BusinessDay 13 Apr 2020

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news you can trust I ** monDAY 13 april 2020 I vol. 19, no 540

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Nigeria’s balance of payment deficit to hit 7yr high of $9bn in 2020

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SEC, FMDQ Depository revolutionise depository services in Nigeria ... FMDQ Depository appointed sole depository to Lagos State N100bn bond

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n June 2019, the Securities and Exchange Commission (SEC), in another unprecedented and forward-thinking market development posture, registered another depository, FMDQ Depository Limited (FMDQ Depository) in the Nigerian capital markets after the existence of a sole depository for over 26 years; thereby empowerContinues on page 31

Inside Hospitality records worst Easter sales in history amid coronavirus P. 30

President Muhammadu Buhari (l), receives in audience Babagana Zulum, governor, Borno State, at the State House, Abuja.

Poor income levels threaten Nigeria’s stock of nursing workforce P. 30

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As oil income falls, FG considers selling marginal oil field licences ISAAC ANYAOGU

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he Federal Government is holding a bid round for marginal fields in a few weeks’ time which is expected to help raise capital and shore up fallen oil income.

Africa Oil & Gas Report, an energy intelligence publication byrespectedanalyst,ToyinAkinosho, first reported that Timipre Sylva, Nigeria’s minister of state for petroleumresources,hasreceived the approval of the president

to hold the marginal field bid round. Officials of the Ministry of Petroleum Resources contacted were yet to verify the information.

Meanwhile, an oil and gas investmentexperttoldBusinessDay that he was getting requests from some clients on prospective fields that may be a good buy, indicating that investors may already be taking positions based on their knowledge of government plans.

The current fall in oil prices is pushing the Federal Government to think up other ways to raise revenue besides depending on monthly crude oil sales.

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Forty-five fields were already in the basket at the Department of Petroleum Resources (DPR), the industry regulatory agency.

There are also additional 11 fields revoked by the DPR due to inability to use them. These include Movido-Ekeh, GolandOriri, Independent Energy-Ofa, Associated-Tom Shot Bank, Bayelsa-Ayala, Sogenal-Akeni and Delsigma-Ke. Others are Bicta-Ogedeh, Guarantee-Ororo, EuraficDawes Island and SaharaTsekelewu. This will bring to 56 fields located on land, swamp

and shallow water terrains from which investors can choose.

Marginal fields are those discoveries made by oil majors which were undeveloped either because of distance from existing production facility, low reserves (in view of the majors) or likely low production volumes as a result of flow assurance issues.

Though marginal fields in Nigeria have average economic life of between eight and 15 years and can produce between 4,000boepd to 30,000boepd per field, they give local players the best opportunity to participate

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in the oil and gas sector, develop expertise and grow local content.

But operators have not always been prolific producers.

A total of 30 marginal field licences have been awarded since the policy was introduced and only around 30 percent of the fields have reached commercial production. Marginal field production only makes up 3.05 percent of crude oil output between 2015 and 2016, say analysts at Bloomfield law firm.

According to the DPR, the marginal field companies pro-

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duced about 2.14 percent of the nation’s total production in 2018.

The depletion rate was about 2.7 percent, with a life index of 36.83 years and a national reserves portfolio of 1.61 percent. The reserves hold a potential for production that lies within the medium-term range.

The government has threatened several times in the past to revoke the licences of operators who fail to develop fields but has often restrained from carrying out the threat in view of the difficult operating environment and the volatile nature of oil prices.

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Nigeria’s Covid-19 lockdown must be lawful and sensibly enforced ing measures and draconian powers to enforce them. But he went on to describe those measures as having “immediate effect” even though the enabling legislation had only just been introduced into parliament and hadn’t become law.

In a powerful intervention, Lord Sumption, a recently retired Judge of the UK Supreme Court, rebuked the prime minOLU ister for failing to recognise that “there is FASAN a difference between the law and official instructions”. Lord Sumption recognised the seriousness of COVID-19 and the he coronavirus pandemic is need for the government to act to save amplifying two of Nigeria’s lives, but added: “Yet, we are entitled to worst attributes: its flagrant wonder what kind of society we have beviolation of human rights and come when an official can give orders and its utter disregard for the rule expect to be obeyed without any apparent of law. President Buhari once said: “Rule legal basis, simply because it is necessary.”

Well, this was the same point – wasn’t of law must be subject to the supremacy of the nation’s security and national interest”. it? – that some senior Nigerian lawyers The COVID-19 emergency has provided made when President Buhari imposed a cover for the magnification of such power lockdown on Lagos, Abuja and Ogun, on abuses. Yet, as Cicero cautioned centuries 29 March, directing “the cessation of all ago: “Beware the leader who sets aside movements” and ordering “all citizens to constitutional rules claiming the need for stay in their homes” and “all businesses and offices to be fully closed”. The lawyers, expediency or security”.

But this is a global issue. COVID-19 has notably Femi Falana and Ebun-Olu Adegiven leaders around the world an excuse gboruwa, asked what power Buhari was to violate human rights and the rule of exercising when he issued those orders. law. As one senior United Nations official Clearly, based on Lord Sumption’s perrecently put it, “We could have a parallel suasive legal argument, a common law epidemic of authoritarian and repressive position, President Buhari’s “orders” in his measures following close to, if not on 29 March address were at best valuable as the heels of, a health epidemic.” That’s “advice”, even “strong advice”, but “neither true. Autocrats are becoming even more has the slightest legal effect without statuautocratic as they use COVID-19 as an tory authority.”

Of course, President Buhari later issued excuse to introduce self-serving draconian the COVID-19 Regulation 2020, using measures.

Take one egregious international exam- powers under the Quarantine Act 1926, ple. In Hungary, the parliament passed the a colonial-era law enacted to quarantine so-called “omnipotence” law, at the behest people and areas with infectious diseases. of the prime minister, Victor Orban, which But while the COVID-19 Regulation gives gives him the indefinite power to rule by some legal effect to the president’s lockdecree without parliamentary approval. down measures, it certainly does not give And what’s the reason for that power grab? legal cover for the human rights violations Well, according to one Hungarian minis- by security operatives purporting to be ter: “We’re at war against the coronavirus, enforcing the government’s coronavirus which depends on the ability to make orders. Recently, the president urged secuquick decisions”. He might have added: rity agencies “to deploy tact and caution in enforcing the rules”. But this goes beyond And to kill or quarantine democracy!

But it’s not just autocrats, even liberal “urging” security operatives to exercise leaders have shifted towards coronavirus- restraint, the question is: do they have the induced authoritarianism. For example, In powers to violate people’s human rights Britain, the prime minister, Boris Johnson, and personal liberty in the first place?

To be clear, there is absolute, indisimposed a coronavirus lockdown on 23 March, with wide-ranging social distanc- putable, need for lockdowns and social

global Perspectives

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distancing to stop or slow the spread of the coronavirus. That’s scientifically and medically established. But, in a free society, both measures must meet two conditions. First, they must be based on proper statutory authority, that is, powers to impose and enforce a draconian lockdown must be explicitly conferred by legislation. Second, such measures must be proportionately and sensibly enforced.

Unfortunately, both have not happened in Nigeria.

Take the legal argument first. As Lord Sumption puts it, “The ordinary rule is that a person may not be detained or deprived of his liberty without specific statutory authority”. For instance, why did the UK introduce the Coronavirus Act 2020 when it already had the Public Health (Control of Disease) Act 1984 and the Civil Contingencies Act 2004, each of which has wideranging enforcement powers? The answer is that neither the 1984 Act nor the 2004 statute confers specific powers to detain people at home or to do other things that the coronavirus lockdown requires. So, the UK government had to introduce the Coronavirus Act 2020 to provide specific legal cover for the new tough measures.

Several senior Nigerian lawyers have made the same point. They argue that, under the Constitution, the government can only restrict, infringe or suspend human rights either by a) declaring a state of emergency or b) introducing a specific Federal statute, both of which require the approval of the National Assembly. The truth is that neither the Quarantine Act 1926 nor the COVID-19 Regulation 2020 issued pursuant to that Act gives the government the wide-ranging powers it is now exercising to violate the human rights of Nigerians.

There are images of security operatives brutalising Nigerians on the streets. In one video on Twitter, soldiers were mercilessly clobbering someone as he kept screaming: “I’m a journalist, I’m a journalist …”. Even if he was not a journalist, such brutalisation was wrong. Recently, the Nollywood actress, Funke Akindele, and her husband, Abdulrasheed Bello, were sentenced to 14-day community service for hosting a house party in violation of the social distancing rules. The singer, Naira Marley, and a former governorship candidate, Babatunde Gbadamosi, who attended

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To be clear, there is absolute, indisputable, need for lockdowns and social distancing to stop or slow the spread of the coronavirus.

That’s scientifically and medically established.

But, in a free society, both measures must meet two conditions

the party, were “pardoned” after they were forced to apologise for failing to “comply with the directives of Mr President” on social distancing.

So, the offence, for which Funke Akindele was given a criminal conviction, was failing to comply with the “directives” of Mr President! But to invoke Lord Sumption again: What kind of society do we live in “when an official (whether president or governor) can give orders and expect to be obeyed without any apparent legal basis, simply because it is necessary”? Why did President Buhari not enact a Coronavirus Act 2020 or declare a state of emergency?

Truth is, the Quarantine Act 1926 does not confer powers to violate the human rights and personal liberty of Nigerians.

If the government wants such powers, it should declare a state of emergency or enact a primary legislation that sets out such specific powers.

Which brings me to enforcement.

Even if lawful, a lockdown must still be enforced proportionately. In Nigeria, a lockdown is double punishment. The vast majority are poor and live in utterly miserable conditions. Many can’t survive by staying indoors, and there are high risks of increased domestic violence. The UK’s coronavirus lockdown, a relative luxury, is achieved by “90 per cent persuasion and 10 per cent enforcement”, with maximum support system. Last week, before his hospitalisation, the prime minister wrote to every household in the UK. In the letter, he said: “I understand completely the difficulties this disruption has caused to your lives”, but added: “I urge you, please, to stay at home, protect the National Health Service and save lives”.

By contrast, President Buhari hasn’t acted as the “Explainer-in-Chief”. Instead, he issued draconian lockdown orders, without proper statutory authority; then, overzealous security agencies enforce the orders by violating the human rights of Nigerians. That’s wrong. To be legitimate, the lockdown must be lawful and sensibly enforced!

Happy Easter Monday everyone!

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

COVID-19 and business continuity – The role of the Board

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o date, the number of documented cases of COVID-19 globally exceeds 1,300,000 with close to 300 cases in Nigeria. In a bid to control the spread of the virus, President Muhammadu Buhari implemented a total lockdown of businesses, international airports, borders, schools and places of worship from 11 pm on Monday, 30th March 2020 in Lagos and Ogun States as well as the Federal Capital Territory, Abuja for at least two weeks – in the first instance.

As governments all around the world struggle to grapple with the pandemic, the question how organisations can effectively respond is critical to their survival. To survive (and thrive) during a crisis or economic downturn, businesses require strong, decisive leadership and the appropriate agility to adapt to rapidly evolving scenarios in order to ensure the safety of their workforce, comply with relevant laws, take steps to preserve their brands and ensure continuity of operations.

Historically, many businesses have developed Business Continuity Plans (BCP) to address situations where business premises, systems, equipment or products suffer sudden damage (fire, flood, earthquake or other disaster) breakdown or breach (cyberattack). The BCP would typically work with the assumption that, at least a few employees can return to their work sites shortly after the incident and data

retrieved from a data recovery site as appropriate. However, as the COVID-19 outbreak has shown us, physical access to employees and work sites, which are two critical elements for business recovery, may become limited for a long period of time.

In order to enable businesses effectively respond to unexpected disruptions as has been brought on by the Covid-19 pandemic, a BCP should incorporate the following elements: Work policy modification: Modifying work policies is recommended in order to provide some flexibility to normal working conditions.

Some of the modifications include: Enable effective working from home by ensuring appropriate work tools, network connectivity, remote and controlled access to central file server; Use of video and audio conferences (zoom has become everybody’s favorite); Reduce the number of people in the workplace through work scheduling in essential services.

Financial impact and liquidity: The immediate, near-term and long-term financial impact (including the ability to meet obligations) of the COVID-19 pandemic should be reviewed within the context of the related impact of the extreme volatility in the financial markets. The need to seek moratorium or renegotiate the terms of existing debt arrangements should be considered.

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plans: It will be useful to consider whether an up-to-date succession plan is in place that identifies a person who can step in immediately as interim CEO in the event that the CEO contracts COVID-19 and the need to implement similar plans for other key roles.

Remuneration and incentives: The BCP will need to look at the best and worst-case scenarios of the impact on the organisation’s income and consequently its ability to meet salary obligations to employees. It should also consider whether incentive plans need to be reworked considering the circumstances, to ensure that appropriate behaviors are encouraged.

It would be prudent to delay setting incentive goals until there is more clarity as to how long the crisis will subsist or build in flexibility with respect to set goals.

Information security: During a crisis, the number of phishing scams and other cyberattacks have the potential to significantly spike and many employees working remotely can pose increased data security risks. As such, appropriate data security and cybersecurity controls as well as an effective cyber risk communication strategy should be built into the BCP. The BCP then has to be monitored, accessed and adapted on an ongoing basis until the crisis situation abates.

COVID-19 represents a real life (albeit surreal) crisis for every Board of Directors.

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Bisi Adeyemi Whilst Executive Management bears the day-to-day responsibility for managing the corporation’s response to the pandemic, the Board needs to provide leadership by reviewing and approving the BCP, monitor and assess Management’s implementation of the same and provide additional guidance as appropriate. Staying well-informed of developments – global and local – as they impact the corporation is critical to the Board’s ability to respond appropriately.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Giving and misgivings: Diversion, looting and outright sharing of funds (Seventh in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

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resident Buhari’s electoral victory owed much to his promises to fight against corruption. The next Nigerian general election is in February 2019 and he is planning to run for re-election. However, corruption in Nigeria is structural and addressing it will require decades, if not generations.

In the run-up to the elections, Buhari will look to highlight examples where his policy has been successful in his first term.”

Also, as confirmation that we are dealing not just with embezzlement of public funds, our remit extends to decadence on a grand scale combined with total collapse of moral value in direct contradiction of Rotary’s Four Wheel Test. Here is the charge sheet of Nigeria which has gone viral: We built this place A lecturer wanting 5 rounds to pass a female student. A policeman demanding 500k for bail. A judge demanding 5 million for judgement. A public servant demanding 50 million for a contract. A voter demanding 5k for his/her vote. A clergy demanding 5-500k for “blessing”.

A leader(s) closes their eyes to corruption and nepotism. A parent offering 50k for ward’s admission into school or paying for exam questions. A society rewarding incompetence. A society closing its mind to murder. A society shutting down common sense.

A society designed to allow the worst to emerge to the top, in many respects.

A society that justifies all things in the name of politics, tribe, ethnicity and individual benefit. A society that blackmail others for difference in thinking.

A nation that we have all collectively built. One working towards oppressing the other. Where impunity is rife.

Where our default thinking is on wailing or hailing, but never a consideration of the issue. A society with low or no expectations from their leaders.

A society in conflict with itself. A society where thought is absent. That all issues are swept under the carpet depending on who holds the broom and where all things can be covered depending on where the umbrella tilts.

A society where seemingly educated men run away from speaking out in the face of evil so that they will be seen as saints. A society where evil doers are glorified by men who pretend to be gentlemen. A society where men have no regards to the legacy they will leave behind. A society where money is preferred to wisdom.

The sheer scale of the sleaze and corruption is more than enough to neutralise the impact of the generosity and philanthropy of Bill and Melinda Gates.

Front page of “The Nation” newspaper of February 2, 2020, we have the following “nauseating (the stories not the newspapers) reports: Headline (I) Jonathan’s ex-chief of staff in trouble over alleged N35 billion fraud.

• Son implicated in defence contracts • Former defence minister got $240,000 cash from N533 million job • Ex-permanent secretary received N170 million, Honda car as bribes A former Chief of Staff to ex-President Goodluck Jonathan, Mike Oghiadome, stands the risk of forfeiting two mansions to the Economic and Financial Crimes Commission (EFCC) after N35 billion arms slush cash was traced to a member of his family.

The mansions are located on Udo Udoma Street, in the posh Asokoro District of Abuja.

The legal unit of the EFCC is already processing the forfeiture of the two assets.

The EFCC has quizzed Oshioke, Ogiadhome’s son over alleged involvement in arms deals.

Ogiad home himself has been in-

vited for questioning but he was yet to honour EFCC’s invitation at press time.

He may be arrested if he fails to show up for questioning.

A ranking member of the House of Representatives who was similarly invited, has been lobbying in the power corridor to prevail on EFCC to drop the summons.

Detectives have however quizzed a defence contractor, Donald Peterson.

Others implicated in the defence contracts are a former Permanent Secretary, a former governorship candidate of the People’s Democratic Party (PDP), and two former Service Chiefs.

Investigation by our correspondent revealed that the EFCC made startling discoveries while probing contracts worth N35 billion for the equipping of the Nigerian contingents on UN peacekeeping missions all over the world.

Findings pointed at diversion, looting and outright sharing of the cash leaving those on peacekeeping missions without necessary tools and equipment.

Part of the cash was found to have gone into private accounts.

It was gathered that the N35 billion was paid into a bank account with number 0001713716, from where it was depleted.

About 1301 companies including two former service chiefs are alleged to have benefited from the scandal.

A document obtained by our correspondent said in part: “In 2007, the UN told the federal government to equip the Nigerian contingents on peacekeeping missions all over the world. The UN asked the Federal Government to raise the money while it will reimburse later.

“There were three options opened to the federal government namely, (a) borrowing from banks (b) use of normal budget and (c) sourcing funds from the capital market.

“The federal government chose the capital market and directed the Debt Management Office (DMO) to raise the cash.

“In June 2008, DMO raised the N35 billion and transferred it into the

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Investigation by our correspondent revealed that the EFCC made startling discoveries while probing contracts worth N35 billion for the equipping of the Nigerian contingents on UN peacekeeping missions all over the world.

Findings pointed at diversion, looting and outright sharing of the cash leaving those on peacekeeping missions without necessary tools and equipment

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Enjoy your COVID-19 lockdown

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n recent times, many people have called me to agonise over the current lockdown and are obviously getting stressed up. I guess some are effortlessly, developing hypertension. This I dare say is very sad.

Anyone who has heard the biblical directives- “In every situation, give thanks” and “rest still and know that I am the Lord” and still worries has not really internalised the eternal message therein. My experience has taught me that in the end everything passes away. Even COVID-19 will pass away. For those who worry, this may be the beginning of their passage. Each of us will be well advised to exercise restraint in any trying circumstance.

The first thing to do is to stop agonising over this period. As trying as COVID-19 is, the heavens are not about to fall. Let me share my little experience with you.

I was 37 when the military struck in 1983.

I had been in government for 4 years and 3 months. To this day, I am grateful to God for the opportunity to have served and wish I had done more. I gave the very best of my life in service. Service was always what I wanted to do and when the chance came, I grabbed with both hands.

But I received an unjust, crude and inhuman recompense from the military government

Nnimmo Adeyemi Bassey Adefulu

headed by General Muhammadu Buhari. Col. Oladipo Diya who was military governor in Ogun State thought I was so close to Onabanjo that there was no getting Onabanjo without getting Adefulu his political son. The whole purpose of his governance was bile. He came with vengeance in his heart. But those who seek to destroy what others built don’t go far. No wonder he is no more than a footnote in the history of Ogun State. His name Diya meaning avenger, was turned round to Kunya, the persecutor.

I was subjected to the most scurrilous of interrogations and mental and physical torture.

But my interrogators soon learnt that they had a wrong candidate. Bisi Onabanjo had run the most accountable of administrations and his accomplishments to this day remain a reference point. The intense search found that I had been prudent in my affairs before and during my days in government. My affairs were so scrupulously recorded that I dazed their several panels with documents and accountability. At a stage, Col Adeleke (I think that’s his name from Ondo town) after the final interrogation of the SIPState Investigation Panel said to everyone, “now this is off the record- I want to learn from this young man. How were you able to keep records like these? If anyone had asked me to account for how I spent my salary over the past 6 months, www.businessday.ng

account of the Ministry of Defence domiciled in a commercial bank.

“Investigation confirmed that some of the cash were disbursed to different military officers and formations including a former Chief of Army Staff and a former Chief of Naval Staff and a former Permanent Secretary in the State House.

“Contracts were awarded to about 131 companies from the cash.

“Also, about $4,347,529.67 from the votes was allegedly used to establish an embassy in Brazil by the Ministry of Foreign Affairs.

“The disbursement of the N35 billion spread from 2008 to 2013 with different purposes being used to divert the money.”

According to the EFCC, the Oghiadomes came into the picture when investigation showed that a contractor, Donald Peterson was allegedly used between 2010 and 2013 to launder some of the cash through award of contracts.

The ex-Chief of Staff was alleged to have wielded political influence to secure juicy contracts for Donald Peterson’s companies including Richfield Technologies Limited and VTB Export/ Import Limited.

Some of the contracts awarded Richfield Technologies Limited were supply of telecommunications equipment (N1,020,000,000); supply of touch recovery vehicles(N80m); supply of Tevex crane( N269 million); purchase of two trainer simulators (N433 million); supply of 65 units of air conditioners (N349 million); supply of 5 units of fuel trailer (N85 million); aircraft refillers (N320 million) and supply of arms and ammunition (N894 million).

As for the VTB Export/ Import Limited, the contracts secured were supply of arms and ammunition (N778 million) and supply of arms to the Nigeria Police (N500 million).

I would not have been able to do it. Yet you have given us compelling records several years old which predated this job. Did you expect that this day will come? You were obviously doing well in your profession, why did you accept a thankless job like this?” I will leave the story of my answer to the panel out of this short discourse.

Suffice it to say that I was in detention for 18 months, 16 of which were spent in Abeokuta Prison and 2 earlier months in detention camps.

They preferred no offense and no charges, not one accusation. I woke up from day to day with no idea of when my nightmare will end. I just stared at the outside from the distance daily and life went on without me. If I had died nothing would have stopped.

From across the road from the elevated grounds of Abeokuta Prison, I looked at the gate of the Governors Lodge which, in my hey days, swung open any time I was spotted in my car, for 16 months. I no longer mattered. The truth of life is that no man really matters. With or without you, life goes on.

Now back to my story, how about that for the Covid-19 worrier? As I said, I was well under 40 with a young family of 5 children. Getting a heart attack from my experience or ending in Aro Psychiatric Hospital would have been very easy to accomplish.

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But, fortuitously, I had learnt from very early in my life that “it is not life that matters but the courage you bring into it”. Faced with challenges one must always look at the good or positive side of any situation. I therefore summoned courage early and I said to myself “with all the terrible injustice being meted to me, somehow this was still an opportunity that must not be wasted.”

That meant I must use every moment well.

From that moment, I ended up going to bed exhausted every night. At a stage I started reading the Bible determined to read it from cover to cover (I skipped the very difficult parts) complete with commentaries here and there.

I learnt to speak French taught by a prisoner from Togo, studied case files for prisoners on the death row and wrote unsolicited legal opinions for their lawyers. I wrote to some Attorney General colleagues of mine seeking reprieve for well reformed prisoners and I got quite a few of them pardoned. Airat Balogun the then AG of Lagos State was particularly helpful.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng

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Nigeria’s private sector takes lead role in Covid-19 roll back

Patrick Atuanya

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igeria’s private sector is taking a leading and commendable role in the country’s fight to roll back the spread of the coronavirus pandemic which has affected much of the globe.

Access Bank Plc, Nigeria’s biggest lender by assets, is teaming up with Africa’s richest man Aliko Dangote to provide treatment and isolation centres across the country as it braces for the impact of the pandemic.

Nigeria recorded 288 cases of the Covid-19 virus, with 51 discharged including seven deaths, as at April 9th.

Some experts have expressed fears that the spread could become much larger than this and similar to the surge in numbers, witnessed in Italy or the United States, if community infections aren’t curtailed due to poor health facilities.

The government is tracing 4,370 persons that have made some contact with confirmed virus cases.

This is why the private sector intervention is much welcome.

The facilities, which will be located across the country with a total of 1,000 beds, will be ready within weeks.

They will have Chinese experts and also serve as testing, isolation, treatment and training centres.

United Bank for Africa Plc (UBA)

for its part announced a donation of over N5 billion ($ 14 million), through the UBA Foundation, to catalyse a comprehensive pan-African response to the fight against the coronavirus (COVID-19) global pandemic.

The donation will provide significant and much needed support to Nigeria and 19 other African countries, by supplying relief materials, critical care facilities, and financial support to Governments. The UBA support programme will be allocated as follows: N1 billion ($2.8 million) to Lagos State Government in Nigeria, N500 million ($1.4 million) to Nigeria’s Federal Capital Territory, Abuja, and N1 billion ($2.8 million) to the remaining 35 states in Nigeria, N1.5 billion ($4.2 million) to UBA’s presence countries in Africa, and N1 billion ($2.8 million) for Medical Centres with equipment and supplies.

UBA will fund a medical centre immediately in Lagos, Nigeria, with beds for isolation and ICU facilities, managed and operated in partnership with Heirs Holdings’ healthcare subsidiary, Avon Medical Hospital.

In addition, UBA is providing a free telemedicine platform, that is physician-led, to provide direct access to medical advice to citizens, in compliance with social distancing requirements.

UBA Group Chairman Tony O. Elumelu, stated: “This is a time when we must all play our part. This global pandemic must bring citizens, governments and business leaders together – and quickly. As we see a rapidly increasing number of cases of the coronavirus in Nigeria and Africa, the private sector has to work hand in hand with various Governments, in stemming the spread of the global pandemic.”

