just coincidental that Hypo Sanitisation Campaign against Lassa is officially launched in two cities today, because Thursdays have been earmarked specially for environmental sanitation exercise across most major open markets in Nigeria. The idea is to have the public incorporate effective sanitisation approach into their regular cleaning while at the same time take them through step by step processes to prevent the spread of Lassa fever both at their shops and at home,” she said.

Wednesday 12 February 2020

BUSINESS DAY

NEWS

Edo Sport Festival: Obaseki promises N9m cash prize to winning LGs … as FG commends Obaseki on pace of work at refurbished Ogbemudia Stadium IDRIS UMAR MOMOH & CHURCHILL OKORO

E L-R: Dapo Oluwaseyi Adelegan, chairman, Creativexone Limited; Aruya Temilade, assistant director, public affairs, Lagos State ministry of information; Doyin Adewumi, MD, Creativexone Limited; Owolabi Mustapha, executive director, iFEST, and Jahswill Osondu, MD, Mind Innovations, at the launch of iFEST in Lagos, yesterday. Pic by Olawale Amoo

FG not disturbed by clamour for renewable energy - minister OLUSOLA BELLO & HARRISON EDEH

ederal Government says it is not disturbed by the clamour that renewable energy will replace fossil fuel in nearest future, as it doubt the sincerity of those advocating that it would completely take over the place of crude oil in the global energy mix. Timipre Sylva, minister of state for petroleum resources who stated this at the ongoing Nigeria International Petroleum Summit (NIPS), said for us as a country, what we advocate is that the country should transit through gas to renewable. The position of Nigeria is

… says carbon emission is the issue

that gas emits less carbon, it is a cleaner fuel and the country has it in abundance, Sylva said, saying, “So, this is why we said gas will become our transitional fuel.” According to Sylva, the world would not completely abandon fossil fuels for renewable because those at the core of driving global demand for crude oil are industries that actually take the crude oil as their main raw material. Such industries include petrochemical, fertilizers companies or gas-based industries like LNG and the refineries, and not electric cars. These, he said, are the drivers of growth for demand for crude oil.

So, Nigeria is not worried about driverless cars or electrical cars, as their development would not reduce the global demand for crude oil, he said. Carbon emission is the real issue the world is having, and not about renewable, he noted, stating further that there is a technology for carbon capture which if fully developed can be used to easily reduce carbon emission from fossil fuel to zero level. He lamented that the European countries had budgeted about a trillion dollar for renewable energy instead of deploying the money on carbon capture technology that would help reduce carbon

emission globally. They know that Asia and Africa, where there is so much carbon emission, are not ready for renewable energy race for now. The bulk of the European budget is to be spent where the lowest carbon emission is being produced in the world. “So, we begin to fear whether this is not an attempt by Europe to subsidised the development of renewables so that in the long term they would have made renewables so cheap that they would become net exporters of energy to the rest of the world. Renewable is not a race to renewable, but race against carbon emission.

do State governor, Godwin Obaseki, has promised a cash prize of N9 million to any three local governments that take between first and third positions in the state sports festival. Obaseki made the promised on Monday while declaring open the third Edo Sports Festival at the University of Benin sports complex in Benin City. He said the local government that took first position would take home N5 million, second N3 million and third N1 million, respectively. “A cash prize of N5 million will be presented to the local government council which comes out first, N3 million to council that finishes second while the second runner up will be rewarded with N1 million,” he said. The governor, who reiterated his administration’s commitment to sports development, noted that the third Edo State Festival was coming up 19 years after the second festival organised in 2001 by the former Governor Lucky Igbinedion-led administration. He also disclosed that the state sport festival was geared towards preparing state-owned athletes for the forthcoming 20 National Sports Festival tagged “Edo 2020” scheduled to take place between March 22 and April 4. He assured that the state sports festival would now be held annually in

the state, however, urged athletes to obey the rules of the games just as he admonished them not be desperate in their quest to becoming a winner. “I want to urge you to compete in Edo way and in doing that, I want you to stick to the rules of the game; it must not be a door-die affairs. I also want you to be good ambassadors of the state,” he said. Earlier, the Edo State Sports Commission chairman, Godwin DuduOrumeh, said the festival would prepare the athletes for the 2020 National Sports Festival to be hosted by the state. Orumeh noted that the festival would go a long way to promote peace and unity in the state. Meanwhile, minister of youths and sports, Sunday Dare, has commended Governor Obaseki on the pace of work as well as the standard of facilities at the newly rebuilt Samuel Ogbemudia Stadium ahead of the 20th edition of the National Sports Festival (NSF). Dare said this after inspecting the progress of work at the stadium. He was accompanied on the inspection tour by Governor Obaseki and the state deputy governor, Philip Shaibu. He noted, “I can say the stadium is 90 per cent ready for the NSF. When I came here in November 2019, the tracks were not laid and the pitch was not at an advanced stage as it is today.

Caleb University matriculates 1,336 students FG urged to protect oil industry data against cyber-attack … as Law programmes begins next academic session MARK MAYAH

o fewer than 1,336 students were at the weekend admitted into various courses at Caleb University, Imota, Lagos State, for the 2019/2020 academic session. The fresh students were billed to strive for excellence in the institution’s four colleges. The colleges are: College of Environmental Sciences and Management, College of Pure and Applied Sciences, College of Arts, Social and Management Sciences and College of Postgraduate Studies. Nosa Owens-Ibie, a professor and vice chancellor of the institution, who administered the oath on the new students at the 13th matriculation ceremony, charged

the matriculants to jealously guard and maintain the reputation of the University, to strictly adhere to the institution’s high moral and academic standards. According to OwensIbie, the students should see their admission as a rare privilege to study in Africa’s best private university in Research and Entrepreneurship Development. The matriculated 1,185 undergraduates and 151 postgraduates’ students, according to Owens-Ibie, represented a progression and an indication of rising confidence by stakeholders in the Caleb University dream, compared with last session when less than a thousand students were admitted at the undergraduate’s level. To the fresh students, the vice chancellor said, ‘’I can www.businessday.ng

assure that the journey you are formally starting with this day ceremony will shape you and in future you can be sure to thank God you are here today. “As a university founded and operated on Christian principles, our day and night are spent in the pursuit of academic excellence and Godly character moulding. “Caleb University has a magnetic pull for students who are passionate about their future, and we are in the business of daily investing in moulding those who own the future Nigeria and start defining that future from today ‘’, he said. He, however, enjoined parents and guardians to synergise and partner with the university as part of the enterprise to mould the children to be what they intended them to be.

OLUSOLA BELLO & HARRISON EDEH

he Federal Government has been urged to develop policies and legislation that will help protect the oil and gas industry’s vital data against cyberattack. The technical assistant on gas business and policy to minister of state for petroleum resources, Justice Derefaka, made the call during a panel session at the ongoing 2020 edition of the Nigerian International Petroleum Summit (NIPS) holding in the nation’s capital, Abuja. “Government needs to develop policies and legislature to address the threat to data. Use of information technology and operational technology exposes the industry and renders it vulnerable to cyber-attack,” Derefaka told the audience.

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According to Derefaka, sharing of intelligence among operators in the industry and simulating situations before cyber-attacks can help reduce vulnerability. Lending his voice to the issue, Amusa Babatunde Adeyemi, senior account representative, Huawei Enterprise Energy Business, said legislation was important in addressing the issues of data vulnerability in the industry, adding that the ability of the different technologies used in different operations in the industry to interoperate with one another would greatly reduce exposure and vulnerability. Earlier, Dan David, managing director, CyberSocAfrica, told delegates at the summit that the use of technology, despite its benefits, also exposes the oil and gas industry to threats. “The oil and gas industry @Businessdayng

is marching towards digitalisation and adoption of new technologies. The use of new technology is also to check the attack of cyber security issues in order to make the industry more secure and safe,” David said. The session also featured key industry players such as Alex Nachi Tarka, president, Nigerian Association of Petroleum Explorationists; Gbenga Onadeko, senior vice president, USA and Carribeans, Welltec; Richard G. P. Llewellyn, managing director, Benchmark Geophysical Consulting Limited, as well as Omar Farouk Ibhahim, secretary general, Africa Petroleum Producers Organisation (APPO). This session highlighted the impact of technology, policy, social, and changes in business model on the demand and supply sides of the oil and gas business.

Wednesday 12 February 2020

BUSINESS DAY

NEWS

Imo financial advisory committee writes Uzodinma, claims nine banks owe state N112.8bn

… wants governor to pursue financial institutions for refund STEPHEN ONYEKWELU

fter four months of extensive work involving 10 consulting firms, the financial advisory committee commissioned by Emeka Ihedioha, ousted governor of Imo State, has come up with some claims against nine banks. The eight-man committee was set up to ascertain and document the locations of and balances on all bank accounts operated by Imo State government, its ministries, department and agencies’ (MDAs) from 2011 to May 29, 2019. On December 3, 2019, formal demands for the refund of the sums owed the state and arising from various infractions committed by the banks were issued by the Accountant General. By the demand notices, the affected banks were required to refund the claims made against them within 30 days or show cause for why they should not do so. In a letter addressed to the governor of Imo State, Hope Uzodinma, dated February

6, 2020, signed by Emeka Opara-Ndudu, a former local government chairman in the state, and Abraham Nwankwo, a former director-general of the Debt Management Office (DMO), the eight-man committee claimed that based on a joint report of the consortium of consultants, nine banks owe the state a total sum of N112.8 billion. This sum comes from N74.6 billion, the sum of the principal amount involved in such infractions and attendant penalties. Added to this is the sum of N38.2 billion to be claimed, which covers the principal sum and attendant penalties arising from the aggregation of debit entries to the state account without proper narration and for which no proper explanation was presented to the Committee. “When our Committee had its last meeting on January 14, 2020, a number of measures were being considered to ensure that these claims pursued,” the letter stated. “Incidentally, these options required the approval of the Governor and had to be aborted following

the change in guard on that fateful day.” One of the banks was liable to refund N73.2 billion of the primary amount and the entire secondary amount of N38.2 billion. “The pursuit of these claims and recovery of the outstanding claims require political will and leadership which can be provided by you. We therefore urge you to do all within your powers to ensure that the expected outcomes from the work of our Committee are realised for the benefit of our State and its citizens. It would be a grave and historical insult, assault and financial rape of the people of Imo State if the recovery of these claims from the affected banks is not vigorously pursued under whatever excuse,” the letter detailed. Probably unconnected to the financial advisory committee’s report, Hope Uzodinma, Imo State governor, ordered all financial institutions in custody of the state funds not to honour any payout draft from the government accounts until further notice.

