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news you can trust I ** tuesDAY 14 january 2020 I vol. 19, no 477

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It’s like debut again as MTN gains 10% after tax dispute cools off SEGUN ADAMS

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hares of Nigeria unit of telecoms’ giant, MTN Nigeria, Monday jumped by the most allowable in a day following the withdrawal of a $2 billion tax claim by Nigeria’s Attorney General.

MTN Nigeria gained 10 percent to N127.60 per share, the highest price in nearly 11 weeks.

Monday’s was also the most share price movement since a 10-percent gain in May 2019, Continues on page 38

Inside

L-R: Jude Chiemeka, head, trading business division, The Nigerian Stock Exchange (NSE); Oscar Onyema, chief executive officer, NSE; Bola Adeeko, head, shared services division, NSE, and Olumide Bolumole, head, listings business division, NSE, at the NSE 2019 Market Recap and 2020 Outlook session, held at The Exchange, Lagos, yesterday.

What Finance Act 2019 means to businesses, economy P. 2

Silent killer: Avoid wrong coping strategies with stress P. 2 Lekoil suspended on AIM as Qatar questions validity of $184m financing deal

More money for FG, growth for small businesses, lower purchasing power

HOPE MOSES-ASHIKE, ISAAC ANYAOGU, OLUFIKAYO OWOEYE, MICHAEL ANI & CYNTHIA EGBOBOH

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rom individuals to households, businesses (big and small), and the government, the Finance Act 2019 that came into effect yesterday, Monday, has something for every

economic agent in Nigeria.

In what seems to be a new dawn for the Nigerian economy, President Muhammadu Buhari on Monday signed into law the Finance Bill 2019. The newly signed law was presented alongside 2020 Appropriation Bill to a joint session of the National Assembly on 8 October 2019.

With the signing into law, the

Finance Act 2019 is expected to set the tone for Nigeria’s fiscal policy for 2020.

However, while the development may mean money for the government from increased tax revenue, and growth of the small businesses, it would in the short-term affect negatively the purchasing power of most Nigerians.

Among others the Bill seeks to promote fiscal equity, align domestic laws with global best practices, and support Micro, Small and Medium-sized businesses. Other objectives of the new law include increase in government revenues and stakeholder investments in investment/capital market through the Continues on page 38

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news Demutualisation tops NSE agenda in 2020 …rule book for Derivatives signals future trading …Corporates raised N132.68bn despite market dip Iheanyi Nwachukwu

T L-R: Adebanji Akintoye, special guest of honour; Pat Utomi, keynote speaker; Anya O. Anya, chairman of the occasion; Wole Soyinka, guest speaker, and Eze Chukwuemeka-Eri, the 34th of Akajiogu Igbo, royal father of the day, during the “Never Again conference” theme: Nigeria Civil War: 50 years after, organised by Nzuko Umunna Ndigbo in Lagos, yesterday.

West African ‘Eco’ could add more woes to Nigeria’s troubled economy MICHAEL ANI

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here are several economic implications that a likely move by Nigeria to adopt a shared currency with other West African countries would have on its economy, and policymakers must take note.

From losing its grip on determining interest rates to controlling any surge in inflation and portfolio outflows, Nigeria faces intense external risk if it signs on to the “Eco,” along with several other West African countries, analysts tell BusinessDay. According to them, though the currency pact facilitates quick transactions and trade among member states, the negative implications outweigh the gains. As such, Af-

rica’s largest economy should resist any temptation pushing it from inking to the deal.

“Our economic fundamentals are still weak, signing on to the eco could further inflict more pain as the Nigerian economy would be affected by developments in other West African nations,” an investment banker and economist says.

As part of plans to make Africa a more integrated continent, leaders of the 15 member-states of the Economic Community of West African States (ECOWAS), had in July 2019, agreed to adopt the name ‘Eco’ for a planned single currency to be used in the region.

Of the 15-members states in the region, a total of eight adopts a singular currency known as the CFA Franc,

while Nigeria, Ghana and five others, use a different currency.

Late last month, the eight West African countries using the CFA Franc, announced plans to adopt the unified currency “Eco” by 2020, after a meeting between Ivory Coast President, Alassane Ouattara, and French President, Emmanuel Macron.

Under the deal, the currencies of Benin Republic, Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger Republic, Senegal and Togo, which were originally tied to the French-backed CFA, would cut financial ties with their colonial masters and adopt the new shared eco currency, which would then be pegged to the euro.

Following the announcement, the Ghanaian govern-

ment in a communiqué dated December 28, said it was determined to join the already eight West African countries in adopting the “Eco,” but expressed concerns over the currency being pegged with the euro.

But back home, analysts have thrown support behind Nigeria reservation on inking to the unified currency deal, which would see it swap the naira for the eco and open its economy to external shocks from member states.

The key lesson for Nigeria, they say, could be drawn from the “euro” agreement that has created a huge burden for members of the pact following structural imbalance from the Greece economy.

The economy of Greece is

Continues on page 38

Silent killer: Avoid wrong coping strategies with stress ANTHONIA OBOKOH

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he World Health Organisation (WHO) says stress has become a ‘World Wide Epidemic,’ saying the effect of stress on our emotional and physical health can be devastating.

As stress becomes the continual scourge in Nigeria, there is an overwhelming demand for strategies to manage the condition effectively. The country was selected as the number one country where residents are stressed out in the world for 2016 and 2017, according to a research carried out by Bloomberg.

Experts say there is need for adequate direct measure to curtail stress management, awareness and people need to adopt better lifestyle choices to reduce the threat to life expectancy.

Life expectancy in Nigeria is 54.7, female 55.7 and the total life expectancy is 55.2, which give Nigeria a World Life Expectancy ranking of 178, according to the latest WHO data published in 2018.

“Lifestyle control can reduce stress, but some people use wrong coping strategy when they are stressed up, they think the best is to smoke cigarettes or take alcohol,” Richard Adebayo, consultant psychiatrist/clinical psychologist at Federal Neuropsychiatric Hospital Yaba, says.

According to Adebayo, many Nigerians are on the high side of using the wrong strategies to cope when they are stressed.

“They think smoking cigarettes or taking alcohol will ease them or solve the stress they go through at home and workplace while some people believe that is an escape route to forget problems. But many run into more troubles and are hooked on drugs and alcohol.

“Coping strategies are very important, but we should not adhere to wrong lifestyles,” he advises.

The experts say understanding oneself is very important to know your limit, boundaries and when you reach the breaking point of www.businessday.ng

stress and take things easy. You must be able to know when to delegate duties and when to say no to give yourself time to do little things like relaxation.

Explaining stress, Adebayo says stress is an everyday event that human beings pass through, it can be physical and emotional reactions due to excessive pressure or it can arise when we cannot cope with pressures.

“Stress has both positive and negative aspect; we need some measures of stress in life for every human achievement, either as a push or motivation to accomplish our objectives aims, plans and goals,” he says.

Meanwhile, stress is a biological response to demanding situations. It causes the body to release hormones, such as cortisol and adrenaline. Many factors can trigger a stress response, including dangerous situations and psychological pressures, such as work deadlines, exams, and sporting events.

“Common effects of stress on the body are headache,

muscle tension or pain, chest pain, fatigue, change in sex drive, stomach upset, sleep problems,” says Maymunah Kadiri, a mental health physician and psychotherapist and founder of Pinnacle Medical Services.

Kadirifurthernotesthatcommon effects of stress on mood could lead to anxiety, restlessness, lack of motivation or focus, feeling overwhelmed, irritability or anger, sadness or depression.

“Common effects of stress on your behaviour could lead to overeating or under- eating outbursts, drug or alcohol abuse, tobacco use, social withdrawal and exercising less often,” she says.

She adds that stress symptoms can affect the body, thoughts, feelings, and behaviour, and being able to recognise common stress symptoms can give one a tip on managing them as stress that is left unchecked can contribute to many health problems, such as high blood pressure, obesity and diabetes.

•Continues online at www.businessday.ng

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he Nigerian Stock Exchange (NSE) will in 2020 proceed to the next steps of its Demutualisation, which includes seeking formal approval from its members on the demutualisation scheme, CEO, Oscar Onyema, said Monday in Lagos.

Onyema disclosed this at the review the market for the year 2019 and outlook for 2020, at the annual event well attended by representatives of Dealing Member firms and investment analysts.

The NSE had received the Securities and Exchange Commission’s (SEC) ‘No Objection’ on its demutualisation, having met the necessary requirements of the apex market regulator.

A key aspect to the Exchange’s vision of becoming Africa’s preferred exchange hub is to successfully demutualise the organisation.

Demutualisation is the process through which a member-owned organisation becomes a shareholder-

owned company.

Basically, it refers to the conversion of a non-profit, mutually owned company to a forprofit entity limited by shares.

Demutualisation segregates ownership and management from the trading rights of the members of an exchange.

“We are committed to continually provide clarity on the demutualisation process to our various stakeholders through regular engagements.

“While keeping an eye on the strategic intent of The Exchange post demutualisation, we will continue to leverage our vast network of stakeholders, in addition to developing new strategic partnerships with the goal of delivering better products and services to our customers,” Onyema said.

A seasoned stockbroker, Kasimu Kurfi, who is the CEO of APT Securities and Funds Limited, said: “We will appreciate if the demutualisation will come very much earlier.”

He said a demutualised exchange would encourage more listings.

•Continues online at www.businessday.ng

Lekoil suspended on AIM as Qatar questions validity of $184m financing deal STEPHEN ONYEKWELU, with agency report

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hares in Nigeria oil firm Lekoil Limited have been suspended from trading on London’s AIM market as the validity of a proposed $184 million project financing was put in doubt.

Lekoil paid $600,000 to Seawave Invest Limited which introduced a group purporting to be Qatar Investment Authority, and arranged the previously announced $184 million financing deal.

On January 2, Lekoil announced it had entered into a binding loan agreement with Qatar Investment Authority – with the deal arranged by independent consultancy Seawave Invest Limited.

LekoilMondaytoldinvestors thatithadnowbeenapproached by representatives of the Qatari Investment Authority questioning the validity of the loan agreement. In a stock market statement,theAIM-quotedcompany said: “Lekoil is urgently seeking to establish, alongside its legal counsel and nominated adviser, the full facts of this matter, and pending this clarification, the company has requested that its ordinary shares be suspended from trading on AIM with immediate effect”.

Lekoil noted that its financial exposure to the previously announced $184 million financing agreement currently stands at $600,000, which was the amount paid to Seawave @Businessdayng

as an initial arrangement fee, in its capacity as introducer to those purporting to be the QIA and lead adviser to the company in relation to the facility agreement, and associated legal fees. No money has been paid to the ‘presumed counterparty,’ Lekoil said.

Lekoil continues to generate positive cash flow at the operational level and will seek alternative funding for the future developmentofOPL310asapriority,includingreactivatingother existingfundingdiscussions.The drilling of appraisal well within OPL 311is still expected to occur within the tenure of the license which expires on August 2, 2022.

As previously announced on 30 August 2019. Lekoil is required to pay Optimum Petroleum Development Company Limited (optimum) sunk cost and consent fees by February 2020 - a payment estimated at $10 million. Lekoil is also required to show its ability by Februanv 2020 to raise 42.86 percent of the drilling costs for one appraisal well, which is estimated to be about $28 million.

Failure to make this payment on time may result in Lekoil and Optimum jointly seeking, and agreeing on a willing buyer to whom the transfer of Lekoil 17.14 percent participating interest in OPL 310 as well as all the financial obligations related to OPL 310 can be made.

•Continues online at www.businessday.ng

Tuesday 14 January 2020

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Here are 3 challenges Nigerians expect government to pay attention to in 2020 ENDURANCE OKAFOR

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hile Nigerians entered into a new decade with great excitement and optimism as well as resolutions to be better individuals, they expect government to focus on key areas to create desired socio-economic changes that would stimulate the development of the nation as well as affect the lives of the citizens positively.

The top three areas most Nigerians want the Buhariled administration to focus its attention on in 2020 are the Economy (70%), Job creation (69%) and Electricity supply (62%), as compiled from the result of a recent poll by NOIPolls, a country-specific polling service.

“During the survey, most of the respondent lamented the increasing cost of goods and services in the country especially food items. Given

that average Nigerians are yet to feel the impact of the increase in the nation’s GDP, the call for the government to focus its attention on the economy this year is understandable,” the report published last week reads.

The Nigerian economy continued to expand at a sluggish rate in the third quarter of 2019, after state data agency, the National Bureau of Statistics (NBS) reported a 2.28 percent growth for the period.

Although that is the fastest growth in four quarters, it is unlikely to resonate with many Nigerians, even though the headline GDP seems to be expanding, it is shrinking in per capita terms.

Since 2015, Nigeria’s GDP per capita has been on contraction mode every year and that helps explain why despite the growth in headline GDP, Nigerians are getting poorer.

With GDP per capita of approximately $2000, the average Nigerian is poorer than the average South African whose average income is a little under

$5000.

Out of the 1,000 randomly selected Nigerians interviewed

by NOIPolls, 69 percent wants the government to channel its resources to ensure that they create more jobs for its citizens in 2020. “This will go a long way in reducing the level of poverty and number of dependent people as well as in reducing the crime rate in the country,” the Abuja-based organisation states.

Nigeria’s jobless rate embarked on an upward spiral in 2015, after a decline to 6.4 percent a year earlier, and according to most recent data by the state-funded NBS unemployment rate in Nigeria climbed to 23.1 percent in the third quarter of 2018.

Further analysis of the result from the poll reveals that 620 of the correspondents, representing the six geo-political regions, thought the government needs to significantly focus its attention on the power supply, considering the sector has faced huge challenges over the years.

Without enabling environment, Nigeria’s revenue will decline under AfCFTA - NESG CALEB OJEWALE

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overnment revenue in Nigeria is projected to decline when the African Continental Free Trade Area (AfCFTA) agreement comes into effect, with five out of six policy simulation scenarios in a new study showing losses in government revenue are more likely to have resulted from the decrease in tariff revenue – as taxes on imports constitute a major source of government non-oil revenue.

The only scenario where government revenue will not decline is when foreign investment inflow and increased labour supply are assumed.

This is according to a study commissioned by the Nigerian Economic Summit Group (NESG), and carried out by Centre for Petroleum Energy Economics and Law (CPEEL) at the University of Ibadan, in conjunction with Equilibria Consult, to conduct an evidence-based study that has the overarching objective of assessing the potential of impact of AfCFTA on the

Nigerian economy.

The NESG notes it commissioned the study to determine the potential impact of the AfCFTA on key macroeconomic variables such as aggregate output, aggregate export, aggregate import, government revenue, investment, and composite prices.

According to the study, government revenue declined by 0.21 percent when linear cut to the tariff is applied and when the tariff cut is back-loaded. The decline in government revenue is only marginally lower (0.20%) when the tariff cut is front-loaded.

However, during the first period of five years, when the government is assumed to increase its investment by 10 percent, government revenue increased by 0.42 percent before declining by 0.13 percent.

Other results from the study indicate that the AfCFTA will be trade-diverting, as Nigeria’s imports from non-African countries will be substituted by imports from African countries.

With AfCFTA, countries with more enabling business environments will attract more investments, as producers are guaranteed access to other African markets regardless of where they are producing from.

Considering the study’s findings that Nigeria’s GDP will be negatively impacted when the AfCFTA agreement comes into force, and in view of the need to make the economy more competitive; it was recognised that relying on the inflow of foreign saving to grow the economy may not readily pay-off.

It was recommended that Nigeria embarks on massive infrastructure upgrade and institutional reforms to improve her business environment.

The infrastructure upgrade could be realised through the concession of major infrastructural projects (electricity, roads, bridges, airports, seaports, etc.) to the private sector.

These concessions, the study noted, must be complemented by strong institutional reforms to effectively regulate the operations of the private sector.

ICAO certifies Nigeria for progress in resolving aviation security, oversight deficiencies IFEOMA OKEKE

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inister of Aviation, Hadi Sirika, has presented to President Muhammadu Buhari the International Civil Aviation Organisation (ICAO) Council President Certificate awarded Nigeria for its progress in resolving aviation security and oversight deficiencies, and for its ongoing commitment to the effective implementation of ICAO Standards and Recommended Practices.

The minister gave briefings to President Buhari in Abuja, as Nigeria scored 96.4 percent in improved security in civil aviation.

Speaking with State House correspondents after the presentation of the Certification for Improved Security in Civil

Aviation to the president, Sirika said the certificate was presented to Nigeria by the International Civil Aviation Organisation (ICAO) after assessing the country’s aviation security system.

He stated that the feat was recorded by the country following the restructuring of the nation’s security around the aviation sector.

“ICAO, having the statutory responsibilities of monitoring, policing and regulating the aviation industry and setting standards, took a survey of 193 member-countries out of which 16 were found to have improved tremendously the security around their aviation system.

“Gladly, Nigeria was one of those 16 member-countries.

Our score from the audit of ICAO was 96.4 percent; this www.businessday.ng

is a remarkable improvement from a country that was scoring less than 50 percent in the past.

“Today, from the approvals we got from our president and his guidance, we have been able to attain 96.4 percent, which is near perfection.

“In recognition of this, Nigeria received a certificate in Montreal, Canada during the General Assembly of ICAO, and we are proud to announce that we are part of those 16 member-countries that received this certificate which I just presented to Mr President,’’ he said.

The minister, who recalled how some passengers of Turkish Airline threatened airport officials in 2015, said the incident had given a wake-up call to the country’s aviation officials. https://www.facebook.com/businessdayng

@Businessdayng

Tuesday 14 January 2020

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news

Residents of Okobaba stage protest to Lagos Assembly over destruction of market Iniobong Iwok

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esidents of Okobaba at Ebute-Metta area of Lagos State on Monday staged a peaceful protest to the Lagos State House of Assembly over the demolition of their offices and make-shift houses.

The protesters numbering about 200 carried placards with various inscriptions such as; “Is Tomori, Oloto above the law?

“Tomori is threatening us with thugs and Police” and “Oloto and Tomori have rendered us homeless”.

Chairman of Wood Turner Association, Chukwuka Chuks Ogbonna, said after the Okobaba sawmill got burnt on November 8, 2019, a lawyer called Tomori representing Oloto visited the scene in December and ordered the arrest and detention of 17 people for daring to rebuild the burnt offices and structures.

He noted that the demolished sawmill cut across three streets ranging from; Kano, Jebba and Ondo Street, adding that the Lagos State government was yet to fulfil the plans to relocate residents of the burnt sawmill to Agbawa Ikosi in the Ikorodu area of the state.

According to a petition sent to the speaker of the Lagos

State House of Assembly, residents of Okobaba said their newly built homes, offices and workshops were totally destroyed by Tomori and his agents without any prior notice or proper engagement with community members.

They add that residents had now become jobless, scavengers and walking corpses.

In his own remarks, Olorisunmibare of Orisunmibare Igbogan in Ijesha in Osun State, Oluwaseun Awodiya, who had business interest in the area, called on the state government to set up a panel of enquiry on the land dispute at Okobaba and cause of the November 8, 2019, fire incident.

He also called on the state government to order Tomori to pay compensation to community members who suffered losses.

Awodiya posited that the Commissioner for Finance in the state, Rabiu Olowo, gave the community members a go ahead to rebuild the burnt structures pending relocation to Agbawa Ikosi, but that Tomori had continued to demolish the structures.

The director of Political Affairs, Office of Civic Engagement, Hundeyin Kolawole, in his response to the protesters promised to look into their demand.

Samsung Heavy Industries sees growth in Nigeria’s oil, gas sector on reforms ISAAC ANYAOGU

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anaging director of Samsung Heavy Industries Nigeria (SHIN) Limited, operator of Africa’s leading marine fabrication and integration yard in Lagos, Jeijin Jeon, has predicted robust economic growth for Nigeria from the energy sector based on reforms including local content development.

He described SHIN as a leading player in the West African oil and gas sector, with a cutting-edge marine fabrication and integration yard located in Lagos.

“Our parent company, Samsung Heavy Industries, is based in Geoje, Korea and is one of the world’s leading shipbuilders and a leader in servicing the offshore oil and gas industry.

“We at SHIN have always considered ourselves part of global organisation, serving clients all over the world. As a result, the quality of work we deliver, the goals we set for ourselves, the way we envision the future – are always guided by world-class standards and expectations,” he said.

Jeon disclosed that this heritage drove the company to choose Nigeria as the location for its first construction facility outside Korea.

According to Jeon, Nigeria’s location and economic growth make for a strong business case, adding however, that what really persuaded the company was the enormous human capital

Nigeria possesses.

He noted that harnessing Nigeria’s potential together with its local partners would help place Nigeria on the global map.

“We are not alone in our observations. In its recently published African Energy Outlook Report 2020, the African Energy Chamber outlined Africa’s growing demand for energy which is being met by new oil and gas resources coming online. As the African continent continues to urbanise, the demand for power increases,” he said.

He said in order to meet the surge in Africa’s energy demand, domestic policymakers aim to encourage operators and contractors to rely more heavily on local industry players for services and supplies, supported by local content regulations across the continent.

Jeon acknowledged the efforts of the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, in pushing to expand the Nigerian Local Content Act into new sectors of the economy, including power, construction and ICT. This also presents a tremendous opportunity for natural gas as a power generation resource in areas which lack some of the needed infrastructure, Jeon said.

He called on the leading international companies in Africa to support the domestic industry through investment capital, training and knowledge transfer. www.businessday.ng

L-R: Moyosore Onigbanjo, attorney general/commissioner for justice, Lagos State; Folashade Jaji, secretary to the state government; Gbenga Omotoso, commissioner for information and strategy, and Frederic Oladeinde, commissioner for transportation, during a press briefing on Advocacy and Enforcement of Traffic Law in the State, at the Lagos Hosue, Alausa, Ikeja, yesterday.

Investors show buying interest in these stocks Anthony Adgidzi, Lafia

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ocal investors are showing buying interest in stocks like Zenith Bank, First Bank Nigeria plc, Ecobank, Flour Mills, Nascon Allied Industries, and Dangote Cement on expectation of share appreciation and dividend yields.

Following a bearish run in 2019, with a negative return of 14.6 percent, the local bourse began the year on a positive note and has sustained the upbeat performance for the sixth trading session of the year.

The NSE has gained 10.40 percent year-to-date, thanks to participation of local nvestors, but analysts are sceptical if the rally will continue given the unpredictability of government policies and harsh operating environment.

Investors’ appetites for Nigerian equities have been underwhelming despite the peaceful conduct of the 2019 election and benign political risks as valuations are relatively cheap, which makes stocks on the bourse attractive.

Analysts are of the view that if foreign investors’ apathy

towards Nigerian equities continues due to macroeconomic uncertainties, then the rally would be short-lived.

“It is local investors like the pension funds that are buying stocks in these companies,” said Paul Ozim, a stock broker.

“The money market rates have crashed thereby paving the way for some local investors to patronise the equity market.”

Flour Mills Nigeria plc, the largest miller in Africa’s largest economy, has a year-to-date of 16.75 percent, but it has a price to earnings ratio of 17.25 times, which makes its share expensive as it operates in an industry beleaguered by weak consumer spending, intense competition, and inflationary pressure.

First Bank’s shares have been appreciating since the start of the year as evidenced in a year-to-date of 24.39 percent.

There has been marked improvement in the lender’s asset quality, thanks to an excellent risk management strategy.

Dangote Cement has a year-to-date of 21.10 percent, which means investors have confidence in its growth potential. It has a dividend yield of 9.52 percent while it paid a

final dividend of N274 billion in 2018.

The largest producer of building materials issued commercial paper of N45 billion so as to shore up working capital and reduce debt. It bought back 10 percent of its N17.05 billion outstanding shares, a strategy that will help magnify shareholders’ earnings.

Zenith Bank has a yearto-date of 17.74 percent while its stocks yield a dividend of 12.76 percent, the highest among listed companies on the bourse.

Nascon Allied and Ecobank have year-to-date of 15.83 percent and 20 percent, respectively.

Analysts at CSL Stock Brokers Limited say the market may stage a comeback in 2020, albeit the bullish performance will be capped by modest economic expansion.

“While we do not believe we are going to see foreign investors returning to the market in droves, we believe activity level will be better than we saw in 2019,” said analysts at CSL Stock Brokers.

Analysts are optimistic unconventional monetary tools adopted by the CBN will buoy

system liquidity and spur local investors’ demand for risky assets.

Last year, the apex bank barred individual and local corporates from participating in Open Market Operations (OMO) auctions so as to force lenders to extend credit to the economy and to stop the mopup of funds from the system through the treasury bills. That has led to a significant moderation in yields on treasury bills and bonds, pushing real yields into negative territory.

“Certainly, the rally won’t be straight-forward as it will be overtaken by profit taking,” said Johnson Chukwu, managing director and CEO, Cowry Asset Management Ltd. “But in a low rate environment the equity market will be the beneficiary.”

Analysts at United Capital Research said the outlook for the Nigerian economy hangs on a framework of a wellintended but slightly uncoordinated policy outline.

The country’s GDP expanded by 2.28 percent in the third quarter of 2019, but still below 6.23 percent growth recorded in the corresponding period of 2014.

Nigeria to tap growth opportunity in UK-Africa Investment Summit HOPE MOSES-ASHIKE

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he UK Government will hosttheinauguralUK-Africa Investment Summit in London,whichoffersNigeriaopportunity to attract much investment for the growth of the economy.

This Summit will bring together British and African businesses to harness the huge potential of the continent when it comes to trade – including through infrastructure, agriculture, enterprise and technology. It will create new lasting partnerships to deliver more investment, jobs and growth to benefit people and businesses across Africa and the UK. Hosted by UK Prime Minister Boris Johnson, the Summit is a great opportunity to highlight and discuss trade and investment relations for both the

UK and Nigeria. Other African countries will also be looking to promote their investment offers.

Nigeria will play a critical role in the success of the Summit. President Buhari is set to head the Nigerian delegation.

At the Summit, the Nigerian delegation will have the chance to engage investors on business environment issues and to emphasise Nigeria’s commitment to continuing to improve conditions for doing business, as recognised in its steady climb up the World Bank’s Doing Business index from 146th to 131st in last October’s report.

The British Prime Minister will meet with President Buhari, who will also attend a reception hosted by Their Royal Highnesses The Duke and Duchess of Cambridge.

In advance of the Summit, the UK Government through the

https://www.facebook.com/businessdayng

Department for International Development worked with the Nigeria Investment Promotion Commission (NIPC) to develop a new Nigeria Investment Guide, whichwillbelaunchedattheSummit. The guide will help investors understand the opportunities and find out about the organisations, processes and services in place to help make the most of them.

Harriet Thompson, British Deputy High Commissioner in Lagos, said, “The UK-Africa Investment Summit is a major opportunity to support growth, development and job creation in Nigeria, including HE President Buhari’s commitment to expanding agriculture and manufacturing.

“Nigeria will be highly visible: the only country to participate in every AIS event, and Nigeria’s companies will be out in @Businessdayng

force: one in seven of the African companies attending will be Nigerian. Every session of the Summit will feature Nigerian participants. We want them to come back with new partnerships that will boost investment and create jobs and sustainable economic growth in Nigeria.

“This is a prime opportunity for Nigeria to make its pitch to quality British companies and investors, demonstrating not only the scale and breadth of commercial opportunities here in Nigeria, but also Government’s commitment to improving the business environment. Global competition for investment is fierce. Nigeria will need to compete for its share, addressing those areas that businesses still find a challenge, such as customs and tax procedures.

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Edo vandal jailed 3 years for stealing BEDC equipment

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ffort by BEDC Electricity plc (BEDC) to curb vandalism on its network has again received a boost with the sentencing of one David James to three years imprisonment by a Benin Magistrate Court 6 in Egor Local Government Area of Edo State.

The accused, male, 26, was sentenced on a two-count charge of stealing armoured cable wires and stealing three transformer bushes spindles both valued at nearly N500,000.

The sentence, delivered by E. A. Aghedo at Egor Magistrate Court on January, 2020 after the accused pleaded guilty to the charges, was without an option of fine.

The offence was contained in the charge sheet No MSG/005c/2020 titled Commissioner of Police vs. David James.

James reportedly committed the offence on December 22nd, 2019 along Upper Ekewan road, Benin City in Egor Magisterial District, a crime punishable under section 390 (a) of the Criminal Code Cap 48 volume ii Laws of Edo State.

The accused was caught by members of Bedekeme Street in Obaji off Ugbiyoko quarters who alleged, during an interview conducted by a television

station in Benin City, that they had been thrown into darkness due to the activity of vandals at different times.

The accused who confessed to committing the crime said he wanted to sell the vandalised items before he was arrested by men of the Nigerian Police, Evbuotubu Division, Benin.

In a confessional statement given to the police, James, who said he was not a first time offender, said the vandalised items were usually sold to dealers in scrap items and that he has been to prison on account of vandalism.

The accused also confessed to have served a jail term of one year and six months at a Benin Correctional Services over cable vandalism in 2005.

He said he is a driver and a house builder.

Vandalism of electricity distribution network and other forms of electrical thefts are serious threats to power sector sustainability and economic growth and have been major acts negatively affecting service delivery to customers. Revenue that could be used for critical development projects are being used to restore damaged and stolen installation.

NIPS 2020 kick-starts decade with furthering energy integration for Africa’s renaissance

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he upcoming 2020 edition of the Nigeria International Petroleum Summit (NIPS) will focus on furthering Africa’s energy integration for the continent’s much needed renaissance and shared prosperity in the unfolding decade.

The African Petroleum Technology & Business Conference with the theme “Widening the Integration Circle: Technology, Knowledge, Sustainability and Partnership” scheduled for February 9 – 13, in Abuja will seek to interrogate emerging technologies and knowledge for the benefit of exploiting the continent’s vast hydrocarbon potentials in a sustainable way.

“Africa’s energy sector needs to move into the new decade with a serious and result-oriented conversation around technology, policies and investment in our quest to build a more prosperous continent,” says James Shindi, managing director of Brevity Anderson, the event producer.

The summit organisers also realise that the continent’s energy sector cannot make meaningful and reach its desired destination without the pre-requisite investment. That is why the keynote address during the Africa’s ministerial session by Younghoon David Kim, chairman, World Energy Council, is focused on “The Pursuit of new investors and strategic collaborations to exploit natural reserves.”

Timipre Sylva, who has thrown his full weight to ensure the success of the summit since his assumption as Nigeria’s Honourable Minister of State for Petroleum Resources, will take the summit attendees on

a reminiscences of Nigeria’s oil and gas industry journey in the past 60 years.

Another major highlight of NIPS 2020 is the roll out of the World Oil Outlook (WOO2020)

by Mohammad Sanusi Barkindo, secretary-general, Organisation of Petroleum Exporting Countries (OPEC).

NIPS is a Federal Government official petroleum industry event with the Federal Ministry of Petroleum Resources and all its parastatals including the Nigerian National Petroleum Corporation (NNPC), Nigeria Content Development & Monitoring Board (NCDMB) and Department of Petroleum Resources (DPR) are joint hosts.

The event is a convergence of African and global energy heavyweights and it is a reflection Nigeria’s unique place on the map of oil and gas industry regionally and internationally.

NIPS 2020 will welcome over 5,000 diversified local and international delegates across the various sub-sectors and disciplines in the energy, oil and gas vast value chain. Just like the previous two editions, the summit will host stakeholders in the oil and gas industry in Nigeria in addition to the participation of several foreign bodies like OPEC, APPO, IEC, several foreign ministers and delegates across global energy industry.

Within a short time of its debut, NIPS has been a great success as it is now considered as the major platform for the oil and gas industry in Nigeria and Africa in general to show its success stories, the plans and investment opportunities and provide a stage for exchanging information and ideas about issues that related to the industry. www.businessday.ng

Obaseki, labour, trade unions harmonise N30,000 minimum wage agreement

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do State governor, Godwin Obaseki, and the Joint Negotiating Council (JNC) on Monday signed the new N30,000 national minimum wage document, which sets the stage for the payment of the new minimum wage to workers in the state.

The governor had in his new year broadcast, assured public servants that they will be paid the new minimum wage, beginning from January 2020.

Speaking at the signing of the document at the Government House in Benin City, Obaseki noted that workers in the state would on January 26, receive bank alerts reflecting the new minimum wage.

He attributed the success of the actualisation of the payment of the new minimum wage to the transparency and openness between the state government, labour and trade unions, noting, “There should not be much difference between a state worker, federal government worker and a local government worker because it is the same government.

