BusinessDay 12 Nov 2018 by BusinessDay

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Terragon acquires Asian marketing technology firm, Bizense

erragon, a data and marketing technology company, has acquired Bizense, a Singapore-based mobile technology company, in a cash plus stock deal which is the first of its kind and scale in Africa. The deal will see Terragon control its intellectual property assets globally, enabling it further adapt and integrate its marketing technology software for financial services institutions and consumer brands across Africa. Terragon’s Founder and CEO, Elo Umeh, said: “Due to lack of options, most African businesses are left to depend on licensed technology built for other markets. With the peculiarities and associated problems Africans are faced with on mobile devices Continues on page 42

Inside Diamond Bank denies P. A4 acquisition offers as stock stretches 3-day winning streak Kachikwu, Wabote, Tinubu, others lead discussions at 25th Africa Oil Week P. A2

L-R: Bola Onadele. Koko, managing director/chief executive officer, FMDQ OTC Securities Exchange (FMDQ); Jibril Aku, vice chairman; Godwin Emefiele, governor, Central Bank of Nigeria (CBN), and Okwu Joseph Nnanna, deputy governor, financial system stability, CBN/chairman, board of directors, FMDQ, during the presentation of the FMDQ Game-Changer Awards to the CBN governor, at the FMDQ GOLD Awards in Lagos, at the weekend. Pic by Olawale Amoo

Buhari’s certificate storm distracts from bigger economic picture P

STEPHEN ONYEKWELU

re s i d e n t Mu h a m mad Buhari’s certificate controversy has captured public imagination at a time when addressing fundamental questions about how to wrestle

Nigeria from the claws of weakening economic performance indicators would have created more value. For the first time in two decades, the Nigerian economy contracted in 2016 with a negative growth rate of -1.58 percent down from the 2.90 percent

expansion recorded in 2015. The economy returned to a sluggish positive growth of 0.55 percent in the second quarter of 2017. Since then, Nigeria’s highest recorded growth is 2.11 percent recorded in the last quarter of 2017. The unemployment rate has doubled from 9.9 percent in the

third quarter (Q3) of 2015 to 18.8 percent in Q3 2017, according to data from the National Bureau of Statistics (NBS). The number of unemployed Nigerians also increased to 15.99 million in Q3 2017 from 11.9 million in Q3 2016, NBS Continues on page 42

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Lessons for NNPC as Petrobras reports 20-fold increase in profit DIPO OLADEHINDE

he inability of the Nigerian National Petroleum Corporation (NNPC) to operate as a fully integrated oil company is short-changing Nigeria as Brazilian state-run oil firm Petrobras, the most indebted listed company reported a 20 fold increase in profits compared to the profit for the same quarter last year on the back of higher oil prices. Petrobras is rising from its selfcreated pit of hell as the New York Stock E xchange listed firm, recorded its best result since 2011 with a net income of $6.3 billion in nine month 2018, which is a growth of 371 percent compared to nine month 2017 thanks to higher margins in sales and exports, cost control discipline, reduction of interest expenses due to the decrease in indebtedness and lower general and administrative expenses. Battling the world’s largest oil industry debt, Petrobras managed to reduce its net debt by 14 percent at end-September 2018 to $72.8 billion compared to end-2017, and down from the $73.6 billion net debt at end-June 2018. The current debt of $72.8 billion is the smallest amount in eight years as net debt surpassed $100 billion in 2015. Free Cash Flow remained positive for the 14 consecutive quarter, reaching $9.98 million (R$37,481 million) in nine month 2018, same level as in the previous year, due to the increase in operating cash generation, despite the payments related to the Class Action agreement, and higher investments. The results represented progress for Petrobras which is striving under Chief Executive Pedro Parente to move past the fallout from a probe, begun in 2014, that showed construction firms bribed Petrobras officials and politicians to win inflated contracts. During nine months 2018, the Brazilian oil company lifted its investments by 10percent year on year to $8.59 billion (R$32.3 billion) with exploration and production accounting for 89percent of total spending. Due to assets divestment, mainly because of Lapa and Roncador fields, production in the nine months fell by 200,000 barrels of oil-equivalent per day (boepd) while total output was down 6 percent Year on Year to 2.61 million boepd. Despite lower crude-oil output, Petrobras continued to increase refinery out for a second consecutive quarter in Q3. Domestic demand picked up during the quarter after Brazil implemented a Real 0.30/ liter (8 cents/liter) subsidy on diesel prices in June after a 10-day strike by independent truckers, although activity slowed slightly in September ahead of presidential elections in October. Petrobras’ refineries produced 1.8 million bpd of oil products in Q3, which was up 0.2 percent year on year but down 2.1percent from Q2. Refined-product sales grew in Q3, especially diesel sales after the subsidy took effect, Petrobras said. The company sold an average of 1.941 million bpd of refined products

in Q3, up 2.9percent on the year and 8.4percent from Q2. Also, another state owned oil corporation Norway’s Equinor, formerly known as Statoil with an average production capacity of 1.8 million bpd kicked off third-quarter results for the energy majors with a slightly lower-than-expected jump in underlying earnings, while cutting its guidance on capital expenditure to around $10billion for the year from $11billion previously, in a move that is likely to soothe investor fears that costs will start to head substantially higher following the oil price recovery to above $75 a barrel. Adjusted earnings before interest and taxes almost doubled to $4.8 billion in the quarter from $2.35billion a year ago, but this was slightly below market expectations of $4.9billion. The company highlighted “capital discipline and efficient project execution” for the reduction. Cash flow from operating activities reached $5.3billion, marginally ahead of analyst expectations. Like other oil producers including Norway’s Equinor and Mexico’s Pemexv, who all saw improved financial results in 2018 and made operating profits, Petrobras is reaping the benefits higher oil prices coupled with more transparency and accountability in the sector once saddled with corruption; the reverse is the case for Nigeria. BusinessDay investigations into the latest August report of NNPC showed modest gains of N70.2million made by NNPCs upstream and gas processing subsidiaries such as the Nigerian Petroleum Development Company (NPDC), RETAIL, Integrated Data Services Limited (IDSL), Nigerian Gas Marketing Company (NGMC), and Nigerian Gas Processing and Transportation Company (NGPTC) were wiped off largely by its downstream subsidiary operations which recorded deficits north of N216.6 million according to figures from the organization’s operations and financial report for 2018 actual. Dolapo Ashiru managing partner at Nirvana Consultants said NNPC is a government agency that will always absorb the losses, but on the long run the citizen will feel the impact of the burden more. “However, Deregulation and privatization is the way forward,” Ashiru said. The combined value of output by the three refineries (at import parity price) for the month of August 2018 amounted to N8.67billion while the associated Crude plus freight costs and operational expenses were N9.78billion and N9.68billion respectively which resulted to an operating deficit of N10.79 billion by the refineries. The 37th edition of the report also indicated a trading deficit of N3.90Billion which is 179.87 percent lower than the previous month’s surplus of N4.88Billion. “This drop in performance month-on-month is principally attributable to the drop in performance of NPDC owing largely to revenue decrease and higher expenditure level when compared to previous month in July 2018,” NNPC said in its August monthly.

Insight

Africa Initiative for Governance (AIG) Panel of Advisors Meeting: Front Row L-R: Herbert Wigwe, member, board of directors, AIG; Enase Okonedo, member, AIG Panel of Advisors; Aigboje Aig-Imoukhuede, founder/chairman, AIG; Olusegun Obasanjo, chairman, AIG Panel of Advisors; Jeya Wilson, member, board of directors, AIG; Chienye Ogwo, CEO, AIG. Back Row L-R: Olusegun Adeniyi, member, AIG Panel of Advisors, and Abubakar Mahmoud, member, AIG Panel of Advisors, at the AIG Panel of Advisors’ meeting in Lagos, weekend.

Oil firms move from worst to best as profit surges BALA AUGIE

il and gas companies have grown from one of the worst performers last year to best year to date, as their earnings grew at a faster pace compared to other companies even amid sluggish economic growth and global political risk. The cumulative net income of the five oil and gas (upstream and downstream) firms that have released third quarter (Q3), 2018 results (Total, Mobil, Forte Oil, Mobil, and Seplat) - surged by 198.83 percent to N63.0 billion from N21.12 billion the previous year. On the other hand, the 10 members of the banking index- Access, Ecobank, GTBank, First Bank Holdings, Stanbic IBTC Holdings, United

Bank for Africa (UBA), Union Bank of Nigeria, and Zenith Bank- saw cumulative net income grow by 15.44 percent in September 2018, compared to the previous year. Also, the Industrial Goods Index, represented by Dangote Cement and Lafarge Africa saw combined net income fall by 16.05 percent to N147.90 billion in the period under review, brought on by a N10 billion loss recorded by Lafarge Africa and a 2.23 percent increase in Dangote Cement’s net income. The consumer goods index components - Dangote Sugar, Flour Mills, Guinness Nigeria, Nigerian Breweries, Nestle, PZ Cussons, Nascon Allied Industries, and Unilever - saw cumulative net income fall by 29.34 percent to N97.83 billion, as only Unilever, Nestle and Guinness re-

corded profit for the period. While the NSE oil and gas index has shed -11.24 percent this year, it has outperformed all others including the NSE ASI Index which has returned negative 15.80 percent, NSE Banking Index -12.22 percent, NSE consumer goods Index -25.50 percent, and industrial goods Index of -31.88 percent, according to data compiled by BusinessDay. Analysts say upstream oil and gas firms have continued to meet production targets while taking advantage of the tail wind in crude oil price, which is why they have recorded strong financial performance and profitability. For the downstream players, experts are of the view the new Nige-

Continues on page 42

Concerns as Nigeria wobbles into 2019 elections …with delayed funding, uncertain Electoral Law OWEDE AGBAJILEKE, Abuja

igeria is wobbling into 2019 elections as the country still struggles to find funds urgently needed for the process as well as conclude the amendment of an ambitious electoral law which had raised hope for free, fair, hitch-free and credible elections. This comes as general elections are just three months away. According to the guideline and schedule of activities for the elections released by the Independent National Electoral Commission (INEC), the Presidential and National Assembly Elections would hold on February 16, while the governorship and state assembly polls hold on March 2, 2019. But analysts have expressed worry that despite a four year window to prepare for the forthcoming elections, Nigeria is still battling with getting an election budget and Electoral Act (Amendment) Bill at the eleventh hour. Last Wednesday, the National Assembly passed the N242 billion 2019 elections budget, amid uncertainty around the Electoral Act (Amendment) Bill.

Although the budget was earlier passed last month, both legislative chambers of the National Assembly rescinded their earlier approval due to sole source of funding the exercise. Some of the activities in the budget have already been concluded, but there are concerns that the late signing of the budget into law would negatively affect procurement of sensitive election materials. These include Notice of Election, conduct of party primaries, submission of Forms CF001 and CF002 at INEC Headquarters, publication of personal particulars of candidates among others. INEC National Commissioner, Adedeji Soyebi, had earlier informed BusinessDay that due to the delay in approving the budget, the Commission was able to monitor the conduct of the just concluded party primaries by obtaining credit facilities to pay its staff as honorarium. In an interview with BusinessDay, an Abuja-based legal practitioner, Kayode Ajulo, blamed both the Executive and the Legislature for the delay in the passing the budget. “Election is constitutional. Every four years we must have a General Election. I wonder why the Executive

presented the budget late when they have four years to the General Election. “In 2015, we knew that there would be an election in 2019. It is like a man whose wife is pregnant. And the man complaining after the wife put to bed that he wasn’t prepared.” Also speaking, the Convener of Election Monitor, Abiodun Ajijola, said late approval of the budget would have grave implications for the forthcoming general elections. Ajijola added: “It should be noted at this point that Nigeria is in a critical moment when something has to be done urgently. It appears that the politicians are not putting Nigeria first and clearly some people are working hard to frustrate the effective conduct of elections in Nigeria in 2019.” Another major concern is that if President Muhammadu Buhari signs the Electoral Act (Amendment) Bill into law, Nigeria stands the risk of violating Article 2 (1) of the Economic Community of West African States (ECOWAS) Protocol, which stipulates that no member country should amend its Electoral Act, six months to an election.

•Continues online at www.businessdayonline.com

Monday 12 November 2018

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Monday 12 November 2018

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BUSINESS DAY

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Monday 12 November 2018

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Monday 12 November 2018

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Death of a colossus and legend

Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

have had to change the title of my tribute to a great man. It was originallyentitled: “Chief Allison Akene Ayida: Another old boy of King’s College (KCOB) bows out.” Social media went on an orgy of frenzy – with reports, reflecting varying embellishments, that the Inspector-General of Police, Ibrahim Idris was sufficiently alarmed and concerned at the passing away of yet another “KCOB” – following the recent demise of former Vice-President, Dr. Alex Ifeanyichukwu Ekwueme [aged 85]; Chief Tunji Gomez [aged 90] and Prince Adedapo Adeniran [aged 94] (all of whom were KCOBs), that he immediately despatched his trusted Deputy Inspector-General, Chief Taiwo Lakanu to proceed to Lagos and co-opt the Commissioner of Police of Lagos State Mr. Edgal Imohimi to get to the bottom of these serial deaths (all of them, except that of Dr. Ekwueme, in Lagos) involving illustrious old boys of King’s College, Lagos. Inevitably, the police had to deal with the delicate issue of suspected foul play and the likely suspects!! Additionally, the Police could not ignore the coincidence with my candidacy

Simi Nwogugu Nwogugu is Executive Director, Junior Achievement Nigeria

onsider Abdul. Born to low-income parents in a small town in North Central Nigeria, Abdul has just graduated secondary school with very few prospects for his future. Though a very intelligent boy, Abdul has not been able to get admission into university because his parents want him to study medicine and he barely passed his science subjects. Abdul’s main interest is photography – an interest sparked by his uncle who brings his beautiful cameras with him when he comes from

as the next president of St Gregory’s College Old Boys Association following my very successful campaign in all thirty-six states of the Federation of Zimboda as well as warm reception and overwhelming endorsement by old boys of St. Gregory’s College worldwide (especially in the diaspora)!! While investigations are proceeding, let us doff our hats to the colossus and legend – Chief Allison Akene Ayida who died in Lagos at the age of 88 years after a protracted illness. From Google and Facebook, we are offered the following snippet (courtesy of Eric Teniola): “Chief Allison Akene Ayida was born on June 16, 1930. He attended King’s College, Lagos from 19461952; Queen’s College, University of Oxford, England, where he graduated in 1956; London School of Economics and Political Science, University of London, England, 1957; Assistant Secretary, Federal Ministry of Finance, 1971-1975;Chairman, UN Commission for Africa;Secretary to the Government of the Federation andHead of Civil Service of Nigeria, 1975-1977. He died on October 12, 2018. He narrated the story of his life in a book entitled “Rise And Fall Of Nigeria” published by Malthouse Press Limited. “I was brought up as an only son by my late parents. One of the virtues you imbibe early without a Big Brother is the habit of a self-sufficient and independent lone ranger. At 33, I was appointed to act as Permanent Secretary to the Federal Ministry of

‘

A whole chapter would have to be devoted to the exceptional courage of top civil servants led by Abdulazziz Attah (Oxford graduate) with Ayida, Asiodu, Ahmed Joda etc in tow who after the disastrous broadcast of Colonel Yakubu Gowon on 29th July 1966 put their lives at risk by driving to Ikeja cantonment to plead with “fierce and supercharged” soldiers before gaining access to Gowon

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Economic Development, in 1963. I was the youngest Permanent Secretary in the Federation. It was part of an experiment to try out the then new breed in the civil service as Permanent Secretaries. I had to look up to senior colleagues such as the late Chief Michael Ani for guidance and leadership.” In my previous capacity as the editor of “The Mermaid” (the college magazine of King’s College), I made the following brief remarks: “I presume that it is well known

that Chief Ayida entered King’s College in 1947 and along with Makanju earned double promotion to Form 3 and thereby became a classmate of Izoma Philip Asiodu and Otunba T. Adeoye Tugbobo. It was the Principal (Headmaster), Mr.J.R. Bunting who secured admission for both Asiodu and Ayidato his alma mater Queen’s College, Oxford University to study Philosophy, Politics and Economics [PPE] on scholarship. After graduation both of them returned to Nigeria and joined the civil service. Asiodu was in the Governor’s office briefly before joining the Foreign Service while Ayida was in the Ministry of Education. It was Chief Festus Okotie-Eboh, the Minister of Finance who facilitated the transfer of Ayida to the Ministry of Finance. It was no secret that Ayida was a protege of the Minister. A whole chapter would have to be devoted to the exceptional courage of top civil servants led by Abdulazziz Attah (Oxford graduate) with Ayida, Asiodu, Ahmed Joda etc in tow who after the disastrous broadcast of Colonel Yakubu Gowon on 29th July 1966 (following the revenge coup d’état by Northern soldiers led by then Lieutenant-Colonel Murtala Mohammed) that there was no longer any basis for the existence of Nigeria as a nation, put their lives at risk by driving to Ikeja cantonment to plead with “fierce and supercharged” soldiers before gaining access to Gowon. All of them could have been shot! One of the soldiers was sufficiently sober to demand of the intruders: “Who goes there? Enemy or foe?

Proceed and be recognised. Do you have your wife’s permission to embark on this dangerous (suicidal) mission?” They performed the superlative feat of persuading Gowon to issue a retraction as follows: “After further deliberations, my colleagues and I have resolved to preserve the unity of Nigeria as one nation.” (not an exact quote). Northern soldiers had commenced packing their wives and children back to the North on trains, trucks, lorries and motor cars. Perhaps this is not the right time to reflect on the lamentation and despair of Chief Olu Falae, Secretary to the Military Government of the Federation (January 1986 to December 1990): “I did not know I had so many enemies until I became Secretary to the Government of the Federation [SGF].” Similarly, Chief Ayida had his fair share of enemies and detractors. Perhaps, that is a subject for another day. However, we can at least remind ourselves of our nation’s stormy and chequered history which is cojoinedwith the travails of the civil service and the strength of character (or otherwise) of successive SGF’s. When the military took over on 15th January, 1966 with Major-General Johnson Aguyi-Ironsi as head of State, probably the most powerful civil servant was Ironsi’s kinsman, Chief Francis Nwokedi. • To be continued next week

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Celebrate global entrepreneurship week by supporting digital entrepreneurship in Nigeria’s first Google impact challenge Lagos to visit Abdul’s parents. After another argument about his future, Abdul’s uncle asks his parents to send him to Lagos. In Lagos, Abdul’s uncle helps him enroll in digital photography classes and lets him use his cameras to take photos, which Abdul is able to sell on Shutterstock and other online stock photography sites. Abdul also learns to drive and registers his uncle’s car with Uber and other ride-sharing apps. Before long, Abdul is making enough money to send a small amount to his parents every month and enroll himself at Yaba

“Paul Okeugo, COO of Chocolate City Group, testing the invention of some Junior Achievement Company Program students.”

College of Technology to study photography, even while continuing to take digital photography courses online. Abdul’s story is not unique. Millions of young people around the world, typically referred to as “Millennials”, are reinventing the way we see life and work in the twenty-first century and technology is allowing them to do so. In many companies today, as in many households, members of older generations wonder loudly: “what is wrong with these lazy Millennials who don’t want to work hard like we do?” But perhaps this is the wrong question. Instead of wondering what’s wrong, perhaps we should look at how to stimulate them to create those engines of growth that many of them are plugging into to generate wealth. Shouldn’t we be asking ourselves how to get our young ones to become active drivers of the global digital economy by creating the next Shutterstock, Uber, Airbnb, Facebook and Amazon? The Global Industry Vision (GIV) 2025 report revealed that the number of personal smart devices will reach 40 billion and the total number of connections around the world will reach 100 billion by 2025, creating a digital economy worth of $23 trillion! We can either sit back and watch this pass us by or we can start training our young people to fully participate in this as

wealth creators instead of as consumers. At Junior Achievement Nigeria (JAN), we have chosen the latter, and that is why we are participating in the Google Impact Challenge. JAN is part of Junior Achievement Worldwide, the world’s largest and fastest-growing economic education non-profit dedicated to empowering young people to own their future. Since 1999, JAN has empowered over 800,000 young people in primary and secondary schools across Nigeria, through our financial literacy and entrepreneurship programs, and some of our alumni are now highly successful and socially responsible entrepreneurs. Not only do we have successful alumni in management positions at all major corporations operating in Nigeria, our alumni also serve as CEOs and Executive Directors of the most dynamic non-profit organizations in Nigeria including FATE Foundation, Africa Initiative for Governance, Paradigm Initiative Nigeria, LEAP Africa, The Education Partnership Center and many other organizations we are proud to call partners in the development of Nigerian youth. As we encountered reports about the future and the relevance of Nigerian youth, we decided that teaching financial literacy and entrepreneurship was no longer

enough to prepare our youth for the future; we had to begin to teach digital entrepreneurship as well! With unemployment levels rising to almost 20% in Nigeria, we were clear on the need to infuse our award-winning entrepreneurship program for senior secondary school students, the Company Program, with digital skills training so as to develop digital entrepreneurs who are fully equipped to lift Nigeria to its highest potential. Our goal is to develop 10,000 young digital entrepreneurs who will put Nigeria firmly among the nations benefiting from that $23 trillion digital economy in 2025! So this week, as we mark Global Entrepreneurship Week, I hope you will partner with us to make this dream a reality by voting for JAN in the first ever Google Impact Challenge in Nigeria! If we get the highest number of votes, Google will provide a whopping $250,000 as well as training and tools to support JAN in achieving our goals to develop 10,000 digital entrepreneurs in Nigeria by 2025! Join us by voting now! https://impactchallenge.withgoogle.com/nigeria2018/charities/ junior-achievement-nigeria Happy Global Entrepreneurship Week!

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Celebrating international accountants’ day

Francis Iyoha Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican. org.ng

very year, International Accountants’ Day is celebrated on November 10 worldwide by the over three million professional accountants cast in the mold of the International Federation of Accountants (IFAC) and also by those who have an operational interest in the services provided by accountants. The day has been set aside since 1972 when the first edition of the event was held to appreciate the importance of the contributions of accountants to the overall welfare of organizations. It is a day to look up to by accountants and would-be accountants with joy and for a legion of reasons. The choice of November 10 for the celebration is significant. It was the day in 1494 that the mathematics book-”Summa de Arithmetica, Geometria, Proportioni et Proportionalita”(meaning everything about Arithmetic, Geometry, and Proportion) authored by Luca Bartolomeo de Pacioli- a monk, was published in Venice. The book had five sections, one of which resulted in the first accounting book which was the only book on the subject

until late into the 16th century. Today, Luca Pacioli is regarded as the ‘father of accounting’ as his work became the foundation for more essays which led significantly to the development of accounting. But it is instructive to note that Lucas Pacioli did not actually invent the system of accounting but succinctly described, during the Italian Renaissance period, a method used by merchants in Venice. Through his work, Luca Paciolilaid the foundation of what we know today as the “principle of double entry bookkeeping” which ensures that every debit entry has a corresponding credit entry. In fact, the principle of double entry is so crucial that he humorously admonished that accountants should not “sleep at night until the debits equaled the credits.” The principles of double entry accounting have remained fundamentally unchanged even though new standards have been developed and technology improved. His contribution to the development of accounting was quite profound and we owe him debts of gratitude. The accounting profession is a noble one and its role in the socioeconomic and other activities of the world cannot be too strongly emphasized. Accounting is practiced in every organization, big or small, public or private, national or multinational. There is high demand for the services of accountants, the remuneration for established accountants is high, and the competition in the profession makes it imperative for accountants to continually upgrade their skills. The profession also provides an opportunity to develop special skills required to mine data and interpret the information. It

‘

In Nigeria, for instance, accountants operate in a societal system that is powerfully constraining and which can be exogenously made and unmade through human actions and interactions. This situation is even made worse especially that accounting as a discipline, is implicated and practiced in all areas of human endeavour

’

could, therefore, be safely and reasonably said that accounting represents the ‘heart’ of every organization. However, in a number of occasions and circumstances, the accounting profession worldwide had been brokenhearted following the pains associated with the misalignments between the Letter and the Spirit of accounting practice initiated and executed by some boards, managers, and accountants who became mor-

ally and ethically disconnected with the ethos of the profession. This is rather unfortunate, especially when it is realized that transactions in the days before and after Luca Pacioli were accounted for “in the name of God.” That is, traders remembered God when they traded and recorded transactions. All of these changed in the nineteenth century when transactions came to be accounted for “in the name of God and profit.” As would be expected, the profit motive trumped the God factor in transactions and consequently, the Letter and the Spirit of accounting practice parted ways. It is in light of the above that the practice of accounting worldwide has undergone and continues to undergo significant processes of change. From compliance with accounting rules and procedures based on social norms of corporate and professional behaviour, change processes continue to dominate the accounting space in terms of Generally Accepted Accounting Principles (GAAP). In-spite of these developments, it is past dispute that the Letter and the Spirit of accounting practice are not in perfect alignment. This has created an opportunity for most people who discuss matters relating to accounting practice to invoke sentiments in order to lend ‘credence’ to their own perceptions that accountants are necessarily dishonest- manipulate transactions and events and cannot be trusted. It is interesting to note that such persons are mere inquisitors who do not even have an operational interest in accounting practice and the output thereof and others too, to whom the knowledge and practice of accounting are a closed book. The

lack of understanding of the role(s) accountants play in the accounting information chain has led the inquisitors, in their wisdom or lack of it, to erroneously ascribe role(s) that do not exist under extant laws to accountants. In Nigeria, for instance, accountants operate in a societal system that is powerfully constraining and which can be exogenously made and unmade through human actions and interactions. This situation is even made worse especially that accounting as a discipline, is implicated and practiced in all areas of human endeavour. Accounting mediates in more than just economic exchange relationships and contractual agreements. Accounting also mediates in social, cultural and political relationships and arrangements. To a degree far above average, we have accountants worldwide who have the integrity of heart, skillfulness of hand and divine will and operative in all the spheres of accounting practice. To that extent. I submit that if lying has become a fine art, it is not the hallmark of the accounting profession. None-the-less, I encourage all who practice or enjoy the services of accountants to join hands in this mood of the celebration of the ‘accountants day’ to ensure that the Letter and the Spirit of accounting practice represent the alignment of the head, the heart and the will of God in meeting stakeholder needs. This is essential in order to continue to and be seen to justify the public interest mandate that is written and inscribed in the heart of every professional accountant worldwide.

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The economic costs of corruption in Philippines

Dan Steinbock Dr Dan Steinbock is the founder of the Difference Group and has served at the India, China, and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http:// www.differencegroup.net/

n August, 500 kilos of shabu (methamphetamine), estimated at ₱4.3 billion (over $80 million), that entered the country was intercepted by the Bureau of Customs at Manila’s container port. The next day, authorities found similar containers, but not the drugs estimated at ₱11 billion (almost $210 million). In early November, former Customs intelligence officer Jimmy Guban, suspected member of a drug syndicate, was turned over to the Department of Justice after days of detention in the Senate. Accepted into the government’s Witness Protection Program, Guban is believed to be a vital witness in the smuggling into the country of billions of pesos worth of shabu. Unsurprisingly, Dr Dante A. Ang, chairman emeritus of The

Manila Times, has said that corruption has “become a way of life in high places in government.” While President Duterte’s campaign against illegal drugs has effectively interdicted the narco-state trajectory, he fears the country may still become “another Colombia.” If corruption and illegal drugs are two sides of the same coin, Ang asks: “Whom can President Duterte trust?” The short answer is: “Nobody.” From drug trade to illicit financial flows While illegal drugs entered the Philippines before the President Aquino III era, it was during his watch that drugs grew embedded with most Filipino neighborhoods. Yet, the drug scourge was downplayed by the mainstream media in the Philippines and largely ignored by international media, despite the expansion of the kitchen labs by drug syndicates, warnings by U.S. State Department, the Discovery documentary about drug leaders’ luxurious life in the New Bilibid Prisons and collusion by government authorities, including former Justice Secretary Leila de Lima. As a Google Trend search demonstrates, it was only after Duterte won the 2016 election and began the war against the drugs that Philippines discovered it had a drug problem. That, in turn, casts a long, dark shadow over the years when the country was ruled by the

Liberal Party. Of course, corruption is not a Philippines monopoly. Setting aside the lucrative multibillion dollar drugs business, illicit financial flows involve huge economic stakes that are not disclosed in national accounts or balance of payments figures. Rather, these flows typically comprise trade mispricing, bulk cash movements, informal transactions, and smuggling. According to research, illicit flows nearly doubled to $130 billion in emerging Southeast Asia between 2003 and 2014. Concurrently, their cumulative value amounted to more than $1 trillion. In country comparisons, Malaysia ranks highest in cumulative illicit financial flows. Between 2003 and 2014, it lost $420 billion in this way. Next come Thailand and Indonesia, while Philippines ranks at par with Vietnam. Each of the last two lost more than $90 billion in cumulative illicit financial flows during the period (Figure 2). Today, even Colombia is in a different league than Philippines in illicit financial flows. Between 2003 and 2013, Colombia lost “only” $15 billion in cumulative illicit flows. Philippines lost an estimated $75 billion more. The costs of corruption According to the IMF, the annual cost of bribery alone has been estimated internationally at $1.5 to $2 trillion (2% of global GDP). Yet, brib-

ery is just a part of the big picture. Historically, corruption that arises from the abuse of public office for private gain has been evidenced by powerful networks between business and government. These dark networks reflect the de facto privatization of public policy. Internationally, corruption has been found to undermine economic development: ‒ Since corruption weakens the state’s capacity to raise revenue and perform its core functions, it increases tax evasion. According to the 2017 UNU-Wider report (2013 data), tax evasion costs Philippines almost $7.4 billion annually, or 2.7% of its GDP. In these terms, the country ranks at par with Haiti, Morocco and India. ‒ By inflating costs in the public procurement process, corruption undermines the quantity and quality of public spending. In addition to procurement abuses, the pork barrel scam (PDAF) illustrates such challenges. In the Philippines, the history of such funds began already in the American colonial period but seems to have intensified following President Corazon Aquino’s creation of the Countrywide Development Fund in 1990. ‒ Because of lower public revenues, countries tend to rely more on central bank financing, which creates an inflation bias. In the Philippines, examples include recent inflation concerns that seem to have been

fueled by supply abuses and hoarding of rice and the consequent destabilized prices (rice smuggling had soared already in the Benigno Aquino III era). ‒ As corruption can even raise the cost of accessing financial markets since lenders factor in corruption, resources are allocated to rent-seeking rather than productive activities. In the Philippines, one cannot help but wonder why it was so important to focus on financial wealth rather than infrastructure investment in the pre-Duterte era. International precedents No country can or should tolerate a status quo, where growth and employment prospects remain subdued while a number of highprofile corruption cases undermine economic growth. Evidence from Singapore, Hong Kong and China demonstrates that anti-corruption struggle can be effective, but only when the anti-graft authorities report directly to the chief executive - not to government agencies, policymakers, police, or military. What the Philippines needs is effective zero tolerance toward corruption. • The original version was published by The Manila Times on Nov. 5, 2018.

