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news you can trust I ** monDAY 13 january 2020 I vol. 19, no 476

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here is a rare praise from Nigeria’s private sector after what appears to be a cooling off in the face-off between the government and the Nigerian unit of telecommunication giant, MTN, over a controversial $ 2 billion tax claim levied by the attorney general and justice minister. “It appears to me that I am walking back into a Nigeria I did not expect,” one foreign private sector operator just returning from vacation told BusinessDay on Friday. This followed reports that telecoms giant MTN Nigeria has withdrawn its case against the attorney general and minister of justice after the latter sent a letter referring the government’s $2 billion tax claim to the apContinues on page 42

After AGF drops tax dispute with MTN Stakeholders applaud move to uphold rule of law

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Nigeria turning page in ties with private sector, investors say LOLADE AKINMURELE & JUMOKE AKIYODE-LAWANSON

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Economy, real sector reel as haulage cost soars on Apapa gridlock CHUKA UROKO & ODINAKA ANUDU

n more ways than one, the gridlock and congestion in Apapa, which have worsened in the last six months, are not only making life miserable for residents and business owners in the port city but also hurting and squeezing the real sector and the economy as a whole. Besides loss of rental income and property value depreciation which are the cross residents have been forced to bear, the Apapa gridlock is the sole reason for the meteoric rise in haulage cost which importers and exporters are contending with, leading to increases in their production costs. Apapa is home to Nigeria’s Continues on page 42

Inside

L-R: Aliko Dangote, chairman, Dangote Group; Adeniyi Adebayo, minister of industry, trade and investment (MITI); Maryam Katagum, minister of state, and Nasir Sani-Gwarzo, permanent secretary, MITI, at the visit of Dangote Group to the Ministry in Abuja.

Nigeria risks bleak future as Excess Crude Account depletes, oil fields idle P. 2

Monday 13 January 2020

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news Can good journalism save Nigeria?

L-R: Adebisi Shonubi, deputy governor, Central Bank of Nigeria (CBN); Joseph Sanusi, former governor, CBN; Tokunbo Otiti, first son of the deceased; Uche Olowu, president/ chairman of council, Chartered Institute of Bankers of Nigeria (CIBN), and Oba Otudeko, chairman, FBN Holdings plc, at the CIBN special governing council valedictory session in honour of late Olademeji Gbadamosi Otiti in Lagos. Pic by Pius Okeosisi

TAYO FAGBULE

big read

Nigeria risks bleak future as Excess Crude Account depletes, oil fields idle DIPO OLADEHINDE

igeria’s idling oil fields and depleting Excess Crude Account (ECA) are dampening hopes of a bright future for the country’s economy. Despite Nigeria’s position as the largest producer and exporter of petroleum in Africa and one of the 10 largest producers in the world, the country is not maximising the potential in its oil sector while its ECA continues to suffer serial abuse without commensurate economic growth or infrastructure development. In some countries like Norway, the government is toiling night and day to protect its unborn generation by maximising potentials in oil sector, reducing aggregate risk to oil price, or insulating its rainyday fund from political pressure which has promoted fiscal prudence. It doesn’t seem the message is reaching home. The Excess Crude Account (ECA) was created to retain excessrevenuesfromtheprevailing crude oil price in the internationalmarket.Incomegenerated above the approved crude oil benchmark price in the annual budget is saved in the account as some sort of buffer. But persistent demand by

states to fund various programmes and the inability of the Federal Government to generate adequate revenue to fund its operation had put pressure on the government to draw down the account. In recent years, the Ministry of Finance has failed to proactively disclose detailed withdrawals from and accruals to the ECA, making it difficult to track budget spending and ascertain the periodic status of the nation’s treasury. The ECA rose from $5.1 billion in 2005 to more than $20 billion in January 2009, but during the last meeting of the National Economic Council in December 2019, Zainab Ahmed, minister of finance, budget and national planning, reportedly disclosed that the balance as of November 19, 2019 was $324.98 million. In its Nigeria Economic Update (NEU) report released in Abuja, the World Bank warned that a ‘moderate’ decline in oil price could trigger another recession, noting that the exhaustion of the ECA had made the country more vulnerable. “Fiscal buffers in the Excess Crude Account have been exhausted, rendering Nigeria more vulnerable to shocks,” the bank said. The report said the ECA was mismanaged, noting that

it has rarely operated as envisaged. When it was established in 2004, the report said, the ECA was to be drawn on only when the actual crude oil price falls below the budget benchmark price for three consecutive months. “Save for the Obasanjo administration, the abuse of the ECA has become serial. It is deeply disturbing that the Buhari government has not demonstrated a better way of handling Nigeria’s ECA,” Charles Akinbobola, a financial analyst at Creditville Limited, said. Between 2005 and 2009, the ECA grew from $5.1 billion to over $20 billion, accounting for more than one-third of Nigeria’s external reserves at the time, but it suffered massive decline during the administration of former President Goodluck Jonathan. From nearly $20 billion when Jonathan took office in 2009, it declined to a paltry $2 billion when he left office in 2015. “Poor levels of transparency exhibited by various agencies and officials of government charged with managing the funds over the years have compounded the problems faced by this fund even further,” Akinbobola said. Established in 2004, the ECA demonstrates how to normalise anaberration.Withoutconstitutional backing, the ECA was cre-

ated to protect Nigeria’s planned budgetsagainstshortfallscaused bythevolatilityofcrudeoilprices. In this way, it would insulate the economy from external shocks. Unfortunately, Nigeria has failed to transform decades of oil earnings into sustainable development, despite being the largest producer and exporter of petroleum in Africa and one of the 10 largest producers in the world. While Nigeria seems to be nonchalant about saving for the rainy day, other countries seem to be preparing earnestly for it. Norges Bank Investment Management oversees Norway’s $1 trillion sovereign wealth fund while United Arab Emirates has nearly $1 trillion capital pool in two Abu Dhabi Investment Authority (ADIA) and Mubadala that is funded by excess oil and gas income. United States’ Alaska Permanent Fund has one of the savviest SWFs in the world; the $65.3 billion fund is financed by oil and gas revenue for the benefit of future generations of Alaskans. Singapore has two accounts called Singapore Investment Corporation (GIC) and Temasek splitting over $800 billion between them.

•Continues online at www.businessday.ng

PFAs can now invest in Lagos State’s N500bn debt issuance programme – PENCOM OLUFIKAYO OWOEYE

ollowing the commitment from the Lagos State Government to ensure compliance with the minimum requirement for inclusion of State Bonds as investible instruments in the pension Industry, the National Pension Commission (PenCom) has granted a reprieve to the

ournalism in Nigeria, news print in particular, is much older than the country. It played a prominent role in the struggle for Independence and guerrilla journalism, an innovation of Nigerian newspapers, emerged as the champion of democracy in the dark years of military dictatorship. Just as before, and more than ever, good journalism remains indispensable. Henry Townsend set up the first newspaper in Abeokuta 100 years before the morning of 1 October, 1960 when Babatunde Ajose, editor of the state-owned Daily Times, wrote: “A nation conceived in faith and unity is born today.” And newspapers like the West African Pilot and The Tribune stoked the fervour and amplified the call for Independence. The unity of Nigeria may have wavered and weakened since then but faith in its potential of being a great country remains. Faith in what is possible in a united and free Nigeria, where the common good – the economic, social, and political dreams and yearnings – of every citizen can be fully and easily attained made journalists resist military rule in the mid-1980s and for most of the last decade of the 20th century. Journalists in those times ran the risk of being assassinated or detained. When the soldiers banned a paper or confiscated all the copies published on a certain day or a mysterious fire burned down their printing press, reporters adopted guerrilla tactics to survive. Suppression of press freedom and assault of journalists were the norm under Sani Abacha until his dictatorship ended and his successor ushered in a democratic government in 1999. Journalism in Nigeria, through its pro-Independence and anti-military rule campaigns, won a measure of political freedom for what can be called the independence and democracy generations. After two ex-generals as president, democracy is still a stranger in Nigeria; militarism, its command structure and a bad habit of excessive government interference curb political freedom and imitative. Hence, the foremost task of journalism today must be to lead the battle for the economic freedom of present and future generations. At Independence, Nigeria had a population of 42 million people; today there are 190 million Nigerians. Nigeria is projected to be the third-most populous country in the world by 2050. Given its size, location and resources, the country is underperforming. Other oilrich countries like Saudi Arabia and Angola are reforming in preparation for a future beyond oil. Meanwhile, the rabid resistance to reform of President Buhari retards development. Nigeria pumps as many barrels of oil as Norway, a country of 5.32 million people, which has grown its savings

from oil revenues to $1 trillion, whereas in over six decades squandermania, corruption and fuel subsidy consume every dollar Nigeria earns. Anaemic economic growth is failing hundreds of millions of Nigerians; it has pushed nearly half of the population into extreme poverty. If any-

government by lifting the suspension order it earlier placed on the inclusion of the Lagos State N500 billion debt issuance programme as an investible instrument for pension funds. PenCom, in a letter dated January 10, 2020 and seen by BusinessDay, said henceforth, Pension Fund Administrators (PFAs) may wish to invest in the current N100 billion issuance under the Lagos State www.businessday.ng

N500 billion debt programme subject to their risk-reward appetite. In a circular no PENCOM/ CIR/PSP/12/02 of November 30, 2012, the pension regulatory body notified that any state government seeking to access pension funds through investment in its state bond must meet certain conditions among which are the enactment of a law to establish the contributory pension scheme,

which must give pension contributions the same priority as salaries; establishment of a state pension bureau and a local government pension bureau to coordinate the implementation of the contributory pension scheme and other related pension matters in the state, and open retirement savings accounts with PFAs for all the employees that are covered under the contributory pension scheme in the state.

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thing at all, a young and growing generation of Nigerians is certain of nothing except debt and despair – if nothing is done urgently. Those born when Nigeria returned to democracy 21 years ago fall within the third-largest age bracket (1525-year olds account for close to one-fifth of the population). Democracy, or a semblance of it, may be the order of the day; stories of pro-Independence and anti-military journalism may seem from a long time ago – BusinessDay which began 19 years ago stands on the shoulders of what good journalism achieved in this era. In a world where technology is rapidly changing our social, economic and political lives, the future of this teeming and young population, the real asset of Nigeria, is at stake. Nigeria needs good journalism, more than ever. More than ever, in a world where there is a multiplicity of voices and an increasing volume of data, where fake news is rupturing trust, stoking divisions, and spreading despair, readers need the right information to decide, to make sense, to know what matters and why. They need solutions. Good journalism serves as a reliable map that helps readers navigate society, highlights pitfalls to avoid, gives prominence to promising terrains and does not hide dangerous regions. Stories must be reported responsibly, with accuracy, with care, with fairness, with thoroughness, with transparency, with the reader in mind. Journalism can’t thrive (much less claim to be good) without a commitment to providing the right information and reporting it with courage. Journalism has an obligation to tell the truth, however uncomfortable it makes those in power. Journalists have a moral obligation, as Chinua Achebe says of writers, “not to ally with the powerful against the powerless… decency and civilisation would insist that you take sides with the powerless”. Today, as we at BusinnesDay recommit to our ethos – journalism that provides solutions, the promotion of economic and social policies that rapidly transform the finance and business landscape, and mechanisms that eliminate corruption while promoting high levels of corporate governance across the board – we take heart in what good journalism has done in the short history of Nigeria. It has, against all odds, called to order the powerful, found common ground, catalysed debates and united voices.

• Fagbule is chairman, Editorial Board of BusinessDay

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news NERC’s minimum market remittance order to offer lifeline to Gencos, others -experts

HARRISON EDEH, ABUJA

he Nigerian Electricity Regulatory Commission’s (NERC) directive in a newly released minimum market remittance threshold payable by the 11 power distribution companies (Discos) operating across Nigeria could offer the enabling lifeline for the generation companies (Gencos), industry analysts say. In its latest minor review of the Multi Year Tariff Order, NERC mandated Discos to make 100 percent remittances to the MO, repay loans to the Central Bank of Nigeria, and, depending on the Disco, remit a stipulated percentage of NBET’s monthly invoices. Industry analysts note the development could usher in a new era of addressing liquidity concerns already bedevilling the sector, which has prompted the Gencos to shut down operations on several occasions. “This initiative of NERC is a major lifeline booster to generation companies and other value chain players in the sector, and could gradually win investors’ confidence back to the sector. There is still the metering g concerns of the Meter Asset Providers, which I suggest the Central Bank of Nigeria could offer interest free loan to them to guarantee mopping of liquidity on the sector

by revenue collection,” Chuks Nwani, an energy lawyer, told BusinessDay. Sam Amadi, former chairman of NERC, told BusinessDay that the initiative was a welcomed development, but suggested financial viability required more radical regulatory stance. “This move is a palliative and a right one to hold the Discos to account for power supplied to them. But financial viability requires more radical regulatory intervention. It starts with thorough implementation of Transitional Electricity Market (TEM) and movement for complete contract - based market,” Amadi said. It would be noted that power distributors are the revenue collection agents of the sector, as they collect electricity tariffs from their customers and make remittances to the market through the Nigerian Bulk Electricity Trading company and the Market Operator. The MO is an arm of the Transmission Company of Nigeria. “The minor review MYTO order has further prescribed minimum market remittance threshold payable by the 11 electricity distribution companies and the projected tariff path until 2021,” the commission’s spokesperson, Usman Arabi, stated, in a clarification statement on the recent upward review order of the commission.

He explained that under the current framework, the minimum market remittance by each Disco was determined after deducting the revenue deficit arising from tariff shortfall from the aggregate NBET and MO market invoices. It, however, stated the each Disco should be availed the opportunity to earn its revenue requirement only upon fully meeting certain obligations and subject to efficient operations. The obligations include the repayment of the CBN’s Nigerian Electricity Market Stabilisation Facility and 100 per cent settlement of MO invoice based on tariffs applied by the MO in determining respective invoices prior to this order. Others are the full settlement of the stipulated monthly invoices for each Disco to NBET being the minimum remittance threshold prescribed in the latest NERC order. The commission further stressed that each power distributor wouldl be held liable for relevant penalties/sanctions where the Disco failed to meet the minimum remittance requirements in any payment cycle, in accordance with its obligations to the MO and NBET. It added that the penalties would apply if any Disco failed to heed the provisions of the market rules and the supplementary Transitional Electricity Market order.

Silent killer: What to know about high blood pressure ANTHONIA OBOKOH

ne in three Nigerian adults has high blood pressure, or hypertension, according Okechukwu Ogah of Nigerian Cardiac Society, in Africa Check to the 2015 review of Nigerian hypertension studies from January 1980 and December 2013, published in the Journal of Hypertension. The common non-communicable disease, hypertension, is made worse when people are not aware and unable to pay for regular checks say, experts. Hypertension, based on most current standards, is defined as having a measured blood pressure of ≥140mm Hg systolic or ≥90mm Hg diastolic. Under this definition, the prevalence of hypertension in Nigeria, currently with a population of over 200 million, is astounding, affecting 28.9% (25.1, 32.8), with a prevalence of 29.5% (24.8, 34.3) among men and 25.0% (20.2, 29.7) among women. E x p e r t s s ay b e c a u s e high blood pressure has no symptoms or warning signs, increasing practice of poor lifestyle pattern, abnormal cholesterol and blood sugar

levels may lead to damage of kidney, heart attack and speed up stroke. One major problem affecting the response to this burden in Nigeria is that the awareness, treatment, and control of hypertension have been low, they say. “Change in the diet is fuelling the increase of heart blood pressure. Our diet in Nigeria has become more westernised, we are frying foods more, we do less exercise, eat junks and fast-food and people are smoking more. This increase in bad lifestyle has made diabetes and obesity an epidemic,” Adeyemi Johnson, cardiologist, founder and managing director of First Cardiology Consultants, says. Johnson notes that one important thing is that hypertension is not a rich man’s disease, long time ago people have that thought but heart attacks occur in rich, middle-class and people who do not have. “Overall, cardiac disease in Nigeria and most of the world is still more male-dominated than the female with a ratio of maybe 60 - 40 percent. Women start to catch up with men as far as heart disease after menopause, and 70 - 80 percent of hypertension can be preventable,” he states. Explaining hypertension,

Ademola Denloye, a medical practitioner at Men’s Clinic and medical director, St Luke’s Hospital, says hypertension is simply elevated blood pressure, stating that the first number called systolic blood pressure, which measures the pressure in your blood vessels when your heart beats, and the second number called diastolic blood pressure measures the pressure in your blood vessels when your heart rests between beats. “Today, the feature is if your systolic is over 140 and the diastolic is over 90, then you are hypertensive and so we want you to keep your blood pressure under 140,” he says. According to Denloye, hypertension is the leading cause of death in Nigerian men. It is the major killer, and lifestyle, the stress of work, dietary habits, and sometimes genetic loading also a contributor to the cause. Meanwhile, genetic factors likely play some role in high blood pressure. “The risk for high blood pressure can increase even more when heredity combines with unhealthy lifestyle choices, such as smoking cigarettes and eating an unhealthy diet,” researchers find.

WEF 2020 Diary

World’s business and government elite head to Davos hoping to re-ignite global economic growth

t is time of the year again when leaders in business and government from around the world make their annual pilgrimage to snow covered homes and hotels in Davos, the pristine village on the Swiss alp defined by its inviting mountains. This year’s gathering which opens on Tuesday January 21 and runs for four days, will be the 50th annual meetings of the World Economic Forum, WEF and will have as its main theme, “stakeholders for a cohesive and sustainable world” and would focus on celebrating business stakeholder responsibility, building on the original concept that was at the foundation of the forum. In a one-page welcome letter sent to out to participants the forum’s executive chair Klaus Schwab who for 50 years has pursued the mission to improve the

state of the world, said, “we also want to have a substantial impact and have identified more than 160 Lighthouse Projects, which demonstrate how our Partners are taking concrete action to address the expectations of society. We invite all participants to join, scale up or replicate these projects to maximize their impact. “Supporting the theme of the meeting, we will launch two specific platforms in Davos. The first contributes to a more cohesive world by providing 1 billion people with new, more relevant skills for accessing decent jobs within the next 10 years. We also want to contribute to a more sustainable world by planting 1 trillion trees over the next decade, addressing the urgent challenge of climate change.” According to him, “the Fourth Industrial Revowww.businessday.ng

lution, with its profound impact on governance and business models, will be prominently featured in Davos. We will also be launching UpLink, a digital platform for integrating and amplifying global efforts to accelerate the implementation of the UN Sustainable Development Goals, with the first platform devoted to the oceans.” The annual meetings come at a time of tepid

“

The meetings can be quite intense and engaging, but the four days also bring moments of inspiring insight and great personal friendships

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global economic growth and political and trade tensions with participants hoping that the gathering will help spur the collaboration and partnerships required for well-rounded economic growth around the world. The meetings in Davos are defined as the “foremost creative forece for engaging the world’s top leaders in collaborative activities to shape the global, @Businessdayng

regional and industrial agendas at the beginning of each year.” The meetings can be quite intense and engaging, but the four days also bring moments of inspiring insight and great personal friendships. Large global firms usually take the opportunity of perhaps the largest gathering of the world’s business elites to showcase new ideas at their own side meetings and cocktails that feature dance as well. One company for instance is inviting select guest to a night to “groove to the musical stylings“ of celebrity model and influencer Helen Holt while they indulge in fusion cuisine curated by Michelinstarred chef, Amin Amrein. This year’s meetings will feature over 1,000 CEOs and Chairs of par tner companies as well as over 250 political leaders from around the world.

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Agric strategy still vague 5 months after minister’s appointment Cynthia Egboboh, Abuja

ive months into the appointment of Sabo Mohammed Nanono as minister of agriculture and rural development, it is not yet clear how the minister intends to revamp that allimportant sector which holds great prospects for Nigeria’s economy. Industry experts are raising concerns over what they termed the minister’s lethargy at a time the government says it is re-focusing on agriculture to boost employment and cut down high poverty levels.

The experts say they are yet to see a clear roadmap that spells out the interests and values of the minister as regards building up the sector, arguing that the delay may derail the modest achievements recorded in the sector in the past. Rabiu Sule, rice farmer, CEO Sule Farms, told BusinessDay that the sector is yet to receive the attention it deserves from the government in terms of leadership, funds, and policy. He said the commitment of leaders is key to the development of any sector and ensuring growth in the overall

economy. Even though Nigeria’s economy has depended on oil over the decades, agriculture, which used to be the mainstay of the economy, remains an important sector. It is currently the highest employer of labour, engaging over 38 percent of the country’s population in active agriculture practice and over 70 percent at subsistence level. Agric sector contributed 29.25 percent to the nation’s overall GDP in Q3, 2019, according to data from the National Bureau of Statistics. Sule said the future of the sector without a clear roadmap

appears shaky as it may affect stakeholders’ ability to make informed decision as well as hinder the nation’s ability to attract investments. He stressed the importance of developing the sector and providing all the necessary conditions for local farmers and foreign investors as well as educating potential and already established farmers on new and easier farming methods and the types of crops that bring higher revenue. “Appointing effective leaders to head key sectors such as agriculture is extremely important and critical in tackling most identified challenges in

the country as well as improving the standard of living of millions of ordinary Nigerians,” Sule said. “How can we say we are focusing on making agriculture our mainstay of economic growth and till now the government does not have a working roadmap of what it aims to achieve? The new minister is neither here nor there, we don’t know his policy or what he is out to achieve, which again speaks to the fact that the government is not carrying the private sector along in its programmes,” he said. A source at the Ministry of Agriculture confirmed to

Sokoto joins Adamawa, Bauchi, 8 others to pay N30,000 minimum wage BUNMI BAILEY

okoto State has joined other 10 states in Nigeria to pay the minimum wage of N30,000 to workers, with the state government pledging to embark on a widescale verification exercise to weed out ghost workers, child workers and syndicates making bogus employment offers. Governor Aminu Waziri Tambuwal disclosed this last week at the signing and submission of the report on the minimum wage by the committee on the implementation of the new wage structure and consequential adjustments, which he established to advise him on the matter. The monthly wage bill of the state will now be above N324 million as against N340 million requested for by labour union collective in the state, the governor said. Nigeria labour unions have threatened to protest against state governments that fail to implement the new minimum wage of N30,000 per month and the consequential adjustments for other workers. Announcing that his administration would commence implementation of the minimum wage from this month, Tambuwal scheduled a meeting of the state executive council meeting for Monday to consider the report. He said the government was poised to “embark on the verification of unscheduled staff and the sharp practice of sale of letters offers of employment to unwary citizens,” stressing also that “a situation where children are on the payroll of the government will not be condoned”. Prior to the negotiation that ushered the new wage regime, the state government had discovered a disparity in the salary data between the state civil service commission, the ministry of finance and the office of the head of service. www.businessday.ng

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BusinessDay that the minister, who resumed office in August 2019, is often away from the Federal Capital Territory, making it even more difficult to understand his programme. “The minister, as you can see, is not around and most times he is not around. But I do not think there is any working plan for the ministry yet because I have not heard of any,” said the source who pleaded anonymity. Jide Adebayo, an economic analyst, said it was high time the government got its priorities right and put its resources and focus on ensuring the growth of the agric sector.

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The Metropolitan Club – If you think you are surrounded by idiots

Bashorun J.K Randle

hen the Metropolitan Club celebrated its 60th Anniversary on 13th October 2019 with a lecture by Professor Wale Adebanwi Rhodes Professor at St Antony’s College, Oxford University followed by a “Black Tie” dinner, the press coverage was a whimper. With a little more encouragement, the event would have dominated the media space for weeks on end – and rightly so for reasons which will be duly canvassed. Well ahead of the event, CNN appeared to have identified it as a great candidate for any of its flagship/prime time programmes – “Focus on Africa”; “Market Place Africa”; “Quest Means Business”; “Anderson Cooper 3600” etc. which would have no difficulty in attracting a sponsor, such as J.K. Randle Professional Services or XKPMG Professional Services. However, as the date approached, what emerged were “technical hitches” or a curved ball. Someone may have raised the point – if the Club is so powerful how come that in none of the military coup d’états inflicted on our beloved country was there was any reference to the club by the likes of Major Chukwuma Kaduna Nzeogwu; Major Joseph Navan Garba; Lt-Colonel Bukar Suka Dimka; Major General Sani Abacha; Major-General Joshua Dogonyaro; and Major Gideon Orkar etc. in the chilling announcement which was a regular occurrence:

“Fellow countrymen, after due consultation with the President and members of the Metropolitan Club as well as my colleagues in the Army, Navy, Air Force etc.......” No way!! Totally wrong call. What probably happened is that in the mistaken belief that the Club is exclusively for the ultra-rich/mega billionaires, many of the names which have been featured on the front cover of Forbes Magazine are conspicuously missing from the members’ list: Alhaji Aliko Dangote, Pastor E.A. Adeboye, Otunba Mike Adenuga, Sir Kensington Adebutu, Mohammed Darwish, Femi Otedola, Haresh Awani, Oba Otudeko, Chief Ade Ojo, Sir Gabriel Igbenedion, Tony Elumelu, Tunde Folawiyo, Equally missing are the likes of: President Muhammadu Buhari GCFR, His Eminence Muhammadu Sa’ad Abubakar III, Sultan of Sokoto; Babjide Sanwo-Olu, Governor of Lagos State, His Royal Highness Oba Rilwan Babatunde Osuolale Aremu Akiolu I; Godwin Emefiele, Governor of the Central Bank of Nigeria; Lt. General Tukur Buratai, Chief of Army Staff; The Principal/ Headmaster of King’s College, Lagos, Prince Nduka Obaigbena. The original intention was to beam the event live to the rest of the world (the global village) in order to advertise Nigeria’s finest – as a counterfoil to the regular diet of Boko Haram insurgents; kidnappers; “419” fraudsters/yahoo boys; bandits; reckless politicians and retired partners of KPMG who are still awaiting their gratuity and pensions. The official statement from CNN made it absolutely clear that it was a purely business decision. No political or racial undertones. No apologies. Anyway, there was no going back and the celebration commenced as scheduled. In deference to the “local content” regulation, the media coverage was limited to Nigerian print and electronic channels. As the Master of Ceremonies, Yinka Akinkugbe (an old boy of King’s College)

was about to introduce the President of the Club, the large gathering of King’s College old boys at my table sent him a note which we all signed. “Just confine the introduction of the new President of the Club to: Alhaji Femi Okunnu, SAN an eminent old boy of King’s College, Lagos. Period.” It was meant to wind up the old boys of St. Gregory’s College who were mostly seated at the far corner of the hall. Instead, the Master of Ceremonies went on and on about the President – former Minister of Works; former President Ansarudeen Association etc. As I surveyed the Members Dining Room which was filled to capacity, it was self-evident that if you are looking for the best brains to run Nigeria (or indeed any African country), you do not need to look further than the Metropolitan Club!! Then I remembered what my late father, Chief J.K. Randle once told me: “If you think you are surrounded by idiots, then you are the idiot!!” Sadly, nothing captures the selfinflicted tragedy of Nigeria better than the frontpage report of the “Nigerian Tribune” newspaper of 3rd December 2019. Headline: “power failure – Nigerians spend $14 billion on generators – African Development Bank.” Maybe that was what provoked Chinua Achebe to declare: “Nigeria is what it is because its leaders are not what they should be.” Indeed, President Donald Trump of the United States of America has chipped in with a different dimension to the equation: “One of the key problems today is that politics is such a disgrace, good people (such as members of the Metropolitan Club) don’t go into government.” How does that explain the rock bottom state of affairs as reported on the front page of “Saturday Tribune” newspaper of December 7, 2019? Headline: “Judge flees as SSS invades court to arrest Sowore.” In 1963, Sir Adetokunbo Ademola

‘

I remembered what my late father, Chief J.K. Randle once told me: If you think you are surrounded by idiots, then you are the idiot!!

To be continued Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

The UK Africa Investment Summit: A great opportunity for Nigeria

ext Monday 20 January 2020, the British Prime Minister, Boris Johnson, will host 21 African leaders in London for one of the biggest events of his premiership so far - the UK-African Investment Summit (UK-AIS). His Excellency, President Buhari will be in attendance, alongside a strong Nigerian delegation of senior Ministers and officials. About 40 leading members of the Nigerian private sector will also be there to make their voices heard and to pursue new deals and opportunities. The UK understands the value of trade and investment partnerships in Africa. Right now, Africa is home to eight of the 15 fastest growing economies in the world, and the coming decade could well see that proportion rise. The UK wants to be the partner of choice for Africa’s largest economy – Nigeria - and build our two-way trading and investment relationship. The City of London is already the number one global exchange for African business, and the home of some of the world most important global financiers. The UK is host to thousands of innovative firms looking for new opportunities. The UK-AIS is designed to showcase the best of the UK and the best of Africa – and help new partnerships flourish. The UK and Nigeria have placed a great emphasis on our trade and investment partnership, especially in recent years. In the twelve months we have held two Ministerial level summits on economic development and trade, hosted a Nigerian investment showcase for Nigerian firms in London, and seen the UK Government’s investment arm, CDC, open its Nigeria office. CDC will grow its portfolio to almost 100 Nige-

rian investees, supporting over 40,000 jobs. Our Export Credit Agency, UK Export Finance, has increased its ceiling for support to Nigeria to £1.5 billion. And all the while, the UK Government is maintaining and increasing collaboration with the pillars of the Nigerian economy – Federal and State ministries of finance, trade and investment, the Central Bank, standards agencies, investment and export promotion agencies and, of course, the private sector - all benefitting from one of UKAID’s biggest programmes of support for economic development to an individual country, totalling £200m over the next five years. Our UK private sector has been busy too – twoway trade has now reached £5.5 billion, while the stock of Foreign Direct Investment (FDI) stands at over £4 billion. Existing UK multinationals like Diageo and Unilever continue to invest in their massive operations here. Major UK firms like Prudential, and the infrastructure firm Turner and Townsend have opened offices or joint ventures. The best of FDI brings good jobs, technology and know-how. We were delighted when UK firm Savannah announced a new £319 million investment last year in Nigeria’s energy supply – speeding Nigeria’s transition to cheaper, cleaner gas power (and helping to supply 10% of Nigeria’s power). Even smaller firms can make a big difference. A UK firm, West Africa ENRG, has brought new technology and efficiency to waste collection and re-cycling to the South West of Nigeria, and employs over 3000 people in safe and clean conditions. Another small UK firm, SESO Global, is bringing blockchain technology to the Nigerian housing and mortgage markets. It is developing the country’s first digital mortgage registry. Both www.businessday.ng

firms are getting the chance to showcase their Nigerian success stories at the Summit. How is the summit going to help? There is potential for so much more. FDI is critical for the economic development of any country but it is too low in Nigeria - Nigeria received only $1.8 billion in 2018 compared with $7 billion for both Egypt and Ethiopia. Despite our long history and some recent success, we think UK companies have far more potential to make financial and investment partnerships work in Nigeria. The Summit will see new commercial investments and new partnerships agreed between our governments. Sessions will focus on sustainable finance and infrastructure; trade and investment - including the potential of the African Continental Free Trade Agreement; the business environment; and the clean energy transformation. The Summit is a not a standalone event. There are a range of events before and afterwards focussed on specific sectors – including agriculture, infrastructure, manufacturing, technology, local currency financing and renewables. For example, our Female Tech Founders event in Lagos saw five Nigerian women entrepreneurs selected to attend the Africa-UK Female Tech Founders 2020 event as part of the Summit. The UK has worked closed with the Nigerian Investment Promotion Agency to develop new investment guides for Nigeria. As well as highlighting key opportunities in sectors like agriculture and renewable energy, they can help challenge the negative image of Nigeria as an investment destination. Investors will have new, concrete information at their fingertips.

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was responsible for the conduct of the national population census. He was at the time the Chief Justice of Nigeria and President of the Metropolitan Club. The controversy that ensued following the release of the official figures remains a recurring decimal in the annals of our nation’s history. Regardless, we can only speculate how deeply disappointed he would have been (if he was still alive. He died on 29 January 1993 at the age of 87) by the front-page report of “ThisDay” newspaper of October 27 2019. Headline: “INEC: Elections in Nigeria are like war” Independent National Electoral Commission’s national commissioner for Edo, Rivers and Bayelsa States, May Agbumuche-Mbu, has lamented the degree of violence often associated with elections in Nigeria, saying it is akin only to a war situation. Agbamuche-Mbu, who narrated as an example, what happened in Rivers State during the recent 2019 general election at a two-day seminar at the Electoral Institute in Abuja, however, sued for caution ahead of the November 16 governorship elections in Bayelsa and Kogi States. In similar spirit, another INEC national commissioner, Amina Zakari, explained why inconclusive elections might be inevitable in certain instances, noting that where it was established that genuine voters had been disenfranchised by any means possible, it behoves the commission to capture the votes of such demographics. On his part, a fellow national commissioner and chairman of the two-day seminar, which held preparatory to the Bayelsa and Kogi elections, Solomon Adedeji Soyebi, already foresaw a heavily monetised exercise in Bayelsa and Kogi, saying there would be intense vote-buying.

CHRISTOPHER PYCROFT Nigeria will play a critical role in the success of the Summit – its delegation will be the only country to participate in every event at the Summit and we will need that team to come back with new partnerships and investment opportunities in order to demonstrate the success of the Summit. Alongside the President and his senior delegation, we know the Nigerians that are attending give us every chance of achieving that – delegates such as Aliko Dangote and Damilola Ogunbiyi (recently appointed Special Representative for the United Nations Sustainable Energy for All initiative). We should recognise that it is not all plainsailing for investors. Although Nigeria has, with UK support, moved up 15 places in the World Bank Doing Business index, there is little point in hiding or denying the well-known challenges in the trading environment, and in power and infrastructure. But we are confident there are opportunities to take despite those problems - indeed, some of those opportunities can help to fix them. The UK’s rapidly growing economic team is here to work on trade, investment and the longterm business environment in partnership with Nigeria. It is also here to help ensure that those returning from the Summit next week can turn their new partnerships into reality. The 2020s should be the decade that sees UK Nigeria investment really take off. Christopher Pycroft writes from Abuja. He is the Nigeria Head of Office, UK Department for International Development (DFID)

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Monday 13 January 2020

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Will economy outperform consensus on Emefielenomics, reform green shoots?

