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news you can trust I ** thursDAY 14 may 2020 I vol. 19, no 563

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COVID-19 worsens manufacturers’ fate AllGambari: eyes on Gate vs service as fear of factory shutdowns grow keeping to fatherland NEWS ANALYSIS

ODINAKA ANUDU

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here is growing worry that many of Nigeria’s manufacturing firms will collapse under the weight of anti virus measures that have dislocated trade and supply chains

Concerns rise over bank takeover

leading to a severe squeezing in output.

Manufacturers fear that banks and creditors may swoop on them from the third quarter of the year as their hope of pay-

ing back loans dims due to a worsening economy caused by a ravaging virus.

Many factories are still under lock and key for fear of coronavirus spread among workers, while

logistics remains a big challenge with security agencies refusing to allow inter-state movement of raw materials and locally manuContinues on page 6

ZEBULON AGOMUO & MICHAEL ANI

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n avalanche of goodwill messages and eulogies has trailed the appointment of Ibrahim Gambari as chief of staff (CoS) to President Muhammadu Buhari to replace the late Abba Kyari.

Gambari resumed office on Wednesday at the Presidential Villa, Abuja, pledging his loyalty and support to his boss. He was in attendance at the Federal Executive Council (FEC) meeting presided over by President Buhari.

But beyond the euphoria of the new appointment, Gambari is coming into the CoS office at a critical moment in the history of Nigeria. His appointment comes at a time when the economy is on its knees amid collapsed oil Continues on page 6

Inside

Nigeria sets ambitious 1.9m barrels oil production in revised Mtef P. 2 NLNG signs EPC Contracts with SCD JV Consortium: Timipre Sylva (2nd row r), minister of state for petroleum resources; Mele Kyari (2nd row l), NNPC GMD; Simbi Wabote (1st row l), executive secretary, NCDMB; O.R. LongJohn (2nd row, 2nd l), chairman, Board of Directors of NLNG; Tony Attah (3rd row, 2nd l), NLNG MD; Sadeeq Mai-Bornu(3rd row, l), NLNG deputy MD, other members of the NLNG Board, and representatives of Saipem, Daewoo and Chiyoda, during the virtual signing of the EPC Contracts for NLNG’s Train 7 project, yesterday.

Lagos leverages five years’ biosecurity roadmap in COVID-19 fight P. 2

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Thursday 14 May 2020

BUSINESS DAY

news record unemployment Nigeria sets ambitious 1.9m barrels What in US means for Nigeria oil production in revised Mtef LOLADE AKINMURELE

Tony Ailemen, Abuja

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he Federal Executive Council (FEC) on Wednesday approved the revised Me d i u m Te r m Expenditure Framework (MTEF) for 2020-2022 as well as amendment to the 2020 budget.

Zainab Ahmed, minister of finance, budget and national planning, who disclosed this after the first ever virtual FEC meeting presided over by President Muhammadu Bu-

hari, said the approval followed the memo by her ministry submitted to the council during the meeting.

The new approved MTEF contains key parameters including new oil price benchmark of $25 per barrel, crude oil production of 1.94 million barrels per day and an exchange rate of N360 to $1.

The FEC meeting was held via teleconferencing, where only ministers that had memoranda to present were physically present at the Villa, while other ministers joined from

their various offices.

“The revised budget is now in the total sum of N10.523 trillion, a difference of just about N71.5 billion when compared to the approved budget” which was passed by the National Assembly in December 2019, Ahmed said.

“This is because, as we cut down the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic. This will include a revenue of N5.158

billion, with a deficit of N5.365 trillion to be financed by both domestic as well as foreign borrowing.

“The foreign borrowing we are doing for 2020 are all concessionary loans from the IMF, which has already been approved and has crystallised, from the World Bank, Islamic Development as well as Afreximbank,” she said.

Ahmed said there will also be some drawdown of previously committed loans for

Continues on page 6

L-R: Michel Puchercos, group managing director, Dangote Cement plc; Ernest Ebi, non-executive director, Dangote Cement plc; Emmanuel Ikazoboh, non-executive director, Dangote Cement plc, and Abdulrazaq Balogun, executive secretary, Lagos State Security Trust Fund, during the presentation of 35 police patrol cars donated by Dangote Cement plc to the Trust Fund in Lagos, yesterday.

Dangote Cement strengthens partnership with Lagos, donates 35 security operational cars TEMITAYO AYETOTO

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angote Cement Plc and the Lagos State government on Wednesday strengthened further their private-public partnership to make the state more investorfriendly with the donation of 35 fully equipped security operational cars by the company to the state government.

Presenting the cars to the Lagos State Security Trust Fund, Emmanuel Ikhazobor, non-executive director of Dangote Cement, who led the management of the firm to Lagos House, Marina, said the gesture was part of the company’s Corporate Social Responsibility (CSR) activities and was being done in appreciation of the efforts of the governor, Babajide Sanwo-Olu, to make the state secure for the people and investments.

He said the donation of the cars was in response to the challenges of securing Lagos

State as a destination of choice to investors, adding that the fact that security is essential to economic development makes it one of the major demands of investors.

“Wearepresenting35saloon cars today to strengthen the operations of the Lagos State Security Trust Fund. We commend the government of the state for instituting a Trust Fund with the mandate of utilising donations from corporate bodies and individuals to equip the security agencies operating within the state,” Ikhazobor said, According to him, the company decided to support the Lagos State Security Trust Fund, which was established in September 2007, because it was in direct response to the security challenges in the state such as logistics, mobility, communications and kitting.

He said the donation of operational vehicles was in continuation of the company’s commitment to the promotion of security in Lagos State. www.businessday.ng

“It should be recalled that our chairman, Aliko Dangote, made donations to the Fund in the past. As a socially responsible organisation, the security and well-being of our host communities remain utmost in our minds,” Ikhazobor said.

“Therefore, a major step towards encouraging investments and creation of employment is promoting and ensuring adequate security in our environments. This is why we at Dangote Cement fully appreciate several initiatives by the state government in the promotion of security and a safe operating environment for business,” he said.

Ikhazobor maintained that Dangote Cement management was of the firm belief that government alone cannot continue to bear the full cost of meeting the expectations of the entire populace in the provision of basic necessities like health, education and security. This gave rise to Public Private Partnerships where

private sector collaborates with public sector in the provision of essential services.

“Our desire to partner government or the public sector informed our interventions such as Apapa-Wharf Road, Itori-Ibese Road, and Obajana-Kabba Road,” he said.

Receiving the car keys, Abdulrazak Balogun, executive secretary of the Fund, described the donation as a huge intervention from a private sector organisation to solve critical challenges of logistics and mobility faced by the security personnel in the state.

He expressed the appreciation of the state governor to the gesture and promised that the vehicles would be put to good use.

“We know that receiving these vehicles is one thing, maintaining them is another thing. Though we don’t have controlof thesecuritypersonnel that would make use of the vehicles, we will try to ensure they are well maintained,” he said.

https://www.facebook.com/businessdayng

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he US unemployment rate jumped to 14.7 percent in April, the highest level since the Great Depression, as many businesses shut down or severely curtailed operations to try to limit the spread of the deadly coronavirus.

The Labor Department said 20.5 million people abruptly lost their jobs, wiping out a decade of employment gains in a single month.

Only in February, the unemployment rate was at a historic low of 3.5 percent, showing the extent of the economic devastation wrought by the COVID-19 pandemic.

The unemployment rate in April jumped to a record 18.9 percent for Hispanics, 16.7 percent for African Americans, 14.5 percent for Asians and 14.2 percent for whites.

The unprecedented rate of job losses in the US should be a source of concern in Nigeria for it is where the bulk of its diaspora remittances come from.

The Nigerian diaspora in the United States transferred about $6.2 billion back home in 2017, making this US-based population Nigeria’s largest source of remittance inflows.

That’s 28 percent of the $22 billion of total remittance inflows from Nigerians in the diaspora for that year. The United Kingdom, the second largest source of diaspora remittances into the country, accounted for 18.6 percent at $4.1 billion.

The US is also home to the largest number of Nigerian emigrants, accounting for 22.6 percent of the total emigrants from Nigeria in the diaspora.

As of 2017, there were about 348,000 Nigerian immigrants living in the US, according to data from the Pew Research Institute, making Nigeria the top birthplace among African immigrants in the country.

That figure means remittance per capita from the US to Nigeria was roughly $17,816 per emigrant.

Nigerians in the US are also some of the most educated groups in the country.

Lagos leverages five years’ biosecurity roadmap in COVID-19 fight …as ECOWAS taps home-grown solutions, innovation, strategic partnerships STEPHEN ONYEKWELU & ANTHONIA OBOKOH

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s members of the Economic Community of West African States (ECOWAS) are leveraging on homegrown solutions, innovations and strategic partnerships to push back the onslaught of the novel coronavirus, Lagos State, Nigeria’s economic capital, is taking advantage of its five years of investment in biobanking and biosecurity governance to fight the pandemic.

From 2015 to 2017, that is, after the Ebola outbreak, Lagos invested in level three biosafety laboratory and biobank for the state. In 2018, it trained key staff in biosecurity and biothreat reduction and completed the Lagos State biosecurity policy and roadmap. From 2016 to 2020, the over 20 million peoplestrong state upgraded and expanded isolation capacity at Lagos Mainland Hospital, the infectious diseases hospital.

The biosecurity governance is coordinated through the Lagos State Incident Com@Businessdayng

mand System.

In Lagos State, the fight against the novel coronavirus rests on a tripod of public health, economy and security.

“To focus only on one leg of the fight is dangerous. We cannot address only the public health emergency and forget the lives and livelihoods of Lagosians. We also need to maintain civil society, law and order,” Akin Abayomi, Lagos State commissioner for health, said on Wednesday.

At the regional level, the 380 million people-strong ECOWAS comprising 16 countries is coordinating the regional effort against COVID-19 through the West Africa Health Organisation (WAHO).

This is the 11th week of dealing with the outbreak on West African soil. On the April 23, WAHO convened a meeting of ECOWAS heads of state to address the growing concerns around the pandemic.

The heads of state resolved that each member state has to commit to publishing daily epidemiological data and ensuring the vulnerable in society are protected.

Thursday 14 May 2020

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news

NLNG signs construction deal with Saipem-led consortium …project to push NLNG from 22 to 30 million metric tonnes per annum

SOLA BELLO & Ignatius Chukwu

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major milestone in Nigeria push from 22 to 30 million metric tonees of liquefied natural gas has taken place as the Nigeria LNG Limited (NLNG) has signed what it calls the Engineering, Procurement and Construction (EPC) contracts for its Train 7 Project with a consortium led

by Saipem along with Chiyoda and Daewoo. NLNG calls it the SCD JV Consortium.

The contract signing is expected to kick-start the actual design and construction of the Train 7 that may gulp $10Bn and could generate over 10,000 jobs. The project excites Bonny Islanders, Rivers people and Nigerians. Most small contractors are heading to Bonny to position for jobs. The Island itself is preparing in terms of accommodation for thousands of new workers and services such as hotels, catering, transportation and semi-skilled jobs.

A statement from the General Manager, External Relations, Eyono Fatayi-Williams, said the execution of the EPC Contracts now triggers the commencement of the Detail Design and Construction phase of the Project expected to increase the capacity of NLNG’s current six-train plant by 35 per cent.

NLNG is indicated as an incorporated Joint-Venture owned by four Shareholders, namely, the Federal Government of Nigeria, represented

by Nigerian National Petroleum Corporation (49%), Shell Gas B.V. (25.6%), Total Gaz Electricite Holdings France (15%), and Eni International N.A. N.V. S.àr.l (10.4%).

Reacting to the signing, Tony Attah, the Managing Director and Chief Executive Officer of NLNG, remarked that the EPC Contracts represents yet another milestone in NLNG’s journey towards achieving its vision of being a global LNG

company, helping to build a better Nigeria.

He said: “With the award of the EPC Contracts to our preferred bidders (SCD JV), we are guaranteeing that our country remains significantly on the global list of LNG suppliers.

This singular act clearly demonstrates our Shareholders’ determination and resolve to sustain the economic dividends that NLNG’s monetization of our vast natural gas reserves offers our great country Nigeria” He expressed confidence in SCD JV Consortium’s proven competence, adding that the demonstration of an understanding of NLNG’s business philosophy by the Consortium will positively influence the execution of the project and ensure zero harm to people, environment and host communities.

Also, the Group Managing Director (NNPC) and a Director on the NLNG Board, Mele Kyari, remarked on NLNG’s successes and its operating model. He said: “Nigeria LNG’s successes since it started operation in 1999 continue to prove that the Company operates a unique business model that is profitable to all its stakeholders. NNPC and the other Shareholders — Shell, Total and Eni — are proud to be a part of this exceptional Nigerian brand that stands out in the global market.”

“It is for this reason that President Muhammadu Buhari instructed through the Minister of State for Petroleum Resources that NNPC as a shareholder must do everything possible to support all the other shareholders and NLNG’s management to secure the much-needed public confidence from all critical stakeholders, especially the critical agencies of the FG and international investors, to pursue the Company’s ambition of adding a 7th train to its existing production capacity.

Oyo State governor, Seyi Makinde (m); his deputy, Rauf Olaniyan (r); Commissioner for Agricultural and Rural Development, Muyiwa Ojekunle (l), and others during the inauguration of monitoring and technical committee on rural access and agricultural marketing project (RAAMP) held at Government House, Ibadan.

Pic, Oyo State Government.

Demurrage, rent charges pile up for businesses over closure of Onne, Rivers ports AMAKA ANAGOR-EWUZIE

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usinesses - manufacturers, importers and exporters that do business in Onne and Rivers ports both in Rivers State would be compelled to pay huge sums as demurrage and storage charges to shipping companies and terminal operators for not taking delivery of their consignments as and when due.

This was due to the shutting down of port operations in the state following the imposition of a total lockdown of Rivers State last week Thursday, as well as the arrest of port workers by the state COVID-19 taskforce on the order of the state government.

BusinessDay search shows that contrary to the Federal Government’s directive that ports should remain open for business during lockdown to aid the movement of essential supplies, the Rivers State government has refused to place port workers under essential service

...release resumption guidelines after Covid-19 lockdown

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ndependent National Electoral Commission (INEC) has directed its state offices in Ondo and Edo to re-open immediately because of the upcoming gubernatorial elections in September and October.

INEC however said the resumption of activities must be in consultation with the relevant state governments for issuance of necessary permits.

The electoral umpire gave these directives in the “Guidelines for Resumption After COVID-19 Lockdown,” release on Wednesday in Abuja.

According to the guidelines, funds required to meet the hygiene protocols (decontamination, hand sanitizers, etc) will be made available to these two state offices as soon as possible, and to all other state offices as the need arises.

The guidelines also stipulated: “State offices should liaise with the various State COVID-19 Response secretariats on decontamination protocols for their respective States.

Local Government Area offices should remain closed and open

only where/when necessary.

“Re-opening of State and Local Government Area (LGA) offices will depend on existing lockdown guidelines issued by the respective State Governments”.

INEC said the guidelines, though consistent with those issued by the Federal Government/ Presidential Task Force on COVID-19, were also aim to reflect peculiarities of the Commission nationwide.

The Commission explained that the guidelines cover areas such as hygiene and personal health, sanitation within office premises, distancing measures, and related matters for the headquarters and state offices of the Commission.

Some of these guidelines read: “All offices of the Commission will be decontaminated before resumption and periodically to ensure environmental safety.

“The use of face masks is compulsory throughout the offices of the Commission, for all staff, visitors and contractors at all times. Staff are encouraged to have their own face masks and will be guided on the use of masks.”

lions of euros had been unable to berth at the Rivers Port for close to two weeks, a situation he said could make his company lose the entire consignment.

According to Kalu, the delay in berthing the vessel with such perishable food items will pile up demurrage that the company must pay to shipping company for not taken delivery of the consignment, adding that businesses pay demurrage of about $7,800 per day.

He further expressed worry that the fish would lose quality and standard if later discharged.

Recall that the Maritime Workers Union of Nigeria (MWUN) had early at the weekend issued a 48-hour ultimatum, which started from Monday, May 11, to Governor Nyesom Wike of Rivers State, demanding the release of the 20 dockworkers that were arrested by the government or risk the union withdrawing all of its

members from Nigerian ports in a nationwide strike.

The 20 dockworkers were arrested for allegedly violating the lockdown directive in Rivers State alongside the union’s bus that was impounded by the government.

Adewale Adeyanju, president general of MWUN, said in a statement that dockworkers as providers of essential services to the nation must be given unfettered access to the ports.

He argued that the withdrawal of service by the union would have a lasting impact on the nation’s economy as all ports, jetties and oil platforms would be shut down completely.

“The affected dockworkers were returning from essential service operations to BUA/ PTOL terminal in Port Harcourt and were forcefully arrested, and detained by Rivers State Taskforce enforcing COVID-19 lockdown,” Adeyanju stated.

DBN urges innovation as MSMEs battle survival amidst Covid-19 pandemic

INEC directs Ondo, Edo offices to re-open James Kwen, Abuja

… as Rivers locks down ports, arrests workers against FG’s directive sector allowed to operate during lockdown.

Tony Anakebe, a port analyst, who frowned at the closure of ports in Rivers, states that the development will further put pressure on the terminal yard occupancy rate that has been battling with congestion since the mid-2019, due to existence of longstanding goods at ports.

Anakebe, who says this is not the time to put port business on hold, further states that the situation would impose serious cost on importers, who would lose millions of naira to high cost of doing business associated with payment of demurrage and storage charges to shipping companies and terminal operators.

Confirming this, Daniel Kalu, managing director of Africa Atlantic International Agencies, told TheCable that the vessel transporting his consignment of 4,500 metric tons of frozen mackerel fish worth mil-

Onyinye Nwachukwu, Abuja

www.businessday.ng

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evelopment Bank of Nigeria (DBN) has urged Micro Small and Medium Enterprises (MSMEs) in Nigeria to embrace innovation and reinvent their current business models for sustainability in order to leverage growth opportunities in the post COVID-19 era.

The advice comes at a time calls have heightened on the Federal Government to urgently rejuvenate MSMEs to save jobs and the economy as countries across the world roll out pragmatic programmes to rejuvenate small businesses that have been hard hit by the coronavirus-induced lockdown.

Panellists at a DBN Webinar believe that Micro Small and Medium Enterprises are the hardest hit by the Covid-19 crisis, as they have limited access to capital and now have to depend on few customer base.

Discussions at the web

conference anchored by the bank’s chief economist, Joseph Nnanna, centred on the theme, “Alternative Financing Options for Sustainable Growth Post COVID-19 Lockdown”.

The Webinar series is aimed at providing capacity building and advisory services for MSMEs through digital platforms to ensure they are empowered to remain in business through this unprecedented period.

While dissecting the current implications of the Covid-19 pandemic on the Nigerian economy, the panellists pointed out that MSMEs are the hardest hit by the crisis, as they have limited access to capital and now have to depend on few customer base.

While encouraging the MSMEs to stay afloat, they are however of the view that only those with innovative thinking and clear vision will be able to take advantage of the new normal.

“If you are an SME, the

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framework should be to survive the crisis period, have as much liquidity as you can and stem expenditure. You must stabilize the business by stabilising your cost and reconfiguring your operations,” said a panellist, Andrew Alli, who is also the immediate Past President and Chief Executive Officer of Africa Finance Corporation.

He said, “For instance, a five-star hotel in Lagos has outsourced their laundry and restaurant. You can now order takeaway and pickup of your laundry. The crisis will end, and we will return to a period of growth. A lot of things will likely change because of this pandemic.

“So, you also need to prepare for that era. You have to be innovative, have a clear vision, be ahead of the curve to take advantage of the new normal,” he advised.

On alternative sources of funding for MSMEs, George Ogbonnaya, head SME, FCMB, stated that investors will be frugal in @Businessdayng

the post COVID-19 era and will only be attracted to businesses that align purpose with strategic direction. He listed alternative sources of funding to include: Crowdfunding, Venture lending, Data driven lending platforms and Risk-Sharing Guarantees.

On her part, Toyin Sanni, CEO of Emerging Africa Capital, admonished small business owners to ‘COVID-Proof’ their business, as quality and branded digital presence will stand as distinguishing factors in the present and post COVID-19 era.

“Quality and how you distinguish your brand from competitors will be very important. So, while saving as much as you can during this period, you should also invest in your brand and digitize your business.

“I would like to use the term ‘COVID-Proof’ for your business.

Redesign your business such that you are able to do an end-to-end i.e. client acquisition, provision of services, and monitoring and evaluation should involve digital models,” she said.

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COVID-19 worsens manufacturers’ fate as...

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factured products.

Patronage is at rock bottom with many workers unpaid, according to manufacturers, and limited number of market days means their supplies are interrupted and returns low. Food, beverage and drug firms were allowed to operate during the lockdowns aimed at curbing the spread of the virus, but they could not function properly without ancillary industries which were not in operation.

“There is no written report on this, but our members have been complaining that they can’t pay salaries and that banks may close in on them, which may lead to takeover,” Ambrose Oruche, acting director-general, Manufacturers Association of Nigeria (MAN), said.

A less strenuous situation occurred in 2016 when foreign exchange inflows into Nigeria fell by more than 50 percent. Fifty-four firms shut down in 2016/17, according to Frank Jacobs, then MAN president. More than 200,000 jobs were reported lost during this period.

The current situation is worse with import and export stalled and price of Bonny Light and Bent Crude falling below $30 per barrel.

Mansur Ahmed, president, MAN, explained that the sector needs an urgent government intervention to avoid many companies running aground.

He said federal and state governments must urge security agencies to allow movement of manufacturers’ vehicles to avoid the looming danger. ”Think about agro-based products used by manufacturers. With the current logistics nightmare, a lot of materials will go bad before they reach the factories,” he said. “Logistics is still a challenge; you can’t move goods easily.”

Ahmed said CBN’s recent announcement of interventions shows Federal Government’s commitment to manufacturing, stressing that the association would sit down with the CBN to discuss modalities for accessing the funds.

Nigeria’s economy risks plunging into a recession, its worst in three decades, ac-

cording to the International Monetary Fund (IMF), which predicts that the economy will shrink by 3.4 percent in 2020.

With firms sacking workers on the back of COVID-19, the unemployment rate, currently at 23 percent, may near 30 percent, say experts.

Manufacturers will be among the hardest hit as their production cost continues to spike and poverty ravages nearly half of the Nigerian population, who are their potential customers.

Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI), said the current situation presents an opportunity for Nigeria to stimulate and promote import substitution – a strategy whereby local industries are established with a view to producing goods that replace imported ones.

“We have to change the narrative from the base, mobilising resources and galvanising critical stakeholders and actors to reach consensus to commit to creating an economy that will not only produce significant proportion of its major commodities (intermediate and finished goods), but equally be competitive on a global scale,” Mabogunje said.

A recent Manufacturers’ CEO Confidence Index, prepared by MAN, shows the CEOs’ confidence fell from 51.9 percent to 44.4 percent in the first quarter of 2020. Eighty-five percent of the CEO respondents, who head various manufacturing companies in the country, reported decline in capacity utilisation on account of the pandemic, while 75 percent of them interviewed reported making low investments in the quarter. Similarly, 79 percent reported decline in volume of sales as 86 percent said they had decline in output.

“It is imperative that the government in conjunction with the Manufacturers Association of Nigeria jointly develop potent strategies that will save manufacturing from completely going under, facilitate the restoration of the sector to the path of sustainable production and position the sector to leverage opportunities provided by the pandemic,” the report, released last Friday, said.

Nigeria sets ambitious 1.9m barrels...