Another iconic private sector firm, Guaranty Trust Bank (GTBank), Nigeria’s leading lender, has set up a 100-

bed Intensive Care Centre in Lagos for Nigerians that may be infected by the coronavirus.

Segun Agbaje, Chief executive Officer, GTBank in a statement said that the center will be fully equipped with all the necessary gadgets, including respirators and personnel to treat and care for those that may be affected.

The Nigerian National Petroleum Corporation (NNPC) and oil companies in the country have also stepped up to be counted in the fight against COVID-19 with a support of N11bilion ($30 million) which would be used to provide medical consumables, logistics and in-patient support system and medical infrastructure.

In a joint statement by the NNPC, Oil Producers Trade Section (OPTS) and Independent Petroleum Producers Group (IPPG), they said the effort was in recognition of the impact of the Coronavirus pandemic on the Nigerian population and economy.

According to the group, the support was necessary to address the demand for medical services, “We are immediately providing medical consumables covering testing kits, medical protective suits and ambulances to the highly impacted areas across the Federation. This will be followed in the next few days with the deployment of ventilators, beds and temporary intensive care facilities across the geopolitical zones in the federation,” the statement said.

The OPTS is a sub group within the Lagos Chamber of Commerce and Industry, an umbrella group of companies that have come together to promote their common interests.

The group membership includes both local and foreign-owned companies registered in Nigeria who hold an oil prospecting license or an oil mining license.

IPPG is an association of indigenous exploration and production

‘

The poor state of health care facilities in Nigeria mean that these donations are vital in the fight to stop the spread of the disease

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

Beware the temporary political consensus

W

e are in something of an economic crisis with three of the largest states partially locked down and the crude oil price collapse wreaking havoc to foreign exchange inflows and government revenues.

As with most other crises there is suddenly a change in the political dynamic and the consensus to make tough decisions has suddenly appeared.

Take the fuel subsidy for instance. It has been a hot topic at least since the 1980s. Every few years we have the same set of debates asking if we should remove fuel subsidies or not. Or if we should increase fuel prices and by how much. Organised labour lines up on one side and some policy makers line up on the other. If you look at the periods when we actually removed subsidies, which by the way we have done more than half a dozen times in the past, it almost always occurs when there is some crisis. Either a revenue crisis, or an oil price crisis, or a corruption crisis. Once the crisis comes, all of a sudden, the decision makers can agree that fuel subsidies need to go. Once the crisis goes away though, the bad behaviour returns.

In the case of fuel subsidies, the bad behaviour is refusing to allow prices go up

when they should go up. If you are looking for a period in history when the government introduced a fuel subsidy you will not find it.

Instead what typically happens is that prices should go up based on the changing price of crude oil or the exchange rate, but the politicians say: “No we cannot allow prices go up right now. Keep prices fixed for now”. And so, a subsidy returns. The argument over whether or not to remove subsidies is not the problem, but a symptom of the problem.

The real problem is the penchant for price fixing. Once the crisis is over the tendency to return to the price fixing ways becomes politically convenient again.

I know some will say this time is different. Indeed, the NNPC chairman has been in the news recently talking about how there is no more subsidy, and how they will use a new “price modulation” mechanism to ensure that they do not have any under-recovery. But the NNPC is not really the culprit in the price fixing behaviour. The PPPRA and the politicians are the real culprits. And they are curiously silent. The NNPC chairman may make his opinions on the matter heard but let us not forget that the person who actually first proposed this price-modulation mechanism was removed rather unceremowww.businessday.ng

ECONOMIST

niously. Institutionally, there is no reason to believe the politicians will not revert to their price fixing status quo once we get through this crisis and prices need to go up.

The fuel subsidy is not the only issue on the table. The question of the exchange rate typically follows the same pattern. Every few years we face the “should we or should we not devalue” question. Again, that is just a symptom of the disease of trying to fix the exchange rate against the dollar. Again, due to the crisis, we have suddenly built a consensus to make some changes. The old official rate of 306 has been scrapped, some windows have been merged, and some other windows have been allowed to move a bit further. Still, are there any institutional changes to guarantee that when this crisis is over, we do not revert to the same old bad behaviour? In fact, the case can be made that the institutional environment has gotten worse with the CBN now mandating that the NNPC and international oil companies sell their foreign exchange to it. Essentially increasing its power to try to arbitrarily decide what the exchange rate should be. And increasing the likelihood that it will try to use that power again in the future.

If the current set of policy makers re-

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companies with a current membership of 25 companies. Companies under IPPG include Oando, Seplat, Pillar Oil, Yinka Folawiyo, Shoreline Natural Resources, Waltersmith Petroleum and Niger Delta Petroleum Resources among others.

Femi Otedola, one of Nigerian renowned businessman, philanthropist, and former chairman of Forte Oil Plc has also pledged to contribute N1bn towards the eradication of COVID-19 in Nigeria, while founder of BUA Group, Abdul-Samad Rabiu, has announced a donation of N1 billion in cash through the BUA Foundation, plus an additional donation of equipment and medical supplies including testing kits and medical protective gear to 9 states in Nigeria.

Union Bank has also partnered with 54gene, a U.S.-based genetic research company, using a $500,000 funding facility to increase Covid-19 testing capacity in Nigeria to 1,000 daily. 54gene launched the testing support fund with $150,000 to secure instruments and protective equipment needed to keep health-care workers safe. The company aims to increase rate of testing in Nigeria to 5,000 tests daily working with other partners.

Many other companies and individuals have contributed including Nigerian-Lebanese businessmen the Chagoury brothers, owners of Eko Hotel and Eko Atlantic City, who donated N1 billion to Lagos State last week.

The poor state of health care facilities in Nigeria mean that these donations are vital in the fight to stop the spread of the disease. It is truly a great moment in time for Nigeria’s private sector and to be commended by all.

NONSO OBIKILI ally want to get this disease of price fixing, and the associated symptoms, dealt with for good then they must think about institutional protections for when there is no crisis, and when the current crisis-induced political consensus goes away. If the price of crude oil goes up and the oil marketers need to raise prices, what protects them from a PPPRA or a presidency who may want to prevent that for political reasons? If the fundamentals of the economy change and the exchange rate should be weaker, what protects Nigerians and exporters from a CBN who, for political reasons, may want to keep the exchange rate fixed via “administrative measures”? Political consensus for anything is a constantly revolving door and as the popular saying goes, “Never waste a crisis”.

Dr. Obikili is the chief economist at BusinessDay

@Businessdayng

12

BUSINESS DAY

Monday 13 April 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Fuel subsidy: A prodigal nation seems ready to shake off a bad habit

editor Patrick Atuanya

Cheap petrol was consumptive. Coronavirus forces reality check

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

Bashir Ibrahim Hassan

F

uel subsidy is one of the biggest fiscal burdens on the nation. Between 2015 and 2018, the federal government sank N7.9 trillion importing petrol to augment supply from the country’s rickety refineries according to data from the National Bureau of Statistics (NBS). This was more than Nigeria’s entire 2017 budget of N7.2 trillion.

In series of recent media interviews, Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation (NNPC), said Nigeria was dumping the reckless fuel subsidy programme, but without corroboration from Aso Rock, and oil prices in a flux, the government’s seriousness remains untested.

Kyari is saying the right things so far. According to him, the NNPC would source foreign exchange like any other company through commercial banks.

It would sell petroleum products based on market realities indicating that the international price of

crude oil will determine how much their derivatives are sold. A bridging cost would be handled through a price mechanism that allows for recovery of transport cost to remote locations in Nigeria.

Yet, the NNPC does not make government policy. While the minister of state’s presentation to the presidency helped to achieve the current downward review of the pump price of fuel, there is no telling that in an election year, the government will not sacrifice sound fiscal policy for political expediency. It is the reason electricity tariffs are subsidised because the previous government on the eve of an election, cancelled a planned tariff review and destroyed the electricity market. The government is picking the tab paying over N2 trillion to cover tariff and market shortfalls.

The Goodluck Jonathan administration attempted to remove subsidies in 2012 but met determined opposition from civil society and large swathes of the Nigerian population. While the policy may have been right, the perception of , pervasive corruption and the profligate spending pattern of that

government starved the plan of mass support.

Prior to the 2015 elections, Muhammadu Buhari called the subsidy a scam but when he got into power, he quietly paid the subsidies without budget allocation for at least two years. He balked at paying marketers the N700 billion they claimed for previous supply in 2017 and they abandoned fuel importation. It became the sole task of the NNPC. Now fuel subsidy has messed up NNPC’s books, ballooning costs and creating doubts over remittances to the government.

When the economy slipped into recession in Q2 2016, Nigeria suffered an embarrassing fuel shortage that year even though it had reviewed prices in 2015 when oil prices plateaued, and the naira crashed so badly it exchanged for over N400 to $1. This year, the government plans to spend N450 billion on subsidies though Kyari now says the money will be used more productively.

Petrol consumption rose from an average of 35 million litres per day in 2015 to around 55 million daily, though Nigerians under Bu-

hari have actually become poorer and the country less industrialised, consumption should have fallen.

In reality, Nigeria is subsidising West African consumption and creating leakages that corrupt officials exploit.

Nigeria is in a fix because it continues to allow a good crisis go to waste. Oil prices fell below $30 a barrel in 2016 and despite counsel from many analysts to get out of fuel subsidy, Buhari ignored it causing a huge drain on the economy. The same opportunity presents itself and unlike previous times, Nigeria has been backed into a really tight corner.

Oil prices have fallen to 20-year lows on account of coronavirus.Nigeria is raiding its rainy-day fund to pay salaries. Reforms are easy to prescribe when the economy is in crises. Now the government has drafted a more realistic budget, cutting out wasteful expenditure items and becoming more frugal in spending. But when oil prices recover, will the old habit of irresponsible and decadent governance Nigerians have known return?

Let’s hope this time, they are wiser.

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

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

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Monday 13 April 2020

BUSINESS DAY

COMPANIES & MARKETS

13

COMPANY NEWS ANALYSIS INSIGHT

INDUSTRIAL

Lafarge in four day-gain on bargain hunting amid impressive 2019 result OLUFIKAYO OWOEYE

S

hares of cementmaker Lafarge was the toast of investors last week following the release of its first post-disposal audited financial report The shares gained 41.3percent during the week after opening at N8.95 on Monday to close at N12.65 on Thursday, the last trading day of the week following the declaration of Friday and Monday as public holiday.

Specifically, it gained 9.5 percent, 9.69percent, 9.77percent and 7.20percent on Monday to Thursday respectively.

The rush for Lafarge shares can be linked to its return to the path of profitability.

Highlights of the result show that management decision to focus on Nigerian market may have finally paid off. Revenue stood at N212.9billion f ro m N 2 1 7 . 8 b i l l i o n i n 2018. Cost-of-Sales surged slightly to N157.04billion from N150.7billion in 2018.

Selling and marketing expenses stood at N5.09billion from N3.89billion in 2018,

Administrative expenses declined to N17.55billion from N24.87billion in 2018.

Profit after tax ballooned to N115.10billion from a loss of N8.8billion in 2018. It also propsed a final dividend of N1 per ordinary share to its shareholders.

WAPCO’s impressive 2019

full-year standalone earnings is not surprising following the divestment of its Lafarge South Africa Holdco. (LSAH) that has been the major drag to the group’s business over the last few years. Prior to the disengagement, LSAH had reported a loss of NGN9.4 billion over 7M-19

According to Mustapha Wahab, analyst at Cordros Capital, at that run-rate and assuming no divestment, the group would have reported another loss after tax of N570.0 million, Also, the repayment of all WAPCO’s FX related borrowings means that the com-

TECHNOLOGY

COVID-19: Analysts predict boost in MTN’s revenue amid lockdown, remote working OLUFIKAYO OWOEYE

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nalysts have predicted a boost in revenue of major telecommunication companies in the country as businesses and companies shift to workfrom-home activity in a bid to curtail the spread of the coronavirus pandemic.

Gbolahan Ologunro, equity analysts at CSL Stockbrokers in a report said the outbreak of COVID-19 which has disrupted activities, leading to shutdown of offices, factories, schools and social gatherings will result in increased data and voice consumption in the short term as people increasingly communicate remotely and seek entertainment during the lockdown.

“Thus, we expect

MTN’s earnings to receive a significant boost. Post COVID-19, we think favorable demographics, rising smartphone penetration along with increasing internet penetration (38.47percent as at Jan-2020 compared with 32.34percent in Jan 2019), and continued investment by the company in deepening 4G coverage are positive catalyst for earnings growth,” he said.

In its full-year 2019 result, MTNN printed a double-digit growth in revenue up 13percent year-on-year to N1.2trillionn in FY 2019, on the back of growth in voice up 8percent yearon-year and data revenue surged 42percent yearon-year.

Management attributed the growth in voice revenue to 10.5pecent year-on-year increase in subscriber base

to 64.3 million in FY 2019) and 7.6percent increase in voice traffic. On the other hand, the growth in Data Revenue was buoyed by 34.9percent year-on-year growth in data subscribers to 25.2 million in FY 2019, greater data traffic (up 85.8% y/y) and improved 4G coverage following the activation of 800MHz spectrum in Q2 2019.

Fintech Revenue grew 23.3percent year-on-year, supported by the increased adoption of the company’s flagship airtime lending service (MTN Xtratime).

No t a b l y , t h e c o m p a n y launched a super-agent ser vice in August 2019 which is largely concentrated on airtime and data sales using agents (known as MOMO agents).

With a network of 108,000 agents nationwide ser ving about one mil-

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lion customers in just four months of operation, we expect continued growth in Fintech Revenue, driven by continued uptake of the service. Additionally, we think the expansion of service offerings (based on management’s guidance) in this segment to include cash deposit and withdrawal services and facilitating e-commerce bodes well for future growth.

“Against this backdrop, we estimate data revenue will grow 50percent yearon-yea (higher than 42percent in 2019) to N329.1bn in 2020e while the contribution of data Revenue to overall Revenue will improve to 25percent from 19percent in 2019. All in, we project FY 2020 Revenue of N1.32trn, implying a growth of 13percent when compared with FY 2019,” he said.

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pany’s earnings are now less volatile despite the recent oil price collapse-induced currency pressure.

The proceeds from LSAH disengagement have been used to offset all its Foreign Currency debt of $293 million, including accrued interest of $23 million. From

N266.20 billion in 2018, debt (ex-overdraft) has declined to N64.19 billion, paving the way for a 56.1percent year-on-year decline in finance charges over 2019FY. Total debt may likely reduce further to N48.2 billion, due to the maturity of one of its bonds in 2019 (N26 billion) Further analysis of the result shows that Lafarge’s energy efficiency remains a significant tailwind as gross margin deteriorated significantly over 2019FY (-454bps).

The increase in Cost Of Sales was largely on account of a 17.6percent year-onyear expansion in production costs. Management attributed the growth in production costs to the huge deposit of some expensive raw material which it had to utilize first before the cheaper ones.

The company said it has completed its Captive Power Plant (CPP) in Ashaka, which could deliver energy cost savings of c.20%. Beyond that, the company also reiterated its commitment towards raising Alternative Fuel usage to c.50% (from c.30% currently) of its energy need by end of 2020.

Media Panache launches first-ever public relations workbook in Nigeria

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eading public relations agency Me d i a Pa n a c h e has announced the launch of its resource guide titled “PR Workbo ok for Enthusiasts and Students” during the celebration of the company’s 4th year anniversar y on Fr iday, March 27 2020.

The workbook is a s o l i d a n d c o m p re h e n sive resource with practical definitions, unique tips from PR professionals and on-the-job experiences. Each module has been created to bridge the gap between the theor y and practice of public relations in Nigeria.

Speaking on the reason behind creating the workbook, Timilehin B e l l o, C E O, Me d i a Pa n a c h e, s a i d . “ We c re ated this workbook for e ve r yo n e i nt e re s t e d i n working in PR, communications, digital @Businessdayng

ma rke t i ng, i n f l u e n c e r s marketing and Media.

We g e t t o n s o f e m a i l s requesting for internships and we want these PR enthusiasts to be equipped with information regarding PR before they join a firm. In the book, after brief explanations on a particular topic, what follows is an exercise. We want everyone to be involved.”

The book also proffers ti p s a n d re co m m e n dations from top industr y experts including Ayeni A d e k u n l e , C E O B l a c kHouse Media, Chude J i d e o n w o c o - f o u n d e r, Red Media Africa, Israel Jaiye Opayemi, MD and C E O, C h a i n R e a c t i o n s Nigeria, John Ehiguese, MD Mediacraft Associates and others.

Some of the topics covered in the book inc l u d e i n f l u e n c e r m a rketing, crisis management, stor ytelling, and public relations.

14

Monday 13 April 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

MARKETS

IMF identifies four priorities as Coronavirus batters global economy OLUFIKAYO OWOEYE

T

he surging number of Coronavirus cases across the globe would push most economies into recession the International Monetary Fund has predicted.

Kristalina Georgieva, IMF Managing Director, said global growth will turn sharply negative in 2020, the worst economic fallout since the Great Depression.

“We projected that over 170 countries will experience negative per capita income growth this year and this bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts,” she said.

To cushion the effect on countries, the IMF boss identified four priority areas in building bridge to recovery.

This include the continuation of essential containment measures and support for health systems, through prioritization of health spending for testing and medical equipment; payment of doctors and nurses;

and ensure that hospitals and makeshift clinics can function.

“For many countries—particularly in the emerging and developing world—this means carefully reallocating limited public resources. It also means increasing the flow of resources to these countries,” she said.

She further advised that governments must shield affected people and firms with large, timely, targeted fiscal and financial sector measures.

This includes tax deferrals, wage subsidies and cash transfers to the most vulnerable; extending unemployment insurance and social assistance; and temporarily adjusting credit guarantees and loan terms.

“We need to prevent liquidity pressures from turning into solvency problems and avoid a scarring of the economy that would make the recovery so much more difficult,” she said.

Third on the list of priorities is the reduction of stress to the financial system and avoid contagion. Noting that banks have built up more capital and liquidity over the past decade, and their resilience will be tested in this rapidly changing

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environment.

“Enhancing liquidity for a broader range of emerging economies would provide further relief. Importantly, it would also lift confidence,” she said.

And lastly, governments must also plan for the recovery phase noting that as measures to stabilize the economy take hold and business starts to normalize, there is the need to move swiftly to boost demand.

“Those with greater resources and policy space will need to do more; others, with limited resources will need more support,” she added.

On the part of the IMF to cushion the effect of dwindling economic fortunes among member countries, she announced $1 trillion in lending capacity to its members.

She acknowledged the unprecedented number of calls for emergency financing— from over 90 countries so far, noting that its Executive Board has agreed to double access to our emergency facilities, which will allow it to meet the expected demand of about $100 billion in financing.

L-R: Adebimpe Kazeem; Olaide Ahmed; Sharon Shanumi all of GDM Group Enumerators, (seated), and the beneficiaries, during the enumeration of beneficiaries of TraderMoni organised by GDM Group at Obalende LCDA, Lagos.

Augustine Agundu (r), commander, operation safe haven, Plateau State; Irimiya Werr (2nd r), representative of Plateau State governor, and Lawrence Danat (l), Chairman, Mangu Local Government Area, during the inauguration of Local Government Primary Schools constructed

by Operation Safe Haven Plateau in Langai village, Magun LGA Plateau State.

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Monday 13 April 2020

BUSINESS DAY

15

cityfile Enugu: Police arrest 6 for armed robbery, kidnapping, recover arms

T

Security operatives enforcing the Stay-at-Home directive of the Lagos State Government on Idimu-Igando road, Lagos. Pic by Olawale Amoo

Lagos to rejig budget to boost jobs, agriculture amid Covid-19 Joshua Bassey & Kelechi Ewuzie

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agos State government says it is prioritising agriculture among the other key sectors that have the capacity to generate employment as part of measures to cushion the effect of the Coronavirus pandemic on the state economy.

Sam Egube, commissioner for budget and planning, stated this during an inter-ministerial Covid-19 update, noting that this will stimulate the economy.

Egube said the government was also engaging with various stakeholders on

the best line of action as the state sets to re-direct its 2020 budget size of N1.1 trillion.

According to Egube, the state government has shown significant courage in the implementation of its economic strategies amid the Coronavirus pandemic which has put a strain on economic activities in the state.

Speaking also, Akin Abayomi, the commissioner for health, said the state in the coming week would be receiving two additional Covid-19 isolation facilities in Gbagada and Landmark, Victoria Island, to ramp up the number of isolation bed spaces received so far to about 400.

Abayomi further dis-

closed that Lagos now has the capacity to test independently through its three new testing facilities.

On his part, Gbolahan Lawal, commissioner for agriculture said the palliative initiative deployed in the state has ensured that the poor and vulnerable are catered for. He assured that the 200,000 households target set for the palliative measure will be met in the coming days.

Commissioner for environment and water resources, Tunji Bello announced that the ministry has sanitised major highways, streets and markets as a measure to contain the spread of the disease.

He assured that plans are on to clear all secondary drainages in the state as the rainy season settles in.

Folashade Adefisayo, commissioner for education, said that the state government in partnership with First Bank Plc would be rolling out one million educational devices to support students learning at home pending the resumption of schools.

Adefisayo noted that there were also radio education programmes that the government has put in place to ensure that students in the state continue to learn during the holiday occasioned by the pandemic.

Foundation donates N10m palliative materials to vulnerable in Edo Idris Umar Momoh, Benin

C

lifford Inegbedion Foundation, a non-governmental organisation has donated palliative materials worth N10 million to over 1,334 residents of Edo Central senatorial district.

The donation is to mitigate the impact of the stateat-home order and closure of markets in Edo State to contain the spread of the Coronavirus pandemic.

Chairman of Orbit Group and founder of the foundation, Clifford Inegbedion, said the donation was part

of his contributions to ease the economic hardship on the people.

The materials donated include 2,000 hand sanitisers, 2,000 face masks, 800 hand gloves, recharge cards to 400 persons, data to 200 persons and foodstuffs to 350 individuals.

“I derive joy from seeing people happy; hence I am doing what I like doing to make life more meaningful to the people,” said Inegbedion.

He explained that the foundation has a database of the vulnerable and the poor within the senatorial district over the years which make www.businessday.ng

it possible to interact with them directly.

He stated that the gesture was to motivate others to invest in the economic wellbeing of the vulnerable.

“Please if God has blessed you in anyway, reach out to the people around you and help even if it is not much and it will go a long way in providing even if it is just breakfast for a family.

“Someone else will provide lunch or dinner for them. People are really hungry and we have to help them to avoid crime and also stomach ulcer now that businesses and work

are closed.

“You can even buy foodstuffs or cook some food and share it out as we have to be our brother’s keeper this time around. Blessings will come from God and not from man as tomorrow is pregnant” he said.

Praying for God’s mercy to halt the plague ravaging the world, Inegbedion urged the people to observe a high level personal hygiene such as washing hands with soap under running water, using alcohol-based sanitisers as well as maintaining social distancing to prevent the spread of the virus.

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he police have arrested six suspects in Enugu State for offences ranging from armed robbery and kidnapping within 10 days.

The command’s public relations officer, Daniel Ndukwe, in a statement at the weekend, said the suspects were arrested between March 28 and April 7.

According to Ndukwe, the command recovered two locally-made pistols with five live cartridges, one tricycle and four mobile phones from the suspects.

He noted that on April 7 at 10 a.m., police operatives attached to Abakpa Police Division arrested one of the suspects at Ogwuege, AbakpaNike; after him and other members of his gang, now at large robbed a victim of a Tecno phone at gunpoint.

“One locally-made pistol with four live cartridges, two phones and a black bag were recovered from the suspect.

“Further investigation to arrest and bring to book other fleeing members of the gang, alleged to have been terrorising the Abakpa-Nike area, is ongoing at the Command’s Special Anti-Robbery Squad,” said Ndukwe.

He added that on the same

April 7 at about 0020hrs, police operatives attached to Uwani Police Division, while on patrol along Onwudiwe by Ohafia Street, Uwani, Enugu, arrested three others.

“Items recovered included a suspected stolen Bajaj tricycle, yellow in colour with Registration number: ENU 600 VL; two knives and two iPhone phones they robbed from different victims at Niger Foundation Hospital, Independent Layout Enugu.

“Preliminary investigation shows that the suspects, who have been terrorising Uwani and other parts of Enugu metropolis, were fleeing from the Ogui axis with the alleged stolen tricycle when they were apprehended.

“The case is undergoing further investigation at the Command’s Special AntiRobbery Squad,’’ the police spokesman said.

Ndukwe said that on March 28 at about 1:14 a.m., police operatives attached to Oji-River Police Division, while on routine patrol along Enugu/Onitsha highway within Umumba/Ezeagu, arrested another suspect who had fallen off a moving motorcycle in an attempt to escape being apprehended by police.

FCT task force nabs security agents for flouting lockdown order

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hairman of the FCT Ministerial Task Force Team on COVID-19, Ikharo Attah, said some military and other uniformed men, who defiled the lockdown order in the FCT were arrested at the weekend.

Attah said the team also arrested 23 persons including children, who attacked the police and vandalised their vehicle in Karmo.

He said that the police were trying to disperse those jogging and exercising in a cluster in the area when the people, who were more than 100, began to attack them with stones and other weapons.

The chairman said the team had also at different places arrested three men who cloned the exemption pass normally issued by the commissioner of police.

The chairman expressed disappointment that the military personnel, who were expected to assist in enforcing the order, were the major violators.

“The team came out very early today to enforce the lockdown order. The experience has not been too good because of the military and other uniform men who violate the lockdown order, most of them are even using their cars for commercial purposes.

