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Neither oil rally nor IMF upgrade is enough for Nigeria stocks A O

We have not taken any foreign loans in my 4-year tenure – Ambode JOSHUA BASSEY

LOLADE AKINMURELE

frica’s largest oil producer is short of worthy catalysts to inspire confidence in its economy. Nigeria has often been able to paper over deep cracks in its dysfunctional economy if oil prices and production stayed put at favourable levels. But that leverage is thinning. That’s because while oil prices have rallied this year, with Brent crude up some 33.2 percent since January, the stock market is down about 7 percent in the same period, breaking a long-standing correlation between oil prices and stocks such that when oil prices climbed, it pulled stocks along, but if prices slumped, stocks took a beating. When oil prices fell below $30 per barrel in January 2016, it Continues on page 46

Ambode

utgoing Lagos State governor, Akinwunmi Ambode, says his four-year administration took no foreign loans despite the pressure on the state’s Internally Generated Continues on page 46

Inside First Bank grows profit by 31.4% to N59.7bn, recommends 26k dividend in 2018 P. 2 L-R: Uchenna Uwechia, legal director, GSK Nigeria; Bhushan Akshikar, managing director, GlaxoSmithKline Consumer Nigeria; Fidelis Ayebae, managing director/CEO, Fidson Healthcare plc, and Biola Adebayo, operations director, Fidson Healthcare plc, at the local contract manufacturing partnership official signing in Lagos.

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NEWS Nigeria’s tax woes revealed by low active VAT accounts ... Higher compliance could boost VAT receipts 800% ENDURANCE OKAFOR & OLUWASEGUN OLAKOYENIKAN

ourcing for revenues to fund Nigeria’s 2019 budget would have been a little easier if the country was able to widen its tax base, especially the proportion of its Value Added Tax (VAT) accounts that were active. Sources tell BusinessDay that of the over 1.5 million registered VAT accounts in 2018, only an estimated 77,000 were actively remitting funds to the government. Africa’s most populous nation continues to struggle with revenue generation despite its VAT collection maintaining an upward trajectory in the past five years, according to figures obtained from the National Bureau of Statistics (NBS). From 2013 when BusinessDay started collating the data, VAT collection in Nigeria rose by N980 billion, from N127.83 billion to N1.11 trillion in 2018. The collection rate jumped

491 percent in 2015 when the Federal Inland Revenue Service (FIRS) was able to collect N759.43 billion, from N128.54 billion the previous year. The active VAT accounts paid a total of N1.11 trillion as consumer tax for full year 2018. The total VAT of N1.11 trillion remitted into the Federal Government coffers in 2018 represents only a fraction of the N9 trillion in potential VAT remittances. Peer nation South Africa’s tax agency collected R1.216 trillion ($101.3 billion) in taxes last fiscal year, of which VAT contributed 25 percent to the total or some 7 percent of GDP. “A lot of factors are linked to that low rate,” said Ayo Akinwunmi, head of research at FSDH Merchant Bank. “What we need to do at the current level is to broaden our tax base and you will get more revenue.” Taking into consideration the fact that an equal amount

Continues on page 46

Banks are star performers among NSE 30 firms BALA AUGIE

he macroeconomic environment has been tough and unpredictable, while low consumer purchasing power and decrepit infrastructure are making it practically difficult for companies to thrive. Amid these monumental challenges, the 30 most liquid and capitalised firms, otherwise known as Nigerian Stock Exchange (NSE) 30, that have released full-year results saw cumulative profit increase by 29.23 percent to N1.38 trillion in December 2018, from N1.06 trillion as at December 2017. But a breakdown of the figure shows the major drivers of bottom-line were banks, who saw combined net income move by 24.92 percent to N778.85 billion in the period under review, thanks to a reduction in bad loans and foreign exchange gains that helped compensate for drop in interest income. Banks have been leveraging on the high yield environment as impetus to revenue, a strategic plan that hinders them from lending to the economy as evidenced in slow loan growth. “The business that they do is the gateway to the economy. Money must pass through the financial ecosystem. You can also see that there is competition as a lot of them have started retail banking,” said Ayodeji Ebo, managing director and CEO, Afrinvest Securities Ltd.

“For consumer firms, it is more of structural issues as consumer wallets remain squeezed and people are not buying as they used to. The cement firms are able to increase prices as they continue to enjoy oligopoly,” Ebo said. The hardest hit by a sluggish economy are firms in the consumer goods sector, an industry that is beset by menacing gridlock at the Apapa port, competition, double taxation, smuggling, and pressured consumer wallets. To further exacerbate the already anaemic situation of companies, they can no longer pass on cost to the final consumer because they had hiked the price of products three years ago to fend off the effects of a severe dollar scarcity on cost of production. For instance, combined net income of nine largest companies on the NSE 30 lists dipped by 24.92 percent to N99.22 billion as at December 2018. However, only Nestle Nigeria and Unilever bucked the trend as they recorded an uptick at the bottom-line. While a rebound in crude oil price since the start of 2018 is a boon for upstream oil and gas firms as OPEC and its allies continue to cut output with a view to stabilising price, the combined net income of both upstream and downstream oil and gas firms dipped by 47.48 percent to N207.28 billion in the period under review.

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

L-R: Babatunde Fowler and Rosemary Fowler, bride’s parents; Frank Aig-Imoukhuede and Emily Aig-Imoukhuede, groom’s parents; Aigbovbioise, Olufunke Aig-Imoukhuede, the couple, and Vice President Yemi Osinbajo and his wife Dolapo Osinbajo, at the couple’s wedding ceremony at the weekend.

First Bank grows profit by 31.4% to N59.7bn, recommends 26k dividend in 2018 OLUWASEGUN OLAKOYENIKAN

igeria’s tier-one lender, First Bank plc, grew its profit for the 2018 financial year by 31.36 percent, making it the second-biggest growth recorded by any Nigerian tierone bank in the year despite a marginal top-line decline. First Bank’s after-tax profit rose to N59.74 billion, from N45.48 billion recorded a year earlier. Pre-tax profit rose 19.75 percent to N65.29 billion in 2018, from N54.52 billion recorded a year earlier, while operating profit grew by 20.66 percent to N65.27 billion, from N54.1 billion.

The improvement in the bank’s operating profit was bolstered by declining impairment charge, increases in its net insurance premium revenue, fee and commission income, and net gains from investing activities for the year. As a result, the directors of the bank recommended a final dividend payment of 26 kobo per 50 kobo ordinary share for the year to shareholders. The bank’s gross earnings dropped by 2.01 percent to N583.48 billion, compared to N595.45 billion recorded in full-year 2017. Interest income of the tierone lender fell 7.49 percent to N434.41 billion, from N469.59

billion, while interest expense surged 8.8 percent to N150.2 billion in 2018 compared with N138.1 billion paid as interest in the previous year. The decline in the bank’s interest income was largely due to moderated yield on money market instruments, according to analysts at CSL Stockbrokers Limited. First Bank’s impairment charge declined by 42.22 percent to N86.9 billion in 2018, from N150.42 billion in the previous year, while net insurance premium revenue rose by 51.86 percent to N15.54 billion compared with N10.23 billion realised a year earlier. Similarly, the bank increased its gains on foreign

exchange by more than half to N32.64 billion in the review year as against N21.06 billion recorded in 2017. Net gains on sales of investment securities grew more than double to hit N5.73 billion in 2018. The bank retained its position as Nigeria’s secondbiggest bank by total assets in 2018 with N5.57 trillion, out of which total liabilities account for N5.04 trillion in the year, leaving N530.65 billion as shareholders’ fund. Despite the rising competition in Nigeria’s banking space, First Bank’s total customer deposits grew by 10.9 percent to N3.49 trillion,

Continues on page 46

Can Nigeria’s oldest conglomerate bounce back from problem-child woes as new challenges emerge? DIPO OLADEHINDE

nvestors and shareholders in Nigeria’s oldest conglomerate UACN will be keen to see management turn around the company, not only because its “problem child” UACN Property Development Company (UPDC) plc is still struggling but also because new challenges are emerging. Not only was it the DNA of early Nigeria, the company was also once the most innovative and forward-looking business in Nigeria, but it is now a shadow of itself as it incurred a N9.4 billion loss after tax compared to 2017 profit after tax of N1.3 billion, while also recording an operating loss of N5.3 billion compared to operating profit of N7 billion in 2017. The UACN Group consists of five subsidiaries including

INSIGHT food and beverage made up of business units involved in the manufacturing and sale of food items, livestock feeds, bottled water, fruit juices, ice-cream and quickservicerestaurants,aswell as its real estate subsidiary. Where the problem lies Revenue from real estate continued to under-perform in 2018 contributing just 2.7 percent to group revenue compared to 3.8 percent recorded in 2017. Real estate revenue also nosedived by 43 percent to N2.2 billion in 2018, from N3.9 billion in 2017, amid challenging market conditions. “On the back of lower housing inventory sales and collections amid challenging market conditions, we estimate that average occupancy rate has fallen to 45-47 percent, from

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55-60 percent pre-2014 oil price slump,” analysts at CSL Stockbrokers Ltd, an arm of First City Monument Bank, said. Revenue from its animal feeds business was underwhelming in 2018, contributing just 20 percent to 2018 group revenue compared to 63 percent in 2017. Revenue from animal feeds business in 2018 was down 24 percent to N42.8 billion, from N56.3 billion in 2017. “We attribute this to weaker sales as a result of intense competition, reduced bird population, higher input prices and loss of market share,” CSL Stockbrokers Ltd said in a note. UACN’sEBITDA(whichcan be used to analyse and compare profitability among companies and industries as it eliminates the effects of financing and accounting decisions) was down @Businessdayng

36 percent year on year to N4.4 billion in 2018, thanks to 12 percentyear-on-year decline inrevenue and further exacerbated by 5 percent rise in selling and distribution costs to N4.7 billion as well as marginal increase of 2 percent in administrative expenses to N7 billion. EBITDA margin, an assessment of a firm’s operating profitability as a percentage of its total revenue, declined to 6 percent in 2018, from 8 percent in 2017. Also, net margins have even shrunk more, declining to -8 percent compared to just one percent in 2017. It once stood at 6.9 percent in 2016, an indication that the company is not doing too well at keeping a cap on other costs.

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NEWS

SSA least in World Bank’s global human capital index

Textile manufacturers to benefit from 3-year tax holiday

Onyinye Nwachukwu & Hope Moses-Ashike, Washington DC

ub-Saharan Africa (SSA) scores the lowest of all the world’s regions on the World Bank’s Human Capital Index, which is a measurement of how well countries invest in the next generation of workers. The score is explained by high mortality and stunting rates in the region as well as inadequate student learning outcomes – all of which have a direct effect on economic productivity. In an effort to help countries turn these indicators around, the World Bank’s Africa Human Capital Plan is setting ambitious targets to be achieved in the region by 2023. Consequently, the Bank on Thursday unveiled a new plan to help African countries strengthen their human capital. The objective is to enable Africa’s young people to grow up with optimal health and equipped with the right skills to compete in the digitising global economy. The new plan unveiled at the Spring Meetings of the International Monetary Fund (IMF) and the World Bank in Washington DC targets a drastic reduction in child mortality to save 4 million lives, averting stunting among 11 million children, and increasing learning outcomes for girls and boys in school by 20 percent. The World Bank is optimistic that these achievements can raise Africa’s Human Capital Index score to increase the productivity of future workers by 13 percent. “Preventing a child from fulfilling his or her potential is not only fundamentally unjust, but it also limits the growth potential of economies whose future workers are held back. GDP per worker in SSA could be 2.5 times higher if everyone were healthy and enjoyed a good education from pre-school to secondary school,” World Bank vice president for Africa Hafez Ghanem said at the launch of the Bank’s Plan during

the Spring Meetings. The Plan also aims at empowering women to prevent early marriage and pregnancy for adolescent girls. “The adolescent fertility rate in Sub-Saharan Africa is 102 births per 1,000 girls— three times as high as in South Asia. This not only damaging for girls and their children, but it also hurts economic growth,” Ghanem noted. The World Bank further announced that it would increase its investments in human capital in Africa by 50 percent in the next funding cycle. This includes new World Bank grants and concessional finance for human capital projects in Africa totalling $15 billion in fiscal years 2021-2023. The Bank intends to invest these funds strategically to unblock structural constraints to human capital development and would also target game changing interventions that leverage technology and innovation to prevent and reverse damage to human capital in fragile and conflict-affected settings. The World Bank also said it was already supporting countries to come up with new strategies to invest more and better in their people. Twenty-three African countries, covering over 60 percent of the region’s population, have joined a coalition of nearly 60 countries to join the Human Capital Project, committing to a set of accelerated investments in their human capital. “Human Capital Project countries are breaking away from traditional paradigms to make investment in their people a priority and are working in a more coordinated way across government to ensure that households have the right enabling environment to support human capital formation,” Annette Dixon, World Bank vice president for Human Development, said.

Gbemi Faminu

n an effort to ease up the business environment, foster the economic diversification policy and also revive the cotton, textile and garment industry, the Federal Government has proposed to grant major textile manufacturing companies a three-year tax holiday starting from this year. Furthermore, foreign investors in the sector that support knowledge and expertise exchange between Nigeria and developed countries will not be charged income tax, while the VAT and duty tax will no longer be charged on imported materials used in the textile industry.

These proposals are among the fiscal measures that the Federal Ministry of Industry Trade and Investment has proposed to revive the moribund local textile industry. The proposals are contained in a publication of the FMITI called COMPENDIUM, which details the ministry’s reforms spanning the period 2015 to 2019, and covering various sectors of the economy. This is coming after various reviews of the national cotton, textile and garment policy birthed in January 2015 during discussions between the federal ministry of industry, trade, and investment and stakeholders in the textile industry as stated in the FMITI reforms report.

According to data from the world integrated trade solution, in 2017 Nigeria spent over N100 billion importing textiles from China, Japan and the United States. In late 2018 the Central Bank of Nigeria (CBN) banned textile importers from accessing the import and export window in order to discourage textile importation and foster the revival of the local industry. Plans have been set in motion to ensure full compliance of the Executive Order 003 regarding patronage of made-in-Nigeria goods. Report from the Nigeria’s Textile Manufacturers Association (NTMA) shows that 85 percent of the $1.4 billion worth

Anambra intensifies effort against revenue leakage, arrests 75 illegal agents Emmanuel Ndukuba, Awka

nambra State government has arrested 75 illegal revenue agents in the last few months to intensify the order banning all forms of levy collections in the state. Christian Madubuko, commissioner for trade, market and wealth creation, made the disclosure while parading arrested more seven revenue touts on Friday in Awka. Madubuko said some of those arrested were prosecuted and jailed by court, and about 15 of them were awaiting trails, while the new seven arrested on Thursday in some parts of Onitsha were arraigned on Friday. The commissioner said the state government was losing huge revenue on daily bases because of the activities of illegal revenue agents. He said, “The state government has few months ago said that no payments, no collection of levies from anybody, be

it for anything, whoever does that is doing at his own risk. “These are criminals extorting money from traders; you can see that traders are fleeing away from the state because of touting activities. “It is in ever y street in Onitsha and environs, the state government is frowning it and we want to put to a stop to it. Some of them were arrested at bridgehead, Okpoko Junction and Main Market, all in Onitsha while on the illegal activity. We know they have their masters and we are after them.’’ He, however, reiterated that the touts were not working for the government, stressing that none of them also had authorised paper for such activity from the government. “They don’t have authorized papers from the government; any person with such papers should come up with it. I am sure that most of the papers you see them flying around are forged. www.businessday.ng

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of textiles that flood the country’s market is smuggled, mainly from neighbouring countries. “We cannot compete with the level of smuggling and counterfeiting going on now. We used to have about 127 textile firms in Nigeria but that has come down to two or three now,” said Grace Adereti, president of (NTMA) said at a Made-in-Nigeria stakeholders’ meeting in Lagos. Minister of state for industry, trade and investment Aisha Abubakar, in 2016 paid a courtesy visit to textile firms, and was informed that the biggest challenge facing the industry was smuggling. Three years down the road, smuggling remains a consistent problem in the industry.

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NEWS ANSAA urges effective revenue courts to recover N300m debt Emmanuel Ndukuba, Awka

he Anambra State Signage and Advertising Agency (ANSAA) has called for effective take off of Revenue Courts in the state to recover N300 million owed by defaulters. Jude Emecheta, managing director of the agency, made the call in an interview with BusinessDay on Friday in Awka, saying outdoor signage clients had refused to pay the outstanding N300 million owed the state government for years. Consequently, the special courts like revenue courts are necessary for effective enforcement of the debt recovery because the normal courts had not yielded the required results. “We have over N300 million outstanding in the hands of signage defaulters here in Anambra. This is why we are calling for effective take off of special courts. We need the revenue courts to enable us recover these debts. “The conventional courts, like the magistrate courts, which we have been using, have not been forceful, due to their inability to grant us some of the reliefs we sought for. “The state government has

set up these courts but they have not taken off. We are waiting so that we can drag our debtors to the courts,’’ Emecheta said. He said ANSAA had compiled a list of 21 politicians who would be charged to court for violating signage codes and not paying fees, saying the agency was presently removing all political billboards and posters in line with the law guiding signage in the state. He, however, expressed regret that the cleaning up of Anambra sky space was at a huge cost to the government, noting, “95 percent of politicians who erected billboards did not pay. They claimed they did not put up those signage and that their supporters did these. “Some who were supposed to pay as much as N40 million, paid just N3 million. Now, we are cleaning up the entire Anambra sky space at a very huge cost, which should not be so. “We are taking about 21 of the politicians to court to force them to pay. They are not free even after the elections are over. “Some of them are paying because of court summons on them but they have until the end of April to clear their debts or face prosecution,’’ he said.

Gender mainstreaming: Obaseki’s aide revs enrolment campaign for female school leavers, adults in learning centres

o bridge the gender gap as regards access to educational opportunities in the state, special adviser to Edo State Governor on Gender Issues, Efosa Uyigue, has commenced a campaign to encourage enrolment of adolescent females and adults in learning centres across the 18 local government areas of the state. Delivering a keynote address to launch the campaign in Etsako East, Etsako Central, and Etsako West Local Government Areas, Uyigue said: “We can never overemphasise the need for an awareness campaign such as this. This is a movement to bridge the gender gap and it is a cause worth following, which will bring about societal balance, equity and justice.” Noting that it was pertinent to address gender inequality, she said, “We have been shown continuously that girl-child education drives development. The more educated women we have, the greater the access children have to basic learning and education at home. This, in fact, is at the crux of every civilization unbeknownst to many.” Uyigue noted that the Governor Godwin Obaseki-led administration was determined to attain gender parity by encouraging more females to acquire education, which will assist in

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curbing female infanticide, child marriages, feticide, sexual abuse and exploitation, rape, domestic violence, physical abuse, female genital mutilation, human trafficking, among others. “We must educate our girls because they have a right to be educated. We must change the narrative. The narrative must read loudly that the girl-child has a right to education; to be protected and to stay safe from violence. She has a right to access health services and she, of course, has a right to fully participate in her community,” she said. According to Uyigue, the Governor Obaseki-led administration is poised to enforce the Edo State Gender Policy and drive home the Sustainable Development Goals (SDGs) 7 outcome targets, which include universal primary and secondary education, early childhood development and universal preprimary education, equal success to technical/vocational and higher education, among others. At the campaign in Etsako West LGA, the council Chairman, Hon. Yakubu Musa, commended the state government for the well-thought-out plan in reactivating learning centres because education of the girl-child is paramount for any country that wants to move forward.

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Abuja, Ukraine chamber collaborate on ‘study in Ukraine’ programme HARRISON EDEH, Abuja

buja Chamber of Commerce and Industry (ACCI), in collaboration with the Ukrainian Chamber of Commerce and Industry (UCCI), has organised an event tagged “Ukrainian Education Days in Nigeria “Study in Ukraine” to give opportunities to Nigerians wishing to source for high quality education outside. Speaking during the event on Thursday, the ACCI president, Adetokunbo Kayode, who was represented by vice president and Provost of the chamber’s training arm known as Business Entrepreneurial Skills and Technology (BEST) Centre, said under the arrangement, brain chain would be sustained. He also said part of the efforts were dedicated towards scaling up the development of the society having identified education as one of the critical elements that will not only redeem the people from the shackles of ignorance, illiteracy and poverty but also bring the world closer through a process known as ‘brain chain’. “This event is also deliberately organised to deepen and sustain the need to expand cooperation between our countries and to promote Ukraine as the priority

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destination for Nigerian youth for higher education. “The Ukrainian Education days provide an opportunity for meeting representatives of leading Ukrainian universities, on-thespot admissions, counselling of prospective students and parents, assessment of admission documentation requirements and various scholarship opportunities for Ukrainian Universities,” Kayode stated. The Ukrainian Ambassador to Nigeria, Valerii Alexsandruk said his country was keen on continuing to explore the huge potentials in Nigeria and properly streamline them in education terms to be useful not only to the country but the whole world. He assured of a great future in the Nigeria-Ukraine relations. A cross section of the delegation which spoke to our correspondent explained that Ukraine has all what it takes to give quality education to Nigerians in an atmosphere that is well structured to deliver affordable education to Nigerians. They also said Nigerians have shown over the years that education does not only deserve the best of educations such as offered by Ukraine but also capable of sustaining the brain chain ideology.

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The black monk (5)

Bashorun J.K Randle

• Continued from last week

he children and wives of generals get a special mention – sometimes for the wrong reason. A case in point is the first son of General Yakubu Gowon. As counterpoise, the camera zooms off to Otunba Niyi Adebayo, the first son of G eneral Robert Adeyinka Adebayo who was the Military Governor of the Western Region of Nigeria from 1966 to 1971. Following the creation of Ekiti State in 1996 Otunba Adebayo became its first civilian Governor and served a four-year term. He is currently the Vice-Chairman (South-West) of the ruling All Progressives Congress. As for the wives of generals, there is no gainsaying that Maryam Babangida, Mariam Abacha; Justice Fati Lami Abubakar and TuraiUmar Musa Yar’Adua were exceptionally powerful. They wielded enormous influence during the regimes of their respective husbands. Their only rival as First Lady in terms of influence was Dame (Mrs.) Patience Jonathan whose husband, a civilian, Dr. Goodluck Ebele Jonathan was acting President from 5th May 2010 to 28th May 2011 and President from 29th May 2011 to 28th May 2015.

What is remarkable though is that during Turai Umar Musa Yar’Adua’s reign as First Lady, Patience Jonathan, wife of the Vice-President was hardly visible. However, from the moment her husband became the President, she wasted no time in letting the nation and the rest of the world know that she had both power and authority in equal measures. Since her husband left office she has been locked into fierce legal battles with the Economic and Financial Crimes Commission [EFCC] over the millions of dollars she is alleged to have stashed away in local and foreign banks and massive funds in the custody of her proxies. As for her successor, Hajia Aisha Buhari, her longstanding grudge match is against the “Cabal” which she alleges are faceless dominant power-brokers in her husband’s government (kitchen cabinet). While Maryam Babangida was First Lady, the cold war between her and the wife of the Chief of Army Staff/Minister of Defence, Mariam Abacha was as fierce as it was palpable. It was obviously a critical factor in General Sani Abacha’s eagerness combined with deviousness in the scheming over the debacle/fiasco of June 12 1993 Presidential election which resulted in Abacha eventually supplanting the interim government headed by Chief Ernest Adegunle Shonekan. What is equally remarkable is that some First Ladies – Mrs. Victoria Aguiyi-Ironsi; Mrs. Ajoke Murtala Muhammed; Safinatu Yusuf the first wife of General Buhari; and Oluremi the first wife of General Olusegun Obasanjo were hardly visible. As for late Mrs. Olufunmilayo Mobolaji-Johnson, she carried on with her job as a teacher at Yaba College of Technology and the Federal Training Centre while her husband Brigadier Mobolaji-Johnson was the

Military Governor of Lagos State from May 1967 to July 1975. General Sani Abacha’s reign was turbulent in more ways than one. He firmly established himself as the absolute ruler who would brook no nonsense from friend or foe. He was ruthless in dealing with those who dared to challenge his authority – especially the leader of NADECO [National Democratic Coalition]. The list of casualties is long and intimidating – from Chief Alfred Rewane who was assassinated in his own home at 100 Oduduwa Crescent, GRA, Lagos to James Bagauda Kaltho, the journalist who was bombed in Kaduna and many others such as Alhaja Suliat Adedejiwho was brutally murdered in Ibadan on November 14, 1996 and strange objects were inserted into her private parts. Even those who fled abroad were not spared. Not only was Lt. General Alani Akinrinade’s home in Opebi, Ikeja, Lagos bombed, he and Professor Bolaji Akinrinade missed being assassinated by a whisker in Benin Republic. The list goes on and on. Unknown to many, the initial ringleaders of NADECO which was set up to reclaim the mandate of Bashorun M.K.O. Abiola, a Yorubaman were Ibos – Commodore Ebitu Ukiwe (who had previously served as General Babangida’s number two/ Vice-President/Chief of General Staff, Supreme Headquarters) and Rear-Admiral Ndubisi Kanu former Military Governor of Lagos State. They both refused to flee the country. Most dramatically, Abacha fell out with his number two, General Oladipo Diya over what he considered treachery and betrayal in favour of his fellow Yorubaman, Abiola. Matters deteriorated rapidly and Diya was exceptionally lucky to miss a flight on which a bomb had been planted. In his own words: “...a plane which I was to take to

‘

While Maryam Babangida was First Lady, the cold war between her and the wife of the Chief of Army Staff/ Minister of Defence, Mariam Abacha was as fierce as it was palpable

Makurdi was planned to be bombed, but by the stroke of fortune, I was 10 minutes late, which was really not in my character. That lateness was what God actually used to save my life. Within those 10 minutes, those who were priming the bomb so that the plane would explode 10 minutes after take-off were killed by the bomb before I got there. I didn’t go ahead with the journey. Although everybody around me, including my chief security officer, said I should continue on the journey, I said no because if I did, the thing would have been repeated in Makurdi. So, I stopped and that was what saved my life. If those who were responsible for that bomb knew God, they would have stopped. They went on and three weeks after, I was arrested on allegation of planning a phantom coup. But I thank God that on every step that was taken thereafter, Almighty God saved me. And since the day they failed in their attempt to blow me away, I gained the confidence that, by the grace of God, I am beyond human destruction.” To cut a long story short, General Diya ended up being charged with plotting a coup along with Major-General Abdulkareem Adisa and Major-General Tajudeen Olanrewaju. As an interjection, the film relies on the incisive observations of former presidents of the United States of America. i.) Thomas Jefferson [from 1743 to 1826] “Those entrusted with power have over time converted it to tyranny.” ii.) Abraham Lincoln [from 1809 to 1865] “Most men can survive adversity but if you want to test the character of a man, give him power.” • Concluded Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Green bond and Stanbic IBTC’s drive for renewable energy supply Joshua Obah

n recent times, there has been a renewed global focus on environmental sustainability. The focus examines the relationship between human society and the natural world. From the Greenpeace organisation in the early 70s to the more recent Kyoto Protocol and efforts by the Green House Protocol, the main attention has been on the effects of carbon dioxide emissions and the presence of greenhouse gases from energy resources. This attention underscores the impact of energy use on the socio-economic development of society. The Kyoto Protocol, for instance, was an agreement aimed at optimising the consumption of energy resources such as fossil fuel that tend to have the most negative impact on the environment. Increasingly, as part of the commitment to a cleaner and sustainable environment, governments and organisations continue to seek and invest in newer and more environmentally-friendly energy sources such as wind, solar, biomass and hydro to power societal and business activities. As part of the renewable energy drive, the Nigerian Electricity Regulatory Commission (NERC) stressed its commitment to stimulate investment in renewable energy generation in Nigeria. The Commission set itself a target to generate a minimum of 2,000MW of electricity from renewables by 2020, that is almost a half of the roughly 5,000MW of electricity currently gen-

erated. The National Energy Policy also reiterated the need to promote increased investments and development of the energy sector industries with substantial private sector participation. To underscore the NERC and the energy policy thrust, a number of innovation-driven organizations are taking advantage to develop and introduce new technologies around renewable energy. A notable example is the MTN Lumos solar system. These new disruptive technologies are changing the way that energy generation and distribution is understood and funded in Africa. These changes have profound implications, far beyond the energy sector. Thus, stakeholders in the energy sector in Nigeria, particularly financial institutions and investors, need to examine these changes and identify ways to restructure their approach to energy financing and management. “Renewable energy has the potential to build a more inclusive economic growth, where Africa’s extensive rural population is fully engaged in meaningful economic activity, and to transform the African developmental narrative,” says Yinka Sanni, chief executive officer at Stanbic IBTC Holdings PLC. We have seen how new technologies are expanding access to energy beyond the cities and big towns. Small, easy-to-install, MTN Lumos home solar, for example, is making energy affordable to rural populations, and challenging financial institutions to come up with less costly – and digitally delivered – funding solutions. Making renewables part of a diversified energy mix provides utilities a way of continuing to www.businessday.ng

attract funding – by using new technologies to sustainably diversify their generation and supply networks, including off-grid and end-user funding elements. Standard Bank is working quickly across its 20 African markets, including in Nigeria through Stanbic IBTC, to understand the full implications and potential of these developments for African growth. Recently, as part of its increasingly wide energy financing portfolio across Africa, Standard Bank, working in collaboration with its Nigerian subsidiary, Stanbic IBTC, announced the consummation of a key debt financing deal that saw the operators of the Shiroro Hydro-electric power station in the country, the North South Power Company Limited, raised over N8.50 billion from a green infrastructure bond, the first by a corporate in Nigeria. Shiroro Hydro is one of only three hydro-electric power stations currently operating in Nigeria and has an installed generation capacity of 600MW, out of the combined circa 2,000MW installed capacity of the three stations. Stanbic IBTC and Standard Bank played a number of key roles leading up to the eventual success of the transaction. They were instrumental in positioning the credit narrative and driving the investor engagement process. The institutional investor community typically refrains from investing in Nigeria’s power sector due to an inadequate understanding of the industry dynamics, and the challenges currently associated with the industry. Identifying this scepticism and investor bias as a potential threat to the transaction, the deal team, led by Stanbic IBTC, arranged and facilitated an investor excursion

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to the power station of the company located in Niger State. Speaking on the excursion, Samuel Senbanjo of AIICO Pension Managers Limited, one of the institutional investors targeted, said “the visit helped me understand the asset and the transaction a bit better.” David Alao of Leadway Pensure PFA Limited, who was also part of the excursion, said: “Truly instructive, giving us plenty insight into North South Power. This singular action also makes the investment case for a relatively unknown company more credible.” The deal team also facilitated a meeting for the executives of the North South Power Company Limited with the National Pension Commission (“PenCom”), where a case was made to position the transaction as one in support of critical infrastructure development in the country. Both initiatives ultimately proved instrumental as the visit to the power station helped to demystify the business operations of North South Power Company Limited and it gave investors the opportunity to witness firsthand the level of commitment and investment of NSP to power generation in Nigeria. The visit to the apex pension regulator also helped to garner much needed pension fund investor community support for the deal. Stanbic IBTC Bank also played the role of receiving bank on the transaction.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Joshua Obah, is a investment analysts based in Abuja

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Nigerian stocks flash warning signals…is anyone paying attention?

Patrick Atuanya

igeria’s main stock market index has returned -5.93 percent year to date (January 1st - April 12, 2019) and -23.9 percent in the past year (between April 2018 and April 2019), one of the worst performances globally for frontier/emerging market equities. The Johannesburg Stock Exchange (JSE) by comparison is up +10.25 percent ytd, and +7.05 percent in one year, while the Nairobi exchange has returned +12.45 percent this year (ytd). In Nigeria stocks are not a perfect proxy for the wider economy as total market capitalisation of N11 trillion represents only 8.5 percent of nominal GDP of N129 trillion (IMF estimates), at the end of 2018. However, the performance of large listed companies in Nigeria such as Nestle (consumer goods), Dangote Cement (industrial materials), Seplat (oil and gas), Nigerian Breweries (Food and Beverage), and First Bank (Financials), which are components of the NSE-30 index (30 largest firms on the exchange), usually provides a clue as to what is happening in the broader sectors in which they operate. The NSE – 30 firms make up some 96 percent of the entire market capitalisation of listed equities. Total revenues for 27 of the 30 firms that have released Full Year, 2018 results as of Friday rose by 5.4 percent to N8.18 trillion from N7.76 trillion in 2017. Combined profits for the same group jumped 25 percent in the period to N1.441 trillion from N1.15 trillion in 2017. (See chart). If firms are barely growing sales but recording a jump in profits it signals

that other things such as cost cutting, FX trading/Treasury investments (for banks) or non-core operations are responsible for juicing profits. Take First Bank for instance which released FY, 2018 results on Friday. Revenues declined by 2 percent in the period to N583.5 billion from N595.4 billion, however profits rose by 31 percent to N59.7 billion. Loans advances to customers also declined to N1.7 trillion from N2.0 trillion. First Bank in a statement noted that “it is reflective of the weak macroeconomic environment that does not support aggressive risk asset creation.” The direction of stock prices (whether rising or falling) is important because

stocks are largely priced based on the expectations that prospective investors have for the future earnings of the company. Falling stocks prices therefore means investors are not confident of higher overall growth in the economy which will boost revenues and eventually profits of firms. Lower stock prices also often affects the ability of firms to raise equity capital through initial public offerings IPOs or rights issues. Often, long periods of sell-off in stocks could result in lower valuations and discourage prospective capital raising. Another negative implication from the stock market’s poor showing is the

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Some N6 trillion in market value has already been wiped out since the end of 2015, when total market capitalisation was N17 trillion, compared to N11 trillion today

potential for Nigeria to lose a generation or two of young investors. Domestic investor interest in the equity markets peaked some 10 years ago in 2007/2008, and majority have yet to return. Lower equity prices also leads to negative wealth effect and sentiment which impacts consumer spending. Some N6 trillion in market value has already been wiped out since the end of 2015, when total market capitalisation was N17 trillion, compared to N11 trillion today. That the Nigerian economy is barely growing is probably not lost on investors. Growth is forecast by the International Monetary Fund (IMF) to rise marginally to 2.1 percent from 1.9 percent in 2018. It is highly unlikely that firms can grow revenues byupper single digits or double digits from such weak levels of expansion. Looking at the numbers a lot of consumer goods firms have been particularly hit hard as disposable incomes remain largely stagnant. Dangote Flour, Dangote Sugar, PZ, NASCON, Nigerian Breweries, and Flour Mills all saw a drop in revenues in 2018, compared to 2017. If blue chip Nigerian companies who probably have easier access to credit and can command more favourable terms on interest rates and fees are struggling, then it signals more dire conditions for smaller firms and enterprises. Getting the economy to grow fast again with firms building new plants and factories and hiring new workers, should help reduce unemployment which recently hit 23 percent as well as poverty. In Indonesia, there is an old saying, that goes ‘good times leads to bad policies, bad times, leads to good policies.’ It is hoped that in the depths of the current bad times, the government will enact good policies to help turn things around and return positive sentiment and animal spirits to the capital markets. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Source: Company Financials

Another view on Audu Ogbe’s devaluation message Victor OGIEMWONYI

n the past week there has been several responses to our Minister of Agriculture, Audu Ogbe’s attempt to place the woes of our currency the “Naira” on the introduction of the Structural Adjustment Program “SAP” by the Babaginda administration some 32 years ago. According to him, the Naira has been devalued every week since then for 32 years. Let us be simplistic for a minute. If we have had an average inflation rate of about 11% in the last 32 years, then the value of the Naira today, at about N357 to one Dollar is roughly correct, if Naira and Dollar was at parity 32 years ago. ( 11 x 32 year= 352 ). This is a ballpark calculation. The fallacy of those claims about SAP is that it was just a proposal. It was never implemented. The populist view at the time will not let the program be implemented. Though it was the right thing to do at the time, we did not have the leaders to do what was right. The story of the Naira started a little earlier in 1982, during the Shehu Shagari Administration in which Audu Ogbe was the Communications Minister. – Yes, the same Audu Ogbe. That was

the administration where we had a contraption called the National Supply Company that imported what was then essential commodities, principally rice, on behave of Government. It will be recalled that the Shagari administration that took over from the military Government of Obasanjo in 1979, had actively promoted the “green revolution “that asked Nigerians to go back to the farm. The new Government did not see the reason to continue with that program but instead thought it wise to exhaust our foreign reserves on importing rice. Just imagine the efficiency of having a government agency importing commodities for the whole of Nigeria. The resulting corruption, brought the government on its knees and paved the way for the Buhari coup of 1983. The supervising Czar was the then Minister for transport, Alhaji Umaru Dikko. Soon after this bazaar of corruption, the economy started to experience a slow down. The IMF came into the picture and proposed that the Nigerian Government adjust its currency by about 15%. Because the Naira was roughly at par with the dollar at the time, if the decision was made then, the average man on the street would not even have known anything happened. The Government did not act. The succeeding Military Government of Buhari/ Idiagbon had their own ideas of how to run www.businessday.ng

the economy. Not only will they not devalue the Naira, they were not going to repay debt payments to the numerous international creditors that became known as the Paris Club, who Nigeria, now owed millions of Dollars. As far as the Government of the day was concerned, our thieving politicians stole the money. This dispute will lead to even more disastrous economic policies that cut credit to Nigeria. Comical policies like barter trade was pursued for a while, until the foolishness of it became obvious. The resulting debt crisis destroyed the economy. The currency decline followed steadily until the debt cancellation and forgiveness in the Obasanjo Administration. Our failure to structurally adjust our economy when it was needed is the reason we are where we are today. Doing it at the time would have created the right economic environment for growth, those who benefited from the bureaucratic bottle necks of the control economy will not allow it. If SAP was accepted and diligently implemented as proposed at the time in the Babangida Administration, the economy would have been booming and our infrastructure would have kept pace with our development. Just as an example of how good reforms work, the banking revolution we have seen today, would not have been possible if the

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Babangida Administration did not decide under Olu Falae as Secretary to the Government and later Finance minister to privatize Government owned Banks. Nobody remembers today that First Bank, Union Bank and United Bank for Africa were once Government owned. The efficiency in the banking system today replaced the terrible services we had in those days. No one can imagine that it sometimes takes 2 days to cash a cheque. The Tally Number days, when you dropped your cheque for clearing at a Bank and took a tally number that you will bring back in the evening or the next day to collect your cash. No one even remembers that these Banks in those days frequently issued their own drafts that were frequently returned for insufficient funds. We have to realize that bad economics policies have consequences. When inflation runs rampant, and economic growth and productivity is consistently low, the Naira will never be strong, because they are the underlying factors for currency strength . The reality of what happened to the Naira is the bad economic policies that has kept inflation at an average of over 10% and interest rates at above 15% for 32 years . Victor Ogiemwonyi is the retired CEO of Partnership Investment Company Plc .

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

Nigeria’s tax system: An overhaul is overdue

he Nigerian government has to quit its addiction to oil dollars. The price of oil and its production are volatile and often beyond government’s control. When petrodollars are plentiful, the government in power can afford to be aloof, spending as it pleases. Whatever the political belief of that government, be it crony capitalism or statism, oildependence has hampered transparency and accountability in our democracy. A government less dependent on oil and more dependent on revenues from taxes will be transparent with and accountable to the people, and certainly pro-growth and business. Which is why the federal government’s plan to introduce a higher VAT rate from 5 percent to 7.5 percent (for yet to be specified goods and services), more excise duties and improve tax collection aren’t bad ideas. Its reason, to find

a new stable stream of non-oil revenue to ensure “fiscal buoyancy and resilience”, is valid. Low revenue mobilisation is “among the factors dampening long-term foreign and domestic investment keeping the economy reliant on volatile oil prices and production”, according to a recent IMF country report. Government is realising how expensive a habit addiction to petrodollars is, hopefully. And also how costly borrowing, which depends on its oil income, is too; for every N100 Nigeria earns today, N60 goes to pay interest. Thus, the administration of President Buhari wants new sources of revenues to fund education, health, power and other infrastructure. Besides, the success or failure of the Economic Growth and Recovery Plan (EGRP) depends on tax reforms. Low tax rates have dogged the economy for years; Nigeria has one of the lowest tax-toGDP ratios and VAT rates in the world. But for its proposed Strategic Revenue Growth Initiative

to work it must take into consideration three major factors: Nigeria’s tax laws are outdated, its tax base low and its tax policies poorly implemented. Poor compliance and a difficult business environment where government is seen more as an obstruction than a catalyst and mistrusted because no one knows what it does with the tax it collects compound the problem. Besides, the VAT will have a negative impact on consumption. To alleviate the expected impact on consumer demand the income from a higher VAT rate must be spent well to stimulate the economy and provide for the more vulnerable. Coupled with a revamped and simpler tax system that boosts the productivity of small and medium enterprises (SMEs) and their capacity to generate jobs. The Ministries of Budget and Planning, Finance, Nigeria Customs Service and the Federal Inland Revenue (FIRS) shouldn’t focus only on meeting immediate revenue shortfalls.

