BusinessDay 14 Jan 2019 by BusinessDay

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Lessons for Nigeria as Ghana’s ‘successful’ health insurance flounders O CALEB OJEWALE

nce upon a golden era in Ghana, for $1.5 (N540) premium, one could undergo a brain or heart surgery through the national health insurance, provided it was due to an accident. Today, some Ghanaians think

Inside Nigeria’s cashew juice market longs for savvy Pull-out investors

Rewane-led minimum wage committee to weigh risks of P. A5 review on economy

BD INVESTIGATIVE SERIES

the scheme has been reduced to a mostly Paracetamol dispensary. Over 40 percent of Ghanaians are covered by health insurance, while in Nigeria, less than 5 percent have

health insurance coverage, with most enrolees in the formal sector, and poor coverage in the informal sector. Ghana’s health insurance was a gold standard of sort when it Continues on page 52

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

FGN BONDS

TREASURY BILLS

Spot ($/N)

364.94 306.90

-2.09 13.21

-0.07 14.32

-0.02

NGUS MAR 27 2019 364.89

15.08

NGUS JUN 26 2019 365.34

10 Y 20 Y 0.00 -0.03 15.49

15.38

NGUS DEC 24 2019 366.24

Onnoghen: Presidency embarks on illegal power grab ... Abuse of due process will send wrong signal to investors – Saraki CHRIS AKOR, Lagos & OWEDE AGBAJILEKE, Abuja ever in the history of Nigerian democracy, not even during the infamous third-term agenda of former president Obasanjo, has the presidency decided to take on the judiciary and directing the Chief Justice to stand down from office without due process of the law. It emerged over the weekend that the government, purportedly on the strength of a petition by an obscure organisation, the Anti-corruption and Research based Data Initiative, whose leader was a former spokes-

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2 BUSINESS DAY NEWS

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MARKETS

Despite tough year, banks seen ending 2018 with higher ROE, profit margins BALA AUGIE

018 was tough year for banks in Africa’s largest economy as stocks capitulated to global geopolitical risk, a sluggish growth in economy and the uncertainties surrounding elections. The bearish trend has spilled into 2019. Amid these global and local macroeconomic headwinds, analysts forecast that the country’s lenders will turn each Naira collected in revenue into higher profit to end 2018 financial year, but they are of the view that such uptick could wane in 2019. For instance, the Nigerian Stock Exchange Banking Index (NSE Banking 10 or list of the most capitalised and liquid firms) is expected to post profit margin of 25.12 percent in full year 2018, from 17.48 percent recorded in 2017, according to data compiled from the Bloomberg Terminal. “If we are to go by their performance in the third quarter of 2018, they should post good numbers in the fourth quarter because they are coming from a low base,” said Wale Olusi, equity research analyst with United Capital Research Ltd. “Even though revenue will be low, we believe lower impairment charges will bolster profitability. The sizes of their loan losses have reduced and that will support profitability. The likes of First Bank Holdings Nigeria Plc, Stanbic IBTC Holdings and Zenith Bank had reduced loan loss expense,” said Olusi. Bank stocks have been beaten down as they continue to operate in a volatile and unpredictable macroeconomic environment. Nigeria’s broad equity market tracker, the benchmark NSE all share index, has returned negative 5.09 percent year-to-date, while the gauge for Nigeria’s top 10 banks is down 3.87 percent in the same time period. The declines are largely driven by negative sentiment as the country gears up for presidential and parliamentary elections in February, and the political environment becomes increasingly unpredictable. Selloffs were also driven by a

combination of trade spat between the United States and China and the hike in interest rates by the US Fed that made investors dump Naira assets in pursuance of attractive foreign assets. “I think that foreign portfolio investors are waiting on the sidelines and they are finding developed assets more attractive because of the increase in rates in advanced economies,” said Kayode Tinuoye, fund manager at United Capital Asset Management Ltd. “Why would they stay in a country where the outcomes of elections are uncertain? Recall that this is election period for some African countries,” said Tinuoye. Nigerian banks are expected to utilise shareholders’ assets in generating higher profit as return on equity (ROE) is expected to hit 17.49 percent in full year 2018, from 11.49 percent recorded the previous year, according to data compiled from the Bloomberg Terminal. “It’s not going to be different from what they declared in the third quarter because there hasn’t been any stimulus to lend,” said Gloria Fadipe, head of research at CSL Sock Brokers Ltd. The rebound in crude oil prices that helped the country exit its first recession in 25 years is a boon for lenders as Non-Performing Loans (NPLs) have improved while impairment charges on financial assets have reduced. The accumulated impairment charge of 13 largest lenders that have released third quarter results fell by 31 percent to N170.06 billion, from N246.83 billion the previous year. Drilling down the figures shows First Bank Holdings Nigeria (FBHN)’s loan loss expense fell by 21.93 percent to N76.18 billion in September 2018, from N97.58 billion the previous year. Zenith Bank Plc’s impairment charge dipped by 69.52 percent to N14.33 billion in the period under review as against N47.05 billion the previous year.

•Continues online at www.businessday.ng

Nigerian firms seeking cash find no takers as MTN fiasco deters investors ENDURANCE OKAFOR

lthough resolved, the MTN certificate of capital importation (CCI) repatriation issue seems to have left a negative after-effect on investors’ attractiveness for Nigerian firms. BusinessDay checks revealed that the inability of some Nigerian firms to attract funds from investors in recent times can be linked to the souring of investors’ appetite for Nigeria as a result of the MTN fiasco. Ibraheem Babalola, managing director of Muster, an AI-powered peer-to-peer shared housing market place, said there was an investment deal that the company was going to close in October 2018, but the deal was never to be. “It was an international deal involving a lot of money that would have enabled us to do so many things and make us grow very fast, and the person that was leading the company that was going to invest in ours had done a lot of deals in the past,” Babalola told BusinessDay.

“But the day before the agreed date that we were supposed to sign the deal, complete the transaction and close it, they reached out to us that one of their limited partners (LP) needed for our next round of investment was uncomfortable with Nigeria FX laws on repatriation and as such they wouldn’t be going forward with the deal,” Babalola said. That was after the parties had concluded on the investment discussions and the investors had sent the term sheet to Muster. Babalola said the incident happened at the time when the “whole MTN and CBN issue was happening and we lost that deal just because of that and that is the worst encounter for Muster”. On whether or not the investment firm didn’t understand Nigeria’s policy well enough as that might have been the reason for not going through with the deal, he said they were not a first-time investor as they “were one of the very early

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L-R: Frank Aigbogun, publisher/CEO, BusinessDay Media/moderator; Babajide Sanwo-Olu, governorship candidate, APC, Lagos State; Toki Mabogunje, deputy president, LCCI; Babatunde Ruwase, president, LCCI, and Jimi Agbaje, governorship candidate, PDP, Lagos, at the LCCI private sector interactive forum with the governorship candidates of Lagos State, themed ‘Private Sector Agenda for Lagos State, Post-2019 Elections’ in Lagos, at the weekend. Pic by Olawale Amoo

Politics and two big risks facing Nigeria in 2019 LOLADE AKINMURELE & OLUFIKAYO OWOEYE

hree major events are set to shape policy and overall momentum of growth in Africa’s largest economy in 2019, according to a BusinessDay survey. BusinessDay polled the outlook of leading local investment houses that included United Capital, Cardinal Stone Partners, Financial Derivatives Company and the research arm of FSDH Merchant Bank. Expectedly, next month’s general elections topped the list of risks facing the economy this year. Some 73 candidates are vying for a chance to lead the country for the next four years, although it could be a fierce battle between two dominant candidates – incumbent President Muhammadu Buhari of the All Progressives Congress (APC) and former Vice President Atiku Abubakar of the main opposition People’s Democratic Party (PDP). Buhari, 75, says he will continue to fight corruption and expand his socialist intervention programmes if re-elected. Atiku, 72, says he will focus on key economic reforms, from ending a system of multiple exchange rates to selling part of opaque state oil company, NNPC, in a bid to revive an economy still reeling from the 2014 crash in crude prices. The investment houses polled by BusinessDay all agree that this year’s election will be tightly contested between Buhari and Atiku, as they said arguments for a Buhari victory

ANALYSIS are not as strong as that of 2015 when the former military dictator edged out then incumbent President Goodluck Jonathan in an unprecedented turn of events. The North-West of the country handed President Buhari the victory in the 2015 elections, with a total of 7.2 million votes, 46 percent of his total votes. In addition, Buhari has won all seven North-Western states in the last two presidential elections (2011 and 2015) by comfortable margins. “While we think President Buhari is likely to maintain his strong position in key states in the North West, especially Kaduna, Kano and Katsina, the 2015 margin may reduce considerably, say, to between 65 to 70 percent, amid recent defections by political heavyweights in the region, especially in Kano, Sokoto and Zamfara,” a team of United Capital analysts said. “Again, President Buhari’s perceived push back of Boko Haram, alongside his long history with the North East region, may support his chances. However, this will be deflated by the fact that Atiku is from this zone,” the analysts said. Cardinal Stone also expects the margin of a Buhari victory in the region to reduce on vote splitting across religious and ethnic lines, as both candidates, Buhari and Atiku, are Muslim and Fulani. In their view, the high profile defections witnessed in 2018 from the ruling APC to the major oppos-

ing party (PDP) would also have an impact, albeit moderate, on the APC’s expected margin of victory in the region, considering recent events in states such as Sokoto, Kano and Zamfara, in particular. “Success in the 2019 presidential elections hinges on the ability of the two main parties involved to consolidate votes in their respective strongholds,” a team of analysts at the Lagos-based Cardinal Stone said. “We have seen that a victory is likely for the PDP, if they are able to gain ground in the North. This victory is possible even if APC retains victory in the same regions as in 2015. Conversely, the APC will need to consolidate its votes in the South West, while retaining its firm grip in the North in order to secure a second term for President Muhammadu Buhari,” they added. Whatever the outcome, this year’s election is sure to take a toll on the economy of Africa’s most populous nation, in need of urgent reforms to grow sustainably and create sufficient jobs for its teeming people. A possible change of guard at the office of the Central Bank governor is the second biggest risk facing Nigeria. The five-year tenure of current CBN governor, Godwin Emefiele, comes to an end this June. Although the CBN governor is eligible for reappointment for another five-year term, no CBN governor has returned for a second term since 1999.

•Continues online at www.businessday.ng

Investors see pile of money in refining, petrochemicals … Bet on IMO supply cap regulation, subsidy removal, rising demand ISAAC ANYAOGU

hen Femi Otedola, chairman of Forte Oil Plc, announced he was selling his entire 75 percent shareholding in the company, the decision was based on a desire to explore and maximise business opportunities in refining and petrochemicals. He is not alone. Savvy investors have caught a whiff of a pile of money in refining and petrochemicals on the African continent within the next five years where over one million barrels a day worth of new refining projects are billed to come

on stream on the continent. Africa is positioning itself from being a major exporter of crude to becoming a refining hub. The Dangote Refinery is promising a 650,000 b/d capacity by 2020. Ghana plans to build a 150,000 b/d refinery in Takoradi along with potential upgrades at the country’s existing Tema Oil Refinery, while Angola plans a 200,000 b/d refinery in Lobito by 2022 along with a smaller plant in Cabinda. “In a few years from now, the winners will no longer be the countries that produce oil, but the refiners,” said Ayodele Oni, partner at Bloomfield law firm. “This is

because refiners dictate the price,” Oni said. According to the International Energy Agency (IEA), petrochemicals are becoming the largest drivers of global oil demand, in front of cars, planes and trucks. Petrochemicals, components derived from oil and gas, are used in all sorts of daily products including packaging, plastics, clothing, detergents and tyres. Even though there are environmental concerns, the world does not look set to be rid of plastic soon. The Paris-based energy think tank further said that petrochemi-

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FRC confirms Nedbank position that Wapic strengthens consumer relationship with Ombudsman desk Ecobank faces no investigation IHEANYI NWACHUKWU

nless proven otherwise, the statement of the chief operating officer of South Africa’s Nedbank on Ecobank should be taken as truth, Daniel Asapokhai, executive secretary/CEO of Financial Reporting Council of Nigeria (FRCN), said weekend. Mfundo Nkuhlu, chief operating officer of Nedbank, which owns 21 percent of the Togo-based lender, said weekend that Ecobank was not under investigation in Nigeria. “Unless you disbelieve them (Nedbank) and you have the basis to prove otherwise. But if they are under investigation, we will get the notice out to the public in line with our processes. Whenever we have anybody under our investigation, we will not make it secret,” Asapokhai told BusinessDay on phone. A social media report that Nedbank’s West African associate was subject to an investigation by Nigeria’s accountancy regulator spooked investors sensitive to any prospect of costly

fines in the country, driving down Nedbank’s share price by more than 4 percent. The report said to be “wrongful” had alleged that the investigation related to allegations that Ecobank had overstated its balance sheet and income statement by applying incorrect exchange rates. Ecobank had in a notice at the Nigerian Stock Exchange allayed the fears of any of its shareholders, creditors, and other stakeholders resulting from the unfounded allegation contained in the said publication. At the time of the report last month, both Ecobank and Nedbank said they had not been notified of any inquiry. On Friday, January 11, 2019, Nkuhlu said Ecobank’s discussions with the regulator since then suggested there is no investigation. “Ecobank Transnational Incorporated management have advised, based on their interaction with the Financial Reporting Council of Nigeria, there is no investigation under way into the previous reporting of ETI’s annual financial statements,” he said in an emailed statement.

MODESTUS ANAESORONYE

nderwriting firm, Wapic Insurance plc committed to ensuring a smooth relationship with its customers has launched an Ombudsman desk. The Ombudsman will ensure that aggrieved customers who feel dissatisfied with the way their claims were handled are given needed attention and their matter settled within the company’s ecosystem. Being the first of its kind in the Nigerian insurance industry, Wapic believes that it holds the industry a strong responsibility to set leadership qualities that will redefine the insurance space in Nigeria. Yinka Adekoya, managing director/CEO of the company, unveiling the initiative in Lagos said this was targeted at strengthening the customers’ dispute resolution process and the confidence of the general public in the activities of the company, as they affect their customers. “Wapic Insurance has created a customer Ombudsman desk within the organisation to resolve customer disputes, and it is the first of

its kind in the insurance industry. Another first in the delivery of Wapic’s Transformational Leadership Objectives,” Adekoya said. The ombudsman desk will be responsible for informally investigating and mediating fair settlement of commercial disputes between the company and its customers, adding that the desk, would usually engage the parties informally with a view to resolving the dispute timely, encourage business continuity and improve customer experience, Adekoya said. “We at Wapic Insurance are very excited to launch this initiative. Whilst the notion of having an ombudsman desk is not new in the Western-developed societies and some parts of Africa including Nigeria, this is first time an insurance company will launch its very own ombudsman desk. “It is a feat for us as an organisation and this also buttresses our vision which is to transform and illuminate the insurance industry for the benefit of our customers and stakeholders as well as our mission which is leading in all that is worthy,” she posited.

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Insurers step up action to enhance vehicle insurance inspection in low internet areas MODESTUS ANAESORONYE

o ensure that consumers and vehicle inspection officers across different parts of the country with or without internet access are able to verify their motor vehicle insurance, the Nigerian Insurers Association (NIA) has launched the Unstructured Supplementary Service Data (USSD) Code. The code: *565*11# will enable consumers and officials in charge of vehicle monitoring and inspection to validate genuiness and validity of the vehicle insurance cover they have anywhere in the country. The NIA it would be recalled had in 2001 launched the Nigerian Insurance Industry Database (NIID, which helped capture insurance policies obtained by motorist’s real time online on the internet and through dedicated hand held devices. But today, the platform has only captured about 2 million vehicles, underscoring the high prevalence of fake and parallel market operators. Speaking at the official launch of the Code in Lagos, Tope Smart, chairman of the

NIA said this represents yet another giant step towards bringing insurance closer to the people and ultimately eliminating fake insurance certificates in the market. Smart said the USSD works independent of internet connectivity. In this instance, any mobile phone (not necessarily a smartphone) would communicate with the NIID system to retrieve policy status whenever required. He said, “It is hoped that with the USSD, we would have fully overcome the problems associated with the dedicated devices as it guarantees uninterrupted service throughout the country and on all networks. “Our existing and prospective customers now have the opportunity to confirm the genuineness of their respective policies at the time of purchase to avoid any embarrassment should claim occur.” He however thanked the partners in the journey- Nigeria Inter-Bank Settlement System plc and Courteville Business Solutions plc for their support and assured them of more strategic partnerships as we develop other modules to improve insurance business in Nigeria.

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But why was he missing from the bench? Bashorun J.K Randle Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

hen in the matter of Chief Frank Odunayo Akinrele, SAN and Mrs. Ibidun Akinrele, the learned silk pronounced judgement in open court: “I have fulfilled all my obligations” at his beloved wife’s 80th birthday on 5th April 2018, those of us who do not belong to the learned profession expected both Ademola Akinrele, SAN (alas an old boy of St. Gregory’s College) and Adedolapo Akinrele, SAN to immediately lodge an objection and proceed to file papers to appeal the matter directly to the Supreme Court on the grounds that Chief Frank Akinrele, SAN should have been restrained from pronouncing judgement in a matter in which there was clearly profound conflict of interest. For the benefit of lay men and women, it has been firmly established as a fundamental principle of law that you cannot approbate and reprobate. For this lapse, we must hold Ademola “The Gregorian” responsible! He did not even lodge a preliminary objection nor an ex parte motion demanding a retraction compelling Chief Akinrele, SAN to continue the excellent work he had been doing for several decades – as a loving husband, GrowthView with

Christina Wehbe Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland, via christina. wehbe@gmail.com E: christina.wehbe@urbanemerge. com Cell: +41 79 950 4760 https://www.urbanemerge.com/ people https://www.qeh.ox.ac.uk/alumni/ christina-wehbe

he year 2019 is focused on political stability, sustainability and economic impact. We, as individuals, employees and corporate leaders each have a stake in the game. Our Growth View column is split in 2 parts - first (1) we will discuss how change, requires investors and corporates to focus on their comparative advantage and adapt their business models. Second (2) the benefit of transparency, to identify gains that can be achieved through pareto-efficiency. With the Nigerian Presidential elections in February, candidates and the electorate aspire for prosper-

devoted father, inspirational mentor, rock solid confidant and unblemished role model. Perhaps the court would be minded to pursue vigorous enquiry regarding what would appear to be an oversight on the part of Chief Akinrele who may have vicariously permitted Ademola to attend St. Gregory’s College, instead of his own Alma Mater, King’s College, Lagos. It is on record that all the three brothers of Uncle Frank – Christopher Olufemi Akinrele; Dayo Akinrele; and Marshall Olatunde Akinrele attended King’s College where they all excelled. They were simply brilliant. Both Dayo and Marshall graduated from Trinity College, Cambridge University. The phenomenal academic achievements of Uncle Frank at King’s College, starting with double promotion in his first year, have been preserved for posterity. Hence, it was no surprise that he earned spectacular laurels at University of Hull where he obtained an LL. B. degree in 1953 (at the age of twentythree). Eyimofe Atake, SAN has availed the court of his evidence in chief: “At Hull University he was awarded the Andrew Marvell Prize for the best graduating law student.” This was followed by an LL. M. from the same university in 1954. With consummate ease, Uncle Frank bagged bountiful commendations from his peers: i.) Late Hon. Justice Adewale Thompson (in his book “REMINISCES”): “F.O. Akinrele was the most brilliant junior of our time” ii.) Late Hon. Justice Franklin Atake “F.O. Akinrele is one of the best Criminal Law Lawyers in Nigeria” It is almost tempting (at the risk of being charged with contempt of court)

‘

His Lordship should have directed his energy and his court to serving a bench warrant on Chief Frank Odunayo Akinrele to join the bench. The judiciary would have been abundantly enriched and our nation would have been better served

’

to challenge the late Chief Justice of the Supreme Court, Sir Darnley Alexander, SAN; GCON; KBE who persuaded Uncle Frank to apply for silk (the elevated rank of Senior Advocate of Nigeria). His Lordship should have directed his energy and his court to serving a bench warrant on Chief Frank Odunayo Akinrele to join the bench. The judiciary would have been abundantly enriched and our nation would have been better served. Another missed opportunity was when Uncle Frank retired at the age of 56 and proceeded to spend the next thirtytwo years on learning French, playing the piano, boating and annual cruises in the company of his wife and Ambassador and Mrs. Omotayo Ogunsulire. We can only speculate and savour the difference such a brilliant mind would have made to the bench either at the

Appeal Court or the Supreme Court. Rather than insist on a cogent answer to the question: “But Why Was He Missing From The Bench?”, time and space compel me to confine my tribute to recalling my first encounter with late Chief Frank Akinrele when in our final year (1963), I was one of several King’s College students who bumped into him as he emerged from his law office on Bamgbose Street, in central Lagos. We exchanged the traditional greeting of “FLOREAT!”. Waiting for him was his sleek, brand-new, long-wheel based American limousine. It was either a Chevrolet or Pontiac. He was wearing his King’s College tie and he greeted us warmly. We owe him our eternal gratitude for the impromptu message he delivered – you too can own a car like this provided you work hard with integrity, confidence and zeal as your guiding principles. At the Lagos Motor Boat Club, Uncle Frank would regale us with those landmark cases which appear to have been relegated into the realm of our collective amnesia – the Apalara murder case; Njemanze murder case; Abakaliki ritual murder; Alphonse and Abayomi murder case; and many others. He recalled everything with clinical precision even though almost fifty years had lapsed. He was also very much involved with the investigation of the U.S. $2.8 billion which was alleged to be missing from the Nigerian National Petroleum Corporation. I leave it to history to judge how and why we missed the red flags. About three years ago, Uncle Frank surprised me when he declared that for almost a decade, he had not travelled out of Nigeria – not even to go on his annual cruises or vacation in Chelsea, London where he had owned a swanky pair of

flats for several decades. According to him, he found all the hazards of going through the airport, customs, immigration, passport control etc. too tiresome and energy sapping. Without attempting to tamper with the court records, we must accept both circumstantial and substantive evidence from Uncle Frank: “My wife was only twenty-one years old when we got married and we have been happily married for fifty-eight years. She has been my soul mate and I remain eternally grateful for her love and devotion. We have been blessed with four children – Ademola, Adedolapo, Olufemi and Adebayo and numerous grandchildren – whose ages range from five to thirty years.” As you are all aware, Uncle Frank was the victim of a freak accident at the Lagos Motor Boat Club on 29th August 2018 while attempting to retrieve his mobile phone which had dropped from his hand when he was seated on a chair. The result was a fractured hip which required surgery. Sadly, he never fully recovered. The timing of the demise of Chief Frank Odunayo Akinrele, SAN on Christmas Day when King’s College Old Boys (KCOB’s) were hoping that the spate of deaths of KCOB’s in 2018 had been finally halted is a severe blow. The catalogue of attempted “genocide” is under investigation by the police Dr. Alex Ekwueme [aged 85]; Prince Adedapo Adeniran [aged 94]; Chief Tunji Gomez [aged 90]; Chief Allison Ayida [aged 88] and now Chief Frank Akinrele [also aged 88] – all of them very distinguished old boys of King’s College. We all know where the finger of suspicion is pointing!

long-term investment. What is the cost of lending? What is the return I expect? Do I truly know how the landscape will change in 2019? It is key to be pro-active. FinTech firms are developing algorithms to predict legal outcomes, and even to include political variables (despite how difficult they are to incorporate quantitatively); into their overall performance calculations. “Why don’t corporates start developing, various predictiveimpact models into their business strategy and product development, to ensure sustainability?” What about developing impact scenarios, on a company level? Make your business model at an SME and MSME level a pro-active strategy, with various scenarios based on potential outcomes.What is the value of having predictive scenarios? GrowthView offers the clear RAS model. These variables have various weights, based on our priorities and growth targets. This will be covered in Part 2 of this column. 1. Risk | minimise your risk, and you also broaden your perspective on the political or economic change. 2. Adaptability |It allows youto adapt effectively to the change. Be ready sub-consciously and pro-active when the time comes. 3. Sustainability | It also gives you the opportunity, to integrate sustainability early on into your business model, without having to pay the cost at a later stage.

Now, to help be forward-looking and have a cohesive vision, below are3 reflections on building a sustainable business model that will give you a comparative advantage in the long-term. I. Keeping steady and knowing your strengths is a strategy both as an individual and as a corporate, helps weed out the chaos around us. Knowing your strength is also knowing your comparative advantage in the market. Particularly across the 17 SDGs, where does your strength in capacity but also in agility lie? II. Agility is then the next stage in corporate or SME growth, being talented at adapting, either as an individual or as a company is what allows a growth shift to be catalysed. By setting different scenarios and predictive analytics, you will set yourself apart in the dialogue of sustainability efficiently. III. Absorbing information and sharing knowledge transparently, as we enter the new year. Companies and markets reflect innovative movements. Keeping eyes and ears open, as leaders share more information and conferences are increasingly taking place. Be aware of the trends. Our choices and decisions as individuals, combined with our values is what will drive impact and change in our economies - locally, as well as internationally.

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Change and sustainability ity and inclusive economic growth. Despite the talks on equity markets tumbling, mergers in Tech & TelCos and the uncertainty with debt and political reforms; the question is, what do we, as individuals and companies, have to look forward to in 2019? Change is a topic that most people are afraid of. We intrinsically fear it and it is engraved in our mindset at a young age. Social and behavioural economics reflect this. Where, uncertainty can drive frantic investments. In both markets and politics, the unknown will drive quick actions and irrational decision-making in large volumes - where people jump on the “bandwagon”. Why don’t we position the “bandwagon’ positively, towards sustainable investments and social impact? Impact investment is the next “digital era” where politicians, companies and individuals are adapting and setting a high value on education, health, poverty reduction and our environment. This is reflected in business models and products put on the market, in Nigeria as well as globally. ‘On a positive angle, change also opens our mindsets to new business strategies, innovation, and allows us to reflect on fresh ideas that leaders put forward.’ FinTech investments are increasing for example, to improve access to finance in rural and poor

communities in Sub-Saharan Africa (SSA). On the same token, investors also see the value of micro-lending and market-entry financing. It is a win/win both for undeserved communities and those providing working capital at a lower cost. This micro-lending is dedicated to sectors that will attract a high volume of customers. Investors and start-ups are making the most of this market change, they aim to decrease the number (#) of middle-men in the value chain and take control of trades patterns to lower corruption and costs. Volume is the market changer As discussed in the previous Growth View, values drive change. We see a convergence among societies and markets that aspire for prosperity and equity. And volumes are speaking. This year, the decision-making power is being handed to people. Banks and companies are introducing impact business models. So how can we make the most of this market trend and investment direction? Motivation is critical in times of economic risk. We tend to let go and not be pro-active in our quarterly or yearly strategy, we prefer to wait as we don’t believe we can predict outcomes. Our societies wait for the political results and the markets to drive themselves, taking a “laissez-faire” approach. In our current landscape, this may be with Brexit, Trump Chinatrade negotiations or the Nigerian presidential elections. We also tend to borrow moreand spend rather than save and keep our cash for the effective

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Nigeria’s growth imperative

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

ere are some statistics that should put Nigeria’s economic managers to shame (assuming they still feel such worldly emotions). The United States is on track to hit the Trump administration’s 3 percent growth target this year, after expanding at a 3.5 percent annualized rate in the third quarter (Q3) of 2018, following growth of 4.2 percent in Q2, and 2.2 percent in Q1, while the Chinese economy (second largest economy globally) grew around 6.6 percent in 2018. The United States has the largest economy in the world at $20.4 trillion, according to data from the International Monetary Fund (IMF),China follows next, with $14 trillion. An economy the size of the US, which is expanding at a 3 percent clip implies new economic output of around $612 billion being created annually, while for China (expanding at 6.6%) it means $924 billion of new economic activity/expansion (assuming exchange rates remain fairly stable in the period). Both economies are creating on an annual basis new economic activity larger than Nigeria’s an-

Tiko Okoye Okoye is an Economic /Microfinance Analyst based in Abuja. He wrote in via tkooziks@gmail.com

eactions to my most recently published essay titled “Still on the Proposed National Microfinance Bank” were fast and furious. Before misconceptions further concretize and speculations run riot, let me hasten to say that all stakeholders – banking regulators, microfinance operators and microfinance investment vehicles – unequivocally share the same basic goal of providing access to financial services at affordable pricing to millions of poor people in order to reduce or alleviate grinding poverty. However, while there is a shared belief in the imperative of the front-burner position of the social mission, they do not all agree on the best way to achieve it. There are two contending schools of thought – the poverty lending approach versus the sustainability/financial systems approach. The formerfocuses on the poorest of the poor/extremely poor (‘poorest of the poor’ according to CGAP classification) and is described as supply-led i.e. a top-down approach. The selfsustainability approach (also known as the financial systems approach) focuses more on the economically active poor and is said to be demanddriven i.e. customer-centric. Both approaches are usually

nual economic output of about $420 billion. More worrisome though is the fact that these 2 economies (U.S and China) bumping up against the ‘law of large numbers’ (wherein if a firm, company or economy becomes bigger, high growth rates become increasingly difficult to maintain), are outperforming Nigeria which is growing from a very low base. In the past four years Nigeria’s annual growth rate has averaged: 2015 (2.8%), 2016 (-1.5%), 2017 (0.83%), 2018 (1.9 %*). Nigeria should manage growth of just 1.9 percent in 2018, according to World Bank estimates. This should rise to 2.2 percent in 2019, the World Bank said last week Wednesday in its annual Global Economic Prospects. While the 2015 growth rate of 2.8 percent was the weakest level since 1999 and down from 6.2 percent recorded in 2014, there is still no sign that growth is set to return to levels (circa 7% per annum) needed to lift millions of Nigerians out of poverty. This is frankly unacceptable and threatens to bestow a lost decade of poverty, unemployment, misery and worsening infrastructure/ quality of life to the ever expanding population of Nigerians. It is instructive that Nigerian economic managers do more than pay lip service to growth as social safety net programmes or dishing out of ‘free’ money by the State (in the form of intervention programmes) to the so called poor can do no more than tinker at the edges. The Federal Government must know that there is no substitute for growth and market reforms for lifting millions of Nigerians out of poverty. It must also know that it is failing woefully in that regard right

now and must duly change course. Since initiating market reforms in 1978, China has shifted from a centrally-planned to a more market-based economy and has experienced rapid economic and social development. China’s GDP growth has averaged nearly 10 percent a year—the fastest sustained expansion by a major economy in history—and has lifted more than 800 million people out of poverty (World Bank). China reached all the Millennium Development Goals (MDGs) by 2015 and made a major contribution to the achievement of the MDGs globally. India, another major global economy (GDP $2.85 trillion), has between 1990 and 2013, pulled some 170 million people (the second-most number of people in the world) out of poverty, reducing the number of its citizens living in extreme poverty by 25 percent. During the same period, life expectancy in the country rose by more than a decade (McKinsey Global Institute, MGI). The World Bank forecasts that India will be the world’s fastest growing

major economy for the next 3 years with GDP growth numbers exceeding 7 percent annually. Getting your economy to expand at 7 percent per annum usually entails hard work by economic managers including pro-growth government policies, attracting and keeping major global companies and manufacturers, and streamlining regulations. McKinsey Global Institute in a recent report found that big companies are driving GDP growth in countries that are growing fast and lifting their citizens out of poverty. MGI found that outperformers identified in the report have almost twice as many large firms (publicly listed ones with annual revenue of over $500 million) as other developing countries, adjusted for the size of the economies. Presence of big firms also leads to clusters of innovation and increased productivity. In Nigeria the urgent need for growth cannot be overemphasised. The negative wealth effect from falling stock markets, poor fiscal

position of the Government (Federal and State), lack of jobs/opportunity for millions of young graduates, all derive one way or another from low or anaemic GDP growth and absence of reforms. Nigeria’s current situation is made more baffling by its infrastructure needs in all sectors. Whether it is roads, high speed rail, subways for cities, bridges, broadband/high speed internet, hotels, food processing, car assembly, power, services, restaurants, manufacturing, food processing, healthcare, quality education, oil refining, housing, and so on, there is massive unmet demand in Nigeria. This means Nigeria is very far from capital misallocation like being done in some parts of China and so can attract capital to make these capital investments, provide a return on investments, create jobs, boost growth sharply and provide a better quality of life for most of its citizens. Even with its impressive economic performance Chinese policymakers are still laser like focused on growth and understand its far reaching implications for employment, income and stability. China is targeting growth of about 6.2 percent over the next two years to meet the Communist Party’s longstanding goal of doubling gross domestic product and incomes in the decade to 2020, and to turn China into a “modestly prosperous” nation. It is sobering that while a country like China that is light years ahead of Nigeria is still setting high growth targets, Africa’s largest and arguably most important economy seems resigned to mediocre economic performance.

