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news you can trust I **monDAY 13 may 2019 I vol. 15, no 308 I N300

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Market I&E FX Window CBN Official Rate Currency Futures

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Spot ($/N)

3M

360.88 307.00

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NGUS jul 24 2019 361.06

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14.44

NGUS oct 30 2019 361.51

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10 Y 20 Y -0.19 -0.26 14.19

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NGUS apr 29 2020 362.41

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500 bills pending at 8th National Assembly T A

DMO makes history as FGN riskfree yield curve extended to 30yrs …FMDQ, others applaud FGN, DMO and buy-side

OWEDE AGBAJILEKE, Abuja

s the Eighth National Assembly winds down, there are growing concerns among analysts as over 500 bills are still pending in both chambers of the National Assembly.

Findings by BusinessDay revealed that while the Senate has passed over 285 bills since inauguration on June 9, 2015, President Muhammadu Buhari has so far declined assent to 41 bills passed by the National Assembly within the period under review.

Although the National Assembly has commenced the process of reconsidering and passing some of the bills earlier rejected by President Buhari, pundits say with less than one Continues on page 42

Raising concern over Nigeria’s legislative process

he Nigerian debt capital markets (“DCM”) experienced a landmark occasion in April 2019, when the Federal Government of Nigeria (“FGN”), via the Debt Management Office (“DMO”), issued its longest-tenored local currency bond – a 30-year bond – for the first time in history.

The issuance of the N53.16bn Fixed Rate (14.80 percent) FGN Bond is a clear indication of the commitment of the improving Nigeria’s ability to raise sustainContinues on page 42

Inside Oscar Onyema (l), CEO, Nigerian Stock Exchange (NSE), and Frank Aigbogun (r), publisher/CEO, BusinessDay, presenting Top 25 CEOs Award to Herbert Wigwe, GMD/CEO, Access Bank plc, at the BusinessDay Top 25 CEOs and Next Bulls Awards in Lagos.

Pictures by Olawale Amoo

L-R: Oluwole Oshin, managing director/CEO, Custodian Investment plc; Ladi Balogun, group CEO, FCMB Group, and Tunde Coker, managing director/CEO, Rack Centre, at the BusinessDay Top 25 CEOs and Next Bulls Awards in Lagos, at the weekend.

Access Bank, FCMB, Fidson Healthcare, others win big at Top 25 CEOs, Next Bulls Awards P. 2

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news Nigeria’s consumer goods firms hobbled by policy inconsistencies ...Revenues slump in Q1 BALA AUGIE

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ver a decade ago, Nigeria’s fast moving consumer goods sector attracted foreign investors who had wagered that the country’s robust demographics and rising middle class would continue to support growth.

Fast-forward to today, global crash in crude oil price that stoked a severe dollar scarcity that tipped the country into its first recession in 2016, decrepit infrastructure, huge energy costs due to unstable power supply, double taxation, and low purchasing power have left companies gasping for breath.

“It’s really tough. The cost of doing business has been on the rise, and firms are unable to pass these costs to the final consumer, whose pockets are squeezed,” said Ayodeji Ebo, managing director/CEO, Cowry Asset Management Ltd. “Because of policy inconsistency, a lot of investors that should partner with govern-

ment on infrastructure are not doing so. Consumer spending cannot improve without policies that will help create employment and reflate the economy,” Ebo said.

Neither the introduction of the Investors’ and Exporters’ (I&E) FX window in April 2017 that eased liquidity in the foreign exchange market nor a hike in the price of key products could stop the precipitous fall in margins since the start of 2018.

For instance, the combined average net margin of 10 largest listed consumer firms fell to 7.07 percent in March 2019, from 8.93 percent a year ago.

Combined net profit fell by 11.03 percent to N33.13 billion as at March 2019, from N37.24 billion a year ago. This compares with a 39.08 percent increase between March 2017 and 2018, and an uptick of 49.08 percent between 2016 and 2017 periods.

•Continues online at www.businessday.ng

SEC mulls N10m penalty for corporate gifts at AGMs/EGMs ... bans meetings with shareholders’ groups Iheanyi Nwachukwu

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usinesses and individuals who have been making a fortune as contractors producing corporate gifts for distribution at annual general meetings (AGMs)/extraordinary general meetings (EGMs) of public companies may need to change their business strategy or go under.

The contracts will soon cease to flow as the Securities and Exchange Commission (SEC) is in the process of stopping public companies from spending a significant amount of their earnings on corporate gifts at their AGMs/ EGMs which greatly impacts on their profitability.

As such, shareholders whose sole aim of attending these meetings is to cart away corporate gifts will henceforth be disappointed.

“Public companies shall not distribute gifts to shareholders, observers and any other persons at Annual General Meetings/Extra-ordinary General Meetings,” according to sub-rule 4 of the proposed amendment to Part N Rule 602 (Miscellaneous Rules) contained in an exposed sundry amendments to the rules and regulations of the Commission seen by BusinessDay. The capital market apex regulatorsaiditobservedthatsome companies arrange meetings

with select groups of shareholders ahead of general meetings to “discuss proposed resolutions and agree on strategies which are often detrimental to the interest of other shareholders”.

As such, it said in sub-rule 5 of the proposed amendment that “public companies shall not conveneanymeetingwithselect group(s) of shareholders prior to an Annual General Meeting/ Extra-ordinaryGeneralMeeting”.

Any company that violates the provisions of (4) and (5) above, BusinessDay learnt, shall be liable to a penalty of not less than N10 million.

“Few of the companies are making reasonable profits and even fewer can afford to pay dividends. If the amount budgeted for gifts at AGMs/ EGMs can be reserved for other relevant operational or administrative expenses, it would positively impact on their earnings per share,” the SEC said.

Meanwhile, as part of the Corporate Governance Scorecard implementation strategy, companies are expected to disclose a Minimum Corporate Governance Report on their websites, according to the Commission.

“The information is expected to be structured to contain reasonable Corporate Governance information on the public companies,” it added. www.businessday.ng

L-R: Tom Wilkinson, non-executive director; Tosin Runsewe, executive director; Lesley Ndlovu, non-executive director; Kunle Ahmed, chief executive officer; Olushola Adeeyo, chairman; Omowunmi Mabel Adewusi, company secretary, and Frederic Coppin, non-executive director, all of AXA Mansard Insurance plc, at the 27th annual general meeting of the company.

Access Bank, FCMB, Fidson Healthcare, others win big at Top 25 CEOs, Next Bulls Awards TELIAT SULE

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t a colourful event which held at Eko Hotels and Suites, Victoria Island, Lagos, at the weekend, BusinessDay Media Group, publisher of BusinessDay and BDSunday, honoured some chief executive officers of firms listed on the Nigerian Stock Exchange (NSE) for having distinguished themselves by contributing to the growth of the market capitalisation of quoted firms in 2018 in spite of the overall market performance ending in the negative

territory.

BusinessDay, in the Next Bulls Awards, also celebrated a number of firms for inculcating good corporate governance, innovations and raising the standards of their organisations to a point where it would be seamless if they were to be listed on the NSE today.

Access Bank, ASL Nigeria, Berger Paints, AIICO Insurance, Beta Glass, CAP, Caverton Offshore Support, CCNN, Custodian Investment, Eterna, FCMB Group, and Fidson Healthcare won in the Top 25 CEOs Awards.

Other winners of the Top 25 CEOs Awards include Linkage

Assurance, Prestige Assurance, Neimeth International, NEM, NPF MfB, Seplat, Stanbic IBTC Holdings, Sterling Bank, Unity Bank, Vitafoam and Wema Bank.

Access Bank and e-Tranzact got special recognitions.

Similarly, Airtel Networks Limited, Dana Airlines, Enyo Retail & Supply, IHS Towers Limited, Phase 3 Telecoms, Rack Centre, System Specs, VFD Group, Farmcrowdy, Alpha Mead Group and Halogen Security Limited won the Next Bulls Awards.

Welcoming dignitaries to the dinner/gala event, Frank Aigbogun, publisher/CEO,

BusinessDay Media Limited, expressed his appreciation to all the attendees who in spite of their busy schedules decided to celebrate with their friends and associates.

“On behalf of BusinessDay Media Group, you are all welcome to the 2019 Top 25 CEOs and Next Bulls Awards. As the leading voice of businesses in West Africa, our sole responsibility is to promote confidence in the Nigerian capital market; to call attention to the humungous opportunities which should be tapped by individuals, households as well

Continues on page 42

Despite sanctions, Iran has better sense of its future than Nigeria DIPO OLADEHINDE

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ran, the world’s 18th most populous country, is no doubt weighed by sanctions, yet it has achieved so much in about a decade with mostly state-sponsored investment in areas that Nigeria, which has no sanctions against it, couldn’t even commission quick-wins not to talk of achieving results.

The Western Asian country, despite being squeezed by punitive sanctions from the United States and confronting its most severe economic challenge in 40 years, boasts of a better GDP per capita of $5,555 in 2018 ($265 higher than its 2017 figures of $5,290) in comparison to Nigeria whose GDP per capita as at 2018 stood at $2,366 using recent population estimate of 201 million by United Nations Population Fund (UNFPA).

Under American pressure, dozens of European companies abandoned operations in Iran

Analysis that they had started after the signing of the nuclear agreement, leaving thousands of Iranians jobless. Re-imposed banking sanctions have sharply curtailedforeigninvestmentand access to international credit, and oil sanctions have more thanhalvedIran’scrudeexports, its main source of income.

But Iran is being touted as a haven for medical and health tourism, thanks to the Caspian region country’s diverse climate, natural resources like mineral springs and medicinal herbs, as well as high-quality medical services at costs lower than those in the west and regional countries.

According to Iran’s Health Ministry, 105,000 inbound tourists visited Iran for medical purposes between March 2016 and March 2017, bringing $588 million in revenue to the country. However, Mohammad Panahi, vice-president of the Association for Development

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of Iranian Medical Tourism Services, said revenues from health tourism were “around $1.2 billion” in 2016.

Despite waves of sanctions over the past four decades which started in 1979 and have spilled over into daily life, Iran’s capital city, Tehran, boasts the largest “hotel hospital” in the Middle East, while an entire complex, called Healthcare City, is being built in Isfahan.

The project, which is worth $260 million and kicked off last month, offers services in beauty treatments as well as traditional medicine.

Another $260 million was invested in the construction of a hospital in the city of Urmiya, in northwestern Iran, which will become the country’s first “smart hospital” capable of being connected with similar hospitals in the world, achievements Nigeria can only dream about despite huge resources.

Iran boasts of a health insurance system that covers about 90 percent of the population while more than 90 percent of @Businessdayng

its pharmaceutical needs are produced domestically by 62 local pharmaceutical companies.

This is unlike Nigeria which, despite oil revenue, can’t boast of quality health facilities.

“I am afraid to contemplate what will happen if you sanction Nigeria the same way Iran was sanctioned. 80 percent of Nigerians will probably migrate to other West African countries because of the hardship. Within a year the country might even suffer severe famine,” Charles Akinbobola, finance analyst at Sofidam Capital Limited, said.

In 2015, the Iranian governmentearnedmorefromtaxthan oil for the first time in almost half a century as the country shifted from its traditional reliance on crudetotaxationrevenuesinthe face of plummeting oil prices. In the same year, just 23 percent of its real gross value added came from oil and gas. Nigeria and other petro-dollar countries can only dream.

•Continues online at www.businessday.ng

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NEWS Efficient Health Insurance Scheme will attract investment to healthcare sector – Obaseki … says, “I will not sacrifice Edo’s collective patrimony for a few persons’insatiable greed”

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do State governor, Godwin Obaseki, has made a case for an effective and viable Health Insurance Scheme in Nigeria to improve quality of life for Nigerians and attract investment to the healthcare sector.

The governor made the submission during a courtesy visit by the National Executive of the Association of Resident Doctors (NARD), at the Government House, in Benin City, Edo State.

The governor noted that priority must be placed on health insurance, noting, “We should ensure and emphasise on having a viable, effective and formidable health insurance system in Nigeria. It is only when we have this in place that we can begin to attract the requisite investment to the healthcare system.”

Obaseki said an important aspect of the healthcare system is prevention, noting that his administration is focusing on delivering quality healthcare at the primary level to ensure serious ailments are nipped in the bud.

He noted, “We are deploying resources to ensure we have a robust healthcare system at the primary healthcare level.”

The governor added that govern-

ment could provide quality healthcare servicesforthepeople,whenitexplores innovative arrangements with the privatesectortoprovidetheseservices.

President of NARD, Olusegun Olaope, said members of the association were in Benin City for the ordinary meeting of NARD, adding that the University of Benin Teaching Hospital (UBTH) had played a vital role in sustaining the group’s ideals since its establishment in 1978.

Olaope also commended Governor Obaseki for his developmental strides in the areas of infrastructure such as roads, schools, and healthcare, among others.

Meanwhile, the state government says the Obaseki-led administration will never sacrifice the state’s collective patrimony to gratify the insatiable greed of a handful of individuals who have constituted themselves into mischief makers in the state chapter of the All Progressives Congress (APC), to blackmail the government and the party.

In a statement, Secretary to the State Government, Osarodion Ogie said no amount of divisive politics and falsehood employed by a few persons in the state chapter of the APC would discourage the Obasekiled administration from delivering

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dividends of good governance to the people.

Ogie said, “Only a handful of individuals whose insatiable greed the governor has refused to entertain at the expense of the peoples’ collective patrimony have decided to employ malfeasant tactics to blackmail him, the government and the party. They have since been advised to accept the fact that the peoples’ interest takes precedence over their avarice and that is our final word to them.”

Ogie noted that the state gubernatorial election is almost a year and half away and “Governor Obaseki’s focus is to work for Edo people who gave him the mandate and no form of distraction will dissuade him. There is no gainsaying that there is a general acceptance of Governor Obaseki and his approach to governance.

He urged the dissenting persons to sample public opinion to measure how Governor Obaseki’s policies and programmes impact on the lives of Edo people, noting, “All that is needed to gauge public opinion is to walk through the streets in any part of the state. The revolution in basic education, transparency in governance and huge infrastructural projects are sufficient to erode the effect of any fake news or contrived controversy.

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For First Bank of Nigeria, 125 years is not just a number

Bashorun J.K Randle • Continued from last week

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f the Bank should ever contemplate a change of name, the obvious choice is ENDURANCE BANK!!

Truly, over the last one hundred and twenty – five years, it has been battered and assaulted by the turbulence of its volatile environment – both political and economic as well as the social tapestry and lattice of governance.

Regardless, the Bank has emerged as a national treasure with regional tentacles and global foot prints.

At its birth in 1894, the Bank shared its page in history with launching of the Hong Kong Jockey Club which is still flourishing even after the handing over of Hong Kong (Harbour) to China by Britain.

Other epochal events of that vintage to mind: Long before “Rural Banking” infiltrated the praxis and lexicon of banking, the Bank was already firmly planted in our rural areas – particularly where the commodities for export to Britain were ready for evacuation. Consequently, those who extracted tin from alluvial mining, the cocoa farmers, palm oil tappers, rubber plantain owners etc. were on

the radar, if not directly at least through agents and middle men who assured them that payment would be effected promptly by the Bank.

The ruggedness of the Bank must have been put to test during the First World War (1914 - 1918) and again between 1939 and 1945 while the Second World War raged. Inevitably the Bank hooked its wagon to the British train and adopted strategies which left nobody in doubt about its allegiance to Britain. It is also instructive that the Bank’s spunk and grit were very much on display as our nation went through numerous coup d’états and putsches starting on 15th January 1966 followed in rapid succession by the revenge coup of July 29 1966 and spiralling into Civil War (1967 to 1970).

Regardless of the turmoil, the Bank for the most part kept its door open with due caution for the safety of lives and cash. It must have been a monumental task and agonising judgment call.

Perhaps when we delve into the archives of the Bank, we shall retrieve records of how it handled some of the most epochal events in our nation’s financial landscape and economic history such as: • The Goschalk award • Adebo Award • UdojiAward We may also be pleasantly surprised when we discover (or uncover) the discreet role played by the Bank in elections all over the country starting with the first one in 1923 right up to the most recent one regardless of the alarming report and lament by Edwin Enabo, INEC (Independent National Electoral Commission) Head of Department of Voters Education and Publicity in Rivers State: “The INEC office is under siege by

men in army uniforms, uniforms of the Air Force and police who have taken over.

They are stopping and screening people.

They are clearing results before they enter the office to the extent that up till now no collation has been done.

We don’t understand where the people are deployed from.

We are not accusing the Nigerian Army or the Nigerian Air Force, but we say the people right now in the office are wearing uniforms of Army and Air Force.

If they are not from them, we are calling on them to come and rectify the situation and allow our officers to enter with their results without molestation and harassment.

Throughout the elections, we had so many reports of insecurity, molestation, harassment and assault on our staff and ad-hoc staff, disruption of the electoral process throughout the state in all the Local Government Areas with the consequence that by yesterday evening we were unable to get any results and by 1 pm today, the office is under siege by men in Army, Air Force, and Police Uniforms.”

The Bank readily availed the government and the election authorities of its advice, observations and support in terms of its trusted officials combined with logistics and communication facilities.

In similar fashion the trust and reputation of the Bank extended to other sensitive matters such as the examination papers of the West African School Certificate; Higher School Certificate and the professional examinations of the Chartered Institute of Bankers of Nigeria and Institute of Chartered Accountants

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following the Nigerianisation of the Bank, no ethnicity can claim that it is its exclusive preserve or turf for the pursuit of primordial interest

of Nigeria [ICAN] whereby the examination papers would be sent in advance in sealed envelopes to the branches of the Bank closest to the examination centres with strict instructions that the envelopes should only be opened at the examination centres. There is no record of failure to exercise due care on the part of the Bank.

Clearly, following the Nigerianisation of the Bank, no ethnicity can claim that it is its exclusive preserve or turf for the pursuit of primordial interest.

Also, considering the role the Bank has played behind the scenes in defining not only the ethics of banking but also the ethos of professionalism as well as the delicate matter of endemic corruption and its consequences, the least we can do is to line up behind Transparency International and the recent publication of: Nigeria’s corruption perception index (1996–2018) Thankfully, Nigerian-born World Heavyweight Boxing Champion, Anthony Joshua has gone viral and lyrical: “There has always been a big piece of my heart as a Nigerian and I do believe that it is that piece that sets me apart. It always says to me, “never give up, dream big!” We come from a nation of warriors.... we have that same tenacity, that Nigeria fighting spirit that makes us game changers! We are relentless. We don’t just face our challenges, we step into the ring to win again and again. If you believe in yourself there is no limit to what you can achieve.”

Undoubtedly, First Bank of Nigeria subscribes to the same article of faith.

Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Music: how can it be monetised in and outside of Africa? UN SDG#10 GrowthView

Christina Wehbe Spotify | What If | Reduce Inequalities

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he economics of someone’s passion is quite intangible and rather difficult to measure. Economics and markets like to measure and quantify nominally.

This allows them to predict and forecast potential revenues, investments and volumes.

Today’s GrowthView explores our passions and interests that cut across societies. Music connects us emotionally. How can we achieve the UN SDG #10 on reducing inequalities within and among countries, with art &music?

How has technology evolved to capture our love for music? Has Spotify’s business model tapped into the African market? Can we simply measure our interests?

The aim is poverty reduction. GrowthView turns to what we value, as people.

Someone’s passion for instruments, singing or football is an emotional connection and this is harder to set on a barometer.

What we value can be measured - emotional impact is sustainable These are hot and cold feelings - this is why in technology we also see heat maps for IT system architectures, to clearly and simply visualize the cost of a software and the buy-in from users internally. For example, in a large corporate bank that has a multitude of software and systems in

place (CRM, trading platforms, data transmitters or simply risk calculation engines). These systems are visualised sometimes with heat maps - red to green.

Same as when children play the hot and cold game or hide and seek and the child says “you are getting hotter” or “no, you are cold”, as he/she wanders looking for her/his friend with eyes closed.

These simple barometers of hot and cold are understood universally.

Markets and investors are constantly looking for scales and for spectrums of growth.

What does this really mean? Growth potential is infinite. Company valuations are based on infinite unknowns, we speculate this is how our society has learned to operate. By speculating, on an infinite range from negative (-) growth to exponential positive (+) multiplying effects.

Is this a logical way to look at the world?

We enjoy simplicity. We like what we can understand. We are enabled when we can share our views and our desires, to others in a way we all comprehend.

‘What if’- Is this the right communication?

A simple rule is to always go with your first choice. It isn’t about exclaiming your first idea, but it is about following your initial instinct.

Thereafter qualifying and embellishing the idea.

When we overthink, we reflect inwards on: how do I sound? Will my investor see the big picture I am trying to explain? How will my family relate to what I’m saying? What if I can’t explain it? And this is a never-ending cycle of “Ifs”.

Confidence reflects our knowledge. Of course, there are those that are self-confident, however they will stumble on their argumentation. Therefore, remember, kids do not think of scenarios with, what if? They go for it and they adapt it if the circumstances change.

The same confidence can be applied to business. We are never 100% certain of our environment; therefore, stick to what you know and be www.businessday.ng

confident by relying on what you are interested and passionate about.

“This may be simplified, but the message is the same. How can adults in Africa or globally be confident and adapt, based on their passion for music, art or sports?”

These are so many infinites, of what “if”. There is a great quote that comes from a French saying, it translates “with IFs, we can change the world”.

The case of Spotify: The company & people have brilliantly tapped into our emotions, globally, and have the potential to help make this world more prosperous. Achieving the UN Sustainable Development Goal SDG#9 on innovation and the SDG#10.

Can our value system or Spotify help poverty and reduce inequalities in Africa?

Interests are a good place to start. Skills is the next stage that is matched to your interest.

Finally, the most important is learning to trust yourself and not overthink with “IFs” - communicate it as a child would.

Spotify removes the starratings and uses algorithms of how many times a song is played through a “popularity bar”.The rating system was a conversion from iTunes and as the world is looking for simplicity, they adapted their model to “like” or “not like”.

We can perhaps rank our “liking” from 1 to 5. This is where technology has learned to adapt their smart apps and phones and simplify it with hot or cold, yes or no measurements.

For traditional investors and entrepreneurs,the number of “likes” helps them group people, from Africa to Asia. A catchy song, can help connect people from different background and countries. This interest and passion create a new sector and interesting opportunities in developing countries.

The progressive method, and what Spotify does is that they measure the popularity of the artist based on the volume of times the song was heard, a much more accurate depiction of

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our emotional connection to the music.

Cutting across our usual barriers of customer segmentation, or pre-disposed thinking on number scales is where market opportunities are going.

Interests and passions are sustainable overtime. Measuring these interests are not too ambitious.

‘Hot’ and ‘cold’ maps or ‘like’ and ‘don’t like’ measurements make it transparent and understandable to various cultures as well as nationalities.

Our human tendency is to debate and argue this is because we enjoy differentiating ourselves and our tastes. Our points of views are unique.

This is true. Let’s shift this thinking.Is this constant scale measurement blocking growth? Or can we make life simpler by focusing on what we enjoy? What do we emotionally connect with?

Prosperity starts with understanding what we enjoy. What we want and need to sustain our family and grow our business. Thereafter we connect with trusted people and partners,as described in the last GrowthView “People Partnership”.

What if our interests and passions could be monetised, just the waya talented football player makes money?

Let music and our interest for African beats grow into more than making us happy.

In sum, the key take-aways for today are 1. Our passions can be measured 2. What interests can make money 3. Technology is the enabler 4. Connect emotionally 5. Be sustainable SDG#9 and SDG#10 Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland.christina.wehbe@gmail. com Cell: +41 79 950 4760 https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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Revisionism and Nigerian economic history

Patrick Atuanya

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he Structural Adjustment Program (SAP) came under fire recently by opponents of a more liberal Foreign Exchange (FX) system in Nigeria, especially during the heated campaign period before the last Presidential elections.

So was SAP actually a negative for the Nigerian economy when it was implemented some 35 years ago?

Under the Structural Adjustment Program (SAP) introduced in 1986, Nigeria reformed its foreign exchange system, trade policies, and business and agricultural regulations.

Like the causes of the 2016 recession, the background to SAP was a sharp fall in the international price of oil in the early 1980s, which saw Nigeria’s export revenues and budgetary receipts fall as well.

Before then the Nigerian Government had gone on a petro-dollar funded spending spree, leading to bizarre outcomes like the Cement Armada (1975 – 1980) when hundreds of cement-laden ships (ordered by the FG) arrived en masse at Lagos, creating severe multiyear-long port congestion during the height of the 1970s oil boom.

The steep expansion in Government spending then changed the structure of relative prices and wages in Nigeria.

Rising wages and an appreciating currency squeezed the profitability of non-oil exports and undermined their competitive position internationally, while cheap food imports muscled out domestic food production.

When the music stopped (oil prices collapsed) in the early 1980’s, the Government failed to adjust its spending to match the realities of the time, leading to Nigeria building up large fiscal and external deficits.

To finance its domestic deficits, the Government of the time relied on borrowing and money printing, while to finance its foreign deficits, it drew down its international reserves.

The decreasing availability of foreign exchange caused the private sector to incur arrears with suppliers abroad.

In 1984, in an attempt to reduce the country’s financial imbalances, Nigeria introduced budget-tightening measures.

Economic activity and employment contracted.

Rather than allowing the exchange rate to depreciate as a way of stimulating the economy, the Government focused on maintaining the artificially high value of its currency in an effort to contain inflation.

Despite these efforts, inflation increased, while decreased availability of foreign exchange boosted import prices and domestic costs.

This sounds eerily similar to Nigeria’s policy responses and outcomes during the recent 2016 – 2018 recession.

By the time SAP was introduced in 1986 the economy was in dire straits.

So what were the economic impact of SAP which included reforms to macro policy, exchange rate/trade policies, financial sector, public enterprises and expenditure?

The data shows that despite difficulties in implementation, the policies incorporated by the SAP-particularly the large depreciation of the real effective exchange rate (REER) -produced results.

According to World Bank data in contrast to an average decline of 2-3 percent per annum between 1980 and 1986, Nigeria’s real GDP grew by about 5 percent per annum between 1986 and 1992, primarily reflecting a recovery in agriculture and manufacturing.

This success notwithstanding, per capita income was still only $320 in 1994 and consumption and income were a little higher (in real per capita terms) than they were in the early 1970s before the oil boom.

According to the World Bank data, with GDP then growing at 5 percent per year and population at 3 percent, per capita income grew at 2 percent per annum, and at that rate, it would have taken about 30 years for Nigeria to recover its peak living standard (achieved in 1981) from its low point at the start of SAP. Today, following the last recession (2016) and oil price collapse there are also various back and forth commentary about whether the actions of Government worsened the economic situation or actually helped to make it less bad than it could have been.

Extensive interviews with firms doing business in Nigeria conducted by the Economist Intelligence Unit (EIU), shows the shortages of foreign currency that followed the collapse of oil export earnings in 2014-16 and the imposition by the Federal Government and central bank of severe restrictions on the availability of FX created problems for businesses.

“Companies dependent on imported raw materials were unable to obtain them and, in some cases, had to close.

‘

In Nigeria in the past, a lack of credible and authoritative platform that documents the nation’s economic history often leads to revisionism

A requirement for naira to be lodged at a bank for six weeks in order to obtain FX put pressure on working capital. At the same time, consumer demand collapsed owing to the decline in real incomes.

Many retailers with rent costs indexed to the dollar went bankrupt,” the EIU report released last week said.

What is also clear is that there were some winners from the rationing of FX, and banning of 42 imported items from accessing FX in the official window by the CBN. These include some players in the Agriculture space like farmers and agroprocessors as well as a few manufacturers that embraced import substitution.

In the SAP era, while the macro economy and greater number arguably benefited, a few urban civil servants and workers in import-substituting industries-bore the cost of adjusting to the downturn in oil.

Today the larger macro economy (and greater number of people) bears the brunt of current policies (in the form of soaring unemployment, low growth, high inflation) while a few are beneficiaries.

In Nigeria in the past, a lack of credible and authoritative platform that documents the nation’s economic history often leads to revisionism, a practice in which, economists and non-economists, lay men and all comers, reinterpret traditional views of causes and effects, decisions, and data.

Today BusinessDay is around and everyday the paper (through all its platforms) document’s Nigeria’s true economic history, for posterity and lessons to be learnt.

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

Nigerian code of corporate governance 2018 Principle 2: Board structure and composition

Bisi Adeyemi

A

while back, putting together a Board of Directors was a lot like decorating a Christmas tree - the CEO would pick out a nice selection of glittering ornaments, then top off the tree with a flashy star (David A, Nadler, Beverly A. Brian- Building Better Boards: A Blueprint for Effective Governance 27”). This analogy puts into context the traditional and informal process of nomination and appointment of members of the Board of Directors. The CEO had the most influence in the process, nominating his/her friends and professional acquaintances. A Board was considered ‘’balanced‘’ as long as its composition included one or two other CEOs, a sprinkling of bankers, lawyers, academics, retired politicians, and community leaders (and indeed traditional rulers).

In recent years there has been an increasing focus on the Structure and Composition of corporate boards. Regulators, investors and other stakeholders are demanding a more structured and systematic approach to Director selection and Board composition. The recently launched Nigerian Code of Corporate Governance, 2018has outlined 28 principles intended

to foster an improved corporate governance regime in Nigeria. Principle Two deals with Board Structure and Composition. ‘’The effective discharge of the responsibilities of the Board and its Committees is assured by an appropriate balance of skills and diversity (including experience and gender) without compromising competence, independence and integrity’’.

Board effectiveness hinges to a large extent on the diversity, experience, skills, and objectivity of Board members. The Code does not prescribe a minimum or maximum Board Size.

It however encourages the Board to ensure appropriate balance of knowledge, skills, experience, diversity and independence to objectively and effectively discharge its governance role and responsibilities while determining its composition, size and structure taking into account the scale and complexity of the Company’s operations; the need for sufficient members to serve on its Committees and the need to secure quorum at meetings.

Diversity has been widely defined to include a variety of attributes including knowledge of the field, skill and experience as well as age, culture and gender relevant for promoting better decision-making and effective governance. Interestingly, the diversity discussion has mostly focused on gender. However, age and cultural diversity can only be ignored to the detriment of Board effectiveness. In an age of disruption and fast passed technological advancement, it is in the interest of a forward-looking Board to ensure the younger generation is appropriately represented in its membership. A pan-national, regional or multinational entity would better serve the interests of its stakeholders if its Board is composed of members from diverse cultural, www.businessday.ng

racial and ethnic backgrounds.

The Code encourages the Board to put in place a Diversity Policy and establish measurable objectives for achieving diversity in gender and other areas.

The Board is required to periodically invigorate its capabilities by ensuring the appointment of new members with relevant skills and fresh perspectives, while retaining valuable knowledge, skills, experience and diversity and maintaining continuity. Thus, whilst not setting term limits for Non-Executive Directors (save for Independent Non-Executive Directors), the Code encourages the Board to periodically refresh its membership. A periodic evaluation of its membership against the objectives of the Diversity Policy as well as the skills set required to lead the organization is useful.

The Board is expected to ensure and maintain its own independence to ensure effectiveness.

The Code recommends that no individual or small group of individuals should dominate the Board’s decision-making. In this regard, the Code provides that a person (or group of persons) who is not a serving Director of the Company should not exercise any influence or dominance over the Board and/or Management. Such a person or group of persons would be deemed a shadow director as defined by extant laws.

Similarly, whilst Directors are permitted to hold concurrent directorships, such shall not affect their scope of engagement on the Board or generate conflict of interest. Accordingly, during the process of nomination and appointment, proposed directors should disclose their memberships on other Boards, and current Directors should notify the Board of prospective appointments to other Boards. The Board will then consider the disclosed directorships

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within the context of the time requirements of the respective Board and determine whether the individual can discharge his/her responsibilities and contribute effectively to the performance of the Board.

To further safeguard Board Independence, the Code recommends that the Chairman of the Board should not serve on any Board Committee. Similarly, the MD/CEO or an Executive Director should not serve as Chairman of any Board Committee. This is to ensure that undue influence by virtue of their office is not brought to bear on Committee deliberations.

The Code recommends an appropriate mix of Executive Directors, Non-Executive Directors and Independent Non-Executive Directors with the majority being Non-Executive directors. To underscore the place of independence, the Code recommends that majority of the NonExecutive Directors should be independent.

Incorporating independence into the boardroom means that the status quo is constantly challenged and critically reassessed. Independent directors bring an unbiased view, distinct from that of shareholders and Management, which provides reassurance to external parties that the Company is being run in an effective manner. Due to their perceived “distance” from the Company, they act as a balancing element in boardroom discussions involving multiple stakeholder interests and managing conflicts of interest affecting board members. Their objectivity also allows them to safeguard the interests of minority shareholders and other stakeholders who may not be represented on the Board.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

@Businessdayng

12

Monday 13 May 2019

BUSINESS DAY

COMMENT

The elusive critical mass: Why change doesn’t happen in Nigeria global Perspectives

OLU FASAN

C

ass Sunstein, the renowned American legal scholar, has just written a new book, titled Why Change Happens. Professor Sunstein explains the different ways that social and political change occurs.Butwhile his theories have general application, they don’t apply to Nigeria. Truth is,Nigeria simply defies the theories of change. It is difficult, extremely difficult, for any structural change to happen in this country. But why? Well, we need to understand how change happens, and why it won’t or doesn’t happen!

First, political economists argue that crisis is a trigger for change. When a countryfaces a serious, existentialcrisisand reaches the TINA (There Is No Alternative) point, it wouldreplace the existing failed order with a newone that works. But the crisis theory doesn’t apply to Nigeria.

How many times has Nigeria reached the TINA moment, be it in its economy or its politics, and yet, instead of rejecting the status quo, it sticks withit?Crisis simply doesn’t jolt Nigeria out of itssclerosis.

Which brings us to the Sunstein theory.

Professor Sunstein argues that change happens when people are willing to challenge a status quo and that resistance becomes a movement, which then reaches a tipping point. His point is that until a critical mass or threshold is reached, and the dam bursts, social or political change will remain elusive. As Professor Sunstein puts it: “What is needed is some kind of movement, initiated by people who say that they disapprove the existing norm and succeeding when some kind of tipping point is reached”. Once that happens, he adds, “change is inevitable”.

But, again, Nigeria defies this theory.

Tipping points are a rarity in this country. Of course, Nigerians are always angry about the status quo; of course, suppressed outrage often gets ventilated and, of course,movements for change often emerge. But that tipping point, that critical mass, which must precede any change, is never reached. The dam never bursts. And, as a result, positive, structural change never happens. But why is a critical mass unreachable?

Well, that takes us to Professor Sunstein’s “law of group polarisation”. That polarisation is underpinned by prejudices. Racial prejudice or, in the Nigerian context, tribal or ethnic prejudice, is a powerful force against building a consensus for change. However, while racial prejudice is strong, Professor Sunstein argues, citing the US, that political prejudice, which he calls “partyism”, is a stronger force against the emergence of a consensus or a critical mass for change.

Politicians simply don’t want to work or cooperate across party lines.

Sadly, both ethnic prejudice and political polarisation are deeply entrenched countervailing forces against the emergence of any consensus for change in Nigeria. If the South supports a proposition, the North is bound to oppose it, however sensible the proposition may be; if a major political party favours a particular change, another major party is likely to reject it. And that’s not even mentioning intra-ethnic and intra-party schisms that make reaching a consensus virtually impossible. Then, of course, powerful individuals hide behind the polarisations to frustrate any change that affect their vested interests.

Now, nothing illustrates the above better than the clamour for political restructuring. For nearly 20 years, since Nigeria returned to civil rule in 1999, the agitation for political restructuring has been vehement and insistent, and no government or ruling party has been able to ignore it. Indeed, there havebeen three significant political interventionsto date on the issue. Yet, all to no avail. But why? Well,ethnic and party polarisations have not allowed any movement for change to reach the tipping point, the critical mass, for a breakthrough.

In 2005, President Olusegun Oba-

sanjo inaugurated the National Political Reform Conference. His administration spent over N1 billion on the conference, attended by about 400 delegates. Yet, Obasanjo effectively binned its report.

The truth is that, the North, even though it participated in the conference, regarded the agitation for a sovereign national conference and political restructuring, which led Obasanjo to convene the conference, as a South West or, more broadly, Southern agenda. Of course, Obasanjo, who was not interested in any political reform, exploited the ethnic polarisation to dump the report of the conference.

Thus, a potentially significant political change was frustrated.

About ten years later, faced with similar calls for restructuring, President Goodluck Jonathanset up the 2014 National Conference,attended by about 500 delegates and believed to have gulped up about N7 billion. But the then opposition All Progressives Congress (APC) rejected the conference and did not participate in it.

Jonathan lost power in the following year’s general election and, so, we will never know whether he would have implemented the report, if he had been re-elected, although without the APC’s support that would have been difficult. Muhammadu Buhari came to power and immediately vowed that he would not read the report of the national conference, let alone implement it. That was not surprising. First, he was pandering to the prejudice of the North, his ethnic group and political base, which is not enthusiastic about restructuring. Second, he was indulging in “partyism”, reflecting his party’s opposition to the Jonathan conference.

But, then,the restructuring issue did not go away. Agitations for political restructuring became so strong that the APCcouldn’t ignore them. In 2017, the party inaugurated a restructuring committee, headed by the Kaduna State governor, Nasir el Rufai. Although some its governors, such as Seriake Dickson of Bayelsa State, supported the el Rufai committee, the People’s Democratic Party (PDP) itself refused to endorse it but, instead, questioned the APC’s motive for inaugurating the committee. Nevertheless, in January 2018, after nearly six

‘

... at the heart of any polarisation is a “we-they” attitude that allows divergent positions to be entrenched and vested interests to be fiercely defended and protected

months of gathering evidence across the country, the el-Rufai committee submitted a four-volume reportto the party’s National Working Committee.

So, what has happened to the report of the el Rufai committee? Truth is, the APC has no intention of implementing it. And it’s the same ethnic and political polarisations again! The Northern faction of the party which doesn’t want any form of political restructuring, which it regards as a Southern agenda, is preventing the adoption of the report by the party.

Recently, Kayode Fayemi, the Ekiti State governor, advised the Yoruba to be “more tactical” if they wanted to actualise their restructuring agenda, adding that “There are those who entertain fear on this issue of restructuring, whether this fear is legitimate or not”. He was referring to the North, of course. But the North participated in the Obasanjo and Jonathan conferences and a Northerner, el Rufai, was the chairman of the APC’s restructuring committee. The reports of all the three consultative bodies were approved by all their delegates or members, which included Northerners.

So, what fears do the North have about restructuring that were not addressed by the consultative bodies? Of course, at the heart of any polarisation is a “we-they” attitude that allows divergent positions to be entrenched and vested interests to be fiercely defended and protected. The North would simply not support anything that remotely looks like conferring an advantage on the Southor reducing in any way the privileges the North currently enjoys.

Of course, where there are visionary and competent leaders that can articulate and drive change as well as a critical mass of well-informed citizens that can demand and push for change, the effects of ethnic and political polarisations can be counteracted. But, in Nigeria, leaders and citizens themselves fuel and exploit the polarisations. Hence a critical mass for change can not emerge, and hence change cannot happen!

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

Why unemployment data are not just numbers on a spreadsheet ECONOMIST

NONSO OBIKILI

T

he National Bureau of Statistics released disaggregated statelevel unemployment data two weeks ago for the period covering the third quarter of 2017 to the third quarter in 2018. We had already seen the nationwide numbers before, and we knew that for the economy as a whole the unemployment rate increased from 20.4 to 23.1 percent. Still it was interesting to see how unemployment varied across the country. To say there were some very bad performers would be putting it lightly.

Ten states saw a ten percentage point increase in unemployment and all of them were in the North. Gombe state was the worst of the bunch with unemployment increasing from just over 10 percent to 27 percent in one year. Bauchi and Adamawa were not far behind while Kano which now has an unemployment rate of 31 percent currently ranks as the state with the fifth highest rate of unemployment and the fifth largest increase

over the period. A very worrying statistic given that Kano is supposed to be one of the states with the largest population in Nigeria.

Part of the unemployment story in the north relates to the dominance of agriculture which is the major employer of labour. Employment in agriculture depends on the seasons of course. People might switch between unemployed and underemployed depending on the farming season. It is therefore useful to look at the trend in both the unemployed and underemployed, that captures people who were completely unemployed but also people who were fully employed and became underemployed.

The numbers paint the same picture.

The states with the largest increases in unemployment are also the states with the largest drop in underemployment.

In essence a lot of people who were managing to eke out an existence have moved out of that survival status into the completely unemployed group.

The story of the Adamawa-TarabaBenue axis sheds some more light on what is behind the unemployment numbers. We know that those states have a significant share of the population employed in agriculture. We also know that they have suffered the brunt of the farmer-herdsmen crisis with lots of people displaced from their land and unable to farm. That displacement shows up in the numbers as well with the largest increase in people who went www.businessday.ng

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when the chips are down, the places with the most educated people and more likely to survive or at least do better

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from doing something to doing nothing concentrated in those three states, with Kwara sandwiched in between.