Patrick Atuanya

igerian stocks are on fire barely 10 days into the New Year. With money is flowing into the Nigerian stock exchange (NSE) at record rates in 2020, it is the best performing stock market globally so far, having gained 9 percent this year. Some top performers so far include Cornerstone Insurance PLC: +29%, FBN Holdings: +24%, and Dangote Cement: +21%. Data from the NSE shows that as at November 2019 domestic institutional investors were responsibly for nearly 50 percent of trades on the bourse. Anecdotal evidence suggests that the number has gone up as local Pension Funds respond to being shut out from the Central Bank of Nigeria (CBNs) Open Market Operation (OMO) bills, by buying stocks. Total Pension Fund assets of N9.8 trillion as at October 2019, comprised of Federal Government securities at 70.43%, money market funds 11.73%, corporate debt 6.5% and domestic ordinary shares at 4.85%. This was definitely an anomaly as everywhere in the world a larger percentage of Pension assets are in-

vested in equities, which outperforms other asset classes over a long period of time. The CBN Governor Godwin Emefiele, should probably take the credit for the rally being witnessed in the equity markets. After banning Pension funds from the OMO markets they pushed most of their liquidity into the Treasury Bills market which subsequently led to a collapse in yields. The CBN in a NTB auction held last week, sold 91-day debt at 3.5%, while the rate on 182-day bills was 4.9%. These rates are both below inflation (which printed at 11.2% in October), but more significantly also below the dividend yields of a lot of blue chip companies trading on the NSE. So in a sense it was a no-brainer that PFAs would rotate into equities from bonds, but the main catalyst for that was the CBNs regulatory actions. Another regulatory action that could underpin growth this year is the December 2019 minor review of MYTO 2015 (multi-year tariff order) published by the regulator NERC last week which showed the average end user allowed electricity tariffs will be slightly increased from N25.3/kwh to N31.05/kwh from April 1st, 2020. The Nigerian power sector has largely remained dysfunctional due to the inability of the regulator to enforce cost reflective tariffs for power. This had led to Distribution Companies (DisCos), who are closest to the consumers mostly insolvent as they often routinely recouped less than 40% of their billings for power supplied. This also meant that they could not

really make investments to upgrade their transformers and substations to reduce technical power losses or introduce innovation to reduce leakages or financial losses. It is hoped that the gradual move to cost reflective tariffs would help to staunch the bleeding of the DisCos and strengthen the power chain from DisCos to Transmission Company of Nigeria (TCN), GenCos and gas suppliers. Staying with power, the recent reversals of some sacking of people known as reformers in the sector would be positive for investor sentiment going forward. President Muhammadu Buhari on Thursday reversed the dismissal by the Power Minister of the Managing Director of the Nigeria Bulk Electricity Trading Company Limited NBET, Marylin Amobi. NBET which was incorporated on July 29, 2010 had served as a special purpose vehicle for the purchase of electricity from the Generation Companies (GenCos), which it sells directly to the Distribution Companies (DisCos) through vesting contracts, under the Power Purchase Agreements (PPAs). The reinstatement of the NBET MD was the second of such act by the President who had on Tuesday, also reversed the minister’s suspension of Damilola Ogunbiyi as the managing director of the Rural Electrification Agency (REA). Ogunbiyi was widely regarded as a reformer in the REA and her suspension largely condemned by all. Meanwhile MTN Nigeria, a subsidiary of MTN Group, Africa’s leading

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The CBN Governor Godwin Emefiele, should probably take the credit for the rally being witnessed in the equity markets. After banning Pension funds from the OMO markets they pushed most of their liquidity into the Treasury Bills market which subsequently led to a collapse in yields

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

Are we hoping to be saved by higher oil prices?

should start off by saying that most people do not want war. War can be very destructive with every life lost a real waste. And then there is the disruption in the lives of people who survive. The trauma. The destruction of property. If you add the fact that nowadays no one really fully wins a war and fighting tends to go on indefinitely then no one should want war. Still there were some in Nigeria who seemed a bit upbeat over the prospects of a war between the United States and Iran. Upbeat because of the effect it would have on oil prices. During the whole brouhaha oil prices jumped from $63 a barrel to above $70. Cue statements of “This is good for Nigeria”. To be clear I am not talking about anyone in particular and I am definitely not talking about any policy makers. Most people think that higher oil prices are good for Nigeria. To be fair this is not a surprising assumption. Crude oil is still our largest export despite the anomaly in the last trade report. Higher prices therefore mean more foreign exchange inflows. And boy do we need inflows. Our foreign reserves have been in something close to free fall for the past six months. It is somewhere near

$38 billion now and that is before you remove the near $18 billion of foreign hot money in OMO instruments. Government revenue has been in a state of flux too with the budget expecting revenue to double in 2020 to somewhere near eight trillion from the four trillion it looks like it was in 2019. Given these realities anyone can be forgiven for thinking that higher oil prices would be good for Nigeria. But is it really that straightforward? First, we know the story of the commodity boom and bust cycle. Oil prices go high and then they collapse. We get an oil windfall and assume that the boom years will last forever and then things go bust and we find ourselves at square one. We have tried to put systems in place to deal with these booms bust cycles but so far, we have not been very good at it. The excess crude account which used to be the mechanism for the government saving of oil windfalls looks dead in the water. The sovereign wealth fund is marginally better but nowhere near where it should be if we were actually following the fiscal rule. For context, since about 2017 the actual oil price has actually been higher than the budget benchwww.businessday.ng

ECONOMIST

mark, but the total of the excess crude account and the sovereign wealth fund have not budged. The culprit is our over optimism. We assume that oil production will be 2.3 million barrels a day when it has not been that high since who knows. We assume that non-oil revenue and independent revenue will grow tremendously when they never do. The result is that any extra “windfall” is simply used to fill up the optimism gap and consumed. The same is true for monetary policy. We will simply use the windfall to maintain our “strong currency” and that will be that. The second reason to not be so thrilled about crude oil price increases is the fuel subsidy. Sorry, there is no subsidy but only under-recovery. If crude oil prices go up then the real price of refined products go up as well. But we do not have flexible prices here in spite of the former minister’s famous price modulating mechanism. Which means as crude prices go up the implied fuel subsidy goes up and that cost gets passed on to all three tiers of government. Don’t loud it but the governments probably spend more money on fuel subsidy than on education and health combined. Luckily, we have not

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telecommunications company announced on Friday that the Attorney General of the Federation (AGF) and the Ministry of Justice has formally withdrawn the demand for the Telco to pay N242.24billion and $1.3 billion alleged back taxes. According to a statement by the mobile-phone company, its legal counsel received a letter dated 8 January 2020 from AGF declaring the withdrawal of the claims. The issues will now be transferred to the Federal Inland Revenue (FIRS) and Nigerian Custom Service (NCS). MTN Nigeria which had filed a suit against the Attorney General of the Federation, over the outrageous claims said it will consequently follow due court process to withdraw its legal action against the AGF and engage with the FIRS and NCS on the issues. This is a major confidence builder in the investment climate of the country and MTNN stock as well. Its shares were up 6.4 percent last week and may well continue to rally as investor’s digest the good news. On a one by one basis the recent actions may seem small and inconsequential to improving the negative narrative prevalent in the Nigerian economy. However taken together there is a sense that the country may gradually be reaching a point where investor sentiment shifts dramatically to a positive stance, leading to a return of animal spirits and attendant upside for the economy.

NONSO OBIKILI

yet reached the point where the subsidy payments are more than the inflows from an increase in prices. But we are heading there inevitably. Since the 1980s we have produced around two million barrels of oil per day. We go up and down sometimes. Since the 1980s however our population has almost tripled and our economy grown even larger. And all those people consume fuel. If the trends continue then we will inevitably become a net oil importer. And then high oil prices will be a bad thing. The moral of this story is, we probably should not be wishing for these crude oil booms. If anything, we should be wishing for stability in the oil market so we can continue our attempts to diversify our exports away from crude oil. Dr. Obikili is the chief economist at Business Day

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BUSINESS DAY

Monday 13 January 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Where is the glory of Nigeria’s latter economy? “

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

Bashir Ibrahim Hassan

he glory of this present house will be greater than the glory of the former house,” says the Lord Almighty, “and in this house I will give peace” Haggai 2:9. This is one prayer and declaration most (all) Christians profess upon starting a new chapter or phase in their endeavours. Sadly, this is not Nigeria’s reality as an economy. Instead it is the case of “the glory of the former house is greater than the latter.” This is evident in a recent analysis carried out by one of our analysts which revealed the pitiable state of the Nigerian economy. To put into context, Africa’s biggest economy, Nigeria, relinquished its position as the fastest growing economic among frontier peers (Next 11) between the periods of 2000 to 2009 to becoming one of the slowest growing economies (ranked 8th of 11) in the last decade (20102019). Nigeria which grew at an average GDP growth

of 7.68 percent in the 2000s slowed growth to an average of 3.81 percent in the last decade. We could term this “a horrible performance”. Obviously, Nigeria proved wrong Goldman Sachs, a global investment bank which named her in 2005 among countries it expected would become the world’s largest economies in the 21st century. Instead, Nigeria ended as the world’s poverty capital. Coupled with her failure to enact some growth stimulating reforms across key sectors of the economy, volatility in the crude oil market which accounts for over 90 percent of Nigeria’s FX has contributed immensely to the underperformance of the Nigerian economy. This is a clarion call for the federal government of Nigeria to fast track necessary reforms or risk another decade of slow growth similarly warned by the Brookings Institution and Goldman Sachs in Q1 2019 if Nigeria’s overdependence on the volatile crude oil market isn’t reduced. As we hope for a prosper-

ous year 2020 and a more glorious decade, we shouldn’t be quick to forget that some economies of the world like China are drifting swiftly away from the production and sale of vehicles powered by fossil fuels, India declaring its intentions to make all new vehicles electric by 2030; Nigeria has to wake up to the profound disruption that vehicle electrification could bring about. Volvo, Jaguar and Land Rover, Volkswagen, Mercedes, Audi and BMW have all promised to roll out electric models in the new decade. The cycles in crude oil prices have buttressed the fact that it isn’t wisdom to run an economy at the mercy of the oil market. The last five years (2015-2019) did the damaged to the Nigerian economy with oil prices averaging $55 per barrel against $104 per barrel in years preceding that period (2011-2014). In the later periods, oil production also slumped to 1.2 million barrels after a wave of militant attacks on oil installations. While Nigeria cannot deter-

mine shocks in the oil market, it can strengthen its buffers to cushion the effect of these shocks by developing other key sectors of its economy. One way is to open up the economy for an influx of private capital. Statistics from the National Bureau of Statistics show Nigeria losing FDI battle. On average, Nigeria has attracted $222 million each quarter in 2019, an alarmingly low amount for a country estimated to need $31 billion in investment each year for ten years to bridge vast gaps in infrastructure. What this means is that despite obvious opportunities, foreign capital is not rushing into Nigeria, as the government continues to maintain a stranglehold on sectors that can attract foreign investment at the detriment of the economy and the people. We call on the federal government to learn from moves of countries like Ethiopia, Ghana and Egypt ; who are putting incentives in place to attract capital. The clamour for bold reforms isn’t exhaustible and very much urgent.

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

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

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BUSINESS DAY

Monday 13 January 2020

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When and how government should intervene: The key to sensible policies in Nigeria global Perspectives

OLU FASAN

overnments exist to promote the public interest. They do so through the policies and institutions they create. But the ability of a government to improve general welfare and generate prosperity depends on making the right policy and institutional choices, based on sound analysis and evidence, and on a robust assessment of the potential impacts of proposed policy actions. Over the years, successive Nigerian governments have failed to foster the wellbeing of Nigerians and of the country. They have consistently made the wrong policy interventions and taken the wrong policy actions. But why? Well, first, there’s the general problem of policy capture by vested interests and the lack of political will to do what’s right. But apart from those problems, there’s also the inability of successive governments to know when and how to intervene. The “when” relates to what government should and shouldn’t be doing, and the “how” is about properly assessing the potential impacts of policy choices. The starting point is the “when”. Why should a government intervene in the first place? This is an important question because not every issue or problem requires government intervention. There is a role for the market or the private sector; there is a role for voluntary organisations, such as charities; and, indeed, there is a role for individuals. If a government intervenes where the appropriate agency is through the market, voluntary organisations or individuals, then the intervention is bound to be suboptimal or, even worse, damaging. So, the first step before any government intervention is to identify the rationale for action. If a sound justification exists, then the government must set out the objec-

tives it aims to achieve with the intervention. Too often, governments intervene without objectives that are SMART, i.e. specific, measurable, achievable, relevant and time-bound! Once a government has set the objectives it wants to achieve, it would then have to consider the various options for achieving the objectives. This is where the “how” comes in. Before choosing any option or a combination of options, the government must carry out a robust impact assessment to assess the potential impacts of the proposed policy on those likely to be affected by it. But, as I said, everything starts with the “when”. So, when should government intervene in economic activities? Well, traditionally, there are two justifications for government interventions. The first is market failure; the second is equity. But both are generally misunderstood. For instance, governments, particularly socialist governments, tend to hide behind the term “market failure” to take harmful policy actions. Yet, government failure, which can be systemic and entrenched, is a much greater evil than market failure, which results from inefficiencies in the operation of markets, but can self-adjust. Similarly, governments – again, usually socialist governments – can abuse the equity justification and use it to pursue damaging redistributive policies, such as excessive taxation and spending, that are anti-wealth and anti-growth, and thus harmful to the economy and general welfare. So, while market failure and equity objectives provide sound rationale for government interventions, they are not excuse for inappropriate policy actions. But to avoid this, it’s important to know what market failure and equity problems entail and what policy responses they require. Let’s start with market failure. It occurs in four circumstances. The first is in relation to public goods, which the market has no incentive to provide because, like public roads or clean air, they are “non-rival”, i.e. can be used by several people at a time, and “non-excludable”, i.e. their use can’t be denied to anyone. This is why governments are expected to provide such things as public roads, sanitation infrastructure and national security because the private sector won’t derive much benefits or profits from

providing them. Another market failure justification for government intervention is externalities. If, for instance, a company knows that by investing in research and development or in training, most of the benefits would go to the wider society rather than to it, it may not make such an investment. On the other hand, a company may be causing harm to society, for example, polluting the environment, without directing incurring the cost itself. In the case of either positive externality, such as R&D that would benefit society, or negative externality, such as pollution that harms society, the government may intervene to correct the market failure. It could invest in R&D, training and innovation itself; and it could impose taxes on pollution. Market failure can also occur because of imperfect information. Markets need information to operate efficiently, and if economic efficiency is being undermined by lack of adequate market information, the government can intervene to ensure relevant information is made available. Finally, market failure can occur when there is market power, which results in lack of, or insufficient, competition. In that respect, government can intervene to create market competition, namely ensuring that economic actors do not engage in anticompetitive practices or behaviour that can harm the efficient operation of the market. Now, with respect to the equity justification for intervention, the aim is to address social justice issues, such as inequality and poverty. So, there are circumstances in which government interventions may be justified, namely, to tackle market failure, such as by providing public goods, addressing externalities, dealing with imperfect information and tackling the abuse of market power. And, of course, to pursue equity objectives, such as addressing inequalities within a country. But what do all these tell us about Nigeria? Well, truth is, government interventions in Nigeria hardly meet the above criteria. When has a Nigerian government intervened to address proper market failure? For instance, which public goods has any government adequately provided? Is it public roads, sanitation infrastructure or even national security? What about externalities? Is the government investing in R&D, innovation or training? And

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So, government intervenes in Nigeria not to achieve economic efficiency but actually to undermine it. Virtually all the Buhari government’s interventions are protectionist

where are the competition policy and laws to tackle the abuse of market power that’s prevalent in some industrial sectors, such as cement? Or is the government addressing the imperfect information, say, in the forex market? Of course, the Buhari government has the social intervention programmes, which you might consider an equity-based intervention, but it is more like throwing good money after bad because the social interventions have not succeeded in tackling extreme poverty, let alone build the productive capacities of the people. So, government intervenes in Nigeria not to achieve economic efficiency but actually to undermine it. Virtually all the Buhari government’s interventions are protectionist. The government allocates resources, such as foreign exchange, instead of allowing the market to do so, and penalises economic actors for its own failures. Take the border closure. Some can argue that smuggling is the result of market failure, but, in truth, it’s caused by policy failure. Nigeria’s trade policies, which create huge price differentials between local and foreign goods, are the major cause of smuggling. The government should tackle its policy failure as well as institutional failure, such as the corruption and inefficiency of customs officials, and market and price mechanisms will work to stop or stem smuggling. But, let’s face it, the government takes wrong policy actions because it never considers their impacts. For instance, no serious government would close its land borders and ban food imports without a robust impact assessment that considers the potential effect of such measures on affected groups, such as businesses, consumers, the poor and vulnerable and, indeed, the wider economy. Policy appraisal and impact assessment are the tools of modern policymaking. Nigeria must stop making policies on presidential predilections but based on sound analysis and evidence, and a robust assessment of their impacts. Only then can government interventions serve the best interests of Nigeria and its people. Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

The Nigerian Code of Corporate Governance: Principle 28 – Disclosures

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ull and comprehensive disclosure of all matters material to investors and stakeholders, and of matters set out in this Code, ensures proper monitoring of its implementation which engenders good corporate governance practice.” Corporate Disclosures constitute an important aspect of Corporate Governance. According to Healy and Palepu, the main aim of corporate disclosures is “to communicate firm performance and governance to outside investors”. This communication is not only required by shareholders and investors to evaluate their investments, but also for the benefit of other stakeholders (including prospective investors and those), particularly information relating to corporate social and environmental policies. With increased scrutiny and regulatory oversight on enterprises, it has become imperative that companies communicate more effectively with stakeholders. Corporate disclosures encourage efficient management of enterprises and better-run companies, in turn, contribute to greater economic efficiency and a greater capacity to generate wealth. This is important because it is not only the investor that benefits ultimately the whole society has something to gain. Disclosure can be in form of financial reporting which essentially entails financial

statements that are in accordance with defined accounting standards as well as nonfinancial reporting, comprising governance, environmental, social and sustainability reporting. The Nigerian Code of Corporate Governance (NCCG) recommends that companies issue a corporate governance report that provides clear information on the company’s governance structures, policies and practices as well as environmental and social risks and opportunities in their Annual Report. Governance practices affect company performance and are an important element in risk evaluation both for individual companies and for markets. Reporting is considered as the most effective tool to harness the benefits of good corporate governance practices. Reporting puts corporate information in the hands of the public and prospective investors make investment decisions based on this information. The market functions best when there is access to sufficient information to properly assess good governance, which is a recipe for sustainable performance. The Code recommends that the Board should use its best judgment to disclose any material matter even though not specifically required by the Code if in the opinion of the Board such matter is capable of affecting the present or anticipated financial condition of the Company www.businessday.ng

or its status as a going concern. The onus of proof of such possible negative effect is on the Board. This provision of the Code envisages information within the exclusive knowledge of the Board which could impact the performance of the Company and the market. The Code has placed the responsibility to disclose of such information on the Board. The Code recommends that the highlights of sustainability policies and programmes covering social issues such as corruption, community service, including environmental protection, serious diseases and matters of general environmental, social and governance (ESG) initiatives should be included in the corporate governance report to be disclosed in the annual report. Corporate Social Responsibility is becoming more important to investors because they are concerned about where and how their money is spent. The Board has the responsibility to ensure the company has insider trading and conflict of interest policies. The Code recommends that Board should ensure that the specific nature of any related party relationships and transactions conducted during the financial year are disclosed in the corporate governance report. The disclosure of related party transactions gives the public assurance of the transparency of the Board’s activities. The NCCG recommends that where the

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Bisi Adeyemi Board has engaged independent experts to evaluate and report on the extent of the Company’s application of this Code, the name of the external consultant and a summary of the evaluation report should be included in the Company’s annual report. The inclusion of the name of the independent evaluation consultant and the summary report reposes public confidence and provides additional credibility to the information disclosed in the annual report. Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 13 January 2019

BUSINESS DAY

cityfile NDLEA nabs 278, recovers 23,842kg of drug in Edo IDRIS UMAR MOMOH, Benin

E Lawma Officers in action, during the enforcement of the ‘Clean-Up of Ikoyi and Victoria Island in Lagos.

Protest rocks Enugu over ‘withdrawal’ of pre-paid meters in S/East REGIS ANUKWUOJI with agency report

coalition of Civil Society Organisations (CSOs), joined by hundreds of residents, at the weekend, took to the streets to protest an alleged decision of Enugu Electricity Distribution Company (EEDC) to remove residents of the South-East region from pre-paid metering system. According to the CSOs, the decision to return the region to estimated billing is an indication that EEDC has resolved to continue its extortion of electricity consumers despite poor service delivery. The protesting CSOs included Vibrant Youths Foundation, Heroine Women Foundation, Parent-Child

Intervention Centre and Daniel Ukwu Leadership Foundation. They were seen marching through Okpara Avenue, Ridge and Enugu-Abakaliki Roads to the EEDC office, to express their displeasure over the company’s anti-customers’ policy that took effect from January 1, 2020. They carried placards with various inscriptions: “EEDC, The People Need Clarification’’; “EEDC-Why Estimated Bill Again.” Leader of the coalition, Onyinye Mamah, called on EEDC to adopt best business practice rather than jungle and crude business method to deal with its customers. “Best business practice says that you directly replace a customer’s existing and functional pre-paid meter with a new one if you want to migrate to a new and better platform

as EEDC claims. “Why should consumers relinquish a functional prepaid meter, he or she bought; and then go ahead to buy a new pre-paid meter at all in the first place notwithstanding its cost,’’ Mamah said. She called on the company to stop forthwith its ongoing move to force its customers in the south-east to estimated billing system and asking its own technicians to by-pass pre-paid meters. Mamah urged the Federal Government, Nigerian Senate and National Electricity Regulatory Commission (NERC) to prevail on EEDC to revert to acceptable business practice. Meanwhile, EEDC commenced putting majority of its customers using stand-alone pre-paid meters on estimation billing as temporary measure before the installation of smart

pre-paid meters. It was observed that the notice to revert to estimation and a wait until February before the smart pre-paid meter would be ready had been pasted in its district offices. Reacting, head of communications, EEDC, Emeka Ezeh, said the company could no longer provide technological support for the stand-alone pre-paid meters; so customers on it should migrate to Meter Asset Provider (MAP) smart pre-paid meters. Ezeh said that the company in collaboration with MAP meter providers had spread installment payment for smart pre-paid meters for 24 months for its standalone pre-paid meter customers. According to him, there is no initial down payment needed for the smart prepaid meter.

Imo flood: Victims receive relief materials from Seplat JOSHUA BASSEY

ictims of last y e a r ’s d e v a s tating floods in Imo State have received relief materials from Seplat Petroleum Development Company. The company donated a truck load of relief items to the displaced victims, as part of its corporate social responsibility. The donated items include bags of rice, mattresses, groundnut oil and mosquito nets. Recall that about 15 communities were, in the first third quarter of 2019, submerged by massive flooding in the riverine

and oil-producing local government areas of Ohaji Egbema and Oguta in Imo State: Among the affected areas were Mmahu, Etekuru, Obiaakpu, Abor, Oguta I and II, Ezi Orsu, Orsu Obodo, Umuorji, Abacheke. The relief items were received on behalf of the victims by Governor Emeka Ihedioha and other top government functionaries. Chioma Nwachuku, general manager, external affairs and communications, Seplat, while presenting the items, states that the company is happy to complement the efforts of the Imo State government in providing succour to the displaced victims of www.businessday.ng

the flood with its donation. She said that the state was a major stakeholder in Seplat and that the gesture was to further create a mutually relationship with the state at all levels. “We at Seplat are mindful that the state is our partner and a major stakeholder. We remain ready to partner with the state government to provide better quality of life for her people. We are hopeful that our donation will alleviate the sufferings of the displaced flood victims,” said Nwachuku. Responding, Governor Ihedioha commended Seplat for the gesture. He stated that he was re-

cently apprised by a Seplat executive of the company’s plan to commence construction of the road leading to Seplat’s ANOH project site. He used the occasion to urge the company to fast track the road construction. The governor also noted that the state was expecting additional partnership with the company in the education sector especially in promotion of technical education. “We are also happy that Seplat is one of the operators in the state with a physical office in Owerri. This means that you have become a responsible corporate citizen of Imo State,” he said.

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do State command of the National Drugs Law Enforcement Agency (NDLEA) says it arrested 278 suspect drug peddlers in 2019. Buba Wakawa, state commander of the agency disclosed in Benin on Friday, while presenting the operational scorecard of the command for 2019. Wakawa, said that the figure comprised of 187 males and 91 females, caught with 23,842 kg of various narcotic drugs. A breakdown of the drugs showed cannabis weighing 23,803 kilogrammes, diazepam 19.112 kilogrammes, tramadol 9.71 kilogrammes, rubber solution eight kilogrammes, Extol one kilogrammes and amphetamine 0.53 kilogrammes. Others included Rapynol 0.100 kilogrammes, cocaine 0.02 kilogrammes, Lexotan 0.02 kilogrammes and 30 bottles of codeine cough syrup. He also disclosed that 22 cannabis farms measuring

9.33 hectares were discovered and destroyed, while 211 drug-dependent persons were counseled and reunited with their families. Wakawa said that 10 vehicles used in cannabis smuggling within the state were also impounded. Illegal drug activities in the state, he said, were reduced following measures put in place by the agency in collaboration with the state government. According to the commander, “the statistical analysis of arrests and seizures for the previous two years indicate reduction in illicit drug activities’’. He attributed the situation to positive results of control efforts by the Edo State Drug Control Committee (ESDCC) and other stakeholders. “The number of suspects arrested in 2019 as against 2018 reduced by 61 per cent while drug seizures also dropped by 21 per cent respectively. There were 339 suspects in 2018 with 47,000 kilogrammes of illicit drugs seized,’’ he said.

Katsina to spend N30bn on road construction

atsina State government says it will be spending more than N30 billion on the construction of roads across the state in 2020. The governor, Aminu Masari disclosed this at the weekend, in Katsina while speaking with journalists. Masari said the government would construct over 570 kilometers of roads during the period. According to him, over 385 kilometers of roads would be rehabilitated and over 2,000 kilometers of feeder roads would be constructed across the state. The governor said that

the roads would be beneficial to the communities, and would be useful for economic development of the people. Masari said that the government would ensure that it completed all ongoing projects especially hospitals and roads that had reached over 80 per cent completion stage. He said that the government would intensify efforts to ensure that it enhanced its Internally Generated Revenue to enable it finance the projects. Masari said that the government had designed a lot of projects that would enhance the living condition of the people. NAN

Lebanese arrested over human trafficking

he Niger ia Security and Civil Defence Corps (NSCDC), Ilorin has arrested one Lebanese and two others for alleged human trafficking. The NSCDC in a statement by its public relations officer, Ayeni Olasunkanmi, said that the suspects specialised in trafficking young girls to Lebanon for purposes of child labour and other related abuses. He noted that the arrest was made possible

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through a coordinated intelligence, provided by the Kwara State Command of the NSCDC, following a tip-off. Olasunkanmi added that the state commandant, Bello Ale has ordered a thorough investigation into the matter, with a view to unravel other syndicates. He said that all those involved in the act would be handed over to the relevant agencies for prosecution.

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Monday 13 January 2020

BUSINESS DAY

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Masterstroke or madness?

Donald Trump wants to curb Iran. Has he gone about it the right way? He may have deterred conventional attacks, but goaded Iran to build a bomb faster

HE KILLING of Qassem Suleimani by an American drone on January 3rd threatened to bring the United States and Iran closer to war than at any time since the hostage crisis in 1979. In a part of the world that has lost the power to shock, the audacious killing of Iran’s most important general, ordered by President Donald Trump, sent Iran reeling. In public ceremonies millions of Iranians put aside their discontent with the regime to mark General Suleimani’s death. Blood-curdling threats of destruction issued from the Middle East, echoed by warnings of mayhem from Western experts. And yet a retaliatory missile strike on two American bases in Iraq five days later killed nobody. It looked like a face-saving attempt by Iran to wind the crisis down. If that were the end of it, Mr Trump would be right to say that his strike had worked, as he suggested on January 8th. Ridding the world of a baleful individual and forcing Iran to curb its aggression really would be worthwhile achievements. In the coming months, that may indeed be how things turn out. The trouble is that nobody, including Mr Trump, can count on it. Two tests will define whether the killing of the general was a success—its effect on deterrence and on Iran’s regional power. For the past year Mr Trump has stood by as Iran and its proxies attacked merchant shipping in the Strait of Hormuz, two American drones, oil facilities in Saudi Arabia and military bases in Iraq. Because it had concluded that there was no price to pay, Iran was becoming more brazen and belligerent. The beneficial effect of the drone strike on January 3rd is to re-establish the idea that America is willing to hit back. Iran’s restraint on Tuesday this week signals that it does not want to face an aerial onslaught by America. Another Iranian missile strike is less likely today than it was just weeks ago.

And yet Iran’s thirst for revenge is surely not slaked. Even if they avoid overt forms of aggression, the Revolutionary Guards are likely to pursue other tactics, including cyber-attacks, suicidebombings by proxies, assassinations of American officials and an array of means they have honed over the years (see Briefing). These reprisals could take months to unfold. As the killing of General Suleimani recedes, Iran will once again begin to probe the willingness of America to use force. In an asymmetric world weak parties often retreat in the face of force, only to return. They have more patience and a greater tolerance of pain than a distant superpower does. The second test is whether America’s strike weakens Iran’s grip on its neighbours. Iran has a network of militias, proxies and forward bases for its Quds Force, across an area that stretches from the Mediterranean to the Arabian Sea. This is about projecting Iranian power, regardless of the atrocities committed by its clients, such as Bashar al-Assad, who used nerve gas on his own people without a whisper of complaint from Iran. General Suleimani’s death deprives this grim network of its architect and orchestrator. It is too soon to judge the calibre of those who are taking his place, but if the general was as exceptional as his reputation (see Obituary), then his loss will be felt. It may also deprive the Quds Force of funds. The Ira-

nian state is desperately short of money. Ordinary Iranians have noticed that resources which are going on guns and mortars might be better spent on schools and hospitals. But there are complications here, too. After the assassination, Iran is hellbent on pushing America out of the Middle East. It will start in Iraq, where it has mostly outmanoeuvred America. The government in Baghdad is dominated by Shia politicians in thrall to Iran. On January 5th Iraq’s parliament passed a resolution calling on the government to start evicting foreign troops, including 5,000 or so American soldiers. The vote is not binding, many Iraqis resent Iranian influence, and American money and weapons are valuable to Iraq. Even so, it increasingly seems more a question of when, rather than if, the troops finally go. Still more threatening is Iran’s nuclear programme. Mr Trump pulled America out of the agreement with Iran, signed in 2015 with six world powers, which limited its ability to get a bomb. He argued that he would be able to negotiate a better deal which also took in Iran’s non-nuclear regional activities—a proposal he repeated in his press conference this week. Last summer there was speculation that Iran was ready to talk. But that now seems out of the question, possibly for a long time. Indeed, on January 5th Iran said it would no longer abide by any

restrictions on the enrichment of uranium. It has every reason to indulge in nuclear brinkmanship not only as a bargaining counter against America, but also because, were Iran to get the bomb, it would permanently oblige America to change its calculations about using military force against it. The lack of an American strategy for negotiation means that the general’s killing has reduced America’s Iran policy to extreme sanctions accompanied by an illdefined threat of massive retaliation if the regime misbehaves. Yet, starving Iran into submission is unlikely to work—other regimes have resisted American pressure for longer. There is no path to the peace Mr Trump this week said he wanted. Indeed, because America’s red lines are unclear, the danger of blundering into war remains. Meanwhile, sanctions and deterrence will gradually become less potent, because they always do. If America wants its approach to be sustained, the price could well be repeated rounds of sanctions buttressed by sustained military counters to Iranian aggression—and an aerial campaign if Iran appears about to get the bomb. Is Mr Trump prepared for that? Are his successors? The wrong place at the wrong time Both Barack Obama and Mr Trump realised that turmoil in the Middle East consumes American resources and attention that would be better focused on Asia. Mr Obama tried to negotiate his way out of the region and failed. Mr Trump is trying to bully his way out instead, but he is likely to fail, too—because his strategy towards the regime in Tehran depends on America being present in the Middle East to contain Iran and maintain deterrence. The dramatic assassination of General Suleimani may look like a gamble that has paid off in the short term. Unfortunately, it has not solved

A OnBalkan trial betrayal

Lessons from a radical education experiment in Liberia The messy reality of trying to improve schools in a poor country

N 2016 GEORGE WERNER faced an unenviable task. Liberia’s education minister was in charge of one of the most difficult school systems in the world. More than a decade of civil war and an outbreak of Ebola in 2014 had stopped many children from going to class. Those who did learned little. Just 25% of Liberian women who completed primary school could read, one of the lowest shares anywhere. Mr Werner’s budget was a mere $50 per pupil per year. Many teachers on his payroll were “ghosts” who did not exist but somehow kept on drawing salaries. So Mr Werner signed off on one of the boldest public-policy

experiments in recent African history. He outsourced 93 primary schools containing 8.6% of state-school pupils to eight private operators. Five charities and three companies were monitored in a randomised controlled trial (RCT). Researchers tracked test scores in the operators’ schools and nearby government ones. More than three years later, the results are in. They reveal the messy reality of education reform in one of the world’s poorest countries. On average children who began the study in outsourced schools learned more than those in government ones. But those gains were “modest”, says Justin Sandefur of the Centre for Global Development. Pupils beginning in privately run schools could on average read 15 words per minute three years later, versus 11 in state-run classrooms. Any boost is welcome, but the average reading Continues on page 17

Monday 06 January 2020

BUSINESS DAY

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The superpower split

Don’t be fooled by the trade deal between America and China

The planet’s biggest break-up is under way

N JANUARY 15TH, after three years of a bitter trade war, America and China are due to sign a “phase one” deal that trims tariffs and obliges China to buy more from American farmers. Don’t be fooled. This modest accord cannot disguise how the world’s most important relationship is at its most perilous juncture since before Richard Nixon and Mao Zedong re-established links five decades ago. The threat to the West from China’s high-tech authoritarianism has become all too clear. Everything from its pioneering artificial-intelligence firms to its gulags in Xinjiang spread alarm across the world. Just as visible is America’s incoherent response, which veers between demanding that the Chinese government buy Iowan soyabeans and insisting it must abandon its state-led economic model. The two sides used to think they could both thrive; today each has vision of success in which the other lot falls behind. A partial dismantling of their bonds is under way. In the 2020s the world will discover just how far this decoupling will go, how much it will cost and whether, as it confronts China, America will be tempted to compromise its own values. The roots of the superpower split go back 20 years. When China joined the World Trade Organisation in 2001 reformers at home and friends abroad dreamed that it would liberalise its economy and, perhaps, its politics too, smoothing its integration into an Americanled world order. That vision has died. The West has faced a financial crisis and turned inward. China’s behaviour has improved in some ways: its giant trade surplus has fallen back to 3% of GDP. But it has an even bleaker form of dictatorship under President Xi Jinping and has taken to viewing America with distrust and scorn (see article). As with every emerging great power, China’s hankering to exert its influence is growing along with its stature. It wants to be a rulesetter in global commerce, with sway over information flows, commercial standards and finance. It has built bases in the South China Sea, is meddling with the 45m-strong Chinese diaspora and bullying its critics abroad.

President Donald Trump has responded with a policy of confrontation that has won bipartisan support in America. Yet the China hawks thronging Washington agencies and corporate boardrooms share no consensus over whether America’s goal should be the mercantilist pursuit of a lower bilateral trade deficit, the shareholder-driven search for profits in American-owned subsidiaries in China or a geopolitical campaign to thwart China’s expansion. Meanwhile, Mr Xi oscillates between grim calls for national self-reliance one day and paeans to globalisation the next, while the European Union is unsure if it is an estranged American ally, a Chinese partner or an awakening liberal superpower in its own right. Muddled thinking brings muddled results. Huawei, a Chinese tech giant, faces such a disjointed campaign of American pressure that its sales rose by 18% in 2019 to a record $122bn. The EU has restricted Chinese investment even as Italy has joined China’s beltand-road trade scheme. China spent 2019 promising to open its big, primitive capital markets to Wall Street even as it undermined the rule of law in Hong Kong, its global financial hub. The phase-one trade deal fits this pattern. It mixes mercantilist and capitalist goals, leaves most tariffs intact and puts aside deeper disagreements for later. Mr Trump’s tactical aim is to help the economy in an election year; China is happy to buy time. Geopolitical incoherence is

neither safe nor stable. True, it has not yet inflicted a big economic cost—since 2017 bilateral trade and direct investment flows between the superpowers have dropped by 9% and 60% respectively, but the world economy still grew by about 3% in 2019. Some businesses, such as Starbucks’s 4,125 cafés in China, need never be affected. But confrontation is constantly spreading into new arenas. America’s campuses are convulsed by a red scare about Chinese spying and intimidation (see Briefing). Rows blaze over athletes kowtowing to China, naval docking rights and alleged censorship on TikTok, a Chinese app used by teenagers worldwide. In the background is the risk of a confrontation between the superpowers over Taiwan, which holds elections in January (see article). Each side is planning for a disengagement that limits the other superpower’s dayto-day influence, reduces its long-term threat and mitigates the risk of economic sabotage. This involves an exceptionally complex set of calculations, because the two superpowers are so intertwined. In technology, most electronic devices in America are assembled in China, and, reciprocally, Chinese tech firms rely on foreign suppliers for over 55% of their high-end inputs into robotics, 65% of those into cloud computing and 90% of those into semiconductors. It would take 10-15 years for China to become self-sufficient in computer chips and for America to shift suppliers (see Technology

Quarterly). Likewise in high finance, which could serve as a vehicle for sanctions. The yuan accounts for just 2% of international payments and Chinese banks hold over $1trn in dollar assets. Again, shifting trade partners to the yuan and winding down the banks’ dollar exposure will take at least a decade, probably longer. And when it comes to research, China still trains its best talent and finds its best ideas in America’s world-beating universities—at the moment there are 370,000 mainland students on campuses in the United States. Were the superpower rivalry to spiral out of control, the costs would be vast. To build a duplicate tech hardware supplychain would take $2trn or so, 6% of the superpowers’ combined GDP. Climate change, a great challenge which could provide a common purpose, would be even harder to cope with. Also at stake is the system of alliances that is a pillar of America’s strength. Some 65 countries and territories rely on China as their largest supplier of imports and, asked to choose between the superpowers, not all of them would opt for Uncle Sam—especially if it continues to pursue today’s policy of America First. Most precious of all are the principles that really made America great: global rules, open markets, free speech, respect for allies and due process. In the 2000s people used to ask how much China might become like America. In the 2020s the bigger question is whether a full superpower split might make America more like China.