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Frank Aigbogun editor Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

Monday 12 November 2018

Can government afford the new minimum wage?

fter a three days warning strike, the government has proposed to increase the minimum wage from N18, 000 to N24, 000. The labour unions have also climbed down from the initial N56, 000 they were demanding to a moderate N30, 000. After another threat of strike the government tacitly agreed to pay theN30, 000 demanded by labour only to begin to sing another song after labour had called of its planned strike just hours before the commencement of the strike. We agree with the labour unions that a review of the minimum wage is long overdue. The current minimum wage, set in 2011, was at a time the Naira exchanged with the dollar at N150.00. Presently, the exchange rate hovers around N360 to a dollar. It even went as high as N500 at a time in 2016. Clearly then, inflation has eroded the value of the naira and the minimum wage as it stands is a huge joke. In saner climes, minimum wages are reviewed at periodic intervals

to keep pace with inflation and the needs of the time. But that has clearly not been the case in Nigeria. The problem though, is not about reviewing the minimum wage but the capacity to pay. Even at the previous proposed N24, 000, the increase will push the federal government’s wage bill to N2.4 trillion, 90 percent of government’s total revenues in 2017. Last month, the budget office of the federation released the 2017 budget implementation report indicating that the federal government only realised half of its projected revenues last year and had to borrow N2.5 trillion from both the domestic and international markets to fund the deficit. The same thing is happening again this year and the government is borrowing to fund its budget. Recently the president sought permission from the National Assembly to raise a $2.86 billion Eurobond loan to fund its 2018 budget which has a deficit of N2.4 trillion and could even widen if ambitious revenue targets set out in the budget are not achieved, as has been the case for

the past three years. Sadly, a higher minimum wage is being proposed at a time the government is being urged to cut down its recurrent expenditure to be able to spend more on infrastructure. The situation of state governments is even direr. Before the recent upsurge in the price of crude oil, about 30 states of the federation were unable to pay salaries (the meagre N18, 000 minimum wage) and have to depend almost exclusively on bailouts to pay the little they were paying pay, like half salaries in some states or reduction in working days by some state governments. Meanwhile, the same NLC agitating for an upward review of the minimum wage has not been able to do anything to compel delinquent states to pay their workers the old minimum wage. The sad reality remains that as desirable as the new minimum wage is, the Nigerian federation (especially states and local governments) do not have the capacity to pay the amount. True, the labour unions and most Nigerians could point to the outrageous cost of running gov-

ernment especially the salaries and allowances of elected and appointed government officials as the reasons behind the dire financial situation of the country. As genuine as that complaint is, it will not increase the capacity of states to pay the new agreed minimum wage. Expectedly, many state governments are already service notice that they will be unable to pay the new wage with their current revenue expectations. We foresee the new minimum wage causing upheavals and labour unrests in many states of the federation. It is our considered view that rather than focusing on forcing the government to review the minimum wage, the NLC and other labour and trade unions, in addition, should join hands with those calling for the restructuring of the Nigerian federation along fiscally viable lines such that states will be financially and economically viable enough to maintain and pay its workforce without recourse to the federal allocation. Only a viable federation can ensure fiscally strong and stable states.

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Monday 12 November 2018

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BUSINESS DAY

In Association With

Too many cooks

Credit comes later Abiy’s law

Libya’s feuds cross the Mediterranean

Ethiopia’s re-education camps are open again The government is illegally detaining young men, to lecture them about the law

Italy will host a peace conference that is mostly about France

“

EACE IS FOR all of us—let us defend it.” These words, printed on a plain white T-shirt, seem innocuous enough. Yet not for Bereket, a 17-year-old lad from Ethiopia’s capital, Addis Ababa. On September 22nd he was arrested as he walked home from church with two friends. He and about 1,200 other young men were taken to a military camp for a month of “lessons” about the constitution and the rule of law. They were released on October 18th, after Ethiopia’s police chief

OR ONCE Italy’s populist government will be pleased to see a group of Africans cross the Mediterranean. On November 12th the leaders of Libya’s warring factions will gather in Palermo, the capital of Sicily, for a two-day peace conference. Italy has an interest in bringing order to its former colony. Libya is an important source of fossil fuels. Its Greenstream pipeline carries gas from western Libya to Sicily. Less welcome are the 647,000 migrants who are thought to have crossed the Mediterranean to Italy since 2014. Most set off from Libya. Their numbers have recently plummeted—just 22,000 arrived in the first ten months of this year, an 80% drop from last year. But they still rile Matteo Salvini, Italy’s de facto leader. Mr Salvini will have his work cut out. The situation in Libya is bleak, with the country split between rival militias and UN-led peace talks bogged down. One of the dignitaries in Palermo will be Fayez al-Serraj, head of the UN-backed government. Despite his lofty title, in practice he is little more than the mayor of Tripoli, the capital, which he controls only with the help of allied militias. One of them, from the nearby town of Tarhouna, attacked Tripoli in August over an economic dispute. More than 100 people were killed before the UN negotiated a ceasefire. Things are little better in the east, ruled by a general-turnedwarlord called Khalifa Haftar. Islamist militants still carry out car-bombings and assassinations, while General Haftar undermines state institutions in Tripoli. He controls the strip of coast near Sirte, where Libya’s main oil terminals are located (see map). They are meant to be operated by the Tripoli-based

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National Oil Corporation. In June, however, the general’s men seized them and announced that revenues would be sent to a rival oil corporation in the east. They withdrew only after America threatened to impose sanctions. In the south, meanwhile, ethnic Tuareg and Toubou militias are battling for control, and criminal gangs from neighbouring Chad prey on civilians. So, to put it mildly, things in Libya are not conducive to a peace conference—but Italy is more concerned with the situation in France. Both countries are jockeying for influence. Italy’s interests lie in western Libya, where both the gas pipeline and the migrant boats enter the Mediterranean. It sees Mr Serraj as an ally and has reportedly paid western warlords to stop migrant boats from setting sail. France is happier to work with General Haftar, whom it sees as more likely to stabilise the country. The French army

has deployed thousands of its troops to fight jihadists in five former colonies in the adjacent Sahel region. In May France’s president, Emmanuel Macron, hosted the Libyan rivals for his own summit. They agreed to hold elections by December 10th. That deadline was always delusional—even ignoring the violence, Libya lacks an electoral law. It also undermined the UN envoy, Ghassan Salamé, who wants Libyans to hold a national conference and draft a new constitution before holding elections. Both Italy and France have commercial motives as well. Libyan oil is cheap to extract and easy to export to Europe. Eni and Total, the Italian and French energy giants, have long competed to produce it. Eni is the largest foreign producer in Libya, but Total is starting to catch up. In March it acquired a 16% stake in the Waha concession in the Sirte basin. If the deal

goes through, it could produce 400,000 barrels per day in two or three years. Eni’s CEO, Claudio Descalzi, says he welcomes the “healthy” competition. “[Libya] benefits from this,” he says. The Italian government is less sanguine. It resents French involvement in a country that it sees as in its sphere of influence. Italian politicians accuse Mr Macron of helping General Haftar for Total’s sake. Other foreign powers are pushing their interests in Libya, too. Egypt and the United Arab Emirates have given military support to General Haftar, whom they view as an ally in their fight against political Islam. Russia, eager to expand its influence, has hosted the general in Moscow, treating him like a head of state. Now Mr Macron and Mr Salvini are using Libya as part of their own competition for leadership in Europe. The UN-led process has been agonisingly slow. But it remains the closest thing Libya has to a way forward.

said their “brainwashing” was complete. Bereket, like most of 3,000 people arrested in this way in September, was never charged. He was, however, given a commemorative T-shirt. The background to the arrests was communal violence, which raged in Addis Ababa for several days in September. According to the police, at least 28 people were killed in riots in the old city centre around September 14th. Many were Oromo, Ethiopia’s largest ethnic group. Shortly after that, Oromo activists held a rally to welcome the return of the Oromo Liberation Front (OLF), a previously banned rebel group that had fought for self-determination. After the event young men, some wearing OLF colours, attacked people in the city belonging to other ethnic groups, killing at least 58. The pattern of mass arrests followed by “re-education” has a long history in Ethiopia. Thousands were packed off to camps after demonstrations against disputed election results in 2005. Tens of thousands were detained during a state of emergency imposed in Continues on page 15

Monday 12 November 2018

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BUSINESS DAY

In Association With

La Clinique Chinoise

Chinese medicine is on the rise in Africa

Growing soft power is sometimes felt at the tip of a needle

Continued from page 14

N A HOUSE in central Dakar three Chinese men stand behind a glass screen. The wall is stacked high with pills, teas and powders covered with Chinese symbols and pictures of healthy models. There is something for everyone. Teas for kidney problems, creams for aches, pills for infertility and four claiming to help men with impotence. “It’s a revolution,” proclaims Aliou Ndiaye, who started working at the Chinese medicine shop three years ago. It now has four branches in Dakar. Senegal’s capital also has several smaller outlets and practitioners. “Many people are curious but I’m still sceptical,” says Ibrahim Sy, a taxi driver, who says his mother was cured of leg pain with tea. Senegal’s experience is part of a wider trend of traditional Chinese health centres opening across Africa. Clusters can be found in Nairobi and Dar es Salaam. Others have opened in Uganda, Ivory Coast and Congo. Their spread underlines China’s growing soft power in Africa. In 2000 when China held its first-ever Forum on

China-Africa Co-operation, a summit held every three years, traditional remedies were on the agenda. Two years later it hosted a conference in Beijing to discuss the topic. Many of China’s 48 Confucius Institutes in Africa teach courses in traditional medicine. Moreover, as many as 50,000

young Africans are studying in China, many on scholarships provided by the host government. Although only a small share are at medical school, many students return with a taste for acupuncture and herbs. Demand is also buoyed by China’s large diaspora in Africa, which some reckon has grown

to 1m people. One practitioner, Mame Awa Diop, studied traditional medicine in China before the Confucius Institute in Dakar asked her to set up a clinic. Business started slowly, she says. But outside her room several people sit in an orderly queue. “Oh, they’re coming,” she says.

Waking up behind the wheel

How the governors’ races went

The Democrats pay attention, and make gains

UNKY MUSIC blared as balloons and silver ticker-tape tumbled over a ballroom of gyrating Democrats. J.B. Pritzker, Illinois’s new governor, declined to strut as he greeted members of a noisy crowd. He had the air of a jovial, portly uncle presiding over a family gathering. Had his party outdone expectations? “We’ve had an excellent night,” he said. “I’m happy.” He toppled an unpopular, oneterm Republican governor, Bruce Rauner, thanks, in part, to dropping over $170m of his own money on the race. That is a remarkable (and record) sum even for an heir to the Hyatt hotel fortune whose assets exceed $3bn. Mr Pritzker’s largesse helped Democrats reach beyond urban strongholds to commuter suburbs such as Naperville, an hour’s drive from Chicago. Democrats won a supermajority in the Illinois legislature. His efforts are emblematic of a wider, and belated, push by Democrats. For much of the past decade the party neglected races for state legislatures and governors’ mansions (see charts). “We were asleep at the wheel,” concedes an activist. In contrast, Republicans grasped the strategic importance of state legislatures, which in many places have the power to gerrymander. Republi-

can candidates ground out statelevel victories in Wisconsin, Ohio and Michigan that prefigured Republican national gains in such places in 2016. The Democrats’ neglect is over, judging by spending on state-level races this year. Local parties reportedly devoted over $2.2bn to such races, not far off the $2.4bn for congressional campaigns. Democrats won solid returns: seven new governorships, for a total of 23 states. That matters for three reasons. First, because governors shape policy. Some new ones will now roll out expanded Medicaid, adding to the 33 states that already took extra federal money under the Affordable Care Act (aka Obamacare). Tony Evers, who

squeaked to victory in Wisconsin, Janet Mills in Maine, and Laura Kelly, who delivered a shock win in usually Republican Kansas, have all vowed to do so. The effects of this will be farreaching. Figures from the Kaiser Family Foundation suggest that in these three states, plus Idaho, Nebraska and Utah (where voters backed referendums on expanding health care) an extra 424,000 people will become eligible for insurance. If all were to sign up, the average (non-elderly) adult population without insurance would fall in those states to just 6.5%, from over 11% today. Democrat-run states are also likely to rethink prison policies and boost education spending, not least where new governors like Mr

Ethiopia’s re-education camps are open again...

Evers, or Tim Walz in Minnesota, are ex-teachers. Second, the governors’ races point to which figures might prosper in future, national elections. Rich, moderate and female candidates did well for Democrats. In Colorado, Jared Polis became the first openly gay governor. Andrew Gillum, the African-American mayor of Tallahassee, ran a strong, left-leaning campaign in Florida focused on young, urban and minority voters. But he lost to Ron DeSantis, who called him a radical socialist. The Republican’s crude comments, such as warning that his opponent would “monkey this up”, did not backfire. Many voters, in Florida at least, warm to a conservative. Last, the new crop of governors will influence how future elections are run. In Georgia, Kansas, North Dakota and elsewhere, state governments were accused of trying to suppress minority votes. That should now be less likely, at least in Kansas. And after the census in 2020 state legislatures will draw up plans for redrawing congressional districts. Governors, who have veto powers, in theory could insist on fairer voting. More probably they will prove partisan, making Florida redder and Illinois more resolutely blue.

2016 to curtail protests against the ruling party. They were lectured by military officers on subjects including the “Ethiopian Renaissance”, the perils of neoliberalism and the supposed threat of Western-sponsored “colour revolutions”. With the appointment in April of Abiy Ahmed, the country’s reformist prime minister, such repressive tactics had seemed a thing of the past. Abiy has freed thousands of political prisoners and begun rewriting some of the country’s most draconian statutes. He often preaches the importance of the rule of law. The arrests in September were the antithesis of this. Bereket and his peers were detained without a court order or even an explanation. Many seem to have been picked up at random. “I feel like a second-class citizen,” says Kassahun, a 37-year-old homeless man on whom the irony of being taught the constitution while being detained unconstitutionally was not lost. “I consider it propaganda,” he says. The incident reveals subtle changes in the once brutal Ethiopian state. Many detainees were surprised not to be beaten. “No one touched us,” says Yazid, a 27-year-old. He and others even spoke positively of their civics lessons. “I learnt human rights are inviolable,” he says. On October 18th the prime minister admitted publicly that most of the arrests had been a mistake. Although he has tried to distance himself, it is implausible that Abiy did not approve the police’s actions. It is likely that he felt under pressure from his party to show he could act firmly against unrest. Despite the talk of a new era in Ethiopian politics, the same party remains in power. The ruling party is “trying to bring something new,” says a former journalist. “But their old self is still intact.”

BUSINESS DAY

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Monday 12 November 2018 In Association With

How does your garden grow?

Africa needs a green revolution Governments can help, but need to get their policies right

ETAHUN SHUMULO is what the Ethiopian government calls a “model farmer”. In the past he would toss seeds at random over his fields near Butajira, in the arable south. These days, using a plastic bottle in which he has cut a small hole, he plants them in pencilstraight lines. To keep the soil healthy he rotates his crops each year. Thanks to hardier seeds from the local agricultural office he now grows mostly maize, Ethiopia’s cheapest staple. “If you do everything the government tells you, you can grow more of it every year,” he says. After feeding his family of nine, he sells more than half his produce. Farmers like Getahun are sowing the seeds of transformation. The more they grow, the more money they have. The more they spend, the more jobs they help create in market towns and cities. Meanwhile, many rural people are giving up farming entirely and moving to the towns. On average, they work longer hours than they once did in the fields, and are more productive. Something akin to Asia’s rural development may, at last, be happening in parts of Africa. Since 2002 the proportion of African workers employed in agriculture has fallen from 66% to 57%. Yet the real value of agricultural production has grown at an average pace of 4.6% a year, double the rate between 1970 and 2000. Even so, the region is lagging behind. Most of the

increase comes from using more land, rather than improved productivity. A green revolution—the increase in agricultural yields seen in most parts of the poor world apart from Africa since the 1960s—is unlikely to succeed if government is obstructive. “Government is the most important partner,” says Boaz Keizire of the Alliance for a Green Revolution in Africa, a thinktank with its headquarters in Kenya, “but in Africa it is the weakest link.” Ideally, governments would pay for public goods, such as research and roads, and regulate markets lightly but fairly. Too often in Africa, they fail at these basic tasks. In Uganda, for instance, the market is so awash with understrength bags of fertiliser and feeble seeds that farmers are reluctant to invest in them. Many are also unable to get their crops to the market because of bad roads. Earlier African regimes were even worse. After independence many squeezed farmers mercilessly, forcing them to sell their crops for a pittance through state-run marketing boards. (The aim was to provide cheap food for city dwellers—the result was to deter investment in farming and encourage smuggling.) Then, in the 1980s, many African states liberalised trade, cut spending on agricultural research and subsidies, and hoped for the best. In 2003, with farm yields stagnating (see chart), the rhetoric shifted again. Governments pledged to allocate

10% of their budgets to agriculture. But by 2016 only ten countries were meeting that target, out of 44 with available data. Malawi tops the public-spending charts, consistently allocating over 15% of its budget to agriculture. But much of that is swallowed up in a costly system of seed and fertiliser subsidies. The scheme has raised yields. It has also lined the pockets of the well-connected businessmen who win procurement contracts. It has had unintended consequences, too. Farmers who slap cheap fertiliser on their fields grow fewer nitrogen-fixing legumes, a cheap and green way of improving the soil. Ethiopia, another big spender, offers a different approach. Farming output has grown by 6% a year since 2000, according to official figures,

more than three times the rate in Malawi. Subsidies are relatively low. Instead, the government has pumped money into research, infrastructure and training. Its network of 72,000 “development agents”—experts sent to teach modern farming techniques—is Africa’s largest. They knock on Getahun’s door several times a month. “Sometimes they will even visit my fields when I’m not there,” he says approvingly. “They’ll ring me if they find something wrong.” Reds in the seed beds Why do approaches vary? Some researchers, such as Robert Bates and Steven Block of Harvard and Tufts universities, think that democracy improves policies by giving rural farmers more of a say. It does not always work out that way. In Malawi politicians

use wasteful subsidies to win votes. By contrast, in authoritarian Ethiopia the government worked to avert the rural discontent that fed rebellions against its communist predecessors. It sees agricultural development as a way to build legitimacy. Yet Ethiopia is not a model to emulate. In practice, its development agents “do everything” from tax collection to mobilising locals to attend meetings and vote for the ruling party, sighs an agricultural expert. They are part of an oppressive system of state control, which works well in some places while failing spectacularly in others. In recent years rural state structures have been among the first targets for violent unrest. Elsewhere, poor governance has derailed policy altogether. In Uganda the state’s training services for farmers have crumbled, along with the waning popularity of Yoweri Museveni, the president. In a quest for votes the focus has shifted from training farmers to handing out inputs. Since 2014 distribution has been run by the army, creating jobs for veterans. “It’s a military operation,” says one of the officers in charge, “but with no bombs or bullets.” Farmers complain that seedlings arrive late or do not grow. Grace Apiyo, a 30-year-old farmer in the north, says she has never received any help or advice from the government. The value added by the average Ugandan farm worker has fallen by a quarter since 2002.

What goes up

Strong growth data obscures a probable slowdown to come America’s economy is being pulled in many directions

INANCIAL MARKETS may have wobbled in recent weeks—the S&P 500 fell by 7.3% in October. But America’s real economy still seems to be in rude health. Figures released on October 26th showed economic growth of 3.5%, at an annualised rate, in the third quarter of 2018. Most economists had expected a sharper slowdown after the 4.2% expansion recorded in the preceding three months. On just one other occasion since the financial crisis, in 2014, has America clocked up two consecutive quarters of such speedy growth. Can it last? Some fear not. The economy has been given temporary fizz by President Donald Trump’s tax cuts. Though these will be in place for some time, the impact on growth may not last. Together with February’s budget bill, they will boost annual GDP growth by 0.6-0.8 percentage points by the end of 2018. But the impact will fade to 0.3 percentage points in 2019 at best, estimate Karen Dynan and Jason Furman of the Peterson Institute for International Economics, a

think-tank. Most forecasters expect America to return soon to a growth rate close to 2%, with the main legacy of the tax cuts being weaker public finances. Boosters retort that the tax cuts will unleash permanently higher growth and investment. Although an ageing population is a drag, a hot economy could enable productivity to grow faster. That would provide the recovery’s final missing ingredient and support growth even as the immediate effect of fiscal stimulus

wears off. At first glance the growth data do little to settle this debate. Over the first half of 2018 taxes on personal income were lower as a share of GDP, compared with the same period in 2017, by around 0.4 percentage points, and those on corporate income by around 0.7 percentage points. In the third quarter government taxation and spending contributed around 0.7 percentage points of the overall 3.5% growth rate, according to estimates by the Brookings

Institution, a think-tank (see chart). Though this is the government’s biggest contribution to real GDP growth since 2010, the economy would probably still be enjoying an uptick in growth without it. Yet a closer inspection offers more support for a pessimistic view. Consider two components of growth: investment and trade. Nonresidential investment was disappointingly weak in the third quarter, particularly given the economy’s broader strength. Just 12% of 116 businesses recently surveyed by the National Association of Business Economics reported that they had increased their investments in response to the tax cut. Investments take time to plan and the data are noisy. But Mr Trump’s tax cut was supposed to lead to a sustained investment bonanza. There are few signs of that so far. There may be trouble in the housing market, too. Private investment in housing, including spending on equipment by landlords, fell for the third consecutive quarter. Explanations include demand constrained by affordability, as well as

supply constrained by pricier land, a shortage of immigrant labour for construction and tariffs that have driven up costs. Changes in the tax treatment of housing and interestrate rises may matter, too.

Monday 12 November 2018

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BUSINESS DAY

Monday 12 November 2018

BUSINESS DAY

CityFile Anambra empowers 100 youths

L-R: Timothy Olawale, directorgeneral, designate, of Nigerian Employers’ Consultative Association (NECA); Godwin Obaseki, governor of Edo State; Celine Oni, director, Learning and Development, NECA; Folusho Samuel, director, Projects, NECA, and others during Obaseki’s official visit to NECA in Lagos.

Emmanuel Ndukuba, Awka

Rivers to force flood victims out of IDPs’ camps …as opposition camp flays Wike’s order

Ignatius Chukwu, Port Harcourt

housands of displaced flood victims may be forced out of the Internally Displaced Persons (IDPs) camps in Rivers State following an order to that effect by Governor Nyesom

Wike. The move has however attracted condemnations from the Tonye Cole Campaign Organisation (TCCO). Independent reports however said the IDPs could not leave the camps for now because the tidal waves that brought coastal flooding to add to river flooding from up country are still strong. Cole had paid a visit to the IDPs and extended support but an order flashed from the state government ordering the IDPs shut. Before now, voices from the affected areas had accused the state government of neglect and even threatened to relocate to the Government House in Port Harcourt and share sleeping place with the governor. The APC governorship candidate donated

relief materials and cash worth millions of naira to the IDP camp in Obedum community and Odual kingdom in Abua/Odual local government area and promised to do all within his powers and in synergy with the Federal Government to provide a permanent solution to the flooding that annually ravages the area and other parts of Rivers State as soon as he is voted in as governor. The visit of Cole to help the victims may have been seen as undue advantage to the opposition, thus the shut-down order. Speaking in Port Harcourt, the directorgeneral of the TCCO, Chidi Lloyd, took a swipe at Governor Wike for allegedly choosing to compound the sufferings of the victims by ordering the immediate closure of the camps instead of visiting the people and providing them much needed succour. He said: “It is condemnable for Governor Wike to ignore calls by well-meaning people to visit suffering flood victims in the Orashi and other areas in Rivers State. Instead the governor has ordered that the IDP camps be

closed down even when communities like Odiereke, Akinima and others are still submerged in water with reptiles roaming freely and occupying homes. “We expect a responsible government to cater for the needs of the flood victims and when the water has completely receded, carry out a comprehensive health audit and possible fumigation before the victims move back to their homes. These our brothers and sisters are likely to face several challenges such as waterborne diseases, rodents and possible snake bites. Even some of their homes may have weakened to the point of collapsing with all the attendant dangers to life,” said Lloyd. Speaking further, Lloyd appealed to the flood victims about to vacate the IDP camps not to allow their spirit to be broken. “But behind every bleak moment in our lives is usually a bright silver lining beckoning. That silver lining is Tonye Patrick Cole, the governorship candidate of the APC who, by the grace of God, shall become the governor of Rivers State come May 29, 2019,” he said.

Customs seizes 12 illegally imported exotic cars, others

ederal Operations Unit (FOU) zone ‘C’ of the Nigeria Customs Service, Owerri,has seized 12 illegally imported cars and other contraband goods with Duty Paid Value (DPV) of ,N240 million in the last one week. Kayode Olusemire, the unit controller, announced this at weekend in its Benin office while taking journalists round the goods confiscated along Benin axis. He said that three suspects were arrested in connection with the seized items, and are helping the Customs with information. Olusemire listed the seized items to include an Iveco truck with a duty paid value of N4.05 million. The truck, he said, was also carrying 633 bags of 50 kg foreign rice valued at N16.20 million, and concealed with cartons of Lucozade Boost and Ribena worth N1.82 million, all totalling N22.08 million. Also impounded was another Iveco truck with DPV of N4.05 million, with 1,680 crates of 33 beer worth N4.44 million, and 175 bags of 50kg foreign rice with DPV of N4.48 million,

totalling N12.96 million. The Customs also impounded a Peugeot Boxer with DPV of N1.44 million, containing 131 sacks of Indian Hemp, valued at N4.13 million, Toyota Camry 2010 model with DPV of N5.14 million and a Volvo XC 90 worth N3.58 million. Equally seized by the Customs was a Toyota Venza 2013 model valued at N12.91 million, Mercedes Benz GLK 350, and Mercedez Benz ML 350 with DPV of N12.95 million and N5.82 million, respectively and a Toyota Tundra valued at N13.37 million. Others are Mercedes Benz ML 350 valued N20.90 million, Toyota Hilux with DPV of N13.37 million, Toyota Tacoma worth N13.39 million, Toyota Highlander valued N17,91 million and a Range Rover HSE, worth N30.73 million aside others. Olusemire warned people against taking illicit drugs, saying that most of the social vices such as kidnapping, Boko Haram activities and armed robbery were results of taking such drugs. He also urged companies and individuals

to desist from planting such drugs. On the impounded cars, the Custom zone ‘C’ boss said that the owners of the cars evaded paying legal duties on them and appealed to importers to always go to the ports or Customs offices nearest to them to pay their duties. “The Customs is ready anytime and anywhere to tackle smugglers. There’s no more heaven for smugglers. No matter the system they use, we will fish them out. “Nigerians find it difficult to comply with the law. The Customs Service is now in a new horizon; officers are being motivated and trained, it is no more business as usual. The paradigm has shifted and the officers are complying with it. “Some people are not supporting Customs officers but what we are doing is for the benefit of all,” he said. The comptroller solicited the help of the media in information dissemination on the negative impact of smuggling and the public in divulging useful and intelligent information that would assist the service do its work well.

ver 100 youths from Anambra central senatorial zone have been selected for empowerment. The youths participated in the justconcluded three week skills acquisition training held simultaneously in the three senatorial zones. The empowerment programme was part of the state government’s plan to equip the youths with skills for sustainable future. Speaking, Bonaventure Enemali, Anambra commissioner for youths empowerment and creative economy, said the Governor Willie Obiano-led administration understands the role of youths in nation building. ``Due to Obiano’s vision concerning the role of the youths, he decided to empower them for future challenges,” he said. The commissioner, who was represented by is permanent secretary, Kelly Uzoh, urged participants to take what they learnt serious, and put them to use. ``The knowledge acquired during this training if put to action will enable government to achieve the aim of the programme,” Enemali said. One of the facilitators, Chinwe Etuga, expressed satisfaction with the level of comportment by the participants as well as support from the host community which she said helped them achieve success. In an interview, the president-general Abba Town Union, Benneth Aniekwe thanked Obiano for empowering the youths. Rosemary Maduka, who spoke on behalf of the participants, thanked the government for the gesture and the facilitators for imparting knowledge to them. ``We learnt a lot of things that will help us to become responsible members of the society,” she said.

