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Nigeria misses 6 electricity tariff reviews as current prices become obsolete Fair market price at N57.40 per kilowatt hour

ISAAC ANYAOGU & STEPHEN ONYEKWELU

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ince the power sector privatisation in 2013, the Nigerian Electricity Regulatory Commission (NERC) has failed to review electricity pricing six times under the Multi

President Muhammadu Buhari (r) congratulating Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), on his reappointment as head of the apex bank for a second tenure, during his visit to the President in Abuja.

Year Tariff Order (MYTO) it instituted to price electricity, a failure that has fuelled illiquidity in the sector and caused shortfalls of nearly N1.4 trillion.

According to the MYTO Rules, there would be a 15-year tariff path for the Nigerian Electricity Supply

Industry (NERSI) with limited minor reviews each year in light of changes in a limited number of parameters (such as inflation, interest rates, exchange rates and generation capacity) and major reviews every five Continues on page 34

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MARKETS

What rising geo-political tensions mean for Nigeria LOLADE AKINMURELE

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igeria is caught in the middle of an escalating global trade war and mounting tensions in the Middle-East, both holding big implications for Africa’s largest Continues on page 34

Inside Jumia records momentum in Q1 as marketplace revenue up 102% P. 2

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news Dangote Refinery awards $368m worth of contracts to local contractors ENDURANCE OKAFOR

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angote Refinery and Petrochemical has so far awarded $368 million to 120 local contractors at the site as part of its contribution to Nigeria content development initiative.

Devakumar Edwin, group executive director, Strategy, Portfolio Development and Capital Projects, Dangote Industries Limited, who made this disclosure during the tour of the Dangote Refinery by members of Nigerian Union of Journalists (NUJ) and Nigeria Institute of Public Relations (NIPR), yesterday in Lagos, said there are several Nigerian content opportunities in the company’s refinery and petrochemical project.

Edwin noted that the refinery would lead to significant skills transfer and technology acquisition opportunities in the country. He added that the Group has embarked on a landmark integrated refinery and petrochemical project, regarded as the largest industrial complex in the history of

Africa, which is expected to take Nigeria to new heights through the transformation of the economy.

According to him, the company is already partnering with the Lagos State government and Siemens in the skills development of the local community for employment at the construction site.

“We have already trained and employed 250 artisans,” he added.

Edwin disclosed the company’s intention to train 900 Nigerian engineers in India, adding, “The company has completed the overseas training of first and second batches of Nigerian engineers and they are being acclimatised at site. The third batch left for India classroom training for one month, on-the-job training for one year and working in real time with experts in the industry every day.”

He said that company has so far employed 3,580 Nigerian personnel on site, which excludes employment by the various contractors and sub-

Continues on page 34

NNPC has stifled oil marketers out of AGO importation - operators

…Corporation says marketers not importing are seeking higher margin

Olusola Bello

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he Nigeria National Petroleum Corporation (NNPC) has allegedly driven oil marketers out of the business of importation of Automotive Gas Oil (AGO) or diesel by making it uncompetitive for them to engage in.

Even though AGO is a deregulated product that any oil marketing company can bring into the country and sell at a competitive price, a cross-section of the market operators who spoke to BusinessDay said some of them had tried to import the product but had their fingers burnt because of the interference of NNPC in the market.

An industry source told BusinessDay that oil marketers who brought cargoes into the country in the recent past are yet to recover from the losses they incurred.

Another operator said his company tried to bring in the product but discovered that its price was more expensive than that of NNPC. Clement Isong, chief operating officer, Major Oil Marketers Association of Nigeria (MOMAN), said the risk of importing the product was too high for his members and so they all prefer to buy from NNPC and sell to the public.

Some other operators said

that the problem was not so much about access to foreign exchange as being speculated in some quarters, but more about the fact that those unlucky to import the product into the country at a time NNPC does risk losing the entire cargo because of the price difference.

The marketers alleged that NNPC does not sell the product in the open where more stakeholders can participate and the corporation does not sell to them directly but they rather buy from third parties.

They further said NNPC sells the product at about N200 per litre or more than that to its friends while the marketers in turn buy from those friends at between N210 and N230.

They also alleged that the corporation claimed that it entered the business, despite the product being deregulated, in order to crash the price of the product which it said was going beyond what local consumers could purchase as the price of crude oil has direct effect on the cost of the product.

But Ndu Ughamadu, NNPC group general manager, public affairs, said the corporation has the responsibility to sell the product at relatively low price to ensure that PMS transportation is not overburdened with higher prices.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Babatunde Fashola, minister of power, works and housing; Okechukwu Enelamah, minister of industry, trade and investment; Zainab Shamsuna Ahmed, minister of finance; Vice President Yemi Osinbajo, and Adeola Ipaye, deputy chief of staff to the president, office of the vice president, at the Economic Management Team Meeting at State House, Abuja.

Jumia records momentum in Q1 as marketplace revenue up 102%

…estimated to record profit by 2022 …Rolls out Jumia Pay in Nigeria, Egypt, three other markets Jumoke Akiyode-Lawanson

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umiaTechnologieshasreleased its 2019 first quarter (Q1) results which show strong momentum in gross merchandise volume (GMV) growth of 57.6 percent year on year (yoy) to €240 million in Q1 2019, from €152 million in Q1 2018. This is on the back of improved numbers of active consumers and spend per active consumer which has seen its marketplace revenue

grow by 102.3 percent.

The company, which suffered a sharp fall in its share price by over 50 percent after being accused of fraud by Citron last week, showed strong improvements in its books, growing its active consumers by 1.3 million to 4.3 million in Q1 2019, from 3 million in 2018.

Jumia says that a major driver of growth in its active consumers is the continued expansion of its products and offerings, as well as the

growing relevance of its platform which drives consumer adoption and engagement.

The e-commerce company increased its technology and content expense by 15.3 percent from €5.1 million in 2018 to €5.9 million in 2019.

“We see a lot of great momentum in the business, especially as we delivered on our four major pillars which are to grow GMV, increase monetisation, drive Jumia Pay and improve efficiency,” said Sacha

Poigonnec, co-CEO and cofounder of Jumia Technologies.

In Q1 2019, Jumia reduced operating loss by 356 basis points (bps), grew marketing and advertising by over 200 percent and sustained Jumia Pay momentum with a €50 million investment by Mastercard. This is a strategic deal that will help Jumia reduce the numbers from payment on delivery and spread its payment

Continues on page 34

MTN may consider other dates for listing on NSE …May 16 just 1 out of 4 dates in view Iheanyi Nwachukwu

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f the purported May 16 date for listing by MTN Nigeria is to be feasible on the Nigerian Stock Exchange (NSE), the telco will have to get all necessary approvals to every document relating to the new status within two days.

Reports (not BusinessDay) had said that Africa’s biggest telecommunications company could go ahead with the placing on Thursday, May 16, linking the information to “the people who asked not to be named as the matter is private”.

The reports, though, noted that the move could be delayed as some steps required by the Nigerian Stock Exchange had not yet been completed.

An informed source close to MTN told BusinessDay on MondaythatthepurportedMay 16isjustoneoutof thefourdates inconsiderationforthelistingby introduction at the NSE.

“It is one of the dates we have in view. We have a total of four dates,” the source said.

“People have been working tirelessly on this listing. I can tell you that everybody has been working towards achieving the first date. But the date is just one of the four.”

The NSE has a history of publicising on its website upcoming events on its platform, such as MTN listing, especially when such event has officially been confirmed. The Exchange had not done so as at the time of filing this report.

“There are still some approvals that Securities and Exchange Commission (SEC) has to make relating to MTN listing on the NSE. SEC has just registered the shares but MTN also needs to meet some requirements of the NSE. For us here, it a very busy period and we are ready to make it (the listing) happen on that date if they (MTN) get necessary approvals,” our source at NSE said.

MTN Nigeria recently registered 20.35 billion ordinary

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shares with the country’s Securities and Exchange Commission. It plans to list around 20 percent of those on the bourse and they could trade at N80 to N90.

That would give the unit a market value of as much as N1.8 trillion ($5.1 billion), making it the second-biggest public firm in Africa’s main oil producer after Dangote Cement plc. It will be the largest when measured by revenue.

The Nigerian equity market recorded back-to-back losses of about N137 billion in the trading week to May 10 as investors continued to have a hard look at the Nigerian economy in the absence of cheery news.

“The Securities and Exchange Commission and the Nigerian Stock Exchange confirmed the application of MTN Nigeria Communication plc for registration of 20.4 billion units of ordinary shares on the stock exchange.

The company aims to list by introduction on The Exchange and we expect this to further @Businessdayng

deepen the equity market,” said market analysts at Lagosbased United Capital plc.

“Looking ahead, the proposed MTN listing seems to be the only game in town,” the analysts said in their May 13 note.

MTN agreed to an initial public offering of its Nigeria business as part of the settlement of a reduced $1 billion fine in the country in 2016.

The planned listing is the first of two stages, with a selldown of MTN’s majority stake to take place at a later date. The carrier appointed former Central Bank of Nigeria Governor Lamido Sanusi, who’s now the Emir of Kano, to its board last week in preparation for the listing.

MTN remains locked in a legal battle with Nigeria’s Attorney General over a $2 billion tax claim, the latest in a series of disputes in the country. The Lagos-based unit is the largest of MTN’s 20-market portfolio, accounting for almost a quarter of its 233 million subscribers.

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NEWS

Celebrating Nigerian Fintech: Gambian delegation understudies TSA

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ederal Government has lauded Nigerian FinTech company, SystemSpecs, for providing the technological infrastructure support that has ensured the success of the Treasury Single Account (TSA). This is as delegates arrive Nigeria from the Gambia to understudy Nigeria’s implementation of the TSA, Monday.

The Gambian delegation, led by the permanent secretary, Ministry of Finance and Economic Affairs, Ada Gaye and its Accountant General, Momodou Lamin Bah, met in Abuja with some government officials, including the Minister of Finance, Zainab Ahmed, Accountant General of the Federation, represented by director of funds OAGF, Muhammad Usman, and director of TSA, Sylva Okolieaboh, among others on Monday.

They were saddled with facts about the Nigerian TSA and its experience in TSA initiation and implementation.

Ahmed explained how the TSA worked to the Gambian delegates, describing the functions of the system and the benefits it had brought to the country.

According to Ahmed, “the TSA sits in the Central Bank; the Account holder is the Ministry

of Finance, as well as each agency that has a sub account; and the transactions are driven by a platform we call Remita, and remittances are done through Remita to the Central Bank.”

She also encouraged the delegates and their Nigerian counterparts to learn from each other.

The director, TSA at the Office of the Accountant-General, Sylva Okolieaboh, who is one of the key figures as far as Nigeria’s TSA is concerned, noted that no policy of government in Nigeria’s history has been as successful as the TSA in terms of implementation, and that is why Gambia, and very soon, Ethiopia willing be coming to learn from Nigeria’s TSA example.

According to Okolieaboh, “If there is any policy that the government has supported 100%, it is the TSA. It is one reform that every incoming government has always supported.

However, I must say that the success we have recorded so far has been because the President and the Federal Government has supported TSA 100%.”

Discussing on the technological facility used in powering the TSA programme, Okolieaboh lauded SystemSpecs, owners of Remita- the indigenous Fintech solution behind

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TSA for their tremendous infrastructural support towards in helping the process.

According to him, “SystemSpecs has facilitated a whole lot. In fairness to SystemSpecs, when the President gave the order for TSA to commence almost immediately in 2015, it was SystemSpecs that stepped in to make that possible. If they did not provide their platform as at that time, I don’t think it would have been possible” On his part, the Accountant General of Gambia, Momodou Lamin Bah explained why Gambia decided to understudy Nigeria’s TSA example, noting that Nigeria is a ‘big brother’ to Gambia, and that its success with TSA has been a source of reference at the IMF. According to him, “We have reference from the International Monetary Fund, sighting Nigeria’s tremendous success in implementing the treasury single account. I was looking at their (IMF) online PFM course (Public Financial Management), and Nigeria specifically is showcased there for successful implementation of the Treasury Single Account.

So, we didn’t have a second choice… We call Nigeria our big brother. When a small brother wants something, he will ask the big brother”.

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comment Motivating the backbone of the Nigerian Navy comment is free

Send 800word comments to comment@businessday.ng

STRATEGY & POLICY

MA JOHNSON

A

nswering the call to serve is to join the long line of selfless patriots who make up the profession of arms. This profession does not belong solely to Nigeria. It stretches across borders and time to encompass a culture of service, expertise, and, in most cases, patriotism. Today, the country’s young men and women voluntarily take an oath to defend Nigerians and the Constitution of Nigeria with other proud and determined individuals in security agencies who have answered the call to defend their country against all forms of threats.

To this end, I congratulate all warrant officers of the Nigerian Navy (NN) for the 2019 Convention whose theme is “Responsive Warrant Officers’ Leadership and Operational Efficiency in the Nigerian Navy.” Our gathering here today is not about broader matters of strategy and grand strategy. It is about how the Nigerian Navy (NN) can use motivation as a tool to improve the operational effectiveness of its warrant officers in a world that is characterized by the fourth industrial revolution. Our discussion here is going to be about the day-to-day condition of our warrant officers, equipment and ships in order to raise the overall operational

efficiency of the NN. As warrant officers, you have been empowered and trusted to lead the ratings of the NN. As a leader and technical expert in your own right, you enhance organizational effectiveness and directly contribute to mission success. You are the indispensable link between the higher echelon and the lower cadre of the NN, ensuring that each task is fully understood and supervised through to completion. You are responsible and accountable for the development and welfare of your subordinates. You teach, coach, and mentor them. As a steward of the institution, you enforce its standards and you are ambassadors of the NN to the world.

If there is one trait that effective leaders have, it is motivation. Motivation drives you as a leader to achieve beyond your own expectations and everyone else’s. Please, note, that the key word here is “achieve.” So who are warrant officers? Warrant officers are admirals of the lower deck. They are the bridge between the officers and men. They demonstrate competence, confidence, and a tireless sense of duty to their cause, command, and comrades in arms. The warrant officer place the needs and well-being of his team ahead of his own, without sacrificing established standards, discipline, or ethical behavior. A warrant officer serves not only as a leader to his or her men, but a follower to those he or she leads.

And without mincing words, I see all warrant officers and their subordinates as the Backbone of the NN. No warrant officer was born a leader. It is the NN who made all warrant officers leaders. Leadership, according to Gen Norman Schwarzkopf of the US Army, is a combination of strategy and character. But if our warrant officers must be without any, it must

be strategy, not character. When one loses his or character, all is lost. A warrant officer that has lost his or her character is useless to himself or herself and the NN. When warrant officers are effective, they will be rewarded and recognized. Reward system exists in order to motivate all ratings irrespective of rates/ranks and professional skill in order to work towards achieving the NN strategic goals. Reward management should not only be about pay and other ratings’ benefits. It is equally about non-financial rewards such as recognition, training, development and increased job responsibility. A navy that aspires to be operationally efficient must recognize two types of warrant officers’ activity namely performance and behavior. A sustained reward system that addresses compensation, benefits, recognition and appreciation will motivate warrant officers to be operationally effective.

It is the responsibility of the NN to ensure that warrant officers help to maintain a high quality naval force by providing tools to work and ensuring that a healthy and positive environment is created for them. While warrant officers are to teach, mentor, and coach their subordinates in order to enhance operational effectiveness. This is only possible if warrant officers are motivated. They are to encourage their subordinates by contributing to their development, and fostering a continuous learning environment for both professional and personal development. The NN must begin to identify warrant officers who are intrinsically motivated.

If you want the best from warrant officers and other subordinate ratings, the NN needs to continually recognize and give them incentives for performance.

‘

If there is one trait that effective leaders have, it is motivation.

Motivation drives you as a leader to achieve beyond your own expectations and everyone else’s

How do we build a culture of motivating warrant officers? The best way to create a culture of motivation is to start with many motivated warrant officers that the NN can possibly have. For instance, the Law of Magnetism in The 21 Irrefutable Laws of Leadership states that, “who you are is who you attract.” If you want warrant officers who are motivated, the NN must have officers who are motivated. People do what they see. You must be motivated as a leader before expecting your subordinates to be motivated.

The NN looks to the warrant officers as the vanguard of high level operational effectiveness and as the backbone of the organization. Being a warrant officer is not for the fainthearted. It is a daunting responsibility and a way of life that calls for substantial sacrifices and unfailing loyalty. Before I draw the curtain on this lecture, please permit me to draw inspiration from Confucius, a Chinese philosopher, who says that “the will to win, the desire to succeed, the urge to reach your full potential….. these are the keys that will unlock the door to personal excellence.” I wish all our warrant officers fair wind and following seas as the NN makes effort to enhance its operational efficiency.

At the end of the two-day convention, all warrant officers boldly declared that they are “Back and better. Together we take ownership of the NN, together we win!” God bless the NN! God bless Nigeria! Onward together!

• Being excerpt of a paper delivered by MA Johnson at the 2019 Warrant Officers’ Convention of the Nigerian Navy from 9 to 10 May 2019.

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

Business strategy is not about war: It’s about love!

Uyiosa Omoregie

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f all the metaphors used to describe business strategy, ‘war’ is the most pervasive. Business strategy is mostly visualised as war against competitors, ‘battles’ for market share, ‘invasion’ of virgin territories with advertising campaigns etc. Many companies have a sales ‘force’ team and market ‘intelligence’ personnel (spies). One of the most influential books, in business strategy circles, is actually an ancient 5th century Chinese military treatise ‘The Art of War’ by Sun Tzu. Michael Porter at Harvard University 40 years ago launched the modern strategy revolution in business management. In 1979, as an associate professor at Harvard Business School, his landmark article ‘How Competi-

tive Forces Shape Strategy’ was published in the Harvard Business Review. It is hard to overestimate the influence of Porter’s article on the teaching and research of business strategy and its influence on business practice. Porter’s article was about ‘forces’ to be overcome. His article begins with this sentence: “The essence of strategy formulation is coping with competition.” Porter’s article is about five forces governing competition in an industry: 1. Threat of new entrants; 2.

Bargaining power of customers; 3. Threat of substitute products or services; 4. Bargaining power of suppliers; 5. Rivalry among competitors. Porter’s Five Forces Model, let’s call this paradigm the ‘Harvard School of Strategy’. It is interesting to see customers as one of the ‘forces’ to be overcome in this model.

At the Massachusetts Institute of technology (MIT), ArnoldoHax, a professor of management, established a different (and much lesser known) paradigm for business strategy formulation. ArnoldoHax believes that the customer should be at the centre of business strategy, not a competitor or a force to be overcome. This paradigm is called the Delta Model. The Delta Model represents change, it is an innovative approach to business strategy. Developed at MIT, this model is more aligned with the realities of the global market place, today’s networked economy. www.businessday.ng

The Delta Model, according to Hax, was developed to “help managers formulate, articulate and implement more effective ways to achieve superior and sustainable financial performance and long-term profitability, providing a completely different perspective from the conventional strategic approaches used by most managers.”

The Delta Model moves away from the prevailing view of strategy as achieving competitive advantage: rivalry. This excessive focus on competitors leads to a backward view of strategy: focusing on what the competitor has already done. This leads to more imitation than innovation. Instead, the Delta Model looks to the future. ‘Delta’ is from the Greek word meaning transformation and change. The Delta Model focuses on the customer as the centre of business strategy.

According to Hax “this paradigm shift constitutes a big transformation that can produce a constructive, long-term relationship with the customer and culminate in customer bonding, a mutually beneficial engagement based upon unbreakable trust and transparency…the essence of strategy becomes not to achieve sustainable competitive advantage with competitors as the benchmark – but to achieve customer bonding, with the customer as the driving force.”

With customer bonding as the strategic

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aim, the Delta Model offers three distinct options to attract, satisfy and retain the customer: 1. Best product; 2. Total customer solutions; and 3. System lock-in. These three options occupy the three corners of the Delta symbol graphically. The best product option offers product functionality, superior price or brand to differentiate the product and increase attractiveness to the customer.

The total customer solutions option attracts the customer because it offers the customer something beyond the actual product the customer is buying. The ultimate option to aim for in business strategy is systems lock-in. With systems lock-in, the strategy is to achieve complete dominance in the marketplace so that the customer will really have no choice better that your option, locked-in.

The Delta Model’s strategic philosophy is best described in the principles ArnoldoHax labelled ‘Haxioms’ three of which are: 1. The centre of strategy is the customer; 2. You don’t win by beating the competition, you win by achieving customer bonding; 3. Strategy is not war, it is love “caring about the customer with a high sense of integrity is the smartest way of doing business.”

Uyiosa Omoregie is a petroleum economist and management analyst.

He can be contacted at uyiosaomoregie@yahoo.co.uk

@Businessdayng

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In Conversation: Adesola Adeduntan, CEO, First Bank (2) Rafiq Raji

A

desola Adeduntan, CEO of one of sub-Saharan Africa’s oldest and largest private sector banking groups, reviews the dominant trends of the sector in Nigeria and the wider West African region and discusses the relationship between the banking industry and the increasing number of telcos which are providing alternative financial services. Interview by Rafiq Raji.

What is your view on the recent stimulus initiatives by the CBN? I believe that the Central Bank of Nigeria intends to achieve economic growth and development through its recent stimulus initiatives. The Nigerian economy is on the pathway to economic recovery, as such, one of the Central Bank of Nigeria’s main objectives is to sustain the economic growth to a level where the economy is strong enough to compete globally. The Central Bank of Nigeria has been deliberate in ensuring appropriate balance between supporting economic growth and managing inflationary pressure.

The CBN has employed two broad approaches in the way these initiatives are being implemented. The first of the two approaches include de-risking bank lending to the private sector through a wide-range of credit guarantee schemes. The aim of this approach

is to ensure that risk assets are created with the main purpose of boosting economic development. The second approach involves direct intervention initiatives in key high impact sectors including agriculture, MSMEs, manufacturing, power, etc. Both approaches, which effectively reflect public private partnerships in financing economic growth are designed to ensure that there is constant flow of credit to vital sectors of the Nigerian economy.

What do you think about the recent bank failures in Ghana?

Bank failures have occurred in different continents and environments, and the causes are typically systemic weaknesses and/or macro issues ranging from adverse macroeconomic factors, poor regulatory supervisory oversight, weak risk management practices, poor corporate governance, to non-compliance. As with most countries, the Bank of Ghana (the Ghanaian banking regulator) is responsible for ensuring adequate confidence, credibility and integrity of the Ghanaian banking sector. As such, the withdrawal of the banking licenses of some banks who contravened regulatory requirement is a step in the right direction as well as equitable. It is also worthy of note that the approach that the Bank of Ghana has adopted in managing and resolving the failed bank issues is commendable. The set-up and migration of the failed banks assets and liabilities into the Consolidated Bank of Ghana has helped to maintain the integrity and credibility of the Ghanaian banking system. Also the current banking industry recapitalization initiative of Bank of Ghana is geared towards strengthening the capital base of Ghanaian banks.

Is there any reason why First Bank is not in Ivory Coast? What do you think about that country’s banking industry?

FirstBank aspires to become the dominant banking services group across Sub-Saharan Africa (SSA), leveraging its rich heritage and strength, and having established itself over a 124-year history as the largest bank in Nigeria and already as one of the largest private sector banking group in SSA. We adopted a structured regional expansion strategy with the main objective of effectively maximizing shareholder value while harnessing the benefits of diversification.

Some of the considerations guiding our expansion are: market growth potential (large addressable market) and reduced earnings volatility; enhanced attractiveness to partners and investors; improved value proposition to customers (e.g., traders and importers); cross-border synergies and country risk hedging (diversified investment across countries; reduced country-specific risk).

Given that Ivory Coast is part of the West African Economic and Monetary Union (WAEMU) where, with a single banking license in one country, a bank is allowed to open branches and operate in other member countries; and FirstBank already has a presence in Senegal (another member of WAEMU), we intend to explore strategic expansion into Ivory Coast in the medium to long term. However, our immediate focus is to reposition and grow our Senegalese subsidiary business which we acquired in 2014.

On my view about the banking industry in Ivory Coast, I would start by noting that Ivory Coast is the world’s top cocoa producer and francophone Africa’s largest economy. The economy recorded 7.6 percent GDP growth in 2017 supported by the stability in the commodity market.

This macro-economic trend supported the healthy banking growth recorded in 2017.

‘

The Ivorian banking system is one of the most profitable in the West African Economic Monetary Union, and the banking industry continues to grow

The Ivorian banking system is one of the most profitable in the West African Economic Monetary Union, and the banking industry continues to grow Ivory Coast’s banking assets reached 9.51 trillion CFA francs ($17 billion) in 2017, up approximately 11 percent over the same period in 2016 driven by the strong economic growth.

In my view, there is still significant opportunity for growth in the Ivorian banking industry given that only 16% of its adult population has access to banking services. This low banking penetration and inadequate credit information has skewed the focus of the incumbent banks on high quality borrowers which are often large private conglomerates or entities in which the state holds a significant share. To convert the potential growth opportunities in the industry, there is need for the apex body to strengthen the financial system.

For players in the industry, there is need to leverage technology to innovate and meet the customers’ needs, and also to build partnerships with the mobile operators who have registered more accounts in its first five years of operation in the country. Interestingly, the percentage of adults with a mobile money account in Ivory Coast is the fifth highest in the world, after Kenya: 58%, Somalia: 37%, Uganda:35%, and Tanzania: 32%. This holds strong digital financial services (DFS) opportunity for the banking industry in Ivory Coast.

• Interview was first published in the first quarter 2019 issue of African Banker magazine “Dr Raji is chief economist at Macroafricaintel.

He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Dear CEO, please lead!

Jude Adigwe

I

will start with a few quotes. John F. Kennedy said: “Leadership and learning are indispensable to each other.” Also, Sheryl Sandberg said: “Leadership is about making others better as a result of your presence and making sure that impact lasts in your absence.”

Furthermore, John C. Maxwell said: “A leader is one who knows the way, goes the way and shows the way.” I began with these quotes because I have come to the realization that there is a difference between being a leader and merely occupying a leadership position -- many think bearing leadership titles, occupying big exquisite offices and giving directives is leadership. Though this is a widely held view, it is important to state that is a flawed view.

I consider myself qualified to couch my thoughts as an open letter (rather than do what a million others will do, talk in hush tones behind closed doors): first, I have been privileged to work in four firms that cut across four industries and I have had the opportunity of working closely with those at the management board. Succinctly, I have sat on two management boards.

Second, leadership falls within the scope of my

area of specialization, Industrial-Organizational Psychology. In addition to these, I have a sense of duty to offer my contribution towards the strengthening of organizations in Nigeria. It is my considered opinion that the right audience for this piece are those responsible for making final and highly influential decisions in organizations.

In my private conversations on organizational leadership, I always say this:‘the quality of leadership of an organization determines the direction the organization is headed and how far it will make it as an entity.’ In my observations of some organizations, I have come to the realization that some company leaders confuse technical skills with leadership skills hence they rely heavily on the former while merely occupying their leadership positions (i.e. they rarely lead). The CEOs of two organizations (I sat on the boards) had the technical skills but lacked leadership skills. Technical skills does not compensate for leadership skills. At CEO level, it becomes less of technical skills and more of strategic leadership, emotional intelligence, accountability etc. You come to the table, every time, with a healthy dose of these attributes and more. Like I mentioned in one of my opinion editorials in BusinessDay titled Executive Leadership: Beyond lengthy experience and executive presence: “competence on a job or different jobs does not necessarily imply leadership skills. Also radiating an aura of gravitas does not mean capacity for effective leadership.

It is significant to stress that leadership qualities need to be acquired – this requires some level of training, mentoring and coaching. You prepare before ascending leadership positions and you continue honing your skills when you take the helm.” At this point, I will share a few experiences.

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I recall vividly how the head of a management board told me that there was no need for policies and procedures in the company. All attempts to convince this MD/CEO fell flat because the primary concern was about making profit but this MD/CEO failed to understand that to achieve that there was need for expansion of business operations and to guarantee sustainability there was need to give structure to the business. In the course of trying to approve policies, meetings were rescheduled no less than four (4) times within a quarter owing to other members of the board not doing their bit in reviewing those policies as advised and there were no sanctions rather their conducts were excused. The CEO failed to understand that promoting a culture of excellence and responsibility was a leadership duty and this entailed among other things disapproving of actions that were not professional.

This experience was somewhat similar to the experience I had in another organization that I was part of the management board.

During my first management meeting with the other board, I presented findings from the research I conducted to gauge employees’ expectations of the organization. It was dismissed with a wave of the hand by the MD/CEO while insisting that the employees had no reason to express expectations as revealed by the survey because they were content. I found this quite worrisome for two reasons: First, the position of the MD/ CEO in a typical organizational structure, most times, makes it difficult to truly feel the pulses of employees. Second, you do not dismiss data with sentiments rather you use superior data and superior data in this circumstance was lacking.

In the aforementioned opinion editorial, I stated

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succinctly that “a listening ear and an open mind are indispensable to effective leadership.” I have heard that with some CEOs multiple perspectives from others are not tolerated -- I think that is fine insofar as the CEO is infallible and omniscient.

Seasoned CEOs understand that they can learn from everyone in their companies (even janitors and chauffeurs) hence the reason they invest heavily in talents and development of those talents. They understand the need to foster a sense of purpose and belonging in their organizations by harmonizing the views of multiple stakeholders. They never dismiss counsel rather they cherish it because they are always mindful of their human limitations.

Never forget that a true and strong organization entails deep and meaningful engagements across board that are aimed at achieving set objectives. I know you are savvy in setting and insisting on achievement of objectives but never fail to ensure that employees are also meaningfully engaged and derive satisfaction while working to achieve those set objectives. See beyond the numbers…remember that behind those financial figures are humans. It is incumbent on you to show leadership in promoting engagement across board. There is more to say but I have said a lot and run out of writing space. Remember that leading a company is a sacred trust – the fate of your company, to a large extent, lies with you.

Lead always. Always lead.

Adigwe is a certified Human Resource Management (HRM) professional and an Industrial-Organizational Psychologist. He offers consultancy services on OB and HRM issues. More details can be found on his website: www.adigwejude.com

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Tuesday 14 May 2019

BUSINESS DAY

EDITORIAL Publisher/CEO

Growing the mortgage system through sustainable models

editor Patrick Atuanya

lobally, especially in advanced economies, mortgage and homeownership have chicken and egg relationship with mortgage being the surest and most convenient route to homeownership. But mortgage has not been a success story in Nigeria despite the country’s huge population which should have been a growth catalyst.

Consistent with its mandate to increase liquidity in the mortgage system and lower interest rate, the Nigerian Mortgage Refinance Company (NMRC), which is government’s latest effort at growing the mortgage system, has visited the capital market twice to raise funds. As at December 2018, it has raised N18 billion with which it refinanced loans of some primary mortgage banks (PMBs).

Expectation was that the refinancing of an estimated 1,045 loans presented by about 12 benefiting PMBs would create significant impact on both the

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

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mortgage and housing sectors in terms of increased loan disbursement to home seekers and a rise in homeownership level.

But that has not happened and is not happening, meaning that there is something fundamentally wrong with the mortgage system. While operators complain of difficult business environment and macroeconomic issues, citing high interest rate and unaffordable property prices, it is not hard to see the downsides of the entire mortgage system.

Besides the opaqueness or lack of clarity, growth in the mortgage system in Nigeria is also clogged by lack of accessibility and affordability. In terms of clarity, there is no unified system. There is no known government-backed mortgage rate which the mortgage banks have to buy into or a mortgage standard or process which the banks have to fit into.

The basic principles of mortgage is that a loan seeker must have steady income and in gainful employment. He must be able to provide income in multiples

for the property that he seeks to buy. But the challenge of job insecurity and low income level remain such that mortgage lenders are hesitant in advancing loans to workers especially the low income earners who need the loans most.

Sustainable mortgage models are, therefore, needed not only to jumpstart growth in the fledgling system, but also to bridge the country’s deepening housing gap. The Singaporean model which involves creating a pool of funds into which everybody contributes monthly and from which everybody borrows to buy a flat or house is a good way to go.

This model succeeded not by magic but because the government, under Lee Kuan Yew, the country’s first Prime Minister, was determined, through a deliberate policy, to make that model work.

The model, apart from creating jobs and transforming huge swathes of urban sprawls and slums into well-planned cities as it did in Singapore, it also has the potential to grow the economy.

Singapore was a poor island in

Southeast Asia, but evolved from a third to first world economy between 1965 and 2000 just because of this and similar policies.

Implementing this model in Nigeria would simply require remodeling or re-engineering the already existing but largely flawed National Housing Fund (NHF) which gives, where it works, single digit interest rate and longer repayment period of between 20 and 30 years, depending on the age of the subscriber.

Setting up a body that subsidises mortgage like the building society in England is another good approach to mortgage growth in Nigeria. This delivers mortgage either through banks or by itself.

It is possible to start changing the narrative in the Nigerian mortgage system by adopting models that work in other economies but this would require strong institutions and determination. This means that legislations around mortgage has to be fine-tuned, implemented and advertised so that people can access it.