“What we have done in Edo is to change the emphasis, by emphasising productivity. If you want someone to be productive, the minimum you can do is to pay the person a living

wage.”

He said the next phase of welfare package for workers in the state will include building capacity of public servants to be more efficient and productive.

“Every worker must have health insurance cover. Every worker who is eligible must have a mortgage or house of their own and every worker will undertake at least one training in the public service training academy every year,” he said.

Earlier, the Edo State Head of Service, Isaac Ehiozuwa, said the new minimum wage was unanimously agreed upon by all parties involved and along with the consequential adjustments.

On his part, chairman, Edo State chapter of Nigeria Labour Congress (NLC), Sunny Osanyande, commended the governor for prioritising the welfare of state workers, noting, “We want to commend Edo State Government for a job well done because we are happy about the adjustments across board.”

Also, chairman of Joint Negotiating Council, Catherine Eseine, expressed appreciation to the governor for making the negotiation process easy by keeping to his promise to pay the new minimum as soon as it was agreed upon by the NLC at the national level.

Nigerian to represent Africa on Merlin Network board first time Daniel Obi

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erlin Network, Europe-based digital rights agency for independent record labels which has distributed over $2 billion record labels in the last 10 years, has for the first time appointed a Nigerian, Michael Ugwu, into its board to represent Africa.

This makes it the first time a Nigerian will be appointed to the board as the seat has always been previously occupied by South Africa.

Merlin has membership of over 20,000 independent record labels and distributors from approximately 62 countries with offices in London, Tokyo and New York.

Ugwu, former general manager of Sony Music West Africa, who is the founder/ CEO of Nigeria’s online digital music distributor, Freeme Digital, was one of eight new executives, according to a statement announced last week to represent Africa on Merlin’s 15-member board.

Other new executives that joined the board are from Australia, Brazil, the Netherlands, North America and South Korea.

Ugwu, according to the statement described the appointment into the board as an important milestone in the evolution of Nigeria’s music industry and its growing acceptance and expanding footprint in the global music scene.

He said: “I am humbled by this appointment. It is another testament that the Nigerian music industry is making the expected progress. The talent, hard work and investment in the industry continue to gain deserved recognition.

“As far as the Nigerian music industry is concerned, Freeme Digital remains committed to the rights and opportunities of Independents and their artists. And we will continue to expand the scope of opportunities and the frontiers of digital music for the emerging generation of independents and artists in Nigeria and across Africa.”

Prior to exiting Sony Music Entertainment West Africa in August 2019 to fully focus on Freeme Digital, Ugwu led Sony’s expansion in West Africa as the General Manager for five years, spearheading unprecedented historic deals for Africa’s biggest talents including Davido and Wizkid.

R-L: Godwin Obaseki, governor, Edo State; Isaac Ehiozuwa, head of service, Edo State, and Catherine Eseine, chairman of Joint Negotiating Council, at the signing of the new N30,000 national minimum wage document, in Government House, in Benin City, yesterday.

Buhari approves inter-ministerial steering committee, project delivery for Mambilla power project HARRISON EDEH, Abuja

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oming on the heels his New Year message wherein he assured on commencement of Mambilla Hydroelectric power project, President Muhammadu Buhari on Monday in Abuja approved the constitution of two committees for the Mambilla Hydroelectric Power Project in Taraba State.

They are the Inter-ministerial Steering Committee (IMSC) and Project Delivery Committee (PDC).

Aaron Martins, special assistant to the minister of power while confirming the development in a statement on

Monday, said the minister of power, Sale Mamman, would chair the Inter-ministerial Steering Committee, while the director in-charge of Renewable Energy in the Federal Ministry of Power would head the Project Delivery Committee, reporting to the Minister of Power through the permanent secretary of the Ministry.

According to the statement, members of the Interministerial Steering Committee are representatives of Federal Government agencies and Taraba State government.

The statement noted that the Federal Government agencies involved were ministries of Water Resources, Environment, Finance, Budget and

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National Planning, Works and Housing, Justice, Information and Culture, and Mines and Steel Development.

Others are representatives of the secretary to the Government of the Federation (OSGF), National Security Adviser (NSA), Nigeria Sovereign Investment Authority (NSIA), and the Nigeria Customs Service (NCS).

The terms of reference of the Inter-ministerial Steering Committee include facilitating and fast-tracking the execution and project delivery of the Mambilla Hydroelectric power project; finalising within six months, the review of the project engineering and technical design concept @Businessdayng

to achieve optimal efficiency and benefit the immediate target market (the Northeast geopolitical zone); as well as obtaining approval of the Loan Facility from the China Exim Bank for the Off-shore component of the project based on the reviewed contract price.

The Inter-ministerial Steering Committee will be supported by Project Delivery Committee, which will be responsible for overseeing the implementation of the project in line with agreed timelines and deliverables, including design of a framework for postproject operational management that will ensure that the project starts performing from the point of delivery.

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Failure can’t be an option in 2020 and beyond STRATEGY & POLICY

MA JOHNSON

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wo decades have gone in the Twenty-first Century but Nigeria is yet to be an industrialized country. The third decade in the century has just commenced and unfortunately, Nigeria has earned a title as the poverty capital of the world. It is not that Nigeria has not been fortunate to make some progress since independence. That the country has not achieved political and economic stability as expected is worrisome.

In spite of efforts of the past 60 years or thereabout of nation building, Nigeria is more insecure, less stable with huge unemployed and underemployed youths, and less confident than it was at independence on 1 October 1960. The result is that Nigeria of the Twenty-first Century goes to negotiating tables in the international environment almost empty-handed seeking financial assistance from countries that have organized their societies, educated and disciplined their citizens.

As far as governance is concerned, policy and practice are two terrains of experience that government in Nigeria has been grappling with for several decades with success somewhat below degree of public expectation in many cases. In our seemingly long struggle to establish ourselves as a developed country, we have continuously run into such troubled waters that negate our democratic advancement and undermine our ability to soar above our numerous socio-economic challenges.

At the core of the issues that continue to plague the country is the question of quality and genuine leadership, and all the values and qualities associated with such. To a large extent, the failures in our national systems are all tied to the question of leadership. Just as in conventional war, no democratic society can attain economic development without visionary and committed leaders.

Nigeria’s leadership crisis is legendary. The problem is common at all levels of the government- local, state and federal. And if the country is to develop economically in the true sense, we must begin to source for quality leaders during elections.

Our progression as a democracy and our efforts at achieving a stable and leading socio-economic polity are the total sum of the core objectives of our contemporary national endeavours.

But these have always been the goals of our historical union since the decades of constitutional reforms that followed since independence.

Invariably, we have struggled with almost the same issues for years and decades, coming out of some and returning into others and going around and round in the same circle. Indeed, Nigeria has not been that lucky. Nigeria emerged from her colonial past on 1 October 1960 with a population of only 32 million which then was ably supported by a strong agricultural base. Today, it is estimated that our population is more than 200 million, and the oil boom of the 1970s has not only weakened the agricultural base, but had destroyed the budding impressive socio-economic foundation which would have sustained the phenomenal upsurge in population. This was therefore, the genesis of Nigeria’s current economic problems.

Before now, hope-inspiring visions (2010 and 2020), transformation agenda, Seven Point Agenda, National Economic Empowerment and Devel-

opment Strategy (NEEDS), and others have not been able to put Nigeria on the threshold of being a developed country.

As Nigeria’s population grows at a rate of 2.6 percent with a double-digit inflation, the economy remains sluggish at about 2.1 percent. Thus, in a context of rapid population growth, one expects that policies and programs to reduce poverty and hunger must expand faster than the population is growing. And for progress to be achieved towards proportional targets elaborated in the Sustainable Development Goals (SDGs) of the United Nations.

There are 17 goals in the SDG. The federal government of Nigeria has appointed a directorate of the ministry of works and housing to supervise all the SDG projects in 6 geopolitical zones.

However, the solution to our prevailing economic problems depends on how far we plan our tomorrow today and how best we evolve and practice the right policy. This is particularly so as Nigeria, the acclaimed giant of Africa, is today, the world’s poverty capital.

Economic development experts have made a plea for economic development planning. They affirm, that emerging countries which have enjoyed accelerated growth and structural transformation are precisely those countries that never jettisoned economic development plans. By implication, if we fail to have an economic development plan, then we have planned to fail no matter how excellent our policies and implementation strategies are.

We hear the government wants to develop infrastructure. Which infrastructure are those in the government talking about? The government needs to be specific as to the type of viable projects to be embarked upon in order to earn the trust and confidence of citizens. So, the economic development plan must be of strategic significance, well researched and thought-out in all its ramifications before it is put in place.

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Nigeria is indeed a country blessed with enormous human and material resources as well as potentials but committed leaders are scarce. In fact, our human resources would have been the country’s greatest assets towards promoting and sustaining a virile economy

Johnson is an author and a retired naval engineer who has passion for African development and good governance

Transportation investments and diversification of Nigerian economy

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ocated in West Africa along the Atlantic Ocean’s Gulf of Guinea, Nigeria is a country whose land borders are Benin to the west, Cameroon and Chad to the east and Niger to the north.

Nigeria is a key regional player in West Africa with one of the largest populations of youth in the world (and half of West Africa’s population in total with approximately 202 million people), making the availability of modern transport connectivity infrastructure a very crucial issue for increase in trade and economic growth in West Africa.

While a lot of developed nations globally have boosted their economies through investments in world-class transport investments, the sector and its infrastructural capacity still remain far below standard. While Increasing urbanisation and growing traffic demand will add more pressure on the largely inadequate transport systems in Nigeria and other poor transport states within the continent, there however seems to be no concrete evidence of steps taken to change the status quo in the region.

Nigeria is a multi-ethnic and culturally diverse federation which consists of 36 autonomous states and the Federal Capital Territory.

With an abundance of natural resources (with a gross domestic product (GDP) of $397.30 billion in 2018) it is Africa’s biggest oil exporter and has the largest natural gas reserves on the continent.

It is also very interesting to clarify that while Nigeria’s major crude oil producing states: Akwa Ibom, Delta, Rivers, Bayelsa, Ondo, Edo,

Imo and Abia. With Akwa Ibom, Delta, Rivers and Bayelsa accounting for 80 percent of the production, and none have modern transportation infrastructures. Without that, and no strategies in place to leverage the advantage on an already competitive global market, they will need to grow and diversify their economy through more investments in the area of transportation and other major sectors to add more value to their economy and the lives of their people.

The collapse of crude oil price in 2018, triggered unpleasant memories because the 2014 and 2015 crash in world oil price is still very fresh in the minds of Nigerians, where the government found itself in unchartered waters and still continues to struggle to revive the economy amidst dwindling oil revenues compounded by unemployment, poverty, insurgency, insecurity and corruption.

Global poverty projections released by The Brookings Institution in 2018, based on data from the World Poverty Clock, shows that Nigeria has overtaken India as home to the largest population of people living in extreme poverty with more than 87million citizens living on less than $1.90 a day compared to India’s 73 million people ,while India has a population seven times larger than Nigeria’s, it is very sad to see this current situation especially with no meaningful progress made to change the status quo.

The direct approach to reduce poverty focuses on the provision of good transportation systems, regular power supply, basic education, nutrition, health, access to employment www.businessday.ng

and product markets for the poor which arises from recognition that the very poor generally do not have sufficient resources to meet basic human needs.

The Nigerian people have gained very little from the dividend of democracy since 1999 and many have become helpless because of poor mismanagement of our vast oil resources as a result of incompetence, corruption, lack of awareness on how to diversify the economy and take added advantage of the huge abundant natural resources, are all part of the reasons why the people are suffering without any meaningful solution forth coming.

There is urgent need for the effective diversification of the Nigerian economy at all levels, this also includes the economy of the states and local governments. It is also very necessary to state that all our leaders at all levels from the Presidency to the counsellor should begin to see governance as an opportunity to serve and add value to the economy and lives of the people. They should therefore begin to treat the responsibility of service in a business-like manner to separate investments from profits and must be ready to all times to render stewardship to the people at all times.

There are enormous resources available in the Nigerian transportation sector which are mostly yet to be fully explored and tapped into. It is on record that apart from crude oil, Nigeria is blessed with other natural resources which includes but not limited to the following natural gas, tin, iron ore, coal, limestone, lead, zinc, arable land, deep ocean, vast seas which are worth billions of dollars and there

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Once that is done, it should not be changed for a period of time irrespective of changes in the personalities in the corridors of power. I strongly believe that it is possible to have an economic development plan that is capable of changing the narrative of the country positively within this decade. But where are the economists?

Nigeria is indeed a country blessed with enormous human and material resources as well as potentials but committed leaders are scarce. In fact, our human resources would have been the country’s greatest assets towards promoting and sustaining a virile economy.

Unfortunately, because of the absence of an enabling environment and the so-called “Nigerian Factor,” which tends to enthrone mediocrity, our human resources have continued to suffer from excessive brain drain. A deliberate effort must be made to check this “second exodus” of Nigerian professionals to foreign countries in search of wealth.

Committed leadership is the key ingredient in any prescription for change. Committed leaders have a continual passion for making a difference in peoples’ lives by providing opportunities and empowering them to be successful. A committed leader must be of good attitude, and must be able to walk the talk. The “change” or “Next Level” that Nigerians voted for during the last election in 2019 can only be actualized if our leaders across board lead by example. Nigeria needs leaders who will walk the talk; leaders who will lead by actions and not by words alone; achievers not deceivers. Leadership is not everything in governance, but it is very fundamental in developing a nation. As the saying goes: “It take a generation of committed leaders to build a nation.” Thank you!

Okotie, a maritime transport specialist, writes via fokotie.bernardhall@ gmail.com, Fokotie@ bernardhallgroup.com

FESTUS OKOTIE

are no denial that tremendous investments opportunities are available to both local and foreign investors in Nigeria transportation sector (railway, pipeline, airways, maritime and land) sector, agriculture, natural resources, tourism, consumer goods, textiles, entertainment, sports.

With the above facts and records, Nigeria as a nation and it’s states should begin to look inwards by identifying the opportunities available in the transport sector and start making efforts to hire the services of experienced transportation experts to harness and explore these vast potentials to attract both local and foreign investors because of the added advantage of its huge population, the urgent need for speedy and exhaustive transportation upgrade across all the modes, hunger of the present government to deliver the dividends of democracy by providing quality life for its citizens, improve the socio-economic status of its citizens by providing modern infrastructures and the need to diversify and open up the economy to attract more investment opportunities.

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Democracy & African development (2) RAFIQ RAJI

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he so-called “dividends of democracy” remain elusive to many Africans. As earlier highlighted, democracy engenders development by increasing investment, educational attainment, provision of public services, human capital and state capacity. Democracy also spurs economic reforms and reduces social restiveness.

Has Africa been a beneficiary of these touted benefits from its experiment with democracy thus far?

Judging from the United Nations’ human development index, it could be argued that there has been a positive development trajectory on the continent.

When juxtaposed with measures of freedom, however, a divergence is observed in recent years.

Thus, it could be inferred that democracy may not be definitively attributed for the past improvements in human development on the continent. For if that were the case, a noticeable decline in progress should be observed in tandem with the recently increasing decline in freedom on the continent.

Why dividends from African democracies below expectations thus far In practical terms, having already established the theoretical thesis, why has democracy underwhelmed on development in many African countries? Firstly, elected officials are rarely held accountable. This is not surprising since they mostly get elected through fraudulent electoral processes. Parliaments that are supposed to check the potential excesses of executives, tend to end up being little more than rubber stamps; especially when controlled by ruling parties. And since victory at the polls is significantly subject to elite manipulation, politicians are largely insensitive to the needs of the people. Apathy on the part of a frustrated and disillusioned populace consequently contributes to a vicious cycle that strengthens the manipulation machinery of the

elite.

Secondly, political participation is largely exclusionary due to high barriers to entry related to ethnicity, financial capacity and corruption.

Political parties charge exorbitant fees for registration and other party-related financing. Campaign costs are also prohibitive. There are similarly huge expenses borne by politicians for dishing out patronage; which they almost always make sure to recoup when they eventually win. Thus, “although democracy appears to yield economic benefits over time, the transition to democracy has not fostered dynamic economies or substantial improvements in welfare in most of Africa” (Lewis, 2008).

Thirdly, state capacity remains weak in most of Africa. This is because ethnic institutions still hold sway in many African countries, especially in rural areas far from capital cities, where whatever state capacity there is tend to be concentrated.

A colonial legacy is responsible in part for these circumstances. In fact, it has been shown that the economic performance of partitioned ethnicities remains similar despite being under different national institutional arrangements. For instance, using light density at night as a proxy for economic activity, one study finds a significant relationship between pre-colonial ethnic institutions (stateless ethnicities, petty chiefdoms, paramount chiefdoms, and pre-colonial states) and regional

development in Africa. In other words, kingdoms, empires, chiefdoms and the like, that were in place before European colonisation continue to be relevant to African development. And the rigidities of these pre-colonial ethnic-based political centralizations explain the incapacity of some African states to exercise full authority over property rights, tax collection and monopoly of violence to this day.

Fourthly, western liberal democracy is a foreign concept. Little wonder, Bradley (2011) contends African perceptions of democracy differ from the Western view. This may explain why “democracy” has not been effective for development on the continent; in light of its increasing decline. Recent African elections have either been fraudulent or violent or both. True, there has been some positive outcomes from the African democratic experiment thus far. Still, it could not be definitively said that democracy has engendered relatively more development for African countries. Rwanda, which is regularly mentioned as an African development exemplar, is an autocracy in practice, for instance.

It could actually be argued that African elites have found that it is easier to manipulate state resources under a flawed or pseudo democracy than an autocracy. Thus, the assertion by Jotia (2012) that “liberal democracy has impeded development in Africa rather than nurturing it” is succinctly true.

Still, there is evidence that democracy has indeed been germane to economic growth for

some African countries. Using data for 43 SubSaharan African countries over the period 19822012, for instance, Masaki & Van de Walle (2014) find “strong evidence that democracy is positively associated with economic growth, and that this democratic advantage is more pronounced for those African countries that have remained democratic for longer periods of time.” More specifically, Narayan, Narayan & Smith (2011) find support in varying degrees for the democracydevelopment nexus in Botswana, Niger, Chad, Ivory Coast, Gabon, Madagascar, Rwanda, South Africa, Swaziland and Sierra Leone. In any case, Cheeseman (2015) asserts that in spite of the negative narratives around Africa’s experimentation with democracy thus far, about a quarter of SubSaharan African countries could be considered to be relatively democratic.

In sum, democracy, while underwhelming in general on the continent thus far, has great prospects for tackling some of the widely acknowledged constraints on African development like ethnicity, nepotism, corruption and so on. Using data on road building in Kenya, for instance, Burgess, Jedwab, Miguel, Morjaria & Miquel (2013) show high level of ethnic favouritism during earlier non-democratic periods, when “districts that share the ethnicity of the president receive twice as much expenditure on roads and have four times the length of paved roads built”, disappears during later periods of democracy. Furthermore, Cheeseman (2014) finds in Kenya and a couple of other African countries that a rising middle class is aiding democratization across the continent, arguing “contemporary demographic changes will improve the prospects for democratic consolidation.” Thus, the prospects of democracy on the continent remain bright. But will development happen in tandem?

References available at https://rafiqraji. com/2019/12/27/macroafricaintel-democracyafrican-development/ “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @DrRafiqRaji)”

On language and culture

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here has been a major row on Nigerian Twitter over the past few days after the news broke that the Ahmadu Bello University translated some books into the Hausa language so that students can be taught in that language. I am on the side of those who say that it is not the most necessary thing.

In Nigeria, we get too caught up in these sentimental arguments about how great our cultures were while forgetting that there is a reason that some of these habits (which became culture) were pretty bad habits, which only changed due to the arrival of our colonisers, for example the killing of twins among the Igbo of antiquity.

The world is in a constant state of evolution, and if your culture, whatever it is, does not evolve, then it will die. Language, dances, et al, are just parts of culture, and they too have to adapt to realities, or they die. Sometimes, an old language/culture has to undergo a change, or be subsumed, so a new identity can blossom Languages spread as a result of trade or conquest, and even then, must find something to recommend themselves to users thereafter or be discarded. A common tongue also unifies, and creates a sense of common identity.

Let us examine a couple of languages.

The English language has evolved constantly for at least a couple of thousand years. From its humble beginnings as the language of the Angles, English spread around the world thanks to the exploits of the British Navy via conquest.

As the language of the mighty British Empire, English became the language of global trade. The British also insisted that their colonial subjects learn their language and their culture, thus all but guaranteeing its survival. English also had

absolutely no problem “assimilating” words from other languages and making them its own, gleefully stealing words from Latin, French and so on.

In the modern era, English continues to demonstrate its durability and adaptability, constantly adding new words. And these words are not just limited to technical terms, English plucks words from slang and everyday use and makes them official words. The pace of evolution is such that the English spoken as recently as 200 years ago, is dramatically different from the language spoken today. Another legacy of its colonial past is that English is able to insert itself into the languages of colonised peoples and supplant their words for even household items.

In some cases, this is due to the fact that these items were not commonplace prior to colonisation, but in other instances, the original words have simply been lost.

The Benin Empire once wielded influence from the boundaries of modern-day Ghana to Igboland. The Empire traded in slaves, artwork and oil, and had a capital city that impressed European visitors. However, the Bini language never spread beyond the capital of the Empire, and the Boas never insisted that their colonial subjects learn their language. Rather, the Enogies sent to rule over colonial territories had to learn the language of the people they had been sent to govern. As such, the conquered peoples got to retain their languages and cultures, as the Empire also did not insist that its vassal subjects dress, and live as the capital did. As such, once the Empire went into decline, it was all too easy to confine the language of a once-mighty and powerful Empire to a relatively small territory. In fact, due to the failure of the Obas to spread their language and culture via conquest and trade,

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the Bini language is not considered one of the “major” languages in Nigeria, and is today only spoken by those who originate from Benin City and its immediate environs.

The English, used their language to unify, first their country, and then (to a lesser extent) their empire. The Bini on the other hand, did not set up their language to unify their empire. Three hundred years after the Bini Empire, the Fulani began to use the Hausa language to unify their own empire. That process was interrupted by the English, but that is a story for another day, but this unity issue is where the question of Nigeria comes in.

Let’s get it straight, at least the three “major” ethnicities will resist efforts to impose one over the other. It is also quite clear to me that the “minor” ethnicities are increasingly aware, if not necessarily assertive, of their own past.

From my view point, while I’m proud of my Igbo heritage, I recognise that unless Nigeria splinters into smaller units each dominated by a single ethnicity, we’ll have to subsume our old cultures into a Nigerian culture/identity. And in this regard, the language of our colonisers must be seen as a tool and not an impediment. As noted above, English has demonstrated its capacity to adapt and evolve over centuries. It is rich in subtext, and is by any measure a fully-developed language, with words for just about every concept in literature, science, art and philosophy. While there are aspects of our individual tribal cultures that should be maintained, we can also not be blind to the fact that the arrival of the colonisers stopped some of our more (for lack of a better word) barbaric practices, such as the routine murder of twins referenced above.

By majoring on the minors, we’re letting Ni-

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Nwanze is Lead Partner and Head of Research at SBM Intelligence

CHETA NWANZE gerian culture evolve very badly without proper guidance. For example, like it or not, officials begging for “new year gifts” or including a mark-up in pretty much every contract are now de facto Nigerian cultural traits. We constantly bemoan the lack of a “maintenance culture” and yet, allowing existing infrastructure to die in order to award inflated contracts for new infrastructure, is also very much part of whatever Nigerian culture we are developing. We say elections are not door-die, and yet extreme election violence is part of our democratic culture. We bemoan profiling of our youths by the police, and yet extortion is part of our police culture. Everywhere you look, we have slowly entrenched the negative aspects of almost everything, and instead of understanding how this impacts our ability to build a viable nation, economy, or anything, we choose to have fights over language.

So, let us ask ourselves, honestly, do we want a united Nigeria? Or do we want to devolve into mutually antagonistic components where we then discover that “Wi-Fi” does not have a Hausa, Igbo, Yoruba, or Bini translation?

For me, either one I’m fine with. I just want the whole nonsense mediocrity that is entrenching itself as our culture to be over and done with.

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Tuesday 14 January 2020

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Frank Aigbogun EDITOR Patrick Atuanya

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Protecting small businesses in Lagos

L

ag o s , Nig eria c ontinues to be the primary centre of play for small businesses in the country. However, a raft of charges, levies and taxes are increasingly making the state inclement for these drivers of the local economy.

Worse is the threat posed by private levies and tolls imposed sometimes with the connivance of officials at local government levels. The state must work harder at stopping this fraud.

In 2019, the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency (SMEDAN) came up with an interesting survey showing that the number of micro, small and medium enterprises (MSMEs) in the country jumped from 37 million in 2013 to 41.5 million in 2017.

Lagos, Nigeria’s economic capital, had 11.5 percent share (8.395 million) of the number.

Th e sur v e y surprising ly showed that micro businesses comprised 99.8 percent of the 41.5 million MSMEs in the country. Again, Lagos had the highest number of this category of business, with an estimated eight percent (3.329 million) of the total.

The two closest states to Lagos were Rivers State with 5.1 percent share of the total (2.129 million), and Kaduna State (1. 931 million entities) with 4.7 percent slice. Analysts say that because of the economic slump, many young people started their businesses

between 2013 and 2017. Many of these new entrepreneurs were in Lagos or moved to Lagos for its opportunities.

Data from the Lagos State government shows that 6,000 Nigerians come into Lagos every day. Lagos has become a hub for virtually all businesses in the countr y—from finance to industry, ICT to energy. The state serves as a meeting point for people from different parts of the country and even foreigners who come in as investors, tourists and for other engagements.

However, the state’s tax system seems to be doing more harm to small businesses than good. The website of the Lagos Internal Revenue Service lists approved state taxes like personal income tax (imposed on individuals in employment or running businesses), Pay As You Earn (deducted from salaries), capital gains tax (paid on profit made from sale of capital assets like land), stamp duties (imposed on legal documents/ instruments), business premises (tax on property), land use charge (imposed on land used for business) and withholding taxes.

However, Lagos has become a hub for touts who force small companies to part with different forms of tax, levy and fee.

Investigations by BusinessDay showed that local governments have various charges ranging from shop permits to parking rates, television/ radio to ‘portion’ permits. Most of those taxes, levies and fees are not receipted, putting transparency and accountability in doubt. One of our

respondents said he was asked to pay N200,000 for television/radio license even when he was not a media organisation, nor did he have anything to do with television or radio. Such backwardlooking taxes do more harm to the state’s prospect of attracting more investors than good. Micro traders on the streets bear much of the brunt as their profits are often eroded and their capacities erased. According to the survey earlier cited, MSMEs created 59.647 million jobs between 2013 and 2017. It is possible that the businesses created 6.86 million jobs in Lagos, judging by the 11.5 percent contribution of the state to the MSMEs numbers. It may even be more considering that the significant activities took place in Lagos. Imagine what happens to jobs when touts and faceless entities and individuals force small businesses to part with massive amounts that are sometimes bigger than their entire profits.

At Oshodi, for example, our reporter found that micro businesses pay between N500 and N1,050 every day. Companies at the lowest rung of the ladder such as pure and bottled water sellers, sweet sellers and plantain roasters pay N500 every Tuesday, N300 every Thursday and N150 any other day. At Otigba Cluster, Computer Village, Ikeja, businesses pay up to N1,800 at Ogunbiyi Community Development Authority. Touts collect these levies.

In Nigeria, riding a tric y c l e ha s b e c o m e f a s h i o n ab l e as unemployment rises in the country. But the tricycle riders

are also not spared. In a local council development authority like Mushin, each tricycle rider pays M3, 300 every day to four different groups, which include t h e Na t i o n a l Un i o n o f R o a d Transport Workers, the local government, the state government and to the Tricycle Owners Association of Nigeria (TOAN).

In other local councils, they pay between N1500 and N3,000—including money for government officials and the police.

The truth is that except the Lagos State House of Assembly takes the front seat by reviewing anachronistic taxes like radio and television taxes, the state may inadvertently continue to lose investors. Many investors were driven from Lagos to Ogun State because of multiplicity of taxes in Lagos. In Ibikunle A m o s u n ’s e i g ht- y ea r t e nu re (2011-2019) as Ogun governor, 304 companies set up plants in the states. Most of the firms have mere administrative offices in Lagos but real factories in Ogun State.

The state g ov ernment, on its part, must harmonise these taxes and make the system more transparent. Otherwise, it will continue to lose sizeable revenue to private pockets as found by our reporter, and small businesses will continue to search for friendlier environment. Local governments, on their part, must begin to take the issue of transparency seriously. What happens to use of official bank accounts or simple digital tools to plug leakages?

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Tuesday 14 January 2020

BUSINESS DAY

COMMENT The story of Trump’s perilous Iran escalation (1)

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Send 800word comments to comment@businessday.ng

DAN STEINBOCK Dr Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/

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n January 3, 2020, the plane of Qasem Soleimani, major general of the Islamic Revolutionary Guard Corps (IRGC) and commander of its elite Quds Force, arrived at Baghdad International Airport. At the same time, the US MQ-9 Reaper, a prime assassination drone, was loitering in the area with other military aircraft.

At the Airport, Soleimani left with Abu Mahdi al-Muhandis, the deputy head of the Iran-backed Iraqi Popular Mobilization Forces. As they entered two vehicles, the convoy headed toward downtown Baghdad. At 1 am local time, the Reaper launched several missiles on Baghdad Airport Road. The two cars exploded in flames killing some 10 people, including Soleimani and al-Muhandis.

After the devastation, whatever was left of Soleimani could be identified only by his ring. Ironically, several perished Iranian and pro-Iranian commanders had been instrumental in the defeat of Islamic State.

Secretary of State Mike Pompeo said Washington had made an “intelligencebased assessment” that Soleimani was “actively planning in the region” to attack US interests. In turn, President Donald Trump declared Soleimani was behind “imminent attacks” on US diplomatic facilities and personnel across the Mid-

dle East.

That’s the official story.

Undermining de-escalation Afterwards, Trump’s team got caught offering mixed messages about Iran’s “imminent” attacks as a justification for Soleimani assassination. National security adviser Robert O’Brien says Trump authorized eliminating Soleimani who cooperated with his allies “to kill American diplomats and soldiers in significant numbers.” Defense Secretary Mark T. Esper claims there was “exquisite intelligence” indicating Soleimani was “conducting preparing military operations” akin to “terrorist activities” against the US. In turn, Pompeo seized Iran’s past behaviour as justification.

None of these reasons, which stress attributed intentions rather than hard evidence, seem credible in the light of Iran’s efforts at multilateral diplomacy, its challenging economic conditions and the behind-the-façade attempt at de-escalation with Saudi Arabia. However, the mixed messages do reflect a longstanding US effort to justify “permanent war” in the Middle East and certain other hot spots. The House resolution to limit Trump’s war powers against Iran is a move in the right direction but it can neither reverse the past policy mistakes nor halt the current escalation.

In the subsequent TV address, Trump delivered his Orwellian soundbite. “We took action last night to stop a war… We did not take action to start a war.” And yet, several US planes were taking off from bases in the eastern United States toward the Middle East as Pentagon sent 3,500 members of the 82nd Airborne Division, one of the largest deployments in decades.

Amid mega rallies for Soleimani and Iraqi parliament calling for the expulsion of US troops from the country, Iran’s Supreme Leader Ali Khamenei spoke about the impending “retaliation.” Trump warned Tehran that any retaliation would result in US targeting 52 Iranian significant sites, including cultural sites. The allusion was to the number of American hostages during the Iran hostage crisis some 40 years ago.

Then came the bomb shell. Two

days after the assassination, Iraq’s Prime Minister Adil Abdul-Mahdi addressed his country’s parliament suggesting that Soleimani was on a peace mission. According to Abdul-Mahdi, he had planned to meet Soleimani on the morning the general was killed to discuss a diplomatic rapprochement that Iraq was brokering between Iran and Saudi Arabia. Abdul-Mahdi said Trump personally thanked him for the efforts creating the impression that Soleimani could safely travel to Baghdad, even as the White House was busy planning a hit.

Subsequently, Pompeo rushed to defend the assassination, again. “We know that [the report about Soleimani’s peace mission] wasn’t true,” he said. “We got it right.” Once again, he presented no hard evidence.