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Aspects of social outreach in microfinance compared on the basis of six aspects of microfinance outreach, namely: Worth; Cost; Depth; Breadth; Length; and Scope. Worth is defined by the value the customer attaches to the outreach effort; cost refers to pricing;breadth refers to the degree of diversification of product offerings; depth to the extent to which poor people are served;length refers to the maturity cycle of product offerings; and scope to the size of the outreach programme. Poverty lending approach typically lays emphasis on a benefit-cost analysis while the sustainability approach focuses on cost-effectiveness analysis.The most critical measurement index in benefit-cost analysis is depth of outreach while the most critical indexin cost-effectiveness analysis is length of outreach (fullcost coverage plus an ample return). Not surprisingly, the poverty lending approach measures success by how well the intervention effort fulfils the needs of the greatest number of the poorest in the short-term while the sustainability approach measures success by how well it expands the frontiers of the mainstream economy in the longterm. The pressing need to combine the best aspects of both approaches led to the dual mission concept of microfinance: fulfilling the social mission of providing affordable microfinance services to large numbers of poor people in tandem with

recovering the full costs of operations. Although microfinance banks have a social mission to escalate access to financial services to the economically active poor it must be noted that microfinance is not a charity but a business relationship that targets the economically active poor, not the extreme poor that are more appropriately served by the poverty lending approach. Rhyne and Rosenberg (1998) succinctly posited that “Every decision to settle for less than full financial viability is of necessity a decision to reduce the number of people who will gain access to financial services in favour of giving a larger benefit to a smaller number.” It was as a result of the understanding that a large-sized outreach depends on easy access to funding sources that made the CBN to launch its Revised Microfinance Policy Framework. But just about a decade later, we are returning full circle to the days of depending on government hand-outs, subsidizing interest rates and capping lending margins – the very same factors that caused past poverty alleviation intervention schemes to crash! Government direct intervention in business breeds inefficiencies and corruption. Political chieftains, traditional rulers and tribal warlords tend to compromise the system by influencing who takes a bite at the ‘national cake’ and those for whom the intervention is targeted hardly ever make it past the doors. And no

one should underrate the ability of the typical Nigerian – whether literate or not – to ferret out arbitraging opportunities offered by the huge interest rate differentials on subsidised facilities! This is not to say that there aren’t cases of regulated microfinance banks that have successfully used the poverty lending approach. However, they are very few and far between and usually require a plethora of special regulations to prop them up. The most notable example is the Grameen Bank (Bangladesh), a NOTFOR-PROFIT microfinance bank founded in 1983 by Nobel laureate Professor Muhammad Yunus. The formation of the National Microfinance Banksignifies the total repudiation of the financial systems approach and adoption of the NON-PROFITGrameen business model and a solid vote for the poverty lending approach. But while the proposed National Microfinance Bankcan accommodate huge losses arising from providing below-market interest rates, existing microfinance banks cannot do same. And even if some buoyant microfinance banks are able to remain in business, it can only be for a limited period of time considering the crowding-out effect the National Microfinance Bank would have on the subsector. There would be a very high customer churn accompanied by huge revenue losses.

The operators must drastically peg costs to remain in business and doing so would mean ‘right-sizing’ their staffing andoperations, culminating in job and income losses (these would be amplified in our extended family system society). Less hands would do far more work, leading to declining effectiveness, poor corporate governance, heightened customer dissatisfaction, rising incidences of employee frauds and unethical/unprofessional conduct. The long-term effect on the formal microfinance subsector would be disastrous as more and more persons will be financially excluded and placed at the mercy of shylock moneylenders and other informal microfinance operators. The more intriguing aspect is the willingness of commercial banks to take a significant stake in the project. Those among them that had engaged in microfinance activities either through a subsidiary microfinance bank or in-house unit had their fingers severely burnt. They ultimately either sold off or wound down their operations. So why get involved again against the backdrop of past errors and regrets?

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The cost of traffic gridlock in Lagos metropolis

agos is one of the largest cities in the world in terms of population and population density. Although, it is the smallest state in Nigeria with a total size area of 357, 7000 hectares, it is the most populated with an estimated population of 21 million, a population density of 4, 193 persons per square kilometre generally and 20, 000 persons per square kilometre in built-up areas of the metropolis. Lagos is the commercial, economic, as well as financial capital of Nigeria accounting for over 50 per cent of Nigeria’s industrial and commercial establishments, as well as 70 per cent of manufacturing activities. In addition, it had the most active stock exchange in West Africa; its four ports collectively handle about 75 per cent of the country’s imports by weight and 90 percent of non-oil exports by weight. What was more, the international airport in the city handled about 80 per cent of airborne exports and imports and 80 per cent of passenger movements in and out of the country. The movement of the capi-

tal from Lagos to Abuja hardly affected the status of Lagos as the largest and pre-eminent city in Nigeria. The state’s population has continued to grow quite rapidly – put at between six to eight percent per annum – and is a dragnet for school leavers and other economic migrants from other parts of the country. It is projected that the population of the city will grow to 36 million by 2020. Despite its huge population and importance, the city’s most common and available means of transportation is road. Rail and water transportation are relatively under-developed in Lagos. Years of military rule, under investment and under maintenance of existing transport infrastructure has seen Lagos lagged behind other major cities in the utilisation of efficient public transportation system such as urban rail system and modern high capacity buses. Growing population has continued to put pressure on existing transport infrastructure and non-maintenance saw to their gradual decay. As at 2006, it was estimated that the city’s transport infrastructure and services were at levels that supported a population of six million some 20 years ago.

In 2006, the government developed a transportation master plan that will integrate road, water, rail, and cable-car transportation to provide one of the most efficient systems of transportation in a megacity. Shortly after, in 2008, the Bus Rapid Transit (BRT) was launched as a stop-gap measure while seven train lines were planned to link all parts of the states and even Ogun state with light rail. However, due to paucity of funds, only the contract for the blue line (the 27-kilometre Badagry line running from Okokomaiko to Marina via Iddo) was awarded at the cost of $1.2 billion to be completed in 2011. It was projected others will be awarded subsequently and the entire Master Plan will be completed in 2020. However, since then, the blue line is yet to be completed and there is no indication that the state government is still interested or working to meet the timeline of the Master Plan. The absence of a modern transport infrastructure in Lagos and the cons equent heavy traffic gridlocks on the roads comes with huge costs to the city and its inhabitants, the state, the country and the economy. Sometime in 2015,

the governor revealed that the state loses over N250 billion to traffic annually. This is besides the billions of Naira lost to businesses and families daily due to the excruciating traffic lock jam that see people spending four or more hours in a 30 minute journey. Also, the Managing Director of Planet Projects at some point disclosed that the result of a recent study indicates that at least three of every ten years spent in Lagos is lost to traffic. It means Lagosians spend an average of seven hours 20 minutes in traffic every day. This is taking a heavy toll on the health of road users, reducing their lifespan and adversely affecting their productivity as well as the economy of the nation. The economic as well as health, emotional and relational cost of traffic in Lagos is colossal and unacceptable. Worse is when the state allows the few roads to deteriorate without repair or fail to provide sufficient manpower to maintain law and order on the roads. While we clamour for the development of other means of transportation, we call on the government to learn to efficiently manage the few roads and infrastructure available to ease the suffering on hapless Lagosians

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Till death do us part

Too many Shopping for challengers a splenectomy

A failed coup in Gabon highlights the staying power of Africa’s ageing leaders Coups are growing rarer on the continent, and the average age of its presidents is rising

T WAS ALL over within hours. At 4.30am on January 7th a small group of junior army officers seized the national radio station in Gabon, an oilrich country in central Africa, and declared a coup. They said they were motivated by the “pitiful sight” of Ali Bongo Ondimba, Gabon’s 59-yearold president, delivering a televised address from Morocco, where he has been convalescing since November after suffering a stroke. The attempt to unseat him was short-lived: by midday, most of the coup-plotters had been rounded up and the government was back in control. The drama in Gabon is a throwback to more turbulent times. Coups have become rarer across Africa—a sign that basic democratic norms are more widespread than they were. But checks and balances on presidential power are often still weak, so many African leaders have been able to cling to office far longer than is possible in more competitive polities. Five have died in office since 2010—all of natural causes. Seven of the current crop have been in power for over two decades. Mr Bongo, whose previous jobs include minister of defence and funk singer, has been in power for only ten years, but his family has run Gabon since 1967; he inherited the top job when his father died.

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Hospital prices are now public That is unlikely to push them down

ROM THE day it became law, the Affordable Care Act, better known as Obamacare, has been a party piñata for the Republicans. They keep bashing it from all sides, trying to tear it apart. But one of its provisions was embraced and even bolstered by the Trump administration: as of January 1st hospitals are obliged to post online the standard charges for all of their services. The idea is, in theory, laudable. Patients, who are otherwise mostly blind as to what their care will cost until the bill arrives, would shop around for lower prices. The biggest winners at first would be the roughly 10% of Americans who do not have health insurance and the 43% covered by cheap plans that require them to pay substantial amounts towards

Mr Bongo is not the only African president who rules from his sickbed. Muhammadu Buhari, Nigeria’s septuagenarian president, spent much of 2017 abroad recovering from an undisclosed illness. Last month he was forced to deny that he had died and been replaced by a body double. He is standing for re-election in February. Algerians often speculate about the

health of Abdelaziz Bouteflika, their 81-year-old autocrat. He is rarely seen in public, but may run for a fifth term this year. In the past such frail leaders would have made easy pickings for a young upstart plotting a coup. But the most recent successful coup in Africa, in which the Zimbabwean army deposed 93-year-old Robert Mugabe in 2017, marks the exception rather than the rule. From 1980 to 2000 there were 38 successful coups in Africa. Since then there have only been 15. This is partly because presidents have grown more adept at coup-proofing their regimes. Many place relatives in key roles, keep the army weak and play factions off against each other. The spread of democracy in Africa has also helped stave off putsches. The African Union (AU) has adopted a policy of “zero tolerance” towards coups, though it sometimes turns a blind eye if given a semi-plausible excuse to do so. In Zimbabwe, for example, the generals detaining Mr Mugabe insisted that they were protecting rather than overthrowing him. The AU did not point out that this was an obvious fib. Mr Mugabe was not popular. In other cases, though, the AU’s

policy has undoubtedly deterred some coups, and helped to foil others. In Burkina Faso, for instance, it played a big role in forcing soldiers to hand power back to civilians after they deposed the president in 2015. The decline in coups is a good thing. But political competition for the top spot is still constrained. Most African countries have presidential term limits. But since 2000 ten countries’ leaders have simply changed their constitutions to stay in power. Omar al-Bashir, Sudan’s ruler since 1989, recently said he would follow suit, even as his government teargassed protesters. As a result, the average age of Africa’s presidents has risen steadily, from 52 in 1980 to 66 today. This is not just because autocrats are living longer. In noisy democracies, too, political parties are often dominated by older figures who are reluctant to leave the limelight. Mr Buhari’s main challenger in elections next month is also over 70, and has run for president four times before. Tunisia democratically replaced a 69-year-old president with an 88-year-old in 2014. The continent’s greying leaders are in no hurry to leave, a sentiment expressed funkily by Mr Bongo in his 1977 song “I wanna stay with you”.

medical bills before their insurance kicks in (known as high-deductible plans). As patients flock to competitors who charge less, hospitals would cut prices to win them back—bringing America’s exorbitant prices closer to those in other rich countries (see chart). In reality, none of this is likely to happen. The price lists that are being published are of little practical use for patients. Each private insurer negotiates discounted rates with each hospital, in contracts that usually neither side is allowed to make public. An analysis of payments for uncomplicated births in California in 2011, for example, found that discounted prices paid by insurers were, on average, 37% of hospitals’ list prices. Uninsured patients, who are most likely to pay the list prices, face a headscratcher: working out which of the thousands of items on the price lists, with descriptions like “ECHO TEE GUID TCAT ICAR/VESSEL STRUCTURAL INTVN”, might apply for their treatment. Even if they manage to nail down the big-ticket items, Continues on page 15

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Agricultural technology

How silicon makes Israel’s desert bloom

Dry summers and hostile neighbours have pushed Israel to innovate

INK BOLLWORMS are the scourge of cotton farmers. The insect is less than an inch long, but it has a voracious appetite for the plant’s seeds. As a child living on Kibbutz Ginosar, in Israel’s north, Ofir Schlam would wake up at dawn to inspect leaves for the pest. “They were really hard to find,” he recalls. Spotting the enemy has become much easier. Four years ago, Mr Schlam co-founded Taranis, a company that uses high-resolution imagery from drones, planes and satellites to diagnose problems in the field—among them bollworms, diseases, dryness and nutrient deficiencies. Investors are joining the effort: in November, Taranis raised $20m. Faced with unfriendly neighbours and an arid climate, Israel has had to innovate to survive. Taranis is the poster child of its stunning rise in agritech. Over 500 companies operate in the field, nearly twice as many as in the better-known cyber-security sector. A third of them did not exist five years ago. Israeli agritech firms attracted $171m in equity investment in 2017, according to Start-Up Nation Central, a non-profit organisation, considerably more than those in bigger farming countries, such as Australia and Brazil. Other countries have bet big on agritech, but Israel is ahead of all but America, say investors. Large countries with big appetites are taking notice. When Wang Qishan, China’s vice-president, visited Israel in October, he toured agritech exhibits. “Agricultural parks” using Israeli technology have mushroomed across China. Indian and African officials have also made recent trips to Israel seeking inspiration. Because it trades little with its

neighbours, Israel long relied on the kibbutzim and other collective farms to grow food for its rising population. That heritage is providing rich pickings today: 54% of Israel’s agritech ventures are managed by someone who grew up in a kibbutz. Conditions forced them to be creative. The southern part of the country often receives less rainfall in a year than England gets in a day. That led to an early breakthrough in water management. In the 1950s Simcha Blass and his son, Yeshayahu, greatly reduced water use by applying it directly to the roots of plants. They helped form Netafim, the world’s leading maker of drip-irrigation systems, worth nearly $1.9bn. Newer companies are exploiting technological advances in areas such as plant biology and artificial intelligence. Startups founded in Israel last year include Sufresca, which is developing edible coatings that extend the shelf life of fruits and vegetables; Beewise, which uses artificial intelligence to automate beehive maintenance; and Armenta, which is working on new therapies to treat sick dairy cows. Other firms are targeting trendy sectors like

pharmaceutical crops and alternative proteins. The new firms benefit from an oversupply of produce worldwide, which has led to lower margins for farmers and greater demand for tools that increase productivity and boost profits. After an unprecedented round of mergers in 2016, farming giants have been looking to cut costs. Shareholders are also looking for new ways of doing things (six out of the ten biggest food companies have replaced their CEOs in the past three years). Many firms see external innovation as faster and cheaper than in-house research and development (R&D). Israel’s overall civilian R&D spending, measured as a share of GDP, is more than that of any European country. Agritech gets a chunk of this cash. The government supports universities and labs; it has also invested in venture-capital funds and directly in startups. The country is good at turning ideas into profits. The Israel Institute of Technology (known as Technion) earns over half as much licensing patents as MIT in America, despite spending much less on research. Next year, for

the first time, the government plans to sponsor pilot projects that connect startups with farmers, so that technology can be tried and tested locally before being introduced to international markets. The state also helps in other ways. Military service is mandatory in Israel, where bright young conscripts spend years developing equipment or software that does well in unpredictable environments. Such skills have direct applications in agritech. Nadav Liebermann, the chief technology officer of CropX, a company that uses wireless sensors to measure soil moisture, served in a unit that created hardware for special forces, including devices placed underground in enemy territory to gather intelligence. His software chief, who learned to code in the army, ran a team of 50 developers at the age of 23. Two branches are particularly good at churning out tech entrepreneurs: Unit 8200, the army’s signals-intelligence arm, and Unit 9900, which specialises in gleaning intelligence from geospatial imagery. Small is not always beautiful The next challenge for Israel’s agritech firms will be scaling up. Limited farmland means they must look for partners abroad early on. So does the need to understand distant export markets with a different climate, like Brazil or the American Midwest. Founders of startups are often quick to sell up, rather than building their ventures into big global companies. Many reinvest their riches in new startups and buyers often continue to use Israel as their base for R&D. The danger is that, without bigger home-grown firms, many less-skilled Israelis— including kibbutzniks—will be cut off from the booming tech industry.

Testing times

Reported cases of HIV in China are rising rapidly

That is mainly because getting tested is so much easier, and less intimidating

ANG XIAOSHUAI, a gay man in the central city of Hefei, used to believe that only people who injected drugs could contract HIV. But then a man he had sex with revealed that he had tested HIV-positive. Mr Wang visited a local NGO and took a pinprick test to determine whether he, too, was infected. Happily, he was not. But the experience was terrifying. “It never occurred to me that someone around me could actually get HIV,” he says. Many others are less fortunate. In November China’s Centre for Disease Control said that 850,000 people were known to be HIVpositive, 12% more than a year earlier and almost three times the number in 2010. An official study found that new cases of HIV among students aged between 15 and 24 rose by more than one-third every year in 2011-15, mostly as a result of gay sex.

The virus may not be spreading as fast as these figures suggest. The rapid increase is largely the result of better detection. Over the past decade the number of health facilities offering HIV tests has quadrupled. In 2016 China launched a five-year plan to combat HIV and AIDS. It increased funding to NGOs providing free self-testing kits to high-risk groups, such as gay men and sex

workers. It also gave NGOS money to provide HIV-positive people with free medicine. In 2015 nearly 70% of those diagnosed with HIV were receiving antiretroviral drugs. In 2017 just over 80% were. Most people in China are infected through heterosexual activity. Sex between men has also become a big contributor, resulting in about one-quarter of transmissions (see

chart). The proportion of sexually active gay men infected with HIV is now much higher than that of female sex workers. Social media have made it easier for gay men to find casual partners. The country has the world’s largest gay socialnetworking app, Blued. On January 6th the service said it was suspending registrations for one week after a Chinese magazine reported that boys under 18 had contracted HIV through encounters facilitated by the app (Blued says it will step up enforcement of measures to prevent minors from joining). But social media can also spread awareness of HIV. Blued has added a red ribbon icon to its platform, clicking on which offers information about HIV services. NGOs also use WeChat, a messaging app, to urge people, gay and straight, to get tested. Such tactics may be helping: 200m tests were performed in 2017, up 38% from 2015.

Hospital prices are now public Continued from page 14

they will still be missing a major portion of the final bill, because the rates charged by physicians, radiologists and other specialists are not included in hospitals’ lists. To dispel confusion hospitals are posting, alongside their price lists, disclaimers and videos explaining that they are useless. The predicament of patients trying to get an idea of what something like a big operation might cost them is laid bare by a study conducted in 2016, in which researchers called 120 hospitals posing as a grand-daughter looking for information on the cash price of hip replacement for her grandmother. Only eight of the hospitals were able to provide a full price, inclusive of physician charges; 53 were unable to provide any estimate. Nearby hospitals often have widely different list prices, even for things as standard as an X-ray or an aspirin tablet. Might some hospitals lower prices when they see what their competitors are charging? That, too, seems unlikely. Most states already require hospitals to publish some of their prices. When prices become public, they may go up, not down, says Renee Hsia of the University of California in San Francisco. Antitrust textbooks teach that transparency can push up prices because firms know that discounting might trigger an immediate price war rather than boost their market share. America’s health care market poses particular challenges. Hospitals set prices using various multipliers and formulas that are often outdated and not linked to costs or quality—a process that the late Uwe Reinhardt, an economist at Princeton University, once described as “chaos behind a veil of secrecy”. Studies of people in high-deductible plans show that when they have access to prices they reduce their use of services but do not pay less for them. Patients usually go for tests to wherever their doctors refer them. The fallacy of pinning hopes on policies such as the new pricetransparency rule is that patients in America are viewed as consumers who can easily shop around, rather than people who are unwell and under duress, says Dr Hsia. But knowing in advance how much their care will cost would be a step forward.

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Monday 14 January 2019 In Association With

Red moon rising

How China could dominate science Should the world worry?

HUNDRED YEARS ago a wave of student protests broke over China’s great cities. Desperate to reverse a century of decline, the leaders of the May Fourth Movement wanted to jettison Confucianism and import the dynamism of the West. The creation of a modern China would come about, they argued, by recruiting “Mr Science” and “Mr Democracy”. Today the country that the May Fourth students helped shape is more than ever consumed by the pursuit of national greatness. China’s landing of a spacecraft on the far side of the Moon on January 3rd, a first for any country, was a mark of its soaring ambition. But today’s leaders reject the idea that Mr Science belongs in the company of Mr Democracy. On the contrary, President Xi Jinping is counting on being able to harness leading-edge research even as the Communist Party tightens its stranglehold on politics. Amid the growing rivalry between China and America, many in the West fear that he will succeed. There is no doubting Mr Xi’s determination. Modern science depends on money, institutions and oodles of brainpower. Partly because its government can marshal all three, China is hurtling up the rankings of scientific achievement, as our investigations show (see article). It has spent many billions of dollars on machines to detect dark matter and neutrinos, and on institutes galore that delve into ev-

erything from genomics and quantum communications to renewable energy and advanced materials. An analysis of 17.2m papers in 2013-18, by Nikkei, a Japanese publisher, and Elsevier, a scientific publisher, found that more came from China than from any other country in 23 of the 30 busiest fields, such as sodium-ion batteries and neuron-activation analysis. The quality of American research has remained higher, but China has been catching up, accounting for 11% of the most influential papers in 2014-16. Such is the pressure on Chinese scientists to make breakthroughs that some put ends before means. Last year He Jiankui, an academic from Shenzhen, edited the genomes of embryos without proper regard for their post-partum welfare—or that of

any children they might go on to have. Chinese artificial-intelligence (AI) researchers are thought to train their algorithms on data harvested from Chinese citizens with little oversight. In 2007 China tested a space-weapon on one of its weather satellites, littering orbits with lethal space debris. Intellectual-property theft is rampant. The looming prospect of a dominant, rule-breaking, high-tech China alarms Western politicians, and not just because of the new weaponry it will develop. Authoritarian governments have a history of using science to oppress their own people. China already deploys AI techniques like facial recognition to monitor its population in real time. The outside world might find a China dabbling in genetic enhancement, autonomous AIs or

geoengineering extremely frightening. These fears are justified. A scientific superpower wrapped up in a one-party dictatorship is indeed intimidating. But the effects of China’s growing scientific clout do not all point one way. For a start, Chinese science is about much more than weapons and oppression. From better batteries and new treatmentsfordiseasetofundamentaldiscoveriesabout,say,darkmatter,theworld has much to gain from China’s efforts. Moreover, it is unclear whether Mr Xi is right. If Chinese research really is to lead the field, then science may end up changing China in ways he is not expecting. Mr Xi talks of science and technology as a national project. However, in most scientific research, chauvinism is a handicap. Expertise, good ideas and creativity do not respect national frontiers. Research takes place in teams, which may involve dozens of scientists. Published papers get you only so far: conferences and face-toface encounters are essential to grasp the subtleties of what everyone else is up to. There is competition, to be sure; military and commercial research must remain secret. But pure science thrives on collaboration and exchange. This gives Chinese scientists an incentive to observe international rules—because that is what will win its researchers access to the best conferences, laboratories and journals, and because unethical science

diminishes China’s soft power. Mr He’s gene-editing may well be remembered not just for his ethical breach, but also for the furious condemnation he received from his Chinese colleagues and the threat of punishment from the authorities. The satellite destruction in 2007 caused outrage in China. It has not been repeated. The tantalising question is how this bears on Mr Democracy. Nothing says the best scientists have to believe in political freedom. And yet critical thinking, scepticism, empiricism and frequent contact with foreign colleagues threaten authoritarians, who survive by controlling what people say and think. Soviet Russia sought to resolve that contradiction by giving its scientists privileges, but isolating many of them in closed cities. China will not be able to corral its rapidly growing scientific elite in that way. Although many researchers will be satisfied with just their academic freedom, only a small number need seek broader self-expression to cause problems for the Communist Party. Think of Andrei Sakharov, who developed the Russian hydrogen bomb, and later became a chief Soviet dissident; or Fang Lizhi, an astrophysicist who inspired the students leading the Tiananmen Square protests in 1989. When the official version of reality was tired and stilted, both stood out as seekers of the truth. That gave them immense moral authority.

Still having cake

Labour’s Brexit cop-out betrays its members Corbyn promised to empower party members. He is sidestepping them

S THE DEADLINE for Britain’s departure from the European Union approaches, with an exit deal still elusive, MPs are haring off in every direction. Parliament has descended into guerrilla warfare, as backbenchers attempt to wrestle the initiative from the executive (see article). Meanwhile the government organised a pretend traffic-jam of 89 lorries on the road to Dover, as part of preparations for a “no deal” exit. All it showed was that Britain is hopelessly unprepared for what happens next. mid the chaos, on January 10th the leader of the opposition, Jeremy Corbyn, stepped forward to propose a way out of the mess. Yet his speech, delivered as we went to press, merely doubled down on his policy of calculated equivocation. Labour will vote against the government’s draft Brexit deal on January 15th, but has no plausible explanation of how it would get a better one, nor a convincing strategy to break the impasse in Parliament if the deal is defeated. Its abdication of responsibility makes Labour complicit in the crisis that is about to engulf Britain. And it exposes the hollowness of Mr Corbyn’s promise that, as leader, he would hand power back to the party’s members, whose growing calls for a second referendum he continues to

ignore. Labour’s Brexit policy amounts to cake followed by more cake. Though the party sensibly rejects the option of leaving with no deal, it insists that the withdrawal terms should provide the “exact same benefits” as membership of the single market while also allowing Britain to manage migration—something the EU would never agree to. In its refusal to acknowledge Brexit’s basic trade-offs, Labour is at a stage in the argument that even the most deluded Tory Brexiteers left behind months ago. Its tactics in Parliament are thoroughly obscure. If the government’s deal is voted down, Labour will try

to force a general election. But that is not in the party’s gift: success depends on the support of Tory and Democratic Unionist MPs, who do not want Mr Corbyn anywhere near Downing Street. The other way to break the stalemate would be another referendum. But Labour says only that such a vote should be one “option on the table”. Mr Corbyn, a convinced Eurosceptic who campaigned only half-heartedly to remain in 2016, has confused matters further by appearing to accept that any referendum should have an option to remain, but also saying that “we can’t stop” Brexit. There is a certain political logic in this lack of clarity. Four out of ten La-

bour voters and six out of ten Labour constituencies backed Brexit. Many voters see a second referendum as a plot to thwart the will of the people. It may even be in Labour’s interests to let the Tories drive Britain over the no-deal cliff. Mr Corbyn, whose main achievement during three decades in Parliament was grabbing a selfie with Hugo Chávez, would not win an election under normal circumstances. The shock doctrine of no deal might just make Britain susceptible to his disaster socialism. Yet Labour’s equivocation is at odds with the strongly pro-EU views of the half-million party members who elected him. Eight out of ten of them voted to remain in 2016. Now seven out of ten want a second referendum. A party “policy forum” this week heard calls from constituency associations around the country for Labour to back a second vote. Even most members of Momentum, a hard-left activist group set up to support Mr Corbyn, want the party to endorse a referendum. Hearing without listening Although all party leaders sometimes have to ignore their members, for Mr Corbyn to go over the heads of the rank and file in this instance reeks of hypocrisy. When members reelected him leader in 2016, Mr Corbyn said that Labour’s growing member-

ship “has to be reflected much more in decision-making”. Yet, over Brexit, Labour members who swallowed his promise of “people-powered politics” have been had. Party managers have done their best to keep controversial Brexit motions off the agenda at Labour’s conferences, in feats of stage management worthy of Tony Blair, a predecessor he derides.

Monday 14 January 2019

BUSINESS DAY

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Monday 14 January 2019

CITYFile

Traders count losses as fire razes stores in Edo IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

raders affected by last Friday’s inferno in Benin, Edo State are counting their losses which they claim runs into several millions of naira. The fire incident which was reportedly caused by power surge at about 6:00 am occurred at No-82, Sokponba Road by 1st Junction. The fire which gutted five stores was, however, put off by officials of Edo State Fire Service after property in the stores were destroyed. One of the traders, Helen Ngwu, who operates a patent medicine store lamented losing all her investment. Ngwu, who said all her hope was dashed, called on the state government and well- meaning individuals to come to their aid. “I want to appeal to the state government and well-spirited individuals to come to my rescue. When I got here, I met my store completely burnt. I really don’t know what happened. Everything I have laboured for since 2000 has burnt down. “My medicines worth millions of naira got burnt and I didn’t pick anything out of the store. “Right now as I am talking to you, I do not have a kobo, everything is burnt down. Government should come to help me. I am on my knees, I do not want to go to the street, I do not want to start begging, I do not want to start prostitution”. Chidolo Obi, a sales representative in a building materials store, who also narrated his ordeal, said over N40m worth of goods were destroyed by the fire. “I can’t explain how the fire started but the goods that have been burnt are between N40 million and N50 million. I also kept about N2 million cash in the store before my boss travelled. But all these are gone,” he lamented. Another victim, Maureen Igbineweka, who deals on artistic materials, said she recently took delivery of her goods all of which have been consumed in the fire. “I cannot estimate the amount of money but it’s not less than N5 million because I just recently returned from the market and everything that I kept in the store got burnt. You know that our materials are very expensive”, she said.

Suspected cultist remanded for hacking men to death

28-year man, Elijah Ogunlaja, was at the weekend docked at an Ebute Meta Magistrate Court, on murder charges and membership of a secret cult. Ogunlaja, who lives in Oworoshoki, a suburb of Lagos, appeared on an eight-count charge bordering on conspiracy, murder, unlawful display of fire arms in the public, belonging and managing an unlawful society. The police prosecutor, Clara Olagbayi, told the court that the accused committed the offences at different times between November and December 2018 at different locations in Oworonshoki. She said that the accused had stabbed one Yusuf to death. According to the prosecutor, the accused had also hacked one Seun Balogun and one Aro with a cutlass and cut open their stomachs. The prosecutor also said that the accused was also alleged to belong to the “Aiye” confraternity. He was also said to have been openly displaying firearms and ammunition and posing a threat to the public. The prosecutor said that the offences contravened Sections 41, 51, 168, 223, 330 and 411 of the Criminal Law of Lagos State, 2015. The magistrate, A.O.Salawu, remanded the accused at the Ikoyi Prison pending the outcome of the legal advice from the State Director of Public Prosecutions (DPPs). NAN

Properties destroyed by fire along Sakponba Road in Benin, Edo State on Friday.

Pic by Churchill Okoro

20 persons die, N417m property destroyed in Gombe

bout 20 people lost their lives and property worth over N417 million were reportedly destroyed in various fire disasters in Gombe between January and December 2018. Wambai Haruna, a deputy director, Gombe Fire Service disclosed this at the weekend, saying, however, that the

service saved 2,053 lives and N4.4 billion property while 168 people sustained various degrees of injuries in the period under review. Haruna said there was the need for the public to cooperate with personnel of the service by alerting them early enough whenever there was a fire outbreak.

He also urged parents to caution their wards on the handling of inflammable items and to switch off all electrical appliances before going to bed, to avoid fire outbreak. Haruna further appealed to the state government to provide the service with more equipment to enhance disaster management.

NAFDAC seizes banned cough syrup in Lagos JOSHUA BASSEY

he National Agency for Food Drugs Administration and Control (NAFDAC) has impounded a truckload of banned drugs in

Lagos. Moji Adeyeye, the Director General of NAFDAC, said officials of the agency intercepted the articulated truck carrying a 40 ft container containing large quantity of suspected fake and adulterated medicines. “After a joint examination by operatives of NAFDAC, Nigeria Customs Service and the Nigeria Police Force, the following products were found in the intercepted truck: “Barcadin with Codeine (cough syrup) – 588ctns x 200bottles x100ml and Feed Fine (Cyproheptadine caplet) – 44ctns x 24rolls x 10pks x 3blisters x10caplets.

“Others are Really Extra (Diclofenac sodium tab) – 190ctns x 100boxes x 10pkts x 1x10caplets and Afrodic (Diclofenac sodium cap) – 207ctns x 100boxes x 10pks x 1x10caplets,” the NAFDAC boss said in a statement. The NAFDAC DG added that, one Luke Mba, who accompanied the trailer and claimed to be the importer, was arrested along with the driver. “Initial investigation suggests that the unregistered products were manufactured or imported from India into Nigeria through the Seme land border and allegedly heading for Onitsha, Anambra. “The agency has resolved to prosecute the suspect in this matter when the police hand him over to us. “It is worthy of note that the Federal Government announced a ban on the production and import of cough syrup containing codeine after investigation

into its addiction epidemic,” Adeyeye said. She said that the agency was tipped-off by a concerned citizen that a truck conveying a 40ft container was transporting assorted suspected pharmaceutical products to an unknown destination. “Operatives of Investigation and Enforcement Directorate of NAFDAC on Wednesday, mounted a six hour surveillance and intercepted the said trailer at Oshodi en route Mushin. “Operatives of the Nigeria Customs Service and Nigeria Police Force came on the scene to lend a helping hand, the trailer was eventually moved to the Area D Police Command, Mushin,” she said. The NAFDAC DG urged all Nigerians to continue supporting the agency in its quest to rid the society of substandard and fake drugs and food.