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2nd Niger Bridge to be completed in 24 months – contractor EMMANUEL NDUKUBA, Onitsha

ulius Berger plc has given assurance that the 2nd Niger Bridge will be completed in February 2022. Friedrich Wieser, project supervisor of the company, gave the assurance when minister of works and housing, Babatunde Fashola, visited and inspected the project on Tuesday. He said the project was 33 percent as against 20 percent when the minister visited last, pointing out that the company had mobilised 1300 workers and 425 equipment to the site to meet the target scheduled. Wieser said the work on the seven kilometres access road world be completed in September this year. “This job is going on smoothly and I am confident that the access road from Onitsha end and Asaba end will be completed by September 2020. At the moment no challenges, we are following our pro-

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gramme as scheduled. “When the minister was here last time we have done 20 per cent progress, now 33 percent,’’ he said. He affirmed that compensation to the host community was not the responsibilities of the contractor but rather the employed, saying, “We never have any disturbance because of compensation.” The minister said the project was going scheduled, added that the recovered looted fund to foreign countries were being used to develop such infrastructure. “You are aware of the efforts of President Muhammadu Buhari to recover money that was stolen out of the country. This is one of the projects in the benefit of that money. “This is one of the yesterday miss-opportunities that have become today’s responsibility for infrastructure. Again, I reiterate that this is front and centre issue for this government under President Buhari to deliver infrastructure to

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grow the economy,” Fashola said. According to Fashola, until the bridge is finished, hundreds and thousands here on this site will be employed here; men and machines, meaning also that lubricant are being purchase. “I think the total consumption of diesel throughout the life circle of this project is about 19million litres of diesel; Julius Berger does not make diesel, so people who supplies and distributes impact the petroleum sector of the industry. “Cement multiplies thousand tones, iron rods and others; so people will see first the economic, employment and productivity impact to actually funding the project.” The minister had also visited the on-going road rehabilitation outstanding section of Onitsha-Enugu Expressway: AmanseaEnugu full rehabilitation of Umunya section in Anambra state, Federal housing, Ishiagu and others.

Wednesday 12 February 2020

BUSINESS DAY

NEWS

Transcorp Group announces significant new Executive, Non-Executive board appointments

ransnational Corporation of Nigeria plc (Transcorp) has announced significant appointments to its Board and Executive Management. Transcorp is Nigeria’s leading listed industrial holding company, whose interests include Transcorp Power, Nigeria’s largest power generator, Transcorp Hotels, owner of the iconic Transcorp Hilton, and significant upstream oil and gas assets. Owen Omogiafo has been appointed as president/GCEO of Transnational Corporation of Nigeria plc, with effect from March 25, 2020. She succeeds Valentine Ozigbo, who is retiring to pursue a career in public service, having served Transcorp for close to a decade. Owen is currently the MD/ CEO of Transcorp Hotels plc and has over two decades of corporate experience in organisational development, human capital management, banking, change management and hospitality. She holds a B.Sc. in Sociology and Anthropology from the University of Benin, an M.Sc. in Human Resource Management from the London School of Economics and Political Science and is an alumnus of the Lagos Business School and IESE Business School, Spain. She is also a member of the Chartered Institute

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of Personnel and Development, UK, and a Certified Change Manager with the Prosci Institute, USA. She has received multiple awards and been named as one of Africa’s top 100 Female CEOs. Dupe Olusola has been appointed as the MD/CEO of Transcorp Hotels, effective from March 25, 2020. She is currently the Group Head, Marketing at United Bank for Africa. She has over 21 years of corporate experience including MD/ CEO of Teragro Juice Concentrate Plant. She holds a BA in Economics from the University of Leicester and a Masters in Development Economics from the University of Kent. She is a certified Project Manager, with qualifications in PMP and Prince 2. She has received numerous awards and was named by the Ventures Africa’s as one of the 10 Most Influential Nigerian CEOs of 2015. The Board of Transcorp Hotels has also approved the appointment of Helen Iwuchukwu as an Executive Director/Chief Operating Officer of the company. She is currently the Group Company Secretary of Transcorp plc. She holds an LL. B. (Hons) degree in Law and was enrolled as a Solicitor and Advocate of the Supreme Court of Nigeria in 1993 (BL Hons) and holds a Master of Laws degree (LL. M.) from Middlesex University Business

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School, London. Helen is a member of the Nigerian Bar Association, with over 25 years in legal advisory, corporate law, corporate governance, administration, human capital management and government relationship management. Christopher Ezeafulukwe has been appointed as the MD/CEO of Transcorp Power Plant, Ughelli, and was the Executive Director, Business Development and Legal, Transcorp plc. He has over 21 years’ experience in business development, legal advisory and company secretarial roles. He holds an LL.B from the University of Lagos, a B.L from the Nigerian Law School, an LL.M from the University of Lagos and further LL.M in Energy, Environmental & Natural Resources Law from the University of Houston, Texas. He is a member of the Nigerian Bar Association, the Institute of Chartered Secretaries & Administrators of Nigeria, the Association of International Petroleum Negotiators and was a member of the Executive Council of Association of Power Generation Companies of Nigeria.

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Wednesday 12 February 2020

BUSINESS DAY

news

Only Nestle, WAMCO, Chi, 3 others can access FX...

L-R: Rowland Ewubare, chief operating officer, NNPC Upstream; Mele Kyari, GMD of the NNPC; Samson Makoji, acting group GM, Group Public Affairs Division, and Timipre Sylva, minister of petroleum resources, at the inspection of NNPC’s exhibition stand at the ongoing Nigeria International Petroleum Summit 2020 in Abuja.

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According to the CBN,

Why Nigeria must focus on education, health... Continued from page 1

million to 3-4 million in the

southern region. In 2017, UNDP’s Human Development report published by the National Bureau of Statistics (NBS) reported intensity of poverty to be higher in North West (45), North East (44) and North Central (41) than in South-South (39), South East (38) and South West (38). Similarly, northern states led by Sokoto and Jigawa dominate on the incidence of poverty, with the worst 13 states (all northern) having a minimum of 76 percent of their population living in poverty. On the multi-dimensional poverty index, there is a repeat of the North being the worstperforming. States with the highest HDI ranking in Nigeria are Lagos, Abuja and Bayelsa while not surprisingly the least are Bauchi, Kastina and Sokoto. A national problem The World Bank predicts that the number of poor in Nigeria (almost 100 million) will increase over the next 10

years so that one in four of the world’s poorest is a Nigerian by 2030 – under a businessas-usual scenario. This has dire consequences for Nigeria that the past few years have highlighted. Even though poverty is not solely responsible for insecurity in Nigeria, the emergence and continuity of insurgency in the North East have been linked to a low level of development in the region. The Almajiri system which has put many young Northern boys on the streets has made the region a fertile ground for insecurity. Babagana Monguno, the National Security Adviser, last year said the government would have to proscribe the Almajiri phenomenon because it breeds street urchins that become a problem to society. Not just the North, insecurity is rubbing off on Nigeria’s international image as seen in President Donald Trump’s recent inclusion of Nigeria on an Immigration Visa restriction list. The spate of insecurity is also a burden on investment into the