Continued from page 2

major ongoing projects to be drawn from both exiting facilities as well as some special accounts with the approval of Mr. President and the National Assembly, and also revenue expected to be realised from privatisation.

“So the borrowing, the multilateral loans drawdown coming from special accounts

and coming from the privatisation will fund the fiscal deficit of N5.365 trillion that we have in the proposed amendment of the 2020 budget,” she said.

The finance minister announced that the Federal Government also has request for another $80m loan on behalf of Ebonyi State government from the Islamic Development Bank. The loan, www.businessday.ng

Ibrahim Gambari, newly appointed chief of staff to President Muhammadu Buhari, being screened during his arrival at the Presidential Villa in Abuja, yesterday.

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All eyes on Gambari: Gate keeping vs... assailed by the coronavirus pandemic that has kept the nation’s leadership on its toes for several weeks now.

At age 76, the former Nigeria’s permanent representative to the United Nations (UN) has seen it all. And he is expected to bring his years of robust experience and knowledge in the management of men and resources to bear on his new job.

Now, working with a president who has just lost a very close friend, Gambari is expected to fill in that gap in every sense of the word. He must be a close confidant, dependant, and a friend indeed.

Kyari’s role in the Buhari presidency was such that he was virtually the brain box of the administration, according to analysts. Before his demise, he wielded so much political power that all economic documents passed through him before getting to President Buhari.

President Buhari on his appointment of ministers last year made it clear that all proposals must pass through his chief of staff before getting to him.

Among other key roles in the economy, Kyari was at the forefront of the Siemens power deal which aims to bring massive improvement to Nigeria’s power sector.

As a well-travelled diplomat, Gambari is not ex-

pected to have any problem with his job description. He must be aware that like in the American tradition, the White House Chief of Staff is saddled with the main responsibility of managing the Executive Office of the President (EOP), including selection, supervision and management of the key staff of the presidential office.

As the principal gatekeeper, he will be controlling access to his boss and managing the flow of information and communications to and from the Presidential Villa.

He will be negotiating with the nation’s bicameral legislature and coordinates agencies such as the Office of the National Security Adviser, Council of Economic Advisers and the Office of Management and Budget.

Obadiah Mailafia, a former deputy governor of the Central Bank of Nigeria (CBN), who had served as a Chef de Cabinet (Chief of Staff) of the 79-member African, Caribbean and Pacific (ACP) Group of States based in Brussels from 2010-2015, said: “Being a CoS is not a dinner party – and certainly not a job for the fainthearted.”

According to Mailafia, “You have to be a jack of all trades and a master of all; a hands-on economist, finance expert and administrator with a nose for power and diplomatic statecraft. It requires patience, high ability, energy,

discretion and tact. But you must also be tough — ready to swim with the sharks and to graze with the bulls. Above all, your loyalty to the boss must be total and unassailable.”

For Gambari, it is worth recommending and to draw his attention to the wordings of the tribute written by President Buhari at the exit of Kyari. This could help him to have a good idea of what his principal may be expecting from him.

Buhari addressed Kyari as “my loyal friend and compatriot for the last 42 years – and latterly my chief-of-staff”, saying “he never wavered in his commitment to the betterment of every one of us”.

He said the late Kyari possessed “the sharpest legal and organisational mind” but his “true focus was always the development of infrastructure and the assurance of security for the people of this nation he served so faithfully, for he knew that without both in tandem there can never be the development of the respectful society and vibrant economy that all Nigerian citizens deserve”.

“Becoming my chief of staff in 2015, he strove quietly and without any interest in publicity or personal gain to implement my agenda. There are those who said of him that he must be secretive – because he did not have a high public profile,” Buhari said.

“But Abba was the opposite: he simply had no need, nor did he seek the cheap

gratification of the crowd; for him, there was nothing to be found in popular adulation.

He secured instead satisfaction and his reward solely and only from the improvement of the governance of this great country,” he said.

The president said Kyari was “working, without fail, seven days each and every week, he acted forcefully as a crucial gatekeeper to the presidency, ensuring no one – whether minister or governor had access beyond another – and that all those representing and serving our country were treated equally”.

Now as chief of staff, Gambari has the dual responsibility of serving the president conscientiously and ensuring he carries the entire country along.

Part of the misgivings some Nigerians had with the tenure of the late Kyari in office was the enormous powers he allegedly arrogated to himself and his cronies, which were said to have impacted negatively on the country.

“If he (Kyari) had had a more enlightened mind, we would have expected him to have used such enormous power to uplift our country from its current morass,” Mailafia said.

This is surely the point at which many Nigerians are waiting for Gambari. What he does with the power in his hand would determine how he would spoken of in the days ahead, especially at the expiration of his stewardship.

she said, would be for the construction of Abakaliki Ring Road project.

“We also got approval today for the Nigeria Customs Service to purchase boats which are manufactured here in Nigeria for its surveillance and anti-corruption activities on the maritime waters,” she said.

FEC also approved N47 billion for the power sector to add additional 40 megawatts of electricity to the national

grid, as well as N683 million for the purchase of 19 operational vehicles for the Nigeria Ports Authority (NPA).

Sale Mamman, minister of power, said the 40 megawatts would be evacuated from Kashimbilla Dam in Taraba State, where it is currently being generated. It would boost power supply in Taraba and Benue States as well as the entire North-East region of the country.

“The Council approved

the ministry’s memo for the revised estimated total cost for the augmentation of the subsisting contract in the sum of N47,235,303,821.90 to provide additional critical power grid infrastructure for the full evacuation delivery and utilisation of 40 megawatts, currently being generated from Kashimbilla, via Takum, Wukari and Yandev, to the national grid,” he said.

Sabo Nanono, minister of agriculture and rural de-

velopment, announced that FEC also approved a loan of $1.2bn for the ministry for the purposes of agricultural mechanisation that will cover about 632 local government councils plus 140 processing plants.

“This is going to be a major revolution in the agricultural sector like we have never seen before. I think the executive council has done the right thing and has approved this,” Nanono said.

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prices and the country is

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Smartphone affordability key in COVID-19 fight DESMOND OKON

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he COVID-19 pandemic has reinforced how important connectivity is in the modern world. As it has become more challenging to communicate directly, the use of ICT has become even more critical for the dissemination of information by government, experts, and the media.

Strategic to digital communication is the smartphone, which allows people to stay in touch, receive information, and teach themselves during this lockdown.

Smartphones may become even more crucial when the outbreak is brought under control, however, the cost of a smartphone is a significant hurdle to mobile internet adoption and use, and this is not the fault of the COVID-19 pandemic.

Low-cost devices are often out of the reach of those in poverty, which is a problem considering that these devices can be key enablers for escaping poverty.

Research in countries like Tanzania and India found that the extremely poor – those who earn less than $2 per day – would have to spend 16% of their annual income just to buy an average-priced smartphone. For people who are struggling to eat on a daily basis, using this percentage of their income is not a rational option.

However, device manufacturers cannot offer phones at a significantly more affordable rate because they have costs of their own to manage.

For this reason, it is necessary to develop business models which ensure that those in poverty can own smartphones. Given the nature of the COVID-19 crisis, there is no better time to develop such business

models and get more people connected, knowing that smartphones are not a luxury.

ICT expert Charley Lewis told MyBroadband that the drive for smartphone uptake in South Africa is important for consumers as those who do not have these devices are deprived of access to much of the Internet and its benefits – such as highly useful apps.

“If pricing of entry-level smartphones can be kept low, and priced into pay-as-you-go plans, and with data prices poised to fall, I see no reason that there should not be an upsurge in smartphone demand,” said Lewis.

“The benefits to universal access and service, and to the increased data revenues, are surely to the benefit of users and operators alike.”

The COVID-19 pandemic provides an opportunity to develop and implement long-term solutions to the digital divide in South Africa.

Strategies for smartphone proliferation: While reducing the taxation on smartphones is an obvious way to make smartphones more affordable, other strategies can also reduce the cost of smartphones for low-income citizens.

Some examples of how governments can assist through subsidies or other means include: Argentina – Provided asset financing to 8 million citizens to switch from 2G feature phones to 4G smartphones.

Columbia – Allocated $90 million over three years to a policy, which included subsidies for lowincome citizens for data and smartphones. Malaysia – Launched a national program to encourage youth to purchase 3G-enabled smartphones with a rebate on certain phones – reducing the cost by 40%.

FG urged to accord priority to medical device manufacturing ANIEFIIOK UDONQUAK, Uyo

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gainst the background of the coronavirus pandemic which has killed thousands around the world and left a devastating impact on the economy, the Federal Government has been urged to accord the manufacturing of medical devices a priority as a matter of nation’s security.

Akin Oyediran, managing director of Jubilee Syringe Manufacturing Company in Awa, Onna council area of Akwa Ibom State, made the call in an interview with BusinessDay. Oyediran said that the outbreak of the COVID-19 had made it necessary for Nigeria to be selfsufficient in medical devices manufacturing.

“We have to find a way as a country to encourage medical devices manufacturing and the way to do this is to discourage the importation of substandard products into the country,’’ he said.

Oyediran, who lamented the impact of the pandemic on the manufacturing sector, said a country like China was able to handle the spread of the virus because it took care of its medical needs by producing their own testing kits without having to depend on other countries.

He said his company had concluded plans to go into the manufacturing of facemasks but the pandemic scuttled the idea. He however, expressed the optimism that it would embark on mask production as soon as possible.

He expressed dismay over the importation of low-grade medical devices into the country, adding that Nigeria now has to compete

with substandard products from other countries, maintaining that increasing the tariff on medical devices would help to protect the local manufacturers.

“The local manufacturers have invested a lot in putting up their factories and we have also spent a lot of money to ensure that the products we produce are of top quality. So, while we are maintaining the top medical product grade, we are now competing with substandard products in the market coming in from other countries. That is creating market problem for us.

It also creates health problem for the general population which also raises a national security issue,” he pointed out.

The medical personnel further urged government to increase the “tariff on imported syringes, since we have the capacity to meet the demands of the country. This will ensure that the national security is taken care of, not depending on importing syringes into the country.”

The managing director, who lauded the Akwa Ibom State government for creating an “enabling environment” for the manufacturing sector to thrive through good road network, said the markets were being affected by COVID-19 with a lot of interests in medical manufacturing, saying, “Our biggest competitors are from China, if they produce good quality syringes, the cost of producing good quality and bringing them to Nigeria is high, so they can’t compete with us.

The problem is with the people that are producing non-medical syringe that are bringing it into the country. Non-medical syringes are very cheap to produce.” www.businessday.ng

Musa Abdullahi (l), representative of the deputy speaker, House of Representatives, presenting COVID-19 lockdown palliatives on behalf of the deputy speaker, Ahmed Idris-Wase, to Sonni Tyoden (2nd, r), deputy governor of Plateau State, for distribution to poor residents of the state, in Jos, yesterday.

Nigerian COVID-19 drug submitted for NAFDAC approval …Agency warns against false claims, reiterates guidelines on disclaimers for herbal medicines not tested CALEB OJEWALE

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s Nigeria joins the rest of the world in the frantic search for a cure or sustainable treatment for the coronavirus disease, the country now officially has one drug that has been submitted to the regulatory agency for approval in treating the virus, which has claimed over 290,000 lives worldwide.

The National Agency for Food and Drug Administration and Control (NAFDAC), in a statement shared with BusinessDay Wednesday morning, said it has received only one application from a company that presented a product for approval in the treatment of the symptoms of COVID-19, stressing it is not for the cure of COVID-19 as a disease.

“A claim of a cure must be subjected to clinical evalua-

tion through well-controlled, randomised clinical trials following an approved clinical trial protocol,” Mojisola Adeyeye, director general, NAFDAC, said in the statement.

Following a series of meetings organised by NAFDAC by setting up the Nigerian Herbal Medicine Product Committee (HMPC) with attendance of manufacturers, academia, researchers and other relevant stakeholders, it said call for expression of interest for the COVID-19-related medicines was made. This has led to several researchers and practitioners responding and being guided to submit such medicines to NAFDAC for expedited review.

“The agency continues to encourage all stakeholders to present the products of their research findings and allow these remedies go through internationally recognised

process of approval through pre-clinical and where applicable, clinical trials,” Adeyeye said.

It was noted that in production of even modern medicines, among the most important raw materials researched and developed are naturally occurring materials obtained especially from plants. Perhaps fortunately, the statement reiterates that the African continent is blessed with diverse plants and herbs that constitute a source of food and medicine that could help in combating the coronavirus pandemic.

However, considering that many plants are similarly very poisonous, NAFDAC, as the agency saddled with the mandate of safeguarding the health of the citizenry, pledged to continue to make sure that only medicinal products (including herbal

remedies) that have proven safety data will be approved for use by the public.

The agency said it currently lists herbal medicines based on historical perspective on the use of the products after carrying out toxicological and microbiological evaluations in the laboratories to ensure that they are, at the minimum, safe. The listing status is valid for two years and is renewable.

NAFDAC stressed that this listing does not validate the efficacy claims being made for the products, hence the labels must bear a disclaimer informing the consumer that “the claims have not been evaluated by NAFDAC”.

“This minimum requirement of ‘proof of safety’ is the agency’s way of encouraging production of herbal remedies from the country’s rich diversity of plants,” said Adeyeye.

Experts sue for ease of land titling as more states embrace model mortgage CHUKA UROKO

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ousing sector experts and stakeholders have commended the decision by more state governments in Nigeria to embrace the model mortgage foreclosure law - an initiative of the Nigerian Mortgage Refinance Company (NMRC).

But concerns remain.

Model mortgage is not an end in itself, but a means to an end, which is why these experts are canvassing ease of property registration, particularly land titling, believing that mortgage can only make meaning or thriving where there is easy access to land titles.

As part of efforts at growing a mortgage system that will drive housing affordability, NMRC launched a legislative reform drive in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states, including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun.

Today, more state govern-

ments are beginning to realise the need for localising the model mortgage foreclosure law in their respective domain, according to Kehinde Ogundimu, the CEO of NMRC. “I got a letter from the Ekiti state government that the bill was going to be passed as soon as they resumed. We have made significant progress with Kwara state where the bill has been drafted. We have also made significant progress in Edo state as well as other states. I think states are beginning to realize that they need to be mortgage-friendly in order to attract the investment that is needed in this sector,” he said.

Ogundimu, who spoke at an online real estate conference hosted by the Housing Development Advocacy Network in Abuja, hopes that between now and the next four months, depending on how the Covid-19 crisis turns out, they will be seeing more states signing on to the foreclosure law.

However, the experts say the mileage being recorded by

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NMRC can only make meaning when these same states are ready to make land easily accessible to investors, especially private estate developers.

“An aggressive campaign is needed for ease of land titling so as to reduce the inherent problems associated with land ownership. The legal structure is being changed now that the CBN and other stakeholders are championing the adoption of what we know as a model mortgage and foreclosure law, Oladapo Fakeye, group head, strategy and performance at Federal Mortgage Bank of Nigeria, said.

Fakeye explained that the foreclosure seeks to make transactions in land, especially mortgage transactions, smooth, efficient, cost efficient and timely, pointing out that investors would like to apply for C of O, transfer of title or for the consent of the state governor and get same within a few days.

“The cost of land is relatively high in this country, particularly in the urban areas where people @Businessdayng

actually need houses; but you have the challenge of high construction and infrastructure costs.

“Most developers will tell you that, in addition to building houses, they also have to provide some of the infrastructure needed for people to stay comfortably in those houses—they provide roads, electricity, water and so many other facilities that should, ordinarily, be provided by the government.

He noted that every transaction in land, particularly as defined by the Land Use Act, must have a governor’s consent for such transaction to be regarded as legal. He pointed out that the processes leading to getting land, title, transferring old title to a new property owner are very long and cumbersome and need to be changed.

Fakeye noted further that accessing mortgages remained a herculean task, explaining that “the high interest rates on mortgage loans continue to scare developers and this further compounds the problem of affordable housing delivery.”

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As technology takes schooling online The Public Sphere

CHIDO NWAKANMA

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hile the onward march of civilisation strides to online learning, it is instructive to look backwards for perspective.

Technology has come to the rescue of education in these covid19 days by taking most of it online. The new paradigm comes with many opportunities as well as threats and challenges.

Distance learning, such as online courses was for most of Africa, the first route to accessing education. Many of our pioneers acquired education on the back of correspondence courses. It was such a big industry. The older generation will remember firms such as the Exam Success Correspondence College in Palmgrove, Lagos and the Rapid Results College of Tuition House, Wimbledon, London SW19 4DS, registered as a training provider.

The University of South Africa (UNISA) is one of Africa’s oldest higher institutions. Its forte was distance learning on the back of strong infrastructure of rail and postal services. UNISA has continued to build on its speciality and is one of the foremost globally in distance

learning.

Covid19 has provided a positive spur for digital or online learning. As in the analogue era, many training providers have registered their presence for this era. There are many Massive Open Online Course (MOOC) providers and new players tapping into the increased demand not only for courses but the infrastructure, know-how, and human resources to deliver online. They are train-the-trainer providers enabling schools to become part of the new tradition.

With the spread of the pandemic, digital learning has become the path for many schools in Nigeria, from secondary to higher education. Anecdotal evidence points to the fact that private institutions have led this move to online.

Private secondary and even primary schools have been in the game now for upwards of eight weeks at the least. So, too, private universities. Pan Atlantic University, Lagos strengthened its digital programme by helping with data to all students.

Information Technology specialists are in greater demand in higher education for setting up and maintenance of the infrastructure for digital education.

Other providers of digital education are vending business models, tools, and training modules.

Observational data points to a growing gulf that is an addition to the digital divide of the recent past. Public schools are almost out of the digital learning movement. We must thank the proactive managers of public broadcast service providers, radio, and television, for stepping up their game to provide support to state governments and schools with programmes on radio and TV. Unfortunately, their support applies mainly to

secondary education. What happens to undergraduates in our public schools? Is there an opportunity for CSR by companies and institutions such as CaCovid?

Provision of higher education via distance education may deepen the inequalities in society. Challenges include the cost of data for students primarily, setting up the infrastructure for delivery and organising for it in public schools with their large numbers of faculties, departments, and year groups. Purchasing data is a challenge.

In many parent groups on WhatsApp or Telegram, requests include leaving out one of two or three children from the online classes because of the cost of data.

Now the schools have issued invoices for the service for the new term for most secondary schools. Then there is the challenge of electricity in homes either lacking the I-better-pass-my-neighbour or the resource for constant purchase of fuel to run it.

The infrastructure of desktops, laptops or tablets and phones may be missing in most homes. Some schools report that some students cannot take part because of the lack of smartphones in their homes. Technology will create and deepen social inequality in the delivery of education.

Experts predict that online courses will be the new normal shortly of at least two years. The closest to what existed pre-covid19 may be a mix of online and classroom engagement.

Yet, online is not eureka, despite all the tooting of its horns by aficionados. It lacks the critical element of gregariousness that characterised the learning process. You learn by engaging with others, seeing the approaches and mannerisms of your teachers, encouraging each other in class. Even the hard-hitting criticisms

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With the spread of the pandemic, digital learning has become the path for many schools in Nigeria, from secondary to higher education.

Anecdotal evidence points to the fact that private institutions have led this move to online

ere is the second part of my systemoriented solutions to the Almajari problem. Last week, we stopped at what individuals and traditional institutions could do to support the state government.

A school for the indigents named the Abolarin College was formed by Oba Adedokun Omoniyi Abolarin, the Oragun of Oke-Ila, Osun state. He is an exceptional traditional ruler not beclouded by traditions and showing the value of his education as a former teacher.

Oba Adedokun founded this school as a tuition-free college. It is a boarding school with a system to develop the total dignity and capacity of the students. All the students must learn three languages and use them in communicating at a specified day of the week. The 94 students from the various parts of Nigeria are all farmers. They farm one-hour a day to cultivate the land, sow and harvest the food they eat.

They are trained in different vocational skills with rules of engagements: the boys cut hair for one another, the girls plait hair for themselves. Each of the students is with a laptop; science and technology are priorities, and not religion. Kabiyesi is not just a philanthropist who can sacrifice his salary and gifts for him as the king but a nation builder. In jeans, t-shirts, and face caps, he talks to the children regularly as a father and a mentor. He is indeed using education to fight poverty and improve social development through the children.

Your excellencies let me now hit the nail on the head. We have been trying to solve the Almajaris problem without zeal and with fear of the status quo. Some of us are afraid to offend the established political and traditional institutions because we need second term votes. After the second term is achieved, our focus shifts to becoming the state’s political

godfathers who select the governors for future generations even when we are not alive. That’s not the way to register our names in the books of life as leaders who came, saw, and make generational impacts.

If fear is your reasons for not taking the hard decision, decisions that will disrupt the existing systems but favour our children on the streets, please consult Nasir. There is Nasir’s theory that can be adopted. His excellency, Nasir El-rufai did the unthinkable. He sacked many teachers in his first term in office. A first-term governor doesn’t behave that way. Those hard decisions are after securing the second term of four years.

But today, we have El-rufai among us. We need leaders who can disrupt the existing systems; that’s the risk leaders must take in the interest of our future.

Here is the system approach to your ban of the Almajaris system. You cannot say you are sending the children to their states and call it a ban. To whom are you sending the children? If their parents have 10percent of your financial capacity, they won’t in the first place, send their children to the mallams.

So, do not ban the system until there is no belief in the myth that there is a knowledge of Islam that can only be acquired outside an organised system—banning without changing the fundamental tenets and culture in the existing order an effort in futility. Check what Qatar, Saudi Arabia and Singapore is doing.

We expect Saudi and Qatar to insist on religion education above Science and Technology, and civility in the society. But that wasn’t the case.

Saudi Arabia is targeting 100percent literacy, and Qatar has achieved 97 percent of literacy ratio for her children of age 15 to 26 years.

Singapore is far ahead as her students are top-ranked in the Programme for International Students Assessment. What are the illiteracy

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ratios in our states?

So, the starting point is changing the parts of the system before the ban of the system can be achieved. Let’s restructure the system instead of the ban.

There is a cultural tenet of the Almajaris system. We need to minimise the output from the production line to a manageable size for the packing machine and the assembly workers to handle and guarantee quality output. The culture of indiscriminate procreation of children outside one’s financial capacity must stop. I am not sure if birth control is anti-Islam, but we must find a creative way of discouraging too many wives and children that burden the states and Nigeria as a whole. We need to educate our people that Omo bee’re ni Osi bee’re according to a Yoruba adage. Please pardon, I won’t say that Yoruba adage in English. A united Nigeria is good to have as there are wisdom and power in diversity. There is a governor here with one of his political appointees as a Yoruba man. I am sure he will interpret that for the governor, and he will tell his colleagues. There is another governor, whose predecessor’s wife is a Yoruba woman and has a close relationship with his wife. The interpreters are two, and I wouldn’t need to worry.

Back to the solutions, we should show leadership. We cannot without giving incentives and ask men to reduce striking with their third legs where our senators, emirs and even local government chairpersons are breeding children as if they are to be sold at an auction and without restraints at showing them as evidence of wealth and influence.

The second part of the system is to utilise the existing physical and financial infrastructures to stylishly modified the system. There might be a need for the tracing of the family of these children, educate them before taking

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and fun-at-your-expense of classmates is contributory to learning. Our long walks from Apapa to Mile 2 as the new TinCan Island Port created a new road and we did so for companionship and to save on bus fares were a fundamental part of the socialisation process. Technology lacks that human element.

Not surprising to read that students are not overly enthusiastic about the online courses we now force them to take.

At undergraduate levels and more so at lower levels, students prefer and need interaction and engagement. Mentoring includes modelling behaviours and practices.

Some courses are plain inappropriate for online learning. They are practical courses and require some tactile and other touchy-feely elements. Think of practical sessions in laboratories for science students or those in performing arts, music, and others.