They need to think long-term. A higher VAT rate and more excise duties are necessary but insufficient. Currently, over 90% of Nigeria’s VAT revenue comes from 3 percent of registered payers. Raising the VAT rate without enhancing enforcement by making it simpler, easier and faster to comply, as was done in Rwanda, won’t bring as much as expected. Closer home, there are lessons to learn from Lagos. When the recession began, it was the only state that didn’t need a loan from the federal government. Rather, it re-inflated the economy through infrastructure projects and provided jobs which improved security. The Governor also deliberately encouraged a 24-hour economy. All without raising taxes; instead it expanded the tax base. It’s difficult to imagine how quickly Nigeria would have exited the recession if Lagos State, which gets more than half its revenues from taxes, was hooked on petrodollars.

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King Bibi keeps his crown

Too challengers A badmany and bloody bet

Binyamin Netanyahu has won a fifth term

Khalifa Haftar, Libya’s strongest warlord, makes a push for Tripoli

What will he do next?

F TER MON THS of heated campaigning, Israeli voters decided to change very little. With most of the votes counted the prime minister, Binyamin Netanyahu, has won a fifth term in office in an election on April 9th. His Likud party tied with Blue and White, a centre-left party led by Benny Gantz, a former army chief. Both had about 27% of the vote. But the right-wing and religious bloc, of which Likud is a part, won a combined 53%. That will give it a majority, probably with 64 seats in the 120-member Knesset (parliament), the same number it holds now. With several parties perched close to the 3.25% threshold to enter the Knesset, the results are still fluid. (Two have demanded a recount.) But Mr Gantz does not appear to have a viable coalition, nor a way to stop Mr Netanyahu from forming one. As with the previous election, in 2015, early exit polls suggested that Mr Netanyahu had been weakened. His rival rushed on stage to declare victory soon after voting stopped. “A historic day”, Mr Gantz declared, telling supporters he would form the next government. While he made promises, Mr Netanyahu made phone calls. He received pledges of support from the ultra-Orthodox parties and a far-right grouping, enough to bring him within striking distance of a majority. There were no signs of consternation as hundreds of Likud supporters streamed into the basketball arena the party had hired for election night. They had been in similar situations before. When Mr Netanyahu finally took the stage after 2am, most Israeli networks had revised their surveys to show him in the lead. On the screen behind him was the campaign slogan: “Netanyahu is in a different league.” The crowd was ecstatic. “This is a night of great victory,” he said. “The right-wing bloc will continue to lead Israel for four more years.” That may be a challenge— though not because of politics. Mr Netanyahu has been indicted,

But he faces stiff opposition and risks losing the territory he already holds

HIS WAS supposed to be a rare moment of cautious optimism in Libya. On April 4th António Guterres, the UN’s secretary-general, arrived in Tripoli, the capital, to prepare for a peace conference which, he hoped, would lead to long-delayed elections later this year. But hours after he arrived Khalifa Haftar, the warlord who controls much of the country, launched an offensive to seize the city. At times his selfstyled Libyan National Army (LNA) has reached within 10km or so of Tripoli’s centre. Dozens have been killed. Flights were suspended after

pending a hearing, in three corruption cases. Prosecutors accuse him of taking gifts from wealthy businessmen in exchange for favours and offering legal and regulatory help to media giants in order to secure better press coverage. He denies wrongdoing. Strikingly, the allegations did not make him any less popular. On the contrary: Likud’s share of the vote increased by three percentage points from 2015. Its projected 35 seats are the most it has won since 2003, when Ariel Sharon led the party. In an election that became a referendum on Mr Netanyahu, many Israelis appear to have voted strategically, favouring one of the two main parties in the hope it would be asked to form a government. It was an impressive showing for Mr Gantz, a political newcomer who faced a vicious campaign from his rival. But it came largely at the expense of other centre-left parties. Labour, which built the country and ruled for almost three decades, collapsed. It won less than 5% of vote. Other Israelis did not vote at all. Turnout was 68%, about four points lower than in 2015. Parties that cater to Arab citizens received just

328,000 votes, a 26% drop. The outcome, and the campaign before it, have deepened Israel’s divisions—not only between right and left but also between Jews and Arab Israelis, who are 21% of the population. Mr Netanyahu repeatedly accused his rivals of plotting to form a coalition with “Arab parties that oppose the Jewish state”. He encouraged an ally to join forces with a far-right Jewish supremacist party. On election day, in what looked like an attempt at voter intimidation, Likud distributed 1,200 cameras to its poll observers in Arab towns. In another sign of Likud’s rough nationalist tilt, one of the new Knesset members celebrating her election was May Golan, an activist who led the campaign to deport African refugees from Israel. In the past Ms Golan failed to enter the Knesset as a candidate of the racist Jewish Power party. Now she will sit with the ruling party. If he forms a right-wing coalition, Mr Netanyahu must pay heed to the demands of at least four other parties. Those representing the Ultra-Orthodox will want to preserve their exemption from the army draft and secure other give-

aways on issues of religion and state. His hawkish partners will want him to fulfil a promise, made in the campaign’s final days, to start annexing parts of the occupied West Bank. That step would raise profound diplomatic and existential questions for Israel. The American president, Donald Trump, is expected to present his own peace plan soon. The Palestinian leadership, enraged at many of Mr Trump’s policies, will almost certainly reject it. Senior Likud members say that will clear the path for annexation. Mr Netanyahu, for his part, will be worried about his future. Wing 10 of Israel’s Maasiyahu jail is designed to hold former prime ministers. His predecessor, Ehud Olmert, was imprisoned there for taking bribes. With the election over, Mr Netanyahu’s lawyers will receive dossiers of evidence to prepare for pre-trial hearings, expected in the coming months. His allies have proposed a bill that would shield a sitting prime minister from prosecution. Some of his prospective coalition partners oppose it. Mr Netanyahu may seek to win their support by making other concessions. If he fails, his fifth term may be a short one.

General Haftar’s jets bombed the city’s only functioning airport. The conference has been cancelled. “The UN is deeply engaged in negotiations for peace,” Mr Guterres said later. “We’re not always successful, I must confess.” The general had long threatened to take Tripoli. Until now he was posturing. No one is quite sure why he chose this moment to move on the capital. Whatever his reasons, his offensive is starting to look like a big miscalculation. He would have entered the conference in an enviable position, holding most of Libya’s land and oil wells. Instead the LNA is now bogged down on several fronts. The general risks losing not only the battle for Tripoli but many of his other gains as well. He may have been encouraged by his recent romp through southern Libya, seized in a lightning campaign earlier this year. Many southerners welcomed the LNA. Their region is rife with ethnic and tribal fighting, and with smuggling gangs. Militants from neighbouring Chad and Sudan have joined Continues on page 19

Monday 15 April 2019

BUSINESS DAY

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A class apart

Governments should celebrate the boom in private education State schools can learn from the private sector; governments can work with it

F SPENDING IS a measure of what matters, then the people of the developing world place a high value on brains. While private spending on education has not budged in real terms in the rich world in the past ten years, in China and India it has more than doubled. The Chinese now spend 5% of household income on education and the Indians 4%, compared with 2.5% for the Americans and 1% for the Europeans. As a result, private schooling, tuition, vocational and tertiary education are booming in developing countries (see our Special report). Since brainpower is the primary generator of progress, this burst of enthusiasm for investing in human capital is excellent news for the world. But not everybody is delighted. Because private education increases inequality, some governments are trying to stop its advance. That’s wrong: they should welcome it, but spread its benefits more widely. Education used to be provided by religious institutions or entrepreneurs. But when governments, starting in Prussia in the 18th century, got into the business of nation-building, they realised they could use education to shape young minds. As state systems grew, private schooling was left to the elite and the pious. Now it is enjoying a resurgence, for several reasons. Incomes are rising, especially among the better

off, at the same time as birth rates are falling. In China the former one-child policy means that six people—two parents and four grandparents—can pour money into educating a single child. The growth of the knowledge economy means that the returns to education are rising at the same time as the opportunities available to those without any schooling are shrinking. All over the developing world, people want more or better education than governments provide. Where cities are growing at unmanageable speed, the private sector is taking up the slack. In India the private sector now educates nearly half of all children, in Pakistan more than a third, and in both countries the state sector is shrinking. Even where the state does pretty well, as in East Asia, richer people still want better schooling for their children than the masses get. Thus Vietnam, which has an outstanding state-school system for a poor country, measured by its performance in the OECD’s PISA test, also has the fastest-growing private sector. In most ways, this is an excellent thing, because the world is getting more, and better, schooling. In rich countries, once the background and ability of the children who attend private schools are taken into account, their exam results are about the same as those in the state sector. But in developing countries private

schools are better—and much more efficient. A study of eight Indian states found that, in terms of learning outcomes per rupee, private schools were between 1.5 times more costeffective than state schools (in Bihar) and 29 times (in Uttar Pradesh). But private schools also increase inequality. They tend to sort children by income, herding richer ones towards better schools that will enhance their already superior life chances and poorer ones towards shoddy establishments that will further undermine their prospects. That is one reason why many governments are troubled by their rise. Other reasons are less creditable: teachers’ unions, which often have a hold over governments, tend to oppose them, and their growth reduces politicians’ power. So for good and bad reasons, governments are squeezing private schools, banning profits, cutting or capping fees, and using regulations to close them or make their life difficult. Governments are right to worry about private education’s contribution to inequality, but they are wrong to discourage its growth. The freedom to spend your money on improving your child’s potential is a fundamental one. Whether governments formally allow it or not, people will find ways of buying private education, by tutoring children out of school or bidding up the price of property near good state

schools. Governments should instead focus on improving the public sector by mimicking the private sector’s virtues. Freedom from union power and independent management are at the root of its superior performance and greater efficiency. Governments should therefore do their best to weaken unions and give school principals more autonomy to innovate and to fire underperforming teachers. To spread the benefits of private schools more widely, governments should work with them, paying for education through vouchers which children can spend in private schools, or paying privately managed schools to educate publicly funded children. These schemes do not always succeed, but Chile, Pakistan and the Netherlands have all demonstrated that big, properly designed and managed voucher systems can work well. Children in Chile, whose entire system is voucher-based, do better than in any other Latin American country for which the OECD collects data. But vouchers should be limited to non-selective schools that do not charge top-up fees; otherwise governments will find themselves subsidising the better off and increasing inequality. The world faces plenty of problems. Governments should stop behaving as though one of them was private education. It will, rather, increase the chances of finding solutions.

Khalifa Haftar, Libya’s strongest warlord.... Continued from page 18

the fray. Locals hoped the general would bring stability. He seized towns and a big oilfield with little bloodshed. Grabbing all the west will not be so easy. Militias from the port city of Misrata have vowed to block the LNA’s advance. One contingent has deployed to reinforce Tripoli. Another is preparing a counteroffensive to the south and east. The Misratans are the strongest force in western Libya and won a decisive victory over Islamic State (IS) in 2016. They resent General Haftar’s ambitions and are linked to the government in Tripoli through the interior minister, Fathi Bashagha, a Misratan. General Haftar had worked for months to co-opt forces in the west, some of whom are frustrated with the UN-backed Government of National Accord (GNA) in Tripoli. Now they seem united against him. His offensive is embarrassing his numerous foreign allies. Egypt and the United Arab Emirates have provided air support. France has special forces deployed in the east. Russia has sold him weapons. (The GNA counts Qatar, Turkey and Italy as partners.) The general’s friends nominally back the UN-led peace process but have tolerated and encouraged his machinations. France has not asked him to pull back. Instead it wants him to meet Fayez al-Serraj, the GNA’s leader, for peace talks in Geneva. Egypt did not even bother to sign an American-led statement calling for calm. After eight years of chaos, it is understandable why General Haftar looks appealing. He brought a measure of control to the east, while the GNA has struggled to keep Tripoli calm. Egypt and the UAE share his anti-Islamist politics. But the capture of Benghazi caused the destruction of large parts of the city. The general himself is 75 and in patchy health. His LNA is a hotch-potch of militias bound by mutual interests and money. It does not represent the entire country, and some of its members are not even Libyan. General Haftar’s empire may not outlast him.

Monday 15 April 2019

BUSINESS DAY

In Association With

A bias against the pious

Nigeria’s vice cops are feeling squeezed Voters rather enjoy sinning, and politicians have taken note

LT H O U G H I T I S guarded by high walls and a thick metal door, a nightclub in Kano hardly bothers to conceal its existence. Disco lights flash out on the surrounding streets. Pop music is pumped carelessly into the night air. Young men and women sip beer and sway to the rhythm, seemingly unconcerned that, under Islamic law, such depravity is punishable by whipping. Between 1999 and 2002 a dozen states in Nigeria’s mostly Muslim north, including Kano state (the capital of which is also called Kano), adopted penal codes based on sharia. At first these states strove zealously to enforce the new rules. Many recruited religious police forces, called the Hisbah, to confiscate alcohol and arrest adulterers (who are occasionally sentenced

to death by stoning, but are never actually stoned) to ensure that citizens did not sin. Many northern politicians, while eager to appear pious, are not really committed to stamping out booze and fornication, perhaps because so many voters want to be left to their own vices. When budgets are tight, they find they don’t

need so many morality police. “The government is not serious about sharia,” grumbles a cleric. Kano is still socially conservative, but residents say it feels less stifling than it was. In Sabon Gari, a neighbourhood full of Christian migrants from Nigeria’s south, bars and betting shops abound. To avoid upsetting southerners,

northern states said sharia would not apply to Christians. However, in the past the Hisbah would scour the neighbourhood’s bars and brothels for Muslims, recalls a hotel-owner. “We don’t see them now,” she adds, except when they come for a drink. A dimly-lit bar in her hotel is filled with men wearing the robes and cap typical of northerners. At the headquarters of Kano’s Hisbah the morality police put on a brave face. Signs outside the building remind passers-by that God is great. Muhammad Rabiu Jakata, its director of statistics, boasts that the force is destroying more beer bottles and prosecuting more sinners than ever before. But in private a colleague confesses that all is not well. Kano’s last two governors have squeezed the Hisbah because they thought it was loyal to their respective predecessors, he says.

Its ranks have fallen from 9,000 in 2010 to 7,000 today, and its budget has been cut by a third. “We still try to do everything,” says the officer, “but it is not like before.” Many residents of Kano now see the Hisbah as little more than a counselling service, useful for settling family disputes but not much else. “If I have a problem with my wife, I go to the Hisbah. If I have a problem with customers I will go to the federal police,” says Saminu, a textile merchant. Between gulps of beer, Danladi, a former civil servant, speculates that politicians have lost interest in sharia because they have exhausted its vote-winning potential. But being a Muslim, he admits, he wishes he could resist the temptation to drink. “We are all human beings,” he adds. “You rarely find a person who is perfect.”

Central banks

The independence of central banks is under threat from politics That is bad news for the world

RITICS OF ECONOMICS like to say that its abstract theories lack real-world pay-offs. There is a glaring counter-example: the global rise of central-bank independence in the past 25 years. In the 1970s it was normal for politicians to manipulate interest rates to boost their own popularity. That led to a plague of inflation. And so rich countries and many poorer ones shifted to a system in which politicians set a broad goal—steady prices—and left independent central bankers to realise it. In a single generation billions of people around the world have grown used to low and stable inflation and to the idea that the interest rates on their bank deposits and mortgages are under control. Today this success is threatened by a confluence of populism, nationalism and economic forces that are making monetary policy political again. President Donald Trump has demanded that interest rates should be slashed, speculated about firing the boss of the Federal Reserve and said he will nominate Stephen Moore and Herman Cain, two unqualified cronies, to its board. Brexiteers rubbish the competence and motives of the Bank of England, while in Turkey President Recep Tayyip Erdogan has been in a tug-of-war with the central bank. India’s gov-

ernment has replaced a capable central-bank chief with a pliant insider who has cut rates ahead of an election. And as we report this week, many top jobs at the European Central Bank (ECB), including the presidency, are up for grabs, and some could become part of a wider political struggle over who runs Europe’s institutions (see article). There is a genuine need for reflection on central banks’ objectives and tools. But dangerous forces are afoot that could have alarming consequences for economic stability. The problem of politicisation last became acute in the 1970s. After the post-war Bretton Woods currency system collapsed, central banks failed to tame racing inflation because politicians, who pulled the strings, were reluctant to bear the short-term cost of higher

unemployment. Two decades of runaway prices and crises led to a new orthodoxy that central banks should be given operational autonomy to pursue an inflation target. In the euro zone, Japan and Britain central banks became legally independent in the 1990s. In America the White House refrained from even publicly discussing Fed policy (see Free exchange). This consensus survived the crash of 2007-08 and is one reason why global inflation has been only 4% a year on average over the past two decades. The fraying of central banks’ independence has several causes. One is populism. Leaders like Mr Trump combine the politician’s desire for low interest rates with a reckless urge to undermine institutions. Another is the scope of central banks’ ac-

tivities, which expanded after the financial crisis. Most now hold huge portfolios of government bonds while, at the same time policing the financial industry. And the record of central banks is far from perfect. Because they have probably been too hawkish (despite their unconventional policies) the recovery from the crisis has been slow, undermining voters’ faith in the technocrats whose loyalty is supposedly to the public interest. All this makes it easier to view them as political. Meanwhile, the memory of the crises that led to independence has faded. Pressure is manifesting itself in different ways in different places. Mr Trump has launched an attack on the Fed. Although his legal authority to sack Jerome Powell, its chairman and a Trump appointee, is not clear, if he wins re-election in 2020 he will be able to nominate a new Fed chairman and two more governors. In Europe a flurry of job changes threatens to lower the calibre of decisionmaking at the ECB and feed underlying disagreements. By the end of the year, three members of the six-strong executive board and eight of the 19 national governors, who also vote on rates, will have left. The most notable of these is Mario Draghi, its head. His departure in October will happen almost

concurrently with elections and a change in leadership at the European Commission and Council, a once-in-40-years overlap. Behind the political game of revolving chairs is a battle between countries to control policy. Northern Europeans have been suspicious of the ECB’s bond-buying, seeing it as cover for subsidising southern Europe. Rather than win by force of argument, they are seeking an edge by getting their own people into the top jobs. That will store up problems.

Monday 15 April 2019

BUSINESS DAY

COMPANIES & MARKETS

Seplat, NGPTC to raise $700 million for AHON gas project, double capital spending in 2019 Pg. 22

COMPANY NEWS ANALYSIS INSIGHT

E-COMMERCE

Jumia raises $196mn on NYSE debut JUMOKE AKIYODE-LAWANSON

umia, a pan-African e-commerce platform, raised as much as $196 million in an initial public offering Friday 12, April 2019, after selling 13.5 million American depositary receipts at $14.50 each. The stock traded at $22.40 as of 12:27 p.m. local time on Friday, valuing the company at more than $1.7 billion. The offering makes Jumia the first African tech company to be listed on the NYSE, the largest stock exchange in the world. Although the retail platform isn’t profitable like some other notable e-commerce platforms around the world including Amazon, sales jumped by almost 40 percent last year to $147.3 million.

Documents from the US security exchange commission (SEC) showed that Mastercard Europe prepurchased $50million in Jumia ordinary shares, after it agreed a few weeks ago, to invest and become a major shareholder, forming strategic partnership with Jumia. With other large companies such as Twitter, Alibaba and Snap listed, Jumia says; “We want to show the digital innovation happening in Africa and the opportunities from Africa in terms of tech and e-commerce. “We contemplated several venues, ultimately, we met a lot of investors and New York seemed the more natural place given the number of investors familiar with the business model. More investors with

marketplace and tech focus in New York than in London. We made a logical choice,” the company said in a statement. Sacha Poignonnec and Jeremy Hodara, co-founders and co-chief executives, Jumia said; “This achievement has been made possible thanks to the hard work of our teams, the trust of our consumers, as well as the commitment of our sellers and partners. All stakeholders deserve credit for this milestone, and we are just at the beginning of a long and great journey. We are going to continue to focus on our mission and to work even harder to help consumers, sellers, partners and all stakeholders benefit from this technological revolution.” Jumia says it sees a lot of upside in going public after being private for seven

years. “Raising the public profile is going to help us bring more sellers to Jumia. Many sellers or partners are yet to know about us, and once they do, we hope they will be keen to work with us. We also hope this will help us build even more trust with consumers, in particular those who are still not comfortable with ecommerce, may now see us as an established company and, we hope this will help our growth and consumer adoption. We also hope that this will help us with talent recruitment, retention, as we aim to attract

more attention from top talent,” Jumia stated. In an updated SEC filing, Jumia indicated it is offering 13,500,000 ADR shares for an opening price spread of $13 to $16 per share, representing 17.6 percent of all company shares. The IPO could raise up to $216 million for Jumia. The e-commerce company has delivered GMV growth of 63.3% in 2018. Revenue from third party sales grew by 121.5%; Jumia has also delivered for the last two years positive platform contribution at group level, and for the biggest

market, Nigeria, positive contribution after all fulfillment expenses during the second half of 2018. Founded in 2012, Jumia started a mission to improve the quality of everyday life in Africa, by leveraging technology to deliver innovative, convenient and affordable online services to consumers. Jumia is currently active in 14 African countries with more than 81,000 active sellers transacting online with millions of consumers. The e-commerce platform directly employs more than 5,000 team members in Africa.

DEALS

Dell Technologies invests over $500m in Nigeria’s IT spare parts market ...set to ship proximity censor PC April TEMITAYO AYETOTO

ell Technologies, a family of businesses with focus on essential technology infrastructure and services said it has invested over $500 million in the provision spare parts for its numerous IT devices in Nigeria. The move was borne out of the American company’s desire to lay a strong grip on the vast technology demand springing out of Africa’s biggest economy after South Africa, Karim Hirji of CEA Services, DELLEMC said. Hirji said the firm has been relentless at introducing fresh innovation in tech asset management solutions and custom services to sustain its relevance in the digital economy, during a joint demand generation programme between DELL EMC and its major partner, BlueChip Technologies. Despite low foreign currency supply in the economy, challenging commodity and oil prices, DELL’s position is that Nigerians remain committed to explore the opportunities in the digital economy. Tope Ajao, chief delivery officer at Bluechip Technologies believes noted that one of the major problems facing businesses today is complexity - arising from huge data sets, new technologies, increasing regulation, globalization and increasing customer awareness and mobility. “Organizations such as

Apple, Google, Amazon, Facebook etc. have proven that simplicity is the way forward. Hence, helping organisations simplify their IT landscape will tremendously lower cost and differentiate their products and services.” Ajao said, adding that information technology needs to rise to the challenge of enabling the business to analyse all relevant data for making decisions on time. Dell Technologies has been at the heart of driving mobility in purpose-built PC solutions, with particular attention on flexibility and efficiency for the end user. Speaking on how the tech company is helping to realise smart solutions and applications Sonia Okpara, its client’s solution specialist said the latest addition to its fleet of PC deigns is the Proximity Censor system, a smarter experience to digital work with

Latitude 7400. The product expected to hit the Nigeria’s IT world this month is built with an intelligence of face recognition and touch sensitivity to speed up users’ accessibility. The interactive PC comes with the introduction after the Dell Chromebook devices and a new charging cart that helps educators integrate technology with new teaching and learning practices. “It is a product of research and development that is smarter with users. As soon as you come close to it, it comes up and its shuts down when you move away from it,” Okpara said. “Basically, we are ensuring a software deployment that reduces bugs and allows fastest connectivity.” In terms of purpose, DELL she said was ensuring that PC solutions were being tailored to suit workplace functions on the basis of activities required.

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

Monday 15 April 2019

BUSINESS DAY

COMPANIES&MARKETS OIL & GAS

Seplat, NGPTC to raise $700 million for AHON gas project, double capital spending in 2019 OLUFIKAYO OWOEYE

eplat Petroleum Development Corporation and the Nigerian Gas Processing and Transportation Company (NGPTC) will raise $700 million for a joint gas project scheduled to start production next year. The project, known as Assa North Ohaji South, AHON is one of the initiatives to boost gas production and infrastructure development in the country. The plant upon completion is expected to process wet gas from the unitized upstream fields at OML 53 and OML 21, with an initial capacity of 300 million standard cubic feet per day and it’s scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021. Austin Avuru, CEO, Seplat noted that the company and Nigerian Gas will provide 60 percent of the funds as equity, while ANOH will source the balance as debt, “Both parties already have each contributed

$100 million in equity, and there will be another equity injection and at the back end of it will be debt,” Avuru Said. Avuru further noted that Seplat will leverage the relative stability in the volatile oil-rich Niger-Delta and double its capital spending to $200 million this year from 2018 “If Niger Delta is stable, the rest is easy for us to handle,” he added. In recent times, there has been a renewed call for more investments in gas infrastructure to improve supplies to power companies and diversify the economy away from oil, which currently accounts for the bulk of revenue. According to Avuru, ANOH will target local customers and has the capacity to double production depending on domestic demand and the availability of feeds including third-party gas. An analysis of Seplat’s 2018 full year result for the period ended 31 December 2018 show, revenue ballooned 65.18 percent to N228.39 billion from N138.28 billion as at De-

cember 2017; eclipsing the N63.38 billion recorded in the corresponding period of 2016. Sales from crude oil surged 61.32 percent to N180.75 billion in December 2018 as against N112.75 billion as at December 2017. Gross profit margin grew 52.43 percent in December 2018 from 49.60 percent as at December 2017. While pretax profit surged by 500 percent to N80.61 billion in the period under review from N13.61 billion as at December 2017. Operating profit increased 176.06 percent to N94.87 billion in December 2018 from N34.37 billion as at December 2017 as the company continues to manage direct costs attributable to projects as evidenced in a 45.85 percent jump in gross profit to N119.75 billion in December 2018 from N64.86 billion the previous year. In August last year, Seplat Petroleum Development Company Plc announced the signing of the Shareholder Agreement and Share Subscription Agreement with the

L-R: Temitope Sowande, head of procurement , First Bank of Nigeria, receiving evergreen customer of the year award from Michael Ade. Ojo, chairman , Toyota Nigeria Limited, his wife ,Taye, and Henry Ade Ojuoko, head, dealer development and special project, Toyota Nigeria Limited, at the Toyota Customer Nite 2019 in Lagos. Pic by Pius Okeosisi

Nigerian Gas Processing and Transportation Company (NGPTC), a wholly owned subsidiary of Nigerian National Petroleum Corporation (NNPC). Seplat incorporated a new subsidiary, ANOH Gas Processing Company Limited in 2017, the ma-

jor activity of the subsidiary is the processing of gas from its OML 53. It is described as one of the largest greenfield gas condensate development projects in Nigeria. Seplat, with a dual listing on the London’s Stock Exchange and Nigeria

Stock Exchange was incorporated on 17 June 2009 as a private limited liability company and re-registered as a public company on 3 October 2014. Seplat’s shares ended trading at N450 on the floor of the Nigeria Stock Exchange as of Friday.

CONSUMER GOODS

AGRICULTURE

Dangote Flour, Nascon, Cadbury lead FMCG YTD performance

ECCIMA commends Dangote’s contributions to Nigeria’s economy

IFEANYI JOHN

he weak consumer purchasing power in Nigeria has meant only three of fifteen Fast Moving Consumer Goods (FMCG) have recorded growth in their share price since the beginning of 2019. Dangote Flour, Nascon and Cadbury are the best performing stocks among the fifteen fast-moving consumer goods stocks, as classified by the Nigerian Stock Exchange. Dangote Flour leads the FMCG pack with 27.27 percent since the beginning of the year while Nascon comes in second with 11.11 percent and Cadbury completes the list of FMCG gainers with 1.00 percent. The NSE Consumer goods Index, posting more losers than gainers since the beginning of the year, is down 12.62 percent. The index has three gainers out of fifteen stocks in the index amidst sell off on the local bourse.

Dangote Flour outpaces all other FMCG companies with a 27.27 percent market value growth since the beginning of the year but this performance is a far cry from the 82.58 percent year to date performance it had at the end of February. After hitting N12.05 at the end of February, the capitalization of company shed 31.5 percent of its value on the back of poor financial performance reported in 2018. Nascon, the second best performing FMCG stock, has held its market capitalization above 11.11 percent since January despite a 17.28 percent decline in its bottom line due to the poor state of ports and smuggling activities in the country. Cadbury comes in third, improving its market value barely by just 1.00 percent even as its profits per shareholder increased by 81.25 percent from N0.16 to N0.29. The other fast-moving consumer goods company that did not shed market

value since January 2019 is Honeywell Flour Mills who posted a YTD return of 0.85 percent at the close of market on Friday as investors await their full year results. On the flip side, the FMCG companies that shed the most since January are Champion Breweries (33.67%), PZ (26.86%), Flour mills (24.0%), Guinness (16.67%), Northern Nigeria flour mills (10.42%), Dangote sugar (7.43%) and Nestle (1.69%). Flour Mills and Northern Nigeria Flour Mills have filed for a delay in the reporting full year results and since the bearish trend in the equities market has failed to end, investor confidence in these stocks continue to wane. Dangote Sugar failed to improve its bottom line and shed 44.76 percent of its profits as compared to its 2017 full year while Nestle Nigeria plc grew its earnings by 27.53 percent compared to the prior accounting calendar.

www.businessday.ng

…As fertilizer plant debuts at Enugu Trade Fair ADAMS SEGUN

he Enugu Chamber of Commerce, Industry, Mines & Agriculture (ECCIMA) has commended the efforts of Dangote Industries Limited on its contributions to the growth and development of the Nigerian economy. ECCIMA President, Emeka Udeze, speaking during the Dangote Group special day at the ongoing 30th Enugu International Trade Fair, said the Group has added a lot of value to the growth of the Nigerian economy, operating in every sector and still expanding and going strong. He said, “today, Dangote business and entrepreneurship indulgence has spread to many parts of the African continent, employing thousands of people across the world, of which not less than 85 per cent are Nigerians. According to him, “the exploits of the Dangote Group show high degree of vision, creative thinking, research, innovation, doggedness, hard work and industry, which has culminated into what one can describe as the Dangote business and industrial empire today.” Udeze said with the soon

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coming on stream of the Dangote Refinery, the nation’s days of scarcity of refined petroleum products will be over, even as it adds value to the economy. In his speech, the Regional Sales Director (Technical) Dangote Cement Plc, Johnson Olaniyi described Aliko Dangote as a man who has made Nigerians proud within the global scene. He said Dangote is the most recognised name from Nigeria, who has changed the country’s fortunes from cement importation to export through self-sufficiency. He stated that worried over the spate of collapsed buildings, Dangote Cement introduced the 3X range of products, which are designed for extra strength and yield. He disclosed that Dangote Cement parades four grades of products which include the BlocMaster, D3X rapid setting, 3X normal setting, and the Falcon. A major debut at the Special day was Dangote Fertiliser, which during a presentation Dennis Ativie, Deputy Sales & Marketing Manager disclosed that Dangote has discovered that while Nigeria’s population is growing, there is no corresponding increase in food production; hence it decided to intervene by building a fertiliser plant. @Businessdayng

The fertiliser plant is to plug the gap between the growth in population and that of food production. He said continuous cultivation has made most arable land to record diminishing returns; hence the importance of the application of fertiliser to boost yields. He announced that good news are coming to the farmers as the fertiliser plant is gearing to produce and roll out its products. Dangote Fertiliser, he explained, would provide farming extension services to educate and guide farmers on application of the different grades of fertiliser for maximum yield. Other subsidiaries of Dangote Group that made presentations at the event include Dangote Flour Mills, Dangote Sugar Refinery and NASCON Allied Industries. Companies under Dangote Group are already adding colour to the Enugu International Trade Fair with an array of edible goods on display. The Group’s participation is part of strategies to grow market share and expand customer reach more customers in the Southern part of the nation. The Group’s well branded pavilion has become the toast of visitors and shoppers at the Fair.

Monday 15 April 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

TECHNOLOGY

TeamApt secures CBN switching licence to power payment infrastructure solutions MICHAEL ANI

eamApt, a financial technology company focused on developing digital banking and Payments Infrastructure, has acquired a switching license from the Central Bank of Nigeria (CBN) that will enable it to develop products to provide infrastructure payments solution. The license will power AptPay, one of its products, to provide solutions for different customer segments in the Nigerian society, the firm said in a statement. “It is the highest license awarded to any fintech by the CBN because the license allows it to put all the banks together and be able to debit their banking position with the central bank,” said Tosin Eniolorunda, CEO of TeamApt. What this translates to is that with AptPay, TeamApt can

actually move money across the banks without putting our money down. This license puts TeamApt on the same level as other Tier-1 financial technology companies, according to Eniolorunda. “If through a payment gateway, a buyer pays a merchant for a product and the payment gateway provider needs to pay the merchant instantly, without the license, the provider will have to pay with its own money. But with the license, the provider is merely moving the bank funds around without tying down its money,” he said. TeamApt Limited is a financial technology company in Lagos with a mission to create financial happiness through the development of Digital Banking, Digital Business solutions and running Payment Infrastructure for Africa, with a customer base of 26 banks across Africa, including Zenith, ALAT by Wema, UBA, First Bank, GTBank and Access

Bank. When asked what plans TeamApt has for scaling across Africa, Tosin, explained the company was in advanced talks with six banks in Ghana with expansion plans underway in Tanzania. He also hinted at plans to expand outside Africa before the end of Q4 2020. In February this year, the firm successfully raised a $5.5 million Series A funding from Quantum Capital partners for global expansion. The firm is also eying to raise additional capital next year to develop more products, Eniolorunda said. The firm has overtime engaged in developing varieties of digital financial services solutions including Aptpay, Moneytor, Profectus and Monnify among others. AptPay, is a robust payment infrastructure powering payment used in processing interbank transfers and direct debits.

L-R: Jay Liu, country manager, Infinix Mobility; Amanda Zhang, marketing manager; Opeyemi Adewunmi, marketing executive, Infinix Mobility Nigeria, and Benjamin Jiana, managing director, Infinix Mobility, during the launch of Infinix Mobility S4 in Lagos. Pic by Olawale Amoo

Axxela pioneers mini LNG project to aid industrial growth OLUSOLA BELLO

he Nigerian Gas Marketing Company has been issued a Gas Purchase Order (GPO) by the Gas Aggregation Company of Nigeria (GACN) for the development of a Liquefied Natural Gas (LNG) Plant in Ajaokuta, Kogi State. The project is a Joint Venture partnership with Transit Gas Nigeria Limited, a subsidiary of Axxela Limited. With gas supply assured, the GPO will help ensure that commercial and industrial businesses across Nigeria that adopt the LNG solution for their power or process needs achieve over 40 percent in cost-savings compared to alternative fuels i.e. diesel. The liquefaction plant is strategically located in the middle of the country to enable easy access of the LNG trucks to the Northern region’s stranded gas market and other parts of the country. LNG storage facilities will also be installed at customer locations to ensure continuous gas supply. Natural gas, predominantly methane, is an environmen-

tally friendly fuel that burns cleaner than other fossil fuels. Gas-fired equipment are more efficient and have significantly contributed to the reduction of greenhouse gas emissions across the world. Recently Oando Plc announced divestment of its residual 25% interest in Axxela Limited held through Glover Gas & Power B.V., to Helios Investment Partners a private equity firm with a focus on investments in Africa. In a statement, the company said the total purchase price for the transaction was USD $41,500,000, thereby optimising value from non-core business activity of the group. According to the release, the net proceeds of the transaction will be applied in partially prepaying the Group’s MediumTerm Loan, MTL. The acquisition by Helios was effected through HIP GLOVER S.à.r.l, a special purpose vehicle incorporated by Helios, which in 2016 had acquired the initial 75% interest in Axxela for $115.8 million. Commenting on the divestment, Oando PLC’s group chief

executive officer, Wale Tinubu said: “The completion of this divestment signifies another win for the Company. We pioneered the development of Nigeria’s foremost natural gas distribution network which has subsequently grown to become the largest private sector gas distributor in Nigeria creating a lasting impact on both the sector and the Nigerian economy. The divestment further reinforces Oando’s ability to create value that can be monetized and the Company’s status as the indigenous partner of choice for international companies looking to invest in Nigeria. This transaction favorably positions us to significantly reduce our debt profile and remain focused on growth through our dollar-denominated businesses. We will continue to maintain significant presence in the Midstream as well as grow our gas aspirations via our Upstream gas assets in our NAOC Joint Venture wherein we have four gas projects within the NNPC’s Seven Critical Gas Development Projects (CGDPs), which are responsible for almost 50% of the 42 TCF that will be delivered by the seven CGDPs by 2020.”

L-R: Dayo Adeshina Programme, manager, National LPG Expansion Plan, Office of the Vice President, Federal Republic of Nigeria; James Rockal, MD/CEO, World LPG Association; Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), and Baylon Duru, chairman, LPG Group, LCCI, during a courtesy visit to LCCI in Lagos.

L-R: Akeem Oyewale, ex-officio; Adebola Adedeji, financial secretary; Taiwo Sonola, president; Aderonke Adetoro, vice president, and Babatunde Majiyagbe, publicity secretary, all of the Association of Assets Custodians of Nigeria (AACN), during a media parley in Lagos.

RENEWABLE ENERGY

Bishopgate MFB, Solar Affairs partner to empower SMEs

ishopgate MFB Ltd has signed a Memorandum of Understanding (MoU) with Solar Affairs with the sole aim of financing solar renewable energy for SMEs. The purpose of this agreement is to provide renewable energy through solar installations to power SMEs businesses across Nigeria. Dele Ilori, managing director, Bishopgate MFB Ltd, said at the signing ceremony

that one of the main objectives of the bank was to empower the SMEs whose businesses rely more on electricity to function effectively at a cheaper cost. All that is required of an SME is the ability to contribute 30 percent of the cost while the bank will finance the balance without collateral. Francis Oludemi, managing director/CEO, Solar Affairs, also made a commitwww.businessday.ng

ment that such beneficiaries will be able to enjoy 24-hours uninterrupted power supply that will be provided with the solar panel installation and this equipment comes with one-year warranty and oneyear insurance. The partnership is to make uninterrupted power supply available to the SMEs at a cheaper cost in line with the economic development plans of the Federal Government.

L-R: Steve Brice, chief investment strategist; Roop Barua, head credit products wealth management; Ijeoma Anusionwu, head managed investments and advisory–Africa; Simpa Adaba, head wealth management Nigeria, and Ayodeji Adelagun, head, rates and credit-West Africa, all from Standard Chartered Bank, at the Wealth Management 2019 Outlook event organised by the bank in Lagos.