“We have arrested them and impounded their vehi-

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cles, along with some civilians who also defied the sit-athome order,” he said.

He further noted that the team had been to Kubwa, Nyanya, Airport road, Karmo and some other places in the FCT, to ensure that residents complied with the order.

“Sadly, we picked up some guys who cloned the exemption pass normally issued by the Commissioner of Police, we have arrested them and handed them over to the FCT Police Command,” he said.

Attah said more cars have been impounded today and many more will still be impounded.

“However, I cannot tell you the number now because the exercise is still ongoing, but at the end of it today, we will announce the number of impounded vehicles and the arrests made.”

He commended President Muhammadu Buhari for the proactive measures taken in the fight against coronavirus in the country.

“The president has given us an order to fight Covid-19, it is very encouraging that people are complying, but the people in the suburb still need to do more. My advice is that people should join government forces to fight Covid-19 so that we can defeat it together,” he said. NAN

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Monday 13 April 2020

BUSINESS DAY

In Association With

A corporate survival guide

The coronavirus crisis will change the world of commerce Firms that make it through will face a new business climate Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub

M

OST BOSSES and w o r k e r s h av e b e e n t h ro u g h economic crises before. They know that each time the agony is different—and that each time entrepreneurs and firms adapt and bounce back. Even so, the shock ripping through the business world is daunting. With countries accounting for over 50% of world GDP in lockdown, the collapse in commercial activity is far more severe than in previous recessions.

The exit path from lockdowns will be precarious, with uneasy consumers, a stop-start rhythm that inhibits efficiency, and tricky new health protocols. And in the long run the firms that survive will have to master a new environment as the crisis and the response to it accelerate three trends: an energising adoption of new technologies, an inevitable retreat from freewheeling global supply chains and a worrying rise in well-connected oligopolies.

Many firms are putting a brave face on it. Pumped with adrenalin, bosses are broadcasting rousing messages to their staff. Normally ruthless corporate giants are signing up for public service. LVMH, the Parisian purveyor of Dior perfume, is distilling hand-sanitiser, General Motors wants to make ventilators as well as pickups, and Alibaba’s founder is distributing masks worldwide. Cut-throat rivals in the retail trade are cooperating to ensure supermarkets are stocked. Few listed firms have made public their calculations of the financial damage from the freeze in business. As a result, Wall Street analysts expect only a slight dip in profits in 2020.

Don’t be fooled by all this. In

the last recession two-thirds of big American firms suffered a fall in sales. In the worst quarter the median drop was 15% yearon-year. In this downturn falls of over 50% will be common, as high streets become ghost towns and factories are shut. Numerous indicators suggest extreme stress.

Global oil demand has dropped by up to a third (see article); the volume of cars and parts shipped on America’s railways has dropped by 70%. Many firms have only enough inventories and cash to survive for three to six months. As a result they have started to fire or idle workers. In the fortnight to March 28th, 10m Americans filed for unemployment benefits. In Europe perhaps 1m firms have rushed to claim state subsidies for the wages of inactive staff. Dividends and investment are being slashed.

The pain will deepen as defaults cascade through domestic payment chains. H&M, a retailer, is asking for rent holidays, hurting commercial-property firms. Some supply chains linking many countries are stalling because of factory closures and border controls.

Italy’s lockdown has disrupted the global flow of everything from cheese to jet-turbine components.

China’s factories are cranking back into action. Apple’s suppliers bravely insist that new 5G phones will appear later this year, but they are part of an intricate system that is only as strong as its weakest link.

Hong Kong’s government says its firms are reeling as multinationals cancel orders and ignore bills. The financial strain will reveal some astonishing frauds. Luckin Coffee,

a huge Chinese chain, has just admitted brewing its books.

In the past two recessions, about a tenth of firms with credit ratings defaulted worldwide.

Which survive now depends on their industry, their balancesheets and how easily they can tap government loans, guarantees and aid, which amount to $8trn in big Western economies alone.

If your firm sells confectionery or detergent, the outlook is good.

Many tech companies are seeing surging demand. Small firms will suffer most: 54% in America are closed temporarily or expect to be in the next ten days. They lack access to capital markets. And without friends in high places, they will struggle to get government help. Only 1.5% of America’s $350bn aid package for small firms has been disbursed so far and Britain’s effort has been slow, too.

Banks are struggling to deal with contradictory rules and a flood of loan applications (see article).

Resentment could rage for years.

Once exits from lockdowns start and antibody testing ramps up, a new, intermediate phase will begin (see article). Firms will still be walking, not running (China is still only functioning at 80-90% of capacity). Ingenuity, not just financial muscle, will become a source of advantage, allowing cleverer firms to operate closer to full speed. That means reconfiguring factory lines for physical distancing, remote monitoring and deep cleans. Consumerfacing firms will need to reassure customers: imagine conferences handing out N95 masks with

the programme, and restaurants advertising their testing regimes.

Over a quarter of the world’s top 2,000 firms have more cash than debt. Some will buy rivals in order to expand their market share or secure their supply and distribution.

The job of boards is not just to keep afloat, but also to assess long-run prospects. The crisis is set to amplify three trends. First, a quicker adoption of new technologies. The planet is having a crash course in e-commerce, digital payments and remote working. More medical innovations beckon, including gene-editing technologies. Second, global supply chains will be recast, speeding the shift since the trade war began. Apple has just ten days’ worth of inventory, and its main supplier in Asia, Foxconn, 41 days. Firms will seek bigger safety buffers and a critical mass of production close to home using highly automated factories.

Cross-border business investment could drop by 30-40% this year.

Global firms will become less profitable but more resilient.

Don’t go from crisis to stasis The last long-term shift is less certain and more unwelcome: a further rise in corporate concentration and cronyism, as government cash floods the private sector and big firms grow even more dominant. Already, two-thirds of American industries have become more concentrated since the 1990s, sapping the economy’s vitality. Now some powerful bosses are heralding a new era of cooperation between politicians and big businesses—especially those on the ever-expanding list of firms that are considered “strategic”.

Voters, consumers and investors should fight this idea since it will mean more graft, less competition and slower economic growth. Like all crises the covid-19 calamity will pass and in time a fresh wave of business energy will be unleashed.

Far better if this is not muffled by permanently supersized government and a new oligarchy of wellconnected firms.

A Balkan Voting in betrayal a pandemic

Wisconsin, or how not to run an election while covid-19 is spreading The mess in a battleground state holds lessons for November’s presidential election

D

EMOCRACIES AROUND the world are wondering how to hold elections during a pandemic. The state of Wisconsin, which may well decide the outcome of America’s presidential election in November, has just provided a lesson in how not to do it.

On April 7th, despite a shelterin-place order from the governor and warnings from the White House about the severity of America’s epidemic, Wisconsin held votes for several offices, including the state Supreme Court. The day before the vote was due, Wisconsin’s Democratic governor, Tony Evers, issued an executive order postponing voting in person until June. That order was disputed by the state’s Republican

Party and its challenge went all the way to the state Supreme Court. The judges sided with the Republicans, so an election that had apparently been cancelled a few hours earlier then went ahead anyway.

In the past decade Wisconsin’s politics have been growing steadily more toxic. As a purple state that is bitterly fought over in national elections, Wisconsin shows what happens when partisanship, left unchecked, leaches into the soil from which political institutions grow.

Democratic candidates do well in Wisconsin’s cities, principally Milwaukee and Madison. The cities are where cases of covid-19 have been diagnosed and where people are sheltering at home, afraid to go out. On election day Milwaukee, a city of 600,000 people, was able to staff just five polling stations. In rural Wisconsin, which leans Republican, the epidemic seems a more distant problem and going to vote less of a Continues on page 17

Monday 13 April 2020

BUSINESS DAY

17

In Association With

The financial core

Emerging markets are in turmoil. The IMF must step in to help. Here’s how

The fund must lend unprecedented amounts. But many poor countries need debt relief Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub

E

MERGING MARKETS are battling a financial crisis as well as a public-health emergency. Since late January foreign investors, desperate to shed risk, have been withdrawing their cash from poor countries.

At the same time falling global trade, depressed commodities prices and vanishing tourists have put export revenues, and hence the supply of foreign currency, into free fall. This has left many countries struggling to pay for imports and to service their dollar-denominated debts, let alone fund emergency health or economic programmes. Over 90 countries have approached the IMF, the lender of last resort for governments, to ask for help.

The fund will need to respond on an unprecedented scale. The $96bn investors have already withdrawn from emerging-market stocks and bonds dwarfs past

capital outflows, according to the Institute of International Finance, an industry group. So far this year the Brazilian real, the Mexican peso and the South African rand have lost nearly a quarter of their value against the dollar. Though few countries have sounded the alarm in public, the fund estimates that emerging markets will need at least $2.5trn over the course of the pandemic.

Some of that help is coming from America’s Federal Reserve. It is running “swap lines” with a select few central banks, which have so far borrowed about $400bn while posting their own currencies as collateral. The Fed is also allowing most central banks to temporarily exchange any Treasuries that they hold for dollars.

But among emerging-market

central banks only Brazil, Mexico, Singapore and South Korea are included in the swap lines, and few poor countries have a ready supply of Treasuries. So most of the burden will fall on the IMF which, unlike the Fed, cannot create dollars at will. The fund says it has about $1trn on tap, about a fifth of which is already committed. Even this may not be enough for the job if large economies like Nigeria, South Africa or Turkey join the legions of small countries seeking help. Another problem is that a big chunk of the fund’s resources is borrowing from its members that must be reauthorised this year, creating uncertainty.

These funds must be secured.

America, to its credit, has already approved its share, but the biggest, richest members need to provide still more. The IMF should then follow a three-pronged approach to fighting the crisis.

First, it ought to create new special drawing rights (SDRs), a currency of sorts which is convertible into dollars but whose quantity the fund controls (see article). This is a bit like printing money to finance a cheap perpetual credit line for every IMF member. In 2009, after the global financial crisis, the fund created $250bn in new SDRs; to-

day it could create more than twice that amount before having to ask America’s Congress for permission to continue. Creating SDRs would provide indiscriminate, unconditional aid without draining the IMF’S reserves. However, it is controversial. The fund’s core mission is making conditional loans that are repaid, not printing money. It could take time to build the necessary support. In the meantime, rich countries should lend their SDRs to countries that are short of reserves. This may be more politically palatable than lending dollars.

Second, the IMF must alleviate the dollar liquidity shortage in solvent countries that have good institutions but which cannot borrow from the Fed. In 2017 the fund’s board rejected a proposal to provide its own swap-like funding to countries with strong institutions. It should revisit that decision. It should also explore ways of getting existing dollar reserves, which are ample at the global level, to where they are needed. For example, the fund could act as a clearing house for currency swaps, guaranteeing participating central banks against losses by graduating any debts that turn sour into a conventional IMF programme.

Double burden

Africa’s debt crisis hampers its fight against covid-19 Governments must choose between paying creditors or saving lives

E

CONOMIC CRISIS and covid-19 are forcing hard choices on most of the world. But the dilemma facing indebted poor countries is particularly acute.

They can either pay foreign creditors or allow more of their citizens to die, say experts.

This dilemma is not new. In 2016 Angola spent nearly six times as much servicing its external debt as it did on public health care.

Fifteen countries in sub-Saharan Africa spent more money paying creditors abroad than they did on doctors and clinics at home. But now, faced with a slump in revenues and skyrocketing borrowing costs as investors seek relative safety, many African governments are struggling to find the money to fight the pandemic and shore up their economies. Whereas rich countries are borrowing to spend about 8% of GDP on stimulus measures, African ones are spending just 0.8% of GDP. This is because the virus has thrown petrol onto a slow-burning debt crisis. The countries most at risk of default—and, by definition, the least able to borrow affordably—are those with limited domestic savings and large external debts, such as Angola, Ethiopia, Ghana and Zambia. But they are not the only ones in trouble. Since 2010 average public debt in subSaharan Africa has risen faster than in any other developing re-

gion, from 40% to 59% of GDP in 2018. Most African countries have borrowed more than is prudent, said the IMF last year; 18 were classed as being in debt distress, or at high risk of it.

Many homeowners in Western countries are getting a mortgage holiday because of the pandemic.

Might governments in Africa get the equivalent? The previous big round of debt relief for the continent came via the Heavily Indebted Poor Countries Initiative, which reduced foreign public debt of recipient countries from about 100% of GDP in 2005 to 40% by 2012. At the time Western governments and multilateral organisations, such as the IMF and World Bank, were the biggest lenders to Africa. Now, though,

China is the continent’s biggest bilateral creditor. Having signed loans worth more than $146bn to African governments since 2000, it may not be as forgiving.

Africa’s debt burden does more than divert spending from health care and stimulus to loan payments. It also discourages rich countries from helping out. Europe and America, in particular, worry that any aid they provide to African countries would eventually end up in the pockets of Chinese lenders.

The World Bank and IMF have asked bilateral lenders to suspend debt payments from the world’s 76 poorest countries. That would be a start, but would cover only a quarter of sub-Saharan Africa’s total debt-service costs. Nevertheless,

the appeal seems to have fallen on deaf ears in China, where officials say they will deal with African debt on a case-by-case basis. Analysts think China is loth to give up the political leverage that comes with being owed so much money. But, like other creditors, it may have to choose between orderly debt relief or chaotic defaults.

Even if China and other government lenders agreed to a pause on payments, states in sub-Saharan Africa might still use emergency funds to pay private creditors.

The states owe bond investors $115bn. (Commodity traders and domestic investors are owed, too.)

Few commercial bonds are due for repayment before 2022, but interest must still be paid. If it is not, bondholders could demand full repayment. African finance ministers, hoping to protect their countries’ creditworthiness, want donors to help pay the interest while negotiations take place.

More than 100 international NGOs have called for a cancellation of all debt payments in 2020. But multilateral banks are reluctant to risk their own credit ratings and private bondholders are hard to corral. Lee Buchheit, a law professor at the University of Edinburgh, suggests changing American and British codes to stop lawsuits by angry bondholders against countries hit hard by covid-19.

Wisconsin, or how not to run an election Continued from page 16

risk. Because Milwaukee has a large African-American population, the urban-rural divide also has a racial element. Thus the virus has unerringly tugged at the state’s main political fault-line.

A state Supreme Court with a member elected under these conditions will lack legitimacy.

Yet the court’s members will be expected to referee bitter political disputes over the next couple of years, possibly including what kind of identification will be acceptable at polling stations and, after the next census, on the legality of newly gerrymandered election districts.

This debacle holds lessons for other states. One is about turnout.

Wisconsin’s Republican Party has insisted on going ahead with in-person voting in the midst of the country’s worst public-health crisis in a century. The official line is that this is all about preserving the sanctity and integrity of elections, but it is also more than a little convenient for a party that seeks low turnout in cities and high turnout in rural Wisconsin.

That approach—gaining electoral advantage by discouraging voting—is consistent with the Republican Party’s hostility nationwide to measures that would make voting easier. In any democracy, a party that considers pursuing a lower turnout to be a legitimate electoral strategy does not deserve to win elections.

Another lesson is about partisanship. Wisconsin’s elections have become so bitter that the struggle has shifted from policy, a fit subject for party politics, to the manipulation of the rules, which is hackery. Mr Evers dithered until the eve of the election and then wanted to extend the deadline for voting by post, which would probably have helped his party. The state Supreme Court blocked this by four votes to two along partisan lines, siding with the state’s Republican Party. At the federal Supreme Court, asked to rule on a lower court’s order that postal ballots count even if they are postmarked after the vote, the five justices appointed by Republican presidents sided with the Republicans and the four appointed

by Democratic presidents sided with the Democrats.

18

Monday 13 April 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

How to strengthen cash flow in difficult times The Solid Wealth Messenger

Grace Agada

T

he only absolute death blow that can instantly kill your business is the prolonged absence of cash flow. Cashflow is the oxygen of business. But every so often an economic cycle comes around that threatens to snuff out cashflow.

When this cycle hits businesses it separates men from boys. It distinguishes between business wizardry and foolishness. It sifts the tough from the weak and the agile from the dull.

The COVID 19 pandemic is another one of such cycles. It will hit businesses hard. Rearrange economic opportunities and change the seat of wealth. There are only two ways for businesses to go at the end of this pandemic. The way of more wealth or the way Financial suffocation. Whichever way your business will go you are already deciding today.

As shakes spear rightly puts it sweet are the uses of adversity but only to those that are prepared. If you sit on the media buying all the liters of lies. Patronizing fear and lamenting over the burning stock market. Oxygen will leave your business.

But if you decide to be that business that shines a flashlight in darkness.

You will receive a big reward for your courage. One thing is sure in difficult times. Money never leaves Earth. It is still in circulation. It is in the hands of people, somewhere with discretionary spending power that is too scared to spend it.

They will spend it when a business hero shows up. And when they can justify these three things. First that it is a necessity or can be perceived as a necessity. A necessity is any product or service that can help people thrive or bounce out of hard times.

Second, is that it is a special thing of preference regardless of whether it is cheap or expensive. Price does not matter. What matters is that a person is willing and able to buy this product regardless of wallet size.

The third is that someone actually sells something to them. This is the one business owner can do something about the most. Selling during a difficult time is the most effective use of time. It is effective because most businesses during difficult times are in surrender mode. There are idle, latent, and slowing down operations. They are reducing their marketing budget and saving money because nobody is buying.

The irony, in contrast, is this.

Consumers during difficult times are looking for businesses that can help them make wise decisions.

They are looking for products and services that can offer them certainty and hope. Their attention quality is at its sharpest. And they are looking for who to believe because the desire to believe intensifies in dark times. Business owners must be mistaken to think that cutting down marketing, and slowing down operations is the way to go.

As Clement Stone puts it sales are contingent upon the attitude of the salesman and not the attitude of the customer. Except you are selling a non-beneficial product that cannot be adapted to function as a dependable pillar in troubled times. The way to go is to be out there renovating your products and services. Maximizing and deepening customers’ value. Leveraging the attentiveness of consumers this season. And Zooming out of the economic slump. Just maybe by doing so, you can cause some customers to switch from competitors to your business. Your competitors are all slowing down. This is your best chance to steal their consumers before the lights come on. When consumers are scared to buy the only way to make them buy is to show up as a hero and shine the flashlight of hope.

So, what then can businesses do to strengthen their cash flow this season?

There are three things businesses can do. And only these three things can boost sales and get a business out of a low sales position. The first is to sell to a new customer. The second is to sell in a new way to existing customers. And the third is to sell a New Product. These are the only three options to maximize cash flow in difficult times.

Selling to new customers means finding customers that are a perfect fit for difficult times. It is about di-

versifying your current customer base. And correcting the imbalance that exists within your current customer base. Diversifying the customer base may mean stepping up to a more resilient customer segment. And it can also mean stepping down to a larger pool of consumers that you can serve at a lower cost. To sell to new customers. Businesses must position their product and services as a necessity or the special thing customers need to thrive. Technology can be used to reach new consumers at a lower cost. And Strategic partnerships like joint ventures. C ollaborations and alliances can give businesses easy access to new consumers. The key question business owners must answer is this.

Who has the ability to buy during a difficult time? What position, justification or reason must I give them to inspire a purchase? Who has already assembled these customers? How can I access these customers through this person? How can I reach these customers in the comfort of their homes? And so on. Different customers are perfect for different businesses in different seasons. And through different strategies.

Next is to sell in a new way. Selling in a new way means selling the same thing to existing customers but changing the way you sell. It is about extracting more money from the same consumers by offering more value. To sell in new ways businesses need to align their product and services to the needs of a difficult time. Products and services must also be positioned differently. The fastest way to do this is to understand the conversations already happening in the consumer’s mind. In their kitchen, living room, bedroom and at night. And to enter these conversations with a suitable product or service. When businesses align their product, services, and message with the fears

‘

Heroes are forged in the battle Front, not in the center of Peace.

Breakthroughs come by working smarter in difficult times

and thoughts in consumer’s minds.

They give consumers a reason, rationale, and justification to patronize them. This is the time to offer more value and show how a business can help its consumers.

Next is to sell something new.

Selling something new is about expanding cashflow opportunities and markets. It means three things.

The first is to create a new product or service that is perfect for this season. The second is to break existing products and services down into small parts. That can be offered as standalone. And at a cost-effective price. The third is to reposition or renovate an existing product and present it as new.

Creating brand-new products in difficult times is easier than it seems. The time freed up from office distractions and endless meetings. Can be invested to create new products. But even if businesses cannot create new products, they can rearrange existing products and reposition them as new. Sometimes selling something new during difficult times can create a whole new business opportunity. That attract free publicity and puts a business on the center stage. Now is the time to reinvent and double up on value if a business have something great to offer.

This circle of adversity is all around the corner. Businesses are slowing down and consumers are held captive in homes. While your physical business office may be shut down. What you must never do is shut down your mental office.

This is the time to think hard and smart. Turn off the TV. Focus only on what you can control. Insist on virtual productivity and strengthen your cash flow. When COVID 19 is over there can only be two types of businesses. The Heroes and the Losers. Which one of them will you be?

Heroes are forged in the battle Front, not in the center of Peace.

Breakthroughs come by working smarter in difficult times.

For more information about how we can help your business send an email to info@createsolidwealth. com

Grace Agada, is the First indigenous Family Business Longevity and Legacy Expert. With unique expertise in helping Self Made Business Men Transition from Vanishing Mortals. To Men with Indestructible Name, Wealth and Legacy. Grace’s philosophy is simple. Successful Business Men do a lot of good in the world. This good should Expand. Receive great recognition and extend beyond their lifetime.

Her goal is to help Family business Men Eliminate factors that disrupt and murder Businesses. Create, Own and Dominate New Market Opportunities.

And reinvent their Businesses for generational Relevance. To learn more about how Grace can help you send an email to info@createsolidwealth.com.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

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@Businessdayng

Monday 13 April 2020

BUSINESS DAY

19

BD Money FINANCE

Here’s what you need to know about First Bank Holdings ‘19 audited result Net Fee and Commission Income grew moderately, up 11.2percent year-on-year, on the back of a significant growth in E-banking income (up 41.2percent) and credit related fees (up 104.7percent), letters of credit commission (up 49percent) and other fees and commission (up 30.1percent).

Other Income ( Net Insurance Premium, Net gains on investment securities, Net gains or loss on financial instruments, Dividend Income, Other Operating Income) was up 32.9percent.

Impairment Charge declined 41.5percent to N51.1bn, compared with N87.5bn for FY 2018, resulting in a decline in Cost of Risk (COR) to 2.6percent compared to 4.3percent for FY 2018. The bank’s NPL ratio declined further to 9.9percent from 24.7percent for FY 2018 The bank’s management had advised that NPL will drop below 10percent by year end.

OLUFIKAYO OWOEYE

F

BNH released FY 2019 audited numbers which showed an increase in Pre-tax profit to N83.6bn compared to N73.6bn printed in its earlier released unaudited numbers.

FBNH’s Interest Income grew marginally, up 1.6percent yearon-year mainly due to a decline in yields on customer loans. While Net Loans to customers were up 10.9percent year-on-year, Interest Income on those loans declined 6.8percent.

Interest Expense also grew marginally, up 1.4percent yearon-year despite an 11.9percent year-on-year growth in Interest Bearing Liabilities reflecting a decline in funding cost on the back of the low interest rate environment.

OPEX increased significantly, up 18percent, this, coupled with only a marginal increase in total operating income led to a deterioration in cost to income ratio (ex-provisions ) to 73.percent in FY 2019 compared to 63.4percent in the same period of 2018.

The y/y growth in opex was mainly on the back of a significant growth on other operating expenses, up 21.2percent y/y driven by mainly by advert and corporate promotions costs (up 135.5percent y/y) and operational and other losses which grew to N20.4bn in December 2019 from only N6.9bn in December 2018.

Pre-tax profit was up 13percent y/y while Net profits were up 4percent y/y bringing FY 2019 RoAE to 12.4percent compared to 9.7percent for FY 2018.

The bank announced a dividend of N0.38 per share, implying FY 2019 dividend yield of 8.64 based on Thursday closing price of N4.4/share

PERSONAL FINANCE

Users of video-conferencing app, Zoom are exposed to these 3 risks ...as subscribers surge by 23m in 2 months ENDURANCE OKAFOR

W

ith the deadly coronavirus causing a surge in work-from-home activity, Zoom, a video-conferencing app has become one of the most popular platforms for virtual meetings.

The Chinese company which was founded in 2011 allows its users to host up to 100 participants for free on a 40 minutes group meeting.

With $15 per month that number can increase to 400 participants.

The California-based tech company grew its active users from less than 5 million in January 2020 to 26.9 million in March. The same period when the coronavirus outbreak became a global pandemic.

Analysis of the data by Statista, an online data portal shows that Zoom added more than 23 million users in two months.

This is due to the fact that millions of businesses around the world have embraced the idea of working from home as countries are taking positions in curtailing the spread of the novel virus which has claimed the lives of more than 53,000 people globally with more than one million confirmed infections.

“With a stay at home order around, businesses are buying

and downloading Zoom for their operations,”Kalu Aja, the CEO of the Abuja-based AfriSwiss Capital Assets Management Ltd said.

However, users of the Zoom have been advised by industry players to consider these three data security risks when using the platform.

Zoomboming Users of the video app have raised alarm over “Zoomboming’.

While this may have not happened to everyone using the platform, some users are however at risk of a third party crashing their meetings.

This implies that an uninvited party can have access to a meeting and also access some data from the participants.

“About 25 minutes into the online session, online trolls also

www.businessday.ng

known as “Zoom Bombers” bombed our meeting and shared derogatory visuals and comments.

