BusinessDay 15 Aug 2018 by BusinessDay

Banks say no issue with indemnity over 9mobile transaction ... sale in final stages, will be concluded soon – NCC

JUMOKE Akiyode-Lawanson

he consortium of Nigerian banks running 9mobile have refuted claims of issues with indemnity which is suppos-

edly halting the finalization of the deal to transfer the telecommunications firm to Teleology Holdings Limited, the preferred bidder as new owners of the telecommunications company.

See BusinessDay Market Monitor on page 2

An indemnity clause essentially involves parties to commercial contracts having to compensate the other (or each other) in case of any liability or loss arising out the signed contract. The formula to compute Continues on page 42

news you can trust I **WEDNESDAY 15 AUGUST 2018 I vol. 15, no 118 I N300

L-R: Saheed Lasisi, general manager, business development, SIFAX Group; Taiwo Afolabi, group executive vice chairman, SIFAX Group; Adama Barrow, President, Republic of Gambia, and John Jenkins, group managing director, SIFAX Group, during the signing of the MoU for SIFAX Group to build and operate a multi-million dollar dry port in the Gambia.

Time running out for petroleum industry bills, analysts warn E

Italy’s Morandi Bridge collapse foretells the danger that awaits Apapa CHUKA UROKO

End of current National Assembly signals wasted efforts on bills Estimated N3trn annual loss from non-passage to continue

ISAAC ANYAOGU

Bank Eurobonds selloff as Turkish meltdown sinks EM assets

igeria risks losing a pile of money spent on international consultants, organising public hearings and thousands of hours work on the Petroleum Industry Bills (PIB) as the race for 2019 elections takes the shine away from important legislations that will stop an estimated $15billion annual investment loss to the economy. According to Nigeria’s legislative practice, the onset of a new parliament triggers the end of all pending bills regardless of time and money spent on developing them, hence stakeholders are calling on the lawmakers to pass Continues on page 42

arly Tuesday morning, tragedy struck in Italy, the largest city in Rome, as a highway bridge, the Morandi Bridge, collapsed over Genoa, causing people, cars and huge slabs of concrete to fall hundreds Continues on page 42

... First Bank, Diamond hold firm DAVID IBIDAPO & EMEKA UCHEAGA

ollar denominated bonds issued by Nigerian Banks have sold off as investors turn risk averse Continues on page 42

Simbi Kesiye Wabote (m), executive secretary, Nigerian Content Development and Monitoring Board (NCDMB) sounding the closing gong at the Nigerian Stock Exchange (NSE). With him are: Isaac Yalah (l), director of finance and personnel management, NCDMB; Tinuade Awe (2nd l), executive director, regulations, NSE; Rose Chukwuonwe (2nd r), coordinator, legal services, NCDMB, and Abayomi Bamidele, general manager strategy, NCDMB, during NCDMB’s official visit to the NSE in Lagos, yesterday.

FG redeems N639bn T-Bills with $2.5bn Eurobond proceeds P. 2

BUSINESS DAY

Wednesday 15 August 2018

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businessday market monitor Commodities

NSE

Bitcoin

Brent Oil

Biggest Gainer

$72.85

Interbrew N35.2

Cocoa

US $2,150.00

Biggest Loser

Flourmill 5.23pc N22 35,288.23

-8.33pc

₦2,200,824.99

FMDQ Close

Everdon Bureau De Change -4.05pc

Buy

Sell

$-N 357.00 360.00 £-N 466.00 474.00 €-N 406.00 414.00

Foreign Exchange

Market Spot ($/N) 3M 6M I&E FX Window 362.20 -0.044 0.09 CBN Official Rate 306.05 11.16 13.12

Currency Futures ($/N)

fgn bonds

Treasury Bills 0.48

10 Y 0.20

20 Y 0.00

14.47

14.68

14.17

NGUS OCT. NGUS JAN. NGUS JUL. 30, 2019 24, 2019 31, 2018 0.00 362.23

0.00 362.68

0.00 363.58

Stock rout on track for worst in pre-election year since 1998 David Ibidapo, Emeka Ucheaga & Omobola Adu

he hot political climate this year has chilled equity market performance since January. The continuous drama of political defections,siegeoftheNationalAssembly by DSS and alleged freezing of two state government accounts by EFCC spooked investors which resulted in a broad-based selloff that caused 2018 year to date market performance to be the worst ever since 1998, according to data compiled by BusinessDay . Year to date performance for 2018 is currently around -7.49 percent and nearing the record of -10 percent witnessed in 1998 when Nigeria was in the process of moving from a military rule to a democratic government. According to data compiled from Bloomberg, in other pre-election years such as 2002, 2006, 2010 and 2014, the stock market rallied between January to August by 18 percent, 34 percent, 20 percent and 2 percent respectively. Omotola Abimbola, Ecobank told BusinessDay that the selloff in the equity market this year is due to the heightened political uncertainty. The tensed political climate in the country has driven down equity prices as investors are demanding a higher risk premium to invest in this uncertain political environment. Analysts expect that the selloff may continue until after the elections next February. In other pre-election years since 1998, the market selloff typically delays till the fourth quarter of the preelection year. However, the ripple effect of the multiple changes in the political

dynamics of the country has reached the stock market earlier than expected. 1998 and 2018 pre-election periods are clear evidence that investors dislike an unpredictable political environment. The drastic slump in foreign buying amid boiling political tensions is at the heart of the stock sell-off and is likely to continue until after elections in 2019, according to Wale Okunrinboye, head of research at Sigma Pensions. The 1998 pre-election period marked the worst performing stock market period in Nigeria so far. The stock market performance, measured by the All Share Index, fell by 10 percent from 6440.51 points in January to 5826.60 points in August. The market saw investors leave due to the uniqueness of the anticipated general elections. The 1999 elections was the first since the 1993 military coup and the first of the fourth Nigerian Republic. In contrast to 1998 and 2018 preelectionperiods,in2002beforethe2003 general elections, the All Share Index increased by 18 percent from 10895.7 points in January to 12847.46 points in August, and afterwards declined in the fourthquarterby0.05percenttocloseat 12137.72 points in December. The Nigeria Stock Exchange (NSE) market witnessed similar trends in 2006, 2010 and 2014 preelection years. In 2006, during the same period, the all share index rose by 34 percent from 24085.71 points in January to 32155.78 points in August and further grew by 3 percent to close the year at 33189.30 points.

•Continues online at www.businessdayonline.com

FG redeems N639bn T-Bills with $2.5bn Eurobond proceeds ... public debt slides to N12.151trn Onyinye Nwachukwu, Abuja

he Nigeria’s Federal Government redeemed N638.897 billion worth of matured Treasury Bills between January and June 2018 as it continues to implement a debt strategy which targets to reduce borrowing costs and encourage more of long term, external borrowing against taking the costlier, short-term domestic money. This brings the total T-Bills redeemed so far to N839.929 billion, sincelastDecemberwhengovernment retired N198 billion maturing bills. Patience Oniha, Director General of the Debt Management Office (DMO) confirmed on Tuesday that the bills were redeemed from the proceeds of the $2.5 billion Eurobond issued in February. Addressing the press in Abuja, Oniha said the debt pay off has helped cut down the ratio of domestic to external debt to 69.83 % - 30.17 % as at June 2018, an improvement on the 73.36:26.64 recorded as at December 2017. The government got an approval from the National Assembly to issue a $3billon Eurobond last year specifically to retire maturing obligations. Out of that, $500million was raised

in November to retire all maturing TBills while the remaining $2.5 billion was issued in February. According to DMO figures, FGN domestic debt stock has consistently decreased from N12.589 trillion in December 2017 to N12.577 trillion in March 2018 and N12.151trillion in June 2018. “The Eurobond proceeds was specifically dedicated to retire maturing obligations, what we did was to use it to retire treasure bills not FGN bonds because they are the short term one. That explained why our long term to short term in the portfolio has increased significantly,” Oniha explained. According to her, “the implications for government is that the portfolio is now more long term than short term, so the risk of refinancing and the mismatch between what we use the money for and tenor of the money is reducing gradually. “Going forward, that remains the strategy which is to increase the long term component that is also what we are trying to achieve by borrowing externally.”

•Continues online at www.businessdayonline.com

Akinwunmi Ambode (r), governor, Lagos State; Bola Ahmed Tinubu (l), national leader, All Progressives Congress (APC), and Tunde Balogun, APC Lagos chairman, during APC stakeholders meeting at the Party Secretariat, Acme Road, Ogba, yesterday.

Nigeria should pay attention to competition from new light crude grades ISAAC ANYAOGU

&P Global Platts, the company that publishes prices used to settle physical crude trades is including new light crudes in its basket from which oil prices are benchmarked thereby resetting the balance of global oil prices as this enhances trade on these crude grades. For Nigeria, the lack of market has not always been a problem; the key challenge has often been ramping production to satisfy market demands. This may change as new crude grades being brought into the Brent basket is offering intense competition for light, sweet, crude grades. The dated Brent basket is likely to see further additions beyond Troll in the coming years as production in Europe continues to evolve and, as part of that, there are likely to be further careful quality reviews says Platts. The largest projects in the region – particularly Norway’s huge Johan Sverdrup field, set to begin the first phase of production in late-2019 – are producing crude grades that are significantly different in quality to the

existing basket. The BFOE market, also known as the 21-day BFOE market, an over-the-counter forward market whereby buyers and sellers trade cargos of Brent, Forties, Oseberg or Ekofisk grades is seeing decline as new crude grades emerge. This is providing an opportunity for the benchmark to evolve in other ways, possibly bringing in grades from outside Europe on a delivered basis. In February, one Asian refiner started testing samples of Kuwait’s new “Super Light” crude oil and found it suitable. State-owned Kuwait Petroleum Corp. prepares to launch its first new export grade in decades and key refiners in the region are excited about increased options. Platts added Forties and Oseberg crude in 2002, followed by Ekofisk in 2007 and Troll in December last year. While the additions helped the benchmark’s liquidity, they presented Nigeria with the challenge of maintaining share in a market where alternatives for sweet crude grades is heating up. Two light sweet Australian crude grades could regularly appear in the Asian spot market later this year fol-

lowing independent upstream company Jadestone Energy’s acquisition of the Montara oil field and rising output from its Stag field promising more competition in Asia. According to Platts, Asian sweet crude traders say that Jadestone’s latest acquisition from the Thai upstream company could mean that Montara crude will be made available in the Asian spot market on a regular basis once it wraps up all the regulatory and financial procedures. Iraq has also introduced its flagship Basrah Light crude for loading in September and bound for Asia even offering a discount against its rival Saudi Arab Medium grade for the first time in five months, signalling an ambition to gain more market share in Asia over the coming quarters. The appearance of these new sweet crudes means that no one country can claim a monopoly for sweet crude grades. This is especially important as the International Maritime Organisation (IMO) low sulphur cap of 0.5 percent takes effect from January 1, 2020. Nigeria will be better served to initiate policies that will ramp up production of new sweet crude grades.

Dangote Cement issues N50bn Series 3 & 4 CPs at 13.2% Abdullateef Eniola-Giwa

frica’s largest cement producer, Dangote Cement Plc has issued series 3 and 4 of 180-day debt notes under its N150 billion commercial paper (CP) programme. N50 billion worth of CPs have been issued at 13.2 percent according to the dealers Stanbic IBTC and FBNQuest as reported by Bloomberg. This offer brings the total commercial paper raised by Dangote Cement to N100 billion and the proceeds are to fund capital expenditure, working capital and general corporate purposes. Commercial Papers are shortterm debt financing securities (no

longer than 270 days in tenor) consisting of unsecured and discounted promissory notes issued by large corporations with good credit ratings, which can be readily traded. Due to their relatively short maturity period, commercial papers are referred to as low-risk investments, offering competitive returns to investors in compensation for the issuer’s credit risk. Series 1 and 2 notes were listed on FMDQ OTC Securities Exchange on the 27th of June, 2018. The were separate listings of N12.04 billion and N37.96 billion at 13.21 percent and 13.96 percent respectively totaling N50 billion worth of CPs in its initial listing under the N150 billion commercial paper programme. In June, Dangote Cement plc announced plans to raise N150 billion

via commercial papers to refinance its debts as the company has N129 billion in current liability which is set to mature over the next 12 months. The market implication of the issuance of the CPS is a better outlook on the company’s performance as the capital injections are at a lower costs. “This landmark transaction is the largest ever commercial Paper issuance by a corporate issuer in Nigeria as it allows us to broaden our sources of funding and combine established bank lines of credit with access to capital market funding, which will lower our overall cost of borrowing,” Joe Makoju, Group Chief Executive Officer of Dangote Cement explained.

•Continues online at www.businessdayonline.com

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6 BUSINESS DAY NEWS ‘Electoral Bill still awaits Presidential Assent’ OWEDE AGBAJILEKE, Abuja

he Presidency has clarified that the 2018 Electoral Act (Amendment) Bill passed by the National Assembly on July 24 and forwarded to President Muhammadu Buhari for assent on August 3, is still pending and awaiting Presidential assent. Clarification on the status of the bill from the Presidency came against the backdrop of report that President Buhari had again vetoed the 2018 Electoral Bill forwarded to him for assent by the National Assembly. Speaking with reporters in Abuja on Tuesday, Ita Enang, senior special assistant to the President on National Assembly Matters (Senate), said the vetoed bill was the one sent to the President on June 27, 2018 and not the one passed by both legislative chambers of the National Assembly

on July 24, the very day it embarked on long recess. According to Enang, the vetoed one was the one with contentious provisions and infractions on provisions of the 1999 Constitution. “The reported vetoed bill was the one passed by the National Assembly and transmitted to the President for assent on the 27th of June 2018 duration of which in line with constitutional provisions expires on the 26th of July, 2018, warranting the said veto. “Yes, an electoral bill was vetoed or refused assent by the President but not the last version of the 2018 electoral bill transmitted to the President for assent on the 3rd of this month that has just spent 11 days on his table and still having 19 days more for possible consideration and assent,” he said. It would be recalled that aside the vetoed version of the 2018 electoral bill forwarded to the President on the 27th of June 2018 and ve-

toed on the 26th of July 2018 by the President in line with the 30 days constitutional life lines for such bill, the President had earlier in the year, rejected the first of the 2010 Electoral Act (Amendment) Bill 2018 forwarded to it in February this year. President Buhari had in vetoing the earlier one in February this year, cited three reasons for doing so, one of which was the new sequence of elections included in the bill through section 25(1). The President in his rejection, said the inserted section in the Electoral Act violates the provisions of Section 72 of the 1999 constitution, which empowers INEC to fix dates of elections and see to its conduct in all ramifications. But both chambers of the National Assembly in the new bill transmitted for presidential assent on the 3rd of this month, deleted all the controversial provisions kicked against by the President.

Largest GIS project to capture orthophotogrammetric data in Lagos JUMOKE AKIYODE-LAWANSON

agos State government, through its Lagos Enterprise Geographic Information Systems (e-GIS) upgrade and Integrated Land Administration and Automation System Project (Lagos eGIS project), has signed a memorandum of understanding (MoU) with Asseco Software Nigeria, a leading IT firm, to procure Unmanned Aerial Vehicles (UAVs) that will capture and update orthophotogrammetric data. An orthophotograph is an aerial image that has been geometrically corrected (orthorectified), such that the photo has the same

lack of distortion as a map, and can be used to measure true distances, because it is an accurate representation of the earth’s surface. The deal to procure UAVs for accurate representation of Lagos State’s geography was signed by Simon Melchior, CEO of Asseco Software, and Hakeem Fahm, the state commissioner for science and technology. As part of Asseco’s delivery of the UAVs, six UAV operators from Lagos State Ministry of Science and Technology will be trained and certified in Poland, to fly and maintain the UAVs in Lagos after delivery. With this development, a simulation environment has been deployed by As-

seco in Lagos to train these operators in preparation for the training and certification in Poland, and ongoing post-delivery training. Speaking at the signing of the MoU, Melchior said, “This project is currently the largest Geographic Information System (GIS) project in West Africa and a major export of technology from Europe to Nigeria.” According to Melchior, one of the key subjects discussed during the meeting was the pioneering nature of this project, as the delivered UAVs constitute the most reliable, safest and cheapest way to accurately capture cadastral data less than 10cm accuracy on an ongoing basis.

Edo, World Bank firm up partnership on agric

overnor Godwin Obaseki of Edo State says the deepening of partnership with the World Bank in agricultural development will usher the state into a new era of prosperity, which will directly impact on the lives of Edo people. The governor, who said this during a lunch with a team from the World Bank at the Government House in Benin City, noted that the state government had implemented crucial reforms to engender transparency, probity and accountability in public finance and policy implementation. The visiting World Bank team consists of its agricultural economist, Adetunji Oredipe, and lead financial management specialist, Governance Global Practice, Parminder Brar.

The meeting is coming on the heels of extensive engagements with top hierarchy of the World Bank, which has sent expanded teams to the state in the last couple of months, to assess the progress of development efforts and landmark projects such as the EdoAzura Power Project, which the Bretton Woods institution is a major partner. According to Obaseki, the state government has ensured the implementation of reforms that have made the state attractive to investors and development partners, who have committed to invest in capacity building, technical education, innovation and technology development as well as in attaining the sustainable development goals in the state. He said the focus on

technical education has attracted investment from the World Bank, in the rehabilitation project, which will see the school offer topof-the-range education in technical areas, and award globally respected certificates to the students. The state government has been pursuing a multipronged agricultural development plan, which led to a recent visit to the International Institute of Tropical Agriculture (IITA). At the meeting with IITA director-general, Nteranya Sanginga, the governor reiterated his administration’s vision was to establish a cassava production zone of at least 50,000 hectares where cassava will be produced and processed with the active participation of smallholder farmers and the private sector.

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Savannah Petroleum, Niger Republic seal pact to expand West African operations DIPO OLADEHINDE

fter acquiring some oil fields asset in Nigeria, United Kingdom-based oil and gas company, Savannah Petroleum, has signed a memorandum of understanding (MoU) with Niger Republic with the aim of expanding its operations in West Africa. The MoU affirms both parties’ commitment to the realisation of a proposed Early Production Scheme (EPS), utilising crude oil resources associated with Savannah’s recent discoveries in the R3 portion of the R3/R4 production sharing contract area in the Agadem Rift Basin of South East Niger. The MoU signing seems like a step in the right direction for the West African focused oil firm, who has been aiming to expand its operations in the sub-region as its Nigeria’s assets produce around 20,000 barrels of oil per day, after it bought Seven Energy’s onshore fields last year, including proven and probable reserves of 92 million boe, a 200 million standard cubic feet per day gas plant and 260km (160 miles)

of pipelines. Andrew Knott, CEO of Savannah Petroleum, says the signing of the MoU provides a clear pathway in relation to the company’s first objective, and is a major milestone to its second objective. “Our Niger project team is highly focused around the delivery of near - term production and cash flows from existing and future discoveries in the R3 area and also further material reserve through our on-going exploration and appraisal drilling program,” Knott says. He says the board believes that “vast majority” of the prospects had similar risk profiles to the ones the firm had already successfully drilled, and therefore it “looked forward with confidence” to the results of the wells still to come in the campaign. The MoU affirms both parties’ commitment to the realisation of a proposed Early Production Scheme (EPS) utilising crude oil resources associated with Savannah’s recent discoveries in the R3 portion of the R3/R4 production-sharing contract area in the Agadem Rift Basin (ARB) of South East Niger. The MoU further binds

both parties to work together towards the realisation of the EPS, and contains specific provisions relating to the actions each party undertakes to conduct as well as setting out the key timelines associated with the project. The EPS is intended to be domestic focused, with oil produced from Savannah Niger’s R3 area discoveries expected to be sold at the Société de Raffinage de Zinder (SORAZ) refinery, which is connected to the ARB via the third party owned 463km (287 miles) Agadem-Zinder crude oil transportation pipeline. As part of the MoU, the Republic of Niger has confirmed its intention to facilitate the conclusion of a crude oil marketing agreement between Savannah Niger and SORAZ; facilitate the conclusion of an infrastructure access agreement between Savannah Niger and the owner of third party crude oil processing and transportation infrastructure—subject to confirmation of the compatibility of the proposed crude oil Savannah Niger intends to include in the EPS and those crude oils currently being processed and transported though this infrastructure.

Wednesday 15 August 2018

NIMASA DG says investors fleeing Rivers Diaspora initiative ‘toxic’ economic zone, urges calm till 2019 dialogue seeks … Wike’s aide hits back, saying things are rather better awareness on opportunity for youths, etc. IGNATIUS CHUKWU “Check the hotels, the oc- migration risks irector-general of cupancy rate has dropped.

the Nigeria Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, has hit hard at his state’s government, saying investors were fleeing Rivers State due to what he termed ‘toxic’ economic environment. Peterside said everything that could go wrong had gone wrong, but urged investors and the people to remain calm until a change of administration that he said was certain to take place on May 29, 2019. The DG’s statement attracted instant reaction from the state government, which stated through the commissioner of information, Emma Okah, that Peterside’s hope to unseat Governor Wike in 2019 was mere wishful thinking. Okah said the DG’s assessment of the state of economy of Rivers State was faulty on all stands. Peterside had shared his concerns with newsmen thus: “Investment climate is toxic. Nobody can bring any new investment to Rivers State due to insecurity, Governor Nyesom Wike’s way of extracting taxes, unfriendly policies, and lack of

The government is not looking at such key indices; there is no single investment that is coming in.” He went on: “The housing sector is zero. Governor Wike is sustained only by the press. Every Rivers fund is pumped into the judiciary, federal judicial institutions. The few projects being done are in Port Harcourt and Obio/Akpor. “Check out two key indicators: Federal allocation and debt service ratio. The ratio of funds coming in and what has been done is almost 95 to 5 percent. The state is getting more than the past administration got, but is doing nothing with it. Debt servicing is done and so, debt is mounting. Rivers State has moved from one of the least indebted states to one the highest indebted states, by the National Bureau of Statistics figures.” Crime rate is highest in Rivers, always ahead of even Lagos, he said, saying, “I am a member of the body where the police submit reports per month. Until the last two months when I did not attend, Rivers was the highest. The state distorts facts.”

MIKE OCHONMA

igration Enlightenment Project Nigeria (MEPN), a Diaspora initiative, will hold a ‘Stakeholders’ Roundtable Dialogue on Migration’ which is a series of consultation with civil society, in Abuja this weekend. MEPN, a Germany-based Nigerian Diaspora initiative, is currently carrying out information campaign in Nigeria to raise public awareness of the dangers and risks of irregular migration. The initiative, whose campaign is supported by Germany’s Federal Ministry of Foreign Affairs, also provides information on legal ways to migrate while encouraging young Nigerians not to overlook opportunities available to them at home. The dialogue, holding on August 18, brings together youths, students, parents and multipliers, such as journalists, artists and religious leaders, among others, to exchange ideas and experiences on the issue.

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

n keeping with its enduring interest in the welfare of the less privileged in our society, and the active poor in particular, this column continues to search for solutions to the challenge of poverty in Nigeria through different means. Recently, we began a process to clearly identify and isolate the forces, institutions and phenomena that we consider highly culpable in pushing the people of Nigeria into poverty. The idea is that those who do not know “who or what is doing them” as they say in local Nigerian parlance, will always wrongly blame the gods and their innocent ancestors, while the real enemy coasts to victory. And we had made the point that fighting poverty without addressing the root causes is a waste of time and resources. A certain bird, in Igbo mythology, appealed to hunters from a certain community in that part of Nigeria, who regularly begin their day with the hunt for birds and animals for food, and who had graciously excluded this bird from the list of edible birds and animals. He told them to be kind enough to always name the creature they are pursuing in order to save him from the life threatening race for life (Osondu), which he runs whenever the villagers shout “catch him catch him”. According to the bird, it is foolhardy to stand and watch when one hears the sound of death, which has no friend FRIEDRICH-EBERT STIFTUNG Stiftung wrote in from Abuja

ver the years, it has become imperative that, besides a working economy, social infrastructure, education and a number of other indicators which define the idea people have of a ‘peaceful’ society, the presence and embrace of peace itself is, above every other, needed for our societies to function as they ought to. Since West African countries gained independence, they have recorded a number of armed, intra-state conflicts, marked by five, large-scale, civil wars. With the dawn of the 21st Century cam a sharp drop, marking a watershed in the political stabilisation of the region. In the place of the former form of violence came election-related violence, long-standing ethno-national conflict, drug trafficking, maritime piracy, extremism, youth inclusion, migration, the rapid development of extractive industries and land management etc., sparking fears over the region’s development. West Africa has come into her own over time, as far as democratisation, economy and regional cooperation are

Wednesday 15 August 2018

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Poverty generators and the challenge of microfinance in Nigeria (3): Poor national strategy in town. Identifying the creature in pursuit of which the hunter is engaged will not only ensure that the only creature on the run are the edible ones, it will also sharpen the hunter’s focus and killer instincts. So it is for poverty reduction strategies like microfinancing. Our first finger-pointing was at the political system or form of government adopted by Nigeria. We posited that the current form of government, which ensures that those who win political office become unaccountable emperors, focused either on their re-election, political survival and how to perpetuate themselves in office, will deliver nothing to the people other than poverty and misery. A political system based on first world superstructure but anchored on the substructure of a “fourth world” is bound to deliver nothing except failure, poverty and enhanced inequality. And such a system can never improve as those who are supposed to improve it are the core beneficiaries of its failings and the main culprits of its failures. The national and state assemblies are perfect examples. These institutions will and have never made or repealed any law in the interest of the people except those from which they currently benefit or hope to do so in future. The examples of this failure are legendary. We also note that the present Presidential system of government does not fit our level of political development. It does not fit our low national financial capacity and it cannot deliver with our present preponderance of strong men and absolute lack of strong institutions. An environment in which the body language of individuals, rather than the spirit of the law, determine whether laws are implemented or left in the law books,

A political system based on first world superstructure but anchored on the substructure of a “fourth world” is bound to deliver nothing except failure, poverty and enhanced inequality is contrary to the original idea of the presidential system, with the enormous powers it gives to individuals. Its inherent assumptions that those in whom power inheres will be forthright, knowledgeable, fair and just,are completely at variance with the character and expectations of those that often emerge as leaders in developing countries like ours. And those features are not a Nigerian thing that one could say do not exist elsewhere. Far from it, even in the United States, from which we copied,but wrongly pasted, that system of government, people are still characterised by the evils of selfishness, greed and other vices we have here today. However, in the presence of a functional criminal justice system that guarantees justice to all, and strong institutions that control officeholders (not the other way round) and ensures that social justice is done to all, intractable challenges arise. We do not have such a system yet and so there is plenty of opportunities for the advancement of personal rather than national interest. This is why all the bad laws in Nigeria will never be repealed as long as the interest of the lawmakers are served by the laws as they are. That is why no single political officeholder can be recalled by his constituency, governors can impeach

their deputies in a matter of minutes and it stays, and such. Another poverty generator in Nigeria, which we finger today, is the absence of an implementable national growth strategy that harbours a true desire to ensure that the development plans we drive are rooted firmly in our own grounds. We may have developed very smart Economic Recovery and Growth Plans (ERGPs). I think the present one has garnered so much accolade from many quarters (including economic experts from quarters where the language of economics is not fluently spoken), with only very few and lonely dissenting voices like that of Bill Gates (who by the way knows much more than all the crowd of self-appointed political economists we consult here). We may as well and therefore desist from whining over what is wrong with any plan, whatsoever, and make meaningful suggestions about their success. However, what beats many observers, including friends and foes of Nigeria, is that we still do not realize that this economy cannot grow on the basis of officially sanctioned Consumerism and unbridled appetite for foreign goods. It is sad that we do not see anything wrong with unrestrained adoption of free trade as a development strategy when we have nothing to sell. Even those that drive the selling end of international trade now speak in terms of the defence of country a la Donald Trump and his well-received America First philosophy. The hopes of many for a quick return to national pride (after all the lost years of Ajaokuta and the Russian fraud of a Still (for Steel) Manufacturing Plant), and the promotion of domestic productivity, which is no longer a thing to be ashamed of given what America and the Europeans, Chinese and

Russians are currently doing, were recently dashed. This happened when the present leadership, arrowheaded by a highly conservative man, continued the promotion of frivolous importation against domestic production, while at the same time launching SME Clinics around the country. It looks like the government was cowed by the massive criticism of its erroneous ban of certain imports from FX allocation at the start of its life. Our trade policy and spending profile ensures that nobody takes Nigeria seriously abroad. For starters, how do we explain the resort to the purchase of astronomically expensive and exotic cars, such as Range Rovers, Lexus SUVs, Land Cruisers and Cadillac Escalades, mostly armoured, for the officials of all governments in Nigeria, including those owing one year salaries to workers. This is even more inexplicable when we realize that Peugeot Automobile and Innoson Motors, among others, are being encouraged to pursue a National Automotive policy to develop a Nigerian car. Perhaps, this tells one where the ERPG is likely to be headed. It’s sad and most unexpected that a country that can easily fall in and out of depression because of minor shocks in the oil industry does not realize the economic implications of national financial strategy that is practically bereft of thrift. Nigeria’ Sovereign Wealth saving is now about $2billion compared to over $1trillion saved by Norway. Stock fish has suddenly become a bigger money spinner than oil! Recall the attitude of the governors to this savings scheme. Consumerism will always strip a country naked and leave its people poor.

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FES peace dialogue and need for security, peace in West concerned but sadly, total peace has eluded the region, though efforts to prevent conflicts have also improved, contributing to overall stability. It was against this back-drop that, between July 11 and 12, 2018, in Abuja, over 50 peace and security experts and practitioners on West Africa, drawn from the academia, security structures and various institutions, West Africa policymakers, civil society organisation (CSOs) and non-governmental organisations (NGOs), participated in the First Abuja Dialogue convened by the Peace and Security Competence Centre Sub-Saharan Africa and the Friedrich-Ebert-Stiftung (FES),in Abuja, Nigeria. The experts represented a diverse field of high-level policy influencers conversant with peace and security, mediation, conflict resolution, disarmament, demobilisation and reintegration, governance, development and gender mainstreaming. The convener, Friedrich-EbertStiftung, is a German non-profit organisation dedicated to the development of the ideas and values of social democracy. That core value and focus informed the theme of the conference, “Understanding the Reasons for Insecurity in West Africa: Need to Promote Collective Security through

Stakeholder’s Engagement and Constructive Exchanges.” The objective was to “contribute to a better understanding of the dynamics and drivers of (violent) conflict and insecurity in West Africa and to provide new knowledge on how best to achieve sustainable security.” The Abuja Dialogue was convened against the backdrop of the incremental and pervasive peace and security challenges, such as agro-pastoral conflicts, the Boko Haram insurgency, terrorism and organised crimes, fragility of State and lack of governance confronting some countries of the West Africa and Sahel region, despite the existence of various mechanisms aimed at addressing such conflicts. Affected countries which were presented as case studies or reference points included, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali and Nigeria. Since some post-conflict situations and new conflicts in the region were festering, the inevitable question which the dialogue sought to address was why certain conflicts, especially pastoral herdsmen conflict and Boko Haram insurgency, armed militias persist, despite the existence of Early Warning Systems (EWS) and conflict prevention and conflict resolution mechanisms meant for addressing such conflicts.

Relatedly, why were existing frameworks and mechanisms, laid down by African Peace and Security Architecture (APSA), the African Governance Architecture (AGA), structures such as, African Union, ECOWAS, ECCAS, Mano River Union, Lake Chad Basin Commission, the Multinational Joint Task Force (MNJFT) the G-5 Sahel, proving operationally inadequate and not delivering the expected results? For maximum interaction and productivity, the Abuja Dialogue was structured to be interactive and to facilitate seamless exchange of ideas. The outcome and the takeaways from the conference are a reflection the complexities of the conflicts bedeviling West Africa and the Sahel and why the extant conflict resolution panaceas are seemingly ineffective. The gaps between early warning and response, existing peace and security architecture and conflict resolution mechanisms, were all pointed out as challenges to achieving long-term peace in the region, mainly because one-size did not fit all. Resolutions from the conference indicate that development aid need to be channeled towards lagging regions and addressing perceptions of inequity in access to opportunities. Focusing

investments where conditions are best risks making already-tense situations worse. Cross-border economic exchanges and collaboration may be useful. Improved land management and a strong, continuous addressing of grievances linked to land access is needed. In order to do away with the ‘resource curse’, extractives discoveries can be given greater attention, seeing as they are prone to conflict risks. This will help manage community and regional grievances as well as corruption. Other recommendations made by the conference included improvement in the management of migrants, significant investments in basic and technical education to increase the size of the skilled labour force and improve livelihoods for young people, provision of more support to ECOWAS and other regional institutions by member countries, strengthening of local government structures to improve citizens’ participation, social accountability, transparency and better services. Note: The rest of this article continues in the online edition of Business Day @ https://businessdayonline.com

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Amidst celebration by the presidency, a statement was released to convey the pledge of president Buhari to ensure that “the lone girl is not abandoned”. “The Buhari administration will not relent in efforts to bring Leah Sharibu safely back home to her parents as it has done for the other girls...President Buhari is fully conscious of his duty under the Constitution to protect all Nigerians, irrespective of faith, ethnic background or geopolitical location and will not shirk in this responsibility, the statement signed by Garba Shehu, said. In fact, three days later the Inspector General of Police said Miss Sharibu will be released in a matter of hours. However, six months after her abduction, there has not been any word on Miss Sharibu neither have the security agencies succeeded in rescuing her as promised by the presidency. Rather it appears the presidency and the country has moved on and has forgotten about the girl. This is sad and deplorable! It was a great error and a big blunder, in the first instance, for the government to agree to leave out Miss Sharibu in the negotia-

tions that secured the release of the 105 girls. In a religiously sensitive country like Nigeria – or even in normal climes, it is something no government should do. It reflected very badly on the image of the government and its ability to manage Nigeria’s diverse religious and ethnic differences. We may even accept the views of the Catholic Secretariat which described Miss Sharibu’s continued detention by the terrorist sect as a demonstration of increased hostilities against the Christian religion in Nigeria. We commend the Bring Back Our Girls (BBOG) movement that have continued to put her issue and those of the other abducted Chibok girls in the front burner and for always demanding for their release. We also commend good-spirited Nigerians who celebrated Miss Sharibu’s birthday on Monday 14 social media and used the opportunity to remind the government of its promise to rescue her. We encourage them and many other Civil Society and religious groups to continue to put pressure on the government to live up to its promise to bring back the girl and the over hundred Chibok girls still in captivity.

EDITORIAL PUBLISHER/CEO

Frank Aigbogun EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya

EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Where is Leah Sharibu?

e a re c o n strained once more to bring to public notice the fate of Leah Sharibu, the only remaining kidnapped teenager from Dapchi who was traded away by the Nigerian government and remains in captivity despite repeated promises of the president and top security agents to secure her release. On February 19, the Islamic terrorist organisation, Boko Haram, dressed in military fatigues and armed with sophisticated weapons, invaded Dapchi and went straight to the Government Girls Science Technical College where they kidnapped 110 students of the school. Amnesty International’s Nigeria Office stated in a report of March 19 that the military failed to respond when it was alerted to a convoy of Boko Haram heading towards Government Girls Science and Technical College in Dapchi, Yobe State, in the afternoon of February 19. It said testimonies from credible sources indicated that the army and the police received multiple emergency

calls up to four hours before the attackers reached Dapchi, but did not respond. “Evidence available to Amnesty International suggests that there are insufficient troops deployed in the area and that an absence of patrols and the failure to respond to warnings and engage with Boko Haram contributed to this tragedy, said Osai Ojigho, head of Amnesty International in Nigeria. Regardless, on Wednesday, 21 March, following what the Director-General of the Department of State Security, DSS, described as a series of “behind-the-scene discussions,” Boko Haram drove back into Dapchi again in a convoy and returned 105 of the 110 girls abducted from the town. Four of the girls are said to have died during their abduction and one – Leah Sharibu – was left behind for refusing to denounce her Christian faith in favour of Islam. The terrorists even had time to preach and parade round Dapchi before their exit to loud cheers from the local community. They were even said to have apologised for taking the girls saying they would not have taken the girls if they realised they were Muslim girls!

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

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Wednesday 15 August 2018

BUSINESS

COMPANIES & MARKETS

DAY

Ernst & Young to spend $1bn on innovation drive

Pg. 14

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

NAHCO posts N4.64bn turnover in half year …signs contract with Max Air, Medview, others IFEOMA OKEKE

ahco Aviance, one of Nigeria’s foremost grounds handling service provider has continued its dominance of the sector as it announces a string of new business signings. The announcement came on the heels of the publication of its 2018 half year financials, showing good returns for shareholders. In the results announced for the half year 2018, the group posted a turnover of N4.64 billion against the N3.71 billion posted for the same period last year. The results showed a 25 percent increase over the same period in 2017. The Company in a statement over the weekend disclosed that it had signed a series of new contracts with both local and international airlines. The signings with local airlines includes Max Air which has since started smooth operations from Lagos and Kano, and handling of Hajj operations for Med-

view, one of the largest operators in the country. Aside handling of International and Hajj operations for Flynas, NAHCO also handles domestic and of recent, regional operations for the nation’s largest operator, Air Peace and Aero World, delivering service to the delight of the airlines. It will be recalled that NAHCO, which handles most of the airlines in the country, in February 2018 began handling the Rwandan International airline, Rwandair, providing ground handling service for the fast rising operator at the Nnamdi Azikiwe International Airport, Abuja. Meanwhile, Profit Before Tax stood at N500.97 million as against N203.08m reported as at half year 2017, a 147 percent increase over last year. Profit After Tax for the half year 2018 stood at N418.57 million, a 137 percent increase over the N176.32 million reported for the same period of last year. Speaking on the strides achieved in recent times by the Company, Idris Yakubu who the managing director/ CEO, took over as CEO in November 2017 said it is a

L-R: Susan Onigbinde of marketing and media; Sheneni Tukura, CEO ;Oluchi Orji of digital marketing, and Jerry Ibeauchi, UX/ VI designer, all of Webercoin Limited, during the press conference to announce the ongoing Webercoin initial coin offering in Lagos. Pic by Pius Okeosisi

result of growing faith in the new management that has superintended the Affairs of the Company during the period. According to him, “We are pleased with the patronage of our Valued Clients,

Fidelity Bank, BOI, Ford Foundation unveils lending scheme for Aba leather manufacturers

idelity Bank Plc, in a strategic partnership with the Bank of Industry (BoI) has launched the Aba Finished Leather Goods Cluster Financing Programme, as part of continuous efforts to promote Made-in-Nigeria goods capable of meeting global standards for export and local consumption. N400 million in financing provided by BoI will be made available on a quarterly basis to over 300 members of the Leather Products Manufacturers Association of Abia State (LEPMAAS). The funds will be disbursed through the Fidelity Bank while the Ford Foundation would provide technical support to the artisans. Speaking at the formal launch of the initiative in Aba, Nnamdi Okonkwo the Bank’s chief executive officer said the partnership with BoI further underlines the Bank’s staunch commitment to addressing the financing

challenges confronting Micro Small Medium Enterprises (MSMEs) in Nigeria. Whilst stating that the financing scheme will further boost import substitution, Okonkwo who was represented by the Bank’s Head, Corporate Bank, Obaro Odeghe, pointed out that the loans will enable them procure requisite materials and equipment for production and expansion. Under this scheme, Obaro said the Bank will provide short-term loans with maximum obligor limits of N300,000 to N500,000 to qualified members of LEPMAAS. According to him, the partnership with BoI is in furtherance of the financial institution’s commitment towards building the next generation of international entrepreneurs in the art of leather products manufacturing in the cluster. “Our long-running support for the growth and development of MSMEs stems from the utmost recognition

of their strategic importance, as critical agents of economic development and transformation in Nigeria. financing scheme to ensure that loans are repaid to drive sustainability of the financing programme. Speaking in the same vein, Managing Director of BoI, Olukayode Pitan, noted that the programme was designed to provide a tailored bundle of financial and non-financial services including capacity building to qualified members of LEPMAAS. Pitan explained that finished leather products to which LEPMAAS is a major contributor, accounts for over 80 percent of the textile apparel and footwear component of the manufacturing sector. According to him, informal computations put yearly revenue from the cluster at over N10 billion despite the competing volumes of similar goods being imported.

the Airlines and the Agents, as well as the contributions of our hardworking and dedicated staff to this very positive result. Management is committed to staff welfare and will continue the negotiation of the Staff

Condition of Service, and conclude before the current booklet expires end September 2018.” Management’s commitment to Staff Welfare led NAHCO to be adjudged as one of the top 100 Best Places to work in

Nigeria in 2018 by highly rated Jobberman. Yakubu further stated that shareholders should look forward to sustained profit performance at year end, on the back of the strong showing of the first half of 2018.