In reality, the US assassination appears to have been the latest effort to pre-empt de-escalation plans in the region, to reinforce Iran’s destabilization.

It follows years of misguided covert operations. Here’s how it happened.

From Trump’s U-turn to new Iran sanctions Only a few years ago, there was still great hope in Iran. After years of diplomacy, the comprehensive nuclear accord (JCPOA, July 2015) was achieved between Tehran and the so-called P5+1 nation; that is, the five permanent members of the UN Security Council – China, France, Russia, UK, and the US, plus Germany together with the European Union (EU). Under the deal, Iran agreed to eliminate its stockpile of medium-enriched uranium, while the International Atomic Energy Agency (IAEA) gained access to all Iranian nuclear facilities.

To Iran, the deal offered relief from US, UN and multilateral sanctions on energy, financial, shipping, automotive and other sectors. These primary sanctions were lifted after the International Atomic Energy Agency’s (IAEA) certification in January 2016 that Iran had complied with the agreement. Yet, secondary sanctions on firms remained in place, along with sanctions applying to US companies, including banks.

After the 2016 US election, the Congress with its Democratic majority – not

‘

The Trump assassination of major general Qasem Soleimani reflects regime change efforts - withdrawal from Iran nuclear deal, new sanctions, covert operations, undermined de-escalation, plunging oil production and diminished economic prospects - that have taken a perilous turn.

president-elect Trump - paved the way for a U-turn. Following the House of Representatives, the Senate in late 2016 unanimously extended the Iran Sanctions Act (ISA) for a decade. Stunningly, the deal that President Obama had portrayed as his legacy in the region was shot down surprisingly fast. Intriguingly, most Democrats reversed their positions regarding the nuclear deal.

As Trump arrived in the White House, he began developing a far more muscular policy against Iran to benefit from Saudi economic and geopolitical support. In May 2017, Trump and Saudi Arabia’s then-king Salman bin Abdulaziz Al Saud signed a historical arms deal, which totalled $110 billion immediately and $350 billion over a decade. Widely perceived as a “counterbalance” against the Iranian influence in the region, it cemented the ties between Saudi Arabia and the US. However, Crown Prince Mohammed bin Salman’s reform efforts have been tarnished by harsh measures against members of his family and opposition, the Khashoggi murder and dismemberment, and the devastating war and famine in Yemen.

In return for the Saudi deal, the White House began a concerted push to counter Iran’s regional and strategic weapons programs, which had been excluded from the Iran deal. In May 2018, Trump signed National Security Presidential Memorandum 11, “ceasing U.S. participation in the [Iran nuclear deal]” and taking additional action to counter Iran’s “influence and deny Iran all paths to a nuclear weapon.”

That’s when the US effectively nullified a decade-long unified, multilateral approach to Iran’s activities, while setting in motion unilateral economic sanctions, which have affected not just U.S. businesses but targeted commerce from other major economies, particularly China, France, Russia, UK, Germany and the EU. Even after Iran’s missile attacks against two bases of American troops, which seem to have purposefully shunned human targets, Trump promised further ratcheting up of economic sanctions against Iran. The use of sanc-

The path to grow Nigeria’s aviation

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or a long time, aviation stakeholders have been expressing concern over the stagnant or retarding predicament of this massive sector, considering our natural, human and economic potentials. Perhaps based on these factors, including the $1.3 billion annually repatriated by foreign airlines, Senator Hadi Sirika put out a plan over four years ago to set up a national airline.

Various media reports said Qatar Airways and Ethiopian Airlines were jointly or separately likely technical partners. However, following a mock up launch of the carrier at the Farnborough Air Show in the United Kingdom about two years, the project suffered a mild set back, albeit it is quietly being resuscitated at the moment.

My friend and senior colleague Chris Aligbe wrote an article last November condemning the suggestion by the Managing Director of Asset Management Corporation (AMCON), Ahmed Kuru, calling for the merger of Aero Contractors and Arik Air to form the national carrier. Sirika without doubt quickly pushed down that proposal, insisting only a new carrier will work.

Chris argued on the ownership of the two airlines in Receivership by AMCON - Arik and Aero, viz a viz the ministry of aviation, and raised an issue of the international encumbrances of the two airlines as a harbinger to interested investors.

The argument of Sirika and his supporters in setting up a national carrier is indeed baffling.

A UK-based respected Nigerian aviation expert

Nick Fadugba said in 2018 it is only Nigeria that owns two national airlines and is struggling to set up a third one! The argument by Chris that Arik and Aero are not government owned because it is under Receivership by AMCON is surprising.

Gleaning through past reports, Sirika is working to get private participation to set up the national airline, although nearly N50 billion ($140 million) was budgeted for that purpose in 2019.

The question to ask is why is government spending a whopping N50 billion on a project that will lose money in the first 3-5 years and with little assurance for success? Why is the government spending this amount of money considering the dire needs in other sectors like education, health and social services? Why is a government that is almost borrowing to service debts setting up a national carrier while it has a better option?

Considering the recent downgrade of Nigeria by rating agencies, which investor will risk investing in a completely new venture?

For Arik and Aero which have tasted the waters, and are regaining customer confidence in their respective markets, and equally making revenues to cover working capital, it makes better sense for government to merge them, while they secure solid technical partners.

The reference of Chris to the legal disputes is not altruistic, because once creditors are engaged, and given sufficient confidence, investors will play ball. After all the current Arik management have been engaging all the airline’s creditors lo-

www.businessday.ng

cally and internationally, and have gained their confidence through constant engagements, and repayment of debts.

It is crucially important to look at the massive advantages of merging Aero and Arik to form a flag carrier. Aero is Nigeria’s oldest carrier with solid experience servicing the oil and gas sector, rotary wing and aircraft repairs. It has a Maintenance Repair and Overhaul (MRO) license to undertake C check for Boeing 737s, perhaps the only facility with that competence in west and central Africa.

Arik is the first airline to operate brand new Boeing and Airbus new generation aircraft and since the days of Nigeria Airways, the only Nigerian airline with the best international exposure. Most aviation experts have fingered huge maintenance cost as one of the major problems for Nigerian airlines. Just imagine a combination of Arik and Aero under one entity, where Aero can also offer services to third parties.

Sirika should work to fix our airports, and not just focus on the current traffic, but think long term. He’s truly putting the cart before the horse.

It’s like building a house in an area where there’s no electricity, water, road and gas. Of what use is a national carrier with the airports we have today? There’s no seamless national and regional connection. There’s even no solid plan to accommodate increasing traffic for the next 10 -15 years, or massively boost traffic.

Sirika should be aware of what is happening with Kotoka international airport in Accra who

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SIMON TUMBA are quietly building a west African hub. Yes, they may not have the traffic like Nigeria, but never mind, their economy is one of the fastest growing in the world with a solid investment climate.

Qatar a country of about 2 million equally doesn’t have the traffic (based on its population), but its yearly throughput is projected to hit 53 million this year, and at least 80 percent of its traffic is transit.

Nigeria is the only emerging market (country) in the world with a 9 digit population that has no global hub - São Paulo (38 million - population of Brazil, 209 million in 2027), Delhi (69 million), Mumbai (48 million - population of India 1.4 billion in 2027), Cairo (16 million - 100 million in 2019), Mexico City (47 million - population, 129 million in 2017), ( Jakarta, 60.25 million population 264 million in 2017), Kuala Lumpur (100 million in 2018 - population of Malaysia 32.6 million in 2019), etc.

Continued on BusinessDayonline Simon Tumba is CEO of SY&T Communications LTD, a Lagos-based PR firm, and Publisher of NigeriaTravelsMart.com

@Businessdayng

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Tuesday 14 January 2020

BUSINESS DAY

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Tuesday 14 January 2020

BUSINESS DAY

COMPANIES & MARKETS

15

COMPANY NEWS ANALYSIS INSIGHT

How top 10 stockbroking firms traded N1.35 trillion in stocks in 2019 OLUFIKAYO OWOEYE

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espite closing the year on a bearish note with the All share index down 14.09percent, top ten stockbroking firms on the NSE traded N1.35 trillion worth of shares between January to December 2019.

According to data gathered from the local bourse, the top 10 stockbroking firms accounted for 53.85percent (85.5 billion shares) of the total volume of stocks traded on the Exchange and N1.35 trillion (70.14percent) of the total value of traded shares in 2019.

Stanbic IBTC Stockbro-

kers led the pack of the stockbrokers on the Ex-

change, the firm traded the largest volume of shares

at 13.8 billion valued at N336.9 billion this repre-

sents 17.49percent of the total value traded in the year.

Rencap Securities pulled 9.12 billion shares valued at N239.4 billion, representing 12.42percent of total traded shares. EFG Hermes traded 8.77billion of shares valued at N188.5 billion. CSL Stockbrokers Limited traded 7.80 billion stocks valued at N119.5 billion. Chapel Hill Denham Securities Limited traded 6.79 billion shares worth N83.08 billion.

The equities market posted negative returns every month in 2019 except for February when it was up 0.92percent making the year the worst since 2016.

Basically, the All-Share Index posted double-digit losses every month from July to December 2019. The

worst month for Nigerian Stocks was in November 2019 posting a negative Year to Date return of 16.48percent.

In May 2019, stocks rallied to a month on month gain of 6percent, the highest for the year, before falling back into negative territory as investors’ appetite waned.

Cornerstone Insurance was the best stock posting a return of 125percent. Access Bank posted the best amongst banks and Blue Chip stocks with a return of 47percent. Zenith, FBNH, UBA, and GTB all closed the year in the red. The worst stock for the year was International Breweries posting a negative return of 69percent. All brewery stocks also posted losses.

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Tuesday 14 January 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Glittering health beauty deepens investment with new make-up line launch MICHAEL ANI

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l i t t e r ing health beauty has launched a new makeup line that will enable the firm to provide better services and further deepen investment in the Nigerian beauty industry.

The new make-up line, known as “brow daddy yakky”, will help the firm in offering a variety of make –up products including powder, bronzers, foundation, and eye-shadow among others.

It will also complement other product lines, from barbing to the spa and micro-blading, which the firm already has running in its business.

“We decided to bring the various aspect of the beauty industry under one roof to enable customers to enjoy top-notch beauty services at an affordable price,” said Kazeem Yayah, chief executive officer for the firm.

According to him, the

make-up line launch will allow the firm to do more in the industry as it continues to ride on success stories stemming from its vast years of experience.

He noted one major selling point for his brand is in the use of organic herbal products, which he says are natural and keeps the skin glowing with negative effects.

“All our products are more of organic and herbal, and they are obtained from Indian and Nigerian herbs,” Yayah said.

The beauty expert, who started his career in 2005 as a nail technician before moving to makeup in 2009, said there is need for the government to regulate the industry and offer some kind of certification to flush out untrained beauty specialist who in the process of rendering services, expose Nigerians to various skin diseases.

He advised Nigerians to use more of organic product, as they are natural and works well on the skin.

“We need a government body that will regulate the industry so we don’t have skincare therapist infect people with diseases,” Yayah said. ”For instance like micro-blading for the skin, require the need for blood pathogen course; but in Nigeria, a lot of beauty experts and cosmetologists do micro blading without undergoing the required training,” With over 14 years since being in business, Glittering health Beauty has offered services like body massage, spa and body polishing, microblading, male and female salon running, permanent tattoos clean-up, among others.

The new make-up line which was launched in the firm’s office in Ikeja, Lagos will add to firms already three established branches, situated in Ghana, Lekki, and Abuja.

Yayah says since inception, the firm has empowered over 2000 Nigerians on beauty training and skincare management.

L-R: Member, Advisory Board, Top 50 Brands Nigeria, Joseph Okonmah; Public Relations Officer, MTN Nigeria, Lakinbofa Goodluck and Member, Advisory Board of Top 50 brands Nigeria, Bunmi Oke at the 2019 TOP 50 BRANDS NIGERIA ceremony where MTN was awarded the Most Valuable Multinational & Telecommunication Brand in Nigeria.

L-R: Emeka Onyeagba, base manager, Eastern Asset, Seplat Petroleum Development Company Plc; Ayodele Olatunde, general manager, Eastern Asset; Chioma Nwachuku, general manager, External Affairs & Communication; Emeka Ihedioha CON, Governor of Imo State; Effiong Okon, operations director, SEPLAT; and Nkeiru Ibekwe, Commissioner of Gender and Vulnerable Groups, Imo, during the donation of relief materials to flood victims in Imo State by SEPLAT in Owerri, recently.

Nigerian equities race higher after central bank policy shift Stocks jump 9% so far this year, making Lagos the world’s best performer NEIL MUNSHI, ALEX JANIAUD AND TOMMY STUBBINGTON

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igeria’s stock exchange has begun t h e ye a r a s t h e world’s best performer, powered by local investors switching into equities after the central bank shut them out of a short-term debt market.

The Nigerian Stock Exchange All-Share Index is up more than 9 per cent this week, putting it top of the table among more than 90 markets tracked

by Bloomberg. Last year, it ranked in the bottom three because of a sluggish domestic economy that is yet to fully recover from a recession brought on by the 2014 oil price crash.

Nigeria’s central bank sells high-yielding shortterm debt, known as open market operation bills, to prop up the country’s currency, the naira, and increase the bank’s foreigncurrency reserves. These securities, which yield as much as 14 per cent, also present an arbitrage opportunity, where investors can borrow from banks

at lower rates to buy the higher-yielding debt.

But in October, the central bank banned private individuals and local nonbanking organisations from purchasing OMO bills in an attempt to stop this trade. The move was part of a broader push by policymakers to spur retail lending in Africa’s largest economy.

As a result, some of those investors piled in to government bonds and the stock market. “Nothing much has changed in terms of the growth outlook,” said Kevin Daly, an emerging markets fund manager at Aberdeen Standard Investments, adding that local investors have been “squeezed” into other forms of short-term government debt and into domestic equities.

“The performance of the index certainly seems to have become entirely decoupled from the performance of the real economy,” said John Ashbourne, senior emerging markets economist at Capital Economics.

Nigeria’s annual growth in gross domestic prod-

uct of about 2 per cent is outpaced by growth in its population. Nearly half of Nigerians are under- or unemployed, and the country is now home to the most people living in extreme poverty in the world. President Muhammadu Buhari has tried to diversify the economy, but has struggled to wean the country off a dependency on crude oil.

The stock exchange received another boost this week from the flotation of BUA Cement, a combination of the Cement Company of Northern Nigeria and Obu Cement, on Thursday.

The business, which became one of the largest constituents on the exchange upon listing, provided “an incentive to take a second look” at the country’s equities, according to economist Nonso Obikili.

Nigerian equities were shunned last year because of a lack of confidence in the country’s growth outlook, along with the focus on high-yielding securities like the government debt market, said Mr Obikili. “I think there’s a lot of good pickings, because last year was really, really bad.”

L-R: Solanke Tinubu, deputy director, Physiotherapy Department; Adedokun Oluwatoyin Funso mother of the baby; Odusanya Oyinlola, national secretary, Nigeria Society of Physiotherapy; Banji Aluko, regional sales manager, Mouka, and Mrs Akintola, representative of the Medical Director University College Hospital, Ibadan,

R-L: Kehinde Shangodoyin, Oyo State commissioner for education, presenting cheques to winners of Raising Girls Ambition (RAGA) competition in Oyo State

Tuesday 14 January 2020

COMPANIES&MARKETS

BUSINESS DAY

17

UACN announces MTN’s Toriola as new director amid restructuring plans OLUFIKAYO OWOEYE

T

he Board of UAC of Nigeria Plc (UACN) has announced the appointment of Karl Olutokun Toriola as the company’s new Non-Executive Director.

Nigeria’s oldest conglomerate in a release to the exchange and signed by Godwin Samuel, the company’s secretary and legal adviser, said Toriola’s appointment became effective from January 1, 2020.

Toriola has several years of broad-based experience in communications, spanning the areas of telecommunications, marketing, e-commerce.

He is currently the vice president of West and Central Africa for the MTN Group with responsibility for operations in the West and Central African

region. He has worked in various capacities in executive leadership which include serving as Group Operations Executive for MTN Cameroon and Chief Technical Officer for MTN Nigeria where he won the Best CTO Award in 2009.

He has also worked as Chief Operations/Regions officer for Vmobile Nigeria and Support Manager, West African region for L.M Ericsson Nigeria Limited.

Toriola holds a Masters of Science degree in communication systems from Swansea University, United Kingdom as well as a Bachelor of Science degree in Electronic and Electrical Engineering from the Obafemi Awolowo University, Ile-Ife Nigeria.

UACN is the parent company UAC Property Development Company

PLC (UPDC).

In September the board and management of UACN announced plans to restructure and recapitalize UPDC. The recapitalization of UPDC would involve an equity capital raise of N15.96 billion by way of a rights issue to repay the company’s short-term debt obligations which stood at N22.84 billion at the end of June 2019 and strengthen its balance sheet.

After the recapitalization of UPDC, UACN will also unbundle its majority interest of 61.5 percent in the UPDC Real Estate Investment Trust (UPDC REIT) to UPDC shareholders through the allocation of REIT units directly to UPDC shareholders in proportion to their post rights issue holdings in UPDC. This will be in addition to their shares in UPDC.

L-R: Nwamaka Onyemelukwe, Public Affairs, Communications & Sustainability Manager, Coca-Cola Nigeria Limited, Doyinsola Ogunye, Founder, Mental and Environmental Development Initiative for Children (MEDIC), Taiwo Adewole, Executive Director, Recycle Points Nigeria and Femi Idowu-Adegoke, Executive Director, EcoViridis Environmental Technology at the launch of the Coca-Cola Foundation-funded Recycling Scheme for Women and Youth Empowerment (RESWAYE) in Lagos on Saturday.

MI5 head shrugs off risk to intelligence sharing from Huawei links UK set to decide on allowing Chinese equipment into 5G network in face of US lobbying LIONEL BARBER, HELEN WARRELL AND GEORGE PARKER

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ndrew Parker, head of MI5, says he has “no reason to think” that the UK’s intelligence-sharing relationship with the US would be hit if Britain adopted Huawei technology in its 5G mobile phone network, as a key decision on the issue looms.

Sir Andrew’s comments will increase expectations in UK government and industry circles that the Chinese company’s equipment will be permitted for use in some “non-core” parts of the network.

Boris Johnson’s government will on Monday face last-minute lobbying from Washington to exclude Huawei from the country’s 5G network, as the prime minister prepares to make a decision — expected this month — with huge geopolitical and economic consequences.

Washington has warned that if Chinese technology is used by the UK then intelligence sharing could be undermined.

But blocking Huawei would be costly to the telecoms sector and deal a heavy blow to the rollout of the new data technology in Britain.

Beijing has also been putting pressure on Mr Johnson not to jeopardise

the UK-China relationship and the decision will be a seen as a key indicator of how the prime minister intends to position Britain in a postBrexit world.

A US delegation comprising representatives from the National Economic Council and National Security Agency will arrive in London for a last-minute lobbying effort with UK officials on Monday.

But in an interview with the FT, Sir Andrew, who is stepping down as directorgeneral of MI5 in April, said the links in the “five eyes” intelligence partnership between Britain, the US, Canada, Australia and New Zealand were “the strongest they’ve been”.

He said the US-UK partnership was “very close and trusted”, adding: “It is, of course, of great importance to us. And, I dare say, to the US too, though that’s for them to say. It is a two-way street.”

When asked specifically whether he thought that the UK would lose out on intelligence relationships if the government decided to go ahead with Huawei, he said he did not think this was a danger. “I’ve no reason today to think that,” he said.

Sir Andrew acknowledged that security concerns alone should not always “dominate and dictate” a decision, and that Mr Johnson and his national security

council had been left with a difficult decision because there were so few suppliers in the market.

All four mobile networks in Britain have now launched 5G with Vodafone, BT, EE and Three all using the Chinese company’s equipment at the so-called non-core level — such as the antennas and base stations used on masts and rooftops — but not in the “core” network operations where customer details are held and calls are routed.

“Perhaps the thing that needs more focus and more discussion is how do we get to a future where there’s a wider range of competition and a wider range of sovereign choices than defaulting to a yes or no about Chinese technology,” Sir Andrew said.

British government officials admit that blocking Huawei now would deal a blow to consumers, noting that Huawei was being used because its equipment was seen as good value.

In spite of US pressure, some inside the UK government and within the telecoms industry expect Mr Johnson to arrive at a similar decision to the one taken by Theresa May’s national security council in April 2019, when ministers agreed to allow Huawei to build some “non-core” parts of the network.

R-L: Inspector General of Police (IGP), Alhaji Mohammed Adamun; Newly Promoted Commissioner of Police, Mr. Titilayo Kayode and his Wife Oluwakemi, after the decoration of the newly promoted Commissioners of Police, in Abuja.......recently

L-R: Ayodele A.O, chief nursing officer; Banji Aluko, regional sales manager, Mouka; Awoyemi Oluwadara, mother of the baby, and Odusanya Oyinlola, national secretary, Nigerian Society Of Physiotherapy, at the presentation of gifts to first baby of the year at Adeoyo Hospital, Yemetu, Ibadan, Oyo State

Sugh Beatrice, head of department, Nigeria Security and Civil Defence Corps (NSCDC), FCT Command, DCC; Patrick Ukpan, NSCDC FCT commandant, and Felix Ikwuegbu, commandant second in Command, DCC, during a news conference by the Commandant on the preparation of the Command for the Christmas, in Abuja

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Tuesday 14 January 2020

BUSINESS DAY

Media business Companies’ quest to boost sales in 2020 expected to jolt activity among marketing agencies … Digital PR, specialisation key considerations Phillips Consulting tasks Interior Ministry on talent development, technology for security

Daniel Obi

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ome operators in the tough-surviving Nigeria’s marketing communication industry are optimistic of healthy marketing activities this year which will assist to buoy the struggling industry.

Though, such enthusiasm was expressed at the beginning of last year on the back of election period. This did not actually materialise as expected, due to some whims but this year, the optimism is linked to heightened desire by more companies to push for increased market share.

This is expected to lead to introduction of variants and product re-launches.

Also anticipated is intense activity of market challengers and counter responses; companies seeking new ways to engage with the consumer; and investment fallout from border closure and the needed marketing communication.

Analysts believe that the border closure since August 21, 2019 will further spin more partnerships, opportunities for branding, packaging and marketing by investors which will increase activity in the marketing communication sector.

Adetola Odusote, Deputy Director, Reignite and Public Affairs Limited who noted that capacity of rice and chicken production is growing fast said this will create room for communication by clients for sales especially as emerging rice products are rising.

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According to Odusote, the immediate past secretary of PRCAN, many clients who survived the turbulent past years will be ready for marketing activities going forward to sustain the business. This is in the face of statement by IMF that Nigeria’s economy will grow by 2.1% this year, the same growth level in 2019. Therefore there will be need to engage consumers to create traction to products and boost sales.

To set the tone for serious marketing this year, some companies have shown interest to recruit new marketing agencies by holding pitches. “Pitches are on-going as clients have started their plans in earnest”, said Bolaji Abimbola, the CEO of Integrated Indigo.

Some organisations such

as Lafarge and Stanbic IBTC recently held pitches for marketing communication agencies while International Breweries recently recruited another agency for business.

While Lafarge is yet to appoint an agency, Stanbic appointed Media Craft to market its activities. “Many more pitches will come this year by clients who are looking for consumer engagement through various channels”.

Looking at recruitments for agencies by clients, Innocent Nwani, a PR practitioner with HKStrategies said companies are considering specialisation of agencies before appointing them. Companies in the FMCG, Oil and Gas or financial sector will consider agencies with experience in those sec-

tors. Companies that are also looking to engage consumers through digital channels will favour agencies with expertise in digital PR. He said agencies with different specialisations can form collaborations to stand advantage to bid for businesses.

Collaboration among agencies to keep the industry healthy was one of the key points underlined at the recent National Advertising conference held in Abuja.

Expecting much activity this year, Abimbola foresees that new product challengers will not rest on their oars this year. This will keep the industry bubbling as companies will try to hold on their market shares while agencies will struggle to hold on to their businesses.

hillips Consulting, (pcl.), a consulting firm in Africa, has tasked Federal Ministry of Interior and other government agencies under it, to embrace talent development, technology and teamwork in order to deliver the federal government promise of taking 100 million Nigerians out of poverty by 2023.

The statement was made during the Ministry of Interior retreat in Osun State handled by pcl recently During the retreat, the managing director of pcl., Robert Taiwo stated that only talent development, deployment of technology and teamwork among the staffers across the ministries and agencies of government could deliver President Muhammadu Buhari’s promise made in 2019.

According to him, “The retreat was designed to generate innovative strategies, policies and programmes for reforming Nigeria’s internal security agencies, thus enabling them to further address the challenge of insecurity in the country.”

Taiwo said, “There was significant focus on how the Ministry will execute the projects and programmes that will deliver the mandate” Meanwhile, the chairman of the company, Funso Phillips in his paper, “The Case for Change and Impact on Human and Capital Develop-

ment”, said, the key factors to drive performance within the public sector include adoption of innovative funding models to address the perennial challenge of insufficient funds.

Phillips said, “Digital transformation deployment will aid improved service delivery as well as improved systems for managing talent, which constitutes the core of the agencies’ delivery capacity.”

The Phillips Consulting managing director, who wrapped up the retreat as well as providing insights into strategic project failure said, “Government project fails due to the fact agencies of government focus on cost increment and scope creep”.

He explained the power of purpose and how it is important for the presidential mandate and its underlying rationale to be shared across all facets of the ministry and its supporting agencies. He clarified the need for urgency in a fast-changing world. He described the importance of governance, key performance indicators and identifying funding sources for the entire project lifecycle.

The entire leadership of the ministry led by the, Ogebeni Rauf Aregbesola, left the retreat with a set of strategically aligned plans that will deliver the presidential mandate in a collaborative and accelerated way.

Nigerians trust access to education, knowledge sharing most effective at unlocking opportunity Daniel Obi

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new survey has reiterated Nigerians belief that collaboration and knowledge sharing are key tools to creating a better world future.

Commissioned by Expo 2020 Dubai, and conducted

by YouGov, the Global Optimism Outlook Survey tracked people’s priorities for the future, looking at sustainability, economic growth, technology, travel, and more, according to a statement.

More than 20,000 people across 23 countries were surveyed, broken down by geographic region, gender,

employment, marital status, and income. Despite the breadth of diversity, it appears the majority of the world is closely aligned when it comes to the key issues facing the planet’s future.

According to the results, 80 per cent of Nigerians believe knowledge gathering, learning and access to education would be effective at unlocking opportunity in the future, followed by access to resources (77 per cent), and collaboration across national borders and cultures (76 per cent).

On a global level, the results also highlight nine in 10 respondents believe that individuals and communities can shape the future through www.businessday.ng

greater knowledge-sharing, communication, and collaboration.

On nationwide economic development, 46 per cent and

45 per cent of respondents cited that access to education and knowledge is encouraging Nigeria’s growth. The survey also revealed that 96 per cent

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believe that greater collaboration and communication between individuals and communities can help in shaping a better future.

Technology consistently appeared as having a role to play in future development and collaboration, with respondents saying they believe tech advancements will continue to build communities (96 per cent) and connect people globally (95 per cent).

Trade was also ranked highly among respondents.

Seventy-four per cent said they would like to experience free trade for all, while 93 per cent said they were optimistic about the future of global trade.

Seventy-seven per cent @Businessdayng

of Nigerian business owners and entrepreneurs between the ages of 30-39 proved to be the most optimistic. This income and age group are keen to drive the country’s sustainable sector in line with growing the economy, and believe this can be achieved if businesses across countries are allowed to trade freely.

When asked about what they most would like to experience in the year 2050, sustainability was front of mind for Nigerians. Seventy-one per cent said carbon-free travel and universal clean energy transportation, followed by sustainable infrastructure and architecture (68 per cent).

Tuesday 14 January 2020

BUSINESS DAY

19

ADVERTISING Marketer reveals strategies for survival of brands in Nigerian market Daniel Obi

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marketing expert has assessed the trend of entr y and exit of Smartphone brands from Nigeria on account of poor understanding of the market and therefore proffered solutions for survival in Nigerian market, Africa’s most populous nation with about 200 million people.

Increasing competition in the smart phone market, high price of phones and low income of consumers and other factors may have forced those who exited the country.

But speaking in Lagos recently, Habib Somoye, marketing director of Xiaomi Corporation, a Chinese electronics company in Nigeria but with headquarters in Beijing believed some brands enter Nigeria and later pull out because they did

not take care of certain marketing strategies.

Somoye who was head of marketing for Gionee, another Chinese phone manufacturer before joining Xiaomi listed four factors that will enable phone brands to survive in the competitive Nigerian market.

One of the factors is after sales service. He said this should be pan Nigeria instead of Lagos alone. Speaking at the introduction of new devices from Xiaomi, Mi Note 10 and Mi Note 10 Pro and hosting of Christmas party for his consumers, Somoye said his

company’s after sales service cut across pan Nigeria.

He also identified quality of phone itself is another key factor to thriving in Nigerian market. “Another differentiating factor in Nigeria’s market is offering quality and value phones with more affordable pricing”, he said.

Somoye who displays understanding of smartphone marketing also told marketers that entry strategy of devices in terms of marketing is critical key to surviving in Nigerian market. He said for instance, Xiaomi is nine months-old brand in Nigeria but it is already competing with other older brands that have been in the market for years.

“We have entry model for all segments of the market, low, mid and high categories.

We don’t want to be positioned that the phone is for the rich or for the poor, it is innovation for everyone”.

Brand Communicator emerges PR Magazine of the Year … Reporter clinches PR Journalist of the year

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rand Communicator, Nigeria’s brand and marketing communications magazine, has emerged the PR Magazine of the Year for the third consecutive year at the 2019 Lagos PR Industry Gala and Awards (LaPRIGA).

Also, it’s Senior Reporter, Azeez Disu, emerged PR Journalist of the year. Recently,

he also clinched the Brand Journalist of the Year at 2019 ADVAN Awards for Marketing Excellence (West Africa).

LaPRIGA is organised by Nigerian Institute of Public Relations (NIPR), Lagos Chapter and the 2019 edition was held at the Grand Ballroom, Civic Center, Victoria Island, Lagos.

The prestigious award is a great networking platform at-

tracting the creme de la creme from different sectors.

It is noteworthy that Brand Communicator won the award in 2017, 2018 and 2019 back to back. In a message to Brand Communicator on the award, the chapter noted: “On behalf of the selection panel of the 2019 LaPRIGA, we are delighted to inform you that Brand Communicator has

L-R: Olusegun McMedal, chairman, Lagos State Chapter, Nigerian Institute of Public Relations (NIPR); Malam Mukhtar Zubairu Sirajo, president and chairman of Council, NIPR; Gbenga Omotoso, Lagos State Commissioner for Information and Strategy; Joshua Ajayi; Publisher of Brand Communicator; Tunji Faleye, editor, and Micheal Efengbe, asst. manager, Business Development, both from Brand Communicator, during the presentation of the 2019 PR Magazine of the Year award to Brand Communicator, at Lagos PR Industry Gala and Awards (LaPRIGA) held in Lagos recently.

been nominated to be decorated as the PR Magazine of the year-the highest honour reserved for publications who excelled in upholding the highest professional standard in publishing and journalism that informs, entertains and educates engaging minds, building relationships, transforming marketing decisions and impacting the future.”

Similarly, in a message to Azeez Disu, the chapter wrote: “On behalf of the selection panel of the 2019 LaPRIGA, we are delighted to inform you of your nomination to receive the coveted honours as the PR Journalist of the year 2019 in recognition of depth of writings on public relations and commitment to the highest professional standard in journalism that engage minds and building relationships.”

Reacting to the win, an excited Publisher of Brand Communicator and CEO of Awesome Communications, Joshua Ajayi, noted that the recognition from the Lagos NIPR for the third consecutive year is an honour and a testament to the consistency and value Brand Communicator provides the industry.

Sanwo-Olu lauds Airtel for supporting entertainment, tourism

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he Lagos State Gove r n o r, B a b a j i d e Sanwo-Olu, has commended Airtel for throwing its weight behind the Greater Lagos 2020 programme, a carnival that held across five locations in

Lagos and featured some of the biggest Nigerian artistes including Olamide, Naira Marley, Fireboy, Zlatan and D.J Spinal, among others.

Speaking at the grand finale of the festival, SanwoOlu acknowledged sponsors www.businessday.ng

of the festival like Airtel for supporting the arts, tourism and entertainment.