We sincerely regret this and take full responsibility for this breach in your privacy and online security,” Northcourt, a Lagos-based real estate advisory firm said in a mail seen by BusinessDay. According to the company, it reported the incident to Zoom technologies and hope to “work with them to prevent this from happening to even more people.”

While stating that the number of daily meeting users reached more than 200 million in March, Eric Yuan, the chief executive officer of Zoom admitted that despite “working around the clock” to support the influx of new users, the service had

https://www.facebook.com/businessdayng

“fallen short of the community’s and our own - privacy and security expectations”.

Data exposure The unclear language in Zoom’s privacy policy about its relationship to third-party data crunchers raises eyebrows as to what extent users’ data is being shared or sold to a third party.

According to the privacy policy which is displayed to potential users when installing the app (although it is ignored most of the time due to the rush to sign up on the app) states that “Zoom does use certain standard advertising tools which require Personal Data (think, for example, Google Ads and Google Analytics).”

But the policy says “we use these tools to help us improve your advertising experience (such as serving advertisements on our behalf across the Internet, serving personalized ads on our website, and providing analytics services).”

According to the policy, sharing personal data with the third-party provider while using these tools may fall within the extremely broad definition of the ‘sale’ of Personal Data under certain state laws because those companies might use Personal Data for their own business purposes, as well as Zoom’s purposes.

Rae Hodge, a tech analyst inter@Businessdayng

preted the above corporate statement to mean: “Zoom shares data with enough advertisers and data crunchers, in enough states, that it would broadly qualify as selling your data.”

She, however, advised that users should review their Zoom and device security settings with an eye toward minimizing permissions.

Tattle-tale Whether a participant of a meeting is using Zoom’s desktop client or mobile app, a meeting host can enable a built-in option through the help of a tattle-tale attentiontracking feature to alert them if any attendees go more than 30 seconds without Zoom being in focus on their screen.

This could mean that a participant who may be glancing at reference documents or discreetly asking and answering clarifying questions in a separate chat (these key parts of any normal meeting are described by experts as indicators of an engaged listener) may appear unserious to the host.

“When translated to online conferencing, they often mean switching windows and shouldn’t be mistaken for signs of inattention,” an analyst said adding that it is even worse for the participant as he/she wouldn’t be aware that the host will be noticing their time off from the visual meeting.

20

Monday 13 April 2020

BUSINESS DAY

Start-Up Digest

In association with

Orajiaka: Building multi-million dollar telecoms business Josephine Okojie

J

ohn Orajiaka is the founder of Adnol Multimedia, a pan – African value-added telecommunication service provider with headquarters in Nigeria.

With operations in more than 10 countries across the African continent, Adnol Multimedia – a business generating $14million revenue annually— provides everything from basic messaging and voice applications to digital lifestyle solutions using shortcodes for subscription services.

John is a 46-year old serial entrepreneur with other investments in a property development business and a private equity firm that invests in SMEs in the country.

John was inspired at 14 to become an entrepreneur by his father who owns a crafting business.

The engineer-turnedentrepreneur saw an opportunity in the mobile value-added services during

the 2010 World Cup held in South- Africa.

To leverage this opportunity, he established Adnol Multimedia to become an MTN’s VAS content provider.

“I registered a company called Adnol Multimedia and applied to become one of MTN’s VAS Content Providers,” John says in a Forbes interview.

“Before long, we were averaging more than $150,000 a month in profits from our deployed services,” he says.

“Our RBT business grew so quickly that it enabled us to diversify our service offering to other digital lifestyle solutions spanning through mobile education, health, and agriculture,” the entrepreneur explains.

He says that the provision of music content on mobile phones has been the most successful of all the company’s value-added services.

He states that the business is expanding its operations aggressively across Africa and looking for growth elsewhere.

“We anticipated that the Nigerian VAS market will

John Orajiaka

someday become saturated so it was common sense for us to look elsewhere for growth,” he explains.

“Apart from South Africa, and maybe some countries in North Africa, Nigeria has the most advanced VAS market in the continent,” he discloses.

Boost for SMEs as LSETF announces moratorium on loans to beneficiaries Odinaka Anudu

T

he Lagos State Employment Trust Fund (LSETF) has announced a moratorium on loan repayments for beneficiaries of its Loan and Hub Financing Programmes designed for micro, small and medium enterprises (MSMEs) and technology start-ups in the state.

This is targeted as cushioning the socio-economic impact of the outbreak of the coronavirus (COVID-19) pandemic in Nigeria, The relief and palliative measure, which target over 11,000 MSMEs in the Programme, takes into cognisance the impact of the shutdown on businesses. The shut-down is in compliance with the social distancing directives by the state and federal governments in the effort to tackle the pandemic and prevent the chain of transmission from personto-person.

Also, in compliance with

the social distancing directives and the consequential cessation of all movement in the state, LSETF will be suspending for a month, its ‘Lagos Innovates Workspace Vouchers Program,’ aimed at supporting and facilitating access to well-equipped workspaces and learnings for potential innovators and founders of start-ups in the Lagos tech ecosystem.

Speaking on the palliative measures, Teju Abisoye, acting executive secretary, LSETF, said the agency was passionate and committed to enabling every productive resident in Lagos to dream, grow and succeed in their endeavors.

“We are keen to help them get access to affordable financial and other institutional support they need to create wealth and employment for our youth, while significantly contributing to building a 21st century economy for Lagos in alignment with the state government’s THEMES agenda,” she said.

“We understand that to do this, we must engender www.businessday.ng

an enabling environment for small businesses to operate and thrive,” she further said.

Abisoye noted the LSETF was aware that many of the beneficiaries might not be able to meet their loan repayment obligations as a resultof the ongoing difficulties caused by Covid-19.

“Therefore, we hope this announcement will serve as a spark of optimism in anticipation of a quick return to normalcy and business continuity. We also urge them to adhere strictly to the recommendations of the World Health Organisation (WHO) and the relevant health authorities in Nigeria as we all work together to end this pandemic,” she said.

This palliative measure is open to performing loan beneficiaries and those with past-due obligations of not more than 60 days. Also, the applicants must complete a loan repayment moratorium form ahead of securing a written acceptance of the approved loan moratorium, LSETF said.

He notes that in the longrun, the business sees potential in data-driven digital lifestyle solutions and services such as m-health, m-education applications and financial solutions in the African market.

Speaking on how increasing internet penetra-

tion in Africa has slowed the business growth, the young entrepreneur says that the advent of 3G and broadband over Wi-Fi connectivity affected his business, especially in Nigeria.

“So, in Nigeria, for example, we are seeing declining revenue streams from music download, inspirational content, humor, news and the rest. But then again, you need to understand that Nigeria is a more developed market,” he says.

“You will be surprised to know that Internet penetration in other African countries is not as widespread as it is in Nigeria,” he tells Forbes.

“So some content businesses that are comatose in Nigeria are doing exceptionally well in other African countries,” he adds.

On his outlook on the future of VAS content business in Africa, he says it is going to be tough, but his business is now developing a focus on deploying data-driven services and applications.

“As you can imagine, the

basic VAS business is becoming increasingly saturated and a growing number of customers are opting to access music online or through mobile applications, coupled with the fact that access to video provides users with alternative entertainment content, which we cannot deliver efficiently through legacy channels,” he says.

“However, our ongoing interest is focused on developing and deploying datadriven services and applications going forward. In any case, we are still committed to this business and to expanding our footprint across Africa,” he adds.

On his advice to other entrepreneurs, he says, “You can achieve any set goal with the right mindset.”

“Read, learn and search out mentors who can also guide you. Do take a calculated risk and don’t be eager for overnight success,” he says.

“There is no such thing. It takes time to build, and a lot of commitment. One has to work for whatever one wishes to achieve,” he adds

7 Startups empowered to fight Covid-19 in Nigeria Hope Moses-Ashike

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ollowing a call for entries from eligible companies and a keenly competitive pitching process, seven innovative tech companies have qualified for much needed seed funding in the Covid-19 Innovative Challenge (CIC).

Facilitated by Ventures Platform (VP) in partnership with ) Venture Garden Group (VGG) and several other key players in the Nigerian tech ecosystem, the challenge received more than 500 entries between 17 and 23 March 2020 from innovative startups with solutions tailored to combat the Covid-19 pandemic in Nigeria.

The solutions were reviewed through a threephase selection process that culminated in a Virtual Demo Day on Thursday, 2 April 2020 where the seven finalists demonstrated their solutions before top officials of the Nigerian Center of Disease Control (NCDC), VP, VGG, medical experts and

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key members of the Nigerian tech ecosystem.

Commenting on the Covid-19 Innovative Challenge, Bunmi Akinyemiju, chief executive officer, Venture Garden Group, said, “As a leading player in the Nigerian tech ecosystem, we are happy to collaborate with like-minded organisations to create and deploy tech solutions to combat the Covid-19 pandemic. Besides financial support, VGG will also be providing mentorship and technical assistance to these startups as we work to strengthen health workers and government officials in the frontline of the crisis.”

The qualifying startups are: Wellvis Covid Triage, an online & USSD-based self-administered risk-assessment tool for measuring the level of exposure to Covid-19 with a symptom logger for remote monitoring by a clinician; GloEpid

by Prunedge, a GPS and Bluetooth-based solution that improves efficiency of contact tracing by the NCDC as well as case reporting and @Businessdayng

management; and Infodemics by Ingenia Nigeria Limited- a risk communication platform that effectively connects health professionals and members of the public requiring medical help.

Others are Driage by Caselink, a risk assessment tool for Covid-19 that matches individuals with the highest risk to the most appropriate clinical resource; MyServiceAgent, an artificial intelligence -powered interactive voice response (IVR) system which can communicate with thousands of callers simultaneously; Covid19 Nigeria, a platform that provides easy access to information as well as a broader and simpler disease tracing system; and Cmapit Analytics , a platform that helps researchers to better study data variables and make more accurate predictions through Geographic Information System (GIS) and data visualisation solutions that provides geospatial data and analyses statistics regarding COVID-19.

Monday 13 April 2020

BUSINESS DAY

Start-Up Digest

21

After securing $500,000, hospitality start-up eyes 3 African markets Olajide Abiola is a military veteran and holds a B.Sc in Computer Science from the University of Ilorin and a certificate of army education in map reading. He is a co-founder of KiaKia, one of Nigeria’s pioneering and leading lending and AI-focused fintech which launched in 2019. He is the co-founder and CEO of Smart Residences Ltd, operating as Gidanka also founded in 2019. In this interview, he tells Start-Up Digest Editor Odinaka Anudu about opportunities in the industry and his plans in the coming years.

Explain in detail what the company does. idanka is a travel/hospitality company that creates beautiful and uniquely designed serviced homes and apartments of various space orientation in carefully selected neighbourhoods across cityscapes through an automated check-in and check-out process. It leverages technology to deliver backend operations and support services like keyless guest access, non-residential housekeeping, laundry and maintenance services to guests. Gidanka works with local developers and realtors to design and take out long leases on spaces in neighbourhoods determined to be travellers’ and tourists’ preferences based on research and data analytics. This way, Gidanka delivers the best part of the efficiency and safety of hotel services, and the privacy, flexibility and variety of personal home. Travellers simply visit the website www. gidanka.com, select their preferred city and space, view the amenities and make payment.

Once payment is confirmed, they receive email and SMS notification of their door access code and Google maps address of the space. Once checked in, guests simply use Whatsapp or text messages to request concierge services which are available 24/7.

G

What gap do you intend to fill in the market?

Travellers now want the

Olajide Abiola

privacy, functionality, flexibility and comfort of a high end home along with the efficiency of hotel services.

Traditional hotels with their limited spaces and boring repetition of interior decoration have given rise to the demand for better lodging and accommodation options.

People want to live in new and fascinating neighbourhoods like the locals whenever they travel. At the moment, it is an emerging industry in Nigeria with very little competition.

Airbnb represents the only competition, but with limitations in that, quality supplies on such home sharing market place is like a game of Russian roulette. There are apartments of uncertain quality and uniqueness.

How are you funded?

We secured $500,000 in seed funding and have been able to lease out properties in four

neighbourhoods to provide 35 unique spaces across the Abuja cityscape in the last seven months. We have hosted travellers from over 12 countries and achieved 75 percent occupancy rates. Interestingly, in the face of the COVID-19 pandemic, our spaces have seen steady occupancy as a result of the service reputation earned within the short period. Initially, there was a one-week dip in occupancy rate as a result of the pandemic, but as the chaos ebbed, the demand normalised as people sought living spaces that felt like home.

How has the uptake been so far?

There has been steady uptake and about 30 percent to 70 percent month on month growth since January 2020 when additional 28 space units were added. The revenue is steady, ticking up and good.

What markets are you operating in currently? Any expansion plans?

Gidanka is presently operating in the Nigerian market, and only in the city of Abuja at the moment. Through new investments, we intend to open up about 70 upscale spaces of varied sizes, designs and decors in the city of Abuja across fantastic neighbourhoods due to the rapidly growing demand and noted preferences by guests. Afterwards, we intend on expanding into five already identified Nigerian cities where addressable markets have been determined. By 2021, with the required funding, we hope to expand into three other African countries with determined addressable markets. Our plans between now and end of 2021 is to have 500 unique living spaces across Nigeria.

The new sets of our apartments and living spaces will be 100 percent energy self-sufficient without compromise on power rationing whatsoever.

All will run on 100 percent alternative and renewable energy.

Tell me about your revenues so far?

Revenues are made from nightly, weekly and monthly room rates. We will be cash flow- positive before the 4th quarter of the year even in the face of the COVID-19. Out of the debt raised, 65 percent has been offset within seven months— five months ahead of moratorium.

NECA partners Redwood Consulting for free online entrepreneurship training Gbemi Faminu

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he Nigeria Employers’ Consultative Association (NECA) in partnership with Redwood Consulting Limited is offering its NECApreneur entrepreneurship courses free of charge for a period of six weeks, beginning from April 2020 to June 2020.

This comes as a part of the organisation’s contribution to boosting economic and capacity development by supporting access to online education for Nigerians, who have been mandated to stay at home to curb the spread of the novel coronavirus.

In a press statement,

Timothy Olawale, director general, NECA, stated that due to the happenings in the environment, people needed to be kept busy and should fully utilise this period for self-development purposes, adding that the courses had been made complimentary in order to encourage participation.

“Although our entrepreneurial courses are paid, we have decided to open them for free to the general public during this period.

Since most people are at home and have extra hours, why not help them put the hours to good use by providing relevant trainings such that at the end of this COVID-19 pandemic, they will www.businessday.ng

be armed with skills to help them get prepared for times ahead,” Olawale said.

The NECAPreneur programme is an e-solution aimed at providing an easily accessible opportunity for the people to develop their entrepreneurial skills and as such contribute to national development. The programme was launched as part of NECA’s mission to influence economic and socio-labour policies in order to create a favourable business environment.

The opportunity comes with a wide variety of online courses suitable for entrepreneurs at different stages of their business which have been made available on NECA’s official website. Some

of the topics to be treated include: How anyone can start a business, market knowledge, logistics & operations and many more.

Hannah Oyebanjo, managing director, Redwood Consulting Limited, said the organization hoped people would take advantage of the free training and prepare themselves for the uncertain times ahead after COVID-19 pandemic.

NECA is a business membership organisation (BMO) that provides a platform for private sector employers to interact with other stakeholders to promote a harmonious business environment resulting in productivity and prosperity for everyone’s benefit.

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A business guide to surviving the corona virus pandemic Spurt! works with African entrepreneurs to build more efficient, more productive and more strategic businesses. We are developing local champions into global giants.

S

purt! is a dynamic consortium of professionals keen to share accessible and useful insights to help people at the helm (and in the thick) of businesses in Africa to build businesses that completely change the continent’s socio-economic narrative. Our work spans across a range of industries but we are partial to family businesses, startups and small enterprises.

You will hear from us on here every other week, but if you have questions, do send them our way too. We will offer productive reflections and interrogations of processes you can adopt to help your businesses do better. We are aware that most small business and startup founders are very busy and end up having to wear many hats. This means that you might focus on the two urgent things that need doing at your firm today and perhaps never get around to thinking about the less urgent but very important things until they become so urgent that they have the potential to cripple your business. It can feel like every day is a crisis. Our work at Spurt! interrupts this cycle and reshapes the way you build your business.

Perhaps, you have plans to hire a consulting firm or the perfect employee to think deeply about or implement on your behalf. the daily running of your business operations. Yet you have found most consulting firms are expensive and finding the right employee talent is hard. We will work with you to translate your hard-earned money into productive results. Our work bridges the gap between your aspirations for your business and the constraints that your environment imposes.

Spurt! is an atypical consulting firm; we are first and foremost invested in supporting businesses on the path to success. We @Businessdayng

have the luxury of not being revenue-driven, indeed, our biggest constraint is time.

We have limited amounts of it and want to make sure we are investing our time in the right businesses. We are invested in being your growth partners and have committed to be as committed to your business as you are.

Spurt! works to ensure businesses on the African continent succeed along multiple value chains— moving to export their products and services across the continent and beyond. Our claim is not that we have all the answers (open secret: no one does), but we have proven time and time again that multiple intelligent heads working together is often a better deal than one head drowning under a mountain of work. We will not be careless with your business, we stake the entire value of our work not on our

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Our work bridges the gap between your aspirations for your business and the constraints that your environment imposes bottom line, but on yours.

We hold a vision for the increased and unparalleled success of African businesses firmly in our minds.

We hope you will find this column both useful and insightful. Let’s work together to bring about your growth Spurt!

Best.

Kristin & Oladoyin www.spurt.solutions Reach us at admin@spurt. group if you have any questions or comments.

22

Monday 13 April 2020

BUSINESS DAY

real sector watch Covid-19 shows why FG must stop paying lip service to manufacturing sector

easily produced by fashion designers in Bangladesh.

Nigeria’s total non-oil export earnings from more than 25 commodities in 2018 were about $3 billion, according to the National Bureau of Statistics (NBS), but Bangladesh, once one of the poorest countries on earth, earned 11 times as that from exporting one product—textile.

Bangladesh, however, has 5,000 garment factories, employing about 20 million people, mostly women, pushing the extreme poverty index down to 12.9 percent, according to the World Bank, as against Nigeria’s nearly 50 percent.

Yale economist Ahmed Mushfiq believes that Bangladesh’s recent economic success is attributed to the flourishing garment manufacturing industry and the country’s robust NGO sector.

Experts attribute Bangladesh’s success to a convivial business environment that guarantees three to five years return on investments. This has forced 37 public and private universities to start

producing ready-made garments for export. Another key factor is cheap labour with minimum monthly wage of a garment worker at $197, which makes it the last but one lowest wage among 21 textile-making countries in the world.

However, Nigeria has even more advantage than Bangladesh in terms of labour cost as its recent minimum wage hike (N30,000) amounts to only $83.3 per worker.

Stitch Dairy, a local publication, argues that the South Asian country has adopted technology and been able to enjoy duty-free advantage to export garments to the European Union, the US and Malaysia, but Nigeria has been a laggard in this area, having not taken maximum advantage of the African Growth and Opportunity Act (AGOA) to export duty-free to the US till 2025. It is also not fully maximising the Common External Tariff and other ECOWAS treaties.

“Nigeria needs an industrial plan now,” Ike Ibeabuchi, a manufacturer, said.

The pharmaceutical in-

dustry is handicapped and offers little hope in the face of Covid-19. This stems from long years of neglect. The industry has been hard hit by a number of factors. One is lack of funding, which has exposed the likes of Evans Medicals to humongous debts it could not repay.

Apart from funding, the industry is also hard hit by high production cost, which makes its drugs more expensive than imported ones.

Cost of production occupies 30 to 40 percent of their expenditure as the firms spend a lot on energy, water, research and development as well as raw materials. Most of the raw materials used by these drug makers are imported because Africa’s most biggest economy does not have a strong petrochemical industry that should produce resins and excipients.

Okey Akpa, chief executive officer of SKG Pharma and former chairman of the Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN), said that increased import of medicines jeopardises Nigeria’s drug and national security.

He stressed the need to have a petrochemical industry where drug firms can get inputs.

Importation of sanitizers has been difficult owing to closures around the world, pushing Nigerians to rely on local manufacturers. Innoson is said to have the capacity to produce ventilators but legislators have been ignoring his locally assembled vehicles for imported ones.

“Now is the time to pay a close attention to manufacturing. What is happening now in the world where some countries cannot export certain items shows that nobody cares for anybody,” Ibeabuchi, earlier quoted, said.

The outbreak of the pandemic grew from a global health crisis to a global economic, social and political crisis and has threatened to stifle means of achieving growth and development worldwide. As an economic impact, the virus has restricted business operations.

In a webinar themed ‘Managing the Shocks and Disruptions of COVID-19’ hosted by the Lagos Chamber of Commerce and In-

dustry (LCCI) last Thursday via Zoom,’ Ayo Teriba, CEO, Economic Associates, said that the outbreak of the virus had depressed global export and also shut down production activities hurting commercial activities in various forms.

Asides the outbreak of the coronavirus, Nigerian exporters have been at the receiving end due to the lack of infrastructure and their inability to meet up with the

import requirement of some countries. This has limited their revenues and profits, with some incurring losses.

Before the coronavirus outbreak, exporters had been battling the closure of Nigeria-Benin border, which made export to West Africa almost impossible.

The Federal Government had considered re-opening the land border before the coronavirus outbreak, one source told BusinessDay.

ODINAKA ANUDU

T

he coronavirus pa n d em ic ha s underlined the need for the federal government to support manufacturing and remove all obstacles that have stood in the way of the sector.

The Nigerian manufacturing sector contributes between eight and nine percent to the gross domestic product as against 14 percent in South Africa. Capacity utilisation is 54 percent, according to the Manufacturers Association of Nigeria (MAN)’s 2019 Economic Review, whereas South Africa’s hovers from 79 to 86 percent, according to research.

Many manufacturing companies in Nigeria have shut down in the last 30 years because of rudderless government policies and incoherent industrial plan.

In recent times, firms like Procter &Gamble (Agbara), Grif, and many others have shut down owing to issues around poor competitiveness.

Grif, maker of aluminium drums, exited Nigeria because the company could not get annealed cold-rolled steel which was its key raw material. Government restricted the importation of the input, asking other players to get supplies from WEMPCO which no longer produces the input. Most of the barrow and aluminium makers have exited the Nigerian market. Federated Steel from China, maker of iron rods, has exited Nigeria and sold its assets to MNIL Limited.

P & G ’s i s s u e s c e n t re around harsh business environment such as high Customs duties, multiple taxation and high produc-

tion costs.

“We are really struggling.

In the metals industry, the majority of the companies are dead,” Oluyinka Kufile, chairman and chief executive, told BusinessDay in 2019, said.

Up till today, Nigeria’s minister of industry, trade and investment, and minister of steel development have not unveiled an industrial plan to tackle challenges faced by steel sector which is facing enormous competition from cheap Chinese steel.

“It is a huge investment that has been on for a very long time,” Kufile,who has invested over $100 million in the industry, said.

“And we are still doing more. When we started, it got to a point that we had to approach American Nexim Bank. They obliged us and gave us the facility. Today, it is a different story,” Kufile further said.

But Kufile is no longer that optimistic today.

“You can see that things are no longer that way they were when you first came,”

he told this writer.

“We cannot compromise standards of roofing sheets we produce, but people bring in cheap products and are allowed to pay lower duties,” he said.

“No country develops its manufacturing sector that way,” he added.

Due to low import duties and inability to tackle smuggling, textile firms from Asaba Textile Mills to Kaduna Mills have all gone under.

These companies could not compete with cheap Asian exports because production cost in Nigeria was high as a result of poor access to power, funds, infrastructure as well as multiple taxation.

The number of fullfledged textile mills in Africa’s most populous country has whittled down to just two, from over 180 in 1985. Industry players say the number of players is 24, but findings show that most of them are manufacturers of rugs, handkerchiefs, sweaters, towels and stockings.

Due to the neglect, the country muted an importation of face masks which are

Exporters feel the pinch as Covid-19 lingers Gbemi Faminu

N

igerian exporters are hard hit by the lingering coronavirus pandemic and cannot move their products to the international market owing to growing border restrictions by countries.

More than 180 countries have been affected by the pandemic and many of

them are locked down to contain the spread of the virus which has killed tens of thousands of people across the world.

Zacheaus Egbewusi, chief executive officer, AgriCommodities Inspection Limited, said in a telephone interview that since the outbreak of the pandemic, the export market has experienced declines in various forms as business partners are no longer responding, www.businessday.ng

forcing some of them to stop supplies.

“When the virus broke out, some of us were not affected because it was mainly in China. So, it was those who had business partners there that suffered it. However, since the widespread, everyone is now being affected as all the countries are trying to curb the spread and many of us have had to stop supply,” Egbewusi added.

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@Businessdayng

Monday 13 April 2020

BUSINESS DAY

23

insight COVID 19, remote working and talent retention Ivana Osagie

T

he world of work as we know it, is changing forever. As you read this article, it is quite likely that like many of us, you are working from home.

While we must grit our teeth and go through COVID19, it’s also important to prepare for a post-COVID 19 world. The crisis has forced many organisations previously unwilling to formally accept working from home as normal business practice, to retrace their steps. I believe having now stepped into this new room, many will decide to spend quite a bit more time here, even after the crisis is over.

Indeed, they may have no choice.

Employees will be more demanding of their employers about the need for a work/life balance. This is just one of the ways in which the world will change when this crisis is over. Organisations have to plan and prepare for the new normal and, just as importantly, adapt to it.