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Monday 15 April 2019

BUSINESS DAY

Monday 15 April 2019

BUSINESS DAY

INSIGHT

Ways of the Tax Master and resurgence of Rivers IGR 1. Touts eliminated, tax audit invasion curtailed to create harmonious environment 2. Resort to red flag system and random stings 3. Emergence of massive tax education activities 4. Robust ICT deployment for automation and digitalization 5. Strict and orderly management of tax processes 6. Pragmatism and weighted options as tax management strategy 7. Some drawbacks: Inability to execute clampdowns, slow implementation of new measures 8. Ahead: More ICT rollouts, property enumeration done, and full tax harmonisation 9. Conclusion: Possibility of economic and IGR boom if peace and stability are allowed

IGNATIUS CHUKWU

W Introduction

hen the National Bureau of Statistics (NBS) released the 2018 half year statistical report of internally generated revenue (IGR) and declared Rivers State as the fastest growing IGR state, most eyes popped. Some could not believe it, except that the NBS has achieved huge credibility over the years. Rivers grew by 36.13%; Lagos by 16.88% - NBS The NBS, in their 2018 report, stated that though Lagos topped all other states in terms of volume of IGR generated, but that it was Rivers State that topped in growth rate within the period under review. A breakdown of the report showed that Lagos, Rivers, Ogun, FCT and Delta were the best five performers during that period. According to the NBS, Lagos State generated N196.395Bn, up by 16.88 percent from N168.025Bn in first half of 2017, to top the list. In second place is Rivers, with N60.906Bn, an increase of 36.13 percent, from the N44.742 billion recorded the previous year half quarter. BusinessDay findings however indicate that the state’s IGR had been very unstable over the years, the worst being the years before 2017, having once touched N7.6Bn per month. It shows however that 2018 seemed to be a turning point to the positive. BusinessDay investigations also showed that Rivers State began the upward drive with N2.5Bn per month in 2007 and pushed to average of N7.6Bn in 2014 but slumped to N5.5Bn in 2015. It kept the ups and downs up to 2017, with 2016 showing some sparks here and there. Gov Wike seemed to show concern on IGR and gave Norteh the marching orders. By May 2018, the Governor admitted that though the target was yet to be met, but that the Service under Norteh made impressive achievements. In 2018, the State projected an IGR monthly average of N12.6Bn but Norteh seemed to deliver an average of N10.01Bn per month. This must be why the Government reduced the 2019 target to N10.04Bn per month, probably taking into account that it is an election year with uncertainty. Norteh however seems to have an eye only on how to boost figures and targets. It was gathered that so far, the instability in the first quarter had not recorded drastic deviations to cause panic. View of the Organised Private Sector Many wondered how Rivers, a state always in turmoil; always in the news for instability in recent years with attendant relocation and closure of companies leading to steady reduction of taxpayers, would still achieve such accelerated growth rate. BusinessDay, Nigeria’s ‘Voice of Business’, began inquiries into the credibility and possibility of such reversal of fortunes when most persons expected a huge decline in IGR collections especially in such a tense and volatile economic space with turbulent environment. The leadership of the Manufacturers Association of Nigeria (MAN) in the state had explained that though full harmonization of taxes had not been fully achieved, but that pragmatic management approaches by the Rivers State Internal Revenue Service (RIRS) and the positive disposition of Governor Nyesom Wike to businesses and investors created a friendly tax environment. MAN, until recently led by Charles Beke,

stated in their annual reports for 2017 and 2018 (AGMs) that no tax case reported to the authorities failed to get instant attention from the government. This was concurred by the highly regarded Ibifiri Bobmanuel-led Rivers Entrepreneurs and Investors Forum (REIF) who stated in their ‘Rivers Debate’ media briefing that tax harassment was one of the striking matters tabled to Wike when he won as governor in 2015 (and to all the top governorship candidates) in that election. He admitted that the matter has been given huge attention. A report by Emi Membre-Otaji, a medical doctor, who just handed over to Nabil Saleh as president of the Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture (PHCCIMA) late in 2018, consistently mentioned tax friendly environment as one of the major highpoints of the present administration. All the business groups that make up the organized private sector (OPS) in Rivers State have however called for full implementation of tax harmonization in the state to boost investor

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If you ask me, I would say the most important task we have executed is creating ease of paying tax in Rivers State and creating sanity and stability in tax administration. We have done this through decentralisation of offices - Norteh confidence. Some other business gurus and groups who have continued to demand for policies to boost ‘Ease of Doing Business’ (EODB) in Rivers State have admitted that the surge the state has witnessed in the scale came mostly from enthronement of friendly tax processes and environment. They said this would help the state achieve a health position in the comity of states in Nigeria. Efforts by BusinessDay since November 2018 to get into the womb of the tax management system in the RIRS as well as to hear from its executive chairman only paid off March ending 2019 when BusinessDay was ushered into the chairman’s offices. The spotless environment and careful choice of colours were enough to indicate order and methodical approach by whoever was in charge. Closer interaction showed that Norteh is a man who could easily switch roles with his interviewer to put the reporter under pressure. He rather asked the reporter what his own findings were about the Revenue Board, about the executive chairman, and about the www.businessday.ng

Nyesom Wike, Governor of River State

Adoage Norteh, Executve Chairman, RIRS.

tax environment at the moment, and what it was in the past. He insisted on reporters making their own findings. Norteh’s concerns and strategies BusinessDay gathered hints from the RIRS about the chairman’s concerns, his personal targets, and his strategies. How to get people to pay tax with ease What seemed to preoccupy the chairman’s mind as the man at the helm of affairs of tax administration in Rivers State is asking questions and finding the answers. The most important question in his mind, it was gathered, is whether it is possible for people to pay taxes in seamless approaches. The answered he got from his questions seemed to push things in different directions to get the kind of result the state has got now. He believes that the system is quiet now: Before, it was outcry over multiple taxes, audit invasions, and many other complaints. All of that is gone, according to most CEOs in the state. Norteh knows what the figures were before he came and what they are now, they are certainly not the same. Another concern to the Rivers State Tax Master is said to be the situation where companies are leaving Rivers State in droves: Norteh at least is certain that that this is not because of tax cruelty or crisis of taxation but because of other reasons which may not be far from the peculiar situation in Rivers State. But these tell on the IGR volumes. For instance, if a company employing 200 persons leaves, it means 200 persons have left the state’s tax net. So, if everybody agrees that companies including international airlines are leaving the state in droves, why is Rivers IGR still growing at the fastest rate? This seems to be the crux of this inquiry. Any discerning person has to look for that rea-

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son why revenue is increasing while companies are leaving. Investigations reveal that the critical factor is the efficiency that the RIRS Board has brought to bear on the tax system in the state, the competence and efficient revenue collection mechanism that the Norteh Board has brought to the table. Experts agree that; “Tax is a code or laws for levying the citizens while Revenue is more like the techniques of implementing those laws to generate income (naira and kobo) for government’s use. It’s just a technical difference. So when you talk about revenue generation, you must talk about appropriate techniques for tax.” Tax, some say, is an amount of money levied by a government on its citizens and used to run the government. Revenue, on the other hand, is the income of a government from all sources, used to pay for a nation’s expenses. RIRS’S new magic Norteh is believed to have come up with strategies that have made the Rivers State IGR to rather be on the increase despite the exodus of workers and bad atmosphere. The answer, they say, may not be a straight solution like in a classroom scenario because the situation varies from place to place and even from regime to regime on same tax jurisdiction. After all, it is said, the federal government has what to collect, the states have theirs, and the local councils have theirs. There is also the dividing line between what a state and its local councils can collect. To him, the bottom-line is, are the taxpayers paying with ease? To achieve this ‘tax-with-ease’ objective, Norteh and his team embarked on some programmes. Some of them are listed in the Board as ICT roll-out, tax audit red flag system, and annual filing modification system. ICT rollout is the broad solution because everything also comes back to leverage this. The Norteh board keeps asking whether it is possible for you to stay in your office and file your annual returns? Why is it impossible for you to make transfers to the Board

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of Internal Revenue Service in the state the same way you transfer money for your other transactions? These questions drive the Board to the programmes they have created. The job may have been made easier because he put himself into the picture as a taxpayer himself. Filing of Annual Reports: This is another critical area that has attracted the attention of the chairman. The filing of Annual Report serves as voluntary compliance mechanism. The chairman has encouraged this because it breathes healthier relationship between the tax authorities and the tax paying public. Tax Audit: Norteh believes that this is a key component of the strategies he and his team deployed to salvage the state’s IGR, He is said to have played down on tax audit visits because he found that it created friction between the RIRS and the tax paying public. It is no more like sending auditors out like invaders every year. Instead, they do it randomly, like an investigation. He rather encourages companies to make filings and willingly report their operations. The RIRS now reviews their filings and see what they paid as taxes from the filings they submitted. This approach makes a great deal of use of red flags, according to insiders. Audit teams now act on red flags and carry out random sampling. To the board, red flags appear when your filing remains same, year in, year out; and tax experts would begin to ask; does it mean that this company does not increase staff, sack or promote? The auditors also look out for sharp increases or decreases in the filings. Tax Master’s eagle eyes The eagle flies high in the sky but sees everything below; so is the tax master. The RIRS boss is understood to have his strategies. Some people present withholding tax receipts, but while they expect to use it to make tax claims, the RIRS too uses it as red flag to know how much revenue they may have made. The Board now wants to know if they paid tax on that income and if it was indicated in the Annual Returns of that year. This is because most companies are believed to make partial disclosures. A cursory look at any financial statement could reveal a whole lot of information about tax payment. If for example, a firm has bought fixed assets with a particular amount, but the cash flow statement does not indicate the source of the inflow, then the question comes; is the inflow income, is it loan, is it from the business, is it a gift? If it is none of these, it could mean that the company has simply depressed its profit for the purpose of company income tax. Though company income tax is not the business of states’ Internal Revenue Service (it is for the FIRS), but to the extent that salaries may have been inflated to depress profit, the appropriate tax must be paid on such salaries. Also, rent payment and other purchases made are tax indicators regarding withholding taxes. The withholding tax goes to the FIRS, but if it’s an individual, it goes to the state’s Internal Revenue Service. If though withholding tax deductions were not made or it was made and not remitted to the relevant tax authority, then trouble has started, because the law has made withholding tax deductions mandatory. You cannot eat your cake and have it, as the RIRS

boss seems to insist. When loopholes are closed, you will naturally hear people uttering such things as we are not doing anything, things are hard, etc. Yes, the tax masters know that the economy is bad but the RIRS says it asking for transactions that already took place. The tax they are asking for, as a state Board, is not profit tax and has nothing to do with business loses. It is tax already deducted from workers and or withholding tax collected from vendors on behalf of the Government. An enterprise that is not obligated under the law to submit Annual Returns to FIRS is still obligated to deduct and pay over the state, PAYE as well as taxes withheld from vendors and contractors. In the thinking of the tax master, however, profit comes into play if such profit is also the income of the owner(s), then the tax becomes due on that income. That is why the Board would say, unless the taxman does not want to come and collect his taxes, one cannot escape tax in the long run. It is said that only two things are certain in life: tax and death. Norteh does not, however, want to take the risk of underrating taxpayers because, according to him, they are very smart. He believes that they understand these things, but knows that in Accounting, there is debit and there is credit. You cannot have a one-legged entry. So, no matter how you want to dodge, what you dodge in one side will appear in another side. If for example, for any asset acquired, the account must disclose the cash flow irrespective of its source including if it comes from the normal cause of trading. So, where did you report it? If you are an individual, that inflow should/must be an income on which tax must be paid. If it is an incorporated company, it is obliged to pay the appropriate profit tax. In this guise, it becomes the responsibility of FIRS. It is for this reason that collaboration for various tiers of tax jurisdiction becomes necessary. There is collaboration between the FIRS, State and Local Government who are empowered by the constitution to collect various taxes. There is collaboration between states, too. For instance, if some people claim that the expatriates on their list are in another state, the RIRS will write to the relevant State Internal Revenue Service to please confirm. This way, they track these things and the appropriate state earns the tax. Harmonisation overview The local councils are where most states have had issues because there are several local councils (774) in Nigeria. Sometimes, people are confused about the taxes the LGAs collect or whether the people that stormed them were actually their staff/agents. This leads to the much-talked about clamour for harmonization. Norteh interprets this concept to mean collaboration whereby both the state government and LGAs agree to put the collectables together and allow one body to collect all and split through the help of ICT. This, too, is not easy because the total amount may appear huge to the taxpayers and they may begin to dodge or pose resistance that may affect the total collectible. There is a lot of work to be done in that area. Tax atmosphere: To achieve healthy tax atmosphere, pragmatism seems to be the key. Sometimes barging into a company may be legitimate but it creates panic and bad image that often work against the state. What the RIRS under Norteh seems certain to report is that Rivers State now enjoys a tax friendly atmosphere at the moment, even as the Service is raising revenue astronomically, if you like. The chairman rather likes to describe it as modest increases, though the IGR has been increasing. He knows what we it was in 2017 when his team came, and in 2018 the RIRS surpassed the 2017 amounts by a substantial margin. All of that happened without roughing the feathers of taxpayers. You can exercise caution or use different methods on different companies. The objective is not to scare away companies and help to ruin those already limping. No! Sanity www.businessday.ng

has however returned on the streets of Port Harcourt. People have testified that the usual fights on the streets of Port Harcourt over tax collection are a thing of the past. How to report tax figures The RIRS boss seems to realize that almost every single journalist that calls for interview is out to obtain figures, probably to cause political sensation. When the chairman does not readily give out the figures, hue and cry follows. When contacted on this, he said: “Yes, I am the chief executive here but I think that Government does not operate that way. We have channels for releasing figures. For instance, we send figures to the Joint Tax Board (JTB) and the figures in turn go to the National Bureau for Statistics (NBS). We also send figures to the Ministry of Finance for local consumption. It thus does not look good to me to go to the public and say these are the figures. Government does not work that way. These figures are in the public domain, just that it is not released the way some people want it. Even the NBS does not release randomly but periodically. So, why should any state’s Revenue Board begin to release figures anyhow? In Rivers State in particular, every-

thing is politicized. Those asking for figures, they are not asking for fiscal application but for political manipulation. Also, if you obtain figures on income, have you asked for figures in expenditure? That is why there is a method of dissemination. If it is not disclosed any time, it is disclosed at the budget presentation time. Go to the website, it is there. Figures are a government matter. I am in one small unit of that Government.” Tax has no political colour Those who think politics is being played in the way tax is collected may be misfiring. The boss says; “Tax has no political party logo or flag. I am not a politician and I have never been one at any point in my life. All I have is a job am privileged to do because there are countless persons qualified to do it”. Other key achievements Findings show that there are many achievements recorded but they cannot all be captured in one write-up. ICT is only the central programme carrying most of the activities so far mentioned above. There are loopholes in the tax society. The RIRS boss feels that there are those who do not pay anything to the Government. They wait until the auditors come, and they now begin to seek manipulations. The Board does not even bother with such people, it was gathered. They simply investigate them. There are things you do and you invite investigation, such as failing to file, failing to pay anything, report of overpayment, etc. The Board has also done things in terms of staff rationalization and alignment to fit people to jobs with greater efficiency.

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Ease of Doing Business drive If you ask Norteh, he would say the most important task his team has executed is creating ease of paying tax in Rivers State and creating sanity and stability in tax administration. They seem to have done this through decentralization of offices in addition to massive ICT rollout. Zero tolerance to cash transactions The other thing he seems to be proud of is zero tolerance to cash transactions or paying with cash. He is on record to always warn, thus “If you give cash you are on your own, because until that money gets to the government account, you have not paid. That is why a lot of people end up paying twice.” Red flags; a sample How would somebody say he is a bricklayer and his tax is between N5,000 and N15,000 per annum. Then he goes to the tax board religiously to ask for tax clearance certificates year after year. Many in the RIRS wonder: “Does it make sense to you that he insists on tax certificate? You see, it is a red flag. What does he need tax certificates for? He wants tax certificate, not just tax receipt. Ok, somebody says he is a petty trader selling crayfish, pays small tax, and then

wants tax certificate. The truth, maybe, is that he wants to buy land, or travel abroad, or is into stock brokerage. And, if you look at their photographs, you see somebody that does not look like a bricklayer o crayfish seller. There are so many things you have to examine.” Tax efficiency gives the boost The writer can now come round to answering the question that agitates the minds of many; what must be responsible for the surge in Rivers IGR in the face of instability and exodus of companies and taxpayer. The best approach in answering to realize that it is important to ask what the Norteh Management has done to avoid drop in IGR despite the negative factors in the environment. The reporter can identify ICT rollout, which is said to be work in progress. The inquirer can also see creating transparency and integrity in the tax administration, creating friendly tax environment to encourage voluntary compliance and thus getting many more payers into the tax-net to compensate for the numbers exiting from the net, and boosting efficiency in collection and remittance to government. Projection: Findings indicate that enumeration is ongoing and substantial part has been completed. Sources at the RIRS say this will help in many ways. But is the Tax Master satisfied with the increase in IGR? His answer is not at all. He believes that with stability and peace in the state, the IGR would surge even higher to where he has set his own target. Which target he will not disclose.

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Monday 15 April 2019

BUSINESS DAY

real sector watch

Roads, policy, harmonised taxes top Ogun manufacturers’ demand from Abiodun

...Gov-elect assures manufacturers will be his priority Odinaka Anudu

anufacturers in various clusters in Ogun State are asking Dapo Abiodun, governor-elect of Ogun State, to renovate industrial roads and cut back multiple taxes levied on investors by the outgoing administration in the state. Speaking at a strategic meeting between Ogun State chapter of the Manufacturers Association of Nigeria (MAN) and the governor elect at Flour Mills of Nigeria (FMN)’s factory in Agbara last Thursday, Paul Gbededo, group managing director of FMN, said due to the peculiar situation of the roads leading to the Ogun State Property and Investment Corporation (OPIC) industrial layout in Agbara, FMN and a few other members of MAN have, over the years, executed palliative measures to help improve the state of the roads. “However, much more needs to be done. I will like to put on record that the only motorable road within the OPIC Estate was constructed by members of MAN within the estate,” Gbededo said. The Flour Mills of Nigeria’s boss said reconstruction of Agbara / Atan road is critical, adding that though

manufacturers are willing to collaborate with the government on this project, government needs to take the lead in ensuring its proper and timely completion. “Some of the companies operating within OPIC have been negotiating how to get this road constructed to enhance our ease of doing business, including preparing and submitting the schematics of the road to the Federal Ministry of Power, Works and Housing. With the monumental benefits that will accrue to Ogun State with the reconstruction of this road, the importance of the state spearheading the efforts to see this project through cannot be over emphasised,” he said. “We cannot, of course, forget the issues of drainages within OPIC Estate. We need to address this to ensure that the roads do not revert to their poor state after there are rehabilitated during the raining seasons,” he said, adding that as part of plans to create an enabling environment where businesses will thrive in Ogun State, manufacturers are appealing for harmonised levies, fees, taxes and permits, which are multiple. Ogun State is currently Nigeria’s leading industrial hub, with virtually all the large enterprises in Lagos having a factory in the state. But the state is hard hit by insecurity, poor infrastruc-

A road leading to OPIC, Agbara, Ogun State photo by Odinaka Anudu

ture and money-chasing regulatory agencies hampering investments. Recently, Procter& Gamble, located in Agbara, which was until July 2018 United States’ biggest non-oil investment in the

country, packed up. Seleem Adegunwa, chairman of MAN, Ogun State chapter, joined Gbededo in saying that infrastructural development is vital for the manufacturing sector to

thrive. He explained that the activities of government agencies, particularly the Ministry of Environment, are sometimes inimical to investments. “Consider cabinet members from people with private sector background,” he advised the incoming governor. “We know you are already doing this, but we realise that it is impossible for appointees to give what they do not have,” he added. Segun Dada, chairman, Nigerian Association of Small Scale Industrialists (NASSI), said 1.6 million people in Ogun are entrepreneurs, meaning that paying a closer attention to them will revivify the economy of the state. He proposed the Enterprise Development Agency, which will be quasi-autonomous, to help develop the entrepreneurship landscape of the state. Olanrewaju Ogunbajo, MAN’s treasurer in the state, said though there are constraints for the incoming government, Abiodun needs to exploit the proximity of Ogun to Lagos. “We urge you to engage the manufacturing sector and explore low-hanging fruits,” he said. “You have willing manufacturers that think out of the box and you can make Ogun attractive for people

who wish to live here,” he admonished. Kunle Oluomo, deputy speaker of Ogun State House of Assembly, promised laws that will support the growth of the manufacturing sector in the state. “MAN is very lucky because the presence of governor-elect underscores the importance he attaches to manufacturers. Let me assure you of investor-friendly laws under the incoming government.” While delivering his speech, Abiodun, the governor-elect, said he plans to increase the ranking of Ogun in the ease of doing business scale. He promised to meet manufacturers twice a year and assured that he will focus on rural and industrial roads once he is sworn in. Abiodun assured investors that he would set up a security trust fund which would be well-managed and robust. “For people to pay taxes, they must also be sure they get something in return,” he said. “Whatever we need to do to create the enabling environment, we will do,” he added. He said he and Babajide Sanwo-Olu, governor-elect of Lagos, are working on creating Lagos-Ogun Joint Development Commission to collaborate in critical areas, especially transportation.

ence to ensure that they are readily available at supermarkets, open markets and street shops all over Nigeria. A source said, “I can assure you that the market is going to love it because of its ability to transform many foods. I can also tell you that some privileged Nigerians that have used it, confessed it was truly a positive culinary and eating experience for them”. Nigeria’s seasoning market parades many brands. Leading the park is Maggi from the stable of Nestle Foods, then Knorr and Royco, produced by Unilever These brands are leaders in their various market segments. Other brands include Tasty cubes, Onga,

Mr Chef, Mamador, Doyin seasoning cubes, Prime seasoning cubes, Suppy cubes, and Devon King’s seasoning cubes. The seasoning market is, however, ramping up growth with new products making inroads into the market. Experts say established brands now need to restrategise to avoid losing positions to new entrants like Terra Seasoning cubes desirous of taking a chunk of the market. Before the introduction of modern food seasonings in cube and powder forms, there had been several local seasonings, such as Iru, Ogiri, and Dawadawa many of which still feature in many Nigerian cooking pots till date.

A peep into TGI’s new Terra Seasoning Cubes

he competition in the food seasoning market is poised to get stiffer as Terra Seasoning Cubes is set to be introduced into the market this today. The product is from the stable of a company within the TGI Group, the conglomerate that produced Chi Limited. The Group has also produced established brands such as Chivita, Hollandia, Renew Starch and Big Bull Rice, among others. The producers of Terra Seasoning Cube, which will come in two variants, Beef and Chicken, are confident that it will most likely disrupt the seasoning market because it was specifically designed to fit the flavour

palates of Nigerians. It was also learnt that

while packaging is superb, the makers and distributors

of the new product will rely on their wealth of experi-

L-R: Frederick Mordi, corporate communication and government affairs manager, Cadbury Nigeria Plc; Lanre Odunlami, senior private sector partnerships associate, United Nations High Commission for Refugees (UNHCR) Abuja; Oyeyimika Adeboye, managing director, Cadbury Nigeria Plc; Antonio Canhandula, country representative, Nigeria and ECOWAS, UNHCR; and Babawale Owolabi, head of Lagos field office, UNHCR, during a courtesy visit to Cadbury head office in Lagos recently. www.businessday.ng

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Monday 15 April 2019

BUSINESS DAY

real sector watch

FMAN eyes revolution in flour industry, invests millions in empowering bakers Gbemi Faminu

lour Milling Association of Nigeria (FMAN) is targeting a revolution in the industry as it pumps millions into capacity development of bakers and equipment acquisition for them. On Friday, several bakers graduated from the 13th batch of FMAN’s empowerment programme, which it did in partnership with the Yaba College of Technology’s Food Tech department, Lagos. Lanre Jaiyeola, managing director, Honeywell Flour Mills, at the graduation ceremony, said there were plans to make major improvements on the programme, especially as a similar programme on the platform was going on at Kaduna Polytechnic. Jaiyeola, who doubles as

the vice chairman, Flour Milling Association of Nigeria, also stated that the training was aimed at improving the baking industry in conformity with global trends. He explained that the training also involved those attaining retirement. All together, 38 beneficiaries— both male and females— participated. “The programme is aimed at empowering people, including experienced bakers, through a shift from the orthodox knowledge, operations and baking methodology to modern-day methodology, which is important for experienced bakers who need to develop their products and services so they can catch up with the trend in the baking space,” he said. “The FMAN invested the sum of N26 to N30 million in acquisition of various baking equipment just to foster development in the baking

space and flour industry as well, so that Nigerians can benefit from the wealth of knowledge of the resource persons resident in YCT. Today, 38 beneficiaries have been taken through various ways of handling flour and shown various ways through which they can handle flour,” he added. Speaking on the milling industry, he said, “The milling industry is witnessing transformations. Before there were 15 milling industries in Nigeria but over the last five years the industry has witnessed a lot of consolidation, mergers and acquisitions, leaving just six to seven active players in the industry. This means that competition has become tough, although healthy.” “In terms of volume, wheat, which is the major raw material, has been relatively flat and the growth is less than five percent year on year,

although the milling industry has actively contributed to the country’s GDP, especially in the food and beverages sub-sector because it fosters value creation in organisations and among individuals,” Jaiyeola added. A representative of the course facilitators commended the association, Honeywell, Flour Mills of Nigeria and other partners for their consistent efforts in contributing to individual empowerment of Nigerian citizens over the past 13 years. He encouraged the sponsors of the programme to reach out to other states and replicate the empowerment to other citizens. Akinlade Sanmi, a beneficiary of the training, said even as an experienced baker, the programme has helped increase his knowledge and expertise, which will be relevant for his business expansion.

African Foundries explains liquid metal incident

n incident took place on 11th April 2019 at African Foundries Limited, Ogijo. In a statement signed by Uche Iwuamadi, executive director of the steel firm, the company explained that there was splash of liquid metal from the furnace in the factory at about 7am that day. “The liquid metal splash accidentally touched three of the company’s factory workers who have already closed from work but were taking their bath in an open place in an unauthorised location described as restricted area within the factory instead of the normal factory bathroom and they were injured in the process,” the company said. “They were rushed to t h e n e a r by h o s p i t a l i n Ikorodu where they later

MAN seeks China option in reviving Nigeria`s industrial sector … Holds first ever National Council Meeting in Kano Adeola Ajakaiye, Kano

he Manufacturers Association of Nigeria (MAN) has used its first ever national council meeting held in Kano, northern Nigeria`s biggest industrial economy, to kickstart a conversation on how explore the current healthy economic relations existing between Nigeria and China to reawaken industrial activities in the country. MAN is of the view that the near –excellent bi-lateral relationship between the two countries dating back to over five decades has matured to a point in which it should begin to yield more positive economic results, particularly for Nigeria. How to concretise the thinking was the theme of a Roundtable Discussion entitled ‘Leveraging on ChinaNigeria Economic Relations to Re-Industrialise the Economy’, held on the sidelines of the national council meeting of the association concluded in Kano, weekend. Delivering his address, Mansur Ahmed, national president of the association, said that his 2,700- member association is promoting a conversation on the theme of the roundtable, as part of its mission to rejuvenate manufacturing activities in the country. “As you are aware, MAN is the umbrella body of the Nigerian manufacturing sec-

tor with over 2,700 manufacturing companies in Nigeria across the sector from Small and Medium Industries, to large multinationals. “Part of our advocacy strategies is continuous dialogue at both national and sub-national levels, so this morning `s dialogue session is in pursuance of this mandate,” he noted. According to the MAN `s president, the theme of the roundtable is anchored on two pertinent observations, first, the slow pace of growth of industrialisation, especially, the manufacturing sector in the country as a whole. But even more worrisome, he disclosed, was the process of de-industrialisation that is increasingly evident in some of the states. Kano, in particular, has suffered in this regard over the past two decades during which almost half of its thriving manufacturing establishments have shut down. Ahmed added that MAN, the government and all other stakeholders must be concerned and explore all potential strategies to arrest and reverse the de-industrialisation process in the country. “The second observation has to do with the increasing Chinese influence on the global economy and specifically on developing countries such as ours, and the opportunity this opens up for our economy. It`s now common knowledge that China has become the 2nd www.businessday.ng

largest economy in the world (GDP over $10 Trillion) and is rapidly becoming a major factor in the changing global economic order. “In 2015, the Chinese government launched the ‘Belt and Road Initiative (BRI)’ as a global economic development strategy aimed to change the architecture of the world economy. BRI involves a $900 billion infrastructure and investment programme designed to connect over 67 countries in Europe, Asia, Middle East and Africa, to China with the goal of changing the direction of trade and investment flows. “In September 2018, Nigeria joined the Belt and Road Initiative. The focus of the Nigeria-China MoU was mainly on infrastructure development, especially in power and transportation sectors. We are all aware that many ongoing projects in these sectors, both at the federal and state levels are indeed being financed by the Chinese. “We are also aware that BRI also covers other areas of investment opportunities, including industrial and SMEs development, trade facilitation and human capital development. It is our desire to explore during this dialogue how the growing Nigeria –China economic relations and the BRI can be leveraged to attract more investment in our manufacturing sector and reverse the direction of de-industrialization in our country,” he explained. https://www.facebook.com/businessdayng

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passed on. The local staff rioted in conjunction with outside hoodlums and caused damages. They looted the company’s property and cash. They also attacked the foreign nationals staff causing injuries to some of them. They disposed them of their personal effects and cash in their residential quarters within the plant,” the company added. The statement said the estimated loss to the company was yet to be determined, adding that with the inter vention of the Nigeria Police and Nigeria Army, the situation was brought under control. “The company has also reached out to the families of the deceased for condolences and necessary settlement discussions and everywhere is presently calm,” the company stated.

Monday 15 April 2019

BUSINESS DAY

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Old Mutual braces to close gap on critical illness protection plan Stories by Modestus Anaesoronye

Quick tips: Developing a savings habit

ack of critical illness insurance (cover), which is currently lacking in Nigeria’s Health Management Organisations, is causing untold hardship and agony to families and households when they have to bear the cost of treatment of their sick relatives from their meagre incomes and savings. Currently, over 800 million people worldwide spend at least 10 percent of their household budgets to pay for health care. In sub-Saharan countries like Nigeria, medical expenses are often made through outof-pocket payments with little coming from government or privately structured healthcare management initiatives. In the case of terminal illness, many sufferers have lost their jobs and their source of income significantly affected. Families have been driven into poverty in a bid to raise money for the treatment of loved ones. Unfortunately, insurance which ideally serves as financial protection has not been fully utilised by Nigerians, says Keith Alford, managing director, Old Mutual Nigeria Life Assurance Company. In response to the gap evident in the Nigeria healthcare space, Old Mutual Nigeria Life Assurance Company, a subsidiary of the pan-African insurance giant and leading global financial services group, Old Mutual Limited has announced a partnership deal with Roche and Hygeia to expand offerings in the healthcare sector to critical illness.

ON THE MONEY

L-R: Obinna Ukachukwu, executive head, Business Development and Strategy, Hygeia; Keith Alford, managing director, Old Mutual Nigeria Life Assurance Company; Alero Ladipo, executive head, Marketing & Customer Experience, Old Mutual; Ladi Hameed, country manager, Roche Products Limited; and Kayode Odetola, head, Retail Mass Market, Old Mutual during the Critical Illness Cover partnership launch in commemoration of the World Health Day

The insurer said it is committed towards the provision of financial protection against critical illness for Nigerians. Old Mutual made this known in Lagos as part of its activities to commemorate the 2019 World Health Day, themed “Universal health coverage: Everyone, Everywhere”. The insurer said the partnership with Roche, a global research-driven healthcare and pharmaceutical company is to develop an innovative insurance plan for terminal illness, tagged the “Old Mutual Critical Illness Plan”. Keith Alford during the meeting with journalist highlighted the importance of Healthcare Coverage, stating that with Universal Health Coverage everyone can obtain the right kind of medical care they need and in due time, without suffering financial hardship. Alford also noted that this financial hardship becomes heightened in the cases of

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terminal illnesses, due to their sometimes prolonged costly treatment and deadly impact. “There is a need for us to plan with insurance policies specially designed to provide protection from the financial burdens of terminal illnesses. It is to this end that, we entered into a partnership with Roche to develop this innovative insurance plan to protect Nigerians from the financial implications of terminal illness.” He stated further that, “As we commemorate World Health Day, we use this occasion to call on Nigerians to choose life and take up insurance as a protection against the financial burden of terminal illnesses, that usually invade lives unannounced”, he added. Alero Ladipo, executive head, Marketing & Customer Experience, Old Mutual said as a company, they have realized that insurance can actually play a role when you are faced with serious health

condition. She said Old Mutual is here to partner with individuals on how to protect their life and have peace of mind through adequate healthcare. Ladi Hameed, country manager, Roche Products Nigeria said in our society today, we only cover basic health care, stating that it has become important to partner with institutions like Old Mutual to develop innovative healthcare packages that takes care of critical illnesses. Obinna Ukachukwu, executive head, Business Development and Strategy, Hygeia who was also part of the panel of discussants said, with the coming of Old Mutual the gap in providing critical illness coverage will be addressed. Ukachkwu stated that critical illness requires a lot of funding, stating that only organisations like Old Mutual with the financial muscle can support the health sector in closing the wide gap.

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hen it c o m e s to saving money, we can all agree that it is easier said than done. We make countless promises to Save but never do, though we know that this is threatening our future goals. So how can I develop the savings habit? Firstly, set aside an amount when you get paid. In other words, pay yourself first - and make sure you look after your future. Today we are providing the necessary steps required to save: 1. Record your expenses; Before you know how much to save, you need to figure out how much you spend. Keep track of all your expenses—that means every expense, from a recharge card, the toll gate fee and your entertainment. Once you have your data, organize the numbers by categories, such as housekeeping, food and transportation, etc and total each amount. You can also consider using your bank statements to help you with this. 2. Plan a monthly budget and don’t exceed it; Once you have an idea of what you spend in a month, you can organize your recorded expenses into a workable budget. Your budget should outline how your expenses

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measure up to your income— so you can plan your spending and limit overspending. 3. Decide on a specific amount and invest it every month in a savings plan. Now that you have a budget, create a category for savings. It is advisable for you to start saving at least 10 to 15 percent of your monthly income. If this is too much, you may need to re-examine your expenses and cut back on some unnecessary spending and find a way to achieve your saving goals. 4. Pick the right saving method; You could choose what type of savings plan you want to invest in. This could be a simple savings account, but the best way is to talk to a financial adviser. They’ll give you the advice on how to save and, most importantly, grow your money. Reputed for our sound financial advice over the last 170 years, this is where Old Mutual comes in. You can call us on 01-2719393 to arrange a free financial education session for your team, or on a one-on-one basis. Our financial advisers can help you with savings and insurance services. For more information, visit your nearest Old Mutual branch or go to www.oldmutual.com.ng. We look forward to helping you with your money matters.

Monday 15 April 2019

BUSINESS DAY

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Large funding coming for InsureTech, as Africa Re drives initiative in continent …Lemonade secures $300m in latest funding round Stories by Modestus Anaesoronye

lobally, technology is redefining the way business is done and the insurance industry is not left out of this disruptive change especially with the growth of InsurTech companies leveraging on best-in-class technologies to simplify the product life cycle for consumers. Africa Re, a leading reinsurer in Africa is driving the initiative in the continent with the launching of InsurTech Challenge, an initiative which aims at identifying, promoting and rewarding technology companies especially start-ups owned by Africans or built by individuals resident in Africa that are solving some of the identified challenges in the insurance value chain. At the global market, InsurTech start-up Lemonade has recently signed a $300 million Series D funding round led by SoftBank Group, with participation from Allianz, General Catalyst, GV, Our Crowd, and Thrive Capital. Lemonade is one of the most high-profile companies to emerge from the insurance technology wave with aims to digitising the

L-R: Idorenyen Enang, directors, Prorisk Insurance Brokers Limited; Derin Agbabiaka, company secretary; Aderemi Adekile, chairman; Oluwagbemiga Olawoyin, managing director; and Nurudeen Fagbenro, during the Company’s board meeting in Lagos.

entire insurance process; the company claims to collect 100 times more data than traditional carriers. Lemonade says it plans to use the funds to accelerate it’s US and European expansion in 2019, and explore new product lines. According to Africa Re,

InsurTech Challenge is a new category of the African Insurance Awards. It is targeted at non-insurers that are collaborating with insurers to improve their customer service delivery, product development and overall innovation all around Africa.

The grand finale will hold at a gala dinner during the annual conference of the African Insurance Organization (AIO) in Johannesburg - South Africa on 10 June 2019. The top 3 shortlisted companies will be offered a platform to meet the in-

surance industry. The winner will get a cash prize of $20,000. “In less than three years, Lemonade has expanded across the US, given back to dozens of charities chosen by our community, and fundamentally changed how a new generation of consum-

ers interacts with insurance,” said Daniel Schreiber, chief executive officer and cofounder, Lemonade. “Looking forward, we aspire to create the 21st century incarnation of the successful insurance company: a loved global brand that can endure for generations; an organization built on a digital substrate, enabling ever faster and more efficient operations, and ever more delighted consumers.” This significant funding round comes off the back of an active year for InsurTech investment. Analysts at Deutsche Bank found recently that volumes had increased by more than 60 percent between 2017 and 2018. Data also showed that InsurTech investments (across all stages) totaled $2.6 billion during the first three quarters of 2018, compared with $1.6 billion for the same period in the previous year. Concurrently, recent analysis by two industry executives highlighted that, despite recording robust premium growth in 2018, generating a sustainable loss ratio below 100 percent remained a challenge for InsurTechs. This transaction is subject to customary closing conditions including regulatory approvals and targeted to close in Q2 2019.

Allianz appoints new CEO to drive life operations in Ghana

llianz has appointed Gideon Ataraire as chief executive officer of Allianz Life Ghana. Gideon brings years of experience to the company and has a proven record of taking customercentric companies like Allianz Life Ghana to the next level. Until this move, he was the Head of Human Resources and General Services at Allianz Nigeria. Allianz officially launched its life operations in Ghana in May 2018 with

a promise to become the life insurance company of choice for Ghanaians. Allianz Life is striving to bring the best-in-class life insurance products and services as well as the expertise of the Allianz Group to the Ghanaian market. As new CEO, Gideon will bring to Allianz Life Insurance Ghana a wealth of experience in people management, building and managing start-ups as well as re-organization. “Gideon’s appointment is a clear reflection of our www.businessday.ng

Gideon Ataraire

company in Ghana’s current mindset: We have hit the ground running and are ready to take the industry by storm! Allianz Life Ghana is poised to make major gains as far as market share, customer service and use of technology are concerned, and we are excited to see what Gideon’s unique experience of managing startups will bring.” says Coenraad Vrolijk, regional CEO of Allianz Africa. The Allianz Group is one of the world’s leading insur-

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ers and asset managers with more than 92 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 673 billion euros on behalf of its insurance customers. Furthermore our asset managers PIMCO @Businessdayng

and Allianz Global Investors manage more than 1.4 trillion euros of third-party assets. Thanks to its systematic integration of ecological and social criteria in their business processes and investment decisions, Allianz holds the leading position for insurers in the Dow Jones Sustainability Index. In 2018, over 142,000 employees in more than 80 countries achieved total revenues of 131 billion euros and an operating profit of 11.5 billion euros for the group.

Monday 15 April 2019

BUSINESS DAY

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Monday 15 April 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

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How GEEP increases financial inclusion ...and its role in National and Economic Development

he Government Enterpr ise and Empowerment Program (GEEP) grants interest-free loans of between N10,000 to N300,000 in a graduating scale of N10,000; N20,000; N50,000; N100,000; and N300;000. Traders either start at N10,000 (TraderMoni), or N50,000 (MarketMoni), or N300,000 (FarmerMoni) depending on the scale of their current trade, and preparedness to meet the criteria at each level. When beneficiaries take a loan and pay back, they automatically qualify for the next higher amount. Each new loan requires simply dialing a USSD code. Disbursements happen in minutes into mobile wallets or bank accounts. One of the primary aims of GEEP is to increase financial inclusion and support for citizens at the lowest base of the economic pyramid. What is financial inclusion? Financial inclusion describe public and private efforts at making financial services accessible and affordable to all individuals and businesses, irrespective of net worth, income and size. Financial inclusion aims at proffering solutions to constraints that exclude people from participating in the financial sector. According to The Global Findex Database 2017, only 40% of Nigerian adults have an account with a financial institution or a mobile money provider. It is clear that financial inclusion targets the financially excluded populace – majority of whom are poor. Lack of access to formal banking infrastructure coupled with illiteracy in rural areas are primary reasons why the unstructured

A GEEP agent registering a petty trader in Ogun state

informal economy has a high number of users. With no access to banks and formal financial services, people adopt traditional methods of saving, and managing day-to-day expenses. Benefits of Financial Inclusion • Savings: Financial institutions offer traders profitable savings options, irrespective of their level of income or profit. Savings help businesses manage changes in cash flow, especially during downward spikes. This basic service offered by commercial banks serves as the basis for other benefits like microcredit. • Credit: With bank accounts in commercial banks, microfinance banks can study the saving and spending habits of traders.