Other parts of the country have their own sets of problems. Boko Haram is still a menace in the north east. Even though the urban areas are mostly secure the rural areas, where much of the farming takes place is still not very safe for farmers. Violence, banditry and kidnapping is also now a major problem in large parts of the north west. All these problems are directly related to the unemployment crisis in those areas and are self-perpetuating.

Can we call it a crisis yet? The violence displaces people and leads to more unemployment, but the unemployment also disenfranchises people and leads to more violence. And around we go. These are not just data points on a spreadsheet in the NBS office but real people whose lives are on the brink.

So, what is the way forward? Perhaps the states that have led the way in job creation can shed some light on what other states need to do and how the federal government can enable this.

On this front, Lagos is the clear outlier.

Lagos had the highest reduction in both unemployment and the combination of unemployment and underemployment.

An even more remarkable feat when you consider that Lagos is probably the most populous state in the country.

What did Lagos do? Part of the story is that Lagos is Lagos and has a concentration of infrastructure, human capital, @Businessdayng

very close proximity to a large market (it is the large market), and better access to the rest of the world. The Lagos economy is also not agriculture based. There are agro-processing businesses of course, and some agriculture that is not crop production related, but by and large the share of agriculture and employment in agriculture in the Lagos economy is very small. Finally, they have a government that made job creation a major objective with the Lagos State Employment Trust Fund Scheme. The combination of all these factors meant that whatever meagre growth happened in Nigeria during the period, Lagos captured most of it.

The lessons for other states is this; first when the chips are down, the places with the most educated people and more likely to survive or at least do better. Secondly, the infrastructure problems are bad, but they are worse the further you get from a port. Thirdly, governance really does matter. Regardless of what the federal government or the central bank does, state governments still have a lot of room to improve their states. Finally, employment in agriculture may not be the future of job creation. No other sector is more vulnerable to instability and that is before we get to the climate change problem. Governors are going to have to think strategically about how to create non-farm jobs.

Dr. Nonso Obikili is Chief Economist at Business Day.

Monday 13 May 2019

BUSINESS DAY

13

EDITORIAL Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

A tenure of two halves

A

game of halves, a cliché among football commentators, is a good description of what to expect as Godwin Emefiele, Governor of the Central Bank of Nigeria, is re-appointed for another five years. Will his second-term be markedly different from the first term? Can his secondhalf be expected to be a game changer?

His re-appointment has been called a vote of confidence and guarantees stability. Is it also a signal of the economic agenda to expect from President Buhari? No doubt the President approves of the other interventionist policies of the CBN. Policies Emefiele has pursued to keep the naira stable. An achievement to his credit. But at what cost?

The re-appointment of Emefiele will calm the nerves of bondholders who have piled $6 billion into government bonds since February. It guarantees that the exchange rate will be stable as the CBN

will continue to intervene in the Investors’ and Exporters’ foreign exchange window, which Emefiele established in 2017.

Maintaining multiple foreign exchange rates preserves the myth of a stable currency.

An artificially strong currency favours the government; it undervalues the ball0oning debt it has incurred mostly to fund recurrent budget expenses such as salaries, and much less on human capital development and physical infrastructure.

Confidence, stability and continuity are good, but not the tenuous variety. Multiple exchange rates continue to distort economic decision making. It makes financing expensive for those who continue to invest and limits competition as only a few can get dollars at the official rate. Many companies have shut-down and thousands of jobs lost simply because of this.

Consequently, economic growth is slow, a good job is hard to find, consumer spending weak and credit tight as banks lend less these days, and,

if they do at all it’s at outrageous rates. In addition, the stock market, whilst just a gauge of a hugely informal economy, has slowed. Few companies want to list or raise new shares. They are wary of the risk of multiple rates.

Investment and capital into the country remains timid as local businesses and foreign investors weigh their options, scale down their ambitions despite the potential of the market and reserve as much cash as possible in case of another downturn or a sudden plunge in oil prices, the mainstay of government revenues and source of money for many of the interventions of the CBN. The CBN has also veered into development finance, in addition to its primary roles of price stability and regulation of the banking system. Through interventions such as the Anchor Borrowers Programme for farmers, multiple funds and facilities for small-scale entrepreneurs, manufacturers, the creative and electricity industries it has made billions

of naira available for lending at single-digit interest rates.

Initiatives that stable prices and well regulated banks coupled with rigorous fiscal policies and structural reforms can catalyse.

Undertaking these responsibilities stretches the attention and capacity of the CBN to focus on its duties.

At the tail end of the first half of Emefiele’s tenure, stability of the naira has come at huge cost and the interventionist policies of the CBN can’t and won’t fix them all; they aren’t a cure-all for the multitude of economic problems we face. The beginning of the second half of Emefiele’s re-appointment is looking good for bondholders and their major client, the federal government of Nigeria but bad for the larger economy.

Will Emefiele read the game, seize the initiative and turn the game around? Or will he continue to look back at the body language of the President to take instructions from the sidelines? We wish it is the former.

Then his re-appointment would truly be historic.

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14

Monday 13 May 2019

BUSINESS DAY

In Association With

Moving in a dangerous direction

Too manykind challengers The wrong of rupture

As America and Iran act tough, the risk of conflict is growing Meanwhile, the nuclear deal is in tatters

Three-quarters of eligible voters boycotted the poll

T

“

HE WORST deal ever negotiated,” was President Donald Trump’s view of Barack Obama’s signature diplomatic achievement: a deal that placed strict limits on Iran’s nuclear programme in return for sanctions relief. The agreement, signed in 2015 by Iran and six world powers, clumsily named the Joint Comprehensive Plan of Action (JCPOA), made it much harder for Iran to build an atom bomb, at least for a while. But it has been on life support ever since Mr Trump declared a year ago that he was withdrawing from it.

On May 8th Hassan Rouhani, Iran’s president, pushed it closer to death. Mr Rouhani said that Iran would stop complying with parts of the deal and warned that more breaches might follow. His announcement had an ominous backdrop. On May 5th America sent an aircraft-carrier strike group and bombers to the Middle East in response to “troubling and escalatory indications and warnings” of Iranian aggression. Two days later Mike Pompeo, the secretary of state, unexpectedly turned up in Iraq, where America has long accused Iran of sponsoring attacks on American forces. The combination of a dissolving nuclear agreement and more sabre-rattling increases the risk that America and Iran will stumble into a war—whether by accident or design.

For now the nuclear deal is hanging on. Iran, said Mr Rouhani, would stop exporting enriched uranium once its stockpile reached 300kg and heavy water over 130 tonnes, thus breaching caps set by the agreement.

That is worrying. Enriched uranium, if spun in centrifuges to higher levels of purity, can be used to power nuclear bombs. Heavy water is used in nuclear reactors that can produce plutonium, an alternative bomb fuel.

Mr Rouhani also gave the deal’s other signatories—Britain, China, France, Germany, Russia and the European Union—60 days to work out how to relieve the pressure brought on by American sanctions, imposed by Mr Trump, which have crippled the Iranian economy (see article). If they do not, Mr Rouhani is threatening to increase not just the volume of its enriched uranium, but

After a lousy election, Benin’s democracy is under threat

W

ITH ONLY two parties on the ballot, both of them supporters of President Patrice Talon, Benin’s general election on April 28th was an unhappy throwback to the country’s post-independence Marxist era, when voters had no real choice at all. This was all the more dispiriting because Benin was in the vanguard of Africa’s democratic revival in the early 1990s, when its long-serving leader, Mathieu Kérékou, became the first incumbent president on the continent to let his people peace-

also the purity, which is capped at 3.67%, far below the level of around 90% required to make a bomb.

Were Iran to enrich some or all of its stockpile to 20%, that would halve the time needed to make the final leap to weapons-grade levels. He also said Iran might resume work on the heavy-water reactor at Arak that had been halted under the nuclear agreement.

Mr Rouhani’s calculation, and hope, is that these steps are strong enough to placate hardliners at home and to signal Iran’s resolve to America, but calibrated enough to avoid provoking Europe into reimposing sanctions. The EU signatories warned Iran in a joint statement on May 9th that they “reject any ultimatums”. But Mark Fitzpatrick, a former State Department official (currently at the International Institute for Strategic Studies in London), thinks Iran’s tactic might work. The heavywater limit is vaguely written and is “too minor an issue” to blow up the deal. It will also take some time for Iran to breach the 300kg-limit on enriched uranium. “When it is exceeded, the amount will probably be judged as not so great as to spark a crisis,” says Mr Fitzpatrick.

Yet it is unlikely that the other signatories will be able to meet Iran’s demands. On January 31st Britain,

France and Germany announced the creation of Instex, a barter-based channel to isolate Europe-Iran trade from American sanctions. But it has proved a disappointment, covering only food and medicine. Aniseh Bassiri Tabrizi of the Royal United Services Institute, a think-tank, says Iranian officials were especially incensed by America’s decision on April 22nd to end exemptions from its sanctions that had allowed some countries to buy Iranian oil. Europe’s best efforts are unlikely to compensate for that blow.

“Eventually, we’ll reach another point where Iranians feel they have to go another step further,” says Ilan Goldenberg, a former State Department official. How much further is the question. If Iran were to shrug off the nuclear deal entirely, it could take thousands of old centrifuges out of storage, install them underground and build up a huge stock of uranium enriched to higher levels. All that might bring its breakout timeline— the time it would take to produce enough material for a single nuclear weapon—to two to three months, where it stood in 2015, or even less.

But such dramatic moves would result in the evaporation of European support, diplomatic isolation and possibly even military action. More likely is that Iran continues to slice

away at the JCPOA over time. “What we will have is not an immediate crisis, but a slow-motion crisis that will play out over years—just the way it did before,” says Mr Goldenberg.

A race between American sanctions on the one hand, and a gradual Iranian nuclear build-up on the other, would take the world back to the febrile years before the nuclear deal, when American or Israeli air strikes sometimes appeared imminent. But the situation may be more dangerous today. Iranian-backed forces have grown stronger in Lebanon, Syria, Iraq and Yemen.

More importantly, American hostility to Iran has grown. Last year Mr Pompeo issued a dozen sweeping “demands” of Iran that resembled terms of surrender. These include halting uranium enrichment (permitted under the deal) and pulling out of Syria. John Bolton, America’s national security adviser, has long advocated regime change. It was he who announced the deployment of warships on May 5th. “I don’t believe that President Trump wants to go to war,” says Wendy Sherman, a former American diplomat who negotiated the nuclear deal. “But I don’t think he fully understands the escalatory cycle Bolton has put him on, and the risks of war, which are growing every single day.”

fully vote him out of office. Since then, the Beninois have managed freely to elect three more presidents, and prevented Mr Talon’s predecessor from flouting the constitution’s two-term limit.

This time, however, new electoral laws made it cumbersome and expensive to field candidates. All opposition parties were barred for not following them to the letter. So Beninois voted with their backsides: only 27% of them bothered to go to the polls.

Many Beninois are proud of their country’s democratic record. Though Benin is poor and corrupt, it seemed to have avoided the fate of neighbours like Togo, which has been harshly governed, and Nigeria, where elections have invariably been violent. Mr Talon, one of Benin’s richest men, was elected in 2016 promising a “rupture” with his country’s history of underdevelopment. But more recently he has been keener to undermine its democracy.

Continues on page 15

Monday 13 May 2019

BUSINESS DAY

15

In Association With

After a lousy election, Benin’s democracy...

Continued from page 14

Trump v Congress, part 8

Donald Trump’s war on oversight

What’s happening now could reshape the relationship between Congress and the presidency

J

AMES WILSON—the one who signed the Declaration of Independence and took one of the Supreme Court’s first six seats, rather than the Scottish hatmaker who founded The Economist—believed that “the House of Representatives [shall] form the grand inquest of the state. They shall diligently inquire into grievances.” Many years later Woodrow Wilson, then a young scholar of government, wrote that for a legislature “vigilant oversight” is “quite as important as legislation”.

Many Supreme Court decisions have affirmed that Congress enjoys vast investigative and oversight powers to check the executive branch.

Pa r t i s a n s h i p i n f l u e n c e s how those powers are used. A Democratic Congress investigated Richard Nixon. During the Clinton administration, the Republican-led House issued more than 1,000 subpoenas and held hearings on the Clintons’ Christmas-card list. Presidents have rebuffed requests, but none has done what Donald Trump has: declare “We’re fighting all the subpoenas”, sue to block them and instruct officials to ignore them. He seems to feel that partisanship renders oversight illegitimate. That view is dangerous.

Congressional oversight power is not limitless. In 1954 the House Un-American Activities Committee convicted John Watkins, a union organiser, of contempt of Congress for refusing to testify about people who had left the Communist Party (he was candid about his own past).

The Supreme Court sided with Watkins, holding that Congress cannot “expose the private affairs of individuals without justifica-

tion”, and that “no inquiry is an end in itself; it must be related to, and in furtherance of, a legitimate task of Congress.”

Steven Mnuchin, the treasury secretary, hinted at this exception when, on May 6th, he declined to release six years of Mr Trump’s personal tax returns to Richard Neal, who chairs the House Ways and Means Committee. A law passed in 1924 states that America’s Internal Revenue Service (IRS) “shall furnish…any return or return information” to that committee, when “specified by written request”. Mr Neal wrote requesting them; Mr Mnuchin “determined that the committee’s request lacks a legitimate legislative purpose.”

Mr Neal says that his committee must examine whether the IRS has properly audited Mr Trump.

Some may find that justification thin, but the Supreme Court ruled that congressional investigations enjoy a presumption of legitimacy. A recent report from the non-partisan Congressional Research Service noted the privacy concerns inherent in releasing Mr Trump’s tax returns (which would probably leak), but those are counterbalanced by what the Supreme Court has called the “indispensable ‘informing function of Congress’”. A federal court will weigh this dispute.

The courts are adjudicating others, too. On April 29th Mr Trump, along with three of his children and several of his business entities, sued Deutsche Bank and Capital One, another bank, to stop their compliance with “congressional subpoenas that have no legitimate or lawful purpose.” That came a week after Mr Trump and several of his businesses sued Elijah Cummings,

who chairs the House Oversight Committee, to block Mazars, an accounting firm, from complying with Mr Cummings’s subpoena for records. Mr Trump argues that these subpoenas “have no legitimate or lawful purpose” and “were issued to harass” him.

Many presidents feel that way.

They have the right to keep some things secret, just as Congress has the right to investigate. Those rights often conflict when Democrats control one branch of government and Republicans the other. “What’s different here,” says Margaret Taylor of the Brookings Institution, “is the full frontal stiff-arm of the House’s oversight efforts.”

That makes reaching an accommodation hard. As one former counsel to a Republican president explains, “It’s not uncommon for a president to say, ‘No way, no how, am I going to share that information with Congress—they just want to hurt me.’

Often from that point you can manoeuvre to a point of agreement.

[But] the current situation doesn’t seem to have any of the hallmarks of compromise.”

Nor is this battle only taking place in the courts. On May 7th the White House blocked Don McGahn, a former White House counsel, from surrendering documents subpoenaed by the House Judiciary Committee because of concerns about executive privilege. Mr McGahn complied with the White House, but as a former rather than current official, his compliance was voluntary. One day later, the White House also claimed executive privilege over the unredacted version of Robert Mueller’s report, after the House Judiciary Committee voted to hold William Barr, the attorneygeneral, in contempt for failing to

deliver it to Congress in response to a subpoena.

These claims may not survive in court. Judges rejected both George W. Bush’s claim that executive privilege blocks aides from appearing before Congress (though it may prevent them from answering specific questions), and Barack Obama’s protest over information that had already been revealed. But court challenges take time, which helps Mr Trump. He can portray them as motivated by partisan spite, while running down the clock until after the next election, when the subpoenas expire, or at least until public attention moves on.

What if Mr Trump faces no consequences for ignoring congressional subpoenas—an action that formed the basis for the third article of impeachment against Nixon? A private citizen who ignores a subpoena can be jailed.

But though some Democrats have mooted dusting off Congress’s power to detain contemnors, that is unlikely to happen soon.

Since Watergate, presidents have felt obliged to at least appear to comply with Congress’s oversight power, even as they negotiated the most favourable possible terms. Mr Trump feels no such pressure. If he succeeds, the age-old system of checks and balances will break down. When the president’s party controls Congress, it will line up behind him; when it does not, he can just ignore its toothless demands.

As the former Republican White House counsel says, “The next president and the next one after that and so on would have an additional precedent to say ‘Subpoenas? Contempt? That’s just a vote. That’s just a political act.

Nothing for me to worry about’.”

Opposition parties, seething at their exclusion from the poll, took to the streets. Mr Talon sent in the army to squash them. The opposition says at least seven protesters were killed. An uneasy calm now prevails, with soldiers stationed outside the house of Thomas Boni Yayi, Mr Talon’s bitter foe and predecessor as president.

Many Beninois worry that the new parliament, due to be sworn in on May 15th, will be Mr Talon’s rubber stamp. Since 1991, the year Mr Kérékou left office, a multitude of parties has competed for power; 11 are represented in the outgoing parliament. The body has been an effective check on presidential power, for instance by forcing Mr Yayi to drop his attempt to stick around for a third term.

Now that Mr Talon has neutered parliament, his opponents fear he will further enrich himself and his cronies. Nicknamed the “King of Cotton”, he won bids for state-owned assets and government contracts while Mr Yayi, then his ally, was in power. The opposition points to the changes in the electoral laws and his readiness to call up the army to suppress protests as further evidence of his intention to destroy democracy. Last year Sébastien Ajavon, a poultry magnate known as “the Chicken King” who had run against Mr Talon for the presidency, was sentenced to prison under what many observers considered false pretences.

The president’s friends say that such complaints come from entrenched elites who oppose his plans to liberalise the economy.

Mr Talon admitted before the poll that the exclusion of opposition parties “brings discredit on our democracy and on me”. By staying at home in record numbers, voters in Benin rebuked him for holding the election anyway.

They will hope that sooner or later the president cottons on.

16

Monday 13 May 2019

BUSINESS DAY

In Association With

Collision course

The brewing conflict between America and Iran Both sides need to step back

T

HE DRUMS of war are beating once again. An American aircraft-carrier strike group is steaming towards the Persian Gulf, joined

by B-52 bombers, after unspecified threats from Iran. John Bolton, the national security adviser, says any attack on America or its allies “will be met with unrelenting force”. In Tehran, meanwhile, President Hassan Rouhani says Iran will no longer abide by the terms of the deal signed with America and other world powers, whereby it agreed to strict limits on its nuclear programme in return for economic relief. Iran now looks poised to resume its slow but steady march towards the bomb—giving American hawks like Mr Bolton further grievances.

Just four years ago America and Iran were on a different path. After Barack Obama offered to extend a hand if Iran’s leaders “unclenched their fist”, the two sides came together, leading to the nuclear deal.

That promised to set back the Iranian nuclear programme by more than a decade, a prize in itself, and just possibly to break the cycle of threat and counter-threat that have dogged relations since the Iranian revolution 40 years ago.

Today hardliners are ascendant on both sides (see article). Bellicose rhetoric has returned. Mr Bolton and Mike Pompeo, the secretary of state, believe in using economic pressure to topple the Iranian regime and bombs to stop its nuclear programme. In Tehran the mullahs and

their Revolutionary Guards do not trust America. They are tightening their grip at home and lashing out abroad. In both countries policy is being dictated by intransigents, who risk stumbling into war.

It is probably too late to save the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA). Iran has been complying, but critics in America complain that its temporary restrictions will ultimately legitimise the nuclear programme and that the deal will not stop Iran from producing missiles or sowing murder and mayhem

abroad. President Donald Trump pulled America out of the agreement last year, calling it a “disaster”.

It is not, but that damage is done.

Renewed sanctions on Iran and the threat to punish anyone who trades with it have wrecked what is left of the agreement. Last week America cancelled waivers that let some countries continue to buy Iranian oil. It is extending sanctions to Iran’s metals exports. Instead of reaping the benefits of co-operation, Iran has been cut off from the global economy. The rial has plummeted, inflation is rising and wages are falling. The economy

is in crisis.

Predictably, rather than bringing Iran’s leaders to their knees, America’s belligerence has caused them to stiffen their spines. Even Mr Rouhani, who championed the nuclear deal, has begun to sound like a hawk.

Having long hoped that Europe, at least, would honour the promise of the deal, he is exasperated. On the anniversary of America’s exit from the agreement, on May 8th, he said that Iran would begin stockpiling low-enriched uranium and heavy water, which would in sufficient quantities breach its terms. Without

economic progress in 60 days, he said, Iran “will not consider any limit” on enrichment. All this suggests that Iran will start moving closer to being able to build a nuclear bomb.

As he walks his country towards the brink, Mr Rouhani has three audiences in mind. The first is his own hardliners, who detest the nuclear deal and have been pressing him to act. He appears to have appeased them, for now. On May 7th the front page of an ultraconservative newspaper declared: “Iran lighting match to set fire to the JCPOA.” He is also trying to get European companies to break with America. He will not succeed.

Despite European Union attempts to design mechanisms that allow European businesses to skirt American sanctions, most of them have decided that the American market is too valuable.

Iran’s most important audience is America, with which it seems to be playing an old game. Iranian leaders have long seen the nuclear programme as their best bargaining chip with the West. Though they have claimed that it is peaceful, UN inspectors have found enough evidence to suggest otherwise. The technology is the same whether power or a weapon is the ultimate goal. Iran’s centrifuges can produce a bomb faster than sanctions can topple the regime, goes the logic of hardliners. But they are wielding a double-edged sword. The threat of obtaining a nuclear weapon is useless if it does not seem credible.

And if it is credible, it risks provoking military action by America or Israel.

Privacy and technology

How creepy is your smart speaker?

Worries about privacy are overstated, but not entirely without merit. Your move, Alexa

A

“

LEXA, ARE you recording everything you hear?” It is a question more people are asking, though Amazon’s voice assistant denies the charges. “I only record and send audio back to the Amazon cloud when you say the wake word,” she insists, before referring questioners to Amazon’s privacy policy. Apple’s voice assistant, Siri, gives a similar answer. But as smart speakers from Amazon, Apple, Google and other technology giants proliferate (global sales more than doubled last year, to 86.2m) concerns that they might be digitally snooping have become more widespread. And now that these devices are acquiring other senses beyond hearing—the latest models have cameras, and future ones may use “lidar” sensors to see shapes and detect human gestures (see article)— the scope for infringing privacy is increasing. So how worried should you be that your speaker is spying on you?

For years the tech industry has dreamed of computing appliances that are considered unremarkable items of household machinery, like washing machines or fridges. The smart speaker has finally realised this

promise. It can sit on a kitchen counter and summon the wonders of the internet without the need for swiping or typing. Using it is like casting a spell.

Say the magic words and you can conjure up dodgy Eighties rock while up to your elbows in washing-up, or prove to your mum that Ronaldo has scored more goals than Messi. This hands-free convenience has a cost: the speakers are constantly listening out for commands. As with any advanced and apparently magical technology, however, myths quickly

grow up about how they work.

So start with some myth-busting.

As Alexa herself contends, smart speakers are not sending every utterance into the tech giants’ digital vaults. Despite their name, the devices are simple-minded. They listen out for wake words, and then send what follows to the cloud as an audio clip; when an answer arrives, in the form of another audio clip, they play it back.

Putting all the smarts in the cloud means these speakers can be very cheap and acquire new skills as their

cloud-based brains are continually upgraded. As part of this improvement, manufacturers (such as Amazon) store sound clips of queries, so they can be assessed by humans if necessary. But Amazon notes that users can delete these clips at any time. There’s always the mute button if you are worried about accidentally triggering your speaker and sending a clip into the cloud during a sensitive conversation. Users, the firm insists, are in control.

Not everyone is convinced by such assurances, however. What if hackers infiltrate the devices? Could governments require manufacturers to provide back doors? Are their makers using them to snoop on people and then exploiting that information to target online ads or offer them particular products? Some people refuse to let Alexa and Siri into the house.

If eavesdropping is your problem, eschewing smart speakers does not solve it. Smartphones, which people blithely carry around with them, are even worse. Spy agencies are said to be able to activate the microphone in such devices, which have even more sensors than smart speakers, includ-

ing location-tracking GPS chips and accelerometers than can reveal when and how the phone is moving. And smartphones are, if anything, even more intimate than smart speakers.

Few of Alexa’s users, after all, take her into bed with them.

Monday 13 May 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

17

• Utilities • Managing your Tax

When wealth is destroyed, who is to be blamed?

The Solid Wealth Messenger

Grace Agada

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measure of success that was used as far back as the Babylonian era was for a man to successfully leave an inheritance for his children.

While the world as we know it has changed since then, this culture has continued across traditions, kingdom and generations, Great wealth legends like Rockefeller, JP Morgan, The Rothschild, and a few others have passed down great financial wealth, teaching subsequent generations to steward it with great care and generosity. However, this culture of generational wealth transfer and sons succeeding their fathers is now under attack by a fear-based virus I call “The Wealth-Giveaway Virus”. The Wealth-Giveaway Virus is a new generation virus that has affected so many of the new generation’s wealth. Wealthy people seemingly no longer want to pass on their wealth. In fact, popular wealth mogul, Warren Buffet, has initiated something called “The Giving Pledge” that calls upon all the world’s wealthiest individuals and families to give away their wealth to philanthropy and charity organizations rather than pass it on What has changed?

On the surface giving away wealth looks plausible and is, in fact, a worthy cause if philanthropy was the real reason why the

wealth is being given away. However, the reason why these people give away their wealth is far from their love for charity. These billionaires already give away millions to charity every year. So why increase the charity donation to as high as your entire wealth just because you may no longer be here? The reason is simple and it is fear-based.

No one goes through the rigors of creating wealth with the intention of giving it away one day to a total stranger. This last minute near the grave action has its root cause in the failure of the family system. The main reason these people pledge to give their wealth away is because they are afraid their children will become lazy or entitled. They question if their wealth will be used and managed wisely and they fear the possibility of their wealth sabotaging their children’s ambitions and independence.

But who is to be blamed for this? Who spoiled the child?

There is no single example of a child that was born with money management problems or a natural ability to squander money.

“Spoiled” is what adults do to children and blame it on them. It is what happens when a child is born into wealth without the necessary preparation and grooming to help that child develop a positive and balanced relationship with money. Spoiled is exactly what happens when the most important element in wealth preservation is left to chance and shielded from real life lessons.

Your children are the only assets you truly have for wealth preservation. Bringing up responsible, financially intelligent, business savvy and leadership inclined children takes hard work, but it is what true leaders do.

There is no great leader without

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving. www.businessday.ng

a successor and great successors are not built by sending them to the best schools. It is up to you to get the help that your children need to grow up into competent stewards of wealth. You must become intentional in the way you are bringing up your children.

You must help them discover a direction for their lives, form positive financial habits from an early age, and find a deeper meaning and essence to money.

Being born into wealth does something to an innocent and unprepared child that parents who built wealth from scratch cannot understand. Children born into wealth need a special kind of grooming and motivation to help them appreciate the value of money and understand the essence of wealth. Luckily, this grooming has been done successfully many times.

Giving away your wealth to charity is no different from dumping your wealth on your children without proper preparation, as the charity as well didn’t earn the money. If you can create an enabling environment that mimics some of the circumstances and conditions that drove you to wealth, if we can expose your children to learn important life lessons rather than shield them and if you can help them discover themselves rather than pressure them to be like you, they would be fulfilled and most importantly succeed on their own.

I don’t know if you have been infected with the giveaway virus yet. But if you haven’t or want to get a permanent cure for this virus, the first place to start is to define the purpose of your wealth and to create a vision, direction, and plan for your wealth. One of

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the tools you can use to kick start this process is the Family Meeting tool. The goal of the family meeting is to help you create an alignment of vision, goal and purpose your family needs to preserve wealth. I have put together a special report titled: “The Productive Family Meeting” that outlines the steps you need to take to host a successful family meeting. If you need a copy of this report kindly Text “Productive Family Meeting” to 08101860042.

If you will not give away your wealth now that you are alive because you trust that you can manage your wealth better than anybody else why give it away just because you may no longer be here. You can protect, preserve and guard your wealth against the forces that undo wealth with the right help and guidance. Now is the time to act. The older and farther away from home your children get the more difficult it is for wealth to be preserved.

We cannot blame wealth as wealth is innocent. We also cannot blame the child as the child was not born that way. Something happened after the child was born and only parents can prevent this from happening.

The true question you must answer is this: “How can I help my children become ‘trust-worthy and deserving of Wealth’?

Your Children can never be their best trying to be like you.

They are their own best self.

‘

If you will not give away your wealth now that you are alive because you trust that you can manage your wealth better than anybody else why give it away just because you may no longer be here

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer.

Email: info@createsolidwealth.com Tel: 08101860042 @Businessdayng

18

Monday 13 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 10 May 2019

Top Gainers/Losers as at Friday 10 May 2019 LOSERS

GAINERS Company

Company

ASI (Points)

Opening

Closing

Change

N579.9

N522

-57.9

DEALS (Numbers)

AFRIPRUD

N3.93

N3.54

-0.39

0.2

GUARANTY

N32.3

N32

-0.3

VOLUME (Numbers)

N10.3

0.2

ETERNA

N4.1

N3.9

-0.2

VALUE (N billion)

N2.5

0.18

N1.95

N1.81

-0.14

Opening

Closing

Change

STANBIC

N43.7

N46

2.3

SEPLAT

GUINNESS

N50

N51.5

1.5

UACN

N6.75

N6.95

ETI

N10.1

NEM

N2.32

MANSARD

MARKET CAP (N Trn)

28,847.81 3,130.00 235,228,073.00 1.360 10.842

Global market indicators FTSE 100 Index 7,203.29GBP -4.12-0.06%

Nikkei 225 21,344.92JPY -57.21-0.27%

Generic 1st ‘DM’ Future 25,624.00USD -192.00-0.74%

Deutsche Boerse AG German Stock Index DAX 12,059.83EUR +85.91+0.72%

S&P 500 Index 2,843.57USD -27.15-0.95%

Shanghai Stock Exchange Composite Index 2,939.21CNY +88.26+3.10%

Stock investors lose N137bn in one week Julius Berger grows Stories by Iheanyi Nwachukwu

I

nvestors at the Nigerian Stock Exchange (NSE) lost about N137billion in just one trading week to Friday May 10, 2019. This resulted to the All Share Index (ASI) declining by 1.25percent week-onweek (WoW).

The stock market had opened the review week at a record value of N10.979 trillion. At a record level of N10.842 trillion market capitalisation and All Share Index of 28,847.81 points as at Friday, it implies the stock market has lost 8.22percent of its year-

open value.

“As the All Share Index continues to trade comfortably below 30,000 points, the outlook appears dim. However, we expect investors to take advantage of beaten down prices at week open but do not rule out the possibility of further sell-offs”, Vetiva research analysts said in the Friday, May 10 note.

In the review trading week, the NSE 30 Index was down by 1.43percent; NSE Banking (-2.77percent); NSE Consumer Goods (-0.23percent); NSE Industrial Goods (-0.36percent); NSE Insurance (-1.74percent); NSE Oil & Gas (-5.29per-

cent); and NSE Pension Index (-2.20percent).

“Thus far in first-half (H1) of 2019, major bourses across Emerging and Frontier markets have witnessed a positive turnaround relative to 2018 and the performance has been largely buoyed by the dovish chorus across global central banks.

“However, the Nigerian Stock Exchange appears missing in action, as a surprise interest rate cut in March, some impressive corporate announcements and a relatively peaceful pre-and postelection period failed to stimulate the market”, said research analysts at United Capital Plc in their May

9 note to investors.

On Thursday May 9, President Muhammadu Buhari asked the Senate to confirm the reappointment of Godwin Emefiele as Governor of the Central Bank of Nigeria (CBN).

Emefiele will continue the herculean leadership tasks at the apex bank for a second five years.

In addition, United Capital research analysts linked the relatively lacklustre performance by the NSE to lack of foreign interests, adding among other factors that “inactivity at the primary market segment has continued to make the market less attractive to foreign portfolio investors (FPIs).”

L-R: Abdlazeez Kaita, project coordinator, Julius Berger Nigeria Plc; Jafaru Damulak, director, Julius Berger Nigeria Plc; Gladys Talabi director, Julius Berger Nigeria Plc; Martin Brack, financial director, Julius Berger Nigeria Plc; and Moses Duku, head, media relations office, Julius Berger Nigeria Plc, at the company’s Investor Relations Forum at Radisson Blu Hotel Victoria Island.

SEC approves payment to investors of Dantata Success

T

he Securities and Exchange Commission (SEC) has granted approval for the commencement of payment to the investors of Dantata Success, which will be supervised by an Administrator approved by the Commission effective May 31, 2019 or even

earlier.

The Securities and Exchange Commission had on February 6, 2019 pursuant to its powers under section 13(w) of the Investments and Securities Act 2007 sealed up the business premises of Dantata Success and Profitable Comwww.businessday.ng

pany (DSPC).

The company has been involved in unlawful solicitation of funds from the public with a promise of inexplicable high returns to investors.

The action taken by the Commission was with a view to protecting investors.

The Commission further

warns the public to exercise utmost caution before subscribing to investment schemes by confirming the registration status of any company or individual and the investment products they are offering before entering into any transaction with them.

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FY’2018 PBT by 173%

... shareholders equity rises to N35bn

N

igeria’s leading engineering construction company, Julius Berger Nigeria Plc Group’s revenue in the financial year 2018 increased by 37percent, Profit Before Tax (PBT) increased by 173percent, total comprehensive income increased by 47percent; earnings per share increased by 47percent, while shareholders equity rose to N35billion during the review year.

Martin Brack, Financial Director, Julius Berger Nigeria Plc noted these at the company’s Investor Forum which held in Lagos on Thursday May 9, 2019.

Meanwhile, Lars Richter, Managing Director of Julius Berger also said at the Investor Forum that the record making progress Julius Berger has made at the second Niger Bridge Project site, reflects the company’s continued commitment to a timely completion of the project.

Richter who showed a video clip of the intensive and extensive engineering construction works going on at the Second Niger Bridge in Asaba/ Onitsha since the short time the company has been awarded the main contract for the works, said, “… the record setting progress Julius Berger has made at the site, reflects the company’s continued commitment to a timely completion of the project”.

Richter also reiterated that the Cold recycling methodology which the company introduced into the country at the ongoing Abuja Kaduna Zaria Kano Road works, “points to an efficient future of road construction, rehabilitation and maintenance in Nigeria”. The methodology, he reiterated, innovatively provides for the milled-off pavement to be recycled and improved for reuse in paving the base layer of the road.

Speaking on the LagosShagamu Expressway, which has seen delays and even work stoppage in the past, due to funding challenges, Richter said since the @Businessdayng

resumption of work, a steady pace of progress is now the reality. He said, “Considering that the Expressway is now financed via the Presidential Infrastructure Development Fund, we presume that we will be able to achieve an uninterrupted pace of work with the new funding structure”, Dr Richter said, adding that “Julius Berger remains fully committed to completion of this complex project, for the benefit of all”.

On the ongoing Bodo Bonny Road, Richter said that in spite of the project’s strategic socio–economic importance as well as its acknowledged challenges, “… as the first major contractor to enter Bonny Island over 20 years ago, Julius Berger has the experience and the technical knowhow to deliver the needed solution, and we are doing so”.

Speaking to the company’s success at both the completed Azura Power Plant as well as to the success of ongoing works at the Okpai Power Plant, Richter also said “Power is a key sector for the future of Nigeria and for Julius Berger, and we now have the proven experience and knowhow to continue growing our portfolio in the power sector” At the event, which has become a traditional preAGM presentation by the executive management of Julius Berger Nigeria Plc, the company’s shareholders and stakeholders were presented with raw data on the business activities and fortunes of the company over the 2018 business year as well as on its economic trajectory. The Managing Director, Engr. Dr. Lars Richter’s presentation dwelt on operational perspectives and outlook. He reviewed the business year 2018, status of operations and outlook for 2019 and beyond. With palpable and positively infectious enthusiasm, Richter informed the investor forum that 2018 was a very successful and pivotal year for Julius Berger, a business year filled with many positive developments and achievements.

Monday 13 May 2019

BUSINESS DAY

COMPANIES & MARKETS

19

MTN Nigeria service revenue up 13.4%, EDBITDA margin at 53.3% in Q1

COMPANY NEWS ANALYSIS INSIGHT

Pg. 20

INTERVIEW

Nigeria needs champions within government to develop infrastructure - BCG

BusinessDay’s Publisher Frank Aigbogun and senior analyst, Lolade Akinmurele, caught up with Hans-Paul Buerkner, global chairman of the Boston Consulting Group (BCG), during his recent visit to Lagos, Nigeria. Here are excerpts from the interview:

W

e would like to welcome you to Lagos again. As you go around countries where BCG is established, what do you look out for?

Buerkner: I think the key really is the people, the entrepreneurial spirit and the effort to get things done.

It is always investing in people, investing in infrastructure, investing in institutions and investing in markets, financial inclusion is also very important. These are the four key pillars and I still see good moments around the world.

I know everyone talks about the trade conflict, increased polarisation in many countries and societies and climate change as key challenges, but I think overall the world is in reasonable shape, growth rates are quite reasonable and so I’m still optimistic we will continue on a good path. Even though, of course you know there are some catalysts that have slowed down but I think one should be realistic of what to expect.

I’m going to come back to the global economic environment but allow me take you further on the question I asked. What stands out for you in countries that you visit and what lessons can Nigeria learn from your observations?

Of course what you notice are two things; one is the infrastructure, from duly built airports to ports, railroads and highways, and of course the other thing is the discussions with people, when they talk about their lives and the lives of their children, about education, business and about how they feel.

I think these are the two most important issues and the key thing you see in emerging markets is that there is improvement in infrastructure. What you physically see is that moving from the three months to the next three months, a road that had not been finished in the last quarter gets completed. In the developed markets in Europe and North America, people are actually satisfied with what they have but are really worried about the future and everybody expresses this.

In emerging markets, people are not satisfied with what they have but they are optimistic about the future and they are willing to engage on the future. So that is something which you’ll hear all the time and that is why I like to be in emerging markets, which is where I spend most of my time because people are very optimistic and willing to take their destiny into their hands.

There are many places like Nigeria where the struggle with building infrastructure is prevalent and I want to ask what the global concepts that are working for developing infrastructure at a rapid pace and how can Nigeria tap into that knowledge First of all, I would say except for China, all countries are struggling with this and all new high ways and ports or airports take a long time.

In China you decide to embark on such projects and in two years you are done with it and everybody has to move aside. There is nowhere else in the world where that is possible and of course I’m aware in Nigeria you have particular issues with infrastructure but I don’t think it is something completely unusual. You find connectivity within Africa overall still with lots of room for improvement.

Same in Asia and Latin America but I think they are making progress because you find leaders like President Joko Widodo

the port in Jakarta, Indonesia, the head of the airport in Singapore or the minister in India who says he wants to really improve the public sector port in India and really expand with limited resources.

These people- the champions within government- are usually concerned with how they can make those places more effective and efficient. I am sure there are also champions in Nigeria, but I think this is the key part for me as it is not something one can do from the outside. You need to have someone, whether it is the public sector or private sector who really wants to get it done and is personally committed to engaging and removing the obstacles. There are many obstacles, not only here but also abroad.

L-R: Tobi Idogho, consultant; Tolu Oyekan, principal; Joao Hrotko, partner and office administrator; Hans-Paul Buerkner, global chairman, and Pelumi Bamgbala, associate, all of Boston Consulting Group (BCG), after an exclusive interview with the global chairman of BCG in Lagos. Pic by David Apara

in Indonesia being much focused on infrastructure and really putting himself on the line and trying to remove obstacles.

Where there are issues, say with a village because a highway is supposed to move close by, he engages with the villagers and this has been on several occasions. He has tried to convince them and get things done.

It still takes time but progress is being made.

In India, the kilometres of roads being built per day has moved to up to 30 kilometres because within the government, there are specific people who really have the will and determination to get things done.

In India, we are working with the minister of transportation who is also in charge of building roads and he really is getting things done, public sector ports, increasing capacity, engaging the people. I think that’s what it takes, you have to have peoplechampions- who drive this and remove the many obstacles that are clearly there.

You alluded to the challenge of will and courage that is required to breakdown some of these barriers.

In Nigeria we see an amplification of funding challenge for building infrastructure especially at a time where government revenues are flat, perhaps declining with rising debt service costs. What should Nigeria be doing to crack the funding challenge?

I think the key thing about infrastructure is not so much the funding. Again, I don’t know the details for Nigeria or Africa but I think it’s interesting to see that the money usually is there. In Asia certainly, maybe that’s also true for Africa, Chinese, Japanese and Koreans are really trying to build and also provide cheap finance. The development banks, the multilateral development banks are really engaged and there is also a lot of institutional investment from pension funds and insurance companies, who actually look for infrastructural investments and to have a steady flow of income. The key is getting these projects off the ground and get going.

