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news you can trust I ** tuesDAY 14 july 2020 I vol. 19, no 605

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How Nigeria can stem its increasing poverty rate – Kale A D

Tough war ahead to stabilise oil prices as shale producers file bankruptcies ISAAC ANYAOGU

MICHAEL ANI

isturbed by the increasing number of Nigerians living on less than one dollar a day, Yemi Kale, statistician general of the Federation and CEO of National Bureau of Statistics (NBS) has recommended three solutions to solving Nigeria’s high poverty rate. Africa’s largest economy has some of the worst prosperity outcomes both globally and among peers in the continent, and that has over time inhibited economic growth of the country. For instance, the country over-

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Fire outbreak: A section of the World Trade Centre building in Central Business District of the Federal Capital Territory, Abuja going up in flames, yesterday. The management of the World Trade Centre said that no serious damage was done. Pic by Tunde Adeniyi

rash of bankruptcy filings from shale oil producers reveals the destructive impact the coronavirus-induced slow oil price is having on US oil production and the battle ahead to keep oil markets stable. Shale producers including Whiting Petroleum, a major shale driller in North Dakota, Continues on page 30

Inside

COVID-19: Millions of Nigerian children at ‘extremely high risk’ of dropping out of school forever – Report P. 2

Tuesday 14 July 2020

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news Here are alternatives for Nigerian investors in crashed interest rates era

… Coronation Asset urges navigating capital market … Investors to ask for naira risk-free fixed-income return of 14.7% HOPE MOSES-ASHIKE

igerian investors are faced with difficult choices as interest rates have crashed, according to Guy Czartoryski, head of research at Coronation Asset Management. Czartoryski says the investors have two alternatives of either to wait for rates to rise again in future or to accept more risk in order to increase returns. But to do that, he says they need to increase their understanding of risk. Coronation Research on Monday published its report on the Nigerian investment landscape titled ‘Navigating the Capital Market: The Investor’s Dilemma’. The revolutionary report studies the Nigerian investment landscape over a 10year period and finds how Nigerians have managed to preserve their capital over the long term. Some of the conclusions are surprising. For example, it has been

remarkably easy to beat inflation over the last 10 years by buying Federal Government of Nigeria Treasury Bills. However, with the crash in interest rates in the first half of 2020, this era has come to an abrupt end. By contrast, equity market returns have not preserved capital for investors over the long term, even when adding back the generous dividends paid to investors. By looking at the internal profitability of stock exchange-listed companies, ‘Navigating the Capital Market’ identifies which stocks are the ones most likely to generate satisfactory returns for their owners, and back-tests the results. The report takes a new approach to setting investment return benchmarks. Instead of targeting inflation, which is the conventional benchmark, it recommends that investors should aim to beat the effects of naira devaluation against the US dollar, and obtain the risk-free return they would have in US dollars.

Law enforcement, public-private collaboration critical in combating illicit trade – experts IFEOMA OKEKE

xperts have alerted governments across the world to the threat of rising illicit trade resulting from the ongoing pandemic situation. The experts, who spoke at a recent webinar, further proffered measures that can assist governments to counter the resultant proliferation of illicit products which cost governments huge losses in revenue. The impact of taxation on illegal trade, particularly during strained economic times, was also a key discussion point during the session. The webinar, titled ‘Global Illicit Trade – Profiteering

from Pandemic,’ was organised by The Economist Intelligence Unit and featured a panel of experts from law enforcement, international organisations and industry. Participants tuned in from various sectors all over the world. The discussion, which was moderated by Christopher Clague, a managing editor and head of Trade and Globalisation Issues at the Economist Intelligence Unit, noted that with the current global situation necessitating shut borders and travel restrictions, organised crime groups had quickly adapted to deploy alternate measures in producing and trading illicit products, including use

of the internet, social media, online networking sites, courier taxis and delivery services. Paul Stanfield, INTERPOL’s director of Organised and Emerging Crime and panellist at the event, highlighted how the restriction in the movement of people are forcing criminals to go online and commit massive amounts of frauds. “Criminals have taken advantage of the situation by becoming savvier using the internet. So, we see a lot of the criminal activities going on online because of the restriction of movements. Criminals are very quick to adapt, and they are motivated primarily by making money,”

tuted by heads of the Federal Ministry of Health, the Nigeria Centre for Disease Control (NCDC) and other Ministries, Departments and Agencies of government, endorsed the partnership between AIG and the NESG for the development of the Systems Platform. The Systems Platform is equally deployed in collaboration with the Nigeria Governors’ Forum. “Beyond improving the transparency, accountability and governance of national resources co-sourced from public, privateanddevelopmentsectors towardstheCOVID-19response, the Predictive Analytic Model embedded in the Platform will enable the Presidential Task Force on COVID-19, and the Nigeria Centre for Disease Control (NCDC) predict and project the rate of infections, deaths and consequent resource requirements,” explained Ofovwe Aig-Imoukhuede, a director of AIG. “This is key for the future of Nigeria’s COVID-19 response”. The Systems Platform is expected to improve the National and State Health Information Management System by adding the Platform’s capabilities seamlessly to the country’s existing data ecosystem. The overarching objective is to help in galvanising efforts at efficiently plugging nationwide resource gaps across the three priority areas of Testing, Treatment and Isolation and Contact Tracing and Tracking in the context of COVID-19. www.businessday.ng

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L-R: Onofiok Luke, chairman, House of Representatives Committee on Judiciary; Abubakar Maidama, secretary, National Judiciary Institute (NJI), and Roseline Bozimo, administrator, NJI, during the committee’s oversight visit to the NJI in Abuja, yesterday. NAN

AIG, NESG partner to fund incidence/response tracker towards control of COVID-19

frica Initiative for Governance (AIG) is partnering the Nigerian Economic Summit Group (NESG) and the Federal Government by funding the building of a Nigeria COVID-19 Incidence and Resource Tracker, Dashboard and Predictive Analytic Platform (Systems Platform) to assist the containment of the COVID-19 pandemic in Nigeria. The Systems Platform solution is expected to provide a robust,up-to-datedatabaseofFederal and Sub-National resource andavailabilityrequirementsfor the COVID-19 response, based on the World Health Organisation (WHO) recommended resource specifications on packages for COVID-19. “Once deployed, the Systems Platform will provide a National and Sub-National Inventory Management System that gives national visibility of what is procured, in-stock and out-of-stock across the Federal and State Testing, Treatment and Isolation Centres,” said ‘Laoye Jaiyeola, CEO, NESG. “The real-time data provided will enable government, the private sector, international organisations and other donors to mobilise more effectively in providing the critical human and material resources needed to support the country’s response to the pandemic”. On May 19, 2020, the Presidential Task Force on COVID-19, which is consti-

Stanfield said. Another panellist, Ian Monteith, global senior director of Anti-Illegal Trade at Japan Tobacco International (JTI), noted that “despite Covid-19 restrictions, significant illegal production has continued throughout the last few months of lockdown and organised crime groups are opening new factories”. “For instance, as many as eight new illegal production or storage sites have been identified in Belgium since the start of this year, many during the crisis. This picture extends to most EU countries and large counterfeit produc-

COVID-19: Millions of Nigerian children at ‘extremely high risk’ of dropping out of school forever – Report Godsgift Onyedinefu, Abuja

eep budget cuts to education combined with rising poverty caused by the COVID-19 pandemic could force millions of Nigerian children out of school forever, with millions more falling behind in learning, a new report warns. Before the pandemic, Nigeria already had an estimated 10 million out-of-school children, one of the highest rates in the world. According to the report released by Save the Children on Monday, other countries in Africa whose children are at extremely high risk of not returning to school after the lockdowns lift are Niger, Mali, Chad, Liberia, Guinea, Mauritania, Senegal and Cote d’Ivoire. Before the outbreak, 258 million children and ado-

lescents were already out of school in 12 countries. As countries are expected to shift funds in the fight against the COVID-19 outbreak, the report warned that the pandemic threatens to cause an additional gap of at least $6.2 billion in investments in education in sub-Saharan Africa region over the next 18 months. Globally, the gap in education spending could be as high as $77 billion. The report noted that girls are likely to be much worse affected than boys, with many forced into child marriage. As the impact of the recession triggered by COVID-19 hits families, many children may be forced out of school and into labour markets. “The impact of school closures extends beyond disruption to education – they also carry other risks to children. Children who are out of school

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are at greater risk of being recruited into labor, abuse, violence and exploitation, and for girls,theyaremorelikelytonever return to school when lessons re-commence,” Mercy Gichuhi, country director, Save the Children International Nigeria, said. “As pressures mount on low-income families, children may need to work to bolster family incomes, and girls will face a disproportionately larger burden for caring for family members who contract the virus and taking care of younger children. Therefore, there is a tendency that the situation could add millions more into the existing caseload of out-of-school children in Nigeria,” Gichuhi said. The director said that many of the poorest children in low-income and conflictaffected countries may not have literate parents, and do not have access to internet @Businessdayng

or devices needed to access distance learning, limiting the support available to them. “In sub-Saharan Africa, 89 percent of the pupils do not have access to household computers, 82 percent lack internet access and around 28 million students live in locations without mobile network coverage. Losing out on months of learning means many children will struggle to catch up, increasing the likelihood of them dropping out of school,” she said. She stressed that the shortfall in investment in education could set back or even bring an end to the education of millions of children in low and middle income countries. “One of them is the 12-year-old Buba from Nigeria – he and many other children in his village can no longer go to school, as it was closed due to the virus,” Gichuhi said.

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Rising COVID-19 statistics: No to ANXIETY, Yes to Positive Action BY BEN MAMEDU

he COVID-19 Statistics, as officially released daily by the Nigerian Centre for Decease Control (NCDC) have been rising exponentially since the first index case was reported in Nigeria on 27th February, 2020. We have crossed the 30,000 mark in total infection cases (32,558 as at 12th July, with 740 deaths). The figures are indeed scary and create room for fear – and anxiety, upon the realization that the curve, rather than flattening, is indeed on a steep ascendance thus giving rise to questions regarding the actual impact of the lockdown on the curtailment of the spread of the virus. Such questions may not be misplaced – from a figure of less than 1,000 infections at the end of March, 2020 when the lockdown was imposed on Lagos, Ogun and the Federal Capital Territory, Nigeria now ranks 49th on the table of most infected countries (out of 215) according to the renowned global statistics portal www.worldometers.info .On April 30, there were 1,932 cases, increasing to 2,170 cases in the country on May 1st .These moved to 9,855 on May 30. On June 1, 2020 10,578 total infections were recorded in Nigeria. Total infections rose to 25,694 by June 30th, moving up by 142% within one month of the ease of lockdown. Despite the scary figures of infection, the lockdown surely had its benefits as it was a period of intense campaigns of safety measures and protocols for keeping safe, which a generality of the populace who are conscious of preventing being infected by the highly contagious virus have since imbibed. These safety measures cannot be overemphasized. They include maintaining regular personal hygiene through washing and sanitizing of hands, wearing of face masks and shields (the former has since been made compulsory while in the public), keeping social distance of two meters between self and the next person, amongst other safety measures. While it is beneficial to adhere strictly to the safety measures in order to drastically reduce the possibility of infection, the measures in themselves do not guaranty safety from infection. The possibility exists, even if slim of being infected, but rather than being bogged down with anxiety over this, it is pertinent to adopt other measures to reduce anxiety. There are indications that rather than imposing another bout of lockdown, we are likely to live with the virus amidst the regular social and economic activities until a vaccine is confirmed for use globally. Boost Your Immune system A strong immune system remains a veritable way the body fights diseases by warding off infections including those emanating from bacteria and viruses. A significant proportion of those infected (about 40% or more in some instances are being reported as asymptomatic

(not manifesting any form of symptoms, or falling ill from infection) this could be attributed to a strong immune system as a result of young age or older persons taking immune boosting diets or supplements. Conversely, anxiety is known to have negative effects on the immune system, breaking down the defenses and making the body susceptible to infections. Healthline. com posits that anxiety can trigger the release of a flood of chemicals and hormones like adrenaline into the body, thus weakening the immune system. Avoid Stress Full activities are yet to resume nationwide despite the ease of lockdown and lifting of the earlier ban on travel across state borders. Major markets are yet to open on a daily basis while several corporate organizations have since rejigged their operations in line with the new normal with more attention to working from off physical site locations. Several individuals currently benefit from the resultant reduced physical activities and are saving on significant hours hitherto being spent in the traffic gridlock while on the road. This should result in less stress, less anxiety and a boost to health. Improve Your Finances Dwindling finances is a regular source of Anxiety. With the slow-down in economic and social activities, majority of businesses are taking the hit from low

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patronage. A gradual activity upsurge is expected in subsequent quarters but the time is now to explore additional sources of income either by individuals or corporate organizations. The ultimate aim is to diversify the source of income as the traditional source becomes inadequate. Individuals have found themselves acquiring additional skills or setting up cottage industries to earn extra income while some organizations like schools have had to set up online learning portals to earn revenue following the continued closure of schools. Consultancy firms have also been busy organizing webinars to impact knowledge on their clients, earning some income in the process. This time may actually demand that existing businesses or products be shut down and new ones created. This is no time to live in denial but to face facts and take action. Secure your Assets In addition to providing physical security to safeguard assets acquired with hard earned income, this is also a period to ensure adequate insurance cover is put in place for such valuable assets as physical security occasionally fails and this is where insurance comes to the rescue to take away anxiety and ensure peace of mind knowing that there is a recourse to indemnity from the insurance company in the event of a loss. Assets could be protected from losses emanating from fire,

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burglary, theft, accidental breakages or damage from collision amongst others. Wisdom is in being prepared in the event of the unexpected and- having a source of recovery to fall back on. COVID-19 not a death sentence It is important not to allow anxiety take hold of us due to fear of being infected. As frightening as the statistics may be, there is a glimmer of hope. This lies in the encouraging rates of recovery – of the 32,558 infected in Nigeria as at 12th July, 13,447 or 41% are reported to have already recovered, while the active cases are undergoing treatment with very high chances of recovery expected. Unfortunately, 740 or 2% deaths have been recorded amongst the aged and those with underlying infections. There is increasing hope for better management of cases with more test centres being opened across the country and vital equipment including ventilators being acquired. It is time to take personal responsibility for one’s personal safety and that of others by continuing to observe the safety measures and following the protocols put in place by the relevant agencies and government authorities. #StaySafe Assured

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#StayProtected

--- Anxiety Away, Value

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Nigeria receives $15m as GPE approves $400m to boost learning KELECHI EWUZIE

etermined to ensure children from Nigeria and 46 other developing countries continue to learn despite the coronavirus-related school closures, Global Partnership for Education (GPE) has approved grants totalling $381 million to support a range of learning activities. According to the body, a further $20 million is being provided to a joint initiative managed by the United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Children’s Fund (UNICEF) and the World Bank, that will ensure regional and global efficiencies and knowledge sharing. A breakdown of the $400 million (N155,236,000,000) shows that Nigeria received $15 million (N5.82bn) in Covid-19 grant funding from the United Nations Children’s Fund (UNICEF). According to a statement made available to BusinessDay, nearly 720 million students are

still out of school in developing countries, where the combined impacts of school closures and economic hardship due to the coronavirus threaten to reverse decades of hard-won gains in education. Girls are especially at risk, as they are more likely to have to take on household chores alongside remote learning. When girls are out of school, they are also more vulnerable to gender-based violence, early marriage and teenage pregnancy. Figures from UNESCO indicate that Nigeria, Africa’s largest economy has over 13.2 million out-of-school children, the highest in the world. “There is a real risk that millions of the most vulnerable children, especially girls, will never set foot in a classroom again,” said Alice Albright, GPE chief executive officer. “GPE is committed to ensuring that no child’s education is left behind because of Covid-19. Our emergency funds are helping partner countries keep children engaged in learning and make sure they can return when schools reopen.”

Cost of making jollof rice surges 78% in 4yrs BUNMI BAILEY

ithin a four-year period, the cost o f p re p a r i ng a pot of jollof rice, a popular delicacy by Nigerian households is almost twice what it used to be, reflecting the erosion of purchasing power to double-digit inflation in Africa’s biggest economy and global poverty capital. According to the July 2020 Jollof Index by SBM Intelligence, an Africa focused geopolitical research and strategic communications consulting firm, the average national Jollof Index increased by 78 percent in the four-year period to N7,240 in June 2020 from N4,087 in July 2016. “There are different elements that have caused this surge. We had the 2016 recession, in August 2019, we have the border closure policy and prior to that time, we had other monetary policies from the

Central Bank of Nigeria and other market positions that spiked the prices of commodities especially food,” said Rosemary Enemuo, senior analyst, SBM Intelligence. Enemuo further noted that in the first and second quarter of 2020, due to the Covid-19, there was increased transportation fare, cost of labour increased and ban on interstate movement that further caused the spike. The SBM Jollof Index is a composite index that tracks how much it costs to make a pot of jollof rice across 13 markets in nine states in the six geopolitical zones for a family of five or six, the average rural and urban family size in Nigeria. The jollof meal, a mixture of rice, tomatoes and spices, is practically a national dish in Nigeria and one meal that is enjoyed in every part of the country. While the Jollof Index has treaded close to food inflation since collection begun, it has provided a simple way of

communicating the realities of inflation to the Nigerian public. The commodities that make up the index are rice, groundnut oil, chicken or turkey, beef, seasoning, pepper, tomatoes, salt and onions. A cursory look at the trend line of the Jollof Index will show that by late 2018, it started to decline and maintained this decline into the first quarter of 2019. This changed as the border closure policy was enacted in August 2019 and has been on the rise similar to the recessionary period of 2016 since then. The oil price decline and the Covid-19 pandemic pushed it further between March and May 2020 as prices rose due to the scarcity and increased demand during the lockdown. For example, in Lagos, the mother of a family of seven in Baruwa said that she typically spends N5,500 making a pot of jollof rice, up from N4,000. She, however, complained that even with this amount, the food does not go around for the

entire family. In the Southeast, a mother said that over the course of the pandemic, the cost of jollof rice for her family of three has gone up from N1,000 to N2,500. And in Cross River, another spoke about the increased cost of making a pot of jollof rice. It now costs N6,000, up from N3,000 to make a pot of jollof rice for her family of six. According to the National Bureau of Statistics (NBS), Nigeria’s food inflation rose by 15.04 in May 2020, the highest in 26 months. “The situation where the cost of the one meal eaten in every corner of the country has doubled within a four-year period is unacceptable,” the report suggested. “As a matter of urgency, the various government departments need to talk more with each other so that a coherent set of policies will be enacted which will have the end result of making food cheaper for Nigerians,” the report suggests.

NDDC scholars in UK, US allege abandonment by commission ...we are working to ensure all beneficiaries are paid – NDDC IGNATIUS CHUKWU

igerian students studying in the United Kingdom and the United States of America under a scholarship from the Niger Delta Development Commission (NDDC) are alleging that the commission has abandoned them to their fate. In a mail to BusinessDay, Chijioke Ukwuegbu, an MBA candidate at Yale School of Management, UK, alleged that 210 NDDC scholars have been abandoned in foreign universities. “We were awarded the scholarship in June 2019 and almost a year later our school fees are yet to be paid. This has led many universities to lock us out from their online portal. Students are having to struggle to eat/pay rent; in fact one of us got infected with COVID-19,” Ukwuegbu wrote. Also in a number of tweets via his Twitter handle (@Chi-

jistar), Ukwuegbu said, “210 Nigerian MSc & PhD students across UK and USA are facing deportation as NDDC is yet to pay their $30,000 scholarship which was awarded since August 2019. #NDDCPay2019Scholars #Pay2019NDDCScholars.” According to Ukwuegbu, some of the universities allegedly being owed tuition resorted to sending letters to the affected students. One of the letters attached to Ukwuegbu’s tweets quoted De Montfort University, Leicester, UK, thus: “Your sponsor Niger Delta has not paid your fee. Please could you chase this up and contact them, we may have to put the fees back to yourself to pay, if we do not receive payment from them.” Another university, the University of Derby, was quoted in a letter informing the affected students that their scholarships have been

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Isa Pantami (l), minister of communications and digital economy, with Nasir El-Rufai, governor, Kaduna State, during the minister’s courtesy visit to the Government House in Kaduna.

Fortune Global Bags ISO 9001:2015 certification GBEMI FAMINU

igeria’s shipping and logistics firm, Fortune Global Shipping and Logistics Limited (FGSL), has been awarded the revered ISO 9001:2015 certification as an attestation to its effective Quality Management System that ensures optimum customer and stakeholder satisfaction. The accreditation is a state-

ment of commitment to the brand’s business principles of compliance, transparency, and adherence to global best practices. To obtain ISO 9001:2015, which is the world’s most popular quality management system, the FGSL teams in Lagos and Port Harcourt, Nigeria, underwent extensive stages of internal and external audits that included the development and implementation of a Quality Management

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System (QMS), documentation review, pre-audit, initial assessment, final audit and close-out of all identified nonconformities. Commenting on the feat, Eric Opah, CEO of FGSL, states, “After several years of commitment to aligning our business with the ISO standard, being ISO certified is no longer a subject of when and how; it is now a reality. I must commend the team and

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all process owners for your commitment towards ensuring that this had to happen and I must say that this whole process was inspired by the customer-centric culture we are building to make sure that we serve our customers excellently, while also maintaining the national and international regulatory standard requirements that are applicable to the day-today conduct of our business operations.”

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The new face of economic reforms: Making it count VICTOR OGIEMWONYI

he new economic reform agenda of the current Government is giving hope that our troubled economy can rise up to its challenges. The response to COVID-19 though slow in starting, was the right thing to do and will produce positive result at the end, and the curve will be flattened. The economic reforms since COVID-19 is a great source of hope that the Government is finally coming to the reality of our economic situation. They are coming to realised that they must be addressed through bold reforms and hard decisions. Fortunately, the Government is in a strong position to take these hard decisions. The economic troubles do not give then room to escape the consequences of not doing the right thing. The hardship also gives the people no alternative, they are already at the worse place they can be. The Government has no election calculations to defer their inaction on. They will have to bite the bullet. There is the added advantage of a Government that can take decisions and stay with it, whether right or wrong. The three critical decisions in the recent weeks shows they are on the right course. Deregulate fuel prices and get rid of the scandalous subsidies, unify the FX rates and stop subsidising efficiencies creating arbitrage window for corruption and the focus on progressive taxation, that pushes the burden of tax to those who use the services. It is also a more efficient way to collect taxes. The decision to deregulate the pump prices of petroleum products is a great one. We can no longer afford the Silly subsidies that benefited those who did not need it. The costly nature of it and the Huge corruption associated with it, was sufficient to shut it down long ago. The COVID-19 struggles showed us that the world has changed and we needed to change with it. The Huge cost savings from these subsidies, will go a long way to address other social needs that have been left unaddressed, for a long time. The significant Reforms just announced, where the CBN is moving to unify the foreign exchange rates at the investors and exporters window is the most realis-

tic thing to do. That is where the market is. This is where those who constitute a bulk of the users of FX come to buy or sell and the Banks intermediate here. The CBN should match the market in its selling prices, supply only at the top of the market. The market will moderate itself. The next most important step to follow this, will be for the CBN to follow up with a circular that clearly state that they will encourage Nigerians and others who wish to save FX in their Domiciliary Accounts locally in Nigerian banks to do so. They will have nothing to fear from the central Bank. FX savings account for individuals will help manage FX rates as widespread Domiciliary Account holdings will take the pressure off CBN intervention and from the Bureau de changes Retail end of the market. The assurance to citizens that there is no illegality in holding and saving in a Domiciliary Account within the country for personal use, will be encouraged rapid increases in the flow of FX from everywhere. It will go a long way in decentralising sources of FX inflows and will greatly create a huge FX savings support that help the economy and reduce the burden on the CBN. Prior to the 2015 elections, some analysts estimated that Domiciliary Accounts holdings in our Banks in the country held as much as 26 percent of the reserves of available FX at the time. Whatever the true figure was, it was huge enough to cushioned the available FX reserves at the CBN. The ill-advised attempts to change policy on Domiciliary Accounts was a disaster. The capital flight that followed that attempt, is yet to recovered. This idea might seem revolutionary now, it is not, bold market reforms like these, are the only hope for Nigeria. Many years ago, around 1998, I wrote an article about the quagmire that was the FX situation in Nigeria and suggested that the CBN fund Bureau De Change (BDCs) segment of the market at the time, because this irrelevant segment of the market, was responsible for rate setting. The small retail end of the market we referred to as “Black Market” because this was the market accessible to the larger population and the supply was not available, speculators had a field day. My reasoning was that, organising that part of the market and funding it, will put out the fires that fuel the daily rises in FX rates. That was 7 years before the CBN

warmed up to the idea. If you Free up the Domiciliary Account end of the market today, there will be the same exact effect , that the opening and organising for the retail end for BDCs did , to closing in on a fairer FX rate .Since the funding BDCs became official policy, It has helped in price discovery, and getting a large individual Domiciliary savings organised and making it legitimate , will take off pressure from FX exchange rates , and even further deepen price discovery. It takes out a large number of speculators in the market. This is one sure way to get the full benefit of the new policy to unify FX rates. The CBN current moves come on the back of some revolutionary policies in this current CBN. It shows the CBN is working with Data and prepared to take pressure. It is paying off. For years many, including this writer, has clamoured for low interest rates. I have argued years ago, that the economy cannot grow on high rates that were mostly in the 20 percent – 30 percent range. Check out all the economies that are growing in the world. Their financing rates were all in the single digit range. The last 3 quarters in Nigeria has shown that the CBN is ready to force interest rates down and there is nothing wrong with that. Depositors and Investors are getting used to the low rates on their deposits and the Banks are getting weaned off the rigged game of collecting deposits at 3 percent and lending to Government at 10 percent. I have always argued that of the 3 rates the CBN monitor in the economy, Interest rates, is the only place it has control and it has shown these past months that it is possible to take control of interest rates. Inflation, should worry us less, we can grow with a 12 percent inflation. A strong growth will see us outpace inflation with time. The Asian economies have shown that it is possible. I have always posited that inflation rate of any economy, is the aspirational growth rate of that economy. In other words, our current inflation rate at 11.5 percent and our growth of about 2 percent shows we have potential growth and economic demand that outpace current growth by 9.5 percent. That is not unusual for an economy that has so much infrastructural deficits and inefficiencies. The reason inflation is so low in the west, is that it’s efficiencies especially enhanced with technology, have levelled inflation. The CBN ‘s new direction to unify the FX rates, will eliminate one of the biggest