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Live @ The Exchanges Top Gainers/Losers as at Friday 11 January 2019 GAINERS

Market Statistics as at Friday 11 January 2019

LOSERS

Company

Opening

Closing

Change

Company

Closing

Change

DANGCEM

N171.5

N177

5.5

N640

N576

-64

GUINNESS

N63

N66

N79

N78

-1

N28

N29

CUSTODIAN

N5.8

N5.3

-0.5

N19.45

N20

0.55

UACN

N8.7

-0.3

N5.7

N6.25

0.55

UNITYBNK

N0.9

N0.83

-0.07

CCNN DANGFLOUR

SEPLAT

Opening

ASI (Points)

29,830.70

DEALS (Numbers)

3,538.00

VOLUME (Numbers)

206,301,197.00

VALUE (N billion)

2.747

MARKET CAP (N Trn

11.1245

Julius Berger, Okomu, Cutix, other stocks rally despite market’s N600bn loss Stories by Iheanyi Nwachukwu

nvestors who at the beginning of this year took position in stocks like Julius Berger Nigeria Plc, Cutix Plc, Okomu Oil Palm Plc, Vitafoam Nigeria Plc and Cement Company of Northern Nigeria Plc have reasons to smile. Their joy comes even as the value of listed equities on the nation’s bourse depleted by about N600billion year-to-date (ytd). From a year-open high of N11.721 trillion, the value of listed stocks on the Nigerian Bourse stood lower on Friday January 11, 2019 at N11.124trillion; it implies investors have lost approximately N600billion this year. Also, the Nigerian Stock Exchange (NSE) All Share Index (ASI) has declined to 29,830.70 points; after opening this year 2019 at 31,430.50 points. Despite persisting sell pressure which erodes stocks value, Julius Berger Nigeria Plc stock price has advanced by 41.29 percent this year. Also, that of Okomu Oil Palm Plc has

risen by 7.61percent this year while Cement Company of Northern Nigeria Plc share price is up by 3.09percent in 2019. Some of the worst hit stocks so far are Access Bank Plc (-16.91percent); BOC Gas (-9.98percent); Chemical and Allied Products Plc (-9.61percent); Champion Breweries Plc (-22.11percent); and Custodian Investment Plc (-6.19percent). Other big losers this year are: Dangote Cement Plc (-6.69percent); Dangote Flourmills Plc (-8.76percent); Dangote Sugar Refinery Plc (-8.20percent). Diamond Bank Plc is down this year by 7.34percent; Eterna (-8.51percent); ETI Plc (-3.57percent); FBN Holdings Plc (-6.92percent); and FCMB Group Plc (-10.05percent). Fidelity Bank Plc stock price is down by this year by 1.48percent; First Aluminum Plc (-8.33percent); Flourmills Nigeria Plc (-16.45percent); GlaxoSmithKline Consumer Nigeria Plc (-15.86percent); GTBank Plc (-2.76percent); Guinness Nigeria Plc (-8.33percent); Honeywell Flour Mills (-10.16percent); Ikeja Hotel Plc (-9.15per-

cent). “Our view continues to favour cautious trading in the equities market amidst brewing political jitters ahead 2019 elections, and the absence of a positive market trigger. However, we expect positive macroeconomic fundamentals to drive recovery in the long term,” said Lagosbased Cordros research

analysts in the January 4 note. Also, Learn Africa Plc stock price has declined this year by 8.82percent; MRS Plc (-9.92percent); NAHCO (-4.11percent); Nigerian Breweries (-8.77percent); Neimeth (-10.26percent); NEM Insurance (-35.93percent); Nestle (-5.65percent); Northern Nigeria Flourmills (-9.38percent); Se-

plat (-10percent); UACN (-10.77percent); UAC Property (-13.61percent); UBA (-4.55percent); Unity Bank (-22.43percent); Lafarge Africa (-1.61percent); Wema Bank (-4.76percent); and Zenith Bank Plc (-5.21percent). “For equities, performance in 2019 will be anchored on the outcome of the general election on

one hand and the change of guard at the Apex Bank on the other. Overall, we imagine a flattish performance in first-half (H1) 2019 and a quick rebound in second-half (H2) 2019, especially if the outcome of the election is seen to result into a smooth and peaceful transmission from May 29 onward”, United Capital analysts said in their January 7 investment views. Other stocks that have outperformed the NSE ASI this year include Africa Prudential Plc while has gained 2.07percent this year; Cutix Plc (9.76percent); Forte Oil Plc (1.05percent); International Breweries Plc (1.64percent); and Jaiz Bank Plc (6percent). Likewise, the share price of Sterling Bank Plc has risen by 4.21 percent this year; RedStar Express Plc (4.76percent) and Union Bank Plc (7.14percent). Vitafoam Nigeria Plc is also up by 2.27percent this year. Lagos-based Afrinvest Research analysts had last week expected a bearish performance on the local bourse as they anticipated sustained sell pressures based on preelection jitters.

Foreigners take shine off local investors in 11 months equities deal

n eleven months to November 30, 2018, foreign investors accounted for 50.87perent of equities trading on the Nigerian Stock Exchange valued at N1.159trillion while domestic investors which accounted for 49.13percent traded stocks valued at N1.119trillion. Total market transactions at the Nigerian Stock Exchange (NSE) in the eleven months period increased by N216billion to N2.278trillion as against N2.062trillion achieved in

the corresponding period of 2017. The Nigerian Stock Exchange (NSE) polls trading figures from major custodians and market operators on their Foreign Portfolio Investment (FPI) flows. Analysis of transactions on the Exchange as at the end of November 2018 shows that foreign outflow from the Nigerian stock market reached a record high of N605.54billion, about N203.28billion higher than an outflow of N402.26billion recorded same period in

2017. In the review period, foreign inflow was lower at N553.48billion, a shortfall of about N45.34billion compared with N598.82billion foreign inflow in 2017. Domestic investors accounted for N1. 119 trillion worth of stocks transactions in the review period while foreign investors accounted for N1. 159trillion; while in the same period of 2017 foreign investors accounted for N1.001trillion worth of stocks transactions while domestic investors ac-

counted for N1.061trillion worth of stocks in eleven months to November 2017. The domestic composition of transactions on the Exchange between January and November 2018 shows retail and institutional transactions respectively accounted for 52.29percent and 47.71percent of the domestic market in November 2018. This indicates a higher participation by retail investors over their institutional counterparts in November 2018.

Month-on-month (mom), total transactions at the nation’s bourse increased by 23.28percent, from N121.45 billion recorded in October 2018 to N149.72 billion (about $488.8 million) in November 2018, the NSE noted in its report on domestic and foreign portfolio participation in equity trading for the month of November. Foreign investors outperformed domestic investors by 12.70percent in November 2018. Total foreign transactions increased marginally by

1.05percent, from N83.48 billion in October to N84.36 billion in November 2018. The foreign outflows increased by 15.78percent, from N42.66 billion to N49.39billion with an inverse reduction in foreign inflows which reduced by 16.72percent, from N40.82 billion to N34.97 billion over the same period. The total domestic transactions increased by 72.13percent from N37.97 billion in October 2018 to N65.36 billion in November 2018.

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C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

CONSUMER GOODS

Guinness Nigeria falls to decade-low on earnings gloom OLUFIKAYO OWOEYE

uinness Nig e r i a P l c ’s share pr ice has plummeted to a decade-low as a pessimistic earnings outlook triggered a sell-off. The stock fell by as much as 10 percent Thursday and despite inching up some 4.7 percent Friday to N66, it remains the lowest in a decade. The Stock’s drop pushes 14-day Relative Strength Index to 1.1%, below level of 30 that signals shares may have been oversold. The stock is down by 37% in past 12 months. According to an analyst at Vetiva Capital, Onyeka Ijeoma, investors may be taking position based on their expectations for H1 results. In its results for the full financial year ended June 2018, revenue surged by 14% year on year from N125.9 billion in 2017 to N142.9billion in 2018. Profit Before Tax jumped by 280% from N2.6 billion in 2017 to N 9.9 billion in 2018. While Profit after tax also jumped by 263% year on year from N1.9 billion in 2017 to N6.9 billion in 2018. Also in its Q1 Financial reports for the period ended 30th September, 2018

revenue dropped slightly from N29 billion in Q1 2017 to N28 billion for the corresponding period in 2018. It would be recalled that Guinness Nigeria Plc attributed the six percent decline in its net sales during the Q1 2018/2019 financial year which ended 30th September, to increased competition in the value beer segment, that more than offset growth across the rest of the business. Baker Magunda, Managing Director/Chief Executive Officer, Guinness Nigeria Plc, noted that the company delivered a result that reflected the continued challenges in the operating environment and increased competition in the beer category. According to him, continued inflationary pressure on raw material costs and volume declines impacted both gross profit and its operating profit. He said the profit before tax, however, benefitted from a significant reduction in net finance charges as a result of the rights issue. Also an analyst at Renaissance Capital, Adedayo Ayeni, predicted that the H1 results will continue to show weakness in operating profit like we saw in the first quarter. He further noted that Tariff increase on beer and spirits introduced by the government i s a f f e c t i ng c o mpa ny ’s e a r n i ng s ma rg i n m o re

Source: Bloomberg than competitors. Noting that Guiness Nigeria does not have the type of brand that can carry it through the cycle” of intense competition in beer market. The beer segment has continued to experience a stiff competition among the three major players in the country namely, Nigerian Breweries, Diageoowned Guinness Nigeria

Plc, and AB InBev-owned International Breweries. The year 2011 ushered in a disruption in the beer market with the arrival of SABMiller and its acquisition of majority shares in International Breweries Plc, makers of Trophy Beer, located in Ilesa, Osun-State. However, in 2017, AB InBev acquired 7 2 . 1 7 % o f S A BMi l l e r ’s shares in International

Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company.

DEALS

VFD Group sells stake in NEM Insurance OLUFIKAYO OWOEYE

FD Group and other key stakeholders have agreed to sell a significant block of its stake in NEM Insurance Plc. According to VFD, a combined block of 1.6 billion ordinary shares of NEM Insurance Plc, representing about 30% of the Insurance Company’s issued share capital, was sold to new shareholders, sponsored by the Directors of the insurance company. VFD Group revealed that the decision to exit the Insurance company was reached following an inconclusive discussion with the manage-

ment of the company on modalities for working together in pursuing its vision. ‘We have had extensive discussions with the Management and Board of NEM Insurance Plc in the last couple of months over our interest in working with the team, to unlock the latent value we see in them,” the comopany said. “However, as we could not agree on the modalities for working together in pursuing this vision, we recently reached an amicable understanding and have thus decided to exit our investment in this great company.’ In a related development, VFD Group has also announced the successful

completion of its capital raise in embarked on in December 2018. The company revealed that it raised N2.78billion from rights issuance and private placements against the original N2billion target. The offer which opened on December 3, 2018, had Kairos Capital Limited acting as the financial adviser, and closed on December 31, 2018. The new capital drive will enable the Group to pursue its desire to establish a presence in every key sector of the financial services industry, including banking. It would be recalled that Group Managing Director of the firm, Nonso Okpala had during the firm’s Annual

General Meeting hinted on the plans by the group to acquire a national bank license this year. He also revealed plans to convert to a Public Limited Liability Company. VFD Group was incorporated on 7th July 2009 and commenced business operations in 2011. The company’s subsidiaries include VFD Microfinance Bank, Anchoria Asset Management, and Germaine Auto Center. N.E.M. Insurance Plc is a major player in the insurance industry providing both general and non-life insurance cover. Its shares are currently trading at N1. 91 on the floor of the stock exchange, with a one year return of 19.38%.

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

Interestingly Guinness remains the biggest in the Spirit segment while other brewers are not ready to enter this segment.

BUSINESS DAY

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Monday 14 January 2019

COMPANIES & MARKETS AWARDS

Fine & Country WA emerges best real estate advisory OLUFIKAYO OWOEYE

ine & Country International WA , a r e a l estate brand that markets, sells properties and provides real estate advisory services was honoured as the Best Real Estate Advisory Nigeria 2018 by Global Banking and Finance Review in its Global Banking & Finance Awards of 2018. The award by one of the leading financial platforms is in recognition for Fine & Count r y I n t e r n a t i o n a l WA dedication to providing leadership and excellence in Real Estate Advisory. Global Banking and Fi n a n c e R e v i e w h o n ours companies that stand out in particular areas of expertise in the banking and finance industry. Fine & Country Inte r nat i o na l WA wa s awarded the Best Real Estate Advis or y Nigeria 2018 because of the c o m p a n y ’s o u t s t a n d ing performance and achievements in real

estate advisory. Resp onding to the re co g nition, Wanda Rich, Editor of Global Banking & Finance Review said Fine & Count r y I n t e r n a t i o n a l WA agents offer clients the comprehensive services needed to see them through every stage of their property transaction. “Their in-depth knowledge, professional approach and unique m a rk e t i n g s t ra t e g y i s what helped them stand out as the winner this year,” he concluded by saying “we look forward to seeing more from them in the years to come.” The Global Banking & Finance Awards honour institutions that stand out in their particular area of expertise in the finance industry. They recognize achievement, challenge, progress and inspirational change in finance globally. Some of the areas where Fine & Count r y I n t e r n a t i o n a l WA stood out in the review per iod include; Com prehensive Real Estate

L-R: Diran Olojo, group head, corporate affairs, First City Monument Bank (FCMB); Gbola Sobande, vice chairman, Federal Nigeria Society for the Blind (FNSB) Executive Council, and Izegbua Amusu, chairman, board of governors of Vocational Training Centre (VTC) of FNSB, during the commissioning and hand-over of a hostel renovated and automated water system constructed by FCMB to the FNSB at its Vocational Training Centre, Oshodi in Lagos.

Research and Advisory, Dedication and commitment to client succ e s s, I n n o v a t i v e a p p ro a c h t o m a r k e t i n g ,

International and Local Expertise, and Highly proficient and dedicated agents. The UK-based Global

Banking & Finance Review is a leading online and print magazine, which has evolved from the growing need to

have a more balanced view for informative and independent news for the global banking and finance industry.

BANKING

Appointments

FSDH Research forecasts 11.69% inflation for December

Multiverse appoints new External Auditors

HOPE MOSES-ASHIKE

head of the release of inflation figures on Thursday by the National Bureau of Statistics, the FSDH Research, an arm of the FSDH Merchant Bank Limited, is expecting inflation rate to rise to 11.69 percent in December 2018 from 11.28 percent recorded in November. This represents a monthly increase of 0.41 percent between the two months and the highest monthly increase since November 2016. The expected increase in the inflation rate will reflect higher price increases within the food and non-alcoholic beverages division and other non-food items due to end-of-year and festivity purchases. An analysis by FSDH Research indicated that the value of the Naira depreciated at the Nigerian Autonomous Foreign Exchange

(NAFEX) market in December 2018, while it appreciated at the parallel market. The value of the Naira depreciated marginally by 0.01 percent at the NAFEX market to close at US$/N364.18 from US$/N364.16 in November, while it gained 0.14 percent in the parallel market to close at US$/N365.00 from US$/ N365.50 in November 2018. The value of the Naira appreciated at the parallel market as a result of newly introduced special ‘Thursday sale’ to Bureau de Change (BDCs) operators. The depreciation recorded at NAFEX between the two months under review increased the impact of foreign exchange on the prices of imported consumer goods in the domestic market. The prices of food items as monitored by the firm in December 2018 moved in varying directions, leading to 1.00 percent increase in its food and non-alcoholic index. The Index increased year-on-year

by 13.83 percent to 295.66 points, up from 259.75 points recorded in December 2017. Also FSDH Research observed an increase in the prices of transport and housing, water, electricity, gas and other Fuels divisions between November and December 2018. “We estimate that the increase in the Composite Consumer Price Index (CCPI) in December would produce an inflation rate of 11.69 percent”, the analysts said. Despite the expected increase in the inflation rate in December 2018 and in 2019, FSDH Research believes the members of the MPC of the Central Bank of Nigeria will vote to hold rates at the current levels in January 2019. The most appropriate instrument to signal tightening at the moment in the face of fragile credit and economic growth is to use open market operations (OMO) to mop up excess liquidity.

OLUWASEGUN OLAKOYENIKAN

he Board of Multiverse Mining and Exploration Plc, the only mining services firm listed on the Nigerian Stock Exchange (NSE), has announced the appointment of Messrs Olukayode Aina & Co. and as its new external auditors. Messrs Olukayode Aina & Co. is a firm of Chartered Accountants which was founded in 1991 and has since played a key role in offering accounting and auditing services to the general public since its formation. In a notice filed at the NSE on Friday, the Lagos-based mining firm said the appointment of the new external auditors was made since its former external editors, Messrs Sola Oyetayo & Co, were no longer eligible for reappointment having served the company for 10 years. “Our external auditors, Messrs Sola Oyetayo & Co., has carried out statutory audit assignments in our com-

pany for a period of 10 years and in line with Corporate Governance rules ceased to be eligible for re-appointment at the end of our 15th Annual General Meeting held on December 11, 2018,” the firm stated. Results for the ninemonth to September 30, 2018 show that revenue of the mining firm ballooned by 119 percent to N2.44 million from N1.12 million recorded a year earlier. However, the firm recorded a loss of N121 million in the first nine months of 2018, this is against a posttax profit of N76.15 million recorded in the same period in 2017. Total assets fell to N4.5 billion as at the end September 2018, down from N4.53 billion recorded in same period in 2017, while the company’s net value, which represents shareholders’ equity, dropped by 18 percent to N960 million from N1.17 billion in the same period last year. Shares of Multiverse stood

at 20 kobo from a peak of 50 Kobo in January 2018 after NSE officially reviewed its 50 kobo minimum floor policy for stocks trading on the exchange, indicating the stock was trading above its intrinsic value. Multiverse Mining and Exploration Plc, formerly known as Multiverse Plc until November 2015, was incorporated on June 20, 2002 and listed on the NSE on April 18, 2008. The firm engages in the business of exploring, extracting, prospecting, boring, refining, drilling for, producing, and quarry mining of stones and other extractive solid minerals in Nigeria. It primarily explores lead, zinc, copper, gold, tin, tantalite, silver, barite, columbite, and tourmaline. It operates granite quarrying operations in Oloparun and Alaguntan sites located in Abeokuta, Ogun State, as well as solid mineral mining operations located in Azara and Abuni sites in Nassarawa State.

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COMPANIES & MARKETS Business Event

L-R: Abidemi Adesanya of Nigeria Brand Awards; Adegboyega Kazeem managing director, IBILE Microfinance Bank Ltd, and Abiola Masha, executive director, during the presentation of the award of ‘Most CustomerFocused Microfinance Bank of the year’ to IBILE Microfinance Bank Ltd in Lagos.

L-R: Paul Farrer, group managing director, NASCON Allied Industries; Hadiza Gabon, brand ambassador, Dangote Seasoning; Fatima Aliko Dangote, executive director, Commercial, NASCON Allied Industries; Hamisu Rabiu, director, Hamis Investment, and Halima Aliko Dangote, executive director, Dangote Industries Limited, at the unveiling of the new Dangote Seasoning Classic Cube, in Kano, recently.

L-R: Femi Asenuga, managing director, Mutual Benefits Life Assurance Limited; Akin Ogunbiyi,chairman, Mutual Benefits Assurance Plc; his wife, Dotun Ogunbiyi; and Segun Omosehin, managing director, Mutual Benefits Assurance Plc with members of the MUTUAL Choir at Mutual Benefits Assurance Plc.’s 2018 Christmas Carol held in Lagos recently.

L-R: Mobolaji Odumosu, chief technical officer (Digital Jewels); Olukorede Olukoya, lead auditor, ISO (Exchange Telecoms); Adedoyin Odunfa, MD/CEO (Digital Jewels); Oluwatoyosi Adebakin, project lead, ISO (Exchange Telecoms); Eboojor Ogoh, manager, ISO ISMS and BCMS (Exchange Telecoms), and Adenike Akinlade, chief marketing officer (Digital Jewels), at Exchange Telecommunication Limited’s Awards ceremony of three International Standards, ISO 9001-2015, ISO 27001-2013 and ISO 22301-2012 in Lagos, recently.

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CEO INTERVIEW

Monday 14 January 2019

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Elizabeth Aluko Managing Director/Chief Executive Officer, EAF Management Consulting Ltd

Interview with Private Sector Leaders

‘Private sector should patronise services offered by start-ups’ Elizabeth Aluko, the CEO of EAF Management Consulting Ltd shares insight on what it entails in being a female CEO in Nigeria, the role her company plays in promoting better Tax culture in Nigeria and on the need for private sector firms to patronize new start-ups instead of just the traditional companies in this interview with Endurance Okafor. Excerpt:

ell us about yourself My name is Elizabeth Aluko, I’m the CEO of EAF Management Consulting Ltd, and EAF is a Human Resource Management outfit that provides Smart HR solutions to bridge competency gaps that instigate poor performance in organizations. We also assist organizations with Corporate Event Management such as Stakeholders meeting, year-End event. I am a graduate of economics and statistics from the University of Benin and I hold a master’s degree from the Obafemi Awolowo University. I started my career in the banking industry before joining the Lagos State Internal Revenue Service (LIRS) as a Tax administrator, Field Audit staff to be precise. That background led to the birth of EAF Company. EAF manages Special Projects supervised by our certified PMP licensed professionals to ensure standard and purpose. We also have trained Public Relations experts that provide organization image protection solutions such as CSR, Cam-

paigns and media publicity when needed. EAF as a company got registered in 2015 but officially started its operations in 2016. So far so good we have executed some training programs, implemented some social impact projects, corporate event planning and handled some media Relations and publicity for some big brands in both public and private sector. What was the idea behind you starting up the company? During my NYSC, I was opportune to serve with The British American Tobacco company where I worked as an intern in the human resource department, and being a multinational company I was exposed to international level of HR practices and that ignited my passion for HR, although I had limitation of background, considering I studied economics and statistics. Out of the love for the profession, I decided to go through the rigorous examination route to get a professional qualification from the Chartered Institute of Personnel Management (CIPM)

after which I got my practice license as a certified HR personnel. I decided to go into HR consulting since no company was ready to offer me the opportunity at the level I wanted due to practical inexperience in the field, also for the burning desire and passion that I had, coupled with the years of experience in tax, financial and risk management from the LIRS and banking industry. I saw the gaps that required to be bridged and I had all that it takes to run a company. That is how EAF management consulting came to being. What stands EAF out from other firms that are in the industry? I must say it has not been easy surviving as a company especially in a competitive terrain like ours but one thing that kept us going over the years is the kind of service that will render to our clients, it is very personalized kind of service that we offer to our clients; we work with them in such a way that we put ourselves in a position to understand their business and become part of them in order to be able to help them grow and achieve their aim and objective of existence. Another thing that stands EAF out from every other firm out there is the fact that we are very passionate about what we do and our commitment to delivering best services to our client at all times is what we hold paramount. The companies that we have worked with, who are now our clients have over time realized that we are trustworthy and can be dependent on to deliver services with high level of professionalism. What is the success level of the company? We have actually recorded a couple of breakthroughs in terms of the projects that we have successfully executed which ordinarily people would think a small start-up will not be able to implement and also

tax policies to enable bridge the knowledge gap while also promoting tax compliance. This is being done as a social impact project carried out through sensitization and training about tax with more focus to reach the small business owners who are not yet able to afford the services of a tax consultant. The Tax101 brings the best tax professionals and administrators on its programme to give first information at no cost to the general public. Do you think Tax101 has been of any impact to your targeted audience? I would say a big yes, and we are very proud of the impact our radio programme has had on both individual and small business owners, like I said before Tax101 was introduced to tackle tax knowledge challenges and also to encourage tax compliance level. I can also say that to some large extent we have been able to educate the general public to know that there are various tax incentives and tax exemptions policies provided by the government to encourage small businesses and promote some sectors of the economy which they can benefit from, either at the state or federal level. Only very few companies with good tax consultants are enjoying these benefits and taking advantage of the information.

considering the kind of companies that we have worked with. To God be the glory that we have been able to record those breakthroughs without much challenges and through which we have been able to prove ourselves that even though we are a start-up company, we are very innovative, creative and we have what it takes to successfully carry out a project. Some of our specific milestones of the past year include; our impactful public education and training which we executed in collaboration with some of the big public sector stakeholders and also some big private sector firms. What was your major milestone of 2018?

I would say our biggest accomplishment in the last year will be our tax education programme which is popularly known as Tax101, a tax education radio program, which was born out of the need to fill the knowledge gap that exist between the taxpayers and the tax authority. Based on my experience as a tax administrator I understand that we have a very poor tax culture in Nigeria and a lot of taxpayers are poorly educated when it comes to the tax laws and tax administration processes and because of that a lot of them were committing tax offences ignorantly and unfortunately in law, ignorance is not an excuse. We felt the need to collaborate with the tax authority also with the mind set to promote a better tax culture by helping to educate the general public about the Nigerian

What it entails in being a female CEO in Nigeria means that you have to work as twice as a male counterpart would do

How are you able to pull resources for Tax101 considering you said it is a social impact project? Running a program like Tax101 is very resource demanding and capital intensive but then again it is a social impact project which is offered to the public at no cost. We have been able to accomplish all that we doing with Tax101 through the support of the Federal Inland Revenue Service (FIRS) and this is because the Executive Chairman of the FIRS, Mr. Babatunde Fowler believes strongly in educating the taxpayers as part tax administration system. Coupled with the great support that we have had from major tax and auditing firms across the country through way of participation as resource persons to

share their knowledge as a way of giving back to the society. What do you think firms operating in industry like yours need to grow? What small companies like us really need to grow is patronage and collaboration from the private sector, as they are not encouraging small businesses. When small companies that offer services go to the big private sector firms, the first thing they would ask is do you have 5 to 10 years experience, some would ask for minimum of 3 job completion certificate and a whole lot of other documents even bank guarantee and performance bond. All these become a limitation to new start-up. What Some of these big private sector companies fails to understand is the fact that good service delivery is not only dependent on experience but on innovation and creativity, as the old conventional way of services delivering may not always be the best as compared to the innovative and technology driven techniques possessed by young entrepreneurs nowadays. I feel the big private sector firms should give more opportunities to small or start-up companies, while we understand the need for big brands to manage the risk associated with dealing with start-up companies, they should also consider the opportunity of been part of the success story of smaller firms by giving them a level playing ground to compete fairly as competition brings out the best creativity. What does it entail to be a female CEO in Nigeria? It comes with a whole lot of challenges, especially when you play in an industry dominated by men. They tend to see you as a weaker gender that should not be entrusted or assigned some projects. Some think women are less creative and lack the ability to think outside the box or handle certain jobs but the truth is some of the best CEO and industrial leaders in the world today are women and the best decision makers are women as well. What it entails in being a

female CEO in Nigeria means that you have to work as twice as a male counterpart would do. If they are putting in 12 hours of work it means you have to put in 24 hours of work because being a female CEO, a mother and a wife means you’re working round the clock and you have to be able to multitask if you must survive. Lastly women CEO must be firm and committed to delivering project with the time frame without excuses of how the home front is equally demanding. I believe been a woman should not be a limitation to being a CEO we can do the work as much as a man. What are EAF’s future projections? For EAF, a projection for this year 2019 which is a new year is to execute more projects, have more clients, not necessary only the big brands but also work with small scale enterprises, maintain more brand image and offer better services that will retain already existing clients. We also hope to do more corporate events like organizing stakeholders section, industry review and outlook, execute

more social impact projects like the existing Tax101 project, which will benefit the average Nigerian businesses at no cost. We also intend to work with other sector to bridge identified gaps as we are not only restricted tax. We hope to impact the Nigeria Economy in our best way possible. Tax101 will still be up and running and we hope to achieve even greater milestones this year through the radio programme. What advice do you have for young girls out there and women like yourself who are aspiring to become CEOs? My advice is that it is never too late nor too early to start a business, I wish I started earlier. Business has no gender. What it takes is your passion, your drive, creativity and the ability for you to endure all the challenges, and if one business idea fails, don’t beat yourself, it’s all part of business experience nobody will teach you. Start again, be innovative, take risk, put in more work, again I would say Start small because there is always an opportunity for you to grow.

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Monday 14 January 2019

Why industrialisation must take front seat in political campaigns ODINAKA ANUDU

igerian presidential candidates must consider industrialisation as one of the main issues of

campaign. Economic watchers believe that the contestants are yet to discuss issues but have been fixated on matters of little importance. Incumbent President Muhammadu Buhari of the All Progressives Congress and opposition candidate Atiku Abubakar of the People’s Democratic Party are two main contenders to seat of president. The campaign is coming when Procter &Gamble just shut its $300 million consumer goods plant in Agbara. This was until July 2018 biggest US non-oil investment in Nigeria. The candidates are faced with the task of telling Nigerians what they intend to do with Ajaokuta Steel Complex , which has gulped $8 billion public funds without producing one sheet of steel. The Senate recently approved $1 billion for the behemoth, which is seen by analysts as a total waste of money. Since 1994, successive governments have claimed that the complex is 98 percent completed, but the remaining two percent has become a hard nut to crack for successive administrations. Muhammadu Buhari’s government budgeted N3.9 billion in 2016 and N4.27 billion in 2017 for the resuscitation of the steel, despite an earlier business case in the last administration showing that the complex could only work if properly privatised. BusinessDay checks show that Ajaokuta Complex has the capacity to produce one million metric tonnes of steel, one million metric tonnes of coal , manganese and limestone, among others. Due to lack of operations at Ajaokuta Steel, Nigeria today imports steel valued at $3.3 billion every year. Frank Udemba Jacobs, immediate past president of the Manufacturers Association of Nigeria (MAN), said over 50 percent of raw materials used in the sector would have been locally available had Ajaokuta been working. Similarly, the Aluminium Smelter Company, located in Akwa Ibom State, is not in operation due to a tussle between Bancorp Financial Investment Group

Buhari

Divino Corporation (BFIG), a consortium of U.S.-based Nigerian investors led by Reuben Jaja, and the United Company RUSAL, a Russian firm. “We need that resolved. Aluminium Smelter Company needs to be re-started so that we can get ingots for local roofing sheets manufacturers,” Oluyinka Kufile, chairman, Basic Metal, Iron and Steel Group of the Manufacturers Association of Nigeria (MAN), told BusinessDay earlier in an interview. Nigeria has three paper mills that are not working at optimal capacity. These include: Nigeria Paper Mill (NPM)Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Company (NNMC)Limited, Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Limited in Ogun State. Studies show that Nigeria loses N180 billion annually from nonperformance of these paper mills. Nigeria spends N50 billion on the import of papers annually, according to a research done by Abimbola Ogunwusi and Peter Onwualu, director and former director-general of the Raw Materials Research and Development Council (RMRDC) Newspapers and publishing firms are struggling to import papers with limited foreign exchange, leading to very high cost of paper products. “The co-investor that bought the NigeriaPaper Mill (NPM) Lim-

Atiku

ited did not buy it to help Nigeria,” said Samson Ololade Ogundele, ex-senior manager, NigeriaPaper Mill Limited, Jebba, Kwara State in Lagos, said at a stakeholders’ forum in Lagos in 2016. “I know it was valued at about N30 billion in Nigeria as at 1995, but this same mill was given to the investor at N334 million in 2008. The aim of the government in handing over the mill was to create jobs and improve the economy. The majority of Nigerians working in Nigeria Paper Mill –both junior and senior—are all casual,” Ogundele disclosed, adding that the Federal Government must re-visit the privatisation in spite of the fact that it is the only paper mill working at the moment. As of today, many private companies are either shut down or mired in intractable legal tussles. Vita Malt in Agbara, Ogun State, is shut down. Multi Trex, a 65,000 metric-tonne cocoa processing factory, the largest in the country, has been taken over by the Asset Management Company of Nigeria (AMCON). In 2015, the only surviving brake pads and lining maker, Star Auto Industries, collapsed as it was unable to compete with cheap Chinese products and could not pay back loan borrowed from the Bank of Industry. “It is difficult to compete with Asia, with substandard, cheap brake pads. I am not happy that import duty on brake pads fell from 25 percent to 10 percent.

This is the situation since 2004 and government has done nothing about it,” CEO of the firm Chidi Ukachukwu, told BusinessDay in early 2014. Today, only three textile firms out of over 120 in the 1980s are in operation. In 1980s, the Nigerian textile market was the third largest in Africa, with over 160 vibrant textile mills and over 500,000 direct and indirect jobs. In fact, by 1985, there were about 180 textile mills in the country, employing about one million Nigerians. However, the fortunes of the sector began to dwindle in early 1990s. Precisely in 1994, many textile manufacturers began to feel the pinch of unstable political situation, massive smuggling and high production costs due to poor infrastructure, taxes and levies, among others. The situation worsened in 1997, when ban on importation of textiles was lifted. There were so many outcries by industry players and well-meaning Nigerians as they warned of the consequences of that policy. Inferior imported products flooded the market. Consequently, many big players in the industry could not survive. Many divested to other interests while others leased their premises to other companies. For instance, Aswani Textile leased its premises to Chellarams, manufacturer of dairy products. Afprint, on the other hand, went into oil manufacturing

and car business. Enpee Industries became a packaging industry. Within six years, over 50 companies had closed down, while about 80,000 employees had lost their jobs. As of today, companies such as Aba Textiles, Asaba Textile Mills, Arewa Textiles, Five Star, Gaskiya, Haffar Industrial Company Limited, SpecoMills, Zamfara Textiles, Millet Nigeria Limited, among others, have all been forgotten when textiles are discussed. “What we need is the enabling environment. We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of the Nigerian Textile Manufacturers Association (NTMA) in Lagos at a Made-in-Nigeria stakeholders’ meeting in Lagos. “We had the revival loans but this didn’t work because our biggest problem has never been money,” Adereti said. Similarly, public firms such as Federal Superphosphate Fertilizer Company and National Steel Raw Materials Exploration Agency are also moribund and need a blueprint. Fifty-four manufacturing firms closed down 12 months preceding August 2016 due to their inability to access dollars to import raw materials, according to a survey carried out by NOI Polls and Centre for Economic Research in late 2016.

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Lagosians divided over economic blueprints of Sanwo-Olu, Agbaje ODINAKA ANUDU

agosians are divided over economic plans drawn by Babajide Sanwo-Olu, All Progressives Congress (APC) governorship candidate and his People’s Democratic Party (PDP) counterpart, Jimi Agbaje. “I think Jimi Agbaje differs completely from Sanwo-Olu because he speaks so much about improving the standard of living and ensuring that every kobo that comes into state bursary counts,” Kayode Amao, a Lagos-based surveyor, said. “Agbaje is interested in bringing more power to our industries, which, for me, makes a lot of sense. Whenever he speaks, he speaks about rail lines, power, housing and traffic. If you spend three hours on traffic, for instance, you lose man hours. So traffic issues are more of economics than environment,” he said. Tagbo Ikezua, a fashion designer in the state, said SanwoOlu’s continuity project had more advantage than Agbaje’s Freedom mantra. “Imagine if you disrupt the Lagos State Employment Trust Fund. Roads in Lagos have more economic benefits than social benefits, and any disruption that occurs due to change of government will be bad. No need to abandon these roads,” he said. A prominent lawyer who does not want her name in print said Sanwo-Olu would work with ‘Lagos Blueprint’, which had so far brought the state to its present level as 5th largest in Africa. “People tend to forget that he was a commissioner for industry and knows how to sustain local manufacturers in Lagos,” she said. But Emeka Umeh, a businessman in the state, disagreed. “If he says he will continue from where Ambode stops, it means he will also raise taxes. “Again, he says he will take Lagos out of the national grid in six months, but how?” he asked. On Friday, the Lagos State Chamber of Commerce and Industry (LCCI) brought together the two governorship candidates to state what they had in stock for Lagosians. The two candidates differed on infrastructure, health and other development issues. The candidates spoke during the LCCI Private Sector Interactive Forum with in Lagos.

