BusinessDay 12 Oct 2020

businessday market monitor FMDQ Close Benchmark NTB* & CP*

Bitcoin

NSE Biggest Gainer Total N96.8

Everdon Bureau De Change

Foreign Reserve $35.7bn

Biggest Loser

28,415.31

GBP-$:1.29 YUANY - 57.21

Commodities

Guaranty

5.37 pc N32

Cross Rates

-5.00 pc

Cocoa US$2,432.00

Gold $1,930.40

news you can trust ** monday 12 october 2020 I vol. 19, no 669

Crude Oil $42.85

I

N300

Buy

Sell

I&E FX Window CBN Official Rate as at October 8, 2020

ntb

385.83 379.00

$-N 450.00 466.00 1m £-N 600.00 616.00 Currency Futures 28-Oct-20 388.88 €-N 540.00 554.00 ($/N)

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www.

FGN

MTN Nigeria plc CP

Dangote Cement plc

Axxela Nsp-spv Funding 1 (Natural Gas) PowerCorp plc plc

Spot ($/N) 29-Apr-21 5-Mar-21 23-Jul-30 30-Apr-25 20-May-27 27-Feb-34

Market

₦5,072,851.09 +0.93

Foreign Exchange

Benchmark Sovereign & Corporate Bonds

0.00

-0.01

1.33

4.09

3m 2m 25-nov-20 30-Dec-20 391.71 394.55

-0.13

-0.06

7.23

6.87

6m 12m 31-Mar-21 29-Sept-21 403.06

420.09

-0.11

-0.49

7.75

9.58

60m 36m 27-Sept-23 24- Sept-25 497.46

589.09

*NTB - Nigerian Treasury Bills; *CP - Commercial Paper

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Businesses, lives suffocate as corruption perpetuates Apapa gridlock Billions lost in revenue, corporate earnings

FG concedes to Labour on tariff, to pay N15bn subsidy for three months

Chuka Uroko, Odinaka Anudu, Isaac Anyaogu, Amaka Anagor-Ewuzie & Temitayo Ayetoto

T

here is a well-organised racket going on in Apapa and Tin Can ports, Lagos, which has perpetuated the gridlock going on in the premier port city. The malfeasance involves trucks drivers, security agencies and government officials operating in the port city.

Known as ‘Fastrack,’ this racket ensures that truck drivers who part with between N250,000 and N350,000 get speedy call-up, Continues on page 31

L-R: Zainab Ahmed, minister of Finance, Budget and National Planning; Ben Akabueze, DG, Budget Office; Eno Udoma-Eniang, head, Government and Legislative Affairs, Regulatory and Corporate Affairs, 9 Mobile; Teju Somorin, professor of Taxation & Fiscal Policy, dean, College of Postgraduate Studies, Caleb University, Lagos; Sanya Gbonjubola, director for Tax Policies, FIRS; Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators in Nigeria; Olusola Teniola, president, Association of Telecommunications Companies of Nigeria; Taiwo Oyedele, Fiscal Policy Partner and West Africa Tax leader, PwC Nigeria; Funmi Olaniyi, manager, Andersen Tax, Nigeria; Nana Nwachukwu, Knowledge Management & Policy Advisor; Ogho Okiti, MD, BusinessDay, and Emilia Asim-Ita, practice director, A’Lime Media, all speakers during the Telecommunications and Technology Sustainability Working Group (TTSWG) Industry Webinar themed: ‘Fast-tracking Economic Recovery through Robust Tax Policies and Practices,’ weekend.

… Nigerians get N10.20 discount shared by Bands A-C, FG to distribute 6m free meters … Labour accepts cost-reflective tariff necessary to attract investment ISAAC ANYAOGU he Federal Government has acceded to demands by la-

T

bour unions to provide relief for Nigerians facing difficulties on account of Continues on page 31

Inside

Strike: Government mulls proscription of ASUU among other options P. 28

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Nigeria needs a robust intellectual property regime for economic growth GLOBAL PERSPECTIVES

OLU FASAN

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robust free market economy is founded on core legal foundations. The overarching one is the rule of law. But once a system of rule of law and legality is in place, then there must be the legal building blocks of a market economy, which include, among others, company law, competition rules and property rights.

Recently, in this column, I examined two pieces of legislation in Nigeria, namely, the Companies and Allied Matters Act 2020, CAMA 2020, and the Federal Competition and Consumer Protection Act 2018, FCCPA 2018. I argued that the two statutes could, if well implemented, provide strong legal bases for a market economy in Nigeria.

In truth, company laws and competition rules, which relate to economic exchange, are not enough to support a free market economy.

Robust property rights must exist before economic exchanges can take place.

Without rules on ownership and transfer of properties, it’s difficult to engage in voluntary commercial exchanges. Which is why, as one scholar put it, property rights provide incentives for investment and wealth-maximising cooperation. And that makes property rights a key legal foundation of a free market economy.

But my focus here is on intellectual property rights, arguably the most controversial and misunderstood of all property rights, such as land and other tangible properties. For many people, intellectual property is obscure and distant, relating to ideas rather than tangible or physical things. Yet, intellectual property, which is about creative effort and knowledge capital, is central to all economic activities. Its scope includes patents, copyright, trademarks, designs and performance rights.

Before we come to the Nigerian context, let’s explore the arguments for a strong protection of intellectual property rights.

The first is the moral rights theory, based on the Lockean “fruits of labour” argument. John Locke argued that intellectual property is the fruit of one’s labour and that one should be able to own the fruit of his or her labour. For instance, if created a piece of art, shouldn’t I have the exclusive right to own and commercialise it? Yet, some would see nothing wrong in pirating or making counterfeits of the work, thus denying me the fruit of my labour!

The second argument, which is probably the most potent, is based on the incentive theory, which links intellectual property protection to the future. The incentive theory says that intellectual property protection provides an incentive to make new inventions. If I cannot commercialise my patented work without its unauthorised use by other people, why should I spend time and capital in inventing new drugs, new computer software etc? And, of course, without such incentive to innovate and create new things, society will not have the high productivity and high economic growth that generate prosperity.

Then, thirdly, there is the argument that links strong intellectual property rights to trade flows, foreign direct investment, creation and diffusion of technology and other areas of international commercial activity. The argument is simple. FDI inflows often involve foreign investors transferring technologies to another country.

But if the foreign investors know or suspect that the intellectual property in their technologies could easily be violated in the host country without remedies, they will hesitate to invest in that country. One of the thorny issues in the “trade war” between China and the US is the allegation that China “steal” the intellectual property of US and Western companies that invest in China.

So, intellectual property protection matters. It is a spur for innovation and creativity and the diffusion of technologies.

But how robust is Nigeria’s IPR regime?

Well, the first point is that, unlike FCCPA 2018 and CAMA 2020, there are no consolidated IP laws in Nigeria. There are various laws, such as the Patents and Design Act of 1990, the Trademarks Act of 1990 and the Copyright Act 2004. The dates of these laws show that some of

them are over 30 years old. The fact that the laws are dated means that they are not compatible with the World Trade Organisation’s Trade-Related Intellectual Property Rights (TRIPS), which introduced new international IP rules and entered into force in 1995.

Nigeria has traditionally paid little attention to the protection of intellectual property rights. Several years ago, a Nigerian delegation to a meeting of the World Intellectual Property Organisation, WIPO, said: “The repeated assertion that IP could be used for the creation of wealth means nothing to the vast majority of Nigerians, whose preoccupation is not wealth creation but the struggle survival from one day to the next.” That view may have changed, but there is still inadequate appreciation of the benefits of IPR protection in Nigeria.

Of course, Nigeria is not a strong IPproducing country. According to WIPO figures, there were only 200 patents granted to Nigerians in 2018, compared to 451 for South Africa. But patents granted to non-residents, i.e. foreigners, in Nigeria, was 642, compared with 4,295 for South Africa, which suggests more foreign interest in South Africa than Nigeria. In terms of trademark registration, the last available data for Nigeria was for 2013 when there were 4,369 trademark registrations for Nigerians and 1,048 for foreigners. But for South Africa, in 2018, there were 16,745 for residents and 15,247 for non-residents.

Surely, the lack of a robust intellectual property protection is a key reason why foreigners are not rushing to register patents and trademarks in Nigeria. The Nigeria Industrial Revolution Plan (NIRP) states that “Nigeria will respect all its intellectual property commitments”, but while the FCCPA recognises the “validity of a licence granted by the proprietor of a patent” (S.64), it seems to offer special protection against “an infringement of a Nigerian patent” (S.65). It’s not clear why the drafters explicitly mentioned “Nigerian patent” in the act, but it is wrong to give the impression that “Nigerian patents” are given preferential treatment over foreign ones.

What about enforcement? Well, even if Nigeria’s substantive IP laws are strong, the truth is their enforcement is extremely weak. The government stated in the NIRP that “Nigeria has already established the

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Surely, the lack of a robust intellectual property protection is a key reason why foreigners are not rushing to register patents and trademarks in Nigeria

broad framework for adequate protection of IPR”, but added: “However, the enforcements of those rights are currently challenging.”

The enforcements of IPR in Nigeria are extremely challenging. For instance, due to pressure from the US and indigenous lobby groups, Nigeria strengthened its copyright law, including introducing strong anti-piracy measures and the protection of folklore. Yet, piracy and counterfeiting remain widespread in Nigeria.

Indeed, Nigeria is believed to be the largest African market for pirated products, with the US-based International Intellectual Property Alliance (IIPA) once saying that “sound recording piracy is at a level of 85 percent in Nigeria” and that “pirates have completely overrun the book market.”

Neither the regulatory and enforcement agencies nor the courts are able robustly to enforce intellectual property rights or adequately punish their infringements in Nigeria. Surely, foreigners have little confidence in the system. For instance, the US State Department once said: “The use of the courts in Nigeria does not automatically imply fair and impartial judgements.”

But the institutional weaknesses are compounded by the fact that neither government officials nor the public see violations of intellectual rights as a crime. They would probably say: What’s wrong with copying somebody’s book, pirating a music record or producing counterfeits of a product?

Well, a lot is wrong! The writers, the musicians, the film producers, the inventors suffer when they cannot derive adequate commercial benefits from the fruits of their labour, and, of course, the economy suffers because they can’t create jobs and pay taxes. Furthermore, Nigeria loses the opportunity to attract high-technology goods, FDI and inward technology transfer.

No nation has ever succeeded without a robust intellectual property regime, and Nigeria can’t be a strong market economy unless its regime of IPR protection is strong.

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

CEO succession – the role of the Board

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assing the baton of leadership or picking the right replacement for a departing CEO is a critical challenge for the Board of Directors, it is oftentimes a complex decision given the interplay of corporate politics and personal emotion.

As the CEO’s performance and that of the company are so intertwined, CEO succession is a key task the Board cannot afford to get wrong. In reality, CEOs are not, for the most part, keen to have this discussed by the Board – perhaps because they are too preoccupied with running the Company or as is typical with all humans, “they are not eager to contemplate their professional mortality” (Harvey Seifter & Peter Economy ).

A Board’s action or inaction regarding CEO succession can have tremendous impact on the Company which Directors owe a duty to protect. The process can indeed be laborious and contentious, but as the Board must live with the consequences of a succession process gone awry, it is in the best interest of the Board to get involved. Leaving it entirely to the CEO to choose a successor may not always be in the best interest of the Company, acting alone, it is typical for the CEO to use largely intuitive criteria to sort through potential candidates.

A collaborative approach in which the Board acting through the nomination (or Governance) Committee - made up predom-

inantly of Independent Directors - actively partners with the incumbent CEO is preferable. Whilst the CEO drives the process, the Board plays an active oversight role as opposed to rubber stamping the CEO’s choice.

Working with the CEO, the Committee will identify the most significant challenges the organization is facing and likely to face as well as the leadership competencies required to deal successfully with those challenges. These will entail some scenario planning, periodic review and adaptation in the context of overall corporate strategy and changes in the business environment.

The Board Committee in conjunction with the CEO will then develop a set of criteria to assess potential CEO candidates.

Assessment criteria would include ability to articulate a strategic vision for the Company; intellectual capacity; technical or professional competence; inspirational and motivational leadership; ethics and values; team building skills; execution and operational excellence; focus and delegation (Building Better Boards, Nadler, Behan & Nadler).

A pool of candidates is then identified and efforts should be made to ensure that the process does not zoom-in on a single candidate, It should also be recognised that the best candidates are not necessarily the most obvious. By developing a pool of potential candidates, the Board also has www.businessday.ng

the opportunity to assess the capabilities of the management team, identify areas that require improvement and work with the CEO to bridge identified gaps.

This approach of course presupposes that the incumbent CEO is performing effectively and enjoys the confidence of the Board where he/she is not performing, he/ she most certainly would not be involved in the process of appointing his/her successor.

On the other hand, where the CEO’s exit is unplanned and sudden – ill health leading to incapacitation, death, removal owing to ineffective performance, fraud or other situations (including political appointment) that make it impossible for him/her to drive the process, the Board would have to take the lead role. Where the Board has developed a system of active involvement in the succession process on an on-going basis, it would not be totally caught unawares in the event of sudden exit.

To achieve a successful change of guards, it is imperative to start the process early to allow time for assessment, development of identified candidates and selection. The transition must also be carefully managed by ensuring the preferred candidate transits into the CEO role in stages. As suggested by the trio of Nadler, Behan and Nadler in their book “Building Better Boards” the transition should be done in five phases – first the lead

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BISI ADEYEMI candidate is placed in a role, e.g. COO which will test his/her ability to lead at a more senior level. Then he/she is confidentially designated as the new CEO and uses this time to think through the structure of the Company and his/her new executive team.

Then follows the official announcement and then the overlap stage in which the new CEO runs the Company with the departing CEO in the wings. The final stage sees the new CEO fully in place and the departure of the old CEO. CEO succession should not be seen as an “event-driven” crisis as the Board should always be prepared for sudden departure which may happen anytime. The process should not be left to the eleventh hour and should be owned and driven by the Board working in concert with the incumbent CEO. Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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Resilience (forging ahead) - Imbibing lateral thinking

BASHORUN J.K RANDLE

A

nger, anxiety and sadness have engulfed our entire nation. We are bleeding and battered but we must nevertheless remain unbowed. On one point both the Chief of Staff to the President and the National Security Adviser do not hold divergent views – our situation is precarious and our mood is volatile.

That is precisely why the retired partners of KPMG who are still awaiting their gratuity and pension have been putting pressure on Resilience Television not to jeopardize their investment in the venture until they have thoroughly verified all the statements attributed to Professor Ibrahim Gambari; Major-General Babagana Monguno (Rtd), Chief Olusegun Obasanjo, Lt.-General T.Y. Danjuma and others.

Indeed, before the documentary is aired, it must be vetted by first-class lawyers like Chief Ladi Williams SAN, Mr Kayode Sofola SAN, Senator Dipo Odujirin SAN, Prince Yemi Adefulu, Mr Asue Ighodalo, Mr Yemi Adeola and the newly elected President of the Nigerian Bar Association, Mr Olumide Akpata. All of them were in Payne’s House while Akpata’s father, Dr Henry Akpata was in Hyde Johnson’s House.

What is at stake is not just our investment (and our bequest to the next

generation) but a unique opportunity to validate the philosophy of Professor Edward De Bono (of University of Cambridge), the architect of Lateral Thinking: “Always ask why. Question everything. Nothing is sacred.”

He is a physician, author, inventor, and consultant from Malta and is regarded as the world’s leading authority on conceptual thinking as the driver of organizational innovation, strategic leadership, and individual creativity. He is known as the father of Lateral thinking, a brain training pioneer. He is the author of “Six Thinking Hats” and is a proponent of the teaching of thinking as a subject in schools.

He says lateral thinking is the generation of new ideas using insight, creativity and humour, by virtue of its freshness, it’s likely to succeed where old-fashioned linear methods fail.

The idea of lateral thinking is to find entirely new ways of thinking and acting, to break out of set patterns that are going nowhere. It is both constructive and positive, it is not passive. Humour and enjoyment are vital as with any process, what you don’t do is as vital in lateral thinking as what you do.

Think of consolidating your own position rather than attacking someone else’s. Negativity allows mediocrity to prevail that’s why lateral thinking is always positive. It’s not hard to find something good about other people, you can at least try asking, “What can she/he do? How can she/he help me?

What is good about her/him? How can we all pull together on this? What is the thing I’m best at? What do I enjoy doing best?

In dealing with problems, Professor de Bono is emphatic: “A problem

is only the difference between what you have and what you want. To solve it, don’t go battering blindly or dig in your heels, put your hands over your ears and mutter Shan’t” Instead, you should ask yourself what you do want to do and go with that. That is the use of “water logic” rather than “rock logic”. Water logic flows round obstacles, adapts itself to the prevailing contours of the landscape, and finds its own level. Rock logic remains hard and unadaptable and may become an obstacle in itself: Linear (unlike lateral) thinking moves in one direction – step by logical step. On the other hand, lateral thinking being ready to explore possibilities, does not go down just one route. On the contrary, it releases talents and abilities we do not realise we have. It involves risk and daring.

The first technique is to search for alternatives. Instead of thinking: “This is the way it’s done” or even worse, “This is the way its always been done”, ask yourself, “How else could I do this?”

Lateral thinking improves with practice. Solving problems is enormously self-reinforcing. The renewed confidence that comes from these feelings of wellbeing strengthens your ability to deal with future problems.

We have been duly cautioned: “So, don’t think “obstacles” – which can’t be got round – think “problems”, because they have solutions.

The powerful message and profound conclusion are that the purpose of lateral thinking is not to be right but to be effective. You can only be effective if you learn to sift the crucial factors in any situation from the confining structures.

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lateral thinking is the generation of new ideas using insight, creativity and humour, by virtue of its freshness, it’s likely to succeed where oldfashioned linear methods fail.

Professor Anya Oko Anya, a renowned Professor of Biology and currently the President of the Nigerian Prize for Leadership has entered the fray with his warning: “failure to bridge gap between rich and poor could be precursor to chaos” It was Richard Nixon, the late President of the United States of America who observed that no leader can afford to haughtily declare that he cannot suffer fools because in any population, fools may be in the overwhelming majority and those we regard as fools may not be fools at all.

At the recent burial of Congressman John Lewis, the legend of civil rights movement in America, former President Bill Clinton delivered a spell binding eulogy which reminded the global audience that: we are poor not because there is not enough to feed the poor but there is not enough to satisfy the rich, he thought the open hand was better than the clenched fist.

He lived by the faith and promise of St. Paul: Let us not grow weary in doing good, for in due season we will reap if we do not lose heart. He never lost heart. He fought the good fight, he kept the faith, but we got our last letter today on the pages of the New York Times. Keep moving. It is so fitting on the day of his service, he leaves us our marching orders: Keep moving.

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

Integration management and our lack of collective intelligence

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frica has one of strongest, most prolific and intelligent men who produce unintelligent result when in a group or institution. So Obama in 2009 while on a presidential visit to Ghana reminded us all “Africa does not need strong men. It needs strong institutions”.

Congrats to Okonjo- Iweala on her being shortlisted to the finals for the WTO appointment, that’s a good win for Nigeria. Inspired by Sarah Chayes in her book the Thieves of States, she reminds us that while Okonjo may have led some technocratic reforms while in government, nearly a billion dollars was consistently missing monthly from our oil revenues while she was finance minister and the people got poorer too.

This statement isn’t to kill joy, what the data and facts show is that she was a finance minister in arguably one of the most corrupt democratic governments of this Millennium.

She may not have anything directly to do with it, but it’s still under her watch as a leader.

It’s always my point about organizational leadership over personal leadership. It’s the challenge of Africans being high flyers, but collectively low, even when we individually rise, it only makes us the tallest midgets of the world.

It’s not enough to be individually upright or smart, no matter how good we are or what we do, when we step back, even before our job is done, what we should really ask is “what was the problem solved” with who we are?

Whether business, as a people or as a government, Africa has potentials. But there isn’t much to do with that, for our collective growth, we need to stop outsmarting ourselves. It starts from the realization that none of us is as smart as all of us but it looks like we have been trained and wired to master individual excellence skill but failed to master that of collective excel-

lence. That’s a paradox; better yet, an Abilene Paradox.

The Abilene Paradox occurs when a group of people collectively decides on a course of action that is contrary to the preferences of most of the individuals in the group. Prof Harvey states in his paper ‘The Abilene Paradox’, “Organizations frequently take actions in contradiction to what they really want to do and therefore defeat the very purpose they are trying to achieve”. This is the inability to manage agreements and the big picture.

The Abilene Paradox occurs because individuals do not want to ‘rock the boat’ or ‘be a killjoy,’ even though their perceptions of the other members’ feelings are incorrect.