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Based on these studies, loans can be offered to SMEs and micro traders. Studies show that access to credit can lead to larger and more profitable businesses. • Insurance: Microfinance institutions offer micro insurance that can be an important instrument for mitigating risk. • Easier and Safer Financial Transactions: Commercial and Microfinance banks offer easier, safer and trackable means of executing financial transactions. Transactions done traditionally in informal systems are not digitally documented therefore there is little or no security on such monies. • More informed Policy making: Policymakers increasingly recognize that a more inclusive

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financial market is directly proportional to economic growth and employment. With the advent of the Bank Verification Number (BVN), and Know Your Customer (KYC), and cashless policy directives of the CBN, the government has access to improved and more accurate citizens’ financial data. Thus enabling the ability to study spending habits, cash flows and other financial activities, thereby improving policymaking. GEEP and Financial Inclusion Financial inclusion requires significant behavioral change, even on the part of the people who would be obvious beneficiaries. They need to stop putting money under their beds. They

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need to learn to pool resources and increase their purchasing power. They need to open mobile wallets and bank accounts, and use them. They need to have a radical shift in their mindset, and build trust in the financial system to enable them raise their profile. It is a very difficult effort that combines behavioral science with finance, technology, education, while making it all so simple that a grandma can rely on it. GEEP removes the first critical barrier, which is the barrier of engagement. It gives beneficiaries a strong reason to want to try. They can only get the loans by opening a bank account or operating a mobile wallet. They can only repay via the bank or vouchers, no cash and they can only access the next one on their mobile phone. GEEP combines this with increasing investment in communication and education leveraging over 4,000 agents across the 36 states and the FCT. The results are encouraging; over half of GEEP’s 1.8 million beneficiaries are first-time operators of bank accounts or mobile wallets. And they use those tools even after the loans. What are the ripple effects? Through GEEP, the Federal government is committed to targeting the over 23 million Nigerians and micro-enterprises that are financially excluded or under-included. The ripple effects of including these traders and artisans financially would be an improvement in collection and management of data in Nigeria. Furthermore, such financial inclusion would lead to an increase in savings, disposable income and economic growth, and ease in making economic policies.

Monday 15 April 2019

BUSINESS DAY

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Monday 15 April 2019

BUSINESS DAY

Start-Up Digest

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How Damilola revolutionises Nigeria’s food space BUNMI BAILEY

amilola Lawal is the CEO of Beans Hub, a food processing business located in Lagos. The business is aimed at giving consumers convenience and a stress-free cooking experience. “Beans hub has just one product for now, which is the Bean Puree (blended beans),” Lawal says. “It comes in two variants— blended puree and peppered puree. Bean Puree is freshly made and has no preservatives, but it can be preserved by only keeping it frozen. It is a ready-to-cook meal. All you need to do is add little water, ingredients and cook or fry,” the entrepreneur describes. The idea behind her business came on November 5th, 2018 when she discovered that there were few people dealing in blended beans. “I was just going about my usual business of the day when the idea dropped. I said to myself, ‘this is unusual and must have come from the Holy Spirit’. I searched the Internet using Google and social media (especially Instagram) about anything that had to do with blended beans and found out that just a few people were in the business. All I really saw was the usual beans flour,” she explains. Now in her 20s, the young entre-

Damilola Lawal

preneur started her business with N10, 000 which was her personal savings. “When I initially started, it was really slow because it is not the regular usual market; it was something different,” she says. “I had a paid advert done, I got visibility and customers. I tried to sell more on Instagram, Twitter and

via word of mouth. Then gradually sales started coming in,” she recalls. Dealing in beans can be stressful especially with the picking and peeling processes that come with it. But with the help of her mum, it has become less stressful “For now, I have just my mum assisting in the whole picking and peeling process of the beans. But

Ifeoma Eze: Entrepreneur with passion for cooking Jonathan Aderoju

feoma Precious Eze is one of the millions of youths who have decided not to be lazy. She is a young and vibrant entrepreneur that is in the business of catering and is passionate about cooking delicious dishes. She obtained her National Diploma from Yaba College of Technology and is now a 300-level student of the National Open University, studying Mass Communications. She was under the tutelage of Real Sumptuous Catering Services in Lagos. Today, she has her own catering firm known as Ifyshines Catering Services. The young entrepreneur was inspired to go into this business because she loved eating and cooking healthy meals, and also had the passion to empower youths like her who had passion for cooking. Ifeoma started this business with as little as N20,000, which she saved from rendering assistance to friends and a former boss. The passionate caterer says her business has grown more than it started, from the regular house parties and house warming to big events such as weddings and big social gatherings.

She looks forward to improving her brand so as to get more clients. Ifeoma is helped by friends and family members who are less busy, although the caterer plans to employ more hands within the year so as to help reduce the rate of unemployment in the country. She sources her food items and materials from Mile 12 Market in Lagos and other local markets. Ifeoma speaks on the challenges she faces in her business. “The challenge confronting me now is that I don’t have most of the important catering equipment yet. I also face financial challenges too. I know if I had

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enough capital to expand this business, I would become a caterer to reckon with today, but all hope is not lost yet.” She urges the government to support entrepreneurs by setting up skills acquisition centres and then giving out tangible start-up funds to help boost businesses. The entrepreneur says people should buy her products because she prepares healthy meals. The young entrepreneur carries out her business in a clean and serene environment. For her, ‘cleanliness is next to godliness’ means ‘clean kitchen begets good health’. On her business expansion plans, she is looking forward to establishing a catering school where she can enrol students and unemployed youths who have passion for cooking. She also wants to have restaurants in different locations. She advises youths who are unemployed and have a dream to never give up on what they believe in and whatever their dreams might be that is not illegal. “Never give up on your dreams and vision. In as much it is legal, stay focused; don’t embrace negative-minded persons around you. Stay positive and creative with your skills, be committed, and don’t be discouraged.”

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with time, I will get helping hands,” she assures. Every business comes with its challenges and Lawal is not left out, as she faces insufficient electricity supply, lack of personal grinding or milling machine as well as low product visibility. “Electricity is really crucial for preservation before it goes over to the consumer. Not having a personal grinding or milling machine can slow down work most of the time for me, but I am working towards getting a personal grinding machine and getting people to know my product since it’s not the regular beans flour everyone is used to,” she says. Lawal feels that the government can help her business by improving the electricity challenge. She maintains or increases her customers’ base by ensuring that she meets their needs to the fullest. “I ensure my clients are fully satisfied with the services I provide, starting from the moment they make their orders up till the time they finally use the products. I ensure the thickness of the bean puree is consistent and I also sell convenience to them,” Lawal notes. The economy has been struggling since its exit from recession in 2017 and this has led to low purchasing power from consumers. But the Banking and Finance graduate from Covenant University

has tried to make the product affordable for consumers. “I have been able to make my product very affordable so it does not drain the consumers’ pockets,” she says. One of the people that inspired her was Morenike Molehin, the chief executive officer of Oak and Teak Interiors. She describes her as a motivator and real role model. “She is a woman who is consistent in her business, family and spiritual life. I study her and I am convinced that I am not too young to build an empire. In fact, I’m too old to do so,” she jokes. Lawal is also being more innovative as she is working on another product. “I am working on another product that does not require getting the beans frozen or refrigerated. It would also be comfortable to move to different states or countries,” she explains. The entrepreneur is a very simple person that believes that everyone is entitled to their opinions. She also believes that in the next five years, her product will have been sitting on almost every shelf in Nigeria and available in shops outside the country. Lawal advises young entrepreneurs to get into any business and do things legally, diligently and consistently. “Don’t be ashamed of your business, make it your gold,” she admonishes.

YALI Network in Nigeria has over 160,000 registered members, says US Consulate ...as Ajimobi shares success tips with budding entrepreneurs Akinremi Feyisipo, Ibadan

ussell Brooks, United States Consulate public affairs officer, has said that the Young African Leaders Initiative YALI Network in Nigeria currently has more than 160,000 registered members who have free access to online courses and information on events and workshops to develop their leadership skills and advance their career goals. Brooks disclosed this while addressing 105 young, talented, ambitious entrepreneurs participants at the 2019 YALI conference for emerging entrepreneurs held at the Ibadan Business School, Bodija, Ibadan,the Oyo state capital The vocational, technical and entrepreneurship training was organised by the Field of Skills and Dreams Academy and supported by the United States Embassy and Consulate in Nigeria. He urged the budding young entrepreneurs to see themselves as risk takers, who should be ready to face all odds without looking at the negative consequences in their quest to reach for the stars. He told the gathering that the US was interested in the Nigerian youth entrepreneurship because of its belief that the body of youths represented solution to the nation’s @Businessdayng

economic dilemma. “Our (America’s) interest is in our belief that you, the youths, represent the future of the African continent. You represent the future of Nigeria,” he said. While saying that the youths represented the greatest resource for a prosperous Nigeria’s future, he noted, “Only you can provide a good future for the country so that Nigeria can take its rightful place in the comity of nations.” He, however, said that resource persons for the conference were drawn from digital entrepreneurship, blogging, agriculture, hotel and catering management, among others.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

Monday 15 April 2019

BUSINESS DAY

Start-Up Digest

We are pioneering revolution in frozen yoghurt industry - Eigbe-Akindele Ehime Eigbe-Akindele is the founder & CEO of Sweetkiwi. She is a Goldman Sachs 10,000 Women scholar, a Cherie Blair Foundation mentee, a Wimbiz associate and was a finalist at the 2017 British Council Alumni Awards. She was named one of Nigeria’s most inspiring women in 2016 and her company, Sweetkiwi, has been named one of the 100 most innovative businesses in Nigeria. On this occasion, she sat down with Lehle Balde to talk about her entrepreneurship journey so far and recent international expansion. What inspired the Sweetkiwi yogurt franchise? weetkiwi was born from my love for desserts and finding a balance with trying to eat healthier. Before I started, a lot of frozen yogurt places I had tried weren’t as healthy as they claimed to be. I began working to create a recipe that was clean, healthy and made of real yogurt. I began plans to start my own brand. We launched in 2011 and I haven’t looked back ever since.

bel conscious and pay attention to what they put in their bodies. This was the revolution we hoped to create, and we are proud to be one of the companies that started the healthy food movement. There are so many diseases that are caused by the food people eat so I wanted to know that the product we were selling was food that helped fight diseases. My top three flavors are Chocolate Hazelnut, Sweetkiwi Signature, Greek Yoghurt.

There is a growing number of frozen yogurt companies in the Nigerian market. How does Sweetkiwi differentiate itself from the rest? Sweetkiwi has its own unique recipe which is made from a real yogurt base, genuinely low in calories and uses clean, natural ingredients. Real ingredients are our difference.

How did you come about the name ‘Sweetkiwi’? ‘Sweetkiwi’ is an urban word for an unforgettable experience. ‘Kiwi’ is typically sour and a sweet one is unforgettable. My first experience with frozen yogurt was unforgettable. I knew that was the same experience I wanted to deliver to customers so that’s how the name came about. How many outlets does Sweetkiwi currently have and where are they located? We currently have two retail outlets, one on Admiralty Way and the other at Palms Mall. We also launched in retail supermarkets in the DC area and we are currently in eight stores. Can you share some experiences and challenges you’ve faced while growing and expanding your brand in Nigeria? Running a business in Nigeria is the most challenging thing I have ever had to do in my life. Lack of basic

Ehime Eigbe-Akindele

infrastructure has been a major challenge. We spend so much on power generation which is an unrealistic expense for a business. The last recession has taken its toll on the business and our original expansion plan. Multiple taxation from the different levels of government and lack of support for growing Nigerian businesses are also major challenges. Poor educational system also unfortunately affects the quality and mentality of staff available to us, so human resources

are a tough aspect for us as well. Sweetkiwi is known for using natural products. Why was this important to you? What are your top three flavours? I am very passionate about clean, natural food. This is why at the core of Sweetkiwi was the intention to do more than just make profits. I wanted to create a brand that made real frozen yogurt with real healthy benefits. Nigeria has come far along and many people are very la-

You recently expanded and scaled Sweet Kiwi outside Nigeria to shelves in US stores. What was that process like for you? The expansion was quite exciting for me because it was a validation of seven years of hard work I had put into the business. To have top US retail brands and top people in the food industry in the US try our products and believe we have something special really gave us so much confidence. We were able to get our products in retail supermarkets within six months and the response we have got back from the US market has been phenomenal. I have been learning so much about the food business, retail distribution and how to tell a compelling

story about Sweetkiwi. As a woman in business, how do you balance your personal responsibilities with your business? I think it’s hard to have a complete balance. I do my best and try not to put too much pressure on myself. I think when you focus on something, another thing suffers. I just try to surround myself with people who help support me and help me pick up on the things I let slip or don’t balance properly. I believe it takes a whole village to have that balance. What are the biggest business lessons you have learned since starting out? I have learnt to take on the attributes of water--that is being persistent and never giving up. I have learnt to read the fine print, between the lines, above and below the lines. I have also learnt to go with the flow. Things never go as you plan them but sometimes when you let God have his place, they work out better. What advice do you have for young entrepreneurs looking to build and run a lasting business? I would advise thinking through your ideas and making sure it is a passion and whatever you are doing adds value not just to you but to your community. When you have done this, put in the work. Building a business isn’t easy. Be clear about what you know and what you don’t, then surround yourself with those who do. Business is a team sport.

Innovation Support Network Hubs berths to support entrepreneurship Jumoke Akiyode-Lawanson

he growth of the innovation sector in Nigeria over the last decade has been steady and is evident in the quality of startups, mentors, angel investors, innovation hubs and other stakeholders that are participating in the fast growing early stage entrepreneurial ecosystem. To foster greater collaboration and knowledge sharing about providing services that support entrepreneurship, a group of hubs from across the country have come together to establish an organisation whose prime objective is to develop a

community of best practices. “We are pleased to announce the creation of Innovation Support Network (ISN) Hubs, an organisation of 75 Hubs from across Nigeria that have begun its process of registration as a legal entity, which welcomes all members of the growing community of Nigerian hubs with the goal of promoting collaboration among hubs supporting entrepreneurship and innovation in Nigeria,” said the organisers. The mission of ISN Hubs Mission is to foster collaboration, inspire and support Nigerian hubs in building a diversified economy that promotes the development of technology, innovation and the early stage www.businessday.ng

entrepreneurship ecosystem in Nigeria. To ensure that ISN Hubs is an organisation that operates with world class corporate governance, member hubs have elected five directors to run its affairs and report to an executive committee comprising each of the founding hubs. The director run five directorates of the organization, namely corporate, finance, partnerships, ecosystem and marketing. Abdulganiyu Yakub of DD Hubs, Kano, corporate director, commented that “ISN Hubs will be governed by a constitution written collectively by members and approved by the Executive Committee.”

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The diverse nature of the organisation’s members is reflected in the board’s gender balance with two female board members and a female company secretary. The directors are: Abdulganiyu Yakub, Digital Development Hub, Kano; Fayo Williams, E xponential Hub, Ikeja; Solape Agagu-Hammond, Impact Hub, Ikoyi; Hans on Johnson, Start Innovation Hub, Uyo; Chukwuemeka Fred Agbata, GoDo.ng Hub, Ikeja while Christie Eze, Kedge Anchor Hub, Port Harcourt is the company secretary. Fayo Williams, partnerships director, is of the opinion that “the diversity already shown in the board formation will guide @Businessdayng

future engagements that will ensure innovative women entrepreneurs will be given equal opportunities to succeed.” ISN Hubs believes that with the right kind of collaboration and partnerships, innovation will become deeper entrenched in our entrepreneurs and add tremendous value to the growth of the Nigerian economy. According to Chukwuemeka Fred Agbata Jnr, marketing director, “ISN Hubs is aiming to create a platform for increasing collaboration between hubs through the facilitation of the identification, exchange and use of commercial best practices by workspaces, incubators and accelerators in Nigeria.”

Monday 15 April 2019

BUSINESS DAY

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Monday 15 April 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

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Companies need to prepare for the next economic downturn MARTIN REEVES

any econo m i s t s are forecasting a downturn, if not a full-blown recession, over the next 12 to 24 months. Naturally, business leaders are considering how to best position themselves for harsher macroeconomic conditions. We studied all U.S. public companies with greater than $50 million in annual sales during the last four downturns and found that nearly three-quarters of them experienced a decline in revenue growth. However, 14% of companies were able to not only accelerate growth but also increase profitability. The companies that weather downturns successfully tended to respond differently on a few key dimensions:

— THEY ACTED EARLY. Companies that proactively recognized the threat — by discussing the possibility of a downturn in their earnings calls before the economic recession that officially began in December 2007 — achieved 6 percentage points better total shareholder return. — THEY TOOK A LONG-

TERM PERSPECTIVE. Substantial competitive opportunities await the leaders who can also keep an eye on the long run. — THEY FOCUSED ON GROWTH, NOT JUST COST-CUTTING. Companies need a balanced approach to performance. But the most important driver was revenue

growth.By combining what we know about company performance in past downturns with the special features of the current situation, we can identify several things companies should consider in preparing for the next one: — DE-AVERAGE YOUR

RESPONSE. Leaders need to understand the specific environment in which each of their businesses operates and choose their resource allocation, as well as their approach to strategy, accordingly. — BUILD RESILIENCE. Leaders need to ensure that their business can withstand many different scenarios, not only a single forecast. — INVEST IN GROWTH. Downturns make growth more difficult in the short term, but they should not undermine the potential for long-term growth, unless leaders starve their companies of the necessary investment. — DON’T LOSE SIGHT OF YOUR LONG-TERM AGENDA. As economist Paul Romer once said, “A crisis is a terrible thing to waste.” — FOCUS ON TECHNOLOGICAL COMPETITIVENESS. Progress will not

stop during a downturn; neither, therefore, can companies afford to put their digital-change agendas on hold. — CONTRIBUTE TO COMMON PROBLEMS COLLABORATIVELY. Today’s pressing technological, economic, social and environmental risks cannot be solved without collective action. The next downturn will challenge many companies, but a few will emerge stronger, both competitively and financially.

data away from Facebook. Never mind that offering data portability is much harder for new entrants than current incumbents like Facebook. This is their proposal to deal with their monopoly. And it is as weak as it sounds because it does not take aim at the core issue: the unassailable network effects that social media generates. What we need is identity portability so that people can leave a social network and still be able to send and receive messages to other networks. In other words, they shouldn’t have to take the network with them if they want to switch.

There is a good case that this regulatory outcome is in Facebook’s longterm interests as well. If Facebook wants to take its cues from history, it should consider Microsoft. Microsoft has to innovate much more than it once did to keep its position, but it has worked out for them. I am glad Zuckerberg is starting to discuss regulation. But if he wants to really engage, he needs to propose regulations that get to the heart of his company’s monopoly.

(Martin Reeves is a senior partner and managing director in the Boston Consulting Group’s New York office and the director of the BCG Henderson Institute, where Kevin Whitaker is the head of strategic analytics and Christian Ketels is the chief economist.)

What was missing from Zuckerberg’s call for regulation JOSHUA GANS

hen Mark Zuckerberg penned an Op-Ed for The Washington Post urging governments to regulate Facebook and other internet companies in four big areas, you could almost hear the eyes rolling. Of course, Facebook is a corporation, and it is acting in its self-interest. But in my view it was actually a positive move. What Facebook needs to understand that it was the winner in a winner-takeall contest for the social media market. Now, it is in an unassailable position and it’s eventually going to be regulated accordingly. Facebook is

effectively a communications company, enabling people to send and receive messages. The problem is that you can send and receive messages only with-

in Facebook. If you want to leave, you can’t without taking your entire network with you. Successful regulation should address this specifically, not just break

up the company for being too big. Zuckerberg proposed data portability to address this issue. Never mind that you can already take your

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Joshua Gans is a professor at the University of Toronto.)

Monday 15 April 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

In association with

When companies cozy up to politicians, the economy suffers UFUK AKCIGIT, SALOMÉ BASLANDZE AND FRANCESCA LOTTI

hen old technologies succumb to new creative ideas, competition thrives, innovation increases, the economy grows and consumers benefit. In 1942, Joseph Schumpeter referred to this as the “gale of creative destruction” and deemed it the engine of sustained economic and technological progress. However, many things impede such creative destruction. In particular, some firms can secure preferential treatment in the market, thanks in no small part to their political connections. In such a world, new, productive firms may struggle to outcompete politically connected incumbents, leading to reduced business dynamism and less innovation. In our study, we try to understand how widespread such political connections are and how they affect firm dynamics, market competition, innovation and the overall productivity of the economy. In Italy, local politicians are allowed to work in the private sector while they hold political office — such as being a mayor, council member, etc. We identify a firm as being politically connected at a point in time if the firm employs at least one

local politician at that time. To better understand performance of these firms, we also match this data on firms and politicians with the firms’ balance sheet data and patent data from the European Patent Office. The nature of this data allows us to explore how political connections affect companies and the broader economy. Overall, we found that across all industries, politically connected firms account for third of total employment. Consistent with what you might expect, we found that the more regulated the industry, the more pervasive the political

connections in that industry. How do these political connections affect competition? Relative to their direct competitors, market leaders are more likely to be politically connected, but less likely to innovate, as measured by quantity and quality of patents and investment in intangible capital. Nevertheless, politically connected firms are more likely to survive in the market and to grow in terms of revenue and employment. These benefits are larger the more powerful the politician the firm employs. However, we find that this growth in size is not accompa-

nied by the respective growth in firms’ productivity. Some of the benefits that these connected firms accrue are also shared with the politicians they employ. Employed politicians earn significant wage premiums relative to their co-workers — premiums that cannot be explained by their individual characteristics. Not surprisingly, this premium increases with the political rank of a politician. While these connections might alleviate certain market frictions, such as regulatory barriers or bureaucratic burden, and provide some benefits

to connected firms, on the other hand — by giving incumbents a powerful advantage over entrants — their detrimental impact on market competition and creative destruction might outweigh the firm-specific benefits.

(Ufuk Akcigit is an associate professor of economics at the University of Chicago. Salomé Baslandze is an assistant professor at the Einaudi Institute for Economics and Finance. Francesca Lotti is a director in the DG Economics, Statistics and Research of the Bank of Italy.)

4 ways working dads can make more time for family you’re a better dad to your kids and a better co-parent to your spouse. The overriding message is clear: Fathers have to make intentional decisions around work-life balance and follow through on them.

JAMES SUDAKOW

ike most of us, I think a lot about how to balance my duties at work with my responsibilities at home. I happen to be a husband and a dad raising four kids. My professional success shouldn’t come at the expense of my family, nor should being present at home compromise my ability to run a business. So what can fathers — from any generational cohort — who want to focus on both career and family do to get the balance right? Four common themes emerged from my conversations on this topic: — MAKE TIME FOR THE LITTLE THINGS. It’s actually the myriad little, day-to-day interactions that really matter. — KNOW WHAT’S TRULY

(James Sudakow is the author of “Out of the Blur: A Delirious Dad’s Search for the Holy Grail of Work-Life Balance.”)

URGENT. Work can be urgent, and often for good reason. But most of it can wait with no dire business consequences. — SET BOUNDARIES. In my

book, I refer to it as “ruthless compartmentalization.” Block out half-day segments during the week that are for family and do not take work calls or

check email. — SET GOALS. Most families don’t have performance metrics. But you can create them for yourself to ensure that

Brought to you courtesy of First Bank Nigeria

Monday 15 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Only Dangote Sugar, Nestle record gross margin expansion

percent the previous year.Cadbury Nigeria gross margin dipped to 22.11 percent in the period under review from 22.47 percent the previous year. Consumer goods firms in Africa’s largest economy are the hardest hit from a sluggish economy as low consumer purchasing power, decrepit infrastructure, smuggling continues to crimp margins.

Of course Nigerians are getting poorer and they have no money to purchase consumer products as they used to. While the country existed a recession in the fourth quarter of 2017thanks to the introduction of a flexible exchange rate regime by the central bank and a rebound in crude price- a vast majority of Nigerians cannot af-

ford consumer products and services even as firms use cheaper packaging format as sachet. Nigeria with a population of 180 million people has 87 million people, has nearly half its population, in extreme poverty; as high inflation environment continues to erode discretionary income, according to the World Bank.

The overall business confidence index on the macro-economy in the month of March 2019 stood at 28.2 index points, while the business outlook for April 2019 showed greater confidence on the macro-economy with 64.8 index points. The survey highlihted poor infrastructure, high interest rate, sluggish economic growth as some of the constraints of businesses in Nigeria

0.04%

… index declines 5.86 percent YTD he Federal Government’s policy of controlling retail oil prices in the country has led to the reduction of revenue and profitability of companies operating in the downstream oil and gas sector. This reality has translated into negative market returns for most of the investors in the Oil and Gas sector as the bearish sentiments in the Nigerian equities market persist. Investors who bought into the NSE Oil and Gas Index would have

2.8%

28.2 index points

Bearish market sentiment hit the NSE Oil and Gas index IFEANYI JOHN

SHORT TAKES The World Bank revised its growth forecast for Sub-Saharan African region downwards from 3.3% to 2.8% on the back of dwindled industrial output and trade spat between United States and China. The World Bank also lowered its forecast for Nigeria’s economic growth in 2019 to 2.1 percent, citing stagnant oil production, high inflation and policy distortions as risk factors

BALA AUGIE

angote Sugar Refinery Plc and Nestle Nigeria Plc outperformed peer rivals as they recorded gross margin expansion amid a tough and unpredictable macroeconomic environment. Investors pay attention to the gross margin because it tells them how good their companies are at creating a product or providing a service compared to competitors. It also shows whether a firm has enough cash to pay operating expenses. Dangote Sugar’s gross margin increased to 26.39 percent in December 2018 from 24.94 percent the previous year, thanks to a 28.12 percent reduction in input costs as influx of cheap product through the porous borders continues to cannibalize sales. Similarly, Nestle Nigeria’s gross margin improved to 42.78 percent in the period under review as against 41.31 percent the previous year, as a diversified product base continues to add impetus to revenue. However, the remaining consumer goods firms fell off the cliff as receding sales deal a great blow on operating performance. Nacon Allied Industries’ gross margin fell to 30.19 percent in December 2018 from 36.92 percent the previous year.Nigerian Breweries’ sales reduced to 39.12 percent in the period under review from 41.67 percent the previous year. Dangote Flour Mills’ gross profit margin fell to 9.11 percent in the period under review as against 23.75

P.E

seen red since the beginning of the year as the index has shed 17.6 index points losing 5.86 percent of its value since the start of the year. Of the 8 listed companies in the Oil and Gas sector, Oando Plc was the only stock that made investors smile as the company’s market value improved by 2.08% to close at N66.54 billion at the close of trading on Friday. The positive market performance of Oando can be attributed to an increase in profitability and its diversification into downstream oil and gas as its 2018 financial result showed an increase in net profit-

ability from 3.97 percent at the end of 2017 to 4.24 percent at the end of 2018 against gloomy results of downstream peers. This increase in net profitability, which was peculiar to the Oando, trickled down to more returns for shareholders as the ROE increased by close to 300 basis points from 7.5 percent to 10.39 percent. The only downstream oil and gas sector to have a comparable performance to Oando’s ROE is 11 plc, which boast of a 0.14 percent increase. MRS Oil was the biggest casualty in the index as the downstream seller of PMS lost 18.87 percent of

its market value. This performance was closely matched by Eterna Oil whose market value went from N4.7 in January to N4.10 at the close of the bourse on Friday. Seplat, the only indigenous E&P oil and gas company in the country, contributed to the index woes as it lost 7.81 percent of its market value. Other poor stock performance include Mobil (4.10%), Forte Oil (3.75%), Total (3.45%) and Conoil closing the index with a year to date performance of 1.08 percent. Stakeholders in the Oil and gas Continues on page 39

At the close of trading on Tuesday, April 9, Nigerian Stock Exchange All Share Index slide marginally by 0.04 percent to 29, 149.46 basis points. Performance as bearish across sectors with Insurance (-1.76%) getting the worst hit, Banking (-0.48%), Oil & Gas (-0.38%), Consumer Goods (-0.17%) and Industrial Goods (-0.13%)

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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Monday 15 April 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Crude oil touches year high as NSE All Share Index falls to year low IFEANYI JOHN

significant crude oil production cuts by OPEC led by Saudi Arabia has helped crude oil price break past the $70 barrier for the first time in 5 months. The voluntary cuts which began late last year has helped crude oil to rally to $71.4 as at Friday, touching a year high price. Despite the 33 percent rally in crude oil price so far this year, the Nigerian Stock Exchange All Share Index has slipped -5.93 percent year to date as at Friday last week, touching a year low of 29,149 points on last Tuesday. Nigeria stock market has been bruised all year, even though crude oil price has rallied all year long. Historically, the correlation between crude oil price and NSE index is typically positive but since the beginning of the year, both variables have been moving in opposite direction. “Its quite odd that crude oil price is rising, and the stock market is Nigeria is declining. Typically,

what you would expect is that for oil rich nations like Nigeria, a rally in crude oil price will translate to improved investors’ confidence in the economy and the stock market,” said Tochukwu Okafor, Lecturer in

Banking and Finance department at Covenant University. While higher crude oil prices have brought about an upgrade in economic outlook for Nigeria, the market outlook hasn’t gotten any

brighter. In January, International Monetary Fund (IMF) announced a downward review of its growth forecast for Nigeria’s economy to 2 percent for 2019 citing decline in crude oil prices after crude oil price

declined from $84 in October 2018 to $52 in December. However, after a strong rebound in crude oil price this year, IMF have now upgraded its forecast for economic growth in Nigeria from 2 percent to 2.1 percent early last week. “It been bloody for equity investors this year largely due to the election uncertainty in the first quarter of the year. Even though companies have been posting strong fundamentals, we still haven’t seen a turnaround in investor sentiment. It’s very confusing to state the reason why we are still seeing the selloffs post-election, but it is probably the market’s way of showing its unsatisfaction with the way the election went. Worries around slower growth has been sort of dismissed by IMF and inflation continues to trend downwards. The minimum wage implementation will boost consumer spending so its really hard to see why investors still remain bearish in this time,” said Maju Eldad, Lecturer in Economics at Federal University of Kashere, Gombe. “Who knows? Maybe if crude oil price breaks the $80 barrier, we may finally see the stock market rally again,” Eldad added.

Reduced exposure to telecom, oil sectors better banks’ asset quality in 2018 ISRAEL ODUBOLA

igerian lenders saw sizeable improvement in asset quality last year, thanks to de-risking measures in the telecom sector and stronger oil prices during the period, which allowed lenders recover tangible amount of defaulted loans in their books. 9-mobile, formerly Etisalat Nigeria, last year started repaying the $1.2 billion credit facility obtained from consortium of 13 lenders including Access, FCMB, Zenith, UBA and Union Bank, which consequently lowered lenders’ non-performing loans (NPLs) in 2018. Recall that in 2013, Etisalat secured a 7-year US$1.2 billion syndicated facility from 13 lenders to

refinance existing obligations and fund network expansion. It however ran into crisis when it defaulted on the repayment scheme two years back, citing economic slowdown and currency devaluation, which lenders classified as non-performing in 2017. The average NPL ratios of 10 lenders stood at 6.32 percent in 2018, in which Access Bank led the pack with 2.5 percent, followed by Stanbic IBTC (4%), Zenith Bank (4.9%), and Pan-African lender, Eco Bank, with highest figure of 9.6 percent. Year-on-year, NPL ratio, on the average, improved by some 1.84 percent points from 8.16 percent in the previous year, with Union Bank improving the most by 12.7 percent points, buoyed by the lenders’ aggressive focus on recoveries and recognition of fully provisioned loans in its books. Only three lenders have their NPL

ratios below the 5 percent regulatory threshold of the Central Bank of Nigeria (CBN). NPL ratio is the proportion of the amount of default loans in a banks’ loan portfolio to the total amount of outstanding loans the bank holds. However, banks’ improved asset quality is not on the back of 9-mobile debt repayment alone, but stronger oil prices (Brent) in 2018, also helped reduce lenders’ exposure to the oil & gas sector. Average annual Brent crude oil price rose to $69.52/barrel in 2018, masking 132 percent surge over $52.51/barre; in the previous year, according to data from Trading Economics. “The exposure of the Nigerian banking industry to oil and gas sector accounts for about 40 percent of the entire gross loan book. Average Brent price was higher in 2018 than in 2017, and this gave impetus to customers in the sector to settle their obligations”, said Gbolahan Ologunro, research analyst at CSL Stockbrokers. The pick-up in macroeconomic conditions as the broader economy grew some 1.11 percent points to 1.93 percent in 2018, coupled with relative stability in the foreign exchange market contributed to banks’ improved asset quality as they were able to recover sizeable amount of NPLs from the manufacturing sector, according to Ologunro.

Bearish market sentiment hit the... Continued from page 38 industry blame the overall negative financial performance on old perennial environmental, operational and regulatory challenges. These include poor governance and management of refining assets, low operating margin for operators leading to low Return on Equity

(ROE), huge debts/receivables on account of unpaid accumulated subsidy and unpaid interest, and foreign exchange differentials on product importation The partial removal of subsidy by government dealt a blow on earnings as many oil marketers couldn’t adjust to the new template of the regulator.

Monday15 April 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: April 12th – April 19th, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

22.72 23.29

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018 Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

Inflation rate (%) (y-o-y) Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

11.31 14 14 (+2/-5)

Decreased to 11.31% in February 2019 from 11.37% in January 2018 Raised to 14% in July ’2016 from 12% Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

44.71 67.55 1.73

April 10, 2019 figure — an increase of 0.23% from April start April 12, 2019 figure— an increase of 2.18% from the prior week March 2019 figure — an increase of 0.58% from February 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

12/04/19

5/04/19

29,565.95 11.11

29,616.38 11.12

Volume (bn)

0.23

0.40

Value (N’bn)

1.97

3.49

MONEY MARKET NIBOR Tenor

Friday Rate

(%) 12/04/19

(%)

Change(%)

Indicators

12/04/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (41.98) Agriculture Cocoa ($/MT) (43.50) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Change Gold ($/t oz.) Silver ($/t oz.) (Basis Point) Copper ($/lb.) (0.17) (0.17)

1-week Change

YTD Change

(%)

69.02 2.68

2.18 1.52

7.07 (12.30)

2394.00 93.20 78.30 12.87 467.50

0.00 (2.25) 0.93 1.42 0.38

23.66 (28.42) 1.03 (16.05) 7.84

1294.21 15.08 294.55

0.33 (0.59) 1.17

(1.77) (12.27) (10.14)

5/04/19

OBB

20.29

15.29

500

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

21.57 19.40 11.95

16.14 15.65 11.41

543 375 53

Tenor

90 Days

12.42

12.67

(25)

1 Mnth 3 Mnths

10.77 11.25

9.95 11.07

82 18

6 Mnths 9 Mnths 12 Mnths

13.96 14.48 14.61

13.92 14.54 14.53

5 (6) 8

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

12/04/19

5/04/19

Friday

Change

(%)

(Basis Point)

12/04/19

12/03/19

Official (N) Inter-Bank (N)

307.00 360.32

307.00 360.33

306.95 361.87

BDC (N) Parallel (N)

0.00 360.00

363.50 360.00

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Friday

Change

(%)

(Basis Point)

12/04/19

5/04/19

3-Year 5-Year

0.00 14.81

0.00 14.35

0 46

7-Year 10-Year 20-Year

14.25 14.35 14.53

14.39 14.47 14.57

(14) (12) (4)

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Friday

Change

(%)

(Basis Point)

12/04/19

5/04/19

2,804.61

2797.88

0.24

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr)

8.44 5.27

8.42 5.27

0.24 0.11

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

14.17 -41.66

13.90 -41.94

0.27 0.28

Index

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day 182 Day

10,000.00 17,600.58

10.3 12.6

3-Apr-2019 3-Apr-2019

364 Day

68,080.46

12.85

3-Apr-2019

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

Rate(%)

Date

Global Economy In the US, job growth showed a substantial reacceleration in the month of March, according to a report released by the Labour Department. The report said nonfarm payroll employment jumped by 196,000 jobs in March after edging up by a revised 33,000 (20,000 originally reported) jobs in February. The Labour Department highlighted notable job gains in the healthcare and professional and technical services sectors. Despite the stronger than expected job growth, the unemployment rate held at 3.8% in March, unchanged from February. In a separate development, the European Central Bank left its benchmark interest rate unchanged at 0% during its April meeting. It maintained that it expects key interest rates to remain at record low levels at least through the end of 2019, amid global growth concerns. The central bank also pledged to keep reinvesting cash from maturing bonds for an extended period of time. Elsewhere in China, exports rebounded strongly in March, while imports fell further, official customs data showed. The exports rose 14.2% year-on-year in March, reversing a 20.8% decline in February. Imports dropped 7.6% annually in March, following a 5.2% fall in the previous month. The trade surplus rose to $32.64 billion in March from $4.08 billion in February. Domestic Economy The IMF Financial Counsellor and Director, Monetary and Capital Markets Department at the ongoing joint annual spring meetings with the World Bank in Washington DC expressed worry over Nigeria's ability to repay its foreign debt which has continued to rise. Though it said conditions were favourable for the country to continue to borrow, the IMF equally expressed worry over the capacity to repay. Nigeria's total debt profile as of December 31, 2018, stood at N24.387tn. The figure swelled by 12.25 per cent from N21.725tn in 2017 to N24.39tn in 2018. In a separate development, the IMF Chief Economist and Director of Research Department during a media briefing on the IMF's World Economic Outlook at the ongoing IMF/World Bank Spring Meetings in Washington DC advised the federal government to initiate policies that would enhance the contribution of the private sector to Nigeria's economic growth. The fund also stated that the trade tension between the United States and China as well as the tension in the European Union over the Brexit would affect the performance of Nigeria's economy negatively, even as it called for proactive policies to mitigate external shocks. The fund had earlier cut the Nigerian GDP forecast to 2.1% from 2.3%. Stock Market The local bourse remained in negative territory as investors become more apathetic to trading in risky asset classes. The All Share Index (ASI) lost 0.17% to 29,565.95 points from 29,616.38 points the preceding week. Similarly, market capitalization lost 0.17% to N11.11 trillion from N11. 12 trillion the prior week. This week, we anticipate the equities market will become bullish as investors take to bargain

hunting in most depressed counters. Money Market Liquidity was constrained last week leading to a rise in rates. The upward movement came following the weekly FX auctions. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates jumped to 20.29% and 21.57% from 15.29% and 16.14% respectively the previous week. In the same vein, longer dated placements also notched upwards. 30-day NIBOR closed higher at 11.95% from 11.41% respectively the previous week. Rates are expected to trend lower this week due to expected combined inflow of N163 billion naira from OMO and Nigerian Treasury bills maturities. Foreign Exchange Market The local unit was stable across all market segments for the week ended April 12th 2019. At the Investors' and Exporters window it remained unchanged at N360.32/$. Also at the official window it ended at N307/$, same as in the previous week. Similarly the parallel market remained unchanged at N360/$ from the prior week. This week, the naira is expected to remain around current levels due to the apex bank's persistent market interventions. Bond Market Average bond yields further declined in the week ended April 12, 2019. This movement stemmed from demand on most instruments. Yields on the seven-, ten-, and twenty year- debt papers closed lower at 14.39%, 14.47%, and 14.57% from 14.39%, 14.47%, and 14.57% respectively the preceding week. The Access Bank Bond index rose by 6.73 points to close at 2,804.61 points from 2,797.88 points the previous week. This week, we envisage a cautious trading session in the near term barring any impactful news. Commodities Last week, oil prices rose fuelled by armed clashes between rival political factions in Libya, which may jeopardize crude oil production if they spread to the Oil Crescent. Bonny light, the Nigerian Benchmark crude, rose $1.47, or 2.2% to $69.02 per barrel. In a similar vein, Gold prices climbed higher supported by bullish outside market forces that include a weaker U.S. dollar index and higher crude oil prices today. Gold gained $4.28, or 0.33%, to $1,294.21 an ounce. Contrastingly, Silver declined by 9 cents or 0.6% to $15.08 an ounce on weak demand. This week, we expect oil prices to pull back due to speculations on a rise in the US inventories and rumours that the OPEC may be considering an exit from its production cuts. For precious metals, firmer U.S. Treasury yields and increased demand for higher risk assets will keep a lid on higher prices this week. MONTHLY MACRO ECONOMIC FORECASTS Variables

Apr’19

May’19

Exchange Rate (Interbank) (N/$)

363

Inflation Rate (%)

11.3

11.35

Crude Oil Price (US$/Barrel)

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

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Monday 15 April 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Why advisory businesses fail and what you need to do to thrive The Solid Wealth Messenger

Grace Agada

he advisory industry is one that was borne out of a high demand for consultants and specialists to guide businesses and individuals alike. However, the industry has not been very exciting for many people lately. If you are in the advisory business but are still struggling to create a predictable and reliable cash flow, this is for you. One of the biggest challenges faced by most advisory Businesses is the challenge of bringing in new customers who are predisposed, willing and financially able to do business. In order to surmount this challenge Advisory Businesses must first understand exactly what business they are in. The First response that may come to mind for most advisors is to think and respond in terms of core deliverables. “We sell real estate, we offer health services, we sell insurance, and we provide legal services.” Whatever business you think you are in, or whatever product or services you provide really does not matter. What really matters is the aspect of the business that can put money inside your pockets. This very important aspect is marketing. You are in the business of marketing. Marketing involves finding what your customers want and giving it to them. But who exactly is you customer? Your customer can either be an ideal customer or a non-ideal

customer. Your ideal customers are customers that have both the willingness to buy and the ability to buy. When a customer has the willingness to buy, it means that this customer is aware of the pain your product or service can solve. He or she sees this pain as urgent and important and is willing and open to solve this problem. Customers with the ability to buy on the other hand are customers who have not only recognized the problem and are willing to solve it, but also have the financial ability and decision power to invest in your product or service. This is who your ideal customer is. One of the greatest assets you can ever have in your business is the quality of your customers and the number of Ideal customers you have. An easy way to know the quality of your current customer base is to identify where your customer falls on the income and wealth pyramid. 60% of any given customer group on the income and wealth pyramid barely gets by. They typically have many financial and personal needs, and will only invest in basic necessities. 20% are broke and struggling and find it hard to meet basic needs. 15% have their personal and family needs covered and can afford to save and invest with cash to spare. 4% are prosperous, and can afford to live in luxury; while the last 1% are super wealthy and can afford anything money can buy. The top 20% is where you can find your ideal customers. The only type of customer your advisory business should have. The problem with most Advisory Business is that they accept every customer that walks in through their business door. This is because they think that getting their ideal customers who will pay them what they are truly worth is hard. This is a misconception that

Objectives • Solid wealth • Groomed Heirs • Undying legacy and Name • Rich relationships • Personal development • Healthcare Planning • Giving. www.businessday.ng

should be eliminated from your mind. It is no harder to sell to the 80% group than it is to sell to the 20% group. Additionally you always want to be taking the fastest way that can get you to the cash flow of your dream: Ask yourself this question. What is the fastest way to get to N100million? • Get 100 people to pay you N1million • Get 50 people to pay you N2million • Get 20 people to pay you N5million • Get 5 People to pay you N20Million Would you rather spend time and energy chasing 100 people who will drain your energy, consume your time send you on endless errands all for a peanut or would you rather focus on five high-quality customers who are more predisposed, civilized, and have the financial ability to pay you your true worth. The option you decide to go for is entirely your choice. There are three main things that are causing your current financial strain: 1) Lack of viable and differentiated solutions to customers who are willing to pay. 2) Selling to the wrong market segments that do not have the willingness and ability to buy 3) Poor financial management where you mismanage the money you make. If you want to make your business stand apart from the pack, attract your ideal customers, create a self-sufficient referral network, make big sales, and rise above the gravitational pull of recession or financial lean times, you must understand that in the new business economy, all the

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power has returned back to the customer and he knows he has it. Attracting your ideal customer is not just going to happen if you stay stuck in the old way of doing business, having the same vague branding, the same ‘me-too’ marketing strategies with zero differentiation, the same poor sales processes pressuring your customers to buy, the same lazy and inept salespeople, sloppy staff, abysmal customer service and so on. Your ideal customer has zero tolerance for anything confusing and ordinary—ordinary products, services, expertise or experience. Your ideal customers will demand more freshness, differentiation, exclusivity, customization and choice. You need to do business in a different way now. Your money is in the hands of your ideal customers but the only way to get it is for you to genuinely earn their interest by providing well-matched, specialized, customized products/ service, and value propositions. The stakes are much higher now but the first place to start is to discover the seven things you must stop doing right now in order to thrive. I have prepared a special FREE report for you that reveals The Seven Reasons Why Most Advisory Businesses Fail. To get this special report and find out more about how you can build a resilient advisory business, kindly SMS “Advisor” to 08101860042.