‘

I have always posited that inflation rate of any economy, is the aspirational growth rate of that economy. In other words, our current inflation rate at 11.5 percent and our growth of about 2 percent shows we have potential growth and economic demand that outpace current growth by 9.5 percent

leakages in Nigeria. It will also eliminate unseen corruption that stinks to the heavens. The federating States will also benefit from the more realistic exchanges rates used for the monthly allocation to States as well. The reform in taxation has also been revolutionary. It needs to go further; the SME space need more air to grow it. Any SME that is not having revenues of N50 million should not pay any company taxes. That is double the current N25m allowed in the new tax regime. Doing this, is even a better form subsidy for SMEs, the current culture of throwing money inefficiently at them and the growing bureaucracy, just to disburse these monies people, yet SNES are not seeing this, is a problem. Taxes are a better way to subsidies and incentivise SMEs. It is also very transparent. The progressive taxes like VAT and Stamp duties will make up for the taxes lost from SMEs. The Taxing authorities will have better focus on the taxes that are easy to collect and reduce their cost in collecting it. The next biggest reforms, are dismantling the NNPC, sell of 70 percent to the public of the various enterprises to be created and sell 30 percent to core investors , who must commit to listing on the Nigeria Stock Exchange within 3/5 years.....NPDC , PPMC NNPC ventures , ....should be the first of the privatisation entities. The waste and drain pipe the NNPC has become, cannot continue. This Government is in a good position to make these happen. There will be opposition from the usual quarters, this Government must show its back bone to those who think they can hold the country to ransom. They should let them know; they have no more elections to win. Government must insist on those reforms that will benefit the majority of Nigerians. The fuel deregulation must include dismantling PPRA and focus it on its Regulatory role, under the Department of Petroleum Resources (DPR) and nothing more. The Government new found courage to reform must be encouraged by all and kudos given to all those at the helm doing these reforms. For a Government that has been so vilified for most of its policies, we should also applaud her, for doing the right things and pushing reforms that will make meaningful improvements to the lives of people in the long run. Ogiemwonyi is a retired Investment Banker and writes from Lagos

Prepare for the global impact of US COVID-19 resurgence Recently, the US has suffered a series of COVID-19 surges. The escalation won’t stay in America. It is likely to cause collateral damage worldwide. n early June, US states began to exit from the lockdown measures, even though the epidemic curve had not been adequately flattened. On July 4th, the White House sought for a “return to normal” with a celebration at Mount Rushmore. Once again, the Trump crowds were not required to wear face masks or practice social distancing, although the US has recently tallied its highest single-day totals of coronavirus infections. Confirmed virus cases in the US could exceed 4 million after mid-July, with over 140,000 deaths, while new cases average over 50,000 daily. As a result of crisis mishandling, U.S. GDP growth suffered a -5 percent contraction in the 1st quarter, which is likely to be followed by a historical -53 percent plunge in the 2nd quarter. The COVID-19 surge across America is no surprise, however. It was only to be expected in light of the catastrophic mishandling of the pandemic by the White House, as projected in

my report, The Tragedy of Missed Opportunities in April (Shanghai Institutes for International Studies). Massive failure, huge human and economic costs On January 3, when the virus gene sequencing was completed by China’s CDC and emergency monitoring initiated, Chinese officials notified WHO. That’s when US CDC director Dr. Robert R. Redfield called Alex M. Azar II, secretary of health, telling him that China had potentially discovered a new coronavirus. Yet, no proactive mobilization occurred. Instead, a long debate began within the Trump administration over “what to tell to the American public.” By the WHO’s announcement of the international emergency (Jan 30, 2020), first cases were also recorded in 20 countries worldwide, including the US. But again, the Trump White House chose not to mobilise. Even when the epicenter moved from Europe to the US, the White House delayed full response. It was only after March 10, when the WHO declared the virus a pandemic that the White House began to mobilise federal resources against the outbreak – over 2 months

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belatedly and ineffectively. To win re-election, the Trump administration has tried to evade responsibility by blaming WHO and China for its mistakes. Yet, US COVID-19 mobilisation failed, due to complacency, belated mobilisation, inadequate preparedness, poorly-enforced lockdowns, premature exits from quarantines, failed leadership, and the list goes on. Worse, Trump’s decision to exit the US from the WHO will compound public-health risks in the future, both in the US and worldwide. But the long-term international implications may prove even worse. Beware of US virus exports What happens in America will not stay in America. Due to months of fattening rather than flattening the curve and the associated resurgence of COVID-19 in the US, international exits from lockdowns and global economic recovery are virtually ensured to take a series of new hits when the US eventually returns back to business. The recent travel ban by the EU against the United States is just a tip of the iceberg. Mexican border states have raised serious concerns about Americans’ pandemic inflows into the

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Dan Steinbock south. Washington implemented strict inflow protocols against Mexicans in March. Yet, as the virus had its first peak in early spring and is now enjoying its second wave in the US, Americans continue to cross the border into Mexico. What happens in the US-Mexican border today is just a prelude to what will ensue internationally as US containment failures – followed by secondary virus waves – are likely to be exported around the world. Dr. Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https:// www.differencegroup.net

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Power sector in Nigeria: Time for a complete overhaul

No successful economy runs on generators and lanterns STRATEGY & POLICY

MA JOHNSON

ince “privatisation” of the power sector in 2013, Nigerians have been battling with one challenge or the other regarding electricity supply. Realities on ground are disturbing. The challenges within the power sector are complex and man-made. Initially, these challenges weren’t expected. But corruption and low ethical standard of conducting business when privatising state-owned enterprises in our society are mainly responsible. Truth be told, the power sector has been under “severe” stress because the stakeholders have fallen short of their contributions towards achieving an efficiency in the sector. Experts say that tariff paid by electricity consumers do not cover the cost of generation, transmission and distribution of electricity supply. For some time, there has been lack of trust between stakeholders and the general public. After “privatisation,” huge funds have been sunk into the power sector but not much has been achieved in the provision of electricity to consumers. Nigeria, for instance, has a total domestic electricity generation capacity of roughly 12,500 Mega Watts (MW) with a population of about 200 million people compared to South Africa’s 51,000 MW and almost 58 million people. The World Bank in a recently published report revealed that Nigeria’s unreliable power sector is seriously affecting the country’s economy causing a huge loss estimated at about N10.0 trillion yearly. The World Bank report

described the power sector, particularly the distribution segment as “operationally inefficient with high losses.” Additionally, the annual economic losses caused by Nigeria’s unreliable power supply is about 2 percent of Gross Domestic Product (GDP), according to the World Bank Report. In the same report, Nigeria ranks 131st with respect to overall ease of doing business in the year 2020 during which access to electricity ranked as one of the major constraints. With respect to electricity supply, Nigeria ranked 171st globally out of 191 countries surveyed, and 33rd among 46 sub-Saharan countries. Also, it was reported that 40 percent of households with access to electricity still use generators. Though many Nigerians rely on generators and non-grid sources such as solar panels, battery-operated lamps, lanterns and the likes. With the number of those who are poor gradually increasing, no nation achieves poverty alleviation without its citizens having access to reliable electricity supply. In fact, hardly can one find a successful economy running on generators and battery-operated lamps in this age and time. But how has the inefficiency in the power sector contributed to poverty in Nigeria? In so many ways namely, debts, policy and regulatory flip-flops, corruption, corporate governance, cost of gas, arbitrary billing, metering, and personal interest among others. The list is endless. Statistics show that out of the output from power generating companies (GENCOs) of about 12,500 MW, only 7500 MW can be delivered. The Transmission Company of Nigeria (TCN) in turn takes about 4000MW of the power produced to deliver to the Distribution Companies (DISCOs). It is unfortunate to know that the country is generating power at a loss, when the bulk of the power generated cannot be transmitted to electricity consumers. The Multi-Year Tariff Order (MYTO) which came into operation in 2015 to gradually phase out electricity subsidy in order to make the power sector commercially viable has not been implemented

for political reasons, according to some experts. Furthermore, some analysts say that electricity tariff is not cost reflective. To avoid a total collapse of the power sector, the Federal Government (FG) established a company known as Nigerian Bulk Electricity Trading Company (NBET) which buys power from GENCOs and sells to DISCOs. NBET is funded by the Central Bank of Nigeria (CBN). Today, NBET is allegedly owing the CBN roughly N2.0 trillion. Yet, millions of Nigerians don’t have access to electricity. So, the NERC wants to embark on the forensic audit of only DISCOs. Methinks it is legal and legitimate for NERC to ask for a forensic audit of DISCOs. But what about a forensic audit of the GENCOs, TCN, and NBET? Or are we saying that these organisations including NERC and CBN cannot audited. How then can we know how much has been spent and for what in the power sector? May be Nigerians don’t need such information. In the midst of the operational challenges, the NERC wrote a letter to DISCOs for increase in tariff. But electricity consumers expressed concerns that increase in tariff will not translate to an improved supply of electricity to various households, offices and the industry generally. DISCOs have rejected increase in electric tariff now until the year 2021. Policy flip-flop on metering is another challenge. At the initial stage of the “privatisation”, DISCOs were responsible for providing meters to electricity consumers. Meters were expensive then. To relieve DISCOs of financial burden, they have been mandated not to issue meters to electricity consumers by the Ministry of Power, Works and Housing. “Metering is now government business.” It is called the Meter Asset Provider (MAP). But most consumers use electricity and are not willing to pay for power consumed. Why? They are not metered. There are reports that imported meters are in containers at seaports in Lagos because of FG directives that 35 percent import duties have to be paid by importers. As simple as those meters are, one would have expected Nigeria to com-

‘

This is the time to carry out a complete overhaul of the power sector in Nigeria. If we fail to overhaul the sector now, the country will keep losing huge sums of money, move from darkness to darkness; and the cycle of poverty will continue in a sustained fashion

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

More than ‘a handful of men’

he allies spent over two years planning the invasion of Normandy but on “Dday”, the fate of the world was decided by a handful of men on strips of beaches. Throughout history, this has been the case; even in these trying times of the COVID-19 pandemic. As the monster rages on; devouring families, economies, relationships and even dreams; the fate of the world undoubtedly still rests on a handful of men – nurses, doctors and other essential service providers. Not on movie stars, footballers, politicians or astronauts; surely because we are not in a theatre production, a game or popularity contest. Our world has just experienced puberty; the changes are rapid, and things will never be the same. It is outlandish and somewhat of a struggle navigating the murky waters of our new existence albeit interesting. The COVID-19 pandemic has opened our eyes to new realities and introduced disruption engineered new ways of doing things. When this is all over, the world we will encounter will be far from the one we knew a few months ago; and so, will require a whole lot more than “a handful of men” to administer it. The execution of our social, political and economic obligations will require a new awakening – smart adaptability. Adapt the same way we did during the heydays of the pandemic; we adapted to enjoying our own company, lived without party jollof rice and abandoned most of our vanities relying on the resolute principles of Health, Safety & Environment (HSE). A scrutiny of the current global state of affairs

reveals dreary trends. From an investor perspective, at least for now, huge profits will no longer be the primary determinant of corporate success; the safety and general wellbeing of the critical stakeholders (staff, clients and partners) is now a leading factor moving forward. Anxiety driven interim solutions from communities, governments and corporations will surge thereby further accentuating the need for improved HSE standards and good faith. The businesses that are unsuccessful at effectively producing an adaptive cocktail of quality health and safety practices, ethics and empathy; will have their future in oblivion. This truth further underscores the need for business leaders to awaken to their HSE responsibilities. It is not enough that the function has been delegated; hands-on involvement will be most constructive. In recent times, several questions have been asked on the backdrop of the COVID-19 pandemic viz a viz HSE. We will address a few shortly. How can HSE help make organisations stay in business financially and psychologically during the COVID 19 era? Some industries such as aviation, manufacturing and energy require the highest safety standards. When we fly, we are required to go through the safety briefing with the crew as they pass materials around and do the demonstrations. Frequent fliers are often tempted to view them as just routines, but those are actually the minimum standards for operation; there are however those industries where www.businessday.ng

the need to comply are not as apparent. In this period, our financials (P&L) will no longer be defined by how much revenue we raked in; it is pretty much like life after a war. A belligerent does not claim victory solely on the back of defeating his adversary, he also considers the soldiers lost. The value proposition of businesses in these times is crucial, but most important is the delivery of such value on the safest of standards because it will increase the brand equity of such businesses for investors, as well as, garner support from regulators both during the pandemic and beyond. How can business owners and leaders integrate HSE into their businesses from inception and follow through? Every crisis comes with an opportunity. The positive in the case of COVID 19 is that suddenly a large part of us are now relatively HSE compliant, as there is basic knowledge on what needs to be done. It has successfully nudged everyone to action. The business entities who do not have HSE incorporated into their business model because their primary focus is making tonnes of money, are actually at a loss. Proper HSE can generate lots of revenue for a compliant entrepreneur. When you scrutinise a luxury car in the league of the Rolls Royce side by side a regular car, something profound strikes. The driver of the luxury car is usually more cautious (even though careless luxury drivers exist) coupled with the fact that the car is designed following

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pletely manufacture these meters in the country. This isn’t so because local manufacturers are equally having challenges importing some components from abroad. It is because they are to pay 10 percent duty on all electronic/electrical components imported from abroad for the local production of meters. From press statements issued by all stakeholders in the power sector, one can see that there is less collaboration among DISCOs, GENCOs, TCN, NBET, NERC and the electricity consumers. They are in business to make profit. Every company is fighting for its survival. The forensic audit recommended by NERC for the DISCOs has created disharmony among stakeholders in the power sector. DISCOs have gone to court seeking to know why they are to be audited alone. The DISCOs claim they have nothing to hide. They see the selective forensic audit ordered by NERC as an act of victimisation. There are reports that the FG has set a goal of achieving 7000MW and 11,000 MW of reliable power supply by 2021 and 2023 respectively through a contractual agreement with Messrs Siemens. There are allegations that the FG wants to hand over electricity distribution to Messrs Siemens. The FG has since denied this allegation. The foundation on which the “privatisation” of PHCN was built is weak. To solve the complex web of problems in the power sector, there will be need for more investments. But which investor will invest in a power sector that doesn’t generate appropriate revenues from electricity supplied to most consumers? The power sector is neck-deep in debt! In summary, this is the time to carry out a complete overhaul of the power sector in Nigeria. If we fail to overhaul the sector now, the country will keep losing huge sums of money, move from darkness to darkness; and the cycle of poverty will continue in a sustained fashion. Mr President, over to you sir! Thank you!

Ken Etete the highest HSE standard. That is not the same standard for the regular car and driver, who has a relatively lower premium of safety standards (there are also cautious drivers of regular cars). Figuratively and literally, the mindset of the Rolls Royce driver is what we need to duplicate in our everyday lives; business owners need to view their businesses as a luxury yacht and HSE as the insurance for the business. What can businesses do to promote cordiality in the face of stigmatisation and mental health challenges? The introduction of mental health therapies, sessions and campaigns by professionals to address the challenges is essential. This is crucial because although work has a future, the foundation remains the mind; and the ability to initiate critical thought is fundamental to healthy work. COVID- 19 has successfully reiterated the need to discourage health stigmatisation and address the concerns and challenges. The mental health issues that existed prior to the COVID outbreak have been aggravated considering the fact that liberties are now limited, and there is anxiety in the system.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Etete is the CEO, Century Group

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Tuesday 14 July 2020

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Are African numbers still poor? (2)

Rafiq Raji

GD & APHRC (2014) identify six key challenges to timely and accurate African data by the continent’s statistics agencies viz. (1) Lack of legal & functional independence (2) inadequate budgets (3) lack of autonomy (4) misaligned incentives (5) relative dominance of donor priorities over national priorities and (6) limited access and usability of data. They find only 12 of the 54 member countries of the African Union have legally and functionally independent statistical agencies. On the challenge of inadequate budgets, only two countries viewed themselves as adequately resourced. Quite palpably, African statistical agencies do not as yet still enjoy the importance they deserve in the priority lists of governments. And even relatively meagre budgetary allocations are often cut. In some cases, international donors and aid agencies fill this gap to some extent. Unfortunately, the divergence of goals and interests among donors and governments can be problematic. The downsides of misaligned incentives are easily discernible. Political considerations, when unfavourable but accurate data could cost elections or cause rifts between communities or tribes, sometime lead to suppression, for instance. Donors’ orientation towards performance targets tends to also push some governments towards gaming official statistics to attract more aid. There is also the knotty issue of access and usability. It is a pervasive practice amongst African statistical agencies to almost literally hide data. “Only 56 percent of the microdata from household surveys conducted between 2000 and 2014 are available to the public”, for instance (CGD & APHRC, 2014). There are sometimes justifiable reasons like budgetary & staff constraints for this reality. A fear of being second-guessed is also another motivation for this seeming lack of transparency. That said, more African statistical agencies now publish increasingly more data online. But in general, the data hoarding practice remains prevalent. It is important to point out that unique circumstances sometime necessitate uninten-

tional measurement inaccuracies. For instance, the COVID-19 pandemic is forcing statistical agencies around the world to adopt innovative approaches to data collection. In France, onthe-ground data collection and observations of behaviour were literally impossible as citizens were stuck at home. Instead, France relied on credit card data and other alternative measures to compute the relevant statistics. Similarly, with face-to-face data collection constrained owing to a countrywide lockdown, Statistics South Africa will conduct its labour force survey for Q2-2020 via telephonic data collection. These forced innovations bring to the fore the numerous alternative measures that are available to firms and investors to gauge the accuracy of published official data, especially in Africa where accurate and reliable data are ordinarily a constraint. More specifically, African statistical agencies released inflation data for March and April 2020 showing only moderate effects of what were palpable and pervasive price hikes & gouging and hoarding of essential goods and services, owing to COVID-19-induced lockdowns. Ordinarily, these unfair practices should have pushed up headline inflation rates significantly. They did not. Put simply, they are likely inaccurate and unreliable. While this is not a uniquely African problem, the probability that the palpably flawed statistics would be revised later by many of the continent’s authorities, as is typically the case for advanced economies, is very slim. Advanced economies similarly released economic statistics for these months that likely failed the accuracy and reliability tests. Take the case of consumer price inflation. With most economies around the world in one form of lockdown or the other, a significant portion of their respective consumer baskets inadvertently misrepresent current realities. Services, which were literally all shut down, should probably not have representations in the consumer price index (CPI) basket for those months, for instance. While statistical authorities are not neces-

sarily to blame, since a temporary change in the CPI weightings may not be optimal or even feasible regardless, their retention, with heavy weights in some cases, means the headline figures are unduly weighed to the downside. Some statistical agencies have owned up to the problem. For example, India chose not to publish inflation data for April 2020 owing to not being able to conduct the requisite fieldwork because of a nationwide lockdown. Some African countries similarly approached the challenge cautiously. As a number of statistical agencies had already compiled the relevant economic data for March 2020 and completed scheduled and ongoing surveys before the authorities-initiated lockdowns, they were probably able to publish statistics for the month with reasonable quality assurance. In April 2020, however, when most African countries were already in lockdown, it is highly unlikely that data acquisition and production would have been similarly encompassing and detailed enough to assure a reasonable level of accuracy and reliability. Regardless, some Afri-

can countries went ahead to publish inflation data for the month of April 2020. Others chose to delay publication. The case of South Africa, which not only chose to postpone the publication of its April 2020 inflation data to late June but published changes to how it would calculate the consumer price index owing to the COVID-19 restrictions, is exemplary. Stats SA highlighted the price collection issues it was facing and the innovations towards overcoming them. As it was only able to collect 12 percent of the weight of the CPI basket directly, it relied on online prices for 20 percent, imputed 26.5 percent, and carried forward the 41.5 percent that were not due for collection in the month using the standard method. Bear in mind that even in normal times, these weighting-led errors occur; and in supposedly advanced economies at that. For instance, there is a raging debate about the weightings of the Euro-Area CPI basket of goods and services, which some suggest should show higher inflation if weighted more accurately. The underlying reasons for this misspecification are not of interest for our inquiry. What is, is that sometimes-statistical errors, by African agencies or otherwise, arise not from sloppiness but simple mis-classifications. Thus, some of the identified deficiencies in African statistics should be put in proper context. Edited version of article was first published by the NTU-SBF Centre for African Studies of Nanyang Business School, Singapore. References are in the original article. “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @DrRafiqRaji)”

Small businesses in the era of uncertainty: Surviving the effect of COVID-19

he year 2020 started with a lot of expectations for most businesses. Plans were put in place, goals or targets were set, budgets were prepared, reviewed and agreed upon by management. Infact, most businesses had plans on how they wanted to penetrate their respective industry and win new customers in order to meet their revenue or sales target. There must have been a general believe that this would be the best year for our businesses. However, with the event of the past three months, most businesses have been forced to re-strategise. There is no doubt that the Pandemic (COVID-19) has affected and is still affecting most small businesses around the world. In Nigeria, the situation is even more compounded by the increasing inflation rate and the exchange rate volatility. All these put together is having a negative effect on most small businesses. The question most business owners are asking is how to survive this period especially as revenue is not very certain and liquidity is drying up. As a business owner, some decisions need to be taken some of which might be very difficult but in the same vein, you have to think about what the business needs to do to survive. Here

are a few steps that can be taken in order to survive this period. Cashflow planning: Cash is very important in any business this is because you need cash to do or remain in business. It is therefore important to plan your cashflow as a business. Planning your cashflow will entail that you establish your current cash position (i.e. where you are presently in terms of liquidity) and also doing a cashflow forecast. In doing the cashflow forecast, have different scenarios (You can have a best case, good case and a worst-case scenario) but in your forecast, you have to be as realistic as possible. In planning your cashflow as a business, you can decide to allocate a certain percentage of your margin (i.e. Gross profit) to take care of your operating expense. You should also review your cashflow on a weekly basis. Always compare your planned cashflow with the actual. Cutting: This is the time to cut down on some unnecessary expenses as a business. Do an analysis of your monthly expense before the pandemic and look at areas where you can reduce cost. One thing that this Pandemic has taught us is that we don’t need to always meet physically before we are able to carry out our work and also transact business. In this vein, the

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business can take a decision that Staff should work from home on a certain day of the week. With this, the business reduces the cost spent on Fuel/diesel or Electricity. Also, with the volatility of exchange rates, it will be better to source for local suppliers for your business. Reduce payroll cost: This is one area most businesses tend to look at when faced with a downtime. The decision to reduce payroll cost may be very difficult to make by many business owners as this will surely affect some employees negatively as it will involve laying off of some staff and also cutting the Salaries of others or those left. The business can also take decisions around telling Staff to go on compulsory leave without pay instead of outrightly laying off its Staff. Whichever strategy the business chooses to apply regarding payroll cost, it should be one that is best for the business given the current situation. Investment decisions: During this period, it might be very difficult to think about investing. However, if the business plans its cash flow properly, there can still be provision for some investment and take advantage of the interest rate or return on investment instead of having idle cash. Before considering any investment opportunities, it is better to look at the return

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Wunmi Temiye

on investment, the issuer and time frame. The business owner might want to consider short term investment for now and continue to roll over the investment. In conclusion, with the new norm that the world is now faced with, it is very important for business owners to prioritise business survival strategy. There is a need to go back to the drawing board and review all plans and targets so as to conform with current economic and social realities. Now that most activities are done virtually, it is time to create an increased online presence of your business to reach your customers. Temiye is the finance lead at Riquesa Limited

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Tuesday 14 July 2020

BUSINESS DAY

EDITORIAL Frank Aigbogun

Fixing agriculture critical to economic rebound

editor Patrick Atuanya

Vibrant agribusiness protects lives and livelihoods

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

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

EDITORIAL ADVISORY BOARD

hocks from the COVID-19 pandemic have hit Nigeria in a time when its absorbers are best defined as weak. It has worsened the precarious state of the economy, costing Nigerians their jobs, weakening economic growth and increasing the number of poor masses. To help save lives, prevent increase in poverty rate and protect livelihood of the poor and vulnerable, the federal government must reprioritise public spending, focus more on expenditures aimed at stimulating and developing the economy. One way will be to lessen the COVID-19 induced pressures on the Nigeria agricultural sector. It has gotten to a point where all hands must be on deck to rebuild a more vibrant and sustainable economy. The federal government’s “I am self sufficient and well able” thinking and policies will not work, hence, the private sector must be carried along. In every economic crisis, households bear the brunt eventually through increased cost of living, job losses, health complications etc. Households account

for more than 70 percent of GDP. Hence, it only makes sense that policy options that can help mitigate the effects of the crisis on this group must be focused on. This will help lay the foundations for a strong economic recovery, generating more jobs and improving employment. The Nigeria agricultural sector has remained a major contributor to the economy compared to other sectors. In 2019, the sector contributed 22.12 percent to Nigeria’s nominal GDP coupled with the fact that the sector employs about 70 percent of Nigeria’s working population. The sector is also the largest economic activity in the rural area where almost 50 percent of the population lives. However, the outbreak of the COVID-19 pandemic has caused the sector to contract. It has brought to the fore many of the existing structural challenges in the sector. Farmers and dealers of agricultural goods struggled through the lockdown, as security agents routinely declined to grant ease of passage. With farmers unable to access their farms, some that should have harvested during the months coinciding with the lockdown were unable to, while those that should have been preparing their land for

the planting season were equally restricted. According to the International Food Policy Research Institute (IFPRI), the agriculture sector contracted by minus14 percent in April/May 2020. Export crops such as sugarcane, beverage crops, export crops declined 47 percent, 45 percent and 58 percent respectively due to falling export demand and input supply disruptions. These crops account for less than 1 percent of agriculture GDP. Also, decline in investment spending and construction activities reduced demand for timber and wood products. This led to a minus 25 percent plunge in the forestry subsector which accounts for 1.1 percent agriculture. Root crops which are the largest food group and agriculture subsector in Nigeria accounting for 43.3 percent of the sector’s GDP contracted by 5 percent. In terms of value of activities, this is huge. Other subsectors moved in a similar direction. Moreover, the shut down of Indorama, a leading fertiliser producer, was termed the major challenge for farmers in this difficult time. Fertilisers are needed to supplement required elements found naturally in the soil for improved output.