This is why many people hesitate because when you say you will build a new toll road, and then it takes about 50 years before you get started because there are a lot of struggles with all kinds of regulation, land disputes, court cases and so forth. The real issue in many places is not so much the money but the ability to get moving.

The reason we see funding as a

challenge here, is not necessary due to the unavailability of capital, but unlocking it through creating a good asset class that people can invest in; like a good pipeline of projects that private equity, pension funds can invest in. In Nigeria we see government only, there isn’t a PPP project that I have seen come to the market in the last three years Different countries have different experience with PPP. For some, it has worked well but for many it has not, including developed markets. I think one of the key ways of financing is to sell existing projects; airport, ports, highways, railroads and then use the money to finance new projects because when you have brown field projects you know what you have, the investors are clear they can really size what they are getting. Whereas for Green field projects, you never know what would come and when it would come. So that may be a way of not only getting the money but also unlocking the funding by selling existing assets at a good price and with the proceeds building the next round of high ways, railroads and airports. I think we have been also working a lot on how to finance infrastructure, the uncertainty has been the major issues for most of the investors-the primary investors. If you can remove this by having specific projects, then it is a much easier task.

BCG is big on infrastructure globally, what would you say is the impact that the work your colleagues in Lagos has had on moving the needle in the area of infrastructure in Nigeria and what more can be done?

I think it’s always important to find the champions within the government or certain institutions that really want to move things forward. We have been working with a number of airports and help to create big expansions to increase the flow of passengers, to increase revenue and so forth. We have been working at ports, at terminals, increasing capacity significantly with very limited investment and I think the starting point has to be somebody who has the determination whether it is the head of

You spoke earlier about global growth and that there have been concerns about the trade war between Unites States and China, do you think these days that it might not be as bad as most analysts had envisaged?

Well, we should say that there is not only a trade conflict between US and China. There is also one between US and Europe, one between US and Japan and another between Europe and China. In other places, you’d see trade barriers and tariffs being reintroduced by many countries. So I think there is a general concern about trade flows and that’s why we see trade as a percentage of global GDP stagnating and even decline some years ago, but it’s up again. At the same time we see more exchange of service and data. Globalisation is not dead or declining; it continues to move forward but takes a different form.

So product has been the core, increasingly services, and of course data. The exchange of data is massive and so what we will see is an on-going globalisation but not quite as physically visible as we have seen it before and we need to address those conflicts and frictions between the various trading blocs and I am pretty sure we would find solutions because everybody would be hurt if we have a real imposition of massive tariffs, 35 percent or whatever the number on a large chunk of the world’s trade, everybody would suffer.

Retaliatory actions hurt different parts of the economy in different parts of the world but I think we should clearly see that especially, the conflict between US and China would continue beyond any trade agreement, because it is a conflict about being the strongest or super power of the world. This is not new thinking. The fight between US and the Soviet Union has now moved on to the friction between US and China.

Back to the issue of the economy, what should business leaders and CEOs be doing at a time like this when there is so much concern about growth and trade and as estab-

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

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Monday 13 May 2019

BUSINESS DAY

COMPANIES&MARKETS

TELECOMS

MTN Nigeria service revenue up 13.4%, EDBITDA margin at 53.3% in Q1 …Group’s Jumia stake valued at $560m JUMOKE AKIYODE-LAWANSON

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TN Niger ia has released its unaudited results for the first quarter (Q1) of 2019, ended March 31. The company delivered improved results, as the Telco’s service revenue increased by 13.4 percent on the back of improved voice and data services and its earnings before taxes, depreciation and amortization (EBITDA) margins also grew to 53.3 percent, up 2.4 percentage points year on yea, as a result of revenue growth and effective cost management.

MTN Nigeria also increased its data revenue by 32.4 percent, Fintech revenue by 22.9 percent, voice revenue by 12.7 percent and service revenue by 13.4 percent.

The company recorded significant revenue increase in service, voice and data; as it added 2.1million subscribers to its network in Q1 2019, to get its subscriber numbers up to 60.3 million network users in Nigeria.

Growth in data revenue was supported by a 10.6 percentage point increase in smartphone penetration, improved network quality, and a 9.1 percent increase in active data subscribers to 20.4 million. Total subscribers increased by 3.6 percent quarter on quarter (QoQ) to 60.3 million.

Although its digital rev-

enue decreased by 68 percent, analysts say that the telco is likely to see a pickup in digital revenues driven by mobile financial services, once the company is granted its payment service banking (PSB) license by Central Bank of Nigeria.

In 2019, MTN Nigeria adopted the IFRS 16 accounting standards in line with global best practice and adjustments are reflected in the results.

“Our first quarter performance was in line with expectations, as service revenue remained resilient with double-digit growth on the back of improvements in voice and data revenues,” said Ferdi Moolman, CEO, MTN Nigeria.

Commenting on the results, Moolman said; “We connected a further 2.1million people to our network, providing them access to worldwide communication services, while additional 1.7 million people are able to access the possibilities that that the internet provides.

This growth is built on our focus on customer-centric delivery, and in particular, on improved customer retention, our continuous focus on value-for-money propositions and further network roll out and enhancement.”

“Q1 2019 saw a significant increase in our capital expenditure programme, with focus on LTE services, where we rolled out 1,188

sites across our key focus cities. In addition, the successful transfer of the 800MHz spectrum from Visafone to MTN Nigeria will further enable improvements to network coverage and service quality,” he said.

Moolman said the telco had made significant progress to list on the Nigerian Stock Exchange (NSE) following the conversion of MTN Nigeria to a public company and the successful registration of its ordinary shares with the Security Exchange Commission (SEC), adding that it is now engaging with the NSE to complete the listing process.

“The business is on a sustainable growth path with service revenue increasing by 13.4 percent year-onyear (YoY), in line with our medium-term guidance of double digit growth. This was led by a 32.4 percent increase in data revenue and a 12.7 percent increase in voice revenue. A general slowdown in economic activities during the election period impacted voice revenue growth,” the company said in a statement.

Early in the second quarter, MTN’s e-commerce joint venture, Jumia Technologies AG, successfully raised $75 million fresh capital, and listed on the New York Stock Exchange (NYSE), resulting in a dilution of MTN’s shareholding from 29.7 percent to 18.9 percent.

L-R: Eric Fajemisin, chief executive; Nike Bajomo executive director, business development, and Bimbo Oladele, head, Micro Pension and Agency , all of Stanbic IBTC Pension Managers Limited, at the launch Stanbic IBTC Pension Managers Micro Pension campaign in Lagos. Pic by Pius Okeosisi

BANKING

SEL Capital expands, eyes Merchant Banking licence OLUFIKAYO OWOEYE

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EL Capital Limited has expanded its operations to provide more funding and financial advisory services to Small and Medium Enterprises (SMEs) and investment advice to High Net-worth Individuals (HNIs).

Segun Opaleye, managing director/CEO, SEL Capital Limited, says the expansion plan will enable the company translate to a merchant bank within the next three years.

Speaking during the opening of the new company’s head office in Victoria Island, Lagos, he states no nation can thrive without giving needed policy and financial backing to SMEs. He says the company, which aspires to be the gateway and catalyst for mobilising capital for business growth and development across Africa, opened the new office

to enable it reach out to more customers.

According to Opaleye, SEL Capital provides advisory services to SMEs on building a growth company, funding opportunities, expansion and structure for easy access to capital.

“We take so much time in guiding SMEs through key requirements to run a proper business. The issue around SMEs that impact negatively on their ability to access funding is poor corporate governance practices and we are helping them to resolve that by creating business-enabling structure for their businesses,” he says.

The company also provides investment advisory services to HNIs, who already understand some of the market dynamics but needed guidance to make better investment decisions.

On the expansion plan,

he says the company started operation last year from its office at Parkview Estate, Ikoyi, Lagos, adding that the new head office is within its plan for a bigger and befitting space to get it ready for business.

“The whole idea is to increase our clientele base. We have also in the short period, been very instrumental in capital raising for key clients and secured funding projects in key growth sector of the economy. We just concluded a $12 million funding for a captive power plant project for a client,” he notes.

As part of its company’s plan to support SMEs and promote financial inclusion, he noted the company is finalizing plan to float a N2 million SME Fund. “True to our value, we are offering innovative and reliable solutions to promote

Nigeria needs champions within government to develop infrastructure - BCG Continued from page 19 lished relationships and partnerships are being tested as vigorously as we see today?

It is important to remain ambitious but at the same time be realistic. Whenever we see the economic growth forecast for the world in 2019 and then three months after they are being reduced by the IMF or World Bank, I think we have to be realistic once it’s global.

Europe would grow 1 to 2 percent, it can be 2 or maybe higher but it can also be 1 or slightly lower. US can grow 2 to 3 percent; Asia is around 5 to 6, Latin America maybe around 2 to 3 depending on commodity price, Africa too is also dependent on commodity price and while we have some countries growing quite high at 6,7,8 per-

cent, the big ones like South Africa, like Nigeria and Egypt are growing more at the lower end of 2 to 3 percent.

I think it is very important not to always have inflated expectations because of the demographics certainly in Europe but also in countries like North America.

The growth of productivity and also the debt level do not allow you to artificially create lower growth just by pumping more money. You have tried this before the recession, now you have seen that it has its limitations.

With the technical population in Europe, you will have 1 to 2 percent growth.

The second element is business leaders should really think about their overall portfolio businesses. You need to question what businesses we are doing. By the way, there are no bad industries. In every indus-

try, there are outperformers and underperformers.

Although some people say certain industries are very bad, there are examples of outperformers in these industries. The difference between the outperformers and under-performers is significant. When you are looking at your portfolio, always look at yourself and ask where you can do better. You ask if you are really creating value in that sector.

If you are not getting the right answers, sell it off. The focus should be where you can create value and differentiate yourself.

For everyone it is important to look at the opportunity created by digitalization. Every industry, sector and company is digitalized one way or the other. The big-tech companies are putting themselves between you and your customers.

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The big-tech companies have a much higher valuation and have more currency to make acquisitions.

Everyone has to think of what digitalization has done for them and how they can benefit. They need to also ask what the threats and challenges are.

Secondly, I think every company needs to start thinking global. It doesn’t really mean you have to be everywhere. But you should ask yourself; where are my customers? How can I really reach customers? Where can I supply or find suppliers in the world? Where can I find relevant data? Where can I work with others to create eco-systems?

The third one is given that there is so much criticism of capitalism or market societies, I think just focusing on shareholder value is not long and sufficient,

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you would have to create value for all your stakeholders; and I think it’s really important to talk about your customers, your employees, your suppliers, government entities and your investors. You have to engage with all of them and create value for them; otherwise you may even lose your license to operate.

Typically CEOs around the world that you meet will ask you your view about c ert ain businesses. What message do you take back to them about Nigeria this time?

Well, certainly, I will say it is important to invest in Africa, but it must be a longterm plan. There are lots of portholes on the road.

I think the key is building step by step. It takes a longterm view to have a strong base, and a base which goes @Businessdayng

beyond commodity. There is opportunity to produce in Africa and to really export from Africa to the rest of the world.

Did you notice any change on the airport road when you came out of the airport?

It took me 40 minutes to get to my office from the airport and that was really a surprise.

Any other surprises?

Yes, of course. But you know that growth is slow in Nigeria. Unemployment is high.

I had the feeling that four or five years ago, there were a lot of Nigerians coming back into country to seize one opportunity or the other, but now there is a net outflow. Everybody seems to be speaking of Canada as the place to go to. That has also caught me by surprise.

Monday 13 May 2019

COMPANIES&MARKETS

BUSINESS DAY

21

Business Event

BANKING

Stanbic IBTC, Fidelity show tier-1 potential DAVID IBIDAPO

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igerian mid-tier lenders are fast growing their asset value by expanding their loan books.

Analysis shows that banks like Fidelity and Stanbic IBTC could in the next five to six years overtake some tier one banks in terms of asset size, assuming the big lenders continue being shy to lending.

This projection is based on the assumption that the banks grow into the future at the average annual growth rate in the last three years.

This will see a bank like Fidelity record an asset value of N3.9 trillion in 2024 based on a current average annual growth rate of 15 percent for Fidelity.

Meanwhile, Stanbic IBTC may be positioned to be referred as a tier one bank with the possibility of overtaking big lenders like GTB, Zenith and First Bank in asset value in the years 2022, 2025 and 2027 respectively.

Our projection based on an annual average growth of 26 percent in the asset size of Stanbic IBTC between 2016 and 2018 will see the tier 2 bank record asset value of N4.14 trillion against N3.65 trillion of GTB in 2022, N10.34 trillion against N8.87 trillion of Zenith Bank in 2026 and N13 trillion against N11.52 trillion of First bank in 2027.

“I will totally agree Fi-

averages N1.3 trillion as at the end of 2018.

Nnamdi Okonkwo, managing director/chief executive officer of Fidelity Bank Plc, disclosed plans by the Nigerian lender to migrate to a Tier-1 bank in the country three years from now.

According to him, 81.5 per cent of the bank’s transactions are now done through digital channels.

While the emergence of digitisation first came as a challenge to banks, now it’s an innovation due to the role it has played in facilitating transactions.

Meanwhile in the last 3 years, the Nigerian banking industry have seen tier 1 lenders grow at a slower pace the size of their assets at an annual average of 11 percent aggregately, lagging mid-tier banks asset growth at 14 percent aggregately.

The slowdown amongst tier one banks was seen majorly in 2018, after big lenders began cutting down on their loan books, seizing juicy opportunities in the Nigerian fixed income space when yields were higher.

Amongst banks categorized as tier one or big lenders, Access bank and UBA grew fastest their asset sizes at 19 percent and 18 percent respectively while Zenith, First bank and GTB grew least value of their assets at 8 percent, 8 percent and 3 percent respectively between 2016 and 2018.

delity and Stanbic IBTC are potential tier one banks,” an analyst who spoke the condition of anonymity told BusinessDay. “However, when banks grow their assets at a certain level, the pace of increase will not be the same because of an higher base, more so, the banks focus at that level will be how to derive as much value for your asset base rather than just growing it, hence concentrate more on other ratios,” analyst explained further.

Amongst mid-tier banks, Stanbic IBTC and Fidelity grew fastest their asset size at an annual average of 26 percent and 15 percent respectively between 2016 and 2018.

While Stanbic IBTC stood as the best performer in the entire banking industry in terms of asset growth, Fidelity on the other hand lagged closely Access bank and UBA which grew within the same period assets by 19 percent and 18 percent respectively.

According to analysts view on the classification of banks into tiers as in Nigeria case, banks are majorly categorized by their asset sizes with banks like Access, GTB, First Bank, UBA and Zenith bank with asset value averaging N4.72 trillion as at December 2018.

Meanwhile, Fidelity, FCMB, Stanbic IBTC, Sterling bank, Union bank, and WEMA bank are classified mid-tier banks as asset size

L-R: Tope Dare, executive director, Inlaks; Olamma Iheanetu, lecturer, faculty of computer and information sciences, Covenant University; Femi Adeoti, MD/CEO, Africa Operations, Inlaks; Adetokunbo Ayo-Ogunsanya, head of human resource and admin, Inlaks; Koyejo Talabi Oladimeji, director, Inlaks; and Femi Odusote, lecturer, faculty of computer and information sciences, Covenant University, during a study tour of the university’s students to Inlaks

L-R: Williams Odah, head, membership, Lagos Chamber of Commerce and Industry (LCCI); Rita Ogieguata, administrative officer, Petroleum Contractors’ Trade section (PCTS) of LCCI; Uzochi Nwagwu, Outgoing chairman, Petroleum Contractors’ Trade section (PCTS) of LCCI; Muda Yusuf, director general, LCCI; Ifeanyi Nwagbogu, incoming chairman, PCTS, LCCI/ group managing director, Schlumberger, and Rosario Osobase, Commercial Manager, Tenaris, during a courtesy Visit to the Lagos Chamber in Lagos.

MARKETS

Unilever pays N8.62bn dividend IHEANYI NWACHUKWU

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hareholders of Unilever Nigeria plc at its 94th Annual General Meeting (AGM) commended the company’s management for their commitment to growth as the company declared and got approval to pay N8.62billion dividend.

The shareholders did not hesitate in giving their approval for the dividend payment, even as they charged the management to remain focused despite the challenging economic landscape in Nigeria. The dividend translates to N1.50 kobo per share.

Unilever Nigeria plc recorded turnover from continuing operations increased by 9 percent from N85.2billion in 2017 to N92.9 billion in 2018. Profit After Tax for the year ended 2018 improved significantly by 42 percent

to N10.55 billion compared to N7.45 billion reported for the year ended December 31, 2017.

The shareholders at the meeting received the company’s audited financial statement for the year ended December 31, 2018 together with the reports of the directors, auditors, and audit committee thereon.

Addressing the shareholders at the meeting, Nnaemeka Achebe, chairman, Unilever Nigeria plc said the company has again demonstrated business resilience. He asserted that the company’s performance shows its commitment to ensure shareholders get returns on their investments.

“The company’s performance for the year ended 31 December 2018 shows impressive growth and resilience. Despite the economic challenges, we have remained www.businessday.ng

focused on our short and long-term growth ambitions with strong emphasis on operational intensity, cost optimization, growing market share across key categories as well as reinvesting in our business.” Achebe said.

Achebe added that Unilever will continue to appreciate the unwavering commitment of its stakeholders; shareholders, employees, suppliers and citizens for their unflinching support over the years.

“We look forward to a better 2019 for our business with improved operating environment that will enable us impact the society positively through our operations. Our commitment to continue to contribute to a fairer and socially inclusive world, improve health and well-being and improve health of the planet remains resolute,” said Achebe.

L-R: Isioma Idigbe, secretary; Olumide Mustapha, chairman; Bizzle Osikoya, member, board of trustees, and Ibukun Abidoye, member, board of trustees, all of Music Publisher Association of Nigeria, at the town hall meeting with the theme “The Music Publishing Business in Nigeria” in Lagos.

Pic by David Apara

L-R: Dolapo Orelaja, head, consumer propositions, Access bank plc; Abiodun Gaffar, legal practitioner; Ihuoma Nwigwe, fitness trainer; and Deola Rojaiye, corporate planning manager, consumer propositions, Access bank Plc at the XclusivePlus Media chat held at the bank’s head office in Lagos recently.

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BUSINESS DAY

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BUSINESS DAY

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Monday 13 May 2019

BUSINESS DAY

real sector watch

Cheap steel threatens to shut down Qualitec Industries ODINAKA ANUDU

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ualitec Industries, a major producer of roofing sheets, is on the verge of shut-down as smuggled cheap steel hurts the company.

BusinessDay visited the aluminium maker to ascertain the impact of poor import policy on it and it was gathered that it has already cut down the number of workers significantly in the last five years.

It was gathered that the number of workers at the expansive factory is fewer than 50 from almost 300 in 2014.

Steel makers complain that importing full or plain aluminium is cheaper than bringing in inputs.

“When you import plain aluminium, for example, you pay five percent duty.

But when you wish to import your input like galvanised sheets, for instance, you pay 35 to 45 percent duty,” a key player in the steel sector told BusinessDay. Qualitec’s caster and rolling mills are still on. But its power plants run almost 24 hours. Coating lines and other sections are still on, but lack of patronage is slowing down activities in the

factory.

BusinessDay had visited the factory at Ota, Ogun State, in 2014.

Oluyinka Kufile, chairman and chief executive of the company, was then optimistic. He had told BusinessDay that he had invested $100 million in new plants, machinery, captive power plants and resuscitation of existing plants. A second production line was being installed, he had said, while machines that would be required, alongside technicians that would operate them, were expected to arrive in Nigeria from Turkey.

“We have made these investments because we believe that what is worth doing at all is worth doing well, “said Kufile had said, during a tour.

“We are in the forefront of production of aluminium in Nigeria and we are very proud of this,” he said.

“It is a huge investment that has been on for a very long time. And we are still doing more. When we started, it got to a point that we had to approach American Nexim Bank. They obliged us and gave us the facility.

Today, it is a different story,” Kufile had disclosed.

But Kufile is no longer

that optimistic today as he openly said his factory is shutting down.

“You can see that things are no longer that way they were when you first came,” he told this writer.

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

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

He complained that state governments move to China and give contracts to companies there whenever they have projects.

“If we do not have confidence in our local players, how do we grow?” he asked.

To avoid manipulating import duties and flooding the Nigerian market with cheap Chinese and Indian steel, Kufile suggested a way out.

“Except government reclassifies all the HS Codes in metals and steel and put them in proper classification, some may continue to manipulate the duties and people will keep bringing in substandard products that kill the industry,” he said.

Nigeria steel sector is hurting from low patronage and cheap steel from

China clearly dominating the global market. Many are shutting down and exiting the country owing to poor policy frameworks and implementations.

Recently, Grif, maker of aluminium drums, exited Nigeria because the company could not get annealed cold-rolled steel which was its key raw material. The cold-rolled steel is one of the items on the Central Bank of Nigeria’s list of 41 items banned from accessing foreign exchange since 2016.

Yet, as of today, nobody manufactures annealed cold-rolled steel, meaning that the company lost its rhythm as it could neither import nor source the essential input locally.

Also, Federated Steel from China, maker of iron rods, has exited Nigeria and sold its assets to MNIL Limited.

Another iron rod maker, Universal Steel, has shut down. Sources close to the company attributed its closure to smuggling and unbridled import of iron rods, which are 20 to 30 percent cheaper.

BusinessDay gathered from reliable sources in the steel sector that Industrial And Farm Equipment Company, a maker of wheel barrow, has exited.

Mouka wins Foam, Mattress Company of the Year award

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ouka Limited, Nigeria’s foremost foam manufacturing company, has been declared the Foam and Mattress Company of the Year at the 2019 Nigerian Real Estate and Property Awards in Abuja on Friday.

Receiving the award on behalf of the foam and mattress company, Oladimeji Osingunwa, Mouka’s commercial director, said the recognition marked an attestation to the prime position Mouka continues to occupy in the minds of consumers as well as its dominance of Nigeria’s bedding industry, adding that the brand would not relent in its commitment to offering sleep solutions to teeming users of its products, even as it is poised for consistent

quality delivery which has earned the its products a huge market share.

“Well, I must confess to you that this is not unusual. In the last three years, Mouka Limited has been winning series of awards.

In recent times, we are one of the few companies to be recognised in Africa – for the second time in a row – by the London Stock Exchange as the ‘Company to Inspire Africa’.

“And we’ve won several awards, including regulatory awards from the International Organisation for Standardisation (ISO), the Standard Organisation of Nigeria (SON). This series of awards is a testimony to the innovative strategy of the business, both in terms of products and in our route to market and customer serwww.businessday.ng

vice excellence,” Osingunwa stated.

On the awards’ selec-

tion process, Joshua Uwabo, founder of the awards, explained that Mouka’s

emergence as the Foam and Mattress Company of the Year for excellent

L-R: Oladimeji Alabi, divisional business manager, North, Mouka Limited; Oladimeji Osingunwa, commercial director; Tobi Akinosi, business partner manager, Abuja; and Tony Okoli, regional sales manager, Mouka Limited, Northwest region at the presentation of the Foam and Mattress Company of the Year Award to Mouka Limited in Abuja recently https://www.facebook.com/businessdayng

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quality products followed a call for nomination and voting, a process which put the brand ahead of other competitors. “…We had a call for nomination at the beginning of the year when we urged members of the public to nominate organisations striving in various categories. We had a lot of nominations, but when we did the voting, Mouka Foam came tops because of its excellent quality products and that is why we are celebrating the company,” Uwabo said.

The Nigerian Real Estate and Property Awards is aimed at recognising players who are shaping the industry, rewarding excellence and providing a networking platform for various companies within the sector.

Monday 13 May 2019

BUSINESS DAY

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real sector watch Manufacturers’ energy spend drops by N24bn amid gas tussle ODINAKA ANUDU

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anufacturers spent N24.28 billion less on alternative energy sources in 2018, according to the Manufacturers Association of Nigeria (MAN).

Expenditure on alternative energy sources fell from N117.38 billion in 2017 to N93.1 billion in 2018, MAN’s economic review says.

“Paucity and high electricity tariff have posed dismal challenges for Nigeria’s manufacturing sector over the years,” MAN says. “However, electricity supply appears to have slightly improved in the second half of 2018 at it stood at 10 hours per day as against nine hours per day recorded since the second half of 2017,” MAN explains.

It adds that average number of power outage in the second half of 2018 stabilised at between three to four times per day since the first half of 2017.

Energy occupies 40 percent of manufacturing expen-

diture, according to players in the sector.

Many multinationals no longer rely on power distribution companies as they see the DisCos as unreliable.

Nigerian manufacturers say they are unhappy that franchisers of natural gas are dollarising payment of the energy source and selling to them at $$7.45 per standard cubic meter (scm), which is

above the international price.

They say the situation is compounding their energy woes and raises production costs while lowering their competitive capacity.

“The persistent increase in the price of natural gas used by our members to power their plants and machineries has reached a crisis dimension,” Mansur Ahmed, president, Manufacturers Association

L-R: Asiat Ayinke Saka, former permanent secretary/commissioner for health and women affairs; Fatiat Sheriff Akaje (Beneficiary); Hajia Risikat Abdullahi, commissioner for local govt commission; Opeyemi Awojobi, sponsorship manager, Tolaram Group, at the official presentation of kiosks to beneficiaries of the Minimie Empowerment Programme in partnership with the Kwara State Ministry of Women Affairs and Social Development.

How NB improves local input sourcing, strengthens drinks industry Odinaka Anudu & Gbemi Faminu

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igerian Breweries (NB) is improving its local sourcing of inputs and packaging materials while strengthening competition in the drinks market.

At the annual general meeting (AGM) held last week in Lagos, Jordi Borrut, managing director, said hundred percent of the brewer’s packaging materials come from Nigeria while 60 percent of its raw materials are sourced locally.

“We work closely with the farmers and integrate them through our own technical assistants that help these farmers. This encourages better yields,” he said.

He said NB took the lead in the beer and malt sections of the Nigerian market last year while coming second in the stout category with Legend and Turbo King brands. He added that in a bid to solve the mobility of products and increase market reach, plans are in the pipeline to expand distribution centres to increase the number of distributors above the current 1,500.

Borrut also said in a bid to

Of Nigeria (MAN), said at an interactive forum on gas pricing in Lagos on April 30.

“Similarly, the continued denomination of price of gas in US dollars has made the product perpetually exorbitant and gradually getting outside the reach of majority of the manufacturers, particularly the small and medium industries,” he said.

The federal government

maintain a healthy competition in the market and drive consumer satisfaction, various decisions will be carried out on all the products, ranging from brands to bottle, with consumer satisfaction and revenue being the determinants.

Martin Kochl, supply chain director, said that NB, in its partnership with local farmers and vendors, has improved the process of sourcing raw materials locally. He said that sorghum constitutes 70 percent of the company’s raw materials but plans are on to explore other substitutes like barley which can be found in the northern part of the country. He further explained that plans and research are ongoing to incorporate the use of barley as an alternative.

“Every product and brand has a difference, which is determined by the type of raw materials and natural resources used during production. Customer satisfaction is the goal,” he said.

Nigerian companies are exploring local inputs to reduce overdependence on foreign raw materials.

According to the Manufacturers Association of Nigeria, local raw-materials sourcing in the manufacturwww.businessday.ng

ing sector averaged 60.29 percent in 2018, as against 63.21 percent recorded in 2017. Raw materials sourcing above 50 percent signifies expansion in that segment while any number below 50 means contraction.

Sade Morgan, NB’s corporate affairs director, said the brewer is working on reducing carbon emission in its production process, explaining that the company works on doing that every year.

“We monitor our production process and seek to drive down carbon emission and also reduce the amount of water usage and see that for the future generation, we are very efficient in our water usage,” she said.

“A l t h ou g h Nig e r i a i s blessed with abundant resources, including water, water is still a very precious resource. We are focused on driving this down and as of last year we had driven down our water usage by 41 percent,” she disclosed.

She added that some of the company’s goals include sustainability, safety and health of consumers and host communities, adding that NB puts in place policies that align with its aims while being conscious of consumer’s needs.

had on January 4 this year gazetted a gas pricing framework for textile industries with a view to cutting down price for key players in the subsector. Many manufacturers are, however, unhappy that this was not extended to all players in the sector to reduce the huge impact which energy costs make on their margins.

“It is also instructive that while the average price of gas globally has been ranging in between and around $2.5 per scm. The case in Nigeria, where it is $7.45 per scm, is worrisome and with this kind of differential, Nigeria manufacturers cannot and may never be competitive,” Michael Adebayo, chairman, Gas Users Group of MAN, said.

Already, the Manufacturers Association of Nigeria, through its MAN Power Development Company, has signed an agreement with Tower Energy Solution & Systems Limited for the supply of six to 10 megawatts (MW) of electricity to Henry Carr Industrial Cluster in Ikeja, Lagos.

MAN has an agreement

with Negris Group for the supply of up to 80 MW of electricity to Odogunyan in Ikorodu industrial cluster.

The organisation is also talking with solar power supply firms in the northern Nigeria, where there is limited gas supply, to enable clusters in Kaduna, Kano and other parts of the north to have incremental power at cheaper rates. Similarly, a negotiation is on the pipeline with Sahara Energy, Geogrid LighTec Limited and other companies for the supply of power to industrial clusters, according to Ibrahim Usman, chairman of MAN Power Development Company Limited.

“The idea is to be able to put manufacturers together in clusters and arrange for power, which can be supplied through providers that will engage in power supply through hydro, solar, gas and will remove the cost of manufacturers getting involved in producing their own power, “ said Reginald Odia, chairman of Economic Policy Committee of MAN and director of the MAN Power Development Company.

NACC’s African Food & Products Exhibition to promote trade, industries

T

he Nigerian-American Chamber of Commerce is set for its annual exhibition & conference. The 3rd African Food and Products Conference and Exhibition (AFPE) themed ‘Sustainability and Innovation: Pathway to Business Success for SMEs’ is scheduled to hold on Friday 24th May and Saturday 25th May, 2019 in Lagos.

It is targeted at promoting the development of trade, industry, commerce, investment and industrial technological relationships between the public and private sectors of the Federal Republic of Nigeria, Africa and the United States of America.

It will witness the pres-

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ence of industry experts, speakers, market leaders, trade promotion agencies, venture capitalists, seed investors, export houses, business clinics, and policy makers.

The AFPE 2019 will attract SMEs, start-up business owners, MSMEs, international and local manufacturers, suppliers and distributors of food, beverage, agro commodities, apparel and fashion products, chain stores, independent sellers, business service providers, key decision and policy makers from leading Nigerian, African and American companies showcasing their products/service offerings to visitors, with a view to

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promoting their products and services to visitors and buyers and increasing export sales by maximising the benefits of the African Growth and Opportunity Act (AGOA).

In 2018, the event had over 1500 attendees with about 90 Exhibitors from within Nigeria and the United States.

“This year, over the twoday period of the event, we expect to have over 2,500 attendees from across Nigeria, Africa and the United States, thus presenting a viable opportunity for exhibiting companies to grow their sales, showcase their products to a target audience and strike million dollars international deals,” NACC says in a statement.

The 3rd African Food and Products Exhibition will feature a conference session with seasoned industry experts and leaders sharing their knowledge and experience on scaling up productivity, driving profitability and positioning SMEs for sustainability and global competitiveness.

Attendance to the conference and exhibition is free but registration is required, NACC says.

Visit afpe.nigerianamericanchamber.org to register.

26

Monday 13 May 2019

BUSINESS DAY

Start-Up Digest

In association with

How Ihegworo blends pharmacy with interior designing Gbemi Faminu

C

hinyere Ihegworo is a pharmacist and an interior designer.

Although a graduate of Pharmacy from Obafemi Awolowo University Ile-Ife, she delved into the world of interior designing and has been able to explore the space fully.

She is the chief executive officer of Modern Design & Interior Limited, a company which creates timeless designs and delivers choice pieces to clients. The firm supplies interior accessories and offers trainings.

She started this business in 2007 while in her fourth year at the university and registered it in 2009. To give her academic work undivided attention and manage her interim job as a pharmacist at the Lagos State Teaching Hospital, she decided to suspend her business. But she returned to it in 2014, after her degree.

Ihegworo was inspired to start the business due to her love for colours, fabrics and her flair for arranging things.

She started with N300,000, which was raised through her savings, profits from jobs she did and help from her husband.

Since its establishment, her business has grown in leaps and bounds as she has on her clientele, various companies and important personalities. Currently, she has five permanent staff members on paid employment and engages many on temporary basis while doing major projects.

She works with quality materials and sources most of her raw materials from Turkey, China and Dubai, although she still gets some of them locally.

Chinyere Ihegworo

Ihegworo encounters challenges in her business, including an overregulated business environment laced with various taxes, logistics problems, lack of premium machines and infrastructure deficit.

Our major challenge is the need for an enabling environment that can sustain

Fidelity Bank sets aside $30m for women entrepreneurs HOPE MOSES-ASHIKE

F

idelity Bank plc has set aside $30 million out of the $50 million it recently signed with African Development Bank (AfDB) for Nigerian women entrepreneurs.

AfDB last week sealed a $50 million financing deal with Fidelity Bank, for on-lending to micro, small and medium enterprises (MSMEs).

“When you get a facility like the $50 million and $30 million is set aside just for women entrepreneurs, it is another step by Fidelity bank to continue to ensure gender balance”, Nnamdi Okonkwo, managing director/CEO, told journalists at Balogun Business Association Plaza, Lagos Trade fair complex.

He noted that there is huge number of such entrepreneurs in the market. “So it is more than just a coincidence that we are here today to connect to our customers and know how we can serve them better”.

Fidelity bank, he said, does not only serve the corporate end of the market, but also serve the middle and the lower class of the market.

The bank is very strong the SME space and has disbursed over N3 billion accessed from the N220 billion MSME development fund. The fund is an intervention by the Central Bank of Nigeria (CBN).

“Most of these people here are SMEs. They are the engine hub of trade and commerce in this country and in line with our customer forum calendar we do this occasionally. We come out here, for instance, and today they are doing their quarterly meeting and we are just here to interact with them”.

Okonkwo said the bank is a heavy player in various single-digit onlending facilities, including the agric intervention funds among others, adding that the Non-Performing Loans (NPL) ratio in this regard has been very negligible.

“We are strong partners to Bank of Industry (BOI) to support the real sector, and manufacturing in different kinds of production. So we are not just dealing with AfDB alone. Indeed we strongly believe that it is our track record in partnering with other developmental institutions that convinced the AfDB that we are good partners to deal with in this case,” he said.

Responding, Okey Ezibe, founding president, Balogun Business Association, said, “We want to say a big thank you. We started with Fidelity and we will end with Fidelity. When this project was conceived, Fidelity was the first bank to come to our aid. We were offered N1 billion take-off. They were the first to sow seed money. They have been very supportive from day one and we will not let them down.

We are all in business to make money and we will partner to make Fidelity grow while we grow ourselves”.

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local production of furniture and other interior accessories at very low cost.

“To produce high quality furniture that can compete internationally, some level of machinery and power supply is required for sustainability,” she says.

“All we ask is for the government to

provide an enabling environment, where machines and power supply are available to enable local production of furniture, fabrics and interior accessories that can compete globally,” Ihegworo says.

Juggling the active role of a wife, mother, pharmacist and business owner, she says that although it is tasking her family helps her to ameliorate the burden and she makes out time for each role effectively.

Although the interior design space is over populated, Ihegworo is able to remain unique from her competitors through her uncompromising quality, affordable services and outstanding designs which correspond with clients’ needs.

For business and self-development purposes, she has actively participated in various trainings, webinars, seminars and workshops. She has a certification from London-based Trendihomes Interior Company.

For business expansion purposes, the pharmacist cum designer intends to establish and become a producer of the raw materials she uses.

“I intend to design a line of products that are relevant and globally accepted.

I am also working on interior design as a channel or approach to improving the health and quality of lives of Nigerians, considering the stressful nature of our environment,” she says.

She advises entrepreneurs to provide valued services and maintain uncompromising habits that will endear clients. She adds that “continuous personal development is extremely important. It is important to acquire more knowledge while embracing networking and consistency to hit the desired result.”

Fagade launches entrepreneurial skills acquisition scheme to empower youths RAZAQ AYINLA

A

bisoye Ayoyinka Fagade, a marketing communications and brand expert, has launched an entrepreneurial skills acquisition scheme to address challenges relating to underemployment, unemployment and unemployability of Nigerian youths.

The scheme tagged, ‘Abisoye Fagade Foundation’, is established to empower youths through mentorship and skills transfer, with a view to availing them of opportunities that improve their chosen careers.

Abisoye Ayoyinka Fagade

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Fagade said the Foundation was established to build the upcoming generations and invest in the future of the nation, saying that the only way to add value to the society is to invest in the youths, whether educated, semi educated and none educated.

Fagade, founder and managing director of Sodium Group said, “One of my visions has always been to put Nigeria on the global map and promote Africa at large, and there is no better way to do that than setting up an organisation that caters and invests in the youth.”

“I just realised you will never be able to lift anyone if you focus only on your own challenges. I have seen a lot of Nigerian youths with ideas that can save this country but they are not making headway because they can find someone to leverage on.

“By and Large, it’s a huge task that I think some of us have to leave our personal challenges to champion. We need to save Nigeria by strengthening our start-ups to become MSMEs. “We are devoted to entrepreneurship, innovation, capacity building, empowerment, championing entrepreneurship and entrepreneurs nationwide.”

Fagade, an alumnus of several global management and leadership programmes such as Howard Business School, Stanford Seed Program, among others, added that his foundation is set to unlock obstacles which entrepreneurs face as they grow their startups into established enterprises.

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Monday 13 May 2019

BUSINESS DAY

27

Start-Up Digest Gbenga Oke: Shaping Nigeria’s cultural music industry Josephine Okojie

G

benga Oke is a gospel artist, writer and percussionist who has made a name for himself in the Nigerian music industry.

He is arguably one of the most versatile, culturally oriented and unique gospel artistes to have emerged out of Nigeria. Consistency, hard work, originality and God’s grace have been the main factors that have kept his music career in the last 14 years.

His songs rendered in the Yoruba dialect are deeply rooted in the South-West culture and make great impact.

Gbenga’s love for percussion and talking drums inspired his music business at an early age of seven.

He has performed and ministered in several states across the country since the age of seven and currently has nine music albums to his credit.

Gbenga Oke

It’s believed that highlife music was created over 70 years ago and was coined by people across West Africa who gathered around danc-

Dufil partners FG, states to empower aspiring entrepreneurs David Ibemere

D

ufil Prima Foods makers of Minimie Chinchin and Minimie Noodles are currently working together with various government ministries across the country to empower young and aspiring Nigerian entrepreneurs by providing them with trade assets to start new businesses.

These ministries among others include Lagos State Ministry of Women Affairs and Poverty Alleviation; Oyo State Ministry of Women Affairs and Social Development; Ogun State Ministry of Women Affairs & Social Development, and Kwara State Ministry of Women Affairs and Social Development.

The beneficiaries were given branded kiosks fully equipped with cartons of all regular and new flavours of the brand like Minimie Instant Noodles Tomato & chicken flavour, Minimie Chin-chin Regular and the newly introduced Minimie Chinchin- Hot and spicy flavour, courtesy Minimie.

Rani Kolati, brand manager, Minimie, in a statement said that the initiative was borne out of the realisation that lots of Nigerian youth who are unemployed still have the zeal to become entrepreneurs. However, due to financial constraints, they cannot start on their own.

In view of this, the company decided to encourage youths who are the future of the nation with businesses to start, Kolati said.

“We bootstrap them with a

and beyond.

He strongly believes that African culture makes the continent unique. He is an ardent preacher of projecting and revealing African and indeed Nigerian music to the world.

Juju and highlife music are two of the styles which originated from Nigeria with music greats like Victor Olaiya, King Sunny Ade, Fela Anikulapo kuti, Victor Owaifo, and Osita Osadebe, making the genre popular and global.

The Yoruba centric highlife and juju style are rich and have created niche for themselves in the community of diverse highlife music patterns in Nigeria. That is what Gbenga represents.

“Every-music in Nigeria borrows one thing or the other from highlife,” he says.

Gbenga has provided not just strength but inspiration, as he progresses with his divine message. He continues to hold a special place in the hearts of both the old and young Nigerians who love highlife and juju.

Firm announces boot camp for intending, existing entrepreneurs

sales kiosk, stock, start-up fund and support them with supplies, so they can continue the business and support their family.

“We set up these sales kiosks in secure strategic locations for these budding and aspiring entrepreneurs at densely populated bus stops/ parks to enhance sales.

After the official handover to them, we ensure to deploy our area marketing managers to assist with sales training and regular checks to help achieve significant amount of profits which will keep them in business for a long time,” Rani stated.

Currently there are 15 kiosks scattered across Lagos— four in Ibadan, one in Abeokuta, two in Ilorin, three in Onitsha, one in Port Harcourt and six in Benin and many others in the pipeline.