Management thinker Jerry B. Harvey, Professor Emeritus of Management at The George Washington University, in an article on the subject, introduced the Abilene Paradox. It occurs because human beings have a natural aversion to going against the feelings of a group - they want to conform socially.

According to Harvey, the paradox may be driven because individuals believe they will experience negative attitudes or feelings if they ‘speak up’ on a topic. Of course, if no one speaks up, the group will make a decision that is counter to the wishes and the common good of the group.

Often times, we see highflying workers at corporate fields complaining about lack of compatibility with other highflying fellow team members so the company goal becomes jeopardized. How intelligent is that? We also see this in government, where sound people collectively make dumb decisions it’s not for the lack of ideas, but the seamless integration of it and that of others for the common good, how intelligent is that? www.businessday.ng

An ancient Greek philosophers of the Oracle of Delphi states, “an intelligent man is one who enters with ease and completeness into the spirit of things and the intention of persons and problems , and then arrives at an end by the shortest route”. But it has become a norm in Africa that we excel at individual intelligence but fail at collective intelligence, in a nutshell, we outsmart ourselves to nowhere.

Great ideas don’t come within but between people and that intentions must be managed, from a project to a product that actually solves the big problem, It’s a lot of refining and the ability to let that happen. Next time you discuss that business idea with your team, don’t get frustrated that it is continually refined; at the end of the day, everyone must agree to disagree, that’s the heart of collective intelligence.

There are different approaches to system thinking, but the most ignored yet most important approach is from the angle of human interactions. We most times design our products from our view or in the case of production, from the factory and even in isolation from real world need of the customer whereas it should first be from the mind of the potential user and customer. It starts from asking, what does the customer really want, how does the customer even think, what is the problem to be solved?

As we ask those questions, we consistently keep them in mind to avoid variation to achieve alignment. In the words of Jim Collins, “Building a visionary company requires 1 percent vision and 99 percent alignment” and that collective intelligence refers to a group or a team’s combined capacity and capability to perform a wide variety of tasks and solve diverse problems for a common goal.

Collective intelligence has been found to

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EIZU UWAOMA consistently be predictive of the future performance of groups and teams. The difference between Africa and the rest of the world is that we have not mastered this art of collective intelligence, which has resulted to clear cut difference in collective excellence.

The primary difference between IQ (individual intelligence) and CQ (collective intelligence) is the social dimension and the ability of groups to achieve unity of purpose, action and thought. Teams with high levels of CQ achieve a state of interdependence and flow when they are working together. In addition, ideas that are collectively reviewed are more prone to easy implementation than those that are unilaterally imposed.

Collective intelligence is the act of corporately solving the ultimate problem. It is taking anything out that gets on the way, sometimes our individuality and difference. It is playing Michelangelo in developing a masterpiece. Michelangelo was once asked how he made such great images from mere carvings from large marbles, he said “I saw David in the marble and carved until I set him free”, in another statement he said, “I kept chipping away anything that didn’t look like David”, that’s the point.

Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

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Dr. Okolo is a Chartered Consultant based in Lagos

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Farewell, investigative journalism. It was fun while it lasted

DAVID HUNDEYIN

B

y the time you are reading this, I should have published my last ever major investigative story on my favourite news platform, NewswireNGR. It is about Polish entrepreneur Marek Zmyslowski and the less than stellar veracity of his ‘Chasing Black Unicorns’ Nigerian investment story.

As with so many other stories before it, I would imagine by now the subject of the story has issued a fiercely worded statement accusing me of all types of unprofessional conduct, and possibly threatening to file a libel lawsuit if the story is not pulled.

I too should have issued a cavalier dismissal of the threats, typically on my Twitter handle, accompanied by a few emojis or gif images. There will as usual be intense disagreement in the various comment sections analysing the story, with some hailing me as the “Voice of Nigerian Youth,” and others dismissing me as a despicable, attention-seeking, insufferably egotistical, potty-mouthed ‘clout’ chaser. I will typically have responded to some of my traducers in my unique, no-hold-barred combative style. A few blocks will inevitably have been issued on both ends of the exchange. Eventually, mercifully, after about 72 hours, the audience will move on to another topic and I will be free.

Only this time, it will be the last time.

A tale of ‘Pashun’ and “Hethix’ When I segued from my quiet global finance and investment journalism niche last year to take up a few opportu-

nities in the Nigerian media space such as this column, I did not necessarily have a plan laid out in my head. As I still tend to do even after crossing the magic age of 30, I simply examined the situation vis-a-vis what I thought I could bring to the table and I went for it. I mean really went for it. Not a few people had warned me about how treacherous the Nigerian journalism space is, but from day one I was determined to be the most objective, unflinching journalist Nigeria has ever had. If sunlight is the best disinfectant, my words would be the Sahara desert at noon.

I did of course have the fortune of possessing some leverage in the remote economy, such that I could treat Nigerian journalism as my passion project while using my brand and butter income to pay my bills. For a while it was the perfect situation. No one dared to offer financial inducements because I looked and sounded every bit the lip-curling aristocrat I was born as that N100,000 that might compromise Ciroma Chukwuma Adekunle from XYZ newspaper wasn’t going to make me flinch, so nobody even bothered.

No one made threats too, because I was a complete unknown quantity - a total maverick that no one quite knew what to make of.

In time however, as Nigeria generally does, it began to figure me out. This was a proud, headstrong person with what he considered to be a strong social compass and a strong sense of independence, so the dark arts used to mesmerise Ciroma would not work here at the same scale. The solution? Use the same tricks, but at a much bigger scale.

N100,000 wouldn’t impress this guy?

Try N1,000,000. Anonymous threats don’t work? Get a family member in the security services to make greasy hints about him getting locked in an SSS cell 7 storeys underground in Abuja, during a family burial. Slowly I started to understand that Nigeria wanted me shushed, so I did what I always do when faced with bullies.

I put my head down and ran straight

toward the threat, kamikaze style.

I got my first financial inducement offer earlier in the year in the sum of N5 million. The circumstances around the event actually spooked me enough to get on a flight to Dubai and spend a week figuring out what the situation was. In classic fashion, I came back ready for war with my keyboard. Anybody could get it - banker, billionaire industrialist, public official - anyone.

My thinking was that very few people on the planet had the perfect storm of circumstances, abilities and audacity to actually do some much-needed public interest muckraking in Nigeria, and I thought “if not me, then who?”

When it stopped being fun It was this sense of purpose that kept me firing when most people would have dialled the energy back a little. It is important to point out that I was always focused on exploring stories that I felt personally invested in, which is why I developed a reputation for writing investigations in an unusually impassioned, personalised manner. This style earned rebuke even from a few senior media colleagues, but I did not care because from day 1, it was always about what I wanted, not how it was perceived.

Investigative journalism is about 65 percent storytelling, and storytelling is an art. The best kind of art is that which you do for yourself, completely unscripted and from the heart.

It may surprise you to know for example, that the voluminous Marek Zmyslowski story I mentioned at the outset was drafted inside just 75 minutes. Typically, the most time-consuming part of my stories is the research and the preparation of visual and multimedia material. When I am done with these, the actual story draft flows out of my fingers in a single rush, a bit like how a recording artist has a studio freestyle session. I check it for typos, then I send it to my editor, and I wait for it to get published and… ...And then I started to get tired of what would happen next. If I were to use an analogy for why I fell out

‘

The thing about journalism in post-1999 Nigeria is that Nigerians have not been deprogrammed from the Babangida and Abachaimposed idea of what a ‘journalist’ is - a humbled, bedraggled, weatherbeaten, unconfident, sorry-looking individual with their eyes cast to the floor.

of love with my work, I would liken it to how the Messi vs Ronaldo debate has degenerated into a meaningless popularity contest that uses ranking metrics such as ‘who doesn’t threaten to leave his club whenever they lose’ and ‘who is more humble.’ these two metrics have absolutely nothing to do with their abilities and performances as professional footballers, but because the sport is now unavoidably personalised, these things have found their way into the conversation.

It was a similar thing with my work.

I started noticing very early on that it was no longer about what work was done, but about who did it and what the reader’s perception of that person is.

The thing about journalism in post-1999 Nigeria is that Nigerians have not been deprogrammed from the Babangida and Abacha-imposed idea of what a ‘journalist’ is - a humbled, bedraggled, weatherbeaten, unconfident, sorrylooking individual with their eyes cast to the floor. The Nigerian ‘journalist’ is supposed to be the the crestfallen subject of Femi Fani-Kayode’s indignant tirade - terrified and fearful for his job, and thankful for whatever crumbs are thrown his way.

To cut a very long story short, my presence began overshadowing my work. The audience stopped engaging on the subject of the stories and became more interested in the personality of the writer. “David Hundeyin is so arrogant” on one side versus “David Hundeyin is the voice of the youth!” I started seeing Twitter accounts named “David Hundeyin stan account” alongside those of the usual suspects who could never see anything good about whatever I did.

Work that I created from the sincerity of my heart would go out and become agonisingly polarised for reasons that had absolutely nothing to do with the contents of the story itself. Finally I made a realisation: Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Digitalisation is the driver for sustainability

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hen it comes to exploring the Nigerian insurance industry’s uniqueness, the low insurance penetration rate (IPR), which is at 0.7 percent relative to gross domestic product (GDP), is first and majorly due to the lack of knowledge and information availed to the public on insurance. With over 70 percent of the population living below the poverty line, low levels of education and cultural influence make the consumer base sceptical of trusting their finances with insurance organizations.

The banking industry’s volatile nature, relative to ease of access consumers have in seeking loans, has put off the populace from associating stability and credibility with all kinds of financial institutions. The industry itself lacks the influx of skilled professionals along with a poor understanding of policies and models that are pertinent to the Nigerian consumer base.

These core issues have saddled the Nigerian insurance market for years, however, the coronavirus pandemic has brought new factors to light in Nigeria’s world of insurance. Financial markets, regulators, insurers and reinsurers, consumers, companies, and organisations have had to consider how factors like health, social activities, travel, communication, and business operations would be affected during this phase and the post-pandemic phase.

If left unattended, the insurance market is the worst catalyst for the economic crisis

d Stockbroker and Management s.

post-pandemic On a global scale, the pandemic has threatened the onset of a financial crisis and recession across economies. In Nigeria, job security is weakening, businesses are cutting back on staff, and employment opportunities are diminishing. Operational costs are higher than ever. Industries like IT, health, hospitality and tourism, and transportation are increasingly vulnerable, interest rates have fallen, credit risk exposure is high and profits are low.

For insurers, the downward trend in the economy poses a risk to solvency ratios and credit losses, health insurers have more illness and disability claims, social events are cancelled or postponed leaving insurers to attend to the costs, prices have been affected due to the decrease in the sale of products and reduced business activity. These factors have forced industry regulator, the National Insurance Commission (NAICOM), to test the resilience of insurers and reinsurers to these economic shocks and changes. This is why NAICOM extended the annual deadline for recapitalization.

Recapitalization in Nigeria is used as a regulatory tool, to sustain economic growth and development, and protect the public interests and the rights of policyholders. Since the inception of this law through the Insurance Premium Act in 2003, the total premium volume is $1.64 trillion.

This has provided development for the Niwww.businessday.ng

gerian climate; however, with the pandemic, the implication of this is it threatens to disrupt the growth rate of the industry.

Traditional and expensive methods will not drive the new era of progress if continuously applied.

Senforce insurance has highlighted ways in which the industry can respond to the pandemic and at the same time, increase the insurance penetration rate: In general, understanding the needs of customers will increase the penetration rate in Nigeria. Senforce has placed focus on the wealth of digitalization and Fintech, which is revolutionizing the insurance space, first by using the spreading reach of mobile phones in Nigeria.

The pandemic has forced the populace to take most of their affairs online. With 123.49 million of the population, Nigeria already has the highest internet usage rate in Africa, larger than Egypt and Kenya combined who come second and third, respectively, as of 2019.

With increased internet connectivity, insurers must use emerging technologies to provide a platform for easier accessibility to consumers.

These online platforms should be simplistic and affordable.

On a national scale, a business model promoting and partnering with other industries is recommended to widen reach. Industries like telecommunication channels make the internet connectivity approach a lot more effective. Priority should be given to the health

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ANI OJUYAH and transport sector as well; they are the first respondents to the Pandemic in Nigeria, regulators and insurers must ensure insurance coverage is reflected in these sectors.

Insurance networks are highly concentrated in a few cities in Nigeria, hence the real sector provides alternatives that serve the larger population. With the fall in interest rates, individual small scale retail outlets are predicted to grow. The informal sector in the economy will see an increase in competition in their respective markets; hence, risks and losses will grow directly.

They will need to insure to protect investments, market reach, and supply. Macroeconomic theories have stipulated this model helps economies recover from losses quickly.

In assisting consumers in adjusting to the changes, these community-based organizations are the ideal immediate distribution channels to the informal population.

Ojuyah is the chairman, Senforce Insurance Brokers Ltd.

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BUSINESS DAY

Monday 12 October 2020

EDITORIAL Nigeria at 60: Not yet the desired dream

PUBLISHER/EDITOR-IN-CHIEF

Frank Aigbogun EDITOR Patrick Atuanya

DEPUTY EDITORS John Osadolor, Abuja Lolade Akinmurele NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan

Nigeria needs focused reforms, especially resource, electoral and anti-corruption reforms

O

n Thursday 1st October, 2020, Nigeria marked 60 years of independence from Britain with parades and festivities. But the celebration came with mixed feelings for the citizens. Despite the fanfare, including a colourful military parade and a dramatic air show, many people did not appreciate such display at a time when Nigerians are overstretched by several challenges which call to question the essence of independence.

Contrary to the aspiration of our founding fathers, Nigeria, the world’s largest black population, with massive wealth to spend as the largest oil producer in Africa, is far from where it ought to be. At 60, the country remains a work-in -progress A country with over 250 different ethnic groups has gone through brutal civil war and over three decades of military dictatorship to become a democratic nation. Its return to civilian rule in 1999 was widely seen as an opportunity for the country to restructure governance and ensure equity in its distribution of resources. But growing corruption and a brutal insurgency in the northeast region of the country that has lasted for a decade have contributed to its failure to effectively tackle some of its most critical problems.

It is paradoxical that a country with abundant human and material resources, a country whose nation-

als are breaking barriers across the world, a country that has produced Nobel laureates and other celebrities, a country with the largest economy in Africa would same time be the world capital of poverty. The development effectively makes it unlikely that the United Nations’ Sustainable Development Goal (SDG) to end extreme poverty by 2030 will be met.

There’s almost nothing to celebrate in a country where almost everywhere is so insecure. Four years before the country gained independence, large oil reserves were discovered along the coastal Niger Delta region, bringing hopes of prosperity for so many.

But, as Nigeria emerged as one of the world’s largest oil exporters, the ruling class mismanaged the resources from oil sales mostly to its own benefit.

Today, the outlook is bad. According to Transparency International’s Corruption Perception Index for 2019, Nigeria occupied the 146th spot out of 180 countries listed, falling to its lowest ranking ever. The amount of money stolen by the political class is enough to fix the most important infrastructures in the country. It is so annoying to see millions of Nigerians languishing in poverty while a group of persons squander the country’s resources.

In sixty years of independence, our key achievements as a nation are that we survived the Nigerian civil war of 1967 -1970 and that we are still a country. Beyond these, every index in

terms of physical and social parameters shows that we have declined.

Up to the early 1980’s Nigerians most likely contemplated going abroad to study only if he/she did not find a place in a Nigerian university. Our universities compared with the best in the world as did our primary and secondary schools.

Our medical facilities, largely public or owned by religious missions were first rate. It is said that up to 1965 the King of Saudi Arabia went to University College Hospital (UCH) Ibadan for his medicals. Today, our social and physical infrastructures are in shambles. The textile factories in Kano and Kaduna and many other industries all over the country have been shut down. We have one of the highest, if not the highest, number of out of school children in the world, the unemployment and poverty rates are scandalous.

There was a time when the safest time to travel was at night. Crime was very low especially in the North. That has changed for the worst. Nigeria’s judiciary was rated amongst the best in the world. Today, in every sector it is a tale of woes. By 1971, the United Arab Emirates (UAE) was a complete desert with no infrastructure. We were miles ahead.

Today UAE compares with the best in the world and has sent people to space while we still grapple with nineteenth century issues. In Nigeria rather than preach tolerance where

we should have strength, the political elite, in agbada and military uniform, have exploited these differences to promote disunity and hate.

Nigeria prides itself as a federation.

But in all honesty, we cannot say we are practicing true federalism. Apart from Lagos and Rivers States, others are completely dependent on statutory allocations. We have a centralised police and correctional (prisons) system creating an anomalous situation where for instance, a person commits a state offence; he is arrested by a federal police, is tried by a state court and sentenced to a federal correctional facility.

Our federalism is clearly abnormal.

Its content suggests a unitary system.

The current centralised system of federalism has become a veritable source of, rather than a credible solvent for, the country’s multifaceted crises of unity, democracy, and development. A more balanced perspective would distinguish between the system’s remarkable achievements in alleviating inter-group political inequality and insecurity, and its conspicuous failures to advance good democratic and economic governance.

Ultimately, focused reforms, especially resource, electoral and anticorruption reforms, will be required to consolidate Nigeria’s real successes in mitigating potentially disintegrative ethno-political conflicts and to assuage current agitations for the wholesale restructuring or dismantling of the federal system.

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

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Monday 12 October 2020

BUSINESS DAY

Government Enterprise & Empowerment Program

Brought to you by

GEEP & COVID-19: Relief loans uplift lives, revive businesses Odinaka Anudu

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he Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development, in April 2020, activated the GEEP infrastructure for the purpose of providing urgent micro loans to petty traders and artisans nationwide to cushion the economic hardships caused

by COVID-19.

These urgent micro loans are reaching 500,000 petty traders and artisans nationwide. Small and micro enterprises at the bottom of the economic pyramid have been hit hardest by lockdown restrictions. These micro loans are to cushion the income losses experienced during the lockdown.

So far, 87, 614 micro businesses have benefitted from the COVID-19 intervention loans in the first phase. The second phase of the loans will be disbursed to 412,368 traders across the country to boost their productivity and ease the impact of lockdowns on them.

A number of beneficiaries shared their relief at getting these loans, just at a time when they weren’t sure how to restart their various businesses, due to a loss of income over the past months.

Blessing Mohammed, a plantain seller, complained that business has literally

Mrs Taiwo, a petty trader

Isioma Otodo, a provisions and household items trader

stopped since the corona virus pandemic started. She said, “I have not been able to restock my small plantain business because nobody was making any purchases.

I was at the neighbourhood shopping place where we sell our goods to people in the community and I noticed the loan registration going on. I registered and I got the alert on my phone. It was a market day, so I was able to rush and buy plantain from the market. I am able to sell to people in our community and I will repay the loan quickly because there is no interest

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attached to it.”

Mrs Taiwo, a petty trader, said, “We don dey inside since and we no fit sell market because we dey fear coro.

As market dey open small small, we come see message say make we register for government loan wey go help us for this coro period.

As I come register, dem tell me say I go dey pay am small small. I say no wahala. I don dey find how I wan take start my small provision business again because the money wey i get before from the business, we don use am chop as we dey inside house. Federal

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government una welldone for this una support. God go bless una.”

Mrs Isioma Otodo had words of gratitude for the government. “I sell groundnut oil, macaroni, indomie, maggi, pepper, salt and other things. You know we earn a living from daily buying and selling, but people have not been able to come out because of the coronavirus. We got a message from our local government to register for this loan. The loan will help our business now that the lockdown has been lifted. The good part is that the loan is

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interest free, so I can pay back within the 6 months period.

We thank the Federal government for this loan.”

Recall that GEEP is the Government Enterprise and Empowerment Programme, one of the social intervention programmes, comprising TraderMoni, MarketMoni and FarmerMoni, and executed by the Bank of Industry. It is a completely digitised programme where all eligible traders are captured into a database, verified via phone and facial recognition technology, and receive disbursements in mobile wallets.

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Monday 11 October 2020

BUSINESS DAY

GENERATIONAL WEALTH

The family office: Why you need one of USD 100 million in investable assets for the services of a family office to be profitable. A singlefamily office costs $1million, typically, to maintain each year depending on the complexities of the family’s needs and is mostcost-effective for families with a networth of USD 500 million and above. Family offices are as distinctive and multifaceted as the families themselves, thus, UHNIs must pay particular attention to the intricacies of their needs and objectives in making a decision.

ONYINYECHI UKEGBU

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What is a Family Office? aximizing wealth potential and preserving wealth across generations remains a chief concern of Ultra High Networth Individuals (UHNI). However, to comprehensively attend to the scale of services required to maximize and preserve wealth at this level, typically, a family office is required.