The governor who was accompanied by his deputy, Obafemi Hamzat, his cabinet members as well as members of the State Legis-

lature, joined thousands of music fans and well-wishers who trouped the venue to literally ‘count down’ to the New Year before sounds of fire crackers and pyrotechnics rented the air at the stroke of 12.00am.

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7even Interactive names Taiwo Agboola CEO

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arketing and creative advertising agency, 7even Interactive has announced the appointment of Taiwo Agboola as its Chief Executive Officer, according to a statement. Before his new appointment which takes effect January 1, 2020, Taiwo was the company’s Chief Operating Officer.

As CEO, Taiwo will oversee the processes at 7even Interactive and drive the business to

achieve and surpass business goals. He will spearhead the development, communication and implementation of effective growth strategies and processes at the firm.

Bringing his over 15 years cumulative experience and expertise in the advertising industry to bear on his new role at 7even Interactive, Taiwo will lead the team to take giant strides in advertising, marketing, digital marketing and media buying.

BD Brand Talk Happy new 2020, new attitudes, new consumers Mike Umogun

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he global economy, especially those of many emerging markets have slowed due to many months of slow growth, and the recovery rate is not as fast as politicians and stakeholders want. As economies begin to recover around the world, marketers face new challenges in relating to their consumers. A new postrecession era has dawned.

Consumers have revised their priorities, and advertising needs to speak differently to these consumers if brands are to survive and thrive in the years to come.

Nigerian consumers have also been impacted by the reverberating effect of the global slow down. The Nigerian economy has grown at an average of 6.8 per cent between 2005 and 2015 and it is currently growing at about 2.2 percent, but it could decline further - according to the National Bureau of Statistics in Abuja. However occasional revenue spikes may be expected due to US-Iran face off following recent US drone strike of a top Iranian general.

The global economic drag is just one of many events that has undermined people’s sense of security in the past decade. Terrorism, political instability, global warming, and the degradation of the environment were all looming large. As a result, a mood of mistrust and anxiety developed among many people around the world, and that mood sparked a reexamination of priorities and values. In Nigeria, the insurgency in the North East of the country triggered apprehension and concern despite government claim of victory of Boko Haram, we are still here grappling with our reality. Many people stopped finding joy in excessive consumption and heedless spending, and a new trend, which we call “mindful @Businessdayng

consumption,” has emerged.

Mindful consumption is demonstrated by consumers buying fewer products and fewer brands, and being more considered in their choices.

Though it is most apparent in mature markets, we expect mindful consumption to eventually affect all global markets, even the emerging ones, because it represents more than just a response to the present crisis. It is a response to the idea that happiness can be purchased.

Various studies by Kantar in Nigeria show that we have mindful consumers a plenty.

In fact: • They make up 23% of Nigerian population • They are well educated – 92 percent with post-secondary education • Average number of children in their family is two • Average Monthly income N75,000-100,000 or USD 6,000 – 7000 per annum • Strong saving culture, low borrowing • Very optimistic about life and they generally ‘shine’ their eyes and always look before they leap • They consume traditional media and rely on the internet to stay connected • They shop in the open air, convenience stores and supermarkets.

• Among these mindful consumers are the Alpha generation, highly tech oriented and very strategic in the way they spend because of their immense access to information and connectivity The brand manager’s new challenge is how to respond to these new consumers in the house. My simple suggestion is occasional marketing research to ensure we are in tune with their expectation so that we are not left behind by these new and highly progressive people. Do not forget, they do not owe us nothing we must make them happy so grow our critical numbers.

Happy new 2020.

Umogun works at Kantar Nigeria

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Tuesday 14 January 2020

BUSINESS DAY

Australian prime minister Scott Morrison was humiliatingly forced to return from Hawaii as the bushfire death toll mounted © Getty

You can tell a lot about a boss from how they act on holiday The Iran crisis and the Australian bushfires offer unhappy lessons about what not to do Pilita Clark

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ast week I arrived at work to find a dispiriting pile of advice had accumulated in my inbox over the new year break on how to be a great leader.

The list was long and familiar.

Be authentic. Inspire purpose.

Embrace uncertainty. None of it mentioned one bit of advice that the past few weeks have shown all sorts of leaders could use: when to cut short a holiday and get back to work.

This is a tricky thing to navigate in an age of work-life balance, when the boss is supposed to set an unplugged, logged-off example to underlings. Yet the crisis in Iran and the Australian bushfires have offered an unhappy set of lessons about what not to do.

The first is simple: when disaster hits, don’t just sit there

and say nothing. Only the churlish would have begrudged Boris Johnson a holiday after a hectic year of Brexit and electioneering.

And when the British prime minister flew to the Caribbean island of Mustique for a New Year break, no one knew the US was about to assassinate an Iranian commander in Iraq, where hundreds of UK troops are stationed. But his silence in the immediate aftermath of the January 3 attack was odd and self-defeating.

He could have forestalled at least some of the predictable criticism lobbed at him for being away if he had said something, anything, faster.

Better yet, he could have done what Google boss, Sundar Pichai, did in 2017 when one of his employees wrote an inflammatory memo blasting the company’s diversity policies. Mr Pichai had just started a summer family holiday when www.businessday.ng

the flap erupted but immediately returned to work to deal with it.

The employee was quickly fired.

The Google row was trivial compared with what is happening in the Middle East but the lesson still applies: no boss ever loses by cutting short a holiday to manage problems in the office.

That rule should be even more obvious when it is your job to deal with the problem.

Yet David Elliott shows it is not. Mr Elliott was in the army before he became emergency services minister last year in the Australian state of New South Wales and is fond of colourful banter. “I will rip your head off and s— in the hole,” he joked on Facebook last month to a friend whose media coverage had just outshone his own.

Mr Elliott soon had plenty of headlines himself after inexplicably heading off to Europe on a Christmas holiday as his state was ravaged by horrific

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bushfires.

As one commentator asked: “What is the point of having an emergency services minister who goes on holidays during a state of emergency?” Mr Elliott abruptly cut short what he admitted had been an “inexcusable” absence and flew home.

Yet his effort pales before that of Australia’s prime minister, Scott Morrison, a leader who has comprehensively demonstrated how not to handle a holiday, with or without a crisis.

Even the most junior worker understands the importance of leaving an out-of-office message when going on leave so people know who to contact in your absence. When Mr Morrison went on a family holiday to Hawaii last month, no official public notice was issued about the trip.

One journalist who asked the deputy prime minister’s office who was in charge was referred back to the prime minister’s @Businessdayng

office, which later suggested that rumours Mr Morrison was holidaying in Hawaii were incorrect. As it turned out he was, until he too was forced to make a humiliating retreat home as the bushfire death toll mounted.

Yet that was not the end of it.

Another leader might have made a contrite apology at such a time and left it at that. Mr Morrison did express regret but he also tried to defend his absence with the memorable observation that Australians understood he was not personally needed to put out the flames.

“They know that, you know, I don’t hold a hose, mate, and I don’t sit in a control room,” he told a radio interviewer. “The brave people who do that are doing that job.”

It was a final, unfortunate reminder that there are times when one learns a lot more about one’s leader when they are away from their desk, not behind it.

Tuesday 14 January 2020

BUSINESS DAY

21

Graduates share their EMBA insights

Previous students reflect on how the programme influenced their career prospects Amy Borrett

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Cristina Savian talian/British. Judge Business School, University of Cambridge, 2018. Founder and chief executive, BEWISE, London How did the EMBA change your professional life?

The great thing about the EMBA is that because you study while you work, you can apply what you have learnt right away.

The course had an immediate impact, giving me the edge I was looking for.

If someone had told me when I started the course that I would set up my own business by the end of it, I would never have believed them. But the support of my peers, along with the skills I learnt, gave me the confidence to launch BE-WISE, a consultancy that brings new technology and innovation to the construction market.

Meeting people who have run businesses for many years, and others just starting out, helped me because unless you meet someone who has been there, you do not think you can do it.

When I meet people now, I try and give them this confidence, as well as an impression of my

experience at Judge because every business school is different and it is important to find a good fit .

Guénolée de Lambert French. Insead, 2018. Paediatric and liver transplant surgeon, Paris How did you think the EMBA would advance your career?

I had been practising as a senior paediatric surgeon for 10 years, but I wanted to do more and help in a different way: I wanted to take care of patients on a larger scale, not on a oneto-one basis, and to deal with the problem of cost-effectiveness in healthcare.

I needed a new toolbox for this and thought that studying for an EMBA would get me to the right point. This path is a surprising one for a doctor at my level in a French public university hospital: few French practitioners consider this kind of executive education.

It was a big leap, but it proved to be beneficial. After 14 months at Insead, sharing with business women and men with so many different horizons, and being led and coached by a truly international faculty, I felt equipped www.businessday.ng

with a new set of competencies — including strategy execution, finance and marketing — and ready to help.

John Park Korean. Ceibs, 2018. Chief information officer, Chanel, Seoul Did the course live up to your expectations?

I started my EMBA after moving to AB InBev’s Asia-Pacific headquarters in Shanghai. I had begun shaping a new innovation function for the region; I felt I was at the peak of my career and was looking for extra challenges to push myself.

I also wanted to connect with other executives with different perspectives and backgrounds to exchange and discuss management lessons.

The course provided me with constant opportunities for selfreflection and leadership training, which has changed my everyday approach to work.

This started from the first week, with the leadership module, where I met world-class faculty and classmates who challenged, supported and coached me intensively throughout the year. Undertaking the EMBA programme at Ceibs has been transformational, reshaping

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me to be a better manager and professional.

Edurne Benito Spanish. IESE, 2019. Corporate director of digital media, Falabella Retail, Santiago, Chile Did the course meet your expectations?

My main reason for pursuing an EMBA was to broaden my areas of expertise and acquire a holistic view of business. I wanted to learn more about finance, logistics, innovation and entrepreneurship. I got much more than that, however.

The combination of leading professors, company visits and guest speakers allowed me to understand problem-solving from a well-rounded perspective. Having access to a wide range of viewpoints trained my critical-thinking skills, allowing me to see beyond the obvious.

I didn’t expect a transformation in my personal life, but when I started my EMBA our daughter was three months old and it was a challenge to commit to my family, work responsibilities and the programme.

This experience empowered me in time management, commitment and effective prioritisation. @Businessdayng

Antonio Escandón Lizaur Mexican/Spanish. IPADE, 2019. Chief financial officer, Inmobiliaria Esmali, Mexico City How did the EMBA change your approach to work?

In many ways, my EMBA did not change my day-today approach to work that much — it just made me more efficient. In strategy and organisational focus, however, it had an impact. My classmates became my personal board and I was able to build a new strategy for my business with their input and perspectives.

Wi t h t h e i r h e l p I b e c a m e aware that financial markets and services are far bigger than I expected and understood some of the risks.

When choosing an EMBA course, it is important to ask: where do I need my network?

You may fancy an international experience, but you need to consider what will give you the best experience for your business. You are already working, you already know your market, and you know where you want to be in 10 or 15 years. A local EMBA could allow you to build a network in the place where you are — or will be in the future.

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Tuesday 14 January 2020

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Why creative entrepreneurship education option must lead economy growth KELECHI EWUZIE

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espite parading a diverse mix of talented youths, Nigeria still grapples with the hydra-headed monster of inadequate management, entrepreneurial and technical skills that will set the stage for tomorrow’s leaders.

Today, latent but unmarketable skills have left many youths unemployed; while some of their underemployed counterparts have become square pegs in round holes.

Experts foresee that in the long run, this state of affairs will have dire implications for Nigeria, which needs a pool of confident graduates with the entrepreneurial skills to make ends meet in the event that employment is not immediately available.

Worried by this development, concern stakeholders in both the public and private sector have called for manager of the economy to move away from mere political rhetoric and invest in measures that would develop budding creative talent, identify best practices in skills and education.

We need a broad, flexible and motivating education that recognises the different talents of all children and delivers excellence for everyone says Steve Mofitt, CEO, New Direction, London.

According to him, “If we are to prepare adequately for the 21st century, we will have to do more than just improve literacy and numeracy skills, Mofitt, while commenting on the 21st century curriculum that will be more economically rewarding, recommended the rebalancing of school policies

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new decade requires innovative strides in order to drive development in a rapidly changing world. It is against this trends that Atlantic hall, a co-educational full boarding secondary school in Lagos has partnered with Sprott school of Business, Carleton University, Canada to deepen experiential learning.

The partnership is seen to be a huge step towards advancement of the school and the students as it approaches its 30th Anniversary this year.

The inter-organisational

Human Capital

Oyo govt lauds private sector intervention projects …As Japan donates 221 classrooms REMI FEYISIPO, Ibadan.

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from ‘academic discipline’ to a much stronger emphasis on creativity and skills development.

“Soft employability skills such as team work, problem solving and self-management are vital across job roles. Employability is not a separate subject, but a combination of skills that can be embedded within other curriculum lessons,” he said.

Education experts insist that new strategises need to be put in place by the Nigerian government towards revamping the educational institutions in the country.

Analysts obser ve that management at the various levels of education needs to appreciate the impact of a functional and innovative academic system to national development.

Isaac Adeyemi, a university professor maintains that there should be constant review and development of curriculum to

ensure that they are relevant to development of enlightened individuals and productive nation.

Adeyemi noted that as a developing country, there is need to strategically decide on the knowledge, skills and competencies the country requires to actualise all the visions about greatness it so desires.

According to him, “Government should have a very strong regulatory arm to monitor the quality of education at the various levels.”

The university don, while highlighting the importance of funding to the overall growth and development of a vital sector like education in the country, said funding should be expanded, stressing that the federal and state governments should monitor to ensure that the budgetary allocation voted for education are actually spent on the sector.

He encouraged those in

government to seek ways to fix their dwindling revenues, adding that government needs to find ways to engage the private sector in education funding.

There is the need to establish a platform for educators to build new and innovative directions for educational practice by focusing on partnerships in educating the Nigerian child, setting the pace for change in methodology, transforming the nation’s schools and equipping the schools to sustain change.

He further reiterated the importance of government fashioning out a carrot and stick approach to get parents to actually send their children to school.

“We need to bring about transformation, restore education in Nigeria to its former glory and raise the bar beyond what it used to be so that it can be up to what we have globally,” he said.

Atlantic Hall, Canadian Business School partner to deepen experiential learning KELECHI EWUZIE

Higher

partnership is geared towards helping its students adapt, with ease to current trends in the educational space and equipping them with necessary skills to enable them become great leaders.

Taiwo Taiwo, chairman, Atlantic Hall Board of Trustees, who is also the founder of the school says the partnership is a means through which critical gaps in terms of learning patterns in the educational system can be covered.

“We are partnering with Carleton University, which is one of the best universities in Canada, because through this partnership, they will be sending teachers, who will www.businessday.ng

support certain critical gaps that we have in our educational system and in that way help our students as well as our teachers build themselves in those areas.

“We are an excellent educational institution and I am very proud to say that we have been adjudicated a spot as one of the top secondary schools in Nigeria but we recognize that the students are lacking certain skills, one of which is experiential learning, creative thinking and writing” Taiwo said.

As the new decade beckons on new strategies, Taiwo stated that the partnership is a strategic vision that will help students of Atlantic Hall

embrace the future.

“We recognise that as we reach a new decade that we cannot sit still. This is an everchanging world and there is no more dynamic a space than the educational space.

“In the future, our students will be talking to computers rather than teachers, they will be learning in totally different ways and it will be foolish of us if we stand still and not help our children to adapt to this ever changing world and in seeking partnerships with dynamic institutions like Carleton University, we know that we are aiding our students to embrace the future.” Taiwo noted.

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yo State Government has applauded the Japan International Cooperation Agency (JICA) for its donation of Two-hundred and Thirty-one classrooms to Thirty selected primary schools in the State, saying the move has increased the educational facilities in the State.

The gesture was facilitated by the Universal Basic Education Board, while the Thirty schools are spread across Twenty-one Local Government areas in Oyo State.

JICA is an agency established by the Japanese Government, to represent Japan on intervention projects. It coordinates Official Development Assistance (ODA) for the Government of Japan.

The Executive Chairman, Oyo State Universal Basic Education Board, Nureni Adeniran, who gave the applaud in his office, while receiving JICA representatives of JICA, commended and by extension, the

Japanese Government for their unalloyed commitment and provision of facilities, which has contributed to the overhauling and improvement of the State’s Basic Education.

He said, “Your intervention projects are timely, because they came at the time the Basic Education system was in need of them.”

“We are very happy to receive you in Oyo state. On behalf of the State Government, we express our appreciation to JICA for considering Oyo State worthy of those projects, at the time they gave us”, he continued.

He said further that, “we believe Government is a continuum, and most importantly, the projects you gave us were for the good people of Oyo State. We thank you so much for your immense contribution”.

While he pledged the State Government’s commitment to maintain the facilities, he also assured them of the Board’s readiness to assist the team, on its post-construction evaluation of the projects in the State, without any hesitation.

Stanbic IBTC strengthens back to school options for students

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etermined to support students with easier option of payment as school resumes, Stanbic IBTC Holdings PLC has announced its array of exciting products and services specially designed to make the Back to School season stressfree for parents and guardians.

As a one-stop shop financial services organisation, Stanbic IBTC has a range of products and services that can give wings to the dreams of children and make paying school fees and purchasing back-to-school ‘must-haves’ more seamless for parents and guardians.

Wole Adeniyi, deputy chief executive, Stanbic IBTC Bank Plc says that with Stanbic IBTC holdings as your financial partner, Back to School preparations are not only easy and seamless for parents and guardians but also exciting and memorable for their children and wards.

According to him, “As schools commence the new term, Stanbic IBTC customers can send their children back to school with minimal fuss, thanks to the support we provide. As a financial institution that understands the desire of parents to freely give their childrens’ dreams wings to fly, the bank remains committed to driving ease and convenience for all its customers.” @Businessdayng

For one, parents can access funds conveniently using Stanbic Salary Advance (SALAD), a personal overdraft service tailored to meet cash flow needs for salary earners, you can Are you already sorted for this back-to-school season?

If yes, then think CHESS. The Children Educational Savings Scheme (CHESS) account from Stanbic IBTC allows parents invest in their wards’ education while kick-starting their financial journey.

The CHESS account offers a higher interest rate than what is earned on regular savings account and it is available to children aged 0 to 17 years with additional benefits for parents who own Stanbic IBTC bank accounts.

For parents who prefer to plan their children’s education well-out in advance, Stanbic IBTC can help SET you up! The Stanbic IBTC Education Trust is designed to help parents fund their wards’ education through a plan that is convenient and flexible and offers long-term benefits.

Stanbic IBTC Trustees Limited scientifically estimates the cost of education using key economic parameters and then offers parents/guardians flexible contribution options to select from, in planning how to fund their wards’ education now and in later years.

Tuesday 14 January 2020

BUSINESS DAY

23

EDUCATION Parents, schools need to focus on helping learners acquire these five skills STEPHEN ONYEKWELU

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imes of big disruption due to innovation in science or technology come with corresponding mega opportunities and challenges that require both a new mind and skillsets.

Globalisation, technological progress and demographic changes are transforming society and labour markets. This means parents; societies and schools need to manage the transition with the least possible disruption and maximise the potential benefits.

Skill needs have are also changing. This can lead to persistent skill shortages and mismatch which are costly for individuals, firms, and society in terms of lost wages and lower productivity and growth. These costs can be reduced through better assessment and anticipation of changing skill needs and by improving the responsiveness of skills development to these changes.

A Deloitte report “Expected skills needs for the future of work” stated that

the future of work is being shaped by two powerful forces: The growing adoption of artificial intelligence in the workplace, and the expansion of the workforce to include both on- and off-balance-sheet talent.

What changes could be in store for the workplace, the workforce, and the nature of work itself?

Complex problemsolving skills top the list. It comprises a collection of

self-regulated psychological processes and activities necessary in dynamic environments to achieve poorly defined goals that cannot be reached by routine actions.

Creative combinations of knowledge and a broad set of strategies are needed.

Emotional intelligence is second on the list of top skills needed to excel at the workplace in 2020. Emotional intelligence refers to the capability of a person to

manage and control his or her emotions and possess the ability to control the emotions of others as well.

In other words, they can influence the emotions of other people also.

The third skill set is creativity. This is needed to stay ahead of automation and artificial intelligence. To be creative is to be unique, imaginative, non-routine, and autonomous. Humans still beat

machines to this.

According to a “Future of Jobs” report compiled by the World Economic Forum, which surveyed top human resources and strategy officers in global companies and compared jobs skills that were projected to be in demand in 2020 with those considered most important in 2015, creativity had moved from 10th to 3rd.

Communication, both written and oral comes fourth. In a world suffering from a deluge of information the ability to combine ideas from very different sources that once seemed unrelated is critical. This means one is able to communicate newfound ideas, to influencers, who can help to shape and implement them.

The fifth is the ability to understand and leverage technology. Technology is changing at an unprecedented pace, so one needs to understand and keep on top of it. Sometimes it is better to read articles in respected technology journals, as books may become quickly out-dated.

For workers in marketing and finance, Structured

Query Language (SQL) is listed as one of the top skills to master in 2020. SQL, a programming language, was also cited as the most indemand tech skill in a recent report from jobs website Indeed, according to Udemy’s 2020 Workplace Learning Trends Report.

Although not necessarily listed on the list of top five skills, cultural awareness and sensitivity provides an important framework in the acquisition of these skills.

This is because workplaces are becoming globalised, it is important to learn how to get along with those who are different from us, Avil Beckford, founder The Invisible Mentor said.

There is a lot of fearmongering happening today, and different groups are marginalised. Imagine what would happen if you explored books that focused on other people and cultures. Read books to understand other experiences.

The broader implication of these new skills, needs are that governments, schools, parents, and education experts need to find effective ways of embedding these skills in the curricular.

Seven courses emerge from NUC’s unbundling of Mass Communication degree STEPHEN ONYEKWELU

T

he National Universities Commission on January 9 announced plans to unbundle mass communication degree into seven separate courses in order to deepen mastery among students and align with global best practices.

Three lessons can be learned from NUC’s recent move. The first is an admittance of the need to audit the courses taught in Nigeria’s universities to ensure they are responding to the needs of the industry. The second is that professors, professionals, and practitioners need to continually work with the Commission to develop appropriate curricular. The third lesson is that no matter how long it takes, change is inevitable.

For two years, regulatory agencies such as the National Broadcasting Commission, and Nigerian Press Coun-

cil and professional bodies such as the Nigerian Union of Journalists, Advertising Practitioners Council of Nigeria, Nigerian Insititute of Public Relations and Radio, Television and Theatre Arts Workers Union and practitioners such as the Nigerian Television Authority, the United Nations Educational, Scientific and Cultural Organisation (UNESCO), and the MacArthur Foundation have canvassed for this unbundling.

“You will agree that many of these “courses” were not treated in depth. Even when they say you are “majoring” in one, you will find that when you get to the field that you would have scratch your head at certain things. No?,” Taiwo Obe, founder of Lagos-based Journalism Clinic said. “Question remains: who will teach these courses?”

The seven courses include Journalism & Media Studies.

This is one of the most popular degrees in mass communicawww.businessday.ng

tion schools across the world.

It is more all-encompassing than many other degrees.

This is why it is among the most sought-after degrees by candidates who wish to gain a broad knowledge of activities and emerging trends in journalism and media world.

Journalism and Media studies education explores all forms of media, from print to film to digital communications. The programme focuses on mass communication and its effects on the public.

The second is Public Relations which is also one of the most sought-after programmes in media and communication training schools in Nigeria and across the world. Many Nigerian graduates want to major in public relations primarily due to the exciting, prestigious and lucrative nature of this discipline.

The third is Advertising.

Advertising is another very popular discipline which

most people want to venture into. A degree in this field is a ticket to lucrative, creative career paths in Nigeria and other parts of the world. While you don’t necessarily need a degree to get into this field, a successful career in advertising usually begins with a comprehensive undergraduate education.

Broadcasting is the fourth.

Broadcasting relates to distributing audio-visual content to mass audiences via electronic media such as radio, television, and webcasting.

Whether you are listening to Political Voices on Dream FM, watching an English Premier League (EPL) analysis on Channels TV or streaming a podcast on Nigeria Info FM, content is being broadcast to you.

The main focus of this course is to engage students in different activities and to hone their skills in radio and television broadcasting. This includes depth knowledge

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of broadcast journalism and new media interplay in the broadcast world.

Film & Multimedia Studies are the fifty course that has emerged from the unbundling of mass communication. This is a highly technical but very exciting programme which is very popular in higher institutions across the world. Film and Media Studies Degree programme incorporates courses in film history, aesthetics, and theory; theory and practice in television, popular culture, and new media; and all aspects of 16mm film and digital video production, including narrative, documentary, animated, and experimental film.

Students learn the theory, history, and practice of filmmaking and media. Graduates are equipped with relevant skills to adapt to the evolving movie industry in Nigeria, including media practice and business. @Businessdayng

Development Communication is the sixth. Higher institutions in Nigeria will be among the few places you can get a bachelor’s degree in Development Communication. What a rare opportunity.

Check everywhere, you would notice that this programme is done at the postgraduate level in most schools.

Information & Media Studies is the seventh. Information and Media Studies programme recognises the importance of connecting media theory learned in the classroom to real-world experiences. Most universities already offering this course have it as Information Science and Media Studies degree programme.

It is a programme designed to provide a synergy between the study of information as a science and mediated communication as a practice. The programme draws on advances in information technology and its applications in mass media and media studies.

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Tuesday 14 January 2020

BUSINESS DAY

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Tuesday 14 January 2020

BUSINESS DAY

Investments

ENERGY INTELLIGENCE

Market Insight Companies Commodity Tracker Policy

OIL

GAS

25

PETROCHEMICALS

POWER

Licenses for private refineries expire 2020, only a handful will reach commissioning ISAAC ANYAOGU

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he Federal Government has issued 45 licenses to private companies for the construction of refineries including modular refineries and as the licenses expire this year, many will fail to reach commissioning, analysis show.

All the licenses issued till date has a combined capacity to refine 2.15million barrels of crude oil a day, slightly lower than Nigeria’s current output, and government officials say, the refineries when completed with turn Nigeria into West Africa’s refining hub and cut billions of naira spent yearly in importing refined products.

Waltersmith Refining and Petrochemicals modular refinery with a capacity to refine 5000 barrels per day with a key equity investment from the Nigerian Content Development and Monitoring Board (NCDMB) is expected to be completed in May 2020.

The construction of the 7,000bpsd OPAC Refinery in Umusetti, Delta State, and

10,000 bpsd Niger Delta Petroleum Resources Refinery expansion project in Ogbelle, Rivers State, seem to be nearing completion but these are the exceptions.

According to document obtained from the Department of Petroleum Resources website, seven of the companies granted licenses are expected to break

ground before they expire. Our analysis show that perhaps three or four may succeed before the year runs out.

Eighteen of the licenses were classified as active but analysis show that barely five are can boost of any real work on site.

The 650,000 barrels a day Dangote Refinery is included in this category but even that will not

be ready this year as completion date has been moved to 2021.

Yet, already, 13 of these licenses have expired already and many are still classified as sourcing for funds.

Licenses to Establish issued to Eko Petrochemicals for a 20,000 capacity modular refinery and 24,000 refinery capacity for Kainji Resources have

expired since 2017 even if they have FEED approval from the DPR. Fifteen licences issued to various companies including Sifax, Grifon, Aiteo, Masters Energy and others have since expired but the dream of a completed refinery is yet to be realised.

Yet these refineries do not look like they will come on stream this year implying that Nigeria will still spend over N700million a day to import petrol.

The NNPC refineries do not fare better. The three refineries lost a total of N123 billion last year, the corporation said in its October operations and financial report.

The refineries, which are located in Port Harcourt, Kaduna and Warri, have a combined installed capacity of 445,000 barrels per day but have continued to operate far below the installed capacity.

Analysts say that until, Nigeria removes a subsidy on petrol, many of these refineries will not see a path to profitability which will help make case to investors for the critical funds required to complete them.

United Capital expects old problems, less deregulation in 2020 outlook for Oil sector DIPO OLADEHINDE

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utlook for 2020 shows old problems to likely to remain in Nigeria’s oil and gas sector according to United Capital analysts, who says the downstream sector might remain marred by government regulation.

Analysts at the Lagos-based investment bank in a 2020 outlook, report said the newly signed Deep Offshore and Inland Basin Production Sharing Contract (DOIBPSC) Act could have a negative effect on investments, as IOCs move to countries with better fiscal terms or channel resources towards American shale production.

“New licensing rounds are set to kick off in 2020, with the government planning to sell offshore and onshore blocks, in a bid to meet the desired 3.0mb/d output target in 2023,” United Capital said in its annual outlook report.

United Capital expects increased domestic presence in existing and new assets, which is positive for local content development, while investments by IOCs might remain on the sidelines.

“ The sub-sector remains plagued by vast operational challenges ranging from inadequate pipeline facilities, oil theft, vandalism, and sabotage,” United Capital said.

United Capital admitted that the high cost of crude oil production, which is estimated at over $20 per barrel remains a sour patch in boosting investment and gaining a competitive edge over other explo-

ration destinations.

In terms of pricing, United Capital expects increased Organisation of Petroleum Exporting Countries (OPEC) and allies production cuts will provide a floor for oil prices.

“Although, the elephant in the room remains a potential supply glut, with shale producers willing to fill the output gap and non-compliant members, such as Nigeria, producing in excess of their caps,”

United Capital said.

The company said oil prices might not rise to rosy levels, limiting revenue and profits for upstream players.

In the deregulation sector, United Capital said in spite of the huge margin between the fixed price of PMS and the expected open market price, the potential for deregulation in 2020 is looking less likely.

“This is buttressed by the recent drive of the government to boost non-oil revenue and curb unnecessary expenditures, with deregulation being the last card on deck,” United Capital said.

The company noted that important fiscal buffers which could limit the impact of deregulation on consumer wallets are lacking while also doubting the completion of the 650,000bpd crude oil refinery being built by Dangote Group in 2020.

“The Direct Sale - Direct Purchase program remains in place to supply products to the Nigerian market,” United Capital said.

United Capital said about 10 modular refineries are reported to be at advanced stages of development, which could also add capac-

ity to the existing underperforming refineries.

“In a bid to survive, many downstream players will continue to expand their product portfolio, into other by-products, to offset the effect of capped PMS prices on margins,” United Capital said.

More than any other thing, Nigeria’s oil and gas sector will be hoping it can attract the needed investment in 2020 to boast production and exploration on idle oil fields.

Foreign investment into the sector is still at its lowest ebb as inflow hit a low of $38.66 million in third-quarter 2019, a sharp decline compared to $171.63 million recorded in Q3 2016.

Despite Nigeria running an economy mostly dependent on crude oil earnings, figures obtained from public data agency, National Bureau of Statistics (NBS), show foreign capital inflow into the oil and gas sector accounts for 0.72 percent of total foreign investments into the Nigerian economy compared to other sectors like the telecoms contributing 16.49 percent in the third quarter of 2019

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Tuesday 14 January 2020

BUSINESS DAY

ENERGY INTELLIGENCE Eight months into MAP implementation, group demands clarity …Pulls FoI on NERC STEPHEN ONYEKWELU

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ight months after the launch of the Meter Asset Provider regulation, PowerUp Nigeria has sent a Freedom of Information request to the Nigerian Electricity Regulatory Commission demanding to know the criteria that qualified companies.

The Meter Asset Provider (MAP) regulation sought to bridge the big metering gap that exits among electricity end-users (residential) in order to end the practice of estimated billing, which consumers have constantly requested that it ends.

The first permits were issued in April 2019. It is less than a year since the first permits were issued to MAPs according to section 4(3) of the MAP Regulation 2018 that requires all electricity distribution licensees to engage MAPs that would assist, as investors, in closing the metering gap. The objective of this is to eliminate the practice of estimated billing in the Nigerian Electricity Supply Industry (“NESI”).

But an electric power consumer rights and policy advocacy organisation has sent a Freedom of Information request to NERC on the state of the Meter Assets Providers metering scheme that came into force finally in May 2019. The request was sent on January 8 to the Commission.

PowerUp Nigeria claims it is justified in sending this request because it led in the advocacy to relieve Electricity Distribution Companies the burden of providing meters to their customers realising DisCos lacked were unable to do so. Two years of calling for the introduction of independent metering service providers finally bore fruits last year.