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Tuesday 14 May 2019

BUSINESS DAY

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Getting the basics of public service reform right

Tunji Olaopa

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hat does it take for the Nigerian public service to become a world class public institution with the capacity to take on the task of democratic service delivery that will empower Nigerians? There are so many answers to this question. This is simply saying that it will not do to simply say the public service must be reformed. We need the specifics of institutional reform to be able to know how far to take the systemic reset needed for the urgent structural transformation of the public service. I intend to supply one dimension of these answers in this article. This is very significant within the context of government’s institutional reform intention signaled either by the National Strategy for Public Service Reform (NSPSR) or any other. Indeed, Nigeria does not need to go through the route of developing a new national strategy for reforming the public service again. The country has strategies too many. What we need is a change management programme that expertly harnesses the legion of strategies, implementation plans, study reports, white papers, policy briefs, etc. generated since 1999 to implement changes, redesign, restructuring, reengineering, impact assessment of on-going reforms in a continuous learning and incremental improvement spiced

with action research, technical supports, performance incentive funds, in sustained experimentation, trial and error, etc.

So, what are some base fundamentals that must be sorted to get the basics right?

I shall only be able to touch on a very few for the purpose of this specific contribution. The first change plank has to do with wrestling with the Weberian model of the bureaucracy in a way that will enable us fashion for ourselves as Nigerians a new public service that is capacity ready to do what we want it to do in terms of efficient service delivery. What is the crucial challenge we face? The challenge is that the Nigerian public service system is locked in the grip of an administrative business model that has failed consistently to make the ministries, departments and agencies (MDAs) deliver on their remits as the engine rooms of public service efficiency in Nigeria. And the source of this challenge is historical and colonial.

The Nigerian public service came into existence in 1954 through a constitutional change. This was through the Gorsuch Commission’s reform of 1954 which recommended the creation of a cadre division of civil service personnel corresponding to general education standard of the period.

The four divisions were: sub-clerical and sub-technical; clerical and technical; executive and higher technical; and administrative and professional. Each of these divisions was further divided into cadres, i.e. the professional and the administrative classes. The Gorsuch Commission report had been preceded in 1946 by the Harragin reform which established the two-service structure: “senior service” and “junior service”. It was this administrative cadre that was to become the core of the public service system in the newly independent Nigeria in 1960. This cadre system still determines the personnel and human resource dynamics of the public service

till date. This personnel framework has two features. The first is seniority on the job drawn on the basis of social pedigree and education, and the second is a generalist orientation which ensures that the administrative cadre knows little or nothing about operational, tactical and strategic basis of policy intelligence and public sector management.

Apart from the distinct weakness of this structure of service arising from its hierarchical and formalized line of authority and chains of command, and the fact that the administrative cadre is usually clueless about the technical dimensions of operations, there is also no incentive for staff officers to become too proficient in a given area of specialization. It is therefore a point of applause that subsequent reforms of the public service system in Nigeria, since independence, has been concerned with rethinking the performance quotient of this generalist-professional distinction underlying the cadre system. Yet, even reform must be aligned to the existing reality to be effective. Now, this is where the criticism against the public service system in Nigeria becomes interesting.

The baseline of this criticism is that the public service in Nigeria has become fundamentally bureaucratic in the sense that its basic operations have now become a serious hindrance to getting government business done efficiently. I have also majorly championed this criticism. I have argued that the Weberian model has aided a paradigm of corruption that allows the political leadership to use the bureaucracy not as a machinery of governance but as a centralized instrument for intervening in the economy and the society. The implication of this is that some of the bureaucrat’s defining features that ensure performance—neutrality, impartiality and anonymity—are compromised. The bureaucracy itself loses accountability and

‘

One of the fundamental planks of my reform model for transforming the public service in Nigeria is to put in place the process for recruiting a new breed of managers

efficiency in the process.

But this is not all we can say about the bureaucratic model. There is a critique of the generalist-professional distinction that will enable us to take the performance of the public service system forward beyond what it is now. And this is that the idea of reforming the public service in Nigeria is not settled by dispensing with its bureaucratic model of doing government business. On the contrary, all that is required is for that model to be reformed in ways that enables meritocracy in recruitment and professionalism in operations. One of the fundamental planks of my reform model for transforming the public service in Nigeria is to put in place the process for recruiting a new breed of managers who will be able to manage the new dynamics required by the new public service that has the capacity to steer the public service through its many challenges of democratic governance. I have outlined what I called the optimal system model that will assist in the re-professionalization of the service. Significant elements of this optimal model include: (a) change of existing cadres into functional fields of specialization; (b) installation and activation of the full scope and capacity of an Integrated Public Human Resource/Payroll Information System; (c) professionalization of personnel administration functions at centre and line ministries levels; (d) new training policy and leadership development scheme; (e) institution of a new performance management or performance appraisal and promotion systems; (f) anew pay, compensations and incentive system; etc.

Note: the rest of this article continues in the online edition of Business Day @https://businessday.ng Prof. Tunji Olaopa, retired Federal Permanent Secretary & Professor of Public Administration. tolaopa2003@gmail.com, tolaopa@isgpp.com. ng

Revisiting the idea of a coordinating minister for the economy

UCHE UWALEKE

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nlike the situation in 2015 when he was in no hurry to assemble his team many months after being sworn in, President Buhari is expected to constitute a new cabinet sooner than later. His second term in office provides an opportunity to revisit the jettisoned idea of appointing a coordinating Minister for the economy. It will be recalled that the practice of having a coordinating Minister was introduced by former President Goodluck Jonathan when he made Dr. Ngozi Okonjo Iweala the Minister of Finance with an additional responsibility of coordinating economic activities of other Ministries. Her appointment, it seemed then, pointed to the need to address the negative spillovers from inadequate synergy among Ministries, Departments and Agencies of government to the extent that in many instances ‘’the right hand did not know what the left hand was doing”.

This unique coordination role for Ngozi Iweala was criticized at the time not least because it had no constitutional basis. Being the first of its kind in Nigeria’s history, her elevated office was seen as equivalent to that of a Prime Minister, which placed her in a position to superintend over every other ministry, department and agency of government. She was, arguably, the next most powerful cabinet member in that administration after President Jonathan and Vice President Namadi Sambo. Against this backdrop, it was not difficult to understand why the Buhari administration chose not to continue with the practice. The Vice President, Yemi Osinbajo,

made it clear from the onset that there would be no such designation as “coordinating minister for the economy” in President Mohammadu Buhari’s administration.

Nonetheless, there is an economic sense in having some sort of framework for policy coordination. Since the fortunes of key Ministries such as Petroleum, Power, Transport, and Agriculture are heavily interwoven, it would be difficult to have a clear roadmap, with respect to any one of them, until some level of integration in economic policy is achieved. Citing an example with the power sector, Muhammadu Sanusi II, the Emir of Kano, was reported to have said during a stakeholders’ workshop on Road Transport Management and Mass Transit Operations in Nigeria, organized by the Federal Ministry of Transportation in Abuja in July 2016, that ‘’one of the reasons why we have not made much improvement on power is due to a lack of coordinating mechanisms.” According to him: “very often in this country, we do not give as much focus as we should to the organic link between the objectives, our strategies, processes, procedures and our results. The Minister of power cannot boast that he will deliver 1,000 megawatts because he can actually build a gas powered turbine and not have the gas. This is because the gas is under the control of a different ministry’’. The Emir also mentioned the case of hydro power where the dams belong to the Federal Ministry of Water Resources while the sites around the dams belong to the state governments.

His conclusion: ‘’we need to have some framework for coordination and harmonization for a clear division of roles and responsibilities and also for ensuring that everything is mainstreamed into one strategic objective” What could be more spot-on?

Indeed, the importance of a coordinating Ministry for the Economy has since been recognized in many developed and emerging economies. In Turkey for instance, an Economic Coordination Board was established in 2009 to strengthen coordination among ministries. The Board comprises the Deputy Prime Minister for Economic Affairs as

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Chairman, together with the Ministers responsible for Finance, Development, Customs and Trade, Science, Industry and Technology, Labour and Social Security while the Treasury acts as the secretariat of the Board. In South Korea, the coordination role is vested in the Minister of Economy and Finance. In 1994, the Economic Planning Board and the Ministry of Finance were merged into the Ministry of Finance and Economy (MOFE) when the government recognized the need for an integrated approach to implementing the government’s functions on economic affairs in an efficient and coherent manner.

Similarly, Italy has a Ministry of Economy and Finance which in addition to ‘conducting the tasks and responsibilities of the State in the fields of economic policy, financial policy, budgeting, and tax policies also carries out all activities related to the coordination of public spending and its oversight’.

Indonesia’s Coordinating Ministry for Economic Affairs has responsibility to ‘co-ordinate, synchronize and control ministries’ responsibilities in economic affairs’. The ministry is led by a Coordinating Minister for Economic Affairs, who is the Deputy Prime Minister for Economics, Finance and Development.

Ditto for Singapore where the Deputy Prime Minister is designated the Coordinating Minister for Economic and Social Policies.

While it is true that the practice of having a coordinating Minister is popular in countries running parliamentary system of government, there is evidence to suggest that it has also been embraced by countries under the Presidential system. As observed by Richard Allen et al in an IMF working paper titled ‘The Evolving Functions and Organization of Finance Ministries’, ‘most advanced countries have developed mechanisms for coordinating policy decisions between the finance ministry and these other ministries and ensuring that the financial costs and benefits of such policies are fully appraised and approved by the finance ministry’’. He argues that ‘finance ministers have to take responsibility for, or at least a strong interest in, activities of the state across the board, since all such activi-

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ties have fiscal implications of one sort or another which the finance ministry cannot afford to ignore’.

What is clear from the experience of many countries is that the position of a coordinating minister is always created to address a complex policymaking environment and the need to coordinate responses to challenges involving multiple ministries- which is why the position is, in most cases, occupied by a powerful minister with the clout and experience to provide the needed push for coordinated action across government ministries, departments and agencies. A coordinating minister for the economy is also expected to have a thorough understanding of both monetary and fiscal policies and be in continuous consultations with ministers and the Governor of the central bank (without prejudice to the latter’s autonomy) on issues bordering on the economy. Former President Jonathan found these qualities in Okonjo-Iweala, who was on top of her career at the World Bank, and had no qualms appointing her the Minister of Finance and coordinating Minister for the economy. While the impact of her double portfolio may have been subdued by the sudden fall in international crude oil price sometime in 2014 which paved the way for the economic recession that followed, many believe that the economy under her grips faired relatively well especially against the backdrop of attaining the status of the biggest economy in Africa.

Therefore, contrary to the apprehension in some quarters that a coordinating minister will add another layer of bureaucracy, the role actually puts in place a problem-solving mechanism that leaves in its wake well-grounded economic policies. It also makes easier the task of supervising the economy by the Vice President who is the Chairman of the Economic team. In view of the many benefits associated with the portfolio, the President is well-advised to name a Coordinating Minister for the Economy this time around.

Uche Uwaleke of Nasarawa State University Keffi is Nigeria’s first Professor of Capital Market and the President of the Association of Capital Market Academics of Nigeria

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Tuesday 14 May 2019

BUSINESS DAY

Media business

The key to retention is a positive customer experience

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ustomers expect quite a lot these days, and that’s because it is being offered to them by other businesses. They are well-connected and they know what’s out there. If you’re not one of those businesses going the extra mile for your customers, you will probably find that they’re not spending their money with you.

The key to retention is a positive customer experience Customers want to be romanced and blown away. They want to experience the memorable and the divine. They want to know that you’re in their corner, and that you’ll stay there with them to support their needs, no matter what it takes.

The fact that customers want options opens up so many opportunities for any kind of business. If you’re selling clothing online, having one view of each garment is not going to cut the mustard. Customers want to inspect their future purchase from every angle and even zoom in as far as the stitching to see if it’s precise.

They want detail and descriptions. They want to know what they’re getting into. This could be a metaphor for each and every

business... how can you go above and beyond to ensure that your customer gets this kind of experience related to your products or services?

Negative feedback about your business can often be the opportunity you’re waiting for to show that you really do value each and every customer as an individual.

Perhaps that customer who zoomed in on that garment actually found a flaw in the stitching after receiving the product. Instead of taking drastic measures

such as discontinuing the line, deleting the customer comment, or worse... ignoring them; you could send them a freebie or a gift card to apologise.

The tricky part comes into play when you try and balance the growth of revenue and the satisfaction of your customer. You don’t want to be spending all your profits on ensuring you are offering the customer experience of dreams. It all comes down to effective strategy.

Designing the customer expe-

rience of dreams Precision and planning are paramount in the designing of the ultimate customer experience, and it all begins with data. Extracting, analysing and learning from your customer data is a smart approach to customer experience as it’s based on actual evidence.

Maintaining a bank of data that is properly managed and in compliance with privacy laws, is the key to personalising your experiences for your customers.

Using this data, teams can rally together to decide what is going to be the best approach for your customer experience strategy, based on insight and ideas from all stakeholders. Having total team buy-in is an integral aspect that contributes to success. Team buy-in enables the CX process to become a part of your business, eventually becoming how you do business: customer-centrically.

Ensuring that customers are being engaged through all stages of the sales funnel is made easier with the use of this data. It can be used to determine when to reach out, when to send an email update, if the use of promotional content is worthwhile etc. It’s all a process of

Editors ask relevant authorities BD Brand Talk to partner journalists on The everest before digital advertising national development

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he Nigerian Guild of Editors (NGE) has called for relevant authorities in Nigeria to begin to see journalists as partners in development and voice of the voiceless rather than treat them as meddlesome interlopers and enemies of the people.

The Guild said this at year’s World Press Freedom Day with the theme: ‘Role of Media in Elections and Democracy’ provides an opportunity for stakeholders in the global democracy enterprise to re-examine the contributions of journalists to the propagation and sustenance of democracy.

Citing growing mortality among journalists including denial of their fundamental right to life in the course of discharging their duties,

Mike Umogun

the Guild appealed to Nigerian security agencies to ensure the safety of all journalists especially during elections. The Guild said the media has the capacity to support peace and reconciliation processes among political actors hence should be allowed to play its constitutional role.

As is the tradition, this year’s World Press Freedom Day also examines the safety of journalists. According to the Guild, ensuring the safety of journalists is the primary way by which societies can foster the independence and freedom of the press, as crucial for democracy.

This, the Guild said, will also ensure public access to information.

The International Federation of Journalists noted that in 2018 alone, at least 94 journalists were killed across the world. The 2018 figure indicates an increase from the previous year which recorded 82 fatalities.

The Guild echoed the concern of the United Nations which had earlier noted that journalists were undergoing too much stress which is ultimately undermining their ability to report accurately without fear of attack. www.businessday.ng

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acebook, Google and probably Amazon store, everything you do in the digital domain. But any marketer who believes that true ad relevance is ever achievable should take a hard look at how the sites and apps they use classify them as individuals.

Here is what a report from the Pew Research Center has to say about the process by which companies figure out what site users might be interested: “It is clear the process of algorithmically assessing users and their interests involves a lot of informed guesswork about the meaning of a user’s activities and how those activities add up to elements of a user’s identity.”

The report details the results of a survey focused on Facebook’s categorization of individual’s interests as represented by their “Your Ad Preferences” page. Not surprisingly, 74 percent of Facebook users did not even know the page existed but when directed to it 51 percent stated they were not comfortable with how the site categorises them,

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and 27 percent thought the categorization inaccurate.

For instance, the fact that I clicked on the advert or message by a University online does not mean that I am automatically a good target for MBA programme organized by the institution. Kantar studies show total consideration should be given to the clickers total personal information which can be sourced before targeting the prospect. Therefore, it would be more meaningful to know the target before shooting the marketing communication darts.

Most of the categories are less than ‘informed guesswork’ and mere literal interpretation. This problem of incorrect inference applies to all the data collected, including the behavioural data gathered from your mobile telephone and other sources.

Most of the categories are less than ‘informed guesswork’ and are mere literal interpretation.

Take for example, the fact that I liked a page about Manchester United (my son’s club) do not make me a Man United fan. What the system may not know is that I visited the website to harvest a few talking points to ensure a I have a meaningful discussion with my son who is a

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trial and error too, because everything is monitored and sometimes the results won’t be what you anticipated. But that’s okay. You simply readjust and try again.

Showing return on investment Return on investment might not come in the form of currency, but could rear its head in other ways. Some of the metrics that businesses can look at in order to validate the success of customer experience are as follows: Customer satisfaction scores Positive customer feedback, Repeat visits, Social sentiment, Net promoter score, Referrals, Customer loyalty, Brand engagement frequency But then there are also the more tangible value-add metrics such as: Campaign ROI, Referrals, Repeat visits,Average revenue per visit Even if you’re only getting a few of those down, you’re on the right track. Your focus is shifting, and your thinking is aligning with the customer and how you can help and serve them. After all, that’s all they want from you!

Culled from Bizcommunity

dedicated follower of the Manchester Club. This problem of incorrect inference applies to all the data collected, including the behavioural data gathered from ones mobile. If we do not know the potential client well how do we serve him better?

Recently a colleague gave this hypothetical example of how geolocation can go astray, “According to my mobile’s location data I am a regular at the gym. I spend half an hour there twice a week, and therefore see many, many ads for protein powder targeted at gym regulars. But my gym could be right next door to a donut shop, and I could in fact be stuffing my face with donuts twice a week.”

I have no doubt that behind the scenes Facebook, Google, Amazon and other stakeholders can create a far more detailed and accurate profile of my behaviour and interests.

The data is all there to be used. If an advertiser really wants to serve me relevant ads they should be taking all this information into account. But how many really do? From what I see, most simply take the basic classification and run with it. But what do you think? Is true ad relevance ever achievable?

Tuesday 14 May 2019

BUSINESS DAY

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ADVERTISING

Marketing Nigeria’s non-oil sector and bickering over DMO’s RAP Marketing managers gathered in Port Harcourt last week to discuss promotion of non-oil sector in event of global shift from oil. This report examines the trend amidst the recent introduction of Reverse Auction Process by government.

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very Nigerian who is interested in Nigeria’s economy diversification and growth should be concerned about the recent publications over the impasse on the Export Expansion Grant, EEG. The Federal Government through its agent, Debt Management Office, DMO was said to have introduced Reverse Auction Process for the issuance of Promissory Notes to non-oil exporters under the Export Expansion Grant, EEG. The Reverse Auction Process is a proposal

by DMO to Nigerian non-oil exporters to accept discount on payment of their incurred debt under EEG in the export business.

Though, DMO is yet to give further details on the Reverse Auction Process, but non-oil exporters are strongly holding to a position that if this proposal is carried out, it will put the exporters in terrible jeopardy as the Promissory Notes are meant to settle debts which are due for payment for export transactions done in the last 9 years during the 2007-2016 period.

It is not news that Nigeria has always been heavily dependent on oil as the main stay of its economy. The negative impact of this endless dependency underlines the need for the country to diversify her economy and develop a robust non-oil export base.

That has been the song of virtually all successive governments in Nigeria. This time, the government of President Buhari seems determined to do something decisive.

The government has realized that it will be very hard for the Nigerian economy to develop without doing something dramatic about growing non-oil exports.

The government dusted some neglected export promotion policies. Obviously, this action is in line with the renewed vigour to grow exports. The government is now getting serious with one key “tool” in that packageThe Export Expansion Grant (EEG). Every stakeholder agrees that its effective implementation will remarkably boost non-oil exports and Nigeria’s economy in general.

The Export Expansion Grant was created specifically to help cushion those disadvantages experienced by Nigeria exporters from a cost perspective due to anomalies in the areas of infrastructure, Power, monetary/ fiscal distortions and many others Shockingly the implementation of policies on this grant by various government agencies has left most exporters extremely astonished, according to recent reports.

Steps to access the grant are not only slow; policies around it are hazy and nebulous. All stakeholders agree that the Nigerian presidency must intervene to set things right. The DMO that operates directly with the exporters in this matter has said that it will make disbursement on the principle of what is designated as Reverse Auction Process (RAP), which implies that only exporters who will accept discounted rates will become beneficiaries. Stakeholders in the sector see this as extremely controversial.

Ironically, a policy that was approved by

Nigeria’s Federal Executive Council with the overwhelming endorsement of the National Assembly is now seen as endangering the country’s capacity to fuel exports, even in modest terms.

Stakeholders even point out that the controversial RAP policy does not take cognizance of the accumulation of debts the exporters have fallen under between 2007 and 2016, and the interests that have piled up.

This is obviously not acceptable to exporters and they are not lying low. Virtually all key local business bodies are also lining up behind them. Under a banner called Organized Private Sector Exporters Association (OPSEA) they have sent a strong Save-Our-Souls letter to President Buhari that exporters are becoming very unsettled in their businesses more than ever and unable to carry out their vital roles.

They are lamenting that the accumulated EEG not paid over the years is biting hard on the export activities of its members. The development, has led to the accumulation of billions of Naira owed exporters between 2007 and 2016.

Consequently, the association is making a three point request on the issue, which are as follows: The Reverse Auction Process (RAP) for issuance of Promissory Notes (PNs) should be reconsidered by the government; the second is that the government (including the Debt Management Office, DMO) should restrict itself to issuing the PNs as the shortest term feasible for payment, while equal treatment should be meted to all beneficiaries of all categories of PN. Thirdly, the exporters should be issued PNs with shortest tenure (spread evenly over a maximum period of three years) bearing in mind that payment has been delayed for a period of three to 12 years for member’s claims.

The DMO, the exporters said has not been forthcoming with any further details www.businessday.ng

about the mechanism of the RAP but they said that essentially it involves the beneficiaries of PN program to offer/accept discounts to their claims before they can be disbursed,” the association stressed in a letter.

However, PNs are intended to settle debts which are due for payment for exports done during the 2007 to 2016 period, and the association is weary that federal government has made no mention of the RAP for issuance of PN in any of its announcements or in its numerous interactions with the exporters in the two to three years of the issuance of RAP. Lamenting about the current state, the association said, “Some beneficiaries of the program have been issued their PIN without subjecting them to any further verification after the NASS approval and without any deduction/reduction being made by the Debt Management Office (DMO) on the PIN approved for them by the federal government and the national assembly.

“Therefore, imposing further reduction in the value of PIN receivable by them is not only unfair and unjust, but this kind of discrimination approach is clearly contrary to the generally accepted standards of proper due process.”

The exporters questioned the alleged further imposition of costs/deductions through the RAP before issuing PIN at this stage, quarrelling that such action raises a question mark on the intent and sincerity of government towards meeting its obligations to the exporters. Continuing with this, OPSEA stated, would seriously erode investor confidence in the Nigerian market.

OPSEA, continuing in its presentation, recounted that before now, previous administrations had commenced the issuance of EEG to genuine exporters but the grant was later suspended in 2007 due to duplicitous claims and counter-claims by stakeholders over who and who should indeed benefit from the package.

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The exporters say government’s inaction is causing mounting challenges to their members. One of such major challenges is the accumulating interests on loans. “We have taken up debts to service the receivables and these debts are incurring further interests with the continuing delay in the payment of EEG claims’, they explained.

OPSEA members play vital role in economic diversification through their contribution in generating the much needed foreign exchange earnings through export and creating numerous job opportunities via their operations throughout the country.

The body lucidly explains its pains and patience to the President: “Your Excellency sir, we are being constrained to draw your attention to the continued hardship and illtreatment being inflicted upon the businesses and investors in strategically important non-oil export sector, especially as it relates to the Promissory Notes (PN) program of the Federal Government of Nigeria “We, the exporters have been waiting anxiously since the approval from the National Assembly (NASS) for the PN to be issued,” the letter read, They also explain that initially, pressure was mounted on the National Assembly to do its work and give its legislative nod for the issuance of the federal government’s N350billion Promissory Notes to exporters in continuation of the Export Expansion Grant (EEG). This was after the executive arm seems to have done its bit. But now, they stressed, the pressure is now back on the executive to complete what it started by ensuring that the PNs are settled without further delays.

For those who could recall, the presidency has shown remarkable urgency on this project with the Federal Executive Council (FEC) sending three issues for the formal approval of the National Assembly earlier in the year. The three executive resolutions bother on EEG claims, payment of construction contractors and pensions.

It could be equally recalled that diversification of the economy is one of the main policy initiatives of the Buhari administration that is aimed at shifting the nation’s economy from oil-based to non-oil sectors.

Stakeholders strongly advice that the federal government should carry private sector players along if they want to realize their economic diversification agenda.

They believe that faithful implementation of the EEG policy is the needed elixir to help track performance in the non-oil sector and accelerate the rate of industrial growth in the country.

The non-oil sector is seen to have great potentials, including the capacity to sustain the economy and ensuring inclusive growth, as in the case of agriculture.

According to the OPSEA, the inability of government to meet up with the promissory notes for non-oil exporters for dues owed them for over nine years may so well undermine the successes recorded so far by the policy.

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16

Tuesday 14 May 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

Banks’ asset efficiency sees no big change in Q1’19 …GTB, Stanbic, Zenith retain top spot ISRAEL ODUBOLA & SEGUN ADAMS

The capacity at which Nigerian lenders utilized assets to generate earnings remain almost unchanged in the first quarter of 2019 given that banking industry’s return on asset (ROA) dipped marginally by 1 percent.

Thirteen lenders on the average realized 54 kobo from every naira investments in assets in the first three months of 2019 compared with 55 kobo earned a year earlier, with Nigeria’s biggest lender by market value, Guaranty Trust Bank (GTB), leading the pack with 1.36 percent.

ROA is an efficiency metric that shows the percentage of profit a firm earns relative to its total assets.

Investors use this yardstick to appraise management efficiency of banks as higher ROA figure connotes better efficiency.

Banks have smaller ROA compared to other industries because they are highly leveraged. According to analysts, ROA figure between 0.70 percent and 1 percent indicates good efficiency for banks.

Behind GTB comes, Stanbic IBTC who earned N1.39 from each naira invested in assets followed by Zenith Bank with 85 kobo.

These three banks maintained their dominance as the most efficient lenders in the industry.

While Zenith Bank and GTB up efficiency by 2 percent points and 12 percent points respectively to 0.85 percent and 1.39 percent, ROA figure of Stanbic IBTC slumped 43 percent points to 1.21 percent in the first quarter of 2019.

Nigeria’s biggest lender by asset, Access Bank trailed with ROA figure of 0.64%, followed by UBA (0.56%), Eco Bank (0.39%), Union Bank (0.35%) and First Bank

(0.35%).

U n i t y B a n k , h av i n g earned 17 kobo per naira invested in assets led laggards in the quarter review, followed by Wema Bank (0.20%), FCMB (0.25%), Sterling (0.29%) and Fidelity (0.32%).

Analysis in terms of capital base revealed that tier-1 banks were more efficient than their tier-2 counterparts.

Five big banks generated 76 kobo from each naira invested in assets compared with 40 kobo realized by the

eight mid-tier lenders in the review quarter.

Year-on-year comparison showed that big banks improved asset efficiency as ROA figure grew 7 percent points from 0.69 percent year before, while mid-tier lenders’ efficiency wors-

ened 6 percent points from 46 percent.

The 13 lenders collectively grew profit by 28 percent to N126.4 billion in the quarter review, faster than assets which up 21 percent from N16.6 trillion a year earlier to N20.1 trillion.

BANKING

Stanbic IBTC, Fidelity show tier-one potentials on faster asset growth pace DAVID IBIDAPO

T

he tenacity at which the Nigerian mid-tier lenders are growing their asset value could in the long run see some of these banks overtake a number of big lenders in asset sizes and value.

Analysis show that banks like Fidelity and Stanbic IBTC may in the next 5 to 6 years overtake banks like Guarantee Trust Bank (GTB) and First Bank in terms of asset size, positioning them to be possibly regarded as Tier one banks.

This projection is based on the assumption that Nigerian deposit money banks, grow into the future at their current average annual growth rate in the last 3 years.

This will see a bank like Fidelity record an asset value of N3.9 trillion in 2024 outperforming GTB with an asset value of N3.8 trillion during the same period based on a current average annual growth rate of 3 percent in asset

growth for GTB and 15 percent for Fidelity.

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

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

“I will totally agree Fidelity and Stanbic IBTC are potential tier one banks,” an analyst who spoke the condition of anonymity told BusinessDay. “However, when banks grow their assets at a certain level, the pace of increase will not be the same because of an higher base, more so, the banks focus at that level will be how to derive as much value

for your asset base rather than just growing it, hence concentrate more on other ratios,” analyst explained further.

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

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

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

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

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

Nn a m d i O k o n kw o, managing director/chief executive officer of Fidelity Bank Plc, disclosed plans by the Nigerian lender to migrate to a Tier-1 bank in the country three years from now.

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

While the emergence of digitisation first came as a challenge to banks, now

it’s an innovation due to the role it has played in facilitating transactions.

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

The slowdown amongst tier one banks was seen majorly in 2018, after big lenders began cutting

down on their loan books, seizing juicy opportunities in the Nigerian fixed income space when yields were higher.

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

L-R: Rahman Akinwonmi, Director of Finance and Corporate Services, Lagos State Employment Trust Fund (LSETF); Abidemi Raji, Lagos State permanent secretary, ministry of wealth creation and employment; HansLudwig Bruns, head of programme, Skills Development for Youth Employment (SKYE) Programme, and Tobias Wolfgarten, team leader, GIZ, Lagos, at the graduation ceremony of 140 potential migrants (including voluntary returnees from the European Union) in the LSETF/GIZ SKYE Programme in Lagos.

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

Tuesday 14 May 2019

COMPANIES&MARKETS

BUSINESS DAY

17

Business Event

BANKING

Appeal Court voids bank PHB’s suit against CBN over sale of licence, assets OLUFIKAYO OWOEYE

C

ourt of Appeal sitting in Lagos has dismissed an appeal filed by Bank PHB Plc (now Keystone Bank Limited) to challenge the sale of licence and assets by the Central Bank of Nigeria (CBN).

Bank PHB had in 2012 filled a suit at the Federal High Court in Lagos to challenge the revocation of its licence by the CBN and the eventual sale of its assets.

The bank claimed that the revocation of its banking licence by the CBN and the eventual sale of its assets through Nigerian Deposit Insurance Commission (NDIC) and Asset Management Corporation of Nigeria (AMCON) to Keystone Bank was done maliciously, in bad faith and in contravention of the provisions of the law.

The bank sought the court to set aside the apex’s bank order CBN revoking its licence and transfer of its assets through the NDIC and AMCON. In response, the CBN filed

preliminary objections challenging the jurisdiction of the court to entertain the matter primarily on the grounds that the bank lacked the requisite locus standi to institute the action.

Upon argument of the applications, the trial judge, Justice Charles Achibong, upheld the CBN’s objection and dismissed the Bank PHB’s claim.

The judge ruled that the bank failed to demonstrate over acts of bad faith on the part of CBN which was a condition precedent necessary for invoking the jurisdiction of the court to entertain the matter.

He stated that such actions of the CBN were carried out in lawful exercise of its duties.

Dissatisfied with the lower court’s ruling, Bank PHB appealed to the Court of Appeal.

The CBN also filed a cross-appeal.

The appellant formulated issues as follows: Whether the trial court was not bound to follow the decision in Savannah Bank of Nigeria v. CBN and consequently conduct a full trial.

Counsel for appellant argued that the trial court was wrong to have decided the matter without conducting a trial, as that was the only way it could have properly evaluated the evidence of the parties and determined whether the actions of the 1st respondent was devoid of good faith.

The appellant submitted that the trial court ought to have adopted the procedure in Savannah Bank of Nigeria v. CBN wherein a similar issue was only determined upon full trial.

Counsel for the 3rd respondent, Counsel to the AGF, Professor Fabian Ajogwu SAN, in arguing the Cross in his argument, clearly distinguished both cases and drew the court’s attention to the fact that in the case of Savanah Bank, no preliminary objection on jurisdiction of the court was raised thus enabling the court to proceed with trial.

The second issue was whether the trial court was right in holding that it could not possibly find the decision of the 1st respondent as being tainted with malice and bad faith.

L-R: Shettima Abdulkadir, general manager finance and management services, Nigerian Electricity Regulatory Commission; Chantelle Abdul, CEO, Mojec International Limited; Ernest Mupwaya, MD, Abuja Electricity Distribution Company, and Mojisola Abdul, chairman, Mojec International Limited, at the Get Metered By MAP Launch in Abuja.

APPOINTMENT

Sterling Bank appoints Femi Jaiyeola new chief compliance officer OLUFIKAYO OWOEYE

S

terling Bank Plc has announced the appointment of Femi Jaiyeola as its new Chief Compliance Officer.

In a notification sent to the Nigerian Stock Exchange (NSE) the appointment has been confirmed by the Central Bank of Nigeria (CBN).

Femi Jaiyeola holds a bachelor’s degree in Accounting from the University of Ilorin and Master’s degree in Finance and Investment from the University of Edinburgh, Scotland.

He is a fellow of the Institute of Chartered Accountants of Nigeria, a Certified Information

System Auditor, and a member of the Board of Audit Investigations and Forensic Accounting.

Jaiyeola is a seasoned professional with over 20 years’ experience in the Financial Services Industry. Prior to joining the Sterling Bank team in April 2019, he was a General Chief Compliance Officer at the now defunct Diamond Bank Plc. Similarly, he was previously the Head of Audit, Nigeria and West Africa Cluster at Standard Chartered Bank. Highlights of his international experiences include six (6) years with UK Financial Service Industry as Vice President in Internal Audit, Internal Auditor in Citi-

group and Barclays Bank.