A family office is a privatelyheld wealth management advisory organisation that manages the totality of investments and wealth for UHNIs with the goal to effectively grow and transfer wealth across generations. They differ from traditional wealth management firms, in that, they are typically made up of a team of professionals across the several disciplines required, to successfully manage the complexities of the family’s the wealth portfolio.

estimated that there are 7,300 family offices worldwide, with a marked increase in numbers between 2017 and 2019.

Number of family offices by geographical location

Number of family offices by geographical location Source: Campden Research

cludes organising philanthropic initiatives, family counselling, concierge services, and trust/ estate planning.

Source: The Global Family Office Report, 2019, UBS and Campden Research

Global data on the growth of family offices The concept was first pioneered in Europe by the rulers and the ruling class but formalized in the United States by the Rockefeller family, when in 1882, Rockefeller established an office of professionals to organize his business operations and manage his rising investment needs, with generational wealth transfer as a crucial undertaking.

Since then, there has been a significant increase in the number of family offices, globally, proportionate to the increase in the ranks of the UHNIs. As of Q2 2019, Campden Research

While the primary intent behind the establishment of a family office is wealth management, in some cases, especially for single family offices, it also in-

Starting a Family Office The UHNI may choose a singlefamily office (SFO) or multifamily office (MFO); the former is run by and serves one UHNI, while the latter serves multiple families. SFO activities are typically broader and more tailored than MFOs as they generally develop gradually in response to the unique organisational, managerial and maintenance of all or part of needs of the family. Their support ranges from non-financial needs, such as tax and legal services to lifestyle management.

While MFOs may provide similar services, the key difference between the two is that MFOs are commercially operated companies that aim to generate profit for themselves, in addition to the families they work with, and they are becoming increasingly popular because of the economies of scale.

Advisedly, an individual or family should have a minimum

Conclusion It is widely acknowledged that most family businesses and assets are rarely sustained by the 2nd generation and a high number of those that do, expire by the 3rd generation. This is especially problematic for an entrepreneurial, developing nation like Nigeria where most businesses or investments do not survive their originators, meaning that each successive generation begins from scratch to build wealth, negatively impacting the rate of economic growth in the nation.

A key driver for the retention and successful transfer of wealth is succession planning, and most UHNIs choose to establish family offices because they want more control over their investments. Recently, the wealth of the shareholders of Nigeria’s biggest companies declined significantly because of the Naira devaluation, economic recession and the global pandemic.

As such, this may present an opportunity to review the state of one’s assets and determine if a family office, -single or multiwould be more fitting.

Source: The Global Family Office Report-UBS & Campden Research (20162019); Campden Research

About the column: Preserving wealth across generations remains a key concern for Ultra High Networth Individuals (UHNIs). This column explores factors that shape the successful transfer and preservation of wealth through the generations. www.businessday.ng

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Monday 12 October 2020

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In Association With

Winners and losers

The pandemic has caused the world’s economies to diverge But its long-term impact will be even more far-reaching

I

N FEBRUARY THE coronavirus pandemic struck the world economy with the biggest shock since the second world war. Lockdowns and a slump in consumer spending led to a labour-market implosion in which the equivalent of nearly 500m full-time jobs disappeared almost overnight. World trade shuddered as factories shut down and countries closed their borders. An even deeper economic catastrophe was avoided thanks only to unprecedented interventions in financial markets by central banks, government aid to workers and failing firms, and the expansion of budget deficits to near-wartime levels.

The crash was synchronised. As a recovery takes place, however, huge gaps between the performance of countries are opening up—which could yet recast the world’s economic order. By the end of next year, according to forecasts by the OECD, America’s economy will be the same size as it was in 2019 but China’s will be 10% larger. Europe will still languish beneath its prepandemic level of output and could do so for several years—a fate it may share with Japan, which is suffering a demographic squeeze. It is not just the biggest economic blocs that are growing at different speeds. In the second quarter of this year, according to UBS, a bank, the distribution of growth rates across 50 economies was at its widest for at least 40 years.

The variation is the result of differences between countries.

Most important is the spread of the disease. China has all but stopped it while Europe, and perhaps soon America, is battling a costly second wave. Over the past week Paris has closed its bars and Madrid has gone into partial lockdown. In China, meanwhile, you can now down sambuca shots in nightclubs. Another difference is the pre-existing structure of economies. It is far easier to operate factories under social distancing than it is to run service-sector businesses that rely on face-to-face contact. Manufacturing makes up a bigger share of the economy in China than in any other big country.

A third factor is the policy response.

This is partly about size: America has injected more stimulus than Europe, including spending worth 12% of GDP and a 1.5 percentage

AAmerican Balkandemocracy betrayal

The spreading scourge of voter suppression Don’t rob people of votes, count them

A

point cut in short-term interest rates.

But policy also includes how governments respond to the structural changes and creative destruction the pandemic is causing.

As our special report this week explains, these adjustments will be immense. The pandemic will leave economies less globalised, more digitised and less equal. As they cut risks in their supply chains and harness automation, manufacturers will bring production closer to home. As office workers continue to work in their kitchens and bedrooms for at least part of the week, lower-paid workers who previously toiled as waiters, cleaners and sales assistants will need to find new jobs in the suburbs. Until they do, they could face long spells of unemployment.

In America permanent job losses are mounting even as the headline unemployment rate falls (see article).

As more activity moves online, business will become more dominated by firms with the most advanced intellectual property and the biggest repositories of data; this year’s boom in technology stocks gives a sense of what is coming, as does the digital surge in the banking industry (see our leader on Ant Group). And low real interest rates will keep asset prices high even if economies remain weak. This will widen the gulf between Wall Street and Main Street that emerged after the global financial crisis and which has worsened this year. The challenge for democratic

governments will be to adapt to all these changes while maintaining popular consent for their policies and for free markets.

That is not a concern for China, which so far seems to be emerging from the pandemic strongest—at least in the short run. Its economy has bounced back quickly. Later this month its leaders will agree on a new five-year plan which emphasises Xi Jinping’s model of high-tech state capitalism and increasing self-sufficiency.

Yet the virus has exposed longer-term flaws in China’s economic apparatus.

It has no safety-net worth the name and this year had to focus its stimulus on firms and infrastructure investment rather than shoring up household incomes. And in the long run its system of surveillance and state control, which made brutal lockdowns possible, is likely to impede the diffuse decisionmaking and free movement of people and ideas that sustain innovation and raise living standards.

Europe is the laggard. Its response to the pandemic risks ossifying economies there, rather than letting them adjust. In its five biggest economies, 5% of the labour force remains on short-work schemes in which the government pays them to await the return of jobs or hours that may never come back (see article). In Britain the proportion is twice as high. Across the continent, suspended bankruptcy rules, tacit forbearance by banks and a flood of discretionary state aid risk prolonging the life of zombie firms

that should be allowed to fail. This is all the more worrying given that, before the crisis, France and Germany were already embracing an industrial policy that promoted national champions. If Europe sees the pandemic as a further reason to nurture a cosy relationship between government and incumbent businesses, its longterm relative decline could accelerate.

The question-mark is America.

For much of the year it got the policy balance roughly right. It provided a more generous safety-net for the jobless and a larger stimulus than might have been expected in the home of capitalism. Wisely, it also allowed the labour market to adjust and has shown less inclination than Europe to bail out firms that are in danger of becoming obsolete as the economy adjusts. Partly as a result, unlike Europe, America is already seeing the creation of many new jobs.

Instead America’s weakness is toxic and divided politics. This week President Donald Trump seemed to ditch talks over renewing its stimulus, meaning that the economy could fall over a fiscal cliff. Critical reforms, whether to redesign the safety-net for a tech-driven economy or to put deficits on a sustainable course, are all but impossible while two warring tribes define compromise as weakness.

Covid-19 is imposing a new economic reality. Every country will be called on to adapt, but America faces a daunting task. If it is to lead the post-pandemic world, it will have to reset its politics.

PRESIDENT IN hospital, virus in the White House, a fight over the Supreme Court, leaked presidential tax returns: it is enough to make you reel. Amid the tumult of the campaign, it is easy to miss a less frenzied turn of events that has no less profound implications for America’s democracy.

It concerns suppressing the vote.

“Elections belong to the people,” said the Republican Party’s greatest president. What, then, would Abraham Lincoln make of his partymen’s efforts—in Florida, North and South Carolina, Texas, Wisconsin and other contested states—to limit the number of people the coming election belongs to?

Allegations of minority-voter suppression are hardly new. They are also often overheated and hard to prove. Yet Greg Abbott’s action in Texas stands out (see article).

On October 1st the Republican governor restricted the number of drop boxes for completed ballots to just one per county. For the 4.7m residents of Harris County, 70% of whom are non-white and liable to vote Democratic, that is a travesty.

Echoing President Donald Trump, Mr Abbott said this was necessary to prevent voter fraud.

Wisconsin’s Republican legislature said the same to justify restricting early voting in the state, as did their counterparts in the Carolinas when insisting on the need for a witness counter-signature on mail-in ballots. Preventing fraud is a sound principle. Some Republican measures, including in Texas, involve tightening up covid-19 provisions for early voting that those same lawmakers had introduced. In practice, however, concerns about electoral fraud, which Republican lawmakContinues on page 19

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BUSINESS DAY

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In Association With

When calling is a calling

For some Ugandans, phoning the radio is a way of life Those who praise politicians can land plum jobs

Continued from page 18

T

HE TRICK to getting on Ugandan radio is to call early and often, says Rajabu Bukenya (pictured). A phone is tucked in his shirt pocket, its radio receiver tuned to a popular talk show. Eight others are balanced on his thighs, all dialling the station’s number.

Soon one connects and he gives his trademark introduction. “This is Rasta Man in Bwaise who eats once a day!” Hunched on a step, beside a wall scrawled with graffiti, he has all of Kampala as his audience.

Mr Bukenya says he phones “from morning up to evening”, expounding on crooked politics, bad roads, or the floods that sweep through Bwaise, a poor quarter of the Ugandan capital. He considers himself a “freedom fighter”.

But not everyone concurs. Adam Kungu, who hosts a political talk show on Top Radio, says that eight in ten calls come from regulars like Mr Bukenya, stopping ordinary listeners from getting through.

“Repetitive callers are a menace,” complains Abby Mukiibi, a programmer at CBS, another station.

“To them it is a way of living now, it’s employment.”

The business model is murky.

Some callers have clubbed together into trade associations. A member says they meet to discuss issues and do not take money from politicians.

But most listeners suspect otherwise. Mr Mukiibi says he knows one caller who used his earnings to buy

a chicken farm and another who got a job in the intelligence service.

When he tries to block repeat callers he gets messages from state security saying “Let those people do it.”

The most dedicated diallers can do well. Linos Ngompek used to drive taxis to pay his college fees.

After graduating he started phoning radio stations to praise the ruling party, and soon joined other “media activists” in government-run training sessions. “Sometimes you find

that a ministry is being bashed on air, so these ministers would call us to give us facts,” he says. He denies receiving cash, but says calling helped him in other ways: in 2014 he was appointed a local security chief by the president, and he is now running for parliament.

The men who phone in—very few are women—insist they are not driven by a desire for fame or money. The role of a caller is to fill “a vacuum” that exists between

government and the people, says Nicholas Musinguzi, a spokesman for “Kangabaije”, a pressure group which phones in daily to stations in Hoima town. It takes its name from a drum traditionally beaten to alert the community in a crisis. In Bwaise, Mr Bukenya canvasses opinion with market vendors and motorbike-taxi drivers. He still lives in “the ghetto”, but now even big politicians take his calls. “My aim is for my voice to reach where I cannot,” he says.

Fuel me once

Nigeria’s President Buhari is doing away with petrol subsidies The reform is long overdue

T

IME IN NIGERIA sometimes seems to follow its own rhythm.

When the government introduced petrol subsidies they were meant to last just six months. Some four decades later, they endure.

Africa’s biggest oil producer sometimes has the continent’s longest queues outside filling stations.

Not one of its four refineries has produced a drop of petrol in more than a year. The reason is that the government forces oil companies to sell petrol at the pump for less than it is worth on international markets (with the state, belatedly, paying the difference). The subsidies have been a huge drain on the treasury: when oil prices were higher in 2011 they equalled almost 5% of GDP. The subsidies are often stolen. And when they are not, they encourage overconsumption of a planet-cooking fossil fuel.

Muhammadu Buhari, now in his second term as Nigeria’s president, has long promised to repair state-owned refineries to reduce the fuel-import bill. But he has also balked at letting them sell petrol at prices high enough to make refining profitable. Until now. Over the past few months the government has steadily lifted the retail price of fuel after announcing in June that it would phase out the subsidies. A litre now sells for 162 naira ($0.42),

up from 121 naira in June.

These reforms have irked opposition parties and trade unions.

Labour bosses threatened strikes, as they did when a previous government tried to end petrol subsidies in 2012. Then, after ten days of protests and 12 deaths (mostly from police bullets), the government backed down and reduced subsidies instead of eliminating them.

This time the government has little choice but to hold firm. The

World Bank reckons Nigeria’s economy will shrink by 3.2% this year, its worst recession in four decades. Government revenues are slumping, leaving little cash to support the more than 40% of Nigerians who are extremely poor, let alone provide subsidised petrol to middle-class motorists.

The economic crisis also seems to have dampened the unions’ fighting spirit. Low oil prices mean that the loss of the subsidies is not

The spreading scourge of voter suppression

being felt as keenly as in 2012.

They called off a nationwide strike scheduled for September 28th after talks with the government. They did not leave empty-handed: the government put on hold planned increases in electricity prices, which are needed to make it profitable for companies to generate the stuff. The unions, it seems, would rather have cheap imaginary power than slightly dearer juice that actually comes out of the socket.

ers have cited in 25 states over the past decade, are almost always unfounded. This makes their arguments against the special covid-19 provisions hard to sustain.

The only major instance of voter fraud in recent times was perpetrated by a rogue Republican activist in North Carolina. There is no evidence of the mass Democratic electoral fraud many Republicans claim to detect. Mr Trump, who alleged that 5m votes were cast illegally for Hillary Clinton in 2016, launched a commission to find some. It returned empty-handed.

Meanwhile, examples of new Republican restrictions have piled up.

In Georgia, Ohio and Texas at least 160,000 people, disproportionately non-white, were wrongly removed or marked for removal from the electoral roll in 2018-19. And though the effect of recent measures is unclear, Florida hints at what may be to come. The state voted in 2018 to enfranchise felons who had met all their obligations, an estimated 1.4m people—including a fifth of black Floridians. The Republican legislature passed a law enacting this plebiscite that interpreted those obligations in the most onerous way possible by demanding they first settle all outstanding fines.

Former felons were always likely to be low-propensity voters, but this erected a formidable bureaucratic hurdle even to those able to pay.

As Florida’s registration deadline passed this week, perhaps one in six had registered to vote.

Mr Trump’s threat that he will refuse to accept the election results has raised fears of a constitutional crisis. They need to be taken seriously. More likely, however, these practised instances of vote suppression will turn out to be the election’s real lasting democratic damage. It is perverse for one party in a democracy to shape its politics around suppressing the vote. Adopting this as a political tool is especially foul in a country where AfricanAmericans were denied the vote in living memory.

The tactic is the apogee of Republican short-termism. True, Georgia’s governor may owe his job to suppressing black votes. But the party will sooner or later be unable to win national elections if it cannot woo non-whites. With every cycle of electoral abuse, the party of Lincoln is handing them fresh grievances.

20

Monday 12 October 2020

BUSINESS DAY

START-UP DIGEST

In association with

Africa Finance Hub founder helps start-ups set up structures, enjoy stability ODINAKA ANUDU

T

oyin Aralepo, a strategic finance expert, is helping entrepreneurs set up structures and experience financial stability.

Through her Finance and Strategy Hub (AFSH), she plans to solve foundational problems hurting the micro, small and medium enterprises (MSMEs), including poor management skills, lack of finance, poor preparation, poor knowledge of the sector, poor accounting and bookkeeping, among others.

Aralepo, a first-class accounting graduate and fellow of the Institute of Chartered Accountant of Nigeria (ICAN), is bringing her over a decade corporate experience in financial management to bear to support the growth of entrepreneurs.

Explaining how she came about the idea of the finance hub, she recalls that she was motivated by a drive to solve some of the challenges preventing MSMEs from properly managing their businesses and moving to the next level.

“Beyond passion, I see this as a call to support businesses and, especially SMEs, to access and enjoy the same value of a multinational CFO. This

led to setting Africa Finance and Strategy hub as a support platform for SMEs,” she says.

The platform gives entrepreneurs access to professional financial management skills and tools that can assist them to understand, manage and scale their businesses.

It also helps them to make smart financial decisions to grow profit and attract investors for funding and expansion, she assures.

“Business owners struggling with the performance of their businesses will be able to build sustainable financial structures for profitable growth,” she explains.

The London School of Business (LSB) alumni observes that one major area where SMEs struggle is financial intelligence, which deals with understanding the numbers and the implication of the various financial decisions taken in business operations.

“No matter how intelligent a business idea is, it will not soar beneath its wings without having the right amount of money. Cash is the lifeblood of any business and business would not function unless there’s adequate money accessible for use,” she notes.

The financial expert advises entrepreneurs to un-

Toyin Aralepo

derstand that management entails planning, organising, controlling and monitoring the financial resources of the business to achieve the set objectives.

She says based on several studies, finance is an area of pain and frustration for several entrepreneurs, leading them to lose grip of their businesses.

“We can compare the

role of finance in business to maintenance of a vehicle.

If you don’t put in quality fuel and oil and do regular servicing, the functionality of your vehicle will be affected and not serve you well. If neglected, the vehicle will eventually breakdown and fail to reach its intended destination,” she says.

Explaining how her hub intends to solve these iden-

tified problems, the entrepreneur says her team has started a business clinic to help business owners to understand areas where they are making losses in their businesses without knowing and proffer how to fix them in a practical manner. “Our operations include face-toface business consultation as well as virtual learning via @ toyinaralepo and @africafinancestrategyhub. We evaluate the state of a business and give support in understanding their business models and how systems are set up to strengthen and run the business models smoothly.”

Once these pains and gaps are identified, she recommends the financial structure to be put in place. This often includes book-keeping and accounting, planning and budgeting, pricing, cash flow management, performance management and development of financial intelligence that will ensure maximum values from products and services. Highlighting her target market and the rationale behind the choice of that market, she discloses that the hub targets business owners who are generating over 600,000 monthly and fall within the global definition of SMEs by the Central Bank of Nigeria and Bank of Industry.

They are at their infancy and they need to get it right.

On where she sees her brand in the next 3-5years, she projects that AFSH is envisioned to be one of the topmost impact makers to help SMEs solve their financial structure problems.

“Our goal is to help 1,000 business owners build financial structure to enable them to make smart financial decisions for profitable growth and wealth creation that will attract investors.

“We want to be the destination hub for business owners to receive professional financial management advice and support to scale their companies,” she further says.

Aralepo advises entrepreneurs to find new ways of doing things and explore fresh perspectives to existing problems.

“Business is war, hence business owners need to find strength within, build resilience and receive instruction for the next level,” she notes.

“We are currently in a new world of realities and it’s a wake-up call for everyone to re-evaluate and re-strategise.

It’s an opportunity to reflect, rethink, reemerge and evaluate what works for you,” she concludes.

SMEs get ‘Customer of the Month’ award from CreditPRO JOSEPHINE OKOJIE

C Dayo Ayanwale, general manager, CreditPRO, presenting the Award for Customer of the Month to Ishola S. Oladoyin, CEO of Ladoyin Global Trade & Investment Limited with some members of staff of CreditPRO business support services Limited recently in Lagos.

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reditPRO Business Su p p o r t S e r v i c e s Limited, a licensed money lending company focused on supporting small and medium enterprises (SMEs) through innovative working capital solutions, is rewarding its SME customers through the ‘Customer of the Month’ initiative.

Dayo Ayanwale, head of business at CreditRPO, said the idea behind the initia-

tive was to support thriving SMEs as well as to reward their good credit behaviour.

“SMEs are the bedrock of every economy. They need a structured support system for them to survive in this harsh economic climate.

Customer of the Month initiative is one of the ways we are supporting our SME customers,” Ayanwale said.

Also, speaking, Abisola Abiola, head of strategy &communication of the organisation, enumerated the benefits accruing to the

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Customer of the Month, which include: free marketing and promotion of the products and services, free website design, mentorship, and advisory services among others.

She said the small business would also be able to attract loans from CreditPRO at a lower rate and with less stringent conditions as compared to other customers.