During the donation exercise in Abeokuta, Abiola Kufile- Okonji, Ogun State commissioner of women affairs and social development, while handing over the business to Sangobiyi- Dorcas, stated that the initiative was in line with the vision of the state government to create jobs, wealth opportunities and alleviate poverty among residents in the state.

Lola Akande, Lagos State commissioner for women affairs and poverty alleviation, at the empowerment exercise in Lagos, while appreciating the Minimie brand, advised beneficiaries to make the best use of the opportunity presented by effectively deploying skills and assets into in the running of their businesses profitably and sustainable. www.businessday.ng

ing clubs. The acoustic guitar is associated with this genre of music.

Since starting, he has written over 1,000 songs in the last 22 years

of his singing career.

His release of ‘Oloyin’ – honey giver— brought him to limelight in 2007. Thereafter, he released ‘Yahweh Dara’ featuring the Midnight Crew. It was another hit in 2009.

Both songs were hits and depicted the very beautiful culture of the Yoruba language in Nigeria.

The young entrepreneur is a graduate of English Language from the Lagos State University.

Gbenga says that even though his genre of music is gospel, people can still feel the very root of nativity in his songs.

“I wrote popular songs like ‘Yesu Afayo’ - meaning ‘Jesus loves me’, which is in Ugandan language and is sung in almost every church in Nigeria today. I also wrote ‘Iwe Anu’, meaning ‘mercy book’ and written in Yoruba language,” he says.

Gbenga also sings in Igbo language, which is another widely spoken local language in Nigeria. He wrote the popular song ‘Chukwu Nemenma’, which has gained popularity across Nigeria

I

n a bid to support intending and ex isting SMEs, entrepreneurs, and startups with helpful business knowledge and skills, DE-Maven Advisory & Consulting Ltd, a financial ser vices company, has announced a boot camp for SMEs and start-ups who seek new and innovative ways to grow their businesses.

The intensive 3-day SME Boot camp is targeted at vibrant and enterprising individuals who intend to learn and understand the intricacies of running a small business, how to get access to funding and grants, various limitations for businesses and the countless software applications to adopt for ease of doing business. The SME boot camp holds from Friday,

June 14 – Sunday, June 16, 2019, at Center for Management Development (CMD), Magodo Shangisha, Lagos State.

The boot camp is intended to equip the intending and existing entrepreneurs to believe in themselves and the propensity of their businesses to grow.

Commenting, Dimeji Olutoye, managing director of the DE-Maven Advisory & Consulting Ltd, said the boot camp will feature seasoned facilitators who have worked with major brands in achieving their short and long term objectives.

“We are very pleased to announce a boot camp aimed at helping build the capacity of intending and existing entrepreneurs in today’s fast-evolving

industry. I am particularly pleased at the prospect of helping build a new generation of entrepreneurs with requisite skills needed to grow in the present age.”

“We are very keen to stage this intensive boot camp and to see more entrepreneurs embrace this rare opportunity to learn how to successfully tackle business limitations, learn new business skills and models, adopt digital solutions for their business and more importantly, discover how to access funding for their businesses,” Olutoye added.

DE-Maven Advisory & Consulting Ltd has also announced a discounted registration fee for interested entrepreneurs who intend to apply for the SME boot camp.

Nigerian youths must acquire vocational skills—Cleric SIKIRAT SHEHU, Ilorin

N

igerian youths, irrespective of their status, should go into trade or vocational training in order to be productive and earn legitimate income, a cleric said.

Moses Tswanya, a reverend and president of United Missionary Churches of Africa (UMCA), Kwara State chapter, gave the advise in an interview with Business Day in Ilorin. He said that all hands must be on deck to make sure the youths are positively engaged for a brighter future.

He said youths are the majority and some of them are at forefront of challenges confronting Nigeria in recent times. He called

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for proactive measures to address the scourge.

Speaking on how the youths can contribute their quota to national development and boost economy, Tswanya said, “With our population, government alone cannot take care of everyone, but one thing I believe is, if God agreed and brought you to this world, he has prepared your means of livelihood.”

“The era of white collar job is over. Our youths can go in to learning of trade like chicken or rabbit rearing, fish breeding and other things out there where they can be getting their daily pay from it,” he said.

“They should start from the grassroots and think of something that will earn them sources @Businessdayng

and legitimate income. They can start with petty trade and before you know it the business keeps expanding. They should not look at those that have made it and they too want to get there quick.”

He said government should improve effort and make jobs available for the youths. “When we look at the graduates from our tertiary institutions that are jobless, you feel for them. I think if government provides more jobs and gives loans to youths to start something, it will reduce the crime rate in our society,” he explained.

The UMCA president urged religious leaders to pray fervently for peace, as he even tasked parents to groom their wards Godly and morally.

28

Monday 13 May 2019

BUSINESS DAY

FEATURE How FCMB is driving value through diversified strategic investments and operation

L

agos: May 9, 2019 –Over 40years of investment experience, solid foundation and rare business acumen, foresight and excellent capacity to forecast trends in a consistently volatile and unpredictable socio-political and economic environment have been revealed to underscore the history of First City Monument Bank (FCMB). The prosperity of the Bank is also linked to prudence of management, professionalism in leadership and continuous motivation of its workforce and the firm’s intense commitment to excellent customer service.

While FCMB could qualify as one of the oldest financial powerhouses in the Nigerian Banking space, the brand is ever fresh, quite innovative, youthful and flexible when it comes to product offerings. In loans portfolio, it has invested in agriculture and the agro-allied industry, the manufacturing, oil and gas, telecommunication, tourism and the hospitality sectors. In infrastructure, it has spent heavily on technology, instituting innovations that are already driving Banking to the future. It has taken the drivers’ seat in digital banking, accelerating financial inclusion with an uncommon speed. It is taking banking to the nooks and crannies of the nation’s towns and villages while transporting Agency Banking and mobilising FCMB Microfinance to empower low-income households, macro, small and medium businesses, for social security and the nation’s economic growth and prosperity.

Asked to scale FCMB on the path of history, Dr. Dan Okehi, a Financial Examiner, Risk and Insurance expert said, “FCMB has continued to wax strong. Like the JP Morgan Chase, Kongo Gunmi, Old Mutual, Caswell-Massey and Genda Shigyos of this world, I see in FCMB, a financial monument built from the foundations to endure”. The expert described the Bank as very focused from the beginning and has shown consistency, acquiring other institutions, has demonstrated vigour and resilience with a clear strategy predicated on a very strong growth and solid succession plan. He said FCMB is a serious financial institution. “I admire its crop of young, skilful, intelligent and vibrant management and staff of FCMB. Not necessarily competing with anyone, I read and hear about its inroads anywhere I turn,” Mr. Okehi submitted.

Speaking on FCMB Group Plc’s current performance, its Group Chief Executive, Mr. Ladi Balogun, said, ‘’our approach to business and commitment demonstrate the resilience of the organisation. It also shows that our diversified strategy of building a Group that is strong in retail banking, corporate and investment banking as well as wealth management, is beginning to bear fruits,

Ladi Balogun

because all the subsidiaries contributed to the performance’’.

FCMB, develops and builds businesses. It is solution-oriented. In today’s financial market, the Bank is driving a women-oriented initiative known as SheVentures, designed for women-owned SMEs. The initiative provides enhanced support to existing and upcoming women-owned SMEs through access to finance, training and mentoring to boost their businesses in a sustainable manner. In addition, the FCMB SheVentures initiative provides zero-interest rate on loans to womenowned SMEs. The Bank has also floated the Canton Fair Campaign called “Race to China” which provides small and medium scale business owners the opportunity to win free tickets and accommodation in China on FCMB’s sponsorship, to attend the 2019 Canton Fair, China’s biggest Import and Export fair.

While the financial supermarket is offering a 3month banking without charges value proposition to SMEs and business owners, its FCMB Millionaire Promo has been directed at the unbanked and underbanked among the public, to develop a savings culture, a way to drive the financial inclusion objectives of the Central Bank of Nigeria.

It was for this reason, the Bank recently launched FCMB Easy Account with the “Your Phone Number is Your Account Number” campaign, a platform for citizens who have never owned bank acwww.businessday.ng

counts. It is developing bespoke products, platforms and solutions that resonate with the needs and lifestyles of the market to consolidate its valuable franchise. The Bank has also launched a digital chatbot, named Temi. This is a computer based and artificial intelligence programme, designed for interaction via voice or texts with human element on social media messaging platforms.

For this Group, things look up remarkably. The stellar performance and giant strides recorded by the financial institution which operates as a Holding Company with eight subsidiaries that are market leaders in their respective segments, is an affirmation of this reality.

The organisation has consistently braced the odds to consolidate its position as one of the dominant players in the Nigerian financial services industry and the economy in general.

The financial results of FCMB Group for 2018 again brought to the fore, its resilience, dynamism and ability to successfully turn the challenges of the business environment to opportunities. This also goes a long way to prove the mettle of FCMB as a brand with an inherent capacity to sustainably deliver exceptional financial services as well as returns to customers and shareholders with profound multiplier effects on the nation’s economy in general. At the 6th Annual General Meeting (AGM) of FCMB Group held recently, shareholders unanimously applauded the entity for delivering an-

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other inspiring result for the financial year ended December 31, 2018. Approved, was the payment of a cash dividend of 14kobo per ordinary share, as against 10kobo paid in 2017.

Going by its audited accounts for 2018, FCMB Group’s profit before tax (PBT) rose by 73% to N18.4 billion as against N11.5 billion in the preceding year. Gross revenue grew to N177.4 billion, an increase of 4.3% compared to the N169.9 billion for the same period in 2017. Net interest income as at the end of 2018 rose by 3% Year-on-Year (YoY) to N72.6 billion. In demonstration of the enhanced confidence of customers in FCMB, deposits also increased by 19% YoY to N821.7 billion while loans and advances stood at N633 billion. Total assets went up by 21% YoY to N1.43 trillion, just as capital adequacy ratio was 15.9%. There was also a significant increase on Return on Average Equity (ROAE) for 2018 financial year as the lender continues to grow shareholders’ earnings. It grew its profit by 61%, driven by improved performance in consumer finance business and increase in fees and commissions First City Monument Bank, the flagship of FCMB Group, recorded a 63% rise in profit before tax to N14.2 billion, compared to N8.7 billion in 2017. The Balance Sheet of the Bank grew by 19% from N1.17 trillion in 2017 to N1.39 trillion in 2019. There was a 20% rise in deposits, just as customer base grew by 20% to 4.9 million customers. The Bank also witnessed outstanding growth in alternate channels by leveraging on technology and collaborations.

In 2018, First City Monument Bank recorded a strong surge in customer acquisition and migration to digital channels for transactional purposes. In addition, the number of customers on the Bank’s mobile channels as at the end of 2018 increased by 124.69 percent to 2.78 million from 1.23 million the previous year. FCMB’s *329# USSD mobile banking channel recorded more than 1,200% growth in transaction count, with transaction volume growing 1,600% from N46million in 2017 to N759million in 2018.There was an improvement in Point of Sales (POS) deployment and transactions last year. Value of POS transactions of First City Monument Bank jumped by 59 percent to N272.76 billion in December 2018 from N171.13 billion as at December 2017. The Bank’s earnings from electronic products and electronic transactions improved by 45 per cent to N8.32bn in 2018 as against N5.75bn in 2017 to emerge as one of the leaders in this segment of the banking industry.

Analysts are of the opinion that with a clear understanding of its market and the environment, FCMB has built a solid and robust foundation thereby cementing its position as a top performer in the financial services industry.

@Businessdayng

Monday 13 May 2019

BUSINESS DAY

29

Access Bank Rateswatch Market Analysis and Outlook: May 3rd – May 10th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

34.80

Increased by 3.22% in Feb’ 2019 from N33.71 trillion in Jan’ 2019

Credit to Private Sector (N’ trillion)

24.16

Increased by 5.37% in Feb’ 2019 from N22.93 trillion in Jan’ 2019

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y)

22.41 11.25

Increased by 4.75% in Feb’ 2019 from N21.40 trillion in Jan’ 2019 Decreased to 11.25% in March 2019 from 11.31% in February 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

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

44.84 72.93 1.73

May 8, 2019 figure — an increase of 0.11% from May start May 10, 2019 figure— a decrease of 4.23% from the prior week March 2019 figure — a increase of 0.58% from February 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

Friday

10/05/19

03/05/19

28,847.81 10.82

29,212.00 10.98

Change(%)

(1.25) (1.43)

Volume (bn)

0.24

0.36

(33.99)

Value (N’bn)

1.36

2.31

(41.10)

MONEY MARKET NIBOR Tenor

Friday Rate (%)

Friday Rate (%)

Change (Basis Point)

Indicators

10/05/19

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

(%)

(%)

72.72 2.59

(4.23) (0.77)

12.81 (15.25)

2321.00 90.45 70.13 11.81 431.00

(1.74) (1.15) (10.02) (3.28) (2.98)

19.89 (30.53) (9.51) (22.96) (0.58)

1285.85 14.79 278.25

1.23 0.96 (0.20)

(2.41) (13.96) (15.12)

10/05/19

03/05/19

9.14

5.29

385

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

10.00 9.17 11.83

5.93 5.25 11.84

407 392 (2)

Tenor

90 Days

12.72

11.88

84

1 Mnth 3 Mnths

10.07 11.97

10.86 10.88

(80) 109

Friday

1 Month

6 Mnths 9 Mnths 12 Mnths

13.48 14.12 14.39

13.39 14.08 14.48

9 4 (9)

OBB

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

10/05/19

(N/$)

Rate (N/$)

03/05/19

10/04/19

Official (N) Inter-Bank (N)

307.00 360.88

306.95 360.65

307.00 360.33

BDC (N) Parallel (N)

0.00 360.00

0.00 360.00

0.00 360.00

Friday

Friday

Change

(%)

(%)

(Basis Point)

10/05/19

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Friday

(%)

BOND MARKET AVERAGE YIELDS Tenor

03/05/19

(%)

10/05/19 Friday (%) 10/05/19

Friday (%)

Change (Basis Point)

03/05/19

3-Year 5-Year

0.00 14.25

0.00 14.76

0 (50)

7-Year 10-Year 20-Year

14.17 14.34 14.25

14.17 14.57 14.55

0 (22) (29)

30-Year

14.69

14.66

3

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.

Change (Basis Point)

3/05/19

Index

2,885.27

2858.43

0.94

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

8.68 5.42

8.60 8.60

0.93 (37.03)

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

17.46 -38.38

16.36 -39.45

1.10 1.07

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day 182 Day

28,018.96 10,615.40

10 12.549

05-May-2019 05-May-2019

364 Day

71,074.82

12.77

05-May-2019

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

Rate(%)

Date

Global Economy In the US, the jobs report showed that the US economy added 263,000 nonfarm jobs in April, exceeding expectations of a 185 000 increase, data from the Bureau of Labour Statistics showed. The unemployment rate fell to a 49year low of 3.6%, from 3.8% in March – mostly due to a decline in the labour force participation rate. Wage growth came in slightly below expectations with average hourly earnings ticking up by 3.2% y-o-y. In all, the figures support the Fed's continued upbeat assessment of the labour market.

Elsewhere, according to preliminary data from Eurostat, the Eurozone economy expanded by more than expected in Q1 2019. The region's gross domestic product (GDP) rose by 0.4% quarter-on-quarter (q-o-q). This follows growth rates of 0.2% and 0.1% in Q4 2018 and Q3 2018 respectively. On an annual basis, GDP increased by 1.2%. The uptick was largely driven by strong investment in Spain and robust consumer spending in France.

Furthermore, unemployment fell to its lowest level since September 2008. The latest data should reduce pressure on the European Central Bank (ECB) to add more stimulus measures. In a separate development, the Bank of England (BoE) warned that “more frequent” interest rate hikes could be possible if there is a resolution to the Brexit impasse, and inflation and growth continue to pick up and perform in line with expectations. The BoE kept the policy rate unchanged at its May meeting and currently foresees only one rate increase by 2021.

Domestic Economy The Central Bank of Nigeria recently launched a program titled Creative Industry Financing Initiative (CIFI) as part of efforts to boost job creation in Nigeria, particularly among the youth. This it did in collaboration with the Bankers' committee of Nigeria. The initiative has four pillars: fashion, information technology, movie and music. The apex bank did not mention the total amount for the latest intervention. The maximum interest rate of 9 per cent per annum (all charges inclusive) is applicable to all loans.

Interested applicants in the creative industry were advised to submit applications to their banks for approval and disbursement. In a separate development, the director of Trade, Federal Ministry of Industry, Trade and Investment has said that trade is the driver of economic growth and development, adding that this is also dependent on the extent of diversification of structured goods and services traded by countries during the official opening ceremony of the Nigerian Competitiveness Project (NICOP) under the West African Competitive Programme.

NICOP is a four -year project commissioned by the German Ministry for Economic Cooperation and Development and cofunded by the EU. The director also stated that Nigeria has adopted an economic and export diversification agenda with the goal of reducing over-dependency on oil and that the development of competitive value chain is a basic driver of regional industrialisation strategy in view of its potentials for expanding production possibilities and enhancing cross border utilisation of human and natural resources.

Stock Market Trading activities at the local bourse remained volatile resulting in a decline in the market amidst continuing selloffs as well as the prevailing low liquidity in the equity segment of the financial market. The All Share Index (ASI) lost 1.25% to close at 28,847.81 points

from 29,212 points the preceding week.

Similarly, market capitalization declined 1.43% to settle at N10.82 trillion from N10.98 trillion the prior week. This week, the market is likely to be characterised by cautious ahead of the release of April inflation and Q1 GDP data.

Money Market Rates in the money market rose in the week ended May 10, 2019. Retail Secondary Market Intervention Sales (SMIS) auction and Open Market Operation (OMO) auction carried out during the week resulted in tighter liquidity. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates closed higher at 9.14% and 10% from 5.29% and 5.93% respectively the previous week. Likewise, the 90-day NIBOR settled at 12.72% from 11.87% the previous week. This week, our expectations lean towards relatively higher rates as a result of anticipated additional OMO auction.

Foreign Exchange Market Last week, the local unit depreciated against the dollar across most market segments. At the official window it ended at N307/$, a 5 kobo depreciation from the prior week.

Similarly, at the NAFEX window the local currency witnessed slight depreciation of 23 kobo to close at N360.88/$. However, the parallel market remained unchanged at N360/$ from the prior week. The relative stability of the local currency continues to be supported by the intervention of the apex Bank. This week, we expect the naira to remain stable, boosted by the Central Bank's sustained supply of liquidity to the market.

Bond Market Average bond yields declined in the week ended May 10, 2019 due to demand on the long end of the curve. Yields on the longer end of the curve such as the ten- and twenty-year debt instruments dipped to close the week at 14.34% and 14.25% respectively from 14.57% and 14.66%.

Consequently, the Access Bank Bond index climbed by 26.84 points to close at points 2,885.27 from 2,858.43 points the previous week. This week, we expect client flows to continue to dictate market direction in the short term.

Commodities Oil prices slipped further due to further escalation of the trade war between the US and China. The trade war between the two largest economies shows no signs of abating as US tariffs on USD200bn worth of imports from China were hiked to 25%, from 10%.

Bonny light, Nigerian benchmark crude, dipped $3.21, or 4.2% to $72.72 per barrel. In contrast, precious metals prices advanced as U.S.-China trade tensions buoyed safe-haven demand. Gold gained $15.62, or 1.23%, to $1,285.85 an ounce. Silver also increased by 14 cents or 1% to $14.79 an ounce. This week, we expect oil prices to trade in a narrow range as the Organization of the Petroleum Exporting Countries (OPEC) and its allies prepare for the Joint Ministerial Monitoring Committee (JMMC) meeting on May 19. For precious metals, prices are expected to be swayed by the outcome of the US and China trade talks.

MONTHLY MACRO ECONOMIC FORECASTS Variables

May’19

Jun’19

362

362

363

Inflation Rate (%)

11.23

11.19

11.21

Crude Oil Price (US$/Barrel)

70

72

72

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

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Jul’19

Exchange Rate (Interbank) (N/$)

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30

Monday 13 May 2019

BUSINESS DAY

insurance today

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Cloud-computing adoption no longer a debate in insurance industry – expert

Stanbic IBTC Pensions flags off game changing campaign on micro pension

Stories by Modestus Anaesoronye

tanbic IBTC Pension Managers Limited, Nigeria’s biggest pension fund administrator (PFA) has taken the lead to unveil a game-changing nationwide micro pension campaign tagged ‘Game Plan - Retire Well.’

The effort is aimed at sensitising and stimulating the informal sector not covered by the current Contributory Pension Scheme (CPS) to secure their buy-in into the pension scheme.

President Muhammadu Buhari had on 28 March, 2019 in Abuja launched the micropension scheme, aimed at covering a larger population of the informal workforce that are not covered under the Contributory Pension Scheme(CPS).

The micro pension scheme, in furtherance of the policy direction and ongoing reforms of Nigeria’s pension industry to extend the coverage of CPS to the informal sector and among other initiatives, geared at building on the achievements recorded with the pension reforms over the past 14 years and capable of putting the industry on stronger footing going forward.

Addressing members of the journalists in Lagos, Stanbic IBTC Pension Managers Limited reiterated its support for the ongoing reforms and other PenCom initiatives it said were necessary to maintain the strength and depth of Nigeria’s Contributory Pension Scheme. The PFA also disclosed its readiness and commitment to contributing its quota by putting in place strategic industry stakeholder engagements on ways to boost wider participation by Nigerians.

Eric Fajemisin, chief ex-

S

T

he long time debate as to whether or not the adoption of cloud computing is the way to go in the insurance industry is over, experts at Deloitte Center for Financial Services have said. They said that, for many insurers, the cloudcomputing debate is over, and with 7 in 10 carriers using cloud in their business today, it is already an integral part of their technology environment and business platform strategies.

In the report 2019 Insurance Outlook, the experts said the traditional drivers of cloud computing—cost savings and pay-as-you-consume contracts—will likely continue to push usage. Yet the next round of adoption will likely be driven by other key benefits that cloud offers—namely speed, flexibility, and scalability.

Insurance chief information officers, who are under pressure to deliver digital capabilities, are looking at developing applications on the cloud as a faster alternative to on-premises deployments.

Beyond that, evolving technologies such as advanced analytics, telematics monitoring via the Internet of Things (IoT), and cognitive applications generally demand newer technology capabilities that are both quickly scalable and flexible, given the amount of data being generated and the processing power needed to leverage it.

Cloud providers seem to be actively evolving their capabilities to offer advanced solutions in partnership with system integrators to create industry-specific solutions, while carriers have an op-

portunity to be part of this ecosystem of partners to gain a competitive edge by drawing timely insights from data in a cost-effective manner, the report said.

More and more core business capabilities are likely to move into the cloud as carriers continue to pursue legacy system modernization. Survey data from Ovum, a technology research firm, measured the progress of Software as a Service (SaaS)—much of it residing in the cloud.

Ovum’s data suggest that insurers are already leveraging cloud applications for core operational activities, although there is still plenty of room for growth here. For example, the number of US insurers with claims systems fully deployed in the cloud has seen a steady rise from 13 percent in Ovum’s 2016 survey to 26 percent in 2018 (see figure 3).

Given these trends, technology vendors are likely to increasingly direct their in-

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vestments to develop innovative cloud-based alternatives, which should spur more insurers to look to the cloud first when replacing on-site legacy systems and adding new functionality, such as artificial intelligence. These drivers should result in more carriers shifting core system capabilities to the cloud in a bigger way, even as they start opting for a cloud-first strategy for new applications and workloads.

As with any transformation, getting the most out of cloud will likely require planning, management, and up skilling. To maximize benefits, carriers should develop a multiyear cloud strategy, ideally as part of broader efforts to create the digital insurer of the future. As insurers plan their IT investments, they should give cloud a higher priority when deploying new applications.

At the same time, they should utilize the advanced capabilities of cloud to gain

access to better analytics for business decisions. For legacy systems, carriers should apply scoring rules based on business value, application complexity, and system criticality to identify which applications to migrate to the cloud and when. The result is a phased cloud migration path based on a carrier’s specific requirements. As discussed later in the regulatory section of this outlook, cybersecurity seems to be an area of concern for many with cloud, because core systems and critical data are essentially being moved off-site to a third party. Regulators across the United States, Europe, and Asia have begun questioning the risk management implications of cloud migration. Insurers should keep in mind that while it may be true that providers are accountable for the security of their cloud’s hardware and software, applying security policies to cloud functions ultimately remains an insurer’s responsibility.

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ecutive, Stanbic IBTC Pension Managers Limited said, ‘Game Plan - Retire Well’ is our callout to stakeholders to secure their future and reinforce the need to save and plan for retirement, irrespective of the nature of their jobs or the profession they may find themselves in. It is all about taking a decision today by signing up for a retirement plan, making the right move now towards a secure future or simply put having a game plan.

Fajemisin noted that ‘Game Plan - Retire Well’, is targeted at the various tiers of demography in the informal sector: the upper class/skilled workers, the middle class/ semi skilled, and the lower class/unskilled Speaking further on the scheme, Fajemisin said it is meant to insulate those not covered in the formal sector of the economy as well as income earners in every category against old-age poverty and would help in deepening asset accumulation in the country. According to him, the scheme will also help provide the crucial capital required for investment in critical sectors of the economy. As an initiative designed to cover an estimated 70 percent of Nigeria’s working population, currently in the informal sector, the scheme offers enormous benefits to the society, regardless of challenges associated with its seamless implementation.

Among its other benefits is improved standard of living for the elderly, safety of funds and access to other incentives, flexible contribution remittances, the opportunity to make withdrawal prior to retirement and the enhancement of financial inclusion in the country.

Monday 13 May 2019

BUSINESS DAY

insurance today

31

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E-mail: insurancetoday@businessdayonline.com

AXA Mansard builds capacity, promises increased dividend to shareholders Stories by Modestus Anaesoronye

A

Investment in InsurTech sustains growth in QI,

F

or the third consecutive quarter, InsurTech funding surpassed the $1 billion mark in the opening three months of 2019, with 85 deals recorded with a total value of $1.42 billion, according to the latest quarterly InsurTech Briefing from insurance and reinsurance broker, Willis Towers Watson (WTW).

When compared with the fourth-quarter of 2018, the deal count increased by 35 percent, while total funding actually fell by 11 percent.

However, WTW notes that during Q1 2019 InsurTech investors across the world executed the highest number of transactions, the highest number of property/casualty transactions, and the highest volume of Series B and Series C funding rounds.

Of the 85 deals recorded in the period, around 54 percent were outside the U.S., which is a continuation of more recent trends.

In the UK, the number of deals increased by 50 percent, while the U.S. deal count improved by 44 percent. At the same time, deal count in China declined by 38 percent in the firstquarter of 2019.

Around 66 percent of investments made in the quarter were in Seed and Series A rounds, although Q1 2019 did produce the highest ever numbers of Series B and C investment rounds, at 12 and 6, respectively, explains WTW. The number of P&C transactions increased by 37 percent on the fourthquarter of 2018, to a huge 56.

“Agile pricing systems inherently recognize that flexibility is needed to meet the unknown future.

Adopting a more agile approach requires companies to put control of pricing and price changes back into the hands of underwriting teams. The emphasis should be on their ability to change prices and rate algorithms frequently and easily, allowing companies to make rapid adjustments in an ever-moving market,” said Neil Chapman, global product leader for Pricing, Product, Claims and Underwriting, Insurance Consulting and Technology, WTW. As global insurers and reinsurers strive for increased efficiency and lower costs, the InsurTech community continues to evolve and advance rapidly, a trend that appears www.businessday.ng

unlikely to reverse anytime soon.

WTW’s most recent InsurTech Briefing has a focus on pricing and underwriting, providing case studies of the InsurTech HazardHub. Andrew Johnston, global head of InsurTech at WTW’s reinsurance arm, Willis Re, said: “The sheer volume of hopeful InsurTech companies and hype is becoming increasingly difficult to rationalize, and one could argue that much of the space is akin to the fable of the emperor’s new clothes. We are seeing, however, that a number of InsurTechs are already adding some genuine value to our industry. We remain pragmatic about where in the value chain we believe this can be achieved.

“Our quarterly InsurTech reports for 2019 will focus on the four major functional areas of insurance, exploring the activities required to make each work, and how technology could be applied to improve those processes.

We continue to believe that success for any InsurTech must follow that bottomup approach, rather than targeting reinvention from the top down.”

XA Mansard Insurance Plc said it’s ploughing back the profitability it achieved in 2018 financial year as part of the strategy to strengthen capacity for bigger businesses, while also being proactive against any development in the industry.

The company’s shareholders who spoke at its Annual General Meeting in Lagos applauded the decision of the company, said they have always known AXA Mansard as a dividend paying company, and believe that that future is brighter.

AXA Mansard in the financial year ended 31 December 2018 recorded a 26 percent increase in gross premium written, moving from N26.83 billion in 2017 to N33.92 billion.

Its profit before tax was N3.38 billion as against N3.23 billion in 2017, indicating a 5 percent increase; while the profit after tax dropped by 7 percent to N2.48 billion as against N2.68 billion the previous year.

AXA Mansard saw an 11

percent leap in total assets, moving from N66.57 billion in 2017 to N73.77 billion in the review year, while similar trend also played out in shareholders fund, which rose by 3 percent to close N20.90 billion at the end of 2018.

Olusola Adeeyo, chairman of the Company who reviewed the global economy as well as the Nigerian economic landscape post general elections said “Understanding these trends and planning to mitigate the inherent risks is key to the future success of our business.” Adeeyo said AXA Mansard is a proactive company and our team is primed to mitigate likely risks and harness opportunities for the ultimate benefit of our shareholders.

“We expect to see policy decision and developments in response to these realities at the Industry, State and Federal level and these will continue to impact the business environment we operate in”. He expressed optimism that the company will continue to forge ahead towards its goal of positioning its self as a clear leader in the non-bank financial ser-

vices sector of the Nigerian economy.` Kunle Ahmed, chief executive officer of the company responding to questions from shareholders said rather than recommending dividend now, the company was strengthening its capacity to enable it deliver greater value in the future.

Ahmed further stated that rather than come back to the shareholders to raise fresh funds, we have ploughed back the profit we made to enable us build the needed capacity that will make the company strong and competitive for bigger risks.

Going into the future, Ahmed said “as we journey into the future of possibilities, with new markets, new customer needs and new and efficient business processes and solutions, we believe that we are in good position to take advantage of these opportunities”.

“We have been proactive in putting key initiatives in place and with the investment of resources in these initiatives and the proven capacity of our people to execute innovatively, our outlook for the future is positive, he said.

SUNU Assurances reiterates commitment to quality customer service

S

UNU Assurances Nigeria Plc, a pan African insurance company with presence in 14 African countries had held its Annual General Meeting, reiterating its commitment to unparallel services to customers Shareholders in attendance were briefed on the company’s activities over the past year, which largely involved the company’s rebranding efforts as the company changed name from Equity Assurance Plc to SUNU Assurances Nigeria Plc with due approval from the shareholders and our regulator, NAICOM. The shareholders also ratified the appointment of Samuel Oghenebrume Ogbodu as the managing director/chief executive of SUNU Assurances Nigeria Plc as well as that of Adeleke Emmanuel Hassan as executive director, Technical & Operations. This is in line with the company’s vision of growing its business consistently over the next five years to

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become one of Nigeria’s 10 largest underwriting companies.

The company’s rebranding activities involved both internal and external communication strategies to inform stakeholders and the general public of the change of name and to raise awareness of the introduction of the SUNU Group’s presence in Nigeria.

The rebranding not only included a change in the company’s aesthetics but also in critical service functions and delivery as the company is focused on leveraging technology to provide quality insurance offerings to our various customers reflecting our pan African presence as a full-fledged member of the SUNU Group.

The rebranding is strategic and designed to align with the exemplary brand of our parent company (SUNU Group). It is worthy to note that SUNU Group is a foremost Pan-African Insurance Group with asset @Businessdayng

base of over $623 Million and operations in 14 African Countries and 23 office locations spanning West and Central Africa. SUNU Assurances Nigeria Plc. is therefore positioned to leverage on SUNU Group’s vast network of knowledge capital, financial strength and technical resources in our quest to differentiate its offerings and service standards in the Nigerian marketplace.

In addition to strengthening the company’s Balance sheet, the partnership with SUNU Group would provide SUNU Assurances Nigeria Plc with critical organizational capabilities & competencies which would be harnessed to create and deliver value to its esteemed clients.

SUNU Assurances Nigeria Plc reassures shareholders of its commitment to keep providing tailor-made products and better service on which SUNU Group has built their reputation across Africa.

32

Monday 13 May 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

The future of drug trials is better data and continuous monitoring ANTONIU L. FANTANA, GINA M. CELLA, CHARLES T. BENSON AND JOSEPH C. KVEDAR

N

ew and p r o v e n d ig i t a l technologies can make drug development smarter, better and faster.

Consumers are also turning to these devices to help them lose weight, increase their daily activity and sleep better.

It’s time to apply them to drug development in order to more efficiently, frequently and accurately present actionable information to researchers and health care providers.

WHAT BECOMES POSSIBLE Digital technologies will

allow researchers to measure the health data of clinical trial participants on a regular basis during the normal course of daily living without significantly disrupting them. They will make it possible to more accurately assess an

individual’s health as well as how the study drug is performing.

To put it in technical terms, the measurements need to be commensurate with the change in the variable being measured. Known as Nyquist

frequency, this identifies how often measurements should be conducted and accounts for the natural variabilities in an individual’s health or their underlying disease, including changes in blood glucose, pain levels, blood

pressure or heart rate.

Digital technologies can allow researchers to detect adverse events to a drug therapy earlier. These events include medication errors, drug reactions, allergic reactions and overdoses. The devices also can enable researchers to glean better insights into these events when they do occur.

therapies to market faster.

WHERE DO WE GO FROM HERE? New technologies will make possible radically new designs for clinical trials — with more targeted interventions, shorter duration and fewer participants — thus lowering costs, increasing efficiencies and potentially bringing important new

(Antoniu L. Fantana leads global patient safety analytics at Eli Lilly & Company. Gina M. Cella is a principal of Cella Communications. Charles T. Benson is a senior director at Eli Lilly & Company. Joseph C. Kvedar is vice president of Partners HealthCare’s Connected Health unit.)

By linking information about an individual’s genotype (genetic information) and phenotype (human traits and behaviors), digital technologies can lead to individualized diagnoses and therapies on a scale previously unimaginable.

What putting patients first really looks like GHAZALA Q. SHARIEFF

A

bout a decade ago, when I was running the emergency department at Rady Children’s Hospital in San Diego, a woman showed up with her seven-yearold grandson, who had been suffering from unexplained fevers and pain that moved from one leg to the other. The staff obtained an X-ray which proved to be normal and the family was advised to follow up with the child’s pediatrician. I almost sent the boy on his way. But then I paused; the family had sought out a different ED four times, uncomfortable with the non-diagnosis each time. They knew something was wrong. I asked the grandmother what her greatest

concern was. She feared her grandson had cancer.

Roving leg pain, normal X-rays, unexplained fever — she could be right.

I suggested that we obtain a blood test. Sure enough, the boy had leukemia.

The success of that training led to a program at Scripps, where I am now the chief experience officer, called One Thing Different. The initiative, now a year old, asks front-line staff to do something different each day in their routines with patients and loved ones. It might be to ask what their patient’s greatest concern is. Or it might be to help a lost visitor find their way. The program is already having impact, as I’ll describe.

There are two critical reasons for providers to focus on this. One is that pro-

viding empathetic care to people when they are at their most vulnerable is, simply, the right thing to do. The other, as everyone in health care knows all too well, is that failing to meet patients’ expectations is increasingly costly.

Here’s how our program

works. Through a website, videos and patientexperience training sessions we encourage the 15,000 employees, 3,000 physicians and 2,000 volunteers across the system to choose their own “one thing” to help patients and their families and then share these with the

organization on a dedicated website. The site categorizes staff by roles, so other employees in the same field can get ideas.

To date we have more than 4,000 entries, a measure of the enthusiasm with which staff has embraced the concept.

It’s probably impossible

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

YE

AR

S

Expertise It’s in our DNA

In an ever changing economy, with 125 years of serving YOU, we remain strong, trustworthy, dependable, safe and consistent.

You can be confident that we will continue to deliver innovative banking products and services which seamlessly and conveniently suit your lifestyle needs.

Visit www.firstbanknigeria.com to learn more about us.

to tease out the impact of the one-thing initiative alone on patient experience, as we have multiple patient experience efforts underway. But since the program launched we have seen a six-percentile improvement in patient experience scores systemwide, and in one unit saw a 20-percentile improvement in assessments of clerks’ helpfulness. And it’s well known that the more engaged health care employees are, the more satisfied their patients.

(Ghazala Q. Sharieff is corporate vice president and chief experience officer at Scripps Health in San Diego.)

Monday 13 May 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

33

In association with

Boards are overlooking qualified women: Here’s how to fix that VADIM REVZIN AND SERGEI REVZIN

T

oday’s gap between the demand and supply of female directors exists for two basic reasons: Boards are overlooking a pool of female talent that is in plain sight, and chief executives are missing the single best way to prepare women to serve on boards.

Consider the reality that most women executives have spent their careers moving up in a single functional silo: human resources. But things have changed, and perceptions should too. Chief human resources officers of big companies are now deeply involved in planning the company’s future.

They understand the high-level business issues, and because they attend some if not all board meetings, they know how to work with a board. At the same time, their expertise in compensation, culture, recruiting and other high-level people issues is itself increasingly valuable as boards and managements prioritize talent.

Boards should mine HR for this new breed of leader, many of whom are female. And while there are fewer female chief financial officers, this too is a source to explore. But that still won’t meet the growing need.

To address the gap, CEOs can help develop this key talent pool while improving the quality and speed of strategic decisions.

One of the best practices we’ve seen is the creation of what we call a group of three: a tight-knit three-way partnership with the CEO, CHRO and CFO. Importantly, a G3 also gives the CHRO a deeper understanding of the company’s financial issues and expands the CHRO’s (and CFO’s) view of the enterprise.

The same idea applies to

lower organizational levels. HR leaders can cultivate broader skills by working closely with business leaders. Structuring their work that way has benefits such as improving placement, recruiting and learning and development, but it also helps identify HR leaders who have the potential and/or capacity to serve on boards. Along with

that, we recommend companies do the following: SEARCH DEEPER AND WIDER. The pool of women who have relevant business experience, including profit and loss responsibility, is surprisingly large once you go three or four levels below the CEO. The names are hidden, and the resumes may be relatively short, but some of these people will have the maturity to be a director.

TAKE RISKS. Boards often back away from a first-time director. But to get the right talent, they should overcome that hesitation and take a chance on a younger and/or less experienced person who meets their criteria.

We know there are qualified women out there. Let’s go find them.

(Ram Charan has been an adviser to the CEOs of some of the world’s biggest corporations and their boards. Dennis Carey is the vice chairman of Korn Ferry.)

Can AI nudge us to make better choices? the distinction between what one feels and what one is expected to say might conceivably be developed to address the tendency of people to say and do things under the influence of crowds that they would otherwise hesitate to do.

BOB SUH

I

n the online world, once expected to be a place of ready information and easy collaboration, lies and hate can spread faster than truth and kindness. Artificial intelligence sits at the crossroads of this behavioral issue, with the potential to make matters worse or to elicit better outcomes from us. The key to better outcomes is to boost AI’s emotional quotient — its EQ — by training algorithms to mimic the way people behave in constructive relationships.

When people with high EQ interact with us, they learn our patterns, empathize with our motivations and carefully weigh their responses.

They decide to ignore, challenge or encourage us depending on how they anticipate we will react. AI can be trained to do the same thing.

While it’s still quite early, the fields of behavioral science and machine learning already provide some promis-

ing techniques, including: NOTING PATTERN BREAKS AND NUDGING. People who know you can easily tell when you are breaking a pattern, and react accordingly.

ENCOURAGING SELFAWARENESS WITH BENCHMARKS. Bluntly telling individuals they are performing poorly often backfires, pro-

voking defensiveness rather than greater effort. A more diplomatic method simply allows people to see how they compare with others.

USING GAME THEORY TO ACCEPT OR CHALLENGE CONCLUSIONS. In most massive screening systems, the rate of false positives is often extremely high.

Artificial intelligence, play-

ing the role of a chess opponent, can decide to counter by accepting the analyst’s decision or challenging it.

CHOOSING THE RIGHT TIME FOR INSIGHT AND ACTION. Decisions that need more thought could be presented at a time when the decision-maker has more time.

An algorithm based on

Brought to you courtesy of First Bank Nigeria

(Bob Suh is the founder and CEO of OnCorps.)

34

Monday 13 May 2019

BUSINESS DAY

INSIGHT

Ogun records 114% revenue growth to sustains RAZAQ AYINLA

P

olitical issues that characterised 2015 general elections which featured the free flow of foreign exchange to execute polls as well as culpable money laundering act of the past government which was said to have aggravated sudden fall in crude oil price internationally accounted for the country’s recession that sparked off the dwindled federal allocations to all tiers of government since 2015.