CWG to launch Entersekt product line into Nigerian market

WG Plc , a panAfrican provider o f i n f o r mat i o n and communications technology, today announced a strategic partnership with Entersekt, a globally recognized innovator in mobile-first fintech solutions. In line with its commitment to continuously offer cutting-edge technology solutions, CWG will provide Entersekt’s full suite of mobile-centred security and payments enablement products to banks and other enterprises in Nigeria and beyond, either as a hosted solution or on-premises implementation. Adewale Adeyipo, executive director/ VP Sales and Marketing at CWG said, “This is a major step towards ensuring that our customers can operate in conformity to relevant global practices and regulations by rolling out market-leading online and mobile experiences at

competitive prices, without exposing their users to fraud.” CWG’s rollout of Entersekt technology begins with Transakt, a sophisticated app-based mobile identity and authentication product. Available as a software development kit or stand-alone mobile app, Transakt is used by tens of millions of smart phone users around the world to safely log into their online and mobile banking, verify payments and other sensitive transactions, and communicate privately with their service providers. Users approve or reject in-app authentication prompts with one tap. About 90 percent of Nigeria’s 113 million strong mobile subscriber base use feature phones, which do not support apps, so user-initiated USSD banking and payments are extremely popular in the country. To help banks secure this channel, CWG will offer Interakt, which counters

man-in-the-middle and other fraudulent attacks through real-time SIM-swap checking and multi-factor transaction authentication. CWG will work in tandem with local mobile VAS aggregators to enable Interakt at mobile networks in the region. Mobile payments are exploding but responding quickly to technological developments and unpredictable changes in consumer preferences can be risky – and expensive. Entersekt’s product Connekt helps financial services providers launch new payment services within their existing banking apps quickly and seamlessly. Depending on the country, it can enable all major QR-code–based mobile payment services; card issuer wallets for Mastercard, Visa, and American Express tap-to-pay purchases;a host of third-party wallets; web payments; and 3-D Secure 1.0 and 3-D Secure 2.0 protected card-not-present payments.

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COMPANIES & MARKETS Ernst & Young to spend $1bn on innovation drive Iheanyi Nwachukwu

rnst & Young (EY) plans to invest $1 billion in new technology solutions, client services, innovation and the EY ecosystem over the next two financial years, commencing from July. The new $1b funding is in addition to the existing, significant annual technology investment. EY is a global leader in assurance, tax, transaction and advisory services. The investment will be used to create new technologybased services and solutions in areas such as financial services, cyber, risk management, managed services, software services as well as digital tax and audit services. This move is part of an ongoing strategy to provide clients and people with in-

novative offerings using the latest disruptive technologies. Additionally, Nicola Morini Bianzino has joined as EY Global Chief Client Technology Officer (CCTO) and Steve George as EY Global Chief Information Officer (CIO). Rounding out this leadership team is Barbara O’Neill, EY Global Chief Information & Security Officer (CISO). As the global CISO, Barbara provides strategic direction for all matters relating to Information Security. These leaders bring significant industry and technology skills and will help drive the EY digital transformation and innovation agenda. These appointments complement our existing investments in innovation including our global artificial intelligence (AI) and Blockchain labs. Mark Weinberger, EY Global Chairman and CEO,

says: “In this transformative age, businesses and governments are under significant pressure to not only keep pace, but get ahead of the vast disruption and technological change. We see enormous opportunities in helping clients address these challenges and stay ahead of the technology curve. With this investment and expanded technology leadership team, EY will help businesses navigate industry disruption to realize their growth potential.” Nicola joined EY from Accenture, where he led AI and AI strategy. He also led Growth and Strategy for Accenture’s technology, innovation and ecosystems, which included new ventures, acquisitions and investments. Based in Silicon Valley, Nicola will focus on bringing digital capabilities to clients so that technology is at the heart of the EY services.

BEDC laments disruption, instability from national grid

etween January and July this year, the Transmission Company of Nigeria (TCN) national grid has been highly unstable with over 2,000 outages and interruptions recorded in BEDC Electricity Plc’s. (BEDC’s) network coverage area of Delta, Edo, Ekiti and Ondo, causing affected customers dissatisfactions. Funke Osibodu, managing director/CEO of BEDC, disclosed this during a media parley organized at the company’s head office in Benin, Edo State, according to a statement from the power distribution firm. However, she said that notwithstanding the supply interruptions, the company was able to record several improvement initiatives, which impacted positively on power availability to customers in all the four states within its franchise area. She noted that recent information from National Bureau

Office of statistics stated that BEDC has the highest number of meters amongst all the 11 electricity distribution companies. Commenting on how the firm had been of service to its esteemed customers, the BEDC boss said: “In Delta State, we restored electricity supply to over 54 Communities including Ibusa, Ogwashi-Uku, UbuluUku, Isselu-Uku (on-going), Ogunu, Otor-Udu, Emadaja, Iwhrekekan, Mosogar, Onyobru Water Side Community. In addition, in order to enhance security, various streetlight projects were commissioned that are providing 24 hours supply covering over 20 km in Asaba across major urban roads such as Mariam Babangida way, Ibusa to Koka Junction, Illa road to DELSU Anwai Campus, Government Core Area, Interbua, Ezenei Road, NnebisiDennis Osadebe Road to Abraka, Okpanam Road and locations

in Effurun area - Jakpa Road, Airport Road, NPA Expressway, DSC Round, Sokoh Estate road, Refinery Road, PTI road. “In Edo State, power supply has also improved from 2hours in 2013 to 6-10 hours for locations with severe infrastructure limitations such as Okada, Oluku, part of Sokponba, Evbuotubu, Oliha and Siluko, all in Benin, there has been improvement from 6hours to 12-15hours for locations with more improved infrastructure including Auchi, Edo North, GRA, Ugbowo, Okhoro and New Benin.” Besides, she added that while “there is 18 -24hours power for commercial customers on dedicated lines involving 23 hotels, several banks, eateries, shopping mall and Government establishments including Central Hospital, Edo State House of Assembly Complex, High Courts, Government House.”

Wapic Insurance to hold conference on H2 performance Bala Augie

apic Insurance Nigeria Plc will hold a teleconference call for investors and analysts tomorrow Thursday in Lagos time, London and Johannesburg, as well as New York with its senior management, to announce its unaudited financial results for the period ended 30th June, 2018. The company has maintained an efficient underwriting capacity as it continues to make an inroad into the Nigerian insurance market. For the first six months

through June 2018, Wapic Insurance’s underwriting profit surged by 112.19 percent to N1.32 billion from N622.08 million the previous year. The growth in underwriting profit was largely driven by improvement in revenue as the firm continues to surmount the heads. Gross premium written (GPW) and gross premium income (GPI) increased by 18.16 percent and 19.52 percent to N6.96 billion and N5.45 billion in the period under review from N5.89 billion and N4.57 billion as at June 2017. Net premium income followed the same growth trajectory as it increased by 43.26

percent to N3.96 billion in June 2018 as against N2.76 billion as at June 2017. A breakdown of Gross premium written (GPW) shows the revenue from Motor insurance grew by 68.68 percent to N1.19 billion while the Nigerian insurer generated N1.07 billion from individual life business. Wapic Insurance’s good underwriting is a major driver of combined ratios. Combined ratio fell to 49.49 percent in June 2018 from 65.29 percent the previous year. The combined ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by earned premium.

L-R: Martin Mabutho, general manager, marketing and sales, MultiChoice Nigeria; Henry Esiaba, brand manager Guinness Nigeria and Felix Awogu, general manager, SuperSport West Africa during the live screening of the Premier League matches of the new football season in Lagos.

FCMB promotes entrepreneurship, urges innovation among youths

irst City Monument Bank (FCMB) has once again demonstrated its commitment towards the empowerment of youths in entrepreneurship, sponsoring a capacity building programme for almost 1,000 members of the National Youth Service Corps (NYSC) in Abuja. Tagged ‘’Youth Entrepreneurship and Empowerment Programme’’, it was in partnership with Activate Success Foundation. The highly engaging, interactive and exciting session provided a platform for the youth corpers to look inwards, develop and deploy their business skills through practical trainings facilitated by experts and successful business owners. According to the Bank, the development will go a long way to empower them with the requisite resources to start and grow successful businesses during and after their service year

in order to become financially independent and contribute significantly to national development. Commenting on the initiative, Olu Akanmu, executive director, Retail Banking of FCMB said it is in line with the commitment of the Bank to provide multiple opportunities that would inspire and enable youths to be actively engaged and eventually become successful business owners. According to him, ‘’FCMB Flexx account empowers Nigerian youths with the entrepreneurial and employability skills they need. Many youths set up their own businesses from their campuses. FCMB will be there with them to provide the necessary entrepreneurial and business skills they need to make great successes out of their businesses. FCMB will also provide great support for the youth businesses and work

with them to nurture and grow the youth entrepreneurial ventures’’. Love Idoko, founder of Activate Success Founder said, ‘’I have a penchant for motivating people. There are businessminded youths out there that are just looking for mentorship or business ideas as well as funds to start their businesses. The purpose is not just to give grants, it is to also empower and motivate as many youths as possible”. FCMB has over the years developed various engagement programmes focused on empowering young Nigerianssuch as #FlexxYourCreativity, #FCMBFlexxtern and the Flexx Youth Entrepreneurship Masterclass. Through these initiatives, FCMB has given young entrepreneurs and students access to training, funding, mentorship, networking opportunities and jobs.

Call To Love Initiative empowers youths in skills summer camp

all to Love Initiative, a foundation focused on social development, has again demonstrated its commitment towards capacity building and empowerment of young ones by organising the second edition of its free Summer Camp for children, which took place in Lagos from August 6 to 11, 2018. The engaging, impactful and exciting week-long training session was tagged ‘’Making A Difference With Education’’. It provided a platform for pupils from low cost primary schools in Makoko, a suburb in Lagos, to learn various life impacting activities. The 112 beneficiaries underwent practical trainings in coding and robotics, vocational skills (such as sewing, bead-making, painting), entrepreneurship,

leadership skills, etiquette, public speaking, team orientation and organisation skills facilitated by experts. This is aimed at effectively engaging and nurturing the young ones with requisite skills to enable them grow successfully through education. Speaking on this year’s Summer Camp, the founder/ chief executive of Call To Love Initiative, Wunmi Benson-Ajia, explained that it provided a veritable platform and unique opportunity for stakeholders, such as mentors, teachers, technical and vocational education specialists to come together and create a learning environment which reforms the beneficiaries, and ensures a more wholesome education. According to Benson-Ajia, ‘’the ultimate goal of the Skills

Summer Camp is to cultivate a pipeline of high-performing beneficiaries who will be provided with various mentorship and scholarship opportunities through the course of their education. It is worthy of note that prior to this year’s Summer Camp over 70% of the children have never used a computer nor learned any vocational skills’’. She assured that the Foundation would continue to champion and execute programmes that would promote the wellbeing of young ones by equipping them with the necessary skills they need to make great successes out of their lives. Upon conclusion of the Summer Camp, exceptional participants were granted scholarships and mentorship opportunities which would last for a threemonth period at the minimum.

BUSINESS DAY

Wednesday 15 August 2018

In Association with

‘Customer is at centre of everything we do’ Carlos Wanderley is the head of retail banking at Union Bank. Under his leadership, Union Bank’s retail business has seen significant growth on all relevant retail banking indicators across customers, products and channels. He speaks on how ‘customer-led initiative’ makes the difference. Hope Moses-Ashike brings the excerpt. How would you describe customer-led retail banking and how is Union Bank using this strategy to develop new offerings that are adaptable to different segments and markets? his approach to banking starts with understanding the aspirations and challenges of customers and then developing or adapting products and services to cater to them. It is not about pushing generic products to them, instead customers lead the way while the bank innovates in response to or in anticipation of their needs. This is customer-led retail banking and it is altering the retail banking landscape. Why is this approach useful? Because at the end of the day, it is the customer who pays the bills and no business can survive without truly understanding the customer. At Union Bank, our customers are at the center of everything we do. All new offerings for our different segments are in response to their needs. For example, based on research and customer feedback right across the country, we realized that there were very few actual savings products in Nigeria. We discovered that most people use their savings account as their day-to-day account which defeats the purpose of a savings account. While people wanted to save, a large number needed help disciplining themselves to do so. To adapt our strategy to people’s needs, we introduced our UnionKorrect savings product. What we are doing with UnionKorrect is convincing people to save for at least one year to qualify for a raffle draw. By incentivising them, we show our customers that it pays to save. Over the year, they see their savings growing and gradually realize that saving money helps

them actualize their personal goals or projects. Another example of this is the introduction of our Elite Banking segment. From our research, we realized that it was the norm in the industry for ‘personalized banking services’ to be reserved for high net worth customers. While we are focused on providing the best service for our high net worth customers, we also set out to develop tailored services for the emerging middle class, designed to meet their personal, financial and lifestyle needs, providing them with many of the value added banking benefits usually reserved for a small group of people. Our Elite Banking customers enjoy benefits including a dedicated relationship manager, access to exclusive elite lounges located in specific Union Bank branches as well as priority pass cards which grant access to 850 airport VIP lounges around the world. We go through a rigorous process for creating any new product or service for our different customer segments; focusing on creating offerings that help our customers succeed. As a leading retail bank in Nigeria, how is Union Bank adapting to new challenges and increased competition in order to consistently deliver on evolving customer expectations? Nigerian and African banks in general have started realizing that a structured retail banking segment is critical to the stability of the whole bank. From all indications, as we go into the future, banks will have to make adjustments and rely even more on retail banking in order to have a proper flow of revenue. At Union Bank, we started that journey four years ago. A tremendous amount of work has already been done but we will not rest on our oars as there is still a lot to be done.

Carlos Wanderley

Since our transformation agenda started about four years ago, we have become more innovative and process driven, which has been important in our quest to satisfy our existing customers and attract new ones. We have also made a paradigm shift from relying on research companies alone. Instead, we are going directly to our customers and having genuine conversations with them. They are not telling us what we want to hear; they are telling us exactly how they feel. They are telling us about their dreams, desires and goals. They also share their frustrations, anxieties and problems. We in turn have taken their valuable feedback and looked inward to evaluate our people, structures and processes to develop solutions that will help our customers succeed. We received the award for the ‘Most Improved Retail Bank’ in the 2016 BusinessDay Banking awards and this year, we won the award for ‘Fastest Growing Retail Bank in Nigeria’ at the International Finance Magazine awards. This is a testament to

the definite achievements we have made in this area. What efforts has Union Bank put in place to deepen customer relationships and focus on specific customer outcomes? At Union Bank, we focus on the seemingly small things alongside the big things. We aim to ensure that our commitment to the customer is delivered at every touchpoint starting from how our customers are welcomed when they visit our branches to the turnaround time of our different banking processes. We have heard a lot of people say “You are different because you welcome us. Even your guards welcome us.” That’s the way it should be and we insist on this standard. People should feel welcome if they visit our branches. I have used ‘if’ because with the exciting range of features on our digital platforms, our customers are able to perform banking transactions wherever they are and whenever they want without having to walk into a branch. This is another way we are improving customer satisfac-

tion, through innovation. Our customers are at the center of everything we do and we are constantly working to ensure we provide them with simpler, smarter banking solutions and services. In addition, we have invested in our people. We are developing a well-trained work force fully capable of engaging our customers and delivering a robust banking experience every time. We have teams that are dedicated to helping our customers with their day to day requirements. One example is the Locate-an-Agent feature on our UnionMobile App which offers our customers the option to call up a Union Bank agent close to them so they can carry out banking transactions at a time and location convenient for them. With this customer centric strategy, we have increased our customer base and grown customer confidence in us. How important is it for Union Bank to attract a new customer base? For a bank that is over a hundred years old, it is very important to attract a new customer base on an ongoing basis. Even more important is the need to ensure structures are in place to continue to satisfy the existing customer base as well as those we intend to attract. This is why we have invested so much in our people, processes and structures over the past four years, and because we have taken these steps, the growth is happening organically. As people, especially the youth, see the improvement in our brand, our branches, our alternate channels and our digital platforms, they have become more attracted to us. As we continue to reach out to Nigerians and listen to them, we are building propositions and products that best suit their needs. Our efforts in

this area are yielding tremendous results evidenced by the 90% increase in new-to-bank accounts at the end of the first quarter of this year compared to the start of 2017. Looking at the future of retail banking, some have predicted that “the smart device will grow in importance and take its place alongside cards as the primary medium for consumer payment.” How does Union Bank intend to drive the adoption of mobile banking? I expect cards to disappear altogether in the coming years. The pace will of course differ depending on the country and the society. In Japan, I anticipate that cards will disappear very soon and the focus will be on mobile banking. Any country that has a huge penetration in a modern payments system like Nigeria or Brazil or India can achieve this too. Nigeria has a huge mobile penetration though there are still some communication and infrastructural issues. The shift from cards to mobile payments is already happening and I expect it to accelerate. At Union Bank, our recently upgraded digital banking platforms and newly introduced USSD code *826# have received very positive response from our customers and the general public. The exceptional features we have integrated into our UnionMobile App like Locate-anAgent, Find an ATM with cash and the cardless withdrawals feature that allows users withdraw cash from our ATMs without their debit cards are unique and will continue to innovate. The adoption of mobile banking by our customers has been impressive over the last 12 months and we are going to keep pushing the boundaries in our bid to continue providing simpler, smarter banking services to Nigerians.

BUSINESS DAY

Wednesday 15 August 2018

SHIPPING

LOGISTICS

MARITIME e-COMMERCE

LADOL Free Zone, SHI gets presidential commendation over $3.8bn Egina project Stories by UZOAMAKA ANAGOR-EWUZIE

he partnership between the Lagos Deep Offshore Logistics Base (LADOL) Free Trade Zone, Samsung Heavy Industry (SHI) and Total Exploration and Production Company, has received Presidential commendation when the acting president, Yemi Osinbajo visited the project site in Lagos last Friday. The partnership resulted in the construction, fabrication and integration of over $3.8 billion Egina Floating, Production, Storage and Offloading (FPSO) oil production vessel, which was built in South Korea by SHI and integrated in Nigeria. Recall that the hull of the FPSO was built in South Korea while the six top modules of the FPSO were integrated at the SHI-MCI yard located at LADOL base in Lagos. Egina project, a deepwater development, is the largest investment project currently ongoing in Nigeria’s oil and gas sector and it is expected to be completed in the fourth quarter of 2018. The FPSO vessel, which has length of 330 meters; 61 meters width and depth of 33.5 meters, will be connected to 44 wells of 21 oil producers and 23 water injector wells through subsea production systems. When operational, it is expected that Egina will add 200,000 barrels of oil per day to the production

Yemi Osinbajo, acting president of Nigeria (m); Hadiza Bala Usman, managing director of Nigerian Ports Authority (NPA) (l) and Ladi Jadesimi, chairman of LADOL (r) in LADOL, Apapa, Lagos. PHOTO BY NPA MEDIA

of the country and it represents about 10 percent of Nigeria’s current total production capacity. Speaking after inspecting Egina FPSO facility on Friday, acting president, Yemi Osinbajo, who noted that developed economies all over the world are private sector driven, said that private sector must recognise that the development of various sectors, remain critical to sustainable economic growth. According to him, government revenue cannot possibly satisfy the demand or push for economic growth. “This is why it makes sense for companies to invest in Nigeria as the Federal Government invests in infrastructure despite earning 60 percent less revenue than the previ-

ous government. Osinbajo, who appraised the Local Content achievements of the Egina project executed by LADOL, Total and Samsung Heavy Industry, commended both parties for utilisation of local skills in the execution of the project. He promised that the Federal Government policy will not encourage the practice of monopoly rather it will open up the business space to drive competition as it push for increased Ease of Doing in Nigeria. “Ensuring that monopolistic practice is discouraged is an important part of encouraging investment because creating the right business environment, will help to bring about competition. Monopoly can only restrict the growth of any

economy as the struggle between regulators and the monopolist impede both local and foreign investments,” he explained. Continuing, he said: “This country can only work, if we are able to deal with corruption. Everything we need to grow the country is here. If people put their personal and financial interests before national interest, we cannot achieve the desired growth that Nigeria deserves.” He further disclosed that the Buhari led administration has signed executive order to ensure that wherever Local Content is required, it is used especially with respect to local skills and capacity. He urged other organisations to emulate the LADOL business model,

which has developed ingenious ways of promoting value addition and investments through sustainable policies in Local Content. In his welcome address, Ladi Jadesimi, chairman of LADOL, said that the mission and vision of LADOL include creating jobs and making Nigeria an African hub for fabrication, engineering and other oil and gas services, have remained unchanged. According to him, the Egina FPSO is certainly a big milestone which has taken LADOL a huge step forward on her journey towards achieving her vision and mission. “The building of the shipyard in LADOL was financed as part of the Egina project to create direct or indirect new job and attract billions of dollars of additional investment across the country. This was made possible by the enabling environment, which is a level playing field created by Muhammadu Buhariled administration and Hadiza Bala Usman-led leadership of NPA. Statistics indicates that the Egina FPSO project has created about 5,000 direct jobs and over 50,000 indirect employments by leveraging on the Local Content Act of 2010. “Over the past 17 years, monopoly has threatened the growth of the nation’s maritime sector. The sector has been kept artificially small and job creation at minimum for decade as consequence. The success of LADOL shows what Nigerians perseverance,

hardwork and dedication can do in a regulatory environment that is free and fair so that competition can take place,” he added. On her part, Hadiza Bala Usman, managing director, Nigerian Port Authority, (NPA) said the NPA/ LADOL partnership not only resulted to the successful berthing of Egina, but also enabled 100 percent private indigenous investment in the port industry. Usman, who said that the Egina project, was the first time NPA and by extension Nigeria will be handling any vessel of this size, called on other operators to emulate the investment made by Total, L ADOL and SHI. “The success of Egina project has shown that the Federal Government Ease of Doing Business, anti-monopoly and level playing field policies have yielded great result. We also give credit to the Local Content Policy and multiplier effects evident in the employment opportunities, capacity building and technological transfer inherent in the project,” she said. According to her, the multiplier effect of Local Content policy is visible in accrued revenue for the nation, employment creation, reduction in capital flight and cost saving attributes. While assuring prospective investors of NPA’s willingness to facilitate investment in Nigeria, Usman advised business organisations to ensure strict compliance with the nation’s statutory rules and regulations.

Port charges, cost top on agenda of Taiwo Afolabi Maritime Confab

aritime industry stakeholders will on Friday come together for the third edition of the Taiwo Afolabi Annual Maritime Conference, to brainstorm on charges and the cost of doing business at the port. The conference, which will hold on Friday, August 17, 2018 at the University of Lagos (Unilag), will be

chaired by Adebayo Sarumi, former managing director, Nigeria Ports Authority (NPA) while Kunle Folarin, chairman, Ports Consultative Forum, will deliver the keynote address. Themed, ‘Port Cost & Port Charges- A Recurring Decimal under Port Reform Regime,’ the conference, which is an initiative of the Maritime Forum, University of Lagos and SIFAX Group, is

organised in honour of Taiwo Afolabi, Group executive vice-chairman, SIFAX Group. Other discussants expected at the event include Obiageli Obi, director-general, Nigeria Chamber of Shipping; Hassan Bello, executive secretary/CEO, Nigeria Shippers’ Council; Henry Ajetunmobi, executive director, SIFAX Off Dock ; Olayiwola Shittu, immediate past chairman,

Association of Nigeria Licensed Customs Agent ; Iheanacho Ebubeogu, general manager, MD’s Office of NPA; Mfon Usoro and Adedoyin Afun, senior partner, Bloomfield Law Practice. Afolabi said that the forthcoming conference provides opportunity to deepen discourse around topical issues in the nation’s maritime industry, as well as proffer practical solutions

to them. “The third edition of the conference would dwell on issues on port costs and charges. This is in view of the constant bickering between the port users, regulatory agencies, agents, importers on one hand and the terminal operators on the other hand, despite the port reforms embarked upon in 2006, which aimed at making the Nigerian port system

better,” Afolabi added. On her own part, Bukola Familoni, president, Maritime Forum, said the conference will be beneficial to both the industry and the students because it will create an avenue for stimulating intellectual discussion between maritime experts and the university community, especially students with interest in the maritime industry.

Politics & Policy

BUSINESS DAY

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Wednesday 15 August 2018

APC boosted by bye election wins as NASS reconvenes this week INNOCENT ODOH AND JAMES KWEN, Abuja

he ruling All Progressives Congress (APC) will go into this week’s resumption of the National Assembly with their numbers boosted by the victories recorded in the bye elections in some constituencies conducted by the Independent National Electoral Commission (INEC) in Katsina, Bauchi and Kogi states at the weekend. The APC candidates- Ahmed Babba-Kaita (Katsina North Senatorial seat); Lawal Yahaya Gumau (Bauchi South Senatorial seat) and Haruna Isa (Lokoka/Kogi Federal Constituency of Kogi state) emerged victorious in the bye elections ahead of a dreaded week, which many pundits have feared will brim with political turbulence, following the ugly events of last week and the impeachment threats dangling on the neck of the President of the Senate Bukola Saraki over his defection. The ruling party was hit by a gale of defections on Tuesday July 24 when 37 members of the House of Representatives defected from the party to the main opposition People’s Democratic Party (PDP) and other parties while in the Senate, 14 senators defected from the APC to the PDP, which dwindled its numbers. However, the APC Members made a feeble recovery with the weekend’s victories. The APC candidate Ahmad Babba Kaita, for Kastina North Senatorial District, polled 224,607 votes against his closest rival, Kabir Babba Kaita of PDP who polled 59,724 votes. The INEC Returning Officer,

Saraki

Professor Hudu Ayuba Abdullahi, who announced the election results in Daura, declared Ahmad Babba Kaita winner having scored the highest number of votes. He said,“That Ahmad Babba Kaita having certified the requirements of the law and scored the highest number of votes is hereby declared the winner and returned elected,”. The APC won in all the 12 local government areas that made up the senatorial district. In Bauchi, the Returning Officer, Professor Ahmed Sarki Fagam, announced that the APC flag bearer polled a total of 119,489 votes out of the total number of 256,763 votes cast in the by-election. The results further showed that the PDP candidate, Ladan Saliu polled a total of 50,256 votes while the candidate

Saraki: PDP raising false alarm, says APC INNOCENT ODOH, Abuja

The war of words between the ruling All Progressives Congress (APC) and the main opposition People’s Democratic Party (PDP) has continued unabated ahead of the 2019 general elections. The APC in a statement by its National Publicity Secretary Yakini Nabena on Monday accused that PDP of raising false alarm saying “The People’s Democratic Party (PDP) in its latest round of bogus claims has alleged that the Federal Government plans to arrest the Senate President, Bukola Saraki and his Deputy, Senator Ike Ekweremadu. “We had thought that by now, the PDP would be tired of its lame opposition strategy of false alarms, baseless and frivolous accusations. “The President Muhammadu Buhari administration has repeatedly demonstrated its strict adherence to the rule of law, therefore the alleged

plan to arrest or harass the mentioned leaders is hogwash and baseless. “Clear conscience fears no accusation. Why are PDP leaders afraid of arrest if their conscience is clear? All law-abiding citizens or resident of the country have nothing to fear about arrest “However, nobody no matter how highly placed will escape the full wrath of the law if he or she runs fowl of our laws. “If the Senate President and the tree-climbing Senator are facing criminal charges in our law courts and his Deputy has explanations to make to the Economic and Financial Crimes Commission (EFCC) for acquisition of numerous properties in Nigeria and abroad through questionable sources, the President Buhari-led APC administration has nothing to do with them. The laws of the country are only being applied and they should answer for their acts of infamy,” the statement said.

of the Green Party of Nigeria, GPN, who is the immediate past Governor of the State, Isa Yuguda scored 33,479 votes to emerge third. In Kogi the APC candidate, Haruna Isah was declared winner of the Saturday Lokoja/Kogi Federal Constituency bye election. Returning Officer for the election, Rotimi Ajayi who announced the results on Sunday in Lokoja said Isah of the APC polled 26,860 votes to defeat Bashir Abubakar of the People’s Democratic Party (PDP) who polled 14, 845 votes. Ajayi also announced that Ahmed Imam of the Social Democratic Party (SDP) scored 2,916 votes while the candidates of the Accord Party and Alternative Democratic Congress (ADC) scored 149 votes and 2,984 votes, respectively.

“The Labour Party scored 90 votes; Democratic Alternative scored 159 votes; while Megga Party of Nigeria scored 50 votes. “19,960 votes from 17 polling units were cancelled due to violence and other malpractices, 15 of the affected polling units were in Lokoja Local Government Area, two were from Kogi Local Government Area”, Ajayi stated. In a further breakdown of the election results, the Returning Officer said 51,669 voters were accredited for the election but only 50,036 voted while valid votes were 1,871. The bye election was conducted by the Independent National Electoral Commission (INEC) to fill the vacancy created by the death of the former occupant of

the seat, Umar Jibrin, also of the APC in March. The APC National Leadership has said that last weekend victories for the party’s candidates in the bye elections are an endorsement of President Buhari-Led APC Administration adding that the victories have again powerfully demonstrated the confidence and trust by the people in the President Muhammadu Buhari administration. A statement issued on Monday by APC National Publicity Secretary Yekini Nabena made available to BusinessDay, noted that since assuming office, President Buhari has demonstrated the political will and remains solidly committed to the task of building a new Nigeria in line with the Change Agenda the party promised Nigerians. “As a political party, we remain genuinely committed to address our challenges, reconcile legitimate aggrieved interests and emerge as a more united and stronger political fighting force as we face General Elections in 2019. “Like every other country, we have our challenges, but they are surmountable. We have an administration working day and night to surmount them and put the country on the right pedestal. With the continued cooperation and support of Nigerians, we have good reason to look forward to the future with great hope,” he said. This week will be a serious test of wits among the Federal lawmakers of the APC and the PDP as they reconvene to face what is predictably a bitter week over lingering disagreements over issues of defections, impeachment threats and last Tuesday’s disturbing invasion of the National Assembly by armed and hooded men of the DSS.

2019: Don’t allow politicians to use you as thugs, Gov Ahmed charges youths SIKIRAT SHEHU, Ilorin

s the 2019 general elections draw near, Nigeria youths have been enjoined not to allow themselves to be used as thugs, eschew violence, get actively involved in the electoral process and get their Permanent Voters Cards (PVCs). The Kwara State Governor, Abdulfatah Ahmed who made the call on Sunday at an official flag-Off of Kwara Youth Empowerment Programme (KWAYEP) Corps in Ilorin, even as he charged the youths to make proper use of their time online, shun fake news and other vices associated with the internet and equip themselves with the necessary skills and knowledge to compete favourably in the ever-

changing world. Ahmed stressed the need for the youths not to allow themselves to be used for selfish ambition but take part actively in politics to ensure entrenchment of good governance. “The time is now for our youths to make themselves relevant in the scheme of things and contribute positively to ensure entrenchment of good governance, “ he said Ahmed assured Kwarans of his government’s commitment to providing an enabling environment for the youths to contribute their quotas to the socio-economic development of Kwara State and Nigeria at large. Saying: “On our part, the State government has put in place policies and programmes to encourage youth participation in

governance and decision-making process”. In their separate remarks, the Rector of International Vocational, Technical and Entrepreneurship College(IV TEC) Ajase-Ipo, Ade Somide, the Chairman, Kwara Internal Revenue Service(KWIRS), Muritala Awodun and a Motivational Speaker, Nasir Abdulkadir emphasised the need for the youths to think outside the box and take advantage of technology to contribute meaningfully to societal growth and development. The speakers also advised the youths to be innovative in their thinking and also take up leadership roles through innovative ideas for an overall development of the country.

Wednesday 15 August 2018

BUSINESS DAY

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Wednesday 15 August 2018

Politics & Policy

2018 Amended Electoral Bill: Questions begging for answers

NASS contended that the trial judge wrongly failed to appreciate that, until the Electoral Act (Amendment) Bill 2018 was passed into an Act by the exercise of the legislative power of the National Assembly to over-ride the veto or withholding of assent to the Bill by the President, the same remained inchoate and not capable of vesting a justiciable civil right or obligation on any person, including the Plaintiff. The legislature further contended amongst others, that the lower court wrongly interpreted the provisions of Section 4(8) of the 1999 Constitution (as amended), so as to reach the conclusion that the Federal High Court was vested with jurisdiction to impugn a Bill perceived to be unconstitutional. “The lower court was further in error, when it relied on the cer-

tificate of the Clerk of the National Assembly pursuant to the Acts Authentication Act on the Bill (Exh ‘A’), as proof that the Bill’s constitutionality could be challenged in a superior court of law. “The learned trial judge erred in law, when he failed to appreciate that the Plaintiff’s suit (subjectmatter of this Appeal), was not properly constituted and therefore, incompetent”, it stated. Reasoning along the argument of the National Assembly, the fivemember panel of the court headed by the court’s President, Zainab Bulkachuwa, said that a bill could not be challenged in court until it becomes an Act. Justice Bulkachuwa ruled that the Federal High Court wrongly assumed jurisdiction to entertain the suit and erroneously struck down the provision. “The lower court operated under the erroneous impression that the bill had become an act,” Ms Bulkachuwa said in her lead judgment which was consented to by the four other members of the panel. “A bill does not become an Act until it has been assented to by the President after it has been passed by the two Houses of the National Assembly,” she ruled. She also said: “The bill, which is Exhibit 1, remains a bill and it is inchoate”, noting that “the National Assembly has not completed its legislative duty as far as the Electoral Act (Amendment) Bill, 2018, is concerned.” She said a court could only nullify a law if it violated a provision of the Nigerian Constitution noting a court could not do such “at the embryonic stage of a legislative process.” She said the bill “has no binding force and cannot have any legal effect of the law” since the bill had not become an Act. “The bill has no legal effect and cannot create a cause of action,” the court added. The court did not bother to pronounce on the constitutionality of Section 25 of the bill since it declared that the suit was premature, coming ahead of the maturity of the bill into an act.

“They need the space to freely express themselves, where they can maximise their potential and opportunities and where they can dream and pursue their dreams to the point of actualization,” he added. Oche lamented that the youth are faced with severe challenges, especially unemployment which if addressed, would lead to productivity rather than the widespread crime associated with young people. He pointed out that the youths constitute the majority of close to 200 million population of Nigeria

adding that the 2019 elections is an opportunity for them to exercise their civic power even as he charged the youth to collect their voter cards, vie for positions and also elect credible leaders into office. He urged the youth not allow themselves to be employed by dubious politicians to serve nefarious interests especially violence during elections as he promised that the organisation would embark on a massive campaign and hold leadership conferences in the six geopolitical zones through its “News Nigeria projects 774”.

FELIX OMOHOMHION, Abuja

he political apprehension behind the 2018 amended Electoral Act as passed by the National Assembly, which President Muhammadu Buhari refused to sign into law but okayed by the Appeal Court, on August 2, has remained a source of concern to political buffs. Though, the National Assembly had removed the controversial section after the furore it generated and resent the revised edition of the bill to President for assent, but the judgment of the Court of Appeal cleared the way for a possible re-introduction of the provision in the future. This has led to many guesses as to what will happen to the bill now that the court had made a definite pronouncement on the validity or otherwise of the proposal. The Court of Appeal sitting in Abuja had on August 2 upturned the judgment of a Federal High Court, which had on April 15 held that the National Assembly has no power to re-order sequence of election outside the election umpire, the Independent National Electoral Commission (INEC). The high court in a judgment following a suit filed by the Accord Party (AP) challenged the constitutional authority of the national legislature to re-order election sequence, which it said is constitutionally vested in INEC. Justice Ahmed Mohammed in the judgment held that indeed the National Assembly lacked the power to reverse the 2019 election timetable earlier released by the INEC. The court ruled that the attempt by the National Assembly to implement Section 58 of the Constitution, which allows the Legislature to override the decision of the President was null and void. Recall, in March this year, the National Assembly passed a bill reversing the 2019 timetable as earlier released by INEC which had presidential election before

National Assembly

other elections. By the National Assembly timetable placed the presidential election last in its order of preference. President Buhari refused to assent to it. As a follow up, the Accord Party had challenged the amendment with the National Assembly, the Attorney General of the Federation and INEC as defendants - saying the House lacked the power. Among reliefs the party sought before the court, which were granted, include “A declaration that the 3rd Defendant, is the only body and or institution constitutionally vested with the powers, vires, and duties to organise, undertake and supervise elections to the offices of the President and Vice President of the Federal Republic of Nigeria, the Governor and Deputy Governor of a State, membership of the

Senate, the House of Representatives and the House of Assembly of each State of the Federation, including fixing or assigning dates of the said elections and sequence of same”. However, the National Assembly appealed the judgment, hinging its argument on grounds that it has the power to legislate on matters affecting Nigerians, including election matters. In its appeal, the House asked the appellate court to set aside the decision of Justice Mohammed, and dismiss in its entirety, the Plaintiff’s claims in the Originating Summons. The National Assembly stated that the learned trial judge, erred in law when he assumed jurisdiction to entertain and determine the suit, when the purpose of passing the Electoral Act (Amendment) Bill 2018 into an Act.

2019: CSO to set up support fund for youth aspirants INNOCENT ODOH, Abuja

s part of the effort to encourage the youth aspirants to the various positions in the 2019 election, the Youth Empowerment Solutions (YES) Project Initiative, a Civil Society Organisation (CSO) has declared it would set up a support fund for political aspirants among youths to enable them prepare for the election. Executive Director of the group, Precious Oche, said this at a news conference to commemorate the International Youth Day, held in

Abuja at the weekend with the theme “Safe Spaces for Youth’’. Oche said that with the Not-TooYoung-To-Run Act, young people are now emboldened to vie for elective positions and participate more actively in Nigeria’s democratic process even as he stressed that the issue of godfather in Nigeria’s politics is a great challenge for youths to grabble with and if not addressed, will limit youths in 2019. He said that YES acknowledges the challenges, adding that this has motivated it to reach out to its partners to get support for youths vying for elective positions.

“We don’t want one godfather somewhere to sponsor someone and then start demanding that 50 per cent of whatever is in the office must go to him. “As a youth-oriented organisation, we believe that there is no better time to create safe spaces for youth than now, especially in our political environment. “Youth needs safe spaces where they can participate in decisionmaking processes and contribute meaningfully to the democratic process that engender good governance, equity, justice and respect for human rights.