Jimi Agbaje

Addressing issues of traffic and transport management, SanwoOlu said that government was a continuum and vowed to continue all projects started by his predecessor for the benefit of citizens. He said that his plan for traffic was holistic, from road repairs and construction to opening up more means of transportation through waterways and rail, to training and empowerment of traffic officials. “For years during the PDP rule, we asked the Federal Government for access to the existing railway corridor, but it was denied. This led us to create the Blue line railway from Okokomaiko to CMS. “We need to complete the track because Lagos needs a transportation system outside roads that can move thousands of people daily,” he said. Responding, Agbaje said that for 20 years of APC governance in the state, residents were still grappling with traffic congestion, especially issues with trailers parked on bridges along Costain to Apapa. “Lagos is one of the two mega cities in the world that do not have a multi-modal transportation system. It is time we started thinking of multi-tiered roads. The world is moving, we cannot afford to be different,” he said. Agbaje pointed out that the rail

Babajide Sanwo-Olu

project had been on for too long, stressing that governorship candidates should have big ideas to address problems peculiar to Lagos. “The way things are presently is not sustainable and it has failed to deliver the sort of impact on the lives of ordinary citizens that should be expected from an economy of Lagos’ magnitude,” he said. Agbaje said that the sort of development that Lagos required should be anchored on improving liveability, expanding the economy and retooling it for the 21st century. On the issue of power, Sanwoolu pledged to take Lagos out of the national grid within six months and provide additional 1,000 megawatts to its current level. He said that he would partner with distribution companies to ensure they upscale their power supply to the state, noting that prepaid meters would be provided to residents to ensure accountability and transparency. On his part, Agbaje said he would improve power by 1,000 megawatts within his first 18 months and encourage investment in embedded power projects toward enhancing power supply. Speaking on health, Sanwoolu noted that the Lagos Health Insurance Scheme would ensure

access to affordable healthcare for Lagosians and help build a health care structure to be proud of. Agbaje countered, criticising the present Health Insurance Scheme, saying making it mandatory was another form of taxation that had been making life difficult for the masses. He said his administration would have significant developments on health, waste management, education, transportation management and in technology to solve problems. Agbaje promised to develop an ocean economy and a knowledge driven economy to enhance the economic well-being of the state and its citizens. But Sanwo-olu was not done, as he said that his administration would be innovative about Internally Generated Revenue (IGR) in a way that would not exert pressure on the citizens. He noted that the private sector remained the engine of economic growth and would continue to create an environment for the private sector to thrive in the state. “As a former commissioner for commerce & industry in Lagos, I know that proper collaboration with the private sector leads to more job creation, improved industrial harmony and boosts

investment,” Sanwo-olu said. Babatunde Ruwase, president of LCCI, said Lagos State was very strategic to the Nigerian economy, being the commercial capital of the country and fast evolving into a megacity with a population of over 20 million. “The private sector in Lagos state is a major stakeholder, having regard to its contributions to the state’s internally generated revenue, job creation and the general advancement of the economy of the state. As in most economies, the private sector is the engine of growth in Lagos State,” he said. He explained that bringing the two candidates together was very crucial because the quality of political governance had profound implications for the quality of investment environment. “Without conducive environment for business, there cannot be meaningful economic progress. And this could impede the capacity of the private sector to create jobs and support revenue growth of government.” He said the LCCI had offered similar platforms for the candidates of the two leading political parties in the state to interact with the organised private sector on issues bordering on private sector development in Lagos State.

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Odunayo Oyasiji

Case Review Edokpolo & Company Limited v. Sem-Edo Wire Ind. Ltd & Ors. (1984) Lpelr-Sc.89/1983

hat to note: This is a matter that was determined at the Supreme Court in 1983. It is an important case in company law. It deals with issues like pre-incorporation contract and minority protection. Fact The appellant was the plaintiff at the Federal High Court, Warri. The appellant is a limited liability company carrying on business mainly in Benin City. In 1975, the appellant in conjunction with a German company called SEM Nigerian Holding G.H.B.H and Company Hamburg entered into an agreement to set up a wire industry in Nigeria on October 27, 1975. They agreed to incorporate a company in Nigeria to carry out the industrial project. The second respondent who is a legal practitioner prepared the agreement. Under the agreement, the appellant was to subscribe 40% of the share capital of the proposed company while the foreign partner was to subscribe 60%. This was in line with the 1972 Nigerian Enterprise Promotion Decree that was in force then. What can be deduced from the agreement is that the two parties to the agreement wish to be the only shareholders in the proposed company. In accordance with the agreement of October 1975, Sam-Edo Wire Industries Limited (1st Respondent) was incorporated on December 5, 1975. One of the provisions of the October 1975 agreement is that the appointment of the directors of the proposed company shall be made by the two parties. The appellant was to nominate the Chairman of the board of directors of the proposed company. On incorporation, the 3rd respondent was appointed as the chairman of the board of directors. On February 27, 1976 the two partners entered into another agreement mainly for the purpose of increasing the share capital; of Sam-Edo Wire Industries Limited from N1,000,000 to N1,500,000. The company then passed a special resolution increasing its share capital from N1,000,000 to N1,500,000. The company subsequently allotted 2% and 3% of the share in the company to the 2nd and 3rd respondents respectively. The said allotment was taken out of the 40% of the shares of the appellant. The appellant protested to the managing director of the 1st respondent company (a nominee of the foreign partner SEM Nigeria Holding Company Hamburg). The protest was in vain. The appellant then instituted an action at the Federal High Court claiming the reliefs below-

“(1) A declaration that the plaintiff is entitled to 40% of the shares in Sam-Edo Wire Industries Limited, incorporated in Nigeria in 1975. (2) A declaration that the share certificate issued to the 2nd defendant as evidence of his shareholding in Sam-Edo Wire Industries is null and void in that the transaction was without the knowledge and/or consent of the plaintiff who is the sole Nigerian partner and owner of 40% of the shares in Sam-Edo Wire Industries Ltd. (3) A declaration that the share certificate issued to the 3rd defendant as evidence of his shareholding as Nigerian partner in Sam-Edo Wire Industries Limited is null and void in that the transaction was without the knowledge and/or consent of the plaintiff who is the sole Nigerian partner and owner of 40% of the shares in Sam-Edo Wire Industries Ltd. (4) An order for specific performance on the 1st defendant company to perform the obligations in the decisions of the board of directors of the company at the board meeting of 30th June, 1978. (5) Any further order or orders which this Honourable Court would consider just and equitable in the circumstances of the case.” It must be noted that the respondent brought an application for the matter to be dismissed. This is premised on the claim that the plaintiff/appellant does not have the right to sue- the wrong being complained of was committed against the company and it’s the company alone that can sue (rule in Foss V Harbottle. Also, the agreement being relied on is a preincorporation agreement which cannot be binding on the company that was later incorporated (1st respondent). Judgement was given in favour of the appellant at the High Court. The Court of Appeal ruled in

favour of the respondent. The appellant being dissatisfied then appealed to the Supreme Court. Issues for determination The appellant’s counsel (Chief Gani Fawehinmi) submitted one issue for determination. The issue is “Can the appellant who pursuant to the Enterprises Promotion Act, was to subscribe to 40% of the Shares of the 1st respondent, and after incorporation of the said 1st respondent, adopted’ with this foreign partner (who with the appellant are the only shareholders) the provisions of the shareholding agreement at the 1st respondent’s general meeting and the board of directors’ meetings in accordance with the objects of the memorandum of association SUE where part of appellant’s shareholding is given to other persons without the appellant’s knowledge and consent?” Argument/Submissions The appellant’s counsel (Chief Gani Fawehinmi) submitted that the 1st respondent company had adopted in its general meetings and board of directors meetings the provisions of the 1975 agreement and that a new agreement between the appellant and 1st respondent had come into existence. He further argued that the appellant is entitled to suebecause its case falls within the exceptions to the rule in Foss V Harbottle. The counsel to the respondent (Chief FRA Williams) on the other hand contended that the agreement of 1975 was not a preincorporation agreement but a shareholders agreement between the appellant and the German Company. This agreement could in no way bind the 1st respondent company. The remedy if there was one lay against the German company which was in any case not even a party to the suit. He submitted that since the main complaint was against the

allotment of shares to the 2nd and 3rd respondents it was the 1st respondent company that ought to have sued and not the appellant. Judgement With regards to the issue of preincorporation contract, the court held that “No one can contract as agent of such a proposed company there being no principal in existence to bind. It is also settled that after incorporation a company cannot ratify such a contract purported to be made on its behalf before incorporation. In Kelner v. Baxter (1866) L. R. 2 C.P. 174 Erie C.J. explaining the rationale of the principle said:” as there was no company in existence at the time, the agreement would be wholly inoperative unless it were held to be binding on the defendant personally...where a contract is signed by one who professes to be signing as agent, but who has no principal existing at the time, and the contract would be altogether inoperative unless binding upon the person who signed it, he is bound thereby; and a stranger cannot by a subsequent ratification relieve him from the responsibility”. It was further held that “there is nothing preventing the company after incorporation from entering into a new contract to put into effect the terms of the preincorporation contract. This new contract can be in express terms or can be implied from the acts of the company after incorporation as well as from the minutes of its general meetings and board meetings.” The court also stated that “It is fairly common knowledge that most companies in drawing up the objects clauses of the memorandum of association cover a spectrum far wider than what they can accomplish immediately. It seems to me that the inclusion of the terms of the preincorporation agreement in the memorandum of association

of a company is an indication of a strong desire by the contracting shareholders that the proposed company after its incorporation should execute the terms of the agreement so included. This can be taken together with the acts of the company after incorporation in determining whether a new contract has come into existence.” On minority protection, the court held that “The contention that the company ought to sue touches on the wider principles usually referred to as the rule in Foss v. Harbottle (1843), 2 Hare 461. By it the court will not interfere with the internal management of companies acting within their powers. If there is a wrong done to the company for which redress is needed it is the company that must sue. The principle is based on recognition of the implications of corporate organisation and management which must include, subject to well laid down exceptions, the supremacy of the majority. These exceptions which have been developed in several authorities include:(a) an act which is ultra vires the company or illegal (b) an act which constitutes a fraud against the minority and the wrongdoers are themselves in control of the company (c) a resolution which requires a qualified majority but has been by a simple majority. (d) where the rights of the shareholders are infringed or about to be infringed. A fifth exception appears to have developed from the cases. An individual minority shareholder can also sue where the interest of justice demands that he be so allowed to sue.” The court allowed the appeal and held that the claim of the appellant was founded on postincorporation agreement and not preincorporation agreement. Therefore, the rule governing preincorporation agreement will not be allowed. The court also held that the rule in Foss V Harbottle will not apply as the wrong that happened in this case was a wrong done against the appellant who is a minority shareholder. Therefore, he has the right to sue and this falls within the exceptions to the rule in Foss V Harbottle. Conclusion While preincorporation agreements cannot be binding on the company after it has been incorporated, a company can enter into a new agreement which validates the preincorporation contract. This new agreement can either be express or implied. Furthermore, the rule in Foss V Harbottle is not meant to encourage fraud on the minority. Therefore, the minority are empowered through the exceptions to the rule to take steps to correct any wrong that was done by the majority.

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• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Thinking of an Investment Club, check out this will lose money. A common investment philosophy An investment club must determine its investing style, a common investment philosophy and an acceptance and adherence to its processes by members. Individual risk profiles and financial situations vary; members who are more aggressive shortterm investors or speculators who wish to invest in high risk stocks may not partner well with the more conservative members who would rather wait to benefit from long-term capital appreciation and are more comfortable with blue chip stocks. Members should have similar or at least compatible investment styles and objectives and should be prepared to support its approach. Hold regular meetings An investment club should ideally hold monthly meetings with clear guidelines. A preliminary meeting will help everyone to determine if they can indeed work together and will help to articulate the commitment expected from participants. At the meetings, investment decisions can be discussed as well as the review club financials, individual investment progress and any cash balance available for investment. Meetings should be run efficiently so that they don’t become tiresome making members struggle

‘

If your time horizon is only a year or less an investment club might not be appropriate for you as you need only invest in short term instruments

‘

f you are interested in investing, but don’t want to do it alone you can join an investment club or start your own. An investment club is simply a group of individuals that pool their funds to make joint investments. Not only can pooling money create better investing opportunities, but members also save on transaction costs by sharing the costs and fees associated with buying and selling stocks as a group. If you are thinking of setting up or joining an investment club, here are some issues to consider. How many members? It is common to have between 5 and 20 members, often groups of friends, neighbors, colleagues, church members, or relatives, who have diverse interests and experiences. If the group is too small, you may not accumulate enough money to invest effectively. Yet, if there are too many people, it can become unwieldy and difficult to schedule or to reach a consensus regarding investment options. A number of between 6 – 15 people keeps group discussions manageable. Put structures in place It is important to rec-

ognize that an investment club isn’t just a group of friends who come together to invest. Money matters can be sensitive and if not handled right can damage friendships. Club matters should thus be formalised and a solid structure should be put in place to guide a club’s activity and ensure that its agenda is carried out efficiently and without friction. A limited liability company or a legal partnership tends to be the most common structure, a formal organization with members who have rights and duties. Once it is legally established, a formal agreement should be put in place broadly stating responsibilities of group members. It should also include information and provide a record of important issues such as the club’s investment philosophy, of when, where, and how often the group will meet, initial membership contributions and ongoing dues. It will also comment on membership in terms of joining or exiting as well as the liquidation of investments, distributions and divesting from the club. This documentation is absolutely essential to protect members should things not work out. As with any other organization, if a group is disorganized, if members do not agree and if there is no structure, it is likely that a club will fail and members

to attend. Financial commitment After a member contributes an initial lump sum for investment purposes, the typical investment club requires a monthly contribution from members. Some clubs are flexible and do not impose a set amount that members must contribute, so that no one is hard pressed to come up with their subscription. Small investments may frustrate investors who want to commit larger amounts of cash whilst a large monthly contribution may eliminate members over the long run. Ideally, you should also be contributing to your Retirement Savings Ac-

count (“RSA”) in addition and building other personal savings and investments. Who does what? Officers should be elected early on as it is important to be clear as to who does what. Typically, a Chairperson presides over meetings and a deputy in their absence. The Club Secretary keeps a record of minutes, and sends out reminders of upcoming meetings whilst the Treasurer coordinates financial matters relating to subscriptions, and keeps records of the club’s holdings as well as each individual member’s holding. The ability of this member is critical to the success of the club so this role must be selected carefully. To enhance the experience of individual members and make them feel more involved, some investment clubs limit the amount of time each member can hold a particular role. This will also diminish the chance of certain members becoming too controlling. A good learning opportunity One of the greatest benefits of an investment club is the learning opportunity it provides. An investment club encourages the sharing of knowledge and experience among members. Money matters can be complicated and learn-

ing about the different types of securities, investing styles and strategies can be hard to do alone. Through an investment club, one can benefit from the support and encouragement of “like minded” people, who have a similar interest in investing. Think long term If your time horizon is only a year or less an investment club might not be appropriate for you as you need only invest in short term instruments. Investing is a long-term pursuit. A short-term horizon makes it difficult to manage the funds efficiently. It is impossible to time the market accurately and to pick winning investments all the time. Whether you are starting a new club or joining an existing one, when properly set up and managed, not only can an investment club provide members with decent returns, but it can provide them with an invaluable learning experience where members share ideas and develop their knowledge in a supportive friendly atmosphere that makes investing all the more rewarding. Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

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Monday 14 January 2019

How BUA plans to cut Nigeria’s importation of sugar, steel Stories by ODINAKA ANUDU

UA G rou p i s ready to bolster local production of sugar and steel to ensure that Africa’s most populous country reduces its dependence on imports. Official data show that Nigeria imports steel valued at $3.3 billion every year. On the other hand, the country spent $459.4 million in 2017 on sugar imports and $516.16 million the previous year, according to the National Sugar Development Council (NSDC). The country imports mainly/ white sugar and refines it locally. Abdul Samad Rabiu, chairman of BUA Group, plans to reduce the country’s dependence on sugar and steel through his integrated investments in these sectors. “Sugar is something that we should be producing locally,” he told a select group of journalists in Lagos. “Whatever it is that we can produce in Nigeria, let us do it, because that is the only way we can grow.” Rabiu expects that he will be able to produce white sugar locally by 2020.

BUA Obu Cement II

BUA acquired about 15,000 hectares for sugar plantations in Lafiagi. It acquired Lafiagi Sugar Company, which had been a joint venture between Mehta Group of India and the Federal Government of Nigeria, in 2008. On steel, Rabiu believes Nigeria should not be importing steel worth over $3 billion at this point. He said the country uses mainly scraps and billets in producing steel even when

it should be able to utilise locally available ores to produce high-grade products. BUA is likewise a big player in the cement industry. It recently commissioned a $350m plant with 1.5million metric tonnes per annum (mtpa) Kalambaina Cement Plant in Sokoto State. It also announced completion of its newest Obu plant in Edo State, which has a capacity to churn out three million mtpa of cement annually.

This brings the total capacity of BUA Obu cement operations to six million tonnes and moves the entire group’s installed capacity to eight million mtpa. The ultramodern plant in Sokoto is blessed with huge limestone deposits and is proximate to Niger Republic, which enhances its export potential. Rabiu said that 30 percent of what BUA produces in Sokoto is exported to Niger Republic, which brings

in foreign exchange into the economy and creates jobs. The cement plant in Sokoto has a 32 megawatts multi-fuel captive power plant and a coal mill and will be generating more power than is currently generated by the entire Sokoto State. Rabiu had said during the commissioning of the Sokoto plant that it would run on coal, heavy oils or a mixture of both. The use of coal is expected to save over 70 percent of energy costs,

compared with 15 million litres of fuel oil per month or 40 tonnes or even 20 trucks of fuel that could have been used per day. He had also said that about 2,000 direct and 10,000 indirect jobs were required to get the plant running. “Imagine having to import cement through the ports with all the challenges,” he said while addressing journalists last week in Lagos. “You have to transport it to Sokoto or Jos. Due to the production of cement in Nigeria, the price of cement today in Sokoto is the same as that of Lagos because we have the raw materials locally,” he said. He called on international funding institutions such as African Development Bank (AfDB) to support Nigerian entrepreneurs and industries to enable them fuel Africa’s industrialisation. “They have a lot of money. They need to support us because Nigeria still imports things like steel, which it should be producing locally,” he said, adding that the major challenge is lack of funds to set up companies that would domesticate production of imported products.

Manufacturers’ expenditure on alternative energy falls 35% but problems still remain

anufacturers’ energy spend fell by 35 percent in the first half (H1) of 2018 from what it was in the corresponding period of 2017, but this does not call for celebration yet. According to the Manufacturers Association of Nigeria (MAN), expenditure on alternative energy source in the sector stood at N43. 19 billion in H1 of 2018, which is 34.6 percent lower than N66.03 billion recorded in the same half (H1) of 2017. This also represents 15.9 percent from N51.35 billion reported in the preceding half. MAN ascribes the decline in expenditure on alternative energy to low utilisation of energy in the period due to general slug-

gishness of economic activities and slight improvement in electricity supply from the national grid. “Electricity supply, particularly from the distribution companies, remained core challenge of the manufacturing sector in the first half of 2018. Average hours of electricity supply in the period remained at nine hours per day since the second half of 2017. However, average number of power outage in the period dropped to three times dally, indicating slight improvement in electricity supply to the sector,” MAN survey says. Forty percent of Nigerian manufacturers’ expenditure goes to energy. The slight improvement in energy supply may not be sustainable as the major challenges haunt-

ing Distribution Companies (DisCos) are not yet solved. Due to poor due diligence by DisCos during power privatisation in late 2013, they are failing to provide sufficient power for homes, offices and industries. Manufacturers are increasingly abandoning DisCos and reaching agreements with private sector players that can provide them with adequate energy for operations. MAN, particularly, has founded the MAN Power Development Company and has entered into agreements with a number of firms, including Tower Energy Solution & Systems Limited, and Negris Group, among others, for the supply of power to various industrial clusters. “South Africa, though with its problems, is still

ahead of us in energy. To industrialise Nigeri, we need to get energy mix right,” said Ike Ibeabuchi, manufacturer and managing director of MD Services Limited. Also, there are issues around gas pricing, which manufacturers are battling with. Local manufacturers say they buy gas in dollars rather than naira, which erodes the foreign exchange with which to procure raw materials. As confirmed by Ibrahim Usman, chairman of MAN Power Development Company Limited, MAN is seeking renewable energy support in other parts of the country where there is no gas. Renewable energy is becoming a reliable alternative energy solution for manufacturers across the

world. In September 2017, a report by David Gardiner and Associates, a strategic advisor to organisations seeking a sustainable future, reviewed 160 of the largest global manufacturing firms in the United States. According to the report, entitled, ‘The Growing Demand for Renewable Energy Among Major US and Global Manufacturers’, 25 percent of manufacturers, including General Motors, AnheuserBusch InBev, and Mars, have renewable energy targets while 83 percent have greenhouse gas reduction goals. The report says that renewable energy, particularly wind and solar, is now among the cheapest and cleanest generation resources, stating that manufacturers are pursuing

that type of energy to help reduce costs. As reported by Alyssa Danigelis of energymanagertoday.com, of the 160 companies surveyed, 18 have 100 percent renewable energy targets. Even though some may dismiss this as an American example, the fact remains that this is happening across the world and manufacturing concerns world over are working towards being energy efficient. One key reason why China is competing with the rest of the world is its renewable energy potency. Apple announced late last month that three more of its suppliers— Sunwoda, Compal and Biel— in China would use 100 percent renewable energy in manufacturing its products by the end of 2018.

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Sustaining ongoing investments in manufacturing sector ODINAKA ANUDU

igerian manufacturers are ramping up investments in various sub-sectors and economic watchers believe they should be encouraged. Nigerian manufacturers invested N4.43 trillion between January 2013 and June 2018, despite borrowing at a double-digit interest rate of between 20 and 21 percent within the period, according to a survey done by the Manufacturers Association of Nigeria (MAN). The investments were made mostly in agro processing, cement, metals, steel, plastics, vehicle assembly, and textile, among others. The biggest beneficiaries of these investments are Ogun and Lagos, which comprises Ikeja and Apapa industrial zones. The survey shows that in the first six months of 2018, manufacturing investment stood at N305.56 billion, which is 7.2 percent decline from N329.28 billion recorded in the corresponding half of 2017. But when viewed against the second half of 2017, the figure represents 72.9 percent rise from N176.69 billion obtained within the period. Manufacturers have been bullish on the Nigerian economy despite tough business environment and high production costs. In 2014 alone, new investors such as Shongai Technologies Limited, Ijako in Sango-Otta, Apples and Pears Limited, Ceplas Farms Limited, Greenlife Bliss Healthcare Limited, and Sumo Steel Limited, berthed Ogun. Even Procter &Gamble (P&G) set up a diaper plant in Agbara within that year, but shut down in 2018 owing to high production costs. Fidson Healthcare, May & Baker, Pure Chemicals, Eagle Packaging, Nycil Limited, and Dufil made significant investments in the Nigerian economy within the period. Less than six months after commissioning its 1.5million metric tonnes per annum (mtpa) Kalambaina Ce-

ment Plant in Sokoto State, BUA has Cement completed its newest Obu plant in Edo State, which has a capacity to churn out three million mtpa of cement annually. This brings the total capacity of BUA Obu cement operations to six million tonnes and move the entire group’s installed capacity to eight million mtpa. “We have built a 32 megawatts multi-fuel captive power plant and a coal mill. To put this in perspective, this new plant will be generating more power than is currently generated by the entire Sokoto State,” Abdul Samad Rabiu, chairman and CEO of BUA Group, said in Sokoto in 2018. Beloxxi, on February 9, 2018, launched the second and third phases of its biscuit lines in Agbara, Ogun State. Beloxxi Industries is one of the largest biscuit makers in Nigeria with a capacity to produce 40,000 metric tons (MT) per annum, amounting to 28 million cartons. The biscuit firm in 2016 closed an $80 million deal with a consortium of 8 Miles (London), African Capital Alliance (Nigeria) and KFW DEG Bank (Germany). The investment is raising the

company’s capacity from 40,000M T to 80,000M T while the staff strength is over 3,700. Similarly, Nestlé also pumped N4.1 billion into its Milo Ready-to-Drink (RTD) beverage plant in Agbara last year. The plant manufactures Nestlé Milo ReadyTo-Drink (RTD) beverage in 180ml cartons and has a yearly production capacity above 8,000 tonnes. “This new production plant is a true reflection of how Nestlé creates shared value for all, by providing good jobs, sourcing 80 per cent of our inputs with local farmers and investing in the development of rural communities,” said Mauricio Alarcon, managing director and CEO of Nestlé Nigeria. More so, a new 30,000 metric tonnes per annum cocoa processing plant in Ikom, Cross River State, is over 60 percent completed and may be commissioned in December, according to BusinessDay checks. In March 2018, Dangote Group inaugurated a multibillion naira rice processing mill in Hadin, Jigawa state. The mill has the capacity to process 16 metric tons of paddy rice per hour as well as N14 billion worth of rice

annually directly from the famers in Jigawa at market rate. In the last four years, PZ Wilmar has pumped almost $150 million into oil palm plantations and palm oil mills, Santosh Pillai, managing director of PZ Wilmar, told BusinessDay. “We are determined to continue with these investments and looking for opportunities to expand our plantations in the state,” he said. Presco has so far invested N75 billion into the palm oil industry, Felix Nwabuko, managing director of Presco, said, adding that the company also plans a capital expenditure investment of N46 billion over a fiveyear period (2018-2022). Nigeria’s monetary policy rate (MPR), which is a benchmark interest rate in the country, is 14 percent. Deposit money banks lend as high as 30 to 35 percent, according to BusinessDay checks. Manufacturers say they were charged 22.9 percent in the first half of 2018, representing 0.25 percentage point higher than 22.65 percent recorded in the same half of 2017. The Nigerian economy emerged from recession in

2017, shutting down over 50 firms and crippling many firms, according to MAN. Inflation rate remains high at 11.28 percent. For Babatunde Paul Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), Nigeria needs to have successful elections and policy consistency to sustain or raise these investments. “We need to know that there is a strong nexus between political stability and economic progress. We should not create a situation where citizens and investors (domestic and foreign) lose confidence in the state institutions,” said in 2018, while analysing the impact of elections on investments. On its part, MAN believes that sustaining these investments requires the implementation of the harmonised taxes and levies project which should be monitored strictly by the Joint Tax Board (JTB) to enforce compliance by states and local governments. “There is a need to reclassify the manufacturing sector into strategic gas users from the current commercial gas users classification,” MAN says, adding that this would cut gas prices and

eventually production costs. “We must continue to entrench better exchange rate management. Forex allocation should tilt more to the industrial sector, including the SMEs,” it says in its latest economic review. “There is a need to fully recapitalise the Bank of Industry (BOI) and fully operationalise the Development Bank of Nigeria (DBN), while intensifying the implementation of the Moveable Collateral Registry and Credit Reporting system.” MNA urges the Federal Government to monitor and enforce the Executive Orders 003 and 005 on patronage of made in Nigerian goods by Ministries, Department and Agencies (MDAs) of the government and local content. “It is important to further construct a realistic margin of preference, which will be applied by MDAs in their procurement decisions. MAN had earlier suggested 30 percent,” the association states. It stresses the need to encourage the state and local governments to embrace patronage of made-in -Nigerian products by toeing the footsteps of the Federal Government. “We must create a sustainable platform through which Nigeria’s general public will be continuously educated on the need to jettison the current penchant for foreign goods and patronise locally manufactured products,” MAN advises. It admonishes the implementation of Steve Oronsanye report on the reduction and re-alignment of government agencies and parastatals in order to streamline the number of taxes, levies, fees and administrative charges payable to them. “We believe it is critical to expand the tax net to capture the non-tax-paying firms, particularly those operating in the informal sector and not to increase tax burden on the already tax compliant businesses.” The body urges the government to continue to support the resourcebased industrialisation and backward integration in the country through appropriate incentives and funding support to investors.

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Access Bank Rateswatch Market Analysis and Outlook: January 11th – January 18th, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.81

Q3 2018 — Higher by 0.31% compared to 1.50% in Q2 2018

Broad Money Supply (M2) (N’ trillion)

31.79

Decreased by 0.007% in Nov’ 2018 from N32.03 trillion in Oct’ 2018

Credit to Private Sector (N’ trillion)

23.08

Decreased by 0.002% in Nov’ 2018 from N23.14 trillion in Oct’ 2018

Currency in Circulation (N’ trillion)

2.1

Increased by 0.074% in Nov’ 2018 from N1.93 trillion in Oct’ 2018

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

11.28

Increased to 11.28% in November 2018 from 11.26% in October’ 2018

Monetary Policy Rate (%)

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

43.05

January 9, 2018 figure — a decrease of 0.07% from January start

Oil Price (US$/Barrel)

56.82

January 11, 2019 figure— an increase of 8.39% from the prior week

Oil Production mbpd (OPEC)

1.736

November 2018 figure — a decrease of 1.64% from October 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Change(%)

11/01/19

04/01/19

29,830.70

30,638.90

(2.64)

11.12

11.43

(2.64)

Volume (bn)

0.20

0.33

(41.15)

Value (N’bn)

2.39

1.77

35.02

NSE ASI Market Cap(N’tr)

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

11/01/19

04/01/19

20.00

OBB O/N

22.50

23.75

(125)

CALL

21.00

15.29

571

30 Days

15.95

15.84

90 Days

14.97

13.84

113

FOREIGN EXCHANGE MARKET Market

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.)

YTD Change

(%)

56.82 3.04

8.39 1.00

(11.85) (0.52)

2362.00 104.45 72.85 12.74 518.75

(0.67) 1.85 1.92 7.69 0.14

22.00 (19.78) (6.00) (16.89) 19.67

1294.95 15.73 265.55

0.30 0.13 1.30

(1.72) (8.49) (18.99)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

11/01/19

04/01/19

1 Mnth

15.23

14.94

3 Mnths

0.00

6 Mnths

13.46

12.62

Friday

1 Month

9 Mnths

14.64

13.52

111

(N/$)

Rate (N/$)

12 Mnths

16.74

16.54

11/01/19

04/01/19

11/12/18

306.90

306.95

306.90

364.84

364.50

359.64

0.00

364.50

363.00

361.00

365.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

1-week Change

(N/$)

Official (N)

Parallel (N)

11/01/19

Friday

Inter-Bank (N) BDC (N)

Indicators

Friday

Change (Basis Point)

(%)

11/01/19

04/01/19

3-Year

0.00

5-Year

15.35

15.40

(5)

7-Year

15.41

15.54

(13)

10-Year

15.29

15.39

(11)

20-Year

15.48

15.49

(1)

Index

Change

(%)

(Basis Point)

11/01/19

04/01/19

2,712.39

2704.19

0.30

8.51

8.49

0.31

Mkt Cap Net (N'tr)

5.28

5.27

0.19

10.42

10.09

0.33

-45.37

-45.73

0.36

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

TREASURY BILLS (MATURITIES)

Disclaimer

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

Friday

Mkt Cap Gross (N'tr)

Tenor 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.

Friday

91 Day 182 Day 364 Day

Amount (N' million) 10,000.00 20,000.00 44,837.72

Rate (%) 11.1939 14.0155 16.9512

Date 2-Jan-2019 2-Jan-2019 2-Jan-2019

Global Economy In the Eurozone, unemployment rate dipped to 7.9% in November 2018 from 8% recorded the previous month. According to the European Statistical Office, it is the lowest jobless rate seen since October 2008 as the number of unemployed people declined further. Among EU Member States, the lowest unemployment rates in November were recorded in Czech Republic (1.9%), Germany (3.3%) and the Netherlands (3.5%). The highest unemployment rates were observed in Greece (18.6% in September 2018) and Spain (14.7%). Compared with a year ago, the largest decreases were registered in Croatia (7.8% from 10 %), Greece (18.6% from 20.8 % between November 2018 and November 2017) and Spain (14.7 % from 16.5 %). In a separate development, China's consumer price inflation dipped to 1.9% in December from 2.2% reported in November. This slowdown came on the back of lower prices seen in non-food, while food inflation remained at its lowest level in three months according to the National Bureau of Statistics, China. Annual core inflation, which strips out volatile food and energy prices, stood at 1.8 percent in December, unchanged from the previous month. Elsewhere in Japan, unemployment rate notched up to 2.5% in November 2018 from 2.4% in the prior month according to the statistics office of Japan. Jobsto-applicants ratio edged up to 1.63 from 1.62 in October. However compared to a year earlier the unemployment rate was higher at 2.7%. Local Economy The World Bank has projected Nigeria's economic growth in 2019 at 2.2% and 2.45% in 2020-21, slightly upgrading its earlier estimate of 2.1% in June 2018. This is based on the assumption that oil production will recover and a slow improvement in private demand will constrain growth in the non-oil industrial sector. It also projected oil price at $67 per barrel for the current year and next year (2020). This is $2 dollar below its initial projections in June 2018. In a separate development, the Nigerian Stock Exchange (NSE) in its monthly Domestic & Foreign Portfolio Investment report for the month of November 2018 revealed that transactions at the nation's bourse jumped by 23.28% to N149.72 billion from N121.45 billion recorded in October 2018. Total foreign transactions increased slightly by 1.05% to N84.36 billion from N83.48 billion the previous month. In the same light, total domestic transactions surged by 72.13% to N65.36 billion from N37.97 billion in October. A breakdown of foreign transactions showed that there was decrease in foreign inflows in the month under review by 16.72% to N34.97 billion from N40.82 billion in the prior month. In contrast, foreign outflows edged up by 15.78% to N49.39 billion in November from N42.66 billion in the preceding month. The cumulative transactions from January 2018 to November 2018 increased by 10.48% to N2.278 trillion compared to the same period in 2017 (N2.062 trillion). Stock Market Last week, the Nigerian Stock Market hit a record low as the market fell below the 30,000 points psychological line amidst high selling pressure ahead of the 2019 presidential election holding on February 16. The All Share Index (ASI) lost 2.64% or 808.20 points to close at 29,830.70 points from 30,638.90 points the previous week. Similarly, market capitalization fell by 2.64% to close at N11.12 trillion from N11.42 trillion the previous week. This week, we expect market volatility to continue as investors and fund managers rebalance their portfolios, while watching the political space and ahead of full year company earnings position and post-election market dynamics.

