BusinessDay 13 Aug 2020

businessday market monitor

Biggest Gainer SEPLAT N350.00

Biggest Loser

BUACEMENT 10.00pc N38.95 -0.64pc 25,141.48

Everdon Bureau De Change

Bitcoin

NSE Foreign Reserve $ 35.625bn Cross Rates GBP-$:1.30 YUANY - 54.85 Commodities Cocoa US$2,466.00

Gold $1,941.39

news you can trust I * *THURSDAY 13 AUGUST 2020 I vol. 19, no 627

₦5,407,623.13 -0.94

I

N300

Market Buy

Sell

$-N 468.00 475.00 £-N 590.00 608.00 €-N 540.00 550.00

Crude Oil $ 45.41

g

FMDQ Close Foreign Exchange

www.

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

386.00 381.00

3M 0.00 1.21

12m NGUS jul 28 2021 421.79

g

6M

5Y

0.00 1.99

-0.29

10 Y 0.00

30 Y -0.01

6.45

9.08

9.90

36m NGUS jul 26 2023

60m NGUS jul 30 2025

495.26

Soaring fertiliser prices lead to second wave of food inflation D N

@

581.52

g

Oil majors’ search for sustainable businesses warns

Nigeria against slow reforms

Josephine Okojie & Bunmi Bailey

STEPHEN ONYEKWELU

igeria’s food inflation rate is set to accelerate in the coming months as the country is now experiencing a second wave of high food prices owing to the recent hike in price of fertilisers.

Nigeria’s smallholder farmers are currently grappling with the rising cost of fertilisers – a major input for crop production as average price of a 50kg bag of NPK 15:15:15 – most used type by smallholder farmers — now sells for N16,000 as against

emand for oil has taken significant beating, thanks to economic fallouts from the coronavirus (COVID-19) crisis, and Nigeria needs to watch closely how oil majors Continues on page 29

Continues on page 29

Inside

L-R: Yinka Adekoya, managing director; Mutiu Sunmonu, chairman, and Mary Agha, company secretary, all of Wapic Insurance plc, at the company’s 61st annual general meeting in Lagos, yesterday.

Honeywell, Fidson, Nascon boom on COVID-19 as brewers lose out P. 2

2

Thursday 13 August 2020

BUSINESS DAY

news

Top up N50bn COVID-19 fund for households, MPC members tell CBN … Emefiele assures of de-risking of lending HOPE MOSES-ASHIKE

M

embers of the Monetary Policy Committee (MPC) have asked the Central Bank of Nigeria (CBN) to top up the N50 billion Targeted Credit Facility (TCF) for households and small and medium enterprises (SMEs) to meet increasing demand for the Fund.

Festus Adenikinju, a member of the MPC, stated this in a personal statement at the last MPC meeting in July, released on Wednesday.

The CBN, in March 2020, set up the N50 billion facility to be disbursed at single digit through the NIRSAL Microfinance Bank for households and SMEs that would be particularly hard hit by Covid-19, including hoteliers, airline service providers, health care merchants, among others.

Godwin Emefiele, governor, CBN, disclosed at the last MPC in July that N49.195 billion out of the fund had been disbursed to over 92,000 beneficiaries.

However, according to Adenikinju, the economy and economic agents are responding positively to the current intervention programmes of the central bank and the government.

“Regulatory measures to protect the financial sector

are working well and should be monitored continuously,” he said.

Aishah Ahmad, CBN deputy governor in charge of financial system stability, said in her personal statement that sustained credit to the real economy – particularly for SMEs and households – would be crucial to economic recovery. “Therefore maintaining banking industry liquidity will be paramount,” she said.

Rogers Nwoke, national president, National Association of Microfinance Banks (NAMB), said the N50 billion was too small for the huge funding gap in Micro, Small and Medium Enterprises (MSME) working capital needs. Microfinance banks (MFBs), he said, disburse more than that in a month. “ You cannot get the needed traction by letting only one new MFB with limited spread to do these disbursements,” he said.

The CBN should make available another N50 billion through qualifying MFBs and the funds will reach MSMEs in less than one month, Nwoke told BusinessDay. Mike Obadan, member of the MPC, said in his personal statement that implementation of most of the CBN policies, measures and

Honeywell, Fidson, Nascon boom on COVID-19 as brewers lose out Gbemi Faminu

C

ompanies producing essential products such as food and drugs have prospered in this COVID-19 era as they see higher margins in the first six months of the year due to increased patronage during the period.

Food makers, Honeywell and Nascon, grew sales by 39 percent and 17 percent in the first half of 2020, respectively, as patronage spiked on increased consumption and food donations to poor households by governments, NGOs and wealthy individuals.

Similarly, drug makers, Fidson and May & Baker, grew their sales by 12 percent and 0.5 percent due to increased demand for drugs at pharmaceutical stores and isolation centres.

However, brewers’ margins slumped on the back

of government’s closure of bars, nightclubs and event centres where beer and alcoholic beverages get its biggest patronage.

“The lockdown period gave room for essential products which were very necessary at that time, especially the food and healthcare subsectors,” Ambrose Oruche, acting director-general, Manufacturers Association of Nigeria (MAN), says.

Oruche expects to see things returning to normal in the second half of the year after mixed performances among manufacturers in the first half.

Fidelis Ayabae, chairman of Fidson Heathcare plc, attributed the growth in margins of pharmaceutical companies to shift in the behaviour of consumers from non-essential to essential products.

“People no longer spend on non-essential things now.

What they do mostly is to buy drugs for fear of COVID-19,” he said.

He told BusinessDay that although drug makers like him lost sales to hospitals due to a 50 percent drop in the number of hospital attendants, he recovered some of the losses in the retail end of the market.

“COVID-19 disrupted availability of raw materials and finished products, and disrupted the global supply chains. But what has happened is that we are reaping the fruit of our investments,” Ayabae, who is the chairman of the Pharmaceutical Manufacturers Group of the MAN, said.

Fisdon has invested over N9 billion in a six-line drug manufacturing plant at Sango-Otta, Ogun State, Nigeria.

Analysts say the classification of food and drugs as essential products during the five-week lockdown was a

Continues on page 29

D

angote Cement plc has produced 10 millionaires through its Dangote Cement Promo Millionaires Club Season 2 promo.

The ongoing promo, which started July 15, 2020, will run for 16 weeks, and 1,000 Nigerians are expected to win a star prize of N1 million each, among other prizes that include: tricycles, refrigerators, television sets, generators, Goodies packs, smaller monetary prizes and airtime.

Adeyemi Fajobi, national sales director, Dangote Cement plc, while welcoming the new winners into the millionaires club, said the new entrepreneurs would support the economy and create more jobs for the country.

“To help ginger the economy affected by the Covid-19 pandemic, the Dangote Cement plc has injected new entrepreneurs into the Nigerian economy. Dangote Cement is poised to create 1,000 millionaires cum entrepreneurs that will support the economy through job creation,” Fajobi said.

Funmi Sanni, marketing director, Dangote Cement, said the Dangote Group would not

relent in its effort to boost the Nigerian economy, saying the president of the Dangote Group, Aliko Dangote, was determined to support government efforts in job creation through massive support for small and medium scale businesses in the country.

Amos Fadare, a beneficiary, described his winning as “a dream come through.

“I have been using other cement brands for some time now, but because of the promo, I decided to buy trucks of Dangote Cement before I luckily won. I want to thank Alhaji Aliko Dangote for given us this opportunity. I also want to urge Nigerians to buy Dangote Cement.

This is real. My wife also won. I am a building engineer and my wife is a cement retailer.”

Duni Fadare said, “I have been a distributor with Dangote Cement for about six years.

I also mould blocks. I found some of the winning cards in my block industry. I found others through the reconstruction work we are doing at home. Last year, I tried but I didn’t win but this year God has decided to make it possible. I was discussing with someone earlier and I told him that this year I will win, and that God will make it possible. It is like I saw it coming.” www.businessday.ng

Continues on page 29

L-R: Oloruninbe Mamora, minister of state for health; Olamilekan Adegbite, minister of mines and steel development, and Babagana Monguno, national security adviser, during a virtual meeting of the Federal Executive Council at the Presidential Villa in Abuja.

Dangote Cement produces new millionaire entrepreneurs in North Cynthia Egboboh, Abuja

boost for their sales.

According to its half-year (H1) 2020 financial statement posted on the Nigerian Stock Exchange’s website, Fidson grew revenue by 12.3 percent to N8.2 billion in the H1 of 2020, from N7.3 billion in the same period of 2019, with its profit after tax rising by 82 percent to N500 million from N275 million in H1 2019.

Also, pharmaceuticals contributed 99 percent to May & Baker’s revenue base in H1 2020. Revenue grew to N4.07 billion in H1 2020 from N4.05 billion in H1 of 2019, representing 0.5 percent increase.

However, its profit after tax moved up by 51 percent to N438 million in H1 2020, from N290 million in the same period of 2019.

For the food industry, Honeywell Flour Mills, a producer of flour and pasta, grew its revenue by 44 percent to

Nigeria to lose $1bn investment as government sets up parallel dry dock Ignatius Chukwu, Port Harcourt

… 100,000 jobs threatened

he recent plan by the Federal Government to set up another dry dock in another part of the Niger Delta region with $10 million contract to a Chinese company to begin feasibility study seems to rock stakeholders’ investments.

Nigeria thus stands to lose over $1 billion in already secured investments in the proposed Finima Dry Dock project as interested investors are said to be shocked by the latest development.

The announcement to this effect by the executive secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, and the minister of state for petroleum resources, Timipre Sylva, who said at the weekend that the government had awarded $10 million contract to China Harbour Engineering Company to start

a feasibility study on setting up a dry dock in Brass, Bayelsa State, seems to send investors in the $1 billion Finima Dry Dock in Rivers State scampering.

BusinessDay gathers that the local partners in the Finima project went into meetings all through Monday and Tuesday after the minister’s announcement at the weekend.

Wabote had declared how the government had just engaged the Chinese company for the construction of a shipyard in Brass Island. In a statement in Abuja, Saturday, the NCDMB said the feasibility study for the project had commenced, adding that when completed, the shipyard would cater for the maintenance and repair services of cargo vessels, oil tankers, and Liquefied Natural Gas (LNG) carriers.

The NCDMB disclosed that there were currently over 20,000

T

https://www.facebook.com/businessdayng

ships working for the oil and gas sector in Nigerian waters, with an annual spend of over $600 million in the upstream sector to engage these vessels.

According to the NCDMB, it would provide funding for the feasibility study as part of its overarching mandate to domicile key oil and gas industry infrastructure and increase retention of industry spend.

The scope of the feasibility study, it explained, includes geotechnical and bathymetric surveys, conducting a market study, ascertaining an optimal construction scale, developing technical proposal and construction plan and estimation of the required investment to bring the project into reality.

It disclosed that the project’s schedule indicated that the site work would be executed within six months while feasibility study would be completed in four months. @Businessdayng

Speaking at the meeting to kick off of the project, the minister stated that it would be executed by China Harbour Engineering Company, which he said had carried out similar projects across the globe as well as in Nigeria.

Reacting, the investors’ forum in Port Harcourt, which has partners from around the world, said Tuesday night after their meetings that the Royal Royal HaskoningdHV of Holland had six years ago carried out same feasibility study for the same Federal Government (through the Nigeria Liquefied Natural Gas, NLNG) at about same cost ($10m) and that the project had progressed for five years at formative stages.

The investors wondered how two government agencies would be spending in excess of $10 million each on same, or likely project, located few nautical miles apart, serving same market.

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

7

8

Thursday 13 August 2020

BUSINESS DAY

news

ILO, NECA collaborate to eliminate child labour in Nigeria BUNMI BAILEY

I

nternational Labour Organisation (ILO) and the Nigeria Employers’ Consultative Association (NECA) have agreed to collaborate in order to accelerate progress on the elimination of child labour in the Cocoa Artisanal and SmallScale Gold Mining (ASGM) supply chains in Nigeria.

To this end, the two organisations have signed an 18-month implementation agreement, ending January 2022, to strengthen the capacities of employers and employers’ organisations in child labour elimination

in supply chains in Nigeria towards improving private sector compliance on child labour elimination.

Speaking on this, Dennis Zulu, director of ILO/ country officer for Nigeria, Ghana, Liberia and Sierra Leone, commended NECA for lending itself as a platform towards the elimination of child labour in global supply chains.

“Employers’ organisations such as NECA played a critical role in the fight for the elimination of the worst forms of child labour by engaging in tripartite discussions on the issue of child labour, providing inputs into

www.businessday.ng

legislation and encouraging the implementation of ILO child labour conventions’ principles at national, state and enterprise level,” Zulu said.

D i r e c t o r- g e n e r a l o f NECA, Timothy Olawale, on his part, noted that despite Nigeria’s ratification of the ILO’s Child Labour Convention 138 on the minimum age for admission to employment, and Convention 182 on the Worst Forms of Child Labour, there is still a high prevalence of exploitation in the largely informal agricultural and mining sectors.

Olawale added that “the challenge of child labour globally has become worrisome and unacceptable to us and no nation can afford to mortgage its future leaders through unwholesome activities such as child labour.”

He further explained that while poverty and unemployment were major drivers of child labour in Nigeria, it has been made worse by the Covid-19 pandemic.

“But it is still not an excuse to interfere with their education or expose them to forms of labour suited for adults,” he said.

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Thursday 13 August 2020

comment

comment is free

9

Send 800word comments to comment@businessday.ng

The national dream destroying corporations Positive Growth with Babs

Babs OlugbemI

D

o we have a national dream in Nigeria? A national dream is a source and the pillar of the national development plans. I know there is a national development plan for Nigeria (called Vision 2020) which is to make efficient use of human and natural resources to achieve rapid economic growth and translate the economic growth into equitable social development for all citizens. This was renewed in 2019 when it was apparent that the year 2020 came in with vast distance ahead of the desired plan on paper.

We have recently centred our national plans as a “follow-follow” initiatives modelled to align with the global slogans like the Sustainable Development Goals after the failure of our “housing for all by the year 2020”, Better life for rural dwellers, family support programme and a host of other first ladies’ programmes. Special vehicle schemes like the National Poverty Evaluation Programme (NAPEP), and the Subsidy Reinvestment and Empowerment (Sure-P) have all failed to lift Nigerians out of the den of poverty, disunity, and slavery though in a republican state.

The failure of poverty alleviation or equality entrenchment efforts is the failure of the governments but the success of a few citizens who are collectively richer than the Nigerian state. These efforts, which I call the carrot approach to slavery alleviation have left much to be desired and is the cause of the agitations

for separate nations within a perceived united Nigeria. I doubt it if the slogan, ‘one Nigeria’ is still alive as it was in the mouth of a section of the country a few decades ago. I will write on this in another article titled “the politics of the carrot”.

All the efforts have failed because they are haphazard with no correlation to an agreed national dream and have created avenues for corruption and mediocrity to thrive. Corruption and mediocrity are not businesses but a national value and way of livelihood in our country. Unlike, the American Dream (Wikipedia), which is a national ethos of the United States, the set of ideals (democracy, rights, liberty, opportunity and equality) in which freedom includes the opportunity for prosperity and success, as well as upward social mobility for the family and children, achieved through hard work in a society with few barriers, Nigeria development efforts are envisaged programmes but implemented as vehicles to enrich few privileged Cabals and ultimately a fighter jets for destroying dreams that could have been realised even when not planned for.

The resources at our disposal are more than the capacity we had shown over the years, thanks to the group of politicians and administrators at our various National Dream Destroying Corporations.

Immediately we left the garden of colonial Eden, and we were blessed with agricultural resources. There was enough cocoa in the South, pyramids of groundnut in the North, Warri and Sapele were with rubber and timber, and the Niger Delta people never suffered for the reasons of non-discovery of Oil. But instead for the discovery of Oil to be a blessing, it was indeed a disastrous curse.

We neglected our dream to feed ourselves and started the focus on Oil and power.

The Northern elites, not the North struggling for political control, own 90 percent of the Oilwell as rumoured, and use the political stooges in the South to play the political ‘Ludo’ in the Carrot game that leads the country to nowhere.

Today, both the North and the South are not better off. The North has used religion and power to destroy itself with Battalions of uneducated children, the army of banditry and people who can kill others for believing in other ways of worship. The Northern elites with the positions, oil wells, many wives and children are sitting on a keg of gun powders. The banditry is the product of their failures. The Boko Haram members are once our political thugs before they find solace in fighting for the gods and killing others, including their brothers. The Northern people are now asking for what the elites have used their votes and power for since independence. What are the advantages of power without development?

The South! Oh, blame not the North for your problems, they have not solved the one created by their craving for power. The Southern political elites are over-ambitious and co-conspirators to the destruction of our dreams. A dream to live in a society where everyone will have equal opportunity. The vision of a country that is indeed the giant of Africa given her multiple ethnicity and diversity of people, blessed with natural and mineral resources and not a delusion as it is now. The Southern elites eat the carrot, while the masses on the roads of the South blame the North for their woes instead of their leaders who have sold their birthright in the politics of the carrot.

Would a northern own all your oil fields if you have leaders who can fight beyond their pockets?

Nigeria as it is a lesson to others especially Ghana, a nearby neighbour that openly proclaimed that she will follow her national dream and will never allow the discovery of Oil to be a curse to her as it was to her big sister-Nigeria.

Let us now summarize this unpalatable encomium, a truthfulness of our reality and a call for change in what we value and how we lead ourselves with the recent claims and counterclaims of corruption at the Niger Delta Development

‘

We are the enemy of ourselves everywhere in Nigeria. We have allowed the creation of the National Dream Destroying Corporations of Nigeria from the first generations of politicians to the ages yet unborn

Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

Making Lagos State more Inclusive for people living with disabilities

“

W

hen written in Chinese, the word crisis is composed of two characters - one represents danger, and the other represents opportunity.” That insight was contained in a speech by one of the greatest presidents in American history – John F. Kennedy. More than half a century of history and human advancements has not changed the truth in that statement. This past one year has been one of the most turbulent in the history of democracy in Lagos State, more so for a party that contained internal tensions to face one of the worst cases of voters’ apathy in a keenly contested general election. But like a phoenix from the ashes, the man at the center of the storm has consistently proven himself worthy as leader of Africa’s 5th largest economy.

Sanwo-Olu’s emergence as governor of Lagos State is a strong vindication of two critical requirements of democratic leadership – Pedigree and Character. Like a Yoruba adage has it that when you are born well (pedigree); you should endeavor to “re-birth” yourself (character). It is not surprising that these two qualities have stood him out as he had unarguably contended with more crises in one year than most governors in a whole term in office. From an inheritance of dilapidated and deteriorating road network, further defaced by horrifying mounds of smelly refuse everywhere, traffic gridlocks holding the transport system by the jugular and a largely dispirited civil service, Sanwo-Olu had quite a full plate on a table set well before formidable “enemies”.

His character showed up as he owned up

to the situation by renouncing the title of His Excellency, choosing to be referred to instead as Mr. Governor, until he is convinced to have earned the accolade. He remained articulate, firm and focused as he eschewed controversy with clarity of purpose and a single-minded focus on delivering good governance to Lagosians.

And then the big one struck – the COVID-19 Pandemic. Again, as in moments of crises of this magnitude, what really matters, more than anything else, is leadership. It is good enough that Lagos State has been steadily consolidating on transformational visions of Bola Ahmed Tinubu and his political dynasty. Hence, Sanwo-Olu was gifted with a structure that fields a pedigree of some of the best eggheads and technocrats in his administration – from a young, dynamic and perceptive Head of Service, to a celebrated Professor of Medicine as Minister of Health, among others no less qualified and decorated.

Perhaps what proves the greater challenge to governance in the face of the global pandemic in Lagos State was not so much about our moribund healthcare infrastructure, but the underbellies of years of sustained inequality, poverty and a lack of social protection safety nets that would have provided a pathway for addressing the socio-economic dimensions of managing a public health crisis of a global dimension like COVID-19 presented. The scary security situations that reared a monstrous head seemed to momentarily stun years of steady investment in the State’s security infrastructure. Then again, leadership came to bear as the situation was swiftly and decisively brought under control and peace returned to Lagos State.

www.businessday.ng

However, Lagos State might be missing out on a unique opportunity embedded in the COVID-19 crises. In tackling the serious socioeconomic dimensions of what appears primarily as a health challenge, an inclusively robust system of policy and practice in governance has been identified as a critical prerequisite to bridging gaps in service delivery to all citizens, with particular attention to vulnerable groups like people living with disabilities, the elderly and children. This has been a dangerous blind spot in the current administration. On May 6, 2020, the UN Secretary General launched a report calling the world’s attention to the silent dangers of the COVID-19 pandemic as it intensifies inequalities experienced by the world’s one billion people with disabilities. In calling for a disability-inclusive recovery and response framework to the crisis, António Guterres called governments’ attention to the fact that even under normal circumstances; people with disabilities are less likely to access education, healthcare and income opportunities, or to participate in their communities.

They are also more likely to live in poverty, and to suffer higher rates of violence, neglect and abuse. “The pandemic is intensifying these inequalities — and producing new threats,” he revealed. It’s no gainsaying that Sanwo-Olu’s administration has been able to harness the opportunities in the dangers of a global pandemic to revamp the health sector through various infrastructural and human resource investments. The security apparatus has witnessed a significant overhaul; even as normal governance and service delivery to Lagosians has not taken

https://www.facebook.com/businessdayng

Commission. The NDDC was created by the Olusegun Obasanjo administration to seek the development of the region.

Niger Delta is the goose that lays the golden eggs. The environment is pathetic if you have ever visited and seen what oil exploration has done the people and the ecological environment. Is the North or the Northern politicians that are now stealing the money meant for the development of the region?

We are the enemy of ourselves everywhere in Nigeria. We have allowed the creation of the National Dream Destroying Corporations of Nigeria from the first generations of politicians to the ages yet unborn. What is happening or is being revealed with the probe of the NDDC is a combination of corruption and mediocrity. In the National Dream Destroying Corporations’ palace, we have corruption, an example of which is the award of contract for a project at an inflated cost.

A project worth N100m could be given to the political contractors at N500m. It is corruption if it is executed with the right material and to the standard as expected, though at an inflated cost of 400 percent of the original price. It is, however, a mediocrity if the same project is neither executed or executed poorly with substandard materials which will soon be damaged, claim the lives of the innocent citizens and cost hundreds of naira to rework within a few years.

The trouble caused by the leaders of all our National Dream Destroying Corporations is that they are destroying the people irrespective of the North or South divides.

We are in the hands of people who are building their pockets at the destruction of the common man on the street.

Dare Dairo a back seat on account of covid-19.

The disappearing gridlocks and cleared refuse are sterling testimonies to this effect. In all fairness, even people living with disabilities have not been totally ignored. The various palliatives at mitigating the hardships of the lockdown have been systemically focused on people living with disabilities and the elderly.

The lapses are understandable in light of preexisting challenges of data gaps and absence of articulated policies and practice of inclusion.

Even some of the previous gains are being lost to the perceived silence of the governor to disability issues.

What Lagos State needs urgently is an articulated response aimed at integrating disability and inclusion in the THEMES agenda with the sole aim of evolving an economy around disability in ways that will sustainably generate wealth, employment and bridge the inequality gaps recognised in the report by the UN Secretary General. Inclusion is not about charity, and persons with disability should not be seen as a liability to governance and government.

Sanwo-Olu has excelled through a turbulent year in office to make a mark for himself as a leader of mettle, character and purpose. He has even more to offer Lagosians as he has definitely not forgotten anybody included in his mandate – including people living with disabilities.

Dairo is the Lagos State Chairman of the National Association of Persons with Physical Disabilities

@Businessdayng

10

Thursday 13 August 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Sign of the times; Coro & A season of protests: Dr Emmanuel, students’ parents, and then, CAN

ik MUO

R

ecent developments from the Coro war front have been encouraging. Schools are opening across the country; modified religious worship and restaurants are being allowed in Lagos; three of our governors have just survived the Coro scare and then joke like joke, the numbers are nosediving from 340 on August 1 to 288 on August 3.

I am elated but as always, I warn against premature celebration.

Those who opened up are closing down again following Coro recrudescence, and they include China, Germany, South-Korea, Madagascar, Singapore, Hong Kong and Australia. Countries are suffering from second and third waves of Coro and in Ghana, 55 pupils of Accra Senior Girls High School have tested positive since the reopening of schools.

I am glad that things are looking up here and I thank God for little mercies. I pray that this unwanted guest goes and goes finally but before then, let us keep all precautions because our people say that taking precaution is not an act of cowardice.

I had scheduled the issues to dissect this week and my plans were on track until I viewed the Channels TV 2pm news on 3/8/20. I was enjoying my lunch with spicy nsala soup garnished with dry fish and roasted goat meat when Channels invaded my privacy. And headline after headline, it was about protest, protests and more protests. And most of these protests were related to Coro and other issues of the moment (Corruption and insecurity). I therefore changed my route and here we are.

Last week (30/7/20), I commended Victor Osagie for doing us proud at the global stage with his immeasurable contributions to the war against Coro through the democratisation of ventilators. Before that piece was published,

another of ‘our own’ Dr Stella Emmanuel, attracted an even greater attention on the same Coro war front. The Cameroonian paediatrician who studied at University of Calabar and practices medicine in the US, stormed Washington and in an obviously agitated spoken and body language, ranted without restraint and declared unequivocally that hydroxychloroquine, zinc, and antibacterial drug, Zithromax, were effective cures for the Coro; that she had successfully treated 350 people, including those with underlying conditions and the aged; and that face-mask was not necessary.

The first person who gave her a thumbs-up was Trump; who had promoted hydroxychloroquine as a cure and who refused to mask his face until just the other day. She spoke on the side-lines of a whitecoat summit which had the objective of countering “massive disinformation campaign” about Coro, arguing stridently that most of the establishment doctors were deceiving people, that people needed not die for Coro and dared Dr Fauci and CNN staff to prove through a third-party urine test, that they were are not already using chloroquine.

She was so agitated or aggrieved that she indulged in typical “street protest” and a lot has been said about her motive and methods, including that she was sponsored by Trump or Trumpeters. But she gained visibility and historic social medial followership, her being yanked off by Facebook et al notwithstanding.

And some asked: if Bill Gates, an IT man with no medical background can freely and boldly make declarative statements about cure and vaccine for Coro, why is she, a doctor, being hounded for speaking about Coro treatment? But she is a doctor and knows their idiosyncratic procedures of her profession and should thus not have resorted to the least in the hierarchy of proof in medical sciences (anecdotal evidence).