Giving staff the flexibility of working remotely is a crucial part of the work/life balance strategies employers can adopt. If done correctly, it can boost staff morale, welfare, and performance. For many staff, the strain of commuting to and from work every day is monumental. Added to the strain, in the city of Lagos where I live, the hours lost sitting in traffic are a massive drain on productivity. A study done in South Africa showed remote working could boost the South African economy by $0.9 billion annually. Given the relative size of the Nigerian economy, that figure would be even higher here. From data collated in studies by Stanford University, Gallup, Harvard University and Global Workplace Analytics, people working remotely are 35 - 40% more productive than office based counterparts and employers experience 41 % less absenteeism amongst remote working staff.

Virtual meetings via video conferencing using tools like Zoom and the like, have become the order of the day in recent times. According to Reuters, the number of Zoom’s daily users ballooned to more than 200 million in March, from a previous maximum of 10 million as at December 2019. Other alternatives to Zoom include Skype, WebEx, and GoToMeeting. One can guess that they too, have seen their usage rise exponentially since the crisis began. The use of collaboration tools and software such as Slack and Microsoft Teams, which allow multi-location collaboration has also skyrocketed.

Due to the COVID 19 virus and

the resulting increase in remote working, Microsoft Teams usage has grown to 44 million daily users from 12 million in one week alone.

Here in Nigeria, the power situation might be a challenge for some people working from home.

However, the use of inverters and solar energy devices could be the solution. Some companies are already deploying these devices to their staff to enable them work more seamlessly from home. Technology companies certainly seem to be beneficiaries of circumstances unpalatable to most, but technology is supposed to solve problems and act as an enabler. The bottom line is that technology is available to support effective remote working.

For women, in particular, the flexibility afforded by remote working cannot be quantified. It

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According to McKinsey, by increasing the participation of women in economic activities, African countries could add $316 billion to their collective GDP by 2025 www.businessday.ng

makes juggling the demands of work, family, and home so much easier. It allows them spend more time with the kids and at the same time, fulfil their work obligations.

For instance, being able to work from home in order to keep an eye on a child who is unwell and therefore off school, would be a huge relief for any mother.

According to McKinsey, by increasing the participation of women in economic activities, African countries could add $316 billion to their collective GDP by 2025. Other research by the Catalyst found that companies with more women on their boards and executive committees perform better financially. With a more gender-balanced leadership team comes better decision making and reduced ‘group think’. It introduces new perspectives and is a wider representation of the company’s stakeholders including customers. This ultimately leads to improved corporate governance and shareholder value.

McKinsey who have conducted research in this area for close to fifteen years, also found that African companies with at least 25% female representation on their boards, had a 20 % higher than industry average earnings before interest and taxes (EBIT) margin.

Gender parity is clearly good economics, yet many companies are either not getting the message, or are perhaps struggling with getting more women to the table.

Attrition rates for women at work globally are much higher than they are for men, particularly as women hit mid-career. This resulting ‘missing middle’ is well documented. A study by the UK’s Chartered Management Institute (CMI) found that while women occupy 73% of entry-level roles, this drops to just over 40% by the time they get to middle management. According to additional

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research, 43% of highly qualified women with children opt to leave their jobs at some point. There are several reasons for this, but one reason is that they simply get fatigued and burnt out from the stress of trying to juggle work and home. Some women quit when they have babies. Others stay on only to quit later when the children get to school age, because they struggle to fit parenting activities into their schedules. What this means is that the pipeline of women available to make it into executive and board-level roles is reduced because of the missing middle. Furthermore, organisations are losing out on qualified and competent talent who can significantly contribute to increasing the bottom line.

They also lose out on returns on their investment in training and developing this talent pool.

A study by KPMG found that globally, the cost to businesses of replacing and training new employees to replace women who quit, is in the region of $47 billion.

This is a huge drain on scarce resources, particularly now the world is staring an unparalleled recession in the face. Something has to change. @Businessdayng

Amongst other options, one way to tackle the problem is by organisations embracing remote working, if they have not already done so. This new world will require some cultural and structural organisational adjustments to make it effective. Some of these adjustments could include changes to communication and performance management systems, but the benefits will far outweigh the pain of change. Aside from improving resourcing efficiencies, by embracing remote working, businesses stand to see higher operating margins, higher return on equity and a significant increase in shareholder value. COVID 19 has proven that working from home can work if we want to make it work. No pun intended.

Ivana Osagie is a corporate strategist focused on building female leadership capacity and advancing gender balance and inclusion in the workplace. She is the Founder/Convener of the Professional Women Roundtable, which advocates for advancing female leadership and gender balance. She develops programs and advises individual women and companies on these goals.

24

Monday 13 April 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Thursday 09 April, 2020

Top Gainers/Losers as at Thursday 09 April, 2020 LOSERS

GAINERS Opening

Closing

Change

Company

Opening

Closing

Change

NESTLE

N765

N830.2

65.2

BUACEMENT

N31.5

N30.8

-0.7

SEPLAT

N490.1

N495

4.9

SKYAVN

N2.16

N2

-0.16

STANBIC

N24.5

N26

1.5

NAHCO

N2.53

N2.4

-0.13

DANGSUGAR

N9.75

N10.7

0.95

REDSTAREX

N3

N2.9

-0.1

WAPCO

N11.8

N12.65

0.85

UACN

N7.1

N7.05

-0.05

Company

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

21,384.03 5,427.00 314,906,187.00 5.018

Global market indicators FTSE 100 Index 5,842.66GBP +164.93+2.90%

Nikkei 225 19,345.77JPY -7.47-0.04%

S&P 500 Index 2,804.85USD +54.87+2.00%

Deutsche Boerse AG German Stock Index DAX 10,564.74EUR +231.85+2.24%

Generic 1st ‘SP’ Future 2,766.30USD +31.40+1.15%

Shanghai Stock Exchange Composite Index 2,825.90CNY +10.54+0.37%

11.144

Nigeria stock market rallies further on increased bargains Stories by Iheanyi Nwachukwu

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emote tading on the Nigerian Stock Exchange (NSE) witnessed increased bargain on Thursday April 9, making it the third positive this week as more investors chose to buy fundamentally sound stocks that hitherto traded at record lows.

The market defied analysts expectations of possible profit taking activity following previous days of gains.

The NSE All Share Index (ASI) increased by 1.47 percent at the close of trading session.

Top on the bargain hunters list are shares of Nestle Nigeria Plc, Seplat Petroleum Development Company Plc, Stanbic IBTC Holdings Plc,

Dangote Sugar Refinery Plc and Lafarge Africa Plc. As at 3.58 pm Nigerian time on Thursday April 9, Brent crude was trading at a record high of $35.32 per barrel.

Development in the crude oil market coupled with the Coronavirus Pandemic rattles the stock market.

Federal Government efforts to curtail the spread of the virus led to the lockdown of Nigeria’s commercial capital of Lagos, the FCT Abuja and Ogun State.

Nestle recorded the highest gains on the Bourse after its share price moved from day open low of N765 to N830.2, adding N65.2 or 8.52percent. It was followed by Seplat which rose from N490.1 to N495, adding N4.9 or 1percent.

On the decliners list, BUA Cement led others after its

share price moved from day open high of N31.5 to N30.8, losing 70kobo or 2.22percent.

The NSE ASI increased from 21, 073.26 points to 21,384.03 points while the value of listed stocks increased by N162billion to N11.144trillion, from preceding day low of N10.982trillion.

This month, the stock market has yielded positive return of +0.39 percent, while the year to date (YtD) negative return moderated further to -20.33 percent.

All NSE sectoral indexes closed positive on Thursday except NSE industrial index that dipped. Banking stocks were actively traded, led by FBN Holdings, GTBank, Zenith Bank and UBA. In 5,427 deals, investors exchanged 314,906,187 units valued at N5.01billion.

CSCS boss appointed CSD representative on global ISSA Operating Committee

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he International Securities Services Association (ISSA) has appointed Haruna Jalo-Waziri, the Chief Executive Officer of Central Securities Clearing System (CSCS) Plc, as the representative of the global community of Central Securities Depositories (CSD) on the Operating Committee of the ISSA, with immediate effect.

The Operating Committee of the ISSA, chaired by Jyi-chen Chueh, Executive Director, Standard Chartered Bank, is the pivotal Committee of the ISSA saddled with the responsibility of providing technical support and execution to the Executive Board of ISSA in proposing, executing and managing work projects aimed at advancing securities services, globally.

In conveying the appointment, Parry Colin, the Chief Executive of ISSA noted, “we are delighted that Jalo has agreed to be a member of the ISSA Operating Committee going forward. We welcome him as the representative of the World Forum of Central Securities Depositories (WFC) to the Committee”.

Parry noted the value proposition of nominating and appointing Jalo to the Operating Committee of ISSA, including his leadership role in the Nigerian CSD and his understand-

ing of ISSA as core member.

He expressed excitement at Jalo’s appointment, as he looks forward to his invaluable contributions towards delivering on the audacious mission and strategic objectives of the ISSA, going forward.

In reacting to his appointment, Jalo-Waziri noted; “this is a clarion call to service in an industry that I am most passionate about. It is my pleasure to have been nominated and appointed to join the esteemed professionals on the Operating Committee of the ISSA and I look forward to working with colleagues, with diverse global experience in actively promoting forward-thinking solutions that create efficiencies and mitigate risk within the global securities services industry.”

For more than 40 years, ISSA has made significant contributions to the development of the worldwide securities services industry by facilitating the interaction among market participants and providing leadership in the formulation and promotion of best practices in the post-trade securities services.

Headquartered in Switzerland, the ISSA is an association of the world’s largest central securities depositories, global custodians and securities transaction services banks, including The Depository Trust and Clearing Corporation (the CSD www.businessday.ng

for the U.S markets), Euroclear (European CSD), Clearstream (the German CSD), Hong Kong Exchanges and Clearing Limited, Citigrpup, Credit Suisse, Deetsche Bank AG, BNP Paribas, Standard Chartered Bank, SWIFT, Bank of New York Mellon amongst others.

The Central Securities Clearing System (CSCS) is a Public Limited Company, with a diversified shareholder base, including the Nigerian Stock Exchange, some of the largest banks in Nigeria, private equity firms, investment banks and other corporate and individual shareholders.

With over two decades of operation, serving as the Central Securities Depository for the Nigerian capital market, CSCS has been pivotal to the growth and transformation of the capital market, including its audacious full dematerialization of share certificates and the shortening of settlement cycle in the capital market.

CSCS serves as the central depository for equities, commercial papers, corporate bonds, sub-national bonds, certain sovereign bonds, equity-traded funds, real estate investment trusts, mutual funds and commodities. CSCS is licensed and regulated by the Securities and Exchange Commission (SEC).

IOSCO reprioritises its work programme to address impact of COVID-19

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he Board of the International Organisation of Securities Commissions (IOSCO) has agreed to pause or delay some of its work in 2020 in order to redirect its resources to focus on the multiple challenges securities markets regulators are addressing as a result of the COVID-19 crisis.

This reprioritisation confirms IOSCO´s ongoing commitment to protect investors, maintain fair, efficient and transparent markets and mitigate systemic risks.

This decision means that the work priorities outlined in IOSCO´s 2020 annual work programme needed to be reconsidered. In deciding on which priorities to pause or delay, the Board was guided by four overarching principles: a recognition that a delay would relieve untoward pressure on IOSCO members who are addressing core crisis challenges; a recognition that operational constraints on financial institu-

tions would likely impede their ability to contribute to IOSCO projects and/or follow up on final reports; a recognition that in many cases it may be inappropriate to issue reports during this crisis given that they may become wholly or partly overtaken by events and/or they would need to be modified to take account of lessons learned or factor in a substantially changed financial landscape as a result of the crisis; and a recognition that IOSCO, the Financial Stability Board and other Standard Setting Bodies with whom IOSCO collaborates are focusing substantial efforts (which is resource intensive) to address the crisis which is now the priority.

In view of these principles, the Board agreed to redeploy resources to focus primarily on matters that are directly impacted by COVID-19. Among other things, substantial resources are being devoted to addressing areas of marketbased finance which are most

exposed to heightened volatility, constrained liquidity and the potential for pro-cyclicality.

These efforts include examining investment funds, as well as margin and other risk management aspects of central clearing for financial derivatives and other securities. A limited number of other work streams that are close to completion will continue, as will work related to G-20 deliverables. The timelines for the projects in relation to asset management linked to FSB recommendations will be coordinated with the FSB. The work being delayed or paused includes IOSCO’s analysis of the use of Artificial Intelligence and Machine Learning by market intermediaries and asset managers, the impact of the growth of passive investing and potential conduct-related issues in index provision, issues around market data, outsourcing and implementation monitoring – all of which would have involved outreach to the industry and supervisors.

Primero BRT lists N16.5bn bond on NSE

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ealing Members of the Nigerian Stock Exchange were on Thursday notified about the listing of N16.5billion Series 1 term

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bond by Primero BRT Securitization SPV Plc. The Bond with a coupon rate of 17percent Fixed Rate is due 2026. It is under the N100billion Medium Term Bond Programme of Primero @Businessdayng

BRT Securitization SPV Plc. The Bonds, listed on the NSE on Thursday, April 9, 2020 were 100percent subscribed. Dunn Loren Merrifield Securities acted as the stockbroker.

Monday 13 April 2020

BUSINESS DAY

MARKETS INTELLIGENCE

25

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Nigeria’s listed insurers now profit creators as ROE jumps BALA AUGIE

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igeria’s largest insurers are now profit creators as they have deployed shareholders resources in generating higher bottom line even amid rising claims, operating and underwriting expenses.

This is the first uptick in the ratio in five years, but the coronavirus pandemic that has stoked unprecedented financial and economic uncertainties could weigh on future profitability.

The improvement in the return on equity is largely driven by an uptick in profit, premium growth and higher investment returns. Insurers had packed money in bonds and other short term government securities when yields were high.

The combined average return on average equity of the 17 largest firms quoted on the bourse increased to 9.77 percent in December 2019 7.49 percent as at December 2018.

The ratio is a paramount measure for potential investors because they want to see how efficiently a company

will use their money to generate net income.

ROE is also an indicator of how effective management is at using equity financing to fund operations and grow the company.

BusinessDay checks shows 76 percernt of companies that have

released full year recorded higher returns, as operators are reeling from pricing distortions, harsh and unpredictable macroeconomic environment.

Aiico Insurance’s ROE moved to 27.12 percent in December 2019 from 16.26 percent the previous year.

The largest insurer by assets saw net income spike by 86.23 percent while net premium income was up 33.14 percent.

Mutual Benefit Assurance (MBA)’s ROE increased to 24.76 percent in the period under review from 13.50 percent the previous year; the insurer’s net income surged 131.54 percent while net premium income was up 18.03 percent.

Nem insurance’s ROE improved to 25.39 percent in the period under review from 17.59 percent the previous year; the insurer’s net incomen spiked

by 74 percent while net premium income was up 30.15 percent in the period under review.

Cornerstone insurance’s increased to 24.25 percent in the period under review from 19.66 percent the previous year.

Lasaco insurance’s ROE increased to 12.31 percent in December 2019 from 3.61 percent the previous year; the insurer’s net income surged by 215.15 percent while net premium income was up While listed insurers are above the curve as evidenced in improved earnings, the future is bleak as the coronavirus pandemics is expected to weigh on profit.

Global ratings agencies Fitch and AM Best predict coronavirus will cause volatility in the financial markets alongside an increase in insurance claims and losses.

The ratings agencies added that they expect the disruptions caused by the pandemics to weigh heavily on reinsurer’s capital and profitability in coming months.

In Nigeria, re/insurance premiums could decline if the economic lethargic continues, as decline in equity market and low yield environment likely undermine insurers’ investment portfolio capital, and earnings.

The insurance index has been outperforming the Nigerian Stock Exchange (NSE) All Share Index (ASI) even amid a massive sell-off as investors are betting that the recapitalization scheme announced by regulator will spur the industry to growth.

With household disposable income under pressure due to high unemployment rate, premium income could shrink, a double whammy for an industry struggling with huge claims expenses.

Banks, Nigerian Breweries, Unilever, others, lose big as market caps plummet IFEANYI JOHN

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he outbreak of the global pandemic coronavirus has been nothing less than devastating for global markets and economies all over the world as Nigeria is not left out.

The Nigerian bourse dipped 4,915 points in March 2020 and is estimated to have lost about NGN2 trillion in the first quarter of 2020. The Nigerian Stock Exchange’s (NSE) All Share Index (ASI) dropped by about 20.73% in Q1 2020, with the entire decline coming as a result of oil price crash and coronavirus sell offs as economic activities continue to slow down.

The NSE’s sector performances were also negative, as all indexes closed the period with a drop. The NSE Consumer Goods Index plunged

the most by 44.84% while the NSE Banking Index followed with a decline of 30.64%. Also, the NSE 30 index lost 23.03% in value during the first quarter of the year.

As the market selloffs have deepened due to the oil price meltdown, some companies have fared far worse than others.

Nigerian Breweries shareholders have seen the value of their shareholdings drop by more than 50 percent, with the company at the start of the year trading at a market cap of NGN471.82 billion but as at April 3 2020 the Nigerian brewery king had dropped to a market cap of NGN205.12 billion losing a whooping NGN266.70 billion indicating a 57% drop in value.

The company saw its share price collapse from N59 to N25.65 per share.

Unilever Plc also saw their market cap drop by exactly 50 percent since the start of the year. As at January 1st,

the company boasted a market cap of NGN126.39 billion but as at end of Q1 2020 the consumer goods company was now worth NGN63.20 billion losing NGN63.20 billion representing a 50% drop in value. The company’s share price plummeted from N22 to N11 per share.

Nestle shareholders on the other hand haven’t fared any better. The firm’s market cap almost halved over the same period. The company saw its market cap drop from NGN1.17 trillion to NGN606.38 billion losing a whooping NGN558.74 billion representing a 48% drop in value. Nestle shares collapsed from N1469.90 to N765 per share.

Oando Plc shareholders also saw their share price dip by 49%. The firm’s market cap plummeted from NGN49.06 billion but as at April 3 2020 the oil & gas company was now worth NGN25.48 billion losing NGN24.12

billion as the company’s share price saw a decline from N3.99 to N2.05 per share.

Stanbic Group since the sell offs began has seen its net worth dipped by 41%, with the company at the start of the year trading at a market cap of NGN430.70 billion but as at end of Q1 2020 the financial services company was now worth NGN255.27 billion losing NGN175.43 billion as the company’s share price saw a decline from N41.03 to N24.30 per share.

Meanwhile, GTB and Larfage Plc saw a 40% decline in their market capitalization while Access, Zenith and FBN all saw a 41%, 37% and 36% decline respectively showing a significant drop in the value of the companies.

The largest companies on the bourse have not witnessed significant drops, with DanCem and MTNN dropping 9% and 14% while AIRTELAF has not witnessed any change in its worth.

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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Monday 13 april 2020

BUSINESS DAY

abujacitybusiness COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Nnaji donates 600 bags of rice, noodles, cash to constituents JAMES KWEN, Abuja

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Me mb e r o f t h e House of Representatives, Nnolim Nnaji has donated 600 bags of rice and 600 cartons of noodles as well as cash to his constituents in the Nkanu East/ West Federal Constituency of Enugu State to cushion the effects of the Covi-19 pandemic.

Nnaji while distributing the items appealed to well to do Nigerians to reach out to the less privileged and vulnerable in the society to help cushion the impact of the lockdown directives by the States and Federal Governments in the wake of the coronavirus.

He stressed that the present situation required that the privileged Nigerians must come out to support what the States and the Federal Governments are doing to provide succour to the citizens.

“This is the time we have to demonstrate our true African belief of being our brothers’ keepers by sharing whatever

we have with our neighbours so that together we can overcome this pandemic” Nnaji said.

According to a statement signed by the Special Adviser Media, Titus Agbo Nnaji also encouraged corporate bodies and churches to equally step in and assist in providing palliatives to the people, noting that majority of the citizens who live on daily income are already suffering the consequences of the stay at home order across the country.

The Chairman House Committee on Aviation further expressed concern over the disturbing videos of severe human rights abuses against those who violated the stay at home order by the security agencies, especially the military which are trending on social media.

He demanded for thorough investigation of the actions of the security agents involved with the perpetrators fished out for appropriate sanctions and prosecution to serve as a deterrent in future.

Covid-19: BPE to provide palliatives to 1,200 households in FCT ... distributes 300 bags of assorted food items in Abuja suburb

JAMES KWEN, Abuja

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he Bureau of Public Enterprises (BPE) said its palliatives to cushion the harsh effects of the Coronavirus Pandemic (COVID-19) amongst vulnerable Nigerians are targeted at 1,200 households in the Federal Capital (FCT).

Director General of the Bureau, Alex Okoh disclosed this during the distribution of the items made up of 300 bags of assorted food types to the less-privileged in Yimitu Village, a suburb of Apo in Abuja.

He reiterated that the

Bureau was moved to embark on the gesture given the hardship Nigerians, particularly the vulnerable amongst them, were subjected to in the face of the lockdown occasioned by the stay-at –home order of the Federal Government against the spread of the pandemic.

Okoh also said the gesture was initiated and supported solely by the management and staff of the Bureau, adding that “contrary to the belief that privatised enterprises in the country are part of the initiative, they (privatised enterprises)’s contribution is to the Federal Government’s Presidential Com-

mittee on COVID-19” He added that in line with the criterion set up for the distribution of the items, preference would be given to widows and single mothers who were targeted to get 60 percent of the items and the remaining 40 percent to the vulnerable in the area.

Responding on behalf of the beneficiaries, one of the community leaders, Nze Leonard Iheanacho, Eze Ndi’Igbo in the area, commended the Bureau for the kind gesture, noting that it was timely as most families in the area had been without food since the lockdown began.

“We can’t believe what we have seen. When we heard the news of the Bureau’s team coming with the food items; we took it with a pinch of salt as such promises in the past have never been fulfilled. But BPE has proved us wrong and we thank the organisation immensely for the gesture”, he stated.

Recall that BPE commenced the gesture in line with its Corporate Social Responsibility (CSR) last Monday with the donation of assorted food items to the Dutse-Alhaji Community, Abuja where jubilant beneficiaries took home bags of food.

Foundation distributes food items to 2000 widows of fallen heroes in FCT GODSGIFT ONYEDINEFU, Abuja

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ver 2000 widows of fallen military personnel and wives of serving personnel in the Federal Capital Territory (FCT) Abuja, have benefited from the food package distributed by the Defence and Police Officers’ Wives Association (DEPOWA).

Benard Onyeuko, Acting Director , Defence Media Operations, Defence Headquarters who made this known in a statement on Thursday, said the gesture was also extended to teaching and nonteaching staff of DEPOWA Schools, as well as Instructors of DEPOWA Skills Acquisition Centre, Abuja.

Onyeuko said the charitable initiative by DEPOWA was to cushion the economic effect of stay at home order

of the Federal Government (FG), with the lockdown of FCT, Lagos and Ogun States to checkmate the spread of corona virus pandemic in the nation.

Items distributed include bags of Sermovita and customized Hand-Sanitizers produced by DEPOWA Skills Acquisition Centre.

According to the statement, the President of DEPOWA, Omobolanle Olonisakin stated that the gesture was to soften the effect of the sit at home order on the barracks communities.

She promised that DEPOWA would continue to support the welfare needs of barracks women, especially the widows and orphans of fallen heroes of military and police personnel who laid down their lives serving their fatherland.

India firm donates palliatives to FCT JAMES KWEN, Abuja

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n India firm based in Abuja, Tulsi Chanrai Foundation has donated 1000 cartons of Indomie noodles to support government palliative scheme for the vulnerable to cushion the effect of sit-at-home presidential order.

The Chief Executive Officer of the firm, Shravan Kumar during presentation of the items said the firm is collaborating with the Presidential Task Force on Covid-19

and the FCT Administration to support those at the bottom of the pyramid who are mostly affected by the lockdown in the nation’s capital.

Kumar also stated that the firm under the leadership of its Chairman, Jagdish Chanrai has developed a support package aimed at ensuring an efficient, effective and impactful response to the coronavirus pandemic, stressing that the support packs so developed would be distributed with the support of the FCT Administration’s personnel. www.businessday.ng

L-R: Chairman, Ministerial Advisory Committee on Covid-19, Aliyu Modibbo Umar; FCT Minister, Muhammad Musa Bello; Minister of State, Ramatu Tijjani Aliyu, and Permanent Secretary, FCTA, Chunyeaka Ohaa, at the Ministerial Press Briefing on COVID-19.

Nigerian military sustains onslaught on terrorists, kill scores in Northeast GODSGIFT ONYEDINEFU, Abuja

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he Nigerian military says it’s troops carrying out robust and aggressive operations in the North East Theatre of Operation, has again defeated Boko Haram and ISWAP terrorists in several encounters, resulting to the neutralisation of several terrorists and recovery of various weapons.

Benard Onyeuko, Acting Director, Defence Media Operations ,Defence Headquarters in a statement in Abuja explained that the troops of 3 Battalion/Quick Response Force Army Super Camp 11 Gamboru in Borno State on targeted patrol de-

feated the terrorists in a fierce encounter which led to the death of two terrorists an uncomfirmed number were wounded.

Onyeuko said some Boko Haram/ISWAP marauders approached the Battalion’s location at about 1800 hours on the 7th of April 2020 in a convoy of seven gun trucks and many motorcycles.

“Consequently, the criminals were over powered after which they took to their heals. They were aggressively pursued up to Wurge axis by the gallant troops/the Quick Response Force.

“Additionally, Three Gun Trucks, Two Anti Aircraft Guns, Two AK 47 Rifles, One HK 21 Rifle and One Rocket

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Propelled Grenade Tube were abondoned by the terrorists and recovered by the troops,” he stated.