Ishola Oladoyin, CEO of Ladoyin Global Trade & Investment Limited, emerged winner in the September

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edition and was rewarded with lots of gifts by CreditPRO. Oladoyin, in his appreciation remarks, said though he was initially sceptical about getting a loan from any finance house due to the negative experiences people had shared, his experience with CreditPRO had been very remarkable.

He said the working capital support he received so far from the company had helped in scaling his food packaging business.

Monday 12 October 2020

BUSINESS DAY

21

REAL SECTOR WATCH

Exporters call for payment of N200bn outstanding EEG debt ODINAKA ANUDU

T

he Manufacturers Association of Nigeria Export Promotion Group (MANEG) has called on the Federal Government to pay the outstanding Export Expansion Grant (EEG) debt amounting to N150 to N200 billion to boost the non-oil export.

They say the country needs non-oil export proceeds to support import-dependent firms, boost foreign exchange availability and shore up foreign reserves.

“The current backlog will be approximately N150 to N200 billion, which is, again, bad because they are creating a fresh backlog and this would bring another batch of promissory notes to be issued in order for exporters to be paid,” Ede Dafinone, chairman, MANEG, told journalists in Lagos at the weekend.

The EEG was set up in 1986 to help Nigerian exporters become competitive at the global market.

It is a practice in many developing and developed countries such as China, India and Australia to provide concessions or cash rebates/grants to companies penetrating new markets or consolidating already established markets to enable them rival competitors.

In Nigeria, companies that exported different kinds of products

…want AfCFTA postponed by 1 year

or commodities between 2006 and 2016 were owed billions of naira in claims as the federal government did not meet the obligation of settling them as promised.

Dafinone explained that apart from N197 billion approved by the National Assembly, there was a N130 billion yet to be approved by the National Assembly. He said outside of that, only 17 percent of 2017 backlog was paid, while 2018 and 2019 were fully outstanding.

He said non-payment of EEG

was greatly affecting non-oil export as a country.

Exporters have argued that Nigeria’s non-oil export grew from $600 million to $3 billion from 2005 to 2013 due to the grant scheme which encouraged them to expand and discover new markets.

“Oil prices crashed in March this year and it highlighted the need for the government to diversify their revenues away from oil towards non-oil. With the stoppage of EEG from 2014 to

2018, there was a complete drop in the amount of non-oil over that period. It is very clear that with EEG, non-oil export significantly grows when that has been paid.

“What we found is that exporters who are beneficiaries of the grant have priced their products at lower prices to break into new markets. A situation where the EEG has not been paid, the exporters find it unprofitable to break into those markets and retreat back towards our own lo-

cal market which, clearly, is not good for the Nigerian market,” he further said.

Dafinone further said that exporters using promissory notes were offering a further discount and needed to be paid to support their businesses.

“Effectively by my rough calculation, every N100 that is being owed for EEG claims, they are collecting between N30 and N40 back from government. I raised the argument lately that the federal government may be cashstrapped, therefore would not be to pay fully. But this is a scheme based on government promising to pay and exporters made commitment in view of that promise to pay given by government,” he said.

The African Continental Free Trade Area (AfCFTA) is said to have the capacity to create the largest trade zone in the world and increase intra-African trade by 52 percent by 2022 while removing tariffs on 90 percent of goods. The free trade treaty is expected to start in January, but Dafinone thinks Nigeria needs another year to prepare.

“We are not properly prepared to take advantage of the possible benefits and, in my opinion, as a country, we need additional preparation to take full advantage. My view would be that we should, on the back of Covid-19, call force majeure on this and ask for an additional year in order to put our house in order before we go live on the AfCFTA,” he said.

He said due to border closure, export through land borders had been totally stopped, but the sea route was still available, adding that this option was largely more expensive than the land borders.

How smuggling, poor access to funds hurt textile industry GBEMI FAMINU

M

anufacturers in the textile industry are hard hit by smuggling and difficulty in accessing funds, according to industry players.

“The textile industry used to have over 200 active firms, but they have all closed,” Hamma Kwajaffa, director –general, Nigerian Textile Employers Association (NTEA), said in a phone conversation.

“We are left with foreign firms and if they decide to leave, the industry will shut down. Despite our investments in importing machines and necessary tools for production, invasion of counterfeit goods have limited our chances and is also damaging our reputation,” Kwajaffa further said.

About 85 percent of the $1.4 billion worth of textiles that flood the country’s market is smuggled, mainly from neighbouring countries, said the Textile Manufacturers Association.

Nigeria had over 100 textile firms in 1970s and 1980s with

companies such as Asaba Textile Mills, Aba Textile Mills, Kaduna Textile Mills, Afprint Nigeria Plc and Enpee Industries, among others. Many of them are dead, with fewer than five now alive.

Experts attribute the situation to unbridled smuggling, high cost of energy, poor patronage, poor competitiveness of local firms and lack of cotton to feed the mills.

There is a N100 billion Cotton, Textile and Garment Fund by government. Over 60 percent of the fund has been disbursed yet the textile firms are still comatose.

According to a 2019 textile sector’s year review by the Manufacturers Association of Nigeria (MAN), the sector is challenged by smuggling, counterfeiting of textile materials, difficulty in accessing funds allocated to the sector, non-implementation of policies, unavailability of cotton, and inadequate patronage of locally made textile products.

The sector’s declining performance was further validated by the Central Bank of Nigeria (CBN)’s Purchasing Managers’ Index (PMI) report, which revealed that in the full year 2019, www.businessday.ng

the sector performed at an average of 53 points, declining by 8.5 percent from the 57.9 average points achieved in 2018 and a 3 points from the 54.9 average points reached in the same period of 2017.

Similarly, the second quarter 2020 GDP report compiled by the National Bureau of Statistics showed that the textile and apparel subsector contracted by 15 percent to -14.43 percent, from 1.03 percent in the previous quarter and by nine percent from the 1.42 percent achieved in 2019.

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Kwajaffa noted that there were some parts of Lagos where textiles are sold for N1,000 for five or six yards of counterfeit material, stating that these are from smugglers who did not have to pay high production cost or taxes nor did they employ people.

He said corruption in the system was another major issue.

“In 2015, over 36 warehouses were raided in Kano alone and N316 billion worth of counterfeit goods were seized. Instead of disposing of the items, they were given back to the owner

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who just had to pay excise duties.

Similarly, the 10 percent Textile Development Levy on imports has not been implemented. Last year, $4 billion worth of textiles was imported and no levy was paid on it,” he explained.

He urged government to enforce payment of the textile development levy to aid the sector growth of the industry, explaining that the executive order 003 should also be implemented.

In the first half of 2019, the CBN governor Godwin Emefiele excluded textiles from the foreign exchange (FX) market. However, plans to revive the over 100 comatose textile plants are yet to be implemented which negates the motive behind the ban placed on textile import.

“In order to build and grow a domestic textile value chain, including active mills across the country, which will benefit the economy, it is necessary to first of all provide electricity to the industries, subsidise importation of textile machines, incentivise cotton farmers and create ready off-takers for them,” Vincent Nwani a Lagos-based business

22

BUSINESS DAY

Monday 12 October 2020

INTERVIEW How MARK Model is helping organisations, individuals achieve effectiveness, success Rajiv Sharma is a Neuro Linguistic Programming (NLP) Global Guru, and creator of the MARK Model—a framework for effectiveness and success.

In the last 30 years, Sharma has trained over 500,000 people in many countries. In this interview with BusinessDay, he shares his thoughts on how people and companies can evolve after the disruption caused by the pandemic. MARK Model can be applied to any field, be it Business, Sales, Leadership, Coaching, and Mentoring or Your Personal Life. Excerpt:

W

hat impact has COVID Created on the lives of individuals and the business environment? How can we recover from this impact?

A lot has already been written and said about what has happened during the pandemic. It has created a massive disruption in the way we live and has affected everyone, right from schoolgoing children to the leaders of the companies and countries.

We can’t change the past, what has already happened, but the best way to respond to these post-pandemic situations is by being mindful. Conduct for the wellbeing and safety of yourself as well as others. What we can do about it is within our control, and this choice will make the difference.

Everything begins in our mind, so the first step is to create encouraging thoughts about your health and fitness. Your body is the number one asset of your life. So the first responsibility is towards yourself. Imagine abundance in all aspects of your life, be it physical and emotional health.

Business leaders need to work with a new mindset to create value for their clients and society at large. The responsibility lies with the leadership and management team to develop their people to address challenges and see it as an opportunity. Organizations need new strategies to move their business forward.

But nothing happens if we just keep thinking. Ideas, how powerful they may be, don’t take us anywhere if we don’t act on it.

You need to be aware of how to translate your mindsets into actions.

Failure to turn your ideas into action is the primary problem people face.

So all individuals and business organizations have to work on converting their mindsets into actions.

Turn your strategies into actionable items, and then make sure you do it.

Taking actions (consistent actions) is the most challenging part of your journey to effectiveness and success.

To organize your journey of life and make it more systematic, you can use the ‘MARK Model.’

What is MARK Model, and how

your subconscious mind is aligned with your conscious mind. No target is going to be difficult when you program your subconscious mind to achieve your goals. With Mark Model, you get techniques to reprogram your subconscious mind.

(Rajiv Sharma, Program Director, NLP Nigeria Limited)

does it solve the problem created by disruption?

MARK stands for Mindset, Action, Repetition, and Knowledge.

‘MARK Model’ is a performance framework that gives you a map to create a new mindset, translate your mindset to actions, repeat your actions to create new habits. These habits lead you to mastery level, and you innovate new Knowledge.

Now think of everything happening in your organization and your life.

Isn’t it based on how you think, the actions you take, habits you form, and the knowledge you apply and evolve?

You will find that your success in your personal or professional life all moves around MARK. Whether you like it or not, you are using all these four components (Mindset, Action, Reception, and Knowledge) in an isolated manner.

A lot of studies have been done on these aspects disjointly. It’s like having an old-style standalone phone, a different camera, and a sperate

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internet device. MARK Model is like a smart device, where you have all the components of success and effectiveness in one place.

The power of the MARK Model framework lies in the process that connects your mindsets to actions and enables you to turn your actions into habits by NLP tools and techniques.

There are steps to follow, and you will get excellent results.

Organizations build high-performance individuals and teams. Teams learn to execute more promptly, make better decisions, resolve more complicated problems, and MARK helps to enhance creativity and innovation.

Using MARK Model, it’s practical to achieve your goals, whether you are an individual, a company, or a country.

Why most people find it very difficult to achieve their goals and desires?

Good point. To answer your question, let’s understand how the conscious mind and the subconscious mind function. Our conscious mind is the ‘aware mind’ and lives in the present.

When I ask you to make a list of your goals or craft the strategy for your organization, you plan it with your conscious mind. You are writing all your goals and objectives with the ‘aware mind’ what you want to achieve in the years to come.

When you are done writing goals and strategies, you return to your daily schedule. You live 80 percent to 90 percent of the day (I mean your schedule) on autopilot mode with the stored programs in your mind. These programs are stored in your subconscious mind. And you picked these programs from your family and your environment. You got programmed, and the foundational programming was done when you were growing from the age of 0 to 7.

I have seen people find it very difficult to achieve their goals if the programs stored in the subconscious mind are not designed for their desires and goals stored in your conscious mind.

You can achieve your goals when

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How can corporates make use of this MARK methodology?

It’s precisely the way you apply MARK for individuals. The responsibility of transforming a company begins with the leadership and team management. And the success of every organization lies in developing their people and teams. It’s more critical after this pandemic because the business environment has changed, and people need a new mindset, new actions to create new habits.

Both time and space have changed for business operations, and organizations need to align their people to meet sales and business targets.

Companies can incorporate the ‘MARK Model’ framework in all learning interventions so that whatever you train your people on translates into actions and becomes their behavior.

We are already consulting for many organizations across the world.

Thousands of people in various companies have been trained on MARK Model, and they have consistently been getting results. If these people can achieve their targets, so can you by using MARK Model in your learning and development programs.

There are 6 to 8 steps under each category (Mindset, Action, Repetition, and Knowledge). These steps enable

people to evolve Growth Mindset, Tranlstae Mindset into Actions, Create Habits to achieve Departmental Targets. Teams will help in innovating the organization’s products and services by contributing the customer knowledge and experience.

How does MARK Work for an individual or corporates? Can you give us an example?

To understand the MARK Model, simply think about reaching a goal.

There are always things to do and a time frame within which it has to be done. Let’s try this, think of a goal or a target you may have, no matter which sphere of life, now let’s apply the Mark Model. Here’s what you need to do: Mindset: Let’s start with the right thought. Are there people who have already achieved what your goal is?

Then it’s time to adapt their mindset; what did they do, how did they go about it. And if it is a goal not many have achieved, think it through, see the goal to fruition, map it out before @Businessdayng

you begin.

The second step is the most important one. It is also where most people fail.

Action: Converting a mindset into simple steps and taking action is what this is all about. Where most people stop and give up is when the action does not generate the desired results.

What most forget is, a single action does not bear a result, various action steps in cohesion chart the path to success. Failure, course corrections, and restarting are all a part of this journey; each of them is keeping you in action.

Here’s the third step, repeating successful action into a pattern and a pattern into a habit.

Repetition: Look at it this way, when someone asks you to drive your car, write, eat, or anything in the realm of your regular everyday routines, you would do it in a jiffy, without really thinking and almost always accurate.

That is what repetition does; it makes specific actions second nature; it adds to your efficiency and effectiveness without really troubling your mind.

And when you have repeated an action enough times, an amateur can become an artist, and self-mastery is attained - provided the right action is repeated over and over.

Most will want to stop at selfmastery, but beyond this is where the real treasure sits.

Knowledge: At this level, we innovate, create new cognitive skills, and become what a few have attained so far. Knowledge is wealth. In this information age, our earnings depend

on what we know and how we apply it. The more you know and apply, the more the probability of your creating wealth multiplies.

So what do you think should be done to overcome the current challenges?

As I said earlier, change your mindset.

What worked before will not get the results you want to achieve.

Translate your mindset into actions ānd consistently keep taking actions towards your desired goal until it becomes your second nature and an automatic reflex.

Take your craft to a mastery level.

Invent new Knowledge, new products, and services.

MARK methodology doesn’t apply only during challenging times.

Your success is guaranteed once you make it your lifestyle. The world is your playground. If you need any help, reach me out.

MARK Model Copyright - www.

NLPNigeria.com

Monday 12 October 2020

BUSINESS DAY

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@Businessdayng

23

24

Monday 12 October 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 09 October 2020

Top Gainers/Losers as at Friday 09 October 2020 GAINERS Company

LOSERS Opening

Closing

Change

TOTAL

N96.8

N102

5.2

ETERNA

Company

Opening

Closing

Change

GUARANTY

N32

N30.4

-1.6

N150.5

N150

-0.5

N4.5

N4.1

-0.4

N3.71

N3.54

-0.17

N4.45

N4.3

-0.15

N3.3

N3.63

0.33

DANGCEM

INTBREW

N4.58

N4.72

0.14

PZ

CUSTODIAN

N5.15

N5.25

0.1

UCAP

BUACEMENT

N41.4

N41.5

0.1

ETI

ASI (Points)

28,415.31

DEALS (Numbers) VOLUME (Numbers)

5,759.00 384,144,997.00

VALUE (N billion) MARKET CAP (N Trn)

3.999

Global market indicators FTSE 100 Index 6,016.65GBP +38.62+0.65%

Nikkei 225 23,619.69JPY -27.38-0.12%

S&P 500 Index 3,479.23USD +32.40+0.94%

Deutsche Boerse AG German Stock Index DAX 13,051.23EUR +9.02+0.07%

Generic 1st ‘DM’ Future 28,533.00USD +223.00+0.79%

14.852

Shanghai Stock Exchange Composite Index 3,272.08CNY +54.02+1.68%

Stocks gained over N700bn despite activities of profit takers was largely driven by activities of investors who chose to increase their stakes in banking, industrial goods, consumer goods, oil and gas, and insurance stocks.

Despite pockets of profit taking activities analysts expect that the positive sentiment in the equities market will be sustained this month as investors position for third-quarter (Q3) 2020 earnings publications.

As returns from equities go back to pre-Covid-19 levels, some analysts are of the view that the market is set for a positive close for the year.

As at 2:30pm trade clos-

Iheanyi Nwachukwu

D

espite negative close (-0.46) seen on the last trading day of the week ended Friday October 9, Nigeria’s equities market still increased in value by N747billion week-on-week (WoW).

More investors moved into Custom Street, Lagos to buy stocks in search for alpha returns because of sustained depression of yields in the fixed income space, coupled with the dearth of attractive investment options.

The week’s record gain

Onyema, Oniha highlight opportunities for investors in Fixed Income market Iheanyi Nwachukwu

I

n line with its commitment to further enhance the capacity of capital market players across available asset classes, The Nigerian Stock Exchange (NSE) hosted a two-day webinar on fixed income this week.

The webinar – which was held in partnership with the Debt Management Office (DMO) and CSL Stockbrokers – focused on the dealing member firms on Wednesday, 7 October 2020, and members of the investing public on Thursday, 8 October 2020.

Speaking at webinar, the Chief Executive Officer (CEO), NSE, Oscar N. Onyema, stated, “The Exchange continues to be the foremost platform creating new types of debt instruments in Nigeria with a market capitalisation of about N16.4trillion. By offering capital raising opportunities and secondary trading to all classes of issuers including Sovereign, Subnational, Corporates and Supra-national bonds, The Exchange facili-

tates the interaction between borrowers and lenders in Nigeria driving efficient allocation of capital. With fixed income markets representing one of the largest subset of global financial markets, NSE reiterates its commitment committed to providing a hybrid market for dealers as well as institutional and retail investors to continue to access increased liquidity in fixed income securities.”

On her part, the Director General, DMO, Patience Oniha expressed her delight to partner with NSE on the webinar and went on to say, “While we have always had the money market & the capital market, the fixed income market has also grown to become active today with capital raising from government, corporates and multinationals. This shows that our market is capable of attracting both domestic & international players for the overall good of the economy.

In meeting our objectives at the to finance the budget & deepen capital market activity, we remain committed to using the fixed income platform to www.businessday.ng

support various aspects of the economy. We will also remain responsive to investors’ needs for portfolio diversification by expanding our fixed income market with more sophisticated debt instruments.”

The webinar also featured a presentation from Equity Analyst, CSL Stockbrokers, Olakayode Olayemi who took participants through the fundamentals of fixed income trading, highlighting both the primary and secondary market activities, as well as the investment opportunities and benefits available for investors in the NSE debt market.

The session was quite engaging with participants engaging actively with The Exchange, DMO and CSL on practical ways to properly navigate the fixed income market.

The Exchange continues to deliver on its mandate to not only provide the Nigerian economy with a reliable, multi-asset hub, but to facilitate financial literacy programmes that help investors gain an in-depth understanding of opportunities in various asset classes.

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ing time on Friday, Nigeria stocks posted positive year-to-date (ytd) return of +5.86percent.

The stock market of Africa’s largest economy which had witnessed two days of rally at the beginning of the review week later recorded increased profit taking activities in the remaining three days.

At the close of the week’s trading, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) appreciated by 5.30percent from 26,985.77 points to 28,415.31 points while the market capitalisation of listed stocks increased from N14.105 trillion to N14.852trillion.

Union Bank joins IFC’s Global Trade Finance Program …Secures $40 million to Boost Trade Finance in Nigeria Iheanyi Nwachukwu

I

nternational Finance Corporation (IFC), a member of the World Bank Group has announced a finance guarantee facility to Union Bank to boost access to finance for local business, enable increased international trade for Nigeria, and help protect the country’s economy from the impact of the COVID-19 pandemic.

The $40 million facility, under IFC’s Global Trade Finance Program (GTFP), will support Union Bank to establish working partnerships with nearly 300 major international banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses.

The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.

According to the terms of the agreement, the GTFP will offer confirming banks partial or full guarantees covering payment risk on Union Bank’s trade-related transactions. These guarantees are transaction-specific and may be demonstrated by a variety of underlying instruments including letters of credit, trade-related promissory notes, guarantees, bonds, and advance payment guarantees.

Emeka Emuwa, Chief Executive Officer of Union Bank, said, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our corporate customers. Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.”

Eme Essien Lore, IFC’s Country Manager for Nigeria, said, “Keeping trade moving is essential to

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growth and job creation, especially during the challenging economic times we are living through today.

We welcome Union Bank to IFC’s Global Trade Finance Program and value a partnership that will make a positive impact on Nigeria’s economy.”