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Your money is in the hands of your ideal customers but the only way to get it is for you to genuinely earn their interest by providing wellmatched, specialized, customized products/ service, and value propositions

Grace Agada is a Senior Wealth Advisor and Author with extensive experience in wealth creation, wealth preservation and wealth transfer. Email: info@createsolidwealth.com Tel: 08101860042 @Businessdayng

Monday 15 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Continued from Friday

Chapter IV The Complicit Middle

y 2018 two more had returned after a full career of more than 30 years in the United States after they left on their second missionary journey. The intellectuals may rationalise their choice exiles, but it does not absolve them of guilt. Neither can those who stayed home and blocked off the public sphere claim to be more patriotic. Many either approach the arena in beggarly deference to power or act powerless in the face of wrong. Some sometimes seek neutrality so intently that you assume that it is for them that Dante’s Inferno confirms the hottest part of hell as being reserved for those who in the face of a moral challenge take refuge in neutrality. By their conduct they had in effect abdicated citizenship and made liars of Socrates, Plato and many of the masters. It was my practice to bring to them the following quotes published often in social media. One of the penalties for refusing to participate in politics is that you end up being governed by your inferior. •PLATO The wise who refuse to rule should prepare to suffer the rule of idiots. •SOCRATES A people who elect corrupt politicians, imposters, thieves and traitors are not victims… but accomplices. •GEORGE ORWELL When APC, the political party that seemed to lead the pack in abuse of the primaries for the general elections set up an appeal panel to review appeals, many were shocked at the incestuous moral paths of the Party Chairman, Adams Oshiomhole, in naming his predecessor in Edo State, Professor Osa Osumbor, as chair of the panel. The charges of nepotism and plane cover-up dominated beer parlour talk. Others with still some faith in intellect as partner in truth thought that the fact that he was a university professor, he would exercise moral authority. This is in spite of the fact that the courts had in the past invalidated his supposed victory in the Edo State Governorship elections, years before, thus suggesting his participation to be improper. As it turned out, his stewardship on that panel was considered a whitewash and a travesty. Waking Up the Spirit of the Young The 18th year of life for many in some countries is the year that they become freshmen in the university, the home of protests. Many do not now have to learn about Karl Marx or quote him as a few undergraduates in Nigeria in the 1970s and 1980s did to protest against one thing or

the other. The age of 18 starts the season of interdependence. Stephen R. Covey canvassed an understanding of the life cycle that runs from the age of dependence (infancy) to a time of passionate assertion of independence (the teenage years) and then a time of maturity when interdependence is the path to lasting accomplishment. Undergraduate life is time of final hurray in the assertion of independence which protest as a way engaging, represents. Beginning from a time of national independence for Nigeria in 1960, the youths protested against the Anglo-Nigeria Defence Pact. Those protests forced the abrogation of the Anglo-Nigeria Defence Pact. It is puzzling that that kind of protest has little chance of taking place today when social media makes it easier to mobilise for protest. It has to be that sometime in the new millennium the youth of Nigeria lost their appetite for protests and possibly deep concern for issues of the common good. Is that really possible? The streets, the arena of the protest world, have been deserted by Nigeria’s Generation X. This is partly because soldiers in power and politicians conspired to choke life out of the student movement in Nigeria, with the banning of the National Union of Nigerian Students (NUNS) and wilfully compromising those who seek to lead in the success or NUNS, of the National Association of Nigerian Students (NANS) with a variety of inducements. Thus, Nigeria lost a veritable growing ground for its next generation. It will take rekindling the passion of the youth in public issues for the young, who often lead redemption turnarounds in troubled nations throughout history, to rise to that role in Nigeria. Without a spirit of Nigeria-consciousness and readiness to protest social wrong as Nigerians in the same age bracket did in the past, the Generation X seems more inclined towards social media wars. They mock everyone in public life without realising that they are in the cusp of a new slavery with their future being mortgaged by a class of adventurers. They have little understanding for “nation” and the spirit of noblesse oblige which requires of www.businessday.ng

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To save Nigeria, a massive programme of youth education and re-orientation is required. An achievement culture rooted in the levers of modernity which the Nigerian academic, Olufemi Taiwo, argues in the book, Africa Must Be Modern the privileged, a duty of care towards those not so fortunate. The youth cannot absolve self of blame, but the extent to which they are complacent is spurred by failure of the generation before to show good

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example, mentor them and provide shoulders for these young ones to climb in order to see tomorrow more clearly. Indeed, it is very African to say that ‘what an old man sees sitting down, a young man may not see standing up.’ But imagine how far the young can see if they combined their vision with the power of the elders to see. To save Nigeria, a massive programme of youth education and reorientation is required. An achievement culture rooted in the levers of modernity which the Nigerian academic, Olufemi Taiwo, argues in the book, Africa Must Be Modern, needs to be aggressively advanced. In the advocacy for value-based leadership and the teaching of leadership, Nigeria’s Centre for Values in Leadership (CVL) has used an approach which it calls The Pedagogy of the Determined to reach the Generation Next. The model of instruction is essentially an adaptation of the Pedagogy of the Oppressed proposed by the Brazilian educationist, Paulo Freire. It would seem obvious that any fruitful strategy for salvaging the

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situation would focus on getting this part of society to acquire the right set of values, competences and motivation. Getting it right with the young, would certainly yield a demographic dividend. To fail here is to leave a ticking time-bomb that could explode at any time resulting in consequences too dear for the sub-region and the dignity of a race. The Hypocritical Tycoons Perhaps more culpable than most for the Nigeria nightmare are the socalled business moguls. They require a stable and predictable environment for their investments to remain secure and have prospects for advancing. Yet no sector is as shy in putting its money where its interests are or where its proverbial mouth is. In years of service on the boards of the national council of Nigeria’s top private sector organisations such as the Manufacturers Association of Nigeria, the Nigeria Employers Consultative Association and the Council of the Lagos Chamber of Commerce and Industry, I have been a participant observer in pretentious partnership for good. The politicians engaged in the criminal looting of the Treasury and sentencing of the poor to misery too hard for the modern mind to fathom, receive nourishment from the new elite of so-called business tycoons. These so-called tycoons’ profit from rents that they are given access to by the poor governance in the country. So, the relationship is symbiotic and not neutral as the businessmen pretend. But on society it is parasitic, in the Main. Adam Smith may have shown that the unseen hand can guide self-interested choices in a market, cumulating the actions of those actors into the wealth of nations. Experience however, shows information asymmetries very prominently leads economic actors to avoid economic intercourse in order to avoid the losses consequent upon uncertainty. This is why market institutions strive to punish those who profit from such abuse of access to good business or market information. This is why high-profiled people like Martha Stewart of Martha’s Vineyard in the US were sent to jail for insider trading, which if it were in Nigeria, would have been a joke. But most of the tycoons in Nigeria are rich because of the abuse of information asymmetry and access to power. As a result, the business elite in Nigeria, are not as inter¬ested in a better society in which their investments can thrive but in continuity of access to the incumbents in power. Be they the devil or saints, the gains of uneven access through compromise outweigh any reasoning on their parts. The so-called successful businessmen are therefore beneficiaries of an unjust system. They commit to its perpetuation even when they see daily, how it can trip up their own interests. The collaboration with state actors that keep institutions weak by business eventually gets in the way of

Monday 15 April 2019

BUSINESS DAY

BOOK SERIALISATION sustaining presently. One of the biggest risks of doing business in Nigeria is regulatory risk. Any player in highly regulated industry like banking, insurance and oil and gas, for example, can wake up to find that they have lost everything – not because of a wrong strategic move but because the new sheriff in town, the head of the regulatory agency does not like the kind of haircut they have chosen to wear. That could result in the revocation of an operating license or the shifting of a milestone that would entrap and lay to waste an enterprise on which thousands of people’s livelihood are dependent. Worse still, if the regulator has the intent of cornering a venture that he or she has desired, they will put in place policies that cause severe earthquakes within the venture, ultimately leading to the relative ease of a change in ownership. In other parts of the world, history has shown that yesterday’s rubber barons have realised the need to clean up the act for their sustainable long-term interest, but in Nigeria, that has not quite happened. Instead this nouveau riche group who have built fortunes from graft, economic rent, and through being bag men for public office holders, empty the teals. They go about ego-tripping in pretence of pursuing public good via one foundation or another, but in reality, they spend a thousand dollars to celebrate a hundred dollar give-back to the community. In 2009, I got a chance to explain this better to an emerging media mogul in Nigeria, Ben Murray-Bruce. Ben, who would later become a senator, was the founder of the Silverbird Media and Entertainment Empire. He had come to visit me and had popped the big question. He said he was puzzled that I lived so modestly even though he could easily point to several tycoons who had ridden on my back to their fortunes. So, tell me, he asked “Why do you hate money?” After a hearty burst of laughter, I asked him how he thought a man who was perhaps Africa’s best-known evangelist of free enterprise could hate money. I then explained that man was a product of his choices. I was motivated more by the number of people I could count who were creating wealth and the jobs that go with them than the size of my bank account. More importantly though, I was mindful of how sustainable wealth should be created. I reminded him of my good fortune in that since I was 19 years old, I had been privileged with access to just about everyone who had been head of state and in government in Nigeria on my own terms. For many of the types he was calling men of money, that kind of access would have been translated into billions of dollars from contracts, allocation of oil well licenses that were essentially mints for printing money. I said to him that none of those men of power I was familiar with could ever recall any request that I made for my self-interest. Whatever I put on the table was for the advance of the common good. That encounter inspired my writing of a book in which I chronicled case studies of several ventures I had either inspired or been part of build-

ing from idea stage to public icons. The book would be titled: Business Angel as A Missionary. Reflections of an Economic Growth Activist. I then asked Ben Murray-Bruce to look around me and see if my quality of life that he observed was less than that of those with overflowing bank accounts. Moved to go beyond the typical half measure in making my point, I reminded him that the television and radio stations in his media group had just collaborated with Vanguard Newspapers to run a national voting campaign to choose Nigeria’s top living legends. For reasons beyond me, I had been nominated alongside the Nobel Laureate, Wole Soyinka, the famous writer, Chinua Achebe, a living former head of state and leading religious figures like Pastor Enoch Adeboye. I had been voted by the public into the top ten. I wondered why they had nominated me and not the private jet owning business people. More interestingly, why had so many people taken the trouble to vote for me given that I had not been in a position of political power for a whole generation nor had the bank account size that could attract so many votes from those in my employment? We left the discussion without reaching any conclusions. Surely business had much to contribute to an environment that observes the rule of law, has strong institutions and rigorously made policies. The business community had not done enough to ensure that would obtain! As the 2019 elections approached, foreign aid agencies began to assist with creating activities that would make for a better atmosphere for the elections. Some of the initiatives they undertook included a workshop by the US elections support NGOs, such as the Centre for International Private Enterprise (CIPE) and sister organisations, IRI, NDI and Solidarity. Several leaders of the organised private sector, including the President of the Nigerian Association of Chambers of Commerce and Industry (NACCIMA), President of the Lagos Chamber of Commerce and Industry, Leaders of NECA and the Institute of Directors (IOD), felt that the private sector was not doing enough to promote an environment conducive to free and fair elections and stable governments.

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They go about egotripping in pretence of pursuing public good via one foundation or another, but in reality, they spend a thousand dollars to celebrate a hundred dollar giveback to the community www.businessday.ng

More shocking, to me, was the loss of institutional memory regarding partnerships for development. In my keynote address I pointed to the 1985 Aga Khan Foundation conference in Nairobi, Kenya. It was based on a theme to advance a tripartite approach to development and human progress in which the public sector, private sector and private development agencies (PDAs) (that is the social enterprise sector (NGOs)), dialogued and worked cooperatively. Hardly did anyone remember that out of it came the Enabling Environment Forum which would become the forerunner of the Nigerian Economic Summit Group. The yearly Nigerian economic summit was designed to get policy makers to interact with businesses and civil society and to align so that governing will produce optimal outcomes. The other sectors, however, allowed the public sector to take lightly the ideas flowing from the summit. There was not enough pressure for accountability from the private sector on public officials whose conduct frustrated the environment of business and challenged economic growth. Indeed, the point made in my 1998 book Managing Uncertainty – Competition and Strategy in Emerging Economies, that the big elephant distorting strategy for firms, especially if you developed models from the Structure-Conduct-Performance paradigm in structural economics was the predatory acts of public officials. Failure to close ranks and alter the power equation between the public and private sectors made the summits, for me, a waste of precious time. I stopped participating in the annual jamborees since 2003. If in formal structures like the NESG the private sector failed so miserably to orient the direction of Nigeria for good, in engaging government, it has done much worse in enabling positive politics. Informally, my constant pointer to better examples is in places like Mauritius where the voice of the chamber of commerce is more powerful. Its debates were considered more robust than in the legislature. I developed a mild polite contempt for the private sector and the private jet club. This is part of the reason I took umbrage at President Goodluck Jonathan, pointing to the Nigerian private jet market, as one of the fastest growing in the world, as evidence of the growth of the Nigerian economy. He said this at the World Economic Forum for Africa in Abuja barely a year before he lost the 2015 elections. I was, however, mildly tickled when sometime in 2018 whilst rushing to catch a flight from Benin to Lagos, I arrived at the airport just as the plane engines started. The doors were closed and stairs moved away. I had missed my flight! It was the last from Benin for the day and I was a touch desperate. Two private jets were parked nearby. I made enquiries and found out that some of the young jet-setting business leaders had come to play golf in Benin. Within minutes they arrived with their golf bags. Sure enough, they were kind enough to offer me a ride to Lagos. During the flight, Jite

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I quietly planned to visit both of them and privately add my voice to the official ones from the designated people

Okoloko, as a good host, came to sit across from me to make conversation. Without any prodding from me, he said the private sector cannot continue to fold its arms and watch the atrocious descent of government and politics from one incompetent group to another. In his view, 2019 should be the last of such. By 2023, he thought, the private sector should go out, find good candidates and support them in the interest of Nigeria. I told him his words were music to my ears and that I had canvassed that since 1999. The biggest problem that I have had with the private sector acting for its own collective good and not the common good of all Nigerians, has been that in it is the tragedy of the commons writ large. That mindset – that which belongs to all belonging to none – has had its members in pursuit of shortterm self-interest; thus, damaging their own individual long-term interests and the common good. My classic illustration used to come from my days on both the council of the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry. One issue inflamed conversation at both council meetings. It was the spectre of multiple taxation and the distribution of goods in the country. This was under military rule when the command structure was such that one order from the top could stop all that. At the MAN meeting held on one of the weeks when both councils had meetings, the president at the time, Hassan Adamu, was mandated to use his friendship with VicePresident Augustus Aikhomu to get his office that coordinated the state to order local governments to stop arresting vehicles moving goods through the country. These arrests were made using the excuse that they had not paid local taxes. At the Lagos Chamber level, a committee was set up to visit Governor Raji Rasaki of Lagos State to urge his intervention. I was curious to know the outcomes of both planned interventions as I was quite friendly with both Aikhomu and Rasaki. I quietly planned to visit both of them and privately add my voice to the official ones from the designated people.

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The following day I went to visit the Vice-President at the official Ikoyi Crescent abode of vice-presidents. As I was arriving, I saw Alhaji Hassan Adamu, the President of MAN leaving. I met, still in the company of the Vice-President, the then Governor of Rivers State, Ernest Adeleye, a Nigerian Air Force Group Captain. The Network News came on whilst there and there was a report of Admiral Aikhomu visiting Kaduna State Wheat farms. The Federal Government had committed millions of dollars of support to encourage backward integration, following the ban on wheat importation because of the huge drain on the country’s foreign exchange of wheat imorts by the flour milling industry. The NTA News report showed the Vice-President beaming with satisfaction at the vast acreages of Wheat planted in Kaduna. The VicePresident was the first to laugh at the report for exaggerating the actual results of the scheme which had become a scam through which states located in belts that claim they could produce wheat extorting money from the Federal Government. To increase the sarcasm of the moment, Adeleye chipped in “Your Excellency Sir, even we in Rivers State can now produce Wheat.” Tapping into the irony I asked the Admiral what assurance he had given Hassan Adamu who had just left about relieving those who were at least doing real production – the manufacturers who were suffering from double or multiple incidents of taxation. He replied that Hassan Adamu had raised no such issue, but he was aware of complaints about branded vehicles being made to pay advert taxes by states they drive through. Then I told him, in detail the nature of the conversation at the MAN Council meeting from the day before. A few days after, I visited the Military Governor of Lagos State, Raji Rasaki. I asked if the delegation from the Chamber of Commerce had met him on the subject. He acknowledged that they had, but cynically added that the members of the delegation were more interested in being allocated land for themselves in Lekki, the upmarket development area in Lagos, than in the mission. In many ways, the character of the private sector has not changed much from what it was 30 years ago. In those number of years, China had gone from a manufacturing upstart to the world’s workshop. If character is everything, how do you rescue a country whose business elite are of such deplorable character. I once listened to a homily on generosity in which the priest, referring to some research, broke giving into four – the grudge giving, the shame giving, the calculated giving and thanksgiving. Some give grudgingly so it’s on record that they gave, others give not to be outdone by some others and avoid that shame, and some do a calculated giving in a transaction in which they expect returns from what they have given. But the giving that is most pleasing is Thanksgiving in response to their humanity and benefits from before. Continues on Tuesday

Monday 15 April 2019

BUSINESS DAY

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Monday 15 April 2019

BUSINESS DAY

CITYfile Edo: 28 physically challenged benefit from NDDC empowerment IDRIS UMAR MOMOH, Benin bout 28 physically challenged persons are undergoing 14-day skill acquisition training programme organised by the Niger Delta Delta Development Commission (NDDC) in Edo State. The Federal Government interventionist agency is partnering with other nongovernmental organisations (NGOs) to empower the physically challenged persons in the state. Theresa Patrison, the coordinator of the NDDC skill acquisition programme in Edo, said the training is to enable the beneficiaries acquire necessary skills for self-employment and decent living The programme is also to enhance Micro Small and Medium Scale Enterprises (MSME) of the trainees with its main objective to strengthen the economies of

Work in progress, during the inspection of Itakpe Warri Railway Project, in Warri on Thursday.

NAN

A’Ibom: Fire service laments lack of equipment

…state with 31 LGAs operates with 1 fire fighting vehicle, pays N50 hazard allowance ANIEFIOK UDONQUAK, Uyo

kwa Ibom, one of Nigeria’s richest states in the oil-rich south-south geopolitical zone, with 31 local government areas, currently operates with only one functional fire fighting vehicle. Staffs of the state fire service are also paid a paltry N50 hazard allowance, an amount that the state fire service director, Ubong Umoh laments can barely buy a paracetamol. According to Umoh, most of the equipment at the disposal of the fire service, and which it is expected to deploy in the event of a fire outbreak in the state, are antiquated, and have no place in modern fire fighting operations. Umoh spoke with newsmen in his office in Uyo, the

state capital, saying the service presently operates with only 200 staff members and therefore handicapped. The director said in the event of a serious fire outbreak in any part of the state, the parastatal cannot effectively tackle the fire because of shortage of staff, low staff morale, lack of funds and equipment. He stated that for over two years, the parastatal has not received the approved budgetary allocation from government and he has had to source for funds to keep the office running. He noted that its manpower cannot tackle fire outbreak effectively in Uyo, and that they do not even respond to fire incidences outside the state capital, adding that his men fight fire without the necessary equipment and only

rely on God to protect them in the course of their duty. According to him, as a director, he has no official vehicle, whereas, the agency is entitled to at least two vehicles for its operations. He said though staff salaries are paid promptly; the parastatal has not received any support from the state government. “Everything in this place is down, if not that I am proactive and the zeal I have for the job, this place would have totally collapsed. Everything is lacking here and because of that, staff morale is very poor. “Our hazard allowance is N50, and that cannot even buy paracetamol. About two staff members have been maimed (one fell down from the fire truck and the other was affected by the heat of the fire)

in the course of working since I can on board last year as the director, and they have not been properly treated. “I have written series of letters for the upgrade of this place, all to no avail. I have evidences to that effect in a file here in case of any eventuality; any memo that I send out, I have a copy here. Our equipment are out-dated. If we have a serious fire incidence, like fire outbreak in a petrol station, we cannot handle it. “We want the government to provide us equipment, improve staff welfare, recruit more staff and carry out staff training within the country and overseas. There is a yearly provision in the budget for these things but since I assumed office last year, I have received zero allocation for these things,” he stated.

the Niger Delta states. “It will help the beneficiaries become job creators instead of job seekers. They will also learn how to manage their business properly. The programme is going to be a 14-day intensive training programme specifically for the physically challenged persons in Edo,” Patrison said. She also disclosed that at the end of the training programme, starter- packs will be distributed to participants according to the skills they have leant. She explained that the participants would be trained in Bead making, photography, wig making, shoe and bag making, head tie, manicure and pedicure, makeup and GSM repairs among others. The NDDC skill acquisition training programme was initiated through the Niger Delta Regional Master Plan (NDRDMP) to address policies for economic development in rural and urban areas of the region.

Delta approves completion of more roads

elta State government has continued to approve the completion of roads across the state to improve the socio-economic lives of the people. Commuters who ply the Ughelli-Asaba road would soon heave a sigh of relief as the state government has approved the completion of work on the parts of the road that have not been constructed. Speaking after the state executive council at Government House, Asaba last week, the commissioner for information, Patrick Ukah said that the completion of the dualisation of Ughelli-Asaba road, sector A and that of sector C1 from Ossissa to Kwale junction in Ogwashi-Uku were approved.

Ukah stated that the approval was to ensure safety of lives and property of persons who make use of the road and facilitate easier evacuation of goods across the state. The council also approved the completion of the construction of Ugbolu/Akwukwu-Igbo road from local government council secretariat to Akwukwu Board camp in Oshimili North local area of the state. Other roads that got the nod of the council were the construction of Idumuesah/Ute-Alohen Road, rehabilitation/construction of Owa-Oyibu/ Udomi-Abavo road and rehabilitation/construction of Owa-Alero internal roads, Owa-Alero, all in Ika North East local government area of the state.

Why public servants need synergy in service delivery JOSHUA BASSEY

overnor of Lagos State, Akinwunmi Ambode Pat Utomi, a professor of political economy, have called for synergy among public sector workers to maximise performance in public service. Both spoke at a recent twoday training session for Lagos civil servants, organised by

the state ministry of establishments, training and pensions, in Ikeja, Lagos. According to them, harnessing the benefits of team building and synergy to maximise performance in the public service should not be underestimated. “Lagos State civil servants need to be trained and retrained so that, working together, the output of the state www.businessday.ng

civil service will be exponentially increased,” Ambode said. Represented by Benson Oke, his commissioner for establishments, training and pensions, Ambode said “synergy happens when one plus one equals ten or a hundred or even a thousand”. The governor noted that a profound result can always be expected when two or more respectful human beings de-

termine to go beyond their preconceived ideas to meet a great challenge, adding that “synergy is better than my way or your way. It is our way”. The governor contended that synergy was not only about cost reduction but could also be access to markets, exchange of products, avoiding overlaps, and exchange of best practices. “Synergy is also described

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as bonus that is achieved when things work together harmoniously. Synergy is everywhere in nature. Alone we can do so little; together we can do so much,” he said. Utomi, who facilitated during the training, said it was about synergy to enable civil servants increase their productivity and become result-oriented. “This is the kind of knowl@Businessdayng

edge to impact on workers and business partners. I commend the Lagos State government for impacting such a laudable knowledge like synergy and teamwork on its workers,” Utomi said. Rhoda Ayinde, the ermanent secretary of the ministry, urged the participants at training to utilise the idea and knowledge impacted to them to better the state civil service.

Monday 15 April 2019

BUSINESS DAY

NEWS Neither oil rally nor IMF upgrade is... Continued from page 1

pulled the All Share Index

down to 22,456 points, which was its lowest in five years. In 2017, while crude oil price doubled from its 2016 levels, stocks returned as much as 42 percent, making it the third best performing market in the world. This trend showing the positive correlation between crude oil prices and the stock market extends to 2014, when oil prices reached a record $114 per barrel in August, helping stocks rally to their highest level since the market crash of 2008. Coincidentally, both stock prices and crude oil prices collapsed in 2008. However, the correlation has fallen apart this year after flashing stress signs in 2018. The abnormal market reaction to higher oil prices doesn’t stop with stocks. In the year-to-date period when oil prices gained 33 percent, the naira only managed

to gain 0.7 percent against the US dollar, also breaking a strong positive correlation between oil prices and the exchange rate. That has left analysts scratching their heads over why the rally in oil prices and stable production has had such a faint impact on the currency. To further expose the waning power of oil prices on investors’ sentiments, oil prices have gained 8 percent in the past one month but stocks and the naira are down 8.5 and 0.2 percent, respectively, according to data compiled by Business Day. “The poor stock market performance is a reflection of sentiments towards the broader economy, as many investors say they had expected an Atiku victory, and recalled their investment after he lost to Buhari,” said Ayodeji Ebo, managing director of Lagos-based investment advisory firm, Afrinvest Securities. “They (investors) have low

expectations of another fouryear term for Buhari and are only comfortable putting their money in government securities, where they are taking zero risk,” Ebo said. “Now that investors are asking for more than a rally in oil to buy Nigeria, the government must act fast to implement the type of reforms that will send a signal that the country is open for business,” he added. Even an IMF upgrade on Nigeria’s economic growth to 2.1 percent in 2019, from the 2 percent forecast made in January, has proved unable to significantly lift sentiments in the investor community. Although the stock market gained 0.7 percent Friday, analysts say the rare uptick is unsustainable. The feeling is that Nigeria has showed little signs of implementing wide-reaching market reforms, from how electricity and petrol are priced to enforcement of contracts signed by the government. And that has dealt a blow to confidence in the economy.

Critics say Buhari is yet to satisfactorily show investors that he will pursue private sector-led growth in the next four years and jettison his government-led approach that attaches little importance to private capital. Atiku Abubakar was President Muhammadu Buhari’s main challenger in February’s presidential elections and he promised to end a wasteful petrol subsidy, multiple exchange rates, and create jobs through the private sector. He also said he would follow the path of Saudi Arabia by selling some stake in state-owned oil company NNPC to diversify the country’s revenue stream. Although Nigeria’s political history suggests Atiku may well have done neither, his private-sector approach to tackling the country’s myriad of challenges endeared him to investors as his ideologies shone bright in comparison to Buhari who banks on his socialist schemes to create jobs and boost economic growth in a country where

government spending forms less than 7 percent of GDP. Foreign and local investment banks predicted a stock rally if Atiku won. The fact that Nigerian stocks were also some of the cheapest in developing markets using the Price to Earnings metric only fanned optimism which dissipated after the former vice president lost to Buhari, who secured a second term over his rival by a margin of 4 million votes. However, the stock market plot hasn’t played out in the bond market, as Buhari’s victory sparked record foreign inflows that drove bond yields to a three-year low. Foreign investors, the biggest players in the stock market, have avoided stocks and favoured bonds because they are not convinced that President Buhari will push through tough reforms that will get the economy growing at the required level, which is closer to 6 percent than last year’s underwhelming 1.9 percent growth.

We have not taken any foreign loans... Continued from page 1

Revenue (IGR) due to mas-

sive infrastructure projects the administration set out to accomplish to cater to the growing needs of the estimated over 21 million residents of the state. According to Ambode, although the foreign component of the state’s debts hovers around $1.43 billion, his administration never added to it but was committed to servicing what it inherited from the previous administrations, which has been compounded by unstable exchange rates. The governor spoke in an exclusive interview with BusinessDay,sayinghisbackground as a financial expert and years of experience at the top level of the state’s civil service as an accountant-general came handy in managing the resources of Nigeria’s biggest state economy to achieve outstanding results. Statistics from the Debt Management Office (DMO) show Lagos State’s total external debt stock as at 31 December, 2018 stood at $1.43 billion. The external debt comprised $1.28 billion from multilateral

source and $143.83 million was bilateral, sourced from the African Development Bank. In addition, the state’s total domestic debt stock was N530.24 billion as at the same period of 2018. “Talking about Lagos State having the highest amount in terms of foreign loans, truth is that I have it on record that in my four years, I never took any foreign loan. So, whatever it is thattheyaresayingabouthaving $1.43 billion is an accumulation of loans that have been taken by successive governments,” Ambode told BusinessDay. “Remember also, these facilities that we call loans were taken at an exchange rate that was lower than N150. But again, this government that has not taken any of these facilities would pay back and has been paying back in the last four years on the new exchange rate which is like N360 because government is a continuum. “That has immense pressure on the internally generated revenue. And when you have this pressure on the IGR that you are using to service these

First Bank grows profit by 31.4% to... Continued from page 2

from N3.14 trillion, driven by increases in current and savings accounts. “The continued healthy growth in the face of heightened competition under-

scores the confidence reposed in the Group by the public, the strength of our franchise as a time-tested financial institution,” the bank said in a statement on Friday. First Bank was not left out of increases in domiciliary depos-

Nigeria’s tax woes revealed by low... Continued from page 2

of VAT may not have been paid by each registered accounts as some may have paid more than others, BusinessDay used a less average amount to do the same calculation. Thus, if a VAT-compliant account pays an average of N10 million annually, this

implies that Nigeria would realise N15 trillion from the tax. The amount would, however, fall to N7.5 trillion if each accounts paid N5 million a year. In 2014 when Ngozi Okonjo-Iweala, then finance minister, hired McKinsey, a consultancy, to plug tax leakages and boost non-oil tax revenue, it www.businessday.ng

R-L: Onyebuchi Okereke, publicity secretary; Debo Fagbami, chairman, both of Society of Petroleum Engineers Nigeria Council, and Kunle Odusoki-Stevenson, head, strategist/legend and legacy PR, at a press conference on the forthcoming Oloibiri Lecture Series and Energy Forum in Lagos. Pic by Pius Okeosisi

“Oil is proving insufficient and investors want more in terms of policies,” said Wale Okunrinboye, head of research at Sigma Pensions. Pension Fund Administrators are dominant local investors in Nigeria. “Nigeria is best described as a country with developing market growth but emerging market risk, which does not make it enticing to investors,” Okunrinboye added. Oil prices are on course for their longest run of weekly gains since 2016, according to Bloomberg data, as the conflict in Libya and US sanctions on Venezuela and Iran constrain oil supplies. OPEC will also press on with output cuts through June. “Appreciating oil prices are likely to provide foreign exchange stability, ability to implement 2019 budgets and economic growth in Nigeria,” said Lukman Otunuga, an analyst at FXTM Research.

•Continues online at www.businessday.ng from passion to improve the lot of the people, his administration leveraged on the Lagos Development Plan 2012-2023 and took specific steps to improve the IGR to enable it deliver on the development plan. “One of the strategic instruments in that developmentplan is to create a financial model for Lagos State. It is not enough for us to say we are having strategic pillars of development without knowinghowtofunditandsoin the development plan, a growth plan for revenue generation had actually been embedded in it,” Ambode said. “Fortunately for Lagos, you have statistics that favour revenue growth. Lagos is the commercial capital of Nigeria; the business community in terms of population or location is here and this is like 70 percent of what is happening in Nigeria; we have the market and again Lagos is the most sophisticated. Those indicators were just enough for anybody to carry on from where the previous administration stopped and then be able to continue.

facilities without complaining, it means that you have been financially prudent to be able to use the remaining resources to do what you have outside there in terms of infrastructure development,” said Ambode. He further explained that beyond being financially prudent, his administration has given value for money by undertakingmajorprojectsthatare further improving the economy

of Lagos in particular and Nigeria in general, pointing to the construction of road networks, Oshodi Transport Interchange (OTI), Lagos airport road, resuscitation of Ayinke House (maternity hospital), Ikeja, jubilee bridges, laybys, redesigning of Ojodu Berger on Lagos-Ibadan Expressway, the light-up Lagos project, among others, as legacies his successor, Babajide Sanwo-Olu, will build upon.

“That is the way to explain what has been happening and the value that comes with the infrastructure that we are giving. It is like double the price of what we are putting inside when you match the issues about loans and resources. Remember also that the country was going into recession when we came in,” Ambode explained. Speaking on his drive in governance, Ambode said aside

its witnessed by Nigeria’s biggest banks in 2018 as customer deposits in foreign currency surged 20.6 percent to N583.5 billion as against N484.0 billion deposited in 2017. Commenting on the results, Urum Kalu Eke, First Bank’s group managing director, said the impressive finan-

cial performance was in line with the management’s plans for 2017-2019 strategic cycle, which has been to strengthen its various businesses and position the company for sustainable growth over the long term. “Our three-pronged approach has primarily been to drive long-term revenue gen-

eration capabilities, overhaul risk management processes and drive efficiency across our businesses,” Eke said. Loans advances to customers declined to N1.7 trillion from N2.0 trillion, but First Bank said “it is reflective of the weak macroeconomic environment that does not

support aggressive risk asset creation”. Eke expects growth in interest income to complement its growing non-interest revenue in 2019 due to its plan to undertake guided expansion of the loan book which contracted in the last two financial years.

was discovered that 65 percent of registered taxpayers had not filed their returns in two years. A survey by BusinessDay revealed that 75 percent of small and medium businesses are not currently in the tax system and about 30 percent of companies operating under the Pioneer Status incentive are alleged to have abused their tax exempt status. The estimated N8.83 trillion

2019 budget contains many tax components as FGN mulls new taxes and a VAT hike in order to meet a higher wage bill following the approval of a new minimum wage. Akinwunmi said having a higher tax rate is not the major issue affecting the nation’s revenue because it would depress consumption and discourage investment in the country. He, however, said what

Nigeria needs to have are strategies to bring in more people into the tax basket such that the country would have a larger base on which it is applying the current tax rate. “Once you do that, government will be able to generate more revenues,” he said. The Federal Ministry of Finance recently initiated the Voluntary Assets and Income Disclosure Scheme (VAIDS),

an initiative that gives Nigerians with tax liabilities dating back to 2010 the opportunity to regularise their tax status by declaring and spreading payments over a maximum three-year period. This led to a record high sum of N5.32 trillion remitted from tax revenues in 2018, despite missingthetargetofN6.7trillion.

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Monday 15 April 2019

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Monday 15 April 2019

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NEWS Ausso Leadership Academy celebrates one year of mentorship experience to business leaders, entrepreneurs Modestus Anaesoronye

business and entrepreneurship mentorship platform in Nigeria, Ausso Leadership Academy (ALA), has marked one year of providing mentorship experience to entrepreneurs and business leaders across diverse business spectrum in Africa. The celebration was marked with an anniversary celebration that coincided with the graduation ceremony of its sixth business and entrepreneurship masterclass cohort. Speaking at the occasion, Austin Okere, founder/CEO of the Ausso Leadership Academy, noted that the strides of the academy in just one year was a validation of its founding purpose, which is to “mentor entrepreneurs to institutionalise and scale their businesses geometrically.” According to Okere, “One year from inception, ALA has remained true to its purpose of mentoring entrepreneurs that will, in turn, become the drivers of sustainable economic growth, creating an oasis of outstanding businesses in Africa. So far, we have enjoyed ever-increasing recognition and endorsement by key stakeholders. “Indeed, we are grateful to everyone that had committed

themselves to this initiative. Without you, we would not have come this far. And, we count on you in our quest to continue to mentor the giants of today and tomorrow.” In his testimonial, Udukheli Izebuno, a business partner at the Academy said, “Every aspect of this institution has been carefully designed for the next generation of people that will do great things. I think #ALA is properly designed and properly targeted to attract these set of entrepreneurs.” Recall that on April 12, 2018, the bespoke entrepreneurial mentoring platform was launched by the opening of “The Entrepreneurs’ Hub”. It is a tailored environment designed to host its flagship masterclasses, mentoring sessions and one-onone mentoring clinics. In the past year, the Ausso Leadership Academy has Mentored about 102 Entrepreneurs, representing 10 major corporates from diverse industry sectors and about 44 medium enterprises. The academy has hosted 47 Champions of Business and Entrepreneurship to share their experiencesand impacted about 400 Guest Delegates with its open Sessions; in line with her commitment to buildinga strong Community of Nigerian Business Leaders and Entrepreneurs.