“We presented the idea to Babatunde Fashola, immediate past minister of Power, Works and Housing. Fashola found the idea workable, called the immediate past Acting Chairman/CEO of NERC, to look into how the Regulation can be worked out, with the draft Regulation coming first coming out on December 22, 2017,” Adetayo Adegbemle, executive director at PowerUp Nigeria said in a statement sent to BusinessDay. It took one year for NERC to get the final implementation of the Meter Assets Providers’ regulation

ready in May 2019. NERC said that over 108 Meter Assets Providers have been licensed provider prepaid meters and end estimated billion.

“We are amazed that barely 20 of these MAPs were eventually assigned to the eleven (11) Electricity Distribution Companies, with a particular meter assets provider being assigned to nine (9) different electricity distribution companies,” Adegbemle said.

This Freedom of Information request calls into question the original criteria for appointing this twenty-one (21) Meter Assets Providers as assigned to the DisCos. It demands to know the production capacity of each independent metering asset provider. The rules governing the installation of meters to electricity consumers, the mechanism to monitor compliance of MAPs assigned to DisCos and procedures submitted by MAPs for consumer support and after service

of installed meters.

The advocacy group further claims that a survey of consumers and investigations it has undertaken show that affected DisCos either lacked the financial or technical capacity to fulfill the metering demands of the electric power sector, especially the power distribution sector. Another claim from the organisation is that Nigerian electricity consumers are not averse to paying higher electricity tariff, if all other conditions, one of which is effecting metering, is met with.

“Many of these MAPs have also been found to be shell companies with no relevant experiences in the power sector, or the requisite know-how,” PowerUp Nigeria’s executive director said.

According to a PricewaterhouseCoopers (PwC) report “Bridging the Metering Gap,” although, the 11 DisCos committed to metering 1.75million customers annually on acquisition of the distribution assets, the metering capacity of the DisCos is constrained by the limited allowable capital expenditure (“CAPEX”) in the Multi-Year Tariff Order (“MYTO”).

If 100 percent of the current MYTO provision is spent on metering, DisCos will have the capacity to meter 1.54 million customers annually. From PwC’s estimation of the actual metering gap, it will take at least 25 years to bridge the metering gap.

Nigeria’s cooking gas market yet to capture over 80m rural dwellers …seven in ten women living in Nigerian villages still, cook with firewood STEPHEN ONYEKWELU

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t is estimated that seven in ten households in Nigeria’s villages still burn wood, dung, coal and other biomass in open fires or rudimentary cooking stoves to warm their homes and cook their food. This is despite the fact that cell phones, satellites and the internet have linked-up most villages with urban centres.

The World Health Organisation estimates that the smoke from burning wood fuels is a major cause of women and children mortality in Nigeria. It is responsible for 95, 000 deaths per year due to complications caused by the inhalation of smoke from biofuels. This makes it the third-highest killer after malaria and Human Immunodeficiency Virus (HIV) and the Acquired Immune Deficiency Syndrome (AIDS).

An estimated 72 percent of Nigeria’s population depend

solely on firewood for cooking, a non-governmental organisation, the International Centre for Energy and Environmental Development, ICEED, also said.

Approximately 64 percent of Nigerians live in rural areas and only 36 percent in urban areas according to the National Population Commission of Nigeria. This is over 120 million of Nigeria’s estimated 200 million people. Seventy percent of these cook with firewood; this is about 84 million people, about three times the population of Ghana.

However, the Federal Government recently said it had put measures in place to ensure that up to 13.8 million households in Nigeria embraced the usage of Liquefied Petroleum Gas (LPG) for their cooking within the next five years.

There are lessons Nigeria can learn from Ghana, her English speaking Economic Community of West African States (ECOWAS) member. Close to 30 million people, Ghana launched her www.businessday.ng

rural liquefied petroleum gas (LPG) in 2013.

The Government of Ghana launched the Rural LPG (RLP) promotion programme as part of its efforts to reduce fuelwood consumption. The aim of the RLP is to contribute to Ghana’s overarching goal to provide LPG access to 50 percent of Ghana’s population by 2020.

The RLP did not announce long-term programme objectives. However, in the interim, the RLP targeted a cumulative total of 170,000 LPG cookstoves to rural households by the end of 2017. As of November 2017, 149,500 rural households had received the LPG cookstoves.

Nigeria’s LPG market has experienced some massive but the high cost of production keeps access to cleaner cooking fuels low. From less than 70, 000 metric tonnes in 2007 is has grown to 400, 000 metric tonnes in currently.

However, manufacturing capacity in Nigeria remains

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low mainly due to high-cost steel, power outages and a Naira poised to depreciate against the US dollars any time the Godwin Emefiele led Central Bank of Nigeria stops defending the emerging economy’s currency.

The 40 percent duties and tariffs imposed on the raw materials imported for making of gas cylinders raise the cost and may further put it out of reach of the majority of Nigerians who live in the thousands of villages scattered across 36 States of The Federal Republic of Nigeria, including the Federal Capital Territory (FCT), Abuja.

People familiar with the sector say some cylinder makers have shut down because of the cost of flat steel. The price went so high that local makers could not compete with imported cheaper cylinders. To drive rural adoption of cooking gas, local manufacturing needs to be enabled and bring down the cost of production. @Businessdayng

Why Kuwait’s new 250,000 bpd raises fresh concern for Nigeria, OPEC DIPO OLADEHINDE

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igeria and other Organisation of Petroleum producing Countries (OPEC) face another major quest to defend oil prices by increasing oil supply as Kuwait said it’s expecting new 250,000 barrels bpd from a so-called Neutral Zone before the end of this year.

The announcement comes as 2020 outlook for oil prices have come under pressure due to abundant reserves and weak global economic growth which has prompted Organisation Petroleum Exporting Countries (OPEC) and its allies to make deeper production cuts starting this month.

Kuwait’s have boasted that it’s expecting another 250,000 bpd from oil fields from a Neutral Zone shared with Saudi Arabia.

The two neighbors have now agreed to restart the two oilfields, which could put an additional 500,000 bpd-600,000 bpd on the oil market.

The news about oil production from the two fields will be a huge concern for OPEC and its allies who now face a dilemma on whether to include or exclude the neutral zone which was previously exempted from production cuts.

“Signing the Memorandum of Understanding means the return of production of 250,000 bpd... before the end of 2020,” Kuwait oil minister Khaled al-Fadhel, said in a parliament session quoted

by Reuters.

Saudi Arabia and Kuwait both agreed last year to resume production at two major oilfields in a shared neutral zone after five years of stoppage. The two fields were pumping some 500,000 barrels per day before production was halted first at Khafji in October 2014 and then at Wafra months later over a dispute between the two Arab Gulf neighbors.

Khafji was jointly operated by KGOC and Saudi Aramco Gulf Operations, while Wafra was operated by KGOC and Saudi Arabian Chevron.

“The Neutral Zone agreement will also enable Kuwait to develop its share of the Dorra gas field in the Neutral Zone to produce 500 million cubic feet of natural gas per day and increase the country’s natural gas and crude oil reserves,” said al-Fadhel.

Saudi Arabia pumps just under 10 million bpd, while Kuwait produces around 2.7 million bpd.

The news about oil production from the two fields will be a huge concern for OPEC and its allies who now faces a dilemma on either to include or exclude neutral zone which was previously exempted from production cuts.

Tuesday 14 January 2020

BUSINESS DAY

27

OFFGRID BUSINESS

Comment

How free energy will change the world SIMON BRANSFIELD-GARTH

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ost of us pay for our electricity.

Many complain about the cost but in reality, the benefit far outweighs the expense.

This top-down approach to power, starting with a power station and the grid to a socket in the home has been with us for a hundred years. But as mobile phones disrupted the landline that had been around for about the same time, so stand-alone power is beginning to make inroads into the way we get energy.

Interestingly, this energy revolution is not happening in Silicon Valley or London but in towns and villages across Africa and

Asia. In the last 4 years, Azuri estimates that 10 million people have

purchased off-grid solar home systems comprising of multiple lights and digital devices, which provide power from the sun at no additional cost and emitting no carbon. Recent figures suggest this number is growing fast, with the potential to double to 20 million people within the next 24 months.

Something that started as a way of providing power to off-grid households, replacing candles and kerosene lamps, has grown into an industry that is providing everyday items like a 32-inch TV with satellite content that is powered entirely with solar, without the grid in sight. From the consumer point of view, these stand-alone solar systems are now indistinguishable from the

grid, except that while the grid is often unreliable, the sun has a pretty good record of turning up on time. In 5 years, systems of a similar affordable cost will provide not just grid-like lights and TV but also fans, fridges and Internet access around the clock.

For many households, that is all the basic needs covered.

Children in Ukambani, Kenya, watching cartoons on PayGo solar powered AzuriTV Free is very different to affordable. When power is free, you can leave a security light on all night, watch TV as much as you like and keep the home cool with a fan 24x7. In a world that is waking up to the impact of climate change, ironically, wasting power becomes cool. After all, why not?

The sun’s energy is going to hit the earth anyway, why not use it to do something useful?

Just as the advent of free Internet access over wifi and unlimited data plans changed the way people used technology, so free energy will change the way people we use appliances. Even in well-off households, consumers will have the choice between free energy from solar or paid for energy from the grid. It’s not hard to see a drive to more efficient devices that run without cost, powered by solar and a USB socket.

The future of energy is about to get interesting.

Simon Bransfield-Garth, CEO at Azuri Technologies

ADFD approves $105m financing of renewable energy projects recommended by IRENA

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bu Dhabi Fund for Development (ADFD), the leading national entity for economic development aid, today confirmed the allocation of approximately US$105 million for eight renewable energy projects under the seventh cycle of its partnership with the International Renewable Energy Agency (IRENA).

The IRENA/ADFD Project Facility announcement marks a record level of funding for any cycle since the Facility was launched and will provide funding for eight projects in Antigua and Barbuda, Burkina Faso, Chad, Cuba, the Maldives, Nepal, Saint Lucia and Saint Vincent and the Grenadines. The announcement made during the 10th IRENA Assembly brings cumulative funding to date to US$350 million, in line with the commitment made by ADFD across seven funding cycles to IRENA recommended projects.

The Facility supports developing countries in securing low-cost capital for renewable energy projects to increase energy access, improve livelihoods and advance sustainable development on the ground.

Speaking on the occasion, His Excellency Mohammed Saif Al Suwaidi, Director General of ADFD, said: “In cooperation with IRENA, ADFD is proud to have supported the deployment of renewable energy solutions worldwide over several years. In its efforts to boost the implementation of the United Nations’ Sustainable Development Goals (SDGs), specifically Goals 6,7,11, 12 and 13 – ADFD-funded projects over the seven cycles of the Facility have led to the widespread adoption of scalable, clean, and sustainable energy alternatives in 26 countries.”

He added: “Today’s announcement re-affirms the UAE’s and ADFD’s leading efforts to combat the effects of climate change by stimulating robust development across the global renewable energy sector. The Fund’s commitment to this priority has enhanced longterm growth prospects and yielded socio-economic benefits for millions of lives in line with the national objectives of the beneficiary countries.”

Francesco La Camera, DirectorGeneral of IRENA, said: “Overcoming investment needs for energy transformation infrastructure is one of the most notable barriers to the achievement of national goals.

Therefore, the provision of capital to support the adoption of renewable energy is key to low-carbon sustainable economic development and plays a central role in bringing about positive social outcomes.”

He added: “The record levels of funding announced in this cycle of the facility will not only support

the eight chosen countries in their pursuit of energy and climate plans but will also further global ambitions to build a sustainable future.

This facility is a true reflection of the transformational outcomes that organisations with shared goals can deliver when they come together, and provides a blueprint effective cooperation in the future.”

In Antigua and Barbuda, an 8 MW hybrid power plant (solar and wind) will receive an ADFD investment of US$15 million. The project is expected to benefit 5,500 households and allows for large reductions in the import of fossil fuels.

In Burkina Faso, an ADFD loan of US$5.5 million will contribute to the construction of a 3 MW solar PV power plant in the country. The project is expected to extend electricity to approximately 40,000 people in rural areas.

In Chad, the ADFD loan of US$15 million will contribute to the construction of a six MW solar power plant. The project is expected to

ANALYSTS: Isaac Anyaogu (Team Lead), Stephen Onyekwelu, Dipo Oladehinde

benefit more than 215,000 people in six cities.

In Cuba, a project will receive an ADFD loan of US$20 million to install 8.5 MW of solar PV capacity, supported with 2 MW of energy storage, in Isla de la Juventud. The project will benefit 32,300 people, aims to support the energy sector, decrease fossil fuel consumption, reduce the level of carbon emissions and secure energy consumption from renewable and sustainable sources.

In the Maldives, a waste-toenergy plant project in the city of Addu will receive an ADFD loan of US$14 million. The 1.5 MW renewable energy project will utilise waste in generating electricity and reduce dependence on imported fuel benefitting 35,000 people.

In Nepal, a project will receive an ADFD loan of US$10 million to support a total of 20 biogas digesters which will serve as demonstration units to 270 municipalities. The digesters will convert organic waste into useful energy and offset the use

of fossil fuels by replacing it with renewable natural gas.

In Saint Lucia, the 10 MW Troumassee solar power station, battery storage and setting up solar energy systems in the country, will receive an ADFD loan of US$15 million.

The venture will support the whole population, economic development, advance the implementation of Saint Lucia’s national energy policy and reduce diesel fuel consumption.

In Saint Vincent and the Grenadines, an ADFD loan of US$10 million will support the installation of a 7 MW solar PV project and benefit 2,444 households. The renewable energy venture aims to reduce carbon emissions, fossil fuel consumption and operating costs.

Since the first cycle selection of projects in 2014, ADFD has successfully funded 32 renewable energy projects across the world, covering up to 50 per cent of the total project costs. They will bring 200 MW of renewable energy capacity online and empower over seven million people with access to electricity, significantly improving their livelihoods. Spanning Asia, Africa, Latin America and Small Island Developing States, the projects encompass a broad spectrum of renewable energy sources – wind, solar, hydro, geothermal and biomass – and technologies.

Since its inception in 1971, ADFD has financed hundreds of development projects in the renewable energy sector around the world worth US$1.187 billion (AED4.4 billion).

Driving the objectives of the United Nations’ SDGs, these projects have contributed to the production of more than 2,500 MW of renewable energy in 60 countries.

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FEATURE Worth reflecting is Finance Minister’s Tour De Force with 2020 Budget Yunusa Tanko Abdullahi

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Zainab Shamsuna Ahmed

More obvious has been an urgent need for accelerated fiscal reform in Nigeria and the fact that it is gaining attention from the country’s leadership is positive.

On top of all the 2020 Budget groundwork has been Minister Ahmed, a name that is worth to be ingeniously ingeminated. She and her colleagues within the Ministry and Budget Office and other key stakeholders ensured that during the budget preparations, tradeoffs and prioritisation, among programs, were made to establish that the 2020 Appropriation Bill fits government policies and priorities. She smartly worked to bring to bear the January – December budget cycle, the same for the passage of the Finance Bill, which the President is told will be done in the coming days. This, according to the President, “will also be a landmark achievement worthy of recognition, being the first time, this has been done in the last 20 years.”

In practical terms, Ahmed and her team have made sure that the most cost-effective variants have been taken up, with the means of increasing operational efficiency in government sought. She has had her eyes on details so that all these can be accomplished, having built financial constraints into the process from the very start.

With all this, she has put in place an economic thrust for formulatwww.businessday.ng

ing expenditure policies, allocating resources in conformity with both policies and fiscal targets, which is the main objective of the core processes of budget preparations, and addressing operational efficiency and performance issues.

Ahmed never set out for an overoptimistic budget that could lead to accumulation of payment arrears and muddle rules for compliance, but she has rather staked clear signals on the amount of expenditure compatible with financial constraints that should be given to spending agencies from the start of the budget preparation

process. She has approached the 2020 Budget with the caution that it is possible to execute badly a realistic budget, but impossible to execute well an unrealistic budget, believing “there are no satisfactory mechanisms to correct the effects of an unrealistic budget during budget execution.”

Having been able to pull through the process of getting Nigeria to run January – December budget cycle, Ahmed has been tested and proven; as at the ninth month of 2019, it was reported that Nigeria’s Gross Domestic Product (GDP) data had raised

“

Ahmed never set out for an overoptimistic budget that could lead to accumulation of payment arrears and muddle rules for compliance, but she has rather staked clear signals on the amount of expenditure compatible with financial constraints that should be given to spending agencies from the start of the budget preparation process

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he umpteen interface and cooperation for the growth of the Nigerian economy, particularly considering the mechanisms for aggregate expenditure control and strategic allocation of resources, have all come to fruition with the signing of the 2020 Budget (Appropriation Bill) into law by President Muhammadu Buhari, the core processes of budget preparation.

The President, through his verified Twitter handle just last Tuesday, announced this to the public.

He twitted: “It is my pleasant duty, today, on my 77th birthday, to sign the 2020 Appropriation Bill into law. I’m pleased that the National Assembly has expeditiously passed this Bill. Our Federal Budget is now restored to a JanuaryDecember implementation cycle’’.

It would be recalled that the President laid the 2020 Appropriation Bill before the Joint Session of the National Assembly on 8th October, 2019 and forwarded the 2019 Finance Bill shortly thereafter. “In the 20 years since the return to civilian democracy, this will be just the fourth time that the Federal Budget was passed before the end of the previous year, and this is the earliest,” Buhari also said.

Taking into account the enormous efforts that go into the budget preparation processes, at the formal budget signing ceremony, the President said: “I wish to acknowledge the efforts of Zainab Shamsuna Ahmed, the Minister of Finance, Budget and National Planning, the Budget Office of the Federation, and all stakeholders, who collaborated and worked painstakingly, to produce the 2020 Appropriation Bill, that I have just signed into law.”

The formal signing event, which held at the State House had in attendance, the Vice President, Yemi Osinbajo, Senate President, Ahmed Lawan, Speaker of the House of Representatives, Mr Femi Gbajabiamila, Others at the event were the Secretary to the Government of the Federation, Mr Boss Mustapha, as well as Mrs. Zainab Ahmed.

It is indeed obvious that the budget preparation process is a powerful tool for coherence, whereas the budget itself is both an instrument of economic and financial management and an implicit policy statement, as it sets relative levels of spending for different programs and activities.

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the stakes in fight against poverty, even though the oil sector’s second-quarter rebound failed to halt slowdown and there was concern by some economists that the economy needed fiscal and monetary stimulus. Economic growth in the country slowed for the third consecutive quarter, adding further pressure on the government to fight rising poverty.

But then the GDP expanded 1.94% in the three months through June from a year earlier, as said by National Bureau of Statistics. That compares with a revised expansion of 2.1% in the first quarter and a median estimate of 2.46% in a Bloomberg survey. Growth was reported at its lowest level since the third quarter of 2018.

Evidently, the oil sector which accounts for 10% of economic output, expanded by 5.15%. That was the quickest pace since the third quarter of 2018, even as crude output was little changed at 1.98 million barrels per day.

The 2020 Budget, tagged “Budget of Sustaining Growth and Job Creation”, is Nigeria’s biggest budget ever, totalling N10.59 trillion. It is up from the N8.83 trillion budget for 2019 and tops the previous record spending plan, the N9.12 trillion budget for 2018. Key assumptions and parameters upon which the 2020 Budget is based include crude oil production of 2.18 mbpd while the benchmark oil price is $57.

The budget assumes a deficit of 1.52 percent of the estimated gross domestic product – representing around 2.18 trillion naira – to be financed through foreign and domestic borrowing.

The National Assembly had on December 5th passed and raised the total estimates of the proposed budget from N10.33tn to N10.59tn. The spending plan includes a value-added tax (VAT) increase from five percent to 7.5 percent. A breakdown of the budget figure as approved by the Senate indicates N560.4 billion for statutory transfers, N4.84 trillion for recurrent expenditure, capital expenditure provision of N2.46 trillion and N2.72 trillion for debt servicing. According to the budget document, the GDP growth rate is projected at 2.93 per cent while inflation rate is put at 10.81 per cent. The budget is also based on an exchange rate of N305 per US dollar.

Yunusa Tanko Abdullahi Special Adviser to the Honourable Minister of Finance Budget and National Planning

Tuesday 14 January 2020

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In association with

E-mail: jumoke.akiyode@businessdayonline.com

‘AI knowledge will catalyse innovation in different sectors, foster economic growth’

YOMI ADEDEJI is the chief executive officer of Softcom, an indigenous software innovation company that has recently invested in Artificial Intelligence (AI) education in Nigerian schools, in collaboration with Data Science Nigeria. In this exclusive interview with JUMOKE AKIYODE-LAWANSON, Adedeji speaks about the importance of grooming digital literate youths in this era of 4th industrial revolution, the importance of public and private sector collaboration for a digital economy, and the advantages that proliferation of knowledge on emerging technologies would bring to this economy. Excerpts.

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oftcom is a software innovation company that deals with identity, payment, data and learning.

Why then has the company made a decision to invest in supporting the growth of Artificial Intelligence in Nigeria? And why now?

With the advent of the 4th industrial revolution, we are beginning to see technology playing a more pivotal role in societal development worldwide. AI is in the forefront of this, and the potential of AI in the context of education is exciting to us at Softcom. We are passionate about education, the ways in which it can be democratized for broad access, as well as the role that technology can play in ensuring that students attain greater academic achievements. We therefore want to play a role in ensuring that students are equipped with the skills to thrive in a fast approaching digital economy.

Data Science Nigeria (DSN) aims to create 1 million AI specialists in 10 years. How does it plan to achieve this and what role will Softcom play in achieving this?

This is a commendable goal and we are constantly thinking of ways to support initiatives like this. For instance, we recently sponsored the distribution of free AI books to 250 schools in Lagos so that students can begin to familiarise themselves with emerging technologies in fast evolving societies. We engaged business executives in a masterclass on AI and Data, and how it can be utilised for business growth; we have also committed to training computer science teachers in AI and basic python programming so that they in turn transfer this knowledge to their students.

In the near future we also hope to host or facilitate free AI workshops.

What is the distribution plan

Yomi Adedeji

to make sure that the first AI book for elementary schools’ spreads across the country? And how is DSN and its major partner Softcom going to ensure that Artificial Intelligence and data science are included in Nigerian school’s curriculum?

Artificial Intelligence will most certainly dominate the future, and it is important we begin to impart this knowledge and build a strong foundation for the next generation.

In partnership with DSN, we have engaged and distributed Artificial Intelligence book to schools in Lagos. However, to effectively spread knowledge on Artificial Intelligence

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and make it ubiquitous across the country, we would need to leverage on e-learning capabilities, which we look to deliver in the future.

Is Softcom’s partnership with DSN a long term one? If long term, would there be a sequel to the first published AI book, to ensure that the youths keep learning AI up until the university level? How soon should we expect this?

Education forms a key focus area for our organisation. This sector, in particular, forms the core in developing our nation and moving us towards a more prosperous future.

DSN’s mission is aligned with ours in utilising technology to push society

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forward, and we would continue to work together with them to advance society.

What should other stakeholders and Nigerian government do to contribute to the growth of AI and robotics in order for Nigeria to harness the huge benefits in this aspect of technology and avoid lagging behind other nations in development?

There is a need for the private and public sector to collaborate in order to ensure meaningful proliferation of AI and other emerging technologies.

I believe that the first step is for basic knowledge on AI to be taught in schools early on as part of the education curriculum so that it is not perceived as this foreign / abstract concept, and its benefits can be more widely leveraged. It is also important that this education be democratised such that anybody anywhere can have access to learn if they choose to.

Over the years of partnering with DSN in training and developing data/technology skills, would you say Nigeria is harnessing enough of the potentials in this sector, and do you think the understanding and adoption of AI and data science is growing at a considerable rate in this part of the world?

The adoption of AI and data science in Nigeria when compared with other countries is still in the early stages however, I believe we are constantly making strides. We are seeing more companies adopting AI for the growth of their business, and we are seeing a lot of awareness around the importance of AI knowledge from individuals even from an early stage. We must also commend the mandate and efforts of home-grown organisations like Data Science Nigeria, whose vision is to promote in-depth understanding of Artificial Intelligence in children from as early

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as 10years old; as well as global technology companies like IBM, Microsoft, and others who run free training and learning programs for Nigerians to further the proliferation of knowledge on emerging technologies.

How can we bridge the huge gap on data science, Artificial intelligence (AI) and machine learning in Nigeria to be on par with developed countries?

The gap in AI and other emerging technologies in Nigeria can be partly attributed to lack of knowledge as well as inadequate infrastructure. However, we are beginning to see more organisations advocating for AI, with others also actively leveraging AI as a solution for business and societal development. I believe the key is continued awareness and education; on an even larger scale, training on Artificial intelligence and creating opportunities for existing AI talents to be harnessed and engaged. We must also encourage the mind-set of paying it forward. Those who have the knowledge should seek opportunities and platforms to also share their knowledge and train others.

What are some of the opportunities that Nigeria can benefit from creating an educational scheme that will expose the younger generation to the relatively new field of AI? We believe that there are numerous opportunities to be gained from education schemes which include AI. More individuals will be equipped with the skills they need to thrive in the fast-paced corporate world, and solve societal challenges. AI knowledge will also catalyse innovation in different sectors of the economy and foster economic growth.

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E-mail: jumoke.akiyode@businessdayonline.com

Sophos launches cyber threat detection, response offering, powered by machine learning JUMOKE AKIYODE-LAWANSON

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ophos, a security software and hardware company that develops products for communication endpoint, encryption, network security, email security, mobile security and unified threat, has launched its newest fully managed threat hunting, detection and response service called the Sophos Managed Threat Response (MTR).

Announcing the global availability of this product, the company revealed that the resellable service provides organisations with a dedicated 24/7 security team to neutralize the most sophisticated and complex threats.

These types of threats include active attackers leveraging fileless attacks and administrator tools such as PowerShell to escalate privileges, exfiltrate data and spread laterally, as explained in the SophosLabs Uncut article on Lemon_Duck PowerShell malware. Attacks like these are difficult to detect since they involve an active adversary using legitimate tools for nefarious purposes, and Sophos MTR helps eliminate this threat.

“Cybercriminals are adapting their methods and increasingly launching hybrid attacks that combine automation with interactive human ingenuity to more effectively evade detection. Once they gain a foothold, they’ll employ techniques and deceptive methods requiring human interaction to discover and disrupt their attacks,” Joe Levy, chief technology officer at Sophos said.

“For the most part, other MDR services simply notify customers of potential threats and then leave it up to them to manage things from there.

Sophos MTR not only augments internal teams with additional threat intelligence, unparalleled product expertise, and around-the-clock coverage, but also gives customers the option of having a highly trained team of response experts take targeted actions on their behalf to neutralize even the most sophisticated threats,” Levy said.

Built on Intercept X Advanced, with endpoint detection and response (EDR), Sophos MTR fuses machine learning with expert analysis for improved threat hunting and detection, deeper investigation of alerts, and targeted

actions to eliminate threats.

These innovative capabilities are based on Sophos’ acquisitions of Rook security and DarkBytes technology, and include: Expert-led threat hunting: Sophos MTR anticipates attacker behavior and identifies new indicators of attack and compromise. Sophos threat hunters proactively hunt for and validate potential threats and incidents, and investigate

Airtel launches TV service, a Video-On-Demand and live TV app ...signs partnership with Trace Africa, Discover Digital, other top content providers JUMOKE AKIYODE-LAWANSON

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opular telecommunications service provider, Airtel Nigeria is leveraging its wide reach of 4G network connection for its newly launched Video-OnDemand, live television app, available to its customers nationwide.

The company said it decided to redefine television experience for its customers by unveiling the Airtel TV, a one stop platform for everything entertainment – live TV, music videos, news, sports and lots more.

Available for download on Android and iOS, the new TV app is subscription-free and offers registered users unlimited access to the entire Airtel TV content library as well as enables them stream different content categories on the robust Airtel 4G network.

In addition to the Video-

On-Demand service, Airtel TV offers live television across popular TV channels including Bloomberg Television, Trace (Urban, Africa, Mziki, Tropical, Gospel and Sport Stars), Gametoon, Fashion Box, Bollywood, Nautical, God TV, Inspiration TV and Al Jazeera English, among others.

Dinesh Balsingh, chief commercial officer, Airtel Nigeria, said the Airtel TV platform promises to constantly deliver the very best of television experience directly to all Airtel customers across the country.

“Airtel is revolutionising the television viewing experience for all its customers. With Airtel TV, we bring the best shows, best movies and the best of live TV to our customers, engaging them with premium content as well as bringing joy, happiness and laughter to everyone regardless of location, entry fee and income level. www.businessday.ng

“With our 4G network, which is the most robust and widest in the country, subscribers to Airtel TV will enjoy a smooth and seamless viewing experience without hiccups and interruptions. We are confident that the Airtel TV platform will delight, entertain and inspire Airtel customers as it offers first class entertainment and world class live TV experience,” Balsingh said.

To access the Airtel TV on the go, subscribers are required to download and install the Airtel TV app from Google Play Store or Apple Store; Launch the app by clicking “Register” and enter their registered Airtel phone numbers, email addresses and thereafter click “continue.” Subscribers will also need to enter and confirm the four digit OTP received on their devices and click the button, “verify email address” to enjoy the live TV experience as well as Video-OnDemand service.

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casual and adjacent events to discover new threats that previously couldn’t be detected Advanced adversarial detection: Sophos MTR uses proven investigation techniques to differentiate legitimate behavior from the tactics, techniques and procedures (TTPs) used by attackers. Coupled with enhanced telemetry from Sophos Central, which provides a detailed, full picture of adversary activities as part

of the service, the scope and severity of threats can be determined for rapid response Machine-accelerated human response: A highly trained team of world-class experts generates and applies threat intelligence to confirm threats, and takes action to remotely disrupt, contain and neutralize threats with speed and precision Asset discovery and prescriptive security health guidance: Sophos MTR provides valuable insights into managed and unmanaged assets, vulnerabilities for better informed impact assessments and threat hunts. Prescriptive and actionable guidance for addressing configuration and architecture weaknesses enables organizations to proactively improve their security posture with hardened defenses.

Sophos says its MTR is customizable with different service tiers and response modes to meet the unique and evolving needs of organizations of all sizes and maturity levels.

Unlike many MDR services that focus on monitoring and threat notification, Sophos MTR rapidly escalates and takes action against threats based on an organization’s preferences.

Tech Explainer: Deep learning and machine learning JUMOKE AKIYODE-LAWANSON

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eople may wonder how Google is able to translate an entire web page to a different language in a matter of seconds, or how their phone photo gallery groups images based on the location where the pictures were taken. These are all products of deep learning.

Deep learning is a subset of machine learning, which in turn, is a subset of Artificial Intelligence (AI).

AI is a technique that enables a machine to mimic human behaviour, while machine learning is a technique to achieve AI through algorithms (a process or set of rules to be followed in calculations or other problemsolving operations, especially by a computer)trained with data. Deep learning is a type of machine learning inspired by the structure of @Businessdayng

the human brain. In terms of deep learning, this structure is called an artificial neural network.

How is deep learning different from machine learning?

With machine learning, human intervention is needed to tell the machine features needed to differentiate between two or more different items. For example, a machine developed to separate yams from potatoes has to be told the unique features of both items to enable it separate them.

However, with deep learning, the features are picked out by the neural network without human intervention.

That kind of independence comes at the cost of having a much higher volume of data to train a machine. Deep learning is the most efficient way to deal with unstructured data.

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property&lifestyle Northcourt projects stronger growth for Nigerian real estate at 2.65% in 2020 … sees a rise in construction cost ENDURANCE OKAFOR

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igerian real estate sector is expected to grow at 2.65 percent in 2020, a report released recently by Northcourt, a real estate investment solutions company, has said.

Economic factors such as the low, but improving purchasing power, demand for indirect commercial real estate, improved construction activities, adoption of technology in construction, and real estate management are some of the factors highlighted by the report as growth drivers for the industry.

“The Nigeria real estate industry as a whole is stabilizing and it has the potential to fully stabilize and report growth in 2020, and this is because it is recovering from the effect of the recession,” Ayo Ibaru, COO /Director of Northcourt said.

Despite exiting 12 consecutive quarters of recession in the first quarter of 2019, Nigeria’s real estate sector was hit by slow economic growth, lack of liquidity and dampened purchasing power and thus, ended the year on a negative but stabilising

mode.

