BusinessDay 12 Jun 2019 by BusinessDay

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Start-ups prove Nigeria’s health issues have digital solutions

APAPA GRIDLOCK

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

Attention shifts to executive-legislature relationship

ames Alban (not real name), a Lagos-based civil servant, needed a doctor to attend to his hepatitis case. He signed up to Mobidoc, also known as mobile doctor, which has hundreds of volunteer doctors on its platform. A specialist on the platform got Alban’s medical case as a text message on her phone and commenced a chat with him. A meeting was subsequently held between the patient and the doctor. Alban’s case was treated and he was charged 25 percent lower than he would have paid had he gone directly to a hospital. Mobidoc verifies the authenticity of every doctor that signs up manually from the Medical and Dental Council of Nigeria Continues on page 38

fgn bonds

Treasury bills

…as APC’s anointed candidates emerge NASS leaders OWEDE AGBAJILEKE, Abuja

he emergence of the anointed candidates of the Presidency and the ruling All Progressives Congress (APC) Continues on page 38

Inside L-R: Nelson Ayewoh, clerk of the senate; Ahmed Lawan, senate president; Mohammed Sani-Omolori, clerk of National Assembly, and Olamilekan Solomon, a senator, at the inauguration of the 9th Assembly at the National Assembly in Abuja, yesterday.

Democracy, the people and the P. 2 nation

Wednesday 12 June 2019

BUSINESS DAY

news Stanbic, Union, Sterling Banks commit N4.5bn to NIRSAL’s agribusiness strategy

L-R: Oluwole Adeosun, 2nd vice president, Chartered Institute of Stockbrokers (CIS); Adedeji Ajadi, registrar/chief executive, CIS; John Osuoha, country manager, Chartered Institute for Securities and Investment (CISI); Olatunde Amolegbe, 1st vice president, CIS; Simon Culhane, chief executive, CISI, and Bola Ajomale, president, National Advisory Council of Nigeria, CISI, at the signing of expanded MoU between CIS and CISI of UK in Lagos.

…Benue, Niger and Ekiti to benefit from pilot scheme ONYINYE NWACHUKWU, Abuja

hree commercial lenders, including Stanbic IBTC, Union and Sterling Banks, on Tuesday committed some N4.5 billion to a Mapping-toMarkets (M2M) strategy of the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) which targets to fix the maize and soybean value chains in the country. While Stanbic committed N2 billion, Sterling and Union Banks brought in N1.5 billion and N1 billion, respectively, announced at the end of the NIRSAL preliminary technical session/roundtable engagement with stakeholders for the M2M project in Abuja. NIRSAL will deploy its Credit Risk Guarantees on the financing tickets generated to provide comfort to financiers for loan disbursements. Aliyu Abdulhameed, MD/CEO, NIRSAL, said the commitments are for a pilot scheme to be run in Benue, Niger and Ekiti States, but will be scaled up to other states which show interest in helping their poor farmers grow. Abdulhameed said the project is expected to save the country about N1 billion through import substitution and possibly help each of the participating maize and soybean farmers generate up to N425,000 and N2.26 million, respectively. NIRSAL will also deploy other robust risk management instruments including the Area Yield Index Insurance to safeguard yields at harvest, boots-on-ground Project Monitoring, Reporting and Remediation Office

(PMRO) personnel in the three states and other risk management instruments to guarantee adequate returns on investment as and when due. He said following several deliberations, they have been able to extract significant commitments to be executed in the 2019 wet season. These include 3,750 hectares of brown-field farmland pledged by Benue, Niger and Ekiti States; N4.5 billion pledged in available funding to smallholder farmers by Stanbic, Union Bank and Sterling Bank under the M2M initiative; 3,750 farmers to be supported across the three states with 107.5 metric tonnes of seeds worth approximately N65.5 million expected to be supplied by seed companies. According to him, 2,062 MT of fertiliser worth about N290 million will be made available by the fertiliser companies, 33,250 litres of crop protection products worth N54.6 million have already been committed; 8,750 MT of maize with a market value of N744 million and 2,000 MT of soybean worth N208 million will be produced and offtaken under the pilot phase. At the event, downstream actors also committed to offtake the maize and soybean produced. Abdulhameed reiterated the strong belief that the M2M strategy would lead to the unlocking of immense potential across all agriculture value chains, the agriculture finance value chain and other agribusiness support sectors in Nigeria.

•Continues online at www.businessday.ng

The journey to June 12 as Democracy Day Zebulon Agomuo

or 19 years, the commemoration of the annulment of the June 12, 1993 presidential election was not a national affair. Initially, it was observed only by civil society organisations (CSOs) and human rights activists to press their insistence that an injustice was done by the military junta under Ibrahim Badamosi Babangida, who annulled the election presumably won by the late Moshood Kashimawo Olawale (MKO) Abiola. A series of events that culminated in Abiola’s death on July 7, 1998 had angered many Nigerians, particularly those from the South West geo-political zone of the country, who felt that it was a double tragedy to have denied Abiola the office and also allowed him to die in prison. A month earlier, precisely on June 8, 1998, General Sani Abacha, the then head of state,

had died suddenly and was succeededbyGeneralAbdulsalami Abubakar. Abiola died in suspicious circumstances on the day that he was due to be released. Although Olusegun Obasanjo, another South West indigene, was elected in a democratic election and sworn in on May 29, 1999 to succeed Abubakar, many Nigerians had insisted that Abiola must be recognised as a president posthumously. All through the administrations of former Presidents Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan, there was no attempt to recognise Abiola as president, proclaim June 12 as a national holiday, or change the date to be a presidential inauguration day. In May 2012, however, Jonathan had changed the name of the University of Lagos to Moshood Abiola University in honour of the late Abiola. The action drew a welter of criticisms. Bola Ahmed Tinubu, cur-

rent national leader of the ruling All Progressives Congress (APC), had congratulated Jonathan for taking an action, but urged him to “do it right”, adding that “we must be careful not to localise or sectionalise MKO”. The defunct Alliance for Democracy (AD), which was formed in 1998, took control of the South West states during the 1999 general election. With the formation of Action Congress of Nigeria (formerly Action Congress) in 2006 through a merger with AD, it continued its dominance of the South West states, thus the remembrance of June 12 became institutionalised in those states under ACN control. That was the case until June 6, 2018, when President Muhammadu Buhari announced June 12 as the new date when Democracy Day would be celebrated in the country to honour MKO Abiola. Buhari had explained that

the date was more symbolic of democracy in Nigeria than May 29, or even October 1. He subsequently conferred a posthumous Grand Commander of the Federal Republic (GCFR) title on Abiola, while his running mate in the election, Baba Gana Kingibe, got a Grand Commander of the Order of the Niger (GCON) national honour. Before it wound down on June 6, the 8th National Assembly passed the Public Holiday Act Amendment Bill to recognise June 12 as the new Democracy Day, and the bill has also been assented to by President Buhari. To make good his promise, President Buhari refused to give a speech when he took oath of office on his inauguration day for the second term in office, saying he would unfold his agenda on June 12.

•Continues online at www.businessday.ng

More Nigerian parents turn to low-fee Democracy, the people and the nation schools for children’s basic education Atiku Abubakar

…as population growth gallops away at 3.20% STEPHEN ONYEKWELU

common sight on the streets of Nigeria is the presence of low-fee schools that provide basic education for the country’s sprawling population of children below 16 years of age due to the government’s weakening ability to do so. Nigeria’s population has increased by 53 million in the last 12 years, figures from the National Bureau of Statistics show. The figures captured in a report,‘DemographicStatistical Bulletin 2017, available on the website of the NBS show that the country’s population, which stood at 140 million in 2006, had swelled to 193 million by 2016.

The figures mean Africa’s largest economy and most populous country has 53 million children between ages 0 and 12 to cater for. In another 10 years, thesechildrenaregoingtobethe country’s labour force in an age that will be dominated by technology in a knowledge-driven economy. But educationists havenotedthatthecountryisnot adequatelypreparingitschildren for the challenges ahead. As population gallops away at 3.20 percent yearly, Nigeria’s capacity to provide basic education is not keeping pace and low-fee schools, that is, schools that charge less than N10,000 per term, are filling this gap.

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

emocracyasaformof government has not only become fashionable but a popular means of governance amongst all lovers of freedom it confers. Celebrating M.K.O. Abiola and others, who sacrificed to usher in the Fourth Republic, won’t be complete without exemplifying the ideals and philosophy of which they championed, sacrificed and died for. The adherence to the principles and ideology of a true democracy anchored on rule of law, should be the firepower behind the celebration, because democracy without the freedom of choice, right of free speech and fundamentalindividualrights,is a caged democracy. As we sojourn in the voyage of democracy, we should bear in mindthatthemostpreciousgain of democracy any democrati-

cally elected government can bequeath its citizens, is not basic amenity of life but the unbridled power to choose their leaders. The right of choice as expressed via sanctity of ballot papers, is the greatest and formidable right of citizens - after right to life. When this pertinent right is muffled, democracy loses its taste,andcitizensofthestatehave reduced to mere subjects whose opinions are inconsequential; incapable of influencing the direction of the boat they are being peddled in. This perfidy will only give birth to an oxymoronicsystem;democracywithout democrats. Certainly this is not the dystopia of democracy our founding fathers visualised. In the foregoing context, it is worthy to emphasise again that rule of law is the foundation of constitutional democracy. Rule of law is what stabilises a nation. A government that disdains orders emanating from courts

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created by the same constitution that brought it to power, is de-legitimising itself and authority it dispenses. Government should not cherry-pick on which court order to obey or not. We should have grown past this nascent stage when laws of the land are subjected to the whims of individuals that wield political power. One of the cardinal responsibilities of government is to safeguard lives and properties. Responsive and emphatic leadership does not fiddle while the nation nosedives to the nadir of insecurity. Our nation loses its place in humanity when lives are being lost unconscionably without commensurate efforts from government to nip this protracted security crisis in the bud. General Muhammadu Buhari should live up to his constitutionally guaranteed role of chief security officer of the country. No excuse should @Businessdayng

be enough for the indiscriminate loss of lives and properties across the nation. Nigerian life matters. The persistent security challenges in the nation has brought to fore the need to rejig the structure of the federation. State policeisincreasinglybecomingthe only way to go resolving security challenges. It is obvious that one federal police system has become ineffective enough to protect the citizens. Restructuring of Nigerian state is no longer a want but need - an idea whose time has come. It is more than a campaign tool to win votes. We should not be proud celebrating twenty consecutive years of democracy when Nigeria is featured in most of the negative developmental indices cum indexes of the world renowned institutions.

•Continues online at www.businessday.ng

Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

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NEWS

JAMB, varsities approve 160 as national cut-off mark for 2019 admission

â&#x20AC;Ś approve 140 minimum score for private varsities KELECHI EWUZIE

he Joint Admissions Matriculation Board (JAMB) and stakeholders from tertiary institutions in Nigeria have approved 160 as the cut-off score for 2019 admission into public universities. The decision was reached at the 19th Admission Policy meeting of Tertiary Institutions in Nigeria, Tuesday at Bola Babalakin Auditorium, Gbongan, Osun State. Stakeholders at the meeting, including heads of all public and private universities, polytechnic, monotechnics and colleges of education, also approved 140 as minimum Unified Tertiary Matriculation Examinations (UTME) score for admission into private universities. For public polytechnics, 120 UTME score was approved, while 110 score was approved as the least score for admission into private polytechnics. JAMB to delay the release of the 2019 UTME results heightened the anxiety in over 1.8 million candidates who sat for the examination. The unusual delay has, aside from frustrating the preparation and academic plans of most candidates, also provided a

leeway for dubious mercenaries operating Computer Based Test (CBT) centres to deceive and dupe unsuspecting candidates seeking solutions. BusinessDay investigations reveal that carrying capacity in

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tertiary education institutions in Nigeria has not significantly improved in relationship to the exponential growth in the number of candidates seeking tertiary education in the country.

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Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

news LCCI calls for tax reduction to boost business activity Gbemi Faminu

agos Chamber of Commerce and Industry (LCCI) has outlined policies to boost businesses in Nigeria, including a concessionary tax rate for micro, small and medium scale enterprises. The chamber calls for speedy issuance of the Pre-Arrival Assessment Report (PAAR) to importers by the Nigeria Customs Service (NCS) to avoid unnecessary delays at the ports, stressing the need to reverse the Federal Inland Revenue Service’s (FIRS) restrictive ban on accounts of tax defaulters. In a communiqué signed by Muda Yusuf, director-general of LCCI, the chamber states that the MSMEs, which constitute a greater part of the business environment, suffer from high tax rates and tax multiplicity that are partly hurting the capacity of these businesses to survive and achieve their aims and objectives. The council requests that tax regulators aid MSMEs using concessionary tax rates, tax holidays and other favourable policies that will support their sustainability. A follow-up to the tax issue is the instruction of the FIRS to ban the accounts of tax defaulters, placing restrictions on the financial freedom of those concerned. “There should be a proper communication and engagement with taxpayers to properly ascertain a tax liability before such extreme actions of invocation of a lien on the accounts of companies are taken. This practice is very disruptive and has caused grave embarrassment to many corporate organisations,” LCCI said. After deliberating on what it calls regulatory agencies’ harmful discharge of responsibilities, the council asks that they perform their duties and obligations without attracting unnecessary publicity that is detrimental to the concerned company. In addition to this, LCCI states that there should be proper coordination between regulatory agencies and anti-graft agencies in dealing with alleged regulatory violations to avoid duplication of investigative actions. On issues relating to import delays, the council affirms that delays by the Customs Service such as late issuance of PAAR and demurrages on cargoes have contributory impact on the high cost of running businesses and are also a negation on the government’s policy on ease of doing business. It advises that the director of the Customs Service intervene and end the delays in all forms. Speaking on the interception of containers on the highways by the Standards Organisation of Nigeria (SON), the LCCI explains that it is unprofessional for the operatives of SON to be intercepting containers on the highways on account of some fees or charges that have not been settled by importers. It asks that such issues should be attended to before the departure of the goods from the port.

Don’t neglect Ogun-Guangdong FTZ, Daniel tells Abiodun RAZAQ AYINLA, Abeokuta

… says Ogun should attract investments to abandoned Olokola, Kajola FTZs

onsidering huge number of contributions to the nation’s gross domestic product and non-oil exports, Ogun State former governor, Gbenga Daniel, has requested Governor Dapo Abiodun to shift government’s intervention and focus to OgunGuangdong Free Trade Zone (FTZ), saying the immediate past government’s neglect of the zone had done more harm than good to the production, processing and distribution of finished products

coming from the zone. Daniel,whosehisadministration in the state between 2003 and 2011 secured licences and partnered Nigerian Exports Processing Zones Authority (NEPZA) on the actualisation of the three free trade zones to the state, namely, Ogun-Guangdong Free Trade ZoneinIgbesa,OgunWest;Kajola Transportation Free Trade Zone in Ifo, Ogun Central, and Olokola Free Trade Zone in Waterside, Ogun East, appealed to Governor Abiodun to improve on the state

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and country’s economy through attraction of more investors to Ogun-GuangdongFTZ,aswellas resuscitation of nearly moribund Olokola and Kajola FTZs. The former governor, who chronicled his achievements on industrialisation at the Heritage Reception organised for Governor Abiodun at Awujale Palace in Ijebu-Ode on Sunday, noted that the current government in thestatemustnotmisplacepriorities on possible investments and supports in all these FTZs, saying

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the state government must place premium on the FTZs for improved gross domestic products, non oil exports in order to create more employments, wealth and foreign earnings. Daniel said, “Apart from the FlowergateIndustrialEstatewhich we established at the Sagamu Interchange, (where Armed Robbers used to waylay motorists to rob, we thank God it is clearly the fastest growing Industrial Estate in Nigeria with the likes of Nestles and The International Breweries

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probably the biggest Brewery in the world). “Our administration secured the three different Licences for three Free Trade Zones in each of the three Senatorial Districts: The Ogun Guangdong Free Trade in Ogun West is up and running but the Access Road is of immediate priority. This is only Free Trade Zone that is operational among the three created by us, Ogun state government must do everything humanly possible to sustain it and place premium on it.

Wednesday 12 June 2019

BUSINESS DAY

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Democratizing development through public policy SMEs Small Business handbook

Emeka Osuji

he SME sector has established itself world-wide as a major force and backbone of the economy, through the creation of jobs and stimulation of economic growth. Accordingly, world leaders ought to do more in the area of public policy action and advocacy to promote the sector. Besides providing employment, household income, and taking the flak of economic adjustments going on around the world, the sector has helped to draw attention away from the rising failure of governance now rampant in the developing world. Promotion of the SME sector has now become a global strategy of development on both sides of the development divide. In other words, policy action targeting to advance the cause of SMEs is no longer limited to developing countries. Even the more advanced countries have continually taken steps in this direction, probably doing more than the developing ones. The advanced countries have long since recognized that the value creation being ascribed to the sector is not just a passing development event but a crucial plank in the process of growth, national economic

welfare, and the peace and stability of nations. During the past three or four decades, developed countries have made significant efforts to implement programmes and policies to assist operators in the SME sectors of their countries. This is evidenced by the findings of several research works in that area. This effort has also been justified by the increasing contribution of the sector to the growth in output and employment in those countries. In the OECD countries where SMEs account for about 99 per cent of all firms, research shows that they are the leading source of employment and account for much of the job placements in diverse economic fields. About 60 per cent of all the jobs in the manufacturing sector come from the SMEs. They also provide about 75 per cent of the employment in the services sector. In terms of value addition, the SMEs are generating on the average between 50 percent and 60 percent of value added. In Europe, specifically, small and medium enterprises have continued to demonstrate dynamism and innovativeness, creating new technologies and products. They are responsible for about 20 per cent of all patents in biotechnology-related fields. In fact, over two thirds of the National Productivity Champions in Europe defined as the most productive firms in their various European countries and industries - are SMEs. In the knowledgeintensive services, this contribution is in excess of 80 percent. The contribution of SMEs to the output and growth of economies of the emerging markets is equally impres-

sive. Here, they contribute as much as 45 percent of all employment and about 35 percent of GDP. According to the National Bureau of Statistic (NBS) in Nigeria, during the past five years, SMEs have contributed 48 percent of the nation’s GDP, which has helped to establish the country as the biggest economy in Africa. Thy also constitute 96 percent of all business entities in the country while providing 84 percent of all employment. These are by no means small issues but evidence of the need to take more pointed steps to improve the operating environment for small businesses in Nigeria. Much is actually being done in that regard, especially by entities like the development banks, but there is need for coordinated and synchronized efforts, and the measurement of results. Compared to Nigeria, SMEs in South Africa make up 91 percent of all business entities; they contribute 60 percent of employment and 52 percent of that country’s GDP. There is indeed no more doubt that these small firms are usually dynamic and innovative. It is therefore a wise policy action to do things that make them spring up and develop. They are also a critical element in any effort to achieve inclusive growth. We can actually do more if we really appreciate the fact that much of our teeming population depends on the SME sector. Given the state of the Nigerian economy and the direction to which things are headed, it is getting clearer by the day that surely, our hope is in the name of the SMEs, who make what we eat and wear. The country has been ruined by

‘

Given the state of the Nigerian economy and the direction to which things are headed, it is getting clearer by the day that surely, our hope is in the name of the SMEs, who make what we eat and wear

poor leadership from time immemorial, to the extent that it has become part of our culture to pursue what could be rodents in other climes while our house burns. As foreign investors pull out of the country, taking away with them some N1.8 trillion, for reasons bothering on escalating insecurity, and government’s apparent helplessness in the face of an imminent disaster, some people are busy struggling for top political positions and fat budgets. It appears clearer every day that our hope is in the name of the SMEs, who make what we need What should have been uppermost on our minds today should have been how to get fellow Nigerians who have been sacked from their homes by fellow Nigerians or people from God-knows where to go back home. But it doesn’t appear to be. What we ought to be focusing on is how to stop the democratization of crime – kidnapping, rape, murder and all known wicked works, which have become fancy trades in Nigeria, but again it is not. Nor are we honestly preoccupied by efforts to find a clear direction of public policy on stopping, through equitable policies, the widening gulf between the tribes and constituent parts of the country that have never been this hateful of one another – a looming disaster that everyone sees in the fog ahead but keeps mum. Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

Servant leadership

ros kay, you led from the front, teaching us invaluable lessons in humility as you “served” us as olori ebi after the departure of our beloved father. Your virtues were too many to mention. Unrivalled in selflessness and so so caring. Lightening quick to forgive, you will forever remain a remarkable inspiration to us all. You showed us how to love completely. You related with us your aburos, as friends, your buddies; often leaving outsiders to wonder if the age gap between us was truly what we claimed. Many, and that includes some of us your aburos, often mistook your gentle spirit, your relentless pursuit of peace, as a sign of weakness. The more fool us. “The one characteristic of authentic power that most people overlook is humility. It is important for many reasons. A humble person walks in a friendly world. He or she sees friends everywhere he or she looks, wherever he or she goes, whomever he or she meets. His or her perception goes beyond the shell of appearance and into essence – Gary Zukav Little did we know how turning the proverbial other cheek takes Christlike humility and a strength impossible to fathom. Undoubtedly, you were the greatest among us. You were our servant leader. There’s plenty of empirical evidence to suggest doing good does indeed make whole. Besides, the bible says so and everyday life says it too. John D Rockefeller became America’s first millionaire at the youthful age of thirty three and its first billionaire at the age of fifty three. He was so ill by this time, he was advised to put his things in order as he wouldn’t see fifty four. Crackers and milk had become his staple diet as he couldn’t ingest anything else. Despite his stupendous wealth, people hanging him in effigies on the streets had become a daily occurrence as he lay helpless on his deathbed. Such was the hatred towards this shrewd businessman. Rockefeller was proud to call himself a Christian and it was evident for all to see that God blessed him with unprecedented wealth but up to this point he was yet to experience Good Success. The sort of success Tabitha, better known as Dorcas enjoyed that when she died, all those positively touched by her

selfless service to humanity quickly sent for Jesus’s disciple Peter. They fervently prayed God would use him to resurrect her so she could continue her good work. No, no-one wishes for such a person to die. One night, unable to sleep, Rockefeller sought the face of God and He answered him thus in a vision: “All the money in the world will do you no good in heaven or hell. Your job and responsibility are to give it away.” Rockefeller got the message loud and clear. He now knew his purpose. He now knew why God blessed him with the power to create wealth. He now knew what he had to do so the blessings which had brought him great riches could also bring him true joy and not sorrow. Having heard from God he also now knew what the missing link was to his complete self-realisation. As he lay on his deathbed it dawned on him that he had no time to waste as he prepared to meet with the Lord. He accepted that even with his almost unlimited resources he wasn’t in any position to stay the hand of God but as long as he still had breath in him, he could at least do his utmost to determine where he would go next, heaven or hell. He quickly set things in motion and established the John D. Rockefeller Foundation. Some would say his philanthropy changed the course of the world. Why? Its resources have been utilised to permanently erase many life threatening diseases known to mankind since then. Already on his last legs, John D Rockefeller did not only experience a miraculous healing but was made whole. As he discovered his true calling, he received the peace of mind that comes with it. That often elusive rest round about which we all seek. His inner healing led to his physical healing and he eventually died at the age of ninety seven. When we believe in the word of God and exhibit faith by living as he has purposed, we are entitled to enjoy His blessings. We don’t just receive the blessings as Rockefeller did during the first half of his life but we enjoy the blessings like he did in the second half. The word of God tells us various incontrovertible signs will accompany us who believe and one of these signs is the casting out of demons from those possessed and harassed by the devil. Does

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this mean those captured by the evil antics of the devil always have to fall down in a heap after exorcism before you know they have been delivered? I don’t contend that some do but is this always the case? That Christlike spirit to help others, which casts out the oppressive spirits of the devil is a sure sign of those who believe. Help that delivers those captured by depression, poverty, hopelessness, fear, anxiety, despondency, worry, sickness is a definite sign of those who believe. Those who go about doing good as Jesus did show they believe. Bros Kay, you went about doing good. You were always there for your immediate family just as you were for us your younger ones. Selflessly you carried our burdens, as if you had none of your own. Just as Rockefeller gave all, you gave all of yourself touching countless of souls. Always lending a helping hand even when you may have needed such help yourself. Through thick and thin you were always there. Just as in the case of Dorcas, no one wanted you to go. None was in any way prepared to accept that. In those wee hours of the morning, Pastors were called, Elders were woken up but this time, it was not to be. The Lord turned a deaf ear as He held on tightly to His saint. Yes, Rockefeller was graciously given a new lease of life on his deathbed but I also know that’s when his life really begun. For you, there were no wasted years. For want of a better term, you hit the ground running. You not only did well but you did good. Broa(my form of “brother” that I always called you), you had an uncanny ability to make everyone feel so important, to feel relevant; no matter the age, no matter the status. Pretence can only be sustained for some time. Sooner or later, the real self will surely manifest for all to see. Your love was not the type which now seems to be in vogue; adorned like a beautiful dress for the world to admire only to be swiftly discarded when it’s no longer expedient but as we Yorubas will say, smoke must emit; and so does one’s character. It still baffles me why our leaders don’t seem to get this. If you want people to follow or support you, be genuine and make them know they matter. Their feelings matter, their opinions

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Character Matters with Daps

Dapo Akande matter, their welfare(well being) matters. Speak with them and not just at them. Do this and the billions you spend to buy their support can instead be spent on those things that let them know they matter. True to type, for you there were no long goodbye’s. No unnecessary fanfare. Dignified simplicity in life and so too in passing. Never one to put anyone out, you commenced your final journey when no-one was watching. Till daybreak all I could utter between uncontrollable tears was, “I can’t believe my brother is gone”. Possibly my darkest moment. Almost certainly the most devastating. Never to be forgotten. John Olukayode omo Akande, it’s been two years now. A nationally celebrated ace cricketer and captain of the prestigious Igbobi College school team back in the days. Room mate to his lifelong dear friends, Inam Udoma and Pastor Eskor Mfon while at Nigeria’s premier university, the University of Ibadan; contemporary of Lord Sebastian Coe, the President of the International Association of Athletics Federations at Loughborough University UK. Broa, we’re so proud of you, not just because of your obvious laudable achievements but because in rare obedience to our Lord, you indeed went about doing good. Sleep on. Changing the nation...one mind 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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Wednesday 12 June 2019

BUSINESS DAY

comment The cost of CBN’s exchange rate policy

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lanrewaju Rufai

any older Niger ians often reminisce about the halcyon days when N1 was equal to $1. In fact, during the 2015 election campaign, it was rumored that President Buhari had promised to make N1 equal to $1 again. Although the story was quickly debunked, the narrative stuck due to the popular belief that the exchange rate can be assumed as a fundamental indicator of the strength of an economy. Many Nigerians hold the erroneous impression that the strength of an economy is determined by the value of its currency, often the currency’s exchange rate to the US Dollar. This popular but erroneous belief can simply be summarized thus: the stronger the currency relative to the dollar, the better-performing the economy. This belief is fundamentally incorrect as the exchange rate is simply value of one currency relative to another currency. Therefore, as an indicator, the exchange rate is insufficient as a measure of assessing economic wellbeing. For instance, the exchange rates of the Japanese Yen and the Cuban Peso to the US Dollar are 108 Yen to 1 US Dollar and 1 Cuban Peso to 1 US Dollar respectively.

Therefore, based on the fallacious premise that the stronger the currency, the betterperforming the economy; one would get the impression that Japanese currency is weak and that the Japanese economy is doing poorly while the Cuban currency is strong and the Cuban economy is in great shape. However, such impression cannot be farther from the truth. The reality is that the exchange rate is just one of several economic performance indicators. In fact, indicators such as the GDP growth rate, GDP per capita, inflation rate etc. are more important for assessing economic wellbeing. Unfortunately, in Nigeria, there has been a fixation on maintaining a strong exchange rate for the Naira, often regardless of influencing exogenous factors. Following a slump in global oil prices in 2015 which depleted public finances and dried up the nation’s dollar supplies, there were wide expectations that the Naira would be devalued. A devaluation of the Naira in 2015 would have allowed the CBN adjust to a new reality and design policies which could have laid the foundation for future sustainable growth. Nevertheless, the Central Bank of Nigeria (CBN) and President Buhari resisted calls by experts to devalue the Naira but instead undertook numerous measures to maintain the impression of a strong exchange rate. Although President Buhari and the Central Bank of Nigeria (CBN) Governor Godwin Emefiele had argued that a weaker currency would lead to higher inflation and economic pain for Nigerians, the undertaken measures have come at great cost to the growth of the economy and perhaps future solvency of the nation. Since 2015 when the Central Bank of Nigeria (CBN) rolled out a string of policies geared towards maintaining an artifi-

cially strong Naira, the Nigerian economy has suffered a plethora of woes including mass exodus of foreign direct investments, low GDP growth and high inflation. Basically, by implementing a monetary policy which tries to achieve the impossible trinity of a fixed exchange rate, free movement of capital and an independent monetary policy, the nation has found itself in an unpalatable economic situation characterized by low GDP growth rate, high inflation and plummeting foreign direct investments. Furthermore, the monetary cost of the Central Bank’s ‘strong Naira’ policy has been massive. The CBN’s 2018 Annual Activity Report reveals that the apex bank increased its liabilities by 250 per cent from N16 trillion to over N40 trillion within three years. 34 percent of this amount, almostN14 trillion, represents Open Market Operation securities which were issued to manage liquidity. This implies that in order to maintain the desirable, artificial high value of the Naira over the last three years, the CBN increased its liabilities to over N40 trillion, mainly through the issuance of OMO securities. This not only represents a precarious threat to the same currency the bank seeks to protect, but also exposes the wider economy to several risks. In addition, due to the artificially strong value of the Naira, the nation’s nonoil exports have become more expensive and less competitive. For a nation intent on diversifying its economy away from a reliance on oil, maintaining an artificially high exchange rate is counterproductive. Typically, when nations attempt to boost production and increase exports, they tend to devalue their currencies to make exports more competitive. Nigeria instead did the opposite.

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Given that the nation is also straining under the weight of its debt ... it is unconscionable that economic administrators are systemically rendering the nation insolvent yet spending massive sums just to maintain a high value of the Naira

In summary, the CBN has condemned the nation to an unpalatable economic situation of low growth, high inflation, depleted reserves and uncompetitive exports for the sake of an artificially strong naira. Given that the nation is also straining under the weight of its debt which currently stands at over N24 trillion, it is unconscionable that economic administrators are systemically rendering the nation insolvent yet spending massive sums just to maintain a high value of the Naira. Unfortunately, there is no easy way out of this quagmire in which the country has found itself. Any brash move undertaken by the CBN might create excess liquidity in the economy which could then force down interest rates and scare off currently active foreign portfolio investors. Such outcome will subsequently result in a scarcity of foreign exchange, a highly undesirable situation. Another probable option could be a devaluation of the Naira as was widely suggested in 2015. However, given that both the President and Governor of the Central Bank have both railed against devaluation, this option seems untenable. Overall, maintaining an artificially strong Naira has come at great cost to the Nigerian economy, with no easy solution in sight. Every feasible solution will require a depreciation in the value of the Naira, an option the CBN and presidency are reluctant to consider. Nevertheless, sooner rather than later, this problem will need to be addressed head-on. How that will happen remains a mystery. Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Dear MKO, ‘it has been a long night: But the dawn is (not) here’ Dear MKO, write to inform you that June 12 has evolved. “From a commemoration observed by scattered bands of devotees, members of the Abiola family, and human rights activists, confined mainly to the South-West,” as Ayo Olukotun carefully worded it, “June 12 has now mutated into a national observance and symbol of nationhood in the same class with other national holidays, totems and identity markers of statehood.” You already know that you have been awarded the highest national honour the Nigerian state could give. It should be a proud moment. Fists should be up in the air, but they are not. We mark the day with mixed feelings even as we remember the ideals you stood for. With deep discomfiture I bring to your notice that Nigeria today is the exact opposite of what you envisioned. You had a vision for this country and you communicated that vision so clearly. You wanted to “make Nigeria a better place for all.” Nigerians agreed with you and overwhelmingly gave you their mandate. That dream was aborted. In its place, Nigeria was turned to be a better place for some, or worse still and more realistically so, a worse place for all. You aspired for Nigerians to transition and “bid farewell to poverty.” That aspiration, like the election, was annulled. And poverty was taken to the next level. Nigeria, yes the very Nigeria you bled and died to liberate, is now the poverty capital of the world. During your famous declaration on that fateful day in 1994, you passionately expressed your concerns; “Our factories are crying for machinery, spare parts and raw materials. But each day that passes, instead of these economic diseases being cured, they are rather strengthened as an irrational allocation of foreign exchange based on favouritism and

corruption becomes the order of the day.” If it is permissible, you need to come and witness the state of our nation. You were “sickened to see people who have shown little or no personal achievement, either in building up private businesses, or making success of any tangible thing, being placed in charge of the management of our nation’s economy, by rulers who are not accountable to anyone.” You know you could have made that exact remark in 2019 and still be right. You were worried about the hegemonic few playing “a permanent game of military ‘about turns’.” You cried that “Appeals to their honour as officers and gentlemen of the gallant Nigerian Armed Forces, have fallen on deaf ears. Instead, they have resorted to the tactics of divide and rule, bribery and political perfidy, misinformation and (vile) propaganda. They arrest everyone who disagrees with them.” Today, despite the deafening claims of integrity, it is as if Nigeria consistently “ranks high in matters of dubious distinction.” You were worried about “the consequences of high inflation, a huge budget deficit and an enormous foreign debt repayment burden, dying industries, high unemployment and a demoralised populace.” The youths gave you the biggest emotional burden. You wept bitterly about our condition; “Our youths, in particular, can see no hope on the horizon, and many can only dream of escaping from our shores.” As it turned out, you were only weeping about the figurative frying pan; we have been pushed off that frying pan into the fire. As you saw it in 1994; “A scarcity of books and equipment has rendered our schools into desolate deserts of ignorance.” Well, things have not gotten any better. Several years after, that

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desert continues to encroach even at a more alarming speed. In mourning a Nigeria that was not allowed to be, we are not disillusioned. You wouldn’t have been a perfect president. But, given your worldview, disposition, successes in many areas of life, the little change you wrought through philanthropy, and the meaningful connections you made, you would have been a damn good president of a multi-cultural Nigeria. Having received the highest chieftaincy title a commoner could get in Yoruba land, you – the Aare Ona Kakanfo of Yoruba land – didn’t yield to the temptation of reducing yourself to an ethnic champion. As proud as you were to be a Yoruba warlord, you fought, bled and died for ordinary Nigerians from all parts of the country. And in so doing, became “an unexpected symbol of democracy” and national unity. You had people you could trust, and those who could trust you too, from all sides of the ethnic and religious spectra. You surrounded yourself with competent people drawn from all parts of the nation. Little wonder citizens from all parts of the nation felt their interests will be better served with you at the helm of affairs. June 12 should be a crystallization of that national unity you envisioned. But today, we are, for the very first time, marking it as a national holiday even while we observe that since the civil war Nigeria has never been divided as it is presently. The fault lines are there, and very visibly so. These are some of the issues we look at and ask; “should we be mourning or celebrating?” In trying to answer that question, we draw from the wisdom of ancient Koreans who admonished their wards to “catch not at the shadow, and lose the substance.”