Then there are security and national interest concerns in the enthroning of technology as the lodestar for delivering education. Governments everywhere have firewalls and determine access and point to desired areas in line with national policies and strategic direction.

Policy. Policy. Strategic direction.

Where are our Ministries of Education and National Planning as online evolves as a critical mode of delivering educational access in Nigeria? Where are those who can spot the opportunities implicit in the gaps the rush to online is creating?

Step up.

Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Almajaris: System solutions to a systemic problem (2)

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Positive Growth with Babs Babs OlugbemI the children to Jonathan Goodluck’s facilities.

At the facilities, we will provide food and education that is a blend of all curriculums. We should spell out rules and sanctions awaiting anyone who escapes from the school. To make this work, some of the existing mallams, the former custodians of these children can be trained and employed at the same facilities. If the children see their mallams in whom they believed and are well pleased, there will be a likely reduction in the attrition rate from the new schools, the Almajari bail-out schools.

The third part of the system is to separate state from religion. No Nigeria state is exclusively a Christian or Islamic state. We cannot claim there are no beneficial Christians in Zamfara, even with the Sharia system. The use of the criminal sharia code of cutting off hands and beating of adults is barbaric and behind the evolution of time. Saudi Arabia, the cradle of Sharia laws has modified the law to allow women to drive vehicles and stopped the beating of people.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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Nigeria, coro & murky political waters … Emperor Wike & the KITArisation of Pitakwa

ik MUO

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ast week, we reviewed the international political dynamics of the war against COVID-19, where Trump is the key player. But one thing is clear; those people were and are playing strategic politics. Everything they do is a means (strategy) to some near or long-term ends (objectives). In Nigeria, apart the ordinary folks who are afflicted and affected by Coro itself or the consequential unplanned war, almost every other person and institution is playing politics with the matter. The greatest worry is that the politics has no pattern!

People play politics with the illness, with the numbers, with the medicine, with the people leading the war, with the federal or state governments, with the “other” party or with everything. Even people supposedly in the same party are throwing thorny punches at their political brethren. I say supposedly because Nigerian politicians belong to only one party: POTS (Party of The Stomach).

Just as the Director General of WHO, may people had warned us against politicising the virus or the war against it. And just as the warning of the WHO chief did not yield any result, the warnings in Nigeria also did not yield any results. But the fact that people are warning against coropolitics is an evidence that there is serious coro-politics. In March 2020, when we were still trying to set up the armoury and strategy for the war against Coro, the PDP accused the federal government of playing politics with COVID-19. On 1/4/20,The National Association of Ogun State Students appealed to Ibikunle

Amosun, (former Governor and current senator) and the two other senators in the state to join hands with Gov. Abiodun, in the fight against COVID-19 pandemic, urging them to “put aside differences as this is not the time for us to play politics” because “the lives of people are more important than seeking personal or political vendetta” Not long after that, Professor Chukwu, who was in charge at the Ministry of Health during the Ebola era, advised Nigerians not to play politics with COVID-19 because “microorganisms do not understand politics”. That advice or warning was recently repeated (6/5/20)

by Ebenezar Babatope who declared that “it is wrong to play politics with the disease…This is not the time to play PDP, APC, or APGA. “We must unite to save lives. After we have defeated the disease, we can go back to full politics again.” But it has been politics all the way, some dirty, some shameful and shameless, some full of braggadocio and some subtle. We shall start with two incidents of micro politics On 28/3/20, the Benue State Government declared Susan Okpe as their Index case. The first controversy arose from the fact that contrary to the usual protocols (there is a protocol for everything nowadays), the government announced the name on TV. The second and more serious was that the lady, a Nigerian-British citizen insisted that she was not positive, that the government was playing politics with the matter and that she was afraid for her life and called on the FG and Britain to move her out of Benue. She was eventually moved to Abuja but as I write, she is still saying that she is not sick, that she did not trust Nigerians, would not take any treatment from them and that the test in Benue was kangaroo. As at 14/4/20, the Minister of health announced that her two results were positive but the woman accused the minister of lying and requested to be taken back to UK. She has used the social media to good effect in this matter. I don’t know how politics came into this but she accused the BNSG of playing politics with

the matter.

A similar matter, but not as complicated, occurred in Anambra State. When NCDC/Anambra State Government announced the state index case on 10/4/20, neither the state nor the Centre knew any peace after the announcement. While the state moved ahead to trace, quarantine and treat all contacts, the patient declared that there was nothing Coroish about his sickness, that the state doctored the result and that ANSG wanted to kill him through starvation. The hospital that treated him then weighed in with its own side of the story, saying the result was not given to them before the governor made the index case announcement and that the patient was properly discharged. The matter got more complicated when none of the contacts tested positive. People then started saying that it was a matter of politics and cash, that the ANSG wanted to attract funding from the Federal Government. The Anambra State Commissioner for Information blamed certain opposition PEPs (Politically Exposed Persons), who, with their eyes on 2021 elections, politicised everything and that the government would not compromise the health of its citizens for politics and cash. The patient has been discharged and the matter has hopefully rested These two are minor and micro political cases and they occurred before the macro and full-blown political wars started. (next week)

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What is happening in Pitakwa is against the rule of law and especially being done by a democratically elected governor.

Port Harcourt has been KITArised. It is condemn-able and I join those who condemn it in unmistakable terms

Other matters: Emperor Wike & the KITArisation of Pitakwa Last week, (7/5/20) I complained about the KITA (Kick in The Ass) and by-fireby-force strategies freely deployed in our war against COVID-19, the undisputed World Enemy. I argued and still argue, and every behavioural scientist will agree with me, that people are not forced to change; they are persuaded and convinced so that they understand the “why” and thus, own the process.

The other day, I saw Governor El-Rufai hopping atop a trailer in search of illegal

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

From the blogs

Camilla Houeland

We are workers, not heroes “African health workers ask for decent work and a strong, public health care system—not applause.” riting in the UK Guardian in March 2020, the Liberian nurse and union leader George Poe Williams, feared that, like during the Ebola crisis, COVID-19 will lead to deaths that could be avoided unless we abandon austerity policies and build a strong public health system. The correct policy response would also require jobs in the public sector, and that health workers get proper working conditions. “We health workers are not heroes,” Poe Williams wrote. “We should not become martyrs at work. We are professionals. We need personal protective equipment so that we can maintain health while saving lives.

We need adequate staffing and well-equipped health systems. We need strong public funding for our sector.”

During the Ebola crisis in 2014, health workers in Liberia made concrete choices about life and death: they had to choose between which patients to try to save and those who were likely to die; they had to choose between going to work risking infection (and death) or not going to work. At the time of Ebola, the National Health Workers Union of Liberia (NAHWUL), of whom Poe Williams is a member, fought for better resources and personal protective equipment (PPE). Today, Poe reflects that a lack of response from the authorities contributed to the fact that eight percent of Liberian health workers died.

The health sector in many countries was in crisis even before the COVID-19 crisis. Underfunding and understaffing of the public health

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system means that many in the world do not have access to health. The logical consequence should be to build a public health system, possibly with international development assistance.

Since COVID-19 went global, we have seen strikes from health workers around the world, which may seem unusual, considering medical staff are seen as essential workers and rarely go on strike.

Admittedly, some strike threats have been about pay. While “ghost workers” are reported on public payrolls in Kenya, i.e. names often of friends or the family of politicians, Nigerian doctors and Liberian nurses dropped off payrolls in 2020 and 2018 respectively. It is not uncommon for public employees in African countries not to be paid wages for work performed. Even when the Ebola virus came to Liberia in 2014, NAWHUL was in such a strike—or a slow-action—for the payment of non-paid wages, but it was interrupted to return to work to counter the Ebola virus.

Both the Liberians in 2014 and the Nigerians in 2020 combined payroll requirements with protective equipment requirements. In most cases this is what’s needed: training and protection requirements. This is also the main requirement of professional associations across Africa: that workers have PPE. It’s about fear of death and professionalism, not greed.

While health care professionals around the world are defined as essential and exempt from coronavirus measures, they also have exceptions to labour rights. The right to strike is restricted for reasons of public health, based on international labour conventions. But both the World Health

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human-cargo. I note the dexterity with which he mounted the tailboard but I wander what he would have told the world if he slipped and broke his neck in the process. What he did, and what many governors have been doing since this COVIDious war started, is crass showmanship. But what is happening in River State is something else. This has gone beyond the war against Coro to unbridled highhandedness and lawlessness in a democracy based on the rule of law and separation of power.

In the recent past, Ezenwo Nyesom Wike, has been seen on TV, arresting lock-down violators, trying them and convicting them. I think he passed an executive order (legislature) on the basis of which he tried and found them guilty (Judiciary) and executed the punishment through the police and his hangers on (executive). We watched as all powers in, above and below the earth became vested Wike, courtesy of the war against Coro. The last time we had such concentration was during the military era. But he has gone beyond this and extended his dictatorial powers beyond imagination. He impounded cars and ordered that the cars be auctioned. Hear him, “the defaulters will be tried by the mobile court and I have told the Attorney General that all the impounded vehicles MUST be auctioned”. He interrogated the offenders, found them guilty, sentenced them to isolation centres, seized their cars, and then remembered that there are mobile courts and ORDERED the AG that the cars should be auctioned. This is a lawyer-turned-governor in a democracy! He followed it up by constructing a gate in the boundary between Rivers State and Abia State. I assume that this is a federal government road.

Organization (WHO) and the Global Association of Public Employees, PSI (Public Service International) point out that in many countries, the limits on rights limitation are far beyond acceptable. This is just one of the reasons why healthcare workers often have low wages, such as in the UK and the United States; income for workers is defined as income to be able to meet workers’ family’s basic needs). In 2014, the salaries of health workers in Liberia were described as “ridiculous” by a Norwegian TV anchor. Across the world, the health sector, with a large number of migrants and a majority of women, is characterised by heavy work pressure and part-time and short-term contracts, while also suffering from under-staffing and unsustainable shift schemes.

In 2016, the WHO recommended creating at least 40 million new jobs in health and social care, especially in poor countries, to reach the sustainability goals by 2030. This year came a new report from WHO that the world needs 9 million new nurses. In Nigeria alone, 500,000 to 600,000 nurses are needed. At the same time, the African Union, the United Nations Development Program and the International Labour Organization fear that the COVID-19 crisis could lead to the loss of 20 million jobs in Africa.

African heads of state are now confronted with a health care system they have neglected for years. African elites have often travelled abroad for treatment. Zimbabwe’s Robert Mugabe died at a hospital in Singapore. Nigerian President Mohammadu Buhari has travelled to the UK several times (one time for almost two months), while one of his predecessors, Umaru Musa Yar’Adua, preferred

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the hospitals in Saudi Arabia (he eventually died there). African heads of state are to blame, but we must also remember a long history of international demands. Underfunding of the health sector is also linked to borrowing requirements for public savings from the International Monetary Fund and the World Bank. But today even the IMF recommends increased investment in the Nigerian health care system.

Social security is also an integral part of the decent working life agenda in Sustainability Goal 8 of the United Nations, which unfortunately is often reduced to mean just job creation (in the private sector). Trade union PSI recalls that although the right to health is enshrined in no less than 150 countries’ constitution, privatisation has meant that access to health is unfairly distributed and dependent on class. Without private health insurance, which is often linked to work, the right for many becomes a theoretical exercise. In Africa, many of the 70 percent of the informal sector’s workforce have weak or poor access to health.

During the coronavirus crisis we are reminded that this is not only unfair, but dangerous for the more privileged of us.

It is not only the health workers at PSI who insist that public health is more resilient, strong and fair. A partially privatized health care system is fragmented and unable to effectively coordinate infection control. To address the coronavirus crisis, both Ireland and Spain have nationalised health enterprises. In Norwegian aid, health and education are two of the most important development goals. Both should be linked to job creation and workers’ rights.

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Why are Nigerian leaders so dictatorial?

Remi Adekoya

O

ur family is the first government we experience.

A government whose system is shaped by the inclinations of its rulers, our parents. Our parents are our first contact with power. It is from the way they govern our household that we pick up our first lessons on how leadership is practised. It is from them we learn our first lessons on how power should reward compliance and punish deviance. Our family’s governance dynamic is our introduction to political culture.

We learn whether those not in power - children - have a right to participate in decision-making or not. To question the decisions of power-holders or not.

To call out power if it is being hypocritical or not. We learn whether those in power - our parents - are subject to constraints by a higher power such as the law or not.

While there are obviously exceptions to the rule, I think most would agree the Nigerian norm is that parents inflict physical violence on their children if they defy their wishes, cannot

imagine them questioning their decisions much less calling them out on hypocrisy and are unrestrained by any higher power from inflicting whatever punishment they wish on their kids, short of killing them. They are also completely free to abuse them verbally and emotionally without consequence. So, the first lesson we learn about power is that might is right. And that power is entitled to physically punish those not in power if they disobey its wishes.

Our next major contact with power is in school where teachers are in authority. Again, apart from a few posh private schools where teachers might be afraid to cane children because their rich and important parents would consider that a personal affront (only we are allowed to hit our kids), the general norm is that teachers can flog students to instil “discipline.” You are also not expected to question what you are taught in school, but to accept it on the authority of the power-holding teachers. Questioning them is disrespect.

And one thing power cannot afford to do in Nigeria is lose face.

By the time you are a teenager, you have started becoming more aware of other power-holders around, outside your family and school. You now know there are ministers, governors, senators and of course, The President. The stories you hear about how they exercise their power don’t surprise you at all.

They generally align with your experience of it. Obedience and deference are what power expects.

Of course, there are some people in positions of authority who seem to take

a different approach. These ones make you pause. You start to wonder if maybe there are different ways after all. But the people around you usually set your mind straight fast enough. “That man is too weak to rule Nigerians. You have to rule Nigerians with an iron fist, or they won’t respect you. That one is busy blowing grammar there,” they’ll scoff.

You sense clearly, they would not respect a leader who isn’t “strong”, meaning ruthless and unshy of lording their power over others. But aren’t there people elsewhere ruling others without doing that, you still wonder.

What about that kind of Obama style?

Gentlemanly. Everybody seemed to admire him after all, including Nigerians. But when you suggest his ways, folk burst out laughing: “Dude, where you think say you dey? This na Naija.

Obama no fit rule Nigerians.” They look at you with a mixture of irritation and amazement, like, is this guy for real?

By the time you’re all grown up and ready to go into politics, you know one thing. If you ever get into power, you are going to do it “Naija style.” Because if not, people won’t respect you. They’ll say you’re not strong enough to rule Nigerians. Who needs that?

The idea a society where children are brought up learning might is right will somehow magically produce leaders who are empathetic democrats is asking a bit much. Nigerian leaders do not suddenly become dictators when they get into power. They have been dictators in the waiting since childhood. Hungry to experience compensation for all the moments they were

‘ Thing is, democracy is not just a system of government, it is a system of values.

Values which, at their core, are actually behavioural instincts. The instinct to listen to those you have power over and take their opinions seriously.

n one week, Africa garnered a 43 percent jump in its COVID-19 cases. These numbers are relative to Nigeria despite her recorded numerical being low. Nigeria’s low infection and fatalities are loss leaders.

They correlate her rather huge testing gap; limited contact tracing, and voluntary acknowledgement of infections. Policymakers must bear these worrying facts in mind. Our national response must henceforth be robust as Nigeria’s pandemic exponential surge has commenced. To mitigate the scope of fatalities, Nigeria’s leadership must recalibrate, seek bi-partisan measures and act boldly in order to avert a possible systemic collapse. Policy, partisan and ideological pussyfooting will not serve collective national interest.

For Nigeria, the unfolding narrative and concrete realities are not comforting. Because this is a global pandemic that affects almost every nation big or small, there is no rescue mission coming to Nigeria. This is a hard and grim fact. Thus, Nigeria’s solution to this crisis, now twined with the collapse of the global oil market, must be home grown. Regrettably, as a nation, we remain ill-prepared and illequipped to grapple with the twin disaster, characterised by some as “the perfect storm.”

Prospective high fatalities aside, the COVID-19 pandemic has unfathomable national security implications for Nigeria. It will push Nigeria’s so-called “poorest of the poor” well beyond the desperate poverty threshold. If that happens, the ripple effect might include the triggering uncontrollable civil disobedience and food riots. The latter, could predicate and also precipitate inconceivable get-even reprisals from long disenfranchised masses against the national elite. One possible tripwire besides hunger-driven-anger will be further extrajudicial killings by security operatives while enforcing lockdowns.

Efforts by Federal and State governments to combat the pandemic have been as salutary as they have been disjointed and compartmentalised. Oddly, the Organised Private

Sector’s CACOVID framework has beaten its own narrow path. For efficacy, CACOVID should have adopted modalities used by the Dangote/Agbakoba 2012 Flood Disaster Committee. The overarching reality is that Nigeria’s laggard response proves her lack of a national resilience strategy, despite her 2014-2015 Ebola experience. A holistic approach was needed from the onset. It did not happen.

Some federal politicos and bureaucrats felt it was business as usual. Hence related policies were transaction-driven and disbursements under the SIP framework skewed by partisan considerations. There were other hindering factors.

First, the FGN made a huge mistake in failing to carry along the 36 states. Second, while some states were proactive, others waited to be “bottle-fed” or “spoon-fed” by federal authorities. Third, was the FGN’s failure to disburse mitigation fund early to the 36 federating units and its sectionalising of the disbursement of N2 trillion palliatives. Fourth, the FGN lost sight of sensible measures; that “prevention is better than cure” and “a stitch in time saves nine.” So as much as the FGN focused on the core affected states, it failed to shield unaffected states by ignoring the fact that the coronavirus being invisible and nimble with trans-boundary capacity, with eventually spread. That being said, each state with an executive governor ought to be fiscally independent and viable.

As variously suggested the FGN still needs to “walk back her COVID-19 response strategy.” If we don’t change our national palliatives (cash & food) distribution strategy, we will upend extant COVID-19 mitigation measures. Locking down 36 states without giving out palliatives will be putting the horse before the cart. It will be a recipe for disaster.

As of 24 April 2020, Nigeria’s COVID-19 numerical stood at 981 infections and 31 deaths.

Meanwhile, most of the 36 states of Nigeria seem to believe they are prepared for the COVID-19 onslaught. They are not. Any such

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assumptions will in time prove delusional as evidenced by the exponential infection rate in Kano State from zero to 73 in one day. FGN and NCDC remain seemingly blind to census of asymptomatic carriers. They are also oblivious of the cumulative R-Value; the number of people being infected daily by unidentified infected persons. The unseen and undocumented numbers are at least ten times published infected and death figures and rising by the hour. Sadly, most Nigerians continue to exhibit a false sense of security by not observing mitigation measures responsibly.

As variously suggested the FGN still needs to “walk back her COVID-19 response strategy.” If we don’t change our national palliatives (cash & food) distribution strategy, we will upend extant COVID-19 mitigation measures. Locking down 36 states without giving out palliatives will be putting the horse before the cart. It will be a recipe for disaster.

As of 24 April 2020, Nigeria’s COVID-19 numerical stood at 981 infections and 31 deaths.

Meanwhile, most of the 36 states of Nigeria seem to believe they are prepared for the COVID-19 onslaught. They are not. Any such assumptions will in time prove delusional as evidenced by the exponential infection rate in Kano State from zero to 73 in one day. FGN and NCDC remain seemingly blind to census of asymptomatic carriers. They are also oblivious of the cumulative R-Value; the number of people being infected daily by unidentified infected persons. The unseen and undocumented numbers are at least ten times published infected and death figures and rising by the hour. Sadly, most Nigerians continue to exhibit a false sense of security by not observing mitigation measures responsibly.

Under auspices of Nigeria’s Governors Forum (NGF), the 36 Governors recently agreed to a two-week interstate spread-mitigation lockdown, albeit belated. Their decision is confirmation of the troubling scope of huge national testing gap; and that partial lockdown and voluntary social distancing are not work-

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made to feel powerless. Now, finally, they get the chance.

Thing is, democracy is not just a system of government, it is a system of values. Values which, at their core, are actually behavioural instincts. The instinct to listen to those you have power over and take their opinions seriously.

The instinct to tolerate critical views told to your face without lashing out.

The instinct to restrain yourself when you have the power to dominate, to crush even. Everybody knows the lingo of democracy these days, but it is quite another thing to actually practise it.

I am not suggesting Nigerians start raising their children full Western-style.

An environment where it is not that unusual to hear a 10-year-old swear at their parent is the other extreme.

The good news is that there is a lot of space in between these two extremes.

Democracy begins at home. Literally.

Most Nigerian leaders are not democrats because they were never taught to be. I too still sometimes contend with authoritarian impulses picked up in childhood. Those raising the next generation of Nigerians must know they are also raising the next generation of Nigerian leaders. The way you exercise your power over your children will be their first lesson in government. So, take care not to be the one raising the next dictator.

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs, Washington Post and Politico among others. He tweets @ RemiAdekoya1

COVID-19: Nigeria must avert systemic collapse

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11

Oseloka H. Obaze

ing optimally. It also affirms that FGN social palliative intervention remains egregiously skewed, and dysfunctional. This reality underpins that prior to the envisaged national lockdown; we need to institute a nationwide palliative intervention, using the 36 States, 774 Local Governments and innumerable community structures.

The scope of the unfolding challenge will be further compounded by limited financial and testing, mitigation, and therapeutic resources.

Nigeria’s present challenges will be further compounded by national revenue from oil sales having just tanked. Her Bonny light oil is selling at $12 per barrel and no one is buying.

Recently the FGN drew $150 million from the Sovereign Wealth Fund leaving a balance of $210 million, with the Excess Crude Account at $72.2 million, and the badly depleted External reserves now at $33.9 billion. Invariably, even as FAAC doled out N780.9 billion to the three tiers of government this week; henceforth the FGN and States will be fiscally challenged.

This lack of buoyancy may turn to insolvency.

Here is the upshot and some plausible emergent scenarios in weeks ahead. Along with the pandemic, a conjunction of circumstances has placed corporate Nigeria at grave risk. Indeed, after many years of policy and governance missteps, Nigeria’s moment of reckoning seems to have arrived. Without being alarmist, if Nigerian authorities fail to handle the pandemic proactively henceforth, she risks a systemic collapse in the near term; that will mean restructuring of sorts by default.

Note: The rest of this article continues in the online edition of BusinessDay @https://businessday.ng Obaze is MD/CEO, Selonnes Consult – a policy, governance and management consulting firm in Awka.

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BUSINESS DAY

Thursday 14 May 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Stop the scam of ‘school feeding’ for at-home pupils The effort reeks of the word corruption

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

M

any contradictions assail the planned resumption on 14 May of the HomeGrown School Feeding Programme in Abuja, FCT. The obvious one is the fact that pupils are out-ofschool based on the directives of the Federal and State Governments to contain the COVID-19 pandemic. Another is the lack of clarity as it now targets families in their homes rather than pupils in primary schools. Then there is the matter of appropriation and executing a different programme from the one for which the Federal Government received the budgetary approval of the National Assembly.

Of course, there is a relatively minor matter of executing authority in the Ministry of Humanitarian Affairs, Disaster Management and Social Development rather than the one responsible for education matters. Citizens can now see why the concept of feeding school children for nutrition and as a contribution to education management at primary school level is not the driver of this scheme.

Against all protestations by citizens and the dictates of common sense, Hajiya Saddiya Umar Fa-

rooq, minister, claimed the Presidency directed her ministry to proceed with the programme even as schools are closed. She has the mandate to deliver feeding support to 3.5 million homes rather than pupils. The nature and purpose of the programme have also changed though it continues with the name for which it got budgetary approval.