LaundrybyTimeSignature, others win World Quality Alliance Award SEGUN ADAMS

aundrybyTimeSignature has been recognised and awarded the Most Outstanding Laundry/Dry Cleaning Company for year 2019 by World Quality Alliance at the annual International Standards Leadership Summit/Exhibition/Awards Nigeria 2019, which took place recently in Lagos. Other companies that won awards in different categories include Nestle Water, Provast Limited, Africa Circle Pollution, among others. Monday Tama, finance and admin manager of LaundrybyTimeSignature, who received the award on behalf of the dry cleaning company, lauded Stanley Ohenhen, chairman of World Quality Alliance for rewarding excellence in a time when Service Quality was no longer taken seriously in Nigeria. He ascribed the service performance of LaundrybyTimeSignature to the commitment of the management and staff of the company. According to Tama, the company pays priority attention to customer service and continuous improvement, which are the two most important factors in achieving excellence in service delivery industry. With the award and recognition, he promised that the company would continue to

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deliver best premium affordable service and thanked the clientele for their patronage. In celebration of the award, he shared a free wash card to all participants of the event and requested them to redeem it at their earliest convenience at any of the company’s service centres located at Lekki Phase 1 or at Atlantic Centre, Chevron Drive, Lagos. The International Standards Leadership Summit/Exhibition Nigeria is an annual multidisciplinary platform where captains of industries discuss the role of international standards to the development of global trade and commerce in Nigeria. It is also a platform to reward service excellence by companies and individuals who have shown exemplary performance. The 2019 award event recognises the distinguished leadership in promoting the role of standardisation in eradicating the global barriers to trade. Ohenhen in a communiqué said, “The event is to honour companies, individuals, multinational agencies, and government institutions. The World Quality Alliance Standard panel has made commitment to create more awareness on the importance of application of International Standards Certification Systems and compliance to organic business functions in organisations around the world.”

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Unions to picket Caverton Helicopters today over pay, others IFEOMA OKEKE

ollowing alleged ill-treatment on their members working in Caverton Helicopters by men of the Nigerian Police Force (NPF), five aviation unions have concluded plans to picket the airline. According to the unions, the picketing will commence today, April 15 and 16, 2019, to express their displeasure over the denial of their rights by the police and also the inability of Caverton Helicopters to pay up their members’ terminal benefits. The unions include: National Union of Air Transport Employees (NUATE); Air Transport Services Senior Staff Association of Nigeria (ATSSSAN); Association of Nigerian Aviation Professionals (ANAP); National Association of Air Pilots and Engineers(NAAPE)andAmalgamated Union of Public Corporations Civil Services Technical and Recreational Services Employees (AUPCTRE), which have resolved to picket the airline starting from Monday. In a circular letter issued to all aviation workers at the weekend, the labour union leaders directed all aviation workers in Lagos to assemble at Freedom Square at the Federal Airports Authority of Nigeria (FAAN) headquarters on Monday and Tuesday next week by 9:00am each day to protest what they described as denial of their rights by the Nigerian police. According to the circular dated April 10, and jointly signed by Ocheme Aba, NUATE General Sec-

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retary; Frances Akinjole, ATSSSAN Deputy General Secretary; Abdul Rasaq Saidu, ANAP Secretary General; Umoh Ofonime, NAAPE Deputy General Secretary, and Bello MA, AUPCTRE General Secretary, workers in Port Harcourt are to also assemble at the NAF Base operations of Caverton Helicopters to carry out similar protests. The circular stated, “In the early hours of Thursday, April 9, 2019, the Nigeria Police Force stormed Caverton Helicopters, intimidated, harassed, assaulted, brutalised and traumatised officials and members of National Union of Air Transport Employees NUATE who were engaged in the lawful activity of picketing Caverton Helicopters under the directive of the union, 12 of them were violently whisked away to unknown destination. “They were later found to have been detained at a facility in Oshodi, Lagos, operated by the Lagos State Environmental Safety Corps Task Force. All 12 members were later released after mass protest at the airport by their fellow members. It is noteworthy that no particular charges were entered against them by the police. Also, NUATE’s official vehicle was towed away to the same facility but damaged beyond repair in the process. Two of the assaulted Comrades are still on treatment of injuries received at the hands of the police while the lone female Comrade among them is currently on trauma therapy.”

BUSINESS DAY

Monday 15 April 2019

NEWS

Nigerian entrepreneurs urged to adopt Chinese model for economic growth KELECHI EWUZIE

igerian entrepreneurs have been urged to adopt Chinese economic model for business advancement in existing and new opportunities as well as improvement in the standard of living. Ding Yuan, vice president and dean of China Europe International Business School (CEIBS), says if the concept is adapted by Nigeria and indeed Africa entrepreneurs, it will help tremendously in shaping the development of the African continent. Yuan, while speaking at the annual One plus One lecture by CEIBS alumni with the theme ‘China’s New Economic Model: Opportunities for Africa’ in Lagos, says researchers in China have found very important factors behind the economic model, which include education and the Chinese savings system. According to Yuan, “The Chinese system supports high quality education which is directly related to its economic development. In addition, savings which is part of the Chinese culture boosts the potentials of their future economic development relative to their growth in the last 40 years.” He notes that this economic model can be fostered through the qualitative business education, which CEIBS offers. This is in relation to the advanced lectures where Chinese cases are brought forward to suit the Nigerian environment and also through dialogue from their peers in China and other parts of the world. Earlier in his address at the event, Sunday Agboola, president,

CEIBS Alumni Association, Nigeria chapter, says the session is aimed at enhancing the knowledge attained by the alumni of the school on how entrepreneurs can take advantage of the Chinese economic model to build on innovative business trends in the country. He says the One plus One lecture means that an alumnus has the opportunity to introduce another partner to enhance his perception on business prospects that are opened to Nigerians in other parts of the world, with special reference to China. The vice president and dean adds that CEIBS also offer opportunities for the Nigerian business community to network with their counterparts in China on investments and opportunities as well as how to tap into various areas of interest. According to him, the combination of Chinese and European style of education would be advantageous to the country and the African continent, since China is one of the largest economies in the world. The professor cited some challenges to this relationship between Chinese and Nigerian businesses, which he attributed to distance and communication gap. However, CEIBS has surmounted these challenges through lectures and dialogues from Chinese chief executives through annual visits to the country. “Every year, we try to bring more exchanges between the two countries, especially in the area of economic advancement through qualitative business education and opportunities that can be harnessed,” Yuan stated.

Palm oil plantation: Dufil consolidates on land acquisition, commences compensation to Edo farmers Daniel Obi

ollowing its acquisition of 17,954 hectares of land from the Edo State government for Palm oil cultivation, Dufil Prima Foods plc, maker of Indomie Noodles, has embarked on a crop compensation payment to 1,628 farmers across 14 communities in Ovia North East Local Government Area of Edo State. Th e pay m e nt e xe rc i s e, which is being overseen by the Ministry of Agriculture in the state, according to a statement, commenced recently and is expected to continue for another three weeks. The move, which crystallises Dufil’s backward integration drive, particularly with respect to oil palm cultivation, is also in line with the Federal Government’s drive for increased activities and revenue from agriculture. This laudable project being undertaken by Dufil will see massive investment being introduced into the region. The project will not only help create job opportunities for indigenes but also serves to cut the importation of oil palm; a development that is in sync with the Federal Government’s efforts to reduce importation. Madhukar Khetan, chief operating officer, Dufil Prima Foods, says in the statement that the project marked an-

other significant milestone in Dufil’s commitment to attaining a further backward integrated and self-sustaining system that supports the Nigerian economy by creating employment opportunities, reducing importation and doing so in a sustainable manner. He adds that crop compensation exercise, which is being carried out marks another achievement in the oil palm plantation project, which will include installation of an integrated palm oil mill. “In addition to this crop compensation to farmers, Dufil’s commitment to the project is worth billions of Naira,” Khetan says, adding that the next step after the compensation exercise is Environmental Impact Assessment (EIA) as well as the Roundtable on Sustainable Palm Oil (RSPO) mandatory assessments and development of nursery. He also commends the state’s commitment to ensuring a sustainable venture. Recently, the CBN governor, Godwin Emefiele, unveiled strategies while speaking during a meeting with stakeholders in the Palm Oil Value Chain. He noted that loans would be granted through the Anchor Borrowers’ Programme (ABP) and Commercial Agriculture Credit Scheme (CACS) at no more than 9 percent per annum to identified core investors.

L-R: Muhammadu Sanusi II, emir of Kano; Sarah Alade, former deputy governor, Central Bank of Nigeria (CBN)/special guest of honour; Razak Jaiyeola, president, Institute of Chartered Accountant of Nigeria (ICAN); Haruna Yahaya, chairman, ICAN dinner committee, and Patrick Akinwuntan, managing director, Ecobank, during the 2019 ICAN annual dinner and awards in Lagos, at the weekend. Pic by Olawale Amoo

Why fuel queues are resurfacing across Nigeria … as finance minister says no plan to remove fuel subsidy Olusola Bello, Lagos; Onyinye Nwachukwu & Hope Moses-Ashike, Washington DC

supply gap created by lack of proper planning for importation of fuel by the Nigerian National Petroleum Corporation (NNPC) for the second quarter of this year may have been responsible for the queues being witnessed at filling stations in some cities across Nigeria. A BusinessDay investigation has revealed that it is not that there is no fuel at all, but what is on ground may not be enough to circulate round the filling stations across the country, hence the queues already being witnessed in some filling stations in Lagos and its environs. Some of the downstream sector operators of the oil and gas industry told BusinessDay weekend that there it was not that there was no fuel at all, but what was on ground cannot go round. “If NNPC says there is fuel, yes, there is fuel. But can it go round and sufficiently meet the demand of consumers currently, no,” an anonymous operator said.

Some of the depots’ operators where NNPC has throughput arrangement told BusinessDay that the organisation had been rationing supply among its retail outlets and things might get worse if the NNPC failed to arrest the situation. Some of the companies said in time past they loaded about 100 or 130 trucks in a week, but now they were hardly able to load 40 trucks. Meanwhile, the Major Oil Marketers Association of Nigeria (MOMAN) says it members have petrol in their depots storage tanks and are loading out petrol to all its filling station. “MOMAN members will continue to receive petrol into their storage tanks from NNPC vessels at berth and lined up for discharge throughout the weekend and will keep its stations replenished and operational throughout this period to serve the public and to kill the queues at filling stations. “MOMAN members urge the public to avoid panic buying as there is enough product supply in the distribution system to meet

public demand,” Clement Isong, CEO of MOMAN, stated. The NNPC, in a reaction to this development, appealed to Nigerians to disregard trending social media report of an impending fuel scarcity due to purported refusal by some oil marketers to lift products from depots. The NNPC in a release Sunday evening by Ndu Ughamadu, group general manager, Group Public Affairs Division, said the tale was fabricated by mischief makers with intent to create undue panic in the prevailing sanity in the fuel supply and distribution matrix across the country. NNPC informed that it had over one billion litres of petrol in stock while imports of 48 vessels of 50 million litres each had been committed for the month of April 2019 alone, noting that there was no need for panic buying or hoarding of petroleum products in anticipation of a phantom scarcity. However, Zainab Shamsuna Ahmed, minister of finance, on

Sunday allayed fears that the government was about to remove fuel subsidies, a situation that might had caused the long queues at the fuel stations. The re-surfaced fuel queues had emanated from fears that government could begin to implement latest advice by the International Monetary Fund (IMF) that the country needed to end fuel subsidies, which it said was benefiting just the rich, and channel gains to social safety net programmes that benefit the country’s huge poor population. She made the clarifications at a joint media briefing by the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, and Udoma Udo Udoma, minister of budget and national planning, on the outcomes of the just concluded Spring Meetings of the IMF and World Bank in Washington DC. Her words, “We are here to discuss with the global community, on various policy issues. One of the issues that always come up, especially in the IMF Article IV is how we handle fuel subsidies.

Fashola confirms FG’s approval of works on Nigeria-Seme-Benin road HARRISON EDEH, Abuja

he Federal Government has approved the commencement of work on the section of the road linking Nigeria with Seme Border with Republic of Benin. Babatunde Fashola, Nigeria’s minister of Power, Works and Housing, stated this on Sunday at the 12th Ministerial Steering Committee and Experts Meeting for the AbidjanLagos Corridor Highway Development Programme in Lome, the Togolese Capital. He, however, said the project would be done in a flexible way in order to improve commuter service while also making it adaptable to the results of the feasibility and technical studies. The minister, who is also chairman of the Ministerial Committee overseeing the project, expressed delight that while the personnel of

presidents and ministers who launched the initiative have changed, the commitment to the project has not changed, adding that the committee had now put in place a system where meetings were now being held quarterly. “From a period between 2013-2016 when no meetings were held because of changes in government and personnel, we have now put in place a system where meetings are held quarterly,” Fashola said, adding that this had enabled the committee to overcome the problems of signing treaties and loan agreements which dragged for a while but which happily have now been completed. Pointing out that feasibility, technical, financial and related contracts which seemed so far from conclusion have now been signed, Fashola paid glowing tribute to the founding presidents of the committee for their vision of choosing “to go far as

a team rather than going fast as individuals”. “Going together, therefore, means working as partners, recognising and respecting each other’s sovereignty and Governmental processes as well as diversity of languages. Therefore, while the personnel of presidents and ministers who launched this initiative have changed, the commitment to the project has not changed,” he said. The minister further described the project as testimony of the strong bond among the ECOWAS countries to pursue common goals and aspirations to ensure the development of the sub-region both in terms of standard of living for the people and the level of communication between the countries, adding that the development of the corridor would enhance rapid integration that was already existing in other economic

blocs of the world. It will also improve socio-economic activities among the West African countries, Fashola said. While hosting the 9th Ministerial Steering Committee and Experts Meeting for the Corridor in Abuja last year, Nigeria’s Vice President Yemi Osinbajo had emphasised the importance of the project, describing it as a strong testimony to the strong relationship among ECOWAS countries. “We believe it would promote regional integration, enable tourism and other forms of economic activities in the sub-region and create the much needed job for our large youth population,” Osinbajo had said, adding that connecting West Africa by means of an efficient road network was one of the easiest and most direct ways of boosting local and international economies and by extension, regional economies of the West African sub-region.

Monday 15 April 2019

BUSINESS DAY

NEWS

2019 budget suffers further delay, as Senate keeps mum OWEDE AGBAJILEKE, Abuja

opes of passing the N8.83 trillion 2019 Appropriations Bill by April 16 were dimmed Thursday last week, as the Senate adjourned till this Tuesday without saying a word on the budget. It would be recalled that Senate president, Bukola Saraki, had on Tuesday given the sub-committees till Wednesday deadline to submit their budget reports to the Appropriations Committee, which was in turn mandated to submit the budget report by Thursday in readiness for the approval of the budget by Tuesday, April 16. According to Saraki, the Appropriations panel would be forced to use Executive submissions if the sub-committees fail to submit their reports to the Appropriations Committee by Wednesday. But at the resumption of plenary on Thursday, the budget item was not listed on the Order Paper; neither did Saraki say a word on the money bill. Only the Senate leader, Ahmed Lawan, gave reason for the budget delay when he moved a motion for adjournment to enable sub-committees submit their report to the Appropriations Committee. A source in the Committee revealed that sub-committees were still submitting their report, even as he expressed doubt if the budget would be passed before Easter. The lawmaker disclosed that about 35 out of the 61 sub-committees have so far submitted their reports, adding that Ministries, Departments and Agencies (MDAs) are still defending their budgets before sub-committees. He, however, did not give the list of

the sub-committees. The Senate is set to adjourn by next Wednesday, ahead of the Easter festivities billed for next week. “From the snail speed with which sub-committees are submitting their reports to us, I doubt if we can pass the budget by next week,” the senator who spoke on condition of anonymity, told BusinessDay. However, our correspondent observed that despite the Wednesday deadline given by the Senate president for sub-committees to submit their reports, budget defence was still ongoing. As of the time of updating this report at 4:50pm, the Ministry of Trade and Investment was still having budget defence with the joint Senate and House of Representatives Committees on Trade and Investments. Indications that the budget would not be presented as promised first emerged on Thursday morning when the Senate Chief Whip, Sola Adeyeye (APC, Osun), observed that the upper legislative chamber lacked quorum for plenary to take place. According to Adeyeye, only 19 senators were seated instead of a minimum of 33 as stipulated by the Constitution. Although, Saraki initially agreed with him and said he would adjourn the session, he later reversed himself after Lawan approached him for a tête-à-tête, despite not forming a quorum. It was further gathered that another reason for the budget delay is to give the Appropriations panel more time to include the sum of N10 billion in the 2019 budget as intervention fund to cater for Internally Displaced Persons affected by the activities of armed bandits in Zamfara State.

Businesses hope for cost, freight reduction as piracy on Nigerian waters drops 36% AMAKA ANAGOR-EWUZIE

mporters,exportersandshipowners are optimistic of reduction in freightcharges,warriskinsurance premium and other surcharges imposed on Nigerian-bound cargo if pirate attacks on Nigerian waters continue to decrease. The optimism comes on the back of the first quarter piracy report released by the International Maritime Bureau (IMB), a specialised department of the International Chamber of Commerce, showing 36 percent reduction in pirate attacks on Nigerian waterways. According to the report, Nigeria, which has been a hotspot for piracy incidents over the past decade, experienced a decrease in reported piracy incidents as it recorded 14 incidents in Q1 2019 against 22 incidents reported same period in 2018. “These results confirm the Nigerian Navy’s increased efforts to actively respond to reported incidents by dispatchingpatrolboats,”thereportnotes. Adewale Ishola, foremost master mariner, told BusinessDay in a telephone interview that the develop-

ment is supposed to boost shipping business because safety is very critical to shipping. According to him, international shipping companies that are raising freight charges and introducing new surcharges on cargoes coming to Nigeria need to consider bringing rates down to benefit ship owners and shippers. “Nigeria is the chair for Gulf of Guinea commission and we must be seen to be playing leadership role. Therearelotsofcollaborationbetween the Nigerian Maritime Administration andSafetyAgency(NIMASA),Nigerian Navy, Nigerian Air Force and Nigerian Army that are yielding good result,” he said. Ishola blamed the surge in piracy attacks recorded previously on the gap created between 2015 and 2018, when the Federal Government terminated the contract between NIMASA and the Global West Vessel Specialist, which centred on policing the nation’s territorial waters. “Now,NIMASAhasanIsraelicompany policing the nation’s maritime domain and it is now yielding good result. We hope the attacks will come

down to zero very soon,” Ishola said. FindingsshowthatGulfofGuinea, which houses Nigerian waters, is rated as a high-risk area for vessels calling seaports in West Africa with international cargoes. This is as even the IMB report, despite the drop in pirate attacks, expressed scepticism that Nigerian waters remain risky for vessels, especially the port of Lagos where four incidents have been reported in 2019. As a result, vessel owners charge war risk insurance premium on cargoes coming to Nigerian ports and other ports in the region. Most vessels also come into the region with armed escort for the protection of the cargoes and the cabin crew onboard. Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA), said the war risk insurance premium has translated into high cost of cargo importation into the nation’s seaports as importers, who pay such premium, also increase the market price of goods. Two shipping lines, HapagLloyd and CMA CGM, operating in Nigeria recently introduced new surcharge called ‘Peak Season Surcharge’ (PSS) on all cargoes

originating from anywhere in the world to Tin-Can and Apapa ports in Lagos and Onne port in Rivers State. Dakuku Peterside, directorgeneral of NIMASA, attributed the development to Federal Executive Council’s recent approval of the Deep Blue Project, an all-encompassing maritime security architecture, which is a clear demonstration of the present government’s determination to tackle the menace of piracy. “The IMB report is not a surprise considering how seriously the Federal Government is paying attention to maritime safety and security, which led to the approval of the Deep Blue Project. This is the best time to invest in Nigerian maritime sector,” he said. Peterside said NIMASA would continue to collaborate with the Nigerian Armed Forces, the Police and other relevant law enforcement agencies to ensure that Nigeria becomes a hub of maritime business in Africa. “We will continue to do all in our powers, within the ambit of the law, to ensure that piracy in Nigerian territorial waters is drastically reduced, if not eradicated,” he said.

FG requires $3bn to connect Abuja to Itakpe rail - Amaechi Stella Enenche, Abuja

he Federal Government says $3 billion was required to link Abuja,theFederalCapitalTerritory (FCT), to Itakpe rail line. Minister of transportation, Rotimi Amaechi, made the disclosure last Thursday during an inspection tour of Itakpe rail project. He noted that a seaport would be required for a successful connection of Abuja to Itakpe by rail, saying, nonetheless, for that to happen, the Federal Executive Council must give the approval. “Connecting the Itakpe-Abuja project, we have to go to the cabinet first, when the cabinet approves that, it will be a different project altogether. We need about $3 billion with a seaport at Warri,” the minister said. He said work had reached advanced stage of completion, pointing out that what was left was laying of tracks, noting, “There is nearly completion here. Julius Berger has said that they will be out of here by June and the only person that has to be left here is the CCECC, which have to do with the tracks work. And, when they finish the track work, these places would be open for use. “On the track, we’ve compared the track work and what is outstanding with the stations that they are workingonandso,beforeSeptember, October, they should be able to finish

the stations if they continue with the pace of work and they can actually do it. We are not harassing them today because we owe them. But, when we pay them, we can harass them. “The communications guys are here, they have reported to site, but, notmuchisfelt,soweneedtosendfor them because, they are the problem we have now. But, when they finish, there will be the train, the track, there will be the offices, but the question is, thegoods.So,weneedthecompanies thatareminingiron-orehereandthen the passengers to use the train.” He further stated: “We have 12 stations on this axis and non is been completed. There are different levels of completion, and some, they said that they have finished with the structural work, it remains the mere finishing. The entire project will be completed by October, he said. “This place should be ready by September, October. The complain on site, I have to verify that when I get back. They should start paying for the ride, it cannot be free forever. I’m impressed with the level of work done so far. When you are owing someone, you can’t say that you are not impress with them. “Remember, this is the third visit. Thefirstvisit,thisplacewasovergrown by weeds and with nothing. The secondvisit,theyhavestarted,butonlyon the other phase, the third visit, almost completed.” www.businessday.ng

Justin Nnaji, chaplain, Saint Luke Chaplaincy, University of Abuja Teaching Hospital (UATH), leading other priests and members of catholic knights of Saint Mulumba during a procession to celebrate Palm Sunday, a triumphant entry of the Lord Jesus Christ to Jerusalem, in Gwagwalada, Abuja, yesterday.

Oil prices fall on surging US inventories, civil unrest in Libya DIPO OLADEHINDE

rent crude, the benchmark for Nigeria’s crude oil, fell on Thursday pressured as Organisation Petroleum Exporting Countries (OPEC)-led cuts, increase in US crude inventories and political turmoil in Libya tighten global supplies. International benchmark, Brent, futures were at $71.44 per barrel, down 29 cents or 0.4 percent from their last close while US West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents or 0.5 percent from their previous settlement. “The situation will be for a short term. If any of the major factors changes, prices will change again,” Ayodele Oni, partner, Energy Practice Group, Bloomfield Law Practice, told

BusinessDay. OPEC, which has agreed with allies to withhold 1.2 million bpd of crude from the market since the start of 2019, fell 550,000bpd in March to 30.1 million bpd, the IEA said. OPEC’s official report on Wednesday put the group’s output at a four-year just over 30 million bpd. The agency, which coordinates the energy policies of developed nations, saw oil stocks in industrialised countries fall in February by 21.7 million barrels, putting inventories 16 million barrels above their fiveyear average. According to Wunmi Iladare, Ghana National Petroleum professor and chair, University of Cape Coast, Institute of Oil and Gas, “Oil production has not come down neither has the economic growth picked up where oil and gas are consumed. So

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I am not going to really put much weigh on the current dynamic beyond, the geo-politics of oil and gas suppliers.” US crude inventories rose seven million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday. US crude oil production remained at a record 12.2 million barrels per day (bpd), making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia. There are also concerns that an economic slowdown will soon dent fuel consumption after the International Monetary Fund this week downgraded its global growth forecast to the lowest in a decade. Despite the surge in US supply and the economic concerns, global @Businessdayng

oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), US sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya. “Oil markets will remain tight as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far,” Ole Hansen, head of commodity strategy at Saxo Bank told Reuters. Beyond the short-term outlook for oil markets, a lot of attention is on the future of demand amid the rise of alternative fuels for transport. “Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya,” said Stephen Innes, head of trading at SPI Asset Management told Reuters.

BUSINESS DAY

Monday 15 April 2019

NEWS

FG to issue N15bn green bond to finance agric, solar, water this year ... financial inclusion rate moving up aggressively - Emefiele Hope Moses-Ashike & Onyinye Nwachukwu in Washington DC

L-R: Temitope Shonubi, executive director, Sahara Group; President Salva Kiir Mayardit of South Sudan, and Ezekiel Lol Gathkuoth, minister of petroleum, following the signing of the $600 million facility provided by Sahara Energy Resources DMCC, Dubai (a member of the Sahara Group) to support ongoing peace process and infrastructure development in South Sudan.

Pope’s symbolic feet kissing, Sahara Energy’s $600m facility boosts S’Sudan peace process

s the South Sudanese people and the world remain in awe of the inspiring feet kissing and blessing of the nation’s leaders by Pope Francis, Sahara Energy Resources DMCC, Dubai, has extended a $600 million facility to help boost resurgent hope for peace in the world’s youngest democracy. P o p e F r a n c i s re c e n t l y kissed the feet of President Salva Kiir Mayardit and Vice Presidents-designate Riek Machar and Rebecca Nyandeng de Mabior during a “spiritual retreat” at the Vatican, urging them to “remain in peace”. Steeped in a consciousness that spurs reciprocal forgiveness, the Pope’s widely commended gesture and ongoing support from various governments and corporate entities like Sahara Energy signpost a prospective march toward peace in South Sudan. The $600 million facility provided by Sahara Energy DMCC, a member of the leading energy and infrastructure conglomerate, Sahara

Group, is expected to support the peace process and facilitate sustained economic growth and development in South Sudan. “Sahara Group is passionate about spearheading sustainable development in Africa and remains unwavering in its resolve to support peace and trade integration on the continent to promote shared prosperity, “said Temitope Shonubi, Executive Director, Sahara Group in a meeting with President Kiir in South Sudan. The World Bank reports that South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and around 60% of its gross domestic product (GDP). The cost required to help 6 million South Sudanese – half of its population – cope with the effects of the country’s economic situation was put at $1.7 billion in 2018, according to the United Nations. The huge funding challenge of transforming South Sudan makes the Sahara Energy facility and continuing global support inevitable.

In line with the governance requirement and need to preserve the integrity of South Sudan’s oil resources, the facility provided by Sahara Energy will be managed by the nation’s Central Bank under the watch of a United Nations led committee. Shonubi said Sahara Group, working in concert with various stakeholders, would support infrastructure development and youth empowerment in South Sudan. “Following the end of the conflict and the reconciliatory efforts made by the Leaders of the Country, we are delighted to partner with the Government and people of South Sudan as well as support regional and global initiatives geared towards transforming the nation. Sahara Group has consistently advocated increased commitment to intra-Africa interventions through collaboration of all stakeholders. This, for us at Sahara, enhances the cause of giving wings to the aspirations of the continent’s over 1.2 billion people.”

Shonubi had during the 2019 African Refiners Association (ARA) meeting in Cape Town reiterated the urgent need for intra-regional trade in Africa and the commitment of Sahara Group to promote the cause. He told delegates at the meeting that Sahara Group, in keeping with its vision of a harmonised Africa, was building an integrated energy business across Africa to harness the potential of intra-regional trade.

he Federal Government on Sunday said it was in the process of issuing N15 billion second green bond to be used to finance various sectors in agriculture, power, health and water resources. Zainab Ahmed, minister of finance, disclosed this at the concluding session of the ongoing 2019 World Bank/IMF Spring meetings in Washington DC. With this proposed green bond issuance, the West Africa’s biggest oil producer will be issuing a total of N25.97 billion green bonds. Nigeria was the first subSaharan African countries to issue green bond in December 2018 to the tune of N10.97 billion. “The essence is that the projects must be green, they must project that are not contributing to carbon dioxide emissions to the society,” Ahmed said, while briefing journalists on the outcome of the several meetings. She said the first green bond was successful and all the projects that were scheduled had been financed and done, and the projects were at various levels of completion. Ahmed spoke on the outcome of her meeting with the World Bank Power Sector team where they discussed the way forward on the proposed $1 billion Nigeria Performance Based Loan (PBL). “We agreed to bring relevant MDAs together to ensure that we advance this operation in a timely manner. We will also discuss the

Oil workers want FG to be wary of IMF’s advice JOSHUA BASSEY

orkers in the oil and gas sector have urged President Muhammadu Buhari to shun any counsel that will destabilise or cause chaos in the economy. The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association (PENGASSAN) gave the advice in a statement in Lagos. Recall that the managing director, International Monetary Fund (IMF), Christine Lagarde, on April 12 called on the Federal Government to remove fuel subsidy because of low revenue mobilisation that existed in terms of tax to

Gross Domestic Product. But the oil workers in the statement signed by Okugbawa Lumumba, PENGASSAN general secretary and Afolabi Olawale, NUPENG general secretary, said that the IMF advice on how to recover Nigeria’s economy was worrisome and could be counterproductive. ``Any economic polic y that is devoid of human feelings can lead to more social dislocations and upheavals which will later become counterproductive as currently experienced,’’ they contended. They noted that IMF has created panic in the country with associated hoarding of petroleum products, panic buying, skyrocketed increases in prices of goods and services

in the country. The union leaders said that earlier, the IMF chief praised the significant progress the nation has made in terms of its Gross Domestic Product (GDP) that increased by 1.9 per cent in 2018 from 0.8 per cent in 2017. The obser ved that IMF was not considering the pains and agonies Nigerians went through to achieve the gains of 2018, with almost twothirds of the world’s hungriest people, among the Nigerians. They further said that imposing more stringent reforms in domestic revenue mobilization including increase in VAT and securing more domestic oil revenues through subsidy removal was an attempt to destabilise the nation.

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Country Portfolio Performance of Nigeria, which currently stands at to $9.8 billion with the Nigerian country team at the World Bank and how we could manage the portfolio for optimum results,” she said. Responding to questions on impact of BREXIT on the Nigerian economy, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), said though Britain and Nigeria had trade relationship but it was not as strong as with that of China and Untied States. “For instance, China is Nigeria’s trading partner followed by the United States. And I had imagined that Britain comes quite low on the scale. “So, if you look at that, you would find that, in my view, there is not going to be any adverse consequences on Nigeria, but we are reviewing it to see the implication, which I would expect would naturally be positive,” Emefiele said. On financial inclusion, the CBN governor said at the meeting, they reviewed the position and observed that financial inclusion rate was moving up aggressively and hoped that by the year 2020, the 80 percent target of inclusion would be achieved. Udoma Udo Udoma, minister of budget and national planning, said at the meeting with International Finance Corporation (IFC), he asked for their support for efforts made at leveraging private sector capital fund critical infrastructure in Nigeria.

Monday 15 April 2019

BUSINESS DAY

NEWS How NCC sensitisation programme on protection of telecoms infrastructure spurs Kogi … as Nigeria suffers deficits in BTS, fibre deployment Innocent Odoh, Abuja

igerian Communications Commission (NCC) embarked on a day sensitisation programme on the protection of telecoms infrastructure to enlighten Nigerians and seek their cooperation on the need to protect critical facilities that aid social development and contribute to the GDP. Okene, one of the major cities in Kogi State on Thursday, April 11, 2019, witnessed massive attendance at the workshop as the conference hall of the Okene Local Government headquarters was filled to the brim with enthusiastic Kogi citizens, who expressed readiness to support the commission. Speaking, the NCC director of zonal operations in the state, said the workshop was also intended to present platform for cooperation between stakeholders in the telecoms industry to reach an understanding toward putting into proper perspective the concern

often expressed by the public about telecoms infrastructure. Represented by the principal manager, Zonal Operations Department, Ekisola Oladisun, the zonal director said even as the advent of GSM had re-engineered the Nigerian economy and its social well-being, there were however some challenges pervading the provision of telecoms services in the country arising from some misconceptions and misguided facts about key telecoms infrastructure such as Base Stations (BTS). He lamented that telecoms facilities had been a target of vandalism, theft and hostility from host communities, saying, “It is therefore imperative for the public to regard telecoms facilities as a collectively own infrastructure that are crucial and essential for the provision of acceptable and efficient quality of service and ought to be keenly protected.” He said in recent time the Commission’s attention had been drawn to the rising public concern regard-

ing alleged likely negative health effect of electromagnetic frequency radiation emanating from the telecoms infrastructure. “Both negative concerns about these subjects have in some cases led to interference and or agitation against the deployment of required infrastructure to the detriment of delivering of quality telecom services in the country. In response to this growing concerns and commitment to public safety, the NCC through the zonal department deemed it necessary as one of its core functions to organize this sensitisation workshop,” he said. He said further the telecommunications sector has been an integral part of the lives of Nigerians with provision of services ranging from, entertainment, information and learning of a broad range of media factors. He stressed that over the past fifteen years, Nigeria has experienced tremendous growth in these sectors and a significant contribution to the Nigerian GDP.

KWIRS generates N6.2bn revenue internally as chairman pledges revenue growth SIKIRAT SHEHU, Ilorin

wara State Internal Revenue Service (KWIRS) has pledged to continue to grow the state revenue generation for sustainable development as the revenue board generated N6.279 billion internally for the first quarter (Q1) of the year 2019. Muritala Awodun, a professor of International Business and Entrepreneurship, who is the executive chairman of KWIRS, gave the breakdown of N6.279 billion revenue generated internally within three months to include N2.16 billion made in January; N1.76 billion revenue generated in February, and N2.38 billion internally generated for the month of March 2019.

While attributing the feats achieved in the state revenue drive to quality training and retraining of the staff as well as the total manpower development, advised the incoming administration to sustain the revenue growth tempo, saying: “If you don’t equip them appropriately, you can’t get required and adequate result.” The KWIRS boss, who stated that the revenue agency was yet to achieve its target of generating an annual N60 billion revenue of N5 billion monthly, noted that the Service had been developed to a point that would not make less than an average of N2 billion every month. He explained that the agency, which started with N17.2 billion

annual revenue generation in 2016, and N19.6 in 2017 and generated a total sum of N23.1 billion last year. He, however, debunked allegation of invitation of the revenue agency by the Economic and Financial Crimes Commission (EFCC) on perceived financial misconduct and investigation of its operations, saying no staff of the agency was invited for interrogation nor arrested by the anti-graft agency. He clarified that the agency responsibility was basically on the collection of revenue, which was always remitted to the bank and the agency had no access to the government accounts since it was not a signatory to the state account.

CBN asks banks to stop charging interest on existing loans for fuel importation Olusola Bello

elieve may have come the way of oil marketing companies with the directive of the Central Bank of Nigeria (CBN) to commercial banks that they stop charging interest rate on loans given to the oil companies for importation of fuel. The oil marketing companies under the umbrella of Major Oil Marketing Association of Nigeria (MOMAN) have been clamouring for the refund of their money, about N800 billion, being the cost of importing fuel under the fuel subsidy regime but which the Federal Government is yet to pay, although it has been given Promissory Note of N236 billion that would mature December 2019. The implication of the CBN action is that the debt of the companies rather than keep rising it would remain what it was before July 2017. The other thing that the CBN is doing, BusinessDay investigation reveals, is that it is looking into the issue of exchange differentials, which

has been a critical element to the rising profile of the debts with the aim of using the foreign exchange rate as of the time the importation was ordered and not the prevailing exchange rate, which is much higher than that what it was at the point of importation. It is only the CBN that can say what the exchange rate was at the point of importation, says Clement Isong, CEO of MOMAN. He said reconciliation process was ongoing with respect to the balance of the money with the Presidential Initiative on Continuous Audit (PICA), a unit of Ministry of Finance, which is looking at the numbers that emanate from the Petroleum Products Pricing Regulatory Agency (PPPRA). According to Isong, it is after PICA confirmation that the Federal Executive Council would approve the remaining balance for payment through the Debt Management Office. The marketers had threatened to shut down fuel depots nationwide if the debt, owed mainly during the past administration, was not paid in

Obaseki positions Edo as digital hub with Facebook, MainOne’s investment in internet infrastructure

do State governor, Godwin Obaseki, says the state is positioned to become the digital hub for the South-South geopolitical zone, with the 400km fibre optic internet infrastructure worth over $20 million being laid by tech giants, Facebook and MainOne in the state. The governor disclosed this on the sidelines of the Annual Investment Meeting, which held in Dubai, United Arabs Emirates, after taking time off his vacation to attend the business meeting. Facebook and MainOne are building an internet infrastructure, which is expected to boost internet connectivity and provide needed support to the growing tech ecosystem, including technology hubs and parks, in the state. According to Obaseki, “Today, we have an innovation hub, we are partnering with technology companies. But what is even more important is that we are working with Facebook and MainOne. We are constructing about 400 kilometres of fibre optic cable in Edo

as we speak. “In the next couple of months, it should be ready for commissioning. Don’t forget that we have energy, we have a lot of oil and gas and therefore we are building power plants, outside Azura, we are also building another 55 megawatts power plant. With electricity and fibre, we are 50 percent there.” Noting that the state government intends to harness the infrastructure to address a wide range of challenges in the state, he said, “All we need to do is to get the content

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providers, and get our educational system to tap into this new reality. Facebook and MainOne have invested in excess of $20m, in the project. On the summit themed, Mapping the Future of Foreign Direct Investment: Enriching World Economies through Digital Globalisation,” the governor said, “The global economic growth now is coming more from digital transactions from digital economies and it’s important that emerging markets key in. So this summit is very apt.”

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full. Such a move could result in a fresh petrol crisis in the country despite assurances to the contrary by the state oil firm, the NNPC. The government, through a finance ministry statement, said the meeting agreed with the aggrieved marketers on “settlement terms” to ensure operations at all petroleum products depots and sales outlets continued uninterrupted till further notice. Meanwhile, the NNPC has once again appealed to Nigerians to disregard trending social media report of an impending fuel scarcity due to purported refusal by some oil marketers to lift products from depots. Despite this assurance there were long queues at filling station in Lagos as of press time on Friday. According to Ndu Ughamadu, NNPC’s group general manager, group public affairs division, the tale was fabricated by mischief-makers with intent to create undue panic in the prevailing sanity in the fuel supply and distribution matrix across the country.

Monday 15 April 2019

BUSINESS DAY

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Vision 2020: FCTA unveils N162 billion five years health plan JAMES KWEN, Abuja

he Federal Capital Territory Administration (FCTA) has unveiled N162 billion five years strategic health development plan to meet up with the vision to be one of the best capital cities in the world by the year 2020. Mohammad Bello, FCT

Minister while speaking at the launching of the plan in Abuja said the scheme was going to provide first class health infrastructure and services across the territory. Bello who was represented by Secretary, FCT Health and Human Services Secretariat, Adamu Bappah stated that the scheme will be funded through statutory budgetary provisions, development part-

ners, world bank assisted programmes, private sector and out of pocket expenditures by end users at the health care facilities. Chinenye Orjiokeye, Head, Department of Health Planning, Research and Statistics of FCTA who is also the programme desk officer, explained that the strategic health development plan -II was drawn from national

development agenda vision 2020 economic recovery and growth plan. Orjioke stated that the scheme will improve health sector governance and leadership, strengthen the system of coordination of health sector investments and step up actions to expand coverage with social health insurance and improve funding to the health sector.