According to Sterling Bank, the new chief compliance officer, brings to the Sterling team the knowledge, skills, and vast experience that he has garnered locally and internationally across Europe, Africa, and the Middle East.

His vast experience covers Risk Management, Banking Operations, Business Advisory, Internal Audit, External Audit, and Compliance.

Recently the bank had appointed Tunde Adeola and Raheem Owodeyi as Executive Directors, while Subbaramaiah Rajapur replaced Sujit Varma as its Non-Executive Director.

L-R: Abdul Jeleel Okewole, chairman, Ogun State Universal Basic Education Board (SUBEB); Aikulola Olu Ola, permanent secretary, ministry of education, science and technology; Amaka Onyemelukwe, public affairs and communications manager, Coca-Cola Nigeria; and Ganiyu Alemo Babayeju, Balogun of Ijaiye and Aare of Egbaland, at the inauguration ceremony of upgraded Educational Facilities at the First Baptist Primary School at the school premises in Abeokuta.

Chicken Republic operator, Food Concepts commences N3.6bn rights issue amid expansion plans

F

ood Concepts Plc, a quick service restaurant (QSR) brands operator in Nigeria and West Africa said that it has commenced the process to raise up to US$10 million (N3.6 billion) through issuance of rights issue.

The Chicken Republic Brand operator said in a statement that it kicked off the process following shareholders’ approval at the 16th Annual General Meeting held on November last year.

David Butler, managing director, noted that the right issue will enable the company actualise its expansion plan and launch new brands into its portfolio.

“The rights issue will enable the company to achieve its strategic growth plans and maximise shareholders’ value.

The net proceeds of the rights issue will be utilised in funding store expansion, supply

chain and distribution improvements as well as launching new brands to meet the flavour profile of the consumer,” he said.

The company’s director also noted that the proposed rights issue presents an excellent opportunity for existing shareholders to increase their investment in the company.

The company has also submitted a formal application as well as the relevant documentation to the appropriate regulatory authority for approval.

Food Concept Plc is also a shareholder of Food Concept Pioneer Limited (Butterfield’s and Yum Yum Baked goods Brands), and currently operates 51 company-owned and 19 franchise restaurants across Nigeria and Ghana.

The firm currently runs 55 stores in Nigeria and Ghana under its Chicken Republic brand.

The company is seeking to www.businessday.ng

expand and increase its market share in the West African region through its affordable fast food and baked goods offerings.

By selectively opening additional stores in new and existing communities and the launch of additional brands, the company aims to operate 300 quick service restaurants and dominate the bread and sausage roll market over the next five years.

Founded in 2001, Food Concepts’ shareholders include International Finance Corporation (IFC), a World Bank member and Development Partners International (DPI), a United Kingdom based private equity.

The firm which operates the Butterfield Bakery and Free Range Farms brands also runs its baked good division through a partnership with Pioneer Foods, a leading South African fast moving consumer good s company.

L-R: Jordi Borrut Bel, MD, Nigerian Breweries Plc; Uche Unigwe, sales director, Nigerian Breweries Plc; Kenneth Maduakor (2nd r) and his wife (m), (Ken Maduakor Group of Companies) winner, national champion award, and Kola Jamodu chairman, Nigerian Breweries Plc, at the Nigerian Breweries 2019 Distributor Award in Abuja.

L-R: Kunle Shonaike, CEO, Automedics; Halimat Adeyemi, graduate, MechTech 2.0; Abayomi Awobokun, CEO, Enyo Retail and supply; Ayeni Akinyemi, 1st prize winner, MechTech 2.0; and Moruf Arowolo, chairman, MOMTAN at the graduation ceremony of MechTech 2.0 students powered by Enyo in Lagos.

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18

Tuesday 14 May 2019

BUSINESS DAY

Tuesday 14 May 2019

BUSINESS DAY

INTERVIEW

19

‘Nigeria should consider privatizing some assets to drive growth, ease unemployment issues’ At the recent ICAN / ICAEW Joint Economic Insight event in Lagos, it was established that to attract more foreign investments into the Nigerian economy, the policy environment needs to be strengthened by the implementation of more liberal and clearer policies. As Chief Economist for North and West Africa, Oxford Economics, Cobus de Hart specialises in the economies of Angola, Nigeria and Ghana. He spoke to BusinessDay Analyst, MICHAEL ANI in Lagos about issues affecting the Nigerian economy and gave recommendations on how progress can be made Excerpts:

Y

ou are a consultant in many African countries and emerging markets. How would you describe Nigeria compared with other countries that you consult for?

East Africa is the region in Africa that is doing very well and that is understandable, because they are not commodity dependent. So when we experienced the commodity price crash in 2015, we saw a lot of oil and major exports come under pressure – making lots of countries, including Nigeria, take on strict reforms to shield their economies against the shock.

However, in my view, Nigeria didn’t follow the right routes in implementing its policies compared to the likes of Egypt, which adopted a lot more liberal policies, making the country grow at about 5.4 percent; whereas Nigeria has been projected to grow at about 2.1 percent this year.

Can you highlight some of these policies?

When the APC-led government took over reins in 2015, how long did it take President Buhari to set up his cabinet? It took him about five to six months. We also saw the budgets being delayed for at least five months every year since that time. We saw late payments to fuel marketers that led to shortages of fuel that crippled the economy.

Another main thing they have also not performed on is the effectiveness of the very budget, that they promised. Capital expenditure as a share of total expenditure was set at 30 percent but last year, capital expenditure was only 14 percent of GDP as against the target set. Hence, we need to ask ourselves where our fiscal policies are going. Is it going towards growth support of the diversification drive or is it going towards somewhere else? At the same time, public debt levels have also increased and we don’t want any situation where public debt levels keep increasing while we are not seeing any gains from our fiscal expenditure because public debt will just be rising for nothing.

So, what recommendations can you give to Nigeria?

Nigeria needs to look at its policy stance. She needs to implement more liberal policies including the unification of the exchange rates, gradual removal of subsidy—yes, it will create a temporary pressure on oil prices, but it will also create more rooms for fiscal expenditures to be spent on capital projects and socio programmes for people that are poor and vulnerable. The reason why portfolio

investors are still vying for Nigeria is simply because the yields in securities are very high. We saw the European Central Bank and the FED’s dovish and this has helped Nigeria in attracting portfolio inflows, but FDIs have fallen to $2.1 billion which is meagre when compared with the $3.3 billion that Ghana attracted. So I believe that if Nigeria can implement a set of more liberal and clear policies, Nigeria will do well. Even the ERGP is not clear and concise in terms of goals.

We noticed that investors are piling up into the fixed income space at the expense of the equity market. What is really driving investor’s sentiments into that space and shunning the equity market?

The equity market is slightly different from the debt market in that the equity markets are largely driven by fundamentals. Remember that you buy equities on the stock exchange because you want to earn dividends or you want the share prices to go up. The only way that happens is when the firms you want to buy into are doing well. But the Nigerian economy is still not doing all that well as there are still concerns on how the policies from President Buhari are going to affect the economy going forward; so even the 2% is not all that good to lift stocks.

Another factor that we have to keep in mind is that the rebound that has been seen in the Nigerian economy is not broad based as we still see various sectors that are still not doing well in the likes of the financial sector, real estate and a few others; that is why equities are struggling to gain traction.

Portfolio flows are easy because those are foreign investors that want to put money in a country especially based on decisions from advanced Central Bank and they can invest and pull their money out quickly hence, they invest in risk-free assets especially when they perceive policy uncertainties in the country.

How would you describe the performance of Nigeria during the first quarter in 2019? Do you feel the growth aligns with reality?

I think the economy did fairly well in the first quarter of 2019. We already saw last year that the non-oil sector is gradually gaining some traction. So it is really encouraging that the non-oil sector is beginning to drive growth in the economy as opposed to oil. If you look at some of the macroeconomic indicators like the Purchasing Managers Index (PMI), they still www.businessday.ng

remain well expansionary even though they came down below what we saw at the end of 2018.

The downside is the disruptions in oil flows like the issues in the Nembe creek and disruption of oil pipelines as we saw oil production trending lower but hopefully, that won’t be a frequent occurrence.

However, it is something that we really need to keep an eye on.

Why do you think Nigeria’s growth pace has been very slow since we exited recession, despite rallying oil prices?

The policies that Nigeria implemented shortly after the oil price shock was not the right way to go because essentially, what the CBN did was that it took the nominal shock which is oil price shock and it turned it into a real shock. So, as soon as it decided to ration foreign exchange, ban imports to boost its reserve; it suddenly turned it into a real shock so people underground could have access to forex to sustain their livelihood to buy goods. So in my view, the policy that they enacted exacerbated the impact of low oil prices on the Nigerian economy.

Oil prices which accounts for about 84% of our revenue has been well above $70. How can we benefit from this gain even with the huge subsidy payment?

We did a very thorough analysis of the subsidy payment in Nigeria and what we came up with is that subsidy payment is sustainable at any oil price in Nigeria. Oil prices can go up or down to any payment, but subsidy payment will still be sustainable. The reason for this is because Nigeria imports more oil than it uses domestically. However, higher oil prices comes with a higher landing cost for the country, but Nigeria is still making way more money from the sales of oil.

However, what this does in most countries is that it crowds out spending on grass root initiatives like infrastructural development and electricity that could have benefitted the masses more. Studies have shown that fuel subsidies actually benefit the rich more than the poor.

What reforms can Nigeria carry out to bring down the rate of unemployment?

You need to generate more funds to grow and focus on sectors that are labour-intensive. In my view, Nigeria cannot do that on its own because the size of its spend to GDP is too small, she needs to attract more FDIs by creating an enabling environment so that investors can come in and

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invest. Nigeria should also consider privatizing some of its assets in certain sectors as this will help in driving growth and alleviating its unemployment issues. There is also a need to focus growth on high employment sectors such as Agroprocessing, manufacturing etc.

What advice can you give on Nigeria’s increasing debt at N24 trillion. Do you think it is a problem for us?

Whenever I look at Nigeria, I see some portfolio managers making this mistake of looking at debt as a percentage of GDP which is really very low in Nigeria’s case.

But if you look at the size of the country’s fiscal deficit which is just below five percent; if you look at interest payments as share of revenue which means how much of your revenue is going directly into servicing debt; they are all going out of proportion. This already means that a significant portion of its revenue is already going into payment of debts which is some@Businessdayng

thing that really needs to be looked into. Nigeria cannot simply continue to borrow money. What is even more shocking is that fiscal expenditure is ineffective, so why are they borrowing money? To do what? To spend on roads, infrastructure, capital expenditure, salaries, subsidies and also delay payments on state employees? Now we have the new minimum wage which is going to increase recurrent expenditure more which will hinder the room for diversification efforts.

One of the problems Nigeria is having is shortfalls in revenue.

How can we shore up our revenue buffers?

The route Nigeria is following is not something I will advise. What Nigeria is doing is putting fines on private companies like what we saw with MTN and the banks. They are also clamping down on some perceived corrupt officials through the EFCC. Now also, they are claiming back taxes from oil majors making them divest from the Nigerian economy. Again to me, the business environment has really been unfriendly.

For Nigeria to raise more revenue, the economy will have to go through some pains. By raising VAT and cutting down on government expenses, Nigeria could rake in more revenue.

Your projection for Nigeria in 2019 is 2.5% growth, higher than IMF revised 2.1% growth. What are your thoughts on this?

We see the non-oil sector expanding by 2.7 percent at the end of Q4 as it has already started gaining some traction.

We also see the new minimum wage coming in alongside the Central Bank loosening policy. We see inflation going lower on the average however, there are also some upside risks. All of these macroeconomic indicators are going to support the rebound in non-oil activities which in turn will boost consumer’s spending. The other thing we need to keep mindful of is FX ratio which has declined significantly. Foreign reversal has gone up due to portfolio inflows. We are expecting one more rate cut this year which will further boost foreign inflows.

Remember also that we are expecting Dangote Refinery to come in soon. All

of these are very positive for the Nigerian economy hence we are very comfortable with our forecast of 2.5 percent growth.

How do you see the future economic prospect for Nigeria seeing that growth rate is growing below that of population growth?

It is concerning. At the end of the day, for a country to take advantage of its demographic development, it will need to create more jobs and there are jobs.

Nigeria is trying to do this but usually, the way it has been done is through FDI (Foreign Direct Investment). Foreign companies come in to set up more factories and that was what happened in China. They have a cheap labour force and everybody shifted their manufacturing focus to China and income level began to rise and people could afford more and that is how they keep moving from industrial- based economy to service-based economy. That is what other African countries are doing but Nigeria is rather following a closed diversification strategy. If they can’t get it right, which I see a very high probability of, then Nigeria might be in significant risk of losing out on the democratic government.

What is your assessment on the Medium Term Expenditure Framework?

I went through it; it is more of the same. There are not a lot of changes in these documents. What strikes me from this document is that its highlights a lot of public infrastructure investments like railways but the money is never directed towards that and so, there is a lot of stake and a lot of tools but does it really happen? And if your Medium Term Expenditure Framework of budget deviates significantly from reality, then what value will the MTEF really have?

What do you think Nigeria can leverage on to drive her financial inclusion target of 80 percent? We are already expecting the PSB. Do you think that is enough?

I am not 100% sure whether the PSB is going to be a hit because I heard there is a lot of lobbying by the banks as they don’t want Telcos to start coming in to the space. It is really interesting and I think Governor Emefiele is bent on seeing it work. Yes, it is still very uncertain but I think it is a step in the right direction. However, we might have to take it slowly because the Nigerian Market is different from other countries such as Kenya, Ghana and the likes.

My suggestion will be that there www.businessday.ng

‘‘

East Africa is the region in Africa that is doing very well and that is understandable, because they are not commodity dependent. So when we experienced the commodity price crash in 2015, we saw a lot of oil and major exports come under pressure – making lots of countries, including Nigeria should be a lot more research and case studies from other countries before proceeding.

You are at the fore front of foreign investors. What is their perception as regards Nigeria and what is their major challenge hindering them from investing in Nigeria?

Honestly, not really good. The reason for this is the policy. I am talking about Private Equity investors, Foreign Direct Investors, people willing to build factories and put up structures in Nigeria.

And the reason for this is that they know Nigeria has this close diversification strategy and policy is very uncertain here. You go through four years here without the CBN taking the rates up and down from 11 to 12 to 14 alongside the restriction in foreign exchange and there is the ban in certain commodities. Even the PIGB has been delayed and you have seen a lot of oil marketers divesting from the Nigerian economy. We

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should have sorted all these out and gotten a clear and precise oil bill on the table.

Talking about the African Free Trade Agreement, do you think our market is mature enough to sign it because the Nigerian government had said that we are not competitive enough?

Where Nigeria is right now, it is following this inward driven diversification strategy. So it does not want to open its borders. I understand why Nigeria is going that way. It is because there could be a lot of dampening, but it is also going to be a gradual process because if Nigeria signs it now, I think it is going to take five to 10 years before it gets implemented. There are so many modalities that need to be put in place before the African free trade will come into place. There is movement of goods, movement of people, customs that need to go into that.

But for now, I think Nigeria will hold on before signing it. The only

@Businessdayng

problem is that if you start to ban goods like rice for instance, it will take some time for farmers to start producing more rice. What happens in the meantime is that the price will go up. Let’s say now that the local farmers start doing well, how are we going to know if these farmers are competitive? Let’s say later on down the line, imports take over; we see that local farmers will be charging too much for rice.

They are not competitive because they have not been exposed to global competitiveness. So, the practices they use may get affected. They are not seeing global new technologies for implementing new techniques. I am talking about rice here but there are a lot of other industries and they might become uncompetitive. That will have a bad effect on the economy because they might charge higher prices than we can afford.

What does your job as Chief Economist of West and Central Africa entail?

I cover most of these countries, macroeconomics. What we do is that we monitor these countries on a continuous basis on the micro and macro level, employments of labour markets, monetary sides, external balances, currencies, global development etc. We monitor these countries on a daily basis.

In my case, I have a team working with me and we cover some of the other countries. We publish reports on some of the African and sub-African clients. They get some of these reports on a monthly basis and we use Statistical Methodology and information to drive our foot prints.

Is this your first time in Nigeria?

Yes, this is my first time coming to Nigeria. I came in last week.

I am not sure whether they are building the airport but it seems to me that going by international standard, the airport needs some work. I remember vividly when I was coming through international arrivals, it kind of gives the impression that there are still a lot that needs to be done to improve infrastructure and I think that is part of the broader picture.

When you are driving through the mainland to the Victoria Island, you could see the lights off on the mainland which shows that there are still a lot of income inequalities in the country. It boils down to the locals which seem to back some of my assertions that policy implementation has been very poor over the past four to five years and there seems to be a lot of distress in the government as well; at least from some of the people I have spoken to.

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Tuesday 14 May 2019

BUSINESS DAY

Pay packages: Benefits focus on homes, loans and wellbeing Rewards are a way to help employers strand out when recruiting Andy Bounds, Rebecca Speare-Cole, Hannah Murphy & Sarah Provan

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hen Diya Gera moved to London from her home in India as a graduate recruit in 2017 she spent months looking for somewhere to live.

She was not alone. “A lot of my friends were struggling to find good flats with good facilities for an affordable price,” she says.

In the end it was her employer, professional services firm Deloitte, that threw her a lifeline.

In 2015 Deloitte had made a deal with corporate landlord Get Living to reserve flats for a number of its graduates in the former Olympic Village development.

The flats are let at market rates but Deloitte takes care of the form filling and tenants do not have to stump up an initial deposit or agency fees, which can bring the otherwise unaffordable within reach.

In the year before the scheme started, Deloitte ran a survey among its graduate intake in which nearly 90 per cent said they wanted help to find housing.

“I stopped looking after [I found out] about this,” says Ms Gera.

Deloitte partner James Ferguson, who had made it a new year resolution to get the scheme under way, hopes to work with other employers to scale it up.

“We could make it available to all our staff,” he says.

The core employee benefits offered by an employer are pensions and life and health insurance.

But companies are also paying attention to workers’ needs beyond the pay packet.

“If the economy carries on growing and there are skills shortages, organisations will be looking to see how they can stand out in the labour market,” says Charles Cotton of the Chartered Institute of Personnel and Development.

One way to stand out is to of-

fer idiosyncratic benefits. They may also reflect the wider values of the organisation and are harder to copy.

At outdoor clothing company Patagonia, some employees are offered three-day weekends to encourage them to get out and about and it has pledged to pay bail for employees if they are arrested during a peaceful environmental protest.

At UK-based brewery and pub chain BrewDog, employees with a new dog can take a week’s “puppy leave”. Facebook and Apple offer egg freezing for women and free housing for www.businessday.ng

interns, while Netflix offers unlimited holiday.

Less quirky is help with repaying student loans. A number of employers, including Goodman Masson, PwC, and Penguin RandomHouse, have set up schemes to assist graduate employees saddled with student debt.

Forbes magazine dubbed student loan repayment “the hottest” employment benefit of 2018”.

The US arm of PwC will ultimately pay $1,200 per year towards associates’ student debt for six years, which it says will reduce their total loan princi-

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pal and interest obligations by $10,000 and shorten the repayment period.

P wC says around 8,400 employees have taken up the scheme since 2015 and that 7,700 are currently receiving money.

Offering student loan repayment both attracts workers and keeps them loyal.

“If people leave within a certain period they have to repay the company, so it’s a good retention device,” says Mr Cotton.

Other employers have focused on the “wellness” trend.

“There used to be a divide @Businessdayng

between work and home, and people talked about work-life balance,” says Debra Corey, adviser to benefits platform Reward Gateway and author of books on HR. “Now it’s work-life integration.”

At London law firm Addleshaw Goddard, as well as private medical insurance, the firm offers a £180 cash benefit toward any health or sports club membership, free weekly yoga classes and a subscription to meditation app Headspace.

Despite “working in a somewhat traditional profession” employees expect such benefits, says the firm’s reward manager Helen Ford.

Addleshaw is one of a group of financial services and law firms that last year drew up a Mindful Business Charter, setting out best practice for reducing stress at work.

There is little point in offering rewards, however, if staff do not know they exist. Ben Frost, a consultant at US-based recruitment specialist Korn Ferry, says many companies worry they should be offering more: “But actually it’s not a reality problem, it’s a communication problem.”

Developments in technology mean that organisations can easily both glean information from employees about preferences and keep them up to date on benefits offerings through platforms and apps.

Reward Gateway offers one such communications platform.

“Each company can put their own personality on it and can use it however they want to drive engagement,” says Ms Corey.

Small companies may not be able to compete with the healthy free food, classes and massages offered by big tech companies in Silicon Valley, but they can make limited budgets work harder by finding out what employees want through engagement surveys and monitoring take-up.

Ms Corey says: “Nowadays tech is so easy. HR needs to get on that bandwagon.”

Tuesday 14 May 2019

BUSINESS DAY

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Business schools are building boldly for the future The expectations of the new generation of MBA student requires a different type of campus Jonathan Moules

T

he designers of the US’s single most expensive academic building have clearly thought hard about what a highly ranked MBA college ought to look like.

Constructed on a former car park in the centre of Carnegie Mellon University in Pittsburgh, Pennsylvania, the Tepper School of Business’s $201m campus building opened its plate glass floor-to-ceiling doors to students and faculty last September.

The 315,000 sq ft brick, steel and concrete edifice houses a virtual reality learning laboratory, a 600-seater auditorium and the largest fitness centre on campus.

The visit was a very slick experience. My only struggle — apart from meeting executive MBA students touring the campus virtually on iPad mounted bots — was finding my way up the swirling staircases to the secluded office of Bob Dammon, Tepper’s dean.

It took the fundraising team close to a decade to persuade 1,250 alumni, including billionaire American businessman David Tepper, to donate the necessary cash for the building.

But doing nothing was not an option, according to Mr Dammon.

“People would want to know why we needed to do a building like this,” he says.

“My answer is that it is an arms race.”

The global competition to construct ever more luxurious facilities at business schools has reached new levels in the past couple of years.

Cornell Tech is a technology, business, law and design campus still being completed on Roosevelt Island in New York.

The main academic building, opened in 2017, is a $115m, fivestorey structure.

It was designed to be “netzero energy”and only consumes power it generates itself.

In the UK, the University of Oxford’s Saïd Business School has revealed plans to spend £60m repurposing a disused Victorian power station.

In its new incarnation it will be an upmarket executive education centre, designed to the standards of a boutique hotel.

And this month Trinity College Dublin will cut the ribbon at a six-storey, €80m new home for its business school, which is

Today’s students want more flexible and inspiring workspaces

another milestone in the university’s attempt to raise its profile as a global MBA provider.

The level of technological capability expected by the millennial generation of MBA students requires new buildings, according to Stephanie Bryant, chief accreditation officer at the US business school accreditation agency AACSB. “There is a lot of competition for the best and brightest students,” Ms Bryant says.

“The old way of teaching with a subject matter expert addressing the class from the front of the room has gone.

Students today want flexible spaces capable of simulating real-life workplaces, such as financial trading floors.”

Pittsburgh has form when it comes to eye-catching academic architecture. The skyline is dominated by the University of Pittsburgh’s 42-storey Cathedral of Learning, a gothic revival skyscraper completed in 1934 and still the tallest academic building in the US. The city’s latest addition, the Tepper building, also stands out because of its energy saving measures and low carbon footprint — features that appeal to millennial passions for sustainability and authenticity.

The school was awarded a Leadership in Energy and Enwww.businessday.ng

‘

Sustainability is often a major theme of new campus building design, but vast building budgets allow new structures to be landmark buildings even in universities that are already internationally renowned vironmental Design gold medal in February for its innovative use of BubbleDeck construction, which reduces concrete use by 25 per cent.

The building’s exterior is clad in the distinctive yellow brick of the original Carnegie Mellon University, but is sourced locally to reduce the carbon emissions of transport.

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“We have built a business school for the future,” Bob Reppe, director of design for campus design and facility development, explains as he leads me up and down the floors.

“It is filled with accidental meeting spaces.” The Tepper building serves more than just the business school at Carnegie Mellon.

It also houses the university’s teaching college, the main campus canteen and the new student welcome centre.

Being at the heart of college life is particularly important for business schools, which have often been the last department to be adopted by a university and so are usually placed on the edge of campus.

“It is very easy for a business school to become isolated because we are primarily a professional school with a lot of masters programmes,” says Laurie Weingart, professor of organisational behaviour, who as acting provost oversaw the final stages of the new building’s completion last year.

“This is a place to pull in the rest of the university.” Durham University is seeking planning permission for a £72m new home for its business school.

If granted, this would relocate its MBA classrooms from the far corner of the campus to the centre of town. @Businessdayng

A significant concern for the architects was the risk of spoiling the views across the ancient city, which is a Unesco World Heritage Site, so they have had to make sure their design hides behind older buildings. They were able to tick the sustainability box by securing the site of the city’s long disused swimming baths to build upon, suspending part of the building with columns because it lies over a flood plain.

Pressure to build something both environmentally sustainable and sensitive to Durham’s centuries-old architecture has come from professors and students as much as from local residents and town planners, according to Susan Hart, the business school’s dean.

“Colleagues have made pretty sure we are on message, that we need to minimise our carbon footprint,” she says.

However, Ms Hart is not defensive about the expansion plans. “We are on a good trajectory in increasing our reputation internationally,” she says.

“We are making visible to the local community the major value of the business school.” Sustainability is often a major theme of new campus building design, but vast building budgets allow new structures to be landmark buildings even in universities that are already internationally renowned.

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Tuesday 14 May 2019

BUSINESS DAY

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

INSEA 2019: Six Nigerian teachers receive N5.2M awards KELECHI EWUZIE

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kinbami Modupe Adebola, Charity Tony-Ubah, Tajudeen Ayofe Amusan, Soji Megbowon, Lanre Abolaji Oguntoye and Olusegun Michael Adeniyi for displaying exceptional dedication to the teaching profession have been rewarded with N5.2 million at the third edition of Inspirational Educator Awards (INSEA) organised by Meadow Hall Foundation (MHF).

Akinbami Modupe Adebola for emerging winner of the Inspirational School Leader of the year award, received N1, 250,000; Charity Tony-Ubah also as the winner of the Inspirational School Leader of the year, went home with a cash award of N1, 250,000; Tajudeen Ayofe Amusan as the runner-up of the Inspirational School Leader of the year received N500,000 cash award.

On his part, Soji Megbowon as the winners of the Inspirational Teacher of the year received a cash award of N850, 000 while Lanre Abolaji Oguntoye also as the winner of the Inspirational Teacher of the year and Olusegun Michael Adeniyi as the runnerup of the Inspirational Teacher of the year received cash awards of N850, 000 and N500, 000 respectively.

The INSEA is a merit-based annual award aimed at elevating the teaching profession and motivating teachers and school leaders to continue to strive for excellence in their profession.

The award is open to teachers in Nigeria who teach in public or private schools (primary or secondary) and participation is free.

Kehinde Nwani, founder, Meadow Hall Foundation, said the vision of MHF is to improve the educational outcomes of the Nigerian Child through enhancing teaching quality, changing mindsets about teaching and advocating for the

teaching profession”.

According to her, “Meadow Hall Foundation has rewarded 13 inspirational teachers and school leaders with the sum of thirteen million naira from 2017 till date through the Inspirational Educator Awards (INSEA).

In her welcome address at the Education Convention, Nwani observed that in today’s knowledge-driven economy, education plays a pivotal role in national development. Substantial investment in human capital is a key component of socioeconomic development.

“Education enriches people’s understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people’s productivity and creativity and promotes entrepreneurship and technological advances” “In addition, it plays a very crucial role in

securing economic and social progress and improving income distribution. Studies show that no country has achieved constant economic development without considerable investment in human capital”, she said.

Josiah O. Ajiboye, Registrar/Chief Executive, Teachers Registration Council of Nigeria (TRCN), opines that it is very clear that Government alone cannot fund education. Private participation in education is real and it has come to stay.

Ajiboye in his keynote address at the Education Convention with the theme, ‘Accelerating National Development through Education’ opines that Education is an accepted veritable instrument for national development. Hence the saying that, “No society can develop beyond its educational system”.

Ajiboye further said that the level of investment in education determines the quality of

gross national product of a country. He compared Finland, Malaysia, Botswana and Nigeria, which Nigeria was ranked lowest in terms of investment in education.

“The quality of a nation depends upon the quality of its citizens, the quality of its citizens depends not exclusively but in a crucial measure upon the quality of education and the quality of education depends more than upon any single factor upon the quality of their teachers and the quality of the teacher depends mainly upon the quality of policy thrust guiding the operations of the teacher which is provided by professional regulatory authority such as TRCN controlling and providing benchmarks for standard of operations. It is in this context that National development all over the world is viewed from the lens of education which is pivoted by accurate policy provided by professional authority in the field”, he said.

NIBFT seeks low tariffs on educational Chimamanda Adichie to deliver materials, grants to boost book industry commencement speech at Georgetown University KELECHI EWUZIE

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badega Adedapo, Chairman, Nigeria Book Fair Trust and President, Nigerian Publishers Association among other stakeholders in the book industry have appealed to the Federal government of Nigeria to create a special low tariff for educational materials in other to boost the book industry.

Adedapo made this known in his address at the 2019 Nigerian International book Fair Trust held at University of Lagos, Akoka to discuss the process of Optimising New Technology in Book Development and Distribution for the Promotion of Book in Nigeria and Africa.

While listing out the challenges in the industry, Adedapo called on government to issue grants to encourage authors, publishers and book distributors to keep doing their creative work, stressing the need for strong collaboration to organise sensitisation and capacity building programmes for all stakeholders is pivotal.

According to him, “Government needs to swiftly respond to the financial requests of operators through low interest rate loan from the Bank of Industry (BOI) in order to make the business conducive for us”.

Mike Olajide, executive director, Sidmach technologies limited opines that if Nigeria does not kill piracy, it will kill the publishing industry calling on authors and publishers to take a stand and fight the monster called

piracy.

Olajide who was represented by Lanre Basamta, quoted a report by Usejournal.com, that reveals that publishers lost 28 percent of their potential revenue to piracy in 2018, a figure that is expected to rise in 2019.

He further said that Goodreader, a respected online publishing site also reports that pirate websites received 300 billion visitors last year and e-books represent a small, but growing segment. This is costing publishers worldwide billions of dollars annually.

In his keynote address titled, ‘Optimising Technology in Book Development and Distribution for Promotion of Book Trade’, Olajide said Technology will continue to transform our lives, not leaving out fundamental things like books.

We can expect that more technology will emerge in the coming years to promote publishing, distribution and trade of books.

“Nigerians must be willing to accept and deploy technology, not only to optimise how we publish and distribute books, but also how we promote book trade by combating piracy”, he said. On her part, Oluremi Tinubu, special guest of honour at the event observes that education is pivotal to the development of any society and books are integral part of the process, adding that the importance of Authors and their works cannot be over stated.

Tinubu promised to use her position as a senator of the Federal Republic of Nigeria to support initiatives and legislations that protect Nigerian Authors and every aspect of the value chain.

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Modestus Anaesoronye

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eorgetown University (Washington DC) has revealed that Chimamanda Ngozi Adichie will speak at the 2019 commencement ceremony for Georgetown College, which hosts majority of the university’s undergraduates.

In the announcement shared on the school’s website, it was revealed that Adichie will aside delivering the speech at the ceremony scheduled for 18th of May, also receive an honorary Doctor of Humane Letters degree from Georgetown University.

The university’s commencement celebrations, which will last from the 16th to the 19th of May, 2019 include individual graduation ceremonies for each of the university’s undergraduate and professional schools, with each featuring an address from a distinguished leader. Other 2019 speakers include world-famous chef and humanitarian, José Andrés; Permanent Representative of the State of Qatar to the United Nations, Sheik ha Alya Ahmed bin Saif Al Thani and Former Secretary of State Madeleine K. Albright.

“We are honoured to welcome an ex-

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Chimamanda Adichie

traordinary group of individuals to campus to share their reflections with our graduating students this May,” said Georgetown President John J. DeGioia.

This will be one of many honorary degrees received by Chimamanda Adichie from major American universities, some of which include, Eastern Connecticut State University, Johns Hopkins University, Duke University, Amherst College and more.

@Businessdayng

Tuesday 14 May 2019

BUSINESS DAY

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EDUCATION ‘Strategic investment in Mathematics education will push Nigeria’s competitive frontiers’ Promasidor Nigeria Limited is strategically positioned to support the development of STEM education in Nigeria. In this interview, Abiodun Ayodeji, Marketing Manager, explains the impact of the Cowbellpedia Secondary School Mathematics TV Quiz Show and how the country is benefitting from it. Excerpts: One of Promasidor’s major CSR initiatives is the Cowbellpedia Secondary School Mathematics TV Quiz Show. What informed the involvement of the company in this project? or Cowbell and Mathematics, the journey started about 21 years ago as a Lagos based initiative.