Before our very eyes and with brazen impunity, the Federal Government has switched a programme and is misappropriating resources.

The switch is inelegant and lacking in supporting rationale. It is an administrative error and unacceptable in financial management to switch a programme and its basis after the approval of the National Assembly.

Minister Farooq said that each household would receive a TakeHome Ration (THR) valued at N4,200. The Take Home Ration consist of a 5 kg Bag of Rice, 5 kg Bag of Beans, 500 ml Vegetable Oil, 750 ml Palm Oil, 500 mg Salt, 15 pcs of eggs, and 140gm Tomato Paste.

The pricing is heavily subsidised as the market prices of these goods add up to more than N4, 200.

According to Hajiya Farooq, “The ministry in consultation and collaboration with state governments, identified the distribution of

take-home rations to the households of the children on the programme as a feasible method of achieving this directive. This is a globally accepted means of supporting children to continue to have access to nutrient rich foods despite disruptions to the traditional channels of school feeding by the pandemic.

“The provision of take-home rations will, therefore, be carried out based on data provided and structures put in place by the feeding programme over the years. Kwara and Bayelsa where the programme was not fully operational before the lockdown will be able to benefit from the modified programme.”

The Minister of Humanitarian Affairs spoke on the targets and modalities for the programme.

The target beneficiaries are children in primary one to three in public schools participating in the programme. A total of 3,131,971 households are targeted for this intervention. Parents/caregivers of beneficiaries are to collect the takehome rations using vouchers.

“We are employing vouchers which are QR coded, serialised with date and timestamped and identified households will be able to access take-home rations from distribution centres. Each household will receive

uncooked food items that have been assessed and approved by nutrition experts as adequate for the children”.

The programme would be a mix of school and at home. The ministry said, “Over 6,000 schools will serve as distribution centres for clusters of communities except in some states with unique security and safety issues where other structures will be used”.

Neither the Ministry nor the Presidency has explained the imperative of continuing the school feeding programme while the nation’s schools are not operational. There is no reported health emergency or disaster suffered by out-of-school children at home with their parents in the FCT or any other part of the country. The School Feeding programme set out to provide one meal per child each day to all primary school pupils in Nigeria. The objectives include improving the health of school-age children, increasing enrolment in schools, enhancing their ability to retain knowledge and school completion rates.

The federal government should stop this switch of the programme into something else just so that they can justify spending the allocated funds. In the streets of Nigeria, the effort reeks of the word corruption, a favourite anathema of the PMB federal government.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong

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BUSINESS DAY

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Thursday 14 May, 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE All Share Index

NSE Premium Index

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

987.17 1,035.45

271.57

121.88

371.12

209.13

1,628.47

1,012.59

879.28

282.41

125.24

402.49

215.04

1,706.08

1,034.88

900.33

3.99

2.76

Week open (30-4–20)

23,021.01

N11.997 trillion

2,010.15

923.62

761.08

Week close (8-5–20)

24,045.40

N12.531 trillion

24,045.40

949.90

759.72

Percentage change (WoW) Percentage change (YTD)

4.45 -10.42

6.32 0.99

2.85 -17.53

0.00 0.00

4.89 -12.09

-20.86

-0.46

8.45 -32.11

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

2.83

4.77

2.20

2.39

-18.09

-7.01

-3.79

-14.58

Analysts say low-priced value stocks attractive despite profit taking activities Iheanyi Nwachukwu

D

espite recent profit taking activities on the Niger ian Stock Exchange (NSE), many value counters trading at record low prices still offer re-entry opportunities for value hunters on the Bourse, analysts said.

The Nigerian stock market had enjoyed significant rallies in recent weeks, even amid the Coronavirus (Covid-19) pandemic.

Coronation Research analysts in their May 11 note urged investors to “buy good stocks when they are at historically low levels, but don’t overdo it.”

“Over the past few weeks have raised our notional positions in MTN Nigeria and Dangote Cement, while enjoying strong

performance in our selection of the major bank stocks. “ This has given us some performance without having to take the binary choice of betting on a market rebound”, the analysts added.

According to the analysts, their key strength is having a small notional Model Equity Portfolio and having flexibility as to how much equity and how much cash they hold.

“Very few professional equity portfolio managers have this luxury. Our selections express our thoughts on the market and how to survive it without having to call the bottom,” Coronation Research analysts further stated.

A l s o, L ag o s- b a s e d GT I Researchers said that after nine consecutive trading sessions of gaining streak, they expect some investors to exit their position in www.businessday.ng

the early trading days of this week, as seen last Friday. However, they believe the low prices of most fundamentally viable stocks will continue to attract long term investors”.

In their May 8 note to investors, FBNQuest analysts said: “the Nigerian equities market concluded the last trading session of the week in the negative territory as profit taking disrupted the upward trajectory on the broad index. We expect the market to witness the same sentiments in the next session”.

Also in their May 11 note, Vetiva Research analysts who noted the gains recorded in most counters last week, had also envisaged profit taking at the beginning of this week “before we see a stable market by mid-week”.

“Prices of most fundamentally sound stocks remain good for investors to take position for a

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medium to long term tenure.

However, liquidity level will continue to play a major role in the direction of the market in the short term”, the analysts added.

We expect developments surrounding the reopening of the world economy and the performance of crude oil prices to influence the direction of the local equity market.

“Also, with a number of first quarter (Q1) 2020 results still expected, investors are likely to take position in select stocks with positive results”, according to Lagos based analysts at United Capital plc.

Bloomberg recently ranked the Nigerian Stock Exchange (NSE) All Share Index (ASI) second in its best performing indices, following Argentina’s S&P MERVAL Index which ranked first.

Several factors were identified @Businessdayng

as reason for the rally. They include oil price recovery, the gradual easing of the lockdown in several economies, and the expectation of dividend payments attracting investors to blue chip stocks.

Investors had booked circa N530billion gain last week.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) a n d Ma r k e t C a p i t a l i s a t i o n appreciated by 4.45percent to close the week ended May 8 at 24,045.40 points and N12.531 trillion respectively.

All other indices finished higher in the review trading week with the exception of NSE ASeM, which depreciated by 0.1percent.

The market recorded total turnover of 1.662 billion shares worth N18.205 billion in 28,791 deals in contrast to a total of 1.012 billion shares valued at N9.892 billion that exchanged hands the preceding week in 17,023 deals.

Thursday 14 May, 2020

BUSINESS DAY

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Investor’s Square

United Capital Investment Views

Equity market sustained bullish trend

T

he equity market sustained a bullish run for the second consecutive week, as the increase in oil prices and attractive stock valuation strengthened the investment case for Nigerian equities.

Notably, the NSE All Share Index gained 4.4percent weekon-week (w/w), to close at 24,045.4 points.

As a result, Year to Date ( YtD) loss moderated to -10.4percent. Also, investors gained N533.9billion worth of value last week, with market capitalisation closing at N12.5trillion. Analysing the level of activity in the market, investors were clearly shopping for large cap stocks, as average value and volumes increased by 47.2percent and 31.4percent w/w, to N3.6billion and 332.4million respectively.

Across the sectors under our coverag e, a bullish performance was noted, as all sectors closed positive. The Consumer Goods (+8.5percent) sector was the best performer, majorly due to massive gains in NB (+25percent), NESTLE (+8.7percent) and PZ (+7.1percent).

The Banking (+4percent) sector followed suit, as prices

number of financial results were released: UACN for Q1-2020 (Revenue down 2.9percent yearon-year (y/y) to N19.5billion, Profit for the period up 87.1percent to N1.9billion, due to a N3.1billion fair value gain on recognition of MDS Logistics as an investment in associate, which offset a N2.6billion loss from UPDC), STERLING for Q1-2020 (Gross Earnings down 6.6percent y/y to N32.8billion, Profit after tax down 36.3percent to N2.1billion), GUINNESS for Q3-2019/20 (Revenue down 17.6percent y/y to N27.7billion, Profit after tax down 97.2percent to N46.4million) and PZ for Q32019/20 (Revenue by 4percent y/y to N20.8billion, made a Loss after Tax of N1.9billion).

This week, we expect developments surrounding the reopening of the world economy and the performance of crude oil prices to influence the direction of the local equity market. Also, with a number of Q1-2020 results still expected, investors are likely to take position in select stocks with positive results.

Money Market: System liquidity remains buoyant The financial system stayed liquid for the most part of the prior week as there was no surprise or significant funding

of ETI (+12.4percent), ZENITH (+7.7percent) and GUARANTY (+4.5percent) increased.

The Insurance (+2.8percent) and Oil & Gas (+2.8percent) indices both trended northwards, owing to price increases in WA P I C ( + 2 6 . 9 p e r c e n t ) , CORNERST (+7.3percent), AIICO (+7percent), ARDOVA (+32.5percent), CONOIL (+9.8percent) and OANDO (+6.9percent). Finally, the Industrial Goods (+2.2percent) sector also gained, due to DANGCEM (+15.4percent) and CAP (+9.6percent).

Elsewhere, investor sentiment was positive, as market breadth for the week was 2.1x. Notably, 38 stocks gained, while 18 stocks declined. In terms of corporate actions, a

pressure throughout the week.

Notably, the overall naira inflows outweighed outflows.

However, average interbank funding rates -open buy back (OBB) and overnight (OVN) rates which traded at sub5percent for the major part of the week inched higher to 7.9percent at the end of the week, amid retail FX funding debits on Friday.

At the secondary market, we observed some buying interests, as players with idle liquidity took positions in NTBs amid the absence of new bills at the primary market. Thus, average NTBs yield declined mildly by 4 basis points (bps) w/w to settle at 2.7percent. However, we saw a bearish sentiment at the OMO market as investors took some profit in the market. Thus,

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average OMO yield was up by 21bps w/w to 10.1percent.

This week, in the absence of any surprise debit by the CBN, we expect the financial system to stay liquid as c. N330.8billion inflow is scheduled to hit the system in the form of OMO (N297billion) and NTBs (N33.8billion). Also, given our expectation for liquidity to remain robust we expect the CBN to successfully rollover the FG’s maturing NTBs, at least at the same rates in the prior auction.

Bond market: A good week for FGN Eurobonds In the previous week, s entiments at the lo cal secondary bond market were mixed, as we saw rounds of buying and selling interest across the days of the week. We note that while some investors were selling to take profit, others were buying with the expectations that rates will dip further. On a w/w basis, the bearish sentiment prevailed as average FGN bond yield increased marginally by 3bps, to end the week at 10.22percent.

At the secondary Eurobond market, the sustained recovery in global crude oil price that characterized the prior week fueled a bullish sentiment for the high yielding Nigerian Eurobonds. As a result, average yield on the sovereign Eurobonds fell by 1.73percent w/w, to 10.40percent. The positivity also flowed down to the corporate Eurobond segment, with average yield declining by 47bps w/w, to settle at 13.70percent.

This week, we expect the Eurobond market to track the performance at the crude oil market, as foreign investors continue to look at the price of the country’s key export commodity for justifying Nigeria’s inability to default interest or principal repayments.

Additionally, we expect the size of market liquidity to dictate the level of interests or activities at the local bond market.

FX Market: Gross reserves increase by N564.3million Earlier in the previous week, the expectation of an intervention funding sales by the CBN lessened the pressure at the parallel market segment and naira appreciated to N420/$. However, demand pressures returned to the parallel market, later in the week, as the CBN weakened its offer rate at the derivative market by c. 14.51percent across all the tenors available on the OTC FX futures.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Vetiva Research on Q1’2020 financials (GTBank and FCMB)

GTBank: Lower interest expense supports mild PAT growth in Q1 ...Net Interest Income defies expectations to grow 10% y/y Iheanyi Nwachukwu

G

TBank released first quarter (Q1) 2020 results, reporting 2percent y/y growth in Gross Earnings.

The bank posted stronger than expected Interest Income of N77billion (Vetiva estimate: N72.9 billion) a 3percent year on year (y/y) growth driven by higher income from customer loans.

Furthermore, Interest Expense declined 22percent y/y to N12.8 billion (Vetiva estimate: N15.5 billion), resulting in Net Interest Income of N64.3 billion (Vetiva estimate: N57.4 billion).

The remarkable growth in Net Interest Income came as the result of a 21percent y/y drop in Interest paid on customer deposits, thanks to the favourable yield environment in Q1. Meanwhile, Non-Interest Income remained flat y/y at N35.8 billion (Vetiva estimate: N37.6 billion).

The disappointing performance was due to a 22percent y/y decline in Fee income (mostly credit related fees), which offset the 50percent jump in foreign exchange trading gains.

Also, the bank’s Opex grew 12percent y/y to N40.7 billion (Vetiva estimate: N35.1 billion), while provisions jumped 88percent y/y to N1.2 billion (Vetiva estimate: N1.2 billion).

Overall, PAT grew 2percent y/y to N50.1 billion, in line with our estimate, giving an ROAE of 29.7percent.

8percent growth in both Loans and Deposits leaves LDR at 57percent The bank reported an impressive 8percent quarter on quarter (q/q) growth in Loans and advances to N1.6 trillion, with a notable 30percent q/q increase in bank overdrafts to 129.8 billion. Meanwhile, the bank’s cost of risk improved 26 basis points (bps) q/q to 0.08percent, the best in class, while NPLs improved 58bps to 5.95percent. Concurrently, the bank recorded an 8percent q/q growth in deposits to

N2.9 trillion, meaning LDR failed to improve, moderating from 56.9percent as at FY’19 to 56.7percent as of Q1’20 reporting.

With the weak economic outlook for the rest of the year, we expect loan book growth to moderate in the near-term, with a contraction likely by year-end. We also expect asset quality to worsen industry-wide. However, we do highlight GUARANTY’s risk management strategy which has kept NPLs stable, albeit above the regulatory benchmark, for the last three years.

TP revised to N45.14 (Previous: N48.43) Due to the mild outperformance across key line items, we have adjusted our FY’20 forecast, while considering our expectation for economic activity in 2020.

Most notably, we have lowered our Interest Expense estimate to N58.2 billion (Previous: N62billion) and we have also lowered our Non-Interest Income forecast to N148.8 billion (Previous: N150.3 billion). Meanwhile, we have also raised our Opex estimate to N135.1 billon (Previous: N134.8 billion).

FCMB: Solid first quarter earnings translate to 31% y/y PAT growth ...Target price revised to N2.59 (Previous: N2.83) due to bearish economic outlook

F

CMB recently released its unaudited first quarter (Q1) 2020 earnings, reporting a 12percent year on year (y/y) increase in Gross Earnings to N49.2 billion (Vetiva estimate (N45.1 billion). This was thanks to a 11percent y/y gain in Interest Income to N38.3 billion, driven majorly by a 10percent y/y increase in interest from loans to N25.9 billion.

With Interest Expense declining 4percent y/y to N15.2 billion, Net Interest Income came in higher at N23.1 billion (up 24percent y/y), beating our estimate of N19.1 billion.

Meanwhile, the bank also posted 14percent y/y growth in Non-Interest Income to N10.9 billion (Vetiva estimate: N11.5 billion) thanks to a 9percent y/y increase in Fees and Commissions to N7.3 billion as well as a 195percent y/y jump in FX revaluation gains to N1.4 billion. However, as expected

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the bank reported a 61percent rise in net loan loss provisions to N3.7 (Vetiva estimate: N3.8 billion), mainly due to a 69percent y/y decline in write-backs.

Meanwhile the bank’s Operating Expenses climbed 16percent y/y to N24.9 billion (Vetiva estimate: N22.3 billion), although this was generally due to increases in general admin and regulatory expenses.

Ultimately, these led to a 26percent y/y growth in PBT to N5.4 billion (Vetiva estimate: N4.5 billion) and a PAT of N4.7.3 billion, a 31percent y/y growth, giving an EPS of N0.24.

FY’20 forecast bearish despite solid first quarter Despite the earnings beats across several line items, we have refrained from an upwards revision of our projections due to the weak economic outlook and general expectations of declines in earnings across the banking sector. @Businessdayng

Importantly, the bank’s 7percent quarter on quarter (q/q) growth in Loan book should support somewhat stable interest income in the coming quarters, however, this will likely be offset by an increase in defaults and writeoffs due to poor economic activity. Furthermore, given Q1’20 run rate, we expect Opex to track higher in 2020, unless management discloses plans for a cost saving in the coming quarters, therefore we raise our FY’20 Opex projection to N88.4 billion (Previous: N85.7 billion).

T P re v i s e d t o N 2 . 5 9 (Previous: N2.83) Overall, our expectations for FCMB’s FY’20 performance have led to a FY’20 PAT projection of N16.6 billion (Previous: N18.9 billion), yielding an ROAE of 8percent (FY’19: 9percent). This gives an EPS of N0.84 and a final dividend projection of N0.14/ share (Previous: N0.16).

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Thursday 14 May 2020

BUSINESS DAY

Thursday 14 May 2020

BUSINESS DAY

17

HUMPHREY ORIAKHI

CEOINTERVIEW

Managing Director, PAC Capital Limited

Interview with Private Sector Leaders

“We have transactions and clients in over 25 African countries”

PAC Capital presently operates in about 25 African countries where it has active transactions and clients. How did it achieve these feats? TELIAT SULE and CHIJIOKE ONYEOGUBALU, in this exclusive interview, engaged HUMPHREY ORIAKHI, Managing Director, PAC Capital Limited. Excerpts:

C

ould you give us a general overview of the investment banking space in Nigeria and the role PAC Capital plays?

Investment banking is broad, and it could be seen from different perspectives including securities trading and asset management.

What most people see today as investment banking is what you will find in capital market activities. More so, Investment banking in Nigeria may differ from what is obtainable elsewhere and could be carried out using different models.

There are venture capitalists and private equity firms also coming to play in the same space as well as firms offering advisory services and issuing house functions.

In Nigeria, we can group investment banks into two groups: those that are affiliated with commercial banks or subsidiaries of banks, and those that are not owned by commercial banks. With the advent of the new regulation from the CBN, commercial banks (also known as deposit money banks) were no longer allowed to own certain subsidiaries that were not core to their functions. That led to changes in ownership structure wherein some banks adopted the “Holding” company model, which allowed them to own investment banks as subsidiaries whilst others have investment banking as part of their banking services. The model in which nonbank affiliated investment banks practice investment banking differs from those that are bank affiliated.

PAC Capital is the investment banking and advisory subsidiary of PanAfrican Capital Holdings Limited, a proprietary investment company in Nigeria with investment across six business verticals and we are neither an affiliate of a commercial bank, nor a subsidiary of any commercial bank.

As an investment banking firm, we provide financial advisory services, project finance, trade finance, structured finance, mergers & acquisitions, issuing house services and other forms of capital raise through diverse sources, locally and offshore. We equally leverage other relationships such as venture capitalist, private equity firms and high net worth individuals. We typically do not fund transactions from our balance sheet but act as financial mediators by assisting clients to prepare documentation towards making them bankable and then source for a potential financier, locally or from offshore.

Relating to infrastructure finance, most state governments have a bias towards capital expenditure. How can you help in that regard?

Most of the states are changing in that direction but we know that before now, budgets were skewed towards recurrent. Whilst we have seen changes in some states, the issue is the implementation. We also observe from our experience with the public sector, both FG and the states, that investment bankers are not in most cases brought into the picture during some of these projects conceptualization. As a result, some of the projects did not stand the test of time because they were not properly structured before they were executed.

Infrastructure projects require a lot of planning; you must do studiescarry out feasibility studies, you also must look at the sustainability of those projects as well as their economic benefits.

Of course, in some cases, some projects may be socially driven and not profit driven; but you also must look at how those projects will be sustainable going forward. For instance, you do not want to build a hospital and then after two years, all the pieces of equipment are worn out and you cannot replace them. So, those factors need to be considered and most of the times, we see those things are not being thought through and sometimes best practices are not put in place.

But if you have an investment banking firm like PAC Capital involved, we will ensure independence and properly review the projects holistically, ensure that the right set of contractors and professional service providers are brought in. We would equally ensure that public procurement procedures are followed and people with requisite skills are brought in especially with the various studies that are required.

Feasibility of the projection can be modelled so that, using the example of a hospital, you do not necessarily have to charge like a private enterprise but something that at the end of the day, can sustain the project for a long time.

Let’s look at the different sectors of the economy vis-à-vis your operations, which ones would you say you have benefitted the most from in the last five to seven years?

Without sounding unkind to all the various sectors, in one way or www.businessday.ng

not saying that we as PAC Capital put money into the projects. If you look at those two, that’s 100 percent and if you put that together with the other 20 percent and take an average, it comes to about 30 percent of that market.

We have equally provided financial advisory services to various prominent and indigenous oil & gas companies including listed ones on the Nigerian Stock Exchange (NSE).

We have been involved in raising more than $1 billion in the oil & gas sector.

Coming to recent activities, telecoms has also been favourable.

Since the privatization of the sector and the sale of the GSM licenses, very moderate activities have happened in that sector, except for the acquisition of NITEL by NATCOM (NTEL). Nonetheless, we had the sale of 9Mobile of which we were the financial advisor and fund arranger for the acquisition of EMTS (9Mobile) by Teleology Nigeria Limited.

It was one of our most interesting transactions that had seemed impossible at the time, but we were able to scale through.

We also have provided financial advisory for government institutions and various state governments. The financial sector is not left out. You would recall AMCON had about three banks mainly Enterprise Bank, Keystone Bank and Mainstreet Bank, which they took over. We raised the financing for HISL Investment to acquire Enterprise Bank from AMCON and we also acted as financial adviser to Sigma Golf consortium to acquire Keystone Bank.

We also played an advisory role for AMCON towards the setting up the bridge bank to take over the assets and liabilities of Skye Bank and subsequently capitalising Polaris Bank. These are just a few of the sectors that have positioned us as a leading investment bank in Nigeria.

the other, all the sectors have been good but when you ask for the most, I would start from power, telecoms, financial services sector and even oil and gas, have been good.

In power for instance, we played a very key role especially during the power sector reforms and during the sale of the defunct PHCN assets.

That, I would say, also brought us to the limelight.

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Recall that during the sale of those assets, most of the financing for the acquisitions of those assets came locally. More than 70 percent, if not up to 80 percent, and, I would say, we were one of the firms to attract finance from outside the shores of Nigeria. Aside that, in terms of market share basis, I would say we had more than 25 percent and I can tell you how. @Businessdayng

Before then, we had 11 DISCOs but only 10 were sold at the time except for Yola and out of the 10 DISCOs, we participated in financing the acquisition of two – Enugu and Kaduna Discos, which accounted for 20 percent. This is not even taking into consideration the advisory services we provided to other firms which also bided during the process. For the GENCOs, there were five generating companies and out of those five, we

raised the financing for the acquisition of Sapele Power Plc which is another 20 percent. However, there were still other two NIPP projects; the Olorunsogo Power Plant in Ogun State, and Omotosho Power Plant in Ondo State. Olorunsogo 1 and Omotosho 1 were NIPP projects and they were not put in the basket of the PHCN assets for sale, but they were also being sold and those two were fully funded through our intervention. When I say funded, I am

What are your strengths as PAC Capital?

Our strength is our people. Anywhere in the world, human capital is key regardless of technology. You need human input to deal with them. Over time, we have always paid attention to our people. Our partnerships within and outside the country have been key and people drive partnership and collaboration. Whatever you do, people will always know you have done something. Our greatest advertisement today are the transactions we have done and all these were achieved by the people we have. www.businessday.ng

So far, how have you been able to handle competition?

Even amongst families, there is a healthy presence of competition.

However, the challenge is when one continues to focus on competition leading to the possibility of inadvertently missing one’s own path or identity. For us, we have our identity and our PAC Capital DNA. We choose not to chase after perceived competition.