Other items recovered are Multi Links, Ten 1.5 MM Ammunition, Two Magazines and a Bluetooth Speaker with Boko Haram Terrorists’ victory song, Onyeuko added while noting that no soldier lost his life or wounded, and no equipment was lost during the battle.

The Director further recalled that on the 6th of April 2020, combined troops of 403 Special Forces Brigade Baga and Niger Republic troops assisted by the Air Task Force Operation Lafiya Dole decisively pounded @Businessdayng

some Boko Haram/ISWAP Criminals at Kure village along Tumbun Rago and Tumbun Fulani general areas of Borno State leading to the death of One terrorist and the recovery of One AK 47 Rifle, a Gun Truck, Anti Aircraft and Light Machine Guns among others.

Similarly, the Nigerian component of MNJTF together with other members from the Lake Chad Basin Commission carried out a clearance operation around the Lake Chad Basin which resulted to neutralization of scores of Boko Haram Terrorists/ISWAP elements, and the decapitation of their various hideouts in the general area of operation.

Monday 13 April 2020

Harvard Business Review

BUSINESS DAY

27

MondayMorning

Coronavirus is widening the corporate digital divide Marco Iansiti and Greg Richards

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e’re seeing the most rapid organizational transformation in the history of the modern firm. In some ways, you can trace what’s happening today to a huge digital transformation that’s already well underway. This digital scale, scope and learning paradigm is already difficult for even established organizations to adopt.

The COVID-19 pandemic is making this only more challenging by adding an increasingly important fourth dimension to digital operating models: virtual work.

Today, rather than digitizing the relationship between firm and customer alone, the virtual model digitizes the relationship between firm and employee. As a result, offices are less important; working from home is not only possible, but often even preferable.

This need to virtualize work due to COVID-19 is driving digital transformation and deepening differences across people

and across firms at an incredible rate. But some businesses and processes still intrinsically require physical closeness — think of hotels, big-box stores, grocery stores and traditional retail. In addition, not all businesses with a digital operating core can be virtualized to the same extent.

The stakes have increased dramatically. Now, digitizing the operating architecture of the firm is not simply a recipe for higher performance, but much more fundamental for worker employment and public health.

The firms that cannot change overnight will be left way be-

hind, exposing their employees to increasing risk of financial and physical distress.

At a fragile moment like this, we must acknowledge that the economy cannot be run by digital firms alone. The COVID-19 crisis is giving us a terrifying, up-close view of how the digital

divide will continue to play out.

Can business and government work together to save us from that future?

(Marco Iansiti is a professor at Harvard Business School. Greg Richards is a co-founder and the CEO of Keystone Strategy.)

How restaurants can survive right now Rafi Mohammed

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ll businesses are suffering today. One industry that is especially visible and emblematic of our economic struggles is restaurants. My advice to restaurateurs — after ensuring the safety of their food — is simple: Lower your prices now.

To start off, let’s be realistic: Few restaurants will be able to maintain normal revenues during this crisis.

The new goal for the next six months is to minimize losses by focusing on contribution margin (revenue minus variable costs such as food and labor).

There are three reasons why restaurants should lower prices. First, most restaurants are offering only carryout, whether by choice or based on orders from state or local authorities. Although restaurants historically charge the same prices for dine-in or takeout, takeout is a less valuable experience. Second, with worries about their in-

comes and stock portfolios, many are scrutinizing optional expenditures. Finally, lower prices can incentivize once-a-month customers to visit more frequently, and can help attract new ones.

While giving diners a break makes sense, restaurant owners must be mindful that this storm will pass and they’ll

have to go back to normal business at some point. To avoid devaluing their business, it’s important that diners understand that these discounts are temporary. It’s essential to create actions that customers must take to obtain a discount, to psychologically reinforce that these discounts are unique and are

not permanent. Some examples: — BRING A CANNED GOOD FOR A FOOD PANTRY: Requiring this gesture reinforces that the current promotion is related to the crisis, enhances a restaurant’s brand and makes customers feel good about helping others.

— BUY IN BULK: Setting a minimum purchase (say, four entrees) for any discount allows diners to justify the discount in their minds. It might also boost orders.

— PURCHASE WITH BOOZE: Tying a discount with the purchase of alcohol can help justify the discount in consumers’ minds, and it can also provide a convenient method to phase out the discount when the crisis subsides (because takeout alcohol won’t be allowed postcrisis).

— CASH ONLY: While eliminating processing fees, this requirement reinforces that this discount is a unique occurrence.

Discounting is an important ingredient to help businesses weather this challenging economic environment.

The mistake that most companies make is not having a plan to retract markdowns.

(Rafi Mohammed is the founder of Culture of Profit.)

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BUSINESS DAY

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news Nigeria to report first diaspora remittances decline in 10 years – Agusto & Co. … expects 20% slump for 2020, further pressure on naira ENDURANCE OKAFOR

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igeria could see a slowdown in diaspora remittances for the first time in over a decade amid global economic crisis fuelled by coronavirus outbreak, according to Agusto & Co. The consulting arm of the rating agency expects a 20 percent drop in the diaspora remittances that will be recorded for Africa’s most populous country this year, saying the projected drop will further put the naira under some more pressure.

“With an economic crisis in several western nations, Nigeria could see a slowdown. We are forecasting a 20 percent drop in the diaspora remittances to $20 billion,” Agusto & Co. said.

That would be a decline of $5 billion from the $25 billion reported in 2019.

Nigeria received $25 billion in direct diaspora remittances between January and December 2019, as compiled from data by Nigerians in Diaspora Commission (NIDCOM).

“For 2019, we are dealing with about $25 billion as remittances from Nigerians in the diaspora,” Abike Dabiri-Erewa, chairperson, NIDCOM, said.

She said the figure did not include monies sent through informal means.

“The foremost remittances are not even captured – the $500 to your brothers, to your sisters. We hope that Nigerians in the Diaspora continue to help in resuscitating the Nigerian economy,” she said.A recent report by PwC, titled ‘Strength from Abroad: The Economic Power of Nigeria’s Diaspora’, estimates that migrant remittances to Nigeria could grow to $29.8 billion in 2020/2021.

The London-based service firm’s projection may be threatened by the impact of the coronavirus outbreak on the global economy and business activities.

Countries like the US and UK, the destinations where Nigerians abroad send more money from, are top on the list of those that have been most affected by the COVID-19 pandemic as they have recorded some of the highest cases.

Data by the US Government revealed that more than 10 million people filed for unemployment benefits in the last two weeks of March. The unprecedented spike was due to the coronavirus pandemic, which has shut down wide swaths of the American economy.

Listed insurers’ claims hit N101.48bn in 2019 BALA AUGIE

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he largest listed insurance companies are meeting obligations to policyholders, but there could be fictitious claims, deteriorating margins, and loss of premium revenue in coming months if the financial and economic headwinds caused by coronavirus tip the country into a recession.

Seventeen insurers paid a combined N101.48 billion in December 2019, which represents 17.07 percent increase from N86.68 billion recorded the previous period.

Within four years, operators have paid combined N426.24 billion in claims to policyholders, as average cumulative claims or loss ratio fell to 28.05 percent to December 2019 from 32.04 percent the previ-

ous year, according to data gathered by BusinessDay. A reduction in loss ratio means the insurance firms are profitable, thanks to doubledigit growth in premium income even amid low disposable income.

The loss ratio measures the total incurred losses in relation to the total collected insurance premiums. It is calculated by dividing the total incurred losses by the total collected insurance premiums. The lower the ratio, the more profitable the insurance company, and vice versa.

Following the torrent of losses incurred two years ago that resulted in weak underwriting performance, insurers have been cautious on the kind of policies they underwrite.

Operators were more exposed to claims from the

oil and gas sector because it carries more risk, while other major losses were also from aviation and maritime risk.

“COVID-19 will result in a global recession. When there is a recession, there will be more fraudulent claims,” said an actuarial scientist who doesn’t want his name mentioned.

“However, this social distancing that we are observing will result in fewer accidents and thus less claims. Also fewer policies are written in a downturn and also from fewer policies,” said the scientist.

Analysts are of the view that companies should have adequate risk management through reinsurance and that failure to take such measure could result in huge claims that burden an entity.

Global ratings agencies Fitch and AM Best predict

coronavirus will cause volatility in the financial markets alongside an increase in insurance claims and losses.

The ratings agencies added that they expect the disruptions caused by the pandemic to weigh heavily on reinsurers’ capital and profitability in coming months.

In Nigeria, re/insurance premiums could decline if the economic lethargy continues, as decline in equity market and low yield environment likely undermine insurers’ investment portfolio capital and earnings.

“There has been a reduction in the volume of transactions that will affect a lot of things. We are under an obligation to meet claims that were incurred before the pandemic outbreak,” said Moronfola Monsuru, senior actuarial analyst at Wapic Insurance.

Hospitality records worst Easter sales in history amid coronavirus . . zero room occupancy rate, empty resorts, beaches, parks Obinna Emelike

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igeria’s hospitality industry is facing the worst challenge in its history as the impact of the coronavirus pandemic continues to spread.

The industry, hitherto adjudged burgeoning, is gasping for breath. Most international hotel chains have shut down their operations and independent and indigenous hotels have toed the same path lately.

Before the shutdown, a drastic business decision taken for the first time in the history of the industry, the rising cases of coronavirus in Nigeria had compelled most international hotel chains in the country to scale down operations to essential services with the hope that business would improve. Hotel occupancy rate had dipped below 30 percent, dwindling further in the week before Easter.

But the lockdown in some major cities across the country and the recent evacuation of some foreigners over fears of coronavirus escalation have further emptied the hotels, leaving hoteliers with scanty

guests that cannot sustain their operations. Currently, the industry is at standstill with zero occupancy.

As at Friday, all international brands in Lagos and Abuja had shut down. Big hotels that remained open only served special interests and did not allow entry or exit by guests or employees.The consequences on the industry are dire. Experts lament that the sector lost over N10 billion in the first quarter of 2020 from low sales and would lose more in the second quarter, starting from the no Easter sales, if the spread of the virus is not curtailed soon.

The experts, however, supported the industry shutdown. Explaining the rationale for the action, they said if a hotel of 100 rooms struggles to run only 20 rooms, it would be a good business decision to close down because the hotel would incur the same operation cost running 20 rooms as it would for 100 rooms.

“Hoteliers are now switching to survival mood and looking at saving their little resources to rebuild the business tomorrow,” one of the experts said. www.businessday.ng

Poor income levels threaten Nigeria’s stock of nursing workforce Temitayo Ayetoto

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he world is experiencing a shortage in the stock of nursing workforce estimated at 5.9 million nurses, largely because of the ageing population of nurses globally. The number of new nurses is not measuring up.

But for Nigeria and some low- and lower middle-income countries which account for the largest shortages, poor income level is mainly responsible for the shortage.

Nigeria falls among countries shouldering 89 percent of the world’s shortages because of poor welfare provision, according to the ‘State of the World’s Nursing Report 2020’ by the World Health Organisation (WHO).

In 2016, the WHO Global

Strategy on Human Resources for Health estimated that by 2030 there would be a global shortage of 7.6 million nurses and midwives in countries with a density below a benchmark of 4.45 physicians, nurses and midwives per 1,000 population – a threshold value that excluded most high-income countries.

Nigeria faces an estimated shortage range of 500,000 to 600,000 by 2030, with current density of 5.6 nursing personnel per 10,000 population, a 3.8 percent of gross domestic product (GDP) health expenditure and a $74 health expenditure per capita. The consequences of declining number of nurses would be too telling on Nigeria should the current coronavirus pandemic, which has entered community transmission level, spread further in rural

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communities.

As of 2019, Nigeria had over 110,000 nurses, depleting the stock from its 200,000 level in 2016. Although the nursing profession retains the largest share within the health workforce, the country risks an excessive loss to countries which are overreliant on migrant nurses, if it fails to make additional investment in multiplying and retention.

Johnson Akomolafe, secretary, National Association of Nigerian Nurses and Midwives (NANNM), Lagos University Teaching Hospital (LUTH), earlier told BusinessDay that the productivity of healthcare providers was often compromised by working conditions that lack tools smart enough to enhance efficiency, overburden them with tasks and expose them @Businessdayng

to different health risk.

The hazard allowance for Nigerian doctors dangles around a staggering N5,000 monthly, $12, an amount about three times less than the allowance of professionals in non-clinical sectors.

Osagie Ehanire, minister of health, on Thursday said he was unaware if medical doctors and other health workers managing the coronavirus disease 2019 (COVID-19) patients in Nigeria were paid any hazard allowance, attracting heavy criticisms from many Nigerians and even resignation calls.

Poor welfare and other factors have occasioned a continued rise in voluntary resignation of nurses, who want to pursue better working conditions that help skills to flourish and appreciate hard work.

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SEC, FMDQ Depository revolutionise...

Continued from page 1

Babajide Sanwo-Olu (r), Lagos State governor, and his wife, Ibijoke, worshipping online for the Easter Sunday service, yesterday. They prayed for family, Lagos and Nigeria.

Nigeria’s balance of payment deficit to hit 7yr high of $9bn in 2020 ... Analysts advise FG to take IMF Stand-By Facility ... Allow further naira depreciation, boost exports LOLADE AKINMURELE

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iger ia could be needing as much as $9bn to plug a gaping hole in its balance of payment this year, the biggest imbalance in at least seven years, according to estimates from local consulting firm, Agusto & Co. That would be the largest outflow from the country’s external reserves since at least 2014 and could set the stage for a big currency devaluation.

Bankers estimate that close to 85 percent of Foreign Portfolio Investors have moved their money out of Nigeria since January, with more planning exits upon maturity of their investments as the country’s risk profile heightens largely on the back of low oil prices.

The International Monetary Fund (IMF) projects the gross external financing needs for emerging market and developing countries to be in the trillions of dollars, “and they can cover only a portion of that on their own, leaving residual gaps in the hundreds of billions of dollars”,said Kristalina Georgieva, the institution’s managing director. “They urgently need help.”

Like for some other developing countries, Nigeria’s balance of payment problem is rooted in the fact that as outflows rise, inflows have slowed to a trickle in Africa’s largest oil producing country.

Oil revenues are estimated to halve this year owing to the coronavirus-induced slump in global demand for

the commodity. OPEC’s plan to cut 10 million barrels of daily production is not expected to significantly boost prices when factories globally remain shut and airlines grounded. Moreover, Nigeria’s production will also now be capped at 1.4 million barrels daily which limits any revenue upside from production.

Furthermore, Nigeria’s current account has been in a deficit the past few quarters mostly driven by services payments.

On the financial account front, there has been a slowdown in accumulation due to the Central Bank of Nigeria’s actions on the Open Market Operations (OMO) in October 2019 and the global risk off due to the COVID-19.

To fund the difference in its balance of payment, the country has been drawing down on its external reserves which is becoming increasingly unsustainable.

There are signs, though, that the government is well aware that it is unsustainable to rely solely on its relatively small external reserves of $36 billion to fix its balance of payment problem. The Federal Government disclosed plans last week to tap multilateral lenders, from the IMF and World Bank to the African Development Bank (AfDB), for some $6.9bn.

Going to the IMF for aid is unprecedented by Nigerian standards and perhaps an indication of a financial storm that’s even worse than in the thick of a recession in 2016.

Back in 2016, when Nigeria reeled from its biggest economic contraction in 25 years www.businessday.ng

occasioned by the slump in oil revenues, then finance minister, Kemi Adeosun, said Nigeria would not consider going to the IMF unless it had a balance of payment problem.

“The IMF has to be the lender of last resort and we are not there yet,” Adeosun said at the time.

The current finance minister, Zainab Ahmed, has also said that the country would not seek an IMF programme but wants to draw on its Rapid Credit Facility (RCF) which is different from the IMF programme in that it comes with almost no conditionalities.

However, the $3.4 billion Nigeria seeks from the IMF which the Fund says will be under its Rapid Financing Instrument could be slashed to half if the Washington-lender sticks to its rule that countries can only borrow 50 percent of their quota or contributions to the Fund in one year.

None of the countries, from Madagascar to Rwanda, who have received disbursements from the Fund under either the Rapid Credit Facility or the Rapid Financing Instrument got 100 percent of their quota.

Instead, they got around 50 percent.

In addition, the IMF has said more than 90 countries had requested aid since the COVID-19 spread around the globe in recent weeks, which means the N1 trillion war-chest of the Fund would be keenly competed for by a legion of countries all seeking emergency bail-out.

Additionally, part of the $2.5 billion sought from the World Bank could already

be spoken for by some state projects which reduces how much the Federal Government gets from this medium, even though the government may be assured of the $1 billion it seeks from the AfDB. Omotola Abimbola, an analyst at Lagos-based Chapel Hill Denham, says the government may be able to raise only about $3 billion from the multilaterals, but that’s less than half of the $6.9bn target.

Going by the possible $9bn balance of payment deficit, raising $3 billion will leave the Federal Government with a gap of $6 billion.

To resolve this deficit, analysts are advising the government goes for a larger amount under an IMF Stand-By Facility rather than the RFI. They also suggest the government allows the multiple exchange rates converge at a single market rate to stimulate increased diaspora remittances and grow exports aggressively.

“Nigeria needs around $10bn for starters and should be talking to the IMF for a loan of this size or at least a StandBy Facility which would help engender investor confidence and somewhat slow the rate of portfolio outflows which would help ease our balance payment problem,” said a money manager who did not want to be quoted as he didn’t have authorisation to speak publicly on the matter.

The other alternative will be to tap the Eurobond market and that will be too expensive at this time given the risk aversion in the market, the money manager said.

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ing issuers and investors with freedom of choice, value and enhanced service delivery.

Following its operationalisation in August 2019 and leveraging on active stakeholder engagements across the Nigerian capital market value chain, FMDQ Depository commenced delivering on its operational mandate to implement value-added products and service offerings; with FMDQ Group providing efficient listing and trading services through FMDQ Securities Exchange Limited (FMDQ Exchange) and the much-required risk management, clearing and settlement services through FMDQ Clear Limited (FMDQ Clear); offering market participants an unrivalled opportunity to experience enhanced liquidity and straight-through-processing.

With the support of market stakeholders, FMDQ Depositoryhassuccessfullyonboarded some of the choicest bonds onto its platform, with its appointment as sole depository to the Lagos State Government N100.00 billion Bond, and more recently, as a joint depository to the Dangote Cement N100.00 billion Bond. The foresight of Lagos State Government in choosing FMDQ Depository for itsmostrecentbondisanindicationof the State’s alignmentwith progressive market development in Nigeria. Indeed, DangoteCementPLCshouldalsobe commended as it has made history by giving investors power, for the first time in the Nigerian capital market, to determine which depository to lodge their assets with, thereby validating theSEC’svisionofdiversification and healthy competition for the market, motivated by FMDQ’s global competitiveness agenda.

As FMDQ Depository is not saddled with the administrative task of allocating the International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs), the Depository will remain focused on building its core competencies, including efficient and valueaddedservicedeliverytomarket stakeholders,whichisthecruxof the depository service.

To ensure operational efficiency and facilitate ease of implementing investor’s choice of depository, FMDQ Depository had been advocating, right from its inception, for the SECregistered central securities depositories (CSDs) in Nigeria to embrace operational collaboration towards promoting the global agenda for interoperability between their systems, thereby effectively empowering investors to deal on their Exchange of choice in Nigeria, irrespective of which depository their assets are held. Indeed, competition, they say, breeds innovation and this is no different as market players have commended FMDQ Group for taking up this mandate which provides participants a choice; @Businessdayng

and for continuing to drive innovative reforms to deliver world-class standards to the Nigerian financial market.

An investment banker from one of the leading financial advisory firms opined that, “it will take a while for market participants to fully dimension the significant value FMDQ Group has brought to the financial market ecosystem in Nigeria. With FMDQ’s focused GOLD Agenda for the market, it will certainly not be business as usual for the market operators.” With innovation at the core of FMDQ Group’s existence, the efficient and integrated linkage between FMDQ Exchange and FMDQ Depository guarantees seamless market making for all securities, including bonds and commercial papers (CPs), held on the FMDQ platform. In turn, investors are availed an unrivalled liquid market provided through the unmatched financial capacity of FMDQ Exchange’s Dealing Members (banks and nonbank financial institutions), credible price discovery from sizable market trades executed by these Members as well as world-class models, and real time refinance/repurchase opportunities provided as part of FMDQ’s market development agenda. In addition, issuers and investors will also benefit from FMDQ Depository’s credible asset servicing for the investments lodged with the Depository; secure and resilient processes and operations; and reliable data and information. Some of the other issuers currently benefiting from the complementary and unique depository services provided by FMDQ Depository include, Citibank Nigeria Limited, Eterna PLC, First City Monument Bank PLC - for their CP issuances - among others.

According to the Chief Executive Officer of FMDQ Group, Mr. Bola Onadele.

Koko, “We are excited as we embark on another phase of implementing FMDQ’s GOLD Agenda - with the overarching objective of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse. FMDQ Depository completes the value chain of pertinent market infrastructure for the pre- trade, trade and post-trade spectrums provided by FMDQ Group – from listing to trading, clearing, settlement, asset servicing and data & information, amongst other services. With the support and collaboration of its stakeholders, FMDQ’s much sought after goal of delivering power of choice to the hands of the investors has been actualised and FMDQ Group remains committed to fostering prosperity to all its stakeholders, especially the issuers and investors, through FMDQ’s capital market value chain services.”

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Obaseki applauds Buhari on pardon for ex-Bendel Governor Alli, Enahoro

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overnor Godwin Obaseki of Edo State has expressed appreciation to President Muhammadu Buhari for the presidential pardon granted to former governor of old Bendel State, late Professor Ambrose Alli and late Chief Anthony Enahoro, both illustrious sons of Edo State who contributed immensely to Nigeria’s development.

In a statement, special adviser to the governor on media and communication strategy, Crusoe Osagie, said the governor deeply appreciated that the presidential pardon, which he had championed in the past few months, had finally been granted.

According to Obaseki, “When the governor graced the memorial service in honour of late Prof. Alli, he said that he had reached advanced stages of a move to secure presidential pardon for Prof. Alli. It is delightful that the pardon has now been granted.

“What is also very pleasing

is the fact that Chief Anthony Enahoro was also granted presidential pardon. Chief Enahoro would always be remembered for his instrumental role in the ideation of what is Nigeria today.”

He said the state government would continue to sustain the legacies of late Prof. Alli and the noble ideals of Chief Enahoro, noting, “With Prof. Alli’s legacies serving as indelible examples of the kind of policies and programmes we are enacting in Edo State, the Obaseki-led administration is going to continue to place the common man at the centre of its policies. Chief Enahoro, on his part, also espoused ideals which we have anchored a number of our programmes, especially on the need for Edo people to chart the path of their destinies on their own terms.

“The president’s gesture gives fillip to our desire to restore the golden age of development in the state and truly drive development that would better the life of the people in the state.”

IMF managing director names Ngozi Okonjo-Iweala member of her Advisory Group Onyinye Nwachukwu, Abuja

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anaging director of the International Monetary Fund (IMF), Kristalina Georgieva, has named Nigeria’s former finance minister, Ngozi Okonjo-Iweala, as a member of a group of prominent individuals to serve as her new External Advisory Group.

The eminent group from around the world draws on high-level policy, market, and private sector experience to provide insights to enhance the Fund’s ability to serve its membership.

The group convened on Friday will provide perspectives from around the globe on key developments and policy issues, including policy responses to the exceptional challenges the world now faces due to the novel coronavirus and its economic impact, according to an IMF statement mailed from Washington.

“Even before the spread of Covid-19 and the dramatic health, economic, and financial disruptions it has brought, IMF members confronted a rapidly evolving world and complex policy issues,” Georgieva said.

“To serve our membership well in this context, we need top-notch input and expertise from the widest range of sources, inside and outside the Fund.

“Toward this end, I am proud that an exceptional and diverse group of eminent individuals with high-

level policy, market, and private sector experience has agreed to serve on my External Advisory Group.

Today we had a dynamic discussion to gain their insights, and to receive informal reactions to our ideas and approaches,” she said.

The members of the managing director’s External Advisor y Group include: Ngozi OkonjoIweala, former finance minister of Nigeria; Tharman Shanmugaratnam, senior minister of Singapore and chairman of the Monetary Authority of Singapore; Kristin Forbes, a professor, Massachusetts Institute of Technology; Kevin Rudd, former Prime Minister of Australia, as well as Mark Malloch Brown, former United Nations deputy secretary-general.

Others are: Feike Sijbesima, Honorary Chair, DSM, Former CEO, Royal DSM; Raghuram Rajan, Professor, University of Chicago; Ana Botín, Group Executive Chairman, Santander; Carmen Reinhart, Professor, Harvard University; Mohamed A . El-Erian, Chief Economic Adviser, Allianz; Scott Minerd, Chief Investment Officer, Guggenheim Investments; and Nyaradzayi Gumbonzvanda, Chair of ActionAid International.

The managing director’s External Advisory Group will meet a few times a year with the IMF’s managing director, deputy managing directors, and a sub-set of IMF department directors.

L-R: Benedict Alabi, deputy governor, Osun State; Adegboyega Oyetola, governor, and others, during the flag-off distribution of 6020 bags of rice to Osun people at Government Secretary’s Office Osogbo.

Covid-19: Finance professionals worry over impact of pandemic on businesses CHUKA UROKO

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inance professionals working in organisations, large and small in the public and private sectors, have expressed deep concerns about the impact of Covid-19 on people, productivity and cash flow of businesses.

The dreaded disease, which the World Health Organisation (WHO) has described as a global health emergency, is taking toll on families and their businesses, leading to pay cuts and posing threat to job security.