Lessons from a radical... Continued from page 16

level in the pilot schools is still behind the 45-60 words per minute deemed necessary to understand a simple passage (and far behind the more than 100 words per minute that peers in rich countries can read). Improvements in maths skills were of a similar magnitude. Unspectacular results are perhaps unsurprising. Running a school in Liberia is hard. Operators talk of building classrooms from scratch and being unable to reach schools during rainy seasons. Unlike in, say, charter schools in America, staff members were mostly recruited from the existing pool of teachers. Many were badly educated. Operators could not fire poor performers or reward good ones. They had an advantage nevertheless. With the help of philanthropic donations they could supplement the government’s budget of $50 per pupil—almost all of which goes on teachers’ salaries. In the first year they spent on average about $300 per pupil beyond the government’s contribution. Two years later that amount was $119. The figures suggest that after spending on startup costs, operators learned to do things more cheaply. Though this was more true of some than others. The biggest spender was Bridge International Academies, a company that opened its first schools in Kenya in 2009. It improved scores, but at a cost of $161 per pupil after three years. Children were also more likely to drop out of its schools. The case of Bridge does, however, point to one of the advantages of the study. Researchers were able to look at the performance of eight different operators, with eight different models. In theory that diversity allows them—and, more importantly, Liberian policymakers—to decide which approach worked best, and why. Three of the operators had no effect on pupils’ results whatsoever. The other five did improve scores. Some had downsides but two operators come out of the evaluation with their reputations enhanced.

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BUSINESS DAY

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Monday 13 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

Investors pick new bride in bellwether stocks after Bonds, T-Bills yields bottom-out OLUFIKAYO OWOEYE

fter underperforming its global peers in 2019, the nation’s bourse seems to have regained its mojo, at least for now. On Friday, the local bourse scaled for the seventh consecutive trading session, as investors’ interests in bellwether stocks drove the benchmark index higher by 9.07percent to 29,415,39 points. Currently, bonds and government short-term debt instruments often called treasury bills are offering abysmal rates of return on investment, prompting investors to seek alternative asset classes to invest their funds. For instance, the average yield on benchmark bonds at the secondary market hovered around 10.50 percent last week. When the nation’s 11.85 percent inflation rate as of

November 2019 is taken into consideration, the instrument leaves investors with a real return of about -1.35 percent. The return is even worse on Nigerian government short-term debt instrument. Average discount rates on benchmark treasury bills stood at about 3.97 percent last week, implying investors stand the chance to lose 7.88 percent of their capital before maturity in real terms. On the other hand, at an average interest rate of 12.19 percent, the central bank’s liquidity management tool, Open Market Operation (OMO), remains the only instrument offering positive real return. These high-yeiding OMO Bills are, however, not accessible to non-bank corporate or individual investors but only foreign investors and local banks. The gain in stocks has

seen investors take an early position in high dividend yield stocks ahead of annual corporate announcements with banking stocks such as UBA, Zenith, FBN, Ecobank, showing significant surge while stocks like Flour mills, Nascon and Dangote Cement have also seen strong buying interest based on expectation of consistent and high dividend yield. On the flip side, in 2019 despite the cheap market valuation, post-election repricing of naira assets as well as an anticipated renewed inflow of foreign capital into Nigerian equities market, snubbed Nigerian equities. The gauge used to measure the general performance of the market ended the year down by 14.6percent to extend a decline that began in 2018. The system is awash with liquidity another N460bn OMO maturing on Thursday

and more liquidity is expected to hit the system from maturing OMO bills. “There will be a surge in

volume of the funds chasing existing investment vehicles with some of the liquidity flowing into the equities mar-

ket there would also be some profit taking in days to come as investors lock in gains after the surge,” analyst said.

L-R: Majiyagbe Abayomi, zonal secretary, Teaching Service Commission, Ifo II, Ogun State; Fakunle Adenike, principal, Community Comprehensive High School, Olambe, Ogun State; Lasilo Temitope, zonal education officer, Ifo Zone, Ogun State; Oladipupo Oyefuga, head, market risk, Stanbic IBTC Bank plc, and Taiwo Ala, head, internal control, Stanbic Bank plc, at the commissioning of the school building and library renovation for the Community Comprehensive High School, Olambe, Ogun State. Pic by Pius Okeosisi

Monday 13 January 2020

BUSINESS DAY

COMPANIES&MARKETS AVIATION

Slower economic activity takes toll on global passenger demand growth in November IFEOMA OKEKE

he International Air Transport Association (IATA) announced global passenger traffic results for November 2019 showing that though demand (measured in revenue passenger kilometers or RPKs) rose 3.3 percent compared to the same month in 2018, slower economic activity took a toll on traffic. “November’s moderate result reflects the continuing influence of slower economic activity, geopolitical tensions and other disruptions, including strikes in Europe. On the plus side, positive developments in the US-China trade talks, in tandem with signs of improving business confidence, could support an uptick in travel demand. In the meantime, continued

modest capacity growth is helping to maximize asset efficiency,” Alexandre de Juniac, IATA’s Director General and CEO said. November international passenger demand rose 3.1 percent, compared to November 2018, which was a marginal increase from the 3.0 percent year-over-year growth achieved in October. All regions recorded traffic increases, except for Latin America. Capacity climbed 0.7 percent, and load factor increased 1.8 percentage points to 80.1 percent. This was unchanged from October’s result and below the long-term trend. Capacity (available seat kilometers or ASKs) increased by 1.8 percent, and load factor climbed 1.1 percentage points to 81.1 percent, which was a record for any November.

All regions saw annual increases in traffic. African airlines’ traffic climbed 4.9 percent in November, up from 2.3 percent growth recorded in October. Challenges in the South Africa market have been more than offset by strong performance elsewhere in the region. Capacity rose 2.8 percent, and load factor climbed 1.4 percentage points to 70.3 percent. Asia-Pacific airlines saw November traffic increase 3.9 percent compared to the 2018 period, a slight decline compared to the 4.2 percent annual growth recorded in October. Capacity rose 2.8 percent and load factor rose 0.8 percentage point to 79.9 percent. While seasonally-adjusted volumes are increasing, the trend has moderated. Disruptions

President Muhammadu Buhari receiving a document from the President, Academic Staff, Union of Universities (ASUU), Prof Biodun Ogunyemi during the visit of ASUU Leadership to the Presidential Villa in Abuja.

in Hong Kong, slowing demand in India and China and less supportive business confidence in several key economies are among the contributing factors. European carriers experienced a 1.2 percent increase in November traffic, down from 1.6 percent growth in October and the

weakest outcome since early 2013. Industrial actions (strikes) disrupted operations for a number of airlines during the month, contributing to the demand slowdown. Capacity dropped 1.1 percent and load factor rose 1.8 percentage points to 83.8 percent.

Middle Eastern airlines posted a 7.4 percent traffic increase in November, up from a 5.6 percent rise in October. Capacity was flat, and load factor soared 5.0 percentage points to 73.2 percent. The strong performance was driven by robust demand on to/from Asia and Europe markets.

Monday 13 January 2020

BUSINESS DAY

COMPANIES&MARKETS

REAL ESTATE

Etoniru offers smart home-ownership opportunity in The Sixtus ENDURANCE OKAFOR

new home ownership opportunity has just opened for investors and potential home buyers as Joe Etoniru & Associates; one of the leading real estate firms in Nigeria has launched The Sixtus, a smart home project that offers convenience, luxury and advanced control system. Offering four units of fourbedroom terrace duplexes and two units of five-bedroom detached duplexes, The Sixtus is set within a serene, beautiful and easily accessible location in Lekki Phase One. According to Chidi Etoniru, Managing Partner of Joe Etoniru and Associates, the contemporary design by the Lagosbased real estate firms gives each homeowner the advantage of their own space with beautiful scenery and adequate serenity. “The Sixtus is one of the projects in our smart home series which offers convenience, luxury and advance home control systems to our prospective homeowners and investors,” Etoniru said. Describing the luxury project which comes at an affordable

rate, Joe Etoniru and Associates said the Sixtus consists of ensuite rooms, smart lighting, smart access control by Alexa, automatic blind control, smart locks and automated gate control. “The Sixtus is a masterpiece that not only gives buyers the convenience they deserve but also rewards investors with the

ultimate value,” the company said in a statement. The location of The Sixtus project which is being delivered in partnership with CREATE-am Nigeria Limited avail residents easy access to schools, grocery stores, banks, hospitals, police stations, worship places, relaxation centres,

restaurants, gyms, and beach. The project which offers a 12-month payment plan has smart living facilities that include blinds, electronics, lights, doors, Closed-circuit television (CCTV), gate. “From motion sensors light controls to CCTV viewing from anywhere in the world, every home in the Sixtus

Ifeanyi Okowa (2nd l), Delta governor, flanked by his wife, Dame Edith (2nd r); Kingsley Otuaro (l), deputy governor, and James Manager (r), senator representing Delta South senatorial District, answering questions from Journalists shortly after a thanksgiving service to celebrate the governor’s Supreme Court Victory at the Government House Chapel, Asaba.

is fully automated with enough control over your home,” Joe Etoniru and Associates assured. Some of the past projects delivered by the real estate company include a set of luxury five-bedroom fully detached house with penthouse in Pinnock Beach Estate, Osapa London and has facilities like swimming pool, carport and fully fitted kitchen with gas cooker. The real estate firm has also delivered luxury 5-bedroom fully detached house with a room BQ in Megamound Estate, Ikota, and was built with an indoor 6-seater cinema, fully fit-

ted kitchen with gas cooker, automated smart home controlled by Alexa Air conditioner, and a fire hydrant for emergencies. With decades of experience in Nigerian real estate market, Joe Etoniru and Associates offers activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of developed land/landed property. The real estate development arm of the company also helps investors and homebuyers in realising their ideas or dream homes from paper to real property.

Monday 13 January 2020

BUSINESS DAY

COMPANIES&MARKETS MARKET

More foreign borrowing seen in 2020 HOPE MOSES-ASHIKE

he expectation of some Nigerian analysts is to see the Federal Government embark more on foreign borrowing this year. “We expect the Federal Government to seek more foreign borrowings, preferably from multilaterals at concessionary interest rates, although Eurobond issuance remains a viable option even at relatively cheaper cost,” analysts at Cowry Asset Management said. The implication of borrowing more according to Johnson Chukwu, managing director of Cowry Asset Management Limited is that it would lead to increase in interest service. Nigeria’s actual external debt service payments stood at $ 65,849.96 in second quarter, 2019 according to data from the Debt Management Office (DMO). Chukwu told BusinessDay by phone that since it is going be at a concessionary rate the impact will not be severe on the economy compared with when borrowing from the

commercial market. Given the ratio of external debt to total debt of 32 percent as at June 2019, it has enough legroom to borrow up to 40 percent of its total debt stock. “We also anticipate more T-bill issuances both for funding its budget deficit and for refinancing maturing short term debt at lower cost”. The Central Bank of Nigeria (CBN) will issue a total of N847.4 billion treasury bills in the first quarter of 2020 as the same amount will be maturing between December and next quarter, next year. The CBN stated this in the Nigerian Treasury Bills issuance programme calendar released on Wednesday. The breakdown of the Tbills programme to be issued in the next three months of year 2020, which represents the amount that will mature during the period consists of a total of N75.6 billion for 91 days tenor, N141.04 billion for 182 days tenor and N630.8 billion for 364 days tenors. The CBN issues Treasury Bills twice in a month to help the Federal Government fund

its budget deficit, support banks in managing liquidity in the system and curb inflation. The inflation rate rose to 11.61 per cent in the month of October, its fastest increase in four months. Nigeria’s economy expanded 2.28 percent in the third quarter of the year with improvements seen in the telecommunications, manufacturing and so on. The analysts expect to see increased government and corporate debt issuances in 2020 as cheaper interest rates provide opportunities for refinancing. According to its borrowing plan for 2020, Federal Government is expected to issue at least N850 billion worth of domestic debt – although “we expect an increase in actual borrowings to finance its capex plan as revenue forecasts appear quite optimistic”. At the Government securities market, NTBs and long-term FGN Bonds were issued on behalf of the DMO in the month of November 2019 according to the CBN’s economic report.

L-R: Toyosi Akerele-Ogunsiji, founder/CEO, RISE Networks; Olatunde Adekola, senior education specialist, World Bank, and Gbenga Omolokun, executive director/COO, VFD Group at the Workplan 2019 conference, theme: ‘The Future of Work and the 4th Industrial Revolution Powered by Local Content’ organised by Rise Networks, in Lagos

L-R: Jegede Olajide, MD/CEO, ABUCOOP Microfinance Bank Limited; Abubakar Sadiq Suleiman, president, NNPC Cooperative, and Micheal Arokodare, chairman, board of director, at the 2018 annual general meeting of the Bank in Abuja. Pic by Tunde Adeniyi

Monday 13 January 2020

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: January 10 – January 17, 2020

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

Credit to Private Sector (N’ trillion)

26.41

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019

Currency in Circulation (N’ trillion)

2.20

Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

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

11.85

Increased to 11.85% in November 2019 from 11.61% in October 2019

Monetary Policy Rate (%)

13.5

Adjusted to 13.5% in March 2019 from 14%

Interest Rate (Asymmetrical Corridor)

13.5 (+2/-5)

Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million)

38.32

January 8, 2019 figure — a decrease of 0.56% from January start

Oil Price (US$/Barrel)

66.21

January 9, 2020 figure— a decrease of 7.15% from the previous wk

Oil Production mbpd (OPEC)

1.80

November 2019, figure — a decrease of 0.33% from October 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

10/01/20

03/01/20

29,415.39

26,968.79

9.07

15.17

13.02

16.55

Volume (bn)

0.28

0.61

(53.86)

Value (N’bn)

4.82

3.76

28.01

NSE ASI Market Cap(N’tr)

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

10/01/20

03/01/20

Indicators

10/01/20

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

1-week Change

YTD Change

(%)

66.21 2.15

(7.15) 1.42

2.71 (29.65)

2577.00 117.20 70.98 13.70 563.25

1.62 (7.93) 3.08 2.78 1.26

33.11 (9.98) (8.41) (10.63) 29.93

1549.50 17.92 280.80

0.22 (1.27) 1.19

17.60 4.25 (14.34)

OBB

9.71

2.36

735

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N

10.71

3.07

764

Tenor

Friday

Change

CALL

11.31

3.00

831

(%)

(Basis Point)

10/01/20

03/01/20

30 Days

9.61

10.77

(116)

90 Days

9.67

10.67

(100)

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

10/01/20

03/01/20

10/12/19

Official (N)

306.95

307.00

306.90

Inter-Bank (N)

362.22

364.44

362.95

0.00

362.00

363.00

BDC (N) Parallel (N)

1 Mnth

3.40

4.01

(61)

3 Mnths

3.54

4.47

(92)

6 Mnths

3.83

4.46

(63)

9 Mnths

4.42

5.10

(68)

12 Mnths

4.68

5.29

(61)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

3-Year

Global Economy In the US, unemployment rate remained unchanged at 3.5% in December 2019, the lowest level since 1969. Data from the Bureau of Labor Statistics revealed that the number of unemployed people decreased by 58,000 to 5.75 million while employment rose by 267,000 to 158.80 million. Nonfarm payrolls increased by 145,000 jobs last month, with manufacturing shedding jobs after being boosted in November by the return to work of about 46,000 production workers at General Motors after a strike, the government's survey of establishments showed. The labor force participation rate was unchanged at 63.2%. In a separate development, Brazil inflation rose to 4.31% year-on-year in December 2019 from 3.27% in November, the highest rate since May 2019. It was driven by higher prices in food and beverages, transport, health, personal expenses, and communication according to Brazilian Institute of Geography and Statistics. Considering 2019 full year, the average inflation picked up to 4.31% from 3.75% in 2018. Elsewhere in China, inflation rate was steady at 4.5% in December 2019, same as prior month. It remains the highest rate since January 2012 as pork prices surged 97% on the back of a prolonged African swine fever epidemic according to the National Bureau of Statistics of China. The government previously said it will use its reserves to provide enough pork supply to meet higher demand ahead of the Lunar New Year holidays later in January. Food inflation eased to 17.1% from 19.1% while nonfood cost rose at a faster 1.3% (1%). For full 2019, consumer inflation was at 2.9%, in line with the government target of 3%.

Friday

Change

(%)

(Basis Point)

10/01/20

03/01/20

0.00

Index Mkt Cap Gross (N'tr)

Mkt Cap Net (N'tr)

5-Year

9.19

9.31

(12)

YTD return (%)

7-Year

10.02

10.30

(27)

YTD return (%)(US $)

10-Year

10.49

10.76

(27)

Friday

Change

(%)

(Basis Point)

10/01/20

03/01/20

3,545.02

3498.17

11.08

10.93

1.35

7.45

7.32

1.79

44.32

42.41

1.91

-11.50

-13.43

1.93

20-Year

11.32

11.72

(40)

TREASURY BILLS (MATURITIES)

30-Year

12.36

12.77

(41)

Tenor

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

91 Day 182 Day 364 Day

Amount (N' million) 10,000.00 20,000.00 3,000.00

1.34

Local Economy The Nigerian Stock Exchange (NSE) published its monthly Domestic & Foreign Portfolio investment report for November 2019. The report revealed that the total transactions at the nation's bourse increased by 5.74% to N172.52 billion from N163.16 billion recorded in October 2019. The total value of transactions executed by foreign investors outperformed transactions executed by domestic investors by 2%. Total domestic transactions increased by 44.30% to N85.76 billion in November from N59.43 billion in October 2019. However, total foreign transactions decreased by 16.36% to N86.76 billion from N103.73 billion during the same period. Total domestic transactions, which is split into retail and institutional investors, revealed that institutional investors outperformed retail investors by 24% during the period. Total retail transactions jumped by 76.69% to N32.21 billion in the reference month from N18.23 billion in October. Likewise, the institutional composition of the domestic market increased by 29.98% to N53.55 billion in November 2019 from N41.20 billion in the preceding month. The performance of the current month when compared to the performance in the same period (November 2018) of the prior year revealed that total transactions increased by 15.23%. In a separate development, the federal government said that small business with a turnover of less than N25m will be exempted from Companies income tax while those that earned between N25m and N100m yearly would pay 20% as Companies Income Tax when the Finance bill of 2019 is signed. Currently, all companies are expected to pay to the Federal Government 30% of their profits as Companies Income Tax. The Minister of Finance, Budget and National Planning said those earning over N100m would continue to pay the 30% of their profits as CIT. The minister said, “Not only will small businesses be able to do more because they are not paying taxes, we are also working together with the trade authorities to also encourage people in the informal sector to become formalised because they will see other businesses like them that are registered doing well”.

institutional investors repositioned their portfolios ahead of the coming earnings season. Consequently, the All Share Index (ASI) jumped by 9.07% to end at 29,415.39 points from 26,968.79 points the previous week. Similarly, market capitalization rose by 16.55% to N15.18 trillion from N13.02 trillion the prior week. We expect investors to take advantage of low prices and positive macroeconomic indices to support the market. Money Market Short term rates climbed higher in the week ended January 10th, 2020 due to outflow about N100 billion from banks position for FX auctions. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates closed lower at 9.71% and 10.71% from 2.36% and 3.07%. The slightly longer dated instruments such as 90-day Nigeria Interbank Offered Rate (NIBOR) settled at 9.67% from 10.67% the prior week. This week, we expect rates to drop in anticipation of Primary Market Auction (PMA) maturity of N152 billion and Open Market Operation (OMO) maturity of N434 billion. Foreign Exchange Market The local currency firmed up across most market segments last week. The official rate marginally strengthened ending at N306.95/$, a 5 kobo gain from the prior week whilst the Nigerian Autonomous Foreign Exchange (NAFEX) gained N2.22 to close at N362.22/US$ from N364.44/US$ the previous week. The parallel market remained unchanged week-on-week at N362/US$. The appreciation recorded in the official and NAFEX market segments may be attributed to the apex bank's regular interventions. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Bond Market Average bond yields declined in the week ended January 10th, 2020 due to strong demand on the 2023, 2026 and 2027 maturities. Overall yields on the seven-, ten- twenty- and thirty-year debt papers finished at 10.02%, 10.49%, 11.32% and 12.36% from 10.30%, 10.76%, 11.72% and 12.77% respectively, the previous week. Consequently, the Access Bank Bond index increased by 134 points to close at 3,545.02 points from 3,498.17 points the prior week. We anticipate a quiet week as yields have lightly peaked out and reached a possible resistant level. Commodities Market Oil price plummeted last week after the US president said that Iran is standing down in the Middle East and that Washington will impose new sanctions on the nation instead of retaliating with military force. Bonny light, Nigeria's benchmark crude lost 7.15% or $5.1 cents to close the week at $66.21 per barrel. Precious metal prices went in varying directions as gold prices rose while silver prices fell. Gold price came on the back of a rise in demand amid weak equities and bullish global trends. Consequently, gold gained 2.38% to $1,549.50 per ounce while silver fell by 1.27% to $17.92 per ounce. This week oil prices are likely to remain stable while the world waits to see if there will be any further reprisal attacks by the Iran government. Precious metal might decline this week due to profit booking as investors take advantage of the high price.

MONTHLY MACRO ECONOMIC FORECASTS Rate (%) 3.5 4.9 5.495

Date 2-Jan-2020 2-Jan-2020 18-Dec-2019

Stock Market Indicators at the local stock exchange continued their bullish trend for the second consecutive week. Bargain hunting during the period was driven by the thirst for undervalued equities and the changing trading pattern supported by the inflow of funds as

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

Feb’20

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@Businessdayng

Mar’20

363

362

11.90

11.96

12.1

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

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

www.businessday.ng

Jan’20

Monday 13 January 2020

BUSINESS DAY

insurance today

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E-mail: insurancetoday@businessdayonline.com

NAICOM, PenCom pushes more protection for retiree annuitants, group life policy holders ...regulation review to be completed Q1 Modestus Anaesoronye

n other to ensure adequate protection of retirees opting for annuities at the point of retirement and group life insurance policy holders, regulator of the insurance industry, the National Insurance Commission (NAICOM) and its pension counterparts, the National Pension Commission (PenCom) are embarking on review of the regulations for both products According to NAICOM, the review which is to ensure that there is effective administration both products will be concluded by March, 2020. The Commission said prudent administration of Annuity and Group Life Assurance business will ensure adequate protection of enrolled persons. In this view, there is an ongoing collaboration between NAICOM and PenCom to ensure success of the scheme, as the size of the funds grow bigger and bigger. Sunday Thomas, acting commissioner for Insurance said recently that with pension assets under management now almost at N10 trillion, a lot of fund will be emtied into the insurance industry through the retiree life annuity. He said it’s because a lot of retirees were beginning to understand the benefits of annuity and its relevance as a retirement plan. “We are expecting that a lot of the pensions will be emptied in insurance through retiree life annuity,

Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance Plc and president, Chartered Insurance Institute of Nigeria (CIIN) middle dressed in Royal attire , surrounded by insurance industry practitioners at the Celebration of his Mother who was called by the lord at 110 years in Warri Delta Sate weekend.

so there is need to prepare on how to manage these funds to protect the interest of subscribers because it will come with its own challenges, Thomas said. The Acting Commissioner said that the public was becoming more exposed and knowledgeable about the workings of annuity. “This we expect will continue, as the future is looking very bright for the business as we have witnessed. “This has also shown a positive growth in trust and confidence in the sector,” he said. According to him, the commission is committed to ensuring financial soundness and viability of the insurers and the adequate protection of policy holders at all times. He said that the commission would continue to ensure that genuine claims were promptly paid, while also ensuring a reasonable protection of investments of

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shareholders. “In demonstrating its willingness to protect the policy holders, the commission has further strengthened its Complaint Bureau Unit to respond to public complaints over claims settlement. “Available statistics have shown that there have been great improvement in this area,” he said. NAICOM says 2020 is a year to turn around the fortunes of the insurance industry. Thomas speaking at seminar for journalist with the theme “Strategic Focus of the Commission in Year 2020; From Compliance to Development” held in Kano, North-Western Nigeria said that the turnaround could, however, not be achieved without digital processes, urging all stakeholders in the industry to embrace it. “As we may all be aware, the industry is currently lagging behind other financial

services sectors in this area. “The Commission is working vigorously to see that all its operations are digitalized. “The year 2020 is a year for us to turn around the fortunes of the industry, and this cannot be accomplished without digitalizing our processes and encouraging the industry to imbibe same,” he said. The Acting Commissioner emphasised that the right pricing of insurance products and effective deployment of technology for ease of transaction were among its key areas of emphasis in 2020. He said that NAICOM would also vigorously pursue the continued implementation of compulsory classes of insurance in every nook and cranny of the country. Thomas said that the commission was not unaware of the challenges inhibiting the successful implementation of such classes of

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insurance, but had resolved to work with relevant stakeholders to ensure a seamless drive. According to him, the successful implementation of compulsory classes of insurance across the nation will ensure adequate protection of strategic national assets: “We will be working with the relevant security agencies to guarantee effective and efficient monitoring of compliance.” Thomas said that the commission would continue to deploy more energy and resources in building public trust and confidence in insurance, despite years of poor perception. He said the annuity business made headlines recently with a boost in the contribution of the business to the sector.Thomas also revealed that the second phase of the Market Development and Restructuring Initiative (MDRI) would soon be unveiled. According to him, when released, it will mark out clear targets and tasks for all stakeholders to achieve. He said that while financial inclusion strategy had been central to the Federal Government developmental plan, the commission had over the years invested hugely in the development of such mechanisms. Thomas said that investment in this regard include the introduction of Micro insurance and Takaful Insurance products. He said the introduction of such lines of insurance was intended to deepen the penetration of insurance in the country and bring

@Businessdayng

into the fold majority of the populace that were hitherto excluded. “So far, some milestones have been recorded in this regard with three standalone Micro insurance and four Takaful insurance companies already granted approvals,” he said. According to him, the commission will in 2020 continue to introduce new reforms and initiatives in line with international best practices for attaining the level of growth and development desired for the sector. The Acting Commissioner said that as the year continues to unfold, giant strides would be made by the commission in all aspects of its statutory responsibilities. Thomas said that the initiative of the commission to recapitalise the insurance sector was a move to ensure that the industry became more robust in its technical competence and financial base. He said it was also to build confidence, trust and enhance market value. According to him, this is aimed at repositioning the sector for self-actualisation in terms of growth and development. “Let me state in clear terms that the recapitalisation process is up and running in line with the roadmap and the Commission will see to its logical conclusion come December 31, 2020. “The task of building an insurance sector of our dreams is a collective one and thus, all hands must be on deck to ensure our dreams become realities,” he said.

Monday 13 January 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Launch of NAICOM portal next big game after recapitalisation Modestus Anaesoronye

he game changer post recapitalization is the launch of the National Insurance Commission (NAICOM) portal. This will change the way insurance is operated in Nigeria and how the insuring public is served, says that Commission. According to NAICOM, no operator will need to be compelled as all activities of the companies and their operations will be captured and monitored in the long awaited portal. The battle therefore to win more customers for increased revenue and profitability will put more pressure on companies as managements will have to thinker with strategies to deliver value and remain in business. Firms will be more faced with the challenge to enhance quality of service, product development and distribution channels in ways that are also cost effective. Analysts say though it is worldwide challenge because there is shrinking income amid economic crises across countries, so requires that firms think outside the box to be able to make profit and enhance shareholder value. Godson Ukah, managing partner, Premium Debate had said the competition

L-R: Edwin Igbiti, MD/CEO, Niger Insurance Plc; Steve Odigbo, regional director, WAICA Re; Shola Tinubu, MD/CEO, SCIB and Gbenga Olawoyin, MD/CEO, Prorisk Insurance Brokers at the celebration of life of late Omotesiri Erhuavworho, mother of Eddie Efekoha, managing director/ CEO, Consolidated Hallmark Insurance Plc /president , Chartered Insurance Institute of Nigeria(CIIN) held in Warri, Delta Sate weekend.

in the market is intense because there is struggle to share the few and available customers particularly in the corporate sector. This is the time to device new products and come up with innovations that make the larger population embrace insurance products, Ukah stated. Analysts from PwC in a report on insurance sector in 2014 observed that customer behavior is a complex subject that affects the insurance industry in fundamental ways, from product development, marketing and distribution to management, financial reporting, and risk management. In 2014, LIMRA and PwC

completed an extensive research study on customer behavior and a key finding of this study was that the life insurance industry lags the property and casualty insurance industry (and both lag other industries) in using advanced analytical techniques to better understand customers. However, the gap is beginning to narrow as more and more insurance companies are realizing the benefits of using advanced analytics for designing products, segmenting markets, developing distribution strategies, and managing inforce business, setting assumptions for financial reporting, and developing

metrics for risk management. According to the report, a growing number of insurance companies have developed a new area of expertise (or center of excellence – COE) to serve the increasing need for data analysis, predictive analytics, and behavioral simulations. The mission of this new COE is to work with actuarial, distribution, marketing, underwriting and inforce management areas to address such questions as: • How do we improve the sales productivity and profitability of our agency force? • How can we more quickly and accurately iden-

tify emerging experiences? • How should our capital allocation strategy respond to different economic or regulatory changes? To understand customer behavior requires a change in insurers’ mindset. First, it is important to view the customer not just as a male age 40 nonsmoker, but as part of a household. Viewing the customer as part of a household switches the focus to- the composition of that household and how it changes over time; the life events, such as having children, that take place in the household; the household’s income, spending, and savings

habits; the type of assets the household owns and the liabilities it owes; and the choices the household makes, both rational and behavioral. Another issue the report raised is that, simulating customer behavior under multiple scenarios can help insurers develop a more holistic understanding of the choices policyholders make. They will discover that certain customer behaviors that seem “irrational” may actually reflect their relatively limited view of customers’ personal circumstances. For example, classifying a customer’s actions as “irrational” because he surrenders a variable annuity contract that was deeply “in-the-money” may be inaccurate. The customer may have needed the cash surrender value to make mortgage payments or cover a large, unexpected medical expense. • These types of behavioral simulations are possible because of the ability to store vast amount of digital data inexpensively, and because the computational speed of computers allows insurance companies to analyze diverse data sources and to form connections that were inconceivable ten years ago. This has given rise of the new profession of “data scientist,” an individual or a team of individuals with strong analytical skills and expertise in particular subject matter or business domains.

Leadway Assurance appoints CEO, as Oye Hassan-Odukale retires Modestus Anaesoronye

eadway Assurance Company Limited announces the retirement of Oye Hassan-Odukale as MD/ CEO. After three decades of nurturing the company in executive capacity, Oye has picked this moment to bow out. During his tenure, Oye saw the business grow from a small regional company into one of Nigeria’s foremost insurance companies, attaining the number one position in terms of GPI and

Balance Sheet Size. Oye is succeeded by Tunde Hassan-Odukale as the organization’s Managing Director/ CEO effective January 01, 2020. Tunde Hassan-Odukale has been a key member of Leadway’s executive and leadership team since 1999, previously serving as the company’s executive director, Financial Services and Systems. Announcing Tunde’s appointment, Leadway’s outgoing CEO, Oye HassanOdukale stated that “In his 30 years of leadership experience at Leadway, Tunde www.businessday.ng

Tunde Hassan-Odukale, managing director/ CEO, Leadway Assurance

has been the driving force behind the tremendous growth we have seen in the areas of Life Assurance, Investments, Finance and Technology. This makes him a natural successor to steer Leadway to its next phase in history”. He commended the professional team at Leadway, emphasizing his confidence that “Tunde will build on the Company’s legacy with their unflinching and committed support.” Reflecting on his appointment, Tunde said: “I am honoured, yet humbled to lead this company

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at a time like this. We have a customer-centric culture and an engaging approach that has enabled us to grow strongly through the years. Building on this legacy is a challenge that I accept together with our professional team. We are where we are because our clients, brokers and direct customers trust our ability to support them in a friendly, empathetic and reliable manner. This is humbling and our ambition to continue to deliver remains fierce. I am passionately committed to consolidate on existing achieve@Businessdayng

ments by placing our clients at the absolute centre of everything we do.” Tunde, 55, is a graduate of the University of London and City University, London. He holds a Bachelor Degree in Pure Mathematics and is an alumnus of the Lagos, London, Harvard and Stanford Business Schools. He sits on the board of directors of various blue-chip companies, which includes First Bank of Nigeria Limited. He is a member of the Royal Society of Mathematics, the Institute of Actuaries and the Institute of Directors.

Monday 13 January 2020

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

How corporate cultures differ around the world J. YO-JUD CHENG AND BORIS GROYSBERG

hen we launched an online assessment to allow HBR readers to explore their own organizations’ cultural profiles, we received over 12,800 responses from across the globe. The assessment gave us a window into the shared, pervasive, enduring and implicit behaviors and norms that permeate an organization (rather than individual employees’ own culture styles). DIFFERENCES ACROSS REGIONS: In this global sample, some patterns were remarkably consistent across regions. On average, caring ranked highly across all regions, while authority ranked among the least salient culture attributes. However, when we examined whether certain culture styles were more heavily represented in specific regions, some interesting differences came to light. RESPONDING TO CHANGE: We found that organizations in Africa exhibited substantial flexibility. Many organizations in this region were characterized by learning and purpose, indicating an openness toward change through innovation, agility and an appre-

ciation for diversity. In contrast, many firms in Eastern Europe and the Middle East were characterized by a strong degree of stability. An emphasis on safety was prevalent in these regions, revealing the prioritization of preparedness and business continuity. Particularly in the Middle East, we found many firms in which authority ranked highly. HOW PEOPLE INTERACT: Firms in Western Europe and in North and South America leaned toward a high level of

independence. This tendency manifested itself in different ways. Western European and North American firms exhibited an especially strong emphasis on results, goal-orientation and achievement. Relative to other regions, enjoyment ranked highly in South America. Firms in Asia, Australia and New Zealand were more likely to be characterized by interdependence and coordination. In these regions, we found workplaces that embodied caring, and a sense of safety and plan-

ning. Particularly in Asia, we found many firms that emphasized order through a cooperative, respectful and rule-abiding culture. WHAT DOES THIS MEAN FOR EMPLOYEES? It can be informative to take stock of how our own work styles mirror or differ from regional culture patterns, especially when considering how our behaviors and actions will be perceived by others. WHAT DOES THIS MEAN FOR MANAGERS? Particularly

when managing global teams, employees’ implicit values and beliefs can lead to misunderstandings and tension. Cultural considerations also come into play when motivating employees, designing incentive schemes, training new employees and implementing decision-making processes.