We see competition as partners and collaborators. In the business of investment banking, one cannot do it alone, partnerships amongst companies in this business is a common feature. Therefore, you see phrases like, “Lead Issuing House and Joint Issuing House’’ or “Lead Financial Adviser or Co-Financier Adviser.

Most offers that you see are jointly done by two or more issuing houses with each party playing different roles. So, if one continues to see competition as a source of rivalry, one would be unable to go far. Most of the times some of the investment banks out there come to us to collaborate on deals even outside the capital market.

On the Afreximbank N300bn long-term loan, what was your experience like on the projects?

On the Afreximbank N300bn Domestic Bond Issuance, it is worthy to note that this is the first time Afreximbank will be issuing a bond denominated in an African country’s local currency. They only lend in dollar ($) or euro (€) but, their primary currency is US dollar

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which is the currency they use in reporting their account. Before our participation in the Afreximbank deal, we had also participated in the first GDR that Afreximbank issued in Mauritius as a placement agent.

You would note that in most countries, foreign exchange risk is a major risk. But with the local currency bond, they can fund Nigerian transactions in naira instead of dollars. I will not like to say more, especially with regard to the structure and utilization until it becomes public. This for me is huge and a welcome development that they recognize the Nigerian economy, which is the biggest in Africa. So, you want to raise $1bn, $500 million etc., you will have to come to Nigeria. Overall, the experience gained while working with other advisors was phenomenal and to play a part in a transaction of this nature with the attendant potential positive impact on the economy is fulfilling.

What other countries do you operate in?

Today, we are living up to our Pan African name as we currently have active transactions and clients in over 25 African countries and our plan is to cover the entire continent, meaning that we are not just restricted to Nigeria. We see bigticket transactions in other African countries too.

Could you shed more light on borrowing in local currency bonds works especially if the fund is coming from foreign financiers?

If today, I want to buy an instrument @Businessdayng

in a foreign market and I have naira, I will convert the naira to buy that instrument in the market’s currency. When they are paying me back, they will not say because I converted from naira therefore, I would be paid in naira. Instead, they will pay me in the currency of the instrument, and I will be the one to convert back to the naira. So, if a foreign investor is investing in a local currency bond in Nigeria, registered with SEC, it cannot be paid back in foreign currency.

The Afreximbank bond is open to Nigerian and foreign investors to invest (but in naira) and I tell you today, even without the foreign investors, the Nigerian market is ready to take up the amount on offer. This amount for me is like a test; N300bn is less than $1 billion, using N360 to a dollar. So, Nigeria can take that. I even think that foreign investors will be struggling to get a piece of it.

Tell us about the Africa Finance Awards and what it means to your institution We won that award consecutively for two years, 2018 and 2019 and for us, it shows consistency. We all know that for some of those awards, you must apply but for this one we did not send any entry. The organisers saw what we had done and recognized us on that basis.

For last year, it was the 9Mobile deal that gave us that award which of course I would like to say it is the telecom sector that has been favourable to us. Part of the satisfaction we have doing this job is that we are also able to impact lives.

People were scared that perhaps the company was going to go down which would have created a huge dent on our unemployment index in the country but today that has been averted which is good for the country and us. On the back of that deal, people with similar situations have come to us to engage our services.

What is the outlook for PAC Capital in the next 5 years?

Our focus is to be the preferred investment banking firm in Africa and that is our goal. Not necessarily as number one in terms of size but the preferred which means we are number one. As I mentioned before, we operate in at least 25 countries where we have transaction footprints and our target is to cover all the countries in Africa. We see the AfCTFA creating that avenue and we are positioning ourselves to take full advantage of that and we expect it would enable us to do much more than we currently doing.

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BUSINESS DAY

Thursday 14 May 2020

Thursday 14 May 2020

BUSINESS DAY

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Garden City Business Digest Customs Area 1 PH generates N16.1Bn in Q1-2020 • Overshoots 2019 Q1 grossing •New Area Comptroller attributes it to new methos, due process Ignatius Chukwu & Kelechi Esogwa

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he Customs Area 1 in Port Harcourt says it collected N16.1Bn in the first quarter of 2020, an amount higher than the slightly over N13Bn of 2019.

The Customs Area Controller of the Command, Comptroller Auwal Mohammed, revealed this while addressing newsmen in his office in Port Harcourt. The Area Controller stated that the figure indicated a surplus of N2.993Bn above the Revenue generated in the Command from January to March 2019, which stood at N13.187Bn. He noted that the differ-

Awwal Baba Mohammed, Customs Compoller Hameed Ibrahim Ali (RTD) Customs ControllerEast General

ence in the revenue was as a result of ensuring that importers were made to pay the correct duty and all the clear-

ance procedures were strictly complied with. He further said the placing of committed and capable officer in conducting

100 per cent physical examination played a significant role during cargo clearance.

He also said he had to en-

gage all relevant stakeholders on regular interactive sessions.

The Customs Area boss expressed delight over the conduct of the Licensed Customs Agents (CLAs) and the shipping lines at the port, warning them, however, against contravening trade regulations, saying it will incur the wrath of the law.

In the area of anti-smuggling activities, the Area Comptroller said that the Command made a seizure of 2x20ft containers declared as hand tools, however on 100 per cent examination, it was discovered to also contain candle wax and tomato paste in retail packs.

The consignments which have been seized and forfeited to the Federal Government have a Duty Paid Value (DPV)

of N30.7m.

Also in the first quarter of 2020, another seizure of 3x20ft containers of vegetable oil and margarine was made.

The consignment which was declared as Spraying Pump for insecticide has a Duty Paid Value (DPV) of N19.6m.

The comptroller, who warned smugglers and unpatriotic citizens to stay clear of the port, informed that the Command would not tolerate any act that will jeopardize national security.

He added that though the COVID-19 pandemic has affected in no small measure the revenue and general port activities, he is however optimistic that with all the measures put in place by the FG, economic activities would soon be restored.

Lebanese national rescued from kidnappers in Rivers community Port Harcourt

by Boat

IGNATIUS CHUKWU

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he youths of Egbelubi in Ndashi community in Etche Local Government Area of Rivers State, rescued a white man who was kidnapped in Owerri, Imo State yesterday night.

The kidnappers while looking for where to hide their victim, drove down to Egbelubi Ndashi which is the boundary between Imo and Rivers states. It was gathered that the community youths intercepted them and the driver and other criminal gangsters took to their flight leaving the one that ought to watch their victim.

An eye witness, John Eke, told newsmen that when they saw the vehicle coming from Imo State to their community, that they stopped the vehicle and queried where they were heading to in the lockdown period.

Eke noted that it was because they barricaded the road because of the governor’s order on border closure that helped them if not, the gang would have escaped with their victim. They said they alerted the Okehi police division.

A Lebanese and renowned Nollywood actor, Bilal Nosser, popularly known as ‘Mr B’, narrating his ordeal to the PPRO of the state command, DSP Nnamdi Omoni, said operatives of Okehi Police Division led by the DPO in a sting operation last night stormed Ndashi in Etche LGA, where they rescued Nosser.

The statement said in course of his rescue, one of the members of the gang named Nwagor Faith who was keeping watch over the victim, was arrested while others took to flight, adding that the suspect has made use-

ful confessions and named other members of his criminal gang.

Bilal who narrated his ordeal in the hands of his abductors said he was invited for a business by one Clifford who asked his driver to come and pick him, adding that his ordeal started from there.

The Commissioner of Police, CP Joseph Mukan, appealed to the public, particularly the residents of Etche and Omuma LGAs to increase their security consciousness and promptly report any suspicious movements and characters to the Police via the following security numbers: 08032003514, 08103696460, 08033396538 A Toyota Venza car belonging to the victim has been recovered, while efforts have been intensified to arrest the fleeing members and recover their operational weapons. …Rivers CP wades into case of Pharmacist Nwidu’s arrest and extortion by a DPO N20,000 bribe may land a police divisional officer in hot soup as the newly posted Commissioner of Police in Rivers State has waded into the scandal and is promising to show his colours with the case.

Details: The newly posted Rivers State Commissioner of Police, Joseph Mukan, is fighting to restore sanity in Port Harcourt as many professional bodies exempted from lockdown said they had been extorted. The most scandalous case has drawn out members of the Pharmaceutical Society of Nigeria (PSN) on warpath over a case of one of its members who was illegally arrested and extorted to the tune of N20,000 to free him.

Mukan has thus urged members of the public especially pharmacists and lawyers to remain calm and watch how would deal with the matter.

The case of the pharmacist had gone viral on social media before a petition flew to the desk of the Commissioner of Police and to the PSN by a pharmacist and university lecturer, Lucky Legborsi Nwidu, director of Luckpharm Pharmacy at Ozuoba area of the state capital.

The pharmacist had demanded for the return of N20,000 forced out of him for bail by

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the divisional police officer (DPO) of the area after he said he had been illegally arrested and detained at his facility in the extreme lockdown that rages in the state capital.

Nwidu and the PSN insist that pharmacists as medical workers were not to be arrested for opening their businesses during lockdown because they save lives. The Rivers State chairman of the PSN, Chima Ogbu, told newsmen that the governor even referred a sick person to pharmacies to obtain drugs and get well duding lockdown while inspecting compliance and wondered why a police man would counter the governor’s directive by arresting and obtaining bail fees from pharmacists.

This has forced the Commissioner of Police to order an investigation into the matter while reassuring pharmacists to be calm and be sure that his administration is out for discipline and true policing.

Explaining his ordeal, the senior lecturer at the University of Port Harcourt said he was in his house when his nurse shouted for help and he went to find a female police officer who he said was a worshipper in same church with him trying to force the lady into a vehicle. He said he offered to be arrested instead and they took him to the Ozuoba police station.

He said all efforts to prove that pharmacists had exemption failed and when the DPO arrived, he joined in antagonizing him and even demanded for N100,000.

He said later in the day, after severe suf-

Joseph Mukan, Rivers new Commissioner of police

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fering, he was forced to part with N20,000 to secure release, but insisted the DPO must refund the money and apologise. He thus fired a petition to the police boss and to the PSN. Nwidu said: “Over 20 years ago I swore to the Pharmacy oath to be a faithful pharmacist who will provide pharmaceutical services to my community, the major reason for which the police because of greed arrested me from home for over seven and half hour without food and water. Is Nigeria fair to me and my profession, Pharmacy?

The police have to return the money paid to them by my lawyer and tender apologies to Pharmaceutical Society of Nigeria and Nigerian Bar Association for this ill-treatment. All the officers and DPO who meted out this unlawful detention to me need to be sanctioned.”

Reacting, the commissioner, through the police public relations officer (PPRO) in the state, Nnamdi Omoni, said: “It has become necessary at this stage to react to the above allegations and state the obvious as follows: The Command is aware of the complaint. The Commissioner of Police invited the DPO and his personnel and had equally contacted the complainant to hear from them, first hand.

“That after hearing from the parties, he ordered a full scale investigation into the matter with a view to ascertaining the cause of the infractions and bringing anybody found complicit to book. That the CP wishes to appeal to the Pharmaceutical Society of Nigeria and indeed any other professional bodies to be calm, as he is poised to dealing with the matter on its merit, no matter whose ox is gored.

“He further wishes to state unequivocally and for the umpteenth time that he has lectured his men on the categories of persons and/ or authorities exempted from the emergency and on the need to be cautious and polite in the discharge of their responsibilities.

“He is hereby finally enjoining the public to remain calm and allow the law take its full course, while assuring them that the Command under his watch will not condone any act of lawlessness and unprofessional acts by his men and promised to remain firm and focused in the discharge of his duties in the State.”

@Businessdayng

20

Thursday 14 May 2020

BUSINESS DAY

RESEARCH&INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

In association with briu@businessday.ng

08098710024

Covid-19: How latest NBS’s data shows the need for urgent economic diversification ISAAC MOSES

T

he COVID-19 global pandemic has effectively halted the world’s economy the resultant effect of this is already taking its tolls on the Nigerian economy. The economy has remained vulnerable to any slight changes in the global energy market due to its heavy reliance on the proceeds from the sale of crude oil.

Recent data from the National Bureau of Statistics (NBS) shows that the Gross Domestic Product (GDP), which measures the total value of goods and services produced in a country for a period of time, was driven by the service sectors, while oil contributed 90 per cent of the foreign exchange earnings.

In quarter four of 2019, crude oil remained the dominant export, valued at N3,629.24 billion and accounting for 76.1 per cent of total exports, while non crude oil exports amounted to N1,141.3billion or 23.9 per cent.

However, the value of crude oil exports in Q4,2019 was 3.16 per cent lower than in Q3,2019 and 0.88 per cent lower than the corresponding quarter of 2018.

On an annual basis, the value of crude oil exports at N14,690.02 billion, was lower than in 2018 by 3.08 per cent.

Other oil products export was 16.13 per cent higher in value in Q4,2019 compared to Q3,2019 but 4.85 per cent lower than the level in Q4,2018. The value of other oil exports was 9.2 per cent lower in 2019 than in 2018.

In Q3, 2019, crude oil accounts for 70.87 per cent (N3,747.8billion) of the value of total export, while non-crude oil exports amounted to 29.13 per cent (N1,540.7billion). However, in Q3, 2019, the value of crude oil

Source: NBS, BRIU

exports was 4.7 per cent lower than in Q2, 2019 and 9.6 per cent lower than the corresponding quarter of 2018.

During the same period, the value of other oil products imported decreased by 41.85 per cent in Q3,2019 against the level recorded in Q2, 2019 and 54.59 per cent when compared to Q3,2018. With the trends in foreign trade statistics, crude oil has continued to show dominant, conversely, the main factor behind Nigeria’s economic growth.

At the recent interactive session on the Budgit – organized webinar tagged ‘Non-Oil Exports: Disrupting Nigeria’s Growth Cycle’, discussants bemoaned the low level of non-oil export in the country. Hadiza Usman, Managing Director, Nigerian Ports Authority (NPA) opined that revenue from the seaports might drop by 75 per cent, as crude exports and price decline due to the effect of COVID-19.

“About 191 million metric tonnes of export cargo passed

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through the nation’s seaports in 2019,out of which 78 per cent of which was crude oil cargo, while the remaining 22 per cent was non-oil export”, Usman said.

With the recent development in the energy market and uncertainties surrounding the global economy, it is imperative for the review of the country’s economic policy towards ensuring a quick diversification of the economy to stir the country away from import dependence and increase non – oil revenue, as the monolithic reliance on oil is failing.

Speaking at The Chartered Institute of Bankers of Nigeria’s (CIBN) Advocacy Dialogue, Series 1.0, which was centered around the theme COVID-19: “Tough Choices for Banking and other Businesses” held in May 2020, Demola Sogunle, Managing Director/CEO, Stanbic IBTC Bank Plc, stated that ‘Nigeria has been hit by twin shocks the COVID-19 pandemic and declining oil prices.”

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“In order for us to mitigate the negative impact of the twin shocks, we need, as a country, to maintain delicate balance between saving the lives of our people and growing the economy”, Sogunle said.

These twin shocks are not necessarily mutually exclusive, and both can be pursued simultaneously. He further stressed the need to diversify the economy from over -reliance on crude oil as a source of revenue and focus more on the real sectors such as agriculture, manufacturing, and SMEs. Diversification priorities to alternative sectors such as agriculture, solid minerals, manufacturing and services sectors, should be further intensified.

Nigeria is splendidly endowed with mineral resources that are yet to be harnessed to their full potential.

In 2014, solid minerals accounted for about 0.14 per cent of the GDP, significantly lower than the 10.44 per cent contrib-

@Businessdayng

uted by oil and gas. Solid minerals exports in Q4,2019 were 69.58 per cent lower than the value recorded in Q3,2019 and 75.10 per cent less than Q4,2018. The 2019 value of solid minerals exports was 61.52 per cent lower than in 2018. The value of solid minerals exports decreased by 17.08 per cent in Q3 2019 against Q2 2019 and 34.97 per cent against the corresponding quarter in 2018.

From all indications, the mining industry lacks the necessary policy thrust and this is reducing the country’s competitiveness in the global market.

PricewaterhouseCoopers (PwC’s) “Mine 2017 Report” has put the aggregate net profit of the world’s 40 largest listed mining companies at $20 billion (about N6.29 trillion). But, Nigeria, with its over 44 mineral deposits, is missing out. This can be attributed to huge infrastructure deficit that characterized the economy.

Zainab Ahmed, the Minister of Finance, Budget and National Planning, in one of her publications disclosed that the Federal Government would require about N36trn (US$100 billion) annually for the next 30 years to effectively tackle Nigeria’s infrastructure challenges. The minister further stated that with the shortfall in oil revenue in recent times, it would be difficult to address the infrastructural deficit. Capital expenditure in 2018 stood at N820.6 billion (as at 14th December 2018 according to the budget office of the federation), far below the budgeted sum of N2.9 trillion translating to a performance ratio of just 28.6 per cent.

Conclusively, investing into the mining sector would not only diversify the economy it will reduce the possible unemployment rate which is rising occasioned by the pandemic.

Thursday 14 May 2020

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

21

TECHTALK

Broadband Infrastructure

Bank IT Security

Four policy responses that could help tech startups impacted by COVID-19 the crisis.

Lagos which received an N15 billion grant from the federal government to fight the COVID-19 pandemic only recently announced a 250 million fund for innovation and research. The fund, however, mostly funds new ideas and research.

FRANK ELEANYA

N

ig er ian te ch startups have continued to count losses as a result of the COVID-19 pandemic.

Although the government at the center said it is planning some financial assistance and have eased the over onemonth lockdown, for many startups time is running out as they burn through their last cash reserves.

A report released in the last week of April by Startup Genome showed that 65 percent of all companies, including 34 percent of Series A+ startups, have less than 6 months’ worth of runway. 74 percent of startups have had to let go of full-time employees, with 26 percent of them having to let go of 60 percent or more of full-time staff.

The report also showed that it has not been all losses as 12 percent of startups have seen their revenue increase by 10 percent or more since the beginning of the crisis. One out of every 10 startups are in industries actually experiencing growth.

In Nigeria, a few startups in the health and fintech sectors have even attracted funding which possibly would keep them going throughout the period of the crisis. In the first quarter of 2020, these startups were responsible for the $55.37 million that came into the ecosystem, according to a Techpoint Africa report.

Over 99 percent of the funding came from foreign investors.

W h il e t he COVID -19

crisis has forced a deeper collaboration between the government and the tech ecosystem, there is still a big lacuna between policymakers, policy-making and the businesses in tech, which has reflected to a large extent on the responses the space has received from the authorities in a time of crisis.

“This is the non-sexy part of founding and growing companies in emerging markets. In the rest of the world, there are Trillions of dollars in palliatives being pumped into resuscitating the economy. But in Africa, we have none of that. No-one is going to save us, we need to save ourselves,” said Jason Njoku, founder of Iroko TV. The video streaming service had to send approximately 28 percent of its Nigerian team on compulsory leave without pay and sacked about 100 contract staff in the offline and outbound marketing teams as

a result of the crisis.

The 1070 startups from over 50 countries that responded to the report highlighted four policy response areas that could help their businesses through the crisis.

Grants to preserve company liquidity The COVID-19 crisis has led to a liquidity crunch for many tech startups. This is despite promises by the Federal Ministry of Communications and Digital Economy that it plans to provide financial relief for startups facing existential threats. But a month after organising an intervention group - Tech4Covid Advisory Committee - created by the National Information Technology Development Agency (NITDA), a department under the ministry, startups are yet to see the promised palliatives.

But in other parts of the

world, Grant is one of the ways some governments are leveraging to save their technology businesses from drowning in the unprecedented crisis they face. The Australian government, for instance, announced a $17.6 billion cash stimulus to startups and businesses. According to the Startup Genome report about 60 percent of the founders who responded across Europe, US, and Asia are receiving assistance or expect government policies to support their businesses directly or indirectly.

In the case of Nigeria, the Central Bank of Nigeria (CBN) made provision of N100 billion to support the health sector, N2 trillion to the manufacturing sector, and N1.5 trillion to affected industries in the real sector.

No provision was made for the tech ecosystem which interestingly - has become the most active space supporting the government in

Instruments to boost investment The financial instruments are designed to increase the take-up by the government of revolving financial support rather than traditional grants and to combine public and private resources.

The instruments may come in three forms such as a risk-sharing loan, based on the sharing of risks between public and private resources, and a capped guarantee instrument, where public money acts as a guarantee against default inside a bank’s loan portfolio. Both instruments aim to provide startups with better access to finance. The third instrument is a renovation loan, for energy efficiency and renewable energy projects in the residential building sector.

Investors around the world have been impacted by the crisis and are more distrustful of putting capital in certain markets. But a government-backed financial instrument will help in building investor confidence and bring in critical capital for startups who need it to survive the crisis.

Support to protect employees, like payroll supplementation grants While a direct intervention

of the government in this regard is practically impossible given the new realities in the oil market and the consequent drastic drop in foreign exchange, it can make it easy for startups to continue to pay their staff especially as lockdown begins to ease.

“The hardest decision I have ever had to make in my life isn’t shutting down a non-performing company like I have done a few times; but rather letting go of high performing and dedicated staff because that’s what the data told me to do,” Edmund Olotu, founder of GPay, an electricity payment infrastructure provider.

Experts have suggested relaxing company taxes and Pay As You Earn (PAYE) obligations so as to help companies and workers survive the crisis. The government can also leverage its platform to drive the adoption of tech products. While it helps promote the services of the tech ecosystem, the government can also increase the patronage of the services by mandating its agencies to use them.

Loans to preserve company liquidity This is one area the government tried to tidy up from the beginning with the provision for a three-month repayment moratorium for all TraderMoni, MarketMoni, and FarmerMoni loans with immediate effect. A similar moratorium was also given to all federal governmentfunded loans issued by the Bank of Industry, Bank of Agriculture, and the Nigerian Export-Import Bank.

Roducate deepens online learning with diverse digital content FRANK ELEANYA

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hile schools across the countr y remain closed, Roducate, an e-learning platform could help parents and guardians keep their wards fully engaged and learning for the duration the lockdown lasts.

The edtech company with over 700,000 unique subscribers arguably has the most diversified content of any digital learning platform in the country.

Its content is so massive that there is something for almost all levels of learning - from Primary 1 all the way through to the university. To ensure relevance, the platform only carries a government-approved curriculum, which is endorsed

by NERDC, NUC, JAMB, Lagos State Ministry of Education, and the Africa Union.

The platform also has Apart from Mathematics and English which are staple, Roducate also has more technical subjects such as music and Cisco/ ICT. The learning materials

come in different styles: lecture notes for avid readers, podcasts for auditory

learners, tutorial videos for visual learners.

“With countries adopt-

ing e-learning as a means of minimising the disruption in education during the COVID-19 pandemic, our children must not be left behind,” Femisola Awosika, CEO of Roducate said in a statement.

Roducate also allows schools to create their own platform on it where they are able to limit access to their students. The schools can choose to present only their own content or present Roducate’s content as well.

For students who are unable to access the internet,

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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@Businessdayng

the company has created a version of its app called Roducate Mass and offers this version preloaded on a smart feature phone which consumes very limited data.

To further minimise the use of data, Roducate Mass is Accessible offline. It is also designed to guarantee child safety.

Roducate is already looking beyond Nigeria as it carries both West Africa and East Africa curricula and it is behind educational programs such as UBALearn, Glo Mobile Tutor, and ARMLearn.

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Thursday 14 May 2020

BUSINESS DAY

BUSINESS TRAVEL

Emirates prepares its all wide-body fleet amid COVID-19 impact Stories by IFEOMA OKEKE

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hile the w o r l d yearns to travel once again, meet and hug loved ones, seek new adventures and close those business deals, Emirates is busy protecting and readying the world’s largest all widebody fleet to take to the skies.