Since the launch of the GTFP in 2005, the network has grown to be the largest of IFC’s seven trade initiatives with a robust network comprising major international banks across the world.

Union Bank’s admission into the GTFP network underscores its focus on developing innovative channels to support Nigerian businesses. In 2018, the Bank introduced the Local Letter of Credit, a first-of-its-kind adaptation of the standard Letter of Credit which focuses on facilitating local trade.

IFC’s partnership with Union Bank underscores IFC’s growing commitment to Nigeria, with investments focused on sectors including healthcare, agribusiness, manufacturing, technology, and SME financing.

Monday 12 October 2020

BUSINESS DAY

MARKETS INTELLIGENCE

25

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

PZ Cussons Nigeria receives more money from operation to support business BALA AUGIE

P

Z Cussons Nigeria Plc is efficient in turning raw materials and labour into income as the company receives more money from operations to support its business, thanks to gradual reopening of the economy.

In the last six years, the consumer goods giant has been making money on a Naira of sales after deducting variable costs and operating expenses.

For the first quarter ended August 2020, the company posted an operating profit of N755.12 million from a loss position of N1.02 billion as at quarter ended August 2019.

Analysts prefer the operating profit as a measure of profitability and efficiency to net income because the former does not include exceptional items that are one off events.

An improvement in margins is largely attributable to strong growth

at the top line (revenue) and cost controls, as the company’s innovative products continue to make an inroad into the Nigerian market.

Revenue spiked by 18.30 percent to N18.70 billion in the first quarter ended August 2020, as the Home and Care Personal/ Durable Electrical

Appliances continues to add impetus to earnings.

The chart below shows the current sales figure is the highest in six years.

The strong sales helped buoy gross margin that expanded by 900 percent basis point to 26.16 percent in the period under review as against 17.16 percent the previous year.

Also, gross profit spiked by 80.80 percent to N4.89 billion as at quarter ended August 2020.

PZ Cussons Holdings, the parent company of PZ Cussons Nigeria, has initiated a number of restructuring initiatives and strategies aimed at refocusing investment, simplifying its operations in Nigeria and disposing non-core brands and activities to improve overall profitability.

The parent has introduced a tighter working capital programme, which has seen a strong improvement in trade receivables and a reduction

in stock. It also announced the disposal of Nutricima Limited (a dairy business) for US$20.30mn (£15.60 million) PZ Cussons Nigeria has zero long term debt in its balance sheet, which gives it the leeway to tap the debt market to raise funds to finance future expansion plans.

The gradual reopening of the economy after several months of lockdown that disrupted the demand and supply chain helped the Nigerian consumer goods giant pared its losses.

Losses fell to N212.35 million as at quarter ended August 2020 as against N1.09 billion the losses the previous year.

The abrupt devaluation of the currency by the central bank in October 2019 led to a foreign exchange loss of N1.052 billion, which erased the windfall from the top line (sales).

Since foreign exchange loss is an exceptional item that does not occur at all times, it is expected that PZ Cussons Nigeria will soon post net profit after tax.

The coronavirus pandemic has dealt a devastating blow to business activities, but analysts are optimistic of a gradual recovery as the government has eased the lockdown.

Real GDP contracted by 6.10 percent year on year (yoy) in the second quarter (Q2) 2020, according to recent data by the National Bureau of Statistics (NBS).

Analysts at Chapel Hill Denham Limited in a recent to client said GDP will contract by 3.0 percent in the fourth quarter.

AXA Mansard overtakes AIICO Insurance to become most profitable listed firm BALA and IFEANYI JOHN

A

xA Mansard has overtaken AIICO Insurance to become the most profitable listed insurers in Africa’s largest economy after net income more than doubled.

AXA Mansard, the largest insurer by market capitalization, saw half year net income surged by 154.18 percent to N3.60 billion, as the insurer recorded improved underwriting position while operating and underwriting expenses are within the single digit growth rate.

That compares with AIICO Insurance, (N2.78 billion); Mutual Benefit Assurance, (N1.56 billion); NEM Insurance, (N1.56 billion); Cornerstone, (N1.0 billion); Wapic, (N654 million); Lasaco, (N632.15 million), Prestidge, (N620 million), and Linkage, (N550.12 million).

AXA Mansard recorded the largest expansion in return on average equity, which means it has deployed the

resources of its owners in generating higher profit than peer rivals.

There are concerns that the coronavirus related claims and deterioration in the credit quality of fixed income securities could undermine listed insurers’ future profit and returns to shareholders.

The cumulative average return on equity of the largest companies on the bourse fell to 5.73 percent in June 2020 from 10.40 percent as at

June 2020, according to data gathered by BusinessDay. Nigerian insurers have the poorest valuations among sub-Saharan African countries.

Lack of clear cut business models and meagre dividend means investors will continue to refuse to buy shares of these entities.

Analysts at Afrinvest Securities Limited in a recent report on the insurance industry observed that

industry price-to-book ratio stood at 0.43x, which compared with South Africa (1.99x), Egypt (1.65x) and Kenya (0.64x).

The insurance sector of the Nigerian economy contracted by 28.15 per cent in the second quarter of the year.

The sector continues to lag its peers in terms of penetration which stood at 0.5% compared with South Africa (12.9%), Kenya (2.8%), Angola (0.8%) and Egypt (0.6%) while density at $6.2 also remains weak compared to South Africa ($762.5), Kenya ($40.5), Angola ($30.5) and Egypt ($22.8).

Analysts are optimistic that a scheme the planned recapitalization of will unlock growth in the industry.

Many firms operate on weak capital that hinders them from participating in big ticket business.

“There is a need for insurers to plug the funding gap between asset and liabilities and also, reprice policies in the light of the current interest rate environment,” said analysts at Afrivest Securities.

P.E

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5 The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

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

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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26

Monday 12 October 2020

BUSINESS DAY

Access Bank Rateswatch KEY MACROECONOMIC INDICATORS Indicators GDP Growth (%) Broad Money Supply (N’ trillion)

Market Analysis and Outlook: October 9 – October 16, 2020

Current Figures Comments -6.1 Q2 2020 — lower by –7.97% compared to 1.87% in Q1 2020 Increased by 1.63% in August’ 2020 from N36.59 trillion in July’ 2020 37.19

Credit to Private Sector (N’ trillion)

Global Economy

30.13

Increased by 0.24% in August’ 2020 from N30.06 trillion in July’ 2020 Decreased by 1.04% in August’ 2020 from N2.4 trillion in July’ 2020

Inflation rate (%) (y-o-y)

2.37 12.82

Increased to 12.82% in July 2020 from 12.56% in June 2020

Monetary Policy Rate (%)

11.5

Adjusted to 11.5% in September 2020 from 12.5%

consecutive periods of contraction. The services sector grew by 7.1%, Money Market

Lending rate changed to 13.5% & Deposit rate 6.5%

production by 9.3% and construction by 18.5%, as lockdown measures Cost of borrowing inched up last week following Cash Reserve Ratio (CRR) debit

Currency in Circulation (N’ trillion)

Interest Rate (Asymmetrical Corridor)

11.5 (+2/-5)

External Reserves (US$ million ) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

In the UK, the Office of National Statistics revealed that gross domestic product remain wary while they reposition their market portfolio in light of current advanced 8% in the three months to August 2020, recovering from five macroeconomic realities.

35.73

October 8, 2020 figure — a decrease of 0.04% from October start

41.58

October 8, 2020 figure— an increase of 6.78% from the prior week

1.48

August 2020, figure — an increase of 0.13% from July 2020 figure

continued to ease. On a monthly basis, the economy grew by 2.1%, the fourth of about ₦460billion and the CBN also conducted the bi-weekly Retail Secondary consecutive monthly increase following a record fall of 19.5% in April. Output Market Intervention Sales (SMIS) auction at the end of the week. These outflows however remained 9.2% below the levels seen in February, before the full impact led to a significant decline in short-term lender's charge such as the Open Buy

FX Market N/US$

NSE ASI & Bond

of the coronavirus pandemic. In a separate development, the Reserve Bank of Back (OBB) and Overnight (O/N) to 4% and 4.88% from 1% and 1.58% India maintained its benchmark repo rate at 4% during its October meeting. respectively. Longer tenored rates such as the 30- and 90-day Nigerian Policymakers said the decision is consistent with neutral monetary policy stance Interbank Offered Rate (NIBOR) settled at 1.9% and 2.13% from 2.32% and and is in line with achieving the inflation target of 4 percent +/-2 percent while 2.45%.This week, rates are expected to remain at single digit levels as the market supporting economic growth and mitigating the impact of COVID-19 on the does not anticipate any significant funding activity.

Inflation Rate

External Reserves & Oil price

economy. For 2020-21, policymakers expect inflation to average 6.8% for the

Foreign Exchange Market

second quarter of the year and a range of 4.5 – 5.4% for the second half. GDP The local unit appreciated against the dollars across most major market last growth for 2020-21 is expected to contract 9.5%, with risk tilted to the downside week. At the Nigerian Autonomous Foreign Exchange Rate (NAFEX) and parallel (-9.8%) in the second quarter of 2020. Elsewhere in Japan, the Ministry of window the naira settled at ₦385.81/US$ and ₦457/US$ from ₦386.49/US$ Finance reported that Japan's current account surplus narrowed modestly to ₦465/US$ as the Central Bank intervened in the Foreign Exchange market

STOCK MARKET

Indicators

COMMODITIES MARKET

2 Weeks Change Ago (%) 9/10/20 2/10/20

Indicators

Last Week

NSE ASI Market Cap(N’tr)

26,985.77

5.30

14.85

14.11

5.30

0.38

0.46

(16.45)

4.00

4.30

(7.10)

Value (N’bn) MONEY MARKET NIBOR

Last Week 2 Weeks Ago Rate (%) Rate (%)

Tenor

OBB O/N CALL 30 Days 90 Days

Energy

28,415.31

Volume (bn)

Change (Basis Point)

41.58 Crude Oil $/bbl) Natural Gas ($/MMBtu) 2.66 Agriculture 2453.00

(0.41)

111.35 68.21 14.09

4.95 4.39 5.46

Parallel (N)

26.70 (14.48) (11.99) (8.09)

2/10/20

4.00 4.88 11.50

1.00 1.58 2.63

1.90 2.13

2.32 2.45

(42) Tenor (32)

0.00

1 Month Ago 2 Weeks Ago Rate (N/Rate (N/$) $) 2/10/20 9/9/20 379.00 379.00 386.49 385.78 0.00 0.00

457.00

465.00

379.00 385.81

BOND MARKET AVERAGE YIELDS

38.99 45.30 41.30 (6.36) BILLS

TRUE

Change (Basis Point)

Domestic Economy

8.71% and 8.98% from to 2.61%, 4.23%, 5.62%, 8.8%, 8.13%, 9.16% and 9.34%

The President of Nigeria recently presented to the National Assembly a N13.08 in that order. The Access Bank Nigerian Government Bond Index notched up to trillion budget estimates for 2021 with N3.12 trillion (23.85%) reserved for debt 4,831.05 points from 4,700.65 points, 130.39 points higher. Market performance servicing. The President, hinting that the nation's economy might relapse into this week is expected to remain bullish following unmet demand from prior week

2/10/20

1 Mnth

0.84

0.83

0

means 52.60% of the budget or N6.88trillion will be spent on both items next

3 Mnths 6 Mnths

1.03 1.34

0.93 1.27

10 7

year. Giving other highlights of the appropriation bill, the President said the

9 Mnths 12 Mnths

1.61 2.05

2.03 2.10

(42) (5)

personnel costs (salaries and allowances) would swallow N3.76trillion (28.75%).

With 23.85% allocated for debt servicing and personnel costs gulping 28.75%, it

445.00

budget was set on some benchmarks such as daily crude oil production of 1.86 million barrels per day and oil price of $40 per barrel. The President, who tagged the proposed fiscal document, 'Budget of Economic Recovery and Resilience',

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Last Week

2 Weeks Ago

assured Nigerians that his regime would do everything possible to take the

Change (Basis Point)

2.46 3.94

4.23

(15) Index Mkt Cap Gross (N'tr) (29)

10-Year

4.86

5.62

(76) Mkt Cap Net (N'tr)

15-Year

8.12

8.80

(68) YTD return (%)

20-Year

7.46

8.13

25-Year

8.71

9.16

8.98

9.34

(67) YTD return (%)(US $) 5.31 (45) TREASURY BILLS PMA AUCTION Amount (N’ Rate (%) (36) Tenor Date million) 91 Day 1.08 10,000.00 30-Sep-2020 182 Day 17,600.58 1.49 30-Sep-2020

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 accept responsibility or liability for errors of fact or 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 written consent of Access Bank Plc.

7-, 10-, and 20-, year papers tapered to 2.46%, 3.94%, 4.86%, 8.12%, 7.46%,

9/10/20

2/10/20 2.61

30-Year

JPY 242.5 billion from JPY 185.5 billion.

recession, stated that N3.85trillion (29.43%) was voted for capital projects, while session.

9/10/20

7-Year

shortfall a year ago, while the primary income surplus dropped to JPY 2248.7 decline. Accordingly, we noted buying interest for the mid to long tenured billion from JPY 2291.6 billion, whereas the secondary income gap widened to securities as the short tenured securities seemed unattractive. Yields on the 5-,

2 Weeks Ago Rate (%)

2 Weeks AgoChange Rate (%) (Basis Point)

5-Year

exports falling 8.8 percent and imports plunging 12.5 percent. Meanwhile, the Bond Market

Last Week Rate (%)

Last Week Rate (%)

Tenor

of the previous year, owing to the coronavirus pandemic. The goods account ₦379/US$. This week, we expect the Naira to trade at similar levels barring any

services account gap widened to a JPY316.6 billion deficit from a JPY1.5 billion The bond market sustained its bullish sentiments as market yields continued to

9/10/20

9/10/20 Official (N) Inter-Bank (N) BDC (N)

(35.49) (12.96)

Wheat ($/bu.)

602.50 6.50 Metals Gold ($/t oz.)

1914.36 0.45 Silver ($/t oz.)

24.29 1.84 306.95 6.95 300 Copper ($/lb.)

330 888 NIGERIA INTERBANK TREASURY

Last Week Rate (N/$)

JPY 2103 billion in August 2020 from JPY 2135 billion in the corresponding month through its Retail SMIS Auction. The official market rate remained flat at

posted a JPY413.2 billion surplus from a JPY 30.4 billion surplus last year, with significant change in market activity.

6.78 7.26

Cocoa ($/MT)

YIELDS

YTD Change (%)

1-week Change (%)

Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

FOREIGN EXCHANGE MARKET

Market

9/10/20

Indicators

364 Day

9/10/20

2/10/20

4,831.05

4700.65

15.68

15.26

11.30

10.89

96.67 4.28

91.36 -1.03

106,370.50

2.8

economy out of recession in 2021. In separate development, the Nigeria Bureau of Statistics (NBS) disclosed that the internally generated revenue of states

2.77

dropped to N612.87billion in the first six months of 2020 from N693.91billion in

2.77

the corresponding period of 2019. The NBS in its report published on the

3.75

'Internally Generated Revenue (IGR) at state level for half year 2020' said, “The 36

5.31

states and FCT IGR figure hits N612.87billion in H1 2020 compared to

30-Sep-2020

N693.91billion recorded in 2019. This indicates a negative growth of -11.7% year on year. Similarly, the Q2 2020 states and FCT IGR figure hits N259.73billion compared to N353.14billion recorded in Q1 2020. This indicates a negative growth of -26.5% quarter on quarter. The NBS stated that Lagos State had the highest IGR with N204.51billion recorded in H1 2020, closely followed by Rivers

Commodities Oil prices jumped last week as energy companies evacuated 183 offshore oil platforms and halted nearly 1.5 million barrels per day of output as Hurricane Delta heads toward the US Gulf Coast. Supporting prices further were potential production outages in Europe's North Sea due to a Norwegian workers' strike over pay. Norway's Lederne labour union will expand its ongoing oil strike from October 10th unless a wage bargain can be reached in the meantime. Bonny light, Nigeria's benchmark crude surged 6.78% to close at $41.58 per barrel. In a similar vein, precious metal prices rose amid a weakening dollar as well as doubts over the sustainability of the global economic recovery from the prolonged COVID-19 crisis. Consequently, gold prices increased marginally 0.45% or $8.61 to finish at $1,914.36 per ounce from $1,905.75 per ounce. Silver settled at $24.29 per ounce, a 1.84% rise from prior week price. This week, oil prices might decline amid mounting concerns over fuel demand recovery as the number of coronavirus cases continue to rise worldwide. Bullions are likely to maintain their bullish run following renewed hopes of further economic stimulus after news that Democratic and White House negotiators resumed discussions over a sweeping coronavirus relief deal.

State with N64.59billion, while Jigawa State recorded the least IGR. Stock Market The Nigeria stock market sustained their positive run for the second consecutive

Sources: CBN, Financial Market Dealers Quotation, NSE, NBS, Energy Information Agency, Oilprice, Bloomberg and Access Bank Economic Intelligence Group computation. * Crude oil (Bonny Light) is as at the previous day.

week in October. Stocks in the financial services, oil & gas, consumer and industrial goods were majorly responsible for the bullish run seen in the stock market. Consequently, the All Share Index (ASI) and market capitalization closed at 28,415.31 points and ₦14.85 trillion from 26,985.77 points and ₦14.1 trillion, respectively the preceding week. This week, market participants are expected to

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Monthly Macro Economic Forecast Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Oct’20

Nov’20

Dec’20

388

389

388

13.6

13.85

13.89

44

46

46

rotimi.peters@accessbankplc.com Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123

@Businessdayng

Monday 12 October 2020

BUSINESS DAY

27

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 09 October 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 279,030.02 7.80 -1.27 302 27,168,771 UNITED BANK FOR AFRICA PLC 232,556.07 6.80 -1.45 265 26,951,960 ZENITH BANK PLC 627,929.88 20.00 -0.50 660 49,974,421 1,227 104,095,152 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 224,345.58 6.20 -1.59 344 49,324,784 344 49,324,784 1,571 153,419,936 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,859,809.08 140.50 - 191 1,340,470 191 1,340,470 191 1,340,470 BUILDING MATERIALS DANGOTE CEMENT PLC 2,564,596.36 150.00 -0.33 125 977,481 LAFARGE AFRICA PLC. 273,832.52 17.00 0.59 240 18,460,237 365 19,437,718 365 19,437,718 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 241,262.27 410.00 - 14 5,574 14 5,574 14 5,574 2,141 174,203,698 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,163.30 40.65 - 2 1,000 UPDC REAL ESTATE INVESTMENT TRUST 10,139.42 3.80 - 3 47,966 5 48,966 5 48,966 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,692.74 115.05 - 0 0 0 0 0 0 5 48,966 CROP PRODUCTION FTN COCOA PROCESSORS PLC 572.00 0.26 - 0 0 OKOMU OIL PALM PLC. 76,312.80 80.00 - 30 51,884 PRESCO PLC 60,500.00 60.50 - 14 11,820 44 63,704 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,860.00 0.62 1.64 12 322,040 12 322,040 56 385,744 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 1 10,000 TRANSNATIONAL CORPORATION OF NIGERIA PLC 25,201.75 0.62 1.61 41 4,209,510 U A C N PLC. 19,880.95 6.90 - 31 363,605 73 4,583,115 73 4,583,115 BUILDING CONSTRUCTION ARBICO PLC. 152.96 1.03 - 1 800 1 800 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,611.20 16.80 -0.59 57 846,215 ROADS NIG PLC. 165.00 6.60 - 0 0 57 846,215 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 15,033.58 0.81 -2.41 18 1,284,987 18 1,284,987 76 2,132,002 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,968.25 0.89 - 1 50,000 GOLDEN GUINEA BREW. PLC. 829.98 0.81 - 0 0 GUINNESS NIG PLC 32,855.74 15.00 0.67 148 2,360,939 INTERNATIONAL BREWERIES PLC. 126,251.72 4.72 3.06 115 2,280,932 NIGERIAN BREW. PLC. 388,649.44 48.60 - 61 230,302 325 4,922,173 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 163,982.86 13.50 -0.74 117 1,742,237 FLOUR MILLS NIG. PLC. 90,208.35 22.00 - 124 1,696,483 HONEYWELL FLOUR MILL PLC 7,533.69 0.95 - 14 101,137 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 828.63 4.65 - 5 70,000 NASCON ALLIED INDUSTRIES PLC 31,925.73 12.05 0.42 28 337,065 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 288 3,946,922 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 13,429.14 7.15 - 49 351,528 NESTLE NIGERIA PLC. 931,371.10 1,175.00 - 10 3,314 59 354,842 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 7,505.06 6.00 - 20 339,914 20 339,914 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 16,080.43 4.10 -8.89 58 3,172,060 UNILEVER NIGERIA PLC. 77,557.57 13.50 - 70 369,028 128 3,541,088 820 13,104,939 BANKING ECOBANK TRANSNATIONAL INCORPORATED 78,903.07 4.30 -3.37 106 4,206,758 FIDELITY BANK PLC 59,108.59 2.04 -2.86 134 18,695,960 GUARANTY TRUST BANK PLC. 912,366.56 30.40 -5.00 588 32,621,641 JAIZ BANK PLC 17,383.91 0.59 - 32 1,858,150 STERLING BANK PLC. 40,306.59 1.40 2.19 411 24,206,258 UNION BANK NIG.PLC. 145,603.76 5.00 -2.00 60 2,014,435 UNITY BANK PLC 6,662.92 0.57 -6.56 14 532,116 WEMA BANK PLC. 23,144.68 0.60 1.67 25 1,080,276 1,370 85,215,594 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 4,545 AIICO INSURANCE PLC. 11,420.85 0.84 - 22 392,615 AXAMANSARD INSURANCE PLC 20,370.00 1.94 - 6 15,536 CONSOLIDATED HALLMARK INSURANCE PLC 3,960.67 0.37 - 0 0 CORNERSTONE INSURANCE PLC 10,899.84 0.60 9.09 20 1,649,800 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,050.56 0.28 -3.57 28 2,093,507 LAW UNION AND ROCK INS. PLC. 4,725.96 1.10 -5.17 6 279,710 LINKAGE ASSURANCE PLC 4,400.00 0.44 - 12 719,507 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 10 189,464 NEM INSURANCE PLC 10,561.01 2.00 -1.48 11 274,983 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 3,816.72 0.60 - 3 10,600 REGENCY ASSURANCE PLC 1,533.81 0.23 -8.00 7 284,100 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 2 5,180 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 9,116.84 0.38 5.26 37 2,224,592 165 8,144,139 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 3,132.69 1.37 - 6 43,256 6 43,256