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Chima Christian Those in government today say you have been honoured and will be forever remembered. We agree, but struggle to reconcile the fact that they are antithetical to your vision for Nigeria, your ethos and the spirit of the struggle. We give it to them; in the transmutation of June 12, Buhari’s government struck a massive emotional chord. They have caught your shadow. We are more interested in the substance. Dear MKO, we seek your wisdom, please answer us from the beyond. Should we be pained or joyed that wreathes are today being laid on the tomb of a visionary, on the account of his vision, by people whose actions and utterances are snuffing life out of whatever remained of that vision? Perhaps, rather than reaching for the emotions of June 12 as they have done, the Buhari-led government should have asked for a lesson on the ethos you espoused. The cosmetic display nonetheless, we find it in our hearts to give due credits for the thoughtfulness in bringing to the fore the issues of June 12. After all, it is commonly said in Nigerian street parlance that “all die na die.” Beloved MKO, as you are celebrated today, we are torn apart by those celestial and immortal words you declared at Epetedo; “It has been a long night.” Sadly, 25 years after, Nigeria remains in twilight: but we still can’t say that “the dawn is here.” With hope, we continue to believe; it is well. Chima is a research associate at Selonnes Consult, Awka

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Sanwo-Olu’s THEMES as the six pillars for developing Lagos

agos State Governor Babajide Sanwo-Olu took off on a high note May 29 as one of those with a clear articulation of direction on inauguration at the Tafawa Balewa Square. Lagos State put together a beautiful display as expected of the city-state of fun and excellence. Sanwo-Olu committed to a “Greater Lagos” that the government would achieve through six pillars of development. The components are T-H-E-M-E-S and would form the basis for assessing the governor in the next four years. THEMES represent Traffic Management and Transportation; Health and Environment; Education and Technology; Making Lagos a 21st Century state; Security and Governance. “Lagos must again rise and help lead this nation to fuller progress and to a closer realisation of the greatness that exists within all Nigerians”, Sanwo-Olu charged. The governor has since charged into action in various fronts, most notably the challenge of traffic management and transportation. Managing the challenge of transportation takes prime place in THEMES deservedly. Traffic Management and Transportation would challenge the policy and execution capacity of the new Lagos State Government. The broad

outline did not offer any specifics but Sanwo-Olu and his deputy JideHamzat should be looking at a few strategic areas. The Lagos-Badagry Expressway currently provides nightmares for residents in that axis, from Mile 12 down to Badagry. The Governor has ordered and must ensure implementation of the palliative measures to enable movement on the roads. Within the first 100 days, citizens should see proof of work on the Blue Line railway project suspended for so long. There is also the matter of the evolving threat of the Lekki-Epe expressway. Forty years after Lateef Kayode Jakande built the broadway linking Lekki to Epe, it remains the single access way to that axis. Except that in the period, the area has become integral to the Lagos of today and tomorrow. It houses a Free Trade Zone, one of the largest refineries in the world and the proposed second Lagos airport. More fundamentally, it has become home to the New Lagos, housing Lagosians with no fewer than 80 housing estates. The first order of duty in that axis is to extend the expansion of the road that stopped at Abraham Adesanya Housing Estate junction. Expand it to Epe. More significantly, commence the coastal road that has remained aspirational for Lagos State Governments. Implementation should happen now to avoid terrible gridlock on that axis from 2020 when the refinery

and the various projects at the Free Trade Zone take off. From Eleko Junction to the FTZ deserves a dual carriageway as an immediate measure. The other urgent and important one is to ensure completion of various road infrastructure projects on the Mainland, notably the Pen Cinema Agege bridge and its roads. Many inner city roads and, in particular, arterial roads beg for urgent attention as they would unclog the bottlenecks. An example is a stretch from CMS through the Yacht Club up to Bonny Camp. It causes so much traffic. Fill the craters and tar. Lagosians would certainly appreciate significant progress on health and the environment. A cleaner Lagos should be the mantra at Alausa as the Government works out how to restore a structure for cleaning the city-state truncated earlier by the misdirected effort of one contractor replacing the many players of the PPP scheme. Lagos is one megacity with more than 70 per cent of residents lacking pipe-borne water. Provision of pipe borne water in Lagos should represent for LASG the journey of a thousand miles. Sanwo-Olu “must set forth at dawn” by taking immediate steps at visioning and implementation. Integration of technology into education as the Governor outlined is the way to go in Lagos. It should commence at primary education levels. Lagos of the 21st Century should

see the implementation of various approved projects for Smart City concepts in the state. It is heartening that the governor highlighted the critical role of power and sustainable urban settlements. Lagos should run on independent power already and lead the drive for the integration of green or alternative sources to our energy mix. Solar, hydro, and conversion of the enormous waste generated in Lagos into power should be on the cards. Sanwo-Olu assured that he would be Governor, friend, brother, neighbour and servant to the citizens of Lagos State. Lagosians would watch with anticipation for the fulfilment of the SanwoOlu promise of transparency in the management of Lagos State finances. Sanwo-Olu stated courageously, “To this end, my administration will ensure that we walk the talk as far as transparency, the rule of law and fiscal discipline are concerned”. The buzz is because Lagos State is notorious for the opacity of its finances with no figures available to the citizens for various infrastructure projects. Sanwo-Olu promises to change all that. Godspeed and courage to the new team in Nigeria’s most visible state. “We must be prudent yet not afraid to act to ensure that this large population enjoys the economic prosperity and social security that our development agenda has to offer”, Sanwo-Olu assured.

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Buharinomics 2: Fixing the bugs of 2.0, installing version 3.0 Bongonomics

Bongo Adi

n the past 4 years, apparent breakdown of law and order across the entire nation has been a serious concern for many. This is in addition to the Boko Haram scourge that has obviously challenged and seems to be overwhelming his capacity. His government has failed to respond adequately to the growing menace of Fulani militia ravaging swathes of the middle belt of the country, the southwest, and other parts of southern Nigeria. Kidnapping, ritual killings and violent crimes continue to terrorize everyday living in Nigeria. Sometimes too, the security apparatuses of the police, the army and the navy, collude with terrorist in orchestrating this macabre dance of death on hapless citizens. It would not be far-fetched to conclude that in the past 4 years, life in Nigeria has come full circle to the Hobbesian state of nature where life is nasty, brutish and short. Everyday harvests of deaths and corpses clearly demonstrate government’s manifest lack of concern for the lives of ordinary Nigerians.

Rather than proactive police measures to address structural problems in the economy, his preferred style was to man the system by attempting to block leakages which led him relapsing into his old ways of economic protectionism that negated liberal market principles. Lapses in administration were frequently apparent and often compounded by frequent logjams with the legislature. But particularly worrisome in the past 4 years is the plunge into lame excuses in the glaring inability to keep to his 2014 campaign promises and a never-ending, nauseating, blame game. With most campaign promises all but reneged, the government found itself in a manufacturing labyrinth of subterfuges and innuendos and when things got out of hand, his minister were caught in barefaced lies and cover-ups. His media handlers have turned deception, half-truths, spinning, agenda-setting, priming and cover-ups into an art form. The situation has been so bad that some feel that Nigeria now epitomizes the post-truth society. These concerns were re-echoed by leading international news covers that greeted his re-election. As the news of his re-election last February filtered in, Financial Times declared that “Nigeria’s returning president has a chance to make amends.” The Telegraph of London asked: “Is Nigeria about to become the next Venezuela? The signs are not good.” The Economist said that it is “time to keep those promises” and

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Nigeria is bedeviled by six core problems of growth, investment, debt, energy, and of course, inequality... Without decisive pro-market reforms it is likely to be “old wine in old bottle.

the BBC News asked: “do the promises stack up?” At home and abroad, the signal is that Buhari’s second term as Nigeria’s head of government is burdened with a damaging credibility and integrity deficit. But like the Financial Times, we think Buhari can still redeem himself and that integrity of his that Nigerians had believed. Nigeria is bedeviled by six core problems of growth, investment, debt, energy, and of course, inequality. Granted all of these problems preceded Buhari’s second coming in 2015, but his approach so far seems to be nibbling at them. Without decisive pro-market reforms it is likely to be “old wine in old bottle.” Growth has decelerated over the last ten years from the peak of 8 percent in 2011 to current 2 percent. For the past 3 years, Nigeria growth rate has underperformed both global and regional average with a mean growth rate of just 2 percent over the last 5 years while the population expands by 3 percent each year which is a percent higher than the GDP. Crudely speaking, we have more people than could be taken care of by our productivity. As is common in such situations, the bulk of the wealth concentrates on quite a few individuals. Recent Oxfam research estimates that just 2 percent of Nigerians own almost all the deposits in Nigerian banks and just 5 percent of the population own approximately 40 percent of the GDP. At current 2%, growth is subopti-

mal, leaving a population gap of 2%. In other words, to beat population, the economy must grow at about 4%. While this absorbs the population expansion, it does not guarantee full employment. To generate full employment, the economy must grow at about 6%. This should remove the employment gap. However, to build a sustainable economy with a transformational capacity requires a GDP growth rate of above 8%. Unfortunately, the highly regulated macroeconomic system of economic patriotism preferred by Buhari’s administration in the second trimester lacks the required momentum to spur the level of growth required to fill the population gap, the employment gap and the transformational gap which guarantees real improvement in the quality of life of citizens. Corresponding with this suboptimal growth is the investment trap. Following his preference for neodirigiste policies, the economy has bled investments, especially foreign direct investments, reversing previous years of record FDIs during which Nigeria was among the most attractive destination for foreign capital in emerging markets. Lack of investment stymies growth since it is the catalyst for sustained economic growth with multiplier effect on aggregate income. • To be continued Dr Adi is a Senior Economics faculty at the Lagos Business School

From academia to industry: Seven tips for academics making the switch

oving from academia to industry can sometimes be daunting, especially if the move was more serendipitous, than premeditated.I found myself in this position over 7 years ago, moving from a faculty position in the United Kingdom, to an industryresearch position in Nigeria. Let me set out by stating for the records that I hold both the academia and industry in very high esteem, and the essence of this piece isn’t to place one above the other, but simply to share my thoughts and reflections on my move from core academia to industry. I have always been a firm believer that there should be more collaboration between “town” and “gown”, for society to fully reap the benefits of the knowledge economy. Reflecting on my experience, I have encapsulated 7 tips that helped consolidate my own move, from core academia to private sector opinion research consulting. It is my hope that this piece serves as a useful guide for academics seeking to take the leap into industry; particularly early career academics who aren’t too sure of options that exist outside core academia, and what’s needed to make the move. From my observation, academic research and industry research often operate from two ends of the same thread. Prior to making my own switch, my academic life revolved around teaching, research and community service – the three cardinal pillars of academia. As a faculty member, my research focused strictly on my personal areas of research interest– strategy, entrepreneurship, small business development and knowledge management. On that end, most of my research projects dealt with much smaller data samples, and it was only natural to multi-task; handling roles like principal investigator, theoretician, research designer, questionnaire designer, enumerator, moderator, data analyst, report writer, result illustrator and disseminator amongst others. Essentially, research-life played out mainly as a one-man show. I was sort of a jack-of-alltrade researcher, except in cases where I had

to collaborate with few colleagues to jointly publish academic papers, for the purpose of“contributing to knowledge” (tongue in cheek – seeking to publish, and not perish). On the other hand, since crossing over to industry research, I’ve had to work on more applied research projects, focusing more on ToRs from clients and partners, rather than my own personal research interests. I’ve also had to manage projects with much larger data samples, with projects cutting across various sectors, subjects and themes. I could be researching the state of Internally Displaced Persons (IDPs) in Maiduguri in one week, and by the next week, I’m off investigating the motivations for irregular migration amongst young people in Benin City. Consequently, I have learnt to work in teams and manage research projects like“production lines”, where output from one stage serves as input for the next. My roles have now become more clearly defined; because I have to work with other professionals like enumerators, moderators, field supervisors, software scripters, data managers, data entry assistants, statisticians, qualitative data analysts, data illustrators, infographers and so on. By implication, I now have to recognize and respect other team members as professionals in their own right, who individually represent important parts of fixing a jigsaw puzzle. So, here are seven tips I believe academics switching into industry ought to consider. 1. Understand the landscapes are different – In every sector, certain ways of life hold sway. The culture in academia is different from the culture in industry; and academics seeking to make the switch need to spend time studying how things are done in the industry they are considering switching into. Don’t assume your PhD grants you the ability to adapt into any culture;else you may be in for a rude shock. 2. Define your space – there’s often the fallacy of thinking that a PhD confers an academic all the knowledge within a particular field of study.Not so Doc!! In actual fact, a PhD makes you more of a specialist, and less of a

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generalist. However, what a PhD does is to equip you with advanced skills to be able to investigate or inquire into domains within a discipline and beyond. After all, the word “research” simply means “search again”. In other words, you learn how to deepen the search, and extend the boundaries of knowledge, from where others left off. Therefore, if you’re thinking of taking a plunge from academia to industry, you must clearly define your space, know where your boundaries lie, understand the core strengths and skills you’re bringing to industry, understand other domains of knowledge that you can extend into, given your skillset and experience; and understand areas that are simply “No-Go” areas. Never claim you know everything. There are areas that are simply not your forte and may require further trainings outside your PhD knowledge. 3. Simplify your science – Given the academic rigour that PhD students have to go through to graduate, there’s often the tendency for academics, especially fresh PhDs, to become what I have termed “methodological purists”; wanting to follow every strict scientific process and rule in the book. From experience, some of those processes may not always apply in the industry, nay the real world. I have realized that science works wonders when simplified and made easy to understand. More so, simplifying your science makes life easier for you and your industry audience. What’s the use of conducting some high-sounding statistical analysis like Kolmogorov Smirnov, Cronbach’s Alpha and Kruskal Wallis tests, when all your client is looking for are frequencies and percentages? As we say in the Nigerian parlance, na who e epp? Meaning, who does it benefit? Simply follow the instructions of your client. The industry seeks ways to simplify, and not compound. This is why visual aids like charts and infographics are becoming increasingly popular these days, as industry practitioners seek to make data more accessible to larger audiences; and not only to fellow academics or peer reviewers of academic journals.

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Bell Ihua 4. Developyour team spirit– Teamwork is an art, not science; and academics transiting into industry must understand that no man is an island. They must learn how to work well with others, how to build effective teams, and how to recruit people; especially in areas they’re not so competent. Put away the days of the solo academic, where you can write your conceptual papers, conduct your research, attend conferences and publish articles all by yourself. Here you must learn how to synergize, and collaborate with other professionals to make up for your technical deficiencies. For instance, if you’ve been used to conducting data analysis on Microsoft Excel, and can collaborate with a colleague with strong competence in SPSS or STATA packages, that should constitute a formidable analytical team. Imagine completing a great research report, and there aren’t good illustrators to bring it alive in a publishable format or communication experts to help with dissemination on different media platforms, that report may never go far. Industry thrives on the ability of pulling together resources and competencies of different people to achieve desired results; and being a team player is one of the critical skills needed to succeed here. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr. Ihua is Executive Director at Africa Polling Institute (API), an Opinion Research think-tank based in Abuja. He was formerly a faculty member at Coventry University’s Business School, United Kingdom.

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Nigeria’s food insecurity fears heightened as population grows faster than production Josephine Okojie

i g e r i a’s f o o d ins ecur ity fears have heightened as crop production is not moving in the same trajectory as population growth. Africa’s most populous nation is populated with 201 million people who must be fed with staples ranging from rice, beans, tomatoes and maize among others. Yet, there is still much demandsupply gap in most of the staple foods, even as the population growth rate stands at 2.6 percent per annum. The World Population Prospects 2017 has projected Nigeria’s population to surpass 300 million people mark by 2050. Experts say this might create food scarcity and hike in prices if the country fails to grow more food for its rising population. “We are not producing enough currently because farmers are still farming using old farming techniques and our yield per hectare is still very low when compared with other nations of the world,” said Abiodun O l o r u n d e n r o , m a n a g e r, Aquashoots Limited. “Our population is growing very fast and we are yet to increase our

productivity. This is even making the few available more expensive for consumers,” Olorundenro said. Latest data from Agriculture Ministry show that Nigeria is the largest producer of yam with 40 million metric tons per annum but yam demand in the country is 60 million metric tonnes per annum (MT), leaving a gap of 20 million MT. Nigeria produces 42 million MT of cassava but has a demand of 53.8 million MT of the crop,

gnatius Onimawo, Vice Chancellor of Ambrose Alli University (AAU), Ekpoma, has challenged academia and stakeholders in the agricultural sector to harness the abundant potentials inherent in castor farming. Onimawo, gave the charge at the 79th inaugural lecture of the university, delivered by Osemwota, Ikpotokin Osadebamwen of the department of crop science titled, ‘Maintaining Soil Fertility for Sustainable Crop Production in Nigeria: The Soil and Crop Partnership’. The Vice- Chancellor stated that castor farming could establish the university community of Ekpoma as a castor belt, given its export potential. “We are moving at top gear to realize our vision of making, Ambrose Alli University best state university and one of ten best in Nigeria. The faculty of agriculture is playing a key role in the realization of this vision. “I have challenged the faculty in many research areas, notably, in rice farming, harvests and sales

MT. Nigeria’s ginger production is 310,000 MT but demand is 650,000 MT, leaving a gap of 340,000 MT. Nigeria’s rice production has risen to 5.3 million MT but demand is still 7.2 million MT, leaving a gap of 1.9 million MT. Maize production in the country is put at 10.5 million MT but demand is 15 million MT, leaving a gap of 4.5 million mt. Local Soybean production is 750,000 MT but domestic demand

Oyo unfolds plans to export maize to Botswana

AAU VC makes case for investment in castor farming IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

leaving a gap of 11.8 million MT. National supply for Irish potato is put at 900,000 MT per annum but with a demand of 8million MT and a gap of 7.1 million MT. Similarly, local production of sweet potato is estimated at 1.2 million MT, while demand is 6million MT, leaving a gap of 4.8 million MT. More so, Nigeria produces 400,000 MT of wheat annually but with a demand of 4 million MT, which leaves a gap of 3.6million

is 2 million MT, meaning there is a gap of 1.3 million MT. Acha production is 78,000 MT but with local demand reaching 187,000 MT, there is a gap of 109,000 MT. Sesame production is 200,000 MT but demand is 600,000, leaving a gap of 400,000 MT. Local shea nut production is 200,000 MT but demand is 1.4 million MT, implying there is a gap of 1.2 million MT. Castor p ro d u c t i o n i s 0 1 4 , 0 0 0 M T. However, demand is 510,000, leaving a gap of 496,000 MT. Nigeria produces 2.5 million metric tonnes of tomato but citizens need 6 million MT of it to survive, leaving a gap of 3.5 million MT. Sorghum production in the country is 11 million MT while demand is 12.5 million MT, showing a gap of 1.5 million MT. Ibrahim Kabiru, national president, All Farmers Association of Nigeria, said Nigeria must now increase its mechanisation to meet the ever-increasing mouths needed to be fed. “ We m u s t s t a r t f a r m i n g all year round and provide farmers with improved seeds varieties to increase our yield per hectare to produce enough for our population,” Kabiru told BusinessDay.

along with extension services to the community. In castor farming to establish the institution as a castor belt, given its export potential and the establishment of an agricultural village of Emuhi”, he said. He said despite the challenges confronting Nigeria’s economy particularly low crude oil prices and food insecurity, researchers and experts are wholly undaunted to renew their interest in agriculture as a way to diversify the economy away from oil. He explained that castor is a vegetable that has a wide range of benefits from medicinal to cosmetics, anti-inflammatory properties, as well as act as a laxative to relieve constipation. Onimawo, said the institution had since 2017 partnering with the Ahmadu Bello University, Zaria, Kaduna state on castor evaluation research program. He said through the program, it has been established that castor can grow in Ekpoma. He however, disclosed that in the on-going first semester examinations for the 2019 academic session, 100 and 200 levels examination were by computer based examinations. www.businessday.ng

REMI FEYISIPO, Ibadan

n a bid to generate foreign exchange and develop agriculture, Oyo state government is already in talks with Botswana to export maize to the Southern African country. Governor Seyi Makinde who disclosed this in his inaugural address, said “we recognise that one of our areas of comparative advantage is agriculture. I am excited to tell you that we have already taken steps to market our potentials. Our farmers will be happy to know that we are in talks with Botswana to export our maize to them. “Our African neighbours have in the recent past imported from Central America, but they are ready to give us a chance,” the governor said. “We welcome the delegation from Botswana led by Business Botswana President, Gobusamang Keebine”. He said his administration

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planned to make lives better for the farmers with good infrastructure. During his campaigns, he said, he spoke to farmers in settlements at Ipapo, Ilora, Eruwa, Ogbomosho, Iresaadu, Ijaiye, Akufo and Lalupon who complained about inability to access credit facilities, poor rural infrastructure, especially feeder roads, difficulty in processing harvests, and lack of storage facilities. “We listened to leaders and members of the Joint Farmers Association and agropreneurs talk about the challenges in the agriculture sector and proffer solutions which we will implement. “Also, as we moved from one local government to the other, we listened to people discuss their concerns. I know that the people of Oyo State are not asking for too much. We spoke to the businessmen who are hurting under multiple taxations, who are pained because the ease of doing business is so bad that Oyo State ranks thirty-five out of the thirty-six states in Nigeria. More @Businessdayng

businesses are shutting down than are being opened,” he said. Governor Makinde said the focus of his government would be to implement policies that would give the people the tools they need to lift themselves out of grinding poverty and lack. “We published our Road Map for Accelerated Development, 20192023, three months before the elections. We want you to hold us to our promises.” In that document, we set forth our policies for tackling the infrastructure deficits, enabling an efficient health sector, improving security, youth empowerment, social inclusion and protection. “O u r p o l i c i e s r e f l e c t a n understanding of the magnitude of problems Oyo State people face and our determination to use the instruments of focused leadership to tackle them. We are not promising miracles, we promise that results will happen if we work together, and that you will see the results, some in a matter of weeks”, he added.

Wednesday 12 June 2019

BUSINESS DAY

AGRIBUSINESS ag@businessdayonline.com

HarvestPlus Nigeria set to launch ‘Biofort Stat’ to drive investment in nutrition Josephine Okojie

meeting with our partners in the Food and Organisation, we agreed that if we are to contribute to the biofortified food sector, data must be important to us,” Ilona said. “ Th i s i s w hy w e a re complimenting FAO stats. At t h e s a m e t i m e, u s e that information to spur investment and help sustain investments. We hope that by the end of July we would have been able to upload

information and make it available to people. “But we will officially l au n c h e d i n Nove mb e r during the Nutritious Food Fair (NFF) to be held in IITA premises,” he further said. H e h o w e v e r, a d d e d that the main goal of the organisation is to help promote fortified crops in the country to help tackle issues of malnutrition. According to him, the

firm is partnering with smallholder farmers and small and medium scale enterprises to increase the production of vitamin A cassava and maize for rural f o o d c o n s u mp t i o n a n d industrial application. Ilona also said that HarvestPlus shall have over 100 on-farm trails across the country for cassava and maize as a demonstration farms to training farmers.

Youths must embrace farming to drive employment – Ogunjobi Akinremi Feyisipo, Ado-Ekiti

he Ekiti State Government has reiterated its determination to harness abundant opportunities in the agriculture sector to tackle unemployment within the ranks of youths in the State. Lanre Ogunjobi, director general of the Bureau of Employment, Labour and Productivity stated this at the 2019 Rural Employment P ro m o t i o n S c h e m e by National Directorate of Employment (NDE), Ekiti State chapter. Ogunjobi who advised

MIKE ABANG, Calabar

arvestPlus Nigeria says it plans to launch a marketing portal called biofort stat to capture information of biofortified crops in the country and drive investment in nutrition. Pa u l I l o n a , c o u n t r y director, made the disclosure recently at a workshop organised by the organisation for its partners held at the International Institute of Tropical Research (IITA) in Ibadan. Ilona said that the marketing portal which would be launched officially launched in November will be loaded with relevant nutrition data for investors that require data to make investment decision in the country’s nutrition sector. “We have built a marketing portal called the Biofort Stat which is conceptualise in line with the FAO stats. After our

Ogoja is a hub for rice production, says Imoke

youths in the state to take keen interest in agribusiness and farming noted that the sector is abound with various opportunities which would enable them make meaningful contribution to the economy growth of the state and generate income for them. He appreciated NDE for taking a giant stride in its mandate by assisting youths and rural farmers in the state, especially the NDE trainees have access to the loans. The bureau director general who said that the loans will change the status of the youths from job

seekers to job providers, advised the beneficiaries of NDE programmes in the state to make judicious use of the opportunity by using the credit for the purpose which it was disbursed. Responding, Adeoye Olusegun who is the state cocoordinator said about 150 Ekiti youths who benefitted from the three NDE Rural Employment Promotion S c h e m e s w e re g i ve n a start-up grant ranging from N20,000 to N50, 000. In a related development, the Ekiti State Government has promised to revitalize Mat We av i ng Bu s i n e s s in the state to encourage

self-reliance and thereby reduce the number of people seeking white collar jobs which are scarce nowadays. Ogunjobi stated this at a meeting with women who trade in mat weaving at Ogotun-Ekit, in Ekiti south West Local Government Area. He described Ekiti people as hardworking, resourceful, and rich in culture, while noting that the state could become a World Tourist Centre if our potentials are fully tapped with an assurance that the government will not hesitate to empower any innovations that could lead to self-reliance.

or mer governor of Cross River State, Senator Liyel Imoke, has described Africa’s first Vi t a m i n i s e d R i c e Mi l l situated in Ogoja as a phenomenal project with great economic potential. I m o k e w h o accompanied his su cce ss o r, B e n Aya d e, on an inspection to the p ro j e c t s i te c ou l d n o t hide his excitement while saying that the project will create jobs and boost rice production in the state, thus, make Cross River a hub for rice production. “This is a phenomenal project that speaks volume of the governor’s vision, not just the vision but the timing of a project of this nature,” Imoke said. “The project makes lots of economic sense and will create employment, increase rice production and make Cross River a hub for rice production in this country.” Imoke admitted that the ‘intellectual money policy’ of Ayade could be the secret of such a gigantic project, especially when the state earns one of the least from federal allocation. “I love the location and this can capture all the rice in the Central and North, and ideally situated in terms of access to the market,” he said. Continuing, the erstwhile governor remarke d that, lots of people feel that the Nigerian rice is of low quality, adding that with the new mill begin built by the state government quality of rice in the

country will be improved upon. Ap p l au d i ng Aya d e’s commitment to increasing l o ca l r i c e p ro d u c t i o n , Imoke admitted that the processing park is equipped with the latest technology that would help improve quality of rice produced in the state and impact farmers’ livelihood. Commenting, the elated Governor Ayade explained that, “this is the first Vitaminized Rice Mill in Africa. It is the latest technology and an adoption of the most sophisticated technique, part of which it is my own intellectual inputs and design.” “We have a team here from Germany who are working to make the plant run fully on solar, two megawatts of power and two megawatts of battery storage, so, day and night it will run without recourse to diesel,” Ayade said. Giving insights on the planned power system, Aya d e i nt i mat e d t hat, “if you want to run on diesel it means you will be operating at a loss and that is why the team is here with me from Germany because they have been tested and proven in the industrial park in Calabar, so we want to extend that plus and have them to do this plant.” Admitting that the quality, size and consistency of the grains will be fresh and polished, the governor who was just took his oath of office for a second term maintained that, “ver y soon you will see this plant running, when you see our rice you will know it is fresh, this is not like the imported type, so very soon we are going to explode.”

Food safety: Report shows Africa’s food-borne diseases require attention Jonathan Aderoju

recent report by a study conducted by the World Health Organisation (WHO) shows that Africa needs to pay more attention to foodborne disease. The report which was released by WHO in c o l lab o rat i o n w i t h t h e Fo o d a n d A g r i c u l t u ra l Organisation (FAO) to mark the first ever ‘World Food Safety Day’ with the theme ‘Food Safety, Everyone’s

Business’ According to the report, an estimated 91 million people in Africa each year consume contaminated food that renders them ill, and around 137,000 of them die. Food containing harmful bacteria, viruses, parasites and chemical substances causes diseases from acute diarrhoea to lifelong conditions among others, the report says. The risk of foodborne diseases is most severe in low- and- middle www.businessday.ng

income countries, linked to preparing food with unsafe water, poor hygiene and inadequate conditions in food production and storage, lower levels of literac y and education and insufficient food safety legislation or implementation of such legislation. “Foodborne diseases are completely preventable.” All players along the food chain, she stresses, “have a role in making food safe, beginning with producers and processors and moving

to distributors, food safety regulators, retailers and eventually ser vers and consumers,” said Matshidiso Moeti, regional director for Africa, WHO in the report. The report estimated that in 2015, 159 million people globally still colle cte d drinking water directly from surface water sources, 58 percent of whom are in subSaharan Africa. In addition to the expense for health care, food-borne diseases impose considerable other costs to individuals,

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communities and countries due to the lost income from illness-related loss of work. “Beyond the US$15 billion in medical expenses that households in low- and middle-income economies spend each year because of unsafe food, a recent World Bank study also found that those economies lose $95.2 billion (N34 trillion) in economic productivity,” the report says. The report stated that most of the health burden and economic loss could be avoided with proper @Businessdayng

management of food and food products and appropriate hygiene by producers and consumers. WHO has set June 7th to raise global attention on the dangers of consuming food toxins as food safety has become such a troublesome condition and burden. “Contaminated food not only affects human health, it taints food secur ity, economic prosperity, agriculture vitality, market access, tourism and sustainable development.”

Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

Market

Emerging market stocks rebound after U.S halts tariff plan on Mexico Israel Odubola

merging market stocks ended a fourday losing streak on Monday following the suspension of proposed tariffs on Mexican goods by world’s biggest economy, United States. The Morgan Stanley Capital International (MSCI) Emerging Market index, which captures large and mid-cap stocks in global emerging markets including Mexico, China, Nigeria, India, South Africa and Egypt, gained 0.46 percent, up 4.3 percent year-to-date. President Donald Trump announced last Friday (June 7) announced an indefinite suspension on the planned tariffs on Mexican goods, saying his and administration and Mexican officials have reached a common ground on immigration policy. The tariff, which would have been effected on Monday (June 10), comprised 5 percent tax on all imported Mexican goods, and would have risen steadily to 25 percent. Trump announced the tariff to persuade Mexico reduce the number of Central American asylum seekers and immigrants arriving at the US southern border. The United States-Mexico tariff agreement is expected to lower trade concerns weigh-

ing on equities in emerging markets, even as the region is feeling the pangs of massive capital outflows on the heels of escalating trade dispute between United States and China. Portfolio inflows to the region plunged 115 percent to an outflow worth $5.7 billion in May, compared to inflows worth $32.6 billion and $38 billion in March and April respectively. Debt inflows in May stood at $9 billion, while equities outflows accelerated to $14.6 billion, its highest level since the June 2013 Taper Tantrum,

which saw equities outflows jump to $22 billion. Of the $14.6 billion outflows, $7.2 billion, which equates to 49 percent, left China. Worse still, the David Malpass-led World Bank projected a slowdown in investment growth in emerging markets to 3.9 percent in 2019 on the account of fragile global growth, escalating debt levels and structural constraints, but a rebound is expected in near term supported by easier financing conditions Nigerian stocks slide 0.36

percent after Monday’s trading session, down 3.5 percent year-to-date. Analysts linked the rout in the Lagos bourse to lack of clear policy direction of the present administration and absence of economic-stimulating reforms that would stir the market. Equities listed on the Johannesburg bourse have gained 10.89 percent since the start of the year on Monday, despite posting its weakest economic report since 2009, having contracted some 3 percent in three months to March.

Egyptian stocks are up 8.54 percent year-to-date, China’s Shanghai have risen 14.4 percent, with Bombay (India) and Sao-Paulo (Brazil) advancing 10 percent each. The eased trade tensions between United States and Mexico might have somehow helped emerging markets, but a strong dollar and cut in Chinese Yuan incite pressure on a number of emerging countries’ currencies. The naira have gained a marginal 0.3 percent relative to US dollar, thanks to Nigeria’s Apex Bank sustained liquidity injection to the foreign exchange market. The Egyptian pound, Indian rupee and Mexican peso have risen 6.9 percent, 0.3 percent, 0.2 percent respectively against the US Dollar, with South African rand and Argentinean peso tanking 5.7 percent and 16 percent. As the U.S Federal Open Monetary Committee meets next week to decide rate, analysts project a dovish policy stance from U.S highest decision-making body, to foster global growth. Yinka Ademuwagun, research analyst at United Capital Plc said “Global central bankers are turning dovish and this due to the fact there is a need to spur growth in the world economy. So rate outlook appears dovish in the near term, a tailwind for emerging markets”

Banking

Sterling Bank earmarks 10% loan portfolio to agriculture financing HOPE MOSES-ASHIKE

terling Bank Plc, has committed 10 per cent of its total loan portfolio to the finance of agriculture in recognition of the significant contribution that the agriculture sector is capable of making to the growth of the Nigerian economy. Bu ko l a Aw o sa nya, group head, Agric Finance and Solid Minerals, Sterling Bank, who disclosed this at a recent summit on Commodity Value-Chain Investment and Agribusiness Support Initiative through PPP in Abuja, said the bank’s commitment is a deliberate effort to support farmers and ensure that the “value chain is properly tied end to end.” Awosanya explained that agriculture financing constitutes one of the five focal sectors of intervention for the bank alongside health,

education, renewal energy and transport (HEART). She noted that the absence of good agricultural practices, failure of farmers to repay loans, inconsistency in government policies as well as bad weather, among others, are some of constraints to lending to operators in the sector. She said “We want to encourage farmers but if the input is bad, the output will fall short of expectations. For instance, poor seed quality is an issue; lack of infrastructure such as bad roads is also an issue because it makes distribution of the harvest from the farm to the market difficult. “Government policy also affects lending to the sector because after the bank has concluded arrangements to finance some farmers, the government may decide to lift a ban on the importation of the commodity. What happens to the ones you have done? So government

policy is also a problem in agriculture.” Nonetheless, Awosanya said Sterling Bank is interested in providing funds to assist farmers to grow although poor farmer education remains an issue. “There is a need to train farmers on the need to always repay a loan because when loans are not repaid, banks will not be encouraged to lend to them again,” she said. She said “We also want government to ensure that they don’t just talk the talk but do what they set out to do. We spoke about fluctuation of price. If government doesn’t come up to mop up funds so that prices are stable, it is also a problem to finance agriculture.” Further justifying Sterling Bank’s interest in agriculture financing, Awosanya said “Agriculture is a sector that has social impact. Without agriculture there will be no food and food is critical to

the survival of man. The sector is the largest employer of labour and over 80 percent of the players in the sector are smallholder farmers.

“We want to help these smallholder farmers to make their businesses bankable and profitable so that they can fend for their families

and send their children to school. That is why the bank has dedicated 10 per cent of its loan book to impact in that sector.”

L-R: Felix Ofulue, head, corporate communications, Ikeja Electric; Onafowokan Oluseye, chairman, New Hampshire Capital; Ugochukwu Obi-Chukwu , Ag chief commercial officer, Ikeja Electric, and Odion Omonfoman, CEO, New Hampshire Capital , at the launch of Meter Asset Provider( MAP) in Ikorodu, Lagos. Pic by Pius Okeosisi

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

Wednesday 12 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Real Estate

Innovative improvement of customer relationship key to business success - Eliezer Endurance Okafor

inding innovative ways to improve customer relationship is integral to the success of a business, Eliezer Workplace Management, one of the leading facility management companies in Africa has said. According to the Lagosbased company, the customer service system in Nigeria became the most talked about concept a few years back and thus led to a better suppliercustomer relationship. However, the problem in the approach to customer feedback still lies in in a country that has the highest population in Africa. “Cliches like ‘customer are always right, the customer is king, we are in business because of you’ were very popular. These statements were a description of what several industries hoped to model and exemplify in their approach. Has it worked? Yes, it has,” David Korede, the Executive Director of Eliezer Workplace Management said. Dele Olaniyi, a manager at a consulting firm situated in Lagos shared his experience with a cus-

tomer service provider from one of the country’s tier one banks and he had this to say- “My bank’s customer care agent called me to ask for my experience regarding their services. Then she went ahead to ask what areas of improvement they needed to focus in order to serve me better, I took my time to explain, as calmly as possible. She thanked me and the line went off.” Three weeks later, Olaniyi said he was called again by the same bank. “I was called from the same bank by another customer care agent asking the same questions, I rattled off the same information because I want to give them the benefit of doubt.” The manager said, perhaps, the info he gave the last time was not entered into some database or the person that was in charge had been fired. “By the time I got the third and fourth call, it began to get very annoying. The question you want to ask at that point is, “what happened to all the feedback I have given before?” Olaniyi questioned. Studies have shown that the scenario is not far-fetched from the experiences many have had

to endure from some other industries and businesses. This was affirmed when BusinessDay reached out to Ada, a business woman in Enugu state as she complained about the inefficient manner at which the company that supplies goods to her shop conducts its customer feedback. Mohammed from far away north and Jegede from Ekiti state made similar comments about their various industries. “It’s a two edge problem. The first is the problem of data, some industry till date has no data, no feedback policy, no means whatever of measuring their customer satisfaction,” Korede explained. According to the executive director of Eliezer Facility manament, the second problem is that of implementation. “When feedback is given, it is so that the recipient can effect those changes and deliver a more excellent service to its customers. Not so in Nigeria. It seems more like many industries, haven solved the first problem, don’t know the way forward, the implementation and changes that need to be put in place. So they keep collecting these datafeedback and do nothing with it.”

ICT

HP fake print supply hits record level in 2018 Jonathan Aderoju

ith a current economic impact of $3 billion (N1 trillion), market trends show an increase in counterfeiting, even as enforcement scores significant wins. Businesses are at more risk of being sold counterfeit print supplies than ever before, according to a recent HP commissioned study by Harris Interactive. Already costing the global economy $3 billion(N1 trillion) per year according to the Imaging Supplies Coalition, the growing risk of fakes is driven by an increasingly broad supplier ecosystem, lack of certainty by buyers that their purchases are genuine, and a lack of awareness of the risks of purchasing counterfeit goods. According to Glenn Jones, Director Global Anti-Counterfeit Programme, HP “Every one of

the key market indicators we monitor show a significant increase in the risk of counterfeit print supplies,” “For companies like HP, counterfeits undermine decades of focused research and testing aimed at creating superior ink and toner and reliable, high-quality cartridges for our customers. For users, fakes cause a significant increase in print failures, low page yield; poor print quality, leaks and clogs, in addition to voiding hardware warranties.” According to Harris Interactive surveys, the past four years have shown a 30 percent plus drop in companies working with a trusted, primary supplier, and a 27 percent increase in companies buying purely on availability. With a broader, less trusted supplier network, SMEs are losing the ability to discern the authenticity of their cartridg-

es with absolute confidence. All regions heavily affected by counterfeiting, in particular the Middle East, Eastern Europe and Africa, with almost three quarters of businesses surveyed feeling confident their purchases were genuine. While the market trends are concerning, HP and other Print OEMs are continuing their significant efforts to battle this issue by actively engaging with local authorities. Across EMEA over the last five years, approximately 12 million counterfeits and components have been seized by local authorities, supported by HP. HP has conducted over 4,500 inspections of reseller stock and suspicious deliveries for customers. Through HP’s Anti-Counterfeiting and Fraud (ACF) Programme, the company also actively educates its customers and partners to be vigilant against fake printing supplies.