This could have proved daunting, but Emirates Engineering, a division of the airline and one of the world’s most technologically advanced aircraft maintenance facilities, has it all covered – literally!

Ahmed Safa, Emirates’ Divisional Senior Vice President Engineering said: “Emirates moves to a different drumbeat – one where the highest standards are absolutely fundamental to our entire organisational rhythm. Everything we do ladders up to ensuring the best customer experience and people feeling safe and

reassured while flying with us.

“That philosophy also extends to our Engineering team and how we maintain and secure our multibillion dollar fleet with the world’s largest number of Airbus A380s and Boeing 777s. We don’t just cover our engines, but have a comprehensive aircraft parking and reactivation programme that strictly follows manufacturers’ guidelines and maintenance man-

uals, and we have enhanced standards and protocols of our own.

“We also have the enviable challenge of a full widebody fleet – 115 A380s and 155 B777s – and the most sophisticated systems and avionics in the industry. While a narrow-body aircraft only requires around 3-4 employees working for eight hours or so to cover it, our aircraft need 4-6 employees working a 12-

hour shift. And taking extra precautions while maintaining social distancing adds its own interesting twist to the proceedings.”

Of the 270 aircraft in its fleet, Emirates had initially parked and wrapped up 218 aircraft – 117 at Dubai World Central and 101 at Dubai International airport – that involved more than 15,500 man-hours of work.

Now around 75 Emirates

aircraft, both passenger and freighter, are crisscrossing the planet carrying people on repatriation and cargo on essential missions. These continue to be maintained as per standard operating procedures. Some aircraft are undergoing scheduled heavy maintenance in Emirates Engineering’s hangars.

Routinely, Emirates covers all aircraft that are taken out of operations for more than 48 hours. Much before the pandemic, Emirates has had to cover a significant part of its fleet during the runway closures at Dubai International airport, and even during the 2010 volcanic ash cloud disaster that partially grounded the fleet.

All apertures and openings through which environmental factors – sand, dirt, water, birds and insects – can find their way inside an aircraft are wrapped up and made watertight. That includes engines and air data probes – such as pitot, static, temperature, angle of attack sensors – engine intakes and

exhausts, and APU intakes and exhausts.

The interiors – whether cabin monuments, seats or inflight entertainment equipment – are also protected from the elements. Potable water systems and aircraft fuel tanks are preserved, and engine and APU systems are protected.

The process also involves the greasing, cleaning and preservation of landing gear and flight control systems.

The team turns off all cockpit switches, disconnects batteries, and installs control lever locks and window blinds.

After concluding the protection and preservation works, the team completes periodic checks at 7-, 15and 30-day intervals across the fleet. These can include simple walk-around inspections to ensure all covers are in place, and there are no visible damages or external leaks.

Complex checks include removing the covers and reactivating aircraft systems, idling engines and testing engine bleed air and flight control systems.

IATA appeals to international community to support African travel and tourism sector

F

ive international air transport and tourism bodies have launched an appeal to international financial institutions, country development partners and international donors to support Africa’s Travel & Tourism sector which employs some 24.6 million people on the African continent.

Without urgent funding, the COVID-19 crisis could see a collapse of the sector in Africa, taking with it millions of jobs. The sector contributes $169 billion to Africa’s economy combined, representing 7.1 pertcent of the continent’s GDP. The request is being made by the International Air Transport Association (IATA), the World Tourism Organization (UNWTO) of the United Nations, the World Travel & Tourism Council (WTTC), the African Airlines Association (AFRAA) and the Airlines Association of Southern Africa (AASA).

These organizations are jointly calling on international financial institutions, country development partners and in-

ternational donors to support the African Travel & Tourism sector through these tough times by providing: $10 billion in relief to support the Travel & Tourism industry and help protect the livelihoods of those it supports directly and indirectly.

They appeal for access to as much grant-type financing and cash flow assistance as possible to inject liquidity and provide targeted support to severely impacted countries; They also suggest financial measures that can help minimize disruptions to muchneeded credit and liquidity for businesses. This includes the deferral of existing financial obligations or loan repayments; and ensuring that all funds flow down immediately to save the businesses that need them urgently, with

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minimal application processes and without impediment from normal lending considerations such as creditworthiness.

Some African governments are trying to provide targeted and temporary support for hard-hit sectors such as Travel and Tourism. However, many countries lack the necessary resources to help the industry and the livelihoods it supports through this crisis.

The situation is now critical. Airlines, hotels, guesthouses, lodges, restaurants, meeting venues and related businesses face mounting losses. Typically, tourism is comprised of 80 percent of small and medium-sized enterprises (SMEs). To preserve cash, many have already begun laying off or placing staff

on unpaid leave.

“The impact of the COVID-19 pandemic is being felt across the whole tourism value chain. The sector and the millions of livelihoods it supports across the world, including vulnerable communities are particularly exposed. International financial support is key to ensuring that tourism can lead to wider economic and social recovery in these communities,” UNWTO Secretary-General, Zurab Pololikashvili said.

“Airlines are at the core of the Travel & Tourism value chain that has created quality jobs for 24.6 million people in Africa. Their livelihoods are at risk. Containing the pandemic is the top priority.

“But without a lifeline of funding to keep the Travel & Tourism sector alive, the economic devastation of COVID-19 could take Africa’s development back a decade or more. Financial relief today is a critical investment in Africa’s post-pandemic future for millions of Africans,” IATA’s Director-General and CEO, Alexandre de Juniac said.

“The Travel & Tourism

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sector is in a fight for survival, with over 100 million jobs losses globally and nearly eight million in Africa alone due to the COVID-19 crisis.

Travel & Tourism is the backbone of many economies across Africa and its collapse will lead to hundreds of millions of livelihoods being impacted and enormous financial pressure for years to come.

“Now, more than ever, it is vital that governments work together on a global coordinated approach towards a swift recovery and ongoing support for Travel & Tourism.

It is critical that the most vulnerable communities receive international help. The speed and strength with which the international community comes together and responds through international financial institutions, country development partners and international donors will be paramount to provide support to the many millions of people whose livelihoods are heavily dependent on our sector,” Gloria Guevara, WTTC President & CEO added.

“Air transport and tour@Businessdayng

ism industries are among the worst impacted by the COVID-19 pandemic. Air transport is critical for the economic development and integration of the African continent. As such, support to the airline industry will aid in a faster economic recovery. An end of operations by African airlines would trigger a host of serious financial consequences, while replacing the air service provided by the airlines would be a challenging and costly process. Urgent, immediate and consistent measures need to be taken for the survival and rebound of the industry,” AFRAA Secretary-General, Abdérahmane Berthé said.

“The impact of COVID-19 in Africa continues to be brutal. Air travel and tourism have essentially shut down.

Now, more than ever, international countries need to come together to help those communities that are most vulnerable. The survival of our industry and its allied sectors has serious ramifications for Africa’s entire air transport system,” AASA CEO, Chris Zweigenthal said.

Thursday 14 May 2020

Harvard Business Review

BUSINESS DAY

23

MANAGEMENTDIGEST

Passion for your startup doesn’t have to mean constant stress KATHLEEN STETSON

E HEALTH

ntrepreneurs are so passionate about what they are creating — and often, so fearful of letting their team and investors down — that they will do almost anything to realize their startups’ potential. Stories of sacrifice abound, with entrepreneurs forgoing sleep, friendships, family relationships, exercise and good nutrition for their business ventures. This approach can lead to chronic stress, which wreaks havoc on physical and mental health.

What if compromising yourself for your startup isn’t necessary for success? And what if it’s possible to teach entrepreneurs to work through the stresses of entrepreneurship more effectively?

At MIT Sloan School of Management’s delta v accelerator this past year, we created a firstof-its-kind, exploratory selfawareness program to help 84 founders and their team members prioritize their individual well-being while building their businesses. By the end of the program, 93% of our cohort felt that self-awareness practice can help entrepreneurs create more successful businesses.

In developing the program,

we hypothesized that if entrepreneurs understood more about the mechanics of themselves — their thoughts, feelings, and automatic physical and emotional responses — they could make better personal choices in the face of the everyday stresses of entrepreneurship. Participants were taught a simple framework for building self-awareness: — NOTICING: Bringing attention to your thoughts, feelings and physical sensations in the present moment.

— LABELING: Assigning a

simple label (e.g., feeling annoyed at my co-founder) to what you notice, every time you notice it.

— GETTING CURIOUS: Without judgment, reflecting on the patterns you notice over time (e.g., I’m feeling annoyed at my co-founder a lot. Why is that? Am I expecting something from her and not getting it, perhaps?).

— ACTIVE CHOICE-MAKING: Making an informed choice, based on your self-reflection (e.g., rather than stewing in this feeling any longer, I think

I’ll chat with a mentor about the problem and plan a sit-down with my co-founder to talk about how I’ve been feeling).

To practice the framework, participants were taught mindfulness meditation, which has been proven to reduce stress and anxiety and help regulate emotion. They also learned short mindfulness practices that they could integrate into their lives. In addition, we conducted peer-group sessions, where we discussed key choices entrepreneurs face. The smallgroup meetings were manda-

tory, and everything else was optional.

By the end of the program, 88% of the participants had independently established their own regular, weekly meditation or mindfulness practice. Before the program, 65% had never meditated, and only 21% were regularly practicing meditation or mindfulness.

After the program, 53% of participants were more frequently utilizing a deliberate tool or technique to work through stress, and 40% were more aware of their emotions.

These entrepreneurs were making active, moment-to-moment choices to change their habitual responses to stressful situations.

We believe that integrating self-awareness into the entrepreneurial ecosystem will lead to healthier startup cultures.

This benefit won’t just accrue to founders, in our estimation, but will create a ripple effect and extend to their team members, their stakeholders and their customers, resulting in healthier — and more successful — businesses.

Kathleen Stetson is the creator of the Entrepreneurial Confidence and Communication program at MIT’s delta v accelerator and founder of Rational Confidence.

Why CEOs should model vulnerability JEFFREY M. COHN CONNECTING ven before the COVID-19 crisis, CEOs faced a world that was increasingly volatile, uncertain, complex and ambiguous. Preparing potential successors to lead in such an environment requires creating a psychologically safe space for rising stars to reach their full potential.

Here’s what incumbent CEOs can do to prepare their most promising employees: — HELP RISING STARS LEARN TO LEAD AMID UNCERTAINTY: CEOs should ensure their rising stars have a crisp understanding of what it means to be a leader in uncertain times. A surprising number of people are unable to maintain self-control in the face of incomplete information and unpredictability. Incumbent CEOs can help by sharing examples of leadership amid uncertainty — both successes and failures — and asking high-potential employees how they would have handled similar situations. It’s crucial to listen with empathy, ask follow-up questions and encourage a group discussions.

— SET THE RIGHT TONE AT THE TOP: Some CEOs still view vulnerability as a weakness. But long gone are the days when CEOs

E

can pretend to be omniscient. A crisis will quickly expose a leader’s blind spots. Instead, incumbent CEOs should aim at establishing a culture in which thinking deeply about one’s development needs becomes the norm. When Brad Smith was CEO of Intuit, he insisted on taking a 360 assessment and sharing the results with the entire company. “Each year I created clear development goals that I shared with other rising stars in the leadership pipeline,” he says. www.businessday.ng

“This created a safe space for them to become more reflective and self-aware.”

— GET RISING STARS TO EMBRACE VULNERABILITY: Bridgewater, one of the most powerful hedge funds on the planet, was led for a decade by the co-CEO Eileen Murray. It’s hard to imagine a more intense culture. To prevent the company’s rising stars from sweeping their baggage under the proverbial rug, she scheduled regular one-on-one coaching

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sessions with them, starting each conversation by sharing her own anxieties and fears. Because she made her employees feel safe, they were willing to explore obstacles limiting their personal growth and to work together to create a leadership-development plan.

— EMBRACE THE RISKS: The inability to make accurate predictions in an increasingly unpredictable world can cause a reluctance to take risks among people.

But companies need CEOs who @Businessdayng

aren’t afraid to make bold bets.

Incumbent CEOs can help rising stars by having deep-dive conversations with them about risk and uncertainty. “Typically, what causes anxiety is the perceived consequences of making a risky bet,” says Ben Breier, the CEO Kindred Healthcare. Breier usually discusses each risky bet with his high-potential talent, considering the potential downsides and likelihood of bouncing back from failure.

— LET GO: When it’s time for the board to select the next CEO, the current one (who is also often the board chair) may have the urge to control the process tightly.

But this can influence potential successors, leading them to parrot the party line and depriving the board of an opportunity to personally assess the potential and values of each candidate. Instead, incumbent CEOs should loosen their grip on the succession process. This will enable candidates to express their unfettered views and vision for the company, even if they differ dramatically from those of the incumbent.

Jeffrey M. Cohn is a CEO succession expert at N2Growth. U. Srinivasa Rangan is a professor of strategy and global studies at Babson College.

24

Thursday 14 May 2020

BUSINESS DAY

Markets + Finance

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

Without additional capital injection, International Breweries could drown

‘

BALA AUGIE

Share premium surged by 2,494 percent to N159.80 billion from N6.16 billion the previous, adding impetus to shareholders’ fund

‘

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henworld’s largest b r e w e r, Anheuser-Busch InBev (AB InBev) merged three of its subsidiaries in the name of International Breweries Plc in 2017, investors were thinking that the strategy would create the most intense competition in the industry.

The idea behind the merger was to pave the way for International Breweries to leverage a market dominated by peer rivals Nigerian Breweries Plc and Guinness Nigeria.

A year after the merger was consummated, AB InBev, through its Nigerian subsidiary, launched more premium product such as Tiger beer, Castle Lite, and Budweiser into the Nigerian market, and that strategic move stoked a short lived beer war.

Interestingly, investors were confident that International Breweries’ copious investment would magnify their earnings. And the company’s shares hit all time high of N58 in January 2018.

But the Nigerian brewer is now a shadow of itself as it is on a ventilator, grasping for breath. In the past

thirteen months, its financial performance has been increasingly deteriorating, thanks to weak sales volume and economic downturn.

Its share price now trades at N5, having lost over half of its market value.

For instance, International Breweries could find it difficult to meet short term obligations to creditors or suppliers as total current liabilities of N194.93 billion as at March 2020 exceeds total current assets of N76.14 billion, resulting in a negative net working capital of N118.79 billion.

The Nigerian Brewer is beset by rising costs. Total cost of production per unit stood at 84.15 percent as at March 2020, which means the company spent N0.84 on

input cost to produce each unit of product.

It incurred other operating loss of N9.94 billion in the period under review, and a breakdown of the components showed foreign exchange loss of N4.69 billion and loss on property loss and equipment of N5.25 billion.

There are concerns that the recent defactor devaluation of the currency by the Central Bank of Nigeria (CBN) could balloon dollar denominated debt in the books of consumer goods firm. Moreover, cost of production could spike as some material component in the manufacture of beer are imported.

In March, the central bank buckled to pressure, and devalued the official

naira rate to N360 to the dollar from N305. The more widely-used black market rate, which had hovered around N360 for about three years because of central bank support, has spiked to about N445.

Expectedly, International slipped into a loss territory as it recorded a loss after tax of N5.64 billion, from a corresponding loss of N3.98 billion the previous year.

As a result of weak sales volumes and exceptional loss, the company recorded an operating loss of N8.04 billion as at March 2020, from a loss position of N232.84 billion the previous year.

An item of N8.59 billion being negative retain earnings is in the balance sheet, what this means is that the brewer has been recording more losses than profit throughout its existence.

Gross profit reduced by 30.98 percent to N6.17 billion as at March 2020 while gross profit margin fell to 17.54 percent from 25.47 percent the previous year.

However, there is light at the end of the tunnel for International Breweries as total debt in its balance sheet has reduced, thanks to capital injections by parent company.

Total debt (short and long term) fell to N107.39 billion as of March 2020 from N263.64 billion as at March

2020.

Debt to equity ratio improved to 0.65 percent as at March 2020 from 348.12 percent the previous year.

What this means is that the company has reduced the proportion of debt in its capital structure.

Drilling down the financial statement of International Breweries shows the marked reduction in debt to equity ratio was due to a surge in share premium.

A share premium account is typically listed on a company’s balance sheet.

This account is credited for money paid, or promised to be paid, by a shareholderr for a share, but only when the shareholder pays more than the cost of a share. This account can be used to write off equity-related expenses, such as underwriting costs, and may also be used to issue bonus shares.

Share premium surged by 2,494 percent to N159.80 billion from N6.16 billion the previous, adding impetus to shareholders’ fund.

While interest expenses reduced to N984.12 million in the period under review from N5.08 billion the previous year, the company’s negative operating income cannot cover interest expense.

Last year, (AB InBev) committed to investing more

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

https://www.facebook.com/businessdayng

@Businessdayng

than N123 billion in its Nigerian operations in a major capital injection expected to consolidate its push for the greater share of sub-Saharan African markets.

International Breweries will raise N164.39 billion through a rights issue of 18.266 billion ordinary shares of 50 kobo each at N9 per share which will be pre-allotted on the basis of 17 new ordinary shares of 50 kobo each for every eight ordinary shares of 50 kobo each held as at the close of business on November 6, 2019. With the rights’ ratio, about 13.72 billion ordinary shares of 50 kobo each will be pre-allotted to AB Inbev.

Consolidation of AB InBev’s Nigerian operations under a single corporate entity.

AB InBev had in 2017 merged its three indirect Nigerian subsidiaries-International Breweries Plc, Intafact Beverages Limited and Pabod Breweries Limited. The merger was done through a scheme of merger with International Breweries subsisting as the post-merger company. The merger was seen as a major strategic move by Anheuser-Busch InBev to upend competition and consolidate its Nigerian base for further expansion into the sub-Saharan Africa (SSA).

Thursday 14 May 2020

BUSINESS DAY

25

news

Saudi Arabia urges Nigeria, others to further cut to restore balance in global oil market Olusola Bello

… as it enacts deeper cut

s Nigeria struggles to save its economy already battered by the impact of coronavirus and falling oil prices, Saudi Arabia’s cabinet has urged OPEC+ countries to further reduce oil production rates to restore balance in global crude markets, state news agency (SPA) reports early on Wednesday.

“The cabinet affirmed the Kingdom of Saudi Arabia’s endeavour to support the stability of global oil markets,” according to a statement.

“The Kingdom of Saudi Arabia’s initiatives aim at urging the countries participating in the OPEC+ agreement and other producing countries to adhere to the cut rates and to provide more reduction in production in order to contribute to restoring the desired balance of the global oil markets.”

Saudi Arabia said on Monday it would add to existing cuts by reducing output by another 1 million bpd next month - equivalent to 1 percent of global oil supply - slashing total production to 7.5 million bpd, down nearly 40 percent from April.

OPEC and its allies, a group known as OPEC+, decided in April to cut output by 9.7 million barrels per day (bpd) for May and June, a record reduction, in response to the 30 percent drop in fuel demand worldwide caused by the coronavirus pandemic. The group was expected to curtail that reduction to 8 million bpd, but sources told Reuters they instead expect OPEC+ to maintain the larger reduction.

The United Arab Emirates and

Kuwait also committed to slashing an extra 180,000bpd in total, adding to reductions the producers agreed to under a deal between OPEC and its allies.

“The idea that the Saudis and Kuwaitis and the UAE said that they’re going to enact deeper cuts than they initially agreed upon is helping the market find support,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

Kazakhstan has ordered producers in large and mid-sized oil fields to cut output by about 22 percent in May to June, while output from Russia’s top oil region in western Siberia is expected to fall by 15 percent this year, in line with the OPEC+ deal.

The US Energy Information Administration (EIA) says it expects worldwide demand for oil to drop by 8.1 million bpd to 92.6 million bpd, a sharp revision from its previous report. It also cut its expectations for US supply in 2020, now seeing a drop of 540,000bpd to 11.69 million bpd, and said total world supply would be 95.2 million bpd.

US crude producing states have logged output cuts, as collapsing prices prompted independent and integrated producers to reduce operations. US crude futures have lost roughly 60 percent so far this year.

The US crude oil inventories rose last week while gasoline stocks fell, data from industry group the American Petroleum Institute show.

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Business activities at Ikotun Market without anybody observing physical distancing, and few people wearing face mask as directed by the government to curb the spread of COVID-19 in Alimosho LCDA in Lagos, yesterday. Pic by Pius Okeosisi

How NEPC sustains exports of non-perishable goods despite COVID-19 GIFT ONYEDINEFU, Abuja

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espite challenges facing the economy occasioned by the COVID-19 pandemic and the oil price crash, the Nigerian Export Promotion Council (NEPC) under the leadership of Segun Awolowo, its CEO, has succeeded in sustaining exports.

This it has done with the commissioning of a British Airways Cargo through Free On Board Global Logistics Limited, a freight and forwarding company, for exports to the United Kingdom, European Union countries and the United States.

This initiative, in collaboration with the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and Export Action Group (NEXAG), is already serving as a relief to exporters who must have been pondering how to convey their products to these destinations amid the ravaging COVID-19 pandemic and the lockdowns it has necessitated across the globe.

Jimmy Adebakin, CEO, Free On Board Global Logistics Lim-

ited, confirmed that the firm has moved cumulatively in excess of 60 tons of Nigerian non-perishable foods, yam, noodles, garri, fish and vegetables to London.

Upon arrival in London, he said the firm provided transshipment services across Europe to North America as well, and the interest is growing every day.

Adebakin said every flight exceeds the performance of previous flight and there is hope that with the right support and publicity, more would be achieved.

“It seems finally that Nigerians have woken up and the COVID-19 has brought it home that we can no longer continue to depend on oil and people are taking the initiative to get involved in this Nigeria nonoil export drive,” Adebakin said.

“We have been supported highly by the Nigerian Export Promotion Council (NEPC) and the Nigeria Export Forum (NEF).

They’ve supported us and we are very grateful for that. We see a change in the curve. We see a change in the attitude and we believe that we need to let Nigerians know that COVID 19 pandemic is here to stay for a long time and the only way we can

support ourselves and the Federal Government of Nigeria is for us to look inwards as individuals, corporate entities and as a government to create the enabling environment, not by lip service anymore,” he said.

Bamidele Ayemibo, an exporter who has been part of the new arrangement, commended the initiative, saying it has helped them to do shipment during this period because everything has been slowed down.

“I think it’s a good initiative.

So instead of not being able to do shipping at all, we have been able to do some few shipping,” Ayemibo said.

Speaking further, Adebakin said COVID-19 has demonstrated that the Nigerian government cannot do everything and that the effort has to be private sector-driven.

“This is why we have made it a point of duty. Yes, we are freight forwarding company since 1970 but we see this as a national assignment now. Currently, we only have four international cargo flights coming into Nigeria. This is subnormal for a nation of 200 million people and these four cargo flights are practically 99 percent

COVID-19-related materials they are bringing in,” Adebakin said.

“If you go to supermarket now, you will see that prices are increasing. Chivita is now selling at N800. This is a local production,” he said.

He said what is happening now is a wake-up call and that the initiative needs to be give publicity.

“We are totally committed with our global network. Our cargo services align with offices in over 3,700 cities of the world in over 180 countries and they are all supporting our drive to provide not only custom clearance on the arrival of the shipment at the destination, they are providing warehousing facilities, distribution facility and they have agreed to support Nigerian exporters to recoup their money,” he said.

“That is another problem that Nigeria exporters are facing, they do not have representation at the country of designation where they have sent their goods to.”

Adebakin said some products that are urgent that need to be at the destination within three days are moved by air, while items like crops are moved by sea.