Farmers now have to find a way of multiplying their farm harvest else food shortage awaits Nigeria in 2021. Projections by some agricultural commodity producers shows that productivity this year could reduce by an average of up to 47.5 percent. Nigerians face a harsher reality of food shortage, job losses; if reforms and policies are not initiated. Food shortage means higher prices amid excess demand. With higher prices adding to inflationary pressures, Nigerians are worse off with no corresponding increase in income due to high job losses. With such reforms targeted at increasing the productivity of farmers as well as the storing and processing capacity of agricultural produce, Nigeria would be able to mitigate the negative effects of the pandemic, while generating more jobs. Without bold reforms, strong fiscal and monetary policy actions, the World Bank warns that the macroeconomic implications of COVID-19 in 2020 and 2021 will be severe – including the loss of life, and the possibility of five million more Nigerians being pushed into poverty – even if Nigeria manages to contain the spread of the virus.

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Tuesday 14 July 2020

BUSINESS DAY

COMPANIES&MARKETS ECONOMY

FINANCIAL SERVICES

Takeaways from revised Medium -Term revenue and Cititrust Holdings Plc wins Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) Global Finance Award OLUFIKAYO OWOEYE

n line with current realities, key parameters and macroeconomic projections driving medium-term revenue and expenditure framework of the Federal Government have been revised. According to the minister of finance, Zainab Ahmed during a virtual consultative public forum in Abuja where she presented the draft 2021-2023 Medium Term Expenditure Framework/ Fiscal Strategy Paper, (MTEF/ FSP) said the medium-term outlook for Nigeria suggests that fiscal risks are somewhat elevated, largely due to Covid-19 related disrup-

tions which have exacerbated structural weaknesses in the economy. Here are key takeaways from the new draft. •The oil price is projected to remain low and volatile in 2020, and with Nigeria’s compliance to the OPEC+ cuts by reducing base production to between 1.412 mbpd and 1.579 mbpd from June to end of the year, growth in oil GDP is expected to plummet in 2020. •Nigeria’s oil GDP is expected to contract by 12.96percent in 2020, year on year, causing an economywide drag resulting in slower growth in non-oil GDP by -3.6percent, year on year. With these, real GDP

is expected to decline by 4. 2percent in 2020. •The nominal GDP is expected to increase from N130,836.1 billion in 2020 to N132,125.4 billion in 2021 and then up to N138,415.8 billion in 2023. Similarly, consumption expenditure is projected to stay flat at N118,735.2 billion in 2020 and N118,468.7 billion in 2021 and grow to N124,358.5 billion by 2023, reflecting a gradual steadiness in the recovery. •Inflation, however, is expected to remain above single digit over the medium term, given the structural issues impacting on cost of doing business, including high cost of food distribution.

•Weaker-than-expected economic performance is expected to threaten the ambitious revenue growth targets, as seen in the 2020 revised budget and the updated medium-term projections. •The projected budget benchmark for 2021-2023 stands at $40 per barrel while revised 2020 budget benchmark is kept at $28 with average exchange rate pegged at N360/$ from 2020-2023. •Fiscal deficit of N5.16tn is expected in 20121 because of the government’s projected ability to generate only N6.98tn revenue all in 2021, while aggregate projected expenditure for 2021 is N11.86tn

L-R: Lion Abiodun Fawale, Cabinet Secretary, District 404B2 Nigeria; Lion Kayode Oshinuga, First Vice District Governor; Lion Ademola Adesoye, District Governor; Lion Lekan Owolabi, Second Vice District Governor and Lion Tolulope Senbanjo, Cabinet Treasurer all at the Press Conference held recently in Lagos.

IFEOMA OKEKE

ititrust Holdings Plc, a leading Nigerian financial s er vices group, has won the 2020 Global Banking and Finance magazine’s award for a decade of offering excellent financial and investment services across Africa. This was announced by Global Banking and Finance magazine in the 18th edition of its annual awards for deserving financial institutions in seven regions and more than 80 countries. In the letter of award, Cititrust Holdings Plc is designated winner of the ‘Decade of Excellence Investment Holding Company Africa 2020’ category. While expressing his joy at the development, Yemi Adefisan, the Group Chief Executive Officer of Cititrust Holdings Plc, said the award is an acknowledgement of the group’s consistent focus on “strategic and valuedriven investments” in financial sector of the economies of the 11 countries, where it currently operates across Africa.” Adefisan said in a statement by the company that the award was particularly gratifying, coming on the heels of winning the prestigious ‘Investment Holding Company of the Year Award’ at the 2019 edition of BusinessDay’s Banks and Other Financial Institutions Awards. He further noted that C i t i t r u s t Ho l d i n g s w a s

proud to share the same platform with Stanbic IBTC Bank, which also won the ‘Best Custodian Bank’ category of the Global Banking and Finance magazine’s award. According to Adefisan, over the years, all the subsidiaries of Cititrust Holdings, which include: LivingTrust Mortgage Bank Plc (formerly Omoluabi Mortgage Bank), Core Capital Ltd, First Options MFB Ltd, FGH Healthcare Ltd, CDP Insurance Brokers Ltd and Bermuda BDC Ltd and others across Africa, have established a reputation for long-term value creation across the financial sector of the economy. He said the company has also continued to make significant investment in cutting edge technology in order to maintain and improve its excellent customer service delivery. Adefisan reaffirmed Cititrust Holdings’ commitment to protecting and promoting the interests of its stakeholders across the African continent and making significant contributions to the development of the Nigerian and regional economy. Cititrust Holdings Plc was founded in 2006 and holds significant investments that cut across commercial and mortgage banking, asset management, stockbroking, and investment banking, currency trading, pension fund administration and insurance services.

ECONOMY

RMBN urges businesses to adopt strategies to manage risks HOPE MOSES-ASHIKE

and Merchant Bank Nigeria Limited has urged businesses to adopt strategies that would enable them manage risks in a VUCA environment. “We believe Nigerian businesses can become resilient and sustainable by adopting strategies to adapt to and manage risk,” said Michael Larbie, CEO and managing director, RMB Nigeria and West Africa in his introduction to the third session of the RMBN Economic and Business Conference. The session focused on how Nigerian businesses can respond, proactively prepare for and thrive in a VUCA environment. A VUCA market is one

that is characterized by volatility, uncertainty, complexity, and ambiguity. Neville Mandimika, global markets research analyst, RMBN, contextualized the West African market within this framework against a matrix of growth, fiscal strength and monetary room. He noted that Nigeria’s current growth is currently averaging at 2.2 percent, which is lower than previous annual cycles. Locally, concerns remain around fiscal strength and monetary room. While there are legitimate reservations about the price of oil rebounding to pre-COVID 19 levels, it does seem to be trending upwards. However, the future comes with several risks to contend with, including the impact of US elections, a possible sec-

ond wave of infections, US’s relationship with China, as well as the Ghana and Ivory Coast Elections. The session was moderated by the Founder of Graeme Blaque Advisory, Zeal Akaraiwe who highlighted the steps investors can take to mitigate a VUCA environment. He emphasized that systemic risk though unavoidable, can be managed through measurement and mitigation. Banks can manage the risk posed to their assets by a focus on asset quality and portfolio monitoring. Bola “Koko” Onadele, CEO, FMDQ Group emphasized the need for the adoption of technology via the adoption of digital tools to measure and monitor risk, complemented by compe-

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tent risk management teams tasked with managing and reporting the risks. He advised that Corporates and Institutions putting together a risk strategy should always start at a macro level and then drill downwards using the investor’s philosophy, corporate architecture, leadership framework and business strategy as the guiding principles. Toyin Sanni, CEO, Emerging Africa Capital Group noted the current risks of playing in the open market operation (OMO) market and listed some attractive alternative investments such as commercial and corporate bonds by investment grade issuers, as well as sub national bonds. She mentioned that medium to long-term solutions are

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needed, which include reducing the dependence on foreign products and the dependence on oil. The markets are vulnerable to volatility in the oil prices because of their dependency on proceeds of crude sales, which has reinforced the need to strengthen alternative sectors such as agriculture, solid minerals and value-added exports. Nigerian also needs to engage with the diaspora, encouraging and supporting diaspora flow. David Alao, CEO, Leadway, Asset Management noted that institutional clients are asking for more collateral or guarantee-linked investments, or investments structured as repos or reverse repos. He emphasized that the market is trending towards more structured @Businessdayng

type instruments and said that while institutional investors don’t have control over external risks, they do have control over their portfolio. They can act prudently and hedge Naira exposure, creating a diversified portfolio of investments. Th e m o d e rato r, Z ea l Akaraiwe summarized the session by stating that Risk Mitigation in a VUCA environment is indeed possible. Investors need to proactively identify risks, employ competent risk managers and monitor risks with the right tools. Even in times like this, there are still sectors that do well and Investors therefore need to diversify the nature of the instruments in their portfolio, as well as the sectors they invest in.

Tuesday 14 July 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

ENERGY

Ibadan Disco cautions customers as the rains begin, urges them to report faults promptly OLUSOLA BELLO

badan Electricity Distribution Company (IBEDC) Plc has called on its esteemed customers and the public to be very cautious around electrical installations within its network as the rainy season begins to gather momentum. The Chief Operating Officer of the Company John Ayodele said that the rainy seasons often witness the highest levels of incidents within the electricity distribution sector because of heavy rainfall, windstorms, and floods. Ayodele therefore, urged members of the public to be on their guards to avoid falling victims of any accident that could easily occur during the rains. Speaking on the need to

observe all safety regulations especially during the rainy season, Engr. Ayodele said that IBEDC is concerned about the safety of its customers and staff, hence, the need for more sensitization and education now. “There is need to create awareness on safety measures during the rainy season because of the hazards that electricity and water can cause. Avoid conditions that can compromise your safety around electricity, such as using wet electrical appliances or handling them with wet hands; stepping in puddles of water that could potentially be charged. You should also guard against exposed electrical wires, and ensure your houses are well earthed. John Ayodele furthermore, called on customers within IBEDC’s network to

stay clear of snapped power wires and cables, sagging lines and fallen poles. He said if there is any such incident, customers should call the Customer Care 0700123 9999 or report through the company’s social media handles immediately, while maintaining a safe distance from the point of the accident. He warned against the practice of conducting commercial activities under power lines and cables, noting that the cables could easily snap due to strong winds. He further advised customers not to engage quack electricians to wire their houses or carry out repairs as errors and deviation from sound technical practice and poor workmanship may lead to fires, loss of properties and even loss of life in some cases.

L-R: Kehinde Sanni, project coordinator; Tope Sanni, team lead/country manager, and Adedeji Ajayi, brand manager, all of Popl Nigeria, at the launch of Scosh App in Lagos.

APPOINTMENTS

Seplat appoints new chief financial officer and executive director OLUSOLA BELLO

he b oard of directors of Seplat Petroleum Development Company Plc has announced the appointment of Emeka Onwuka as chief financial officer (“CFO”) and executive director of the company, joining the Seplat Board with effect from August 1, 2020. O nwuka has over 30 years’ experience in financial ser vices within Sub-Saharan Africa. He has acted as the voice and face of major financial institu-

tions in Nigeria as former group managing director /CEO of Diamond Bank Plc and former Chairman of Enterprise Bank Limited. Onwuka is a Partner at Andersen Tax Nigeria and holds various board positions as chairman; FMDQ Securities Exchange Limited; director FMDQ Holdings Limited; director, Ecobank Nigeria Limited; and director, Bharti Airtel Nigeria. Onwuka received his B.SC. in Political Science from the University of Nigeria, Nsukka and holds an MBA from the University

of Benin. He is a Chartered Accountant, a Fellow of the Institute of Chartered Accountants of Nigeria, a Fellow of Chartered Institute of Taxation of Nigeria. He has attended executive programs at the Lagos Business School, Wharton Business School and Harvard Business School. Onwuka holds the Nigerian National Honour, Officer of the Order of the Niger (OON). The Board of Seplat is confident that the wealth of knowledge and experience he brings will be a great addition to the Company.

Dradrock poised to deepen corporate governance with appointment of new board MODESTUS ANAESORONYE

radrock Real Estate Limited, a Lagos based real estate development company, has unveiled a five-man board of directors that will take the fastgrowing organization to the next level. The board was formally introduced at a brief media event, which took place at Dradrock’s corporate office in Lekki, Lagos. Oladipo Idowu-Agida, managing director of the company, explained that the primary goal of this new line of action was to institutionalize every aspect of quality corporate governance in the

organization. The board is ultimately responsible for ensuring that the company complies with legal and regulatory obligations. Speaking briefly on the issue, Idowu-Agida stressed that one fact he has taken away from vast entrepreneurship training is that when building a sustainable business, the company must have a life of its own to grow one key element that nurtures and sustains a business is a corporate governance. His words, “Corporate governance is the life of a growing business, and the lack of it has killed most businesses in our environment. (Wellstructured corporate governance) is what investors, www.businessday.ng

institutions, and customers want to see. “The extraordinary growth of the Dradrock real estate company can be attributed to the vision and entrepreneurial skills of Idowu-Agida. Id ow u -A g i d a f u r t h e r highlighted that investors want to know that they are dealing with an institution, not an individual; they want to visualize a predictably sustainable organization. Additionally, “when we started Dradrock, our goal was to build an indigenous company that will grow a multinational organization with a board that will develop a process that ensures growth and sustainability.

Chinenye Ozoadu Regional Manager Operations; Anthonia Nwakonuche General Manager; Amb Marksman chinedu Ijiomah Chairman/President; Tina Imohimi Director Construction and Progress Barnabas HR Dept

L-R: Pauline Sanusi, staff of Special Correctional Centre for Girls; Folashade Ashafa, president, Ikeja Viva L’Amour Lions Club; Adenike Adeniji, vice president, Special Correctional Centre for Girls, and Oluyemisi Lasubulu, secretary, Ikeja Viva L’Amour Lions Club, during the Donation of Sewing Machine and Grinding Machine held recently in Lagos.

L-R: Ms Folashade Ambrose-Medebem, Founder Women Inspiring Impact Network (WiiN); Dr. Mrs. Temitope Iluyemi, P&G Director Government Relations, Africa and Ms Chisom Ogbummuo, Founder, The Conversation Café at the official handover of Always sanitary pads by P&G to WiiN in commemoration of 2020 World Menstrual Health & Hygiene Day

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Tuesday 14 July 2020

BUSINESS DAY

property&lifestyle Nigeria needs to harness opportunity in real estate and technology to grow economy — Gtext Homes MD ... as firm perfects plan to support start-ups with N12m ENDURANCE OKAFOR

or Nigeria’s economy to expand at a d e s i rab l e rate, the country needs to maximize the opportunities in the real estate industry, technology and agriculture sectors, according to Stephen Akintayo, CEO of Gtext Homes, a subsidiary of Gtext Global. Akintayo, who spoke at a recent cheque presentation to three agric start-ups who emerged winners of the company’s conference agric pitch competition, noted that Nigeria is still struggling because it is yet to harness the potential of the three sectors. “I believe this country will get better through three major sectors- real estate, technology and agriculture,” he said, arguing, “if we harness the power of those three sectors, we’ll be able to build a great country.” Gtext Group recently supported three agric start-ups with N1 million as they emerged winners of the pitch competition. The cash prize was split into three, with Agro Direct taking home N500,000

Colourful, cultured and effortlessly sophisticated, Applecross has flourished through the seasons to become one of Perth’s most desirable waterside locales. Featuring 164 stylish residences and resort style amenities over 30 levels, Sabina Apartments joins an evolving precinct brimming with modernity and convenience while paying homage to the suburb’s rich heritage.

a s t h e ov e ra l l w i n n e r while BBN Food & Farm and Farms Global took N300,000 and N200,000 respectively for emerging the first and second runner-up respectively.

Having established its presence in the real estate industry, and supported industry start-ups, Gtext Group said it thought of how best it could reach out to other sectors.

“So to celebrate our 12th anniversary, we decided that we will be supporting about 12 different sectors of the Nigerian economy with N12 million,” Akintayo said. While the company has already given N1 million and training to the winners from its real estate pitch, the Gtext Global said it has an interest in encouraging young Nigerians, not only in going into real estate but also in the agricultural sector. According to Akintayo, this is “because there is a lot we need to do with our youth; we need to begin to invest in the youth and we need to encourage them to go into agriculture.” Wi l f re d O k a f o r, t h e winner of the Gtext pitch and the co-founder of Agro Direct, a Fintech company bridging the gap between buyers and sellers of agric products, said his company was grateful for both the growth capital and the training from Gtext Global. “We thank Gtext Global for providing such initiative and being the winner, we plan on investing the money in our process line,” Okafor said.

How Yobo-Lifecard Empowerment Fund enables Nigerians to own homes, land CHUKA UROKO

or young Nigerians aspiring to become home or land owners, opportunity beckons as the Yobo-Lifecard Investment International Initiative is out now to empower 100 of such people through its YoboLifecard Empowerment Fund. The initiative is a collaborative effort between Joseph Yobo, who is not just a footballer, but also an experienced real estate investor and a seasoned businessman, while LifeCard Investment is a firm offering result-driven real estate solutions to people seeking to own real estate assets. “At Lifecard Investment, we believe strongly that every living person is entitled to approximately two acres of land. So, we are offering an opportunity that serves both young home seekers and investors. We want them to key into the opportunity and meet their needs,” Grace Ofure Ibhakhomu, LifeCard CEO, said in a statement in Lagos at the weekend. Ibhakhomu recalled that, looking at year 2020 from a

distance, about 9 months ago, the year seemed promising with lots of possibilities. Millions of people came into the New Year with high hopes and energy to conquer many challenges, win many battles, and lift some trophies. But, all of a sudden and out of nowhere, Covid-19 pandemic struck, dashing hopes, wrecking homes, and crashing dreams and ambitions. All across the country and the world, families lose loved ones while many remain in isolation, out of reach of their families. “The world has to endure these difficult times and support one another so they can come out stronger postCovid-19. But the question remains as to how we are to gain this renewed energy. What the world needs at this vital moment is support from one another – leaning on one another’s shoulders and making the tough journey together to a point of succor,” she said. According to her, the need to journey together is the reason LifeCard Investment International is offering would-be homeowners the opportunity to own a property at a giveaway price. www.businessday.ng

“Asabrandthatunderstands the challenges in the world, LifeCard Investment, a real estate firm with a strong reputation, is making this amazing offer in partnership with Joseph Yobo, one of Nigeria’s football personalities,” she explained. Ibhakhomu, an innovative and energetic entrepreneur, stressed that the company offers result-driven real estate solutions to people, adding that whether such people intend to do this for a good return on investment or acquire it to meet their own needs, the management of the company can deliver these services seamlessly. According to her, this is what inspired the offer they are making in collaboration with Yobo, who is also their brand ambassador. Yobo described the offer as “empowerment opportunity” thatisopento100people,stressing that the Yobo brand in partnership with LifeCard believes that owning a home should not be an impossible mission, more so as the partnership wants to helppeopleachievetheirhomeownership dream. “We have prepared an empowerment pool fund for 100 people that can set-off

N500,000 or N1,000,000 as an upfront payment for a property they show interest in. This is possible with a down payment of N1 million on a house orN500, 000 on a landed property he chose to invest in,” he said. He explained: “All these payments are made from the Joseph Yobo-LifeCard Empowerment Fund. With this, you’ve activated your home-ownership clause with LifeCard Investment International and that automatically means you are a homeowner who just bought a property with an upfront payment done for you from an empowerment fund.” He described the opportunity as a support offer from LifeCard Investment aimed to help investors achieve their 2020 dream of owning their own homes. According to Ibhakhomu, LifeCard Investment believes one can still do a lot this year, explaining that a home seeker could move into his own home before the last quarter of this year. “You can make this possible by embracing this amazing offer; so take action,” he advised.

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Talking Real Estate

With Oluwakemi Adeyemo

Winning the real estate off-plan game

“W

hy do developers need our money to build?” someone once asked. While this question is from a Nigerian, it could originate from anyone curious to know about how some delicate, yet profitable, aspects of real estate investment work. Not everyone entering into the real estate investment ecosystem fully understands what is obtainable – the intricacies, changes, expectations and required preparedness. While a generation had a certain experience and perspective of how real estate should work and worked, other generations are expressing entirely different perspectives. Off-plan real estate, which is an arrangement to purchase a real estate property before it is built, is meant to increase the money-making options available in the brick and mortar real estate. But does everyone agree with or get easily comfortable with investing in off-plan real estate? Developers need investors’ money to build, especially in a clime where real estate development loans or funding are expensive and scarce. Because project costs are expensive, the finished projects are also, often expensive. However, the enduser often has to bear all these costs. Hence, the cheaper the project cost can be, the better – regardless of the niche market. Whether people get easily and quickly comfortable with investing in off-plan real estate depends on what I describe as the dynamics, dangers, opportunities and strength of the project as well as the stakeholders. When these four elements are properly captured, explored and communicated, investing in off-plan real estate can be the most profitable option for stakeholders and investors. The dynamics of a location and all people involved, including the government of the day, must be outlined and carefully considered. Worthy of consideration is the dynamics of the off-plan option itself. Off-plan means you are selling or buying into the conceptual design of the developer. You are buying or selling the project on paper. This can also mean that you are the direct product off-taker, who can also later become the seller. Being the seller bestows on you the responsibility of marketing your investment by yourself. Therefore, culture, personality and value must be made to align, and expectations clearly defined. Potential impediments @Businessdayng

to the successful completion of the project; inability to resell stakes or the possibility of suffering loss inherent in poor understanding of the process; and lack of clear communication or likely compromise to any aspect of the business must be brought to the fore and presented to stakeholders. It is unreasonable and impractical to give stakeholders a pictureperfect idea of the investment process. There are a few moneymaking options in the real estate value chain. Each option has an exploitable set of circumstances requiring the commitment of resources or knowledge that makes it possible to achieve maximum profit and a win-win situation with little or no risk exposure. The off-plan investment option, in particular, presents the opportunity for investors to, sometimes, double their investment. When a developer, on the other hand, delivers on investor’s expectation, the developer earns credibility which results in more patronage. Each money-making opportunity in real estate has its advantage over others. While it’s okay for stakeholders to be optimistic and expectant of profits, the qualities that guarantee the deliverables on the part of all stakeholders must also be proven. For instance, the resilience of the project delivery process and the inherent capacity of the developer to deliver, to endure, and to resist delays, compromise in quality or abandonment, must be ascertained. So also is the investor’s ability to grasp the project concept and commit resources as at when due. In most off-plan projects, investors appear to be on the receiving end. Therefore, they are expected to be able to scrutinize the developer’s process and make informed demand within limits and agreed on terms. After an investor has taken all necessary precautions and evaluations as highlighted above, it is still expedient to seek counsel. All documents and contracts must be carefully reviewed. If you are a first-time investor or an investor looking to build a property portfolio, you will find off-plan investment to be quite rewarding once you understand the dynamics of the game and play by the rules. Oluwakemi Adeyemo is the CEO of Futureperfect Limited. She helps to optimize profit in real estate investment. info@futureperfectproperties.com.

Tuesday 14 July 2020

BUSINESS DAY

BDTECH

In association with

E-mail: jumoke.akiyode@businessdayonline.com

86% of Nigerian organisations fall victim to public cloud cybersecurity incidents

...Europeans suffer less incidents with GDPR compliance

of reported attacks in Nigeria. Detailed in the SophosLabs 2020 threat report, misconfigurations drive the majority of incidents and are all too common given cloud management complexities. Despite this, only around a quarter of organisations (25 percent) from Nigeria say lack of staff expertise is a top area of concern. Data from a cloud security posture management tool further reveals that globally 91 percent of accounts have overprivileged identity and access management roles, and 98 percent have multi-factor authentication disabled on their cloud provider accounts.