(J. Yo-Jud Cheng is an assistant professor at the Darden School of Business. Boris Groysberg is a professor at Harvard Business School.)

Don’t mistake execution for strategy GRAHAM KENNY

business involved in conducting clinical trials for medical and pharmaceutical companies recently sent me a copy of their strategic plan for review in preparation for a forthcoming strategic planning workshop. I studied the nine pages carefully. But despite its promise to outline the company’s “Mission, Vision, Strategies, and Actions,” the document contained no real strategy. Strategy design involves detailing positions to take on what I call strategic factors. These are the decision criteria used by key stakeholders, i.e., the criteria used by customers in deciding to buy from a business, or by employees in deciding to work for an organization or by suppliers in deciding to supply to a company.

Strategy design must take place at the organization level. Executive teams struggle with strategy design because they don’t adopt organization-level thinking at the start. They rush

to execution at a strategy retreat, because they invariably arrive ready to address what they need to do. Unless the doing impulse is switched off, until design is ready, the cart gets

put before the horse. What any planned workshop has to achieve is clarity on the company’s positioning on the strategic factors for its key stakeholders and a stripping

away of nonessential actions, leaving only those which clearly drive these positions. To do that you need to shift the executive team’s thinking — away from individual action and up to organizational positioning. In preparation for your next strategy retreat, recognize that underpinning the essential difference between strategy design and execution is level of analysis. While most participants may be unaware of it, it is one of the most important and useful concepts in social science. Strategy design operates at the organization level. Strategy execution operates at the individual level. If you don’t make this distinction, you’ll be committing the error of mistaking individual action for strategy. And that can be disastrous.

(Graham Kenny is managing director of Strategic Factors, a Sydney-based consultancy.)

Monday 13 January 2020

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

Dear HBR: On how to handle troublesome teammates AMY GALLO

successfully referred a friend’s friend to be my peer on my team. We’re under the same manager. She was very appreciative of the referral and was very friendly when I trained her on the job. However, shortly after I finished training her, she turned around and tried to compete with me, and became very aggressive and sneaky. What should I do? A: One of my first instincts in any conflict situation is to try to think about it from the other person’s perspective. Annie McKee, the author of “How to Be Happy at Work,” says you need to have cognitive empathy (the ability to understand another person’s perspective) to “unearth your curiosity” when someone is bothering you. Ask yourself: What’s motivating your peer to behave this way? What could be going on here? You may not have the answers to these questions, so you should consider gathering more information and figure out whether others in the office perceive this woman in the same way you do. People may be having a similar reaction and not telling you because they know you referred her. If you find out that she is actu-

ally well-respected, don’t try to convince everyone that she’s a jerk. Try to understand why others may be working well with her when you aren’t. Is there something about the dynamic between you two that’s causing problems? You might consider having a direct conversation with her to try

to clear the air. When you talk to your co-worker, be specific about what’s happened and how it’s made your job harder. And then ask her how she sees the situation. That said, I suspect that that conversation might not go well. It’s always better if you can solve

the issue yourself without your manager stepping in. If you find that the conversations with your peer, and your boss, don’t change the situation, you’ll need to protect yourself and change your mindset. Otherwise, this is likely to eat you up inside. And have some self-compassion. Remem-

ber: It’s much easier to try to change your reaction to someone than to change them.

(Adapted from an episode of “Dear HBR.” Amy Gallo is a contributing editor at Harvard Business Review.)

Is China actually stealing American jobs and wealth? and Amazon. To be sure, China and the United States are not without their troubles. Both countries are showing stubborn growth in their carbon footprints and military spending, to name just two disturbing trends. But the data of the last 25 years portray U.S.-China commerce as the most synergistic bilateral relationship in world history, bringing peace along with mutual prosperity.

JOHN L. GRAHAM AND BENJAMIN LEFFEL

he current U.S. administration sees China as the United States’s principal global rival, and it has effectively declared economic war on the country. Its justification is largely that China is stealing American jobs and pirating American intellectual property. Data collected by the Long U.S.-China Institute suggest that China is far less guilty of these crimes than many policymakers and commentators would have us believe. The U.S. granted Permanent Normalized Trade Relations, or PNTR, to China in 2000 and, in the following year, China joined the World Trade Organization. Neither event hampered the steady growth in purchasing power for Americans, whose per capita gross national product rose from $37,900 to $62,600. The story on jobs is less clear, but it’s hard to argue that trade with China has had much impact on U.S. payrolls. The

(John L. Graham is a professor at the University of California, Irvine, where Benjamin Leffel is a doctoral candidate.) U.S. unemployment rate had reached a 30-year nadir of 4.0% in 2000, just before China’s admission as a PNTR and WTO member. The unemployment spike we saw in 2009 is probably best explained by the 200809 recession, and since then, unemployment has steadily declined to a rate (3.9%) lower than that reached in 2000. Few would conclude from this that trade with China has damaged U.S. incomes or jobs.

What about intellectual property theft and corruption? China has offended on these fronts. There have been welldocumented cases of IP theft and bribery. But the data shows that Chinese practices are improving. There are, of course, concerns that some Chinese firms are weaponizing the U.S. patent system to hobble U.S. innovation in key technologies — notably Huawei, which boasts

an impressive 56,492 patents worldwide. But a breakdown of comparisons of U.S. patents granted to individuals by country provides a reassuring empirical context for interpreting the headlines. What’s more, on a per-company basis, the 1,628 U.S. patents granted to Huawei in 2018 are hugely overshadowed by Samsung’s 9,245, IBM’s 9,100, and more than 2,000 each for Intel, Microsoft, Apple, Google

Brought to you courtesy of First Bank Nigeria

Monday 13 January 2020

BUSINESS DAY

real sector watch

Nosak pumps $75m into ethanol plants, readies for AfCFTA ODINAKA ANUDU

osak Group has invested more than $75 million in three ethanol plants in Nigeria even as it gets ready to tap opportunities in the African Continental Free Trade Area (AfCFTA) which begins in July 2020. In an interview with BusinessDay, Osaro Omogiade, managing director of Nosak Distilleries Limited, said his group’s investments had been huge, adding that the company would continue to pump huge amounts to tap opportunities in the economy. “Conservatively, to put up a distillery, let’s just say a 100,000-litre per day capacity distillery, you need at least $20 to $25 million. By the time you start adding storage tanks and other utilities, the cost will have been more. So, put that amount in three places and you will be looking at over $75 million. This is just being conservative. So, it is a huge investment,” he said. Nosak is a diversified business group with interests in agriculture, finance, logistics/haulage, real estate and manufacturing. The distillery plant was established in 2001 in Lagos and it manufacturers food-grade ethanol which serves as a raw material for paint makers, pharmaceuticals, soap

manufacturers, perfume makers and brewers, among others. Its distillery segment has three ethanol plants, and it has commenced the process of setting up a backward integration project in Edo State. According to Omogiade, the company was working with foreign experts in the engineering, equipment design, and fabrication in order to make the project happen. “It is our hope that the project will be completed in the next two years,” he said. He estimated the installed capacity of the company at 500,000 litres per day. “When we started in 2001, we started with a capacity of about 100,000 litres per day. But currently we have three plants in Lagos and the three of them have a total installed capacity of 500,000 litres per day,” he said. He explained that Nosak was ready and well positioned to tap opportunities in the AfCFTA. “Let me even take you from the point of the Group. The Group’s presence in the export free trade zone is an indication that we are ready. We have resumed export to neighbouring West African countries, commencing with Ghana,” he further said. The managing director said the steps taken by the company signified readi-

Osaro Omogiade

ness for the upcoming continental trade treaty. “We believe in living global because of the associated advantages. If you do export, you will hedge against the foreign exchange problems.” He noted that the company had experimented with some neighbouring West African countries, which placed it on the right footing for regional and continen-

tal competitiveness. “After Ghana, we plan to go to other African countries. That has always been our roadmap— to export to most African countries. We are also looking at other countries such as Togo, Benin Republic, Cote d’ivoire, Angola and Central African Republic. Those are the countries we are looking at, and we have the capacity to do so,” he explained. He said export expansion

was the strategic direction of Nosak Distilleries. “Beyond playing in the country, we want to extend our frontiers to African countries, especially with the coming of the African Continental Free Trade Area agreement. If you do not do that, you leave the market for foreigners. When you look at the players around, you will see that Nigeria is possibly the biggest in the whole of

Africa. So everybody must be ready,” he noted. Like other manufacturers, Nosak Distilleries faces challenges. Omogiade said one of the major challenges was poor state of infrastructure. “Most of our roads are not accessible. When we have products, goods and services to deliver, the turnaround time is longer than necessary,” he said. “Where ordinarily you should spend two hours, you may end up spending 20 hours. Your customers sometimes may be unwilling to come because of the roads. Also, it adds to the cost. You spend more money on petrol or diesel as well as more time on the road. For a journey of two days, you spend one week,” he said. He said government must intervene in the area of infrastructure to save businesses from shutting down. “That is one area we need government intervention. Power is also a challenge. When we set out, we said to ourselves, ‘The power situation in this country is not so good. If we depend on the national grid, we might not have it easy.’ So we invested in gas generators. As we speak, we have over 5,000KVA gas generators. Beyond that, we also invested in diesel generators of over 2,000KVA. It is very expensive, but we are able to plan our operations.”

Flour Mills rebrands two subsidiaries under agro-allied division ODINAKA ANUDU

lour Mills of Nigeria (FMN) has completed a name chang e and rebranding process for two of its subsidiaries as part of an ongoing process of creating a collective identity across its agro-allied division,. Consequently, AgroAllied Syrups Limited and Agro-Allied Farms Sunti Limited will now be known as Shao Golden Farms Limited and Sunflag Farms Limited respectively. The change, which is part of a more extensive groupwide restructuring process, commenced during the first quarter of FMN’s financial year in 2019. The management had informed that

the restructuring process was initiated to improve the efficiency and competitive advantage of its various businesses in the agriculture sector, the company said in a statement sent to BusinessDay. Shao G olden Far ms Limited (formerly, AgroAllied Syrups Limited) is one of the largest commercial cassava farms in Nigeria with over 5,000 hectares of arable land in Shao, Kwara State. The farm was established to secure timely and sufficient availability of raw materials for the operation of FMN’s downstream subsidiary, Premium Cassava Products Limited. On the other hand, Sunflag Farms Limited (formerly, www.businessday.ng

Paul Gbededo, CEO, FMN https://www.facebook.com/businessdayng

Agro-Allied Farm Sunti Limited,) is a 4,500-hectare farm along the Niger River basin. It is currently being prepared for FMN’s seed development programmes. FMN has assured its customers that the change of identity will not affect existing policies on products or customer relations, but instead improve their existing quality commitments. With the new brand i de ntit y, Sha o G o ld en Farms Limited and Sunflag Farms Limited’s are now in line with the broader brand guideline of FMN Agro-allied division and are poised to continue to deliver on the promise of producing quality products to customers. Incorporated in Septem@Businessdayng

ber 1960 and quoted on the Nigerian Stock Exchange since 1978, FMN Plc is one of Nigeria’s leading food and agro-allied companies. It is a fully integrated and diversified food and agroallied group. The FMN group strives in its mission to ‘Feed the Nation, Everyday’ through its five core food value chains: Grains, sweeteners, oils and fats, proteins, and starches. FMN creates value along the entire food chain with its ‘farm-to-table’ model by providing inputs and knowhow to farmers, aggregating and sourcing crops and raw materials to supply its processing facilities across Nigeria, and distributing its innovative food brands to its customers.

Monday 13 January 2020

BUSINESS DAY

real sector watch

Nestlé Nigeria: Positioned for growth amid economic uncertainty Gbemi Faminu

N Profile

estlé Nigeria is a giant in the fast moving consumer goods (FMCG) industry and one of Nigeria’s largest food and beverage companies. It has its headquarters in Switzerland. The company commenced operations in Nigeria in 1961 and was listed on the nation’s bourse in 1979. From its first factory commissioned in 1982, Agbara, Ogun-State, it currently has three manufacturing sites, with a recently commissioned water factory in Abaji— outskirts of Abuja. The principal activities of the company include manufacturing, marketing and distribution of food products, including purified water throughout the country. The company also exports some of its products to other countries within and outside Africa. Backward integration Nestlé Nigeria is known for its active role in backward integration and local sourcing of raw materials in the country. According to its manufacturing operations report, the company purchases its raw and packaging materials majorly from local sources, as it hopes that it will help develop the economy, create job opportunities and strengthen the naira. With a wide variety of products ranging from cereals to milk, coffee, seasoning, spices to beverage, Nestlé is the fourth largest company in the Nigerian bourse after Dangote, MTN and, recently, BUA. It sources 80 percent of its maize, sorghum, millet, soya, cassava starch, cocoa powder, and palm olein from

more than 41, 600 local farmers and processors scattered across the country. Nestlé Cereals Plan project has over 30,000 farmers who supply 100 percent of the grain requirement for Golden Morn Maize. Through its Sorghum and Millet in the Sahel (SMS) project, now called Nestlé Nigeria & IFDC / 2Scale Project Sorghum & Millet, it engages a lot of farmers, thereby raising their incomes while reducing unemployment. In the course of this project, the food and beverage giant has engaged no less than 10,671 farmers. Nestlé Nigeria helps farmers improve their living by investing in sustainable farming practices through the Sorghum and Millet in the Sahel and Feed Future Nigeria and Nestlé Maize Quality Improvement projects. According to the company’s financial report, “80 percent of the agricultural input in our production is sourced locally. In addition

to providing a steady source of income by buying directly from local aggregators and farmers, we have trained more than 30,000 farmers on good farming practices to not only increase productivity but also improve the quality of the grains to meet Nestlé’s high-quality standards.” The company also sources over 90 percent of its packaging materials locally. The company says it is exploring more local sourcing opportunities, which still exist for various spices, vegetables and high-quality cassava flour, adding that it plans to increase its backward integration profile from its current level of 80 percent following its drive to support the growth of SMEs in Nigeria through its initiatives. At its 2019 Suppliers’ Day event in Lagos, Nestor Finalo, supply chain manager for Nestlé Nigeria, disclosed that local suppliers constituted more of its direct suppliers as the company had up to

1,000 direct suppliers with 700 locally, adding that the food maker planned to bring in many more local suppliers as long as they were able to fulfil all the requirements attached. “Responsible sourcing has always been at the core of Nestlé Nigeria’s operations. We are committed to long-term partnerships with our suppliers as we sustain efforts towards increasing the percentage of raw and packaging materials sourced locally,” Finalo had said. Financial and market performance Nestlé, with a strong portfolio, has been on top of its game for many years and has maintained a profile of continued growth in revenue and profits, surviving economic headwinds unlike many peers in the FMCG industry. According to a public statement from the company, “Nestlé is committed

to margin expansion. We have set an underlying trading operating profit margin target of 17.5 percent to 18.5 percent by 2020, up from 16 percent in 2016. “Our primary driver is to reduce structural costs in non‑consumer facing areas. Well‑identified projects in manufacturing, procurement and general administration are expected to deliver total savings of CHF 2.0 to 2.5 billion ($2.05 billion to $2.57 billion) by 2020.” BusinessDay analysis of Nestlé’s financials for nine months to September 30, 2019 showed that the company recorded revenue worth N211 billion, which was a four percent increase from the N203 billion recorded in the same period of 2018. This was in spite of serveral uncertainties in the Nigerian economy, particularly low consumer purchasing power and deepening poverty. The bulk of its revenue came from its food subsector which contributed N131.8 billion. Its beverage subsector contributed N79.5 billion while the company got N3 billion from its export earnings. Its profit before tax also grew between January and September, 2019, reaching N56 billion, which is 18 percent higher than N 48 billion achieved in the same period of 2018. The company recorded N36.8 billion as its profit for the period, representing an 11 percent increase from the 33.1 percent realised in 2018. However, Nestlé’s total equity and share capital remained the same, having N56 billion and N396 million respectively in 2018 and 2019. Further analysis of its financials shows that the company may realise revenue worth N281 billion for the full year of 2019, represent-

ing a 5.6 percent increase in its income. It is able to efficiently use its assets and shareholders’ funds to generate earnings. In 2018, its return on assets and equity hit 5-year high and till date, it remains one of the top performers on the exchange with a share price of N1, 469 per share. CSR Activities Nestle Nigeria is an advocate of giving back to its host community as it actively engages in corporate social responsibility (CSR), especially in activities that centre around SME development, environmental protection, and technological advancement, among others. In 2019, it established its Research and Development (R&D) Innovation Challenge as part of the efforts to contribute to the local innovation ecosystem, with the hope that it will help boost local entrepreneurship as well as provide a platform for start-ups, researchers and developers to contribute to local sustainable growth by bringing breakthrough ideas to the market. The company, also in 2019, partnered with Wecylers, a start-up recycling firm to achieve a clean and healthy environment “One of our ambitions at Nestlé is to strive for zero environmental impact in our operations as we strive towards a waste-free future. A key part of achieving this goal is to make 100 percent of our packaging reusable or recyclable by 2025,” said Mauricio Alarcon, chief executive officer of Nestlé Nigeria, said recently. Aside employing members of its host community, the company also aims to help 10 million youths globally to have access to economic opportunities by 2030.

How US-Iran faceoff impacts Nigerian manufacturers Odinaka Anudu

he face-off between the United States and Iran may have caused panic across the world, but it comes with a positive impact on oil prices, which eventually favours Nigerian manufacturers. The price of Brent crude hovered around $70 per barrel last week after the United

States sanctioned the killing of Qasem Soleimani, an Iranian general. Oil price rise is always good news for Nigerian manufacturers who need foreign exchange to import raw materials and machineries. Nigeria depends on oil for over 90 percent of its foreign exchange, which manufacturers need for the importation of inputs. A drop in oil prices, as expewww.businessday.ng

rienced in late 2015 and 2016, shrinks the foreign exchange available for the economy and puts manufacturers importing inputs, machinery and packaging materials in jeopardy. According to Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN) during the oil market crisis of 2016, about 54 manufacturing firms shut down for being unable to access dollars for their inputs.

A report released by NOI Polls in association with Centre for the Studies of Economies of Africa in 2017 showed that dollar crunch forced 272 firms to shut in one year. Should oil price fall, manufacturers will, again, increase local input sourcing or scale down operations. But rising oil prices makes dollars available for manufacturers and other businesses in the economy.

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However, many manufacturers are already expanding their backward integration programmes to source more inputs locally. Utilisation of local rawmaterials by manufacturers stood at 56.6 percent in the first half of 2018, according to the Manufacturers Association of Nigeria (MAN). It, however, represented a drop by 4.12 and 9.1 percentage points from 60.72 percent @Businessdayng

in the corresponding period of 2017 and 65.7 percent in the preceding half respectively. “Local sourcing of raw-materials in the manufacturing sector slowed in the first half of 2018. This may be adduced to the general sluggishness of the economy and a renewed ability for importation of raw materials considering the tranquillity in the foreign exchange market,” MAN said in its first half of 2018 economic review.

Monday 13 January 2020

BUSINESS DAY

Start-Up Digest

In association with

10 entrepreneurs to watch in 2020 Odinaka Anudu & Josephine Okojie

espite the difficult business environment in Nigeria, the country is still a leading hub for entrepreneurship in Africa. The country has earned the position owing to a growing number of entrepreneurs, its population size and increasing number of start-ups support organisations active in the ecosystem. As a result, yearly, we are seeing more innovative entrepreneurs providing solutions to societal problems, causing disruption in their sectors while creating jobs. On this note, Start-UpDigest takes a look at some of these start-ups who will make some serious waves in the country’s entrepreneurship ecosystem in 2020. The criteria used in our assessment include, but not limited to, growth, social and economic impact, international recognition, expansion, structure of business, and potential for growth. The entrepreneurs are not in any particular order. Chibuzo Opara, DrugStoc Getting quality medicines is not always easy in a developing country like Nigeria. But the situation is gradually changing with the entry of DrugStoc, a multichannel, cloud-based platform with over 7,000 highquality drugs, co-founded by Chibuzo Opara. The platform exists to empower healthcare providers to fulfil their mandate for a healthier Africa. Opara’s DrugStoc seeks ways to improve access to pharmaceutical products and services. Opara, managing partner and co-founder of DrugStoc, says the company exists to solve the problems of fragmented supply chain market, counterfeiting and in-transparent pricing. Opara is a medical doctor and health economist. His co-founder Adham Yehia is an expert in health facilities management. Both of them met in the Netherlands while doing their post-graduate studies.

Chibuzo Opara

Adepeju Jaiyeoba

Temie Giwa-Tubosun

Abasi Ene-Obong

Adetola Nola

“By the time I got back to Nigeria, I had already met my partner. We started doing management consulting for a group of healthcare facilities and found out that sourcing quality medication and medical consumables was not optimised for the health provider. It was a lot of work finding and sourcing the right medication these facilities requested,” he says. “Back then, sourcing for medication for the facilities we managed proved challenging. If you asked us the difference between this and that drug, we would be unable to give you the assurance regarding the quality of the drugs. This was unacceptable to us, but we decided to take on the challenge head on,” he recalls. Sourcing drugs from DrugStoc is a simple process : You go on the platform, place an order and within 24 hours the products will be supplied, according to Opara. The platform offers a myriad of payment, credit and financing solutions which are adapted to the realities of the pharmaceutical supply chain in the country. The drug firm works with over 800 pharmacies and with the Association of General and Private Medical Practitioners of Nigeria, which has over 2,000 registered members. The firm deploys artificial intelligence (AI) and blockchain technology to enhance its track and trace capability with a view to sanitising the system. “What we do is to streamline the whole area by offering them value in terms of being able to get access to quality drugs,” he says. The growth of the company has been tremendous since 2017. So far,

the amount of prescriptions through hospitals and pharmacies that the firm serviced in the last two years has exceeded two million. Opara reminds Nigerians that DrugStoc’s products are not expensive because of the firm’s advantage of doing huge volumes.

in rural communities. Maternal mortality in Nigeria was 814/10,000 live births in 2014 so she needed to do something to reduce this phenomenon. “We connect women in rural areas to life-saving supplies they need at child birth. We work with women in these communities because we believe the location of a woman at child birth or her economic status in life should not be a factor in determining whether she lives or dies at child birth. The kit is an assembly of all the things which a woman needs at child birth. It is aimed at fighting the issue of accessibility and affordability of sterile equipment during child birth,” she explains. She has different manufacturing partners in Nigeria who supply her with the content of the delivery kits. In some cases, she and her team design particular sterile equipment and then ask manufacturers to produce in large quantity. The kits are, however, not completely free. They are sold in different rural communities at the cost of $5. “ Wo m e n w i t h i n t h e communities also sell the kits to traditional birth attendants, birthing homes, primary healthcare centres and other areas. From the sales of these kits, these women are also able to get incomes, support their families, start new businesses or pursue new dreams or even send their own children to school,” she says. She does not just give out kits. She tries to establish contact or relationship with the ultimate consumer of the goods. And one way in which she does that is by training birth attendants. “We have different trainings categories to different birth attendants. Our focus is on two lowest cadres of

healthcare: Community extension workers and traditional birth attendants. Since 2014 when the mother of two boys started till July 2019, she has sold over 500,000 kits across 346 communities in Nigeria. “ We have re tu r n i ng customers and those who order in large quantity or demand customisation of packs,” she explained. So far, the growth has been rapid. In 2014, she started in two communities and had only 30 kits. This has moved to 346 communities now and over 500,000 kits. “Right now, we are looking into new product developments,” she said. She has been developing herself since then. Through the Mandela Washington Fellowship, she has studied Business and Entrepreneurship at University of Texas, Houston. Thereafter, she interned at the Maternal and Child Health section of the United Nations Foundation. She has also been privileged to receive the support of the United States African Development Foundation in kicking off Mother’s Delivery Kits.

tem that tracks the safety record of the blood. It likewise has an app that allows blood donors to register and book appointments at blood banks closest to them. It has distributed over 16,000 units of blood, registered more than 3,500 donors, and worked with over 400 hospitals to save more than 4,500 lives, BusinessDay found. “I look forward to continuing my journey to solve problems and make a significant impact on the future of Africa,” she said after the prize in Ghana.

www.businessday.ng

Adepeju Jaiyeoba, Mothers Delivery Kits It takes courage to move from law to health. Jaiyeoba studied Law at Obafemi Awolowo University. But she has decided to move to the health sector to make a difference. In 2011, she had an unforgettable experience that later became an inspiration. She lost a close friend at child birth. Her friend had a good job, financial power and exposure, yet died at child birth. This made her wonder what women in rural communities without money, education and good jobs could be going through. “When you see numbers, those are just numbers,” she tells Start-Up. “It is when you knew one person who died at child birth that you would know that no one was immune to dying at child birth. My friend was educated, working class, had information and the financial power to seek good healthcare, but she still died at child birth. It made me wonder what could be happening at rural communities where people would not have access to all these sterile facilities,” she says. She thereafter went to rural communities and saw things herself. The difference, however, is that she decided to do something about that. In 2014, she founded Mothers Delivery Kit to reduce maternal mortality

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Temie G iwa-Tub o sun, LifeBank G i w a -Tu b o s u n i s t h e founder and CEO of LifeBank, a start-up that works with hospitals to find lifesaving medical products. She came to continental limelight in November 2019 after winning Jack Ma Foundation’s Africa Netpreneur Prize Initiative (ANPI). $250,000 in Ghana. L i f e B a n k h a s s av e d many lives, providing blood and other health services during emergencies. The start-up has an app that connects hospitals with available blood supplies, and has developed what is known as SmartBag tag, a blockchain-powered sys@Businessdayng

Abasi Ene-Obong, 54gene Abasi Ene-Obong left his role as a management consultant in the pharmaceutical sector to move back to Nigeria to build Africa’s first biobank. It was founded by the young entrepreneur in July 2019 to unlock the African genome and improve the understanding of the world’s most genetically diverse population. Ene-Obong and his team are starting from the very beginning as there are no blueprints for biobank on the continent. 54gene partners with hospitals and research institutions in African countries and with pharmaceutical and biotechnology companies to address the challenge of limited diverse genomics data, which may hold the key to medical discoveries and new healthcare solutions. Backed by investors including Y Combinator, Fifty Years Ventures, Better Ventures, and KdT Ventures, 54gene aims to equilibrate healthcare for people of African origin while advancing the quality of medical care worldwide. The business is looking radically to disrupt the $100billion global pharma-

Monday 13 January 2020

BUSINESS DAY

Start-Up Digest

Anike Lawal

Akomolafe Bankole

Etop Ikpe

Angel Adelaja

Wole Akeju

ceutical industry.

tors. Veritasi Homes and Properties has empowered a lot of Nigerians and is poised to achieve more this year, as the number of homeless Nigerians continues to rise. According to statistics, the country needs 17 to 18 million housing units to meet the needs of homeless citizens, which places real estate firms like Veritasi on a good pedestal in 2020.

Lack of such prompted her to establish Mamalette in 2013. S i n c e s t a r t i n g , Ma malette online maternal health network has grown a n d ha s re a c h e d ov e r 40,000 mothers monthly. Since inception, over a million people have visited the site. The business runs partnerships with some medical practitioners and health experts who provide responses to questions asked by mothers and would-be mothers on the platform.

trepreneurship skills to acquire greater heights with Akotex Group. Given his meteoric rise over the past years, there is a chance that the business would soon become a top brand in the country and Africa at large. His determination to succeed in life and desire to innovatively inspired the establishment of Akotex Nigeria Limited – his first arm of business in 2016.

DealDey, West Africa’s answer to Groupon. Prior to that, Etop founded Tinker Bell Media LTD, which produced We Run the Game-- a syndicated sports program broadcast terrestrially across 12 Broadcast Networks. In 2018, he was listed as Forbes under 30 inspiring entrepreneurs in Africa. His businesses have provided thousands of direct and indirect jobs for Nigerians.

Adetola Nola, Veritasi In the highly competitive real estate business in Nigeria, it is difficult to stand out from the crowd. But this is certainly not the case for Adetola Rilwan Nola, founder of Veritasi Homes and Properties Limited. Nola, 29, is a passionate entrepreneur on a mission to improve individuals’ wellbeing through the provision of affordable housing for low-income Nigerians. He was listed as one of the Forbes Africa 120 Game Changers in 2019 and was inspired to establish Veritas Homes and Properties Limited in 2017 owing to his desire to help Nigerians own their homes. No l a, a g ra d u at e o f C h e m i ca l Eng i n e e r i ng from Obafemi Awolowo University, who once had a shoe factory, needed to sell his cars and factory machines and equipment to pursue his dream of providing affordable housing for Nigerians. He started the business with a single employee but now has 18 full-time employees, 12,000 real estate consultants and 1,300 real-

Anike Lawal, Mamalette Many entrepreneurs are driven by a passion to solve societal problems. For Anike Lawal, chief operating officer, Mamalette, her driving force is to address issues with maternal health using the power of technology. Through her online platform, Anike established a local health network for mothers in Africa by helping them find the right health information needed for their daily maternal health development. Anike was inspired to establish Mamalette owing to her first experience as a mother. During her first pregnancy, the young entrepreneur was in dire need of a health platform to seek answers to questions on maternal health.

Akomolafe Bankole, Akotex Group Akomolafe Henrich Bankole is one of the most successful under-30 entrepreneurs in Nigeria. He is the managing director of Akotex Group, a conglomerate of four businesses across several industries, including real estate/construction, technology, escalator, elevator fitness, and wellness. He was listed as one Forbes Africa 120 Game Changers in 2019. At 26, Bankole has made a considerable impact in the Nigerian business space. He has constantly sought to develop his en-

Etop Ikpe, Cars45 Etop Ikpe is the founder of Cars45, Nigeria’s foremost and largest used car sales platform that runs local inspection centres in strategic locations around the country to help customers service their cars. According to Forbes, Cars45 raised a $5 million Series A round from the Frontier Cars Group in May 2017. Ikpe is a veteran entrepreneur with experience in transport, automobiles, mobile communications technology, and marketing. Etop was previously the commercial director of Konga, one of Nigeria’s largest e-commerce platforms, and formerly the CEO and Co-MD of

accessible to ever yone to produce food even in cities. She created a stackable container farm using shipping containers, where a single container can produce vegetables grown on one-and-a-half acres of land. Fresh Direct also creates low-tech affordable technologies from indigenous materials to make farming simpler.

Angel Adelaja, Fresh Direct Angel Adelaja is the founder and chief executive of Fresh Direct, an environmentally friendly, organic agricultural production and processing company that also deals in manufacturing agricultural equipment and technology. The farming aspect of the business uses new solutions such as hydroponics and vertical farming in the cultivation of crops. Adelaja founded Fresh Direct in 2014, with a goal to make agriculture easy and fun for young people, empower them with employment and strengthen them to also be successful employers of labour. Also, to make farming

Wole Akeju, Redbox Deluxe Every entrepreneur in Nigeria has a unique story to tell and usually an inspirational one of how their entrepreneurial journey started. For Wole Akeju, the founder of Redbox Deluxe Café, his inspiration was as a result of his passion for food. Redbox Deluxe Café is a real celebration of Nigeria’s food industry, with its essence created from local and traditional ingredients that are unique. It provides 24 hours catering services to clients around Lagos metropolitan. Through its Redbox Deluxe Café, Akeju is providing meals for Nigerians with busy schedules to eat regularly without having to skip a meal. The business was launched in February 2019 and has since grown from a single outlet to four outlets now. It has partnered with Jumia and Opay Foods, among others, to ensure the effective delivery of food to its clients anywhere around Lagos and its environment. The business has created employment for some Nigerians as it currently has 8 full-time and 25parttime employees.

personal and business developments, which is why I invested so much in undergoing several trainings,” she said. “I have been privileged to attend the Special Event Show New Orleans, IMEX Group Las Vegas USA, the Nigeria-British Chamber of Commerce, Women in Leadership, Fate Foundation TFD series, WIMBIZ, Centre for Entreprise Management & Research amongst others.” She is a recipient of the GoldMan Sachs scholarship and Cherie Blair Foundation Road to Growth at the prestigious Pan Atlantic University

/LBS, among others. She is a fellow member of the Institute of Management Consultants in Nigeria, International Live Events Association (ILEA Nigeria chapter), Association of Professional Party Organisers and Event Managers of Nigeria (APPOEMN), and Association of Event Vendors in Nigeria (ASSEV). Sotunde sees herself as an inspiration to many women and is a female leading entrepreneur in the industry, celebrated on radio/ TV shows, newspapers and magazine where she shares her success story as a young CEO and mentor.

Olabisi Sotunde receives IMC Fellowship

labisi Sotunde, managing director of the BusyBee Group, has joined the list of professionals who were certified recently as Fellows of the Institute of Management Consultant of Nigeria. S otunde was among those who attended the investiture ceremony of the institute which took place at Lagos Airport Hotel recently. Sotunde, who has a background in Chemical Engineering, and later event planning, is now by this development a certified management consultant.