N1.2bn British grant coming for 3... Continued from page 1

The ODA programme – Polytechnic Maintenance Workshops programme (PMWP) – billed to run from 2020 to 2022, will begin in April 2020 with the training of some selected participants, mainly senior staff, from these institutions. Max Lawrence, the programme’s coordinator, in an exclusive chat with BusinessDay said each of the three centres will have nine Nigerian tutors and four others from the United Kingdom (UK) to oversee the projects. In addition, the Yaba and Enugu centres will be supervised by Ken Houghton, while the Kaduna centre will be manned by George Edwards. According to Lawrence, the need for a series of specialist maintenance courses for senior staff of polytechnics and colleges of technology was

emphasised by the Education Ministry to ODA advice in 2014. Consequently, in February 2015, he said two representatives from the North East Wales Institute visited Nigeria and following observations made and information gathered, the present series of workshops were approved. Before the completion of the projects in 2022, it is expected that each centre would have produced no fewer than 35 consultants in the different courses to be undertaken during the programme. The three-year project will run in three phases in each institution. At YABATECH, the first phase which takes off between April/May 2020 will undertake such courses as electronics servicing, engineering machine shops and electrical power installation. The second phase which starts in April/May 2021 will deal with such courses as physwww.businessday.ng

country,especiallytheNorthern region, experts have said. Insecurity issues resulting from the herdsmen attacks and the Boko Haram insurgency have also been threatening food security in the country. The NBS latest report for conflict and food insecurity in Nigeria for the year ended 2017 revealed that 79 percent of households in the Northeast region of the country had food insecurity. This rubbed off on the South given that the North and Middle-belt are the major food-producing areas. Since 2013, the Movement Against Fulani Occupation (MAFO) and the Benue State government have carefully documented over 60 attacks against farmers and residents of the state by Fulani pastoralists with over 1,800 people killed, thousands more injured and over 108,500 displaced from their homes with more than 175,000 registered in eight internally displaced people’s camps in the state. More recently in Lagos, a state-wide restriction of motorcycles and tricycles (okada

and keke) from the highways appeared to have been partly informed by the influx of supposed Northerners into Lagos in search of greener pastures. What can be done? The success of the South in reducing poverty cannot be divorced from its investment in education and health of people in the region. In Nigeria where education is basic, free and compulsory for children up to 15 years, no less than 10.5 million aged 5-14 years are out of school, according to the latest data from the United Nations Children’s Fund (UNICEF). The majority of children who are unable to access safe and quality education are situated in the North where across the region net attendance rate is at 53 percent. Bauchi,Niger,Katsina,Kano, Sokoto,Zamfara,Kebbi,Gombe, Adamawa, Taraba and the Federal Capital Territory, Abuja, are the worst 10 states with about 8 million children not in school and, an average enrolment rate of only 57 percent.

ics/electronics, laboratory technology and digital electronics, while the third phase, in January/February 2022, will cater for automotive engineering, printing and welding. At KADPOLY, the project will take off between August and September 2020 with such coursesasengineeringmachine shops, wood machinery and electrical power installation. However, in its second phase, machine shops, civil engineering laboratories and electrical servicing will be pursued between January and February 2021. Laboratory technology, civil engineering and building technology as well as agricultural engineering will be undertaken between September and October 2022. At IMT, the first phase in November/December 2020 will cover engineering machine shops, electronic servicing and mechanical engineering workshops, while the second phase will cater for electrical power

installation, control engineering and aviation. It will take off June/July 2021. The third phase which starts in November/December 2022, will have such courses as laboratory technology, chemical plant engineering and microprocessor engineering. Also non-existent in the polytechnics are base maps, which are generally typographical maps to provide information on the artificial and natural features of the environment, which are very necessary tools for effective planning. They also provide basic details for compilation of materials for evolving land information or geographical information systems. It was gathered that they were either not available or obsolete. According to a ministry source, up to date base maps are essential tools for monitoring environmental disaster, planning and location of social amenities.

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these companies have already keyed into the backward integration campaign of the bank. Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said, “You may not know the information the CBN has. I know the CBN is particular about backward integration and supports efforts to promote it. Unless you have more information on the criteria for selecting the companies, you may not comment so well.” He said the companies listed have the capacity to fill the huge milk supply gap in the country, stressing that the move could boost their production capacities. Nigeria produces 700,000 metric tons (MT) of dairy products annually but demand stands at 1.3 million MT, according to the Federal Ministry of Agriculture. Africa’s most populous country spends $1.2 billion to $1.5 billion on milk importation annually, according to available data. With the CBN’s new rules, companies such as Chellerams plc, Kneipe, Sosaco Nigeria, Jago, PZ Cussons and L&Z, among others, are not covered under this new waiver. Analysts say these firms excluded from the CBN list may be forced to buy raw milk from the six firms with eligibility to access FX from the market. Yinka Ademuwagun, consumer goods analyst, United Capital, said the new restriction by the CBN would create new opportunities for local farmers in the market by opening new businesses around the dairy value chain. On the other hand, he said, the new policy would be cost-negative for companies who are yet to start the implementation of a backward integration programme as they are left with no choice than to source FX from a more expensive parallel market. According to Ademuwagun, the new policy should not be shocking to companies as the apex bank gave them close to six months to prepare for the implementation. The dominant milk producing system in Nigeria is the Fulani Nomadic System whose cows have a milk yield of 1 litre a day on the average. Other countries have done much better. The average milk yield per day from exotic/ crossbred cows in India, United States, the Netherlands, Turkey, China and India is between 30 litres and 90 litres per cow per day, especially during peak lactation, statistics show. Nigerian cows have very low yield because of poor genetic composition, poor feeding practices and the laborious nomadic system of breeding which need to be @Businessdayng

addressed, the LCCI said. At the moment, only FrieslandCampina WAMCO has a visible backward integration project in communities in Oyo State. The company provides loans to dairy farmers who produce milk and sell to the Dutch company. The apex bank had July last year directed Deposit Money Banks (DMBs) in the country to stop the processing of milk and its related products on ‘Bills for Collection basis’, which allowed the importer to buy on credit. It also streamlined the mode of payment for the importation of milk and its related products to be on the basis of Letters of Credit (LC) only. “Investing in backward integration requires huge capital commitments, human expertise coupled with the right breed of animals to thrive,” an investment analyst told BusinessDay. One of the negatively affected firms told BusinessDay that it was an unfair treatment to small players. “Many of us cannot afford the backward integration project and we may not be able to get funding from the CBN or other sources for that. So, it is a question of big vs small,” the player, who is based in the northern part of Nigeria, said. Arla Foods, the world’s largest producer of organic dairy products, in September last year signed a Memorandum of Understanding (MoU) with Kaduna State government to source milk locally. Kaduna State and the Federal Government will offer 1,000 nomadic dairy farmers’ permanent farmlands with access to water, while Arla Foods will be the commercial partner that will purchase, collect, process and bring the local milk to market. According to the CBN governor, FrieslandCampina WAMCO, Neon Agro, Chi Limited and Irish Dairy have shown interest in investing in the Bobi Grazing Reserve in Mariga Local Government Area of Niger State. Close to 700 families and 300,000 cows are already domiciled in the 31,000-hectare landmass for the kick-off of the project. Two of the companies, FrieslandCampina WAMCO and Neon Agroare, acquired 10,000 hectares (ha) each; Chi Limited and Irish Dairy are taking up 4,000 ha, bringing the total to 28,000 ha. The remaining 3,000 ha will be used by the state government. Integrated Dairies Limited, an indigenous dairy company based in Jos, Plateau State, has engaged the Plateau State government and key stakeholders on the development of Wase Grazing Reserve, while Nestle plc has indicated interest in developing its dairy project in Abaji, FCT.

Wednesday 12 February 2020

BUSINESS DAY

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Wednesday 12 February 2020

BUSINESS DAY

NEWS

We are yet to receive Amotekun bill – Lagos Assembly INIOBONG IWOK

… House to give bill accelerated debate

he Lagos State House of Assembly has said it was yet to receive the copies of a bill to establish the Southwest Security Network that would legalise the planned regional security corps, also known as Amotekun, in the state. Report had said all the states Assemblies in the region had received copies of the bill and would start deliberation on it earnest. The Ogun State governor, Dapo Abiodun, was said to have taken the lead by forwarding the bill to the state’s House of Assembly for passage. However, in a telephone interview with BusinessDay, Tuesday, the spokesman of the Lagos State House of Assembly, Tunde Buraimoh, said the House was still

awaiting the bill from the Executive, while promising that it was ready to give it the necessary attention toward its speedy passage. Buraimoh said there was the possibility that the House would harmonise the bill so that the regional security outfit would be fashioned to work with the Lagos State Neighbourhood watch optimum delivery. According to Buraimoh, “Well, there have been reports, but I am not aware of the bill in Lagos Assembly, but we would give it extra attention when it comes. The bill may be with the Executive, but it has not been transmitted to the House, we are still awaiting the bill. “Since we have the Lagos State Neighbourhood Watch, we expect that the bill would be harmonised so that in-

put can be made and we see how it can work in line with Amotekun.” Speaking further, the lawmaker representing Kosofe Constituency 11, said the House was ready to work with bills to deliver on the expectation and anxiety of people towards the bill, stressing that it however must be within the ambit of the law. “We need to be patient so that there would be uniformity in the bill among the states House of Assembly in the region. But we must faction out ways so that all contentious areas would be remove. “The law cannot just be turn out like that there would be consultation, so that the laws can be similar it achieve what it was met for and within the ambit of the law. “The bill enjoys goodwill and support among our peo-

ple and we are happy about that. We would be ready to work on it as soon as possible, but what needed to be done must be done. It is healthy development that the people are yearning for it and we have the political bill to get it done,” he added. Recall that the Governors of the region reached an agreement with the Federal Government to set up the security network with a law after the controversy which greeted it establishment. Similarly, other regions have since mooted the idea of floating their own regional security network as the security situation in the country degenerate. It is however, expected that the Amotekun bill would be passed soonest by the respective states assemblies and signed into law.

Nigeria among countries with lowest VAT rate in Africa - Osinbajo

mo State government has reiterated that there is no controversy over the adoption of Treasury Single Account (TSA). Governor of Imo State, Hope Uzodinma, had on assumption of office warned that all funds meant for the state must be domiciled in TSA. Governor Uzodinma’s directive to that effect is being complied with fully by all heads of Ministries, Departments and Agencies of government in the state, according to a statement signed by Oguwike Nwachuku, chief press secretary/media adviser to the governor. “This explanation has become necessary following insinuation in some quarters as orchestrated by a

Total commits about $40m to intervene in Nigeria’s North East region

few ragtag local publications and social media loafers, that the state Government has abandoned the TSA. “Governor Uzodinma’s administration is not only committed to due process and accountable governance, but determined to use all the resources meant for Imo people to work for them. “He frowns on mismanagement of scarce state resources by the past administrations and is putting in place mechanisms to achieve commendable accountability in office. “Governor Uzodinma will not be party to any attitude that promotes financial malfeasance in Imo under his watch,” according to the statement signed by the CPS on February 11 and made available to BusinessDay.