L-R: Charles Omoera, chief executive, Stanbic IBTC Trustees; Sola Fijabi, director, PACE Sports and Entertainment Marketing; Emeka Ogbu, vice president, Nigerian Universities Games Association; Alex Goma, MD, PZ Cussons; Neeraj Vaidya, Commercial Officer, Vista International, and Charles Nnochiri, head of marketing, PZ Cussons, Consumer, at the 2019 Higher Institutions Football League Draws.

L-R: Dozie Mbanefo, CEO, New Crystal Communications Limited; Blessing Umebali, publisher, Brandmatters Magazine; Emeke Okeke, GMD/CEO, Media Fuse Dentsu Aegis Network Limited, and Innocent Oboh, president, Dijo Group, at the 3rd Africa Leadership Conference, organised by International Advertising Association, Ghana chapter, at Labadi Beach Hotel in Accra Ghana.

L-R: Shamsideen Kareem, a guest; Dare Lawal, another guest; Binta Adisa, MD, Roots Foods Limited; Lanre Adisa, chairman, Roots Foods Limited, and Awoga Awoyemi, another guest, at the celebration to mark the fifth anniversary of the company in Lagos recently.

MSMEs

BoI, devt agencies, others tour facilities for MSMEs in Edo

takeholders in the investment sector, including officials of the Bank of Industry (BoI) have toured facilities set up by the Governor Godwin Obaseki-led administration for Small and Medium Enterprises (SMEs) in Edo State to improve the ease of doing business and increase productivity. The team of investors were conducted around the Edo Innovation Hub, Edo Production Centre in Benin City and the Edo Food Processing Cluster in Ehor, to get a glimpse of the different hubs for innovation, manufacturing and agro-processing available to SMEs in the state. The BoI team was led by Mr Ayo Gbajumo. The tour was held with support from the Deutsche

Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ). Senior Special Assistant to the Governor on Skills Development and Job Creation, Mrs. Ukinebo Dare, said the stakeholders were in the state to assess how the state government is assisting entrepreneurs to activate their ideas, start and grow businesses through the use of technological innovations. She said at the Edo Innovation Hub, in Benin City, the Obasekiled administration has provided training opportunities for youths to develop skills in graphics and web design, artificial/business intelligence, data analysis, among others. During the stop at the Entrepreneurship and Agribusiness Development Center in Ehor, Dare

explained that the Ehor Centre houses the Edo Food and Agric Cluster (EDOFAC), which was initiated by the state government to empower rural farmers, with the training programme focused on enterprise development, food processing, marketing and distribution. The governor’s aide added that the goal of the stakeholders’ tour was to provide an overview of the opportunities for investment in different sectors of the state’s economy, noting that government was playing the role of the driver of the process so that more private organisations would participate without hindrance. At Ehor, the BoI team inspected the shoemaking and poultry farming sections, where trainings were on-going.

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L-R: Solomon Lalung, governor, Plateau State; Saratu Iya Aliyu, national president, NACCIMA; Fati Abdusallam, chairman of the occasion, Abdussalam Abubakar, and Yahaya Bello, governor, Kogi State, at the installation ceremony of Iya Aliyu as the 20th National President of NACCIMA in Kaduna.

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Wednesday 12 June 2019

BUSINESS DAY

tax issues Transparency initiative uncovers pool of taxable offshore funds … 47 million offshore accounts information exchanged Iheanyi Nwachukwu

he international community has brought about an unprecedented level of transparency in tax matters, which will bring concrete results for government revenues and services in the years to come. The Automatic Exchange of Information (AEOI) initiative - activated through 4,500 bilateral relationships - marks the largest exchange of tax information in history, as well as the culmination of more than two decades of international efforts to counter tax evasion. According to new data released by the Organisation for Economic Co-operation and Developmen (OECD), more than 90 jurisdictions participating in a global transparency initiative under the OECD’s Common Reporting Standard (CRS)

since 2018 have now exchanged information on 47million offshore accounts, with a total value of around EUR 4.9 trillion. “The transparency initiatives we have designed and implemented through the G20 have uncovered a deep pool of offshore funds that can

now be effectively taxed by authorities worldwide. “Continuing analysis of crossborder financial activity is already demonstrating the extent that international standards on automatic exchange of information have strengthened tax compliance, and

we expect to see even stronger results moving forward,” according to OECD Secretary-General Angel Gurria. Gurria unveiled the new data prior to a meeting of G20 finance ministers in Fukuoka, Japan. He noted that these impressive results are only the first stock-taking of collective efforts, adding that even more tax revenue is expected as countries continue to process the information received through datamatching and other investigation tools. “We really are moving closer to a world where there is nowhere left to hide.” Voluntary disclosure of offshore accounts, financial assets and income in the run-up to full implementation of the AEOI initiative resulted in more than EUR 95 billion in additional revenue (tax, interest and penalties) for OECD and G20 countries over the 2009-2019 period. This cumulative amount is up by EUR 2 billion

since the last reporting by OECD in November 2018. Preliminary OECD analysis drawing on a methodology used in previous studies shows the very substantial impact AEOI is having on bank deposits in international financial centres (IFCs). Deposits held by companies or individuals in more than 40 key IFCs increased substantially over the 2000 to 2008 period, reaching a peak of $1.6 trillion by mid-2008. These deposits have fallen by 34percent over the past ten years, representing a decline of $551 billion, as countries adhered to tighter transparency standards. A large part of that decline is due to the onset of the AEOI initiative, which accounts for about two thirds of the decrease. Specifically, AEOI has led to a decline of 20percent to 25percent in the bank deposits in IFCs, according to preliminary data. The complete study is expected to be published later this year.

Understanding tax evasion, avoidance, mitigation: The ethical stance on avoidance in Nigeria Gali Aka and Omojo Okwa

ax evasion and avoidance indisputably have implications for most jurisdictions all over the world. When taxpayers do not comply with their tax obligations, economic activities may be distorted. Against this background, tax avoidance and evasion also have a psychological impact on those individuals who pay their fair share to the development of a country. Addressing the problem of tax avoidance and evasion is particularly pressing at this moment, given Nigeria’s present economic situation. Nigeria is a monoculture country and it is vulnerable to negative fluctuations in price of crude oil. According to the 2019 report of the International Monetary Fund, a large infrastructure gap, low revenue mobilization, and high dependence on hot money has constrained our growth as a country below the level needed to reduce vulnerabilities and improve development outcomes. To salvage the situation at hand, the Government, at both the State and Federal level, needs to generate more revenue from taxes to shore up the shortage from crude oil, make appropriate developmental policies and spend wisely. The Federal Government of Nigeria (FGN) has shown commitment to increasing internally generated revenue from all sources, particularly through taxation. Between 2015 to date, the FGN has launched some schemes to give defaulting tax payers the opportunity to make up their outstanding tax obligations in return for waiver of penalty and interest and criminal prosecution. One of such is the Voluntary Assets and Income Declaration Scheme (VIADS) for all categories of taxpayers in default of taxes. The question at this juncture is not

whether the scheme will recover lost revenues, but rather whether it will change people’s ideology about taxes and encourage voluntary compliance going forward and second, whether appropriate sanctions will be applied to the so-called defaulters. To encourage voluntary compliance and ensure that taxpayers desist from willful default, it is imperative that tax authorities and taxpayers understand, and can clearly distinguish between tax evasion, avoidance and mitigation; and that the government has people’s trust. This article looks at the problem of tax avoidance and evasion and tries to situate the issue within the geopolitical ideology within and outside Nigeria. Definitions Tax evasion, avoidance and mitigation needs to be distinguished because taxpayers are entitled to know their legal position and understand the boundaries between the three concepts. One of the consequences of misunderstanding the three concepts is the risk that legal actions would be brought against taxpayers on a ‘frivolous’ basis, as many of the tax avoidance schemes occupy a grey area.

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In brief, to start with is tax evasion which involves actual knowledge of wrongdoing. The intent here is to escape the incidence of taxation. This type of criminal act is punishable in most countries by civil penalties. The hallmark of tax mitigation as stated by Lord Nolan is that “a taxpayer takes advantage of a fiscally attractive option afforded to him by the legislation, and genuinely suffers the economic consequences that parliament intended to be suffered by those taking advantage of the option.” Professor David Ulph, Director of the Analysis and Research Division of Her Majesty Revenue & Customs (HMRC) as he then was, defined tax avoidance as using ‘artificial’ or ‘contrived’ methods of adjusting taxpayers’ social, economic or organizational affairs to reduce their tax liability in accordance with the law while not affecting the economic substance of the transactions. At the intergovernmental level, the parameters set by the Court of Justice of the European Union for the concept of tax avoidance is that which involves wholly artificial arrangements designed to obtain a tax advantage which circumvent national

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tax rules. From the above definitions, the writers make the judgments that: Tax evasion involves non-declaration of income for tax purposes, tax avoidance involves arrangements that are artificial i.e. involves deceit to reduce taxes while tax mitigation is taking genuine options afforded by the law. These positions guide the writer’s analysis of issues in later parts of the article. The above notwithstanding, the problem with most definitions is the inability to encompass all possible circumstances of ambiguity created by the tax laws, such that one may not be able to easily place each case into the appropriate bucket. Political and Philosophical Ideology to Pay Tax Tax evasion as earlier mentioned is illegal. For tax avoidance, irrespective of the positions taken by individuals or the definitions given, it is widely seen as legal but unacceptable. The most relevant basis to determine the moral limits to tax avoidance is the ideologies of a ruling political party or terrain. Rulings in tax avoidance cases always reflect the political ideology prevalent in a society. An example is the words of the US Courts of Appeal judge, Learned Hand, who said that: “There is not even a ‘patriotic duty’ to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.” In the UK the ruling in the case of the Duke of Westminster is indicative that the UK court did not view tax avoidance as an unethical practice in the past. Furthermore, in the US Gregory case, Judge Hand’s words refer to the doctrine of choice. To choose between alternatives, the one @Businessdayng

which minimizes tax liability as well as fulfills legitimate business purpose. Public opinion used to be irrelevant in the past until steps are taken by the legislative and judicial arms of government to determine the validity of taxpayer’s position on the interpretation of the law. For this reason, it may be reasonable to suggest that the moral limits to tax avoidance should be the legal limits set by the relevant policy makers and the courts. Judicial Practices in dealing with avoidance cases Most tax avoidance cases border on the statement of fact and/or clarification on the point of law. The common view in most jurisdictions is that the words of the statute must be interpreted in their context and with an eye to the purpose of the provision. The judicial practices in countries vary widely. The UK Judicial approach to tax avoidance for example started with the respect for legal facts created by the contracting parties. This was laid down by Lord Tomlin in Duke of Westminster case where he stated that it was wrong to assume, as the Special Commissioners did, that the Court may ignore the legal position and regard what is called ‘the substance of the subject matter. He noted that such a doctrine involves substituting the incertain and crooked cord of discretion for the golden and straight metwad of the law The Courts now look at the substance of the matter in order to determine the true consequences of the transaction in the legal form adopted by the parties. The opinions expressed in this article are strictly those of the authors who are as follows: Gali Aka (Manager) and Omojo Okwa (Manager) of Global Transfer Pricing Services of KPMG in Nigeria. They can be contacted at gali.aka @ng.kpmg.com and omojo. okwa@ng.kpmg.com respectively.

Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Nigeria lags Kenya, Ghana, others in mobile banking …as country awaits PSB Stories by Endurance Okafor

he use of mobile phone to access financial services ranks sub-Saharan Africa (SSA) countries amongst the highest in the World. The only current notable exception is Nigeria, a recent survey by EFG Hermes, an Egyptian investment bank present in the Middle East and North Africa region, shows. According to the EFG Hermes survey (Mobiles: Deepening financial inclusion, but at a high cost) on mobile banking across Frontier markets, in Nigeria, the value of mobile payments is insignificant, as the preferred payment platform is NIPs (NIBSS Instant Payments). Figures by the investment bank analysed by BusinessDay revealed that Nigeria only recorded 8 percent of its population who used their mobile phones to access their bank accounts in 2018. Kenya remained the continent’s leader in mobile banking. The 2018 report published recently by the Egyptian bank shows that 72 percent of the banking population used their mobile phones to access their accounts, nearly three times the global average that stood at 25 percent. This means that seven

out of every 10 Kenyans are using their mobile phones to access their bank accounts for services to save or get loans coinciding with a change by the lenders and micro-financiers to adopt mobile and digital platforms that cut on operational costs. Uganda was the closest to Kenya at 47 percent while Tanzania followed at 37 percent. The average percentage of the banking population in the Sub-Saharan Africa (SSA) stood 21 percent while globally the Americas that include the US had 68 percent usage of the platforms,

according to the report by EFG Hermes. “Although credit penetration across our focus countries in SSA continues to lag global levels, the use of mobiles to access financial services ranks our countries among the highest in the World,” the report read. Nigeria, Africa’s most populous nation, was ranked at bottom position in the mobile account pyramid, sharing space with South Asia, the data revealed. Most of the consumers in the SSA countries, the report notes, can now access services such as opening of new accounts, applying for

loans and making payments for utilities through the use of mobile phones, increasing financial inclusion. ‘’Whilst we are very encouraged by the depth of mobile banking across our universe of SSA countries, we believe that now is the time to focus on the costs and would encourage both the central banks and ICT regulators to review the cost of this financial inclusion,’’ EFG Hermes said. EFG Hermes said in the report that mobiles will play an increasing role in financial inclusion because of the infrastructure gap and low penetration of salaried

workers which is unlikely to change materially in the near term. Encouragingly, it noted, this is already happening as per the World Bank’s latest Findex Data Survey. “With the development of NIPs (NIBSS Instant Payments), a shared agency network and low cost framework, Nigerian banks should remain dominant in the retail payments space for the benefit of its low-income users. Its spirit of ‘fair play’ and open competition is the difference and should be an example for the rest of SSA,” the report mentioned. Nigeria currently has 36.8 percent of its adult population excluded from the financial cycle, this translates to a population of 36.6 million adult Nigerians who at the moment are not included in the financial net. However, the central Bank of Nigeria (CBN) has a target to include 80 percent of its adult population into the financial cycle by the year 2020. This leaves the apex bank with an exclusion gap of 16.8 percent, estimated to be bridged in less than two years for it to meet its 20 percent exclusion target. Checks by BusinessDay revealed that the Telco-led model in driving financial inclusion in African countries reported tremendous progress owing to the al-

ready existing large customer base of the Telcos. With the aim to meet its target, Nigeria’s apex bank proposed Payment Service Bank (PSB), an initiative that will enable companies outside the financial industry to acquire mobile money license which will allow them to carry out payment services like: maintain savings accounts and accept deposits from individuals and small businesses, which shall be 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 pre-paid cards; and operate electronic purse. Nigeria’s bank-led financial inclusion model has been argued by industry sources as one of the reasons for the lag in the country’s inclusion rate. Thus, the proposed PSB by the apex bank has been seen as a welcomed development considering it will avail other businesses, especially the Telcos the opportunity to partake in providing payment services. At least 30 business names have since applied for registration as payment service banks since the CBN proposed the PSB in October last year, but the regulator is yet to give license to any of the applicants.

MTN introduces artificial intelligence service for Mobile Money

TN Group, the South African multinational telecommunications company, has announced the launch of its Mobile Money (MoMo) artificial intelligence service or “chatbot”. The chatbot, the first in Africa, went live in Ivory Coast in May 2019 and will be rolled out across MTN’s MoMo footprint in the next few months. According to the telecommunication giant, the artificial intelligence mobile money “assistant” enables customers to engage with MTN’s MoMo services, including payments, on various social media platforms such as WhatsApp and Facebook Messenger, and via SMS. The service will also be included over time, in MTN’s own newly released advanced instant messaging service “Ayoba”. The chatbot is an artificial intelligence guide

that assists users to navigate MTN’s MoMo services and provide other useful information. This innovation leverages messaging and artificial intelligence to drive customer engagement and enhance their MTN MoMo experience, the company said on its website on Friday, June 7th 2019. According to MTN Group President and CEO, Rob Shuter, “we are passionate about bringing the power of our mobile money solutions to more than 60 million customers across Africa over the next few years. Harnessing modern technologies like artificial intelligence can improve in scale, how MTN interacts with customers, enabling them to reach us anytime and anywhere, through a variety of channels including social networks and messaging applications. We can also harness the power of artificial intelligence to provide our customers with

the right answers to their questions at the right time.” The group CEO mentioned also that the telecom company is committed to improving financial inclusion with a range of solutions aimed at addressing the needs of various market segments. “While MTN has made great strides in these areas, we will continue working to deliver our vision for MTN to become one of the largest Fintech players across our footprint,” Shuter added. Checks by BusinessDay revealed that MTN Nigeria has applied for the Payment Service Bank (PSB) license to proposed by the Central Bank of Nigeria (CBN) to enable it become a mobile money operator in a country that has one of the highest exclusion rate in the continent. According to figures by Nigerian Communications Commission (NCC), the country’s telecommunica-

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tions industry has a reach of 86 percent of the country, with 162.3 million customers (the single largest customer base of any industry in Nigeria). This makes the industry till date, one of the most thriving sectors in the country and analysts have disclosed that it has the capabilities, including technology, infrastructure, distribution network and subscriber base. Meanwhile, Nigeria’s telcos industry players have a combined presence in 773 local government areas across the country further emphasizing their ability to reach especially hard to reach areas of the country. The communication service providing companies in Nigeria also have about 1,000,000 unique agents already in place selling airtime across the country, and analysts say this can quickly be converted to establish mobile money agent networks which

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can help reach out to the unbanked Nigerians especially those in the rural areas. 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).” BusinessDay’s analysis of Nigeria’s peers who are driving financial inclusion through the Telco led model shows that the telecommunication company with the largest customer base and infrastructure also generates the highest revenue while also having dominance of the industry. Kenya’s mobile money market for example has five players among which are: MPesa, Airtel Money, T-Kash, @Businessdayng

Equitel Money and Mobile Pay. Safaricom controls the lion’s share with 83.08 per cent of the market, Equitel 16.36 per cent and Airtel 0.56 per cent. Telkom Kenya has 1,581 base stations, some of which are leased, while Airtel has 1,548. Combined, however they are not close to Safaricom which has 4,000 base stations. East Africa’s biggest mobile-network operator, Safaricom Plc, developed one of the world’s first mobile phone-based money transfer services, and says 88 percent of its almost 30 million customers now use it. This is not different in Ghana, as according to the figures from the country’s National Communications Authority (NCA), revealed that between 2012 and 2017,MTN Ghana has been the consistent market leader by number of subscriptions.

Wednesday 12 June 2019

BUSINESS DAY

PrivateEquity &fundraising

Frequently asked questions when seeking private equity funding Raising Private Equity (PE) funds has been seen as a reliable model for companies who want to grow their operations quickly. The quest becomes much easier when such business has an innovative product that can disrupt the market as well as strong figures that suggest it can generate a large profit within five years. It is very likely that a private equity company will be interested in you. Since it is becoming more and more popular for companies wishing to expand inorganically, to seek the PE route, BusinessDay analyst, Michael Ani, in this piece compiled some frequently asked questions answered by PE Cheryl Vijjeswarapu, East Coast Head of Private Equity – Oracle NetSuite.

hat advice would you give executives considering Private Equity

investment? I would start by asking some questions. First, what are your growth plans and at what rate do you plan to scale? What is your current funding structure? If you are using cashflow from operations to fuel growth, is it enough to match up with expectations along the time frame you wish? Are you in a competitive landscape where it is more advantageous to grow now vs. later? Moreover, there are also sector specific questions - e.g. for retail businesses: are you a leader in a specific geography and do you require institutional capital to not only fund growth but also to provide the strategic relationships to openup new distribution channels? As an example, e.l.f. Cosmetics was acquired by TPG (a PE company) which helped put them into a lot of big box retailers. It also depends on some of the less mathematical considerations, like are your executives ready to give up or share control? Are you looking for a liquidation event? Where your key executives in his /her life and what are their goals? Does PE or bringing in any new shareholders match up with those goals? What are some of the signs to look out for in order to ascertain that a business is ready for PE investment?

Traditionally, PE firms look to invest in mature companies that are cashflow positive and that exhibit some market leadership in a segment. Recently, however, companies are starting to see PE dollars earlier– a lot of traditional buyout firms have created growth funds to get in on rounds where VC’s are co-investing. Of course, this again depends on the sector, for Software as a service (SaaS) companies, PEs are less worried about strong EBITDA but are more concerned with recurring revenue. Each PE fund has their own investment mandate so what some firms consider too small of a company, another may consider the perfect target. Alternatively, a company could be a good candidate for an additional acquisition to a PE firm’s existing platform. One thing is for sure, PE firms will put all potential investments through a thorough diligence process. Companies should absolutely have their books in order and hopefully have a good system, like NetSuite, in place. Even if systems are not already in place, when a firm receives PE investments, it is a good indication that they’ll experience an inflection point in growth. Typically in the first 1-2 years they will move onto a system like NetSuite to help them scale and meet the growth thesis being driven by their PE firm. If you have multiple offers on the table from various firms, how would you recommend determining which offer is best for your business?

In today’s market, there is a lot of capital out there. The best businesses likely have multiple buyers, whether it is a financial sponsor like a PE firm or whether it is a strategic buyer or corporation interested in acquiring their asset(s). My suggestion is common in today’s economy: Do not just look at the valuation. It is much more important to get along well with your sponsor, to ensure your expectations for the future of the business, and how you’ll get there are aligned. Don’t just take the highest offer – consider the bigger picture. Hopefully you’re not getting wildly different views on purchase price, and it’s important to note that every PE firm is different, so make sure you understand their style. Are they prescriptive with a set of standard operating procedures? Or are they more hands-off and provide guidance without mandating? In any event, ensure that you trust the team and the vision – it’s a two-way street with management teams of the portfolio company and PE teams, so you must make sure you and your firm are on the same page. Who are the right stakeholders to hold conversations with potential investors & why? Definitely the board and shareholders, but beyond that a lot of PE firms will ask to talk to a level of management below or even two layers below the executive level. They are looking for a granular view into the business. If the portfolio company allows this

kind of access, it will greatly benefit your diligence process. However, a lot of portfolio companies will keep any potential investment tight-lipped so as not to startle or worry the employees. PE firms get a bad rap sometimes, and the knowledge of a potential investment may worry employees about their future with the company. The best answer is keep folks on a need-to-know basis, but make sure as the PE-firm does diligence on you, that you are also doing diligence on them to ensure they’re the right capital partner. Think of it almost like a job-interview. Do you have any advice for businesses that are unsure if they are ready to start talking to potential investors? It’s always better to start conversations sooner, rather than suddenly deciding you want to sell because you need the liquidity event for personal or business reasons. You will get a better purchase price if there are lots of folks looking at you, so get a great banker, with a great network and a track record in your sector. Today’s valuation multiples are very high relative to historical prices, so you are in a great position. If you have not thought about the long term – 5-8 year – goals for your company, including how you will fund it and what the competitive landscape is, your team should start formulating a long-term plan. At the very least, you will learn something new by engaging with potential investors, which will be useful at whatever point you do decide to exit.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: OGAR DAVID ) 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 June 2019

BUSINESS DAY

BANKING

In Association with

Low consumer credit adoption points to problem of KYC Stories by HOPE MOSES-ASHIKE

onsumer credit and mortgage may likely be the focal point of the banking sector activities going forward. This follows the pronouncement by Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) at the last Monetary Policy Committee (MPC) meeting in May 2019. The MPC also felt that the consumer market and mortgage trading market must be catalysed in Nigeria. Consumer lending is a type of financing centred on individual and household consumers. It includes home and auto loans, as well as personal loans extended to people who use the funds for individual or family purposes. “One of the inhibiting factors to growth is the fact that we have not been able to effectively jump-start the credit and mortgage businesses in Nigeria. Management will decide on how to put in place regulation that will assist people or banks to ensure that consumer credit is improved again in Nigeria,” Emefiele said. At a roundtable with the CBN governor in Lagos last weekend, private sector lead-

Godwin Emefiele. CBN, governor

ers including Aliko Dangote, Africa’s richest man/owner of Dangote Group and Jim Ovia, businessman/founder of Zenith Bank laid emphasis on consumer credit and said banks were doing their best on it. Ovia noted the process had been slow because of the challenges associated with people given accurate data for Know-Your Customers (KYC) process.

The CBN in January 13, 2013 introduced the three-tiered KYC to banks and other financial institutions. The three-tiered KYC seeks to implement a flexible account opening requirements for low-value and mediumvalue account holders subject to cap and transaction restrictions. It is hoped that through ‘further discussions’ banks might increase their appetite for consumer credit extension, Razia Khan, managing director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank, London, said. However, the consumer credit survey for the first quarter 2019, published by the CBN, revealed that the availability of unsecured credit provided to households rose in Q1 2019 but is expected to fall in the next quarter. Lenders reported higher appetite for risk and market share objectives as the major factors that contributed to the increase in Q1 2019. Despite lenders’ resolve to leave the credit scoring criteria for unsecured loan applications unchanged, the proportion of approved loan applications for households decreased in Q1 2019. Lenders expect to leave unchanged the credit scoring criteria Q2 2019, but anticipate an increase in the total loan applications to be approved in Q2 2019.

In Q1 2019 relative to Q4 2018, lenders reported an increase in the availability of secured credit to households. Higher appetite for risk and improving economic outlook were major factors behind the increase. Availability of secured credit was expected to increase in Q2 2019 as well, with improving economic outlook and market share objectives as the likely contributory factors. The report stated that Lenders tightened credit scoring criteria in Q1 2019, and therefore the proportion of loan applications approved in the quarter decreased. Lenders expect to leave unchanged the credit scoring criteria in the next quarter, yet expect an increase in the proportion of approved households’ loan applications in Q2 2019. “We do know that banks have always expressed some resistance to increasing credit to the private sector, given the past experiences of Non-Performing Loans (NLPs). The MPC has directed management to think about administrative legal and regulatory framework to be put in place to ensure that some of the credit risks associated with granting loan to private sector that ultimately results in NPLs should be mitigated such that when banks decide to lend to private sector or increasingly the probability that NPL should rise should be moderated,” Emefiele said.

Fidelity Bank restates commitment to youth development

Heritage Bank gets CIBN nod for academy, trains 300 new intakes

idelity Bank Plc, has described sport as a strong element in youth development, reiterating support for the sector. Nnamdi Okonkwo, managing director /CEO, stated this at the closing ceremony of the Anambra State U13/U17 Academicals recently. He explained that Fidelity is pleased to partner with the state as a way of giving back to the society, stressing that through the initiative the bank also intends to curb youth restiveness by engaging them meaningfully. “Since sport is a very strong element in youth development, we felt we needed to partner with the state to make sure we get this competition going strongly. You can see what happened here today and I think that it was really an international standard show they put up. We are proud to have supported that and we are looking forward to continuing this support,” he said. Earlier, the Deputy Governor, Nkem Okeke, who represented the governor, Chief Willie Obiano, said that the competition was a demonstration of the governor’s belief and commitment towards advancing the cause of the youths in the state. According to him, engaging the youths

n line with its commitment to ensure greater efficiency and boost its workforce, Heritage Bank Plc has received a nod from the Chartered Institute of Bankers of Nigeria (CIBN) for its establishment of a full-fledged learning and development institute, with the training of 300 new employees. The Institute dubbed “The Refinery” being supervised by the Bank’s Human Capital Management Group is currently training 300 new intakes who are fresh from universities across and outside the country with diverse academic backgrounds and impressive academic records, in an ongoing intensive 12-week rigorous and thorough academic programme at the school, in Port Harcourt. The Refinery is a tailored learning experience Institute with the perfect blend of technologies, techniques and methodologies to optimise training experiences, which will help employees succeed in ensuring that the bank’s business stays ahead of the curve with the banking sector along with Heritage Bank’s target goals. Having visited The Refinery in Port Harcourt during the ushering in of the new

in all forms of programmes, projects, sporting activities, skills acquisition are all part of youth development to keep them away from social vices. “We’ve all had a wonderful day seeing these kids show their skills in football. You can see the enthusiasm of these kids,” Okeke said. He commended Fidelity Bank Plc for sponsoring the tournament, noting that the presence of the CEO of the bank at the finals showed the commitment of the bank to the initiative. He called on other corporate organizations to take a cue from Fidelity and sponsor other events. “It’s not just football that we play here. There are other games like basketball, tennis, whatever, they can be involved in organizing these and I know we have the players in Anambra,” he stated. Meanwhile, Central School, Ekwulobia defeated Eri Primary School three goals to one to lift the U13 trophy and a cash prize of N500,000. At the U17 category, Community Secondary school, Uga beat Metropolitan College, Onitsha 3-2 to win the trophy and cash prize of N1,000,000.

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intakes, the Group Head, Learning and Development of CIBN, Babatunde Apena in his commendation stressed that Heritage Bank’s training facility is the best in Nigerian banking industry and at par with international best standard. According to him, despite the training facility still undergoing various upgrades for accreditation, it stands out as one of the best in the industry. The MD/CEO of the bank, Ifie Sekibo, has described Heritage Bank as a forward looking business whose strength lies in the ability to spot and mould talents into great professionals. He noted that the Refinery was established to train, nurture and arm young employees with the right skills needed to fast-track development and enable teams to flourish. Sekibo further explained that at the Academy, “we hire young graduates who want to advance their skill levels, which will lead to a direct and indirect improvement of life for their families and communities that will culminate toward more productive, resourceful persons.”

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Wednesday 12 June 2019

BUSINESS DAY

PENSION today

In Association with

Deeper insight into the pension industry’s ‘Multi-Fund Structure’ The Multi-Fund Structure became effective 1st July 2018 as directed by the National Pension Commission (PenCom) under the amended Regulation on Investment of Pension Fund Assets. Here, experts in the pension industry provide insights and clarifications on some of the concerns of contributors and retirees.

Multi-Fund Structure (New) he National Pension Commission (“PenCom”) before take off the new investment structure released the Amended Regulation on Investment of Pension Fund Assets for the Pension Industry. The new investment guideline introduces a multi-fund structure, which would replaced the “one size fits all” structure that puts all active contributors into one Retirement Savings Account (“RSA”) Fund without consideration for age or risk profile of such contributors. What is the multi-fund structure? The Multi-Fund structure is a framework that aims to align the age and risk profile of RSA holder’s by dividing the RSA Fund into four distinct Funds. The current RSA Fund will be sub-divided into three separate Funds, while the RSA Retirees Fund would be the 4th Fund. What is the difference between the 4 Funds? The respective funds differ based on their overall exposure to variable income instruments such as equities (that is, Ordinary Shares) and the age profile of the members. What are variable income instruments? Variable income instruments are investments that generate income or returns that cannot be pre-determined from the date the investments were made. In addition, the prices of such instruments fluctuate daily. Instruments in this category include Ordinary Shares, Collective Investment Schemes (“CIS”) such as Mutual Funds, Real Estate Investment Trust; Infrastructure Funds and Private Equity Funds. Such investments have potentials to generate high returns over the long term but could be risky owing to uncertainty and fluctuations in market prices and returns. What has age and risk profile got to do with how my pension funds are invested? In investing money, everyone has a limit to the amount of risk that they can take and the amount of uncertainty they can handle. This is known as risk tolerance. Typically, younger people tend to have more capacity for risk because they still have time to recover from loses (if any). Once a person is nearing retirement, it is advisable that they limit the amount of risks they take and reduce exposure to uncertainty as they would start drawing down on their pensions within a short period. Consequently, the allowable exposures to variable income instruments have been designed such that Fund I has the highest allowable limit, followed by Fund II, III and IV respectively. This reduces the risk and uncertainty of contributors in line with their ages. Can I decide which Fund Type to be assigned to? Right from the day of commencement, a default mechanism was applied. According to the default mechanism, all active contributors that are 49 years and below was placed

in Fund II while active contributors that are 50 years and above were placed in Fund III. Subsequently, an active contributor can make a request to his PFA to move between Funds subject to certain restrictions. An active contributor of 49 years and below can opt for Fund I, while an active contributor in Fund III may elect to be assigned to Fund II. However an active contributor in Fund III is not allowed to opt for Fund I while an active contributor in Fund II is not allowed to opt for Fund III. Fund III is strictly for active contributors above 50 years. To be assigned to any fund based on the preceding, an RSA holder must make a formal request to his/her PFA. How often can I move between Fund types? An active contributor may switch from one Fund type to another Fund type within a PFA, once in 12 months without paying any fees (subject to a formal application). Any additional requests for switches among Funds within a 12 month period by the active Contributor shall attract a fee, of an amount not less than a minimum value, to be determined by PenCom from time to time. When will the 12 month period start counting, will it be from the date of commencement or from the date of my first switch? PenCom will provide details on the 12 months period in the operational framework that would guide the transition to the MultiFund structure. Are there any benefits in this multi-fund structure? Of course there are. The new structure allows RSA holders more control over how their

pension funds are invested based on their risk tolerance. For instance, an RSA holder in Fund III owing to the default classification based on age, may have more tolerance for risks and uncertainty and could opt to be assigned to Fund II. Who takes the ultimate switch responsibility between the contributor and the PFA? Whilst the contributor has the right to switch between funds depending on his or her preference, the PFA will be responsible for affecting the switch upon receipt of a formal request from the contributor. The PFA is also in a position to provide financial advice to contributors to assist in assessing risk and making an informed decision. What are the impacts on my pension balance when my PFA moves into the multifund structure? The balance in your RSA will not change due to the movement to the multi-fund structure because the entire balance would be moved to the appropriate fund without charges. However subsequent growths in your balance would depend on contributions such as the mandatory monthly contributions, voluntary contributions as well as returns generated by the PFA on that particular fund. What is/are the requirement(s) for switching from one fund type to another? In order to switch from one fund type to another, a formal request must be submitted by the contributor to his or her PFA. If my date of birth is wrongly captured, which Fund Type will my PFA profile me? You still have the opportunity to check and update your records with your PFA at any time, but better now.