Money Market Cost of borrowing at the money market recorded mixed movements last week. On one hand Open Buy Back (OBB) remained unchanged at 20% while overnight (O/N) rates fell slightly to 22.50% from 23.75%. Longer tenured interbank rates increased across other rate buckets. The 30-day and 90- day Nigerian Interbank Offer Rates (NIBOR) climbed to settle at 15.95% and 14.97% from 15.84% and 13.84% respectively. The market experienced tight liquidity as the CBN mopped up funds through Open Market Operations (OMO) and a special OMO session. This week, we expect rates to nudge higher due to expected Retail Secondary Market Intervention Sales (SMIS). Foreign Exchange Market The local currency took a beating in most market segments last week. At the Investors' and Exporters' (NAFEX) window the naira lost 0.09% to close at N364.84/$ compared to N364.50/$ the previous week. The parallel rate also trended lower, settling at N363/$ relative to N361/$ the week before. In contrast, the official window slightly appreciated by 5 kobo to close at N306.90/$ from N306.95/$. The relative stability of the local currency continues to be supported by the intervention of the apex Bank. This week, we envisage the naira remaining at prevailing levels, as the CBN continues to support the currency. Bond Market Bond yields declined last week following demand from institutional investors which pushed up price of bond. Yields on the five-, seven-, ten- and twenty year debt papers finished at 15.35%, 15.41%, 15.21% and 15.48% from 15.40%, 15.54%, 15.39% and 15.49% respectively the previous week. The Access Bank Bond index rose marginally by 8.20 points or 0.30% to 2,712.39 points from 2,704.19 points the previous week. This week we expect the market to remain quiet as investors look forward to macroeconomic news to determine their position. Commodities Market Oil prices surged last week fueled by hopes of near-term trade deal with China, a weaker U.S. dollar and the impact of Organization of Petroleum Exporting Countries (OPEC) supply cuts. OPEC's 1.2 million barrels per day in production cuts appear to have offset the continued surge in U.S. output, which hit a record 11.7 million barrels per day last week. Bonny light, Nigerian benchmark crude gained $4.40 to settle at $56.82 a barrel, 8.4% up from the previous week. In a similar vein, precious metals prices inched higher for the fourth consecutive week. This was supported by a weak dollar on expectations that the US Federal Reserve may pause on its monetary tightening cycle in 2019. Gold prices edged up 0.3% to $1,294.95 per ounce last week, while silver prices closed 2 cents, or 0.1%, higher at $15.73 per ounce. This week, concerns over rising U.S. production and the end of the trade talks could begin to weigh on crude oil prices. Precious metals prices are expected to remain bullish, buoyed by partial US government shutdown and the US president’s threat to declare an emergency.

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

Jan’19

Feb’19

Mar’19

364

365

11.30

11.61

11.45

58.00

62.00

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

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Cement makers to remain unwavering despite rise in debt to equity ratio BALA AUGIE

ement makers will remain unwavering despite a projected increase in the proportion of debt in their capital structure. This is because the major players in the cement space- a subsector of building material Industry- had raised equity capital to navigate financial risks, but the outlook for some them is bleak. According to data from Bloomberg Terminal, full year 2018 debt to equity (D/E) ratio for NSE Industrial Goods Index- lists of the most capitalized and liquid firms- is expected to touch down at 107.43 percent, from 86.42 percent as at December 2017. The ratio has been growing since 2016 as companies borrowed aggressively to fund expansion with a view to increasing market share. In 2016, Lafarge Africa consummated the acquisition of United Cement Company of Nigeria (Unicem) Limited from Flour Mills of Nigeria Plc, but suffered N28 billion foreign exchange loss due to dollar based debt of its subsidiary. The Naira weakened that year while external reserves fell due to the precipitous drop crude oil price that saw the country slip in its first recession in 25 years. “A high D/E ratio doesn’t mean they are exposed to risk because none of them is at risk of default. There have been

nalysts fret that global geopolitical uncertainties and crude oil price volatility could balloon banks’ Non Performing Loans (NPLs). Tier-2 lenders are exposed to oil and exchange shocks because they lack the capital buffers to withstand the headwinds. The tier-1 lenders, excluding First Bank, have significantly reduced dollar-denominated debts in their

P.E

SHORT TAKES N823.3 billion The Central Bank of Nigeria would in first quarter of 2019 issue N823.3 billion worth of treasury bills. A total of 91-day bills valued at N51.45 billion, N164.92 billion of 182-day bills and N607.05 billion of 364-day bills would be issued in the first three months respectively

29, 336.80 points

a couple of debt issuances, mostly in commercial papers,” said Onyeka Ijeoma, equity research analyst at With Vetiva Capital Management. “Lafarge did around N10 billion while Dangote Cement has done N100 billion in issuance. Lafarge has also added N132 billion rights issue to equity. Also Cement Company of Northern Nigeria (CCNN) has added N300 billion to equity. A higher D/E ratio for these manufacturers is not worrying,” said Ijeoma. The cumulative average times coverage ratio of -Dangote Cement, CCNN, and Lafarge Africa- stood at 69.10 times operating profit, which means they have enough earnings to cover interest expense, according to data gath-

ered by Markets Intelligence. Combined long term debtboth long and short term- fell by 13.24 percent to N557.79 billion, according to data gleaned from Markets and Intelligence While Lafarge Africa has embarked on capital raising with a view to reducing leverage ratio, data gathered from Bloomberg Terminal shows full year D/E ratio will touch down at 214.62 percent, from 150.76 percent the previous year. Procrastinators are sanguine that the cement sub sector of the industrial goods industry will outperform the industry as they are poise to take advantage of the infrastructure deficit and expected growth in cement volume to jerk up revenue.

“We expect the Cement subsector to finish 2018 on a strong note as fourth quarter numbers have historically contributed to the largest share to overall output,” said analysts at United Capital Research Capital Ltd. “More so, the New Orders Index, as gauge from central bank’s monthly PMI- for Cement sector showed faster acceleration in Oct-18 and Nov-18 respectively, underscoring further growth in the sector,” said analysts at United Capital Ltd. C e m e nt ma ke r s a re strengthening strategies that will give them the leeway to taking advantage of the above fiscal policy opportunities. For instance, Cement Company of Northern Nige-

ria (CCNN), owners of the 500,000 metric tonnes per annum Sokoto Cement Plant, merged with Kalambaina Cement Company Limited Plant- which owes 1.5 million metric tonnes per annum- to form a combined entity with 2 million metric tonnes per annum cement plant. Both firms are owed by BUA Group of companies. Lafarge Africa, the second largest cement producer, with a market share f 25 percent, bought a plant in Calabar, in southeastern Nigeria, that can produce 5 million metric tons of cement a year and is also investing in its South African operation as it seeks to increase capacity to 17.5 million tons from 14 million tons across the continent.

Analysts fret Banks’ asset quality could deteriorate on oil price volatility Israel Odubola and Segun Adams

capital structure. When oil price dropped to an all-time low of around $36 per barrel in 2016, the country entered into its first recession in the quarter of century and banks’ NPL ratio spiked to 10.72% in Q2 2016 from 3.65% in Q3 2014-when oil price was above $100 per barrel. The plummet in oil price saw the NPL quadruple from N398.7 billion to N1.67 trillion in the space of two years. Despite the rally in oil price driven by OPEC’s output cut in 2017, the NPL

ratio failed to improve as it rose further peaking at 15.13% in Q3 2017, the highest so far since Q2 2011. Although since Q4 2014, the NPL has been improving at a slow pace, analysts are concern that there might be a reversal of this downward trend. “The behaviour of NPL this year largely depends on how the economy performs. If there is stronger economic recovery but the economy is threatened, one of it is unstable oil price which could impact negatively on banks’

NPL. If oil price drops below its current level, it will have a large effect on revenue of oil companies” Johnson Chukwu, CEO Cowry Asset Management Limited told BusinessDay, “If the economy grows stronger, we should expect the capacity of companies to meet their obligations to banks is good, and NPL loans. A lot is tie to the performance of the economy most especially oil price”, said Chukwu. Asset quality in the Nigerian banking industry

remained a concern in 2018 as industry NPLs stayed elevated at 14.2% as at Q3-18 (lower than 15.1% in Q3-17 but higher than 12.5% in Q218), according to the NBS. A research analyst at Proshare Limited, Saheed Kiaribe opined that the unavailability of data for Q4 2018 beclouds the outlook of NPL in 2019. However, he asserted that given the happenings in Q4 2014, NPL ratio might go beyond the 14.16% recorded in Q3 2018. Continues on page 44

The Nigerian equity market shed by 2.33% to 29, 336.80 points at the close of trading on Wednesday January 9 2019 from 30, 036.15 points a day earlier. Market capitalization between close of trading last Tuesday and Wednesday went down by N2.61 trillion

N4.81 billion Losses recorded by African Alliance Insurance Plc expanded by 215% to N4.81 billion for the first nine months ended September 30 2018, from N1.52 billion losses incurred in the corresponding period in 2017

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

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

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Markets Intelligence

Small lenders set to outperform 2017 FY profits by almost 40% …contrasting analysts’ views on stock recommendation leave market perplexed IFEANYI JOHN

s analysts await earnings for the companies in the Nigerian equity market, the promising outlook of small lenders’ full year earnings in 2018 has failed to translate to a general sense of positive ratings of Tier-II banks by some investment houses. The country’s small banks often referred as Tier-II banks have been growing their loan books even as the big banks keep a tight lid on theirs. While the big banks, often referred to as Tier-I banks largely cut back on loans and advances to customers in the first half of the 2018 due to fears of economic slowdown and political uncertainty, small banks increased their loan exposure as the economic recovery narrative resonated more strongly among the smaller lenders. “The small banks are taking an aggressive approach to lending because they need to grow their balance sheet, while the big banks are holding back and de-risking their balance sheet. The economic growth in the country isn’t convincing and we are struggling with heightened political uncertainty ahead of the 2019 presidential elections,” said Johnson Chukwu, CEO of asset management company, Cowry Assets. The annualized profits of these companies show that all small banks are set to outperform their 2017 performance by an average of 39.84 percent. The banks set

nsurance companies will not increase the proportion of dividend payment from profit, as firms are unable to grow revenue at a faster pace to cover rising claims and expenses in a volatile and harsh and unpredictable environment. It is unsurprising that owners of these firms receive an abysmally return on investment compared to their peers in the banking industry since they are lack the capacity to take on more risk. Insurance industry’s average paid out dividend ratio in 2018 stood at 38.4 percent, 18.73 percent higher than dividend pay-out in 2017, according to data compiled from the Bloomberg terminals. In the last four years, the Nigerian insurance sector has struggled to pay-out at least 40 percent of their earnings as dividend. This signifies that there could be regulatory cap on amount to be distributed from retained earnings since a lot of them have a weak capital base. According to Bola Onadele, CEO/ MD FMDQ OTC securities exchange “The basic fundamental of dividend per share of insurance firms is driven by their revenue. If their revenue doesn’t grow, their dividend per share will not improve”. “Low revenue of insurance firms

The departure of the bank’s head raises questions about its future amid Trump administration suspicions of international institutions

to outperform by large margins include Ecobank (74.79%), Stanbic IBTC (64.62%), FCMB (60.87%) and Wema Bank (55.75%). The cumulative profits of TierII lenders are set to grow by 86.42 percent from N136.61 billion in 2017 to N254.6 billion by annualizing profits of the period ended as at the third quarter in 2018. Ecobank and Stanbic IBTC holdings were the main contributors to the profits as they both controlled 71.14 percent of the total profits of the 8 banks in review. However, this did not translate to consensus “BUY” ratings on smaller banks from Meristem Research, EUA Intelligence and Afrinvest Research. FCMB, Fidelity Bank and Wema Bank had the most positive consensus view of the three research firms in terms of potential upside going forward. FCMB was recommended as a BUY from both Meristem and EUA Intelligence while Afrinvest

recommended its customers to hold on to the stock. Meristem was bullish on the broad financial services sector with BUY ratings on all banking stocks which represents the positive outlook on earnings. However, Afrinvest and EUA Intelligence had only small banks as good investment opportunities on their valuation recommendation. EUA Intelligence preferred FCMB and Fidelity to all other small banks while Afrinvest preferred Ecobank and Wema bank. Sterling Bank and Union bank are the only Tier II banks that started the year on a positive note on the stock exchange recording a positive movement in share price -4.21 percent and 7.14 percent. Unity bank and FCMB have recorded year to date negative returns of 14.95 percent and 10.05 percent respectively while other banks in this category have a year to date negative average return of -6.12 percent.

Analysts pessimistic on increased dividend pay-out by insurance companies David Ibidapo, Segun Adams & Israel Odubola

Why Jim Yong Kim’s move has shaken up the World Bank

is tagged to the fact most Nigerians do not have insurance policies. There is low patronage for insurance policies in Nigeria. Growing dividends lies in boosting revenue and their revenue can grow, if people patronize their policies better” Onadele concluded. Insurance industry contribution to the economy is less than 1 percent, one of the lowest in Sub Saharan African. BusinessDay analysis revealed on the average dividend pay-out ratio of insurance firms in the last four years has only grown by approximately 2 percent. In 2016, average pay-out ratio declined significantly to 12.37 percent from 35.85 percent before an uptick to current levels at 38.4 percent in 2018. This point to the fact that insurance firms are more aggressive in payments of dividends compared to DMBs. The insurance sector’s aggregate dividend payment in 2017 rose by 13 percent to N3.99 billion from N3.52 billion in 2016, but none have paid dividend of N2 per share. Also, some analysts opine that the unfavourable regulatory climate, late budget passing and election outcomes are major factors that may inhibit growth in dividend payment by insurance company in 2019.

Speaking with BusinessDay, Ola Gam-Ikom, Insurance consultant and founder, Third party media explained “Dividend pay-out is not going to be better than last year. The environment is expected to be harsher for insurance firm as the election budget might not be implemented on time and in the regulatory environment we should expect to see NAICOM come hard on operators unfortunately’’. Explaining the reason for low dividend in the insurance sector of the economy, analyst explains lack of shareholder’s focus unlike the banking sector. “ The structure of insurance is very different from that of banking because insurance is of a longer term, thus there shouldn’t be any comparison between dividend payouts in both industries as insurance requires that value is built on a long term basis before profitability is achieved’’ Gbolahan Ologuno, Analyst, CSL Stockbrokers. ‘’The insurance company in Nigeria are run in a way that shareholders aren’t in focus like banking. If banks want to hit a target in the year, it is dependent on shareholders dividend expectation unlike insurance companies that write gross premium without thinking of shareholders expectations’’ Gbolahan concluded.

he day after suddenly announcing that he was ditching the presidency of the World Bank for a Wall Street private equity firm, Jim Yong Kim made an appearance before staff to muster an explanation. In the packed atrium of the bank’s headquarters, just two blocks away from the White House, Mr Kim said he was leaving three years earlier than expected to take a lucrative job that sounds similar to his World Bank role — helping the private sector finance infrastructure projects in emerging markets. “This opportunity came, and, you know, it is very hard to predict when these things come to you in your life,” he said. The 59-year old former academic and health official then dashed off because he had a “a lot of phone calls” to make, leaving other top officials to field remaining questions. Many in the audience — with whom Mr Kim had repeatedly clashed since taking the reins of the World Bank as Barack Obama’s appointee in 2012 — left unsatisfied. “The town hall didn’t clear up a thing,” one World Bank employee lamented. Mr Kim’s abrupt, voluntary exit has not only triggered confusion and frustration for staff at the bank, but raised profound questions about the leadership and the future role of an institution that has been a centrepiece of the US-led international economic order. Created in the aftermath of the second world war in conjunction with the IMF to help reduce global poverty, the World Bank’s influence has been waning as it has faced growing competition from private sources of capital and from regional development banks and much more assertive bilateral lending by China to many poor countries. While the World Bank lent $64bn in fiscal year 2018, some estimates have pegged Chinese lending overseas at several multiples of that. Moreover, since it has traditionally been led by an American, it is now facing the prospect — much sooner than many inside the Bank could fathom — of a new president chosen by Donald Trump, who has been openly sceptical of multilateral institutions and could attempt to reshape the way it operates. A World Bank president chosen by the Trump administration could, in particular, try to limit its financing of projects intended to tackle climate change, as well as any work that is seen as supporting the building of Chinese infrastructure through the Belt and Road Initiative — and may

insist on other big course corrections as well. “I think frankly right now people in the bank are worried about how do we protect the institution,” says one former senior World Bank official. That an American will lead the World Bank is likely but not a given. Its board has launched a selection process, vowing that it should be “open, merit-based and transparent” — meaning it would not necessarily be tied to nationality. Some observers have hoped that Mr Kim’s early exit could be the opportunity for the world to coalesce around an alternative candidate, finally breaking the gentleman’s agreement that allows the US to choose the head of the World Bank and Europeans to manage the IMF. But others say that may be wishful thinking. David Dollar, a former World Bank official and US Treasury emissary to China who is now at the Brookings Institution, says if there were an attempt by other countries to block America’s nominee it could backfire. “It is a very complicated game,” he says. “My instinct is that there is a very strong likelihood that the US nominee will be approved. The world has an interest in the US staying engaged with the World Bank.” Possible names are already floating around Washington, including David Malpass, a current top Treasury official on international affairs, Nikki Haley, former ambassador to the UN, Mark Green, head of the US Agency for International Development, and even Ivanka Trump, the president’s daughter. A Treasury department spokeswoman says it has received “a significant number of recommendations for good candidates” and was “beginning the internal review process” to make its selection. Still, people familiar with the process say a contest could yet materialise. Among possible emerging market alternatives are Ngozi Okonjo-Iweala, a Nigerian economist who challenged Mr Kim for the job in 2012, Donald Kaberuka, a Rwandan economist and former president of the African Development Bank, and Sri Mulyani Indrawati, Indonesian finance minister. Whoever emerges as the winner will have to grapple with Mr Kim’s thorny legacy. When he was plucked from the presidency of Dartmouth College in 2012 to lead the bank, the Korean-American had little previous experience in finance or public service. Yet Mr Kim plunged the bank into a major internal shake-up to get rid of the “silos” within the institution and encourage more sharing of information.

Analysts fret Banks’ asset quality... Continued from page 31

“From my observation in Q4 2018, there has been no significant improvement in the price of oil which is vital to the performance of the budget and the banking sector. Should the trend persist in 2019, banks NPL would pile up. However, we cannot be certain for now until the report for Q4 2018 is released”, Saheed added BusinessDay analysis of the investor report of Tier-1 lenders showed that the cumulative average of NPL ratio stood at 8.38% in the first nine months of 2018, an improvement over 9.00% in full year of 2017. On the other hand, the cumu-

lative average of NPL ratio of six Tier-2 lenders improved by 2.71% basis points to 7.27% in the first nine months of 2018 from 9.98% in 2017 FY. The analysis showed that Access Bank (4.7%), Stanbic IBTC (4.7%) and Zenith Bank (4.9%) had NPL ratio within the regulatory threshold of the Central Bank of Nigeria, thus reflecting their good asset quality. Overall, the average NPL ratio of 11 lenders captured in the analysis, improved to 7.77% in the first nine months of 2018 as against 9.54% in 2017FY, although still 2.77% higher than the regulatory benchmark of the CBN.

Monday 14 January 2019

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Nigeria’s start-up investment deals rise 300% in 2018 Josephine Okojie and Bunmi Bailey

igeria’s start-up investment deals in 2018 increased by 300 percent, an indication that the country’s entrepreneurial ecosystem is gaining momentum. A recent Venture Capital report by WeeTracker, a global tech media platform that monitors startup ecosystem across countries, shows that investment deals in Nigeria increased to 136 in 2018 from 34 deals recorded in 2017. The report also states that the country moved two places to overtake South Africa and Kenya as the fastest growing economy in Africa in terms of start-up investment deals in 2018. The report identifies the growth of entrepreneurship on the continent. “During our multiple conversations with the stakeholders of the ecosystem last year, it turns out that Africa is fertile for any kind of business to prosper. The demand for traditional business is as high as technology-driven enterprise, but when both are combined, what we get is an exceptional business,” the report says. According to experts, Nigeria is gradually becoming a major tech

hub in terms of start-ups generation and entrepreneurs’ preferred location for investments. “Digital companies in Nigeria have created thousands of jobs and activities within the ecosystem and this is striving to

consolidate the nation’s status as a top-notch international hub by attracting investors and stimulate entrepreneurship in the country,” Oo Nwoye, executive director, Tech Circle says. Nwoye says that Nigeria is tran-

sitioning into a dynamic ecosystem offering start-ups a platform to potentially grow into milliondollar businesses. “Last year, tech companies such as Paystack and FlutterWave received huge funding from

abroad to strengthen their mobile payment solutions,” he says. Also, Kola Aina, co-founder, Venture Platform, says that Nigeria is going to witness the emergence of numerous fintech start-ups, with investments coming in from both public and private investors. He explains that there are growing opportunities in IT, biotech and other fields, drawing young, educated professionals to become entrepreneurs. Ibrahim Tajudeen, head of research, Chapel Hill Denham, in his own opinion, says that the demography of Nigeria is what is really attracting such start-up investments. Uche Aniche, convener of StartupSouth, believes that the Nigerian eco system has undergone transformation in recent years. “Thanks to the wave of fresh young talents. Lots of start-ups and small businesses have taken off, creating a surge of co-working spaces and a collaborative spirit that is vital for the success of innovation hubs,” Aniche says. He says investments in Nigerian companies have grown steadily over the past one year, pointing to a relative improvement of the investment in the ecosystem and a huge amount of money available to invest in start-ups.

How Badeji makes money from event lighting, stage designs Gbemi Faminu

adeji Adebayo is the chief executive officer of ProdigyEffekts. The 29-year-old entrepreneur is in the business of event lighting, effect creation and stage designs. He has Bachelor of Arts and Master of Arts degrees in Performing Arts from the University of Ilorin. He has been lucky to work for various organisations, movie producers and event managers in designing stages, creating effects, and setting up unique lighting. He started this business with N30, 000 in 2013 while in his 400 level, using the fund to buy basic instruments. Afterwards, he made further investments into getting additional instruments from the profits he made from other jobs. The young entrepreneur was motivated to take up a career in that path after discovering his love for stage design in his second year at the university. When the lights in the school theatre were installed, he asked a lecturer to put him in charge of it. While there, he read about lighting. His interest was further aroused when he realised that setting up lights and designing stages came to him naturally with various inspirations and he enjoyed doing it. He was further encouraged by his lecturers who saw his passion

and ideas as workable. Today, he has been able to achieve feats in the arts world. “It is very rare to see people in this field. Performing arts has various divisions such as makeup, acting, music and so on, but most people prefer this field to lighting, which is also important because it comes in handy if you want a fascinating stage design and lighting effect for your events,” he explains. He says his is a unique type of

Badeji Adebayo

business that is just being given due recognition in Nigeria. He explains that lighting business before was like the proverbial prophet not having honour in his home, but admits that things are changing, given what he has been able to achieve since starting. “Although I am a lecturer in Performing Arts, I still concentrate on my business.” He says in Nigeria, seminars and workshops about lighting is not common, pointing out that this is

different abroad where it is appreciated. This is why he takes most of his trainings online from foreign institutions and plans to physically be present at one of these trainings soon, he says. Speaking on challenges he encounters in his work, the entrepreneur says that he needs funds. “Most of the instruments I use are very expensive and cannot be easily obtained. Therefore, I improvise and make the basic instruments myself, which has turned out to be a very good idea. Aside that my type of job lacks the necessary recognition, it is capital intensive and requires huge amount of money, which I might not be able to get sometimes,” he notes. He urges the government to pay more attention to the arts industry and help in funding trainings and workshops. Funding is also needed to make the necessary tools available at subsidised rates, he says, adding that the industry needs cheap loans. “I plan to make basic lighting instrument locally and sell to other people in the business. I also plan to train people who want to follow my line of business and it is in my plan to establish contacts with top organisations so I can increase my clientele.” He is yet to get permanent workers but he employs ad hoc staff working for him whenever jobs are available. He pays them

based on how much work they do and is planning to have permanent workers soon. On his long-term goal, Badeji says he intends to become a wellknown lighting player rocking the world of arts, with his company and a training institute producing many protégés. His short-term goal, on the other hand, is to acquire certifications from institutes to advance his career while also being mentored by experienced and first-class experts in the field. Advising other entrepreneurs and youths in general, he says, “Make a conscious effort to develop yourself regularly, and endeavour to stand out from the crowd.”

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Monday 14 January 2019

Start-Up Digest

Start-ups to watch in Nigeria’s tech space in 2019 a service called eProcure that connects farmers directly to buyers for their farm produce. eProcure is like an inventory management system, with an algorithm that guarantees delivery of high quality produce when and where you need it. This has helped remove the middle men from the distribution chain. The success recorded in these areas took Kitovu’s innovations to about 3,000 farmers, and has opened the doors to further growth possibilities into Africa’s $100 billion agro-sector.

Josephine Okojie

espite difficult business environment in Nigeria, start-ups in the tech space have continued to thrive against all odds. Yearly, we are seeing more innovative tech startups providing solutions to societal problems. On this note, Start-Up-Digest takes a look at some of these startups that are making serious waves in the technology space. Paystack Paystack is a technology company that provides online payment facilities to merchants and others by way of an application programming interface (API) and a few lines of codes. It is one of Nigeria’s largest payments platforms and has processed nearly 20 per cent of all online transactions in Africa’s biggest economy. The company, founded by Shola Akinlade and Ezra Olubi, initially caught the eye of industry players when it was selected as the first Nigerian tech company to be accepted into the world-famous Y Combinator Progamme, based in Silicon Valley. Since securing $120,000 earlystage investment from Y Combinator, the founders have quietly been building the company, working to secure more investments and building a network of partner merchants in Nigeria with over 1,500 currently using the platform to accept online payments. Hotel.ng Hotels.ng is an online hotel booking platform where you can browse through thousands of hotels and book your desired rooms. Mark Esssien founded Hotels. ng, and the organisation has turned out to become Nigeria’s largest hotel booking website. The 33-year-old Essien studied in Germany and returned to set up Hotels.ng, having found that nobody was doing this at that time. He raised $250,000’s seed fund from Jason Njoku’s SPARK in 2013, but the fund almost got exhausted along the line because most of it was going into salaries. But it is a dif-

Mark Esssien

ferent story today, having secured more international funds. The online portal allows people from all over the world to book rooms from a selection of over 8000 hotels. It is easier and convenient for tourists and those who need hotels, meaning that there is a high potential for growth. Tuteria Godwin Benson, a first-class graduate of Systems Engineering from the University of Lagos, founded Tuteria to help Nigerian students find teachers near them. Tutors are often manually assessed, after which they face interviews from experts. The Akwa Ibom-State entrepreneur was inspired to start this enterprise after teaching a man’s children maths for a month. The man did not pay him and he was surprised to learn that he lived closed to him, yet he did not know him. So he needed to connect students and students that were close to each other PiggyBank Piggybank.ng is an online savings platform that enables savers to put away funds that they do not need and withdraw easily when the saving duration expires. With PiggyBank, savers can save as little as $1 a day and then restrict

Olumide Soyombo

withdrawal of their savings to specific chosen dates. Unlike a regular bank’s savings account, where you can access the money at any time, Piggybank.ng helps its users maintain their savings discipline and culture. Piggybankers can earn an average six percent per annum on automated savings or 10.95percent per annum on the fixed deposit products. Safelock and can withdraw funds for free once per quarter. Piggybank.ng, which is cofounded by Somto Ifezue, Odunayo Eweniyi and Joshua Chibueze, is now particularly popular amongst Nigeria’s millennial, for whom going online via their mobile phones for day-to-day transactions is second nature, and who currently make up 60 percent of the company’s registered users. Having recorded staggering savings growth of 3,000 percent between 2016 and 2017, the Piggybank.ng community has saved over $5million and the company has commanded the attention of a group of Nigerian investors led by Olumide Soyombo, co-founder of Leadpath, who has helped the company raise $1.1 million. Kobo360 Kobo360 is a tech-enabled digital logistics platform that aggregates end-to-end haulage operations to

help cargo owners, truck owners and drivers and cargo recipients to achieve an efficient supply chain framework. The start-up has an Uber-like app that connects Nigerian truckers to companies with freight needs. It pays drivers online immediately after successful hauls. Through an all-in-one robust logistics ecosystem, Kobo uses big data and technology to reduce logistics frictions, empowering rural farmers to earn more by reducing farm wastages and helping manufacturers of all sizes to find new markets. The start-up has refused to be intimidated by heavyweights such as UPS, FedEx, and DHL and has invested heavily in the haulage business. The logistics start-up has been accepted into Y Combinator’s 2018 cohort and raised $1.2 million. Kobo360 was founded by Obi Ozor. Kitovu To address challenges faced by farmers, Kitovu has devised a geolocation technology that matches crops with the right soil types to increase farmers’ yields per hectare. Kitovu’s soil tests are affordable for farmers and have helped to considerably boost their yields per hectare. The start-up has also developed

Skoolkive Babajide Esho is the founder of Skoolkive, an online educational platform that helps schools automate and effectively manage their processes. The platform helps school administrators and parents to easily receive and make payments through a single channel. The business, through its biometric features, also helps record students’ clock-in and clock-out, which can be sent to parents to enable them to effectively and efficiently monitor their children in secondary schools. Jide was inspired to establish Skoolkive to help address some of the challenges in Nigeria’s educational system. He established the business in early 2017. He and his partners pooled funds from personal savings and secured a pre-seed funding from Procyon Group, which cumulatively amounted to over N2.5 million. This fund was used to set up the business. Skoolkive has signed a partnership deal with the regional sections of National Associations of Proprietors of Private Schools. Edusko Africa Edusko Africa is a tech start-up that connects parents and students with good and affordable private schools across Africa. The organisation also assists parents in making informed choices on their wards’ education ranging from elementary to tertiary institutions. Lack of adequate information in the country’s educational sector for parents inspired Jide Ayegbusi to establish Edusko in 2015.

25 entrepreneurs emerge in FIIRO House Africa’s TV reality show ODINAKA ANUDU

ore than 25 entrepreneurs have emerged at the FIIRO House Africa’s First Industrial TV Reality Show, which aims to promote indigenous technologies for rapid industrialisation of the national economy, job creation and reduction of unemployment rate. Lanre Shonekan, chief executive officer, Lashone Links Group of Companies, who disclosed this at the audition for the Africa’s First Industrial Reality TV Show in Lagos, said that only 25 entrepreneurs were able to make it to the next stage, out of 10,000 youths that applied for the competition.

Shonekan noted that the selection was tough, as they had to go to all the geopolitical zones of the country to select the best 25 entrepreneurs who have made it to the next stage. He listed the centres where selections were done to include FIIRO for South West; Abuja for North Central; Kano for North West, and Anambra for South East. He explained that the 25 entrepreneurs would be kept in a house for six weeks where they would be further be exposed to more FIIRO’s R&D technologies. “We are expecting that the task will be done every day in the house but most importantly, every Sunday. The audition will be live on Superscreen TV where Nigerians will be allowed to vote for their best choice

online,” he said. According to him, the winners of the first, second and third positions would go home with N25 million, N15 million and N10 million respectively. “It will promote indigenous technologies and local content among industrial practitioners, entrepreneurs, manufacturers, as well as provide quality sales programming both online and on television. “The programme will connect and promote interest of the Nigerian youthful population, especially the unemployed youths and prospective entrepreneurs in indigenous technologies’ solution for manufacturing and production. Speaking at the event, Ananaba Anuihe, director of programmes,

Superscreen TV, said the competition would provide an opportunity for unemployed youths to be gainfully employed. He stated that this is first reality TV show in Nigeria and in Africa that will promote indigenous technologies’ solution for manufacturing and production. “We’re participating in this show in order to encourage Nigerian youths.” One of the selected participants, who spoke on behalf of others, Ajiroghene Omanudhone from Delta State, who is into recycling of plastic waste for furniture for schools, said this is the first of its kind in Nigeria, where entrepreneurs would be given a start-up capital to establish industry. He noted that this kind of initia-

tive should be encouraged by the government and the private sector as this is the only way to provide employment for the nation’s teeming youths. Speaking in the same vein, another participant, Gbene-Nnah Dumdebabari from Rivers State, who is into snail farming, said that government should encourage the organiser of the programme to take it to the next level. “It is time the youths of this great country, Nigeria, are encouraged by the government to go into entrepreneurship,” she stated, adding that “this is a good idea which will enable the winners to establish their own industries and be able to employ more people and reduce unemployment in the country.”

Monday 14 January 2019

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Start-Up Digest

Agriko is disrupting Nigeria’s food chain through technology — Oluyemi Agriko is at the forefront of disrupting a large industry - the agriculture and food sector. Leveraging on data and technology, the agro-based firm is gradually placing itself in the prime position for disrupting the food supply chain and for fundamentally changing the way consumers shop for food. In this interview, Wole Oluyemi, chairman of the Agriko Group, shares his goals and the business strategy with Odinaka Anudu, Start-Up Digest editor.