Presently, it has become a national affair. In 2016, we brought all Cowbell interventions on Mathematics under an umbrella, Cowbellpedia which is a brand asset of Cowbell Milk to provide a platform to reward excellence in the subject area of Mathematics irrespective of where you come and social strata. This is in line with the essence of the brand i.e. providing affordable quality nutrition to every Nigerian Child.

No nation can truly develop without a conscious investment and effort in Science and Innovation, and Mathematics is the bedrock of these two. Also, you will agree with me that a lot of students have a phobia for this subject area and with the Cowbellpedia platform; we have been able to stimulate the interests of many students in Mathematics.

Cowbellpedia has 3 major legs; Cowbellpedia Secondary Schools TV Quiz Show, Cowbellpedia Radio Maths Class which is a 5 minutes class on radio and Cowbellpedia Mobile App that can be downloaded on Google Play store on android devices and App Store on Apple devices.

Why are you so convinced about this approach?

It’s important to demonstrate to students that Mathematics is easy and fun to learn, it would help a lot of them who have phobia for Mathematics. That is what Cowbell has done to demystify Mathematics. We figured out that if we could let our students become more interested in Mathematics, our nation Nigeria can truly become the giant of Africa. Even in commerce, if you are doing a “Profit and Loss” statement, you need to be able to add and subtract.

And everything is around Mathematics.

If an average student has an interest in Mathematics; he would excel in science, commerce and all the spheres of life.

Has the competition been able to meet its stated objectives?

Yes, it has. The objectives are to awaken the consciousness and interest in mathematics amongst Junior and Senior secondary school students in Nigeria, improve students’ performance in Mathematics Pan Nigeria, create a credible platform for identifying outstanding students and encouraging excellence in Mathematics, provide a creditable platform that will reward excellence in the subject area of Mathematics.

Student enrolment has been increasing on a yearly basis and in 2019 we have the highest in the history of the competition at over 56,000 students. Also, the brand’s top and bottom line has moved in sympathy with this direction.

What has been the highpoints of spon-

F

Abiodun Ayodeji

soring the competition over the years?

It has been a symbiotic relationship; the brand and the Nigerian child have gained a lot. In terms of high point, an example is Ayodeji Akinkuowo, the student that won in the senior category of maiden edition of the Cowbellpedia Secondary Schools Mathematics TV Quiz Show. He got a government scholarship to Russia, studying aeronautic engineering. This was possible, because he made his life’s dream of becoming an aeronautic engineer known during the competition.

Another high point is Munachi ErnestEze who won the Junior Secondary School category in 2015. Two years later he won the Senior Secondary School category. It shows consistency.

Last year, in celebrating the 20th relationship between Cowbell Our Milk and Mathematics, we added some new dimensions to the Cowbellpedia initiative. We had the Cowbellpedia Academy in partnership with some foreign universities and Professors aimed at driving support and interest in Mathematics by exposing selected students and teachers across the country to various teaching and learning techniques in achieving, sustaining and managing academic feats especially in Mathematics.

Also, we did a documentary, Milk of Kindness which focused on the lives of Cowbellpedia participants and the impact the

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brand has had on their lives and families.

What do you think is responsible for the upsurge in the enrolment figure for the competition this year?

I would like to thank our partners, the schools and parents who have encouraged their wards to take part in the competition.

The States Ministry of Education has also

“

It’s important to demonstrate to students that Mathematics is easy and fun to learn, it would help a lot of them who have phobia for Mathematics.

That is what Cowbell has done to demystify Mathematics

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been of significant help. Secondly, continuous improvement; KAIZEN is in the team’s DNA to identify opportunities to raise the bar every year in terms of the call for entry, conduct of examination, TV quiz-show format, etc. Secondary Schools owners now use Cowbellpedia as an important marketing tool for enrolment of new students hence, the interest shown by schools. Also, we have increased significantly the total prize money in the last 5 years, the prize money is now N2M for the winner in each category and there are other cash prizes reward at each stage of the competition for students and teachers.

What has been the impact of Cowbellpedia on the brand?

There are ways we measure impact. Cowbellpedia is a platform that makes dreams become reality; a case in point is Ayodeji Akinkuowo who won the 2015 edition in the Senior Category who is now studying Aeronautic Engineering in Russia. Every year, Cowbell increases her footprint in many households through the Cowbellpedia platform and families have been reciprocating by buying Cowbell fortified with VitaRich at point of buy. This is coming through in our numbers and Brand Health measures.

When you promote a good cause, it’s about the long-term value of the consumers Are you considering support for the Arts and Humanities too? Or, is it only Mathematics and Science?

Cowbellpedia is presently focused on Mathematics and if there are opportunities in future, Promasidor Nigeria Limited may consider but not necessarily under the Cowbell brand.

Are you looking at selling the idea to the government?

We work with the government especially the Ministry of Education at the state level.

We use state owned secondary schools for the 200 examination centres that we use, for the stage 1 of the Cowbellpedia Secondary Schools Mathematics TV Quiz Show When we talk about Promasidor, what comes to your mind?

Promasidor is about providing quality nutrition to the Nigerian people. This has been since inception in 1993 that we pioneered powdered milk in small portions in sachets at affordable prices that made milk a good source of protein accessible to most Nigerian homes and families. Also, we immersed ourselves in the lives of consumers to understand how milk is consumed and we launched Cowbell Chocolate and Cowbell Coffee. These are convenient 3 in 1 propositions that the only task required of a consumer is to add water and you have a complete beverage.

Our guiding principle is to understand the consumers’ pain points and help them to solve them through our products and brands. There are some major nutritional deficiencies in sub Saharan Africa which are Iron, Zinc, Calcium, Iodine, Folate, Protein and Promasidor products fortification strategy has been along this direction.

@Businessdayng

24

Tuesday 14 May 2019

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.’

Infinity Trust Mortgage Bank Plc: Increased interest income underpins profit BALA AUGIE

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igerian mortgage and real estate indusrty is beset with a myriad of challenges that makes it practically difficult to bridge the 17 million housing deficit.

While the introduction of the Importers’ and Exporters’ Windows by the central bank and a rebound in crude oil price helped the country exist its first recession in 25 years, the economy continues to grow at a slow pace.

That means owning or buying a property a country where over 50 percent of its people live on less than $1.92 a day is a luxury, which is why mortgage banks are grasping for breath as they are unable to break even.

Other challenges inhibiting the growth of the industry includes: The land use Act and insufficient funding.

Little wonder the mortgage and real estate contribution to the economy remains abysmally poor compared to some sub-Saharan African countries.

Nigeria is yet to realize its real estate sector’s potential, considering it was only able to contribute 6.50 percent to the country’s GDP in Q3 2018 as against its 6.83 percent it contributed in the second quarter of last year, and the 5.63 percent contribution it reported in the preceding quarter.

Whereas in South Africa, the region’s most industrialized and second largest economy after Nigeria, its real estate sector contributes

Olabanji Obaleye, manading director/CEO, Infinity Trust Mortgage Bank

about 30 percent to GDP, and in the UK, the property industry contributes about 70 percent.

Amid these myriad of challenges, Infinity Mortgage Trust Bank Plc continues to thrive as evidenced by consistent earnings growth and margin expansion,while it shareholdes have rewarded in form of steady diviend payment.

For the first three months through March 2019, Infinity Mortgage Trust’s turnover increased by 60.22 percent to N344.90 million from N215.26 million the previous year. Revenues have been growing at a Compound Annual Growth Rate (CAGR) of 12.15 percent between 2015 and 2019.

Interest income moved by 51.03 percent to N253.41 million in the period under review from N167.78 million the previous year; the growth at the top lines was driven by

an increase of 65.33 percent, 80.65 percent, and 44 percent in Other Mortgage Loans and advances to customers, Treasury Operations and Placements, and National Housing Fund Loans.

Infinity Mortgage Trust has been investing in latest technology,while intensifying on its online banking business, as fees and commission income rose by 53.51 percent to N16.96 million in the period under review from N11.05 million as at March 2018.

Also, noninterest revenue was up 92.75 percent to N91.48 million from N47.46 million the previous year.

Infinity Mortgage Trust has utilized the resources of its owners in generating higher profit while turning each Naira invested in sales into higher profit.

For instance, pretax profit margin increased to 39.10 percent in the period under review from 30.50 percent the previous year while net margin increased by 36 percent in March 2019 from 27.40 percent the previous year.

Retrun on equity (ROE) increased to 2.10 percent in the period under review as against 1 percent the previous year.

A high ROE means the Bank has been growing profit consistently while retained

earnings have been on upward trajectory.

Net profit surged by 110.01 percent to N123.76 million in the period under review from N58.93 million the previous year while profit before tax followed the same growth trajectory as it spiked by 15.43 percent to N134.52 million from N65.48 million as at March 2018.

The nargin expansion is the largest among peer rivals that capitulated to the macroecononic headwinds.

The mortgage giant’s operating profits surged by 57.72 percent to N304.41 billion in the period under review as against N194.23 billion as at March 2018.

Infinity mortgage Trust has been aggressive about lending as loans and advances were up 5.19 percent to N4.04 billion in the period under review as against N3.80 billion.

Declares dividend of 3K The company has a steady dividend payment as it has declared a final dividend of 3 kobo per 50 kobo ordinary share for the financial period ended December 201.

Come Thursday, May 30, 2019, the dividends will be paid electronically to shareholders whose names appear on the Register of Members as at Wednesday, April 24, 2019.

Only shareholders who have completed the e-dividend registration process and mandated the Registrar to pay their dividends directly into their bank accounts, will get paid.

While the Register of shareholders will be closed between April 25th, 2019 to May 9th, 2019, April 24th, 2019, has been scheduled as the Qualification Date.

Historical Background Infinity Trust Mortgage Bank Plc was incorporated on January 28, 2002. It, however, commenced business operations in Abuja, in 2003.

As part of its strategic turn-around, the bank was converted to a Public Limited Liability Company on January 25, 2013, and had to change its

name to Infinity Trust Mortgage Bank Plc. Consequently, its shares were listed by introduction on the main floor of the Nigerian Stock Exchange (NSE) on December 11, 2013.

In 2014, it became a Na-

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

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@Businessdayng

tional Mortgage Bank. Currently, the bank has equity shareholding in Nigeria Mortgage Refinance Company (NMRC).

Infinity Trust Mortgage Bank Plc is currently trading at N1.42 on the floor of the NSE.

Tuesday 14 May 2019

BUSINESS DAY

BDTECH

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E-mail: jumoke.akiyode@businessdayonline.com

Why Nigeria needs a regulatory framework for blockchain technology … Massive employment opportunities in cryptocurrency industry Stories by Jumoke Akiyode Lawanson

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echnology experts and industry stakeholders have in the last few years clamored for acceptable structure and regulation blockchain and digital currency, which they say is more than necessary in today’s fourth industrial revolution that involves all things digital.

Several discussions have been raised about the need for government to create a regulatory framework for digital currency, leverage the digital dynamism of blockchain technology to manage public funds and to spur a wave of startups in the digital currency ecosystem.

Blockchain is a continuously growing list of records called blocks which are linked and secured using cryptography. By design, blockchains are inherently resistant to modification of data which makes it arguably the most secure way of handling money. The distributed ledger technology can record transactions between two parties efficiently and in a verifiable and permanent way.

However, in Nigeria, our government seems to be making no effort to incorporate blockchain applications to improve the economy. It is highly unregulated and the Central Bank of Nigeria (CBN) warned Nigerians to be wary of investments in cryptoccurrencies which are not accepted as legal tender in the country.

L-R: Ada Ibelegbu; Eugene Uka; Ayotunde Coker, Managing Director; Ejieke Ezeadiugwu, Head, Marketing/Communications; Elizabeth Ilodiuba and Kelechi Ohalete all from Rack Centre at the BoICT 2019 award ceremony as Rack Centre was inducted into Data Centre Hall of Fame for its outstanding achievements as a leading data centre in Sub Saharan Africa.

Speaking a while ago at the first blockchain conference held in Lagos, Chimezie Chuta, coordinator of blockchain Nigeria user group, said that the revolutionary technology is being explored and exploited in developed nations around the world.

“What makes blockchain better to use is that no one can alter the content and if any one does, such content will not have consensus with the other platforms existing in the network. More so, if one of the nodes goes down it does not affect everything, as other nodes that have the data will still be on.

“We already know the challenges being faced in Nigeria, and this technology is one tool that will greatly strengthen our financial system and help or government to control funds.

“Blockchain transports so many other applications on it and can be applied in document verification, state services, land registry, educational sector, and best in financial system because it cuts out the middle men in any service” Chuta said.

This emerging technology holds pivotal potential and offers transformational solutions to numerous world problems. With the World

Economic Forum recently asserting that blockchain solutions could add a staggering $1 trillion dollars to the world economy within the next 10 years (2028). Nigeria therefore needs to pay more attention to this emerging technology to transform and grow the nation’s economy.

Stakeholders have called on the Nigerian government to come up with policy statements, create a regulatory agency, and have a clear road map for blockchain and digital currencies; so that startups will be clear on laws in the handling of such businesses.

“A regulatory framework to ensure checks and balances needs to be put in place. We need to know the people in these businesses. Do they have the capital to protect the users?

They may not be able to regulate bitcoin itself but they can regulate its use and that is what we expect government to do. Government is looking for how to create employment, and the cryptocurrency industry is an industry that can employ millions of Nigerians because it has many off shoots” Chuta said.

Musa Itopa Jimoh, head, payments system policy and oversight of Central Bank on Nigeria (CBN) said; “Nigeria’s position is very clear and we cannot stop the tide of waves generated by the Blockchain technology and its derivatives.”

“However, the CBN has the responsibility of ensuring price and financial system stability, the central bank has kick started several initiatives and research works to identify the various use cases of blockchain technology including the issuance of digital currency using the blockchain technology,” Jimoh added.

Blockchain technology is an innovation that has been around since the 1970, while being applied in the fields of asymmetric cryptography for military grade un-hack able data storage, and distributed databases not reliant on a single computer. It has been successfully implemented as the architecture of distributed ledger system behind Bitcoin, the first mainstream cryptocurrency.

Inlaks, Temenos drive digital transformation in Vista Bank Group

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nlaks, an ICT infrastructure and systems integrator in SubSaharan Africa has partnered with Temenos, a banking software company to implement the digital transformation strides of Vista Group. Vista Bank is a challenger bank with the vision of building a world-class Pan-African financial institution.

Implementing the Temenos software will support Vista Banks’ innovative strategy of generating new products and services speedily to cater for its operating mar-

ket, thus enabling the company to provide its customers with marketleading services through enhanced functionality and digital channels while conducting its banking operations.

Femi Adeoti, managing director, Africa operations at Inlaks said: “As a Temenos partner for over 20 years, it is our delight to provide best in class digital banking solutions to Vista Bank via Temenos who has held the number one position for core banking solutions according to IBS ranking for 18

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years running. Inlaks as a company thrives on providing innovative solutions that enable our customers adapt and stand out in the everevolving landscape of financial technology.”

Jean-Paul Mergeai, managing director Middle East & Africa at Temenos said: “We look forward to working as a close strategic technology partner of the bank as it realises its goal of building a worldclass Pan-African financial institution group in addition to driving both economic development and

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financial inclusion in Africa. With Temenos’ market-leading, cloudagnostic, cloud-agnostic technology the bank will be in an ideal position to meet their commitment of providing cutting-edge digital banking solutions, as well as innovative products and services, aimed at satisfying the unique needs of their customers.”

“This partnership further strengthens Temenos’ longstanding presence in West Africa where for years our real-time and scalable banking software has

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been helping financial institutions address their evolving customer demands and regulatory requirements,” he said.

Inlaks partners with leading original equipment manufacturers (OEMs) in the technology industry to provide world-class information technology solutions that exceed the needs of its customers.

Over the years, Inlaks has built a reputation as a top ICT and infrastructure solutions provider, helping customers effectively seize new market and service opportunities.

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Tuesday 14 May 2019

BUSINESS DAY

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

Gender disparity remains dominant across IT industry …As Tek Experts white paper reveals 82% of Nigerian women feel discriminated Stories by JUMOKE AKIYODE-LAWANSON

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egardless of the efforts being made to change the narrative of underrepresented females in Information Technology, a recently released report by Tek Experts, global provider of business and IT support services shows that there is very minimal attempt by organisations to create gender balance.

The white paper titled ‘Achieving Gender Balance: Views from Across the IT Industry’ highlights a wide range of issues as identified by women in the Nigerian IT industry.

These issues, ranging from persistent pay gap, lack of career growth opportunities for women, recruitment bias, general lack of inclusion and diversity in the IT industry amongst many others, were brought to light when the company launched a survey earlier in the year to feel the pulse

of women on their unique experiences as women in the industry.

Completed by over 2,000 women worldwide, the survey was conducted in five countries where the company operates in – Bulgaria, Nigeria, Costa Rica, USA and Vietnam.

In Nigeria, over 300 women responded to the

questions and survey findings show that 82 percent of women felt discriminated against because of their gender during the recruitment process for an IT organisation; 31percent of women do not get the same training opportunities as men and 76 percent of women felt that policies promoting gender diversity

L-R: Sefunmi Fadahunsi; country programs manager, Sub-Saharan Africa, Oracle Academy, Iyiola Ayoola; executive secretary of the Nigeria Computer Society (NCS), Dele Bayo-Osibo; founder, Initiative for Information Technology Capacity Building (i4itcb), Hettie Abimbola Soriyan; lecturer at Obafemi Awolowo University (OAU), Ile-Ife, Osun State, and Olufemi Oyenuga; chief customer architect, ECEMA, Oracle Africa, at the seminar organised for STEM lecturers held in Enugu recently.

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pact skills on agents on agent banking and mobile money.

“The workshop offered training and follow up to execution of new agent network in northern Nigeria especially in Kano state, share funding and product opportunities among participants as well as provide varieties of point of sale terminals (PoS), fund transfer platforms among others for agents to access from the exhibition stand,” he said.

According to Olojo, AMMAN also used the opportunity to launch its special agenda for Northern women with the theme; ‘Northern Women for Financial Inclusion (NWFI’).

Northern Women for Financial Inclusion is an advocacy programme that seeks to break the barrier of reaching the women in the last mile.

“Core of NWFI is advocacy and job creation for Northern women so as to bridge cultural barrier that deters women from mingling with the general www.businessday.ng

workplace and we have worked tirelessly to ensure we are a reflection of what we preach. We have implemented recruitment policies to achieve gender balance so we not only talk the talk; we also walk the walk.

Our leadership team is almost entirely composed of women who have proven through their amazing track record in the industry that they deserve a seat at the table.”

“Also, the IT industry’s customer base is diverse, so I think this is something that should be reflected within companies themselves. Women definitely have a place and a value in this industry and there is a lot of added value to be gained by having women on your team. Tek Experts is certainly proof of that,” he added.

Also speaking on the need to achieve gender balance in the workplace and in particular the IT industry, Ashim Egunjobi, country manager, Tek Experts Nigeria said; “There is an

absolute need to encourage women to take on more IT roles. Diversity is very important in every sector more so the IT sector because we develop lifestyle products, software and services that are essential for everyday living. Having both male and female perspectives helps to holistically understand what the end user needs and presents more than one way to solve a problem.”

“This whitepaper not only identifies the issues we have with diversity and inclusion in the IT industry, but it also recommends practicable solutions to ensure major IT companies, including ourselves and our clients, sufficiently tackle this issue of diversity and ultimately engender better futures for women in IT everywhere,” Egunjobi added.

More information on the white paper, can be found on questioningdiversity.com and can be downloaded for free on the company’s website.

Stakeholders call for improved STEM education

Mobile money agents move to bridge knowledge gap in financial inclusion n a bid to further drive financial inclusion and achieve Nigeria’s 80 percent target by the year 2020, it has become crucial for critical players to device ways to increase awareness and bridge the knowledge gap among financial inclusions agents in the country.

With focus on Northern Nigeria, which has the highest number of financially excluded people, the Association of Mobile Money Agents in Nigeria (AMMAN) in collaboration with Ecosa Hybrid Network recently organised a capacity building workshop with the aim of bridging the knowledge gap amongst financial inclusion agents and other core stakeholders in the industry in the region.

Speaking on the importance of financial literacy, Victor Olojo, national president, AMMAN, said the workshop became necessary in view of low awareness in that part of the country as well as im-

in the IT industry should be strongly implemented by government and major companies, and much more.

Speaking on the launch of the whitepaper, Naama Saar, the company’s chief executive officer, said; “At Tek Experts we are deeply passionate about inclusion and diversity in the

…As i4ITCB, Oracle Academy, NCS host STEM lecturers in South East Nigeria public. It has been reported that Kano and Gombe states were least states in the financial inclusion ranking in the country,” he said.

He further stated that AMMAN has taken its rightful place in the financial inclusion industry in Nigeria with the workshop.

“We are now the alternative to all other stakeholders, who failed to deliver on the 2020 goal of the CBN of reducing exclusion rate to 20 percent,” Olojo said.

AMMAN has proven to be capable and impactful. Since most banks and MMOs only deploy technologies and are interested in profit making without taking the responsibility of agent training and job creation The association provides a reliable channel for feedback on performances of various digital financial services.

Stakeholders say this has helped in raising the efficiency of financial inclusion services in Nigeria.

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he Initiative for Information Technology Capacity Building (i4itcb) has called for improved method and practice of teaching Science, Technology, Engineering and Mathematics (STEM) in schools, especially in the South Eastern part of Nigeria.

The Non-Governmental Organisation (NGO), made this emphasis at a one-day Academia and Technology Seminar for STEM lecturers held recently in Enugu State in collaboration with the Nigeria Computer Society (NCS) and Oracle Academy which demonstrated educational curriculum resources to aid the educators impart their students.

Dele Bayo-Osibo the founder of Initiative for Information Technology Capacity Building said the capacity building seminar had become important to help close the gap between the science and technology industry and academia.

“The Idea is that we will, overtime, close the gap between the industry and the academia. We believe in moving from ‘Knowledge to Impact’. And as such, we want to

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impart knowledge in the academia because they are critical stakeholders in this move to improve IT technicians, professionals in the polity”, Bayo-Osibo said.

Speaking at the seminar themed: ‘Teaching for industry relevant STEM skills’, Hettie Abimbola Soriyan, Lecturer at Obafemi Awolowo University (OAU), Ile-Ife, Osun State, said that STEM teachers need a change in their mindset to be able to win-back students to the classrooms.

She said, “They are working with a generation that does not show as much interest in class room lectures as its was in times gone by, because their interest in technology, especially social media has increased in leaps, almost as a disadvantage. So, lecturers need to leave our comfort zones to train ourselves to use that technology to reach out to the students. Engage the students; give them some things to think about, analyse and present their thoughts.

Soriyan emphasized the need to train students for the digital future by using technology to their advantage.

Also speaking, Iyiola Ayoola, executive secretary of the @Businessdayng

Nigeria Computer Society (NCS), said; “When we refer to the fourth industrial revolution, it implies that IT has penetrated every facet of human endeavor. As a result, we are seeing technological disruptions today.

“So, we are talking about lecturers and teachers of Computer Science courses; they should be able to stay ahead of the class and the result is graduates who are ready to conquer in this technological dispensation. We have many IT courses now in Big Data, Robotics, Mobile Internet, Internet of Things (IoT), Blockchain, Virtual Reality; these are disruptions in the IT industry that should be taught with the relevant tools and revamped curriculum,” Ayoola added.

During her presentation, Sefunmi Fadahunsi, country programs manager, Sub-Saharan Africa, Oracle Academy, reiterated the global IT giant’s determination to impact next generation of professionals through free educational resources around STEM that teachers and schools can leverage to deliver quality teaching and learning experience.

Tuesday 14 May 2019

BUSINESS DAY

Investments

ENERGY INTELLIGENCE OIL

GAS

PETROCHEMICALS

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Market Insight Companies Commodity Tracker Policy

POWER

POLICY

Nigeria lost 633kb/d modular refining capacity to licence expiration …government policy uncertainty, investor apathy fingered STEPHEN ONYEKWELU

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igeria’s planned modular refining capacity has shrunk thanks to licencees who got licences to establish but failed to go beyond the first stage of the process.

Refinery licensing for both conventional and modular types happens in three stages. Sector’s regulator, the Department of Petroleum Resources (DPR) first awards a licence to establish with 24 months validity. Then comes the approval to construct (ATC) and the final stage in the process is the approval to operate (ATO).

A total of 633, 000 barrels per day refining capacity were lost to the inability of the promoters of these projects to make them take off. The lost planned capacity nearly equals Aliko Dangote’s 650, 000 bpd refinery under construction. Out of 45 refining licences issued by the DPR as contained in the agency’s refinery update as of April 2018, 39 were for modular refineries.

“The objective of modular refinery is to ensure that the big capital requirement, which seems to be the major reason why refineries are not

established, is overcome by building small size refineries,” said Rabiu Suleiman, senior technical adviser to Nigeria’s petroleum minister on refineries and downstream infrastructure, in a recent interview with the Guardian, Nigeria.

Experts say industrial sabotage, crude oil theft, illegal refining operations, pipeline vandalism and piracy

present significant challenges in Nigeria’s oil and gas industry. And that modular refinery investors can be swayed by the security condition of the country as investors would, more often than not, desire an environment, where their investment is not only safe but also secure.

According data obtained from DPR’s website, the companies

whose licences to establish expired in 2017 got them in 2015. They included, Kaiji Resources Ltd., Eko Petrochem & Refining Company, Hi Rev Oil Ltd, Frao Oil Nigeria Ltd, Epic Refinery & Petrochemical Industries Ltd, Masters Energy Oil & Gas Ltd, Cross Country Oil & Gas Ltd, Grifon Energy Limited and Sifax Oil & Gas Company Ltd.

Others are, Capital Oil & Gas Industries Limited, All Grace Energy Ltd, Green Energy International Ltd, Fresh Energy Ltd, Chyzob Oil & Gas Ltd, Aiteo Energy Resources Ltd and Associated Worldwide Company Ltd. Only Amakpe International Refinery Inc. got its refining licence early than 2015, which was in 2007.

“Building a petroleum refinery, whether conventional or modular is capital intensive. So, funding is likely the major challenge preventing companies who got licence to establish but failed to break ground before their licences expired” Bode Lukan, chief executive officer of Bodeni Energy Ltd. said. “Uncertainty of government policy is another factor.”

Although Nigeria is a leading producer of crude oil and gas, the country has remained the only oil producer that relies completely on the importation of refined petroleum products to meet local need.

This has given rise to economic challenges, infrastructure shortfall, unemployment, budget deficit as well as poverty, especially as government struggles to pay subsidy on over 55 million litres of premium motor spirit (PMS) also called petrol consumed daily, a system fraught with high-level corruption.

State governments can establish their own power stations – Fashola ISAAC ANYAOGU

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abatunde Fashola, the minster of Power, Works and Housing has said that contrary to wide held beliefs, there is nothing in the power sector regulations or law that prohibits state governments from generating, transmitting and distributing their own electricity.

“Clearly therefore, contrary to widely held beliefs, state governments can establish their own power stations, can generate, transmit and distribute electricity in areas not covered by the National grid within that state and establish their own electricity to promote and manage their own power stations” Fashola said in a keynote address delivered at the Punuka Annual Lecture Series on May 9, in Abuja.

The minister therefore called on other tiers of government such as state and local governments to pay attention to communities within their territories with limited access to grid power to improve energy access for them off-grid solutions.

“They are clearly not areas covered by the Grid and therefore constitute a viable area of intervention by a state government to contract their own power supply without reference to the federal government,” said Fashola.

The former Lagos state governor took a swipe at calls for review of the 2013 privatisation exercise, saying those calling for review had to be more specific on what they want as the

sector is essentially in private hands.

“The reality before privatization is that the Ministry of Power had over 50,000 staff, owned trucks, employed electricians who went out to repair faults, the Ministry controlled power stations like Jebba, Kainji, Shiroro, Egbin to mention a few and the Ministry employed all of those who worked in Distribution.

“All that is gone, since November 2013. From over 50,000 staff, the Ministry now has a staff strength of 729 people. There are no electricians, fitters, repair vehicles or distribution staff in our ministry anymore and we do not supply, repair or replace distribution transformers or meters.

All of these are now the work of the DisCos, under contract with BPE and under license by NERC as a matter of Law,” Fashola said.

According to the Electric Power Sector Reform Act of 2005 (EPSRA), the minister is not empowered to issue directives to DisCos directly.

He can issue directives to NERC to exercise their regulatory power over DisCos or GenCos and this includes for non-performance or to license a competing company to provide an alternative to non-performance and BPE who has a performance contract with DisCos to enforce the terms and condition of the contract, Fashola said “It is such directives from the minister that has led to regulations being www.businessday.ng

Hon. Minister of Power, Works and Housing & Keynote Speaker, Babatunde Fashola, SAN (middle), former head of State,Gen. Yakubu Gowon (2nd left),Managing Partner, PUNUKA Attorneys & Solicitors, Mrs Elizabeth Idigbe(right), Senior Partner, PUNUKA Attorneys & Solicitors, Chief Anthony Idigbe,SAN,(2nd right) and Heir Holdings Limited,chief executive officer, Emmanuel Nnorom(left) during the PUNUKA Attorneys & Solicitors 2019 Annual Lecture Programme with the theme,” Rethinking the Model for an Effective Nigerian Electricity Supply Industry(NESI): Challenges for Government and Industry,” at the Transcorp Hilton Abuja last weekend.

made by NERC to license Meter Asset Providers to bridge the metering gap that DisCos cannot cover and Eligible customers to allow consumers who utilize up to 2 MW and are not satisfied with what the DisCos give them, to buy their power directly from the GenCos The minister said Nigerians can help by not only protecting electrical

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installations, paying our bills, helping to stop energy theft and interacting more with our Discos who are the interface with consumers, they must also consciously conserve energy and reduce waste.

“In addition, those who are selfgenerating through diesel or petrol generators must understand that @Businessdayng

their cost of self-generation at over N100 kw/h is much higher than public power.

“Since nothing stops them from using generators, there is nothing that should stop them from converting their generators to cleaner and cheaper energy sources like solar panels on their roof tops.

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Tuesday 14 May 2019

BUSINESS DAY

ENERGY INTELLIGENCE Investment

Four ways gas flare sale programme will enhance Nigeria’s energy security – Derefaka ISAAC ANYAOGU

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igeria’s gas flare commercialisation p ro g ra m m e w i l l contribute to energy security in Africa’s largest economy by growing demand for gas based solutions, creating enabling technology, grow midstream players and increasing environmental awareness, Justice Derefaka, programme manager, Nigeria’s Gas Flare Commercialisation Programme (NGFCP) has said.

In a presentation at the third edition of Lawyers in Oil and Gas Conference held in Lagos on May 7, Derefaka said that the growing global demand for energy fuelled by rising population will make energy security a priority of many countries. Global population is expected to reach 10billion by 2050 with 67 percent living in cities. As fossil fuels decline, more gas investments would be required to complement renewables.

“An increase in energy demand which will be driven by economic growth, and as people seek to improve their quality of life, this will

Justice Derefaka

require a secure energy source.

Even assuming significant future energy efficiency gains, global energy demand is expected to grow by 30% between 2015 and 2040 quoting IEA New Policies Scenario,” Derefaka said.

To prepare the country for this future, Derefaka said the gas flare

commercialisation programme had been developed to meet an anticipated gas demand projected to grow from industrial and domestic LPG demand. Gas will be heavily demanded by industries for plastics, fertilizer and power and demand for clean cooking will drive uptick in demand for LPG.

Another result that the country could gain from the NGFCP is improved technology through iintroduction and refinement of new end-use technologies for example GTL and small scale LNG. It will also reduce costs and eliminate barriers that fosters decline in the cost of CNG compressors.

Derefaka also said the programme will encourage new midstream players in the Nigerian gas industry allowing inflow of new infrastructure players to enable gas uptake and usage in previously unreachable regions. This will drive business development from gas companies to unlock new domestic markets for gas leading to improved energy security for Nigeria.

Nigeria is a signatory to Global Gas Flare Reduction Partnership (GGFRP) which works to increase use of natural gas associated with oil production. Nigeria is a part of the COP agreement, committed to emission reduction and cleaner energy. Derefaka stressed that these goals will be enhanced by the success of the NGFCP. There are currently over 16,000

flare sites in 90 countries all over the world with over 150BCM gas flared annually. This is enough to produce 750 billion kWh power which is more than the entire power consumption on the African continent annually.

Despite a 70% decline in flaring over the past decade, in 2015, around 1,000 MMSCFD of gas was flared in Nigeria, exceeding around 800 MMSCFD utilized for power generation and around 450 MMSCFD utilized in domestic industry. Nigeria has the world’s 7th biggest gas flare with about 172 flare sites.

The NGFCP seeks to abolish gas flaring by raising fines and providing an incentive for investors to use flared gas. Under the new regulations, the Federal Government has asserted its right to take gas free at the flare and will auction it off to third parties.

According to Derefaka, the strength of the NGFCP is that it leverages institutional leadership and oversight to drive reform priorities and provide early warning to policy makers of regulatory issues that need to be fixed.