Will I be able to move back to the preferred fund free of charge after my date of birth correction (especially when my date of birth was wrongly captured by my PFA)? Yes, you will be able to move free of charge given that a contributor has the option to move for free once within 12 months. However, you still have the opportunity to check and update your records with your PFA before the commencement of the transition. Can I split my voluntary contribution in a separate Fund Type while my mandatory goes into another Fund Type? Every RSA holder is entitled to only one Pin for all types of contributions. Consequently, your voluntary contribution will be in the same Fund as your mandatory contribution. Will the RSA and VC funds have separate fund price or the same? The RSA and VC will have the same fund price because they will be invested in the same fund the contributor selects. What impacts does Multi-Fund structure have on my future pension assets at the point of retirement? The Multi-Fund structure provides more alignment between your retirement goals, risk appetite and age. Consequently, there will be a better chance for your pension assets to meet your expectations when you retire. Once an RSA holder makes a withdrawal such as 25% and then becomes unemployed, can he request that his funds be moved to another fund structure since no contributions are entering his RSA? The regulation does not restrict movements due to withdrawal of 25%. As long as the individual is below 50 years, the option is to switch between Fund I and Fund II. Is it possible for a client below 50 years to move to fund III? No, Fund III is strictly for active contributors of 50 years and above. If I decide to switch from Fund II to Fund I, can I switch back to Fund II? Yes, but it will be at a cost if you intend to switch back to Fund I within 12 months. Will I have access to the financial reports of other funds? The annual financial reports of the RSA Funds of all PFAs are published once a year at least 2 national dailies. In addition, the fund prices would be published daily on the websites of the PFAs. With the new multi-fund structure, can I be given the option to choose which specific variable income instruments my funds can be invested in? No, the regulation only allows contributors to select a Fund, but the PFAs would continue to have the responsibility of selecting the specific instruments that the Funds would be invested in.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail:

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Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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Wednesday 12 June 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

African insurance market returns to stability after economic downturn … Nigeria negative at 10.5% on inflation adjusted-basis Stories by Modestus Anaesoronye

he African insurance markets have returned to a more stable environment following the deep and sudden economic downturn in 2015/16, this was disclosed on Monday at the General Assembly of the African Insurance Organisation (AIO) Conference in Johannesburg, South Africa,. According to the annual survey conducted among the CEOs of Africa’s primary insurers by Dr. Schanz, Alms & Company AG, a, Zurich-based advisory firm specialising in global insurance and reinsurance, the industry continues to benefit from its underlying growth story, the resilience that it demonstrated during the downturn and a strengthening regulatory framework. “The mood among Africa’s insurance executives polled for this year’s Africa Insurance Barometer is slightly more cautious than last year,” says Prisca Soares, secretary general of the African Insurance Organisation. “Following the deep recession of 2015/16, insurers are less bullish. The crisis exposed Africa’s continued vulnerability to external shocks. In addition, the prospects for the global economy and for global trade have reduced for the near-term future. However, with the availability of technology and an expanding middle class, awareness and the understanding for the benefits of insurance are improving among policymakers, regulators and consumers. This will generate additional impulses for the industry.” In 2017, Africa’s insurance premiums increased to a volume of $ 66.7 billion, up by 12 percent from $59.4 billion in 2016, primarily driven by a strengthening of its main currencies against the US Dollar. On an inflation adjusted-basis, overall insurance premiums increased by just 0.5 percent in 2017, which was ahead of the growth

L-R: Moruf Apampa, executive director, Business Development, FBNInsurance; Festus Izevbizua, executive director, Finance and Admin, FBNInsurance; Val Ojumah, managing director/CEO, FBNInsurance; Roseline Pius Iyogwoya, FBNInsurance 2018 TRAC Award Winner; Odinakachi Umekwe, head, Retail, FBNInsurance; and Tunde Lawanson, executive director, FBN General Insurance at FBNInsurance 2018 TRAC Awards presentation ceremony recently held in Warri.

in advanced markets (-0.6 percent), but below the 10.3 percent volume growth for the world’s emerging markets. In Africa’s largest insurance markets, total real premium growth was positive in Egypt (+9.8 percent ), Namibia (+7.8 percent) and Morocco (+3.0 percent), stagnant in South Africa (+0.1 percent) and negative in Nigeria (-10.5 percent), Algeria (-2.8 percent) and Kenya (-2.0 percent). Access to skills and talent has turned into a major stumbling block for the further development of Africa’s insurance industry. For the first time all interviewees agree that a lack of access to talent limits the industry’s ability to innovate, escape pricing pressure

CIIN elebrates 60 years of manpower development for industry, economy

he Chartered Insurance Institute of Nigeria (CIIN), Nigeria’s premier professional Institution is set to commemorate its 60th anniversary with a schedule of activities lined up to acknowledge the Institute’s contribution to the development of manpower in the country in the past 60 years. The anniversary celebration which has been themed, “Diamond legacies, Driving Growth’’, is to acknowledge the Institute’s commitment to its duty as the rallying point for insurance professionals in Nigeria. To celebrate the milestone, the Institute has lined up activities which will kick off with a Jumat and Church Service. Other highlights of the anniversary celebration would include, a charity event and a public Lecture. The week-long activities will come to a climax with a Gala Night and the launch of the Institute’s

compendium chronicling the landmarks of CIIN in the last 60 years. The anniversary celebration is billed to run from Friday, August 2nd, 2019 to Thursday 8th, 2019. The Institute enjoins all stakeholders to take part in the celebrations that have been earmarked to celebrate 60 years dedicated to the development of manpower for the growth of the insurance industry and the National economy. It will be recalled that The Chartered Insurance Institute of Nigeria was established in 1959 and charged with the responsibility of determining the standards of knowledge and skills to be attained by persons seeking to become Insurance professionals in Nigeria. The Institute became Chartered vide Decree (Now Act) No 22 of the Federal Republic of Nigeria and has served as a significant platform for the growth of the insurance industry in Nigeria over the years. www.businessday.ng

and commoditisation, expand distribution, improve risk management and rejuvenate management. Although regulation is generally regarded as greatly improved, protectionist tendencies and a lack in regulatory Coordination or harmonisation threaten to hold back development at a time when technology and the need for scale and efficiency motivate insurers to consider regional expansion. Africa’s insurers are keen to advance their industry and to free themselves from pricing pressure in the more generic lines of business. Technology and new product development are seen as key opportunities to access and appeal to new customers, both in commercial

and personal lines, and to address the continent’s low insurance penetration. However, insurers remain wary as the commodity crisis from 2015/16 highlighted once again Africa’s vulnerability to external shocks. In addition, political risk remains a crucial factor. Although interviewees generally perceived Africa as a far safer place, the social unrest that can quickly erupt around elections and political hand-over’s remains a concern. Premium rates remain under pressure. Interviewees expect a further rate decline in commercial lines, unless regulators intervene and demand risk adequate pricing or higher capital charges. Personal lines are slightly better priced as competitive pressure is not as pronounced while insurers hope regulatory intervention will curb unprofitable pricing. In commercial lines, profitability reflects the poor pricing of the past years, when large losses and claims inflation ate into insurers’ margins. Going forward, insurers will increase their efforts to innovate and expand their distribution. Premium growth is recovering slowly from Africa’s commodity crisis in 2015 and 2016. The markets have stabilised, following a wave of consolidation and as higher solvency requirements have weeded out smaller and weakly capitalised insurers. Furthermore, in response to continuously eroding margins some international insurers have reduced their market presence in Africa, while regional African or domestic players have sought to fill this void through market extensions and expanding into neighbouring markets. The majority of the executives polled believe today’s regulation is adequate. In particular the introduction of risk-based capital schemes and a more proactive stance to limit undercutting rate actions are widely applauded. However, regulation is also criticised for poor enactment, lack of support for innovation and too little co-ordination between markets.

Fidelity Pension assures contributors, retires of seamless retirement

idelity Pension Managers Limited, a leading pension fund administrator (PFA) in Nigeria has assured its contributors and retirees the company’s commitment towards ensuring that they enjoy a happy retirement. This assurance was given during a customers’ interactive forum organized by the PFA at the University College Hospital (UCH), Ibadan, Oyo State. The event had customers in and around Oyo State including staff of University College Hospital (UCH) and Oluyoro Catholic Hospital, Ibadan. Olumuyiwa Afolabi, group head, operations, Fidelity Pension Managers, spoke on the importance of early retirement planning in building a long-term future. He stated that Fidelity Pension Managers makes pension services easy and accessible to their clients conse-

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quently, making them retire happily. According to him, the interactive forum was necessary in order to create the platform to understand the challenges that customers face and proffer solutions to these challenges. Customers were educated on pension remittance, documentation for benefit payments and the opportunity for Additional Voluntary Contributions (AVC). The multi-fund structure of the investment funds was also explained in details. National Identity Management Commission (NIMC) officials were available to enrol clients who do not have national identity numbers- a core requirement to complete the data recapture in fulfillment of National Pension Commission’s (PenCom’s) directive to update the records of clients with national identity numbers (NIN) and Bank Verification Numbers(BVN).

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Wednesday 12 June 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Insurer offers response services in environmental emergencies for policyholders Stories by Modestus Anaesoronye

llianz Global Corporate & Specialty SE (AGCS) says it now offers expanded emergency response services as part of its Environmental Impairment Liability (EIL) coverage when pollution and/or contamination events occur. ACCS has established strategic partnerships with GM Consultant (global) and HETI (United States and Canada) to offer immediate support and claims investigation services for clients, worldwide. Responding to a pol-

lution or contamination incident in a timely and effective manner helps control the overall impact to the environment and minimizes negative effects on human health, biodiversity and property. Through GM Consultant and HETI, AGCS can offer a 24/7support system to handle related emergencies. EIL coverage typically includes pollution insurance and businesses interruption (BI) indemnity covering loss of profits and extra expenses. “ We a r e e x t r e m e l y pleased to be working with GM Consultant. Coupled with our existing relationship with HETI in North

America, we are now poised to offer a truly seamless and global response”, stated Peter Opening, head of Global Claims Liability, AGCS. “Responding to environmental emergencies requires the coordination of multiple parties, including regulatory and law enforcement agencies. This is often a daunting task, but these partners can effectively assist in appropriate response activation, remediation, regulatory communication and waste disposal, as well as claims auditing functions.” Environmental emergency scenarios resulting in water, air or ground pollution are wide-ranging, including damage from

waste discharge activities, emissions or disposal practices, as well as spills of toxic substances leaking into the environment, despite established security measures. Agricultural run-off, such as pesticides or fertilizers sweeping into soil or groundwater can also cause environmental damage and adverse health effects. Pollution can arise from natural perils too, as demonstrated by mold claims post Hurricane Harvey. For businesses, the consequences from environmental incidents can be significant resulting in potential liabilities such as penalties or fines from regulators and having to pay significant

disposal, remediation or clean-up expenses after contamination or spillages. During an emergency, dedicated specialists from GM Consultant or HETI will help AGCS EIL clients analyze the root cause of an incident, design and implement a personalized and well-planned crisis response, including containment measures and support communication and thirdparty coordination. Founded in 1999, GM Consultant group is an independent loss adjusting and consulting firm, offering comprehensive solutions for operational risk and claims management in 30 countries and jurisdic-

tions. HETI is a full-service environmental health & safety risk management company, established in 1986, which maintains offices/contract staff throughout North America. “Supporting an effective crisis or emergency response is becoming a key element across the AGCS Liability product line,” added Ciara Brady, Global Head of Liability, AGCS. “With our new global vendor network, AGCS EIL clients will benefit from real-time, global incident response services in local languages– a great value-add service that further outlines AGCS’s commitment to providing client-centric solutions.”

Wapic increases authorized share capital to N15b ahead of NAICOM recapitalisation deadline

Okanlawon Adelagun (male) executive director, Technical Linkage Assurance Plc surrounded by executives of Children Living with Cancer Foundation during the official visit of the foundation to Linkage corporate head office in Lagos

Allianz Nigeria supports Lagos community with provision of potable water

llianz Nigeria Insurance plc, subsidiary of global insurance giant, Allianz Group has reaffirmed its commitment to improving living conditions in its host community with the provision of a pipe-borne water facility for Illogbo community in the Ojo area of Lagos State. AbimbolaAlabi, group head of Corporate Services at Allianz Nigeria, explained that upon a routine review of the company CSR outreaches, it was uncovered that the facility was in need of major renovation and a standby power source owing to the erratic power supply in the area. “Our management was more than eager to approve the renovation and the provision

of a power-generating set”. The potable water project was initially ideated and executed by the graduate trainee class of 2016 of the company. As part of the curriculum, the new hires were required to decide upon and source funds for the execution of an impactful CSR project of their choosing. “Our due diligence and site visits revealed that contrary to intuition, there were actually communities in Lagos that lacked access to clean drinking water,” disclosed Ifeoluwa Adeniyi, claims manager at Allianz Nigeria, and project leader at the time. “We did a cost analysis and embarked upon the project because it was sustainable, completing it in three weeks, in time for our www.businessday.ng

graduation”. We want to be at the vanguard of responsible corporate citizenship, improving the well-being of people of our host communities to the extent possible”, Alabi continues. “We understand that sustainable development is as much the responsibility of bold individuals and organizations that do sustainable business as it is the government’s responsibility and we are committed to doing more than simply conduct ethical business. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we hold the leading position for insurers in the Dow Jones Sustainability Index”.

oard of Directors, Wapic Insurance Plc, a multi-line insurance company has secured the approval of its shareholders to increase the authorized share capital of the company from N8.5 billion to N15 billion, by the creation of 13 billion additional ordinary shares of 50 kobo each. According to the company, this is necessitated by the recent directive of the National Insurance Commission(NAICOM), which mandated insurance companies to increase their paid-up sharecapital before the 30th June, 2020 deadline. Wapic operates a general Insurance Business as well as a Life Business here in Nigeria, and so will requires to meet minimum paid up share capital of N10 billion for general and N8 billion for life ahead of the deadline. The resolution approval, according to Aigboje AigImoukhuede, chairman of the Company is in the best interest of shareholders, and to enable the company accommodate any share capital increase. Aig-Imoukhuede while responding to shareholders questions at the 60th Annual General Meeting (AGM) held in Lagos said the board is committed to

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ensuring that Wapic did not just meet the capital requirement, but stand strong to compete effectively. The chairman who was on the side of NAICOM about increasing the capital base of operating companies said, insurance business requires a lack of funding to attract the right talent, build skills and grow the business. “I want to assure you that Wapic will be there when the recapitalisation exercise will be completed, he assures the shareholders. Wapic during the financial years ended 31st December 2018, posted a gross written premium of (GWP) of N13.9 billion, a 42 percent increase from N9.81 billion in 2017. This performance the company said was buoyed by attainment of leadership status in some major accounts and enhanced underwriting capabilities. The group also achieved an underwriting profit of N2.2 billion, a 40 percent growth from N1.54 billion achieved in 2017. Accordingly, the group experienced an 88 percent decline in profit before tax(PBT) to close at N187 million, negatively impacted by the drop in investment and other income, and the @Businessdayng

growth in underwriting and operating expenses for the period. Profit After tax during the review year is N351.2 million. Meanwhile, the company paid claims amounting to N4.96 billion, a 30 percent increase from N3.82 billion paid out in 2017, underscoring the importance it attaches to its customers towards meeting their claims obligation. Yinka Adekoya, managing director, WAPIC Insurance Plc in a statement at the AGM said going into the future, the company plans to up its drive for business excellence through sustainable practices, motivated by its commitment to customer satisfaction. “While we are hopeful about our future, we are very conscious of the realities of geopolitical and economic volatility, regulatory challenges, foreign currency pressure and customer needs and consumption pattern”. Adekoya noted that Wapic will continue to improve and emerge stronger than ever. “Our current financial performance together with our firm commitment to improving our service delivery underlines our affirmation that our efforts to date at building an institution of repute have been successful”.

Wednesday 12 June 2019

BUSINESS DAY

Harvard Business Review

ManagementDigest

The investor revolution Robert G. Eccles & Svetlana Klimenko

ost corporate leaders understand that businesses have a key role to play in tackling urgent challenges such as climate change. But many of them also believe that pursuing a sustainability agenda runs counter to the wishes of their shareholders. The impression is that environmental, social and governance — or ESG — issues just haven’t gone mainstream in the investment community. That perception is outdated. We interviewed senior executives at global institutional investing firms and found that ESG was almost universally top of mind for these executives. Most of the investment leaders in our study described steps their firms are already taking to integrate sustainability issues into their investing criteria. Six factors are acting as tail winds for the investors’ heightened focus: — THE SIZE OF INVESTMENT FIRMS: The top five asset managers hold 22.7% of externally managed assets, and the top 10 hold 34%. Large investment firms are now so big that modern portfolio theory — which holds that investors can limit volatility and maximize returns in a portfolio by combining investments from asset classes with varying levels of risk — cannot be used to mitigate system-level risks. A small investment firm might be able to hedge against climate change by investing in “doom” stocks, such as gold, but firms that have trillions of dollars under management have no hedge against the global economy: They have become too big to let the planet fail. — FINANCIAL RETURNS: Many corporate managers believe that adhering to sustainable investing entails sacrificing some financial return in order to make the world a better place. That view is outdated. A study by Harvard Business School’s George Serafeim and colleagues (including Robert G. Eccles) found that

companies that developed organizational processes to measure, manage and communicate performance on ESG issues in the early 1990s outperformed a carefully matched control group over the next 18 years. — GROWING DEMAND: Asset owners such as pension funds are increasingly demanding sustainable investing strategies from their asset managers. Not only are sophisticated asset owners aware that sustainable investing improves returns, but many of them are also focused on the nonfinancial outcomes. “Our wealthiest clients want to know their investments are making a difference to make the world a better place,” noted Rina Kupferschmid-Rojas, head of sustainable finance at UBS Group. — AN EVOLVING VIEW OF FIDUCIARY DUTY: It’s a mistake to believe that sustainable investing means sacrificing some financial return, and so is the belief that fiduciary duty means focusing only on them — thereby ignoring ESG factors. However, recent legal opinions and regulatory guidelines make it clear that it is a violation of fiduciary duty not to consider such factors. Some countries are already taking steps to redefine the fiduciary duty concept: In 2018, the Swedish parliament approved major reforms requiring the four main national pension funds to become “exemplary” in the field of

sustainable investment. — TRICKLE-DOWN WITHIN INVESTMENT FIRMS: Historically, the ESG group at investment firms was separate from portfolio managers and sector analysts. Now senior leaders are making sure that ESG analysis is being integrated into the fundamental financial activities carried out by analysts and portfolio managers. The big Dutch pension fund ABP, for example, has a program for full ESG integration across all asset classes. — MORE ESG ACTIVISM BY INVESTORS: Shareholder activism is on the rise in financial markets — and ESG is increasingly becoming a focus of these interventions. Active managers who intend to hold a stock for a long time and passive managers who hold a stock forever have an incentive to see that companies address the material ESG issues that will improve their financial performance. One form of active engagement is proxy resolutions and proxy voting, an aspect of the active ownership strategy for sustainable investing. According to the ESG research and advisory firm Institutional Shareholder Services, the share of total resolutions focused on E&S in the U.S. has grown from around 33% in the 2006-2010 time period to around 45% between 2011 and 2016. By 2017, it stood at just over 50%. Leading topics for these resolutions include climate change,

human rights and diversity. Our research reveals five actions that companies can take to prepare for the new era of sustainable investing: — ARTICULATE YOUR PURPOSE: The easiest way for board members to communicate their company’s place in society is to publish a statement of purpose. In it, the board articulates the company’s reason for being, identifies the stakeholders most important to its continued prosperity and lays out the time frames over which senior management’s decisions are evaluated and rewarded. — IMPROVE ENGAGEMENT WITH SHAREHOLDERS: The statement of purpose provides a good foundation, but it should be part of a larger, integrated report for shareholders. Company reports should include a materiality analysis that identifies the ESG issues that affect financial performance. Companies should also take charge of quarterly calls and not let them be driven by short-term sell-side analysts. Management can then use these calls to explain how the targets are contributing to financial performance. — INCREASE INVOLVEMENT BY MIDDLE MANAGEMENT: As ESG considerations at major investment firms are trickling down from the CEO level to analysts and portfolio managers, companies need to respond by increas-

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ing their own middle management’s involvement in identifying and managing the material ESG issues. After all, middle managers are the ones who commit resources for achieving strategic objectives. — INVEST IN INTERNAL SYSTEMS FOR ESG PERFORMANCE INFORMATION: Few firms have reliable systems for measuring ESG performance. Instead, ESG information is typically generated through spreadsheets or software solutions focused on distinct topics. The result is poor-quality ESG data. Developing standards for ESG information will be helpful here. Corporate leaders can also play a role in speeding the pace of change by challenging the software vendors to extend into ESG metrics and pressing audit firms to provide assurance on reported ESG performance. — IMPROVE MEASUREMENT AND REPORTING: Some ESG issues don’t affect a company’s bottom line but still impact society at large. A growing segment of the investment community is interested in those impacts. The challenge is that there is currently no agreed-upon way of measuring the positive and negative effects of a firm’s products and services on society. The Impact Management Project is a network of organizations working to harmonize impact measurement and reporting initiatives. CEO Clara Barby calls it a “big tent” of people and organizations committed to creating standards. A change in the way investors evaluate companies is underway. Businesses should seize the opportunity to partner with investors willing to reward them for creating long-term value for society as a whole.

Robert G. Eccles is a visiting professor of management practice at Saïd Business School at the University of Oxford. Svetlana Klimenko is a lead financialmanagement specialist in the operations policy and country services vice presidency of the World Bank.

Wednesday 12 June 2019

Harvard Business Review

BUSINESS DAY

ManagementDigest

How to survive a recession and thrive afterward Walter Frick

A RESEARCH ROUNDUP. n early 2000, a five-yearold online bookseller called Amazon.com sold $672 million in convertible bonds to shore up its financial position. One month later, the dot-com bubble burst. More than half of all digital startups went out of business over the next few years — including lots of Amazon’s then-rivals in e-commerce. Had the bubble burst just a few weeks earlier, one of the most successful companies ever might have fallen victim to that recession. Recessions — defined as two consecutive quarters of negative economic growth — can be caused by economic shocks (such as a spike in oil prices), financial panics (like the one that preceded the Great Recession), rapid changes in economic expectations (the “animal spirits” described by John Maynard Keynes; this is what caused the dot-com bubble to burst) or some combination of the three. Most firms suffer during a recession, primarily because demand (and revenue) falls and uncertainty about the future increases. But research shows that there are ways to mitigate the damage. How should a company prepare in advance of a recession and what moves should it make when one hits? Research and case studies examining the Great Recession shed light on those questions. In some cases, they cement conventional wisdom; in others, they challenge it. Some of the most interesting findings deal with four areas: debt, decision-making, workforce management and digital transformation. The underlying message across all areas is that recessions are a high-pressure exercise in change management, and to navigate one successfully, a company needs to be flexible and ready to adjust. DELEVERAGE BEFORE A DOWNTURN Companies with high levels of debt are especially vulnerable during a recession, studies show. In a 2017 study, Xavier Giroud (of Massachusetts Institute of Technology’s Sloan School of Management) and Holger Mueller (of New York University’s Stern School of Business) looked at the relationship between business closures and associated unemployment and falling housing prices in various U.S. counties. Overall, the more housing prices declined, the more consumer demand fell, driving increased business

closures and higher unemployment. But the researchers found that this effect was most pronounced among companies with the highest levels of debt. They divided up companies on the basis of whether they became more or less leveraged in the run-up to the recession, as measured by the change in their debt-to-assets ratio. The vast majority of businesses that shuttered because of falling demand were highly leveraged. Leverage effectively limits companies’ options, forcing their hand and leaving them little room to act opportunistically. Many companies have some level of debt going into a recession. Although there’s no magic number, modest levels of debt aren’t necessarily a problem, research shows. Nonetheless, Mueller suggests that if a company thinks a recession is coming, it should consider deleveraging. FOCUS ON DECISION-MAKING A company’s performance during and after a recession depends not just on the decisions it makes but also on who makes them. In a 2017 study, Raffaella Sadun (of Harvard Business School), Philippe Aghion (of Collège de France), Nicholas Bloom and Brian Lucking (of Stanford) and John Van Reenen (of MIT) examined how organizational structure affects a company’s ability to navigate downturns. “Decentralization was associated with relatively better www.businessday.ng

performance for firms or establishments facing the toughest environment during the crisis,” the researchers report. They also found that the benefits of decentralization faded as economic conditions improved. Why did decentralization help? “The recession introduced a lot of uncertainty and turbulence,” says Sadun. Because decentralized firms delegated decision-making further down the hierarchy, they were better able to adapt to changing conditions. Of course, organizational structure isn’t easy to adjust quickly in preparation for a recession, but that doesn’t mean companies can’t learn from these findings. “What decentralization does,” says Sadun, “is match decisions with expertise.” She says companies can fall into the trap of hoarding decision rights during a downturn. But the uncertainty of a recession necessitates experimentation, which requires that decisions be made throughout the organization. Even if companies decide not to decentralize, they can try to do a better job of gathering input from employees at all levels when making key decisions. “Recessions offer opportunities for change,” notes Sadun. LOOK BEYOND LAYOFFS Some layoffs are inevitable in a downturn; during the Great Recession, 2.1 million Americans were laid off in 2009 alone. However, the companies that emerged from the crisis in the strongest shape relied less on layoffs to cut costs and leaned

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more on operational improvements, Ranjay Gulati (of Harvard Business School) and his colleagues found in their study of public companies. That’s because layoffs aren’t just harmful to workers; they’re costly for companies, too. Hiring and training are expensive, so companies prefer not to have to rehire when the economy picks back up, particularly if they think the downturn will be brief. Layoffs can also hurt morale, dampening productivity at a time when companies can ill afford it. Fortunately, layoffs aren’t the only way to cut labor costs. Companies should consider hour reductions, furloughs and performance pay. In some parts of the world, policymakers encourage shorter hours as an alternative to layoffs. Many countries and more than half the states in the U.S. have some sort of “short-time” compensation program, whereby workers whose hours are reduced receive partial unemployment compensation. INVEST IN TECHNOLOGY It’s tempting to think of a recession as a time to batten down the hatches and play it safe. However, downturns actually appear to encourage the adoption of new technologies. Why do companies invest in technology during a recession when money is tight? Economists theorize that it’s because their opportunity cost is lower than it would be in good times. When the economy is in great shape, a company has every in@Businessdayng

centive to produce as much as it can; if it diverts resources to invest in new technologies, it may be leaving money on the table. But when fewer people are willing to buy what you’re selling, operations need not be kept humming at maximum capacity, which frees up operating budget to fund information technology initiatives without dampening sales. For that reason, adopting technology costs less, in a sense, during a recession. That’s fine in theory, but other reasons may make more practical sense to managers. Technology can make your business more transparent, more flexible and more efficient. As we’ve seen, recessions can create wide and long-standing performance gaps between companies. Research has found that digital technology can do the same. Companies that have neglected digital transformation may find that the next recession makes those gaps insurmountable.

Walter Frick is the deputy editor of HBR.org.

Wednesday 12 June 2019

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

Motoring

Vehicles maintenance costs dip over bad roads …As alternative rail transport means lags MIKE OCHONMA Transport Editor

here are mounting concerns that total cost of ownership of new and used fleet vehicles by corporate institutions, commercial vehicle operators and individual owners in Nigeria are increasing as the day rolls by as a result of the negative economic effects of potholes and failed portions on the road which contributes to the wear and tear of the vehicles. Almost everyday, there are dehumanising stories of what commuters go through on these bad portions of the roads dotted with gullies and craters, be it with commercial vehicles, company vehicles used in taking members of staff to and from work and individual privare car owners. Experiences shared by commuters plying these routes have always left a constant sad reminder in the minds of travellers of a government at both the federal and state levels that have remained very insensitive to the sufferings and pains that travellers along this route go through. Safety experts who studied the economic effects of bad road networks in the country estimates that, about 51% of vehicle users in Nigeria will experience one or more damages to their vehicles every month. Reports also indicate that annual losses resulting from vehicle maintenance due to bad roads is valued at over N133.8 billion, apart from other economic losses from bad roads like air pollution, delayed movements, armed robbery and incessant accidents on the roads which has led to untimely loss of lives and properties.

At every point in time a vehicle is under stress as a result of bad effects of decrepit portions the road, the major safety components of the entire suspension systems made of the break systems, the bushing, the lower arms and the stabiliser linkages becomes the first spare parts that will be affected. This ugly picture indeed should be of great concern not only to owners and operators of these vehicles, but should also be of serious concern to the government as to the implication it has on the health of commuters as well as cost on vehicle maintenance. While the gory tale of growing effects of abandoned bad segments of the roads has remained a national disgrace and a hydraheaded problem that cuts across the entire length and breadth of the country,

some roads in parts of the country has always made news headlines. A roll of the affected roads is legion and many times not properly documented by the authorities concerned. These includes, but not restricted to the Abuja-Keff-Lafia road, Enugu- Onitsha road, AbaPort aharcourt highway, KadunaAbuja road, the Lagos-Badagry. From the interpretation of a data released by the National Bureau of Statistics, NBS, and the Federal Road Safety Corps, every four hours, no fewer than two lives are lost on the roads. And every year, about 20,000 of the 11.654 million vehicles in the country are involved in accidents, causes of some of which are as a result of dilapidated sections of the road. According to the NBS, the number of lives lost to road traffic ac-

cidents from January 2013 to June 2018 are as follows: 2013- 5,539; 2014- 4,430; 2015- 5,400; (FRSC): 2016 - 5,053; 2017- 5,049; January to June, 2018- 2,623. Meanwhile, the Federal Government is still confronted with the challenge of making movement of goods and passengers by rail functional with billions of naira already spent on the ongoing construction of a standard gauge rail from Lagos to Ibadan with Kano as the final destination as well as the LokojaItakpe-Warri rail corridor. It is hoped that providing an alternative and functional rail system, including water transportation will reduce the number of wear and tear on the vehicle, lower maitenanace cost and drastically reduce the rising rate of road traffic crashes on the roads.

Michelin, GM team up to say goodbye to tyre punctures

hough funky-looking airless tyres have been around for a while - Michelin has been developing them since 2005, and none have yet been fitted to a regular road car available to the masses. But apparently, all of that is going to change in 2024 when Michelin and GM will be joining hands to introduce a version of their ‘Uptis’ tyre (unique puncture-proof tyre system) that sufficiently replicates the characteristics of a normal, air-filled tyre. Michelin says the Uptis tyre, which is made from composite rubber and resin-embedded fibreglass, can “bear a car’s weight at road-going speeds” thanks to material and structure improvements. Previous iterations of airless tyre could not support as much weight, or travel at high-enough speeds. The benefits of a tyre without air in it are many and varied. GM and Michelin say the risk of punctures and blow-outs will be totally eliminated, as will excessive, lifeshortening wear caused by under- or

over-inflation. All that means tyres can be replaced much less often, so fewer can be produced and the raw materials, energy and emissions required to do so also saved. Michelin claims some 200 million tyres are prematurely scrapped every year because of damage. Airless tyres will also be good for autonomous cars, which “will demand near-zero maintenance from the tyre to maximise their operating capabilities.” Later this year, the companies will start real-world testing airless tyres on a fleet of Chevrolet Bolt EVs.

CFAO Motors takes over Suzuki franchise

or some time now, auto industry watchers believe that the Suzuki brand has been silent and left them guessing as to what is happening to the Japanese brand launched about five years ago to battle rivals. Today, latest news is that CFAO Motors has snapped over the dealership of the Suzuki brand and ready to deliver better services to prospective individual and corporate fleet buyers. It would be recalled that Suzuki Motors Corporation in 2007 appointed C&I Motors Limited as its distributor and representative in Nigeria. Reacting on the latest acquisition of Suzuki brand dealership in Nigeria, Thomas Pelletier, managing director of CFAO Motors/ Country Delegate, stated

that his company took over the Suzuki car franchise to complement the range of models distributed by the company and to satisfy the needs of car enthusiasts in search of trendy www.businessday.ng

pocket-friendly vehicles. He said: “It gives us great pleasure to introduce the Suzuki brand of vehicles to the Nigerian market, distributed by CFAO Motors Nigeria and also by the

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CFAO Group in 25 other African countries. “Our partner, Suzuki Motor Corporation, Japan is renowned for the production of top quality and reliable vehicles which are widely trusted for durability and competitive prices”. The Suzuki models available in Nigeria are city cars: Alto, Dzire, Swift, Baleno, Ciaz and Ertiga. The Off Road Vehicles/ Sports Utility Vehicles (SUVs) are Jimny, Vitara. All vehicles come with a 3 year or 100,000 km warranty. According to the MD: “Now, our customers can own a brand new vehicle for just N3.6 million ’’ As is traditional with CFAO, the company has already trained it engineers and technicians on @Businessdayng

the technicalities of the Suzuki brand in a bid to offer prompt after-sales services in terms of maintenance, repairs and genuine spare parts. Other brands under CFAO Automotive division in Nigeria include: Mitsubishi Motors (through joint venture Massilia Motors), Fuso, JCB, King Long.

Thomas Pelletier, MD of CFAO Motors/ Country Delegate

Wednesday 12 June 2019

BUSINESS DAY

TRANSPORTation Motoring

RailBusiness

ModernTravel

Roads

RAIL

MODERN TRAVEL

IATA plans radio frequency identification roll out for baggage

President’s delay on ministerial posts may affect rail projects MIKE OCHONMA Transport Editor

here are very strong indications that, delay in appointing ministers by President Muhaammadu Buhari to hit kick-off the second term of his administration may extend the delivery timeline of the Lagos-Kano Standard Guage Rail project. Vice president Yemi Osinbajo had in March 2017 commissioned the Lagos-Ibadan segment of the Lagos-Kano railway modernisation project inside the compound of the Nigerian Railway Corporation (NRC) in Lagos. The 156 kilometer LagosIbadan standard gauge rail project was awarded at awarded at the cost of $1.53 billion in 2012 to the China Civil Engineering Construction Corporation (CCECC) for the construction of the project. However with initial delays faced by the project, a groundbreaking ceremony finally took place on March 7, 2017, while the railway was scheduled for comple-

tion in December 2018. Putting the decrepit rail projects across the country is seen by many as one infrastructure that would go a long way in addressing the transportation needs of the country both in the movement of passengers and cargo in the face of many years of roads decay. Many Nigerians are of the opinion that with the appointment of Rotimi Amaechi as the Transportation Minister, the commencement of work on the Lagos-Ibadan standard gauge rail corridor which will eventually terminate at Kano has received the needed boost. They hoped that, President Muhammadu Buhari should not waste time and must as a matter of urgency and necessity appoint ministers, especially hat of the transportation sector to accelerate the pace of development. Ibrahim Dauda, director of the Audit Department, Fiscal Responsibility Commission (FRC) had during an inspection tour of the ongoing Lagos-Ibadan standard gauge rail project said that, the project is one that guarantees

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been paid are detected at the point of registration and owners of such vehicles are referred back to the NCS for payment of the required duties, thus the idea of short-charging the government is defeated. He called for continuous collaboration between the FRSC and NCS in the three states of Sokoto, Kebbi and Zamfara. Umar Gimba on his part stressed the importance of collaboration between the two agencies especially in the areas of Intelligence gathering, blocking of revenue leakage and general improvement in national security. He advised against smuggling and stated that his men are up to the task of thwarting the efforts of smugglers in the zone. The two organizations promised continuous collaboration for the overall benefits of the country. www.businessday.ng

potential for mishandling. Combined, RFID and modern messaging standards should reduce the mishandling rate by a quarter. “Deploying RFID and adopting modern baggage messaging standards will help us to cut mishandlings by a quarter and recover bags that are mishandled more quickly. Passengers want to arrive with their bags. And on the rare occasion when that does not happen, they want to know exactly where their bag is.” said Alexandre de Juniac, IATA director general. Among other things, the resolution commits airlines to use RFID data alerts to enact processes with airports and ground handlers that prevent potential mishandlings, even though the resolution does not specify timelines. It is anticipated, however, that global adoption of RFID could be achieved within four years. The IATA chief said that implementing RFID tracking technology and adopting modern messaging standards is a team effort.

American Airlines further delays Boeing 737 Max return

Vehicle smuggling by roads no longer lucrative- FRSC t is no longer lucrative to snuggle vehicles into Nigeria as getting such vehicles validly registered without paying custom dutirs on them is impossible. This assertion was made by the Zonal Commanding Officer Federal Road Safety Corps (FRSC), Zone 10 Sokoto, comprising Sokoto, Kebbi and Zamfara States Kayode Olagunju, during a courtesy visit to Umar Gimba, Area Commander Comptroller of the Nigeria Custom Service (NCS) in Sokoto, Kayode Olagunju explained that the collaboration of the FRSC, NCS, Federal Inland Revenue Services (FIRS) and the states lapping on technology has made registering such vehicles without paying appropriate fees difficult . According to him, vehicles on which custom duties have not

value for money. The project he said has substantially met the criteria for transparency and accountability in the management of the funds, adding that, the inspection team have been to the site of the ongoing construction of the LagosIbadan standard gauge rail line which passes through Abeokuta. “From the briefing we have received and seen on the site, the project will be substantially completed and delivered. We are happy that the federal government has always been meeting up with its funding and the China Eximbank has been up too. Their commitment has assisted in the project. FRC he declared had the mandate to ensure that all projects promote prudent and transparent fiscal management in the country. This means ensuring that, all projects have value for money; they are completed according to standards, transparency and accountability, particularly in the management of funds.

he International Air Transport Association (IATA) has resolved to support the global deployment of radio frequency identification for baggage tracking. At the last annual general meeting, IATA also called for the implementation of modern baggage messaging standards to more accurately track passengers’ baggage in real time across key points in the journey. In 2018, less than 0.06 percent of the estimated 4.3 billion bags carried by airlines were mishandled, according to the latest figures from SITA. Since 2007 baggage mishandling has fallen by 70 per cent and today 99.9 percent of mishandled bags are re-united with their owners within two days. RFID read rates are 99.98 per cent accurate which is significantly better than that of bar codes. And modern messaging standards will enable airlines to proactively take action when there is

he American Airlines has confirmed it now expects the Boeing 737 Max to remain grounded until at least September 3rd. The Fort Worth, Texas-based carrier had previously removed the aircraft type from its schedule until next August 19 . American Airlines originally planned to operate roughly 115 daily flights on the 737 Max. However, there is no certainty the plane will return to schedules in September. The FAA is currently working

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with manufacturer Boeing to certify software upgrades to the 737 Max following two fatal crashes in Indonesia and Ethiopia. A combined 346 people were killed in the accidents five months apart. Southwest Airlines, the biggest Max operator, has set August 5th for the plane to resume flights, while United plans for August 3rd. In a statement American Airlines said it “remains confident” that the software updates, along with the new training elements Boeing is

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developing for pilots, will lead to re-certification of the aircraft “soon”. American added: “We have been in continuous contact with the Federal Aviation Administration, department of transportation, National Transportation Safety Board and other regulatory authorities, and we are pleased with the progress to date.” Customers affected by the cancellations can be booked on other flights or can request a full refund, American Airlines added.

Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

How Nigeria can reform import-export procedures for trade facilitation amaka Anagor-Ewuzie

igeria needs to reform importexport, regulatory and transit procedures by implementing integrated policy and procedures that are globally accepted, experts have said. According to them, this will ensure effective trade facilitation through the reduction of transaction costs, cargo dwell time and ensure safety and security of cargoes at Nigerian ports. BusinessDay understands that Nigeria import-export, regulatory and transit procedures are burdened with lengthy, cumbersome processes that are associated with unnecessary delays, high transaction costs and increase of cargo dwell time, making the ports the most expensive globally. Recall that the Federal Government under the Destination Inspection Scheme contracted the acquisition of cargo inspection scanners to some service providers,

L-R: Kayode Opeifa, vice chairman, Presidential Task team on Apapa Gridlock, briefing Hassan Bello, executive secretary/CEO, Nigerian Shippers’ Council, at the end of its two-week task of clearing Apapa roads and bridges.

including Cotecna, SGS and Global Scan on a build, own, operate and transfer (BOOT) basis, for a period of seven years from 1st of January 2006 to 31st December 2012, but was extended for one year. Unfortunately, at the contract termination, the scanners were handed over to the Nigeria Customs, and are yet to be fully put into use due to

the argument of the scanners being ‘broken’. Lucky Amewiro, former member of Presidential Taskforce on Reform of Customs, said the breakdown of the scanners necessitated the adoption of 100 percent physical inspection of cargo by Customs, which is quite laborious in the un-stuffing and loading of goods.

osepdam Port Services (JPS), the operator in charge of ter minal ‘A’ at the Tin-Can Island Port Complex, has been certified with ISO 9001:2015 by Care Limited in the United Kingdom. ISO 9001:2015 is an international standard certification that specifies requirements for quality management system. It ensures the certified organisation continuously improves and responds to situations, changes, risks and other measures including regulations. It also ensures the company provides products and ser vices that meet customer and regulatory requirement. Speaking in Lagos at the weekend, Simon Travers, managing director, JPS, commended the staff for their steadfastness in achieving the feat. Travers, who was represented by David Iriabe,

general manager, enjoined the staff to continue to improve on the organisation’s processes and systems that led to the successful obtaining of the ISO 9001:2015 certification. “We are here to celebrate excellence, hard work and teamwork because without it, we would not gather here today. The certification is not a one off thing but a continuous engagement which must show in the way we work, respond to customers, and for the first three years of the certification, I know the staff are more than capable to get the renewal,” he added. Emmanuel Apotherhe, port manager of Tin-Can Island Port, commended the terminal operator for subjecting its processes and procedures to global check and certification. Apotherhe however said the certification was the beginning of success for the company. “It is not an easy thing to get certified because it involves someone watchwww.businessday.ng

tion created bottlenecks that resulted in high demurrage and rent due to delays. He pointed that such processes should be harmonised to reduce cost and time of clearance. Meanwhile, Jonathan Nicol, president of Shippers Association of Lagos State (SALS), who condemned the operations of the Nigeria Customs Strike Force, a unit of Customs, recently deployed to the port, said its presence was gradually militarising the port. Nicol further condemned the modus operandi of the SON, which currently makes the environment of trade very unfriendly for shippers. While noting that the activities of multiple checks duplicate procedure and increase costs, Amewiro said the multiple alerts by government agencies should be harmonised in line with international best standards. He added that the activities of Federal Operation Unit (FOU) of Customs should be streamlined in order to concentrate on anti-smuggling activities, which should be 40 miles from the ports.