Man bags 5 months for stealing phones

Magistrate Court in Minna on Friday sentenced a 28-year-old man, Mohammed Yakubu, to five months imprisonment for stealing two phones. Yakubu, who was arraigned on a twocount charge of criminal trespass and theft, had pleaded guilty but appealed for mercy. In her ruling, the magistrate, Sa’adatu Gambo, sentenced the accused to five months in prison. The police prosecutor, Ahmed Ali, had earlier told the court that Danlami Kassim and Christiana Auta, both complainants, reported the matter at the Tudun Wada Police Station on November 6. Ali quoted the complainants as alleging that the convict trespassed into their respective offices at the state secretariat, Minna, and made away with their phones. He said both phones were recovered from the accused during police investigation. The offences contravene sections 348 and 287 of the penal code law. He prayed the court to try Yakubu summarily in line with section 157 of the administration of criminal justice law. (NAN)

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BUA completes construction of 3mmt cement plant in Edo ODINAKA ANUDU

L-R: Uche Enumah ,secretary Society of Occupational and Environmental Health Physicians of Nigeria SOEHPON ; Effiem Abbah, Vice President; Jukka Takala, President, International Commission on Occupational Health ICOH; Chinonye Nwañkwo, assistant secretary, SOEHPON, and Okon Akiba, president, during the 2018 SOEHPON conference as part of activities to mark its 40th anniversary in Lagos. Pic by Pius Okeosisi

key regional markets across Nigeria, BUA Cement has in no time become the industry leader in capacity utilisation as well as maintaining a strong presence and brand leadership position in regional markets where it operates, “Rabiu said. “The nature of the formulation of BUA Cement’s products and the product strength has seen it dubbed,

‘King of Strength’ by block makers and others in the construction industry in Nigeria,” he added. In addition, BUA Cement has also entered into a partnership with the Standards Organisation of Nigeria (SON) and Industrial Training Fund (ITF) to train thousands of block makers across Nigeria on the proper mix and techniques for block-making to reduce

the rates of building collapse in Nigeria. The completion of the new 3million mtpa BUA Obu II Cement Plant will see BUA’s installed capacity rise to 8million metric tons by the time it fully becomes operational in December 2018. The plant has the capacity to run on multifuels – gas and heavy oils— and will give BUA Cement a stronger foothold in the South-South and South

East markets in Nigeria where it has become the preferred brand of cement. By virtue of its location in Okpella, Edo State, BUA Obu Cement plants are five hours away from all the major markets across Nigeria. BUA Group announced last year that it built a 50km pipeline to carry gas to fire its gas turbines at its Obu Cement Plant.

First Access partner Vlisco Group to invest $200m ChamsAccess, for digital credit to micro lending in Nigeria’s cotton industry N TONY AILEMEN, Abuja

lisco Group’s plan to invest an estimated $200 million in Nigeria’s cotton industry, which is expected will create 700,000 jobs has been applauded by the Federal Government. President Muhammadu Buhari thanked the chief executive officer of Vlisco Group, David Suddens, for the initiative, adding that his administration was already making efforts to revive the ‘good old days’ when the cotton and textile industry employed hundreds of thousands of Nigerians. Buhari while receiving the Viisco team at the Presidential Villa, Abuja on Friday, said he was excited at the prospect of reviving the industry while had hitherto provided jobs for millions of Nigerians I am very much aware of your company’s effort especially your investments in the textile industry, and it is one area that we are trying to develop because it will

UAC strengthens capacity with Human Resource Director

ess than six months after commissioning its 1.5million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State, BUA Cement has announced completion of its newest Obu plant in Edo State, which has a capacity to churn out 3 million mtpa of cement annually. This will bring the total capacity of BUA Obu cement operations to 6 million tonnes and move the entire group’s installed capacity to 8 million mtpa. A date for commissioning will be announced soon, according to a statement from BUA Group. Speaking at a business forum recently, Abdul Samad Rabiu, founder and executive chairman of BUA Group – owners of BUA Cement— said that the completion of BUA’s Obu Cement second line puts BUA Cement in prime position to become Nigeria’s second largest cement producer by volume in the shortest possible time. “Through a strategic combination of BUA Cement’s newer, more energy efficient plants and the proximity of our factory locations to

create employment and boost agriculture. ‘’To get cotton to grow again in the country is like going back to the good old days when the textile industry used to employ more than hundreds of thousands of people. ‘’I am very excited about the prospects of reviving the industry because it will keep farmers busy, create employment which brings more security, help the economy, transfer of technology and of course we have a large market to absorb the products,’’ President Buhari reiterated Nigeria’s commitment to forging a stronger economic partnership with the Netherlands, assuring the Dutch investor that the Nigerian authorities will continue to do the utmost to keep smugglers at bay at borders. In his remarks, Suddens told the President that the 172-yearold company plans to use cotton grown in Nigeria for production. ‘’I want a new strategy that brings Vlisco manufacturing to Nigeria. I want to change the supply chain from Asia to

Nigeria. ‘’For the total supply chain for cotton, textile and garment industry from weaving, spinning, printing to retail, we want to use Nigeria cotton and we have already started to encourage the creative industries in the country to find a voice and give them a platform across the world. ‘’I am convinced that it is time for the textile industry to move from Asia to Africa, ‘’ he said. Also speaking, the Dutch Ambassador to Nigeria, Robert Petri told President Buhari that the company’s visit was a followup to his successful visit to the Netherlands in July, during which he met with Chief Executive Officers of Dutch companies. ‘’Also during that visit, a Memorandum of Understanding was signed between our two countries seeking more intensified cooperation. After that visit, there were more successive visits by top Dutch officials to Nigeria. ‘’This shows that we are seriously committed to furthering our collaboration,’’ Petri said.

ew York based fintech First Access, has partnered a foremost Nigerian Fintech Company, ChamsAccess Limited to deliver digitized and automated credit solutions to microlenders. The solution is a software platform that allows micro lenders anywhere to digitize their entire lending process. Because of its flexibility, the platform can replicate existing processes and accommodate a wide range of needs around origination, approval, monitoring and collection. In this way, First Access provides an easy way for traditional institutions to enter the digital world, driving faster growth and strong risk management practices. Lenders can build in their own analysis and scoring, reducing paperwork and customer acquisition time, and adding transparency to the risk management process. Combining quantitative and qualitative data from multiple sources, the platform provides additional visibility, stability and control for managers. The technology is affordable and easy to adopt. ChamsAccess, the local/implementation partner here in Nigeria, will provide the necessary support for the software. ChamsAccess and First

Access will help local institutions embed their loan products, policies, brand, staff roles and more directly into their accounts on the platform. Speaking at the sign-off ceremony, Dumebi Obodo, chief executive officer of ChamsAccess Limited, expressed his excitement at the development, explaining that the unique and highly affordable software-as-aservice application is designed for extreme flexibility of data sources - it enables micro lenders to incorporate nearly any source of customer data via API or to collect it manually offline, which is especially relevant in the Nigerian market.

he Board of UAC of Nigeria Plc has announced a new leadership in the company’s Human Resources Department with the appointment of Vitus Chidiebere Ezinwa as the group human resources director. E z i n wa, a s e a s o n e d business manager and human resource professional, is coming to UAC with a formidable pedigree and rich experience gained from leading multinational corporations. He holds a Bachelor’s degree in Sociology/Anthropology from the University of Nigeria Nsukka, MBA in Management from Lagos Business School, a Masters in Applied Business Research and a Doctorate in Business Administration, both from Swiss Business School, Zurich, Switzerland. Ezinwa worked as Group Human Resources Director for Promasidor Africa; Human Resources Director, Coca-Cola Nigeria & Equatorial Africa with responsibility for 10 countries and Human Resources Director for British American Tobacco, West and Central Africa covering Ghana, Benin, Niger and Togo. He was also the Group Human Resources Director for Tropical General Investments (TGI) Group. He is a member of the Advisory Board of Afterschool Graduate Development Centre and the Institute of Directors as well as a Fellow of the Chartered Institute of Personnel and Development (CIPD) UK. He is a co-founder and Director of HR Network Africa and was, until 2014, a member of the Lagos Business School’s Advisory Board.

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COMPANIES & MARKETS Energy360 Africa CEO sees consumer focus shaping downstream sector DIPO OLADEHINDE

n order to be relevant in the next era of digital transformation, firms in Nigeria’s oil and gas dow nstream s e ctor need to be more customer centric to grow profitability. Speaking at the 12th Oil Trading and Logistics Africa Downstream Week which was a convergence of leading players in Nigeria’s oil and gas sector, Abayomi Elebute, chief executive officer of Energy360 Africa Limited said firms today need to focus on technology, innovations and address issues concerning the dynamic nature of retail customers. “The king of the retail space in the downstream sector by 2030 will be the oil and gas firms which are the most customers centric; who focuses on the needs of customers rather than just supply trends. According to Elebute Elebute said with technology, firms will be able to keep track of how many customers come into their fuel stations to transact, what time and when

they need their fuel, what their actual needs are and how to use customer’s feedback to grow revenue. “A digital culture allows people to drive results faster, it also attracts better skills; businesses who do not invest in digital transformation will start crumpling in the next few years” Elebute told the audience. The CEO of Energy360 warned that if firms in the downstream sector continue to focus on the products and less on the customers it will not only limit their expansion but will also limit their profitability. Abayomi Elebute noted that just as we have witnessed the tremendous growth in other sectors like telecoms, CEOs and business managers in the 21st century need to invest in digital transformation strategies that will help develop and transform them to meet the modern day needs of their customers. He acknowledged that in the retail oil and gas space, Energy360 has competitively changed the dynamics of oil

and gas businesses by allowing CEOs and stakeholders to instantaneously control their business without allowing fellow competitors beat them to it. “Data is the new oil, if you don’t invest in understanding your data, you cannot grow; surpassing expectations,” Elebute said. Energy360 said it’s well positioned to provide services for firms operating in the downstream sector which will protect their revenue and improve margins through elimination of losses from fraud and leakages. “Energy360 provides systems that provide real time data from retail fuel stations, fuel points (dumps) and trucks supporting the growth of data driven decisions within organizations and fostering the optimization of business processes. Our systems allow businesses to change pump prices remotely, monitor inventory and sales remotely, track replenishment and supply processes and a host of other functions” CEO of Energy360 said.

Consolidated Hallmark promises prompt payment of claims to customers MOESTUS ANAESORONYE

nderwriting firm, Consolidated Hallmark Insurance (CHI) Plc has promised its teeming customers nationwide of prompt claims settlement and service delivery, saying, it was determined to increase insurance penetration and acceptance in the country. Eddie Efekoha, managing director/ CEO who stated this at an Interactive Session with Insurance Brokers in Lagos, also promised its shareholders good returns on investment, adding that CHI is a law-abiding company that doesn’t give room for sanctions from regulatory authorities for infractions. He noted that the insurer is professionally run and always abide by the ethical standard of insurance profession, stating that the underwriting firm has paid dividend seven times in the last 10 years, while it has settled all its claims. According to him, “As a company, we always

strive to improve by delivering exceptional services to our clients. We have paid all our claims in the last 11 years. Nobody has taken us to court on the account of nonsettlement of claims. On a year-on-year basis, the claims we have paid have continued to increase, yet, we have been paying them.” Promising that Consolidated Hallmark will not relent in the discharge of its duties as expected, he said, the insurer is judicious in the way it invest and utilise shareholders’ funds, noting that though the company might not have declared bogus profit, it has consistently declare profits over time. To increase its bottom line and reap from the huge insurance potentials in the country, Efekoha, who is also the President, Chartered Insurance Institute of Nigeria (CIIN), said, CHI has redeveloped its strategy, leveraging on technology to give better and seamless services to its relevant stakeholders. “We might not have big capital, but we have the competence. We are the

leader in Aviation, Marine and in Oil and Gas insurance businesses and the industry can attest to that. Very recently, we have paid a major claim. On the 19th of April, 2018, we have a marine claim of N2.1 billion of which we are the lead insurer and before October, 2018, the claim was paid. We don’t value investment income over that of claims, even though, we need it to reward our shareholders,” he pointed out. He perceived the recent threat by the National Assembly to instruct Securities and Exchange Commission(SEC) to close down the company, as an uniformed decision, saying, his company has done nothing wrong to warrant such. He applauded the brokers who have consistently become the backbone of the company by bringing their insurance businesses to Consolidated Hallmark, disclosing that the firm will always come out with innovative products and services that will suit the needs and yearnings of the insuring public.

Livestock247.com leverages technology drive herds market SEYI JOHN SALAU

igeria’s first livestock e-commerce platform launches animal identification and traceability technology to compliment government’s efforts of regulating, structuring, transforming and promoting investments in the livestock sector of the economy. The platform is structured to bring together the livestock stakeholders, connecting buyers, sellers, ranchers, livestock merchants, veterinary professionals, butcheries/abattoirs, haulage and logistics companies and financial services providers to ensure the customers have cost effective, convenient and healthy livestock available. Amina Oyagbola, the chairperson of Livestock247.com said, the livestock market has for

long cried out for standardization, rationalization and structure to reposition the health and economic wellbeing of our communities, nation and Africa at large. According to her, livestock247.com seeks to substantially limit the dangers inherent in the distribution, handling and preparation of livestock by simplifying access to health, fit for slaughter livestock. “This is of particular importance because the World Organisation of Animal Health Countries (OIE) has reported that 60 percent of existing human infectious diseases are zoonotic diseases that transmit from animals to humans,” said Oyagbola. Ibrahim Maigari, the CEO of livestock247.com said the platform is enhancing and facilitating financial inclusion by bridging the livestock market gap, thereby taking livestock production to the main-

stream. According to Maigari, the 2011 Agricultural survey released in 2016 by the Federal Ministry of Agriculture reveals that 95 percent of the national herd is under pastoralist and small holders’ management, hence justifying the need for transformation and intensification of production. “…Nigeria cannot legally export a kilogram of beef today before livestock247; with livestock247, you can just buy off the platform and start export,” said Maigari. “This is a major disruption of livestock market in Nigeria. The application of technology to buy livestock is good for the economy, the people, and food security. It’s important we look at other industries also; on how to use technology to solve real world problem,” said Hakeem Fahm, the Lagos State commissioner for science and technology.

Monday 12 November 2018

COMPANIES & MARKETS Business Event

L-R: Bolarinwa Onaolapo, Nigerian content industry collaboration manager, Shell Nigeria Exploration and Production Company, Hakeem Fahm Popoola, Commisioner for Science and Technology, Lagos State and Johann Pretorius, Director, Training, SAP Training and Development Institute, at the SAP skills for Africa training graduation and network in Lagos. Pic by Olawale Amoo

L-R: Akinbobola Oluwatunmise, student, Epe Senior Grammar School, overall winner of inaugural Edition Of Tax Debate For Lagos Secondary Schools; Akinyemi Akintomide, deputy director of education, Education District VI, Oshodi; Morenike Babington Ashaye, founder/president, International Centre For Tax Research and Development, and Dena - Rose Ajayi, chairperson, Society For Women In Taxation (SWIT) Lagos Chapter, at the inaugural Edition Of Tax Debate for Lagos Secondary Schools, in Lagos.

L-R: Princess Banke Ademola, director of music, MUSON; Daniel Taylor, countertenor and Professor of Voice at University of Toronto; Ellen Mcateer, Canadian Soprano and Emeka Nwokedi, director of music and choir conductor, Muson at the masterclass hosted by MTN Foundation in Lagos

L-R: Bimpe Carrena, board member, State Universal Basic Education Board (SUBEB); Wole Adeniyi executive director, operations; Ngozi Atiomo, zonal operations manager, Lagos Island, Demola Sogunle, chief executive, all of Stanbic IBTC Bank Plc; and head teacher, Bethel Primary School, Akinsanmi, during the commissioning and handing over ceremony of renovated and newly constructed classrooms, sanitary facilities and other projects at the school by Stanbic IBTC Bank, personal and business banking Operations Team as part of the bankâ&#x20AC;&#x2122;s CSI initiative in Maya, Ikorodu, Lagos.

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James Momoh

BUSINESS

Chairman/CEO, Nigerian Electricity Regulatory Commission (NERC)

Interview with Public Sector Leaders

‘NERC is looking for collaboration through competition’ In 2012 Nigeria had one of the lowest levels of energy use in the world. But in 2013, Africa’s most populous nation embarked on a massive reform and privatisation of the power sector, which gave birth to the Gencos, TCN and DisCos. In this exclusive interview, James Momoh, chairman and chief executive officer of the Nigerian Electricity Regulatory Commission (NERC) spoke to BusinesDay’s OLUSOLA BELLO and STEPHEN ONYEKWELU on the milestones attained and the road ahead for the Commission. Excerpts:

How is your tenure as Chairman/CEO impacting the Commission? As an engineer and I take pride in being one, who has worked through the trenches, who has practised and theorised it, I feel committed that Nigeria cannot be in darkness. We would have wasted our time as career engineer and those of my colleagues who work as lawyers and rate calculators at the commission if we fail to turn things around.

energy space, to be available, accessible, and affordable, to be reliable, there will be massive challenge. The energy space as I see it touches the transportation system, the financial system, agriculture and health to mention only these ones.

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Customer education is something we are very serious about too because up to now, the customers do not know their rights and how to save energy by simple things like turning off the lights when you do not need them

To turn things around is a major challenge because some of the problems there predate us. But we were invited to make a difference and that difference is our call to order and service every day. In this light, we started by asking ourselves, what the low edges or low hanging fruits, that we can pluck to make some immediate impact in the lives of customers? We found many of them. One, we realised that customers complain every day about how estimated billing is done, being overcharged and not having reliable power supply. They also complain about fallen high

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be a vertically integrated utility company and that the sector needed to be unbundled and we did so. This was how we got the electricity generating and distributing companies, of course we inaugurated the management of Transmission Company of Nigeria. To sustain the gains of privatisation, you need a regulator that creates a level competitive playground by ensuring the quality of service delivery, affordability and reliability. This also entails ensuring customer satisfaction and keeping electricity tariffs competitive so that customers are able to pay their electricity bills. When Distribution Companies (DisCos) are not remitting money, we must speak out. We want to be measured based on metrics applicable to our peers globally and around Africa. We want to rank well among peers based on objective indices. We give all this human face. We believe in dialogue and when there is an infraction, we invite the parties involved, admonish them and ask for improved compliance. I am often building bridges between DisCos and customers and asking them to turn the lights on and provide power. We know sometimes too our customers do not want to pay. They have the money, but just do not want to pay. Some do not have money but wish to have electricity. There is an instance in Lokoja, where someone told me they had a group that cannot be called customers but consumers because they cannot pay. I tell them to bring them on, when they taste the light, they will learn to pay. When the light is bright, reliable, noiseless and cheaper, most people will abandon their generating sets. At NERC, we are committed to making sure that this country, takes this responsibility of providing light 24/7 seriously because it transforms lives. In our mandate, for these set of commissioners, our mandate is to strive to provide the necessary policy framework and enforcing the policies. We will also enable those things to be actualised.

tension wires and the dangers of electrocution. They say the DisCos do not act even after complaints are laid before them. We decided to look for low edges, for instance, the edge technologies that will change the sector overnight and they are simple things. I know this because I have work in the field as a consultant in Nigeria. I found customers do not cut trees, so we cut trees, so that the wires are no longer hanging, then you strengthen the wires and therefore you are able to carry the strength of electrons to different homes. What else, metering? We said if DisCos cannot afford to provide

meters due to liquidity problems, we will come up with a franchising business model, a new method where a business of you or me or whomsoever wants to get involved providing and installing metering services, we welcome them and simply calibrate the metre with one of our other agencies. Now the customer can go to market x or y and get their meter. With this the customer pays for the power they get and can decide who they want to get power from and we charge you per kilowatt hour. This is what our meter asset provider (MAP) regulation is about. The other thing I said is that there might be a situation where I want to use power from another source and my neighbour has excess. This led to the eligible customer policy. This is a situation where someone has captive generation and might decide to go into the market of using solar, hydro technology or wind or whatever and have access to your own customer and provide that power to these people, like the Ariaria market and the one that is going to be opening soon, the Sura market and other markets. This means the eligible customer will make alternative options available to the customer. It is cheaper and people will not fall back to their generating sets, when there power outage and for places such as villages at peripherals will have access to power. This is the regulation that has been passed. We also looked at capping the cost

of power so that, the estimated power that people are complaining about over and over again will no longer be the order of the day. This means through our regulation which is going to be posted very soon for discussion, there will be a maximum, a cap on what you can estimate. We don’t want estimation to go on but for a short time, while the meters are being rolled out, there may be need for us to make sure the customers are not taken undue advantage of. How prepared is your staff for these reforms? We are increasing the capacity of our staff, through local and international training programmes. We have provided an academy at NERC and every two weeks you see us like scholars, updating ourselves. Customer education is something we are very serious about too because up to now, the customers do not know their rights and how to save energy by simple things like turning off the lights when you do not need them. We are also concerned about the wellbeing of our licensees. We provide them with skills to curb their operational losses and overall it is a win-win for all parties involved. We must remind ourselves that the population keeps growing every year by 3.5 percent, in three four five six years, Nigeria will be the third largest country in the world. If we do not prepare the

What will happen if we fail to get it right in the energy space? If this hub called energy fails, then our national development is threatened and we cannot be among the top biggest economies in the world. We should all be committed, even you in the communication space can help educate and inform the customers. We want the licensees to know that NERC is not against them. What NERC is looking for is collaboration through competition. We are going to introduce competition because the only reason why you will want to go buy a Cadillac or Mercedes Benz is because you think one offers better value than the other. We want customers to have choices. Many years ago when a similar privatisation took place in the USA is was called customer choice. This was before we started calling it modernised grid, future grid. The first big conference that I helped to host in my campus was called customer choice. Customers want to have a choice but in the Nigerian setting, customers do not have a choice. The choice customers have is to go and spend money to pollute the environment, to pollute the eardrums and at the end of the day I cannot sleep with this thing on. Now we are saying there will be clean pure energy, there will be affordable power and different sizes with different technologies that will make it better. Commissioners at NERC have been mandated to know what the law says and abide by them, make life better than we found it and at the same time enforce the rules. We want to see transparency in the sector. We want to see growth and also want those who have taken loans to pay back. NERC tried to increase tariff and it was challenged in court and the court ruled, I think, against it and I understand NERC was going to appeal against that ruling. What has happened to that case? Our mandate requires us not only to keep tariffs constant by the law that established us; we are supposed to review the tariffs through the multi-year time order (MYTO) regularly. That tariff has to be based on some requirements. First of all, we have to look

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Our mandate requires us not only to keep tariffs constant by the law that established us; we are supposed to review the tariffs through the multi-year time order (MYTO) regularly

‘

n the last 17 years BusinessDay has championed a private sector led economic prosperity model in Nigeria. We have also supported the work that NERC is doing to make the power sector competitive and the new privatised sector needs the support that BusinessDay offers. Welcome to BusinessDay. Clears throat. We are very well honoured that you make out time to welcome us. We know how busy it can be, this time of the day (17:45) to keep everybody here. Upon resumption as chairman and chief executive officer (CEO) of NERC, we set our minds to develop a framework of action, which we will need to take and move the Commission forward building on the legacy established by my predecessors. Going forward, we will have to do better than the founding fathers. In this regard, we have asked a lot of questions. I have down the strength, weakness, opportunities and threat (SWOT) analysis and have asked the big question in terms of the cost of inaction. And we know we will lose a lot if we do not act. We then decided to set up a framework of action, which will guide us going forward in the next three to five years. What were some of the questions you asked yourselves? Bottom line of the questions we ask ourselves is to say look, where the teamwork in this environment is and which activities are designed to bring key actors in the sector together. Then there is the question of communication. Are we able to communicate what we mean clearly? Are we scared of saying the truth? And when things are done, is it made clear to the public? We have the best of interest of the citizens and investors at heart, same for our operators and licensees. So, we said, we are not going to be scared, we need people like BusinessDay to work with us. Such that when we say things, we are not saying it out of prejudice, but from the stand point of the law that established NERC. This mandates us to provide oversight and regulatory functions for the sector. It is in this context that we have decided we will communicate our stories of achievement. How is NERC going about the realisation of its mandate as power sector regulator? NERC followed on from the realisation that Nigeria cannot

at the gross domestic product (GDP) of the country to see at what rate we are growing, not only population growth. We have to look at the enumerated number of customers that actually use electricity. We also have to make sure that meters are provided, so we know exactly the actual cost and calculate it or know what return on investment is. We have to ensure that the losses are minimised, because electricity rates are to be cost reflective; the losses must be identified and eliminated because they constitute hidden costs. This ensures that commercial and technical losses are minimised. The technical losses can range from losing energy as a result of a weak transformer to losing energy because a transmission line is weak and untangled, this kind of losses have to be curtailed. When you put all that together you will be able to determine the cost electricity per kilowatt hour. With this the tariff may be adjusting upwards or downwards. It is only when all this is put together that we can say what a cost reflective tariff is. At this point, NERC announces what the new tariff in joint conversation with electricity Generating Companies (Gencos), DisCos and customers. The next step is to assign tariffs according the various customer classes – residential, commercial, industrial, and special and streetlights. When we have not sat down to look at the numbers and what we can change and cannot change, for example the foreign exchange

rate because you may still be buying some inputs in dollars and you are going to sell it in naira. What still cannot change is this, when you take a loan you must pay back. Your workforce that is too large, you have to reduce or increase their efficiency. Or you do not have the edgy technology and continue to pay to use legacy infrastructure, then you are wasting my time and your time. When you put a cap on how much DisCos can charge per kWh, are you not impairing competition? You cannot ignore it. Somebody put in N701 billion to support a business you have already said you are the owner. You took a licence to run your business, if you make a profit, declare it. Go and find out how the businesses called Genco, and DisCo, are doing, you will shake your head. The government provided this seed money, to assist all the businesses in the electricity supply chain, to reduce the burden. So, if government has given you, let us not call it subsidy, but cushion. If government has given you this cushion, I will not want you to immediately take advantage of my customers. This is taxpayers money, N701 billion is tax payers money that the government gave to you this much money to help you fix your transformers, to help you put your meters in place and reduce losses. The DisCos should be thankful for such seed money. Whatever the problem was in the past, I do not want to hear it, because now I have given

you something. We expect the DisCos to turn this around into wealth. I think the court ruling must have been based on the fact the customers and NERC have not seen much impact. What kind of impact do you expect to see? We have not seen the impact of that investment. Remittances are still very low. This is a sign that the DisCos are not doing well. In most cases, we have not seen new technology introduced to improve operational efficiency. We have not seen meters and that is why we are engaged in metering. We have also not seen a full participation between the customers and DisCos in terms of what they will do to get out of the hole. So, as an honest judge, I need to say there is a need now for us to review all the ingredients in order to calculate the tariff and make sure that where appropriate the rate will change, by how much I do not know. But the condition for changing it I know. I am having meetings with DisCos and Gencos to find the way forward. Metering is one among the first ones. Customer enumeration is another. Then we need more industrial and commercial customers, because when we have more people using it, the law of large numbers kicks in. The DisCos will have more customers running after them and we would have created also the eligible customer market that allows independent networks and mini-grids. Expect smart grids and all those things and new edge technologies that would be introduced into the country.

BUSINESS DAY

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Monday 12 November 2018

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BUSINESS DAY

Stocks

Currencies

Commodities

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Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

economy

Insurers remain profitable as combined ratio improves BALA AUGIE

he combined ratio for listed insurers improved in the third quarter of 2018, signalling efficient underwriting results amid a tough and unpredictable macroeconomic environment. The cumulative average combined ratio of 20 firms that have released third quarter results fell to 78.73 percent, this compares with 84.12 percent in 2017 and 0.99 percent in September 2016, as appropriate pricing underpinned underwriting profit. We derived the combined ratio using the National Insurance Commission (NAICOM) formula- total operating or management expenses plus net claims expenses divided by net premium income. A ratio below 100 percent means an insurer earns more in premiums than it pays out in claims. Experts are of the view that firms have been curtailing expenses in order to bolster efficiency as management expense ratio is a yard stick shareholders use to gauge the performances of managers. Also, firms must return surplus capital back to shareholders in from of dividend payment. A breakdown of the figures shows AXA Mansard Insurance Plc’s combined ratio fell to 98.25 percent in September 2018 as against 108.5 perecent the previous year. Mansard’s underwriting profit surged by 102.93 percent to N4.44 billion in September 2018 from N2.18 billion the previous year, the first uptick in four years. Lasaco Insurance’s combined ratios fell to 70.42 percent in the period under review as against 114.92 percent as at September 2017. The company’s underwriting profit surged by

146.47 percent to N1.52 billion in the period under review from N618.59 million the previous year, first uptick in four years. Cornerstone Insurance’s combined ratio reduced to 94.39 percent in the period under review from 157.75 percent them previous year. The company recorded an underwriting profit of N1.67 billion in September 2018 from a loss figure of 622 million the previous year. Regency Assurance Plc’s combined ratio fell to 84.25 percent in the period under review as against 91.49 percent the previous year. Underwrit-

ing profit was up 10 percent to N1.59 billion in the period under review from N1.45 billion the previous year. The underwriting profit is net premium income less claims and under-

Monday 12 November 2018

P.E

SHORT TAKES 379.84 billion naira HSBC and UBS have closed their offices in Nigeria; the country’s central bank said in a report on Friday as it revealed the foreign direct investment in Nigeria fell to N379.84 billion ($1.2 billion) in the first half of the year from N532.63 billion ($1.7 billion) a year earlier

Diamond Bank

writing expenses, which is synonymous with gross profit for manufacturing, oil and gas and service firms. “There is sanity in the industry; people are trying to price appropriately. The

suspended TBMSR AND the process of implementation of solvency 11 have led to increase in capital base,” actuarial analyst at Wapic Insurance Plc. “Shareholders want to see return on the busi-

ness. The sanity will see improved results in the financial statement,” said Monsuru. Experts say the introduction of the TBMSRalbeit it has been suspended by regulator- will ensure that insurers do not have to be compelled to increase capital to underwrite risks that stress their capital without commensurate return on investment. Insurers are spending less on operating expenses to generate each unit of premium income as cumulative average operating or management expenses fell to 38.38 percent in September 2018 from 40.67 percent the previous year. “It is a key performance indicator for them. Some of these firms have reduced management expenses,” said the actuarial analyst who doesn’t want his named mentioned.