Collaboration, technology Africa’s best options to fix higher education challenges post COVID-19 KELECHI EWUZIE

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he higher education system in Africa is racing against time to tackle the current challenges occasioned by the impact of COVID-19 that have disrupted known brickand-mortar type of education.

But amid these challenges, stakeholders in the sector say this pivotal industry can leverage collaboration, technology, and innovation to find home-grown solutions in order to remain relevant after the pandemic.

The experts, who spoke on Wednesday at the day-two of the higher education webinar conference organised by the Centre for Higher Education, Innovation and Development (Nigeria) in collaboration with BusinessDay (Nigeria) and Universities South Africa, said enough of Africa’s higher institutions seeking

American or European solutions to their problems.

They observed that the closure of tertiary institutions and the disruption of face-to-face learning option presented a drawback to the majority of the educational institutions in the continent.

This situation, they argued, has made collaboration, technology and innovation among managers of the institutions and policy makers in the sector imperative in order to stay relevant during the pandemic to deliver blended learning opportunity for students.

“It is time Africa’s higher education managers began to look inward and re-engineer her education system to capable hands who can use what we have to get the solutions that we want and reduce the over-dependence on Europe and America for www.businessday.ng

solutions,” said Sandy Onor, deputy senate committee chair on higher education and Tertiary Education Trustfund (Nigeria), at the webinar with the theme ‘Leading in times of global crisis: The role of education leaders and government in rethinking and remaking higher education and learning in Africa, now and for a post COVID-19 world’.

Onor noted that if all Africa’s higher education does is to aid concepts and theories from Europe and America without domesticating same in tandem with the realities of Africa, then the continent is not making progress.

He called on stakeholders in the education space to begin championing an education system that allows students the liberty, originality and confidence to look at the challenges in the society with a view to developing

the peculiar solutions.

Linda Mayer, director, operation and sector support, Universities South Africa, said managers of higher education need to start collaborating more coherently within the African concept in order to bring Africaspecific solutions.

Mayer insisted that post COVID-19, Africa would seek collaborative opportunity for students to study locally, work on models of social justice, such that the continent would have an enabling legislative framework for academics and students.

“We should stop looking at the rest of the world to drive Africa’s solution. We are the only people that can address our own problems and we need to be collaborative and ensure that we are able to come up with solutions that are commensurate with what we need,” she said.

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Kwara swears in five new judges, urges fairness SIKIRAT SHEHU, Ilorin

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overnor AbdulRahman AbdulRazaq has sworn in five new judges for the Kwara State High Court, urging them to adhere strictly to their oath of office to be fair.

The new judges are Funsho Dada Lawal, a former permanent secretary and solicitor general of the state ministry of justice; Olanipekun Sherifat Bola, a registrar at the Ilorin High Court of Justice; Hussein Toyin Kawu, a deputy registrar at the Akure Division of the Court of Appeal; Nureni Kuranga, a deputy chief registrar (Administration) at the state high court Ilorin; and Umar Zikki Jubril, a senior magistrate Grade II in the state.

“The judicial oath enjoins you to administer justice without fear or favour, ill-will, or affection. This oath is a solemn promise and only a firm commitment will see to its accomplishment,” AbdulRazaq said Wednesday in Ilorin at the swearing in ceremony attended only by top echelon of the state judiciary and a few other senior government officials in line with the COVID-19 safety protocols.

“As you assume office as judges, it is imperative that you apply yourself religiously in accordance with your oath of office towards ensuring that justice is done and is seen to have been done at all times.”

AbdulRazaq said the new judges have each paid their dues in public service and that their new positions were a new call to a greater service to the state and the country. @Businessdayng

“This administration is determined to support the judiciary in the quest to stand on a solid footing with adequate complement of judicial officers and relevant facilities to perform its functions,” he added.

“To this end, the state government has a comprehensive plan for gradual renovation of court buildings across the state within the limits allowed by the global economic meltdown.

The modest achievements recorded so far clearly point at our resolve to make things a lot better than we met them.”

Kwara State Chief Judge Suleiman Durosinlorun Kawu, for his part, said the new appointees underwent competitive screening and were deemed qualified at every stage of the nomination exercise that started in August, 2019.

Kawu also commended the Governor for his support to the judiciary since he assumed office last year May, including the rehabilitation of the State High Court Complex and four courtrooms in Ilorin metropolis, approval for similar renovation of courtrooms across the state, and purchase of five brand new Peugeot 508 vehicles for the new judges, among other things.

“As an independent arm of government which is conscious of its constitutional responsibility, the state judiciary shall continue to work in harmony with the other branches of government for the greater good of the people of the state as recently demonstrated when it made available in the three senatorial districts of the state judges of the lower court to try violators of the lockdown order,” he said.

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Thursday 14 May 2020

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Covid 19:

How is Nigerian Sports Playing the Giving Game?

ONUWA LUCKY JOSEPH

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lite sportsmen and women everywhere are identifying with the travails of mankind under the Covid 19 dispensation.

Given that sporting activities are on hold, they are taking a loser look at their environments and doing what’s in their power to plug the gaps by reason of their star status, gifting, and enormous resources.

Roger Federer was on Twitter to announce his donation of $1million to hungry kids in Africa. His mother is South African, by the way, and it’s courtesy Mama Roger’s influence that the money will go to kids in South Africa, Namibia, Zambia, Zimbabwe and Malawi to beef up their meal rations for the next two months. Kids in his Papa’s land of Switzerland also get to get some of the largesse.

According to FIFA.com, “Cristiano Ronaldo and his agent Jorge Mendes have given money to fund a number of intensive care units in Portugal, with the Northern Lisbon University Hospital Centre receiving two new units accommodating ten beds each and Santo Antonio Hospital in Porto a new unit of its own. The pair are paying for beds, ventilators and heart rate monitors”.

The site also reports that “Lionel Messi has dug deep and donated €1m to Barcelona’s Hospital Clinic and to a hospital in Argentina.

‘Thanks to this donation, we can give better treatment to our patients with Covid-19,’ said Josep M. Campistol, the director and CEO of the Hospital Clinic.

It is also public knowledge that Pep Guardiola, A former Barcelona star in his own right and erstwhile coach of Barcelona, (who tragically lost his own mother to Covid 19) has donated €1m to the Barcelona-based Angel Soler Daniel Foundation.

In the USA, the NBA and NBPA (National Basketball Players Association) gave a 50million dollar commitment towards fighting the disease and have been giving millions here and there to fulfill that commitment. The first 2million of that amount was given in March towards supporting “ongoing coronavirus relief efforts globally and locally”. Of course, in their individual capacities, Lebron James, James Harden, Kevin Durant (who tested positive for the virus, by the way), Steve Curry, Giannis Antetokounmpo (Nigerian parentage, as you know), and many other basketball stars as well as stars from Ice Hockey, American Football, MLS, and Major League Baseball (MLB), are responding in their collective and individual capacities.

So the inevitable question: where is the Nigerian sportsman/woman?

Regrettably, he/she is largely missing. And it does not help, with particular regards to Covid 19 relief and other humanitarian endeavours, that that tribe of elite, reasonably well earning Nigerian sportspeople is shrinking. Which means we are all the time looking towards the same

Roger Federer Foundation Grants $1m For Meals In Africa

Christiano Ronaldo

IGHALO ORPHANAGE HOME, Photo, cortesy of Sun UK

set of people to come to the aid of the less fortunate. Their resources are not inexhaustible.

And it does not help at all that our sports associations are peopled by folks who strive to get elected only so they can enjoy government subventions rather than generate income that powers their associations. The only time the officials are in the news is during election cycles which usually end in stalemates or become subjects of court adjudication. No tournaments worth the name do they organize, no laurels do they bring, no innovations. And all these despite the juicy promises that preceded their elections. Isn’t that micro Nigeria writ large for us all?

When clubs go defunct in Nigeria, it usually is for financial but even more for organizational reasons.

It’s a crying shame that sports, an extremely low hanging fruit, has not been harnessed by government and those put in charge to actualize its potential for wealth creation and social restructuring. There’s no easier course for migrating from the backwaters of society to being at the forefront. But government’s talk-talk and little action has left the disadvantaged falling further into the mire of poverty.

All these, notwithstanding, some resonant names still come to mind who, having gone abroad and made a name and some fortune for themselves, return time and again to these shores to lift some of their compatriots. Asisat Osoala comes to mind. She gives back enthusiastically and with a lot of energy. Her football clinics, supported by corporates see her in her elements as she interacts with the kids, particularly the girls, egging them to embrace www.businessday.ng

IGHALO ORPHANAGE HOME, Photo, cortesy of Sun UK

the hard work required for eventual promotion to her present status.

She hands out scholarships and, we have no doubt, this being Nigeria, a lot of cash to her young fans.

Another guy who had been there before her is Kanu Nwankwo, who with his Kanu Heart Foundation did good work to reel in support for individuals, especially young folks who had congenital heart conditions. There isn’t much push for the Heart Foundation now, but Kanu had racked up a lot of goodwill in the preceding years. And not to forget, he gets involved now and again, in Asisat’s clinics.

Shehu Abdullahi, the Super Eagles defender who plays for Bursaspor in Turkey, has also found time and resources to found a football academy in Sokoto, his hometown. Aside which he deals counsel, kits and cash to his numerous younger admirers.

Unfortunately, aside those three, Nigerian sportspeople have not been known for their charity on a sustained basis. Yes, they are brand ambassadors and involved in product promotions which sometimes involve giveaways. However, these are not in their personal capacities; just in their capacity as brand ambassadors for the brands they are fronting.

Despite the global din about the corona Virus, Mikel Obi, former Captain of the Super Eagles, turned out to be one of the very few who has responded with some measure of relief, donating 1,800 crates of eggs to poor families in Jos where he grew up. He also donated bags of rice and beans.

Ahmed Musa, who succeeded Mikel as captain of the Super Eagles, donated an undisclosed number of bags of rice to vulnerable com-

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munities in Kano. As did Moses Simon who is reportedly one of the topmost earners at FC Nantes in France; he is said to have shelled out N500,000 for the upkeep of the vulnerable in Kaduna.

Who else? Odion Ighalo, who recently opened a N500million orphanage in Ijegun, Lagos, is certainly not tight fisted, but he is yet to commit to any structured Covid 19 splash.

It’s possible that things are going on underground and certainly in limited measures (with family and friends being default beneficiaries) by some of our stars, but by and large, a lot more is expected of them.

And all the more, ironically, because there’s such a small pool of them.

They need to come out frontally as ambassadors representing the country and its people on and off the pitch. It’s a big burden, yes.

And we don’t say that only with regards to players currently active. Ex-players, some of whom reputedly amassed a fortune and are still earning big from business and endorsements cannot shy away from doing their bit to enable poor Nigerians, their biggest supporters, live easier under these really inclement conditions. Where are they? Sunday Oliseh, Jay-Jay Okocha, Tijani Babangida, Daniel Amokachi, and others should rise up now to be counted. Even if they do not have a sense of debt to their country, (yes, we know Nigeria still owes some of them allowances from 20+ years ago!) they certainly do owe their fans. Their give back can help galvanize the current crop of players some of who are in the habit of showing off their wealth and appurtenances – to the envy of many, it must be said – on social media. @Businessdayng

With Nigeria being the incontestable poverty capital of the world and they being some of the very few privileged ones who escaped the ghettoes and troubles of the environments that millions of their countrymen and women still live in, they got their work cut out for them.

Had we prioritized overall sports development, we wouldn’t be talking only about footballers. Time was when athletics had stellar names like Innocent Egbunike, Chidi Imoh, Sunday Utih, the Ezinwa brothers, Ajayi Agbebaku, Adenekan Olopade, Falilat Ogunkoya, Mary Onyali, Chioma Ajunwa, Fatima Yusuf, etc, etc. Unfortunately, these stars came before athletics was a big money affair. Our boxing was churning out champions like Obisia Nwankpa, Eddie Ndukwu, Joe Lasisi, Billy Savage, Ngozika Ekwelum, Hogan ‘Atomic Bomb’ Jimoh, and before them, Hogan Bassey and Dick Tiger Ihetu.

As we find in other settings where sports has flourished and where the principle of cascaded spend has ensured a conveyor belt of new stars, they can easily call on their wealth of talent (pun intended) to help play their part in alleviating the attendant stress of the pandemic. Not so for countries like Nigeria and many others in Africa where we have to keep looking at the small pool. Our country needs to get its systems working again. Just in the same way that fiscal federalism is destined to ensure a poorer Nigeria, all things considered, so is our refusal to develop the very things that can make us richer.

While true that the corporate sector needs to awaken to its responsibility of sports sponsorship, what is truer is that the real reason they are not as involved is because it’s difficult for them to see beyond the rampant maladministration.

Where is the gain? Why would a corporate put its money there?

But after we have dished out the blame to others, our small pool of sports stars, not to forget musicians, and film stars, need to chip in so the country can chip away gradually but surely at the ravages of Covid 19.

We can do it. If ordinary folks are rolling up their sleeves and hitting the homesteads of the poor and vulnerable, so can our stars. And they, like their illustrious counterparts abroad, ought to think themselves privileged to be so considered.

Thursday 14 May 2020

BUSINESS DAY

27

cityfile COVID-19: Lagos lawyer makes case for online/virtual marriage

A Traffic gridlock on Abuja-Kaduna highway at Zuba.

NAN

Delta declares Abraka market hideout for criminals ... orders traders to relocate or face arrest Mercy Enoch, Asaba

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ays after bulldozing structures at the popular Abraka Market located along Asaba-Benin Expressway, the Delta State government has declared the market a criminal hideout.

The market before the demolition had been populated by traders who deal in all sorts of items, including foodstuff, vegetables, cosmestics, jewelries, and clothings, among others.

The demolition was part of the state government’s plan to keep Asaba clean, hence the exercise commenced few months ago by Asaba Devel-

opment Authority led by the director-general, Onyemaechi Mrakpor.

With the demolition, Abraka traders have joined in the list of thousands of displaced traders in the state capital amid the coronavirus ((COVID-19) pandemic.

Delta State governor, Ifeanyi Okowa who spoke last weekend after inspecting the demolished Abraka Market, disclosed that the state government had ordered the relocation of the traders in order to nip in the bud, the security challenges posed by the market and give Asaba a facelift.

“The place was such that it was already creating a security problem for us and unfortunately we have found that a lot of people were developing

brothels in that place. And beyond that, it had become a criminal hide-out and we took that decision at the state security council that we needed to ensure that we are able to secure Asaba,” said Okowa.

He added that “in our plan to secure Asaba, we agreed that there was the need for the whole of that place to be bulldozed and people there relocated to another part of Asaba; that relocation has already been done and the place has been brought down.”

The governor said the state government would think through what development to bring to demolished site by way of putting it into good use.

“We want to put processes in place, working with various ministries and our Delta

Investment Development Agency (DIDA), to see what we are going to put in that place because it’s a sizeable land in a prime location that can be converted to something useful”.

Okowa warned that any unauthorised person found there would be arrested and made to contend with the law just as he advised former traders at the market to relocate.

He explained that the demolition was not to witchhunt anyone but a deliberate effort to avoid using the land as criminal den.

The governor sued for peace and unity among residents of the state, and assured that his administration would continue to take decisions that would be to the advantage of all.

COVID-19: Lagos traders reject fresh lockdown … lament losses from previous lockdown

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raders at the Balogun Lagos Trade Fair Complex market have kicked against the planned fresh lockdown by the Lagos State government to check the spread of coronavirus pandemic.

The traders, who expressed relief for the subsisting three days a week trading period instead of total lockdown that was the situation some weeks ago, urged the government to speed-up testing capacity to capture infected persons.

Governor Babajide Sanwo-Olu, had on Sunday threatened a fresh lockdown if people continued to flout the safety guidelines on ease

of movement to control the rising number of infected persons.

President of the Balogun Business Association (BBA), Tony Obih said that the easing of the lockdown that created room for traders to sell their wares helped to reduce the rising cases of robbery in the state.

“Many of those involved in the rising cases of criminality such as the ‘One Million Boys’, the inglorious gang that allegedly tormented residents were engaged in one economic trade or the other to earn a living.

“In as much we compel traders and customers to www.businessday.ng

comply with the safety guidelines in the market environment which they adhered to, there is no reason for a fresh lockdown.

“We cannot be solving one problem and at the same time creating another. There is need for us to weigh the options and strike a balance that will have human face.

“The law enforcement agents are state officials. They should endeavour to ensure people comply with the directives in public transportation and other areas as regards social distancing and save the society from further crisis,” he said.

Speaking also, Chikwem

Obasi, a beauty care importer, who doubled as patron of the market, said intensifying testing capacity was key.

Obasi, who said that most of his wares got damaged during the lockdown as a result of heat, warned that a fresh lockdown would further harm traders that were already counting losses from the previous five weeks’ restriction.

He appealed to government to increase testing capacity and curtail the rising cases, saying a fresh lockdown would have a negative social impact like the previous one that spurred armed robbery and burglary in the state.

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Lagos-based lawyer, Spurgeon Ataene, has said that celebration of marriages virtually or electronically should become acceptable following the COVID-19 pandemic.

He said that although the procedure was not envisaged by the provisions of the Matrimonial Causes and Rules, its practice should be adopted to enable individuals to get married amid COVID-19.

Fo l l o w i n g g o v e r n ments’ ban on public and religious gatherings as a result of the pandemic, some marriages pre-scheduled to hold on various dates are now stalled.

Recently, the National Judicial Council (NJC) introduced the concept of virtual court proceedings and issued guidelines to be adopted by all courts in Nigeria as part of its effort to mitigate the spread of the virus.

In the same vein, Ataene noted that the concept of virtual/online marriage was novel, but said that circumstances had made it necessary.

“Marriages conducted virtually or electronically is not conjectured by the matrimonial Causes Act and Rules, but it can be

adopted considering prevailing circumstances.

“However, the most important things to look out for before entering into marriage and which should also be the concern of those involved, must remain the principal focus.

Whether a marriage is to be conducted virtually or physically, the most important factors must be in place.

“Both persons must be of sound mind, they must be of age, their consent must be given, and in Nigeria, the union must be between a man and a woman,” he said.

According to the lawyer, once the conditions are met, an official in any designated position empowered to conduct marriages can proceed with it whether electronically or virtually.

Ataene added that while the place or venue for the ceremony might not be an issue, it would be instructive for parties to document such marriage proceedings to avoid denials.

“Once the conditions necessary for a marriages to take place are met, the said marriage should be valid whether the parties are physically or electronically present,” he said NAN

Group distributes food items to indigents in Badagry

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nongovernmental organisation (NGO), Real Acts of Kindness (RAK) Development Foundation has distributed 250 food items received from Victim Suppor t Fund (VSF) to indigents and widows in Badagry.

Founder of RAK foundation, Mobolaji Ogunlende said the gesture was to cushion the effect of COVID-19 lockdown on the people.

He spoke during a courtesy visit to VSF COVID-19 Taskforce Chairperson, Toyosi Akerele-Ogunsiji in Badagry on Monday.

Ogunlede said that the foundation spent five days distributing the food items to widows and the vulnerable, adding that the relief package would also be given to selected widows in Gbaji town.

He assured the residents of Badagry that the NGO would collaborate with more Private Public Partnership (PPP) to en-

@Businessdayng

hance a better livelihood for widows and vulnerable.

Ogunlende said that VSF COVID-19 Food Relief Packages distribution exercise was very effective and transparent.

“Our foundation is one of the 10 NGOs that was selected to help distribute the VSF COVID-19 Intervention, coincidentally we are based here in Badagry.

“The 250 food items given to us consisted of Rice, Beans, Garri (Cassava flakes), Salt and Vegetable oil.”

He said in distributing the items, 90 bags were distributed at Olorunda Local Council Development Area (LCDA) 50 bags at Badagry West LCDA and 50 bags were distributed at Badagry local government.

The NGO also distributed 39 bags in the riverine communities from Ojo to Badagry while the remaining 21 bags were given to selected widows within the areas.

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Thursday 14 May 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 13 May 2020

Top Gainers/Losers as at Wednesday 13 May 2020 LOSERS

GAINERS Company

Opening

Closing

Change

MTNN

N111.6

N110

-1.6

FIDSON

N2.46

N2.39

-0.07

1.15

CHAMPION

N0.81

N0.76

-0.05

N6.1

N6.05

-0.05

N3.4

N3.35

-0.05

Opening

Closing

Change

MOBIL

N160.9

N176.9

16

TOTAL

N96.3

N102.8

6.5

N11.55

N12.7

UNILEVER

STANBIC

GUARANTY

Company

N28.5

N29.25

0.75

UBA

N21

N21.45

0.45

UPDCREIT

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

23,709.44 3,573.00 159,235,165.00 1.540

Global market indicators FTSE 100 Index 5,904.05GBP -90.72-1.51%

Nikkei 225 20,267.05JPY -99.43-0.49%

S&P 500 Index 2,818.45USD -51.67-1.80%

Deutsche Boerse AG German Stock Index DAX 10,542.66EUR -276.84-2.56%

Generic 1st ‘DM’ Future 23,205.00USD -369.00-1.57%

Shanghai Stock Exchange Composite Index 2,898.05CNY +6.49+0.22%

12.356

Nigeria’s stock market seen moderating profit taking activities ...gains N7.6billion Stories by Iheanyi Nwachukwu

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igeria’s stock m a r k e t witnessed moderated profit taking activity on Wednesday May 13 as investors began to rethink their reentry strategies, this time in a bagain mood amid ongoing remote trading session.

After two days of profiteering on the Bourse,

market watchers had made case for bargains in favour of value counters trading at record lows.

The market’s negative return year to date stood at -11.67 percent. This week, the market is down by -1.40 percent. This month, the market has gained +2.99percent.

More shares of MTNN Plc were offered by investors with the intention to take profit. The share price dropped most from a high of N111.6 to N110, losing N1.6 or 1.43 percent, followed by that of Fidson

which dipped from N2.46 to N2.39, losing 0.07kobo or 2.85percent.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) inreased marginally by +0.06 percent at the close of trading session on Wednesday May 13. It moved further high to 23,709.44 points from preceding day high of 23,695.90 points.

On the advancers list, Mobil Oil Nigeria Plc rose most from N160.9 to N176.9, adding N16 or 9.94percent while Total Nigeria Plc moved up

Notore lifts Rivers State communities, state Govt with Covid-19 relief package

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eading Nigerian agribusiness company, Notore Chemical Industries Plc, has cushioned the socio-economic effects of the coronavirus (COVID-19) pandemic in Rivers State, with the donation of truckloads of food items and relief materials to its host communities in the state and the Rivers State Government.

The Group Managing Director of Notore Chemical Industries Plc, Onajite

Okoloko, who was represented by the company’s Group Chief Technical Officer, Bode Agagu, presented the donation to the Secretary to the Rivers State Government, Tammy Danagogo, in Port Harcourt, as part of the company’s Corporate Social Responsibility (CSR) in the wake of the pandemic.

According to Notore, “In line with our mission to enhance the quality of life and assist in cushioning the effect of

Onajite Okoloko, group managing director/CEO, Notore Chemical Industries plc www.businessday.ng

the COVID-19 pandemic and the consequential lockdown in Rivers State, we have supported the Rivers State Government with relief materials.

This also is complemented by donation of food relief items directly to Notore’s host communities in Alode, Koniju, and Onne.”

“In addition to the donation of food items, we also embarked on community awareness campaigns to sensitize the people on the severity of the pandemic and urged them to stay cautious,” the company added.

The distribution of food items to Notore’s host communities held in the different communities and ran from May 1 to May 5, 2020, to ensure even distribution of the materials to the most vulnerable members of the communities. Branded T-shirts displaying COVID-19 safety and prevention measures were also shared among members of the community in addition to mounting of billboards and banners at strategic locations as well as distribution of posters on the awareness campaign.

from N96.3 to N102.8, adding N6.5 or 6.75percent.