Jumoke Akiyode-Lawanson with wired report

usiness organisations in Nigeria have been identified as one of the hardest hit by public cloud cyber security breeches, as more than eight out of ten Nigerian organisations experienced a public cloud security incident in the last one year. A recently released global survey by Sophos, a British security software and hardware company, revealed that 86 percent of organisations suffered - including 34 percent ransomware, 43 percent of other malware, 57 percent of exposed data, 46 percent of compromises accounts and 26 percent cryptojacking between 2019 and 2020. The state of cloud security 2020 report which highlights findings of an independent survey conducted by Vanson Bourne among more than 3,500 IT managers across 26 countries in Europe, the Americas, Asia Pacific, the Middle East, and Africa that currently host data and workloads in the public cloud, shows that globally, organisations running multi-cloud environments are greater than 50 percent more likely to suffer a cloud security incident than those running a single

cloud. According to the report, Europeans suffered the lowest percentage of security incidents in the cloud, an indicator that compliance with General Data Protection Regulation (GDPR) guidelines are helping to protect organisations from being compromised. India, on the other hand, fared the worst, with 93 percent of organisations being hit by an attack in the last year. “Ransomware, not surprisingly, is one of the most widely reported

cybercrimes in the public cloud. The most successful ransomware attacks include data in the public cloud, according to the State of Ransomware 2020 report, and attackers are shifting their methods to target cloud environments that cripple necessary infrastructure and increase the likelihood of payment,” Chester Wisniewski, principal research scientist, Sophos, said. “The recent increase in remote working provides extra motivation to disable cloud infrastructure that is being relied on more than ever, so

it’s worrisome that many organisations still don’t understand their responsibility in securing cloud data and workloads. Cloud security is a shared responsibility, and organisations need to carefully manage and monitor cloud environments in order to stay one step ahead of determined attackers,” he said. The unintentional open door: How attackers break in Accidental exposure continues to plague organisations, with misconfigurations exploited in 64 percent

The Silver Lining Nearly all respondents (97 percent) from Nigeria admit to concern about their current level of cloud security, an encouraging sign that it’s top of mind and important. Appropriately, “Identifying and responding to security incidents” tops the list of security concerns for nearly half of respondents (45 percent) followed by “managing access to cloud accounts” and “data leaks” (32 percent and 32 percent respectively). Interestingly only 54 percent of respondent from Nigeria say they have full awareness of their cloud assets and 22 percent say they are aware of only a minority.

BMP Car penetrates ride hailing service industry with launch of 2-in-1 tech transport operation Jumoke Akiyode Lawanson

igerian tech startup BMP Car is set to redefine the ride hailing tech transport system with its newly launched 2-in-1 model - car sharing and VIP taxi on the same platform, which allows users to link-up and join anyone embarking on the same route with them or book an instant ride to their various destinations. Unlike the existent service of

Uber pool, BMP’s car sharing mode is useful for both intra and interstate travel while it’s VIP taxi mode is for service mainly within Lagos State. The idea was designed to reduce hassle for online transport users, as the platform aims to offer Nigerians simple, reliable, secured and cheap transportation service to reduce stress and aid smooth inter and intrastate travels. Ezekiel Ojo, chief executive officer and founder of BMP Car said the platform was set up with a

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unique model of providing a 2-in-1 service of Car Sharing and VIP Taxi model with instant bookings, unlike its competitors. “Being a community that connects car drivers to passengers, users’ identities on the platform are properly verified after registering with their details so that partners can know who they are travelling with,” he said. Explaining further, Ojo said that through the car sharing, car owners can find nearby people that are trav-

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elling the same direction with them through a few clicks and get paid while users can also easily get across to available car owners embarking on the same route with them.” He said that people can request for a ride through the VIP taxi model adding that it was positioned to offer drivers and partners the best earnings while also offering users excellent service. “Unlike other online hailing platforms that failed to identify some critical problems facing driv-

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ers and users, BMP Car was designed for both the riders and the users to generate additional revenue and enjoy a convenient, easy and safe platform. Anyone can earn more revenue which could be drivers or passengers on car sharing, while VIP drivers are permanently available on the platform to respond to an instant booking by the users,” Ojo said. The BMP Car app is available both on the Google Play store and Apple App store.

Tuesday 14 July 2020

BUSINESS DAY

Markets + Finance

‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Analysts see Covid-19 disrupting business valuation

h e w o r s e n i ng c o ro n a i r u s i s having a dramatic impact on world equity marets, with world listed equity values on downward spiral, a crisis that is more severe than the 2008/2009 financial crisis and the Second World War. Analysts and investors have divergence of views on the impact of COVID-19 on the business valuation, but they concur that valuators will have to readjust their future earnings forecast. During an economic downturn, companies’ revenues recede and profit slumps, and that results in reduction in cash flow; a reduction in expected future cash flow undermines the value of a firm. The economic devastation caused by COVID-19 has been so severe on some businesses that valuators will have to reassess the going concern premise in valuing companies in the coming months. Interestingly, the industry that requires human contacts and interactionsbars, theatres, restaurants, cinemas, fitness house- are more susceptible to extreme volatility. Wale Olusi, Head of Research at United Capital Limited said COVID-19 is a risk to the economy and the cost of equity will rise and that valuation will fall. He added this crisis is coming with yields rising and that it is an anomaly that will force valuators to use inflation rate instead of the conventional risk free rate of returns in the calculation of cost of equity. The United States’ (US) 20-year Treasur y bond nominal yield rate has fallen due to measures taken by the Federal Reserve to aid

the economy as investors pile into save haven assets to avoid the equity rout. As a result of extreme volatility and uncertainties caused by coronavirus and crash in crude oil price, the International Monetary Fund (IMF) slashed its forecast for global economy and warned of spiraling debt. It now estimates a contraction of 4.9 percent in global gross domestic product in 2020, lower than the 3 percent fall it predicted in April. The Fund expects the United States economy to contract by 8 percent this year as it had estimated a contraction of 5.90 percent in April, but there are growing concerns that a second wave of attack by the virus in some cities that had reopened for business could damp slow economic recovery. Similarly, the fund also downgraded its forecasts for the euro zone, with the economy now seen shrinking by 10.2 percent in 2020. The Washington based institution estimated Nigeria’s GDP would contract by 5.4 percent and not the 3.4 percent it projected in April 2020; a double whammy for a country that exited its first recession in 25 years in 2017. According to the Q1-2020 GDP report published by the National Bureau of Statistics (NBS) on 24 May 2020, Nigeria’s economic growth slowed to a nine-quarter low of 1.87 percent year on year (YOY) from 2.55 percent (yoy) in Q4-2019 and 2.12 percent yoy in Q2-2019. Abiola Gbemisola, analyst at Chapel Hill Denham Limited is of the view that the current crisis will impact on banks’ valuation because of their loan assets will deteriorate on the back of regulator pressures that are eating up yields. The impact of the COVID-19 pandemic and the

John Opubor, managing Partner, Coronation Capital

control measures put in place does not favour loan disbursement, therefore,

‘

Coronation Capital is a private equity fund manager with a culture built on promoting innovation, good corporate citizenship and delivering strong returns to our investors

‘

BALA AUGIE

loan growth is expected to be muted. Earnings of lenders will be most under pressure as they were forced to lower interest rates in order to meet the Loan to Deposit Ratio requirement (LDR). Also, impairment s on loss will spike due to the need to meet the IFRS 9 requirement. In a bid to revive pand e m i c st r i cke n e c o n o mies, governments across the globe have lowered interest rate and accelerated bond buying stimulus package. The European Central Bank (ECB) has spent €1.35 trillion (pandemic emergency purchase programme) on fixing the balance sheet of member countries reeling from the devastating impact of the virus. The Executive Board of the IMF has approved Nigeria’s request for emergency financial assistance of $3.4 billion under the Rapid Financing Instrument (RFI) to meet the urgent balance

of payment needs stemming from the outbreak of the COVID-19 pandemic. The current gyrations in stock market and battered earnings brought on by COVID-19 pandemic and crash in crude oil price has cast a pall on future expected cash flow. Consequently, market participants and the general public need to be sensitised on the the extent of disruption to business valuations in corporate finance world. As a part of its Education, Development & Impact Series, leading Private Equity Firm, Coronation Capital is organizing an online master class on July 20 - 21 and 27 - 28, 2020 with Aswath Damodaran, a renowned Professor of Finance at New York University’s (“NYU”) Stern School of Business. The four-day event is designed to provide participants with a deeper understanding of corporate finance, valuation methodology and financial statement analysis with a key focus on appraising the business impact of financial decisions on the organizational performance. Damodaran has published several books and articles on equity valuation and corporate finance and has been featured in the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. Professor Damodaran has been voted ‘Professor of the Year’ by Stern’s graduating MBA class five times and has been awarded NYU’s Excellence in Teaching and Distinguished Teaching award; Coronation is delighted to bring him to Nigeria for a second time. The Valuation Master Class is a thought leadership and capacity building initiative of Coronation Capital. Lecture sessions will be

BD MARKETS + FINANCE Analyst: BALA AUGIE www.businessday.ng

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hosted virtually and will also feature an engaging oneon-one fire side chat with Professor Damodaran on various topics including his views on the current global business environment and the Nigerian economy - opportunities for growth and investment. The Finance guru will train employees of Coronation Capital as well as related companies in the Coronation ecosystem which covers insurance, investment banking, asset management, technology and venture capital. Given that there is limited space, participation will be extended, by invitation only, to finance practitioners in the media and public sector as well as Coronation counterparties. Coronation Capital’s Opubor has argued that amid the COVID-19 challenge a new light has shone on businesses and their models for financial and operational sustainability. Opubor says, “the opportunities for growth and investment in Nigeria and the need to focus on improving internal capabilities, understanding fundamental analysis to take advantage of market opportunities when perceived has become critical at present”. Coronation Capital is a private equity fund manager with a culture built on promoting innovation, good corporate citizenship and delivering strong returns to our investors. Coronation Capital aims to build well-positioned, well-run, cash-generative, and sustainable businesses that become significant employers and sources of growth in West Africa and across the continent. A core pillar of good corporate citizenship for Coronation Capital is utilizing education and development to positively transform our immediate environment.

Tuesday 14 July 2020

BUSINESS DAY

EDUCATION Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Themes agenda: actualizing the 21st century skills for education transformation in Lagos state MARK MAYAH

t has been one year since Governor Babajide Olusola Sanwo-Olu began to hold the baton of leadership in Lagos State with the six pillars of development as its mandate for a greater Lagos. The third pillar representing Education and Technology, has since its inception transformed to be a model of admiration to many as the Sanwo-Olu administration placed high premium on Education and Technology as veritable tools to drive the 21st century economy of the State. With the vision to become a model of Excellence in the development of Education in Africa by providing high quality education accessible to all learners, through effective and efficient management of resources for the attainment of self-reliance and socio-economic development, the Sanwo-Olu led administration has continue to raise the bar with strategic measures and transformation plan for the success of the sector. The administration with the passion for learning, schools transformation and capacity building for teachers has been further driven with the new trends towards engendering quality education that will be at par with the 21st century standard of learning. The State Government with its trail blazing agenda has resolved to restructure the Education sector by ensuring that the teaching and learning methods in the schools are improved state-wide. The challenges the sector is faced with, were unquantifiable at the inception of the administration and proffering solution to these multi-faceted challenges required the laying of formidable foundations to achieve laudable feats in the quest for positive changes and the resolve to surmount these challenges. To begin with, the Ministry of Education was allocated N133.5 billion naira (One Hundred and Thirty Three Billion, Five Million Naira) only in the Year 2020 approved budget; this represented a growth of 137% increase year on year which in turn meant government’s readiness to move the sector forward. Under the Ministry of Education are offices and agencies also collaborating with the building of the vision for Education: these are the Lagos State Universal Basic Education Board (LASUBEB), the Lagos State Technical and Vocational Education Board, (LASTVEB) Office of Education Quality Assurance (OEQA), Lagos State Teaching Service Commission (TESCOM), Lagos State Examination Board and

Governor Babajide Olusola Sanwo-Olu

the six Education districts. There have been major achievements by the Sanwo-Olu administration this past year in the area of Education Transformation Plan, Infrastructure, Basic Education, Teacher’s Recruitment, Home Grown School Feeding Programme, School Curriculum, Teacher’s Capacity Trainings, State Tertiary Institutions, E-Learning and Teaching in the wake of the Covid-19 pandemic. Construction and upgrade of public schools infrastructure In the period under review, 54 classrooms were completed in secondary schools and 60 worst infrastructure schools were rehabilitated by the Ministry of Education and Lagos State Infrastructure Asset Management Agency (LASIAMA). The Ministry also delivered 60,000 tables and chairs to schools while 92 classrooms were officially handed over to public primary schools. To ensure the schools building are maintained, LASIAMA established a school maintenance plan and designated Facility Managers to each school. Some of the beneficiaries of these schools infrastructures are; Eva Adelaja Junior High school, Bariga; Maya Senior Grammar school, Ikorodu; Egbe Junior College, Egbe; Ayanleye Primary School, Ifako Ijaye; Oladele Alake Primary School, Ejigbo; Saviour Primary School, Ifako Ijaye; Ikotun Primary School, Ikotun; Bashua Military Primary School Shomolu and Ansar Ud Deen Primary School, Epe. www.businessday.ng

Improving the quality of primary education The slogan, “Leave No Child Behind” became prominent with the advent of the Eko Excel Initiative, a transformation initiative of the incumbent administration. EkoExcel; an acronym for “Excellence in Child Education and Learning” which was rolled out in phases is planned to help 14,000 Head Teachers and students embrace digital teaching, using tablets and updated curriculum in line with the Sustainable Development Goal 4, the National Policy on Education, Universal Basic Education Commission (UBEC) Act 2004 and SUBEB Law 2006, to aid in achieving an all-inclusive, Quality Universal Basic Education. As we speak, over 4,000 primary school teachers from 300 public primary schools have been captured under the Pilot Scheme with each of them given a tablet to work with. The programme equipped teachers with skills to deliver value, empower pupils with requisite knowledge to improve education and help in sustaining the growth of Lagos State as a leading knowledge driven city and economy in the world. Apart from the technological advantage of Eko-Excel, the initiative provides a multi-dimensional approach to learning, which includes character moulding of pupils from their formative stage. To do this, Character Boards were placed in all public schools. The Board being used to display the names of well-

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behaved and outstanding pupils in order to celebrate them with the intention of making other pupils aspire to have their names written for good conduct and subsequently get celebrated in a healthy competitive atmosphere. The Covid-19 pandemic became a stark reality such that the earlier paradigm shift to integrate technology into the Schools’ curriculum was apt, as the Pandemic was not envisaged. These current realities further heightened the State government resolve and commitment to innovatively use media technology to push the quality of education to a world class standard while making learning outcomes accessible with the background knowledge that Education remains a critical success factor for the socio-economic development of an economic hub. To continuously build capacity of teachers, 18,000 secondary school teachers have been trained in digital literacy by Microsoft Office, an additional 2,500 secondary schools teachers have been trained in Scenario Planning based on Remote Learning, Teaching and classroom coordination. These are post Covid-19 measures connoting preparedness and safety precautions when schools are finally re-opened. Aside, seminars, webinars, sensitization workshops and stakeholders’ workshops are continuous for teachers across the State. While revamping the sector, there was improvement in capacity and welfare of schools personnel as N7.8million naira was disbursed to School teachers as Car Refurbishment loans and N3 million disbursed as housing loans. Other incentives to further encourage teachers are awards for Best Teacher and apartments for Best Teacher and Best School Administrator. The Ministry also recruited 2000 primary school teachers and 1000 secondary school teachers to complement the existing team and the newly engaged were given adequate trainings before joining the workforce. To leverage Public-Private Partnership for a grand impact, the Ministry of Education organized the 2020 Public-Private partnership (PPP) - Dialogue aimed at accruing collaboration towards improved quality education in the State and also implemented the government Transformation Plan for Education focusing on 15 areas in the sector for partnership by stakeholders. This partnership has begun to yield positively as First Bank PLC donated 20,000 e- learning devices; Edfin Micro Finance Bank donated 100 @Businessdayng

e-learning devices to teachers while MTN Nigeria provided 6 months internet support for students among others. The low-end devices have been preloaded with the Ministry of Education accredited Curriculum and are designed to work offline making it efficient and suitable for students’ learning processes. The offline option removes the snag of data consumption With the incursion and the ‘new normal’ that the Covid-19 pandemic entrenched in its wake, leading to Schools closure, these stakeholder’s donations have come in handy. Also with the emergence of the pandemic, ensuring the safety of students and the need to stem the tide of the infection became crucial. The Ministry hitherto organized electronic learning and teaching platforms through Radio, Television and the internet to continuously engage the students. Moreover, across the 976 Public Primary Schools in the state, the Ministry through the Home Grown School Feeding Programme fed 135,445 pupils daily. The school Curriculum which plays an important role in learning outcomes was reviewed and integrated with 21st century skills in the State schemes of work while the 2020 major Book is on-going. The Distance Learning Approach is also currently being integrated. The Ministry is leaving no stone unturned as it has improved on the capacity and welfare of students, the results of these can easily be gauged in their performances and emergence as champions in competitions locally and internationally. In the finals of the national Robot Olympiad in September 2019 held at Edutus, Gyor Hungary, the State emerged 2nd, 3rd & 4th respectively, while the State Contingent received 11 trophies and 14 medals in 2020 National Junior Engineers technicians and Scientist (JETS) competition to mention but a few. Today, State government’s vocational centres are better equipped as Office equipment, consumables (Arts and Crafts materials), Generator, fridge and sewing machines have also been delivered. Two new buses have been provided for monitoring primary schools. To improve the efficacy of the Office of Education Quality Assurance, a grading instrument was instituted for evaluating the standard of education in schools -a revamping of guidelines for establishing, operating and sustaining a school and increased Private School Registration above 100% year on year. The Office has since launched the read Aloud Programme for Basic School Students in the State.

Tuesday 14 July 2020

BUSINESS DAY

EDUCATION Why investment in special needs education should be prioritised post-COVID-19 KELECHI EWUZIE

s the Federal and St at e g ov e r n ments map out strategies towards the reopening of schools, a call has gone out for the investment in special needs education, to effectively close the inequality gaps in learning. Education stakeholders and frontline non-governmental organisation on special education, the Inclusive Education and IEP Centre (IEIEPC) has urged governments to help cushion the effects of the COVID-19 pandemic on the learning and development of children with special needs. Oyeyinka Oluwawumi, director of IEIEPC said there is the need to cater for children with special needs to ensure their development is not overly impacted by the COVID-19 pandemic. Oluwawumi while speaking recently at a webinar for parents, guardians, caregivers, teachers and government agencies on special education said there is need to engage children, study them to discover hidden potentials, seek

Adamu Adamu, education minister

to understand their temperament and inculcate healthy living styles in them. Tolu Eniolorunda, president, International Association of Special Educators, Nigerian chapter while speak-

ing at the webinar with the theme, ‘Supporting Children and Persons with Special Needs’ called on parents and family relations of children with special needs to take the opportunity provided by

the ongoing school closure to understand the strengths and weaknesses, abilities and disabilities of those children with special needs to enable them give the appropriate kinds of support necessary for the realisation of their potentials. According to Eniolorunda, “This lockdown period caused by the COVID-19 Pandemic offers a significant advantage to parents, teachers and caregivers of children with special needs to give more attention to this category of children. “Prior to now, most parents were too busy with so many engagements that they never really had time for them hence the lack of awareness of the abilities of these children. All parents of special needs children should take full advantage of the period to understand and appreciate their abilities so they can support them accordingly,” she said. Speaking at the occasion, Olufemi Fakolade, a special educator and former head, department of Special Education, University of Ibadan, decried the severe impact the current classroom closure would have on the education

and general development of special needs children, while citing unavailability of resources such as equipment, Internet access, specially designed materials and trained manpower support as inhibiting factors. While offering insights on how to maximize online classes, Fakolade enjoined special education teachers to draw up a list of top virtual learning applications, study their features and apply them appropriately I line with the peculiarities of each individual child. “We need to understand the peculiar challenges and attributes of the individual child. There are some apps like Zoom, WhatsApp, Cisco WebEx, Google Classroom, Virtual Classrooms, Schoology and Learning Management system that can be adapted to teach our children with special needs. The teacher with the support of parents can manipulate them to accommodate the peculiarities of these students and their syllabus”, she said. While calling on government at all levels to play active roles in urgently addressing all factors that hamper ac-

cess to quality education of special needs children, John Oyundoyin, renowned special educator, called for the recognition of caregivers as essential service providers and inclusion of disability organisations workers into the COVID-19 taskforce because of their better understanding of these categories of people. The webinar, which drew participants from several states including; Akwa Ibom, Osun, Enugu, Ogun and Lagos, as well as, Abuja was put together to help parents, guardians, relations and caregivers of children while they strive to appreciate their challenges. The IEIEPC is a non-governmental organisation devoted to improving the lives of special needs children and persons through advocacy and enlightenment campaign for inclusion, providing services, training teachers, parents and other stakeholders on issues of inclusive education, special education and individualised educational planning in unique ways that improve the quality of life and maximise the learning potentials of persons with special needs.

Nigeria’s problem is leadership, followership – Experts • urges Public, private partnership to save education sector •says government must be committed at implementing policies MARK MAYAH & BUNMI BAILEY

igeria’s problem is not scarcity of human and natural resources, but leadership and followership, according to experts in the nation’s education sector, blaming the nation’s leadership for their failures to implement laudable education policies by technocrats. They called on corporate organisations, industrialists, faith organisations and nongovernmental organisations to rescue the nation, in form of public private partnership to safe the sector from imminence collapse. The webinar includes, the minister of state for education, Chukwuemeka Nwajiuba, House of Representatives Committee Chairman on Basic Education, Julius Ihonvbere [Prof], Founding Trustee, AlAmanah Foundation/School Head, Al-Amanah Academy, Kaduna, Fatima Hamza and STEM Education Advocate, Uchenna Onwuamaegbu-Ugwu, made the submissions at a one-day webinar, Re-ignite

Public Affairs National Dialogue Series in partnership with BusinessDay, with the theme: ‘’Nigeria @ 60. ‘Education: Navigating A New Normal’. In their views, Nigeria’s educational system has been in the doldrums for decades, largely due to lack of commitment by the nation’s leadership. However, the COVID-19 pandemic, unarguably a major global health crisis, has further exposed the crisis within Nigeria’s education sector as governments and educational institutions including stakeholders struggle to adjust to a new normal in the face of uncertainties. It was indeed a broad session, touching on education, health, economy, Politics, and other vital national and international issues. ‘’No matter what indicators need, we are worse than we were in past time,’’ Julius Ihonvbere said, adding ‘’ The standard of living of the average Nigeria is fallen in education, health and social services - all these have suffered tremendously. ‘’ His argument is that the structural transformation required for change is yet to be www.businessday.ng

placed, resulting in the depreciation of our relative importance in the world. He blamed the problem on the elite, which includes leadership and followership, saying: ‘’ we have been let down by the elites. Our education system has fallen and we need to have a new discourse on education.’’ Ihonvbere, who noted that over 20 bills on education were passed by the National Assembly without being implemented by the executive arm of government, assured Nigerians that ‘’come next year, education sector will be accorded a befitting budgetary allocation with strict compliance as regards implementation. Members of NASS will ensure right pegs in

President Muhammadu Buhari

the right holes.’’ Said he: ‘’we have brilliant ministers, permanent secretary, directors, technocrats but we are witnessing a failed education system, due largely to lack of commitment in terms of funding and implementation of policies. Many of our lecturers today can’t afford PC, academic journals have disappeared. What we have now is cultists group etc.,’’ Ihonvbere stressed. The educationist therefore, stressed the need for soul searching ‘’ as to where we have gone wrong and how to overcome these, ‘’ adding that a redefinition of Nigeria’s educational system was necessary ‘’ if the Nigerian dream towards economic development is to be attained in the near future. ‘’ Speaking at the occasion, the founder, Al-Amanah Academy Kaduna, Fatima Hamza, called on administrators of public schools to always liaise and cooperate with their private schools counterparts for quality delivery of good education contents to the nation. Noting that lot of creativity has come out from the COVID-19 chaos, stressing to achieve ‘’our objectives, there is need to improve the confi-

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dence of teachers at all times.’’ In her word: ‘’I have seen innovation coming to light and some many learning styles coming up and students appreciate greatly. As new skills are coming out, digital literacy has shot out. Many 21 century skills are shooting out.Teachers for the first time are truly appreciated by the parents for what they are doing in that tech space. I feel that there is a lot that the private sector is doing and am of the view that we can be partner to the government towards successes,’’ Hamza said. For Uchenna Onwuamaegbu-Ugwu, she called on the private sector to adopt a public school, saying there are too many private schools on the land. According to her, ‘’ let the individual wanting to establish school go to government and negotiate terms with the government in adopting a school. If public schools were genuinely adopted by the private sector, you will see a positive change because the government too needs help. The government needs the private school and also stem education is very important from a young age. In his remarks, the min@Businessdayng

ister of state for education, Chukwuemeka Nwajiuba said government does not have all the resources for funding education. He appealed to private organisations and wellmeaning individual to come and adopt some of government schools rather than establishing new ones. Government, he explained does not know all. We are ready to partner with individual and organisations wishing to adopt any of our schools. The minister stated that “Government will only regulate. Nobody in public knows all. We need to take everybody along at efforts to salvage the nation’s education sector.’’ The minister who promised to make the system workable however, stressed that the education ministry “will change the current curriculum soonest. He commended the organisers of the event, saying: “their efforts worth emulating.’’ The webinar was moderated by Modupe AdefesoOlateju(Dr), an education policy expert specialising in Public- Private partnerships in education. She is the managing director of The Education partnership centre (TEP Centre).