She is also not the first to speak in praise of hydroxychloroquine. Prof Otegbayo, Chief Medical Director of UCH, Ibadan said he was treated with it and Governor Mohammed of Bauchi took “full responsibility’’ and directed his medical team to deploy it in Bauchi State.

Her case is however different because of har aluta approach and for condemning

other contrary medical opinions, calling their purveyors fake and comparing them to “good Nazis” who watched while Jews were slaughtered. Whatever the case, she has attained visibility and her office would be overflowing with patients while manufacturers and dealers in the drug should be going for thanksgiving.

A pharmacist in Nigeria is reportedly selling the medicine for N50,000 (for 60 tablets)! NCDC, NAFDAC and NMA also have to do greater job in convincing people not to engage in chloroquine-based self-medication That was the first in this season of protests. It was a one-woman protest; it was about coro but it was off-shore and we got involved because she was mistaken for a Nigerian, because she is a black and because she schooled in Nigeria. Other protests followed.

The National Association of Polytechnic Students (NAPS) protested at Ibadan and promised to dislocate the already comatose economy if the government did not reopen higher institutions within 2 weeks. They wondered why markets and Churches should be opened while schools were shut. They argued that Coro was not a death sentence, warned the Federal Government to avoid getting entangled with global Coro-politics and advised the government to stop the salaries of lecturers who did not return to school! Parents of exit-class students in private secondary schools in Ogun State, also protested the Coro-Test requirement for returning to school as imposed by Ogun State Government.

The government had undertaken to fund the testing of public-school candidates but negotiated a 50 percent discount for private school candidates, who would then pay N25000 for the tests.

The parents were not against the tests but insisted that the government should bear the burden and that asking them to pay N25, 000, to get a child tested, without being mindful of the current economic reality in the country, was the height of insensitivity.

Away from the Coro warfront, students on NCDC scholarship protested in front of the Nigerian High Commission in London, over the non-payment of their fees and allowances just as youths in Yenegoa protested against the rut

‘

One thing has however intrigued me about all these protests. By the act of God, all the protesters have received some responses from the authorities!

in NCDC and supported the forensic audit. In a very amusing twist, NCDC has invited the president to come and commission some of its projects. At least to show that all the money did not disappear! And then, not long after the women of Southern Kaduna had undertaken a naked-protest over the systemic slaughter by unknown gun men, Christian leaders of different denominations protested against the killings by armed herdsmen in Kaduna State accusing the President the Governor of adopting a do-nothing strategy in the genocide and ethnic cleansing.

It accused the government of culpability because of its actions and inactions and tacit support for the Fulani.

One thing has however intrigued me about all these protests. By the act of God, all the protesters have received some responses from the authorities!

The ministry of Education has given the universities up to 5th August to showcase their readiness for resumption; the Ogun state government has made a U-turn on the contentious testing requirement, saying it lacks the capacity to test all the public students before the due-date and that school management and PTAs should decide how they do their own thing for private schools. The President has ordered NDDC to pay the fees and allowances of its scholars this week while the President summoned a security council meeting on 4/8/20.

In effect, the Polytechnic Students, the private schools’ parents, the stranded NDDC pikins and the protesting Southern Kaduna indigenes, have all received one form of response or the other to their requests. I am gathering a group so that we protest about the increasing provision of darkness by the DISCOs. I pray that we shall also receive some reactions when we do so.

As I was writing this, (4/8/20) I attended virtual afternoon mass at Holy Cross Cathedral and it happened to be the celebration of the 8th anniversary of Archbishop Alfred Adewale Martins.

I join the lay faithful in Lagos to pray: Oh Lord, bless our Chief Shephard and also pray for the fruition of the proposed jurisdictional units Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

The German EU Council Presidency – COVID-19 and the need for a stronger EU-Africa partnership

T

he COVID-19 pandemic has shifted political priorities around the globe.

All of a sudden, people around the world face a global health emergency with deep economic and social ripple effects.

For the government of Germany, the recovery from COVID-19 has become a political priority both at home and abroad.

In Nigeria, Germany works closely with government agencies and engages with local communities at the same time. In this endeavor, the German Embassy Abuja recently initiated a project focused on providing free face masks and hand washing stations to local communities in Nigeria. This project was officially launched in two communities in the F.C.T. on August 3. Masks have been sourced sustainably from fabric off-cut and produced by female tailors from disadvantaged groups, improving communal health and creating local income opportunities. The materials carry the logo of the current EU Presidency, which Germany assumed on July 1 for the next six months. Our message: the recovery from COVID-19 is our joint responsibility.

That rings true for Europe’s engagement with Nigeria and Africa at large. For the year of 2020, Europe and Africa have set themselves an ambitious agenda for an ever-stronger EU-Africa Partnership. The new President of the European Commission, Ms. Ursula von der Leyen, made

her first official visit outside the EU to Addis Ababa underlining the EU’s strong commitment to advance the partnership. Europe and Africa are united by a shared understanding of an effective multilateralism and a rules-based international order, where the global challenges of our time are addressed collectively: peace and security, climate change, sustainable growth, digitisation and migration – to name but a few.

When COVID-19 struck at the beginning of this year, it revealed in drastic ways how interconnected we all are. While the rapid spread of the pandemic has impacted all of us, it has not affected us in similar ways. It has hit Africa particularly hard, causing severe economic, social and humanitarian damage.

For Europe’s partnership with Africa, the present crisis has reinforced our determination for closer cooperation, guided by a sense of shared responsibility and solidarity. In a joint Financial Times op-ed, Chancellor Angela Merkel and other African and European leaders have stated firmly: “only a global victory that fully includes Africa can bring this pandemic to an end.”

As Germany has assumed the Presidency of the Council of the European Union, Africa is at the heart of the EU’s global response to COVID-19, echoing the United Nations’ call to “build back better”. As “Team Europe”, we stand with our neighbouring continent to respond to

www.businessday.ng

the immediate priorities of African states, societies and people in need in this crisis.

In making a strong commitment to “Team Europe”, Germany has taken extensive steps in the fight against COVID-19, for example by helping to build resilient health systems and mitigate the economic and social impact for people in Africa. Amongst other bi- and multilateral commitments, • Germany backs the World Health Organisation (WHO) in its coordinating role in the fight against COVID-19 by increasing its annual commitment for 2020 to over €500 million (incl. €250 million for the WHO’s Strategic Preparedness and Response Plan), making it the largest donor; • We are expanding our cooperation with the African Union’s Africa Centre for Disease Control and Prevention (CDC) in order to advance diagnostics and disseminate information; • We support the European Commission’s Coronavirus Global Response initiative and the WHO-initiated global ACT platform to develop and ensure an equitable access to COVID-19 vaccines, tests and treatments. Germany’s commitments amount to a total of €908 million which includes €230 million for CEPI and an additional €100 million for Gavi, the Vaccine Alliance; • Within the G7 and the G20, we have strongly advocated for a moratorium on debt

https://www.facebook.com/businessdayng

Birgitt Ory payments for least developed countries and secured additional credit lines through the World Bank and the IMF. • Moreover, the German Federal Government, already the world’s second largest bilateral humanitarian donor, is providing €450 million in additional humanitarian assistance to ensure food security, water supply and sanitation for the most vulnerable groups, including refugees and displaced persons in conflict regions, and to keep the humanitarian logistical system up and running.

Without collective action, solidarity, and empathy, it will be impossible to tackle this global challenge. If we uphold these values in our joint effort against COVID-19, we can apply them to many other pressing global challenges we are facing together. The upcoming AU-EU Summit is a milestone for jointly developing a broad and ambitious political agenda that will deepen our strategic cooperation in the long term. During its term as Council Presidency, Germany will lend its full support to an everstronger EU-Africa partnership aimed at building a shared and brighter future for our peoples.

Ory is German Ambassador to Nigeria and ECOWAS

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

comment

11

comment is free

Send 800word comments to comment@businessday.ng

Nigeria cannot make progress without doing away with wasteful subsidies

CHRISTOPHER AKOR

I

n January of 2012, I watched with dismay as the labour unions, youth and civil society groups shut down the country in protest over the government’s deregulation of the downstream sector and the removal of subsidy on petrol. What started as mere protests by the youth caught fire and became a popular movement that almost brought down the government of the day. Despite the rationalisations of some of the protest leaders, it was apparent Nigerians were resolutely against the removal of the subsidy on petrol.

But I just could not see the sense in the protests/strikes. In 2011 alone, about N1.5 trillion naira ($9.3 billion) was spent on subsidising imported refined petrol. This represented about 30 percent of Nigeria’s government’s expenditure, 4 percent of GDP and 118 percent of the capital budget. In comparison, Nigeria’s education, health and works/roads’ budget for 2011 was just a mere $2.2 billion; $1.32 billion and $680 million respectively. This is besides the obvious fact that Nigeria was exporting its jobs and what it does not have while importing what it has.

How could any right-thinking government accept this kind of frivolous and senseless expenditure? It was quite clear to me then that the government was right in wanting to do away with the subsidy regime so as to free up such huge funds for other priority areas like education, health, infrastructure, and security among others. Besides, the removal of subsidy will ultimately lead to private investments in refineries that will obviate the need to spend hardearned foreign exchange on importing

petrol. The later revelations that the subsidy regime was riddled with fraud were all the more reason why I thought it should go.

But arguing for subsidy removal wasn’t a popular position to hold in Nigeria in January of 2012. Some of us who did were called names. Perhaps that is why thought leaders, prominent citizens and academics decided to bury their heads in the sand with some hypocritically claiming to side with the people when it was clear the people were being seduced into demonstrating against their true interest.

Much more pitiful however is the behaviour of opposition politicians at the time who saw the protests/strike only through the prism of their ambitions.

They fuelled the protests by concocting figures and arguments to show that there was nothing like subsidy and petrol should actually be selling below N40/ litre. No wonder some Nigerians were expecting the president to reduce the price of petrol upon coming to power.

Organised labour on its part was only interested in protecting its interests – which is better served by government regulation of the industry so it could retain the privilege of protesting and going on strike anytime an increase in the price of petrol is announced. That was how they seduced late president Yar’adua into revoking the sale of 51 percent equity stakes in the Port Harcourt and Kaduna refineries to the Bluestar Consortium Limited for a princely sum of $721 million promising him, together with the NNPC, that the NNPC was capable of turning around the fortunes of the refineries to make them functional at 100 percent capacity within months.

But one could ask, why are Nigerians so used to subsidies and why is the Nigerian state so bent on providing subsidies, especially for consumption even when it is economically ruinous to do so?

The answer is rooted in the nature of the Nigerian, nay African state. Most African post-colonial regimes did not make any effort to broaden the social base of state power and had to concentrate on capital cities and urban centres where opposition to their rule is most

likely to come from. They impoverish the rural areas to keep the cities happy.

They impose price controls on rural farmers to keep foodstuffs cheap in the cities. They provide transportation, petrol, electricity, and foreign exchange subsidies to keep the few middle class and city population happy or calm.

Also, buoyed by a sense of entitlement, Nigerians felt they should not be paying much for fuel and that it is part of the benefits they should enjoy since their country produces oil.

Well, in Nigeria, the subsidies have only grown over the years while budget allocations for health, education, infrastructure have dwindled. We could boldly make the claim that the subsidy regimes in Nigeria are responsible for the poverty, low quality of life, and the economic malaise the country faces presently. Take for instance the electricity subsidy. Despite the government privatising the electricity generation (GENCOS) and distribution (DISCOS) companies, the government still holds the sector by the neck fixing and dictating prices. Of course, the current prices fixed by the government are below the production cost for power. Is it any wonder then that there has been no major investment in the sector and Nigeria continues to wallow in darkness?

We know too well about economic carnage being caused by the fuel subsidy. Another subsidy regime that has crippled the economy of the country is the forex subsidy regime. In keeping with its gate-keeping role, the government has continued to maintain a fixed exchange rate so as to continue to provide cheap dollars for rich and middle-class Nigerians to engage in conspicuous consumption of foreign goods, embark on foreign travels and send their children to foreign schools.

To complete the circle, the government also sponsors Nigerians to pilgrimages in Saudi Arabia and Israel and when it became too expensive, it began providing subsidy in the form of cheap dollars below the exchange rate to pilgrims.

Besides the huge economic cost of the forex subsidy regime is the corruption created through arbitrage opportu-

‘

Genuine investors are being put off by the unpredictable environment where the government arbitrarily fixes exchange rates and where the rates could change at a flash and without regard to market fundamentals.

Such investors would rather wait out the instability or better still, take their money to serious countries

nities. By irrationally maintaining a dual exchange rate system where the official exchange rate is far lower than the black market or unofficial rate (currently, N371/N475) to a dollar, successive governments are not only subsidising the rich and the connected at the expense of the poor, but have also been creating a huge industry of corruption where smart politicians, businesses, and wellconnected individuals game the system by obtaining dollars at the official rate and selling same at the black market and making huge profits at little or no cost.

The argument that the Central Bank is supplying cheap dollars at official rates to manufacturers is ridiculous.

Most genuine manufacturers have no access to the CBN’s dollars. They get their dollars from the black market.

Rather, those dollars go to fake manufacturers and businessmen who are adept at gaming the system, opening up fake Letters of Credits, obtaining the dollar at the official rate and selling them off at the black market. It is no wonder that the dollar has become the most profitable commodity for those lucky enough or connected to get it at the official rate.

Even for genuine manufacturers who get it at the official rate, they usually index their prices against the black-market price. That explains why the economy runs on the black-market exchange rate. So, whatever way it goes, the manufacturers and businesses gain and the people and country lose.

Meanwhile, genuine investors are being put off by the unpredictable environment where the government arbitrarily fixes exchange rates and where the rates could change at a flash and without regard to market fundamentals.

Such investors would rather wait out the instability or better still, take their money to serious countries.

The results of the government’s subsidy regimes are: a huge industry of corruption, a damaged economy, capital flight and divestments, and lost foreign investors.

A substantial part of this article was first published under a different headline June 25, 2020

Special economic zones and Nigeria’s industrial ambition (1)

N

igeria’s return to democracy in 1999 heralded significant and comprehensive macroeconomic reforms which revivified the country’s yearning for industrial growth through several policies that were geared towards stimulating industrial restructuring. These policies include the establishment of the Bank of Industry in 2000; the 2003 Nigeria Industrial Policy; 2007 National Integrated Industrialisation Development; 2009 Industrial Park Development Strategy etc. The cities of Lagos, Kano, Aba and Port Harcourt were once christened “industrial cities”.

A cluster concept strategy of industrial growth was ineffectively experimented and phrases such as “the private sector as the engine of growth while the government facilitates and regulates investments” have been severally used. The country had aspired to promote indigenous entrepreneurship and utilise the venture capital financing strategy to drive industrial growth.

In this light, there was a proliferation of special economic zones (SEZs), industrial estates, Free Trade Zones (FTZs) and Export Processing Zones (EPZs) in every nook and cranny of the country. According to the Nigeria Export Processing Zones Authority (NEPZA), Nigeria has forty-one of such zones and estates at the moment under different ownership structures: federal government, state government, govern-

ment and private sector. Of the forty-one zones, twenty-two zones were declared active and nineteen were inactive. However, of the twentytwo, the actuality remains that most of them are still in the first phase of development while only a few are operational such as the Lekki and Ogun-Guangdong Free Trade Zones. The nonoperational zones have become white elephant projects, and others, at best abandoned.

Furthermore, it is noteworthy to mention that the NEPZA list excludes the most recent three: Enyimba Economic City, Funtua Cotton Cluster and Lekki Model Industrial Park. The agreement for their establishment was signed in early 2019, in a bid by the Buhari led government to re-launch SEZs as a special vehicle for improving manufacturing share of Gross Domestic Product (GDP), raise manufacturing share of export earnings and create jobs. In addition to these three, were eight other ones whose feasibility studies were being carried out across states. The announcement of the three pilots coincided with the launch of the Nigeria SEZ Investment Company Limited (NSEZCO), as a Public-Private Partnership initiative to develop new SEZs all over the country.

Understanding how Nigeria works, the signing of these new agreements signals a shift away from focusing on the existing ones or previously announced ones. If setting up a completely functional SEZ entails only signing agreements, issuing out licenses, visiting dedicated sites

www.businessday.ng

with media razzmatazz, cutting red ribbons and making policy statements, then Nigeria has nothing to worry about. However, setting up a functional SEZ requires so much more - it is a very expensive undertaking and involves careful and skilled planning, design, and management which should not be taken lightly.

It is also mind-boggling that without any previous success in managing an economic zone or industrial estate, Nigeria has more than forty of them, competing for scarce resources and with none of them functioning even at average. Factors that have affected the development and optimal functionality of the zones include problematic legal, regulatory and institutional frameworks; inadequate infrastructure; lack of policy consistency and failure of host governments to maintain commitments to zones; inadequate finances; and poor operational know-how for zone management. At the end of 2019, NEPZA threatened to revoke the licenses of inactive zones, amidst the challenge and failure surrounding land acquisition and resettlement issues in the zones. With financial resources wasted by investors, and the lands not being productively used for years, one wonders how the land-settlement/relinquishment would eventuate.

Broadly, zones and industrial estates are a geographically delineated area (usually physically secured), with central management or administration, that offers several benefits to

https://www.facebook.com/businessdayng

Chambers Umezulike

investors, and with a separate customs area (duty-free benefits) and streamlined procedures. In most instances, they have a special regulatory regime, mostly liberal regarding issues such as foreign investment, labour and land use. They are normally serviced with efficient customs, fast-track licensing and registration, different tax regime, access to FOREX etc. often through “one-stop-shop” services. They also have better and more reliable on-site infrastructure like roads, power, and water, in comparison to the domestic economic environment, and fiscal incentives such as tax incentives and subsidies.

Note: The rest of this article continues in the online edition of BusinessDay @https://businessday.ng Umezulike is an international development professional and Development Economics Researcher. He can be reached through chambers.umezulike@gmail.com and on Twitter via @Prof_Umezulike

@Businessdayng

12

BUSINESS DAY

Thursday 13 August 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Improving the condition of Nigerian roads Nigerian roads are highways to hell

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

Bashir Ibrahim Hassan

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

A

pproximately, Nigeria has 200,000 kilometres of roads. Of this number, 34,000 kilometres belong to the federal government and they constitute the class of roads called federal highways in the country.

The condition of these roads is so poor that only about 35 percent of the network is said to be motorable. A trip through many of these highways, especially those in the southern part of the country, confirms to any traveller that there are no better highways to hell.

Though there are efforts at addressing the country’s N3 trillion out of $15 trillion global infrastructure gaps, such efforts hardly make a significant and appreciable impact.

Besides budgetary allocations, there have been interventions from direct foreign investment (DFIs).

The infrastructure tax credit scheme is another of such interventions as could be seen in the reconstruction of the 35-kilometre Apapa-Oshodi Expressway in Lagos being undertaken by the Dangote Industries at the cost of N73 billion.

The Sukuk funding for road construction which recorded 132.25 percent over-subscription in 2019 is yet another intervention.

The second tranche of the ₦100 billion of the fund is meant to fund 28 road projects across the country.

These include the dualisation on of the Lokoja-Abuja-Benin; AbajiLokoja; Kano- Maiduguri; OyoOgbomosho and Benin-Shagamu roads and the rehabilitation of the Enugu-Onitsha and Enugu-Port Harcourt roads.

It is unfortunate that despite these efforts, the roads remain death traps with craters and ditches. Perhaps, the reasons are not far-fetched. It is no secret that the cost of either constructing or maintaining a kilometre of road in Nigeria is extremely high when compared to other African countries.

A report by an Abuja-based Centre for Social Justice (CSJ) based on an earlier study by the World Bank estimates the cost of constructing a kilometre of road in Nigeria at between N400 million and N1 billion.

The budgetary allocation for the Federal Ministry of Works and Housing in the 2020 budget is N262 billion. In the 2019 fiscal year, the ministry of Power, Works and Housing had a budget allocation of N428.4 billion. This is higher than the N127 billion for Power and the N262 billion for works and housing in 2020 put together by about N39 billion.

Placing these numbers side by side with the 200,000 kilometres of

roads in the country makes roads infrastructure funding in the country a huge joke, meaning that poor funding and lack of commitment to the maintenance of existing ones are reasons for the death traps Nigeria has as highways.

It is another pain in the neck that contracts for road construction in the country are mostly over-priced. This also explains why road reconstruction projects last almost forever. A case in point is the reconstruction of the 127 kilometres Lagos-Ibadan Expressway awarded in 2013 at N167 billion, an equivalent of $1 billion at the time in terms of naira exchange rate to the dollar.

In the same year, a similar contract was awarded for the 1,028-kilometre Lagos-Abidjan road project. The Economic Community of West African Countries (ECOWAS) which awarded the contract estimated this project to cost between N167 billion and N240 billion.

The six-lane ECOWAS project is expected to connect five major cities in the region namely Lagos in Nigeria; Cotonou in Benin Republic; Lome in Togo; Accra in Ghana and Abidjan in Cote D’Ivoire.

This means, in other words, that the number of kilometres to be covered by that project is 8 times higher than Nigeria’s Lagos-Ibadan Expressway

project, and the cost per kilometre is far lower than that of Nigeria.

At the projected maximum cost of N240 billion, the ECOWAS road cost per kilometre will be N234 million while the six-lane Lagos-Ibadan Expressway contract awarded at N167 billion costs N1.3 billion per kilometre. And that was seven years ago.

We are pained that in spite of its petro-dollar wealth, Nigeria’s highways are dilapidated and unmotorable such that travel experience on these highways are not only harrowing, but also expensive. For example, the journey between Enugu and Onitsha should not take more than an hour, thirty minutes, but now, it takes close to five hours.

It is the same experience for travellers on Enugu-Owerri; Enugu Port Harcourt, Lagos-Benin-Ore, Lagos-Badagry, Lagos-Ibadan Roads.

Travel time and cost on each of these routes have increased by over 100 percent. That is not all. Traveling on these highways has health and security implications.

We urge the federal government to do more in improving the condition of these roads. The budgetary allocation to the roads sector should be given special consideration, especially now that the country needs increased economic activity to save its recessing economy. Time for action is now.

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

Research&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

13

In association with briu@businessday.ng

08098710024

Leveraging on the digital economy to spur Nigeria’s economic growth ISAAC ESOWE

G

lobally, the field of digital technology is an attraction for foreign capital investing. Almost one in five foreign direct investments in Europe or 19 per cent, targets the digital technology sector. Digital technology is rapidly transforming and reshaping global economic landscape, infusing virtually every sector and aspect of daily life as well as changing the way and manner businesses functions.

In 2016, the global digital economy was worth some $11.5 trillion, equivalent to 15.5 per cent of the world’s overall GDP. It is expected to reach 25 per cent in less than a decade, quickly outpacing the growth of the overall economy. However, countries like Nigeria are currently capturing only a fraction of this growth and need to strategically invest in the foundational elements of their digital economy to keep pace.

Ernst & Young Nigeria, in 2018 defined Digital Economy as the part of the economic output derived solely or primarily from digital technologies with a business model based on digital goods and services.

The digital economy is made up of various components, including a platform economy, a gig economy, an industry 4.0, a digital economy, data analytics, robotics and Artificial Intelligence (AI), machine learning, 3-D printing, and e-commerce among others.

An insight gained from the World Bank Nigeria Digital Economy Diagnostic Report reveals that digital economy can change the way economies of scale are achieved; this can be evident during the economic lockdown and cessation of movements caused by the novel coronavirus pandemic, with online service delivery restricted, the digital economy provided a soft landing for both

buyer and sellers in a competitive market. And again, it is certain to address the issue of irregular information, solving some principal-agent problems where buyers and sellers are separated by intermediaries or even multiple levels of intermediaries.

It can also strengthen people’s trust in firms or governments by enabling some decentralized forms of trust (such as with a blockchain) where centralized authorities are not trusted. It may allow products and services to be customized and targeted—enabling better inclusion but also easier ways to exclude some too.

Improved digital connectivity can only achieve the desired transformational impact on economic opportunity and inclusive growth if combined with improvements in digital skills and literacy, the coverage of digital identity schemes, and access to digital payments and other financial services, as well as digital support to start-ups and existing businesses. With such capabilities, the Nigerian economy can harness digital data and new technologies,

www.businessday.ng

generate new content, link individuals with markets and government services, and roll out new and sustainable business models.

In building a solid digital economy, Nigeria needs to focus on digital infrastructure, digital literacy and skills, digital financial services, digital platforms, and digital entrepreneurship and innovation.

The industry is such a dynamic sector that even the health crisis of COVID- 19 could not have its tolls or rather affect the investment activity that concerns it. Although, the effects of the pandemic on the economic activity across nations varied considerably from sector to sector.

Take for instance, tourism and aviation sector had the major brunt, as the lockdown directives instigated by the Nigerian government and other nations alike caused a vast deep in the demand for air transportation. According to the International Air Transport Association (IATA) data released in March 2020, the report reveals that globally the sector lost $252 billion.

https://www.facebook.com/businessdayng

Other sectors include – hospitality, transport, automotive industry, construction, manufacturing amongst others have been hit hard while sectors like digital services and e-commerce have been slightly affected.

Isa Pantami, the minister of communications and digital economy, who presented the keynote address during a virtual forum organised recently by the Association of Telecoms Companies of Nigeria (ATCON), urges all federal government parastatals under the supervision of his ministry to promote the country’s digital economy initiative.

The recent and ongoing Covid-19 pandemic which almost paused the world’s economic activities has brought about a new normal where the demand for critical data infrastructure and broadband are now in higher demand to enable people to keep abreast with digital developments and to enable local and international investors to keep track of their investments.

Despite the recent growth in fibre installations in Nigeria, national fixed-line in-

@Businessdayng

frastructure is still poor, and mobile systems remain the primary means for carrying retail and enterprise data traffic in Nigeria. Furthermore, fixed broadband penetration in Nigeria is very low, with a household penetration rate of 0.04 per cent at the end of 2018, below the African regional average 0.6 per cent, and well below the world average 13.6 per cent. This is due to backbone investment in Nigeria having focused primarily on major urban areas and inter-city routes, and unlike its West African peers such as Ghana and Senegal, Nigeria does not have a national backbone network through which high-speed Internet connectivity can be extended across the entire country. As a result, mobile broadband has become the most common and popular way through which people in Nigeria access the internet.

“Federal government will continue to develop its digital economy policy for a digital Nigeria. Both the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) that are under the supervision of my ministry, now have special departments that promote digital economy initiative and I urge them and all other parastatals under my supervision, to ensure that they promote the digital economy initiative of the federal government to maintain investor’s confidence and to protect the interest of Nigerians, especially telecoms consumers”, Isa Patanmi said.