Market

Bid rounds: Nigeria remains silent as Uganda woos investors for new oil blocks DIPO OLADEHINDE

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lection season over, Africa’s biggest oil producing country is still silent on its oil licensing round last held in 2007 while other oil-producing countries like Uganda plan to launch a second competitive bid round for exploration licenses in the Albertine Graben area where over 6.5 billion barrels of oil resources have already been discovered.

The hydrocarbon deposits discovered 12 years ago have been repeatedly delayed by a disagreement with oil companies over tax disputes, however Uganda will be offering oil exploration deal for the second time under open bidding, as a result of the success recorded from the first bid round.

According to Irene Muloni, Uganda’s Minister of Energy and Mineral Development, seven new exploration blocks will be open for bidding during the third week of May to coincide with the East African Community Petroleum Conference that is scheduled to take place in Mombasa, Kenya.

Five exploration blocks ranging from 400 to 1300 km2 are expected

to be launched for this licensing.

Extensive data is available on the blocks including seismic and well data. The licensing round follows the first licensing round through competitive bid which was successfully undertaken in 2017.

“The minimum requirements for bidders have not yet been stipulated by the ministry but will be revealed at the conference,” Muloni said in a press conference.

The area that is being put up for bid has three commercial areas that cover both onshore and offshore blocks include Ngaji in Kanungu and Rukungiri districts; Kasuruban in Buliisa and Packwach; Avivi in Arua district; Turaco in Ntoroko district; and Omuka in Nebbi district.

“We have so far allocated 10 percent of the Graben to the existing firms. From the remaining 90 percent of the Graben, we have picked data and it is this data that has helped us with the forming of these new blocks,” Muloni said.

France’s Total, China’s CNOOC and the UK’s Tullow are preparing a final investment decision this year for a $20 billion project to develop over 1.7 billion barrels of reserves www.businessday.ng

in Uganda’s western Albertine Graben area near the border with the Democratic Republic of Congo.

The country is also planning to construct a 1,445 km crude export pipeline via Tanzania’s port Tanga and an oil refinery that is expected to produce finished products for the East African region.

Uganda launched its first competitive round in 2014 but the round failed to attract significant interest from larger oil companies.

Completed in 2016, the round saw Armour Energy from Australia and Oranto Petroleum from Nigeria emerge as the top bidders for the Kanywataba area and Ngassa block respectively all in the Albertine Graben area.

Uganda made its first commercial oil discovery in 2006. To date, over 121 wells have been drilled with a success rate of over 88 percent.

In Nigeria, Stakeholders in oil and gas industry are still left guessing about when a major licensing round or at least a marginal fields bid round will be held amid a lull in exploration activities.

Luqman Agboola head of infrastructure at Sofidam Capital Lim-

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ited does not expect any successful bid happening in Nigeria until the next five years as the country needs to clear a backlog of mess that have occurred in the sector in time past.

“When you look at the market the feeling is that the money is not there so who will bid for those fields?” Agboola asked.

Agboola noted that having the main aim for having bidding rounds is to make money and allow efficiency because oil blocks have gone beyond political patronage which occurred in time past.

Ayodele Oni, energy partner at Bloomfield Law Practice said the government loses a huge amount of revenue daily by not conducting a licensing bid round but this loss is not truly only accountable to the protraction in conducting a bid round.

“Nigeria has lost more from nonproducing marginal field licenses which it has estimated could cumulatively produce an average of 90,000 bpd of crude,” Oni, energy partner at Bloomfield Law Practice said.

Oni noted that some of the factors for non-producing marginal field ranges from inappropriate due diligence to technical or financial @Businessdayng

challenges therefore it’s pertinent that these challenges are addressed before conducting another bid round.

Nigeria has the second largest proven reserves in Africa, with an estimated 37.5 billion barrels of crude oil deposits at the end of 2017, representing 2.2 per cent of the global total, according to the BP Statistical Review of World Energy 2018.

Oil remains the heartbeat and chief source of income for Africa’s biggest economy, accounting for a whopping 85 percent of export revenue, however in the last twelve years, Nigeria’s oil reserves and daily production had remained almost stagnant hovering in the region of 37 billion barrels and two million barrel production day (bpd) respectively, data from Organization of Petroleum Exporting Countries (OPEC) showed.

A 10-year target set by the Federal Government to boost crude oil reserves to 40 billion barrels and daily production to 4 million barrels by 2020 is becoming unrealistic as analysts say corruption and government shenanigans have decreased growth in the sector.

Tuesday 14 May 2019

BUSINESS DAY

OFFGRID BUSINESS

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COMMENT

The political and regulatory problems with tariffs in Nigeria ZIRA JOHN QUAGHE AND BARKA SAJOU

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ver five years since Nigeria privatized its power sector, electricity tariffs are still not cost-reflective. An uncommercial tariff regime, worsened by losses across the value chain, has inhibited improvements in power supply.

Electricity is currently sold at a deficit of nearly 50%. While the true cost of producing and distributing electricity is estimated to be N51 to N68 per kWh, the Distribution Companies (DisCos) are only allowed to sell at a regulated price of N31 to N36 per kWh. For this reason, the financial shortfall in the power sector reached N348.50 billionas at October 2018, according to data from the Nigeria Bulk Electricity Trading Plc (NBET).

Starved of private investment, Nigeria sought to increase liquidity via donor finance, but the power sector has not been able to effectively leverage donor financing (such as the $5.2bn World Bank facility) due to the government’s unwillingness to establish cost-reflective tariffs.

In Nigeria’s privatized electricity sector, it is expected costs of power production and distribution should largely determine tariffs charged to consumers. That way, power companies are able to recover their cost and further invest in the sector.

This has not happened one main reason – electricity tariffs in Nigeria do not reflect market conditions; instead, tariffs are reviewed in a manner that is not consistent with realities of power production and supply in the country. Tariffs have remained the same since February 2016, going against the government’s Multi-Year Tariff Order, that stipulates bi-annual tariff increases.

To keep the sector running, the government expends significant public funds to support power generation and distribution companies.

Substantial government “interventions” and a slow transition to a private-sector-driven electricity market has come with two key consequences for Nigerians. On one hand, power supply has not improved and is only

likely to worsen as DisCos are cashstrapped. Secondly, the government is expending significantfinancial resources to support a sector that should be funded by consumers.

Exemplifying sectoral inefficiencies and underinvestment, Nigeria dispatches only about 4000 MWon average over the past three years, despite have having an installed capacity of about 13,000 MW, largely due to constraints in gas supply and distributions capacities.

This shows that improvements in generation would not translate to improvements in power delivered without investment in transmission (which is still government-owned) and distribution.

Despite the significant market shortfall, the government has maintainedthat it would not increase electricity tariffs in the near term.

While the economics of electricity generation and supply is usually far removed from consumers, electricity prices are easily monitored by many.

Therefore, keeping electricity tariffs low could be a visible way to deliver benefits to a wide range of electorates in exchange for political support, given the 2018-2019 political climate.

Such political motivations are aided by the fact that many Nigerians still view electricity as a government service (or public good).

Why inconsistent tariff policies hinder the viability of Nigeria’s power sector Liquidity crisis and significant government expenditure Given the current tariff regime, even with zero collection losses, there would still be payment shortfalls across the value chain. For this reason, Nigeria has a power sector that is only viable through substantial financial support from the government, the lender of last resort.

For example, the between 2015 and 2016, the World Bank calculated that Nigeria’s electricity tariff shortfall amounted to N458 billion. Going by the current tariff trajectory, the highly indebted power companies are expected to incur more debts in 2019, reaching a tariff shortfall of N2.4 trillionby July 2019.

L-R Bolaji Aluko, DG, Ekiti Transformation Office; Wiebe Boer, CEO, All On; Bamidele Faparusi, Ekiti State Commissioner of Infrastructure; Michael Sonubi, Ekiti Territory Sales Manager, Oolu Solar; Kayode Fayemi, Governor of Ekiti State; Afolabi Akinrogunde, Investment Manager, All On; Abimbola Shopeju, Deputy MD, Lumos Nigeria; Femi Ashipa, VP Marketing, Lumos Nigeria; Tony Carr, CEO, Starsight; Aishat Alimi, Investment Analyst, All On during a meeting to discuss the Ekiti State off grid energy strategy at the governor’s office in Ado-Ekiti

Poor service delivery Investments in Nigeria’s electricity value chain are hindered because the sector’s cash deficits have eliminated incentives for owners of DisCos to invest in improving power supply to consumers. On the demand side, lack of stable power has made customers unwilling to pay, and pushed industries to seek alternative sources of power outside the grid network.

These trends further contribute to tariff shortfalls and reduces capital available for further investments.

What can be done to improve the situation?

Implement policies to improve management and regulation Establish a clear and predictable tariff policy that protects the interest of customers and investors, outlining a clear trajectory for cost recovery.

Implement communication programs to create awareness that electricity is a commercial service with a price (not a public good).

Improve governance of the power sector by ensuring that rules and policies are effectively enforced

Implement data-driven processes for decision-making across the power value chain by deploying information systems management tools to analyze billing, metering, collection and measure performance of electricity companies.

Conduct periodic energy audits to establish a realistic estimate of technical, commercial and collection losses.

Implement programs to regularize debts owed by customers and integrate management of metering, billing, collection, disconnectionreconnection, among others.

Reduce vulnerability of distribution networks and meters to tampering and illegal connections, and conduct field assessments to identify and fix irregular connections.

Enforce stringent penalties for electricity theft, while making energy theft a recognizable offense.

Conclusion Nigeria’s potential for growth, prosperity, and development is undermined by lack of access to reliable power. It is estimated that 90% of businesses in Nigeria own a back-up generator. According to the World Bank, nearly seven out of ten businesses identify power as their main business constraint. This shows that the negative effects of a non-per-

forming electricity sector go beyond households; electricity deficiencies have a bearing on commercial sectors, which are critical to transforming Nigeria’s economy.

It is critical for stakeholders to understand that public policies supporting tariffs that are not cost-reflective will not deliver quality power supply to Nigerians. That said, ensuring an incremental tariff policy is only a part of the solution to Nigeria’s electricity challenges – limited gas availability and significant collection losses remain critical bottlenecks.

However, the other challenges do not affect the viability of the sector as a whole, unlike the way non-cost reflective tariffs have impacted viability of the sector. Inconsistent and unpredictable tariff policies, as witnessed in the five years since privatization, would only worsen the existing liquidity crisis, increase pressure on public finance, and prolong the journey to steady power for Nigerians.

Zira John Quaghe a researcher at the Natural Resource Governance Institute (NRGI) and Barka Sajou an energy infrastructure expert at the Nigeria Electricity Supply Industry (NESI)

NIMASA prepares structure to maximise opportunities provided by renewable energy

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he agency responsible for regulating shipping, maritime labour and coastal waters, the Nigerian Maritime Administration and Safety Agency (NIMASA) has announced plans to put in place structures that will explore more opportunities in the renewable energy space which

may lead to less activities in crude oil exploration and exploitation in the country.

While delivering a paper with the theme, “The effect of global energy transformation” at one of the side workshops during the just concluded Offshore Technology Conference, OTC in Houston Tex-

as, Director General of NIMASA Dakuku Peterside emphasized its readiness to develop policies that will see to a smooth transition from the regime of intense wet cargo operations, to the inevitable era of renewable energy.

“We at NIMASA are working to create a new framework to maxi-

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

mize opportunities provided by renewable energy. So the world does not leave us behind,” Peterside said at the event.

The DG at NIMASA said the regulatory body is taking conscious steps to put the necessary building blocks for an era of renewable energy when exploration

and exploitation of oil and gas and all associated logistics will no longer play a major role.

“We propose policies to promote transition to clean and renewable energy. We have accepted the inevitability of renewable energy in years to come” Peterside noted.

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email: isaac.anyaogu@businessdayonline.com, stephen.onyekwelu@businessdayonline.com, oladehinde.oladipo@businessdayonline.com

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Tuesday 14 May 2019

BUSINESS DAY

property&lifestyle Rental Market

Fresh challenges in housing market as landlords seek agreement, commission fees outside terms Endurance Okafor

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he lack of sufficient andpocket-friendlyaccommodationinmost Nigerian cities has left manyhome-seekersat themercyofsomelandlordswho, accordingtoBusinessDaychecks, are taking undue advantage of the challenges in the country’s property market.

Some house owners in the busy mainland of Lagos and Port Harcourt are said to be enacting new terms of renting apartments to prospective tenants that are unfavourable to estate agents and their clients.

BusinessDay survey revealed that some landlords who have highly sought-after apartments with cheaper price ask potential tenants to pay legal (agreement) fees to them instead of a lawyer and the commission which is also supposed to be the agent’s fee for initiating the transaction is split to give a share to the house owner.

“What happened before now was that the lawyer from the landlord was entitled to the agreement fee while the agent was given the commission but nowthelandlordsaretakinghalf of the commission and sometimes more than half coupled with the agreement as they no longerusetheservicesoflawyers and no written agreement is given other than a receipt,” Ade Usman, a real estate agent in Yaba, told BusinessDay.

According to the middleaged man who gets most of his clients from an online platform, the landlords’ recent behaviour is as a result of the fact that “they feel if one agent doesn’t collect the amount he is given, another agent will.”

He attributed this to the increase in the number of agents now scrambling for the same business. “These days, anyone can bring a tenant to a landlord andclaimthathe/sheisanagent andiswillingtotakeanyamount, thereby stirring unhealthy competition in the market.”

Agency fees are not illegal as some people think it is; it is a reward for the service rendered to both the landlord and prospective tenant or a buyer looking for a house or a piece of land. In fact, if middlemen in manufacturing and trading businesses get rewardedwiththeadditionalprice to the producer’s price, house agents should not be exception.

Generally, agency fees for tenancy agreements are 10 percent of the tenancy rates. For instance, if a property is going for N800,000 per annum, the agency fee will be 10 percent of the rent which amounts to N80,000 for one year and if the agent is collecting 2 years rent, that will be N160,000.

According to Patience Dokunmu, a young graduate who has just got a job with a consulting firm in Surulere, the 10 percent commission is not applicable to “those agents who charge you whatever they want

just because they know you needthehouseandthelandlord too does not consider you when charging agreement fees.”

The young lady said she recently got a single room apartmentforN250,000perannumbut the commission and agreement fees were slammed on her without any calculation whatsoever.

“I paid N50,000 each for both agreement and commission, that is N25,000 more than what I was supposed to pay as commission and also there was no lawyer that signed agreement andmylandlorddidn’tevengive me any agreement document,” Dokunmu told BusinessDay. AccordingtoBoyeAjayi,Chief Operating Officer at Property Communications, and National PublicSecretaryofAssociationof Estate Agents in Nigeria (AEAN), things like this happen when people prefer to use shortcut, refuse to contact a professional coupled with the fact that estate agency as a profession is not well regulated, arguing that, if it were well regulated, things like these wouldn’t come up.

“The problem we have is that tenants and home buyers patronize persons who are not supposed to be practicing in this particularprofession,”Ajayisaid.

He explained that agency issuesarethesoleresponsibilityof a professional and they are paid commission for their services while on the other hand, a lawyer take the legal (agreement) fees which he uses to prepare terms and conditions which

will be beneficial to both parties.

Ordinarily, an agent is entitledtotheentire10percentofthe cost of acquiring an apartment, without giving any portion to the landlord, whereas the agreement or legal fees is money paid to a legal practitioner who operates in the property industry for thedocumentationoftheagree-

ment between a landlord and his prospective tenant.

For property sales, it usually attracts5percentofthetotalprice paid for the property (negotiable in some instances if the potential propertyownerhasaskilledlawyer in pointing out the reasons it should be less than 5%).

Credit Sales reports that the

average rent of Nigerians between 20 and 35 years of age is around N82,800($230) monthly and the average price of one bedroom apartment in mega cities like Lagos, Abuja and Port Harcourt is around N90,000 ($300) per month. This means that a lot of people cannot afford to rent by themselves.

Interior Decor

IL Bagno transforming interior experience with multi-sourced solutions FG plans housing projects in 34

states, makes national ID criterion

Temitayo Ayetoto

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L Bagno, a private limited liability company operating under Black Pelican Limited, has been in Nigeria for 15 years, transforming the interior furnishing experience with innovative options sourced from world leading manufacturers of interior solutions.

With the coming on stream of its above-par solutions in sanitary wares, kitchen, lightings, and furniture among other fittings, demand has become diversified and increased with users’ awareness on these options.

“This means bathrooms are not just pale corners for unwholesome body exercises, and neither is lighting a mere illumination without aesthetics. Rather, it is treated as a sanctuary that should be surrounded with relaxing gadgets that reflect taste, personality and lifestyle”, Adetutu Opeyemi, IL Bagno’s brand manager, told BusinessDay.

Temitayo Ayetoto

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“We started as a bathroom company but over the years we saw the need to consolidate everything within interior space; we don’t want to be boxed. Our core is total interior solutions and our focus is excellence in terms of customers’ services,” she said.

Under selective partnerships with international

brands such as Iguizzini, Stua, Emco, and Hansgrohe, IL Bagno brings residential and corporate demands for interior furnishing up to speed with ground breaking designs.

The company’s latest products with most recent and awing designs are from the stables of Iguizinni and Stua. Iguizinni is an Italian

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company with a technological focus on lightning designs for both indoor and outdoor spaces. Stua, on the other hand, tailors its innovations to furniture products.

Some of Iguizzini’s latest products which IL Bagno is set to deliver to the Nigerian market include Laser Blade XS and Laser Mini-me collection.

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ssomegovernmentinitiated housing projects acrossthecountrynear completion,thefederal governmenthassaidplanswere afoot to roll out these facilities to eligibleNigerianssoon,pointing out that the criteria for accessing those homes would be the national identity card.

The project facilitated under the pilot national housing scheme with funding from federal mortgage bank of Nigeria (FMBN) is a mixture of blocks of flats and bungalows in the southern part and largely a suite of bungalows with one to threebedrooms in the northern parts.

“There are federal mortgage bank funded projects around the country and one of them is our national housing project pilot. We are trying to find what peoplewillacceptandwhatthey can afford. We are mindful that there are many empty houses around the country and we are still in that laboratory stage. We are also looking at how to roll out allocation,” explained Ba@Businessdayng

batunde Fashola,the minister of Works, Housing and Power in a mediainterviewattheweekend.

Although the basic housing structures are standing, the minister said the projects still await final infrastructure installations such as the estate roads, water supply system, mechanical and electrification structure.

According to him, some of the earlier goals that were set in terms of trying to industrialise housing in the country were already being met with most of thematerialsbeingusedonsites, sourced locally from windows to cement, nails and roofing materials among others. These, he said, were drivers of the small and medium scale industry, which could not be separated from the contribution of the manufacturing sector to the gross domestic product in 2018.

However, the government has seen need to readjust its projects in terms of final cost of output without hurting quality as some of the models being adoptedpresentchallengessuch as additional costs on roofing designs,excessspaceandothers.

Tuesday 14 May 2019

BUSINESS DAY

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property&lifestyle Project Finance

Equity finance tops funding sources for real estate projects, here’s why … credit facilities from lenders favour big ticket developers ISRAEL ODUBOLA

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huge number of real estate firms get funding from equity sources than debt to execute projects owing to risk-averse attitude and cautious stance of Nigeria’s financial institutions, BusinessDay findings have shown, meaning that debt financing is hard to come by.

According to industry sources, real estate firms rarely utilize debt finance as financial institutions, especially deposit money banks, prefer to fund projects with short pay-back period to others with longer gestation period like real estate projects.

Folorunsho Bankole, Deputy Managing Director, Stable Shelters Development Limited, told BusnessDay that real estate companies explore private equity and off-takingfinancingoracombination of the two, or their personal funds, while a few apply for loans from deposit money banks.

Even though most funds are drawn from private equity, it doesn’t come cheap either. Information gathered revealed that private equity investors charge interest between 35percent and 50 percent, or even more, and this is a majoy reason cost of housing executed by private developers are unaffordable to an average Nigerian.

“Debt financing is very rare because banks don’t give”, said Bankole. “Requirements attached to loan facility are numerous. And at the end of the day, they tell you that the risk assessment of your project is

not viable,” he added, noting that funding real estate is not a bank-thing.

He, however, maintained that top real estate developers or firms that have close relationships with management of banks get funds easily from them, but this is not so for an average developer.

Rotimi Olu-Steven, a broker at International Real Estate Partners, shares that view. “Real estate firms are not borrowing from banks as before. Moreover, banks are very careful knowing that the sector is in downturn.”

An analysis of banks’

loans and advances to the sector in full year 2018 shows waning debt finance for real estate projects.

Eight lenders including Access Bank, UBA, First Bank, Zenith, FCMB and Guaranty Trust Bank collectively gave loans and advances worth N623.3 billion for real estate projects in 2018, which is N60 billion lower than N683.3 billion given out in the previous year.

Worse still, total banking industrycredittothesectordipped some4.54percentpointsto-2.92 percent in quarter four of 2018 compared with 1.62 percent in

the previous quarter.

However, even though experts claim that real estate developers scarcely make use of debt financing because of its complexities, a cursory look at how some high-rise buildings in Lagos are financed shows something different.

For instance, Heritage Place, a 14-storey Grade A office building in highbrow Ikoyi area of Lagos, developed by a consortium led by London-headquartered privateequityfirm,ActisCapital, was financed through a $65 million loan sourced from First City Monument Bank.

Propertymart commits to quality, delivery of Cityview Estate, others

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ropertymart Real Estate Investment Limited, a foremostrealestatefirm inNigeria,saysitiscommittedtotimelydeliveryofquality houses at its Cityview Estate, Arepo in Ogun State as well as otherongoinghomeownership projects across Nigeria.

Specifically, the firm has assured prospective home owners and investors that all ongoing housing units in the estate would be completed and handed over to them before the end of 2019.

Deji Fasunwon, company’s managing director, while speaking about their milestones, disclosed that Propertymart had delivered over 85 per cent of houses across its housing projects in key cities and towns in Nigeria.

Facilities management: A case study

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Housing

CHUKA UROKO

Infrastructure Maintenance With Tunde Obileye

“Propertymart is a significant player in Nigeria’s real estate sector and, since 2008, we have provided real estate solutions in Lagos, Ogun and the Federal Capital Territory (FCT). Our key housingprojectsincludeCityview Estate, Arepo; Edensville Estate, Simawa; Fairmont Apartment, Lekki;andFairmontHilltop,Alagbado amongst others,” he said.

Fasunwon commended clients for their patience and assured that the company was focusedonitsmissionofassisting Nigerianstoachievetheirdreams of becoming home owners.

He explained that though Propertymart, like many businesses, experienced the harsh operating environment occasioned by the 2016 economic recession,ithasconsistentlylooked inwardsandinnovativelydevised ways to achieve its objectives of ensuring clients satisfaction. www.businessday.ng

“As a company with integrity, the management refused to do what an average real estate company in such situation would do; like asking its customers to come and pay more for the houses they had subscribed to, or refund the monies received from customers.

“The company believes that of more importance is the achievement of the dreams of its customers irrespective of the challenges of the times.

Rather than the company exploring the easy way out, it has decided to ensure whatever it took to deliver properties subscribed to by its customers.

“One major step taken by the company was to dispose of some of its stock trade meant to bereservedforprofitinthefuture.

These included plots of land in prime locations in some of its estates and also some of its other

properties. Efforts are yielding good results as it has resulted in delivering properties to customers”,themanagingdirectornoted.

He revealed that the company was constrained to work with only a few reliable and trusted contractorstoensurequalitytoits customers, pointing out that the effectofthisdelay,expectedly,led to dissatisfaction of many of the customers who had subscribed to different products and were expecting delivery of same.

Fasunwonaddedthat,rather than introduce new housing estates during the recession period, Propertymart focused on achieving delivery of most of its backlogs, pointing out that “this has been productive as 136 units of houses were delivered in the first quarter of 2019 and another 138unitsareexpectedtobecompleted and delivered at different times in the second quarter.

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ecently, my company worked with a major organization as a facilities management consultant and found the following: •The department responsible for facilities maintenance and management had a high turnover ratio and no well-established team to oversee the set objectives • Super visors functioned as the mainten a n c e p l a n n e r s, a n d scheduling was done in the afternoon prior to the following day.

• Super visors were actually not planning any work, which meant the technicians were repairing assets on the fly with no documentation of work performed.

•The department was not prioritizing corrective maintenance. As a result, 81 percent of corrective work orders was marked as needing to be completed within 48 hours, while 13 percent of work orders was marked as needing to be completed within 24 hours.

• A work management assessment determined that the utilization rate was below 12 percent.

• Inve nt o r i e s w e re bloated such that fees for expedited orders outpaced the actual cost of the materials.

The result of these findings was to urgently identify the root cause of this problem and put in place a system that will be performance-driven and result-oriented.

The report to senior leadership on the situation recommended the following actions to remove the deficiencies: A ss e t ma nag e m e nt framework: This step focuses on a holistic reliability-based optimization strategy for assets — failure mode, effects and criticality analysis, maintenance strategies, quality management methodologies, etc.

Wo rk m a n a g e m e nt process guide: This recommendation refers to the entire work manage@Businessdayng

ment process to identify, plan, execute, close out and analyze.

Material management process guide: This recommended set of processes is designed to identify material requirements, procurement and provisions for the materials to be available at the right time at the right place and at a fair price.

Data management process guide: This recommendation provides a process with roles and responsibilities in order to manage critical data related to, for example, ha rd wa re b re a kd ow n structures and bills of material, as well as to manage and maintain data quality.

Clearly defined roles and responsibilities: This recommendation involves restructuring the entire maintenance department.

Supervisors supervise and establish a formal planning department that includes schedulers. They also re-assign identified resources to predictive maintenance strategies and development.

The recommendations were adopted and an action plan immediately established to the facilities management system.

The resulting impact of this exercise created increased productivity through a clearly defined roles and responsibilities template enabling all FM personnel to function in a coordinated and integrated manner.

Facilities managers can improve their departments greatly to keep facilities in top condition and make end users satisfied. Furthermore, the bottomline of their organisations can be increased through cost savings.

In conclusion, the extent to which facilities managers will impact positively on their facilities depends on how much they are ready to take necessary decisions to achieve their set goals.

Obileye is a UK-trained lawyer and CEO, Great Heights Property and Facilities Management Limited Email: Tundeobileye@greatheightslimited.com

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Tuesday 14 May 2019

BUSINESS DAY

POLITICS & POLICY

Ambode pays ‘thank you’ visit to Buhari Tony Ailemen, Abuja

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overnor of Lagos State, Akinwunmi Ambode, on Monday, was in Aso Rock Villa, Abuja for a “thank you” visit to President Muhammadu Buhari.

Recall that the President was in Lagos a few weeks ago to commission projects executed by Governor Ambode.

Speaking with State House correspondents after a closed door meeting with the President, the governor said recent political experience in Lagos State has made him wiser.

In apparent reference to his political trajectory, Ambode said he is “politically wiser now.”

According to him, “We did our best and, most im-

portantly, the projects we did were people-friendly and people-centered. I just think a lot more people have enjoyed the benefits and dividends of democracy than we actually met it.

And that gives me joy that we were able to touch lives.

“Wherever you find yourself just make a positive difference to people and Nigerians, that is the whole essence of service.

I’m grateful that I had that opportunity.”

In an apparent reference to his political experience in Lagos State, where he was allegedly schemed out of a second term bid, Ambode said the experience “has afforded him an opportunity to review his style from being a technocrat in government to a seasoned politician.

“You see, every politician

Akinwunmi Ambode

Only court will determine Okorocha’s fate – INEC insist …Commission to begin review of 2019 election June 1 Iniobong Iwok

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he Independent National Electoral Commission (INEC) has disclosed that it would only issue Certificate of Returns to Governor Rochas Okorocha of Imo State after a ruling on the matter pending at the federal High Court.

Governor Okorocha was the candidate of the ruling All Progressives Congress (APC) in the February 23 Imo West Senatorial election.

The commission withheld his certificate of returns after the Presiding Officer had declared him winner of the election.

INEC claimed the declaration was made under duress.

Okorocha is however, challenging INEC decision at the Federal High Court.

The governor, who is completing his second term in

office later this month, had insisted in a petition that going by laws governing elections in the country, INEC had no right not to issue him a Certificate of Return.

The commission had recently promised to meet and deliberate on Okorocha’s latest letter and take a final decision on the issue.

But speaking in a telephone interview with BusinessDay, Monday, Festus Okoye, INEC Commissioner for information and voter education, however, revealed that such meeting had been called off.

Okoye said that since both parties were in court over the issue, the commission had decided to wait for a final judgment on the matter, stressing that the commission was however, ready to respect the decision of the court.

According to him, “There is no meeting that would be held

learns every day. The fact remains that I came in as a technocrat so I used to call myself a techno-politician, but I think I am politically wiser now. I am more of a politician than a technocrat now,” he said.

Ambode is the first Lagos governor since 1999 that will not be returning for a second term after he lost the governorship ticket of the party in the state.

The National Leader of All Progressives Congress (APC), Bola Tinubu, had anointed Babajide Sanwoolu, to succeed Ambode as the new state governor.

Responding on his mission to the Villa, he said, “You will recall that on the 25th of April, Mr. President paid an official visit to Lagos State and he commissioned some of our projects. It is just significant

on the issue. Okorocha has gone to the Federal High Court on the issue, and some parties have also gone to the election tribunal, so we have decided to wait for a final judgment.

“The commission will wait for the judgment of the court, we do not have powers to take decision on his Certificate of Returns, nor can we be intimidated.”

The INEC Commissioner further stated that Okorocha’s opponent and other parties in the February 23 election, had gone to the tribunal to challenge the result of the Senatorial election and had also written to the commission to issue him with Certificate of Return.

“There are other parties that have also written that they should be join in this suit, they have also gone to the tribunal to challenge the result, they have asked us not to issue him with the Certificate of Return,” Okoye added.

for me to come officially on behalf of all Lagosians and show appreciation; thank him physically and wish him well during this Ramadan period and thank him for finding time and deeming it fit to commission those projects.

“Those projects are projects that will actually touch the lives of Nigerians and we are happy Mr. President was able to share his time with us and we are grateful,” he said.

On what he wants to be remembered for as he leaves office in a couple of days, the governor said: “Well, in another 16 days or so we will be leaving office but what is important is that I was able to have that opportunity to be elected as governor of Lagos State and to touch humanity in a way that I did.”

Moghalu, Sonaiya, Olukotun call for constitutional reform to enthrone good governance wo former presidential candidates in Nigeria’s elections, Kingsley Moghalu, Remi Sonaiya and a university don, Ayo Olukotun have advocated for electoral and constitutional reforms to ensure good governance in Nigeria, especially at the grassroots.

Speaking at the Sikiru Kayode Adetona third annual professorial chair lecture held recently to celebrate the 85th birthday of the monarch at Ijebu-Ode, Ogun State, the three scholars agreed that the present political structure at the grassroots (local government level) has failed and should therefore, be reviewed.

Without good leadership, there cannot be good governance; hence, constitutional restructuring of the country must be addressed, says Moghalu.

“We have seen something happening recently in Kano State where the emir of Kano’s throne is being balkanised and bastardised. We know why; it is to quash an independent voice, so this raises the question of the roles of traditional rulers. The government should no longer appoint traditional rulers.

Let the traditional rulers be selected by their community and recognised by the government,” he said.

Moghalu opined that traditional rulers should have informed role in a restructured Nigeria, which will be advisory. “In a restructured Nigeria, with a new constitution, traditional rulers should have a formal role, that is, advisory roles. This is what we should do. We cannot make traditional rulers errand boys for politicians and when they refuse to play that role we begin to play around

with them,” Moghalu said, stating that there is need to empower the people to demand for accountability from government.

Ayodele Olukotun, the current occupier of the Sikiru Kayode Adetona professorial chair in his lecture, entitled ‘Grassroots Governance: The Soft Underbelly of Nigeria’s Political Architecture,’ said the local governments appear to have produced exactly the opposite of their original objectives in Nigeria.

According to Olukotun, local governments have failed to bring governance closer to the people at the grassroots. “…rather local governments have produced absentee local government chairmen who are only seen at council headquarters to receive the monthly statutory allocations. This is a common experience in most of the local government councils in Nigeria,” he said.

Grown School Feeding Programme, NPower, TraderMoney and others, adding, “I briefed him fully that they are going according to plan.”

“I did request for more supports in various states and I did promise him that as a governor and as Anambra State, we will give all the supports to make sure that he has a successful second term in office.

“We did ask for appointment too in various areas.

The President is a good man and he will look at those re-

quests dispassionately and handle them accordingly.

“There are many federal roads in Anambra; they have concentrated mainly on the main one now which is Onitsha-Enugu Expressway.

“But we have over seven more dilapidated federal roads in Anambra that have not been touched for over twenty years. Quite honestly, it was under his tenure - under Petroleum Trust Fund (PTF) that those raids were made and now he is the fellow fixing them many years

after.

“So I came to congratulate him on his well deserved victory. That is one; then I gave him update on the Federal Government projects that are going on in Anambra.

For example, Second Niger Bridge, which is going according to plan; work is going on there very well.

The minister of Power, Works and Housing and myself were at the sites recently and I came to brief him fully how that work is going as planned.