She is a trained facilitator in events management, entrepreneurship and an event business coach. She is an international mentor for the Global Entrepreneurship Network (GEN Nigeria), Tony Elumelu Foundation, Cherie Blair Foundation Road2Growth for Women and brand amabassador. Sotunde explained that through her Events Academy, she has trained, mentored and coached over 800 event professionals through planning/decoration classes, master class workshops and mentoring programs. “I believe so much in www.businessday.ng

L-R Jerry Agada, a professor, president , Institute of Management Consultant (IMC) Nigeria chapter, presenting the IMC Fellow Certificate to Olabisi Sotunde, CEO of BusyBee Group, during the Institute’s Investiture in Lagos recently. https://www.facebook.com/businessdayng

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Monday 13 January 2020

BUSINESS DAY

INTERVIEW We know what moves people, what pulls them to act, what makes them raving fans – Williams ADEBOLA WILLIAMS, co-founder and CEO, speaks on RED | For Africa’s strategic direction in this interview with SEGUN ADAMS. Excerpts:

ow has RED evolved over the years, and what has that journey been like for you as the helmsman? Every single person who has been a part of our 15-year story, including those who simply follow the RED brand, understand how we started as young entrepreneurs who had a mission to inspire and celebrate change-makers who were investing time, money, and effort in changing the African narrative. At the same time, we also understood the power of the media in executing our vision. So though the media is our passion, our goal really lies in social engineering - building a world we want to see, one community at a time. Currently, our business has evolved into a three-pronged approach: content, consulting, and culture intelligence. As the CEO of the company, the excitement in the job comes from understanding that for 15 years, we have consistently worked with millions of young Africans who believe in our vision, even among those in a much younger generation. Have the changes in media consumption by the consumer moved the needle in terms of PR as a whole in Nigeria? Basically, how relevant is PR in the current chimes? We’ve gotten to the stage where brands can now create their own content to attract their target market. This means putting out content and telling stories consumers actually want to see and hear without blatantly blasting them with features, specifications, pricing, and appeals to buy. The industry has become a lot more interactive, with consumers insisting on experiences and excitement, and brands are complying by making their communication more fun and appealing. Public relations is definitely relevant, and what we need to discuss is how we can improve skills and opportunities for professionals and students in the industry. There’s been some speculation over the direction of RED | For Africa, and some experts say they perceive a future in strategy consulting. What is the truth? Yes. Strategy consulting is the future, our future. We are bootson-the-ground culture experts with a content and project eco-system across Sub-Saharan Africa that keeps us deeply connected to and gives us unrivalled credibility with youth audiences across sectors, industries and nations. We have data, consulting expertise, and the smartest guys in the room. But what makes us different from other consulting firms? We

are your inroad into the culture. We understand that formal structures don’t guarantee real change. PowerPoint presentations and bloodless data points don’t tell real stories. Change happens in, around and at the edges of the culture, and can only be leveraged authentically and effectively by connectors who have a grip on all the moving parts. Connectors are the ones who build ecosystems, creating and sustaining the conditions for informal actors to take the stage, and thus ensuring momentum. Our connector-skills have been honed over 15 years - as Africa’s demographic, economic and political trendlines took a sharp turn – via our continent-wide proprietary assets including The Future Awards Africa, REDx, The Future Enterprise Support Scheme and Y! Africa. They give us a crucial edge. Data is easy to find, simulate and buy. Cultural insight – figuring out what makes people move and act everywhere from politics to music – isn’t. Our consulting authority comes from the youth and the streets. We are the consultancy that understands grassroots phenomena and local insights. In your role as a CEO of RED | For Africa, a top PR firm, how do you approach companies that don’t get the relevance of consulting and PR? How do you make that argument? Over the years, RED has grown to become a network of companies with investment and practical experience in public relations, media and content creation, human development, and technology, especially through digital media. As a result, we were able to offer our clients a broad range of services based on our expertise across several fields, and our understanding about the different phases or processes, from providing necessary information to highlighted problems, to make sure that these learnings can be facilitated to improve organisational effectiveness. For public relations, as long as

communities and brands need to engage each other based on trust, the industry is not going anywhere. What will continuously change are the methods to improve communication, and the need for innovation in creating a more engaging, relatable, exciting message. The audience, just like consumers, needs to believe, and brands cannot achieve this effectively except through public relations. For RED, our clients have an extensive opportunity to provide excellent consumer experiences by leveraging on different expertise and platforms selected across the company – design thinking, data collection and feedback, content, implementation, and so on. What kind of impact do you think content and cultural intelligence are making on consulting? We are currently operating in an industry in which brands need to build trust, cultivate customer loyalty, and sustain consumer interest. So instead of the previous one-off communication in advertising, brands are fully involved in compelling brand storytelling through marketing communications – which has also made branded content marketing an important strategy. It’s not just an opportunity to be positive about a new feature or must-have purchase, but a method to create and reveal positive, productive content that celebrates the individuality, and that engages consumers through the brand personality. Rather than operating as a company that only offers advice to clients, our consultancy services are built on intelligence, expertise, and capacity to articulate, curate, accelerate information/content into solutions and then connect to those who need to make decisions that move nations and communities forward. So the impact of content and cultural intelligence is evident through our business of curating cultural capital. In providing value through consulting, it is essential to have healthy and current cultural quotient across

several industries and be able to relate and work effectively across cultures. What would you say about competition, especially in the strategy consulting space? There are several firms in Nigeria involved in the space, with many focused on building relevance through brand building, corporate financing, IT, human management, taxation across different industries. Our strength lies in our capacity to use the media, data, and technology to solve customercentred problems. Our proposition to corporations, governments, donors, bilateral and multilateral, embassies, businesses, politicians, investors, and HNIs is simple – “We know what’s happening with the culture, and we are the ones that connect you to the streets.” When you say customercentric solution firms, what exactly does that mean for clients and their customers? Our business approach is hugely focused on creating a positive experience for the client/customer by maximizing our offerings and building relationships. Our proprietary tool, the PainPoint Matrix, is centred around these two essential questions: What’s the biggest problem you are facing with your customers or target audience – at the moment, and for the future? What’s the biggest growth opportunity with your customers or target audience – at the moment, and for the future? To help you answer those questions, we have successfully leveraged on both expertise and platform in media and culture, alongside data and technology to solve customercentred problems and deliver unforgettable customer experiences. We have also built a strategy and execution framework to bring those answers to live, which is the full power of the RED platform – providing end-to-end solutions across the customer value chain: insight: consumer behaviour and market research; product development; brand building; marketing and communication; commerce: sales and distribution; communities: customer service and engagement and sustainability: social investment and stakeholder management. No other platform working in sub-Saharan Africa has the potent and evolving mix of media-based brands, platforms and content that constitute the full power of RED – working boots-on-the-ground over the past 15 years with communities, corporations, politicians, activists, diplomats, retailers, policy-makers, content creators, change-makers, gatekeepers and culture champions across East, West, Southern and Central Africa. What is your assessment of PR in Nigeria compared to

other climes is the industry in Nigeria in tandem with global best practices? Just as it is currently being witnessed globally, public relations is witnessing in Nigeria is also going through a revolution. What we are lacking is how we can quickly and easily adapt to these changes in strategy, innovation and consumer engagement. What’s your reading of the Nigerian economy and RED’s role in the coming years? While the economic outlook still remains fragile, an important subsector for national growth has been SMEs, especially through youth entrepreneurship and job creation. What everyone can see is that we are steadily creating a tax economy, where the government would need less dependence on crude and foreign borrowing. But if the CBN directive on loan-to-deposit is fully implemented by Nigerian banks, there’ll be a significant increase in credit available for the private sector, creating jobs, and spurring tax revenues. With so many young graduates and inspiring entrepreneurs passing through The Future Project, our human development company, and even The Future Awards Africa, we have immense opportunity to boost young businesses SMEs, encourage innovation, reduce imports, and increase foreign direct investment, thereby boosting the naira and fighting inflation. Can we say RED | For Africa will be around in the next few years? I’ll definitely agree with you, but I’ll say for many more decades. Basically, because our business model has never been static, and there are always changes and improvements due to internal discussions, advice from staff and other internal stakeholders, market activities, and cultural revolution that the world is witnessing almost daily. How are data shaping strategy consulting and PR in today’s world? Data science has become a commodity for clients and professionals. Although it is evolving, it is important in identifying meaningful patterns, especially in understanding organisational performance metrics, and complex changes happening in industries. Although data is also evolving option in public relations, many professionals now leverage these opportunities for coverage tracking and measuring brand hits and understanding the landscape for constant improvement. PR professionals also use data for understanding clients’ problems and shape the way in which they’re approached. So, as markets continue to evolve, organizations can adapt and make real-time decisions more quickly than their competitors.

Monday 13 January 2020

BUSINESS DAY

RWANDA SPECIAL REPORT

Inside Rwanda’s economic miracle LOLADE AKINMURELE, IFEOMA OKEKE & OLUFIKAYO OWOEYE

or a tourist, especially one from Nigeria, Kigali’s squeaky clean street corners is the first thing that gets you purring and drawing parallels with some local governments in Lagos. It’s not just Kigali that’s clean. Large parts of northern Rwanda are also as clean. Rwanda’s 12 million population means it is a much smaller country compared to Nigeria. It’s less than half the size of Lagos and about the same population as Alimosho local government. The Rwandan locals say littering the streets attracts punishments ranging from hefty fines

to jail terms and that has largely kept unruly behavior in check. Everyone partakes in a cleaning exercise once in a month and that includes even the President, Paul Kagame. Adjudged one of the cleanest countries in Africa, and indeed the world, Rwanda’s streets look very different from the one littered with lifeless bodies in 1994. The people refer to their country as a start-up state, one that is still picking the pieces and slowly rising from the ashes of a genocide that snatched the lives of some 800,000 people a quarter of a century ago. In their eyes, Rwanda is only 25 years old. “Rwanda was dead in 1994,” a tour guide at the Kigali Geno-

cide Memorial, where 250,000 casualties of the genocide were buried, told Business Day. But where did it all begin and how did Rwandans turn against one another in a brainless wave of killings that was ignored by the Western countries who had the ability to quell the war and the United Nations, which refused to intervene and pulled out its troops in the thick of it all. To understand all of these, we need to go back to the very beginning when Belgian forces landed on Rwandan turf during the first World War. “Rwandans were peaceful people who were satisfied to have a King who played to the role of a loving father to them,” said Deon, who works at the Ki-

gali Genocide Memorial Centre. “The Belgians found it difficult to stamp their authority on the people because they only respected and listened to the King and no one else,” Deon, said. Seeing that, the Belgians opted for divide and rule, a system that worked in other colonies. The Belgians started to sow seeds of discord among the people and was promoting differences that never existed. “It was all propaganda but they succeeded in making the Hutus resent the Tutsis and in 1935 introduced identity cards labelling each individual as either Tutsi, Hutu, Twa,” Deon said. Before now the word “Tutsi” was only used to describe cattle

herders while the Hutus were mainly farmers. The ‘Twas were in between. So the distinction was not political neither was it cultural, it was simply economic. All three categories spoke the exact same language and had same culture. However, the Belgians oversaw self imposed differences in the three. The Tutsis, who the Belgians put in high offices, were portrayed as the privileged and wealthy few and the Hutus as the impoverished majority. This sparked outrage among the Hutus who felt they were second class citizens to the Tutsis. So when the Belgians handed

Continues on page 34

Everything we learnt from Rwanda’s 2019 national dialogue session LOLADE AKINMURELE, IFEOMA OKEKE & OLUFIKAYO OWOEYE

w a n d a n s f ro m a l l parts of the hilly country converged at the 2,600-capacity Kigali Convention Centre to participate at the 17th National dialogue, otherwise known simply as “Umushyikirano”. The Kigali convention center located some 6 kilometers from the Kigali International airport, is a product of private sector led participation in the country’s economy. In 2007, three Rwandan corporate investors pooled resources to build the real estate complex which houses Radisson Blu Hotel, Kigali Information Technology Park, and a museum.

Since completion in 2016, the convention center has hosted the country’s national and international events such as the World Economic Forum on Africa in 2016, ACCA Africa Members Convention in 2019 among others. Interestingly, the once-war torn capital has earned a reputation in recent years as one of the cleanest and safest cities in Africa. In attendance, during the twoday national dialogue session, was President Paul Kagame who not only addressed some socioeconomic issues the country currently faces, but also answered questions from the different regions of the country. The national dialogue program provided an avenue for Rwandans to collectively reflect on www.businessday.ng

the nation’s Vision 2020, issues related to the state of the nation, functioning of the decentralized structures, and issues of national unity and development. For the first time, Rwanda diaspora community also joined other participants including members of the Cabinet and Parliament, local government, Civil Society Organizations, media and the diplomatic community. Speaking at the event, President Kigame highlighted major achievements of his administration and efforts build on the success recorded so far. In the Ease of Doing Business on the continent, Rwanda occupies the second spot, however, Kigame expressed the desire of Continues on page 34

President Paul Kagame

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Monday 13 January 2020

BUSINESS DAY

RWANDA SPECIAL REPORT Inside Rwanda’s economic miracle Continued from on page 33

Everything we learnt from Rwanda’s 2019 national dialogue session Continued from on page 33

his government to be the first on the annual ranking. Rwanda is ranked 9th in the 2020 Global Gender Gap Index, Kigame said the desire of his administration is to occupy the top five in gender equality global ranking, currently, the cabinet line-up has in total 14 women out of 27. He also hinted that the country was ripe for a female president, a statement that elicited wide applause from the crowd. According to Kigame, the economy has continued to grow at an average of 8 percent amid security challenges in neighboring countries. The economy probably expanded 8.5 percent in 2019, and Kagame said the target for 2020 will be 10 percent, enough to bring Rwanda within the top two fastest growing economies in the world. On health, it was said that 90 percent of Rwandans now have health care insurance thanks to a universal health care model, which provides health insurance through a system called Mutuelles de Santé. The system is a community-based health insurance scheme in which residents of a particular area pay premiums into a local health fund, and can draw from it when in need of medical care. On education, the progress made in increasing school enrollment to 90 percent was duly recognised even though Kagame yet again wanted more. For the country to compete at global markets, the president said the country would need continue to work with other countries to improve the quality of education. The Carnegie Mellon University (CMU) in Rwanda established in 2011, was born out of a partnership between CMU and the Government of Rwanda is the only U.S. research university of-

fering its master’s degrees with a full-time faculty, staff and operations in Africa. The country will target more of such partnerships, Kagame said. In his words “We need to put in more efforts, we are advancing but slowly, we are not running, we need to run”. The Rwanda economy is based mostly on subsistence agriculture by local farmers using simple tools, assuring that the Girinka programme aimed at reducing extreme poverty in rural areas of Rwanda by providing each poor family with a cow would continue. So far, the programme has

“

The President also urged the youths in the country to develop a problem-solving mindset at their various places of work

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increased household income through the sale of milk and because fertilization of soils with manure has also raised crop yields. As part of the Rwanda’s tourism promotion drive, Rwanda’s Development Board agreed a three-year sponsorship deal with the French club to promote its tourism industry on the kit of its women’s team as well through stadium branding. This follows from signing a 3-year contract “Visit Rwanda” sleeve sponsorship with English Premier League side Arsenal in a deal worth 30 million British pounds. The campaign, which was controversial at its launch, has lifted overall tourism numbers by 8 percent, officials told BusinessDay during an Interview in Kigali. According to the Rwanda Development Board (RDB), the number of tourists from England alone has climbed by 5percent compared to the previous period. The surge in the number of visitors into the country has caused authorities to increase its Visa on arrival fee from $30 to $50. Recently the country suffered heavy causalities from heavy downpour, but during the event, President Kigame urged resident of areas prone to natural disasters to relocate to the new structures provided by the government, urging local leaders to desist allocating lands to people in such vulnerable areas. The President also urged the youths in the country to develop a problem-solving mindset at their various places of work. One of the highlights of the event was the comment from an undergraduate who is the son of a rebel warlord still hiding in the Congo Forest and who has been under government scholarship. He publicly urged his father to embrace peace and come out of the forest.

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power to the Hutus in 1962, it unearthed pent up Hutu resentment for Tutsis. Direct elections had resulted in a representative government dominated by the majority Hutu under President Grégoire Kayibanda. The Hutus in government openly declared their hatred for Tutsis and there was a wide spread campaign urging the Hutus to treat the Tutsis with disdain and later to even kill them. The Tutsis were regarded as “cockroaches, filthy low-lives who deserved to be slaughtered and their women raped and abused,” according to Deon. Unsettled ethnic and political tensions were worsened when Juvénal Habyarimana, who was also Hutu, seized power in 1973. In 1990, the Rwandan Patriotic Front (RPF), a rebel group composed of 10,000 Tutsi refugees from previous decades of unrest, invaded the country, starting the Rwandan Civil War. The war ground on, worsening ethnic tensions, as the Hutu feared losing their gains. The assassination of Habyarimana was the catalyst for the eruption of the genocide in 1994, in which hundreds of thousands of Tutsis and some moderate Hutus were killed including the prime minister Agathe Uwilingiyimana. The Tutsi RPF conquered Rwanda, and thousands of Hutus who championed the genocide were imprisoned pending the establishment of the Gacaca courts. Millions of Hutu fled as refugees, contributing to large refugee camps of Hutu in the neighboring Democratic Republic of the Congo, where there were already refugees from other countries. Since the brutal genocide which managed to elude the attention of the western world, Rwanda has made some remarkable progress. A sign that the country has put its terrible past behind it is that it is now adjudged the safest in Africa, which is no small feat for a country where neighbors turned on one other in a split second during the genocide. A mix of foreign aid and a booming local tourism sector has been used to rebuild the country. Rwandan coffee began to gain importance after international taste tests pronounced it among the best in the world and the U.S. responded with a contribution of 8 million dollars. Rwanda now earns some revenue from coffee and tea export, although must compete with larger coffee-producing countries like Brazil and African peers @Businessdayng

like Ethiopia and Kenya. Rwanda ranks 37th in the world in terms of coffee exports by revenue and earned $69 million in 2018 alone, according to data from the World Top Exports. The main source of revenue, however, is tourism, mainly the Kigali Genocide memorial centre and mountain gorilla visitation. The Kigali Genocide Memorial Centre provides a platform to understand the events leading up to the genocide. A guide takes visitors through an emotional timeline of events that helped unravel what happened during the genocide. During Business Day’s visit, a short video of survivors of the genocide whose fathers, mothers, brothers, sisters and other relatives were brutally killed was first played, before a tour of pictures and the remains of some of the victims of the genocide from children to adults who were mainly Tutsis and a few moderate Hutus. The last words of a nineyear old Tutsi Rwandan before she was matcheted during the genocide were “The UNAMIR will come for us.” It never did. She was killed along with tens of thousands of children and over a million people in total. Some of their pictures hang on the walls of the Kigali Memorial Centre. Today, no one in Rwanda is keen to identify as either Tutsi or Hutu, as deduced from interviews with scores of Rwandans. The postwar government has placed high priority on infrastructure development from constant electricity to good roads, opening water taps in the most remote areas, providing free and compulsory education, and promulgating progressive environmental policies like one that bans the use of plastic bags. Ethnicity has been formally outlawed in Rwanda, in the effort to promote a culture of healing and unity among the people. One can stand trial for discussion of the different ethnic groups, some Rwandans told Business Day. The country’s Vision 2020 development policy has the aim of achieving a service-based society by 2020, with a significant middle class. On the evidence of what has been achieved so far, particularly in terms of infrastructure, it has made some to describe the country’s many exploits as an economic miracle. The personality of President Kagame continues to split opinion but that hasn’t stopped Rwanda from rising from the ashes of a troubling past many thought would mark the end rather than the beginning of the country.

Monday 13 January 2020

BUSINESS DAY

RWANDA SPECIAL REPORT Hotels in Rwanda now have over 70% daily occupancy rate since Arsenal deal – Bafakulera

In this interview with BusinessDay in Kigali, Robert Bafakulera, president of Rwanda’s Private Sector Federation and hotelier, highlights the impact of the “Visit Rwanda” campaign in partnership with British football club, Arsenal, and consistent efforts by the government to open the economy for more private sector participation. Rwanda hospitality sector coming of age he hospitality sector has come a long way since not being able to properly accommodate the 1800 people that attended our national dialogue conference in 2010. At that time some people had to move out of their homes to accommodate the flurry of guests. We had very few hotels and the most prominent was probably the Intercontinental hotel, which is now Serena Hotel. A lot has however changed since realizing we needed more high quality rooms to match a fast growing hospitality sector. Between 2015 and 2016, we opened several four and five star hotels owned by both locals and foreigners. Intercontinental hotel was renovated and expanded before it was bought by Serena hotel and transformed into a five star hotel. Conferences and several other meetings were being hosted in Rwanda, so we saw the need for rooms and we have gone on to address that. After our Convention centre was completed, the likes of Marriott hotel and Raddison Blu were also completed and we had other local brands come up. Booming tourism and hospitality sector The government has a plan to encourage private sector to add at least 1000 rooms every year. We will need more rooms in the future as the hospitality sector expands. The high return on investing in Nigeria has over time proven a strong incentive for prospective investors from around the world. The return on investment is around 30 percent. The government has also put other incentives in place. For instance, investors get at least a three year tax holiday for investing in the hospitality sector. Challenges for private sector in Rwanda Our private sector is small in terms of size and there are very few corporates. The challenge is we have small and medium size enterprises, which are unable to sometimes access finance and not able to do big things. Small businesses don’t have access to finance because they are not formally structured. Most of the young people, men and women operate informally. They don’t have the books of account in order to get affordable loans. When they do get loans, they get it at high interest rates. Corporates get loans at 14 percent interest but small businesses get loans

Robert Bafakulera

at 20 or 21 percent. Another thing is to get this loan takes a very long time. Govt role in private sector growth The Government is trying its best and what is being done is to encourage people to have investments where people put money together and invest big. When we do that, government will do what it can to make sure such company grows fast. They give tax incentives and exemptions and so on. That is the only way we can grow our private sector because most businesses do not grow beyond certain limits but people who have come together have done a lot of things. We have sizable commercial buildings in town where people have come together and set it up together. Many companies are buying the idea of joint investment, to make sure they are able to solve what they cannot solve individually. Another way the government is aiding private sector growth has been by building strong institutions that work. Government processes have limited individual services and increased online services which help to limit corruption and improved the ease of doing business. Today, transfer of land titles is done online, as the days of moving from one place to another and wasting time is gone. Before, you

would queue up to pay tax but today you can do it in the comfort of your offices. In Rwanda, all you need to do is to present your invoice and you just pay tax. You don’t need to go to revenue offices. The same thing applies to domestic tax. There are lots of improvements in domestic tax. We have the Electronic Bill System (EBS). When you sell and issue an invoice, data is shared with the Rwanda Revenue service. At the end of the month, you both know how much tax you will pay and at the end of the year, they equally know your turnover. In that way, it increases the trust between the business people and those receiving the tax. Positioning Rwanda for gains of Africa Continental Free Trade Agreement Rwanda has come a long way and Rwandans are already exporting. As private sector we are trying our best in this regard and government is trying to build relationships with most African countries, especially in West Africa. We have been going to West African countries such as Ivory Coast, Ghana, Congo Brazzaville etc. We are encouraging our people to start moving to these countries to build relations as well as do business. They will soon come to Nigeria. You know Nigeria is a big

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market and a very interesting one. We have partners who are already there and moving from one country to another country to do business is not so easy, something the AfCFTA will help improve. I’ll say we (private sector and government) are in the process of laying the type of foundation that will see us be big beneficiaries of what would be the continent’s biggest trade deal. Impact of Nigeria’s border closure Nigeria’s land border closure has affected us, but not much. I know some business people with whom we have relationships have been affected. Some import rice which comes through the Nigerian border. How inclusive is Rwanda’s high economic growth The growth in Rwanda is evenly distributed. Here government has encouraged and guided the local administrators to be more responsible for the people. Every year, local governments come to showcase what they have done in terms of education, health and other ways of improving the standard of living of the people within their jurisdiction. If you go out, you find that it’s not only the capital Kigali that is well developed but also the towns which mostly have well-constructed roads. Also, there is electricity and water everywhere. When you go to some other countries, you find out that it is only the centre that is developed but not here, everywhere in Rwanda is developed and squeaky clean, and the private sector is being encouraged to drive job creation and reduce poverty. Another thing is that there have been a lot of social campaigns targeted at the poor. There was a campaign where the poor were given cows. There was also another campaign on medical insurance, where everyone can use medical insurance. So, all these initiatives have made people grow together and feel a sense of belonging. Benefits of Rwanda’s free trade mantra Free trade is about the free movement of people and reducing barriers to trade. In East Africa, you are able to bring products from other countries tax free. According to our understanding of West Africa, things are very expensive. When you go to other countries, the prices are high. In Rwanda we have the policy of Made-in-Rwanda which is encouraging local production even as we adhere to the principles of free trade which helps make our industries more competitive. How made-in-Rwanda goods are promoted We give priority to goods made in Rwanda but we are not raising taxes

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on imports. It is just a matter of goodwill by Rwanda people to promote Madein-Rwanda products. We appeal to patriotism to buy what is produced here above other goods. Impact of “Visit Rwanda” campaign We have a good success story to tell from that particularly from the branded Arsenal shirts. I run a five-star hotel of 153 rooms which I opened in 2016. When we opened in 2016 we were managing five to seven percent occupancy rate. In 2017, we moved to 16 percent and in 2018, we were at 40 percent. However, since the Arsenal deal in 2019, we are doing about 70 percent daily occupancy rate on average. That shows the impact it is having has been positive. I also must acknowledge the vital role of our visa on arrival policy on boosting hotel occupancy rate. Cost of “Visit Rwanda” campaign with Arsenal It cost around $30 million. If I told you I was getting six percent when I started my hotel and now I am getting close to 70 perent, along with other hotels, then we are taking of a return of investment of over 60 percent. Marriott Hotel, which has 260 rooms, was facing the same problem as we did at our hotel with low occupancy rate in 2016. Serena Hotels and every other hotel were also facing the same problem. Today, we are almost moving at the same pace in terms of occupancy and that has had a huge impact. My colleagues will tell you that the investment on Visit Rwanda is small money compared to what we are getting today in terms of hotel patronage and economic activity. This initiative came with the help of our Tourism Board and Rwanda Development Board. Rwanda Development Board is a one stop centre for investors. You will get all the information you want there. About Rwanda’s private sector federation The Private Sector Federation was set up 1999, having replaced Rwanda chamber of commerce. The structure of the Private sector Federation is into two chambers and five provinces. The ten chambers are sector based and the chambers are associations. We have association of hotels, manufacturing and so on. The people who are not in the associations are independent businesses. So those are under the leadership of provinces. Under provinces there are districts and under districts, there are small sectors. We have categorised them into different circles. We have about 15,000 members out of 180,000 businesses.

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Monday 13 January 2020

BUSINESS DAY

RWANDA SPECIAL REPORT Why CMU is in Rwanda and not Nigeria – Rugege In 2011, US-based private research university Carnegie Mellon University (CMU), after signing a 10-year partnership with the Rwandan government established an African campus, the only one of its kind on the continent. Crystal Rugege, director of strategy at what is now known as CMU Africa, gives insights into one of the most significant public-private partnerships impacting higher education in Africa today, how it all started and goals for the future.

Journey with CMU am a graduate of the Carnegie Mellon University campus in the United States. In my final semester, I was approached by the Dean of Engineering after they had been in conversation with the government to establish a branch campus of Carnegie Mellon University here. So that was my first job out of graduate school when I completed my masters. I have been with the university for 11 years. I spent two and half years developing the blue print for how we wanted to engage and then moved here in December 2011 to start the university and get it running. Biggest attractions in returning home For the past 25 years, the government has been really intentional about its vision for creating a knowledge economy with the right conditions to do that and recognising that youth and young people are really its most abundant resource. I was bought by that vision. The strategy has been to develop high quality human capital while using technology as an accelerator for developing growth across all sectors. So, when the government approached CMU back in 2017, prior to me coming on board, it was something that was exciting for us because we do have other international campuses but one of the core tenets of CMU is to try to improve the human condition at the global scale through education, research and innovation. So, given that Africa is the youngest and fastest growing continent in the world and also the opportunity to have a presence in one of the most progressive countries in the continent, leading the way on many fronts and prioritising the investment on young people, in education, research, innovation and entrepreneurship was really something that was very exciting. So, it wasn’t a very difficult decision for us to come here. We started actively in 2012 and were sold on the government’s focus on high quality education and technology. We believe it is one of the fastest paths to development. The government was very particular about what degrees we wanted to offer. We offer two masters degrees one of which include masters in Information Technology and our students with that degree can decide to focus on different areas such as machine learning, fintech, agricultural technology, engineering. They have a wide range of IT and how it applies to different technology and different sectors. The second degree is in Electrical and Computer Engineering. Most of the students in that degree programme are largely interested in Energy but also things like embedded systems and Internet of Things, for example drones. We currently have students from

about 20 countries but 19 across Africa. We have had some American students. That number continues to grow year on year. We have many students from Nigeria and they do quite well. We have had four students from the US and have moved here to start companies. Two went back to the US and came back because they became interested in the technical system and the opportunity to engage here. The ease of doing business for people to start businesses and start new ideas is also key. The country is trying to position itself to be attractive for our international students to stay after graduation to start companies, experiment and test certain ideas

well. We started out with a random student population but there was always the intent to be a resource for Africa. So, in the last three to four years, we have really seen a lot of growth in terms of international students and it continues to grow yearly. Impact of alumni We have been very lucky that we have a very close relationship with industry. One of the unique things about our programme is that it is the same degree that is offered in the US, meaning that someone who finishes here, the degree looks exactly the same with someone who finished in US. It means he has a globally recognised credential and it means

Crystal Rugege

with the intention to either move back to their own countries or across the continent. We have about 16 students and graduates in total. We have seven alumni so far and nine that are current students. Nigerians in CMU Our Nigerian students are doing very well. There is one who just finished in May and he has been accepted for a PHD programme at the Oxford University. So, he started a couple of months ago doing his PHD in Human Centred Computing. We have another Nigerian at another top university in the US also doing his PHD. We have one at IBM and you know IBM has two resource labs, one in South Africa and another in Kenya. We have another Nigerian student there as an artificial intelligence engineer who is also doing www.businessday.ng

that they can compete at a global stage. We have complete academic and operational autonomy that we can maintain the right standards. We also need to be contextually relevant and so, lot of the research that our faculty engage in and a lot of the projects that our students work on particularly when we invite industry to present us with problems so that the students can work on them; this is where they get the applicability within the African context because we want to make sure that they are solving challenges that are relevant in the environment where they are. We see that even when they graduate. The three gentlemen from here that are working on IBM research are working on problems that are specific in Africa. This has really been something that we promote among our students

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and alumni to have them engage in solving African problems. Because of that close relationship with industry, we have enjoyed a very high placement rate. About 10 percent go into PhDs, another 10 percent are engaged in start-ups. In fact, one of our start-ups just went through the last round of interviews at in Silicon Valley. I just saw an article last night that they have been able to raise four million dollars for a start-up that they have with other colleagues from across the continent and the other 80 percent are working in Africa and around 30 percent of those working go into leadership positions immediately after graduation. So, we found that while our programme is small, it has been very impactful. We recently did an impact assessment of our programme because we are eight years in. There is an interesting research from the International Labour Organisation, where it looks at the multiplier effect of educating highly skilled engineers. The multiplier effect of educating one highly skilled engineer translates into 20 to 30 additional jobs in a local economy, depending on the economy we are talking about. It will be lower in a smaller economy like this but imagine what it will be in a larger economy like Nigeria. We have been really proud to be able to contribute to the knowledge economy not just Rwanda but in the continent. This is our first semester in this new campus but it will allow us to scale up to 350 to 400 students. Our current student population is 150, so we will be able to more than double that. We are also looking for ways we can achieve economies of scale by maximising on the infrastructures executive education just to build on the fact that we have this wealth of knowledge and really creating a community of research and innovation. Why Rwanda and not Nigeria Rwanda had the first mover advantage. The Nigerian government never approached CMU. We go to Nigeria almost every year to recruit. So we like to see more students from across the continent to benefit but really the story of CMU Africa started in Rwanda. It started with the vision of the government and with them approaching the university to say they would like them to come here. All our international partnerships have started that way, where we have been invited to come into that space. It is important that we are responsive to demands that have been pre-identified and so the fact that the government was asking us to come in and specifically respond to this deficit of technology and engineering skills and also the fact that they weren’t saying just do this for Rwanda. From the very beginning, it was the government’s decision for this to be an African Centre of Excellence. @Businessdayng

So, while it is relatively small, I would say if we are able to venture into other countries, we wouldn’t want to offer the same degrees or replicate what is here. We would want to build on the existing infrastructure. Funding structure The government is funding a large portion of the operations. We also have other funding partners that provide scholarships and also provide operational support to the university. We are actively always looking for funding partners to become self-sustaining. We are always looking for partnerships in terms of scholarships and research. Quality and cost of CMU Africa degrees The end product students in CMU Africa receive is the same as in the US, so the cost is also the same. The director of this programme in Rwanda was here with us before he travelled to India. He has been with the university for 40 years. So from his masters to his PHD to his entire teaching carrier, he has been with the university. So, the hiring of staff, the recruitment of students and the conferring of degrees all sit within CMU Pittsburgh to ensure that we are able to maintain the same standards. Because the quality is the same, the tuition is the same with those studying in Pittsburgh. The current tuition fee is around 40,000 dollars but all African students that are admitted to our programme are eligible for some form of financial aid and because we have some funding partners, will say around 80 percent get full scholarships and 20 percent get some form of partial scholarship. So, there is no student here that does not have some form of financial aid. Everyone is charged the same tuition, so everyone is eligible for scholarships, loans etc. For Rwandans, they are guaranteed some certain package of scholarship and this is provided by government but we also fund Rwandan students through external partnerships. Criteria for recruiting students Someone who has a degree in broadly technology areas, engineering, computer science, electrical engineering, electronic engineering and so on are eligible to apply. We also have some interesting students. For instance, we had one person who had a Bachelor’s degree in Food Science but he had a very strong background in statistics and he had also taught himself programming. He did very well in our IT programme. So, we won’t dismiss anyone but we actually look for certain technical competences because we want to make sure that we are not admitting people who won’t be able to succeed in the programme. We offer broad disciplines in terms of our degrees but students can have areas of concentrations. For instance in Science and Machine leaning.

Monday 13 January 2020

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

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Dangote Cement shareholders to see EPS expansion after buyback BALA AUGIE

angote Cement Plc will see earnings per share move higher, thanks to a share buyback as the share price of the largest producer of the building material continues to rise. Earnings per share (EPS) of Dangote cement was N9.01 as at September 2019 (as gleaned from its financial statement), but it will jump by 10.51 percent after the share buyback, according to calculations by Markets Intelligence. Its ordinary shares outstanding was 17.04 billion before the exercise but it reduced to 15.36 billion after the exercise, as the company had announced it would sell 10 percent (1.70 billion) of its outstanding

shares (17.04 billion) to its owners. To arrive at the revised earnings per share, we divided net income of N154.35 billion (9m) by the new ordinary share capital of 15.36 billion. Earnings per share (EPS) is calculated as a company’s profit divided by the outstanding shares of its common stock. The resulting number serves as an indicator of a company’s profitability. Dangote’s cash balance in the period under review stood at N91.27 billion, but reduced to N90.12 billion after the exercise, while its cash from operating activities of N294.46 billion means it has the financial strength to fund future expansion plans or reward its owners in form of either shares buyback or cash. Investors have confidence in the scheme of share back as Dangote share price rose from N145

(pre exercise) to touch down at N175 as at 2:00 pm Lagos time. “This means it has the ability to pay dividend to its owners. It is positive for the firm. It means it is doing better,” said Ayodeji Ebo, managing director and CEO of Afrivest Securities Ltd.

The cement markers’ stock yields 9.10 percent in dividend, which means an investor will get N90,000 for every N1million he invest in the stock. In a notice sent to the Nigerian Stock Exchange (NSE), the cement maker said the buy-back

programme would be completed within 12 months from the date of receipt of the approval of shareholders for the programme. A buyback allows companies to invest in themselves. Reducing the number of shares outstanding on the market increases the proportion of shares owned by investors. A company may feel its shares are undervalued and do a buyback to provide investors with a return. And because the company is bullish on its current operations, a buyback also boosts the proportion of earnings that a share is allocated. Another reason for a buyback is for compensation purposes. Companies often award their employees and management with stock rewards and stock options. To make due on rewards and options, companies buy back shares and issue them to employees and management.