PenCom targets 30m informal workers in micro pension by 2024 REGIS ANUKWUOJI, Enugu

ational Pension Commission (PenCom), says it is targeting no fewer than 30 million Nigerian informal workers in its Micro Pension Plan (MPP) within the next five years. Peter Aghahowa, Head of Corporate Communications Pencom who disclosed this while speaking at the Enugu International Trade Fair, said President Muhammadu Buhari had on March 28 launched the MPP for self-employed persons in the informal sector such as artisans, petty traders, water sellers among others. Aghahowa, represented by Carol Alex-Uzomah, Assistant General Manager, Corporate Communications said the move was to assuage the yearnings of this category of workers by ensuring financial

inclusion in the sector, saying: “the plan which is an initiative of the PenCom is aimed at the provision of pension services to self-employed persons in the informal sector and employees of organisations with less than 3 staff. “The informal sector constitutes an estimated 69 million work force in the country and represents an estimated 88 per cent of Nigerian workers that lack pensions and safety nets for their old age. The goal of the commission is to achieve coverage of 30 million people in the informal sector by 2024”. He said they were at the trade fair to sensitise members of the informal sector including artisans on the new initiative and appealed to prospective beneficiaries to take advantage of the MPP to safeguard their future, adding that there would always be life after active service years.

Kano: Popular Farms & Mills invests 8 billion in rice, sesame ADEOLA AJAKAIYE, Kano

L-R: Joshua Zakari, Etsu of Dakwa Abuja; Lazarus Angbazo, MD/CEO, GE Nigeria and Grid Solutions Sub Saharan Africa; Usman Gur Mohammed, MD/CEO, TCN; Louis Edozien, permanent secretary, Ministry of Power, Works and Housing, and Audren De Kerdrel Guillaume, deputy ambassador of France to Nigeria, at the official ground breaking ceremony of the ‘Abuja Feeding Scheme’ held in Abuja. Pic by Tunde Adeniyi

19 Children rescued as FCTA clamps down on illegal orphanages JAMES KWEN, Abuja

t least 19 children of 4,7,8,11, 16 and 9 years comprising boys and girls have been rescued as the Federal Capital Territory Administration, FCTA began clampdown on illegal orphanages being operated in the Federal Capital Territory, Abuja.

Safiya Umar, Acting Secretary of the FCT Social Development Secretariat and other officials at the commencement of the exercise sealed up one of the orphanages, ‘Famouskids orphanage home’ Angwan Zegele road, Tungan-Maje. Umar said the action which followed the FCT Minister’s directives was informed by a police report to the secre-

tariat which several investigations were carried out before closing down the place. According to her, the exercise would mop up the nation’s capital especially the outskirts of human trafficking and other practices against child right act, saying if necessary steps are not taken, those who claimed to be running orphanages will be breeding

people that could be problem to the society. “There is a lot in the Federal Capital Territory that we have to do, the abuse is becoming too much, how can somebody set up an orphanage and be selling children, when the social development secretariat authority want to know, the person will be nowhere to be found”, she said.

Chieftaincy title: Supreme Court to hear appeal against Oshiomhole May 23 FELIX, OMOH-ASUN, Abuja

he Supreme Court is to hear submissions on the appeal lodged before it by Rich Osemwengie and others over the traditional title of Ogiamien of Benin kingdom on May 23. The plaintiffs are challenging the validity of the Traditional Rulers and Chieftaincy Edit of 1979, which recognises the Ogiamien title in the kingdom

as a mere palace chief at the extant of the Oba of Benin, rather than a separate institution. When the case came up at the Supreme Court, counsel to Osewmengie, Godwin Oaikhena, told the justices of the apex Court, headed by Bode Rhodes-Vivour, that the plaintiffs have filed three motions before the court. One was to give the matter accelerated hearing. The second was a mo-

tion to adduce additional evidence - a document (letter), which was not available as when the case was filed because the first plaintiff was in prison and could not access the document when the case was first filed. The counsel also said the plaintiffs were asking for stay of execution of the decision of the appellate court until determination of the case at the Supreme Court.

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However, counsel to Oshiomhole and Benin Traditional Council, Austen Alegeh (SAN), maintained that the additional evidence cannot be filed at an appeal stage, rather at the trial court and prayed the court to discontenance the motion. However, the court asked parties to reserve their submissions until May 23 when all motions will be heard with the substantive matter.

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opular Farms and Mills Limited, one of the biggest rice production companies in Nigeria, is investing the sum of N8 billion in opening up a new rice and sesame seed processing plants in Kano State This investment is particularly, geared at scaling up the rice milling activities in the Company from its current 430, 000 metric tons, to a record target of 1.5 million metric tons. Suleiman Umar, National Pogramme Manager of the company, who confirmed this, during the foundation laying ceremony of the new plant held in Challawa Industrial Layout in Kano explained that the new investment was a practical demonstration of the company `s support and commitment to the on-going efforts by the Federal Government to make Nigeria self-

sufficient in rice production. Umar disclosed that the company which started rice production in the country over 10 years ago, presently operates a rice mill with installed capacity of over 430,000 per annum, and has plan to also grow it Sesame Seed processing capability to 44,000 tons per year. “Popular Farms and Mills Limited is a key stakeholder in Nigeria`s Agricultural Sector, and have being spearheading investment in massive rice production in many states in the Northern part of the country. “Our company has been very active in supporting rice farmers in states, such as: Adamawa, Taraba, Benue, Niger, Kaduna, Kano, Jigawa, Sokoto, Zamfara, and Kebbi, through assisting them to embrace modern farming techniques, in addition to provision farming inputs through the farmers cooperatives and associations involved in rice production”, Umar stated.

Kaduna benefits from World Bank 200 million dollars agro intervention ABDULWAHEED ADUBI, Kaduna

aduna state has benefited from the 200 million dollars appeals project of the World Bank which is to enhance agro-processing, productivity and livelihood. Yahya Aminu, State Coordinator of the Project at the opening of a one day sensitization workshop in Kaduna disclosed that the project is in line with the Agricultural Promotion Policy. Aminu who said the aim @Businessdayng

is to focus on food security, local production, job creation and economic diversification, added that the project targets 10,000 direct beneficiaries and 50, 000 indirect beneficiaries in Kaduna state According to him, “the objective of the project is to enhance agricultural productivity of small and medium scale farmers and improve value addition along priority value chains that are Diary, Ginger, and Maize for Kaduna state”.

Monday 15 April 2019

BUSINESS DAY

LEGALPERSPECTIVES With Odunayo Oyasiji By Temilade Awoyale

Trade Mark: Is it a necessity?

o many Nigerian Companies and business owners do not see the reason to go further in any other type of registration apart from the registration of their companies and that of their business names. It is imperative to note that the law and or procedures associated with registering companies and business names differ from the rules governing trade mark registration. A company registers its name with the Corporate Affairs Commission pursuant to the provisions of Companies and Allied Matters Act 2018 while a company registers its trade mark with Trademarks, Patents and Designs Registry, Commercial Law Department, Federal Ministry of Industry, Trade and Investment pursuant to the provisions of Trade Marks Act and the Trade Mark Regulations. A Trade mark is a registered right that protects elements of brand identity such as trading names, brand names and logos. Trade mark sets apart the goods and services of an enterprise and distinguishes them in the midst of same or similar category of products of other competitors in the market. Trademarks protect use in connection with goods and services, but not use as a company or business name. Registration of a company name does not give that company any trade mark protection in respect of that name. The company must apply separately for a trade mark if it wishes to protect its name when used in connection with goods and services.

3. INTANGIBLE ASSET THAT CAN APPRECIATE OR DEPRECIATE OVER TIME The value of a brand name is directly connected to the reputation of business and can appreciate in value over time or depreciate in value. Examples of worldwide trademarks that have appreciated and acquired reputation over time are ‘coca-cola’, ‘pepsi’, ‘twitter’, ‘facebook’ etc. 4. IT CAN BE MONETIZED A registered trade mark can be bought, sold or licensed in form of a franchise to a third party after building the brand name and the business. It paves way for expansion in the sense that the more you grow your business and its reputation; the more people will want to buy through franchise. Examples of such franchise include ‘Mr. Biggs’ and ‘KFC’. Registration of trade mark is not compulsory and is most often ignored by entrepreneurs but it remains one of the most important asset of a business. Here are some of the reasons why a trade mark should be registered. 1. EXCLUSIVE RIGHT TO USE THE MARK AND A DETERRENT A registered trade mark gives the owner the exclusive right to use that mark and sue for infringement incase of any unauthorized use of the mark. In addition, where a registered trade mark has acquired a reputation, others are put on notice of your rights and the owner

may be able to prevent another party from using same or similar mark in relation to different goods or services if the use will take unfair advantage of the trade mark’s reputation or e detrimental to it.

5. USEFUL IN PROCEEDINGS A registered trade mark is prima facie evidence of validity of registration and the rights conveyed in the registration.

2. BRAND UNIQUENESS The market place is crowded and consumers have too many options for one single product or service. The uniqueness of a Trade mark captures consumers’ attention and makes your products and services stand out. Consumers viewing a trade mark immediately know which company they are dealing with.

6. OPERATES IN PERPETUITY Most recognized brands in the world have been around for a long time. A registered trade mark is only valid for 7 years and the renewable for 14 year period. There is no limit on how many times you can renew it. In conclusion, the immeasurable benefits of registering a trade mark outweighs the cost of registering it, you should therefore make it a priority as your business grows.

By Odunayo Oyasiji

Laches and acquiescence

Laches

aches means unreasonable delay. Such delay can be in the area of pursuing a right or claim and such delay can lead to the granting of a claim that is brought after the delay to be inequitable. The doctrine of laches in a way bars or prevents a person from getting the relief sought as the delay in seeking the relief cannot be justified. It is usually invoked as a defence in civil matters. This defence is based on the maxim that the law helps the vigilant and not the indolent. Therefore, laches is a form of punishment for someone that sleeps on his right for too long to the extent that the situation changed and granting reliefs against the defendant will amount to a form of injustice. Furthermore, the person relying on the defence of laches usually show that the plaintiff knows that his or her right has been trampled on and yet refuses to take steps quickly to address it or seek redress. To be successful under this claim a person must show that there is a delay in seeking a redress and the delay must be an unreasonable one. Also, the defendant must either show that the plaintiff acquiesced to what he is complaining about or that the there will be prejudice to the defendant. The implication of this is that this

doctrine is available to protect people in a scenario that a person unnecessarily and unreasonably sleeps on his right. If he wakes up after the delay to seek redress when things have changed in such a way that granting the relief sort will effect a level of injustice on the defendant then the plaintiff (person that slept on his right) will be denied of the reliefs sought.

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Never sleep on your right, act fast before it is too late. Acquiescence This is a common law principle. It has to do with a situation where a person permits his civil right to be infringed or trampled on, he cannot later claim against the person who infringed on his

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right. Acquiescence can be in different forms. It can be in an implied form where the party whose right was infringed does nothing about it for a long time and thereby behaving in a way as if he or she agrees to the infringement. However, if the failure to take steps is due to some other reasons like lack of resources then they can make a claim later in future. It must be noted that it is the duty of the party relying on it for defence to show that the failure to take steps was deliberate and that the party has conducted himself in a way that shows approval. Another type of acquiescence is a situation where the affected party (the person whose right has been infringed) expressly communicates his approval of same to the party infringing on his right and that no action will be taken. This can be verbal or in writing. He will not be permitted to turn around and make a claim against the party that infringed on his right. The above shows that a party whose right is being trampled on must be careful of giving approval either expressly or by conduct if they do not mean to do so. This is because it may be difficult to later make a claim on the basis of such infringement later except if exceptional circumstances can be shown to the court.

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BD Money

Monday 15 April 2019

BUSINESS DAY

EQUITIES

Agri-Business

COVER

PERSONAL FINANCE

Nestle: Volume growth to drive profitability in 2019

How poultry investors can position for profit in peak periods

Inside Nigeria’s sports gaming industry

Nestlé Nigeria reported substantial moderation in revenue growth in full year 2018 (+9.1 percent year on year to N266.28bn) compared to the 34.2 percent year on year surge posted in full year 2017.

Poultry production is adjudged one of the most lucrative, reliable and engaged investment areas of Nigeria’s agriculture mainly on the premise that there is a huge market demand without adequate production capacity to match it.

Everything you need to know about personal income tax

Page 58

Nigerians are lovers of sports especially football, and in recent times, it has gone beyond just entertainment but also about making money and losing money in most cases.

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Tax is a moral obligation which individuals and legal entities have to fulfil in the areas where they carry out economic activities.

Page 60

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Monday 15 April 2019

BUSINESS DAY

Equities

Nestle: Volume growth to drive profitability in 2019

estlé Nigeria reported substantial moderation in revenue growth in full year 2018 (+9.1 percent year on year to N266.28bn) compared to the 34.2 percent year on year surge posted in full year 2017. This temperance in revenue growth reflects tame price and volume increases in the review period. Whilst the company successfully raised average price of its product portfolio in full year 2017 in response to cost inflation, sustained weakness in disposable income amidst intensifying market competition limited the pricing power of Nestlé in full year 2018. In addition, Nestlé’s muted price increase might be a competitive response to Cadbury’s decision to maintain competitive prices in the review period. In our opinion, Nestlé retained market leadership in its food and beverage businesses, which reported revenue growth of 9.0 percent year on year and 9.1 percent year on year, respectively, in full year 2018. In full year 2019, our expectation is that revenue will improve by 10.5 percent year on year to N294.3bn, supported by volume growth and a mild price increase to slightly account for inflation. In addition, we expect priceinduced increase in turnover in the food business. Moderation in marketing expenses to drive EBITDA margin higher. In full year 2019, Nestlé’s cost to sales ratio declined by 147bps to 57.2 percent in full year 2018 (from 58.7 percent in full year 2017). This followed an equally slower 6.3 percent year on year expansion in cost of sales to N152.4bn (from N143.3bn in full year 2017) compared to revenue growth of 9.1 percent. This cost efficiency was driven by lower input prices in full year 2018: Sugar

(-9.5 percent year on year), Soybean Oil (-14.9 percent year on year) and Crude Palm Oil (-22.0 percent year on year). However, the company’s EBITDA margin was somewhat flattish at 25.4 percent (from 25.5 percent in full year 2017) due to the impact of higher marketing and distribution expenses (up 23.7 percent year on year to N43.5bn from N35.2bn) driven by spend on advertising (up 50.4 percent year on year). Going forward, we expect cost pressures to be slightly elevated on expectations of increases in cocoa, soybean oil and crude palm oil prices in first half of 2019. Expectations of higher cocoa prices are based on supply setbacks in Ghana and Ivory Coast whilst Lunar Year festivities across Asia has supported a rally in soybean oil and crude palm oil prices. Hence, we forecast full year 2019 gross margin at 42.5 percent compared to 42.8 percent in full year 2018. Irrespective, tamer spend on operating expense is likely to drive EBITDA margin to 25.7 percent (+30bps year on year) in full year 2019. Profitability to remain supported by lower finance costs. The company’s profit before tax (PBT) rose by 27.6 percent year on year to N59.8bn in full year 2018 from N46.8bn in the prior year, missing

our estimate of N63.8bn. PBT improvement was driven by lower finance cost in full year 2018 as finance cost declined significantly to N2.6bn in full year 2018 from N15.1bn in full year 2017. The decline in finance cost was driven by a net repayment of N51.5bn between full year 2017 and full year 2018, comprising intercompany and bank loans. In our view, the repayments were supported by improvement in Nestlé’s cash flows. We also note the decline in the company’s net debt to equity ratio to 13.8 percent in full year 2018 from 45.6 percent in full year 2017, which is comparably lower to peers (Cadbury – 32.3 percent, Unilever - 70.1 percent). In full year 2019, PBT is likely to increase to N70.0bn (+17.2 percent year on year) on projected growth in sales and further decline (-71.0 percent year on year) in finance costs. Free Cash Flow to Equity to remain positive. In line with expectation, Free Cash Flow to Equity (FCFE) came in at N47.5bn in full year 2018 from a negative N28.3bn in full year 2017, buoyed by a N74.6bn net operating cash flow that was mainly driven by efficient management of working capital. Full year 2018 capex spend amounted to N12.7bn with capex intensity at 4.8 percent (vs. 3.6 percent in full year 2017). In full year 2019, we forecast capex intensity at 4.1 percent and we expect the company to sustain its debt repayments with total debt (intercompany loans and bank loans) likely to settle at N1.9bn by close of full year 2019. Hence, we expect FCFE to grow by 7.2 percent year on year to N50.9bn in full year 2019. We maintain our BUY rating on Nestlé. We cut our 12-month target price

to N1,708.25 from N1,768.62 previously and retain a BUY rating on the stock. In arriving at our TP, we employed a blend of DCF and multiples valuation approaches (P/E and EV/EBITDA). Our DCF assumptions include adjusted beta of 0.84, risk free rate of 13.93

percent, and terminal growth rate of 5.0 percent. We expect a total return of 21.9 percent (capital appreciation of 17.8 percent and dividend yield of 4.1 percent). By Abiola Gbemisola & Tajudeen Ibrahim, Chapel Hill Denham Research

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 15 April 2019

BUSINESS DAY

Agri-Business How poultry investors can position for profit in peak periods Temitayo Ayetoto

oultry production is adjudged one of the most lucrative, reliable and engaged investment areas of Nigeria’s agriculture mainly on the premise that there is a huge market demand without adequate production capacity to match it. In fact, the country continues to experience record scale of importation and smuggling despite growing interest in raising products. But to make the most of the opportunity of the shortfall, particularly in peak seasons of demand, it’s imperative that investors position their poultry produce well enough to maximise profit, poultry experts say. They observe that breeders can struggle to break even, even in the euphoria of peak period demand such as Easter, Christmas, Salah or New Year, when they fail to properly map out sales strategies. While price is a major attraction for sales, profit margin could be enhanced by minimising the cost that goes into ensuring good weight, size and health of chicken sold at strategic locations. Higher sales is undoubtedly a given during these periods as a seller can be certain that consumers who cannot afford costlier livestock products such as goat, ram or cow could easily opt for a broiler, priced at N2,500 for instance. In the two months preceding any festive period, prices of day-old chicks usually soar to as much N450 each along with feeding materials. Those who try mitigate that cost by buying at a less triggered period are also have their profit margin threatened by the cost feeding and maintaining good dietary level. And at the end of the day, many consumers want cheap chickens that won’t strain their pockets. As a result, Agropoultry, a poultry consultancy firm advises that such investors should target markets that will appreciate the effort that goes into production than open markets where they can be priced out of profit. Solomon Oluwatimilehin, a poultry expert laid emphasis on calculating the numbers of months it will be reared. “The problem is that feed prices have risen. The day-old chicks are also now expensive. To feed a day old chicken to the ripe age stage for sale has become increas-

ingly difficult because the cost sometimes makes it non-competitive for sale,” the farmer. “The marketing becomes difficult, that people resort to other cheaper options like fish.” However, there are other means investors can hedge their products for better returns including value addition. Infant sale The market for day-old chickens is a thriving one many breeders seek to cut the stress of brooding broilers from a day old till early maturity – as a strategy to mitigate loss. The interest in raising them begins after the chickens are covered in feathers. “As a broiler farmer, you can target this group of people and sell to them. All you need to do is to raise your broiler chicks from a day old to 3 weeks old, depending on what your market wants. Broilers in this category are sold at the rate of N600-700 per bird in Nigeria,” the agency said. Maturity-stage sale This is the category that dominates the Nigerian poultry. Many poultry farmers www.businessday.ng

raise their broilers until 6 weeks or more before offering to consumers. This naturally comes with a higher profit than infant sale but a higher cost is equally incurred from health and nutritional maintenance. BusinessDay checks indicate that nutritional strategies can push up profitability, largely from a slight reduction in feed consumption which is by far the major contributor to the total cost of production. When any factor reduces the welfare in the flock, the nutritional requirement increases, and the increase is met either by increased nutrient intake or decreased production. Either case could trigger higher cost of production and by extension a reduction in the profit. Hence, there are incentives to reduce the cost of production. Proper dietary care can increase profitability in the chicken flock by at least 20 percent, productivity and liveability 10 percent. Nutritional interventions such as dietary protein supply can reduce stress by supplying required amino acids and dietary fibre. The link between bird welfare and pro-

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ductivity lies in the fact that birds require energy for activities that they perform. Because of the constraint of the energy budget, the energy could be diverted to useful (production) or wasteful (stress prevention or treatment) activities. Birds exposed to poorer welfare will use more of their dietary energy to cope with their stressful condition and ultimately have less energy for productive purposes. Slaughter and sell. Apart from selling your broilers when they are young or mature, you can slaughter, dress and package them for the consumers. While there are many who avoid slaughtering live animals like chickens, and some do not have the time to dress them. Doing this for them by selling dressed meat means increased profit margin. “This is where frozen broiler chicken comes in. Doing this requires experience, hygienic practices, and government approval. That is to say, it is a venture that is quite expensive. But, if you have the capital, it is lucrative,” he said.

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Monday 15 April 2019

BUSINESS DAY

Monday 15 April 2019

BUSINESS DAY

Cover Story

Investing

Inside Nigeria’s sports gaming industry OLUFIKAYO OWOEYE & OLUWASEGUN OLAKOYENIKAN

igerians are lovers of sports especially football, and in recent times, it has gone beyond just entertainment but also about making money and losing money in most cases. The growth in the sports betting industry has been phenomenal across the country, apparently because there is good money to be made and everyone wants to be part of it. The desire to make additional income, growing youthful population and internet penetration in the country are some of the factors that have helped the growth of sports gaming in the country. A visit to one of the sport betting shops in Ikeja reveals that the process of placing bets is quite simple. The punter checks the betting board to get the ID of the game(s) he wishes to bet on. In front of the ID, he writes his prediction e.g. (“away team to win”, First to Score”) and submits to the computer operator who inputs it into the system and gives him a ticket. You win, you tender your winning ticket and cart away your cash. You lose, you join the thousands around the world who have also lost that day. Kennedy, 34, says placing of bets offers him another source of income apart from his daily factory work at a manufacturing company in Ogba. “This is my side hustle but most times it is only one game that will cut my ticket for the day and sometimes all my prediction will earn me cash,” he said.

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Sport betting comes with great risks and with some of these risks come losses including some that could be too much to take. Bettors should always bear in mind that betting relies on uncertainties and one must be able to handle whatever comes with making such decisions Until now due to the high level of financial exclusion in the country, punters had to go through Agents who occupy the brick and mortar shops to place bets. However, in recent times, betting companies have started to partner with telcos to avail bettors of a USSD code which can be used for direct payments into online accounts. Interestingly, banks, fintechs and investing platforms are also exploring collector relationships with betting companies. The incentive is clear; if these companies are able to help the betting companies collect directly from the bettors, it eliminates the need for agents, and with that, they keep more of their revenue.

According to the News Agency of Nigeria (NAN), an estimated 60 million Nigerians between the ages of 18 and 40 are involved in active sports betting while almost N2 billion is spent on sports betting daily, which translates to nearly N730 billion in a year. A report by KPMG in 2016 revealed www.businessday.ng

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some startling numbers from the sports betting industry in Nigeria. As at 2016, the leading sports betting company, Bet9ja raked in an average monthly turnover of $10 million, while NairaBet made an average turnover of $3 million – $5 million, a 20 – 30% margin on profit. No doubt, the widespread use of mobile phones in Nigeria has been a positive game-

Why investors snub REITs despite potentials ISRAEL ODUBOLA changer for the sports betting business. Every day, it gets easier to pay, play and win or lose. According to figures released by the Nigerian Communications Commission (NCC), as at February 2019, there are about 173.6 million cell phone subscribers with over 100 million internet users in Nigeria, with 80 percent of this figure being able to access the internet on their phones. The 86.9 million Nigerians now living in extreme poverty represents nearly 50% of its estimated 180 million population and supporters of sports betting in Nigeria claim it is a business that offers employment to thousands of young people, provides quick money for ordinary people, generates tax revenue for the government and contributes to economic growth. Currently, there are over 50 betting sites in the country with each offering a wide variety of services around sports betting. From popular English Premier League games to the unimpressive Nigerian Premier League to little-known European leagues like the Gibraltar Premier Division and Lithuania A-League. There’s always a game to pick out and wager on; online operators capitalize by improving the user experience on the sites and running campaigns to keep users coming back. Sport betting comes with great risks and with some of these risks come losses including some that could be too much to take. Bettors should always bear in mind that betting relies on uncertainties and one must be able to handle whatever comes with making such decisions. Sports betting gives its bettors a feeling of pleasure and hope for the “big win”. However, the widespread organic publicity of the very few who get that “big win” makes bettors believe that their “breakthrough” is near For government adequate regulation of this industry could provide another source of income for the already shrinking internally generated revenue. Global trends have shown that Sports betting is clearly regulated and is a major sector for the generation of tax revenue by the government. This has however not been the case in Nigeria as the industry remains largely unregulated despite the existence of several Acts. As such, the issue of multiple taxations and licensing continues to plague local operators.

eal estate investment trust (REITs) ought to provide investors with opportunity to diversify their portfolio in funds of various property types, thereby lessening investment risk and volatility but in Nigeria, investors overlook these positive sides owing to unexciting performance of the REITs market. The asset class is perceived as a ‘no-go area’ for profit-seeking investors considering the woeful market performance of publicly-listed REITs on the Nigerian Stock Exchange. Analysis of the three listed REITs is highly bearish as the stocks depreciated on year-to-date, one-year return and five-year return. UPDC REIT lost 18.18 percent in value year-to-date, the biggest among peers, compared with Skye Shelter Fund (-19 percent) and Union Homes (-9.96%), underperforming the All Share Index (ASI), which has wiped off 5.9 percent in value. The stock performed abysmally poor in their one-year return, with UPDC bottoming with 46 percent decline, followed by Skye Shelter Fund down by 14.50 percent and Union Homes, which lost 9.96 percent in value. Analysis of their five-year return gave a bearish picture. UPDC REIT lost a whopping 51 percent in value, trailed by Skye Shelter Fund down by 14.50 percent and Union Homes dropping by 14.48 percent, lagging the benchmark index that shed 24.83 percent in five years.

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This therefore signals that the investors shy away from Nigerian listed-REITs because of their weak fundamentals, and most importantly, these corporates have not been posting enticing figures that could catch the interests of investors. Union Homes REITs, which has released its 2018 scorecards, reported the lowest net asset value (NAV) of its portfolio in four years, buoyed by non-occupancy of key properties. During the last financial year, two major properties of the Lagos-based fund manager were vacant due to major repairs on them, and this significantly weighed down on its operations given that rental income accounts for tangible cut in its investment income. Despite decline in fund’s net asset value, the fund manager grew profit margin by 10 percent points to 65 percent in full year 2018. Skye Shelter posted contraction in all its income segments in full year 2018. Interest income was down by 1.03 percent

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to N122.4 million in 2018 compared with N123.7 million in the previous year; rental income contracted 2.13 percent to N92 million in the review period. Moreover, the firm earned no profit on disposal of investment property. This consequently lowered total income by 5.29 percent to N215 million in 2018 relative to N227 million earned in 2017. The waned total income made net income shed some 9 percent to N152.8 million compared with N167.7 million in the previous year, and net income per unit shedding 8.2 percent to N7.64 in the review period from N8.32 in the year before. UPDC failed to file its first-quarter, half-year and full year 2018 results with the Exchange, which is thing investors loathe as they need data to make informed decisions. The current size of the Nigerian REIT sector is less than N50 billion through three-listed REITs that account for less than 0.5 percent of the NSE. In developed countries with more advanced capital markets, REITs account for 2.5 percent to 5 percent of the entire stock exchange. Nigeria’s REIT market continues to lag behind peers unlike South Africa that has about 50 listed REITs, in which they among the top performing sectors on the Johannesburg Exchange. Real estate investors have always complained that there are actually no REITs in Nigeria, what the country has is a unit trust scheme with trustees, in which taxation is passed down to the investor as if he owned the property himself. “Our current structure allows rental income to be taxed somewhere along the value chain, thus reducing investors’ total return”, said Damilola Ijalade, broker with PWAN Homes.

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Monday 15 April 2019

BUSINESS DAY

Personal Finance

Everything you need to know about personal income tax (Part 1) SEGUN ADAMS

ax is a moral obligation which individuals and legal entities have to fulfil in the areas where they carry out economic activities. It is a certain percentage on income or profit made in a country or state therefore paid to the government, typically, to enable the financing of projects. Straightforward as it sounds, many Nigerians do not understand the what, why and how of tax and oftentimes, this puts them at variance with the law. There several taxes in Nigeria although not all applies to everyone. There is the Company Income Tax (CIT) for companies incorporated in Nigeria-resident or not, Value Added Tax (VAT) which is an indirect tax on consumption, Withholding Income Tax (WIT), a method used to collect Income Tax in advance, Tertiary Educational Tax (EDT) used for rehabilitation, restoration and consolidation of tertiary education in Nigeria by the Tertiary Education

Trust Fund (TETFUND), Petroleum Profit Tax (PPT), among several others. What is Personal Income Tax (PIT)? Personal Income Tax is an amount deductible from the income of an individual based

on rates in accordance with the law, for instance the PIT Act 2011 (as amended) in Nigeria. In simple terms, PIT is the amount on income earned whether from salary, business profit, property or investment that is to be paid to the govern-

ment. The obligation is a proportion of the income (tax base) hence varies. The Federal Inland Revenue Service (FIRS) says the tax is imposed on the income of individuals, corporate sole or body

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Straight forward as it sounds, many Nigerians do not understand the what, why and how of tax and oftentimes, this puts them at variance with the law www.businessday.ng

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of individuals, communities, trustees or executor of any settlements. Other things to know about PIT Remittance is made through the Federal or States Internal Revenue Service (IRS) although for non-residents, members of the Armed Forces, Police, and Officers of Nigerian Foreign Service, it is administered by the FIRS. The due date for filing returns of the tax is 31st March of every year and the due date for remittance of PAYE is 10th day of every succeeding month. FIRS requires that an employer shall file return of emoluments and tax deducted from the employees in the preceding year not later than 31st January of every year. Why should I bother? Asides argument about morality, there are repercussions defaulters are liable to when they are found guilty of evading tax. Information on the FIRS website state that: • A person who fails to file a return shall be liable on conviction to a fine of N5,000 and a further sum of N100 for every day during which the failure continues or imprisonment of six (6) months or both. • Any employer who fails to file a return, shall be liable on conviction to a penalty of N500,000 for body corporate and N50,000 in the case of individual. There is also a huge disservice to business or individuals in avoiding this civic duty as many the offenders would miss out on many prospects requiring Tax Clearance Certificate (TCC) to access, as is increasingly becoming the case for businesses operation today. (In the second part, a step by step approach to calculating your personal income tax will be given.)

Monday 15 April 2019

BUSINESS DAY

Data

Federal government eurobond Yields on Eurobonds rose week on week by c.185bps from an average of 6.75 percent last week to 6.87 percent last week as market turned slightly bearish. During the week Brent rose higher than $71per barrel, the highest in five months as fears of upheaval in Venezuela, OPEC cut and US Sanctions on Venezuela and Iran further tightened supply and forced prices up. Goldman Sachs estimates the drivers of the Oil deficit to persist through 2Q 2019. At 01.35 Eastern Day Time (18:50 GMT), Brent remained above $70 at $71.67 per barrel.

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Monday 15 April 2019

BUSINESS DAY

Questions of the week 1.Which would be a better investment option for me right now: Equities or Fixed Income. 2. Is it advisable for a young couple (no kids) to rent a 3-bedroom apart-

ment? 3.Who should I make my next of kin; my wife, kids or siblings. 4. What is the most convenient way for me to buy government securities?

Advancers and Laggards of the Week

source:NSE

Week Ahead (Monday, 15th April – Friday, 19th April, 2019)

Week Ahead

Charts of the week

Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodities

Sugar – Expectations of lower European Union Harvest in the 2019/2020 season could prop prices up in near term. Cocoa- Unfavourable weather conditions could affect output from top-producing countries including Ivory Coast. This would elevate prices and boost Nigeria’s export revenue. Fixed Income Commercial paper with description “FBNQ CP VI 17-April-19” issued by FBN Quest Merchant Bank at 14.95% issue yield will mature on Wednesday, April 17, 2019. A 91-day Treasury bill auctioned in the secondary market for N17.5 billion at 11% stop rate will mature on Thursday, April 18, 2019. Currency The naira is expected to hover around prevailing levels at various windows boosted by sustained supply of liquidity by Nigerian Apex Bank to the market. Data Release The National Bureau of Statistics to release data on Pension Asset and Membership for quarter one of 2019 on Friday, April 19, 2019.

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Last week the International Monetary Fund (IMF) revised marginally upward Nigeria’s economy growth rate projections for 2019 to 2.1 percent from its January estimates of 2 percent as the fund cut its outlook for global growth to the lowest since the financial crisis. The 2019 global growth rate would be the weakest since 2009, when the world economy shrank. The IMF also projects a moderation in Nigerian consumer prices to 11.7 percent in 2019 and 2020 from 12.1 percent in 2018. It’s the third time the IMF has downgraded its outlook in six months.

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Monday 15 April 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Trump’s attacks on the Fed trigger global alarm Economists warn central bank independence is under assault around the world SAM FLEMING AND CHRIS GILES

onald Tr ump’s attempts to influence the US Federal Reserve have triggered anxiety among policymakers gathered for meetings in Washington, as economists fret that the apparent absence of an inflationary threat is making it easier for politicians to push for looser monetary policy. Officials at the spring meetings of the International Monetary Fund and World Bank defended the Fed following Mr Trump’s attempts to appoint two political allies to its board, and demands that it lower rates and restart quantitative easing. The Fed is not alone in facing a threat to its independence: the Turkish and Indian central banks have also been pressured to loosen policy in recent months. “I am certainly worried about central bank independence in other countries, especially in the [US], the most important jurisdiction in the world,” said Mario Draghi, president of the European Central Bank. With 19 governments, the ECB had an advantage because any advice from different governments was generally contradictory, he said. But he stressed that independence was crucial for the credibility of the decisions central banks take to regulate the economy. “Populism on the left and the right is also encroaching on central banks,” said Tharman Shanmugaratnam, deputy prime minister of Singapore and chairman of its central bank. The political pressure, “does pose a very real risk of central banks

being encouraged, urged and forced into new and much larger quasifiscal roles”. Mr Trump was at it again on Sunday, tweeting: “If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4% instead of 3% . . . with almost no inflation. Quantitative tightening was a killer, should have done the exact opposite!” Economists fear that given sluggish growth rates and an absence of inflation, central banks are likely to face increasing political demands for looser policy. In a lecture last week, Kenneth Rogoff, the Harvard economist, warned that central bankers have traditionally been able to warn that if they are not independent, “the devil will break loose and there’ll be high inflation”. Yet that threat no longer felt urgent given low price growth around the world, which could diminish the perceived need for independence. The independence of major central banks seemed assured after they tamed the scourge of inflation and helped lead efforts to fight and mitigate the financial crisis a decade ago. As government budget deficits exploded and fears of a debt crisis grew earlier this decade, central bankers became the only game in town for delivering economic stimulus and quelling market panic. This was best epitomised by Mr Draghi’s 2012 comment that he would do “whatever it takes” to solve the eurozone crisis, a comment, which at a stroke, marked the moment its intensity began to fade. That high watermark is now long

Paris set to cast the only vote against start of bloc’s trade talks with US

rance will be overruled on Monday when the EU votes to launch trade talks with the US — putting Paris at odds with Berlin and other capitals for the second time in a week. The trade talks are a priority for Germany to try to defuse transatlantic tensions. But Paris said last week that it would oppose the negotiations on the grounds that US president Donald Trump has rejected an international deal to fight climate change. Senior French officials admit it is “probable” that France will be the only country to vote against starting talks on Monday, leaving Paris isolated and giving Brussels the task of leading negotiations opposed by one of the EU’s most powerful members. President Emmanuel Macron’s stance that France “must make its voice heard” in opposing the talks because “the long-term European project is at stake” echoed his hardline position at a Brexit summit of EU leaders last week. He fought a long delay to the UK’s EU exit on the grounds that it would destabilise the bloc. While Mr Macron has won domestic plaudits, the episodes have made an outlier of a president who

promised to lead in Europe, with Berlin among those on the other side of the argument. With EU elections approaching in May, Brussels is bracing for more assertive gestures from Mr Macron. At home, the French president is determined to sideline the weaker parties of the right, the left and the ecology movement and frame the vote as a contest between his pro-European La République en Marche and the anti-EU Rassemblement National of Marine Le Pen. His moves over the past week have gone down badly with other capitals. One European diplomat said other member states were “growing more and more exasperated by French political grandstanding ahead of the European elections . . . It is quite disappointing to see the Elysée increasingly putting party interests before European interests”. Paris contests that it is fighting on important points of principle for the direction of the EU, while noting that its opposition to the trade talks also sends a clear message to voters. “France will continue to hold high its commitment to the climate,” said one official in Paris. “It is a major issue for the coming months and for people’s choices in the European elections.” www.businessday.ng

gone and the discussion today is about the assault central bankers are facing. In a lecture on central bank independence, Mr Rogoff, a former IMF chief economist, argued that some central banks had been too “rigid” in sticking to inflation targets when more flexibility was required, and in taking credit for the good times even when this was not justified. He set out a number of further reasons for the challenge facing central bankers — including a lack of inflation, an absence of tools to boost economies when interest rates are zero, and a lack of fiscal policy expertise in central banks, which limits their ability to advise governments on stabilisation when monetary policy is

out of ammunition. Now, the attitude, “Thank you very much independent central banks, you did a great job, we really appreciated it, we don’t need you any more” was taking hold, Mr Rogoff said. While this view was gaining strength, it was almost certainly wrong because inflation would come back at some point, he added. “Completely undermining the independence of central banks, those countries that do that, including the US, will live to regret it,” he said. Amid the concern expressed at the IMF spring meetings, there were some more sanguine voices. Axel Weber, the former Bundesbank president, stressed that attempted

political interference was nothing new. He pointed to unsuccessful attempts by former German chancellor Konrad Adenauer to pressure the central bank in the 1950s, and more recently from former French president Nicolas Sarkozy when Mr Weber was on the ECB governing council. “My answer was ‘who cares what Mr Sarkozy thinks?’”, Mr Weber recalled. “The credibility and the sovereignty and the independence of the Fed is under no threat whatsoever. The Fed knows what to do,” said Mr Weber, who is now chairman of UBS, on Friday. “We just need to be aware that we need to stay our course despite calls from politics to do something else.”

German regulator says Huawei can stay in 5G race

Macron makes a stand as France finds itself isolated in EU JIM BRUNSDEN AND VICTOR MALLET

Agency defies US call for ban on Chinese group provided it abides by data secrecy rules TOBIAS BUCK

ermany’s telecoms regulator has given the clearest signal yet that equipment maker Huawei will not be excluded from the buildout of the country’s superfast 5G network, despite fierce pressure from the US to shut out the controversial Chinese supplier for security reasons. Jochen Homann, the president of the Bundesnetzagentur, or federal network agency, told the Financial Times in an interview: “The position the Bundesnetzagentur takes is that no equipment supplier, including Huawei, should, or may, be specifically excluded.” Washington has repeatedly urged European governments to ban Huawei infrastructure from their 5G networks, arguing that Beijing could use the Chinese group’s technology to conduct espionage or cyber sabotage. Last month, the US ambassador to Berlin warned the German government in a letter that Washington would consider scaling back intelligence co-operation should Huawei be given a role in the 5G roll-out. The Chinese group has denied

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US claims that its technology poses a security risk, but some American allies — including Australia and New Zealand — have decided to follow the guidance from Washington and bar Huawei from parts of their telecoms infrastructure. Mr Homann, however, said his agency had yet to see evidence to back up such concerns: “The Bundesnetzagentur has not received any concrete indications against Huawei. Nor are we aware of any other body in Germany that has received any reliable indications.” The Bundesnetzagentur launched its keenly-awaited auction of 5G spectrum last month, with bidding continuing on Friday after more than three weeks and 180 rounds. The four operators competing for licences to operate 5G networks — Deutsche Telekom, Vodafone, Telefónica and Drillisch — have so far tabled bids totalling more than €5.2bn. Once the auction is over, the companies can start building the required infrastructure for the fifth generation network, with Huawei expected to play a key role. Mr Homann pointed out that banning Huawei from the process would cause problems for Deutsche Telekom and its rivals: “The operators all work with Hua@Businessdayng

wei technology in their systems, anyway. Plus, Huawei holds a large number of patents in this area. If Huawei were excluded from the market, this would delay the rollout of the digital networks,” he said. In an attempt to counter the concerns of the US and others, Mr Homann’s agency released a draft of new security guidelines last month. The new rule book, which is still under consultation with industry and other government branches, says that equipment can be bought only from trustworthy vendors “which unequivocally abide by national safety regulations, as well as provisions in the secrecy of telecommunications.” Mr Homann said: “If Huawei meets all the requirements, it can take part in the 5G network rollout.” He pointed out operators had to “take special care when selecting system suppliers” and that “security-related components may only be used if they have undergone IT security checks by an approved testing body and have been certified by the Federal Office for Information Security, the BSI”. But Mr Homann insisted that “there will be no requirements on the part of the Bundesnetzagentur that are aimed at a particular company.”