C&I Leasing lauds NIMASA over release of hijacked vessel in Equatorial Guinea

Josepdam Port Services gets ISO 9001 certification for quality standards amaka Anagor-Ewuzie

“This resulted in serious delays, with high demurrage, rent, and high security implication for non-application of scanners for the detection of harmful goods, such as arms and ammunitions in line with international best practices,” he said. Amewiro suggested the need for re-evaluation of the scanners to know the pres-

ent state and update them as recommended by Smith Detection, the manufacturers of the scanners. He further stated the need to look into the main cause of the collapse of the scanners, and if possible, work out a Public Private Partnership (PPP) arrangement to maintain the scanners. Amewiro, who said there was an urgent need to provide holding-bay at the port, and called the Nigerian Ports Authority (NPA) to use part of 7% Port Development Levy (PDL), to develop port infrastructure such as holding-bay, trailer parks and port access roads. He noted that absence of these infrastructures had increased the number of days to access and exit the port, with attendant carriage risk of continuous falling of containers due to the terrible condition of the port access roads. Faulting the pre-shipment inspection process of Standards Organisation of Nigeria (SON) on SONCAP, which results in duplication of local procedure, increased cost and time of doing business at the port, Amewiro said the ac-

amaka Anagor-Ewuzie ing over you and ensuring you do the right thing, but I believe it’s the beginning of greater things,” he said. John Aderibigbe, managing consultant of DU&T, disclosed that when an organisation is certified, it shows the management has developed the right processes and that someone has come to audit the firm to ensure conformity with standards. “The certificate shows you pass an exam and there is need to put a measure in place to ensure continuous improvement because we will continue to review your processes, customer requirement and you must be up to date with the requirement,” he advised. Ad e r i b i gb e h ow e v e r charged the terminal operator to be steadfast in order to maintain the certification. “The certification body will come to ensure that the system is still working appropriately and still complying with the new trend of requirement on yearly basis,” he added.

he management of C&I Leasing Plc has commended the efforts of the Nigerian Maritime Administration and Safety Agency (NIMASA), Toko Ali Gongulong, the Nigerian Ambassador to Equatorial Guinea, Defence Attaché, Seyi Oladipo of Nigerian Navy, and the Spanish Navy, for their intervention and timely release of MV CHARIS, which was hijacked by sea pirates in Equatorial Guinea. Andrew Otike-Odibi, managing director, C&I Leasing, said in a statement that the vessel was on its way to execute a vessel recovery contract in Equatorial Guinea when it was hijacked in that country’s territorial waters by sea pirates. The pirates, he said, attempted to use his vessel to attack another marine vessel, MV BLUE MARLIN, before they were arrested by the authorities of Equatorial Guinea and detained. This was contrary to reports that MV CHARIS was arrested in Malabo, Equatorial Guinea, on suspicion of in-

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volvement in piracy activities. “MV CHARIS was released on Wednesday the 29th of May 2019, after a series of interrogation and negotiations with the support of NIMASA representatives, Ambassador Gongulong, Oladipo, and the Spanish Navy. The crew then sailed following inspection and repair of the vessel on the 31st of May 2019. “A misunderstanding of the specifics occurred between the arresting authorities because on arrival in Malabo, MV BLUE MARLIN was docked for repairs, with its crew treated decently, while MV CHARIS and its crew were detained by the police under threat of being charged with piracy, whereas they were equally attacked and hijacked by the pirates,” he said. It will be recalled that Teodoro Nguema Obiang Mangue, vice president of Equatorial Guinea, had announced on the country’s national radio station that 10 sea pirates of Nigerian origin were arrested in relation to the hijacking of a vessel; MV BLUE MARLIN and this same vessel with another vessel named MV CHARIS @Businessdayng

were subsequently handed over to the Equatorial Guinea Navy by the Spanish Navy as the incident was clearly within their jurisdiction. However, investigations later revealed that following the attack on MV CHARIS, the pirates destroyed its communication links, leaving only the SAT Line which was eventually used to make a distress call. It was then that C&I Leasing reached out to NIMASA, who then engaged all the necessary authorities in both Nigeria and Equatorial Guinea to aid the release of the company’s vessel MV CHARIS. Thereafter, the company sent a team from its Marine Operations to Equatorial Guinea to help expedite the identification and release of MV CHARIS and her crew. At a recent visit to NIMASA to appreciate their support on the release of the vessels, Otike-Odibi reiterated that C&I leasing is committed to remaining the most preferred marine partner for International Oil Companies (IOCs), assuring all clients that the company was committed to continuous improvement of security on all vessels in operation.

Wednesday 12 June 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Safe shipping: Nigeria set to lead war against piracy, maritime crime in Africa amaka Anagor-Ewuzie

etermined to reduce the increasing pirate attacks that vessels undergo while on voyage to West African region considered as high risk area, the Nigerian Maritime Administration and Safety Agency (NIMASA), has declared Nigeria’s commitment to playing the leadership role in the fight against piracy and other maritime crimes in the Gulf of Guinea region. Dakuku Peterside, director-general of NIMASA, made the declaration while delivering a keynote address at a symposium on Security in the Gulf of Guinea (GoG) at the headquarters of the International Maritime Organisation (IMO) in London. According to him, the GoG countries were facing serious security challenges that had affected their economies severely and, therefore, needed global support and cooperation to tackle the problem. Nigeria being the biggest economy and most populous country within the region, accounting for over 65 percent of cargo generated in the area, he said, the country occupies a vantage position to lead efforts to solve the maritime security challenges in the region. “The location of the Gulf of Guinea held enormous advantages, as it holds a significant percentage of the world’s total oil and gas reserves as

L-R: Friday Enamegbai, commercial manager, Josepdam Port Services Ltd; Florence Oyedepo, HR manager; David Iriabe, general manager, and Apata John, maintainance manager, during the presentation of the ISO 9001:2015(QMS) in Lagos recently.

well as rich deposits of solid minerals, such as diamond, bitumen, copper, uranium, granite, quartz, lead, fluorite, and marble,” he disclosed. He stated that the conference will afford the international community a platform to develop actionable strategies to put an end to piracy and other security threats in the African geological and maritime region. Peterside, who doubles as the chairman of the Association of African Maritime Administrations (AAMA), noted that the Gulf of Guinea occupied a strategic location in international seaborne trade. “It is home to two regional economic blocs including

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the Economic Community of Central African States (ECCAS) and the Economic Community of West African States (ECOWAS), comprising 26 countries. “It is, therefore, seen as a resource provider and critical contributor to national growth and prosperity of the nations lining its coasts and even those inward and with no shared boundaries, due to the access it grants to them,” he said. “The region’s waterways were a key navigational route for international commerce, connecting the Far East to countries in the North and South of the Atlantic. It is the hub of extensive trans-Atlan-

tic trade linking Africa with Europe and the Americas,” he said. He highlighted the factors that made Nigeria strategic in the fight against maritime crimes in the GoG region to include being the country with the highest military contingent and with a huge deposit of oil and gas, which makes it a place of interest in international energy dynamics. Other factors include the geo-strategic location of Nigeria, and the country’s big deltas, which are the largest in the world, with thousands of creeks. While acknowledging that maritime insecurity had eco-

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nomic, social and environmental implications for the region, he told the international community that Nigeria was leaving no stones unturned in the attempt to overcome the challenges. “It was this determination that led to the decision to approach the menace through a total spectrum of maritime strategy. The strategy involves law enforcement, regional cooperation, response capability building, and enhanced maritime domain awareness for all organs of government involved in maritime security. The NIMASA boss however believed that with the new initiatives, kidnapping and other violent crimes in the GoG region could become history in a matter of months. Highlighting the importance of regional and international cooperation in the fight against maritime crime, Peterside stated that countries in the region have no option but to work together to arrest the situation. To find tailored short and long-term solutions to strengthen regional and international collaborations in the Gulf of Guinea, he said, Nigeria will be hosting a Global Maritime Security Conference (GMSC), which comes up in the country’s capital, Abuja, from October 7 to 9. The summit is themed “Maritime Security and Global Trade Facilitation,” as part of Nigeria’s commitment, along with its partners, to stamping out piracy in the region.

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“Implementation of an integrated national surveillance and waterways protection solution with command and control infrastructure in the Agency was part of the government’s deep blue contract to enhance security in the Gulf of Guinea,” he disclosed. Peterside said it was Nigeria’s interventions that led to the establishment of the ECOWAS Integrated Maritime Security Strategy (EIMS) and Inter-Regional Coordination Centre (ICC) in Yaoundé. He also disclosed that Nigeria played a leading role in the establishment of the African Integrated Maritime Security (AIMS). He however called for more support in the fight against piracy and maritime crimes. NIMASA is a government agency responsible for ensuring safety and security on the country’s waterways, among other mandates as enshrined in the NIMASA Act, 2007. At the operational level, NIMASA, through collaboration with the Nigerian Navy in 2012-2013, established “Operation Prosperity,” a security taskforce, among others, which had helped to reduce criminal activities in the region. Also, the agency is determined to establish a legal framework to fight maritime crimes through an anti-piracy bill. The bill, when signed into law, will bring to bear appropriate sanctions on offenders and deter perpetrators of maritime crimes.

Wednesday 12 June 2019

BUSINESS DAY

NEWS

LIRS to employ TID to improve tax remittance Gbemi Faminu

agos State Internal Revenue Service (LIRS), in a bid to improve its revenue generation method, is set to incorporate the use of the Taxpayers Identification Digit (TID) module into the Tax Identification Number (TIN) system and the Joint Tax Board (JTB). The tax identification number is a unique number that will be generated and issued to individuals as well as corporate organisations for the purpose of tax remittance. The TIN will be operated using biometrics as well as the existing Bank Verification Number (BVN) for easy identification and verification to ensure a less clustered transaction. Consequently, access to LIRS electronic platform for all transactions, such as registration and creation of Payer ID for new taxpayers, payment of taxes and validation of taxpayers’ profile will necessitate the need for BVN validation. Therefore, every self-employed individual would be required to provide details of their BVN to the LIRS for the creation of their unique TID, while corporate organisations are to ensure that their employees provide their BVNs for processing of their tax clearance certificates (TCC). According to the LIRS, the upgrade is necessary in order to foster a smooth tax remittance and also eliminate the problem of multiple payer identification. Furthermore,

it will reduce fraudulent activities with taxpayers’ identity and encourage registration of taxpayers through a simple and convenient process. Wole Obayomi, partner/ head of Tax, Regulatory and People Service (TRPS) KPMG Nigeria, in the Tax Alert document, explained that the BVN was sensitive and confidential information regulated by the Central Bank of Nigeria. Less intrusive means of identification should be encouraged like the national identity card, driver licence, international passport, among others, for this purpose, Obayomi advised, adding that taxpayers should be encouraged with a convenient and seamless method of tax payment. He pointed out that the Federal Inland Revenue Service (FIRS), which is the major reference for tax collection in Nigeria, successfully registered several companies and individuals for tax purposes and issued TIN to them without requiring sensitive information such as the BVNs of their directors or the individuals. He also added that the LIRS should take a cue from its superior. While the LIRS explains that the use of the BVN is the fastest and least disruptive route to achieving the planned integration system with the JTB-TIN system, it assured taxpayers of the safety and security of their data, adding that all information and data released to them will be treated with strict confidentiality.

Group advocates conscious, deliberate policy direction for gender parity SEYI JOHN SALAU

s principal officers of the ninth National Assembly were being elected and inaugurated on Tuesday, June 11, WIMBIZ, a women advocacy group that represents the interest of women in management, business and public service, called on the newly elected leadership of the National Assembly to ensure conscious and deliberate policy direction was taken through legislation to achieve gender parity in Nigeria. The group made its position known at the WIMBIZ CEO/ Policy maker interactive breakfast series held in Lagos, Tuesday, with the theme ‘Hidden Figures: The Cost of Exclusion’. Considering the current figures, Nigeria’s gender inclusion, especially in the area of political representation is statistically less impressive. The proportion of seats currently held by women in the national parliament, both in the Senate and House of Representatives, is put at 3.8 percent. Over the years, Nigeria has

not made meaningful progress in the areas of gender inclusiveness and equality. This exclusion according to analysts comes at a high cost, considering the economic stagnancy, high unemployment and uneven wealth distribution prevalence in the country. Therefore, there is an urgent need to focus on gender parity and institutionalise sustainable reforms in promoting gender equality that can be an economic game changer Nigeria needs in this current administration. Comfort Lamptey, the UN Women country representative in Nigeria and ECOWAS, said Nigeria’s GDP would increase by allowing more women play in the real sector of the economy, resulting in economic growth for the country. “If we create the right policy and environment that encourages women to participates equal terms as men in the former economy; that also means closing the wage gap between women and men. We will see a tsunami in the private sector in Nigeria,” she said.

Aliyu leads Nigeria to 11th World Chambers Congress in Rio Obinna Emelike

ational president of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Saratu Iya Aliyu, will lead a delegation from various chambers of commerce and industry in Nigeria to the 11th World Chambers Congress (11 WCC) in Rio De Janeiro, Brazil, from June 12 - 14, 2019. The 11th Congress will open up Nigeria’s organised private sector to trade promotion and investment opportunities, facilitate and strengthen relations from diverse attending companies, countries and regions and a platform to exchange real-world ideas and best practices on chamber and business activities. The 11th Congress will also witness the World Chambers Competition; the only award programme of its kind to recognise pioneering projects undertaken by chambers from around the world. Nigeria and other 15 chambers of commerce out of 74 submissions will move to the final round of the World Cham-

bers Competition. Representing 11 countries, the selected chambers will each have the opportunity to present their innovative initiatives to the global network of chambers attending the 11th WCC. Nigeria is the only African chamber shortlisted to the final round for the “Best Education and Training Project” category through Abuja Chamber of Commerce and Industry (ACCI). Aliyu thanked ACCI for representing Africa and making Nigeria proud. “We are proud of ACCI achievements and will be happy to share our experience, learn and exchange ideas on investing in education and training as antidote to economic development and job creation through small-and mediumsized enterprises (SMEs) in RIO” The 11th World Chambers Congress is the largest international gathering of the globe’s most prominent leaders and brightest minds in transforming the future of chambers of commerce and their business members.

Nestle Nigeria mobilises volunteers to cleanup plastic waste in Lagos CALEB OJEWALE

lastic waste is both an eyesore and an environmental hazard, and to commemorate World Oceans Day 2019 at the weekend, over 250 Nestlé Nigeria plc’s volunteers with their families collaborated with RecyclePoints to clean up some parts of the Okun-Ajah community in Lagos, Nigeria. At the end of the exercise, the company in a statement said the volunteers had removed 1,500kg of waste from the beach. Participants worked together to pick up plastic and other wastes found at the beachfront, ensuring proper segregation, weighing and baling of collected materials for proper management. “Plastic waste is one of the world’s most pressing issues,” said Mauricio Alarcon, managing director/CEO of Nestlé Nigeria, speaking on the significance of the cleanup activity. According to Alarcon, through clean up initiatives and other activities, Nestlé aims to play active role in changing behaviour and raising public awareness about reducing plastic waste and recycling more. This is part of the company’s broader vision to achieve a waste-free future. “Nestlé is committed to

leading lasting and impactful change, and we know that there is no better place to start than from within our own company,” he said. The World Ocean Day is an annual commemoration providing an opportunity to unite citizens, educate people on the issues relating to the ocean, and encourage them to take action to protect and conserve the ocean. Across its locations worldwide, Nestlé says its employees at all levels observed the day by dedicating their volunteering hours to clean-up activities. Responding to the plastic waste challenge and striving for zero environmental impact in its operations is described as an integral part of Nestlé’s commitment to creating shared value for shareholders and society. In April 2018, the company had announced its ambition to make 100 percent of its packaging recyclable or re-usable by 2025. Its vision is that none of its packaging, including plastics, ends up in landfill or as litter. In Nigeria, the company works alongside other partners in the Food and Beverage Recycling Alliance (FBRA) to find creative solutions to managing plastic waste while preventing leakage into the ocean. www.businessday.ng

L-R: Olawale Ajai, head of department of strategy, Lagos Business School; Ferdi Moolman, CEO, MTN Nigeria, and Bismarck Rewane, CEO, Financial Derivatives, during the guest presentation by the MTN CEO at the Lagos Business School Breakfast Club in Lagos. Pic by Pius Okeosisi

Democracy Day: Obaseki urges support to deepen democratic values ... insists on sanctions against erring parents at World Day Against Child Labour

d o St at e g ove r n o r, Godwin Obaseki, has tasked Nigerians to support government’s efforts at deepening democratic values in Nigeria, so as to allow the people drive the process of governance. Obaseki said this in his Democracy Day message in Benin City, noting, “I call on all Edo people, Nigerians and friends of our dear country to support our effort to deepen democratic values towards ensuring that our people are major stakeholders in the process of governance.” The governor also congratulated President Muhammadu Buhari “for officially recognising June 12 as the nation’s Democracy

Day in honour of the Late Moshood Kashimawo Olawale (MKO) Abiola, who paid a steep price for this participatory government.” He said, “On behalf of the government of Edo State, I felicitate with Nigerians on the occasion of our Democracy Day celebration. This day is one of extreme significance in our history as a nation as it marks the return of power to the people.” The governor saluted “All the actors both within and outside our shores that fought assiduously for the restoration of democratic values in Nigeria despite the constraints.” Furthermore, the state governor says the state government has strengthened

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institutions to enforce the Child Rights Law, to ensure that children are protected from abuses, especially child labour, which robs them of their childhood and deprive them of the opportunity to lead a fruitful, rewarding life. The governor insisted that parents and guardians who run foul of the provisions of the Child Rights Law would go in for flouting the law, adding that reforms in the state’s basic education sector should encourage parents to send their children to school. The governor made the call in commemoration of the 2019 World Day against Child Labour, marked every June 12, by the International @Businessdayng

Labour Organisation (ILO), and observed across the globe. The state is putting the necessary policies and programmes in place to assist children across the state reach their goals in life as part of commitment to ending child labour, which can be achieved through collaboration among stakeholders. He noted, “There is an urgent need for parents, guardians, caregivers, religious groups, well-meaning individuals and organisations to support the government in putting an end to the practice by ensuring that children who should be in school are not used as cheap labour.

Wednesday 12 June 2019

BUSINESS DAY

news Air Peace faults AIB on mandatory occurrence report IFEOMA OKEKE

ir Peace on Tuesday disagreed with the contents of a press release by the Accident Investigation Bureau (AIB) saying the airline had consistently failedtofileMandatoryOccurrence Report(MOR)onincidentsinvolving its aircraft. The airline said the press statement emanating from the Bureau was a misrepresentation of facts concerning the incidents in question. In the night of May 15, 2019, an AirPeaceBoeing737-300withregistrationnumber5N-BUKmadea hard landing in Lagos on account ofsuddenchangeinweatheratthe point of touch down. Inastatementissuedbytheairline’smanagementinLagos,itsaid theAIBgrosslymisrepresentedthe factswhenitalludedthattheairline only reported the incident after the Bureau’s team visited its corporate headquarters in Lagos on June 6, 2019,whichwasaboutthreeweeks after the incident. Contrarytothepressstatement issued by the AIB, Air Peace duly notified the Nigerian Civil Aviation

Authority (NCAA) of the incident on May 16, 2019, before it followed up with a written communication and subsequently filed an MOR on May 17, 2019, with reference number APL/QM/279/19. The said MOR filed by the airline was received and signed for by the NCAA on the same date. The airline complied with the statutory timeline for the filing of MOR. Accordingtotheairline,itisstill in shock over the deliberate misrepresentation of facts by the AIB, andquestionedthemotivebehind the press statement. The airline queried: “Was the press statement intended to scare the flying public against an airline that has consistently demonstrated zero tolerance for unsafe practices?” The airline also expressed surprise at AIB’s dredging up of the incident, which occurred on December 14, 2018, en route Enugu Airport, during which oxygen masks were automatically deployedasaresultofchangeincabin pressure. The airline said matters relating to masks dropping during flight were not peculiar to Air Peace, but common to airlines the world over.

More worries for Nigeria’s sweet crude as US shale production gains traction STEPHEN ONYEKWELU

onny Light and Qua Iboe, Nigeria’s crude oil grades, have been the toast of both the US and international markets thanks to its low sulphur content, but this is rapidly changing with the shale oil constituting a competition. The US oil production is on track to spike to a record 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas alone is expected to soon top 5 million barrels per day in oil production, more than any Organisation of Petroleum Exporting Countries’ (OPEC) member,otherthanSaudiArabia. New refining technology in Asia has boosted appetite for

heavier more sulphurous crudes that can be upgraded, at the expense of light sweet crude. Recent mega-merger and acquisition deals in the Permian Basin, West of Texas have set oil majors up in a race to take a position in the world’s most prolific shale oil fields in the US, but Nigeria continues to dilly-dally about reforming its petroleum sector laws to grow its oil reserves and daily production. “Iworryaboutoilpriceswhich are beyond our control, and the countrythatcanproducewiththe minimal level of cost challenges our existence automatically. The current 2 million barrels per day we produce is quite ridiculous, we need to move to 3 million, our refinery programme has to be bullish as well,” former minister of

state for petroleum resources, Ibe Kachikwu said in his latest interview with BusinessDay’s editor and others. “At the end of the day, shale oil is my immediate worry.” InApril,Chevronmadepublic its decision to takeover Anadarko Petroleum for $33 billion, a deal seen as a watershed moment for the Permian Basin and the U.S. shaleindustryasawhole.Thedeal is believed to be the beginning of a massive round of consolidation in the shale industry. Occidental Petroleum Corp. made a counteroffer of $57 billion (with debt) on April 24, and then on May 5 sweetened its terms. On May 6 Anadarko’s board backed it as “superior” to that of Chevron, which has until May 10 to up the ante. It is already the energy

industry’s biggest bidding war in decades. “Our oil reserve today is a thirty-year reserve so technically unless there are new serious finds, in 30 years your oil should be dwindling. Gas is in 60 years although it is luckily seen as a clean fuelalthoughourissueshavebeen our ability to harness it quickly,” Kachikwu said. Already, the Permian has rapidly shifted in favour of the largest oil companies, with ExxonMobil, BP and Chevron betting their futures on West Texas and New Mexico. Exxon expects to produce 1 million barrels per day (mb/d) from the Permian by 2024, while Chevron had announced plans to produce 900,000bpd by the same date.

Sanwo-Olu congratulates Lawan, Gbajabiamila ... advises lawmakers to put nation above personal interest Zebulon Agomuo

abajide Sanwo-Olu, Lagos State governor, has congratulated Ahmed Lawan and Femi Gbajabiamila on their victories as president of the Senate andspeakeroftheHouseofRepresentatives, respectively. Governor Sanwo-Olu described Lawan’s and Gbajabiamila’svictoriesasresultsoffocus,hard work, resilience and team spirit, saying that the keenly contested elections in both chambers of the National Assembly are a clear indication of deepening democratic culture in Nigeria. AstatementsignedbyGboyega Akosile, deputy chief press secretarytothegovernor,quotedSanwoolu as saying, “We should not lose sight of the fact that the elections into the leadership positions of the Upper and Lower Legislative Chambers of the National Assemblyisaclearmanifestationthat Nigeria’s democracy is growing in leaps and bounds.” ”Recall that in the past, such elections were either not as transparentaswhatwewitnessedtoday

or emergence of the leaders were remotely controlled from outside the hallow chambers. But today, the National Assembly members participated and chose their leaders in the full glare of millions of Nigerians. This must be commended’,’thegovernorfurthersaid. The Lagos State governor, who watched proceedings of the two Chambers live at the National Assembly complex in Abuja, advised thenewlyelectedprincipalofficers of the Senate and the House of Representatives to see their new positions as a heavy responsibility because according to him, “Leadership itself is responsibility’.’ He urged Senator Lawan and Gbajabiamila to work closely with the Executive arm of government for speedy and efficient service delivery to Nigerians. “Nigeriansarelookinguptothe ruling class, regardless of who is at the top or what political parties we represent. The average Nigerian is interested in the quick passage of the appropriation bill and other bills that will have direct positive impact on his life’’, Sanwo-Olu stated.

Globacom celebrates Democracy Day with Nigerians

lobacom has joined men and women of goodwill to send good wishes to citizens of Nigeria on the occasion of the celebration of the country’s Democracy Day. June 12 was designated as Democracy Day by the current administration last year in recognition of the highly regarded election held on that date in 1993. The election acclaimed to have been won by MKO Abiola was annulled to the disappointment of most Nigerians. Globacom, in a statement released from its head office on Tuesday, said the annulled election played a major role in the

entrenchment of democratic governance in the country. Globacom said the experience of Nigerians before, during and after the elections has helped to shape democracy and ensured its stability in Nigeria. “The experience of June 12 is a national watershed in our democratic trajectory. It speaks to Nigerians’ passionate desire for democratic governance, liberty, and rule of law, human rights and the inalienable right to vote and be voted for. It is a metaphor that symbolizes the country’s rejection of repression of people’s will in any form, shape or size,” the statement said. www.businessday.ng

L-R: Nelson Ozuem, regional service manager, Abuja region,Sterling Bank; Folayemi Agusto, co-founder/director, Eat Drink Festival; Ado Abdulkareem, business executive, retail banking, Sterling Bank, and Daphne Akatugba, marketing manager, specialised products, Sterling Bank, at the 6th edition of Eat Drink Festival, holding for the first time in Abuja, sponsored by Sterling Bank.

Oredo Council proposes N4.2bn for 2019 fiscal year IDRIS UMAR MOMOH, Benin

xecutive chairman of Oredo Local Government Area of Edo State, Evbareke Jenkins Osunde, on Tuesday presented the 2019 budget estimates of N4,220,740 billion to the legislative arm for consideration and approval. Osunde noted that the 2019 budget christened, “Budget of Sustainable Socio-Economic Growth” was designed to actualise the dreams of the 2018 fiscal year. The 2019 budget estimate is N345,795,210,78 million less than the 2018 estimate of N4,566,535,210,78 billion, he noted. He s a i d t h e s u m o f N2,952,857,830,88 billion was proposed for recurrent expenditure, while N1,267,882,169,12 billion was for capital expenditure. The budget will be financed from the federation account, internally generated revenue,

value added tax, share from excess crude oil and AID/grants, he said. The local government boss explained that the sum of N2.6 billion was expected from the federation account, N600 million from VAT, N10 million from excess crude, N320 million from AID/grants and N690.740 million from independent revenue sources. He also said of the N2,952,857,830,88 billion for recurrent expenditure, the sum of N1,470,230 billion, representing 34.8 percent would be spent on consolidated revenue fund and charges (teacher’s salary) and N538,702,500,88 million, representing 12.8 percent for mandatory social contributions. Others are N25 million representing 0.6 percent for financial Charges’- general, N793,315,330 million, representing 18.8 percent for personnel cost and N125,610 million, representing 3 percent for overhead.

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FirstBank bags multiple awards

irst Bank of Nigeria Limited has been conferred with multiple awards cutting across the industry this year. The bank, which is also commemorating its 125 years anniversary, has been widely commended for re-inventing itself and being nimble in its service delivery, while painstakingly adapting to the dynamic changes that have enveloped businesses, especially with the advent of globalisation. In recognition of its high transactional volume and leading role at promoting cashless transactions and financial inclusion in the country, the bank recently won two awards at the CBN Electronic Payments Incentive Scheme (EPIS) Efficiency Awards. The awards are: Cashless Driver: Highest Volume in Bill Payments and Cashless Driver: Highest Transaction Volume in Real-Time Payments. World Finance Magazine and Global Finance magazine awarded the bank Best Private Bank in Nigeria 2019, as it also won the Bank of the Year in Nigeria 2019 and Best Financial Inclusion @Businessdayng

Programme in Nigeria 2019 by International Investor and Best Banking Brand in Nigeria 2019 by Global Brands Magazine. At the recently held Asian Banker International Excellence in Retail Financial Services Awards, the bank bagged the Best Retail Bank in Nigeria as well as Best Process Automation Initiative, Application or Programme awards. Global Banking and Finance Review named FirstBank the Best Retail Bank in Nigeria, while the Most Socially Responsible Bank - Nigeria award was bestowed on the Bank by International Finance Magazine. Speaking on the awards, Folake Ani-Mumuney, group head, marketing/corporate communications, FirstBank, said: “These awards reinforce our leading role in critical business segments and activities like brand reputation, financial inclusion, digitisation of financial services in the industry. It is a great honour to the Bank and further proof that we are beyond comparison. The awards are dedicated to our customers who are the centre of our business.”

Wednesday 12 June 2019

BUSINESS DAY

news Start-ups prove Nigeria’s health... Continued from page 1

(MDCN) and other professional bodies. So, most of the doctors on its platform are known in their professions. “We are determined to solve the problems of patients having to queue for a long time before having an access to a doctor,” Abiodun Okunola, Mobidoc’s business development executive, told BusinessDay. Start-ups like Mobidoc are proving that Nigeria’s health challenges can be overcome with simple digital solutions. Today, one does not necessarily need to go to the hospital to get a doctor. Like Alban, 41-year-old Joshua Okonua was a tuberculosis patient at a general hospital in Onitsha, southeastern Nigeria. A drug was prescribed for him but he could not find it in pharmacies and open markets. Two weeks ago, he found it on DrugStoc’s multi-channel, cloud-based platform, which has over quality 7,000 drugs. He noticed that DrugStoc traces all the drugs on its platform to their manufacturers, which is an easier way of identifying

which is which. “What we saw were counterfeiting, fragmented market, poor access to credit and all the issues that patients would encounter when they go to the hospitals. They go there, there are no drugs and the drugs they will even find are fake. So, we are eliminating such,” Chibuzo Opara, co-founder of DrugStoc, told BusinessDay at The Hague, Netherlands, during the Global Entrepreneurship Summit (GES) held between June 3 and 5. Opara explained that DrugStoc works with over 800 pharmacies and hundreds of hospitals which buy drugs directly from the platform. If you are a pregnant woman and need a doctor, then visit Ask The Gynaecologist (ATG), which has helped over 500,000 women have their children without complications. The platform assigns a doctor to a patient and offers free follow-ups in private conversations. Treatments and consultations are in the upwards of $21. Nigeria has grim health statistics. Ten percent of all the children born die, according

to the United Nations Children Fund (UNICEF), just as 80,000 Nigerians die of cancer every year, according to the World Health Organisation (WHO). Fifteen thousand are killed by heart-related diseases. About 2,000 doctors leave for the United Kingdom, the United States or Asia to make more money, said the Nigerian Medical Association (NMA). According to data from World Bank, Nigeria had 814 per 100,000 maternal mortality rates in 2015, caused by the loss of too much blood within 24 hours after a woman has given birth. These grim statistics and harsh realities characterise Nigeria’s healthcare system, which ranks 197 out of 200 countries in the WHO ladder or 171 out of 195 (in terms of investment) on the Institute for Health Metrics and Evaluation (IHME) at the University of Washington. But the likes of Mothers Delivery Kit are trying to plug such health gaps. It uses a data-driven platform to save the lives of women at childbirth, supplying them with all they need at just $5. “We have sold over 500,000 kits since we started in 2014,” Adepeju Jaiyeola, chief execu-

tive of Mothers Delivery Kit, told BusinessDay at The Hague. “The location of a woman and her economic life should not determine whether she lives or dies at childbirth,” she added. Flying Doctors of Nigeria (FDN) was founded by Ola Orekunrin, a British-born Nigerian and a medical doctor, to provide air ambulance services, moving injured patients as well as patients with health challenges to hospitals for adequate attention. It leverages technology in doing so. Victoria Duru, company’s administrator, in a mail sent to BusinessDay, said FDN’s focus is on transferring critically unwell persons from areas of limited access to medical care and specialist centres using available technology to save as many Nigerian lives as possible. According to the Federal Ministry of Health, 1.7 million units of blood are needed every year to save human lives in Nigeria. To find the blood and deliver it to the person that needs it to survive is a challenge, but Giwa-Tubosun is dedicated to solve this challenge through her application, LifeBank. To do this, LifeBank mounts campaigns for blood

donations, connects blood donors to the nearest blood banks and links them to the hospital that needs the blood to save lives. One of its two platforms allows hospitals to request for blood while the other allows voluntary donors to indicate their willingness to donate blood. LifeBank directs donors to the nearest blood bank in one of over 25 blood banks in Lagos where blood is collected and stored. When requests for blood are made through LifeBank app, Giwa-Tubosun collects the blood and delivers it to the hospital that needs it using her logistics team, she said. To solve the challenge posed by Lagos traffic in delivering blood to the needed patient on time, Giwa-Tubosun uses dispatch motorbike to deliver blood, keeping it at 10 degrees Celsius and in Bluetooth-padlocked boxes that can only be opened by the intended recipient. “We give a service that means the difference between life and death to so many people,” said Giwa-Tubosun. InStrat Global Health Solutions collects healthrelated data about diseases and shares such data with

governments, health ministries, agencies, international organisations and hospitals in order to avert possible occurrence of epidemics. Using an application known as Early Warning Outbreak Recognition system (EWORs), Okey Okuzu, founder/CEO, told BusinessDay that the process is simple. It requires that healthrelated data of places are regularly sent out to the relevant authorities in order to keep track of behaviours of diseases. In such a way, authorities will be able to easily track changes in behavioural patterns of a particular disease. Okuzu explained that if over a period of time the data remain constant, it means the issue is still within the scope. However, if it is observed that the number of people being treated for, say, diarrhoea, has increased, it is an indication that something is not adding up somewhere. It is then clear to every stakeholder that epidemic is looming. “So when you have a situation where there is an elevation in reported diseases that are beyond the historical level, then we need to alert the authorities that there is something going on,” Okuzu explained.

Attention shifts to executive-legislature... Continued from page 1

into the positions of presid-

ing officers in the National Assembly has reignited the issue of cordial relationship between the executive and the legislative arms of government. On Tuesday, Ahmad Lawan and Ovie Omo-Agege were elected as president and deputy president of the Senate, respectively, while Femi Gbajabiamila and Ahmed Idris Wase emerged as speaker and deputy speaker of the House of Representatives. The four had been earlier endorsed by the party and the Presidency. President Muhammadu Buhari had already expressed happiness over the emergence of the new leadership of the National Assembly, describing it as “a new dawn, different from duplicity and perfidy of the immediate past”. “The executive does not desire a rubber-stamp legislature. While separation of powers is essential, collaboration among all arms of government should be the name of the game. Opposition need not be virulent,” Buhari said. “Stepping into the Next Level, the legislature has a big role to play for the goals of the administration to be achieved. This is for the ultimate good of the nation. At the end of the day, we, the people, who elected our representatives at the national level are the winners,” he said. But analysts and some lawmakers are looking at the implication of this development for Nigeria in the next four years, with many of them saying it is a positive for the country. In a chat with Business-

Day, Uba Sani (APC, Kaduna), said with the emergence of the four presiding officers, the coast is now clear for a cordial relationship between the executive and the legislature. “With the emergence of the four presiding officers endorsed by the APC, I can assure you that there will be smooth working relationship between the two arms of government and the people will be better for it,” he said. “This Senate of the Ninth Assembly will make a bigger difference than the other Senate,” said Ayo Akinyelure (PDP, Ondo). Also speaking with BusinessDay, another lawmaker, Ishaku Abo (PDP, Adamawa), said the executive arm of government must work with the Ninth Assembly and focus on security. He said the government of Nigeria must focus on security immediately or Nigerians would wake up one day and realise that they no longer have a country. James Ornguga, the APC publicity secretary in Benue State, said with new legislature, there would be no more delays on the budgets and requests from the Presidency. According him, Nigeria would be better for it in the new era of smooth executivelegislative relationship, even as he dismissed the fear of rubber stamping of the legislature. “I presume there is going to be a reliable and highly efficacious relationship between the executive arm of government and the legislature and henceforth the unnecessary delays, and the unpatriotic moves of the last Assembly have been already eliminated and we are trusting God that www.businessday.ng

L-R: Emeka Emuwa, chief executive officer, Union Bank; Cyril Odu, chairman, board of directors, and Somuyiwa Sonubi, company secretary, at the bank’s extra-ordinary general meeting in Lagos.