IHEANYI NWACHUKWU

HARRISON EDEH, Abuja

SOLOMON ATTAH, Lafia

mid the growing concerns and anxieties among business owners over the Financial Act signed by President Muhammadu Buhari and the increase in the Value Added Tax (VAT), the Federal Government has again given further insight into the new financial system, saying it is not meant to create extra burden for Micro, Small and Medium Enterprises (MSMEs) in Nigeria. Vice President Yemi Osinbajo gave the clarification at the National Micro, Small and Medium Enterprises Clinics for Viable Enterprises in Lafia, the Nasarawa State capital. Nigeria is currently among nations’ with lowest VAT rate of 7.5 percent in the entire African continent, he said. According to Osinbajo, “Despite the increase in VAT, there is so many inbuilt advantages for small businesses to thrive. The small businesses can take advantage of the Financial Act to make their businesses even grow better.” Osinbajo said the gradual reduction in interest rate through the Central Bank of Nigeria (CBN) was one of the Federal Government fresh initiatives in creating a more favourable environment for small businesses to thrive. He explained the modifications on restriction to access to Treasury Bill and the Open Market Operation of the CBN had brought six income yield down to between 5 percent and 6 percent. “This will help greatly in reducing interest rate for commercial loan in the country. We expect to see

Imo says no controversy over Treasury Single Account

anaging director, Total E&P, Mike Sangster, said about $40 million was spent annually on corporate social responsibility (CSR), stating further that majority of such projects were in the Nigerian North East region. Sangster, who stated this in Abuja at the ongoing 2020 edition of the Nigeria International Petroleum Summit (NIPS), said various projects were also com-

missioned in November 2019 in all parts of Nigeria, especially in the North East to alleviate some of the deprivations caused by insurgency in the region. He said with the cooperation of Nigeria National Petroleum Corporation (NNPC) and other partners, the company had contributed in no small measures, especially in the area of youth empowerment, health care delivery, education, sports, and infrastructure development in communities across the length and breadth of Nigeria.

Investment opportunities seen in real estate, bonds, shares in 2020 HOPE MOSES-ASHIKE

Bala Mohammed, governor of Bauchi State (r), with Olamilekan Adegbite, minister of mines and steel development, at the governor’s visit to the ministry. NAN

interest rate for commercial loan will go down gradually and very soon it might able to get to single digit interest rate for commercial loan,” Osinbajo maintained He added, “the new incentive under the Financial Act exempt small companies with the turnover of N2.5 million a year. Any company that has a turnover less than N25 million in a year is now exempted from paying income tax. “So, all the small companies do not have to pay cooperation tax because their turnover is less than N25 million. “Companies that have a turnover of between 25 million and 100 million a year will now pay income tax at a lower rate of 20%, which is

almost 10% off what the rate use to be.” The vice president said, “Many people have said this is a higher tax rate for consumers and has complications on those who are trading as well. “You must remember that this is the lowest VAT rate in the whole of Africa. “Why, it is true is that Ghana has reduced its VAT rate from 15 to 12.5%. Ours is 7.5%,” he said. He went further to mention that small and medium companies with a turnover of less than N25 million do not have to register for VAT. “So that way, the government is not creating any extra burden for the small and medium companies. “In addition to reduce the impact of VAT on consumers,

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several basic items such as food, drugs and educational items. So there is no payment of VAT on food, drugs and educational items.” The vice president continued that there was another upside increase in the VAT as additional revenues would now go to the states to be able to pay the new minimum wage. He said: “There is another upside increase in the VAT. This is additional revenues will now go to the states from VAT. “The states can now be able to earn additional revenues so that they can do additional things, at least to begin to pay the new minimum wage. This way, it will improve consumers spending as well.

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n view of the continuous slump in Treasury Bill (T-Bill) yields occasioned by the stoppage of individuals and non-bank corporates from the Central Bank of Nigeria’s (CBN) Open Market Operations (OMO) auctions, a real estate advisory firm, Northcourt has called on investors to invest in real estate, shares and long-term bonds to reduce risk and realise higher returns. Northcourt is a real estate investment solutions company that adopts a research-based approach to developing and managing property as well as providing real estate advisory services in West Africa. Speaking at the capacity building forum of the Finance Correspondents Association of Nigeria (FICAN), on the topic “investment opportunities in 2020,” the Chief Operating Officer/ Director of Advisory, Nourtcourt Ayo Ibaro said though @Businessdayng

there is always a risk of losing money whenever one invests, there is also the need to invest wisely. Stressing that the recurrent expenses in the retail sector is still huge, Ibaro revealed for instance that most big malls spend about N30 million in diesels per month. According to him, the real estate sector provides a better option for investors that are looking for long-term windows to invest in, because real estate has greater chance of appreciation. He added that land for instance was not static, which explains why it kept appreciating even during recession. “If you have appetite for just short-term investment, then invest in shares, bonds and explore currencies because,” Ibaro advised. He wants retail investors who have been having sleepless nights over low T-Bill yields to be careful in 2020 because the CBN and other multilateral organisations might still take certain decisions that could change every market expectations.

Wednesday 12 February 2020

BUSINESS DAY

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Wednesday 12 February 2020

BUSINESS DAY

Live @ The STOCK Exchanges

Prices for Securities Traded as of Tuesday 11 February 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 341,234.17 9.60 -0.52 173 24,978,756 263,335.54 7.70 -0.65 316 49,472,856 UNITED BANK FOR AFRICA PLC ZENITH BANK PLC 627,929.88 20.00 0.76 429 30,240,597 918 104,692,209 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 211,782.23 5.90 0.85 258 6,313,288 258 6,313,288 1,176 111,005,497 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,442,541.57 120.00 4.35 86 4,487,874 86 4,487,874 86 4,487,874 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 67 173,640 LAFARGE AFRICA PLC. 249,670.83 15.50 2.99 61 1,766,408 128 1,940,048 128 1,940,048 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 4 15,378 4 15,378 4 15,378 1,394 117,448,797 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,338.94 3.50 2.94 10 1,029,909 10 1,029,909 10 1,029,909 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 10 1,029,909 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 5,015 64,865.88 68.00 - 13 16,865 OKOMU OIL PALM PLC. PRESCO PLC 49,850.00 49.85 - 4 1,000 19 22,880 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,830.00 0.61 - 20 358,177 20 358,177 39 381,057 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 3 10,411 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 39,428.55 0.97 -2.02 63 14,436,900 U A C N PLC. 26,796.06 9.30 9.41 90 3,035,114 156 17,482,425 156 17,482,425 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,700.00 22.50 - 18 45,330 ROADS NIG PLC. 165.00 6.60 - 0 0 18 45,330 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,338.56 0.90 - 6 68,700 6 68,700 24 114,030 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,594.61 0.97 - 4 8,789 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 - 21 12,667 INTERNATIONAL BREWERIES PLC. 208,181.03 7.75 -8.82 28 2,210,234 NIGERIAN BREW. PLC. 411,840.46 51.50 - 40 131,344 93 2,363,034 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 153,600.00 12.80 -4.48 82 393,261 FLOUR MILLS NIG. PLC. 93,488.65 22.80 - 44 470,743 HONEYWELL FLOUR MILL PLC 8,643.92 1.09 - 7 8,844 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 17 110,055 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 150 982,903 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,655.10 9.40 4.44 25 832,607 NESTLE NIGERIA PLC. 984,479.06 1,242.00 - 148 209,871 173 1,042,478 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,291.75 5.03 - 49 698,883 49 698,883 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 19,852.39 5.00 - 26 85,400 UNILEVER NIGERIA PLC. 86,175.08 15.00 - 33 132,981 59 218,381 524 5,305,679 BANKING ECOBANK TRANSNATIONAL INCORPORATED 127,529.38 6.95 -2.11 33 27,741,978 FIDELITY BANK PLC 62,295.81 2.15 0.94 45 6,480,750 GUARANTY TRUST BANK PLC. 853,504.20 29.00 -1.02 356 41,430,482 JAIZ BANK PLC 19,446.40 0.66 -1.49 25 1,495,755 STERLING BANK PLC. 48,080.00 1.67 -1.18 47 1,550,485 UNION BANK NIG.PLC. 202,389.23 6.95 - 90 2,684,975 UNITY BANK PLC 6,662.92 0.57 - 3 183,696 WEMA BANK PLC. 26,616.38 0.69 - 18 690,744 617 82,258,865 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 2 AIICO INSURANCE PLC. 5,890.67 0.85 3.66 27 1,224,864 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 1 100 CONSOLIDATED HALLMARK INSURANCE PLC 2,845.50 0.35 -2.78 14 2,022,000 CORNERSTONE INSURANCE PLC 7,953.93 0.54 - 3 35,542 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,757.62 0.24 -7.69 18 751,039 LAW UNION AND ROCK INS. PLC. 5,155.60 1.20 - 33 532,444 LINKAGE ASSURANCE PLC 4,080.00 0.51 -8.93 65 6,246,211 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 1 500,000 NEM INSURANCE PLC 11,617.11 2.20 1.85 12 293,852 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 3,175.71 0.59 - 3 5,144 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 -9.09 4 570,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 100 WAPIC INSURANCE PLC 4,683.96 0.35 - 19 156,777 202 12,338,075 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,812.56 1.23 - 6 49,299 6 49,299