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Monday 15 April 2019

NATIONAL NEWS

Sudan’s military ruler pledges to hand over power to civilians Protests continue against regime days after President Omar al-Bashir ousted DAVID PILLING

udan’s new military ruler has pledged to hand over power to civilians after a transition period in what appeared to be an attempt to quell months of street protests that have toppled two leaders in as many days. General Abdel-Fattah Burhan, who took over the military council on Saturday — barely 24 hours after another general had seized power — said in a television address that he would “uproot the regime” of former president Omar al-Bashir. He called for immediate dialogue with leaders of the protest movement and called for help in restoring “peace, order and security”. He also lifted a 10pm curfew that has been roundly ignored by protesters since it was imposed by the new military council on Friday. Gen Burhan’s address on Saturday followed the resignation of the powerful intelligence chief, Salah Abdallah Gosh, who had been closely identified with the repressive apparatus of Mr Bashir’s 30-year regime. The military took over after forcing Mr Bashir to resign on Thursday following months of demonstrations against the regime. It said it would rule for a transition period of up to two years. Protesters remained wary of what many consider a trap being laid by the new military council, but they did elect leaders to represent them in talks. Until now, demonstrators have been careful to conceal the names of organisers. A second round of discussions between protest leaders and representatives of the new government took place on Sunday in Khartoum.

The fast-moving events followed the removal on Friday night of Lieutenant General Awad Ibn Ouf, a day after he had taken to the airwaves to declare himself Sudan’s new de facto leader. On social media, jubilant Sudanese joked that he had not lasted as long as the average deodorant and had quit before his Wikipedia page could be updated. “The security forces are in a desperate scramble to save the regime,” said Murithi Mutiga of the Crisis Group, a think-tank. “They underestimated the protest movement which has been incredibly well organised and sustained.” Military governments in Sudan have a history of subterfuge. When Mr Bashir took over in a coup in 1989 he imprisoned Hassan al-Turabi, the late leader of the National Islamic Front, for several months. But it later emerged that Mr Turabi was the eminence grise behind the takeover. The Sudanese Professionals Association, which has led antigovernment protests that began last December, said people had grown accustomed to “various forms of trickery, absurdity and farce” at the hands of authorities. Thousands of protesters remained camped outside the military headquarters on Sunday where they are demanding an immediate transfer of power to a civilian-led government. Omar el-Digeir, leader of the opposition Sudanese Congress party, said representatives in talks with the military had demanded a civilian government with “full executive powers”, according to the privately owned Baj News website. Mr Mutiga said the next few days would be crucial. “The protesters perceive they have the wind in their sails,” he said. “The security forces are on the back foot.”

Japan’s foreign minister slams efforts on North Korea

Taro Kono says Pyongyang continues to get around sanctions with ship-to-ship transfers

LIONEL BARBER AND ROBIN

anctions on North Korea are full of holes and the international community needs to crack down, Japan’s foreign minister has said in an interview with the Financial Times. Taro Kono said that the Pyongyang regime continues to get around sanctions by transferring cargoes between ships at sea, harvesting funds from North Korean workers abroad and hacking attacks on cryptocurrencies. “There are a lot of ship-to-ship transfers going on, getting oil products to North Korea, and getting North Korean coal to some countries,” said Mr Kono. “North Korean ships are involved and several [other] countries are involved, [albeit] not directly or not knowingly.” His comments reflect Tokyo’s desire to ramp up economic pressure on Pyongyang after negotiations between North Korea and the US stalled without progress towards the destruction of its nuclear arsenal. Japan has publicly identified at least 12 incidents of North Korean tankers lying alongside other vessels in international waters since the start of 2018. Based on the size

of the ships, potential transfers would significantly exceed sanction limits. Officials say Japan has spotted many other suspected ship-to-ship transfers with a lesser degree of certainty. It has not named all the sanctions-evading vessels, suspecting that many bear false markings. The US recently froze the assets of two Chinese shipping companies for alleged sanctions-busting. “There is an international operation going on in the East China Sea to prevent ship-to-ship transfers,” said Mr Kono. “We are also asking and sharing information with China so we hope China will tighten its grip on this issue.” Mr Kono said the recent summit in Hanoi showed North Korea that US president Donald Trump would not give way on the decommissioning of Pyongyang’s nuclear weapons and so the only way out of sanctions was “to make the right decision to get rid of all the weapons of mass destruction and missiles of all ranges”. North Korean leader Kim Jong Un said last week that his country would deal a “serious blow” to those imposing sanctions, according to state media agency KCNA. www.businessday.ng

House judiciary committee chairman Jerrold Nadler wants access to the full, unredacted report into alleged collusion between the Trump campaign and Russia © Getty

Battle looms over full details of Mueller report Democrats want unredacted version of findings on Russia probe KIRAN STACEY

ashington is gearing up for another fight over Donald Trump’s connections to Russia, as Congressional Democrats urge the US attorney-general to release the Mueller report without redactions next week. William Barr has promised to give Congress a redacted version of the report into links between Mr Trump’s 2016 presidential campaign and Russia in the coming days. But Jerrold Nadler, the head of the House judiciary committee, which has taken the lead in investigating the conduct of the Trump administration, insisted over the weekend that Mr Barr should hand over the report’s entire findings. Mr Nadler told CNN on Sunday: “[Mr Barr] will be forthcoming only if he releases the entire report and the underlying evidence to the judiciary committee. That is the proper locus of deciding what has to be held from the public — that’s what has been done in the past.” Mr Nadler was responding to comments from Rod Rosenstein, Mr Barr’s deputy, who told the Wall Street Journal on Sunday that Mr Barr was being “as forthcoming as he can”. Mr Rosenstein added: “This notion that he’s trying to mislead people, I think is just completely bizarre.”

Robert Mueller, who has spent the past two years investigating the Trump campaign, gave his 400-page report to Mr Barr last month without bringing any further charges. Mr Barr then wrote a four-page summary of the report saying that Mr Mueller had not found any conspiracy or co-ordination with Moscow, but that he had been less conclusive over whether the president had tried to obstruct justice. The attorney-general added that he and Mr Rosenstein had decided not to bring a case of obstruction against the president. Mr Barr said last week he would release a redacted report “within a week”. But Democrats on the House judiciary committee have voted to issue subpoenas to secure the full report — something Mr Nadler says he will do if Mr Barr does not provide it. That could result in a lengthy court battle between the White House and Mr Trump’s Congressional opponents, a constitutional fight that has the potential to consume the administration ahead of next year’s election. Mr Trump’s lawyers are working on their own counterreport to Mr Mueller’s. Mr Nadler criticised Mr Barr’s conclusion in a memo written last year that it would not count as obstruction of justice if the president exercised his supervisory authority over investigations into his own conduct.

Mr Nadler called that conclusion “a very wild theory”. “It is for Congress to decide whether the president obstructed justice, and ultimately the American people,” he added. Meanwhile, another battle is taking shape over whether law enforcement agents spied on Mr Trump’s campaign, something Mr Barr told Congress last week he thought did occur. Mr Barr told the Senate appropriations committee he thought the FBI might have overstepped the mark when it launched an intelligence operation into whether members of Mr Trump’s campaign were colluding with Russia. He said: “I think spying on a political campaign is a big deal. It’s a big deal. “I’m not suggesting that those rules were violated, but I think it’s important to look at that.” Mr Trump has claimed on several occasions that his campaign was being spied on, but officials have defended the investigation, saying it was conducted within the law. Mr Nadler on Sunday came to the defence of the FBI, telling CNN Mr Barr’s claims were “complete and utter nonsense”. “It was proper legal surveillance when they were concerned that the Russians were trying to infiltrate a presidential campaign,” he said. “That is not spying.”

Apple spends hundreds of millions on Arcade video game service Gaming could generate more revenues than TV or news subscriptions TIM BRADSHAW

pple is spending hundreds of millions of dollars to secure new video games for its forthcoming Arcade subscription service, according to several people familiar with the deals. The substantial outlay to developers shows how seriously Apple is taking games as a new source of subscription revenues, despite the public paying more attention to its star-studded push into television and news. It also reflects the increasing competition in Silicon Valley for exclusive rights to the best content, as the iPhone maker bids against other new games platforms from Google and Tencent, as well as the console makers Nintendo, Sony and Microsoft.

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Apple Arcade was unveiled last month at an event in Cupertino, California, where Hollywood celebrities including Oprah Winfrey and Steven Spielberg touted its TV+ platform. Apple is hoping to drive new and more predictable sources of revenue from online services as sales growth wanes for the iPhone. Some analysts predict games subscriptions could become a multibillion-dollar business for Apple within a few years. But to establish itself in the market, Apple is having to make substantial upfront investments without knowing whether Arcade will be a success. Several people involved in the project’s development say Apple is spending several million dollars each on most of the more than 100 games that have been selected to @Businessdayng

launch on Arcade, with its total budget likely to exceed $500m. The games service is expected to launch later this year. That compares with the $1bn that Apple was said in 2017 to have budgeted for original content for TV+, though analysts believe that its video spending has already exceeded that level. Apple is offering developers an extra incentive if they agree for their game to only be available on Arcade, withholding their release on Google’s Play app store for Android smartphones or other subscription gaming bundles such as Microsoft’s Xbox game pass. But after a few months of exclusivity, developers will be free to release their games on PCs or other games consoles such as Nintendo’s Switch or Sony’s PlayStation.

Monday 15 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Chevron agrees $50bn takeover of Anadarko Petroleum

Bid accepted after rival approach from Occidental Petroleum was rejected ED CROOKS AND JAMES FONTANELLA-KHAN

hevron, the second-largest US oil and gas company, has agreed a $50bn deal to buy Anadarko Petroleum, one of the country’s leading independent producers, in the most significant move towards consolidation in the American industry since the decline in crude prices that began in 2014. Anadarko accepted Chevron’s bid after rejecting a rival approach from Occidental Petroleum, on the grounds that there was a higher risk the deal would have fallen apart, according to two people familiar with the matter. Buying Anadarko will strengthen Chevron’s position in US shale oil production in the Permian Basin of Texas and New Mexico, which it has made a strategic priority for expansion. It also brings the group more assets in deep water oil and liquefied natural gas, including Anadarko’s new development in Mozambique. The acquisition is expected to deliver cost savings worth $2bn a year. Michael Wirth, Chevron’s chief executive, said the deal created “attractive growth opportunities in areas that play to Chevron’s operational strengths”, underscoring the group’s commitment to “short cycle” investments that will pay off quickly, including developments in shale. Roy Martin, an analyst at Wood Mackenzie, said the deal would establish Chevron as a fourth “ultramajor” oil company, alongside ExxonMobil, Royal Dutch Shell and BP, marking increasing polarisation between the largest global groups and the rest. Anadarko shareholders are being offered 0.3869 shares of Chevron and $16.25 in cash for each share, valuing the equity at a total of $33bn at the closing price on Thursday. Including Anadarko’s debt, the total enterprise value is $50bn. Jason Gammell, an analyst at Jefferies, wrote in a note that the Chevron deal “strikes us as primarily a Permian expansion”. In a presentation to analysts on Friday, Chevron highlighted the benefits of combining its assets with Anadarko’s in the Delaware Basin, to the western side of the Permian region in Texas and New Mexico. Chevron’s reserves in that basin have some of the lowest production costs in the US shale industry, analysts said. Mr Wirth

told the Financial Times that buying Anadarko would “take a good position and make it even better”. Mr Gammell wrote: “The acreage fit between the two companies in the Delaware Basin means that there will be a lot of filling in of checkerboard patterns, allowing for more efficient development.” At Chevron’s opening share price on Friday morning, its offer was worth about $62.50 per Anadarko share, representing a premium of 33 per cent to the closing price on Thursday. Occidental, which is also a large producer and holder of reserves in the Permian Basin, had offered more than $70 per share in cash and stock, said those briefed about the transaction. Occidental did not immediately respond to requests for comment on its position. For it to go hostile, however, would be a tough prospect because it would require a vote of its own shareholders, which would be far from guaranteed. Occidental would also need to assume a significant amount of debt, said a person close to Anadarko, who added: “Chevron is a much safer bet and better for a Anadarko shareholders in the long-term.” Anadarko’s decision to accept Chevron’s offer follows a period of sustained share price weakness. Like many other US independent oil companies, it has been out of favour with investors despite the rise in crude prices this year, with its shares dropping from a peak of more than $112 in August 2014 to $46.80 at the close on Thursday. Mr Wirth said Chevron would still go ahead with Anadarko’s LNG development in Mozambique, despite its difficulties with the gas mega-projects Gorgon and Wheatstone in Australia that have gone over budget and are behind schedule. The company’s priority had been to get those facilities up and running well, Mr Wirth said, and now that had been achieved it was able to look at other LNG developments, including Anadarko’s planned plant in Mozambique. “They have done a really nice job of finding a material gas reserves and progressing a project that has the ability to be world scale,” he said. Chevron shares fell more than 4 per cent in early trading after the announcement, to $120.25. Anadarko shares soared 32 per cent to $61.85.

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The deal is the most significant move towards consolidation in the US oil and gas industry since the decline in crude prices that began in 2014 © Bloomberg

General Khalifa Haftar, Gaddafi’s old foe, makes a play for power The strongman who controls eastern Libya has moved to seize Tripoli HEBA SALEH

hen General Khalifa Haftar, the 76-year-old strongman who controls eastern Libya, ordered his troops to seize Tripoli last week, it did not seem to bother him that António Guterres, the UN secretary-general, was in the city preparing for a peace conference. The timing, with its implied contempt for UN efforts to heal Libya’s division, is in keeping with the general’s character. He opted for military action, Libya-watchers say, because the reconciliation process would not anoint him supreme ruler of the oil-exporting country. “He has a personal ambition for dominance,” says Frederic Wehrey, analyst and author of The Burning Shores: Inside the Battle for the New Libya. “He also says that Libya is not ready for democracy.” Libya has been in turmoil since the Nato-backed revolution of 2011 overthrew the dictator Muammer Gaddafi. The country is split between a UN-backed government in Tripoli and rival authorities in the east, while scores of militias control local areas. Even the Tripoli government relies for protection on allied armed

groups who prey on the city’s economy, battle on its streets and brutalise stranded migrants trying to reach Europe. In the east, Gen Haftar commands a self-styled Libyan National Army, which includes remnants of Gaddafi’s military supplemented with local militia brigades — “a hodgepodge”, says a former western diplomat. This year, the general has expanded from his eastern base, allying with tribes and militias in the south and securing control of a swath of territory, including oilfields and export facilities. His ambition to seize Tripoli has, for now, scuttled the UN’s conference and, as fighting rages on the outskirts of the city, he shrugs off international calls for talks. “Negotiation and a political process are not part of his agenda,” says the diplomat, who has firsthand experience of the military leader who he describes as “stiff, formal, full of his own dignity”. Gen Haftar’s career reads like a cold-war thriller. He participated in Gaddafi’s coup against the monarchy in 1969 and rose to a high rank in the army. In 1987 he led an invasion force into neighbouring Chad, but was captured and imprisoned with his troops. Gaddafi

would not negotiate to free them so, betrayed and humiliated, the general accepted an offer from the CIA to turn on his master. “The CIA wanted to form a rebel army on Chadian soil to carry out an incursion into Libya,” says Jalel Harchaoui, Libya analyst at the Clingendael Institute in The Hague. “They told Haftar: you can rot and die in prison or work for us.” Gen Haftar formed that army from the Libyan captives, using torture and coercion against those who refused. He had already garnered a reputation for brutality, according to Mr Harchaoui, who says he was known for executing deserters. But the army never fought and, during a coup in Chad, the CIA evacuated Gen Haftar and his men, sending them first to Iraq and then in 1991 to the US, where he spent 20 years. He returned to Libya in 2011, during the revolt against Gaddafi, but failed to find a role at first. His rise on the national scene came in 2014, after he formed his LNA and launched Operation Dignity against militias in Tripoli. The clashes over several weeks helped entrench the break-up of the country.

Bank stocks strive to reverse underperformance as reporting season starts PETER WELLS

olid first-quarter earnings from JPMorgan and Wells Fargo may go some way to comforting investors who have just emerged from perhaps one of the most jittery lead ups to bank reporting seasons in recent years. In the weeks going in to April 12 — when the first of the US lenders reported earnings — one of the most tracked sector benchmarks, KBW bank index, had swung from comfortably outperforming the S&P 500 to lagging it by some way. That reversal, which came over the span of a week, was triggered by the Federal Reserve’s U-turn on monetary policy on March 20 and new forecasts for no interest rate rises this year, all but scotching a rising rates environment that is typically good for bank profitability. JPMorgan this morning reported the highest ever first-quarter profit for a US bank, helped by the higher

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interest rate environment that prevailed for most of this year, but now looks to be at an end. Wells Fargo and PNC Financial today reported results that at least met analysts’ forecasts, with net interest income flat from a year ago at the former and up 5 per cent at the latter. Twenty trading sessions before the start of bank reporting season, and the 24-stock bank index was outperforming the S&P 500 by 5.7 per cent, which is the best run up to that juncture since the period leading up to April 2017. Roughly a week after the Fed’s March meeting, the bank index underperformed the S&P 500 by as much as 3.3 per cent. That spread of about 9 percentage points is the biggest since the lead-up to reporting season in at least three years, according to analysis by the Financial Times. Stretch out the lead-in period to 30 sessions, and the level of outperformance is 6.1 per cent. That is the best since fourth-quarter reporting season in January 2019 when the @Businessdayng

market was roaring back from its Christmas Eve nadir, and also one of the strongest lead-ins over the past few years. The question for investors is what happens next? Over the past three years, the KBW bank index has outperformed the S&P 500 20 sessions after the start of bank reporting season in seven of the past 12 quarters, and eight out of 12 quarters by the 30-day mark. That may not be statistically robust enough to warrant an all-in bet, but it may offer comfort to some. Historical patterns aside, the likely neutral interest rate environment makes a tougher time for banks. The yield curve, measuring the spread between short- and longterm borrowing costs, has flattened this year, which is often regarded as an indicator of an economic slowdown. Combined with the falling trading revenues and rising credit costs some banks are facing, the outlook for the sector starts to look tougher from here on.

Monday 15 April 2019

BUSINESS DAY

ANALYSIS

Can China conquer Hollywood? Alibaba’s Gao Xiaosong explains how Jack Ma’s right-hand man on bad movies and censorship t is one of the chillier days of the year in Beijing on the Saturday afternoon I visit Gao Xiaosong. I arrive early at “Linked Hybrid”, a sprawling, futuristic block whose eight apartment towers are linked by soaring sky bridges. A concierge eyes me warily as I mill around the lobby in my puffy coat, waiting for the appointed hour. I imagine he is watching me closely because I have told him the apartment number and assume he knows I’m meeting a celebrity. But when Gao greets me upstairs, I realise this was probably incorrect: the flat is barely furnished, the living room empty except for a single electric massage chair. With his pudgy figure, pockmarked cheeks and scraggly goatee, Gao himself is not exactly glamor-

Deng Xiaoping’s economic reforms set the country on a course for explosive growth. “In October or November, every family bought a few hundred kilos and put them in the courtyard or the corridor. Those big, coarse cabbages — it’s hard to make them taste good.” As the hotpot warms, Gao offers a choice of wine, beer or Maotai, the premium brand of Chinese baijiu, or white spirits. I hesitate, recalling rueful baijiu experiences from the past, but sensing that the trajectory of our conversation may turn on this decision. I choose Maotai. Gao produces a bottle with his own name and face printed on the label (“It was a gift,” he says wryly. “Not ideal.”) But the apartment lacks proper baijiu glasses, which are like a smaller version of a sherry glass. Gao phones his driver to ask him

ous — but I am not fooled; the 49-year-old is firmly embedded in China’s entertainment elite. He’s been a popular singer-songwriter, a film director, and a Malcolm Gladwell-style public intellectual. These days, though, his role has taken him far from China. Jack Ma, founder of the e-commerce giant Alibaba and China’s richest man, has told him to conquer Hollywood. As chairman of the strategic committee at Alibaba Entertainment, Gao is charged with learning the secrets of making compelling TV and movies — a mission with huge ramifications for Hollywood and China. Only the US outspends China in TV production; last year the Chinese audience for movies hit a record high, with box office takings at Rmb61bn ($9.1bn). But Gao says that when it comes to quality, the country still has a lot to learn. “Sometimes I’m embarrassed,” he says. “Even a crap movie can earn a lot of money. At the moment, Chinese movies really aren’t worthy of accepting Rmb60bn from the common people. We can do better with this money.” After so much time away from Beijing, Gao seems to crave home comforts. The table is set with the simple necessities of hotpot: the classic meal of stewed meat and vegetables cooked on the table. “I grew up in Beijing, and I always feel that if you’re hosting guests in the winter, it’s not much fun to go outside,” says Gao. “It’s better to host at home.” Though he is now often served hotpot at restaurants in elaborate banquet style, Gao grew up on rather more modest versions of the dish. “When I was a kid, there were no vegetables in winter, only cabbage,” he says, recalling the austere Beijing of the 1970s, before

to pick up some, while pouring the first round into wine glasses. While China’s economic and geopolitical influence has grown dramatically over the past 15 years, its cultural influence around the world lags by comparison. Gao points out that when he started his career as a singer-songwriter in the early 1990s, there were no record companies in the whole of China. “The history [of China’s entertainment industry] is short, so we need to proceed slowly,” he says. South Korea, he thinks, might serve as a model. With the help of Korean government subsidies beginning in the late 1990s, Korean films, TV shows and — most famously — the country’s glossy K-pop groups have been exported to Asia and beyond. It’s an inspiring vision, but would require China’s studios to make better films. I ask if censorship explains why Chinese movies have failed to captivate world audiences. Gao is emphatic that the real issue is a lack of skill and experience. And Hollywood, he argues, has its own informal censorship regime. “In Hollywood, many things can’t be filmed. The villain can’t be a person of colour. He will definitely be a white man like you. It can’t be a woman or an Asian . . . My experience is that political correctness in Hollywood is possibly the most powerful censorship in the world. But despite this strong pressure,” he adds diplomatically, “Hollywood still makes great movies.” In fact, Gao insists that limitations on content stimulate rather than stifle creativity. Growing up in the 1970s, he was raised on a diet of Soviet cinema — proof, he suggests as he reels off a list of movies, that modern masterpieces can be produced under censorship.

GABRIEL WILDAU

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How Game of Thrones changed television The much-anticipated final season arrives this weekend — but can the show’s formula be repeated? INDIA ROSS

ne balmy evening two summers ago, I stepped into a London pub in the hope of a quiet drink. It was 9pm on a Monday, but the Three Compasses was already jammed. A chorus was being led by a group waving their beers like conductors’ batons. Couples were clinging to one another. At one point a young man stood up, pointed at a projector screen and yelled: “Get a grip, Theon!” Monday nights, it transpired, were Game of Thrones nights. If similar scenes have played out in homes and bars around the world in recent years, this weekend they will be even bigger. The final season of HBO’s fantasy epic arrives on a tide of cultural anticipation unseen since the climax of Harry Potter. So far, the trailer has been viewed more than 50m times on YouTube. Over seven juggernaut seasons, the most ambitious TV show of our era has become a phenomenon that is casually referenced by politicians and novelists as a byword for the most brutal and cynical way of wielding power. At the centre of the Game of Thrones universe are two questions: one, how a strange work of fiction — which features, among other exotica, dragons, eunuch warriors and the living dead — came to have such a hold on our culture; and two, how it’s all going to end. For as the show careers towards its finale on May 19, we are heading for one of those once-in-a-decade events in which it is almost unseemly not to take an interest. “I plan to be very drunk,” the show’s co-creator David Benioff told Entertainment Weekly last month, referring to the night of the final broadcast, “and very far from the internet.” Depending on how you look at it, Game of Thrones is either a very good TV show or a very bad one. The premise, for anyone who has somehow yet managed to escape watching, is that the land of Westeros is divided into seven kingdoms run by seven dysfunctional families that have for centuries existed in a state of on-again-off-again civil war, the result being that the entire show is orientated around a protracted battle for overall dominion — and one rather garish Iron Throne. Adapted for TV by Benioff and DB Weiss, based on an unfinished series of novels by the American fantasy writer George RR Martin, the show exhausted its source material in 2016; since then Benioff and Weiss have been following a blueprint provided exclusively to them by the novelist, so even the most ardent fans still have no idea where the narrative is headed. The case against the show rests largely on its preoccupation with

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the lowest forms of entertainment. The first episode includes three beheadings, four instances of borderline non-consensual sex and six full-frontal shots of naked female bodies. There’s also a scene in which a character is slit with a sword so that his digestive system falls out on to the floor; another then remarks: “A Dothraki wedding without at least three deaths is considered a dull affair.” The show’s willingness to revel in sex and violence feels particularly out of kilter in our era of heightened sensitivity to gender politics. Some of its most transgressive moments would surely never have happened in the #MeToo era. The camera frequently lingers on the female body — it’s worth noting that in the first seven series of Game of Thrones, only one of its 19 directors was a woman — while rape occurs with what feels like unreasonable regularity and in often ludicrous scenarios (at one point a major character, Jaime Lannister, rapes his twin sister while she mourns at their dead son’s tomb). “I stopped watching around the point in season three when Joffrey, a 15-year-old despot, was encouraging two prostitutes to beat each other to death,” says the writer Will Self, referring to a preposterously villainous boy king, whom his almost equally vindictive mother Cersei (who was also, incidentally, the rape victim) installs on Westeros’ Iron Throne in the hope of pulling the strings behind the scenes. “I’d been watching it with my teenage son, and I suddenly thought: Really? Is this the sort of thing I want him to experience as entertainment?” But all the things that make Westeros squalid and disturbing are also the things that make it such rich dramatic terrain. Drawing on JRR Tolkien and the 15th-century Wars of the Roses, among other fictional and historical touchstones, it conjures a pre-bureaucratic world in which politics operates primarily through subterfuge and force, a formula that has only taken on greater resonance in our new age of strongman politics. A drama of personalities — from the tyrannical Ramsay Bolton, who feeds his enemies to his dogs, to the cerebral Tyrion Lannister, the cheerful strategist behind much of the show’s chicanery, played to much acclaim by the actor Peter Dinklage — its early seasons were a slow but often richly satisfying exercise in political manoeuvring. As the show has progressed, its audience has outgrown the original core fan base (the 2011 pilot was watched by a relatively niche audience of 2.2m in the US; the most recent season finale reached 12.2m American viewers, and that year the show also held the dubious honour of being the most pirated series @Businessdayng

ever), its tenor has shifted. Once a complex playground for hardened devotees, it has since simplified its politics and narrowed its focus, transitioning almost imperceptibly over the course of the latter seasons into a more straightforward battle of good versus evil. “As the budgets have increased, the scope, the panorama of the drama, has become huge,” says Cambridge historian Helen Castor. “But at the same time, the story has become less historical and more mythical . . . it feels much more, in a sense, Arthurian.” One of the show’s most notable early features was its tendency to dispatch beloved characters at a moment’s notice, the most divisive example being the first-season beheading of Sean Bean’s Ned Stark, who until that point had been the moral heart of the show and was therefore presumed indispensable. “If I watch [the US TV series] 24,” co-creator DB Weiss told the Oxford Union in 2014, in reference to the dramatic benefits of the show’s seemingly indiscriminate killings, “I never wonder whether Jack Bauer’s going to live or die, I’m just wondering how he’s going to get out of this situation.” But as Game of Thrones draws to a close, it is less concerned with the fate of individual characters than with that of Westeros as a whole. At the end of the penultimate season, a maniacal army of undead “white walkers” who have been threatening to descend on the seven kingdoms since the pilot, were on the brink of doing just that. Our last moments in Westeros were spent in the presence of a fire-breathing dragon that was destroying the 700ft wall that had been keeping the walkers at bay — a feat of lavish computerised imagery unlike anything seen before on the show. “It appears that Tyrion’s assessment was correct,” Jon Snow, the show’s ostensible hero, says to his new ally Daenerys Targaryen, upon appraising Westeros’s predicament. “We’re f***ed.” A parallel is often drawn between the “New Hollywood” of the 1970s, the artistic heyday in which filmmakers such as Martin Scorsese and Robert Altman made their most celebrated and challenging works, and the recent “golden age” of television. In this analogy, Game of Thrones is Star Wars — the blockbuster that changed everything. Arriving in 2011 into a richly creative landscape whose prized assets were challenging, insular psychodramas like Mad Men, it showed audiences that a TV show could provide not only sophisticated dramatic arcs but also spectacle. Importing a model that had proven hugely successful in cinema, it repurposed an existing fictional world with a dedicated fan base into a high-budget visual experience, in the manner of The Lord of the Rings, Harry Potter and early Marvel film franchises of the 2000s.

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Insight Presidential race 2019: Atiku mimicked Trump but lacked his populist touch global Perspectives

OLU FASAN

ecently, Atiku Abubakar, a leading presidential candidate and runner-up in this year’s presidential election, tweeted a message congratulating the US President, Donald Trump, on the conclusion of the Mueller investigations that he did not collude with Russia to influence the 2016 US presidential race. In the tweet, Atiku said: “I congratulate @realDonaldTrump on his vindication by the Robert Mueller report. It is my hope that the lifting of this cloud will give room for further successes by the 45th President of the United States”. This was a curious intervention. Whywould Atiku interfere in such a sensitive internal US domestic affair, which the US Congress could still reopen? Was he trying to ingratiate himself with President Trump? Was he enamoured of him? But,then,it occurred to me that Trump was actually Atiku’s role model. He would very much have liked to be the Donald Trump of Nigerian politics: a very controversial billionaire businessman cum politician, who defied all odds andsurvived damaging allegations of impropriety to become president. Few presidential candidates could be more beleagueredthan Trump. He faced strong allegations of scandals and misjudgement, yet they simply bounced off. Trump was Teflon, bulletproof, undamaged by the barrage of attacks – and won! To be sure, Trump isdifferent things to different people. I once wrote that“Buhari is the Donald Trump of Nigerian Politics” (BusinessDay, 27 August 2018). But here I am also saying that Atiku would have been

the Donald Trump of Nigeria. How could Buhari and Atiku both be like Trump? Well, here, briefly, is the comparison I made between Buhari and Trump. Both were different in wealth, lifestyle and taste, I said, but similar in politics and rhetoric. Buhari and Trump are populists and demagogues, who claimed to be fighting for ordinary people against the powerful elite, and they commandmessianic followers. Both are protectionist, nationalistic and anti-globalisation. They both pandered to their electoral bases, keeping them excited with what Americans call “red meat rhetoric”. When it comes to populism and demagoguery, Trump and Buhari are birds of the same feather! But it is precisely the similarities between Buhari and Trump that divide Atiku and Trump. Put simply, both Buhari and Atiku are like Trump for different reasons. Like Trump, Atiku is a controversial and colourful character. Both are brash and amoral wealthy businessmen. The word “amoral”, of course, does not mean being immoral; it simply means being indifferent to moral issues;provided a behaviour is not illegal the amoral personis not moralistic about it. For instance, in his book, The Art of the Deal, Trump sees deal-making not as a moral issue but a zero-sum game: if you are not losing, he is not winning! Thus, providing no illegality is involved, his attitude to business transactions and tax-payment may be lax. To date, Trump is still resisting pressure to release his tax returns. Similarly, there are controversies about how Atiku acquired his business interests and made his wealth. When he said during the election that he paid N10m in taxes over three years, not a few people were alarmed that he paidsuch a relatively small tax despite being, as widely believed, a multi-billionaire. But did he break any law? Apparently not! As I write, there is the raging controversy about whetherAtikupaid an American firm $30,000 to “unseat” President Buhari, whose re-election he described as a “sham” and is challenging in court. Truth is, Atiku shares much of Trump’s controversial and colourful character. And going into this year’s presidential election, he was almost as beleaguered as Trump was

in 2016 and needed to overcome sustained attacks on his character and integrity. But he did not survive the savagery. Yet, as stated above, Trump showed that a presidential candidate facing damaging allegations could still win. Indeed, we saw another example last week when, despite facing corruption charges, the Israelis prime minister Binyamin Netanyahu won a fifth term in office. Before the election, the country’s attorney-general, Avichai Mandelbit, announced that he would charge Netanyahu with bribery, fraud and breach of trust in three separate corruption investigations. Yet, he still won the election, just like Americans elected Donald Trump, despite allegations about his business practices and criticisms of his alleged racism and misogyny, including tawdry comments about groping women. So, why, despite vicious attacks on their character and integrity, did Trump and Netanyahu win, and Atiku, in similar circumstances, did not? Well, the answer, to some extent, lies in populism. Atiku was not a populist. He mimicked Trump in many things. For instance, his campaign slogan was “Make Nigeria Work Again”, a variation or an adaptation of Trump’s “Make America Great Again”. Atiku had election promises, such as on taxation, privatisation and investment, that wouldbenefit the rich, well, some said, mainly his cronies. He himself said “I would enrich my friends”. Trump, of course, also made election promises on tax and regulations that would benefit his fellow members of the billionaire club. In fact, his cabinet was full of billionaires. But that’s where the similarities ended: Atiku did not copy Trump’s populism; he didn’tplay on the fears of his ethnic group or exploit the anxieties of the poor. Every analysis of the US presidential election shows that Trump won largely by tapping into the anger of the non-collegeeducated white voters, as well as the evangelicals. To the white working-class men, whose concerns were declining standards of living, plummeting wages and job losses, Trump’s rage against globalisation, free trade and immigration was red meat; and for the evangelicals, his pro-Israel and anti-

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Atiku did not copy Trump’s populism; he didn’t play on the fears of his ethnic group or exploit the anxieties of the poor

abortion positions were all they needed to throw their weight behind him. In the end, the states that gave Trump victory were those economically depressed rust belt states, such as Michigan and Pennsylvania, as well as those where the evangelicals hold sway. In the Israelis election, Netanyahu also played on the security fears of the Israelis, particularly their loathing of the Arabs. For instance, he floated the idea of annexing to Israel the Jewish settlements on the Palestinian West Bank. As the Financial Times put it, “Instead of shying away from the scandal (Netanyahu) met the probe head on, transforming it into a rallying cry for his base”. By contrast, Atiku did not pander to what could have been his base. Surely, he couldn’t become president without performing well in the North. Yet, he did little to woo the North. All his signature promises, such as political restructuring and privatisation, appealed to the South but were unpopular with the North. The North resisted the privatisation programme of the Babangida regime because they believed it would mainly benefit the affluent South. Similarly, they see restructuring as a Southern agenda. Yet, these were Atiku’s flagship campaign promises. He made no attempt to pander to the fears of the North, to play the populist card. But Buhari did! He fed his Hausa/Fulani base with, as it were, red meat. He gave the herdsmen tacit support in their struggle with farmers. He rejected political restructuring and would not embrace globalisation and free trade. He railed against the rich eliteand presented himself as the saviour of the poor. It was straight from Trump’s populist rule book! Surely, Atiku would have liked to be the Donald Trump of Nigeria, a controversial businessman who becomes president. But it’s Buhari who is Nigeria’s real Donald Trump, a populist anti-globalisation, anti-free trade, anti-elite demagogue, who rode on the back ofthe poor to power! Atiku lacked the winning side of Trump.

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

Low savings rates: Where are the savings to investment assets? ECONOMIST

NONSO OBIKILI

he logic of savings is a very simple one for a country. To produce we need investments. In general, more investments mean more production. Investments in things like infrastructure, machinery and all that stuff which help us be more productive. Investments don’t just appear though. They generally come from savings. Savings here meaning whatever we produce that we don’t consume. To use a very simple example based on agriculture: if a farmer consumed all his produce from the previous harvest then the farmer would have no way of farming in the next season. So, the farmer has to save something from the previous harvest to enable him or her farm during the next season. As it is for this farmer, so it is for countries. Savings is the left hand and investment is the right. Nigeria unfortunately has a relatively low savings rate, that is, the fraction of income that is not consumed. On average it has been about 20 percent of GDP over the last few decades, although it dropped to

13 percent in 2016 and 15 percent in 2017. For comparison it is about 33 percent in Indonesia, 32 percent in Malaysia, 25 percent in Vietnam, 37 percent in Algeria, and 47 percent in China. To be fair we aren’t the worst country. There are many countries with lower savings rates than us. You also can’t forget to mention foreign savings. In terms of thinking about investment a country can mobilize domestic savings as well as foreign savings. That is the “left hand” of foreign investment. We don’t do a great job at mobilizing foreign savings either, as foreign direct investment in Nigeria is relatively very low at 0.9 percent of GDP in 2017. The rest of the world mobilized some of our savings too, at 0.3 percent of GDP in 2017. So net foreign direct investment was very low at 0.6 percent of GDP. Net portfolio investment was actually negative in 2017 although I’m sure it would have reversed in 2018. Still in general the story is the same, we don’t mobilize that much savings either from domestic or foreign sources. All this has me worrying about what role the financial sector, with its relative lack of good income generating assets, has played. In theory the financial sector is supposed to mobilize those savings and direct it to the best investments that increase productivity the most while minimizing risk. But there are just not that many assets which both incentivize savings and direct that to good investments. The current deposit rate on savings accounts return only about 4 percent,

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In 2018 over 70 percent of all government spending, including that raised from debt, Awent to consumption i.e. debt service payments and salaries and entitlements

with twelve month fixed deposits return averagely 10.7 percent, both lower than inflation. In other words, if you actually save money with banks you may end up losing money. In terms of converting deposits to investments, 40 percent of all bank lending goes to the oil and gas sector and government. This is systematically problematic as one doesn’t create jobs and the other is not known for spending very well. There is the option of bypassing the banks and investing directly in Nigerian businesses but that is a risk that most are not willing to take. Government securities are an alternative in terms of mobilizing savings for investment. Returns on government securities are typically higher than inflation so they beat the banks on that front. However, the investment “right hand” isn’t great. We know what federal government spending looks like. In 2018 over 70 percent of all government spending, including that raised from debt, went to consumption i.e. debt service payments and salaries and entitlements. Mobilizing savings for government consumption is not systematically ideal either. Corporate securities are better in terms of mobilizing for investment, but they are still a very tiny fraction of traded debt instruments. The stock exchange is supposed to be another financial alternative for mobilizing savings for investment. In this case both hands are bad. On the left hand the returns to investing in the stock market have been very poor, with the exception of a few stocks. There have also been very

few IPOs so in terms of investment you might as well chuck that in the bin. Then there is land, which given the way we practice it, is identical to locking assets in a safe and throwing away the key and then finding the key ten years later. Land is a good investment for savers looking for good returns but is a very poor asset for investment as people typically just sit on the land waiting for the value to appreciate. Then there is foreign exchange, which has historically been a very good investment in terms a making sure you don’t lose money. For instance, the US dollar has been a better investment that almost all other options over the last twenty years. A good left hand for savings but a not so great right hand for investment. Anytime you buy dollars you are essentially indirectly loaning money to the US government. Some banks give foreign currency loans but that is also a very small fraction of lending. So, there we have it. On the one hand, a bunch of assets and institutions that are good for savers but not good for investment. On the other a bunch of assets and institutions that are not so good for savers but good for investment. Where are the systematically useful assets that are both good for regular savers and that still transmit to investment? These are some of the challenges we need to think harder about.

Dr. Nonso Obikili is Chief Economist at Business Day.

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