A new global research conducted by Association of Chartered Certified Accountants (ACCA) among 10,000 finance professionals, including an expert panel of 227 in Nigeria, turned out startling revelations.

Respondents in Nigeria say the most severe impact of the virus is employee productivity being negatively affected,

with 55 percent saying this was the case, followed by cash flow problems hitting business viability.

33 percent of the respondents, according to the research, stated that the virus is really an impact while a third of the respondents explained they were unable to obtain supplies from preferred suppliers in regions affected by the outbreak.

The research says that only 45 percent of businesses have been able to conduct a financial reforecast, perhaps, due to the fast-evolving scale and duration of the Covid-19 pandemic alongside the extent of necessary social distancing controls put in place by governments, which have created vast uncertainties for businesses.

As a result, 82 percent suggest their organisations are expecting that they may see negative revenue growth, with 77 percent saying they are expecting negative profit growth too.

The findings also showed

Facebook launches Coronavirus Information Centre in Nigeria, 16 other African countries Jumoke Akiyode-Lawanson

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acebook is expanding its Coronavirus Information Centre to 17 more countriesinsub-SaharanAfrica, including Nigeria.

The Information Centres form part of Facebook’s effort to help the global fight against COVID-19 by providingpeoplewiththelatestnews andinformationfromtrustedhealth authorities as well as resources and tipstostayhealthyandsupporttheir familyandcommunity.

The Coronavirus (COVID-19) Information Centre is featured at the top of News Feed, which provides a central place for people to keep informed about the Coronavirus.Itincludesreal-timeupdates from national health authorities and global organisations such as the World Health Organisation, as well as helpful articles, videos and posts about social distancing and preventing the spread of COVID-19.

Facebook users can opt in to

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follow the centre to get notifications and see updates in their News Feed from official government health authorities.

The centre has already launched in South Africa, and will now be expanded to the following new sub - Saharan African markets: Benin, Burkina Faso, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Ethiopia, Gabon, Guinea, Kenya, Mali, Mauritania, Nigeria, Senegal, Seychelles, The Democratic Republic of Congo (DRC) and Togo.

Kojo Boakye, Facebook’s head of public Policy, Africa, said; “We’ve built the information centres,incollaborationwithnational health partners, to ensure that people can get access to information from trusted health sources.

The launch of the COVID-19 Information Centre on Facebook in more than 17 countries across sub-Saharan Africa aligns with our commitment to making accurate, timely information about the pandemic accessible to all communities.”

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63 percent of respondents thought their organisation’s business continuity plan has allowed them to respond effectively to Covid-19 disruptions.

Yet, only 10 percent of respondents thought the economic stimulus package introduced by the government in response to Covid-19 was effective for supporting their organisation.

Tom Isibor, head of ACCA Nigeria, explains in a statement obtained by BusinessDay last Thursday that this research aims to understand the business and financial blows to organisations so far from the viewpoint of ACCA’s members – finance professionals working in a wide range of businesses and organisations.

“The findings gauge the short to medium term implications, while also looking at the measures being undertaken and considered by organisations to mitigate the damage.

It also looks at what lessons we can all learn from the pandemic,” Isibor says.

ACCA is recommending that organisations follow the ‘three As’ of crisis planning – Act to respond in a sustainable manner and focus on employees and stakeholders; Analyse the different information sources to secure your organisation; and Anticipate the business impact and future trends.

Jamie Lyon, the report author, explains that “everyone is hurting, but particularly the smaller organisations. For many of us, the ‘face of work’ has changed overnight. In the short term, leaders are facing a very difficult operating environment when it comes to employee productivity and engagement, alongside a number of compounding and wideranging challenges.”

He adds that the pandemic has stifled and stalled customer demand, supply chain disruption, people mobility issues, product and service delays or deferments, investment challenges and so on.

ALGON takes Covid-19 enlightenment to grassroots, constitutes respond team in Nasarawa Solomon Attah, Lafia

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gainst the backdrop of the global pandemic that is threatening human existence, the Association of Local Governments of Nigeria (ALGON) in Nasarawa State has constituted a quick response team on COVID-19 that would embark on an aggressive enlightenment to the people at the grassroots.

Inaugurating the team in Lafia, the state ALGON chairman who doubles as the chairman of Lafia Local Government, Mu’azu Maifata, tasked the respond team to educate the people on measures to contain the virus.

Maifata urged the team to collaborate with the state respond team by providing information on any person suspected with symptoms of the virus.

Maifata however distrib@Businessdayng

uted face mask, hand sanitisers, thermometers, hand gloves among others to some communities to prevent the spread of the pandemic.

He also directed Lafia branch of the National Union of Road Transport Workers (NURTW) to ensure strict compliance with the government directive to use only one motor park is operating.

According to him, the directive became necessary to ensuring that commuters were screen before entering and living the park.

“The government had already provided testing kits including thermometers, face mask, sanitizers, hand gloves among others to be use in central motor park in Lafia”.

The ALGON chairman therefore advised the people to maintain social distancing, improve hygiene, avoid touching their faces and wash their hands regularly to avoid being infected.

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Covid-19: Tenants gain as landlords offer rent-free period to sustain business CHUKA UROKO

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he ravaging impact of coronavirus pandemic may have some silver-lining for tenants, especially middle- and low-income earners in residential houses whose income has been badly affected by the virus.

This is because, while some landlords say the current situation calls for understanding and forbearance, some others are offering rent-free period of 6-12 months as a way of sustaining their business and also cushioning the impact of the virus on tenants.

“This is the time for landlords to show understanding with their tenants. Many of these tenants are workers whose salaries have either been cut or not paid at all because workplaces have been shut down,” Kunle Awobudu, president, Nigerian Institute of Building (NIOB), told BusinessDay.

Awobudu said the housing market was passing through a trying period when rent payment default was rampant because household income had been badly eroded by the coronavirus, which has locked down economic and business activities.

Frank Okosun, CEO, Knight Frank Nigeria, a foremost firm of estate surveyors and valuers, takes it further. “We have calls from our clients offering six to 12 months rent-free period,” he confirmed.

“These clients just want to keep people in their houses because they know the costimplication of maintaining empty houses,” he explained, adding that residential vacancy rate might spike in the weeks and months to come.

Okosun foresees a challenging future for the real estate sector, pointing out that the falling oil price and a possible devaluation of the Naira will impact on the sector in a very significant way.

“The Nigerian economy depends on oil. The 2020 budget

was benchmarked on $60 per barrel when the oil was selling, until a couple of days ago, for below $30. This means the economy risks slipping into another recession,” he said.

The Central Bank of Nigeria (CBN) has been trying its best to protect and save the Naira from devaluation, but with the state of the global economy, there is only so much the apex bank can do. Okosun reasons that if the naira is devalued, it would affect cost of building materials which are up to 70 percent imported.

“This means that supply of housing will shrink while demand will still be there.

Following the simple rules of economics, when demand is high and supply is low, the inevitable is a rise in price levels,” he said.

Okosun noted that tenants were not moving or changing address and this is more pronounced in the commercial office market. He lamented that the coronavirus pandemic struck when the office market was about to recover from

recession.

A recent report by Broll Property Services puts the vacancy rate in the office market, as at the end of the second half of 2019, at 41 percent. The report also puts the number of office space expected in the market in 2020 at 130,000 square metres.

With the current situation in the economy, Okosun sees more vacant spaces coming.

“Today, all offices, except those on essential services, are shut down and people are working remotely from their homes.

This may continue even after the lockdown because people have seen that it is cheaper and more convenient,” he observed.

Before now, office space suppliers or landlords had been offering interesting incentives and concessions to prospective tenants to beat competition which defines that segment of the real estate market. The market has seen significant over-supply and the scramble for tenants is quite keen.

MainOne boosts fight against Covid-19 with connectivity to Lagos Command Centres SEGUN ADAMS

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ainOne, West Africa’s leading connectivity and data centre solutions provider, is partnering the Lagos State government and National Centre for Disease Control (NCDC) to help curtail the COVID-19 spread in the state. The company is enabling the COVID-19 Command Centre and isolation facilities with high speed connectivity infrastructure to facilitate effective monitoring, communication and response, as its contribution to Lagos State’s efforts to fight the pandemic.

MainOne’s CSR solution will ensure that the state government, health officials and doctors on the frontline s battling the pandemic are well connected with each other and to the rest of the world.

This is being achieved via the provision of high-speed internet access as well as managed wi-fi services to the five isolation and command centres spread across Lagos; Yaba, Ikeja, Gbagada, Lagos Island and Ikoyi, in addition to the state’s Command Centre.

The Command Centre plays a critical role in enabling the government monitor the

spread of the disease, using algorithms, data analytics and surveys to localize the spread and update stakeholders on the current COVID-19 situation in Nigeria. The enhanced connectivity will provide a platform for exchanging upto-date scientific findings and knowledge on the disease with colleagues around the world, positioning Nigeria as partners in the global fight against the pandemic.

Speaking on the company’s COVID-19 intervention, Funmike Olayera, sales manager, public sector, MainOne, said, “We understand that our healthcare centres are our first line of defence. We appreciate the work the health care workers, the State Government and the NCDC are putting in to ensure we curtail the spread of the virus in Nigeria.

“As a communications company, we understand how critical technology is to solving the world’s challenges and we are happy to partner with Lagos State Government to keep Nigerians safe. For these reasons, we will continue to do our part in supporting the Government effort to stop the spread of the virus in the country and ensure any infected Nigerians are properly cared for.”

Minister promises amicable resolution of Army, Abuja native land dispute James Kwen, Abuja

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Simon Lalong, governor, Plateau State driving the fumigation tractor to officially inaugurate the state-wide fumigation to stop the spread of COVID-19 in Jos on Friday.

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Like Nigeria, Ghanaian operators still collect demurrage, rent charges on overtime containers

… port business still ongoing amid lockdown

AMAKA ANAGOR-EWUZIE with agency report

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ust like operators in Nigeria, Ghana has also not suspended demurrage – fees paid for overstayed containers – and rent charges at the port, due to outbreak of the coronavirus also called Covid-19 in Ghana, the Ghana Ports and Harbours Authority (GPHA), has said.

According to the GPHA, all operations at the port are going on as usual apart from measure that have been instituted to reduce the number of people who can enter the port to help in respecting the social distancing protocol.

Meanwhile, Customs Licensed Agents and Freight Forwarders in Nigeria have

continued to accused terminal operators and shipping companies of failing to suspend the same charges in Nigeria despite the fact that ports and banks within the port have remained open for port related business, BusinessDay check has revealed.

Esther Gyebi–Donkor, general manager, marketing and corporate affairs of GPHA, told the B&FT, an online news platform in Ghana, that matters have not reached the extent where restriction will be put on non-essential cargo which will require modalities to suspend the charging of demurrage and rent. www.businessday.ng

“There shouldn’t be issues of demurrage and rent at this time. There was a business continuity plan that was put in place. For now, we are clearing all kinds of cargo, so those whose documentations are ready to clear good should go through the permit system with Customs and GPHA and get the goods cleared,” she said.

According to Gyebi–Donkor, with proper documentation, clients should be given a pass by security agencies at various barriers to get to the port.

“Once you have our identification cards, the Customs and GPHA permit which shows that you have some duties at the port, you will be given access to

pass. The GPHA says, as much as possible, it wants the port to be free and not have issues of congestion, therefore, it has entreated all persons whose goods have arrived at the port and have received documentation, to come clear them as early as possible to avoid paying demurrages,” Gyebi–Donkor said.

She stated that it was better that goods were cleared from the port in order for the cargo owner to free the port of backlog and himself of any demurrage.

“Come for the good, if they are food, you can take them to the market and sell as the directive has said; if the goods are not captured under the directives, go and keep them in your warehouse,” she added.

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he Federal Capital Territory (FCT) minister of state, Ramatu Aliyu, has promised indigenes of Tunga-Maje in Gwagwalada Area Council of Abuja that the disputed parcel of land allegedly encroached upon by the Nigerian Army would be resolved amicably by the highest authorities.

Aliyu, who made the promise when she visited portion of the disputed land, also assured the indigenous people and traditional heads that justice would be done to both warring parties.

The minister however commended the community for not taking laws into their hands and assured that if the disputed land was allocated to the Nigerian Army, resettlement and adequate compensation would be made to the natives.

“I must sincerely extend my appreciation to both the chairman of Gwagwalada Area Council and Abuja Municipal Area Council for calling on FCT Administration and the trust that the administration can resolve this lingering land dispute.

“I must also appreciate the Agura of Zuba and the indigenous people of Tunga-Maje for your calm conducts. You have demonstrated that you are indeed law abiding citizens.

From the narration of the Agura, it has been a painful moment, but hopefully this time around, we will be able to take it to the appropriate quarters where the needful will be done.

“If indeed the land is allocated from the federal authorities to the Nigerian Army, of course consideration must be made for a new place to relocate to @Businessdayng

and of course to settle you by compensation.

“But before then, we will not jump the gun. Therefore, we want you to be law abiding as we go back to revisit the issues.

Justice must be done. I want to appeal to you to be law abiding because the matter is not beyond the authorities to handle,” Aliyu assured.

E a r l i e r, c ha i r ma n o f Gwagwalada Area Council, Adamu Danze, revealed that since his inauguration four years ago, the battle to reclaim the disputed land from the Nigerian Army had been vehemently resisted with its attendant casualties.

Danze said despite the intervention of the National Assembly through various public hearings, innocent lives have been loss through army bullets, adding that the orphans from such senseless killings are now burden to both Gwagwalada and Abuja Municipal Area Councils.

The Council Chairman therefore appealed to FCT Minister of State and other relevant authorities to use their good offices to resolve the issue.

According to him, “we have been battling with this issue to the extent that lives are loss from army’s bullets. Many homes are now orphans and the community is taking care of these orphans. We are in pain over this matter and we are appealing to you to take further action”.

A statement by the special assistant to the FCT minister of state, Austine Elemue, said the minister was received by the Agura of Zuba, Mohammad Bello, who also informed her of the pains the community had gone through since the beginning of the crisis.

Monday 13 April 2020

FT

BUSINESS DAY

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FINANCIAL TIMES

World Business Newspaper

Nigeria in ‘crisis’ as oil receipts plummet Africa’s biggest crude exporter seeks $7bn in emergency funds in face of imminent recession Neil Munshi and David Pilling

I

n a sign of just how severely Nigeria’s economy has been affected by the coronavirus pandemic and the oil price crash, Africa’s biggest crude producer this week warned of an imminent recession, requested $7bn in emergency funding and ditched a costly oil subsidy scheme.

Although the country of 200m people had recorded a relatively modest 254 cases of coronavirus

by Wednesday, with just six deaths, Zainab Ahmed, the finance minister, warned that Nigeria would fall into its second recession in five years if drastic action were not taken to cushion the economic blow.

Ms Ahmed estimated this week that the economy could shrink as much as 3.4 per cent this year without a massive stimulus plan that includes billions in central bank, federal government and international support.

The warning came as the IMF began considering Nigeria’s emergency request for $3.4bn in funding, and the World Bank, from which the country has sought up to $2.5bn, released $82m to strengthen the country’s healthcare infrastructure.

“We need to do things that are very radical, and very bold and very different and maybe even unusual so that we don’t slip into a recession,” Ms Ahmed told AriseTV. “Our economy is in crisis.”

The Central Bank of Nigeria’s N1tn ($2.6bn) stimulus package amounts to just 0.7 per cent of 2019 gross domestic product, and the

People queue to receive food aid during the lockdown in Abuja © Afollabi Sotunde/Reuters

$3.4bn requested from the IMF is only 0.8 per cent of GDP, noted Yvonne Mhango, an economist for sub-Saharan Africa at Renaissance Capital. By contrast, many western economies have announced stimulus packages of 10 per cent of GDP or more.

“As a percentage of GDP, the amounts are small . . . Nigeria, like most [of sub-Saharan Africa], doesn’t have the capacity to put forward a sizeable stimulus package,” said Ms Mhango, who has cut her GDP forecast for 2020 from 1 per cent growth to a 0.4 per cent contraction.

“It was already on the back foot pre-crisis with an extraordinarily low revenue-to-GDP ratio of 6 per cent,”

she said. “So, yes, the loans will help.

But only to fill the funding gaps . . . not enough to jump-start the economy.”

Global consultancy McKinsey this week estimated that a best-case scenario “contained outbreak” would produce a 2.5 per cent contraction.

An “uncontained” one could see Nigeria’s economy shrinking 8.8 per cent.

It is unclear how much oil production cuts agreed this week to counter the effect of the biggest demand collapse in history will help Nigeria, which has been hit hard by falling prices.

Ms Ahmed has already reduced the government’s projection of 2.1m barrels a day of oil production to 1.7m, and is working to cut Nigeria’s

record $35bn budget for 2020, passed in December and based on an oil price of $57 a barrel, by about 15 per cent. Oil is currently trading at about $30.

Nigeria relies on crude receipts for more than half of government revenues and virtually all its foreign exchange. Both Fitch and S&P have downgraded Nigeria’s credit rating in recent weeks on the oil slump. Fitch also said that all 10 Nigerian banks were at “severe risk” because of their exposure to the oil sector.

The previous time oil prices plummeted, in 2015, the country sank into a recession from which it has only recently, and barely, recovered.

Economists said that downturn was both exacerbated and prolonged by

policy errors, including central bank resistance to what was an inevitable naira devaluation.

President Muhammadu Buhari has been a staunch opponent of a weak currency, partly because of its perceived impact on inflation, which disproportionately affects the 87m Nigerians living in extreme poverty.

But, last month, the central bank buckled to pressure, and devalued the official naira rate to N360 to the dollar from N305. The more widelyused black market rate, which had hovered around N360 for about three years because of central bank support, has spiked to about N415. In its downgrade note this week, Fitch described the currency move as too little, too late.

The oil price drop has pushed the government finally to remove the petrol subsidy, which had fixed fuel at N145 a litre and absorbed billions of dollars in spending. Economists have long advocated an end to the costly subsidy regime, and on Wednesday, Mele Kyari, head of the state-owned Nigerian National Petroleum Corporation, acknowledged on local TV that the subsidy had mainly benefited multiple car-owning elites.

“The stoppage of subsidy . . . will ensure monies are freed up for government to fund critical infrastructural projects such as education, health, roads and many others, for the benefit of the ordinary man,” he said.

Editor’s note The Financial Times is making key coronavirus coverage free to read to help everyone stay informed. Find the latest here.

How the next euro crisis could unfold

What if Italy cannot service its debt and a future government is tempted to default?

Wolfgang Münchau

S

This is not a forecast. But I think it is a plausible scenario. After initial relief at the emergency deal struck last week by EU finance ministers, investors will study the small print and conclude the rescue package will have no macroeconomic impact.

The main elements of the deal were a credit line from the European Stability Mechanism, credit support from the European Investment Bank, and reinsurance for national unemployment schemes.

The dispute about whether a loan from the ESM bailout fund should come with strings attached will be forgotten. Italy does not want one anyway. Giuseppe Conte, prime minister, has concluded that his government would not survive the humiliation. In any case, the European Central Bank has done enough to forestall a sovereign liquidity crisis this year. The ECB’s pandemic emergency purchase programme

trumps all else.

The only programme under discussion that could have made an economic impact is the postcrisis recovery fund. After EU leaders kicked the ball across to the finance ministers, they have kicked it back.

The European Council’s agreed text mentions a recovery fund, together with a reference to innovative financial instruments. (This means different things to different people.)

But nothing was agreed. The momentum for “coronabonds” as an instrument to raise finance for the fund may be fading.

My expectation now is that the European Council will, instead, end up agreeing on a small recovery fund from within the EU’s 2021-2027 budget, with the usual exaggerated claims of how much this amount can be leveraged. The main function of a recovery fund will be to serve as an attention-seeking device for idle European institutions making no macroeconomic impact whatsoever in a €12tn economy.

So we are left with national fiswww.businessday.ng

cal policies and ECB support. My baseline assumption is that the economic impact of the crisis will be larger than estimated by some forecasters. The German economic institutes have produced their joint forecast of an improbably precise 4.2 per cent decline in national gross domestic product this year, followed by a 5.8 per cent increase in 2021 — the perfect V-shaped recovery. If they are right, and if it translates to the eurozone as a whole, then we are done.

There will be no crisis and no need for extraordinary measures beyond those that have already been taken.

But I believe they are wrong.

These forecasts are not factoring in the global network effects of the lockdowns, the lasting impact on sectors, such as transport and tourism, and a possible second wave of infections in the winter. My scenario assumes a fall in eurozone GDP closer to 10 per cent this year, with Germany performing a little better than the average and Italy and Spain worse. My scenario also assumes that the German economy will re-

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cover moderately in 2021, while the south will recover less.

The combination of rising debt and falling GDP will raise Italy’s debt-to-GDP ratio from the current 135 per cent to between 160 and 180 per cent.

The majority of members in the ECB’s governing council will always support the eurozone economy in a moment of crisis. But I would not bet on the ECB bankrolling highlyindebted countries indefinitely. The ECB’s emergency programmes will end. People may start remembering Christine Lagarde’s slip of the tongue last month. The president of the ECB may actually have meant it when she said the bank’s job is not to close spreads. There are quite a few people in the ECB governing council who believe exactly that.

At some point, rating agencies or investors could start to question Italy’s solvency. The issue is not only the total amount of outstanding debt, but also the country’s low economic growth rate. This is the third recession in Italy since 2008. Each @Businessdayng

time the economy has emerged weaker. So, what if the rating agencies conclude that Italy cannot service its outstanding debt, and attach sequential credit downgrades?

Imagine if this happens in 2021 or 2022, just before Italy’s next general election. Mr Conte and his government are popular right now.

Will that continue to be so once the full depth of the recession becomes apparent? Matteo Salvini, a more marginalised political figure in Italian politics since last year, may bounce back. If he were to win an election in 2022 or 2023, his government might be tempted to default on Italy’s debt. And then what?

Like any scenario, this one, too, depends on uncertain events unfolding in a particular sequence. I hate to attach numerical probabilities to any future outcomes. But I think this scenario is not any less likely than the optimistic one of a V-shaped economic recovery, on which actual policy is based.

So I am left wondering: why does the EU not wish to hedge against it?

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Monday 13 April 2020

BUSINESS DAY

FINANCIAL TIMES

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Pressure on Saudi Arabia as Opec+ meets to finalise deal Biggest oil supply cut in history endangered by Mexico’s refusal to make equal cuts Anjli Raval, David Sheppard and Derek Brower

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pec and its allies will meet on Sunday as Saudi Arabia comes under pressure to finalise the biggest oil supply deal in history, with the coronavirus pandemic wreaking havoc on the global energy sector.

The outline agreement, to remove 10m barrels a day or more of global supply, has won the support of Opec and Russia and the G20 group of nations, with US president Donald Trump becoming the unlikely champion of a deal to support oil prices.

But despite winning broad backing over three days of talks, getting the deal over the finish line has become fraught after Mexico — a relatively small oil producer — defied Saudi Arabia’s push to have all members of the Opec+ alliance cut output by an equal margin.

Saudi Arabia’s reticence to sign up without Mexico’s full co-operation threatens to damage its relationship with the US, which has said it could place tariffs on the kingdom’s oil sales if it fails to make a deal.

Opec+ countries will now hold another online meeting at 5pm London time as efforts are made to sign off on the deal before markets reopen on Sunday night.

Failure to reach an agreement risks sending oil prices even lower.

The market is already creaking under the weight of record oversupply, as lockdowns and the economic fallout from the coronavirus pandemic have slashed oil consumption by as much as a third.

Brent crude has recovered to

Mexico is defying Saudi Arabia’s push to have all members of the Opec+ alliance cut output equally © AP

about $30 a barrel since Mr Trump announced a deal was in the works, bouncing from an 18-year low near $20 a barrel, though it remains down by more than half since March.

Russia insisted over the weekend that the deal is done and that Mexico’s “deferred agreement” would soon be resolved.

G20 energy ministers also called on the world’s leading countries to take “all the necessary and immediate measures to ensure energy market stability” and recognised the “commitment” of some producers to cut output.

The Opec+ group wants other oil producers — such as the US, Norway, Brazil and Canada — to contribute by cutting investment in oil production and buying up crude

for strategic reserves.

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman has not commented publicly on the deal since Friday morning, but has long insisted there can be no free-riders within the Opec+ group.

Russia’s reluctance to deepen production cuts in line with other members last month prompted Saudi Arabia to start a price war.

A senior Saudi official said he believed a deal would still be reached, but insisted there be no exemptions, despite Mexico’s wish to make a smaller contribution to the cuts. “We will have an agreement,” they said. “It’s very important that we don’t provide an exemption like this [to Mexico] because everybody will ask for one.”

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Sign up here The kingdom faces growing pressure as Mr Trump has gone out on a limb to support a deal, despite longtime opposition in the US to the Opec cartel, which has frequently been blamed for raising petrol prices for motorists.

Mr Trump has stopped short of mandating US production cuts.

But energy secretary Dan Brouillette said on Friday that output in the country was expected to fall by 2m barrels a day, or by more than 10 per cent in the coming months due to the drop in prices.

On Saturday, US senators from

oil-producing states held a conference call with Saudi officials including the oil minister to urge the kingdom to swiftly follow through with its cuts.

After Mexico offered Opec+ a cut of just 100,000 b/d, not the 400,000 b/d demanded by the kingdom, Mr Trump even said the US could “pick up some of the slack” for Mexico.

Talks among producers continued over Saturday to enable a workaround, with most analysts expressing confidence the deal would soon be signed, given Mexico’s disputed production amounts to less than 3 per cent of the total under consideration.

Mohammed Barkindo, Opec’s secretary-general, also held negotiations on Saturday with Mexico to find a breakthrough, people familiar with the matter said.