He added that the government on its part would ensure that the interests of telecoms companies and the interest of Nigerians were protected, saying that the government is currently addressing the challenges in the cost of investments such as the issue of vandalization of telecoms infrastructure, among others.

14

Thursday 13 August 2020

BUSINESS DAY

COMPANIES&MARKETS Flourish Ventures sees Universal Insurance beats Covid-19 impacts, record growth in profitability mixed impact of COVID-19 Modestus Anaesoronye

U

nderwriting firm, Universal Insurance Plc during the first half of the year 2020 recoded growth in both top and bottom-lines despite the covid-19 pandemic, which underscores the firm’s business resilience.

A review of the Half year Financial results for the year 2020 uploaded by the Company via the Issuers Portal of the Nigerian Stock Exchange, revealed a whopping N2.2billion Gross Written Premium in the first half of 2020 as against N1.2billion recorded within the same period in 2019, showing an over 100 percent increase.

The results also show a profit after tax of N209 million recovering from a loss position of N173million recorded within the same period in 2019.

Ben Ujoatuonu, managing director/CEO of the Company revealed that

Universal Insurance Plc was rated among the top insurance firms in Nigeria in terms of effective communication with clients online during the pandemic as published by Alexa Rating Agency.

According to Ujoatuonu, the summary of the Company’s Audited Financial Statements for the year ended December 31, 2019, showed that the topline grew marginally and showed a recovery from a loss position of N47million in 2018 in Profit after Tax as against N65million in 2019. The Balance Sheet also showed a significant improvement in performance as the Non-Life Insurer showed strength by reducing its liabilities from N3.4 billion in 2018 down to N1.7billion in 2019, implying that the Company, in its bid to meet the recapitalization agenda of the regulatory body, the National Insurance Commission (NAICOM), is forging head-on to meet the

statutory requirement long before the final whistle is blown.

He further stated that by this performance, the Company has already achieved 71 percent of the first segment of its recapitalization plans which is way above the 50% mark set by NAICOM come December 31, 2020.

The Company’s Shareholders’ Fund however, dropped from N9.4billion in 2018 to N8.3billion in2019 while the Assets value decreased from N12.8billion in 2018 to N10billion in 2019.

The Company recorded growth in Gross Written Premium to N1.8billion in 2019 from N1.6billion in 2018.

“For 2019 our topline was better than what we had in 2018 even though it was marginal, but it showed levels of improvement from what we had in 2018. “Our results for 2018 showed a loss of about N47million but we recorded N65million profit in 2019. Also, our Balance Sheet showed a

significant reduction in our negative retained earnings.

It moved from N2.1billion in 2018 down to N1.7billion in 2019. What this also means is that we have improved our capital as required by NAICOM in its recapitalization programme” he stated.

Continuing further, he said, “Going by the 2019 Audited Accounts and considering the NAICOM capital computation, Universal Insurance Plc. has its capital in excess of N7.1billion or 71 percent of the N10 billion capital requirements. What this means is that Universal Insurance Plc. has met the first segment of the 50 percent of new capital by December 2020”.

Ujoatuonu explained that the growth in Gross W r i t t e n P re m i u m f ro m N1.6billion in 2018 to N1.8billion in 2019 and the performance of the Company in the first half of the year were signs that the Company has launched itself on the path of growth.

L-R: Taiwo Adeona, secretary, Lagos State Water Tankers Association (LSWTA); Funke Adepoju, executive secretary, Lagos State Water Regulatory Commission (LSWRC), and Abdul Adeshina, chairman, LSWTA, during a stakeholders meeting on licensing of water tankers opera

Aramco’s Q2 profit tanks 73.4% predicts oil recovery

O

il giant, Aramco’s profit plunged 73 percent in the second quarter of the year, on the back of a slump in energy demand and prices as coronavirus crisis hit sales at the world’s biggest oil exporter.

Aramco reported a 73.4percent fall in secondquarter net profit, a steeper drop than analysts had forecast, and said it expected capital expenditure for 2020 to be at the lower end of a $25 billion to $30 billion

range. Net profit fell to 24.6 billion riyals ($6.57 billion) for the quarter to June 30 from 92.6 billion riyals a year earlier.

Aramco’s free cash flow stood at $6.1 billion in the second quarter and $21.1 billion for the first half of 2020, respectively, compared with $20.6 billion and $38.0 billion for the same periods in 2019.

Aramco said it will pay a dividend of $18.75 billion for the second quarter of this year, in line with plans

for a $75 billion dividend for 2020.

Amin Nasser, CEO Aramco said the rapid spread of COVID-19 globally had significantly reduced demand for crude oil, natural gas and petroleum products.

Nasser said he sees a partial recovery in the energy market and a pick up in demand as economies gradually open after the easing of coronavirus lockdowns.

Look at China, their gasoline and diesel demand is almost at pre-COVID 19

www.businessday.ng

levels. We are seeing that Asia is picking up and other markets (too),” he told reporters after announcing the company’s quarterly results.

“As countries ease the lockdown, we expect the demand to increase.” he said.

In recent times, major oil companies have taken a hit in the second quarter as lockdowns to contain the coronavirus limited travel, which reduced oil consumption and sent prices tumbling to levels not seen in nearly two decades.

https://www.facebook.com/businessdayng

A

rjuna Costa is a Managing Partner, Flourish Ventures, a venture firm of the Omidyar Group, that invests in fintechs and entrepreneurs whose innovations help people achieve financial health. In this interview with Jumoke Akiyode-Lawanson, he talks about the effect of COVID-19 on Nigeria’s tech sector, the future of startups in Africa, the company’s focus on venture investing across emerging markets in Asia, Africa, and Latin America and other important issues.

Excerpts.

W hat effect has the novel coronavirus had on your portfolio companies, especially in Nigeria?

The Covid 19 pandemic has affected businesses and business operations across the world and we are not an exception. We have seen a reduced uptake and use of some of our products and an increase in some, like Paga, which simplifies payments and expands access to financial services in Nigeria.

Rou gh l y h ow mu ch has Flourish invested in Nigerian startups to date?

So far, we have invested $21.35 million in our portfolio across Africa. In Nigeria, we have an investment worth $11.15 million.

Across the world, technolog y companies are growing astronomically and are rated as ver y profitable companies.

Do you think Nigeria is catching up fast enough with the rest of the world in the area of technology?

Nigeria and indeed the rest of Africa has a very promising tech space. We have seen the growth of many local tech companies and even the entrance of international players in the market. This phenomenon has further been fueled by a conducive regulatory space and a supporting government that appreciates the role of technology in different facets of Nigeria’s development.

In the wake of the COVID-19 pandemic, more Nigerians were forced to rely on digital solutions for many things - cashless payments, electronic transactions, virtual meetings, virtual classes for school children, etc.

However, there are still a good number who are still stuck in the analog age. How do you think technology companies can help build people’s @Businessdayng

trust in technology?

I think different companies should properly define their solutions in ever y endeavour that they do. In as much as a majority of the population are today embracing various solutions powered by technology, we have a population that is still left behind. As companies playing in the tech space, we need to find ways to properly integrate all the different levels of our communities whether through financial inclusion tactics or general awareness campaigns on the benefits of technology.

W hat does your job as Managing Partner at Flourish entail?

As a Managing Partner, I co-manage Flourish with a primary focus on venture investing across emerging markets in Asia, Africa, and Latin America. I am driven by a deep compassion for vulnerable populations across the globe hence I partner with entrepreneurs using innovative technologies to enhance their customers’ financial well-being.

What is the future of startups in Africa as a whole?

Startups present exciting opportunities for Africa. In the next decade, we will see an emerging workforce of professionals employed by various startups offering solutions across multiple sectors of the economy. This will be activated by the increased penetration of the internet and the general appetite for consumers to embrace tech ideas and innovations.

What are your future plans for Nigeria?

We have investments in Nigeria. We will continue to support and grow our investments in the country, leveraging on opportunities presented especially in this age of digital penetration.

We will definitely keep the media in the loop in case we have any exciting announcements in the future in country and beyond.

Thursday 13 August 2020

Innovation

Apps

BUSINESS DAY

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

15

TECHTALK

Broadband Infrastructure

Bank IT Security

How NCC’s plan to open up financials of telcos is a win for subscribers FRANK ELEANYA

B

efore the end of 2020, the Nigerian Communications Commission is most likely to publish the financial statements of the top six telecommunication companies including MTN Nigeria, Airtel, Globacom, EMTS (9Mobile), MainOne, in Nigeria for the first time.

The move could usher in a new era of unprecedented transparency in the telecommunication sector.

For consumers, this could mean more clarity around the cost of data and access to more quality service.

While the NCC may likely not be publishing the financial reports for 2020 first, it has already started the process for submitting the 2019 financial statement from July.

The mandate known as the Accounting Separation Framework (ASF) is a comprehensive set of policies and guidelines for generating detailed Regulatory Financial Statements employed across different businesses, products, and licenses of Operators.

The NCC framework was developed through a consultative process in 2015 and it is also a practice followed by national telecom regulators across the world. Countries like

the UK, UAE, and Ireland have all developed ASF. It is considered to be an effective, least invasive, and less costly solution to implement to meet regulatory objectives. Regulators across several jurisdictions have made it mandatory for one or more licensees in Fixed and/or Mobile markets to submit RFS. Olusola Teniola, President of Association of Telecommunications Companies of Nigeria (ATCON)

describes the framework as “long overdue” and one of the recommendations of the National Broadband Plan 2020-2025.

“It is what we need now and it is for separation of services so that there is no cross-subsidy,” Teniola told BusinessDay. “Therefore, the consumers are aware of what they are paying and competition is also strengthened and the wholesale market is now neutral and at the same

price which is very important for having a growing industry.”

Specifically, the publication of accounts that are transparent helps other smaller operators to understand how the powerful telcos like MTN Nigeria’s revenues relate to costs.

The availability of information gives operators the confidence that the interconnection arrangements are equitable, in that it should demonstrate

that there is no over or under-recovery of the big operator’s network. Also, the publication of detailed cost statements showing the average cost build of products and services provided by a big telco will increase and raise the confidence of competitors that there are no anti-competitive subsidizations.

The NCC has had to address complaints in the past of playing favorites to bit networks like MTN.

For instance, in 2018 the commission was forced to suspend MTN’s bid to acquire Visafone, the only surviving Code Division Multiple Access (CDMA) operator because competitors such as Airtel and 9Mobile had protested that it would give the SouthAfrican telecom giant an undue advantage. The acquisition would have meant MTN also becomes the owner of the 800MHz Spectrum from Visafone Communications Limited.

Although Visafone was finally sold to MTN, the spectrum licence was not part of the deal.

According to the NCC’s guideline on the framework, the ASF is to be provided by the licensees every accounting year beginning from the accounting year on 31 December 2019. The process of submission includes first reporting which will end by 31 July 2020 for the financial year January 2019 to December 2019.

The 2020 financial year report is to be submitted the latest 31 March 2021 and the one for 2021 will be submitted by March 2022.

Adedeji Olowe, CEO of Trium Networks said the impact of the framework on consumers may not be immediate.

“But it forces telecoms to show their numbers and they find it difficult to subsidize their bad products,” he said.

Luno inks Genesis partnership to enable crypto holders earn interest from assets FRANK ELEANYA

L

uno’s over 4 million customers across the world will now be able to earn interest from their cryptocurrency holdings after the global exchange sealed a partnership with Genesis, a full-service digital asset broker.

A statement BusinessDay received from Luno, the partnership creates savings accounts providing institutional-level interest rates to clients in traditional and

emerging markets. These innovative savings accounts will provide traditionally underbanked customers in emerging markets access to banking to banking services via the market infrastructure built for the global cryptocurrency community while providing another potential source for generating a yield on crypto holdings for customers in all markets.

Since it launched the first OTC bitcoin trading in 2013, Genesis has grown to become the first and largest institutional digital asset lender,

with zero defaults across the history of its lending business.

“By combining Genesis’s infrastructure with Luno’s footprint in more than 40 countries, we’re creating a fairer, more inclusive financial system by providing access to interest-bearing products to historically underbanked and unbanked populations,” Michael Moro, CEO Genesis said.

Genesis book of active trading loans increased by 118 percent from the end of the first quarter of 2020

to $1.4 billion at mid-year, according to the firm. The partnership with Luno opens up an opportunity for the digital asset lender to expand its offerings to customers in Africa where digital lending is starting to gain momentum as a result of a wider effort to drive financial inclusion.

With headquarters in London, regional hubs in Singapore and South Africa, Luno also has a physical presence in countries like Nigeria where millions of people and businesses lack access to credit. Marcus Swanepoel,

CEO Luno says the partnership allows the exchange to offer more diversified financial products to customers.

“We’re dedicated to providing innovative financial solutions to consumers all over the world - whether they are in Africa, Asia, or Europe - regardless of their local currency,” Swanepoel said. “We specialise in making crypto safe and easy to use.”

While the statement does not state how much interest customers could make from lending their crypto assets, usually lenders on the Gen-

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

esis platform often get returns of 6 percent to 12 percent on those loans.

“Digital currency investors have become increasingly sophisticated, seeking not just liquidity from exchanges, but also a competitive yield on their crypto assets,” Leon Marshall, head of Institutional Sales at Genesis, said.

“Our global focus has helped us become the largest trading and lending firm in the digital asset space, and we are both privileged and excited to be working with a global leader like Luno.”

16

Thursday 13 August 2020

BUSINESS DAY

BUSINESS TRAVEL

How unions’ poor understanding of economics threatens airline operations IFEOMA OKEKE

A

s the impacts of COVID-19 continue to hit various sectors of economy across the world, many experts have said the aviation sector appears to be the worst hit this period and a lot has to be done to win back the confidence of the travelling public.

While airlines wait for the ‘bounce back’ period, operators are however faced with the reality of responding to the impacts of the pandemic by finding best ways to mitigate costs.

One of such ways is to downsize the workforce in response to the reduction in fleet size as a result of reduced passenger patronage.

For instance, German airline Lufthansa cut 22,000 jobs as it struggles to deal with the slump in air travel caused by the coronavirus pandemic.

British Airways proposed to make 12,000 of its 45,000 staff redundant, with more than 1,000 pilot roles at risk.

Ryanair is set to shed 3,000 jobs 15 percent of its workforce - with boss Michael O’Leary saying the planned cuts are “the minimum that we need just to survive the next 12 months” EasyJet disclosed that it will cut up to 30 percent of its workforce - about 4,500 jobs and Virgin Atlantic, which employs 10,000 people, has said it will cut 3,000 jobs.

Nigerian carriers, which are also affected by the pandemic, last week had to lay-off some pilots and engineers just like their counterparts in other climes.

As at today, all the airlines are struggling in the face of traveller apathy, high cost of operations and other obligations. Air Peace with over 120 flights then has come down to about 20. Yet it has a workforce of over 3000 and multiple taxes that are not easing out.

In view of these realities, Air Peace last week had to painfully lay off 69 pilots and Bristow Helicopters laid off 100 pilots. Other airlines have also

had to review the salaries being paid to its staff.

Air Peace last week stated that it has taken a very painful but rightful decision; in the circumstances it found itself as a result of the devastating effects of the COVID-19 pandemic on its operations and financial health, to terminate the employment of some of its pilots.

The airline stated that this decision was taken for the greater good of the company and its almost 3000 workforce, the affected pilots inclusive.

The airline said it cannot afford to toe the path of being unable to continue to fulfil its financial obligations to its staff, external vendors, aviation agencies, maintenance organisations, insurance companies, banks and other creditors hence the decision to restructure its entire operations with a view to surviving the times.

However, more reassuring was that Air Peace stated that when everything comes back to normal, those pilots affected will have a place to come back to in future if they so wish.

Despite the realities these airlines have had to face, aviation unions have however taken it upon themselves to frustrate the efforts of the airline in its recovery process by threatening to shut down the entire industry, while local pilots are insisting on regular pay despite the obvious.

Experts have said that the sheer irresponsibility of the union and recent threats to shut down the entire industry are worth interrogating.

Unions agitate The National Association of Aircraft Pilots and Engineers (NAAPE) last week issued a two week ultimatum to airlines that have sacked or plan to sack their pilots and engineers to reverse the decision or else they would withdraw their services to the airlines.

The Nigeria Labour Congress (NLC) last week also said it will not hesitate to mobilize the weight of the entire Nigerian workforce to the premises of Turkish Air, Air Peace and Bristow Helicopters if its demands

www.businessday.ng

to reinstate sacked workers in these organizations are not met within two weeks.

The NLC in a letter signed by Ayuba Waba, its National President, read, “As agreed between labour and Employers’ associations, social dialogue should be used to resolve industrial concerns instead of the current resort to unilateralism. We will not hesitate to mobilize the weight of the entire Nigerian workforce to the premises of Turkish Air, Air Peace and Bristow Helicopters if our demands are not met.”

Experts condemn unions’ action However, Seyi Adewale, the chief executive officer of Mainstream Cargo Limited told BusinessDay that Air Peace had earlier resorted to social dialogue in a bid to reach a win-win situation on best modalities to adopt to resolve the issue but the workers wanted to have it their own way.

Adewale said, “On the side of the union, rather than insist they will shut down if their demands are not met, I will suggest they come together and agree on a win-win situation.

“For instance if an airline has 100 pilots but had to scale down its fleet as a result of low passenger patronage, then they have to allow for redundancy, pending when it can fully utilise its fleet again and call back

https://www.facebook.com/businessdayng

these workers.

“There has to be a form of negotiation between the owners of the business and the pilots and this was exactly what Air Peace was trying to do then. Air Peace has started negotiations with the pilots to reach a win-win situation but the pilots wanted to have it their way which shouldn’t be so.”

He insisted that pilots need to be considerate as no reasonable business man will want to run a business at a loss.

“The pilots say the owners of the business should not only be focused on making profit but I would like to ask, who would pay for the losses?

Airline operators are going through a lot now and they need to be considered,” he added.

Olumide Ohunayo, an aviation analyst, hinted that in this era, everybody needs to ‘calm down;’ from the unions, to the workers, to the airlines, most importantly to the regulators and the supervising ministry.

Ohunayo said the airlines at this time cannot be threatened, abandoned or left on their own.

He condemned the action of the unions who recently threatened that the airspace will be unsafe for flight just because they had disputes with two airlines.

@Businessdayng

“What we are having now is a 40 to 50 percent confidence level in passengers. This means we are having 40 to 50 percent load factor compared to what it was before the COVID-19.

This pandemic is the worst ever for the industry. We have SARS, 9/11, financial meltdown and all these affected airlines but for the first time, this pandemic affected the whole region and aircraft were grounded.

“Aircraft manufacturers are bleeding. Everyone in the industry is bleeding and in so much pain. When airlines cannot fly, park aircraft, reduce frequency, what happens is that staff attached to such aircraft whether they are pilots or engineers, will have to step aside pending when they return to full operations.

“The priority here is for airlines to get back to full operations. There is very little happening in the Nigerian airspace now. Even Lufthansa that has collected palliatives from their government is downsizing. So, what is the big deal? There is a need to re-orientate the unions, the government and the agencies to see that it is a time that we all need each other,” Ohunayo said.

John Ojikutu, member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that the intended lockdown of operations by unions is another reason why flights will drop more or disappear from the sky.

“We never had anything near 25 percent of what you find in Europe, Asia or America before now or pre COVID-19. What the unions are doing now in Nigeria is to kill the industry,” Ojikutu said.

FG’s support needed to sustain airlines Experts in the aviation sector have said the federal government’s support is needed to sustain the airlines.

Seyi Adewale told BusinessDay that this is a good time for the government to intervene by talking to the unions, adding that the government should also help the airlines in mitigating these losses.

Thursday 13 August 2020

BUSINESS DAY

17

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

interview

CAMA 2020 is one of the most impactful statutes of our time – OZOFU OGIEMUDIA In May 2017, UUBO Partner, OZOFU OGIEMUDIA was called to chair the technical advisory committee (TAC) to the Nigerian Senate on the review of bills to amend the Companies and Allied Matters Act, Cap C20, LFN 2004 (CAMA 2004) and the Investments and Securities Act 2007. The bill which was passed by both houses of the 8th National Assembly, did not receive the President’s assent, until August 7th, 2020 when a revised version of the bill (with amendments), was assented to by the President.

In this interview with BusinessDay Law Editor, THEODORA KIO-LAWSON, Ogiemudia speaks about the impact of CAMA 2020 on the ease of doing business in Nigeria, the cost reduction of registering security interests at the CAC and its implications for Nigerian businesses, the innovative parts of its provisions which reflect the reality of these times, as well as the need for the business and legal communities to learn and unlearn several concepts governing Nigerian company law in the last three decades. EXCERPTS…

T

he Business community received with joy the news of the President’s assent to the new Companies and Allied Matters Act 2020. You were involved in the process.

Can you tell us more about this?

In 2016 when the Nigerian Bar Association Section on Business Law (NBA-SBL) advised the Corporate Affairs Commission (CAC) on changes that should be made to the CAMA, I got involved in the effort to support a bill to repeal and re-enact the Companies and Allied Matters Act, Cap C20, LFN 2004 (CAMA).

I was also part of the NBA-SBL team that participated in the Peer Review of the Business Environment Legislative Review which was organised by ENABLE 2, GEMS and the Office of the Senate President to review the report of the team led by Prof Paul Idonigie on the Review of the Business Environment Acts and Bills. The Peer Review identified that the CAMA stood out as one of the most important Acts that required immediate reform in order to enhance the Nigerian business environment.

In May 2017, I was asked to chair the technical advisory committee (TAC) to the Nigerian Senate on the review of bills to amend the CAMA and the Investments and Securities Act 2007. I am deeply honoured to have worked on the draft bill.

The signing of the Companies and Allied Matters Act (CAMA) 2020 has been received with much excitement in the legal and business communities. This is because the Act is one of the most impactful statutes of our time and is designed to enhance the ease of doing business in Nigeria, especially for micro, small and medium-scale enterprises which are the engine of the Nigerian

INSIDE

economy.

The Act is the product of a collaborative effort amongst various stakeholders including the NBA SBL, the CAC, the Presidential Enabling Business Environment Council and the Nigerian Economic Summit Group under the National Assembly Business Environment Roundtable. It is the culmination of several years of hard work and reflective of the commitment of the government and the private sector to progressive legal reform through smarter regulation.

What are some highlights of the CAMA 2020 that we should look forward to?

The CAMA 2020 introduces a lot of long-awaited changes into Nigerian company law. I will highlight some of the most impactful changes.

It is now possible to have single shareholder/single director companies. This is available to small companies. Single member and director companies will make it

possible for business owners who currently trade as sole proprietors to register a company without the need to bring in new owners/ directors at the initial stage, and continue to run their business as before but with benefits of limited liability and access to credit.

The threshold for defining small companies has been increased, to enable more companies qualify as small companies and therefore enjoy the benefits conferred on small companies by the CAMA 2020. Under the CAMA, a small company was a company that, amongst other criteria, had a turnover of not more than N 2 million and a net asset value of not more than N 1 million. Under the CAMA 2020 a small company is a company that, amongst other criteria, has a turnover of not more than N 120 million and a net asset value of not more than N 60 million. The additional benefits that small companies enjoy are that they do not have to hold annual general meetings, appoint auditors or a company secretary. This is expected to result in reduced costs and a lighter regulatory burden on such companies.

Electronic copies of documents, electronic signatures and virtual meetings are now recognised.

There is no longer a concept of authorised share capital. Instead, companies are only required to ensure that they maintain the minimum issued share capital required under the CAMA 2020.

New entities have been introduced into our company law.

These are limited partnerships and limited liability partnerships.

This will provide more options for investors, such as private equity funds, seeking to structure their holdings in Nigerian businesses.

Members of the Technical Advisory Committee (TAC) of the 8th National Assembly, led by Chairman, Ozofu ‘Latunde Ogiemudia presenting the draft bill to the Senate President.

Continues on page 21

Ozofu ‘Latunde Ogiemudia, Partner Udo Udoma & Belo-Osagie (UUBO)

The Finance Act, 2019 – The tax man gives and takes?

18

The role of anger in the 2020 NBA elections

19

Companies and Allied Matters Act 2020: Reforming provisions that impact the Nigerian business community

20

www.legal.businessday.ng legalbusiness@businessday.ng

18

Thursday 13 August 2020

BUSINESS DAY

BD

LegalBusiness

The Finance Act, 2019 – The tax man gives and takes? (Continued from last week)

I

Part Two n Part One of this series, we considered some of the changes introduced by the Finance Act, 2019 which should be of interest to companies operating in Nigeria, as well as potential investors who are interested in Nigeria. In particular, we discussed reforms pertaining to the taxation of digital and remote services, removal of full WHT exemption for long-term foreign loans, thin capitalisation rules and tax holiday for agricultural companies.

We shall now discuss other changes introduced by the Finance Act. Tax-free earnings for Real Estate Investment Companies The amended Companies Income Tax Act (“CITA”) provides that dividend and rental income received by a real estate investment company (“REIC”) will be exempt from tax, provided that 75% of the dividend or rental income is distributed within 12 months of the end of the financial year in which the dividend or rental income was earned. If the distribution does not take place within this period, the tax exemption will be lost and such earnings will be assessed to tax.

A REIC is defined as a company duly approved by the Securities and Exchange Commission (“SEC”) to operate as a real estate investment scheme in Nigeria.

Elimination of punitive taxation of tax-exempt income and retained earnings Before the recent amendment of the CITA, where a Nigerian company paid dividends that exceeded its profit, the tax payable by the company would be based on the dividends and not on the lower profit. This meant that a subsidiary would be liable to income tax if it distributed dividends from tax exempt income, or, to a further income tax if it distributed dividends from retained earnings which had previously suffered tax.

It also created a disincentive to use local holding companies, as a

distribution to its shareholders of the dividends received by a holding company.

CITA has now been amended so that no further companies’ income tax will apply to dividends which are: • paid out of retained earnings that have suffered tax under the CITA, PPTA, or CGTA; • paid out of tax-exempt income; • paid out of franked investment income; or • paid by a real estate investment company from its rental or dividend incomes.

These amendments effectively eliminate the double taxation that occurs where such dividends are paid from retained earnings that have been taxed. They also ensure that tax incentives are not eroded when dividends that are paid out of tax-exempt income are distributed.

Planning points: As a result of this reform, companies can distribute dividends from tax exempt income without paying income tax, and distribute dividends from retained earnings without paying a further income tax. Consequently, the pressure to distribute all profits in a financial year in order to avoid double taxation is removed.