Diamond Bank last week denied it was in talks with investors to raise cash but said it was managing its capital, which borders on the regulatory minimum, to grow. Central Bank of Nigeria

The Central Bank of Nigeria has directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes

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

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

Monday 12 November 2018

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BUSINESS DAY

Markets Intelligence Economy

Stock investors don’t care about T 11.15 percent profit growth

SSE and Npower lambasted for merger ‘shambles’ Management teams blamed for delay that analysts say could scupper deal

BALA AUGIE

nvestors seem to have shrugged earnings growth of the largest and most liquid firms in Africa’s largest economy. The cumulative net income of NSE 30 firms or Index increased by 11.15 percent to N964.75 billion in September 2018, from N866.03 billion the previous year. But the stock prices are not moving in tandem with the uptick in profit since the start of the year. The NSE ASI Index have shed -15.80 percent since the start of the year while the NSE oil and gas index shed -11.24 percent, NSE Banking Index drop -12.22 percent, NSE consumer goods Index -25.50 percent, and industrial goods Index -31.88 percent. D o m e st i c ma rke t ha s capitulated to the selloff in emerging market stocks brought on by economic and political uncertainties in Turkey, South Africa, and Argentina. Also, rate hikes by the United States of America

Federal Reserve have made developing market assets attractive to foreign investors. Analysis by Markets and Intelligence shows 8 out of the 30 firms fell off the cliff

as earnings dipped. Dangote Sugar Nigeria Plc’s net income fell by 37 percent to N16.71 billion in September 2018 from N26.51 billion as at September 2017.

Avoiding compliance was part of Goldman culture, ex-banker claims Leissner, after guilty plea over 1MDB, told court he acted to benefit the bank

im Leissner, the former Goldman Sachs partner who pleade d guilty to crimes in connection to the 1MDB scandal, claimed concealing facts from internal compliance officials was “very much in line” with the culture at the bank. Mr Leissner made the comments as he pleaded guilty to two counts of conspiracy on August 28, according to a transcript of the hearing made public on Friday after The New York Times filed a motion to unseal it. “I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs,” he said in a statement to a court in Brooklyn after he pleaded guilty. The former Goldman banker admitted to hiding from others at the bank the involvement of Jho Low, the Malaysian financier, in three 1MDB bond issuances in 2012 and 2013. Goldman underwrote more than $6bn worth of bonds from 1MDB, earning $600m in fees. The US has alleged that more than $2.7bn of that money was misappropriated by Mr Low, Mr

Leissner and a second former Goldman banker, Roger Ng, who was arrested in Malaysia last week. A third Goldman banker whose conduct was referenced in Mr Leissner’s indictment but who was not charged was placed on leave last week. Mr Low has denied any wrongdoing. He is still at large, according to the justice department. Mr Ng has not entered a plea and could not be reached for comment. A spokesperson for Goldman had no immediate comment. An attorney for Mr Leissner declined to comment. Goldman is under increasing pressure this week after it emerged Lloyd Blankfein, the chairman and former chief executive, had met Mr Low in 2009. The bank has long argued that it was misled by some of its bankers in south-east Asia about the 1MDB deals and did not know about the alleged misappropriation of money from the fund or the bribes allegedly paid to Malaysian government officials. On Wednesday, David Solomon, Goldman’s new chief executive, said: “It is obviously very distressing to see two former Goldman Sachs employees went

so blatantly around our policies and so blatantly broke the law.” The bank is currently in negotiations with the justice department over what, if any, punishment it should receive for its role in the 1MDB scandal. It has hired a former close colleague of the DoJ’s criminal division chief as it attempts to stave off potential criminal charges. The transcript of Mr Leissner’s plea hearing highlighted the efforts of prosecutors to build a case against the bank directly. The former Goldman banker, who was arrested in June according to court records, stated he acted “within the scope of my employment and with the intent to benefit Goldman Sachs and myself”. He said that the 1MDB bond deals “resulted in substantial fees and revenues for Goldman Sachs, of which and in many cases, it was very proud of at the time”. At the same time, he admitted to concealing his wrongdoing from compliance staff at Goldman and breaking its policies and procedures. “I knew that concealing Jho Low’s involvement as an intermediary was contrary to Goldman Sachs’s stated internal policies and procedures,” he said.

he decision by SSE and Npower to delay the planned merger of their retail businesses was denounced as a “shambles” by industry analysts on Friday, saying it had thrown the whole premise of the combination into doubt. The two energy retailers, which have spent the past year planning a merger to create a new London-listed provider, announced late on Thursday they needed to delay the arrangement, blaming the UK government’s introduction of a price cap on certain household energy bills. But industry executives and sector analysts said it suggested a failure on the part of management of both London-listed SSE and Npower, owned by Germany’s Innogy, to anticipate the affect of the widely expected intervention in the market. Both companies cited the ceiling on default tariffs, which was finalised by the UK government this week, as the primary reason for the delay. But analysts said neither the cap itself nor its level should have come as a surprise, adding that plans to introduce it were flagged by the prime minister more than a year ago and just before the merger was announced in November 2017. The level of the cap was initially proposed by UK energy regulator Ofgem in September (at levels broadly expected by the industry), before shifting by just £1 after a consultation period to the levels announced on Tuesday — £1,137 for typical duel-fuel customers. Ahmed Farman at Jefferies said the merger was “in shambles” and said it might undermine confidence in the entire retail energy sector, adding he would no longer rule out the entire deal collapsing. One executive at a rival utility company said it was “extraordinary” to make an announcement like this as if the price cap had come as a shock to SSE and

Npower. Deepa Venkateswaran, an analyst at Bernstein, said: “Clearly the price cap is tough [for energy providers] but you would not say it is new news. We knew the cap levels in September. Most people running these businesses have been running scenario analyses since last year.” Other utilities had focused on strengthening their balance sheets and posting additional collateral to their retail arms ahead of the price cap introduction, rival executives said, with one adding that SSE and Npower were now open to the charge of not having done enough in advance despite being heavily exposed. Npower and SSE have about 1m and 2m customers respectively on the standard variable tariffs, which are being targeted by the price cap, according to Ofgem figures, and both have had tough years. SSE has had two profit warnings this year while Npower returned to being lossmaking during the second quarter. Analysts said any new talks between Npower and SSE were likely to focus on a need for a cash injection for the new entity in order to hit rating agencies’ stringent capital requirements ahead of the listing. Ms Venkateswaran at Bernstein added that both parties might need to inject up to £1bn collectively into the venture. Innogy is due to hold a minority stake of 34.4 per cent in the new retail operation, with SSE’s shareholders taking the remaining 65.6 per cent. However, the merged company would make up 14 per cent of SSE’s equity valuation and 5 per cent of Innogy’s, according to analysts at RBC Capital Markets, who said any negative market reaction was likely to be focused on SSE. SSE’s share price fell by as much as 4.5 per cent before recovering slightly to end 2.5 per cent lower on Friday, while Innogy’s dropped 0.3 per cent.

US crude oil chalks up record 10-day losing streak Higher output from US and Saudi Arabia outweighing impact of Iran sanctions

S crude prices closed lower for a 10th straight day on Friday, netting the benchmark its longest losing streak on record as further signs of rising output and supplies triggered another day of selling in the oil market. West Texas Intermediate closed in a bear market on Thursday, while Brent — the international benchmark — today matched its US peer as it registered a drop of more than 20 per cent from its October peak. The declines have come amid a rapid reassessment by traders as to the state of oil supplies. Higher output from the US, Saudi Arabia has now outweighed the start of US sanctions against Iranian imports that helped drive the price of Brent to a

four-year high of more than $86 a barrel in early October. That has culminated in WTI falling for 10 consecutive sessions, over which time prices have shed about 11 per cent. WTI settled 0.8 per cent lower at $60.19 a barrel on Friday, having been down as much as 2.3 per cent at one point. This is the first time WTI has fallen 10 days in a row, according to Financial Times analysis of Bloomberg data going back to 1983. Before this most recent string of declines, WTI had chalked up nine-day losing streaks on five other occasions, with the most recent ending in July 2014. Brent, which settled ⅔ of 1 per cent lower at $70.18, dropped for its ninth session in 10.

BUSINESS DAY

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This is M NEY A daily guide to your Personal Finance

Monday 12 November 2018

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

‘We grow wealth for clients, helping them meet needs yet envisaged’ Taiwo Yusuf is the head of asset management at Meristem Wealth Management Limited. In this interview with Modestus Anaesoronye he shares his thoughts on creating wealth for clients, operating environment, investor education and the future of the industry in Nigeria. Excerpts: What is asset management to Meristem? o us at Meristem, asset management is a platform to show our wealth creation expertise. We look at it as an opportunity presented by our clients to us, to take them to where their heart desires. Text book definitions look at Asset Management as the practice and act of putting the expertise of the asset manager at the disposal of clients who own assets and resources. However, to us as a firm we take our cue from this definition and define our expertise to be growing wealth for clients and helping clients meet needs that are yet to be envisaged. People at some point in life find themselves in practice of their profession(s) and in their practice for over a few years, they get to accumulate savings and assets. It is our duty as asset managers to ensure that those assets and savings that people have put together do not become liabilities, but rather work for them in the extent that it generates income for them optimally. So, for us, what asset management means is that we want to manage the assets and resources that our clients have worked and toiled for to generate income for them optimally, so that wealth is created for all. This is our essence as a firm, this is our promise. Looking at the environment, what has been the trend of the asset management industry in Nigeria and what have you done to navigate this trend? The Asset Management Industry in Nigeria has been through a lot. In looking at the trends, I will delve across all the phases. Let’s walk down memory lane about a decade ago. A decade ago, the knowhow of the investing populace was not as advanced as what we have today, people were open to almost all financial services options, except mainstream investments. Thankfully, this is no longer the case, because just like every trend, a paradigm shift must occur. We are not

at an optimal investor educational level yet, as there is still a lot of investor education to happen. We are currently at a base level when compared to developed nations, however, this base is still regarded as progress, when compared to where we are coming from. The effort to improve the education level of the investing populace has been intensified significantly, thanks to contributions from the asset management firms and regulatory bodies of today, who ensure that part of the job scope covers, educating clients on how they should invest their assets. Still on the memory lane, back then we never had what we know today as Fintech firms, and this is significantly one of the greatest disruptions of today. The Fintech space has become a disruptive addition to the whole financial sector and has also evolved the know-how of asset management. Thanks to Fintech, we can use technology to drive savings, investors education and to ensure that the service culture is also improved. This has really taken us a lot further in quality service delivery. In the past you had to travel very far to access the above listed offerings but right now with the click of a button, financial solutions can be delivered to you. To further paint a portrait of how far we have come, I will explain the trends based on the following anchors; Firstly, in terms of the different instruments and securities that are available to investors, it has improved over the years. Some years back, you could count on your fingertips the mutual funds options that were made available to investors, but thanks to the Fintech disruption, these days you find that almost all asset managers have one mutual fund product or the other that are tailored to meet the needs of investors. Second, market depth has been greatly enhanced, thus allowing for more participants in the market and causing asset managers and regulators to offer options of different asset classes that clients could invest in. Some

Taiwo Yusuf

years back, you could hardly see the dollar denominated investment to buy for investors but now you have several dollar denominated and forex trending retail investment that you can make for your client. The third is, in terms of sophistication and the knowhow of the asset managers themselves, today you have more products being introduced into the market that aid hedging of investments against foreign exchange losses, especially with the

‘

We pride ourselves as solution providers, who are flexible enough to create a unique product that addresses every unique need

‘

volatility of the money market. So, it is safe to say what we have had is a continuous improvement in terms of the options that investors could use as investment outlet for people and in terms of the convenience that could encourage people to save. You mentioned about trend that has changed in knowledge overtime. How is your company addressing the gap in terms of investor’s education? As Meristem, we are at the forefront when it comes to investor education. Our strategies and initiatives that we adopt as a firm is education and inclusion driven. An example, as regards financial inclusion; we focus on reaching out to schools and students by creating awareness about investment and savings culture across. We go the extra mile by starting up investment clubs at schools we encounter or partner with existing clubs in different schools across the country. We are also part of the National Youth Service Corps (NYSC) training programme, where we educate fresh graduates on the benefits of savings, investment and about the capital market. Some of the tools that

we use to drive this, is an opportunity for everyone to own dummy portfolio accounts loaded with virtual funds to encourage people to trade and to experiences the potentials linked to investments. This is quite important to us and we believe that if people are provided with opportunities to experience the benefits of investing especially at a young age and a zero-risk stage, they will go on to cultivate the habit and this will grow wealth for them in good time. All these are things we still do in other to increase financial inclusion and create an improved knowledge of how the capital market works generally. What is the future of the industry and how are you marrying this to the regulations on ground? The Asset Management industry is still evolving. We have come so far but we have more to do in terms of deepening the options that is available to investors. In as much as it is exciting for us that we have been able to introduce so many products and options as an industry, there are also new initiatives that we are yet to scratch the surface. The need to increase available investment options in the market is still a strong and visible reality for our sector. There are discussions on alternative investments, like creating a viable forward and future market on our Exchanges, there are also initiatives to create more products that would further deepen the market. These discussions could birth the kind of future we are hoping to see for ourselves here and what that could mean is that we are going to be a 500-billiondollar economy. Why should people invest in Meristem, as a fund and asset manager? Meristem as a company has been in existence for nearly 20 years. We started as a firm with just one company, but today we have five subsidiaries. Currently, the Meristem wealth management has assets under management in excess of N180 billion and this is a company that we started as a subsidi-

ary of Meristem ten years ago. Also, for us we live on the clarity of thought that customers are king to us, thus, aside from having excellent customer service, we also consistently outperform the benchmarks in terms of the return that we generate from our portfolios. This is in clearly terms, means that we constantly seek to outperform our clients’ expectations. An apt example is a case of our Mutual Funds product, in the first quarter last year, we were ranked as one of the top best performing mutual funds product. For us, we deliver in terms of performance and excellent customer service. We listen to our clients and we tailor up products and services that address and meet our clients’ needs. We are a very flexible and enabled company, in terms of services to our clients, thus providing them with nothing short of the best. You mentioned, mutual funds, I would like to know other products that are offered by Meristem Wealth which investors can explore? There are several products and services that we offer to our clients and these products and services are essentially developed from listening to our clients as regards what their needs are. We pride ourselves as solution providers, who are flexible enough to create a unique product that addresses every unique need. From a broad perspective, we offer financial advisory services, research, portfolio and fund management services, trustees solutions etc. For a more eagle-eyed perspective we have products that enable our clients have access to investment instruments such as Bonds, treasury bills, commercial papers etc. As mentioned above, we have several products, and the products we have is, targeted at different levels to help meet different need points. At Meristem, every individual is welcome, because we our products are tailor made for different classes of client.

Monday 12 November 2018

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BUSINESS DAY

Monday 12 November 2018

Access Bank Rateswatch Market Analysis and Outlook: November 9 - November 16, 2018

KEY MACROECONOMIC INDICATORS GDP Growth (%)

1.50

Q2 2018 — lower by 0.45% compared to 1.95% in Q1 2018

Broad Money Supply (M2) (N’ trillion)

25.28

Increased by 1.68% in Sept’ 2018 from N22.27 trillion in Aug’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel)

22.56 1.928 11.28 14 14 (+2/-5) 41.77 77.71

Increased by 0.40% in Sept’ 2018 from N22.56 trillion in Aug’ 2018 Decreased by 0.12% in Sept’ 2018 from N1.926 trillion in Aug’ 2018 Increased to 11.28% in September’ 2018 from 11.23% in August’ 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9% November 7, 2018 figure — a decrease of 0.42% from November start November 9, 2018 figure— no change from the prior week

Oil Production mbpd (OPEC)

1.75

September 2018 figure — an increase of 1.51% from August 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

NSE ASI Market Cap(N’tr)

Friday

Change(%)

9/11/18

2/11/18

32,200.21 11.76

32,124.94 11.73

0.23 0.23

0.12

0.24

(49.29)

Value (N’bn)

1.58

2.85

(44.53)

MONEY MARKET NIBOR Friday Rate

Friday Rate

Change (Basis Point)

(%)

9/11/18

2/11/18

OBB

4.25

4.08

O/N CALL 30 Days

5.00 4.21 0.00

4.83 4.60 12.74

90 Days

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

77.71 3.58

0.00 12.23

20.56 17.15

2276.00 119.40 80.50 12.80 502.00

(0.61) 0.51 1.17 (3.61) (1.23)

17.56 (8.29) 3.87 (16.50) 15.80

1219.09 14.34 270.05

(1.37) (3.04) (1.84)

(7.47) (16.58) (17.62)

Tenor

13.41

1 Mnth 3 Mnths

12.25 13.24

11.85 12.67

40 57

Friday

1 Month

6 Mnths 9 Mnths 12 Mnths

13.28 15.03 16.50

13.51 15.37 16.56

(23) (34) (6)

(N/$)

Rate (N/$)

2/11/18

9/01/18

Official (N) Inter-Bank (N)

306.65 361.73

306.60 362.33

306.45 362.10

BDC (N) Parallel (N)

363.50 363.00

363.50 362.00

362.99 361.00

Friday

Change

(%)

(Basis Point)

2/11/18

3-Year 5-Year

0.00 15.09

0.00 15.00

0 9

7-Year 10-Year 20-Year

15.49 15.48 15.67

15.43 15.38 15.58

7 10 9

Indicators

Change

(%)

(Basis Point)

2/11/18

Friday

Change

(%)

(Basis Point)

9/11/18 Index

2,663.24

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

8.31 5.20

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

8.42 -47.24

2/11/18 2664.43

(0.04)

8.32 5.22

(0.04) (0.36)

8.47 -47.17

(0.05) (0.07)

TREASURY BILLS (MATURITIES) Tenor

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

Friday

(%)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS Friday

Friday 9/11/18

BOND MARKET

9/11/18

(%)

17 (39) (1274)

9/11/18

Tenor

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

13.84

Friday

1-week Change

FOREIGN EXCHANGE MARKET Market

9/11/18

(%)

Volume (bn)

Tenor

Indicators

91 Day 182 Day 364 Day

Amount (N' million) 7,851.74 43,522.53 93,915.15

Rate (%)

10.9752 13.49 14.4

Date 31-Oct-2018 31-Oct-2018 31-Oct-2018

Global In the US, the Federal Reserve decided to maintain the target range for the federal funds rate at 2 to 2.25%, citing realized and expected labour market conditions and inflation. The hike is the 4th this year. The central bank reiterated that it expects further gradual increase in interest rates will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near its 2% objective over the medium term. Policymakers, however, noted that business investment had “moderated from its rapid pace earlier in the year,” a possible drag on future economic growth. In a separate development, investor morale in the Eurozone fell in November, a survey showed. Sentix research group said its investor sentiment index for the euro zone fell to 8.8 from 11.4 in October. The November reading was the lowest since October 2016 and marked the third consecutive monthly drop. A sub-index on current conditions fell to 29.3 from 33.0, hitting its lowest level since April 2017. A sub-index measuring expectations fell to -9.8 from -8.3 the previous month. Analysts attribute the weak outturn to concerns about U.S. trade policies and the future of Germany's car industry. Elsewhere in the UK, manufacturing sector activity deteriorated in the month of October, the latest data from Markit showed. The manufacturing Purchasing Managers' Index (PMI) in the UK came in at 51.1 points in October, as compared to a previous 53.8 reading. Manufacturing output growth weakened during October while new orders and employment levels declined. Most of the decline in demand came from overseas, both inside and out of the European Union, although growth in domestic demand also slowed during the recent month. Domestic In a recent presentation by the International Monetary Fund (IMF) on the economic outlook for sub-Saharan Africa, a senior resident representative warned that more than 50% of the Nigeria's revenue was being used to service the country debt. He stated that although Nigeria's debt to Gross Domestic Product (GDP) remained low at between 20 and 25%, the country spent a high proportion of its revenue on debt servicing as a result of low revenue generation. For Nigeria, he added, the debt servicing to revenue ratio was more than 50% while for sub-Saharan Africa, the rate was about 10%; a figure he said was too high and reminiscent of what the region went through in the period following debt relief at the beginning of the 21st century. He advised that increase in revenue is very important to bridge the gap to ensure that revenue to GDP is sufficient to pay up and service debt profitably. The International Monetary Fund (IMF), also predicted that the Nigerian economy is expected grow by 1.9%in 2018, up from 0.8 per cent in 2017, due largely to fewer disruptions in oil production. Stock Market The bulls dominated the bears in the stock market last week, occasioned by price gains on highly capitalised stocks. At the close of trading the All Share Index (ASI) gained 75.27 points, representing a growth of 0.23% to close at 32,200.21 points. Similarly, market capitalisation rose by N3 billion to close at N11.76 trillion. This week, we anticipate sustained bargain hunting in bellwethers as investors take advantage of cheap entry prices, thereby driving performance indices higher.

Money Market Cost of borrowing edged up slightly last week as Retail Secondary Market Intervention Sales (SMIS) auction conducted by the CBN mopped liquidity in the system. Consequently, shortdated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 4.25% and 5% from 4.08% and 4.83% respectively the previous week. In the same vein, longer dated placements notched upwards. The 30-day and 90-day NIBOR closed higher at 13.09% and 13.84% from 12.74% and 13.41% respectively the previous week. This week, inflow of maturing OMO bills will offer support to system liquidity. However, OMO issuances, bond auction debits and forex sales by the CBN are likely to squeeze liquidity and apply upward pressure to overnight lending rate. Foreign Exchange Market The naira depreciated marginally against the green-back across all market segments monitored last week. At the interbank window, the naira lost 0.17% to close at N361.73/$ compared to N362.33/$ the previous week. The official and parallel rate also trended lower, settling at N306.65/$ and N363/$ respectively last week relative to N306.60/$ and N362/$ in that order the week before. The weakening seen across all markets comes amidst continued intervention by the monetary regulator to provide liquidity to the FX market. This week, we envisage the naira will trend around current levels. Bond Market Bond yields continued their rise for the fifth consecutive week as bearish sentiment dominated the market. Trades were majorly flat and the increase in yield was as a result of participants adjusting their quote because of the high supply seen in the market. Yields on the five-, seven-, ten- and twenty-year debt papers settled at 15.09%, 15.49%, 15.48% and 15.67%% from 15.00%, 15.43%, 15.38% and 15.58% respectively the previous week. The Access Bank Bond index declined slightly by 1.19 points to close at 2,663.24 points from 2,664.43 points the previous week. This week, we expect the market to remain bearish as investors monitor economic macroeconomic fundamentals. Commodities Oil prices came under pressure last week, weighed down by rising supply. The US Energy Information Administration reported that oil inventories rose to 432 million barrels last week — the seventh week of increases. Consequently, the price of OPEC basket of 15 crudes fell $1.96, or 3%, to settle at $70.68 a barrel. In a similar vein, precious metals prices inched lower last week following the US Federal Reserve's decision to keep interest rates steady. Gold was down 1.37% at $1219.09 per ounce, while silver fell 3% to $14.34 per ounce. This week, oil prices are likely to nudge higher amid reports that OPEC is exploring the possibility of a production cut for 2019. For precious metals, we expect prices to trade sideways in the absence of any significant market triggers.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Nov’18

Dec’18

Jan’18

Exchange Rate (Official) (N/$)

363

364

365

Inflation Rate (%)

11.30

11.32

11.45

Crude Oil Price (US$/Barrel)

77.00

78.00

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation. For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

Monday 12 November 2018

C002D5556

BUSINESS DAY

C002D5556

BUSINESSINTELLIGENCE

Monday 12 November 2018

In association with

Quorum at board meetings – From beginning to end? Enobong Shittu

quorum is the minimum number of members required by law, Articles or the Charter of a group or entity that must be present at a meeting to transact business. According to Wikipedia, “a quorum is the minimum number of members of a deliberative assembly necessary to conduct the business of that group”. Roberts Rule of Order states that “a quorum should be as large a number of members as can reasonably be depended on to be present at any meeting except in very bad weather or other unfavourable condition.” Typically, the Board Charter or Articles of Association of the Company specifies the quorum for a meeting. However, in the absence of any specific provision in the Board Charter or Articles, reference is usually made to the provisions of the Companies and Allied Matters

Act 2004 (CAMA). Section 264 of CAMA provides that “unless the Articles otherwise provides, the quorum necessary for transaction of the business of directors shall be two where there are not more than six directors, but where there are more than six directors, the quorum shall be one third of the number of directors, and where the number of directors is not a multiple of three, the quorum shall be one third to the nearest number”. Therefore, for the proceedings of a meeting to be considered as binding, the requisite quorum must be formed. The appropriate quorum for a Board meeting would vary per organisation and it is important that the Board does not set a high quorum requirement that hinders the ability of Directors to transact Board business or too low that a few directors can take binding decisions. Nevertheless, setting a minimum quorum for a meeting ensures that majority of directors are up to speed on important developments, paving the way for clear communication, and sound decision making. Setting a realistic quorum requirement and sanctioning Directors for excessive absenteeism is an

effective way of achieving balance. The requirement for quorums is intended to keep Boards balanced and cohesive. Establishing a quorum is often the first order of business at a board meeting and the Company Secretary has the responsibility of notifying the Board Chairman if the meeting is not likely to have a quorum and confirming same at the Board meeting. The Chairman presiding at a meeting at which a quorum is not formed at the beginning can cure the defect by waiting to confirm if other members will join. Where it is clear that other Directors will not join, he has to adjourn the meeting. It is instructive to state that in the event that Directors present at an inquorate meeting proceed to discuss any matter and take decisions in respect thereof, such decisions shall not be binding nor enforceable. In the case of Mega Blow Moulding Limited v. Sarantos, the court addressed the validity of a resolution passed at an inquorate Board meeting. In reaching its decision, the court found that the Board meeting did not comply with the quorum requirements and accordingly passed ruled that the resolution

Audit Committee Seminar Masterclass “Improving the Performance of the Audit Committee” ©

Audit Committee Members, Directors, Internal & External Auditors, Accountants, Compliance and Regulatory Oﬃcers, Company Secretaries, Risk Managers Date: Thursday, November 15, 2018 Location: Radisson Blu Anchorage Hotel, Ozumba Mbadiwe, Victoria Island, Lagos. Enrolment & Registration: N120,000 (discounts available) Modules:

at the time when the meeting proceeds to business. In practice, one issue that sometimes arises is that of the “vanishing quorum”. This refers to the situation where a quorum is present at the beginning of a meeting but lost at some point during the meeting. It is noteworthy that if the meeting is quorate at the beginning but loses quorum during the meeting, this fact must be brought to the attention of the Chairman immediately and the meeting should be concluded and consequently adjourned. Following quorum protocols keeps the board balanced, independent and effective. The Board Chair should ensure that meetings are duly quorate from beginning to the end and the Board should continuously review its policies on quorum and Director attendance at meetings to optimize Board effectiveness.

at the meeting was invalid. Virtual meetings (i.e. teleconferencing or video conferencing) offer a practical solution to Director availability to attend Board and Committee meetings as it affords directors who are unable to be physically present at meetings the opportunity to honour their board commitments. The Companies and Allied Matters Act is silent on virtual meetings. For the avoidance of doubt, it is recommended that the Articles or Board Charter provide for virtual meetings and Directors who attend Board meetings remotely will be accounted for in determining quorum. Generally, it is rare for board meetings to have seamless attendance at each meeting during the year. Thus, if the Board lacks the required quorum to transact its business and decides to proceed due to the level of urgency of the agenda items, any decision made at that meeting shall be invalid. The Companies and Allied Matters Act provides that a quorum should be formed at the beginning of the meeting and no business shall be transacted at any meeting unless a quorum of members is present

Enobong Shittu, Consultant, Company Secretarial Unit, DCSL Corporate Services Limited. Kindly forward comments and reactions to eshittu@ dcsl.com,ng

“Enthroning Good Corporate Governance in Microﬁnance Banks” Date: Thursday, November 15, 2018 Location: Radisson Blu Anchorage Hotel, Ozumba Mbadiwe, Victoria Island, Lagos. Enrolment & Registration: N75,000 (discounts available) Modules:

• Understanding Financial Statements and Key Financial Ratios; • Maintaining an Eﬀective Risk Management Framework;

• Enthroning Good Corporate Governance in Microﬁnance Banks;

• Understanding Cybersecurity;

• Dimensioning Risk Management in Microﬁnance Lending;

• The Role of the Audit Committee in Preventing Corporate Governance Failures; and

• Strategies for Marketing Financial Services; and

• Strategic Shareholder Activism. For enquiries and registration: • Nike Taiwo: ntaiwo@dcsl.com.ng or 08090381864 |Mobile:08052800715 • Edem Aye: eaye@dcsl.com.ng or 08090381864 |Mobile: 08022158098

• Fraud Management – Detection and Prevention. For enquiries and registration: • Nike Taiwo – ntaiwo@dcsl.com.ng or Mobile: +234 (0) 8037699347 • Temi Tuoyo – ttuoyo@dcsl.com.ng or Mobile: +234 (0) 8081579496