Tuesday 14 July 2020

BUSINESS DAY

How Wall Street internships are going virtual

US banks are redesigning one of their oldest rites of passage for the Zoom era LAURA NOONAN

oom etiquette classes, digital job shadow ing and online scavenger hunts await the thousands of students who begin Wall Street’s first year of virtual internships on Monday. Goldman Sachs, Citigroup and JPMorgan Chase all welcome their summer cohorts this week and will seek to capture the essence of one of Wall Street’s oldest rites of passage — in a world where interns cannot step foot in their offices. The coronavirus pandemic has disrupted the traditionally immersive — and highlycompetitive — experience of banking internships, where eager twenty-somethings learn technical skills and get hands-on experience, all while trying to convince senior executives to hire them full-time. This summer’s internship season has been redesigned with working from home in mind. The length of these paid programmes has typically been halved from 10 weeks to five, and novel elements introduced such as teaching remote working techniques, crash courses on how to come across well on video calls and guidance on dress codes for the Zoom era. Goldman Sachs is even offering its interns picture cards with sartorial suggestions. Meanwhile, the team building exercises such as wine tasting and scavenger hunts that once took place in person will now be conducted virtually. “Given that it’s a remote experience, there was generally a fear of ‘are they going to be showing up? How are they going to be showing up? Are they going to be passively sitting at their screens all day?’” said Vicki Tung, head of campus recruitment at Goldman Sachs. “Because of that we’ve had to be very intentional and deliberate about what intern schedules will look like.”

Thousands of students will begin Wall Street’s first year of virtual internships this week © Getty Images

The 2,200 interns joining Goldman virtually this week will be given hourly schedules, including “one-on-one” encounters with bankers spanning everything from mentoring chats to 30-minute virtual job shadowing sessions, which interns at Goldman’s markets division will do several times a day. These will allow them to see a trader’s screen as they work, while simultaneously video chatting with the trader to learn why they are putting on positions. “[Goldman’s management] are seriously committed to making sure this is a real-world experience,” said Ms Tung. Interns across the firm will spend more than 60 per cent of their time on “real work” — such as live deals in investment banking, or other assignments for the bank or its clients. The remainder of their time will be spent on training. Ms Tung said the social side of the programmes was straightforward to recreate online, thanks to the array of technology available for www.businessday.ng

hosting events such as virtual wine tasting and scavenger hunts. “All of those things we’re taking advantage of,” she said. Citigroup has 1,500 interns starting its five-week global programme on Monday. Courtney Storz, Citi’s global head of campus recruitment, said the bank had been forced to “totally reimagine” the scheme during the pandemic. This year’s plans include bonding sessions with peers, such as “virtual dinners where [interns] bring their own meals or cook as they go” and a virtual speaker series, which will include Citi chief executive Mike Corbat. Interns will wrap up their first day with a virtual panel discussion and performance by a group of actors from a hit Broadway show. Ms Storz acknowledged that interns would spend less time working on real transactions than in typical years, partly because of difficulties in having them work on confidential material from home. Citi is adopting a “sprint” approach so interns rotate

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through different desks and departments, which will ensure they “don’t get lost” in an area they “don’t enjoy”, said Lee Smallwood, the bank’s chief operating officer for markets and securities services for North America. In markets, that means working on a different asset class every week. “We are in uncharted water,” said Dan Keegan, who heads Citi’s North America markets and securities services business. Nonetheless “the commitment to the [intern] group is to provide them with an apprenticeship that familiarises them with the business and allows them the opportunity to work with the different desks to better understand where the fit is longer-term”, he added. Citi has already committed to making offers to 75 per cent of its students globally, provided they meet minimum performance requirements. JPMorgan, which has about 3,000 interns globally, declined to comment on its plans. The bank told the Financial Times back in April @Businessdayng

that it wanted to “replicate every piece of what an internship would involve”. Bank of America began its global virtual programme on June 15. More than 2,000 interns have spent the past month on sessions about careers in finance, professional development and BofA’s culture, as well as an online curriculum that includes some sessions with Cornell University. Some interns said that a virtual class meant they got to know a wider group of peers than they might have done in the traditional format, BofA said. Meanwhile, Morgan Stanley, which hired 1,400 summer interns this year, started North America and Asia’s group on June 30, and those in Europe starting on July 6,* So far, the programme was “running seamlessly”, the bank said. And with this year’s intake unable to soak up the bank’s culture in person, a spokesman said it has sent them branded duffel bags, mugs and sweatshirts, to “make sure they felt the Morgan Stanley pride from afar”.

Tuesday 14 July 2020

BUSINESS DAY

Insurance experts put premium on start-ups reaching the big time Investors have backed ‘insurtechs’ such as Lemonade but will consumers do the same? OLIVER RALPH

emonade, the SoftBank-backed home insurance start-up, got its long awaited IPO away last week and enjoyed a big initial price jump. The shares more than doubled to $69 on the first day of trading, valuing the company at $3.8bn. Lemonade is one of the big hopes of the emerging “insurtech” sector, with investors betting that its combination of slick technology and new ideas about how to sell insurance will bring in ranks of new customers. The industry is “ripe for disruption”, said Hugh Tallents of consultancy cg42. “The top four property & casualty [insurance] carriers in the US were established in and around the great depression and their product offering hasn’t changed a whole lot since then.” According to research firm CB Insights, insurtech companies have raised a total of $17bn from investors since the start of 2016. UK-based Octopus Ventures is one of those that has invested. “You see many very valuable, very large, very established companies which generally haven’t seen the challenge . . . that we have seen in other sectors,” said Malcolm Ferguson, a partner at Octopus. He added: “When we see . . . someone that’s not been displaced for a very long time and has a very powerful business model but customers are unhappy, we know there’s something there that could be interesting for us.” Lemonade is aiming to shake up home insurance with promises to use artificial intelligence to settle claims quickly and a business model designed to ensure that charities receive some of the benefit when payouts to customers

The $250bn US motor insurance market is ripe for disruption by ‘insurtechs’, say experts © AP

are low. “A lot of what we are trying to do is capture consumers young,” said chief executive Daniel Schreiber. The company has already expanded from renters insurance into cover for homeowners, and is now eyeing other markets such as pet insurance. The model has pulled in a swath of VCs as well as SoftBank, while other more traditional investors such as fund manager Baillie Gifford bought in at the IPO. But for all that enthusiasm, five-year-old Lemonade is still lossmaking and has only a small share of its core markets. Last year, it generated $116m in premiums, mostly on insurance for home renters and homeowners in the US. The US renters insurance market is worth about $5bn a year according to research firm CB Insights, while the homeowners insurance market is worth about $74bn. “I just don’t see that Lemwww.businessday.ng

onade has had a significant impact on the industry, let alone transformed it in any meaningful way,” said Chris Sandilands at consultancy Oxbow in a recent blog post. Lemonade is not the only insurance start-up that has yet to win the sort of market share that start-ups elsewhere have managed. Root, for example, is one of the biggest insurtechs to target the $250bn US motor insurance market. It generated premiums of $187m in the first half of last year. That is an annualised rate of $374m, but it suggests a market share of just 0.1 per cent. “I am concerned there isn’t anyone in home or motor doing enough to properly disrupt the marketplace,” said Steven Mendel, chief executive of pet insurance specialist Bought By Many. While there are some interesting ideas such as pay-by-mile car insurance, he added: “I am nervous that this does not become big scale disruption, it just becomes a side event.”

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Potential disrupters face an array of challenges, from hefty regulation to finding the capital needed to ensure that claims can be met. But one of the biggest hurdles, say industry experts, is the need to find customers and convince them to put their faith in a new brand. “The cost of entry in this market is extremely high. It’s a bit of an advertising arms race,” said Mr Tallents. “The big four insurance companies in the US spend north of $2bn on marketing each year . . . it’s incredibly difficult to break in.” Some insurtechs have dropped the idea of going direct to consumers entirely and are instead working with more established brands to sell their services. One of them is Trov, which was set up in 2012 with the idea of selling insurance for individual items such as cameras. Trov started out targeting consumers directly, but found that the costs were too high. So over the past year it has @Businessdayng

changed tack, signing partnerships with Lloyds Bank in the UK and Suncorp in Australia instead. “Our decision was an economic decision” said Scott Walchek, Trov chief executive. “The proposition was appealing to consumers but the economics weren’t sustainable.” He believes there is plenty of scope for partnerships between established brands and start-ups. “Consumer brands have found ways to capture millions of customers but their margins are pressed. Now they have to increase wallet share by offering new products and services,” he said. But some in the industry think that direct to consumer insurtechs such as Lemonade and Root can still make it into the big time. “It is a matter of time,” said Mr Ferguson. “These businesses take ten or 20 years to become really disruptive . . . In ten years, I don’t see how the old school players can compete with those that are more efficient and can lower claims.”

Tuesday 14 July 2020

BUSINESS DAY

Media business Pay-As-You-Go model not applicable to Pay-TV Daniel Obi

ay-as-you-Go model which is related to GSM and pre-paid electricity meter is after all not applicable in Pay TV as demanded by some subscribers. Sources close to the Pay TV industry explained that the operation of telecommunication and pay TV is different. Operators of Pay TV buy content from anywhere in the world and broadcast the content without timing. “Will you ask for a refund after 10 minutes in a Cinema hall or ask Cinema to show film on pay as you go?” one of the sources asked. Buttressing this point recently, Babatunde Irukera, chief executive of Federal Competition and Consumer Protection Commission (FCCPC), “explained that what obtains in telecoms is not

necessarily applicable in pay television, as broadcast content must have been paid for and customers only pay for access unlike in telecommunications where the subscriber only pays when the timer starts”. He spoke when he appeared on Sunrise Daily, Channels Television’s flagship public affairs programme last Friday. Nigerians who are demanding for Pay as you go may have been confused with the pay as you go model in telecommunication or pay- perview model in pay TV which is different from pay as you go. “Pay-per-view is not that

you pay for what you view from the point of when you turn your television on. It is primarily that there are certain programmes, maybe a boxing match, a soccer match or some movies that are still in the cinemas that some of the pay TV operators have bought and you can literally request instead of going to a stadium or going to a cinema to watch, you can watch it in your home and pay for that view. That is pay-per-view, but we confuse it with pay-as-yougo”, Irukere who said his agency has investigated different pay TV models around the world, said in a monitored report. In the pay TV market, some operators adopted monthly, weekly and daily subscription models instead of pay as you go system as requested by subscribers. Recently, the House of Representatives waded in to the public agitation with favourable disposition to payas- you-go model which is not applicable to pay TV.

Contestants point direction for NIMN ahead of election Daniel Obi

he quality of discussion and debate by candidates contesting for the vice president’s office and council members of the National Institute of Marketing of Nigeria, NIMN is an indication that the institute’s future and progress will possibly be on good hands. The four contestants for the Vice President 1 position of the Institute articulated their initiatives and programmes that will see the 17 year old marketers’ body raise the institute’s brand equity, membership and revenue and build an institute that will be recognised nationally and globally. The contestants, according to the order randomly chosen by the moderator, Bola- Bayo

Ajayi, a public relations consultant are: Idorenyen Enang, an accomplished business and thought leader; Onyekachi Onubogu, Chief Executive Officer of Frutta Juice and Services; Umar Musa Mustapha, the present first vice president of the Institute and Ify Emesiama Dike, a visionary leader . The online elections for the positions started on July 9 to end on July 15 when all results will be announced. In his presentation, Enang said his desire to contest is predicated on thought leadership by using insightful judgement, thinking strategically and applying his global perspective in bringing his experience to bear to the institute. Enang who had worked in global organisations also said that he will concentrate on people leadership as people

make great results; building support structures to motivate the younger ones; Visioning: building compelling case for ideas and initiatives; focusing on result oriented leadership. In his speech at the Webinar debate, Mustapha promised to ensure quality work that will elevate the institute to greater height. He also promised to ensure rapid chapter development, support and champion quality marketing and training. Mustapha who was one time the pro-chancellor of University of Ibadan promised to proactively formulate policies that will be in line with expectation of members. He also promised to ensure the Institute becomes nationally relevant and its certificates recognised by government and companies.

ENSSAA GM says sanity is restored in Enugu’s outdoor space

ioneer General Manager of Enugu State Structures for Signage and Advertising Agency (ENSSAA), Ike Ezugwu has taken stock of the activities of the agency, six months after it was inaugurated, saying that sanity is already being restored to the state’s outdoor advertising space. Ezugwu, who was appointed GM of the agency in December 2019 by the State Governor, Ifeanyi Ugwuanyi, said in addition to the primary objectives of streamlining the industry for revenue accountability, significant efforts are also being made to declutter

the skylines in line with the vision of the governor for a cleaner, safer cityscape. He said in a statement that the people of the state are impressed by the efforts of the agency thus far and welcome

Ike Ezugwu www.businessday.ng

the decluttering of streets of superfluous Signage and billboards, many of which are also constituting safety hazards to road users. The ENSSAA boss revealed that although the COVID-19 pandemic had slowed the operations of the agency, he and his team have also been able to expedite the decluttering efforts and removal of ugly and hazardous billboards in all parts of the state capital and major towns. Part of his strategies towards voluntary compliance with the provisions of the ENSSAA law in the state is a continuous sensitization of the public.

Present time re-enforces technology as backbone of businesses, economy - Phyllion CEO Temi Ophylia Ibekwe is the founder of Phyllion and Partners Limited, a fast-growing PR and marketing consulting firm based in Lagos, Nigeria. With various certificates in marketing from Nigeria, UK and USA, Temi has worked in key Public Relations firms in Nigeria in strategy and account manager capacities, facilitating pitch wins and project leads. In this interview, the strategic communication professional said the Tech Online conference scheduled this week seeks to bring exposure to technology breakthroughs in Africa, its impact, possibilities and support it provides as a driver in other sectors. What is the rationale behind your forthcoming Online conference with the theme: “Embracing Technology Transformation in Africa, What Next? he technology sector is undoubtedly the driving force of global economies, Nigeria inclusive and the times we live in now more than ever, reenforces technology as backbone of the economy. Almost every other sector; finance, agriculture, entertainment and even government thrive on technology and we have seen huge changes, growth, acceptance and adoption of tech solutions amongst businesses and consumers everywhere. The impact of this support however is lightly shared, and this is what communications, and, in the case, Public Relations brings to bear in this sector. At Phyllion, we want to bring exposure to technology breakthroughs in Africa, its impact, possibilities and support it provides as a driver in other sectors. Who are your targets as big organizations are already conscious of using technology to drive transformation? The conversation around embracing technology transformation in Africa, really affects organizations of various sizes. While it’s true that the larger organizations are already conscious of transformation through tech, there is still a lot to be done. This is why you hear about Digital Business Transformation which is still an ongoing process for many businesses in Nigeria and Africa. This transformation will take time; however, we will agree that the recent pandemic has given rise to a quick adoption of technological processes that companies had been slow to implement such as process automation, digital business operations and Artificial Intelligence. We have particularly seen changes in social interpersonal relations, customer solutions using chat bots and apps to enable communication and enquiries. We’ve come to the point where stakeholders should begin to champion developments that chart the course of African Tech solutions and that’s why you see the later part of the theme, “what’s next”? The conversations at our upcoming conference will chart a cause for the immediate future, how we should begin to approach transformation through technology and what role PR has to play in that journey.

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Temi Ophylia Ibekwe

Who are the speakers expected at the online conference? I am very delighted to share that we will be having a thrilling and thought driven time with brilliant minds like YomiBadejo-Okunsaya, GMD, CMC Connect and President African Public Relations Association (APRA) who will give the Keynote address; Ayeni Adekunle, Group CEO, Black House Media Group and myself from the Communications sector and the Tech space. We will have Emmanuel Asika, Channel Head, Hewlett Packard Africa; Tomiwa Aladekomo of Techcabal; Tosin Faniro-Dada, Head, Startups (Lagos Innovates) - Lagos State Employment Trust Fund (LSETF); Funmi Eniolorunda, the COO of Venture Garden Group and Segun Iffie, Global Service Delivery, Hewlett Packard Enterprise, operated by Selectium Nigeria. We will also be having a startup pitch panel comprising Managing Director, HP Central Africa, Ify Afe CEO Edgebase Technologies, Joel Egbai, US based Digital Business Transformation Strategist, Ogechi Chidebell and Mo DurosinmiEtti, Program Manager at the Bulb Africa. Why is the conference coming at this time that COVID 19 pandemic has laid prostrate many businesses? Honestly, there is no “better time” businesses have tried to navigate and are still navigating the pandemic and majority have had to re-structure or resize. The pandemic has taken a toll on businesses in ways we cannot imagine which is why the conversation is coming at a time when we need envision and lead the near future before it comes upon us. It is a proactive approach to the realities still yet to come. However, business and people can instead better position for this future. You integrated a business @Businessdayng

pitching process where those with business ideas can present their ideas to investors; could you tell us more about this concept? Nigeria our country, has millions of ‘innovatives’ as I will like to describe them and there are several tech enthusiasts. Pitching a business to an investor is serious business, perhaps often the most daunting moment in an entrepreneur’s journey. And we were able to secure a few investors looking for impact driven tech solutions to support. The pitch process presents the opportunity for start-ups in the introductory to growth stage to win an investor on board if they meet the set expectations. It is just our way of using public relations to generate mutually beneficial relations for stakeholders. Terms and conditions do apply. Phyllion & Partners is a Tech PR company in Nigeria and it s the host of this Tech Conference which is first of its kind in the PR sector, tell us, what is Tech PR and is this conference going to be done annually going forward? I am glad you asked, one key purpose of hosting this conference in a way that we have done it; using technology, creating web and mobile applications to enhance user experiences, is really to shed light on the role PR plays in enabling technology. Tech PR seeks to build lasting relationships and reputation for technology businesses using their impact stories to drive beneficial results for the stakeholders within the sector. It also helps give exposure to the technology solutions within the space to better position them to achieve their goals. Yes, the Phyllion Tech Conference will be done annually going forward. So, we are glad to be championing the first Tech PR conference in Nigeria as we look forward to more conversations within the sector.

Tuesday 14 July 2020

BUSINESS DAY

ADVERTISING Purple unveils new identity, repositions brand to promote lifestyle, retail

n line with strategic repositioning of the company, the management of Purple Group has announced the rebranding of Purple Capital Partners Limited and change of name to Purple. Also its flagship multiuse centre, Maryland Mall in Lagos will now be known as Purple Maryland while the ongoing development in Lekki is to be known as Purple Lekki. The decision, it said, was in line with the group’s core belief in continuous innovation and customer satisfaction. The Chief Executive Officer of the company, Olayide Agboola, who made the an-

nouncement in Lagos, according to a statement, noted the rebranding and repositioning takes effect from July 1. He also indicated the process would be implemented on all the company’s physical and digital touchpoints. Speaking on the new direction for Purple, Agboola explained; ‘’We are refocusing our brand and extending our reach beyond just real estate development. We see the need to curate affordable lifestyle experiences by leveraging our expertise in real estate development. With MarylandMall, now Purple Maryland and our ongoing

development with PurpleLekki, we are integrating retail, arts, entertainment, media and advertisement, family fun, food and drinks, e-commerce and financial services all in one through superior mixed-use centres and services. Our new focus is clear; working with our range and network of partners, we are creating affordable lifestyle experiences for our consumers across all income levels.” Speaking on what the new identity connotes, Agboola stated that the new Purple identity signified growing strength, resilience and elegance, which he noted accurately represents

the significant growth and successes it has recorded over the past few years. He said: it’s a story of sheer resilience, best practices and excellent service delivery to our partners and clients across the group. With this brand repositioning, we are re-committing to our core beliefs and ensuring unwavering commitment to our values, to our investors and to our esteemed partners. Our refreshed brand clearly communicates these values. We are also excited to unveil the brand identities for our new services and ongoing development projects”.

BHM Founder, Ayeni Adekunle to speak at 2020 Tech PR conference

he Founder and CEO of Nigeria’s leading Media and Public Relations company, BHM, Ayeni Adekunle, has been confirmed to speak at the 2020 Phyllion Tech PR Conference. First-of-its-kind in the Public Relations Space, Phyllion Tech PR Conference, comes on the heels of the enduring disruptive technology which has impacted business operations as a result

Ayeni Adekunle

of the COVID-19 pandemic, greatly altering the norms. Themed “Embracing Technology Transformation in Africa, What Next”, the event, organised by Phyllion & Partners, a Tech PR consulting firm in Lagos, is scheduled to hold virtually on July 17, 2020. Speaking ahead of the conference, Ayeni says, “I’ve always spoken about the importance of Nigerian companies embracing technology to transform not only their

operations but the Nigerian landscape and I’m glad platforms like the Phyllion Tech PR Conference are championing the cause ensuring we set a lot of these theories in motion.” The BHM Group has pioneered several tech-centred initiatives in the Nigerian PR sector, one of them being the BHM App, which serves as a pool of resources for Nigerian public relations practitioners and is credited as the “first PR mobile application”.

CSR: Rotary Club of Lagos donates mini-water plant to a Lagos market

n continuation of its philanthropic roles in Lagos communities, Rotary Club of Lagos, has announced a donation of water project with treatment plant for the use of traders at Araromi Oredegbe Lewis Market, Sandgrouse, in Lagos Island. The facility, the organisation explained, was to help traders in the market, popular known as Sandgrouse Market, have access to clean and portable water, hitherto considered a luxury in the area. While handing over the facility to the representative of the traders in the market, the District Governor, Rotary Club, District 9110, Rotarian Bola Oyebade, charged the traders to make good use of the facility, through proper maintenance so as to make it truly beneficial to traders and residents around the area.

He also announced the extension of a micro-credit facility of N50,000 each to three women in the market, to further assist them in extending their business frontiers. Speaking on behalf of the President of Rotary Club of Lagos, Dare Adeyeri; a past president of the Club, Ehi Braimah stated that the siting of the mini water project in the area would go a long way in enhancing the standards of living of traders in the market and other residents in the neighbourhood. Commending Rotary Club of Lagos for the gesture, the Baba Oja, Araromi Oredegbe Lewis Market, Sandgrouse, Munirudeen Bakare assured that the facility would be well maintained so as to encourage the organisation to do more.

We assist organisations monitor funds for Covid-19 to ensure they are not mismanaged – Paga GM Folakemi Falodun is the General Manager for Paga’s Digital Financial Services business and merchant payment services. She attended Babcock University in Nigeria and Lancaster University in the United Kingdom where she graduated with degrees in Economics and Finance respectively. Folakemi who has over 10 years of experience working in several roles within Finance and e-commerce in Nigeria and the United Kingdom speaks on Covid-19 and how Paga assists organisations to grow. Excerpts Paga recently launched Donate.ng in response to COVID-19, could you share some insight into the idea and motivation behind this? onate.ng is a donation website that we launched a s pa r t o f ou r response to the COVID-19 pandemic. The goal of this platform is to support credible initiatives and courses helping Nigerians during these difficult times by ensuring that they access financial support. We selected three non-profit organizations each working in different areas of need; from health education to feeding poorer families and communities and increasing testing outlets available in the country. In the coming months, we will be extending this platform to other (non-COVID) initiatives and humanitarian courses. How does Donate.ng work? The website hosts campaigns on behalf of organiza-

tions, also known as Sponsors. These sponsors have gone through our verification process to ensure that they are credible and ensure that the funds that are donated on this platform are used for the stated purpose. We have made the experience for the donors very simple and straight to the point. Interested donors can visit the website - www.donate. ng, to access information on the campaigns and choose to donate towards any or all of the campaigns. The payment on this platform is powered by Paga’s payment gateway - Checkout which simplifies the payment for donors both locally and internationally. We support payment from all sources - wallet, bank and cards (local and international). The funds collected from this platform is remitted in to designated accounts set up on Paga for each organization and Paga monitors to ensure they appropriately put to use. Can you tell us about the www.businessday.ng

organizations you are currently working with on donate.ng and why you chose them? We are working with three organizations. The first one is Flying Doctors Health Investment Company, this is the company behind Flying Doctors Nigeria. The company recently innovated mobile testing centers to help health workers to scale the COVID-19 testing across the country. These mobile booths

Folakemi Falodun

offer very secure ways for the health workers to administer the required tests on patients; significantly reducing the risk of exposure and cost of disposable PPEs. The second organization is Dr. Ameyo Adadevoh (DRASA) Health Trust, this is a public health organization that was established in memory of Nigeria’s Ebola heroine, the late Dr. Ameyo Stella Adadevoh. To date the firm has trained over 1,100 health workers on how to prevent the spread of infectious diseases and empowered more than 500 youths to become health and hygiene ambassadors in their schools and communities. We are supporting them to be able to reach more people in more states across the country. The third organization is Kinabuti and Friends, this is an NGO that provides food and shelter to poorer families and communities. This NGO has extended its outreach to cater for families whose liveli-

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hoods have been affected as a result of the pandemic by providing regular feeding allowances to these families. We are working with the organisation to take these programs to more communities across Lagos. Has Paga put any measures in place to ensure the donations get to the right organisations? Yes indeed. As I mentioned earlier, we have carried out due diligence on each of the organizations and reviewed the track record. The funds are deposited into a secure Paga account which we monitor to ensure the funds are not mismanaged. Could you share more initiatives Paga is currently pushing through DFS? We recently launched an investment platform on Paga as part of our DFS initiatives, in partnership with Wealthtech, a subsidiary of Sankore Investments. With this platform, our customers can save their money and invest di@Businessdayng

rectly from their wallet. This service is available on our website - www.paga.com. What is Paga’s role in promoting payments for Merchants and small businesses? We are at the forefront of supporting businesses; well established ones and the smaller ones to collect payments securely digitally. We help businesses collect payments through all our digital channels; web, app, USSD and our agent network. In addition to this, we provide payment gateways to businesses who want to collect payments on their own websites and apps. Lastly, we support businesses who have limited resources with our PayMe page that serves as a customized website for SMEs to display their goods and services, this PayMe page also comes with a payment link that they can plug into their social media pages or share directly within their networks for instant payments.