N i g e r i a’s e c o n o m ic growth of 2.28 percent eluded the real estate sector which contracted by 2.31 percent in the third quarter of 2019. Though lower than the growth reported in the first quarter of 2019, the thirdquarter performance was the highest in six months.

Speaking to the subsectors where opportunities lie for real estate players in 2020, Tayo Odunsi, the CEO of Northcourt, cited smaller housing units under residential, focus on family entertainment features for hospitality while for office; improved occupancy rates coupled with increased migration of tenants to new Grade A office buildings will be an area to focus on for good returns.

According to the forecast by Northcourt, cost of construction is likely to hit the roof due to the expected increase in development activities.

“Construction costs to rise by mid-year as development activities rise,” Odunsi said.

The real estate company is also optimistic that more international entrants in retail, hospitality and proptech will be witnessed as the year

unfolds.

Titled ‘Nigeria Real Estate Market Outlook’, the 2020 industry report also highlights some of the challenges that players in Nigeria’s property market may face.

Reduced political spending, regulation of the residential real estate sector, susceptible nature of the hospitality industry and self-building of international entrants in the industrial arm of the sector are some of the key issues that will impact performance, as contained in the report.

However, the Lagos-based real estate firm believes that yields will favour operational real estate in development and business income. Exam-

ple of such players that are likely to tap from the projection include those that are into-student accommodation, entertainment centres (family entertainment centres, lounges, co-working).

“The Finance Bill, once operational, will favour indirect real estate investment including REITs and other factors pushing for REITs . Recapitalisation of mortgage banks and insurance companies will also create traction in those sectors and will be positives for real estate,” Northcourt projected in the report.

Nigeria’s housing challenge borders on insufficient

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Gtext Homes commits to providing affordable housing for Nigerians Josephine Okojie

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n a bid to ensure that Nigeria’s middle class and low-income earners can own a home, Gtext Homes says it is committed to providing affordable luxury housing for Nigerians at Berly Estate.

Stephen Akintayo, managing director and chief executive officer of Gtext Homes, made this commitment at the maiden edition of Red Fest family festival organised by the organisation recently in Lagos.

According to him, the Red Fest family festival was organised to inspire people to have the vision of owning a property in the estate which is built with a private beach for residents.

He said that plans were on-going to buy more property along the area to create a resort and build a pedestrian bridge from the estate to the resort.

“One of the things we are going to pride ourselves in is to be the biggest green estate because we have our estate in Ikorodu, Atan, Abuja, and other locations coming up,” he said in a statement.

“Some of our designs have trees and to be as green

as possible is the focus because we have our focus on climate change as the discussion is still on. There will be a swimming pool, gym and, since there is a lot of water around here, we are looking at creating an artificial lake,” he added.

According to him, Beryl Estate gave birth to the vision of Red Fest.

Akintayo explained that the Berly Estate project has a lifespan of three years and the construction phase would be completed by 2021 while it is expected to be fully habitable by 2022.

“Statistics show that, by 2021, over 200,000 new jobs would be created in this community and that is why we are advising people to come and invest here now and get value for their money. If you build your house here and you are not ready to live here, then you can lease it out,” he assured.

“As you can see, houses here are designed for high net worth people. Every one of our estate has security even on the street to monitor and ensure that quality people live here. We do our background check on everyone that wants to live in our estate,” he said.

Developers’ value proposition at Peridot Parkland Estate offers buyers low energy cost … 5-year interest-free mortgage loan also on offer CHUKA UROKO

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mong the value propositions which developers of the Peridot Parkland Estate is offering prospective buyers and residents, low energy cost which is a major index in

most household income profile, stands out.

A 252-unit estate located in Idale along Topo in Badagry, Peridot Parkland Estate is the first green and eco-friendly residential project being developed by the Lagos State government and Echostone Nigeria as a joint venture project, targeting

about low income home seekers in the state.

The estate, which is expected to be commissioned in the next six weeks, is designed to utilise less energy for cooling and heating, thereby ensuring sustainability of the environment.

The joint venture scheme between Lagos state and

L-R: Abdul-Akeem Ayodeji Amodu, SA to the Governor on Housing; Moruf Akinderu-Fatai, Commissioner for Housing; Sammy Adigun, director, Echostone, and Wasiu Akewusola, Permanent Secretary, Ministry of Housing at Idale in Badagry during the inspection. www.businessday.ng

Echostone Nigeria is expected to add 2000 units of green and eco-friendly homes to the housing stock in Lagos when other related schemes located at Ayobo and Imota are completed.

“The estate has reached 90 percent completion within less than a year of commencement and will soon be delivered to the public before the end of the first quarter of 2020,” said Moruf Akinderu-Fatai, the Lagos State commissioner for housing during a site inspection of the Peridot Parkland Estate.

According to him, the innovative technology and eco-friendly designs used at Idale will soon be deployed towards construction of multilevel structures in urban part of the state to speedily reduce the challenges of housing deficit.

Akinderu-Fatai pointed out that the collaboration with Echostone has shown clearly that the state government will speedily meet up with its target in housing delivery thereby increasing the

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housing stock in the state.

He disclosed that apart from the benefits accruing to the environment through optimization of energy consumption, the project also showcases an innovative technology which speeds up housing delivery, utilizes lesser energy and generates minimal waste from site activities.

“The green estate comes with a garden and two trees each for every house,” said Akinderu-Fatai.

Sammy Adigun, MD, Echostone Nigeria, said the project was designed with some mortgage partners that offer a five-year interest free loan to individuals on level 10 and above, under the Family Homes Funds initiative of the federal government called ‘Help to Buy’.

“We are not looking for people to pay us cash, instead we are offering mortgage; if you have N900, 000 and you and your wife can pay about N50, 000 monthly, you can move into any of these houses. So, you pay 10 percent and we can @Businessdayng

allow you to pay over 10 to 20 years, depending on your age,” Adigun stated.

According to him, the energy savings level of the building is 29 percent from reduced window to wall ratio and energy savings bulbs for internal and external spaces.

He said that water savings from the houses is 35 percent from low flow showerheads, faucets and dual flush. In addition, 43 percent less embodied energy is saved in materials usage such as in-situ reinforced concrete slabs, aluminum sheets on timber rafters for roof and in-situ reinforced walls for both internal and external walls.

“Other eco-friendly attributes include reflective reefing, roofing overhang, positioning of window to optimize natural light and ventilation so as to reduce use of electric fan and light,” said Adigun stating that the walls and structures of the homes were built using concrete for greater thermal and sound insulation.

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property&lifestyle ‘We are opening a portal for greater relationship between govt and investors’ CHUKA UROKO

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oncerned about the social impact of inadequate housing on its citizens, Lagos State government is, increasingly, evolving strategies for solving this problem. In this interview, Moruf Akinderu-Fatai, the state’s commissioner for housing, offers insights into what the state government, through the ministry, is doing to increase home-ownership level in the state and close the wide demand-supply gap. Excerpts: Globally, housing is a big issue, especially in big cities like Lagos. Here, residents don’t have access to mortgage that could enable them to buy houses. What is your ministry doing to address this?

Mortgage depends on citizens having sustainable income over a period of time. Lagos State government, apart from working on reducing mortgage interest rate to the minimum on its own houses to increase affordability, is also promoting an environment that is conducive for increasing economic activities so that people can meet the basic requirements of mortgage .

What, in your view, are the major factors militating against making housing

affordable and available to low income earners?

The first thing is paucity of unencumbered land. We see solution to this in having a synergy between government ministries, departments and agencies (MDAs) connected with land matters. Now, we have that good relationship with Lands Bureau and already many opportunities are opening up particularly in Lekki and Epe areas.

High cost of materials and labour is also another reason houses are not affordable and, therefore, not available to low income earners. We will sponsor researches into development of technology that will reduce cost of building.

We will also build human capacity with training programs for artisans both to reduce unemployment and bring down cost of labour.

Funding is also another major problem. Building homes is highly capital intensive and we are involved in private partnership and joint ventures on many of our projects. We are also actively looking for cheap funds to translate our visions into reality.

One of the key elements of the sustainable development goals is the provision of affordable housing. What is your ministry’s plan to key into this vision?

Apart from working hard

Akinderu-Fatai

to deliver our on-going projects within the next 24 months, we are planning to initiate new schemes in all parts of the state. This is aimed at making more Lagosians home owners.

We are also looking into transit homes for those in emergency situations to reduce homelessness and destitution . Beyond this, we have solid plans to turn around some of our dilapidated estates into livable cities to achieve the SDG 11 of sustainable and liveable cities.

Lagos has many slum settlements. What is the state government doing to turn these slums into liveable settlements without denying the original settlers the right to their space?

We have our plans in this respect. We are starting with Lateef Kayode Jakande Estate in Ilasan, Etiosa local government. 400 of the original allotees will be temporarily relocated to some of

our on-going estates while we upgrade the estate.

The first 100 days of this administration was marked as though some landmark achievements had been recorded. What can you point back to in the housing ministry within this period?

Some on-going housing schemes were completed, notably the Lateef Jakande Gardens in Igando which boasts 492 homes. Others are the Igbogbo Scheme 11B and the Sangotedo housing scheme phases 1 and 2 which is nearing completion. We are also involved in resuscitating some abandoned projects.

We are presently revisiting some joint venture projects for compliance and quick completion. We are also resolving conflicts on some of the projects; opening a portal for greater relationships between government, operators and investors in estate development for the purpose of transparency and collaboration in the interest of the citizens of the state.

Arguably, your ministry is quite strategic to the economic development of this state. In specific terms, what make up the major responsibilities of the ministry?

The responsibilities of this ministry are diverse and they include formulation, review and implementation

of state housing policies. We provide quality housing for Lagos state citizens along with the provision of infrastructure in government housing estates. We also supervise the maintenance of existing housing estates.

Our ministry also intervenes in real estate transaction matters including tenancy and rent; collaboration with the private sector for the provision of housing. We also promote artisanal skills development in housing production; facilitate job creation and economic empowerment through the employment of local artisans.

The ministry carries out research into use of local building materials and consultancy services on housing matters for other ministries, departments and agencies. It co-ordinates agencies involved in housing matters and engages in brokering peaceful coexistence among organized shelter providers in the state. We carry out other responsibilities such as matters related to resettlement of displaced persons, and also identify abandoned properties; estate agencies regulatory activities and forfeiture of properties.

What measures have you put in place to see these responsibilities through?

We have a solid work

More private equity, mergers & acquisition to drive mortgage sector growth in 2020 CHUKA UROKO

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ore private equity participation, mergers and acquisitions will be the major growth drivers in the Nigerian mortgage sector in 2020, close watchers of the sector have said.

In 2019, three leading primary mortgage banks (PMBs), namely, Abbey Mortgage Bank Plc, Resort Savings and Loans and Trustbond Mortgage Bank Plc, at various times, either received private capital or merged with another PMB, as the case may be, and the result has been positive.

The slow growth of this

sector has been attributed largely to low capital base of the operators which did not improve appreciably even after the recapitalization round that saw their capital base rise from N100 million to N2.5 billion and N5 billion for state and national licences operators respectively.

Other reasons adduced for this slow growth are the sector’s relative ‘newness’ for which many people say they don’t understand what the PMBs do and are, therefore, not willing to keep their money with them.

Another reason is that all the money deposited in the mortgage banks are short term whereas the banks are expected to lend long term

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to suit the purpose of borrowing which is generally housing finance.

For purposes of shoring up their capital base and performing their the housing financing function, it is expected that more PMBs will follow Abbey Mortgage and others’ example—raise their capitals to provide affordable mortgages for more Nigerians on the low to middle income range.

In 2019, VFD Group invested N2.37bn in Abbey Mortgage Bank. This followed the resolution of the bank’s shareholders at their annual general meeting in July of that year to raise additional capital by way of private placement of the company’s ordinary shares.

Abbey Mortgage operates under the supervision of the Central Bank of Nigeria (CBN) and it is expected that the new capital raise will advance its business of providing banking services in personal savings and investments, cash management, specialized banking, deposit and funds management, children and school account services, real estate and mortgage services, amongst others.

In October of 2019, Camey & Rocks Business

Consulting Limited acquired the majority shares in Resort Savings & Loans Plc. The current authorized share capital of the bank is 20 billion units of shares amounting to N10 billion at N0.50k per share.

The bank has over 13,000 shareholders.

The business consulting firm acquired 43.35 percent of the bank’s shares, making it the majority shareholder in the mortgage bank. This is an example of the private equity being canvassed.

Peter Adejoh, the Chief Executive Officer of Camey and Rocks, explained that the investment was aimed at taking the bank to the next level in mortgage banking services in Nigeria and beyond.

“With this, we expect to deliver impressive returns to our shareholders and satisfy the expectations of customers and other stakeholders in the nearest future,” he said.

A merger event took place in 2019 as Trustbond Mortgage Bank Plc and First Mortgages Limited, having secured the approval of their respective shareholders, decided to merge to increase mortgage access for homeownership in Nigeria.

The two mortgage institutions agreed to merge for the main purpose of becoming

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a larger mortgage banking firm with technical capabilities to take advantage of economies of scale and become the preferred choice for their clients.

Expectation is that the merger of these mortgage products and services providers will be birthing a bigger and stronger PMB that is capable of changing the housing and mortgage sector story in Nigeria where deficit is deep and ownership is low.

The success stories of these PMBs so far has raised further expectation that more will follow suit, leading to the growth of the sector, more access to housing finance and increased home ownership.

“In 2020, there is expectation for more mergers and acquisitions especially in the mortgage sector of the Nigerian economy,” said Festus Adebayo, CEO, Fesadeb Communications, citing the Trust Bond Mortgage, Abbey Building Society and Resort Savings experience.

“It is expected that more will follow suit by raising their capitals and providing affordable mortgage for more Nigerians on the low to upcoming middle-income range,” Adebayo said. @Businessdayng

force of professionals in the built environment sector.

We have architects, engineers, quantity surveyors, town planners and estate surveyors. These with other supporting professionals are keyed into developing and implementing strategies for designing and completion of quality projects.

We are blessed that the Number 1 citizen of this state is also an accomplished professional in this area and he is very passionate about people and about bridging the housing demand-supply gap. That’s why housing got a pride of place within the first 3 months of this administration.

Our strategy is based on a critical analysis of every single aspect of the building process –from conception to delivery with the intention of reducing wastage of resources and optimization of opportunities. Land, money, time and labour are utilized in such a manner that our outcome justifies every input.

The Lagos Affordable Public Housing (LAPH) initiative is a strategy based on joint venture arrangements between the state and private investors. The state provides unencumbered land and gets official documentation while partners are responsible for funding and project implementation under strict supervision of state professionals

Northcourt projects...

Continued from page 31 stock, low ownership level and lack of demand enablers, especially mortgage or lowrate housing finance.

Individual efforts at increasing the stock by way of developing more houses, coupled with talk shows offering insights into possible solutions have not helped to reduce the demand-supply gap or increase ownership level estimated at more than 17 million units and 25 percent respectively Despite its large-size population and self-acclaimed biggest economy in Africa, Nigeria is still crawling behind its peers in terms of homeownership level in the country.

Whereas homeownership level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, it is only 25 percent in Nigeria whose population is estimated at 200 million. Going by United Nations projection, the country’s population will be as high as 400 million in 2050.

“The major issues that continue to affect housing delivery in Nigeria, which also accounts for the wide demand-supply gap, include constraints related to the high cost of securing and registering secure land title,” said Nasir El Rufai, Kaduna State governor.

33 BUSINESS DAY

FT

Tuesday 14 January 2020

FINANCIAL TIMES

World Business Newspaper NEIL MUNSHI

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igerian president Muhammadu Buhari has signed into law a new finance bill that seeks to increase government revenue while bolstering the struggling small business sector in Africa’s largest economy.

The legislation, passed by both chambers of the national assembly last year, raises the country’s value added tax rate from 5 per cent to 7.5 per cent, a modest but important step for a country with one of the world’s lowest tax-to-gross domestic product ratios. It also provides incentives for investment in Nigeria’s capital markets and exempts some small businesses from corporate income tax, while easing the burden on medium-sized companies.

The bill shows that Mr Buhari’s administration “wants to increase revenue” and “support and grow local businesses”, said Yvonne Mhango, sub-Saharan economist for Renaissance Capital.

Mr Buhari was elected in 2015 and has introduced a series of policies — including Central Bank of Nigeria-backed loan programmes for farmers and small businesses — aimed at reducing the economy’s dependence on crude exports but has struggled to recover from a recession brought on by the 2014 oil price crash.

Africa’s largest producer still

Nigeria ratifies finance law in boost for small business Legislation cuts taxes for some enterprises while increasing VAT

Nigeria’s president Muhammadu Buhari approved the 2020 Budget in December © Nigeria Presidenc/Reuters

derives 57 per cent of government revenue and 94 per cent of foreign exchange from the oil industry, according to the IMF. Economic growth has stalled at about 2 per cent and about half of Nigerians are either

With Google’s sales growing as fast as a decade ago, company nears market cap milestone

Renminbi erases the heavy losses it sustained in August that unnerved global investors

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hina’s currency has gained further momentum — wiping out the heavy losses it took over the summer — amid cooling tensions between Beijing and Washington.

The renminbi rallied as much as 0.5 per cent against the US dollar, crossing the Rmb6.9 mark for the first time since August and bringing its rise for 2020 to nearly 1 per cent. Its climb in the early days of this year highlights the upbeat sentiment among global investors and cautious optimism of an improvement in relations between the world’s two biggest economies.

The currency in August faced its worst sell-off in a quarter century and eventually slumped to nearly 7.2 to the US dollar in a fall that ricocheted across world markets.

Traders and investors closely watch the currency as a broader market bellwether to which movements in many other assets are often closely tied, according to analysts.

Equities were indeed broadly higher in Asia on Monday, with China’s benchmark CSI 300 index and Hong Kong’s Hang Seng both closing about 1 per cent higher, while in London the FTSE 100 notched a again of 0.4 per cent in morning trading.

The gains on Monday came days before the planned signing of a trade pact in Washington by US and Chinese officials, scheduled for Wednesday, that will help lock

in the terms of a limited agreement reached last month. Although details on further concessions by both sides are scarce, the signing will at least prevent further levies on Chinese imports from being introduced by the US, which will also halve tariffs on $120bn of imports imposed in September.

Line chart of Renminbi per dollar showing Renminbi claws back losses from August trade tensions The renewed strength for the renminbi on Monday was despite broad stability for the greenback, with the dollar index that tracks the US currency against a basket of peers essentially flat on the day.

The offshore renminbi, which is not bound by the Chinese central bank’s trading band, was also back below the Rmb6.9 per dollar mark, having firmed 0.2 per cent on Monday to 6.8947.

“Obviously the market is focused on the phase one agreement,” said Mansoor Mohi-uddin, senior macro strategist at NatWest Markets, pointing to renewed strength in both the onshore and offshore rates since markets opened in 2020.

China’s central bank has been setting its daily midpoint level around which the currency is allowed to fluctuate gradually firmer since the trade truce was announced around a month ago.

Still, the currency is about 7.5 per cent weaker compared to its level shortly before the first tariffs were imposed by the US in June 2018. www.businessday.ng

stimulate activities in the capital market”, according to an analysis by PwC, the international accountancy firm.

The bill exempts businesses with less than N25m ($70,000) in annual turnover from corporate income tax,

Alphabet on the brink of joining the $1tn club

China’s currency extends 2020 rally on easing trade angst HUDSON LOCKETT

unemployed or underemployed.

The finance bill includes provision that will ease burdens on the insurance, banking and oil industries and is “expected to bring about a significant increase in investments and

while lowering the tax rate for companies making up to N100m from 30 per cent to 20 per cent.

“This could encourage more small businesses to come into the tax bracket, and if it works, could begin to reduce the [federal government’s] dependence on oil revenue,” said Cheta Nwanze of SBM Intelligence, a Lagos-based consultancy.

But such exemptions mean the overall impact on the ability of the government to raise revenue is “likely to be mixed” in the short term, said Nonso Obikili, director at the Abujabased Turgot Centre for Economics and Policy Studies.

“Some things are straightforward — like the VAT increase — but the overall effects, especially on government finances, will have to be observed over time,” he said.

As with all legislation in Nigeria, the impact of the law will depend on its implementation, said SBM’s Mr Nwanze, a frequent critic of the Buhari administration. “Call me cynical, but can you name one law in Nigeria that has been well-implemented?” he said.

RICHARD WATERS

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he stock market value of Google parent Alphabet is on the brink of hitting $1tn for the first time, making it the fourth of the Big Tech to reach the milestone.

The internet search company came within 1 per cent of the $1tn threshold on Friday, after a 7 per cent rally since the start of the year on hopes that it will report another record surge in advertising when it announces earnings on February 3. Shares were little changed early on Monday.

Alphabet’s rise to $1tn comes against the backdrop of growing calls for stronger privacy and antitrust regulation, which have been one of the few clouds hanging over its stock price.

It also follows a historic change in leadership last month, with cofounders Larry Page and Sergey Brin stepping back from the company they founded as students at Stanford University in 1998. The shift has stirred hopes on Wall Street that under its new chief executive officer, Sundar Pichai, Alphabet will become more disciplined in its spending, fuelling a further rise in its share price.

Apple was the first public company to reach $1tn, in August 2018, and is now more than a third of the way to a second trillion. It was followed by Amazon, which has since fallen back below the 13-digit threshold, and then Microsoft, now worth $1.26tn. The tech companies have since been surpassed by Saudi Aramco, which went public last month and now has a market value

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of $1.87tn.

Behind its relentless rise to a stock market milestone lies Google’s success in positioning itself to become the biggest beneficiary as global advertising and marketing spending has moved online.

A graphic with no description The company’s founders once worried that relying on advertising could jeopardise the independence of their search results, warning in an early research paper about the “mixed incentives” that could result. But advertising continues to account for a significant majority of Alphabet’s sales and the Google division brings in 99.6 per cent of company revenues. Ambitious long-range projects such as driverless cars and new drug discovery have yet to see a pay-off.

The company, which started the last decade with revenue growth of 24 per cent, is expected to report that sales were still growing by nearly 20 per cent as the decade drew to a close — even though, at more than $160bn, they are now more than five times the level of 2010.

“Ten years ago, I don’t know anyone who thought they’d still be growing at 20 per cent,” said Mark Mahaney, an analyst at RBC Capital Markets. The company accounted for only 10 to 15 per cent of global advertising and marketing spending, leaving plenty of room for further expansion, he added.

‘There is no next Google’ Google’s rise marks a sea-change over the past decade, with mobile advertising rising on the back of booming smartphone use and sur@Businessdayng

passing the company’s traditional search desktop business in 2018.

Mr Mahaney put the continued high growth rate down to the many incremental improvements Google has made to its search advertising service, as well as the acquisition, 13 years ago, of the YouTube video site.

“No one knew how great an asset that would be,” he said.

As Alphabet starts the new decade under new management, hopes for another phase of growth have moved beyond advertising. A group of businesses that include the Play app store, cloud computing and hardware sales are now growing at more than twice the wider group level and already make up 16 per cent of revenues.

Some Wall Street analysts have also valued the Waymo driverless car division at as much as $150bn, even though it has yet to develop into a business. But ambitious “moonshot” projects such as these are also criticised by many investors who argue they have become an expensive distraction.

“They keep trying to find the next Google, but there is no next Google,” said Walter Price, who runs Allianz’s global tech fund.

Referring to the continuing control of Mr Page and Mr Brin, thanks to their ownership of a special class of supervoting stock, he added: “Their negative influence lingers on even though they are not in management any more. The stock would be 50 per cent higher if they changed their position and became more sensitive to investor needs, as Apple and Microsoft have done.”

Tuesday 14 January 2020

FT

BUSINESS DAY

34

NATIONAL NEWS

African oligarchs turn to Asian offshore destinations Light regulation and a full array of services hold the prospect of good old-fashioned plunder RICARDO SOARES DE OLIVEIRA

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sabel dos Santos, Africa’s richest woman and the daughter of Angola’s former president José Eduardo dos Santos, has moved her residence and that of several of her companies to Dubai.

The revelation emerged early this month, just days after Angola froze Ms dos Santos’s assets in the country, a noteworthy escalation in the government’s offensive against the family that ruled the oil-rich state for 38 years until 2017.

As her political clout evaporates in western Europe and investigations there come to a head, it may become difficult for Ms dos Santos to divide her time between her former main residences in London and Lisbon.

Ms dos Santos’s reported move to the Jumeirah Bay gated community (her companies are now based in the Almas Tower) is only the latest of a number of high pro-

Geneva by decamping to lightregulation Dubai and Singapore.

The second reason is that, by moving to new financial centres, African oligarchs encounter the same service providers that work for them in London, Lisbon, Paris, Zurich and other traditional centres. Dubai, Hong Kong and Singapore feature the same top-range banks, legal firms, commodity traders, management consultants and all-purpose advisers they would find in more traditional locations. Many of these service providers cheerfully suggest to their African clients that they should relocate to more amenable contexts and continue their relationships on new ground. In short, the new Asian settings feature world-class service provision, in places committed to a much greater degree of discretion than is increasingly the case in western financial centres.

The third reason is the proactive role played by Asian governments in attracting new global

Isabel dos Santos is one member of Africa’s elites in search of new, more accommodating financial services © BRUNO FONSECA/EPA-EFE/Shutterstock

file escapes by African oligarchs with legal troubles to Dubai, including the Gupta brothers’ move from South Africa.

These spectacular events reveal deeper patterns of shifting offshore dynamics. Capital flight out of Africa

by African elites and foreigners alike is recognised as a serious, perennial problem undermining African development. It is estimated to far exceed foreign aid to the continent and its pace has quickened in tandem with African economic growth since the turn of the century.

Until about a decade ago, capital flight out of Africa mostly occurred through a variety of onshore financial centres and offshore havens in OECD states and British Overseas Territories.

Since then, diversification towards Asian financial centres has become noticeable. Dubai is a high profile location, but others such as Singapore and Hong Kong also feature prominently.

There are three main reasons for this. The first is the increased regulatory burden in more traditional financial centres. From multiple Caribbean jurisdictions to the Channel Islands and from Switzerland to Liechtenstein, the nature of the offshore game may not have changed radically, but a rhetorical shift away from secrecy, a much greater degree of investigative scrutiny and genuine legal changes have rerouted some African wealth flows into more opaque locations. International businesses active in Africa such as commodity traders have also reacted to bad press in places like

business. As Oxford academic Matthew Erie explains in a notable recent investigation of Asia’s new legal hubs, governments in the region promise world-class infrastructure and service provision as well as political stability and the rule of law. (The latter is a more credible offering in Singapore and Hong Kong than in Dubai, of course, but the autocratic nature of Dubai’s government is offset by a unique receptivity to some characters and types of money flow.)

Much of this economic activity is legitimate and the result of institutions and capabilities put in place by governments, but many associated flows are not. Indeed, it is the symbiotic relationship between licit and illicit business that seems conducive in such locations. The policy approach is too often either to turn a blind eye or to actually encourage this.

Welcoming opaque financing and politically exposed persons from Africa and elsewhere is often a deliberate strategy, not an unintended consequence.

This will sound familiar to those tracking the workings of Asian financial centres and the way in which they have hoovered up business from often fraught regional settings.

Russian, central Asian, Middle Eastern and south Asian offshoring strategies have used such channels for decades. In the African setting, however, this was the case only to a limited extent until the past decade, except for a narrow connection between north-east Africa, especially Somalia, and Dubai.

Joko Widodo has made increasing foreign direct investment a priority for his second term © MAST IRHAM/EPA-EFE/Shutterstock

UAE commits $23bn to Indonesia infrastructure projects Investment will be pumped into a sovereign wealth fund and includes energy deals

STEFANIA PALMA AND SIMEON KERR

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he United Arab Emirates is to pump $23bn into Indonesia to help finance infrastructure and energy projects in south-east Asia’s largest economy.

The UAE investments will be made via Indonesia’s new sovereign wealth fund, according to a spokesman for President Joko Widodo and will contribute to the building of the country’s proposed $31bn new capital city. The fund, created by Mr Widodo, is designed to support local start-ups and to boost economic growth.

The announcement followed a visit by Mr Widodo to the UAE at the weekend. The deal will include “11 business agreements . . . consisting of energy, oil and gas, petrochemical, seaport, telecommunication and research,” said Luhut Pandjaitan, Indonesia’s coordinating minister for maritime affairs and investment, in a statement.

The UAE’s commitment comes after Mr Widodo, who was re-

elected in 2019, made increasing foreign direct investment a priority for his second term. FDI is critical for Indonesia, which runs a current account deficit and in 2018 resorted to import tariffs to keep it in check, but also to bankroll Mr Widodo’s $400bn infrastructure programme, announced after his re-election.

This mega plan involves moving Indonesia’s capital from Jakarta to East Kalimantan province on the island of Borneo, as part of efforts to invigorate an economy that is growing at about 5 per cent a year. Construction is scheduled to begin in 2021 and relocation in 2024.

Yet, Indonesia has lagged behind its neighbours in terms of FDI, with investors historically lamenting red tape and protectionism, especially in the natural resources sector. But FDI showed signs of picking up in the third quarter of 2019 aided by a postelectoral boost, with volumes growing 17.8 per cent year on year to Rp105tn ($7.6bn), according to the Indonesia Investment Coordi-

nating Board.

The UAE has joined other international players — including Masayoshi Son, chief executive and founder of SoftBank, and the Asian Infrastructure Investment Bank — in helping to fund the proposed new capital. Indonesia wants to pass legislation to establish a plan for the new city in the first half of 2020.

As part of the deal the Abu Dhabi National Oil Company (Adnoc) signed a series of agreements with Indonesia’s oil and gas company Pertamina and Chandra Asri, a petrochemicals company. Adnoc also signed a memorandum of understanding with Pertamina to explore the potential for the development of a crude oil to petrochemicals complex in Balongan, Indonesia.

“The agreements signed with Pertamina and Chandra Asri will potentially help Adnoc to secure additional in-market presence in one of south-east Asia’s fastest growing economies,” said Sultan Al Jaber, Abu Dhabi company’s chief executive.

Shares in oil producer Lekoil suspended after Qatari loan queried Sovereign wealth fund questioned validity of $184m loan the Nigeria-focused company announced HARRY DEMPSEY

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hares in London-listed oil producer Lekoil were suspended on Monday after Qatar’s sovereign wealth fund questioned the validity of a $184m loan agreement the Nigeria-focused energy company had announced earlier this month.

The Aim-listed group said in a statement that it had paid $600,000 to Seawave Invest Limited, which introduced the company to people purporting to be from the Qatar Investment Authority (QIA).

Shares in Lekoil doubled to trade at 9.4p per share last week after the loan agreement to fund appraisal drilling at the Ogo field in Nigeria was signed near the beginning of the year, but people familiar with the QIA told the FT on Monday they had no knowledge of the loan.

Lekoil said in a statement that it is urgently seeking to establish

“the full facts of this matter,” adding that no money has been paid to the QIA. Seawave Invest says on its website that it is “an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa”. The website includes no names of company staff and lists addresses in both Ghana and Bahamas.

A representative for Seawave hung up when contacted by the Financial Times.

It is not the first time that London’s AIM market has encountered problems with Nigerian oil and gas producers. Executives at Afren, which was a partner in the Ogo field and formerly belonged to the FTSE 250, were found guilty of fraud and moneylaundering in 2018 in London.

Lekoil currently holds a 40 per cent economic interest in Ogo, but is seeking to sell the 23 per cent interest which was acquired through a purchase of Afren’s

shares to a potential funding partner. Optimum, the operator and local partner, holds the remaining 60 per cent.

In the first half of 2019 the company produced 2,329 barrels of oil per day at Otakikpo in Nigeria, and it estimates that it could recover 232m barrels of oil from Ogo. Mirabaud and Numis act as joint brokers for Lekoil, while Strand Hanson is its nominated adviser.

Both brokers declined to comment.

Commission payable to Seawave for arranging the facility and the upfront payable fee to the Qatari sovereign wealth fund totalled almost $10m, Lekoil had previously said.

The alleged deal had an annual interest rate payable of 3.72 per cent to the QIA, it said. By comparison, Seplat Petroleum, another Nigeria focused Aim-listed company, pays over 5 per cent of interest on a current revolving loan agreement.

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Tuesday 14 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Trump administration nears decision on LNG shipping by train Move would offer US natural gas producers an alternative to congested pipelines GREGORY MEYER

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he US’s rich supply of natural gas may soon be transported by train, enabling energy shippers to sidestep congested pipelines in parts of the country.