Another key implication of the reforms is that where investors determine that it is beneficial to set up a holding structure in Nigeria, that can now be done on a tax neutral basis and without concerns about the possible double taxation of the profits of subsidiaries and erosion of tax incentives.

Possible income tax and VAT exposure for foreign entities Recent decisions of the Nigerian courts and the amendment of the VAT Act’s definition of ‘exported services’ may have broader tax implications for foreign entities who would ordinarily be considered not to be tax-resident in Nigeria.

Prior to its amendment by the Finance Act, the VAT Act defined an exported service as a “service performed by a Nigerian

resident or a Nigerian company to a person outside Nigeria”. As exported services were (and still are) exempt from VAT, one view widely held in practice was that a Nigerian entity marketing services to Nigerian residents on behalf of a non-resident company was not required to include VAT in an invoice for that service or to include such transactions in its VAT returns for the relevant period.

However, in Allan Gray Investment Management Nigeria Limited (Appellant) v Federal Inland Revenue Service (FIRS), the Tax Appeal Tribunal (“TAT”) took the view that a South African investment manager was carrying on business in Nigeria because its Nigerian subsidiary marketed investment funds to Nigerian residents on its behalf. That finding was used to support a decision that services rendered by the local subsidiary were in fact rendered to a fixed base of the non-resident company and, therefore, could not be considered to be exported services. The decision in Allan Gray now appears to have been codified by the Finance Act’s redefinition of ‘exported services’ as expressly excluding services provided to the fixed base or permanent establishment of a non-resident person.

One implication of these developments is that Nigerian companies or individuals that are engaged to market foreign funds to local investors on behalf of non-resident fund managers will now be required to issue VAT invoices in respect of such services.

There is also a chance that the tax authorities and courts could begin to take the view, following the TAT’s reasoning in the Allan Gray decision, that non-resident businesses that market funds or services to local investors or clients through local representative offices should be deemed to have a permanent establishment or fixed base in Nigeria, and therefore be liable to pay income taxes in Nigeria.

Planning Points: It is neces-

sary for foreign entities resident outside Nigeria to assess their operations and existing relationships (with local representatives or agents) to determine whether the prevailing circumstances are such that their firms may be deemed to have permanent establishment or fixed base in Nigeria and therefore become liable to pay taxes such as VAT and companies income tax.

VAT and CGT Exemptions on Business Reorganisation Prior to the Finance Act, the transfer of assets in the course of a business reorganisation was construed as a disposal for the purpose of capital gains tax (“CGT”).

Such transfer of assets was also deemed as a ‘supply of goods’ to the transferee and was, therefore, subject to VAT. This was so even if the transferee was a wholly owned subsidiary of the selling entity.

The Finance Act has introduced amendments to the CGT Act and the VAT Act. The effect of these amendments is that CGT and VAT will no longer be payable upon the sale or transfer of assets during a business reorganisation if: • the sale or transfer is to a Nigerian company for the purpose of better organisation of that trade, or business or the transfer of its management to Nigeria; and • the entities are related, i.e. one company has control over the other, or both companies are controlled by some other person, or both companies are members of a recognised group of companies for a minimum period of 365 days prior to the date of the reorganisation.

However, if the transferee subsequently disposes of the assets within 365 days after the date of the transaction, the tax exemptions will be rescinded.

Planning points: Opting for an asset acquisition rather than a share acquisition would now be tax neutral. It would involve the following 3-step process- (1) the selling entity will incorporate a wholly-owned subsidiary; (2) the selling entity will transfer the assets to the wholly-owned

subsidiary after 365 days; and (3) the selling entity will then sell the subsidiary to the acquirer.

Incentives for Small Businesses The Finance Act provides that small businesses (i.e. with a turnover of N25million or less) are exempt from CIT, whilst medium-sized companies (i.e. with a turnover greater than N25million but less than N100 million) are to be taxed at a reduced rate of 20%.

WHT on Dividends from Petroleum Profits Before now, dividends paid out of profits that had been subjected to petroleum profits tax did not suffer withholding tax (“WHT”).

This meant that investors in the petroleum industry could receive dividends from upstream companies free of WHT. However, such dividends will now suffer 10% WHT, unless paid to a shareholder that is resident in a country that has a DTA with Nigeria, in which case a reduced rate of 7.5% will apply.

Minimum Tax for Companies with Foreign Ownership Where a company has no taxable profit or where the income tax payable by it is too low it is to pay a minimum income tax. Previously, companies with at least 25% foreign equity were exempted from paying this minimum CIT. The Finance Act has removed the exemption and revised the minimum CIT payable. Under the amendment, a minimum CIT of 0.5% of gross turnover (less any franked investment income) is now payable by such companies. However, any company with a gross turnover of less than N25,000,000 is now exempted from paying the minimum CIT.

ǼLEX is a leading full service Commercial & Dispute Resolution law firm in Nigeria and Ghana. AELEX Notes is a dedicated platform that provides insights into legal issues, developments, insights and perspectives of thought leaders. Visit us at www.aelex.com

Founder Institute Lagos partners ǼLEX to Support Early-Stage Startups

T

he Founder Institute (http://fi.co), the world’s largest pre-seed startup accelerator, and ǼLEX (https://www.aelex.com), an innovative full-service law firm established to meet the dynamics of modern-day businesses and to deliver prompt, efficient and quality services, have agreed to collaborate in helping early-stage startups currently enrolled at the Founder Institute Lagos. “ǼLEX believes that startups play a very vital role in the economic growth of any society, by spurring innovation and injecting competition, thereby making a positive investment.

Speaking about the partnership, ǼLEX’s Partner, Perenami Momodu, has this to say, “A lot of startups have challenges selecting the right legal partner to

assist them with protecting their intellectual property, registering their businesses, protecting their business interests and navigating through the tortuous regulatory landscape. Our collaboration with the Founder Institute Lagos, therefore, comes out of the need to provide the necessary legal tools that the innovators at the Institute require to make them investment ready to scale.”

Founder Institute Lagos and ǼLEX will collaborate to support and provide resources for the www.businessday.ng

40+ startups joining each cohort of the navy-seal programme. In addition to supporting startup founders throughout Lagos, a goal of this initiative will be to limit risk exposure at the critical early stage, facilitate regulatory compliance and ensure good corporate governance, thereby increasing the success potentials of investors and founders alike, and generally enhancing the growth of the local startup ecosystem.

According to the Director,

https://www.facebook.com/businessdayng

Founder Institute, Ifedy Eze, “access to legal advisory and support is one key factor critical to the success of a startup, especially at the pre-seed stage when founders are bootstrapping and not able to afford the high-cost professional services.

This partnership offers founders in the programme access to quality legal advisory and a robust bouquet of legal services ring-fenced within a deferred payment plan that ensures that they are not asphyxiated by the usually capital intensive legal demands of building a technology enterprise. ǼLEX has a demonstrated history of providing cutting-edge legal services that empowers their clients to win many times over, and that is the magic we are excited to bring to the table via this partnership.”

For early-stage founders and @Businessdayng

teams up to the challenge, the Founder Institute’s comprehensive step-by-step program provides the structure, mentor support, and global network of entrepreneurs needed to start an enduring company. The Founder Institute is the only program of its kind that focuses on people versus ideas, accepts founders with day jobs, and shares equity with all participants.

Speaking further about the partnership is Founder Institute’s Regional Director for Africa, Chukwuemeka Fred Agbata Jnr, ‘this collaboration with a reputable law firm such as ǼLEX is indeed one of the ways FI is contributing to building a more sustainable ecosystem’.

Founder Institute Lagos Cohort III commences on the 19th of August, 2020, with 40 enrolled Continues on page 19

Thursday 13 August 2020

BUSINESS DAY

barPERSECTIVE

BD

19

LegalBusiness

The role of anger in the 2020 NBA elections

A

nger is a central emotion of action and motivation, it makes people make decisions on the spur of the moment and we saw this play out on 30th July, when the Nigerian Bar Association (NBA) in a free and fair election elected Olumide “Oga kpata-kpata” Akpata as its 30th President.

Olumide won by maintaining a healthy “social distance” of over 5,500 votes from the first runner-up Babatunde Ajibade, who I proudly supported.

The NBA election involved almost the whole country; indeed one would have thought it was another national election. On various social media platforms, one could deduce that apart from those who believe in the mission of Olumide Akpata, a major reason why many young people voted, even those who were apathetic or undecided, was anger.

It was raw outrage at the NBA and the SANs, hence the need to change the status quo. It led to mantras “we want change”, “revolution”, “break the jinx”, “free at last” “like Kwara ‘O to ge’ like NBA”. Unfortunately, they were not sure or clear what they were changing to -- they just wanted change.

Although free and fair, the vote was not free from the fear that Olumide Akpata would be rigged out of the election. Most young lawyers who formed the bulk of his supporters held this suspicion. Their fear was not totally unfounded; it arose from a generally held but erroneous belief that the NBA has been led by Senior Advocates of Nigeria (SAN); and to perpetuate their rule would scuttle the chances of Olumide.

This theory was heightened when a letter addressed to Okpoko SAN

by Awomolo SAN became public.

Okpoko was requested to rally past NBA presidents and to “do all within your powers to preserve the integrity, respect, honour of the office... because of [an] unannounced but powerful and potent revolutionary

Joshua Nwachukwu

move by our junior colleagues who are very much in larger numbers to wrestle the office of the NBA from the rank of SAN...It will be a great failure of leadership for the senior advocate to surrender leadership to the outer bar when there are willing and able senior advocates”.

The letter was condescending.

It was disrespectful to junior and senior lawyers and presidents of the bar who were not SANs. It would make one imagine that the tenures of those presidents exemplified failure or was worse, when compared to those of senior advocates.

This reductionism and arrogance enraged many young lawyers and entrenched them the more in their quest to truly revolt.

Young and senior lawyers, SANs (including the other two contestants who are SANs) quickly disavowed themselves from the letter and distanced themselves from its anachronistic line of thought.

The letter, a personal opinion of one of 500 SANs, several of whom had openly supported Akpata, made young lawyers see the letter as the “official” position of the Body of Senior Advocates of Nigeria and vowed to take revenge. Political

pundits have described this letter as a turning point in the election.

Despite the outrage that met the letter, barely 48 hours to the election, another senior advocate, Daudu, released a letter which was also fixated on the electoral power of young lawyers. From the letter, I got the impression that the learned silk was not comfortable with universal suffrage, as it has altered the dynamics of the NBA elections. I suspects he prefers the “glorious days” of the delegate system, which history suggests was fraught with both financial and political corruption as it placed enormous power in the hands of a few.

Moreso, the general tone of his letter suggests that young lawyers are unable to make the right political decision and they should be patient, slave (sorry, learn) and wait to become senior lawyers and do what “seniors” do and then they can “chop alone”. To his credit, unlike the first letter it does not see the rank of SAN, or the absence of it, as the sole criteria for the office of president. He suggests that requisite experience at branch level is of more importance.

When one reads both letters, one won’t be surprised at the anger of young lawyers. Indeed, like most elections, this election was influenced by anger, misinformation and weaponisation of both.

Little wonder many see this election as a political statement from young lawyers. Anger is fuelled by the consciousness of power and young lawyers are showing they have power and they would use those powers to fight for inclusivity and for reforms to engender more welfare and respect. Indeed with the election, many young lawyers pride themselves not as spectators but as participants in making history.

Joanne Freeman, professor of history at Yale University, captures the sentiments of young lawyers when he said “anger has a peculiar power in democracies. Skillfully deployed before the right audience, it cuts

Continued from page 18

CAMA 2020: A well deserved icing on the NBA-SBL Cake

“I

Seni Adio, SAN, Chairman, NBA Section on Business Law

We thank His Excellency President Buhari for his assent, and also the Hon. Attorney General of the Federation, Mr. Abubakar Malami, SAN for his support. www.businessday.ng

many years have been underdogs, time will tell whether he achieves all these in two years, or not.

Interestingly, he does not have a record of public advocacy but the young lawyers don’t care. They are tired of an NBA that fights and thinks of Nigerians (if they even do) but do not cater for its members, most especially young lawyers; they are requesting that charity begins at home. The President-elect captured this concern in his post- election speech he said, “ the victory of last night is for young lawyers who have become disillusioned with the way the NBA has been run over the years and how the profession appears to be disconnected from the challenges that face them and their future”.

With his success at the polls, emotions are calming down.

After having 24 hours of celebration and taunting, many are now hoping and praying that the President-elect fulfils his campaign promises. The euphoria of the election is over.

Some of your friends who supported Olumide have told me to face reality and “calm down”.

The danger of utilizing anger is that while it reaps short-term gains, history suggests that it also provokes a fearsome backlash. The Presidentelect has spoken a lot; we hope he achieves all or most because there is nothing more disappointing than the head of a government talking tough and achieving nothing or little.

Indeed, uneasy lies the head that wears the crown, the President-elect has a huge task at hand, to prove young lawyers right and to prove the likes to Awomolo and Daudu wrong. The choice is his. He also has to douse the growing polarization in the legal profession. He has to debunk the extremist beliefs of some of his supporters that he has come to challenge the SANs, because as Winston Churchill said, meeting jaw to jaw is better than war-war.

I wish the President-elect and his team, an adventurous two years.

Founder Institute Lagos partners ǼLEX to Support...

QUOTE OF THE WEEK t’s been an incredible 3 weeks between the Nigerian Bar Association Section on Business Law (NBA-SBL) 14th Annual Business Law Conference which held between July 16-17, 2020, and was an outstanding and unprecedented success by all accounts, and President Muhammadu Buhari’s assent to the Companies & Allied Matters (Repeal and Re-enactment) Bill 2020, now the Companies & Allied Matters Act 2020 (“CAMA 2020”).

It is the very well deserved icing on the NBA-SBL Cake because the Act is the singular most transforming legislation to ease doing business in Nigeria and generally fostering a competitive economy.

straight to the heart of popular politics. It is attention-getting, drowning out the buzz of news cycles. It is inherently personal and thereby hard to refute with arguments of principle; it makes the political personal and the personal political. It feeds on raw emotions with a primal power: fear, pride, hate, humiliation. And it is contagious.

Apart from anger, there was misinformation and unnecessary information, for example some supporters of other contestants, wanted to make the marital status and weight of the President-elect an election issue, this was clearly beneath the threshold of dignified and civil politicking, moreso not one, expected from “learned men”.

The biggest misinformation among many, which is stiff rife even after the election, is that the president-elect is the first non-senior advocate to lead the bar. Unknown to them, the NBA has had more nonsilks than silks as president. Some are even saying that he is the first non-silk president in 30 years. This also is misinformation. What is true is that the President-elect is the first elected (emphasis on elected) nonsilk president since 1991. The nonsilk presidents from 1991 to date were not elected but were elevated when the then Presidents became Attorney Generals of the Federation.

I have had to burst this misinformation bubble a couple of times to the dismay of friends whose sole reason for voting was to break the illusory jinx. This is just for clarity sake and not to diminish the victory or weight of our President-elect whose firm is minutes away from mine.

It’s true that all these are tools of politicking; however it is still helpful to call this out, for posterity sake at least.

To Olumide Akpata’s credit, his agenda of lawyers’ welfare, continuing legal education, entrepreneurial opportunities, health care, access to finance, curriculum revamp resonated with young lawyers who for

It has been a long hard road but we remained undaunted and Act is the result of extensive and harmonious collaboration between the private and public sectors, represented by the NBA-SBL, Presidential Enabling Business Environment Council (PEBEC), Nigerian Economic Summit Group (NESG), National Assembly and, in particular, the Offices of the Senate President and Rt. Hon. Speaker, together with our development partner UK DFID (collectively, NASSBER).

The new Act brings Nigeria in comity with other entrepreneurshipcentric economies and will also foster inclusive growth by attracting the informal sector into the fold.”

https://www.facebook.com/businessdayng

founders. ǼLEX is a leading Commercial & Dispute Resolution law firm in Nigeria. They are one of the largest full-service law firms in West Africa with offices in Lagos, Port Harcourt and Abuja in Nigeria and Accra, Ghana.

The firm provides legal services involving commercial practice areas that cover a broad spectrum of matters relating to Technology, Telecommunications, Project Finance, Tax, International Trade, Securities Law, Energy & Infrastructure, Banking & Finance, Arbitration & Litigation and Intellectual Property Law. Lawyers in the Firm are admitted to practice in several jurisdictions including Nigeria, New York, Texas, Ghana, England and Wales. In addition to qualifying in law, the firm’s lawyers have qualifications in disciplines such as political science, economics, @Businessdayng

data protection, cybersecurity and engineering.

About the Founder Institute The Founder Institute (http:// fi.co) is the world’s largest preseed accelerator. We help prefunding entrepreneurs and teams build an enduring company by establishing a critical support network of local startup experts that are invested in their success, and providing a structured and challenging businessbuilding process that has helped our alumni raise over $800M. Leaders of the world’s fastestgrowing startups have used the Founder Institute to raise funding, get into seed-accelerators, generate traction, recruit a team, build a product, transition from employee to entrepreneur, and more. The Founder Institute was founded in 2009 by Adeo Ressi and Jonathan Greechan, today the program operates across 200+ cities and is localized into 9 languages.

20

Thursday 13 August 2020

BUSINESS DAY

GREYMATTER Companies and Allied Matters Act 2020: Reforming provisions that impact the Nigerian business community

O

n August 7, 2020, President Muhammadu Buhari assented to the Companies and Allied Maters Act, 2020 (“CAMA 2020”), which repeals and replaces the Companies and Allied Matters Act, 1990 (the “Repealed Act”).

As noted in our earlier Newsletter which highlighted critical changes sought to be introduced by the new regime, shortly after the repeal and reenactment bill was first passed by the National Assembly, this CAMA 2020 is undeniably a progressive development in the Nigerian business and economic landscape and a big boost to the Ease-of-Doing-Business (EoDB) campaign of the Government.

CAMA 2020 provides a robust framework for reforming identified onerous legal, regulatory and administrative bottlenecks which, for three decades, have made doing business in Nigeria substantially difficult (particularly for Micro, Small and Medium Enterprises (MSMEs)), and impeded investments into Nigeria.

In this article, we highlight key provisions in CAMA 2020 and their impact on current and future commercial transactions as well as business entities, generally.

MERGERS, ACQUISITIONS AND BUSINESS COMBINATIONS (A) ACQUISITIONS (i) Right of first offer and other restrictions CAMA 2020 introduces in Section 22, a statutory “right of first offer”. In

essence, subject to the provisions of the articles of association of a company, it is now prohibited for a member of a private company to transfer shares in said company to a non-member, without first offering the said shares to existing members.

Furthermore, a company cannot, without the approval of all its shareholders, sell assets having a value of more than 50% of the total assets of the company. Also, a shareholder or a group of shareholders, acting in concert, cannot agree to sell more than 50% of the shares of the company to a non-shareholder without such non-shareholder agreeing to buy the shares of the other existing shareholders on the same terms. (ii) Provisions on Financial Assistance by Company for acquisition of its shares The definition of financial assistance as it relates to a company’s acquisition of its own shares has been updated in CAMA 2020 to include any other financial assistance given by a company, the net assets of which are thereby reduced by up to 50%, or which has no “net assets”.

Whilst “net assets” was not defined in the Repealed Act, the term has now

been expressly defined in section 183 (3) of CAMA 2020 to mean the “aggregate of the company’s assets less the aggregate of its liabilities”; and these liabilities include any charges or provision for liabilities in accordance with the applicable accounting standards applied by the company in relation to its accounts.

Additionally, the exemptions to the financial assistance rule have now been expanded under section 183 (3) (a) – (f) of CAMA 2020 such that a company shall not be prevented from rendering financial assistance where: (i) “it is done in pursuance of an order of the court under a scheme of arrangement; a scheme of merger or any other scheme or restructuring of a company done with the sanction of the Court”; (ii) “its principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or the reduction or discharge of any such liability, but an incidental part of some larger purpose of the company, and the assistance is given in good faith in the interests of the company”.

INDUSTRY FILE

New York State Bar Association and NBA Women Forum sign MoU today

T

he Nigerian Bar Association Women Forum (“NBAWF”) is set to enter into a partnership with the New York State Bar Association (“NYSBA”) through its Women-In-Law Section.

The partnership will be evidenced by a Memorandum of Understanding (“MoU”) which will be executed by both parties at a virtual signing ceremony today, Thursday August 13th, 2020 at 5pm prompt.

Under the partnership, the NYSBA and the NBAWF will undertake joint initiatives to advance and empower women in the legal profession for success.

Speaking about the event, the vice chair of the forum, Chinyere Okorocha urged stakeholders to work with the NBAWF to sustain its goal towards advancing gender equality and empower female lawyers for success, “by putting all hands on deck and collaborating towards making the partnership a resounding success,” she said.

In attendance at the signing, will be the President of the NYSBA, President Scott M. Karson, the Chair of the

www.businessday.ng

Ayotola Jagun, head, external relations committee; Busayo Balogun-Agusto, deputy head external relations; and Theodora Kio-Lawson, deputy head, media and publicity.

The Signing Ceremony, which will mark the commencement of a laudable Partnership between the NYSBA and the NBAWF, is anticipated to have far reaching effects; and will undoubtedly be commemorated as one of the Forum’s key accomplishments.

Competition and Consumer Protection Commission (“FCCPC”) and any relevant government agency in a regulated industry, whereby the FCCPC takes precedence over and above such relevant government agency in matters of mergers/business combination. In addition to this, any regulation by the CAC on mergers will also be subject to Guidelines jointly issued by the FCCPC and the Securities and Exchange Commission (“SEC”) on the subject.

However, it is currently unclear, if the merger of associations “properly so called and/or structured”, would be subject to the jurisdiction of the FCCPC. Indeed, the definitions attaching to the terms such as “associations”, “undertakings” or “business enterprises” will be key in settling the FCCPC’s jurisdiction in this regard.

To be continued The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

George Etomi & Partners and GEPLAW Consults to hold Webinar on “Renewable Energy Projects in Nigeria

A

NYSBA Women in Law Section, Terri. A Mazur, the President of the NBA, Paul Usoro SAN and the Chairperson of the NBAWF, Prof. Oluyemisi Bamgbose SAN. Other attendees at this event include, Ernesto Guerrero, program manager, Law Students and Diversity and Inclusion, NYSBA, alongside key members of the NBAWF. This includes, Chinyere Okorocha, vice chair; Nsidibe Aideyan, secretary; Dr. Foluke Dada, head, Advocacy Committee;

Acquisition by a company of its own shares (Share Buyback) Section 184 (1) provides for the procedure for the acquisition by a company of its shares and Section 186 outlines the persons from whom a company may buy back its own shares which are: (a) the existing shareholders or security holders on a proportionate basis; (b) the existing shareholders in a manner permitted pursuant to a scheme of arrangement sanctioned by the court; (c) the open market; and (d) by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or any other similar scheme.

Where a company buys back its shares, payment for the share buyback shall be made from the distributable profits of the company.

(B) MERGERS (i) Hierarchical jurisdiction between the Federal Competition and Consumer Protection Commission and the Corporate Affairs Commission (“CAC” or “Commission”) Section 849 of CAMA 2020 provides for the merger of associations, and states that two or more associations with similar aims and objects may merge under terms and conditions as the CAC may prescribe by regulation.

It is important to note that Section 105 of the Federal Competition and Consumer Protection (“FCCP”) Act of 2018 establishes a hierarchical jurisdiction between the Federal

s at July 2020, news on global renewable energy space revealed that global investment in Renewable Energy (RE) capacity, excluding large hydropower dams, experienced a 5% increase from $125.8 billion in the first half of 2019 to $132.4 billion of 2020, despite COVID-19. In Nigeria, RE rose to the fore during the peak of the lockdown period and the attendant restrictions on movement across affected cities. The provision of electricity access to isolation centers and health centers through renewable energy sources as a substitute for the unreliability of grid supply heralded the key importance of renewable energy in the nation’s economy. This laudable development, notwithstanding the pandemic, had a grave impact on business operations in the economy including those involved in RE development.

Despite these challenges, there is the imperative for sustained action and commitment by sector players towards achieving SDG7 Access to Clean and Reliable

https://www.facebook.com/businessdayng

Energy, in order to develop a sustainable economy. The medium and long-term gains of RE to market players and the Nigerian economy at large require the significant gains recorded in the sector to be built on.

Following the prevailing impact of COVID-19 on the RE sector in Nigeria, the law firm of George Etomi & Partners, in partnership with GEPLAW Consults, recognizes the need to sensitize key sector players on the outlook and opportunities in the sector post-COVID. The webinar seeks to analyze the current state of the sector in relation to COVID-19, the direct impact of the pandemic on sector participants and stakeholders, existing or proposed legal, regulatory and policy developments, financing and investment climate for projects postCOVID and next steps towards the transition to clean energy and energy security.

The Webinar is scheduled to hold on Monday, August 31st, 2020 at 3pm and shall comprise of prestigious speakers including market participants and representatives of govern@Businessdayng

ment/regulatory authorities who have vast experience and knowledge regarding the topic.

The Panelists include: Dr. Musiliu Oseni, Commissioner, Planning, Research and Strategy- Renewable Energy & Research Division, Nigerian Electricity Regulatory Commission; Sele Inegbedion, Hub Manager, All On; Dr. Afolabi Otitoju, Senior Sustainable Energy Expert- ECOWAS Centre for Renewable Energy and Energy Efficiency, Technical Assistant- Federal Ministry of Power; Segun Adaju, President, Renewable Energy Association of Nigeria (REAN), CEO, Consistent Energy Limited; Ujunwa Ojemeni, Energy and Development Finance Executive, Senior Technical Adviser, Office of the Honourable Commissioner for Energy & Mineral Resources, Lagos State; Femi Adeyemo, Chief Executive Officer, Arnergy; Bankole Oloruntoba, Chief Executive Officer, Nigeria Climate Innovation Center (NCIC) and Alex Obiechina, Chief Executive Officer, ACOB Lighting Technology Limited.

Thursday 13 August 2020

BUSINESS DAY

BD

21

LegalBusiness

CAMA 2020 is one of the most impactful statutes of our...