Seyi John Salau

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Appointments: Obiano seeks more slots for Igbo Tony Ailemen, Abuja

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overnor Willie Obiano of Anambra State on Monday appealed to President Muhammadu Buhari to give more slots to Igbos during his second term.

Governor Obiano, who was fielding questions from State House correspondents after a closed door meeting with President Buhari, said Igbos deserve to get more of such cabinet appointments

in the next dispensation “I did ask for support in appointments: ministerial, ambassadorial, parastatals and so on, so that all of us can move to the Next Level.”

He also revealed that about N2.3 billion has been spent so far by the Federal Government in school feeding in Anambra State.

The governor, who said he was at the Presidential Villa to congratulate the President, said the state has over 8000 youths who are already employed, under the www.businessday.ng

N-Power programme “Youths that ordinarily would have been doing some other things, are gainfully employed by the Federal Government and of course, we did ask for favour in that area. We did ask for increase in the social programmes that the Federal Government is handling; more support for school feeding. Now, we are feeding 126,000 pupils every day,” he said.

Obiano said he had briefed the President on the social programmes, Home

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Tuesday 14 May 2019

BUSINESS DAY

33

news LSSTF to raise N10bn for sports development in Lagos Desmond Okon

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fter months of planning and strategising, the Lagos State Sports Trust Fund (LSSTF) is now set to raise a minimum of N10 billion within a period of five years for the development and promotion of sports in the state.

More so, through its principle of the “Power of 10,” and as an autonomous organisation, the LSSTF seeks to secure commercial revenues that will limit government funding to 10 percent or less. This was made known to journalist recently in Lagos.

Explaining the concept of the “Power of 10” principle, which serves as the blueprint of the organisation’s goals, Olufemi Pedro, former deputy governor of Lagos State, who spoke at the event, said: “We are also committed to ensuring that no less than 10 million Lagosians participate actively in sports. In addition, we plan to deliver at least 10 infrastructure projects annually; develop 10 athletes each from 10 different sports from grassroots to podium; and train 10 coaches in each different sports annually.”

The Lagos State Sports Trust

Fund Law of 2017 established the LSSTF. Its Board of Trustees (BoT) was inaugurated by the incumbent governor, Akinwunmi Ambode, in March 2018, making it the first of its kind in subSaharan Africa.

The establishment of LSSTF means that the sports sector of the state is expected to be salvaged from its dilapidation resulting from insufficient/lack of funding, as it would also drive socio-economic development.

Pedro, who doubles as the chairman of LSSTF, further emphasised the commitment of the body to create adequate funding for sports development and efficiently manage these funds, with a vision to making the state the leading sports hub in Africa.

“We are created primarily to play a critical role in financing the development and promotion of sports, sporting activities and facilities in the State. The State appreciates the relative importance of sports in wealth creation, job creation, and general economic development.

“Our mission is to raise and manage funds for the sustainable development and promotion of sports in Lagos,” he said.

Pedro said the State also believes that if it is going to be

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Resign if you can’t do without diversion Nigerian bank agent networks of LGs’ funds - group tells governors reduce fraud risk by partnering RAZAQ AYINLA, Abeokuta

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he 36 states Nigerian governors, including outgoing governors and governorselect, have been asked to resign if they can’t do without brazen diversion of local governments’ funds in the name of joint finance of capital projects.

Sounding the warning to the culpable governors in Abeokuta, the Ogun State capital on Sunday, the Association of Ex-Local Government Chairmen of Nigeria (ASELGON), reiterating that any governors and governors-elect that can not comply with the direct disbursement of local government allocations should resign on or before May 29.

Albert Asipa, the ASELGON national president, spoke against the backdrops of new guidelines on federal allocations as released by the Nigerian Financial Intelligence Unit (NFIU) that was launched in Abuja, last week.

He lauded President Muhammadu Buhari for the initiative, just as he noted that the initiative would check governors’ brazen diversion of local government funds and treasury looting at the grassroots level in the name of joint finance of government obligations.

The latest NFIU guidelines only supports the Joint Account system

in terms of receipt by the 36 states of the federation, but not disbursement of the funds meant for local governments by the overseeing state government as the guidelines also allow each of the 774 local government areas in the country to access N500,000 cash transactions limit per day.

Expressing a satisfaction with the new guidelines through a press statement in Abeokuta, Asipa affirmed that God had answered the Association’s prayers of three years and granted its request to scrap joint account, adding that the conduct of LG elections should also be handled by the Independent National Electoral Commission (INEC) instead of various states’ electoral bodies.

He however noted that with the NFIU guidelines, the grassroots will surely witness positive changes in the areas of provision of healthcare delivery, road maintenance, rural electrification and other basic amenities.

Asipa, a former chairman of Imeko-Afon Local Government Area of Ogun State, said governors should see the Federal Government directive as an opportunity of reducing grassroots pressure on them and called on President Buhari not to succumb to any pressure by the Nigeria Governors’ Forum (NGF) to reverse or tinker with the guidelines.

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cloud-based banking providers ENDURANCE OKAFOR

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n April 5, 2019, the Nigerian bank agent network, Kudi, announced its $5 million investment in their expansion to grow and offer more financial services to underserved Africans. In the past two years, Kudi has built a network of more than 4,500 merchants that process over $30 million in payments each month.

To successfully expand and manage a network of agents throughout rural communities in Nigeria, leaders of financial institutions are recommended to equip their branches and agents with reliable cloud-based technology. Implementing a cloud-based platform to manage a network of agents is a scalable and elastic IT solution that requires minimal capital investment – involving no on-premise servers, data centres or hardware.

Despite regulatory efforts to prevent fraud, between January and June of 2018, Nigerian banks recorded 20,768 cases totalling N19.77 billion. The Central Bank of Nigeria (CBN) reported fraudulent ATM withdrawals, illegal funds transfer, pilfering of cash and theft as primary causes of

@Businessdayng

fraud.

Real-time data about all lending activities and transactions from agent networks enable leaders to prevent fraud within their financial institutions. With cloud-based digital technology, leaders of financial institutions can monitor and nurture a large network of agents efficiently from the head office, with only an internet connection and laptop or smartphone.

When financial institutions do not have access to real-time data, opportunity for fraud to occur is greater. Since transactions that happen via delivery channels are integrated with the financial institution’s core banking system of choice, the risk of fraud to occur is reduced thanks to increased transparency.

Oradian’s cloud-based core banking platform, Instafin, was designed specifically for financial institutions to have access to real-time data about all their operations and agents. Instafin provides automatic and continuous report consolidation from the entire network. This means that all client data is ready and available in real-time and enables constant monitoring of business performance.

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news Nigeria misses 6 electricity tariff...

Continued from page 1

years, when all of the inputs

are reviewed with stakeholders, but this has not been done since 2016.

The current electricity pricing does not benefit the customers who cannot enjoy quality service because they are compelled to pay a tariff that is less than the cost of production and so are forced to rely on generators where they pay five times the current tariff.

It does not also benefit the operators who are compelled to charge below their cost of production and lack motivation to invest and improve service.

“Today, electricity pricing is wrong. The model is not fair.

The average today is N27.30.

What will be reasonable to sustain the industry is N57.40.

This includes the debates around gas pricing too,” Kola Adeshina, chairman of Sahara Group, told BusinessDay. “We are suffering from lack of six tariff reviews. Whereas the consumers are agitated and worried, the reality of our life is, the power generator gives invoices to the bulk trader at an exchange rate of N360/$, the distribution companies are made to charge the customer using an exchange rate of N199/$,” Adeshina said.

Power generation companies bear the biggest pain in this warped pricing system.

Egbin Power, Nigeria’s biggest generation company, is

owed over N160bn. Other GenCos complain of large debts because invoices are not fully settled by the Nigerian Bulk Electricity Trading Company which can only pay about 30 percent of invoice. The Transmission Company of Nigeria recently said it gets paid only 25 percent of its market invoice.

“The solution to the problem is to pay the true cost of power,” said Sunday Odutan, executive secretary, Association of Nigerian Electricity Distribution Companies (ANED), in a meeting with Eko DisCo customers in Lagos.

In addition, operators are calling for a fund to cushion the temporary impact of a tariff increase on the most vulnerable members of the society.

Analysts say the prevailing

tariff will only worsen liquidity gapsinthesectorasthevariables that went into costing electricity have changed since 2015.

“The prevailing DisCo tariff today was modelled against variables that have been overtaken by time and events and therefore does not reflect the true pricing of electricity.MYTO2015forDisCos was built on 196/$1, 8.3 percent inflation rate, certain available capacity and therefore the final tariff was a product of these variables.

Whiletheyhaveallmovedhigher, tariff has not,” Chuks Nwani, energy lawyer, said.

NERC’s failure to implement MYTO Rules led to media reports that it has jettisoned MYTO, but the regulator insisted it was keeping its rules.

In a press release issued in June last year, NERC said,

“Following recent inaccurate reports in the media, the Nigerian Electricity Regulatory Commission hereby reaffirms that there are no plans to dump the Multi Year Tariff Order (MYTO) framework used in determining end-user tariffs based on revenue requirement of the electricity industry.

“As part of the periodic evaluation of software models utilized by the Commission, the Commission plans to review the MYTO financial model to ensure its integrity and consistency of the platform with approved tariff principles pursuant to the numerous updates undertaken since inception of the methodology in 2008.

“The holistic review of the MYTO model also includes aligning the basic assumptions

and parameters with the underlying principles of the tariff methodology and ascertaining the full workability of the macros and other formulae. This is an important initiative of the Commission as we prepare to commence review of Performance Improvement Plans (PIP) to be submitted by utilities for the tariff period 2019-2023.”

Under the Power Sector Recovery Programme, failure to review tariffs has slowed full implementation of the programme and threatened the capacity of the sector to benefit from loans from international institutions such as the World Bank.

Operators are now calling on the regulator to implement its own rules to make the sector viable.

What rising Geo-political tensions mean...

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oil producer.

Whilethetradewarbetween the US and China could impair global growth and dampen demand for oil thus causing a fall inprices,oil-supply-threatening tensions in the Middle East could lead to reduced supply and higher oil prices.

On Monday, the geo-political tensions took a turn for the worse after China detailed plans to retaliate against higher tariffs by the United States on Chinese imports by imposing extra tariffs on about $60 billion worth of American goods, while Saudi Arabia said two of its oil tankers were attacked while sailing toward the Persian Gulf.

Thetankersweredamagedin “asabotageattack”offtheUnited Arab Emirates coast on Sunday, state-run Saudi Press Agency reported. The vessels were approaching the Strait of Hormuz, the world’s most important chokepoint for oil shipments.

The UAE foreign ministry on Sunday reported an attack on four commercial ships. No one has claimed responsibility. Two of the targeted tankers were registered in Saudi Arabia, one was flagged in the UAE and the other in Norway, according to a UAE government official.

Crude oil prices gained 2 percent after news of the Saudi tanker attack broke, only

to fall 0.7 percent to below $70 per barrel as the market digested the impact of a prolonged global trade war.

“The escalating global tension raises the risk of a recession,” said Bismarck Rewane, an economist and CEO of financial advisory firm, Financial Derivatives Ltd. “If there’s a recession, oil demand will reduce and prices will fall, to that extent the Nigerian economy is adversely impacted,” Rewane told Business Day. Higher US tariffs will drive up the Federal Reserve’s preferred measure of underlying inflation, and further escalation could raise consumer prices even more and dent US growth, Goldman Sachs Group Inc. economists said in a research note.

The movement in oil prices is closely watched in Nigeria, where oil accounts for nearly 70 percent of government revenue. Nigeria can ill-afford any drastic decline in oil revenue at a time when the government is pressed for cash and has a long list of local and international creditors to repay.

Abuja has remained reliant on crude oil after several attempts to break an over two decade-old dependency on the commodity. It’s so bad that the price movement of a commodity like oil has become a proxy for economic

Jumia records momentum in Q1 as marketplace...

Continued from page 2

platform across other markets.

“We are seeing appetite from international sellers on the e-commerce platform, with keen interest to sell in Africa and you will see more of these partnerships in the future. We have already rolled out Jumia Pay in three new markets after being launched

in Nigeria and Egypt and in the next few months, we will launch in other markets where we operate but for now, it’s too early to talk about how fast the evolution from prepaid to postpaid is,” Poigonnec said during a conference call to announce the results on Monday.

Showing pre-tax profit for the fiscal year ended 31 December 2018, Jumia reported

Dangote Refinery awards $368m worth of...

Continued from page 2

contractors at the site.

Edwin disclosed that the company, in partnership with the Nigerian Content Development and Monitoring Board (NCDMB) and the National

Directorate of Employment (NDE), kicked off training for 200 youths in its host communities as part of its corporate social responsibility initiatives.

He disclosed that the programme is meant to prepare the selected youths with vocawww.businessday.ng

Members of Nigeria Labour Congress agitating for removal of Chris Ngige as minister of labour and employment, held in Abuja, yesterday.

Pic by Tunde Adeniyi

performance.

When oil prices bottomed in 2016, the economy slid into a recession for the first time in 25 years.

When oil prices recovered and production stabilised in 2017, the economy expanded in the second quarter after five straight quarters of contraction through Q1 2017.

The rising geo-political tensions make a strong case for Nigeria to wrest the economy off the control of external factors.

“The economy remains at the mercy of factors we don’t control and until we take our destiny into our own hands, the risk of another recession is always lurking,” a fund manager who sits in Lagos said on condition of anonymity, as he was not authorised to speak publicly.

Iran’s Foreign Ministry Spokesman Abbas Mousavi described the maritime incident as “concerning and regrettable” and called for efforts to shed light on what ex-

actly happened, the semi-official Tasnim News reported.

He warned against “foreign seditious plots to upset the region’s security and stability”.

Global crude benchmark Brent for July settlement rose as muchas$1.38onMondayto$72 a barrel on the London-based ICE Futures Europe exchange.

US stocks sank in New York, with the S&P 500 headed for its biggest decline since January 3. Trade-war fears hit the shares of companies from

Apple Inc. to Boeing Co., while Treasuries rallied with the yen on demand for haven assets.

China’s move to hike tariffs came in response to the US decision last week to increase levies on $200 billion in Chinese imports to 25 percent from 10 percent. Trump on Monday accused China of backing out of a deal that was taking shape with US officials, saying Beijing reneged on an agreement to enshrine a wide range of reforms in Chinese law.

a net loss of -€162 million in 2017. Its losses increased to -€170.1 million in 2018 as a result of economic crisis in Nigeria, its biggest market.

However, the company is projected to reduce losses this year with -€166.3 million. Estimates for 2020 and 2021 are -€139.1 million and -€117.9 million, respectively.

“We are working towards reducing the amount of losses made each year and the com-

pany should see profitability in the last quarter of 2022,” Juliet Anammah, CEO, Jumia Nigeria, told BusinessDay. The €50 million investment

by Mastercard into Jumia, in a concurrent private placement with its initial public offering (IPO),markedanothermilestone in the development of Jumia Pay and a validation of its potential.

Jumia’s gross profit margin as a percentage of GMV increased from 5.6 percent in

Q1 2018 to 6.5 percent in Q1 2019. The company has leveraged its strong brand awareness and highly localised market approach in Africa to gain 205bps of marketing efficiency this quarter, bringing sales and advertising expense from 7.2 percent of GMV in Q1 2018 to 5.1 percent in Q1 2019.

“We believe that Jumia is increasingly relevant for consumers and sellers in Africa.

Looking ahead, we remain

focused on our core operations, driving consumer adoption and engagement on our marketplace, increasing the penetration of Jumia Pay, while continuing to improve our financial profile and making a sustainable impact on the continent,” Poignonnec and Jeremy Hodara, co-CEOs of Jumia, said.

tional skills that will make them employable or self-employed.

According to the company, the youths are currently being trained in areas of plumbing, masonry, welding, iron bending, auto mechanics and electrical works because of the instant value addition to their lives and communities.

Speaking on the progress made so far on the refinery project, Edwin disclosed that the company has imported world’s largest reactor regenerator and well as a crude column, which is equivalent to a 30-storeyed building weighing about 100 fully-loaded trucks.

He said that the Dangote

Petroleum Refinery can meet 100 percent of the Nigerian requirement of all liquid products, such as gasoline, diesel, kerosene and aviation jet, and also would have surplus of each of these products for export.

According to him, the refinery will ensure that the security of local supply of petroleum

products is guaranteed as well as the availability of petrochemical feedstock (polypropylene and polyethylene), which will be enough for the Nigerian market as well as the neighbouring countries.

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Tuesday 14 May 2019

BUSINESS DAY

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news Transnational crime: IGP to host ECOWAS police chiefs Innocent Odoh

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igeria’s acting Inspector General of Police (IGP), Mohammed Adamu, will on Tuesday, May 14, in Abuja, host West African Police and Security Chiefs (WAPCCO) for a three-day security summit ending on Thursday, May 16, as part of efforts at galvanising multinational efforts towards finding a lasting solution to transnational crimes, especially terrorism and violent extremism.

A statement issued on Monday by Force Public Relations Officer, Frank Mba, noted that the summit would also search for ways to address kidnapping, illicit circulation of small arms and light weapons, human trafficking, maritime security, herders’ and farmers’ conflict, among others.

The event, which will have in attendance the INTERPOL Secretary General, representatives of African Union Mech-

anism for Police Cooperation (AFRIPOL), members of the Institute for Security Studies (ISS) in South Africa and representatives from Committee of Chiefs of Police from Central Africa among other key Security Stakeholders will present very importantly, an opportunity for all Security Chiefs across West Africa to re- commit themselves to collaborate more effectively towards tackling trans-border crimes and other regional security threats in an increasingly globalised world.

The WAPCCO is a structure under ECOWAS designed to bring together Heads of Police of ECOWAS Member States to exchange and share intelligence and collaborate with one another in the fight against criminality and Security threats in West Africa.

WAPCCO’s areas of interest include the tackling of illicit trade on drugs, enforcement of immigration laws, policing of marine space, customs activities, and financial intelligence amongst others, the statement added.

Buhari receives, congratulates Emefiele on his re-appointment Tony Ailemen, Abuja

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resident Muhammadu Buhari on Monday received the re-appointed governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, at the Presidential Villa, Abuja.

Emefiele, who is returning as the governor of the CBN, met the President behind closed doors.

The returning CBN governor however did not speak with newsmen after his meeting with the President, but it was gathered that the President used the opportunity to congratulate him on his recent reappointment, which serves as a mark of confidence in his ability to navigate the affairs of the apex bank

for another five years.

BusinessDay gathered that Emefiele, who was attending a seminar organised by Standard Chartered in London when he was reappointed, was at the Presidential Villa to brief the President on the nation’s financial issues The President was said to have expressed confidence in Emefiele’s abilities to navigate the affairs of the bank, while congratulating him for being the first CBN Governor to be re- appointed in recent times.

It will be recalled that financial experts had applauded the President’s decision to reappoint Emefiele even as markets forces are said to be reacting positively to the development

FG to establish task force on illegal trafficking in wildlife species JOSEPH MAURICE OGU

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he Federal Government is planning to establish a task force to combat illegal trade in any species of wild flora and fauna, BusinessDay gathers.

Adejo Andrew, director, department of forestry, Federal Ministry of Environment, made this known at a workshop on ‘Combating the West African illegal trade in threatened vulture and their parts for belief-based use’ organised by the Nigerian Conservation Foundation (NCF), Lagos.

According to Andrew, illegal trade in wild life species has become alarming, especially with the embarrassment caused Nigeria with the current seizures of pangolin and ivory, believed to have passed through Nigeria as transit route to other countries.

“It is in this context that I wish to inform us that we would soon establish a task force on illegal trafficking of wildlife species,” Andrew said.

The task force will take care of both the domestic trafficking of wildlife species as well as international trafficking, as Nigeria is being used as transit point to other destinations,

he said.

On the case of vulture specifically, the rate of threat to the creature is even more frightening because it is not traded illegally for export but traded and used locally due to the various belief systems on the efficacy of its parts being used in different traditional belief systems.

Andrew expressed the Federal Government’s worries over the fast disappearance of vulture from our ecosystem.

Hooded vulture species cannot longer be seen in the villages and towns where they were previously recorded, due to the unfriendly activities of human beings on them, he noted. Even other species, which spend most of their time in the forest, are critically endangered as a result of various anthropogenic activities.

“The Federal Government is very concerned about the decline of birds population especially the vultures,” he noted.

The director lauded NCF for the initiative to conserve the endangered vultures as such endeavour will also be a tool to conserve the forest ecosystems that provide habitat for the birds and other wild animal species. www.businessday.ng

L-R: Aliyu AbdulRahaman Dikko, chairman, board of director, Bank of Industry (BoI); Olukayode Pitan, managing director, and Toyin Adeniji, executive director, micro enterprises, during the bank’s 59 annual general meeting in Abuja, yesterday.

Investors debunk claims of donkey extinction in Nigeria ... say value chain can generate $2bn annually Innocent Odoh, Abuja

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he Donkey Skin Processors Marketers and Export Association (DSPMEA) has refuted claims by a UK-based group, the Donkey Sanctuary, that the Nigerian donkey specie is going into extinction and wants to visit Nigeria between May 13 and 15 to seek support for a bill to prohibit the killing and export of donkeys or their derivatives as reported in one of Nigerian dailies on May 7.

The DSPMEA said in a statement issued on Monday by its national vice president, Ifeanyi Dike, that the claim that donkey population was going into extinction was false.

He said the association in collaboration with the Earthwheel

Logistics Limited had established a multi-billion-naira investment used in breeding, processing, marketing and the export of donkeys and donkey derivatives in some parts of the country, adding that the donkey value chain could generate about $2 billion annually for Nigeria.

“We have set up donkey ranches in Bauchi and Jigawa states and other parts of the North, and we have established another mini ranch in Ufuma in Anambra State, where modern facilities have been put in place to enhance the breeding of donkeys, which in the long run will multiply the donkey population in the country in their millions.

“This initiative to produce more donkeys and use their derivatives for export in order to earn foreign exchange for Nigeria is in line with

the diversification agenda of the Federal Government in the agriculture sector,” he said.

The statement also noted that the donkey producers and processors, with about 5,000 members in the country, were also collaborating with the Nigerian Animal Production Research Institute (NAPRI) for a structured framework to breed donkeys to preserve local stock and to tackle the menace of smuggling.

“We understand the need to grow our local donkey stock and that is why we are working with the Federal Government on modalities to regulate the breeding, processing, marketing and exporting of donkeys and donkey products which will benefit the government as well as create the needed jobs and stop smuggling our donkeys,” he said.

He said further that the donkey business value chain had created

over 5,000 jobs ranging from the people breeding to those slaughtering, and those who were selling even as he called on government to take cognizance of this value chain and avoid any imposition of ban on the business to avoid people being thrown out of jobs in this era of high unemployment.

He pointed out that donkeys are very traditional to the Nigerian people as people use them in varied ways including for food, stressing that is the reason the entire Nigerian people must be educated and enlightened on how to grow the donkeys which is exactly what the investors are trying to do.

“Donkeys are traditionally used as a symbol of authority, gift and weddings in parts of the South East and South South and also the project did not exclude local breeding.

Aviation unions issue NCAA 14-day ultimatum to address anomalies in organogram IFEOMA OKEKE

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viation unions in Nigeria have issued the management of the Nigerian Civil Aviation Authority (NCAA) 14day ultimatum to address the alleged anomalies in its organogram.

The unions also told the management of the agency to ensure that workers who were due for promotion since the past two years were duly promoted and put in their right positions.

The unions: Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), National Union of Air Transport Employees (NUATE) and the Association of Nigeria Aviation Professionals (ANAP) on Monday held a peaceful congress at the headquarters of NCAA at the Murtala Muhammed Airport (MMA), Lagos, to press home their demands.

Emmanuel Jaja, deputy president, ATSSSAN, in an in-

terview with the media, accused Hadi Sirika, minister of state for aviation, of doctoring the new organogram and agreement reached with the NCAA management.

According to Jaja, a tripartite team comprising of the unions, NCAA management and the government had sat down to fashion out a new organogram for NCAA as a result of its new status, but Sirika single-handedly changed the organogram.

He alleged that the new organogram returned to the management was entirely different from what was agreed with the committee, adding that it was skewed against the workers.

He insisted that the new organogram would not create room for development of workers, adding that some who were due for promotion since 2017 were yet to be promoted, while the government was also on the verge of merging some of the directorates.

“There was a tripartite com-

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mittee on the issue of the organogram of NCAA; the unions, NCAA management and the government, but all of a sudden, when the organogram returned to the management, what was presented to the team was entirely different from what was agreed upon.

“However, in the process, issue of promotion, contract staff and others are coming up, which is normal. In the organogram, there is vacant for some staff of NCAA to be promoted to the positions of Assistant General Managers, Deputy General Managers and General Managers, but it was discovered that with what the ministry came out with, the opportunity is no longer there for such people to be promoted and this didn’t augur well with the workers.

“As it is, the organogram of NCAA has been messed up with what the management and the government just did. The unions will follow the due process in its action. We all know that strike or picketing is not a tea party. @Businessdayng

The staff are requesting for an ultimatum from us here now to ginger the management to take the right step.”

Besides, Abdulrazak Saidu, general secretary, ANAP, described the action of the ministry as tampering with the autonomy of NCAA. He pledged that the unions would kick against the move by the government, stressing that after the 14 days ultimatum operations of NCAA would be grounded indefinitely.

“We won’t allow this to stand.

The autonomy of NCAA is being threatened; the future of the workers is being threatened, based on unnecessary interference from the government.

“We are shutting down NCAA after two weeks if the government doesn’t listen to us.

This is in solidarity. An injury to one is an injury to all,” he said.

He also accused Sirika of flouting the directive of President Muhammadu Buhari on the inauguration of Board of Directors almost two years later.

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Tuesday 14 May 2019

BUSINESS DAY

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Tuesday 14 May 2019

BUSINESS DAY

37

news Osun to hold economic summit in June

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sun State will hold a summit next month to reposition its economy and showcase its potentials to local and foreign investors.

In his inauguration speech on November 27, 2018, Governor Adegboyega Oyetola, while revealing his plan for the economic summit, said: “The multi-stage, multistakeholder summit will dissect and recommend strategies which will drive meaningful youth employment, enhance food security, agricultural development, activate mining prospects and boost tourism potentials of this state.

“We will showcase Osun as a strategic location for industrialisation. We are convinced that the peaceful atmosphere, a welcoming people, low crime rate, communal peace and the relative stability of electricity supply, will attract local and foreign investors.”

A statement on Sunday by chief press secretary to the governor, Adeniyi Adesina, quoted the chief of staff to the governor, Charles Diji

Akinola, as saying the three-day economic and investment summit would hold between June 25 and 27 in Osogbo, the state capital. It will be declared open by Vice President Yemi Osinbajo.

The statement said Governor Oyetola “is committed to putting Osun State on the path of economic growth and prosperity,” adding that the objectives of the summit include sharing with critical stakeholders the economic roadmap of the Oyetola administration and to showcase investment opportunities in the State to investors.

“Besides, it will focus on seven key potential growth sectors which include: agriculture, mining, ICT and innovation, culture, tourism and creative economy, youths and jobs through light manufacturing, infrastructure development, and industry/commerce.

“Renowned speakers, panellists, special guests in public and private sectors and other participants who fall within the summit focus sectors will participate.”

Reps recover N1.9bn from auditor-general’s report, refer N72.6bn, $1.8m for recovery James Kwen, Abuja

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ouse of Representatives has recovered the sum of N1.9 billion from auditorgeneral’s report between 2010 and 2014.

The House also referred to the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices Commission (ICPC) and the Nigerian Police, a total sum of N72.6 billion and $1.8 million for recovery.

Kingsley Chinda, chairman, House of Representatives Committee on Public Accounts, who made these revelations Mon-

... say corruption still high in government

day, while briefing journalists in Abuja, disclosed that fixed assets had also been recovered by the Committee.

Chinda said, “Among the fixed asset, two Peugeot 504 cars, one Peugeot 406 valued at N1,460,000 and then one Berretta pistol and 13 round live ammunition were also sent back to the Federal Government of the Federal Republic of Nigeria.”

According to Chinda, 552 MDAs were queried by the office of the Auditor-General covering the period 2010 to 2014 out of which the committee was able to consider 512 of

those queries.

Chinda said in last four years, the Committee has cleared the Auditor-General’s report from 2010 to 2014 and laid the 2010 report before the National Assembly which has been considered and passed, saying it is first of its kind since 1999.

“At the inaugural meeting of the Public Account Committee on Tuesday, May 10 November 2015, we made several commitments to you in the press briefing which we had with you at the inception of the Public Account Committee.

“One of such commitments

L-R: Shuaib Audu, executive director, investments, Stanbic IBTC Asset Management Limited; Oladele Sotubo, chief executive, Stanbic IBTC Asset Management Limited; Abdur-Rahman Ahmad, chairman, advisory committee of experts, Stanbic IBTC Asset Management Limited; Eric Fajemisin, non-executive director, Stanbic IBTC Asset Management Limited; Angela Omo-Dare, nonexecutive director, Stanbic IBTC Asset Management Limited, and Babalola Obilana, executive director, business development and service, Stanbic IBTC Asset Management Limited, at the signing ceremony of Stanbic IBTC Shariah Fixed Income Fund in Lagos.

Financial inclusion: Edo gives start-up capital to extend banking services to rural communities

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do State government, through its job creation and skills development platform, EdoJobs, has completed training for 60 young people in Etsako West, Owan East and Owan West local government areas, to provide financial services for the unbanked population in rural communities.

Speaking at one of the sessions, an official of Edojobs, Sam Omomoh said the state was committed to expanding economic opportunities for residents in rural areas through an array of empowerment schemes and has provided the beneficiaries with start-up capital.

He said the ‘First Monie Empowerment Scheme’ in Etsako West, Owan East and Owan West LGAs would groom a new crop of mobile money agents to provide banking services to the people and save them the hassles of making gruelling trips to banks in far-flung towns.

Omomoh added that through the money agents, rural dwellers would have easy access to financial transactions, which include cash transfers, withdrawals and other cashless services at their convenience.

According to Omomoh, “Governor Godwin Obaseki through EdoJobs will support 20 participants to be selected by the First Bank team, in each of the LGAs, who will be provided with start-up capital for three months to be deposited in their First Monie wallets.”

Chairman, Etsako West LGA, Musa Yakubu, expressed appreciation to the state government for the initiative.

On his part, secretary, Owan West LGA, Daniel Iruobe commended the effort of the state government and encouraged beneficiaries to make good use of the opportunity to improve their livelihood.

Arik adjusts schedule to cope with aircraft maintenance IFEOMA OKEKE

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rik Air, one of Nigeria’s leading airlines, has carried out adjustment on its scheduled operations to cope with the exigencies of its aircraft that are on mandatory maintenance.

In a statement issued Monday by Adebanji Ola, the airline’s communication manager, said the airline’s fleet had witnessed a reduction in number in the last two weeks due to the fact that some aircraft had been flown overseas to Approved Maintenance Organisation (AMO) in Europe.

“The management stated that in order to maintain schedule integrity

and ensure flights depart on time, it had to cut down on the number of flights operated daily,” Ola stated.

The airline further stated that as a safety conscious airline, it takes aircraft maintenance very seriously.

It however assures its customers that the aircraft will start returning from maintenance in the next few days while scheduled operations will be back to normal in a couple of weeks.

Roy Ilegbodu, CEO of Arik Air, elaborated: “We regret any inconveniences that our customers may suffer due to this schedule adjustment. We are almost done with the checks and our customers will start seeing the effect with improved services.”

www.businessday.ng

is to work assiduously to raise standard of our oversight performance to an enviable height in line with the best global parliamentary practice to address the hip of backlog of AuditorGeneral Reports and move from the paper documentation to a paperless system.

“Today, we have been able to establish a fully functional Public Account Committee website platform with a server in a committee room 446 and it is currently being put into use and again we can proudly say today we are leaving a paperless Public Account Committee of the House of Representatives.

Shell targets 2,400mw electricity from new gas supply project Olusola Bello

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ngoing Assa North/Ohaji South gas development project in Imo State, southeast Nigeria, will produce 600 million standard cubic feet of gas per day, energy equivalent of about 2400 megawatts (mw), which is enough to provide uninterrupted electricity to about 2.4 million homes, Osagie Okunbor, managing director, Shell Petroleum Development Company of Nigeria Limited (SPDC) and country chair, Shell Companies in Nigeria, said on Monday.

Okunbor spoke at the media launch of the 2019 edition of the Shell in Nigeria Briefing Notes, an annual publication detailing the activities of the business interests of the global energy firm in Nigeria covering SPDC, Shell Nigeria Exploration and

Production Company (SNEPCo), Shell Nigeria Gas and the Nigeria Liquefied Natural Gas. SPDCtookthefinalinvestment decision on the Assa North/Ohaji SouthprojectlastDecember,giving amajormomentumtothedomestic gas aspiration of the Federal Government for increased power generation and industrialisation.

Giving a breakdown of the gas production, Okunbor said 300 million standard cubic feet of gas per day would be processed at a new gas processing plant owned by the SPDC Joint Venture while the remaining 300 million would go to a proposed gas processing plant by SEPLAT Petroleum.