This, among other economic factors, prompted some States of the Federation to consider areas of comparative advantage and embark on intensive economic drive, fiscal restructuring and financial re-engineering with a view to providing buffers that tackle the nation’s recession naturally and automatically.

Ogun State is one of these States that had envisaged what the future would hold during and after recession, hence, Governor Ibikunle Amosun and his team swung into action to find reliable alternatives to financing N9.1billion monthly wage bill obligations, despite constant monthly collections of between N3 billion and N3.3 billion from Federation Allocation Accounts Committee (FAAC).

Part of what Governor Amosun did to increase internally generated revenue accruable to Ogun state coffers monthly from paltry N750 million revenue, about nine years ago, to about N7 billion on a monthly basis, was a huge investment in infrastructure which made easy access to land and land title documents as well as ease of doing business realistic thereby, attracting both local and foreign direct investments that translated into wealth creation and job opportunities.

The economic feats are also traceable to effective financial engineering methods that brought the much needed prudence and intensive revenue drive mechanism to administration of Governor Amosun in Ogun state with the effective blockage of the perceived revenue leakages and shoring up of internally generated revenue in the State.

Although, Board of Internal Revenue Service generates 60 to 65% of the entire monthly revenue through taxation and other levies, it must be noted that other Ministries, Departments and Agencies (MDAs) such as Ministry of Urban and Physical Planning that handles building approvals; Bureau of Lands and Survey which sells and allocates State lands, including issuance of land title documents as well as certificate of occupancy; Ministry of Commerce and Industry that gives haulage right of way, among other MDAs, also contribute to the monthly revenue generated for the State Government.

Introduction of single treasury account in Ogun state even before that of the Federal Government in all MDAs coupled with automation and digital platform through which revenue is being generated; series of friendly approaches and engagement of tax payers through street to street, shop to shop and media outreach, inter-agency collaboration and enforcement as being undertaken occasionally by the Board of Internal Revenue Service, have all had positive impacts on the whole process of revenue generation.

For instance, Year-on-Year (YoY) revenue reports by National Bureau of Statistics (NBS) and Joint Tax Board (JTB) tagged, ‘States IGR Reports’ as well as the fiscal sustainability index researched by some financial information service platforms such as BidgIT, Proshare, Nairametrics, among others, have shown Ogun State in the league of top five Nigerian States in terms of Revenue Generation.

Available statistics between 2015 and

Nyesom Wike, Governor of River State

2018 put Ogun state only behind Lagos and Rivers states in terms of internally generated revenue as Ogun state made between N2.8 billion and N6.2 billion as IGR as against static N3.3 billion revenue coming to State’s coffers monthly, from Federal Allocation Accounts Committee (FAAC).

A four-year financial sustainability index analysis indicates that Ogun state has grown revenue by 144% between 2015 - N34.6 billion; and 2018 - N84.55 billion, meanwhile Lagos and Rivers states only grew their revenues within the period under review by 42.5% and 37.4% respectively.

A close analysis will further show Lagos and Rivers states that are above Ogun state on the revenue log as released by the National Bureau of Statistics (NBS) to have generated more revenues than Ogun state in terms of figures, but the percentage growth of revenue recorded by Ogun is far above Lagos and Rivers states.

Reports indicate that Lagos state made N268.2 billion in 2015 and 382.2 billion in 2018, representing a 42.5% revenue growth rate and Rivers state that raked in N82.1 billion in 2015 and N112.8 billion in 2018, representing 37.4% growth rate unlike Ogun state that increased revenue growth rate by a whopping 144% from N34.6 billion in 2015 when Mr Adeosun was appointed as OGIRS Chairman, to N84.55 billion in 2018 financial year.

Little wonder, the Governors’ Forum in 2017, invited the Chairman of Ogun State Internal Revenue Service (OGIRS), Mr Adekunle Adeosun, as one of the best performing states in terms of internally generated revenue in the country, to make presentations and by way of peer review, the www.businessday.ng

economic mechanisms adopted to increase the revenue base of Ogun state more than ten folds.

Mr Adekunle Adeosun, a New York trained banker of over 30-year experience and Executive Director of a major commercial bank in Nigeria before being tapped by Governor Amosun to chair the State-owned Internal Revenue Service (OGIRS) in 2015.

The appointment of Mr Adeosun by Governor Ibikunle Amosun was meant to change the revenue narratives and fashion out ways by which tax net would be expanded to cover more tax payers with a view to increasing taxation-based revenue portfolio, a task that he jealously achieved by capturing 250,000 fresh tax payers from the informal sector and increasing the number of the High Networth Individuals (HNIs) in the State from only two persons to 126 persons, representing over 1,000%. All of these and more were achieved through a team work and implementation of tax laws backed up with enforcements.

administration has brought paradigm shift in the whole process as a huge number of tax payers within the informal sector has been dragged into the tax net and more are still coming on board.

OGIRS was able to achieve 300% tax collection increment from this area due to intensive tax drive as being initiated by the State Revenue Board with the OGIRS Chairman himself, Mr Adekunle Adeosun and other very senior staff, leading street campaign for tax collection to markets, motor parks, public gatherings among other places across the three senatorial districts of the state.

This effort has not only increased level of tax payment compliance, but has also sparked off upward movement of trade associations captured in the tax net by 35%, the success which has turned Ogun State to a pace setter in the comity of Boards of Internal Revenue Service across the country as many of State-owned Boards of Internal Revenue Service now liaise with Ogun State Internal Revenue Service (OGIRS) to understudy the magic used to get more people from the Informal Sector into the tax net.

Why the successes were recorded?

Informal Sector and Personal Income Tax This is the major tax area where lots of revenue were being lost on a daily basis before the advent of this administration.

Hundreds of thousands of people who are mainly market men and women; taxi, bus and truck drivers; tricycle and Okada riders as well as lots of operators of the small and medium-scale enterprises were not captured and therefore, huge revenue was being lost.

Road Taxes The application of automation of motor vehicles registration and renewal known as Autoreg has made the whole process of motor registration and renewal as well as the driver’s licence registration and renewal into a one-stop shop which has increased traffic and revenue generated between 2016 and 2019 by over 80%.

The increasing traffic of motorists and people transacting with offices of Ogun State Internal Service (OGIRS) on a daily basis has also prompted establishment of five additional dedicated capturing centres for Road Taxes and Driver’s Licence in border areas, namely, Akute, Agbado and Ibafo and in he metropolis - Kotopo

But, the advent of Governor Amosun-led

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INSIGHT

top five position on states IGR report along Abeokuta-Ibadan road and in Ifo along Abeokuta-Lagos expressway.

Stamp Duties This is a tax catchment area where inter agency collaboration effort is required; a cordial relationship that exists among the Ogun State Internal Revenue Service (OGIRS), Bureau of Lands and Survey and Ministry of Urban and Physical Planning. Huge revenue which has been leaked before now is being recovered in form of stamp duties, capital gain tax and administrative fee collected on the properties offered, and accumulated taxes usually recovered from both the buyers and sellers of the buildings and landed properties offered for sales. Through this action, lots of revenue is being made as the seemingly lost taxes are being recovered to government purse.

High Networth Individuals This is personal income tax from High Networth Individuals (HNIs). In the first tenure of Governor Amosun, only two persons were captured in this category, but now the number of High Networth Individuals that remit their taxes to Ogun state has skyrocketed to 126 with more than 20 of them paying N20 million and above.

Border Tax Collection In 2014, there was a concerted effort from Ogun state government to invoke Residency Rule on Tax (This is a tax law which says that taxes, especially Pay As Your Earn PAYE) are remitted to the State of Residency rather than the State where the employees work).

Over the time, the employees that are living in Ogun state border areas such as Arepo, Sango, Ota, Isheri, Mowe, Ibafo, Ishasi, Agbara, Atan, Ifo, Warewa, Lambe, Agbado, Magboro, among other places, from Lagos state axis and Bakatari, Orile-Ilugun, Mamu, Ijebu-Igbo, Ajebo, Sagamu, among other places, from Oyo state axis, were used to remit their taxes to these Southwest states where they work despite living in all these border towns located in Ogun state.

But, in 2016 there was an aggressive tax policy drive which necessitated tax payers’ enumeration for data collation. During this enumeration exercise, lots of employees that are living in Ogun state but working in these Southwest states are now being captured. Multinationals, local and foreign manufacturing and service-based industries, banks, government ministries, departments and agencies are now remitting their employees’ PAYE to Ogun state.

Ogun State Government has recorded appreciable level of success in border tax remittances due to the collaboration with other State governments and businesses that honour Ogun state request for back duty (remittance of backlogs of PAYE wrongly deducted and remitted to other tax jurisdiction).

All these successes recorded in Border tax collection were largely due to State government investment in infrastructure such as roads, vehicular and pedestrian bridges, housing; improved security and community services, attraction of foreign direct investments which jacked up Pay as You Earn, among other government interventions.

Despite the huge success recorded on border tax, Ogun state government still needs to do more on enforcement as several industries are still giving false information on employees’ tax status and remittances, thereby evading tax. The border areas’ effort and enumeration exercise so far, cover just about 30%.

Here, more collaborative efforts are still needed among Southwest states of Oyo, Ogun, Lagos, Ondo, Osun and Ekiti to ensure through Odua Group and newly formed Development Agenda of Western Nigerian (DAWN) to forge a common front against false information and filing of tax returns and remittances in order not spare tax evaders in Southwest and Nigeria as a whole.

The Joint Tax Board (JTB) is also spearheading efforts among the States, Customs and Immigration Service for sharing its information on collaborative efforts.

Withholding Tax, Federal Agencies Tax, Pools and Betting Ogun state has been a construction yard since the administration of Governor Ibikunle Amosun in the last eight years; lots of contracts have been awarded for the socio-economic development of the State and Consultancy services, among others were approved in the years under review.

This has positively affected the collection of withholding tax.

Withholding tax bridges the gap between the informal sector and the money bag contractors which has been second to none in terms of the overall sectoral performance recorded in tax collection in the state.

Due to vigorous continuous investigation and audits of tax agents, about 55% increase is being recorded which has also increased the revenue base of the state.

For the collection of taxes - PAYE from the employees of the Federal Agencies, OGIRS has done a data capturing and opened discussion with the Federal Government on the payment of their workers taxes which are already yielding fruitful results, the only area where we have some challenges is the area of Pools and Betting.

The National Lottery Board is usurping the power of the State Internal Revenue Service by issuing license to operators of Pools, Betting and Lottery as against the statutory law which empowers State Board of Internal Revenue. This is really affecting collection of taxes meant to be received from that sector.

National Lottery Board is a regulator and should not dabble into licensing of operators of Pools, Betting and Lottery.

However, Ogun State Internal Revenue Service (OGIRS) has made a milestone from the operations of Pools and Betting going by the series of effective initiatives and enforcements such as sales tax on sales by Pool Agents, tax on winnings, registration and renewal of licences of Pools and Betting promoters which have yielded fruitful results.

Tax Compliance Level of compliance in tax payment and remittance is very high based on the overall achievements recorded in areas where taxes, levies and fees are remitted to the State government. The extension of tax net to parents of State-owned tertiary institutions has increased level of compliance by 80% as students of State-owned higher institutions such as Olabisi Onabanjo University (OOU), Tai Solarin University of Education (TASUED) Moshood Abiola Polytechnic www.businessday.ng

(MAPOLY), and a host of other State-owned schools have their students registered every year with evidence of tax payment from their parents.

Also, government contractors from all Ministries, Departments and Agencies (MDAs) cannot be awarded contracts if evidence of tax payment is not included as part of bidding process, similarly, if anybody stands surety in the Ogun State Courts, evidence of tax payment is always shown before such a surety can be legally binding and effective.

These mechanisms adopted in tax collection and payment has really contributed to huge revenue generation for the State.

E-collection of Taxes The Board has migrated from the manual registration of tax payers to online registration of both individuals and corporate bodies. This has improved the work flow efficiency through available technology as well as staff’s workability and effective end-to-end communication and exchange of messages.

Online collection of taxes, levies and fees through EGOLEPAY App, e-annual returns filing and online confirmation of tax clearance certificates have sped off tax collection and payment which have also jacked up revenue generation.

Similarly e-platform is being developed by the Revenue Board for self assessment.

With online self assessment, all tax payers can make accurate and effective calculations of taxes, know whatbto pay and remit as tax without waiting for any Revenue officers to do that.

Enforcement and Legal Services This is critical to revenue generation as the last resort of tax collection is legal action against suspected tax defaulters. Sometimes taxes, levies and fees can be paid and collected legal enforcement and enforcement could not undertaken without a recourse to Law Court.

The prompts legal applications, orders of injunction and judgments against tax defaulters and suspected evaders which are always carried to recover lost taxes, to ensure that law takes it course and serves as deterrent to would-be tax defaulters and evaders.

So, the Legal Services Department of OGIRS has been active in all the cases handled which resulted into 97% success recorded in all the legal applications filed and

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appeals served at both the High Court and Court of Appeal with only one legal matter pending at the Supreme Court of Nigeria.

This proactive and detailed effort of the OGIRS Legal Services has resuscitated Revenue Court in the State and has attracted several State-owned Boards of Internal Revenue Service to make a working visits Ogun State Internal Revenue Service in order to understudy its legal operations that have won OGIRS many legal matters and out of Court settlements of cases.

With all the statistics which show Ogun as the fastest growing state on State-by-State IGR Reports as released by Joint Tax Board (JTB) and National Bureau of Statistics (NBS), recording 144% revenue growth between 2015 and 2018, it won’t be out of place to ensure that Adeosun-led leadership of Ogun State Internal Revenue Service (OGIRS) has achieved a milestone in the collection of taxation-based revenue which is unprecedented in the history of 43-year old Ogun state.

Considering all the human efforts and mechanisms deployed in the last four years to drive revenue in Ogun State, especially by the State Revenue Board which generates 60 - 65% revenue for State government monthly, efforts must be intensified to double the revenue.

From all indications, survey and preview of internally generated revenue (IGR) of Ogun state from Personal Income Tax (PIT) alone should be a minimum of N8 billion monthly if all the efforts are compassed towards these areas of growth already identified in the revenue survey earlier undertaken, as well as the points stated below.

• That the compliance level of the Informal Sector is very low. It is estimated to be between 25% and 30%. More can be done with Informal Sector, where most of the State residents earn their income with more enlightenment and technology.

• Continuous enumeration of border areas to capture residents that pay to tax jurisdictions where they work as supposed to where they live.

• Deployment of technology and investment in staff training, in new tools for tax administration and orientation and reorientation into private sector mindset.

• More channels to reach out to tax payers and restructuring of existing ones.

With all these suggestions being followed up diligently by the incoming administration, Ogun state revenue will be on the next level of progress in terms of internally generated revenue.

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36

Monday 13 May 2019

BUSINESS DAY

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

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Nigerian Banks see margin expansion in Q1, 2019 BALA AUGIE

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igerian Banks are ingenious enough to overcome the wind of turbulence as they continue to see margin expansion in the first quarter (Q1) of 2019 Hitherto, they bought up local government bonds that offered among the highest yields in emerging markets, though they reduced credit to companies and consumers hampered by challenges in an economy too dependent on oil.

Today, lenders are taking reaping the fruit of copious investment in latest technology, retail banking, and aggressive loans recovery as noninterest revenue (fees and commission income and accounts maintenance charge) have helped compensate them to turn each Naira invested into higher profit.

Also cost curtailment also added impetus to profit, albeit there room for improvement.

A cursory look at the first quarter financial statement of 12 largest banks quoted banks quoted on the floor of the bourse shows cumulative average net profit margin increased to 19.40 percent in March 2019 from 18.15 percent the previous year, according to data gathered by Markets intelligence.

The major drivers of efficiency ratios were 24.15 percent reductions in impairment charge to N23.73 billion in the period under review. While total operating expenses were up by 3.39 percent to N309.81 billion, the figure is lower than the 11.25 percent

inflation figure.

Ten of the twelve banks under our coverage recorded improvement at the bottom line (profit) as cumulative net income increased by 16.50 percent to N223.97 billion from N192.25 billion a year ago.

“We observed that profitability was supported by higher non-interest income and lower impairment charges, which partly offset the pressure on Net Interest Margin (NIMs),” said Analysts at Chapel Hill Denham Ltd. “NIMs are under pressure due to lower fixed income yields as well as weak loan growth amid the soft macro,” said analysts at Chapel Hill.

Drilling down the figures shows Guaranty Trust Bank (GTBank)’s net profit margin of 41.27 percent as at March 2019 outperformed industry average of 19.48 percent, based on data gathered by Market Intelligence.

Access Bank recorded the largest expansion in margins among the lender under our coverage. Net profit margin increased to 37.14 percent to 37.14 percent in the period under review from 25.34 percent the previous year.

Zenith Bank’s net profit margin moved to 31.76 percent in the period under review as against 27.52 percent the previous year.

United Bank for Africa (UBA) saw margins increase to 31.76 percent in the period under review compared to 27.52 percent as at March 2018.

Stanbic IBTC Holdings Plc’s net profit margin of 31.76 percent in the period under review outperformed industry average, but the figure is lower than the last year’s 40.18 percent.

Analysts are of the view that yields on government securities will remain attractive since the Central Bank of Nigeria (CBN) is aggressively mobbing out excess liquidity with a view to curbing inflation and stabilizing the economy.

Following the unexpected interest rate cut in March, short term instruments rallied in April with average NITTY closing lower by 16bps mom to 13.03 percent due to the CBN’s ac-

SHORT TAKES

commodative stance with regards to money market liquidity.

“Even in the event of a moderation in yields on fixed income instruments, many banks believe that as long as yields remain above 10%, they still remain attractive considering that fixed income instruments have no Capital Adequacy Ratio (CAR) implications, are tax free and do not result in NPLs,” said analysts at CSL Stock Brokers Ltd.

… Analysts say investors dumping stocks for bonds

N

igeria is becoming a hotspot for bond investors as double-digit bonds yield and stable exchange rate has made the country’s bonds among the most attractive in the world. Little wonder why the 30-year FGN bond which made its debut last month was oversubscribed by 400 percent.

By market close on Friday, the 10-year FGN yields closed at 14.49 percent, making Nigeria’s bond the sixth highest yielding sovereign bond security in the world. While this is good news for investors seeking high return on capital, this is bad news for the government as the country’s treasury struggle to cope

11.745% The 2-year Federal Government Savings Bond was offered at 11.745% in May, higher than 11.276% and 11.62% offered in April and March respectively. Also coupon rate on the 3-year tenor in May stood at 12.745%, outstripping 12.726% offered in April and 12.62% offered in March.

57.7 index points

Nigerian Bonds are 6th most attractive sovereign debt security in the world IFEANYI JOHN

P.E

Manufacturing Purchasing Managers’ Index in the month of April stood at 57.7 index points, indicating expansion in the manufacturing sector for the 25th consecutive months. Twelve of the 14 sub-sectors reported growth in the period.

14.35%

with the high cost of borrowing.

“I think most of the foreign investment coming into Nigeria has been going straight to sovereign debt in

the past few months,” said Obinna Uzoma a Lagos based market analyst. “That explains why bond yields have been gradually dropping since

last year when it was around 16.5 percent to about 14.5 percent today.”

Since reaching a one year high of 15.8 percent in October 2018, the 10-year bond yields have fallen consistently as buying pressure continues to drive prices higher and yields lower. As at Friday, bond yields had dropped more than 130 basis points in the last 6 months.

Maju Eldad, a Lecturer of Economics at Federal University of Gombe, Kashere told BusinessDay that “there has been a lot of asset rotation out of stocks to bonds in recent months.” Eldad explained that “investors are seeing double digit bond yields at zero risk in an economic environment where inflation has declined consistently for the Continues on page 37

Money market, fixed income and bond funds recorded grew 14.35%, on the average, in the first quarter of 2019.

Money market fund grew 11.25% to N517.6 billion; fixed income fund up 15.60% to N65.71 billion while bond funds rose 16.20% to N16.62 billion.

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 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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MARKETS INTELLIGENCE Nestle, Cadbury, and Dangote Sugar outshine peers in Q1 competitors.

Cadbury recorded its best performance in three years, a stellar performance that means it has surmounted the headwinds. Its revenue moved by 12.71 percent to N9.28 billion in the period under review; the growth was driven by an upturn in demand for products, cost curtailment, and reduction in the price of key product.

Gross margins moved to 25.58 percent in March 2019 from 21.84 percent the previous year while net margins increased to 5.46 percent from 0.267 percent a year ago.

Nestle Nigeria’s net profit increased by 49.30 percent to N12.84 billion in the period under review against N8.60 billion the previous year while gross profit margin moved to 44.34 percent in March 2019 from 38.18 percent as at March 2018.

The improvement in margins can be attributed to stronger volumes in Infant food and milk products as well as higher year on year (y/y) prices in Milo.

Of the three firms, Dangote Sugar has an attractive valuation as its P/E ratio stood at 7.0 times earnings as at 2:00 pm; this compares to Nestle, 25 times; Cadbury, 38.87 times and earnings.

BALA AUGIE

D

angote Sugar, Nestle, and Cadbury have outperformed peers in all financial metrics in the first quarter even amid pressured consumer spending and high inflationary environment.

High cost of energy, multiple taxations and over regulations, high interest rate/difficult condition in accessing loans in Nigeria, and infrastructure/bad roads/poor rail transport systems, are eating deep into consumer good’s firms’ margins.

Amid the above quagmire, Dangote Sugar’s net income increased by 32.68 percent to N7.0 billion, from a year ago; thanks to cost control measures that help compensate for lower revenues.

Gross margins increased to 33.0 percent in the period under review, from 25.0 percent; this means the largest producer of the sweetener has enough revenue to cover production costs.

Analysts are sceptical that the firm will continue to grow revenue given taunting challenges such as smuggling of products by some

These firms outstrip NSE’s benchmark index since 2019’s start ISRAEL ODUBOLA

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mid the stock market rout and a sluggish economy, some firms have seen their shares gain since the start of the year.

The above means there is light at the end of the tunnel for the broader economy that is gradually recovering from its first economic downturn in a quarter of a century.

Among the tier-one lenders

in the financial services space, only Access Bank- Nigerian largest lender by assets- has returned 4.41 percent year-to-date, outperforming the benchmark index (-8.2%) and banking stocks index (-7.2%).

Analysis of the year-to-date performance among the mid-tier lenders revealed that Sterling Bank delivered the most value to investors having returned 41.05 percent since year kick-started, trailed by Union Bank (+25%) and Wema (+14.29%).

Sterling Bank’s significant share appreciation is largely on the back of its quite impressive earnings figure posted in the full year 2018, and the first quarter of 2019.

The lender reported a double-digit growth of 15 percent in bottom-line in the full year 2018 to N9.2 billion partly due 18.1 percent growth in fees & commission income, and equally sustained momentum having bottom-line by a modest 5 percent.

In the consumer goods sector, just four firms including Nestle

and Cadbury saw their shares advancing with Dangote Flour outstripping peers with 148.18 percent surge since the start of the year.

This is due to the fact that investors are taking a position in the stock because of the N130 billion purchase consideration offered by Olam International to take over 5 billion shares outstanding of the miller.

Cadbury’s 10 percent gain hinges on the fact it posted its best earnings scorecards in three years.

Top and bottom-line were at their highest level at N36 billion and N823 million respectively since 2017. The consumer goods giant maintained tempo as it grew revenue and after-tax earnings substantially.

Nestle’s shares gained 2.36 percent since the year started, attributable to favourable investors’ sentiments on the back of its attractive earnings figures.

Among the industrial goods player, Cutix outperformed its peers to emerge the only firm with a share price advance since 2019’s start.

The electrical cable maker has so far gained 12.80 percent since the year started.

The NSE benchmark index dipped 17 basis points at the close of Friday’s business, thereby extending its year-to-date losses to 8.22 percent. This translates to N878 billion or $2.87 million losses on the local bourse so far.

Nigerian Bonds are 6th ...

Continued from page 36 past two years. Very soon, inflation will fall to single digits and we won’t be able to find bonds at this rate anymore, investors know this and that’s why there is a big rush into bonds today.”

The 5 countries with bond yield higher than Nigeria were Venezuela (46.58%), Argentina (23.57%), Turkey (20.15%), Egypt (16.09%) and Uganda (15.9%). While the countries ahead of Nigeria are either suffering from a full-blown economic crisis or spiraling inflation, Uganda whose inflation rate is barely 3.5 percent seems like a shock entry to the list. The unusual combination of very low inflation and high bond yield made Uganda the best country to invest in bonds based on real bond yields as Uganda’s real bond yields closed on Friday at 12.4 percent.

Real bond yields refer to the actual gain on investing in bonds after deducting inflation. Investors typically focus on the real bond yields when searching for investment opportunities in the bond market. Currently, Nigeria’s real bond yields was around 3.24 percent as at Friday as a steady drop in inflation in the two years have helped moved Nigeria from a negative real bond yield to a positive real bond yield.

“I think the real bond yield will continue to stretch gradually over the next few months as we expect to see lower inflation in the country and a gradual return to a normal yield curve in the country,” Uzoma concluded.

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BUSINESS DAY

39

cityfile

Road crashes claim 36 lives in Edo, Delta, Anambra

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Ibrahim Shuaibu (r), director-general, National Youth Service Corps (NYSC), inspecting Quarter guard, during his assumption of office in Abuja. NAN

Labour sets for protests in Abuja today …as NUPENG insists on Kokori as chair of NSITF board JOSHUA BASSEY

O

rganised labour is not giving up its demand to have the board of the Nigeria Social Insurance Trust Fund (NSITF) inaugurated, with Frank Ovie Kokori, a former general secretary of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), as chairman.

Labour resolved at the weekend to proceed on protests in Abuja today (Monday) to drive home its demand. The resolution was reached at the Central Working Committee (CWC) meeting of the Nigeria Labour Congress (NLC) which held in Abuja.

This is as the leadership of NUPENG, backed by its umbrella body, United Labour Congress (ULC), week-

end, in Lagos, also issued a four-point demand on the Federal Government to resolve the lingering crisis between the minister of Labour and Employment, Chris Ngige, and the organised labour.

Recall that the NLC and NUPENG, on Wednesday, May 8, picketed the Asokoro, Abuja residence of Ngige, in their bid to compel the minister to inaugurate the board of the NSITF with Kokori as chairman.

The picketing had turned violent, as some members of the labour movement were wounded, with the NLC and NUPENG accusing Ngige of masterminding the violence.

The minister has, however, denied the allegation that he ‘hired thugs’ to chase labour and its members away from his residence, and insisted that Kokori is to chair board of the Michael

Imoudu Institute of Labour Studies Ilorin (MINILS), as against NSITF’s, for which he (Kokori) had been nominated in 2017 by President Muhammadu Buhari.

But organised labour would not accept the minister’s explanations: “The CWC resolved to embark on a protest on Monday, May 13, 2019 in Abuja against the brutalisation of its members by the Ngige thugs, and has accordingly directed its members and civil society allies to commence immediate mobilisation,” a communiqué issued by the NLC and signed by Ayuba Wabba reads.

In the same vein, Joe Ajaero, president of ULC, in a statement in Lagos, roundly condemned what he called “growing trends of deployment of thugs within the nation’s industrial relations space”.

Williams Akporeha, president of NUPENG, who also addressed newsmen in Lagos on the same issue, said Kokori deserves the honour to chair the NSITF board, as he is known for engendering justice, workers’ rights and of stainless integrity, having also committed 17 years of life as labour leader to fight oppressive military regime in Nigeria, for which he was detained for four years.

The union therefore issued a four-point demand to the government on how to resolve the crisis, to include: apologies to labour and visit to members injured during last week’s protest at Ngige’s residence; inauguration of the NSITF board with Kokori as chairman; intervention of President Muhammadu Buhari and called on wellmeaning Nigerians, to speak up on the matter to avoid further degeneration.

NDLEA intercepts 70,800 tablets of illicit drugs in Edo IDRIS UMAR MOMOH, Benin do State command of the National Drug Law Enforcement Agency (NDLEA) says it has intercepted 70,800 tablets of various psychotropic substances.

Buba Wakawa, state commander of the agency, who made this known, in Benin, the state capital, also disclosed that a total of 1,262,73 kilogrammes of cannabis were seized.

Wakawa said within the month of April 2019 a total

E

of 32 suspected drug traffickers were arrested in the state. He gave the breakdown of the suspects as 17 males and 15 females.

The NDLEA chief listed the intercepted drugs to include Diazepam 53,250 tablets, Tramadol 14,430 tablets, Exol 3,000 tablets and Rophynol 120 tablets.

According to him, officers attached to Irrua command arrested two suspects: Adamu Abdullahi (27) and Kabiru Ahmad (28) on their way to Gombe State.

He said the suspects www.businessday.ng

claimed to have started the business three years ago. It is unclear if they have any link with Boko Haram but investigation is ongoing,” said Wakama, adding that one Volkswagen Gulf 3 with registration number AGD 790 GU was recovered from the suspects.

He further disclosed that that one Adamu Abdullahi, a father of three with two wives who hails from Akko village in Kumo local government area of Gombe State, was arrested in a commercial bus along Ewohimi Road, Esan

South local government area.

Wakawa explained that the suspect in his statement of confession claimed to have started the drugs business three months ago while Kabiru Ahmad, his accomplice with one wife with three children both contributed money in buying the drugs.

Wakama, who said there was no hiding place for drug traffickers in the state, warned that anyone caught dealing in narcotic drugs would be made to face strict sanctions as provided for under the NDLEA Act.

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hirty-six persons have been reported dead in various road crashes in Edo, Delta and Anambra between January and March, this year.

Three states make up the Federal Road Safety Corps (FRSC) zone 5, with the zonal headquarters in Benin.

Kehinde Adeleye, the zonal commanding officer, who gave the figure at the second quarter zonal retreat for commanding officers, zonal heads of departments and units in the zone, in Benin, said the data was against the 34 deaths recorded within the same period in 2018.

He said that within the same period, 57 crashes were recorded, as against 47 in 2018, while 170 persons were involved, as against the 173 recorded in 2018, in the same period.

“It has been observed that there has been an increase in road traffic crashes, as well as fatalities

in the first quarter.

“It is also necessary for FRSC officials to put heads together and come up with new initiatives to ensure that the major goals and objectives of the “Decade of Action on Road Safety’’ are achieved,’’ Adeleye said.

He, however, explained that the FRSC had less than one year to achieve the basic objectives of the Decade of Action on Road Safety, adding that there was need for personnel in the zone to work hard to achieve set goals.

The theme of the retreat was “an overview of assessment criteria for 2019, as aligned with 2019 FRSC corporate strategy goals’’ and was delivered by Ben Anafa.

Anafa, who is the corps commandant, monitoring and evaluation, Abuja, urged the FRSC personnel to evolve a positive work ethic, embrace technology and avoid distractions while on duty.

Agency seizes 401 cartons of expired soft drinks in Minna

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ational Agency for Food and Drugs Administration and Control (NAFDAC) says it has confiscated 401 cartons of expired assorted soft drinks in a warehouse in Minna.

Anikoh Ibrahim, the state coordinator of the agency, said on Friday that the expired soft drinks included: 376 cartons of Amstel Malt, 17 cartons of Coca-Cola and eight cartons of Maltina.

According to him, the agency’s operatives, acting on a tip-off, swooped on the warehouse, located behind Kasuan Gwari in Chanchaga local government area of the state and seized the products.

“We discovered the expired products on a tip-off.

After checking the products, the dealer admitted to have found that the drinks had expired and reported the issue to the companies that produced them.

“The dealer said that he was still waiting for the companies to come and @Businessdayng

pack the drinks as they promised before we closed in on him,” he said.

Ibrahim explained that when such products expire in the custody of a businessman, by law, he is expected to label them expired item and pack them at a designated place and inform the agency.

“The dealer did not do so but displayed the drinks among other good ones being sold,” he said.

He, however, noted that if consumers or retailers had bought the expired drinks and reported the matter to the agency, the dealer would be charged to court accordingly.

“The dealer acted on ignorance, so the agency placed an administrative fine on him as well as issued him a warning letter,” he said.

Ibrahim said that the administrative charge emanated from the agency’s tariff for such offenders.

He said that the dealer was also made to write an undertaking not to be involved in such violations again. NAN

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Monday 13 May 2019

BUSINESS DAY

NEWS

FG moves to audit NRC assets at Apapa Port over Lagos-Ibadan SGR project MIKE OCHONMA & STELLA ENENCHE, Abuja

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inistry of Transportation has directed the Nigerian Railway Corporation (NRC) to take stock of its assets at the Apapa Port, with a view to creating space for the station over the ongoing Lagos-Ibadan standard gauge rail project.

Rotimi Amaechi, transportation minister, gave the order Saturday, during an inspection tour of the site for the rail station, which is part of the Lagos-Ibadan standard gauge rail corridor.

Amaechi said an audit of the railway properties became more compelling, following discoveries made during the inspection. The evaluation will help uncover the number of properties on lease, as well as the period of expiration.

“How can NRC acquire their own property? If all these properties are for NRC and were leased out, we need to know for how many years, if it has expired or not,” the minister said.

“Let us revalue it. If we are to get those properties for the stations, does it make economic sense or not; if it

does not make economic sense we can leave it, we want to have a hotel and shopping mall there, just like the Ebute Meta station.

“They should not just do valuation but know the ownership of those properties. If we have leased them out, they have no choice but to pay.

If the lease has expired, the owners don’t have a choice than to hand over the property to us but we have to do an audit first.”

While commenting on the issues militating against the use of rail to transport cargoes to Apapa port, Amaechi insisted that only the standard gauge lines could be deployed to increase the tonnes of cargoes that can be transported daily.

“We are yet to construct standard gauge that will function in that capacity. Until that happens, you can’t move enough cargoes,” he said.

“Currently, I hear we are moving about 200 to 300 thousand tonnes of cargoes in the year when we have about 30 million tonnes of cargoes and if we have about 30 millions tonnes of cargoes, we need to make sure that the tracks function properly to move more cargoes,” he stated.

NSITF considers legal options to force compliance on employee compensation JOSHUA BASSEY

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igeria Social Insurance Trust Fund (NSITF) is considering legal options to compel employers of labour to comply with the provisions of Employees Compensation Act (ECA).

The enabling Act as amended (2011) makes it mandatory for employers of labour to pay 1 percent of their employees’ emoluments to a pool of insurance fund being managed by NSITF. “We have used the persuasion and subtle approach to enlist the buyin of employers since the inception of the fund in 2011,” Segun Basorun, a general manager with NSITF, said in Lagos, when the management gave details on developments within the Fund.

“But going forward, we’re going to invoke the provisions against employers who have remained recalcitrant and refused to register with ECA scheme,” Basorum said.

The fund acts as a buffer against injuries, loss of body parts, permanent disability or death of an employee resulting from accidents on line of duty. It is indeed a form of social insurance that provides succour directly to an employee or his/her dependants in the event of untoward occurrences in the course of duty.

While official statistics shows increasing accidents at work places with compelling need for compensation of victims, the rate of compliance with the law by employers of labour has remained abysmally low; a development that the NSITF says cannot continue to fester.

According to Adebayo Somefun, managing director/CEO of NSITF, in the last two years, over 24,880 claims and compensation had been processed and paid to beneficiaries under different contingencies.

“Within two years of our administration, NSITF has rehabilitated 42

persons, making the total of 54 since implementation of the scheme in 2011,” he said.

“This process entails providing prosthetic limbs for employees who lost a limb in accidents while at work and training such employees on the usage of the artificial limbs. We have also provided hearing aids to some victims. Other beneficiaries in the last two years include.”

He further disclosed that 347 dependents and 448 disability beneficiaries were monthly payroll of the fund as at February 2019. About other 20 persons above the age of 55 years had been paid lump sums on a one-off basis, he said.

On how to access the scheme, NSITF said employer - government or private/individual, was required to pay only one per cent of total payroll of their employees to the NSITF, emphasising that this is at no cost to the employee.

“Once that is done, it becomes the duty of NSITF to carry the burden which otherwise would have gone to the employer where there is a workplace injury, death or disability.”

Somefun described the scheme a “no-fault” scheme that covers all categories of workers in every sector of employment.

The law-enabling act stipulates that every organisation that employs even one worker is under statutory obligation to register for the ECS; these include domestic staff. It also emphasises that failure to do so amounts to a breach of the law.

According to Section 73 of the ECA; an employee means a person employed by an employer under oral or written contract of employment whether on a continuous, part-time, temporary, apprenticeship or casual basisandincludesadomesticservant who is not a member of the family of the employer including any person employed in the federal, state and localgovernments,andanyofthegovernment agencies and in the formal and informal sectors of the economy. www.businessday.ng

Selorm Branttie (3rd r), mPedigree’s Global Strategy director, with key senior members from COMESA, Seed Companies and Regulatory body.

FMCG firms grumble as inflationary pressure affects consumer spending Gbemi Faminu

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ccording to the World Bank’s 2017 World Development Indicators (WDI) report, Nigeria has a large population of 190 million people that increases daily. This makes it an attractive space for companies targeting large market, especially Fast Moving Consumer Goods (FMCG) and manufacturing companies. Despite this, companies in the sector have complained of average sales due to decline in consumer’s patronage.

Since the recession experienced in the third quarter of 2016, the Nigerian economy has been on a snail paced recovery to economic abundance and this is evident in both companies and citizens’ profile as citizens’ purchasing power declined, result-

ing in low sales for companies.

Although data from trading economics show that consumer spending in Nigeria increased by 3.9 percent between the first and second quarters of 2018, key players in the FMCG industry whined about reduced customer patronage, attributed to various reasons ranging from inflationary pressures to constrained income.

Furthermore, despite the heavy cost incurred for production reasons, which include forex and operating cost, which increase the cost of production of the manufacturing companies in the FMCG, the companies are unable to effect an increase in the process of the various products as consumer’s low purchasing power will threaten the possibility of a sell-out.

Nigerian Breweries, a

leader in the FMGC industry, recorded a decline of 41.2 percent in its profit for the year 2018, having had N33 billion in 2017 and N19 billion in 2018, the company’s net revenue also reflected a decline of 5.8 percent recording N324.4 billion in 2018 from N344.5 billion realised in 2017.

Jordi Borrut Bel, MD/CEO of NB, stated that the business environment in Nigeria was quite challenging in 2018, adding that economic upheavals that increased inflationary pressures and also constrained consumer’s purchasing power affected beer consumption in 2018, which consequentially affected the volume of sale the company recorded in 2018.

The NB is not the only company bearing the brunt of low consumer purchase as Adesola

Sotande-Peters, vice president of finance at Unilever Nigeria, also disclosed at a breakfast meeting that the FMGC was battling with low consumer purchase as the sector was highly dependent on foreign exchange to source raw materials, which increased its cost of production.

Furthermore, consumer’s sensitivity to product prices, especially increased prices, has caused a decline in their purchasing power.

Ranti Adeshola, a sales expert, said, “Economic challenges have constrained consumers income through slashed salaries and some downsizing, therefore consumers do not buy products like before regardless of what price it is. This has affected the volume of sales companies record and in some cases this runs as a loss.”

Buhari calls for commitment to true Federalism

… receives APC “Good Governance” Award Tony Ailemen, Abuja

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resident Muhammadu Buhari on Friday called for return to true Federalism where every component state uses its resources to develop their state.

The President, who was speaking after receiving the Progressive Governors Forum award alongside eight other governors of the All Progressives Congress (APC) for “standing with the party since 2013,” gave example of how the South West is United because it had a welldesigned development agenda.

The President noted that economic growth and competitiveness of nations depend on the harmonious collaboration of all the tiers of government, particularly in a federal set-up, adding, “It will be belabouring the point to say that true federalism is necessary at this juncture

of our political and democratic evolution.”

Buhari, who assured of his administration’s commitments to improving the welfare of the Nigerian people, noted that “At a time when some few privileged individuals and groups have chosen to exploit and manipulate the ethnic and religious fault lines for seeking personal and partisan advantage, we need to build bridges across the different divides and instil faith in the unity and indivisibility of one Nigeria.”

He also appealed to state governments to be a strong pillar of support for anti-corruption agenda, as well as continued support for the programmes of social protection, school feeding programme and other policies geared towards human capital development.

“Going forward, we must all work towards building a socially cohesive society in which the

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resources of the country work for all.

“We will continue to apply public funds in such a way that no section of the country or segment of the population suffers social exclusion,” he said.

The President while also acknowledging that Nigeria is on a renewed growth trajectory, assured that his administration would do everything within its powers to sustain the current economic recovery efforts.

“We will continue to reinforce our macroeconomic policies to achieve sustainable economic stability and growth,” Buhari promised.

“We will also continue to ensure that growth comes along with more jobs and a fair and just distribution of the national wealth. Your continued cooperation in this regard is very vital.”