Continued from page 17

Members of the 8th National Assembly congratulating the committee for its work.

thorised share capital has been removed by the CAMA 2020. I do not, however, think that this should cause any alarm. The aim of this amendment was for the share capital of the company to provide a more realistic reflection of the true state of affairs with respect to the capital of the company that has actually been issued and paid up as the authorised share capital did not actually reflect this. Another reason for this change was to eliminate the front-loading of costs associated with the creation of authorised share capital even where the company was not prepared to issue all of its authorised share capital. With the changes made by the CAMA 2020, companies will only pay CAC filing fees and stamp duty on the share capital that they have issued. Companies are now only required to ensure that they maintain the minimum issued share capital under the CAMA 2020 and a quarter of their issued share capital is paid up. The minimum issued share capital for private companies is N100,000 while for public companies it is N2,000,000.

Under the CAMA 2004, a company was required to issue at least 25% of its share capital and there was no requirement for any of it to be paid up. This meant that the company could create its authorised share capital, issue a quarter of it, and never make a call

for its shareholders to pay up the amount outstanding on their shares. Under the CAMA 2020, a company simply needs to pass a resolution issuing a specified number of shares. Thereafter, the company will be required to file a return at the CAC along with the resolution that was passed.

Before doing so, the com-

reality of the digital age that we are in?

The CAMA 2020 is being celebrated for bringing Nigerian company law into the digital age. This is a particularly welcome development in view of the ongoing COVID-19 pandemic which has created difficulties with respect to public gatherings for the purpose of holding

‘

The business and legal community will need to ‘unlearn’ some of the concepts that have governed Nigerian company law for three decades

‘

This innovation puts an end to concerns raised over the constitutionality of limited liability entities created by the states and whether their limited liability would be recognized when they conduct business in other states of the Federation.

The cost of registering security interests at the CAC has been reduced by 65% for private companies and 82.5% for public companies.

Prior to the CAMA 2020, the CAC filing fee for registering security interests was 1% of the secured amount (for private companies) and 2% of the secured amount (for public companies). Under the CAMA 2020, the CAC cannot charge more than 0.35% of the secured amount.

The implications of this cannot be overemphasised. It has substantial implications for the cost to Nigerian businesses of obtaining credit, as Nigeria has to date been infamous for the significant regulatory costs associated with creating security for debt financing.

Company rescue processes have been introduced. These processes are administration and company voluntary arrangements.

The introduction of these concepts will provide a way for Nigerian companies that are in financial difficulty to explore ways by which they can rescue their business and be able to continue as a going concern. Winding up will no longer be the only option available for dealing with insolvent companies.

The test for an insolvency (inability to pay debts as they fall due) has been increased from N2,000 to N200,000 to reflect present day realities.

Netting provisions based on the ISDA model netting law, have been introduced to facilitate the participation of Nigerian entities in qualified financial contracts such as derivatives, swaps and hedging transactions.

Greater disclosure of substantial shareholdings including beneficial interests in shares, has been introduced in order to discourage asset shielding.

There is now a requirement for at least three independent directors in all public companies and a limitation on the number of boards of public companies that an individual can serve on at the same time.

We understand that authorised share capital has been abolished.

This sounds quite drastic and has several market participants concerned.

Can you please put their minds at ease?

Yes, the concept of au-

pany will have to pay stamp duty on the issued shares, and CAC filing fees for the issued shares. Accordingly, the company will at all times have a certain number of issued shares and it would only be required to have paid stamp duty and CAC filing fees on the shares it has issued. In addition, at least 25% of the issued shares must be paid up.

What innovations have been introduced by the CAMA 2020 to reflect the

www.businessday.ng

physical meetings.

Under the CAMA 2004, all statutory meetings and annual general meetings of all companies are required to be held in Nigeria. This did not contemplate virtual meetings and the CAC had to come up with guidelines to help companies navigate the difficulties of holding meetings during the COVID-19 lockdown.

However, under the CAMA 2020, a private company may hold its general meet-

https://www.facebook.com/businessdayng

ings electronically provided that such meetings are conducted in accordance with the articles of the company.

Other innovations that reflect the current digital age are: company records can be maintained in electronic format ; electronic share transfer forms will be accepted by all companies; notices of meetings can be given by electronic mail to any member who has provided the company an electronic mail address; and any document required to be annexed to the annual return may be delivered to the CAC either in hard or soft copy.

In addition to the CAMA 2020, it is noteworthy that the CAC, under the leadership of the Registrar-General, Alhaji A.G. Abubakar, is on a digital drive that will enable users of the CAC’s services submit filings electronically and receive physical documents by courier, thereby reducing the overreliance on physical and manual processes. This is a welcome development, and I believe that the CAMA 2020 provides the perfect framework for further digital innovation at the CAC, leading to increased efficiency.

There will be lots of learning and unlearning as a result of the CAMA 2020.

How do you propose to help the market get a better understanding of the CAMA 2020 and all that has been changed by the Act? @Businessdayng

The CAMA 2020 has been many years in the works.

There was a lot of consultation and stakeholder engagement around the bill that is now the CAMA 2020.

As a result, the market has been aware of, and eagerly anticipating the innovations introduced by the CAMA 2020. I was deeply honoured to have worked on the draft bill and will continue advocating for changes to our business laws. I was privileged to interview Alhaji Abubakar at the first eConference of the Nigerian Bar Association Section on Business Law in July 2020, on the topic, ‘Changes on the Horizon: The Future of Company Law in Nigeria’ and that interview revealed some key changes that would be introduced by the CAMA 2020 as well as the CAC’s efforts to empower itself to be able to administer these changes. In the last week of July, I was part of a panel organised by the Institute of Directors that discussed the CAMA 2020 and engaged with a vibrant audience on what to expect from the new Act. Now that the CAMA 2020 has become law, and given my understanding of the background to most of the changes introduced by the Act, I intend to continue engaging with clients, colleagues and market participants on knowledge sharing and ways to best navigate the uncharted waters of the CAMA 2020. The business and legal community will need to ‘unlearn’ some of the concepts that have governed Nigerian company law for three decades, such as authorised share capital, physical meetings, company seals, etc. In their place, we will have to learn and understand the new concepts of minimum issued share capital, effecting share buy backs, setting up limited partnerships and limited liability partnerships, mergers of incorporated trustees, company rescue processes, netting for qualified financial contracts and lots more.

The CAMA 2020 has expanded the CAC’s board to include more private sector representation. With representation from both statutory bodies of accountants, the Institute of Chartered Secretaries and Administrators of Nigeria and the Nigerian Association of Small and Medium Enterprises, we expect that there will be a stronger voice from the Nigerian business community advocating for processes that will enhance the Nigerian business landscape and help position Nigeria as an attractive market for investment in Africa.

22

Thursday 13 August 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N12.882 trillion

2,205.73

N13.063 trillion

2,232.04

NSE All Share Index

Week open (29-07–20)

24,693.73

Week close 07 08–20)

25,041.89

Percentage change (WoW) Percentage change (YTD)

1.41 -6.71

1.19 5.47

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,014.69

740.58

122.34

402.48

170.34

1,845.77

1,146.73

930.13

1,031.11

1,053.21 1,070.58

278.60

740.58

292.37

122.00

405.36

178.53

1,847.16

1,147.87

956.89

4.94

-0.28

1.62 -10.48

0.00 0.00

1.65 -9.11

-18.07

-3.04

0.72 -3.04

NSE Lotus II

4.81

0.08

-32.00

0.68

NSE Ind. Goods Index

0.10 6.72

NSE Pension Index

2.88 -9.22

Domestic investors took shine off foreigners in H1 equities deals …accounted for 60.5% of record N1trn Storeis by Iheanyi Nwachukwu

I

n the first-half (H1) to June 30, investors on the Nigerian Bourse exchanged N1.003trillion worth of stocks, representing a decline from N1.087trillion exchanged in H1’2019.

Interestingly, foreign investors exchanged only N396.63billion worth of Nigerian equities or 39.52percent of the total value traded while domestic investors accounted for N606.93billion or 60.48percent.

Details on domestic and foreign portfolio participation in Nigeria’s equity trading for H1’2020 show that foreign investors brought in N129.95billion into the equities market while they took away N266.68billion. The retail domestic investors’ equities deals were valued at N286.41billion in H1’2020 while domestic institutional investors who traded N320.52billion worth of stocks. The largest transaction was in January (N235.46billion) while the lowest was in May (N119.15billion).

Despite the early optimism in the first month of 2020, a sharp decline in crude oil prices driven by the Covid-19 pandemic led to the near bearish market in H1. The NSE All Share Index (ASI) recorded negative return of circa -9 percent.

Amid Covid-19 pandemic, Nigeria’s equity market returns failed to preserve capital for long term

investors, even when the generous dividends paid to investors are added back.

“The market started the year with the post-election hangover of 2020 but gradually picked up as Companies started posting their annual results. Unfortunately the rally was curtailed by Covid-19 pandemic that eventually led to a lockdown of activities across board”, said Olatunde Amolegbe, president, Chartered Institute of Stockbrokers (CIS).

“Interestingly, the two month’s l o ckd ow n p e r i o d w i t n e ss e d unexpected market recovery as the

All Share Index (ASI) which was down about 21percent pre-lockdown gained about 12percent within the 2 months. This really is a testimony to the foresight of the Nigerian Stock Exchange and stockbrokers as they have digitized their business in preparation for unforeseen events such as this. So the market continued to serve the nation even during the lockdown”, he had stated.

In H1’20, stocks in the Health & Pharmaceuticals sector and those in Telecoms were on the rally radar.

For the Health & Pharmaceuticals sector, the reason was the significant

stimulus plan put together by the Central Bank of Nigeria (CBN) to support operations in the health and pharmaceutical industry.

Also, the N100billion credit support fund which targeted the healthcare sector to aid working capital and support research. The Health & Pharmaceuticals sector have remained at the forefront of the Federal Government efforts in the fight against Covid-19 pandemic.

Since the stimulus announcement, it spurred interest in healthcare and pharmaceutical stocks listed on the Nigerian Bourse.

In terms of value of deals traded, only 10 stockbroking houses exchanged stocks worth N86.86billion in the 6 months period, while represents 67.10percent of the total value traded between January and June 2020, Broker Performance Report shows.

Apel Asset Limited led the pack after it exchanged N13.490billion worth of equities in H1 representing 10.42percent of the total value traded. Others are: Stanbic I BT C S t o c k b ro k e r s L i m i t e d (N13.120billion or 10.13percent); EFG Hermes Nigeria Limited (N12.872billion or 9.94percent); Rencap Securities (Nig) Limited (N8.332billion or 6.44percent); C o rd ro s S e c u r i t i e s L i m i t e d (N8.277billion or 6.39percent); Vetiva Capital Management Limited (N8.241billion or 6.37percent);

Cardinalstone Securities Limited (N7.202billion or 5.56percent); CSL Stockbrokers Limited (N6.255billion or 4.83percent); Chapel Hill D e n ha m S e c u r i t i e s L i m i t e d (N4.967billion or 3.84percent); and Meristem Stockbrokers Limited (N4.103billion or 3.17percent).

Tajude en O lay i nka, C E O, Wyoming Capital and Partners the 8.8percent loss at the end of H1 2020 was still a reasonable figure to celebrate “if we must consider what the economy went through in the course of global pandemic, especially the shocks that were transmitted through the market when crude oil prices eventually collapsed in April, 2020.”

“Now that market has had a better understanding of the pandemic, and the fact that everyone has got to live with it, going forward, it is unlikely that market will go through a repeat of the experience we had at the start of the pandemic”, Olayinka added.

Over a thirteen (13) year period, domestic transactions decreased by 72.30percent from N3.556trillion in 2007 to N985billion in 2019 while foreign transactions increased by 53.08 percent, from N616billion to N943billion over the same period. Total domestic transactions accounted for about 51percent of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49percent of the total transactions in the same period.

United Capital Research:

Lafarge Africa H1-2020 unaudited result: Weathering the storm?

R

ecently, Lafarge Africa Plc released its half-year (H1) 2020 unaudited financial statement and according to the report revenue grew by 2.3percent year-on-year (y/y) during the period.

This was despite apparent challenges that characterised second-quarter (Q2) 2020 amid the COVID-19 induced lockdown. Herein, we review the H1-2020 performance and updated some of our assumptions for the rest of the year.

Operational efficiency fueled impressive performance Lafarge Africa revenue declined by 5.1percent y/y to N56.8bn in Q2-2020 due to lockdown measure imposed across Nigeria (especially in Abuja, Lagos, and Ogun) during the quarter.

However, Revenue grew by 2.3percent y/y to N120.5billion in six months period of H1-2020.

Notably, the management attributed the growth to increase

in volume sold and better average prices in H1-2020 when compared to corresponding period in 2019.

Analysing the Revenue by product, we observed a significant decline (-64.1percent) in Aggregate and Concrete product (which accounted for less than 5percent of the total revenue) in Q2-2020 to N0.5bn and similar trend was observed in H12020 (-40.2percent) to N1.95billion.

Meanwhile, Cement product which accounted for over 90percent of total revenue produced a mixed performance, down 3.6percent y/y to N56.3billion in Q2-2020 but up 3.5percent y/y to N118.6billion in H1-2020.

The management was able to contain Cost of Sales which mildly increased by 0.5percent y/y to N41.7billion, slower than Revenue growth (+2.3percent y/y). Although Variable cost of sales rose sharply 6.5percent y/y to N52.5billion, the www.businessday.ng

pressure was eased by the sharp decline in Production cost (which include personnel expenses, byproducts costs and electrical energy expenses), down 17.8percent y/y to N9.2billion.

Also, a sharp decline in Operating Expenses (OPEX), by 27.9percent y/y to N9.4billion supported the overall bottom-line performance in H1-2020. This was as Administrative/ Selling and Marketing expenses fell 30.6percent and 9.9percent y/y to N7.8billion and N1.5billion, respectively. Similarly, Net finance cost tumbled 67.3percent resulting in 86.1percent y/y surge in Pre-tax profit to N28.8billion. However, a 1.5x jump in Tax expense brought Post-tax profit growth to 47.3percent y/y to settle at N23.3billion. Notably, the jump in tax expense was a fallout of tax credit accessed by the company in 2019.

Healthy Balance sheet The cash balance spiked by

https://www.facebook.com/businessdayng

47.1percenty/ytosettleatN39.9billion.

Our findings revealed that the spike in cash balance was driven mainly by significant reduction in interest paid (53.5percent y/y to N4billion), lease payment (22percent y/y to N3.4billion), and loan repayment (93.9percent y/y to N5.4billion). We note a 10.9percent y/y decline in receivables to N7.3billion, this was partly due to the drop in Q2-2020 sales volume. Furthermore, total borrowing decline by 14.4percent y/y to N55billion, which supported the decline in interest cost. In all, net asset increase by 2.1percent y/y to settle at N352.1billion while total assets experience a mild decline of 0.3percent y/y to N495.8billion.

Rating upgraded to Buy at 23.1percent potential upside We are positive about the shortterm outlook for Lafarge Africa, as the company continues to restructure its balance sheet to improve @Businessdayng

performance. Also, we believe that the relaxation of economic lockdown in the second half of 2020 help sustain revenue expansion (as construction activities resumes fully). Accordingly, we have estimated a Revenue growth of 3.3percent y/y in FY-2020E. Also, we expect Cost of Sales growth to come lower compare to revenue growth, hence, gross margin is expected to be strengthen.

Our expectation for lower cost of sales rests on the back of the aggressive cost optimisation strategy that the company has embarked on since the beginning of the year which has resulted into a 17.8 percent reduction in production cost. However, our concern remains the continued increase in energy cost.

Also, we have estimated an uptick in OPEX as the company resumes promotional activities in a bid to drive volumes and compensate for Q2-2020 shortfalls.

Thursday 13 August 2020

BUSINESS DAY

23

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Who has key to unlocking stranded oil field OML 11? olusola Bello

T

he Department of Petroleum Resources (DPR) is currently running the 2020 bid round for 57 marginal oil fields located offshore, swamp and onshore terrains in the Niger Delta. This exercise is expected to be concluded this year 2020. The activities are run in accordance with specific Guidelines made public as part of the bid process. When completed, the fields will be allocated to the oil companies who successfully scale through the Technical and Commercial tender evaluations, and pay the required signature bonus. Thereafter the companies will be given license to enter into the fields, and commence exploration and development to produce oil and gas.

The 57 fields selected carefully excluded all the fields in OML 11 within the geographical territory of Ogoni, that have remained locked in due to crisis in the communities and inse-

curity. The exclusion was necessary to avoid further crisis, as every attempt by the Nigerian National Petroleum Company (NNPC) to cede the Ogoni oil fields to an operating company for resumption of Exploration and Production (E&P) activities have failed, since the forced shut down in 1993 when the operator SPDC, was chased away.

All the plans to get an operator back have failed, primarily because the attempts were done secretly,

with selected companies not going through an open and transparent process, in line with recognized industry practices. Some of these companies included Belema Oil, Robo Michael, TEN Oil, and more recently Sahara Energy. All these were rejected by Ogoni people because they were allegedly forced on them.

According to Eddie Wikina ,former managing director, Treasure Energy Resources Limited, and an ex general manager in

Shell Nigeria, It is generally a considered opinion that any process that will lead to successful resumption of E&P activities in Ogoni must include views and wishes of the people; and they must be open and transparent.

Ogoni people he said have gone through a wide stakeholder’s engagement process, to produce a Template to guide the process of selecting an Operator who is acceptable. The Template addresses the Needs, Interests, Concerns and

NNPC pledges to boost gas delivery to domestic market olusola Bello

T

he Nigerian National Petroleum Corporation (NNPC) ha s re st at e d i t s commitment to working with relevant partners and stakeholders in the Oil and Gas Sector to boost delivery of gas to the domestic market.

Mele Kyari, group managing director of NNPC, made the commitment at the launch of the Nigerian Gas Transportation Network Code (NGTNC) which is designed to enhance the use of gas as a catalyst for national economic development.

In a goodwill message at the event, the NNPC boss said the corporation was at the centre of gas delivery to the domestic market, stressing that it was involved in all the available gas delivery infrastructure in the country either directly or indirectly through joint venture partnership.

According to Kenny O bater u,group general Olusola Bello, Team lead,

manager of corporation in in statement He said the inauguration of the Network Code was an opportunity to enhance gas delivery and utilization in furtherance of the Federal Government’s objective of transforming gas into a key component of the nation’s energy mix and revenue sources.

“We will continue to give our support to this process to ensure that the full delivery of this process is achieved.

We commit to working closely with the DPR to ensure that the target of the government is attained. This opportunity has provided the right framework for the transportation of gas from the source to the end user in order to get value. We are happy to have this framework on ground and we are ready to collaborate with all our partners, the gas offtakers, gas producers, transportation companies, shippers, and all those involved in the gas value chain,” Kyari enthused.

Speaking on the significance of the Nigerian Gas

Graphics: Joel Samson.

Transportation Network Code (NGTNC), the Minister of State for Petroleum Resources, Timipre Sylva, said it would help to grow gas infrastructure, expand gas utilization, curb gas flaring, and provide codes to standardize the gas value chain in line with global best practices.

The Minister said the NGTNC was part of the key reforms instituted by the President Muhammadu Buhari Administration to expand domestic gas-topower, gas-to-Industr y, gas-to-manufacturing and mitigate the challenge associated with gas flaring in the country.

He noted that the gas codes would go a long way in deepening economic development, improve gas supply, boost Liquefied Petroleum Gas supply, and attract more investment opportunities in the nation’s gas value chain.

Sylva commended NNPC and its gas subsidiary, the Nigerian Gas Company (NGC), for partnering with the Department of Petro-

www.businessday.ng

leum Resources (DPR) to meet the six-month target to bring the Network Code to life.

Earlier in his welcome remarks, the Director of DPR, Saraki Auwalu, noted that the Department has emplaced the network code platform and would continue to work with all Industry players for the success of the NGTNC. The highpoint of the ceremony was the unveiling of the Network Code Electronic Licensing and Administrative System (NCELAS) portal and the supervision of the signing of framework agreements between NGC, Gas Hub, and Dangote Fertilizer Limited by the Minister of State for Petroleum Resources.

The Nigerian Gas Company will serve as the transporter while Gas Hub and Dangote Fertilizer Limited will serve as the shippers, with the Gas Aggregation Company of Nigeria Limited (GACN) in the role of agent as provided by the framework.

Expectations of the wide spectrum of Ogoni people.

The Template is based on the model of Partnership, Respect, Inclusiveness and Participation.

The evolution of the Ogoni Template lays the foundation, and produces the opportunity for the DPR to seize and conduct a special bid round for the OML 11 oil fields in Ogoni. The same process applied in the current bid round for 57 marginal fields should bet followed, but with Me Guidelines refined to reflect the Ogoni Template_ This is the key to unlocking the stranded vast oil and gas reserves within OIVIL 11 in Ogoni. The fields should be thrown open to interested Nigerian ad companies, and award to follow any of these options: 1. One oil field allocated to one company.

2. Maximum of two oil fields awarded to one company.

3. Combination of 1, 2 or 3 companies awarded 1 or a number of fields.

The above will lead to reduced risk exposure for the companies, and also ensure

ExxonMobil Nigeria names new chairman, managing director

E

xxonMobil has announced the appointment of Richard Laing as chairman and managing director of its three affiliates in Nigeria: Mobil Producing Nigeria Unlimited, Esso Exploration and Production Nigeria Limited, and Esso Exploration and Production Nigeria (Offshore East).

Effective August 1, Laing replaces Paul McGrath, who has been appointed to vice president of Global Projects for ExxonMobil in Houston after more than three years in Nigeria.

Prior to his appointment, Laing was executive director of oil and gas production and related support groups for all of the ExxonMobil affiliates in Nigeria.

“It is a privilege to lead the ExxonMobil team in Nigeria and build on the work that Paul McGrath has done over the last three years,” said Laing. “I look forward to the work that lies ahead and continuing

Email: energyreport@businessdayonline.com, Tel: +234-8023020011

https://www.facebook.com/businessdayng

reduced financial burden in raising capital for field development. Sharing of the fields will create more employment opportunities, and lead to faster development to reach first nil Awarding all the fields to one company is therefore not recommended. It is ex cad that the usual community incidents and crisis will be eliminated or substantially reduced, since the award process included the demands of the people as enshrined in the Ogoni Template.

Majority of Ogoni people have been yearning for resumption of E&P activities with sores preconditions which include assurance of environmental safety, and meeting specific social and economic development needs. This recommendation addresses their needs and concerns, and will lead to Early re-opening the Ogoni kingdoms to the much desired economic activities after 27 years oil inactivity, that resulted in increased poverty insecurity. Militancy, Illegal bunkering and environmental degradation.

The key for this to happen lies with the DPR.

@Businessdayng

Richard Laing

the company’s outstanding relationships.”

He joined ExxonMobil in 1989 and has held a variety of engineering, planning, safety and managerial positions in upstream and downstream operations while working in the United Kingdom, Qatar, United States and Nigeria.

Laing holds a bachelor’s degree in mining and petroleum engineering from University of Strathclyde, Glasgow as well as a master’s in petroleum engineering from Heriot-Watt University, Edinburgh.

24

Thursday 13 August 2020

BUSINESS DAY

Garden City Business Digest Oil spill: AGIP absolves self of spill along Orashi River

Port Harcourt’s ABEC may be showing the way:

Says online learning has come to stay • Ibim: The pandemic did not stop us; integration of in-class and online is the way to go Ignatius Chukwu

T

he Nigerian education system seams to take a hit from the coronavirus pandemic as students and pupils have been condemned to life at home for months and learning has been put to a halt. Some schools have however found a way to carry on through online learning as if if nothing happened.

One such school in Port Harcourt, ABEC (Arch Deacon Brown Education Centre) with a group of schools, said it was already experimenting the online teaching and learning type before the attack on learning.

One-time commissioner of information in Rivers State, former acting CEO of the Niger Delta Development Commission, and a renowned journalist, editor and publisher of Business Eye, now the executive director of ABEC, Ibim Semenitari, reminded Nigerians that online learning or e-learning has been there.

She told BusinessDay in an exclusive interview that distance learning did not start today and mentioned the days of Correspondence course which many people used to get some education or to complement their learning. A local council chairman in a part of the country once boasted of using it from primary school to a diploma.

Now, “This method progressed to distance learning which is widespread today.

So, online is part of a larger non-contact learning system.”

The former commission-

Ibim Semenitari

er said technology has only boosted distance learning and given it a new dimension. “Covid-19 has also come to make online-learning transformation urgent and compulsory.

So, it has come to stay.”

The founder of ABEC group (Dr Christy Toby) described the prospect as scary. “Your teachers may come from any part of the world. Schools may no longer be saddled with in-class and physical teachers but distance-teachers from as far away as the UK, US, Canada, South Africa, or Ghana. The era of part-time or piecemeal teaching staff may soon emerge.”

The top journalist and publisher talked about vast possibilities that exist in the emerging e-learning era whereby developing countries can

source expert teaching to feed their rural learners through recorded lessons and e-learning.

Reflecting on the Chibuike Rotimi Amaechi era when elearning was introduced and e-tablets were introduced with libraries in the 500 new primary schools Semenitari said; “The Amaechi vision is now relevant. This urgency to embrace e-learning worldwide may make people recall the Amaechi education philosophy. He was enthusiastic in trying to install modern primary and secondary schools in all parts of Rivers State with e-classrooms fitted with e-tablets per child, solar power supply and internet connectivity. This was to grow to a point where the best teaching anywhere in the world could be drawn down

and linked to Rivers rural and urban schools realtime.

“Recorded lessons could also be transmitted. If this vision is recalled and integrated into the state’s education system, there is a possibility that Ministry of Education could retain a group of teachers in rare subjects (such as English, Maths, Sciences) who would teach in one physical classroom and disseminate the lessons online or through recorded packages to all schools in the state so all pupils and students can get same quality across board real time or even delayed relay”.

She went on: “To have an e-class, all you need are laptops, solar energy, and internet connectivity. The state was pursing this agenda. Public schools could leverage on these facilities to build online learning backbone in the state so all schools can hook up. It may provide cheaper a learning system.

The ABEC Model: Explaining how ABEC group has handled the new challenge, the executive director said ABEC schools were already practising a form of e-learning or online system before the Covid-19 disruption. “That is why we did not stop. We completed our term and the syllabus.

The pandemic did not stop us. We have both in-person and virtual classes working.

Some lessons are recorded for the sake of learners who need many repeats as opposed to fast learners. All types have been provided.

ABEC has exclusive schools system where handicapped

learners sit with the rest. On this, Semenitari stated: “Tose with disabilities had their own system of learning. We had audio for those with sight impairment and sign-language for those with hearing impairments. We must admit that those with sight impairment gave more challenge because we do not have abundant Braille systems in the country.