What is Agriko about? griko was re-strategised in 2017 after being non-operational for about a decade. Our goal is to transform the agri-products supply chain. We recently started to implement our plan to deliver over 50 SKUs of fruits and vegetables, which include different varieties of plantain, banana, potatoes, strawberries, pineapple, mangoes, apple, carrots, ginger, tomatoes, red bell pepper (Tatase), scotch bonnet (ata rodo), African basil (efirin), bitter leaves (efo ewuro), water leaves (gbure), African spinach (efo tete), Lagos spinach (efo shoko), flute pumpkin leaves (ugwu), wild mango seeds (ogbono), and melon seeds (egusi), in addition to our existing drink distribution business which focuses on only drinks from natural fruits and not from concentrates. You are known as a chartered accountant and a marketplace evangelist with strong presence on social media. How did you get into agriculture? This question always comes up in every interview I have granted about Agriko. Gone are the days when agriculture is seen as a dirty business. I was literarily born and raised in a poultry farm in Ijebu Igbo, Ogun State. By the way, Ijebu Igbo is the largest town in Ogun State. My father is an agriculturist and rose up to very senior levels in the Ministry of Agriculture in Ogun State before his retirement. Poultry farming was his side hustle and that is where my parents got money to educate five children of which I am the youngest. From the proceeds of my father’s farming business, God blessed him with two civil engineers, two chartered accountants and a consultant urologist. So, from my childhood, my parents built that love of agriculture in all of us, although none of us was really interested in studying agriculture as a course at the Uni-

tions. These challenges, which have been there since I was born, create a good opportunity for a business like Agriko. We believe that wastage and inefficiency can be reduced, food hygiene transformed and then, ultimately, profitability of farmers improved, while still ensuring that consumers are able to get hygienic and nutritious food and drinks at very competitive prices. As a result, we realised that most of our customers used to go to the Mile 12 market to haggle prices of food products. Now, they have a choice of dealing with a structured organisation for more hygienic products at very competitive prices.

Wole Oluyemi

versity level. In secondary school, I was also blessed with a very good disciplinarian teacher in agriculture by the name Adeshina. He is a brother to the former minister of agriculture - Akinwunmi Adeshina. By the way, my SSCE result in Agriculture was A1 (distinction) and I have my certificate. While my father is a poultry and livestock producer and my eldest brother is also into cash crop production, I chose to focus on the downstream part of the agricultural value chain. I was not ready to face the production risks and the market dynamics of the upstream part of the value chain. I am more interested in positioning Agriko as a leading supplier of fruits and vegetables, focusing on the supply chain and logistics that starts from the farmgate until the produce gets to the fork at the dining table of the consumers. Why do you think that there is a business opportunity in this area?

Like I said earlier, I have been in agriculture from when I was younger with experiences from my father’s farm. I sold chicken and eggs in several markets in Lagos, Ogun and Oyo States as a young boy. With all modesty, I think I have an idea of the agricultural market and value chain. Secondly, my work experience has also exposed me to diversified learning over the years. Above all, I am an Ijebu boy, so it is normal for me to focus on where I think the real money is. In Nigeria, agricultural products have traditionally moved from farmer to consumer through a series of intermediaries. While this supply chain has been effective in moving produce, it also suffers from high wastage and inefficiencies. Over half of fresh produce is wasted before it reaches the consumer due to poor storage and transportation logistics. Fruits and vegetables cost three to five times more at the retail outlet, compared to the farm gate. Food is moved and stored in less hygienic condi-

So, who are your typical customers? Our customers are categorised into five segments - modern retail chains, neighbourhood outlets, hotels, restaurants & institutional caterers, food processors & exporters, as well as families & cooperatives. We are working on a soft subscription model for families, as this will enable us to leverage our subscriber touch points to consistently manage supply chains and demand, and to optimise the customer experience as well as our business economics. In order to serve our customers effectively, we have a team of Field Sales Consultants that manage the relationships with customers in their assigned geographic territory. These consultants are basically entrepreneurs as they get a percentage of their sales achievement, in addition to a guaranteed monthly fee. They are not employees; they are businessmen and women. We plan to have hundreds of such Field Sales Consultants by 2020.

farmer cooperatives and franchised aggregators with access to over 2,000 farmers across the various geographic regions of Nigeria. Our produce is moved in our fleet of GPS-enabled trucks, graded and sorted in our distribution centers (in Ogun and Lagos States) and delivered to our various clients within 72 hours. We also recently signed a deal with an agritech company from Malaysia to support the production of some carefully selected exotic fruits and vegetables in Lagos. We plan to commence commercial production in 2020 after about 12-month trial production from the test facility in Lagos that is already under construction. This facility will enable us to simulate weather and humidity, in addition to water supply and other resources to allow the production of these exotic produce throughout the year in Lagos. Agriko will continue to work with a number of technology partners to develop and consistently upgrade our post-harvest handling capability and reduce wastage and inefficiencies through the extension of shelf life, improvement in hygiene and reduction of wastage, at a cost structure suitable to the Nigerian market. These will be supported with the use of automated route optimisation and deployment of low cost refrigerated transport and storage with GPS tracking of vehicles.

Where do you get your produce from? We currently procure about 50 varieties of fresh fruit and vegetables directly from over 12 partners such as farmer producer companies,

Do you enjoy your foray into this business considering your other business interests and background in oil and gas, and in accounting and consultancy practice? It is really fun for me. I enjoy being called a corporate trader by my customers in the modern trade large supermarkets. The one I enjoy most is the unofficial title of ‘Sarki d’Abinci’ which I understand is a title that means ‘king of food’. I love food and people that follow my @ WoleOluyemiCo page on Instagram know that for fact.

cally and internationally. I am currently registering my business to commence exporting my products next year,” Olufunke said. She called for funding support for processors of the produce to enable them purchase processing machines and dryers as well as advocacy on health benefits in plantain consumption, noting that some Nigerians still have wrong perception that its consumption is meant for only diabetes patients. Besides cocoa, cashew and sesame, plantain is another crop in Nigeria that has huge export potential.

Plantain can be eaten raw when ripe, processed into flour to make ‘elubo’, a local meal consumed in Nigeria with soup, and also serves as industrial raw material in firms producing sanitary pads, fabrics and also for the food and beverage industry for making baby foods, biscuits, bread and cakes. Its nutritional benefits include low-fat, good for blood pressure, a key source of vitamins and minerals, high in fibre and rich in protein. This makes the consumption of plantain a great option for diabetic patients.

Tapping into opportunity in plantain processing Josephine Okojie

here is already a demandsupply gap of 99,800metric tons (MT) for plantains in Nigeria, which presents an opportunity for entrepreneurs. A recent plantain report by the Bill and Melinda Gates Foundation puts Nigeria’s plantain flour production at 25, 200 metric tons (MT) and estimated demand at 125,000MT. This means that currently, there is a 99,800MT demand and sup-

ply gap in production, showing a huge potential in the subsector for investments opportunities. “Plantain business is booming now in Nigeria because there is a strong demand for the flour,” said Adjarho Oghenekaro, national president, Banana and Plantain Farmers Association of Nigeria (BAPFAN) in a telephone response to BusinessDay. “Processing plantain helps in reducing post-harvest loss of the crop which is currently about 30 percent,” Oghenekaro said. According to the Food and

Agricultural Organisation (FOA), Nigeria is world’s fourth largest producer of plantains, with 2.8 million MT annually, behind Ghana with 3.6 million MT, Cameroun with3.5 million MT and Colombia with 3.3million MT. “I lecture at one of the higher institutions in Ondo State but went into processing plantain when I realised the demand for processed plantain products is becoming huge daily,” said Adekonbi Olufunke, CEO, Providence Plantain Flour. “The business is lucrative and demand is growing daily both lo-

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Monday 14 January 2019

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What Countries and Companies Can Do When Trade and Cybersecurity John Baldoni

n the “internet of things” era, almost all products can be connected to the internet, and most of them can also be used for spying and other malicious activities. And since data is considered a critical asset, services, from international banking to payment systems to consumer websites, are part of this too. As part of our initial research on this topic, we identified 33 cases of a country blocking the import of a product or service because of cybersecurity concerns. In each case, different circumstances and actions led to different outcomes. Countries and companies need to consider their options. We have

developed a framework to systematically organize these cases, basing it on our in-depth interviews with domain experts. What options do countries have? — DO NOTHING. Governments can accept the po-

tential risk of a cybersecurity situation and choose to ignore it. — DEVELOP IMPORT TRADE BARRIERS. Some nations will take actions to implement trade policies or regulations that will directly restrict the import of international trades.

— RESTRICT G O V E R NM E N T PROCUREMENT. Governments can prohibit the use and purchase of certain products. — DEVELOP NORMS. Countries can agree to not engage in certain types of be-

havior. — AMPLIFY THE CONFLICT. On the other hand, some nations can choose an opposite option and escalate the conflict. What options do companies have?

— RECOMMEND ACTION. — ACQUIESCE. — COMPROMISE. Google exited the Chinese market eight years ago to avoid having to censure its search results to meet Chinese government rules. The company has recently decided to re-enter, with modest changes to its search engine operation. It is not yet clear that this compromise will be accepted by both parties. — AVOID. — DEFY. An organization may challenge or attack cybersecurity regulations. — COLLABORATE. Finally, organizations can choose to work with countries to mitigate the negative impact of regulations, or even to be involved in the regulation-making pro-

cess. As the digital economy continues to develop, cybersecurity will play a critical role in international trade. Instead of considering security only a regulation issue, governments need to consider ways to avoid unnecessary confrontations, and organizations should become proactively involved to address concerns and influence policy to improve outcomes for everyone.

(Stuart Madnick is a professor at the MIT Sloan School of Management and the MIT School of Engineering. Simon Johnson is a professor at the MIT Sloan School of Management, where Keman Huang is a research scientist.)

How retail changes when algorithms curate everything we buy digital human-machine services could end up playing a key role that department stores currently do, curating a vast range of clothing or other consumer goods to make it easier for customers to find just what they want. REVIEW AGGREGATORS As consumers buy more types of products online, the importance of fair reviews across platforms will increase. We expect this will lead to the rise of review aggregators across platforms in a broadening range of retail segments.

Bobby Gibbs and Nick Harrison

he first stage of the digital-shopping revolution saved consumers time and money by letting them buy things they already wanted without having to go to a traditional retail store. A major part of the second stage will likely be a dramatic refinement of technologies that tailor recommendations and then scour the internet for the best deal. We expect that retail curators will become an industry on their own, changing the structure of the retail sector and capturing a significant share of retail sales. Below, we explore three types of digital curating engines that are emerging. MARKET MAPPERS

We expect agnostic curating engines that will consider not just products’ price but delivery and other potential costs to suggest the best deals. Once that happens, market mappers will be able to find the best combination of items for a

full online shopping trip, where the customer pays the shopping service for a variety of goods in one go. DIGITAL PERSONAL SHOPPERS A step beyond market mapping is to tailor offers

to individual shoppers. The key technology is learning algorithms. Pioneered by Netflix, among others, these types of algorithms get better at their predictions as the customer approves or ignores successive offers. Ultimately,

CURATING RETAIL Retailers are already beginning to pioneer shopping models that show these types of curating engines are attractive to shoppers. And when retail curators gain momentum, the model could scale well globally,

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particularly in segments where products tend to have the same specifications in all markets, such as technology and some kinds of apparel. Once that happens, retailers, just like travel agents before them, risk becoming back-end utilities serving new intermediaries. The best way for retailers to protect themselves: Give customers good reasons to keep coming to them directly.

(Bobby Gibbs is a principal in Oliver Wyman’s retail and consumer goods practice. Nick Harrison is a partner and co-lead of Oliver Wyman’s retail and consumer goods practice globally.)

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BUSINESS DAY

Monday 14 January 2019

BUSINESS DAY

52 BUSINESS DAY NEWS

Lessons for Nigeria as Ghana’s ‘successful’ health... Continued from page 1

launched in 2003, one year before Nigeria’s National Health Insurance Scheme (NHIS), and on several occasions, delegates were sent to understudy it in order to improve that of Nigeria.

Currently, the health insurance scheme in Ghana is failing and Nigeria has a lot to learn from it. “Nigeria should not make the same mistake as Ghana in thinking it can support health insurance with taxes, and very low premiums,” Nancy Ampah, CEO, Nationwide Medical Insurance, a private health insurance company, said in an interview in Accra. “I think they should determine the premiums actuarially. Healthcare is expensive. I do not know about Nigeria but in Ghana, everything is imported, which makes healthcare very expensive. This makes it difficult to sustain it. If we are able to get an industry that produces some of the drugs, that will be a different ball game,” Ampah said. While Nigerian delegates who visited Ghana in the past may have returned with a template they copied for adaption, BusinessDay’s findings during a recent trip to the former Gold Coast indicate all is not well with the

administration of health insurance in the country, and the same mistakes should be prevented in Nigeria. Ghana’s health insurance “was not sustainable from the word go, but it looked good,” Ampah emphasised, adding, “As we went along, the faults started showing and that is where we are now.” Ghana’s National Health Insurance Agency (NHIA) issues a biometric card to people who register and under the scheme, everyone below the age of 18, and those above 70 years of age, get completely free healthcare. Those not in this category of ‘free healthcare’ essentially bear more of the financial burden, and funding the health insurance scheme was where the failure emanated. Private health facilities still in the scheme attend to patients unenthusiastically, as they are unsure when the government will pay for services rendered, while many others have simply decided to pull out of the programme. Pharmacies were also part of the programme, but with the problem of default in payment, many have equally pulled out. However, in the beginning when more health providers were enthusiastic to participate in the scheme, findings indicated enrolment was low, and

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coupled with initial enthusiasm, funding was not considered a challenge. However, the means and scope of funding were not sustainable as manifesting now that almost half of the population is on the scheme. Isaac Norteye, a 22-year-old Ghanaian shop attendant, said he registered for NHIA in 2015 because he heard hospitals could attend to people stranded without cash but in need of medical care. Narrating his experience, however, he said, “It doesn’t cover all the medicines. For me, I would say it only covers Paracetamol and malaria drugs. At times, even when they have a particular medicine at the hospital, they will tell you to buy it outside, simply because you’re with a health insurance card. Every time I have gone, medicines were prescribed for me to purchase at a pharmacy.” Philly Tamakloe, a nursing mother, renewed her health insurance card in 2017 when she was pregnant with her son. According to her, the health insurance reduced the amount she would have paid, even though she could not recall the exact figure. Though she prefers private hospitals, they would hardly accept her NHIA card. “Some private hospitals don’t accept NHIA because they are losing money. Probably the government does not pay its share from treatments administered to patients, so they refuse to take more patients

L-R: Mubo Olasoko, MD, Meristem Registrars and Probate Services Limited, Sulaimon Adedokun, MD, Meristem Wealth Management Limited, Damilola Hassan, head, wealth management, Meristem Wealth Management Limited, and Akin Adeniyi, lead consultant, GIPS, at Meristem Global Investment Performance Standards declaration event in Lagos. Pic by Pius Okeosisi

Onnoghen: Presidency embarks on illegal... Continued from page 1

person to the President when he was in the defunct Congress for Progressive Change (CPC), hur-

riedly filed charges against the Chief Justice, Walter Onnoghen, at the Code of Conduct Tribunal for non and fraudulent declaration of assets. The government also took the unprecedented step, via a motion, requesting the Chief Justice to recuse himself and stand down from office until the case against him at the Code of Conduct Tribunal is determined. It will be recalled that in 2016, even after being made acting Chief Justice, President Muhammadu Buhari refused to forward his name to the Senate for confirmation as substantive Chief Justice as was the norm, even when it was clear from the constitution that he could only act for three months in that capacity. The Vice President eventually forwarded his name for confirmation on the eve of the expiration of the three months when the president was away on medical vacation. Interestingly, the government

ignored the clear provisions of the constitution which laid down the procedures for the discipline of judicial officers and procedures for the removal of the Chief Justice. Section 292 (1) of the 1999 constitution provided that the CJN can only be removed from office by the president acting on an address supported by two-thirds majority votes of the Senate. More significantly, in the case of Ngajiwa Vs FRN (2017), the Appeal Court held that any judicial officer accused of an offence must first be subjected to investigation and disciplinary action by the National Judicial Council (NJC) and after only that the judicial officer can be arraigned in court. The decision of the federal government to ignore both the constitutional provision and judgement of the court to ask the CJ to recuse himself just one month before an election, can be given a political interpretation. “Judicial councils are bodies that are designed to insulate the functions of appointment, promotion, and discipline of judges from the parti-

san political process while ensuring some level of accountability,” Afe Babalola, a renowned legal luminary volunteered in a signed statement. “It is for this reason that the 1999 Constitution in section 153 provides for the establishment of the National Judicial Council and in paragraphs 21(b) &amp; (d) of the Third Schedule grants to the Council the power to exercise disciplinary control over judicial officers. As the allegations made against the judges are said to arise from or pertain to their office as Judges, I am of the view that the Constitution requires that any infraction by the said Judges be firstly investigated and resolved by the National Judicial Council (NJC) to the exclusion of any other body or authority,” Babalola submitted. He submitted that whereas other judicial officers can be removed by the president acting upon the recommendation of the National Judicial Council, the Chief Justice of Nigeria can only be removed by the President upon receipt of an address supported by two-thirds majority of the Senate! Equally, a lawyer, political economists and fellow at the London School of Economists, Olu Fasan

Monday 14 January 2019

since they are losing. If I were the one, I would not continue treating other patients if I was losing. But with the government hospitals, they have no choice but attend to patients,” Tamakloe said. Matilda Adusu, a businesswoman who is also nursing a baby, said even though she has registered for health insurance, she has not used it personally for medical care, except for the time she had her baby girl. She also got a reduction in her hospital bill, but explained her husband was in the best position to recall the amount. “Health insurance works somehow. This is because, sometimes you can go to the hospital with the health insurance card, and then it won’t cover everything you expect it to cover. There are some things or drugs you will be told the health insurance does not cover so you have to pay. Although you have the health insurance card, still you need to get money so that if it doesn’t cover it, you pay,” said Obed Addo, a visual artist. Addo once had a medical emergency involving his son at a time he was broke and had not registered for health insurance at that time. The incident, he said, pushed him to do the registration, although he still has not used it much. Ghana’s NHIA is funded through a portion of three sources – the Social Security and National Insurance Trust (SSNIT); Value Added Tax; and Premiums. For VAT, 2.5 percent is put aside for health insurance, while in premiums, the NHIA stated on its website that premium is set from GH¢7.2 (minimum) to GH¢48.00 (maximum), equivalent to about $1.5 (N540) to $9.8 (N3,528) per annum. The deductions from SSNIT and VAT are, however, inadequate. For SSNIT, the informal sector is largely left out. Also, VAT deductions are not adequate to complement SSNIT, considering how many people are now covered by NHIS in Ghana. In addition, the premiums are too low to provide much buffer for the other two sources. SSNIT is composed of 13 percent of basic salary, contributed by the employer of every worker in the formal sector, and 5.5 percent contributed by the workers themselves, a total of 18.5 percent. According to information on SSNIT’s website, out of the 18.5 percent, the employer remits 13.5 percent within 14 days of an ensuing month to SSNIT. Five percent is remitted to the Second-Tier Mandatory Oc-

cupational Scheme. Subsequently, SSNIT gives 2.5 percent out of the 13.5 percent to the National Health Insurance Authority (NHIA) for the member’s health insurance. Unlike their Nigerian counterparts, most Ghanaians have knowledge of health insurance, but many who are registered no longer have faith in it. Thirty-two-year-old Ebenezer Tetteh, who manages his father’s four fishing boats at the harbour in Sekondi, said he only just enrolled for NHIA in June 2018 but has not been to the hospital since then. He did not register earlier because he claimed he does not fall sick often, and when such happens, he takes a lot of herbal medicines. “I believe in herbs, and I can’t remember the last time I’ve been to the hospital,” Tetteh said. He enrolled because his father took ill sometime in 2017, and was taken to the hospital. His father also does not believe in orthodox medicines, but his condition seemed to defy the herbal treatments. He had a partial stroke and the herbs helped a lot with his recovery, but at some point, he needed to run tests in a hospital. “We were told there are petty things we need not pay for, so we should get health insurance. Like lab tests and other things would be covered, that was why we enrolled him for health insurance and the rest of us followed suit,” he explained. In a rare commendation of the NHIA, Freda Samson, a middle-aged woman from Ghana’s Eastern region, said she has done six surgeries since joining the NHIS about 10 years ago without paying. Her last surgery was in June 2017, but she did not disclose the nature of those surgeries. Samson said she was treated at a government hospital in the Eastern region, saying only some private hospitals accept NHIA. “It is good that you do health insurance because if you don’t have money and you’re sick, when you go to the hospital they’ll treat you freely,” she said, opining the health insurance is effective, at least for her. Told of bad accounts shared by other people, like getting more of Paracetamol, she said, “It is not Para matter, they will treat you well!” However, while few exceptions like Samson exist, Ghana’s health insurance has lost the vibrancy from its early years, with government over-burdened with bills that keep accumulating. Therefore, hospitals and pharmacies are increasingly reluctant to offer their services.

was emphatic that regardless of the allegations against the Chief Justice, it is inappropriate to request the CJ to stand down at this material time. “This doesn’t look good. Why was he appointed Chief Justice of Nigeria without a proper scrutiny of his asset declaration? He was acting CJN for several months and a member of the court for several years. Why wasn’t this issue brought up at least a year ago? Why now, a month to the polls?” Fasan queried in a tweet on Sunday. Meanwhile, Senate President, Bukola Saraki, has said abuse of due process in the proposed trial of the Chief Justice of Nigeria (CJN), Walter Onnoghen, before the Code of Conduct Tribunal (CCT), would send a wrong signal to local and foreign investors about Nigeria’s system of litigation. Reacting to the arraignment of the head of the nation’s Judiciary on Monday over false assets declaration, Saraki cautioned that the matter should be handled with care. In a statement on Subday signed by Yusuph Olaniyonu, Special Adviser (Media and Publicity) to the Senate President, he advised the Federal Government to ensure that

the trial does not cause chaos in the nation’s judicial system. “All these subjective actions politicize the anti-graft fight. They weaken national institutions. They send wrong signals. The CJN is not above the law but his trial puts the entire judicial system on trial. It sends a signal to the entire world about our judiciary. It has implications for the confidence of local and foreign investors about the system of adjudication over disputes in our country. Thus, the matter should be handled with care, demonstrating intense transparency and strict adherence to due process,” the Senate President who was similarly arraigned by the Federal Government before the CCT for similar charges but was discharged and acquitted by the apex court in 2018, noted. According to him, if the Government truly has genuine reason to put the incumbent Chief Justice of Nigeria on trial, it should ensure that every step in the process is transparent and the normal process as provided by the law is followed to the letter.

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Monday 14 January 2019

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Amaechi tapes: A peep into why Nigeria is not working CHRISTOPHER AKOR

he dissonance between what Nigerian politicians profess before the public and in front of the cameras and what they believe or admit to close aides and friends in the closet are worlds apart. And this goes to show the quality of leadership the country parades and why it is retrogressing despite its promise and the amount of resources available to it. Rotimi Amaechi, minister of Transport and director-general of the Buhari-Osinbajo Presidential Campaign Organisation, was caught on tape decrying the dismal failure of the Buhari administration while characterising the president as one who does not read and is not moved by criticisms and complaints. He also dismissed the country as hopeless, helpless, and up to no good. While the opposition People’s Democratic Party (PDP) has been celebrating the release of the tape, the ruling All Progressives Congress (APC) or, more appropriately, media aides of the president, while not denying that the voice in the tape was Ameachi’s, maintain that it was doctored to present both Amaechi and the president in bad light. On his part, the minister has refused to either confirm or deny the authenticity of the tape, a time-tested strategy of waiting for the storm to blow over. Regardless, the leaked tapes offer rich insights into the thinking and hypocrisy of the average Nigerian politician who puts up the appearance

of being the most patriotic Nigerian with the zeal to transform the country but inwardly, does not believe in the viability of the country and is prepared to sell the country for a mess of pottage. “Three years of Buhari o, everybody is crying: pressmen are crying, farmers are crying, workers are crying, politicians are crying, students are crying, three years o! The rate of poverty is very high. The people are hungry. Nigeria will never change,” Amaechi was caught on tape saying. He was, however, careful to warn his listeners that what he was saying was only meant for their ears alone and must not make it to the public space. “These are not things you publish o. If you publish them, you will never sit with me any day,” he said in the tape that has gone viral on social media. In another of the leaked tapes, Amaechi went personal, offering an insight into the president’s character. “The president does not listen to anybody. He doesn’t care. You can write what you want to write. The president doesn’t care. Does he read? He will read, he will laugh. He will say, ‘Come, come and see, they are abusing me here.’ In fact, there was one case of somebody in Onitsha, a trader in Onitsha who couldn’t sell his goats during Sallah. And I was with Oga on the plane and the man was busy abusing Buhari. He said, ‘Amaechi, come, what is my business with Onitsha goat seller?’” the minister was heard saying. Finally, and most telling of all, Amaechi dismissed the country as a failure and a lost cause. “ This countr y can never

change, I swear. The only way this country can change is if everybody is killed. This country is going nowhere, I swear,” he said. “Even if you divide the country into 10, it will still not change. I’m not joking o. When Magnus (Abe) was my SSG, I told him that this country is hopeless and helpless. He said, ‘Oga, stop it now. Coming from a governor, don’t be saying that.’ But two months in Abuja, Magnus said this country is hopeless and helpless. I said, ‘Why?’ He said, ‘You are right, the only thing they do in Abuja is share money, they don’t work.’” He was further heard saying. Yet, in public, the same Amaechi will regale Nigerians with the good works of the Buhari presidency, assuring the youths that Buhari will secure their future. “I only have a simple but candid advice to Nigerian youths and that is: come 2019 elections, they should vote for Buhari because their future is at stake,” Amaechi said at the 2018 Future Awards in Lagos. This brings to mind the revelation by Eghosa Osaghae, vice chancellor of Igbinedion University, at the 2017 Platform, of his discussion with an unnamed American ambassador to

Nigeria, who, as the professor narrated, challenged him to name any Nigerian, dead or alive, that truly believes in the country and has its interest at heart. Osagahe said the ambassador pointedly told him that all Nigerians he had met before and while serving in the country were prepared to sell off the country for their private gains. A Nigerian on Twitter, Collins, captured Amaechi’s hypocrisy succinctly when he queried, “You do not believe the country can get better unless everybody is killed, yet you receive taxpayers’ money every month as salary to do what you don’t believe in.” That explains why, despite the effusive claim to patriotism by leaders and politicians, Nigeria still remains a backwater country with broken education, health, and other critical infrastructure necessary to help Nigerians lead meaningful lives, while the leaders ensure they and their families have access to these facilities in the developed countries of the world. Perhaps, Vladimir Putin, the strongman of Russia, had Nigeria in mind when was said to have described Africa as nothing but a cemetery for Africans. “When an African becomes rich,

his bank accounts are in Switzerland. He travels to France for medical treatment. He invests in Germany. He buys from Dubai. He consumes Chinese. He prays in Rome and Mecca. His children study in Europe. He travels to Canada, USA, Europe for tourism. If he dies, he will be buried in his country of Africa. Africa is just a cemetery for Africans. How could a cemetery be developed?” Putin was quoted to have said. Unsurprisingly, in a fourth Amaechi tape, Thursday night, the minister was again heard boasting that all his children live abroad and his salary as a ministercannotcaterfortheirexpenses. “My salary is N960,000. APC takes N100,000. How much will remain? It won’t pay; all my kids are overseas, all. My first son is in Dublin, my second son is in Canada, and my third son is in Britain. It won’t pay any of their fees,” he was heard saying. Going by Amaechi’s claim of not earning enough to pay his children’s fees abroad, the rational step of action was for him to decline public office and go into private business to be able to raise enough money to cater for his family abroad.

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Nigerian firms seeking cash find no takers... Continued from page 2

investors in Hotels.com, they sold a company to Thomas Cook and did IPO for about four companies and has also helped in the sale of about five companies”. MTN Group recently reached a $53 million settlement with the Central Bank of Nigeria (CBN) to resolve a dispute over an alleged illegal transfer of $8.1 billion out of Nigeria. “We know it requires material work to change the negative perspective some investors have of Nigeria but we are doing that and it is working, albeit slowly,” Yewande Sadiku, chief executive officer, Nigerian Investment Promotion Commission (NIPC), said at a conference in Singapore. The story of another lost investment by a Nigerian firm was narrated to BusinessDay by someone familiar with the start-up. “I know of a company who, after talks with an investment firm and close to finalising a deal, got a call that they cannot pull through with it,” the source said, pleading anonymity. He, however, did not state the reason but said “this was just during the period MTN was put under pressure to pay the fine by CBN”. The fine and resultant squeeze put on MTN by Nigerian authorities was condemned by many foreign investors. “A short-term gain like the MTN fine leads to longer-term pain as who wants to invest in Nigeria after episodes like these?” Wayne McCurrie, a senior portfolio manager at South Africa-based Momentum Asset Management, said. Rafiq Raji, chief economist at Macroafricaintel, said seasoned Africa-focused investment professionals are not really moved by such MTN events considering such hold-

ups are typical of emerging markets countries. He added that the key determinant, as with all investment decisions, is whether the reward outweighs the risks. “The only difference now is that more African countries are competing for these investments and are increasingly better at attracting them,” he said. Data already show that Nigeria is losing out to its African peers as a destination for Foreign Direct Investment. FDI inflows to Nigeria fell to $981.7 million in 2017, less than a third of South Africa’s $3.2 billion FDI inflow and seven times less than the $7.4 billion flows mustered by Egypt, the continent’s top FDI destination that year, according to National Bureau of Statistics. Ghana, the second-largest economy in West Africa that is the size of Lagos in population terms, attracted $3 billion, the chief of the Ghanaian Investment Promotion Commission said at the Africa Singapore Business Forum. That gives Nigeria an FDI per head of $5.4 million, compared to Egypt’s $77.8 million and South Africa’s $58 million, given the three countries’ 180 million, 95 million and 55 million population, respectively, underscoring the need for increased foreign investment in Nigeria, projected to be the world’s most populous nation after India and China by 2050. Meanwhile, at the last MPC meeting, Godwin Emefiele, governor of Nigeria’s central bank, stressed that the MTN issue was an isolated one. “I will continue to say that CCIs that are being issued to our foreign investors remain sacrosanct and no other company is being investigated on the issue of CCI,” Emefiele said.

Godwin Obaseki (m), governor, Edo State; David Osifo (2nd r), commissioner for health, Edo State; Julie Erhabor (2nd l), chairperson, Primary Healthcare Advisory Committee; Patrick Okundia (r), chairperson, Secondary Healthcare Advisory Committee, and Alex Okoh (l), chairperson, Health Financing Advisory Committee, at the inauguration of the Edo Health Improvement Programme (HIP) Advisory Committee, at Government House, Benin City, Edo State.

Investors see pile of money in refining... Continued from page 2

cals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then. They are also poised to consume an additional 56 billion cubic metres (bcm) of natural gas by 2030, and 83 bcm by 2050. The volatility of oil prices and its capacity to upset the world’s geopolitical balance have consequences for refining margins. Bearish oil prices result in marginal gains for buyers of its derivatives but high oil prices send the price through the roof. Local investors see money in ramping distribution across the sub-region which will cut down freight costs and improve delivery timelines. West African investors are also betting to cash in on the International Martime Organisation (IMO) regulation which places a 0.5 percent sulfur cap on marine fuels and comes into force on January 1, 2020. “This IMO regulation will drive demand for lower sulfur products,

and consequently trigger stronger demand for sweeter crude feedstocks around the world. This could work in West Africa’s favor as the global appetite for sweet crudes will also be greater,” according to analysts at S&P Global Platts, a commodity tracking firm. The Federal Government, analysts say, will loosen its grip on Nigeria’s three grossly underperforming refineries. According to the NNPC, refinery utitlisation from January to August 2018 averaged 12 percent from 18 percent in 2017 and there is no indication that it will improve. Already, the NNPC has drawn up several arrangements including collocating refineries to attract investments. As the Dangote Refinery nears completion and agitations to remove the bruising subsidies continue, it will make no economic sense to continue to regulate the retail price of petrol. Chuks Nwani, an energy lawyer, says Nigeria has to rethink its engagement with crude oil. “We have so much depended on selling crude that we forget that

we can make more money if these products are refined and sold to African market,” Nwani says. Nwani concedes that making concessionary sales as a short-term measure will be encouraging, but argues that state-run NNPC should speedily take steps to use tolling arrangements to refine Nigeria’s products locally and sell to the African market. “There are so many idle refineries all over the world and if they are guaranteed tolling arrangement with appropriate guarantees in place, they will relocate and assemble these refineries in Nigeria within a space of eight months. NNPC will supply crude to them, they will refine locally and send back to NNPC to sell to the market. NNPC will pay them for the cost of processing only. It guarantees market for our product and creates employment to Nigeria,” he said. NNPC operates a crude swap arrangement under which crude oil is exchanged for derivatives, but analysts say a lot value is lost in the process as such arrangements rarely account for other derivatives besides petrol, diesel and kerosene.