Wednesday 15 August 2018

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BUSINESS DAY

Politics & Policy

Vote buying is real threat to 2019 polls - Chukwani In this interview, national chairman of the National Democratic Party (NDP) Chudi Chukwuani, spoke on the vote buying phenomenon, the recent realignments among political parties in the country and other national issues. He spoke with OWEDE AGBAJILEKE What do you make of the coalition that is building up against the APC and the President in 2019? ell it is what is expected in a diverse political configuration such as the one we have in Nigeria. At least our political class is now realizing that go it alone is not the best way of achieving a political objective. It must be said that the present day ruling party APC is a child of political coalition so it is all for the betterment of politics in Nigeria.

in any state were there’s a break down of law and order or any agitation of break-up of any constituent part of Nigeria. No ethnic group or group of individuals would be allowed to hold the national security interest of federal government to ransom.

What is your perception of the Executive Order 6 on asset forfeiture, amid the debate it has generated so far? I believe that the Executive Order 6 is perfectly in order and was drawn and signed in line with the due process of the law! If anyone is against it the person is at liberty to ventilate its opposition in a court of law.

Is your party in any of the coalition arrangements so far? Currently our party NDP (National Democratic Party) we are not engaged in any coalition agreement for now. Are there any plans for your party to join a coalition camp because it does appear that parties are beginning to align along lines of either the PDP or APC? Yes, there is plan for our party, NDP, to join either of the coalition of PDP and APC. But one thing our party NDP shall never do is to join the “coalition of Bandits and Treasury looters “.

Chukwuani

Should the quality of the opposition coalition be a source of concern for the incumbent? As it appears for now the public perception is that we are seeing for now is what is being termed as a “coalition of Bandits and Treasury looters “ and as such it is not yet a threat to the incumbent.

ing new/start-up businesses by giving loans expeditiously and in timely manner, increasing food security by increasing agricultural output and reducing prices. These SSSA’s can then take over the running of the affairs of those Ministries and Central Bank of Nigeria pending the appointment and confirmation of new Ministers. In this way, the President will be in conformity with the provisions of the 1999 constitution of Federal Republic of Nigeria (as amended).

Talking about governance, you once advocated a cabinet shakeup as a way to address some of the challenges faced by the administration and that hasn’t happened yet. What do you think? I believe that a number of factors are mitigating against the President on embarking on cabinet reshuffle for now. One of the major mitigation factors is the frosty relationship that currently exists between the Executive Arm and the Legislative Arm especially the Senate and its Leadership. I believe that the President does not want to be embroiled in a long drawn out confirmation drama as witnessed in the confirmation/nonconfirmation of the EFCC chairman. But I believe that one way the President can overcome the present non cooperative attitude of the legislative arm is by targeted strategic re-juggling of key economic ministries such as Central Bank of Nigeria, Finance, Budget, Works and Housing, Agriculture, industry, trade and investment, transport and aviation. The President should sack those ministers and appoint Super Senior Special Advisers(SSSP) who believe and share his economic vision of creating jobs, reducing/strengthening the exchange rate of the Naira, releasing money to the economy, empower-

Could the presidency have handled the relationship with the National Assembly any better or is the National Assembly totally to blame? I believe both sides share on the blame. The way and manner the leadership of the National Assembly emerged is a result of the direct negative influence of the “national leader of the APC” who wanted to have total control of all the apparatus of government around the President. You will also remember that it was also at a time the President was not at full strength due to his illness. The net effect was that the President was not able at that time to assert himself as the leader of the APC to the exclusion of anybody else. For example in the United States of America and in the United Kingdom which the likes of the “national leader of APC” and his associates like to visit and quote when it suits them, can any republican or conservative member of the British parliament be going about and parading him/ herself as the leader of the Republican Party in front of Donald J Trump or Prime Minister Theresa May? But here in Nigeria excessive political greed is the bane of our troubles. One man will want to be the one to determine who is the Senate President, Speaker of the House of

Reps, Chairman of EFCC, Chief of Army Staff, DG SSS, the NSA, DG NIA etc., to the exclusion of other political interests both inside and outside political parties that came together, formed a coalition and brought the government to power. This was the root of the problem in the APC and it continues to this present day. It’s more than three years into this administration and the security crisis continues to rage, what is your assessment of the situation? Why has it lingered this long? I am completely in sync with Mr President that some of the security instability is being instigated by politicians and substantial evidence abound to support the position of Mr President. I believe that it is high time the President stop treating these political instigators of security breaches with a kid gloves. These misguided politicians who threaten the national security interest of the Nigerian state must be ruthlessly dealt with. You said substantial evidence abound to show that politicians are behind the crisis, can you share some of them? The evidence is already in the public space. For example in Benue State the police already have in custody political officials that have been identified as sponsors of the horrible mayhem there, same as was the case in Kwara, Plateau, Rivers and others. Therefore, I am taking this opportunity to urge Mr. President to without delay and without consideration of any political favour declare immediately a state of emergency in Zamfara, Borno, Benue, Taraba, Plateau and Rivers States. And Mr President should make it clear that the Federal Government is ready and able to declare a state of emergency

The Ekiti elections held recently throwing up lots of drama and strong narratives amid allegations of assaults, what is your reaction to the events leading to and after the Ekiti State elections? I believe that what played out in Ekiti is pure crude politics on the part of the Governor. Muhammadu Buhari, GCFR is the President and Commander-in-Chief of the Armed Forces Federal Republic of Nigeria period. Simple decency and courtesy would have informed the Governor, Fayose to extend courtesy to the office of the President of Nigeria by going to the airport to receive the President, afterwards the Governor is at liberty to wish the President good luck at your rally I am now going to my party rally too and may the best party win. It was very wrong and crude for the governor to commandeer all the transport vehicles and motorcycles in the state and lock them up in the government house! That’s economic sabotage and the Police are there to maintain enforce the law and maintain peace for all peoples in Ekiti residents and visitors alike. Can you now imagine what some of these Governors will do if we had state police and the governors are in charge of state police. We hope that the misguided agitators for state Police and the so called restructuring can learn a lesson or two from the warped politics of Ekiti. Nigeria must remain an indivisible entity with a strong central government. What is your reaction to the outcome of the polls? It was essentially an easy win for APC. The so called coalition which was formed prior to the election went missing and cold. The PDP cannot expect to win any election in a state where the workers are being owed seven months salary and pensioners are being owed several months arrears. Therefore all the antics of neck brace, tear gas and disrespect to the office of the President has come home to roost. The vote buying phenomenon which played out during the Anambra, Edo and Ondo elections also happened in Ekiti, signalling that it has perhaps come to stay. What

does it portend for 2019? Vote buying is illegal under our laws and gravely distorts the democratic process. INEC has gravely failed in their statutory responsibility and should be held responsible. Till date INEC has been unable to prosecute or sanction any political party for running fowl of our electoral laws. INEC has rather assumed the role of an empty barrel that makes the most noise. From reports filed by election observers in the field, agents of the two leading political parties APC and PDP were caught on video paying cash money to voters in exchange for their votes and yet INEC has not seen it fit to sanction any of the offenders. So in answer to your question, vote buying portends a clear and present danger to the 2019 general elections. The opposition and even some leaders have expressed concerns over the 2019 general elections against the backdrop of what they fear might not be free and fair polls, do you share such view? I believe that the security deployment for the Ekiti elections and withdrawal of security details from the political leaders on the day of election is a clear pointer that the Nigerian security forces are ready and able to ensure peaceful free and fair elections and I salute the IGP and the DIG for their courage and wish them luck. The 2019 General Elections will be peaceful free and fair as long as our security forces draw up a strategic security plan and INEC deliver its materials on time and handle its assignment in consonance with the provisions of the law. Problems with Elections are always due to INEC not obeying the orders of court. For example, INEC has deliberately and negligently refused to obey the order of the Court of Appeal Enugu division that said that INEC deregistration of political parties is unconstitutional. INEC chairman and its commissioners are reminded that they are unelected power and must obey the Order of the second highest court of the land. We cannot have a free and fair elections as long as INEC continues to be in breach of the order of Court respecting Deregistration of political parties. Does the security architecture of Nigeria at the moment inspire confidence ahead the 2019 polls? Events so far have shown that both the executive and legislative arm of government have expressed serious concerns on the current security challenges facing our nation. The country has always had a good security architecture the problem has always been on implementation and adequate funding. The best security assets the country has are always deployed to protect the political leadership, banks chief executives, foreign contractors executives, and their families and most times these security assets are used for running domestic errands.

BUSINESS DAY

Tuesday 14 August 2018

BUSINESS DAY

Wednesday 13 Wednesday 2018

Leadership

Shaping people into a team

What MoviePass can teach us about the future of subscription businesses

t has been a very rough few months for MoviePass. Since I last wrote about the company in May of this year, theater operator AMC entered the subscription market, to early success, and MoviePass took out and paid back a $6 million emergency loan and flip-flopped on both its pricing and its product. Lately the company has resembled a fish out of water, gasping for breath. Will MoviePass survive? The broad answer is yes; the specific answer is more complicated. It could remain as a stand-alone business (although that’s unlikely), or it could survive as part of another business (through an acquisition). In a sense, MoviePass will survive no matter what happens to the actual corporate entity, simply because companies like AMC have adopted its basic business model. And the company will surely live on in business lore as a cautionary tale. I’ve watched a lot of movies that lack the plot twists that MoviePass has been serving up lately. Regardless of what ultimately happens to the company, here are five lessons we can learn from its struggles. First, MoviePass is a testament to the power of price elasticity curves. At $49.95 per month, MoviePass had 20,000 subscribers. At $9.95 per month, it grew to 3 million in a matter of months. What will happen now that the price is still $9.95, but with a three-moviesper-month cap? (We’re ignoring the few days that MoviePass raised the price to $14.95 before flipping back.) Should MoviePass have matched AMC at $19.95 per month, a price-value equation that has already brought the newer

service 200,000 subscribers? It depends on the shape of the price curve. Playing with pricing requires great skill and precision. MoviePass should have done its price experimentation at the outset and on a local basis. If it had done so, it could have optimized its price points and tested alternative pricing models more quietly, instead of jerking millions of customers around. Even a slight tweak — such as moving to a club-pricing model like Costco’s — might have solved MoviePass’ cash-flow problems. These kinds of tweaks could also have enabled the company to consider regional pricing strategies, given that its cost of goods (the full price of movie tickets, which it pays theater operators) varies from $8 per ticket in Nebraska to over $15 in New York. MoviePass is also a good reminder that the United States has local profit pools. It is silly to think that

a one-size-fits-all national strategy is the right approach for a market as ethnically and economically diverse as the United States. Second, MoviePass’ troubles are a lesson in the folly of treating consumers with a transactional mindset. The company’s grand vision was to accumulate millions of consumers so that it could monetize them through advertising. This ad strategy led to its quest to scale as quickly as possible, given its cash burn. This meant MoviePass had to grow much faster than its customer support could keep up with. The constant price and product changes clearly show how little MoviePass understood what consumers really wanted, and these rapid changes have forced consumers to flee the company. To scale, companies need the right infrastructure to keep consumers happy. Third, MoviePass failed to recognize how the behavior of “superconsumers,” customers who

are highly engaged with a category and a brand, differs from that of average consumers — and how, if not anticipated, these differences can create problems for a company’s cost model. It can especially be a problem if the company uses a buffet model of fixed prices and unlimited quantities, as MoviePass did. Consider Nicholas Norfolk, a movie superconsumer who published a piece earlier this summer on Medium about his goal of seeing 100 movies. Before MoviePass, he attended 13 movies a year, so he was a movie superconsumer already. But going forward, he planned to watch 10 movies per month — meaning that his consumption would expand ninefold. MoviePass clearly didn’t anticipate this behavioral shift when it forecast its costs and devised its pricing. Other companies can learn from this mistake. Fourth, because MoviePass didn’t consider the fact that a ticket is only one part of the total

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amount of money a consumer might spend to attend a movie, it failed to create additional revenue opportunities. An excellent recent analysis by Price Intelligently of over 12,000 current, former and prospective users of MoviePass or AMC, found that an individual consumer going for a night out at the movies by himself was willing to pay $51.39. However, if it was a “date night,” then that consumer was willing to pay $101.49. And if it was a “family night,” then the consumer was willing to pay $148.96. (These pay totals include not just the cost of the tickets, but also a Lyft ride, dinner and drinks.) Ideally, MoviePass needed to find a model that gave it access to a bigger chunk of that spending, not just the ticket. For instance, MoviePass could have chosen to collaborate with category creators like Studio Movie Grill, a rapidly growing $200 million movie theater that provides full meals during shows. Since Studio Movie Grill sells appetizers, main dishes, desserts and drinks that have to be pretty good, it likely has far greater flexibility to offer discounts than a traditional theater chain like AMC, where consumers buy just one or two vastly overpriced items. Finally, MoviePass’ struggles show that bullying is a bad business plan. At the core of the company’s strategy was the goal of scaling enough to have the power to shake down movie theaters for concession profits or reduced prices on tickets. This plan didn’t work. MoviePass’ attractive priceto-value proposition attracted early attention and customers, but it wasn’t a viable long-term model.

BUSINESS DAY

C002D5556

Wednesday 15 August 2018

In association with

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How lack of farm extension service undermines Nigeria’s food security Stories by JOSEPHINE OKOJIE

igerian smallholder farmers have continued to lag behind its peers owing to their inability to raise productivity due to the collapse of the country’s agric extension service delivery. Despite the potential of Nigeria’s agricultural sector to diversify the economy, it is still fraught with a lot of challenges that have continued to limit the sectors growth. One of such challenges is the collapse of agricultural extension services which has been seriously weakened by inadequate funding to support field extension services, poor roads and policy flip flop by various governments. The inability of farmers to access vital information that is beneficial to them and inadequate dissemination of information by extension agents have reduced agricultural productivity in the country for decades. Agric extension service is the application of scientific research and new knowledge to agricultural practices through farmers’ education. The extension agents function as the link between farmers, research institutes and the government. ‘Since I started farming more than 10 years ago, extension agents have only visited my farmland twice,’ says Samuel Sanondo, a farmer who farms 15 hectare of maize and yam in Donga local government area in

Taraba State. “I am still farm with the farming methods I learnt from my father. The extension agent that is supposed to teach me new techniques has only visited my farm once,” Sanondo says. Sanondo’s case is similar to farmers across the country as the extension service system has been marred with a lot of challenges especially in the area of manpower. For more than a decade, there has been no recruitment of extension agents in most state of the federation. This has reduced the number of extension agents; with many approaching retirement age. “The issue of manpower is a very big problem. There has been no recruitment of extension agents by

some states since the World Bank grant was exhausted in the 80’s,” says Mohammed Khalid Othman, assistant director, National Agricultural Extension Research Liaison Services (NAERLS). “We have a situation where some states have one agent serving 2,000 farming families.” According to Othman, the country cannot improve farmers’ productivity when the ratio of extension agents given to farmers is as high as what we have currently in the country especially at a time were the government wants to diversify the economy through agriculture. In trying to address the issue of limited extension agents, some states have resulted to picking cooperatives and association heads and educating

them on latest technologies and information necessary for the farmers in their communities who in turn are expected to pass the information to them under their cooperatives and associations. But it has failed to get to farmers in rural communities as most of the heads of such associations who attend such training’s on modern techniques can hardly translate to other farmers. Abdul Sule, a tomato farmer in Alabata, Odeda, Ogun state says “any time the extension agents come, they pick selected farmers for training so that those farmers can come back and teach us what they have learnt but most of the farmers come back and are unable to explain anything

to us.” According to Antti Ritovnen, chief executive officer, Dizengoff Nigeria, has noted that lack of farmers education is the major challenge confronting Nigerian farmers, saying that farmers are yet to increase their yield per hectare because they lack the information on good farming practices. Ritovnen called on the government to revive Nigeria’s agricultural extension service, saying it is the major way information is being disseminated to farmers mostly in the rural areas. Research institutes in Nigeria have blamed the government for the gap that exists between the farmers, research institutes and extension service. The government needs to address the problem with the delivery of extension services in other to boost farmers’ productivity. Government has to make provision for bridging the gap between the lab and the farms, they complain. In view of this shortfall, experts underscore the need for privatesector participation in the funding and delivery of agricultural extension services so as to meet the needs of the farmers. They argue that agricultural extension services have been dominated by the Agricultural Development Programme in Nigeria for a long time. The experts insist that the traditional extension services, linked with production objectives and blanket recommendations, can no longer meet farmers’ expectations.

PorkMoney set to launch pig processing plant in Nigeria

NBMA reviews, validates biosafety guidelines

n l i n e w i t h t h e Fe d e ra l Government efforts to diversify the country’s revenue base away from oil, PorkMoney, Nigeria’s leading pig farming enterprise, is set to launch a pig processing plant in the country to produce variety of pork products for local consumption and exports. Linda Obi, chief operating officer, PorkMoney told journalists on the sideline of the company’s master class programme for entrepreneurs recently in Lagos. “We did our research for Nigeria and Ghana and we realise that above N3billion is actual spent on pork

he National Biosafety Ma n a g e m e n t A g e n c y (NBMA) has commenced the review and validation of some of its guidelines on biosafety to strengthen the nation’s agricultural systems. Rufus Ebegba, director general and CEO, NBMA said during the opening of the review and validation meeting recently, that the guidelines were in the process of development over the past two years and had undergone intensive in-house assessment and critical review by stakeholders and needed final validation before being release to the general public. Ebegba said that the guidelines for review and validation include the NBMA risk analysis framework which details risk assessment- a precondition for the release of any Genetically Modified Organism (GMO) crop in the country. “The guideline encompasses r i s k ma nag e m e nt p l a n s a n d strategies to be employed if any potential risk arises from the practice of modern biotechnology,” he said.

consumption annually. A lot of pigs by products are still being imported into the country so there is a market there and we taught of bridging the gap,” Obi said. “Hence, we are trying to localise pig farming by on boarding partners who come on board with an amount as capital and get between 20 and 35 percent return on their investment after 11 month contractual period. “We are going into processing of pigs very shortly and we would be establishing a processing plant in the country and we would launch our Porko Yum brand with three products which are sausages, bacon

and pork cubes,” she added. She also stated that pig farming is lucrative than any other livestock farming in the country, saying that pigs produce twice in a year with an average of 12 winners at a time. Similarly, she noted that a farmer can easily turn a pig to 30 pigs within a short period of time, owing to the rapid growth of pigs and coupled with the low mortality rate. “Pigs produce twice in a year and can produce close to 11 and 12 winners at a time. They grow to mating at about eight month. You can easily turn a pig to 30 within a short period of time.” She also stated that PorkMoney is in partnership with the Oke Aro Pig Farm which is the largest pig farm settlement in West Africa to boost local pig production in the country. “We are also looking at getting our own land for pig farming to boost local production,” she said. “China and Morocco are big markets for pork and we are looking at that market and also our local distribution channels to meet our local needs by first increasing our production,” she added.

“The guideline aims to s t re ng t h e n t h e e n f o rc e m e nt system for proper regulation.” Other guidelines reviewed a t t h e w o r k s h o p a re N B M A administrative manual, NBMA communication strategy, national biosafety emergency response, biosafety information manual, institutional biosafety committee guidelines, biosafety laboratory manual and inspection Guidelines. He added that the Biosafety Laboratory Manual ensure the accurate analysis of GMOs and the guaranteed safety of personnel working in the laboratory. Ebegba thanked all the stakeholders present especially the media for accurate dissemination o f i n f o r mat i o n o n i s s u e s o f biosafety in the country. He noted that the media still have a lot to learn in terms of relating issues of biosafety to the general public. This review and validation meeting involves stakeholders from different Ministries, Departments and Agencies who are involved in the National Biosafety Framework.

Wednesday 15 August 2018

C002D5556

BUSINESS DAY

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Amo Farm commends Ogun on Noiler bird initiative JOSEPHINE OKOJIE

m o Fa r m S i e b e re r Hatchery Limited has commended Governor Ibikunle Amosun of Ogun state on his approach in alleviating poverty and improving the living standards of rural women in the state through the noiler bird empowerment programme. Speaking during the second phase of noiler bird activation and distribution in Ogun State, Ayoola Oduntan, group managing director, Amo Farm Sieberer Hatchery Limited, said the programme which witnessed the distribution of 35,000 noiler birds to 3,000 rural women across the three senatorial districts of the state, shows the unrelenting commitment of the state government to development of agriculture. Oduntan who expressed his company’s commitment to rural empowerment and the success story in Ogun state said the programme was an expansion on the first phase where 1,000 rural women benefitted from 10,000 noiler birds in partnership with British American Tobacco Nigeria (BATN).

From Left; Ayoola Oduntan, group managing director, Amo Farm Sieberer Hatchery Limited; Abiola Kufile-Okonji, Ogun State commissioner for Women Affairs and Social Development;Yetunde Onanuga, deputy governor of Ogun State and Adepeju Adebanjo, Ogun State commissioner for Agriculture during the distribution of 35,000 Noiler Birds to 3,000 beneficiaries in Ogun State recently.

Noiler can significantly reduce childhood stunting, infant mortality, maternal mortality as it tackles poverty and malnutrition, he said. “The Noiler Bird is a dual purpose bird that grows quickly and bigger than the native birds, lay more than the native birds but most importantly,

Smuggling, threat to FG’s agric development agenda, says Lokpobiri JOSEPHINE OKOJIE

he Federal Government has identified smuggling as the biggest threat frustrating its efforts and successes in the agricultural sector. Heineken Lokpobiri, Minister of State, Federal Ministry of Agriculture expressed concerns that unless urgent measures are put in place to address the issue of smuggling of foreign food products into the country, the Federal Government might not achieve its target for the sector. “All the efforts and achievements recorded, both in the fishery sector and in the rice sector, which we are doing excellently well will be reversed if we do not combat the issue of smuggling,” the minister said during a courtesy visit to the Ogun state Governor, Ibikunle Amosun in his office in Abeokuta recently. Lokpobiri also cautioned that social problems will continue to fester in the country if the problem is not promptly nipped in the bud because all the efforts that Government has made in the area of job creation through agriculture will be reversed. The minister however commended President Muhammadu Buhari for taking steps to combat the challenge and also urged states living in the border areas of the country to take measures to complement the efforts of the Federal Government in this regard. Lokpobiri identified Ogun State as one of the states that is badly affected by this issue of smuggling and appealed to the governor to do everything within his power to

address the issue. “Ogun state is one of the states that is badly affected by this issue of smuggling. It has a whole lot of problems; it affects our daily existence as a country because today we have been able to create a lot of jobs through agriculture and if smuggling is allowed to continue, the likelihood is that that will be reversed, there will be lot more of social problems,” he said. The minister revealed that one of the measures put in place by the government to combat smuggling was the setting up of the committee headed by the Vice President, Yemi Osinbajo, which he said is working round the clock to ensure that we combat this issue of smuggling. Besides, Lokpobiri stated that the government is doing everything humanly possible to ensure that the country collaborate with the Republic of Benin, Niger and Chad to check this problem, noting that the recent visit of the President of Benin Republic to Nigeria was for that purpose. Amosun in his response also shared his concerns with the minister on the issue of smuggling, said “we are not unaware of those challenges that smuggling poses to our agriculture and that is why we are insisting that all our porous borders should be closed.” Amosun regretted that his state has the highest number of unmanned borders in the country and disclosed that he was already discussing with the minister of interior minister and the conptroller general of the Nigerian Immigration as well as the Nigerian Customs on ways of mitigating the impact of the problem both in the short and long term basis.

it would survive in rural backyard environment with fewer resources,” Oduntan said. “It can lay four times the number of eggs the local birds lay and can grow two and half times bigger. Poultry feed constitutes 70 per cent of farmers’ expenses in running a poultry business

in the country but with the noiler initiative, farmers spend less on feed as noiler birds can feed and survive on household remnants.” The group managing director stated that the testimonies of previous beneficiaries who are mostly small holder farmers attested to the fact that

noiler bird, a dual purpose breed, is suitable for backyard rearing. He noted that the noiler project’s objectives among others are to increase rural women’s income, improve households’ nutrition and increase their productivity. This ultimately reduces poverty among rural dwellers by improving quality of life through meat and egg production. It has taken 15years of work and investment to develop noiler bird. Its uniqueness as a Nigerian product resulted in it being named NOILER to celebrate Nigeria, Oduntan said. He noted that the Noiler birds are easy and cheap to rear because of their ability to feed on remnants from the kitchen and farms and have been successful in diverse backgrounds from Maiduguri to Yenagoa. According to him, the noiler breed is resistant to common diseases like the local birds and the beef is tasty and tough and can be reared with no antibiotics and chemicals, adding that they can be raised as ‘organic chickens. He stated that if the noiler initiative is replicated across the country, it will help to achieve some of the key targets of the United Nations 2030 Agenda for Sustainable Development.

Kano commences agric initiative to increase farmers’ loan repayment ADEOLA AJAKAIYE, Kano

usuf Gawuna, Kano State Commissioner for Agriculture and Natural Resources, says the administration of Governor Abdullahi Umar Ganduje is implementing an initiative aimed at encouraging farmers in the state to promptly repay loans they obtained for agricultural activities. Gawuna disclosed that the initiative was fashioned out to correct the wrong notion which most farmers in the state have about obtaining agriculture loans which they see as their own share of national cake. He noted that the initiative which is being implemented in partnership with the leadership of the state chapter of the All Farmers Association of Nigeria (AFAN) is helping to increase the rate of loan repayment from the 4 percent it was before the advent of the Ganduje administration. The disclosure of the about the initiative is coming on the heels of an announcement made by the state government that the sum of N132 million is to be released to the AFAN in the state for the implementation of a new Tractors Acquisition Scheme.

According to the commissioner, his ministry was forced to introduce the loan repayment arrangement as way of encouraging the farmers to move away from the prevailing entrenched culture of not repaying agriculture loans obtained from government financial institutions Speaking as a Guest of Honour at a 5-day capacity development training programme organised by Nigeria Incentive –based Risk Sharing for Agricultural Lending (NIRSAL), which was concluded over the weekend in Kano, he revealed that the initiative was primarily introduced to help farmers access more loans from government sources. Commenting on the capacity building programme of NIRSAL, Gawuna expressed delight with the composition of participants at the event which according to him, were drawn from public and private players in agricultural development. Gawuna charged participants to use the platform which the training offers to come out with better ways through which loans being giving out by the Federal Government under the Anchor –Borrowers Scheme can be guarantee across the agricultural

Governor Abdullahi Umar Ganduje of Kano state (wearing white in the circle), and Yusuf Gawuna, commissioner for agriculture and natural resources (in brown cloth), flagging off a scheme geared at making Tractors accessible to farmers in the state recently.

value –chain. He said a system of loan guarantee along the value-chain would go a long way in reduce the growing incidences of loan defaults being experience on the part of farmers that benefitted under the Anchor-Borrowers Scheme. Babagana Mustapha, head of the Kano office, project monitoring reporting and remediation office (PMRO) disclosed that the capacity development programme was conceived by the agency, as one of the practical means of fashioning out how to assist players in the agricultural sector to increase their productivity. He noted that the agency, resolved to embark on the capacity development programme as a result of a study it conducted which identified inadequate capacity on the part of players, as one of the critical factors hampering the effective development of the Nigeria Agriculture industry. “Capacity building is one of the five core-mandates of NIRSAL, and the capacity development programme which we are starting today is primarily conceived to help participating stakeholders come to term with new technology, skills and competencies in the development of agriculture along the value –chain. “Programmes of this nature are imperative, this is because it is becoming very clear that we as nation cannot continue to depend on out-dated techniques, if we are to adequately feed our growing population” Babagana stated. A c c o rd i n g t o t h e a g e n c y , participants in the programme, who are drawn from the various segments of the agricultural sub-sectors, would during the event attempt to proffer solutions to some of the challenges confronting the development of agriculture along the various value chains.

BUSINESS DAY

C002D5556

Pension Today

Wednesday 15 August 2018

In Association with

Pension regulator, operators reinforce growth potentials in micro scheme …targets year end for take-off …as assets hit N8.23 trillion

he nation’s pension industry has continued to record increased growth in assets, as well as in the number of contributors, even as expectation heightens for greater mileagewith micro pension scheme. Industry regulator, the National Pension Commission (PenCom) had disclosed during the third edition of the National Association of Insurance and Pension Correspondence Conference in Lagos that the number of contributors under the Contributory Pension Scheme(CPS) has grown by 312, 291, increasing from 7.89 million as at December 2017 to 8.14 million as at June, 2018. According to the commission, the net assets value of the pension fund was N8.23 trillion as at June, 2018, representing an increase of N716.94 billion up from the value of N7.52 trillion as at 31st December, 2017. This increase the Commission noted is attrib-

L-R ; Susan Oranye, executive secretary, PenOP; Lana Loyinmi, head, contributors and bond redemption department, National Pension Commission; Bala Zakariya, chairman of the occasion ; Moruf Apampa, MD/CEO, SUNU Asurance Plc; Adebayo Adeleke, MD, Lancelot Ventures Limited, and Supo Sogolola, executive director, Law Union and Rock Insurance Plc during the 3rd National Association of Insurance and Pension Correspondents (NAIPCO) national conference with the theme ‘ The role of stakeholders in developing insurance pension sector in Lagos. Pic by Pius Okeosisi

uted to new contributions received interest/coupon from fixed income securities and net realized / unrealised gains on equities and mutual fund investments. Aisha Dahir-

The full implementation will be a major economic booster and will reduce the level of poverty associated with informal sector and old age

Uma r, a c t i n g d i re c t o r general,PenComsaid feedback from the stakeholders and operators have been received, considered and incorporated after release of the draft Guidelines and framework on the Micro Pension Plan. The PenCom boss who was represented by Lana Loyinmi, head, Contributions Bond said the final guidelines for the Micro Pension Plan(MPP) will be released as soon as they are approved, stating however that the Commission is developing the required ICT infrastructure to drive the process and this is critical to the success of implementing the scheme. “It is envisaged that before the year ends, the plan will commence.” Ronke Adedeji, president pension fund Opera-

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

tors Association of Nigeria (PenOp) said the planning and execution of micropensions is a missing link in increasing pension coverage in Nigeria, stating that the full implementation will be a major economic booster and will reduce the level of poverty associated with informal sector and old age. Adedeji speaking on the topic “Exploring The Micro Pension Concept” said the final guidelines when released will provide unique regulatory framework to govern micro-pension arrangements, which shall address registration, investment of funds, risk management, membership, withdrawal of benefits and taxation incentives. Section 2(3) of the Pension Reform Act, 2014 (PRA2014) provides that

employees of organizations with less than three employees as well as the selfemployed persons shall be entitled to participate in the Contributory Pension Scheme in accordance with the guidelines issued by the Commission. Dahir-Umar at the NAIPCO conference also stated that in order to enhance the monthly pension of retirees in the Contributory Pension Scheme, the Commission initiated the Pension Enhancement Programme. “It was discovered that the returns being generated by the PFAs on the balances of the RSAs of majority of retirees could be used to enhance their monthly pensions. Consequently, the Commission sought for and obtained the approval of the Secretary to the Government of the Federation

to implement the pension enhancement, which resulted in increased monthly pensions for most retirees receiving pension under the Programmed Withdrawal arrangement. Accordingly, the PFAscommenced the enhancement of pensions of all retirees under Programmed Withdrawal with effect from December 2017. Dahir-Umar further stated that the implementation of the pension enhancement is one of the significant milestones attained since the commencement of the CPS. It confirms that the CPS has workable internal mechanisms to respond to legitimate demands of retirees as they seek a reasonable retirement income.” On circular on Voluntary Contributions, she said the Commission issued a Circular on Withdrawals from Voluntary Contributions (VC) in November, 2017. “The Circular was necessitated by the observed incidences of high rates of withdrawals from VCs by contributors, which appeared to negate the main purpose of using such contributions to augment pensions at retirement.” “In addition, the Commission seeks to ensure strict adherence to AntiMoney Laundering provisions and relevant taxes laws. The main thrust of the Circular is that 50 percent of the VCs can be withdrawn once in every two years, while subsequent withdrawals would be on incremental contributions from the last withdrawal. Furthermore, the remaining 50 percent of VC shall be domiciled for augmenting pensions upon retirement.”

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

Wednesday 15 August 2018

C002D5556

BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

Claims payment, and transformation in the insurance industry

… CHI consumer testifies prompt claims payment Stories by Modestus Anaesoronye

he story of how insurance services in Nigeria respond to claims payment is changing rapidly as a claim was paid in less than two hours, after an incident was reported, a situation which has won the applaud of analyst in the sector. The irony of it is that the old age long impression that insurance companies don’t pay claims continues to linger, and is transferred from one generation to the other, by those who have not had any experience or taken out any insurance policy in their life. This remains a major problem for the nation’s insurance industry that must now tell their story, about the good things the industry is doing, how they are paying claims, helping people to return to their businesses after loss, or how dependants of deceased people got on with life after the death of their beloved ones. Insurance is helping families to pay their children’s school fees, pay house rents, pay mortgages and sustain standard of living after demise of their bread winners. Like the minister of Finance, Kemi Adeosun said recently, insurance pays huge sums of money on claims annually but nobody tells the story, PFAs pay huge amounts of money monthly on benefits and no one is telling the story, but the only people that talk are those who have issues with their claims. This is why the on-going rebranding campaign in the insurance industry must be refocused,

Mohammed Kari, Commissioner for Insurance

to tell the story and tell it well. A recent experience of a Consolidated Hallmark Insurance (CHI) customer, who had an accident with his insured car and got his claims paid in less than two days, was unbelievable, indicating a major transformation that has taken place in the Nigerian insurance industry, which should not go unmentioned. The customer had taken out a comprehensive motor cover with CHI for his Toyota Camry, and has paid premium for the year before his car had the accident. Uchenna, the customer tells his story to BusinessDay. “I had an insurance policy with

Eddie Efekoha, managing director, CHI

CHI and I had paid my premium for the year. I was driving my car two weeks ago on a Saturday evening after visiting a friend at his office at about 7pm. There was some traffic at Ilepo Round About, along Iyana-Ejigbo Ikotun Road, and my lane was directed to move by people controlling traffic there. To my surprise, a jeep came from behind and hit my car damaging the boot, back rear light and the bumper, while I also hit a Sienna Car right in my front. Before we knew what happened, the jeep escaped and we were left to our faith.” “I took photograph of my car, showing the damages, and on Monday at about 11am I contacted

CHI, my insurance company and reported the incident. I thought they were going to feel bad because I have brought problems to them, but surprisingly, they were very sympathetic, and more concerned about my safety, asking “hope you did not sustain injuries.” “They asked me to send the photograph of the accident car, and also contact my mechanic to send a quotation, while they also sent me a claims form to fill and submit immediately. As soon as my mechanic sent me a quotation and I forwarded to them, they called him on the telephone number in the invoice he sent, agreed with him the cost of repairs and pur-

chase of damaged parts. Before 4 pm on that same Monday, they sent me discharge voucher and their offer, and I completed the form and returned same”. “The most exciting thing about this interaction was the promptness, and the eagerness to ensure I was settled very quickly, so the chain of email communication was unbelievable, far from the impression so many people have about insurance.” According to Uchenna, before the close of work on Tuesday, his claim was paid into his account, and before then, he was receiving regular mails that his cheque was being processed; that his payment will be made soon and this came to pass, the insurance customer said. Insurance companies in Nigeria have proven in recent times that they are liquid and have the required capacity to meet claims obligation when losses crystallise. This is evident in quantum of claims paid in major losses that have hit the industry in the past few years. Examples are millions of dollar claims paid on Dana air crash, billion naira claims on Nigerian Bottling Company fire incident; Dangote factory fire claims and Friesland Foods West African Milk Company (WAMCO) flood claims. In 2014 insurance companies in Nigeria paid total claims amounting to N87.007 billion; This rose to N105.22 billion in 2015. As at 2016 financial year, underwriting companies in Nigeria paid claims totaling N119.63 billion, which is no mean feat when you consider the challenges associated with accessing fund for business, as well as associated high interest rates.

At Custodian Mentors Conference, experts urge youths to embrace values, integrity for greater Nigeria

igerian youths have been urged to embrace values and integrity to become successful in life, for a greater Nigerian nation. The youths are believed would bring the change Nigeria is yarning for, if values and integrity are entrenched in their life and entrepreneurial quest for economic survival. The trio of Wole Oshin, group managing director, Custodian Investment Plc; Oby Ezekwesili, senior economic advisor, African Economic Development Policy Initiative (AEDPI) and former minister of Education; and Leke Alder, principal partner, Alder Consulting who spoke

at the maiden edition of Custodian Mentors Conference organized by Custodian Investment Plc emphasized the significance of value system in life and business. Wole Oshin, who lamented the declining value system in our society, said it’s unfortunate that in our society today bad thing thrive, but however admonished participants at the conference to ‘do the right thing at any given time, as though it may be tough at the beginning, it pays at last. “Integrity pays.” Oshin also emphasized the importance of culture, as the guiding principle in his organisation. We are conscious of our culture as an

organisation, and so do not take for granted keeping with a guiding principles. He said the challenge with most entrepreneurs is allowing their self to be consumed by where they are going, without paying attention to integrity which is necessary for sustainability. He also urged the youths to be entrepreneurial in any where they find themselves in order to emerge as successful in whatever business they find themselves. While encouraging Nigerian youths to remain steadfast in pursuant of their careers, he said “I don’t care what anybody says, what

i know is that Nigeria is a great nation, with a lot of potentials for growth”. Oby Ezekwesili in her presentation, recounted her early stages in life and her family value system, which she said influenced her believe and philosophy till date. According to her, she was guided by the family believe in discipline, values and knowledge which where what her late father preached to his children. She said being a person of value will give you sustainable value, and lasting values are inestimable. Ezekwesili said the major problem of Nigeria today is poor gov-

ernance and lack of accountability, urging Nigerian youths never to negotiate their values, stating that integrity is not complete until it is consistent. Admonishing the youths on “finding their future”, Leke Alder advised the participants to put in their best in anything that comes their way, as that is capable of unlocking their future. He also emphasized on the importance of integrity, stating that integrity is a credit certificate, avoid giving excuses in life, use your imagination; never be afraid to take on giants, telling they youths that they are not too young to contribute.