So, we made up with audio tapes. That is why we appeal to the government to invest in Braille educational system in Nigeria. This is because publishers do not want to go into it because of cost. It does not seem profitable.

“We went straight into online teaching because we did not want to leave our pupils and students idle for long. If you stop teaching children, their brains would relapse. So, from April to June 2020, ABEC supported the e-learning scheme without asking for support (fees) from parents. It is only from July that we asked them to support with very minimal amounts.”

On the next steps at ABEC, she said: “We are waiting on government to declare what next. ABEC has large classrooms for spacing of our students. We are ready to implement full protocol in the school for the learners.

“We had digital classrooms even before now. So, we are going to integrate the physical and virtual classroom systems going forward. Some of our exstudents abroad offer to teach our students online. We have been doing this. Integration is the way to go.”

•Company reinstates commitment to development Ignatius Chukwu

R

umours were rife last week that oil spill from the Agip Oil Company (NAOC) had caused havoc in their area of operation in Rivers State. The company said they sprang into action but at the end of the joint team search, nothing of sort was found.

In a statement, the company has decried the recent media reports on the alleged oil spills said to be caused by NAOC operations in Orashi River. The management n a statement in Port Harcourt said the company wasted no time as soon as the rumors emerged.

The statement said; “A field inspection was performed on July 29, 2020 jointly with community representatives from Obrikom and Omoku, as well as officials from National Oil Spill Detection and Response Agency (NOSDRA) and the Rivers State Ministry of Environment.

“No oil leakage point along the Orashi River channel on any NAOC facility was observed. Furthermore, the oil appeared to be weathered, which is not consistent with oil that has just been produced”.

The company said the result of the investigation excludes the possibility of the said oil originating from its facilities.

NAOC noted that during the investigation, several sources of illegal refineries and oil theft loading points and illegal oil transport boats were observed along Orashi River shoreline.

Rivers to approve youth policy framework Port Harcourt

by Boat

IGNATIUS CHUKWU

T

he Rivers State Government is set to approve the youth development policy planned by the Ministry of Youth, with a firm commitment to revalidating all youth bodies in the state.

The Commissioner for Youth Development in the state, Prince Obi Ohia, who disclosed this in Port Harcourt recently while inaugurating the central committee for the

2020 International Youth Day celebration, said the Ministry could not kick-start the process of youth development without a well structured framework.

Ohia noted that it had become necessary to articulate a road map through which the youth would be developed, stressing that youth development should be a process and not a programme and that the Ministry was prepared more than ever to right the wrongs of the past .

The commissioner said the project should be a process whereby the Ministry would monitor and evaluate its protégés so as to give accurate development indices for effective planning.

According to him, the Ministry was at the final stages of creating a youth development policy document aimed at streamlining youth development activities. He gave assurances that critical stakeholders would be engaged in order to factor in their input before a presentation would eventually be made to the State Executive Council for final approval.

“If this development policy document

www.businessday.ng

is created, the state would then have what it takes to approach the multi National organisations, IOCs and other individuals as well as

Obi Ohia

https://www.facebook.com/businessdayng

corporate bodies doing business in the state for maximum support”.

There are plans underway, the Commissioner hinted, to propose a Bill which hopefully would be passed into law with the help of the Rivers State House of Assembly Committee on Youth Development concerning youth in the state.

Ohia explained that it is only when the youth policy is backed by law that a trust fund for youth development can be initiated, saying it becomes mandatory for anybody doing business in the state to contribute to the trust fund.

The Commissioner disclosed that the ministry has also designed a guideline to mitigate crisis often associated with youth elections in various communities that would involve security profiling against cultism and criminality.

Earlier, the Chairman, House Committee on Youth Development, Aforji Igwe, who is also the Chairman of the Central Committee for 2020 International Youth Day celebrations, gave assurances of the Assembly’s support for the Ministry.

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

25

26

Thursday 13 August 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 12 August 2020

Top Gainers/Losers as at Wednesday 12 August 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N38.95

N38.7

-0.25

N6.55

N6.4

-0.15

ZENITHBANK

N16.85

N16.75

-0.1

CHAMPION

N0.86

N0.78

-0.08

N4.15

N4.1

-0.05

Opening

Closing

Change

SEPLAT

N350

N385

35

BUACEMENT

AIRTELAFRI

N348

N380

32

ACCESS

N48

N51.5

3.5

PRESCO

OKOMUOIL GUINNESS

N77

N80

3

N14.5

N15.4

0.9

ETI

ASI (Points)

25,141.48

DEALS (Numbers) VOLUME (Numbers)

3,636.00 204,878,098.00

VALUE (N billion) MARKET CAP (N Trn)

3.830

N

igeria’s equities market failed to record another session of profit taking as investors on Wednesday August 12 moved to buy stocks like SEPLAT, Airtel Africa, Presco, and others that were hitherto underpriced amid Covid-19 pandemic. Cumulatively, stocks gained about N135billion.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) in-

creased by 1.04percent to 25,141.48 points from preceding trading day low of 24,883.70points while the value of listed equities on the Nigerian Bourse increased from N12.980trillion to N13.115trillion.

Top on the list of gainers are stocks like Seplat Petroleum Development Company Plc which increased from N350 to N385, after adding N35 or 10percent.

Investors are buying SEPLAT stocks as impressive news on crude oil price stability signposts better earn-

ings for the independent indigenous Nigerian oil and gas exploration and Production Company. The NSE Oil & Gas sector has risen most this month by 10.67percent, followed by NSE Banking (+5.08percent).

Crude oil prices rose on Wednesday after an industry report showed U.S. crude inventories last week fell more than analysts had expected, bolstering hopes that fuel demand in the world’s biggest economy can weather the coronavirus pandemic.

Brent crude was up 61 cents, or 1.4percent, at $45.11 a bar-

FTSE 100 Index 6,280.12GBP +125.78+2.04%

Nikkei 225 22,843.96JPY +93.72+0.41%

S&P 500 Index 3,383.38USD +49.69+1.49%

Deutsche Boerse AG German Stock Index DAX 13,058.63EUR +111.74+0.86%

Generic 1st ‘DM’ Future 27,874.00USD +260.00+0.94%

13.115

Nigeria stocks gain N135bn as investors raise bet on SEPLAT, Airtel, others Stories by Iheanyi Nwachukwu

Global market indicators

rel, after falling around 1percent on Tuesday.

Airtel Africa Plc share price also increased from N348 to N380, adding N32 or 9.20percent; while Presco Plc rallied from N48 to N51.5, adding N3.5 or 7.29percent.

The market’s record negative return year-todate (YtD) decreased to -6.34 percent. In 3,636 deals, equity dealers exchanged 204,878,098 units valued at N3.830billion.

GTBank, Access Bank, Zenith Bank, FBN Holdings and Sterling Bank were actively traded stocks.

Shanghai Stock Exchange Composite Index 3,319.27CNY -21.02-0.63%

ASHON, CIS renew pact for market development

P

oised to pull professionalism and resources together for accelerated market development, Association of Securities Dealing Houses of Nigeria (ASHON) and Chartered Institute of Stockbrokers (CIS) have renewed plans for collaborative efforts.

The President and Chairman of CIS, Olatunde Amolegbe, who recently received staff of office, as the 11th President of the Institute, in his acceptance speech, pledged that the Institute would work with ASHON and other trade groups to achieve common goal.

“We will continue to work in close partnership and cooperation with the Securities and Exchange Commission (SEC), the Association of Securities Dealing Houses of Nigeria (ASHON) and all the registered securities trading platforms in the country.”, said Amolegbe.

Similarly, in his goodwill message for Investiture

of Amolegbe, ASHON’S Chairman, OnyenwechukwuEzeagu, lauded the Institute’s new President and expressed willingness of ASHON to partner with the Institute to strengthen professionalism and move the market forward.

“Today, we celebrate one of the architects and proponents of a reinvigorated Institute of Stockbrokers. We know Olatunde Amolegbe to be a man of integrity, an exemplary Stockbroker and an astute business man. He has the strength of character to lead the Institute and we have no doubt in his ability to keep turning the momentum of growth which his predecessors had initiated despite all odds.

“Our advice to him and all of us is that we should join hands in the great work of advocacy, in finding solutions to the survival of our industry, which is in dire strait.

Stockbrokers’ president, Amolegbe sworn-in, unfolds agenda

T

Left-Right: Onome Okodiya, director; Michael Edeko, company Secretary; Akinloye D Oladapo, GMD / CEO; Jegede Paul Abiodun, chairman; Oluwaseyi Oyinlola, director; and Funmilola Omodamori, executive director, all of Japaul Gold and Ventures Plc at the unveiling of the company’s new name and logo after the AGM held recently in its head office in Lagos.

Northern Nigeria Flour Mills proposes N26.7m dividend payout from N64.6m full year profit

T

he Directors of Northern Nigeria Flour Mills Plc (NNFM) will recommend to shareholders at the forthcoming annual general meeting the declaration of a total of N26.73million representing a dividend of 15kobo per ordinary share of 50 kobo each.

This is contained in the company’s annual report for the year ended March 31, 2020 released on the Nigerian Stock Exchange (NSE).

NNFM is 47percent owned by individuals and institutions in Nigeria and 53percent owned by Flour Mills of Nigeria Plc which

is the parent Company and ultimate controlling party is Excelsior Shipping Company Limited, a company registered in Liberia.

Further look at the ownership structure shows Flour Mills of Nigeria Plc owns 94,545,159 units of NNFM shares, representing 53.06percent of its 178,200,000 outstanding shares. Northern Nigeria Investment Limited owns 12,955,000 units or 7.27percent; Dantata Investment & Securities Limited owns 11,661,114 units or 6.54 percent; while other individuals and institutional shareholders account for 59,038,727 units or 33.13percent. www.businessday.ng

Northern Nigeria Flour Mills Plc pre-tax profit for the year in review increased to N120.67million from a pre-tax loss of N52.41million in 2019.

The company grew after tax profit for the year to N64.63million from an after tax loss of N31.69million in 2019. Its full year revenue grew to N8.84billion from a low of N4.14billion in 2019; while operating profit increased to N562.19million from N527.86million in 2019.

The proposed dividend, if approved by the shareholders of the company, is subject to deduction of appropriate withholding tax.

Northern Nigeria

Flour Mills Plc was incorporated in Nigeria with interests in milling of wheat, maize and sorghum. The directors believe that there is no intention or threat from any source to curtail significantly the Company’s lines of business in the foreseeable future.

Basic earnings per share increased to 36 kobo against Basic loss per share of 18 kobo in 2019. The share exchanges at N 4.3 per share on the NSE. The Company operates in Kano State, Nigeria.

There have been no material changes to the nature of the Company’s business from the prior year.

https://www.facebook.com/businessdayng

he President, Chartered Institute of Stockbrokers ( CIS), Olatunde Amolegbe, during investiture yesterday, as the 11th President President of the Institute identified the key areas of focus under his new administration.

Besides, State Governors and captains of financial institutions have pledged their willingness to collaborate with the Institute whose members are agents of capital formation and mobilization in order to enhance Nigeria’s economic growth and development.

In his acceptance speech after his swearing-in by the Institute’s Assessor, Disciplinary Tribunal, Justice Adesuyi Olagbegi and decorated with the insignia of office at the of physical and virtual ceremony, Amolegbe assured the financial market community and the government of his administration’s determination to address immediate needs of the Institute while medium and long term strategic focus would be vigorously pursued. ” I will work in harmony with our distinguished Council Members to ensure that we @Businessdayng

take CIS to the next level in all aspects. These include the areas of conducting examinations, policy advocacy, membership relationships, and , trainings and professional development. However, I pledge firmly that we will carry all our critical stakeholders along in everything we do.

He reiterated his earlier position that regulators should not increase the minimum capital base of market operators as the current operating environment would not support such a move. “ We will continue to work in close partnership and cooperation with the Securities and Exchange Commission (SEC), the Association of Securities Dealing Houses of Nigeria (ASHON) and all the registered securities trading platforms in the country; and may I at this juncture make a strong plea that any plans to increase minimum share capital requirement for Capital Market Operators be suspended for now. It will simply not be right in the face of the gargantuan operational and revenue challenges currently facing the industry.

Thursday 13 August 2020

BUSINESS DAY

27

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

Disability Initiative:

Rita Ofili Wants To Be the ‘Wheel Chairlady’ of the Silver Screen Onuwa Lucky Joseph

R

ita Ofili got spunk.

That much is clear after a first encounter. Repeated encounters only cement that reputation.

She’s in your face and does not let go. She’s got lots to say and you got to listen. She’s used to people being offhandedly dismissive, so she has that game well sewn up. Your yawning won’t do it. Neither would your incoming calls, or contrived calls. She waits till you’re done.

And then she continues like there’d been no interruption.

Rita’s mission is one that won’t be messed up by interruptions. Hers is about the disabled community (sometimes referred to as the differently abled) in Nigeria.

The discrimination against them is obvious and it comes from everywhere. Isn’t it just in the nature of man/woman to discriminate? Everywhere you turn, there’s one group turning up its nose against another, claiming superiority.

This is why Rita is fighting for her people to be seen as regular Nigerians, with all the opportunities available to Nigerians made available to them. They want to be able to access banks, get into worship centres and other public places without someone necessarily needing to lend an obvious hand. They want to be seen as valuable and able to contribute their quota to Nigeria’s development. And all of these seemed within reach when President Muhammadu

Buhari signed into law the Prohibition of Discrimination against Persons with Disabilities bill. But laws are one thing; implementing them, as we know all too well in Nigeria, is a whole different pot of stew.

So, Rita, alongside her people, is taking matters into her own hands. Her foundation, Ephaphata Foundation

is moving into entertainment with the production of an inclusive TV drama series that chronicles the lives of disabled people (particularly those in wheel chairs). The series, 12 episodes of which have been shot (out of 35) is called ‘Onset’ because Rita envisages that its onset on Nigerian screens will herald,

for real, the dawning of a new day for Nigeria’s disabled.

What stoked the fire for this endeavour was back during her time as a student at the University of Lagos when her lecturer, Mazi Bright Nnabuihe insisted that if the unwilling Rita was to pass his course, she had to take part in stage acting like every other student. The good man let her know that he didn’t consider her disabled.

She was his student, found fit for admission into UNILAG and so had it in her to do what everybody else did. And so she did, enjoyed the challenge, and has been hooked on acting ever since.

After school, still on a high, she started rolling her wheelchair to auditions, seeking roles. But unlike her old teacher, the guys in professional drama didn’t consider her normal enough to get any roles. In her words, ‘I was perceived as crippled, and so, unfit’.

Which explains why Rita was in a fit recently when an actress, who was supposed to act alongside the ‘disabled’ crew, threw some tantrum, insisting she would not be part of it. In the actress’ warped mind, disabled people may have ‘spiritual’ issues that could rub off on anyone who came too close to them.

Rita also remembers the harrowing time she had in the university, having to ‘crawl up the 3rd to 6th floor four times daily for lectures’. Sure, special provision couldn’t be made for her, but even worse was the ‘never functional elevator because of electrical and

technical issues, no ramps for ease of access for a physically challenged person’.There were times she fell off her wheelchair or had accidents while being carried upstairs by compassionate fellow students. Those are all stories Nigeria’s disabled community can well relate to.

However, the reason she insists on drama to tell her story for the need of inclusion is because she’s keenly aware of the power of the media to influence and change behaviour. According to her, ‘we believe that one of the most effective ways to influence public perception towards people living with disability is through the media. It is our belief that this production will help shape the way society defines, perceives, and views people living with disability’.

Please Support Rita’s initiative To get this through to screen, however, there is the arduous matter of facilitating

the shoots. She seeks support from the private and public sectors as well as individuals.

Thankfully, British American Tobacco Nigeria Foundation threw in the first corporate mite of N500,000 via a charity challenge. To play your part, do kindly send your contribution to Ephaphata Hope Foundation, Fidelity Bank, 4010857750 RITA, ACCORDING TO RITA I am a physically challenged person on wheelchair; I am resolved to create the world I want to live in irrespective of my physical challenges.

My wheelchair of fortune sure has wheeled me through my life challenges. I maybe wheelchair bound but I am normal as anyone else. And I am certain it would help me navigatetherigoursofthefuture.

I am the CEO of Ephaphata Hope Foundation a non-governmental platform advocating and creating awareness on the needs to embrace persons living with disability.

At WeForGood’s WYSD Conference:

Build a Resilient Africa! Adejoke Orelope-Adefulire and other mentors charge youths Onuwa Lucky Joseph

A

s the world counts down to the achievement of the Sustainable Development Goals (SDGs) in 2030, stakeholders in Africa need to intensify efforts towards ensuring that the continent is not left behind. How this can be achieved was the crux of the discourse at the second edition of the Sustainable Solutions Africa Launch Conference organized by WeForGood International.

The event, which took place from Wednesday, July 15th-Thursday July 16th, 2020, congregated prominent government officials, professionals, social innovators, and youths from around the globe to tackle the glaring social challenges plaguing Africa.

The central theme was ‘Building a Resilient Africa in an Ever-Changing Digital World’ The Conference inspired youths to enrich their minds with innovative and creative thinking ideas required for entrepreneurship purposes as

the attendees were equipped to think big, start small, and scale up. It also emphasized the urgent need to address the ever-increasing challenges facing Africa while taking cognisance of its data limitations that can be easily overcome through proper monitoring and evaluation techniques.

Organized to commemorate the United Nations World Youth Skills Day (WYSD), it also served as the launch of the second edition of the Sustainable Solutions Africa Project, a blended fellowship and accelerator program by WeForGood International, a project designed to promote skills for sustainable development and for reducing unemployment and poverty on the continent.

Temitayo Ade-Peters, CEO of WeForGood International, in her welcome address, noted that as Africa increasingly strives towards digital penetration, it was pertinent to discuss how this digital revolution can create a thriving economy for the continent.

She described the upcoming start-up training in partwww.businessday.ng

nership with Tekedia Institute to prequalify Africans for the fellowship as a robust training that will be globally relevant and locally applicable, further stating that this year’s fellowship programme promises to be even more impressive as WeForGood was set to equip entrepreneurs who get selected as fellows to build impactful and sustainable businesses through a yearlong coaching and funding. Mrs. Ade-Peters also announced that for 2019, WeForGood successfully facilitated N90m for its fellows who have now collectively impacted 566,448 people.

Prof. Ndubuisi Ekekwe, Chairman FASMICRO Group, and Lead Faculty at Tekedia Institute kicked off Day One with the theme titled: ‘Adapting to The New Normal; How Can African Youths Anticipate and Thrive?’ Cheerfully announcing that this was indeed the best time to be a young person, Prof Ekekwe put the onus is on every African to contribute his or her quota to building the continent by taking purposeful action as

opposed to mere talk. He charged attendees not to wait for government, but to immediately begin to think of innovative and sustainable ways to help Africa overcome poverty and other social challenges.

“African youths must use technology to solve the challenges on this continent. Action builds nations, actions builds economies and systems, action changes destines.

It is time for African youths to take action”, Prof Ekekwe rounded up.

This impressive session made way for the panel of the day. Danielle Kayembe, CEO, Greyfire; Enahoro Okhae, MD, Pause Factory; and Oluseyi Akinyoyenu, ED, Oryx Africa were on this panel that was brilliantly moderated by Adedoyin Jaiyesimi, the Chief Communications Consultant at The Comms Avenue.

A take home note from the discussion was the need for African youths to develop innovative skills such as critical thinking, digitalized creations, and most importantly adaptation and flexibility to business

https://www.facebook.com/businessdayng

fluctuations. Additionally, the panelists laid emphasis on the importance of collaboration with likeminded individuals and organisations to execute projects as well as the need to embrace challenges from the perspective of creating change.

Senior Special Assistant to the President of Nigeria on the Sustainable Development Goals, Princess Adejoke Orelope –Adefulire, ably represented by Ms. Rose Keffas, noted in her goodwill message that the SDGs are a call to action, to end poverty, safeguard the planet, and ensure all people enjoy peace and prosperity by the year 2030.

Rounding up Day 1 was a well-delivered speech by Mr. Edward Kallon, the UN Resident Coordinator, Nigeria, who in his speech read by Mr. Zebulon Takwa, reiterated his desire to work with WeForGood in exploring opportunities to ensure that youths are skilled enough to build a resilient continent.

Day Two was even more remarkable as it birthed more insights from the robust @Businessdayng

speakers who are experienced trailblazers from diverse walks of life. The conversation focused on ‘Accelerating Africa’s Sustainable Development - Deploying the Playbook of Social Innovation’.

Ken Egbas, Chairman Starr Group, and CEO TruCSR who was charged with giving the opening speech called on social innovations in Africa to grow out of mushroom ideas driven by excitement and build structured frameworks to promote longevity. His eyeopening session made way for the panel discussion on the topic of the day.

Panellists for this session were Oluwabankole Falade, Director, Regulatory Affairs and Government Relations, IHS Nigeria, Chioma Ukonu, Co-­founder, Recycle Points, Babatomiwa Adesida, Private Sector Engagement Specialist, Sahara Group, Achenyo Obaro, CEO Mitimeth, and Mories Atoki, CEO, ABC Health.

(Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

28

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

29

News Oil majors’ search for sustainable businesses...

Continued from page 1

are responding by fundamentally reshaping their business models.

The three months ending June saw international oil companies beginning to implement a paradigm shift in strategy, which before this point has been discussed mostly in clichés. This shows how big oil and gas companies will look and act in the future.

Massive write-downs in portfolio values are becoming common as the reality sets in that not all reserves will find a market. Asset sales will be key to open room for new investments, but the pool of buyers may be lacking, according to people familiar with the matter.

In this year’s second quarter alone, British Petroleum, Chevron, Total and Shell wrote down the value of their portfolios by about $50 billion.

Exxon, infamous for not taking impairment charges, has warned it may have to wipe 20 percent of its proved reserves off its books as it reckons with low prices. The five Western majors are collectively pursuing goals for asset sales that total $80 billion.

European and US companies remain divided to a considerable degree in the approaches they have laid out, but all the majors seem destined for a smaller and hopefully more profitable future, with an emphasis on lower-cost and carbon, quicker-turnaround projects, less frontier exploration and less traditional refining. Many are aiming to build a bigger role in alternative energy, says Noah Brenner, Eastern Hemisphere editorial director at Energy Intelligence.

Strategies among European majors pursuing the Big Energy model are not uniform, but they do share fundamental characteristics.

They have a greater emphasis on gas and liquefied natural gas (LNG), which will be increasingly integrated with renewables, battery storage and hydrogen. Oil reserves will be evaluated both for their costs and carbon footprint. Big oil US majors, meanwhile, will continue to play in short-cycle tight oil in the Permian Basin, where spending can rise and fall alongside oil prices.

“We’re transforming from

an international oil company (IOC) focused on producing resources, to an integrated energy company focused on delivering solutions for customers, from IOC to IEC,” Bernard Looney, BP CEO, told investors, pledging to cut oil and gas production by 40 percent over the next decade as it ramps up investments in things like renewable power and electric vehicle charging.

Nigeria sits on 37 billion barrels of proven oil reserves and 202 trillion cubic feet of natural gas, according to the Ministry of Petroleum Resources. Nigeria has also been unable to reform its oil and gas sector quickly enough to attract fresh investments.

For almost two decades, its Petroleum Industry Bill meant to reform the sector is yet to be passed into law.

However, going live on Monday of the Nigerian Gas Transportation Network Code is expected to liberate investments into gas infrastructure and increase domestic gas utilisation in Nigeria. It questions though how Africa’s biggest oil producer’s reserves will fare in the face of dwindling oil fortunes in the global market.

“Nigeria needs to focus on value addition. Our oil reserves are still important and oil will take long time to go away,” Ayodele Oni, energy partner at Bloomfield Law Practice, states in a phone interview. “The target should be to refine and sell finished petroleum products locally and export to other African countries,” Oni says.

Citing the success of Indorama Eleme Petrochemicals Company Limited, which floundered under full government ownership but flourished after privatisation, some experts have said sustained deregulation of the downstream oil and gas sector will be essential in reposition Nigeria as Africa’s refining hub.

The failures of Nigeria’s government owned refineries support arguments for deregulation of the downstream sector, which people with deep knowledge of the industry say will stimulate investment inflows into building refineries. This will, in turn, develop a petrochemicals industry that feeds on Nigeria’s oil reserves to grow new industries.

Top up N50bn COVID-19 fund for households, MPC...

Continued from page 2

interventions had begun. In the case of the N50 billion Targeted Facility, he said it had been oversubscribed by households and SMEs. “This will need to be augmented by the bank while implementation of all the policy measures should be vigorously pursued in order to realise the set objectives,” Obadan said.

Obiora Kingsley Isitua, a member of the MPC, noted in his personal statement that 92,000 household and SME beneficiaries has received financial support to the tune of N49.2 billion and 61 manufacturing projects had been catalysed by injections of N152.9 billion, while the healthcare sector had been strengthened by support of N93.6 billion. www.businessday.ng

L-R: Oluwole Oke, chairman, House of Representatives Committee on Public Account; Lawan Ali, and Nasiru Gabasawa, both are members of the committee, during an investigative hearing on the activities of the Nigerian Shippers Council, at the National Assembly Complex in Abuja, yesterday. NAN

Soaring fertiliser prices lead to second...

Continued from page 1

N7,500 sold during the dry season farming in January/February 2020. This represents 113 percentage point increase in the price.

Similarly, the average price of a 50kg NPK 20:10:10 varies between N7,500 and N8,000 as against N6,000 sold in early part of the year, representing 33 percent increase in price. Urea sells for N11,000 as against N6,000 sold earlier in the year, representing 83 percent increase in price.

Even the Presidential Fertiliser Initiative (PFI) fertiliser sells between N6,500 and N7,000 depending on the location, despite President Muhammadu Buhari announcing that prices of fertilisers under the PFI would be sold for N5,000 as palliative measures for farmers.

“The prices of fertilisers have been surging and the situation has been challenging for farmers because it is even delaying planting,” Abiodun Olorundenro, operations manager, Aquashoots Nigeria, says.

“There is currently insufficient supply of fertilisers in the country. We made an order for several bags of fertilisers from Notore in May and only got our supply in late June. We are still waiting for the third truck. This is unlike before when we placed for an order and got all the following week,” Olorundenro further states.

The initial lockdown to control the spread of the COVID-19 pandemic that has infected 47,290 people and 956 in Africa’s most populous nation obstructed the supply of fertilisers to blending plants, thus causing delays in production, experts say.

Fertiliser contains nitrogen, phosphorus, potassium, and other trace minerals in various chemical forms, according to Science Direct, and it enhances growth and maturity of crops.