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Concerns rise over spate of voluntary delisting on NSE IHEANYI NWACHUKWU

he spate at which companies listed on the Nigerian Stock Exchange (NSE) opt to voluntarily exit the Exchange is now a source of concern, particularly at a time when the bourse is in need of new listings. A company’s name ceases to exist on the Daily Official List of the Nigerian Stock Exchange due to decisions that are most times voluntary, regulatory or as a result of Mergers & Acquisitions (M&As). The term “delisting” of securities means removal of listed securities from the Exchange. The securities of an affected Issuer will no longer be traded on

…17 companies chose to exit in 16 years

the Exchange and the Issuer’s name will be removed from the Daily Official List of the Exchange. BusinessDay recent check shows that from 2002 to 2018, no fewer than 17 companies earlier listed on the NSE chose to voluntarily delist. This is in addition to many others that were regulatory-induced or due to their M&A consummation. Our check shows that 13 out of the total companies that voluntarily delisted, representing 76.4 percent, voluntarily chose to be delisted from the Daily Official List of the Exchange between 2011 and 2018. “Delisting tends to reduce the universe of liquid shares, thereby affecting

the depth and breadth of the stock market, especially if there are no new listings,” Douglas Muyeche, a finance lecturer at the National University of Science and Technology, Bulawayo, Zimbabwe, said in a recent note. “Inasmuch as most delisting(s) are involuntary, there are good reasons for a counter to opt for voluntary delisting in light of enhancing shareholder value. The cost of remaining public versus the cost of going private has been cited as the most determinant factor in voluntary delisting,” Muyeche said. Another notable reason he gave for companies’ voluntary delisting is the inability to raise equity

capital by the listed firm, “owing to a relatively lower share price compared to the real net asset value of the firm”. “The need to merge, demerge or restructure a firm may be drivers of voluntary delisting,” he said. Oscar Onyema, CEO, NSE, assumed office on April 4, 2011. He will today, Monday, January 14, 2019 lead other management staff of the Exchange to present the 2018 market recap and 2019 outlook. Voluntary delisting is the withdrawal of an Issuer’s securities listed on the Exchange with the express approval of the holders of its securities, after complying with relevant requirements in that regard.

Vice President, Yemi Osinbajo (2nd l), receiving certificate of appreciation from some Market Moni beneficiaries during the Niger State edition of National Micro Small and Medium Enterprise Clinic MSME in Minna, at weekend. With them is Abubakar Sani (3rd l), governor, Niger State.

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Monday 14 January 2019

World’s first branded ride-hailing initiative debuts in Nigeria ENDURANCE OKAFOR

harting a new course for local drivers on ride-hailing app services in the Nigerian market, Sterling Bank plc used their cabs as out-ofhome media to announce its refreshed brand identity in the Nigerian market. First of its kind anywhere in the world, the initiative opens a new stream of income for drivers on Uber and Taxify platforms in Africa’s largest and fiercely competitive market. Applauding the move, regular Taxify rider, Adeola Adejokun said “I woke up to the sight of saloon cars on the mainland wearing Sterling Bank’s new logo. It did not click until I requested a ride and one wearing the proud colours of Sterling showed. Behind the wheels was an elated driver full of praise for Sterling Bank for improving his bank account balance at the point in time when his rent was due, in addition to his children’s school fees. The driver declared that he would not have risked the desert route to Europe if the type of opportunities being created by Uber, Taxify and Sterling Bank were available some 10 years ago.” Adejokun added that the bank’s decision to partner with local drivers is commendable because it delivers direct economic benefit to a striving socio-economic class. On his part, Brand Analyst, Adewale Okoya, said, “We should watch out for Sterling, the bank is onto something. It is one of the few brands that is true to its ethos of enriching lives. There is no better testament to this than its array of market disruptive offerings

introduced in the last few months that is changing the way people invest in treasury bills, secure consumer loans and pay transport fares. “I am particularly delighted by the new income stream created for drivers at Taxify and Uber by this unconventional bank. It is direct economic empowerment of individuals who are striving to make ends meet. At least these drivers have a reason to smile this January.” Okoya noted that the numbers will continue to add up for Sterling in terms of profitability given its strategic approach to brand communication, especially its clinically executed rebranding exercise. “Departing from the norm, Sterling effectively deployed taxi advertising, a premium out-of-home advertising format, to present its refreshed brand to Nigerians. “The bank’s new corporate logo has become easily recognizable in just a few days because it has been taken round the entire Lagos metropolis by corporate taxis. I have sighted the logos on corporate taxis at the hottest spots in town such as commercial areas, airports, hotels, nightclubs, worship centres and the city centre.” Apart from enjoying recall by reaching a concentrated and varied audience in the busiest parts of Lagos on a daily basis, Sterling’s brand refresh also plucked the heartstrings of digital natives in Nigeria and the Diaspora. The bank has been the subject of positive trending conversations online for days. Industry watchers have been applauding Sterling in the last 12 months for delivering high impact campaigns at the bestcost possible.

Nigeria’s stock market records first positive close in 2019 Nigeria’s ‘nature’ pushes elections into top danger watch list … gain driven by GTB, Dangote, Zenith OLUWASEGUN OLAKOYENIKAN

he Nigerian stock market has recorded its first positive close this year driven by gains in Guaranty Trust Bank, Dangote Cement and Zenith Bank as investors saw opportunities in cheap valuations. The All-Share Index (ASI) of the Nigerian Stock Exchange (NSE) rose by 0.62 percent to close at 29,517.73 points, halting the market’s six-day losing streak. Yesterday’s gains could be “attributed to bargain hunting on the backdrop of cheap valuations of stocks with sound fundamentals,” said Gbolahan Ologunro, a Research Analyst at CSL Stockbrokers. Investors took positions in these stocks ahead of

full-year financial declaration “which we expect to be impressive’’ despite political uncertainties which becloud next month’s general elections, Ologunro. Guaranty Trust Bank was the highest contributor to today’s gain, rising by 6.07 percent to close at N33.20. Dangote cement trailed with 0.88 percent price gain to close at N171.50, while Zenith bank grew by 2.86 percent to close at N21.60. Investors gained N68 billion as market capitalisation of listed equities, which opened at N10.94 trillion, rose to N11.01 trillion after the close of business at the Lagos burse, moderating the year-to-date loss of ASI to 6.09 percent. “We have seen a drop of over 6 percent in the market this year, which opened up

an opportunity for people who are looking for short capital gain opportunity,” Johnson Chukwu, CEO, Cowry Asset Management Limited said. The market had plunged to a 19-month low Tuesday and recorded 2.33 percent decline Wednesday, it biggest daily loss in 11 weeks as investors sold on elections worries. “The decline in the stock market is expected, with the elections fast approaching,” said Aluko Paul, a Research Analyst at MBC Securities. Law Union and Rock Insurance Plc gained the most today. The stock rose 10 percent to close at 55 kobo. Julius Berger Nigeria Plc rallied to a six-month high, gaining 9.86 percent to close at N28.40, while Eterna plc garnered 8.86 percent to close at N4.30.

BUNMI BAILEY

en African countries have elections scheduled to hold this year, but only that of Nigeria, the most populous in the continent, has its own rated among the leading risks in 2019. The Eurasia Group, a political risk consultancy based in New York, which listed the forthcoming general elections as one of the world’s “Top Risks 2019,” says Nigeria faces its most fiercely contested election since the transition to democracy in 1999. “One candidate is the incumbent, Muhammadu Buhari. He is an elderly, infirm leader who lacks the energy, creativity, or political savvy to move the needle on Nigeria’s most intractable problems. His opponent is Atiku Abubakar, another gerontocrat who would focus on en-

riching himself and his cronies, avoiding the difficult and politically unpopular tasks necessary for reform,” the report states. Nigerians will go to the polls on February 16, 2019, to elect the President and National Assembly members. On March 2 they will vote for the state governors and members of the states Houses of Assembly. This will be the sixth quadrennial election since the end of military rule in 1999. African countries with elections this year are Senegal, Angola, South Africa, and Malawi. Others are Mauritania, Mozambique, Botswana, Namibia and Tunisia. Most of the candidates in these polls are seeking re-election, but political analysts say Nigeria’s size and violent nature stand out in the list. “In Nigeria, our nature is set to be notorious, violent, dare devils, Boko Haram,

etc. And that is why foreign countries are focusing on our election in February,” says Idowu Omolegan, a political analyst. “If there is trouble here it will affect other West African countries in terms of refuges, war, etc.,” Omolegan warns. Nigeria is meant to set examples for other African countries, so whatever happens in the country, “the world will watching and as a result of that Nigeria is very important, unique in the world map,” he notes. However, some analysts believe that the anticipated violence represents a counter attack by the forces that the current administration says it has been fighting. “This is in light of its size and the seeming elite backlash against the Buhari administration due to its anti-corruption stance,” said Rafiq Raji, chief economist, Macroafricaintel”.

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FSDH expects 11.69% December 2018 inflation rate BUNMI BAILEY

… Macroafricaintel forecasts 11.5-12 %

e c e m b e r ’s 2018 Consumer Price Index (CPI), otherwise referred to as inflation rate, is forecasted to rise to 11.69 percent from 11.28 percent recorded in November, according to a report by FSDH Merchant Bank Limited. But Macroafricaintel, another research house sees inflation rising to as high as 12 percent for the same period. FSDH’s expected monthly increase of 0.41 percent points between the two months is the highest monthly increase since November 2016, the report said. Ayo Akinwunmi, head of research, FSDH Merchant Bank, explained, “The increase in the prices of food items and nonfood items of the high velocity of end of the year

purchases drove up prices of consumer food items.” Rafiq Raji, chief economist at Macroafricaintel, a research firm, expects inflation in December to to rise to 11.5-12 percent. “My Forecast is based on the recent monthly change trend and typical price increases during festive periods, said Raji. “ But it is likely in the middle of these ranges of forecasts. The actual inflation headline would probably be within the 11.5-12 percent range, in my view.” The National Bureau of Statistics is scheduled to release the inflation rate for the month of December on Thursday 17, January 2019. Prices of major food items start to rise during or in the run-up to the festive periods. Ibrahim Tajudeem, head of research, Chapel Hill Denham, said

the forecast could be higher due to the festive-period induced spending, which would lift inflation. “Additionally, demand for dollar increased in December due to the festive season so the Central Bank of Nigeria (CBN) had to supply more dollars for people to travel and spend .So demand generally was strong in demand.” The Food Price Index (FPI) report released on January 10, 2019 by the Food and Agriculture Organization (FAO) for the month of December 2018 remained relatively the same as November 2018. However, the World Bank has hinted at a possible increase in food prices in 2019 because of severe weather conditions, may accelerate the inflation rate in 2019 in Nigeria. The FAO notes that the decline in the prices

of dairy and sugar in December was largely offset by the increases in cereal, meat and oils. The FSDH report noted that despite the expected increase in the inflation rate in December 2018 and in 2019, FSDH Research believes members of the Monetary Policy Committee (MPC) of the CBN will vote to hold rates at the current levels in January 2019. “The most appropriate instrument to signal tightening at the moment in the face of fragile credit and economic growth is to use open market operations (OMO) to mop up excess liquidity,” the report stated. The MPC, which has the responsibility to formulate the country’s monetary and credit policy, is scheduled to hold the first meeting for the year in January 21-22, 2019.

L-R: Charles Ebereonwu, external relations manager, Total Exploration and Production Nigeria Limited; Ozena Utulu, head, brand management and sustainability corporate communications; Joseph Uboh, Heritage Bank finance and admin manager, and Queen Uboh, president, Para-Power Lifting of Nigeria, during the media parley by the organising committee of the International ParaPowerlifting competition coming up later this month in Lagos. Pic by Pius Okeosisi

Lagos governorship debate: Sanwo-Olu pledges to clear Apapa gridlock in six months INIOBONG IWOK

…Agbaje to focus on human capital development

abajide Sanwo-Olu, governorship candidate of the ruling All Progressives Congress (APC) in Lagos State, has pledged to clear the gridlock in Apapa in six months if elected governor, saying he had identified solution to the current gridlock across the state. Sanwo-Olu spoke at private-sector interactive forum organised by the Lagos Chamber of Commerce (LCCI) for the governorship candidates of the two leading political parties in the country, which also featured the candidate of the People’s Democratic (PDP) in the state, Jimi Agbaje. Agbaje, who is contesting for the Lagos governorship for the third time on PDP platform, said his administration would give priority to

the educational sector and human capital development. This was needed to make the youth competitive and selfreliant in a modern society, he said. Sanwo-Olu said he had identified the solution to the current traffic gridlock across the state promised that that his administration would work with traffic experts to check the perennial traffic gridlock in the state and install street light across Lagos. Apapa, which hosts Nigeria’s busiest seaports, has experienced extensive disruption in business, commercial and transportation activities following the collapse of one of the link bridges to the seaport. “One of the things I would do within the first six months in office is to solve the Apapa gridlock, I have identified

traffic managers who would help us solve the gridlock across the state if elected governor and we would make street lights across the state also work,” Sanwo-Olu said. He promised to reform the education sector in the state by carrying out capacity training for public schools teachers, while equipping the primary and secondary health centres with seasoned health personnel. “We have about 320 primary health centres across the state. That means physical infrastructures are there, what we need to do is to get manpower, nurses and doctors into the hospitals; so that we can have a fully reformed and functional system in primary and secondary health system,” Sanwo-Olu said. “We would initiate health insurance scheme with several

of the private hospitals joining us.” Explaining on his decision to focus on education, Agbaje said: “We cannot be talking about the future in a knowledge-driven economy in a global world that believes in knowledge. So we will give high percentage of our budget far above the UNESCO percentage to education. Every school would have internet connectivity, those things that are required for learning. It is our priority,” Agbaje said. Like Sanwo-Olu, Agbaje also stressed that his administration would reform the health sector in the state, and initiate a health insurance scheme in partnership with the private sector to provide health care, which would be affordable and accessible to residents of the state.

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Explainer:

What is gas flaring costing Nigeria?

DIPO OLADEHINDE

ix decades after Africa biggest oil producing country started producing oil in profitable quantity the hazardous and harmful practice of flaring gas into the atmosphere has continued unabated. What is gas flaring? Gas flaring is the burning of natural gas that is associated with crude oil when it is pumped up from the ground. In petroleumproducing areas where insufficient investment was made in infrastructure to utilize natural gas, flaring is employed to dispose of this associated gas. Economic loss to gas flaring Analysis by BusinessDay showed from January 2018 till September 2018, Nigeria flared a total of 215.9 billion scf flared translating to a total cost of $755.65 million (N275.6 billion) using the average price of natural gas of $3.5 per 1,000scf as at September last year. Further analysis revealed if the flared 215.9 billion scf were to be sold today Tuesday, January 8, 2019) at the current price of $3 per 1,000scf it would cost $647.7 million (N236 billion). Analysis of the NNPC report using September average cost of $3.5 per 1,000scf showed in January Nigeria flared 31.68 billion Scf of gas worth $110 million, in February 27.25 billion scf was flared worth $95.3 million while in march and April, Nigeria flared 26.88 billion scf and 23.06 billion scf worth $94 million and $80.5 million, respectively. The oil and gas companies, which include international and indigenous operators, also wasted 21.20 billion scf of gas in May worth $74.2million, 21.66 billion scf in June worth $75.81, 21.21 billion scf in July worth $74.2million, 22.42 billion scf in August worth $78.47, and 20.54 billion scf in September worth $71.89million. Impact on the environment In Nigeria, oil companies both local and international engage in gas flaring, as a 24 hour-a-day, 365 day-ayear practice. Some of these flares have burned without cessation for 40 years. People live literally next door to the roaring, ground-level flares that leap as high as a several-story building and belch black clouds of toxic smoke in the middle of, or next door to, their villages. Gas flaring harms local health through emissions that have been linked to cancers, asthma, chronic bronchitis, blood disorders, and other diseases. These human health problems affect

the people of oil-producing communities, such as the Niger Delta, where 30 million people live with little to no health care access. Also, Gas flaring causes acid rain, which impacts soil fertility and is associated with reduced crop yields, causing hunger in the Niger Delta where fish farming have already declined due to pollution which have also reduced the means of livelihood of many fish farmers. Past efforts to stem the tide without result Previous efforts by the Federal Government to curb incidences of gas flaring have yielded little fruit. The gas-flaring charges imposed by the Associated Gas Re-Injection Act (AGRA) on oil producing companies are comparably negligible. To compound this issue, the Tax Appeal Tribunal has held that levies paid for flaring gas under the AGRA are tax deductible. The implication is that oil producing companies can flare as much gas as they want to, and deduct the levies they pay for flaring this gas from their taxable income. New Measures The present government renewed its commitment to end the practice and, in this regard, launched a new framework – the Nigerian Gas Flare Commercialization Programme (NGFCP) – to tackle the longstanding issues. In October last year, the Federal Government increased the gas flare penalty from N10 per thousand standard cubic feet of gas to $2 or N612.8 (at the official exchange rate of N306.4 to one dollar) per thousand standard cubic feet of gas. The government also announced a fine of N50, 000 or six months jail term, or both, for anyone who provided inaccurate flare data. What are the solutions? Luqmon Agboola, head of energy and infrastructure at Sofidam Capital, said government should be firm and decisive in the implementations of laws against gas flaring and also solve the bottlenecks in capital infrastructure. Agboola said government should give a firm deadline and wield the big stick on defaulters. Emmanuel Afimia an energy analyst at Afimia consulting said the government needs to be more proactive in harnessing the opportunities natural gas can bring on the economy. When the gas is converted to wealth for industrial use, it will create jobs and bring billions into the coffers of government, Afimia said.

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Onnoghen: Abuse of due process will N134bn Supreme Court verdict: Shell denies We are committed to growth of send wrong signal to investors - Saraki liability, ready to go ahead with appeal Nigerian football - Aiteo Group OWEDE AGBAJILEKE, Abuja

enate president, Bukola Saraki, says abuse of due process in the proposed trial of the Chief Justice of Nigeria (CJN), Walter Onnoghen, before the Code of Conduct Tribunal (CCT), will send wrong signal to local and foreign investors about Nigeria’s system of litigation. Reacting to the arraignment of the head of the nation’s Judiciary on Monday over false assets declaration, Saraki cautioned that the matter should be handled with care. In a statement on Sunday signed by Yusuph Olaniyonu, special adviser (media and publicity) to the Senate president, he advised the Federal Government to ensure that the trial does not cause chaos in the nation’s judicial system. “All these subjective actions politicise the anti-graft fight. They weaken national institutions. They send wrong signals. The CJN is not above the law but his trial puts the entire judicial system on trial. It sends a signal to the entire world about our judiciary. “It has implications for the confidence of local and foreign investors about the system of adjudication over disputes in our country. Thus, the matter should be handled with care, demonstrating intense transparency and strict adherence

to due process,” the Senate president, who was similarly arraigned by the Federal Government before the CCT for similar charges but was discharged and acquitted by the apex court in 2018, noted. According to Saraki, if the government truly has genuine reason to put the incumbent Chief Justice of Nigeria on trial, it should ensure that every step in the process is transparent and the normal process as provided by the law is followed to the letter. He said a situation where the petition that triggered the trial was submitted to the Code of Conduct Bureau (CCB) on Wednesday January 8 and by January 10 on Friday, the Chief Justice was presented with it for his reply only for the charges to be drafted that same day and filed in the Code of Conduct Tribunal (CCT). This taking place within three days and commencement of trial fixed for Monday, January 14, already indicates unnecessary haste and short-circuiting of the process of fair hearing. “It is important for the government and members of the public to know that as somebody who have travelled this route before, we should refrain from any media trial and political players should avoid abusing the judicial process in order to achieve what they could not get through normal political contests.

IGNATIUS CHUKWU

upreme Court on Friday, January 11, 2019, dismissed an appeal filed by Shell Petroleum Development Company (SPDC) trying to stop a judgment debt to an Ogoni community and awarded N500,000 against the oil firm for allegedly filing an incompetent appeal. Shell on Sunday, January 13, 2019, however, kicked out, denying any liability in the matter and said it was rather ready to go ahead with the appeal. Lawyers for the respondents however said there was no appeal anymore at the apex court based on the Friday verdict. The position of Shell brings another twist in the windy case that began in an Eleme High Court at a mere N6 billion only to grow to a Federal High Court case at N17 billion. In each case, Shell lost to the community people over oil spills in Ejama Ebubu in 1971. Experts say two major issues tick out in the deepening case; is there still an appeal before the Supreme Court, and is Shell owing N17 billion as it claims or N134 billion as the Ebubu community claims to be the case in the Supreme Court? A Shell spokesperson said on Sunday, “SPDC is aware of the Supreme Court’s order on our notice of appeal. We are seeking to obtain a copy of this and will respond

appropriately once we have reviewed the detail. SPDC denies any liability in this matter and we remain ready to defend this case based on the available facts.” On what the ruling means for the substantive case and whether SPDC now needs to pay the N17 billion original sum in the 2010 judgment, Shell said: “We are yet to obtain a copy of the ruling to ascertain the basis of the conclusion of the court to enable us respond appropriately.” Shell did not mention that the First Bank guarantee in the judgment of N17 billion also included the 25 percent interest awarded to the community people on the principal. The Supreme Court had on Friday dismissed the appeal filed by SPDC, which prevented First Bank of Nigeria Limited from paying the plaintiffs community a judgment debt said to now total N134 billion to the plaintiff community represented by 10 Ogoni chiefs of Ejama Ebubu community of Ogoni in Rivers State. In a ruling on Friday, the justice, Kumai Bayang Akaahs, said the notice of appeal filed by the oil firm was incompetent and struck it out based on Order 8 Rule 7 of the court’s rules.

... pledges full support to CAF Awards ANTHONY NLEBEM

iteo Group, an integrated energy conglomerate and the major sponsor of Nigerian football, has expressed determination to continue to support the growth and development of Nigerian football and to make the prestigious Confederation of Africa Football (CAF) Awards better in the years ahead. Ndiana-Abasi Matthew, senior manager, corporate communications, Aiteo Group, stated this at the company’s office in Lagos, also saying the organisation would continue to contribute to the development of football and sports in general on the continent and beyond. Matthew said: “We are proud with social responsibility role in the country because with a short time Aiteo Group is noted worldwide as a big supporter of football in the world. “The CAF Awards will get bigger and better in the years ahead, and we are also going to make our presence felt better in all our sponsor-

ship roles in Nigeria. Sport is massive in the country, especially football because it is a unifying factor over the years.” Aiteo Group is the sponsor of the Federation Cup in Nigeria and the outfit is also footing the bills of national team coaches. The outfit sponsors the CAF Awards that took place last year in Accra, Ghana, and the second edition took place last week in Dakar, Senegal. “We are enjoying the partnership with the Nigeria Football Federation (NFF) and we also believe we are making Nigerians enjoy the game of football better,” he said. Meka Olowola, managing partner, Zenera Consulting, a PR firm working with Aiteo Group, also stated that so much was in stock for the lovers of the football in the years ahead. “This is the beginning of an exciting year for the fans of football. Aiteo is committed to making the game better in Nigeria and Africa. We will have a retreat soon and after that we will roll out our sports calendar for the year,” Olowola said.

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LCCI, stakeholders kick against fuel subsidy in 2019 budget OLUSOLA BELLO

... some say it will elevate corruption

takeholders in the downstream sector of the Nigerian oil and gas industry have kicked against the provision of fuel subsidy in the 2019 budget. They say including subsidy in the budget will elevate corruption in the sector to the highest level and will not allow for any transparency in the sector. According to them, this is going to serve as an avenue to raise the level of corruption in the sector. Many of the operators in the downstream sector of the petroleum industry who spoke with BusinessDay but do not want their names mentioned for fear of intimidation, advocate for complete deregulation of the sector so that there can be sanity and transparency in it operations. They say NNPC as government agency is the only one that will administer the subsidy, and express doubt if there can be any transparent

in its dealing, as the corporation may not be able to resist pressures from government officials who want supports for their surrogates through the subsidy exercise. Subsidy they say attracts fraud, and in this time of election part of the money may be shared to briefcase oil operators cum politicians who are working for the re-election of the present government through inflated volume of petroleum products brought into the country. They cite the claim by the NNPC that the country is consuming about 60 million litres daily as grossly over inflated figure meant to remove money from the system. They want the government to channel the money for the subsidy to Education, Health and roads, among other things. They however agree that whatever negotiation the government is doing with the organised labour on wages if it fails to take into consid-

eration that there will be increase in price of petrol by whichever party that wins the election, will render all the efforts useless. Because, according to them, increasing the price of fuel without the necessary palliatives to cushion the effect of the increase will make any wage increase now useless. Muda Yusuf, directorgeneral, Lagos Chambers of Commerce and Industries (LCCI), says: “Perhaps, the biggest fiscal burden on the economy today is the petroleum subsidy regime. It is a big hole in the finances of government. It puts tremendous pressure on the foreign reserves and the foreign exchange market, just as it exerts immense stress on the nation’s treasury.” He says it remains a cause for concern that the subsidy regime has subsisted, especially at a time when the economy is facing unprecedented fiscal challenges; at a time when productivity in the economy is constrained by

acute infrastructure deficit; at a time when public institutions are finding it hard to pay salaries. There cannot be a better example of resource misapplication, he says. According to Yusuf, there are two components of this: “The first is the genuine subsidy, which is the differential between the pump price and the landing and other costs of fuel. The second (and more disturbing component) is the transparency problems inherent in the fuel subsidy administration, including the petroleum equalisation policy. For several years, the economy suffered severe bleeding from this phenomenon.” He says one of the critical elements of the oil and gas sector reform, particularly the downstream sector, is the complete deregulation of the sector. This is the spirit of the Petroleum Industry Bill, which regrettably, has again got stuck in legislative process. The reform of the oil and gas sector will create a number of advantages for the economy.

L-R: Tony Elumelu, chairman, Heirs Holdings; Rotimi Amaechi, minister of Transportation; Aliko Dangote, president, Dangote Group, and Dakuku Peterside, DG, NIMASA, at the NIMASA Corporate Dinner and Merit Awards in Lagos at the weekend. Pic by Pius Okeosisi

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Rewane-led minimum wage committee to weigh risks of review on economy LOLADE AKINMURELE

he Bismarck Rewane committee appointed by the Federal Government will not be recommending any particular minimum wage for the federation but would instead study and recommend ways that an agreed minimum wage can be implemented with the barest disruption to the economy, BusinessDay has learnt. The Technical Advisory Committee on the Implementation of an Increase in the National Minimum Wage was inaugurated by President Muhammadu Buhari on Wednesday and many began to claim that it was up to the team to be led by leading economist and CEO of Financial Derivatives Company, Rewane, to come up with an acceptable minimum wage for Nigeria. However, our correspondent who has been given insight into the work of the committee reports that the way the work of the committee has been structured, it was clear that the committee would be concerning itself with determining what level of revenue gap will ensue on the basis of the implementation of the national minimum wage and how this will impact on the nation’s revenue structure. The committee, once it has determined the resulting revenue gap, will aim to figure out how to fund this gap, whether by debt, asset sale, or other means. According to a senior government official, the third area of work for the committee is to “to study the impact of the possible revenue gap on Nigeria’s macroeconomic stability and how the issue of a national minimum wage can

be leveraged to link productivity measurement as well as other measures of efficiency in government”. Fourthly, the committee members will also come up with how “the identified revenue impact could play out in the time of oil price collapse so that the nation does not assume a false sense of security at a comfortable oil price level”. Organised Labour and the Federal Government have been at loggerheads over a new minimum wage. Current minimum wage is N18,000 ($50) and has remained so since 2011 when it was last reviewed. The Nigerian Labour Congress (NLC) and other labour unions are asking the Federal Government to increase the minimum wage to N30,000. The minimum wage issue has divided the tiers of government, with state governors saying they would not be able to pay the N30,000 minimum wage. They are pressing the view that states should be permitted to determine their own minimum wage outside the parameters to be set by the Federal Government in the proposal it plans to send to the National Assembly on or before January 23. There are also concerns about how to ensure adoption of the new national minimum wage by the private sector, especially given the different layers and sizes of the private sector organisations. The committee has four weeks within which to submit its report and it is working with global experts from professional firms like PwC and KPMG, who will be helping to validate some of the assumptions and data that the committee may want to use.

Lagos economy records N50bn cash transactions from tourism in December Emefiele to unveil CBN’s year plans at MPC JOSHUA BASSEY

ourism, entertainment and creative related activities generated cash transactions of over N50 billion in Lagos in December 2018, Steve Ayorinde, commissioner for tourism, arts and culture, says. Ayorinde said trends and reports monitored by the Lagos State government over four weeks in December, especially during Christmas and new year festivities, captured an estimated spending well above N50 billion, a record slightly higher than December 2017, which also recorded a good run in travel, entertainment and leisure-related spendings.

The monitored reports attributed the trend to the peak in entertainment activities; influx of people from neighbouring states, neighbouring countries, and holidaymakers from abroad who either chose Lagos as their primary destination or transit to other parts of Nigeria last December. He said the figure was obtained from various reports, statistics and analyses monitored across immigration office, banks, aviation, hospitality and leisure parks; food, beverage and distribution businesses as well as event venues, shopping malls and cinema box office. According to him, the reports monitoring the

prevailing December trends showed an unprecedented footfall influx of more than three million people entering Lagos in December alone with a multi-billion naira spendings in tow in hotel lodgings, local in-bound flights and taxi/chartered transportation, alcohol and beverage consumption; culinary business; visits to resorts, parks, clubs and lounges, live theatre and cinemas; concerts and clubs as well as ancillary businesses like fashion and clothing, kiddies’ games and toys, and private security guards, which are all now part of the tourism and entertainment ecosystem.

HOPE MOSES-ASHIKE

…injects $263m, CNY39m into retail SMIS

overnor, Central Bank of Nigeria (CBN), Godwin Emefiele, will on January 21 - 22, unveil the bank’s plans for the year during the first Monetary Policy Committee (MPC) meeting in Abuja. This is coming as the CBN weekend injected $263 million into the Retail Secondary Market Intervention Sales (SMIS), being its first intervention in that sector this year. This was in addition to the CNY39 million consummated through a combination of spot and short-tenored forwards, arising from bids received from authorised dealers. Naira on Friday appreciated against the US dollar, gain-

ing N0.18k to close at N364.94k per dollar compared with N365.12k/$ traded the previous day at the investors and exporters forex window, data from FMDQ show. At the Central Bank official forex window, the local currency traded stable, closing at the rate of N306.90k to the dollar. However, naira lost N1.00k at the parallel market, as it closed at N363 per dollar after trading on Friday, as against N362 the previous day. The figures obtained from the CBN revealed that the US dollar-denominated interventions were for requests in the agricultural and raw materials sectors while the Yuan sale was for payment of Renminbidenominated Letters of Credit

for agriculture as well as raw materials. Isaac Okorafor, director, corporate communications at the CBN, said the move was in furtherance of the CBN governor’s avowed commitment to ensuring foreign exchange liquidity in the system as well as boosting trade and production. With the rates closing at N359/$1 on Friday, January 11, 2019, Okorafor, expressed confidence that the CBN, in the weeks ahead, will sustain its intervention through the sale of foreign exchange to all segments of the market to meet all legitimate foreign exchange demand in the market while also striving to achieve exchange rate stability in the market.

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May makes eleventh-hour Brexit plea to Tory MPs PM says failure to back her deal would be catastrophic breach of trust in democracy Jim Pickard

heresa May has launched an eleventhhour plea to MPs to back her Brexit deal in Tuesday’s crunch vote, warning that a failure to deliver Brexit would represent a “catastrophic and unforgivable breach of trust in our democracy”. Writing in the Sunday Express, the British prime minister insisted that Conservative MPs who did not back her agreement risked either no Brexit or a no-deal Brexit. “My message to Parliament this weekend is simple: It is time to forget the games and do what is right for our country.” Separately, Stephen Barclay, the Brexit secretary, said there were worrying signs that Parliament would try to thwart Britain leaving the EU. “The possibility of losing the prize we all fought for is now very real,” he wrote in The Sunday Telegraph. “Parliament has to be for something. It is not good enough to simply say what it is against.” According to some estimates the government could be on track for an epic defeat on Tuesday evening, by as much as 200 votes when its withdrawal agreement with Brussels is put to a House of Commons vote. Jean-Claude Juncker, the president of the European Commission, is set to make a final effort to save the deal by making promises to try to limit the contentious Irish backstop to no more than a year.

Mr Juncker and Mrs May are to co-ordinate an exchange of letters, probably on Monday, to try to win over wavering Eurosceptic MPs. Downing Street expressed alarm on Sunday after it emerged that a cross-party group of MPs was seeking to change the Commons rules to enable backbench motions to take precedence over government business if Mrs May’s deal is defeated on Tuesday. That would overturn a precedent dating back to the 1880s. In theory MPs could then compel the government to delay Article 50, meaning that Brexit would not take place as planned at the end of March. It is thought that the measure could even give MPs the power to try to force a second referendum. “This is extremely concerning,” a Number 10 source said. “If successful this would give MPs powers to control not only what happens to Brexit legislation but all legislation. It represents a real threat to all government business.” Julian Smith, the chief whip, commissioned written legal advice about the plans, according to The Sunday Times. The ensuing document says that the move by MPs would represent “a clear and present danger” to all government business: “The government would lose its ability to govern.” Chris Leslie, a Europhile Labour MP, said the idea of a backbencher plot was “spin” from Downing Street. In reality it would be hard to change Commons Standing Order 14 — which says

Chris Grayling, transport secretary, told Sky News that if Parliament thwarted Brexit the UK could see the arrival in the UK of the kind of populist “political extremism” seen in much of mainland Europe. John Major, former Tory prime minister, said that revoking Article 50 was now the “only sensible course” to take in order to carry out a second referendum. “Jumping off a cliff has never had a happy ending,” Sir John wrote in The Sunday Times. Jeremy Corbyn, the Labour party leader, is expected to launch a vote of no confidence in the government within hours of Mrs

May’s expected defeat, setting the scene for a vote as early as Wednesday. However, Mr Corbyn has not confirmed any such plan, given that he is unlikely to muster enough votes to win in those circumstances. He is refusing to say whether Labour would back Brexit in a snap general election. Asked repeatedly on the BBC’s The Andrew Marr Show whether a Labour manifesto would back leaving the EU, he refused to answer five times. He also indicated that he did not want a second referendum, saying he would “rather get a negotiated deal now”.