BUSINESS DAY

Monday 12 November 2018

Start-Up Digest

In association with

How Nigeria’s health crises birthed problem-solving entrepreneurs ODINAKA ANUDU

t is often said that any problem is an opportunity in disguise. Yes, Nigeria is faced with health crises in many ramifications, but these are rather opportunities for a number of young entrepreneurs. The country has demography of 198 million, which presents a market opportunity but also a health burden on the government. The 2017 alone was marred by outbreaks of diseases such Lassa fever, which occurred in 718 cases wherein 68 persons died. Between January and July 2018, there have been 115 deaths in confirmed cases and 10 in probable cases. Cerebrospinal meningitis was suspected in 14,518 cases, across 181 local government councils, with 1,166 people reported death. There were many other issues last year, and many health cases have come up this year too, which ordinarily should leave everybody complaining. However, young entrepreneurs are going into the health sector with a different, innovative mind-set. Let us now have a close look at how start-ups are leveraging innovation to solve healthcare challenges while making millions in the process. Flying Doctors Nigeria Flying Doctors Nigeria was founded by Ola Orekunrin Brown, a medical doctor, helicopter pilot and the healthcare entrepreneur. Brown founded Flying Doctors Nigeria, West Africa’s first air ambulance service, after her younger sister died while traveling in Nigeria. Today, the 32-year-old entrepreneur, who graduated from the University of York, UK, at the age of 21, speaks in various fora. Her firm has over 20 aircraft, which have airlifted more than 500 air travellers. At the September Breakfast Meeting of the Nigerian-American Chamber of Commerce held in Lagos, Brown said there were two forces militating against small businesses and start-ups. She called one ‘market forces’ and the other ‘evil forces’. “The real issues are around evil forces. I have helped smaller companies to wage ‘spiritual warfare’ against these forces,” she said, to the amusement of the audience. “The first of the evil forces and the biggest one is multiple taxation. If you look at how much tax small businesses are supposed to pay, you will see why they are not competitive. “You pay 30 percent of your profit. If you do it the way it is supposed to be done, maybe 50 percent of your revenue can go to tax. But then, you now forget you owe the banks and you have to pay 20 percent interest. You also pay to Lagos Inland Revenue Service (LIRS). These are the kind of things that af-

Adeloye Olanrewaju

Ola Brown

fect our competitiveness and stop us from reaching these standards.” Brown said the second force was the structure of the banking industry. “Because the Monetary Policy Rate (MPR) is high, the interest rate is high. From the accessible commercial banks, the least you can get is 18 percent, that is if someone wants to help. At the micro level, maybe it is difficult to access,” she said. SaferMom SaferMom empowers pregnant and new mothers to make informed health decisions through SMS, voice calls and mobile apps. What this platform does is to help mothers monitor and track their health and that of their newborn babies. They can also monitor their antenatals, immunisation schedules for their babies, nutrition and behavioural routines. SaferMom contents are available in English, Yoruba, Hausa, Igbo and Pidgin English. Basically, SaferMom tries to tackle poor access to preventive health care, reduce cost of health care services, improve health care literacy and help cut rising mortality rate. SaferMom sends SMS or uses a voice call twice a week to contact mothers on issues such as pregnancy follow up, parenting tips, common symptoms, child health care tips, nutrition guides, sexual and reproductive rights, family planning tips, clinic reminders and immunisation reminders. It was co-founded by Adeloye Olanrewaju after he found a huge gap in health literacy, social and psychological support for mothers

Charles Immanuel Akhimien

Femi Kuti

Vivian Nwakah

while serving as an intern at a small primary health centre catering for over 12,000 pregnant mothers and newborns monthly. Safermom recently emerged as one of the top six winners of the Internet.org Innovation Challenge in Africa awards. MOBicure MOBicure is a social enterprise that provides mobile technology solutions to some of the most pressing healthcare issues facing Nigeria and other developing nations. It was co-founded by Charles Immanuel Akhimien, a medical doctor, entrepreneur, UN SDG Young Leader & UN SDG pioneer. Its flagship product is called Omomi, which is a mobile platform for pregnant women and mothers of under-5s, which enables them to monitor their children’s health and have access to specific and lifesaving maternal and child health information, as well as medical expertise at the touch of a button. MOBicure was recently founded to bring healthcare to the doorsteps of Nigerians using mobile technology. The platform has also innovated MyPaddi app, which enables free discussion on health-related issues, including insights on sex, contraceptives, and abuse, among others. KompleteCare This was launched in May this year to reduce the amount of time patients spend in public hospitals before being attended to. The app, which can be accessed at the Google play store using a mobile phone, is a collaborative

effort between the Society for Family Physicians of Nigeria (SOFPON) and a healthcare company in Nigeria, Sevenz Healthcare. Doctors register via the app and get paid for their services. “You’ll have to fill in your MDCN number. It will be confirmed first before you are allowed to log in as a doctor. There’s a place for doctors, and there’s a place also for the patient. The app will direct a patient on the doctor to meet – let’s say a cardiologist,” the group said. “In the future, the biggest hospital will be on your mobile phone.” Medsaf.com Buying and selling of drugs in Nigeria can be challenging. Medsaf’s entrance into the health sector is to make this process easy and efficient. Through its platform, Medsaf gets medications directly from leading local and foreign manufacturers, eliminating issues relating to quality control and ensuring fair pricing, and deliver these medications to hospitals, pharmacies, and clinics all over the country. Founded by Vivian Nwakah, the firm provides customers with an inventory management system that allows them to see real-time stock levels for their medications, receive order reminders and alerts, while accessing historical sales data for forecasting. Nwakah’s Medsaf won the Nigerian leg of the Seedstars World competition in 2017, earning it a chance to pitch for $500,000 in equity investment at the global final in Switzerland this year.

Ubenwa Ubenwa is saving newborn lives by enabling quick and cost-effective diagnosis of birth asphyxia (suffocation) from infant cry. Co-founded by Charles Onu and Udeogu Innocent in 2017, this start-up employs artificial intelligence (AI) in solving healthcare problems. Birth Asphyxia is one of the top three causes of infant mortality in the world, causing the death of about 1.2 million infants annually and severe life-long disabilities such as cerebral palsy, deafness, and paralysis. Ubenwa is developing a machine learning system that can take as input the infant cry, analyse the amplitude and frequency patterns in the cry, to provide instant diagnosis of birth asphyxia. As of December last year, the founders said the AI solution had achieved over 95 percent prediction accuracy in trials with nearly 1,400 pre-recorded baby cries. Kangpe Kangpe provides a platform to enable users to ask doctors their health questions and get answers within 10 minutes. It was founded by Femi Kuti, Ope Olumeken and Matthew Mayaki, who launched Kangpe in Nigeria in 2015. Three years after, the start-up has extended from Nigeria to Ghana, Kenya, Rwanda and some French-speaking African countries.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Fifen Eyemisanre Famous Graphics

BUSINESS DAY

C002D5556

Monday 12 November 2018

Start-Up Digest

Meet Onyekachukwu, founder of Vickkypearl and Pearlie Fashion Josephine Okojie

igeria’s landscape is changing, with young people realising that entrepreneurship is the surest way of escaping poverty and financial dependence. Oke Victoria Onyekachukwu happens to be one of those young people who believe that Nigeria is a goldmine and that problem solvers are value creators. She is the founder and chief executive officer of Vickkypearl Cakes, a startup that specialises in the production of fresh cakes in Lagos and its environs. Victoria is also the founder of Pearlie Fashion, a firm that produces and sells both female and male accessories. This makes her a chief executive officer of two firms. Surprisingly, she founded these two firms as an undergraduate at the Federal University of Technology, Akure. Victoria has over five years of experience in baking and catering. She was inspired to establish Vickkypearl Cakes by her strong passion for designs and creativity, with a passion for recreating beautiful cake decorations seen in parties

and events she attended. She had been baking cakes for family and friends for free before making it a business in 2015, after undergoing company registration procedures. “I believed in my artistic, creative mind. I believed I could make cakes as beautiful as those ones seen at parties and events and I could make exactly what others wanted or dreamed about. Entrepreneurship, for me, is in-born as I never did it basically to augment my allowance,” the baker tells Start-Up Digest. Before establishing her business in 2015, Oke had attended a catering school to learn designs and gain more knowledge of cake-making from professionals. After some time, she started taking some online courses to learn global trends in the two areas. The then undergraduate started her business with no initial capital. The entrepreneur explains that when she started, most of her clients would always pay upfront for cakes, which often enabled her to buy the ingredients needed for baking and decoration. Oke says that despite the challenges in the economy, her business still sees growth,

Oke Victoria Onyekachukwu

with patronage from new customers increasing by leaps and bounds. “Overtime since starting, I have got contracts to supply cakes at the places I buy ingredients to make cakes for my customers. The busi-

ness has grown dramatically such that I now have enough resources to buy modern baking equipment for the business.” “Since starting two years ago, I have been contracted to make several weddings cakes and so many birthdays and

bridal showers cakes,” Oke discloses. Oke has continued to educate herself more to remain relevant. She believes that one can never learn enough in any industry. She says that social media has made a positive impact on her business as some of her customers patronise her using various social media channels. Oke says she will tell her younger self to brand herself no matter the cost. She will also want her younger self to start early, as failing early guarantees future success. The young entrepreneur says the country’s huge infrastructural gaps have remained a major impediment to her business. “Bad road is really a big challenge to my business. It is really affecting delivery. Where I could have taken a taxi, I will, sometimes, walk for fear of pot-holes that can cause cracks on the cake,” she says. “Poor power supply is also a big challenge to my business. I do most of my baking at night. The poor power supply has affected my business and increased my production cost because most times I have to make use of a generator or lamps. “Another challenge facing

my business is the rising cost of baking items in the market and the unwillingness of customers to pay more. Most of them want good cakes for cheaper prices despite high cost of production,” the young entrepreneur explains. She urges governments at all levels to provide critical infrastructure such as steady power supply and good roads, stating that Nigeria cannot drive its industrialisation strategy in the absence of infrastructure. When asked how the country’s low consumer purchasing power has impacted her business, she says, “The business at a point had a decline because customers couldn’t afford to buy the size of cake they wanted. So they ended up requesting smaller sizes or cupcakes, but this period happens to be my good moment because I have suddenly become the cupcake mistress.” “I make more cupcakes now than ever. There was a time I made 300 cupcakes and sold them in less than a week. During Valentine period last year, I was wowed. Most orders now are cupcakes. I now remind people that I still make eight, ten and twelve inches cakes,” she further states.

lion revenue business.

small business owners in the oil-rich region, while the Aspire Growth Fund frees between $100,000 and $3 million to businesses to stimulate growth in the area. GroFin provides its funds mostly for a maximum of six years.

Funds available for Nigerian entrepreneurs ODINAKA ANUDU

ven though experts generally agree that finance is not the biggest problem facing Nigerian entrepreneurs, many of them still believe that it still ranks among the first five. Understanding the critical importance of funding to Nigerian business owners and entrepreneurs, Start-Up Digest, in its characteristic manner, has dug up some of the easy-to-get funds available in the country this year. Criteria The general criterion for accessing these funds is the capacity to present a bankable and viable business plan. The entrepreneur should be clear on where he wants to be in the near future, and must also be able to describe the market for his or her products. BoI Funds If there is anywhere entre-

preneurs can get cheap or single-digit funds (often at nine percent lending rate), it’s from the Bank of Industry (BoI). This development finance institution (DFI) has been rated by many local and international agencies as one of the best managed banks in the world. The BoI has a number of funds that entrepreneurs of all levels can access. First is the Graduate Entrepreneurship Fund (GEF), which is meant for serving members of the National Youth Service Corps (NYSC). Candidates are allowed to submit their business ideas, which are then reviewed by a team of experts. The NYSC members whose ideas are marketable and bankable are then selected, trained for four weeks and then given between N500,000 and N2 million. There are also the Cottage Agro Processing (CAP) Fund for small and medium agro processors; Nolly Fund for players in the Nollywood industry, as well as Fashion

Fund for designers and other players in the value chain. In fact, the bank has other matching and managed funds, including a fund for the automotive industry. Through 122 business development experts, entrepreneurs can be assisted in fund applications. The bank has a N5 billion fund from Africa’s richest man Aliko Dangote to finance SMEs at a single digit rate. Tony Elumelu Fund Tony Elumelu Foundation

has $100 million for 10,000 African entrepreneurs. This will continue to be available for another a few years. If you are in agriculture, fashion and design, light manufacturing, ICT, and solid minerals, among others, then apply for the annual Tony Elumemu’s fund. You can be lucky to be one of 1,000 entrepreneurs to be shortlisted. Through the Elumelu fund, Momarr Mass Taal, the CEO of Tropingo Foods in The Gambia, who got $5,000 seed capital in 2015, turned his enterprise into a $1.2 mil-

GroFin Fund GroFin, a development financier, has committed over $500 million to funding Nigerian micro, small and medium business (MSMEs) across the country. The firm has five different types of fund: the Aspire Nigeria Fund, the Growth Africa Fund, the Small Growing Business Fund, the Aspire Small Business Fund and the Aspire Growth Fund. The Aspire Nigeria Fund, the Growth Africa Fund and the Small Growing Business Fund cater for all parts of Nigeria except the Niger Delta. The Aspire Small Business Fund provides a minimum of $100,000 and a maximum of $1.5 million to SMEs in Nigeria. The Aspire Small Business Fund and the Aspire Growth Fund cater for the Niger Delta. The Aspire Small Business Fund provides between $10,000 and $100,000 to

Lagos State Employment Trust Fund Lagos State has N25 billion to support SMEs. The fund is divided into two categories; micro and small businesses. Under the micro, businesses can access up to N500, 000 loans with an interest rate of five percent and a tenor of one year. For the small business category, businesses can get up to N5 million for a tenor of three years. The criteria for accessing the funds include: membership of a business organisation, which will recommend the business for the loan; Lagos State tax receipt for at least six months, and Lagos state residency card. This takes three weeks for processing.

BUSINESS DAY

Monday 12 November 2018

Start-Up Digest

Air Force officer turns entrepreneur, sets up Gada Africa to revive Aba shoes Ben Chiobi, a retired air vice marshal, is the chief operating officer (CEO) and founder of Gada Africa, a marketing and logistics firm. The firm recently launched an online platform in Aba, the commercial hub of Abia State, to promote made-in-Nigeria products. He spoke with GODFREY OFURUM. Excerpts How did you get into entrepreneurship, having served in the Air Force for 33 years? t runs in the family. I come from a family of entrepreneurs. Let’s say it is in my DNA, but I had this vow right from when I was in secondary school to Nigeria. And I was given that opportunity in 1982 to attend the Nigerian Defense Academy (NDA) and I was privileged to be commissioned on June 22, 1985, and thereafter, I said I was going to dedicate myself to serving the country. I was privileged to fly different aircrafts in the Nigerian Air Force, up to the moment I retired. However, I decided to unveil the interest that I have in different areas, particularly in entrepreneurship and the burden was on how to promote made-in-Nigeria. Serving the Nigerian Air Force gave me the opportunity of traveling to various parts of the world. And each time I visited any of those locations, what often agitated my mind was to find madeIn-Nigeria goods on shelves of the shopping malls, but often I didn’t find them. So, I said to myself that when I finish from public service, I was going to do my best to promote and market Nigerian products. So, the advent of internet made it easy for me to get that done, but I said, ‘where should I start’ and naturally, it is Aba, because all the referrals kept saying, ‘go to Aba, that I will find the people that are productive in Aba clusters’. And when I came, I truly saw that it was the case and decided that, as part of our market entry strategy into the e-commerce industry in Nigeria, we are going to interface with Aba people, not to exploit them, but to choose an avenue of a seminar to ask them to come with samples of their products. Interfacing with them gave us an opportunity to see their products and right in their presence take shots of those products and put them on our website and that is exactly what we have done in the course of this programme and we will continue to do that until we have at least one-thousand different products from Aba on our website, then we will move to Benin. From Benin, we will move to Kano and from Kano, we will go to Lagos. And once we’ve done all that, we’ll create what we call ‘Gada Africa Made in Nigeria Hub’

Ben Chiobi

in each of these locations. And we will now be able to have what we call ‘a Fulfillment Centre’, where people can walk in with samples of their products and have an opportunity of hosting them on our website for free. And like we said, the service charge and other things will begin to come once they begin to make money through our platform. So, our concept is to bring our services closer to the people and get them understand that we are here to unveil a win-win approach. Once we are done with Nigeria, we will move to other African countries and I’m sure once we are able to do that, I will become a fulfilled man, because Nigeria has done a lot for me. I served the country for 33 years in the course of my military career, so I just feel that the greatest thing I can do is to give back to the society. And that is why we are not asking anybody to pay us any fee to enroll on our site, we are not asking them to pay us any fee before they can host their products on our site, but subsequently those fees will come. We will leverage on just commission based on what we have on each site, ranging from 10 to 20 percent. We have what we call service level agreements with each individual person that will be on our site and that is what it is all about.

Apart from hosting these products on your platform, you also promised that Gada Africa will handle the distribution of the goods, which, to me, is unique. Do you have the capacity to do both marketing and distribution of the goods? That is what we call ‘Logistics value chain services’. It will not be enough for us as an e-commerce company that is running an online-mall to just sell without bothering about how the products will get to the end users and we are already building the structure. Let me give you an example. In Aba here, we are going to have our Made-in-Aba Logistics Hub or what we call Gada Africa Hub. What we will be doing there is that any manufacturer in Aba that brings his/her products, he/ she will put them on our display stand. Then if anyone orders a product from our site, it will also be from our hub that we will ensure that the product gets to the customer that has placed order for it, through the partnership that we have built. We have built partnership with local and some international logistics handling companies, which I may not mention now until we tidy up all the arrangements. This is to ensure that for every product people order, they want door to door service that will happen. But

the capacity will be built over time, but for now, the capacity that we have developed is that effective from December 1, 2019. If you place any order from our platform, that order gets to you if you live in Lagos or Abuja. The idea is to see that products that are made-inAba are pushed from this end. We have a hub here, and in the next one month, the office will be ready for business, so that by December 1, if an order is placed on our site for a product that is made in Aba, all that the manufacturer needs to do is to drop it in our office and we will now ensure that whoever placed order for the product will get it and in good time. Overtime, we will be able to share with our customers the timings for other destinations. We have built a structure and we will be unveiling them as time permits. And that is why I said that we have the capacity. However, we do not have the capacity to send products to everywhere in the world, as I speak with you now, but we want to see that structure overtime is developed. But what I am assuring you now, is that if you live in Abuja or Lagos and you place an order for any product made-in-Aba on our site, give it a maximum of four days, you’ll get the product. Aba artisans need capacitybuilding to improve the quality of their products. Does Gada Africa have plans to fill this gap? I need to let you know that our services are supported by the Nigerian Export Promotion Council (NEPC), the Standards Organisation of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC), because what we have worked out with them is to see that it is only products that are certified by at least SON and NAFDAC that would be sold on Gada Africa and that is one pledge that we have made to these very important stakeholders. However, that does not leave out people that their products are not certified. Gada in this outing will not be able to share all our plans. As I speak to you, we have packaging sample for every kind of product you can think of, but we decided that we should not unveil that here. When you come to our office, you’ll see different packaging samples, because we are preparing these products for export. Beyond export, we are preparing them to be placed in proper locations in shopping malls around the

world and so in that case it means beyond packaging in bulk, we are also talking about how to package for retail. So, what that means is that for any of these people that are in any of these production clusters, when they visit our hub, they will see the different samples and look at how that fits into their production cost. It is not binding that they must use a particular one, but we will only share with them that the difference between bottled and sachet water is in the packaging. So, if you make your product presentable, definitely customers will ask for such products. So, we are working on that and beyond that we will continue to educate them. By the grace of God and God giving me life and resources, I intend that every year, we will be organising ‘Ndi Ahia’ seminar and exhibition. So, this is Ndi Ahia seminar and exhibition part-one, where we organise free seminars and exhibitions for everybody that is in the production cluster in Aba, so that they can see the opportunities that are out there. In the second edition, we intend to bring in people with different kinds of machines for production. In this case, as I speak with you, Gada is also discussing with a Korean firm that is also talking out investing in Aba, putting automation machines for shoe production. And the good news is that as I speak with you, the Aba Chamber of Commerce, Industry, Mines and Agriculture just hinted us about an investment forum that is about to hold in Aba and we intend to invite the Korean company and others to see exactly where the gaps are. If Gada is filling the e-commerce gap, we will need someone who can fill the automation process gap. Gada is there also to fill the gap of packaging, to ensure that their products are shipped to customers within and outside the country. What is your last word to Aba artisans? My advice to Aba artisans is to take it one step at a time. You are in business today and you think that your problem is funding. It may not necessarily be funding. It might just be that you need to understand the processes of getting your products to international standards, so that you will not only meet local consumers, but also meet the requirements and needs of international consumers.

BUSINESS DAY Harvard Business Review

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Women act more ethically than men when representing themselves — But not when representing others Maryam Kouchaki

esearch tells us a lot about why people behave unethically. Many studies, however, look only at the unethical actions people take on behalf of themselves. What about when we act on behalf of others? We conducted four studies to examine whether people were more likely to lie when negotiating on behalf of others, rather than for themselves. We recruited 1,337 participants to engage in negotiations, and found that gender played a role in how we negotiate for ourselves and others. Men were more likely than women to lie when they were negotiating for

themselves, but not when negotiating for others. But the reverse was true for women. When we asked whyparticipants made the decisions they did, we saw that women were more likely to report feeling guilty about letting down those they were advocating for. They were more willing to engage in questionable behavior because they anticipated feeling more guilt, and worried about disappointing others. Even though our studies focused on women, other research has yielded similar general findings that people tend to act unethically when representing others, if they believe those they’re promoting are OK with it, or prefer it. So how can we combat

ations, and that can lead to erroneous assumptions about someone’s ethics and expectations, which in turn may lead to unethical behavior on their behalf. STATE YOUR EXPECTATIONS: When you’re representing someone, you should also be upfront about where you are and aren’t willing to go. While the tendency to act unethically on behalf of others exists, the good news is that you can act to prevent such outcomes.

the tendency to behave unethically when acting on someone else’s behalf? Our research suggests a few approaches:

AIM FOR INTENTIONALITY: At the individual level, it’s important to be aware of your motivations when advocating

for others. ASK FOR CLARIFICATION: There can be significant ambiguity in real-world advocacy situ-

(Maryam Kouchaki is an assistant professor of management and organizations at Kellogg School of Management, Northwestern University.)

4 ways to pressure-Test strategic decisions, inspired by the US military Rick Lynch and Jay Galeota

he ability to poke holes in one’s own strategies is something the U.S. military has practiced and refined over centuries. While sometimes necessary, making it up as you go is more often associated with failure and is often a symptom of ineffective or inaccurate anticipation of competitive moves or environmental shifts. The techniques the military has honed can help executives anticipate problems and change course when necessary: BUILD SITUATIONAL AWARENESS. In the business world, it’s crucial to

make sense of the environments in which we operate and foresee how different factors will affect our decisions. Start by forming teams and task-

ing them to develop alternatives based on different views of the same situation. For example, what if a new competitor enters the market earlier than

expected? The next step is to compare these hypotheticals collectively and determine what countermeasures will have the most impact.

DEVELOP AN OUTSIDEIN PERSPECTIVE. Think of aircraft. For a long time, the military used planes primarily to increase visibility of topography and troop movements, but starting in the early 1900s, the military began using them to deliver ordinance and conduct warfare. What are your organization’s aircraft? Think to yourself: In future scenarios, could any of these become new lines of business? GAME IT OUT. Another practice is war-gaming, and there is often no substitute for putting real people into the mix to see how they react. Incentivizing “opposing” teams

for success will help ensure a robust simulation. FORM DIVERSE, STRATEGIC GROUPS. Finally, form strategic initiatives groups, and populate them with people who can analyze problems from various perspectives.

(Rick Lynch served in the U.S. Army for 35 years, retiring as a lieutenant general. Jay Galeota was the chief strategy and business development officer and president of Emerging Businesses at Merck and is now the president of G&W Laboratories, Inc.)

Monday 12 November 2018

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real sector watch BUSINESS DAY

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Dufil showing strength 22 years after entering noodles industry

Stories by ODINAKA ANUDU

f there is any Nigerian manufacturing company that has shown consistency and confidence in the economy, it is Dufil Prima Foods, also known as De United Foods Industries Limited, maker of Indomie noodles. However, Dufil’s confidence is not for nothing as it has a large customer base that has come to love the taste of its noodles. The company has a long history in Nigeria. It entered the noodles industry in 1996, with a manufacturing plant in Ota, Ogun State. When this company first produced Indomie, Nigerians gave a veiled protest, saying that the company was trying to make them eat worms. But this perception soon evaporated. Five years after, the company incorporated its Choba, Port Harcourt, plant. As of 2004, it was already producing one million cartons of Indomie per month. The company continued expansion, incorporating Insignia Print Technology LFTZ Enterprise in 2007 as a subsidiary of Dufil Prima Foods Limited at Lekki, Lagos. In 2008, Dufil Prima Foods was converted into

public limited company and became the holding company of the group. This was also the year the noodle maker started the seasoning division at Ota. With demand for its noodles rising, Dufil reached the production of one billion packs of Indomie noodles in 2010. That is not all, as the firm incorporated and commenced operation of Northern Noodles Limited as a subsidiary of Dufil Prima Foods Plc at Kaduna. The company is today the leader in the industry, acquiring two production lines of Dangote Noodles Limited for N3.75 billion ($12.26 million) in Novem-

ber 2017. Dufil signed an agreement with Dangote Noodles to buy its plants at Ikorodu and Calabar factories. The firm was also to buy stock worth N383.94 million. In May 2018, the company acquired May &Baker’s Mimee noodles, with its production line, in a deal worth N775 million. “We are pleased to announce this transaction, which delivers immediate value to our current shareholders and reflects the successful alignment, partnership, and commitment of our board, employees and suppliers,” Girish Sharma, chief operating officer of Dufil Prima Foods, said

Struggling pharma industry wants implementation of Executive Order 03

igerian drug makers want the federal government to ask its ministries, departments and agencies (MDAs) to implement Executive Order 03 to drive patronage of locally manufactured medicines. Nigeria’s President Muhammadu Buhari came up with Executive Order 03 in 2017 to enhance local content and boost patronage of made-in-Nigeria goods and services. It provides that local firms should be involved in any contract or patronage by MDAs at about 40 percent. However, drug makers say implementation of the Executive Order has not been strong as no big tender has been seen from the government side. One chief executive of a Lagos-based drug firm complained that the industry was

gradually dying for lack of patronage, wondering what would become of the country’s medicines security if over 120 drug firms in the country were forced to collapse. Okey Akpa, chairman of Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (MAN), confirmed that no big tender had come this year from the government side. The pharma sector is struggling with major players unable to sustain production pre-2015 years. Already Swiss Pharma has been bought by an investor after experiencing early struggles, while Evans Medicals has gone under. Incidentally, these two drug makers got the WHO prequalification, which ordinarily should raise the level of their competitiveness. The pharma indus-

try depends on import for over 50 percent of their raw materials, while patronage remains a major hurdle to cross. Capacity utilisation is less than 40 percent, say players in the industry. Another chief executive of a pharmaceutical industry told Real Sector Watch that the industry was struggling and some firms might go under except there were policies to protect existing investors that had pumped over N300 billion so far in the industry. “The challenges of pharmaceutical companies reflect the problems facing the industry. Patronage is key and remains something the industry wants the government side. Also, you must look at a business case in terms of incentive or protection of an industry before asking players to upgrade,” Akpa said.

while confirming the deal. Sharma had at an earlier meeting said that the company was in an expansion drive that would see it investing additional N20 billion in Nigeria after its initial N10 billion investment. Dufil acquired 100 percent of May&Baker’s food division, and less than 10 percent of its total balance sheet size, Sandra Aduba, May and Baker’s head of communication department, said. “The noodles industry is a red ocean and a loss contributing unit for us hence the decision to sell. The board and shareholders approved the sale at an EGM

held on 23rd Nov. 2017,” Aduba said in an emailed response to BusinessDay questions. Many Nigerians may not know that this company exports noodles to several markets, including the United States and Europe. Africans, especially Nigerians, in the Diaspora consume this product in large quantity. Little wonder why the company’s export to the United States alone reached about $30 million in 2013, said Deepak Singhal, chief executive officer of the company, at an event that year. Also around that year, it was gathered that Dufil was already a $600 million company. Unconfirmed sources said the company, in 2012 alone, sold 1.6 billion packets of noodles between N35 and N95, which was then more than what consumed in any country outside Asia except the US, Brazil and Russia. In 2017, Dufil, following the approval granted by the FMDQ Board Listings, Markets and Technology Committee, listed the Dufil Prima Foods N10bn Series 1 Fixed Rate Bond under its N40bn Bond Issuance Programme on the OTC Exchange. The Series 1 issuance achieved a 100 percent sub-

scription level with participation from a wide array of domestic (pension fund administrators, fund managers and commercial banks) and foreign investors. The proceeds of the issuance were to be used to refinance existing debt obligations and finance partial capital expenditure plans of the company. “Dufil, as a company operating in the Nigerian market for over two decades, is pleased to have taken this additional step in expanding and diversifying its financing options beyond the conventional commercial bank debt market by establishing relationships with non-bank institutional investors in Nigeria. Dufil bond received participation from both domestic and foreign Investors. In case of domestic investment, a wide range of top- notch pension funds, asset managers and banks participated. Furthermore, Dufil is also extremely pleased to have had foreign investor participation in the bond issue as this is a testament to the company’s adherence to international best practices and standards, which the company employs in all aspects of its business operations,” Madhukar Khetan, then chief operating officer for Dufil, had said.