“We ran into a big problem because of the COVID-19 pandemic, as fertilisers supply to blending plants were delayed, and there were equally logistic constraints,” notes Gideon Negedu, executive secretary, Fertiliser Producers and Suppliers Association of Nigeria (FEPSAN). “We also had some problems with Indorama, which are the suppliers of Urea under the PFI, as they were forced to shut down operations owing to the pandemic,” Negedu points out.

He stated further that the combination of both factors resulted in an inadequate supply of the product, thus creating a rise in prices across the country.

BusinessDay’s check on Indorama website shows that a 50kg bag of Urea sells for N6,400 as against N11,000 sold by agro-dealers, while a metric ton goes for N114,000.

Jossy Nwocha, head of corporate communications, Indorama, says agro-dealers

Honeywell, Fidson, Nascon boom on COVID-19...

Continued from page 2

N26 billion, from N18 billion in the corresponding period of 2019.

Similarly, Nascon, a member of Dangote Group producing salt, tomato paste and seasonings, was able to grow its revenue base by 17 percent to N14 billion, with gross profit rising by 66 percent to N5.8 billion. Profit after tax grew by 3 percent to N1.48 billion.

During the pandemic, cement makers also grew their sales. Dangote Cement, a member of Dangote Group,

grew revenue to N332 billion in H1 of 2020, from N328 billion in the corresponding period of 2019.

Dangote Cement also grew profit after tax by 17 percent to N174 billion in H1 of 2020, as against the N149 billion it recorded in the previous year.

Similarly, BUA cement grew its revenue by 13 percent to N101 billion while its profit for the period grew by 13 percent to N34 billion.

According to analysts, cement makers were lucky as some state governments, organisations and individuals used

https://www.facebook.com/businessdayng

are the ones inflating prices owing to the surge in demand from farmers.

“The whole scenario is due to what is called market sentiments. Dealers, retailers, and farmers hoard their products to create artificial scarcity to increase the price,” he explains.

As a result, Nigeria is now seeing a second wave of food price increases. Prices of all food items are making rapid climbs and showing no sign of slowing.

In Mile-12 Market in Lagos, a 50kg bag of local parboiled rice now sells between N25,000 and 26,000 as against N23,000 sold a month ago, indicating 9 to 13 percentage rise in price.

A 70kg bag of drum beans now sells for N26,000 as against N20,000 sold last month, indicating a 30 percent price increase.

A 60kg bag of red garri sells for N13,200 as against N9,600 sold last month, a 37.5 percent increase, while a small bucket - popularly called painter - is sold for N1,100 as against N800 sold in July.

Similarly, a 60kg bag of white garri, which was sold N8,400 last month, now sells for N12,000, while a painter sells for N1,000 as against N700 sold previously.

For palm oil, a 25-litre keg now sells for N11,000 as against N8,500 sold in July, representing 29.4 percent increase in price. A 25-litre keg of King Vegetable Oil sells for N14,000 as against N12,000 sold last month.

The general inflation

quickens to a 26-month high at 12.6 percent in June, mainly driven by the food inflation index. The composite food index stood at 15.18 percent, 0.14 percent points higher than 15.04 percent recorded in May 2020.

Nigeria had, since 2016, kick-started the PFI, which is in its third stage of implementation to improve the country’s local capacity blend while producing fertilisers to ensure timely supply of the product to farmers and conserve foreign exchange spent on importation of the product. The country currently has 35 blending plants with a blending capacity of about 5 million metric tons.

Nigeria is still not producing enough food to feed its 200 million population owing to inputs challenges and age-old problems in the agriculture sector.

Bismarck Rewane, economist and chief executive of Lagos-based Financial Derivatives Company Limited, a financial consulting firm, said on Channels TV in 2019 that high food prices in Nigeria indicated that the country was not producing enough food for a population growing at 2.6 percent every year.

“What informs rising food prices in Nigeria?” he asked, rhetorically, while explaining Nigeria’s food inflation rate.

“It is either there is high demand for foods or that we are not producing enough.

But the answer is that we are not producing enough,” Rewane said.

the opportunity of the break caused by the pandemic to build infrastructure and houses.

“Contracts for several projects were on in several states during the pandemic, and cement makers benefitted from that,” Ike Ibeabuchi, a manufacturer, explained.

Makers of soaps, disinfectants and sanitizers also recorded a boom this period as many consumers made use of these items as preventive measures against COVID-19, said Obisike Nwachukwu, a medical practitioner and manufacturer of sanitizer.

With bars, events and night clubs shut, local brewers had it

tough which reflected in their financials for the first half of the year; with the Nigerian Breweries experiencing revenue decline of 11 percent to N151 billion in H1 of 2020. Profit after tax declined by 58 percent, from N13 billion in the first half of 2019 to N5.5 billion in the same period of 2020.

Similarly, International Breweries experienced revenue decline of 12 percent, recording N60 billion in the first half of 2020 as against the N68 billion in the previous year. It further recorded N9.3 billion in its loss after tax, representing a 37 percent increase in its loss profile.

@Businessdayng

Thursday 13 August 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

30

Thursday 13 August 2020

BUSINESS DAY

31

news

Entrepreneurs to deploy modern technology to boost farming in A/Ibom ANIEFIOK UDONQUAK, Uyo

B

etter days are here for farmers in Akwa Ibom as entrepreneurs are set to deploy drone technology to boost farming in the state.

Pioneered by a technology start-up based in Akwa Ibom State, it has successfully built aerial robotics and sensor drones that can assess Normalised Difference Vegetation Index (NDVI) which interprets farm data to decide which farm areas require attention.

In a recent demonstration at the “OurFarms NG” field day, the indigenous tech startup showed that farm inputs such as fertiliser, herbicides and pesticides could be applied with the aid of drones.

Melvyn Anwana, special assistant to Governor Udom Emmanuel on entrepreneurship who made this known commended the local startups for their innovation, noting that aerial robotics are indeed the future of agriculture.

“Drones, more formally known as Unmanned Aerial Vehicles (UAVs) or Unmanned Aircraft Systems (UASs) essentially are flying robots that can be remotely controlled or flown autonomously through software-controlled flight plans in their embedded systems, working in conjunction with onboard sensors and GPS,” she said.

According to her, in the past, drones were mostly associated with the military and used for anti-aircraft target practices, intelligence gathering and more controversially as weapons platform.

She noted that drones have recently been deployed to civilian and of course more productive uses to include search and rescue, surveillance, traffic monitoring, weather, firefighting, photography, agriculture, amongst others.

With indigenous firms venturing into the production and fabrication of these drones, (which will ensure local sourcing, availability and technical support services), she said agropreneurs in Akwa Ibom are set to explore new ways that will yield great returns in the overall investment in agriculture.

According to her, “Our Farm.NG’s first field day, which held recently was a rare opportunity for field goers to see first-hand, the fields and different crops cultivated

by Our Farm at Ikot Uso community, Nsit Ubium local government area of Akwa Ibom State,” adding that the field goers were taken through the fields of 4.3 hectares’ plantain farm intercropped with Mellon crops, corn and cassava.

“We were also shown a three-hectare land, fully prepared for functional integrated farm to be launched in the last quarter of the year.”

Speaking at the field day, Idorenyin Essiet, the farm manager said it would leverage on the business of agriculture, to not only create wealth for its partners and investors, but to improve the quality of lives in the rural communities by supporting them in three critical areas; education, health and provision of basic social amenities.

Why we liquidated Fortis Microfinance Bank - NDIC HOPE MOSES-ASHIKE

N

igeria Deposit Insurance Corporation (NDIC) on Wednesday explained reasons behind the liquidation of Fortis Microfinance Bank Plc. The corporation said it has adhered to statutory guidelines on the distress resolution and liquidation of the bank and the protection of interest of depositors.

A statement signed by Sunday Oluyemi, director, communication and publication affairs said the initial efforts by regulatory authorities involved the setting up of joint CBN/NDIC Interim Management Committee (IMC) to manage the affairs of the bank towards stemming the tide of its mismanagement and also to protect the interest of its depositors.

The intervention by the IMC also included the payment of N2 billion released to it by the committee of governors of CBN to the bank’s depositors in order to ease the hardship being experienced by them.

As the fortunes of Fortis MFB Plc began to decline due to mismanagement and abysmal corporate gover-

nance practices, the CBN, in collaboration with the NDIC, took several actions to address its deteriorated financial condition.

The intervention of regulatory agencies in the resolution of the defunct Fortis MFB were in two phases. The first phase involved corrective and supervisory measures which eventually included the sacking of the Executive Management, dissolving the board of directors and the appointment of a joint CBN/ NDIC Interim Management Committee (IMC) to temporarily manage the affairs of the MFB. One of the reasons for the setting up of the IMC, among others, was the need to protect the interests of the depositors.

The second phase involved the revocation of the operating licence of Fortis MFB by the CBN and its subsequent liquidation by the NDIC. Unfortunately, when all the regulatory/supervisory efforts to turn around the fortunes of Fortis MFB failed to yield the desired results, the CBN was left with no other option than to revoke its operating licence in December, 2018.

Sadique Abubakar (r), chief of the Air Staff, and Babagana Zulum, governor, Borno State, during the visit of the governor to Nigerian Air Force Headquarters in Abuja.

NAN

Fitch sees Nigeria struggling to flatten COVID-19 curve …expects GDP to contract by 6% in 2020 ...naira to weaken to N475 …debt-to-GDP at more than 35% Endurance Okafor

T

he total number of Covid-19 cases in Nigeria is still low given the country’s large population, according to Fitch Solutions Country Risk & Industry Research, a subsidiary of Fitch rating which provides credit and macro intelligence solutions.

The New York-based research agency said its anecdotal evidence suggests that the real infection rate in Nigeria is much higher than the current figures.

“Nigeria has had no success in “flattening the curve”; and is now loosening lockdown restrictions despite a worsening health situation,” Fitch Solutions said in its ‘Nigeria: From crisis to crisis’ report released

www.businessday.ng

on Tuesday.

A recent analysis by BusinessDay shows that with more testing, Africa’s most populous country could have higher Covid-19 cases than Spain, Italy and the UK combined.

Going by the analysis, nearly two million people in Nigeria may have been infected with the virus. The low testing rate in the country has however been a barrier to knowing the actual cases.

As of July, Nigeria with the highest population in Africa has conducted 317,496 sample tests, while Ghana with less than 20 percent of Nigeria’s population, has conducted 370,000 tests, and South Africa, more than 2.5 million tests.

With the projected decline in consumer spending due to the impact of

Covid-19 on consumers’ income, Fitch Solutions says it expects Nigeria’s economy to contract by as much as 6 percent in 2020.

“This will be mostly due to a sharp fall in private consumption spending due to lockdown rules, tighter fiscal policy, and declining oil income,”, adding that activity will strengthen in 2021, “but growth will probably remain slow.”

In real terms, Fitch Solutions says output will not return to the level seen in 2019 until 2023. “We expect that headline growth will remain very weak over the coming years, with the country falling behind regional peers.”

While the global GDP is expected to fall by 2.9 percent this year, Fitch Solutions says Nigeria will be one of Sub Sahara Africa’s worst-performing econo-

mies this year. Like Angola, it says Nigeria is suffering from both the Covid-19 crisis as well as a sharp fall in oil prices.

“We also expect that the country will have a very slow recovery. Structural weakness and poor policymaking that dragged on growth in recent years will continue,” it said, adding that output per head will probably continue to fall, as it has done since 2016.

Africa’s top oil exporter who relies on crude sales for around 90 percent of foreign exchange earnings and more than half of government revenue was forced to review its 2020 budget amid the drop in crude price as the country’s very narrow revenue base (6 percent of GDP) leaves the government with a very limited ability to service its debts.

Nigeria loses $17bn annually to illicit financial outflows - CISLAC James Kwen, Abuja

C

ivil Society Legislative Advocacy Centre (CISLAC) says Nigeria loses an estimated $17 billion annually on illicit financial outflows through tax evasion, theft, laundering of corrupt proceeds and other crimes by companies with unclear ownership structures.

Executive director of CISLAC, Auwal Musa who stated this at a press conference in Abuja, however, commended President Muhammadu Buhari for signing the Companies and Allied Matters, CAMA (Repeal and Re-Enactment) Act 2020.

Musa said the CAMA, when implemented, would

…wants NASS to pass anti-corruption bills help Nigeria profit from windfall of tax revenues and block leakages.

He noted that in the context of the shattered economy triggered by the global coronavirus pandemic, CAMA can single-handedly help take millions of Nigerians out of abject poverty.

According to the CISLAC boss, until now, the absence of the enactment of the CAMA made it impossible to act on establishing a publicly available register of beneficial owners which is important in the fight against corruption.

“Financing the Nigerian fight against corruption and poverty is sabotaged continuously by financial secrecy, which erodes national sov-

https://www.facebook.com/businessdayng

ereignty. Instead of funding ourselves from taxing business activity, we borrow money abroad and bankroll our budgets at unfavourable and unsustainable terms”, he said.

Musa explained that with the provision regarding the disclosure of persons with significant control in companies, CAMA has introduced transparency provision with an obligation for entities to disclose capacity in which shares are held, either as a beneficial owner or as a nominee of an interested person.

“CISLAC at different occasions called out both the legislature and the executive on the importance of this law, and we are thankful that we have it now. We want to extend @Businessdayng

our appreciation to the National Assembly who speedily passed this law in the early days of the 9th assembly after suffering non-assent by the president in the 8th assembly.

“We urge governmental authorities to step up with establishing policies, tools and instruments, which will aid a speedy enactment of these provisions. It is important that this conduct is executed with political impartiality and professionalism. We commit that the civil society will monitor the implementation and will continue highlighting gaps and deficiencies.

Musa urged the National Assembly to hasten their effort in other anti-corruption bills and present them to the President for his assent.

32 BUSINESS DAY

Thursday 13 August 2020

news

Lagos new regulations seen eroding profits of Uber, Taxify

NEPC urges exporters to pay attention to value addition

…as e-hailing companies incur losses globally

he chief executive officer, Nigerian Export Promotion Council (NEPC) has called on newly registered exporters in Nigeria to pay attention to value addition, especially on agro-based products to create jobs locally.

Awolowo gave the advice at an export roundtable with newly registered exporters, organised by the Aba office of the council on Tuesday.

The NEPC boss encouraged the intended exporters to start small, noting that there is market for quality products all over the world.

Represented at the forum,

by Roslyn Ekanem, an assistant director and trade promotions advisor, Aba office of NEPC, Awolowo, urged them to take a step, stressing that no market is saturated.

MICHAEL ANI

I

n what might be described as an act that could scare off private investments, the Lagos State government has introduced a new regulation that would squeeze out some amounts from the revenues of ride-hailing businesses.

E - ha i l i n g b u s i n e s s e s such as Uber and Taxify have been battling with the increasing cost of operations which has drained their revenues, and new regulation compelling them to pay 10 per cent service tax on amounts generated on every trip could further eat into their revenue.

The Lagos State government in a document titled ‘Guidelines for Online Hailing Business Operation of Taxi in Lagos State 2020’ mandates all e-hailing taxi firms to pay N25 million yearly to the state government per 1,001 vehicles for an operational licence and

another N10 million yearly for renewal on every 1, 001 car in their pool.

The move to increase the revenues of e-hailing businesses comes at a time when Africa’s most populous nation is in need to foreign direct investments to create jobs for its burgeoning youthful population and shore up revenues sources for government It is also coming at a point when Uber, Taxify and others are making huge losses globally. Data shows that since 2014, Uber has been recording a loss, and it was only in 2018, the group managed to rake in $1 billion as net profit.

In 2019, Uber recorded its biggest loss ever to the tune of $8.5 billion in 2019. The same could be said of Taxify, as the e-hailing firm in 2018 printed some $61 million as a loss. Increasing further taxes on these firms could further add more woes to these companies Critics say the move could

scare intending investors looking to invest in the space.

“It shows inconsistencies of policies on the path government and this might serve as a deterrent to investors willing to invest as they are unsure what kind of policies the government might come up with next that would be unfavourable to their businesses,” said Gbholahor Olorungo, an equity research analyst at CSL Stockbrokers.

Being Nigeria’s commercial city, the ride-hailing business has recorded an unprecedented boom as start-up companies leverage on the states huge population and poor transportation services to provide e-hailing services for its over 20 million populace.

Lagos is home to the majority of the over 9000 active drivers of Bolt and Uber, two of the biggest e-hailing firms in the country.

But in the face of new regulation, riders and drivers could yet face the biggest costs. It also raises some

GODFREY OFURUM, Aba

data privacy concerns as the regulation requires the state to have access to ride-hailing companies’ databases, ostensibly to track transactions and service tax payments.

The state’s proposed 10 percent service tax per ride may be passed on to customers or drivers, in addition to Uber’s commissions, according to analysts who spoke to Businessday.

This could further inflict pains on Nigerians whose purchasing power has been hit badly due to a large drop in income occasioned by the pandemic.

Uber and Bolt Drivers have kicked against the move, while, for its part, Uber has described the new regulations as “inconsistent and unclear.”

Barely a few months ago, motorcycle-hailing services like Gokada, MaxNG and O’Ride were forced to stop operations in Lagos in what resulted in millions of dollars lost in investment for investors of these companies.

L-R: Olumide Owoyele, team architect and visualiser; Ifeoluwa Akande, team architect; Abayomi Awobokun, chief executive officer, ENYO Retail and Supply, and Tobiloba Babalola, team representative, at the Enyo Open Ideas Competition (EOIC) winners’ unveiling in Lagos.

NAHCO explains disbursement of N1.1bn gratuities to ex-workers IFEOMA OKEKE

N

igerianAviationHandling Company (NAHCO) Plc has cleared the air on the controversial N1.1 billion gratuities paid to its ex-workers after privatisation in 2005.

The ground handling company insisted that it paid the entire gratuities due to its 936 workers who were either retrenched or reabsorbed back into the system in line with its condition of Service (CoS) at the time.

Some ex-workers of NAHCO had faulted claim by NAHCO that it paid N1.1 billion to the ex-workers since the privatisation of the company. They had challenged the firm to open its books to scrutiny.

Briefing journalists on Wednesday at the headquarters

of the company at the Murtala Muhammed Airport (MMA), Lagos, Ganiyu Afolabi, head, human resources said that after privatisation of NAHCO in 2005, the new management commenced payment of gratuities to disengaged and reabsorbed staff from 2008.

According to Afolabi, the new management rather than wait for the Bureau for Public Enterprise (BPE) to pay its workers who were either disengaged or reabsorbed commenced the payment of severance packages of N1.1 billion to its 936 staff from its coffers in 2008 with the hope of getting a refund from bureau.

The company, however, said that between 2008 and 2020, no fewer than 11 correspondences had emanated from it www.businessday.ng

to BPE and the Pension Transitional Arrangement Directorate (PTAD), a directorate that BPE transferred the case to.

The first of such correspondences according to Afolabi was on May 15, 2008, while it sent a reminder letter to the bureau on April 2, 2009.

OtherswereJuly27,2009;January 13, 2010; March 8, 2010; October 27, 2010; September 7, 2011; February 22, 2012; July 19, 2012; February19,2019andJuly16,2019.

He explained that the July 19, 2012 letter from NAHCO eventually led to a major response from BPE, which in 2013 in a letter signed by Benjamin Dikki, the director-general of BPE, led to audits of NAHCO’s claim in 2013 and 2015.

Heexplainedthatthecasewas eventually transferred to PTAD

in 2015 after the comprehensive audits of NAHCO by BPE. He said: “NAHCO was privatized in August 2005 as part of the Federal Government’s privatisation strategy as at then. The privatisation happened through the Initial Public Offer (IPO), which means that there were thousands of investors. There was no core investor.

“In December 31, 2007, there was a restructuring in the new company, which involved downsizing of the workforce. Gratuity was paid to every staff that were either disengaged or reabsorbed by the management.

He explained further that while some of the staff were downsized by December 31, 2007, some were reabsorbed on January 1, 2008 by the new management.

https://www.facebook.com/businessdayng

T

“Going by the testimonies of established exporters, it is time for them to make a move”.

On his experiences from the clinic, he observed that people were excited and eager to do something, but lack the how.

“For instance, the man, who was talking about how to get a contact abroad, we have given him some encouragement that would make him take a step.

“The lady, who said she is been frustrated by NAFDAC, we have encouraged her not to relent, but to try again and again.

Amobi Nwanagu, president, Pride of Abia Production, shoemakers expressed the optimism that Nigeria would soon become a global centre for sourcing of footwear.

He encouraged producers to package their products well for export, adding “it is good to export, because that is the only thing that can keep our economy going.”

Insecurity: State police a necessity, says ex-DSS DG Iniobong Iwok

A

former director with the Department of State Service (DSS), Mike Ejiofor has said that Nigeria must urgently overhaul its security apparatus and approve state police as a solution to the security challenges confronting the nation.

Ejiofor’s comment comes amid continued outcry among Nigerians on the spate of killings in the country and consistent calls on President Muhammadu Buhari to sack heads of the various security agencies.

Only recently, the National Assembly passed a vote of no confidence on the heads of security agencies for failing to address the spate of attacks and killings in the country.

But speaking in an interview on Channels Television’s Sunrise Daily on Tuesday, Ejiofor said replacing the service chiefs may not address the security concerns facing the

country because the problems were multifaceted.

The security expert, however, advocated for a complete restructuring not just of the country, but also the nation’s security architecture if the battle against insecurity is to be won. He disagreed with insinuations that state police may be abuse by state governors and politicians.

According to him, “We can see that when the Southwest set up Amotekun this people migrated to Delta, Edo region.

For me every state must take responsibility, the argument that state police would be abuse does not hold water because the federal police is presently being abused by the executive. There must be check and balances to check what the state police will be doing”.

Speaking further, he said that the heads of security and intelligence agencies have done enough in tackling the issues, but added that their best is not enough.

Court convicts 3 for hijacking Equatorial Guinea vessel AMAKA ANAGOR-EWUZIE

T

he Federal High Court in Port Harcourt has convicted three persons accused of hijacking an Equatorial Guinean flagged vessel- MV ELOBEY VI, off Equatorial Guinea’s coast in March 21, 2020.

The conviction is the first since the signing into law of the Suppression of Piracy and Other Maritime Crimes (SPOMO) Act 2019 by President Muhammadu Buhari, according to a statement

by Philip Kyanet, head, corporate communications of Nigerian Maritime Administration and Safety Agency (NIMASA).

Justice Mohammed Sani, who delivered the judgment, convicted Binaebi Johnson, Daniel Lemmar and Ghane Gordon on Counts 1 – 2, and @Businessdayng

also ordered them to pay a fine of N20 million each under the new anti-piracy act 2019.

Recall that the Nigerian Navy had arrested nine persons- Binaebi Johnson, Daniel Lemmar, Ghane Gordon, Hassan Hakeem, Gregory Smith, Ofem Uket, John Mark, Chidi Amadi and Eze Amadi, who were suspected to be members of a kidnapping syndicate. They were said to have demanded $2 million ransom out of which $200,000 was eventually paid.

During the proceedings in the court on August 10, Binaebi Johnson, Daniel Lemmar and Ghane Gordon pleaded guilty to counts 1 and 2, and not guilty to counts 3 - 5 while the remaining six accused persons pleaded not guilty to the charges against them.

Thursday 13 August 2020

BUSINESS DAY

33

news

Governing council sacks UNILAG vice chancellor over alleged abuse of office KELECHI EWUZIE

T

he governing council of the University of Lagos (UNILAG) has sacked Oluwatoyin Ogundipe, vice chancellor of the university over what it termed gross misconduct, financial recklessness and abuse of office.

The decision to remove the vice chancellor was reached at an emergency meeting presided over by Wale Babalakin, pro-chancellor and chairman of council held on Wednesday at the National Universities Commission’s (NUC) conference hall, in Abuja.

Oladejo Azeez, registrar and secretary to council, University of Lagos in a statement made available to BusinessDay stated that the council’s decision was in accordance with the statutory powers vested in it by law.

The decision to move the emergency council meeting to Abuja was as a result of the frosty relationship between the chairman of the governing council of the university, Wale Babalakin and the management of the institution BusinessDay also gathered that inability of the council to meet on the campus of the university in Akoka, Lagos was as a result of the declaration of Babalakin as a persona non grata by members of the Academic Staff Union of Universities (ASUU), UNILAG chapter.

BusinessDay findings re-

vealed that the frosty relationship between Wale Babalakin and the university management started after the council issued a query in May 2019 to Oluwatoyin Ogundipe, the university vice chancellor and two of his three deputies, Folashade Ogunsola and Oluwole Familoni.

Reports of the investigative panel set up by the council to audit the university’s expenditure in about 18 months, also indicted Rahamon Bello, former vice chancellor of the university; Taiwo Ipaye, former registrar; Lateef Odekunle, and Lekan Lawal ex-bursar and his successor respectively; Duro Oni, former deputy vice chancellor; Niyi Ayeye and Adelere Adeniran, former directors of works, The query followed the report of a committee led by Saminu Dagari, a lecturer at Tafawa Balewa University, Bauchi, which audited the UNILAG’s expenditure between May 2017 and September 2018.

The committee said it discovered contracts were awarded without recourse to due process, payment without valid contracts and approvals, contract overpayment, contract splitting by vice chancellors and tenders board, over-budgetary spending, frequent official travels and expenditure without due approval by the governing council.

Private sector critical to unlocking downstream sector potentials - operators DIPO OLADEHINDE

T

he role of the private sector is vital in addressing issues militating against the investment potentials of Nigeria’s downstream sector, operators have said.

The downstream sector of the Nigerian petroleum industry has over the years been enmeshed in controversy, attracting little or no investment over the years The sector unlike what obtains in other countries where oil and gas activity is virtually run by the private sector, has continuously remained under government’s stranglehold.

“The private sector needs to play a more efficient role; we have spent too much time dependent on government, who is currently doing too

much,” Doyin Salami, chairman, Nigeria’s Economic Advisory Council (EAC) said.

Salami explained that in order to achieve the potentials of the downstream sector, there must be clarity of philosophical framework which must be in line with modern realities.

“The government cannot be the regulator and operator in the same business, it’s not ideal,” Salami said at a webinar titled “Reflections on governance in the Nigerian downstream oil sector.”

On the role government should play, Salami said the regulator must ensure a level playing field for every private firm in the sector.

Wilson Opuwei, an oil and gas entrepreneur with business interests in exploration and CEO of Dateline Energy Services Ltd said most of chal-

lenges operators face is the politicisation of the downstream sector with fewer private companies participation.