Recounting how the APC was formed, Buhari noted that while the “South-East and South @Businessdayng

South were facing strong challenges, it was easier to woo the South West because it was more united.”

The President and the other recipients were presented with the awards at the banquet hall of the Presidential Villa, Abuja.

Chairman of the Progressive Governors Forum, organisers of the event, Governor Rochas Okorocha of Imo State, at the pre-event briefing, noted, “Buhari deserves the award for uniting the party stalwarts.

“We are gathered for the love of our country, for admiration of an exalted captain in the person of President Muhammadu Buhari. We are here gathered for patriotic devotion of a leadership we consider visionary for which we are well pleased.”

He described them as the “founding fathers of our great party during the merging period especially, the progressive governors, eight of them remaining.

Monday 13 May 2019

BUSINESS DAY

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news Apapa: Trailer Park opening delays again, but there’s hope CHUKA UROKO

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nce again, the Federal Government has failed to open the Tin Can Trailer Park being constructed along the Apapa-Oshodi Expressway. Government had earlier scheduled the park for opening last week Friday along with the Lilypond Terminal as temporary measures for tackling Apapa gridlock and congestion.

Adedamola Kuti, Federal Controller of Works, Lagos, had explained to BusinessDay in a telephone interview that the opening of the park was being delayed by the absence of critical infrastructure in the park.

This was confirmed by an official of Borini Prono, the Italian

construction company handling the construction of park, who told BusinessDay at the project site Friday morning that water and light were the major facilities needed to throw the park open.

“We are almost done; all the poles for the light have been mounted; all that remains is running the wires and connecting them to the power source which could be a giant generator or national grid. We have also done the reticulations for water.

“We are constructing the pillars that will carry the overhead tanks in two places as you can see.

Once we are through with that, we will dig the borehole, which will take just a few hours, the pipes will be connected and water will start running everywhere, including the toilets,” the Borini Prono

official, who did not want to be named, assured.

The official, who was amused when this reporter reminded him that the park was to be opened that day (Friday after it failed a week earlier), pointed out that money was needed to get all that done, but the government was taking long in responding to their request for funds to get those facilities.

The official was however optimistic that the park might be ready before the end of next week, lamenting that they had lasted too long on the project which, he noted, should have been a threeyear project but had been on since 2010, when government awarded contracted for its construction.

BusinessDay observed during the Friday morning visit that the

park was largely ready, except for the aforementioned facilities and the shoreline protection, which the official explained was suspended to enable them concentrate on the critical needs of the park. “The shore protection can be constructed even after the park is opened,” he said.

A critical look at the park shows that there may be problems of overcrowding and congestion, looking at its size and the load it is expected to carry. “About 400 trucks are expected to use this place and each truck will come with at least six people. There will be food vendors, other businesses and service providers; I have my fears,” the official noted, hoping however that managers of the park would be efficient and firm with their work.

Kian Smith Gold Refinery initiates first West Africa gold confab … to develop Nigeria’s gold value chain JOSEPH MAURICE OGU

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ian Smith Gold Refinery, which is setting up the first gold refinery in Nigeria, is to host the first ever West Africa gold conference, the company says.

Tagged Gold West Africa, the regional conference, which will bring together players from different countries, is a strategic collaborative effort between Kian Smith Gold Refinery and Noemdek, a Nigeria-based international advisory firm.

“This is the first regional conference in West Africa on gold,” Nicole Smith, Gold West Africa event manager, told BusinessDay. Smith noted that out of the 15 ECOWAS countries, Cape Verde, Benin and Togo were the only countries without notable gold reserves. However, Benin and Togo are notable for gold trade. All other ECOWAS countries have significant documented gold reserves, internationally listed gold mining companies or a significant footprint of artisanal gold mining.

Despite this, there is presently no internationally recognised gold ‘market centre’ in Africa.

“West Africa has a thriving underground gold economy that if regulated, could unlock

the West African region as the gold market centre of Africa,” he noted.

Smith said the event would bring 150 critical gold sector stakeholders from over 14 countries together with the aim of establishing a strong West African public and private sector lobby around the precious metal that could become the economic game changer for the region.

The conference, which comes up on June 25-26 in Lagos, will focus on developing the West African gold economy by strengthening the region’s gold value chain and enabling relevant policies and market infrastructure for the gold ecosystem by positioning Nigeria as pivotal to the sector’s development.

“Creating a sustainable gold value chain means ensuring benefit to individuals, governments, companies, investors and to the environment,” Smith assures.

By doing this, the company positions itself as solutionoriented to the gold market challenges and equally stands to contribute significantly to the economy of Nigeria and Africa.

According to Smith, the company is playing a part in finding solutions that ensure Africa benefits from its own resource wealth.

FG seeks collaborative efforts to end forced labour, human trafficking JOSHUA BASSEY

L-R: Mojisola Olurotimi, secretary, organising committee, Nigerian Institute of Public Relations (NIPR), 2019 Annual Lagos Public Relations Week; Odion Aleobua, chairman organising committee, NIPR 2019 Annual Lagos Public Relations Week; Olusegun McMedal, chairman, NIPR Lagos Chapter, and Thelma Okoh, secretary NIPR Lagos Chapter, during the official unveiling ceremony sponsored by Modion Communications, in Lagos.

Lagos-Ibadan standard gauge rail project nears completion MIKE OCHONMA & STELLA ENENCHE, Abuja

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ngoing construction work and laying of tracks along the Lagos-Ibadan standard gauge rail project has reached kilometre DK 133 out of the 156 kilometre, representing 85.2 percent distance competed, while 23 kilometres will be completed in the next three weeks.

Speaking after inspection on Friday at Kila in Ibadan, Rotimi Amaechi, minister of transportation, said the ongoing rail project was almost 100 percent complete.

Amaechi noted, “When we started, this whole area we are driving through was just bushes.

They have not cleared the road, we created roads with our cars, but at the end of the day, we are coming to the end of the project with a new vegetation.”

The minister explained further that, “There used to be green grasses here, trees, waters and creeks. The creek is turned into dry land some of the areas where you have valleys we have build bridges, any area that we did not need to build bridges, we created roads.

“Areas we could have just

moved straight on, we created valleys just to ensure Nigerians are able to move from Lagos to Ibadan.

“We are going to the end of the track, because we are getting to kilometre 156, and what remains is 33 kilometres, which they can cover in the next three weeks.”

According to Amaechi, the CCECC has confirmed that by the end of May, they will complete track activities on this Lagos to Ibadan. “So, we are ahead of schedule and 100 percent ahead of schedule. We should be at the end of the outskirt at the end of month,” he said.

Responding to the state of work at the Itakpe-AjaokutaWarri rail project, the minister said: “The track has gone to Warri and they are using it now, but they have not finish with the station and I expect that by the end of the year they can finish it, in fact, before July.

On whether he has delivered on his mandate and what he can score himself, he said, “How can I score myself.

Have you ever seen where a teacher scores himself or students score themselves. I really don’t know. www.businessday.ng

China plans $250m dry port in Ibadan … gets Buhari’s accolade for infrastructure drive Tony Ailemen, Abuja

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resident Muhammadu Buhari has commended Chinese government’s infrastructure support for Nigeria, as the Chinese Railway Corporation concludes plans to construct a $250 million dry port in Ibadan, the Oyo State capital.

The President stated this while receiving the chairman of China Railway Construction Corporation Limited (CRCC), Fenjian Chen, at the Presidential Villa, on Friday.

Nigeria’s infrastructure, the President said, had depreciated and deteriorated over the years, affecting the standard of living, and leading to loss of lives through avoidable accidents.

“We are very grateful to China for the effort to rebuild our infrastructure, and for bringing technical expertise to the country.

We will give the required support and cooperation, so that our old, out-of-date, and collapsed infrastructure might be turned around” he said.

He promised to personally pay attention to the many projects being undertaken in the country, for the good of Nigerian people.

Chen, who led a highpowered Chinese team to meet with the President, said CRCC is an international company, operating currently in 124 countries of the world.

He disclosed that the Corporation has 18,000 local employees in Nigeria alone.

“Part of projects CRCC is undertaking includes railway, dry port, free trade zone, and building of highways. About 40,000 more jobs are to be created from these.

“The sum of $250 million dollars will be invested on a dry port in Ibadan, Oyo State, and it will decongest the ports in Lagos, and speed up clearance of goods by the Customs Service,” he said.

He commended President Buhari for the war against corruption and insecurity, expressing confidence that Nigeria would soon become a much better country.

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he Federal Government has called for collective efforts of relevant stakeholders to tackle the menace of forced labour and human trafficking in order to accelerate sustainable growth and development.

Vice President Yemi Osinbajo made the call at the launch of Alliance 8.7 and National Consultation in Nigeria, in Abuja.

According to Osinbajo, “No government, country or organisation can solve this challenge alone and eradication efforts can only be accelerated through concrete commitments, coherent and coordinated action at the national, regional and global levels.”

Osinbajo, represented by Stephen Ocheni, minister of state for Labour and Employment, explained, “Alliance 8.7 is a global partnership committed to taking immediate and effective measures to accelerate action towards the eradication of forced labour, modern slavery, human trafficking, and securing the prohibition and elimination of the worst forms of child labour in all its forms everywhere.”

Speaking further, he said, “International Labour Organisation (ILO) estimates the global figure of child labourers to be 168 million with Nigeria accounting for about 15 million; and 25 percent of Nigeria’s 80 million children under the age of 14 are engaged in @Businessdayng

economic activities and half of this population is children exploited as child labourers and those working in hazardous situations such as victims of child trafficking, domestic work, sex work, drug peddling and hawking.”

The Vice President, however, noted that government has been giving attention to child labour, forced labour and human trafficking issues in the country through existing national laws, ratification/ adoption of international conventions and protocols, as well as national policy documents on child labour.

Chris Ngige, minister of Labour and Employment, who was represented by William Alo, the permanent secretary in the ministry, said the occasion marked a milestone in the determination and commitment of Nigeria in ensuring that further concrete measures were taken to accelerate the efforts at eradicating this menace in the country, in line with the Sustainable Development Goals (SDGs) 8.7.”

According to Ngige, “addressing issues of child labour, forced labour, and human trafficking is key to achieving the SDGs relating to the ministry’s mandate, and the launch of Alliance 8.7 and national consultation is critical to the ministry as it is committed to ensuring decent work, as well as quality education for children, and removing them from all forms of child labour.”

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Monday 13 May 2019

BUSINESS DAY

news 500 bills pending at 8th National...

Continued from page 1

month to the end of the

Eighth National Assembly, this would be a tall order.

BusinessDay reports that the life of the Eighth National Assembly ends on June 8, 2019.

Investigations showed that some of the bills still pending in the National Assembly include the National Housing Fund Bill, Small and Medium Enterprises Development Agency Bill, Federal Mortgage Bank of Nigeria Bill, Industrial Development (Income Tax Relief) Amendment Bill, Stamp Duties (Amendment) Bill and National Agricultural Seeds Council Bill.

Also yet to be passed are the four petroleum industryrelated bills, namely, the Petroleum Industry Governance Bill, Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and the Petroleum Host and Impacted Communities Bill.

The Agricultural Credit Guarantee Scheme Fund (Amendment) Bill, Chartered Institute of Entrepreneurship (Est.) Bill, Nigerian Maritime

Administration and Safety Agency (Amendment) Bill, Advance Fee Fraud and Other Related Offences (Amendment) Bill, as well as over 10 constitution amendment bills are also yet to be passed.

Others include Climate Change Bill, National Transport Commission Bill, Federal Road Authority (Establishment) Bill, National Broadcasting Commission Amendment Bill, National Oil Spill Detection and Response Agency (NOSDRA) Act (Amendment) Bill, Electoral Act (Amendment) Bill, Suppression of Piracy and other Maritime Offences Bill, Federal Audit Service Bill, Anticipatory Opening of Bank Accounts for Corporate Customers (Prohibition) Bill, among others.

While some of the bills are awaiting second reading, third reading and committee stage, othersarependingconcurrence, even as other proposed legislations are being reconsidered after the President rejected them.

In the same token, some bills have been passed but are

still being cleaned up by the Legal Services Department.

Kabiru Gaya (APC, Kano), chairman, Senate Committee on Works, told BusinessDay in an interview that the National Assembly would make consciouseffortstoensurethatmost of the bills are passed before the end of the Eighth Assembly.

Gaya, who is also a senatorelect in the Ninth Assembly, admitted that taxpayers’ money would go down the drain if the bills are not passed by the Eighth Assembly.

The former governor of Kano State, however, said there was no cause for alarm as, according to him, bills that could not be passed by the current National Assembly would be rolled over and passed by the incoming Ninth Assembly.

“We are trying hard to make surethatthese(pending)billsare passed. For those the President madeobservations,wearetrying to correct those observations the way the Executive wants it and send it back to the Executive to sign it quickly. Why we are doing that is because we don’t want to lose the time, the taxpayers’ money we have spent in preparing these bills,” Gaya said.

“It takes not less than six months to one year to do a bill.

And all that includes taxpayers’ money we have spent. So, we need to fast-track that. Otherwise, if all these lapse, it means we will start all over in the new Senate. Bring the bill for first reading, second reading, public hearing and third reading.

“So, we will look at those bills and appeal to Mr President that where these bills do not need another alteration, he can approve them and sign them, just like he signed the North East Development Commission Bill,” he said.

Gaya, however, cautioned his colleagues to be mindful of the kind of bills they sponsor, else the Executive may find it difficult to assent to them.

“We should be sending bills that are more dynamic and in tune with the current situation, not bills on associations, unions and so on. Let us have few bills that are good enough for the country,” he said.

Stakeholders also expressed worry that they may have to start from the beginning by reinitiating the bills and lobbying members of the Ninth National Assembly in order to begin

fresh legislative process for the enactment of the bills.

Ralph Agama, a constitutional lawyer, called on lawmakers to devote more time to enacting critical legislations rather than embarking on endless breaks.

He, however, submitted that it was better for the National Assembly to delay the enactment of bills than hurriedly passing them and creating a lacuna when the bills are eventually signed into law.

This, he argued, is responsible for the increasing number of rejected bills.

“I don’t think that the National Assembly operates without rules governing procedures of whatever they do. So, if their assignmentisgovernedbyrules, they must first be seen to do it withintheambitofthelaworthe timeframe within which the law permits them to pass them. The fact that these bills are critical for one reason or the other needs a lotofscrutinytoensurethatwhat theyaredeliveringtoNigeriansis that which can stand the test of time,”Agamasaidinatelephone interview with BusinessDay. “And that is one of the things that we see when bills are trans-

mitted to be signed into law without proper scrutiny, you discover that when these bills metamorphose into law, they will come with a whole lot of lacuna that at the end of the day, givingtheinterpretationtosome ofthoseprovisions,peoplebegin to cry foul for injustice.

“On the Electoral Act (Amendment) Bill, it is very vital to our democracy. And if anything is hurriedly done, it may still not stand the test of time. On one hand, there is the need for time to properly scrutinise bills, both executive and private bills, so that whatever will be given to Nigerians will stand the test of time.

“On the other hand, we can’t because this Eighth Assembly is running out, hurriedly pass those bills. You are sacrificing the interest of Nigerians on the altar of time.

Take it leave it, governance is a continuous process. And so wherever they have stopped, these bills can still be brought back to the Ninth Assembly.

It will be better than hasten up to pass those bills where at the end of the day, it will not satisfy the yearnings of Nigerians,” Agama said.

DMO makes history as FGN risk-free yield...

Continued from page 1

able debt towards promoting economic growth and national development.

Investors demonstrated their ardent appetite for the issue with the results of the April 2019 FGN Bond Auction revealing that a total subscription of N80.41bn was received for the N20.00bn offered (N53.16bn allotted) by the DMO for the 30-year bond, representing an over 400 percent subscription rate. This is a glaring indication of investors’ desire for investments at the longer end of the sovereign debt yield curve.

Whilst the decision to issue a long-tenored bond is not an anomaly, this latest issuance comes almost 40 years after the last 25-year bond (previously the longesttenored local currency FGN Bond) was issued by the FGN in 1980, following previous issuances in 1976 and 1979.

With the success of this offering, the DMO has, in addition to managing government’s debt sustainably, reinforced its role in the development of the domestic capital market by facilitating the extension of the sovereign debt yield curve, which represents appropriate funding for housing credit and infrastructure as well as an investment opportunity for both pension fund administrators (“PFAs”) and insurance companies looking to reduce mismatches in their asset du-

rations and liability horizons.

The DMO has listed the bond on the platform of FMDQ OTC Securities Exchange (“FMDQ”) to enhance its visibility and promote secondary market liquidity for the bond.

The DMO also listed the bond ontheNigerianStockExchange.

The capital market community has lauded this audacious move by the DMO, which positions Nigeria to stand amongst other African markets such as South Africa and Kenya which have previously issued 30-year bonds.

Nigeria remains the leading West African nation as stakeholders expect this bond issuance to serve as a case study for other countries within the region, to take the plunge by extending their yield curves.

“The introduction of the bond is a welcome development as it creates further opportunities for growth in the Nigerian financial markets,” said Bola Onadele. Koko, managing director/CEO of FMDQ. “Furthermore, yield curve extension creates more impetus and opportunities for the introduction of risk management (hedging) products such as bond futures and interest rate derivatives to help fund managers (such as PFAs) and insurance companies that have invested in the bonds to manage the interest rate risk, which is typically higher for longer-tenored debt securities.

We are aware that FMDQ, the

Access Bank, FCMB, Fidson Healthcare, others...

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as businesses,” Aigbogun said.

He commended the managements of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) for their relentless efforts to attract more interest into the market. He,

however, said the capital market is currently dominated by the bears, an indication that equity prices are grossly undervalued as most stocks trade below their actual valuations, in spite of the forecasts about the post-election rally.

“The Nigerian economy www.businessday.ng

R-L: Yewande Sadiku, executive secretary/chief executive office, Nigerian Investment Promotion Council (NIPC); Emeka Offor, director, strategic communications, and Aminu Takuma, department of states coordination, during a courtesy visit of NIPC management to BusinessDay head office (The Brook) in Lagos, at the weekend.

Pic by Olawale Amoo

capital market regulators and other market stakeholders are intensifying concerted efforts to launch these hedging products soon to improve the diversity and global competitiveness of the Nigerian financial markets,” Onadele. Koko said.

“TheDMOshouldindeedbe congratulatedforitsproactivityin reaction to the desires of the buysidewhichmotivatedtheDMO’s request to one of the Exchanges toconductasurveytodetermine the local and international markets’appetiteforFGNBondswith tenors over twenty (20) years,

and also on their impressive speed to action on the feedback receivedfromtheexercise,which indicated the considerable interest by the surveyed investors in longer-tenoredsovereignbonds,” he added.

Other stakeholders have indicated that the DMO has cleared the path for other issuers such as subnationals and corporates to access longerterm funding for their projects as the 30-year FGN Bond serves as a benchmark for pricing of non-sovereign debt at the longer end of the yield curve.

Onadele. Koko further added that evidence from the recent issuances of the Viathan Funding PLC N10.00bn 10year bond (the first power bond in the country) and NSP-SPV Powercorp PLC N8.50bn 15year bond, both of which were also listed on FMDQ, indicates that corporates are already taking initiative by accessing the DCM to channel funds towards infrastructure and other economically stimulating projects.

It is expected that many nonsovereign issuers would follow suitintheshorttomediumterm.

Considering the encouraging success of the debut 30-year FGN Bond, the DMO is encouragedtocontinuetoblazethetrail for the markets. The introduction of more diverse bouquet of long-tenored securities such as inflation-linked, floating rate and zero-coupon bonds, will promote better management ofrealisedandrealyieldsamong others. This will indeed support thedevelopmentoftheNigerian economy by further deepening the domestic DCM, making Nigeria a more attractive investment destination.

has shown a lot of mixed signs since the beginning of 2019, indicating that investors will have to be cautious in their decisionmaking until stakeholders are sure of the directions of the business cycles. The mixed signs manifest in the forms of the annual inflation rate that is trending downward, unemployment and total debt stock that are skyrocketing, while the

general economy is struggling to grow at about 2 percent,” Aigbogun said.

The annual Top 25 CEOs Awards, which debuted in 2012 as BusinessDay’s way of recognising CEOs who distinguished themselves by adding value to the investments of shareholders, have as parameters share price appreciation and profitability.

A team of analysts at BusinessDay Research and Intelligence Unit (BRIU) peruses the performances of listed firms on the NSE once transaction ended on the last trading day of the year. Supported with the appraisal of each firm’s latest financials, the list of listed firms is then pruned down to 25, whose CEOs are honoured annually at the event.

The Next Bulls Awards made its debut this year to support the mandate to get more firms listed on the NSE. Companies considered for this category of awards are those that will seamlessly get listed on the NSE should they decide to do so today.

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BUSINESS DAY

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Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 10 May 2019 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. 252,371.10 7.10 1.43 234 20,972,984 UNITED BANK FOR AFRICA PLC 222,296.24 6.50 -1.52 210 7,310,764 ZENITH BANK PLC 627,929.88 20.00 -0.25 448 16,638,322 892 44,922,070 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 260,240.87 7.25 -0.68 123 16,363,227 123 16,363,227 1,015 61,285,297 BUILDING MATERIALS DANGOTE CEMENT PLC 3,050,250.83 179.00 - 48 569,304 LAFARGE AFRICA PLC. 177,185.75 11.00 - 26 138,414 74 707,718 74 707,718 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 307,168.06 522.00 -9.98 13 14,778 13 14,778 13 14,778 1,102 62,007,793 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 14,408.66 5.40 - 1 5,100 1 5,100 1 5,100 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 1 5,100 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 2,000 OKOMU OIL PALM PLC. 66,773.70 70.00 - 15 8,263 PRESCO PLC 58,000.00 58.00 - 2 93 19 10,356 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 - 8 123,975 8 123,975 27 134,331 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 635.35 0.24 - 5 50,520 JOHN HOLT PLC. 182.90 0.47 - 2 2,400 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 45,932.23 1.13 -0.88 131 16,383,948 U A C N PLC. 20,025.01 6.95 2.96 112 4,195,518 250 20,632,386 250 20,632,386 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 30,360.00 23.00 - 26 107,702 ROADS NIG PLC. 165.00 6.60 - 0 0 26 107,702 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 10 36,599 10 36,599 36 144,301

AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,196.18 1.43 - 9 242,610 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 112,804.72 51.50 3.00 31 790,457 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 7 21,879 NIGERIAN BREW. PLC. 522,197.70 65.30 - 30 2,034,999 77 3,089,945 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 85,000.00 17.00 0.88 120 1,805,007 DANGOTE SUGAR REFINERY PLC 168,000.00 14.00 - 39 383,989 FLOUR MILLS NIG. PLC. 65,606.07 16.00 - 34 225,730 HONEYWELL FLOUR MILL PLC 9,119.73 1.15 - 14 261,185 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 766.26 4.30 - 0 0 N NIG. FLOUR MILLS PLC. NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 19 107,537 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 226 2,783,448 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 20,660.22 11.00 - 31 177,086 NESTLE NIGERIA PLC. 1,204,837.50 1,520.00 - 31 3,641 62 180,727 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 10 VITAFOAM NIG PLC. 4,940.83 3.95 - 23 186,786 24 186,796 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 35,734.29 9.00 - 13 169,911 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 28 169,639 41 339,550 430 6,580,466 BANKING ECOBANK TRANSNATIONAL INCORPORATED 189,000.38 10.30 1.98 30 355,819 FIDELITY BANK PLC 53,313.63 1.84 -0.54 76 6,892,979 GUARANTY TRUST BANK PLC. 941,797.74 32.00 -0.93 167 2,375,898 JAIZ BANK PLC 14,732.12 0.50 -5.66 14 1,732,833 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 77,158.32 2.68 -0.74 43 24,733,881 UNION BANK NIG.PLC. 203,845.27 7.00 - 23 201,550 UNITY BANK PLC 8,416.32 0.72 -4.00 8 658,571 WEMA BANK PLC. 27,773.62 0.72 - 15 724,736 376 37,676,267 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 1.45 20 402,056 AXAMANSARD INSURANCE PLC 19,005.00 1.81 -7.18 14 412,351 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 0 0 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 509,300 GOLDLINK INSURANCE PLC 1,046.49 0.23 -8.00 1 2,500,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 120,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 -3.33 6 5,100,000 LAW UNION AND ROCK INS. PLC. 1,890.39 0.44 -4.35 8 122,650 LINKAGE ASSURANCE PLC 3,520.00 0.44 -8.33 18 3,128,728 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 -8.70 4 339,000 NEM INSURANCE PLC 13,201.26 2.50 7.76 32 2,991,084 NIGER INSURANCE PLC 1,547.90 0.20 -4.76 11 563,964 PRESTIGE ASSURANCE PLC 2,691.28 0.50 6.38 8 413,459 REGENCY ASSURANCE PLC 1,667.19 0.25 -3.85 16 1,770,849 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 8.70 10 44,544,624 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 1 1,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 3 15,100 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 -9.09 4 928,850 WAPIC INSURANCE PLC 5,219.27 0.39 -2.56 25 1,635,957 184 65,498,972 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,086.96 1.35 - 12 328,320

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12 328,320 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,080.00 3.54 -9.92 61 2,422,885 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 - 7 73,118 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 35,644.88 1.80 -4.76 40 1,085,621 1,234.89 0.24 4.35 3 206,816 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 471,065.44 46.00 5.26 26 1,075,002 UNITED CAPITAL PLC 15,360.00 2.56 3.23 56 1,538,171 193 6,401,613 765 109,905,172 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 -4.17 4 816,500 4 816,500 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 - 1 100 10,762.89 9.00 - 15 3,205,804 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,968.04 2.30 -0.86 24 531,639 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 949.58 0.50 -9.09 14 981,229 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 3 625 57 4,719,397 61 5,535,897 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 888.00 0.25 -3.85 16 6,657,709 16 6,657,709 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 100 648.00 6.00 - 3 40 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 1 6,900 5 7,040 PROCESSING SYSTEMS CHAMS PLC 1,878.42 0.40 -9.09 41 7,667,425 11,088.00 2.64 - 1 10 E-TRANZACT INTERNATIONAL PLC 42 7,667,435 63 14,332,184 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 3 9,000 23,800.00 34.00 - 26 42,282 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 201,095.56 15.30 - 17 102,075 FIRST ALUMINIUM NIGERIA PLC 886.35 0.42 - 4 61,279 313.43 0.59 - 1 191 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 51 214,827 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,258.45 1.85 - 5 8,260 5 8,260 PACKAGING/CONTAINERS BETA GLASS PLC. 34,473.07 68.95 - 5 1,021 GREIF NIGERIA PLC 388.02 9.10 - 0 0 5 1,021 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 61 224,108 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 2 7,410 2 7,410 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 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. 55.00 0.25 - 1 1,000 1 1,000 3 8,410 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,628.30 0.26 -3.70 61 8,080,340 61 8,080,340 INTEGRATED OIL AND GAS SERVICES OANDO PLC 59,670.78 4.80 3.23 75 4,267,286 75 4,267,286 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 62,382.98 173.00 - 28 27,908 CONOIL PLC 13,948.44 20.10 - 11 24,268 ETERNA PLC. 5,086.16 3.90 -4.88 22 131,152 FORTE OIL PLC. 45,521.71 34.95 - 7 3,774 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 17 39,378 TOTAL NIGERIA PLC. 55,002.54 162.00 - 25 3,724 110 230,204 246 12,577,830 ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 4 67,500 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 3 15,058 7 82,558 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 500 1 500 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 3,014.25 1.45 - 6 4,900 IKEJA HOTEL PLC TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 2,000 7 6,900 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 3 14,010 LEARN AFRICA PLC 941.17 1.22 -8.96 4 196,272 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 5 250,000 12 460,282 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 447.58 0.27 -10.00 7 628,676 7 628,676 SPECIALTY INTERLINKED TECHNOLOGIES PLC 764.54 3.23 - 0 0

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NEWS

Investment commitments to Nigeria reach $220bn in 3yrs – Enelamah ONYINYE NWACHUKWU, Abuja

I

nvestment commitments to the Nigerian economy reached some $200 billion between 2016 and 2018, Okey Enelamah, minister of Industry, Trade and Investment, said at the weekend.

He, however, admitted that the ability to convert those promises into tangible investments remains key.

“If you look at the investment commitments that were announced last year for the

… hopeful Nigeria will soon sign the AFCFTA

country at every level, which is tracked by the Nigeria Investment Promotion Council, it is over $90 billion. The year before it was over $70 billion, and the year before then it was over $60 billion,” Enelamah said, speaking on some of the achievements of his ministry within four years.

“This shows us that Nigeria has a potential and is attractive.

Now the challenge for us as a country and definitely for the ministry is how much of these will we convert,” he said.

Enelamah said, for instance, the RUYI group, one the largest and most successful Chinese textile and garment companies, committed to invest $2bn and is also partnering with the government on the planned industrial parks.

Nigeria, Africa’s biggest economy, still struggles to expand its manufacturing base, which contributes less than 10 percent to economic output, and to create the needed jobs.

“I do believe that we are well

on our way but we must commit to the enabling environment because what the investors need is the right environment so that when they put in their investments it will not suffer loss,” he said.

Government hopes to increase manufacturing output to 20 percent of GDP within a few years through industrial parks and Special Economic Zones, a project that has been in the works for a while now, he said.

Giving update, the minister

again raised optimism on the Project MINE (Made in Nigeria for Export) which is expected to be driven by the industrial zones projected to start off with some $500 million and targets to raise manufacturing sector’s contribution to GDP to 20 percent while generating over $30 billion annually by 2025.

“We are targeting raising $500m with the government providing 25 percent and we have been working on that. Our plan is to establish world-class industrial parks across the country starting with three.

Extension of 50% reduction in business name registration fee to incentivise SMEs CAC HARRISON EDEH, Abuja

C

orporate Affairs Commission (CAC) on Saturday said it had extended for the third time the window for registration of Business Names at the reduced cost of N5,000.00 by 90 days.

The Commission said the extension was prompted by the need to provide opportunity to Micro, Small and Medium Scale Enterprises (MSMEs) who could not register their businesses in the first and second phases of the Business Incentive Strategy (BIS).

Azuka Azinge, acting registrar-general of the CAC, said in a statement in Abuja.

Recall, the Commission under its BIS, had reduced the cost of Business Names registration from N10,000 to N5,000 for a period of three months (October 1 to December 31, 2018).

Upon expiration of the initial three months window, the Commission received several requests from stakeholders and the public, and extended same for another period of three months (January 1 to March 31, 2019) due to popular demand, particularly from state governments.

The acting registrar-general stated that the third extension will deepen the success achieved in the first and second phases and will run from Monday, 13th May to 13th August, 2019.

She enjoined members of the public to take advantage of the further extension to register their Business Names at the reduced cost of N5,000.

Members of the public can either do it themselves online by login on to the Commission’s website: www.cac.gov.ng or visit any of the Commission’s offices nationwide.

Also, Azinge revealed that the Companies and Allied Matters Amendment Bill had since been passed by the National Assembly and was awaiting Presidential assent. www.businessday.ng

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“We are also looking to revamp two existing parks owned by the government – the Calabar industrial park and the one in Kano where work is ongoing because we have got approvals in the last 10 to 18 months.

“What we are now doing is to attempt to establish three more as a model, one in Lekki Free Trade Zone, for the export of textiles, garments and agro processing. The other one is in Abia state and is huge, about 9,000 hectares, and there is another one in Funtua in Katsina that will focus on cotton.

Monday 13 May 2019

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FG moves to audit NRC assets at Apapa Port over Lagos-Ibadan SGR project MIKE OCHONMA & STELLA ENENCHE, Abuja

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inistry of Transportation has directed the Nigerian Railway Corporation (NRC) to take stock of its assets at the Apapa Port, with a view to creating space for the station over the ongoing Lagos-Ibadan standard gauge rail project.

Rotimi Amaechi, transportation minister, gave the order Saturday, during an inspection tour of the site for the rail station, which is part of the Lagos-Ibadan standard gauge rail corridor.

Amaechi said an audit of the railway properties became more compelling, following discoveries made during the inspection. The evaluation will help uncover the number of properties on lease, as well as the period of expiration.

“How can NRC acquire their own property? If all these properties are for NRC and were leased out, we need to know for how many years, if it has expired or not,” the minister said.

“Let us revalue it. If we are to get those properties for the stations, does it make economic sense or not; if it

does not make economic sense we can leave it, we want to have a hotel and shopping mall there, just like the Ebute Meta station.

“They should not just do valuation but know the ownership of those properties. If we have leased them out, they have no choice but to pay.

If the lease has expired, the owners don’t have a choice than to hand over the property to us but we have to do an audit first.”

While commenting on the issues militating against the use of rail to transport cargoes to Apapa port, Amaechi insisted that only the standard gauge lines could be deployed to increase the tonnes of cargoes that can be transported daily.

“We are yet to construct standard gauge that will function in that capacity. Until that happens, you can’t move enough cargoes,” he said.

“Currently, I hear we are moving about 200 to 300 thousand tonnes of cargoes in the year when we have about 30 million tonnes of cargoes and if we have about 30 millions tonnes of cargoes, we need to make sure that the tracks function properly to move more cargoes,” he stated.

NSITF considers legal options to force compliance on employee compensation JOSHUA BASSEY

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igeria Social Insurance Trust Fund (NSITF) is considering legal options to compel employers of labour to comply with the provisions of Employees Compensation Act (ECA).

The enabling Act as amended (2011) makes it mandatory for employers of labour to pay 1 percent of their employees’ emoluments to a pool of insurance fund being managed by NSITF. “We have used the persuasion and subtle approach to enlist the buyin of employers since the inception of the fund in 2011,” Segun Basorun, a general manager with NSITF, said in Lagos, when the management gave details on developments within the Fund.

“But going forward, we’re going to invoke the provisions against employers who have remained recalcitrant and refused to register with ECA scheme,” Basorum said.

The fund acts as a buffer against injuries, loss of body parts, permanent disability or death of an employee resulting from accidents on line of duty. It is indeed a form of social insurance that provides succour directly to an employee or his/her dependants in the event of untoward occurrences in the course of duty.

While official statistics shows increasing accidents at work places with compelling need for compensation of victims, the rate of compliance with the law by employers of labour has remained abysmally low; a development that the NSITF says cannot continue to fester.

According to Adebayo Somefun, managing director/CEO of NSITF, in the last two years, over 24,880 claims and compensation had been processed and paid to beneficiaries under different contingencies.

“Within two years of our administration, NSITF has rehabilitated 42

persons, making the total of 54 since implementation of the scheme in 2011,” he said.

“This process entails providing prosthetic limbs for employees who lost a limb in accidents while at work and training such employees on the usage of the artificial limbs. We have also provided hearing aids to some victims. Other beneficiaries in the last two years include.”

He further disclosed that 347 dependents and 448 disability beneficiaries were monthly payroll of the fund as at February 2019. About other 20 persons above the age of 55 years had been paid lump sums on a one-off basis, he said.

On how to access the scheme, NSITF said employer - government or private/individual, was required to pay only one per cent of total payroll of their employees to the NSITF, emphasising that this is at no cost to the employee.

“Once that is done, it becomes the duty of NSITF to carry the burden which otherwise would have gone to the employer where there is a workplace injury, death or disability.”

Somefun described the scheme a “no-fault” scheme that covers all categories of workers in every sector of employment.

The law-enabling act stipulates that every organisation that employs even one worker is under statutory obligation to register for the ECS; these include domestic staff. It also emphasises that failure to do so amounts to a breach of the law.

According to Section 73 of the ECA; an employee means a person employed by an employer under oral or written contract of employment whether on a continuous, part-time, temporary, apprenticeship or casual basisandincludesadomesticservant who is not a member of the family of the employer including any person employed in the federal, state and localgovernments,andanyofthegovernment agencies and in the formal and informal sectors of the economy. www.businessday.ng

Selorm Branttie (3rd r), mPedigree’s Global Strategy director, with key senior members from COMESA, Seed Companies and Regulatory body.

FMCG firms grumble as inflationary pressure affects consumer spending Gbemi Faminu

A

ccording to the World Bank’s 2017 World Development Indicators (WDI) report, Nigeria has a large population of 190 million people that increases daily. This makes it an attractive space for companies targeting large market, especially Fast Moving Consumer Goods (FMCG) and manufacturing companies. Despite this, companies in the sector have complained of average sales due to decline in consumer’s patronage.

Since the recession experienced in the third quarter of 2016, the Nigerian economy has been on a snail paced recovery to economic abundance and this is evident in both companies and citizens’ profile as citizens’ purchasing power declined, result-

ing in low sales for companies.

Although data from trading economics show that consumer spending in Nigeria increased by 3.9 percent between the first and second quarters of 2018, key players in the FMCG industry whined about reduced customer patronage, attributed to various reasons ranging from inflationary pressures to constrained income.

Furthermore, despite the heavy cost incurred for production reasons, which include forex and operating cost, which increase the cost of production of the manufacturing companies in the FMCG, the companies are unable to effect an increase in the process of the various products as consumer’s low purchasing power will threaten the possibility of a sell-out.

Nigerian Breweries, a

leader in the FMGC industry, recorded a decline of 41.2 percent in its profit for the year 2018, having had N33 billion in 2017 and N19 billion in 2018, the company’s net revenue also reflected a decline of 5.8 percent recording N324.4 billion in 2018 from N344.5 billion realised in 2017.

Jordi Borrut Bel, MD/CEO of NB, stated that the business environment in Nigeria was quite challenging in 2018, adding that economic upheavals that increased inflationary pressures and also constrained consumer’s purchasing power affected beer consumption in 2018, which consequentially affected the volume of sale the company recorded in 2018.

The NB is not the only company bearing the brunt of low consumer purchase as Adesola

Sotande-Peters, vice president of finance at Unilever Nigeria, also disclosed at a breakfast meeting that the FMGC was battling with low consumer purchase as the sector was highly dependent on foreign exchange to source raw materials, which increased its cost of production.

Furthermore, consumer’s sensitivity to product prices, especially increased prices, has caused a decline in their purchasing power.

Ranti Adeshola, a sales expert, said, “Economic challenges have constrained consumers income through slashed salaries and some downsizing, therefore consumers do not buy products like before regardless of what price it is. This has affected the volume of sales companies record and in some cases this runs as a loss.”

Buhari calls for commitment to true Federalism

… receives APC “Good Governance” Award Tony Ailemen, Abuja

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resident Muhammadu Buhari on Friday called for return to true Federalism where every component state uses its resources to develop their state.

The President, who was speaking after receiving the Progressive Governors Forum award alongside eight other governors of the All Progressives Congress (APC) for “standing with the party since 2013,” gave example of how the South West is United because it had a welldesigned development agenda.

The President noted that economic growth and competitiveness of nations depend on the harmonious collaboration of all the tiers of government, particularly in a federal set-up, adding, “It will be belabouring the point to say that true federalism is necessary at this juncture

of our political and democratic evolution.”

Buhari, who assured of his administration’s commitments to improving the welfare of the Nigerian people, noted that “At a time when some few privileged individuals and groups have chosen to exploit and manipulate the ethnic and religious fault lines for seeking personal and partisan advantage, we need to build bridges across the different divides and instil faith in the unity and indivisibility of one Nigeria.”

He also appealed to state governments to be a strong pillar of support for anti-corruption agenda, as well as continued support for the programmes of social protection, school feeding programme and other policies geared towards human capital development.

“Going forward, we must all work towards building a socially cohesive society in which the

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resources of the country work for all.

“We will continue to apply public funds in such a way that no section of the country or segment of the population suffers social exclusion,” he said.

The President while also acknowledging that Nigeria is on a renewed growth trajectory, assured that his administration would do everything within its powers to sustain the current economic recovery efforts.

“We will continue to reinforce our macroeconomic policies to achieve sustainable economic stability and growth,” Buhari promised.

“We will also continue to ensure that growth comes along with more jobs and a fair and just distribution of the national wealth. Your continued cooperation in this regard is very vital.”

Recounting how the APC was formed, Buhari noted that while the “South-East and South @Businessdayng

South were facing strong challenges, it was easier to woo the South West because it was more united.”

The President and the other recipients were presented with the awards at the banquet hall of the Presidential Villa, Abuja.

Chairman of the Progressive Governors Forum, organisers of the event, Governor Rochas Okorocha of Imo State, at the pre-event briefing, noted, “Buhari deserves the award for uniting the party stalwarts.

“We are gathered for the love of our country, for admiration of an exalted captain in the person of President Muhammadu Buhari. We are here gathered for patriotic devotion of a leadership we consider visionary for which we are well pleased.”

He described them as the “founding fathers of our great party during the merging period especially, the progressive governors, eight of them remaining.

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PHOTOSPLASH BusinessDay Top 25 CEOs and Next Bulls Awards 2019

L-R: Oscar Onyema, CEO, Nigerian Stock Exchange (NSE), presenting Top 25 CEOs Award to Herbert Wigwe, GMD/CEO, Access Bank plc. With them is Frank Aigbogun, publisher/CEO, BusinessDay.