Buhari will move at a higher speed this time with this competent Assembly that is willing to cooperate with him in the interest of Nigeria,” he said. “I am not looking at the idea of rubber stamping. I am looking at the competence and credibility of the people elected. Look at Senator Ahmed Lawan, a very competent legislator, he has been there over years. He has a lot of experience and is a man that is focused. So I believe he will not just back the President but back the interest of Nigeria. Look at Femi Gbajabiamila, another competent legislator. So the quality of people that we have produced clearly points to the fact that Nigeria will be better with them,” he added.

Analysts had attributed the executive-legislature rift that characterised the Eighth National Assembly from 2015 to 2019 to the emergence of the leadership of the National Assembly as they did not have the backing of the Presidency and the APC. This, according to pundits, was also responsible for the highest number of rejected bills by President Muhammadu Buhari. Some of the rejected bills include the Petroleum Industry Governance Bill, Budget Timeline Bill, Electoral Act (Amendment) Bill, Stamp Duties (Amendment) Bill, Industry Development (Income Tax Relief) (Amendment) Bill, among others. Another issue that affected

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the cordial relationship between the two arms of government in the Eighth National Assembly was the budget. While President Buhari had blamed the Eighth National Assembly for not passing the budget on time and accused lawmakers of padding the national budget, the presiding officers of the Eighth Assembly had attributed the late passage of the budget to late submission of the fiscal document by the President and refusal of heads of Ministries, Departments and Agencies to appear before relevant committees during budget defence. For instance, last month, President Buhari criticised then Senate President Bukola Saraki and Speaker Yakubu @Businessdayng

Dogara for delaying budget passage during his first term in office. In an interview on the Nigeria Television Authority (NTA), the President described as unpatriotic the action of the two principal officers of the National Assembly over the years. Making specific reference to the delay in the 2018 budget which took the Eighth National Assembly seven months to pass, Buhari had said, “I told Saraki and Dogara that by holding the budget for seven months, you are not hurting me, you’re hurting Nigerians. In terms of patriotism, I rate them very, very low. I feel very bad indeed. National Assembly to hold the Budget for seven months.”

Wednesday 12 June 2019

BUSINESS DAY

news

Nigeria, Benin Customs to integrate operations for ease of bilateral trade AMAKA ANAGOR-EWUZIE

he Nigeria Customs Service (NCS) and Benin Republic Customs have concluded plans to integrate importers and exporters declarations at the border stations as part of ECOWAS mandates to facilitate trade. The new initiative will feature single declaration, deal with corrupt tendencies, reduce cost of doing business, promote trade, prevent revenue losses and curb smuggling across the two countries’ borders. However,anydeclarationsmade for imports within the two counties would be distributed and shared electronicallytobothCustoms. The project is expected to take off on June 20, when it will be formally launched by both Customs. Speaking at a stakeholders sensitisation in Seme, Badagry: ‘Nigeria-BeninCustomsConnectivity for Border Seamless Trans-

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actions,’ Hameed Ali, Comptroller General of Customs, who was represented by assistant comptroller general in charge of ICT, Benjamin Aber, said the single declarations made at either of the countries would be electronically accessible to both countries. Hesaidimportersdonotneed to declare a second time during transit, and told importers and exporters that the system would be trader friendly, increase revenue, prevent smuggling and promote trade within the two countries. On the efficiency of the system, he said the system would be protected from hacking and also from any form of disruption. “Importers and exporters from both countries don’t have anything to fear. The system is being designed that both importers and exporters can relate with the Customs of the two countries. The system is user-friendly as it enable you to chat and lodge your complains at any time,” he said. He therefore allayed fears of likelihood of reneging by Benin as the case in the past, saying officers on the project were committed to its success. Also, director general of Benin Republic Customs, Sacca Boco Innousa Charles, said the initiative wouldreducesmugglingandfacilitate trade within the two countries. He described the initiative as

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he 2019 BusinessDay Real Estate Roundtable has been rescheduled to hold on Thursday, June 27, 2019, at the same venue in Abuja. BusinessDay Conferences, an arm of BusinessDay Media Limited, the organiser of the roundtable, said it was being rescheduled because of the Democracy Day celebration holding today (Wednesday), adding that most of the speakers and panellist were involved across the country. BusinessDay organises the roundtable in association with Real Estate Developers Association of Nigeria (REDAN). This year’s roundtable is the third in the series and is convened by BusinessDay Conferences, which has carved a niche for itself in hosting very cerebral and successful conferences, breakfast meetings, awards and roundtables in various sectors of the economy. Following the success of the previous editions, this year’s edition promises to be bigger, and provide a very broad platform for discussion and provision of ideas

for the many challenges facing the real estate industry in Nigeria. The 2019 Roundtable plans to look at the key challenges facing the industry and roles of the government, industry players, and the consumers in tackling these challenges, particularly the issue of land acquisition in homeownership. Land ownership in Nigeria can be a rigid process due to the complex nature of the land tenure system. As a result, the Roundtable will address issues such as land acquisition, registration, tenures, land use charge, and other element of title ownership and transfers, legal issues in land administration; and regulatory issues, standards, building plans and permissions. The Roundtable will bring together key players in the property development business, the built environment, top industry analysts, policy makers, academics and potential home owners to discuss the challenges facing the industry, appraise the progress that have been made over the past years, brainstorm on the way forward

and possible policy options for the sub-national and national governments. Speakers will be drawn from major property developers across Nigeria and CEOs of top mortgage institutions, money deposit banks as well as government officials. Elder statesman and chairman of Urban Shelter Group, Ibrahim Aliyu, has accepted to chair the Roundtable and to share his wealth of experience with participants. Ugochukwu Chime, national president of REDAN, Ahmed Musa Dangiwa, managing director/CEO, Federal Mortgage Bank of Nigeria (FMBN), Ese Owie, an astute lawyer and academic, and Kehinde Ogundimu, managing director/CEO, Nigeria Mortgage Refinance Company (NMRC), are scheduled to speak at the roundtable. Among others scheduled to speak also are Ezutah Lekwa, president, Nigerian institute of Town Planners, and Joseph Agbanla, president, Surveyors Registration Council of Nigeria (SURCON).

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a dream come true, adding that moves for achieving the initiative began about 15 years ago when leaders of both countries initiated the inter connectivity system. He said the new initiative was a model that would draw attention to Krake/Seme borders, saying it would serve as an example forothercustomsadministrations to replicate from other countries. “The new mechanism is a fall out of previous meetings between Nigerian President and Benin President. Our presidents held a meeting 15 years ago in Badagry. I was there and today the effort of both countries is about yielding results. “I was a member of the economic watch committee. I never knew I would be here to be part of those seeing it come real. This forum is about sharing and knowing responsibilities, to improve our incomes as various economies. We should continue as partners in building a better economies for our two countries,” he said.

BusinessDay reschedules Real Estate Roundtable

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Femi Gbajabiamila, newly elected Speaker, House of Representatives (2nd r); taking oath of office before, Mohammed Sani-Omolori, clerk to the National Assembly (r), during the inauguration of the 9th House of Representatives, in Abuja, yesterday. With them is Abdulmunini Jubrin, director-general, Gbajabiamila Speakership Campaign Group (2nd l) and others.

Corruption war: Buhari seeks abolition of banks’ secrecy jurisdiction

… promises to ‘name and shame’ looters of public funds … as Kagame calls for policy transparency, accountability Tony Ailemen & Innocent Odoh, Abuja

isturbed by the frustrations and long delays in tracking illicit financial transactions, occasioned by “secrecy jurisdiction” and “offshore financial centres,” President Muhammadu Buhari Tuesday said his administration would push for the abolition of banks’ secrecy jurisdiction among others, as the war against corruption enters the “Next Level.” The practice enables banks to shield people suspected of financial crimes to either undermine laws, or escape rules and regulations of other countries, while relying on “banks’ secrecy.” Buhari, while noting that the

anti-corruption fight was not an end in itself but an instrument not only to fight poverty but a means to restore the right order of things, urged African countries to collaborate more on tackling the menace. President Buhari speaking at the “National Democracy Day Anti-Corruption Summit,” with the theme, “Curbing Electoral Spending: A Panacea to Public Corruption,” at the Transcorp Hilton, Abuja, said his administration would “Press for a crackdown on safe havens for corrupt assets, abolishing of bank secrecy jurisdictions and tax havens on the continent and beyond.” The President said his administration would use outcome of the interaction as the basis for a more concerted effort to strengthen the capacity of the

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Economic and Financial Crimes Commission (EFCC) and other anti-corruption agencies by providing additional material, organisational and logistical support. Buhari, who assured that he would close existing legislative loopholes, facilitate collaboration with the judiciary, and strengthen the criminal justice system, also promised to enforce asset declaration by public office holders and ensure sanctions by professional bodies against lawyers, bankers, brokers, public officials, and other individuals facilitating corrupt practices. Other actions to be taken by the government include comprehensive support and protection to whistle-blowers, witnesses and victims of corruption, adoption and formulation of the @Businessdayng

policy of ‘naming and shaming’ all those who engage in corrupt practices while encouraging and honouring those who do not. Others include to “educate, mobilise and encourage Nigerians at the grassroots level to take ownership of the fight against corruption, as well as insist on the unconditional return of looted assets kept abroad and further strengthening of international cooperation through information and mutual legal assistance.” Rwandan President, Paul Kagame, in his keynote address, called for transparency, public accountability in public policy formulation and execution, even as he noted that refusal to fight corruption is even more dangerous than confronting the menace.

Wednesday 12 June 2019

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Wednesday 12 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Benedict Mander

ucía Colombo feels let down. The marketing assistant was full of enthusiasm when President Mauricio Macri took power promising change for Argentina. But almost four years on, she struggles to explain what has really improved — at least in her day-to-day life. “The economy was supposed to be one of Macri’s strong points, but it’s not much better now than it was before. Some things are worse,” she said, complaining about how expensive everything is. “Can anyone fix this country?” Although Mr Macri was elected in 2015 on promises of transforming Argentina’s struggling economy, the noxious impact of a currency crisis last year has left many supporters disappointed — or even angry — with his performance in power. That is undermining his chances in the October presidential elections. Wi t h a n nu a l i n f lat i o n o f around 55 per cent and a recession dragging on, the latest polls continue to show an advantage for former populist president Cristina Fernández de Kirchner and her lesser known, unrelated former cabinet chief Alberto Fernández, who are running for vice-president and president respectively. “The problem is that if poorer

Macri battles to prevent return of ‘Kirchnerismo’ in Argentina President unveils infrastructure projects to build support from disenchanted voters for October elections voters are even worse off now than they were under populism, it is perfectly rational for them to vote for populism again,” said Oscar Muiño, a writer who supports the ruling coalition. “Unless a black swan appears, it looks tough for Macri.” Unable to focus his campaign on his economic achievements, Mr Macri has instead been busily unveiling infrastructure projects around the country, not only highlighting concrete achievements but also contrasting them with the previous administration’s less impressive record on that front, just as a trial begins in which Ms Fernández is accused of corruption in public works projects. With luck, though, an economic inflection point may finally have been reached. Key indicators such as growth, inflation, employment and exports are recovering. In April the economy grew for the first time from the previous month, by 1.2 per cent, although officials expect a contraction of about 1 per cent for 2019 as a whole. “We are beginning to emerge from the crisis,” said Nicolás Dujovne, economy minister, claiming that by October real salaries will be 7 to 8 per cent higher than

more slowly and often by less, compressing lending margins. Such is the case with Bank of America, with $900bn in loans against $1.4tn in deposits. Its shares are down 7.8 per cent — more than any other big US bank — since the start of the sell-off. Renewed trade tensions have exacerbated concerns about the slowing economy over the past month, leading to a collapse in interest rate expectations. Fed funds futures now anticipate at least two Fed rate cuts before the end of the year, with the first possibly coming as early as July, and three or even four are significant possibilities. Another source of rate sensitivity for banks are loan portfolios dominated by business loans, which adjust to rates more quickly than do retail credit card or mortgage loans. That is true of Comerica, a fast-growing bank with $71bn in assets. It has fallen 9 per cent since May. Silicon Valley Bank, which has both excess deposits and a portfolio of loans to start-up and high-tech companies, is down over 13 per cent. The relationship between bank earnings and rates is not simple. While lower rates can compress margins, Fed rate cuts also stimulate the economy, which increases demand for financial products. www.businessday.ng

duo is insurmountable, that could trigger a renewed bout of volatility in the peso and, in turn, another spike in inflation, wiping out gains in real salaries. “If that happens [in a big way] before the primary elections [in August], that’s when we can say goodbye to this administration having any chances of re-election,” said Jimena Blanco, head

of Americas research at Verisk Maplecroft, a risk consultancy. For now, she said the government has done what it can. That includes measures to alleviate inflationary pressures by revamping price controls on basic goods, freezing programmed hikes on public utilities and introducing new rules to allow more intervention in foreign exchange markets.

Gay sex still criminalised in 30 of Africa’s 54 countries

KBW Bank Index off 7% since sell-off began, with some including Bank of America falling further

s expectations have increased that the Federal Reserve will cut US interest rates as early as next month, investors have sold bank stocks, showing particular eagerness to rid themselves of the most ratesensitive lenders. Since the bank sell-off began in the first week of May, the worst performers in the widely followed KBW Bank Index are overwhelmingly rate-sensitive banks, including Bank of America, Silicon Valley Bank and Bank of New York Mellon, all down 7 per cent or more. Despite a recent rebound, the banks index itself has fallen 5.4 per cent since then, while the S&P 500 is down less than 2 per cent. Meanwhile, banks with balance sheets that are relatively immune to declining rates, such as US Bancorp, have outperformed most rivals. The earnings of banks that have significantly more deposits than loans are hit harder than others by falling rates. Such banks generally invest excess deposits in rate-sensitive short-term securities. As rates decline while these banks roll over their security portfolios, interest income falls. What the banks pay for deposits should fall as well but it does so

they are now, even though they will not have recovered all the lost ground since last year’s currency crisis. Indeed, the greatest challenge is to maintain stability in the exchange rate, which is closely tied to Mr Macri’s performance in opinion polls. If markets believe that the gap between Mr Macri and the Fernández-Fernández

Botswana court decriminalises homosexuality

Prospect of US interest rate cut weighs on bank shares Robert Armstrong and Robin Wigglesworth

Mauricio Macri, Argentina’s president, must declare soon who will run as his vice-president in the October elections © Bloomberg

Joseph Cotterill and David Pilling

otswana will join the limited but gathering ranks of African countries to decriminalise homosexuality following a high court decision on Tuesday to strike down anti-gay penal laws dating back to British colonial rule. Judges ruled that Section 164 of the country’s penal code, which penalised gay sex with up to seven years in jail, violated rights to privacy and dignity. The Gaborone court dismissed the provision as a “British import”. It ruled that homosexuality was not “unAfrican”, a claim made by several leaders including Yoweri Museveni, president of Uganda, who has been publicly hostile towards gay rights. The Botswana ruling is a boost for LGBT rights on the continent after a setback last month when Kenya’s high court upheld century-old anti-gay laws that are a legacy of British rule. “The time has indeed come to decriminalise consensual private sexual intimacy,” said Michael Leburu, the judge reading out the verdict. “Sodomy laws deserve a place in the museum or archives and not in the world. It is not the business of the law to

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regulate private consensual sexual encounters.” The bid to repeal Section 164 was brought by “LM”, a gay man, and backed by Legabibo, an LGBT group in Botswana. The ruling referenced decriminalisation of homosexuality by India’s supreme court last year but not the Kenyan judgment. Homosexuality is still criminalised in more than 30 of Africa’s 54 countries. There is a split between former francophone and lusophone states, which have more tolerant attitudes towards LGBT rights, and former British colonies where laws outlawing anal sex between men remain on the statute books. Laws are most draconian in countries practising sharia law, such as Sudan, Somalia and northern Nigeria, where homosexuality is punishable by death. South Africa has the most liberal laws, with same-sex marriage legal since 2006. This year Angola decriminalised homosexuality after repealing a penal provision on “vices against nature” inherited from Portuguese rule. Cape Verde and São Tomé and Príncipe, two other former Portuguese colonies, have also struck down anti-gay laws. In May, Kenya’s high court rejected an attempt to repeal the @Businessdayng

colonial-era criminalisation of gay sex, dismaying a growing activist movement in the east African country. Judges said that the ban was constitutional because it represented the values and views of the country, adding that courts “should be loathe to fly in the face of public opinion”. The Botswana court on Tuesday ruled specifically that public opinion should not override human rights. There are flourishing — if mostly underground — LGBT communities in many big African cities, although mainstream attitudes are still less tolerant that fast-changing mores in much of the western world. Binyavanga Wainaina, the Kenyan writer and activist who died last month, only came out as a homosexual in 2014 after years of internal struggle. In the so-called “lost chapter” in his memoir, he imagined himself confessing to his mother on her deathbed that he was gay. Of the certainty, even as a boy, that he was homosexual, when society told him it was wrong, he wrote: “The feeling is not sexual. It is certain . . . It comes every few months like a bout of malaria and leaves me shaken for days, and confused for months.”

Wednesday 12 June 2019

BUSINESS DAY

NATIONAL NEWS

Group of US states to sue to block T-Mobile’s takeover of Sprint Move could derail the merger of the two wireless operators Kadhim Shubber

group of US states will sue to block T-Mobile’s $26bn takeover of Sprint as early as Tuesday, according to a person familiar with the matter. The move by states including New York and Maryland could derail a merger that would eliminate the smallest of America’s four national wireless operators. The Federal Communications Commission’s chairman has publicly backed the deal, while Makan Delrahim, the antitrust chief at the Department of Justice, is yet to reveal his

decision. Reuters first reported news of the impending lawsuit earlier on Tuesday morning. The New York state attorneygeneral’s office has scheduled a press conference at 2pm to make “a major announcement impacting New Yorkers across the state, as well as individuals throughout the nation”. T-Mobile and Sprint didn’t immediately return requests for comment. Sprint shares were down 4.5 per cent, while those for T-Mobile USA were off 1.1 per cent in morning trade.

Sudan internet blackout forces battered protesters to rethink Government leans on telecoms groups to shut down online access Tom Wilson

he Sudanese authorities have extended an internet blackout into a second week, forcing citizens in Khartoum to find new ways to communicate as a bloodied protest movement regroups after a brutal crackdown. Last week, after government soldiers stormed the protesters’ sit-in in central Khartoum and left more than 100 people dead, Sudan’s network operators Sudatel, Zain and MTN switched off mobile internet access for customers. Then on Monday fixed line internet services for most offices and houses were also cut, plunging the country into near complete data darkness. The blackout is the latest in a series of controversial disruptions to internet services in Africa this year, where authoritarian governments are increasingly leaning on telecoms firms to shutdown communications services to disarm opposition movements or hide rights violations. The latest disruption on Monday came as unverified reports circulated of new killings by state security forces in Zalingei, Darfur, more than 800 miles to the west of Khartoum. A spokesman for Sudan’s military leaders said the internet had been disconnected “for a limited time” but provided no justification. One of Sudan’s international mobile operators declined to comment, citing concern for the security of its staff if it discussed the disruption publicly. The other operator did not respond to a request for comment. A spokesperson for state-owned Sudatel said he had no information about any instructions from the government to shutdown services. In Sudan’s nascent revolution, which began last December with demonstrations against former President Omar al Bashir’s 30-year rule, internet access was as central as a sit-in outside the defence ministry in Khartoum that grabbed international attention. Platforms including Facebook, WhatsApp and Twitter were used widely to organise protests with hundreds of thousands of images and videos shared online despite regular disruptions to access. But a government militia known

as the Rapid Support Forces cleared the sit-in with brutal force last week in a move that coincided with network disruptions that were followed by a full shutdown of mobile internet access. While citizens are still fearful of more arrests and state-backed violence, the resistance is already evolving, activists told the Financial Times. The focus of opposition activities has shifted to small neighbourhood committees that are providing the new backbone of the struggle. “Right now, everything is being done inside the neighbourhoods,” explained Muzan Alneel, a 33-yearold mechanical engineer who has participated in the demonstrations since December. “People are trying to minimise their movement . . . and coming up with new tools to share information,” she said. The neighbourhood committees were set-up in January initially to help set the routes of anti-government marches through the city’s different districts. Since then the groups have become important sources of collective strength for Khartoum’s population and they have found renewed purpose since the sit-in was demolished, said Sulaima Ishaq Sharif, an activist and mental health worker. On Saturday, as RSF soldiers patrolled central Khartoum, as many as 300 protesters gathered in Ms Sharif’s neighbourhood in the Omdurman area of the capital north-west of the centre. Organised into four committees of 50 to 60 households, the community groups in her district are working to sustain the resistance by passing information, providing financial support to those families in most need and building barricades on neighbourhood streets. The work is knitting communities together in ways that Sudan’s military leaders will struggle to break, said Ms Sharif, who has been treating protesters for psychological trauma at the sit-in and in Omdurman since the demonstrations began. “During the protests, you find safety in somebody’s house, you meet people from your neighbourhood you never knew,” she said. “It’s integrating people.” www.businessday.ng

Hong Kong saw its largest protests in 30 years on Sunday, with hundreds of thousands of people marching against what they said was Beijing’s growing legal over-reach © Bloomberg

US warns Hong Kong ‘special status’ at risk over extradition bill Statement comes as New Zealand court rejects China’s request to surrender suspect in a killing Sue-Lin Wong, Alice Woodhouse, Nicolle Liu and Jamie Smyth

he US has expressed “grave concern” over a controversial Hong Kong extradition bill that would allow individuals to be sent to China to stand trial, saying the proposal puts the territory’s special status at risk. The statement follows the largest protests in Hong Kong in 30 years on Sunday, when hundreds of thousands of people marched against what they said was Beijing’s growing legal over-reach in the semi-autonomous territory. Morgan Ortagus, state department spokeswoman, said the US was concerned “the lack of procedural protections . . . could undermine Hong Kong’s autonomy and negatively impact the territory’s longstanding protections of human rights, fundamental freedoms and democratic values”. The US response came as a New Zealand court on Tuesday rejected an extradition request from China, citing the risk the accused might not get a fair trial and could be subject

to torture. Hong Kong was guaranteed its civil liberties would be protected for 50 years after its handover from the UK to China in 1997 under the “one country, two systems” framework. The territory does not have an extradition agreement with mainland China. The US grants Hong Kong special status under the 1992 Hong Kong Policy Act, which allows the semiautonomous territory to be treated as a non-sovereign entity distinct from China for trade and economic matters under US law. Willy Lam, adjunct professor at the Centre for China Studies at the Chinese University of Hong Kong, said the state department’s statement was “very significant”. “The chances of US Congress abrogating on the 1992 Hong Kong Policy Act have risen significantly after 1m people turned out and also Carrie Lam’s intransigence in the face of such an outpouring of popular opinion,” said Mr Lam. Carrie Lam, Hong Kong’s chief executive, vowed to push ahead with a second reading of the bill on Wednesday, claiming the law was needed to plug a legal loophole and

was misunderstood by critics. Analysts warned Hong Kong risked being dragged into rising tensions associated with the USChina trade war and an export ban by Washington on Huawei, the Chinese telecoms equipment group. Ho-fung Hung, a professor of Chinese political economy at Johns Hopkins University, said the state department’s comments and public statements from some US lawmakers linking the extradition law amendment to Hong Kong’s special status amounted to a red line. “Hong Kong has become a very important part of the larger US-China intensifying rivalry,” he said. Mr Lam said many shell companies owned by mainland Chinese have been registered in Hong Kong since 1997 and “operated by China with the sole purpose of taking advantage of Hong Kong’s special status to, for example, import technologically sensitive material and knowhow from the US”. While the US does not allow the export of dual-use or technologically sensitive material to China, Beijing can get round this by setting up shell companies in Hong Kong, he said.

Foxconn ready to move production out of China if necessary Taiwanese manufacturer seeks to reassure companies worried about US-China trade war Kathrin Hille

oxconn has told companies worried about the trade war between Beijing and Washington that it can move electronics production for the US market out of China at short notice, adding that production will begin at its new Wisconsin plant by the end of next year. The company said 25 per cent of its total capacity is now outside of China, and Liu Young-way, a member of the company’s newly formed top management committee, said it could help Apple, for example, move iPhone production out of China if necessary. But he noted that Apple had not yet asked for a shift. The situation for the global economy and the industry “looks bleaker and bleaker, and the situation is unpredictable”, said Mr Liu. Foxconn will start mass production of displays, car electronics and servers for the US market at its new plant in Wisconsin by the end of next year, Mr Liu said, and plans to invest $1.5bn and employ up to 2,000 people by the end of 2020. At the first investor conference Fox-

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conn hosted in its 45-year history, the world’s largest electronics manufacturer and largest assembler of Apple’s iPhone presented a new management structure designed to deal with the exit of Terry Gou, its founder, from day-today business as he runs for president of Taiwan. Mr Gou is expected to resign from the post of chairman at the group’s annual general meeting on June 22, and be replaced by one of four new members of the board to be elected at the AGM. Apart from Mr Liu, the head of the group’s semiconductor business, the new board members include Jay Lee, deputy chairman of Foxconn’s industrial internet unit, Lu Sung-ching, head of the company’s connector unit, and Tai Cheng-wu, chairman of Sharp, the Japanese technology company Foxconn acquired in 2016. Mr Liu, who moderated the investor meeting and gave the main speech, said the new body was a formalisation of frequent meetings Mr Gou had held with the heads of group units and marked the transition to professional managers running the company. Since the four board members who @Businessdayng

have a seat on the management committee will have a majority on the board of directors, the new committee can, in principle, vote through any decisions made by the new committee. Senior executives made clear, however, that Mr Gou will continue to play a key role. Mr Liu said the company founder would retain a seat on the board. “His future role [in the company] will depend on how the presidential campaign goes,” Mr Liu said, leaving open the possibility of Mr Gou’s return to a top role if he does not win the presidential election in January. Addressing the slump in global demand for smartphones, the devices which have driven growth in the electronics hardware market for several years, Foxconn said it would focus on 5G, automotive electronics, the industrial internet of things, medical applications and semiconductors. Management said the company expected to spend about NT$30bn to NT$50bn (US$955m to US$1.5bn) a year in capital expenditure, but these investments would be channelled more into developing technological capabilities required in these new fields.

Wednesday 12 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Debt markets are pricing in a real risk of ‘Quitaly’ Credit default swap prices suggest investors are weighing Italy’s exit from the eurozone

Marcello Minenna

taly is the only country across the eurozone not to really benefit from the big rally in government bonds this year. The main culprit? The risk of exiting the eurozone, which is reflected in a permanent increase in Rome’s cost of borrowing. If we look across bonds of 10year maturities, the effects of the rebalancing of portfolios towards sovereign bonds are impressive. The yield on the German Bund is about 45 basis points lower than the turn of the year, pushing it into negative territory, while the French equivalent has lost 60bp. In Spain, bond yields are about 85bp lower, while even Greece is down about 160bp. But for Italian bonds, there is a loss of just 40bp or so, from alreadyhigh levels. The performance of Greek debt deserves particular attention, in the context of Italy. Both countries are carrying lots of debt (182 per cent of gross domestic product for Greece, and 133 per cent for Italy) and are plagued by low growth, poor productivity and subdued inflation. The first factor to consider is that the Greek government bond market is very thin on liquidity. Just a few big deals by a few important players are enough to move prices. Of a total debt stock of about €400bn, only €71bn — less than a fifth — is traded on the secondary market, because the majority is frozen in the balance sheet of the European Stability Mechanism. Of the remainder, about €40bn has been deeply buried

for years in the balance sheets of Greek banks, insurance companies and pension funds. Only about €30bn is available for trading. After years of very limited interest in the market among investors, Greek banks increased their government bond holdings by about 30 per cent (€5bn) in January this year. Meanwhile, among foreign investors, US and French investment funds and banks have re-entered the market, heavily increasing their exposure to Greek sovereign risk. Financial stability seems to justify this renewed interest in Greek debt. Defying some very bleak expectations, the government has been able to obtain a primary budget surplus of 3.9 per cent in 2017 and 4.4 per cent in 2018 — both well above the 3.5 per cent agreed with the European Commission, the European Central Bank and the IMF (the so-called troika). Recent estimates envisage a stable budget surplus of about 1 per cent a year, after debt-servicing costs, until 2022. A favourable picture emerges, too, from the reading of spreads on credit default swaps, which is the premium paid to buy protection against a default of Greek debt. Despite thin trading volumes, these instruments indicate an 80 per cent fall in the cost of insuring five-year bonds against default since 2016. It is illuminating to examine the differences between the new CDS contracts based on the legislation introduced in 2014 by the International Swaps and Derivatives Association, and the old contracts based on 2003 laws.

Michael Calvey, founder of Baring Vostok, in court in Moscow © Reuters

Russian court orders Baring Vostok to give up bank stake Private equity firm told to sell investment in Vostochny Bank before appeal

Max Seddon

court has ordered Baring Vostok to surrender a stake in a Russian bank at the centre of a dispute that saw the private equity firm’s US founder Michael Calvey arrested. Baring Vostok, one of Russia’s largest foreign investors, was directed to transfer a 10 per cent stake in Vostochny Bank, a top-30 lender focused on Russia’s Far East, to a company owned by Kremlinconnected businessman Artem Avetisyan, before the firm can appeal against an earlier decision to make it hand over the shares. The judgment will give Mr Avetisyan and his partners, who control 40 per cent of Vostochny’s shares, control of the bank before a central bank-mandated capital raising that would have diluted his stake. The ruling was made by a court in Blagoveshchensk, the city 5,000 miles east of Moscow where the bank is based.

Mr Calvey’s supporters claim that Mr Avetisyan and his partner Sherzod Yusupov are abusing Russia’s criminal and civil courts to win their dispute with Baring Vostok. The case against Mr Calvey and three of his colleagues — arrested in February on charges of defrauding Vostochny of Rbs2.5bn in a relatedparty transaction — has shocked Russia’s business community, already battered by Moscow’s poor relations with the west. Russian president Vladimir Putin, however, publicly backed the case against Baring Vostok in his first comments last week. Mr Calvey was released to house arrest in April after lobbying by Kremlin-connected businessmen, but his colleagues, including Frenchman Philippe Delpal, remain in detention ahead of trial. Baring Vostok had refused to hand over the 10 per cent stake on the grounds that its merger with Mr Avetisyan’s Uniastrum bank had weakened Vostochny’s credit profile so badly that the central

bank ordered it to create an extra Rbs19.6bn in reserves. Mr Calvey claims that Mr Avetisyan and his partners stripped the bank of Rbs17bn in assets in the run-up to the merger, invalidating the call option, and is using the court in “unethical and illegal attempts” to stop the Rbs5bn recapitalisation ordered by the central bank. Mr Avetisyan and Mr Yusupov deny asset stripping and say the criminal case is unrelated to their dispute with Baring Vostok. “In practice, the court has turned an invalid call option into a valid liability,” Baring Vostok said. “This is an unprecedented action by the court, which has essentially treated the [10 per cent] stake [ . . .] as a perishable product.” Mr Avetisyan’s company Finvision said: “The decision to fulfil [the option] immediately was essential to prevent the company suffering serious losses that would have made fulfilling the court’s [earlier decision] impossible.”

Digital health breakthrough as US insurers Extreme weather sends energy demand growth to nine-year high BP warns of ‘vicious cycle’ as use of heating and cooling systems worsens emissions crisis agree to pay for insomnia app pected to say in a speech to launch carbonise the power sector quickDeal with CVS Health means digital treatment can be paid for in same way as sleeping pills Sarah Neville

undreds of thousands of Americans will be able to access an app to tackle sleeplessness after CVS Health, which administers health benefits for insurers and big employers, set up a way for the treatment to be paid for in the same way as a drug. On Tuesday, CVS said it was partnering with Big Health, a San Francisco-based company that has developed the Sleepio app to treat insomnia. The agreement means that employers or health plans will be able to add Sleepio to the list of solutions they reimburse, and check patients’ eligibility, using the same systems and processes used for drugs. The Sleepio programme is based on cognitive behavioural therapy, which helps users make changes to improve their sleep. It has been studied in eight randomised controlled trials. Troyen Brennan, CVS Health chief medical officer, said poor-quality sleep and insomnia affected about 30 per cent of American adults, and could “impact a wide variety of mental

health conditions”. The tie-up marks a significant step forward for digital therapeutics, which use software to prevent, manage or treat a medical condition, often at less cost than conventional medicine. “Digiceuticals”, as they are sometimes called, have yet to gain widespread traction in the US healthcare system, partly because of uncertainties about whether health plans will pay for them. According to a recent report on digital therapeutics from Rock Health, which invests in digital health, health plans were most sceptical about the potential benefits of digital treatments. Megan Zweig, director of research at Rock Health, said that “not a single health plan leader” interviewed for the report had mentioned digital therapeutics as a potential treatment on its own. Peter Hames, co-founder and chief executive of Big Health, said the partnership with CVS “allows digital therapeutics to be reimbursed and administrated at scale using the same underlying infrastructure as drugs for the first time”. www.businessday.ng

Anjli Raval and Leslie Hook

xtreme weather drove the growth in energy demand last year to its highest level since 2010, triggering warnings of a “vicious cycle” fuelled by reliance on heating and cooling systems that could worsen the world’s carbon emissions crisis. Energy group BP said in its closely watched annual market review that energy consumption grew 2.9 per cent in 2018, led by China and the US, despite modest economic growth and strengthening oil and gas prices. The rise spurred a 2 per cent increase in carbon emissions, the fastest since 2011 and equivalent to increasing the global passenger car fleet by a third, or just under 400m. “If there is a link between the growing levels of carbon in the atmosphere and the types of weather patterns observed in 2018, this would raise the possibility of a worrying vicious cycle,” Spencer Dale, BP’s chief economist, is ex-

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the report on Tuesday afternoon. The US saw an unusually high number of very hot or cold days last year, the most since the 1950s. China and Russia also saw greater fluctuations in temperature in 2018. Such patterns could cause stronger growth in energy demand and carbon emissions as households and businesses seek to offset the effects, Mr Dale will warn. Carbon dioxide in the atmosphere causes a greenhouse effect, trapping heat and increasing average global temperatures. Changes in atmospheric currents linked to climate change are also thought to contribute to extreme cold weather snaps in some areas. Power generation is the largest source of energy-related carbon emissions, and as the world electrifies and demand for services such as air conditioning grows, the need to clean up the system will intensify. “It hasn’t been possible to de@Businessdayng

ly enough to offset the growth in demand,” Mr Dale, who was former chief economist at the Bank of England, will say. Climate activists and investors have called on oil and gas companies to take responsibility for their role in global warming, urging them to move into lower carbon businesses. BP has pointed to the world’s enduring reliance on fossil fuels and said it is aiming to increase output while ultimately reducing emissions. But the latest statistics show the global energy system is not able to easily break this link as would be necessary to meet the Paris climate agreement goals. “There are grounds for us to be worried,” Mr Dale will say, and will add that there is a “growing mismatch between hopes and reality”. According to BP, oil, gas and coal accounted for nearly threequarters of the growth in energy demand last year, their highest share in five years.

Wednesday 12 June 2019

BUSINESS DAY

ANALYSIS

Jeffrey Talpins’ Element Capital cuts manager numbers Macro hedge fund parts company with 7 employees after disappointing May Robin Wigglesworth and Joe Rennison

lement Capital’s Jeffrey Talpins, one of the hedge fund industry’s biggest but least-known stars, is cutting about a tenth of his employees, according to people with knowledge of the plans. Although largely unknown outside the money management world, Mr Talpins’ Element has emerged as one of the most successful “macro” hedge funds in an industry whose luminaries include Paul Tudor Jones, Alan Howard and Louis Bacon. Element’s $18bn hedge fund has averaged annual returns of more than 20 per cent since 2005, producing steady and strong gains and never suffering a down year over a turbulent period that has wrongfooted many other macro hedge funds, which bet on big economic trends. However, the fund suffered a tough December. After another disappointing month in May — when it was down 3.5 per cent, crimping its returns to 3.2 per cent so far this year — Element has closed what it calls its “portfolio manager programme” of quasi-independent trading centres, which receive money to invest separately from Mr Talpins and his core team. The portfolio manager programme accounted for about 10 per cent of Element’s assets under management, and the closure meant that six portfolio managers and one analyst were recently let go, according to people briefed on the decision. They are Matthew Isherwood, a former quant at Sabre Fund Management and Capula Investment Management; Don Carson, a former Bre-

van Howard fund manager; former Goldman Sachs trader Pablo Duran Steinman; Mark Dragten and Tom O’Shea, two former GAM portfolio managers; portfolio analyst Graeme Hawinkels; and George Polychronopoulos, a former managing director at JPMorgan’s chief investment office. The employees who were let go either declined to comment, did not respond to requests for comment, or could not immediately be reached by the FT. Element declined to comment, but a person briefed on the cuts said the closure of the portfolio manager programme was driven by a desire to focus the hedge fund’s resources on its core team, rather than because of the fund’s performance. Details around how the mediashy Mr Talpins manages money are sparse. The hedge fund’s website only says that it has a “modern macro” style of investing that combines traditional economic, systematic and relativevalue analysis. Despite high fees of between 2 and 2.5 per cent of assets annually, plus more than 20 per cent of performance gains, Element has more than trebled its assets under management since 2015. As a result, Mr Talpins appeared on Forbes’ list of billionaires for the first time last year, with an estimated fortune of $1.7bn. He studied economics and applied mathematics at Yale, and went on to be a star bond trader at Goldman Sachs and Citigroup. Last year, he helped endow a new economic research centre at Yale, and his family foundation focuses on improving opportunities for inner-city children, according to his biography on the American Prairie Reserve, where he sits on the board.