Tuesday 14 July 2020

BUSINESS DAY

Investments

ENERGY INTELLIGENCE

Market Insight Companies Commodity Tracker Policy

OIL

GAS

PETROCHEMICALS

POWER

Here are 10 major talking points in NNPC’s latest report DIPO OLADEHINDE

he latest report f ro m Ni g e r i a n National Petroleum Corporation (NNPC) has unveiled how the state behemoth performed in the first quarter of 2020. First Trading deficit in over 12 months A trading deficit of N9.53Billion was recorded in March 2020 compared to the N3.95Billion surplus posted in February 2020. The decline of over 300percent in the month is due primarily to the huge decrease of 181percent in Nigerian Petroleum Development Company Ltd (NPDC’s) performance which was caused by the present decline in crude oil prices due to Coronavirus-related impact of reduced exports and dawdling world oil consumption; combined with deficits posted by the refineries and NNPC’s corporate headquarters. Dollar Payments to Federation Account

lowest since December 2019 A total export sale of $256.19 million recorded in March 2020 was the lowest since December 2019 of $223million. In march Cr ude oil export sales contributed $184.59 million (72.05percent) of the dollar transactions compared with $281.14 million contributions in the previous month; while the export Gas sales amounted to $71.60 million in March which is the lowest in 15 months.

Gas production lowest in 12 months A total of 218.37 Billion Cubic Feet (BCF) of natural gas was produced in March 2020 translating to an average daily production of 7493.65 Million Standard Cubic Feet per Day (mmscfd), which is the lowest in 12 months. Domestic gas to power still low A total of 661 mmscfd was delivered to gas-fired power plants to generate an average power of about 3,064

MW in March 2020. The abysmal generation of less than 4,000 megawatts (MW) of electricity hardly suffices for energy requirements as Nigerians still wallow in darkness, despite boasting of Africa’s largest gas reserves of around 202 trillion cubic feet (Tcf) and about 600 TCF unproven gas reserves. FID for condensate refinery expected in July 2020 NNPC announced it has kicked off the first phase of establishing the first condensate refinery in the

country with a firm commitment to take the Final Investment Decision (FID) on it in July 2020.

was remitted to fund the JV cost recovery for March 2020 to guarantee current and future production.

Lower remittance to federation account NNPC remitted the sum of N147.15 billion to the Federation Account Allocation Committee (FAAC) in March 2020 which is lower than N148.5 billion recorded in the previous month. Recall from March 2019 to March 2020, total NNPC remittances to FAAC is N1.6 trillion; out of which Federation and JV received the sum of N763.64 Billion and N916.03 Billion respectively.

PPMC sold 1.6 billion litres of petrol The lockdown in Lagos, Ogun and Abuja due to the coronavirus pandemic which kickoff on March 30 didn’t deter PPMC from selling and distributing 1,645.76 million litres of PMS, the highest since January of 1,199 million litres.

Higher Export receipt Export receipt of $362.18 million was recorded in March 2020 as against $282.32 million in February 2019 while the contribution from Crude oil amounted to $292.42 million however Gas and miscellaneous receipts stood at $65.60 million and $4.16 million respectively. Of the export receipts, $141.14 million was remitted to the Federation Account while $221.04 million

Pipeline vandalism still a major concern Products theft and vandalism have continued to destroy value and put NNPC at disadvantaged competitive position as a total of 1,346 vandalized points has been recorded between March 2019 to March 2020. Group Revenue falls NNPC’s group revenue decreased by 3.5percent or N14.56Billion to N402.99Billion in March compared to last month. Similarly, expenditure for the month decreased but slightly by 0.3percent or N1.08Billion, at N412.51Billion.

Explainer: Are DisCos running scared of providing quality service to customers? STEPHEN ONYEKWELU

wo weeks ago, electricity distribution companies (DisCos) disengaged from a chance to have customers pay service reflective tariffs and Nigerians lost an opportunity to exchange money for an improved quality of service. The service reflective tariffs are designed to remove the subsidies that the Federal Government pays on electricity consumption. President Muhammadu Buhari’s administration alone has paid up to N1.7 trillion in subsidies and about N380 billion so far this year. According to people with deep knowledge of Nigeria’s Electricity Supply Industry (NESI) the electricity market subsidy goes entirely to two tariff classes, the R1 class which is paying and continues to pay N4 per kWh. This is N50 below the average range of N53 – N55 per kWh to deliver electricity. Nobody is complaining because the Discos have systematically moved many of these consumers to R2, which pays more.

The second bit of the subsidy and the overwhelming bulk goes to the R2 class. This is the class where everybody from the president to the middle-class population living in the urban areas belongs. The average tariff is between N25 – N26 per kWh. The remaining N27 – N28 is paid by the Federal Government. One vital condition for the service reflective tariffs that were supposed to have started on the first day of July was that customers are to pay tariffs commensurate to the quality of service www.businessday.ng

received, measured in the number of hours. This is a big difference from what used to obtain in Nigeria’s fledgeling electricity market. Unmetered residential customers (over five million Nigerians), who pay for electric power based on estimated billing, have constantly complained of having to pay monthly electricity bills without receiving the corresponding supply of electric power. But with the new terms, customers will pay for only the number of hours they have had electricity and

negotiated with the respective DisCos. When a DisCo fails to meet this term of the contract, customers are to report the breach to the Nigerian Electricity Regulatory Commission (NERC) for compensation. However, DisCos seem to be running scared of service quality regulations in backing out of the new tariff hike. Although DisCos have also made some legitimate demands that need to be met. With the new condition, DisCos can no longer collect tariffs and walk away without meeting the agreed

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number of hours of electricity supply. Someone in a top managerial position in one of the DisCos said “we must find a middle ground on this whole matter. In Ikoyi I am not sure Eko DisCo has given us eight hours of consistent power supply, not to talk of twelve hours.” There is a complaint process where when customers are overcharged they have to go to NERC and the Commission in turn, will force the Disco to refund the customer. The source said NERC’s adjudication antecedents show it will be overwhelmed by the number of complaints and fail to act expeditiously. Service quality regulation is an integral part of the electricity market in countries such as Peru in Latin America. Service quality regulations are outlined in the Law of Electric Concessions and in the Service Quality Regulation and its supervision the responsibility of the General Bureau of Electricity and the Supervisory Agency for Investment in Energy and Mining (OSINERG). @Businessdayng

Compensations due to electric power interruptions are defined in the Electric Concession Act (DecreeLaw No. 25844) and its Regulations (Supreme Decree No. 009-93-EM) and the Technical Regulation for the Quality of Electric Services (NTCSE, after its name in Spanish) (Supreme Degree No. 020-97-EM) and amendments, from which some general extracts read as follows. Article 86 of the Electric Concession Act establishes that “if the power supply suffers total or partial interruption for more than four consecutive hours the concessionaire will compensate the users for the cost of the power and the energy not supplied, following the conditions established by the law, except in the cases of which they were due to a cause attributable to the affected user.” The NTCSE specifies that the suppliers must compensate their customers for power supply whose quality of service has not met the tolerance levels established according to their voltage.

Tuesday 14 July 2020

BUSINESS DAY

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Tuesday 14 July 2020

BUSINESS DAY

INTERVIEW ‘AKK pipeline will commercialize upstream gas, spur industrialization’ The groundbreaking ceremony for Ajaokuta-Kaduna-Kano (AKK) pipeline project currently dominates the hype in the infrastructure delivery agenda of the government. The AKK projects goes beyond infrastructure to amplify the gains of the Nigerian Content policy in the petroleum industry with the choice of indigenous Oilserv Limited as lead contractor. Chairman of the company, Engr EMEKA OKWUOSA, who was on ground at Ajaokuta spoke to BusinessDay and provides atypical insight into the significance of the project. Excerpts...

ay we know your role in the AKK pipeline project? I am Emeka Okwuosa. I am the Chairman of Oilserv Limited. Oilserv is an Engineering, Procurement and Construction (EPC) company. We are a consortium partner and the lead contractor for the first segment of the AKK pipeline project. Considering the scope of work and criticality of the first segment of the project which is going to carry the full pressure of the full pipeline volumes, do you guarantee readiness and capacity for delivery? We are ready for it. In fact, what we are carrying out today is official flagoff which is the groundbreaking ceremony. But as you can see over there, we are ready. We are already working: we are laying the lines. Oilserv is a 100 per cent indigenous company currently employing more than 600 staff. With this AKK we probably will go to between 1,500 and 2000 at the peak of the personnel matrix. But the fact remains that we are ready. This is not the first project. We are commissioning the OB3 gas project which is actually slightly larger than this in terms diameter. The OB3 gas pipeline is 48 inch in diameter. So, we have the experience, we have the personnel, we have the equipment and we are capable and we will deliver this project. What plans do you have for the host community youths that might seek participation in the project? Like I said, we will crank up our employment by more than 1000 and major part of this 1000 will be indigenes of the areas where we are. We have a clear programme to develop the areas where we build pipelines. What does this project represent in the Nigerian Content policy implementation? First of all I give thanks to Mr President for being in the forefront of driving progress in the oil and gas industry. As you may be aware, which a lot of people may not, President Buhari built the infrastructure we had in the 1970s when he was the Federal Commissioner for Petroleum Resources. Most of these refineries you see today were built within the period when he was there. When President Buhari came to power in 2015, he made the domestic gas infrastructure development a cardinal project. This project has been in the drawing board since 2008, 2009. He made it happen. What this project shows clearly is the dedication of President Buhari to local content and local capacity. Oilserv is an example of that, and Oilserv shows clearly that government means what it says. We have been operating before the local content law came into being, but we have continued to build capacity, including building capacity beyond Oilserv by empowering other contractors to grow. So, we constitute a team with federal government in this regard. How are you managing the project partnerships to guarantee smooth process and collaboration in the project delivery

sense that the offtake will not be robust enough to justify that pipeline. So, in reality gas will make a lot of difference because with gas availability industries can run. And besides industries running, we are also talking about power generation, gas based industries like the urea plants which manufactures fertilizers. So with AKK you will be able to locate these plants where you need the fertilizer which is where you have agricultural activities going on. That makes it cheaper and more available. So, in terms of the economic effect it is going to be massive. So, AKK is very important and it is going to make a lot of difference in the economy of Nigeria.

Engr Emeka Okwuosa

within the time frame? We have partners as I said earlier. It’s a consortium arrangement and this consortium arrangement has a Chinese company called CFHEC. You may be aware that this project is also not funded directly by the government. This project is funded using facilities or loan that is obtained for this project. This project is commercially viable. It’s a project that the loan can be taken care of by the commercial nature of the project. So in lieu of that we have injected a Chinese partner to meet the Chinese content requirements. But Oilserv is the primary EPC company. Our experience is what will also help to drive this process. We also have Oando in the consortium as partner. They are not an EPC company but we have been together for a long time in other projects where Oilserv is the EPC company. May we get more clarification on the viability profile of the project and how it is going to generate funds to address the loan? Like I said, this is fully viable. The facility being taken is meant to be repaid in 15 years; but this project can pay itself in less than 10 Years because this is a commercial venture. When you pipe this gas you have gas flowing through to industries, to power plants. There are tariffs to be paid to even transport this gas. If you understand the mechanism of gas transportation, for every cubic meter of gas that passes by there is an amount that is paid by those who use it. In addition to that, the gas itself that passes by would have to be paid for to be used. So this is a commercially viable project. It’s not the kind of a project that government has to support for it to be viable. What challenges do you envisage in delivering the project, and what are your fears? I won’t say I have fears. Every project comes with its challenges. There are challenges to build a project like this in virgin forests, to go through rivers, to go through rocks, to deal with security issues. These are challenges; but I don’t have fears because we have the knowledge and the experience to deal www.businessday.ng

with it. We are very ready to deliver the project and deliver the project on time. May we share your perspectives on the value proposition of AKK pipeline for the economy? Gas is very important to the economy of Nigeria. Nigeria is predominantly a gas country, and not necessarily an oil country. We have an abundance of gas reaching up to 200 trillion cubic feet of gas already proven and existing reserves; but clearly there is far much more than that because exploration has not gone far in the gas sector. When we look at the real gas issues in the country, I would say that Nigeria has not developed the capacity to utilize gas; and the capacity for gas utilization is about infrastructure. You cannot easily store gas after producing it. The reason is simple. Gas is very difficult to hold unlike liquids. And for you to keep gas in a place, you have to pressurize it in order to move it to a location. There are many ways to move gas. One is the liquefaction system in which you have to pressurize, compress and freeze it in order to ship it. That is what the NLNG does presently. But to utilize gas in Nigeria, what is required is clearly a gas transportation infrastructure. Nigeria has conceived this in a clear way since the early 2000s and come up with the Nigerian Gas MasterPlan of which a portion has been constructed. One is the Escravos to Lagos Pipeline which starts from Escravos, goes through Benin and then heads to Lagos. It goes all the way to the Egbin Power Station and feeds the entire Lagos. The other section of the NGMP is actually what was going to kick off from the Qua Iboe Terminal (QIT) in Akwa Ibom State, and then goes through Ibom node, then to Umuahia and Enugu to Ajaokuta. The system would now progress from Ajaokuta to Abuja, to Kaduna and Kano. So what we are working to achieve now is the AKK which is the section from Ajaokuta to Kano. And the Ajaokuta-Kaduna-Kano is very important because without the existence of this pipeline, the entire section of the Qua Iboe pipeline which ends in Ajaokuta will not be commercial enough in the

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Why is AKK now perceived as the main project in the entire Nigerian Gas Masterplan, especially when there are no sales agreements justifying pipeline? It is important to state clearly here that this issue of Nigerian Gas Masterplan is well articulated, and it has been there for more than 20 years. The implementation of the masterplan started with the Escravos to Lagos pipeline which is already in place. I will come to that. The materplan also involves the OB3 pipeline which is the East to West interconnector. Now when you look at the NGMP, it is just well articulated. The execution of the AKK part of it, as well as other southern parts, has been delayed for quite a while and the reasons are there. But we give credit to President Muhammadu Buhari for taking the gauntlet and making this a reality and supporting it strongly. Most private operators in the country’s petroleum industry already have plans for their equity gas commercialization. Is there obligation on operators to feed gas into the AKK pipeline? Let me say that all these activities are centered on NNPC’S state of operations. They articulate this with the International Oil Companies (IOCs). When you look at the midstream industry which is these pipelines, you find out that NNPC is at the center of activities; and the corporation has done a lot of studies, a lot of operations economics, a lot of work on long term outlook value generation, a lot of work on industry collaboration. I am privileged to be pretty involved in all these. I am an optimist and that is why I am also an entrepreneur. I am involved in the set up and building of all the pipelines in Lagos delivered by Gaslink which was owned by Oando. Those pipeline supply industries from Ikeja all the way through Ikorodu Road and down to Western Avenue. Even before that, the entire Ikeja was served, Ilupeju was served, Ilasamaja was served. As we speak today, the reason industries are bubbling around Ikeja and environs is the presence of energy source. And this energy is gas. So, let us also put this in perspective when we talk of AKK pipeline. Industries that are already moribund are huge in number. If you go to Kaduna you will see that, and if you go to Kano you will see that. So, when there is energy in the form of gas, these industries will have the impetus to kickstart again. Of course, we are not yet talking about other industries that will spring up @Businessdayng

from the scratch. So I am optimistic. There are arguments that gas infrastructure is needed more in the upstream industry to connect and enhance production of stranded gas? In addressing the issues of stranded gas, let me point out that when you talk of stranded gas it doesn’t translate to production. But let us remember one thing: that you do not talk of production when there is no offtake. And the reason why production is muted is because of offtake issues. Offtake cannot happen if you do not have infrastructure to deliver the gas. These are step by step issues. Now let me be a bit selfish. When you have stranded gas and you have this need of interconnecting it to demand centers, it creates a business case for investments. And the investment that comes in is what drives employment; it is what drives capacity building. As we speak today, we all know that AKK will generate thousands of jobs. It is not just all about jobs, local vendors will come in, and materials will be supplied locally during construction phase. Given the terrains that the pipeline will traverse, do you think the 2023 timeline for delivery is feasible given the obvious challenges in the operating environment? Of course, you will always have challenges when you construct pipelines in Nigeria. Those challenges come from the issues of security, issues of local conditions, road conditions because you have to move the line pipes by road most of the times. We do not have the robust rail system to do that. So, that impacts a lot on the speed. Having said that, the timing put on this project is well articulated. It is feasible and we know it is possible. It is just that we have to work hard on it because it is necessary to do that. So, when you look at the economic impact, I would say clearly that the impact of this project is massive in concept and will be massive in reality. What guarantees do we have that the AKK pipeline will not be vulnerable to fuel thieving syndicates that plague NNPC’s pipelines? On pipeline security, I would emphasize that we are not waiting for explosion to happen, but the issue of public education is necessary. Gas pipeline is not oil pipeline. Gas pipeline has massive amount of pressure. And when you talk of pipeline of 40 inch diameter size, and you look at the length of this pipeline, then you imagine the amount of pressure that is built up there. Any attempt by anybody to sabotage the pipeline will lead to catastrophe for the person and for any person around. It is not oil pipeline, so people should endeavour to keep away from it. Having said this, we take serious action during construction to bury this pipeline about two meters below the surface. We also install fibre-optic system to monitor when somebody is trying to break in. These are some of the measures to prevent third party infringement. There are other measures we take but these are some of the ones that we put on ground to ensure that no unauthorized person interferes with the lines.

Tuesday 14 July 2020

BUSINESS DAY

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Two years after, NBS sets to release Nigeria’s latest unemployment report ENDURANCE OKAFOR

igeria’s labour statistics, a report that shows the country’s unemployment numbers will be published by the National Bureau of Statistics (NBS) by the end of July, according to the Zainab Ahmed, minister of finance. Ahmed disclosed this during therecentvirtualconsultativepublic forum in which she presented thedraft2021-2023MediumTerm Expenditure Framework/Fiscal Strategy Paper, (MTEF/FSP). “I’m pleased to announce that by the end of July 2020 we’ll have the newest NBS unemployment report,” she said, adding that the survey is completed and “the final report is being put together.” Going by the new date announced by the minister, the labour force report would be released earlier than the scheduled August 31 in the calendar of the statistics office. If published by the end of July (Q3 2020), it will make it exactly two years since the last unemployment report was released in the third quarter of 2018. The most recent labour force

statistics by NBS shows Nigeria’s jobless rate was at a record-high of 23.1 percent in Q3 2018. The country’s unemployment rate soared in 2015 after a decline to 6.4 percent a year earlier. On why the labour report has not been published since July 2018, a source from the data agency told BusinessDay in March 2020 that it was due to the lack of fund. “Not every report we publish requires funds or a lot of funds. Some reports can be easily published unlike the unemployment data that involve surveys and fieldwork,” the source said on the condition of anonymity. Meanwhile, labour force statistics is considered by economists as an important economic and social indicator used in the analysis, evaluation, and monitoring of: the economy; the labour market; and a wide range of government policies. Ayorinde Akinloye, an analyst at Lagos-based CSL Stockbrokers said unemployment and job creation is one of the most important lagging indicators for an economy as it explains how well hiring and job creation is following an economic downturn or upturn.

Passengers decry non-adherence to social distancing on aircraft … no cause for alarm, operators say IFEOMA OKEKE

ince the resumption of domestic flight operations from the lockdown occasioned by COVID-19, air passengers have continued to complain over the airlines’ failure to adhere to social distancing order on-board the aircraft. Four months ago, the Federal Government of Nigeria shut down all airports across the country as a result of increased cases of COVID-19, but re-opened Lagos and Abuja on July 8, and Kano and Port Harcourt on July 11, stressing that it would ensure airlines comply with the rules to ensure people stay safe in the terminals and on-board the aircraft. However, in recent pictures gone viral, passengers were seen sitting very close to one another and the order of middle seat spacing between passengers was not followed as instructed by the Federal Airports Authority of Nigeria (FAAN). Before the resumption of flights last week, a statement signed by Henrietta Yakubu, general manager, corporate affairs, FAAN, stated, “In the ‘New Normal,’ departing passengers must comply with the following guidelines; all passengers must arrive the airport properly kitted with their face masks on. “They must also ensure a minimum of one point five meters (1.5m) physical distancing, Aviation Medical/Port Health personnel would screen each passenger and ensure the use of face masks, those travelling

with pets must get necessary clearance from Nigerian Agricultural Quarantine Services, all passengers’ luggage would be disinfected before entry into the departure halls.” A passenger who recently travelled from Lagos to Abuja recounted his experience to BusinessDay, thus: “I boarded a flight from Lagos to Abuja on Thursday last week only to sit very close to another passenger. There was no such thing as social distancing. From the entrance of the airport, to the terminal, social distancing was observed, only to get into the aircraft and passengers were sited close to themselves.” He called on the authority to ensure airlines comply strictly with the social distancing order since they had raised airfares to cushion for losses made from vacant seats. Since flight resumption, domestic airlines have raised fares by almost 50 percent. BusinessDay’s check shows that a one-way ticket from Lagos to major destinations such as Abuja, Port Harcourt or Owerri increased by 48 percent, which before COVID-19 pandemic was between N22,000 and N28,000 but now cost between N33,000 and N41,000. For instance, a one-way ticket from Lagos to Abuja on Arik Air costs N32,699, Dana Air costs N35,099, and Air Peace costs N40,299. Hadi Sirika, minister of aviation, who is also a pilot, said chances were slim for people to contract the virus on-board because of the High Efficiency Particulate Air (HEPA) system in aircraft. www.businessday.ng

L-R: Kayode Fagbemi, director, planning research and forestry, National Emergency Management Agency (NEMA); Muhammadu Muhammed, director general, NEMA, and Godwin Obaseki, governor, Edo State, during a courtesy visit by NEMA officials to the Government House, Benin City.

World risks another virus like COVID-19 if wildlife crimes not stopped – UNODC

he United Nations Office on Drug and Crime (UNODC) says that the world risk another virus of the magnitude of Covid-19 if the trafficking, sales and consumption of wildlife are not stopped. UNODC said this in a statement in Abuja, adding that the UNODC World Wildlife Crime Report 2020 pointed to the fact that zoonotic diseases represented 75 per cent of all emerging infections in the world. According to the report, diseases like SARS-CoV-2 that caused Covid-19 pandemic have already been linked to wildlife with pangolins top on the suspected list. “The Covid-19 pandemic has shown that wildlife crime is a threat not only to the environment and biodiversity, but also to human health.

“When wild animals are poached from their natural habitat, butchered and sold illegally, the potential for transmission of zoonotic diseases – those caused by pathogens that spread from animals to humans – is increased.” The report said further that zoonotic diseases represented up to 75 percent of all emerging infectious diseases and include SARS-CoV-2 that caused the Covid-19 pandemic. “The products offered from the trafficked species for human consumption, by definition escape any hygiene or sanitary control: as such, they pose even greater risks of infectious diseases,” it said. The UNODC noted that pangolins, which were identified as a potential source of coronavirus, were the most trafficked wild mammals in

FG asked to simply process of shareholders’ collection of billions of unclaimed dividend …money to serve as palliative to families Daniel Obi

trategic initiatives on how the government can facilitate the deployment of multi-billion naira unclaimed dividend as palliative to Nigerian shareholder families at a time of Covid-19, have been put forward by the President of Institute Chartered Secretaries and Administration of Nigeria (ICSAN), Bayo Ayeku . While owners of this money and their families have been severely affected by the economic difficulties, a condition worsened by Covid-19, they cannot access their money due to avoidable bottlenecks and bureaucracies. As of December 2019, the unclaimed dividend in Nigeria amounted N130 billion from N103.1 billion in December 2016 and the amount keeps increasing. Some of the preventable

challenges that make it difficult to access the money include multiple forms for shareholders to process, difficulty of approaching individual registrars and payment of mandatory 10 percent of the fund for letters of administration from the court. To make it easy for many of them to access the fund to alleviate the biting economic hardship, Ayeku who spoke to BussinessDay recently suggested to the regulatory authorities to simplify the process by designing a simple form where the shareholders will list all the companies where he/she has outstanding dividend. The form will be submitted to one registrar who will process his own aspect of unclaimed dividend and electronically forward to the next registrar. Ayeku suggested that there must be a time frame for each registrar to make the process more efficient.

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the world, with seizures of pangolin scales having increased tenfold between 2014 and 2018. It said that Nigeria unfortunately played a significant role in the trafficking and sales of pangolins with at least 51 tonnes of pangolin scales seized in 2019, rising from just two tonnes in 2015. The UNODC also noted that in the last 20 years – 1999 to 2020, it made 180,000 seizures from 149 countries and territories. Top on the list of species that were being trafficked were- mammals, reptiles, corals, birds, and fish, adding that traffickers from about 150 nationalities have already been identified. Analysing the data, UNODC executive director, Ghada Waly, warned that if wildlife crimes were not stopped, they would heightened the

risk of a future public health emergency. “This data underscores the global nature of the issue. Wildlife crime affects all countries through its impacts on biodiversity, human health, security and socio-economic development. Stopping the trafficking in wildlife species is a critical step not just to protect biodiversity and the rule of law, but to help prevent future public health emergencies,” Waly said. The director further observed that the transnational organised crime networks were reaping the profits of wildlife crime while the poor were paying the price, adding that to protect people and the planet in line with the Sustainable Development Goals, and to build back better from the Covid-19 crisis, wild crime must be checked.