PrivateEquity & fundraising 28

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COMPANIES & MARKETS

Abraaj’s North Africa deal team wants split-off Oluwatosin Dokunmu

Duet eyes investment in four other companies ...Hires former Abraaj, Temasek Execs to Africa Team MICHEAL ANI

merging-mark e t i nv e s t o r, Du e t P r i vat e Equity has strengthened its African private-equity team with several new hires, even as the firm said it is eyeing more investment deals in four other companies. The firm is closing in on several more deals in Sub-Saharan Africa, according to chief investment officer Henry Gabay. It is aiming to buy another company in the beverage sector, a biscuit maker, a data-centre business and a pharmaceuticals company, Gabay said in a press statement. Th e c o nt i nu e d e xpansion of the team follows recently completed transactions including the acquisition of a leading West-African beverage manufacturer, AJEAST Nigeria Limited, earlier this month, in a bid to profit from increased consumer

spending in West Africa. Duet said it invested more than $50 million to take a majority stake in the business and finance its growth. Its first deal in Nigeria, buying a softdrinks business A consumer goods executive at Ajeast Nigeria’s former parent company, AJE Group, joined Duet alongside the deal. Julio Roda will join Duet’s bench of industrial advisers and help the firm source, scrutinise and monitor consumer-sector investments in Africa, Duet said. Duet also hired three executives to its Africafocused deal team. The most senior hire, Fred Chima, has joined the firm from Singaporean state investment fund Temasek Holdings as a managing director, Duet said in a statement. Chima joined Temasek in 2015, where he worked on direct investments in the Middle East and Africa. Meanwhile, Diamatho

Doumbia has joined as a vice president. Ms. Doumbia joined from L ATC Group, a Nigeria-based investment company, to focus on deals in Frenchspeaking Africa. At LATC she helped set up a logistics business serving the offshore oil and gas industry, Duet said. Former Abraaj employee Kwinten van Nes joined Duet as an associate, the firm said. Mr. Van Nes worked for Abraaj for two years in the firm’s Dubai, Lagos and Mexico City offices, focusing on health-care and consumer investments. A host of investment professionals have left Abraaj or been laid off in recent months as the emerging-markets investment giant goes through insolvency proceedings. Duet now has nine investment professionals focused on deals in SubSaharan Africa, Gabay said. Based in London, Duet Private Equity is a division of Duet Group, an invest-

ment firm founded by Gabay in 2002. Duet also has a hedge-fund arm and this month announced the acquisition of a Belgian wealth-management business, Merit Capital NV, for an undisclosed sum. Gabay said the privateequity business primarily looks at deals in Africa and Central and Eastern Europe but also considers special opportunities in other geographies. The firm finances its deals on a deal-by-deal basis, tapping a network of between 60 and 80 backers including large family offices and large European institutional investors, Gabay said. The firm’s deals are often financed by family offices with experience of a particular sector or market, he added. The Africa team seeks majority equity investments of $20 million to $100 million. The firm has a portfolio of seven African companies, including Ajeast Nigeria.

faction of Abraaj deal-makers is requesting a $375 million break-off from the group’s funds, as disclosed in a proposal sent to the liquidators of the private equity firm. The team is seeking a spin-off in what it termed as “an amicable separation” of the segment from the Dubai-based private-equity firm as seen on Wall Street Journal. In the advent of this split-off, an advisory firm would be appointed to supervise the new segment as a “guardian” with Ahmed Badreldin leading the secession. Ahmed Badreldin has been responsible for Abraaj Group’s investments in the Middle East and North Africa (MENA) since he joined the group in 2008. Abraaj group once had under management, assets worth $14 billion at its peak, but has been seeking to liquidate the business to pay off the $1 billion debt generated from its unusual business model. “Separating the North Africa fund offers a win-win for staff, investors and portfolio companies,” the proposal said. “We would provide the required stability and continuity to ensure that the value of Abraaj North Africa Fund II’s portfolio would continue to be maximized by the team that created it.” Colony Capital in June once agreed to take-over some of Abraaj’s funds of which the North Africa fund was included for an undisclosed fee but the deal collapsed before it was completed. According to the group, the firm raised the North Africa vehicle in 2015 to invest in midsize companies in Algeria, Egypt, Morocco and Tunisia with European Investment Bank and a unit of the World Bank Group as investors. The firm has an estimated realizable value of $1,064 million which has already started getting offer bids from interested buyers. The assets for sale includes 12 funds and holdings in K-Electric, Spinneys, Entertainer and Wamda. Abraaj has recently received several lawsuits in Turkey and UAE from bounced cheques and other legal cases since the commencement of its liquidation. The private equity firm established in 2002, filed for provisional liquidation in June with stakes in select markets in Africa, Asia, Latin America, Middle East, Turkey and Central Asia.

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: samuel iduh ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 15 August 2018

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BUSINESS DAY

Investing in people to build human capital 32 My father wanted me to be a medical doctor – Oba Adeyinka Oyekan 30

Global Mining and Utilities Drops to 6.2% in 2017 - UNIDO 31

Doing it the Steve Jobs way 32

Nigerian woods’ double mess First, Nigeria is reported to be number one destroyer of primary forests in the world. It is said to have joined the likes of countries such as Indonesia and North Korea known for getting rid of their green forest; second, illegal woods’ export from Nigeria to China, Vietnam, Portland, Turkey and Italy has hit a disturbing N122 billion, reports SIAKA MOMOH.

According to information by the Food and Agricultural Organisation (FAO), deforestation accounts for 87 percent of total carbon emissions of Nigeria and its wide biodiversity of 899 species of birds, 274 mammals, 154 reptiles, 53 amphibians and 4,715 species of higher plants will also be strongly affected by the negative impacts of deforestation.

Primary forests FAO records show that between 2000 and 2005, the country lost 55.7 percent of its primary forests, defined as forests with no visible signs of past or present human activities. Logging, subsistence agriculture, and the collection of fuel-wood are cited as leading causes of forest clearing in Nigeria. The FAO records further reveal that primary forests are being replaced by less bio-diverse plantations and secondary forests. It argues that due to a significant increase in plantation forests, forest cover has generally been expanding in North America, Europe and China while diminishing in the tropics.

Deforestation Deforestation is a process where vegetation is cut down without any simultaneous replanting for economic or social reasons. It has negative implications on the environment in terms of soil erosion, loss of biodiversity ecosystems, loss of wildlife and increased desertification among many other reasons. This clearing of the green forest also has an impact on social aspects of the country, specifically regarding economic issues, agriculture, conflict and a lot of damage has been done to Nigeria’s land through the processes of deforestation, notably contributing to the overwhelming trend of desertification. Forest industries The Nigerian forests support a wide range of forest industries, which include both the formal and informal sub-sectors. Agreed that these industries put a lot of pressure on the forest resources of the na-

f there is anything to worry about, in Nigerian agribusiness today, it is its forest resource – its timber in particular, and its related value chain. Nigeria’s timber resource is in trouble, and by extension, the nation’s forest industries are in trouble too. The first scenario is that Nigeria, which is said to be number one destroyer of primary forests in the world, has joined the likes of countries such as Indonesia and North Korea, known for getting rid of their green forests. Second, as if this killing burden is not enough, illegal timber export from Nigeria has hit a disturbing N122 billion level!

tion, but with good forest management, our timber resource will not face the kind of dilemma that it is facing now. The formal sector is essentially wood based and is fairly well developed and comprise mechanical wood industries, including sawmills, veneer and plywood manufactures, particle board, paper and paper board manufactures. Furniture manufacturing is also carried out at a secondary level. The informal forest sector comprises an informal wood based sector which is the country’s largest user of wood, (most of which are burnt as fuel) and the non wood forest products sector. Death of forests The way we are going, if we are not careful, our forest will become extinct and the economy will suffer for it. For instance, a forest resources study carried out by the Federal Department of Forestry in 1988 notes that round wood ( industrial round wood, fuel wood and poles) production in Nigeria comes mostly from the natural high forest zone of the country, in particular from the Southern states of Cross River, Edo, Ogun, Ondo and Oyo states of Nigeria, that its harvesting is carried out not only by mill operators, independent registered loggers but also by poachers, and that illegal felling of logs

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remains a serious problem. “There is a general shortage of round wood and face veneers. The forest resource study puts the volume of industrial wood in 1998 at 268.7 million m3 for all forest types. The continued and sustained levels of round wood consumption in Nigeria are indeed a threat to the forest estate and a source of deforestation which is now a serious problem. This also stresses the need to embark on an aggressive afforestation programme,” the report says. May be some want to argue that 1998 is a long time ago, that the situation must have improved by now. The following will however negate such argument. A study conducted from 1901 to 2005 found out that there was a temperature increase in Nigeria of 1.1°C, while the global mean temperature increase was only 0.74°C. The same study also found in the same period of time that the amount of rainfall in the country decreased by 81mm. It was noticed that both of these trends simultaneously had sharp changes in the 1970s. From 1990 to 2010, Nigeria nearly halved its amount of forest cover, moving from 17,234 to 9041 hectares! The combination of extremely high deforestation rates, increased tem-

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Off BusinesTurf

My father wanted me to be a medical doctor – Oba Adeyinka Oyekan This story, part of a series called ‘Advice Papa Gave Me’ by Siaka MOMOH, was first published in Vanguard on Sunday June 2, 1985.

‘

y father was a perfect gentleman. He was straightforward and godly. And he loved tradition. He was born in 1885 and he does in 1936. He was never an Oba but his father was one. Oba Oyekan 1 was thus my grandfather. My paternal grandparents came from Imesi-Ile in Ilesha area of present Oyo State (this was in 1985, but now Osun State) and settled in Lagos. MY father, a Christian, a thorough one, had only one wife. He was of the Methodist Church where he was a sides man and member of the Auxiliary Society. He had four children, two of whom (the first and the last) died. I was number three and the only surviving son. The number two, my elder sister, is alive – she was 76 last month (remember this statement was made in June 1985). Papa attended Tinubu School and Methodist Boys High School, Lagos. He was very smart in geometry, algebra and arithmetic. And as was expected, I was good in these subjects. But I must say my knowledge of mathematics is declining with age, I suppose. I will be 74 by June 30. His profession was of immense benefit to us his children. He gave us lessons at home after school, which were no doubt very useful. My father wanted me to be a medical doctor but I couldn’t be one because the money was not there. I went in for a close substitute, pharmacy, which attracted no fees. This was at Yaba Pharmacy School. My father was happy about it. He had to borrow money to build a house when we moved from Catholic Mission Street to Isale-Eko.

Oba Adeyinka Oyekan II (1911- 2003) Oba of Lagos, dancing to the ‘Gbedu drums’ during his Coronation in 1965.

He could not defray the outstanding debt before his death. It was less than a thousand pounds. A so called family friend, Amusan Akeju, who is now late, told my mother he would pay the debt and hand over the house when my mother paid back, played her out. He took over the house. I hear his children are now fighting ownership of the house. In our days, pharmacists knew more about treatment than obtains

today. Pharmacists could thus pass for doctors. As students, cocaine was one of the ingredients we had for drug-making. There was plenty of it. No one thought of making wealth with it or snorting it like it is done today. It was imported. My father’s influence on my education apart, he advised me as follows before he died: Said he: “Don’t you ever go against the government. Once a government is formed, you

Global Matters

Global Mining and Utilities Drops to 6.2% in 2017 - UNIDO

‘Statistics presented in the World Statistics on Mining and Utilities 2018 are highly relevant to the Sustainable Development Goals, especially to those related to sustainable production and consumption, which aim at reducing the rate of domestic material consumption.’

Efetobore EKUGBE

he United Nations Industrial Development Organisation (UNIDO) has stated that the combined share of mining and utilities in global GDP has only marginally dropped from 6.8 per cent in 2005 to 6.2 per cent in 2017. According to UNIDO, the reason for this decline was as a result of the growth potential of mineral products generally diminishing due to the depletion of mineral resources; however, increasing consumption of utility products has driven the growth on other side – especially in developing countries. UNIDO in its latest report said developing and emerging industrial economies contributed more than half of the global production

of mining and utility products in 2017. These figures are presented in the World Statistics on Mining and Utilities 2018, a biennial publication of the United Nations Industrial Development Organization (UNIDO), which presents global statistics on mining, quarrying and utility sectors comprising electricity, gas, steam and air-conditioning as well as water supply, sewerage, and waste management. UNIDO said China tops the list of leading economies with the highest share in global valueadded of mining and utilities followed by the United States, Saudi Arabia, Australia and the Russian Federation, maintaining that the extraction of crude petroleum and natural gas is one of the most important mining activities supplying the essential minerals to meet

the energy demand of businesses and households. UNDO added that the per capita consumption of electricity, gas and water is much higher in industrialized countries, however increasing exploitation of mineral resources to meet the growing demand of energy products from industry as a whole has driven higher growth of mining industry in developing countries. “Statistics presented in the World Statistics on Mining and Utilities 2018 are highly relevant to the Sustainable Development Goals, especially to those related to sustainable production and consumption, which aim at reducing the rate of domestic material consumption. However, rising production of minerals may pose certain challenges in achieving sustainable consumption,” UNIDO warned.

must support its policies. Avoid riff raffs, the dregs of the society. Don’t mix with them.” And he went on to say one day, I would become Oba of Lagos, that he saw this in his dream. As if advice was tied to dream, and as if it was predetermined that I would heed advice, I heeded his advice and I am Oba of Lagos today. There was a great scuffle for the throne when it became vacant. The scuffle started in 1949. My real oppo-

nent was Adeniji Adele. But I had another problem - my family -my father’s uncles, four of them, didn’t support my candidacy. They snubbed me and presented Dosumu alias Temiyemi. Unfortunately for them, Dosumu died within six months of the infighting. Meanwhile, Adeniji Adele had been installed Oba. I must mention he was an Action Group (AG) man and I was NCNC. You know what this meant in those days; even now. With the death of Dosumu, the principal actors in my family – the four uncles, felt defeated and shamed. They became penitent for their misdemeanor. They rushed to me, prostrated, and begged that I should forget the past and fight it out with Adele. They did this several mornings. I was capped head of my family in 1950. I took up the challenge and fought the case up to the Privy Council, the highest adjudicating body in the colonial days. The struggle continued till Oba Adeniji Adele died in 1964. I ascended the throne formally in March, 1965. This however was not without contest. There were 50 other contestants whose names were presented to the kingmakers. I was chosen and my name forwarded to government for ratification. You can see it was not all that easy. But one thing was sure – I had a very good record. There was nothing against my candidacy. Outside my administrative functions, as a traditional ruler, as a pharmacist, I am a wholesale dealer in medicines. But drugs are scarce now. I am planning to go into importation. Plans are in the pipeline to float a limited liability company in partnership with some people.

Lagos Chamber holds workshop on transport industry

agos Chamber of Commerce and Industry is organizing a national workshop to address the theme, “Capacity Building in the Transport Industry Visà-vis the Railway, Maritime and Aviation Sub-sectors”. The workshop, according to a statement from LCCI headquarters in Lagos, is scheduled to hold on Thursday, August 16, 2018 at 10:00 am at the LCCI Conference and Exhibition Centre, 10, Nurudeen Olowopopo Drive, Alausa, Ikeja. The theme of the workshop will be addressed by Dr. Dakuku Peterside, Director-General of Nigerian Maritime Administration and Safety Agency (NIMASA), Engr. Fidet Edetanien

Okhiria, Managing Director/ CEO of Nigerian Railway Corporation (NRC), Captain Fola Akinkuotu, DirectorGeneral of Nigerian Airspace Management Agency (NAMA), Mr. John Cashin, CEO & Director of MetroRail Limited and other operators from the private sector of the Industry. The Honourable Minister of Transportation, Dr. Chibuike Rotimi Amaechi is expected as the Special Guest of Honour while the Honourable Commissioner for Transportation, Mr. Ladi Lawanson is the Guest of Honour. The President of the Lagos Chamber of Commerce & Industry, Mr. Babatunde Paul Ruwase, FCA is the Chief Host/Chairman of the occasion.

Wednesday 15 August 2018

C002D5556

Agribusiness

‘FAO food price index records Sharp decline in July’ Stories by Efetobore EKUGBE

he Food and Agriculture Organisation (FAO’s) Food Price Index (FPI) recorded sharp decline in July as all the major traded food items posted notable declines, led by dairy and sugar. According to FAO, its FPI, averaged 168.8 points, 3.7 percent below their June level, the biggest monthly drop since late last year, stating that the index had been on a steady rise in 2018 until June. The FAO FPI is a measure of the monthly change in international prices of a basket of commodities. The FAO Dairy Price Index led the slide, declining 6.6 percent, with butter

and cheese quotations dropping faster than those for whole and skim milk powders. The FAO Sugar Price Index fell 6 percent to a nearly three-year low, largely driven by improved production prospects in India and Thailand, both important sugar-producing countries. Expectations of lower output in Brazil, the world’s largest producer and exporter, limited the fall in international sugar prices. The FAO Cereal Price Index declined 3.6 percent from June and is now below its year-ago level. Export quotations for wheat, maize and rice all declined, although wheat and maize values edged higher towards the end of July.

The FAO Vegetable Oil Price Index was 2.9 percent lower, its sixth consecutive monthly decline, and is now at its lowest level since January 2016. Part of the July slide was driven by spill-over weakness from the soybean market, which is affected by the trade dispute between China and the United States of America. Rapeseed oil values trended upwards, however, buoyed by improved demand from biodiesel producers and negative crop prospects in the European Union. The FAO Meat Price Index declined 1.9 percent from its June value, which was revised up in the wake of higher beef export prices from Brazil due to a truck drivers’ strike.

‘Unique Identification Number will give Nigerians Access to Credit’ ‘According to the World Bank access to credit report, Nigeria has moved from 37th position in 2017 to 6th in 2018, a feat he said was possible courtesy of the federal government’s different initiatives aimed at reducing bottlenecks hindering the business community.’

ith more than 74 per cent of Small and Medium Enterprises (SMEs) having limited or no access to credit, the Credit Bureau Association of Nigeria (CBAN) has stated that a unique identifier would go a long way to unleash access to credit to fund small businesses in the country. Indeed, the Bureau stated that this is a very important infrastructure the government must invest in to really attain financial inclusion, stressing that the present administration must prioritize developmental efforts to implement an aggressive means of Identification otherwise, not much would be achieved. The Chairman, CBAN, Mr. Tunde Popoola, at its 5th national credit reporting conference, said access to credit by Micro Small and Medium Enterprises (MSMEs) and consumers in Nigeria is still very low, stressing that despite the country’s huge population of over 190 million people, less than 15 million persons/entities have enjoyed at least one form of credit from banking institutions. Meanwhile, he stated that according to the World Bank access to credit report, Nigeria has moved from 37th position in 2017 to 6th in 2018, a feat he

said was possible courtesy of the federal government’s different initiatives aimed at reducing bottlenecks hindering the business community. He said the major responsibilities of credit bureaus are data collection, matching and dissemination, maintaining that the value of having a unique identifier cannot be overemphasized in performing these tasks. He lamented that currently, the identifier for corporate entities such as company registration number (RC number) is not readily provided by data furnishers. Popoola pointed out that the country has multiple forms of government issued identifiers for individuals including National Identity Cards, Bank Verification Numbers (BVN), Drivers License, voters card and international passports, adding that in most countries of the world with

successful credit bureau infrastructure, there is always one single means of identification which Nigeria has to adopt. “The current situation makes data matching very tedious, cumbersome and expensive for the bureaus. This is because the bureau relies on identification of data subjects to be able to match and merge data and develop innovative products for the markets. We therefore urge the government to speedily implement a unique identifier for every Nigerian.” Also speaking at the event, the Director, Banking Supervision Department, Central Bank of Nigeria (CBN), Ahmed Abdulahi, said both the financial and non financial sectors have a crucial role to play to attain more financial inclusion in the country, stating that Nigeria’s credit bureau industry has been promoting the use of credit information to make financial decisions to enable businesses achieve their financial goals thus promoting financial inclusion in the country.

BUSINESS DAY

Editor’s Note

his is August, the 8th month of the year. As usual, we bring you another superb edition of your Non-Oil Digest magazine. It is loaded with must-read stories. Nigeria’s timber resource is troubled and the spin-off from this are troubled forest industries. Nigeria is reported to be number one destroyer of primary forests in the world. It is said to have joined the likes of countries such as Indonesia and North Korea known for getting rid of their green forest. As if this is not enough, illegal woods export from Nigeria to China, Vietnam, Portland, Turkey and Italy has hit N122 billion. This is worrisome news in this season when we are rethinking agriculture. Our cover, this month, has the rest of the story. In our entrepreneurship section is Olajumoke Familoni, professor of management and distinguished entrepreneur, who, for three days, in Lagos, taught business stakeholders how to run their businesses entrepreneurially. Late Steve Jobs case study was one of the training aids at the workshop. We bring you Food and Agriculture Organisation (FAO’s) Food Price Index (FPI) in our agribusiness section. It recorded sharp decline in July as all the major traded food items

Siaka Momoh

posted notable declines, led by dairy and sugar. According to FAO, its FPI, averaged 168.8 points, 3.7 percent below their June level, the biggest monthly drop since late last year, stating that the index had been on a steady rise in 2018 until June.The FAO FPI is a measure of the monthly change in international prices of a basket of commodities. Off BusinessTurf this month brings you an interview with Late Oba Adeyinka Oyekan by Siaka Momoh in June 1985 in Vanguard. The interview revealed how the Royal Highness had it tough ascending the throne of his ancestors. This is a must read. For advert placements, sponsorship, reactions editorial contributions, please contact SIAKA through siakamomoh@yahoo.com; 2348061396410; 23408023033988

Nigerian woods’ double... Continued from page 29 peratures and decreasing rainfall are all contributing to the desertification of the country. Put this against the need to revive and sustain Oku-Iboku and Iwopin paper mills, you will have a clearer picture of the issue in question. Or what do you think? Solution How do we make amends? Any solution to the problem of deforestation in Nigeria must be an approach that incorporates and aggressively targets all aspects that are related to the problem. We must start thinking of areas of energy alternatives, improved technology, forestry management, economic production, agriculture and security of the locals that are dependent on the land. One aspect that is very crucial is the need to vigorously engage in replanting of trees that have been cut down. We need to take a cue from Gabon which is currently engaged in sustainable

management of its forest resources. The country has one million hectares of forestry registered under sustainable management permits, including more than one third which has received international certificates (FSC, OLB, Keurhout and ISO). Gabon is currently involved in what it calls ‘Gabon Emergent’ something akin to Nigeria’s Transformation Agenda (if you like Change Agenda). The early results of Gabon Emergent are already visible. This writer was in Gabon and saw it happening. World Bank/Justice for forests A World Bank report, ‘Justice for Forests: Improving Criminal Justice Efforts to Combat Illegal Logging’ has advised on how to fight illegal logging. According to the report, to be effective, law enforcement needs to look past low-level criminals and look at where the profits from illegal logging go. It says by following the money trail, and using tools developed in more than 170 countries to go after dirty money, criminal justice can pur-

sue criminal organizations engaged in large-scale illegal logging and confiscate ill-gotten gains. The World Bank estimates that illegal logging in some countries accounts for as much as 90 percent of all logging and generates approximately US$10-15 billion annually in criminal proceeds. Mostly controlled by organized crime, this money is untaxed and is used to pay corrupt government officials at all levels. The new report provides policy and operational recommendations for policy makers and forestry and law enforcement actors to integrate illegal logging into criminal justice strategies, foster international and domestic cooperation among policymakers, law enforcement authorities and other key stakeholders, and make better use of financial intelligence. Illegal woods’ export This is the second scenario. Report has it that N122 billion worth of Nigerian woods have been exported illegally to

China, Vietnam, Portland, Turkey and Italy. In 2013 alone, report has revealed, illegal logging and lumbering of some wood valued at $156 million were smuggled out of the country, while in 2014, $85.8 million left the country, 2015, $46.2 million; 2016, $16 million; and 2017, $35.22 million. In specifics, International Trade Centre (ITC) Statistics on Nigerian export revealed that China took delivery of woods worth $55 million, Vietnam$4.44 million; Portland, $13.5 million; Turkey. $146.73 million; and Italy. $2.43 million etc. It would be recalled that, worried by the illegal logging going on in the country, President of the Lagos Chamber of Commerce and Industry (LCCI), Babatunde Ruwase, asked the Federal Government to ban exportation of woods in the country. According to Ruwase, “The present level of deforestation in the country in intolerable. It is better to encourage exportation of furniture than the exportation of woods,” raising the issue of value addition which he said “has

more beneficial impact on the economy than primary product export”. Importation of furniture Unfortunately, the importation of furniture to Nigeria has surged to N151.2 billion ($536.3 million since last year when the Nigerian Customs Service removed from the import prohibition list. According to International Trade Statistics, between 2014 and May 2016, Nigeria imported furniture from China valued at $153.8 million; Netherlands, $46 million; Germany, $16.7 million; France, $129 million; United Kingdom, $13.4 million; Greece, $7 million; South Africa, $10.8 million; Turkey, $9 million; United States, $14.6 million; Italy, $16.02 million; and Kuwait, $3.25 million. Chinese Customs Statistics reveal that 45 per cent of the total wood used for furniture in China is imported from Nigeria. We therefore have in our hands right now in our wood industry, a double jeopardy. This is a challenge we must address squarely.

BUSINESS DAY

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Wednesday 15 August 2018

Entrepreneurship

Doing it the Steve Jobs way

lajumoke Familoni, distinguished entrepreneur and teacher of leadership and entrepreneurship, for three days, in Lagos, taught business stakeholders how to run their businesses entrepreneurially. The International Centre for Leadership and Entrepreneurial Development (ICLED) workshop held recently at 239 Muri Okunola Street Victoria Lagos. This writer was a participant observer. Having known the ICLED’s boss Professor Olajumoke Familoni for as long as her training institution had existed (one and half decade), he knew what his co-trainees were up for; he knew they were all priviledged to learn from a reputable entrepreneur and teacher of leadership and entrepreneurship. When she commenced her outpourings on the traits of leaders and entrepreneurs, at the Muri Okunola workshop, citing Steve Jobs and Warren Buffett as case studies, yours sincerely was quick to see the linkage with her earlier treatise, years back, so to say, on innovation in a paper she titled ‘Encouraging Innovation in Organizations’. Siaka could recall Familoni defined innovation as follows: “The word innovation is termed to mean different things to different people, albeit it is so important to the sustainability of our enterprises that when we fail to continuously innovate we face the possibility of extinction. We constantly must review our processes and the way we do things, our products, span our environments for new desires, needs and wants and based on this seek new innovations and process.” Steve Jobs as case study Steve Jobs case study, the learning tool presented at the workshop’s first day (it was a three-day workshop), matched this definition. How? Let us take a look at the following on Jobs: ‘In 1976, when Jobs was just 21, he and Steve Wozniak started Apple Computer in the Jobs’ family garage. They funded their entrepreneurial venture by Jobs selling his Volkswagen bus and Wozniak selling his beloved scientific calculator. Jobs and Wozniak are credited with revolutionizing the computer industry with Apple by democratizing the technology and making machines smaller, cheaper, intuitive and accessible to everyday consumers. (Isn’t this innovative? Isn’t it entrepreneurial?) Wozniak conceived of a series of user-friendly personal computers, and — with Jobs in charge of marketing — Apple initially marketed the computers for $666.66 each. The Apple I earned the corporation around $774,000. Three years after the release of Apple’s second model, the Apple II, the company’s sales increased by 700 percent to $139 million. In 1980, Apple Computer became a publicly traded company, with a market value of $1.2 billion by the end of its very first day of trading. Jobs looked to marketing expert John Sculley of Pepsi-Cola to take over the role of CEO for Apple. (This is an entrepreneurial decision).

Investing in people to build human capital

I The next several products from Apple suffered significant design flaws, however, resulting in recalls and consumer disappointment. IBM suddenly surpassed Apple in sales, and Apple had to compete with an IBM/ PC-dominated business world. (But Apple is not done yet.) In 1984, Apple released the Macintosh, marketing the computer as a piece of a counterculture lifestyle: romantic, youthful, creative. But despite positive sales and performance superior to IBM’s PCs, the Macintosh was still not IBM-compatible. Sculley believed Jobs was hurting Apple, and the company’s executives began to phase him out. Not actually having had an official title with the company he co-founded, Jobs was pushed into a more marginalized position and thus left Apple in 1985. (Wait for Jobs’ next step; there is no stopping the innovator, the one with creative ability, the entrepreneur). Pixar In 1986, Jobs purchased an animation company from George Lucas, which later became Pixar Animation Studios. Believing in Pixar’s potential, Jobs initially invested $50 million of his own money in the company. The studio went on to produce wildly popular movies such as Toy Story, Finding Nemo and The Incredibles; Pixar’s films have collectively netted $4 billion. The studio merged with Walt Disney in 2006, making Steve Jobs Disney’s largest shareholder. Reinventing Apple After leaving Apple in 1985, Jobs began a new hardware and software enterprise called NeXT, Inc. The company floundered in its attempts to sell its specialized operating system to mainstream America, and Apple eventually bought the company in 1996 for $429 million. In 1997, Jobs returned to his post as Apple’s CEO. Just as Jobs instigated Apple’s success in the 1970s, he is credited with revitalizing the company in the 1990s. Innovation With a new management team, altered stock options and a self-imposed annual salary of $1 a year, Jobs put Apple back on track. Jobs’ ingenious products (like the iMac); effective branding campaigns and stylish designs caught the attention of consumers once again. In the ensuing years, Apple introduced such revolutionary products as the Macbook Air, iPod and iPhone, all of which dictated the

evolution of technology. Almost immediately after Apple released a new product, competitors scrambled to produce comparable technologies… You must have noticed the element of creativity, innovation, risk taking. Familoni also had this in her paper in question. Hear her: ‘… Innovation or innovative ideas is not to be taken lightly, as it comes with a price, a price which only most times the daring are willing to take. It’s a price that sometimes defies all logic and knowledge till the price is obvious. This is the price that so called developed countries have paid, the price for their citizens to err, to make mistakes and get up, pat themselves on the back and keep moving till the price is won.’ Jobs and his partner made mistakes, experienced failures, made losses but never gave up.’ We heard all these and more that Monday. We were told he was innovative, passionate, responsible, was not a lone ranger interfaced with all departments, was intuitive – not one to wait for data, thought out of the box, was charismatic, was a fast learner, integrated value chain, leapfrogged, was customer oriented, etc. There was not much on Warren Buffett whose net worth as at July 24, is N$82 billion this first day. The ICLED three-day workshop on Entrepreneurial leadership meant for middle managers, business owners etc, is aimed at making them gain an understanding of crafting and analyzing business ideas, tools and processes of evaluating business propositions and leadership style of communicating business ideas and thinking out of the box in organizations. Feedback Feedback gathered from some of the participants proved they had something good to take home, even with a first day experience. Adefunke Ase from Dr Ase&Co/ASAP Management Services Limited said: “I gained how to handle my business in a better way: working with the right team; ability to restructure, working with the right team; thinking out of the box; how to focus on product/service and not on price. Fadulu Bukola, Head of Operations, ICSL Land Use Charge, learnt how to be a team player; how to be creative and innovative and by so doing, make her organisation profitable. For her, it is ‘No’ to micromanagement ‘but I must have full knowledge of the business so that I can make innovative changes’.

discovered lately that there is a close relationship between the role of a writer and a pastor, I mean a pulpit minister. To write a sermon, the pastor has to be inspired; the pastor is inspired by the Holy Spirit. An issue in the society strikes the pastor, he or she mulls over it, cogitates, or in spiritual parlance, meditates on it, consults the Word – the Holy Bible for references - and he/she puts pen to paper, or in this IT age, engages the keyboard with robust passion. Inspiration The writer does same; he goes through the same process. The writer is said to catch the muse – the creative stimulus, the inspiration. Thus pastors and writers are inspired species. Sermons and stories are meant to shape humanity. The man or woman of God draws on examples to illustrate preaching. The writer does same, and occasionally picks on some stories he or she finds suitable to make a point and publishes such in full. Yours sincerely is a professional writer and by his grace, a minister of God, and so he is speaking from experience. He is playing the latter role on this space today with a profound story on people from the World Bank. The story: Scientific and technological advances ‘Scientific and technological advances are transforming lives: they are even helping poorer countries close the gap with rich countries in life expectancy. But, in fact, more than 260 million children and youth in poorer countries are receiving no education at all. There is a moral case to be made, of course, for investing in the health and education of all people. But there is an economic one as well: to be ready to compete and thrive in a rapidly changing environment. Governments have long invested in economic growth by focusing on physical capital — roads, bridges, airports, and other infrastructure. But they have often under-invested in their people, in part because the benefits have been much slower and harder to measure. Hence, as World Bank Group President Jim Yong Kim noted recently in Foreign Affairs, the world today faces a “human capital gap.” This is a key insight from the World Bank’s forthcoming World Development Report 2019: The Changing Nature of Work. The frontier for skills is moving faster than ever before. But without an urgent and concerted global effort to build human capital, vast numbers of people and entire countries are in danger of being excluded from future prosperity. The Human Capital Project This urgent challenge is why President Kim has put the full backing of the institution behind a new Human Capital Project. The World Bank

Group is committing to help countries prioritize human capital in a sustained way; given the deepening recognition that jobs and skilled workers are key to national progress in countries at all income levels. There are three main objectives: first, to build demand for more and better investments in people; second, to help countries strengthen their human capital strategies and investments for rapid improvements in outcomes; and third, to improve how we measure human capital. The new Human Capital Index, to be released at the World Bank’s Annual Meetings in October, will support all three objectives and offer a crucial resource for both governments and citizens. It will help measure productivityrelated human capital outcomes such as child survival, early hardwiring of children for success, student learning, and adult health. From Transparency to Transformation The index will measure the health of children, youth, and adults, as well as the quantity and quality of education that a child born today can expect to achieve by the age of 18. This will help strengthen transparency, which strong evidence suggests can move people and policymakers to demand and create better services. The data is intended to jumpstart a conversation in each country about what matters for tomorrow, led at the highest levels of government. “The new measurements will encourage countries to invest in human capital with a fierce sense of urgency. That will help prepare everyone to compete and thrive in the economy of the future – whatever that may turn out to be,” President Kim said. “And it will help make the global system work for everyone.” The Human Capital Project will help countries in several areas: leveraging resources and increasing spending efficiency, aligning policies with resultsfocused investments, and addressing measurement and analytical gaps. Governments are already demonstrating an interest in transforming their human capital outcomes. Some of the first countries that are working with the World Bank Group on human capital strategies will share highlights at the Annual Meetings in October. No country can afford to underinvest in its human capital. While the context varies, a focus on human capital is essential for countries at all income levels, since the frontier for skills is continuously moving and the demand for better education and health is increasing everywhere. The Human Capital Project should deliver progress toward a world in which all children arrive in school well-nourished and ready to learn; can expect to attain real learning in the classroom; and are able to enter the job market as healthy, skilled, and productive adults.

BUSINESS DAY

Concerns mount over AbujaKaduna train service Page 34

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World Cup reveals travel experiences at Russian 2018

New data sharing plan to boost passenger info apps

Page 34

Toyota jazzes up 8th-generation Camry …With refreshed looks, more power, superb delivery Stories by MIKE OCHONMA

n a renewed move to shore up its reputation as dependable, safe, and exciting luxury passenger car to drive, one of Nigeria’s bestselling car is broadening its lineup to include “a Camry for everyone” following its unveiling last week inside the Toyota Nigeria Limited showroom located inLekki, Lagos. The Camry model was first introduced in 1982 and has evolved through generations before the 8th generation new Camry. Meanwhile, more than 18 million units have been sold across regions as at 2015. This model has undergone a total transformation and transition, from a proven sedan to one that pushes the limits. It is a model that has enjoyed high level of goodwill. The models being introduced in theNigerian market are 2.5 liter and 3.5 liter petrol engines respctively. For the Camry’s eighth-generation, arriving at Toyota dealerships in the country this summer, designers cast the car in a sportier mold to suit an upgraded slate of engines as well as a new entrylevel model. According to sources of the local franchisee, “Even as we emphasize feel, handling, and overall driving performance, the automakers have created a Camry that continues to improve in the areas of power output and classleading fuel economy which are the two things that will resonate the drivers”. In a welcome remark presented by Kunle Ade-Ojo, managing director, Toyota Nigeria Limited represented by Bunmi Onafowokan, general manager, Corporate Services, he noted that the new model has undergone a total transformation and transition, from a proven sedan to one that pushes the boundaries of technology. According to him, ‘’ It is a model that has enjoyed a high level of goodwill and acceptance not only for the superior quality engineering behind it, but also for its stunning beauty’’. Ade-Ojo said, it is no exaggeration that the rich history of this model already imbues it with outstanding attributes peculiar only to all its siblings in its model line-up. While the Camry is definitely a yardstick by which other sedans are measured, it seems this segment has become increasingly crowded in the past decade and most automakers today sell a high quality, well designed midsize

Wednesday 15 August 2018

New design outlay introduced for Mitsubishi’s global dealerships

sedan like the Camry. Giving highlights of the unveiled Camry, Bayo Olawoyin, brand manager, Toyota Nigeria Limited disclosed that, the engineers line of thought was to manufacture an outstanding vehicle with an appeal founded on rational aspects of quality, durability and reliability, (QDR), Improved ride control, quietness while the engine is on laced with an interior that projects an immediate feeling of excellence on one hand and a driving experience that everyone appreciates. Olawoyin also noted that, among the key selling points are the vehicle’s leading fuel economy and driving performance, world top class safety performance, segment leading advanced human interface (HMI), impressive value and value for money and it is a high quality ride. It comes with more efficient and powerful available LED headlights that naturally add a stylish touch to it, 7-inch colour multi information display to show current and average fuel economy, compass heading and audio presets. There is also the 8-inch multimedia touch screen and available 6 speakers, 800-watt entune 3.0 premium audio that makes occupants feel more at home with this type of audio system. Camry offers a compelling choice of petrol engines, the allnew 2.5LDynamic Force 4-cylinder and a new 3.5L V6, each delivering a sophisticated blend of performance and efficiency. Both engines utilize the D-4S direct-injection system, which selects the optimal injection method based on driving conditions to pack a powerful punch with en-

hanced fuel economy to boot. The new 2.5 liter engine has improved performance by approximately 6% over that of the outgone model. In terms of specifics, the 2.5 liter version has fitted into it 215/55 R17 tire size, comes with 6-speed automatic transmission, 8 inches display audio, DVD, 6 speakers, dual auto AC, 1-12V console box, 2 USB at rear, push start button, cruise control, clearance/back sonar,

and reverse camera. On the other hand, top of the range 3.5 liter version comes with everything like the 2.5 liter variant, but in addition to enhanced tyre size 235/45 R18 , 8 speed automatic transmission and 3-zone auto airconditioning system.

ast month, automotive manufacturer Mitsubishi Motors Corporation (MMC) announced that it will introduce a new design for the interior and exterior of about 5,000 dealer stores globally. The move is based on the new brand message ‘Drive your Ambition’, initiated in October last year, and is intended to provide a better customer experience in a high-quality retail environment and to strengthen Mitsubishi Motors’ brand image. The striking new design features black, white and grey colour schemes with red dynamic lines as an accent. The uniform design will also ensure a coherent experience for customers across all points they touch the brand, from motor shows, websites and brochures to the dealership. The architecture reflects the new corporate and visual identity, with a dynamic slope as a signature element to present the robust and dynamic image of the brand. Inside, the showroom is designed to provide a better customer experience, while the cars are presented to make sure they are seen as the stars. “Our brand is evolving and we need to reflect this in each and every customer touch point,” says Mitsubishi Motors global marketing and sales division senior VP Guillaume Cartier. He notes that implementing the new dealer identity is to ensure that customers experience a consistent ‘Mitsubishi-ness’, including the look and feel, and service quality of Mitsubishi Motors globally.

Jaguar Landrover dealership announces new models entry

R-L: Yebeltal Getachew, Customer & Commercial Leadership Director, Coca Cola Nigeria, Abiona Babarinde, GM, Marketing & Corporate Communications, Coscharis Group in hand shake with Ahmed Oseni, Captain of IBB Golf Club, Abuja and Olalekan Adenuga, DGM, Network Development, Coscharis Motors at the official unveiling of the latest Jaguar Landrover models into the local market held at the IBB Golf Club, Abuja last weekend.