Fitch, Agusto affirm BoI’s positive outlook

gusto&Co, a top rating agency, has revised the Bank of Industry’s ratings from Aa- to Aa while Fitch retained the bank’s long-term issuer default ratings (IDR) of AA+ (nga). According to Agusto&Co, the Aa assigned rating reflects the development finance institution’s very good financial condition and strong capacity to repay obligations on a timely basis. Agusto noted that the rating recognises BOI’s good capitalisation levels, acceptable asset quality, good liquidity profile and low cost funding base during the review period of 2018. On its part, Fitch noted that BoI’s ratings are sensitive to any change in the state’s ability to support the bank, as indicated by a downgrade of Nigeria’s sovereign rating, adding that the bank’s strong capital ratios are prudent given the DFI’s sensitivity to

the volatile economic environment. Though the rating agencies affirmed the susceptibility of the bank’s fragility in the macroeconomic environment, particularly as it targets risky economic sectors, they noted that safety measures such as bank guarantees, treasury bills, and federal government bonds provided by large corporates mitigate risks to an extent. With the bank’s non-performing loan (NPL) ratio standing at 4.9 percent at end of first half 2018, the rating agencies noted that there are expectations that the volume of delinquent loans to moderate slightly in the near term given some remedial actions taken on the affected impaired loans. On the bank’s outlook, Agusto said,: “While the bank’s funding base has grown significantly, its loan portfolio has not shown that level of growth. This is as a

result of major challenges the bank faces, such as insufficient capacity to reach micro, small and medium scale business across the country and the dearth of bankable projects. “To extend its reach, BOI is partnering with commercial and microfinance banks which have the branch network and staff strength to penetrate the market nationwide. However, insufficient bankable projects remain a drag on the bank’s projected performance. This is primarily due to the weak macroeconomic and operating environment which deters businesses from thriving. “Going forward, we expect the bank’s performance to be upheld by the support of its two largest shareholders driving the lending business, funding from multilateral finance organisations and anexperienced management team overseeing the daily operations of the bank”.

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real sector watch Flour Mills undaunted by economy as expansion continues Stories by ODINAKA ANUDU

lour Mills of Nigeria (FMN) has remained undaunted by Nigeria’s economic swings as the company continues to expand from flour to sugar. FMN is one of Nigeria’s largest conglomerates with interests in flour, sugar, palm oil, noodles, animal feeds, grains and logistics, among others. Despite swings in the Nigerian economy, the group has continued to invest billions in backward integration projects across states, pumping money in areas where there are demandsupply gaps. The group has invested in a fertilizer blending plant in Kudenda, Kaduna State, as well as silo complexes from the Federal Ministry of Agriculture and Rural Development (FMARD). FMN plc has invested N50 billion in the sugar value chain, providing a concrete example of efforts to cut sugar importation into Africa’s most populous country. The group’s Sunti Golden Sugar Estate , near Mok-

wa, in Niger State, is situated on 17,000 hectares of irrigable farmland, and a sugar mill that processes 4,500 metric tons of sugar cane per day. It invested over N1bn in irrigation system and infrastructure, including drain

pumps, pump stations and a power grid, a recent statement from the group said. Analysts b e lie ve th e group, alongside Dangote, has made genuine efforts to curb sugar imports from Brazil into Nigeria. Speaking at an annual

general meeting held in June this year in Lagos, John G. Coumantaros, chairman, FMN, said the sugar investment had made huge savings in foreign exchange for the country, boosted local capacity and reduced unemployment by putting thou-

sands of Nigerians to work in the agriculture sector in line with the agricultural policy of the government. “At full capacity, the mill is expected to produce one million tons of sugarcane, which roughly translates into 100,000 metric tons of sugar yearly.” As a company, FMN’s revenue rose four percent to N389 billion, with profit before tax (PBT) recording a 28.9 percent surge, rising from NN10.979 billion in the year ended March 31 2017 to N14.153 billion in the corresponding period of 2018. The company experienced a drop in profit after tax (PAT), from N9.829 billion in 2017 to N9.244 billion in 2018. The Group’s PBT rose from N10.472 billion in 2017 to N16.541 billion in 2018. Similarly, the Group’s PAT surged from N8.836 billion in 2017 to N13.615 billion, representing a 54.08 percent rise. It was gathered that one of the subsidiaries—Agri Palm Limited—located at Iguiye and Ugbogui near Benin City (with 4.500 hectares of oil palm plantation) recorded improvements in

yields with a 25 percent increase in fresh fruit bunches. Coumantaros said following the acquisition of additional 20,000 hectares of arable land in Edo State, FMN was on the verge of ascertaining the boundaries by planting beacons for better management. As part of FMN’s plan to raise starch production, one of FMN’s subsidiary—Agroallied Syrups Limited—has succeeded in cultivating 800 hectares of cassava in Shao, Kwara State, in the last 12 months, Real Sector Watch understands. “You would recall that in my last year’s report, I highlighted our Group’s agreement with Ere-Egwa Farms Limited, a company with wide experience in the growing of cassava to support our downstream company with the supply of cassava through a contract farming arrangement. I am pleased to report that the strategic decision had started yielding the desired results, as evident in the increased supply of cassava tubers to Thai Farm International, our downstream company in the value chain,” he said.

FG bent on signing AfCFTA despite opposition from MAN

espite opposition from the Manufacturers Association of Nigeria (MAN), sources from the federal government told Real Sector Watch over the weekend that Nigeria will soon join other 49 countries in the African Continental Free Trade (AfCFTA) party. One of the sources said though the government was being circumspect to ensure that it would not be party to any trade treaty that would destroy Nigeria’s manufacturing sector, it had considered the merits and demerits of the trade treaty and decided that the former outweighed the latter. “We are looking at the first quarter of next year,” one source, who did not want to be quoted, said. “The thinking is that we can’t be left out of the treaty at this critical point of our history. Pressure is being mounted on the President, but beside that, we see the AfCFTA as a no-brainer,” a

source added. Last week, the private sector, academics and trade experts disagreed over the country should first strengthen its economy before signing the AfCFTA or signing it while strengthening the economy. At a one-day conference organised by the Nigerian Institute of International Affairs (NIIA) in Lagos recently, Chibuzo Nwoke, a professor and vice chancellor of Oduduwa University, raised a number of questions for the Nigerian trade contingent, saying that though the country had not rejected the AfCFTA, the federal government must have a closer look at the place of regional economic communities in the implementation of the trade treaty. “How will the Common External Tariff (CET) and the ECOWAS Trade Liberalisation Scheme (ETLS) fit into the scheme? How was 90: 10 arrived at? Is the AfCFTA consistent with the Economic

Recovery and Growth Plan (ERGP)? We need to ensure that the Nigerian economy remains competitive,” Nwoke said. He explained that protectionism was not a totally bad idea as countries often came up with strategies to protect their local industries. The Manufacturers Asso-

Buhari

ciation of Nigeria (MAN) said it was not against the trade treaty as perceived in some quarters, but pointed out that there was an ambiguous basis for the determination of 90:10 Market Access ratios, set to be achieved within five years. Segun Ajayi-Kadir, director-general of MAN, said the thinking behind the instan-

taneous implementation of Market Access without negotiating the Rules of Origin was untidy and ran contrary to sound trade negotiation practice. “ Nig e r i a s h ou l d n o t sign the AfCFTA based on bandwagon effect or on the grounds of diplomatic niceties,” he said, adding that the association remained resolute in its belief that a trade agreement that would improve intra-African trade was desirable for the continent’s development. But Iyalode Alaba-Lawson, national president of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), had countered MAN’s argument, saying that Nigeria was deeply involved in the negotiation process from the beginning and should not afford to be excluded from a common African market because it was a veritable strategy to raise the competitiveness of African economies in the global market.

Alaba-Lawson, who was represented Ayoola Olukanni, director-general of NACCIMA, pointed out that the association was in support of conducting baseline studies but added that this should not be allowed to stall the AfCFTA process. “AfCFTA is entering critical stages and negotiations are going on in priority sectors while Nigeria is still indecisive. We must therefore remember that the world will not wait for us. We need to sign so that we can be involved in negotiations, especially with regards with our areas of concern,” she said. The AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994, targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity. The deal is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all African countries sign up.

BUSINESS DAY

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Live @ The Exchanges Top Gainers/Losers as at Friday 09 November 2018 GAINERS Company

Market Statistics as at Friday 09 November 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

N81

N81.5

0.5

SEPLAT

N638

N668.5

30.5

FIDSON

N4.5

N4.9

0.4

NESTLE

N1450

N1460

REDSTAREX

N4.2

N4.5

0.3

N81.6

N82

0.4

UBA

N7.8

0.2

AIRSERVICE

N6.6

0.4

N23.85

N24

0.15

REDSTAREX

N4.25

N4.5

0.25

ZENITHBANK

ASI (Points) DEALS (Numbers)

he Securities and Exchange Commission (SEC) has ordered NEM Insurance Plc (NEM) to reconvene the 48th Annual General Meeting of the company held in Ibadan on June 20, 2018. SEC directive follows “a thorough investigation by the commission due to complaints received from the aggrieved shareholders of the insurance company.” SEC Nigeria has resolved not to recognise the earlier organised 48th Annual General Meeting of NEM Insurance Plc alongside the resolutions reached at the said meeting. Also, the Corporate Affairs Commission (CAC) is expected to invalidate the meeting as a result of

Mary Uduk,acting DG SEC

the contravention of the provisions of Companies and Allied Matters Act 2004. The SEC said the outcome of the investigation carried out by its enforcement department revealed the followings: NEM Insurance Plc failed to give the required twenty-one (21) days’

notice to its shareholders for the 48th Annual General Meeting held in Ibadan on June 20, 2018; and that NEM Insurance Plc instructed Apel Capital Registrars Limited on June 8, 2018 to dispatch the notice of the 48th Annual General Meeting of June 20, 2018. Also, Apel Capital

StanChart launches world’s first sovereign Blue Bond

tandard Chartered Plc group in partnership with the World Bank, has launched the world’s first sovereign blue bond for the Republic of Seychelles. The bond raised $15 million from international investors, which will help expand and protect marine areas, improve governance of priority fisheries and develop the Seychelles’ blue economy. The World Bank assisted in developing the blue bond and reaching out to the three investors: Calvert Impact Capital, Nuveen, and Prudential. Standard Chartered acted as placement agent for the bond. Speaking about the landmark placement, Simon Cooper, Chief Executive, Corporate, Commercial and Institutional Banking at Standard Chartered, said: “The world’s first sovereign blue bond is a landmark transaction and one in which Stand-

ard Chartered is proud to have played a role, in partnership with the World Bank and the Republic of Seychelles. Finding innovative ways to mobilise capital to tackle development issues is a priority for us.” “The Seychelles blue bond will help protect the health of our oceans while developing a blue economy and serves as a powerful example for other countries, highlighting that finance can play a role as an important force for good,” added Daniel Hanna, Global Head of Sustainable Finance and Global Head of Public Sector & Development Organisations, Standard Chartered. The Seychelles blue bond is partially guaranteed by a US$5 million guarantee from the World Bank and further supported by a US$5 million concessional loan from the Global Environment Facility, which will partially cover interest payments for the bond.

Proceeds from the bond will also contribute to the World Bank’s South West Indian Ocean Fisheries Governance and Shared Growth Program, which supports countries in the region to sustainably manage their fisheries resources and increase economic benefits from their fisheries sectors. The launch comes soon after the Group created a new Sustainable Finance team to focus on emerging market sustainable financing and to lead all its business activities in the area. This also follows recent announcements to cease financing new coal fired power plants, explore its role in promoting greater disclosure on emissions and set new science-based emissions targets.

2,678.00

VOLUME (Numbers)

121,260,461.00

VALUE (N billion)

1.580

MARKET CAP (N Trn

SEC asks NEM Insurance to reconvene 48th AGM over aggrieved shareholders complaints Stories by Iheanyi Nwachukwu

32,200.21

Registrars Limited on June 12, 2018 engaged and used a company, Hurricane Express Services Limited, not in the list of Licensed Courier Companies in Nigeria to dispatch the notice of the meeting to some of the shareholders in Lagos only; and that the action of NEM Insurance Plc contravenes Sections 217 and 220(1) of Companies and Allied Matters Act, 2004 and Section 24 of the SEC’s Code of Corporate Governance for Public Companies 2013. The commission expects NEM Insurance Plc to give requisite notice to all shareholders in accordance with the provisions of Companies and Allied Matters Act (CAMA) and the SEC’s Code of Corporate Governance for Public Companies 2013 while its decision on the AGM has also been communicated to the Corporate Affairs Commission (CAC).

11.755

Corporate Investments and Individual Advisers for launch at 2018 IAPM conference

he Corporate Investment and Individual Advisers (CIIA) will be officially launched at the 2018 edition of the Investment Advisers and Portfolio Manager (IAPM) conference which holds in Lagos on Wednesday November 14. The plan to launch CIIA was disclosed on Tuesday November 6 during a press conference on the forthcoming IAPM conference. Abimbola Olashore, president of the IAPM who led the briefing said the conference will focus on the theme “The Future of Investment Advisory Services in Nigeria.” Oluwatoyin Sanni, president of CIIA said the objective of the conference is to showcase excellence and the quality of leadership in the IAPM. Mobolaji Balogun, a renowned investment

banker and chairman, Lafarge Africa Plc will be the guest speaker at the 2018 IAPM conference. CIIA which is an affiliate of the Association of Investment Advisers and Portfolio Managers, was registered by the Securities and Exchange Commission of Nigeria on April 20, 2018. The CIIA will serve as a selfregulatory organisation (SRO) for corporate and individual investment advisers in the Nigerian capital market. Olashore said, “IAPM Members’ Forum is an annual event that brings the investment community together to exchange information on issues, trends and latest developments in the financial market. The event also serves as interface for networking among members, members of the investment community and the regulators of the financial markets”.

SEC acting DG, NSE president, others for PEARL Awards

s the countdown to the prestigious 2018 PEARL Awards ticks, organizers of the programme have announced that the event would be graced by the Acting Director General of the Securities & Exchange Commission, Mary Uduk and Ambassador Shehu Malami, renowned Statesman, as Special Guests of Honour, while President & Chairman of Council of the Nigerian Stock Exchange, Abimbola Ogunbanjo, will be chairman at the event. The Chairman, Senate Committee on Local Content, Senator Solomon Olamilekan, a recently celebrated Fellow of the Institute of Chartered Accountants of Nigeria as well as President, Chartered Institute of Stockbrokers of Nigeria, Ademola Adekoje & President, Chartered Institute of Bankers of Nigeria, Dr. Uche Olowu, among oth-

ers, will be Guests of Honour. This is apart from expected record attendance by Chairmen, Chief Executives and top officials of major players in the Nigerian Capital Market, captains of commerce & industry, regulators, diplomats and top government functionaries at the event. According to Faruk Umar, who is the Chairman of PEARL Awards’ Board of Governors, “The Award in the past twentytwo editions has grown in relevance and has become a major barometer for measuring the pulse of the Nigerian Capital Market”. He stressed that that the Board and Secretariat of PEARL Awards are pleased with the confidence reposed in the PEARL Awards by major stakeholders of the Capital Market over the past more than two decades of rewarding corporate excellence with

fairness, objectivity and integrity. Tayo Orekoya, the President of PEARL Awards Nigeria, opined that the 2018 edition is a major morale booster for firms whose effort in the post-recession Nigeria has kept key market index inching upwards, inspite of market and economic challenges. “There is no better time and platform for the performing organizations to be rewarded for wadding through the low moments of the Nigerian economy than now and at PEARL Awards”. Instructively, with the list of Award nominees for this year already released, Orekoya added that almost all the seats for the Sunday November 25th event at the Eko Hotel’s Grand Ball Room have been taken up. “This speaks to the enthusiasm that the nominees’ list has generated since its release a couple of days back.

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Buhari’s certificate storm distracts from... Continued from page 1

data show. But many Nigerians

have been distracted by the storm in a cup generated by the certificate controversy. The West African Examination Council (WAEC) waded into the storm by providing the embattled President Buhari, a retired-major general of the Nigerian army a certificate of attestation on Nov. 2 but this only sparked more arguments and counter arguments. “@MBuhari How come mathematics and woodwork that you had F9 (fail) both disappeared in your new @waecnigeria result. Keep embarrassing us sir. I wonder what basis senator Adeleke is being prosecuted?” Sule Mathew Oloche, CEO of RBG Energy Limited tweeted on Nov. 3. “Sorry, bro. We no longer capture

in our certificates or Attestation of Results the subjects a candidate had F9s in, please,” WAEC retorted. While the Certificate saga dominates headlines, big issues for any incoming administration to grapple with remain. A September, 2018 Nigeria country forecast report released by the Economist Intelligence Unit (EIU) expects that there would be no significant reforms in the Nigerian economy between 2018 and 2022. “The sort of fundamental structural reforms needed to propel the economy onto a higher growth path is unlikely during the forecast period,” the report stated. Reforms such as the liberalisation of foreign exchange markets or market led pricing in the energy sector have been anticipated. However, the EIU believes that this will be

Terragon acquires Asian marketing... Continued from page 1

remaining unsolved, Terragon is taking the lead in mobile and digital transformation through best in class software, top talent in artificial intelligence and machine learning, as well as product innovation, to provide custom solutions.” Bizense has core expertise in mobile advertising and targeting technologies with operations in key Asian markets including India, Singapore and Indonesia. The acquisition will help Terragon scale its digital trans-

formation and data monetization service which it currently provides to a number of leading African Telcos. Amit Khemchandani, Bizense Founder and CEO, said: “Terragon’s pan-African scale, extensive client base and ambition is what excites us about joining the team. The similarities between Africa and South East Asian markets, and the unmatched technology we have co-developed provides a tremendous opportunity for us to capitalize on the momentum we’ve built over the past few years.” “Now we are fully aligned and

Oil firms move from worst to best as profit ... Continued from page 2

rian National Petroleum Corporation (NNPC) policy as sole importer of petrol, has allowed them leverage their brand and wide service stations to distribute product while at the same time increasing volumes and growing profit. “Sincethechangeoftemplate,NNPC dictates your margins, and the only way to make money is to increase your volume,” said Jubril Kareem – Acting Head of Energy Research at Ecobank.

Kareem added that the benefit for investors are mixed, as the companies are no longer borrowing to cover subsidycost;meaningtheycanbettermanage liquidity without the need to fight the government for prompt payment. “Also the interest usually accrued from such borrowing will also decline,’’ said Kareem. While the prognosis is positive for oil and gas firms as far as commodity price remains at current levels and government holds on to the cur-

Monday 12 November 2018

contentious leading to a practically impossible reform of the sector. The 2018 budget passed in June shows that proposed recurrent expenditure stood at N3.51 trillion while capital expenditure is at N2.89 trillion. As a percent of revenue, recurrent expenditure is estimated at 68.27 percent of government revenue while capital expenditure is only 31.73 percent. Also according to EIU forecast, while spending to gross domestic product (GDP) of the country increases, government retained revenue to GDP will remain as low as 3.8 percent. Views on the certificate situation depends on who you talk to, an academic, a politician or the common man on the street. “For most academics, it is clear that President Buhari has no certificate and WAEC trying to cover up for him cannot stand,” Harold Nwariaku, principal consultant at Lekki-based

Harold & Co. Consulting, a human capital development company said on phone. “The age issue and grades obtained at the so-called WAEC exams do not add up.” Article131, (sub-sections a-d) of Nigeria’s 1999 Constitution as amended provides as follows: A person shall be qualified for election to the office of the President if: he is a citizen of Nigeria by birth; he has attained the age of forty years; he is a member of a political party and is sponsored by that political party; and he has been educated up to at least School Certificate level or its equivalent. President Buhari was democratically elected president of Africa’s most populous nation since 2015 but had before now failed to present his school certificate since 2014 when he ran on the All Progressives Congress (APC) platform. But in an Aug. 10 2015 tweet

WAEC had stated “The Council has introduced “Attestation of Results” that can be obtained on request to serve as replacement for lost/missing certificates.” However there is a snag. London-based Cambridge Assessment (now University of Cambridge Local Examinations Syndicate) was the original body that was in charge of conducting school certificate examinations across West Africa in the 1960s. In a response to one of the requests to authenticate President Buhari’s controversial certificate, Cambridge said on its website: “We can only confirm or verify results at the direct request of or with the permission of a candidate. “This is in accordance with the provisions of the General Data Protection Regulations, Data Protection Act 2018 and section 40 of the Freedom of Information Act 2000.” Meanwhile, the candidate of Peoples Democratic Party (PDP) Atiku Abubakar submitted relevant documents, with a Diploma in Law in 1969 from the Ahmadu Bello University being his highest qualification. “For some politicians this is an opportunity to nail the President’s stance as a man of Integrity. The School Certificate controversy is the most glaring way to discredit the president but I doubt that this will have much impact,” Nwariaku said. President Muhammadu Buhari’s Secondary School Certificate has been a subject of polemic since 2015 when it was found missing in the forms he submitted to the Independent National Electoral Commission (INEC) for the purpose of the presidential election. At that time, Buhari had through a sworn affidavit claimed that all his credentials were with the Secretary of the Military Board. “I am the above named person and the deponent of this affidavit herein. All my academic qualifications documents as filled in my presidential form, APC/001/2015, are currently with the secretary, military board as of the time of presenting this affidavit,” he stated in both declarations. For everyday Nigerians, this is a convenient source of distraction. “It has distracted from the recent Boko Haram killings, the terrible state of both social and physical infrastructure and police extortion on our roads,” Nwariaku added.

focused on building out platforms, tools and machine learning models to help businesses in Africa acquire new customers and get existing customers to do more. We are excited about the next phase of this journey as we innovate for Africa and other emerging markets,” Amit adds. In the age of data, privacy and digitalization, Terragon has taken this strategic step to lead the market by deepening its investment in software so as to be flexible in customizing services to clients, protecting consumer data with the best in class security and enriching the data and value chain of its partners in the

digital age. “This move has been a long time coming as it will strengthen the company’s technology offerings to its clients. Bizense is a perfect fit for us as we’ve had time to grow our partnership and ascertain compatibility. We are united by a common culture of innovating game-changing mobile solutions - this is the unique differentiator,” Terragon’s CTO and Co-founder, Ayodeji Balogun said. Terragon helps companies in Africa drive continuous growth by providing intelligent connections to consumers on mobile web (browsers, apps, sites and more) and

non-web channels (mobile operator channels). In 2015, Terragon entered into a joint venture with Bizense to build its proprietary mobile ad serving technology for Africa. That partnership also led to the development of other marketing technologies including its Adrenaline platform which powers data-driven web and non-web marketing for leading brands and financial services companies on the continent. Terragon CEO, Elo Umeh had earlier in the year indicated that the company will invest its freshly raised $5million in human capital and technology.

rent template, other companies are ensnarled in a myriad of challenges undermining growth. For instance, Dwindling purchasing power among consumers, insecurity in the northern part of the country, decrepit infrastructure, high incidence of smuggling, counterfeiting locally manufactured products, and the menacing grid lock at the Apapa Ports have made it practically difficult for consumer goods companies to make profit or bolster margins amid sky high cost of production. According to a recent World Bank

data, 92.10 percent of Nigerians live at below $5.50 a day, meaning majority have low disposable income to purchasebasicgoods,furthercastingcloud on profitability for consumer firms. Christian Orajekwe, equity research analyst at Cordros Capital said that Nigerians suffered significant erosion from Naira devaluation and increase in price of fuel while wages are yet to increase with inflationary consequences of those events. “After the recession, a lot of middle income class left the country in search of greener pastures thus

dampening sales volumes as patronage reduced,” said Orajekwe. Nigeria’s economy remains fragile as GDP grew by 1.50 percent in the second quarter of 2018, down from 1.95 percent expansion recorded in the first quarter. As a result of the above stumbling blocks, Dangote Flour Mills, NASCON and Flour Mills net income fell by 75 percent, 37 percent, and 46.0 percent in the third quarter of the year. Banks have also seen interest income grow at a slow pace due to lower yield environment.

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Interview

A minimum wage is good, but a minimum job is better In this interview, Tonye Cole, the Governorship candidate of the All Progressives Congress (APC) in Rivers State talks about the minimum wage amidst growing concerns of unemployment in Rivers State.

here have been several concerns about the impact of a new minimum wage. In your opinion, what should the new minimum wage be? At the minimum, the minimum wage should be a living wage. In other words, a worker who earns the minimum wage should be able to afford the basic needs of life (food, shelter and clothing). I agree with the workers who say that the current minimum wage is a poverty wage. It is the equivalent of only five hundred and eighty naira per day. Though my vote is for a national living wage for all workers in Nigeria, I also believe that a worker should be rewarded based on the value created. For instance, an employer may find it difficult to sustain the salary of an employee earning one hundred thousand naira per month, if the employee only contributes fifty thousand worth of value. If the President approves the new minimum wage of thirty thousand naira per month, do the states have the ability to pay? There is something more important that the ability to pay. It is the willingness to pay. We are humans even before we are Nigerians. The facts shows that an employee who collected eighteen thousand naira per month in 2011 would be happier that the person who will collect thirty thousand naira per month in 2018. This is because the rate of inflation has deflated the wages of workers in private and public sector institutions. But despite the financial constraints several states face, a higher minimum wage has more advantages than disadvantages. A higher wage attracts and keeps talent. A higher wage will assist you to keep your child in school. A higher wage gives low income families access to better health care and drugs. States must no longer treat wage as an expense. Wage is an investment. More than ever before, Government must be run like a serious business. A higher minimum wage is a new contract with a worker. The

the ways that India has reduced poverty, illiteracy and unemployment is through a revolution in its education sector. We must create new incentives for our children to stay in school. They must see that quality education will guarantee a quality job. In Rivers State, what is the fastest way out of a potential unemployment crisis? We do not have a potential unemployment crisis in Rivers State. We have a Real unemployment crisis. All the economic reports say the same thing. The evidence shows that there are approximately three million unemployed and underemployed persons living in Rivers. While some want a higher minimum wage, many more want a minimum job. What other sectors in Rivers State can the youths be engaged in? The level of industrial development in Asia, Europe and America makes it difficult (not impossible) for Nigeria to compete in the global manufacturing industry. But, we still have an opportunity to compete favorably in the services sector. As Governor, I will initiate new policies that will attract investments in entertainment, sports and creative arts.

Tonye Cole

worker also promises a higher minimum productivity. Both parties must fulfill this obligation. Wouldn’t a drop in oil prices affect the ability of a state like Rivers State to pay the new minimum wage? Since 2008, Rivers State has been generating over One Hundred Million Naira per day in internally generated revenue (IGR). The only state in Nigeria that generates more internal revenue than Rivers is Lagos State. IGR is money that does not come from the federation account. This means that there is an economy in Rivers state that goes beyond relying on oil income from the federation account. In other words, Rivers State is filled with untapped potential. Isn’t the potential of Rivers State limited by the rising cost of living? The cost of living in Paris, London, and San Francisco is relatively high. Despite the high cost of liv-

ing in these cities, they keep attracting new migrants, tourists and business visitors. This shows that though it is important to reduce the rising cost of food and rent, reducing the high cost of living should not be the vision of any serious Government. My focus is on reducing the higher cost of insecurity, joblessness and poor education. The future of Rivers State lies in how quickly its leader can create and distribute wealth. That is my vision for Rivers State. A wise man once said, “Tomorrow belongs to the people who plan for it today.” What sort of policies can be used to improve the quality and standard of labor in Rivers State? Presently in Rivers State, the oil sector is not just the most attractive sector it is the only attractive sector. The National Bureau of Statistics (NBS) reveals that agriculture contributes twenty six percent

(26%) to our nation’s Gross Domestic Product (GDP). Sadly, in Rivers State, agriculture contributes only ten percent (10%) to the GDP of the State. The analysis is simple; this is the time to have an agricultural revolution in Rivers. This will lead to thousands of jobs for our unemployed youths. The latest unemployment report reveals that Rivers State has the worst unemployment record in Nigeria. More than 40% of potential workers in the state are unemployed. We cannot continue to feed the rich while the poor starve. There have been some concerns from the private sector that the real problem in Nigeria is not only unemployment but the unemployability of the youths. How should the nation address this issue? If youths are unemployable, then we need to retool our teachers. Certainly, better skills will reduce unemployability. One of

How can the country encourage more women to join the labor force? A woman must be respected and treated fairly not only during the job application process, but while she is on the job. There is a lot of on-going research on how lowering the personal income tax rate for women can be used to encourage women to participate in the labor force. As Governor, I will implement an innovate process (state wide) that protects the identity of women who report cases of sexual harassment, intimidation and domestic abuse. Is there a secret to achieve our goal of a more prosperous nation? There are many secrets but I particularly like William Ward’s approach. Like him, I believe that there are four steps to achievement. “Plan purposefully. Prepare prayerfully. Proceed positively. Pursue persistently.”