Companies asked investors to pump N290.09bn fresh capital in 2019 BALA AUGIE

n 2019, Nigerian companies asked investors to pump fresh equity capital to help deleverage their balance sheet and plot a path to recovery, but this year they may opt for corporate bonds and commercial papers because of low money market rates. A total of 10 companies across sectors raised a combined N290.09 billion via rights issue in 2019, according to data gathered by Markets intelligence. A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. Between 2014-2018, consumer goods firms were tapping the equity market more than other sectors because they had to reduce interest expenses in their books. Analysts are of the view that there might not be follow up offering like rights issue because stringent policies by the central bank have made bonds and commercial papers attractive for issuers. “The case for alternative capi-

tal raise is gradually becoming more pronounced as rates are as low as 3 percent and 4 percent,” according to Yinka Ademuwagun Research Analyst United Capital Plc. “However, people may do rights because of the little rally we are seeing at the moment but the gains are not enough to wipe

out the losses of 2 years,” said Ademuwagun. International Breweries raised N164.39 billion through a rights issue of 18.266 billion ordinary shares of 50 kobo each at N9 per share. The capital will be sourced from shareholders of parent company, Anheuser-Busch InBev. The beer maker is beleaguered

by weak sales, huge debt, and recurring losses as it operates in an industry reeling from inflationary pressures and weak consumer purchasing power. Lafarge Africa raised N89.90 billion in rights issue as it restructured its outstanding short term $315 million shareholder loans. The strategy paid off. When the cement marker released its third quarter results, its debt had erased and it reverted to the path of profitability. UACN Property Development Company Plc (UPDC) raised N15.40 billion additional capital from shareholders to help deleverage its balance sheet and to take up its shares in the UPDC fundraise. Fidson Healthcare Plc, the largest pharmaceutical company in Africa’s largest economy, raised capital via a rights issue to a tune of N3 billion. The drug maker intends to invest proceeds of the issue on the acquisition of new technology and manufacture of drugs. Wapic Insurance and Sovereign Trust Insurance raised N5.93 billion and N2.08 billion in rights so as to help bolster capital and meet National Insurance Commission (NAICOM) stringent rules. Last year, NAICOM increased capital bases for insurance companies so that they have the financial

strength to take on more risks and compete with their peers across Sub Saharan Africa. Following a bearish run in 2019, with a negative return of 14.6 percent, the local bourse began the year on a positive note and has sustained the upbeat performance for the sixth trading session of the year. In 2019, despite attractive valuations and subdued political risk following the conduct of the general elections, investors’ appetite for Nigerian equities remained largely underwhelming. With a more stable political climate, investors appear to be reassessing their risk appetite. The NSE has gained 9.5 percent year-to-date, making it the world’s best performing bourse, albeit fuelled largely by local investors participation. The unconventional tools deployed by the central bank have added impetus to system liquidity, spurring investor appetite for risk assets such as equities. The apex bank barred individual and local corporates from participating in Open Market Operations (OMO) auctions so as to force lenders to extend credit to the economy and to stop the mop-up of funds from the system through the treasury bills.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 13 January 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Passive income and financial independence but don’t want a full-time tenant or flat mate? If you make some effort to make it presentable and functional, you may be able to rent it out through Airbnb or other companies; this is fast becoming a serious option for short-term city dwellers alongside small guesthouses and hotels. Can you Blog? Is there an area that you are passionate and knowledgeable about? Is your lifestyle of interest to others? You may find that there is a large audience out there that is interested. As you build traffic and a following, you should be able to monetize the blog by selling advert space. Starting a blog is one of the most effective side hustles as you can do it in your spare time and wherever you are in the world. However, it takes time and much effort to build content and credibility and to consistently present it in a way that appeals and adds value to your audience. Stock Photos Is photography your hobby? Do you take awesome photographs? If so, you can put them up in a gallery of stock photos selling your photos as stock photos. There is a huge market for stock photography that is more relevant for local use. Create an Online Course Consider creating an online course; this is a wonderful way to share your knowledge with your audience, build a strong following and earn passive income. What is your area

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If you are middle-aged, close to retirement and have been living solely on your salary, your goal should be to use your remaining peak earning years to create sources of passive income, which is often the main source of funds in retirement. Your pension will just not be enough

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ecently there has been talk of “financial ind e p e n d e n c e”. What does this mean to you? Most people live in the cycle of active income, which ties their time to their income; the salary you get from the work you do is as a direct result of your efforts at work. Active income can be earned only by investing time and effort directly in return for money; if you don’t work, you don’t earn. Whether you are a teacher, a builder, a banker, a software developer, an athlete, an actor, or a doctor, you have to work to earn a living. On the other hand, people are able to detach the time spent from the money that they earn; their money is actually working for them with little extra effort on your part apart from the initial act of active investing. They earn passive income from various sources including investment property, dividend income from owning stocks, interest income, royalties from publishing books, music, from business interests and so on. Financial independence comes when your passive income streams far surpass your expenses. That is what we must all aim for as with this, you have the freedom of choice and flexibility. Here are some sources of passive income: Interest Income Interest is a most basic form of passive income. Interest earned on savings account balances, fixed deposits, money market funds or bonds is a relatively riskfree source of passive income. However, do note that interest rates hardy keep apace with inflation, so it can be a challenge to earn or grow capital in any significant way. Investment Property Investing in residential or commercial property for investment purposes is a time-tested way of enjoying passive income alongside capital appreciation. The

location and condition of the property are of significant importance for you to realize stable rental income far into the future. Seeking appropriate advice from reputable real estate companies will give you the best chance at success. D i v i d e n d -Y i e l d i n g Stocks Another effective way of earning passive income is to buy shares in a publicly quoted company that regularly pays dividends to its shareholders. Seek professional guidance; a reputable stockbroking house will select stocks for you but it is also important for you to develop your knowledge of investing so that you understand what is being done with your money. Whilst investing provides one of the most accessible forms of passive income; in discussing its advantages, one cannot afford to overlook the issue of risk, which is an integral part of investing. There is always the very real possibility of loss, as markets can be volatile and prices will go up and down. A diversified portfolio will help to mitigate this. Business Interests If you are considering investing in an interesting business opportunity, seek professional advice. Some of the greatest sources of passive income have come from people taking a chance on an entrepreneur with a great idea, after doing their due diligence. Rent Out a Room Do you have an extra room that you don’t need

of expertise? What are you passionate about? Can you teach it? Are you prepared to put in the time to create valuable content? What does your audience want to learn about? To create an online course like other passive income sources requires upfront effort in creating the course and tweaking it from time to time. Initially your course may be available for free; as you continue to give value over time, and the quality and standard of your content is evident, you can charge for your courses and start creating a passive income stream by making it available online for sale to an audience. Write a Book Can you write? Do you have a passion for something that you can turn into knowledge for others? Creating a book takes time and sleepless nights but that effort once executed can turn into repeated sales. Once a good book is published, it can continue to generate income far into the future.

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Get that book that has been in your mind out there in 2020. Deal with your Debt With the best will possible and all the effort to create multiple sources of income, without dealing with overwhelming debt, attaining financial independence will be a challenge. Debt is simply a tool and for most people, it is necessary to borrow at some time or the other especially if you are purchasing a long-term asset such as a property. However, when your debt begins to control you, it is important to make every effort to regain control of your finances. As far as possible, avoid borrowing to buy depreciating assets and make efforts to pay back the most expensive urgent debt. Don’t ignore or wish away your debt; put in place a disciplined payback schedule, otherwise you are simply creating passive income for lenders. If you are middle-aged, close to retirement and have been living solely on your salary, your goal should be to use your remaining peak earning years to create sources of passive income, which is often the main source of funds in retirement. Your pension will just not be enough. When you work because you wish to and not because you have to, you can engage in work that you love. We all have things that we’re passionate about but we often have to defer them or put them off altogether. Uncover your talent, uncover your passion and see how you can begin to monetize it this year. Whilst earning passive income is important and tempting, this does not mean that you should quit your full-time job be@Businessdayng

fore you are ready. It is not always smart to drop everything to follow your passion; most people simply cannot afford to do this with the financial obligations that they face. The time must be right and if you enjoy what you do, there is absolutely no reason why you shouldn’t continue doing it. The prospect of creating and generating passive income can sound glamorous and easy. Do remember that whilst passive income can build that important financial momentum, you must be willing to invest time, and this could be years of putting in the effort to build something viable; it doesn’t just happen. Like any new business, creating passive income requires focus, discipline, commitment and consistency. Have you tried to envision your life in 2020 and beyond? What do you want to spend your time doing? Where do want to live? It is rare to find people achieving their financial goals and dreams solely from their salaries and subsequent pensions. True financial freedom requires alternative sources of income and passive income. Building such sources of income is the foundation for sustained wealth and financial independence. Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 13 January 2020

BUSINESS DAY

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Monday 13 January 2020

BUSINESS DAY

news

So Energy enhances access to petroleum products in Ghana DIPO OLADEHINDE

o Energy Ghana, an affiliate of Sahara Group, has commissioned a retail station located at Alajo, in the centre of the city of Accra to promote seamless access to world-class petroleum products in Ghana, the group said on Sunday. The station bears the characteristic modern So Energy design, which has become a brand associated with reliability, efficiency, convenience and safety in Ghana. The new retail station will serve both private and commercial vehicles in Kotobabi, Alajo, Circle and other suburbs in and around Accra. The operation of the So Energy station will also enhance availability of petroleum products in the region, with projected sale of a minimum of 200,000 litres of Automotive Gas Oil (AGO) and Premium Motor Spirit (PMS) monthly. At the commissioning of the station, Yvette Selormey, managing director, Sahara Downstream Companies in Ghana, stated, “With the addition of this station, So Energy will continue to provide exceptional services to its customers, sell quality

products delivered at good pump levels and competitive prices.” She added: “Expanding our retail network across the major cities in the country is in line with our vision of bringing energy to life by providing access to clean, safe and exceptional petroleum products to drive economic growth and development in Ghana.” Selormey said So Energy, in keeping with the dedication to providing premium customer experience, remained committed to working with the government and good people of Ghana to enhance the growth of the energy sector as well as contribute to empowering lives through support for the Sustainable Development Goals (SDGs). “So Energy has since become a notable corporate citizen in Ghana with remarkable interventions in education, health, youth empowerment and entrepreneurship. We are delighted that the So Energy brand is household name amongst private and commercial drivers in Ghana as they would drive long distances just to purchase fuel from a So Energy Branded Station,” Selormey said.

Hanan Buhari and unprecedented abuse of presidential powers Farooq Kperogi

he Presidency said it isn’t a legal violation or even a subversion of convention for Buhari’s daughter to use a publicly funded presidential jet for private purposes. That’s flatout untrue. But even if it were true, things don’t always have to be illegal for them to be condemnable. Something can be condemnable because it’s unethical or immoral, even if it’s legal. Making a tax-funded presidential jet available for the private use of Buhari’s daughter is straight-up unethical, even borderline illegal. Of course, it’s entirely defensible, even expected, for Buhari’s family members to get on a presidential jet WITH him. That’s one of the perks of the presidency. But Buhari’s daughter, not being a Vice President, a Senate President, or a Speaker, cannot, on her own, use a presidential jet—certainly not for private purposes. Plus, there’s no precedent for this in Nigeria. None of Obasanjo’s children ever used a presidential jet for personal vanity trips. We definitely never heard of any Yar’adua children use a presidential jet for private functions. And most people never even knew Jonathan had children. We barely heard of or saw them, and surely never ever read that any of them used a presidential jet without their dad in it. No one in Nigeria’s history has personalized governance

and murdered age-old expectations of basic decency in governance with as much impunity as Buhari has. Most members of his extended family not only hold key positions in his government, his children intrude on our national consciousness in the brashest and crudest ways imaginable. The “corrupt” Second Republic politicians that Buhari overthrew and jailed in 1983 weren’t nearly as reckless, nepotistic, corrupt, and irresponsible as he has been. Shagari’s wife and children, for instance, were barely seen. None of them ever used the presidential fleet for personal trips. None of Shagari’s family members officially worked in the inner recesses of the Presidency. The 1999 constitution says, “A public officer shall not put himself in a position where his personal interest conflicts with his duties and responsibilities.” Buhari violates this on a regular basis. Recall that in 2015, Buhari wondered why a Nigerian president would need a fleet of aircraft when even the British Prime Minister used “the same public aircraft like an ordinar y Briton.” He said he would sell off the aircraft in the presidential fleet if he became president. When we p re ssu re d h i m t o ma ke good his pledge, his spokesman claimed on Oct. 5, 2016 that the government had put two jets up for sale. As usual, it was a lie fabricated to repel scrutiny. www.businessday.ng

President Muhammadu Buhari (l) receiving a souvenir from Charles Uwadia, president, Computer Professional Registration Council of Nigeria (CPN), at their visit to the Presidential Villa in Abuja. NAN

FG takes step to reduce dependence on oil, gas … as Nasarawa wants FG to take control of solid mineral deposits Anthony Adgidzi, Lafia

inister of Steel and Mines Development, Olamilekan Adegbite, says the Federal Government has taken steps to shift it attention from over dependence on oil and gas to fossil oil in a bid to diversify Nigeria’s economy. Adegbite made this know when he paid a courtesy visit to the Governor of Nasarawa State, Abdullahi Sule, at the Government House in Lafia, to discuss possible ways of collaboration to boost the country’s economy, create job, wealth and to increase the internal revenue of the state. The minister explained that, they were in Nasarawa to explore possibilities of collaboration, cooperation with the state government, to make sure mining was taken to a further height of development. According to the minister, President Muhammadu Buhari has foreseen the end for the use of fossil oil and as such has mandated the ministry to seek to diversify the country’s economy towards moving away from over dependence on oil and gas. The minister stated that the president specifically wanted the Ministry of Mines and Steel

Development to use the mining sector to diversify the economy, create employment for the people as well as bring much needed revenue to the coffers of the Federal Government. “And part of that mandate is to ensure that mining takes place in every nook and cranny of Nigeria, in the proper manner that benefits everybody. So, it is not skewed in any direction,” the minister said. He disclosed plans by the Federal Government to reach out to informal miners that constitute 80 percent of the miners in the sector, through equipment leasing as well as training, in order to carry out mining properly that would be beneficial to Nigerians. Governor Abdullahi Sule, who was elated with the visit, said categorically that, no state governor wanted to change the ownership of solid minerals, which is the exclusive preserve of the Federal Government. According to the governor, Nasarawa does not want to be the owner of the solid minerals found in the state and as such, “We want to leave it to remain the way it is, under the control of the Federal Government. All that Nasarawa State needs, and that’s the same way all my colleagues,

I strongly belief, also wish, is that we don’t need to have any control of it but we just need to know what is happening.” The state cannot continue to claim that it is the Home of Solid Minerals without even knowing what is happening in the solid minerals industry, he said. He asserted that Nasarawa had the potentials to be one of the wealthiest states in the country, but that it was yet to know what was happening to its God-given wealth in terms of solid minerals. The Governor welcomed the initiative by the Federal Government, through the ministry, to seek collaboration with the states, local governments and communities where mining activities take place, with a view to sanitizing the mining sector. Sule commended the Minister for already carrying out the responsibility of a committee that came into being following interactions between the Governors and the Minister during a session of the National Economic Council (NEC), aimed at reviewing the control of the mining sector. “The bottom line is, we just want to keep the status

quo, it belongs to the Federal Government, being controlled by the Federal Ministry but the states can be carried along,” he stated. Commenting on the plan by the Ministry to reach out to informal miners across the country, with a view to organizing them and enhancing their productivity through equipment leasing and knowledge sharing, Governor Sule said even if that was the only thing the Minister would achieve, it would have been a tremendous achievement in the mining sector. While acknowledging that the state is open and willing to partner and collaborate with the Federal Government, the Governor noted that If only the Ministry can achieve the leasing support, it will solve the entire problems of the sector. Sule expressed concern however that with states like Nasarawa, which has abundant mineral resources like zinc, lead, tin and barites among others, yet the country still imports barites for use in the nation’s oil industry. “We are one of the states with the highest percentage of barite yet we are importing barite and bentonite for our oil industry. This is uncalled for,” the governor told the minister.

Western Lotto to employ 20,000 youths in 18 states

estern Lotto Nigeria Ltd says it is seeking to employ 20,000 youths as Point of Sales officers in 18 states across the country. The company said in a statement that this was part of its initiative to boost job creation, empowerment and productive engagement of young people. Applicants are expected to have a minimum qualification of Senior School

Certificate (SSCE) and a maximum of Ordinary National Diploma (OND) in any discipline. “Successful applicants shall be entitled to monthly salary of N30,000 – in line with the minimum wage approved by Labour and the Federal and state governments. They will also be entitled to a commission of 7.5 percent of their monthly sales which could take their monthly pay to N60,000,”

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the statement said. “This employment is guaranteed for an initial period of two years.” Applications deadline is on or before January 31 and the relevant states are Lagos, Ogun, Oyo, Osun, Ondo, Ekiti, Rivers, Edo, Delta, Bayelsa, Nasarawa State/FCT, Kwara, Kano, Kogi, Niger, Enugu, Imo and Akwa Ibom. The company encouraged applicants to apply @Businessdayng

online on its website or submit their applications and reference forms by hand at Western Lotto headquarters and area/regional offices. Western Lotto Nigeria Ltd is the sole rights owners of the Ghana Games in Nigeria, a sister company of Western Bet and Lotto9ja (an online instant games platform) under the BWC Group, Lagos, with interests in real estate and hospitality.

Monday 13 January 2020

BUSINESS DAY

news SEC says market regulation now more efficient with technology Iheanyi Nwachukwu

he Securities and Exchange Commission (SEC) says regulation of the market in a technology driven era is now more efficient. For this reason, SEC is stepping up its use in regulation to ensure that investors in the capital market are adequately protected. Acting director-general of the SEC, Mary Uduk, who stated this while speaking with newsmen weekend, said the Commission was continuing to deploy technology in regulation. She said, “Our regulation is becoming better and more efficient. We are able to tap into data we could not tap into before, so these now make regulation easier and more efficient and make us better able to protect investors. “We have also continued to encourage the members of the capital market community to embrace technology to make it easier for themselves and investors to invest. These days we have a lot of improvements, as now most stock broking firms have platforms you can just log in and buy on your own. “As technology is improving access to the market it’s also improving the ability of the regulator to better regulate the market.” It is based on the foregoing that the Capital Market Com-

mittee decided to embrace financial technology for easy accessibility, she said. She said, “One of the major reasons for the acceptance of technology in the financial sector is that it makes things very easy to access and also to achieve. FINTECH has come to stay and the sooner we acknowledge and accept it the better for everyone. SEC constituted a Market-Wide FinTech Road Map Committee because we have realized that we live in a technologically driven era, and it is only important that the Commission embraces this trend and create an enabling environment for technology to positively impact on our market. “We support FinTech by engaging and guiding Fintech start-ups that seek to operate in the Nigerian capital market. As the regulator, we are also working on adopting Fintech and Regtech in our regulatory operations while we encourage those we regulate to embrace Fintech, not as competitor, but as enablers to their existing operations and processes. “Specifically, we are looking into the area of crowdfunding, cryto assets, robo advisory and distribution of collective investment schemes products through fintechs. We need to be able to balance our objective of protecting investors and encouraging innovation and development in the market.”

Price capping of petroleum product key obstacle to Nigerian refinery rehabilitation - experts ... seek cut on fuel import to lessen subsidy loss in US-Iran faceoff HARRISON EDEH, Abuja

igerianNationalPetroleum Corporation (NNPC) may notsucceedinitsintention of turning around the refineries on the back of price capping regime established through the baptised subsidy payment called ‘under recovery,’ according to petroleum sector governance experts. The NNPC has repeatedly assured for more than 10 years that it wouldensureoptimalperformance of the refineries across the country through rehabilitation, quite assuring that it is already talking with investors on the development. Mele Kyari, group managing director, NNPC, had re-echoed this stance, assuring that the corporation would start with Port Harcourt refinery rehabilitation early 2020. But analysts observe that the

move by the corporation to attract investors to invest on the refinery rehabilitation is possible on the concernsthatthereisnobankable investment feasible in a capped petroleum regime. “No investor would put his money on a refinery when there is asubsidyregime.Banksspecifically won’t finance refinery rehabilitation on a subsidy regime. Refinery business are a marginal business, andthereisalreadyatightbudget,I wonderhowtheGroupManaging Director of the corporation would commence the rehabilitation as he promised on the last year on the assumption of office,” Henry Ademola Adigun, an oil sector governance expert, states. “When you cap a product, investors are aware because it cannot guarantee them profit on the product,” Henry says further. Speaking further, he notes that

the corporation must focus on liberalisation of the petroleum downstream sector. On the pros and cons of the Nigerian government in the Iran and United States of American, he says, “The Federal Government would make more… but based on the Petroleum Products Pricing Regulatory Agency’s (PPPRA) template, the payment of subsidy for about 58 million litres per day could see us paying more trillions in subsidy. I expect the PPPRA to see how to address these concerns, which they have tried to bring down to 52 million litres per day. “With the enforcement of border control and less subsidy for other West African countries, which we have been doing inadvertently, the PPPRA must find a way to lessen what we pay in subsidy so that we don’t lose what

we gain in sales.” Nigeria spends over a trillion on subsidy payment, which calls for concern with sector analysts calling on the Federal Government to liberalise the sector for maximum benefits. Adeola Adenikinju, a professor of Energy Economics at the University of Ibadan, says the NNPC must focus on getting fiscal governance framework right to commercialise the sector. “NNPC is treated more as a government entity rather than a purecommercialoutfitthatshould deliver value to its stakeholders and Nigerians. “I believe the refineries should be sold. The passage of the regulatory and governance framework for the industry like the PIGB will address the problems of the industryplayersincludingtheNNPC holistically.”

Oshodi Interchange targets 1m passengers daily

anagers of the global icon, Oshodi Transport Interchange, Planet Projects, are targeting 1 million passengers daily when the facility becomes fully operational. Managing director, Planet Projects, Biodun Otunola, revealed this recently at a parley with media executives at the site in Oshodi, Lagos, saying this would enable the facility take care of one ninth of the 9 million passengers who journey through the Lagos traffic daily. The Interchange, which began operations in Terminal 3, one of its three terminals on May 1, last year recorded 1,600,000 passengers by end of year implying an average daily traffic of 6,400 passengers. While the Planet Projects manages the facility owned by the Lagos State Government, the Lagos State Bus Services handles the transportation of passengers. LSBS’ initial fleet of 35 at the facility was recently boosted by the Babajide Sanwo-Olu administration with an additional 65 buses and there are hopes that the delivery of 820 buses currently at the ports will put more buses on the road and move the facility closer to its target. Industry operators estimate that Lagos needs 7,000

high capacity buses and at least 14 terminals of different dimension to encourage owners of private vehicles to embrace the park and ride policy of the state government by riding on the buses. Otunola, a transportation engineer and strategist, said Planet Projects was committed to making the interchange work to prove that Nigerians have the capacity to build and operate a complex transportation icon such as the Oshodi interchange. “This facility was built by Nigerians. There is no foreign labour from design to construction. “During construction, we were able to demonstrate the advantage of Nigerians managing their own construction. For instance, there was no day we didn’t work on site despite the rains. Yet, foreign companies usually stop work during rainy season,” Otunola noted. He said Terminal 2, designed to provide inter-city services, was being prepared for take-off beginning with trips to nearby capitals such as Ibadan in Oyo State, Akure, Ondo State, Oshogbo, Oyo State and Abeokuta, Ogun State. Towards this objective, discussions with the government and bus owners have started to yield fruits. www.businessday.ng

L-R: Babagana Monguno, national security adviser; Mahmood Yakubu, chairman, INEC, and Mohammed Adamu, inspector general of police, at the meeting of the Inter-agency Consultative Committee on Election Security (ICCES), at the INEC headquarters in Abuja. Pic by Tunde Adeniyi

How FG can revive Nigeria’s ailing refineries - PENGASSAN JOSHUA BASSEY

etroleum and Natural Gas Senior Staff association of Nigeria (PENGASSAN) has suggested the adoption of the Nigerian Liquefied Natural Gas (NLNG) model to revive the four federally-owned refineries. The four refineries, located in Warri, Delta State; Port Harcourt, Rivers State, and Kaduna, have for years been left in deteriorating state, unable to refine petroleum products to meet local consumption needs of Nigerians. As a result, Africa’s biggest economy depends more than 80 percent on imported products to function.

But PENGASSAN believes this situation can be remedied if the Federal Government can adopt same strategy that turned the NLNG around- that is restructuring the ownership of the refineries. The NLNG, backed by the NLNG Act, is owned by four shareholders: Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (NNPC) (49%); Shell (25.6%); Total Gaz Electricite Holdings France (15%) and Eni (10.4%). This has ensured a reduced Federal Government’s influence on the management of the NLNG. This is generally believed to have contributed

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to the success story of the NLNG. Ndukaku Ohaeri, president of PENGASSAN, who spoke with journalists in Lagos on developments within the oil and gas industry, among other national issues, believed that replicating the NLNG strategy with the refineries would equally turn them around. “We continue to advocate the application of the NLNG ownership and operating model for our refineries as one of the best ways to maximize those national assets,” Ohaeri said. He noted that the resuscitation of the refineries would create more jobs, reduce the burden of importing refined @Businessdayng

petroleum products and add value to our national economy as well as save some foreign exchange. Ohaeri also called for the passage and signing of the Petroleum Industry Governance Bill (PIGB), so as to remove observed barriers to efficiency, address corruption and position the industry for greater competitiveness and productivity. “We also call for the inclusion of a clause that mandates International Oil Companies (IOCs) to refine certain percentage of their crude production in-country. This will definitely mark a new era in the oil and gas industry to the benefit of the nation and her people.”

Monday 13 January 2020

BUSINESS DAY

news Economy, real sector reel as haulage cost... Continued from page 1

two busiest ports – Apapa

and Tin Can Island – which together account for about 75 percent of the total export and import activities in Nigeria. On account of the gridlock, travel time to Apapa from other parts of Nigeria has graduated from days to weeks on a single trip and this is impacting negatively and significantly on businesses, increasing costs, eroding importers’ margins, squeezing consumers and ultimately slowing economic growth. “Export cargoes are either trapped in traffic jams or stored in transit warehouses in Lagos,” said Pius Ayodele, president, Cocoa Exporters Association of Nigeria. Akin Olusuyi, president, Cocoa Processors Association of Nigeria, agrees, noting that “shipment delays are making it difficultforexporterstogetcredit from banks to finance their operations”.He recalled that about 1,760 tons of cocoa butter and cake were held up in the Apapa gridlock some time ago. For importers, rising haulage cost, which some estimates reckon is higher than the cost of bringing goods from China, is a major concern because of the heavy impact it has on their overall costs. “In the last 24 months, we have seen over 600 percent increase in haulage cost alone, no thanks to the gridlock and congestion in Apapa,” lamented a business owner whose company is located not too far away from the Tin Can Island Port. The business owner who craved anonymity explained to BusinessDay that to move their consignment in a 40-footer container from Tin Can Island Port to their office within the same Apapa recently, they had to pay N690,000, up from N80,000 they paid for same size container two years ago. “We are talking about movement within Apapa; from that you can get a sense of what other importers are going through moving their consignment from here to other parts of Lagos and other parts of the country, especially the Eastern and Northern parts,” the business owner said. Jon Kachikwu, CEO of Jon Tudy Enterprises, an exporter totheUnitedStates,saidheused to pay N55,000 to N65,000 for a 40-foot container from his Yaba factory to Tin Can Island Port four years ago, but now pays N350,000. He said agency fees havealsorisenfromN350,000to N650,000 as a result of the mess in Apapa and Tin Can ports. A manufacturer who prefers anonymity said he paid N1 million to bring in his container in December 2019, which included N400,000 for transport to his Ojota/Mile 12 factory. “Thecommissionerofpolice hastosignbeforeyoumoveinor move out your container. And this involves money. You have to ‘settle’ the police, the Navy and the Army, otherwise your container will be there for three weeks. But once you pay, your container will be free in one week,” the manufacturer said. Ede Dafinone, chairman,

Manufacturers Association of Nigeria (MAN) Export Group, told BusinessDay that transport per container from his factory in Sapele to Lagos port in 2018 was N195,000, but the cost has gone up to N340,000 as of December 2019. However, total port cost per container (Grimaldi shipping line, forwarding agent, and government agencies) was N183,500 in 2016, but rose slightly to N189,500 in 2019. An Ikeja-based manufacturer said he used to pay N60,000 to N70,000 for a 40-footer container to Apapa Port in 2015, but he paid N520,000 in November 2019. He lamented that this has raised his production cost and hit his margins significantly. In a related case, a truck driver who introduced himself simply as Afis told BusinessDay he came into Lagos from Warri, Delta State, and was yet to enter Tin Can Port after three weeks on the road. That was before paying a bribe. “I am sure to enter the port tomorrow because I have just paid N170,000 to somebody I was told could help me to move my truck. I will still pay N25,000 when I reach the port gate before I can enter finally,” Afis said, anger and frustration in his tone. Asked if the man who assisted him was a police officer, a soldier or a member of the presidential task team (PTT), Afis said, “He is not a soldier or policeman, but I don’t know if he is a member of the task team; in short, I do not want to know who or what he is.” Kayode Opeifa, executive vice chairman of PTT, had told BusinessDay in an interview that the Apapa gridlock has persisted despite all efforts because “corruption is fighting back”.He explained that those who feed fat on the Apapa mess would do everything to frustrate efforts at making it work. Emma Ameke, a port operator confirmed the haulage increases. “It has been a big problem these days and the experience in getting to Apapa has become a nightmare. Businesses continue to slide to their lowest level. It takes us almost two weeks to get our containers loaded after finishing with the Customs,” Ameke said. “Transportation costs have gone up so high because trucks’ turnaround has dropped significantly as a result of the congestion and gridlock. Before now, a truck driver could go on two to three trips a day within Lagos; now he can only do one trip. Outside Lagos, he could do two trips in a week; today he can only do once in a month,” he said. All these increases are putting pressure on businesses but, according to Ameke, at the receiving end is the economy, which continues to suffer, and the consumer to whom the importer passes on the additional costs. “Until all these anomalies are addressed, Nigeria will continue to be too expensive a market for foreign direct investment which the economy needs badly at the moment,” he noted. www.businessday.ng

Godwin Obaseki (r), Edo State governor, and Ruth Osahon Okunwe, chairman, Esan West Local Government Area, after the chairman’s swearing-in by the governor, at the Government House, Benin City.

Nigeria turning page in ties with private... Continued from page 1

propriate tax authorities, the Federal Inland Revenue

Services (FIRS) as the Nigeria Customs Service. The letter from the justice minister was received by MTN lawyers who are believed to have advised that the case which MTN brought challenging the tax claim be withdrawn, given the good faith shown by government. Telecommunications industry stakeholders say that this decision should have been made a long time ago. Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), told BusinessDay in a telephone interview that the bodies established by government to look into taxes and exports should be independent and allowed to do their work without interference. “Although we are happy that it would appear that the AGF has not found anything materially different from what FIRS and Customs already know about MTN, what we can only pray for is that going forward, cases that involve these types of situation or accusations of such a large organisation – a multinational corporate that is operating not only in Nigeria but in other countries – should be thoroughly viewed and investigated by the appropriate government agency before going to public and stating confidently that they had found an issue, when now there may not be any issue,” Teniola said. BusinessDay understands that directors of MTN Nigeria held a special board meeting Friday morning at which it was agreed that the case be taken out of court while the company prepares for engagement with the FIRS and the Customs Service on the matter. MTN Nigeria’s share price has rallied two straight days and closed at N116 on Friday, the highest this year. “The development is wel-

come and indicates that a big overhang issue around investing in Nigeria has been lifted,” said Tajudeen Ibrahim, head of investment research at Lagos-based Chapel Hill Denham. “It is also consistent with our view that the AGF is not the party legally responsible for collecting taxes and duties in Nigeria.” Several business leaders interviewed by BusinessDay spoke of a number of positive developments which have been roundly welcomed by the private sector. These include the ability of the government to have the 2020 federal budget ready for implementation before the end of last year, the emergence of a progressive tax regime, the push by the electricity regulator NERC to enthrone a market-determined tariff, and the resolve of President Buhari to push back the shock sack of two CEOs of parastatals which was ordered by the minister of power in December. “All these moves are positive for the economy and I think it is part of a good trend,” Bismarck Rewane, leading economist and member of the newlyestablished presidential Economic Advisory Council, told BusinessDay. Muda Yusuf, directorgeneral, Lagos Chamber of Commerce and Industry (LCCI), also welcomed the new development regarding MTN and the AGF. “It is a return to the path that should normally have been followed. The manner in which the AGF came into the picture of the tax saga aroused significant suspicion and had a negative signalling effect,” Yusuf told BusinessDay. “To deepen the confidence of investors, we need to fix fundamental and systemic issues. We need structural and institutional reforms. We also need to address monetary, trade policy and fiscal policy is-

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sues. These are the things that would endure,” Yusuf said in a comment on Friday. It can be recalled that the development of this case and allegations of illegal repatriation of funds by the telecoms company hurt MTN’s shareholder value in Johannesburg and delayed the company’s plans to list on the Nigerian Stock Exchange (NSE). “We have to understand that the reputation of this company has been tarnished by that single act and there is an impact on MTN’s brand and its ability to convince its shareholders that there was nothing like that,” Teniola said. He said the Nigerian government needs to make a statement that provides an assurance to investors who have any doubts about this issue that this type of thing will not occur again. Timothy Olawale, director-general, Nigeria Employers’ Consultative Association, an umbrella organisation of private sector employers, also commended the government for opting for dialogue and avoiding a long-drawn legal process that was not in the interest of both parties. “We affirm that with the rate of unemployment in the country, government and its agencies will do well to continuously take steps that will increase the confidence of local and international investors,” Olawale told BusinessDay. “The MTN situation has been a test case. We hope this will herald a positive change in government agencies’ disposition to the private sector. We presently still have some regulatory agencies stifling businesses by jettisoning dialogue and forcing businesses to take the legal option, which is not good for job creation and investment promotion,” he said. The controversial land border closure which is hurting legitimate exporters and a N50 stamp duty on Point of Sales (POS) transactions that threatens to roll back gains @Businessdayng

of building a cashless economy and financial inclusion are some policies investors hope the government will also review in due time to further cement a change of approach to private sector. Gbenga Adebayo, president and chairman, Association of Licensed Telecommunications Operators in Nigeria (ALTON), told BusinessDay that it is only fair that the rule of law is followed under all and every circumstance. “Revenue collection, excise and levies collection are the responsibility of statutory revenue collection agencies. So long as the FIRS and NCS are allowed to do their work as provided for by law, and rule of law is allowed to prevail, that would be fair to all. Where we have a problem is where we have an agency that has no direct responsibility of certain services attempting to execute such service,” he said. Last year, Abubakar Malami, Nigeria’s attorney-general, had asked MTN to pay $2 billion in taxes relating to the importation of foreign equipment and payments to foreign suppliers since 2008. MTN denied the tax liabilities and proceeded to sue the Nigerian government over what it said were false claims and challenged the legality of the AGF in a matter relating to taxes. A senior MTN Nigeria plc official told BusinessDay that the withdrawal of the court case was a logical follow-up to the action of the justice minister. “By this action taken by the minister, the case seemed to have fallen off anyway. We are grateful for this and we know that this might not be end of the matter but we now look forward to dealing with the appropriate tax authorities,” the official said. The tax claims brought by the government had set alarm bells ringing among investors, and it is believed to have damaged investor confidence in Nigeria.

Monday 13 January 2020

BUSINESS DAY

Monday 13 January 2019

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

16,000 farmers receive input for dry seasoning farming in Taraba

Middle, Managing Director, Abuja Property Development Company (APDC) Lawal Aliyu Magaji, flanked by John Osadolor, Deputy Editor/Director Northern Operations BusinessDay and Onyinye Nwachukwu, BusinessDay, Abuja Bureau Chief after an exclusive interview

Nathaniel Gbaoron, Jalingo

Public health is FG’s major priority - Minister Godsgift Onyedinefu, Abuja

he Minister of Health, Osagie Ehanire has restated that Public health is a major priority for the Government of Nigeria and it will continue to prioritise it’s development. The Minister said this when he visited the Nigeria Centre for Disease Control (NCDC) National Reference Laboratory (NRL) in Gaduwa, Abuja.

The visit is part of his routine visits to Departments and Agencies within the Federal Ministry of Health, to ensure their alignment to the vision of the present administration to improve the health of Nigerians. Ehanire expressed delight that the facility exists and provides critical laboratory functions for the country and has made progress since its operationalisation in 2017. The Minister also congratulated NCDC on

the integration and collaboration that has been achieved across agencies and disease programmes in the health sector. The Director General of NCDC, Chikwe Ihekweazu, highlighted the support of partners notably the World Health Organization, US-Government, Public Health England, Robert Koch Institute and others in strengthening the capacity for public health laboratory services in Nigeria. Ihekweazu said, over

the last three years, the laborator y has developed the capacity for molecular diagnosis of Lassa fever, monkeypox, yellow fever, measles, rubella, meningitis, cholera and highly pathogenic infections such as Ebola. The National Reference Laboratory is the apex Public Health Reference Laboratory of the country and has the mandate to coordinate the diagnosis of diseases of public health importance.