34 BUSINESS DAY

Wednesday 08 August 2018

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Local and global rail news as it breaks

Concerns mount over Abuja-Kaduna train service World Cup reveals travel experiences … Two years after take off at Russian 2018

MIKE OCHONMA & STELLA ENENCHE

wo years after the all the glitz and razzmatazz that heralded the official opening of the AbujaKaduna standard gauge rail line for passenger service, investigations by BusinessDay has revealed that the standard and quality of service that defined the system when it was commissioned is gradually falling. Checks reveal that some of the challenges confronting are many, among which is ticket racketeering, double ticketing, and theft has characterised activities at the Idu - Rigasa service stations. There are also issues that border on the lack of coordination at the point of ticket sales, and poor hygiene. During a recent tour on the train, it was observed that, at the point of ticket sale at the Kubwa station, there was no request for passenger identification, like in 2016 when the train commenced operations and was highly celebrated. Concerns are now being raised that the development has grave security implication on passengers, as this opens the system to infiltration by criminal elements. To confirm these fears, BusinessDay found that the police officers attached to secure and guard the station were just at the entrance to the station are only there without any sense of responsibility, with little or no attention paid to security- who was going in and out of the station. Worried by the state of affairs of the service delivery, Nuhu Waya, former minister of state for power and one of the commuters of the AbujaKaduna train services who with our reporter called on the management to adopt a better way of handling ticketing. He added that people do not have to queue up to buy ticket at the station. “Just as we do at the airline where people can buy ticket online, we don’t just have to come to here before we confirm that we are really travelling. That will ease the suffering

he world cup mundial have ended in Russia, but fans that travelled by train would have seen a lot of Russian Railways during their travels to Nizhny Novgorod, St Petersburg, Samara, Volgograd and Kaliningrad, which are respectively a four, four, 13, 18 and 20 hour train journey from Moscow. During the World Cup, matches were hosted at 11 Russian cities. Of these Yekaterinburg was the furthest from Moscow, requiring a 27-hour train journey of 1,100 miles. Although fans were faced with long train journeys, they did not have to pay for their rail travel if they registered for a Fan ID and had a match ticket. In this way, tickets were issued to 319,000 fans who were car-

of passengers and ensure that they get their seats, “but over all, it’s a good start,” he however stated. He called for railway police that will be monitoring what is going on the train adding that the railway police have always been there since the days of Nigeria Railway Corporation and should be awakened. “The security on the coach is quite satisfactory at least we are not confronting kidnappers in the train but conduct of our people should improve so that there should be quarrelling on the train over seating arrangement.” At the Kubwa station, it was discovered as at 9:40am that, the beautiful toilet facilities installed there were not functioning, except for one of the taps at the corridor. Arriving at the Kaduna station, there were no security checks as our correspondent walked in freely to the waiting room without any hindrances from supposed unarmed security men. Some of the passengers, who

spoke on their experience on the train advised that the ticketing system should be computerized to help curb the issue of ticket racketeering. An angry commuter, who simply introduced himself as Frank confirmed that multiple tickets were sold for the same seat. “And now I paid for a seat and am standing. I don’t think they (railway management) are moving forward,” he fumed. “The quality of service is poor, they should look into it particularly ticketing because they are engaging in sharp practices,” Frank lamented. Another passenger, Mohammed Ishaq however commending the rail management said, “It’s a fair service because it is serving the purpose it is meant to serve but as usual with this country there are lapses. “I think the government is not doing enough to monitor what they are doing because they are over selling tickets with the wrong dates on them. Just today they sold a ticket carrying yesterday’s date on it to my friend,” Ishaq revealed. Raising concerns about the hy-

giene of the toilets in both Abuja and Kaduna stations, another regular user of the corridor, who pleaded anonymity advised, “don’t even dare to use the toilet in Kaduna because it is a whole mess and possibly could infect the user. As you can see, it is is only one of the taps that is running in Kubwa station but better than Kaduna. In Kaduna you will have to buy water outside to clean.” The project, which cost the federal government a whopping sum of N317.3billion, is among the most expensive rail projects in Africa, according to experts. The 186.5km Nigeria’s first standard-guage rail track connects the federal capital city Abuja with Kaduna state which enables faster movement of good and people between the two cities. With the addition of eight coaches on January 5, 2018, the rail transport currently does four trips, conveying about 2000 passengers on a daily basis to and from the Abuja -Kaduna route.

New data sharing plan to boost passenger info apps

ritish passenger operators have agreed to publish more real-time information to enable tech firms to develop better travel apps under new plans announced on August 8 by rail minister, Jo Johnson, and Rail Delivery Group (RDG) chief executive, Paul Plummer. The initiative will see more realtime information made available. The initiative will see more real-time information made available. The Department for Transport (DfT) says it is targeting closer ties between rail and tech firms with the aim of achieving seamless, hasslefree journeys. It also wants to provide better updates for passengers on services and delays, as well as more information about seats and on board facilities. It says better use of data could also allow train

operators to plan more effectively and to predict and fix issues before they arise, creating a more reliable railway. The British government and RDG, which represents the rail industry, have published the Joint Rail Data Action Plan which sets out the

obligations and deadlines for delivering on these ambitions, overseen by an industry-led taskforce. Building on data that the industry has already made available, data will be released over the coming months to provide more consistent and timely information about train services, delays and disruption. Information will also be made available on the composition of up each train, enabling operators to more accurately communicate on board facilities, and to help passengers plan ahead and board in the most convenient place. The plan will see the rail industry identify and remove barriers to better information sharing by improving standardisation of how data is collected, stored and published, and improving clarity over which data

is commercially sensitive and what data can be used for what purposes. The government and rail industry will also explore what incentives could be introduced to drive further innovation and data sharing, on top of that already planned. “Technology gave rise to the railway, connecting Britain, and the rail industry wants to channel this spirit to help produce cutting-edge products and services that can be exported around the world,” Plummer says. He noted that, digital technology in rail already means more timely information and less time spent waiting, helping to put customers in charge, and as part of the rail industry’s plan to change and improve, we want to use technology to give customers more and more control.

ried on 734 special trains on 31 routes between the host cities. In addition, 12 suburban rail operating companies provided free travel for 290,000 passengers and the metro system in most cities (including Moscow and St. Petersburg) offered free travel at certain times on match days. Head of Russian Railway’s passenger business Pavel Burtsev considered that the success of these additional trains was, in part, due to station and infrastructure projects during preparation for the championship and the modern rolling stock used for them which included high-speed Sapsan trains, new double-decker trains and Lastochka trains. More than 2,300 conductors and 4,000 railway station personnel received special training and English language signs were provided at stations used by the fans. Russian Railways CEO Oleg Belozyorov considered that “Railway workers contributed greatly to the immense success of the competitions. We have received positive feedback from both fans and our foreign colleagues.” The 2026 World Cup will be hosted by Mexico, USA and Canada with 3,000 miles between two of the host cities, compared with the greatest distance between stadiums of 1,100 miles during the Russian World Cup. It will be interesting to see how North America’s railways rise to this occasion.

Wednesday 15 August 2018

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Tax Issues

BUSINESS DAY

Taxation still seen as critical ‘stay awake’ issues for CFOs IHEANYI NWACHUKWU

espite renewed optimism in 2018, a KPMG study shows that Chief Finance Officers (CFOs) of companies still have some critical ‘stay awake’ issues which includes taxation. No fewer than 57 percent or over half of CFOs surveyed by KPMG expressed high concerns about the government’s aggressive tax collection drive as well as concerns of tax duplicity and multiplicity. In addition, 43percent of the survey respondents are wary of ambiguous tax law provisions. In its annual CFO outlook survey, KPMG had sought the views of CFOs on the outlook for their businesses in 2018, current strategies for cost and risk management and what they believe the Government should prioritise to create an enabling environment. In comparison to 2017, CFOs are more confident about the general business outlook for 2018. KPMG International’s global survey of CFOs and other senior finance executives of organisations worldwide is one of the most comprehensive and long-running survey series of its kind. Some of the specific areas of concern noted by CFOs include the overall uncertainty in policy direction, slow pace of

government action, need for improvement in electricity and transport infrastructure, as well as multiple taxation. “Taxation should continue to be a focus for revenue generation but should not be the only focus”, according to Austin Menegbo, CFO, Segilola Resources Operating Limited. “In principle, in any country, the

citizens should pay their taxes, and they should embrace it as a civic duty. However, this works better when the government fulfills its basic obligations and provides necessary basic infrastructure,” Oyinkan Adewale, Chief Financial Officer, Union Bank of Nigeria Plc said in the KPMG survey dated March 2018. This is germane in light of new legisla-

tions and regulatory policies of the government. A good number of the CFOs believe that there are grey areas on interpretation of the tax laws. In addition, with increasing sophistication and transformation of business value chains, there are several areas for which there are currently no provisions in the tax laws. Consequently, there is a need for the government to review the tax laws and consider the applicability and implementation of these laws viz-a-viz business changes and developments. Organisations and CFOs are expected to pay particular attention to increasing enterprise value through proactive management of tax issues particularly engagement with the tax authorities. In the survey response, Brian Egan, group CFO, Dangote Cement Plc wants tax assessments to be based on factual information. “Government should explore the use of technological tools in determining assessments,” he added. Also, Banji Adeniyi, Chief Financial Officer, GTBank Plc said in the survey that “plethora of taxes that are levied from time to time and engagement of consultants by different Government agencies especially States Inland Revenue Services and RMFAC makes the business environment very unfriendly and reduces the ease of doing business in Nigeria.

Principles for identification and taxation of capital income in Nigeria (2) Continued from last week

he application of this principle has been established in a number of judicial decisions, globally. For example, in the case between the Commissioner for the South Africa Revenue Service (CSARS) and Founders Hill (PTY) LTD (FH) [CSARS v Founders Hill (case no. 509/10) [2011] ZASCA 66 (10 May 2011)], the Supreme Court of Appeal of South Africa (SCA) ruled that the income earned by FH from disposal of surplus land was revenue in nature, due to the fact that a profit motive was established from the arrangement of the sale. In this case, the respondent (FH) was established by its parent company, AECI Ltd, to acquire the surplus land held by the latter solely for the purpose of realizing the land. FH contended that the gains made from the sale of the land were capital in nature because the land was a capital asset held for advantageous disposal, not a stock-in-trade held for profit. The SCA, however, held that the land was a stock-in-trade for the company, because the sole objective of the company was to realise the land on behalf of its parent company. In a similar case in Nigeria between Arbico Limited (Arbico) and the Federal Board of Inland Revenue (FBIR), [Arbico v FBIR, (case no. 2 All NLR 303) (1996)], the Supreme Court in Nigeria (SCN) held that the profit made by Abico from a single sale of building was a trading profit, rather than a capital profit. The SCN supported the findings of the lower courts that the sale of the building by Arbico was driven by the opportunity to make a profit, which the company did in pursuit of its business objective. Arbico, a building contractor, acquired a piece of land and developed it for the purpose of accommodating its expatriate employees. However, the building was subsequently sold to the Federal Government of Nigeria after completion. The company contented that the income was capital in nature, because it did not arise from its normal business activity, and that the building was a capital asset of the company. This principle can sometimes be based

on subjective evaluation. Therefore, a critical assessment of the facts and substance of the transaction must always be carried out. It is not always sufficient to solely rely on the professed intention of the seller. Some indicators of profit motive include; the repetitive nature and frequency of the transaction, recognition of a superprofit, the accelerated/impromptu nature of the sale, for example, if an item/asset is disposed for a profit before it is fully depreciated or amortised. These indicators are not conclusive evidence in themselves; hence, the circumstance of each transaction must be discussed with the seller before reaching a conclusion. •Surrogatum principle: This is a Canadian income tax principle, and is typically applied to a compensation received, e.g. for a loss or breach, termination of contract, insurance claims, court settlement, etc. It considers the substance of the event that gave rise to the compensation, and assesses the impact of the event on the business of the beneficiary. This principle was applied in the case between River Hills Ranch Ltd., Bar M Stock Ranch Ltd., Avalon Ranch Ltd.(collectively referred to as taxpayers) v Her Majesty the Queen (revenue authority) (case no. 2009-1597(IT)G) (2 August 2013)]. The taxpayers received a compensation from their contractor on termination of a contract that led to the complete cessation of their businesses. The Canada Revenue Authority assessed the payment to income tax, but the taxpayers objected to the assessment and argued that the income was capital in nature. The court held that even though the terms of the contract suggested that the compensation was for expenses incurred in providing service to the contractor, the actual substance was that the payment was to compensate the taxpayers for loss of contract which represented their entire business, hence, the income was capital in nature and should be taxed as such. In essence, if an event materially impacts the operations of a company, or its assets, any compensation received in respect of such event would be deemed a capital sum. On the other hand, if the event does not materially affect the

operations or assets of the company, any compensation received will be considered as part of its operating income, and would therefore be treated as a revenue receipt. ªThe incidental principle: This principle is used to evaluate incomes that are not related to the disposal of an asset by a seller, i.e., where an income is received by the seller/beneficiary without a corresponding disposal of an asset or property. In applying this principle, it is important to consider how the gain or income originated, and the underlying purpose for/substance of the transaction. In some instances, the impact of the income on the business may also be considered (similar to the evaluation under the surrogatum principle). This principle was applied by the UK Court of Appeal - Civil Division, in the case between Inland Revenue Commissioners v John Lewis Properties Plc (Case number: A3/2001/1543) [5]. The Court ruled that a lump sum payment received by John Lewis Properties Plc (the tax payer) from a Bank, for surrender of it rights to rental income for a period of five (5) years to the Bank, was a capital income. The court concluded that the substance of the transaction was a temporary sale of interest in the underlying assets (that is the landed property) which produced the rental income for the Bank. The taxpayer owned some properties which it leased to a related party. In 1995, the taxpayer executed a deed of assignment with a Bank to assign its right to receive the rents on the properties for a period of 5 years to the Bank. In return, the Bank paid a lumpsum / upfront amount of £25m, which represented the discounted value of the 5 year rent on the date of the assignment. Also, the tax payer (and its related party) claimed roll-over relief for capital gains on the full amount received. It is important to note that this transaction structure was a wellrecognized tax avoidance scheme adopted by property owners in the UK at the time (so that they could pay CGT instead of income tax on potential rental income). In Nigeria, this principle was espoused in the case between United Dominions Trust (UTD)

Bank (Nigeria) LTD (UDTN) v FBIR [(case no. APP/COMM/237) (1 December 1976)]. In this case, the Body of Appeal Commissioners (BAC) held that foreign exchange gain realized by UDTN was revenue rather than capital in nature. UDTN had obtained a long-term pound sterling denominated loan from its parent company, UTD London, to finance the hire-purchase of cars for Government employees. However, due to the devaluation of the English pound sterling, UDTN made an exchange gain on settlement of the loan obligation. The BAC posited that the loan from UTD London which gave rise to the exchange gain, was obtained by UTDN for the purpose of its hire purchase business and was not intended to form part of the company’s capital structure. The ratio decidendi in this case was a consideration of the intention of the parties with respect to the loan, i.e., whether the loan was intended to form part of the capital structure of the borrower, or to be used as its trading stock or to buy trading stock. Conclusion Based on the above, there is an urgent need for the Nigerian tax authority to, as much as possible, clarify the rules for identification of capital and revenue incomes for tax purposes. However, the principles discussed above should serve as a guide to the tax authority and tax payers when evaluating various business incomes for tax purposes, subject to express limitations imposed by the relevant pieces of legislation. A careful, contextual and dispassionate application of these principles will help parties reach an agreeable position in cases of disputes regarding proper classification of income for tax purposes. The correct decision must be based on the facts of the transaction, not on conjecture of the parties.

Babem, Olufemi Senior Manager, Tax, Energy & Natural Resources, KPMG in Nigeria Awe, Lovina Senior, Tax, Energy & Natural Resources, KPMG in Nigeria

36 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 15 August 2018

Supported by:

BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM Themed: How technology is driving financial inclusion in Nigeria With special guest; Olufisayo Oludare, Head of Business & Strategy, at Advancio and BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde peaking on how Advisory Interactive Solution is helping to spur financial inclusion in Africa most populous nation, Oludare, the guest on BusinessDay’s radio show said the firm is a financial software development company that focuses on financial inclusion. “So we build solutions that will help drive financial inclusion in different parts of Africa. Our flagship solution is Cover Branchless, which is currently being used by four banks to help them carry out basic financial services outside of a typical branch. So today, we are working with Wema Bank, Diamond Bank, Keystone and Heritage Bank; these banks are using our solutions which could be accessed via different channels like the POS, MPOS, Android and iOS applications to carry out transactions in rural and remote places,” Oludare said. With the company’s solution Oludare said it can easily create a bank account for anybody and the person’s account number will be sent directly to the phone number used to register and they can start transactions immediately. The transactions range from funds transfer, bills payment and customer services pertaining to their various banks. When asked on the best model in capturing more people into the financial net, considering the Central Bank of Nigeria threw in the towel on its 80 percent financial inclusion target in 2020, the guest said he knows mobile money is the fastest way because if one looks at the mobile phone penetration in Nigeria, it has over 110 million phones in circulation and about 80 percent of it is unique. “So with people having unique identifiers as phone numbers, they can easily create bank accounts for

these people and use any type of feature phone to access the account and do transactions from your SIM Toolkit. Yes, I will say mobile money but there are discussions around that and I am sure the CBN is working with the major players to make that happen,” he said. When the guest was asked why CBN seem sceptical in allowing telecoms to take the lead in financial inclusion, and the likely hindrances that are keeping the licenses from the telecoms Oludare said CBN wants to protect the banks. “Banks should do the banking not the telecoms and that is what they are trying to achieve for the population. We have over 180 million Nigerians and I am sure they do not want the telecoms to take over that market from the banks

because if the telecoms start doing the banking what will the banks do? What I suggest is that the telecoms should help in getting people bank accounts and then the bank will do the banking. The issue is that financial literacy is not enough in Nigeria so telecoms can help with that though agents scattered all over to help with financial literacy and opening bank accounts,” the guest said. Explaining the step by step process of how Advisory Interactive Solution open bank accounts the Lagos-based Head of Business & Strategy at Advancio said the application that is installed on any Android or iOS phone will capture basic details ( tier one details) for the customer. “First name and last name, phone number, date

of birth, gender and then the persons address. We can then take a picture of the person and the person sign twice on a white sheet of paper and then we take a picture of that too. When we proceed, it will show the agent a summary page and if the information is correct, you push it and when you do so, our solution has a back end that talks to the core banking application which generates a bank account and sends it to the customer immediately. When the customer receives the account number, he can pay cash to the agent directly to credit his account in some cases, there is an immediate amount that is taken with the bank account of about N1,500 depending on the bank because ATM cards will be issued immediately. Tier one bank accounts

will let you do one time transactions not higher that N50,000 and you cannot save more than N300,000. If you have a Bank Verification Number (BVN), our solution will also help you validate it so what we do is if you give me your BVN, the agent will enter it and the platform will validate it and it allows you to do a withdrawal. So in one of the banks we are working with, you can also be issued with a debit card instantly and you can take that debit card to the nearest ATM, change your PIN and start doing transactions,” Oludare explained. On how many people have been reached through the platform, the guest on the radio show said “we have opened over 1,000 bank accounts and we have done billions of transactions in terms of volumes

since we started in February last year. We started with Diamond Bank and they are doing very well, accessing us through different channels like I mentioned earlier, you could use a smart phone, POS or mobile POS platforms and the bank agents are the people that need to have the mobile phones and POS devices.” While on the challenges the platform and the agents trying to implement the solution are facing Oludare said at the beginning, it there was scepticism, as people did not believe that one could open bank accounts instantly. “When it started, I remember a rural area in Abuja who were surprised but later were the ones spreading the word that you could get a bank account immediately so it was a market place and the information went round and people started saving.” The requirements to have a BVN are quite steep and for rural dwellers to migrate Tier One accounts to tier two, what happens to the accounts after the seizure of the account? Oludare responded by saying one does not need to migrate to Tier two to have access to their money but rather just a person just need to have a BVN. “To get the BVN is the official requirements, truth of the matter is if you have a tier one account and you walk into a bank branch, they are going to create a bank account for you.” “The good thing is that CBN has allowed the creation of BVN without bank accounts. They have given super agents the license to create BVN for people. So for the people in Maiduguri that do not have these things, I am not sure how they will have access to their funds. These are strict rules in Nigeria, you need a PVC and you can get a PVC as long as you are 18 and it is in every Local Government, so get one, in my opinion, PVC is the easiest thing to get. Some of the agents that open accounts for these rural dwellers also follow up and open BVN for them, Wema Bank is doing a good job with that and they actually facilitate. To solve that Continues on page 37

Wednesday 15 August 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION LBS: set to release annual digital financial inclusion report Supported by:

bid to create fit-for-purpose interventions.” Oyinda commented. The institution has released three reports under a study titled “Sustainable Business Models for Delivering Digital Financial Services to Lower Income Unbanked Citizens of Nigeria”. The study focused on an in-depth analysis of mobile money consumers and operators (MMOs), identifying sustainable business models and other market interventions which would enhance financial inclusion. The institution has also published the first report titled “Digital Financial Ser-

vices in Nigeria: State of the Market Report 2016” that provides an overview of the current state of financial inclusion and digital financial services adoption in Nigeria. It also focused on understanding consumer profiles as well as the supply-side assets, resources and capabilities (ARCs) needed to effectively deliver mobile money services in Nigeria. In the second year, the focus was two-pronged: consumer gender segmentation and the regulatory landscape. The gender segmentation provided insights into the gender differences in financial inclusion across Nigeria’s adult population.

On the regulatory side, regulatory and legislative documents were mined to identify market-enabling policies for sustainable Digital Financial Services. The results were consolidated and presented in a second report titled “Digital Financial Services in Nigeria: State of the Market Report 2017”. This year, the focus is on the economics of financial inclusion and customer segmentation. The economics of financial inclusion is a six-paper series’ study that looked at the nexus between financial inclusion and key macro-economic variables and how financial inclusion contributes to economic growth and development. The Customer Segmentation Framework (CSF), an artistic presentation of the findings of the study introduces the different customer personas of the unserved & underbanked to aid intervention efforts. The launch and exhibition will provide an opportunity for stakeholders of the financial service industry to experience and learn more about the different personas of Nigerians who live day to day without financial services. SIDFS is an initiative of Lagos Business School developing a comprehensive financial ecosystem with the support of the Bill and Melinda Gates Foundation.

That does not make sense. The CBN needs to reduce the regulations around the banking of tier one customers,” Oludare added. The guest responded on if financial inclusion should just be on paper “If you are familiar with what the CBN and the commercial banks are doing, you will agree with me that they are moving even though it is at a slow pace. The whole BVN thing will be solved soon as a similar model used for the PVC will be adopted. The CBN is now working with agents on this and not government offices to fast track this.” What do you think a company as yours can do to provide advisory services to your customers?

Responding to the question Oludare said “so financial literacy is what people should start with, the banks are not playing their roles. So when we started we did some of this stuff for microfinance banks and worked with market people. These guys when they see banks, they see it as a place where they save their money and get loans, but that is not happening. So there is a lack of trust, but then the banks can also say bring your money and we will give you loans at low interest and this will drive people there.” “The likes of PiggyBank are doing a good job even though they are just rendering added value services and not including new

people. Today in the market places, people are not formally included but they have their own collective associations. We created a product back in the day for these people using a model similar to the “Baba Alajo” model. We go around daily and collect your money and you get an alert signifying that your money has been saved in the bank. The person gets the interest on his money while equally paying for the service being rendered. Today they pay an agent fee of 3.3 percent of every deposit volume, because when Baba Alajo comes, the first day is what they take and what you save for the remaining 29 days belongs to you,” Oludare concluded.

OLUWATOSIN DOKUNMU

agos Business School (LBS) has disclosed its plans to release the third annual digital financial inclusion report titled “The Consumer Segmentation Framework” during a two-week art exhibition from August 16, 2018. The Sustainable and Inclusive Digital Financial Services (SIDFS) initiative of the LBS in partnership with Dalberg and the Bill & Melinda Gates Foundation, conducted a survey on the unserved and underbanked consumer segments in Nigeria to uncover insights useful for decision making. The SIDFS intends to present the research report during an art exhibition portraying the characteristics of individual customer segments which is in a drive towards developing a sustainable framework to bring all Nigerian adults into the financial fold. The insights in the report is expected to aid regulations and decision making for key stakeholders in understanding the segments they seek to serve. Immanuel Umukoro, research fellow, SIDFS opines that “this exhibition will help key stakeholders better appreciate and come to

terms with the reality of the audience that they seek to serve.” “Our evidence-based approach employs scientific and analytical methods to acquire and explore consumer and operator data, from which we uncover insights which drive innovative product development. These are not just economic in nature but consumer-centric, and will also spur reforms that are able to catalyze the digital financial services ecosystem in Nigeria.” The essence of launching the report during the art exhibition is to help stakeholders understand

the target market as art and culture reflects the true nature of people. “Art has been described as helping to hold a mirror up to society, reflecting its interests and concerns while at the same time challenging its ideologies and preconceptions.” Oyinda Fakeye, co-founder & director, Video Art Network Lagos (VAN Lagos) and curator of the art exhibition, said. “The power of using audio-visual realism to portray the customer segmentation profile is such that will allow stakeholders connect deeply with the personas that they seek to engage, in a

BusinessDay Radio programme; Financial Inclusion Today Continued from page 36

problem faster, the CBN is working with some players in the industry who have thousands of agent locations where the rural dwellers instead of going to the bank, can just go to the supermarket and get your BVN captured and it will start anytime soon from the last discussions we had as they are just the partnership,” Oludare explained. On how the telecoms can use their wide reach of people to create more bank accounts the guest said the mobile money can be used on anybody’s phone in the SIMs tool kit and Banks have incorporated opening accounts with the USSD, and so what that does is

that the data stored from the registration of the SIM can be passed to the bank and bundled together to help one open the account but to access it to make withdrawals, the person will have to be properly identified before they can part with the money that is theirs. Who follows up after you have created solutions, do you think the responsibility is just on the Banks? Oludare replied by saying “I went to Kenya last year to see how MPesa works, I did not just google it, I had to go and breakdown how it worked for them. Well, in the case of Kenya, the cart was before the horse and in Nigeria, it is the other way round. The regula-

tions have strained a lot of systems in the country, all the companies that help the digital banking space have to run through banks as everything banking has to go through the banks in Nigeria. So CBN can relax on some of those things and then people will go to work.” “I do not see why somebody that has not heard of banking should have a BVN before a bank account. So if we go to a rural area and convince a farmer that he should open a bank account because of access to credit and other benefits that he is entitled to and he agrees, I proceed to open a bank account for him and I cannot complete it because he does not have a bank verification number.

BUSINESS DAY

Wednesday 15 August 2018

Live @ The Exchanges Top Gainers/Losers as at Tuesday 14 August 2018 GAINERS Company

Market Statistics as at Tuesday14 August 2018

LOSERS Opening

Closing

Change

Company

Opening

Closing

Change

INTBREW

N33.45

N35.2

1.75

FLOURMILL

N24

N22

-2

NASCON

N19.95

N20.5

0.55

UACN

N14

N12.65

-1.35

CUSTODIAN

N5.13

N5.64

0.51

BERGER

N7.95

N7.2

-0.75

UNILEVER

N52.6

N53

0.4

ETERNA

N7.2

N6.5

-0.7

UAC-PROP

N1.8

N1.9

0.1

NNFM

N7.2

N6.5

-0.7

ASI (Points) DEALS (Numbers)

igerian stock market which opened this week with the value of listed equities at N12.941trillion closed Tuesday August 14, 2018 at N12.883trillion, representing a dip of N58billion. The Nigerian Stock Exchange (NSE) All Share Index (ASI) which also opened this week at 35,446.47points closed Tuesday at 35,288.23 points. Nigerian stock market has underperformed lately due to brewing political risk coupled with underwhelming first-half (H1) 2018 earnings released last week. UBA Plc, Lasaco Plc, FBN Holdings Plc, Fidelity Bank Plc and GTBank Plc were actively traded stocks at the Lagos Bourse on Tuesday. In 3,448 deals, stock traders exchanged 164,512,517 units valued at N1.612billion. “We expect sell pressures to be sustained in the market till midweek even though the Relative Strength Index (RSI) of the market (at 24.7) is below the oversold threshold of 30”, according to Lagosbased investment analysts at

Afrinvest. Also in their investment view this week, United Capital analysts expect the stock market to remain largely downbeat “due to the absence of a bullish trigger”. They however noted that the current depressed market provides long-term bargain hunting opportunities on fundamentally mispriced stocks. International Breweries Plc occupied topmost position on the gainers table after rising by N1.75 or

5.23percent from its open price of N33.45 to close at N35.2. Also, NASCON Plc rallied from N19.95 to N20.5, up by 55kobo or 2.76percent; Custodian Investment Plc stock price advanced from N5.13 to N5.64, up by 51kobo or 9.94percent. Unilever Nigeria Plc rallied from N52.6 to N53, up by 40kobo or 0.76percent; while UAC-Property Development Company Plc rose by 10kobo, from N1.8 to N1.9, up by 5.56percent.

VALUE (N billion)

On the loser list, Flour Mills Nigeria Plc dipped most after moving from N24 to N22, down by N2 or 8.33percent. UAC of Nigeria Plc declined from N14 to N12.65, down by N1.35 or 9.64percent. Berger Paints Plc dipped by 75kobo or 9.43percent, from N7.95 to N7.2; while Northern Nigeria Flour Mills Plc declined from N7.2 to N6.5, losing 70kobo or 9.72percent. Eterna Plc also lost 70kobo or 9.72percent, down from N7.2 to N6.5.

L-R: Naboth Onyesoh, manager, corporate communications, Nigerian Content Development and Monitoring Board (NCDMB); Isaac Yalah, director, finance and personnel management, NCDMB; Tinuade Awe, executive director, Regulations, The Nigerian Stock Exchange (NSE); Simbi Wabote, executive secretary, NCDMB and Rose Chukwuonwe, coordinator of legal services, NCDMB during a Closing Gong Ceremony at the Exchange in Lagos.

that mandated central clearing of standardised over-the-counter (OTC) derivatives. CCPs should be subject to strong regulatory, supervisory and oversight requirements to fully realise the financial stability benefits they offer. Analysing the network of relationships is a useful starting point for understanding potential sources of systemic risk in central clearing. To assess whether the findings of the July 2017 report (based on data as of September 2016) were stable over time, the international standard-setters conducted another more streamlined data collection (as of October 2017) from the same 26 CCPs. The results are broadly consistent with the previous analysis and show that: Prefunded financial re-

sources are concentrated at a small number of CCPs. The two largest CCPs (as measured by prefunded financial resources) account for nearly 40percent of total prefunded financial resources provided to all CCPs, compared with 32percent in the July 2017 report. Exposures to CCPs are concentrated among a small number of entities. The largest 11 of the 306 clearing members (as measured by prefunded financial resources provided to the CCP) are connected to between 16 and 25 CCPs. Viewed from the perspective of CCPs, this indicates that the default of a CCP clearing member could result in defaults of the same entity or its affiliates in up to 24 other CCPs included in this analysis.

The relationships mapped are characterised, to varying degrees, by a core of highly connected CCPs and entities and a periphery of less highly connected CCPs and entities. However, even the less highly connected CCPs often are linked to at least one highly connected entity that indirectly connects the CCP into the more interconnected part of the network structure. A small number of entities tend to dominate the provision of each of the critical services required by CCPs. This relationship between CCPs and other entities suggests that a failure at one of these central elements of a CCP network would likely have significant consequences for the rest of the network.

164,512,517.00 1.612

MARKET CAP (N Trn

Study highlights continued central clearing interdependencies

he Financial Stability Board (FSB), the Committee on Payments and Market Infrastructures (CPMI), the International Organisation of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS) published the second report that maps interdependencies between central counterparties (CCPs) and their clearing members and other financial service providers. The international standard-setters published the first report on central clearing interdependencies in July 2017. CCPs are an increasingly important part of the financial system, particularly following the post-crisis reforms

3,448.00

VOLUME (Numbers)

Lagos Bourse loses N58bn in two day Stories by Iheanyi Nwachukwu

35,288.23

12.883

Association of Corporate Treasurers of Nigeria set for September breakfast meeting …partners SWIFT

he Association of Corporate Treasurers of Nigeria (ACTN) in collaboration with the Society for Worldwide Interbank Telecommunication (SWIFT) is set for its Breakfast Meeting scheduled for September 6, 2018 at the Wheatbaker, Lagos. The Association of Corporate Treasurers of Nigeria is a professional Association of Corporate Treasurers of the buy side (Oil and Gas sector, Telecommunications, Trading and Manufacturing, Service, Food and Beverages, Hospitality etc.) of the Nigerian financial markets. The membership of the association cuts across Financial Directors, CFOs, Corporate Treasurers, Financial Controllers or Treasury/Finance Manager Financial controllers, Risk Managers and Chief Accountants of various organizations who form the key players in the Nigerian financial markets and are affected by the quality of monetary policies of the Central Bank of Nigeria. Increasingly, the treasury function is playing a crucial and strategic role in today’s corporations. Not only does treasury support the day-to-day financial objectives of a company (cash management, banking, investment, among other), but it also provides crucial information helping business leaders make risk-informed strategic decisions. “Treasury departments are usually regarded as high-risk environments due to the large amount of funds they manage, and for their involvement in controlling bank accounts, the window through which funds leave and reach the company. Having the right controls in place for managing risks, protecting oneself from cyber-

criminals, and creating a solid treasury operation is of key importance. Simultaneously, the availability of big data is providing value-added insights to treasurers. From payment processing, to managing balances, transaction costs, usage of cash across subsidiaries and FX exposures – data and business intelligence can help treasury make better informed strategic decisions”, said Patrick Ajunwoko, Executive Secretary/CEO, Association of Corporate Treasurers of Nigeria. In today’s world, regulatory compliance obligations, fraud and cybercriminality threats require treasury operations to be run with the greatest operational efficiency. That is why centralisation, standardisation and automation of treasury processes and workflows remain important for the success of organisations. As part of the efforts of the ACTN towards the education and enlightenment of its members, the association regularly holds breakfast meetings where issues on economic policies as well as policy directions and their impacts on the activities of the corporates are reviewed and discussed with lead speakers/ Discussants from Regulators, Economists and Financial Markets experts. “SWIFT as the global provider of secure financial messaging services shall be introducing its new application, SWIFT for Corporates, a portfolio of solutions for corporates built to overcome the challenges of multi-banking. It is an application which once connected can streamline and automate business flows by communicating with Corporates’ various banking partners using SWIFT global standardised ISO and proprietary format (MT) messages.