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,200.00 4.60 - 36 144,690 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 5 4,079 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 1 100 FCMB GROUP PLC. 37,625.15 1.90 1.06 36 763,519 ROYAL EXCHANGE PLC. 1,286.34 0.25 - 1 2,412 STANBIC IBTC HOLDINGS PLC 399,188.76 38.00 - 13 144,095 UNITED CAPITAL PLC 15,660.00 2.61 - 60 1,029,313 152 2,088,208 977 96,734,447 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 1 50 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 1 50,000 2 50,050 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 2 1,418 2 1,418 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,320.22 2.55 - 9 121,338 GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,979.38 5.00 - 36 282,827 MAY & BAKER NIGERIA PLC. 3,484.97 2.02 - 13 122,041 949.58 0.50 - 4 23,795 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 62 550,001 66 601,469 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 - 4 590,000 4 590,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 321.84 2.98 - 0 0 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 1,549.70 0.33 - 3 110,424 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 1 200 4 110,624 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 0 0 0 0 8 700,624 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 2 3,646 BUA CEMENT PLC 1,195,411.70 35.30 -1.94 20 255,988 CAP PLC 17,220.00 24.60 - 24 84,530 MEYER PLC. 244.37 0.46 - 1 48,828 1,769.32 2.23 - 1 2,000 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 48 394,992 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,377.78 1.35 - 7 47,000 7 47,000 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 0 0 0 0 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 55 441,992 CHEMICALS B.O.C. GASES PLC. 1,873.10 4.50 - 1 2,903 1 2,903 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 1 2,903 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,628.30 0.26 8.33 75 29,618,984 75 29,618,984 INTEGRATED OIL AND GAS SERVICES OANDO PLC 43,509.94 3.50 1.45 67 1,369,713 67 1,369,713 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 48,031.29 133.20 - 17 7,984 CONOIL PLC 12,491.14 18.00 - 18 30,582 ETERNA PLC. 2,738.70 2.10 - 19 123,121 FORTE OIL PLC. 24,161.02 18.55 - 56 63,600 MRS OIL NIGERIA PLC. 4,206.05 13.80 -9.80 4 102,432 TOTAL NIGERIA PLC. 36,328.84 107.00 - 18 11,281 132 339,000 274 31,327,697 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 1 100 1 100 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 1 50 1 50 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 5 24,500 417.27 0.89 - 4 103,800 TRANS-NATIONWIDE EXPRESS PLC. 9 128,300 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,328.25 1.12 - 9 74,190 7,076.28 3.15 - 0 0 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 30,781.64 4.05 - 1 479 10 74,669 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 2 800 LEARN AFRICA PLC 871.74 1.13 - 5 103,251 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 1 2,000 517.69 1.20 - 1 15,000 UNIVERSITY PRESS PLC. 9 121,051 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 563.62 0.34 - 1 100 1 100 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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Wednesday 12 February 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Brexit: Barnier rebuffs UK pitch for ‘permanent equivalence’ in financial services

EU’s chief Brexit negotiator says Brussels will not budge on question of City access MEHREEN KHAN AND SAM FLEMING

he EU’s chief Brexit negotiator warned the UK it would not be granted a permanent deal allowing City of London access to European markets, in words that will intensify concerns among financial services companies about the settlement they will receive. Michel Barnier told MEPs in Strasbourg that people in the UK should “not kid themselves” about the offer they will get on financial services. There will be no openended provision for financial services “equivalence” as a result of the upcoming talks over the two sides’ future relationship, he said. His words came after it emerged the UK would be seeking a “permanent equivalence” regime for financial services that would last for “decades to come”. The UK’s opening position in the financial negotiations was revealed yesterday in a photograph taken by a long-lens camera of an unreleased briefing paper carried into Downing Street on Monday. The document said Sajid Javid, the chancellor, would seek a full chapter on financial services in any free trade agreement, with “comprehensive, permanent equivalence decisions”. The negotiating stance is a response to escalating concerns among UK financial services executives that the EU could easily revoke equivalence agreements after Brexit, destabilising their businesses and leaving them scrambling to continue to offer services to European clients. We will keep control of these

Michel Barnier: ‘There will not be general open-ended or ongoing equivalence negotiations on financial services’ © Patrick Seeger/EPA

tools and will retain a free hand to take these decisions Michel Barnier But the EU has insisted it would stick to the normal rules that govern its equivalence decisions, which allow the determinations to be revoked at short notice — in some instances as little as 30 days. “There will not be general openended or ongoing equivalence negotiations on financial services,” Mr Barnier said, in an apparent response to reports about the UK’s position. “We will keep control of these tools and will retain a free hand to take these decisions.” He added that Brussels was worried by statements from “some UK politicians” who were promising to break free of EU rules after Brexit. The EU has repeatedly insisted that

the further Britain diverges from its regime, the more distant the ultimate relationship between the two sides would be. In an opinion article for City AM, a London-based financial newspaper, Mr Javid warned that some parts of the City would diverge from existing Brussels rules in a move that could lead to accusations of Britain trying to “cherry pick”. He said in the same article: “Findings of equivalence now and measures to sustain trust and cooperation . . . offer the best solution to the question of agreeing our relationship with the EU this year”. He added: “This is important not only in the short term, but to establish the norms and ways of working with the EU that will endure for the decades to come.”

Equivalence would, if granted, provide access for a specific range of sectors — central clearing houses, investment firms and trading venues. But, Mr Barnier said, the decision on whether to grant equivalence would rest with Brussels. “We are not negotiating on these topics,” he said. “Rather we are checking if there is consistency and where possible we will grant equivalence in some sectors of the financial services industry.” Past experience has shown the EU is more than ready to withdraw equivalence assessments to get what it wants in discussions with trade partners. Last year, for example, Brussels cut off EU investor access to the Swiss stock market after progress in talks between Bern and Brussels

over a broader framework agreement foundered. In December Valdis Dombrovskis, the EU’s financial services chief, told the FT that Brussels would be vigilant in checking that UK rules for ensuring financial stability and protecting consumers stayed aligned to EU standards and would act decisively in the event of any lapses. The latest draft of the EUs negotiating mandate, seen by the FT, reiterated that the “key instrument” the two sides would use to regulate interactions between their financial systems would be unilateral equivalence frameworks. It added that co-operation between the parties “should recognise the importance of transparency and appropriate consultation between the parties in relation to equivalence decisions”. Meanwhile, European Commission president Ursula von der Leyen said she was “surprised” that UK Prime Minister Boris Johnson had highlighted an Australian-style relationship with Brussels as a potential post-Brexit model. She told MEPs that Australia does not have a trade deal with the EU and said the UK-EU relationship should be “way more ambitious”. “Honestly, I was a little bit surprised to hear the prime minister of the United Kingdom speak about the Australian model. Australia, without any doubt, is a strong and a like-minded partner, but the European Union does not have a trade agreement with Australia. “We are currently trading on WTO terms and if this is the British choice, well, we are fine with that, without any question.”

Five lessons from a medical scandal

A rogue surgeon went unchallenged in a workplace culture that did not question his expertise

MICHAEL SKAPINKER

n 1997, a retired general practitioner went to see Ian Paterson, a surgeon, about a lump in her breast. Over the next four years, Paterson performed several surgical procedures on her, including a mastectomy. It subsequently emerged that there had been nothing wrong with her. The GP was one of 10 patients, nine women and a man, who, a jury found, had undergone unnecessary breast surgery at Paterson’s hands. In 2017, he was sentenced to 15 years’ imprisonment, later increased to 20 years, for wounding with intent and unlawful wounding. Last week, an official report said it had received evidence from more than 100 patients and their relatives of unnecessary or inappropriate surgery by Paterson. But the report said that this was “not simply a story

about a rogue surgeon”. Paterson, who worked both in the UK National Health Service and at private hospitals, was able to continue with his malpractice because of organisational cultures of “wilful blindness”. The 232-page report, and its findings of problems ignored or dismissed, could have described many organisations that have nothing to do with surgery. There are lessons in the Paterson case for managers everywhere. The first is that people are reluctant to disbelieve the highly trained. They trust not just doctors’ expertise, but that of architects, engineers, pilots, accountants and lawyers. These specialists have undergone years of training. Questioning them would require more knowledge than most of us have. If we didn’t believe what the experts told us, where would we go? For a second opinion? Many of Paterson’s medical colleagues trusted him too. www.businessday.ng

The GP who was his patient was not the only one who believed in him. Many family doctors in the Birmingham area where Paterson practised thought he was the best. One patient who underwent what she later found out was unnecessary surgery said her GP had described Paterson as “the top cancer specialist in the country”. Perhaps it helped that Paterson was generous to GPs, providing them with hospitality such as tickets to rugby matches. But this was part of the second lesson, which is that a confident, crowd-pleasing manner goes a long way. One patient described Paterson as “a lovely man, I could not fault him”. Another said: “He made you feel calm, as if nothing was a problem”. But pay attention if those charming types turn nasty when challenged. In multidisciplinary team meetings, Paterson would dominate discussions and turn into a “bully” when his patients were discussed.