Collusion allegations haunt president as he prepares to mount re-election bid

Former staff have complained about their treatment at Canadian bank’s London arm he UK’s City watchdog has begun a full-blown investigation into the working culture at Royal Bank of Canada in London after dozens of former employees complained over their treatment, several people familiar with the matter told the Financial Times. Inquiries started as a less formal fact-finding exercise last summer when a handful of former staff claimed to have been dismissed after highlighting legal and compliance issues over several years. They stepped forward after one former employee, a currencies trader, won a case for unfair dismissal, in which he claimed to have been treated poorly after raising concerns over what he saw as a “box-ticking” compliance culture. An appeal on that case is still pending. Since then,

government business always has precedence, because the government itself would have to allocate time for debating and voting on such a change. “I don’t believe Downing Street is worried about any standing order changes, they are hyping it to frighten the Eurosceptic ERG [European Research Group] into falling back into line,” he told the Financial Times. What was more broadly true, Mr Leslie said, was that Parliament was seeking to take back control through existing mechanisms — such as by seeking to amend next week’s Business of the House motion.

Donald Trump lashes out at Russia inquiry report

Watchdog steps up probe of RBC’s UK ‘working culture’ Katie Martin, Caroline Binham and Philip Stafford

Theresa May: ‘My message to Parliament this weekend is simple: It is time to forget the games and do what is right for our country’ © Getty

the group has grown rapidly. The step-up by the Financial Conduct Authority comes as the watchdog takes a tougher stance on banking culture and the treatment of whistleblowers. The launch of an official investigation means that if the watchdog finds wrongdoing, the bank faces a substantial fine and the possibility of sanctions for senior managers. Some of the former staff have approached the FCA directly, while some have been contacted by the regulator, people familiar with the matter said, illustrating the watchdog’s proactive stance. The FCA has held extensive interviews with many of these individuals, seeking to determine whether there is a pattern of poor treatment of staff by the Canadian bank, and how it handles internal complaints about employee behaviour. Continues on page 66

James Politi

onald Trump launched an irate Twitter tirade after the New York Times reported that law enforcement officials had in 2017 opened an inquiry into whether he was secretly working for Russia following his ousting of James Comey as director of the FBI. “My firing of James Comey was a great day for America. He was a crooked Cop,” the US president tweeted. “Everyone wanted him fired. Republican and Democrat alike,” he added. According to the report, the FBI probe into Mr Trump was intended to determine whether the US president had been “knowingly working for Russia or had unwittingly fallen under Moscow’s influence” and whether he had obstructed justice in firing Mr Comey, who had been investigating allegations of Russian meddling in the US election to favour the Trump campaign. The furore over Mr Comey’s sacking led the US justice department to bring in Robert Mueller, a former FBI director, as an independent special prosecutor to continue the investigation into possible Russian collu-

sion with Mr Trump’s campaign. The Mueller probe has led to multiple indictments of allies and aides of the US president over the past two years, casting a dark cloud over the Trump White House. It has been a frequent target of angry attacks by the president, who has described it as a witch hunt. In an apparent response to Mr Trump, Mr Comey cited a quote from Franklin D Roosevelt, the former US president, in a tweet. “I ask you to judge me by the enemies I have made — FDR,” he said. As well as criticising Mr Comey, Mr Mueller, and Hillary Clinton, his Democratic opponent in the 2016 presidential race, Mr Trump on Saturday insisted he had been “far tougher” on Moscow than Barack Obama, George W Bush, and Bill Clinton, and “maybe tougher” than all US presidents on Russia. “At the same time, & as I have often said, getting along with Russia is a good thing, not a bad thing. I fully expect that someday we will have good relations with Russia again!” he tweeted. The outburst highlights the extent to which allegations of Russian collusion haunt Mr Trump’s

presidency as he prepares to mount his re-election bid next year. It came in the midst of the longest US government shutdown in history, as Mr Trump is trying to force Democrats in Congress to accept the building of a wall on the southern border with Mexico, to fulfil a key campaign promise. Democrats have adamantly insisted they would not fund such a wall. Mr Trump insisted there was “no chaos” over the White House strategy on the shutdown, despite growing concerns among some Republicans that they were losing the stand-off in the eyes of the public. It came in the midst of the longest US government shutdown in history, as Mr Trump is trying to force Democrats in Congress to accept the building of a wall on the southern border with Mexico, to fulfil a key campaign promise. Democrats have adamantly insisted they would not fund such a wall. Mr Trump insisted there was “no chaos” over the White House strategy on the shutdown, despite growing concerns among some Republicans that they were losing the stand-off in the eyes of the public.

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FT Watchdog steps up probe of RBC’s UK ‘working culture’–

Goldman advisory division surges past fixed-income traders

Continued from page 65

One former employee who met the FCA said it was clear the regulator was seriously scrutinising the bank. “There was no way this was just a little exploratory chat,” the person said. “Every question was culture, culture, culture.” The FCA declined to comment on the live investigation. The bank declined to comment on the investigation or to say whether any staff had been suspended while the inquiry was under way. “We take our duties as an employer very seriously and promote the freedom for employees to speak up and raise concerns without fear of retaliation,” it said. “We encourage a robust compliance culture and have controls in place to uphold our principles, policies and procedures.” The treatment of whistleblowers is not the only focus of the regulator’s probe; other issues include the broader handling of complaints and the processes used to dismiss staff. But the FCA is especially keen to foster a safe and open environment for people working in the financial services industry to sound the alarm on any area of poor practice. The regulator has recently pledged to overhaul its own way of treating whistleblowers after being criticised for not properly protecting individuals’ identities and being lax about acting on their information. The FCA also came under fire last May for a soft approach to Jes Staley, the chief executive of Barclays, following the watchdog’s investigation into how he twice tried to unveil the identity of an anonymous whistleblower. Mr Staley became the first person to be penalised under the FCA’s senior managers regime, which aims to hold top managers responsible for failings on their watch, receiving a £642,000 fine. He held on to his job, however, even though the regime gives the power for the FCA to ban top brass. The bank itself escaped any action from UK regulators but received a $15m fine last month from New York watchdogs. The FCA has pledged to take a tougher approach to culture, and has been deluged by a tide of whistleblowing complaints, with a 220 per cent rise in 2018 in complaints to the regulator about “non-financial” behaviour, such as bullying, homophobia and sexual harassment. The FCA already has live investigations into companies it suspects of not taking such allegations seriously enough, and put the City on notice in December that firms faced fines and top brass risked their jobs if they did not treat whistleblowers appropriately.

Monday 14 January 2019

Choppy markets cause investment banks to underperform retail banks in fourth quarter Laura Noonan

The west should not miss the Africa opportunity Preconceived ideas and inadequate analysis prevent investment into the continent Aboubaker Omar Hadi

ith its new strategy in Africa, the US is calling into question the financial aid it grants to countries across the continent. International assistance may remain important to some countries. However, it is through investment that Africa’s development and prosperity will be guaranteed. Yet in this field too, the US seems to be taking a back seat; quite the paradox, given that it also deplores the fact that Africa seeks such investments from those who treat us as legitimate business partners, such as China. Located between Asia, Europe and the Americas, Africa is at the centre of international trade. More than a mere geographical fact, day after day our continent acquires more and more means to contribute to wider global growth. Before becoming a great economic power, China was tipped as a future giant in large part thanks to its human capital. By 2050, Africa will be home to 2.4bn inhabitants — a quarter of the world’s population — of whom 1bn will be under the age of 18. In Africa, just as in China, human capital is a major asset. Regardless, we must continue to improve the prospects for our young people, who all too often search for opportunities elsewhere. Customs barriers are holding back Africa’s market potential and that is why the continent is undertaking the construction of

the world’s largest free trade zone by 2030. Once implemented, it will unite up to 55 states with a combined gross domestic product of $3.3tn. It will take Africa only 14 years to forge what has taken other continents decades. Denis Mukwege issued a forceful reminder when he was awarded the Nobel Peace Prize: African countries are among the richest on the planet, but their people are among the poorest in the world. By doing little more than exporting its raw materials, Africa forfeits any chance of creating jobs and wealth. This situation is in the process of changing; African economic growth is being driven by the demand of the continent’s growing middle class. The continent is industrialising and now intends to transform and add value to the goods it exports. The latest international rankings offer encouraging signs. Djibouti leapt 55 places in one year in the World Bank’s 2018 Doing Business rankings and was as one of the top 10 most improved economies for ease of doing business. Ethiopia proudly boasts double-digit growth and we should all celebrate recent political developments in the Horn of Africa. We could go on: the inaugurations of several ports respond to growing demand in east Africa; railway networks are expanding at high speed in Morocco, Nigeria and in the Horn of Africa; and sub-Saharan economic growth is expected to reach 3.8 per cent in 2019.

However, rather than spurring hope and confidence, our continent continues to evoke uncertainty and scepticism due often to preconceived ideas or inadequate analysis. The most commonly expressed concerns are related to debt. By becoming too indebted with certain creditors, mainly China, African countries are mortgaging their future sovereignty. First, we note that those who once exercised their own power over our continent today appear to worry for our sovereignty. Their concerns fail to conceal their true motives. Some would argue that loss of influence is the real worry of those who persist in seeing the continent through the prism of the past. That being said, debt is calculated on the basis of an assessment of a nation’s wealth. Many have put ambitious policies in place in order to regulate the informal economy that has, until now, not contributed to income taxes. Djibouti’s true GDP is $6bn, with an informal economy estimated at $4bn. As such, debts are based on figures that do not represent the reality of our economies. Regardless, many African nations are experiencing remarkable growth rates, with Rwanda at 8 per cent, Ethiopia at 11 per cent and Côte d’Ivoire at 7.2 per cent. Other countries on the continent will soon be in the same boat. On a practical level, this means that our nations are becoming richer, which ultimately strengthens their ability to pay off their debt.

Apple resellers in China reduce some iPhone prices by up to 22% Discount follows highly promoted trade-in scheme urging existing customers to upgrade Yuan Yang and Nian Liu

wo of Apple’s major resellers in China have cut prices of some iPhone models by more than a fifth, as they try to battle the poor sales in the region that led to a rare earnings warning. The popular ecommerce platforms JD.com and Suning reduced the prices of the iPhone 8, 8 Plus and XR on Friday, although prices on Apple’s official website remain the same. The steep discounts come a week after Apple shocked investors with a rare revenue warning, blaming its negative revenue forecast for the final three months of 2018 on lower demand in China. Domestic analysts have said that Apple’s latest models, such as the iPhone X, have suffered the most because of their high prices

relative to other high-end models by competitors such as Huawei. “Apple’s days in China are getting harder and harder, and they’ve admitted their problem,” said James Yan, director at Counterpoint, a technology research firm. “Retailers are trying to make use of the shopping season before Chinese new year [in February] to win back any losses on iPhones.” “Apple is under a lot of sales pressure in China, so local sales managers will try to use their connections with local retailers to sell as many as they can,” Mr Yan added. Apple’s outlet on JD.com, one of China’s biggest ecommerce platforms, dropped the price of the basic iPhone 8 model to Rmb3,999 ($590), a 22 per cent drop from the price on Apple’s China website.

The iPhone 8 Plus fell to Rmb4,799, a fifth below Apple’s website price. Prices on ecommerce platform Suning for the iPhone XR, last year’s new release, fell to Rmb5,399, from Apple’s website price of Rmb6,499. Both Suning and JD appear on Apple’s list of authorised online resellers. Most of Apple’s iPhone unit sales are through such thirdparty channels and not from their own stores or official website, according to market research firm Canalys. The price drop may have been initiated by the retailers themselves, said Yiting Guan, an analyst at Canalys. Although prices on Apple’s website are fixed by US headquarters, prices for local retailers are set in co-ordination with Apple in China, said Mr Yan.

oldman Sachs’ quarterly results are expected to mark a historic moment next week: investment bankers in the group’s advisory division are set to make more revenue than its under-fire fixed income traders for the first time in a decade. The results will offer a silverlining to new boss David Solomon as the former mergers and acquisitions adviser prepares to unveil a tough set of earnings and face questions on Goldman’s handling of the scandal over Malaysia’s 1MDB fund. Several analysts believe Goldman’s M&A unit earned higher fourth-quarter revenues than its fixed-income powerhouse where former chief executive Lloyd Blankfein cut his teeth, thanks to a combination of an M&A boom and volatile fixed-income markets. If confirmed by Goldman in Wednesday’s earnings, that would mark the first time that advisory revenue topped fixed-income since 2008, when revenues from trading things like bonds and currencies turned negative, UBS analysts wrote in a note to clients. On an underlying basis, fixedincome has not undershot advisory for more than 20 years, since the 2008 fixed-income loss included a big hit from investing activities, which were taken out of the division in a 2010 restructuring. Brennan Hawken at UBS expects Goldman’s advisory revenues to rise 42 per cent yearon-year to $1.1bn, reflecting a “monster quarter” where public data show the volume of closed deals the company advised on more than doubled. Mr Hawken expects Goldman’s fixed income, currencies and commodities (FICC) revenues to rise 6 per cent year-on-year, to $1.06bn. Analysts at KBW, JPM Securities and Autonomous said their models also predicted Goldman would earn more from advisory than FICC in the last quarter, while Wells Fargo analyst Mike Mayo said advisory fees “could get close to the point of FICC revenues” but would not definitely beat them. Mr Solomon became chief executive on October 1, ending 12 years of Mr Blankfein’s leadership. He launched a review that fuelled speculation Goldman would pivot away from its trading roots, where revenues have been increasingly volatile and capital demands are high, in favour of the more stable and capital-light advisory businesses. The impact of Goldman’s heavy trading focus is evident in analysts’ predictions for the fourth quarter. Estimates submitted to data service Factset expect choppy market conditions to drag Goldman’s pre-tax profits down almost 13 per cent year-on-year for the quarter, the worst relative performance of the big six US banks.

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Monday 14 January 2019

ANALYSIS Federal employees start to feel pain of US government shutdown Financial pressures build with few alternatives available and no end in sight to impasse Courtney Weaver

Brexit brinkmanship: playing chicken over Theresa May’s deal Failure to win Commons approval will intensify the brinkmanship that has left all sides believing they can secure their own outcome George Parker and James Blitz

heresa May has warned that Britain will enter “uncharted territory” if, as expected, MPs reject her Brexit deal on Tuesday. But already the contours of this bleak new terrain have been coming into view in the first two weeks of 2019. As MPs prepare for the vote on the terms of Britain’s exit from the EU — seen by some as the biggest decision facing parliament since the early days of the second world war — the British political system is paralysed. And the country remains angry and deeply divided. Police have been called in to protect MPs from protesters camped outside parliament. “We are preparing for all scenarios, and deal or no-deal the police will be here,” Metropolitan Police chief Cressida Dick said in December. “We will do our level best to keep everybody safe.” Inside parliament, the atmosphere is no less febrile. Last week it resembled a bear pit as the House of Commons Speaker, John Bercow, was accused of ripping up the parliamentary rule book to help opponents of Brexit. Meanwhile, near Dover, Britain’s main entry point for fresh food, medicines and other goods, ministers ordered a trial to see what would happen if — as some government forecasts suggest — customs and regulatory checks in a no-deal Brexit cause a collapse in trade at the port. About 80 lorries took part in a mock traffic jam, somewhat fewer than the 10,000 trucks the Kent port handles on busy days. Government officials say an unpublished government report insists Britons will have “enough calories” to survive such disruption, but some fresh foods would quickly run out. A freight company hired by the government to bring in emergency supplies turned out to have no ferries. And health secretary Matt Hancock has boasted that he is now the biggest single purchaser of fridges in the world, in order to store medicines, while business secretary Greg Clark has warned of the “mounting alarm” at what is seen in global boardrooms as the UK’s collective outbreak of madness. Mrs May insists that the only way to avoid tumbling out of the EU without an agreement — unless the law is changed, Britain will leave by default on March 29 — is for MPs to support her deal, a compromise plan hammered out with Brussels over almost two years. Mrs May’s aides say they are borrowing from the “winning ugly” strategies of American football teams, which slowly work their way downfield with a running game that methodically grinds down the opposition’s defensive line play after play, rather than the style of more TV-friendly flair teams that make

dramatic progress through long, spectacular forward passes. “The second option isn’t available to us,” admits one May aide. That attritional push will, over the coming weeks, face two remorseless and linked facts: Brexit day is less than 80 days away and while Mrs May tries to sell the deal at Westminster, in the real world companies and individuals are preparing for a disorderly and potentially chaotic no-deal exit. “The problem is that everybody has an interest in taking this to the wire,” says one pro-Brexit minister. “The PM thinks the closer we get to March 29, the more likely it is that people will step back from the cliff-edge and back her deal. The Remainers think that if there’s a stand-off, in the end we’ll have to delay Brexit and have a second referendum. And the Brexiters think if they can just keep going, we’ll eventually leave without a deal because that’s the default setting.” The next phase in this game of chicken will be played out in parliament on Tuesday. Mrs May’s deal sets out the terms of an orderly withdrawal, including a £39bn exit bill, protection of citizens’ rights, a standstill transition period lasting until at least December 2020, and a contentious guarantee against a hard border in Ireland. It also gives a vague outline of future relations between the EU and UK, with details to be filled in later. The problem is that even the prime minister expects to lose the vote; Tory Eurosceptics believe it is a messy compromise that would not represent a clean break from the EU; her allies in Northern Ireland’s Democratic Unionist party— whose 10 MPs have kept Mrs May’s minority government in power — believe the plan for the Irish border would impose new barriers between the region and the rest of Britain; opposition parties seem determined to vote it down. Mrs May has already delayed the vote to avoid a damaging pre-Christmas defeat. “You’re not going to have the complete collapse in Brexiter sentiment which Number 10 seems to be envisaging,” says David Jones, a former Brexit minister. A cabinet minister concurs: “I don’t think the vote will go through.” Downing Street now openly discusses how Mrs May expects to proceed if, or when, she loses on Tuesday. The plan is straightforward: she will plough on. Mrs May hopes to peel off some rebels by Tuesday and limit the scale of her defeat. A loss by 50-80 MPs might look like something of a let-off, given that some senior Tories predict the margin of defeat could be 200 or more. Then she will go back to Brussels, seek some new assurances that the Irish backstop — which provides for a “temporary” UK/EU customs union — will be temporary and try again. Various amendments, offering MPs more control over the backstop

and giving opposition Labour MPs promises that post-Brexit Britain will not undercut EU labour and environmental laws, will be waved through to try to assemble what party whips call a cross-party coalition “in the national interest”. Foreign secretary Jeremy Hunt warned last Friday that the Commons faced “paralysis” over Brexit. But supporters of the May plan believe that in the end at least 30 hardline Tory Eurosceptics will reject her deal and that she will need Labour support to get it through. But if her own proposal is defeated, the prime minister will be obliged to put forward a “Plan B” within days— limiting her room for manoeuvre. Perhaps the biggest problem for Mrs May’s strategy of trying to frighten MPs into supporting her deal is that all of her critics seem to think if they can just get a bit closer to the March 29 deadline, their own perfect Brexit outcome — whether it is a no-deal exit, a Norway-style economic relationship or a second referendum — will materialise. That is despite there being no evidence to suggest majority parliamentary support for any particular Brexit, least of all an unplanned one. Although Brexiters insist a nodeal exit is nothing to be feared, environment secretary Michael Gove — a leader of the Leave campaign in 2016 — warned last week that it would hit smaller farmers and food businesses, with tariffs of up to 40 per cent on beef exports. Mr Clark has said it would mean Britain trading with the EU on the “most rudimentary terms” of world trade. Food queues at supermarkets would be indelibly linked to this Tory government in the public memory. In cabinet last week Mr Gove said those hoping for the “perfect Brexit” were like “ swingers in their mid-fifties” hoping that Scarlett Johannson might turn up at the party. So far there is no sign that the rival camps in Westminster have given up hope that the Hollywood star might be a late arrival. Mrs May says the government is not pursuing a no deal Brexit and a large majority of MPs and some cabinet ministers have indicated they will mobilise to stop it happening. Yet it remains the legal default setting and Mrs May has not ruled it out. “When you’re playing chicken, make sure the other side has an incentive to back down,” says Tom Tugendhat MP, chair of the House of Commons foreign affairs committee. Mr Tugendhat worked as a Bloomberg energy correspondent in 2000 when protests about high fuel prices in Britain led to a blockade of refineries and panic buying. He fears the same could happen again if a no-deal Brexit looks imminent. “Life is a confidence trick,” he says. “This is not a logistics exercise, it’s an exercise in psychology.”

ince the US government shutdown hit on December 21, Joanna McCleland has been stuck in a dilemma of Kafkaesque proportions. A programme analyst at the Department of Homeland Security, who is detailed to Customs and Border Patrol, Ms McCleland is one of the roughly 380,000 federal employees who has been furloughed — placed on temporary leave — because of the shutdown, and one of the many who lives from pay cheque to pay cheque. She had tried to apply for unemployment insurance, but struggled to complete the application as many of the forms she needs are on the DHS computer network, something she is not allowed to access during the shutdown.

George Mason University, said overall 145,000 workers had been furloughed in the Washington region. An estimated 25 per cent of federal contractors in the area were also affected by the shutdown. Together, those federal workers and contractors made a daily contribution of more than $119m to the regional economy, he said, without taking into account workers indirectly affected by the shutdown: the retailers in federal buildings and the food truck operators outside them, as well as those providing cleaning services and building security. While some evidence of the shutdown’s economic impact could begin to appear in January employment data and mortgage and credit delinquencies, it was more likely that the shutdown could be felt sooner in more visible ways, Mr Fuller suggested.

Hundreds of furloughed federal workers and their supporters gathered outside the headquarters of the AFL-CIO union on Thursday demanding that President Donald Trump re-open the government © Bloomberg

To apply for a second job, she would need to get permission to do so from DHS — something she is unable to do — also because of the shutdown. “If it [the shutdown] goes into February, I don’t have money to pay my rent,” she said. Her mid-month cheque took care of her car payment, student loan and utilities. While friends had agreed to help her out and cover the difference, the uncertainty is still troubling. She is her household’s main breadwinner. Ms McCleland said fellow federal employees who had survived other extended shutdowns told her this one felt different. “This one feels like: what is the endgame? Is it going to be months? Is it going to be years?” For many of the 800,000 federal workers affected by the shutdown, reality hit on Friday — the first day that many did not receive their payslip as a result of the continuing government impasse and stalemate between the White House and Congress. As of Friday at midnight, the shutdown will be the longest in history, surpassing the 21-day closure during the second presidential term of Bill Clinton. Movement towards a near-term resolution seems less and less likely following a breakdown in talks this week between President Donald Trump and Democratic congressional leaders. Steve Fuller, an economist at

Some US news outlets have reported that Transportation Security Administration officials are absent from work in higher-than-normal numbers, opening up the possibility that the shutdown could cause a backlog at major US airports. The Washington Post reported that the Food and Drug Administration had sharply curtailed the number of inspections it performed. On Thursday outside the AFLCIO union headquarters — a block from the White House — hundreds of federal workers and their supporters gathered, demanding that Mr Trump reopen the government, shouting slogans such as “We want to work!”. Some were parents who said the shutdown was taking a toll on family finances. “My husband is also a federal employee and we have a 12-yearold who is painfully aware that both of his parents are furloughed and he’s really stressed about this,” said Jana McCabe, a National Park Service employee. “As a parent that hits you in the gut.” Elaine Suriano, a furloughed scientist at the Environmental Protection Agency, said she had been angered by Mr Trump’s assertion that federal workers backed his decision to keep the government closed until Democrats agreed to support his wall. “I’m a registered independent . . . There may be workers that do support it, but there are a lot of people who don’t,” she said.

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OLU FASAN 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

ne of the greatest misfortunes of this country is that it has never had avisionary and competent leader. Successive Nigerian leaders have been either utterly inept or woefully visionless, or both. But few have combined incompetence with brazen arrogance. However, President Buhari stands out! He is both extremely incompetent and unbelievably arrogant. Recently, Eurasia, the international consulting group, said in its 2019 Top Risk Report that Buhari “lacks the energy, creativity or political savvy to move the needle on Nigeria’s most intractable problems”.Yet, Buhari is also known to be stubborn, with a didactic “my way or the highway” approach to governance. How can a leader be both inept and arrogant? It’s a double whammy, a double tragedy, for any nation! Of course, President Buhari’s arrogance and ineptitude span the entire spectra of policy and governance, but I want to start with his recent seemingly symbolic gestures that show his conceit and insensitivity. Have you noticed the APC’s new two four-fingered sign? President Buhari started it when he raised two four-fingered hands in the National Assembly while presenting the 2019 budget. The picture went viral. Buhari’s wife, Aisha, further popularised it when she and APC women used the sign during the launch of the women’s wing of Buhari’scampaign council. Then, at the launch of the main campaign council, the president, Vice President Yemi Osinbajo, APC party leaders and everyone else present at the launch used the sign. You may wonder, why am I focusing on this sign? Well, two reasons. First, the use of the sign in a self-entitled manner to suggest four more years – each four-fingered hand represents four years – is so in-your-face, presumptuous and arrogant. Buhari’s presidency has been internationally-adjudged to be a failure. But instead of showing humility in asking to be reelected, he and his supporters are arrogantly raising two fourfingered hands at Nigerians. It is provocative and insensitive! When Buhari marked his first year in office, the outcries across the country were: “this is not the change we voted for” and “shattered dreams”. One newspaper started its coverage this way: “Bitterness, complaints, unending sighing and gnashing of teeth have been the lot of Nigerians since the inau-

guration of the Muhammadu Buhari administration a year ago.” Less than six months to the end of his term, that sense of despondency remains palpable. Do you remember the late Chief Bola Ige’s famous phrase, “Two fingers of a leprous hand”? Well, to put it bluntly, the APC’s four-fingered hands are “four fingers of two leprous hands”. The first leprous hand represents Buhari’s woeful first term; the second would, if he is re-elected, represent another dreadful second term. For, quote me, Buhari’s second term, if it happens, would be disastrous for Nigeria. The simple truth is that Buhari lacks the vision and intellectual wherewithal to generate economic prosperity and social progress. To make matters worse, he is stubbornly self-willed. These are recipes for disastrous policy and governance failures. Anyone expecting a miracle from a Buhari second term is living in cloud-cuckoo-land! Still on the four-fingered sign: it is disturbing for an even more pernicious reason. Does Buhari know that the four-fingered Rabbi’ah sign is a symbol of the Muslim Brotherhood, an Islamist group accused of terrorist activities? The leader of the UK Labour Party, Jeremy Corbyn, was recently widely condemned when it was discovered he used the sign during a visit to a mosque in 2016. If President Buhari didn’t know what the sign represents, then that confirms his ignorance of international affairs. But if he knew and still used the sign, then he is unbelievably insensitive in a country with a history of inter-religious conflicts. And, tell me, how can President Buhari say he is fighting Boko Haram, a terrorist group, and at the same time use the Rabbi’ah sign associated with Islamist terrorists? Of course, he doesn’t care

President Buhari

about such contradictions and insensitivities. Which brings me to another of Buhari’s gesture of arrogance. Recently, he said he would hand over his campaign for re-election to Bola Tinubu “in order to concentrate on governance”. Really? Why does this president keep insulting the intelligence of Nigerians? First, has he governed over the past 3½ years? He spent much of his presidency overseas receiving medical treatment for an undisclosed illness. As the Financial Times put it, Buhari’s illness“hassappedhispresidency of strength and direction”. Even whenheisathome,herarelygoes to his office or attends meetings of the Federal Executive Council.

How many FEC meetings has Buhari chaired in his nearly four yearsaspresident?And,ofcourse, amidthelacunainleadershipand policy direction, his presidency has been hijacked by a self-interested powerful cabal, as even his wife repeatedly tells Nigerians.

‘

President Buhari’s arrogance and ineptitude span the entire spectra of policy and governance...How can a leader be both inept and arrogant? It’s a double whammy, a double tragedy, for any nation!

Now, he wants to concentrate on governance less than six months to the end of his term! In any case, what about democratic accountability and respect for the electorate? Can you imagine any American president seeking re-election saying he would hand over his campaign to a party leader “in order to concentrate on governance”? No, he would be facing the people; he would be participating in presidential debates and appearing in live TV interviews. He would be working tirelessly to sell his record and future plans to the electorate. But Buhari is doing none of these, yet he arrogantly expects to be re-elected. The truth, of course, is that Buhari is only masking his weaknesses.Helacksenergy,articulacy and people’s skills; he’s comfortable only among a coterie of acolytes. As a recent Chatham House report puts it, Buhari is “an aloof and disengaged leader, ‘walled off’ from his own government and party, and from Nigerians themselves”. So, he is using Tinubu as a front. But Nigerians did not elect Tinubu in 2015 and will not elect him next month! Of course, this plays into Tinubu’s strategic agenda. As he traverses the length and breadth of Nigeria for Buhari’s re-election, he will also be building national support for his 2023 presidential ambitions. If he helps Buhari to win reelection, well, Tinubu will call in the favours in 2023. But this is dishonest and selfish politics. Tinubu should wait until 2023 to face Nigerians; Buhari should face them now. The president of Nigeria should not emerge through surrogacy! So far, I have focused on Buhari’s “symbolic” gestures of arrogance and incompetence. But there are also substantive actions relating to policy and governance. Indeed, over the past 3½ years, Buhari has governed Nigeria with mindboggling arrogance, stubbornness and ineptitude. As everyone knows, he adamantly refused to appoint a cabinet for the first six months of his presidency. Recently, Pastor Tunde Bakare said Bu-

hari didn’t appoint ministers because “there was no money to pay them”.Really? But that was not what Buhari told the nation. First, he dismissed ministers as “noisemakers”. Then, he said he would not appoint ministers until he had put in place “new rules of conduct and good governance”. Yet, nearly four years in power, the socalled “new governance rules” haven’t stopped allegations of corruption swirling around his government. Indeed, his first budget was marred by “budget padding”. And, according to the International Budget Partnership’s Open Budget Index, Nigeria’s budgetary process was less transparent in 2017 than before Buhari took over. Of course, as we also know, Buhari has run the economy with arrogance and ineptitude. He took over a struggling economy due to falling oil prices but made the situation worse. Unbelievably, for a president facing an economic crisis, Buhari had no finance minister for several months, and when he eventually appointed one, she was so lightweight, lacking any international stature needed to restore investor confidence. Then, for nearly 2½ years, President Buharistubbornly pursued misguided monetary, exchange rate and trade policies. He described economists as “socalled experts”. Inevitably, the economic contracted in 2016, with -1.5% growth rate, the first time in 20 years, and growth remains sluggish at 1.8%. We are told that Buhari is building infrastructure, even though debt-fuelled. But, as Bill Gates rightly said, it is completely misguided to focus on physical infrastructure at the expense of human capital development. In civilised climes, physical infrastructures are built through private investments while government spends state resources on human development – health, education and social services. But Buhari wants to build roads, not develop human and social capital. I mean, youth unemployment rose from 3m in 2015 to 13m in 2018 (a 263% increase over 3½ years). Poverty, inequality and insecurity are deepening. Unity and social cohesion, ever fragile, are fracturing even more. All of these under Buhari’s presidency! Yet, he would not countenance political restructuring, describing those advocating it as “talking loosely”. Governor Seriake Dickson said recently that Buhari “lost a golden opportunity to be great statesman” by refusing to support restructuring. But does Buhari care about a legacy, about a stamp on history? President Buhari has run this country with utter arrogance and ineptitude. He won’t be re-elected in any civilised nation. Of course, he may win next month. As I wrote last week, he faces an opponent who has the vision and the competence but is widely perceived to lack the right values. But Nigerians should be aware that, without a Damascene conversion, a Buhari second term would be worse than the first.

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Insight Buhari is Nigeria’s most arrogant yet inept leader

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Fascinating business facts

20%

xpectedly, alarm bells are ringing at OPEC capitals around the world as treasury managers of countries making up the cartel watch, almost helplessly, the unstoppable plunge in global oil prices that will have far reaching consequences for social cohesion and peace in especially countries like Nigeria which depend heavily on oil revenues. The price of the global benchmark grade, Brent has fallen from $86 per barrel which it attained on October 3, to below $55 Friday. Analysts say this could wipe out almost 20% from Nigeria’s expected oil revenues which could fall to a mere $49bn in 2019 when the country holds crucial elections.

0.8% There is more than a week left until the new year, but at this point, it’s almost certain European stocks will post the worst year since 2008. The Stoxx Europe 600 dropped 0.8 percent on Friday in London, taking this year’s loss to 14 percent. Meanwhile, the blue-chip Euro Stoxx 50 is less than 1 percent away from entering a bear market after hitting the threshold earlier.It’s a testimony to how fragile sentiment is that even news of Chinese stimulus couldn’t lift the gloom, with U.S. futures pointing to a third day in the red on Wall Street. Tensions between America and China are simmering again after China demanded that the U.S. withdraw espionage charges against Beijing officials. A government shutdown also looms in the U.S.

mbattled South African President Cyril Ramaphosa has asked his finance minister to begin the process to set up a council of economic advisers. South Africa which has just emerged from recession is asking itself if it is “not stuck in a thinking mode which is not relevant to the actual conditions in South Africa?” the finance minister said. Government officials are meeting in Pretoria to present policy proposals to raise the level of economic growth in South Africa’s where annual expansion hasn’t exceeded 2 percent since 2013.

85%

lobal battery prices have fallen 85 percent since 2010, BloombergNEF reports in its annual Lithium-Ion Battery Price Survey, and with storage forecast to grow to 14 times its current level by 2030 as millions of electric vehicles hit the roads. BNEF predicts demand will total 1,851 gigawatt-hours in 2030, up from the current 132. EV batteries are expected to account for 84 percent of that.

$11.7bn

frica’s troubled aviation sector is on the verge of a massive make over after it was announced that Boeing Co and Nigeria based Green Africa Airways have committed for up to 100 737 MAX 8 aircraft, in a deal that carries a list price of $11.7 billion. The deal is the largest aircraft agreement from Africa the commitment is evenly split into 50 firm aircraft and 50 options, it added. The 737 MAX 8 is the fastest-selling airplane in the Boeing fleet, accumulating more than 4,800 orders from over 100 customers worldwide. It is estimated that airlines in Africa will require 1,190 new airplanes as the continent boosts both intra-continental and intercontinental connectivity over the next couple of decades, Boeing said, citing its 20-year Commercial Market Outlook.

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