Wednesday 15 August 2018

BUSINESS DAY

40 BUSINESS DAY

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Wednesday 15 August 2018

Live @ the Stock exchange Prices for Securities Traded as of Tuesday 14 August 2018 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 277,708.53 9.60 -3.03 101 2,920,993 UNITED BANK FOR AFRICA PLC 311,214.73 9.10 -0.55 147 26,867,538 737,817.60 23.50 0.21 288 5,720,203 ZENITH INTERNATIONAL BANK PLC 536 35,508,734 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 342,800.05 9.55 -1.04 280 11,453,858 280 11,453,858 816 46,962,592 BUILDING MATERIALS DANGOTE CEMENT PLC 3,646,668.58 214.00 -0.47 100 401,372 LAFARGE AFRICA PLC. 242,855.99 28.00 7.14 51 695,469 151 1,096,841 151 1,096,841 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY LTD 382,488.96 650.00 - 5 317 5 317 5 317 972 48,059,750 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 69,730.82 73.10 - 22 121,914 OKOMU OIL PALM PLC. PRESCO PLC 60,000.00 60.00 - 12 27,948 34 149,862 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,070.00 0.69 9.52 12 338,666 12 338,666 46 488,528 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,164.81 0.44 - 2 3,697 225.71 0.58 - 5 2,448 JOHN HOLT PLC. S C O A NIG. PLC. 2,111.93 3.25 - 0 0 45,119.27 1.11 -3.48 93 5,592,759 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 36,448.40 12.65 -9.64 24 204,312 124 5,803,216 124 5,803,216 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 1 1 1 1 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 33,000.00 25.00 - 14 107,378 165.00 6.60 - 0 0 ROADS NIG PLC. 14 107,378 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT CO. LIMITED 4,936.95 1.90 5.56 6 330,577 6 330,577 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,900.00 95.00 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 11,300.89 45.20 - 0 0 24,014.43 9.00 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 0 0 21 437,956 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 14,484.57 1.85 -3.14 9 266,973 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 197,134.45 90.00 - 29 105,310 INTERNATIONAL BREWERIES PLC. 302,574.34 35.20 5.23 19 3,511,377 823,680.91 103.00 -0.48 78 765,137 NIGERIAN BREW. PLC. 135 4,648,797 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 40,000.00 8.00 -2.44 43 636,230 DANGOTE SUGAR REFINERY PLC 181,800.00 15.15 -0.98 65 700,682 FLOUR MILLS NIG. PLC. 90,208.35 22.00 -8.33 114 2,175,220 HONEYWELL FLOUR MILL PLC 13,481.34 1.70 - 33 913,266 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 1,158.30 6.50 -9.72 7 96,076 NASCON ALLIED INDUSTRIES PLC 54,313.49 20.50 2.76 69 1,647,581 UNION DICON SALT PLC. 3,676.41 13.45 - 1 500 332 6,169,555 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,969.84 10.10 - 22 92,895 NESTLE NIGERIA PLC. 1,236,543.75 1,560.00 - 32 17,933 54 110,828 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 3,377.28 3.24 - 22 361,399 22 361,399 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 55,785.20 14.05 - 38 227,917 UNILEVER NIGERIA PLC. 304,485.29 53.00 0.76 36 211,658 74 439,575 617 11,730,154 BANKING DIAMOND BANK PLC 26,634.45 1.15 -0.86 69 4,993,758 ECOBANK TRANSNATIONAL INCORPORATED 385,340.58 21.00 -0.71 42 150,240 FIDELITY BANK PLC 48,098.16 1.66 -7.78 133 8,287,983 GUARANTY TRUST BANK PLC. 1,125,742.61 38.25 -1.42 204 7,478,583 JAIZ BANK PLC 17,383.91 0.59 -1.69 11 692,234 SKYE BANK PLC 7,772.97 0.56 -1.75 46 3,122,343 STERLING BANK PLC. 39,442.87 1.37 -0.72 41 3,905,296 UNION BANK NIG.PLC. 167,444.33 5.75 -1.71 42 961,060 UNITY BANK PLC 10,286.62 0.88 - 40 2,897,479 WEMA BANK PLC. 25,844.89 0.67 6.35 14 225,214 642 32,714,190 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE COMPANY PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 1.45 33 3,790,782 AXAMANSARD INSURANCE PLC 24,990.00 2.38 - 2 2,000 CONSOLIDATED HALLMARK INSURANCE PLC 2,450.00 0.35 9.38 5 564,068 CONTINENTAL REINSURANCE PLC 15,870.30 1.53 -9.47 3 236,000 CORNERSTONE INSURANCE COMPANY PLC. 3,682.38 0.25 - 1 95,000 GOLDLINK INSURANCE PLC 2,411.47 0.53 - 0 0 GREAT NIGERIAN INSURANCE PLC 1,913.74 0.50 - 0 0 GUINEA INSURANCE PLC. 2,149.00 0.35 - 0 0 INTERNATIONAL ENERGY INSURANCE COMPANY PLC 539.32 0.42 - 0 0 LASACO ASSURANCE PLC. 2,416.73 0.33 -9.09 36 12,240,697 LAW UNION AND ROCK INS. PLC. 3,866.70 0.90 - 1 4,500 LINKAGE ASSURANCE PLC 4,960.00 0.62 -7.46 12 515,582 MUTUAL BENEFITS ASSURANCE PLC. 2,640.00 0.33 10.00 18 1,138,290 N.E.M INSURANCE CO (NIG) PLC. 15,577.48 2.95 -5.08 22 1,613,306 NIGER INSURANCE CO. PLC. 3,018.40 0.39 - 7 277,600 PRESTIGE ASSURANCE CO. PLC. 2,175.92 0.57 - 4 31,824 REGENCY ALLIANCE INSURANCE COMPANY PLC 1,600.50 0.24 -4.17 7 1,274,420 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 4.17 8 1,081,000 STANDARD ALLIANCE INSURANCE PLC. 5,422.63 0.42 - 0 0 STANDARD TRUST ASSURANCE PLC 4,483.72 0.48 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 -4.76 11 747,207 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE COMPANY PLC 7,040.00 0.44 - 0 0 VERITAS KAPITAL ASSURANCE PLC 3,466.67 0.25 -7.41 7 5,000,000 WAPIC INSURANCE PLC 5,353.10 0.40 -7.50 33 610,860 210 29,223,136 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,704.35 1.62 - 0 0

0 0 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,914.00 1.17 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,922.05 1.42 - 0 0 RESORT SAVINGS & LOANS PLC 5,664.87 0.50 - 0 0 2,949.22 3.02 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,000.00 4.00 -1.23 29 375,426 CUSTODIAN INVESTMENT PLC 33,173.71 5.64 9.94 28 1,538,508 660.00 0.44 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC FCMB GROUP PLC. 36,436.99 1.84 -3.16 56 2,717,597 411.91 552.20 - 0 0 NIGERIA ENERYGY SECTOR FUND 1,389.25 0.27 - 4 83,125 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 505,683.72 50.00 - 25 2,736,415 18,000.00 3.00 0.67 55 1,659,151 UNITED CAPITAL PLC ValuAlliance Value Fund 3,312.39 103.20 - 0 0 197 9,110,222 1,049 71,047,548 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 959.35 0.27 -10.00 61 6,949,879 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 61 6,949,879 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 9,225.00 6.15 - 3 4,400 18,296.91 15.30 - 17 18,066 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 2,234.40 2.28 -0.87 15 543,899 1,363.94 0.79 - 13 131,205 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 411.96 1.90 - 0 0 48 697,570 109 7,647,449 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 -4.76 6 195,590 6 195,590 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 680.40 6.30 - 2 3,868 435.56 0.88 - 0 0 TRIPPLE GEE AND COMPANY PLC. 2 3,868 PROCESSING SYSTEMS CHAMS PLC 1,596.66 0.34 -8.11 1 400,000 E-TRANZACT INTERNATIONAL PLC 16,590.00 3.95 - 1 10,000 2 410,000 10 609,458 BUILDING MATERIALS BERGER PAINTS PLC 2,086.73 7.20 -9.43 23 816,334 19,845.00 28.35 - 9 16,328 CAP PLC CEMENT CO. OF NORTH.NIG. PLC 38,831.34 30.90 - 30 248,994 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 2 3,000 361.24 0.68 - 0 0 MEYER PLC. PAINTS AND COATINGS MANUFACTURES PLC 467.82 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,785.18 2.25 - 0 0 PREMIER PAINTS PLC. 1,279.20 10.40 - 0 0 64 1,084,656 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 3,522.64 4.00 - 28 332,964 28 332,964 PACKAGING/CONTAINERS BETA GLASS PLC. 38,997.82 78.00 - 0 0 GREIF NIGERIA PLC 388.02 9.10 - 1 272 1 272 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 8 203,510 8 203,510 101 1,621,402 CHEMICALS B.O.C. GASES PLC. 1,752.39 4.21 - 3 9,550 3 9,550 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 57.20 0.26 - 0 0 0 0 3 9,550 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,690.93 0.27 -3.70 35 2,696,963 35 2,696,963 INTEGRATED OIL AND GAS SERVICES OANDO PLC 62,157.06 5.00 -4.76 104 2,239,934 104 2,239,934 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 64,907.15 180.00 - 11 3,905 CONOIL PLC 16,863.04 24.30 - 18 12,249 ETERNA PLC. 8,476.94 6.50 -9.72 60 5,767,567 FORTE OIL PLC. 29,957.07 23.00 - 46 537,154 MRS OIL NIGERIA PLC. 8,701.65 28.55 - 0 0 TOTAL NIGERIA PLC. 62,811.54 185.00 - 17 10,239 152 6,331,114 291 11,268,011 ADVERTISING AFROMEDIA PLC 2,219.52 0.50 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 18,818.75 1.93 - 1 2,400 1 2,400 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 541.12 0.46 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,360.13 5.70 - 1 7,500 TRANS-NATIONWIDE EXPRESS PLC. 365.70 0.78 - 0 0 1 7,500 HOSPITALITY TANTALIZERS PLC 674.44 0.21 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,801.22 3.10 - 1 139 IKEJA HOTEL PLC 5,799.84 2.79 - 1 500 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 4 450 TRANSCORP HOTELS PLC 51,302.73 6.75 - 1 294 7 1,383 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 5,280.00 0.44 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 302.40 0.50 - 0 0

Wednesday 15 August 2018

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Nigerian joblessness at all-time high? Checking a politician’s claims Claims Two claims on unemployment in Nigeria. Source: Presidential candidate Atiku Abubakar (July 2018)

Verdict Explainer: One unproven, one correct

Presidential candidate Atiku Abubakar claimed Nigeria’s jobless rate was the highest yet, and more than 10 million youth were unemployed. The way unemployment is calculated has changed, so it’s not possible to prove it’s at its highest rate in Nigeria’s history. Labour force data confirms that more than 10 million people defined as “youth” are unemployed. Joining the presidential race, former Nigerian vice-president Atiku Abubakar took aim at the ruling party for what he said was its poor management of the economy. “Today, we have the highest unemployment rate in the history of this country,” Abubakar said at a July 2018 rally in Adamawa state. “More than 10 million youth are unemployed.” Abubakar was in office from 1999 to 2007. He is running on a Peoples Democratic Party ticket for the election set to be held on 16 February 2019. A reader asked us to check if his claims about unemployment were accurate. Africa Check sent queries to Abubakar, to his campaign office as well as to Nathaniel Otaba, who handles his online media campaign, but we have not received any response. (Note: We will update this report should we get a response.)

Claim “Today, we have the highest unemployment rate in the history of our country.”

Verdict

Nigeria’s latest unemployment data is for July to September 2017. It shows that the country’s unemployment rate increased to 18.8% from 16.2% in the previous three months. This was the 12th consecutive quarterly rise since the last three months of 2014, when joblessness stood at 6.4%. (Note: Nigeria’s economy slowed down in 2014 and officially entered recession in 2016, which it only exited in the second quarter of 2017.) But in 2011, the unemployment rate was higher – at 23.9%. This is according to the National Bureau of Statistics’s 2011 Annual Socio-Economic Report. Case closed? No, because the bureau revised how it calculated unemployment in 2014. This means the two periods cannot be compared. In the old calculation method, anyone working fewer than 40 hours was considered jobless. Now, the statistics bureau counts people working fewer than 20 hours a week as unemployed. People who work only 20 to 39 hours a week are seen as underemployed. Nigeria’s job market ‘still fragile’ “It is undesirable for a presidential hopeful to make such a claim because the methodologies have changed,” said Sarah Anyanwu, a professor of development economics at the University of Abuja. She chaired the committee that reviewed unemployment statistics in 2014. “So you cannot compare unemployment rates just like that.” She added that the claim would only be true if the comparison were for a period after the methods changed. Still, if the old method were used to calculate the current rate, unemployment may well be higher than the 23.9% seen in 2011, a director at the statistics bureau, Isiaka Olarewaju, told Africa Check. The statistics body explained in its latest report: “Consequently, (the) unemployed population under the old [method] equals (the) unemployed population under the new method plus the underemployed population under the new method.” In the most recent data, unemployment is at 18.8% and underemployment at 21.2%. Under the old method the two figures would be combined to produce a jobless rate of 40%. “The increasing unemployment and underemployment rates imply that although Nigeria’s economy is officially out of recession, [the] domestic labour market is still fragile,” the report notes. As official definition of unemployment has changed, we rate the claim as unproven. Claim “More than 10 million youth are unemployed.”

Verdict

The statistics bureau considers the youth labour force to be people aged 15 to 34. The most recent data shows 25.5% of people in this age group were unemployed in the third quarter of 2017 – an estimated 10.96 million people. A further 11.68 million young people were underemployed, meaning they worked under 20 hours per week. “Young people are more likely to face difficulties securing full time employment and are more likely to be completely idle or take up part-time, leisure, voluntary, or otherwise menial work which is under 20 hours a week, and are thus more likely to be considered unemployed and underemployed,” the December 2017 labour force report states.

41 News

BUSINESS DAY

FG, states share N821.86bn in July, despite CBN’s concern Conrad Omodiagbe

he Federal Account Allocation Committee (FAAC) has continued to increase its monthly disbursements to the tiers of government despite liquidity concerns being raised by the Central Bank of Nigeria (CBN) as well as the fact that the country is not accumulating enough savings. According to a report from the National Bureau of Statistics (NBS), the three tires of government shared N821.86 billion in July, indicating an increase of N152.96 billion in comparison with the N668.90 billion shared in June. The money distributed comprises N687.35 billion from the statutory account, which shows an increment from the previous month that had N575.48 billion

and also N85.34 billion from Value Added Tax, showing a reduction of N8.08 billion when compared with the month of June. N7.32 billion was also used to service excess bank charges. CBN governor, Godwin Emefiele, said last month that even though inflation forecast for the near term pointed to further moderation in price level, the apex bank was concerned about the liquidity impact of the approved N9.12 trillion 2018 FGN budget expansionary fiscal budget and increasing FAAC distribution, arising from rising prices of crude oil as well as the build-up in election related spending. Emefiele was further concerned that while the prices of crude oil in 2017/18 improved, the monthly allocations to various level of government equally increased, “suggesting that the Federal Govern-

ment was not conscious of saving for the rainy day. “The Committee, therefore, advised the fiscal authority to build-up buffers, especially now that the price of crude oil is relatively high,” Emefiele said after the Monetary Policy Committee meeting. According to the latest NBS report on Tuesday, the Federal Government got an increased allocation of N315.01 billion from the total disbursement, a N32.79 billion increment from the previous month. State governments also received an increased sum of N194.51 billion as opposed to June’s N181.7 billion and finally, the 774 local government areas were allocated N147.05 billion, also another visible increment. Further review of the report showed that Oil producing states received an allocation of N42.85 bil-

lion as their 13% derivation fund, a reduction from N53.07 billion allocated in the month of June. The country’s revenue generating agencies namely the Federal Inland Revenue Service, the Department of Petroleum Resources and the Nigerian Customs Service all received increased allocations of N12.21 billion, N5.42 billion and N4.82 billion, respectively. With N100 billion also transferred to the Excess Crude Account (ECA). Kano State received an allocation of N8.24 billion for the month of July, making it the state with the highest allocation, while Bayelsa received the lowest allocation of N1.71 billion. The report also revealed that of all the oil producing states, Delta received the highest allocation from the 13% derivation fund with N10.77 billion.

L-R: Aminou Akadiri, executive director, Federation of West Africa Chambers of Commerceand Industry (FEWACCI); Jean-Baptiste Satchivi, present/chairman, Benin Chamber of Commerce and Industry; Babatunde Ruwase, president, Lagos Chamber of Commerce and Industry (LCCI); Chekou Oussouman, programme specialist, Organisation international de la francophonie, and Muda Yusuf, director-general, LCCI, during a courtesy visit of the Benin Chamber of Commerce and Industry to the Lagos Chamber of Commerce and Industry in Lagos.

Osinbajo orders immediate overhaul of SARS ...directs investigation on alleged violations of the squad Tony Ailemen, Abuja

isturbed by allegations of human rights violations levelled against the Special Anti- Robbery Squad SARS, an arm of the Nigeria Police Force, Acting President Yemi Osinbajo Tuesday ordered immediate overhaul of the anti -robbery squad. The Senior Special Assistant to the Acting President on Media and Publicity, Laolu Akande said in a statement that the Acting President has also directed the National Human Rights Commission to set up a Special Panel that will conduct an investigation of the alleged unlawful activi-

ties of SARS. He said the investigation will afford members of the general public the opportunity to present their grievances bordering on allegations of human rights violations, with a view to ensuring redress. The order may not be unconnected with several calls by Nigerians on the Federal government to scrap the anti-robbery team following claims that their activities had aided rather than reduced crimes in the country. Recall that the Lagos state command of the Nigeria Police Force (NPF), had following similar allegations of human rights abuses, constituted a high

powered panel of top officers to investigate the allegations culminating in the dismissed of five out of 92 policemen tried for various offences in the first half of the year 2018, on the 10th of June. He directed the Inspector General of Police (IGP) Ahmed Idris “to, with immediate effect, overhaul the management and activities of SARS and ensure that any Unit that will emerge from the process, will be intelligence-driven and restricted to the prevention and detection of armed robbery and kidnapping, and apprehension of offenders linked to the stated offences”

CHANGE OF NAME

I, formerly known and addressed as Umeh Chinyere Mary now wish to be known and addressed as Oduchukwunma Chinyere Mary. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Ugbo Charles Ugochukwu now wish to be known and addressed as Ugbo-John Charles. All former documents remain valid. General Public please take note.

CONFIRMATION OF NAME

I, Sofadekan Oluwakemi Christianah is also known as Benjamen Oluwakemi Christianah. Henceforth, I want to be addressed as Sofadekan Oluwakemi Christianah. All former documents remain valid. General public should take note

Wednesday 15 August 2018

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COMMENT

BUSINESS DAY

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The proliferation of substandard import products: The lemon problem AMAMCHUKWU OKAFOR Okafor is a policy researcher and strategist with an M.Sc. from Friedrich Schiller University, Jena, Germany. He wrote via amam. okafor@gmail.com

believe I grew up at a time that saw the last plenitude of quality products in Nigeria. I remember my brothers would jest: “revere that –Scanfrost– fridge before opening it, it’s older than you.” It was the same for the National TV, the SMC ceiling fan, the Kenwood turntable and other home appliances. These devices lasted over a decade without repairs. These products were from Europe and America. Chinese products were thought of as inferior. Then, few individuals could do importation businesses. Titles like “importerexporter”, “general merchandise” and “international” connoted status in markets and social unions. All that soon changed. Today, over 18.7% of imports are from China, and it is no coincidence that a significant portion of imported goods are inferior products. In fact, in a regular shop, you are typically first offered a substandard item as nearly all original items have their substandard version in competition. Even pharmaceutical products are not spared.The dealers exploit the information asymmetry

to create imminent lemon problem in the import-goods market: fake products crowd-out original products. It is better to pay the minimum price and get the minimum quality than to pay the maximum price and get minimum quality instead of the maximum quality. Interestingly, the dealers operate brazenly in most markets across the country, they are not in hiding. The war against piracy and watered quality seem to have eluded the regulatory agencies in their duplicative forms – Standard Organisation of Nigeria (SON), National Agency for Food and Drugs Administration and Control (NAFDAC) etcetera. How did we get here? Historical coincidences As population increased, it became insufficient for the few importers to meet the import demands of the entire country. At about the same time, the country was making huge petro-dollars in oil revenues. As these monies began trickling into the society, more individuals found it attractive to venture into import businesses. This time may have also coincided with indigenization decree of 1970s when Nigerians began to take positions in the shipping/ cargo trades. By this time, China was building its economy towards industrialization, surplus production and export drive. Today, they are the second largest economy in the world! Chinese producers brought greater flexibility in terms of pricing and quality which made them more attractive to many new importers than their European and American counterparts. This price-quality

In 2017 alone, import demand was NGN1.79 trillion, dwarfing the NGN720 billion set aside for Naira/Yuan swap for three years compromise made Chinese imports to Nigeria cheaper relative to others – exploiting the price sensitivity of consumers. This quality flexibility is most evident when one finds that an item produced in China for European or American markets tend to be more durable than those produced for Nigerian markets. Regulatory lapses Another explanation for the proliferation of substandard items is weak import regulation amplified by poor border management – corrupt border agents. In Nigeria today, anyone can import almost any item in commercial quantities so long as it is not in the contraband list or the few special goods that require import license. Times changed, the sector evolved but the regulatory framework has not changed. Just anybody should not be able to import goods in commercial quantities: it does not only make regulatory administration difficult especially for a highly populated country where there ispersonnel shortfall; it makes import demand for foreign currency becomes uncontrollable with attendant depreciation pressure on the local currency. In 2017 alone, import demand was NGN1.79 trillion, dwarfing the NGN720 billion set

aside for Naira/Yuan swap for three years. On the production side, it cripples domestic ability to produce, leading therefore to output decline and unemployment. Ecommerce One last factor was the internet and technology revolution. The development of internet technologies sparked irreversible revolution of trade through ecommerce, facilitating cross-border transactions such that everybody can buy virtually from any part of the world. This reduced the transport costs of business and eroded the market powers of the earlier importers. The importers market today, is purely competitive. A simple way out Admittedly, there have been major reforms to stem the tide such as antipiracy technologies, raising penalties from 50,000 naira to 300,000 naira, and seeking collaborations with governments of trading nations. However, the fight must be strongest at home. It is therefore important to restrict commercial importing to registered importers and trading companies who meet certain criteria. These registration criteria need not be monetary payment but wouldinclude minimum capital requirements, loan credibility, storage/warehouse facilities, logistics ability and etcetera. The registration system would allow for efficient administration of regulatory checks on product quality and standards. The registered import businesses would be buoyant enough to issue product warranty and return guarantee should the

product not satisfy the customer as against the current practice where consumers are ambushed by petty importers unable to give these assurances. So this would go a long way to ensure consumerism and consumer protection. By way of trade protection, the registered importers would typically organise themselves into unions according to their respective trade lines and help combat substandard imports so as to protect their market profit and avoid regulators knocking their doors. The intuition is that these importers are better positioned to curbthe menace of substandard items, and with the right incentives, would develop the internal interest to do so. Regulatory agencies can then focus on design standards and compliance. Should any substandard product enter the local market, agencies would know where to begin their investigation. Interagency collaboration in order to avoid unhealthy rivalry and stakeholder engagement to bring about synergy in product tracking would help solve the lemons problem.As a final caveat, we are about signing the continental free trade agreement which opens our borders to a flood of importers from across Africa, if we cannot manage our own importers, what is to say we wouldbe able to manage the multitude of African importers? Free trade does not mean dumping of substandard goods. We would more now than before, need a registry of importers.

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Good game, chaps...Part 1 Integrity, Integrity, Integrity; now a rather scarce commodity in these climes

DAPO AKANDE Dapo Akande, author of the acclaimed book, “The Last Flight...a personal journey to rediscovering values”, is also the Founder of MINDS Reform Initiative, a NGO focused Character Education. Contact:dapsakande25@gmail.com

recall as if it was yesterday something that happened decades ago when I and all my siblings were still studying and living in the United Kingdom. A girlfriend of one of my older brothers (who we his siblings fondly call Femo or bros Femo) phoned the house asking to speak to him. My younger brother Segun who couldn’t have been more than eight years old at the time answered the phone. After politely asking her to hold on, with the exuberance of a child he quickly ran up the stairs to

inform bros Femo. What transpired during their brief conversation wasn’t something I was privy to as I was busy doing something in the kitchen. A few seconds later I heard Segun’s hurried footsteps as he ran down the staircase to return to the phone, a landline. What I heard next still rings loud in my ears till today, 37 years later! To my total disbelief, Segun told bros Femo’s girlfriend that “bros Femo said he was sleeping”! Unbelievable! Such is the innocence of a child. We need to catch the children at this stage of innocence. This stage where we can infuse virtues and values in their minds before they get corrupted and polluted by what society yearns to teach them. Our hope is they will school society and not the other way round. As our present society is, an older person asked to tell this same “white lie” would execute it to perfection as he would know what’s up, as they say. Bros Femo once told me how it took him a while to adjust when he first got to the UK. His mindset was just totally out of synch with that of a typical Brit. He said he would

throw major tantrums whenever his team, the school’s 1st XI, lost a football match. His team mates would watch him in total bewilderment as they headed off to enjoy tea, which is actually a full course meal, with the opposition after the match. The same opposition they had been tearing into as bitter rivals and vice versa just thirty minutes or so earlier on the football pitch. The two teams were now sharing a meal as best buddies and respected adversaries. In the UK this is quite normal. I was sharing with my children the other day how it’s usual practice after every match for the home team to form what we call a tunnel of

honour. This is where all the players of one team form two lines while facing each other. The space in the middle is the tunnel. The tunnel is always formed on the touchline so the opposition team walks off the pitch as they walk through it. This is accompanied with clapping by the home team who form the tunnel and the traditional hearty “three cheers’ led by the captain. As an unwritten rule the spectators would join in to appreciate both teams and as it’s customary, the home team would give their adversaries congratulatory pats on the back as they saunter through the tunnel, not necessarily because the visiting team won but just because they played a “good game”, even if they did suffer a most humiliating defeat. Still, in the spirit of good sportsmanship we would do this and offer the traditional outburst of “good game” as they pass through. As soon as they pass through the tunnel they too would form a tunnel and offer the same pleasantries. None of the sneering or jeering that you may experience in other cultures. No mocking for

losing woefully. The victorious team doesn’t rub the nose of the losing team in it. Everyone acknowledge and appreciate that you did your best even if your best wasn’t good enough to win. This culture of good sportsmanship encourages integrity. Accepting defeat and learning to be gracious even in victory. This marks a huge departure from the do or die and win at all cost attitude, often advertently but sometimes inadvertently encouraged here. This is not an approach to life we should pass on to our children. Life is not all about winning. In fact, many a time one gains more from defeat than from an easy victory as it presents a wonderful to learn. As Rabbi Harold Kushner rightly said, “the purpose of life is not to win. The purpose of life is to grow and to share. When you come back to look at all that you have done in life, you will get more satisfaction from the pleasure you have brought to other people’s lives than you will from the times that you outdid and defeated them.” Send reactions to: comment@businessdayonline.com

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Banks say no issue with indemnity over... Continued from page 1

the amount of compensation is usually included in the contract and

the precise wording of the indemnity clause determines the extent of the indemnity and the risks allocated between the parties to the contract. Sources at the Nigeria Communications Commission (NCC) however tell BusinessDay that contrary to earlier reports that the deal was being held back by the failure of the telecoms regulator to issue a certificate of no objection to finalise the sale, the real stumbling block came from AFREXIM bank, lenders to Teleology. The sources say that the lawyers for AFREXIM bank, where Teleology Holdings Limited raised most part of its $301 million financial bid, expressed concerns about the final payments for 9mobile and had “asked for a high level of indemnity from 9mobile, run by the owed banks before the conclusion of the sale”. NCC says it then told the banks to resolve the issue and get back to them before the deal can be sealed. However, the CEO of one of the owed banks told BusinessDay yesterday that although a reason for indemnity was raised during the high level meeting between the banks and the regulator in Abuja a few weeks ago, “it was not an issue and it is a private matter that should in no way be a deal breaker, or cause

for a delay.” Banking sources tell BusinessDay that they were never aware that the NCC was waiting for them to resolve the indemnity issue. “Afrexim has however withdrawn the demand for a higher indemnity, so it is a non-issue,” another banking source said. After running into debt for defaulting loan payments to a consortium of Nigerian banks, the then Etisalat was taken over by the owed banks, renamed 9mobile and opened up to new investors through a bidding process. Teleology holdings limited emerged as preferred bidder and said that it had successfully raised and made ready its balance of $251 million which was paid into an escrow account about two weeks before the July 25, 2018 deadline date. This is in addition to the initial $50 million paid as a non-refundable deposit on March 21 2018, to show commitment on the sale in fulfilment of its buyer obligation but it is still unable to take over 9mobile. Umar Garba Danbatta, Executive Vice Chairman of NCC who spoke to Journalists on Monday said that the sale process has been delayed as a result of other debts incurred overtime by 9mobile. However, he said that about half of the debts have been settled and the regulator will investigate the capacity of Teleology by carrying out another

round of technical evaluation and due diligence on the company. “9mobile owed N12 billion Annual Operating Levies (AOL) for two years, numbering fees of N1 billion and spectrum fees of N2.3 billion, and on paying the spectrum fees, half of the AOL and half of the numbering fees, the NCC transmitted a letter of ‘No Objection’ to allow the transfer of shares to United Capital from EMTS, the original owners of Etisalat Nigeria. As soon as they meet the next conditions, and the technical evaluation of Teleology is concluded, we will again transmit the final approval letter of ‘No Rejection’ for transfer of shares form United Capital to Teleology,” Danbatta said. The NCC EVC maintained that the sale is in its final stages and would be concluded as soon as possible. The firm 9Mobile generates revenues of N200 billion per annum, with an EBITDA margin of 10 percent, according to data from investment Bank Renaissance Capital. “There has been no capex spend since 2014. 9Mobile needs to invest between $300mn- $450mn a year to remain competitive,” Renaissance Capital analysts led by Olamipo Ogunsanya, said in a recent note. “9Mobile has lost subscribers, its margins are under pressure, and lack of capital investment has made it less competitive than peers.”

•Continues online at www.businessdayonline.com

L-R: Taiwo Akerele, chief of staff to Edo State governor; Godwin Obaseki, Edo State governor; Parminder Brar, lead financial management specialist, Governance Global Practice, and Adetunji Oredipe, senior agricultural economist, World Bank, during a lunch with the governor at the Government House, in Benin City.

Italy’s Morandi Bridge collapse foretells the... Continued from page 1

of feet onto the city below. The Associated Press quotes government officials as saying that, at least, 20 people were found dead

in the rubble, while other accounts put the death count even higher at above 30 in what Italy’s deputy transportation minister called Europe’s worst major bridge disaster in decades. “Mycountrywaswoundedtodayas innocents lost their lives unjustly. I pray for the victims and their families and thank the emergency services who are working tirelessly on the scene”, President Antonio Tajani noted in a tweet on his Twither handle, @EP_President. That unfortunate incident in Italy holds a grave lesson for Nigeria as it calls to mind quickly the disaster probably waiting to happen in Apapa, the country’s premier port city, where thousands of trailers and tankers surging towards the ports, are parked almost permanently on the Ijora-Apapa Bridge, exerting enormous pressure on the bridge and weakening its structural stability. The collapsed Morandi Bridge is a 1960s-era bridge and, according to the ANSA news agency, it had long been in a chronic state of stress and decay, adding that, though there had been major structural work performed within the last two years, au-

thorities now suspect it was still weak. It is easy to see a similarity between the Morandi Bridge and Ijora-Apapa Bridge in terms of age, stress and decay. The Nigerian bridge, according to Babatunde Fashola, the country’s minister for Power, works and housing, was built 40 years ago and has not received any form of maintenance for that long period of time it was constructed. This is a bridge where all the iron rods at its connecting joints have been exposed by constant wear and tear by heavy duty and articulated vehicles. The bridge is already weak and tired with numerous craters on virtually every spot and is heavily flooded after every bout of rain, yet government, whose responsibility it is to repair and maintain it looks away and hundreds of trucks make it their permanent parking lot. Civil and structural engineers have warned of the danger in allowing trucks to be permanently parked on the Apapa bridge. “Though it is most unlikely that the bridge structure and integrity will be adversely affected from the point of view of overload from the ‘empty’ trucks, many of those trucks are not in perfect condition”,noted Gabriel Ojo, a civil engineer at Sanni, Ojo & Partners Consulting Limited, in a telephone interview. “And because many of them are not in perfect condition, the trucks

are likely to have oil, including petrol, diesel, engine oil, brake oil, dripping on the bridges; these are organic solvents that naturally dissolve the asphalt topping and cause the bridges topping and the decks to deteriorate very fast”, he explained. FemiAkintunde,astructuralengineer and GMD/CEO, Alpha Mead Group, affirms, stressing however that heavy duty trucks packed at close proximity to one anotherandinstaticconditionoveralong period of time have adverse impact on the bridges. “What this implies is that the combined weight of the vehicles packed in this condition will be far more than what the bridge was designed to carry under normal condition”. “The implication of this situation is that the higher concentration of the static load of these closely parked trucks on the bridge will subject its structures to high degrees of stress at the various joints and support joints than normal, leading to faster wear and tear at critical points, which ultimately puts the structural integrity of the bridges at great risk of collapse or catastrophic failure”. The Morandi Bridge, which stands 300 feet high, spans a three-quartermile section of the coastal city, and carries highway traffic between Italy and France. “Traffic was likely especially heavy on Tuesday”, the AP wrote, “as vacationers headed out in advance of a major Italian holiday”.

•Continues online at www.businessdayonline.com

Wednesday 15 August 2018

Time running out for petroleum industry bills... Continued from page 1

these critical bills even if they are im-

perfect and amend them later, rather than letting all the work already done on them go to waste. It was difficult passing an omnibus petroleum industry bill in the past 17 years until it was broken down into four aspects: the Petroleum Industry Governance Bill (PIGB), the Fiscal Regime Bill, the Upstream and Midstream Administration Bill and the Petroleum Revenue Bill otherwise known as the host community aspect - with a decision to pass the less controversial ones first. The lawmakers have successfully passed the Petroleum Industry Governance Bill (PIGB) in May this year and have transmitted it to President Muhammadu Buhari for his assent. However, two months later, the president is yet to assent to the bill, which will trigger significant reforms of the country’s oil and gas sector. If the president vetoes the PIGB, there is fear that, with the deterioration in the relationship between the National Assembly and the Presidency, it could signal the end of the bill. There is also the concern that the focus on politics as the 2019 elections gets nearer would not allow the National Assembly focus on the PIGB if it is returned to them. Already, both chambers of the National Assembly have organised public hearings on the three other bills. The bills are now awaiting third reading in the house. However, the house has been adjourned until September 25, while members are locked in a supremacy battle and high level politicking that gives little room for consideration of critical bills like the petroleum industry bills, on which billions of dollars of foreign investments in the oil and gas sector hang on. “If they do not complete work on the bill, before the end of their tenure in 2019, they will have to start afresh and all the work done on the bills will be lost. This is not good news for the sector at all,” Uche Obi, SAN, managing partner of Lagos-based Alliance Law firm told BusinessDay by phone. On the implications of such a development, Obi said “It will cause further delay in investment activities in the oil and gas sector and all the things that we are trying to achieve by an early passage of the bill will be lost, it will cause uncertainty in the system and a lot of investments in the petroleum sector will be lost.” Ayodele Oni, energy lawyer and partner at Bloomfield Lawfirm speaking on the loss to the nation said that other hidden costs involved in considering bills may not be immediately visible.

“Besides the cost involved in paying international consultants, there are transport fares, organising logistics support which are claimed, human and material costs including road accidents, and not to mention the thousands of hours spent in the process, it does not bode well for the country at all if the bills are not passed,” Oni said. However, Oni holds out a thin hope that the lawmakers could amend their rules to enable them continue work on previous bills from the past legislative session as he said this may have happened to the PIB itself but if this current assembly fails to pass it, the implications for the economy will be huge. Global extractive industry watchdog, Publish What you Pay (PWYP) estimates that Nigeria, which is Africa’s largest crude oil producer loses $15billion annually for failing to put in place a proper legislation for its oil and gas industry which contributes over 60 percent of its Federal budget and 90 percent of export proceeds. Nigeria has been unable to attract significant investment in over a decade and projects including the 120,000bpd Zabazaba-Etan project; 140,000bpd Bosi project; 110,000bpd Uge project and 100,000bpd Nsiko Deepwater projects have not progressed. The one billion barrel Owowo field development is also waiting on the right fiscal terms among other conditions for it to reach a final investment decision. Meanwhile, the oil sector is at an inflection point globally with countries that were major buyers now morphing into major suppliers, the rise of electric cars hangs on the sector as a threat and competition from new low-sulphur crude grades is growing. Also in places where oil demand has traditionally come from including China and India, there’s an increasing switch to renewables. The International Energy Agency on Friday, August 10, raised its estimate of world oil demand growth next year to 1.5 million barrels per day (bpd) from 1.4 million bpd forecasting that much of this volume will come from non-OPEC oil output growth. For many upstream oil companies, the preoccupation is to raise output while reducing costs and improving financial position. The IEA estimates that major oil companies have increased their oil and gas output by 11 percent since 2014 while cutting spending by 49 percent. This implies that they will increasingly look to invest in countries with certain, competitive fiscal terms, something Nigeria’s tardiness with its petroleum sector bills does not guarantee.

Bank Eurobonds selloff as Turkish meltdown... Continued from page 1

following the current Emerging market contagion fears, a fallout from the Turkish currency crises. Foreign investors have been exiting both Nigerian equities and Eurobonds since the beginning of the year due to increase

political risk in the country. Total value of the Eurobonds outstanding issued by Nigerian banks amounted to $3.387 billion as at August 2018, according to data from the FMDQ. BusinessDay investigation of Eurobonds issued by Nigerian deposit moneybanksrevealsthatamongpeers, only Diamond bank plc and first bank plc escaped the sell offs experienced in Eurobonds issued by the Banks. While other banks experienced declines in their bond prices, First

bank and Diamond bank Eurobonds prices appreciated by 2 percent and 1.5 percent respectively. First bank Eurobond price rose to 100.04 year to date (YTD) from 98.48, while Diamond bank bond price rose to 99.85 from 98.41 year to date, YTD. “First bank bond prices are doing well as the market has corrected for the recently executed call option and also the improved financial position of the bank compared to last year,” Wale Okunrinboye, Head of research at sigma Pensions said. “Diamond bank on other hand is benefiting from improved sentiment from investors as they perceive that the recent selloff of its international subsidiary will mean more income to be able to meet their debt obligations.”

•Continues online at www.businessdayonline.com

Wednesday 15 August 2018

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HiFL: UNIPORT, UNILORIN grab first win

he second round of matches at the ongoing Higher Institutions Football League (HiFL) ended on Tuesday with two home wins. The University of Port Harcourt team, Uniport Sharks, defeated the DELSU Titans from Delta State University, Abraka. The pulsating match was characterised by scintillating moves from both teams to the admirations of the spectators. In another explosive encounter that could be described as a local derby, the OAU Giants from Obafemi Awolowo University held their host the UI Pioneers of University of Ibadan to a three all draw. The match was played endto-end as both teams displayed the best of football artistry. The friendly atmosphere at the match took the shine when fans of the UI Pioneers applauded what was described as the “shaku-shaku” goal scored by OAU Giant’s Oripelaye Kehinde. Oripelaye was voted the StanbicIBTC man-of-the-match. In the other matches, the

UNILORIN Warriors defeated the ABU Nobles of Ahmadu Bello University by one goal to nil while the UAM Tillers from the University of Agriculture held the UNIMAID Tigers to a one all draw at the University of Maiduguri. For the second round of matches, StanbicIBTC’s man-of-the-match award was won by Oripelaye Kehinde of Obafemi Awolowo University, Sani Bilyaminu of University of Port Harcourt, Ogunronbi Hawal from University of Ilorin and Isaac Daniel from the University of Maiduguri. In his remark, chief executive, StanbicIBTC Holdings, Yinka Sanni, expressed his delight at the opportunity provided by HiFL to engage with the youth. “We are enthusiastic about our sponsorship of the university league. The sponsorship is in line with our objective to engage the youth in talent-moulding and character-building initiatives and our determination to contribute to the development of sports and by extension the economy,” Sanni said.

No date for reconvening on N242bn INEC budget - Saraki, Dogara KEHINDE AKINTOLA, Abuja

eadership of National Assembly at the end of the emergency meeting held on President Muhammadu Buhari’s request for approval of N242 billion for the 2019 general elections resolved to exhaust all the legislative procedure. Accordingly, the Senate president, Bukola Saraki, and speaker, House of Representatives, Yakubu Dogara, disclosed that a date had not been set for the reconvening of the Senate and the House of Representatives to consider the Independent National Electoral Commission (INEC) 2019 elections budget request forwarded by President Buhari on July 17. The notice was contained in a statement jointly issued by Yusuph Olaniyonu, special

adviser (media and publicity) to the Senate president, and Turaki Hassan, special adviser (media and public affairs) to speaker, House of Reprehensive. According to them, the “leadership of the two chambers had met and agreed to reconvene to consider the proposal this week before which a meeting between the Joint Senate and House of Representatives Committees on Electoral Matters and officials of the INEC must have held on or before Monday August 13, 2018. “The joint committees were also expected to meet with the joint Senate and House Committees on Appropriations, Loans and Debts on the Eurobond loan request after which two reports would have been ready for presentation in the two chambers.

Nigeria at risk as study finds rise in fake anti-malaria drugs ANTHONIA OBOKOH

new study published by JAMA Network Open has found that the mass production of fake anti-malaria drugs have become pervasive in low- and middleincome countries, targeting markets in Africa and other developing countries. Nigeria is the single most heavily malaria-burdened country in the world, with 48 million malaria cases annually and 180,000 deaths per year hence the bulk of these drugs end up in Nigeria. Malaria remains one of the most devastating infectious diseases with approximately 212 million infections and 429,000 deaths (link is external) each year globally - primarily children under the age of five in sub-Saharan Africa. The research was carried out on substandard and

robust debate and interaction. The 2018 cohort from the Tony Elumelu Entrepreneurship Programme, as well as mentors and partners, will be present, as the culmination of their intensive 12-week induction. In keeping with the Foundation’s record - most recently with President Macron of France - of bringing politicians face to face with the new generation of young businessmen and women shaping Africa, the Forum will include an interactive session with President Uhuru Kenyatta of Kenya and President Nana AkufoAddo of Ghana, moderated by TEF founder, Tony Elumelu. The Forum will also feature the launch of the TEFConnect, the world’s largest digital

falsified medicines burden health systems by diverting resources to ineffective or harmful therapies, causing medical complications and prolonging illnesses. However, the prevalence and economic impact of poor-quality medicines is unclear. According to the findings, the systematic review of 265 studies comprising 400,647 drug samples and metaanalysis of 96 studies comprising 67,839 drug samples, the prevalence of substandard and falsified medicines in low- and middle-income countries was 13.6 percent overall (19.1% for anti-malarials and 12.4% for antibiotics). Data on the estimated economic impact were limited primarily to market size and ranged widely from $10 billion to $200 billion. The authors say their findings show it is important for global collaborative efforts to improve supply-chain management, surveillance, and

regulatory capacity in lowand middle-income countries to reduce the threat of poor-quality medicines. “Substandard and falsified medicines are a substantial health and economic problem; a concerted global effort is needed to secure the global supply chain, increase quality control capacity, and improve surveillance to better assess the problem and identify solutions,” according to the research. Obinna Onwujekwe, a professor at the Department of Pharmacology and Therapeutics, University of Nigeria, Nsukka, said the results show that the health system actors should be eternally vigilant in Nigeria and in other countries to ensure that substandard drugs do not impede or erode gains made in malaria treatment. “Drug regulatory authorities and their partners should intensify drug quality monitoring activities with appro-

priate sanctions for defaulters,” Onwujekwe said. The World Health Organisation (WHO) estimates that 10.5 percent of medicines worldwide are substandard or falsified. Furthermore, most of the burden falls on low- and middle-income countries because of poor pharmaceutical governance, weak technical capacity, and poor supply-chain management. Until recently, the efforts to combat substandard and falsified medicines have been fragmented because of the complexity of the issue and intellectual property rights disputes “This issue not only has significant health and economic consequences, but directly threatens global health security and efforts to meet the United Nations Sustainable Development Goal 3.8, to achieve universal access to safe and effective essential medicines,” say the authors.