The value of listed equities on the Nigerian Stock Exchange increased by N7.6 billion from N12.349trillion to N12.356trillion.

In 3,573 deals, investors exchanged 159,235,165 units valued at N1.540billion.

Banking stocks were actively traded stocks on Wednesday led by FBN Holdings, Access Bank, UBA and Zenith Bank.

Q1 2020: Sterling Bank grows deposit base, loans

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terling Bank Plc reported a net operating income of N18.779 billion during its first quarter 6Q1) ended March 31, 2020 compared with N18.565 billion during the corresponding period of 2019, representing an increase of 1.2 percent.

This was disclosed in the bank’s condensed unaudited group interim financial statement released last the weekend.

Managing Director and Chief Executive Officer (MD/ CEO) of the bank, Abubakar Suleiman, explained that the bank’s net trading income grew remarkably to N984 million as against N435 million during the corresponding pe-

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riod, representing an increase of 126.2 percent, despite a very challenging macro-economic environment.

Overall, the Bank recorded gross earnings and profit after tax of N32.9 billion and N2.065 billion respectively for the first quarter ended March 31, 2020.

The bank’s marginal drop in net profit was attributed to a combination of a decline in fees and commission income following the downward review of transactional charges and a slight increase in total expenses which rose from N15.3 billion in 2019 to N16.6 billion in 2020.

The increase was driven mainly by other operating expenses and depreciation and amortization costs. Income tax expense

@Businessdayng

also went up from N33 million in 2019 to N154 million in 2020.

However, the bank was able to reduce its non-performing loans from 2.2 percent to two percent during the review period.

The CEO added that the bank’s deposit base rose to N898.576 billion in the first quarter of 2020 from N892.660 billion in the corresponding period of 2019, loans and advances up to N 6 2 7 . 1 2 2 b i l l i o n f ro m N618.732 while total assets rose to N1.231 trillion from N1.182 trillion, representing a growth of 4.1 percent.

Also, during the review period, the bank managed to reduce cost of funds further by 18.4% on the back of growth in low cost deposits, resulting in a growth in net interest income to N15.449 billion.

Sterling Bank has an authorised share capital of N16 billion, made up of 32 billion ordinary shares of 50 kobo each of which N14.395 had been issued and fully paidup and a share premium of N42.8 billion.

UNI TED W E STAND Becauseofyoursuppor t ,wear egai ni ng mor egr ound i nt he bat t l eagai nstt heCOVI D1 9 pandemi c.Thankyou.

Toget herweW I LLat t ent hi scur ve.

Commi ssi oned I sol at i onCent er s Del t a,Ri ver s,Enugu,Kwar a, Ondo,Ogun,Kano,Bor no Yett o beCommi ssi oned I sol at i onCent er s Ot herst at esar el aunchi ng soon.

Joi nus !

suppor t cacovi d@act r ust f oundat i on. or g

09045531 044

St ayi ngAl i veToget her .

30

Thursday 14 May 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Federal Reserve chair warns further economic stimulus may be needed

Powell signals need for additional fiscal measures on top of $3tn already pledged JAMES POLITI AND COLBY SMITH

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ay Powell, the chair of the Federal Reserve, has said “additional policy measures” may be needed from the US central bank and fiscal authorities to prevent greater longterm damage to the economy from the coronavirus pandemic.

“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” he said in remarks to the Peterson Institute for International Economics in Washington on Wednesday.

Mr Powell warned “deeper and longer recessions” tended to leave “lasting damage to the productive capacity of the economy”, and the US risked an “extended period of low productivity growth and stagnant incomes”.

“We ought to do what we can to avoid these outcomes, and that may require additional policy measures. At the Fed, we will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way,” he said.

Mr Powell ruled out a move to negative interest rates, which Donald Trump, the US president, had again urged the Fed to consider in a Twitter post this week.

The Fed chair had already dismissed negative rates as “not an appropriate policy response” for the US in March, and reiterated his scepticism on Wednesday — just days after markets had priced in the prospect — arguing that the Fed’s existing tools were working and

The US central bank chair cautioned that ‘deeper and longer recessions’ tended to leave lasting economic damage © AP

the evidence on the effectiveness of negative rates was “very mixed”.

“It’s an unsettled area, I would call it. I know that there are fans of the policy, but for now it’s not something that we are considering,” Mr Powell said. “We think we have a good toolkit and that’s the one we’ll be using.”

He did signal that the White House and Congress should be considering additional fiscal stimulus, on top of the $3tn already passed since the start of the crisis.

Democratic lawmakers in the House of Representatives this week unveiled legislation for a further $3tn in stimulus, though Republicans panned the proposal, heralding tricky negotiations.

“Additional fiscal support could be costly, but worth it if it helps

avoid long-term economic damage and leaves us with a stronger recovery. This trade-off is one for our elected representatives, who wield powers of taxation and spending,” Mr Powell said.

The Fed has already delivered in quick succession a series of emergency measures to shore up financial markets and the economy. In addition to slashing interest rates to zero and uncapping the quantity of US Treasuries and agency mortgagebacked securities it has committed to buying, the Fed has rolled out a number of new facilities to lend unprecedented support to critical debt markets, including those for corporate debt and municipal bonds.

Among people who were working in February, almost 40 per cent of those in households making less

than $40,000 a year had lost a job in March Jay Powell, Federal Reserve chair Many of these programmes have yet to become fully operational, and the Fed has pledged to continue to adjust the terms if warranted by underlying market conditions. Mr Powell said the Fed’s so-called “Main Street” lending programme, designed for medium-sized businesses with less than $5bn in revenues and fewer than 15,000 employees, would “go live in a few weeks”.

“I am hopeful that we can meet the demand that is out there, we are committed to continuing to innovate and adapt,” Mr Powell said.

Trading conditions in many of the markets targeted by the Fed

have improved in recent weeks, but investors remain concerned that volatility could resurface should the economic outlook fail to improve even as cities and states ease the policies they put in place to curtail the spread of coronavirus. “[Mr Powell] wanted to temper any assumption that people or the markets are making that the recovery is going to be swift,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “The Fed can do a lot to alleviate liquidity problems, but they are going to be limited if and when this becomes a solvency crisis.”

In his prepared remarks, Mr Powell did not offer any clues about specific actions the Fed might take in the future on monetary policy, especially since negative interest rates are off the table. Some economists have been calling for the US central bank to firm up its forward guidance, pledging to maintain interest rates close to zero until the economy reaches certain milestones in its recovery, with unemployment, at 14.7 per cent in April, dropping to a certain level.

The Fed chair noted that the economic toll had already been severe, particularly in low-income communities — those “least able to bear it”. He pointed to a Fed survey due to be released on Thursday that illustrated the burden on struggling households.

“Among people who were working in February, almost 40 per cent of those in households making less than $40,000 a year had lost a job in March,” Mr Powell said. “This reversal in economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future.”

Pandemic stimulus debt will ‘come back to haunt us’, warns OECD Economic recovery will be slower than initially expected, says Angel Gurría MARTIN ARNOLD

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he extra debt being taken on by already heavily indebted governments and companies to tackle the coronavirus crisis will “come back to haunt us”, Angel Gurría, secretary-general of the OECD, has warned.

Speaking in an interview during the FT’s Global Boardroom online conference on Wednesday, Mr Gurría said: “We are going to be heavy on the wing because we are trying to fly and we were already carrying a lot of debt and now we are adding more.”

Mr Gurría, who has run the Paris-based club of mostly rich nations for 14 years, said governments may have to “capitalise” some of this extra debt by bailing out companies or writing off some of the vast loan guarantees they have extended to keep banks lending.

He forecast that many countries’ economies would recover more slowly than initially expected from the record postwar recession that is expected in the first half of this year; it could take at least two years before many countries recover from the shock to their economies.

“I am not convinced that we www.businessday.ng

are going to have a V-shaped recovery,” he said. “I think it will be more like a U. The key thing is to shorten the lower part of the U . . . When you are thinking about the recovery, we don’t know whether it is going to be 2021 or 2022.”

His comments echoed remarks IMF managing director Kristalina Georgieva delivered to the same event on Tuesday, when she warned the global economic outlook had darkened further in the weeks since the IMF forecast that the pandemic would cause the worst downturn since the 1930s.

In mid-April, the IMF forecast global output would contract 3

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per cent this year and net public debt would rise from 69.4 per cent of national income last year to 85.3 per cent in 2020.

Mr Gurría said the OECD estimated that every month of “hard lockdown” in which social interactions were restricted to contain the spread of coronavirus would knock 2 percentage points off economic growth.

After several European countries outlined plans to lift much of their lockdowns this month, he warned that the process of returning to some form of normality in daily life would be a slow one.

“You have really got to throw everything you have got at beat@Businessdayng

ing the virus,” said Mr Gurría. “I see the reopening as touch and go — it is not a science — it is more of an art.”

The recovery could be disrupted by governments’ and companies’ attempts to simplify and shorten their supply chains to source more production locally and make them less exposed to the kind of disruption caused by the pandemic, he added.

“People say, ‘I would like to have my supply chain closer to me’ [but] that may not be the most cost-effective solution, it may not be the most efficient solution. It would be better to diversify the sources of supply,” he said.

Thursday 14 May 2020

BUSINESS DAY

31

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

CFTC warns on return to negative oil prices

US regulator urges market infrastructure providers to brace for future sub-zero drops GREGORY MEYER

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he US commodities regulator has issued a rare warning to brokers, exchanges and clearing houses, urging them to be ready for the risk that oil prices could again drop below zero.

The Commodity Futures Trading Commission advised exchanges to monitor their markets and remind them to “maintain rules to provide for the exercise of emergency authority”, including the power to “suspend or curtail trading in any contract” if markets become disorderly, according to an advisory notice released on Wednesday.

The alert comes after the US benchmark West Texas Intermediate oil contract plunged below $0 a barrel last month for the first time, as buyers searched for places to store a glut of crude.

Clearing houses “should prepare for the potential that certain contracts may experience significant price volatility, and that

The CFTC fears a repeat of the chaotic final two trading days in the May oil contract for the US benchmark, which settled at minus $37.63 a barrel © FT montage

negative pricing is a possibility”, the notice said.

The WTI contract for June delivery is scheduled to expire next Tuesday, raising the prospect of a repeat of the chaotic final two trading days in the May oil contract, which settled at minus $37.63 a barrel on April 20.

The move caused losses for traders and at least one futures broker, and sparked widespread criticism of an oil benchmark referenced by drillers, refiners,

consumers and investors.

“We are issuing this advisory in the wake of unusually high volatility and negative pricing experienced in the May 2020 West Texas Intermediate (WTI), Light Sweet Crude Oil Futures contract on April 20,” said the eight-page advisory signed by the CFTC’s heads of market oversight, clearing and risk, and swap dealer and intermediary oversight.

A senior CFTC official said its notice applied to all contracts,

not just oil, and did not represent a forecast that negative oil prices would return. “We are not predicting the market. We’re just suggesting planning,” the official said.

Brokers should carefully watch contracts as they approach their expiry date, the agency cautioned, advising them “to be particularly diligent in monitoring and assessing risks”.

Connecticut-based Interactive Brokers disclosed a $104m loss as it compensated customers who were stuck in last month’s trading around the May WTI contract. GH Financials, another broker, has since required all traders to exit front-month energy contracts five days before expiry.

Exchanges list futures contracts and operate electronic trading platforms, while clearing houses pool margin and other collateral to guarantee trades. In WTI futures, both the exchange and clearing house are operated

by CME Group, the world’s largest exchange company based in Chicago.

CME first warned traders and brokers of the prospect of negative

oil prices on April 8. It reiterated the possibility a week later. Intercontinental Exchange, which lists oil contracts in London, has also enabled its systems to permit negative prices.

Terry Duffy, CME chief executive, told CNBC last month that his company worked with regulators for two weeks before announcing that negative oil prices would be allowed. “So this was no secret that this was coming at us,” he said.

The CME and ICE clearing houses have also been preparing for negative pricing by switching the way they calculate pricing for options on the WTI benchmark.

The May contract plunged into negative territory last month as traders fretted about capacity constraints at the tank storage complex of Cushing, Oklahoma, the delivery point for WTI futures.

Low prices have hastened a slowdown in US oil production, however. Stocks at Cushing declined by 3m barrels last week to 62.4m barrels, the US Energy Information Administration reported on Wednesday.

Emerging economies hold back on asking creditors for debt relief Renegotiating borrowing from private investors could damage future access to finance JONATHAN WHEATLEY

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merging economies grappling with a debt crisis are resisting calls to renegotiate what they owe to private creditors, for fear it will damage their access to financial markets in future, lenders and borrowers have warned.

The G20 group of leading nations has agreed to suspend repayments on bilateral debt from 73 poor countries — a group that does not include prominent serial defaulters such as Argentina, which is on the brink of its ninth default — and asked private creditors to do the same.

But debt restructuring or requests for a standstill on repayments risk triggering downgrades in countries’ credit ratings, which would make it more expensive for governments to borrow in future. Some bond investors, including many large pension fund managers, would have no choice but to sell their holdings of downgraded debt, making it harder for nations to raise commercial funding for infrastructure and other vital investments; some issuers would risk being shut out of markets for years.

Countries including Pakistan, Benin and Rwanda have expressed concern about it — although others, including Ethiopia, have called for a blanket debt write-off.

“The fear [among some coun-

tries] is that the medium-term cost in terms of market access, borrowing costs and reputational damage could be a lot higher than the short-term cash flow savings” of debt restructuring, said Alex Garrard of Amia Capital, an investor in emerging market bonds and other assets.

The Institute of International Finance, a financial industry group, estimates that bilateral lenders are owed about $11bn from the 73 countries this year.

Multilateral lenders such as the IMF and the World Bank are owed about $7bn, it says, and commercial lenders — banks and bondholders — about $13bn.

Kevin Daly of Aberdeen Standard Investments, a big institutional investor in emerging markets, said: “International financial institutions [IFIs, such as the World Bank and regional development banks] have been doing the heavy lifting [in terms of providing investment finance for poor countries]. But these countries will need access to private capital once the crisis is over. They can’t rely on IFIs for ever.”

Kristalina Georgieva, managing director of the IMF, underlined the importance of market access to emerging economies on Tuesday, noting that countries had been able to borrow “at very reasonable yields” after central banks in advanced economies provided emergency liquidity to financial markets. “That helps them and www.businessday.ng

helps the rest of the world through this difficult time,” she said.

Roberto Sifon Arevalo, head of sovereign ratings analytics and research at S&P Global Ratings, one of the three big rating agencies, said S&P would have little choice but to downgrade a sovereign issuer the moment it requested a standstill and would probably regard any renegotiation of terms as a default. Moody’s and Fitch, the other two big rating agencies, have voiced similar concerns.

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Sign up here Mr Sifon Arevalo said that even if the renegotiated loan terms compensated bondholders for delayed payments, it was unlikely that a sovereign would be better placed to pay its debts after the initial impact of the crisis than it is today.

“That’s what we are going to have to look at, rather than whether you offer a bigger coupon,” he said. “What is your financial health going to be? If it is complicated today, it’s unlikely to be better eight months from now [when the G20 moratorium runs out].”

Borrower countries are aware of the risks.

Pakistan was the first country to say it would request a standstill, postponing $1.8bn in bilateral re-

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payments due this year. Its finance ministry made clear its reluctance to ask the same of private creditors, saying it would consider doing so only if the G20 made its own standstill conditional on private sector involvement and that, even then, “we would have to weigh the costs and benefits”.

African borrowers have raised similar concerns. Romuald Wadagni, finance minister of Benin, wrote last month that talk of debt relief or moratoriums would “further tarnish the reputation of our governments and jeopardise their access to future financing”.

Paul Kagame, president of Rwanda, also expressed caution about the consequences of debt relief. “We shouldn’t be looking for excuses to cancel debt for its own sake,” he told the Financial Times.

Benin and Rwanda are both relatively small borrowers in the international capital markets.

Benin has one €500m eurobond outstanding, on which the next interest is not due until March next year — beyond the current scope of the G20 initiative. Rwanda, with one $400m eurobond outstanding, faces one interest payment of $26.5m in November.

Other countries have more to gain from a standstill. Ghana, Angola, Honduras and Nigeria, for example, all face bond repayments this year of more than $500m each.

All together, of the 73 countries covered by the G20 moratorium, 26 countries have eurobonds out@Businessdayng

standing and face repayments of about $5bn this year.

According to World Bank data, countries covered by the G20 initiative have total external public debts of about $500bn, including $65bn owed to bondholders and $25bn to commercial banks, with the rest owed to bilateral and multilateral lenders. A recent study from the Federal Reserve Bank of Minneapolis showed sovereign borrowers were reluctant to miss payments on commercial debt, while being relatively willing to renegotiate bilateral debt.

Countries reluctant to ask for standstills admit they need help — but in a different form. Mr Wadagni argued that Benin and others needed outright financial support, in the form of new reserve assets from the IMF — a proposal recently vetoed by the US despite support from European leaders — and concessional finance from multilateral lenders.

In a recent paper for the National Institute of Economic and Social Research, Peter Doyle, a former IMF official, criticised the G20 initiative and a similar one from the IMF for offering relief to poor countries based on the amount they had borrowed rather than on their individual needs.

He argued that better options would be IMF liquidity or outright grants from G20 nations, to cover the $100bn economic hit the fund estimates the eligible nations will suffer in the pandemic.

industry Insight

BUSINESS DAY Thursday 14 May 2020 www.businessday.ng

Changing Nigeria’s approach to industrialisation (2) ODINAKA ANUDU

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ast week’s piece focused on the futility of throwing money at Nigeria’s industrial problem. It was argued that while Nigerian industrial drivers would inevitably need funding to scale, throwing money at every industry could be counter-productive.

This week’s piece examines protectionism as another major reason why Nigeria has remained an industrial Lilliputian in the comity of nations. Protectionism involves restriction of importation or an outright ban on goods into a country in order to support local production. It supports the use of tariffs and import quotas to limit importation. Proponents of protectionism argue that it safeguards employment, protects the economy against dumping and promotes industrialisation.

Protectionism has been in existence for several centuries, and virtually all developed countries today have adopted one form of it or another. Paul Bairoch, a Swiss economic historian, wrote in one of his articles that “historically, free trade is the exception and protectionism the rule.”

It is a self-preservation principle that tells any country to protect itself against another.

The United States has been described as the mother of protectionism since the 18th century.

Before the work of Douglas Irwin was produced, historians had attributed America’s development to protectionist policies such as high tariffs, which, according to them, boosted local manufacturing capacity and jobs. But Irwin, an economic historian, found that high tariffs shrank the growth of the United States by 0.5 percent in early 1900s.

A little research on Wikipedia would show that Europe became more protectionist in the 18th century after the Napoleonic Wars, but historians reckon that it increased the cost of living for workers and reduced their disposable incomes. This, in turn, shrank their capacity to buy from local manufacturers.

The local manufacturing sector suffered in Europe, especially in Britain, despite restrictions that were imposed to support them.

Over the years, Nigeria has adopted the simplistic argument that banning importation will stimulate local production. For elevated self-interest, Nigerian manufacturers have adopted this argument in all their presentations and treatises, and are fully convinced that their problem is government’s lack of grit to ban all imports and allow manufacturers to produce and sell to the consumers.

However, Nigeria’s economic history shows that bans and import prohibitions have produced different results for the economy.

An example, once again, with textile will suffice. Since the British colonial days, the Nigerian textile industry had enjoyed protection from European and Japanese competition. High import duties were imposed on foreign textile and fabrics (eight pence per square yard). The industry boomed up till 1970s and 1980s due to government interventions and support. But problem started when it became obvious that the industry was being shielded from competition. There was poor innovation, but players relied heavily on government bans to prosper. Little was done about threatening issues such as obsolete equipment, lack of black oil/ high energy cost, and high cost of cotton, among many others.

When the Structural Adjustment Programme (SAP) came in 1986, it became obvious that borders would be thrown open for competition to thrive. Many textile companies fizzled out in the process because they could not compete with imports. Incidentally, this coincided with the period of global oil price crash when local textile companies could not find

dollars to import new machines.

And imports were cheaper than locally manufactured goods. This was the similar story with many industries in Nigeria, including palm oil.

It is often believed that once you ban an item, local manufacturers will ramp up production and meet the needs of expected consumers. Again, history has shown that this is only a half truth. Products such as tomato paste, wood, and rubber, among many others, have been on the Nigeria Customs Service’s Import Prohibition List for long, but have their local production met the demand? Today, some of the products on the prohibition list are smuggled because of the surging local demand.

Analysts have often suggested that ban must not be any government’s first choice policy. The reason is that it is often counterproductive. The Tomato Policy of 2016 prohibited the importation of concentrate because of the entrance of big local players. But issues like regular supply of fresh tomato, cost of fresh tomato, logistics and many others were not considered before that policy came into place. After the policy was launched, Dangote Tomato stopped operations. It is still not

‘‘

The point often missed by proponents of protectionist policies is that the consumers bear the greatest brunt. As Adam Smith and many free trade proponents argued, protectionism promotes monopolies and creates cabals who may determine prices to the detriment of the consumers

easy for t the company to get sufficient fresh tomato from local farmers today. In other words, the Tomato Policy looks more like a failed policy because, as usual, prohibition was the central policy, rather than addressing reasons why the country did not have a manufacturer of tomato concentrate more than 55 years after Independence.

The point often missed by proponents of protectionist policies is that the consumers bear the greatest brunt. As Adam Smith and many free trade proponents argued, protectionism promotes monopolies and creates cabals who may determine prices to the detriment of the consumers. In a country like Nigeria, where 87 million people are extremely poor or 100 million people in multidimensional poverty, according to well-known studies, it amounts to punishing the poor when a government simply shuts down borders to promote local manufacturing.

This sometimes stems from poor understanding of the major challenges faced by Nigerian manufacturers. Even if you ban electronics because a few companies are now making them, what guarantees that the consumers will get them at reasonable prices? Can local manufacturers really sell at reasonable prices when they are like local governments on their own—providing their own power, water, and sometimes roads? The Apapa and Tin Can ports today are critical de-industrialisation points which nobody in government is taking seriously. The interest of successive governments, including the present one, have always been to shut down borders on some products and then create monopolies and punish the consumers who voted them into power.

A recent empirical study

by Volker Treichel, Mombert Hoppe, Olivier Cadot and Julien Gourdon showed that the policy of extensive import bans in Nigeria has a heavy cost for poor Nigerians and that changing it could allow 3.3 million Nigerians to leave poverty.

Policy makers have always referred to the lessons from cement industry to show that bans work. It is public knowledge that the government of Olusegun Obasanjo, in 2005/2006, summoned Aliko Dangote and encouraged him to invest in cement, assuring him that his firm would be protected. Investors willing to set up local plants were, like Dangote, given the license to import up to a period of time when they would scale up. That policy worked because there was sincerity on the part of the then government and the new investor (s) to implement it. This same policy later failed in rice industry during Goodluck Jonathan administration because the then government accused some companies of sabotaging the policy by exceeding the quotas given to them. There is no guarantee that the policy will ever work in this climate, with Customs officials getting increasingly corrupt and economy becoming more difficult for the people.

Dani Rodrik, Harvard economist, opines that “a serious retreat into protectionism would hurt the many groups that benefit from trade and would result in the same kind of social conflicts that globalization itself generates.”

Trade, whether anybody likes it or not, makes everybody better.

Nigeria must learn lessons from history by addressing structural problems affecting the manufacturing sector, rather than believe that protectionism is a one-size-fits-all.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.