Delay in PIB passage creates uncertainty in oil, gas sector - WEIN

he Women in Energy Network (WEIN) says that the long delay in the passage of the Petroleum Industry Bill (PIB) into law has created lingering uncertainty in the oil and gas sector. President of the network, Funmi Ogbue stated in Abuja on Monday. According to Ogbue in a statement made available to the media, the delay is costing the country huge sums in revenue due to lost investments. The minister of State for Petroleum Resource, Timipre Sylva, said recently that the PIB which is currently with the executive would be sent to the National Assembly soon. Ogbue said: “The existing oil and gas sector regulatory framework is amorphous and ineffective because of too many overlaps in responsibilities and accountability. The expedient passage of and purposeful implementation of the PIB is critical to addressing most of the loopholes in the @Businessdayng

management and governance of the sector.” She noted that the PIB when passed into law will improve governance of the sector by strengthening institutions in the areas of clarity of structures, roles, accountability, transparency, and overall efficiency and effectiveness. “The PIB will ensure that the focus of legislating the sector shifts from the present to the future,” she added. Th e W E I N p re s i d e nt charged the National Assembly to engage in both law-making and oversight of the relevant agencies, as well as deliberate on policies aimed at ameliorating the possible impact of the new developments, such as deregulation of the downstream sector on women in particular. “The National Assembly should review all ongoing social investment programmes with a view to ensuring that they have sufficient focus on supporting and empowering poor women.

Tuesday 14 July 2020

BUSINESS DAY

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Nigeria braces for new reporting metric to capture non-financial operations of companies MICHAEL ANI

new reporting metric that seeks to capture the non-financial operations of companies is underway and sector regulators are gearing up to adopt it. Known as Integrated Reporting (IR), the reporting metric, according to Innocent Okwuosa, chairman, Nigerian Integrated Reporting Committee, goes beyond just analysing the financial position of a company, to quantifying other non-financial operations, which companies use in creating values. “The current reporting of financial performances alone is no longer sufficient to provide investors with enough information to make proper investment decisions,” Okwuosa said. Okwuosa who sat for over three hours speaking with journalists at a media parley in Lagos, said as opposed to the early 60s when tangible assets, which financial reporting captures, represented about 80 percent of a company’s corporate value, the trend has reversed with tangible assets now constituting only 20 percent. That, he said, was a pointer to why reporting companies’ performance should go beyond just the traditional financial reporting to include the quantification of the nonfinancial assets that are used

to create value. These non-financial assets being used by companies to create value, and which IR aims to capture, include financial capital, manufacturing capital, natural capital, social and relationship capital, human capital, and intellectual capital, Okwuosa said. “Financial reporting cannot exist on its own but needs inputs from other metrics,” he said, adding: “For instance, an oil company that is operating at the heart of Niger Delta region or a company that engages in gas flaring, the integrated reporting looks at all these holistically and provides answers to how businesses create value through resource allocation, future outlook, business models and strategies.” By adopting the IR as a way of showing to investors a clear representation of the non-financial position of a company, Nigeria will join the league of its economic rival, South Africa, which has already kick-started the implementation of IR, and whose economy is already reaping the fruits in terms of Foreign Direct Inflows (FDI), according to Okwuosa. Other member countries of the African Integrated Reporting Council include Kenya, Zimbabwe and Morocco. The initiative is backed by the World Bank and the Pan African Federation of Accountants (PAFA).

Reps mull budget increase for National Judicial Institute in 2021 ... to partner NJC, others on court automation James Kwen, Abuja

ouse of Representatives is consideringincrementin the budgetary allocation to the National Judicial Institute (NJI) in the 2021 fiscal year to enable the agency achieve its mandate in the face of the daunting challenges posed by the dreaded COVID-19 pandemic. Chairman, House Committee on Federal Judiciary, Onofiok Luke (PDP, Akwa Ibom), disclosed this on Monday when he led other members of the Committee to oversight function at NJI headquarters in Abuja. Luke said the legislature was committed to repositioning the judiciary for equitable and quick dispensation of justice in the COVID-19 and post-COVID-19 eras, taking into consideration the demands of the time; the guidelines and the provisions of the protocols that have been set by government. He noted that the main purpose of the oversight was to determine ways that the legislature could assist the Institute to be

able to train the country’s judicial officers and their supporting staff to live up to the task of delivering justice despite the hindrances caused by COVID-19. The legislator said the Committee would liaise with the National Judicial Council (NJC) and other superior courts of records on how to automate court system now that social distance was the order of the day. “We know right now in the world that everything has gone digital. In most countries, we have virtual courts, internet courts and prior to today we have been advocating for the automation of court system, but it has stared us in the face now and we cannot run away from it. “Our sole aim being here is to try to see how we can put heads together and then try to reposition the judicial system through the NJI to achieve a greater purpose in post COVID-19 era as we go into 2021 especially as it has to do with 2021 budget because there has been changes in the world and these changes have affected every area of our lives”.

CBN outlaws FX for maize importation Hope Moses-Ashike

he Central Bank of Nigeria (CBN) on Monday discontinued the processing of Forms M for importation of maize/corn into the country. The apex bank directed all authorised dealers to submit the list of Forms M already registered for the importation of maize/corn using a designated format on or before the close of business on Wednesday, July 15, 2020. It said the move is part of efforts to increase local production, stimulate a rapid economic recovery, safeguard rural livelihoods and create jobs. Many jobs have been lost as a result of the ongoing Covid-19 pandemic. “As part of efforts by the Central Bank of Nigeria to increase local production, stimulate a rapid economic recovery, safeguard rural livelihoods, and increase jobs which were lost as a

result of the ongoing COVID-19 pandemic, Authorised Dealers are hereby directed to discontinue the processing of Forms M for the importation of Maize/Corn with immediate effect,” the CBN said in a circular signed by O. S. Nnaji, its director, trade and exchange department. “Accordingly, all Authorised Dealers are hereby requested to submit the list of Forms M already registered for the importation of Maize/Corn using the attached format on or before the close of business on Wednesday July 15, 2020. Please ensure strict compliance,” the circular said. Form M is a mandatory documentation process to be completed by all importers for importation of goods into Nigeria. The CBN in 2015 excluded importers of some food items from accessing foreign exchange in order to encourage local production of such items.

Osagie Ehanire (l), minister of health, receives from JeanClaude Brou, president, Economic Community of West African States (ECOWAS) Commission, critical medical equipment donated by ECOWAS/ West African Health Organisation to Nigeria to help in fighting COVID-19, in Abuja.

Nigeria should galvanise its young population for economic improvement - World Bank ENDURANCE OKAFOR & BUNMI BAILEY

o improve Nigeria’s economy and lift its extremely poor population, Africa’s largest economy would need to make the most of its demographic dividend, the World Bank has said. While explaining the importance of a country’s demographic information, Abdul Azad, senior economist, World Bank said Nigeria can capitalise its young working population for the much needed breakthrough. “Nigeria can benefit quite a lot from its demographic dividend. For example, 54 percent of male and 51 percent of the female are below the age of 20 years old,” Azad said on Chan-

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nels TV Business Morning programme monitored on Monday. According to him, Nigeria’s “young working age people can be capitalised to be a productive member of the society and contribute to the GDP,” as this would help to reduce “inequality and poverty rate.” The World Bank’s senior economist also cited countries in Asia and Southeast Asia where the demographic dividend was being capitalised to create a productive workforce that can improve the economy and attract investments. Demographic dividend, as defined by the United Nations Population Fund means, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working age population is larger

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than the non-working age share of the population.” While economists have established the fact that Nigeria’s populationandresourcesarevast, its challenges loom equally large. Nigeria’s living standard report by the National Bureau of Statistics (NBS) put the country’s population who lived below its poverty line between September 2018 and October 2019 at 40 percent. This translates to a total of 82.9 million people who lived below its poverty line of N137, 430 ($381.75) a year. The maiden report which was focused on the poverty and inequality rate in Africa‘s most populous nation revealed that the average household size in Nigeria was 5.06 persons per family: in rural areas the size is higher - 5.42 individuals versus 4.50 in urban areas. @Businessdayng

“We can look at the average household size in the country when we talk about demographic structure. This means that they will be more pressure on available resources available to that household and can eventually take that household out of poverty,” Yemi Adeniran, director, Real Sector & Households Statistics, NBS said, confirming the fact that Nigeria has a huge youth population that can be engaged productivity to produce wealth for the nation. Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.

Tuesday 14 July 2020

BUSINESS DAY

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Tuesday 14 July 2020

BUSINESS DAY

news Tough war ahead to stabilise oil prices... Continued from page 1

US, filed bankruptcy in April. Chesapeake Energy, a shale pioneer, declared bankruptcy in June and Diamond Offshore Drilling is filing for bankruptcy next month. Analysts say more companies will follow the same route. Almost 250 oil and gas companies could file for bankruptcy protection by the end of next year, more than the previous five years combined, according to Rystad Energy, an analytics company. Rystad analysts now expect oil demand will begin falling permanently by decade’s end as renewable energy costs decline, energy efficiency improves, and efforts to fight climate change diminish an industry that has spent the past decade drilling thousands of wells, transforming the US into the biggest oil producer in the world. The death of these oil companies signals the battle oil producers, including Nigeria, will have to fight to stabilise prices. The Organisation of Petroleum Exporting Countries (OPEC) in consort with non-OPEC members, including Russia, have used supply caps to rein in the market but that tool is looking blunt in view of frequent violations and low demand. Oil slipped in early Asian trade on Monday as traders look an OPEC technical meeting this week, which is expect-

ed to recommend an easing in supply cuts that have been propping up crude prices. Brent crude fell 27 cents to $42.97 a barrel early Monday, while US West Texas Intermediate crude was at $40.27 a barrel, down 28 cents. Oil prices recovery has slowed following a resurgence of coronavirus cases, prompting several US states to impose tighter travel restrictions that could dampen oil demand recovery at the world’s largest consumer. This reduces the consequence of the slight gain of more than 2 percent on Friday after an upward revision by the International Energy Agency in its 2020 oil demand by 400,000 barrels per day. Oil prices have recovered sharply from multi-decade lows in April after OPEC and allies cut output by a record 9.7 million barrels per day for three months since May. OPEC’s Joint Ministerial Monitoring Committee (JMMC) will meet on Tuesday and Wednesday to recommend the next level of cuts. But many shale producers are not optimistic. Matt Gallagher, chief executive of Parsley Energy, one of Texas’s biggest independent oil producers, said the record output level struck earlier this year would be the high-water mark. “I don’t think I’ll see 13m (barrels a day) again in my lifetime,” the 37-year-old Gallagher told the Financial Times.

Law enforcement, public-private... Continued from page 2

the Czech Republic, Greece, Spain and Ireland in recent weeks,” Monteith said. He explained that criminals were very quick in adapting their ways of working and switching to the goods that are in high demand, while using the same illegal channels. For instance, in Ukraine organised crime groups that are normally involved in illegal tobacco activities smuggled 1.5 tons of medical masks to Italy in the first week of the pandemic. There was similar a seizure in Germany of illegal cigarettes and personal protective equipment. In the EU (Europol study) some of the organised crime groups trafficking pesticides are also involved in other illegal activities such as trafficking counterfeited cigarettes and illegally trading pharmaceuticals. This clearly demonstrates that criminal groups are well connected, organised, business driven and operate as a network. “The current pandemic crisis has been taking an immediate toll on the real economy and people’s disposable income. Many people have experienced unemployment and loss of earnings immediately reducing their purchasing power

while the crisis has created additional pressures on an increasing number of consumers who have less money to spend. Hence, an increasing number of consumers will inadvertently revert to nontaxed, illegal products and this applies to all sorts of goods such as electronics, health products and car parts amongst others,” Monteith said. János Bertók, acting director, OECD Public Governance Directorate and a panellist at the webinar, added that there are more than 100,000 new websites that have been created related to COVID-19 for distribution of products. “This distribution channels are created to provide all COVID-19 related protected foods or pharmaceuticals and this is extremely dangerous, because there’s very limited control of the quality. There is an internal and very rapid spread of falsified medicines,” Bertók said. “There were strong viewpoints on the possible solutions which governments could deploy to overcome this challenge. Amongst the key points emphasised was strong and consistent enforcement of existing measures such as strengthening the control on borders, stricter punishments and higher sanctions as deterrents for criminals,” he said. www.businessday.ng

James Adeche Momoh (l), chairman/CEO, Nigerian Electricity Regulatory Commission (NERC), with Gabriel Suswam, chairman, Senate Committee on Power, during the oversight visit of the Senate Committee on Power to the NERC head office in Abuja, yesterday. Pic by Tunde Adeniyi

How Nigeria can stem its increasing poverty... Continued from page 1

took India in extreme poverty ranking with about six people entering the poverty trap every minute, according to a 2018 report by Brookings Institute. Some 29.4 million persons are also jobless as at Q3 2018 based on official data, one of the highest in the continent. In a paper titled ‘Innovative Economic Solutions to Unlock Mass Poverty,’ seen by BusinessDay, Kale recommends addressing unemployment, increased formalisation of the formal sector and designing of appropriate tax systems to extract revenue from economic activities, as some of the policy routes Nigeria must take if it wants to tackle poverty. Kale shows that Nigeria has the lowest poverty line and lowest Gross Domestic Product (GDP) per capita when compared with economic rival nations like South Africa and Egypt, despite having the biggest economy in the continent. Based on his calculation, Nigeria has a poverty line of N137,430 per annum, and when divided by 365 days it equates $0.97 per day, a disappointing number when placed side by side with South Africa’s N266,495 ($1.88 per day) and Egypt’s N215,864 ($1.53 per day). But despite a poverty level of $0.97 per day, the lowest among the three aforementioned nations, some 40 percent of its population currently live below the poverty line. This is only better to some extent than SA’s 49.2 percent, but disheartening when juxtaposed with the 32.5 percent of Egyptians living below the poverty line. Similarly, the country’s GDP per capita at $2,222 is nowhere close to SA’s GDP per capita of $6,130 and that of Egypt’s $3,047, according

to Kale. A lower GDP compared with other nations, puts Nigerian as having a lower standard of living, and one that is struggling to supply its inhabitants with everything they need, elementary knowledge in economics. Nigerian President Muhammadu Buhari, who secured another 4 years to rule after beating his main opponent Atiku Abubakar in the 2019 elections, has always spoken of lifting an average 10 million Nigerians annually through a 10-year period by creating enough jobs for its burgeoning youthful population. But this has largely been a mere stale campaign promise for Nigerians who have seen more of its populace being drowned into poverty rather than being prosperous. The country now holds the mantle of being the poverty capital of the world, overtaking India, reports from Brooklyn Institution shows. Kale, whose office has been the major custodian of data, explains that the contribution of education and family size to poverty reduction represent an important opportunity for policy makers to fast track poverty reduction. Taking a clue from the 2019 National Living Standard Survey (NLSS), which the state funded agency recently conducted in collaboration with the World Bank, Kale notes that large households and agriculture are key risk factors determinant of poverty rate. According to Kale, larger household sizes are associated with higher poverty rates while a higher education is associated with lower poverty rates. In the paper, the statistician general observes that Nigerians at the poverty line spend almost three times as much on food as they do on non-food essential items.

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This was significantly different from their counterparts in South Africa and Egypt – an indication of agricultural productivity, and reliance on food imports and the impact on prices, he states. Egypt, with the lowest poverty rate, spends significantly less on food when compared to both Nigeria and South Africa, indicating the importance of local agricultural productivity, he notes. In the report, he cites the case of clear regional disparities in the distribution of poverty across the nation with Sokoto, Taraba, Jigawa, Ebonyi and Adamawa having 87.73, 87.72, 87.02, 79.06 and 75.41 percent, respectively, of population living below the poverty line, compared to only 4.5, 6.02, 8.52, 9.32 and 9.82 percent of the population in Lagos, Delta, Osun, Ogun and Oyo, respectively. In terms of income inequality going by Gini Coefficient, a metric that tries to show the spread between the have and the have not, the paper puts the national Gini Coefficient at 35.1 percent, evenly distributed across states. It also cites Plateau as having the highest income inequality in the country with more than half of its population living below the poverty rate. Kaduna was ranked second states with the highest incidence of income inequality, After successfully highlighting key solutions that can help in salvaging the country’s poverty incidence, Kale, who is known for high economic intellect driven by data, further gives insight into ways the key recommendations can be achieved. Addressing unemployment According to Kale, unemployment and poverty appear closely related; however, the strategies in solving unemployment will differ @Businessdayng

among states. In states facing unemployment there is a need to stimulate demand for labour and skills relevant to the states’ specific dominant economic activities. In states facing underemployment, Kale explains that strategies could aim to improve output per worker, e.g. by improving access to mechanised agricultural production. Lastly, he points out that attracting investments into the state, through ease of doing business initiatives, could also play a key role in boosting employment and quality of employment. Increasing sector formalisation Under the sector formalisation as a way of reducing poverty, he makes some striking observation in his four lines of thought: First is the fact that industrial activity appears more common among low poverty states. Secondly, he notes the fact that agriculture and services are more dominant in states with higher poverty. Thirdly, he recommends formalising the informal sector, and lastly, a higher value addition by developing value chains. Taxing to foster development He questions the fiscal capacity of Nigerian states, noting that the extent to which states can generate revenue given their taxation system could go a long way in tackling the country’s poverty incidence. The lower poverty states appear to have greater ability to generate taxes from economic activity than high poverty states, he explains. Furthermore, he stresses on the importance of designing an appropriate taxation system to extract revenue from economic activities, boost internally generated revenue, which are then applied to poverty reducing development projects.

Tuesday 14 July 2020

BUSINESS DAY

Thebigread

The $6bn judgment that is pitting...

Continued from Back page

the basis of irregularity or a point of law. A much larger number of awards never see the light of day. Electrifying Nigeria In 1960s Dublin, pre-Beatles showbands including Maxi, Dick and Twink, and Daddy Cool & the Lollipops ruled

the day. Two decades later, the bands’ manager Michael Quinn transformed himself into an industrial consultant for projects in Nigeria, and over the course of 30 years undertook projects in port upgrading, industrial gas tank manufacturing, and military equipment repair. One project resulted in Quinn, who died in 2015, and his business partner Mr Cahill winning a $2.3m decision against the Nigerian government before a Nigerian arbitration panel. He was also the subject of charges, later dropped, of possessing secret military materials. The gas processing project emerged from plans to electrify Nigeria under then-oil minister Rilwanu Lukman — who Nigeria now claims was among a group of corrupt officials involved in the deal. Nigeria says that P & ID did not invest any money in the project, though it spent $40m on exploratory work, which was financed by Nigerian billionaire and retired general Theophilus Danjuma. One of Mr Danjuma’s companies said in a letter to Nigerian fraud authorities that P & ID had signed an agreement with the petroleum ministry “behind our back”. At the heart of Nigeria’s latest filing is the claim that Lukman — who died in 2014 and was never charged with any wrongdoing connected to P & ID — conspired with Quinn and others on a deal designed to fail and that his successor, Diezani AlisonMadueke, with others steered the arbitration to fail as well, so that all parties could profit. Mr Malami argues that two of England’s most accomplished jurists — Lord Hoffman and Sir Anthony Evans — who wrote the majority award, were hoodwinked. At the very least, says one veteran London arbitration lawyer, the figure they arrived at — $6.6bn — is “commercially naive”. “These are serious arbitrators,” the lawyer says. But “nobody makes this kind of money in Nigeria”. Lord Hoffman and Sir Anthony declined to comment. P&ID dismisses Nigeria’s case as fabricated to avoid paying up, adding that both parties called expert witnesses to support their competing claims, but the panel agreed with P & ID.

“Nigeria raised multiple arguments, both in terms of the merits of the case and the enforceability of the contract, and the damages at various points,” says Andrew Stafford, a Kobre & Kim lawyer representing P & ID in the High Court case. “Most of the evidence shows that they were trying their hardest.” On Monday, Nigeria will try to convince a judge otherwise. Its lawyers want to introduce what they say is new evidence of an alleged fraud. The government says that officials — including Lukman and Ms Alison-Madueke, who has been charged with fraud and money-laundering in connection with other cases but not P & ID’s, knew the agreement was a “scam” and “stood to make financial gains” if P & ID won the arbitration case. Nigeria says it will submit as evidence confessions from two government officials who admit receiving bribes, along with their bank records that it says show tens of thousands of dollars in deposits from companies linked to P & ID. One of the officials, Taofiq Tijani, who chaired the government technical committee that reviewed the gas plant contract, says he received a bag with $50,000 in cash from the late P & ID project director Neil Hitchcock after a dinner in Abuja with Mr Quinn, according to a January 2020 statement filed in London by Mr Malami. Two former P & ID officials in Nigeria have pleaded guilty to money laundering and tax evasion on behalf of the company’s local Nigerian subsidiary, in what the company called a “show trial”. The Nigerian claims are based on “fabricated evidence, illegal detentions, coercion of witnesses, threats to family members, and forced confessions”, P & ID said in a December statement after Nigeria issued a warrant for the extradition of Quinn’s son Adam, who Mr Malami says in his witness statement is a director of Lurgi Consults, one of the companies that Nigeria says bank records show made payments to Mr Tijani. A different burden of proof Arbitrators and supranational groups have grown concerned about the limited transparency of state-related arbitrations, and the ability of tribunals to spot crime. The “Mauritius convention” — formally known as the UN convention on transparency in treaty-based investorstate arbitration — set new transparency standards for investor-treaty cases in 2014 and last year the Basel Institute on Governance launched guidance to help arbitrators spot corruption red flags. Tribunal panels are less www.businessday.ng

well equipped to root out corruption than national courts because they lack the investigative powers of the state to compel third-party evidence. Safeguards are put in place to prevent tribunals from validating corrupt contracts. But there is no international standard dictating the burden of proof for proving criminality in arbitration tribunals, unlike the regulations that cover those matters in national courts. Claims of corruption are also frequently used as a tactic, say lawyers, by parties wishing to overturn awards — exactly what P & ID is accusing Nigeria of doing now. “Arbitrators face two competing pressures when it comes to protecting tribunals’ integrity,” says Jayne Bentham, a partner at Simmons & Simmons, the law firm. “Arbitrators must try to root out corruption but also defend the arbitral process and the enforceability of awards against tactical attempts to prevent justice being done.” In the most extreme cases, arbitration has actually been used to execute fraud. In February 2019, three arbitrators and two employees of a Cairo arbitration tribunal were convicted by an Egyptian criminal court for masterminding what Chevron, the US energy company, called a “sham” arbitration against it worth $18bn. Despite the convictions, Chevron was still forced to defend itself against the $18bn award in a Californian district court, where a federal judge dismissed the attempt to enforce the award. In a statement, Chevron said it had been “targeted in a criminal scheme”. Seizing state assets Lawyers watching the case say Nigeria is unlikely to succeed. The country is now more than two years past its deadline to challenge the original award. And London’s courts are notably unwilling to grant appeals in such proceedings. In the three years to September 2019, only nine appeals to arbitration awards brought on the basis of points of law or serious irregularity were upheld out of more than 300 put before the High Court. While Nigeria may still be able to appeal, if the judge ultimately denies its request to present new evidence, it is probable that P & ID will be allowed to begin seizing state assets that amount to almost five times Nigeria’s 2019 national education budget, eight times its health budget, and four times the counterterrorism budget. “To allocate such a huge amount,” says Mr Suraju, the good governance advocate in Lagos, “I think it was not just an aberration, it was a conspiracy against the future of a nation and the people of that country.” https://www.facebook.com/businessdayng

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Tuesday 14 July 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Shale boss says US has passed peak oil Parsley Energy CEO: ‘I don’t think I’ll see 13m barrels a day again in my lifetime’ DEREK BROWER

S crude production has already peaked, according to one of the country’s leading shale executives, as producers battered by the price crash shun new output growth and start trying to become profitable. Matt Gallagher, chief executive of Parsley Energy, one of Texas’s biggest independent oil producers, said the record output level struck earlier this year would be the highwater mark. “I don’t think I’ll see 13m [barrels a day] again in my lifetime,” the 37-year-old Mr Gallagher told the Financial Times. “It is really dejecting, because drilling our first well in 2009 we saw the wave of energy independence at our fingertips for the US, and it was very rewarding . . . to be a part of it.” American oil output plunged by as much as a quarter this spring, as crude prices crashed in the wake of a Saudi-Russia price war and the coronavirus outbreak, prompting several operators, including Parsley, to shut wells and slash planned spending. Soaring shale production helped the US become a net exporter of petroleum in November last year — a stunning reversal for a country that imported more than 10m b/d a decade earlier. Since May, however, that has reversed and net imports have trended upwards. [The shale sector has] not been gifted with discipline Matt Gallagher, Parsley Energy

Parsley’s 37-year-old chief executive, Matt Gallagher, right, has emerged as a progressive voice in Texas’s oil industry © James Durbin / The Oilfield Photographer, Inc.

chief executive US oil briefly traded below zero in April, but a recovery to around $40 a barrel since then still leaves it beneath the break-even price for many shale producers. It was “hands down” the worst oil-price crash in recent history, Mr Gallagher said, and would have a lasting impact on the sector. “Our industry is the industry of mobility and comfort,” he said — referring to fuel for car and air travel and for heating and air conditioning — “and mobility is being drastically rethought and there will be new innovations on comfort.” The Parsley chief has earned a

reputation as a progressive voice within Texas’s oil industry. He took to LinkedIn with his thoughts on George Floyd’s killing, and recently bought a Ford electric car. In his interview with the FT he spoke of his admiration for the European oil supermajors that recently announced net-zero emissions goals. He also called for an end to flaring in the shale patch. Parsley was among the top 20 natural gas flarers by volume in Texas, according to a report this year from the state’s oil and gas regulator. But Mr Gallagher said it had reduced the practice — a huge source of carbon emissions — to less than 1 per cent.