Trump says very low inflation in US ‘a beautiful thing’ US president also renews attack on Fed as producer price data shows growth moderated in May Peter Wells

ow inflation in the US is a “beautiful thing”, Donald Trump said on Tuesday as he renewed his attack on the Federal Reserve and suggested currencies including the euro were “devalued against the dollar”. The US president’s comments, on Twitter, came moments ahead of the release of inflation data that showed producer prices rose in May by their slowest annual pace in more than two years, and ahead of consumer price figures on Wednesday. Responding to a tweet from Bloomberg’s opinion writers asking how European landmarks might be able to “stop tourists from coming”, Mr Trump said: “This is because the euro and other currencies are devalued against the dollar, putting the US at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” He followed up with a separate tweet, saying: “The United States has VERY LOW INFLATION, a beautiful thing!” Data from the Bureau of Labor Statistics this morning showed the headline producer price index rose 1.8 per cent in May from a year ago, slowing from the previous month’s 2.2 per cent pace on account of a decline in energy prices. That is the index’s lowest level since January 2017.

It was weaker than the median forecast of 2 per cent from economists in a Refinitiv survey. Factoring out prices for food and energy, the core PPI was up 2.3 per cent in May — the slowest in 16 months — slower than the 2.4 per cent rise the month before, but in line with Wall Street’s expectations. Top Fed officials, including chairman Jay Powell, have suggested they are willing to cut interest rates if the global outlook deteriorates sufficiently, particularly if the US’s trade war with its allies drags on. Given the labour market has been a bright spot for the US economy, data last week showing a slowdown in US jobs growth in May has intensified debate over whether the Fed needs to cut interest rates to support domestic growth. Renewing his months-long criticism of the Fed’s monetary policy stance, Mr Trump said earlier this week it had been “very, very disruptive” by raising interest rates too quickly, thereby giving China an edge in trade negotiations. Inflation data due on Wednesday are expected to show the headline consumer price index rose 1.9 per cent year-on-year last month from a 2 per cent pace in April, and for core inflation to remain steady at 2.1 per cent. Retail sales, which should give an indication as to the health of the US consumer, are due on Friday. www.businessday.ng

Why ‘cracking seven’ is a big deal for China’s currency The next significant test for the renminbi will be this month’s G20 meeting in Japan Hudson Lockett and Robin Harding

hy is ‘cracking seven’ a big deal for China’s currency? If China’s renminbi slips past Rmb7 a dollar — “cracking seven” in trader talk — it would take the currency to a level of weakness not seen since the depths of the global financial crisis 11 years ago. It would also breach a widely recognised floor that China’s central bank has previously defended during bouts of sharp depreciation last year and in 2016. The defence mounted in 2016, in which China was forced to burn through some of its foreign exchange reserves, spending as much as $107bn in a single month, followed a shock devaluation from the previous August that marked the currency’s biggest one-day drop in decades. While it delivered a shot in the arm to the country’s export-led economy, it spurred substantial capital outflows and drew accusations of currency manipulation from critics in Washington and put it under regular scrutiny from the US Treasury Department. Fast forward to this year, and following a tumble in early May after US president Donald Trump threatened higher duties on Chinese goods as part of the 11 month-long Sino-US trade dispute, the renminbi has largely halted its fall in the lead-up to the G20 summit in Osaka at the end of this month. The meeting is probably the final chance for the two countries’ leaders to thrash out a deal that would avoid the US levying 25 per cent tariffs on virtually all goods imported from China. How does China manage the renminbi? Since 2015 the onshore renminbi exchange rate has been allowed to move 2 per cent in either direction of a daily trading band midpoint set each morning by the People’s Bank of China. When Mr Trump threatened higher tariffs in May, the mid-

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point soon softened enough to push the weak end of the trading band past Rmb7 per dollar, where it remains, ostensibly permitting the currency to fall past the threshold at a moment’s notice. Beijing also permits a smaller pool of the currency to trade in Hong Kong, part of a drive to internationalise the renminbi. The offshore exchange rate is not limited by the trading band and is therefore subject to the sway of international market forces. But while a gap between the two rates has opened in recent weeks there is far less daylight between them now than was seen following the shock devaluation in 2015. On Tuesday the PBoC announced it would issue renminbi debt in Hong Kong, prompting speculation it was seeking to sop up liquidity there and defend the currency by making it more difficult for international investors to bet against. But Mansoor Mohi-uddin, senior macro strategist at NatWest Markets, said this was unlikely to have been the main goal of the issuance, since onshore demand for the dollar in China was probably driving markets, rather than offshore short selling. What does the Trump administration think? The US Treasury Department again declined to label China a currency manipulator last month, although it expressed “significant” concerns over the exchange rate, then closer to the seven level than at any point since 2008. But on Saturday, at a meeting of financial ministers and central bank governors in Osaka, ahead of the G20 meeting, US Treasury secretary Steven Mnuchin appeared to suggest that a failure to intervene could itself be viewed as a sort of manipulation. “Sometimes if the market expects intervention and you’ve been intervening for a long time to support a currency, and you don’t intervene, that could also have a big market impact,” he @Businessdayng

said. Is seven a matter of if, or when? Although the renminbi hit a six-month low against the dollar on Monday, many strategists are sceptical it will crack seven before the G20 and on Tuesday the onshore rate was 0.2 per cent firmer at Rmb6.913 a dollar. Christy Tan, head of markets strategy and research for Asia at NAB, said the PBoC was unlikely to use devaluation as its weapon of choice when dealing with trade issues. The central bank has not forgotten the hard lessons learnt from the capital outflows and international criticism it weathered in 2015. But she added that if no deal was struck at G20 and Mr Trump did go all-out with 25 per cent tariffs on the remaining $300bn in Chinese imports, “seven will break through in very short order”. Re cent comments from Chinese officials have laid the groundwork for that, downplaying the importance of the seven threshold. On Friday central bank governor Yi Gang said no hard limit existed for the dollar exchange rate. “I don’t think this is an important question,” Mr Yi said in an interview with Bloomberg News. “I don’t think along the mathematical scale any one number is more important than the other number,” he added. Mr Yi’s attention is arguably focused elsewhere. Homin Lee, Asia macro strategist at Lombard Odier, said that the key lower bound for the renminbi was not seven per dollar, but rather 92 — that is, the implicit lower bound for the CFETS Renminbi index, which measures the currency against a basket of peers. The latest weekly reading for the gauge left a bit of breathing room yet at just over 93. “They have already shown willingness to defend this implicit lower bound, and if they remove that lower bound . . . then there’s no obvious anchor for the markets,” Mr Lee said.

Wednesday 12 June 2019

BUSINESS DAY

POLITICS & POLICY

Now that Lawan and Gbajabiamila lead the 9th National Assembly… Zebulon Agomuo

rior to the election of the principal officers of the 9th National Assembly yesterday, there had been wheeling and dealing by the leadership of the ruling All Progressives Congress (APC) to produce a pre-determined outcome. On several occasions, Adams Oshiomhole, national chairman of the APC, drummed it into the sub-consciousness of members on the need to make the leadership of the 9th National Assembly an APC affair. He had insisted, “This time around, we must ensure that we have a leadership of the National Assembly that shares the vision of the executive. Although we will adhere to the principle of separation of powers, there is only one government and unless the various arms pursue the same agenda, it is difficult for the executive to realise its vision because legislative backing is often required for the executive actions.” The insistence by the ruling party to take control of the 9th Assembly was predicated on its experience in the 8th Assembly. Although Bukola Saraki and Yakubu Dogara, former Senate president and speaker, House of Representatives, respectively, were elected on the APC platform, the manner of their emergence as principal officers of the bicameral legislature went contrary to the aspira-

tion of leaders of the party and the Presidency. As a result of the manner of their emergence, Saraki and Dogara became a pariah to the APC family. The frosty relationship that existed between the Executive and the legislature negatively affected governance. Meaningful collaborations that could have positively impacted the Nigerian people could not take place as each camp saw the other as an enemy. In the series of fights that took place between the Executive and the Legislature, the masses bore the brunt. Important bills that were passed into law by the lawmakers were not assented to by the President. One major concern that trailed the campaign for the Senate presidency and House of Representatives speakership was the fear that the emergence of Ahmed Lawan and Femi Gbajabiamila would spell doom for the country in the next four years. Those who nurse this fear allege that the National Assembly would become a rubber stamp. At every turn, the leadership of the APC and the Presidency had alleged that the ‘unfriendly” disposition of the 8th National Assembly frustrated the efforts of President Buhari to achieve for the people. In fact, some have blamed the lawmakers for whatever the Executive did not do rightly in the first four years. The election of Lawan

Lawan

Gbajabiamila

and Gbajabiamila may have cleared the way for the APCgovernment to perform optimally. The expectation now is that there would no longer be any excuse if anything goes wrong, or if passed bills are not assented to. It is also expected that budgets will be passed expeditiously and implementation executed without let. President Muhammadu Buhari had recently accused Saraki and Dogara of frustrating implementation of budgets, hence hindering him from taking care of Nigerians. According to him, “I asked them how they felt to hold the country at ransom for seven months without passing a budget. Unfortunately, they were not hurting me; they were hurting the country. So, really, in terms of patriotism, I think I rated them very low indeed. But to hold a budget for seven months cannot be justified if you really bother about the country.” Before the election of the

principal offices of the National Assembly, Lawan and Gbajabiamila had promised that a vote for them would not mean surrendering their independence to the Executive arm of government. They had also promised to run an inclusive government, contrary to the advice by Oshiomhole to corner all reasonable offices at the two chambers. It is expected of them to draw a line on the extent of their relationship with the Executive and the extent to which they would allow party influence over the activities of the National Assembly. The national chairman of the party, it would be recalled, had emphatically said: “We will not share power in the House of the Representatives and the leadership must ensure that critical committees that drive government are chaired only by the APC members. If the Nigeria people wanted them to be chairmen of committees they would have voted for them. “So, all the chairmen of committees, except the one

that is statutorily reserved for the opposition, which is Public Accounts, they can have that. So, we would not do the kind of thing that happened the last time in which some APC members became distant spectators in the management of committees, when the PDP had majority of the strategic committees in the House; that will not happen in the next Assembly.” If this advice is carried out, it would mean that there would be a rancour in the two chambers, and that would create a problem of instability and tension. Again, that would also portray Lawan and Gbajabiamila in bad light. Recall that both lawmakers had made promises to their colleagues in other parties on fairness and equity if they would have their support in the election yesterday. Reneging on such promise would amount to double-speak and taint the integrity of the two officers. Of serious concern also is the implication of yesterday’s development for the South East. The outcome of the election appears to have shown a marked marginalisation of that zone. Guy Ikokwu, a Second Republic politician, wondered: “If you don’t have a National Assembly whose leadership is inclusive, then who are they debating for, because it departs from democratic norms? “The current situation shows that Nigeria is not moving in the right direction;

prompting him to drop the idea. Incumbent President, Muhammadu Buhari in June, 2018 took a bold step by directing that the nation’s Democracy Day will, henceforth, hold on June 12 of every year as against the former arrangement where the ceremony held on May 29. Buhari equally went ahead last year to posthumously honour Abiola with the highest national honour of the Grand Commander of the Federal Republic (GCFR). However, amidst criticism from some sections of Nigerians about his administration’s unpopular policies in his first term, it appears the decision to declare June 12 Democracy Day may have struck the right chord. “The decision to declare June 12 Democracy Day and honour Abiola is undoubtedly significant; it is in recognition of the plight of Nigerians; what

the country had been subjected to over the years, it is first step to me. I think this government should be respected for this move”, Wale Oshun, president of Afenifere Renewal Group, said. Yinka Odumakin, publicity secretary of Afenifere, however, believes the values of June 12 had been eroded with the current state of affairs in the country. “Yes, he has done well with the declaration, but come to think of it, tomorrow June 12 would weep with what is going on in the country now; Abiola’s mantra was bye-bye to poverty. June 12 was about unity of Nigerians, it was a day that Nigerians either Hausa, Igbo came out to vote massively for Abiola, but with the state of the country now, I can only say we are mocking June 12,”. Odumakin said. Some political activists have called on the President to extend the honour to some other

Nigerians and activists who fought for the actualisation of the June 12 mandate. These activists resisted the annulment; several of them were killed, while many others then went into exile. It is worth mentioning that effort of some activists such as the late Chima Ubani; Sylvester Odion-Akhaine, Emma Ezeazu, Frank Kokori, Chukwuemeka Ezeife, Ndubuisi Kanu, Innocent Chukwuma , Chidi Odinkalu, Joe Okei-Odumakin, Abdul Oroh, Gani Fawehinmi, just to mention a few, cannot easily be forgotten in the struggle. Some political leaders have also urged President Buhari to go a step further by announcing the result of the election and officially declare Abiola the winner of the presidential election. “I think President Buhari should move a step further and declare the result of the election and announce Abiola

every region should be carried along in the running of the country.” He further blamed the leadership of the APC for the current situation, adding that it was not a good sign for the country. “ Th e A P C l ea d e rs h i p should blame themselves for whatever happened in the National Assembly. It shows that Nigeria is a failed state; every part of the country should be carried along not only in the National Assembly but in the appointment of security chiefs which is not the case now,” Ikokwu added. Olisa Agbakoba, lawyer and Senior Advocate of Nigeria (SAN), equally pointed out that the decision of the leadership of the APC was a breach of the constitution and federal character commission, stressing that the move may not lead to unity in the both chambers. “What has happened is not good; it does not lead to legislative harmony; the constitution says the process of appointing people must include ethnic consideration; it is a breach of the federal character and section 14 of the constitution. “I don’t know how the APC expect legislative harmony and inclusion with this arrangement, and they expect the Southeast to be happy? I thought they said their government would be inclusive, except they are telling us they are still campaigning; we are talking about governance,” he added.

the winner of that election, for posterity sake; we have issued several releases on that, it is our group’s demand,” Oshun further said. Chibuke Ananaba, a senior advocate of Nigeria (SAN) noted that the recognition of June 12 will go a long way in healing the wounds of the past in the country, stressing that the move by President Buhari and National Assembly should be commended. “Giving more prominence to June 12 would be the beginning of healing the wounds of the past and opening the way to discuss people that made sacrifice for June 12, and I think they deserve recognition,” he said. Former Minister, Bimbo Ogunkelu, however, thinks the declaration may be coming late, stressing that the essence of the day may not be significant for the younger population which forms the bulk of the country’s population.

The story behind June 12 Iniobong Iwok

he signing of the June 12 bill into law by President Muhammadu Buhari which constitutionally legalised June 12 of every year as a public holiday and Democracy Day in Nigeria marks a new era and turning point not only for the celebration of democracy in Nigeria, but the struggle for the actualisation of the June 12 mandate. The June 12, 1993 annulled presidential election, presumed to have been won by the late Moshood Abiola, up till today, is still perceived to be the fairest election in the history of Nigeria. The National Electoral Commission (NEC) headed by Humphrey Nwosu, had adopted Option A4 for the election. But the election was annulled by the then military ruler, Ibrahim Babangida. Abiola, who was then a

wealthy business mogul and philanthropist, contested on the platform of the Social Democratic Party (SDP), while his running mate was Baba Gana Kingibe . Abiola and Kingibe contested against Bashir Othman Tofa and his running mate, Sylvester Ugoh, who ran on the platform of the now defunct National Republican Convention (NRC). While Abiola died under questionable circumstances in 1998, his wife Kudirat was assassinated on June 9, 1996. Successive military regimes and civilian administrations that followed after the attainment of the Fourth Republic in 1999 ignored the need to give due recognition to Abiola and the June 12 mandate. Although, former President Goodluck Jonathan, renamed the University of Lagos (UNILAG) after Abiola, the move was resisted by students and Alumnus of the institution, www.businessday.ng

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Wednesday 12 June 2019

BUSINESS DAY

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Wednesday 12 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 11 June 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 227,489.44 6.40 1.59 161 25,090,305 UNITED BANK FOR AFRICA PLC 212,036.41 6.20 -1.59 149 6,049,193 ZENITH BANK PLC 632,639.35 20.15 -0.49 317 28,157,649 627 59,297,147 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 251,267.05 7.00 -0.71 142 3,490,102 142 3,490,102 769 62,787,249 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,747,859.26 135.00 -0.74 200 11,138,952 200 11,138,952 200 11,138,952 BUILDING MATERIALS DANGOTE CEMENT PLC 3,152,493.87 185.00 -2.12 46 156,989 LAFARGE AFRICA PLC. 161,077.95 10.00 - 54 468,116 100 625,105 100 625,105 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 302,107.44 513.40 - 27 60,208 27 60,208 27 60,208 1,096 74,611,514 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 70,589.34 74.00 - 9 8,120 PRESCO PLC 58,000.00 58.00 - 12 19,621 21 27,741 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 - 7 74,671 7 74,671 28 102,412 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 5 33,000 JOHN HOLT PLC. 182.90 0.47 - 2 288 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 45,932.23 1.13 -0.88 53 2,708,138 U A C N PLC. 18,440.30 6.40 - 28 1,139,013 88 3,880,439 88 3,880,439 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,578.00 21.65 - 13 100,333 ROADS NIG PLC. 165.00 6.60 - 0 0 13 100,333 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,287.35 1.65 - 3 7,055 3 7,055 16 107,388 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 9,395.40 1.20 - 12 148,190 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 104,043.18 47.50 - 40 136,772 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 3 7,299 NIGERIAN BREW. PLC. 455,823.42 57.00 -1.72 136 13,406,609 191 13,698,870 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 80,000.00 16.00 - 70 607,379 DANGOTE SUGAR REFINERY PLC 132,000.00 11.00 -4.35 84 1,570,590 FLOUR MILLS NIG. PLC. 57,200.30 13.95 0.36 80 2,057,132 HONEYWELL FLOUR MILL PLC 8,564.61 1.08 - 25 669,409 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,211.69 14.80 - 8 10,321 UNION DICON SALT PLC. 3,321.07 12.15 - 1 300 268 4,915,131 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,566.31 10.95 - 25 52,524 NESTLE NIGERIA PLC. 1,149,351.57 1,450.00 - 17 3,523 42 56,047 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,678.16 3.74 - 10 48,071 10 48,071 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 29,183.01 7.35 - 35 137,305 UNILEVER NIGERIA PLC. 177,807.92 30.95 8.22 28 881,987 63 1,019,292 574 19,737,411 BANKING ECOBANK TRANSNATIONAL INCORPORATED 179,825.60 9.80 - 21 51,919 FIDELITY BANK PLC 50,126.40 1.73 0.58 66 3,411,412 GUARANTY TRUST BANK PLC. 897,650.97 30.50 -0.16 174 4,043,909 JAIZ BANK PLC 14,142.84 0.48 4.35 14 554,330 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 67,945.39 2.36 -3.28 151 21,087,829 UNION BANK NIG.PLC. 203,845.27 7.00 - 21 158,831 UNITY BANK PLC 7,481.18 0.64 1.59 15 316,900 WEMA BANK PLC. 22,758.93 0.59 -3.28 28 2,067,269 490 31,692,399 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,643.24 0.67 - 16 507,381 AXAMANSARD INSURANCE PLC 20,055.00 1.91 - 7 27,384 CONSOLIDATED HALLMARK INSURANCE PLC 1,788.60 0.22 - 9 26,700 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 0 0 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 20,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 2 50,010 LAW UNION AND ROCK INS. PLC. 1,976.31 0.46 - 1 300,000 LINKAGE ASSURANCE PLC 3,840.00 0.48 2.13 3 430,381 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 8 1,216,090 NEM INSURANCE PLC 11,089.06 2.10 2.44 11 340,444 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 2 21,356 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 772,511 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 -8.00 16 1,985,549 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 2 34,590 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 50,000 WAPIC INSURANCE PLC 5,486.92 0.41 2.50 26 50,303,347 107 56,085,743

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,292.76 1.44 - 5 89,035 5 89,035 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,820.00 3.41 - 67 1,020,606 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 2 1,783 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 32,872.50 1.66 - 59 3,441,353 1,131.98 0.22 - 1 23,965 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 435,223.50 42.50 - 18 116,063 UNITED CAPITAL PLC 13,320.00 2.22 0.45 98 3,662,654 245 8,266,424 847 96,133,601 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 8.33 6 1,130,001 6 1,130,001 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,575.00 5.05 - 1 5 9,148.46 7.65 - 32 484,384 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,812.77 2.21 -0.90 7 426,200 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 2 2,000 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 2 510 44 913,099 50 2,043,100 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 45 25,175,208 45 25,175,208 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 400 648.00 6.00 - 0 0 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 2 1,500 3 1,900 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 -5.71 29 1,855,777 9,996.00 2.38 - 0 0 E-TRANZACT INTERNATIONAL PLC 29 1,855,777 77 27,032,885 BUILDING MATERIALS BERGER PAINTS PLC 1,854.87 6.40 - 5 9,151 21,770.00 31.10 - 4 2,227 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 177,437.26 13.50 - 10 7,408 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 2 25,664 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 2 100 23 44,550 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,501.08 1.42 -2.74 18 567,439 18 567,439 PACKAGING/CONTAINERS BETA GLASS PLC. 37,497.90 75.00 - 3 126 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 126 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 44 612,115 CHEMICALS B.O.C. GASES PLC. 1,565.08 3.76 - 1 300 1 300 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 1 633 1 633 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 79.20 0.36 - 0 0 0 0 2 933 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,565.68 0.25 -7.41 29 1,542,192 29 1,542,192 INTEGRATED OIL AND GAS SERVICES OANDO PLC 46,617.80 3.75 -2.60 85 1,943,302 85 1,943,302 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 58,957.33 163.50 -3.82 17 104,834 CONOIL PLC 15,960.90 23.00 - 13 19,223 ETERNA PLC. 4,760.13 3.65 - 1 1,370 FORTE OIL PLC. 34,515.75 26.50 - 40 182,323 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 1 1,000 TOTAL NIGERIA PLC. 50,928.28 150.00 - 34 50,480 106 359,230 220 3,844,724 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 450 1 450 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 5 19,050 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 0 0 5 19,050 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 3,014.25 1.45 - 3 1,100 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 3 260 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 100 7 1,460 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 - 1 50,530 LEARN AFRICA PLC 1,033.74 1.34 - 2 6,622 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 2 14,900 5 72,052 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 7.14 20 3,061,550

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Wednesay 12 June 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 11 June 2019

Top Gainers/Losers as at Tuesday 12 June 2019 LOSERS

GAINERS Company

Opening

Closing

Change

UNILEVER

N28.6

N30.95

2.35

N6.3

N6.4

0.1

ACCESS

Company

Opening

Closing

Change

N170

N163.5

-6.5

MOBIL

ASI (Points) DEALS (Numbers)

DANGCEM

N189

N185

-4

N136

N135

-1

VOLUME (Numbers)

N58

N57

-1

VALUE (N billion)

N11.5

N11

-0.5

NEM

N2.05

N2.1

0.05

MTNN

NAHCO

N3.06

N3.09

0.03

JAIZBANK

N0.46

N0.48

0.02

DANGSUGAR

30,099.83 3,169.00 233,451,164.00

MARKET CAP (N Trn)

3.520

Global market indicators FTSE 100 Index 7,398.45GBP +22.91+0.31%

Nikkei 225 21,204.28JPY +69.86+0.33%

S&P 500 Index 2,883.19USD -3.54-0.12%

Deutsche Boerse AG German Stock Index DAX 12,155.81EUR +110.43+0.92%

Generic 1st ‘DM’ Future 26,050.00USD -36.00-0.14%

Shanghai Stock Exchange Composite Index 2,925.72CNY +73.59+2.58%

13.256

Union Bank gets shareholders’ approval to restructure balance sheet Stories by Iheanyi Nwachukwu

Companies and Allied Matters Act (CAMA). The transaction which is subject to confirmation

by the Federal High Court, will have no impact on the Bank’s creditors or its shareholders’ funds but instead, is

he shareholders of Union Bank of Nigeria Plc have approved the proposed reduction of N54.4 billion from the bank’s Share Premium Account. This is in a bid to restructure the bank’s balance sheet for optimal performance. The shareholders endorsed the move during the Bank’s Extra-Ordinary General Meeting (EGM) which held recently in Lagos. Union Bank’s financial position as at December 31, 2018 indicated a deficit of N54.458 billion, representing accumulated permanent losses from legacy transactions. In a bid to offset the negative retained earnings, the Bank’s Board of Directors proposed the Share Premium Reduction in accordance with sections 106 and 107 of

expected to pave the way for the payment of dividends to shareholders. Commenting on the development, the Chairman of the Board of Directors, Mr. Cyril Odu highlighted the Bank’s focus on delivering value to its stakeholders. He said; “Union Bank is on course towards delivering its 20192021 strategic objectives. As we continue our push towards being Nigeria’s most reliable and trusted banking partner, we remain focused on improving the profitability of our business and delivering value to all our stakeholders – shareholders, customers, business partners and employees.” Following the successful execution of the Bank’s debut local currency bond issue to raise N13.5billion and the tightening up of its loan portfolio, Union Bank remains well positioned to continue executing key business priorities in 2019 and beyond.

CISI, NCMI sign MoU to boost capital market growth

he Nigerian Capital Markets Institute (NCMI) and the Chartered Institute for Securities & Investment (CISI) have commenced a partnership, which will continue the NCMI’s important mission to be a catalyst for capital market growth in Africa. The NCMI is the educational and training arm of the Nigerian capital markets regulator, the Securities and Exchange Commission (SEC). At the signing ceremony in Lagos Tuesday, Acting Director General of the SEC, Mary Uduk said the vision of the SEC management is for the NCMI to become a world-class training institute and the first amongst its peers adding that It is in furtherance of this vision that the Commission entered into the

partnership with the CISI (UK) to ensure professionalism in the market. “As you all know, the Securities and Exchange Commission (SEC) has a dual mandate to regulate and develop the Nigerian capital market. In furtherance of its developmental mandate, the Nigerian Capital Market Institute (NCMI) was established in 2004 to promote human capacity development and bridge the knowledge gap in the financial services sector with particular reference to the capital markets. “The Nigerian Capital Market Institute (NCMI) offers a wide range of specialized training designed to equip market practitioners with the skills and technical knowledge needed for the efficient operation of our capiwww.businessday.ng

tal market. The institute also organises regulatory examinations for sponsored individuals of capital market operators to ensure that they possess the requisite skills, knowledge and competence to engage in capital market operations and also to determine their suitability as fit and proper persons” she stated Uduk said both institutions shall collaborate to develop and strengthen the regulatory examinations currently being run by the NCMI and also work closely to develop Nigeria-specific content for CISI’s professional refresher which shall form part of the Continuous Professional Development (CPD) for market operators in Nigeria. “Finally, the Nigerian

Capital Market Institute (NCMI) will undergo the accreditation process and be recognised as an Accredited Training Partner (ATP) of Chartered Institute for Securities and Investments (CISI) which will enable it conduct training sessions for market participants who choose to undertake CISI’s Introduction to Securities and Investments (IISI). To ensure the sustainability of the partnership, train-the-trainer sessions will be delivered to the Nigerian Capital Market Institute (NCMI) trainers” she added. In his remarks, Chief Executive Officer of CISI, Simon Culhane expressed delight at the collaboration which he said would benefit investors in the capital market greatly.

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Oando disagrees with SEC on cancelled AGM …says not in best interests of Company, its shareholders

ando Plc has disagreed with Securities and Exchange Commission (SEC) on its decision to cancel the company’s 42nd Annual General Meeting (AGM) which would have held in Lagos on Tuesday June 11, 2019. The Company which acknowledges receipt of SEC letters on the cancelled AGM disagrees with the SEC’s position that its directive to suspend the 42nd AGM accords with the Ex-parte Order, adding that it had by notice to the public and its shareholders on May 10, 2019 validly convened its 42nd Annual General Meeting. According to Oando in a statement released on the Nigerian Stock Exchange (NSE), the actions contained in the SEC’s letter to the Company dated Friday, May 31, 2019 “were effectively put in abeyance by the Ex-parte Order of the Federal High Court, which was granted on Monday, June 3, 2019.” The Company also said it stands to lose significant shareholder funds by the attendant cancellation of the AGM at such short notice, adding that it reserves its rights to take all legal steps to protect its business and assets whilst remaining committed to act in the best interests of all its shareholders. The Securities and Exchange Commission (SEC) had on Monday June 10 suspended the Annual General Meeting (AGM) of Oando Plc (a company listed on the Nigerian and Johannesburg Stock Exchanges). In a statement by SEC, @Businessdayng

the Commission directed the suspension of the Annual General Meeting of Oando Plc to allow the parties maintain status quo. SEC said this is in adherence to the Ex-parte Order of the Federal High Court, Ikoyi Lagos in SUIT NO: FHC/L/ CS/910/19 in Mr. Jubril Adewale Tinubu & Anor V Securities & Exchange Commission & Anor. The AGM would have held at the Zinnia Hall, Eko Hotels and Suites, Plot 1415, Adetokunbo Ademola Street, Victoria Island Lagos. The Commission said it will update relevant stakeholders and the public on the outcome of the ongoing litigation. “We have received notification from the Securities and Exchange Commission by a letter dated today, Monday, June 10, 2019 at 12:42pm directing the suspension of the validly convened 42nd Annual General Meeting (AGM) of Oando Plc on the premise of the Ex-parte Order of the Federal High Court, Ikoyi Lagos in Suit No: FHC/L/ Cs/910/19 in Mr. Jubril Adewale Tinubu & Anor V Securities & Exchange Commission & Anor (“Ex-parte Order”),” Oando said in a letter at Nigerian Stock Exchange (NSE) dated June 11 and signed by Ayotola Jagun, Company Secretary. “It is the Company’s position that the action taken by SEC in directing a cancellation of the AGM is not in the best interests of the Company and its Shareholders who have travelled at great expense, from far and wide, to attend the annual meeting of their Company”, Oando said.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 12 June 2019

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BUSINESS DAY

OIL

Angola: ExxonMobil, Sonangol sign Angola oil Block 15 redevelopment deal Page 54 GAS

L– R: Oladoku Isiaka, executive director (development) Exxonmobil; Andy Olotu, chairman board of trustee, SPE Nigeria; Paul McGrath, managing director Exxonmobil; Debo Fagbami, chairman, SPE Nigeria Council, & Kwesi Sagoe, member, board of trustee, SPE Nigeria, during Society of Petroleum Engineers (SPE) courtesy visit to Exxonmobil Nigeria Headquarters in Lagos recently

Senegal: Opposition wants BP gas deal probe Page 55 Market Insight

Debrief

Late buyers may benefit from discounts on Nigerian crude FRANK UZUEGBUNAM

Oil prices rise on likelihood of ongoing OPEC+ supply cuts Page 59 OPEC weekly basket price DAY

PRICE

7/6/19

62.71

6/6/19

60.88

5/6/19

61.04

4/6/19

61.63

3/6/19

61.61 Source: OPEC

rude traders say late buyers stand to benefit from possible discounts on the Nigerian grade. Slower than usual trading for July-loading cargoes has encouraged sellers to drop prices. Price offerings on some Nigerian grades were heard to have come down slightly from multiyear highs, traders said, but backwardation and abundant US crude continued to leave many cargoes without buyers. Nigerian cargoes have struggled to sell after early month price indications dissuaded customers, although traders said offers were beginning to come down. European refiners, despite favourable refining margins, remained reluctant to pick up Nigerian cargoes. One trader said major grade, Bonny Light, offered early this

month at as high as $4.00, was overpriced by $2.00. According to Platts, sellers of Nigerian crude were heard to be reluctant to lower high prices despite a lack of significant interest, with Bonny Light still being offered around a $3 premium compared to dated Brent. Pressure has come from Azeri BTC, a comparable grade to some lighter Nigerian varieties, as cargoes have sold at around dated Brent plus $2.30, down by 50 cents from late May offers. Market participants are divided over whether the cargoes will be marked down further and ultimately sold or absorbed by energy majors’ own refining systems. Also, traders reported confusion about the cause of loading delays lasting at least several days at the Bonny Light and Forcados terminals. Shorter delays were reported to loadings of Bonny Light, also operated by Royal Dutch Shell. The company said operations were continuing at the Bonny Light and

Forcados terminals after traders reported loading delays at both. Phillips 66 was scheduled to transport at least one Suezmax of West African crude, likely Nigerian, to Canada’s East coast for early July loading according to Eikon fixtures. Nigerian exports fell in May, according to Kpler, by 202,000 bpd to the lowest since January at 1.85 million bpd due to seasonal lows as well as reduced US demand. Meanwhile, Alexander Novak, Russian energy minister said he could not rule out a scenario in which oil prices could fall to $30 per barrel if the global oil deal was not extended. Novak said there were big risks of oversupply on the market and that Moscow needed to monitor the oil market more in order to be able to take a balanced decision in July. But Citigroup Inc. is sticking to its target of Brent oil rising to $78/bbl in three months. Supply risks, rising demand over the northern summer, light

fund positioning and a tight physical market are some of the reasons cited by the bank for its optimism in a note by analysts including Ed Morse, global head of commodities research. Citi’s forecast implies a 28 percent increase from current levels. “Underpinned by rising trade tensions, the global economic picture has clearly deteriorated since May,” Morse wrote in the note released recently. “Yet this macro pessimism masks tangible bullish oil market fundamentals.” With the oil price rout of late 2018 still vivid in the minds of producers, and with Saudi Arabia committed to drawing down oil inventories, there is unlikely to be a rapid increase in production over the summer months, according to Citi. Also, with the forward curve for Brent in “particularly steep” backwardation, consumers will probably continue to buy to lock in volumes below spot prices on a deferred basis, the lender said.

Wednesday 12 June 2019

BUSINESS DAY

oil

WEST AFRICA

Outlook

Angola: ExxonMobil, Sonangol sign Angola oil Block 15 redevelopment deal

xxonMobil has signed an agreement with Angolan state-owned Sonangol to redevelop deepwater oil Block 15. Andre Kostelnik, Exxon Mobil’s director general in Angola, signed the deal on

the key lucrative deepwater block with Sebastiao Gaspar Martins, Sonangol’s chairman, during the Angola Oil and Gas conference in Luanda. “This renewed collaboration will enable Angola to optimize recovery and add production from mature fields,” said

Brief

Hunter Farris, senior vice president of ExxonMobil Upstream Oil & Gas Company. As operator, ExxonMobil will complete a multi-year drilling program in the block and install new infrastructure technology to increase capacity of existing subsea flow lines. The project will generate about 1,000 local jobs during the execution phase, and will produce approximately 40,000 additional barrels of oil per day once online. Changes to the production sharing agreement extend operations through 2032 and bring Sonangol into the Block 15 partnership with a 10 percent interest. Under the agreement, Esso Angola’s interest is 36 percent, BP Exploration’s share is 24 percent, ENI Angola Exploration’s interest is 18 percent and Equinor Angola’s share is 12 percent. Block 15 is an existing development with a recoverable resource potential of approximately 4 billion gross oil-equivalent barrels, and more than 2 billion barrels have been produced since 2003. Angola’s deepwater blocks have seen renewed interest from international oil companies (IOCs) in the past year due to some reforms by Angola’s government. The government has started offering tax breaks to encourage companies to link existing marginal discoveries to operating production platforms. This license consists of Kizomba Satellites Phase 2 project, and is one of Angola’s largest oil producing blocks. Block 15/06, which is close to the ExxonMobil Block 15, has proved lucrative for rival Eni, which has made five discoveries in the past 12 months. These five discoveries altogether are estimated to contain up to 1.8 billion barrels of light oil in place, with possible upside.

United Kingdom: Shell plans to drill 10 UK wells a year in expansion drive

hell plans to drill 10 wells a year offshore the UK as operator over the next three years, including development and exploration wells, as it builds its North Sea hubs and looks for West of Shetland opportunities, Steve Phimister, its UK and Ireland vice president said. Phimister said Shell had recently taken on three new drilling units and was “optimistic” about exploration both in the central North Sea and the West of Shetland area. The 10 wells a year to be drilled would be a combination of development and exploration wells, he said. Europe’s oil and gas majors are mostly focusing their UK operations on the less mature West of Shetland area, particularly with the departure of their US counterparts, but all retain assets in the core North Sea as well. In the West of Shetland area, Shell could return to an operating role if opportunities arise out of its exploration acreage, in which it is mostly a junior partner to BP, but holds some licenses as operator, Phimister said. However, this non-operating role is a legacy issue rather than a point of principle, Phimister said. “We have some operated exploration areas in the West of Shetland. If operated opportunities

Egypt: BP sells Egypt assets to Dragon Oil

P said it has agreed to sell its interests in Gulf of Suez oil concessions in Egypt to Dubai-based Dragon Oil, as part of the supermajor’s plan to divest more than $10 billion in global assets over the next two years. Under the terms of the deal, Dragon Oil, a wholly-owned subsidiary of the Emirates National Oil Company (ENOC), will purchase producing and exploration concessions, including BP’s interest in the Gulf of Suez Petroleum Company (GUPCO). The deal, which is subject to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is expected to complete during the second half of 2019. Financial details were not disclosed. The sale comes as BP dials in on Egypt’s vast offshore gas reserves. In December 2018, BP acquired from Eni a 25 percent participating interest in the Nour North Sinai concession area offshore Egypt.