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Diamond Bank denies acquisition offers as stock stretches 3-day winning streak LOLADE AKINMURELE

iamond Bank plc has refuted claims made by former chairman, Oluseyi Bickerstheth, that the tier-two lender received acquisition offers from an unnamed investor. The Carlyle-backed lender, in a note to BusinessDay Friday, said, “The Company has not received an offer from an investor to inject cash” and that “its Board of Directors continue to review all strategic options on a regular basis. “Diamond Bank would also like to clarify it enjoys the support of its major shareholders, including The Carlyle Group and Kunoch Holdings who are, as ever, working in cooperation with the Board and management as appropriate to ensure the successful operation of its business in Africa’s most dynamic banking market.” The bank’s stocks gained 4.07 percent as at 1pm in Lagos, Friday, outperforming the banking index that was up

0.32 percent and stretching a three-day winning streak that started Wednesday, November 7, according to data from the Nigerian Stock Exchange (NSE). Yield’s on its $200 million Eurobond maturing in 2019 climbed to 15.67 percent, Thursday, according to FMDQ data. Rumours of investors showing interest in the bank - whose capital adequacy ratio of 16 percent is above the regulatory threshold of 15 percent, was fanned by former chairman Bickerstheth. Bickerstheth, who spoke with international news organisation, Bloomberg, had claimed Diamond Bank received offers from an unidentified investor to which the majority of the board refused while he was chairman. Diamond’s biggest investor is US private equity firm Carlyle Group LP, which has declined to comment. Carlyle Group owns 17.75 percent of the bank. Kunoch DB Holdings, owned by Pascal Dozie, is the second largest shareholder

in Diamond Bank with a 9.25 percent stake. Diamond Capital Partners Limited holds 6.10 percent of the bank while other investors hold 1 percent each and below. Further to the announcement of 24 October 2018, Diamond Bank is in active discussions with regards to the appointment of new non-executive directors to the Board and, subject to CBN approval; these will be announced in due course. Diamond Bank’s recent third quarter results published on October 26, 2018 show the business continues to execute its clearly articulated tech-led retail strategy despite headwinds in the Nigerian economy. Diamond bank announced October 24 that Bickersteth alongside three other directors had resigned over personal reasons, but news making the rounds is that the directors resigned to pave way for new investors to nominate their representatives on the bank’s board.

LASG seeks private sector partnership to grow economy JOSHUA BASSEY

agos State governor, Akinwunmi Ambode on Sunday, called for a broader partnership with private sector players to further grow the economy of the state. Lagos is Nigeria’s economic and business hub, accounting for most of the quoted companies in the country. Lagos, according to the National Bureau of Statistics (NBS) latest figure, generated N334 billion in 2017, higher than the combined revenue of 30 states in Nigeria. But Ambode believes that the state can achieve even more together with the private sector and thereby further raising its Gross Domestic Product (GDP). The governor spoke at the closing of the 2018 edition of the Lagos International Trade Fair, on Sunday, while also expressing the belief that participants and exhibitors in the just concluded fair would take the business and investment opportunities that Lagos economy offers. “I urge you to partner and connect with us in Lagos State, as there are abundant investment opportunities waiting to be explored. Our state is in-

vestor-friendly, and with your partnership, we are committed to do more,” said Ambode, who was represented by his deputy, Idiat Adebule. Olayinka Oladunjoye, the state commissioner for commerce, industry and cooperatives, while also speaking, said that the annual participation of the state at the fair afforded it opportunity to host hundreds of Micro, Small and Medium Enterprises (MSMEs) freely at its pavilion. Oladunjoye said that the opportunity given the MSMEs would stimulate demand for their products, facilitate inflow of capital through exposures and networking as well as boost productivity, employment and profitability. The commissioner added that the state was well-positioned to harness its strength and potential and to connect businesses by encouraging investors to leverage and identify synergies that added value to them. She said that the state would continue to create an enabling environment for businesses to thrive in the state. Mudashiru Obasa, speaker, Lagos State House of Assembly, represented by Jude

Idimogu, chairman, House Committee on Commerce, urged the Federal Government to intensify efforts in curbing importation of goods to boost local production. He said that encouraging local production and patronage would boost the nation’s economy, competitiveness and create employment for its teeming youth population. “It is our collective responsibility as Nigerians to patronise goods made in our country. We cannot continue to grow the economy of other countries at the detriment to ours,’’ he said. Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), the organisers of the annual trade fair, described Lagos State as the commercial, industrial and financial hub of Nigeria and indeed the economic gateway of subSaharan Africa. Ruwase said the state was host to several large and small industries with a fast growing population that currently stood at about 22 million. The LCCI boss said there was need to proactively tackle the peculiar challenges of urbanisation as the state’s mega status continued to emerge.

Monday 12 November 2018

Kachikwu, Wabote, Tinubu, others lead discussions at 25th Africa Oil Week

he African oil and gas industry is showing signs of renewed investor interest and confidence on upward movement in oil prices and recent oil and gas discoveries. This was very apparent by the host of panel discussions, country and company presentations at the recently concluded 25th edition of the Africa Oil Week (AOW) at Cape Town International Convention Centre, South Africa. AOW, the continent’s leading annual oil and gas gathering, marked its 25th year with its largest delegation to date. Over 1,900 guests including CEOs, government officials, key business decision makers and oil and gas executives from over 70 countries were in attendance to discuss ‘The Leading Business Intelligence and Transaction Platform for Africa’s Oil and Gas Sector.’ The event, which held from November 5 to 9, provided a platform for sector

participants, to share their strategies for growth, better government participation in the sector and engage in high level discussions on the future of the continent’s oil and gas industry, focusing on current challenges and trends and proffering solutions that will provide a positive and lasting impact for all. Nigeria was well represented as Africa’s largest oil producing nation; in attendance were Ibe Kachikwu, Nigeria’s minister of state for petroleum, Simbi Wabote, executive secretary of the Nigerian Content Developing and Managing Board (NCDMB), who both spoke extensively on Nigeria’s local content development approach and its overall contribution towards the African Oil and Gas industry. Oando plc, a leading oil and gas company, led several discussions during the course of the week. In addition to being a platinum sponsor, delegates from the company provided the Nige-

rian business perspective on various panels. Speaking on an economic outlook panel titled: “Can Africa’s upstream play a significant role in the context of the global and regional energy landscape” Oando group chief executive, Wale Tinubu, said, “We have been substantially supported by the Government’s local content policies which have effectively enabled indigenous players step in and play a significant role in the sector. In Nigeria today, out of the 2 million barrels of oil being produced, 400,000 can be attributed to indigenous production.” Alongside Tinubu on this panel were Jens Frølich Holte, state secretary, Ministry of Foreign Affairs, Norway; David Hicks, Senior Vice President: Upstream, IHS Markit; Jasper Peijs, Exploration Vice President, BP; Mounir Bouaziz, VP Commercial/New Business Development South America & Africa, Country Chair Dubai & Northern Emirates, Shell and Paul McDade, CEO, Tullow Oil.

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Atiku, FG offer divergent versions of how securitymen welcomed PDP candidate from Dubai

ormer Nigerian vice president and the presidential candidate of the People’s Democratic Party, PDP Atiku Abubakar says he and his staff were intimidated “by agents of the state” as they arrived from Dubai to the Nnamdi Azikiwe Airport in Abuja. “I arrived to Abuja this morning to a search by agents of the state, aimed at intimidating me and my staff,” Abubakar tweeted on Sunday afternoon. But in a response the minister of state for Aviation Hadi Sirika dismissed Atiku’s allegation as mischievous, saying, “while it is true that the Task Force on Currency at the airport did the routine action of checking the former Vice President’s travel bag, he was accorded full respect as a senior citizen.” However, according to Sirika, “for the records, all incoming passengers

on international flights go through customs, Immigration, health and security screening. Where the aircraft is using the private, charter wing, as the PDP Candidate did, such arrivals are met by a team of the Immigration, customs and other security agencies. They go to the arriving aircraft as a team. The airport authorities confirm that this is a routine process, applying to all international arrivals, including the minister unless the passenger is the President of Nigeria. The President, the Vice President and passengers aboard planes on the Presidential air fleet use the Presidential wing of the airport.” Abubakar who arrived Abuja airport at 1 am Nigerian time from vacation in Dubai is the main challenger against President Muhammadu Buhari in Nigeria’s next general election holding in February. His campaign to get Ni-

geria “working again” has resonated with a section of Nigerians who are disenchanted by Buhari’s handling of the economy and allegations of corruption against a few of his aides. Abubakar’s claim of intimidation will be seen by many in Africa’s most populous as attempt by the government to cow him and the incident comes a few days after the ruling All Progressives Congress called for the probation of his strategy meeting organized with some of PDP leaders in Dubai. “There is more to the meeting that meets the eye. Nigeria has enough meeting/conference rooms, many of which meet international standards,” the deputy spokesman of APC Yekini Nabena said. “It is therefore clear that the Dubai meeting was for other sinister political purposes ahead of the 2019 general elections.”

Monday 12 November 2018

Completion of $1.5bn Lagos-Ibadan rail project to delay as FG overruns budget … may seek FEC, BPP approval to cover supplementary cost AMAKA ANAGOR-EWUZIE

here are indications that the Federal Government may not meet up with the timeline for the completion of the $1.5 billion Lagos-Ibadan standard gauge rail project, as it has exceeded its budget for the project, BusinessDay investigation reveals. BusinessDay understands that the project, which has delivery deadline of December 2019, is being executed by the Nigerian Railway Corporation (NRC) and its technical partner, China Civil Engineering Construction Company (CCECC). Also, the Federal Ministry of Transportation has already compiled all incidental items and cost overrun from the $1.5 billion initially earmarked for the project, and is set to submit the list to the Bureau of Public Procurement (BPP) and the Federal Executive Council (FEC) for considerations and approvals. Investigations also re-

vealed that part of the cost overrun threatening to Lagos-Ibadan standard gauge rail project includes: Apapa Port rail sidings initially budgeted at 2.4km, has now been estimated at 6.4km. The rail siding, which is expected to connect all the terminals in Apapa Port to the standard gauge rail, was budgeted based on 2.4km calculation. Rotimi Amaechi, minister of transportation, has directed that the “difference should be calculated as part of the projects cost overrun,” a ministry source told BusinessDay. The source said: “Another cause of cost overrun is the identification and relocation of oil and gas pipelines in the port. A cost effective solution, which involves construction of protective structures over the oil and gas pipelines is being sought instead of outright relocation of the pipes. “However, the detection of many underground oil and gas pipelines remain a challenge for the project consultant, and the use of a geo-radar equipment to de-

tect underground pipelines is set to be put to use.” This, the source said, is not part of the project budget and it was not envisaged the use of a geo-radar equipment at inception, and this also forms part of the project overrun that the minister has already directed should be collated for onward submission to FEC. Amaechi, during one of his routine inspection of the project, explained that such cost overrun was expected as the project progressed. “We will definitely have scenarios as the project progresses. Many of the issues we are having now were not envisaged at inception. We have asked that all cost overruns be submitted to the Ministry,” he said. Recall that Fridet Okhiria, managing director of NRC, said the call for extension of the deadline of the project by the National Assembly had not been approved. The delay will further put burden on port users as stakeholders call for effective use of rail line in cargo movement.

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CBN to auction more OMO as N552bn maturity hits financial system Thursday HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) will likely increase its Open Market Operation (OMO) auction this week as maturities worth N552 billion are expected to hit the financial market on Thursday. OMO refers to the buying and selling government securities, usually by central banks to control liquidity in the system. Also, a primary market auction will be held on November 12, when the CBN will auction instruments worth N133.3 billion, while an equal amount will mature, according to a report by Afrinvest Securities Limited. The appetite for T-Bills remained strong in the week, as investors continued to trade at a high pace, despite multiple OMOs in the week, while rates have increased in successive weeks. “We envisage a further

hike in rates as we move towards the general election, given the expectation of increased capital flow reversals,” analysts at Afrinvest said. The CBN conducted two OMO auctions last week in response to the heightened system liquidity, offering instruments worth N681.2 billion. On November 6, the CBN auctioned the 121-day, 184-day and 338-day instruments at marginal rates of 11.5 percent, 13.0 percent and 14.5 percent, respectively, while on November 8, 91-day, 182-day, and 357-day instruments were offered at 11.5 percent, 13.0 percent and 14.5 percent accordingly. Consequently, financial system liquidity pared to N396.9 billion by the close of the week. CBN Bills at the open market amounted to N13.97 trillion in the first half of 2018 compared with N3.70 trillion, in 2017. In the same period, a total of N11.65 trillion was

subscribed to while N9.74 trillion was sold, respectively, as against N4.59 trillion and N3.87 trillion, in the corresponding period of 2017. The high level of activity was attributable to sustained monthly disbursements to the three tiers of government by the Federation Accounts Allocation Committee (FAAC), high volume of CBN Bills maturities and the frequency of auctions. Thus, the cost of liquidity management rose to N848.32 billion, although moderated by the over 300 basis point decline in yields in the review period, compared with N577.46 billion in the corresponding period of 2017. The CBN’s half-year activity report shows that the tenors of the OMO auctions ranged from 73 to 365 days, at stop rates of between 10.9000 and 14.4000 percent. In the preceding year, the tenors were between 140 and 364 days at stop rates of between 16.0000 and 18.6000 percent.

Monday 12 November 2018

Minimum wage: Stakeholders say constitutional amendment way out of logjam JOSHUA BASSEY

s organised labour, federal and state governments bicker on the recommended N30,000 national minimum wage, stakeholders have advocated constitutional amendment to bring wage matters into the concurrent legislative list, as a way of addressing wage crisis going forward. Presently, the Constitution puts wage in the exclusive legislative list. This means that only the Federal Government is empowered to legislate and fix national minimum wage for workers at both the federal and state levels, as well as those in the formal sector of the economy. Under the National Minimum Wage Act, signed in 2011, which prescribed N18,000, organised private organisations with 50 workers and above are expected to pay a national minimum wage. But the stakeholders believe that moving wage from

the exclusive to the concurrent legislative list, will allow both states and federal authorities to negotiate separately with labour and pay in accordance with resources available to them, and this will solve the protracted minimum wage debacle. Dapo Oyewunmi, a lawyer and CEO of Centre for Law and Business, who spoke on the seeming wage logjam, on a national television in Lagos, on Friday, insisted that the way to go was decentralise wage negotiation. While the state governors who had opted for N22,500 are yet to accept the N30,000 recommended by the tripartite national minimum wage committee, which submitted its report to President Muhammadu Buhari on Tuesday, Lai Mohamed, minister of information and culture, said Wednesday last week that the presentation of the report to the President did not mean that the Federal Government had agreed to

pay the recommended figure, as Buhari would still study the report. “I think it (N30,000) was a recommendation. Mr President will consider it and will make his views known in due course,” Mohammed said. But Oyewunmi, reacting to the development, said: “If labour has the interest of workers at heart, the way to go in the long run is bring wage into the concurrent legislative list. “States should sit down with labour and look at what they have, the number of workers on their payroll. These are key determinants in wage negotiation given that all states don’t have the same resources.” Ama Pepple, chairman of the tripartite national minimum wage committee, also agreed that taking wage out of the exclusive legislative list would address concerns often expressed by state governors over ability to pay, as each state would negotiate based on what was available to it.

Afreximbank, UK’s CDC Group sign $100m trade agreement HOPE MOSES-ASHIKE

frican Export-Import Bank (Afreximbank) and the United Kingdom’s CDC Group plc at the weekend in Casablanca, Morocco, signed a $100-million master risk participation agreement to support Afreximbank’s Trade Facilitation Programme. Under the terms of the risk participation arrangement, CDC will provide unfunded risk participation to Afreximbank as the bank provides trade finance products that include trade confirmation services; trade confirmation guarantee; and irrevocable reimbursement undertakings. Speaking during the signing ceremony, Kamel, Afrex-

imbank’s executive Vice President for business development and corporate banking, said that agreement will support Afreximbank’s trade confirmation services under which the Bank provides confirmation lines to African financial institutions to support their trade businesses and increase capacity to undertake trade finance transactions. It will also support the Afreximbank trade confirmation guarantee programme which offers full guarantee to international banks on behalf of African financial institutions, with the aim of resolving the issue of lack of credit limit by international/confirming banks for the African counterparts or situations of limited credit limit due to capacity constraints, among others.

L-R: Jude Emeka Idimogu, chairman, House Committee on Commerce, Industry and Cooperative, representing the speaker, Lagos State House of Assembly; Olayinka Oladundoye, commissioner for commerce, industry and cooperatives, Lagos State; Idiat Oluranti Adebule, deputy governor, Lagos State, receiving LCCI Trade Fair Excellence award from Babatunde Paul Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI), during the closing ceremony of the 2018 Lagos International Trade Fair in Lagos, yesterday. Pic by Olawale Amoo

Osinbajo tasks SMEs to judiciously use loan facility KELECHI EWUZIE

ice President Yemi Osinbajo has tasked traders in Ketu Market Lagos to judiciously use the collateral free loan facility they received in order to boost their businesses. Osinbajo stated this in Lagos when he unveiled the Federal Government’s TraderMoni, a government enterprise and empowerment programme for petty traders at the Ketu Market in Lagos. The Vice President accompanied by the Lagos State governor, Akinwunmi Ambode, and the All Progressives Congress Lagos State governorship candidate for the 2019 election, Babajide Sanwo-Olu, assured traders that the government would increase the loan

to each individual provided they were faithful in paying back the sum when due. Akanbi Taofeek, the head of Ikosi-Ketu Market, speaking on behalf of the recipients, said by remembering the petty traders, the Federal Government was taking the right step in the right direction. Taofeek observed that although the amount involved was small, it would go a long way to ease the suffering of the downtrodden Nigerians and traders. He assured the government of support to ensure the recipients kept to what he called “very encouraging repayments terms.” Speaking in the same vein, Amope Adesanya, the female head of the market, urged the government to sustain the

tempo with which they had all come out to unveil the loan assistance to the common traders without the usual requirements by microfinance banks and similar organisations. Hence, the desire of the market associations to support government to ensure the money goes round to traders. Beneficiaries who spoke with our correspondents include - Ismaila Orilowo and Sunday Adekunle, both meat sellers at the market. While Orilowo noted that initial loan sum of N10,000 might be too small for his kind of business, praised the government for at least starting something. “If such initiative has been on all the while, a lot of economic burdens will have been eased for common Nigerians,” he said.

National Assembly can’t be blamed for budget delay - Olujimi OWEDE AGBAJILEKE, Abuja

enate minority leader, Biodun Olujimi (PDP, Ekiti State), has advised the Presidency to desist from playing politics with sensitive issues like the budgeting process. Olujimi noted that a recent statement credited to President Muhammadu Buhari blaming the National Assembly for the annual delay in the passage of the Appropriation Act was not only unfortunate but only showed that the Executive arm was not saying the truth. In a statement on Sunday, the PDP lawmaker said: “The President himself in June this year ex-

pressed surprise during a meeting with the leadership of the National Assembly when he was confronted with the fact that ministers and heads of other agencies have refused to defend the budget proposals of their ministries and agencies before legislative committees. “On that occasion, the President stated that the information was contrary to what he was fed by his aides before coming for the meeting. He then ordered the Secretary to the Government of the Federation (SGF), to compel all heads of MDAs to immediately appear before the respective committees so that the budget can be passed.

“It is a well known fact that some ministers had in the past appeared before the National Assembly committees and denied certain provisions in the budget of their Ministries. In one instance, Information Minister, Lai Mohammed, denied the provision made for the purchase of computers in his ministry as stated in the budget proposal submitted to the National Assembly. “This kind of disconnect between budget proposals and the position of the heads of MDAs made the National Assembly to insist on budget defence by heads of MDAs. This has helped to curb the menace of what is known as budget padding.

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NAICOM to grant ‘State Insurance Producer’ licence …releases operational guidelines today MODESTUS ANAESORONYE

ndustry regulator, the National Insurance Commission (NAICOM), in furtherance of its policy to diversify product distribution, has announced plans to grant states of the Federation what is called State Insurance Producer (SIP) licence. The SIP will be an Agency of a state government licensed by NAICOM to provide intermediary services, and will be remunerated from the services they provide. The operational guideline expected to be released today shall come into effect on January 1, 2019, Mohammed Kari, commissioner for insurance, made the disclosure weekend at the 2018 Educational Seminar of the Chartered Insurance Institute of Nigeria held in Ibadan, the Oyo State capital. Kari said the key responsibilities of the SIP included facilitating the sale of the compulsory classes of insurance within the state jurisdiction and all classes for its principal’s insurances (State Government); additional insurance ser-

How drop in ease of doing business ranking dampens Nigeria’s economic growth

vices and products would be considered in the future, depending on the success of the initial approach. It will also exercise on defaulters the power to penalise them according to the laws of the State, while maintaining proper records of individuals and organisations bound by the requirements of the compulsory classes of insurance and monitoring the compliance.

“Once licensed to operate by the Commission, the SIP shall enter into a Memorandum of Understanding as may be sanctioned by NAICOM, with approved insurance companies in its jurisdiction for purposes of placement and management of insurance business within the state.” “The SIP shall only transact insurance business with approved Insurers, and only

insurance companies with branch oﬃces in the respective states will be eligible to transact business with the SIPs.” Kari stated that to complement the SIP policy, the Commission would be opening 20 new branch oﬃces in states across the nation for strict management of the policy and the enhancement of insurance penetration.

United Capital announces appointment of 2 new non-executive directors as John Shinkaiye retires

Alaghodaro: God, people, cornerstone of our policies, programmes – Obaseki

nited Capital Plc, Africa’s renowned Investment Banking Group is pleased to announce the appointments of Sir Stephen Nwadiuko and Mr. Sonny Iroche as Non-Executive Directors following the retirement of Ambassador John Shinkaiye. These appointments are subject to requisite regulatory approvals effective October 2, 2018. Stephen Nwadiuko is a fellow of Chartered Institute of Bankers of Nigeria, Institute of Chartered Accountants of Nigeria, Compliance Institute of Nigeria as well as an associate of Certified Pension Institute of Nigeria. He is a retired Deputy Director, Banking Supervision Department of the Central Bank of Nigeria (CBN) where he worked for over 20 years. He was a former council member of the Chartered Institute of Bankers of Nigeria and Chairman Chartered Institute of Bankers of Nigeria, Abuja Branch. He is currently a Member of the Investigat-

ing Panel of both the Chartered Institute of Bankers of Nigeria and Institute of Chartered Accountants of Nigeria as well as a member of the Board of Trustees of the Compliance Institute Nigeria. He was recently appointed as the Managing Director/CEO of First Guarantee Pensions Limited by the National Pensions Commission. Sonny Iroche is a seasoned Finance Executive with over thirty years’ experience in Banking, Power and Public Service. He has served on various boards such as the International Glass Industries Limited and GT Bank Sierra Leone. These appointments will further cement United Capital as the leading investment banking group in Nigeria. Speaking on their proven track record and broad experience, United Capital’s Board Chairman, Mr. Chika Mordi said “Stephen and Sonny both bring robust insight and perspective to the quality of deliberations on the board, I welcome them both on board.”

...CAN chair, PFN president, Archbishop Idahosa back reforms

Stephen Nwadiuko

Sonny Iroche

EXPLAINER:

DIPO OLADEHINDE

L-R: Olawale Ajai, host, Lagos Business School, Breakfast Club; Sade Morgan, legal, public affairs and communication director, Nigerian Bottling Company (NBC) Limited; Adesola Adeduntan, CEO, First Bank of Nigeria Limited; Enase Okonedo, dean, Lagos Business School, and Bismarck Rewane, managing director, Financial Derivatives Limited, at the November edition of the Lagos Business School Breakfast Club sponsored by Nigerian Bottling Company in Lagos.

do State governor, Godwin Obaseki, says he is running a government that will ensure maximum benefit for a larger number of Edo people and residents than distribute the funds to a few cronies, noting that his commitment to development will not wane. The governor said this during the Alaghodaro Thanksgiving Service held at the Church of God Mission International (CGMi), Faith Arena, in Benin City, adding that his emergence as a governor was God’s wish. His statement follows the endorsements of by senior clergies in the state, of the various reforms initiated by the Obaseki-led administration in critical sectors such as education, health care, and employment creation, among others. The endorsements came from the Chairman, Christian Association of Nigeria (CAN), Edo State chapter, Bishop Oriname Oyonnude Kure; President, Pentecostal Fellowship of Nigeria (PFN) Rev. Felix Omobude and the Archbishop of Church of God Mission International (CGMi), Margaret Idahosa. “I am here today because He (God) made a way. God made it possible for me to be the governor of Edo State

and he has guided my every step along the way and in everything we have done since assumption of office,” the governor said. The church ceremony is part of activities marking the second-year anniversary of his administration. “At the start of my administration, I made a promise before God to set aside one Sunday every year to offer thanksgiving to God for what he has achieved for us in Edo State,” he said. Going down memory lane, the governor recalled that he resolved a long time ago to put people of Edo State ahead in his policy formulation and governance. “We wanted to take governance to the people. We wanted to leave a legacy to Edo people where they will see governance as not exclusive to a few people. Restating his commitment to a government that prioritises the people above any other interest, he said, “As a government, we want to take government to our people; we don’t want to keep government in Government House, anymore. The government truly belongs to the people, whether churches, schools or social gatherings. We want to integrate the people more into what happens in government.

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he Importance of a business-friendly environment cannot be overemphasized in Nigeria’s economic expansion pursuit which is why Nigeria’s recent drop on the World Bank’s latest Ease of Doing Business rankings, slipping from 145th out of 190 countries surveyed in 2017 to 146th in 2018 dampened any light of current economic growth or stability plans by Federal Government of Nigeria. While the effort made so far by the Nigerian government to improve the business environment is commendable, the recent report of the world bank showed their is still much work to be done as greater effort should be directed at solving other issues that could undermine such gains. What is Ease of Doing Business Index? The Doing Business Index is an annual ranking an index published by the World Bank that objectively assesses prevailing business climate conditions across 190 countries based on 10 ease of doing business indicators. The index captures ease of doing business reforms that have been validated by the organized private sector, and offers comparative insights based on private sector validation in the two largest commercial cities in countries with a population higher than 100 million. The report consequently features Lagos and Kano for Nigeria. Cost to Nigeria’s economy The drop in the World Bank ease of doing business report exposed the perennial problem facing the ease of doing business in Nigeria which includes lack of infrastructure, traffic gridlock around ports areas, trading across borders, challenges of documentations and business registration, among others as the reason for the drop. The result also uncovered the poor economy approaches by the federal and state governments. Given the country’s potential and the reality of 70 per cent poverty, youth unemployment of over 50 per cent and an economy that is barely off the floor after a recession, there is so much still to be done to open up the economy to local and foreign investment and foster competition. Omotola Abimbola, a fixed income and currency research specialist at Eco-

bank said the poor ranking goes to show the structural challenges that Nigeria is going through regarding poor infrastructure, difficulty of doing business around property rights and contract enforcement. Abimbola also explains why the rallying oil prices that Nigeria has witnessed have not had major impact on the country because the private and the nonoil sector were not able to grow as it should and attract investment. Hence it is a wakeup call to policy makers that there needs to be a lot more work to be done. While Nigeria dropped in the ease of doing business ranking, others countries are not waiting for us India rose 23 places on the rankings from 100th in 2017 to 77th place in 2018, after placing 130th in 2016, the result of policies it formulated and implemented. Malaysia also moved nine places up to No.15 in 2018, the result of six business reforms. Ghana moved up six places to 114th as the West African country continues to reform; Singapore retained its No.2 spot. Solution There is still a lot of room for improvement considering the current business realities in Nigeria, which still appear unfriendly as businesses are exposed to registering property, getting credit, protecting minority investors and multiple taxes/ levies from various regulatory agencies, cutting across tax, immigration, customs. The intention of government is to see that the difficulty around these issues are removed such that Nigerians or even foreigners who want to do business in Nigeria do so with ease. Priority should be given to infrastructure like India that invested $1 trillion in infrastructure between 2012 and 2017, 40 per cent of which was private sector-funded. Jumoke Oduwole, the Secretary of the Presidential Enabling Business Environment Council (PEBEC) and Senior Special Assistant to the Vice President on Industry, Trade & Investment commenting after the release of the report, said the feedback from the World Bank has reaffirmed the commitment of the PEBEC to remove bureaucratic bottlenecks faced by businesses in Nigeria as the government works towards improving the country’s competitiveness.

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No plan to phase out N100 notes - CBN HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) on Friday said there were no plans to phase out the lower denomination banknotes, specifically the N100 note. The N100 banknote has been scarce and the ones available are mutilated, raising concern among Nigerians, who are wondering whether the CBN wants to phase out the naira note. “There are no plans to phase out the N100 note. The N100 note is in circulation. We have printed new ones. The lower N50, N20, and N10 notes

are also in circulation and we have just printed new ones of those ones,” Isaac Okorafor, director, corporate communications department, said in Lagos on the sideline of the CBN special day at the ongoing 2018 Lagos International Trade Fair. Okorafor disclosed that the new director of currency was recently appointed and that the new notes had the signature of director of currency. “We keep printing new notes. The only problem we have is that the N100 note is the main currency that people use in spraying and that is why it seems that it is scarce. What happens is that people prefer to use the N100 note to spray,

and to abuse it. You cannot abuse the naira, use it to spray and think we will continue to print everyday,” he said. He was concerned that the banks were not circulating the lower denominations. “We have devised a stop gap, a temporary solution to it. We interact with markets across the country, with big shops and shopping malls across the country to exchange this money, put it in circulation through them as we think of how to really make banks begin to issue these lower denominations. I can confirm that we have met with a lot of success. The market people are now relieved of the scarcity,” he said.

Edo, NECA in talks on manpower development JOSHUA BASSEY

igeria Employers’ Consultative Association (NECA) and Edo State government are in talks for the training of thousands of youths from Edo to acquire technical and vocational skills with which to lift themselves out of poverty and possibly become job creators rather than job seekers. Godwin Obaseki, governor of Edo State, who

was at the NECA House, Lagos, last week, to hold talks with management of the employers’ body, said it had become imperative for Edo youth, many of whom were taking dangerous trip across the Mediterranean in their bid to reach Europe for greener pasture, to acquire skills in order to fill existing and emerging skill gaps in different sectors of the Edo economy, as his administration continued its development strides.

“We target to create thousands of jobs as an administration by sharpening people’s technical skills, so we have been focusing on strengthening the Benin Technical College. We just got a grant of two million dollars to expand the facilities available at the College. We need trainers and training targeting at industry needs. We have chosen to work with NECA to train the youths in specific areas of industry needs,” Obaseki said.