L-R: Glenda Noemdoe, group head, employee health and wellness, Standard Bank Group; Yinka Sanni, chief executive, Stanbic IBTC Holdings plc; Olufunke Amobi, country head, human capital, Stanbic IBTC, and Demola Sogunle, chief executive, Stanbic IBTC Bank, during the Stanbic IBTC 2018 Health and Wellness Week in Lagos.

4th annual TEF entrepreneurship forum for October 25 frica’s leading entrepreneurship-focused philanthropic organisation, the Tony Elumelu Foundation (TEF), has announced October 25, 2018, as the date for its fourth annual TEF Entrepreneurship Forum. The largest gathering of African entrepreneurs and the broader entrepreneurship ecosystem will unite over 5,000 entrepreneurs, global investors, leaders from the African public and private sectors and developmental organisations at the Federal Palace Hotel, Lagos. The event is a unique opportunity to generate ideas, forge networks and bring policymakers and the private sector together, in a spirit of

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platform for African entrepreneurs, dedicated to connecting African entrepreneurs and the entrepreneurship ecosystem. Elumelu stated: “In just four years, we have directly impacted 4,460 entrepreneurs, and we are beginning to see the results – job creation, ripple effects, but most importantly a recognition that Africa’s economic well-being is driven by entrepreneurs: female and male, large and small – they are the engine of our continent’s transformation. “We will be championing and celebrating them. This year, we are truly achieving scale and impact; we received over 150,000 applications in 2017 alone, up from 20,000 applications in 2015.

Invest more in water provision to boost health, Dangote Foundation urges

overnment at all levels, the organised private sector, and wellmeaning individuals have been urged to commit more resources to ensure adequate provision of clean water to help tackle malnutrition successfully in Nigeria. The recommendation was made by Zouera Youssoufou, managing director/CEO, Aliko Dangote Foundation (ADF), while speaking in Lagos recently. Youssoufou’s call is coming ahead of the World Water Week holding in Stockholm, Sweden, between August 26 and 31, with the theme, ‘Water, ecosystem and human development.’ It also follows the recent declaration of emergency on the water and

sanitation sector by the Federal Government of Nigeria. Speaking on the water component of the ADF Nutrition Programme, the Foundation’s CEO said, “Within our flagship nutrition programme we have a substantial Water, Sanitation and Hygiene (WASH) component. We cannot be effective at fighting malnutrition if we don’t also provide clean drinking water to our beneficiaries. “We have a global water challenge, which is what SDG 6 is focused on solving. Achieving SDG 6 is essential for progress on all other SDGs and vice versa. Sustainable management of water and sanitation underpins wider efforts to end poverty, advance sustainable develop-

ment and sustain peace and stability. We all have a part to play as Government, Private sector, development partners and individuals.” In 2016, the Foundation launched a $100 million nutrition programme with the Bill and Melinda Gates Foundation. ADF is focused on Community Management of Acute Malnutrition (CMAM), reaching on the most severely malnourished children through the Primary Healthcare System. This intervention includes treating affected children with Ready to use Therapeutic Foods (RUTF), combined with household level empowerment programmes to enable the parents improve their livelihoods.

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Vacancy rates deepen in real estate sub-markets as affordability remains critical CHUKA UROKO

pparently, this is the right time to move cash to the residential real estate market as the number of empty houses in the highbrow areas across the major cities of the country keeps rising without buyers or prospective tenants. The opportunities are all the more compelling as developers who have not dropped their prices are offering attractive concessions. Whereas demand in the low-middle segments of the real estate market remains strong with widening demand-supply gap and low vacancy rates, the upper end markets across major cities or sub-markets of Nigeria are passing through challenges with over-supply and deepening vacancy rates. Across the various segments of the property market, vacancy rates are rising, but it is more pronounced in commercial office space and retail, due largely to affordability factor arising from

weak individual, institutional and household purchasing power. In Lagos, Nigeria’s commercial capital, mainland strongholds remain strong with low vacancies. In the first half of this year (Q1 2018), Yaba, Surulere and Magodo Phase 11 recorded low vacancy rates of 3 percent, 4 percent and 5 percent, respectively. In the more cosmopolitan areas of Victoria Island, Oniru, Lekki and Ikoyi, the story is different. Vacancy rates here are as high as 35 percent, 37 percent, 39 percent and 40 percent, respectively. The reason for these is also because affordability remains a central consideration. “This is to be expected in a market where you have bandwagon effect. Everybody is concentrating at the high end, building for one particular market with narrow demand,” Erejuwa Gbadebo, CEO, International Real Estate Partners (IREP), said in an interview. This is also why in Abuja,

the federal capital territory, while there is high demand for low cost 1 and 2-bed apartments, 3 to 4-dedroom houses in Q1 2018 saw a drop in demand due to the weakened purchasing power of the average resident. High tenement rates, waste management and water bills contributed to the reduced interest. In H1 2018, the low cost areas of the city such as Gwarimpa and Lugbe recorded low vacancy rates at 4 percent apiece while Apo, Jabi, Katampe, and Utako had 13 percent, 10 percent, 28 percent and 13 percent respectively, explaining the many empty houses that define the city’s high end property market. In Port Harcourt, Old GRA and GRA Phase 2 had relatively low vacancy rates at 6 percent and 7 percent respectively, while such areas as GRA Phase 1, Elenlewo and Peter Odili which are highbrow areas of the Garden City recorded 14 percent, 10 percent and 13 percent, respectively.

SIFAX Group to build, operate multi-million dollar dry port in Gambia

IFAX Group, a multinational company with interests in maritime, aviation, haulage and logistics, oil and gas and hospitality, has signed a memorandum of understanding (MoU) with the government of the Gambia to build and operate a dry port in the country’s capital, Banjul. A dry port (sometimes inland port) is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a centre for the trans-shipment of sea cargo to inland destinations. The MoU was signed in Banjul by John Jenkins, group managing director, SIFAX Group, and Abdoulie Tambedou, managing director, Gambia Ports Authority (GPA). The terms of the MoU include a multi-million dollar investment in the building and operations of the dry port to decongest the Port of Banjul in a public-private partnership business model.

After the signing ceremony, the SIFAX Group delegation, which also included Taiwo Afolabi, group executive vice chairman, and Saheed Lasisi, general manager, business development and strategic planning, also met with the Gambian President Adama Barrow, where prospects of extending the company’s investment plan to other sectors of the country’s economy was discussed extensively. Afolabi, while thanking the Gambia’s president for the opportunity to invest in the country, assured him and the people of Gambia of SIFAX Group’s willingness to open up the economy of the country by not only build and operate a world-class inland container terminal but also invest in other sectors that would help the country grow and compete favourably among her peers in the continent and beyond. According to Afolabi,

“SIFAX Group believes in making Africa the focus of its investment hub. We are of the view that Africans stand a better chance to sincerely develop and tap the array of business and growth opportunities that abound in the continent. “We have been doing this in some West African countries and we are sincerely grateful to the president for opening the doors of The Gambia to us. Our promise is that the country’s economy will feel our impact, as we don’t intend to limit our interventions to the maritime sector alone. We have identified other areas we will be willing to invest in the nearest future.” On his part, Jenkins assured that the company would rely heavily on its 30-year-old business experience acquired working in various sectors and countries, as it sets out to turn around the country’s maritime sector.

Edo takes custody of two abandoned children

do State government has taken into custody two abandoned children, around the Faith Mediplex complex and the Third Junction axis of the state. The Ministry of Women Affairs and Social Development, which took custody of the children, promised to reconnect them with their families. Magdalene Ohenhen, commissioner for women affairs and social development, who was at the Faith Mediplex in Benin City, the

state capital, where a twomonth-old baby was abandoned, said the hospital had written to her after the child’s mother abandoned him. According to Ohenhen, “I came here after receiving a letter informing the Ministry that a baby was abandoned at the hospital by the mother.” She noted that the state government would ensure that the baby is fully taken care of. A Child Protection officer with the ministry, Ehis Agugu, noted that an-

other boy was brought to the ministry by officers of the Nigeria Police attached to the family unit. He said the boy was reportedly found around 3rd Junction, close to Ekiosa Market, in Benin City, urging members of the public, who may have information on the parents or guardians of the child, to furnish same to the ministry. He noted that the state government is keen on protecting children, especially with the implementation of the Child Rights Act.

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FINANCIAL TIMES

YouTube: How vloggers became the new Oprah Winfreys

Shale boom zaps volatility in US natural gas market Page A5

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World Business Newspaper

FBI fires agent who sent anti-Trump messages

Peter Strzok was removed from Mueller’s investigation in December Kadhim Shubber

he FBI has fired Peter Strzok, a former top special agent who was removed from the investigation into Russian election meddling after his antiTrump texts emerged, according to his attorney. Aitan Goelman, Mr Strzok’s lawyer, said in a statement that David Bowdich, the deputy director of the FBI, ordered his firing on Friday afternoon. Mr Goelman said the FBI official in charge of employee discipline had recommended a less severe punishment: demotion and 60-day suspension. “The decision to terminate was taken in response to political pressure,” said Mr Goelman. The FBI issued a statement late on Monday afternoon that said that Mr Bowdich had the “authority to review and modify any disciplinary findings and/or penalty as deemed necessary in the best interest of the FBI”. Donald Trump, who has used Mr Strzok’s texts to argue that the Russia investigation is a “witch hunt”, seized on the agent’s dismissal to repeat his criticisms of Robert Mueller’s probe. “Agent Peter Strzok was just fired from the FBI — finally,” he tweeted. “Based on the fact that Strzok was in charge of the Witch Hunt, will it be dropped?” Mr Strzok, a 21-year veteran of the FBI, was a senior agent on the investigation in to Hillary Clinton’s private email server and then the agency’s investigation into Russia’s activities during the 2016 election. He is the latest senior FBI official to lose their job in the fallout from the politically fraught investigations. In March, Andrew McCabe, the former deputy director, was fired days before he was due to retire for misleading investigators about

leaking to the media about the Clinton investigation. Mr McCabe has denied being dishonest. Mr Strzok was removed from the Russia probe led by Mr Mueller, the special counsel, in December after it emerged that he had exchanged antiTrump texts with Lisa Page, a lawyer at the FBI who he was having an affair with. Ms Page left the FBI in May. One of the texts that became public later was an exchange during the 2016 election in which Ms Page asked Mr Strzok: “[Trump’s] not ever going to become president, right? Right?!” He replied: “No. No he won’t. We’ll stop it.” Mr Strzok became a target of attacks by Mr Trump and Republicans, who grilled him in July at a testy hearing of the house judiciary and oversight committees. Bob Goodlatte, the Republican chair of the judiciary committee, threatened to hold Mr Strzok in contempt after he refused to answer certain questions about the ongoing Russia investigation on the order of the FBI. The former FBI agent has consistently denied that he allowed his personal views to affect the decisions he made in his job. “After months of investigations, there is simply no evidence of bias in my professional actions,” he said in his opening statement at the July hearing. He was criticised by Michael Horowitz, the FBI’s inspector general, who said in a report in June that Mr Strzok’s texts had “sowed doubt about the FBI’s handling” of the Clinton investigation. Mr Horowitz found no evidence of bias in the decisions made by the FBI in the Clinton probe, but raised questions about Mr Strzok prioritising the Russia investigation over newly discovered Clinton emails shortly before the 2016 election. The Clinton investigation had ended months earlier when James Comey, the former FBI director, decided against bringing charges.

Brussels steps up legal threat to Poland over judicial reform Warsaw and European Commission in bitter stand-off over rule of law Mehreen Khan

russels has stepped up threats of legal action against the Polish government over contentious reforms to its judiciary in the latest sign of deteriorating relations between the EU and Warsaw. The European Commission on Tuesday urged Poland to rectify a law that would force supreme

court judges to retire early, or face being sued at the European Court of Justice. Warsaw has a month to respond. The commission has been in a bitter two-year stand-off with Poland’s ruling Law and Justice party over a revamp of the Polish judiciary, which Brussels argues is eroding the rule of law. The EU in July issued a formal Continues on page A4

Peter Strzok was a senior agent on the investigation in to Hillary Clinton’s private email server and the agency’s probe into Russia’s activities during the 2016 election © Getty

Shale boom zaps volatility in US natural gas market Surge in production allows prices to defy hot summer demand Gregory Meyer

expected to top 1,000 by the end of the season, ranking the summer of 2018 among the top five for heat, according to Commodity Weather Group. That has required more generation from electric power plants that increasingly run on gas. Natural gas “power burn” surged to a record 37.7bn cubic feet per day during July, according to S&P Global Platts. Exports have also fed demand. The US is now a net exporter of gas to the tune of 2bn cu ft/d, the Energy Information Administration estimates. The volumes flow through new pipelines to Mexico and liquefied natural gas export terminals recently opened on the coasts of Louisiana and Maryland. The strong summer use of gas follows a winter when heating demand left gas stocks depleted. While producers will bank additional supplies over the summer and autumn, EIA forecasts that stocks at the end of the “injection season” in October will amount to just 3.3tn cu ft — the lowest

for that month since 2005. “It does create some concern that under the right conditions we could see some fireworks for prices,” said Rich Redash, head of North American gas and power research at S&P Global. For now, though, gas prices have been a damp squib. Nymex September gas futures on Monday settled at $2.930 per million British thermal units, inside its range of $2.50-$3.50 over the past year. Daily price moves have also been subdued. Realised 30-day volatility for front-month gas futures this month dropped to the lowest level since 1991, the year after the New York Mercantile Exchange first listed the benchmark Henry Hub gas contract, Bloomberg data show. Volatility and prices have declined as production continues to surprise the market. Output has surged from shale formations such as the Marcellus and Utica in the north-east and the Permian and Haynesville centred around Texas.

Turkish lira rebounds 6% after streak of steep falls No sign of Turkey backing down as Erdogan urges Apple boycott Adam Samson and Laura Pitel

urkey’s currency has found its footing after two days of intense selling that ricocheted across the currencies market. In early London dealings, the lira rose 6 per cent, with one dollar buying 6.49 units of the currency. The move comes after a 6.3 per cent fall on Monday and a 13.8 per cent drop last Friday — which has left the currency down by a quarter this month alone, even after the bounce higher on Tuesday. Turkey’s equities market was also boosted. The BIST 100 index of leading Istanbul stocks was up 2.4 per cent in morning action, with the banks sector up 4.5 per cent. Other currencies, which had faced ructions on Monday, were also calmer. The South African

rand climbed 2.4 per cent, while the Mexican peso rose nearly 1 per cent. MSCI’s broad EM currencies index was up 0.27 per cent after a 0.66 per cent fall on Monday. But there was no sign of Turkey backing away from a confrontation with the US that helped triggered the lira’s woes. President Recep Tayyip Erdogan appear to open another front on Tuesday, urging Turks to boycott Apple and other US technology companies in retaliation for US sanctions against his country. “If they have the iPhone, there is Samsung on the other side,” he told ruling party members. “In Turkey we have Vestel Venus phones.” Shares in Vestel, a Turkish home appliances and electronics producer, rose sharply following his comments. The US has been pressuring

Turkey to release an American pastor it had detained, a move that prompted US sanctions against a duo of senior Turkish government officials. Mr Erdogan maintained that Turkey would not retreat despite the pain inflicted on the nation’s currency, which has lost more than 40 per cent of its value since the start of the year. “What is this you’re doing?” he asked the US. “What is it that you are trying to accomplish? What do you want to do? You should know: the character of this nation is not one that wavers.” Sarah Sanders, the US press secretary, said on Monday afternoon Washington time that national security adviser John Bolton met with Turkish ambassador Serdar Kilic at the White House.

BUSINESS DAY

C002D5556

NATIONAL NEWS

FT Brussels steps up legal threat to Poland ...

Elon Musk says advisers lined up to take Tesla private

Continued from page A3 notice to the Polish government of an infringement process for breaking the bloc’s laws by increasing the political influence on judicial appointments. This month Warsaw responded that concerns over the judicial overhaul were “unfounded”. Brussels on Tuesday said the response did “not alleviate the commission’s legal concerns”. “The European Commission maintains its position that the Polish law on the supreme court is incompatible with EU law as it undermines the principle of judicial independence, including the irremovability of judges,” said the opinion. An EU official said the decision to escalate the infringement process, 12 days after the Polish government’s letter, was a sign of fraying diplomatic relations between the two sides. Should Warsaw fail to take action, the infringement procedure could lead to Poland being brought before the ECJ. “It is a political signal to escalate the process so fast, and a sign that a political dialogue is non-existent,” said the official. In addition to the infringement process, the commission last year launched an unprecedented “Article 7” investigation into Poland’s compliance with EU fundamental values, which, if followed to its conclusion, could result in Warsaw’s being sanctioned and losing its EU voting rights. The supreme court law, which came into force last month, lowers the judicial retirement ages from 70 to 65 and could force 27 out of 72 judges to retire early. Law and Justice has argued that the overhaul is needed to complete reforms left incomplete since the communist era, but the EU has warned it will increase the government’s political influence over the judiciary. Malgorzata Gersdorf, head of the supreme court, who would be among those forced out under the measures, has resisted early retirement and branded the reforms a “purge”. As infringement proceedings can take months and even years to be decided at the ECJ, the process is likely to have less of an impact on Poland’s government than the Article 7 procedure. EU member states have yet to vote on whether to apply sanctions under Article 7, with Hungary — which is waging its own battle with the EU over the rule of law — resisting countermeasures against Warsaw. The sanctions would ultimately need unanimity among the EU’s 27 member states. This month Poland’s supreme court decided to suspend applying parts of the retirement law. It has sent five questions to the ECJ and would await an independent opinion before enforcing all parts of the retirement law. In its opinion, the commission said that measures to allow a judge to appeal against early retirement and stay in office with the explicit permission of the Polish president did not constitute an “effective safeguard” for the rule of law. “There are no criteria established for the president’s decision and no judicial review is available if the request is rejected”, said the commission.

Wednesday 15 August 2018

Electric car founder in new bid to signal that he is serious about buyout

T President Aleksandar Vucic of Serbia said last week that he wanted ‘proper borders’ with Kosovo, which is 90 per cent ethnic Albanian © Reuters

Belgrade and Pristina see partition as answer to Kosovo impasse Idea had been considered a non-starter by international community Valerie Hopkins

wo decades since Serbia’s war with former province Kosovo, diplomats and leaders are toying with an idea that used to be considered a red line. “Partition”, “border adjustments” and “demarcation” are the talk of Belgrade and Pristina, with some hopeful of a breakthrough that would see Serbia finally recognise Kosovo’s independence and pave the way for both countries to join the EU. President Aleksandar Vucic of Serbia said last week that he wanted “proper borders” with Kosovo, which is 90 per cent ethnic Albanian. “I push for that [the boundary with Kosovo’s Albanians], and that’s my policy,” said Mr Vucic on Thursday. “To have a territory treated differently, without a clear idea what belongs to whom — that is always a source of potential conflicts.” Mr Vucic’s statement marks one of the first times he has openly dis-

cussed Belgrade’s potential recognition of Kosovo, which successive Serbian governments previously swore would never happen. Serbia considers Kosovo the cradle of its Christian Orthodox faith because of the medieval monasteries on the territory. Partition has been a back-up plan for two decades as a way to make up for the humiliating loss of Serbs’ ancestral home. Kosovo map That was considered a non-starter by the international community, which prized a multi-ethnic state, and by Kosovo itself. But the idea has resurfaced as the west hopes to see Kosovo and Serbia forge a lasting peace. President Hashim Thaci of Kosovo, who has engaged with Mr Vucic for years in Brussels-brokered talks, said on Wednesday that he would advocate a “correction of the border” that would see three predominantly ethnic Albanian municipalities in Serbia’s Presevo valley become part of Kosovo. Mr Thaci did not elaborate on which parts of north Kosovo might

be ceded to Serbia, and neither leader has presented a map or elaborated a plan. “This does not mean partition of Kosovo, a territorial swap or autonomy for Serbs [in north Kosovo] but a correction of the border and recognition and membership for Kosovo in all international mechanisms,” said Mr Thaci. Pristina seeks UN membership, which Serbia has blocked along with its ally Russia. Kosovo declared independence a decade ago, almost 10 years after Serbian forces withdrew following 11 weeks of Nato bombing. More than 110 countries recognise Kosovo, including 23 of 28 EU member states. Belgrade and Pristina began negotiating under EU auspices in 2011, trying to settle issues such as control over Kosovo’s energy infrastructure, freedom of movement and, crucially, the future of the remaining Serbs. With momentum recently injected into stalled Balkan peace processes following the name deal between Greece and Macedonia, Brussels and Washington are

Why Saudi Arabia’s oil output figures are drawing scrutiny A drop in the country’s production in July raises questions about what’s really happening David Sheppard

audi Arabia’s oil production is arguably the most important number in the industry, determining whether the market will be under- or oversupplied. It is closely tracked by a host of actors from oil traders to the White House, so when it throws up surprises it quickly attracts attention. In June the kingdom vowed to raise output, in a move widely seen as responding to pressure from US President Donald Trump after crude prices reached the highest level since 2014. But after hiking output that month, the kingdom has said that it lowered output again in July. Figures provided by Saudi Arabia to Opec and published on Monday suggest it cut output by 200,000 barrels a day last month to 10.3m b/d— reversing about 40 per cent of the previous increase. It is fair to say the oil market — and potentially the tweet-happy occupant of the White House — might be wondering what is going on. The kingdom has offered a prosaic explanation, saying it is simply responding to the level of demand in the market, producing the barrels its refinery customers need. “Oil companies are not asking for

more,” said one person familiar with Saudi energy policy. But this has not been readily accepted by everyone in the market. Part of the reason the kingdom first responded to White House pressure to increase output is the reimposition of US sanctions on Saudi’s arch-rival Iran. While oil sanctions do not take effect until November, the argument goes that Saudi Arabia should be lifting output regardless of customer demand to build up a supply buffer against the looming shortfall of Iranian barrels. Traders increasingly expect US sanctions to knock out at least 1m b/d of Iranian exports. Consultancy Energy Aspects said it believed the reported 10.3m b/d figure was “too low and probably an attempt to support prices”, pointing to satellite imagery it said showed domestic inventories building in Saudi Arabia. The kingdom may feel pressure from the White House to lower prices, but does not want the market to collapse given its own economic dependence on oil, trying instead to balance crude between $70 and $80 a barrel. It also does not want to overly antagonise Iran, a fellow Opec member, which has opposed the cartel raising output aggressively. The uncertainty has not been

helped by agencies that track Saudi Arabia and other Opec members’ output putting out an unusually wide range of assessments for Riyadh’s production. The six so-called secondary sources used by Opec — the International Energy Agency, the US Energy Information Administration, pricing agencies Platts and Argus, Petroleum Intelligence Weekly and IHS Markit — saw production between 10.3m and 10.6m b/d last month. Argus and IHS Markit, which had relatively low assessments, both defended their numbers following a report that said some agencies had faced pressure from Riyadh to lower their production numbers. Both said they had reached their assessments independently. “I have never known the Saudis to take this kind of tack,” said Diane Munro, Argus Editor in Chief. Sources at agencies with higher assessments — speaking on condition of anonymity — said they had, however, been contacted by Saudi officials who had cautioned their figures were too high. Whatever the truth on Saudi output last month, attention will soon shift to August’s number. Traders will be bracing for the next surprise, unless more clarity arrives first.

esla founder Elon Musk says he has lined up advisers to help take the electric car maker private, in the latest effort to signal that his desire for a deal is serious. Following a message last week that he was considering taking the group private at $420 a share and declaring “funding secured”, Mr Musk has faced questions over the possible sources of backing for the buyout, as well as the spectre of lawsuits from disgruntled shareholders. “I’m excited to work with Silver Lake and Goldman Sachs as financial advisers, plus Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisers, on the proposal to take Tesla private,” he wrote on Twitter. Naming his advisers appears to be the latest step to convince investors — and the Securities and Exchange Commission — that the enterprise is serious, adding professional heft to the process. However, Mr Musk waited for six days to release the list after his first tweet saying funding for the deal had been secured. Silver Lake, one of the companies named on Monday evening as working with Mr Musk, was unaware of his plans when they were announced last week, according to a person familiar with the situation. The latest dribble of information through Twitter came hours after Mr Musk wrote a lengthy blog post defending the way he has communicated his desire to remove the business from the glare of the public markets. In an update on Monday, Mr Musk said he had been in discussions with Saudi Arabia’s sovereign wealth fund about aiding a deal to take the company private, but also that he was seeking additional outside investors as well. According to his blog post, he left a meeting on July 31 with Saudi Arabia’s Public Investment Fund believing that they had agreed in principle to back the move — the reason he wrote “funding secured” in his message a week ago. In the update, he said any detailed proposal would be presented to an independent board committee once discussions with investors had finished. Latham & Watkins, the law firm, is advising the committee, according to two people with knowledge of the situation. Shares in Tesla closed on Monday at $356.41, well below the intraday peak of $387.46 they reached last week. Mr Musk’s message a week ago that he wanted to take the company private came within hours of the Financial Times revealing that the PIF had quietly built a 3 to 5 per cent stake in Tesla. He said in a blog post on Friday that while no final decision on taking the company private had been made, it was “the best path forward”. Mr Musk wants to take the carmaker out of the public gaze to focus on ramping up production of the Model 3, expanding its factories and launching new products. Tesla has improved its financials, cutting the amount of cash the business burns through every three months, while also booking profits on the top-end Model 3 it is manufacturing.

Wednesday 15 August 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Shale boom zaps volatility in US natural gas market Surge in production allows prices to defy hot summer demand Gregory Meyer

hen US natural gas futures passed a milestone this month, they did so quietly: volatility fell to the lowest levels since the market’s debut nearly 30 years ago. The event seemed improbable. Volatility usually fades when commodity stocks are ample. Yet US gas stocks are 19.5 per cent below average. When the winter starts they are set to be at their lowest in more than a decade. This situation is the latest example of how the world’s largest gas market has been transformed by shale drilling. While demand for gas is galloping, it has been met by waves of supply that show no sign of abating. Conditions that put traders on edge a decade ago get shrugs. Like much of the northern hemisphere, the US this year is experiencing extremely hot weather. Cooling degree days — a measure of air-conditioning demand — are expected to top 1,000 by the end of the season, ranking the summer of 2018 among the top five for heat, according to Commodity Weather Group. That has required more generation from electric power plants that increasingly run on gas. Natural gas “power burn” surged to a record 37.7bn cubic feet per day during July, according to S&P Global Platts. Exports have also fed demand. The US is now a net exporter of gas to the tune of 2bn cu ft/d, the Energy Information Administration estimates. The volumes flow through new pipelines to Mexico and liquefied natural gas export terminals recently opened on the coasts of Louisiana and Maryland. The strong summer use of gas follows a winter when heating demand left gas stocks depleted. While producers will bank additional supplies over the summer and autumn, EIA forecasts that stocks at the end of the “injection season” in October will amount to just 3.3tn cu ft — the lowest for that month since 2005. “It does create some concern that

under the right conditions we could see some fireworks for prices,” said Rich Redash, head of North American gas and power research at S&P Global. For now, though, gas prices have been a damp squib. Nymex September gas futures on Monday settled at $2.930 per million British thermal units, inside its range of $2.50-$3.50 over the past year. Daily price moves have also been subdued. Realised 30-day volatility for front-month gas futures this month dropped to the lowest level since 1991, the year after the New York Mercantile Exchange first listed the benchmark Henry Hub gas contract, Bloomberg data show. Volatility and prices have declined as production continues to surprise the market. Output has surged from shale formations such as the Marcellus and Utica in the north-east and the Permian and Haynesville centred around Texas. The government last week forecast 81.1bn cu ft/d in dry gas production for 2018, a record high and up by 7.5bn cu ft/d from 2017. The flows have made traders less concerned about inventories. They have faith that gas wells will keep the market well supplied. “I think that has contributed to a certain degree of complacency,” said Adam De Chiara, portfolio manager at CoreCommodity Management, a $4bn fund manager based in Connecticut. “And you see that in the volatility in the nearby price.” Prices for some futures contracts tell a less comfortable story. The discount that gas contracts for October delivery have against gas for January 2019 delivery has shrunk to 21 cents per mBtu in recent weeks, suggesting companies buying gas to store for winter must compete with the current strong demand from the power sector. Another heavily traded spread, between gas for March 2019 and April 2019 delivery, has a 31 cent premium for March, suggesting supplies could be tight by the end of a cold winter. As a gas trading executive pointed out, volatility tends to be lower in the summer than in the winter as demand is weaker.

Turkish lira rebound helps wider recovery in risk appetite Emerging market currencies stable, while stocks rise in Istanbul and Europe Michael Hunter and Hudson Lockett

A rebound for Turkish assets is helping risk appetite recover across global markets as the lira remains above its record low. Most emerging market currencies are holding their ground as investors measure their response to Turkey’s currency crisis. India’s rupee touched a record low, before it too found support. The lira itself is 4.5 per cent stronger at TL6.5379 per dollar, a day after falling heavily to touch a record weak point of TL7.24 per dollar amid central bank efforts to shore up Turkey’s financial system. The yield, which moves inversely to price, on Turkey’s 10-year debt is down 116 basis points as investors buy the debt, sending its yield to 20.37 per cent. Buyers have moved in for Istanbul stocks, with the benchmark Bist 100 up 1.4 per cent. The index tracking the country’s banks — among the sectors most directly exposed to a currency crisis — is up more than 3.8 per cent. Nonetheless, an air of caution remains. The Europe-wide Stoxx banking index is steady, unable to hold earlier gains of 0.8 per cent.

Deutsche Bank analysts warned of “risk-off contagion” from the crisis, estimating the global banking system’s exposure to Turkey at the end of March stood at $223bn. Chris Turner, global head of strategy at ING, said if events led to “more indiscriminate selling” of emerging market assets, “those countries that had attracted the lion’s share of recent portfolio flows” would look most exposed. “The big EM proxies of Poland and Mexico could be at risk in this case,” he warned. In the meantime, Poland’s currency is 0.2 per cent firmer at 3.7586 zloty per dollar. Mexico’s peso is 1 per cent stronger on the day at 18.9239 pesos per dollar. India’s rupee touched a record low at Rs70.80 per dollar, before finding support and strengthening to Rs69.8150, leaving it 0.3 per cent firmer for the session. Indonesia’s rupiah softened again, slipping 0.2 per cent to Rp14,620 per dollar. Equities European stock markets are rising, with London’s FTSE 100 up 0.2 per cent and Frankfurt’s Xetra Dax 30 gaining 0.7 per cent. The region-wide Stoxx 600 is up 0.5 per cent. Bourses diverged in Asia-Pacific

trading. Sydney’s S&P/ASX 200 index climbed 0.8 per cent and Tokyo’s Topix rose 1.6 per cent with gains across the board. But Hong Kong’s Hang Seng ticked down 0.2 per cent as financials and technology stocks dropped. The CSI 300 index of major Shanghai and Shenzhen-listed stocks lost 0.5 per cent. On Wall Street on Monday an opening rally for the S&P 500 — after it suffered its biggest one-day fall in a month on Friday — turned into a 0.4 per cent loss by the close. Futures trade expects it to regain 0.3 per cent at the US open. Forex and fixed income Japan’s yen is weaker by 0.2 per cent at ¥110.94 per dollar while the euro is flat at $1.1404. The dollar index is 0.1 per cent softer at 96.299. The yield on 10-year US Treasuries is unmoved at 2.8985 per cent. Commodities Oil prices are higher on concern about the impact of Saudi production cuts on global supply. Brent crude, the international benchmark, rising 1 per cent to $73.34 a barrel and West Texas Intermediate, the US marker, gaining 0.9 per cent to $67.82. Gold is up 0.2 per cent to $1,194.56 per ounce.

China’s Ganfeng Lithium buys stake in Argentina lithium project Chinese regional investment arm in landmark bond default

Acquisition from Chile’s SQM for $87.5m a vote of confidence in lithium market Henry Sanderson

hina’s Ganfeng Lithium, one of the country’s top producers of the battery metal, has bought Chilean producer SQM’s stake in the Cauchari-Olaroz project in Argentina for $87.5m. Ganfeng will own 37.5 per cent of the brine project, which is expected to start production in 2020, with the rest held by Canada’s Lithium Americas. Ganfeng will also provide a $100m loan to fund its development. The acquisition comes ahead of Ganfeng’s initial public offering in Hong Kong, which is expected to raise around $1bn, and is the latest Chinese purchase of a lithium project in South America, following an offer by Tianqi Lithium to buy 24 per cent of SQM for $4.1bn last year. Ganfeng said it had also signed an agreement with Lithium Americas to “explore future opportunities to jointly develop lithium resources across

North and South America.” The Cauchari-Olaroz project in Argentina’s Jujuy province is one of a host of new lithium projects that aim to meet rising demand for the raw material from electric cars. A Tesla Model 3 uses about 38 kilogrammes of lithium, according to estimates from SQM. Despite the demand outlook, however, shares in the largest lithium producers have fallen this year, on concerns about oversupply of the battery metal. SQM shares have fallen by 23 per cent year-to-date while Lithium Americas are down by 58 per cent. Still, analysts at VSA Capital Research in London said Ganfeng’s purchase is a vote of confidence in the lithium market. “The fact that Ganfeng Lithium is acquiring additional top tier lithium projects highlights to us that the demand outlook from China is far stronger than in the West and that lithium stocks are due a re-rating,” they said.

Xinjiang holding group misses debt payment signalling end of implicit state bailout Gabriel Wildau

n investment arm of western China’s Xinjiang region has failed to repay a Rmb500m ($73m) bond, marking the first public default by a Chinese government-linked holding company. The default by the Sixth Agriculture State-Owned Assets Management Co is the first by an investment holding company and a signal to investors that even state-owned groups that are agents of fiscal policy — considered closer to Beijing than commercially operated state-owned enterprises— are not guaranteed to be bailed out by the state. Sixth Agricultural is a holding company for state-owned enterprises in the city of Wujiaqu, including cotton trading, coal mining, real estate, finance and logistics. Bond defaults have risen sharply in China this year as Beijing has

mounted a fierce campaign against excessive debt. The central government keeps a tight lid on direct fiscal borrowing by local governments but has allowed them to skirt these limits by borrowing via investment vehicles such as Sixth Agricultural. Using traditional accounting, China’s budget deficit was a modest 3.9 per cent of gross domestic product last year, but when such off-budget spending was included, the “augmented deficit” was 10.8 per cent of GDP, according to the IMF. In 2014, the finance ministry authorised direct borrowing by local governments for the first time in a bid to encourage them to establish clearly-defined debt limits and phase out the use of opaque, off-budget vehicles. The explosion of local borrowing since the 2008 financial crisis — local government debt has risen from 27 per cent of GDP in 2013 to 45 per cent in 2017, according to the IMF — has

sparked warnings from global watchdogs and Beijing officials. Borrowing through local government financing vehicles has continued, however, serving as a crucial source of financing for infrastructureled fiscal stimulus. Yet even as Beijing allowed the practice to continue, authorities said they must operate on a commercial basis with no expectation of a bailout if they were unable to repay their debt. Previous defaults by both stateowned and private companies were often followed by bailouts days or weeks later. But analysts said imposing losses on investors would reduce moral hazard by forcing them to evaluate borrowers’ fundamentals rather than relying on expectations of government support. “This is China’s first case of a default by a city investment company,” said Shi Min, chief credit officer at Lerui Asset Management, a Beijingbased bond hedge fund.

BUSINESS DAY

C002D5556

Monday 13 August 2018

ANALYSIS China’s high-speed rail and fears of fast track to debt Critics say project is dependent on unsustainable government subsidies Tom Mitchell and Xinning Liu

YouTube: How vloggers became the new Oprah Winfreys Some web stars make millions of dollars, but the stress of creating daily content can take its toll Hannah Kuchler and Emma Jacobs

hen Marcus Butler told his parents of his plan to devote himself to his YouTube channel, he was earning just “tens of pounds”. That was eight years ago, when the excited 18-year-old had just returned from VidCon, the annual online video extravaganza in Los Angeles, where he met vloggers who had bought houses with their earnings. “There was something material that showed there was potential in it,” he says. Having travelled to LA as a “weird kid who liked YouTube”, he came back a wannabe entrepreneur. “I never had that vision when I started that it would be a business,” he says. Mr Butler became part of the “British invasion of YouTube”, one of a group of friends including Alfie Deyes, Zoella and Caspar Lee, who have boosted each others’ profiles. His biggest hit was rapping on helium with US vlogger Tyler Oakley, which received more than 8m views. Now, Mr Butler has bought rental properties in his hometown of Brighton, set up a subscription healthy snacks box and a music management company. He started generating income from his share of YouTube ads that ran next to his videos. Like other successful vloggers, he also promotes brands, products and services. Other revenue streams include tours, book deals and merchandise. In short, he has become a role model for a new generation of YouTube wannabes. Those budding YouTube vloggers face an uphill struggle as they try to break through. They now have to compete on a crowded platform where it would take eight years to watch the content uploaded in 24 hours — including that produced by stars from film, music and other areas of entertainment. YouTube itself is wary of competition in video content from Facebook on one side and in streaming music from Spotify on the other. Before the careers of their peers have even started, younger vloggers have the strain of running a complex business in full view of their followers. Nevertheless, the opportunity is huge: anyone with a smartphone can try to reach YouTube’s audience of 1.9bn signed-up users. The size of the YouTube creator economy is hard to estimate. Alphabet, Google’s parent company, does not even break out YouTube’s revenue. But the number of channels making more than $100,000 a year has increased by 40 per cent year on year, according to the company. For YouTube and its parent, Google, which bought the channel

for $1.7bn in 2006, this world of content is a key way of keeping users on its website rather than its rivals’. Rich Greenfield, analyst at BTIG, estimates YouTube revenues to be in the high teens of billions of dollars. Of the 1.7bn views YouTube received in the first quarter, 84 per cent were for the self-created content of so-called “influencers”. While that category includes the channels of major artists, the best-known vloggers rival them in reach: Logan Paul, who created a storm of controversy this year by showing an apparent suicide victim in one of his videos, has 18m subscribers for his channel, more than Adele (17.8m) or Beyoncé (17.1m). Chart on Facebook and YouTube vloggers “The vlogging landscape has grown tremendously over the past 10 years,” says Greg Goodfried at United Talent Agency. “You can make an exceptional living having a large audience on YouTube.” Creators can quickly reach audiences in other countries: 48 per cent of European vloggers export outside their home country, with three quarters of UK creators’ audiences outside the UK, according to research firm the video analytics company Tubular Labs. “The growth and scale have created a really wonderful opportunity for creators being able to reach a global audience and build a real business,” said Kelly Merryman, vice-president of content partnerships at YouTube. Vloggers have been a key part of the YouTube model since its early days. In May 2007, just over two years after the platform was launched, it brought in the programme where creators receive 55 per cent of the revenue their videos generate — which has since expanded to 97 countries. Now advertising is not the only option — or even the majority of incomes — for vloggers. As larger creators started making the most of their money from partnerships with brands, YouTube bought FameBit, a marketplace to connect creators with marketers, in 2016. At this year’s VidCon, YouTube announced that vloggers can now sell memberships to their channels that give fans exclusive content and create their own merchandise through the platform. “When creators start on YouTube, they are telling their story. Over time, they create a brand, a community, a fanship. It reminds me of what Oprah Winfrey did withsyndication at 4pm in the afternoon when I was growing up,” says Ms Merryman. “She reached out to us in our households and told us about life: Oprah’s book club, recommendations of movies to see,

household goods to buy, because we trusted her.” Some of the top brands partnering with YouTubers include Epic Games, maker of the hugely popular online game Fortnite, Old Spice, the consumer label, and Kay Jewelers, according to Tubular Labs. Many creators secure external representation with an agency or manager. Scott Fisher, a founder of Select, a management company for digital creators, has done deals for his clients with brands including Starbucks and Revlon. Making “seven figures” is now commonplace on YouTube, he says. Creators with large followings often have even more employees — from video production help to lawyers, accountants and sometimes stylists — than traditional celebrities. “The world is now much more favourable to an independent creator than to be on a show for five years,” Mr Fisher says. Only a select few, however, can become the next mini-Oprah, even on the internet. Unjaded Jade, an 18-year-old from Berkshire in the UK, has more than 200,000 followers of her channel, with more than a million views for her 5am school morning routine video. She says advertising revenue is a lot lower than people assume. “I couldn’t live on it. It’s pocket money,” she says, although she makes more through brand deals on the video platform and through her Instagram account. The hardest part is getting noticed. Mathias Bärtl, a professor at Offenburg University of Applied Sciences in Germany, found that the top 3 per cent of YouTube channels received 90 per cent of the site’s views in 2016, up from about two-thirds in 2006, shortly after YouTube started. If your children want to become YouTube stars you should “do them a favour and crush their ambition now”, he says. Jonathan Saccone Joly, who started his channel in 2010 when he was already at the ripe old age of 30, is aghast at the idea of school-leavers aspiring to be professional YouTubers. “It is a massively saturated audience. People are trying to do more extreme things to get recognised,” he says. “It’s like playing the lottery, being an actor or a musician.” Myles Dyer, who has 48,000 subscribers to the channel he uses to promote social change, says people were doing provocative things to get clicks, but insists it is important to not be a “slave to the algorithm”. “People are now doing more subscriber and sponsored content. I’ve never made enough out of YouTube to pay the bills,” he says. Mr Dyer is now using Patreon, an online subscription service, to receive donations from fans.

n a recent weekday morning, Liu Ai’jun boarded one of eight daily high-speed rail services between Urumqi, capital of China’s north-western Xinjiang region, and Hami, an oasis town 614km to the east. The trip, along the longest and most expensive line in the country’s HSR network, took just three hours and cost Rmb167 ($24). Previously Mr Liu, a self-employed elevator salesman and technician, used to rely on infrequent and expensive flights between the two cities. Before the new HSR line was completed in 2014, the train between Urumqi and Hami took seven hours. “If you’re not in a rush, why not take the train,” Mr Liu said. “The train is a lot more relaxing [than flying].”