In February, BP announced the start of production from the second stage of the West Nile Delta development, which includes five gas fields across the North Alexandria and West Mediterranean Deepwater offshore concession blocks, producing from the Giza and Fayoum fields. The first stage, producing from the Taurus and Libra fields, started up in 2017. The final stage, developing the Ra-

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ven field, is expected to begin production late this year. When fully onstream in 2019, combined West Nile Delta production is expected to reach up to 1.4 billion cubic feet per day (bcf/d), equivalent to about 20 percent of Egypt’s current gas production. All the gas produced will be fed into the national gas grid. The BP-operated Atoll Phase One gas project began production in early 2018. The Eni-operated Zohr gas field, in which BP is a partner, began production late 2017. BP has also made a series of discoveries in Egypt in recent years including Satis and Qattameya. Bob Dudley, BP chief executive, said, “Egypt is a core growth and investment region for BP. In the past four years we have invested around $12 billion in Egypt, more than anywhere else in our portfolio, and we plan another $3 billion investment over the next two years.

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come along for us, I would be interested.” Shell was “working hard” with Siccar Point to select a development concept for Cambo, and “looking for [project] sanction as soon as we can”, he said. In the central North Sea, Shell aims to approve another gas and condensate project, known as Jackdaw, next year, involving a four-well development, Phimister said. It would supplement the Fram and Arran projects approved last year as part of Shell’s Shearwater hub area, he said. The company also plans exploration drilling near the Gannet and Nelson fields, also in the central North Sea, he said. Shell is also interested in the possibility of increasing its 28 percent stake in Shearwater, which the company operates, but with BP holding an equal stake, Phimister said. “I am interested always to deepen ownership at the right price in my own core hubs,” he said.

@Businessdayng

Wednesday 12 June 2019

BUSINESS DAY

gas Brief IEA: Global gas demand to grow at 1.6 percent per year until 2024

lobal gas demand is expected to grow at a rate of 1.6 percent a year until 2024, fuelled by Chinese consumption which will account for over a third of the demand growth during the period, the International Energy Agency (IEA) said. China’s push to switch from coal to gas in power generation and natural gas for residential use to improve air quality under its “blue skies” initiative will play a major role in driving demand, the IEA said. China’s gas demand growth is seen at an average rate of 8 percent, down from the two-digit growth rate in recent years as its economic growth slows, but would still account for around 40 percent of the global demand increase in the coming years, said Keisuke Sadamori, IEA Director for Energy Markets & Security. The Asia-Pacific region will remain the largest source of gas consumption growth in the medium term with an average rate of 4 percent per year, and will account for around 60 percent of the total consumption increase until 2024. Domestic demand in the United States, the Middle East and North Africa, would contribute to the growth in demand, the IEA said in its annual gas

WEST AFRICA

ENERGY intelligence

Senegal: Opposition wants BP gas deal probe

group of opposition politicians in Senegal has called for an investigation of the history of two major offshore gas blocks run by BP after a report alleging fraud involving Aliou Sall, President Macky Sall’s brother. The British Broadcasting Corporation (BBC) published an investigation alleging that in a previously unpublished arrangement, BP agreed to pay Timis Corporation, a company run by Romanian-Australian tycoon Frank Timis, around $10 billion in royalty payments for its stake in the blocks. The report said the early history of the acreage, which contains one of the largest deposits of gas in the world, was mired by fraud involving Timis, who has mining and energy interests across Africa. The BBC alleged that Timis in 2014 secretly paid $250,000 to a company run by Aliou Sall called Agritrans, based on a trove of documents it reviewed. It said Timis also paid Aliou Sall $1.5 million in salary over five years for his work in Petro-Tim, the company originally given the blocks before Timis Corporation, and that he was also offered $3 million in shares in Timis companies. Aliou Sall denied receiving the $250,000 payment from Timis and called the BBC’s report “totally false”. BP said in a statement that it “rejects any implication that it acted improperly in the acquisition of our interests in Senegal” and that it “conducted extensive

and appropriate due diligence” before acquiring the license. It said the $10 billion figure quoted by the BBC was “wholly inaccurate”. Senegal’s offshore oil and gas reserves have the potential to transform the impoverished West African country when they start flowing in the next decade, likely in volumes rivaling some of the region’s biggest producers. The blocks, called Cayar Offshore

Profond and St. Louis Profond, have caused controversy since 2012, when a previously unknown company called Petro-Tim was unexpectedly awarded the license despite having no known track record in the industry. Soon after, the president’s brother was hired at the company. Protests against the deal erupted in the capital Dakar in 2016, casting a shadow over Sall’s first term.

Mozambique: EPC contract awarded for Mozambique LNG

market report. Gas demand in Europe will benefit from the shutdown of coal and nuclear power plants, but gains would be limited by the expansion of renewables and lower demand for heating, it said. The industrial sector is expected to be a strong source of growth, accounting for almost half of the global increase, replacing power generation as the main growth driver. In 2018, global gas demand saw its strongest growth since 2010 at an estimated rate of 4.6 percent, driven by the United States and China, both accounting for 70 percent of total demand growth. “Demand growth in the US was the largest, increasing by 80 billion cubic metres (bcm) or over 10 percent. The switch from coal to gas mainly in power generation for the US or in residential and industry sector for China was responsible for nearly half of the increase,” Sadamori said.

joint venture between McDermott, Saipem and Chiyoda, has reached full agreement for a contract with Anadarko Petroleum Corporation for the Mozambique Area 1 Liquefied Natural Gas (LNG) Development, McDermott International announced. CCS JV’s project scope includes the onshore engineering, procurement and construction (EPC) for all components of the onshore LNG development, which includes two LNG trains with a total nameplate capacity of 12.88 million tonnes per annum (MTPA), plus the associated utilities and infrastructure. Previously, CCS JV provided front-end engineering design (FEED) services for this LNG development. McDermott said its initial portion of the EPC contract award is approximately $2 billion. McDermott and Saipem have established a new office in Milan, Italy, where a team from both companies will lead the project management, engineering and procurement in advance of sharing on-site construction management responsibilities. McDermott will perform engineering from both London and Gurgaon, India. Chiyoda will only provide advisory services for the joint venture. Work www.businessday.ng

at the site is expected to commence when Anadarko issues a Notice to Proceed after it takes a Final Investment Decision (FID). As the operator of Offshore Area 1, Anadarko is the primary project sponsor. Additional sponsors include ENH Rovuma Área Um, S.A, Mitsui E&P Mozambique Area1 Ltd., ONGC Videsh Ltd., Beas Rovuma Energy Mozambique Limited, BPRL Ventures Mozambique B.V., and PTTEP Mozambique Area 1 Limited.

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To date, approximately 75 trillion cubic feet of recoverable natural gas has been discovered in the Offshore Area 1, the equivalent of a 12 billion barrel oil field, about 40 kilometers offshore, in approximately 1,600 meters water depth. Mozambique LNG is one of the first subsea developments in Mozambique. The wells to be tied directly to shore via a subsea gathering system capable of handling 2 billion cubic feet on natural gas per day.

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Wednesday 12 June 2019

BUSINESS DAY

power

WEST AFRICA

ENERGY intelligence

Solar module efficiency increasing as demand rises

Africa: Subsidise solar mini-grids to power rural Africa, investors urge

ocal renewable-energy grids can provide electric power to hundreds of millions of people in developing nations, especially in Africa, but will not attract enough financial backing unless they are subsidised, a group of investors said. Twelve energy and impact investors, with more than $2 billion under management and about 100 mini-grids built or in development, urged donors to reduce financial risks for them. “The capital is there and waiting to invest, but there is a missing piece,” said Nico Tyabji, director of strategic partnerships with SunFunder, which provides debt financing for solar enterprises. That is using public money to pay mini-grid developers and operators ac-

cording to the number of connections they make. In a position paper, released to coincide with the Africa Energy Forum in Lisbon, the investors said mini-grids, which are self-sufficient grids serving households and businesses, had “immense potential” to accelerate electrification in Africa. Around the world, the number of people without access to electricity dropped to about 840 million in 2017 from 1.2 billion in 2010, said a global tracking report last month. But sub-Saharan Africa lags behind, with 573 million people, more than one in two, still living without electric power, in part because of the cost of extending national grids in remote or rural areas. Analysis from the International En-

ergy Agency showed that to achieve universal electrification - a global goal by 2030, mini-grids would the cheapest technology to connect 290 million people, according to the investors’ paper. “However, mini-grids have not yet attracted the private investment required to achieve this outcome,” it said. According to a report from McKinsey, the benchmark cost for national grid connections in rural areas is $2,300 per connection, compared with about $1,000 for mini-grids, it noted. Pilot projects to test the model of paying mini-grid developers for the connections they make have been launched in East Africa using funds from government development agencies, including those in Britain and Sweden, said SunFunder’s Tyabji.

t is estimated that by 2035 solar photovoltaic (PV) projects will contribute 9.8 percent of overall electricity generation in Africa, making way for solar module efficiency research and development. In South Africa, the National Energy Regulator of South Africa (NERSA) announced recently that it has the go-ahead to license 500 megawatts (MW) per year of embedded generation projects each with an installed capacity of under 10MW. Those projects will now be able to proceed without having to seek prior approval from the energy minister. These sorts of projects typically cover residential, commercial and industrial sites, and would include properties such as retail centres, warehouses and offices. Along with shifts in the traditional energy market, consistent and rapid innovation in the field of solar PV places this energy generation alternative at the forefront of efforts to reduce our collective dependence on fossil fuels. So says Tim Frankish, managing director of SolarSaver, an independent local renewables company that provides CAPEX-free solar solutions to businesses both here and in a growing sub-Saharan market. Frankish states: “The solar energy sector is highly innovative and the past few years have seen a rapid growth in the range of available solar panels, also known as modules. These modules now come in innumerable different sizes and capacities, and employ a range of different technologies. These developments are all aimed at driving efficiency, from both a

Report: 2018 - A good year for wind turbine manufacturers in Africa

he year 2018 was a recordbreaking year for wind turbine manufacturers in Africa, according to new research from Wood Mackenzie Power & Renewables.

As noted in the report, ‘Africa wind power market outlook 2019’, construction activity in South Africa will peak at more than 1GW of capacity in 2020 and 2021 as developers race to operationalise projects that were awarded through bidding window 4 in 2015. In the longer term, the country’s Integrated Resource Plan is expected to target more than 10GW of additional wind power capacity through 2030, while President Cyril Ramaphosa’s proposed reforms for the power sector will create a more favourable environment for renewable energy deployment. “South Africa boasts its largest wind power market, with 2.1GW of operational capacity as of Q1 2019,” noted Sohaib Malik, Wood Mackenzie Power & Renewables Senior Analyst. Developers only commissioned projects in four markets in Africa during 2018. Malik highlighted some wind turbine manufacturers successes from last year including the 310MW Lake Turkana project in Kenya, the largest single installation on the African continent. “Africa’s wind project pipeline stands at 18GW as of Q1 2019. The project realisation rate, however, remains low in the www.businessday.ng

region due to a host of challenges faced by developers,” Malik pointed out. As some governments took measures to address these issues, the regional market is expected to recover and grow exponentially between 2019 and 2021. “This growth is underpinned by a five-fold increase year-on-year in turbine order intake in 2018 and 6.5GW of wind capacity in advanced stages of development. The scale of the development pipeline underlines the ability of the continent’s largest wind markets to grow in a sustained manner, providing a blueprint for emerging markets to tap their wind potential and fuel economic growth,” added Malik. Inconsistent policy measures have historically plagued wind market growth in Africa, however that is beginning to change. According to Malik, there’s a growing momentum behind the development of long-term incentive mechanisms to support the regional wind market. “Competitive procurement has proven to be the favoured tool of policy support, with South Africa and Morocco introducing auction programs in 2011 and 2015, respectively.

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technical and a financial perspective.” Manufacturers, such as Canadian Solar, have been successful in developing higher performance modules that include features such as passivated emitter real cell (PERC) and half-cut cells. The use of high solar module efficiency means that installers require fewer of them to yield the same system output. This benefits clients through a reduction in a project’s BOS (balance of system) costs and enables more power to be generated off a smaller footprint. The latter is particularly beneficial for high energy consumers that have limited roof space, for example. Another innovation that is making a significant impact on the solar landscape is the bifacial solar module. Bifacial modules include solar cells on both the front and rear sides, enabling sunlight to be captured both from above and below.

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Wednesday 12 June 2019

BUSINESS DAY

POLICY

WEST AFRICA

ENERGY intelligence

OPEC’s attachment with Russia is sparking internal disagreement

DIPO OLADEHINDE

he marriage between Organization and Petroleum Exporting Countries (OPEC) and Russia is exposing increasing internal conflict within the oil cartel who is currently struggling with lower oil price. The cartel depends on extending its alliance with Russia to keep restricting oil supplies if it stands any chance of engineering a quick rebound in prices; however Vladimir Putin relations with OPEC’s kingpin Saudi Arabia also means Russia’s president can name his own terms to continue their partnership. Saudi Arabia agreed to postpone OPEC’s planned June meeting in Vienna last month, solely to accommodate Russian oil minister Alexander Novak, who had asked for the rescheduling citing a conflict. The decision sparked internal discussion and complaints among OPEC members who feel Saudi Arabia violated OPEC’s bylaws which stipulate that only cartel members can make such a request. “Saudi Arabia is the largest producer in OPEC and commands the most weight and bears a lot of responsibilities, but by binding themselves to Russia, they have gotten themselves in this rock-and-a-hard-place situation, where the other countries are starting to feel shut out,” Ellen Wald, a senior fellow at the Atlantic Council Global Energy Center told Forbes.

Saudi Arabia’s regional arch-rival, Iran has been the most vocal about Russia’s new influence while another handful of OPEC’s smaller member countries like Algeria, Kazakhstan, Libya and Venezuela have expressed displeasure over the situation. The loudest gripes about Russia’s new influence have come from Iran, Saudi Arabia’s regional arch-rival, but they have also been voiced by a handful of OPEC’s smaller members: Algeria, Kazakhstan, Libya and Venezuela. “I disagree with the proposed changes of the dates,” Bijan Zanganeh, Iranian oil minister, wrote in a letter reported by Reuters last week. “I have already tight commitment in that period and, moreover, no reason was provided on the urgency of giving consideration to this date change.”

Earlier, Iranian Minister of Petroleum Bijan Zangeneh said the country had no plans to exit OPEC while also confirming that he would attend the upcoming OPEC meeting in Vienna later in June. “Iran has no plans to withdraw from OPEC,” he said in an interview with state news agency ICANA, which noted that he expressed regret that some OPEC members had turned the organization into a political hub against Iran and Venezuela. “Oil is not a weapon and it should not be politicized; we have always said that the oil market should be a-political and oil should not be used as a weapon, because it would hurt OPEC and its members, and I believe that these countries are taking OPEC towards collapse, but we want OPEC to be preserved; these two countries will undermine this or-

Snapshot Oil is not a weapon and it should not be politicized; we have always said that the oil market should be a-political and oil should not be used as a weapon, because it would hurt OPEC and its members, and I believe that these countries are taking OPEC towards collapse, but we want OPEC to be preserved; these two countries will undermine this organization by instigating infighting in OPEC www.businessday.ng

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ganization by instigating infighting in OPEC.” Iran’s oil exports, according to data cited by Reuters, may have fallen to just 400,000 bpd last month, less than half of exports in April. The United States had given eight countries six-month waivers to continue buying oil from Iran after it re-imposed sanctions on the Iranian oil industry in November. The United States, however, pursued a maximum pressure campaign against Iran last month and put an end to all sanction waivers for all Iranian oil buyers, beginning in May. OPEC’s biggest producer and most powerful member Saudi Arabia and Russia were the world’s top two oil producers until 2017, when US output surpassed production from both countries, since then both countries have been meeting to keep oil price higher. The so-called OPEC+ coalition reached a historic deal in 2016 to slash output in a bid to end a punishing oil price downturn. The group of two dozen producers briefly lifted the caps last year, but agreed to fresh production cuts in December after a three-month collapse in oil prices. OPEC Secretary-General Mohammed Barkindo and some oil ministers have long sought to make the alliance permanent, but Russia essentially nixed that idea in December last year. Other OPEC members including Algeria, Angola, Iraq and Nigeria have also pushed back on the idea of a permanent coalition that gives the Saudis and Russians more influence, according to the Wall Street Journal report.

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Wednesday 12 June 2019

BUSINESS DAY

finance people appointments

WEST AFRICA

ENERGYintelligence

Tullow to address funding gaps with indigenous oil, gas firms

Brief

Energy trader Gunvor bounces back in Q1 after tough 2018

wiss energy trader Gunvor Group bounced back in the first quarter of this year after posting a steep net loss for 2018 as restructuring started to pay off, its new chief financial officer said. The Geneva-based firm, which ranks among the top five oil traders, had a net loss of $330 million last year, compared with a net profit of $162 million in 2017. Revenues rose 39 percent to $87 billion. A steep profit decline in 2017 had already prompted the firm to undergo an overhaul that began last year. “We really took advantage of that challenging time to reposition the company, seek cost efficiencies and it proved to be effective. We have a very solid Q1 result. It is one of our best ever quarters for the group,” chief financial officer Muriel Schwab, who joined two months ago, said. Gunvor cut support staff, hired more traders, promoted a younger generation, invested in automation and beefed up its governance. Schwab added that its US presence, which started two years ago, had overcome its start-up phase and transformed Gunvor into a global player. “We became leaner on the support side but concurrently we also had that generational shift ... and we are bringing new skills into the company,” she said. It recently appointed a new chief operating officer, Gia Mai,

and condensed its executive committee to seven people. These also include the chief executive, the CFO, the managing director of Asia-Pacific along with three senior traders. Former CFO Jacques Erni left the firm at the end of May. The company said the loss last year was due to one-offs including the cancellation of an upgrade at its Rotterdam refinery, a write-down of its investment in a Caspian Sea oil block, unpaid receivables and litigation in China and in Switzerland relating to a Congo Republic investigation. To deal with the losses, Gunvor told its bankers this year that it would take action, including with asset sales. Plans to sell the firm or bring in a strategic investor have been pushed to the long term. “We are basically cleaning our house and today, we are much stronger. We are not in a rush, we would like a strategic partner rather than a financial sponsor. We are looking in the long term for someone that can complement our business model,” she said. Its traded volumes rose slightly to 185 million tonnes last year from 184 million tonnes, with crude and oil products steady at around 2.7 million barrels per day. Gunvor became the biggest LNG trader last year at 11 million tonnes. The firm has investments in 17 oil product tankers that it intends to double by next year.

ullow Oil has interacted with more than 200 indigenous companies in the oil and gas sector and some seven banks in Ghana to deliberate on solving the challenges of financing projects in the industry. According to Tullow, the quest to improve local content participation in the sector has always been undermined by access to credit for the local companies. Cynthia Lumour, director of external affairs, social performance and local content at Tullow Oil Ghana, said that the conference is just the beginning of the company’s journey with the local firms. “We at Tullow believe that the oil find should be a catalyst for growth to benefit the local people so as a key player in this space, we do more of these workshops to bring the suppliers, dealers and financial institutions together to network and find a solution to the challenge,” she said. Local content participation in the oil and gas industry remains a challenge despite the enactment of the local content law

and other related regulations to improve the capacity of citizens. Tullow Oil has been one of the oil exploration companies that engage local players along it is supply chain since the beginning of its exploration activities in the country.“Certainly it is part of our local content strategy and local companies are being encouraged to take advantage of it to bridge the access to credit gap

in the sector,” Lumour added. Meanwhile, some of the companies lauded the initiative by Tullow Ghana also expressed concern about the fees on the credit facilities and the need for the banks to review the rates downwards. The engagement will also help suppliers in the industry to secure funds from the banks easily through the right channels.

Anadarko CEO Walker gets $98m golden parachute after sale

nadarko Petroleum CEO, Al Walker, will receive a golden parachute worth $98 million following the oil producer’s $38 billion sale to US rival Occidental

Petroleum. The payout is part of $300 million to be shared among six Anadarko senior executives, also including President Robert Gwin and CFO Ben Fink, according to a filing with the Securities and

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Exchange Commission. Occidental, which had been pursuing Anadarko for almost two years, trumped Chevron’s competing bid last month in what will be the largest takeover in the industry for four years. Anadarko altered severance payments for its senior executives the day before Chevron announced an agreement to buy the company in April, setting them up to collect millions of dollars of additional compensation once a deal was completed. The changes meant the executives would collect 200 percent of their target bonuses for 2019, and included a vow to cover excise taxes on golden parachute payments, a type of benefit that is been criticized by shareholders. Walker, 62, has been CEO since 2012. He has total beneficial ownership of Anadarko stock valued at about $76 million at the current market price, according to the filling. That includes shares currently held plus and “stock acquirable within 60 days” due to historic bonus

Wednesday 12 June 2019

BUSINESS DAY

marketinsight

WEST AFRICA

ENERGY intelligence OPEC Flakes ‘Iran has no plans to leave OPEC despite tensions’

I Oil prices rise on likelihood of ongoing OPEC+ supply cuts

il prices rose after Saudi Arabia said producer club OPEC and Russia were likely to keep withholding supplies, and in relief that the United States and Mexico averted a trade war that would have damaged the global economy. Front-month Brent crude futures, the international benchmark for oil prices, were at $63.71, 42 cents, or 0.7 percent, above previous trading close. US West Texas Intermediate (WTI) crude futures were at $54.43 per barrel, 44 cents, or 0.8 percent, above their last set-

tlement. Traders said crude prices were rising because of statements by OPEC’s de-facto leader Saudi Arabia saying that the group was close to agreeing extended supply cuts. “With a production cut extension now sounding more likely than not, it should be incredibly supportive for oil prices,” said Stephen Innes, Managing Partner at Vanguard Markets. The Organization of the Petroleum Exporting Countries (OPEC) and some non-members, including Russia, known collectively as OPEC+, have withheld supplies

since the start of the year to prop up prices. “Also with the Mexican stalemate averted and no harmful shockwaves from the G-20 meeting, risk assets should open with a bounce in their step and oil could trade favourably as WTI and Brent will continue to track the broader risk environment high,” Innes said. Stock markets jumped after a deal between the United States and Mexico to combat illegal migration from Central America averted a tariff war between the neighbours.

Citigroup sees Brent rising to $78/ bbl in three months

itigroup Inc. is sticking to its target of Brent oil rising to $78/bbl in three months. Supply risks, rising demand over the northern summer, light fund positioning and a tight physical market are some of the reasons cited by the bank for its optimism in a note by analysts including Ed Morse, global head of commodities research. Citi’s forecast implies a 28 percent increase from current levels. “Underpinned by rising trade tensions, the global economic picture has clearly deteriorated since May,” Morse wrote in the note released recently. “Yet this macro pessimism masks tangible bullish oil market fundamentals.” With the oil price rout of late 2018 still vivid in the minds of producers, and with Saudi Ara-

bia committed to drawing down oil inventories, there is unlikely to be a rapid increase in production over the summer months,

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according to Citi. Also, with the forward curve for Brent in “particularly steep” backwardation, consumers will probably continue to buy to lock in volumes below spot prices on a deferred basis, the lender said. A range of technical indicators also support Citi’s bullishness. Brent’s 14-day relative strength index has fallen to 23, well below the 30 threshold that suggests it’s been oversold. The global crude benchmark has also breached its lower Bollinger band, an indicator that a rebound is coming. Global refinery run rates should increase by up to 4 MMbpd in the third quarter from the previous three month amid higher consumer demand, Citi said in the note. Meanwhile, central banks are already reacting to counter the slowdown in growth, the analysts said.

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ran has no plans to leave the Organization of the Petroleum Exporting Countries (OPEC) despite being treated like an enemy by some fellow members, Bijan Zanganeh, oil minister said. “Iran has no plans to leave OPEC and regrets that some members of OPEC have turned this organization into a political forum for confronting two founding members of OPEC, meaning Iran and Venezuela,” Zanganeh told the Iranian parliament news site ICANA. “And two regional countries are showing enmity towards us in this organization. We are not their enemy but they are showing enmity towards us and (they) use oil as a weapon against us in the global market and world.” Zanganeh did not name the two countries. Tensions between Iran and Saudi Arabia and the United Arab Emirates, both US allies, have spiked this year after the two said they would increase oil production to make up for Iranian crude cut off from the market by US sanctions.

US President Donald Trump’s administration added Iran’s largest petrochemical holding group to its sanctions list, accusing it of indirectly supporting Tehran’s Revolutionary Guards. Washington said the move aimed to dry up revenues to the elite Iranian military force but analysts called it largely symbolic. Zanganeh was also quoted by ICANA as saying the United States had made it increasingly difficult for Iran to sidestep sanctions but it had come up with new ways to circumvent them.

Putin says Russia disagrees with OPEC on fair oil price

resident Vladimir Putin said Russia had differences with OPEC over what constituted a fair price for oil, but that Moscow would take a joint decision on output with OPEC colleagues at a policy meeting in the coming weeks. Putin’s comments have set a stage for tough talks between Russia and its partners over their policy on the global oil market, which are expected to take place within a month. The Organization of the Petroleum Exporting Countries (OPEC) and large oil producers led by Russia are due to meet in Vienna in the end of June or early July to decide on their policy for the next half of the year as the current deal expires. They have agreed to cut their combined production by 1.2 million barrels per day, or more than 1 percent of global output, from January 1 until the end of June in order to support oil prices and balance the global crude market. Russia joined the efforts with the OPEC in 2016 and their cooperation has helped to stabilise oil pieces and ease an overhang of stockpiles. Speaking at a gathering with the foreign media in St Petersburg, Putin said he would not reveal what Russia and its part@Businessdayng

ners would do on the oil market in the second half of the year, but said several factors, including higher oil demand in the summer should be taken into account. Putin also pledged to continue cooperation with OPEC, though Russia and the organisation’s kingpin, Saudi Arabia, have certain differences on socalled “fair price” of oil. “This is natural”, said Putin. “Look at the price of a barrel, which Saudi Arabia uses to calculate its budget. This is significantly higher than for us,” Putin said, adding that Russian budget implied an oil price of $40 per barrel. According to an International Monetary Fund official, Saudi Arabia would need oil priced at $80-$85 a barrel to balance its budget this year.

Wednesday 12 June 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

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

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

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

Snapshot

If LNG prices continue to linger around their current low level for an extended period of time, some of the more expensive LNG projects could struggle to offer competitive terms to buyers, and this could result in FID deferrals

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LNG Ltd. In 2018, the buzz term in the natural gas world was the alarmist cry of “stranded assets”, with headlines shouting that overproduction of shale oil and gas in North America would leave markets oversaturated with product and infrastructure soon to become obsolete thanks to the rise of more affordable wind and solar. Since then, there have been just as many think pieces and reports tempering the stranded asset panic with assurances that natural gas is here to stay. “US LNG export to China is already seriously affected by the 10 percent tariffs in effect from last year, and we expect it to continue to be so as long as the tariff is imposed”, Per Magnus Nysveen, Rystad Energy head of analysis said. Increased China tariffs will create additional headwinds for US LNG projects that are currently awaiting final investment decisions (FIDs). If LNG prices continue to linger around their current low level for an extended period of time, some of the more expensive LNG projects could struggle to offer competitive terms to buyers, and this could result in FID deferrals. Most of these projects need to secure long-term contracts in order to get financing for their development. China is expected to be one of the biggest con-

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

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Wednesday 12 June 2019

BUSINESS DAY

tax issues Transparency initiative uncovers pool of taxable offshore funds … 47 million offshore accounts information exchanged Iheanyi Nwachukwu

Understanding tax evasion, avoidance, mitigation: The ethical stance on avoidance in Nigeria Gali Aka and Omojo Okwa

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Thebigread

BUSINESS DAY Wednesday 12 June 2019 www.businessday.ng

Retail: How bookshops survived the Amazon onslaught Despite being hit hard by the rise of ecommerce, the book trade believes it has found ways to thrive Frederick Studemann

o anyone who remembers the chaotic old Foyles bookstore in central London, its new incarnation a few doors further up Charing Cross Road is a remarkable sight. Sleek in design, well ordered in layout with enticing curated clusters of books recommended by staff, Foyles now comes with many of the familiar signature notes of contemporary high street retailing: the café, the gallery and events space, and the atrium, a central reference point for five floors devoted to the pleasure of reading, a mission underscored by the bold slogan stamped on one of the walls: “Welcome book lovers, you are among friends.” Such engaging self-confidence is a refreshing, even defiant break from the gloom that has stalked bookselling — and publishing — in recent years. It is also in keeping with a new approach to bookselling by Waterstones, which bought Foyles last year. Since almost going out of business nearly a decade ago Waterstones has reinvented itself under chief executive James Daunt, junking many of the customs of chain store retailing in a bid to prove that in a sector dominated by the disruptive might of US ecommerce group Amazon, there is still life and profit to be found in high street retailing. Now the question is whether Mr Daunt can repeat the experience across the Atlantic. Last week Elliott Management, Waterstones’ owner, agreed to buy Barnes & Noble, the ailing national US bookstore chain, in a $683m deal that will see Mr Daunt move to New York to take charge of the American company and its 627 stores alongside his continuing stewardship of Waterstones. The fact that Elliot, a wing of the activist hedge fund founded by Paul Singer, and a company known more for its forensic reading of balance sheets than its love of fine writing, has made two big investments in the sector within the space of a year has lifted spirits in an industry that until recently felt it was fighting for its very survival as Amazon rewrote the rules of the book business. While booksellers were among the first retailers to feel the full force of the Amazon effect, with the Borders chain closing in 2011, the rest of the industry has begun to suffer. In the past two years, there have been a string of retail bankruptcies and mall closures as a result of the relentless rise of ecommerce. Yet the Barnes & Noble deal is the latest sign that the book trade, at least, may have seen Amazon reach the peak of its influence and found ways to survive. “There are limits to the online experience. In the world of books it is as good as it can be,” says Mr Daunt, a former banker who made his name running a boutique London bookshop chain. “Now other retailers are going through what we went through. We endured the fire and it forced us to dramatically improve our shops and raise our game.” The two companies will be run as separate businesses and Mr Daunt says his aim is not to turn Barnes & Noble into Waterstones, but rather to create the conditions for it to be a better bookseller: “I won’t dictate,” he adds. Still, he hopes to expand Barnes & Noble — “America is very under-bookshopped” — and expects to deploy some of the strategies that have served him well in the UK such as devolving power, particularly over purchasing, to local managers at Waterstones’ more than 280 shops. This contributes to more efficient management of stock, reducing the costs and hassle of handling unsold “returns” — books bulk ordered by head office with little regard for differences in regional reading habits. Indeed,

one of the competitors the new Barnes & Noble will face is Amazon itself, which now has 19 bookshops across the US, with store managers benefiting from the data that Amazon collects on the market. The empowering of store managers, making outlets appear distinctively individual rather than another piece of a centrally-directed operation, is also part of an emphasis on improving customer experience — one of the precious few advantages a bricks-and-mortar operator has over pure ecommerce rivals. “You want to enjoy yourself, to bring your kids and have fun buying a book,” says Mr Daunt. Get that right and customers will come, and spend. Joseph Evans, senior research analyst at Enders, wonders — given the scale of Barnes & Noble, which has more and bigger stores than Waterstones — how applicable that model is. However, he adds that “the impetus is the right one. The threat to [both] is coming from the same place.” The publishing business will be hoping that Mr Daunt succeeds. A commercially viable physical retail sector is seen as critical for providing some balance to Amazon. As well as transforming the way books are marketed, priced and sold, the ecommerce group has moved into direct competition with publishers through its own publishing activities, in physical, screen and audio formats. Its global reach also poses a fundamental challenge to long-established arrangements for territorial rights and distribution — cornerstones of the industry’s business model. “Amazon is the decisive factor in our business,” says David Shelley, chief executive of the UK arm of Hachette, one of the “big four” English-language publishers alongside HarperCollins, Macmillan and Penguin Random House. Living with that reality has not been easy. Publishers chafe at Amazon’s tough negotiating tactics and demands that, as suppliers, they reorganise their internal structures to suit the retailer’s needs. But there is seemingly little that they can do about it. As one senior publishing executive puts it: “Amazon is a brutal partner — both a source of concern and a fact of life.” Yet Amazon has enabled publishers to reach a wider market of customers and made it easy to sell to them. Readers have shown their happiness with Amazon in the shape of purchases worth billions of dollars every year. “I think Amazon opened the world to books and I can only say thank you,” says Jane Friedman, co-founder of ebook retailer Open Road and a former chief executive of HarperCollins. In recent years many publishers were anxious that Amazon and the digital disruption it represented would overwhelm their industry in the same way it had film and music. As well as disruptions to the supply chain, readers’ habits were also changing. Consumers — particularly younger ones and fans of genre fiction — were

switching to ereaders and other digital devices, or just turning away altogether and streaming videos and podcasts on their smartphones instead. “It all seemed terminal,” says John Makinson, former chief executive of Penguin, the British publisher. Penguin’s response was the 2013 merger with Random House to create a business with the global scale to be a credible counterweight to Amazon. Publishing is indeed being digitally disrupted, but not always in the apocalyptic way many in the industry once feared. Changes made in response to Amazon — the reach for scale through consolidation; the tightening up of processes throughout the supply chain — have helped make the sector more efficient and profitable. Sales and profits have held up. The UK’s industry income in 2017 rose 5 per cent to £5.7bn. Publishers report increased reader appetite for “serious” non-fiction books that seek to bring clarity and understanding in uncertain times. One result of this is that the big publishers now enjoy lucrative economies of scale, working their backlists and using their buying power to cut production and warehousing costs. “Publishing is at root a catalogue business. Most new books are only about a third as profitable as backlist titles,” says Toby Mundy, former chief executive of independent UK publisher Atlantic Books and now a literary agent. “The big publishers can gear their businesses in such a way that the cost of all their operations are covered by the profits from the backlist, allowing them to run their new books programme more like a spread bet.” If one of those bets pays off, the profits go straight to the bottom line. This is not an advantage enjoyed by smaller and midsized players. While technology has enabled an energetic sector of entrepreneurial independents, typically focused on a particular type of literature, the lack of backlist scale — and their reduced bargaining power with retailers — limits profitability. If the big houses look to achieve profit margins of about 10 per cent and above, smaller operators have to settle for low single digits. The traditional physical book itself has also proved resilient in the face of insurgent formats. While a few years ago the last rites were being read for the book, it has, as Stephen Page, chief executive of Faber & Faber, puts it, proved to be a “hugely flexible form of technology”. After an initial period of strong growth, ebooks appear to have plateaued, with some publishers reporting sales even dipping. Ebooks accounted for 24 per cent of total UK sales last year, barely changed from the year before, according to Nielsen. Reading long texts on screen is, it seems, less of a pleasurable experience than many thought. “It’s as if everyone’s Kindle battery died on the same day” is how one executive

puts it, though the publishers’ success in gaining greater control over ebook pricing may also have played a role. Digital disruption has turned out to be “more benign than many pessimists thought”, says Anthony ForbesWatson, chief executive of London-based Pan Macmillan. Less benign perhaps is the growth in selfpublishing, particularly in the realm of genre fiction — crime, fantasy and so on — that is traditionally one of the profit engines of the industry. It is a lively market, with sales mostly in ebook form and often through Amazon, but one where precise data are hard to come by. Yet, Enders’ Mr Evans suggests it is contributing to a bigger ebook market than is being officially recorded. The growth of digital innovations such as self-publishing highlights the industry’s broader response to new technology. Like many industries publishing has invested heavily in becoming more digital-savvy. This has seen publishers change their operations in areas such as marketing — whether through better management of a book’s electronic metadata to improve “discoverability” on Amazon, or reaching readers direct via social media. Data analytics also informs pricing strategies and the understanding of consumer trends. “The more data you’ve got, the more competitive you are,” explains one publisher. But sceptics wonder how effective the incumbents have been at exploiting the potential of digital media. “They are quick to pounce on the latest social media hit,” says one former publisher. “But they are less good at building and managing online communities that drive a lot of reader engagement.” And while ereaders may have disappointed initial expectations, digitally-delivered books are very much apparent in the current talk of the sector: audio. Although books on tape and, later, CD were an established, if cumbersome feature of publishing for years, audio has been transformed by the era of downloads and streaming. It has proved particularly attractive to an often elusive and potentially lucrative part of the market: men in their thirties and forties. Again, the Amazon effect is apparent. Much of the growth of the audio market has been driven by Audible, an online subscription business acquired by Amazon in 2008. This has prompted fears of a looming squeeze on publishers by Amazon once the audio market achieves greater scale. Others are more sanguine. Books may have been the foundation stone of Amazon, which has become the biggest retailer for publishers, but books now account for less than 10 per cent of total Amazon sales worth $232bn in 2018. For some this creates the unusual phenomenon that an industry’s health is tied up with an entity that has increasingly less interest in it. For others, like Mr Daunt, it suggests opportunities. •Culled from FT

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