Nasarawa launches sale of 240 metric tons of fertilizers for dry farming season Anthony Adgidzi, Lafia

n continuation of his commitment to improving food and agricultural production, Governor Abdullahi Sule of Nasarawa State has launched the sale of 240 metric tons of assorted fertilization to farmers which would be sold at the rate of N4, 000 per bag. Governor Sule at the lunching of fer tilizer sale for 2020 dry season farming in Lafia said, his government was targeting to implement various projects and programmes towards improving agriculture to the next level of development. The State Deputy Governor, Emmanuel Akabe who stood-in for the Governor warned those handling the fertilizer sales that, they would be held responsible for any anomalies in the distribution of the fertilizer in their respective domains. He also warned the co-

ordinators at various levels to ensure remittance of sales to the designated banks as any misappropriation would attract appropriate sanction. The Governor who is not unaware of the activities of middlemen, cautioned them against diversion, increasing price of fertilizer and extorting farmers, saying that anyone caught would decisively be dealt with. He noted that the state is suitable for production of various crops and as such, government was going to ensure effective distribution process in the delivery of farm inputs to the farmers. The Governor added that with the sale of the fertilizer, government would ensure all year round farming with the view of attaining sustainable food production and food security in the state. According to him, the state was endowed with fertile lands and good cliwww.businessday.ng

matic condition suitable for the production of arable crops for both domestic and export consumption. “It is for these reasons that about 80% of the state population are engage in farming, thereby stands as the major employer of labour and most viable vehicle for achieving food security in the state”. “It is imperative to say that until agricultural resources are properly exploited, we will not be able to create the desired employment for our teeming population as well to create wealth for the well being of our society. “Indeed, this will make the state depend less on the monthly allocation from federation account. We must deliberately take steps and device means on improving our internal generated revenue”, the Governor said. According to Sule, the commitment of the State in improving the sector will pave way for increas-

ing industrial activities, considering that agriculture is the fulcrum for industrial development. He noted that the proximity of the state to the Federal Capital Territory, Abuja and other neighboring states, Lafia Cargo Airport have put the state in an advantage position for a ready market. Earlier, Commissioner for Agriculture and Water Resources, Otaki Allanana said, aside from the tons of assorted fertilizer, government would ensure make accessible tractors, seedlings and other farming impute. The Commissioner urged farmers to take advantage of government gesture and to maintain closer contact with field extension workers so as to keep abreast of the new development in the agricultural sector. He called on farmers to make use of the fertilizer to effectively boost their crop production and improve their livelihood.

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t least 16,163 Rice Farmers in Taraba have received farm inputs worth N200,000 each for the 2020 dry season farming in the state. The loan inputs were provided by Rice Farmers Association of Nigeria (RIFAN) to it’s registered members at a ceremony in Jalingo, the Taraba State Capital. Speaking during the ceremony, Taraba State Chairman of the Association, Tanko Andami said the distribution of the farm inputs was to boost rice production in the State. According to him, the loan was secured from the Central Bank anchor borrower’s scheme through

Unity Bank to help rice farmers boost production for local consumption and for export. Andami said apart from the inputs, each beneficiary of the scheme will receive N60,000 cash from Unity Bank to take care of labour cost on their rice farms, adding that each beneficiary of the loan was expected to repay the loan after harvest. While expressing satisfaction over the response of loan beneficiaries in repaying the loan granted them last year, the Chairman said the loan scheme has help rice farmers in boosting yields. BusinessDay gathered that this is the second time the loan would be given to rice farmers in the state to helped boost rice production in the state.

Mambilla Beverages have overshot its profit margin - IIiya Nathaniel Gbaoron, Jalingo

anaging Director/Chief Executive Officer of Taraba Investment and Properties Limited, Iliya Ezekiel has disclosed that the profitability reports and the general performance of the state owned companies from 2016 to date are growing rapidly and above the budgeted figures due to commitment of staff, management team, and the state government supervision skills. According to the Managing Director, the Mambilla Beverages Nigeria Limited which was incorporated in 2012 after the requidation of Nigeria Beverages Production Company Limited that started production of tea in Nigeria in 1982 was bought over by the Taraba state governmentand by 2015 started producing competitive products for the Nigeria markets. Iliya stated that when the government of Governor Darius Ishaku came on board, he did not only injected life into the company but completed and commissioned the 400Kw Hydropower Plant Tunga, provided modern tea processing (CTC), machines and alsopurchased modern tea barging and overwrapping machines to kick start @Businessdayng

massive production in 2015. The Managing Director in an exclusive interview with BusinessDay in Jalingo said with the current restriction placed on importation of tea in Nigeria and engagement of Taja Guru Limited to develop the market expansion of theproduct the company’s prospects are bright. Other factors which he said are the great opportunities for the company are the influx of people from the Mambilla Plateau as a result of the 3,050 megawatts Hydropower Project proposed by the Federal Government which will enlarge demand, the over 15,000 hectares of land for future expansion and development as well as the Tea bushes in the three estates at Kusuku, Kakara and Banguba which have not cross the economic threshold age limit. Iliya maintained that, while generating over 3,000 employments and striving to improved the Internally Generated Revenue Profile of Taraba State, the company has from 2015 till date produced 1,200,000kg of made tea for Nigerians. He appreciated the tireless commitment of Governor Ishaku in reviving the moribund company which is among the 8th revived so far out of the 25 subsidiaries of Taraba Investment and Properties Limited (TRIP).

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INEC pledges to halt polls in places with threat to voters, staff safety James Kwen, Abuja

ndependent National Electoral Commission (INEC) has vowed that although, it has no power under the law to cancel an election, it will not proceed with the process in any constituency where the safety of voters, its personnel and materials are threatened. INEC also says collation of results will not proceed where the collation centres are invaded and declaration of winners will not be made where Returning Officers are threatened. Mahmood Yakubu, INEC chairman, who stated this Friday at the Inter-Agency Consultative Committee on Election Security (ICCES) meeting in Abuja, said the Commission was concluding arrangements for the re-run elections scheduled for January 25, 2020, in one senatorial district, 12 Federal Constituencies and 15 state constituencies. Yakubu stressed that it was the responsibility of the security agencies to secure the environment for the successful conduct of elections, saying the purpose of security deployment during elections was to protect the voters, election officials and materials, accredited observers, the media and to safeguard the integrity of the processes generally, including the polling units and collations centres.

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Passengers stranded at Dubai airport 2020: NIMASA expects significant drop in piracy on Nigerian waters as flood disrupts operations IFEOMA OKEKE

housands of passengers are stranded and will face flight cancellations and multiple delays following effects of heavy rain that affected the Dubai International Airport overnight. As at Sunday morning, a total of 22 flights have been confirmed cancelled. Dubai International Airport (DXB) said on Sunday that some 22 flights were cancelled on Saturday night while one inbound flight was diverted to Al Maktoum International Airport, also known as Dubai World Central, is an international airport in Jebel Ali, 37 kilometres southwest of Dubai, United Arab Emirates, opened June 27, 2010. These figures are from Saturday night only, as the total number of flights cancelled or delayed during the last two days due to rain and water logging will be announced later. Passengers from Nigeria connecting to other destinations are stranded as some who are flying as far as the United States claim that there are no flights for them for the next couple of days. Emirates flight into Lagos arrived over four hours late probably due to the delays from the situation from the airport and arriving at Dubai Airport. A passenger connecting to North America, said, “It’s crazy out here, no flights for two to

three days. The Nigerian flight came in five hours later; we are in Dubai but it’s a mess here. Connecting flight left since and the crowd I sent you has since tripled.” Airport officials have advised passengers to arrive at the airport well in advance and always check flight status with their airlines. Meanwhile, the airport spokesperson said the Dubai Airport was now at the recovery mode, as the backlog of delayed flights was being cleared this morning (Sunday). In an earlier statement on Saturday by the spokesperson, “Dubai Airport confirms that operations at the DXB continued to be hampered by the knock-on effects of waterlogging caused by heavy rainfall earlier today (Saturday) which has resulted in a number of flight delays, cancellations and diversions. “We continue to work closely with our service partners to clear the backlog, restore full operations and minimize inconvenience to our customers. “However, with additional rain expected later this evening, the disruption is expected to continue for the next 24 hours. Accordingly, customers are advised to check directly with their airlines for more specific flight information and allow additional time to get to the airport.”

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SEYI JOHN SALAU

irector-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, in reeling out the outlook for the year 2020 has assured stakeholders in the Nigerian maritime sector of significant drop in instances of piracy on Nigerian waters this year. Peterside gave this assurance at a recent press conference in Lagos to highlight NIMASA’s achievement in 2019 and discuss plans for the year 2020. According to Peterside, the agency is vigorously pursuing its mandate to develop indigenous commercial shipping capacity in international and coastal shipping trade in Nigeria. Hence, the needs to reform the Nigerian shipping register and also build in-house capacity for enforcement. Recall that in June 2019, President Muhammadu Buhari signed into law the Suppression of Piracy and other Maritime Offences Bill (AntiPiracy Bill), to deal with the menace of piracy and related crimes in the Nigerian maritime. According to stakeholders, this law is a significant milestone for the maritime industry in Nigeria.

NIMASA will build on successes achieved in 2019 as regard building local capacity by encouraging and supporting more Nigerians to invest in vessel ownership, especially joint venture arrangement with foreign partners, the director-general said. He also used the opportunity to touch on the forthcoming NIMASA corporate dinner and maritime stakeholders awards scheduled for Saturday, January 18, in Lagos. The awards are geared towards celebrating members of staff and stakeholders that were outstanding in the year under review. In 2019, NIMASA recorded a general improvement in its special Cabotage register that resulted in the registration of 125 new vessels in Nigeria. Peterside also disclosed that the year also witnessed a presidential approval for the Cabotage vessel financing fund, dedicated to empower local capacity in the sector. Also, in the year under review, NIMASA was able to secure jobs for 7,414 Nigerian seafarers who were on-board sailing vessels. He also disclosed that the agency improved on its documentation processes in ensuring sailing clearance are issued under 24 hours for vessels calling at Nigerian ports.

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NCDMB trains 1000 secondary school teachers Olusola Bello

he Nigerian Content Development and Monitoring Board (NCDMB) has trained over 1000 science teachers in secondary schools across Nigeria as part of its Teachers Development Training Programme, Simbi Wabote, executive secretary, said weekend. He spoke at the closing ceremony of the second phase of the training programme in Kastina State, which benefitted 270 teachers, organised with support from the Kastina State Ministry of Education. Represented by the director, Planning Research and Statistics, NCDMB, Patrick Daziba Obah, the executive secretary promised that NCDMB would increase the pace of continuous development of teachers across the country. He explained that the Board’s sponsorship of the retraining programme was borne out of its desire to create new models in the quest for academic knowledge, adding that trainings given to teachers would enable their students compete with counterparts elsewhere in the world and position them in the knowledge of science, technology, engineering and mathematics (STEM). He expressed hope that the training of teachers would translate to better performances by

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their students in WAEC, NECO, JAMB, and other national and international examinations and lead to better technical skills and craftsmanship. He also charged the teachers to ensure Katsina State emerged as number one in STEM education and the students among the leaders in the quest for technological and industrial selfreliance. He stressed that NCDMB was set up to ensure the development and utilisation of Nigerian materials, equipment and workforce in the Nigerian Oil and Gas Industry and the realisation of this important goal required technical workforce, better trained administrators and personnel with essential skills He maintained, “The teaching methods of yesterday is no longer sufficient for the challenges of today and so we have modified the design and delivery of this programme in response to your needs. This year we have given you electronic tablets with all the reading materials and we have enough reasons to continue to advance the methods of learning.” Speaking further, he stated that NCDMB placed high premium on capacity development, especially in the teaching of STEM education across secondary and tertiary institutions in Nigeria.

Monday 13 January 2020

BUSINESS DAY

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55 BUSINESS DAY

Monday 13 January 2020

FINANCIAL TIMES

World Business Newspaper NAJMEH BOZORGMEHR

ran’s most senior Revolutionary Guard commander was summoned to a closed session of parliament on Sunday as public feeling in the Islamic republic turned against the regime over the role played by the elite security force in the downing of a passenger aircraft that killed 176 people including 82 Iranians. Major Gen Hossein Salami is responsible for the country’s ground, air and naval forces. There were no immediate details of the questions the legislative body asked him but the move came after Tehran, on Saturday, admitted that its air defence system was responsible for the unintentional shooting down of the Ukraine International Airlines passenger jet last Wednesday. Iran blamed human error plus heightened tensions with the US for the disaster. The acknowledgment was a huge embarrassment for the Islamic republic — which had initially denied any involvement in the crash — and the Revolutionary Guard. It triggered large-scale protests in parts of the capital Tehran and in cities across the country including Isfahan, Rasht, Mashhad, Hamedan and Babol with people angry at what they believed was an attempted cover-up. The demonstrations continued into Sunday morning with many protesters calling for the resignation of

Iran questions Revolutionary Guard over downing of airliner British ambassador arrested and briefly held during university protests

Protesters light candles at a vigil for the victims of the Ukraine International Airlines flight that was unintentionally shot down by Iran © Bloomberg

senior politicians including supreme leader Ayatollah Ali Khamenei. The anti-regime slogans being shouted were among the most aggressive heard in Iran in many years with calls for the Revolutionary Guard — the most powerful organisation in the Islamic republic — to stop interfering in the country’s affairs. While others shouted “too many years of crimes; death to this

Pedro Sánchez wants to assuage concerns over presence of radical left in government

Mattress-maker Casper warns public investors of their power to make or break brands

asper has highlighted the growing power of socialmedia influencers to make or break brands, naming its own online advocates as one of the risk factors facing its initial public offering. The US mattress-in-a-box company launched in 2014, and emerged as an internet sensation when Kylie Jenner, who has more than 150m followers on Instagram, showed off pictures of its wares. Filing for an IPO on Friday, Casper warned investors that its inability to control future messaging by such influencers could put their money at risk. “Use of social media and influencers may materially and adversely affect our reputation,” the company wrote in its offering documents. “Influencers with whom we maintain relationships could also engage in behaviour or use their platforms to communicate directly with our customers in a manner that reflects poorly on our brand and may be attributed to us or otherwise adversely affect us.” Influencer marketing has expanded into an $8bn business as celebrities, experts and other people with large followings on social media platforms charge thousands of dollars to promote products. For start-ups such as Casper, influencers offer an opportunity

to reach customers directly — and at a relatively low cost. The danger is that influencers associated with a brand lose their enthusiasm for a product — or their sway over the public. Social media influencers are also becoming a legal risk for companies as US and UK regulators issue guidelines that call on influencers to more conspicuously disclose their relationships with brands. Casper said its influencers could “subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties” that may undermine its financial health. Online fashion brand Revolve, which last year raised $212m in an IPO giving it a $1.3bn valuation, also listed its influencer marketing strategy as a risk in its offering documents. “If we are not able to develop and maintain positive relationships with our network of over 3,500 influencers, our ability to promote and maintain awareness of our sites and brands and leverage social media platforms to drive visits to our sites may be adversely affected,” the company wrote. Casper’s IPO will be closely watched on Wall Street because it is one of the first tests this year of the investor appetite for unprofitable consumer businesses backed by venture capital, following stumbles by groups such as Peloton, SmileDirectClub and WeWork last year. www.businessday.ng

squares. But more protests have been called for Sunday with Iranians encouraged to post black pages on Instagram with angry messages. US president Donald Trump posted a tweet in Farsi that he would “stand by” the Iranian people and follow their protests “closely”. The downing of the plane last Wednesday came just hours after

Spain’s PM seeks to bolster economic credentials with cabinet

Social media influencers named as stock market listing risk factor ORTENCA ALIAJ

Velayat [supreme leader]”. University students, who mourned the deaths of some graduates from the prestigious universities of Sharif and Amir Kabir chanted: “Our geniuses are killed [and] replaced by clerics”. Riot police holding shields and batons and security forces later dispersed the crowd and maintained a heavy presence in downtown and western Tehran as well as some main

Iran had launched missile attacks on bases housing US forces in Iraq in retaliation for the assassination of Qassem Soleimani, a senior Revolutionary Guard leader, in a US air strike. Saturday’s protests — and the admission of guilt — are in sharp contrast with the mood just seven days earlier when millions of people turned out to mourn the death of Soleimani and called for retaliation against the US. After one protest the British ambassador, Rob Macaire, was arrested and briefly detained on Saturday before being released. Dominic Raab, UK foreign secretary, said the arrest of the ambassador “without grounds or explanation is a flagrant violation of international law”. The ambassador said he had not participated in any demonstration but attended a vigil for victims of the air crash, which he left when the group started to chant. While some hardline Iranian officials sought to accuse the UK of trying to fuel protests, Iran’s deputy foreign minister, Abbas Araghchi, said security officials had not known Mr Macaire was a diplomat when was he was detained. The ambassador was released as soon as his identity was confirmed, he said, in a statement on Twitter.

DANIEL DOMBEY

edro Sánchez, Spain’s prime minister, has announced a cabinet designed to emphasise his new administration’s mainstream social democratic credentials despite his alliance with the radical left. The ministerial line-up, unveiled on Sunday after Mr Sánchez last week narrowly won parliament’s approval to take office, keeps key economics posts in the hands of his Socialists and away from Podemos, their leftwing coalition partners. “Sánchez is signalling to the outside world and to Brussels in particular that he sees this as a broadly social democratic government with a technical character,” said Miguel Otero at the Elcano Royal Institute, a Madrid think-tank. “He’s highlighted the importance for him of the economic agenda, his ambitions for Spain to play a bigger role internationally, and that it’s the Socialists, not Podemos, that have the key posts.” In remarks after he informed King Felipe VI of the composition of the cabinet, Mr Sánchez said that, as the first coalition to rule in Spain for 80 years, his administration would take “the path of European politics, of forming government majorities through dialogue”. The prime minister has strengthened the roles of his two most senior economics policymakers: Nadia Calviño, economics minister, who becomes a deputy prime minister, and María Jesús Montero, budget

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minister, who will also serve as government spokesperson. The two ministers face difficult negotiations at home and abroad at a time when the economy has cooled. The government has to reconcile its spending promises with demands by Brussels to rein in the country’s structural deficit and faces a challenge in passing a budget, given the coalition’s lack of majority in parliament. Mr Sánchez has given the post of foreign minister to Arancha González, a former World Trade Organization and European Commission official who has most recently headed the International Trade Centre, a UN-WTO development agency. José Luis Escrivá, head of Spain’s Independent Authority for Fiscal Responsibility, a state public finances watchdog, becomes social security minister. Parliament approved the coalition government’s formation despite opposition from rightwing politicians, who denounced the prospect of Communist ministers and the role of Catalan and Basque secessionists, whose abstentions were necessary for Mr Sánchez to win the vote. Spain is the largest EU country where the left holds power, at a time when social democracy is on retreat across much of the continent. Pablo Iglesias, Podemos leader — whom at one point Mr Sánchez had sought to exclude from government — will now become a deputy prime minister. But, in a move that appears designed to offset Mr Iglesias’s ascent, Mr Sánchez has @Businessdayng

named three Socialist deputy prime ministers, all women. While women represented a majority of Mr Sánchez’s first cabinet, named in 2018, his new government will be made up of 12 male and 11 female ministers. One of Podemos’s most significant appointments is Yolanda Díaz, a labour lawyer and Communist party member who is taking up the employment portfolio. The new government seeks the partial reversal of 2012 labour reforms, which many economists say boosted Spain’s competitiveness but which critics allege have damaged workers rights. Another Podemos nominee is Manuel Castells, an internationally renowned sociologist who becomes university minister. Overall, Podemos will have five of 23 cabinet seats. Last week’s parliamentary vote on the installation of the government was contentious not just due to the role of Podemos but also because of the abstention of the Republican Left of Catalonia (ERC), a separatist party. Its leader Oriol Junqueras is serving 13 years in prison for his role in an illegal 2017 referendum and declaration of independence. In a move last month widely seen as trying to encourage the ERC’s abstention in the vote on the new government, Spain’s solicitorgeneral’s office proposed temporarily releasing Mr Junqueras so he could be sworn in as a member of the European parliament. The European Court of Justice had previously found that Mr Junqueras had held parliamentary immunity as an MEP.

Monday 13 January 2020

BUSINESS DAY

NATIONAL NEWS

Central banks begin to grapple with climate change The Fed lags behind the ECB as monetary policy faces a challenge-turned-emergency GAVYN DAVIES

he bushfires raging in Australia are a graphic illustration of the climate emergency that seems certain to dominate global political debates in the next decade. However, macroeconomists and central bankers have been slow to focus on the new issues that climate change will bring to their policy deliberations. This is changing rapidly. There are essentially three areas that central bankers need to address: First, the developing risks to financial stability in insurance and banking that will be triggered by natural disasters and the changing price of carbon relative to renewable energy supplies. Second, the impact of climate change on gross domestic product growth and inflation, and thus on their “normal” monetary policy decisions. Third, their possible direct role in mitigating climate change through managing their balance sheets appropriately. Progress has been substantial on the first issue, but much less on the other two. There is now a consensus among central banks that the growing risks to financial stability must be addressed urgently. Mark Carney, in his twin roles of governor of the Bank of England and former chairman of the G20’s Financial Stability Board, has been the world leader in encouraging

corporations to measure, publish and address climate risks, backed by stress tests. He is soon to leave the BoE but fortunately, he now moves on to become UN envoy on these issues. By improving the quality of information on the effects of climate change, Mr Carney hopes to avoid a “Minsky moment”, akin to the subprime mortgage collapse in 2008, when complacent markets suddenly recognised the scale of hidden risks embedded in asset prices. About 50 central banks have now joined the NGFS, the central banks’ network focused on climate change risk management. The Federal Reserve has declined to participate, but is realising that this position will not be tenable for much longer. On monetary policy, however, there is less consensus, and a clear divide is emerging between the Fed and the European Central Bank. Last November, Fed chairman Jay Powell told a congressional committee that climate change is not a “near-term threat”, and is not something the Fed is considering “right now”. The Fed’s leadership believes the effects of climate change on GDP growth and inflation — as distinct from its effects on the natural environment — will be negligible in the near term, and of uncertain size in the very long term (see box). Climate change is therefore hardly mentioned in Federal Open Market Committee monetary policy deliberations.

Taiwan election result leaves China’s Xi Jinping with few options Tsai Ing-wen’s landslide victory is a blunt rejection of Beijing’s policies and behaviour KATHRIN HILLE AND TOM MITCHELL

sai Ing-wen’s resounding reelection as Taiwan’s president on Saturday will only harden Xi Jinping’s uncompromising approach towards the island, Chinese officials and analysts insist. However, the Chinese president has limited options when it comes to trying to imprint Beijing’s control on to the de facto independent island. With neither military force nor a political rapprochement feasible in Beijing’s view, Mr Xi’s administration will continue its policy of refusing to engage with Ms Tsai’s government while seeking to influence opinion on the island through unofficial grassroots channels and overt displays of economic, diplomatic and military might. Yet, said Ms Tsai after her victory, it was Beijing’s growing pressure and its insistence that Taiwan must become part of China under the “one country, two systems” model — discredited in Hong Kong — that left Taiwan’s voters determined to protect their sovereignty and democracy even more loudly. Taiwanese and western analysts note that China’s turn to a more authoritarian and internationally assertive stance under Mr Xi has thus helped a patriotism centred on Taiwan’s democratic identity to take root. Mr Xi, who is positioning himself to take a third term as president in 2023, views “unification” with the

island as a historic mission that would cement his status alongside Mao Zedong and Deng Xiaoping as one of modern China’s “transformational” leaders. In a 2019 speech, Mr Xi said that “unification” was not something that could continue “to be passed from generation to generation” and repeated Beijing’s insistence on a one country, two systems approach, under which Taiwan would recognise China’s sovereignty over the island in return for wide-ranging autonomy. According to opinion polls, more than 80 per cent of Taiwanese reject the model. “Peaceful unification is still our first and best choice, but the possibility of using military force is increasing,” said Wang Xiangsui, a former Chinese air force colonel who now teaches at Beihang University in Beijing. “Tsai has challenged our bottom lines. China will increase pressure on Taiwan economically, militarily and diplomatically.” In Beijing’s initial reaction on Sunday, the Chinese State Council’s Taiwan Affairs Office said it would continue to pursue the one country, two systems model for the “unification” of Taiwan. Ms Tsai won with an unprecedented vote count and retained control of the legislature for her Democratic Progressive party (DPP). Armed with a strong mandate, Ms Tsai urged Beijing to “respect the will of the Taiwanese people” and “find more healthy and sustainable ways to engage”.

Lies over downing of aircraft shake Iran’s trust in its rulers

Shooting of passenger jet erases domestic gains for Iranian leaders in tumultuous week

NAJMEH BOZORGMEHR

n little over a week, public feeling in Iran has swung from fervent support for the regime in the face of American aggression, to anger and distrust after the country’s military leaders lied over the downing of a commercial passenger jet that killed all on board. After the US assassination of the military commander Qassem Soleimani in neighbouring Iraq on 3 January, millions of Iranians across the country came together to pay tribute to the fallen soldier. The huge funeral turnout amazed political and military leaders, who just two months earlier had faced the most violent anti-government protests since the revolution. Iranian politicians interpreted the nationalism evoked by Soleimani’s death as a sign of continued public support for their controversial regional and defence policies, despite the debilitating impact of US sanctions. But then on Saturday Iran admitted the Ukraine International Airlines passenger jet that came

down last Wednesday shortly after take off from Tehran had not crashed as previously stated, but had been mistakenly shot down by Iran’s air defence system. Overnight public attitudes changed as Iranians poured on to the streets in Tehran and other cities to mourn the dead and challenge the Islamic regime over its devastating mistake. Gone were the slogans heard during Soleimani’s funeral of “Death to the US” and “Death to Israel”. Instead protesters chanted “Guards; you are the dictator; you are our Isis” and “Shame on you, guards; leave the country alone”. The acknowledgment of Iranian culpability for the death of the 176 passenger and crew on board, including 82 Iranians and 63 Canadians, came after senior officials had denied the jet could have been hit by an Iranian missile and accused the US using such allegations for psychological warfare. Officials, including the Iranian ambassador to the UK, have since retracted their statements, adding that they had previously been informed by Iranian authorities that Iran was not to blame.

Saeed Laylaz, an Iranian political analyst, said the decision by some in the military and political leadership to mislead others over the tragedy had rocked public trust in the regime. He compared it to the decision by Soviet leaders to hide facts about the disaster at the Chernobyl nuclear power station in 1986, a course of action that would ultimately contribute to the breakup of the Soviet Union. “A major part of the public faith that the guards gained and its big military victory [attacking US forces] were damaged overnight in what is Iran’s equivalent of the Chernobyl disaster,” he said. “This has led to huge splits inside the ruling system, at a time the power struggle was already tense, on why the guards hid a reality even from the president when they knew from the first second of the incident what had happened.” As tensions increased in Iran on Sunday, Major Gen Hossein Salami, the most senior commander in the Revolutionary Guards, was summoned to a closed session of parliament to answer questions about the role of the elite security force in the incident.

Aboriginal groups sue Australian states for loss of land Landmark ruling prompts multibillion-dollar compensation claims JAMIE SMYTH

ndigenous groups in Australia are suing state governments for tens of billions of dollars in compensation for loss of ancestral lands in a move that experts warn could dent public budgets and force miners and other industries to make payouts. Court documents show the Bigambul and Kooma Aboriginal peoples are each claiming A$25bn ($17bn) compensation from Queensland for economic and cultural loss related to land on which they were granted native title, a form of legal recognition over rights to land or water. The lawsuits, filed on December 23, follow a similar claim made by a group claiming to represent the Noongar people for A$290bn lodged against Western Australia — a sum that is more than the value of the resource-rich state’s entire economy. Aboriginal people have been registering native title claims for

decades since a 1992 High Court decision that overturned the concept of terra nullius, the declaration made by British colonisers when they first arrived 250 years ago that Australia was unoccupied. The claims now cover around 2.8m sq km of Australia. However, there has been new interest in seeking compensation following a landmark ruling by Australia’s High Court in March. The so-called Timber Creek judgment helped to establish how native title compensation claims should be assessed and decided. “Timber Creek was by far the most significant native title decision since the Mabo case in 1992, which first recognised the land rights of Indigenous peoples,” said Tony Denholder, partner at Ashurst, a law firm, which is not involved in the Western Australian case but could yet be commissioned by a party in the Queensland one. “It is now triggering claims from the hundreds of native title holder groups, which could potentially cost states tens of billions of dollars in

compensation.” Mr Denholder said New South Wales and Western Australia had already passed legislation that would enable state governments to demand that companies occupying disputed land help pay out on compensation claims — a move that could leave miners and other private companies liable to cover some of these costs. The Timber Creek ruling relates to an A$2.9m award for the loss of 1.26 sq km of land in a town in Northern Territory. The ruling only covers compensation claims on traditional lands that were taken over by governments for other uses such as mining, agriculture or public works since 1975, when Australia passed a racial discrimination Act. David Stevenson, the lawyer who filed the compensation claims on behalf of the indigenous groups in Queensland and Western Australia, said the multibillion dollar claims lodged in Western Australia and Queensland covered much larger land areas than Timber Creek.

Monday 13 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Saudi Aramco stretches away as top IPO after extra sale Goldman exercises option to sell more stock, bringing total proceeds to $29bn ANJLI RAVAL

he world’s biggest initial public offering got even bigger on Sunday, as Saudi Aramco sold an additional 450m shares to increase the proceeds from its recent stock market debut to $29.4bn. Saudi Arabia’s state energy giant last month raised a record $25.6bn through its long-awaited flotation on Riyadh’s Tadawul stock exchange, where the kingdom sold 3bn shares at SR32 each. The company had said it might sell more stock using the so-called “greenshoe” option, which allows underwriters to increase the offering if the shares stay above the IPO price. Goldman Sachs was chosen as the bank to manage the placing of any additional shares with investors. The IPO relied heavily on wealthy families and funds in Saudi Arabia and the Gulf after foreign investors balked at the valuation expectations of the country’s highest authorities. Shares in Saudi Aramco slipped slightly to about SR34.75 on Sunday. While this is more than the IPO price of SR32, the stock has retreated about 8 per cent from a mid-December high which briefly valued the company at $2tn — a level long coveted by Crown Prince Mohammed bin Salman. The company’s shares, like broader Saudi financial markets,

have been rattled by heightened tensions in the Middle East after the US assassination of a top Iranian military commander. The listing has been at the heart of economic reform plans led by Prince Mohammed, with proceeds from the IPO due to be ploughed into non-oil investments. Saudi Aramco is the world’s most profitable company by net income. Yet the offering, which took place after a series of delays and ultimately a scaling back of its ambitions, has been like no other. Riyadh pulled out the stops to ensure its success, rather than leave it vulnerable to market forces. For example, the kingdom issued bonus shares and made bank loans available for retail investors, while pressuring wealthy families to buy in. It also encouraged state funds to keep some money aside to support trading in the after-market. When Prince Mohammed first disclosed intentions for the stock market flotation of Saudi Aramco, the kingdom had ambitions to raise $100bn from the sale of 5 per cent on an international stock exchange. But a tepid response from foreign institutions forced Saudi Aramco to abandon plans to market the offering globally, restricting it to the Gulf, and to scale back the size of the stake on offer to about 1.5 per cent. Analysts said that global fund managers were unimpressed by the dividend yield on offer, among other factors.

Commodities may not stay cheap forever There are many reasons for the US dollar to weaken, which would cause commodity prices to rise RANA FOROOHAR

here are plenty of expensive assets in the world today. The past decade of loose monetary policy and central bank money dumps have created the infamous “bubble in everything”. This is one reason we now have the bizarrely yo-yoing investment environment that we do, in which everything from risky stocks to safe gold is rising at the same time. But one thing has remained reliably cheap — commodities. While the US equity market, which keeps ratcheting up to new highs, is almost as expensive as in the past 150 years, commodities are about as cheap relative to stocks as they’ve been in the past century. Part of this is natural — and structural. Over the past 200 years, the real price of industrial commodities has been trending downwards. That’s because every time a new peak in prices disrupts what is usually a long-term bear market, companies and consumers adjust. They might substitute in a cheaper commodity for a more expensive one, develop technologies that allow more efficient extraction or (gasp) actually try conserving energy. On that note, who in my generation can forget Jimmy Carter’s 1977 presidential plea, amid an energy crisis, for Americans to turn down their thermostats, which he delivered from the White House while wearing a thick cardigan?

With the exception of a couple of spikes, industrial commodity prices have been falling relative to the S&P 500 ever since. And most people think there’s good reason for that to continue. In a deflationary world, at the tail-end of a recovery cycle, with ageing populations consuming less and a global economy that’s less dependent on commodity-heavy manufacturing relative to services, there are plenty of factors keeping commodities cheap, even if we don’t experience a recession in the US or the rest of the world. Add to these factors the wild card of an escalating US-Iran conflict, as well as a global push towards greater action to prevent climate change. The latter may not be a priority for the US administration, but it is for the young activists who make up a growing share of voters. Like most chief executives, economists and policymakers, younger generations believe a shift further away from fossil fuels is inevitable. In investment circles, there’s even talk of oil tankers becoming “stranded assets”, whose value will fall precipitously as renewable energy takes centre stage. And yet, having watched the last big demand-driven oil spike in 2008, as well as the more financially driven price spike in 2011-12, which eventually came undone when central bankers pulled back on quantitative easing, I think it’s unwise to assume that we have entered a permanent bear market in commodities — at least not yet.

US bank share prices likely to lose momentum Last year’s rally ‘unsustainable’ despite expected rise in Q4 earnings for big lenders LAURA NOONAN AND JENNIFER ABLAN

he late 2019 rally in US bank share prices is likely to run out of steam early this year, investors and analysts warn, even as three of America’s top five banks prepare to announce double-digit increases in their fourth-quarter earnings this week. Banks were among the best performers in the US stock market in the fourth quarter, with the largest five posting average share price gains of almost 17 per cent in a period when the diversified S&P 500 index rose more than 8 per cent. For 2019 as a whole, shares in JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and Bank of America rose an average of 38 per cent, while the S&P index gained 29 per cent. “I certainly don’t think the trajectory of the improvement in [banking] stock prices in 2019 is sustainable,” said Andy Braun, a portfolio manager at Impax Asset Management, arguing that last year’s rise “reflect how discounted [banking] stocks were at the beginning of 2019”. Banks entered the year weighed down by idiosyncratic concerns,

including fears Goldman would be hit by a massive fine for its role in the 1MDB scandal, and industrywide ones. These included recession fears, banks’ failure to grow loans, and a flattening of the US yield curve earlier in the year. JPMorgan was the only one of the five banks that began the year with a market value that was higher than the book value of its assets, reflecting its status as US banking’s leader in the post-financial crisis era. This week’s fourth-quarter earnings will give an update on the book value of the banks’ assets. It will probably show that Bank of America now has a market value in excess of the value of its assets, based on the bank’s yearend share price and its expected fourth-quarter results. Citigroup, which began the year trading at about 70 per cent of its book value, probably had a price to book value of more than 90 per cent by the end of the year, while Goldman Sachs probably improved its price to book value from a starting point of less than 80 per cent to more than 95 per cent. Last week analysts at UBS downgraded JPMorgan from a “buy” to a “neutral” rating, claiming “substantial share outper-

formance” meant there was no longer “sufficient upside” to the stock. JPMorgan’s shares rose 40 per cent last year, and the bank had a price to book value of 156 per cent at the end of the third quarter. “We’ve gotten back to fair value or thereabouts,” Mr Braun said. “Looking forward, banks don’t necessarily have the Federal Reserve as a tailwind, which they had at the beginning of last year,” he added, referring to the benefits from interest rate rises in late 2018 that flowed through to early 2019 profits. Most US banks share prices have beaten the market in 2019, with the exception of Morgan Stanley. Citigroup was the biggest winner with an increase of nearly 50% compared to the market growth of 28% JPMorgan, which kicks off the banks’ earnings on Tuesday, is expected to report a 12 per cent increase in quarterly net income versus a year earlier, according to analysts polled by Bloomberg. Morgan Stanley, which closes the earnings season on Thursday, is expected to post a 37 per cent rise in net income year on year, while Goldman Sachs is set to report a 13 per cent improvement.