The federal government intends to allow liquefied natural gas (LNG) to be loaded on to rail tank cars and moved across the nation’s railway network, with the deadline for public comments on the proposal set for Monday.

The US became the world’s largest gas producer after fracking revived old shale fields. But opponents have slowed new pipelines in the northeast. In the Permian Basin of Texas and New Mexico, oil producers are flaring 750m cubic feet a day of associated gas partly in the face of pipeline bottlenecks, according to Rystad Energy, a consultancy.

Condensing gas into a liquid and carrying it by train is a potential alternative, executives say. The technology has been used in Japan for almost two decades. Less efficient than pipelines, trains are nonetheless potentially a more versatile way to ship modest volumes.

“It’s an interesting idea, especially in some areas where there are pipeline constraints and challenges in getting gas to market,” said Charlie Riedl, executive director of the Center for LNG, a trade group that supports the US Department of Transportation’s

proposal.

The government last month issued its first special permit to a subsidiary of New Fortress Energy to load tank cars with LNG in Pennsylvania’s Marcellus Shale and haul them 200 miles south to a New Jersey river port. There, LNG would be put on vessels bound for destinations including gas-fired power plants in the Caribbean region.

New Fortress is led by Wes Edens, the billionaire co-founder and chief executive of Fortress Investment Group, a private equity business owned by Japan’s SoftBank. The company plans to liquefy and ship about 300m cu ft/d of gas, a fraction of Pennsylvania’s production of 19bn cu ft/d.

“This special permit is a significant milestone that establishes requirements for moving domestic LNG in a safe and efficient manner. It supports our efforts to bring cleaner and more affordable energy to markets that are reliant on oil-based fuels,” New Fortress said.

Trains were first used to haul oil during the Pennsylvania oil boom of the 1860s. Crude oil returned to the rails about a decade ago, as rising shale output strained oil pipelines.

President Donald Trump requested a national LNG-by-rail policy from the transportation department in an executive order he issued last year on energy infrastructure. It is consistent with the administration’s other moves to facilitate fossil fuel production and trade.

Pound falls below $1.30 on growing signs BoE will cut rates UK currency has dropped 2% in first two weeks of 2020 PHILIP GEORGIADIS

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terling has fallen below $1.30 for the first time in 2020 on swelling expectations that the Bank of England could cut interest rates as soon as this month.

The pound fell 0.7 per cent to $1.2970 in morning trading on Monday, leaving it more than 2 per cent lower since the start of the year and on track for its fifth consecutive day of losses. Sterling fell 0.6 per cent against the euro, leaving £0.8565 required for a unit of the shared currency.

Monday’s drop accelerated after fresh figures showed that the UK economy contracted 0.3 per cent in November.

The shape of monetary policy has overtaken political risk as a key driver for the currency since the beginning of 2020. Two monetary policy committee members have already suggested they could vote to cut rates as soon as this month if data do not show the economy is picking up.

Over the weekend, Gertjan Vlieghe, an external monetary policy committee member, told the Financial Times he needed to see an “imminent and significant improvement in the UK data to justify waiting a little bit longer,” and on Friday, Silvana Tenreyro told a conference she could also vote for a rate cut “in the coming months”.

Outgoing governor Mark Carney also last week knocked ster-

ling after suggesting that more stimulus could be on the cards.

Large exchange-rate moves over the past week are evidence the market has built up significant positive bets on the pound since the December’s general election, said Adam Cole, chief currency strategist at RBC Capital Markets. Those bets are now looking vulnerable. “The balance of risks is that those positions unwind as the market prices in a greater risk of a January rate cut,” Mr Cole said.

Line chart of Implied probability (%) showing Market expectations for BoE rate cut jump At the most recent meeting in December, the rate setters voted 7-2 against cutting rates.

Last week, market participants saw just a 5 per cent chance of a rate cut in January, judging from swaps data compiled by Bloomberg. On Monday, that probability shot up to 52 per cent. Markets are also fully anticipating a rate cut by August.

This shift is also reflected in UK government bonds, which have rallied on the prospect of lower interest rates. The yield on the 10-year gilt fell to 0.74 per cent on Monday, compared with more than 0.8 per cent last week.

Lee Hardman, a currency analyst at MUFG, said: “The UK rate market has been underpricing the risk of a BoE rate cut and will need to continue to adjust to price in a higher risk as soon as at the end of this month.”

Matteo Salvini, Italy’s opposition leader, is agitating against the ESM treaty

Italy emerges as biggest obstacle to eurozone banking union Rome wants a ‘package deal’ that includes common deposit insurance scheme MARTIN SANDBU

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n 2012 eurozone leaders vowed to break the “doom loop” by which national governments and their banking systems could drag each other down in a financial crisis. This began the long journey towards a banking union in which taxpayers would no longer be on the hook for failing banks.

Had the leaders fully understood what they were signing up for, they may not even have started. The logical destination of breaking the doom loop is to relinquish one of a government’s most attractive powers — the ability to make “its” banks finance its deficits when nobody else is willing. The fear of losing a captive market for sovereign bonds is now turning into a seemingly insurmountable obstacle to progress, notably in one country.

Rome has emerged as the biggest stumbling block to the two big financial reforms of the euro: upgrading the European Stability Mechanism rescue fund for troubled governments, and completing the banking union.

The new ESM treaty is being held up because the Italian opposition, led by Matteo Salvini, is

agitating against it on the grounds that it will force losses on Italians who put their savings in government bonds. Rome is holding off on approving the ESM until it can make it politically saleable at home.

“Basically they need something to claim victory,” says Lorenzo Codogno, former chief economist of the Italian Treasury. Regional elections at the end of the month do not help.

Rome has let it be known it wants the ESM passed as part of a “package deal” which must include banking union and its ultimate prize of a common deposit insurance scheme. But it is simultaneously resisting demands from counterparts that banks must first be prevented from holding too much of their own country’s debt, or common deposit insurance is out of the question. Again, compromise founders on the fear of making it harder to sell government bonds.

As Mr Codogno warns, “if Italy blocks ESM on basis that it can get a package deal, that may be a miscalculation and you may get nothing”.

“I doubt that this position will prevail,” says Lucrezia Reichlin, economics professor at London Business School. A regional election win should make it easier for the government to sign off on the

ESM revision, she notes.

Still, for banking union to get moving again two concerns must somehow be satisfied at the same time: the need to reduce banks’ exposure to their own sovereign, and debt-laden governments’ fear of not being able to borrow. Italy’s central bank chief, Ignazio Visco, has stated repeatedly that capital charges on banks’ sovereign exposures could be acceptable if, but only if, a common eurozone “safe asset” — a “eurobond” — was introduced at the same time. That solution, however, is anathema to Germany and other northern states.

An intriguing alternative is being promoted by Luis Garicano, an economist and liberal Spanish MEP. Instead of substituting common eurobonds for government bonds, Mr Garicano recommends letting banks treat as risk-free a diversified “safe portfolio” all eurozone government bonds. Under such a system, any Italian bonds that Italy’s banks needed to offload would be bought by banks elsewhere in Europe, because they would diversify away from their country’s debt. It would also encourage investment banks to securitise diversified bundles of bonds.

Beales in sale talks to avoid collapse UK department store chain blames ‘lunacy’ of business rates for adding to trading difficulties ALICE HANCOCK AND JONATHAN ELEY

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eales, one of the UK’s oldest department store chains, is in talks with two potential buyers to save it from a collapse that would put more than 1,000 jobs at risk.

Tony Brown, Beales’ chief executive and owner, said that the company was speaking to a venture capital firm and a rival retailer about buying the business, and would either confirm a sale by the end of this week or look at alternatives.

If an agreement cannot be reached, he added, administration “would be an option for us”. On Thursday last week, Beales filed a notice of intent to appoint an administrator, giving it 10 days’ protection from creditors.

Mr Brown would not reveal the

identity of either party. Mike Ashley, the controversial founder and chief executive of Sports Direct, has previously expressed interest in the chain but has more recently spoken of the challenges of turning round House of Fraser, which he acquired in August 2018.

Sports Direct did not immediately respond to a request for comment.

Mr Brown said the “lunacy” of business rates had compounded the trading difficulties that afflicted all retailers over the festive period. In some locations, he said, the company was paying more than three times its rent in rates.

Beales reported a pre-tax loss of £3.2m for the year to the end of March 2019, up from £1.5m the year before. Sales declined slightly from £48.7m to £48.3m.

The group first began trading in 1881 in Bournemouth where its

headquarters remains. Beales has 21 stores spread across middle-sized UK towns including Bedford, Mansfield, Tonbridge and Skegness, as well as one in Scotland.

In 2018, two years after it reduced rents on 11 of its stores through a company voluntary arrangement, Mr Brown led a management buyout of Beales backed by restructuring specialist Hilco.

In December last year, Beales announced that it was appointing KPMG to oversee a sale of the company while it continued “to acclimatise to the ever-changing landscape and challenges of the retail market”.

Both the British Retail Consortium and the Centre for Retail Research have declared that 2019 was one of the worst years for UK retail in the past 25 years. After stagnant Christmas sales, many retailers have struggled to meet costs.

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Tuesday 14 January 2020

BUSINESS DAY

FT

ANALYSIS

Australia is no longer the lucky country

Blessed by economic good fortune, it now faces a future blighted by climate change

he book The Lucky Country was written about Australia in the 1960s, and since then the label has stuck. For anyone slogging their way through a British winter, the image of Australians on the beach seemed impossibly alluring. On my first visit to the country, 25 years ago, a Sydneysider teased me: “You guys used to deport your convicts here.

Now what do you think?” Naturally, we were sitting outside at a barbecue with beers in our hands.

In the decades afterwards, Australia’s luck seemed only to improve. Asia’s boom created huge demand for the country’s commodities. For the past three decades, Australia has not suffered a single recession — a unique record in the developed world. With a population of just 25m to share the riches of an entire continent, prosperity seemed guaranteed long into the future.

While the US and the UK fretted about the erosion of middle-class lifestyles, the “Australian dream” powered ever onwards.

But by participating so eagerly

of an Australian summer, were also temporarily closed. There is anxiety about the Australian Open — the first grand slam tennis tournament of the year — which is due to start in Melbourne on January 20. (Last year play had to be suspended for a time because of extreme heat, which touched 44C).

The fires could rage in Australia for a couple more months.

But the greater fears must be longer term. Average temperatures in Australia are rising, with successive summers setting new records. Last year was the hottest and driest in the country’s recorded history, with rainfall 40 per cent below average. Australians, who used to look forward to the summer, are beginning to dread it — both because of the heat and because of the foreboding about the future that it inspires.

But these fears are by no means universal. The last Australian election saw a victory for rightwing parties which had pooh-poohed the need for drastic action on climate change, portraying climate activism as a fetish of rich urban liberals, happy to deprive ordinary Australians of

in the mining boom, Australia might also have been helping to dig its own grave. Fossil fuels are driving climate change; and, as the government now accepts, global warming is a major factor behind the fires, water shortages and record temperatures that are ravaging the country.

The statistics of homes destroyed and lives lost are tragic but do not, in themselves, suggest that a whole society is at risk.

Some 27 people have so far been killed and more than 1,800 homes have been lost. But the ecological toll is horrifying.

In the state of New South Wales alone, it is feared that more than 1bn animals may have been killed by the fires or have had their habitats destroyed, including a third of the state’s koalas — devastating an animal that has become a symbol of the country and its unique wildlife. The coral of the Great Barrier Reef, another of Australia’s great natural wonders, has already been severely damaged by climate change.

The fires have not ravaged the major urban areas, where the majority of Australians live. But daily life has been severely affected by the haze from the fires. Air quality in Canberra, the federal capital, was for a while the worst in any city in the world, causing the national art gallery to close, postal services to be suspended and some embassies to shut down. In Sydney last week, pools and tennis courts, those symbols

their jobs, pick-up trucks and Sunday roasts.

The political right’s complacent stance about climate change, along with a series of errors, has led to a backlash against Scott Morrison, the prime minister, who once waved a lump of coal around in parliament, urging his audience not to be frightened of the stuff. But the fact that Australia is still so dependent on coal for its energy generation and exports no longer seems like something to laugh about. The country’s go-slow approach to international climate negotiations also looks increasingly like an act of self-harm, rather than a shrewd defence of the national interest.

The government responds to its critics by pointing to an inconvenient truth. Australia accounts for just 1.3 per cent of global carbon emissions. If you include the country’s coal exports in the calculation, the figure rises to 4 per cent. Still, it is clearly true that Australia could shut its entire coal industry down without having a transformative impact on global emissions.

Australians who want to see the country take more urgent action respond that if even rich Australia fails to change its ways, it cannot expect countries with lower living standards, such as China, to rein in emissions. That may well be true. On the other hand, even if Australia does take action, there is clearly no guarantee that others will follow its example.

GIDEON RACHMAN

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Italian politics: Matteo Salvini’s comeback bid Victory in the leftwing region of Emilia-Romagna, could propel the League leader to prime minister MILES JOHNSON

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hen Alan Fabbri was growing up near the northern Italian city of Ferrara in the 1990s he engaged in an act of teenage rebellion that surprised his friends: he decided not to become a communist.

As a 19-year-old student he signed up to the rightwing northern separatist party the Northern League, breaking not only with the political mainstream of his staunchly leftwing region of EmiliaRomagna but also going against the traditions of his own family, some of whom had fought as partisans against Nazi Germany.

Last year he ran as the now rebranded League candidate for mayor of Ferrara and won. The result left observers across Italy stunned. A city that had been controlled by Italian left since the end of Benito Mussolini’s fascist regime — and for the majority of those 73 years by the Italian Communist party — had fallen to Matteo Salvini’s anti-migrant Italian nationalist movement.

“I got my first League membership card when I was 19 . . . I was a black sheep,” the bearded and pony-tailed 41-year-old recalls, speaking from his office near Ferrara’s 14th century Estense castle.

“On my mother’s side they were communists. One of my grandfathers was illiterate but on the table he still always had a copy of l’Unità” — the communist paper founded by the Marxist theorist Antonio Gramsci in the 1920s.

“Many here used to believe people could never vote for a rightwing party because of their family traditions, but that has changed. Many ex-communists now vote League as we defend workers. The left has taken this region for granted, they thought they had already won and they were shocked.”

Now with regional elections for the legislative assembly taking place this month in EmiliaRomagna, Mr Salvini, who since taking over in 2013 has remodelled the party from its northern separatist roots to become a pan-Italian rightwing party, is aiming to stage a huge upset by seizing control of an area traditionally regarded as the spiritual home of Italian socialism.

Opinion polls are showing the rightwing coalition candidate, the 43-year-old League senator Lucia Borgonzoni, may be able to smash through Italy’s red wall. She is neck and neck with the incumbent centre-left Democratic party (PD)

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president of the region, Stefano Bonaccini.

Mr Salvini is bullish. “Let it be clear, we are going to win here,” he said on the campaign trail last week in Modena. “From the 27th of January the world is going to change . . . Everyone here tells me that they used to vote communist but now they don’t any more because they are no longer communists, they are something else now”.

Should Ms Borgonzoni triumph, not only would it deal a hammer blow to the PD, it would also probably trigger a crisis in the ruling coalition with the Five Star Movement, which could threaten to bring down the government. With Mr Salvini’s party far ahead of its rivals in national polls, new elections could then see the League leader sweep to power as Italy’s prime minister.

“If the PD lose in Emilia-Romagna, it 100 per cent has the potential to bring down the national government and set Salvini on course to become prime minister,” says Daniele Albertazzi, an academic at the University of Birmingham and expert on the history of the League.

“It really is too close to call.”

Victory in Emilia-Romagna would underline Mr Salvini’s rapid recovery since deciding last summer to launch the biggest political gamble of his career by bringing down his party’s then-coalition government from an Italian beach dressed in swimming trunks and with a Mojito in hand.

Soon after declaring that he was ending his alliance with the anti-establishment Five Star Movement, the League leader’s bid to force new national elections and become prime minister backfired.

His spurned ex-partners struck up an unlikely pact with the PD, forming a new coalition government and banishing Mr Salvini back into opposition.

Since then, the national popularity of League has consolidated, with opinion polls consistently showing it is comfortably the most popular party in Italy. In October a centre right coalition led by the League won the central region of Umbria from the PD, with Mr Salvini immediately setting his sights on the bigger prize of EmiliaRomagna.

A talented and relentless campaigner, Mr Salvini’s return to opposition has suited him as he travels up and down Italy attacking the PD-Five Star coalition as it lurches from one political crisis to the next. A League victory in EmiliaRomagna, League politicians hope, should be enough to push Italy’s @Businessdayng

fragile coalition government over the edge.

“This coalition is already so fragile that the only thing gluing it together is their fear of Salvini,” says Erik Jones, professor of European studies and international political economy at the Johns Hopkins School of Advanced International Studies in Bologna. “If they lose it is hard to see how they make it through the spring.”

How did an area that for Italy’s entire postwar history has been regarded as the most dyed in the wool regione rossa — with a proud tradition of resistance to far-right politics — reach a point where Mr Salvini’s security and antimigration platform could triumph?

“What we are seeing is a process going on, which is the same in many others parts of Europe, where people are no longer politically loyal to the identity that defined their fathers and grandfathers,” Mr Albertazzi says.

Alessio Mare, a 39-year-old bookseller from Ferrara, believes that his generation feels little connection to the experiences of the past, and this has meant many have far fewer qualms with voting for the League than their elders.

“People don’t remember any more about the partisans and the war,” he says. “Before, many people would never have dreamt of voting for the right, now they have forgotten about all that.”

Giovanni Orsina, director of the LUISS School of Government in Rome, says the communism of Emilia-Romagna always had a distinctive regional flavour that was geared more towards small entrepreneurs rather than workers in large factories. This has meant that regional concerns over immigration and the economy are not overshadowed by ideological purity.

“These people were voting communist in the past, but this was because they saw the party as a defender of their local communities and traditions,” he says. “It was very pragmatic and not particularly ideological. There is a tradition in the region of very high level of public services. But now many of these shopkeepers and artisans believe that the League will better defend their interests than the Italian left.”

Stefano Caliandro, regional coordinator of the PD, argues that the party has fallen victim to “antipolitics” that has seen Italian voters move away from traditional parties in favour of the League. “We have to face the rightwing wave that has hit not only Emilia-Romagna but the whole of Europe.”

Tuesday 14 January 2020

BUSINESS DAY

news

Nigeria fails to comply with OPEC production cut … even as cartel is making deeper cuts than planned Olusola Bello

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igeria may be hurting itself by failure to comply with its December OPEC production quota cut and may not get the support of other OPEC members when the need arises in future for them to support her course to increase crude oil production, an oil and gas operator says.

The country is however challenged by the need to make more revenue to fund its social, education, health and infrastructure and other sectors.

Though Nigeria is not the only one that is guilty of this act, as Iraq is also neck deep into it also, but they say Iraq’s position may be understandable as it is still recovering from the ravages of ISIS, and this may earn her the sympathy of other major OPEC members than Nigeria would attract if she makes request in future to increase her quota.

While Nigeria is to reduce supply by 57,000bpd, Iraq, OPEC’s second-largest oil producer, pledged to reduce output by 175,000bpd. Nigeria currently produces 1.7 million barrels per day, even though she is capable of producing over 2 million barrels per day.

However, the Saudi Arabia is still compensating for Iraq and Nigeria, which, despite cutting

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their respective productions, are still not complying with their December quotas, the S&P Global Platts survey found.

OPEC did not only continue to cut its crude oil production in December 2019, but it also managed to reach its deeper-cut target for Q1 2020 a month earlier than planned, the monthly S&P Global Platts survey showed.

The achievement may not look that remarkable if one considers that, as usual, not all cartel members respected their December—looser—quotas, and that OPEC’s largest producer and de facto leader, Saudi Arabia, still did the heavy lifting and compensated for the cheating of some other producers.

As in all previous months, Saudi Arabia over complied significantly with its share of the cuts, helping the cartel achieve the new quota effective January a month early. Saudi Arabia’s December oil production was 9.82 million bpd, as per the Platts survey. This is way below the December quota of 10.3 million bpd and even below the new Q1 2020 Saudi quota of 10.14 million bpd.

OPEC’s total crude oil production stood at 29.55 million bpd in December, down by 100,000bpd compared to November, according to the survey.

December’s crude oil production at the 10 OPEC mem-

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bers that have the stricter quotas as of January—with Venezuela, Libya, and Iran exempt and Ecuador leaving OPEC on January 1—was 25.06 million bpd, just below the combined new ceiling of the 10 producers with quotas—25.15 million bpd, Platts’ survey showed.

This survey’s findings were similar to the ones in the monthly Reuters survey, which showed earlier this week that OPEC’s crude oil production further declined in December, as Saudi Arabia continued to lead by example cutting much more than required, and as the biggest laggards in compliance—Iraq and Nigeria—moved to better comply with their quotas.

The Saudis reduced their crude oil production by another 50,000bpd in December, taking the Kingdom’s overcompliance to more than 500,000bpd compared to its quota in the deal, according to the Reuters survey.

At the OPEC+ meeting on December 6, OPEC and its partners decided to deepen the current cuts by 500,000bpd in the first quarter of 2020, when demand is expected at its weakest for 2020. This brings total production reductions at 1.7 million bpd—that is if rogue members fall in line with their quotas. Of these, OPEC’s share of the cuts is 1.2 million bpd.

How Oshodi-Abule Egba BRT will impact commuters JOSHUA BASSEY

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he Bus Rapid Transport (BRT) lane being constructed between Oshodi and Abule-Egba in Lagos State will reduce the commute time on the route by as much as 75 percent, figures from government officials indicate.

Oshodi to Abule-Egba, in Lagos, is a distance of 13.68 kilometres. Currently, commuters spend an average of two hours in peak traffic periods: 7am to 10am and 5:30pm to 9:30pm travelling this distance in the yellow commercial buses, paying between N300 and N350 per trip.

However, the BRT would be operating on a segregated route carved out from the exiting Lagos-Abeokuta Expressway, and would run 25 to 30 minutes maximum, between Oshodi and Abule-Egba.

Checks further showed that longer travelling hours are sometimes the lot of commuters on this ever-busy route, depending on whether there are sudden impediments like upturned trucks or crashes involving small vehicles.

As a result, some commuters see commercial motorcycles as an alternative during peak traffic hours. But the commer-

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cial motorcycle option comes with its own consequences, as lives have been lost in accidents involving motorcycles on the road.

Here is where the planned flag off of the Bus Rapid Transport (BRT) scheme on this route

by May 2020, holds relief for mass of commuters, who can look to a reduced travel time and convenience, which are some of the benefits that the BRT offers.

The BRT would be operating on a segregated route carved out from the exiting LagosAbeokuta Expressway, and would run 25 to 30 minutes maximum, between Oshodi and Abule-Egba.

It was not certain at the time of this report, what fare the BRT would be charging on the route, as Fola Tinubu, Managing Director of Primero Transport Services Ltd, the licensed operators of BRT scheme, in Lagos, when contacted, said he would talk to BusinessDay later on the unfolding scheme. But an official of the Lagos State ministry of transportation, hinted that the “fare should not be exploitative” compared with the yellow buses.

Lagos State governor, Babajide Sanwo-Olu, on Sunday, visited the area to see the level of work on the ongoing BRT route construction, and put the level of work at 75 percent completion.

@Businessdayng

Sanwwo-Olu told reporters that the scheme would be ready by May, this year, with 200 buses to flag off operations.

“This BRT corridor was conceived with the intention to address congestion and transportation challenges along the Oshodi-Abule Egba corridor. We are fully back on this project and we are pushing the contractor to step up the pace of work on it. Once it starts operation, this will significantly bring relief and reduce traffic congestion and transportation problems along this route.

“We are hoping that by the end of May, we should complete the entire phase 1 of the BRT infrastructure along this route.

The work has been pushed up and the entire project is about 75 per cent to completion. The rest of the construction activities to be done include completion of bus shelters, rigid pavements and terminals.”

Sanwo-Olu said the Government had started to address some impediments slowing down the construction work on the path, which, he said, included blocked drainage network along the route. The governor said desilting of the identified drain channels at Katangowa market would be done to pave the way for completion work on the BRT lane.

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Tuesday 14 January 2020

BUSINESS DAY

news It’s like debut again as MTN gains 10%...

Continued from page 1

when MTN made its NSE

debut.

“The news came as a positive surprise to investors. One of the biggest downside risks for foreign investors had been that dispute with the AGF,” said Yinka Ademuwagun, an analyst at Lagos-based United Capital.

“Moreso, the stock had declined in the last few weeks presenting a good entry point.”

The Attorney-General of the Federal Republic of Nigeria and Minister of Justice (AGF) had on Friday, January 10, withdrawn a claim for back taxes of approximately $2 billion and referred the matter to the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS).

The tax dispute dates back to August 2018, when the AGF made a demand for MTN Nigeria to pay almost $2bn in taxes relating to the importation of foreign equipment and payments to foreign suppliers since 2008.

MTN denied any wrongdoings and late last year filed a lawsuit challenging the legality of the AGF in the matter.

The High Court hearing for the case was adjourned to January 30 and 31 2020.

However, MTN Nigeria has said it would consequently follow due court process to withdraw its legal action against the

AGF and engage with FIRS and NCS on this issue.

“We appreciate this decision of the Attorney General which paves the way to an orderly and amicable resolution of this matter,” said Rob Shuter, MTN Group CEO. “MTN remains fully committed to meeting our fiscal responsibilities and contributing to the social and economic development of Nigeria and all regions where we operate.”

The turn of events came as a pleasant surprise to investors who had been worried that the $2bn tax dispute could affect MTN Nigeria’s dividend payout, as well as the company’s valuation.

MTNN led the gainers’ chart Monday as the market advanced by 0.74 percent extending a record bull run to 11 trading days. Year’s return for the market is now 10.40 percent.

MTN Nigeria, the biggest mobile phone network in the country, grew its profit by almost 29 percent to N148bn in nine months ended September 30 2019.

Revenue of the Telco grew by 12 percent in the period to N856bn as subscribers rose almost 10 percent to 61.6 million on an annual basis.

So far in 2020, MTNN share price has surged almost 22 percent.

West African ‘Eco’ could add more woes...

Continued from page 2

faced with worsening trade balance alongside increasing current account deficit, which is rubbing on other member countries to the agreement including the economy of Germany.

SBM Intelligence in a research report notes that the fact that West African countries are largely net trade importers is yet another setback for the single currency decision.

“For instance, Nigeria, according to former minister of agriculture, Audu Ogbeh, spends $22 billion annually on food importation and spends significantly more on importing refined petroleum products. This puts the country in a position where its scarce foreign exchange supplies must continually chase these goods whose prices are set externally,” SBM notes.

Nigeria is Africa’s largest economy and heavyweight in the region and accounts for about 67 percent of ECOWAS GDP, a situation that has prompted analysts to say the current deal would be between Nigeria and the 14 other West African countries.

“Although we are going to have a larger market, Nigeria is not a productive economy, hence it will not be competitive to benefit from the currency deal,” Johnson Chukwu, managing director at Lagosbased Cowry Asset Management Limited, says.

Chukwu notes that Nigeria is still faced with a lot of structural issues that would

hinder the gains from a currency pact.

The Eco is expected to be invoked by July this year, however, there are indications the unified currency might not come to limelight given its numerous conditions the majorities of its members are yet to meet.

The single currency was first planned to be introduced in 2003 but the launch has been postponed several times; in 2005, 2010 and 2014.

The currency agreement obliges member countries to meet conditions such as maintaining inflation rates below 10 percent and achieving budget deficit-to-GDP ratios of 4 percent. It also stipulates that the Central Bank financing of budget deficits should be no more than 10 percent of the previous year’s tax revenue while Gross external reserves of country members must cover at least three months of imports. To date, no country in the bloc has fully met such stringent conditions.

Nigeria’s inflation jumped to 11.9 percent in November following a government directive to shut its land borders to check smuggling of products particularly petrol and rice.

Nigeria is also faced with poor infrastructure, non-tariff barriers, and inefficient customs significantly inhibit intra-regional trade in the bloc. Thus, analysts argue that establishing a common currency would fail to achieve its purpose unless trade relations are strongly augmented the sub-region. www.businessday.ng

L-R: Seyi Makinde, governor, Oyo State; Raphael Afonja, commissioner for works; Emmanuel Akinpelu, director of Highways; Issam Fegnali, managing director, KOPEK, and Pascal Hafouch, contracts manager, during the inspection of Jakata/Bembo/ Apata Road, Ibadan.

What Finance Act 2019 means to businesses...

Continued from page 1

introduction of incentives.

The new Act made changes to the Companies Income Tax (CIT) act, Value Added Tax (VAT) Act, Petroleum Profits Tax Act (PPTA), Personal Income Tax Act, Capital Gains Tax Act (CGTA), Customs and Excise Tariff Etc. (Consolidation) Act and Stamp Duties Act. Responding to the impact of the new finance law on the economy, Ayodele Akinwunmi, relationship manager, corporate banking, FSDH Merchant Bank Limited, said it means more money for the Federal Government to finance its operations and infrastructure to lay the required solid foundation for the growth of the economy.

“It should also lead to the growth of many small-scale businesses that have tax exemption. However, the increase in the tax rate may reduce the purchasing power of the people in the short term”, he said.

In the oil and gas industry, it will raise costs for the companies by removing tax exemptions and other incentives granted these companies to invest in the sector.

Downstream companies hitherto enjoyed incentives including a five-year tax-free period, accelerated capital allowance after the tax period and tax-free dividends for five years.

Now, these provisions have been removed in the new law.

These incentives extended to industrial projects that use gas in power plants, gas-toliquid plants, fertiliser plants and gas distribution and transmission plants, allowed companies to claim Gas Utilisation Incentives (GUI) and Pioneer Status Incentive (PSI) on the same qualifying project. This is no longer the case.

To drive investments into machinery, the Nigerian government grants companies that replace obsolete plant and machinery 15percent investment tax credit. The new law eliminates this incentive.

According to section 60 of the Petroleum Profit Tax Act

(PPTA) withholding tax was not charged on dividends from upstream operations.

The Finance law has repealed this section and now dividends from upstream companies will henceforth be subject to withholding tax at the prevailing rate of 10 percent (or 7.5% if payable to recipients of a treaty country).

Since oil and gas companies often incur significant costs by way of technical, management, consultancy or professional services carried out by non-resident companies, the new law creates a proxy for such activities performed outside Nigeria if there is a significant economic presence for the services provider in Nigeria.

According to the finance law, the Nigerian recipient of such services will now be required to deduct withholding tax from the applicable fees which will be regarded as the final tax in the hands of the recipients.

“This could increase the costs of such services to Nigerian companies where the service providers pass on the withholding tax costs through “net of tax” clauses, especially if there is no tax relief available to the foreign company in its home country,” said Tax analysts at PwC Nigeria in their review of the Finance Bill.

Companies Income Tax (CIT) Act The new law introduces provisions that create a taxable presence for nonresident companies (NRCs) carrying on digital activities, consultancy, technical, management or professional services in Nigeria, provided that they have “significant economic presence” (SEP) in Nigeria; and profit can be attributable to such activity.

This is to ensure taxation of companies with an economic base in Nigeria.

In what could be a game changer for players in the insurance sector, the new law removed some impediments that have restricted the growth of insurance companies.

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Under the new Act, insurance companies would be able to carry forward losses indefinitely as opposed to the 4-year restriction currently in place. Life and non-life businesses would no longer be liable to special minimum tax provision and all wholly, exclusively, reasonably and necessarily incurred expenses will be tax-deductible.

Also, the new Act removes the double taxation caused by excess dividend tax (EDT) thereby encouraging corporate savings and retention of profits. The new law granted exceptions to the EDT provisions as against what is currently obtainable where a company that pays dividend in excess of its taxable profits, such dividend is subject to CIT at 30ppercent whether or not the income from which such dividend is paid had been taxed hitherto or whether the underlying income is altogether exempt from tax.

Henceforth, EDT is inapplicable to dividends paid out of retained earnings, exempt profit and rental/dividend income of Real Estate Investment Company (REIC). The exemption also covers franked investment income (FII).

The Finance Act also introduces thin capitalisation rule by disallowing “excess interest” on related-party lending (involving a foreign lender).