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The third lesson is that when problems start to appear, it is tempting to avoid seeing them rather than taking action. As questions about Paterson’s surgery built up, his supervisors failed to connect them. “Managers . . . do not always interrogate data well, but instead seem to look for patterns which reassure rather than disturb,” the report said. This is particularly true when the possibly problematic person seems important to the business. When two GPs did raise concerns with a private hospital where Paterson worked, they were told he couldn’t be suspended as he brought in too much revenue. The fourth lesson is that those who speak up are likely to suffer. Some of Paterson’s colleagues were worried about his practices. When six doctors raised concerns with the chief executive of the NHS trust where Paterson worked, four were themselves investigated by the Gen@Businessdayng

eral Medical Council because they had worked with him. The inquiry team that produced last week’s report said some medical professionals who had raised concerns were reluctant to talk to them. “They did not want to draw attention to themselves again,” the report said. Many preferred not to be involved at all. “This theme of people thinking it is someone else’s responsibility to take action surfaced repeatedly,” the report said. This is the fifth lesson. The responsibility for connecting the dots and taking action rests with those at the top. When problems emerge, they need to ask questions. One of the most striking elements of the Paterson case, the report said, was the lack of curiosity by those in charge. The result of that lapse was not just the damage to their hospitals’ reputations, but the mutilation and trauma of those who had trusted them.

Wednesday 12 February 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED TOMMY STUBBINGTON

he UK chancellor last year made it clear he was pushing ahead with a reform that could wipe £100bn off the value of a slice of Britain’s bond market. Five months later, investors still seem strangely reluctant to sell. Holders of specialised inflation-linked bonds are not typically thrill-seekers. Instead, the pension funds that buy the debt, whose repayments are linked to the rate of inflation, do it to satisfy a need to dish out funds to pensioners far into the future. But one month before chancellor Sajid Javid launches a consultation on the deadline for scrapping the inflation measure these investors rely on, hopes for some kind of compensation or reprieve are helping to keep the market afloat. “It seems a very large redistribution is being made without a proper discussion about whether it’s fair,” said Robert Gall, head of market strategy at Insight Investment, one of the largest players in the index-linked gilt market. “Investors are seeking to get that topic on to the consultation.” In September, Mr Javid agreed to shake up the retail prices index, a measure that consistently overstates the rate of inflation, pledging to bring it in line with a measure of consumer prices that includes housing costs (CPIH). The reform will save the taxpayer £2bn a year in puffed-up interest payments on inflationlinked bonds, known as linkers. It will also tame rising prices for rail tickets, student loan repayments and mobile phone contracts that also refer back to the RPI rate. But bondholders and pensioners with RPI-linked benefits will lose out. Linkers dropped sharply after Mr Javid’s announcement, with some longer-dated bonds losing 10 per cent in price within minutes. But since then, they have

Inflation-linked bonds hold steady despite impending £100bn RPI hit Holders of ‘linkers’ hope for leniency in reform of UK inflation measure

held steady, as some investors say they plan to fight the substance of a shift they argue would cut payouts to pensioners and could even undermine the UK’s good name as a borrower. The chancellor’s decision appears to be final, albeit with a delay — a consultation to be launched alongside the budget on March 11 will ask only whether the change should kick in from 2025 or 2030. The details of RPI reform are dry, but the stakes are high. More than a quarter of the UK’s public debt is inflation-linked, more than double the proportion in any other large advanced economy. The bulk is held by pension funds that use them to hedge against

their liabilities. A “big three” of Insight Investment, Legal & General Investment Management and BlackRock handles 87 per cent of this hedging business, according to pension consultancy XPS. According to research by Insight Investment, fully pricing in the RPI reform after 2030 would reduce the value of outstanding linkers by £90bn. If the change takes hold from 2025, the hit would be £120bn. It is difficult to say exactly how much of that has already been priced in to the market, but most analysts estimate it to be under £45bn. Investors argue that the value of RPI-linked interest and repayments on linkers was baked into

the price when they bought them, and that they should be honoured, possibly through compensation. That is particularly true of new bonds issued since 2013, when a previous attempt to reform RPI resulted in no change and a promise not to make one in the future. “Anyone who was buying index-linked gilts in the recent past was told when they bought them that they would be linked to RPI,” said Ben Lord, who manages an inflation-linked bond fund at M&G Investments. “For that cohort of people, I do feel a change is going to be hard to swallow.” The government has not indicated that it will consider any compensation. Others say buyers should have

looked at the small print. All the outstanding inflation-linked bonds maturing beyond 2030 have a clause saying the index that underpins them can be altered if the government finds it to be “just and equitable”. It is hard to imagine pension funds, with their insatiable appetite for long-dated inflation protection, will simply stop buying. “There should always be a bit of caveat emptor in this world,” said Barclays strategist Moyeen Islam. “I think there’s a bit of pearlclutching going on here. Will it ruin the UK’s good name? I very, very much doubt it.” In the run-up to September’s RPI move, the government was already cutting the portion of its debt that is inflation linked. The UK’s Debt Management Office has continued to issue fewer linkers than normal since then and hardly any long-dated ones — a factor that has further supported bond prices. The hiatus might be extended: DMO boss Robert Stheeman said last month he would have to be “circumspect” about index-linked issuance while the consultation over RPI plays out. Still, the bondholders that will bear the cost of this shift are pushing for a sensitive solution. Mr Lord worries about the longer-term reputation of the UK as a bond issuer if recent buyers of index-linked gilts get burnt: “Everyone involved needs to be very mindful of how these people are treated. They were buying a gilt-edged security and we need to treat them properly.”

Daimler suffers worst results in decade as profits dive German carmaker’s earnings plunge 60% in 2019 amid ‘Dieselgate’ woes JOE MILLER

aimler suffered its worst annual performance in a decade last year as it was forced to set aside billions of euros in “Dieselgate” litigation costs, compounding its struggle to fund a late move into electric vehicles. The German carmaker on Tuesday reported a more than 60 per cent fall in earnings in 2019 as net profits at the Mercedes-Benz parent dropped to €2.7bn last year from €7.6bn in 2018, despite sales remaining at roughly the same level. The lacklustre results prompted the company to propose slashing its annual dividend to just 90 cents per share, down from €3.25 in 2019. In a year that was already challenging for auto manufacturers, because of a slowdown in the global car market, Daimler booked €5.4bn in legal liabilities, including more than €4bn in relation to the alleged manipulation of diesel emissions tests. Daimler continues to deny any wrongdoing.

“We are going to restore the financial health of this company,” vowed chief executive Ola Kallenius, who has overseen four profit warnings since taking over last May. “I will work 24/7 with this management team to make that happen so that the numbers that we’re presenting today hopefully represent somewhat of a turning point,” he added. The Stuttgart-based carmaker, which employs almost 174,000

workers in Germany, announced last year that it would axe a tenth of managers worldwide, and more than 10,000 jobs in total by the end of 2022, saving more than €1.4bn. Mr Kallenius refused to deny reports that a further 5,000 roles could be cut. On Tuesday, the Stuttgart-based automaker said it would offer roughly 130,000 German employees almost €1,100 each as a “onetime appreciation bonus”.

Investors, however, were left with “little room for optimism”, said Michael Muders, a portfolio manager at German institutional investor Union. “It will be years before Daimler achieves the level of returns that shareholders can expect from a premium car manufacturer,” he added, while warning that there was “no reason to hope that [the Dieselgate] payments will settle the matter”. As well as dealing with legacy litigation issues, and high personnel costs, Daimler is being forced to spend heavily on ramping up its production of electric vehicles and plug-in hybrids, in order to avoid fines from Brussels for breaching new emissions regulations. The European standards, which were phased in from January 1, mandate a fleet-wide CO2 level of 95g per kilometre in the next couple of years. Daimler’s average is currently at about 137g, and batterypowered vehicles still account for just 2 per cent of its annual sales. Meanwhile, profit margins at

Mercedes-Benz cars, Daimler’s core division, have more than halved, to just 3.6 per cent, despite a 17 per cent increase in sales in China, the company’s single biggest market. Mercedes’ Vans unit made a €3bn pre-tax loss, described as “horrendous” by Mr Kallenius. Daimler’s share price, which had fallen more than 14 per cent in the past 12 months, rose 2.5 per cent to €44.22 in early trading, as the car sector’s exposure to the effects of the coronavirus outbreak began to subside. The company’s market valuation has been buoyed in part by persistent interest from Chinese competitors. BAIC, which owns about 5 per cent of Daimler, is thought to be engaged in a bidding war with the German brand’s largest single shareholder, Geely, which holds a near-10 per cent stake. On Monday, Geely announced that it intended to merge with Volvo Cars, creating the first global Chinese carmaker.

Wednesday 12 February 2020

BUSINESS DAY

ANALYSIS

£106bn HS2 rail project given green light by UK Europe’s biggest infrastructure scheme backed despite cost and environmental concerns JIM PICKARD AND GILL PLIMMER

oris Johnson has given the green light to the High Speed 2 rail scheme — the biggest infrastructure project in Europe — despite environmental concerns and worries about the spiralling costs. The prime minister told the House of Commons on Tuesday that it was the ambition of the government to create a “fantastic transport infrastructure” to unite and level up the country. The cabinet had backed the project at a meeting earlier in the morning, he said. “We have to fix the spine . . . and our generation faces a historic choice. We can try to get by with the existing routes from north to south, we can consign the next generation to overcrowding, standing up in the carriageways, or we can take the guts to take a decision,” he said. “No matter how difficult or controversial, which will deliver prosperity to every part of the country.” The new rail line would improve Britain’s transport capacity, lead to “extraordinarily fast” journey times and finally make rapid connections between regions, Mr Johnson added. The announcement ends the fog of uncertainty around the project, which has seen its price tag balloon from £56bn to £106bn since last summer. HS2 is seen by its supporters as a critical upgrade to Britain’s creaking transport network, slashing journey times from London to Birmingham and then on to Leeds and Manchester. The project is not set to be

completed until as late as 2040. He said there would be new “delivery arrangements” both for the London terminus at Euston and for the third stage of HS2, known as 2b, that will run to Leeds and Manchester, as reported by the Financial Times on Monday night. Mr Johnson said the review of the third stage would look at integrating it with the proposed £39bn Northern Powerhouse Rail project under a new delivery body called High Speed North. Mr Johnson said the decision on HS2 was part of a wider package of infrastructure investment, including £5bn for improved bus services over five years. “The transport revolution is local,” he

insisted. “But we cannot make these improvements in isolation from one another.” The prime minister said HS2 Ltd had not “distinguished itself” in its handling of local communities and “exploding” costs. He said there would be a new minister responsible for the project, a new ministerial oversight group, changes to the way the project was managed and further attempts to drive down costs without adding the further delays of a redesign. Adam Marshall, directorgeneral of the British Chambers of Commerce, welcomed the decision as “great news for businesses, investment and growth” in many parts of the country.