A forgotten rule that could help smooth Brexit WTO’s underlying principle is that trade shouldn’t be used as a political lever JONATHAN FORD

oris Johnson might want to sign an “ambitious” free trade agreement with the EU by the end of the year. But what if he can’t get one? The prime minister has told Brussels there are no circumstances under which the UK would extend the transition beyond 2020. He would rather crash out deal-less than fail to “get Brexit done”. Exit on WTO terms hardly looks appealing. It is generally seen as leaving Britain between a rock and a hard place, forced either to cut tariffs on all countries or to impose them on the remaining EU27 at the same level the bloc presently applies to the rest of the world. That’s certainly how Brussels frames a no-deal outcome. Either choice threatens to deliver the UK economy a shock, and one far

greater proportionally than the EU27 would face. It is easy to see why politicians and others believe new tariffs to be inevitable in a no-deal situation. The concept of “most-favoured nation” (MFN) status is hard-wired into the world’s trading rules. It obliges states to treat the same goods alike, regardless of where they come from. So if you lower your tariffs on shirts from one state from 5 to 2 per cent, then you must do the same for everybody else. Within the EU customs union, Britain enjoys quota-free zero tariffs. Preserving that in a no-deal exit would involve extending those same terms to all 164 WTO members; an outcome that, while lowering certain prices (think food), would also likely dynamite numerous industries wholesale. That’s why many think tariffs would go up, creating extra costs and bottlenecks. And why that vision is one that

Brussels is keen to wave as an implicit threat. But what if that wasn’t in fact the correct interpretation? One strain of thought, encapsulated in a paper by Tom Grant, an international lawyer, believes it misunderstands the nature of the EU, which binds its participants far more tightly than any conventional free trade arrangement. While an international organisation based on treaties, in trade at least it acts as if it were a sovereign in its own right. World trade rules developed at a time when other entities existed that shared some characteristics with today’s EU. These were the colonial empires, where subject states delegated their international relations to the metropolitan master. In the late 1940s, when the General Agreement on Tariffs and Trade (GATT) was signed, these were being dismantled as colonies exercised self-determination.

Monday 13 January 2020

BUSINESS DAY

ANALYSIS

Tear gas company boss on the benefits of ‘less-lethal’ weapons Safariland’s Warren Kanders, who left the board of the Whitney museum after protests

n some ways you just think the world’s gone mad — but the world’s always going mad,” says Warren Kanders, turning a complaint about the activists who chased him from the Whitney Museum of American Art’s board last summer into an explanation of what attracted him to the business that drew their attention. The one-time acquisitions adviser who took his dealmaking skills and built a $450m chain of spectacle stores describes himself in his official biography as “an American investor, industrialist and philanthropist”. His main job these days, though, is running Safariland, a KKR-backed supplier of equipment to police forces, bomb disposal units and crime scene investigators. And the reason his position as vice-chairman of the New York museum attracted scrutiny is that some of its $500m-a-year revenues come from selling tear gas. In late 2018 US agents fired Safariland-supplied canisters at a group including children which was attempting to cross the US-

which he attributed to America’s divided public discourse. His name began appearing in articles about institutions’ ties to controversial donors alongside those of certain Sackler family members who stand accused of building fortunes on America’s opioid crisis. Mr Kanders says he feels no affinity with the Sacklers. He has a broader point to make about leading at a time when “the loudest voices get the headlines” — and a score to settle. The Whitney “had very weak leaders . . . who quite frankly did not want to engage and always felt it would go away,” he charges. An “uninformed” fringe group was allowed to have unmerited influence, he claims, because the Whitney’s executives failed to lead the kind of discussion that could have bridged the gulf between his views and theirs of Safariland’s products. Should he have played more of a role in hosting such a debate? “That’s an interesting question,” he replies, before saying that the protesters were so extreme in their positions that it was impossible to meet them halfway. Mr Kanders, who is Jewish and whose tear gas has been used by Israel in the

Mexican border near Tijuana. The chaotic scenes played into the thesis that first drew Mr Kanders to the company: “If the world’s always going mad, what is it you always come back to?” he asks rhetorically. Mr Kanders once observed that an ageing population would be good for spectacle sellers such as the Benson Eyecare chain he sold in 1996. He sees similarly long-term forces propelling the “less-lethal weapons” industry he bought into with the proceeds. “My view is that as the world’s getting smaller there’s going to be more conflict, and the nature of conflict is that a lot of it is going to be in how we interact with each other and how we protect ourselves.” It was not until the tear gas was used almost 3,000 miles from his Greenwich Village townhouse, however, that Mr Kanders discovered how close to home that conflict would come. Almost 100 employees of the Whitney published a letter in response to the border clashes, berating the museum’s leaders for not considering cutting ties with a board member they saw as “complicit” in injustices. Adam Weinberg, the Whitney’s director, urged mutual respect but activists picketed Mr Kanders’ home, leaving his family feeling threatened and requiring police officers to patrol the protest — many of them sporting Safariland products. In July, Mr Kanders resigned, lamenting a “toxic environment”

Palestinian territories, believes some activists were motivated by anti-Semitism. Asked to respond to his accusations, a Whitney spokesman declined to comment. Mr Kanders is speaking out, he says, because he fears society will have “real issues” if leaders do not encourage people to listen to each other. He reads from a document he wrote to refine his thoughts. “Leadership’s about creating a culture and an environment, working together [so that] through both discussion and debate we can all arrive at a better place — and if for whatever reason we can’t reconcile our differences we can at least respect one another’s viewpoint.” When it comes to society’s differences over his products, he maintains: “Our job is apolitical.” That is not how Safariland is seen by critics such as Joshua Wong, the Hong Kong democracy activist, who called last August for a campaign to end its sale of crowd-control weapons to the territory’s police force. But Mr Kanders says its sales outside the US all satisfy State Department protocols. Is he comfortable with every context in which his products have been used? “I can’t opine on that,” he says, but he sees them as promoting civil order. “If you look around the world from Paris to Hong Kong to Chile, in the absence of these less-lethal products the results would be quite different,” he argues.

ANDREW EDGECLIFFE-JOHNSON

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Vanguard and the US financial system: too big to be healthy? The fund manager has grown so dramatically that it raises questions about its influence on corporate America ROBIN WIGGLESWORTH AND RICHARD HENDERSON

alvern, Pennsylvania is the quintessential small-town America: verdant, quiet and lined with 19th-century streetlamps. But just outside the town lies the sprawling campus of Vanguard, a $6tn asset manager that is reshaping the sleepy town and the surrounding area. “It’s definitely had a major economic impact,” says Christopher Bashore, the borough manager for nearby East Whiteland, where Vanguard is based. Indeed, one local hotelier estimates that over half of his guests, a mix of financial advisers, consultants and clients from pension funds, come because of the investment group. Once an upstart investment c o mp a ny s hu n n e d — e ve n mocked — by rivals, Vanguard has disrupted the investment management world. The cheap index-tracking funds championed by its late founder Jack Bogle helped batter down fees across the industry and have attracted $10tn of assets. The company is now cautiously expanding in Europe, China and elsewhere, moving deeper into financial advice, and even exploring whether it could offer its customers private equity funds. “The sheer size of Vanguard and the income that it generates allows us to invest more for our clients, roll out things like advice, enter new markets,” Tim Buckley, Vanguard’s chief executive, says in an interview. “Our size gives us the ability to do it while still lowering your costs to improve your returns.” However, disruption ruffles feathers. Moving its tanks on to the lawn of financial advisers means that Vanguard is competing with clients who provide almost a third of its assets. International expansion will take it into less hospitable terrain. There are concerns that the inexorable tide of passive funds are distorting markets and weakening corporate governance. And while Vanguard’s success has been a boon to millions of retail investors, there is mounting nervousness over its sheer size — something even Bogle acknowledged before passing away a year ago. So far those worries have mostly manifested themselves in small technology glitches that have annoyed its clients — most

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recently at the end of 2019, when its website seized up with customers trying to reshuffle their portfolios. Yet the bigger concern is that its deepening control over the stock market could at some point become unhealthy. Char t s h ow i ng Va ngu a rd catching up on BlackRock. Assets under management U.S dollars, trillion. “If just a few asset managers in practice control most companies, that’s not how capitalism should work,” says Martin Schmalz, a professor at finance at Oxford university. “The question is when that threshold is reached. I don’t know if it has, but we have to think about this now.” This issue is not specific to Vanguard. But the investment group is swelling at a dramatic pace, thanks to one crucial advantage over its rivals: it is owned by its own funds, allowing it to use profits after covering costs and business investments to lower its fees, rather than reward outside shareholders with dividends and buybacks. In other words, the more it grows, the cheaper its funds can become, in turn generating more growth — a virtuous cycle that has helped Vanguard more than treble in size since 2011. It is particularly dominant in the US, where it last year took in more money than its two biggest rivals BlackRock and Fidelity combined according to Morningstar. Vanguard today accounts for over a quarter of the entire US mutual fund market — a market share almost as big as Fidelity, BlackRock and Capital Group put together — and it is one of the biggest shareholders in virtually every major listed US company. Rarely, if ever, has one firm dominated the US investment industry so extensively, according to Alec Lucas, a Morningstar analyst. “Vanguard is getting into unprecedented territory,” he says. “Their growth is something that bears monitoring.” The question is whether it might at some point become so large that its influence over corporate America stirs interest among politicians, regulators and activists. Gerry O’Reilly may not be a household name, but he is the world’s biggest fund manager. He is one of the best-performing ones as well, despite eschewing traditional industry analysis, powwows with executives or poring through securities filings. A former track runner — he represented Ireland at the 1992 Olym@Businessdayng

pics — he is the lead manager of Vanguard’s $874bn Total Stock Market Index Fund, which alone would rank among the world’s 40 largest investment groups. It has also done better than most rivals, despite only striving to mimic its benchmark. Someone investing $10,000 a decade ago would today have over $35,000. The average hedge fund investor would only be sitting on $14,780, according to Hedge Fund Research. However, while index funds may be dubbed passive, managing one can still involve a lot of finicky work for Mr O’Reilly and the US equity team of 10 “crew members” — the company is suffused with nautical terms and paraphernalia, a legacy of Bogle naming Vanguard after Horatio Nelson’s flagship. “There are times when it’s a little stressful,” the fund manager says. Much of it is to ensure they do not diverge too far from their index, but Vanguard also tries to eke out tiny gains that can add up to valuable extra returns over time, with another 10-strong team dedicated just to analysing trading costs. “We have to strike a balance between tracking an index and doing so in a smart way,” says Rodney Comegys, a former submariner who runs Vanguard’s equity index group. Investors reap the benefits. Nonetheless, not everyone is thrilled by Vanguard’s expanding heft, which goes beyond index funds. With $1.4tn in activelymanaged funds — many subadvised by Wellington, out of which Vanguard was born — it would also be one of the world’s biggest asset managers without a single index fund. Chart showing that Vanguard dominates US mutual fund industry, with a US market share of 25.6%. It’s nearest rival BlackRock only has 9.7% Some critics say index funds like Vanguard’s distort markets, but the bigger concern is boardroom power accumulating in Malvern, thanks to the company’s expanding stakes in almost every major US company. Last year even Vanguard’s founder acknowledged the conundrum. “It’s a serious issue, and everyone that says it isn’t, isn’t telling the truth,” Bogle told the FT. Mr Buckley dodges questions of whether Vanguard is or could become too big, arguing that size “is certainly not a goal”, but waxes lyrical about the “huge advantages” of its scale and unique ownership model for customers.

BD Money

Monday 13 January 2020

BUSINESS DAY

COVER

INVESTING

Are you burdened by school fees? These bank products can help

How to make your 2020 goals achiveable

After the euphoria of a â&#x20AC;&#x2DC;Detty Decemberâ&#x20AC;&#x2122; comes the huge reality of the year. One of such reality is the payment of school fees by parents. Most schools across the country have reopened for the second term academic session. For parents...

Ideally one should start from the beginning and not the ending. A common saying however says the beginning determines the ending. So how would you like your December 2020 to look like. You have to start to paint the picture now.

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Monday 13 January 2020

BUSINESS DAY

Monday 13 January 2020

BUSINESS DAY

Cover Story

Investing

Are you burdened by school fees? These bank products can help OLUFIKAYO OWOEYE

fter the euphoria of a ‘Detty December’ comes the huge reality of the year. One of such reality is the payment of school fees by parents. Most schools across the country have reopened for the second term academic session. For parents, it is time to think not only about the payment of school fees, but also the purchase of new school uniforms, shoes or sandals, bags, and books. While parents want the best for their children, having quality education can also come with a hefty price tag. Interestingly, some financial institutions also have launched some educational products aimed at easing the burden usually experienced by parents at the beginning of a new academic session. Access Bank Access Bank’s advance School fees is designed to provide parents/guardians with short–term financing to cover tuition fees for their children/wards. It is also ideal for the financing of undergraduate study, postgraduate study, and professional examinations. After meeting the requirements one can access loans amount up to N5million. Requirements include BVN, Credit checks, employment ID or any identification means. First Bank’s educational products and solutions for school owners and parents include the FirstEdu loan, which is targeted at private nursery, secondary and A-levels schools. The product offers an opportunity for private schools to access flexible funding to meet urgent cash flow needs, replace old furniture and equipment, as well as refurbish dilapidated buildings and classroom blocks. Customer can access up to N10m

How to make your 2020 goals achiveable Oluwatosin Olaseinde, Founder of Money Africa.

deally one should start from the beginning and not the ending. A common saying however says the beginning determines the ending. So how would you like your December 2020 to look like. You have to start to paint the picture now. New year resolutions are a common thing. Some work. Some don’t. What differentiates both however are actionable steps. Financial Goals for 2020 1. Write it down A short pencil is better than a long mind. Writing down your plans for the year. Be very specific. Doing so forces you to think through and be realistic. It also serves as a great mental reminder. You will find it very hard to forget in entirety what you wrote. 2. Draw up a budget Earning in some ways is never the problem. Your earnings are very much clear. You get an alert when you are paid. Your profit is quite clear. Spending on the other part is always the troublesome part. The money justs tend to go in trickles and before you know it, its finished. That is why you should have a budget. A

budget does not mean you can’t spend on fun stuff. It just helps to make your spending more orderly. You do not want to be the person 3. Build an emergency fund Emergencies never inform us when they happen, that is why they are called emergencies. Rule of thumb says you should have at least six months of your monthly income in an emergency fund. The figures could however rise if you have a family. The mix of currencies could also change if you have obligations outside the country. 4. Invest in a mutual fund If you are new to investing, a mutual fund is a great place to start from. It is relatively affordable so you don’t have to break the bank. You also don’t have to bother yourself with the day to day management of the fund. Asset managers send a quarterly report, which you can go through. 5. Build stock portfolio Stocks are a great way to diversify one’s portfolio. Treasury bills are currently yielding single digit returns at the moment. Some stocks on the other hand, have dividend yields as high as 13% to 15%. An ideal portfolio should have a little bit of everything. 6. Start a side hustle Extra money is always a great thing. You can

start a side hustle in 2020. A side hustle does not mean that you have to be physically active. You can do something as simple as reviewing CVs or even taking classes on cooking on whatsapp and telegram. 7. Read and listen to podcasts At the end of the day, you are the person most affected by the ups and downs in your finances. That means you need to get a hang on your numbers. You can read books on personal finance. You can watch videos on youtube. You can also listen to podcasts. There are two things

you do not completely outsource. Your finances and your health. 8. Invest in personal development Personal development is the biggest investment you can make. The returns are infinite. Take a course, read a book pertaining to your field. Watch a youtube video or listen to a podcast. Don’t end 2020 the same way you begun. The higher your earning capacity, the higher your income and ultimately the larger the amount of money you can save/invest 9. Reinvest your returns If you keep spending the returns on your investment, it’s like planting a seed and then digging the soil. The seed will not do very well. Compounding is a powerful principle. 10. Accountability partner Have you made previous resolutions and failed to keep them. You should get an accountability partner. An accountability partner is someone who holds you to account regarding your goals, and encourages you to stay on track. An ideal partner should be someone who understands your goals and weaknesses. They should also have goals they are aiming for as well, so you are motivated too. Money Africa is a personal finance and investing platform aimed at propelling users towards financial freedom.

The six easiest ways to lose money when saving SEGUN ADAMS

with no tangible collateral required apart from the domiciliation of school account with the bank. Others include operational vehicle loan, term loans for constructing new sites and extension of existing sites, personal loan against salary, First naira credit card which lets parents spread out costs for easy payments, which enhances parents’ capacity to pay their children’s school fees. GTBank Guaranty Trust Bank has smart kids save (SKS) account available in two categories: SKS (0 – 12 years), SKS Teen (13 to under 18 years). Minimum opening/ account balance of N1, 000, with comwww.businessday.ng

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Customer can access up to N10m with no tangible collateral required apart from the domiciliation of school account with the bank

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petitive interest rates at 4.05percent. It also allows lodgements of cheques, drafts, and dividends into the account, subject to a maximum of N100,000 per instrument and many more benefits. The bank also has a school fees advance that allows competitive credit to help parents pay for their children up to three times in a year. Stanbic IBTC has a school fees loan open to customers of the bank. The loan can also be used to pay for other expenses, such as buying a laptop or materials needed to complete school projects. Flexible repayment terms over four months (if the school fees are payable each term) or 12 months (if school fees are payable yearly), Flexible interest rates and can be renewed every year if you have a satisfactory repayment and current account records.

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f you are like many Nigerians, one of your 2020 goals would likely be to spend wisely and save a lot, especially after last year’s ‘Detty December’. Your goal is laudable but saving money could cost you money if you don’t do it right. In this article, common mistakes people unconsciously make in saving money are shown, as well as how these pitfalls can be avoided. Saving in traditional piggybanks: The easiest way to lose out saving money is to put your cash in piggybanks. Popularly known as “Kolo”, these wooden or plastic containers will ensure inflation erodes the value of your money-if insects or thieves do not get to it first. An easier way to save is in a bank for the safety of funds and importantly to ensure your savings earn interest. While in Nigeria savings account attract as low as 2 to 6 percent per annum compared to annual inflation above 10%, it still beats the returns any piggy bank can offer. Not automating savings: It is okay to have trust issues (with your-

self) when it comes to saving. If you struggle with sticking to your savings plan, then it is a must you automate your savings-and there are several apps for that. Even if you are disciplined enough, apps that automate savings also have features that allow you to create savings target and can estimate how much you need to save per period to reach that goal. Saving into your main account:

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One of the worst things to do is keep your savings in a pool of fund you withdraw from regularly. Whatever you do, create a separate account for your savings and ensure it is solely for that purpose. Not knowing interest rate: It is not enough to save because money loses value with time. This means you must be compensated for keeping your money

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with any bank or fintech company. Knowing the rate of interest across banks and platforms is, therefore, necessary if you want to get the best return on your fund. Saving too much: In Economics, a theory called Paradox of Thrift posits that if everyone saved during a recession the economy will be worse-off. That is not what this is about. When saving, you must ensure you get your budgeting right and do not save more than you can afford too or else you might end up in (costly) debt; borrowing to support your budget. (In a few instances, debt can be cheaper than spending your cash. This depends on the cost of borrowing and inflation rate.) To avoid stories that touch, you should create an emergency fund you can easily access to solve any urgent and important need. Forgetting to invest: There’s a true saying, “Nobody has ever gotten rich saving.” It is unlikely you would be an exception to that rule. To grow wealth, you must take some form of educated risk in assets like stocks, cryptos, currencies etc. You must, however, speak with an investment expert if you are unsure about what to do.

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Monday 13 January 2020

BUSINESS DAY

Market Wrap-up

total turnover of 2.683 billion shares worth N32.646 billion in 30,956 deals were trad-

ed this week by investors on the floor of the Exchange, in contrast to a total of 2.309 billion shares valued at N21.675 billion that

exchanged hands last week in 14,906 deals. Fifty-one equities appreciated in price during the week, higher

than forty-four equities in the previous week. Twenty equities depreciated in price, lower than twenty-four equities in the pre-

vious week, while Ninety- two equities remained unchanged, lower than Ninety-seven equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week Week Ahead (Monday, April –activities Friday, 12th April, 2019)week, with a significant Profit-takers would 8th dominate in the coming

legroom for a further rally as the elevated maturities from fixed income instruments hunt for investment vehicles. Nonetheless, we advise investors to cherry-pick fundamentally sound stocks. In the coming week, OMO maturities (NGN405.39 billion) will bolster system liquidity, and so, barring any liquidity mop-up activities by the CBN, we expect a contraction in the overnight lending rate. Trading activities to remain strong in the bonds market, as investors seek higher-yielding assets. However, cautious trading is expected as investors await the outcome of December 2019 inflation. Trading volumes to start to temper in the Treasury Bills market, as the average yield sits at the single-digit level. However, the average OMO yield is expected to remain around the same level, paring marginally in the coming week For commodities, Sugar increased global demand to increase global price in the near term while the Cocoa cartel will stir global chocolate market and push up prices. Brent likely to trade between $69-$70pb in the coming days, driven by the heightened geopolitical tensions in the Middle East which threaten oil supplies

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The stock market on Friday gained 0.7 percent to extend NSE’s bull run to the 10th trading session. This is the longest since a 16-day gaining streak which lasted from July 6 to July 27 in 2017. Year’s return in now 9.59 percent.

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Monday 13 January 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 10 January 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 383,888.44 10.80 -1.37 387 45,227,014 UNITED BANK FOR AFRICA PLC 287,275.14 8.40 0.60 363 22,137,073 ZENITH BANK PLC 686,013.39 21.85 -0.68 508 29,177,613 1,258 96,541,700 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 274,598.99 7.65 -0.65 310 15,445,246 310 15,445,246 1,568 111,986,946 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,361,123.51 116.00 3.45 259 4,718,922 259 4,718,922 259 4,718,922 BUILDING MATERIALS DANGOTE CEMENT PLC 2,930,967.27 172.00 -1.71 174 2,345,902 LAFARGE AFRICA PLC. 248,060.05 15.40 -0.97 307 9,243,379 481 11,589,281 481 11,589,281 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 346,888.07 589.50 - 3 117 3 117 3 117 2,311 128,295,266 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,338.94 3.50 -4.11 13 437,926 13 437,926 13 437,926 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 13 437,926 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 4,500 OKOMU OIL PALM PLC. 62,958.06 66.00 10.00 24 176,938 PRESCO PLC 56,900.00 56.90 -0.26 27 674,410 52 855,848 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 9.26 18 877,159 18 877,159 70 1,733,007 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 2 80,731 S C O A NIG. PLC. 1,903.99 2.93 - 4 4,533 TRANSNATIONAL CORPORATION OF NIGERIA PLC 43,086.87 1.06 -2.75 80 5,957,936 U A C N PLC. 29,533.29 10.25 9.63 270 17,733,387 356 23,776,587 356 23,776,587 BUILDING CONSTRUCTION ARBICO PLC. 521.24 3.51 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,842.00 21.85 - 14 80,728 ROADS NIG PLC. 165.00 6.60 - 0 0 14 80,728 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 10 123,062 10 123,062 24 203,790 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,672.91 0.98 -1.01 12 821,520 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 0.50 70 5,797,021 INTERNATIONAL BREWERIES PLC. 79,081.93 9.20 - 59 4,690,311 NIGERIAN BREW. PLC. 448,226.36 56.05 - 45 123,130 186 11,431,982 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 180,000.00 15.00 - 93 1,678,620 FLOUR MILLS NIG. PLC. 94,308.73 23.00 -1.30 153 21,786,990 HONEYWELL FLOUR MILL PLC 8,485.31 1.07 - 9 203,968 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 -0.33 61 2,319,414 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 316 25,988,992 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,815.03 10.55 - 19 87,093 NESTLE NIGERIA PLC. 1,165,125.42 1,469.90 - 25 172,885 44 259,978 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,004.05 4.80 - 34 179,133 34 179,133 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,227.29 5.85 - 34 249,998 UNILEVER NIGERIA PLC. 109,155.10 19.00 - 40 419,816 74 669,814 654 38,529,899 BANKING ECOBANK TRANSNATIONAL INCORPORATED 143,126.50 7.80 1.30 81 1,265,465 FIDELITY BANK PLC 65,483.04 2.26 -0.44 86 4,114,255 940,326.18 31.95 -1.84 216 13,975,699 GUARANTY TRUST BANK PLC. JAIZ BANK PLC 19,446.40 0.66 -5.71 38 2,087,870 STERLING BANK PLC. 57,292.93 1.99 -0.50 51 1,605,399 UNION BANK NIG.PLC. 177,636.59 6.10 -0.81 64 351,651 UNITY BANK PLC 8,416.32 0.72 - 3 40,750 WEMA BANK PLC. 27,387.87 0.71 -7.79 31 4,196,634 570 27,637,723 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,336.26 0.77 -1.30 21 1,402,112 AXAMANSARD INSURANCE PLC 21,525.00 2.05 - 10 111,208 CONSOLIDATED HALLMARK INSURANCE PLC 3,414.60 0.42 - 0 0 CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 8,543.11 0.58 -7.94 14 245,767 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,977.33 0.27 -6.90 21 778,330 LAW UNION AND ROCK INS. PLC. 2,148.17 0.50 -5.66 7 1,183,243 LINKAGE ASSURANCE PLC 3,840.00 0.48 - 1 3,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 8 228,000 NEM INSURANCE PLC 11,986.74 2.27 -6.20 10 298,500 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 1 20,500 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 49,099 SOVEREIGN TRUST INSURANCE PLC 2,500.18 0.22 - 1 20,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 2,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,817.79 0.36 -5.26 34 3,010,647 130 7,352,406 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,835.43 1.24 5.08 6 298,300 6 298,300

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 1 10 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 1 10 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,020.00 4.51 -4.04 55 762,495 CUSTODIAN INVESTMENT PLC 34,997.09 5.95 - 17 410,790 540.00 0.36 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 39,605.42 2.00 -0.50 136 11,031,621 ROYAL EXCHANGE PLC. 1,697.97 0.33 - 6 218,477 STANBIC IBTC HOLDINGS PLC 446,461.11 42.50 - 31 1,451,669 UNITED CAPITAL PLC 15,600.00 2.60 -4.06 94 3,441,372 339 17,316,424 1,046 52,604,863 HEALTHCARE PROVIDERS EKOCORP PLC. 2,418.21 4.85 7.78 4 402,356 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 -9.09 6 1,684,375 10 2,086,731 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 2 6,700 2 6,700 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,633.17 2.70 - 20 287,704 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,338.15 5.30 - 51 6,122,100 MAY & BAKER NIGERIA PLC. 3,743.76 2.17 - 6 50,000 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 - 5 44,431 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 82 6,504,235 94 8,597,666 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 -8.00 4 1,980,000 4 1,980,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,323.81 0.45 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 437.40 4.05 - 2 4,965 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 9 34,635 11 39,600 PROCESSING SYSTEMS CHAMS PLC 1,643.62 0.35 -2.78 12 1,485,555 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 12 1,485,555 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 0 0 0 0 27 3,505,155 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 11 45,082 BUA CEMENT PLC 1,388,438.52 41.00 6.63 161 8,198,646 CAP PLC 17,500.00 25.00 4.38 41 278,708 MEYER PLC. 265.62 0.50 - 6 92,163 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 1 1,343 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 220 8,615,942 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,518.69 1.43 - 7 85,393 7 85,393 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 1 100 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 100 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 228 8,701,435 CHEMICALS B.O.C. GASES PLC. 2,289.35 5.50 - 1 579 1 579 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 1 4,252 1 4,252 2 4,831 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -4.76 23 3,189,586 23 3,189,586 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,860.94 3.85 -0.77 71 6,185,530 71 6,185,530 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 21 70,328 CONOIL PLC 14,468.90 20.85 - 41 29,315 ETERNA PLC. 4,694.92 3.60 - 3 2,620 FORTE OIL PLC. 22,011.93 16.90 - 45 316,537 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 15 13,928 TOTAL NIGERIA PLC. 36,328.84 107.00 - 35 144,362 160 577,090 254 9,952,206 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 1 19,331 1 19,331 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 4 9,450 TRANS-NATIONWIDE EXPRESS PLC. 403.21 0.86 -6.52 5 301,200 9 310,650 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,328.25 1.12 - 1 1,000 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 37,241.98 4.90 - 5 21,637 6 22,637 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 933.45 1.21 - 4 309,093 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 2 530 UNIVERSITY PRESS PLC. 560.83 1.30 - 7 400,385 13 710,008 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 - 1 34,000 1 34,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0 0 0

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Monday 13 January 2020

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United Bank for Africa: Promoting Africa SEGUN ADAMS

nited Bank for Africa (UBA) last Monday announced the appointment of the first non-Nigerian African Executive Director, in a move that epitomises the Pan African character of the big bank. The lender, also known as Africa’s Global Bank in announcing several appointments to the Group Board and Africa Operations, named Abdul-Aziz Dia, a Senegalese national, as Executive Director for Treasury and International Banking, subject to the approval of the Central Bank of Nigeria (CBN). “Aziz becomes the first nonNigerian Group Executive Director of the Bank, bringing a wealth of multi geographical experience to the Group,” UBA said. UBA also announced the appointment of Oliver Alawuba CEO as UBA Africa, Chukwuma Nweke as Executive Director, Retail and Payments, and Chiugo Ndubisi as Executive Director & Group Chief Operating Officer. The Board appointment is fresh off a restructuring exercise aimed at empowering the UBA workforce, and underlines a broader commitment by the bank to invest in the highest quality human capital. UBA recently reformed its grade structure and technology teams, having reduced its grade structure from 16 to 12 levels, at the end of 2019. The Bank welcomed 3,000 new staff members in 2019 and promoted over 5,000 employees. UBA is the largest employer in the Nigerian banking sector, with staff strength of nearly 20,000 employees group-wide. In his new role, Dia will be responsible for UBA’s global network of operations in New York, London and Paris, together with Group Treasury, where UBA offers a sophisticated suite of products to multinationals, international institutions and African clients, the Pan-African bank said. Dia, who was previously appointed a Non-Executive Director in UBA in May 2019, boasts of over 25 years of banking experience gained with a niche in Capital Markets and Treasury. Some of the countries Dia has worked in include UK, France, Senegal, Togo, Kenya, Ghana, Cote d’Ivoire and Nigeria. He has worked at senior level positions with several inter-

national financial institutions including African Development Bank, Citigroup, Standard Chartered, ECOBANK, and UBA Group (both as Functional Head and General Manager). Before joining UBA Group Board as a Non-Executive Director, he served ECOBANK as Senior Vice President, Group Treasurer in charge of FX, Fixed Income, Money Market and Group Balance sheet. Dia has served on various Boards as an Executive Director, both in Europe and Africa. He holds a Master Degree in Statistics and Financial Mathematics from ENSAE in Paris and is a Harvard Business School Alumni for Advanced Management. He speaks 6 languages fluently (French, English, Romanian, German, Wolof and Fulani). Promoting Africa Over the years, UBA has shown a strong commitment to its pan-African network which spans 20 African countries including Liberia, Mali, Uganda, Kenya, Tanzania, Ghana, DRC, Cote d’Ivoire, and Senegal where the lender promotes inter–andintra-African trade and the inflow of investment capital. Across Africa, UBA has demonstrated its interest in the development of SMEs and entrepreneurs by supporting training, seminars, social entrepreneurship schemes, conferences, workshops and capacity-building projects put together by organisations that have solid economic empowerment programmes. The Tony Elumelu Foundation which is a non-profit organization founded by Tony Elumelu, Chairman of Heirs Holdings,

the United Bank for Africa and Transcorp, in 2019 promised to remain strong on job creation and empowering African youths. UBA last year hosted over 20,000 visitors, 100 small and medium enterprises and leading private and public sector players from across Africa in the continent’s biggest entrepreneurial fair. The UBAMarketplace 2019 was held, on the side-line of the Tony Elumelu Entrepreneurship Forum, the largest gathering of the entrepreneurship ecosystem in Africa and a forum which last year, brought together leaders from various industries, policymakers as well as political figures across the continent. UBA, through its foundation, is also invested in propelling Africa to higher levels of development through education and the protection of the environment. The bank’s Read Africa program and National Essay Competition are geared at stimulating the quest for sound knowledge and arming educational institutions/organizations with support and/or resources to meet various learning needs. UBA has also donated resources to support education in countries across Africa including Ghana and Zambia where books were donated. Concerning the environment, In May 2008, UBA Foundation signed on to the United Nations Environment Program Finance Initiative (UNEP FI) Statement, pledging its commitment to improving the environment and promoting sustainable development by forging best practice throughout the industry. The big bank has also rolled out projects in areas outside the ambit of Education, Environment & Economic Empowerment. Financial Performance UBA saw one of the biggest growth in profit among tier-one banks and in the banking industry for the nine-month period reported last year. The bank grew profit by 32.3

percent to N81.63 billion after it recorded double-digit growth in both net interest and noninterest income. The growth was on the back of higher interest income as UBA grew its loan book on a year-todate basis. UBA’s net interest income rose by 5.5 percent to N158.914, while non-interest income grew 22.1 percent to hit N87.67 billion. Net fee and commission income rose 25 percent to N63.29bn in the period. Shares of UBA rose 0.6 percent to N8.4 per share Friday, bringing year to date return on the banking stock to 17.48 percent, above the broad market’s gain of 9.59 percent since the start of the year. Data from Bloomberg puts UBA’s dividend yield at 10.12 percent compared to an average of 7.9 percent for the tier-one banks. The bank also has a Price to Earnings (P/E) ratio of 3x compared to a 3.746x average of its big peers. This shows that UBA

is currently cheaper than nearly all big bank stocks while it offers juicy returns. Corporate Information United Bank for Africa, was founded in 1948 making the institution 72 years this year. UBA serves over 18 million customers across the globe with more than 1000 branches and touchpoints. Last year, UBA won the The Banker Magazine’s African Bank of the Year 2019. In 2018, the bank received the award of Africa’s Best Digital Bank by the Banker’s magazine. UBA is led by seasoned and renowned professionals with depth having worked for several years in diverse national and international institutions. Kennedy Uzoka, awarded BusinessDay’s Bank CEO of the year in 2019, is UBA’s Group Managing Director/CEO while Ugo A. Nwaghodoh is Group Chief Finance Officer (CFO). The Group’s Chairman is Tony O. Elumelu and Joseph C. Kesh is Vice Chairman. Current information on UBA website names other members of the board as Kennedy Uzoka, Dan Okeke, Uche Ike, Oliver Alawuba, Chukwuma Nweke, Ibrahim Puri, Liadi Ayoku, Foluke K. AbdulRazaq, Isaac Olukayode Fasola, Owanari Duke, Samuel Oni, Erelu Angela Adebayo, Abdulqadir Jeli Bello, Angela Aneke, Abdul-Aziz Dia, and Chiugo Ndubisi. UBA’s mission is to be a role model for African businesses by creating superior value for all our stakeholders, abiding by the utmost professional and ethical standards, and by building an enduring institution. Connecting Africa with the world, the UK and the USA are part of UBA’s global network and the bank has a presence in Paris, France.

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