While Saudi Arabia would almost certainly seek to blame Mexico in the event talks collapsed, the other members of Opec+ appeared keen to move on from the squabble, leaving Saudi Arabia increasingly isolated.

One of the kingdom’s closest allies, the UAE’s oil minister Suhail Al Mazrouei said on Twitter the country would “help balancing the oil supply and demand, while the world is united to fight Covid-19”.

Opec, where Saudi Arabia is seen as de facto leader, released a statement from the African Petroleum Producers’ Organization supporting the deal, describing it as “a significant step in halting the speed at which the global oil industry was heading for total collapse”.

APPO said its members outside Opec+ would also commit additional supply cuts to the deal.

Argentina heads for ninth sovereign debt default Analysts expect the country to make bondholders an offer they cannot accept Benedict Mander and Colby Smith

A

rgentina is heading for its ninth sovereign debt default, analysts have warned, with increasingly frustrated investors set to reject the government’s debt restructuring offer due this month.

Last week, the centre-left government delayed payments on $10bn of local-law debt, a move seen by many as a signal of what is to come.

After missing a self-imposed deadline of March 31 to reach a deal on $83bn of external debt owed to private investors, officials said last week that talks would continue until at least the end of this week.

The process, already beset with delays, has been further set back by the disruption on financial markets caused by the coronavirus crisis, which analysts said would

make it easier for President Alberto Fernández to justify a default.

Carlos Abadi of Decision Boundaries, a financial advisory firm, said the government risked making an offer to investors without first ensuring it had enough of them on side. “I fear that Argentina may jump into the pool without first making sure there is water in it,” he said. “The result is likely to be a failure of the offer and, hence, default.”

A bondholder involved in negotiations said Argentina was heading towards a “hard” default, with no prior agreement with investors. “It is very hard to be optimistic,” this person said.

Prices of Argentina’s sovereign dollar bonds have plummeted in a broad sell-off of riskier assets due to the coronavirus pandemic, to levels suggesting investors expect an imminent default.

The country’s international bond maturing in April 2021 has www.businessday.ng

fallen 45 per cent since the beginning of March and now hovers around 30 cents on the dollar. The country’s once-vaunted 100-year bond, issued in 2017, has plunged to 26 cents on the dollar, a more than 35 per cent fall since the beginning of March.

“Seeing where bond prices are now, the government probably feels more empowered and believes it can put forward more aggressive terms,” said Patrick Esteruelas, head of research at Emso Asset Management. That would make negotiations with bondholders even more protracted, he said.

Settling Argentina’s debt issues was widely seen as essential to solving its economic woes, including a recession now in its third year and inflation of about 50 per cent. But any sense of urgency in government for doing so has diminished since the spread of Covid-19.

Mr Fernández, who has a repu-

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tation as a skilled negotiator, has repeatedly said he wants to avoid a default. But he has also insisted that this must not be at the expense of the wellbeing of Argentines. The coronavirus crisis has underscored the government’s other goal of securing fiscal and financial relief through debt restructuring.

The next test will come on April 22, when Argentina is due to pay about $500m to bondholders.

Gordon Bowers, an emerging markets research analyst at Columbia Threadneedle, said he expected Argentina to fall into hard default at that point. “If negotiations aren’t progressing and it looks like a deal can’t be done in the 30-day grace period, it doesn’t make a lot of sense [for the government] to let go of $500m,” he said, especially as net foreign exchange reserves have dwindled to about $12bn.

But others say a default is not @Businessdayng

yet inevitable. Some analysts recommend a standstill in negotiations until the coronavirus crisis has passed and Argentina’s economy has stabilised. Mr Abadi said creditors would accept “a one-year reprofiling”, which would also satisfy Argentina’s need to stop bleeding dollars through debt payments.

“If a debt deal was improbable last year, in this context it looks nearly impossible. But the crisis opens a new door,” said Eduardo Levy Yeyati, a local economist, who sees a standstill as Argentina’s only viable option.

He argued that such an offer to bondholders could be “sweetened” by using some of the $13bn that remains to be disbursed from Argentina’s currently suspended $57bn IMF programme — implemented when it came to the country’s rescue during a currency crisis in 2018 — as an upfront payment to creditors.

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Monday 13 April 2020

BUSINESS DAY

FT

ANALYSIS

Coronavirus exposes America’s broadband problem Poor internet access in rural areas was already an issue before the pandemic. It is now more important than ever Kiran Stacey

T

om Egan is the kind of entrepreneur America needs right now. For 30 years, Mr Egan has run a company making lifts to get wheelchair users in and out of vehicles and around the home. But now he has converted his upholstery shop to make surgical masks and gowns, and his 3D printing machines to make face shields, which he is planning to sell to medical centres in New York City, the current world epicentre of the coronavirus pandemic.

The only problem was that until last week Mr Egan, who is based in upstate New York, had no broadband internet, like tens of millions of other rural Americans. For years his patchy and makeshift internet connection was an irritation, cutting him off from customers and suppliers. Then it became a more serious issue.

“We make things with fabrics,” he says. “Not many people do that in the US any more — it is a lost art. Now we are getting a flood of people asking us what we can produce. Nothing has shown up our need for a connection quite like the Covid-19 crisis.”

Mr Egan finally got a connection at the end of last week after years of lobbying and the intervention of his local congressman.

Other rural Americans, however, are not so lucky.

Even as the US races to be the first country to roll out superfast 5G internet connectivity nationwide, 21m Americans remain without any broadband connection at all, according to the most recent figures published by the Federal Communications Commission last year. BroadbandNow, a consumer website, puts the figure at double that.

It is especially a problem in rural areas: the Pew Research Center estimates that a third of rural Americans do not have broadband at home.

Even before the pandemic, rural broadband had become a simmering political issue, an acute example of being left behind which some Democrats were using to prise rural voters away from President Donald Trump.

It is a subject that resonates from congressional districts in upstate New York to presidential swing states such as Iowa.

With the virus spreading rapidly beyond cities into rural counties, poor access to broadband has exploded into a major Congressional row, as politicians tussle over billions of dollars’ worth of stimulus money.

“I think rural communities are realising that this is as deep a divide as access to electricity was at the turn of the century,” says Abigail Spanberger, a Democratic

member of Congress who recently won her semi-rural Virginia seat from the Republicans. “And if politicians want to be attentive to the communities they represent, broadband matters.”

Before the pandemic, many people in excluded rural areas found workarounds. Small business owners visited friends’ houses to communicate with customers or file online accounts.

Schoolchildren would go to their local libraries or even fast food restaurants to do homework. Mr Egan paid over $4,000 to put up a radio antenna on a friend’s house on the adjacent hill and beam a wireless connection to his office.

But now, with public buildings closed and people confined to their homes, children are in danger of falling behind, medical patients are unable to contact their doctors and businesses cannot contact their customers. Many farmers cannot even operate their machinery: modern irrigation systems, for example, use real-time weather data to calculate how much water to pump out.

“I don’t think there has ever been a moment where everybody understands the profound role that broadband plays in our nation’s life, says Jonathan Spalter, chief executive of the industry association US Telecom. “This is no longer a matter of commerce, it is a matter of life and death.”

The US is not the only country to have struggled to provide broadband access to all its citizens. But the problem is much smaller in other industrialised nations. The UK has now rolled out broadband to 99.5 per cent of its population, according to the telecoms regulator Ofcom, while the EU average was 96.7 per cent in 2018.

Broadband rollout has proved a particularly difficult challenge in the US, thanks in part to how large and spread out the country is. Pew research shows it takes an average of two years between getting a grant to provide broadband to a particular location and the connection being switched on.

“There is no other OECD country that has the kind of vast rural www.businessday.ng

land mass that the US has, and no country that has the kind of geographic and demographic challenges when it comes to delivering broadband,” says Mr Spalter. “Just think of the challenge of trying to get it from one end of Alaska to the other.”

It is not just Alaska that lacks broadband. Mr Egan is just a 15-minute drive away from the nearest city. Charter Communications had laid cable to within half a mile of his property, but until last week had been dissuaded from taking it the extra few hundred yards by high costs and a lack of potential customers. State and national governments have already spent billions of dollars trying to incentivise telecoms companies to build out to homes, offices and farms such as Mr Egan’s, and explanations vary on why it has not yet worked.

Some believe it simply needs more money. The Federal Communications Commission last year launched one of the biggest national schemes yet, promising to auction off $20bn worth of incentives for rural broadband access.

But the FCC itself estimates it will cost as much as $80bn to get fibre optic cable to every household in the US, while the consultancy firm Deloitte puts the figure as high as $150bn.

Others believe the money has simply been misspent, focusing on incentivising private companies, which need to find a profit margin, rather than smaller nonprofit groups.

“For the most part, we are still hoping that the private sector will find a way to make it happen, and it’s just not happening,” says Christopher Mitchell, a researcher at the Institute for Local Self Reliance. “The FCC has long believed that the big telephone companies could solve this problem, but they don’t consider things like rural electrification co-operatives.”

A far more fundamental problem is that no one knows who actually lacks broadband access. The official maps run by the FCC define an entire census block — which can run to many hundreds

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of people — as connected if just a single property within it has access. According to those maps, Mr Egan has long had a connection.

But when BroadbandNow took a sample of more than 11,000 addresses and checked them against whether any internet service provider would provide a connection, it found the number of unconnected households was probably double that counted by the FCC. The commission is now working on new maps which it says will provide a more accurate picture of the problem. But Ajit Pai, the Trump-appointed FCC chairman, wants to begin awarding money to areas before the new maps are released. He intends to start auctioning $16bn worth of money this October, just weeks before the presidential election.

Jessica Rosenworcel, a Democratic commissioner at the FCC, says: “The chairman has proposed, 13 days before the election, sending out $16bn. But I feel like we have put the cart before the horse.

We are going to spend the money and do the data collection later — we have got it entirely backwards.”

The current crisis is spurring a wave of short-term solutions.

Several telecoms companies have opened up their public WiFi hotspots for people to use for free, while some are providing free packages for families for whom affordability is the main problem rather than the lack of a connection.

Schools are also proving resourceful. Teachers in the Morrisville-Eaton school district in New York state are filming lessons and uploading them on to flash USB drives to be distributed to students without broadband at home. The district has also bought 60 Verizon hotspots, which use cellular networks to provide internet at home.

Such solutions however, are often expensive. The Verizon hotspots cost $40 a month each — money the school district can ill-afford. Greg Molloy, the area’s school superintendent, says: “We don’t know where the money is going to come from but we know we have to do this for the kids and @Businessdayng

we will figure out the money situation later.”

Democrats in Congress pushed for $2bn to be included in last month’s stimulus package specifically to help schoolchildren get online during the coronavirus outbreak. That plan was scotched at the last minute amid rancorous negotiations between the two parties. But some are hoping that it might make it into the next round of crisis spending.

Teachers worry that short-term fixes such as this will not stop longterm damage being done during the coming months. Grades are likely to suffer — a study by Michigan State University published earlier this month showed pupils with fast home internet access scored half a grade higher than those with none.

And some worry about the possibility of children suffering more serious, but less measurable harm. “I have spent a lot of time on the phone to pupils who don’t have internet access at home.” says Rachel Murat, a teacher at Maine-Endwell High School, also in rural New York. “But I rely on being able to see them to know whether they are getting what they need at home: do they have shelter, food, a stable place to be.

Do they feel safe?”

Over the long term, campaigners for digital access hope that the pandemic will push this issue further up the political agenda.

Even before the outbreak, there were signs that politicians were taking it more seriously. Mr Egan, Mr Molloy and Ms Murat all live in a district represented by the Democratic congressman Anthony Brindisi.

Mr Brindisi won his seat from an incumbent Republican last year in part by campaigning on this issue, regularly attacking Charter Communications, which runs the local cable service under its Spectrum brand. Mr Brindisi says: “A big piece of what I ran on was the lack of broadband service, especially in our rural areas, the unwillingness of our large corporations to expand our broadband service in this area.”

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 236,375.75 6.65 2.31 249 17,070,803 UNITED BANK FOR AFRICA PLC 212,036.41 6.20 9.73 316 37,770,530 ZENITH BANK PLC 439,550.91 14.00 5.66 622 28,280,126 1,187 83,121,459 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 168,707.88 4.70 6.82 527 56,017,226 527 56,017,226 1,714 139,138,685 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 1,933,678.74 95.00 - 140 829,247 140 829,247 140 829,247 BUILDING MATERIALS DANGOTE CEMENT PLC 1,993,739.37 117.00 0.09 644 17,211,051 LAFARGE AFRICA PLC. 203,763.61 12.65 7.20 435 34,990,736 1,079 52,201,787 1,079 52,201,787 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 291,280.06 495.00 1.00 31 219,184 31 219,184 31 219,184 2,964 192,388,903 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,405.05 3.15 - 4 5,265 4 5,265 4 5,265 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 4 5,265 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 52,512.75 55.05 - 4 22,763 PRESCO PLC 36,450.00 36.45 - 3 9,274 7 32,037 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,100.00 0.70 - 6 1,200,130 6 1,200,130 13 1,232,167 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 28,453.59 0.70 7.69 66 6,778,034 U A C N PLC. 20,313.14 7.05 -0.70 60 2,096,138 126 8,874,172 126 8,874,172 BUILDING CONSTRUCTION ARBICO PLC. 423.23 2.85 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 30,096.00 22.80 2.70 82 1,098,163 165.00 6.60 - 0 0 ROADS NIG PLC. 82 1,098,163 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,234.62 0.86 - 2 8,450 2 8,450 84 1,106,613 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,263.60 0.80 - 6 81,500 GOLDEN GUINEA BREW. PLC. 829.98 0.81 - 0 0 GUINNESS NIG PLC 49,721.69 22.70 - 25 183,659 INTERNATIONAL BREWERIES PLC. 134,310.34 5.00 2.04 43 616,948 NIGERIAN BREW. PLC. 177,531.23 22.20 - 99 2,482,333 173 3,364,440 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 128,400.00 10.70 9.74 32 1,016,104 FLOUR MILLS NIG. PLC. 88,158.16 21.50 - 36 101,455 HONEYWELL FLOUR MILL PLC 7,137.18 0.90 - 15 52,227 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 22,520.23 8.50 - 6 48,534 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 89 1,218,320 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 12,959.59 6.90 9.52 37 2,614,626 NESTLE NIGERIA PLC. 658,063.22 830.20 8.52 118 575,233 155 3,189,859 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,316.09 4.25 - 7 68,618 7 68,618 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 17,470.10 4.40 - 11 82,485 UNILEVER NIGERIA PLC. 60,322.56 10.50 - 35 346,014 46 428,499 470 8,269,736 BANKING ECOBANK TRANSNATIONAL INCORPORATED 85,325.41 4.65 5.68 58 794,556 FIDELITY BANK PLC 60,847.07 2.10 -1.87 172 27,447,214 GUARANTY TRUST BANK PLC. 554,777.73 18.85 3.01 603 31,623,559 JAIZ BANK PLC 13,848.20 0.47 -7.84 26 639,745 STERLING BANK PLC. 40,018.68 1.39 9.45 33 2,326,760 UNION BANK NIG.PLC. 192,196.97 6.60 - 5 9,351 UNITY BANK PLC 4,909.52 0.42 -8.70 16 514,022 WEMA BANK PLC. 22,758.93 0.59 5.36 50 2,909,949 963 66,265,156 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 50,000 AIICO INSURANCE PLC. 9,517.37 0.84 5.00 30 1,372,340 AXAMANSARD INSURANCE PLC 16,590.00 1.58 - 3 60,600 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 1 15,500 CORNERSTONE INSURANCE PLC 7,953.93 0.54 -6.90 5 368,069 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,684.39 0.23 9.52 7 456,350 LAW UNION AND ROCK INS. PLC. 4,210.40 0.98 - 0 0 LINKAGE ASSURANCE PLC 3,680.00 0.46 - 11 612,266 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 0 0 NEM INSURANCE PLC 10,930.64 2.07 - 3 12,600 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 1 200,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 4 15,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 200 WAPIC INSURANCE PLC 6,237.84 0.26 4.00 28 1,115,577 95 4,278,502 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,629.63 1.15 - 4 65,000 4 65,000

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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 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,900.00 3.45 - 35 451,951 33,820.72 5.75 - 8 117,452 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 0 0 33,862.64 1.71 0.59 83 7,974,939 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,029.07 0.20 - 2 206,627 STANBIC IBTC HOLDINGS PLC 273,129.15 26.00 6.12 28 1,565,866 13,800.00 2.30 - 53 3,343,059 UNITED CAPITAL PLC 209 13,659,894 1,271 84,268,552 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 0 0 1,030.41 0.29 7.41 3 600,000 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 3 600,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 5,299.36 2.54 - 36 648,154 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,620.62 4.70 8.05 26 337,396 MAY & BAKER NIGERIA PLC. 3,795.52 2.20 - 16 51,990 987.56 0.52 9.62 15 692,533 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 93 1,730,073 96 2,330,073 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 27 3,851,210 27 3,851,210 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 911.95 0.31 -8.82 43 4,725,000 43 4,725,000 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 216.00 2.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 986.17 0.21 -8.70 9 1,300,100 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 4 2,674 13 1,302,774 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 1 3 1 3 84 9,878,987 BUILDING MATERIALS BERGER PAINTS PLC 1,941.82 6.70 - 1 95 BUA CEMENT PLC 1,043,022.11 30.80 -2.22 35 593,537 CAP PLC 16,240.00 23.20 - 6 10,051 MEYER PLC. 265.62 0.50 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 42 603,683 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,219.27 1.26 - 25 719,833 25 719,833 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 1 200 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 200 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 68 1,323,716 CHEMICALS B.O.C. GASES PLC. 1,519.29 3.65 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 0 0 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 3 19,495 3 19,495 INTEGRATED OIL AND GAS SERVICES OANDO PLC 29,835.39 2.40 9.09 43 1,316,742 43 1,316,742 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 58,019.78 160.90 - 3 2,199 ARDOVA PLC 14,652.91 11.25 - 51 357,125 CONOIL PLC 9,125.47 13.15 - 22 158,172 ETERNA PLC. 3,116.91 2.39 - 12 102,465 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 2 1,365 TOTAL NIGERIA PLC. 32,695.95 96.30 - 13 6,938 103 628,264 149 1,964,501 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 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 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,686.42 2.90 -3.33 44 1,564,125 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 44 1,564,125 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,058.01 0.99 - 7 183,550 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 7 183,550 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 187.49 0.31 - 0 0 LEARN AFRICA PLC 694.31 0.90 - 9 55,850 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 427.10 0.99 -1.00 4 318,000 13 373,850 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 1 250,000 1 250,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Company IN FOCUS

BUSINESS DAY Monday 13 April 2020 www.businessday.ng

FBN Holdings: Will tighter broad macro outlook stall asset quality recovery?

SEGUN ADAMS

A

27 percent growth in profit for First Bank of Nigeria Holdings (FBNH) last year was influenced by improvements in asset quality of the big lender due to its aggressive risk management. In 2020, a bleaker outlook for Nigeria will test further asset quality recovery.

Impairment charges for credit loss of FBNH in 2019 fell by about 42 percent to N51.1bn, its lowest in at least five years which supported profit after tax of N73.67bn for the year.

The decline in provision for bad loans followed a risk portfolio clean-up and the bank actively pursuing recoveries on loans written-off.

This saw Non-Performing Loan (NPL) ratio slid from 24.7 percent to 9.9 percent in 2019 (a 5-year low) following two consecutive years of decline after a 2016 spike.

By sector, FBNH’s biggest NPLs at the end of 2019 was in the finance and insurance sector (18.2 percent in 2019 vs 67.7 percent in 2018). The second-biggest concentration of bad loans was in agriculture (18.0 percent in 2019 vs 27.2 percent in 2018) while Oil & Gas upstream was 5.5 percent (vs 43.2 percent) and downstream had 8.1 percent (vs 11 percent in 2018).

NPL Coverage fell from 80.3 percent to 47.5 percent year-on-year.

Also, the cost of risk fell to 2.5 percent while net loan and advances to customers rose 10.9 percent.

In 2019, FBNH reduced the proportion of total debt held in foreign currency unit from 53 percent to 46 percent while it reduced exposure to the Oil & Gas sector.

Of N1.619trn gross loan last year, Oil & Gas Upstream accounted for 17.9 percent, down from 24.2 percent in 2018 although for downstream of the sector loan exposure

rose from 14.1 percent to 16.5 percent.

While the lender has said “focus is on further improving current metrics”, the banking industry will face headwinds on the heels of bleaker prospects on the Nigerian economy due to a double whammy of the coronavirus pandemic and associated decline in oil price.

“We expect higher asset quality ratios in 2020, given lower oil prices and weaker Nigerian Naira,” said Lagos-based Chapel Hill Denham in a note to client. “It is, however, worth noting that the oil and gas sector contributed 31 percent to (FBNH) gross loans in 2019 vs. 35 percent in 2018.”

Chapel Hill Denham banking analyst Aderonke Adesola said the Cost of Risk and NPL ratio could rise due to the impact of weaker oil prices on the cashflow of business in the oil and gas sector, although the analyst noted that exposure of FBNH is better than it used to be.

While the loans can be restructured to ease pressure given a weaker economy, analysts say Nigerian banks should see higher impairments charges and rise in NPLs. According to Adesola, the “de-

valuation” of the Naira will likely translate to higher NPL for foreign currency-denominated loans of FBNH (46% of total loans book in 2019) when the bad loan is converted to Naira. The foreigncurrency loans mostly held by Oil & Gas businesses is expected to increase because of the higher exchange rate.

Apart from the Oil & Gas sector, sectors like power, manufacturing and trade are among those that could face a challenge in repaying their loans.

The border closure and significant slowdown in the economy are expected to the coronavirus pandemic are said to be downside risks for manufacturing and trade activities.

In 2016 FBNH saw Cost of Risk jump to 10.4 percent from 5.7 percent while NPL ratio hit 24.4 percent from 18.1 percent and impairment charges rose 90 percent due to the oil shock and exposure to vulnerable sectors.

Industry outlook The prognosis for Nigerian lenders is in line with the outlook by international credit rating agency which has in the last few weeks

moved to downgrade the country’s rating ahead of an expected slowdown in earnings and growth because of COVID-19.

Fitch Ratings late March downgraded the three-highest rated banks in Nigeria to Long-Term Issuer Default Rating (IDR) ‘B’ and Viability Rating (VR) ‘b’, and placed National Ratings of 10 rated Nigerian banks on Rating Watch Negative (RWN). “... all Nigerian banks will face material pressures from a weaker operating environment over the next few months given the oil price crash, a potential further devaluation of the Nigerian naira and the impact of the COVID-19 pandemic on individuals and businesses,” Fitch said.

Fitch’s credit-worthiness revision on bank came a week after Moody’s told Bloomberg that a weaker naira would put negative pressure on Nigerian banks’ asset quality and capital metrics as they have a high proportion of foreigncurrency-denominated loans.

However, Moody’s noted that Nigerian banks hold good capital buffers, a position shared by CSL analyst Gbolahan Ologurno.

According to Ologurno, lenders have since 2017 increased their riskassessment framework, while some have restructured their loan books and taken additional measures to ensure their obligors have a hedge contract as protective measures.

But Fitch draws lessons from the 2015/2016 oil price crash which saw banks’ bad loan spike and expects the current oil price shock to adversely impact the oil and gas sector, which accounts for around 30% of the banking sector’ gross loans.

Fitch said its stress tests show that asset-quality risks arising from deterioration of the banks’ oil and gas exposures are the biggest threat to their ratings.

Additionally, it expects the nonoil segment to be impacted by the slower economy, but also due to the COVID-19 crisis, which could severely affect communities and

industries, Fitch said. “It would particularly test the quality of consumer and SME loans.”

Last year the Central Bank of Nigeria (CBN) forced banks to lend as much as 65% of their deposits as loans but prioritized the SMEs sector.

In the light of the COVID-19 outbreak and oil price decline, the CBN introduced regulatory forbearance to consider temporary and time-limited restructuring of loan terms and tenors to households and businesses affected by COVID-19.

Non-Performing Loans (NPLs) ratio of banks fell from 6.59 percent in January to 6.54 percent in February 2020, still above the prudential benchmark of 5.0 percent of the CBN. Financials snapshot Gross earnings of FBNH grew 6.7 percent year-on-year to N627bn.

Non-interest income grew 20.3 percent to N179.5bn while interest income increased by 1.7 percent to N290bn amid a challenging interest environment.

Profit before tax jumped 30.9 percent while a tax increase of 76.5 percent moderated profit after tax growth to 26.5 percent.

Earnings per share at the end of the year rose to N2.05 from N1.62 in 2018, while dividend yield jumped to 9.5 percent from 6.3 percent in the previous year.

The lender’s shares rose 6.82 percent to close at N4.7 per share on Friday.

COVID-19 response FBNH has activated a robust Business Continuity Plan to ensure minimal disruptions to operations.

The focus is to support the country, ensure the safety, health and well-being of our employees while providing essential services for our customers in a safe environment through alternative channels, it said.

FBNH is also a member of the COVID-19 coalition that provides support for the government in expanding health facilities for testing, isolation and treatment and has provided an educational intervention scheme for 1 million children affected by the pandemic.

According to FBNH, its distinctive network in digital and Agent banking positions the Group as the most reliable distribution channel for government and NGO COVID-19 support programs with 53,000 agents including a good number of branches that will remain in operation during the pandemic.

About FBN Holdings FBN Holdings PLC provides commercial banking activities.

The Company offers merchant, investment banking, trusteeship, fund management, registrars, and advisory services through its subsidiaries. FBN also sells insurance policies and mortgages via subsidiary companies.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.