He said, “The project would be a major game-changer in Nigeria’s quest for energy sufficiency and economic growth as we look to grow the domestic gas market.”

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He said the SPDC and its joint venture partners – NNPC, Total and Agip – would continue to exploreotherareasofsupportforthe expansion of domestic gas supply and continue to make investments under the right conditions.

The Assa North/Ohaji South Gas Development Project ranks top among the Federal Government’s Seven Critical Gas Development Projects aimed at accelerating Nigeria’s aspiration for energy sufficiency and diverse industrial growth.

Explaining the company’s gas development strategy, Igo Weli, SPDC’s general manager, external relations, said Shell was transforming to a gas-oriented business and currently accounts for about 10 percent of Nigeria’s domestic gas most of which was used for power generation.

SPDC and SNEPCo continue

@Businessdayng

to contribute tremendously to the Nigerian economy. They paid N515.14 billion to the Federal Government in 2018 in taxes, royalties and levies while contracts worth N393.94 billion were awarded to Nigerian companies in the same year.

These contributions, according the 2019 Shell in Nigeria Briefing Notes, are aside the N39.58 billion paid to the Niger Delta Development Commission and another N44.36 billion disbursed for various community-driven projects in the Niger Delta under the SPDC JV Global Memorandum of Understanding.

Shell Companies in Nigeria also made direct spending of N17.03 billion on social investment projects making Nigeria the largest concentration of social investment spending in the Shell Group.

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Tuesday 14 May 2019

BUSINESS DAY

NEWS

EU buyers ditch Nigerian crude for cheaper alternatives ISAAC ANYAOGU

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igeria is facing a hard time finding buyers for its crude as 20 cargoes of June loading offered at slightly higher prices struggle to find buyers because customers in Europe sought cheaper barrels in the Mediterranean and from Russia, according to crude oil loading schedule seen by Reuters.

This situation is worsened by the force majeure on the Amenam stream and Bonny Light streams, which has continued to cause loading delays. This could significantly impact implementation of the budget and government programmes for the year.

The Amenam-Kpono field, op-

erated by Total sits astride offshore blocks OML 99 and OML 70, about 30km off the eastern part of the Niger Delta while Bonny Light is a lightsweet crude benchmark crude for all West African crude production, the field is operated by Shell in Nigeria.

In the past, large orders from India offsets market decline from Europe but even Nigeria’s major buyer India was heard not to have significantly stepped up purchases despite having been Iran’s number two customer, Reuters said.

Oil market analysts now consider Nigeria the wild card in a market where disruptions to production from Venezuela and Iran has led the Organisation of Petroleum Exporting Countries (OPEC) to dig into spare capacity. US sanctions on Iran and Venezuela has cut global production by 1.85 million bpd from

2018 peaks according to Reuters estimates but Nigeria cannot fill the capacity.

Nigeria’s inability to strengthen its foothold in the global oil market is already having a telling effect on the local economy. According to the latest quarterly review of Nigeria Extractive Industries Transparency Initiative (NEITI), Federal Account Allocation Committee (FAAC) disbursements between January and March 2019 dropped to $1.929 trillion as against N1.938 trillion disbursed for the same period in 2018.

“Oil prices experienced a downward spiral from November 2018.

Oil prices were above $80 per barrel in October 2018 but by December 2018 they had dropped to $57 per barrel. Average oil price for the first quarter of 2019 was $63.17 per barrel. Average oil price for year

2018 was $71.06 per barrel. Thus, oil prices have been considerably lower in the first three months of 2019 than they were in 2018”, NEITI said in its review.

NEITI in its report said the combined net disbursements from the Federation Allocation Account Committee (FAAC) to the 36 states and the Federal Capital Territory, Abuja, in 2017 and 2018, can hardly fund the 2019 budgets of 35 states.

This raises concern the market situation could hurt the Federal Government’s ability of implementing the 2019 budget. In the proposed 2019 budget, the federal government projects about N3.73 trillion as oil revenues to be derived from assumptions that oil prices will sell at an average price of $60 per barrel and Nigeria’s production will reach 2.3 million barrels per day.

L-R: Ajoke Ogunsan, chief executive officer, Executive Trainers Limited; Ruqayatu Ahmed Rufai, former minister of education; Peter Okebukola, former executive secretary, National Universities Commission, and Ayodele Ogunsan, chairman, Executive Trainers Limited, at the ongoing British Council GOING GLOBAL Higher Education Conference at Berlin Congress Centre, Berlin, Germany.

Need for HR professionals to be knowledgeable about tax laws

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he need for Human Resource (HR) professionals to be more knowledgeable about Nigeria’s taxadministrationhasbeenadvocated at the maiden Senior HR Leader’s Advocacy Round Table recently held by the Chartered Institute of Personnel ManagementofNigeria(CIPM),toprovideaplatformforintellectualdiscourse onemergingandtrendingissuesinHR policy environment in Nigeria.

Theroundtableamongotherthings deliberated on the national importance of tax administration and the nurturing of creative and strategic responses that would optimise the competence of the human resource/people management practitioners in Nigeria.

“As an Institute, we want to always create sessions for senior HR managers to discuss and review critical national policies that impact the profession and the labour force in general,” Ajibola Ponnle, registrar/ CEO of CIPM, said.

AccordingtoPonnle,theadvocacy round table is to clarify issues such as the possible impact of the anticipated increase in value added tax (VAT, CIT) rates nationally, the newly proposed National Housing Fund (NHF), the new national minimum wage and the new taxation regimes on Capital Gain Tax by some states government.

Funke Amobi, the country head, human capital at Stanbic IBTC, in a panel discussion on ‘Emerging and

Trending Issues in Human Resource Policy Environment in Nigeria Tax Issues (VAT/CIT/CGT),’ said tax was key to the strategic responsibilities of HR professionals, while compensation was the key driver of employees’ engagement.

According to Amobi, HR professionalsshouldleveragetaxexpertiseto educate staff about tax laws, and posits that HR professionals should seek collaboration andinteract with regulators to benefit all stakeholders.

Jide Ologun, a legal practitioner and HR consultant, said there was a need to bring resourcefulness to the management of resources in Nigeria.

According to Ologun, Nigeria should notbereckonedwithasapoorcountry.

AbideenAkande,specialadviserto the executive chairman, LIRS, said the major challenge with Nigeria tax issues was that the cost of compliance was higherthanthepenalties,saying,“There is a price for every prize; if we want a sane society, we need to pay our taxes.”

According to Akande, the LIRS tax reform drive in Lagos is to bring down the cost of compliance effectively to help create an incentive for voluntary tax compliance among Lagosians.

The programme attracted seasoned HR Professionals such as Chukwuemeka Chime, the senior manager, general tax, Pw-C, Musa Rabiu, the group CHRO of Dangote Cement. www.businessday.ng

ECA signs $28m contract with supplier to commence Africa Hall renovations HOPE MOSES-ASHIKE

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conomic Commission for Africa (ECA) has signed a contract with three companies for the multi-million dollar works to revamp the historic Africa Hall. The contract value is $28,209,539.57.

The signing with contractor Africa Hall Projects FZE marks a paramount milestone of this iconic project. The contract for the renovation and refurbishment of Africa Hall is the biggest ever signed by the ECA with a supplier.

ECA director of administration, Carlos Haddad, signed the contract on behalf of the ECA. “We are excited by the signing of the main renovation works contract which paves way to upgrade the safety standards and restore the state-of-the-art technology while preserving the historic and heritage values to Africa Hall. We are confident the renovation will be completed on time and delivered in 2021 as budgeted for,” said Haddad.

He thanked the entire team, who were involved in the finalisation of this contract, for their effort to bringing the agreement into effect.

The construction works envision a complete renovation of Africa Hall main building related to infrastructures, surrounding landscape works, a new Visitor Entry Building, upgrades to the ECA compound perimeter wall, a new visitor car park and roadworks external to the ECA compound.

The contractor is Africa Hall Projects FZE, a joint venture incorporated as a free zone enterprise under the laws of the Ras Al Khaimah Economic Zone of the United Arab Emirates. The three parties that have come together to form the joint venture are: CONSTRUZIONI 2000 S.R.I., a corporation established under the laws of Italy. - Bridge Construction P.L.C., a corporation, established under the laws of Ethiopia. - R.C. Trade Limited, a corporation, established under the laws of the Emirate of Ras Al Khaimah (UAE).

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ANALYSIS

IGR growth, blocking leakages, fiscal discipline antidote to states’ rising wage burden MICHAEL ANI

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igerian states, if they want to effectively fund the new minimum wage of N30,000 recently signed into law by President Muhammadu Buhari as well as meet other obligations, have no option but to look inwards and grow their internally generated revenue (IGR), analysts have said.

In addition to expanding the tax net to drive internal revenue growth as well as executing industrial and businessfriendly policies to improve the presence of corporates, businesses and industries, the analysts advised the states to block revenue leakages, reduce inefficiencies and improve fiscal discipline.

Although many Nigerian state governors on May 1, during the celebration of the 2019 International Workers’ Day, committed to the full implementation of the new minimum wage as soon as the National Salaries, Income and Wages Commission worked out the guidelines and modalities, the reality is that many of the states in their present fiscal status cannot pay. Many of them have been struggling to pay the previous N18,000 minimum wage approved in 2011.

The minimum wage of N30,000 assented to by the president in April is a 67-percent increase on the former N18,000. Before the new minimum wage bill was signed, many state governors had objected to N30,000, proposing N22,500 instead.

Since the bill became law, several governors have requested a review of the revenue-sharing formula in favour of the states to enable them meet the attendant increase in their respective wage burdens.

This request has, however, been turned down by President Buhari, who has instructed state governors to focus efforts on improving their IGR to meet their wage obligations.

The Revenue Mobilisation and Fiscal Commission (RMFAC) has also advised state governments not to expect an increase in their allocations unless a constitutional amendment, which could possibly linger for years, is made.

Most state governments have relied on monthly allocations from the Federation Account Allocation Committee (FAAC) to meet their overheads and to finance capital projects.

This is perhaps with the exception of Lagos and Rivers states, which have been able to significantly grow their IGR profile.

“Considering the hard stance of the presidency on the revenue-sharing formula, states have to intensify efforts to diversify revenue away from FAAC allocations which in turn depend largely on oil.

Blocking revenue leakages, reducing inefficiencies and improving fiscal discipline is also a necessary step,” analysts at Lagos-based investment and financial securities firm, CSL Stockbrokers, said in a recent @Businessdayng

note.

With the implementation of the new minimum wage policy, the personnel cost in no less than eight states will exceed 100 percent of their IGR. It means these states could be devoting their entire IGR to the payment of worker salaries alone.

They include Osun, Kebbi, Zamfara, Borno, Adamawa, Taraba, Yobe and Benue States.

For all eight, their monthly average personnel costs exceed their IGR. In addition to the eight states listed, 16 others will see average monthly personnel cost accounting for more than 50 percent of IGR. This means more than 50 percent of IGR of the affected states will be used to pay salaries.

For the remaining 12 states, personnel costs will remain below 50 percent, with Lagos and Rivers the most comfortable of the pack.

“Our analysis of state governments’ 2018 revenue profile revealed that 34 of the 36 states in Nigeria have at least 60 percent of their revenue mix skewed towards FAAC allocations with four of those states (Bayelsa, Borno, Kebbi and Yobe) having at least 90 percent of their revenue mix skewed towards FAAC allocations,” CSL Stockbrokers analysts said.

Recent data released by the National Bureau of Statistics (NBS), however, show that states like Ondo, Bauchi, Imo and Sokoto were able to more than double their revenue buffer simply by creating a more enabling environment for businesses and investments to thrive.

Nigerian states, excluding the Federal Capital Territory, recorded some N1.1 trillion as IGR in 2018, up by 17.8 percent from the N936.5 billion they generated in 2017, NBS reported recently.

Data show that states receive revenue mainly from direct taxation, tolls, shares in oil production, and ownership of land.

Four of the 36 states – Abia, Benue,CrossRiverandOsun–reported decline in IGR, while their counterparts in Ondo, Bauchi, ImoandSokotowereabletomore than double their IGR last year.

Ondo’s revenue was up 126.83 percent to N27.8 billion while Bauchi and Imo States came second and third, growing their revenue base by 121.8 percent and 117.3 percent to N9.7 billion and N14.9 billion, respectively. Sokoto was fourth, growing its revenue by 108 percent to N18.8 billion in 2018.

The analysts at CSL further explained that as the workforce becomes more formal, states benefit from direct taxes on businesses. They added that the states also benefit from the formalisationoftradeandretailasshopping malls replace informal markets.

“State governments can drive internal revenue growth by growing the tax net as well as executing industrial and business-friendly policies which would improve the presence of corporates, businesses and industries,” they said.

Tuesday 14 May 2019

FT

BUSINESS DAY

FINANCIAL TIMES

39

World Business Newspaper

China hits back with tariffs on $60bn of US goods Markets rattled by escalation in tensions between Washington and Beijing PAN KWAN YUK AND NICOLLE LIU

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hina has hit back at the US, announcing on Monday that it would raise tariffs on $60bn worth of US goods after the Trump administration pushed ahead with new punitive duties on Chinese goods on Friday.

Beijing said on Monday that it would raise tariffs on those goods to between 10 per cent and 25 per cent starting on June 1.

“China’s adjustment of tariffadding measures is a response to US unilateralism and trade protectionism,” said China’s Ministry of Finance in a statement.

The fresh escalation in the titfor-tat tariff battle that has built up over the past year further eroded hopes of a quick resolution to USChina trade discussions and sent US share prices lower. The S&P 500 fell 1.8 per cent in opening trade.

Treasury yields slipped as investors sought the safety of government bonds, sending the yield on benchmark 10-year US government debt to its lowest since late March, down 4.1 basis points to 2.4139 per cent.

The tensions also knocked

China’s currency and emerging market currencies more broadly.

The renminbi was down 0.9 per cent against the US dollar on offshore markets, having crossed the Rmb6.9 level for the first time this year. The MSCI index tracking EM currencies was down 0.7 per cent, setting it on course for its biggest fall of 2019.

The response from Beijing comes just three days after the White House more than doubled its levies on $200bn of Chinese goods to 25 per cent. The Trump administration has threatened to hit a further $300bn of Chinese imports with the 25 per cent tariff rate if there is no progress in trade negotiations.

In response, China’s finance ministry said on Monday the tariff increase by the US “violates” the agreement between the two countries to resolve their trade differences through talks.

“In order to defend the multilateral trading system and defend its legitimate rights and interests, China has to adjust tariffs on some imported goods originating in the United States,” it added.

Earlier on Monday, President Donald Trump warned Beijing not to retaliate against the rise in

Regional tensions run high after US tightens sanctions on Iran

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audi Arabia said two of its oil tankers came under attack off the coast of the UAE on Sunday, confirming they were among four vessels that the UAE said had been sabotaged amid rising tensions in the Gulf.

Khalid al-Falih, the Saudi energy minister, said on Monday the Saudi oil tankers were attacked off the coast of Fujairah, one of the seven emirates that make up the UAE. He said that there were no casualties or oil spills, but that the attacks had caused “significant damage to the structures of the two vessels”, according to a statement on the Saudi news agency.

A day earlier, the UAE said four commercial vessels were “sabotaged” off Fujairah, the region’s main tanker refuelling hub and a choke point for crude exports out of the oil-rich region.

Riyadh and Abu Dhabi, which are the main Arab states supporting the Trump administration’s efforts to push back against Iran’s regional influence, did not say who they thought was responsible for the attacks. They did not provide further details about the nature of the attacks and no group has claimed responsibility.

Tehran distanced itself from the incident and warned against “adventurism” in the region. Iran’s foreign ministry spokesman said on Monday the incident was “worrisome” and “regretful”.

But the attacks will heighten fears

point set by the People’s Bank of China, was 0.8 per cent softer at Rmb6.874 per dollar.

Among other EM currencies caught in the crossfire, Turkey’s lira was the standout faller, weakening by 1.9 per cent to TL6.097 per dollar.

Ramped-up US sanctions aimed at weakening strong ties between Tehran and Baghdad

that shipping lanes in the Gulf, crucial to much of the world’s oil exports, could become flashpoints as tensions escalate between the US, its Arab allies and Iran.

Brent crude was trading at a fivesession high on Monday. The international oil price rose 1.5 per cent to $71.70, its biggest single-day rise in over a month.

Saudi Arabia’s foreign ministry said the attacks constituted a “dangerous threat to the safety of navigation and affects negatively regional and international security”, according to the Saudi news agency.

Brent crude, the international benchmark, rose 69 cents — or nearly 1 per cent — to $71.28 a barrel in early London trading. West Texas Intermediate, the US marker, increased 24 cents to $61.90 a barrel.

Mr Falih called on the international community to protect maritime navigation and oil tanker security to prevent “adverse consequences” for energy markets and the global economy. Riyadh said one of the tankers attacked was due to load Saudi crude from the port of Ras Tanura for delivery to the US. The head of the national security committee of Iran’s parliament said Gulf states were to blame for turning the region into a military zone and making themselves vulnerable.

“There are groups whose interests lay in making the region insecure,” Heshmatollah Falahatpisheh told the state news agency, IRNA. “Iran and the US need to agree on a red line … so that third parties cannot exploit the situation.” www.businessday.ng

Apple fell 5 per cent while Boeing dropped 3 per cent after a Chinese media report that Beijing could reduce orders from the manufacturer.

The onshore renminbi, which is limited to a 2 per cent trading range either side of a daily mid-

Basra’s energy reliance epitomises Iraq’s dependence on Iran

Saudi Arabia says 2 oil tankers attacked near UAE SIMEON KERR, ANDREW ENGLAND, ANJLI RAVAL, NAJMEH BOZORGMEHR AND MICHAEL PEEL

tariffs his administration pushed through last week and said China would be “hurt very badly” if it does not agree to a trade deal.

Stocks in companies seen as likely targets for any further escalation of the tariff battle suffered in early Wall Street trading.

CHLOE CORNISH AND NAJMEH BOZORGMEHR

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ew in Iraq’s oil capital, Basra, look forward to the fetid humidity of summer, when temperatures can soar to 55C. But for Adel Abdul Mahdi, Iraqi prime minister, the coming months will be especially nerve-racking, as his government races to prevent a repeat of protests over electricity blackouts that brought Basra to its knees last year.

But to do this, he requires the help of neighbouring Iran.

The head of electricity production for the area that includes Basra said he had a “guarantee from the Iranian side” that there would be no repeat of 2018, when Tehran turned off the 400MW power line to southern Iraq, worsening rolling blackouts that sparked unrest.

That promise, along with two new electricity units supplied by US company General Electric, makes him “optimistic” that this summer will be better than last.

Basra’s energy reliance on Iran epitomises Iraq’s awkward dependence on a neighbour with which it has long had a volatile relationship, including a bitter eight-year war in the 1980s.

Iran and Iraq have forged close ties in the years since the dictator Saddam Hussein was ousted in the 2003 US-led invasion. But the ramping up of economic sanctions on Iran under US president Donald Trump are aimed at weakening

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those ties.

Mike Pompeo, US secretary of state, used a brief visit to Baghdad last week to ratchet up the pressure on Tehran. The US “stood ready to continue to ensure that Iraq was a sovereign, independent nation,” Mr Pompeo warned, referring to what American officials said was Iran’s escalating activity in Iraq, without giving further details.

Sadiq al Ali, a Basra-based businessman, reflected widespread popular frustration with US and Iranian interference in the country when he said: “I hate Iran and I hate America. Because they cause trouble.”

During the riots last summer, protesters turned their ire on the Iranian consulate in Basra and set fire to it, along with local political party buildings. Mortars were also lobbed at the US consulate near Basra airport.

Dependence on Iranian electricity is just one way that southern Iraq relies on its neighbour. Many in Basra see a conspiracy behind Iran’s commercial hold on their city in everything from food to fuel.

They lament how Basra’s economic development has lagged despite its huge oil wealth. “We are Iran’s backyard,” complained Hassan Sarhan, a lawyer and civil rights activist. “They can do anything here.”

Although difficult to prove, such suspicions chime with the Trump administration’s accusations that Iran meddles in the region with malevolent intent. @Businessdayng

Washington’s main concern is Iran’s influence over the Shia politicians who rule in Baghdad, many of whom spent time as political exiles in Iran when Saddam was in charge. The US also fears that powerful Iran-linked Shia militias could threaten US assets and personnel in Iraq, despite recently fighting alongside each other against the Sunni extremist group Isis.

The concerns of Basra’s residents are rooted in the city’s politics, which has been dominated

by Iran-linked parties and militias since the US-led invasion. Many in Basra believe this has left local government institutions in hoc to Iranian companies and unwilling to improve local manufacturing or services because Iran benefits from selling to them.

Underlining their concerns, Hadi al Ameri, a militia leader turned politician with Iranian ties, recently became involved with the state’s Basra Oil Company, its general director Ihsan Esmael confirmed to the Financial Times.

However, Zmkan Ali Saleem, senior researcher at the American University of Iraq’s Institute of Regional and International Studies, said Iran was too often a scapegoat for Iraq’s own failure to provide basic services and develop its economy. Blame for that, he said, rested with “the Iraqi state and Islamist parties in Basra who have been competing violently for resources”.

40 BUSINESS DAY

FT

Tuesday 14 May 2019

NATIONAL NEWS

Uber extends slide on second day of trading

Shares fall nearly 10% as market debut continues to disappoint PHILIP GEORGIADIS

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ber shares lost nearly a tenth of their value at the open in New York, as the ride-hailing app extended its slide after making a rocky market debut on Friday.

The stock fell more than 9 per cent in the early minutes of trading on Wall Street, leaving Uber more than 15 per cent lower than its IPO price of $45 a share.

Uber’s launch has illustrated investor scepticism over the unprofitable ride-hailing industry, but has also come amid wider market weakness. The S&P 500 fell 2 per cent last week on US-China trade fears, and was set to fall further on Monday.

“Investors continue to grapple with the valuation of the tech transportation stalwart especially in the backdrop of a risk-off vibe on the heels of heightened US/China trade

tensions and market choppiness,” said analysts at Wedbush, who remain bullish on the stock’s longer term prospects.

Uber shares fell nearly 8 per cent on Friday’s closely watched first day of trading, the eighth worst first-day share price performances for a USlisted IPO raising more than $1bn, according to Dealogic.

The decline came after Uber was priced at the low end of its indicated range of $44 to $50, below the price at which stock was sold to private investors three years ago. Its market value is below $70bn, significantly below the $100bn it had hoped to achieve until recently.

The investor backlash against ride-hailing companies has also hit Uber’s rival Lyft. It slid more than 3.5 per cent on Monday, leaving shares at $49.36, compared with an IPO price of $72.

Goldman Sachs applies for Tokyo banking licence Investment bank to launch global cash management business as part of plan to diversify

LAURA NOONAN, DAVID CROW, PATRICK JENKINS AND LEO LEWIS

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oldman Sachs is applying for a banking licence in Tokyo as it prepares to launch a global cash management business later this year, several people familiar with the situation told the Financial Times.

Goldman has pledged to eliminate the “pain points” of traditional cash management by launching its own high-tech version. David Solomon, chief executive, recently said the bank would be $100m a year better off just by managing its own money in house.

Cash management is a complex business that demands a global network so companies using the service can pay out and receive money right across the world. Even just servicing Goldman’s own needs would require a significant global presence.

The industry’s biggest players, JPMorgan, Citigroup and HSBC, have extensive banking networks right across the world.

Goldman Sachs, a 150-yearold brokerage which only became a bank out of necessity during the 2008 financial crisis, so far only has banking licences in the UK, Germany, the US and Hong Kong.

A person familiar with the situation said Goldman would run the cash management business through a combination of banking licences and correspondent banking relationships — using a local bank as a middleman to receive cash in markets in which the main bank does not have its own licences.

Two other people confirmed that Goldman had begun the process of applying for a banking licence in Tokyo, where it is one of the oldest and most prominent foreign banks. Adding a Tokyo

licence would give Goldman its own licensed entities in sterling, US dollars, yen and euros, four of the most traded currencies in the world.

The Japanese Financial Services agency declined to comment, as did Goldman Sachs.

Goldman Sachs already has a banking licence in Hong Kong, which could be expanded to facilitate cash management activities.

The cash management push is part of a wider plan by new Mr Solomon to reshape Goldman from its trading and high-end investment banking roots into a more diversified financial company with a greater focus on steadier earnings sources, such as cash management, consumer banking and mass-market wealth management.

On a conference call last week, Stephen Scherr, Goldman’s chief financial officer, said: “Given the scope of our work done to date, we are pivoting to execution mode in many areas where we see a clear path to opportunity.”

Goldman says it sees opportunity in cash management because the business is heavily fragmented, with none of the top three in the sector having a market share above 5 per cent.

The Wall Street bank believes it can use its status as a newcomer to build a faster and more efficient network than those of existing competitors, which Goldman argues are weighed down by inefficient legacy systems.

But incumbents argue that it will not be easy for Goldman to break into a market in which other banks have spent decades building up their operations and are also investing heavily in technology to improve their performance. www.businessday.ng

Keir Starmer: ‘A significant number of Labour MPs, probably 120 if not 150, would not back a deal if it hasn’t got a confirmatory vote’

Cross-party Brexit talks close to collapse

Labour negotiator warns MPs will oppose deal unless it includes ‘confirmatory’ referendum GEORGE PARKER

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ross-party Brexit talks appeared close to collapse, after Labour’s chief negotiator warned that more than half of his party’s MPs would not back any deal unless it included a second “confirmatory” referendum.

Keir Starmer, shadow Brexit secretary, said that between 120 and 150 of 246 Labour MPs would oppose any deal that did not come with a second EU vote attached.

The proposal has been strongly criticised by Prime Minister Theresa May and would be opposed by many Tory MPs. The talks were already in trouble due to a Labour demand that any agreement should include a permanent customs union. If Mrs May agreed to such a proposal it would split the Conservative party, with many Tory Eurosceptics refusing to accept it.

A sixth week of cross-party talks resumes on Monday, but the pros-

pect of any agreement — let alone before European Parliament elections on May 23 — is now seen as remote by senior figures on both sides of the table. Gavin Williamson, former defence secretary, said it could “only ever end in tears”.

Some Europhile cabinet ministers — including chancellor Philip Hammond and work and pensions secretary Amber Rudd — who championed the talks as a way of unblocking the Brexit stand-off at Westminster, now accept the process is running out of road.

Officials close to their camp say the ministers could urge Mrs May to change tack and move to a plan B — a series of indicative votes on different Brexit options — at cabinet on Tuesday. Such an exercise has been tried before and failed to create a Commons majority for any option.

The prime minister is under intense pressure to step down after the European Parliament elections, which are expected to result

in a drubbing for the Conservatives. Opinion polls at the weekend showed the Tory vote share at between 10 per cent and 15 per cent.

Sir Keir told the Guardian the parliamentary arithmetic would not add up for a cross-party deal unless it contained a second referendum: “A significant number of Labour MPs, probably 120 if not 150, would not back a deal if it hasn’t got a confirmatory vote.”

Tom Watson, deputy Labour leader, said that within both of the main parties attempting to enforce a deal would be “very, very difficult”.

He added that he wanted a “confirmatory ballot” on Mrs May’s deal.

Labour is also facing pressure at the European elections: the party’s pro-Brexit supporters are moving across to Nigel Farage’s new Brexit party, while Remainers are switching to the Liberal Democrats, Greens or Change UK, which are unambiguously opposed to leaving the EU.

Jumia denies fraud allegations that have wiped 50% off stock Africa-focused ecommerce group ‘completely stands by’ filings with US SEC NEIL MUNSHI

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umia, the Africa-focused ecommerce company, has denied allegations of fraud by an activist shortseller, responding to claims that sent its shares plummeting just weeks after a blockbuster debut on the New York Stock Exchange.

Sacha Poignonnec, co-chief executive and co-founder, said the company “completely stands by” its filings with the US Securities and Exchange Commission, which were questioned by Citron Research in a report last Thursday that claimed Ju-

mia’s equity was “worthless”. Shares have fallen over 50 per cent since the release of the report by Citron, whose founder Andrew Left told the FT he had taken a short position in the company.

“We will not be distracted . . . by those who seek to create doubt to profit at our expense and that of our long-term stakeholders,” Mr Poignonnec said on an analyst call following the announcement of firstquarter results, which it had brought forward following the allegations.

Over the weekend, Jumia passed around a research note by Citibank that rebutted some of Mr Left’s al-

legations, but also argued that the company needs to be more transparent about some of the issues raised, particularly whether active user numbers were inflated, and a related-party transaction involving one of its co-chief executives.

Jumia, which operates in 14 African countries, reported a loss of €45.4m in the first quarter, against a €34.2m loss in the same period a year earlier. Revenues rose 12.3 per cent from the previous year to €31.8m.

The company also announced a €50m partnership with Mastercard for its payments system JumiaPay.

US generic drug companies hit by price-fixing claims

Shares of Teva and others fall after 44 states accuse them of an anti-competitive conspiracy HANNAH KUCHLER

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hares in generic drugmakers including Teva, Mylan, Novartis, Sandoz, and Pfizer fell on Monday after 44 US states announced a lawsuit alleging an anti-competitive conspiracy to artificially inflate prices for more than 100 drugs, some by more than 1,000 per cent.

Teva shares were down 11 per cent at $12.75, Mylan lost 6 per cent to $20.73, Novartis declined 2 per cent to $80.27 and Pfizer was 1 per cent

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lower at $40.35 on Monday, amid fears that the drugmakers could be hit with damages and penalties as a result of the suit, which was filed on Friday.

The lawsuit also named 15 individual senior executives at some of the companies, including Teva, Sandoz and Mylan, accusing them of orchestrating the “multibillion-dollar fraud”.

Teva alone is accused of raising prices on almost 112 generic drugs.

William Tong, the Connecticut attorney-general who led the 44-state @Businessdayng

investigation, said the probe was in its early stages, and that he would not stop until the companies and individuals were held accountable.

“These are drugs that people in this country rely on every day for acute and chronic conditions and diseases from diabetes and cancer to depression and arthritis,” he said.

“We all wonder why our healthcare, and specifically the prices for generic prescription drugs, are so expensive in this country — this is a big reason why.”

Tuesday 14 May 2019

BUSINESS DAY

41

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Global markets dealt strong blow as trade worries mount Equities face heaviest sell-off since December 2018 MICHAEL HUNTER, ADAM SAMSON AND RICHARD HENDERSON

G

lobal equities faced the heaviest fall of 2019, while emerging market currencies wobbled, amid swelling concern about the Sino-American trade dispute and the knock-on effects to the world economy.

A flight from risky assets that began last week accelerated on Monday after China said it would increase tariffs on around $60bn worth of US imports in retaliation for a US decision to increase levies on $200bn of Chinese imports.

The S&P 500 dropped 2 per cent shortly after the opening bell on Wall Street, extending falls across Europe and Asia.

“It seems like China is going nuclear here,” said Tony Roth, chief investment officer of Wilmington Trust Investment Advisors. “Both sides are really dragging their heels in at this point.”

The declines left MSCI’s broad All-World equity barometer down more than 1.6 per cent, leaving it on track for the steepest decline since late March.

Worries over the escalation in tensions between the world’s two largest economies sparked ructions in emerging market currencies, which tend to be seen as riskier than their developed market counterparts.

China’s currency, the renminbi, was down 0.9 per cent against the US dollar on offshore markets, having crossed the Rmb6.9 level for the first time this year. Other major emerging market currencies were also caught in the crossfire, sending MSCI’s broad EM FX index down 0.7 per cent to levels not seen since

January.

Turkey’s lira was the standout faller, weakening by 1.9 per cent to almost TL6.10 per dollar. The decline offset a rebound at the end of last week, but recent doubts about the country’s ability to sustain a defence of its currency were highlighted again as wider sentiment soured.

“It will be difficult to keep markets calm without further progress in trade talks in the coming months,” said Lee Hardman, a currencies analyst at MUFG. Mr Roth added that “it seems less likely there will be a deal in a day, a week or a month — because the issues are so complicated.”

Investors took shelter in perceived havens. The Japanese yen jumped 0.8 per cent on the buck, while a rally in US government debt pushed Treasury yields lower.

The trading pattern left bourses in countries with stock indices dominated by exporters making some of the biggest losses. Taiwan’s TWSE 50 fell 1.6 per cent. South Korea’s Kospi lost 1.3 per cent, while its currency lost 1.1 per cent to hit the weakest level since January 2017.

Michael Hanson, head of global macro strategy at TD Securities, predicted that the renminbi would act “as a shock absorber to the economic impact of heavier tariffs”. He predicted that, without an improvement in trade relations, China’s currency might weaken by between 5 per cent and 6 per cent against the dollar.

Mainland China’s CSI 300 stock index was down 1.7 per cent, trimming its advance for 2019 to just over 21 per cent.

“Investors . . . are taking some chips off the table” after a strong start to the year said Koon Chow, strategist at UBP.

Tariff battle hits global stocks and emerging market currencies MICHAEL HUNTER AND DANIEL SHANE

G

lobal stocks and emerging market currencies fell on Monday as the trade dispute between the world’s two biggest economies escalated.