L-R: Oscar Onyema, CEO, NSE; Edwin Igbiti, MD/CEO, AIICO Insurance plc, receiving Top 25 CEOs Award from Frank Aigbogun, publisher/CEO, BusinessDay.

L-R: Oscar Onyema; Gazie Decker, general manager, marketing, CAP plc, receiving Top 25 CEOs Award on behalf of Omolara Elemide, CEO, CAP plc, and  Frank Aigbogun.

L-R: Oscar Onyema, presenting the Next Bulls Award to Segun Onasanya, MD/CEO, Airtel Nigeria, and Frank Aigbogun.

L-R: Oscar Onyema, presenting the Next Bull Award to Theo Williams, country manager, AJE Group PTY Nigeria, and Frank Aigbogun.

L-R: Oscar Onyema, presenting the Next Bull Award to Femi Akintunde, GMD/CEO, Alpha Mead Group.

L-R: Oscar Onyema, presenting the Next Bull Award to Onyeka Akumah, co-founder, Farmcrowdy Limited, and Frank Aigbogun.

L-R: Oscar Onyema, presenting the Next Bull Award to Wale Olaoye, GMD/CEO, Halogen Security Company Limited, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Top 25 CEOs Award to Ladi Balogun, group CEO, FCMB Group Plc, and Frank Aigbogun.

L-R: Oscar Onyema; Odamah Momoh, deputy general manager, NEM Insurance plc, receiving Top 25 CEOs Award on behalf of Tope Smart, GMD/CEO, NEM Insurance plc, from Frank Aigbogun.

L-R: Oscar Onyema, presenting the Next Bulls Award to Dona Okeke, representing Innocent Chukwuma, executive chairman, Innoson Group, and Frank Aigbogun.

L-R: Oscar Onyema; Chantelle Abdul, GMD, Mojec International, receiving the Next Bulls Award; Mojisola Abdul, chairman, Mojec International, and Frank Aigbogun.

L-R: Oscar Onyema; Adeyinka Adesope, GMD/CEO, Palton Morgan Holdings, receiving the Next Bulls Award; Semira Oguntoyinbo, executive director, Palton Morgan Holdings, and Frank Aigbogun.

L-R: Oscar Onyema; Niyi Toluwalope, MD, eTranzact International plc, receiving Best Turnaround and Transformation at the NSE/Top 25 CEOs Award from Frank Aigbogun.

L-R: Oscar Onyema; Amaechi Okobi, group head, corporate communications, Access Bank plc, receiving Best Communications on the NSE, and Frank Aigbogun.

Pictures by Olawale Amoo

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Monday 13 May 2019

BUSINESS DAY

PHOTOSPLASH

53

PHOTOSPLASH

BusinessDay Top 25 CEOs and Next Bulls Awards 2019

L-R: Oscar Onyema, presenting Top 25 CEOs Award to Balla Swamy, MD/CEO, Prestige Assurance plc, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Top 25 CEO Award to Demola Sogunle, chief executive, Stanbic IBTC Bank, on behalf of Yinka Sanni, chief executive, Stanbic IBTC Holdings plc, and Frank Aigbogun.

L-R: Oscar Onyema; Tunde Coker, MD/CEO, Rack Centre, receiving Next Bulls Award from Frank Aigbogun.

L-R: Oscar Onyema, presenting Next Bull Award to John Obaro, MD/CEO, SystemSpec Limited, and Frank Aigbogun.

L-R: Oscar Onyema; Justina Lewa, company secretary, Sterling Bank plc; Mojisola Bakare, general manager, corporate banking, Sterling Bank, receiving Top 25 CEOs Award on behalf of Abubakar Suleiman, MD/CEO, Sterling Bank, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Top 25 CEOs Award to Jide Omole, regional executive, Lagos, Wema Bank plc, on behalf of Ademola Adebise, MD/CEO, Wema Bank, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Next Bulls Award to Pawan Sharma, CEO, Tolaram Group, and Frank Aigbogun.

L-R: Oscar Onyema; Francis Olorunfemi, general manager, Urban Shelter Limited, receiving the Next Bulls Award on behalf of Saadiaya Aminu, MD/CEO, from Frank Aigbogun

L-R: Oscar Onyema; Okanlawon Adelagun, executive director, technical, Linkage Assurance plc, receiving Top 25 CEOs Award on behalf of Daniel Braie, MD/CEO; Anthony Saki, head, oil and gas, Linkage Assurance, and Frank Aigbogun.

L-R: Oscar Onyema; Oluwole Oshin, MD/CEO, Custodian Investment plc, receiving Top 25 CEOs Award from Frank Aigbogun.

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L-R: Oscar Onyema, presenting Next Bull Award to Kofo Akinkugbe, MD/CEO, Secure ID; Francis Ebuchi, director, sales and marketing, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Next Bull Award to Arjan Mirchandani, chairman, Sona Group Nigeria Limited, and Frank Aigbogun.

L-R: Oscar Onyema; Ebenezer Kolawole, executive director/finance and operations, Unity Bank plc, receiving the Top 25 CEOs Award on behalf of Oluwatomi Somefun, MD/CEO, from Frank Aigbogun.

L-R: Oscar Onyema, presenting Top 25 CEOs Award to Ajayi Olakunle, head, accounting and reporting, Fidson Healthcare plc, on behalf of Fidelis Ayebae, MD/CEO, and Frank Aigbogun.

L-R: Oscar Onyema; Gbenga Omolokun of VFD receiving the Next Bulls Award on behalf of Niyi Adenubo, MD/CEO, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Next Bulls Award to Mahendra Kumar Vaidh, COO, WACOT Limited, on behalf of Ujwalkanta Senapati, MD/CEO, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Next Bulls Award to Dave Ibelegbu, on behalf of Leo Stan Ekeh, chairman/CEO, Zinox Technologies Limited, and Frank Aigbogun.

L-R: Oscar Onyema, presenting Top 25 CEOs Award to Nnamdi Obiagwu, general manager, Eterna plc, on behalf of Mahmud Tukur, MD/CEO, Eterna plc, and Frank Aigbogun. Â

L-R: Oscar Onyema; Abayomi Awobokun, director/CEO, Enyo Retail & Supply Limited, receiving the Next Bull Award from Frank Aigbogun.

L-R: Oscar Onyema; Akinwunmi Lawal, MD/CEO, NPF Microfinance Bank plc, receiving Top 25 CEOs Award from Frank Aigbogun.

Pictures by Olawale Amoo

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Monday 13 May 2019

BUSINESS DAY

PHOTOSPLASH BusinessDay Top 25 CEOs and Next Bulls Awards 2019

Frank Aigbogun, publisher/CEO, BusinessDay, giving his opening remarks.

Oscar Onyema, CEO, Nigerian Stock Exchange, giving his goodwill message.

L-R: Veronica Onoja, customer service director; Bunmi Abejirin, head, customer experience, and Nike Yeye, commercial controller, all of Airtel Nigeria.

L-R: Famuyiwa Eki, head, agency, Grenadines Homes Limited; Fernando Barreto, group chief operating officer, Palton Morgan Holdings, and Fasunwon Deji, head, legal, Palton Morgan Holdings.

L-R: Dalu Ajene, deputy managing director/head, investment banking, Rand Merchant Bank Nigeria; Yomi Awobokun, director/CEO, Enyo Retails and Supply, and Ladi Balogun, group CEO, FCMB Group plc.

L-R: Tunde Coker, MD/CEO, Rack Centre, and Hakeem Adeniji-Adele, deputy managing director/executive director, e-Tranzact.

L-R: Chioma Okolie, head, CSR; Seun Solanke, IT director, and Emeka Oparah, corporate communications director, all of Airtel Nigeria.

L-R: Meher Melwani, business development, Priya Amarnani; Tajudeen Ahmed, GM/group head, business development, BUA Group, and Wale Ajayi, partner, KPMG.

L-R: Dada Thomas, chairman, Alpha Mead; Femi Akintunde, GMD, Alpha Mead, and detoun Akintunde, his wife.

R-L: Michael, Olawole-Cole, past president, NIM; Arjan Mirchandani, chairman, Sona Group of Industries, and Ashok Manghani, group chief operating officer, Sona Group of Industries.

Theo Williams, past MD, AJE Nigeria, and Ali Ghaze, owner of Colimex Engineering.

L-R: Wale Adeagbo, chief operating officer, Academy Halogen; Omolara Idowu, managing partner, Explicit Pro Limited, and Kola Idowu, chief finance officer, Halogen Group.

L-R: Abayomi Agiri, head of directorate/HR and strategy, Custodian and Allied Insurance Limited; Olubunmi Aderemi, head, management services directorate, Custodian and Allied Plc, and Austin Akpe, MD, Custodian Trustees Limited.

L-R: Jimi Awosika, vice chairman, Troyka Holdings; Wale Olaoye, CEO, Halogen Group, and Abiola Ojo-Osagie, MD, AfricInvest Nigeria.

L-R: Wole Olufore, MD, Alpha Mead Facilities; Wale Odufalu, group executive director, corporate services, Alpha Mead Facilities, and Babatunde Green, MD, Alpha Mead.

L-R: Toye Odunsi, MD, Custodian and Allied Investment Limited; Wole Oshin, GMD, Custodian Investment plc, and Wole Abegunde, GMD, Meristem Group.

L-R: Henry David, chief technology officer; Ifeanyi Chukwuekem, business analyst, and Femi Aminu, chief risk officer, all of e-Tranzact.

Pictures by David Apara

Monday 13 May 2019

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NEWS

SEL Capital deepens expansion drive … mulls merchant banking licence

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o nation can thrive without giving needed policy and financial backing to Small and Medium Enterprises (SMEs), says Segun Opaleye, managing director/CEO, SEL Capital Limited, while speaking at the opening of the new company’s head office in Victoria Island, Lagos.

To this end, SEL Capital has expanded its operations to provide more funding and financial advisory services to SMEs and investment advice to high net-worth individuals (HNIs).

Opaleye states that the expansion plan will enable the company translate to a merchant bank within the next three years.

The company, which aspires to be the gateway and catalyst for mobilising capital for business growth and development across Africa, opens the new office to enable it reach out to more customers.

According to Opaleye, SEL Capital provides advisory services to SMEs on building a growth company, funding opportunities, expansion and structure for easy access to capital.

“We take so much time in guiding SMEs through key requirements to run a proper business. The issue

around SMEs that impact negatively on their ability to access funding is poor corporate governance practices and we are helping them to resolve that by creating business-enabling structure for their businesses,” he says.

The company also provides investment advisory services to HNIs, who already understand some of the market dynamics but needed guidance to make better investment decisions.

On the expansion plan, he says the company started operation last year from its office at Parkview Estate, Ikoyi, Lagos, adding that the new head office is within its plan for a bigger and befitting space to get it ready for business.

“The whole idea is to increase our clientele base. We have also in the short period, been very instrumental in capital raising for key clients and secured funding projects in key growth sector of the economy. We just concluded a $12 million funding for a captive power plant project for a client,” he notes.

As part of its company’s plan to support SMEs and promote financial inclusion, he notes the company is finalising plan to float a N2 billion SME Fund. “True to our value, we are offering

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innovative and reliable solutions to promote and deepen financial inclusion,” he says.

“We are planning to conclude on tranche one of N1 billion by third quarter of this year. The whole idea is for us to support SMEs more. For any Central Bank of Nigeria (CBN)-licensed financial institution, all we are doing is intermediation. We believe that given our experience within the space, we should be able to deepen the market and provide financial support for the SMEs to grow their businesses,” he states.

The institution’s plan is to within three years, translate to a merchant bank, where it can support its clients and customers with bigger balance sheets.

“So, some of the things we are doing today are actually geared towards ensuring that we can easily move into the merchant banking segment of the market, which is our end game. We believe that with the support of our customers and other key stakeholders, we are on track to achieve this goal. It is a tough order for ourselves but if you see what we have done in the last one year, everything is geared towards that goal and we believe we can achieve it,” he says.

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Monday 13 May 2019

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Monday 13 May 2019

FT

BUSINESS DAY

59

FINANCIAL TIMES

World Business Newspaper

Pressure mounts on Theresa May to quit as Tory support collapses Opinion polls indicate further surge in support for Farage’s Brexit party SEBASTIAN PAYNE

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heresa May is coming under increasing pressure to quit as prime minister as new surveys highlighted the scale of the threat to the Conservatives of the new Brexit party, both in this month’s European Parliament poll and a possible general election.

Ministers admitted on Sunday the European Parliament elections on May 23 would be difficult for the Tories, with some Conservatives privately predicting a meltdown because of a surge in support for Nigel Farage’s Brexit party.

Mrs May will on Thursday meet the executive of the Tories’ 1922 committee of backbench MPs, when she is expected to face fresh pressure to name a departure date.

If she does not provide clarity, the committee may seek to change its rule book to allow MPs to force a Tory leadership election sooner than the current permitted date of December 12.

A substantial number of Conservative MPs and activists want Mrs May to make way for a new leader quickly because of her failure to get her Brexit deal approved by the House of Commons.

The prime minister has only said she will step down once her deal is passed by parliament, and MPs’ rejection of the EU withdrawal agreement has forced Brexit to

be delayed from March 29 to as late as October 31.

One of the Conservative party’s candidates for the European Parliament elections described the mood on the campaign trail as “absolutely terrible”, saying “the problem is the PM personally. Not her deal or her policies — her”.

“If she stands aside this week — that is, if the succession is already formally under way by polling day — there may be something for her successor to salvage. If not, we are looking at the end of the Conservative party.”

Two opinion polls on Sunday suggested the Brexit party is set to come first in the European elections.

An Opinium survey for the Observer found that 34 per cent of people intend to vote for Mr Farage’s party, with Labour on 21 per cent, the Liberal Democrats on 12 and the Conservatives trailing in fourth place on 11 per cent.

A ComRes poll put the Brexit party on 27 per cent, with Labour on 25, the Lib Dems on 14 and the Tories on 13.

This survey — commissioned

by Brexit Express, a pro-Leave organisation — also asked people about their voting intentions in a general election, finding that Labour was on 27 per cent, the Brexit party on 20 per cent and the Conservatives on 19 per cent.

The local elections on May 2

Pro-EU cheerleading reflects alarm over nationalism and threat to single market

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erman business leaders are appealing to voters to resist populist parties in this month’s European elections, in an unusual intervention that reflects alarm about the rise of nationalism and the threat it poses to the EU’s single market.

In an interview with the Financial Times, Paul Achleitner, chairman of Deutsche Bank, said civil society had to “fight back against those who are promising easy, populist answers” which are aimed at “marginalising certain social groups”.

“Europe’s diversity and cultural pluralism is the continent’s big advantage relative to China and North America,” he said. “We must not be tolerant towards intolerance.”

A similar call came from the German banking association, which said it strongly opposed “nationalist tendencies, isolationism and protectionism” and supported “proEuropean parties that want to lead Europe towards a successful future”.

“Let’s all try to prevent protectionist and populist tendencies getting stronger,” said a pre-election social media campaign signed by the bosses of Germany’s leading banks, including Martin Zielke of Commerzbank and Christian Sewing of Deutsche.

The pro-EU cheerleading is taking many forms. Deutsche Bahn is lighting up Berlin’s central railway station in the colours of the EU flag while Lufthansa is branding one of its Airbuses with the slogan “Say yes to Europe”, in

EU is their number one priority above all else,” added the MP. “They’re mostly Conservative voters and they easily represent a quarter of the electorate.”

Damian Hinds, education secretary, said no one was in any doubt that the European elections would be “difficult” for the Tories.

“For some people this is the ultimate protest vote opportunity,” he told the BBC. “Actually, ironically this is, in a sense, for

some people, this is the second referendum.”

Robert Buckland, justice minister, said that while “nobody wanted” the European Parliament elections, it would be seen as a “giant opinion poll as to the merits of Brexit”.

Another minister said: “The door knocking I was doing in the run-up to local elections reinforces the [polling] numbers. People are really really angry.

Washington is preparing new tariffs after alleging that Beijing “reneged”

big letters on its fuselage. “Our Europe needs your vote,” said Lufthansa chief executive Carsten Spohr.

So far the messaging appears to be having little effect. Polls suggest that the EU elections will see the main centre-right and centre-left parties lose ground while Eurosceptic groups from across the continent will see gains.

Among them is the rightwing Alternative for Germany, which rose to prominence as part of a backlash against Angela Merkel’s liberal asylum policy and is now represented in all 16 of Germany’s regional parliaments.

The AfD is currently on 12 per cent in opinion polls: in the last European election in 2014 the party garnered only 7 per cent of the vote.

German industry, which has been one of the biggest beneficiaries of the euro and the EU single market, has watched the populist onslaught on EU institutions with growing dismay.

It is also deeply worried about Brexit, and the impact it could have on supply chains, particularly those of German carmakers with operations in the UK. One reason for industry’s concern is a fear that the growing strength of the AfD could lead to restrictions on immigration, at a time when falling birth rates and a shortage of skilled labour is making Germany increasingly reliant on a steady flow of foreign workers. A recent study by the IAB think-tank found the German economy requires at least 260,000 immigrant workers a year by 2060 to make up for the negative demographic trends in the German labour market. www.businessday.ng

increased the pressure on Mrs May after the Tories lost more than 1,000 seats: the party’s worst performance in over 20 years.

One senior Conservative MP said “the pressure will be overwhelming” for Mrs May to resign after the European Parliament elections.

“The Euro elections matter more than the local elections because they will show us the number of people for whom leaving the

China’s Liu He denies backtracking on trade agreements with the US

German business leaders urge voters to resist populists GUY CHAZAN AND OLAF STORBECK

Theresa May is expected to face fresh pressure to name a departure date on Thursday when she meets the executive of the Tories’ 1922 committee of backbench MPs © Michal Wachucik/Getty Images

CHRISTIAN SHEPHERD, TOM MITCHELL, NIAN LIU, JAMES POLITI AND DEMETRI SEVASTOPULO

C

hinese vice premier Liu He has denied that China backtracked on agreements made in trade negotiations with the United States, in Beijing’s first detailed response to Washington’s allegation that changes to negotiation texts prompted President Donald Trump to call for additional tariffs on Chinese goods.

Over recent months both sides believed they were nearing a draft agreement that might be concluded as soon as this week. But Mr Trump, who had insisted since late January that the negotiations were proceeding smoothly, changed his tune last week as he alleged Mr Liu’s team was seeking to “renegotiate” terms of the evolving deal.

On Friday, Mr Trump ordered a sharp rise in the punitive tariff rate currently imposed on about $200bn worth of Chinese imports, from 10 per cent to 25 per cent.

He also moved closer to imposing tariffs on all imports from China after talks between Mr Liu and US officials in Washington failed to find a last-minute resolution.

Robert Lighthizer, the US trade representative, said Mr Trump had told him to start preparations for imposing tariffs on the roughly $300bn in Chinese goods that are currently not subject to tariffs. “[The president] ordered us

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to begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300bn,” he said in a statement. “Details will be on the USTR website on Monday as we begin the process prior to a final decision on these tariffs.”

The Chinese government said last week that it would respond to Mr Trump’s move with new tariffs of its own but has so far been relatively calm in its response, as it believes a deal could still be within reach.

Mr Liu told Chinese media at the weekend there had not been a breakdown in talks and that China had not “reneged” on the deals, claiming that the two sides were still in the process of exchanging draft agreements when Mr Trump threatened higher tariffs.

“We believe that before an agreement is reached, any change is very natural,” he said, according to Hong Kong-based Phoenix Media. “We did not backtrack. We had disagreements over how to write some of the text is all.”

China wants a deal “premised on equality and dignity”, Mr Liu said, adding that the remaining differences were “matters of principle” over which China could not make concessions.

On Saturday evening, however, Mr Trump taunted Beijing’s negotiators. “I think that China felt they were being beaten so badly in the recent negotiation that they might as well wait around for the next @Businessdayng

[US presidential] election, 2020, to see if they could get lucky and have a Democrat win,” the president said. “The deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now.”

The higher US duties imposed on Friday will only apply to Chinese goods shipped from Friday onwards — and not on products already en route to or in US ports.

China has yet to announce counter measures.

As most merchandise trade between the world’s two largest economies is transported across the Pacific by ship, that gives both sides several weeks to negotiate a settlement before the tariffs kick in. The two sides concluded their 11th formal round of trade talks in Washington on Friday.

China believes the tariffs are the “starting point” of the trade dispute and must be fully removed before a deal can be reached, Mr Liu told Phoenix.

“The Chinese are showing remarkable restraint and an eagerness to stay engaged in talks despite harsh words from the US,” said Eswar Prasad, a professor at Cornell University and former head of the International Monetary Fund’s China division.

China, which imports far less from the US than the US does from China, has imposed tariffs of its own on almost all US imports, with most of the impact felt by American farmers and energy exporters.

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Monday 13 May 2019

NATIONAL NEWS

Shareholder revolt puts spotlight on Rio’s Oyu Tolgoi mine SailingStone to vote against management overseeing $5.3bn Mongolian copper project NEIL HUME

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io Tinto’s giant copper project in Mongolia’s Gobi Desert will be in the spotlight this week when a long-running spat with a dissident shareholder comes to a head in Canada.

Oyu Tolgoi is one of Rio’s most important growth assets. The AngloAustralian company is overseeing construction of a $5.3bn underground project aimed at lifting output to 550,000 tonnes of copper per year.

When finished it will make Oyu Tolgoi the world’s third-largest source of copper, an industrial metal tipped to be in ever-greater demand as the green energy revolution takes hold.

However, the project has run into technical problems and first sustainable production from the vast underground deposit is not expected until around 2022, a year later than originally envisaged.

While Rio operates the mine it does not have a direct shareholding. Oyu Tolgoi is in fact 66 per cent owned by Turquoise Hill Resources and 34 per cent by the Mongolian government.

Rio in turns own a controlling 50.8 per cent stake in Toronto-listed Turquoise Hill, which has seen its market value halve over the past year to $2.9bn.

At Tuesday’s annual shareholder meeting, SailingStone Capital

Partners is planning against the re-election of Turquoise Hill’s four independent directors, which it said have been handpicked by Rio and are not acting in the interest of all shareholders.

“After five years of engagement, we simply do not believe that they are acting in our best interests, and therefore no longer deserve our support,” said SailingStone, which owns a 10.9 per cent stake in Turquoise Hill. It wants minority shareholders to have a direct say in the appointment of one independent director to the board.

“Rio Tinto has a 50.8 per cent stake but apparently 100 per cent of the rights associated with being an owner. We don’t believe that this arrangement achieves even minimum corporate governance standards.”

SailingStone said the primary headwind for Turquoise Hill’s poor stock performance has been corporate governance.

The fund also said that attempts to portray the delays at Oyu Tolgoi as being related to “ground conditions” are only part of the story, and Rio’s management of the project has also been a “critical factor”.

“These are not geotechnical issues — these are project management shortcomings,” said SailingStone, citing a statement issued in February by Turquoise Hill that blamed delays sinking a key shaft on “structural, mechanical, piping and electrical installation productivity”.

Metro Bank explores sale of loans hit by accounting error Upstart UK lender draws up plans to sell more than a billion pounds worth of loans NICHOLAS MEGAW

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etro Bank has drawn up plans to sell more than a billion pounds worth of loans at the centre of a misreporting scandal that caused its share price to plunge and forced it into a rights issue.

The move would be a significant reversal of strategy for the former darling of Britain’s challenger banks, which won admiration from investors for its rapid growth but changed its approach after the discovery of an embarrassing accounting error.

At the start of this year, the upstart lender was found by regulators to have miscalculated its risk-weighted asset tally and overreported its capital ratios as a result.

Craig Donaldson, chief executive, told the Financial Times: “Two of our asset classes saw the risk-weighted assets held against them go up, therefore return on equity went down; one of the ways we could address that would be to securitise them or sell the book.”

The bank has discussed the idea of a sale with investors, but Mr Donaldson stressed that it had not made a final decision on what to do with the loans, which amount to more than 10 per cent of its total loan book.

The accounting error involved large numbers of commercial property and professional buy-to-let loans.

Because of the mistake, Metro found it did not have as much capital against them as it should have done.

Metro had a total of £4.1bn of commercial and buy-to-let loans at the end of 2018, of which about £1.7bn was directly affected by the risk-weighting changes. Its total loan book grew 38 per cent to £15.2bn in the year to the end of March.

The bank had already said it would cut back on new lending in the affected sectors. But Mr Donaldson’s latest comments, made after the impact of the mistake became clear in its first-quarter results, are the first time the bank has acknowledged it may also offload a sizeable chunk of its existing assets.

Metro’s common equity tier one ratio, a key measure of balance sheet strength, was 12.1 per cent at the end of March, down from 13.1 per cent at the end of 2018 and barely above its self-imposed minimum level of 12 per cent.

The bank is already looking to top up its capital levels with a £350m share placement. In a statement on Saturday evening, the bank said it was in “final discussions” with investors, and dismissed speculation that it had struggled to win support for the deal. However, some analysts believe it would need further capital injections in the near future if it is to meet growth targets. www.businessday.ng

Putting on a brave face: China vice-premier Liu He (L) says goodbye to US trade representative Robert Lighthizer (R) after trade talks between the two countries at the offices of the US Trade Representative in Washington on Friday

US trade hawks flying high in battle with China Trump’s tough stance is a warning to America’s other trading partners JAMES POLITI

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ours after Donald Trump ramped up trade tensions with China by inflicting higher tariffs on the country’s imports, Lou Dobbs, the conservative Fox Business Network anchor, led his evening broadcast by showering praise on the move.

“For far too long communist China has been cheating the United States on trade,” he said. “President Trump has made it clear: the failure of previous presidents to aggressively represent US interests in foreign policy and economic policy has ended, and president Trump made believers out of the Chinese today,” he added.

Mr Dobbs is one of Mr Trump’s favourite pundits because of his hardline views on trade and immigration, and his predilection for conspiracy theories. His satisfaction with the president’s stance on trade reflects the glee among hawks in Washington at the direction of the negotiations with Beijing, even as the stand-off has sounded alarm bells for the global economy.

For weeks, many American proponents of a tougher line with China feared that Mr Trump might settle for a markets-soothing compromise that would resolve few of the longstanding

problems in the bilateral trade relationship. In addition, they lamented that Mr Trump had given up significant leverage by failing to move to higher tariffs on Chinese imports earlier this year, as originally planned.

But last week some of those doubts were swept away. The Trump administration accused China of reneging on its commitments, moved to raise tariffs on $200bn of Chinese imports within five days, and set in motion a process to impose levies on all remaining Chinese imports, worth a further $300bn.

The White House seems to have fully embraced the idea of China as an economic predator which will only change its behaviour if maximum pressure is applied, dismissing the potential damage to US consumers and businesses.

US officials who had been more amenable to compromise with Beijing, including Larry Kudlow, director of the National Economic Council, and Steven Mnuchin, US Treasury Secretary, have now backed a far more confrontational approach advocated by Robert Lighthizer, the US trade representative and Peter Navarro, the White House adviser on manufacturing.

“Some in the Trump administration hoped for altruism from Beijing.

But President Xi [Jinping] has now turned the trade ‘doves’ against him

by once again reversing past promises.

And he underestimated the resolve of President Trump,” Michael Stumo, chief executive of the Coalition for a Prosperous America, a group representing manufacturers and unions sceptical of international trade, wrote in an article on its website this week.

The shift has not only plunged the US negotiations with China into uncharted waters, but could be a warning for America’s other trading partners that Mr Trump may yet turn against them too.

In particular, it could raise concerns in the EU and Japan that Washington might impose tariffs on automotive imports, and in Canada and Mexico that Mr Trump could move to withdraw from the Nafta trade agreement unless the US Congress speeds up efforts to ratify the USMCA, its replacement signed last year by Mr Trump. That deal is stalled on Capitol Hill amid resistance from Democrats. “These events could be a turning point, or they may just lead to more of the same.

But the facts are what they are. For all of President Trump’s rhetoric about deals, to date his only real policy has been to shut down trade. After all of this, his end game may just be tariffs,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

South Africa has given the ANC one last chance President Ramaphosa must change both his nation and his party

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yril Ramaphosa is a complex and formidable figure. That is just as well. The problems he faces as South Africa’s president are complex and formidable, too. Not only must he rescue his own party from the depths into which it fell during the years of his morally bankrupt predecessor, Jacob Zuma. He must also tackle the social and economic ills that his African National Congress inherited from the apartheid system 25 years ago — problems it has done too little to address.

Mr Ramaphosa has been president of the ANC since December 2017 and of South Africa since last February. But this week’s election marks a watershed. Now the South African people have given him their vote, albeit indirectly via a parliamentary system and albeit with a lower majority than any of his predecessors. Still, he must use what

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added legitimacy he has to be bold and to root out enemies of progress, especially within his own party.

With more than 90 per cent of voting districts counted on Friday, the ANC had nearly 58 per cent of the vote. That is quite a fall from grace.

Never has the ANC vote dropped below 60 per cent in a national election in the 25 years since the end of apartheid. Without Mr Ramaphosa, it would almost certainly have fared worse. The former union leader and successful businessman, who was Nelson Mandela’s preferred choice to succeed him as president, consistently outpolls a party whose standing with the electorate is at an all-time low.

Fortunately for the ANC, the main opposition parties are in almost as bad a shape. The Democratic Alliance has struggled to shake off its reputation as a “white” party and has been beset by @Businessdayng

infighting of its own. The Economic Freedom Fighters, an ANC breakaway led by the radical Julius Malema, has increased its vote to about 10 per cent.

But, with Mr Zuma gone and the ANC co-opting its policy of land expropriation, it has lost some steam.

To the extent that Mr Ramaphosa has a mandate, what is he to do with it? First, he must clean house. The president himself has admitted that his party has been “captured” by corrupt forces. In a televised commission of inquiry, the nation heard lurid tales of how shady business interests influenced government policy, the award of contracts and even cabinet appointments through bags of money. The problem is not bad apples. The ANC barrel is rotten. Mr Ramaphosa needs to make examples of the worst offenders by sacking them. He also needs to empower state prosecutors and investigators to pursue convictions.

Monday 13 May 2019

BUSINESS DAY

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COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Changing the German growth model will not be easy The world champion of the analogue age is struggling with digitalisation WOLFGANG MÜNCHAU

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mmanuel Macron made a revealing comment on the sidelines of the recent Western Balkan summit in Berlin last month.

The French president said: “The German growth model has perhaps run its course”. I think this is quite an extraordinary statement coming from a French president. It shows that he must have reflected on this issue for quite some time. And it shows that thegreat love affair with Germany is over. We are clearly entering a different phase in the Franco-German relationship.

The demise of the German growth model would not be necessarily a calamity. If all goes well, the slow erosion of German ubercompetitiveness could even be the fortuitous accident that triggers economic convergence in the eurozone. But on a continent where not everything goes well all of the time, it could pan out rather differently.

The German model has two interacting components — technological and macroeconomic. Germany is benefiting from the great inventions of the past, and managed to maintain market leadership in many specialised engineering disciplines. It has been a successful industrial strategy for a long time. Germany supported its model with an elaborate infrastructure: from skills-based, technical training to high-tech, applied research institutes, and industryfriendly government policies. Do not think for a minute that the lack of a speed limit on autobahns is simply a voter preference.

I would discourage readers from predicting the demise of the German growth model lightheartedly. One needs to appreciate both its past

successes and the specific problems it now faces. It is rooted in inventions that proved economically persistent.

We have seen successive generations of smartphone-makers come and go, but Mercedes is still selling the fueldriven car Karl Benz first patented in 1886.

What gave German industry another lease of life was how globalisation increased demand for German machinery and how it led to integrated global supply chains. I admit I did not see the supply-chain effect when I predicted the demise of the German economic model over a decade ago.

New trends may intrude that would extend the lifespan of the growth model further. But Mr Macron is ultimately right. It is going to end — “perhaps”, as he wisely added.

The reason to expect this development is that the world champion of the analogue age is struggling with digitalisation. The German car industry is now trying to catch up with the technology of electric batteries, where the knowhow resides in the US and China. Germany is also trying to catch up in the research on driverless cars. On many levels, it has failed to make the transition to the 21st century. Of the ten most valued German brands, SAP, the software company, is both the highest rated and the youngest — if you exclude Deutsche Telekom. SAP was founded in 1972.

The last big industrial success story is almost half a century old.

As industrial exports decline, so should Germany’s excessive current account surplus. But Germany may well compensate by cutting wages or increasing the fiscal surplus. It is already on course to over-fulfil the eurozone’s fiscal target to reduce public sector debt to 60 per cent of gross domestic product.

Finnair’s ‘little Brexit bet’ shows confidence in UK economy

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innair has made “a little Brexit bet” by increasing flights to the UK, the airline’s new chief executive has said, as part of a wider push to compete with Chinese carriers on routes that link Europe and Asia.

Topi Manner, who took charge in January, told the Financial Times the airline had added a daily return flight between London and Helsinki, taking its total to six. It has also introduced a larger twin-aisle plane on one of its return flights, lifting the number of seats by 20 per cent across all flights on that route.

“If I look at the UK market, London is one of our fastest-growing origins . . . We believe in the UK market,” Mr Manner said. This growth, he added, was not specifically because of Brexit but reflected a confidence in Britain’s underlying economy.

Half of Finnair’s revenues come from passengers transferring to Asia. Mr Manner said he wanted to use Helsinki’s favourable position as a hub to connect

Europe and Asia, in the fashion of global “superconnectors” Emirates and Qatar Airways in the Middle East. He called Finnair a “snow” connector, unlike the “sand companies of the Gulf”.

The airline, which is 56 per cent owned by the Finnish state, reported a pre-tax loss of €48.5m in the first three months of 2019, compared with a pretax profit of €16.8m in the same period the year before.

Mr Manner said the loss was “pretty much according to our expectations” and in part driven by investing in technology, as well as the rising price of jet fuel and unfavourable currency movements. These last two factors have been dragging down European airlines’ recent results.

While he said the company was adhering to its full-year guidance, he conceded that “we see Chinese carriers adding capacity to European routes” in line with local demand, which was pushing down airfares, adding that the competition from China was “noteworthy”. www.businessday.ng

The Fed grapples with low inflation and trade wars Markets expect rates to be cut but the FOMC may not agree GAVYN DAVIES

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he Federal Reserve chairman surprised the markets in his latest press conference on 1 May when he withdrew a significant part of the dovish rhetoric that has supported risk assets since early January.

Jay Powell’s main messages that day were that downside risks to the economy stemming from foreign economic events, notably in China, had diminished, and that recent low prints for core inflation were only temporary. Under repeated questioning, he refused to give any indication that a reduction in interest rates was even remotely under discussion.

Despite this, market sentiment remains extremely open to the possibility that the Fed’s next move will be to cut rates. In the latest Wall Street Journal survey of US economic forecasters, there is a small majority that believe the next move will be downwards and will occur before the end of this year.

Furthermore, futures prices in

the Fed funds market show policy rates around 0.5 per cent lower by the end of 2020, which is 0.9 per cent below the median “dot” contained in the Federal Open Market Committee’s latest projections.

It, therefore, seems that the Fed’s cautionary tone about the next move in policy rates is not fully accepted by the markets. Why not?

There are two main factors influencing market sentiment: fears about the renewal of trade wars, and low incoming inflation data, relative to the developing framework for the Fed’s inflation target.

The impact of new US tariffs President Trump’s decision to increase the tariff levied on $200bn of Chinese imports from 10 per cent to 25 per cent is now being implemented. A further threat to impose tariffs on the remaining $325bn of imports, at 10-25 per cent, remains in the wings, and will take two to three months to implement.

The Fed’s initial reaction to this news is likely to be cautious and guarded. In recent speeches and

minutes, the FOMC leadership has argued that the direct economic impact of the tariffs announced so far has not been very great. In particular, they have never pointed to the possible inflationary consequences of higher tariffs as a reason for changing monetary policy.

On growth, they have suggested that the direct impact on trade flows may be modest, but have warned about possible hits to business confidence, implying that a larger growth impact may become visible over a few quarters.

Independent estimates of the impact of all the additional tariffs under consideration tend to be bunched around an impact of about -0.4 per cent to US GDP, spread over two years, with an addition to US inflation of about 0.2-0.4 per cent over that period.

The impact on Chinese GDP is usually shown to be two to three times larger than that in the US, without making allowance for adverse effects on business and consumer confidence, or any offsetting easing in macro policy.

Software and data group Ion buys Acuris in £1.35bn deal

Sixth London-Helsinki daily flight part of wider bid to connect Europe and Asia JOSH SPERO

The decline of Germany’s economic model casts uncertainty over the future relationship between chancellor Angela Merkel and French president Emmanuel Macron © Kay Nietfeld/dpa

Private equity group BC Partners agrees to sell the owner of financial information service Mergermarket JAVIER ESPINOZA AND PHILIP STAFFORD

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rivate equity group BC Partners has agreed to sell the owner of financial information service Mergermarket to Ion Group in a £1.35bn deal, three people with direct knowledge of the transaction said.

BC Partners bought Mergermarket for £382m in 2013 from Pearson, then owner of the Financial Times.

The sale of Acuris, as the business is now known, will extend the expansion of Ion, a financial software and data business, into trading and cash management tools, data and analytics for capital markets.

Acuris has grown partly through a series of acquisitions. Companies House filings show Acuris’s pre-tax profit was £23m in 2017, up from £22m a year earlier and £15.8m in 2015.Ion emerged as the

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successful bidder last week, ahead of competing interest from trade buyers, including Fitch Ratings and Moody’s, and other private equity groups, including Advent International and EQT. The Dublin-based group is looking to offer trading and back office processing systems to banks and fund managers, who often spend millions updating their in-house IT every year, to little competitive advantage.

Ion has grown through acquisitions since 2005, buying 20 companies with an enterprise value of about £7bn. Among the deals, were a stake in data provider Dealogic, while the £1.5bn purchase of Fidessa last year pushed it into equities and derivatives markets.

As part of the Acuris deal, BC Partners will retain a minority stake of 25 per cent while Singapore’s GIC, which bought 30 per @Businessdayng

cent in 2017 is selling out, people with knowledge of the transaction said.

Nikos Stathopoulos, the BC Partners executive behind the original purchase, is expected to remain on the board of Acuris, these people added.

BC Partners is set to generate around five times the return on its original investment, a person with direct knowledge of the matter said.

The deal will help boost BC Partners’ returns as it sets to raise a new flagship fund following troubled investments. BC Partners have also had successful deals recently, including the sale of animal health firm Antelliq to Merck in December.

BC Partners declined to comment. Ion could not be reached for comment. The company declined to comment last week on reports a deal for Acuris was near.

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ANALYSIS

Oracle China staff protest at wave of ‘political firings’ R&D workers blame US-Beijing tensions for 900 job losses YUAN YANG AND NIAN LIU

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he American software company Oracle has fired 900 staff from its China team, making up 60 per cent of its research and development effort there, according to employees, some of whom blamed tensions between the US and China for the cuts.

Oracle’s China staff were told on May 7 that the company was “optimising” its workforce and that redundancies would be made

by May 22, according to eight employees at the company’s R&D centre in Beijing, Oracle’s biggest unit in China.

The announcement came as a surprise and led to protests outside Oracle’s building. The decision, which came in the same

own conclusions. At a protest on Wednesday near the Oracle R&D centre in Beijing, staff unfurled red banners with slogans such as “Oppose Oracle’s political firing of staff, keep politics away from technology” and “Keep the jobs in China”.

“The official explanation is they are ‘optimising’, but I think this is unreasonable, because they are cutting a lot of product lines that still make money: databases, ERP [enterprise resource planning],” said a second Oracle engineer.

“We think the real reason is to do with the US-China trade war. If it was about business, they’d cut a portion of staff or only lossmaking teams, not everyone. It’s not about products, it’s about nationality,” the engineer said.

Another engineer working on

Oracle staff on their way to a recruitment fair

week as the US announced additional tariffs on Chinese goods, saw staff blame the trade war.

Although only the first wave of 900 job cuts have been officially announced, many employees said they believed the whole of the China R&D operation would eventually go. A job fair in Beijing’s Software Park, near Oracle’s headquarters, was peppered with engineers still wearing their red Oracle lanyards last week.

“I’ve not been laid off yet, but I expect to be,” said one young Oracle employee at the fair. “There are lots of people saying that Larry (Ellison) doesn’t like China. I think it’s because the US has this ‘China threat’ narrative,” he added.

The employee referred to the Oracle co-founder’s interview with Fox Business last October, in which Mr Ellison said that “we [the US] have a serious competition going with China, I’m on Team USA”, and “if we let China produce more engineers than we do, if we let China’s technology companies beat our technology companies, it won’t be long that our military is behind technologically also”.

Oracle did not confirm or deny the job cuts, and declined to comment on the company’s China strategy, but said: “As our cloud business grows, we will continually balance our resources and restructure our development group to help ensure we deliver the best cloud services to our customers in China.”