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,671.82 1.36 - 2 1,500 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 2 1,500 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 11,400.00 5.73 0.53 107 3,353,633 CUSTODIAN INVESTMENT PLC 30,879.79 5.25 1.94 21 703,200 DEAP CAPITAL MANAGEMENT & TRUST PLC 405.00 0.27 - 1 20,000 FCMB GROUP PLC. 44,754.13 2.26 -3.00 53 11,581,150 ROYAL EXCHANGE PLC. 1,389.25 0.27 - 2 13,807 STANBIC IBTC HOLDINGS PLC 472,004.90 42.50 - 28 614,910 UNITED CAPITAL PLC 21,240.00 3.54 -4.58 153 10,148,167 365 26,434,867 1,908 119,839,356 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 2 42,881 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 -7.69 3 121,000 5 163,881 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,656.94 3.67 - 14 200,421 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,936.08 5.80 -0.85 49 1,398,300 MAY & BAKER NIGERIA PLC. 5,175.70 3.00 - 36 176,701 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 3,456.47 1.82 - 3 52,300 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 102 1,827,722 107 1,991,603 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 2 11,300 2 11,300 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 764.87 0.26 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 216.00 2.00 - 3 3,692 TRIPPLE GEE AND COMPANY PLC. 178.18 0.36 - 0 0 3 3,692 PROCESSING SYSTEMS CHAMS PLC 939.21 0.20 - 10 1,247,648 E-TRANZACT INTERNATIONAL PLC 9,870.00 2.35 - 2 10,200 12 1,257,848 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,541,593.75 410.20 - 20 10,626 20 10,626 37 1,283,466 BUILDING MATERIALS BERGER PAINTS PLC 1,941.82 6.70 - 7 11,679 BUA CEMENT PLC 1,405,370.69 41.50 0.24 45 987,639 CAP PLC 13,090.00 18.70 - 21 198,952 MEYER PLC. 265.62 0.50 - 1 400 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 74 1,198,670 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 1 100 CUTIX PLC. 3,029.47 1.72 - 2 79,886 3 79,986 PACKAGING/CONTAINERS BETA GLASS PLC. 27,698.45 55.40 - 7 10,187 GREIF NIGERIA PLC 388.02 9.10 - 0 0 7 10,187 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 84 1,288,843 CHEMICALS B.O.C. GASES PLC. 1,769.04 4.25 - 4 9,150 4 9,150 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 2 11,100 2 11,100 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 6 20,250 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 23 1,155,520 23 1,155,520 INTEGRATED OIL AND GAS SERVICES OANDO PLC 27,722.05 2.23 -2.62 87 2,770,495 87 2,770,495 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 67,395.25 186.90 - 39 86,533 ARDOVA PLC 16,215.89 12.45 - 26 153,418 CONOIL PLC 9,992.91 14.40 - 22 24,675 ETERNA PLC. 4,734.05 3.63 10.00 31 1,042,409 MRS OIL NIGERIA PLC. 3,794.59 12.45 - 10 6,800 TOTAL NIGERIA PLC. 34,631.23 102.00 5.37 54 329,960 182 1,643,795 292 5,569,810 ADVERTISING AFROMEDIA PLC 887.81 0.20 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 1 100 1 100 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,019.91 3.26 - 14 204,339 TRANS-NATIONWIDE EXPRESS PLC. 431.34 0.92 9.52 3 6,578,559 17 6,782,898 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 3,748.05 2.42 - 0 0 IKEJA HOTEL PLC 2,099.58 1.01 - 0 0 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 3 40,280 3 40,280 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,600.00 0.30 - 1 2,850 1 2,850 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 - 1 1,000 LEARN AFRICA PLC 848.60 1.10 - 5 50,400 STUDIO PRESS (NIG) PLC. 1,064.85 1.79 - 0 0 UNIVERSITY PRESS PLC. 534.95 1.24 - 2 5,000 8 56,400 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 1 1,000 1 1,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 1 50 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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28 BUSINESS DAY

Monday 12 October 2020

NEWS

Akeredolu wins Ondo guber election with 292,830 votes RAZAQ AYINLA & KORETIMI AKINTUNDE, Akure

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overnor Oluwarotimi Akeredolu of the All Progressives Congress (APC), has been declared winner of Saturday’s Ondo State governorship election, by the Independent National Electoral Commission (INEC).

The incumbent governor won with a wide margin of 292,830 votes, as he also garnered 25 percent spread across the 18 local government areas of the state.

The candidate of the People’s Democratic Party (PDP), Eyitayo Jegede trailed Akeredolu with 195,791 votes, while the Zenith Labour Party (ZLP) candidate and deputy governor of the state, Agboola Ajayi got 69,127 votes.

Announcing the winner of the ele ction, the chief returning officer and vice-chancellor of the University of Ibadan, Idowu

Olayinka said: Oluwarotim i O d u n ay o A k e re d o l u of APC secured the highest votes among the 17 contestants. He scored 25 percent in all the 18 local g ov e r n m e n t a re a s. T h e difference between him and the candidate of PDP, Eyitayo Jedege is higher than the number of cancelled votes.”

According to him, tot a l v a l i d v o t e s s t o o d at 572,745, rejected -18,448, while cancelled votes were 16,709.

Olayinka said, “Subsequently, having certified with the requirement of the law, I hereby declare Oluwarotimi Odunayo Akeredolu as the winner and hereby return elected.”

Meanwhile, the Resident Electoral Commissioner (REC) in the state, Rufus Akeju has said that Akeredolu would be presented with the Certificate of Return on Tuesday at the INEC office, Akure by 10am.

L-R: Doyin Arueyingho, committee member, Arise; Siju Iluyomade, founder/convener, Arise; Iyabo Ladipo, director, charge affair, Arise, and Lolade Wakama, 2020 chairperson, Arise, at a press conference of 2020 Arise Walk for Life with the theme: #StayingAlive, in Lagos, yesterday.

Pic by Olawale Amoo

Strike: Government mulls proscription of ASUU among other options

Africa Speakers Bureau launches talent management platform TEMITAYO AYETOTO

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frica Speakers Bureau has announced its talent management platform, AfricaSpeakersGroup.Com. The platform is built to connect keynote speakers, top performers, influential thinkers, authors and knowledge carriers, masters of ceremony, and s o o n , to o p p o r tu n i t i e s in the most efficient and rewarding ways, according to a statement signed by Patience Paul-Ezra, head, communications and experience team.

T h e p l a t f o r m, w h i c h debuts as the first professional speaker agency in Nigeria and first Africafocused speaker bureau on the continent, seeks to make finding and hiring the right kind of talents for specific events a lot easier for event organisers, corporate organisations and government agencies.

“Given my over 10 years of experience in organising conferences and planning events, I have a good understanding of how diffi-

cult it could be to find and secure the right kind of talents that best fit specific events,” said Odinaka Iloh, chief executive officer, Africa Speakers Bureau.

“And contrary to expectation in some quarters, the rise in the number of v i r tu a l e ve nt s g o i ng o n across the world at this period, occasioned by Covid-19 pandemic, has not made finding and hiring of the right talents any easier,” Iloh said.

AfricaSpeakersGroup.

Com, with a focus on Afr ica and the w orld, has the ambition to assemble the best array of talents on the African continent and beyond, while offering a very efficient talent booking experience for clients.

With the platform, event organisers and speakers are able to concentrate their efforts on delivering better experiences for e v e n t p a r t i c i p a n t s, t h e statement said.

While the platform opened on Monday (today) for talent registration and public viewing, it will open for business on Monday, November 2, 2020, it said.

JOHN OSADOLOR, Abuja

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ederal Government may proscribe the Academic Staff Union of Universities (ASUU) for the teachers’ union refusal to call off its over eight months strike, BusinessDay learns.

Lecturers in state and federal universities have been on strike since March 9, 2020, over the government’s insistence that the teachers must register on the Integrated Personnel Payment Information System (IPPIS), which the government says will enable it know the number of university teachers in its employ and the cost of running the university system, and also help it fight corruption.

Lecturers of state-owned universities who are members of ASUU are on strike in solidarity with their federal counterparts, except those in privately owned universities.

Sources close to the office of the minister of education, Adamu Adamu, discloses to BusinessDay that the government is considering several options of making the teachers return to the classrooms, but top among them are proscription of ASUU or “float an online Integrated Personnel Payment Information System (IPPIS), which is the main object of the strike to allow university lecturers who are interested in registering on

labour laws.

A document seen by BusinessDay detailing the decisions reached at the meeting states, “a lecturer is deemed to have called off the strike only after he/she has registered on IPPIS. There is no doubt that many lecturers are willing to register on IPPIS.” “Apart from the online registration, the Federal Government has the option of out-rightly proscribing ASUU,” while the document alleges that the ASUU had in the recent past physically assaulted its members who were willing and ready to register on the IPPIS registration platform.

It was learnt that the hardliners at the meeting were of the view that ASUU leadership allegedly resorted to physically assaulting its members who wanted to register on the IPPIS platform to prevent them from doing so, adding that was enough ground to proscribe the over 50,000 – strong – member teachers’ union.

“There are two good reasons why government should ban ASUU as an organisation. First, there were allegations that ASUU officials physically assaulted lecturers from registering on the IPPIS platform. This is enough reason to ban ASUU. The association has no right under any law whatsoever to physically assault its members.

“Secondly, at the time of the national and global pandemic, otherwise called Covid-19, when

the entire world is searching for a cure through laboratory research, Nigeria’s ASUU found it very convenient to embark on an indefinite strike when they should be doing research to come up with vaccines to tackle the pandemic,” the document states.

Other options under consideration are for the government to recruit lectures from Eastern Europe, after sacking those who refused to enrol on IPPIS, and “the government can also religiously implement the policy on adequate Graduate Assistant Engagement, where the best three students in any department will be retained as graduate assistants,” in line with the recent President Muhammadu Buhari’s approval that the best brains from each institution be retained as academic staff.”

“Also open to government is the option of retiring all academic staff who have refused to enrol on IPPIS and introduce the system of part-time lecturing as it is being done in the United States of America. In addition, all doctorate students should also take up lecturing as part of their doctorate programme,” the document notes.

Ben Bem Goong, head of media, Federal Ministry of Education, told BusinessDay in Abuja that the options open to the government and ASUU in resolving the crisis were many but declined further comment.

Experts task N/Assembly on laws to functions of NCAA IFEOMA OKEKE

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s the National Assembly commences a review of Civil Aviation Act 2006 before it, professionals in the sector have tasked the assembly members to promulgate laws that will strengthen the oversight functions of the Nigerian Civil Aviation Agency (NCAA).

Players in the sector said that while the regulatory agency has performed well to improve safety in the industry www.businessday.ng

IPPIS to do their registration seamlessly.

“Upon completion of their registration, each lecturer will print this form, attach a recent passport photograph to his form and submit to the Vice Chancellor for signature and onward submission to the office of the Accountant General for the Federation, who will do the needful by paying the registered staff.”

BusinessDay learns that while the conservative staff of the ministry and its departments and agencies at a meeting where the decisions on what options available to government to return the teachers to work are pushing for the second option, the hardliners are said to be pushing for the proscription of ASUU. The parley where the options were laid out, it was learnt, held last week at the Federal Secretariat, Abuja headquarters of the ministry.

A source at the meeting said the officials also agreed that “lecturers who have their registration completed ‘on the IPPIS platform’ will be paid their February salaries only,” while “the next salary will be paid with effect from the date the lecturer registered.” Academic staff members of federal and state universities have not been paid salaries since February this year.

This, according to the source, is to ensure the implementation of the ‘no work, no pay’ rule as contained in the nation’s extant

in the past years, the current Civil Aviation Act 2006 did not really empower it to enforce the economic regulations of the industry, especially on the airlines and organisations in the sector.

They also canvassed for real autonomy for NCAA, saying that political interference was hindering its progress and performance.

The players equally urged the National Assembly to ensure the retention of the five percent Ticket Sales Charge/

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Cargo Sales Charge (TSC/ CSC), which was the main source of NCAA revenue before some of the agencies were included in the sharing formula, be retained and if possible, improved upon so that the agency could remain strong and virile.

Ifeanyi Ogochukwu, aviation analyst, said that strengthening of economic regulation of NCAA was critical to the growth of the sector in Nigeria.

Ogochukwu, a licensed air traffic safety electronics spe@Businessdayng

cialist in an interview said that the regulatory agency should be empowered to effectively carry out oversight functions of the entire industry, most importantly the charter operators.

Ogochukwu, a former management staff of the Nigerian Airspace Management Agency (NAMA), warned that attempt to weaken the power of the regulatory agency may spell doom for the industry, as aviation was internationally regulated with standards.

Monday 12 October 2020

BUSINESS DAY

29

NEWS

NDDC directs IOCs to pay into CBN offshore account IGNATIUS CHUKWU, Port Harcourt

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he Niger Delta Development Commission (NDDC) says it is only in its CBN offshore account that international oil companies

(IOCs) can pay their monies into.

The commission said this in a statement issued by Kemebradikumo Pondei, its acting managing, on Friday in Abuja.

According to Pondei, the

www.businessday.ng

clarification has become necessary to guide members of the public, especially the IOCs from being duped.

He said this was especially so as a certain security agency was coercing international oil companies into

paying 3 percent revenue of their commission into a private account in London.

“It has come to the attention of the management of the NDDC that certain security agency is coercing international oil companies

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into paying three per cent revenue of the commission into a private account in London and in the security agency’s account in London.

“Kindly note that it is only the account of the NDDC in the CBN offshore

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account that such monies can be paid into. Any company that has paid as directed by the security agency should immediately contact Clever Okoro, the director legal service of the NDDC.

30

Monday 12 October 2020

BUSINESS DAY

news LAW & DEVELOPMENT SUMMIT SERIES

Nigeria struggling to shake off revenue problem LOLADE AKINMURELE & OLUWAFADEKEMI AREO

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he Law & Development Summit, a webinar jointly organised by BusinessDay and Olisa Agbakoba Legal (OAL), is scheduled to hold on October 22-23, 2020. The online summit will examine the role law can play in generating new government revenue and boosting job creation in Nigeria. This is the first in a three-part series highlighting the country’s revenue challenges and possible solutions.

Between January and May 2020, total government revenue generated was below total government expenditure by 59.1 percent, a stark reminder of Nigeria’s ailing finances.

The Federal Government’s retained revenue has continued to perform poorly against total expenditure, with deficits of over 50 percent for three years straight.

Revenue generated in the first five months of 2020 was N1.6 trillion and expenditure incurred was N3.9 trillion, according to data from the 20212023 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

What is worse is the sheer amount of money going to debt servicing from already lean government earnings.

The same data from the MTEF/FSP show that between the five-month period under review, debt servicing swallowed up to 96 percent of the total generated revenue.

Since2015,nationalexpenditure has doubled but the nation has continuously failed to meet revenuetargets,necessitatingthe need to incur debt to meet the government’s obligations.

The reasons for Nigeria’s declining revenue are not farfetched. The country derives the bulk of its government revenue and foreign exchange earnings from oil exports.

However, the inflow of petrodollars has steadily declined in recent years owing to a fall in the price of crude oil from a peak of $113 per barrel in 2012 to around $60 in 2019, a situation that has resulted in the inability of the government to meet revenue targets.

Nigeria has largely attacked its revenue challenge by going on a borrowing spree.

Yet, this has not impacted the economy that has been stuck in a low growth path despite higher debt levels.

As at June 2020, Nigeria’s public debt stood at N31 trillion with external debt accounting for 36.7 percent at N11.36 trillion and domestic debt accounting for the remaining 63.3 percent at N19.65 trillion. That is more than double the debt stock in 2015.

As if Nigeria’s fiscal woes

were not bad enough, the Covid-19 pandemic and volatile oil prices this year have made matters worse, with the government growing increasingly broke.

The poor performance of Nigeria’s revenue profile and huge government debts have led to the introduction of several policies aimed at boosting revenues, especially from taxes.

At 6.1 percent, Nigeria has one of the lowest tax revenueto-Gross Domestic Product (GDP) ratio in sub-Saharan Africa. This is barely 40 percent of the government’s target of 15 percent stated in the 2019 public finance bill.

The government launched the Voluntary Asset and Income Declaration Scheme (VAIDS) and raised Value Added Tax (VAT) by 50 percent, but the result has been underwhelming, as they have proved insufficient in materially boostinggovernmentrevenues.

It was always going to be difficult to boost tax revenues in an economy still grappling with the after-effects of the recession it suffered in 2016, as well as spiralling unemployment and a low growth rate.

The VAIDS scheme for instance, which was to give defaulting tax payers the opportunity to make up their outstanding tax obligations from 2011 to 2016 in return for waiver of penalty and interest and criminal prosecution, was supposed to fetch $1 billion (N360bn) had only added N70 billion to government coffers as at January 2020, according to Zainab Ahmed, minister of finance, budget and national planning. That is less than 20 percent of what was targeted.

The renewed pressure on earnings this year from COVID-19 and lower oil prices means the government’s desperation is growing.

The Federal Government said last Wednesday that it was taking over the revenue management of 10 Government Owned Enterprises (GOEs).

“Government is increasingly concerned with the dwindling profile of revenue and this trend has to be quickly arrested, particularly with key revenue generating agencies of the government,” the finance minister said.

On the same Wednesday, the Federal Government put up a jet in the Presidential fleet for sale. Some findings indicate that the same jet sold for $22.91 million in 2012. The aircraft, which thegovernmentsaidhadarange of 3,190-nautical mile and had flown for 1,768 hours, will surely be worth much less today as it is no longer brand new.

While the proceeds of the aircraft sale will have an infinitesimal impact on government revenue, the move signals an urgency to trim fat in government spending. www.businessday.ng

Telecom operators want review, harmonisation of 39 taxes, levies on sector

...as government defends tax collection FRANK ELEANYA

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igeria’s telecommunication operators have said it is counterproductive to overburden the sector with about 39 taxes and levies, thereby limiting the capital required to upgrade broadband infrastructure across Nigeria, and adding to other cost pressures the industry already has.

In view of this, there is a need to review and harmonise the tax environment in the country, they urge government.

The operators sought on Friday at the Tax Conference themed ‘Fast-tracking Economic Recovery through Robust Tax Policies and Practic-

es,’ organised by the Telecommunication and Technology Sustainability Working Group (TTSWG) and BusinessDay. Taiwo Oyedele, head of tax, PricewaterhouseCoopers, noted that in view of the strategic importance of the ICT sector in driving the digital economy, there was need for reforms in Nigeria’s taxation system with the objective to encourage investors to continue to invest in the various sectors.