Lagos to leverage trade fairs to attract FDIs ODINAKA ANUDU

agos State government says it will leverage opportunities provided by trade fairs to attract foreign direct investments into the state. The state adds that it will continue to create enabling business environment for local and foreign investors to make this happen. Akinwunmi Ambode, Lagos State governor, said the move was necessary to earn the much needed foreign exchange for the state and the economy. Ambode, who was represented by Idiat Adebule, deputy governor, at the closing ceremony of the Lagos International Trade Fair (LITF), said the state would leverage new opportunities and network generated from the just concluded Lagos International Trade Fair (LITF) to drive enterprise development and economic growth for the country. He expressed hope that the trade experiences of the LITF would translate to increased GDP of the state, enhance social economic capital for Lagosians through job creation, new investments, business opportunities and networks that sprung up over the last ten days.

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“Being the premier international trade fair in Nigeria and the flagship of world-class trade and business exposition in the West African sub region, it is not surprising that the Lagos International Trade Fair is always an eventful experience for buyers and sellers, producers and consumers, business and governments both locally and internationally.” He, however, commended the Lagos Chamber of Commerce and Industry (LCCI) for its consistent hosting of the fair, while also calling on local and foreign investors to take advantage of the abundant investment opportunities waiting to be explored. “Our state is investors friendly and with your partnership, we are committed to doing more,” he said. Also speaking at the event, Babatunde Ruwase, president, LCCI, said despite the limitations of the business environment, infrastructure challenges and the state of the economy, the chamber was able to hold a successful fair, pointing out that the Nigerian business community and foreign investors had again demonstrated their confidence in the Nigerian economy.

Apapa Port: Stakeholders call for urgent intervention by FG

ome stakeholders in the maritime industry are calling for urgent intervention by the Federal Government to check the current congestion and gridlock within the Apapa seaport in Lagos. The stakeholders say the situation, caused by a myriad of factors, could degenerate into a crisis if not checked immediately. The stakeholders list these factors to include the port concession of 1996, non-availability of critical equipment, slow procedure and bureaucracy. Consequently, there are stacks of un-cleared cargoes in the port as it often takes up to a month to clear cargoes. Chris Igbokwe, one of the exhibitors at the ongoing Lagos International Trade Fair in Lagos, said some of the generators and pumping machines planned to be exhibited at the fair had not arrived in Lagos even as the 10-day fair was drawing to a close. “The goods were sent since September. It takes about four to five weeks to get to Nigeria and you give yourself about 10 days to receive them, but as I speak to you the goods are not out of the port,” he said.

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Macron rails against the rise of nationalism

French president’s speech to mark centenary of the Armistice seen as rebuke to Trump Harriet Agnew and David Keohane

mmanuel Macron railed against nationalism as a “betrayal of patriotism” in an implicit rebuke from the French president to his US counterpart Donald Trump in Paris on the centenary of the end of the first world war. Addressing Mr Trump and dozens of world leaders, Mr Macron said: “By saying ‘Our interests first. Who cares about the others?’ we erase what a nation holds dearest, what gives it life, what makes it great, and what is essential: its moral values.” The French president’s speech at the Arc de Triomphe marked the culmination of armistice commemorations on a weekend when Mr Trump — the architect of “America first” politics — cut a sometimes isolated figure on his visit to France. The US president arrived after other world leaders at the Sunday morning ceremony and did not go to an afternoon peace forum that most heads of state later attended. The previous day Mr Trump skipped a visit to a US first world war cemetery because of rain. In a solemn address, Mr Macron said: “Patriotism is the exact opposite of nationalism: nationalism is a betrayal of patriotism.” “I know, the old demons are

resurfacing, ready to finish off their work of chaos and death. New ideologies manipulate religions . . . Sometimes, history threatens to retake its tragic course and threaten our heritage of peace that we believed we had definitively settled with our ancestors’ blood.” After the Sunday ceremony, Mr Trump tweeted: “Beautiful ceremony today in Paris commemorating the end of World War One.” Mr Macron put considerable effort into wooing the US president when Mr Trump took office, but their relationship has become strained in recent months. Mr Trump’s visit came in the week US voters delivered a split verdict on his presidency in congressional elections. Before landing he sparked tension by hitting out at Mr Macron from Air Force One over comments he said the French leader had made about the need for a “true” European army. “Very insulting, but perhaps Europe should first pay its fair share of Nato, which the US subsidises greatly!” Mr Trump tweeted. The Elysée said Mr Macron’s comments, made earlier in the week, were misinterpreted in press reports. Russian president Vladimir Putin, who was also in Paris, joined the debate. “Europe is . . . a powerful economic union and it is only natural that they want to be independent and . . . sovereign in

the field of defence and security,” Mr Putin said in remarks to statefunded broadcaster RT. He added that a European army would “strengthen the multipolar world,” a term he has used to describe a future without the US as the sole global superpower. Mr Putin and Mr Trump had a “brief conversation” in Paris, said the Russian president’s spokesman on Sunday, adding that they had both agreed to meet at the G20 event in Buenos Aires which begins later this month. In the French president’s speech he issued a plea for in-

ternational co-operation to fight challenges such as climate change, poverty, famine and inequality, as well as “withdrawal, violence and domination.” At the peace forum Angela Merkel, German chancellor, echoed Mr Macron’s message. “We take peace for granted. I am concerned that a blinkered nationalism may take hold again,” she said. “Isolation wasn’t the right answer 100 years ago. How could it be wise to isolate ourselves today, with a widely interconnected world?” António Guterres, UN sec-

retary-general, drew parallels between the present day and the 1930s. “Our fundamental rights are being threatened by terrorism and numerous other factors,” he said. “Our spirit of togetherness is being torn apart. These sour passions fuelled anti-Semitism and racism in the past, let us never forget that.” Paris welcomed almost 70 heads of state and government for the centenary commemorations, including Justin Trudeau, prime minister of Canada, and Benjamin Netanyahu, the prime minister of Israel.

Credit Suisse escapes criminal action EU regulators monitor big tech’s financial services foray Move welcomed by bankers who complain of uneven playing field over $2bn Mozambique scandal UK’s financial watchdog drops probe into loans arranged to fund fishing fleet Caroline Binham and Patrick Jenkins

redit Suisse has escaped criminal prosecution by the UK’s financial watchdog over the $2bn “tuna bond” scandal in Mozambique, where loans to set up a state fishing fleet vanished. The Financial Conduct Authority has decided to drop its criminal probe into the matter, informing the bank in August that it has downgraded the case to a regulatory investigation, according to people familiar with the matter. The U-turn is a boon to the bank as the FCA was previously looking to use its criminal money-laundering powers in what would have been one of the first cases of its kind. Credit Suisse is already in the crosshairs of Swiss regulators for money-laundering weaknesses exposed by a number of corruption scandals, from Fifa to Petrobras, the Brazilian oil company. The FCA regulatory investigation focuses on both the bank and individuals involved in the tunabond scandal, who now face a fine or a ban at worst, rather than potential jail time. The FCA started scrutinising the matter after the International Monetary Fund suspended lending to Mozambique over $2bn

of “hidden loans”, arranged by Credit Suisse and Russian bank VTB, for a new state-owned fishing company and two other companies owned by Mozambique’s national intelligence agency. The US Department of Justice still has a criminal investigation open into the matter. The DoJ is probing not only Credit Suisse but also VTB and BNP Paribas for their roles in the affair, while the US Securities and Exchange Commission is running a parallel regulatory probe. Swiss authorities are also investigating. Credit Suisse, the FCA, VTB and BNP Paribas declined to comment. The corporate investigations firm Kroll last year found that $500m of the borrowed money had gone missing. It also concluded that Mozambique had paid over the odds for more than $700m worth of fishing boats, naval vessels, radars and maritime security.The tuna bond scandal put the brakes on what had been one of Africa’s fastest growing economies and Mozambique defaulted on the debt last year. It first sold bonds to international investors five years ago to finance a new state-owned fishing company, Ematum, but was later found to have spent the bulk Continues on page A15

Martin Arnold

uropean financial regulators are discussing whether to supervise big technology companies more closely in response to recent moves into financial services by groups such as Amazon and Google, according to one of Europe’s most senior central bankers. Olli Rehn, governor of Finland’s central bank and a member of the European Central Bank’s governing council, said the issue of big tech’s encroachment into the financial sector had prompted “a very lively discussion by financial supervisors and central banks in Europe”. His comments on Sunday at the Financial Times Middle East Banking Forum in Dubai will be welcomed by many senior bankers who have been complaining about the uneven playing field as they worry about competing head-on with big tech groups. They could also signal a new front in the tussle between European authorities and US tech groups, which are already being subjected to intense scrutiny by EU competition authorities and moves to extract more tax from their European operations. When asked whether the ECB was considering regulating big tech groups that have moved into financial services, Mr Rehn said: “We see big tech is moving in there,” adding that it was “currently a mat-

ter for discussion among financial supervisors”. The Finnish central banker, who was previously vice-president of the EU commission with responsibility for economic and monetary affairs, also warned that banks would have to overhaul their balance sheets to adjust for the risks of climate change. Describing climate change as “the biggest market failure of all time” he said banks would have to take account of factors such as rising sea levels, extreme weather events, changing rainfall patterns and mass migrations in assessing the risks on their balance sheets. “For a banker or any financial institution, climate change poses physical risks, such as extreme weather . . . and the debt servicing ability of a borrower or their credit quality may be affected,” he said. But Mr Rehn’s comments on the potential for regulating big tech groups are likely to grab most attention in the banking sector. The introduction this year of “open banking” regulation, forcing EU lenders to provide access to accounts of customers who authorise it, has left many top bankers worrying that large US and Chinese tech groups will cherry-pick the best parts of their business while escaping the burden of regulation. Big US tech companies such as Amazon, Google, Facebook and Apple have been expanding into

payments and other financial services. Chinese tech groups Alibaba and Tencent have already taken a dominant share of their country’s retail payments market. Financial regulators on both sides of the Atlantic have already turned their attention to the cloud, as concerns mount over how to supervise online storage services, which hold information from the world’s biggest banks. Cloud services are used by banks to store customer-account data and their banking systems on servers hosted by big tech groups. As well as cyber risk, regulators are worried about concentrating so much information in the hands of Amazon, Google and Microsoft — the three big companies that dominate cloud provision — without the same level of supervisory oversight as banks. The Bank of England is considering whether to test banks’ resilience, analysing what would happen if access to the cloud were disrupted. The BoE’s Prudential Regulation Authority is also expected to publish more detailed thinking on the subject as a prelude to possible regulation. Meanwhile in the US, the Office of the Comptroller of the Currency is reviewing banks’ relationships with third-party vendors, including cloud providers. EU watchdogs have also had discussions with tech groups and asked to see commercial agreements with banks.

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Credit Suisse escapes criminal action...

Democrats demand Whitaker step back from Mueller probe

Continued from page A14

of the funds on naval vessels and other security equipment. After the government was forced to restructure the original $850m tuna loan in 2016, it emerged that two other companies had taken loans of $1.2bn for maritime security equipment that had not been disclosed to donors. This week Mozambique’s government said it had reached a deal with creditors to emerge from default on the former tuna bonds. Credit Suisse is still involved in the saga as it is representing investors in one of the previously hidden loans, who want to strike a similar deal for their debt which is also in default. The decision by the FCA turns the heat up on the regulator to realise its pledge to start bringing criminal money-laundering cases. It is yet to file charges in any. Earlier this year, it said it has 75 cases of money-laundering open on both companies and individuals “many of which” had both a criminal and regulatory element. Politicians have demanded more action by UK agencies that fight financial crime to attempt to stem the tide of hundreds of billions of pounds that is estimated to flow through the City of London.

Sacked Stobart executive forces High Court showdown FTSE 250 company stands firm against claims made by former director Andrew Tinkler

Josh Spero and Hannah Murphy

ne of the UK’s bitterest boardroom disputes in recent years is scheduled to reach court on Monday as the Stobart Group defends the dismissal of its former chief executive, who led a campaign to oust the company’s chairman. The row around Andrew Tinkler’s firing as a director in June has drawn in high-profile investor Neil Woodford, who is a significant shareholder in Stobart and is expected to testify on Mr Tinkler’s behalf at the High Court. The infrastructure group, whose assets include Southend airport and a biomass business, was in turmoil over the summer while Mr Tinkler tried to unseat Iain Ferguson as chairman and install retail entrepreneur Philip Day. Mr Tinkler’s effort failed at the annual meeting in July, where Mr Ferguson secured reelection by a narrow margin. Stobart said: “We have a strong case, and are confident of winning. We look forward to the court agreeing with our view on Mr Tinkler’s conduct.” Mr Tinkler, who entirely denies Stobart’s claim, launched a defamation suit against Stobart, which he is still pursuing. His spokesman said Mr Tinkler would return to Stobart if he won his case. In court papers filed over the summer, Stobart accused Mr Tinkler of forming a “conspiracy” with Mr Woodford, Mr Day and others to replace the chairman so the board could increase Mr Tinkler’s pay and reinstate him as chief executive or executive chairman.

Monday 12 November 2018

New House majority vows to prevent any interference from acting attorney-general

Katrina Manson and Courtney Weaver

Large crowds wave Polish flags and set off flares during a march in Warsaw on Sunday to mark the centenary of the country’s independence © Reuters

Poles gather in Warsaw to mark centenary of country’s independence Annual march goes ahead despite fears that it promotes ‘aggressive nationalism’ James Shotter

ens of thousands of Poles gathered in Warsaw on Sunday ahead of a march to mark the centenary of the country’s independence. Chanting “God, honour, fatherland”, waving Poland’s red and white flags and setting off flares and firecrackers, a huge crowd massed in the city ahead of a speech by Polish president Andrzej Duda. Last year’s march, which was organised by two far-right groups, attracted tens of thousands of people, including members of ultra-nationalist groups from across Europe, and drew international condemnation after some marchers brandished white supremacist banners and shouted racist slogans. Warsaw’s liberal mayor, Hanna Gronkiewicz-Waltz, attempted to ban this year’s march, citing security concerns and arguing that “ag-

gressive nationalism” had no place in Warsaw, a city all but destroyed by Nazi Germany. Poland’s ruling Law and Justice party then said that it would arrange a state march instead at the same time and along the same route as the banned nationalist march, only for a court to overturn the ban on the nationalist march, prompting concerns of clashes between the two marches. However, at the last minute Poland’s leaders struck a deal with the groups who had arranged the nationalist march to combine the two marches in a joint march on a Sunday. Poland’s prime minister Mateusz Morawiecki warned ahead of the march that the authorities would not tolerate any displays of extremism, and government officials urged people just to bring Polish flags. As the march prepared to start the organisers repeated the message again. “We re-

mind you this is a red white march,” one man shouted through a megaphone. However, while the vast majority waved Polish flags, there were also flags from far-right groups, such as Italy’s Forza Nuova, and Poland’s National Radical Camp, one of the groups organising the march, which traces its roots back to an anti-Semitic group of the same name that was banned in the 1930s. Other marchers had brought banners with messages including “Stop migration” and “Death to the enemies of the fatherland.” Earlier in the day celebrations took place elsewhere around the city, with Poles singing hymns to mark 100 years since Poland regained its independence at the end of the first world war, 123 years after it was partitioned by Russia, Prussia and the Habsburg Empire.

Oil groups budget just 1% of spending to green projects European companies are among biggest investors while China and Russia trail Anjli Raval

he world’s biggest energy companies are spending only a fraction of their investment budgets on low-carbon projects, even as the oil and gas industry comes under fire for its contributions to global greenhouse gas emissions. European companies such as Total, Shell, Equinor and Eni are among those spending the most on low-carbon investments, but the industry on aggregate allocated just 1.3 per cent of its total 2018 capital expenditure to these ventures. The figure is in a new report from environmental non-profit and investment research provider CDP, which has ranked 24 companies by their preparedness for a global transition towards cleaner fuels. European energy majors, which are pivoting towards lesspolluting gas, setting climaterelated targets and investing in low-carbon technologies, ranked the highest in building resilience. China’s Cnooc and Sinopec, Rus-

sia’s Rosneft, and Marathon Oil of the US were at the bottom of the list of 24. “The shift to a low-carbon economy presents the question of what role oil and gas companies will play,” said Luke Fletcher, senior analyst at CDP. “Companies are now facing increasing scrutiny from investors.” Shareholders have put pressure on energy companies to take responsibility for the sector’s role in contributing to global warming. Even as a number of companies have launched initiatives to cut gas flaring, reduce methane emissions and set long-term ambitions to reduce their net carbon footprint, environmental advocates and investors do not believe they have gone far enough. Increased investor scrutiny has come as oil and gas players are grappling with how to invest in greener investments when they are not as profitable as their traditional fossil fuel businesses. Investors are also pushing companies to invest in projects

that will be economically resilient as the world shifts towards greener energy and provide disclosures of the risks posed by global warming for investor returns and financial stability. Energy majors are recovering after a multiyear oil downturn that forced companies to cut costs, pay down debt and rein in spending. As crude prices and cash flows pick up again investors are demanding that they divert investments into clean energy. Big producers have warned that forcing companies to pull back spending on traditional oil and gas projects in favour lowcarbon investments or flexible US shale production will only threaten energy security and create supply shortages. “Renewables are growing at a remarkable rate,” BP’s chief executive Bob Dudley said last month, adding they could supply about a third of the energy mix by about 2040. “But we still need to meet the remaining two-thirds of demand.”

op Democrats on Sunday called for the acting US attorney-general to recuse himself from the Mueller inquiry as the new House majority geared up for a fight over the future of the Russia probe. Nancy Pelosi, the veteran Democratic leader who is expected to become speaker of the House following her party’s victory in the midterm elections, said she had no confidence in Matthew Whitaker, the president’s pick as temporary replacement for Jeff Sessions, who he sacked last week. “He should never have been appointed and . . . it does violence to the constitution and the vision of our founders to appoint such a person in such a manner to be the chief legal officer in our country, and that’s bipartisan,” she told CBS News’s Face the Nation on Sunday. The Mueller inquiry, which Mr Trump has repeatedly cast as a political “witch hunt”, has cast a pall over his presidency. Mr Whitaker has appeared to echo his concerns, arguing in August last year that the attorneygeneral’s office should ensure that former FBI chief Robert Mueller “limit the scope of his investigation” into whether Mr Trump’s campaign colluded with Russians to secure his election. “If he doesn’t, Mueller’s investigation will eventually start to look like a political fishing expedition,” he argued in a CNN op-ed the month before he was appointed as chief of staff to the attorney-general. Mr Sessions recused himself from overseeing the investigation and resigned at Mr Trump’s request last week. Chuck Schumer, the top Democrat in the Senate, said his party would attempt to bring legislation to stop Mr Whitaker from interfering in the investigation if he does not recuse himself. “He’s already prejudged the Mueller situation. If he stays there, he will create a constitutional crisis by inhibiting Mueller or firing Mueller,” Mr Schumer told CNN’s State of the Union on Sunday, adding leading Democrats had written to the chief ethics officer of the justice department asking him to issue guidelines about recusal. Jerrold Nadler, who is likely to become chairman of the House judiciary committee in January, said he planned to call Mr Whitaker as his first witness to testify on his “expressed hostility” to the Mueller inquiry. Mr Nadler told CNN’s State of the Union that Mr Whitaker’s stance represented “a real threat to the integrity of that investigation” and described him as “a complete political lackey”. Mr Whitaker’s role has not been confirmed by the Senate. Republican senator Lindsey Graham, who is close to Mr Trump, argued there was no need for Mr Whitaker to recuse himself. He told CBS that a permanent attorney-general was not expected to be selected until next year, potentially giving Mr Whitaker a strong hand over its direction in the meantime.

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fivethings

Insight AfCFTA, EPAs and Brexit: Africa needs holistic integration GLOBAL PERSPECTIVES

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

was a key speaker at this year’s Global Trade Review (GTR) Africa Trade and Infrastructure Finance Conference held in Londonon October 30. The organisers invited me to talk about the potential implications for Africa of the African Continental Free Trade Area (AfCFTA), the Economic Partnership Agreements (EPAs) and Brexit, Britain’s impending exit from the EU, all of which they described as a “landmark moment”. They were right. AfCFTA, the EPAs and Brexit aresignificant developments that have huge implications for Africa. They will determine the extent to which Africa can achieve greater economic growth and prosperity and increase the welfare of its people. To achievethese, Africa must be a great trading continent and a great destination for foreign investment and capital. But that requires it to integrateinternally and with other markets globally. So, my message at the GTR Africa conference was that Africa must integrate internally, by making AfCFTA work, and externally, by engaging constructively with Europe on the EPAs and with a post-Brexit open Britain. Africa must, of course, not ignore America, China, India, Japan and other major trading nations! In other words, Africamust integrate holistically! In a world of interconnected yet sovereign nations, free trade agreements (FTAs)are theguaranteed means of securing market access for a country’s exports, gaining access to cheap, valuable imports, and attracting foreign investment and capital. But FTAs are also powerful tools for incentivisingdomestic policy and institutional reforms and for signalling to the outside world that a country is open for business. When a country enters into meaningful FTAs it necessarily undertakes pro-market reforms, which assure foreign investors of its business-friendliness. But Africa is reluctant to undergo radical policy and institutional transformation needed to make it business and investment friendly and, so, has failed to integrate internally, let alone externally, through deep and comprehensive FTAs. Indeed, Africa isthe only continent that has failed to participate in meaningful FTAs. As a result, it is, perversely, signalling to the rest of the world that it is not a good place to do business. This was evident from the views of participants at the GTR Africa conference. The chairman of the conference, Edward George, Head of Group Research and UK Representative Office of Ecobank, conducted a live poll, asking the nearly 300 participants: “Using one word, what’s your perception of doing business in Africa?” Well, the words most used were “challenging” and “difficult”, followed by “opportu-

nity”. So, in the minds of foreign business people, Africa is full of opportunities, but doing business in the continent is “challenging” and “difficult”. But the challenge and difficulty are also experienced by Africans themselves, which is why intra-Africa trade is very low, at around 11% of total African trade, compared with 62% in Europe, 50% in North America and 30% in Southeast Asia. I argued that AfCFTA was necessary to address the high trade costs that limit intra-Africa trade, push trade into predominantly informal channels and stop Africa from developing regional value chains, let alone participate in global ones. The high tariffs, at an average of 8.7%, and the even more problematic non-tariff barriers, including poor infrastructure, crippling regulations and “thick” borders, with cumbersome customs and logistics bottlenecks, make intra-Africa, andindeed extra-Africa, trade extremely difficult. Yet if AfCFTA works, according to the United Nations Conference on Trade and Development (UNCTAD), it would add $17.6bn (2.8%) to Africa’s trade with the rest of the world, while intra-Africa trade would rise by $34.6bn (52%), with a further $85bn added if trade facilitation is addressed. Overall, intra-Africa trade could rise from 10.2% to 22% by 2022. That’s without adding other advantages, such as the pull for FDI and a bigger bargaining power that come with having a market with a population of 1.2bn and a combined GDP of $3.4 trillion. But where is the will to make AfCFTA work? Although 49 of the 55 African countries have now signed the agreement, only 10 have, so far, ratified it. Yet 22 ratifications are required to bring AfCFTA into effect. The agreement is expected to enter into force by January 2019, butachievingthe remaining 12 ratifications before then may be a tall order.The truth is thatlack

of political will and resistance to deep liberalisation, as showed by the persistent delay in submitting market access offers, remain the bane of the AfCFTA project. Of course, as we know,Nigeria is still navel-gazing, talking to itself aboutwhether or not to sign the agreement. Someoneasked me, sarcastically, at the conference: “Your president said he was too lazy to read the AfCFTA agreement, has he now read it?” Former President Olusegun Obasanjoalso took a dig at the president, saying recently that Buhari’s “hands are too weak to sign” the AfCFTA agreement. Well, there has recently been some movement, although, in reality, it looks like a false dawn! On 22 October, President Bu-

hari inaugurated the “Committee on the Impact and Readiness Assessment for the AfCFTA”. This followed a seven-month nationwide “sensitisation and consultation”exercise. According to the president, the committee must address the issues raised

‘

I argued that AfCFTA was necessary to address the high trade costs that limit intra-Africa trade, push trade into predominantly informal channels and stop Africa from developing regional value chains, let alone participate in global ones

during the sensitisation exercise and “develop short, medium and long-term measures to resolve the issues”. It must report in 12 weeks, i.e. in early January. But what are the issues that must be resolved before Nigeria can sign the AfCFTA agreement? Strangely, they are virtually all the problems that have long afflicted businesses in Nigeria. They include: cost of finance, insufficient energy, poor transport logistics infrastructure, low productive capacity, multiple taxation, smugglingandinsecurity. But the government had also commissioned

an independent study, conducted by the Africa International Trade and Commerce Research, which showed that “78% of businesses believe that AfCFTA will make a positive impact on local businesses”. So, why should the supply-side problems, which indeed exist, stop Nigeria from joining the AfCFTA, despite its recognised benefits? In any case, isn’t AfCFTA intended to incentivise domestic reforms to tacklesuch supply-side problems? As I said earlier, genuine membership of an FTA usually triggers domestic policy and institutional reforms. No serious country ever waits until it has addressed its domestic institutional problems before signing FTAs, rather, liberalinclined countries either reform

unilaterally or use FTAs to launch and lock in domestic reforms. When Estonia, a former Communist country, embarked on far-reaching domestic reforms in the 1990s, it did so because it was committed to trade and economic liberalisation and then used bilateral free trade agreements and WTO and EU accessions to fasttrack and lock in those reforms.49 out 55 African countries, including South Africa, have signed the AfCFTA agreement, and 13 of the 15 ECOWAS members have done so. Surely, Nigeria is simply parading, unashamedly, its protectionist credentials by kicking the signing of the agreementinto the long grass with rather convenient excuses. But, let’s face it, whether or not Nigeria signs AfCFTA, whether or not the agreement enters into force, it would still face huge implementation challenges, as I argued previously in this column, and it won’t be, as envisaged by its promoters, the harbinger of a single market for Africa. I wanted to test this proposition at the conference, so I asked the organisers to put the followingquestion to the participants: “Is AfCFTA a credible forerunner of a single market for Africa?”. With everyone using a Sli.do voting app on their mobile phone, the answers came instantly. 53% said no; 47% said yes. This was more positive than I had expected, but it shows that international businesses have positive expectations about AfCFTA. But can African politicians and policymakers meet those expectations?Well, the jury is out, consideringthe poor integration in the regional economic communities (RECs), where, for example, ECOWAS, a supposed customs union, have5.60% average tariffs, with only 10% of its total tariff lines fully liberalised. As I said, my talk also covered the EPAs and Brexit, but there is no space to discuss them in detail here. Essentially, on the EPAs, my argument was that they giveguaranteed access for 100% of African products to EU markets while protecting Africa’s “sensitive” products from EU exports. Furthermore, given the EU’s commitments on the development component of the EPAs, the agreements could help Africa address its “3C challenges” ofcompetitiveness of supply capacity, conformity with international standards and connectivity with international markets. But the EPAs havedivided Africa. Of the five African EPA regions, only the SADC EPA group, with its 6 members, has signed the agreement. Kenya is disappointed that Tanzania is refusing to sign the East African Community’s EPA. And, in ECOWAS, 13 of the 15 members have signed the agreement, with Nigeria holding out to the frustration of Ghana! Finally, Brexit. The starting point is that Africa will lose a supportive voice in Brussels without Britain at the EU table. But an open Britain, with an independent trade policy, could benefit Africa, particularly with respect agricultural exports. So, Brexit could give Africa the best of both worlds: a guaranteed access to the EU market, if Africa signs the EPAs, and an increased trade with the UK, if Africa engages with Britain. I left the conference with the message I started with: Africa must integrate internally and externally. “Integrate, integrate, integrate – therein lies Africa’s future”, I concluded. Pleasingly, it was well-received!

for your new week

Fascinating business facts

1.4m

very year, 1.4 million young Nigerians apply for a university place but only about half a million or a third of them are successful. Every year, 450,000 boys and girls graduate from Nigerian universities with only half of them going on to find jobs, any job. So every five years, Nigeria is ending up with about 7.5 million of her young population despondent and desperate about their failure to enter a university or to get their career near a start point. All this, to any one is a recipe for a social combustion.

9.6m

outh Africa’s expanded unemployment rate has risen to 9.6 million from 6 million between 2001 and 2018. The expanded definition includes people who have given up looking for work. The narrow unemployment rate, however, is at 6.1 million people — that is equivalent to 3.2% of the world’s unemployed, despite South Africa’s total population being just less than 0.8% of the global population. South Africa is perhaps the only country with an unemployment rate in excess of 20% for more than two decades.

6 times

ow unlikely are you to have a job in South Africa? South Africa is one of the few countries in the world where there are more adults not at work than adults at work. Along with other factors‚ such as single female-headed households‚ this low number of employed results in much of South Africa’s poverty and inequality. Working-age South Africans are six times more likely to be unemployed than the average adult world-wide

ost rich people in Africa, especially those self-employed do not pay personal income tax, PIT. Of the 60 top lawyers surveyed in Uganda, only 35% admitted to paying PIT while only 5% of Ugandan company directors pay personal income tax which should account for a good part of government revenues. For example, whereas PIT accounts for only 2% of government revenues in sub Saharan Africa, it is a whooping 10% in OECD countries.

66.88%

igeria and Ghana have the lowest excise duty as a percentage of the retail price of tobacco. While the level is 13.20% in Ghana, it is at 15.87% in Nigeria. Many countries using excise duty as a tool for punishing the itching finger of smokers and they include Turkey which has an excise duty as a percentage of retail price at 66.88%, the UK 65.49%, Canada 60.93%. Most African countries come quite low. In Kenya it is at 35% and South Africa 36.52%

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