“It’s time to stop debating and start delivering the new capacity and connections that HS2 will bring to our communities and businesses,” he said. But Mr Marshall expressed concerns about the lingering uncertainty about the northern leg of the project. “The government’s decision to review parts of the route beyond Birmingham will unsettle business communities in the Midlands and the North,” he said. “The case for many of the transformative transport, regeneration and investment projects planned in the North and Midlands depends on the full project going ahead.” Richard Butler, West Midlands regional director of the CBI business group said the UK had a Victorian rail system that was “creaking at the seam”. “We need to do something about capacity and it’s almost impossible to upgrade the current network without closing it down indefinitely to achieve that,” he said. “High Speed 2 is the only way of bringing in that extra capacity we need.” The project has also been backed by many civic leaders in the Midlands and northern England, including Richard Leese, leader of Manchester City Council. “All of our commuter lines are full and there’s no room for freight on the existing network, so taking the long distance trains off the existing network and putting them on their own network means we will have

more and more reliable services between Manchester, Birmingham and London and across to Liverpool, Bradford and Leeds,” he said. Mr Johnson’s decision to push ahead defied criticism from his senior adviser Dominic Cummings and dozens of his own MPs who argued that the money could be better spent on many smaller projects that could be delivered more quickly. Richard Wellings, head of transport at think-tank the Institute of Economic Affairs, said he was “deeply disappointed” with the decision. “With the predicted costs ballooning to £106bn, the costs are now likely to exceed the benefits,” said Dr Wellings. “And the project is highly unlikely to transform the north in the ways that have been promised. Investment in alternative schemes — such as incremental improvements to existing infrastructure in northern towns and cities — would deliver far larger economic gains.” There are also concerns about the impact of the scheme on countryside along the length of the route, including 108 ancient woodlands, five wildlife refuges, 39 nature reserves and 33 protected sites. Greenpeace UK executive director John Sauven said the decision would give Mr Johnson the “dubious honour of being this century’s largest destroyer of irreplaceable ancient woodlands in the UK”.

Wednesday 12 February 2020

BUSINESS DAY

NATIONAL NEWS FT Joe Biden seeks a ‘miracle’ comeback in New Hampshire Declining poll numbers undercut his claim to be Trump’s most formidable Democratic foe DEMETRI SEVASTOPULO

oe Biden, the former US vice-president who is struggling out of the blocks in the Democratic presidential race, had just taken some friendly questions at a town hall in Hampton when a young woman warned she would be “a bit mean”. “How do you explain the performance in Iowa and why should voters believe that you can win the national election?” she asked. Mr Biden, 77, responded that it was a “good question”. He finished in fourth place in last week’s Iowa caucuses, and polls suggest he might do even worse in Tuesday’s New Hampshire primary — a result that would undermine his argument that he would be able to beat Donald Trump “like a drum” in November’s presidential election. After congratulating Pete Buttigieg and Bernie Sanders for leading the field in Iowa, Mr Biden asked his audience to reserve judgment about his prospects until the race moves to the more ethnically diverse states of Nevada and South Carolina. “You have to take the first four as one,” he said. “You’ve got two primaries and two caucuses back to back.” Buttigieg is a bit young really, but I think it’s more dangerous to have Biden who sometimes stumbles and misspeaks Barbara Wilson, a 68-year-old voter in New Hampshire Mr Biden’s plea for patience is based on polls showing him to be the preferred candidate of African-American voters, who will be crucial in South Carolina. However, a Quinnipiac poll released on Monday suggested that his African-American firewall may be crumbling. The poll showed Mr Biden’s support nationally among black Americans has fallen from 49 per cent before Iowa to 27 per cent, while Michael Bloomberg, the former New York mayor, had become the second most popular candidate among African-American Democrats — backed by 22 per cent, up from 7 per cent last

month. There have not been many polls in South Carolina, but Mr Biden leads with 31 per cent, while former hedge fund manager Tom Steyer in second at 18.5 per cent, according to an average compiled by RealClearPolitics. Charlie Cook, a veteran political analyst, said history showed that Mr Biden — seen as the frontrunner in the Democratic primary contest only weeks ago — may be running out of time. Candidates who fail to make the top three in Iowa and top two in New Hampshire have no path to the presidency, he said. “It’s pretty safe to assume that Biden’s numbers in Nevada and South Carolina would not hold up with poor showings in both Iowa and New Hampshire. Biden needs a miracle in New Hampshire, not later,” Mr Cook said. As recently as October, Mr Biden told Iowa’s KGAN television that the Midwestern state and New

Hampshire were critical: “I’ve got to win them both.” Speaking at the Rex, a theatre in Manchester that once featured adult movies, Mr Biden made it clear he was pinning his hopes on AfricanAmerican voters in other states. “The only Democrats to win the presidency is where we had overwhelming support from the AfricanAmerican community,” he said. “That was true for Jimmy Carter, Bill Clinton and Barack Obama.” At rallies across Iowa and New Hampshire, Biden fans said he was the most qualified to be president. “He has much more experience than the other candidates. He is also a people person. I can really feel the vibe when he relates to people,” said Gloria Todaro, 67, a black woman at the Hampton event. But while Mr Biden impresses some older voters with tales about meeting world leaders during his five decades in politics, he appears to be struggling to win over

younger Americans. Speaking at The Rex, John Lynch, the former Democratic governor of New Hampshire, said that he had met many young Biden supporters. But when asked why so few attended Biden events, he said: “I don’t know why they’re here, or not here. I don’t know.” In Hampton, Natalija Pasalic, 22, a student, said Mr Biden did not appeal to her generation. “He talks a lot about our parents and our future, but not from our standpoint. He just talks about his experience, which is great and dandy, but his experience 20 years ago isn’t what’s happening today,” she said. While younger voters are flocking to Mr Sanders, the 78-year-old self-declared socialist, Mr Biden as another problem — some older voters feel he is too old and are embracing younger alternatives to Mr Sanders. Barbara Wilson, a 68-year-old originally from Germany, said her

ideal ticket would be Amy Klobuchar, the US senator from Minnesota, and Mr Buttigieg because she wants to see a moderate president. “Buttigieg is a bit young really, but I think it’s more dangerous to have Biden who sometimes stumbles and misspeaks.” Speaking at a Buttigieg event in Lebanon, Mike Caldwell, a 49-year-old whose son Christopher was wearing a “Pete 2020” shirt, said he had been leaning toward Mr Biden but was reassessing his position after feeling the energy at the packed rally. “Obviously events like this kind of sway you a little bit. I do like that Pete’s young and his ‘turn the page’ theme resonates with me,” he said. His 77-year old mother-in-law, Linda Morgan, a life-long Biden fan from Pennsylvania, said she was also thinking again after the Buttigieg town hall: “He reminded me of Obama. He is calm and he is young.”

US judge clears T-Mobile’s $59bn Sprint takeover without conditions Ruling dismisses Democratic-led states’ argument that deal would have anti-competitive effect

for the companies in an 173page decision on Tuesday. The judge said he was unpersuaded by arguments that T-Mobile would act anticompetitively following the merger, or that Dish, to which the combined group will divest some assets, would fail to be an effective new entrant. He also pointed to Sprint’s struggles, saying he was unconvinced it would be a sus-

KADHIM SHUBBER

federal judge has approve d T- Mo b i l e’s $59bn acquisition of mobile rival Sprint without conditions, clearing a path for further consolidation in the US telecommunications market. Judge Victor Marrero, who oversaw a challenge to the deal by a group of Democratic-led states, ruled decisively www.businessday.ng

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tainable player in the market. “The overwhelming view within Sprint and in the wider industry is that Sprint is falling farther short of the targets it must hit to remain relevant as a significant competitor,” he wrote. News of Judge Marrero’s decision had leaked on Monday ahead of the release of the decision after the parties were informed of how he would rule.