The sector currently contributes about N14 trillion - 10 percent of the GDP - to the Nigerian economy. The sector’s importance became even more pronounced during the Covid-19 pandemic where it emerged as the sector sustaining the operations of different

industries, ensuring that there is business continuity.

“One of the things we have to do is getting the right people to pay tax,” Oyedele said.

He also noted that the focus on people at the lower end of the society, industries that were visible, while leaving others not paying their fair share of taxes had to be addressed with the use of technology.

Kaduna State government introduced technology and was able to increase its internal generated revenue (IGR) of N13 billion to over N44 billion within the period of two years.

Matthew Olusanya Gbonjubola, director, Tax Policy and Advisory Department, Federal Inland Revenue Service

Sarbeswar Sahoo (l), MD/CEO, Prestige Assurance plc, receiving the Top CEOs Award 2020 Trophy from Ogho Okiti, managing director, BusinessDay Media Limited, at the 2020 Top CEOs and Next Bulls Awards organised by BusinessDay in Partnership with Nigerian Stock Exchange in Lagos. Pic by Pius Okeosisi

(FIRS), said the situation in which the country’s revenue depended on the commodities market was abnormal, whereas in other countries the basic source of revenue for the government was taxation.

Nigeria has largely neglected its tax revenues. This is why the country has been unable to review its tax legislation for many years, with a view to bringing them up to date with current realities.

The pandemic, therefore, was a blessing in disguise because it opened the eyes of the authorities to source revenue in a sustainable way.

“We have to do a delicate balancing and we are still doing so today,” Gbonjubola said. However, the government is in serious search for new revenue sources to fund the 2021 budget, and it is also aware that there is a limit to which it can continue to borrow. Even the FIRS got involved in providing palliatives during the lockdown.

Olusola Teniola, president, Association of Telecommunications Operators of Nigeria (ATCON), said while it was not out of place for operators to pay taxes - because they are law-abiding - multiple taxations were one of the biggest obstacles limiting capital deployment in the industry.

Teniola said the focus should be on taxing the outcome. The companies and entities that are carrying the tax burden are in the formal sector of the economy because they are the most visible ones and they should not be overburdened with tax with-

Continues on page 31

Why IGP disbands SARS nationwide … disbandment reaffirms Buhari’s police reforms resolve – APC innocent odoh & James Kwen, Abuja

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he Inspector General of Police (IGP), Mohammed Adamu, on Sunday announced the disbandment of the Special Anti-Robbery Squad (SARS) nationwide.

A nationwide protest against the anti-robbery squad’s atrocities has been on for several days, with the protesters demanding outright disbandment of its operations over incessant killings of innocent Nigerians.

Adamu announced it dissolution across the 36 State Police Commands and the Federal Capital Territory (FCT). The IGP, while noting that the dissolution of SARS was in response to the desires of Nigerians, said by this dissolution, all officers and men of the now defunct SARS were being redeployed with immediate effect.

The Force was not oblivi-

ous of the ever present need to combat armed robbery, kidnapping and other violent crimes in the country, which was before now the core mandate of the erstwhile Squad, he said.

But assured that a new policing arrangement to address anticipated policing gaps the dissolution would cause had been evolved and shall be announced in due course.

However, as part of measures to prevent a re-occurrence of events that gave rise to the dissolution, a Citizens’ and Strategic Stakeholders’ Forum was being formed to regularly interface with Police leadership at all levels and advise on police activities as they affect the general public.

“In addition, the Force is constituting an Investigation Team, which shall include Civil Society Organisations and Human Rights Bodies to work with the Police in investigating alleged cases of human

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rights violations.

“The measure, the IGP believes, will enhance transparency and accountability in police services as well as providing a system of deterrence for erring police officers whose action clearly violates the rights of the citizenry,” the IGP said.

The IGP commended Nigerians, particularly those who genuinely expressed their concerns for a better policing orientation in an organised, patriotic and civil manner.

He reaffirmed the determination of the Force to bequeath to the country a Police Force and System that was professional in service delivery and most importantly, accountable to the people.

The All Progressives Congress (APC) has welcomed the disbandment of the Squad, viewing the decision as a major and concrete step towards President Muhammadu Buhari affirmed resolve @Businessdayng

to achieve better policing and necessary reforms.

Reacting to this, APC in a statement by its deputy national publicity secretary, Yekini Nabena, said from the recent #BlackLivesMatter social movement to other global clamours for review of Police operations, particularly in regard to citizens they were empowered to protect, the need for Police reforms in Nigeria was urgent and continuous.

The APC spokesman noted: “With benefit of experience and public outcry over the operations of the now disbanded SARS, the APC is confident that the new policing arrangement promised by the Inspector-General of Police, Adamu Mohammed will balance the need to effectively combat armed robbery, kidnapping and other violent crimes in the country and ensure humane, professional and accountable police operations.

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News FG concedes to Labour on tariff...

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Covid-19, and as a result

Nigerian electricity consumers will get a discount on their bills for three months ending December 31, BusinessDay has learnt.

Labour’s victory, which was formalised at a final meeting Sunday at the villa, means that the Federal Government will now have to pay as much as N5 billion monthly in subsidy that will be funded by a value added tax (VAT) rebate to be offered to electricity distribution companies (Discos) till the end of the year.

In the emerging deal between government and Labour unions who rose on protest against the recent decision to end petrol and electricity subsidies, the Federal Government agreed to a two-phased approach to solving the impasse - shortand medium-term solutions.

According to those close to the negotiation, the immediate solution will see the government pay N 5billion monthly as subsidy till December 2020, while the shortterm approach involves reviewing the basis upon which the Service Reflective tariff was determined as well as audit the revenue of Discos and evaluating the mechanism for gas pricing.

According to the terms of the immediate resolution, electricity customers across Bands A-C, who saw a tariff increase, will enjoy different levels of discount. Customers in Band A will see a 10-percent reduction in tariff increase, which amounts to N2.49 per kilowatt hour, adding a N1.8 billion bill to government’s monthly subsidy spend.

Electricity customers in Band B will enjoy a 10.5-percent reduction in tariff increase, which amounts to N2.24 per kWh and will cost the government N900 million monthly.

While electricity customers under Band C will enjoy a 31-percent reduction in tariff increase amounting to N5.46 per kWh. This will cost the government N2.350 billion every monthly in fresh subsidies.

Customers in Bands D and E, whose consumption was not subjected to tariff increase, are not affected. There will also be a mandatory refund for any overbilling during transition to service based tariff while tariff for bands D and E will remain frozen.

Under the service-based electricity tariff, customers in Bands A - C, pay from N56 per kWh to N42 per kWh, depending on the Discos. In the past the average payment for electricity was between N28 and N37 per kWh for most electricity customers.

This subsidy will be funded by from VAT proceeds

from the Nigerian Electricity Supply Industry.

Labour unions also secured an agreement to provide Nigerians with 6 million meters through the national mass metering programme (NMMP), which the Central Bank of Nigeria will fund.

Other concession won by the Labour include the protection of the salary of electricity workers, the mandatory publication by NERC of allowed billings in naira for unmetered customers to make the capping regulation more effective as well as recommendation for the inclusion of Labour representation in NERC. The second phase of the deal is that within 90 days, there will be a review of the inputs into the Multi Year Tariff Order to clarify why Discos have different pricing for power.

There would also be a ground audit of implementation of the Service Based Tariff to ensure that consumers are not over-charged, or placed in a wrong service band. Gas pricing and resource capacity of the NERC and NEMSA will also be evaluated according to the deal.

The government on the other hand secured Labour’s understanding that a costreflective tariff was inevitable if the sector was to attract the badly needed investment to stop it from being a drain on public finance to free funds for education and healthcare.

By this deal, the government is betting that the short-term loss will be immaterial when compared to the benefits of a thriving electricity industry capable of attracting investment and does not need a government subsidy.

Nigeria is in the middle of a Siemens deal that seeks to improve distribution and transmission infrastructure in the country and double power distributed to homes and offices in the next five years.

Nigeria is also negotiating a $750-million financing from the World Bank to improve cash flow in the power sector and a tariff review was a condition precedent for the deal and a Labour strike on the electricity sector would be bad for the agreement.

Analysts have said current reforms including the tariff review were needed to attract private sector investment to the sector.

“The country hasn’t performed well in improving electricity access,” said Ayodele Oni, energy lawyer, and partner at Bloomfield law firm, “The power sector has consistently got worse until recently. Things have improved slightly and if all hands remain on deck, the story should be different within the next decade.” www.businessday.ng

Mohammed Adamu, inspector general of Police, addressing a news conference to disband the Federal Special Anti Robbery Squad (FSARS) and fresh measures on fighting crime, in Abuja, at the weekend.

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Businesses, lives suffocate as...

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entering the ports before others on queue. Because money is involved, the trucks of drivers who are able to pay come into the ports at the same time, resulting in total lockdown of the premier port city, BusinessDay has found.

But this is just one out of many reasons why the gridlock has defied solutions from Lagos State and Federal Government.

“If you want the Fast-

track system, you will spend between N250,000 and N350,000 to get your way through for 20-foot and 40foot containers, respectively,” a clearing and forwarding agent, who spoke in an interview with BusinessDay, said.

“If you pay that money by 2pm, your container will be at the ports by 8pm and by 9pm10pm, you shall have loaded your container. That is the fast-track. But if you choose to queue, it takes a minimum of four to six weeks to enter the ports,” according to the agent.

This comes with cost on

the economy. A report by the Lagos Chamber of Commerce and Industry (LCCI) says Nigeria loses N600 billion in Customs revenue annually, including $10 billion in non-oil export sector and N2.5 trillion in corporate earnings across various sectors due to the poor state of Nigerian ports.

Currently, 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day, despite that the two ports could only accommodate 1,500 trucks, the LCCI states.

In an interview conducted by the Manufacturers Association of Nigeria (MAN) on critical challenges facing the sector in Q1 2020, 94 percent of the CEOs say congestion at the ports had a significantly negative effect on their productivity and cost of production.

“Most worrisome are the issues of deliberate delay in cargo clearing time, raising of technical barriers, rejection of relevant documents by officers of the agency that approved import documents, multiple agencies with duplicated functions and other rent-seeking activities of vested interests at the port that excessively fleece

Telecom operators want review...

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out expanding the tax base.

“There should be consideration for the harmonisation of the multiple taxes - about 39 taxes and levies, and charges, indiscriminately applied to our industry,”Teniolasaid.Harmonisationwouldaidtheplanningfor capitalexpenditureprogrammes that are very capital intensive in terms of the industry. Lack of reviewwouldcontinuetopromote uncertainty operators have in policy decisions.

For Teniola, a proper approach would be to sit down and have a dialogue with policymakers to understand those taxes that are not applicable to the sector. For the ones the industry is already paying, there should be a review to consider how to harmonise them.

Oyedele recommended that the 39 taxes be streamlined to five. According to

Oyedele, creating multiple taxes that are not tied to any specific benefit often creates loopholes for corruption, and the government ends up not getting much from them.

However, when there are less taxes tied to specific benefits or incentives, the industry is happy to oblige and the government makes more money.

Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), said the misconception during the pandemic lockdown was the authorities’ fixation on the revenue made by the operators without identifying with the cost pressures the industry carried throughout the period.

Operators were able to sustain their operations as well as other businesses across the country without downtime, which cost them a lot of money and personnel to achieve.

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operators,” they say.

Jon Tudy Kachikwu, CEO of Jon Tudy Interbix, exporter of packaged foods to the United States via Apapa, loses most of his products on Apapa Bridge. He spends N650,000 to move his foods from Iddo in Lagos to the port city as against N350,000 in November 2019. This represents 86 percent increase in the cost of moving from Iddo to Apapa, both in Lagos.

His products spend three weeks on Apapa Bridge before getting to the ports, but they often get bad before reaching the destination country.

Now, he goes through Tin Can Port via Mile 2, using barges to convey his products to the port.

“Security agencies are the biggest problems we have in Nigeria. Our logistics costs have doubled in the last one year because security agencies are asking for money at each junction. We cannot talk about development and food security, but continue to pay lip service to corruption by security agents, which is killing businesses. How will Nigeria have the scarce foreign exchange when Apapa and Tin Can are frustrating exporters?” he asked.

The Federal Government few years ago set up the Presidential Task Team (PTT) led

by Kayode Opeifa. Many players at the port city say the task force has not been as effective as they ought to.

One major player at the ports told BusinessDay that the Apapa problem could be solved if vested interests including government agencies want to get it solved, dismissing the taskforce by whatever name called.

According to him, any new taskforce for traffic control means increase in the cost and level of bribery on the road.

“If police, FRSC and LASTMA are now collecting N200,000 from you for 20-foot container, they will now tell you to make it N300,000 and if it is 40-foot, they will ask you to make it N400,000 because of the new taskforce team,” he said, stressing, “As long as these corrupt security agencies and others profit from this system, there is no incentive to fix the mess in Apapa.” @Businessdayng

Another operator said while he spent about N500,000 to bring a container from China to the Apapa Port, he spent over N1.2 million to take the same container out of Apapa to Sagamu.

Four modular refineries set to come on stream before the end of this year with over 25,000 barrels per day (bpd) refining capacity spurred by Federal Government’s duty waivers, but the troubled Apapa ports threaten these plans.

Investigation shows that the benefits of a duty waiver are entirely wiped out by exploitative charges required to pay various port officials and security personnel to get into the port and take out containers.

Inside the ports, there are thousands of containers which delivered goods into Nigeria but without corresponding products to export.

As a result, they are left at the ports. In the second quarter of 2020, exports (including crude oil and minerals) amounted to 36 percent of total trade estimated at N6.242 trillion.

Finished and agricultural products comprised merely N347 billion, representing just 5.6 percent of the total trade, according to National Bureau of Statistics’ (NBS) Foreign Trade Statistics. This explains why empty containers stay on Apapa bridges for months.

In terms of solutions, the LCCI said, “Our desire is for Nigeria to get to the point where it can move containers and other items to and from ports by rail across the country,” in a recent statement.

According to CEOs of manufacturing firms earlier quoted, government must deliberately conduct a comprehensive review of all the contributory factors and consciously implement ongoing reforms in a manner that all port-related challenges that seemingly appear to have defied all solutions are permanently resolved.

Ambrose Oruche, acting director-general of MAN, called for a rail line that leads into the ports, saying, “Manufacturers are suggesting that a rail line be constructed in a way that it conveys containers out of the ports to the terminal.

“They also want to be allowed to use barges through Ikorodu,” he further said.

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NEWS

Stakeholders hail government opting for Lagos Assembly probes non-discretionary, open bid round in PIB Alimosho gas explosion …say previous reforms failed because ministers sabotage them OLUSOLA BELLO

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takeholders in oil and gas industry have lauded efforts of the Federal Government opting for non-discretionary, open bid round awards of oil blocs in the proposed Petroleum Industry Bill (PIB).

They say previous reforms planned for the oil and gas industry by successive governments failed because the ministers in charge of the industry decided to ignore them as soon as they discovered their powers had been whittled down in the reforms.

This is the major reason the PIB has suffered the kind of setback it has gone through in the last 20 years, some of them say.

According to them, from the time of General Ibrahim Babangida up to the administration of Goodluck Jonathan all the ministers that presided over the oil and gas industry had either tactically shelve or

Seye Fadahunsi, a former executive director of Pillar Oil, says it is a wonderful development if the government can keep to the terms of the rules it has laid down for itself.

“This would bring probity to the process. But would it be able to implement and not succumb to pressure when politicians decide the act? It is a wonderful development but would it stand by it,” Fadahunsi asks.

Austin Avuru, immediate past managing director/chief executive of Seplat Petroleum Development Company, says inserting non-discretionary and open bid rounds award in the proposed law would ensure that things are streamlined with high level of transparency, which is good for the industry and the country.

“A non-discretionary and open bid rounds would also raise government revenue.

Since it is in the law, if the government fails to do the necessary things it could be

refused to pursue the reform agenda for the industry as soon as they discovered their power would be reduced.

They therefore commend the efforts of the current government for including the item in the proposed law, which if passed would enhance transparency and increase government revenue.

Discretionary allocation of oil blocs was very prevalent during the military regimes of General Ibrahim Babangida and late General Sani Abacha, therefore denying the nation the revenues that should have come to it through a competitive bidding round in form of signature bonuses.

If the National Assembly decides to pass the bill into law with the item intact, it means the power of the minister of petroleum resources would have been reduced by half over such exercise, as a Commission to be set up would now have the responsibility to carry out such duty.

sued,” he states.

George Izomor, managing director/chief executive, MG Vowgas Limited, notes that inclusion of the item in the law is a good idea, saying Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC) has been making efforts to transform the oil and gas industry and that the government should be encouraged for taking such a bold step.

He urges the National Assembly not to delay the passage of the bill.

The draft bill says: The grant of a petroleum prospecting licence or a petroleum mining lease on a previously appraised area of a petroleum prospecting licence or a surrendered, relinquished or revoked petroleum mining lease in, under or upon the territory of Nigeria, shall be by an open, transparent, competitive and non-discriminatory bidding process conducted by the Commission.

INIOBONG IWOK

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agos State House of Assembly has ordered investigation into the gas explosion that occurred at Baruwa in Alimosho area on Thursday, October 8, with a view to addressing the recurring incidents in the state.

The house directed its committee on special duties to probe the incident which occurred when an LPG tanker exploded while discharging at the Best Roof Plant, killing five people and injuring many others.

The investigation by the house followed a motion moved by Bisi Yusuf (Alimosho 1) during an emergency plenary on Friday in which he condemned a situation whereby gas plants were sited within residential areas.

Yusuf, therefore, urged the state ministry of physical planning and urban development to desist from approving siting of gas plants within residential areas.

Contributing, Ganiu Sanni-Okanlawon (Kosofe I), said that the recurring incidents of gas explosion in the state was worrisome and advised the relevant authorities and agencies to ensure proper enforcement

of regulations relating to siting of gas plants.

Gbolahan Yishawu (EtiOsa II), urged the state government to shut down every gas plant without approval and ensure that those with approval complied with the relevant rules and regulations.

The lawmaker added that those operators who had approval should also be strictly monitored to ensure they comply with the rules and regulations.

Speaker of the house, Moshood Obasa, while commiserating with the people of Alimosho, especially those who lost their loved ones, said the house would no longer fold its arms over the recurring loss of lives.

“It is our duty to protect the lives of our people and how do we go about that?

We need to get accurate information as to how these gas plants are being approved and how they are being supervised.

“We need to allow our committee on special duties to look into this and engage the necessary and concerned authorities and operators. This will enable us get true pictures and what exactly are responsible for these explosions,” he said.

Concerns mount over rising malaria scourge in Nigeria ...as country loses N132bn annually on malaria GODSGIFT ONYEDINEFU, Abuja

H L-R: Adesina Adedayo, vice president, Chartered Institute of Taxation of Nigeria (CITN); Gladys Olajumoke Simplice, president/chairman of council, CITN; Yomi Olugbenro, partner and West Africa tax leader, Deloitte/special guest of honour, and Samuel Olushola Agbeluyi, deputy vice president, CITN, at the Chartered Institute of Taxation of Nigeria 2020 fellow conferment ceremony in Lagos, at the weekend.

MAN calls for uniformed electricity tariff to support production GBEMI FAMINU

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anufacturers Association of Nigeria (MAN) has called on the federal government as well as the electricity distribution companies to implement a uniform electricity tariff across all 36 states in order to create a production balance for local manufacturers.

MAN said that this would help boost productivity in the sector.

The MAN president, Mansur Ahmed in a statement at the weekend, said differences in electricity tariff would negatively affect some manufacturers who already struggled with productivity and sales volume, adding that the unfavourable

difference in the tariffs would aggravate the production woes of the industry players in addition to the epileptic power supply which they had had to deal with over the years.

“Disparity in electricity tariff has been observed to favour some regions of the country over others and most worrisome is the fact that manufacturers whom are made to pay higher tariffs sell their products in the same market and cannot afford resultants effects of wider gap in the prices of products as competitors in the industry,” he said.

Ahmed said the tariff difference, in some instances, was as high as 25 percent, making it impossible to ensure fair competition among

manufacturers.

“The resultant effect of this tariff differential is that manufacturers under the Discos with higher tariff rate sell at a loss in order to sustain the market share and, if action is not taken urgently, the affected manufacturers may be forced to close down with looming adverse effect on employment and the economy,” Mansur explained.

He added that if a unified exchange rate could not be implemented, the government should provide a form of palliative to help cushion the impact of the additional cost by establishing an equalisation fund to support distribution companies with smaller numbers of customers in order to ensure tariff uniformity

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across the states.

Beyond the call to unify the tariff rates, MAN president reiterated that poor power supply had continued to infringe output and competitiveness in the sector, adding that manufacturers spent over 40 percent of the production cost on electricity generation which increased the cost of operation and goods produced.