“From that perspective, some healthy regulation would, over time, probably benefit the industry’s reputation,” he added, potentially helping to lure environment-focused investors back to the sector. “You want to be behind a company that makes this a priority,” he said. Capital markets have largely closed to shale producers in the past year as investors fled a sector that became famous for worldbeating production growth but an inability to repay debt. The shale sector had “not been gifted with discipline”, Mr Galla-

gher acknowledged, and has often been led by management teams who “put up very little personal risk and had very lopsided upside reward based on growth”. But new capital restraint was now “trickling into the industry”. Parsley is among companies that have restarted the wells they shut during the worst phase of the price crash. But the company has no plans to increase production with new drilling this year or next. Twice weekly newsletter Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here. Only 223 horizontal rigs — a proxy for US shale drilling activity — were operating on July 9, according to data provider Enverus, compared with 853 a year ago. US oil production would eventually stabilise at around 11m b/d, Mr Gallagher said, as producers focused on maintaining output, not increasing it. That is in line with current production, according to consultancy Rystad Energy, but about 15 per cent below this year’s peak. The oilfield services sector that carries out the bulk of the work for oil production companies would suffer most, Mr Gallagher said. Hundreds of thousands of jobs depended on activity in the shale patch, he said, “and those activity levels are just going to be dramatically lower for a long time”.

Putin delays $360bn spending plan as Covid-19 batters economy Volte-face comes shortly after vote that allows Russian president to extend his rule for another 16 years HENRY FOY

ladimir Putin has delayed his flagship $360bn national investment plan by six years as the coronavirus pandemic pitches Russia into recession and leaves a hole in the federal budget. Mr Putin unveiled the socalled National Projects two years ago as a much-needed Rbs25.7tn ($362bn) injection into the Russian economy, and promised it would lift stagnant living standards and drive up moribund GDP growth to exceed the global average by 2024. The decision to delay the initiative, billed by the Kremlin as Mr Putin’s primary domestic objective during his current term as president, is the starkest sign yet of the damage the Covid-19 pandemic is wreaking on Russia’s economy and the long-term impact on the country’s budget revenues.

Vladimir Putin takes part in a state projects meeting on Monday via video conference call © Alexei Druzhinin/Kremlin/Reuters

It is also a volte-face on Mr Putin’s pledge earlier this year to boost short-term spending as he sought to revive his sagging public ratings, and comes just a few weeks after he won a national vote endorsing a new constitution that will allow him to ignore previous term limits and rule for another 16 years. www.businessday.ng

Postponing the investment bonanza is likely to further delay Russia’s recovery from a six-year economic funk and means real household incomes are likely to continue to fall, potentially deepening public discontent that has fuelled a series of protests against Mr Putin over the past year.

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Analysts have pointed to a recent surge in arrests and detentions of political opponents, journalists and activists as a sign that the Kremlin will seek to combat public discontent with force rather than handouts. “We have to work under tighter budget constraints,” prime minister Mikhail Mishustin told Mr Putin in a televised meeting on Monday. “The spread of the coronavirus and its consequences for the global economy and our country . . . have created new limits, slowing economic growth and constricting consolidated budget revenues,” he added, before Mr Putin endorsed his suggestion that the National Projects deadline should be extended to 2030. Russia’s domestic lockdown to prevent the spread of Covid-19 and a global slowdown that has hit demand for its natural resource exports are set to see the @Businessdayng

country’s economy contract by 6 per cent this year, according to World Bank forecasts, and only begin to recover in 2022. In addition, a plunge in oil prices caused by a global collapse in demand for fuel from drivers, airlines and shippers is expected to result in a $40bn shortfall in budget revenues this year. The Kremlin’s decision to save cash by delaying the National Projects plan comes as other European governments roll out massive stimulus programmes to help their economies bounce back from the pandemic. Western sanctions imposed on Russia after its 2014 annexation of Crimea restrict Moscow from borrowing on international debt markets, and Mr Putin has resisted tapping the country’s $170bn national wealth fund, fearing that it will be necessary to protect against potential future sanctions.

Tuesday 14 July 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Google plans to invest $10bn in India

‘India Digitization Fund’ comes as US tech companies jostle for position in fast-growing online market BENJAMIN PARKIN AND TIM BRADSHAW

oogle has said it plans to invest $10bn in India in the coming years, including in infrastructure and equity investments, as Silicon Valley companies jostle for a position in one of the world’s fastest growing internet markets. Sundar Pichai, chief executive at Google and its parent company Alphabet, announced the scheme after speaking with India’s prime minister Narendra Modi on Monday. Mr Modi described the conversation as “extremely fruitful”, discussing new working practices during the coronavirus pandemic as well as security and safety online. “This is a reflection of our confidence in the future of India and its digital economy,” Mr Pichai said at an online event, announcing the fund. Google’s pledge comes three months after rival Facebook invested $5.7bn in Jio Platforms, the fast-growing Indian telecoms company that has launched a series of digital services. Jio, part of Mukesh Ambani’s oilto-retail conglomerate Reliance Industries, has also sold stakes to 11 other foreign investors including the investment arms of US chipmak-

ers Intel and Qualcomm, as well as Saudi Arabia’s Public Investment Fund, KKR and Silver Lake. Google has also explored investments with Jio and rival telecoms operator Vodafone Idea in recent months, the Financial Times has reported previously. In January, Amazon said it planned to invest $1bn in India, while Apple is stepping up its

iPhone manufacturing in the country through its supplier Foxconn. Google said its “India Digitization Fund” would be spread over five to seven years, focusing on affordable internet access, new product development tailored to Indian market needs and accelerating digital transformation, as well as healthcare, education and agriculture.

India, with its 1.3bn population, represents one of the biggest opportunities for tech companies globally after hundreds of millions of Indians started using smartphones and accessing the internet in recent years. Google Pay, the company’s digital payments service, has grown rapidly since launching in the country in 2017. The increased interest in India

from Google and other US-based investors comes as tension on the Indian-Chinese border closes avenues for investors from China, the south Asian country’s other large source of foreign capital. Chinese internet giants such as Tencent and Alibaba, along with Chinese venture capital companies, have become among the largest investors in Indian tech. But India in April changed its foreign investment rules to require government approval for all wouldbe Chinese investors. A sharp escalation in tensions following a deadly clash on the Himalayan border last month prompted the authorities to ban 59 Chinese apps including ByteDance-owned TikTok. Access to India, now the world’s second-largest mobile market, is particularly important for Google as it is shut out of China and faces the prospect of greater difficulty in operating in Hong Kong following the passage of the new security law there last month. “Google is rising to the occasion by trying to invest a fairly substantial amount in India’s digital transformation,” said Ravi Shankar Prasad, India’s electronics and information technology minister. “I’m very happy that Google is recognising India’s digital innovation and the need to create further opportunity.”

Wall Street opens higher as focus shifts to US earnings Investors welcomed the first major results as PepsiCo reported stable revenues HARRY DEMPSEY, PHILIP GEORGIADIS AND THOMAS HALE

S stocks rose on Monday as traders looked ahead to an important week which sees the start of earnings season on Wall Street and an EU meeting to discuss the bloc’s €750bn recovery fund. The S&P 500 was up 0.8 per cent at the open, leaving the benchmark index on course to build on last week’s late gains. The tech-heavy Nasdaq continued to extend its all-time high, gaining 1.1 per cent. The rise followed gains in Europe and the Asia-Pacific region. Europe’s Stoxx 600 rose 0.8 per cent in afternoon trading, helped higher by London’s FTSE 100 adding 1.1 per cent. Japan’s Topix benchmark closed up 2.5 per cent. Investors welcomed Wall Street’s first major results, with PespiCo shares rising 0.5 per cent at the open after the food and drink company reported revenues that fell less than Wall Street analysts had feared, bolstered by strong sales of snacks. Overall, S&P 500 companies are expected to report a decline in earnings of 44.6 per cent in the second quarter, in what would be

the worst such performance since the 2008-2009 financial crisis, according to data provider FactSet. European and US equities have struggled to find momentum to continue their rush higher in the past month, as coronavirus cases and deaths continue to blight the American recovery. Investors were facing “competing elements” as they weighed signs of economic recovery visible in survey data and high-frequency indicators against the spread of the virus through developing markets and some US states, said Shoqat Bunglawala, head of European www.businessday.ng

and Asian portfolio solutions at Goldman Sachs Asset Management. The asset manager’s portfolio was broadly neutral across risk assets, given that markets were likely to remain rangebound as traders looked ahead to the promise of a recovery next year, Mr Bunglawala said. Asia-Pacific equities started the week with gains as traders were hopeful that data this week will show a return of Chinese economic growth in the second quarter. China’s CSI 300 of Shanghai- and Shenzhen-listed stocks climbed 2.1 per cent.

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Last week, mainland Chinese equities posted their best week in five years as investors piled into a rally bolstered by signs of economic recovery and support from state media. The country’s stock market has risen 18 per cent in 2020, while benchmarks in Europe and the US remain down on the year. The gains for European and Asian shares on Monday came in spite of concerns that a surge in the number coronavirus cases in many US states could compromise an economic recovery and a move by Beijing to impose sanctions on @Businessdayng

US officials. Florida became the first state to record more than 15,000 cases in a single day on Sunday as infections continued to rise across the south of the US — a trend that is forcing the worst-affected states to impose new restrictions. Evidence of a recovery in China would come at a time when fears of fresh Asia coronavirus outbreaks persist, with Hong Kong experiencing a new wave of cases during the past week. Melbourne, Australia’s second-biggest city, has been put under a fresh six-week lockdown as authorities try to curb a renewed outbreak. Haven assets remained in demand, as China indicated that it will sanction a group of US politicians in a tit-for-tat move against measures announced by Washington last week over alleged human rights abuses against ethnic minorities in Xinjiang. The price of gold moved up 0.7 per cent to $1,812 per ounce, after climbing above $1,800 last week for the first time since 2011. Data showed traders poured $40bn into funds backed by gold in the first half of the year. Oil prices declined, with Brent crude, the international benchmark, dropping 0.7 per cent to $42.92 a barrel.

Tuesday 14 July 2020

BUSINESS DAY

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Tuesday 14 July 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 13 July, 2020

Top Gainers/Losers as at Monday 13 July, 2020 LOSERS

GAINERS Company

Opening

Closing

Change

MOBIL

N192.6

N173.4

-19.2

0.25

MTNN

N116.1

N115

-1.1

0.25

ZENITHBANK

N16.7

N16.2

-0.5

N41.2

0.25

GUARANTY

N22.45

N22

-0.45

N1.95

0.14

ETERNA

N2.24

N2.09

-0.15

Opening

Closing

Change

N9.5

N10

0.5

AFRIPRUD

N4.25

CILEASING

N3.95

N4.2

N40.95 N1.81

NASCON

BUACEMENT CAVERTON

Company

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

24,200.60 3,950.00 231,234,804.00

VALUE (N billion) MARKET CAP (N Trn)

2.154 12.624,

Mobil, MTNN, Zenith, GTB, other stocks cause market’s negative start …NSE ASI down 0.44%, dips 1.14% month-to-date Iheanyi Nwachukwu

igeria’s stock market opened this week trading (Monday July 13) on a negative note, corroborating BusinessDay’s earlier report that the market will remain pressured this week. The continued spread of the Coronavirus and its negative impact on major global and domestic indicators remain a source of worry to investors and businesses. The market’s benchmark performance indicator printed lower at 24,200.60 points, representing a decline of -0.44percent compared to preceding day high of 24,306.36 points; while the value of listed equities on the local bourse decreased by N56billion to N12.624trillion as against preceding trading day high of N12.680trillion. The stock market’s negative return year-to-

date (YtD) stood higher at -9.84percent. In this month of July, stock market has decreased by -1.14percent. In 3,950 deals, investors exchanged 231,234,804 units valued at N2.154billion. Sterling Bank, FCMB, Fidelity Bank, GTBank and MTNN

were actively traded stocks on Monday July 13, 2020. Mobil Oil dipped most, from N192.6 to N173.4, losing N19.2 or 9.97percent; MTNN followed after its share price decreased from N116.1 to N115, down by N1.1 or 0.95percent. Also, Zenith Bank made

the top losers league after its share price decreased from N16.7 to N16.2, losing 50kobo or 2.99percent. GTBank dropped from day open high of N22.45 to N22, shedding 45kobo or 2percent, while Eterna Plc dropped from N2.24 to N2.09, losing 15kobo or 6.70percent.

L-R: Kweku Tandoh, Office of the deputy Governor, Edo State; Kayode Ogun, branch manager, The Nigerian Stock Exchange (NSE), Ibadan; Patrick Okundia, commissioner For Health, Edo State; . Andrew Obi, Incident manager on COVID-19 Response, Edo State; and Sunday Idornigie, NSE Ibadan Branch during the NSE’s donation of 3,800 non-medical face masks to the State Task Force for COVID-19, Edo State as part of the Masks for All Nigerians campaign.

Law Union & Rock to complete recapitalisation before year end Modestus Anaesoronye

nderwriting firm, Law Union & Rock Insurance Plc is set to complete its recapitalization before December 2020, well ahead of regulatory deadline of December 31, 2021. The underwriting firm first announced on the floor of the Nigerian Stock Exchange (NSE) on Friday 28 February 2020, that a Transaction Implementation Agreement (TIA) had been signed between itself and Verod Capital Management (“Verod”); with the intent of the latter to acquire Law Union & Rock 100 percent.

Verod is an Anglophone West Africa Private Equity firm focusing on investing equity and equity-linked capital in growth companies across various consumer-driven sectors in Nigeria, including in particular, the insurance industry. In a recent interview, Ademayowa Adeduro, managing director, said the company has reached 85 percent completion of its recapitalization process. He stated that the company has gone as far as securing approval of the National Insurance Commission (NAICOM), the Nigeria Stock Exchange (NSE), and the Federal Competition and Consumer Protection Council (FCCBC), allowing Verod Capital acquire 100 percent www.businessday.ng

shareholding of the Company. Verod has also placed the required funds to meet the statutory N10 billion paid up capital for General Insurance businesses. The acquisition would be achieved through a Scheme of Arrangement, where all shares would be transferred to Verod Capital as regulated by SEC. Upon successful completion of the Scheme of Arrangement process, a Court Ordered Meeting or Company AGM will authorize the acquisition. This meeting is expected to take place in August 2020. It is noteworthy to recall that the Company witnessed impressive growth in its 2019 financial accounts, posting a

254 percent increase in Profit after Tax, from N226.5 million in 2018 to N802.8 million, thereby picking up its capitalization journey on a strong note in 2020. Ademayowa further added that “keeping in good faith with the Transaction Implementation Agreement (TIA) signed by Law Union & Rock Insurance Plc and Verod Capital Management Limited, the latter has made the mandatory 10 percent deposit required, which is in excess of N500 million. Based on these activities, the company is progressing and looking to close all recapitalization process before the end of the year, with a reassuring posture for our stakeholders and partners.”

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Global market indicators FTSE 100 Index 6,187.33GBP +91.92+1.51%

Nikkei 225 22,784.74JPY +493.93+2.22%

S&P 500 Index 3,228.59USD +43.55+1.37%

Deutsche Boerse AG German Stock Index DAX 12,808.24EUR +174.53+1.38%

Generic 1st ‘DM’ Future 26,350.00USD +373.00+1.44%

Shanghai Stock Exchange Composite Index 3,443.29CNY +59.96+1.77%

SEC, NITDA collaborate on data protection Iheanyi Nwachukwu

he Securities and Exchange Commission (SEC) has restated its readiness to collaborate with the National Information Technology Development Agency (NITDA) to foster safe conduct of transactions and usage of personal data in the Nigerian capital market. Director General of the SEC, Lamido Yuguda stated this during a webinar on Nigerian Data Protection Regulation and how it affects the Capital Market. The event had as its theme: Nigeria Data Protection Regulation (NDPR): Implications on the Nigerian Capital Market. Yuguda stated that the Commission is very serious on the issue of data protection in the capital market assuring that going forward, the SEC would continue to create necessary awareness. According to him, “You may all recall that in 2019, the National Information Technology Development Agency (NITDA) issued the Nigerian Data Protection Regulation (NDPR) with the objectives to safeguard the rights of natural persons to data privacy; foster safe conduct for transactions involv-

ing the exchange of Personal Data; prevent manipulation of Personal Data; and ensure that Nigerian businesses remain competitive internationally. “By this regulation therefore, all private and public organizations that collect, process, store, archive and destroy data of natural persons in Nigeria or of Nigerians resident abroad are required to comply with the provisions of the Regulation. “Since the Commission and indeed all Capital Market Operators perform these activities on data as covered by the NITDA NDPR, we are also subject to the new regulation, in one way or the other. That explains the reason behind organizing today’s webinar to enlighten the capital market community on the provisions of the NDPR”. The SEC Boss assured participants that the new management would make it a duty to interact with the market from time to time in a bid to develop the capital market and improve its contribution to the economy. He expressed the hope that the lessons gained from the session would impact the operations of participants meaningfully and lead the Capital Market to full compliance with NDPR.

FBNInsurance pays N4.4bn claims in 6 months

BNInsurance Limited has displayed resilience in its business strategy despite the negative impact of the coronavirus pandemic on the Nigerian economy. The company recently paid the sum of N4.4 billion in claims to its customers in the first half of the year 2020. This represents a 26.7 percent increase year-on-year when compared to N3.4 billion paid during the same period in 2019. While briefing news men at the company’s Lagos head office, Val Ojumah, managing director/CEO of FBNInsurance, disclosed that prompt settlement of customers claims is one of the underpinning business successes of the insurer as it strives to continually boost customers’ confidence and trust during the 10 years of the company’s existence. According to Ojumah, “As a responsive and reliable insurer, @Businessdayng

we have -during this turbulent time- kept our promise to our customers by paying claims promptly. Our focus remains to provide financial security and relief to our esteemed customers especially at this trying time.” On a related note, the company has unswervingly delivered on its promise to its shareholders by paying dividends promptly. At the recently held virtual AGM, the company announced a full year dividend of 97k per share for 2019 which represents a 49 percent increase over the 65k per share that was paid in 2018. The company has consistently paid dividend to its shareholders since 2013. As at year end, the total assets base of the company grew from N70.5billion in 2018 to N109bilion in 2019. This represents a 55 percent growth year-on-year of which over 90 percent are in liquid assets.

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BUSINESS DAY Tuesday 14 July 2020 www.businessday.ng

The $6bn judgment that is pitting Nigeria against a London court … Legal challenge by Nigeria sparking questions of transparency at arbitration courts By kate beioley & neil munshi, FT

n January 2010, two Irish businessmen secured a 20-year contract to turn Nigeria’s vast gas reserves into power. But the government never built a promised pipeline to feed gas to the processing plant, and their British Virgin Islands-registered company, Process and Industrial Developments, or P & ID, never so much as put spade to soil on its planned site in a riverine corner of south-east Nigeria. P&ID, founded by Michael Quinn and Brendan Cahill, says it hoped to provide gas to generate power for millions in one of the least electrified countries in the world. Instead, a little over two years later, the company began an arbitration action against Nigeria that accused the west African state of a breach of contract. In 2017, a panel of three arbitrators voted 2-1 to award P & ID the full sum of its claim for future profits tied to the original project: a stunning $6.6bn. With interest, the award has ballooned to almost $10bn, or a quarter of the foreign reserves of Africa’s largest economy. After missing multiple deadlines to appeal — and only after P & ID applied to the British commercial court, a branch of the High Court, for enforcement — Nigeria challenged the award. On Monday its lawyers will ask a High Court judge in London to allow them to present what they say is newly discovered evidence that both the contract and Nigeria’s arbitration defence — under a previous administration — were, as President Muhammadu Buhari said in a speech to the UN last year, “a sham” that was “attempting to cheat Nigeria out of billions of dollars”. P & ID denies any wrongdoing, and says that Nigeria has invented the accusations to avoid paying what it owes and to delay the seizure of state assets. “The government is firmly committed to overturning the injustice of the award — no matter how long it takes,” attorney-general Abubakar Malami told the Financial Times. “We will pursue all available legal avenues in our fight to secure justice for the people of Nigeria.” The case has shone an uncomfortable light on the role of arbitration courts in resolving multibillion-dollar disputes between companies and even countries. Critics argue that the behind-

closed-doors nature of such cases presents a public interest risk, particularly when sovereign states are concerned. Arbitration clauses are standard in most business contracts to give parties a speedy, flexible way to settle disputes. Parties generally specify the “seat” where the arbitration will take place — a neutral location like London or Paris — which determines which national courts have jurisdiction over the pro-

cess. Advocates say the system generally works, yet the fact that only the most eye-popping cases make it into the public domain — while the majority remain secret — unsettles critics, who say justice involving states should be hammered out in the open. The only reason the Nigeria case came to wider public attention is because P & ID went to court to have the $6.6bn judgment enforced.

How one deal sparked a decade of legal action - Timelines

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JANUARY 11, 2010 Nigeria signs 20-year contract with P & ID, in which the company would build a gas processing plant

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AUGUST 22, 2012 P & ID begins arbitration process, alleging breach of contract

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JULY 17, 2015 London tribunal finds that Nigeria had breached the contract and so was liable to P & ID

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JANUARY 31, 2017 Arbitration tribunal issues final award of $6.6bn and attaches a pre- and post-judgment interest rate of 7 per cent

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JANUARY 28, 2018 Nigeria requests fraud investigation by the Economic and Financial Crimes Commission into the P & ID deal

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MARCH 16, 2018 P&ID applies to the English High Court to enforce the final award and begins a parallel process in the US

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SEPT 26, 2019 English High Court allows P & ID to enforce award but grants Nigeria permission to appeal the award and said the company could not begin seizing state assets JANUARY 24, 2020 Nigeria requests a hearing to present what it says is evidence of fraud

“There’s no way the arbitrators would have sat in the open and considered this level of ridiculous damages against a country in the public glare,” says Olanrewaju Suraju, chairman of Human and Environmental Development Agenda, a Lagosbased NGO. “There’s no way that under public scrutiny anyone would . . . award such an egregious amount of damages.” ‘Secret courts’ Designed to be free of political interference, tribunals offer companies, who may not trust courts in the countries where they operate, some protection. Depending on the rules they have agreed, parties generally select one arbitrator each to sit on a three-person panel, from senior members of the judiciary and industry experts. Awards, enforceable in over 160 countries, are notoriously difficult to overturn. “Arbitrators are not tasked with rooting out the evils in society but to address the issues that are put before them,” says Jeremy Wilson, co-chair of law firm Covington & Burling’s arbitration practice. “The role of the arbitrator is to resolve a dispute between relevant parties, which is different to the role of a judge or court.” London has become a particularly popular place to arbitrate because of its roster of former judges, top-flight lawyers and the reputation attached to English law, which underwrites business contracts the world over. The London Court of International Arbitration dates back to 1892 and its arbitrators boast specialisms in fields ranging from maritime disputes to engineering. The UK capital in particular fosters confidentiality through rules in applicable law, which means the bulk of the arbitration court’s decisions never become public.

Parties benefit from keeping their commercial or state secrets hidden, but a roster of cases have triggered questions about the extent to which they should remain confidential. Matthew Saunders, a disputes partner at the law firm Ashurst, says: “Money [in arbitration involving states] can end up being spent in circumstances where the public has had no ability to scrutinise the process, or learn from it.” In 2014 the Russian state was hit with what remains the most punitive arbitration award in history — a bill for $50bn awarded to the former owners of Yukos, a Russian oil group expropriated by the state. In 2014, a panel in the Permanent Court of Arbitration in The Hague ruled Russia had destroyed the company once owned by jailed oligarch Mikhail Khodorkovsky for political reasons — triggering a fightback by Russia which resulted in defeat in the Dutch appeals court in February. In another London case, detailed in a 2018 Court of Milan judgment, ex-Nigerian oil minister Dan Etete in 2011 faced an ex-Russian diplomat who sought $65m in the arbitration court for his role as a middleman in the sale of oil block OPL 245. The tribunal ruled in favour of Mr Etete, who, in separate cases, has been accused in UK and Italian courts of having awarded himself the block when he was minister, and then selling it in an allegedly corrupt $1.3bn deal involving Royal Dutch Shell and Eni. Mr Etete has denied any wrongdoing throughout the OPL 245 affair. Simon Taylor, co-founder of the campaign group Global Witness, says the arbitration between Mr Etete and the Russian middleman was “absurd”. “Decisions around sums of money which belonged to a state and are therefore of supreme public interest should not be going on in secrecy,” says Mr Taylor. “It’s absolutely extraordinary and effectively makes those courts potential and in some cases actual laundering entrepots for illicit activities.” The critics of investor-treaty arbitration — cases between investors and states — range from ex-US secretary of state Hillary Clinton to Jean-Claude Juncker, former head of the European Commission, who called them “secret courts”. About one-third of all claims issued in London’s commercial court are matters arising from arbitration awards, with more than 300 challenges applied for in the three years to October 2019 on Continues on page 31

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