Thebigread

BUSINESS DAY Wednesday 12 February 2020 www.businessday.ng

Stockpickers turn to big data to arrest decline Many fund managers are embracing machine learning and other technologies to improve their performance Robin Wigglesworth

n the last Sunday of April 2019, a sleek Gulfstream V jet belonging to Occidental Petroleum touched down at Omaha airport. The oil company had sent a delegation to Nebraska for a secret meeting with Warren Buffett, hoping to persuade Berkshire Hathaway’s chairman to come to their rescue in their battle for Anadarko. Unfortunately, the meeting did not stay secret for long. An “alternative data” company called Quandl that tracks the flight details of private jets had quickly alerted its clients — mostly hedge funds — of the Gulfstream V’s unexpected visit and the potential trading opportunity. Two days later, Occidental announced a $10bn investment from the Oracle of Omaha. The episode is emblematic of how the beleaguered industry of stockpickers is trying to recapture its edge at a time when many have failed to meet their benchmarks and have lost the faith of investors. A large number of traditional hedge funds and mutual fund groups have watched assets flow out either into passive funds or into computer-driven “quantitative” investment strategies. In a bid to restore their prowess, they are turning to some of the datamining techniques pioneered by their “quant” rivals and are investing heavily in programmers and data scientists. They are hoping that a hybrid approach, which combines the judgment of an experienced stockpicker with the insights that big data can offer, will give them a new lease of life. “For three decades the hedge fund industry largely took two different paths — fundamental and quantitative — and the two never really crossed,” says Matthew Granade, a senior executive at Point72, a large US hedge fund. “Now we’re seeing the two paths slowly coming together.” Investors have always been adept at using new technologies to gain an informational advantage. Venetian traders would use telescopes to inspect the flags of incoming ships, deriving clues on their cargo to buy and sell commodities accordingly. As Jack Treynor, former editor of the CFA Institute’s Financial Analysts Journal, once observed: “You may not get rich by using all the available information, but you surely will become poor if you don’t.” The investment industry’s unending information war has been supercharged by the era of big data and artificial intelligence. Merging old-school fundamental and cuttingedge quantitative investing — often given the awkward portmanteau “quantamental” — is one of the most powerful trends in asset management. Take Lee Ainslie’s Maverick Capital. Mr Ainslie was one of the “Tiger Cubs” who split from Julian Robertson’s hedge fund Tiger Management in 1993, going on to forge a name as one of the industry’s top stockpick-

ers. Maverick didn’t hire its first quantitative analyst until 2006, and Mr Ainslie admits he was initially somewhat sceptical. “It was an experiment. I thought the effort might end up being a waste of time and money, but I also thought it could make us better investors,” he says. “Today quant plays a role in virtually every part of our investment process . . . It has helped us be better prepared for a much tougher environment.” However, integrating the two approaches is often difficult in practice. Some money managers admit that results have so far been patchy, bemoan the cost of sought-after technology staff and new data sets, and quietly wonder whether it is a waste of time and cash. While almost everyone in the industry expects asset management to rely more on quantitative techniques in the future, it remains an open question whether this will end up as a material advantage for stockpickers or just an expensive dead end. For over two decades the Georgian townhouses of Mayfair were home to GLG Partners. Founded by three former Goldman Sachs bankers in the mid-1990s hedge fund heyday, GLG quickly became one of the most prominent members of the wealthy London district’s financial community, where its larger-thanlife traders could scour markets for opportunities by day and hobnob with clients at Michelin-starred restaurants by night. But two years ago it finally moved into the headquarters of its parent Man Group, the gleaming modernist Riverbank House overlooking the Thames. Man, which bought GLG in 2010, was under pressure to cut costs, but executives say the main impetus was to mesh GLG’s traditional “discretionary” traders with its computer-powered quant arm AHL — hoping that the combination would prove greater than its parts. Today, GLG and AHL’s portfolio managers, traders, researchers and executives all sit together on the sixth floor, which has helped the crosspollination of expertise, according to Paul Chambers, formerly head of equities at Man AHL and now head of quantitative research at Man GLG. “It’s easier to meet and exchange information when you walk past your colleagues in the corridor,” he says. The cohabitation of GLG’s oldschool traders and fund managers with AHL’s programmers and data scientists is an apt manifestation of a trend taking place across the investment industry. Many traditional hedge funds and mutual fund groups aim to curb outflows and ameliorate pressures on fees, and hope that programmers and data scientists can help. “I wholeheartedly believe that discretionary investing will continue to thrive, as there are many things that humans are much better at than machines,” says Teun Johnston, the chief executive of Man GLG. “But I believe that quantamental investing will grow, and my job running a discretionary business is to ensure that it continues to thrive.”

What the quantamental approach means in practice varies greatly. It can range from automating back-office aspects such as recordkeeping and compliance, improving risk management tools and portfolio analysis, to overhauling trading and research. Once-recondite fields of computer science, such as natural language processing — teaching computers to understand and analyse text and human speech — and machine learning are now buzzwords across the industry. “A profound shift is under way among investors,” Vishwanath Tirupattur, global head of quantitative research at Morgan Stanley, said in a recent report titled “Quant Ain’t Just for Quants Anymore”. “The significance of quant in our clients’ investment process is clearly on the rise,” he wrote. “Increasingly, they are applying sophisticated quantitative techniques in investment analysis.” Morgan Stanley polled 400 big investment clients at a conference late last year, and 51 per cent said machine learning — a field of artificial intelligence used to parse huge data sets — was either a component of or central to their investing process, up from 27 per cent in 2016. Only 13 per cent said machine learning is not being investigated, down from 44 per cent three years earlier. The main impetus comes from a poor stretch for returns that have tested investor faith. Only 12 per cent of US equity mutual funds have surpassed their benchmarks over the past decade, according to S&P. Even high-flying hedge funds have been brought down to earth, especially the classic long-short hedge fund, which bets on stocks both falling and rising. “Investors are understandably fed up,” Mr Ainslie says. “The longshort community hasn’t delivered on its promise of equity-like returns with less risk over the past decade.” The most excitement surrounds the integration of “alternative data” into the investment process. This can range from scraping the internet for product reviews, social media chatter and web traffic, to churning through credit card purchase data, digital shipping records, email purchase receipts and even mobile phone locations and satellite imagery. “Data is a big disrupter,” says Ravit Mandell, who leads a new data unit at JPMorgan’s $1.9tn asset management arm. “Storage and computing power are really cheap now. So why not try to collect all the informa-

tion available in all languages from around the world?” For example, JPMorgan Asset Management has created what it calls a natural language-processing dashboard. This continuously crunches information from millions of documents and textual data sources — such as investment bank research, social media, earnings call transcripts, online job boards, news stories, and regulatory filings — and delivers it to fund managers at a touch of their keyboards. Integrating quants and alternative data fully into a fund manager’s research and investment process — but without trying to turn them into quants themselves — is crucial, according to Man GLG’s Mr Chambers. “Realistically, no discretionary manager wants to help a quant automate them away, and no quant wants to create tools that no one uses,” he says. Some investment groups began experimenting with alternative data well over a decade ago, but it is only in recent years that efforts have really taken off. Maverick Capital, for example, ramped up its efforts in 2015, and now has 15 quants and data scientists. Mr Ainslie says the results have only become apparent in the past two years — and the early days of data collection now seem quaint to him. “We used to hire people just to count cars in parking lots and things like that. In hindsight, it was all ridiculously inconsistent and anecdotal,” Mr Ainslie says. “We’re in an ocean of information and navigating it can be difficult. But our experience as fundamental investors has really helped us to focus on the right things.” However, some money managers privately say they have been left disappointed by the pay-off from their investments in highly paid programmers and expensive alternative data. Even when they do discover something they can exploit, the profitability is quickly eroded by other funds pouncing. “Everyone knows these data sets exist now. The challenge is taking it and creating a meaningful signal,” JPMorgan’s Ms Mandell says. Data on credit card purchases, for example, have now become such a commodity that some say there is little value left to extract from it. Other data sets, such as satellite imagery and geolocation data from smartphones, are promising but expensive, often hard in practice to turn into actionable, profitable trades

— and come with privacy concerns that turn some investors off. Some information can be only occasionally useful — such as the private jet data that revealed Occidental’s stealthy Omaha visit. Even Tammer Kamel, the head of Nasdaq-owned Quandl, which supplied that information, warns that there may now be too much hype surrounding alternative data. “It’s powerful, but it’s not as easy as people initially think it is,” he says. “There are a few dozen firms that are having real and sustainable success with alternative data. But I don’t think the club is expanding very quickly.” The biggest hurdle is the resistance of many traditional fund managers to learning new tricks and tools, according to Point72’s Mr Granade. “It’s much harder to do than most people realise, mostly for cultural reasons. Producing insight from data is not easy but the biggest challenge is figuring out how to drive collaboration and understanding between the portfolio managers and data scientists.” Institutional investors are keen on the trend but one admits that it is often hard to determine who has actually managed the feat of melding quant techniques with traditional investing. “If you don’t use data science and quants you’ll struggle. But how much is real, and how much is marketing?” the investor asks. There remain many pitfalls. Two years ago, Mr Ainslie wrote a letter to his investors suggesting that Maverick had finally “cracked the code” in integrating alternative data with its traditional investment approach. But almost immediately after he sent the letter, the hedge fund suffered a poor bout of performance, he admits. Nonetheless, while the letter was “probably premature”, Mr Ainslie still reckons that it represented an inflection point for the $9bn hedge fund. “It’s in the last two years that we’ve really started to see the benefits of alternative data,” he says. “The number of data sets is exploding, and we believe our ability to extract value from them is improving every day.” More recent results seem to bear out his optimism. Maverick’s flagship fund notched up a 17.2 per cent return last year, compared with 11 per cent for the average long-short hedge fund. A leveraged version of the same fund gained 33.2 per cent, and the “Maverick Long Enhanced” fund clocked 45.6 per cent. Mr Ainslie remains optimistic that Maverick — and the investment industry as a whole — will eventually see the benefits of a hybrid approach. Investors who do not combine fundamental and quantitative analysis will perish, he says. “We’re seeing some benefits, but we’re still in the early innings,” he stresses. “While I don’t think we’re going to read that Warren Buffett has hired a quant team tomorrow, in the future if a fundamental investor doesn’t develop such capabilities I believe they will be at a competitive disadvantage.”

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