He said that an improvement in electricity supply in terms of quantity, quality and efficiency in service delivery and pricing was critical to the competitiveness, growth and development of the sector, adding that it was also a technique for sustaining the employment of over six million direct and indirect workers in the sector.

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ealth experts and the World Health Organisation (WHO) have scored Nigeria’s progress on eliminating malaria low, in spite of interventions over the years running into billions of naira.

Health analysts say the disease despite costing Nigeria up to N132 billion annually, it is yet to receive the level of attention it deserves, as the government has refused to take responsibility amid huge infrastructural deficit.

Lynda Ozor, malaria programme manager, WHO, says that Nigeria needs to focus more on prevention, breaking the cycle of transmission than treatment, and also to improve access to anti-malaria drugs, going forward. According to her, unlike other diseases in Nigeria, all Nigerians are at risk of malaria.

“Despite efforts, a lot still needs to be done, the burden in Nigeria is so huge”, she told BusinessDay. Available statistics show that malaria accounts for more than 40 percent of all healthcare costs incurred @Businessdayng

by families, depleting more than 7 percent of a family’s monthly income.

The Federal Government puts the financial loss due to malaria annually at an estimated N132 billion in the form of treatment costs, prevention, and the loss of man-hours.

In 2013, the Federal Government announced that it was spending N480 billion annually on the management and treatment of malaria in the country. In the same year, Nigeria spent $2.4 billion on malaria alone.

Available data show that Global fund has committed some $708 million to malaria fight in Nigeria since 2008, while PMI has contributed a total of $420 million since 2010.

Experts further worry that the burden of malaria is borne by citizens through out-of-pocket expenses. A report by The Lancet shows that $424·4 million was the total spending on malaria in Nigeria as at 2016. Of that sum, 37·8 percent was out-of-pocket expenses, why 19.2 percent was from government and 42·4 perc e nt f ro m d e ve l o p m e nt funding.

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Insurance plays catch-up on financial inclusion target

Crown Interactive launches automate, collaborate SAAS campaign DESMOND OKON

MODESTUS ANAESORONYE

…as Micro, Takaful schemes make sluggish start

he sluggish take-off of micro and takaful insurance schemes expected to drive penetration among low-income mass of the population as well as the grassroots is pulling back insurance sector’s push to meet its financial inclusion target.

The Nigerian Financial Inclusion Strategy 2012 expects that by 2015 no fewer than 21 percent of the adult population would have one form of insurance or the other; while in 2020, no few than 40 percent of adult population would have one form of insurance policy or the other.

But this has not been possible as the two schemes expected to boost activity in the country’s underwriting business are in sluggish start, contributing less than 1 percent of the total industry premium put at about N490 billion at the end of 2019.

As at the end 2019, five registered micro insurance and five registered takaful insurance firms have cumulatively generated paltry N2.350 billion, and paid out claims amounting to N615 million.

However, in all, only about 3 million adult Nigerians have one form of insurance policy or the other, being about 1.5 percent of the total country’s population put at 200 million.

Zubairu Darazo of the National Insurance Commission (NAICOM) released the figures during a presentation titled ‘Insurance Development In Nigeria -The Financial Inclusion Option’ in Uyo, Akwa Ibom State, recently.

Darazo said the G20 countries including Nigeria made a commitment to improve access to financial services by reaching out to low-income population through Micro finance, Micro insurance, and Micro pensions, and the segregated or underserved through alternative financing institutions such as Non-interest Financial Institution, Noninterest Banks, and Takaful Companies.

He said the challenges faced in achieving the target in the insurance industry were due to lack of proper understanding of both concepts by operators and consumers.

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According to Darazo, other challenges include poor public awareness as well as lack of skill manpower among the operating companies.

He, however, noted that the Commission had positive outlook for both takaful and micro insurance going forward.

A number of stakeholder engagements workshops and sensitisation programmes are lined up for the year 2021, while market development and enforcement of compulsory insurance drive embarked on by the Commission is expected to improve the uptake of Takaful and Microinsurance as well, he stated.

NAICOM says the goal of achieving the target of 40 percent adult population penetration will be pursued through a broad range of coordinated interventions.

According to the Commission, these include to provide enabling environment and framework for the excluded and low-income population to participate and benefit from insurances, through the development of legal and regulatory

frameworks on Takaful and Microinsurance, heralding the release of the guidelines in 2013.

Other measures include liberalisation of Insurance intermediaries: referral agencies and new insurance agents; define and implement insurance literacy programmes; enforce quick settlement of claims and sanctions for infractions, through establishment of a dedicated department complaints bureau in the Commission.

“We are also incentivising insurance companies to develop micro-insurance products, Takaful insurance and indexbased insurance products to serve low-income/rural individuals,” the Commission said.

According to a PwC report on ‘African Insurance Trend,’ approximately, only 1.5 percent of all Nigerian adults are covered by insurance today.

The report shows that uninsured Nigerians face risks and require better mechanisms to mitigate these risks as an alternative to the informal arrangements currently in use.

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technology software firm, Crown Interactive has announced its “automate and collaborate” campaign to present the company as a partner that helps organisations achieve their business goals by adopting software to automate and achieve greater insight into their business operations while fostering more collaboration with their partners across the supply chain.

The campaign highlights the value of software as a service (SaaS) and Crown Interactive CICOD suite of SaaS services to promote industry collaboration and new business models, enabling organisations to realise their potential value.

“In an increasingly connected world, SaaS technology is enabling manufacturers and other businesses gain greater insight into their value chain and supply chain. It is providing insight about the activities of key distributors, sub-distributors and retailers, as well as the opportunity to automate the engagement of these crucial business partners. The campaign is a call to action for industry operators to use software as a service to gain a greater understanding of their operations, improve operational efficiency and the customer experience”

@Businessdayng

said Omamofe Boyo, chairman, board of Crown Interactive.

Manufacturers and other firms require 360-degree insight into their operations, key distributors, wholesalers and retailers.

They also seek greater efficiency in their business operations including warehouse management, revenue collection, order management and logistics.

Partners along the supply chain such as wholesalers and retailers require access to finance but often struggle to collect the financial and operational data that appeal to bankers and other potential financiers. Software as a service is a software licensing and delivery model that provides solutions to these common challenges in an efficient manner.

“We like to think of software as a service as getting CAPEX value from OPEX. The cost savings that our CICOD suite of services offer to organisations present a compelling case for the adoption of SaaS for organisations seeking greater automation and the advantages of traditional ERP software.

However, CICOD offers even more value by delivering greater visibility of operations along the supply chain, leading to greater collaboration with partners.

We look forward to telling this story,” said Wumi Oghoetuoma, managing director of Crown Interactive.

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abujacitybusiness Comprehensive coverage of Nation’s capital

PIB: Experts count prospects of oil sector ... Want new law to address Nigeria’s strategic imperatives for oil sector James Kwen, Abuja

E Bala Mohammed (l), governor, Bauchi State, with former Vice President Atiku Abubakar, during a visit to the former Vice President by Peoples Democratic Party Reconciliation Committee headed by the Governor in Abuja. Picture by Tunde Adeniyi

FCTA fumigates public schools ahead of today’s resumption Dozie Emmanuel, Abuja

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s full academic activities in both public and private schools in the Federal Capital Territory Administration (FCTA) resume this Monday, officials of the territory have embarked on fumigation of all public schools across the six area councils.

The FCT Minister of State, Ramatu Aliyu, performed the symbolic flag-off exercise at the Government Junior Secondary School, Garki, Abuja.

In a press statement by her media aide, Austine Elemue, the minister said the exercise

was aimed at protecting and safeguiding pupils, students and management staff of public schools against COVID-19 pandemic.

The Minister called on operators of private schools in the Territory to carry out the same exercise before school resumption and tasked parents and guardians to ensure that their wards are properly kitted before going to school.

According to her: “we are here to symbolically flag-off the fumigation exercise as collectively decided and championed by the Honourable Minister, Malam Muhammad Musa Bello.

“Earlier in the day, we had

a press conference on the need for the schools to be opened on Monday for academic activities.

“So, to that effect and in adherence to extant rules of the COVID-19 pandemic, we want to ensure that there are adequate safety and care for our children. So we are embarking on the fumigation of our schools.

“The Honourable Minister is also doing the same thing at JSS Jabi. So, from today, the whole public schools in the Federal Capital Territory will be simultaneously fumigated until Monday when we are ready for resumption”.

The Minister pointed out

Digital economy now a major driver of illicit financial flows in Africa – Dipeolu Godsgift Onyedinefu, Abuja

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gital economy have become a major source of Illicit Financial Flows (IFF) in Africa as money leaving the continent illegally continues to rise, Adeyemi Dipeolu, Special Assistant to the Vice-President on Economic Matters has said.

Dipeolu said leading Multinational companies carrying out online transactions in Nigeria and other African countries are not paying taxes, while informing that the money leaving Africa through Illicit flows is currently at $80 billion annually and still rising.

“Some of the biggest companies in the world

are doing business in a lot of our countries and they are not paying any taxes, because they claim not to have Permanent establishment in our countries , but they are doing business, nearly everybody has a Google account or shops in Amazon, but our countries don’t get the benefits of those business activities, it is imperative to pay attention to that”, he said.

“IFF from Africa are large and increasing, in 2000, we are dealing with just over 10 billion dollars in IFF, now we are at about 80 billion”, Dipeolu added.

Dipeolu said this at a Webinar on Understanding Illicit Financial Flows (IFFs) organized by the Independent Corrupt Practices and Other Related www.businessday.ng

Offences Commission (ICPC) in Abuja.

According to him, Stopping illicit flows requires international cooperation and local political will, but regrets that there is no global frame work yet to do that.

B o l aj i O w a s a n oy e, Chairman, ICPC called for conscious actions by international and local actors to address IFF, which he notes is draining the resources of African countries with negative effects on domestic governance.

“Many African countries are struggling to find the money that they need to develop, stopping this requires administrative action, some require legal reforms, technology intervention” he said.

that there was criteria for resumption and most of them were complying, adding that any school found wanting would be sanctioned.

On her part, the Principal of Government Junior Secondary School, Garki, Mohammed Fatima, expressed the preparedness of her school to resume academic activities as announced by the authorities.

She said: “we are very prepared as you can see for yourself. We are perfectly prepared. The grasses are trimmed, fumigation is going on, we have our wash hand basins, sanitizers, liquid soaps and face masks. In short everything is on ground”.

xperts have identified the prospects of the Nigerian oil sector when the Petroleum Industry Bill (PIB) 2020 recently transmitted to the National Assembly by President Muhammadu Buhari is passed and sign into law.

The experts who spoke at the technical session on the PIB organized by the Facility for Oil Sector Transparency (FOSTER) in Abuja asserted that various provisions of the new law particularly on deregulation would enhance the country’s prosperity and transparency in the oil sector.

In a presentation on:”End of Fuel Subsidy and the Future of the Petroleum Downstream Sector”, Uche Uwaleke, a Financial Economist and Professor of Capital Market at the Nasarawa State University, Keffi said there is bright future ahead of the downstream sector following deregulation.

Uwaleke, however said the level of brightness depends on the passage of the PIB with which the goal of Nigeria becoming a net exporter of refined products and the refining hub of West Africa is made more realistic.

He explained the West African market holds significant potential as refineries such as SIR (Ivory Coast), SOGARA (Gabon) and SAR Senegal) cannot meet current demand for refined products in the

Military strikes, hit bandits’ camp, kill scores in kaduna Godsgift Onyedinefu, Abuja

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he Air Component of Operation Thunder Str ike has hit some bandit’s camps and killed scores at their hideouts in the forests and border areas of Kaduna State.

John Enenche, Coordinator, Defence Media Operations (DMO) who disclosed this in Abuja said the air strikes were executed at Camp Alpha in Kwiambana Forest as well as at Fadaman Kanauta and Jan-Birni on 6th and 7th October 2020 after intelligence reports established that the locations were being used by the bandits as staging areas, to store their

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logistics, hide rustled cattle and launch attacks.

Enenche said the air strike at Kwiambana Forest was undertaken after an ISR aircraft spotted 4 clusters of huts where the armed bandits reside.

“The Nigerian Air Force (NAF) jets and attack helicopters dispatched by the Air Component recorded successful hits in the target area taking out some of the bandits.

“In the same vein, at Fadaman Kanauta and Jan-Birni, the NAF attack aircraft took turns in strafing the target areas leading to the neutralization of several of the bandits as well as damage to their dwellings”, he said. @Businessdayng

region, estimated at 39 billion litres.

According to the scholar, there is potential uptake by neighbouring countries if refined products from Nigeria are readily available, noting that substantial local supply of refined petroleum products is imminent with the 650,000bpd Dangote Reflnery which is currently under construction.

Uwaleke also said the takeoff of Waltersmith refinery in lmo State, Azikel Refinery in Bayelsa State and other modular refineries are expected to drive increased local refining capacity in the future.

He supported the end of fuel subsidy regime as it is not in the long term interest of the ordinary Nigerian, stressing that experience in the country has shown that petrol subsidy is like a drug that temporarily dulls a pain which manifests later with renewed vigour.

“So, it amounts to wasteful spending. Subsidies benefit the poor only if they are on production than on consumption which the rich are in a stronger position to corner.

“Therefore, I think the government has taken the right decision. The challenge now is to ensure that what is saved is channelled to implementing pro-poor policies especially in the area of health, education and job creation”, the Professor of Capital Market stated.

On why fuel subsidy must be ended, he said: “Fuel subsidies are contributing to the debt burden costing around N1triilion each year - over 10% of government budget.

Since 2017, these subsidies now feature as a cost item and are characterised as underrecovery in NNPC’s books.

Not only are energy subsidies an unsustainable fiscal burden, but they also fuel black markets”.

Giving further justification, Uwaleke posited that end of subsidy will curtail smuggling of petroleum products due to price differentials across borders, crowd in resources which could be used to promote economic and social development, encourage multiple exchange rates inimical to investments.

He however stressed that government should be prepared to deal with the new challenges arising from deregulation of the sector such as possible cartels in the emerging oligopolistic market structure, fluctuations in pump price arising from volatile oil prices, product availability in rural areas and tackle instability in exchange rates.

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Company IN FOCUS

BUSINESS DAY Monday 12 October 2020 www.businessday.ng

Nigeria’s biggest miller defies virus as revenues hit 9 yr-high Favour Olarewaju

F

lour Mills of Nigeria (FMN) Plc has defied tough economic conditions to grow revenue to the highest in nine years.

Nigeria’s biggest flour miller saw revenues hit N728.35 billion in the half-year of 2020 despite expectations that the coronavirus pandemic could negatively affect its earnings as it has with several other companies in the consumer goods space.

Flour Mills’ revenue increased by 10 percent from N662.15 billion in H1 2019 despite the 7.5 percent rise in its cost of sales to N637 billion up from N592.3 billion within the same period.

What is driving revenues?

Flour Mills benefited from Nigeria’s land border closure and preference for value brands in growing its revenue.

Specifically, the trade restrictions stemming from the COVID lockdown also benefited its pasta and poultry segment with a 15 percent and 29 percent growth in volume for Q1 2020/21 YoY due to lower competition from imported alternatives.

The food segment accounts for over half of the company’s products with flour representing 65 percent of its food volume mix.

Also, introducing value products between 2019/20 and Q1 2020/21 to ensure affordability and higher value given lower consumer incomes as a result of the lockdown helped Flour Mills to boost revenues of the business to consumers (B2C) segment by 31 percent for Q1 2020/21 YoY. These value brands include Golden Vita, Golden Penny Noodles, Auntie Pasta, Auntie B Spaghetti Slim, and Semovita.

PAT climbs by 98% to N16.35bn In line with revenues rising faster than cost, profit after tax (PAT) grew by 98.4 percent to N16.35 billion in H1 2020 from N8.24 billion in H1 2019.

Similarly, profit before tax (PBT) hit its highest point at N23.95 billion in 2020, representing a 52.8 percent increase from N15.68 billion in 2019 on a half-year basis.

Share performance Also, the share price of Flour Mills currently stands at N22, a 12 percent increase from N19.7 as at January 1st 2020 on a yearto-date basis despite fluctuations.

Other highlights Administrative expenses grew to N28.26 billion in H1 2020, a 17.5 percent rise from N24 billion in H1 2019. Selling and distribution expenses increased by N11.28 billion, a 10.5

Source: NSE percent rise from N10.2 billion.

Advertisement also marginally increased to N2.27 billion in half-year 2020, a 4.7 percent rise from N2.17 billion in the same period of 2019.

Also, the company’s finance cost reduced by 9.5 percent to N24.8 billion in 2020 down from N27.45 billion in 2019 on a halfyear basis, showing that Flour Mills spent less money financing its expenditures.

Given the reduced costs relative to higher revenue, it is not far-fetched that the country’s biggest flour miller by market value saw its gross profit rise to N91.3 billion in H1 2020, a 30.8 percent increase from N69.8 billion in the same period of the previous year.

Interestingly, Flour Mill’s increase in gross profit, PBT and PAT was the second highest increase in these earnings in the 9-year period under review.

This brings to light the seeming trend that Flour Mills has an inclination to record its highest profit growths during economic downturns in the country.

This is evidenced in the reviewed period as the company hit its highest PBT and PAT growth of 94.8 percent and 99.4 percent respectively during the first six months of 2016 when Nigeria was experiencing economic recession.

Half-year 2016 also saw an 18.1 percent growth in revenue to N461.79 billion up from N391 billion in the same period of 2015.

This revenue increase of H1 2016 was despite the almost proportionate rise in cost of sales by 18.2 percent to N408.9 billion up from N345.79 billion in H1 2015.

The years that Flour Mills had reduced profits (either before or after tax) did not coincide with recessionary slumps of the country.

Outlook for full year Taking an inference from this, it could be projected that Flour Mills might maintain its strong performance or record even higher growth if Nigeria fully dives into a recession as projected internationally and nationally by the World Bank,

‘‘

Given the reduced costs relative to higher revenue, it is not far-fetched that the country’s biggest flour miller by market value saw its gross profit rise to N91.3 billion in H1 2020, a 30.8 percent increase from N69.8 billion in the same period of the previous year

International Monetary Fund (IMF) and the Central Bank of Nigeria (CBN).

Already, Nigeria recorded a 6.1 percent contraction in real GDP growth rate in Q2 2020, thereby implying that Flour Mills might continue to blossom down the lane into Q3 while other companies struggle to stay afloat.

Cardinal Stone analysts in a research note identified 5 key pillars that will likely further boost profit after tax growth for (FY) 2020/21.

Trade restrictions Lingering border closures and the recent exclusion of food and fertilizer importers from accessing official foreign exchange (FX) will likely spur regulatory bounce on these FMN segments.

Value-added innovations Also, continuing in their innovative product launches and gravitations towards value brands to cater for price-sensitive customers will likely to remain supportive of Flour Mill’s growth for the rest of the year.

Decline in sugar duty The reduction of sugar duty to 5 percent from 10 percent for FY 2020/21, greater investments in mechanized harvesting, planned 25 percent expansion of cultivation lands to 3,500 hectares from its current 2,800 hectares could lead to greater margin resurgence.

Lower lending interest rates by CBN and BOI The reduced lending rate to FMN by the Bank of Industry (BOI) and Central Bank of Nigeria (CBN) between March and April 2020 will likely flatten

interest expense, thereby driving cost downwards.

The CBN and BOI slashed interest rate by 5 percent on FMN’s N42.4 billion facility and N10.8 billion outstanding loans respectively for one year such that these subsidized loans make up 40 percent of FMN group’s total borrowings as at June 2020.

FMN also disclosed its intention to leverage on the N70 billion bond program before year end to cushion pressure on repayments and related costs.

Possible drawbacks?

Despite the impressive performance of Flour Mills Nigeria, further currency depreciation, possible reopening of Nigeria’s borders and flood disruptions at Sunti could interfere with the company’s growth projections.

Already, FMN has seen N9.4 billion FX loss in Q1 2020/21 alone from naira depreciation in March and this could become worse especially since FMN imports take up cumulative 62.5 percent of raw materials for production.

Also, reopening of the borders will renew imported competition and dampen market share.

On 25 September 2020, FMN informed the stock exchange that excessive flooding disrupted operations and expansion project (to 4,000 hectares of cultivated land by mid-2021) timeline at its sugar estate in Sunti.

This puts caution on FMN’s margin projections since the full extent of damages is yet to be known until the flood subsides, according to Cardinal Stone analysts.

Nonetheless, analysts have a BUY recommendation on FMN’s stock, with an upside potential of 36.4 percent.

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