But some employees, many of whom were surprised as well as angry about their two-week notice period, have come to their

Oracle’s ERP line said: “It’s not about the business, it’s about the international situation. They want to continue to sell products to China, but not to make products in China. I say if they do that, then we should set up our own competitor, the government should subsidise our own technology.”

The Chinese media has praised Oracle for offering a minimum of six months’ severance pay.

But employees were concerned about social insurance payments stopping by the end of the month, which in Beijing is tied to the provision of education and the right to buy housing.

Beijing’s other tech companies saw their opportunity to swoop in: at the jobs fair, two Huawei headhunters put up a sign advertising a “Oracle-Huawei dialogue” messaging group on WeChat.

At least two other WeChat groups set up for axed Oracle workers have reached their maximum capacity of 100, including one specifically for those over 35 years old — many tech companies explicitly say they will not hire older workers.

“Our team is profitable, and in fact two years ago we were given a new project to develop,” said a developer who had worked on Oracle’s PeopleSoft team for five years, who said that about 90 members of their China team of 130 had been fired.

“They still need PeopleSoft, so they’re going to re-hire in India and the US. The way they’re doing it, it gives us the impression they want to get rid of us as quickly as possible,” she added. www.businessday.ng

The Brexit effect: private equity firms shun UK for Europe Confusion over the means and timing of the UK’s withdrawal from the EU is raising questions about the value of deals JAVIER ESPINOZA

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ohn Sinik wants to remain in the UK but says he could soon have no other choice but to leave. The private equity executive is being courted by other European countries, including Portugal and Italy, to move his firm there and pay substantially less tax than what he pays now in the UK. The California-born Mr Sinik says he is conflicted. On the one hand, the UK offers good schooling for his children and it has been his home for over two decades. The UK is still the major European financial hub and it makes sense for his private equity group — Metric Capital — to be based there.

Yet, his company’s ties with the UK have diminished sharply. Metric Capital has not done a single leveraged buyout in Britain since the Brexit vote in 2016 because his fund invests in euros, and the risk of being hit by currency volatility is too high. Most of the people the business has hired over the past two years have been for new offices in countries such as Spain, Germany and France as it looks to get involved in those countries’ deal flow.

He still thinks the UK is the place to be for private equity firms but he says political uncertainty about the country’s future relationship with Europe is pushing it close to “breaking point”.

“The gap between the UK and other alternatives such as France, Italy or Spain is shrinking rapidly,” he says from his central London office. “We could go tomorrow.”

Given the tax incentives available in some other countries, a number of executives have already left and others are seriously considering it. Johannes Huth, European head for US buyout giant KKR, moved to Paris in 2017 as France overhauled its tax regime to make the country more business friendly. Mr Huth has been downbeat about the prospects of investing in the UK because of Brexit. Many firms have been increasingly reluctant to do deals in the UK because of the uncertainty. AnaCap, for example, downgraded the UK as a top-tier investment destination in 2017.

Some buyout groups have been operating from what they see as a worst-case assumption — that the UK crashes out of the EU with no deal — which analysts believe would lead to the country being

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unable to hire easily from Europe and could also prompt a large drop in sterling against the dollar and euro.

For the private equity firms that have come to dominate international finance in the decade since the global financial crisis, the UK was once the perfect bridgehead in Europe — it was the best place to both buy and sell companies and to attract executives from across the region. London was a city both at the heart of Europe, yet at ease in an American dealmaking culture.

But Brexit has inverted the terms of trade for private equity in Europe. At least in the short term, many firms are extremely wary about doing deals in the UK given so much that is unknown about the country’s political and economic future. In some cases, investors in deal funds are even demanding exposure equal to no more than a third of their funding in the UK. Executives also worry that the UK may end up with a leftwing government, lead by Labour leader Jeremy Corbyn, who has called for higher corporate tax and increased income tax for top earners, and has a much more sceptical approach to private equity dealmaking. Some money managers, like private equity veteran Edi Truell, have already taken their fortunes out of the UK ahead of a possible Labour government.

At the same time, some of the European countries that once accused private equity of representing a rapacious and unwelcome form of capitalism have seen a boom in deals and are bending over backwards to attract Londonbased firms and executives.

“If we find that it is harder to hire talented Europeans to work in London to complement our British staff due to Brexit, we will be forced to consider moving the office,” says Mr Sinik.

Whether a short-term trend or not, the uncertainty caused by Brexit has already had a direct impact on private equity investment.

According to figures by Invest Europe, the trade body representing venture capital and private equity in Europe, investments rose in the lead up to the 2016 vote but then dropped to their lowest level since 2013. Activity picked up in 2017 only to drop again last year, the numbers showed.

While the value of dealmaking in Europe, excluding the UK, rose 13 per cent to €63.9bn in 2018, the @Businessdayng

UK itself saw a 12 per cent fall to €16.7bn last year.

Smaller markets have boomed in recent times. Private equity investments in Spain have more than doubled from €2.3bn in 2015 to €6bn last year, according to Invest Europe, and France saw a rise from €11.5bn in 2015 to €16.2bn last year — only marginally lower than the UK, the data showed.

While buyout bosses postpone major investments in the UK, until they gain clarity over Brexit, some of the largest deals are happening elsewhere. The three biggest in Europe last year took place outside the UK, including Carlyle’s €10.1bn acquisition of Akzo Nobel’s speciality chemicals business in the Netherlands, and CVC’s purchase of Italy’s Recordati, a pharmaceuticals business, in a €5.9bn deal.

Spain is one of many countries in Europe where private equity was once considered by politicians and businesses as an unwelcome, aggressive form of capitalism. Yet buyout funds are, for the first time, convincing owners of businesses there that this is the right time to sell.

Cava maker Codorníu, for example, sold to Washington-based Carlyle last year after nearly five centuries of family ownership. “Spain is hot right now,” says an adviser to large private equity funds in Europe.

However, there are fresh worries that the Socialist party’s recent re-election may dent interest — at least in the short term — for deals in Spain. France, traditionally Europe’s second-largest market for private equity deals, saw strong growth despite recent social unrest.

The Nordic countries also saw stronger rises in activity relative to the UK, according to Invest Europe.

Denmark, for instance, saw a huge increase from €1.8bn in 2015 to €3.1bn last year. Sweden’s investment went from €1.8bn in 2015 to €2.8bn in 2018.

Last year was also a record for UK investors in the Nordic market, according to figures from Norwegian private equity investor Argentum.

London-based private equity group Cinven bought Swedish cargo group Envirotainer in a €1bn deal, while Bridgepoint bought Swedish risk and compliance services provider FCG, an indication of how established British buyout funds are looking beyond the UK. “This record activity is an indication of the influence of Brexit for other European markets, including ours,” says Joachim Hoegh-Krohn, Argentum chief executive and a private equity veteran.

BD Money

Monday 13 May 2019

BUSINESS DAY

ANALYSIS Four implications of Emefiele’s re-appointment as CBN governor Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), was nominated

by President Muhammadu Buhari for a second five-year term in office Thursday, making him the first CBN governor to keep his job for a second term since the end of military rule two decades ago.

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INVESTING Everything retail investors need to know about TradeFi TradeFi (“the Platform”) is the latest disruptive and innovative mobile (and web) application which enables individuals to invest in Federal Government of Nigeria Bonds (FGN) and Treasury Bills directly from their phone, laptop or tablet.

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BUSINESS DAY

Analysis

Four implications of Emefiele’s re-appointment as CBN governor LOLADE AKINMURELE

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odwin Emefiele, governor of the Central Bank of Nigeria (CBN), was nominated

by President Muhammadu Buhari for a second fiveyear term in office Thursday, making him the first CBN governor to keep his job for a second term since the end of military rule two decades ago.

Although the appointment remains subject to the Senate’s approval, there are four key implications of a second term for Emefiele.

Naira stability It’s hard to argue it won’t be more of the same, in terms of policies, when Emefiele has a second go at the helm of the CBN. There are wide expectations for sustained exchange rate stability, which Emefiele so vigorously pursued during his first tenure, even if it comes at the cost of burning through the external reserves to sustain dollar supply or putting its balance sheet on the line to mop up excess naira liquidity.

The market rate for the naira has hovered tightly around N360-N363 per US

‘

As an incentive for banks to lend to the agriculture and manufacturing sectors, Emefiele told the banks last year that any of them that lent money to either of those sectors at single digit rate interest rates could apply to get the funds from the cash reserve they have stashed with the CBN

Godwin Emefiele, CBN governor

dollar for almost two years now while the defacto CBN rate has held steady at N306 per dollar.

The naira barely bulged last year when fears of continued interest rate hikes in the US led to fund reversals from emerging markets and sent their currencies plummeting.

It was Emefiele’s resolve to keep the naira steady by increasing the CBN’s dollar interventions and mopping excess naira liquidity that shielded the currency from the emerging market rout.

If global oil prices and local production stay healthy, you wouldn’t bet against a stable exchange rate. With the right firepower, Emefiele has demonstrated with his first term that the CBN

will defend the naira.

Meanwhile, there’s a good chance Emefiele retains his signature multiple FX rates practice.

Interest rates and bank lending Interest rates are unlikely to let up in the short term.

Emefiele’s commitment to exchange rate stability and his target of singledigit inflation rate means continued monetary tightening through OMO auctions and other strategies like keeping effective Cash Reserve Ratio (CRR) for the banks closer to 40 percent than the benchmark 22.5 percent.

A tight monetary environment would restrain banks from lending, which has pretty much been the case for more than

three years now.

Rather than lend to the real sector in an economy fraught with risks from inadequate infrastructure to weak consumer demand, banks- especially the big lenders- have opted to park cash in high yielding government securities.

The big lenders from GTB to Zenith saw their loan books shrink in 2018 for the third year running, even when the initial guidance was for a 10 percent expansion.

Some have again guided towards growing their loan books this year as they rediscover appetite for retail lending. They however admit that a tight monetary environment is the biggest threat to their plans.

Focus on agriculture and manufacturing With Emefiele bent on getting the banks to lend to the real sector at affordable rates, his reappointment almost guarantees a continuation in CBN interventions for the agriculture and manufacturing sectors.

As an incentive for banks to lend to the agriculture and manufacturing sectors, Emefiele told the banks last year that any of them that lent money to either of those sectors at single digit rate interest rates could apply to get the funds from the cash reserve they have stashed with the CBN. There’s isn’t enough data to suggest the banks are falling over one another to lend to those sectors as a result of the CBN incentive.

Boon for local producers Perhaps the biggest implication of Emefiele’s reappointment is that the Central Bank will continue supporting local producers at the expense of importers.

There’s a chance more items make it to a list of 42 items whose importers are banned from buying FX from official channels.

Emefiele remains desperate to send a signal that the CBN is willing to support local production and promote non-oil exports as a means of diversifying the country’s dollar revenue stream.

It will be more of the same in the next five years whether it is by introducing additional intervention schemes for local manufacturers or letting the hammer loose on importers of items that can be sourced domestically.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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@Businessdayng

Monday 13 May 2019

BUSINESS DAY

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Investing Everything retail investors need to know about TradeFi LOLADE AKINMURELE

T

radeFi (“the Platform”) is the latest disruptive and innovative mobile (and web) application which enables individuals to invest in Federal Government of Nigeria Bonds (FGN) and Treasury Bills directly from their phone, laptop or tablet.

TradeFi affords retail investors the opportunity of understanding what fixed income securities are, as well as enabling them take advantage of the asset class to grow their wealth. That’s a golden opportunity for Nigerians, most of whom do not have an inkling of fixed income market dynamics.

“An average Nigerian investor sees fixed income as a myth, failing to comprehend how it works,” highlighted during an interview with Tosin Osunkoya, Managing Director, Comercio Partners Asset Management.

Leveraging on technology, Comercio Partners Asset Management, through TradeFi, provides the investor the opportunity to exploit the benefits of the fixed income market with risk-averse investment options with higher return than inflation. In addition, TradeFi would be used as a medium to demystify the dynamics in the fixed income market with an e-learning window designed to enlighten the investing public with the basic knowledge of these investment options.

Investors have the free will to decide their investment horizon from a range of two weeks (14 days) to 20 years on the platform based on their investment goals. It is instructive to note that the platform allows investors to terminate their investments at any time during the life of the investment Furthermore, TradeFi offers competitive returns higher than a savings or regular fixed deposit account which affords an interest rate of about 3% and 7% per annum, respectively. Fixed income securities, i.e. FGN bonds and Treasury bills provide superior returns between 12 - 14% (currently) depending on the tenor of the investment.

When inflation (11.25% in March 2019 according to data by the National Bureau of Statistics) is factored in, an investor who has cash in a savings or fixed deposit account is in fact effective-

ly making negative real returns between 4% and 8% respectively. For treasury bills and FGN Bonds however, there is a real return between 1 - 4% depending on the tenor of the investment chosen.

5 reasons to invest in fixed income securities: 1. Federal Government (FGN) bonds and treasury bills are 100% safe with fixed returns.

2. Income earned from these instruments is tax exempt, steady and competitive.

3. FGN bonds and treasury bills are good for savings towards retirement, marriage, school fees, house projects, holidays etc. which enable the investor gain financial freedom.

4. It enables individuals enjoy those benefits which accrue to high net-worth investors in the financial market.

Benefits of using TradeFi platform to Invest: 1. Safety; your investments are secured and warehoused by a reputable custodian, Stanbic Nominees Ltd. 2. Returns; Competitive return on your investments higher than a savings account and regular fixed deposits.

3. Liquidity; which implies free entry and free exit and no penalties for liquidation your investments.

4. Convenience; On a click of a button initiate and monitor your investments www.businessday.ng

“

An average Nigerian investor sees fixed income as a myth, failing to comprehend how it work

from wherever you are.

5. The operation of TradeFi is endorsed by the FMDQ OTC Securities Exchange.

How to get started on the app: 1. You can access the platform on your mobile devices through the play store for android or app store for iOS. You can simply visit TradeFi for the web version (www.tradefi.ng) 2. Register on TradeFi by completing the short onboarding process.

3. Once your account is activated, simply fund your TradeFi wallet by transferring money to the dedicated account and choose amongst the investment opportunities that work for you at your convenience.

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Currently, over 1,000 users have registered on the platform and are already benefiting from investing in FGN bonds and treasury bills. The sign-up, funding, investment and liquidation processes are very easy and users can conveniently view their investment history, returns and portfolio.

The minimum amount a customer can invest using the TradeFi app is N100,000 only.

About Comercio Partners Asset Management: Comercio Partners Asset Management Ltd is a fast growing, boutique investment management company providing bespoke, cutting edge traditional and alternative investment solution.

Comercio Partners Asset Management (CPAM) is licensed by the Securities and Exchange Commission (SEC) and regulated by FMDQ OTC Securities Exchange to operate as Investment Advisers, Portfolio and Asset Managers.

CPAM provides a platform that balances its clients’ investment objectives with their risk appetite and investment time horizon. The company’s aim is to constantly generate superior, risk adjusted returns to their high net-worth, Institutional and Retail clients by providing high quality investment advice through a well-diversified, multi asset class approach.

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Monday 13 May 2019

BUSINESS DAY

Monday 13 May 2019

BUSINESS DAY

Cover Story

Before you fall victim of another Ponzi scheme OLUFIKAYO OWOEYE

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arely three years after losing millions of naira to several Ponzi schemes with many yet to recover, a similar peer-topeer pyramid scheme is gradually gaining traction among young Nigerians, named LOOM. Organizers of the Ponzi scheme are requesting for as low as N1000 or N13,000 with a promise of 8x the value of the investment within 48 hours.

Ponzi scheme got its name from Charles Ponzi who made an elaborate scam in the 1920s. Figures from the Nigerian Electronic Fraud Forum, (Neff ) shows that over N12 billion were lost by Nigerians to several Ponzi schemes in 2016.

Similar to other Ponzi schemes, the Loom pyramid has four color-coded levels namely, purple, blue, orange and red.

The first to sign up for the group sits in the central level (red level) and gets the payout when the group fills up.

Two people sit in the orange level, while four investors fill the blue level.

The purple level takes new entrants with eight spots open. Potential investors are typically invited to join a WhatsApp group and advised to get as many other investors as possible as the scheme only works if it keeps a steady stream of new investors to pay earlier investors. The more people are recruited into the group, the quicker it breaks and the quicker the payouts are to investors. The initial investment is usually paid to the group admin who sits in the red level.

Looking at the modus operandi of this scheme, it is clear that it is not a sustainable investment scheme as participants will eventually lose their money in the system. When investors start to dry up, groups will take a longer time to fill up, and newer recruits will lose their investment without any payouts. This will only be averted if there’s an unending supply of new inves-

“

A notable feature of Ponzi schemes is that the returns promised participants are attractively high and based on this, investors are promised early returns in the hope that the early investors will spread the “good news

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tors, an impossible feat.

Chinedu, 25 recalls with sadness how he lost his NYSC savings to several Ponzi schemes two years ago.

“I was serving in Akwa-Ibom and was introduced to the MMM by a fellow corps member, the prospects look attractive and joined using my monthly allowance, all the money eventually went down the drain,” he said According to Chinedu, there is a possibility that early participants would get paid very fast but the temptation to make more cash will lure them to try again and most times they get trapped. “Ponzi makes and breaks” he added.

How to identify a Ponzi scheme A notable feature of Ponzi schemes is that the returns promised participants are attractively high and based on this, investors are promised early returns in the hope that the early inves-

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tors will spread the “good news”, thereby inviting more contributors to the scheme. Once new contributors join the scheme, their cash would be used to pay out high returns to older investors.

Also, Ponzi schemes by nature do not have any underlying assets that the money is invested in.

The only way they can guarantee consistent returns is the recruitment of new members. Once the rate of growth of new members starts to drop, the likelihood of the Ponzi collapsing gets higher.

Unlike most investment schemes such as mutual funds, pension funds, ETF’s, etc., which are all recognized and regulated by the Security and Exchange Commission (SEC), Ponzi schemes do not have such oversight. As such, investors do not have any form of recourse, exposing them to the risk of losing their entire investment when it collapses.

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Monday 13 May 2019

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Explainer BONDS

Inside the world of FGN Savings Bonds OLUWASEGUN OLAKOYENIKAN

L What you should know about commercial papers as an alternative source of funding HOPE MOSES-ASHIKE

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or mid-level organisations across different industries, one financial instrument that has not received much attention in terms of direct funding required for working capital funding, are Commercial Papers. This is because such organisations have not explored the possibilities of accessing commercial papers and this is due to a lack of awareness of its numerous benefits when it comes to raising funds.

With the right financial advisory, these organisations can easily finance day to day short term expenditures by investing in Commercial papers. “CPs” as they are often called, provides a cheaper source of funding in comparison to other securities.

In very simple terms, Commercial Papers are short-term debt financing securities with a 3 to 9 months maturity period.

They usually consist of discounted promissory notes issued by large corporations with good credit ratings. Commercial papers are typically for working capital, and are generic, with a structure that allows for ease of investment and exits via a recognised exchange. These financial instruments are open to all

kinds of investors, ranging from individuals to financial institutions such as banks, asset managers, trustees and corporate treasuries.

A total of N505.30 billion was raised in 2018 through CPs programmes by various corporates, representing 231.8 percent rise over the N152.35 billion recorded in 2017.

There were a total of 60 CPs quotations on the FMDQ OTC Securities Exchange in 2018 against 33 CPs quotations in the previous year.

Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), at July 2018 Monetary Policy Committee (MPC) meeting urged the large corporate to issue commercial paper notes to boost credit to the real economy at lower rate.

Issuing commercial paper notes is beneficial to an investor as it provides attractive investment opportunities. Commercial papers are cheaper than bank loans.

So what makes Commercial Papers an alternative source of cheap funding?

Issued at a discount: Commercial Papers are issued at a discount which means the demands for periodic interest payments have been eliminated in preference for single payment at maturity. This helps firms manage their cash flows. www.businessday.ng

Lower Interest Rate: Commercial papers are issued at lower lending rates than what is obtained from commercial banks.

This makes it less expensive for firms and businesses to run their operations and can quickly meet short-term or working capital funding at relatively cheaper rates.

Funding from the Capital Market: This makes it a less expensive source of funding as the capital market is more liquid compared to other sources of short term funding.

For Issuing Houses like FBNQuest Merchant Bank, providing advisory for organisations who require such funding is at the core of its investment banking division. It is important for such organisations to seek the right type of advisory when looking to invest in commercial papers.

The process of issuance of CPs, is straightforward with a detailed step by step approach, documentation and guidance from the issuing house. For investors, FBNQuest helps with the application process, deposit with the CSCS (Central Securities Clearing System) and payment to the investors at maturity.

Investors are urged to contact FBNQuest Merchant Bank at Fbnquest.com/merchantbank to find out more on how to invest in Commercial papers.

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ow-income earners with excess money lying fallow in their accounts may be missing out on some investment opportunities in the monthly Federal Government of Nigeria (FGN) Savings Bonds, particularly if the interest rates on the instruments are further raised next month.

No doubt, “investment” is fast becoming one of the most frequently used words as awareness on financial literacy gains momentum in Nigeria, but not as much as those who have heard the word can find their way around investing in the nation’s financial markets.

Last week, the stock market slumped to its weakest level in two years amid sell pressures despite relatively impressive first quarter results, the development may have further discouraged some potential investors who were skeptical about the possibility of a market rebound in the short to medium term.

An alternative to stock investment for risk-averse individuals is the FGN Savings Bonds issued monthly by the Debt Management Office (DMO). This form of investment basically allows investors to loan out their excess money to the federal government for an agreed period while they earn a percentage of their investment annually, semiannually or quarterly until the bond matures and the investor gets his initial payment.

Proceeds from these bonds are used by the federal government to fund its budget deficit. It also helps in promoting savings culture and enhancing financial inclusion in the country as income earned from the instruments is exempted from taxes.

The agreed time for the repayment of the bond is referred to as maturity date; the percentage of the investment to be paid every three

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months is coupon; while the investor is called the bondholder.

In an auction conducted last week, the DMO offered two-year and three-year FGN Savings Bonds for subscription for the month of May with higher interest rates compared with those issued in the previous two months. Also, the DMO assured a quarterly coupon payment for the bonds.

The two-year tenor was offered at 11.745 percent, while the three-year instrument was offered at 12.745 percent. These correspondingly represent higher rates compared with 11.276 percent and 12.276 percent which the debt instruments were issued in April, and 11.62 percent and 12.62 percent in March.

This implies investors can get more value for their investment and much more if the country’s inflation rate sustains its downward trend having decelerated for three straight months to March this year.

A N50,000 invested on a threeyear bond tenor in May 2019 at 12.745 percent would deliver N6,372.5 every three months till May 2022, bringing the total possible coupon payment to N76,470 excluding the bullet repayment of the invested N50,000 due on the maturity date.

How to participate The bonds are first issued to the public in the primary market in an auction system just like it was conducted last week but can later be sold at the secondary market if the investor wishes to opt out before the maturity date.

Interested investors can contact stockbroking firms appointed as distribution agents by the DMO. A list last updated on February 6, 2019, and containing 129 agents can be accessed on the debt agency’s website.

A unit of either of the bonds cost N1,000. However, investors are expected to make a minimum subscription of N5,000, translating to 5 units of the instrument. This subscription can later be increased in multiples of N1,000, but such subscription cannot exceed N50 million.

Investments in these bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of the country, indicating investments in the asset are safe as it is almost impossible for the government to default payment.

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Data

Federal government eurobond Yields on Eurobonds rose week on week by c.213bps from an average of 6.82 percent when the market closed last week to 6.97 percent as buying interest on sovereign Eurobonds intensified from the previous week.

Brent fell below $71per barrel last week and dipped below $70 on Tuesday, the first time since April 5.

Analysts at RBC Capital Markets told CNBC that tensions in key international waterways could drive up oil prices this year. RBC Capital Markets believe the geopolitical possibilities of Iran restarting its nuclear program and tensions around key strategic waterways could be key in escalating prices. Consequently, RBC currently has Brent crude projected to average $75 a barrel for 2019, moving into the low $80s over the summer.

Price was rose 0.34 percent to $70.63, 19:20 (GMT+1) on Friday according to information on Bloomberg.

Corporate eurobond Yields on corporate Eurobonds rose c.753 bps across all tickers from last week with average yield at rising from 9.19 percent on last week to 9.89 percent.

The increase in yields was on account of Diamond Bank Plc. rising by 32.92 percent whereas yields on all other corporates fell, asides Seplat that remained flat. www.businessday.ng

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Monday 13 May 2019

BUSINESS DAY

Investing New to investing? Here’s why knowing your risk tolerance matters Israel Odubola

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s a rookie investor, how much risk can you tolerate? This is an important question as the answer helps you make the right investment choices.

Before you know the level of your risk tolerance, it is important to understand the nature of investment risk, the likelihood of occurrence of losses relative to the expected return on any investment.

This risk is especially prevalent when you invest in stocks because stock prices will always fluctuate – and there are never any guarantees about performance.

Of course, depreciation in value does not mean you need to sell, you can hold on to the stock with the hope that its value will rebound. And this can certainly happen, but again, it is not 100 percent assured.

How you respond to this type of investment risk will tell you a great deal about your own risk tolerance. Of course, no one with a high tolerance for risk, or a low one, will like to see lose money on his or her investment.

If you are the sort of person who can retain your confidence in your investment mix and can focus on the long-term and the potentials for recovery, you may well have a higher tolerance for risk.

On the other hand, if you find yourself

losing sleep over your losses and in despair about reaching your goals, and questioning whether you should be investing at all, then you may have a low tolerance for risk.

This self-knowledge of your own risk tolerance should help inform your investment

WeekAhead Ahead (Monday, 13th May – Friday, 17th May, 2019) Week

decisions to a point.

Even if you feel you have high tolerance risk, you almost certainly should not load up your portfolio exclusively with stocks because if the stock market enters a prolonged slump just as seen in the Nigeria equities

market, you could face heavy losses that may take many years to overcome, causing you to lose significant ground in the pursuit of your financial goals.

Conversely, even if you discover you don’t have much tolerance for risk, you may invest in risk-free securities such as treasury bills, Federal Government savings bonds, and sovereign notes. It is also important to weigh the returns on these securities with the current inflation rate to avoid losing purchasing power.

Ultimately, then, you will probably want to let your risk tolerance guide your investment choices – but not dictate them with an “iron hand”. So if you believe you are highly tolerant of risk, you might have a somewhat higher percentage of stocks in your portfolio than if you felt yourself to be highly risk-averse.

But in any case, you will likely benefit from building a diversified portfolio containing stocks, bonds, government securities, and other investment. While this type of diversification can’t guarantee profits or protect against losses, it can help reduce the effects of volatility on your portfolio.

By knowing your own risk tolerance, and the role it can play in your choices, you can play in your choices, you can help yourself create an effective investment strategy – one that you can live with for a long time and that can help avoid the biggest risk of all – not reaching your investment goals.

Chart of the week

Event Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

Newrest ASL Plc will hold its Annual General Meeting on Thursday, May 16 at Golden Tulip Hotel, Amuwo Odofin GRA, Lagos.

The Lagos-based airline & logistics services provider grew revenue by 39% to N5.42 billion triggered by 45% expansion in proceeds from inflight catering and related services.

Consequently, after-tax profit surged 361% to N1.49 billion. The directors approved for shareholders’ recommendation a dividend of 20 kobo per share of 50 kobo each.

Data Release The National Bureau of Statistics to release Selected Banking Sector data for first quarter of 2019 on Tuesday, May 14.

A snapshot of the report in the previous quarter (Q4 2018) showed that bank credit worth N15.13 trillion was dissipated to the private sector, with oil & gas sector accounting for 23.45%, manufacturing (14.74%), capital market (7.31%) and real estate (4.12%) among others. Given the gradual improvement in the broader economy, we expect a modest uptick in bank credit to private sector in first quarter of 2019.

Fixed Income Commercial paper worth N35 billion issued on August 17, 2018, by Dangote Cement Plc at 13.97% issue yield will mature on Tuesday, May 14.

A 2-year Federal Government bond worth N310 million issued on May 17, 2017, at 13.189% coupon will mature Friday, May 17.

Currency The Nigerian naira traded depreciated 6% at N360.68 against the US dollars at the Investors & Exporters window at Friday’s close of business. Friday’s turnover stood at US$367 million.

The local currency remained unchanged at N307/$ at inter-bank window. Going forward, we expect naira to trade at current levels on various windows boosted by regular liquidity supply by Nigerian Apex Bank to the market.

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While other emerging markets have returned positively to respective investors of their exchanges, investors in the Nigerian equity market have seen their value erode aggregately by 7 percent since the start of 2019 as at Tuesday.

The Nigerian bourse seems to be only notable exchange in emerging market space with negative year-to-date return, even as it underperformed average EM & FM markets with 9.32 percent and 6.98 percent respectively on Tuesday.

Analysis revealed that while the Nigerian equity market seem to lack adequate boost in terms of clear policy direction, despite impressive results by companies during current earnings season, spread with other emerging markets have widened consistently making

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Monday 13 May 2019

BUSINESS DAY

71

abujacitybusiness Comprehensive coverage of Nation’s capital

FCDA to review 215 abandoned buildings James Kwen, Abuja

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he Federal Capital Territory Development Authority (FCDA) says it would review the circumstances behind the over 215 abandoned structures it has discovered within the Federal Capital Territory, Abuja.

Umar Jibrin, Executive Secretary of FCDA who disclosed this after the weekly Federal Capital Territory Administration, FCTA Executive Coun-

cil meeting in Abuja also said all abandoned and uncompleted buildings, parks and event centres existing in the capital will be subjected to review.

Jibrin noted that most structures built in the FCT city centre contravened the Abuja master plan which must be pulled down after necessary procedures have been followed.

He said this decision followed the resolutions of FCT Executive Council meeting with the Minister, Muhammad Bello in at-

tendance during which the new initiative was informed after the review of policy issues and programmes of development in FCT by the executive council.

Explaining that there were 95 uncompleted buildings in Abuja, 879 vacant plots, six without approval and 739 plots duly allocated, the FCDA Boss said 15 plots have been revoked and 10 withdrawn with 114 having no records.

“With the increasing rate of insecurity across the country, we have re-

solved that all structures in FCT, especially those that are not in line with the master plan be pulled down. Most of the areas that will be affected include Asokoro, Maitama, Gwarimpa and Wuse areas. The exercise is not targeted at any individual but to restores green areas as captured in the master plan”, Jibrin stated.

He said all agencies involved have been directed to take measures that would assist in the demolition exercise.

PAL pensions adds Uni Abuja to Nextu network Cynthia Egboboh, Abuja

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AL pension in line with it’s position of creating value for Nigerians has added University of Abuja to the NEXTU network to promote financial literacy and employability skills among students.

Sunmisola Mark-Okoma, Head, Brand Management and Corporate Communications speaking at the training in Abuja said the project was aimed at guiding youths through career choices and financial literacy.

She said, “this is why we started the NEXTU project; a project that aims at guiding young people through career choices and financial literacy.

Basically, PAL Pensions would provide them with the support they need to live their dream and be who they want to be”.

Sunmisola, explained that the NEXTU’ is the corporate social responsibility initiative of PAL Pen-

sions focused on providing knowledge and guidance for ‘Unleashing the Potential’ of young people on career, finances, entrepreneurship/tech, new media, entertainment and life choices.

She noted that University of Abuja would join University of Lagos, University of Benin, University of Port Harcourt, Obafemi Awolowo University, Ahmadu Bello University and University of Nigeria who are already on the network. “ Th i s ye a r, w e a re expanding the NEXTU platform to include ‘The NEXTU Academy’. The Academy would combine theoretical business & graduate school training with Practical workplace skills to raise workforce ready graduates.

“Our online program tagged #Sellyourself would also run later in the year where young people can win various prizes worth over a Million Naira”, Sunmisola stated.

STDD begins waste evacuation in Abuja satellite towns James Kwen, Abuja L-R: Raji Omotunde, chairman, Lagos State Association of Master Barker; Bolaji Anifowose, vice president, Olam Grains; Anurag Shukia, MD/CEO, Olam Grains; Rohit Chugh, vice president, Flour Grains, and Ishaq Abdulraheem, chairman, Master Barker, Abuja, at the customer Forum of Crown Flour Mill Limited in Abuja.

Pic by Tunde Adeniyi

Innovate 1 Pay LTD boss bags distinguished Euro-knowledge award Harrisin Edeh, Abuja

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ahmood Ahmadu, the founder of Innovative I pay Limited has been recognised with the distinguished Euro knowledge award, having pioneered the organisation to an appreciable height as a global establishment rendering financial services across different parts of the world.

Innovate 1 Pay Limited

is a foremost financial technology company in Africa as well as the largest provider of payment services for millions of clients’ transactions and payments processed within Nigeria and globally for activities related to Nigeria and other client locations.

Mahmood alongside his full management team have succeeded in implementing a Pan-African and globally outward vision for the company in the last few

years, handling very large IT delivery projects at national scale for its clients.

Since being granted its CBN operating licenses in 2013, the company has partnered with some of the largest banks such as First Bank, Diamond Bank and Guaranty Trust Bank to develop competing solutions across its ecosystem.

Innovate 1 Pay also has cordial working relationships with other private

firms as well related public sector partners to deliver value to their clients and citizens respectively.

The firm is one of the established private institutions rendering services to the Nigerian Immigration Service and the Federal Road Safety among others by providing a global payment platform and extended services associated with identity management to address the core requirements of its clients.

Insecurity: Red Cross trains 50 volunteers Nathaniel Gbaoron, Jalingo

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ollowing recent reports of attacks and killings in Taraba state, the Red Cross, an international non governmental organization (NGO) in continuation of its intervention has trained at least 50 volunteers to respond to cases of emergency before evacuation of victims to the

hospitals.

According to Martins Manja, Secretary of Red Cross in Jalingo, the aim of the training was to give first aid skills to volunteers as a means of saving lives before final evacuation to the hospital.

Manja explained that the 50 community volunteers were trained in Manya community in Takum and

Suntai community in Bali local government areas of Taraba State.

“This training to mark 156 years of the existence of Red cross is to equip and build local capacities most especially among young people with requisite skills and first aid kits as well as use of available local resources within the community to respond to emergency situations.

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“The training is necessary because in case of an emergency situation where one is bleeding, such a person need immediate care to prevent avoidable death.

“In most cases these emergencies happened in the rural areas where immediate access to the hospital is a challenge, so the training will help the volunteers to safe lives in such situations.

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s part of efforts to promote environmental sanitation in the Area Councils and Satellite towns in the Federal Capital Territory (FCT), Abuja, the Satellite Towns Development Department (STDD) has commenced evacuation of solid waste from temporary to permanent sites.

Yamawo Tanko, STDD Coordinator who spoke during the exercise at a temporary dump site behind Mpape market promised that the dump sites would never be allowed to increase into such a volume as the Department would monitor the sites at short intervals to avoid over bloating.

Tanko disclosed that the refuse has not been evacuated in the past three years and called on the private sector to partner with the FCT Administration in tackling the challenge which he explained was common with human development and urbanisation.

“This exercise, which is meant to keep the FCT environment clean is one @Businessdayng

of the mandates of the STDD. We got a call from the Chairman of the Abuja Municipal Area Council (AMAC) about the refuse.

There are two locations for the dumpsites. This one by the market and the other one within a residential area.

“There is no way we can stop dumping of waste because it is a continuous thing, but we can manage and control it. We also call on serious private sector partnerships to help us evacuate and manage the increasing waste in the FCT. “Also, what we have decided to be doing is not to allow the refuse to accumulate this much, because this temporary sites has not been evacuated in the past three years. We will not allow it get to this volume.

“We will be coming every now and then to check and evacuate the waste because it now takes a lot of resources to do it. The contractor evacuating it thought it would take only two days to finish the job but it over seven days now, and you can see the refuse has refused to finish”, he stated.

Company IN FOCUS

BUSINESS DAY Monday 13 May 2019 www.businessday.ng

Can CAP plc maintain its impressive 2018 performance?

OLUFIKAYO OWOEYE & OLUWASEGUN OLAKOYENIKAN

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he Nigerian Paint industry is very competitive with several players jostling for market share. The industry has also witnessed significant improvement in terms of product quality as every manufacturer is forced to up his game or become irrelevant.

In the past, some of the paint companies were mostly subsidiaries of foreign companies, at the same time, indigenous paint manufacturers also sprang up and completely bought over the shares of these foreign companies and continued to expand and increase their profitability, one of such company is Chemical and Allied Products CAP Plc. Corporate Information CAP Plc was established originally as Imperial Chemical Industries ICI investments limited in 1957 but became ICI Nigeria Limited in 1965. However, following the promulgation of the Indigenization decree in 1972 and 1977, ICI Nigeria Limited sold 40%, and then 60% to the Nigerian Public and changed its name to Chemical and Allied Products Limited.

In 1992, ICI Nigeria Limited finally disposed-off its minority 40% shareholding in CAP Plc when it sold 35.7% of its equity to UAC of Nigeria Plc. and the rest to the Nigerian public on the floor of the Nigeria Stock Exchange and currently UAC of Nigeria Plc holds about 50.09% of the company’s equity.

The paint industry has done fairly well in the face of unflinching obstacles and harsh operating environment in the country. Over the years, CAP has become one of Nigeria’s leading paint manufacturers with a wide range of paint brands such as the Dulux and Caplux brands. It also has a technical support agreement with the AkzoNobel United Kingdom in respect of paints produced and sold.

CAP in the marketplace The drivers of growth in the paint industry are high demand for real estate properties and growing construction market and industrial production, higher disposable income of paint consumers as the economy transitions from the last

recession As one of the leading paint makers in Nigeria, CAP Plc has a target market that cuts across both private paint users and industrial ones. In other words, paints manufactured by the company are patronised by both everyday Nigerians seeking to paint their homes, as well as construction companies and real estate firms who build homes for the purpose of reselling.

The paint industry is highly fragmented with over 500 operators in the organised and unorganised market.

However, the structured market accounts for 60-65 percent market share as the largest industry segment is decorative paints, accounting for about 80 percent of the revenue annually.

CAP has consistently acted as a lender to other members of the UACN Group.

Figures from financial statements for the 12 months ended December 2016, shows that the company lent N500 million to Livestock Feeds Plc, another UACN subsidiary, which has since been repaid.

UPDC Properties financial statements for the half year ended June 2017 also show that the company borrowed N263 million from CAP Plc. Recent financial performance The last five years - 2014 through 2018 – have brought great fortunes for Cap Plc both in terms of profitability and turnover as the paint maker continuously

increased sales except in 2016 when the nation slumped into its worst economic woes in 25 years.

From a gross income of N6.99 billion in 2014, the company made as much as N7.76 billion as sales proceeds as its variant products enjoyed increased patronage, even as the cost of production continued to rise faster, no thanks to the country’s inflation rate which remained double-digit since February 2016.

In spite of all these travails, the managers of the company showed efficiency in utilising its resources as the company retained more as profit from sales in 2018 more than it did in previous years. For instance, the net income margin of the company was 23 percent in 2014, this hovered around 24 percent three years after to fall to 21 percent in 2017.

Reduction in the company’s finance cost coupled with lower tax expense in 2018 helped it retain 26 percent of its revenue for the year. This means that for every N100 recorded by Chemical and Allied Products from sales in 2018, N26 was eventually held as profit after all expenses were taken care of.

However, administrative as well as selling and distribution expenses remained an issue for the company. Directors’ emoluments rose 7.5 percent to N74 million in 2018 from N69.6 million, even as costs on other staff fell to N542 million

from N551 million.

Over N137 million was devoted to marketing, communication, and entertainment in the year as against N105.7 million in 2017. Security expenses were slashed to M10 million from N11 million, while fund for tour and traveling ballooned to N48 million from N36.8 million.

Net income surged 35.4 percent to N2.03 billion in 2018, an unusual feat for the company to have recorded decline in its bottom line in the previous two years.

This significant achievement recorded by the pant maker in 2018 compared to the previous year was not only evident in its income statement, but an analysis of Cap’s balance sheet for the year also shows the profit boost bolstered its shareholders’ fund to N2.81 billion as against N2.24 billion accrued by the owners of the company in 2017.

It is still worrisome why the company was yet to record any major improvement in reducing the ratio of its total liabilities to assets. BusinessDay gathered that the proportion has grossly remained around 55 percent compared to its total assets within this five-year period.

The performance of Chemical and Allied Products (CAP) on the Nigerian Stock Exchange in the last five years between May 11, 2015, and May 10, 2019, was mixed, but investors who bought ownership stakes in the company five years ago would probably have their investments shrink by 8.45 percent.

This owes to the fact that Cap’s share price rippled through the years from N40.85 to close at N34 on Friday after remaining unchanged for thirteen straight sessions at the local bourse. At the current price, the stock is 32 percent close to its 52-week low of N25.75 and 15 percent off its 52-week high of N40.

The future of this paint manufacturer looks bright as it relies on big-ticket projects, economic recovery in the real estate sector which is still sluggish, and the passage of the 2019 budget should have positive effects on the paints sector. The Standard Organization of Nigeria must also ensure that only paint products that meet the standards are allowed in the market.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.