“Downstream regulations must be less stringent for the private sector to operate in,” Opuwei said at the event.

Other stakeholders at the event say the challenges facing Nigeria’s downstream sector ranges from poor governance and management of refining assets to low operating margin for operators leading, low Return On Equity (ROE), huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest and foreign exchange differentials on product importation.

On quick wins needed to address challenges facing the sector, stakeholders recommend the government needs to create the necessary business environment through

price liberalisation and strong independent regulation while challenges surrounding pipeline infrastructure, technology, supply consistency and capital needs to be addressed.

Nigeria’s inability to refine adequate petroleum products domestically in order to meet local demand has continued to render the downstream sector vulnerable to foreign exchange volatility particularly for petroleum independent marketers.

The advent of Dangote refinery - which is set to produce 650,000 bpd of refined products – and other modular refineries will significantly impact the current landscape in the downstream sector which upon completion will exceed domestic consumption levels and subsequently export excess refined products to neighbouring African countries.

ENYO rewards winners of open ideas competition with N1.75m Endurance Okafor

E

nyo Retail and Supply (ERS), one of Nigeria’s leading fuel retailing companies, has concluded its maiden edition of the Enyo Open Ideas Competition (EOIC) - an innovative contest intended to create ideas for sustainable design of its service stations.

The competition which kicked off on February 27, 2020 with over 350 entries awarded the winning team which comprised of Tobiloba Babalola, Ifeoluwa Akande and Olumide Owoyele the sum of N1.75 million in prize money.

The announcement of the top three finalists was made at an official event hosted at the ENYO Olowo Eko Service Station in Lagos, where winners showcased 3D models of their designs as they were presented their prizes.

While entries were subjected to a rigorous review process by prominent and renowned professionals in the architecture space design in Nigeria including Fitzgerald Umah, chairman, Nigerian Institute of Architects, Lagos State chapter and managing director/CEO, Contemporary

Architecture Ltd and Tosin Oshinowo, director, CmDesign Atelier among others.

The participants were tasked on activities such as architects, creative and innovative individuals with the opportunity to develop the ‘service station of the future’ using the example of existing ENYO service stations.

According to the judges, the three finalists were selected based on innovation and relevance, aesthetics, technical quality, clarity and comprehension as well as the functionality of the design concept.

Commenting on the initiative, Abayomi Awobokun, CEO, ENYO Retail and Supply, said: “The Enyo Open Ideas Competition was borne out of the desire to create new service and product spaces leveraging both our ideas and the ideas of young professionals with the hope of achieving more respectful, user friendly, and functional retail spaces for our customers.”

According to ENYO, the company is keen in ensuring that the filling stations it designs and builds are more in line with some of the sustainable development goals especially those which are related to the environment. www.businessday.ng

L-R: Adewale Temitope, chairman, House Committee on Transport; Babajide Sanwo-Olu, governor, Lagos State; Abimbola Akinajo, general manager, Lagos Metropolitan Area Transport Authority (LAMATA), and Hakeem Murk-Okunola, head of service, during the inauguration of Oshodi-Abule Egba BRT corridor in Lagos.

Eko Bridge gridlock: Respite coming after repair work on Sunday CHUKA UROKO

A

fter several weeks of enduring traffic slowdown on Eko Bridge, motorists will, from Monday, August 17, start experiencing better flow of traffic as the Federal Government says repair work on the failed portion of the bridge will be done on Sunday, August 16.

Olukayode Popoola, the federal controller of works in Lagos, who disclosed this to BusinessDay on Wednesday, explained that the contractor, Budwell Construction Company, chose to do the work on Sunday in the expectation that traffic would be lighter that day.

The controller disclosed further that after the repair work, a gantry or barrier would be mounted on the bridge to prevent articulated vehicles or any other vehicle that is above

…as faulty asphalt plant stalls palliative work on Ikorodu Road 2.4 metres from using the bridge and causing more harm.

Following the partial closure of the Third Mainland Bridge to enable the federal government and Borini Prono Construction Company to carry out repair work on the 11.8kilometre bridge, the federal and Lagos State governments decided to carry out palliative work on identified alternative routes.

Ikorodu Road is one of those alternative routes and it is presently the melting pot for motorists going to or coming from the island through Eko Bridge and Carter Bridge to the mainland. The road is in bad condition which is why there is always heavy vehicular movement and falling trucks incidents there.

https://www.facebook.com/businessdayng

“We are aware that the road is in bad condition. The Chinese Civil Engineering and Construction Company (CCECC) is the contractor commissioned to work on that road which is a major alternative route to the Third Mainland Bridge already partially closed,” Popoola said.

He explained that work has stopped on the road because the contractor’s Asphalt Plant was faulty and the company has decided to import asphalt from their home country.

“Work will resume on the road once the asphalt arrives but I can’t tell you when that is going to be,” he said.

Prior to the partial closure of the Third Mainland Bridge on July 24, 2020 to commence repair work that would last for @Businessdayng

six months, the federal and Lagos State governments decided to work on alternative routes due to the traffic congestion that would be caused by the closure of the bridge.

While the Federal Government contacted Borini Porini to fill up potholes at the IddoOyingbo Road, and CCECC to repair the Independence Tunnel in Ikorodu, the Federal Roads Maintenance Agency (FERMA) rehabilitated the drainages at Ijora Olopa.

Popoola said the Lagos State government agreed to fix bad portions around the Iganmu Bridge, adding that its public works agency was also fixing some other roads.

He noted that repair work had started with the Lagos State Public Works Corporation.

34

Thursday 13 August 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

New Zealand probes freight as mystery source of virus outbreak

First locally acquired Covid-19 cases in 102 days threaten to hit economy ahead of election Jamie Smyth in Sydney

N

ew Zealand authorities are investigating whether the country’s first locally acquired cases of Covid-19 in more than 100 days were spread by refrigerated freight imported from overseas.

Officials are looking into the sudden emergence of Covid-19 in four family members in Auckland, the nation’s biggest city. One of the four, who tested positive this week, worked at a cold storage facility that is now being tested for traces of the virus.

“We do know from studies overseas that actually, the virus can survive in some refrigerated environments for quite some time,” said Ashley Bloomfield, director-general of health. “We are confident we didn’t have any community transmission for a very long period.”

The new outbreak led the government to impose a strict lockdown in Auckland on Wednesday.

Experts said a genetic analysis of the four new Covid-19 cases should help to explain whether they were infected by surface transmission from freight or via the much more common route of human-to-human transmission.

“Imported freight is a possibil-

The government of Prime Minister Jacinda Ardern had targeted elimination of the virus within its national borders rather than suppressing its spread © Getty Images

ity that should be explored via testing,” said Nick Wilson, professor of public health at the University of Otago. “Nevertheless, I suspect it is far more likely to be a borderrelated event, such as a worker infected from someone in managed isolation and quarantine.”

New Zealand had been widely praised for closing its international borders and imposing a strict

lockdown when the virus initially began spreading across the Pacific nation.

Unlike most other developed nations, the government of Prime Minister Jacinda Ardern has targeted elimination of the virus within its national borders rather than suppressing its spread.

Until this week, the success of the strategy had enabled the

removal of most social distancing restrictions and the return of normal life, except for the continued closure of international borders and quarantine for returning residents.

During 102 days without any new Covid-19 cases acquired outside of quarantine facilities, the economy performed better than analysts expected. Authori-

ties last week reported an official unemployment rate of 4 per cent in the three months to June.

But the fresh outbreak threatens to dent New Zealand’s nascent recovery, prompting the Reserve Bank of New Zealand to expand its quantitative easing programme to NZ$100bn (US$65bn), up from NZ$60bn, and signal its intention to deploy new monetary policy tools.

“Any significant change in the global and domestic economic outlook remains dependent on the containment of the virus, which is highly uncertain as evidenced today by the return to social restrictions in New Zealand,” said Adrian Orr, RBNZ governor, following a monetary policy meeting at which official interest rates were held at 0.25 per cent.

Ben Udy, economist at Capital Economics, warned that domestic economic activity would be significantly affected if social-distancing restrictions lasted longer than the anticipated three days.

The Covid-19 outbreak could also affect New Zealand’s upcoming election on September 19, with Ms Ardern deferring the planned dissolution of parliament on Wednesday by “at least a few days” to deal with the Auckland cases.

Additional reporting by Alice Woodhouse in Hong Kong

Joe Biden names Kamala Harris as his Democratic running mate Senator is the first black woman on a main US party’s presidential ticket Lauren Fedor in Washington

D

emocrat Joe Biden has named Kamala Harris as his vice-presidential running mate, making the senator from California the first African-American woman on a main US party’s presidential ticket.

Ms Harris was one of the most experienced candidates on Mr Biden’s short list and the Democratic presidential candidate, who served four decades in the Senate before becoming Barack Obama’s vice-presidential choice in 2008, cited her record in his announcement on Tuesday.

“I have the great honour to announce that I’ve picked Kamala Harris — a fearless fighter for the little guy and one of the country’s finest public servants — as my running mate,” he wrote on Twitter.

Although Mr Biden had vowed to pick a running mate who was “simpatico with me”, he was personally closer to other finalists for the position, particularly Susan Rice, Mr Obama’s national security adviser.

Still, on Tuesday Mr Biden referenced Ms Harris’s friendship with his son, Beau Biden, who died in 2015 from brain cancer. The younger Biden was attorney-general of

Kamala Harris was one of the most experienced candidates on Joe Biden’s short list of running mate © AP

Delaware from 2007 until shortly before his death; Ms Harris served as California attorney-general before entering the Senate.

“Back when Kamala was attorney-general, she worked closely with Beau,” Mr Biden said. “I watched as they took on the big banks, lifted up working people, and protected women and kids from abuse. I was proud then, and I’m proud now to have her as my partner in this campaign.”

Mr Biden and Ms Harris are expected to appear in-person together at a campaign event in Wilmington, Delaware, on Wednesday.

Mr Biden’s announcement www.businessday.ng

comes just days before the Democratic National Convention, when the former vice-president, 77, will formally accept his party’s nomination for US president.

Ms Harris, 55, will also speak at the virtual convention, which will be broadcast from multiple locations around the country, rather than a crowded convention centre, owing to the Covid-19 pandemic.

Ms Harris, whose parents are of Indian and Jamaican heritage, is the first South Asian-American senator in US history and the second African-American woman to be sworn into the upper chamber.

She was elected to her first term

https://www.facebook.com/businessdayng

in the US Senate in 2016. Before her six years as California’s attorneygeneral, she served as district attorney of San Francisco.

Ms Harris launched a bid for the Democratic presidential nomination last year to much enthusiasm, with about 20,000 people attending her kick-off event. She earned plaudits for strong debate performances, including one appearance in June 2019 when she went after Mr Biden for opposing mandatory school busing, a policy intended to integrate black and white students.

But she failed to break through in a crowded field and suspended her campaign in December, two months before the Iowa caucuses, saying she had not raised enough money to keep running.

“The fact that she was a presidential candidate herself means she is vetted publicly more than many of the other contenders for the VP slot, so that makes her a safer pick,” said Kyle Kondik of the University of Virginia Center for Politics.

However, many former aides to Mr Obama had been lobbying for Ms Rice. One person familiar with the campaign said Mr Biden’s inner circle preferred the former national security adviser because of her background working with him in @Businessdayng

the White House. Advocates believed Mr Biden could trust Ms Rice more than Ms Harris, citing her attack in the early primary debate.

But some operatives argued Ms Rice would be a vulnerability because she lacked experience as a campaigner — she has never held elective office — and her foreign policy experience overlapped with Mr Biden.

Mr Biden currently leads Donald Trump by 7.2 points nationally, according to the RealClearPolitics polling average. While vice-presidential picks have typically not had a significant effect on election outcomes, analysts have eagerly anticipated Mr Biden’s selection, given he will be the oldest president in US history if he wins.

Speaking on Tuesday evening, Mr Trump attacked Ms Harris for being “nasty” both towards Brett Kavanaugh during his Senate hearings for the Supreme Court, and towards Mr Biden himself during the primary debates.

But Mary Anne Marsh, a Democratic consultant, said Ms Harris’s high-profile questioning of Mr Kavanaugh as a member of the Senate judiciary committee and Mr Biden in nationally broadcast debates highlighted one of her biggest strengths. “She’s very, very effective at it,” said Ms Marsh.

Thursday 13 August 2020

BUSINESS DAY

35

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Gold rebounds from biggest daily tumble in 7 years Broad sell-off in haven assets sends precious metal back below $2,000 Henry Sanderson

G

old rebounded from its biggest one-day sell-off in seven years on Wednesday, prompting analysts to forecast a period of more steady moves for the precious metal after it soared to record highs last week.

The commodity fell almost 6 per cent on Tuesday, plunging below $2,000 a troy ounce as rising hopes of a new US stimulus package led investors to flee haven assets such as gold and government bonds in favour of equities.

The tumble in gold was accompanied by a sell-off in US Treasuries, with the yield on the 10-year note climbing 8 basis points to 0.65 per cent on Tuesday. Yields move inversely to prices.

The price of silver also fell heavily on Tuesday, dropping almost 15 per cent in its biggest one-day decline since 2008.

Gold prices reached a low of $1,864 early on Wednesday. By mid-afternoon they had recovered, up 1.3 per cent at $1,935 an ounce.

A 30 per cent rally in gold this year propelled it to an all-time

A 30% rally in gold this year propelled it to an all-time high of $2,063 last week © Bloomberg

high of $2,063 last week, driven by concerns over the impact of the coronavirus pandemic, particularly in the US, and the vanishing income available from safe assets such as government bonds.

Analysts at Commerzbank and Morgan Stanley said condi-

tions remained favourable for gold, with US real yields — the return investors can expect once inflation is taken into account, if they buy and hold the debt to maturity — still trading deep in negative territory.

Gold, which does not pay inter-

est or dividends, becomes more attractive the further real rates sink below zero.

But Commerzbank added that gold prices were unlikely to return to their recent record levels due to the sell-off in exchange traded funds backed by gold.

SPDR Gold Trust, the world’s largest gold ETF, said its holdings fell 0.3 per cent to 1,258 tonnes on Tuesday.

A “period of consolidation” from here could last for several weeks, said Commerzbank. “That would also be a healthy state of affairs following the excessive price surge,” it added.

Susan Bates, an analyst at Morgan Stanley, said that it would take “a real reversal in real US interest rates” to bring an end to the strong market for gold. But if US real yields were to move back to zero, she said, that would “spark a sharp sell-off” in the commodity.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that the rally in gold paused on Friday in the wake of a stronger than expected US jobs report — suggesting that the commodity will need a bleaker economic environment to sustain its bull run.

He predicted movements in the gold price from here would be “engulfed in a battle between short-term technical traders looking to sell, as the steep uptrend is broken, and longer term buyers who missed the first move above $2,000/oz”.

US stocks rally towards all-time high with Treasuries under pressure Growing confidence in economic rebound and hopes for a vaccine lift global markets Bryce Elder, Sarah Provan and Tommy Stubbington in London and Hudson Lockett in Hong Kong

U

S stocks rallied and Treasuries sustained a further bout of selling on Wednesday after optimistic economic data and rising hopes over a potential coronavirus vaccine bolstered investors’ confidence.

The S&P 500 was up 1.4 per cent in lunchtime trading on Wall Street, reversing a fall from the previous session. The rise leaves the US benchmark less than half a percentage point from the all-time high it hit in February before the coronavirus crisis struck US and global markets.

Wall Street gains followed strong trading across European markets, where the Stoxx 600 rose 1.1 per cent. The FTSE 100 closed 2 per cent higher despite secondquarter data showing the UK falling into its deepest recession on record.

US government bond prices remained under pressure, extending Tuesday’s sharp sell-off. The 10year Treasury yield, which moves inversely to price, rose 0.018 percentage points to 0.67 per cent. A week ago, it was just 0.5 per cent.

The move came after a report

Analysts pointed to huge sales of new debt as a short-term catalyst for the sell-off in Treasuries © Bloomberg

showed core US consumer prices, a gauge of inflation, rose at a more rapid pace than expected last month, the latest indication that parts of the world’s largest economy have begun to stabilise after the heavy blow caused by Covid-19.

“The strong momentum in Covid-sensitive categories is very unlikely to be sustained, but it’s hard to ignore the resilience in pricing power in the face of www.businessday.ng

double-digit unemployment and very low utilisation rates,” said Aneta Markowska, chief financial economist at Jefferies. “The very timely and aggressive fiscal support may be part of the explanation, as it helped fuel a surge in retail activity immediately after lockdowns.”

Data from Europe showed a similar trend. Eurozone industrial production rose 9.1 per cent in June as the region’s manufacturers

https://www.facebook.com/businessdayng

increased their activity after a near halt in previous months. In the UK, the gross domestic product report showed economic output rebounded more vigorously than forecast in June following a historic contraction during the spring.

Yields rose on German and UK sovereign debt.

Sentiment was further improved by signs suggesting US coronavirus infection rates were plateauing while progress on a @Businessdayng

vaccine had been made, said Mark Dowding, chief investment officer at BlueBay Asset Management.

This improved outlook had been one factor that had weighed on US Treasuries and pushed yields higher, he said.

“Bond markets had been pricing not just that interest rates would stay at zero for a very long time, but also that the [Federal Reserve] and [European Central Bank] would increase their bond buying at some point,” Mr Dowding said. “Anything that makes that slightly less likely is going to weigh on bond prices.”

Analysts also pointed to huge sales of new debt as a short-term catalyst for the sell-off. The US Treasury is set to auction a record $38bn of 10-year bonds on Wednesday.

Equities in the Asia-Pacific region slipped. China’s CSI 300 index of Shanghai and Shenzhenlisted stocks shed 0.7 per cent while Hong Kong’s Hang Seng rose 1 per cent. Australia’s S&P/ ASX 200 dropped 0.2 per cent.

In New Zealand, the S&P/NZX 50 index fell 1.5 per cent as authorities put the city of Auckland back into strict lockdown in response to the first locally acquired cases of Covid-19 in more than 100 days.

Additional reporting by Daniel Shane

industry Insight

BUSINESS DAY Thursday 13 August 2020 www.businessday.ng

Pandemic revives Gulf fears over food security

States that are vulnerable to import shortages and sharp price rises are investing overseas and in agritech at home Andrew England and Emiko Terazono in London

F

or more than two years, Mariam al-Mheiri had been preparing for a crisis. So when aeroplanes stopped flying into the United Arab Emirates as the coronavirus pandemic spread across the Middle East in March, the country’s first food security minister knew what was expected.

She had to guarantee that her desert nation, which imports 90 per cent of its food, was going to be able to keep supermarket shelves fully stacked.

While planes sat idle at the nation’s shuttered airports, she called an extraordinary meeting of the UAE’s nascent Food Security Council. Early warning systems were adopted and the movement of “strategic” food items — from cereals to rice and vegetables — was monitored inside and outside the country. Overseas diplomatic missions were put on alert in case food exporters imposed export restrictions. And a plan to diversify food imports was quickly passed on to UAE traders with a clear mission to identify alternative markets.

When planes did return to the skies to repatriate foreign workers to the likes of India, Pakistan and the Philippines, they came back loaded with food. “There were days when certain foods were not coming into the country . . . but we always managed,” Ms Mheiri says.

“The leadership reassured the people and said ‘food and medicine is a red line for us, we will take every measure to ensure you always have access to what you need.’”

The UAE was not alone in fearing that disruptions to international supply chains and the risks of governments imposing protectionist measures could trigger a global food crisis. But for Gulf states — where there are no permanent rivers or lakes and minimal rainfall — the vulnerability to such shocks is acutely felt.

It is a phenomenon that has, over the past decade, sparked an upsurge in overseas investment in agricultural resources and in agritech ventures at home. That trend is expected to pick up pace given the pandemic, with the UAE and Saudi Arabia among the most active as they eye opportunities from the Americas to Europe, Africa and Asia.

In the four months since the Middle East’s first Covid-19 case was reported in Dubai, Abu Dhabi, the UAE’s wealthy capital, has made several investments all aimed at improving food security.

ADQ, an Abu Dhabi investment holding company, bought a 50 per cent stake in one of the region’s biggest agribusinesses, Al Dahra — which specialises in the cultivation

of animal feed and production of rice, flour, fruits and vegetables — and already operates in more than 20 countries. It will now have the heft of one of the world’s richest states directly behind it. Another sovereign entity, the Abu Dhabi Investment Office, invested $100m in four agritech companies to build facilities in the emirate, including AeroFarms, a US-based group that plans to build a 90,000 square foot indoor vertical farm and research facility, touted as being the world’s largest of its kind.

Saudi Arabia, which imports about two-thirds of its food, has also been active. Salic, a food

Back then, spooked Gulf states, including Saudi Arabia, the UAE, Qatar and Kuwait controversially rushed to secure overseas farming projects, particularly in impoverished African countries such as Sudan and Ethiopia, stoking criticism that the wealthy oil producers were “land-grabbing”. Many of those projects failed to deliver.

“The Gulf countries barked up the wrong tree,” says Eckart Woertz, director at the Hamburgbased GIGA Institute for Middle East Studies. “Neither domestic self-sufficiency nor self sufficiency by proxy are the main challenges, rather the management of value

food production by 30 per cent by 2021 and give the local processing industry, which produces 6m tonnes of food annually, the ability to triple output if needed.

One investor in the sector says the UAE government previously focused on incentivising the private sector to build domestic capacity.

But businesses have long faced problems in persuading supermarkets and consumers to choose locally grown produce over overseas goods. And many private sector investors also remain reluctant to invest heavily in a sector that is subject to the whim of price controls.

That helps explain the recent

and livestock company owned by the Public Investment Fund, the kingdom’s sovereign wealth vehicle, in May acquired a 30 per cent stake in Indian group Daawat Foods, as part of its strategy to secure rice supplies. Last year, it invested £7m in British agritech firm Hummingbird Technologies, which employs drones, artificial intelligence and satellite imagery to produce high-resolution maps that can help farmers forecast crop stress, spot disease and weeds and predict yields.

“Food security should rank as high as defence — it doesn’t matter how many F-16s [fighter jets] you buy, if you can’t keep food on the shelves, you have bigger problems than defending borders,” says a UAE-based investor. “Before the [crisis the food security] ministry was about research, not implementation, but now it is writing cheques.”

Learning food diplomacy Neither the UAE nor Saudi Arabia — the region’s two financial and political heavyweights — have suffered food shortages this year. Yet officials in both countries say they are accelerating their food security programmes after the crisis revived memories of past food emergencies, the last of which was in 2008 when rice and cereal prices soared.

chains and food diplomacy.

“The [Gulf states] are now much more cautious regarding those risky investments in food insecure countries,” he adds.

Officials insist the Gulf states have been refining their strategies in recent years to combine more targeted overseas investments with the development of technology-backed production at home, particularly for vegetables, fruits and fish. They have also built up strategic food reserves and invested in mills, logistics and production facilities.

The UAE and Saudi Arabia signed an agreement to co-operate on a range of food security measures in November — from investments to agritech development.

And both harbour bold ambitions.

Ms Mheiri, who was appointed in 2017, was this year put in charge of a team to develop the agritech sector in the UAE, with an end of August deadline to produce a blueprint.

“We want to become a global hub for food knowledge and technology, why can’t we also start going into cellular agriculture, alternative protein?” she asks. “These are technology-based foods that are emerging but don’t need huge amounts of water and arable land.”

The goal is to increase domestic

injection of state investment. Saudi Arabia, the largest and most populous of the Gulf states, is boosting its domestic production with $3.2bn set to be allocated through its Rural Development Programme over the next six years. Among Riyadh’s ambitious goals are raising annual coffee production from 300 tonnes to 2,500 tonnes by 2026, increasing rose-stem output from 500m to 2bn, and producing 5 tonnes of caviar per year.

Since the crisis began it has increased funding to the state’s $5bn Agriculture Development Fund by $666m to support local farmers and facilitate imports. “[The pandemic] was almost a test, to check whether or not our strategy was working; it seems it is,” says Abdulrahman Abdulmohsen Alfadley, the Saudi environment, water and agriculture minister.

“We may need to accelerate some programmes, some items.”

Yet Saudi Arabia’s own experiences underscore how challenging the process can be. During the 1970s, when the kingdom was flush with petrodollars after imposing an oil embargo that caused a spike in crude prices, it set about radically transforming agriculture in a quest to become self-sufficient. By the 1990s, the desert nation was the world’s sixth largest wheat exporter

as the government subsidised the sector by paying farmers about six times global prices.

Its desire to become a top cereal producer was, however, unsustainable. As its precious water resources were depleted, the government announced in 2008 that it would phase out wheat production within eight years but it then had to reverse that decision when wheat farmers turned instead to alfalfa, a fodder for livestock that consumes even more water.

As a result, Saudi Arabia — which has reduced its non-renewable water usage from 25bn cubic metres to 10 bcm over the past five years — is looking again to increase its wheat production with a target of doubling output to 1.5m tonnes per annum, equivalent to 45 per cent of the kingdom’s needs, next year.

“This is a high-cost insurance to put their [leaders] minds at ease,” says Joseph Glauber, senior research fellow at the International Food Policy Research Institute, a Washington based think-tank.

“The strategy is understandable and might help to deal with a short-term crisis. But it would be prohibitively expensive to achieve self-sufficiency, especially in bulk grains like wheat.”

The rise of agritech A 45-minute drive from Abu Dhabi sits a high-tech greenhouse — an example of the type of project the UAE and Saudi Arabia are betting on to hit domestic production targets.

Operated by Pure Harvest, a start-up that has received funding from UAE, Saudi and Kuwaiti entities, the 6,270 square metre facility is made from materials that help control the strong desert sunlight, and extreme temperatures and humidity levels to maintain a Mediterranean climate in a country where outside temperatures can soar above 50C in summer.

Completed in August 2018, the greenhouse grows six varieties of tomatoes, satisfying between 2 per cent and 3 per cent of the UAE’s demand and claims to use almost 90 per cent less water than a typical Gulf greenhouse. Pure Harvest raised $20.6m in a fundraising in April, led by Wafra International Investment Company, a Kuwaiti firm that pledged $100m if its projects prove successful.

“The region has a competitive advantage — the sun, cheap labour, cheap energy and incredible transportation,” says Sky Kurtz, Pure Harvest’s co-founder. “We can harness the climate with technology.”

He does, however, acknowledge the difficulties of operating in the Gulf, from the extreme climate to the dearth of skills, the difficulty of attracting capital and promoting local produce. Not to mention the minimal water resources.

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.