New York’s S&P 500 fell 1.8 per cent in opening trade, after China said it would retaliate against new US measures with its own set of tariffs on goods imported from the US. Treasury yields slipped as investors sought the safety of government bonds, sending the yield on benchmark 10-year US government debt to its lowest since late March, down 4.1 basis points to 2.4139 per cent.

Shares in trade-sensitive Apple fell 5 per cent to leave the US technology company near correction territory, while Boeing fell 3 per cent after a Chinese media report that Beijing could reduce orders from the manufacturer.

The deepening sense of unease among investors hit emerging market currencies. The MSCI index tracking EM currencies was down 0.7 per cent, setting it on course for its biggest fall

of 2019.

The offshore renminbi was 0.9 per cent weaker at Rmb6.906, a line not touched since December. The yen, which benefits from haven demand in turbulent times, strengthened by 0.8 per cent, its biggest rally in 7 weeks. The Swiss franc was 0.5 per cent stronger.

The CSI 300 index of stocks listed in Shanghai and Shenzhen earlier fell 1.5 per cent, adding to its decline of 4.5 per cent over last week.

Losses for European bourses deepened on news of China’s response. The region-wide Stoxx 600 fell 1.1 per cent.

Asian indices fell across the board.

Among them, benchmarks dominated by exporters made up some of the biggest losses. Taiwan’s TWSE 50 fell 1.6 per cent. South Korea’s Kospi lost 1.4 per cent.

US President Donald Trump had earlier warned China not to retaliate against the rise in tariffs his administration pushed through last week and said China would be “hurt very badly” if it does not agree to a trade deal. www.businessday.ng

The decline of Germany’s economic model casts uncertainty over the future relationship between chancellor Angela Merkel and French president Emmanuel Macron © Kay Nietfeld/dpa

Escalation of trade tensions between China and the US is hitting global markets

Bitcoin is the 10-year Treasury of our time JEMIMA KELLY

W

ell this is embarrassing. Just weeks after we were forced to admit there was a cracking use-case for bitcoin, we’ve once again been left red-faced. Bitcoin has risen while other risky things have fallen, and in so doing has proven, once and for all, that it is a safe-haven asset.

Don’t believe in central banks?

No worries. Bitcoin is the US 10-year Treasury of the modern era. It hit a nine-month high on Sunday of around $7,400. Nuff said.

For proof of its risk-free credentials, look no further than Twitter, where you will find plenty of cool-headed market commentary, featuring lists of high-risk things (like shares in actual companies and the currency of the world’s second-biggest economy) in the red, and safe things (like bitcoin) in the green.

What about that Binance hack last week though, when $40m of bitcoin was stolen by hackers?

Doesn’t matter. Bitcoin still exists, so the hack only makes it stronger.

From Reuters this morning: Other market participants said perceptions of bitcoin’s resilience in the wake of last week’s $40 million theft from the major Binance exchange was supporting sentiment.

The nine-month high comes after a recent surge in value for Bitcoin, which has defied concerns over the US-China trade war to jump more than 20 per cent over the last week.

What if bitcoin’s jump was something more specific? Something more substantive? Something more meaningful? Could we be seeing a pivot in the land of alt-bro finance?

Could those who queued up outside Metro Bank to get their money out have put it straight into bitcoin? Or perhaps it was retail investor bros pivoting from Uber to crypto (following last week’s IPO flop) wot dun it?

All very confusing. Some — like cypto-trolls David Gerard and Bitfinexed — are speculating that it is in fact the $800m worth of Tether released into the crypto market in the past month or so that has pushed up the price.

Others are spreading FUD about a looming bitcoin bubble and troubles at Tether crypto exchange Bitfinex. From Preston Byrne: I will not dwell at length about Bitfinex’s current drama, save to say that individuals who have allegedly done business with Bitfinex are under federal indictment, assets managed by those individuals have been seized, and Bitfinex itself is known to be under investigation for alleged fraud by the attorney-general of New York.

Flight to safety sounds a lot more likely if you ask us. If by safety you mean the highest risk thing that you can possibly get your hands on. The thing is, the concept of a safe haven is a self-fulfilling prophecy, isn’t it?

If you say enough times that bitcoin goes up when stocks go down, people will buy bitcoin when stocks go down. Even if it is the very antithesis of all things safe and havenish.

At least Twitter’s bots allow you to see through the noise though.

Type “bitcoin” into the search bar and (depending on who you follow) you’ll get bitcoin bros retweeting themselves . . .

SEC gives green light to first ‘negative fee’ fund Latest stage in a ferocious fee war waging among asset managers OWEN WALKER

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he first investment fund that pays customers who commit their money has been given the green light by the Securities and Exchange Commission, the US markets regulator.

The arrival of so-called ‘negative fees’ is the latest stage in the ferocious fee war waging among asset managers. It is a sign of the difficulties for new players trying to break into a market that is dominated by a handful of large index fund managers that have the economies of scale to offer ever-cheaper funds.

Salt Financial, a New York boutique manager, has introduced a new charging structure for its recently launched Salt Low

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truBeta US Market ETF after receiving regulatory approval late last week. The structure applies a 34 basis-point fee waiver to the fund’s 29bp management charge.

The result is that the fund will have a negative fee of 5bp, meaning customers will receive $5 for every $10,000 they invest.

The structure will be in place until the fund reaches $100m of assets — seen as a crucial size for a new ETF to reach.

Last week, before the company had received regulatory approval, Salt’s president and chief operating officer Alfred Eskandar told FTfm the company had devised the fee structure after struggling to attract assets to its first ETF, which it launched @Businessdayng

last year.

“David needed a slingshot to take down Goliath — we need a negative fee model to force our way into this anti-competitive market,” he said.

Asset managers gave up more than $3.5bn in income through fee cuts last year — and nearly $16bn since 2014 — according to Flowspring, a fund management research company. It found that products with expense ratios below 5bp grew 20 times faster than those above 20bp over the past five years.

Fund giants including BlackRock, Vanguard, JPMorgan Asset Management, Fidelity Investments and Charles Schwab have been especially aggressive fee-slashers.

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Tuesday 14 May 2019

BUSINESS DAY

FT

ANALYSIS

Boeing expects changes to safety regime after 737 Max crisis Lead independent director defends chief executive as pressure builds on regulators PATTI WALDMEIR, ANDREW EDGECLIFFEJOHNSON AND SYLVIA PFEIFER

B

oeing is expecting “far reaching” changes to the way aircraft are certified safe across the global aviation industry, according to its lead director, as pressure builds on regulators to prevent further fatal accidents like the two recent Boeing 737 Max air disasters.

David Calhoun, who is lead independent director on the board of the world’s largest commercial aircraft maker, defended the role chief executive Dennis Muilenburg has played in the crisis provoked by the two

its own “independent” review of the design of the Max and that the completion of this was “a prerequisite to the return to service of the aircraft” in Europe.

Aviation experts said it was not unprecedented for EASA to conduct its own review, but it was unusual. The normal convention is for regulators to follow the lead of the authority in the country where the aeroplane was manufactured, in this case that of the US Federal Aviation Administration. The FAA, which had been seen as the leader on aviation safety prior to the two accidents, has come under fire both for the way in which it cer-

Boeing 737 Max aircraft remain grounded around the world © Reuters

crashes in Indonesia and Ethiopia, in which 346 people died.

All Boeing 737 Max aircraft have been grounded until Boeing and regulators agree on a fix to a flight control system believed to have played a big role in both crashes.

“I think our leader has done a really good job in keeping the company focused on delivering a fix to our part of this issue, and also to begin planning for longterm changes which I think are going to be quite far reaching and not just for Boeing but for the industry at large,” he told the Financial Times in an interview.

“I am confident that substantive things will happen.

Nobody’s ducking anything. I think this will be a very long set of improvements over a long period of time”, he added, but declined to go into detail.

Mr Calhoun defended Mr Muilenburg’s decision to advise the US regulator not to ground the jets until after most global regulators had done so. “So far he has passed all the tests,” said Mr Calhoun.

His comments came as signs of a deepening rift emerged between US and European regulators over who should be in charge of ensuring the safety of the Max before it returns to global skies.

The European Aviation Safety Agency said it was conducting

tified the aircraft and for being the last big regulator to ground the plane.

News of the rift comes ahead of congressional hearings in Washington this week into the Max crisis and before the FAA convenes a critical May 23 meeting with other global regulators, which Boeing hopes will lay out a path to allow the Max to return to the skies.

“It is not unexpected and national regulators always have the ability to do their own additional checks but it certainly has not happened very often,” said one industry expert.

Southwest Airlines and some US pilots unions said at the weekend that they had received federal grand jury subpoenas for documents relating to the Max, as part of an investigation by the US Department of Justice into the development of the Max and its certification as safe.

Mr Calhoun said Boeing’s future would depend on restoring the trust of the flying community in the safety of its planes, but added that there is “no advertising campaign that we could organise that would mean a hill of beans” to reassuring passengers. “We have to do what we do, engineer it with pride and put it in the air and make sure everything around it is safe.” www.businessday.ng

Uneasy allies: Donald Trump, Angela Merkel and Emmanuel Macron attend the ceremony for the Centenary of the WWI Armistice in Paris last November

US rift with Europe widens ahead of Orban visit

Donald Trump resets relations with America’s traditional allies in the EU DEMETRI SEVASTOPULO AND GUY CHAZAN

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hen Mike Pompeo, US secretary of state, last week ab r u p t l y ca n celled a meeting with German chancellor Angela Merkel, the Süddeutsche Zeitung newspaper declared that the USGerman friendship was “in ruins”.

Washington said Mr Pompeo had to fly to Iraq for a pressing Iran issue. But the cancellation of the meeting with Ms Merkel, who has faced harsh attacks from President Donald Trump, was another reminder of how strained relations have become between the US and its European allies.

Abigail Spanberger, a former CIA operative elected to Congress last year, said the “contemptuous” way Mr Trump treated allies had hurt some of the most important US relationships. “When you have a good relationship, world leaders understand that things come up,” she said. “If we were in a circumstance where we were benefiting and working closely with the Germans . . . it would be less of a diplomatic drama.”

Since Mr Trump came to office in 2017, the US and its key European allies — Germany, France and the UK — have diverged over everything from climate change to trade to the Iran nuclear deal.

Critics say Mr Trump is undermining alliances that have underpinned transatlantic security for decades by welcoming authoritarian leaders, such as Hungarian prime minister Viktor Orban who visits the White House this week.

“It is not lost on the Europeans that the president goes after the true democratic leaders and has refused to go after the true authoritarian figures,” said Nicholas Burns, a former US ambassador to Nato.

“We are seeing a possible US repudiation of what made the alliance viable over 70 years . . . President Trump does not believe that the EU is a valued ally. He believes that the EU is a competitor.”

Beto O’Rourke, a Democratic presidential contender, told the Financial Times that Mr Trump should be strengthening alliances to help deal with joint concerns

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such as China. “We have a great opportunity to renew those alliances and friendships . . . and also an opportunity to stand up to the strong men, the autocrats, the dictators that dominate so much of the challenges that we face right now,” he said.

US officials say the president is just trying to ease an unfair burden on the US. Gordon Sondland, US ambassador to the EU, said there had been “too much gilding the lily and not enough substance” over the years.

“We’re interested in substance and then resetting certain relationships between us that have gone completely out of balance, instead of coming here and taking nice photos and attending lovely soirées and allowing the underlying issues to fester,” said Mr Sondland. “Good friends and strong allies have serious conversations.”

Constanze Stelzenmüller, a Brookings Institution Europe expert, said US-EU ties had entered a period of “uneasy peace” as Mr Trump has been focused on reaching a trade deal with China — except for Germany.

While Berlin was unhappy with Mr Pompeo last week, the bigger issue is that both sides are miles apart. Mr Trump is exercised about Germany’s huge current account surplus, its level of defence spending, and the Nord Stream 2 pipeline bringing Russian gas into Germany.

“The US would say that there has been no discernible progress on any of these issues, so why even bother to talk,” said Norbert Röttgen, head of the Bundestag’s foreign affairs committee. “Trump’s style is that if you don’t give in to America’s demands, he will snub you.”

The US has distanced itself from the multilateral institutions and international agreements that Germany holds dear — a stance reinforced by John Bolton as national security adviser — such as the Paris climate accord.

“Talks with Pompeo in Berlin would not have achieved a breakthrough on any front,” said Ulrich Speck of the German Marshall Fund. “All the dossiers are stuck.”

Germany’s failure to meet its Nato commitment to spend 2 per @Businessdayng

cent of gross domestic product on the military is a good example. Now Berlin is braced for another setback.

There is a growing expectation that Mr Trump will follow through on a threat to impose import tariffs on European cars, which would be a body blow for the German car industry.

Clete Willems, a former senior Trump administration official and incoming partner at law firm Akin Gump, said it was “critical” that the US and EU work together. But he said the US “has serious concerns about the EU’s agricultural market access barriers, regulatory barriers for autos and other products, and taxation policies that harm US technology companies”.

While some European officials hope Mr Trump will not impose the auto tariffs while he negotiates with China, Mr Sondland warned about complacency. “The president very much intends to use the auto tariffs as a tool if necessary,” he said. “The president has a ‘wait and see’ attitude right now, as these talks resume to see if there is forward progress being made or if Europe continues to drag its feet indefinitely.”

Relations between the US and Germany have also been hurt by highly unusual interventions by the US ambassador to Berlin, Richard Grenell. In March, he warned Germany that the US would scale back intelligence sharing with Germany’s spy agencies unless Berlin blocked Huawei from its 5G network. And in January he wrote to companies involved in Nord Stream 2, warning their activities “carry significant sanctions risk”. Martin Schulz, the former Social Democrat leader, said he was behaving “like an extreme rightwing colonial officer”.

Germany and the US have hit rocky patches before. Gerhard Schröder and George Bush fell out over the US invasion of Iraq, but their administrations stayed in close contact. For Mr Trump and Ms Merkel, that is not the case. At the G7 in Canada last year, Mr Trump threw several pieces of candy on to the table in front of Ms Merkel and then told her she could never claim that he never gave her anything.

“The temperature of the relationship froze as soon as Trump came in, and it has never recovered,” said Mr Speck.

Tuesday 14 May 2019

BUSINESS DAY

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@Businessdayng

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Tuesday 14 May 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Monday 13 May 2019

Top Gainers/Losers as at Monday 13 May 2019 LOSERS

GAINERS

Opening

Closing

Change

MOBIL

N173

N165

-8

0.28

STANBIC

N46

N44.05

-1.95

N7.5

0.25

GUINNESS

N51.5

N50

-1.5

N2.46

N2.55

0.09

GUARANTY

N32

N31

-1

N0.5

N0.55

0.05

UBA

N6.5

N6

-0.5

Company

Opening

Closing

Change

OKOMUOIL

N70

N77

7

AFRIPRUD

N3.54

N3.82

FBNH

N7.25

CAVERTON NEIMETH

Company

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

28,484.44 3,856.00 214,684,260.00 2.784 10.823

Global market indicators FTSE 100 Index 7,380.64GBP +29.33+0.40% S&P 500 Index 2,919.44USD -26.20-0.89% Generic 1st ‘DM’ Future 26,252.00USD -247.00-0.93%

Deutsche Boerse AG German Stock Index DAX 12,286.88EUR -125.87-1.01% Nikkei 225 22,258.73JPY -48.85-0.22% Shanghai Stock Exchange Composite Index 2,906.46CNY -171.88-5.58%

Market hits new low as stock investors book additional N141bn loss Stories by Iheanyi Nwachukwu

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he Nigerian stock market opened this week on a negative note as investors booked approximately N141 billion loss at the close of trading on Monday May 13, 2019. This dismal outing on Custom Street pushed further the yearto-date (ytd) negative return at -9.11percent.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) depreciated further by 1.26percent to close at 28,484.44 points as against 28,847.81 points recorded the preceding trading day. Only 11 stocks gained against 30 losers.

Mobil Oil Nigeria Plc was the biggest loser on the Bourse after its share price declined from N173 to N165, losing N8 or 4.62percent.

Stanbic IBTC Hold-

L–R: Norna Awoh, head, Palestine Capital; Oladipo Aina, managing director/CEO, Signet Securities Limited; Jude Chiemeka, divisional head, Trading Business Division, The Nigerian Stock Exchange (NSE); Adedapo Adekoje, president, Chartered Institute of Stockbroker (CIS); Sam Willie Ndata, Doyen of Stockbrokers and Patrick Ezeagwu, chairman, Association of Stockbroking Houses of Nigeria (ASHON) at NSE Retail Investor Coverage Workshop at the Exchange in Lagos.

ings Plc followed after its share price decreased from N46 to N44.05, losing N1.95 or 4.24percent.

The share price of Guinness Nigeria Plc

was also down, from N51.5 to N50, declining

by N1.5 or 2.91percent.

GTBank Plc lost N1, from N32 to N31, down by 3.13percent; while PZ Cussons Plc dipped

Food Concepts to raise N3.6bn via rights issue

F

ood Concepts Plc, owner of the Chicken Republic brand has commenced the process to raise up to N3.6billion by way of a rights issue following shareholders’ approval at their 16thAnnual General Meeting held on November 1, 2018.

A formal application as well as the relevant documentation has been submitted to the appropriate regulatory authority for approval. This move is seen by the directors of the company as an excellent opportunity for existing shareholders to increase their investment in the Company.

According to David But-

ler, the Managing Director of the company, “The rights issue will enable the company achieve its strategic growth plans and maximise shareholders’ value. The net proceeds of the Rights Issue will be utilized in funding store expansion, supply chain and distribution improvements as well as launching new Brands to meet the flavour profile of the consumer.

Food Concept Plc is the owner of the Chicken Republic Brand, a leading Quick Service Restaurant (QSR) Brand and a shareholder of Food Concept Pioneer Limited (Butterfield’s and Yum Yum Baked goods Brands).

Food Concept Plc curwww.businessday.ng

from N9 to N8.5, down by 5kobo or 5.56percent.

Okomu Oil Palm Plc advanced most, from N70 to N77, adding N7 or 10percent. It was fol-

lowed by Africa Prudential Plc which rallied by 28kobo or 7.91percent, from N3.54 to N3.82.

FBN Holdings Plc stock price gained 25kobo, from N7.25 to N7.5, add-

ing 3.45percent.

Caverton advanced from N2.46 to N2.55, adding 9kobo or 3.66percent; while Ecobank Transnational Incorporated was up by 5kobo or 0.49percent, from N10.3 to N10.35.

The value of listed stocks which opened at N10.842 trillion decreased to N10.701trillion.

In 3,856 deals, stock dealers exchanged 214,684,260 units valued at N2.784billion. UAC of Nigeria Plc, GTBank Plc, UBA Plc, Sterling Bank Plc, and Transcorp Plc were actively traded stocks.

“With bearish sentiment dominating the bourse even with attractive prices, it is difficult to take a clear stand on the direction of the market. However, we expect investors to start cherry picking select stocks and begin to bargain on prices,” said Lagos-based analysts at Vetiva Capital.

SEC says commodities market will aid economic diversification

rently operates 51 company-owned and 19 franchise restaurants across Nigeria and Ghana. The Company’s mission is to be the most loved fast food and baked goods company in West Africa.

The Company’s strategy to achieve this is to increase its market share by continuing to delight its customers with great tasting, every day affordable value food propositions, selectively opening additional stores in new and existing communities and the launch of additional brands. Food Concept Plc’s plan is to operate 300QSR restaurants and to dominate the bread and sausage roll market over the next five years.

T

he Commodities Trading Ecosystem has been described as an important market that is capable of playing a strong role in the nation’s diversification efforts as being championed by the present administration.

This was stated by the Acting Director General of the Securities and Exchange Commission, SEC, Mary Uduk at a Capacity Building programme for Judges and Top Management of the Investment and Securities Tribunal, IST on Commodities Trading Ecosystem held in Abuja, Monday.

Uduk, who was represented by Acting Executive Commissioner Operations SEC, Isyaku Tilde, said it is important to organise the commodities market to enhance

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its efficiency, growth and competitiveness which will better position it to play a strong enabling role in food security, employment generation and economic diversification which is the main thrust of this government She further stated that there is a lot of benefits in promoting commodities exchanges and the ecosystem in general as they provide a transparent pricing mechanism, promote attractiveness of agribusiness, foster financial inclusion and improve quality of agricultural output and profitability as well as government revenue. It also enhances the wellbeing of the farming communities and help reduce rural - urban drift.

The Acting DG said the SEC as part of its imple@Businessdayng

mentation of the 10-year Capital Market Master Plan, constituted a Technical Committee on Commodities Trading Ecosystem whose mandate was to identify challenges of the existing framework/ infrastructure and develop a roadmap for a vibrant ecosystem.

According to her, “The Technical Committee set up to develop a roadmap for reviving the Commodities Trading Ecosystem came up with over forty (40) recommendations to be implemented in 4 phases between 2018 and 2025; the report also observed the knowledge gap that exists within the ecosystem and recommended the need for capacity building on the Commodities Trading ecosystem to stakeholders and to the general public.

Tuesday 14 May 2019

BUSINESS DAY

45

Live @ The STOCK Exchanges Prices for Securities Traded as of Monday 13 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 238,153.01 6.70 -5.63 203 10,540,670 UNITED BANK FOR AFRICA PLC 205,196.53 6.00 -7.69 378 15,964,003 ZENITH BANK PLC 618,510.93 19.70 -1.50 426 11,145,370 1,007 37,650,043 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 269,214.70 7.50 3.45 164 4,616,506 164 4,616,506 1,171 42,266,549 BUILDING MATERIALS DANGOTE CEMENT PLC 3,041,730.57 178.50 -0.28 76 207,988 LAFARGE AFRICA PLC. 177,185.75 11.00 - 43 214,600 119 422,588 119 422,588

EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 307,168.06 522.00 - 21 15,923 21 15,923 21 15,923 1,311 42,705,060 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 1 10 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 1 10 1 10 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 1 10 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 73,451.07 77.00 10.00 41 841,333 PRESCO PLC 58,000.00 58.00 - 19 32,828 60 874,161 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 -4.76 7 300,543 7 300,543 67 1,174,704 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 688.30 0.26 8.33 3 172,177 JOHN HOLT PLC. 182.90 0.47 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 46,338.71 1.14 0.88 80 12,250,775 U A C N PLC. 20,169.08 7.00 0.72 133 41,289,048 216 53,712,000 216 53,712,000 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 30,360.00 23.00 - 21 44,424 ROADS NIG PLC. 165.00 6.60 - 0 0 21 44,424 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 5 82,987 5 82,987 26 127,411 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 11,196.18 1.43 - 4 42,590 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 109,519.14 50.00 -2.91 25 3,745,302 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 8 216,540 NIGERIAN BREW. PLC. 519,798.63 65.00 -0.46 58 2,654,941 95 6,659,373 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 85,000.00 17.00 0.29 231 6,528,472 DANGOTE SUGAR REFINERY PLC 165,600.00 13.80 -1.43 56 397,799 FLOUR MILLS NIG. PLC. 65,606.07 16.00 - 50 200,543 HONEYWELL FLOUR MILL PLC 9,119.73 1.15 - 17 261,360 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 13 10,485 UNION DICON SALT PLC. 3,321.07 12.15 - 1 2 368 7,398,661 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,721.12 10.50 -4.55 31 95,386 NESTLE NIGERIA PLC. 1,174,320.24 1,481.50 - 61 23,740 92 119,126 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,940.83 3.95 - 5 15,215 5 15,215 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 33,749.05 8.50 -5.56 19 222,338 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 20 96,684 39 319,022 599 14,511,397 BANKING ECOBANK TRANSNATIONAL INCORPORATED 189,917.86 10.35 0.49 31 765,729 FIDELITY BANK PLC 53,023.88 1.83 -0.54 103 4,730,880 GUARANTY TRUST BANK PLC. 912,366.56 31.00 -3.12 303 37,977,265 JAIZ BANK PLC 13,553.55 0.46 -8.00 30 2,006,965 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 76,294.61 2.65 -1.12 224 13,028,842 UNION BANK NIG.PLC. 203,845.27 7.00 - 29 118,547 UNITY BANK PLC 8,416.32 0.72 - 7 178,264 WEMA BANK PLC. 26,230.64 0.68 -5.56 33 1,891,734 760 60,698,226 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,573.93 0.66 -5.71 19 1,004,831 AXAMANSARD INSURANCE PLC 19,005.00 1.81 - 11 65,905 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 1 1,889 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 1,002,000 GOLDLINK INSURANCE PLC 955.49 0.21 -8.70 2 2,500,010 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,197.03 0.30 - 6 1,927,000 LAW UNION AND ROCK INS. PLC. 1,890.39 0.44 - 1 5,000 LINKAGE ASSURANCE PLC 3,520.00 0.44 - 2 100,000 MUTUAL BENEFITS ASSURANCE PLC. 2,346.27 0.21 - 8 787,086 NEM INSURANCE PLC 11,881.13 2.25 -10.00 12 304,310 NIGER INSURANCE PLC 1,547.90 0.20 - 1 289 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 5 276,282 REGENCY ASSURANCE PLC 1,400.44 0.21 -4.55 23 2,107,380 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 - 12 44,100 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 1 100 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 10 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 1,250 WAPIC INSURANCE PLC 5,219.27 0.39 2.56 23 3,458,293 131 13,585,735 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,086.96 1.35 3.70 16 457,753 16 457,753

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 1 20 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 20 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,640.00 3.82 7.91 55 651,888 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 - 3 25,000 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 33,664.61 1.70 -5.56 81 4,889,691 ROYAL EXCHANGE PLC. 1,234.89 0.24 - 2 6,166 STANBIC IBTC HOLDINGS PLC 451,096.36 44.05 -4.24 18 941,651 UNITED CAPITAL PLC 13,920.00 2.32 -9.37 98 5,271,919 257 11,786,315 1,165 86,528,049

HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,900.00 4.60 - 3 4,950 GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,762.89 9.00 - 24 245,858 MAY & BAKER NIGERIA PLC. 3,795.52 2.20 -4.35 13 413,813 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 10.00 14 1,359,378 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 54 2,023,999 54 2,023,999 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 -4.00 14 1,103,260 14 1,103,260 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 3 140 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 6 100,058 9 100,198 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 -10.00 32 4,365,190 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 32 4,365,190 55 5,568,648 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 11 23,175 CAP PLC 23,800.00 34.00 - 22 125,985 CEMENT CO. OF NORTH.NIG. PLC 201,095.56 15.30 - 15 68,155 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 -4.76 5 202,500 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 53 419,815 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,170.38 1.80 -2.70 24 605,000 24 605,000 PACKAGING/CONTAINERS BETA GLASS PLC. 34,473.07 68.95 - 8 101,547 GREIF NIGERIA PLC 388.02 9.10 - 0 0 8 101,547 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 85 1,126,362 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 55.00 0.25 - 1 825 1 825 1 825

ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,753.56 0.28 7.69 39 3,531,688 39 3,531,688 INTEGRATED OIL AND GAS SERVICES OANDO PLC 57,806.07 4.65 -3.12 55 917,321 55 917,321 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 59,498.22 165.00 -4.62 22 491,104 CONOIL PLC 13,948.44 20.10 - 33 104,631 ETERNA PLC. 5,151.37 3.95 1.28 19 141,512 FORTE OIL PLC. 45,521.71 34.95 - 3 4,198 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 0 0 TOTAL NIGERIA PLC. 55,002.54 162.00 - 14 15,212 91 756,657 185 5,205,666

ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 1 2,000 1 2,000 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 1 20 1 20 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 2 505 TRANS-NATIONWIDE EXPRESS PLC. 361.01 0.77 - 5 3,790 7 4,295 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 2 35 IKEJA HOTEL PLC 3,014.25 1.45 - 2 500 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 1,400 5 1,935 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 2 1,000 2 1,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 0 0 LEARN AFRICA PLC 941.17 1.22 - 3 10,817 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 798.11 1.85 - 3 3,100 6 13,917 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 414.43 0.25 -7.41 12 1,325,200 12 1,325,200

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Tuesday 14 May 2019

BUSINESS DAY

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Tuesday 14 May 2019

BUSINESS DAY

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47

leaderSHIP

BUSINESS DAY Tuesday 14 May 2019 www.businessday.ng

CEO in focus

Herbert Wigwe: The man behind Access Bank’s growth as biggest lender by asset MICHAEL ANI & DIPO OLADEHINDE

W

henever the success story of Nigeria’s banking sector is discussed, the name Herbert Wigwe easily comes to mind as his trajectory is a must-read for anyone interested in Nigeria and Africa’s banking industry.

Since assuming the position of the chief executive officer (CEO) of Access Bank in 2014, Wigwe has not only led a pack of industry-defining banking professionals inspired to consistently create shareholders’ value but has further demonstrated innate capability in driving growth prospect that saw the bank becoming the largest lender by assets.

In 2017, Wigwe flagged off a five-year strategic plan that would set the bank on the path of becoming “Africa’s gateway to the world”.

According to him, the new five-year strategy would accelerate its growth story to position Access Bank as the No. 1 Nigerian bank by 2022 and create a Universal Payments Gateway to dominate international trade and inter-African payments.

The new strategy which had six strategic levers ranging from making the bank digitally conscious to retail banking growth and consolidation in wholesale markets; customer-focused, analytics-driven, with robust risk management; strong global collaboration in key gateway markets and the creation of a universal payments gateway.

The vision imbedded in the plan to become the biggest lender in Africa’s largest economy served as a driver that resulted in the consolidation of the bank with one of Nigeria’s biggest retail lenders, Diamond Bank.

The merger valued at $200 million involved Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank.

The fallout from the deal saw the bank climb to the number one spot — overtaking two of Nigeria’s biggest lenders (Zenith and First Bank) — to become the biggest bank by asset, a growth plan it earlier hoped to achieve in 2022.

The bank’s asset grew 29.7 per cent from N6.4 trillion as at end of the first quarter of 2019—ahead of Zenith’s N5.88 trillion and First bank’s N5.8 trillion—after the financial consolidation by both banks.

Not only did the merger help in growing the firm’s asset, but it also aided in boosting the number of depositors base for the bank to---- while total equity grew to N568.7bn from N482.6bn in Dec 2018, with a total number of issued shares of 35.5bn.

About Wigwe Herbert Wigwe rose to the position of the CEO and Group managing director of Access bank, succeeding Aigboje AigImoukhuede in January 2014, who retired in line with a Central Bank’s directive limiting the tenure of bank CEOs. Prior to his entering into the bank, Wigwe started off his professional career

Wigwe

with Coopers and Lybrand Associates, an international firm of Chartered Accountants. He spent over 10 years at Guaranty Trust Bank where he managed several portfolios including Financial Institutions, Corporates and Multinationals but left the bank as an Executive Director to co-lead the transformation of Access Bank Plc in March 2002 as Deputy managing director.

Born 52-year ago, Wigwe’s impressive pedigree is known to industry watchers,

just as his humble lifestyle is not strange to those who are familiar with him.

Financial performance of the bank under Wigwe Since piloting the affairs of the bank as the chief executive officer in 2014, Wigwe has succeeded in growing the assets of the bank by an average of 24.3 per cent, based on BusinessDay analysis of the firm’s financials.

Before the beginning of the financial

year in 2014, Access bank had its total asset stood around N1.84 trillion which however increase by 14.6 per cent to close the 2014 financial year at N2.1 trillion.

A similar trend followed in 2016, 2017 and 2018 with the total asset of the firm increasing 34.4 per cent, 17.7 per cent, and 20.8 per cent to N3.48 trillion, N4.1 trillion, N4.95 trillion respectively. As at end of Q1 2019, a total asset for the bank is standing at N6.4 trillion.

Aside just seeing growth in the asset, the 52-year oil CEO has also helped in building strongly other financials in terms of gross earnings, Profit Before tax and loan to customer’s that have yielded positively to shareholders.

Since 2014, Access bank’s gross earnings has seen an average increase of 20.94 per cent, to N524.7 billion in 2018, the highest since he assumed the position in the bank.

Gross earnings soared some 18.6 per cent into N254.4 billion in 2014. It further increased by 37.5 per cent and 13.2 per cent to N337 billion and N381.3 billion in 2015 and 2016 respectively.

This same positive momentum was also sustained by the bank in 2017 and 2018 when gross earnings for the bank edged up some 20.3 and 15.2 per cent to N459.1 billion and N528 billion in the period under review. The bank raked in some N160.1 billion as earnings in Q1 2019, which, when annualized could touch N640 billion in the year-end 2019.

This sporadic increase by the firm could be attributed to the merger deal between the bank and the defunct Diamond bank.

Similarly, growth in pre-tax profit for the firm has averaged 19.8 per cent since 2014, reaching a five-year high at N103.2 billion, while the firm has also maintained steady growth in its loan book. Loans to customers averaged 21.4 per cent to N2.6 trillion as at Q1 2019.

The fundamentals of Access bank sure appear bright even as it aims to focus more on the retail segment of the market in order to prevent issues of high non-performing loans that hit the banking sector in the wake of the recession when banks loan hugely to the oil sector.

With his 53th birthday just around the corner, precisely August 15, Wigwe is one business leader whose deftness and ingenuity are legendary but does not like the spotlight.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.