Excess interest is any amount paid or payable as interest on a loan, which exceeds 30percent of Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) With the new Act, Medium-and-Small Scale Enterprises in Nigeria would now focus on growing their businesses with minimal issues around taxes.

Section 33 of the Act focuses on payment of minimum tax as small businesses earning lower than N25 million turnover in any tax year will also benefit from the amendment as any business in that category will be exempted from Companies Income Tax which is 30 percent of the profit earned by registered companies in Nigeria. @Businessdayng

Similarly, medium-sized companies will also have their bites of the government’s tax largesse aimed at helping businesses grow. Companies in this category with revenue running between N25 million and N100 million in any tax year will be required to pay a company income tax rate of 20 percent, while companies with turnover bigger than N100million annually would pay CIT rate of 30percent.

To create incentives for early payment of taxes under the self-assessment framework, Section 77 of the Act proposes a 2percent and 1percent bonus for medium-sized and large firms, respectively, where companies’ income tax liability is paid before 90 days to the due date of filing/ payment.

Value Added Tax The new Act increases Value Added Tax rate to 7.5percent from the current 5percent, which is expected to increase government revenue. Items exempted from VAT are basically essential items and other food items.

With the passage of the new finance bill into law, the amount paidasValueAddedtaxes(VAT), would be 7.5 per cent.

The new rate shows an increase of 50 per cent from the 5 per cent initially paid as VAT before the bill was signed into law.

The need for the increase came amid concerns of dwindling revenues that has made the government handicapped and unable to fulfil a fiscal obligation.

Proceeds from the taxes would also enable the government to pay the new minimum wage of N30000, which was increased by 67 per cent, following agitations by trade unions on the need to raise the least amount paid to the country’s least workers.

To lessen the burden of the tax increase on small businesses, the bill stipulates only businesses that have an annual turnover of N25 million and above, will be required to register for VAT, charge and collect VAT on its sales.

•Continues online at www.businessday.ng

Tuesday 14 January 2020

BUSINESS DAY

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POLITICS & POLICY 50 years after: Nigeria’s situation similar to what led to civil war - Forum ... We cannot afford to lose another 2.5m people, Soyinka, Utomi, others warn Iniobong Iwok

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obel laureate, Wole Soyinka and other prominent Nigerians have said that the nation’s political situation is dangerously similar to what led to the civil war, warning that the nation cannot afford to lose another 2.5 million people to another civil war.

Soyinka, who spoke at ‘Never Again Conference: Nigerian Civil War: 50 Years After’, lamented that humanity tends to forget history; hence repeat of awful situations.

The eminent scholar, who reminisced on the events that led to civil war, lauded the formation of the ‘Amotekun’ security outfit in the southwest states, saying that it is the greatest New Year present for the people.

Prof. Anya Anya, who is the chairman of the occasion, in his address believes violence cannot provide the solution to the problems facing the nation.

According to him, Nigeria must learn from the mistakes of the past and what some say was a failure of leadership.

He added that Nigeria was not the only country that has gone through such

a situation as the civil war, and that losing a war was not necessarily a badge of failure.

In his keynote address, Professor Pat Utomi highlighted the collapse of culture as one of the major problems of the country.

He, therefore, called for urgent attention and a joint effort to fix the problem.

Banji Akintoye, elder statesman, warned that the

country was sliding dangerously towards dissolution.

Akintoye, who was the co-chairman of the event which was organised by the Nzuko Umunna and Ndigbo Lagos, said the imaginations of other tribes in the current administration had become alarming.

According to him, “The government of our country is being managed in ways that make it look like an

L-R: Pat Utomi, Anya O. Anya and Wole Soyinka at the event, Monday.

Lagos Assembly invites Sanwo-Olu’s nominees for final screening Iniobong Iwok

T

he Lagos State House of Assembly has invited 11 nominees for the state executive council, civil service commission and Lagos State House of Assembly Service Commission (LAHASCOM) for final screening on Thursday, 16th January 2020.

Giving the report of the 8-man adhoc committee on screening of the governor’s nominees during plenary on Monday, the chairman of the committee, Rotimi Abiru said that all the nominees met the criteria of the committee.

Abiru stated that all the nominees were screened by the committee on Friday, 13th December, 2019 and that they all answered the questions put to them and provided all the necessary documents.

While some members, including Tunde Braimoh,

exclusive preserve of a particular minority.

“There seems to be an agenda being pursued to establish minority in all positions of command in the executive, administrative, judicial and security services of our country. The voices of the majority register protests continually and are continually disrespected and ignored.”

According to him, “If we,

Rotimi Olowo and Gbolahan Yishawu wanted to know the specific performances of the nominees, the Speaker of the House, Mudashiru Obasa said that there was no need to doubt the competence of the committee as he said that they had done it in the past.

“The nominees would still be invited by the House to defend their nominations and this would give us an opportunity to know their ability and capability,” Obasa said.

The report of the committee was then adopted as the resolution of the House and motion for its adoption was moved by Abiodun Tobun and supported by Victor Akande.

Re ca l l t hat t he t hre e commissioner-nominees screened by the committee on Friday, 13th December, 2019 included Ganiyu Ayuba, Olugbenga Oyerinde and Bamigbose Martins.

The Assembly had on August 16th, 2019 rejected three www.businessday.ng

in our sober deference to reality, find that we can no longer hold together as one entity, then let us together peacefully find a rational solution, and let us never again plunge into any kind of war among us.

“It is sub-human to continue to suffer pain and brutalisation without trying to get rid of it. And it is insanity to keep doing a thing the same way over and over again and expect a different solution.”

The professor of history insisted that refusing to recognise and harmonise with the fundamentals would certainly continue to encourage Nigeria’s slide towards dissolution very soon.

“We fought and ended a civil war, but we have never really moved measurably away from the brinks of civil war,” he added.

Akintoye lamented that the character of the leaders in power presently and the mood among Nigerians was similar to months leading the civil war.

Earlier, the President of the Ndigbo in Lagos, Obi Umahi, a retired major general, had lamented that mutual suspicion continues to serve as a tool used by politicians to further divide the country, hence, setting the

country towards the path of eternal hate and conflict.

“Nigeria has never been riddled with mutual suspicion and disunity as we are today. Besides, life is cheap and threats of insecurity can almost be touched. We cannot afford to allow this to continue,” he warned.

In his speech, the coordinator of Nzuko Umunna, Ngozi Joseph Odumako lamented that 50 years after the civil war, the Igbos are yet to be fully integrated into the political system.

He said that despite the policy after the civil war of Rehabilitation, Reconstruction and Reintegration, the situation has not changed from what it was after the civil war.

According to him, “Have we truly rehabilitated? Have we truly reconstructed?

Have we truly reintegrated?

These are the key questions we are going to answer today and thereafter, direct our future actions in line with the answers.

“As I call on all to forgive and heal, we must remind ourselves too that healing and forgiveness can only be deeply achieved through justice, fairness, peace, prosperity, progress and development,” he concluded.

Armed Forces remembrance: Group wants free education for fallen heroes’ children

of the cabinet nominees presented to it for approval by Sanwo-Olu, necessitating their replacement.

Those rejected by the house included Ajayi Bembe, George Obafemi and Olanrewaju Sanusi.

The eight other nominees screened by the Committee included three for the state House of Assembly Service Commission and five for the state Civil Service Commission.

Those screened for the Assembly Service Commission included, Akeem Bello, a former member of the 8th Assembly, Kabiru Lawal, a member of the House from 2007 – 2015 and Richard Osungboye.

The nominees screened for the state Civil Service Commission were, Babatunde Seriki, a former member of the House; Avoseh Suuru, Adesina Odeyemi, Olubunmi Fabanwo and Kamalrudeen Olorunoje.

IDRIS UMAR MOMOH, Benin

A

s the Nigerian government marks the 2020 Armed Forces Remembrance Day, the Foundation for Families of Fallen Servicemen (FFS) has appealed to the Federal and the 36 state governments to consider granting scholarship awards to the exservicemen’s children.

Alex Ojo, chairman of the foundation made the call in a letter to the Nigeria Governors’ Forum on Monday and made available to newsmen in Benin City.

“We appealed to the Federal Government and state governments to offer scholarship and free education to children of members of the Armed Forces and other security agents who

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died in the line of duty for the nation.

“We also appeal to the Federal Government and the 36 state governors in the country to seize the occasion of the forthcoming Armed Forces Remembrance Day to declare support for families of fallen servicemen who died in the course of defending the nation,” he said.

Ojo noted that adequate support for families of fallen servicemen in the area of education and other forms of care are imperative for the country in view of the security challenges facing the country.

He added that the families of the fallen ex-servicemen faced a lot of after the death of their bread winners.

He explained that making education free for the @Businessdayng

children will encourage and boost the morale of security operatives and members of the armed forces who give their all to defend the country at the front lines.

He said the foundation was established to support the children and wives of security operatives who die in the line of duty, with particular focus on their children.

“Our mission includes facilitating free education, free health services, housing, and economic empowerment for dependents of soldiers and other security operatives who die in the line of duty for Nigeria,” he added.

He further said that the foundation was geared towards promoting patriotism and gallantry at the front lines to strengthen security for a safer and more progressive Nigeria.

Tuesday 14 January 2020

BUSINESS DAY

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41

42

Tuesday 14 January 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 13 January 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 375,002.13 10.55 -2.31 450 63,689,857 UNITED BANK FOR AFRICA PLC 297,534.97 8.70 3.57 386 40,632,556 ZENITH BANK PLC 681,303.92 21.70 -0.69 456 39,504,781 1,292 143,827,194 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 260,240.87 7.25 -5.23 342 17,805,482 342 17,805,482 1,634 161,632,676 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,597,235.87 127.60 10.00 271 12,000,320 271 12,000,320 271 12,000,320 BUILDING MATERIALS DANGOTE CEMENT PLC 2,930,967.27 172.00 - 177 1,877,156 LAFARGE AFRICA PLC. 241,616.93 15.00 -2.60 247 7,193,221 424 9,070,377 424 9,070,377 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 346,005.40 588.00 -0.25 26 4,380,343 26 4,380,343 26 4,380,343 2,355 187,083,716 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,338.94 3.50 - 12 97,552 12 97,552 12 97,552 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 12 97,552 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 20,000 OKOMU OIL PALM PLC. 62,958.06 66.00 - 35 193,755 PRESCO PLC 52,250.00 52.25 -8.17 19 4,325,690 55 4,539,445 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,770.00 0.59 - 4 11,210 4 11,210 59 4,550,655 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 1 240 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 43,086.87 1.06 0.94 106 16,552,122 U A C N PLC. 31,838.33 11.05 7.80 208 24,365,559 315 40,917,921 315 40,917,921 BUILDING CONSTRUCTION ARBICO PLC. 521.24 3.51 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,842.00 21.85 - 29 335,401 165.00 6.60 - 0 0 ROADS NIG PLC. 29 335,401 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 9 65,367 9 65,367 38 400,768 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,672.91 0.98 - 10 60,650 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 - 47 131,393 INTERNATIONAL BREWERIES PLC. 79,081.93 9.20 - 59 4,565,526 NIGERIAN BREW. PLC. 448,226.36 56.05 - 84 357,558 200 5,115,127 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 177,600.00 14.80 -1.33 71 630,284 FLOUR MILLS NIG. PLC. 95,538.84 23.30 1.30 93 11,358,433 HONEYWELL FLOUR MILL PLC 8,088.80 1.02 -4.67 44 3,279,302 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 10,480 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 - 44 827,184 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 253 16,105,683 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,842.92 9.50 -9.95 38 1,687,853 NESTLE NIGERIA PLC. 1,165,125.42 1,469.90 - 37 134,584 75 1,822,437 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,104.12 4.88 1.67 43 1,401,120 43 1,401,120 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,227.29 5.85 - 32 208,291 UNILEVER NIGERIA PLC. 103,410.10 18.00 -5.26 52 1,826,674 84 2,034,965 655 26,479,332 BANKING ECOBANK TRANSNATIONAL INCORPORATED 143,126.50 7.80 - 62 887,683 FIDELITY BANK PLC 65,193.29 2.25 -0.44 112 10,708,959 GUARANTY TRUST BANK PLC. 927,082.15 31.50 -1.41 237 18,169,137 JAIZ BANK PLC 19,446.40 0.66 -3.03 33 2,095,911 54,413.89 1.89 -5.03 67 2,908,346 STERLING BANK PLC. UNION BANK NIG.PLC. 177,636.59 6.10 - 46 284,188 UNITY BANK PLC 8,416.32 0.72 - 18 105,975 WEMA BANK PLC. 27,773.62 0.72 1.41 27 1,094,770 602 36,254,969 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,336.26 0.77 -1.30 38 1,323,267 AXAMANSARD INSURANCE PLC 22,050.00 2.10 2.44 17 916,682 CONSOLIDATED HALLMARK INSURANCE PLC 3,414.60 0.42 - 2 39,350 CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 8,101.23 0.55 -5.17 33 986,899 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 7.41 12 491,666 LAW UNION AND ROCK INS. PLC. 2,148.17 0.50 - 7 111,745 LINKAGE ASSURANCE PLC 3,840.00 0.48 4.17 10 750,125 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 0 0 NEM INSURANCE PLC 11,986.74 2.27 - 3 60,300 NIGER INSURANCE PLC 1,547.90 0.20 - 2 35,000 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 6 134,637 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,500.18 0.22 - 1 3,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 3,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,817.79 0.36 2.78 39 1,295,856 171 6,151,527 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 3,109.83 1.36 9.68 9 1,084,020 9 1,084,020

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 1 20 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 1 20 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,200.00 4.60 2.00 44 2,137,391 CUSTODIAN INVESTMENT PLC 34,997.09 5.95 - 10 107,463 540.00 0.36 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 38,021.20 1.92 -4.00 146 16,987,410 ROYAL EXCHANGE PLC. 1,697.97 0.33 - 1 12,326 STANBIC IBTC HOLDINGS PLC 446,461.11 42.50 - 17 18,313 UNITED CAPITAL PLC 15,660.00 2.61 0.38 80 4,766,569 298 24,029,472 1,081 67,520,008 HEALTHCARE PROVIDERS EKOCORP PLC. 2,418.21 4.85 - 2 28 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 3 82,000 5 82,028 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 1 666 1 666 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,737.49 2.75 1.85 16 606,700 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,756.70 5.65 6.60 55 798,958 MAY & BAKER NIGERIA PLC. 3,743.76 2.17 - 10 103,004 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 968.57 0.51 -8.93 16 578,134 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 1 31,500 98 2,118,296 104 2,200,990 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 4.35 9 3,994,823 9 3,994,823 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,323.81 0.45 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 437.40 4.05 - 0 0 287.07 0.58 - 2 5,576 TRIPPLE GEE AND COMPANY PLC. 2 5,576 PROCESSING SYSTEMS CHAMS PLC 1,596.66 0.34 -2.86 12 3,339,000 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 2 692 14 3,339,692 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 8 1,671 8 1,671 33 7,341,762 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 6 6,823 1,320,709.81 39.00 -4.88 225 2,535,597 BUA CEMENT PLC CAP PLC 17,500.00 25.00 - 62 268,513 MEYER PLC. 265.62 0.50 - 2 2,113 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 295 2,813,046 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 2,518.69 1.43 - 13 187,428 CUTIX PLC. 13 187,428 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 20 207,081 GREIF NIGERIA PLC 388.02 9.10 - 0 0 20 207,081 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 328 3,207,555 CHEMICALS B.O.C. GASES PLC. 2,289.35 5.50 - 4 6,500 4 6,500 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 4 6,500 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,315.17 0.21 -4.76 26 1,273,650 26 1,273,650 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,104.08 3.95 2.60 82 3,295,943 82 3,295,943 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 23 50,085 CONOIL PLC 13,879.04 20.00 -4.08 44 260,763 ETERNA PLC. 4,694.92 3.60 - 7 133,300 FORTE OIL PLC. 22,011.93 16.90 - 77 643,728 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 18 37,717 TOTAL NIGERIA PLC. 36,328.84 107.00 - 24 73,680 193 1,199,273 301 5,768,866 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 2 161 2 161 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 2 340 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 4.65 14 510,703 16 511,043 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 2,328.25 1.12 - 5 9,300 IKEJA HOTEL PLC TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 33,821.80 4.45 -9.18 3 251,000 8 260,300 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 933.45 1.21 - 2 10,600 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 560.83 1.30 - 11 676,050 13 686,650 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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Tuesday 14 January 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 13 January 2020

Top Gainers/Losers as at Monday 13 January 2020 LOSERS

GAINERS Company

Opening

Closing

DANGCEM

N142

N146

4

FLOURMILL

N19.75

N21

1.25

NASCON

N12.95

N13.95

1

GUARANTY

N30.1

N31

0.9

DANGSUGAR

N14.2

N15.05

0.85

Change

Company

Opening

Closing

Change

SEPLAT

N592.1

N589.5

-2.6

MTNN

N109

N108

-1

UNILEVER

N20.7

N20

-0.7

PZ

N5.65

N5.1

-0.55

N6

N5.7

-0.3

UBN

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

29,633.58 5,377.00 348,236,974.00 8.547 15.287

Market shows Nigeria stock investors reaping more ...as positive return increases to 10.40% year-to-date

I

L-R: Emeka Onyeagba, Base Manager East Seplat; Ayodele Olatunde, general manager Eastern Asset; Chioma Nwachuku, general manager External Affairs and Communications Seplat; Emeka, Ihedioha Imo State Governor; Effiong Okon, Seplat operations director, and Nkeiru Ibekwe commissioner for gender and Vulnerable groups Imo State during Seplat’s donation of relief materials to Oguta and Ohaji Egbema flood victims in Imo State

The Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 0.74percent on Monday while the Yearto-Date (ytd) return stood at 10.40percent.

The All Share Index closed at 29,633.58 points as against the preceding day close of 29,415.39 points while Market Capitalisation closed at N15.287 trillion as against preceding day close of N15.175 trillion.

The signing into law of

Nigeria’s Finance bill 2019 and implementation of the 2020 budget may have a positive impact on companies’ earnings as well as consumer spending, the NSE CEO said. President Muhammadu Buhari on Monday January 13, 2020 assented to the Finance Bill 2019.

“Though market breadth closed negative with 20 losers and 16 advancers, we believe that renewed sentiment in

MTNN will continue to spur positive activity in the market”, said analysts at Vetiva Securities who expect a positive close in Tuesday session, “barring any major losses in market heavyweights.” The volume of stocks traded increased by 23.96percent, from 280.92 million to 348.23 million, while the total value of stocks traded increased by 77.51percent from N4.815 billion to N8.547 billion in 5,377 deals.

Stanbic IBTC reaffirms commitment to growth of Nigeria’s Debt Capital Markets

S

FTSE 100 Index 7,617.60GBP +29.75+0.39% S&P 500 Index 3,280.43USD +15.08+0.46% Generic 1st ‘DM’ Future 28,842.00USD +65.00+0.23% Deutsche Boerse AG

engagement between market participants to further increase understanding of the initiatives required to grow the debt capital markets in the country.

In 2019, Stanbic IBTC won several awards such as the Best Foreign Investment Bank, Best Debt House, Best Equity House and Best Loan House in Nigeria at the EMEA finance African Banking Awards. Stanbic IBTC was also awarded as Africa’s Best Investment Bank at the Euromoney 2019 Awards of Excellence. The Association of Issuing Houses Nigeria also recognized Stanbic IBTC as the Best Investment Bank and Commercial Paper House.

According to Sogunle, www.businessday.ng

these achievements are a demonstration of the organization’s position as a leading, end-to-end, financial services provider in Nigeria.

While speaking on how the Nigerian debt capital markets fared in 2019, he said that capital markets activities were at its peak in the months of May, June and July. He added that N439billion in corporate paper was issued in comparison with N470billion over the same period in 2018.

He said: “We expect the total volume issued in 2019 to eclipse 2018 as markets have seen yields fall to levels unseen since 2015 and a number of issuers are gearing up to take

advantage to lock in lower funding rates for extended tenors.

Despite the undulating nature of the market, there has been increased sophistication, amongst issuers, of the different financing options available in the local debt markets with issuers effectively timing capital markets issuance to maximize cost savings relative to bank debt. We have witnessed an increasing number of corporate issuers exploring alternative funding options such as Green Bonds and Infrastructure Bonds, in addition to conventional bonds, commercial paper and Eurobonds.”

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Deutsche Boerse AG German Stock Index DAX 13,451.52EUR -31.79-0.24% Nikkei 225 23,850.57JPY +110.70+0.47% Shanghai Stock Exchange Composite Index 3,115.57CNY +23.28+0.75%

Stockbrokers push for financial market overhaul …say demutualisation, insurance sector recapitalisation will boost market

A

ncreased interest in Nigeria’s listed stocks reflects in record advance of 0.74percent on Monday January 13,

tanbic IBTC Holdings Plc has reaffirmed its commitment to the growth of the Nigerian debt capital markets. Demola Sogunle, Chief Executive, Stanbic IBTC Bank Plc disclosed this at the Bonds, Loans and Sukuk Nigeria Conference which held recently at the Eko Hotel and Suites, Victoria Island, Lagos.

Sogunle noted that the Stanbic IBTC group was constantly driving innovation to encourage growth and development in the markets.

The Stanbic IBTC Chief Executive added that the organization would continue to facilitate value added

Global market indicators

Iheanyi Nwachukwu

Stories by Iheanyi Nwachukwu

2020.

The record positive which represents N112billion in equities gain has helped push the year-to-date (ytd) positive return to +10.40percent.

Oscar Onyema, Chief Executive Officer (CEO) of Nigeria Stock Exchange (NSE) reviewed the market for the year 2019 and gave the outlook for the year 2020.

“The year 2020 has started on a good note… We intend to work closely with our stakeholders to sustain this growth trajectory”, he said.

MTNN Plc recorded the highest gain on the Bourse after moving from N116 to N127.6, adding N11.6 or 10percent, followed by UACN Plc which increased from N10.25 to N11.05, adding 80kobo or 7.80percent.

Presco declined most from N56.9 to N52.25, losing N4.65 or 8.17percent; followed by newly listed shares of BUA Cement which crashed from preceding day high of N41 to N39, after losing N2 or 4.88percent.

43

pparently bothered by the lackluster state of Nigeria’s financial market, stockbrokers under the aegis of the Chartered Institute of Stockbrokers (CIS) have reviewed Nigeria’s economic outlook and re-affirmed the need to overhaul the financial market to attract more investors into the capital market. It said demutualisation and insurance sector recapitalisation will provide additional boosters for market revitalisation. Besides, the gentlemen of the city have urged the federal government to set up a council, comprising different professional bodies to drive savings as a strategy to encourage investors towards me dium and long ter m investment in Nigeria.

In a statement titled “The Nigeria Economic Review: Outlook and Recommendations for 2020”, the Institute urged the federal government to review entire financial system for enhanced growth and development.

“The Federal Government should Review the structure of the entire Nigerian Financial System significantly to raise the utilization and development of the capital market, especially, fixed income and equity segments to create a balanced and faster growth inclined system. There is a need to set up an independent Council comprising Banks, St o ck b ro ke r s, Mo r tga g e I n s t i t u t i o n s, I n s u r a n c e Companies, and Pension Fund Administrators, etc. to more effectively coordinate the mobilization of savings in the country”, CIS said.

“Federal G overnment should institutionalize the funding framework for Capital Market Literacy (CML) in Nigeria by financially empowering CML oriented bodies, as is done in France through the IEFP. The Tertiary Education Trust Fund (Tetfund) should allocate a portion of its fund to the Capital Market Literacy (CML) drive, and to the CIS in particular. As banks control almost the entire liquidity in the @Businessdayng

Nigerian financial system, they should support capital market investments, including reintroduction of margin lending with improved regulations.

CBN, being the dominant institution that currently provides liquidity support for critical economic sectors, should extend its liquidity support to the capital market, including the equity segment.

“The Federal Government should direct Pension Funds in Nigeria to look beyond fixed income investments and also invest substantially in the equities market for liquidity and stability purposes. Greater tax incentives should be granted to companies and individuals in accordance with their levels of savings and investments in formal and recognized outlets such as stock markets”, the statement said.

The Institute noted that In Nigeria, economic policy was largely discharged by way of continual interventions by the CBN while the Federal Government’s decision to close the country’s land borders also had significant impact on performance indicators. Figures from the National Bureau of Statistics (NBS) and the CBN showed that, although there were improvements as the year went by, the key parameters of economic performance were significantly below the targets set by the Federal Government’s Economic Recover y and Growth Plan (ERGP).

CIS noted that further that “Nigeria recorded a GDP growth of 2.28percent in Q3, 2019, up from 2.12percent recorded in Q2, but still far below the ERGP’s target of 4.5percent. “The CBN’s website indicates that the price of Nigeria’s Bonny Light crude had hit $71.31 as at 27 December 2019. Nigeria’s inflation rate stood at 11.85percent YoY as at November 2019, but as at the time of writing this report, the National Bureau of Statistics had yet to release its Report on Job Creation and Unemployment”.

“The last NBS’ data for Unemployment was in Q3’2018 and showed that 23.1percent of the labour force was unemployed.

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BUSINESS DAY Tuesday 14 January 2020 www.businessday.ng

Ifeanyi Orajaka: How GVE Projects is changing mini grid narrative in Nigeria ISAAC ANYAOGU

I

t started out as a final year project for three final year university students. How can we assist a backwater community without access to the national grid generate electricity cheaply and sustainably? They began to research and apply for funding and five years later that experiment gave birth to Green Village Electricity (GVE) Projects Limited with Ifeanyi Orajaka as its face.

GVE Projects Nigeria Ltd, has now grown to become Nigeria’s biggest renewable energy company. It was founded by the trio of Ifeanyi Orajaka, Chuka Eze and Ikechukwu Onyekwelu, around 2009 when they were interns at Shell Petroleum Company in the Niger Delta and about to complete their final year in the University.

While in their 20s, they set out to do something about energy poverty in rural Nigeria, especially in the Niger Delta region.

They went to remote villages, where people still lived without electricity access, despite being in an oil-rich region. These communities relied on kerosene lamps and candles for light and had to go to the village market to charge their mobile phones.

“We started formally in 2009 as undergraduate students in FUTO but we got incorporated in 2012, and we distributed our first mini-grid which happened to be the very first in West African region in 2013,” said Orajaka.

“I joined IEEE in 2009 as a student member and had the good fortune to lead a team that won an Outstanding Student Humanitarian Prize in the inaugural IEEE Presidents’ Change the World Competition that year for our “Project Spread the Light: Provide Electricity in a Small Settlement.” IEEE Executive Director Jim Prendergast personally alerted me to the Humanitarian Technology Network, which I joined, as it meshed with the objectives of my team’s project.

“This led me to join the Community Solutions Initiative, which became today’s IEEE Smart Village Initiative, and to present papers at international IEEE conferences, including regular attendance at the annual IEEE Global Humanitarian Technology Conference,” the company said.

Orajaka said IEEE’s support provided the young entrepreneurs with credibility and led to

Orajaka

collaboration with other organizations, such as the U.S. African Development Foundation that sponsors the Power Africa OffGrid Energy Challenge. Upon an invitation from the U.S. Department of State I attended the 2015 Global Entrepreneurship Summit in Nairobi, Kenya.

All of these factors contributed to the success of GVE and the credibility that GVE and its collaborators brought to their application funding support to Nigeria’s Bank of Industry.

From this humble beginning, the company has built over 13 mini grids around Nigeria and now serves about 7000 households with cumulative solar energy capacity of 0.65 megawatts.

“Our target in the mediumterm is by 2023 to impact 3.6 million Nigerians,” Orajaka said recently.

“It is a very herculean task but currently we have been able to attract the right partnerships from both the investment and the financing and business development world to help us achieve that goal. Currently we have the Bank of Industry as shareholders, member of the board of the company. Most recently we also on-boarded All On and we are also working with Electrify,” Orajaka said.

The critical success factor for GVE Projects is a strong corporate governance practice. It has a diversified board and maintains a long-term relationship with critical stakeholders. This is im-

portant when you are running a business in your mid-20s having to manage millions of dollars in grant funding.

GVE, under Orajaka and his team has built an active corporate board comprising of the three chief promoters, a C.F.O with professional experience at Barclays Capital New York and three seasoned non-executive directors and Bank of Industry Nigeria. The management team is led by a Chief Executive Officer who has a strong entrepreneurial spirit and three Executive Directors who are all founders and shareholders of the business, and are professional engineers.

An advisory board also exists due to the dynamic and complex nature of energy projects as well as the risks associated with the infancy stage of the overall RE industry in the country. Its role is to provide expert advice on technical issues and management of risk within the organization and its business. This implies that a strong corporate governance structure has been put in place to effectively manage risks and ensure best practices within the organization.

Impact of grant funding GVE in 2009 was awarded the “Outstanding Student Humanitarian Prize” of US$1,000 as part of the IEEE Presidents’ Change the World Competition. It was also awarded US$30,000 in the Bank of Industry/United Nations Development Programme (UNDP) prize in May 2012.

The next year, IEEE Smart Village, a global humanitarian program helping remote, energy-deprived communities build toward sustainability with renewable energy and technology, partnered with GVE on US$675,655.40 equity and debt investment from the country’s Bank of Industry. IEEE Smart Village will provide GVE with US$65,535.20 of matching funds as part of a seed-funding program supporting grant, bringing the total investment to US$741,190. three units each with 24 kW PV solar-based microgrids in three off-grid Nigerian communities.

With this funding, GVE implemented the IEEE Smart Village’s portable battery franchise model to a Nigerian village through the installation of a 6 kW PV microgrid. The project enabled basic lighting, charging cell phones, powering small tools and entertainment devices and provided electricity for a health center. As a result, GVE was named a winner of the Power Africa Off-Grid Energy Challenge, an initiative launched by General Electric (GE) and the United States African Development Foundation (USADF).

Under the IEEE Smart Village, initiative, GVE Projects, Ltd commissioned 37Kw PV microutility in the village of Bisanti in 2015. This is the single largest mini-grid system to be developed in Nigeria, and the first of three 10% IEEE Smart Village seed-funded projects in Nigeria.

The second and third microutility stations are scheduled to open late February.

Each system provides energy access to 200+ households and 25+ small and medium sized enterprises along with installation of extensive market-center street lighting. GVE is now in discussions with the Bank of Industry Nigeria to secure the capital allowing continue expansion this year into more villages.

GVE reached an understanding with the Nigerian Ministry of Energy protecting it’s projects with exclusive territorial rights for their microgrid programs.

“From the pilot projects we have deployed, our business model has proven sustainable and scalable. Our fee structure is designed to give customers the best service at the lowest possible rate, making off-grid electricity provision reliable and affordable.

Our ultimate goal, with the Bank of Industry’s financing and the support of IEEE Smart Village, is

to light 200,000 homes to serve a million people over the next five years” says Orajaka.

Orajaka also said “This ambitious plan will sustain GVE Projects, Ltd., if all goes well. One of our major drivers has been the satisfaction we take in creating value and the socio-economic uplift in the lives of the indigenes of our host communities.

We are agents of change, for the common good. I asked one of my customers to describe the impact of reliable, affordable electricity on his life. How did he light his home at night? How did he charge cell phone batteries?”

“Our business and the positive impacts we’re having on offgrid communities in Nigeria has been made possible through my own membership and participation in IEEE and the support we have received from the Smart Village Initiative. My colleagues and I are grateful for IEEE’s support, which began when we were merely young students with lofty ideas for an energy access revolution in West Africa. And we are honored to be ambassadors for IEEE wherever we go.

As with other start-ups, the process of establishing such a business has not always been rosy. Orajaka said the business encountered critical challenges, including severe financial constraints. “We have made sacrifices. But the families we empower have been supportive and have bought into our dreams.

“Now, on a daily basis, we are applying the electrical engineering education we learned at university as well as the experience we’ve earned through our field deployments, as well as through the support of IEEE PES, the IEEE Smart Village Initiative and the international conferences we have been enabled to attend.

Today, GVE Projects, Ltd., has become one of the most wellknown renewable energy providers in Nigeria,” said Orajaka.

Through the efforts of companies like GVE Projects Ltd, the Nigerian mini grid market today has reached an inflection point where costs are competitive with alternatives like diesel and petrol generators, and projects are moving away from grant funding to commercial investments.

Nigeria currently has about 20 mini grids but there is a large potential for installing 10,000 mini grids of 100 kW each by 2023 and this will only meet 30% of anticipated demand indicating there is room for more growth.

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