Prof Zhao estimates that China Railway’s overall debts will grow 60 per cent over the next few years, reaching Rmb8tn by 2020. China Railway did not respond to interview requests for this article. China Railways interest payments exceed operating profits In the first quarter of this year, China Railways reported a net loss of Rmb376bn. During the same period, bank loans accounted for Rmb156bn, or more than 60 per cent, of its total funding. The company’s interest payments on its debt have exceeded its operating profit since at least 2015.

The convenience to Mr Liu has come at a considerable cost to stateowned China Railway Corp, which over the past decade has built the world’s largest HSR network with 25,000km of track. Today, just a decade

Earlier this week, China Railway announced it would invest more than Rmb800bn this year, 10 per cent more than originally budgeted. The company intends to expand its HSR network to 30,000km of track by 2030. The Lanzhou-Xinjiang line along that Mr Liu travelled is the longest, and most controversial, link in China’s HSR network. Built at a cost of Rmb140bn,

after construction began, two-thirds of the world’s HSR tracks have been laid in China. The December 2009 debut of China’s first long-distance high-speed rail service, which raced 1,100km between the southern city of Guangzhou and Wuhan in central China in just three hours, was a dramatic example of the Chinese Communist party’s debt-fuelled response to the global financial crisis. Such investment projects fuelled demand for concrete, steel and other industrial commodities in the world’s second-largest economy in the years after the crisis. But they have also saddled China Railway and other state-owned enterprises with huge amounts of debt. In the decade to 2016, Chinese corporate debt levels rose from 100 per cent of gross domestic product to 190 per cent, or Rmb141tn. As of March, China Railway’s total debts stood at Rmb5tn. According to Li Hongchang, a transport expert at Beijing Jiaotong University, as much as 80 per cent of the company’s debt burden is related to HSR construction. For critics of China Railway, the HSR network is a debt crisis waiting to happen, dependent on unsustainable government subsidies with many lines incapable of repaying the interest on their debt, let alone principal. “China Railways has always depended on financial subsidies and continues to raise new debt to pay off old debt,” says Zhao Jian, a colleague of Prof Li’s at Beijing Jiaotong University. “[This] will inevitably lead to a railway debt crisis.”

it connects three large north-western provinces inhabited by 53m people — a relatively low total for China — in a combined land area bigger than Argentina. This flies in the face of the basic economics of high-speed railways, which work best at relatively short distances through densely populated corridors. “The sweet spot distance is 300500km,” said Jonathan Beard, head of transport consultancy for Arcadis Asia. “Any shorter and road tends to be more competitive. Any longer and air tends to be more competitive.” Designed to handle 320 trains a day, the Lanzhou-Xinjiang HSR currently has only eight daily services. “Because of this large amount of idle capacity, [the line’s] annual revenues are not enough to pay for its electricity costs,” said Prof Zhao. China’s high speed rail boom While few supporters of China’s HSR network would disagree that the Lanzhou-Xinjiang line is a white elephant of enormous proportions, they say that looking at one line in isolation misses the very point of the network. They argue that profitable lines such as China Railway’s lucrative Beijing-Guangzhou HSR corridor, which links six provinces with a total population of 430m, will ultimately balance out lossmaking ones. “The lines will be here for the next 40 years,” said Gerald Ollivier, a senior World Bank infrastructure specialist who focuses on China HSR projects. “You need to look at that timeframe, which distributes the fixed costs over many more years, and passenger growth to understand the true financial story.”

Wednesday 15 August 2018

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BUSINESS DAY

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Wednesday 15 August 2018

BUSINESS

DAY

COMPANIES & MARKETS Taxation seen as catalyst for Nigeria’s development ODINAKA ANUDU

illiam Babatunde Fowler, executive chairman of the Federal Inland Revenue Service(FIRS), says taxation is a catalyst for Nigeria’s sustainable development as it ensures robust funding of government infrastructure and social services. Speaking at the maiden edition of GTL Trustees Limited Thought Leadership Roundtable series in Lagos, Fowler said there was a need for increased tax compliance in the country to enable government to meet the infrastructural, economic and social needs of the people. He said there were two major ways in which government financed its expenditure— taxation and borrowing—, but argued that taxation was preferable to borrowing as debt had to be repaid usually with

interest and other debt servicing obligations which could sometimes create additional burden on the government. Speaking on the theme, ‘Tax: an old wave on a new shore’, Fowler said studies had shown that the extent to which an economy was able to grow sustainably and develop depended to a large extent on its ability to generate tax revenue to finance its expenditure and the efficiency of its tax system. Fowler enumerated some of the revenue generation challenges faced by states and local governments to include: poor information flow and systemic leakages; poverty and insecurity; emphasis on crude oil by government, as well as underdeveloped tax system. In her own remarks, Mary Uduk, acting director-general of the Securities and Exchange Commission (SEC), pointed out that SEC was proud to be identified with this initiative

given its conviction that a viable and efficient tax system would attract local and foreign investors to the market, as well as enhance Nigeria’s economic growth She congratulated GTL Trustees and urged that the laudable initiative be sustained. “Generally, our tax laws need to be reviewed and those that are specific to the capital market require special consideration,” she said. Uduk noted that the Commission was seeking ways in which tax regimes would favour listed public companies that were well governed, transparent and constituted less burden during tax collection. “Tax incentives to such companies can then serve as encouragements to others to be listed, thereby deepening our capital market and making it possible for citizens to invest, own and partake in the wealth of companies.”

Business Event

L-R: Elege Odigwe Emmanuel, chairman, Prison Fellowship Ogun State Chapter; Ituah Ighodalo, senior pastor, Trinity House; Toyin Sanni, HOD, Prison Ministry Trinity House; Olawepo John Bola, chairman, PFN Lagos State chapter, and Niyi Famuyide, church administrator, Trinity House, during the recent visit of Trinity House to minister to inmates of Abeokuta Prison.

Grand Cereals introduces new packaged ‘dog food’

n its determination to keep trained dogs that serve as security agents, healthy, Grand Cereals Limited, an integrated food company with foremost brands in the cereals, vegetable oil and animal feeds category has unveiled one of its products, Binggo Dog Food in new attractive packaging into the Nigerian market. This was unveiled during the recent Dog Breeders’ Forum organized by the company in Lagos. The brand which was introduced in the last quarter of 2014 has become a household name among the dog breeding community in Nigeria. Delivering his key note address at the event, Mukhtar Yakasai, deputy managing director of the company reaffirmed the company’s commitment to continuous product innovation

and improvement to meet and surpass the breeders’ expectations at all times. He further stated that the enviable position Binggo is currently enjoying could not have been possible without the collaboration of the breeders who opened up their Kennel to Binggo Dog Food. “Since introduction, Grand Cereals Limited (GCL) has engaged in continuous research and innovation to deliver a world class brand that is comparable to leading dog food brands internationally”. He said that in recognition of the progress made with the brand, The Nigeria Police Force Animal Branch (FAB) adopted Binggo as the official dog food of the Nigeria Police Dogs due to its ability to sustain dogs through the rigorous training and day to day policing functions. This fact

was corroborated by the Commissioner of Police, Department of Operations, Force Animal Branch, Aishatu Abubakar, who was ably represented by SP Julius Samuel at the Dog Breeders’ Forum event in Abuja, he said. Also speaking at the event in Jos, Victor Chinonso; president, Jos kennel Club also known as Champion Breeders, stated in a statement that “breeders need a dog food that is well formulated to bring out the breed’s conformation and performance of their dogs”,he stated further “Binggo Dog Food has proven to fit into this role perfectly since it is hygienically produced, has all the nutrients in balanced proportion, and it’s readily and freshly available unlike the imported brands that stay up to 4 months on the sea before arriving the shores of Nigeria”

Africa-China relations take spotlight at Stanbic IBTC forum HOPE MOSES-ASHIKE

he business community has gained a deeper understanding of the workings of the currency swap agreement between Nigeria and China as a recent forum organized by Stanbic IBTC Bank PLC, a member of Standard Bank Group, put into perspective the growing economic ties between the Asian giant and Africa. Stanbic IBTC said the forum was meant to provide critical insight into how best to help clients and businesses leverage the opportunity as well as assess the impact of the Chinese economy on trade in Africa. The interactive session tagged ‘A Night of AfricaChina Connection’ also provided a veritable platform for the bank to showcase its value proposi-

tion to the Chinese community in Nigeria. Demola Sogunle, Chief Executive, Stanbic IBTC Bank, who was ably represented by, Wole Adeniyi, executive director, operations, Stanbic IBTC Bank PLC said a major objective of the conference was to deepen the bank’s connection with the Chinese business community in order to set in motion enablers for a successful execution of the policy and further stimulate the strong trade and business ties between Africa, with special focus on Nigeria and China. He described the agreement as a win-win for all parties as clients and businesses are exposed to business opportunities in Africa and China, while promoting trade in, for and across Africa with a special focus on the Africa-

China and China–Africa trade corridor, based on credible and practical information. It was also an opportunity to shed more light on how the strategic institutional relationship involving the Industrial and Commercial Bank of China (ICBC), Standard Bank and Stanbic IBTC will help to drive trade between Africa and China. ICBC, the world’s biggest bank, holds 20 percent stake in Standard Bank, while Standard Bank has 64 percent in Stanbic IBTC. The relationship presents a huge leverage in Africa-China trade ties and has resulted in various initiatives across Africa, ranging from Renminbi trading, to AfricaChina business centres, and landmark deals, which collectively constitute Standard Bank’s Africa-China trading corridor.

L-R: Ismaeel Ahmed, senior special assistant to the president on Social Investment: Dotun Adebayo, operations manager, National Home Grown School Feeding Programme (NHGSFP); Mariam Uwais, special adviser to the president on Social Investment, and Abimbola Adesanmi, programme manager NHGSF, during a breakfast media round-table by the National Social Investment Office (NSIO) in Abuja. Pic by TundeAdeniyi.

L-R: Sani Shehu, president, Miners Association of Nigeria; Abubakar Bawari, minister of state for mines and steel development; Dele Ayanleke, national secretary, Miners Association of Nigeria, and Abdulkadir Mu’azu, permanent secretary ministry of mines and steel development, during the first National Stakeholders’ Discourse on the Opportunities and Challenges of Artisanal Mining in Nigeria held in Abuja. Pic by Tunde Adeniyi

L-R: Simisola Abass, legal officer, Lagos State Lotteries Board; Joy Okuna, assistant director, National Lottery Regulatory Commission Lagos; Goodluck Ikporo, general manager, Bounce News; Susie Onwuka, head, Consumer Protection Council, Lagos Office, and Modupe Ogunyemi, head of marketing, Bounce News, during the Bounce News Awoof Promo Final draw to select the Grand prize winners to London & Dubai with all expenses paid trips, held in Lagos.

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 15 AUGUST 2018

Opinion

The ides of Abacha OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

round 2014-early 2015 several of my pro-APC (more accurately pro-Asiwaju Tinubu) friends looked forward enthusiastically to a Buhari presidency based on their assumption that their principal would be the vicepresident. Deriving from Buhari’s history of “abdicating” power to a powerful deputy, they envisaged a “de facto” presidency, an expectationprobably inherited by the current vice-president’s entourage after Buhari declined to pick Tinubu as running-mate in favour of his nominee. I suspected that this trend of thought was misguided and warned explicitly several times that I thought it was Abacha’s administrative history rather than Buhari’s that would prove a better guide to the future! In particular I reminded a few of my friends that Abacha’s deputy, General Oladipo Diya

enjoyed significant power for only a few weeks until the regime stabilized whereupon the despot transferred effective power to Alhaji Aminu Saleh his secretary to the military government; and Major Al Mustapha! Diya’s close friend and Odogbolu compatriot, the activist lawyer, DrOluOnagoruwa whose reputation in civil society was part of the initial endearment of Abacha to civil society and pro-“June 12” groups, was appointed Attorney-General by Abacha, but was unaware as Professor Auwalu Yadudu, Abacha’s subsequently appointed legal adviser drafted decrees for the dictator’s signature. Onagoruwa read about those decrees in newspapers like other Nigerians and paid a very high price for his and Diya’s naivety about the General! I noted several times that rather than the untrammeled power that everyone looked forward to in the model of General Tunde Idiagbon and Alhaji Salihijo who exercised the power of Buhari’s office as Head of State and PTF Chairman respectively, perhaps it was the humiliation and neardeath of General Diya as Abacha’s deputy that might prove a more accurate historical

reference point! I did not think Buhari had sought power determinedly since 2003 in order to hand it over to a Yoruba deputy or godfather! The examples from both Buhari and Abacha of course remind us that those to whom de facto power was entrusted were of similar ethnic, geo-political and religious persuasion as the grantors of power! The sense in which Buhari’s second coming might remind us of his first coming as a military ruler and Abacha’s brutal dictatorship, rather than the “reformed democrat” that many people hoped for in contrived self-delusion was however most likely to be in relation to the character of his government rather than just the fate of his sponsors and deputies! There were early signs that Buhari, in spite of his verbal avowals was not quite ready for the niceties of democracy and constitutional order in his unwillingness to constitute a cabinet. It became apparent that he preferred a “constitutional dictatorship”in which he; executive appointees such as Chief of Staff and Secretary to Government of the Federation; and civil servants would run government without the distraction (as he

seemed to regard it!) of federal ministers as required by the constitution. In the end, Buhari appointed ministers after seven (7) months only when his reluctance had become untenable! Then there was the blatant disobedience of court orders especially with regard to the release of former National Security Adviser, Colonel Sambo Dasuki; Shiite leader, Sheik Zakzakky; and IPOB founder, Nnamdi Kanu. Kanu was freed during one of Vice President Osinbajo’s stints as Acting President but the two others have not been quite so lucky! The next signal that Buhari pays scant attention not just to democratic norms but also our diversity and federal nature was revealed in the composition of his military, para-military, security, intelligence and law enforcement appointments all of which he concentrated in Northern Muslim handsunder Buhari, the Attorney General, chairman of EFCC, Inspector General of Police, Army and Air Force Chief of Staff, Director of State Security, National Security Adviser, Controller Generals of Customs, Immigration and Prisons, the Commandant of the

NSCDC, the DG of National Intelligence Agency etc. are all Northern Muslims. In the case of the Inspector General, his appointment required the untimely retirement of a whole generation of senior police officers! The DSS headed by Buhari’s kinsman, Lawal Daura in particular began to operate like then National Security Organisation (NSO) head under General Buhari, Ambassador Rafindadi-without regard to rule of law, constitutionalism and even propriety. The most alarming episode was the invasion in dead of night, by armed DSS personnel of the homes of senior judges, including Supreme Court judges, across the country! Strong attempts were made to cow alternate centres of power apart from the judiciary-National Assembly, media including social media and even NGOs all witnessed subtle and not so subtle attempts to diminish their independence and authority. Senate President Bukola Saraki, in particular, and his deputy Ike Ekweremadu have borne the brunt of the presidency’s attempt to attain unrestrained power. Recent developments how-

ever have been more alarmingthe barricading of the National Assembly by armed and hooded DSS officials on August 7, 2018 in a perceived effort to remove the Senate President who decamped from the ruling APC; the attempt by a small minority of Benue State legislators to impeach the state governor who also left APC apparently aided by the police; the EFCC’s attempts to cripple the Benue and Akwa Ibom state governments financially for political reasons; and the manner of conduct of recent elections in Ekiti, Bauchi, Kogi and Katsina. New APC national chairman, Adams Oshiomhole has begun to act like he is chair of the Armed Forces Ruling Council, Communist Party of Nigeria or other totalitarian political grouping and a recently elected senator from Bauchi campaigned on a platform of making Buhari president-forlife, something a civil society leader warned me was on the cards three years ago! If the government persists in its determination to remove the Senate President and his deputy without the constitutional numbers required so-todo, we would be approaching I fear, the full manifestation of the ides of Abacha!

Desired attributes of Nigeria’s next CEO CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

he 2019 elections would be significant in several respects. It would be the sixth general election since the return to civil democratic rule in 1999. Nigeria would be marking 20 years of continuouscivilian government in 2019. It is the longest stretch in which we have allowed choice,and the people have had a say in who governs. By May 2019, new people would take office in two tiers of government, the federal and the states. They would be the drivers of what happens to most of the federating units of the country. In consequence, there is an ongoing debate

about choice. Citizens are mainly debating on a choice between the contending parties as well as that between the younger, new-breed candidates and the older established names in both the Peoples Democratic Party and the All Progressives Congress. It is a tough call on citizens because the lines are so blurred as not to make a difference among the parties. Many readily dismiss the chances of the new breed despite the sterling credentials of some of them on face value. PDP gets the black brush deservedly for its failings in 16 years at the helm. The atrocious performance of the APC at the centre has equalled the PDP in infamy. APC has been an incubus on the people, sucking the energy of the citizenry overnight with its gross failure in various areas including primarily the economy, welfare, security and the unity of the country. It is scandalous how the party that spoke so eloquently about the problems with the land has

itself become the problem of Nigeria. Having tried many men and parties, I submit that the challenge before Nigeria is one of finding capable managers who would drive the process of building systems, methods and teams. Managerial competence is a catch-all phrase to capture this. The man to lead Nigeria must have some critical attributes. They apply for the men to govern the states. Competence. We need a leader with the capacity to execute. Execution capacity is what gets things done at the top. We do not need a man who doodles, prevaricates or cannotmake decisions from the melange of ideas and suggestions that he would receive. The leader must be quick to the draw, informed and knowledgeable. More than the stock of knowledge that he brings to the table, however, is his receptivity to ideas and innovation. The educated man is not the man who knows all the answers but the one who is willing and able to seek out solutions. In the Knowledge and Information Age, we need a leader who is

ready to open himself and our country to know and to drive the process. UK’s Department for International Development has identified characteristics of good governance regimes. They include state capability —the extent to which leaders and governments canget things done;responsiveness— whether public bodies and institutions respond to the needs of citizens and uphold their rights; and accountability—the ability of citizens, civil society, and the private sector to scrutinise public institutions and governments and to hold them to account (DfID 2006, 22). Conviction.The leader must be a visionary with the passion for driving such an envisioned future. Connectedness. The leader should be a panNigerian networker with the willingness and ability to reach out and engage all groups for the benefit of the country. The CEO of Nigeria Inc and States Unlimited must be team builders. The notion of the Governor or President as

Superman is jaded and untrue. Unfortunately, both the constitution and years of practice during military rule have conditioned the civil service and other groups to wait on the Governor or the President. Our law gives so many powers to them. Then our culture makes them monarchs. We need to change this culture. Instead, we need CEOs who are facilitators and team leaders. They should build strong super teams. Super teams thrive because they have good leadership, share a common goal, trust and respect team members, have excellent communication, encourage and reinforce each other, are disciplined and demand balanced accountability. Communicator. A leader able to persuade, convince and influence the majority to follow his vision and path is a significant attribute of the CEO of Nigeria Inc. Communication is a lubricant of social relations and more so in managing complex entities such as states and governance units. Commu-

nication does more. For the government, communication ensures the buy-in and favourability with constituents that earns continued legitimacy. Governments must win the “legitimacy of public authority” through performance and the ability to communicate that performance both as a vision and in feedback on actual results. Government leaders must have the ability to articulate a clear vision for the country as well as the policy choices and tradeoffs they have made on the public’s behalf. Compassion. Nigeria’s leader must have a heart that cares for people. Kindness would make him feel the pain and insult that poverty throws at our people and work to drastically reduce the burden. We are running out of time in meeting the Sustainable Development Goals after failing on most scores with the MDGs. These are the attributes I consider critical. Dear reader, what should our next leader bring to the table, in your view?

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 15 August 2018

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BUSINESS DAY

POLICY

Shrinking renewable energy investment stirs environmental concerns

Page 5

finance people appointments

AOS Orwell Strengthens Leadership Team with Key Strategic Appointments Page 6 OPEC weekly basket price DAY

PRICE

10/8/18

71.88

3/8/18

72.61

27/7/18

72.81

20/7/18

71.06

13/7/18

74.05 Source: OPEC

L-R: Chikezie Nwosu, chairman, SPE Nigeria Council; Chike Onyejekwe, managing director, AITEO; Maikanti Baru, group managing director, NNPC & Austin Avuru, managing director, Seplat during the Society of Petroleum Engineers’ Nigerian Annual International Conference & Exhibition (NAICE 2018) held in Lagos recently

Debrief

Before US takes over European LNG market FRANK UZUEGBUNAM

igeria should be in position to take advantage of European countries’ quest to wean itself from Russian natural gas supplies. Between 1999 and 2006, Nigeria was deemed the fastest growing LNG country in the world because every 18 months, the country was adding a new train. However, from 2007 to date, no new capacity has been added. The 10mtpa Brass LNG and 20mtpa Olokola LNG have been unable to reach Final Investment Decision (FID). Only recently, the NLNG awarded FEED contract for its Train 7 as it gets ready

for FID. “Some prediction is that global capacity will move from the over 285 million tonnes (MT) per annum capacity to about 400MT in 2025 but a lot of that is projections. Some of that is forecast but what I want to know is that the additional 8MT capacity that Train 7 will bring to market in a very competitive manner”, Tony Attah, chief executive, NLNG told Businessday in a recent interview. While we wait for the additional LNG capacities, the European commission is seriously mulling for LNG supplies from United States. Jean-Claude Juncker, President, European Commission and US President Donald Trump in late July included

considerations for LNG in their bilateral trade relationship. A joint statement from the meeting said European countries want more LNG sourced from US shale basins to diversify the European market. European Commission trade officials will travel to Washington on August 20 to follow up on the energy agreement. Europe relies heavily on Russia for oil and natural gas which is often a source of tension given anti-trust concerns about Russian energy company Gazprom and the tendency of the Kremlin to use energy as a tool for political influence. “The growing exports of US liquefied natural gas, if priced competitively, could play an increasing and strategic role in

EU gas supply,” Juncker said in a statement. “But the US needs to play its role in doing away with red tape restrictions on liquefied natural gas exports.” Europe received about 10 percent of total US exports last year, up from 5 percent in 2016 after the American shale gas revolution went global with the opening of the Sabine Pass export facility on the country’s Gulf of Mexico coast. Since then, Europe has imported more than 40 LNG cargoes from the US, or 2.8 Bcm, the Commission said. Still, that is just a fraction of Europe’s demand of almost 550 Bcm last year. Most gas arrives by pipelines from Russia and Norway, as well as in LNG tankers from Qatar, the biggest producer of the super-chilled fuel.

02 BUSINESS DAY WEST AFRICA Outlook Niger: Niger eager to capitalize on oil wealth

he government of Niger said it is eager to capitalize on the potential launch of new crude oil production as soon as possible. British energy company Savannah Petroleum, which has a core focus on Africa, signed a memorandum of understanding with Niger’s government to move forward with an early production scheme for discoveries made in the southeast of the country. “As a government, we

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erations. Though it provided no estimate of the total potential reserves, the company said it has made oil discoveries at three wells in its license area in Niger’s Agadem Rift basin. After completing its third well in a drilling campaign in June, the company said it estimated the unrisked recoverable reserves at the Kunama prospect in the broader basin at 35 million barrels. Final results from Kunama-1 are pending. The company has a memorandum of under-

are keen to see that these and future discoveries commence production as soon as possible, given the positive contribution to economic growth, tax revenues and our local communities that they have the potential to deliver,” Foumakoye Gado, Niger Minister of Energy and Petroleum said in a statement. Savannah has two production sharing contracts in Niger and found the area is relatively underexplored, though Chinese companies have posted successes in drilling op-

Ghana: PIAC, others collaborate to prosecute oil revenue abusers

he Public Interest and Accountability Committee (PIAC) has started engaging the Auditor-General and other public accountability institutions to enforce sanction regimes and prosecute people who misuse oil revenue. A comprehensive report by the committee on the use of oil revenue over the last seven years revealed that there had been no value for money in the projects that were executed in priority sectors such as education, health, agriculture and road infrastructure. At a public engagement with think tanks and other stakeholders in Accra, Steve Manteaw, Chairman of PIAC, said the committee had already contacted the Auditor-General to further conduct audit in-

vestigation of the projects and take steps to prosecute persons who had, in various ways, misused oil revenue. The forum was attended by think tanks, including representatives from civil society organisations (CSOs) such as IMANI Africa, the Institute of Demo-

Wednesday 15 August 2018

cratic Governance (IDEG), Centre for Democratic Development (CDD), Africa Centre for Energy Policy (ACEP) and the Ghana Anti-Corruption Coalition (GAC). Manteaw said PIAC had come up with several reports on the misuse of oil revenue over the last

seven years but the recommendations had not been acted on by the appropriate bodies. “The mandate of PIAC will not be fully served if we just restrict ourselves to making disclosures without ensuring that the recommendations are actually implemented.

L-R: Simbi Wabote, executive secretary, NCDMB; Ibe Kachikwu, Hon. Minister of State for Petroleum Resources; Tony Attah, MD NLNG; Folashade Yemi-Esan, permanent secretary of the Ministry of Petroleum Resources; and Sadeeq Mai-Bornu, deputy MD, NLNG during the Minister’s visit to the NLNG Plant on Bonny Island…recently

standing with the governments of Niger and Nigeria to examine construction of a pipeline that could carry oil out of Niger to export terminals. “We expect the NigerNigeria Export Project to provide one of the potential routes to market for Savannah’s existing and future discoveries in Niger,” Andrew Knott, CEO said in a statement. Pipeline construction through Nigeria could contain an element of risk given security concerns in the nation’s southern coastal states.

Brief United Arab Emirates: UAE plans oil pipeline from Ethiopia to Eritrea

he United Arab Emirates plans to build an oil pipeline connecting Eritrea and Ethiopia, the latest sign of the Gulf state’s increasing involvement in the Horn of Africa. The pipeline will run from Eritrea’s port city of Assab to Ethiopia’s capital Addis Ababa, an Ethiopian official said. Landlocked Ethiopia began extracting crude oil on a test basis from reserves in the country’s southeast in June and will need access through Eritrea in order to export it. The pipeline plan was earlier reported following a meeting in Addis Ababa between Ethiopia Prime Minister Abiy Ahmed and Reem Al Hashimy, the UAE’s minister of state for in-

ternational cooperation. The UAE played a behind-the-scenes role in helping Ethiopia and Eritrea end a two-decade state of war last month. Hashimy, who last month publicly referred to herself as the UAE’s policy lead on sub-Saharan Africa, said after meeting Abiy that the UAE is keen to exploit investment opportunities in Ethiopia, a country of 100 million people with the fastest growing economy in Africa. The UAE is also driven by a fear that rivals such as Iran or Qatar could gain a foothold. Both Qatar and Turkey are strong supporters of Somalia’s government. Earlier this year, ties frayed between Mogadishu and Abu Dhabi and the two countries ended a UAE military training programme in Somalia.

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gas

ENERGY intelligence

Egypt: Egypt partner with firms to put final touches on gas deal

China: PetroChina, Qatar holding advanced talks on LNG supply deals

WEST AFRICA

Brief

etroChina Ltd is in advanced discussions with Qatar to purchase liquefied natural gas (LNG) under short- and long-term agreements. China needs to secure LNG to supply its push to replace coal with cleaner burning natural gas to reduce air pollution. After Beijing started the program last year, China has overtaken South Korea as the world’s second-biggest buyer of LNG. Tying up with Qatar, the world’s biggest LNG producer, makes sense as the Middle Eastern country seeks buyers for a planned output expansion. One of the deals under discussion covers several million tonnes of annual supply starting this year through 2022. The price and volume is yet to be finalised, the sources added. China’s LNG imports may surge by 70 percent over the next three years to 65 million tonnes in 2020, according to consultancy SIA Energy. Last year, China imported a record 38.1 million tonnes, 46 percent more than the previous year. PetroChina started supply talks with Qatar, the world’s largest LNG exporter, several months ago to cover a growing long-term supply gap as demand is set to rise faster than domestic

BUSINESS DAY

fields could produce, said two of the sources. Despite growing competition from rival exporters such as Australia, Russia and the United States, Qatar stands among the most competitive suppliers to China due to the size of its output, geographic proximity and low cost, said Chen Zhu, managing director at consultancy SIA Energy. The talks with Qatar follow China’s decision to add LNG from the United States to the latest list of US goods under tariffs amid the trade war between the world’s two-largest economies. China’s imports are bound to grow as the country has only secured 43 million tonnes per year of imports and is expected to need 65 million tonnes per year of imports by 2020, rising to 87 million tonnes per year by 2020, according to SIA Energy forecasts. “Given the growing appetite for imported LNG, China has to look for new LNG sources and investments. This will benefit new projects in Qatar, Canada West Coast, Russia, Mozambique, Australia and Papua New Guinea,” said Chen. Qatar is looking to expand its LNG capacity to 100 million tonnes per year from 77 million tonnes per year currently.

he companies developing Israel’s largest natural gas fields and their Egyptian partner have finalized details of a deal that would give them control over a pipeline to Egypt, a crucial step that would pave the way for a $15-billion export contract. The deal involves setting up joint venture companies in Cyprus and the Netherlands, through which Israel’s Delek Drilling LP, US-based Noble Energy Inc. and their Egyptian partner, East Gas, would buy a 37 percent stake in Eastern Mediterranean Gas Co., held by businessmen Sam Zell and Yosef Maiman, among others. The agreements would eliminate legal obstacles to implementing the gas export contract, seen as a step adding economic depth to a relationship dominated by security since the two countries signed a peace treaty

more than four decades ago. It would also advance Egypt’s plan to capitalize on its own giant Zohr gas field and become a regional energy hub. The deal is shaping up as follows: Delek and Noble are in the process of setting up a Cyprus-based joint venture Egypt’s East Gas would set up a Netherlands-based company which then would part-

ner with the joint venture established by Delek and Noble The new entity, also based in Holland, would buy the 37 percent stake in EMG held by Zell and Maiman, among others, who successfully filed arbitration cases against Egypt over a previous deal canceled in 2012. Under the contract signed in February, Delek and Noble are to export

64 Bcm of natural gas over 10 years to Egypt through Dolphinus Holdings Ltd. The buyout by the two companies and their Egyptian partner in effect settles three of the four arbitration cases that had blocked the contract’s implementation. The fourth arbitration case involved the fine awarded to Israel Electric Corp. after Egypt broke an earlier contract to supply gas. A Geneva arbitration court ruled IEC should be given $1.76 billion in compensation. The Egyptian government and the utility, however, have reached an initial agreement to reduce the fine to around $470 million. The reduced fine would be amortized over a period of around 15 years, and the main sticking point is over which bank would issue a letter of credit, the people said. IEC wants a top-tier international lender, while Egypt is pushing for the National Bank of Egypt, they said.

India: Essar signs 15-year gas deal with GAIL

ssar Oil & Gas Exploration & Production Ltd has signed a 15-year gas sale and purchase agreement with GAIL (India), the company said. The contract will help it to monetise its entire coal bed methane (CBM) production of 2.3 million metric standard cubic metres per day (mmscmd) from the Raniganj East block at a globally competitive price, the company said in a statement. “The agreement is in line with the govern-

ment’s vision of moving towards a gas-based economy, thus fuelling development,” said Vilas Tawde, company’s chief executive and managing director. The company said it will now be focusing on ramping up production from its existing 348 CBM wells and the 150 wells it intends to drill in the future in the block. The company is also looking at other opportunities in the unconventional space, like shale gas exploration, that exist in its portfolio.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 15 August 2018

power

Nigeria: Schneider Electric’s digital solutions set to increase profitability and optimise costs for oil, gas companies

Nigeria’s power grid collapses 2018: facts and figures STEPHEN ONYEKWELU

igeria’s electricity grid collapsed twice in the last two months, once in June and another in July caused by infrastructure deficit, data obtained from the Federal Ministry of Power, Works and Housing show. Nigeria’s total power on the grid dropped from a high of 3,659.5 megawatts on June 7 to as low as 41.4MW on June 8. When this happened, the Transmission Company of Nigeria responded. “The Transmission Company of Nigeria hereby state that as a result of gas pipeline rupture on the 15th of June, 2018, as well as technical issues at the Shell gas wells on the 16th of June, there has been a sharp drop in generation into the grid by a total of 1,087.6MW, resulting in load-shedding

nationwide, necessary to maintain stability of the grid” Ndidi Mbah, general manager, public affairs, Transmission Company of Nigeria (TCN) explained in an earlier email response. This is not the first power grid collapse in 2018. On July 08, another collapse of the grid occurred as the system dropped from a high of 4,089.1MW on July 7 to a low of 92.3MW the next day. So far, no grid collapse has been recorded in August 2018. Nigeria’s power generation figures hovered between a low of 3,000MW and a high of 4,800MW in the first eight days of the month. Looking back, two days into 2018, Nigeria’s power transmission grid recorded a first major collapse, January 02 night due to a fire incident on a gas supply pipeline leading to widespread blackout across the country, BusinessDay had reported.

“Regrettably, after a sustained period of increasing production and distribution of power since September 2017 to date, the Nigerian Gas Processing and Transportation Company Ltd (NGPTC) has reported a fire incident on its Escravos Lagos Pipeline System near Okada, Edo State on Tuesday, 2nd January, 2018,” said a statement from the ministry of Power, Works and Housing. As a result of the incident, a shutdown of the pipeline supplying gas to Egbin 1,320MW; Olorunsogo NIPP 676MW, Olorunsogo 338MW, Omotosho NIPP 450MW, Omotosho 338 MW and Paras 60MW power stations were effected. The sudden loss of generation due to interruption in gas supply from these stations caused the national transmission grid to trip off around 20:20 on 2nd January 2018. The national trans-

mission grid is owned and operated by the Transmission Company of Nigeria (TCN). “Inconsistent electricity provision raises the production costs borne by businesses. The entrepreneur is hurt by poor and underdeveloped transport systems, and wants the government to fix these problems to enable businesses have a breath of fresh air” Majiri Otobo, founder and CEO of Kuicare Limited, said. Nigeria generates 74 percent of its power from thermal power stations that require gas for fuel. The gas is produced by oil and gas companies overseen by the Ministry of Petroleum Resources. The gas is delivered to the power stations through pipelines owned and operated by Nigerian Gas Processing and Transportation Company Ltd (NGPTC), a subsidiary of Nigerian National Petroleum Company (NNPC).

chneider Electric, the foremost innovator and specialist in energy management solutions has reaffirmed its commitment to providing the industry with digital solutions for businesses that are guaranteed to enhance profitability and optimise costs. This was made known by the Oil and Gas Segment Lead, Schneider Electric, Tolulope Falola, during the Society for Petroleum Engineers/Nigerian Annual International Conference and Exhibition themed: “The role of the Oil and Gas industry in enabling diversification of Nigeria’s Economy” which held recently in Lagos. Speaking at the workshop on Digitalization sponsored by Schneider Electric, Tolulope stated

that given the recent challenges in the industry, there is a need for Oil and Gas companies to optimize costs, reduce down time and increase availability. Tolulope said Schneider Electric’s EcoStruxure platform will help the industry address these current challenges, with a range of digital solutions for asset modernization, predictive maintenance and online profit advisory service.

Africa: Mini-grids’ project platform requires $500m investments

leading platform in connecting private mini-grid developers and investors, Odyssey Energy Solutions, announced that its pipeline has surpassed 550 projects, and now requires investments of more than $500 million. The mini-grid projects on the platform represent about 275,000 connections, with a generation capacity of about 150MW of installed solar PV and biomass, with plans to include hydropower in the long run. The 550 projects being developed on the platform come from 21 countries, including Cameroon, Cape Verde, Democratic Republic of Congo, Ethiopia, Ghana, Haiti, India, Kenya, Lesotho, Myanmar, Niger, Nigeria, Philippines,

Rwanda, Sierra Leone, Somalia, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. “With no outbound marketing, we are seeing incredible uptake of the Odyssey platform,” said Emily McAteer, company co-founder and CEO. Project ticket sizes range from $40,000 to $3 million. Users on the platform currently comprise a network of over 100 developers, investors, vendors, government institutions as well as non-profit organisations.

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POLICY

BUSINESS DAY

Shrinking renewable energy investment stirs environmental concerns ISAAC ANYAOGU

lobal investment in renewable energy declined by 7 percent in 2017, its largest fall in over 15 years, according to the International Energy Agency’s World Energy Investment report released last month, stirring concerns for the world’s aspirations to cut carbon emissions. The World Energy Investment 2018 provides a critical benchmark for decision making by governments, the energy industry, and financial institutions to set policy frameworks, implement business strategies, finance new projects, and develop new technologies. The report says the falling cost of renewable energy sources like solar PV which has made it more affordable than ever, however the investment decline signals danger to sustainable development goals which are hinged on scaling sustainable energy sources. As projected in the IEA Sustainable Development Scenario, new renewables generation needs to rise rapidly and global investment in renewable electricity needs to almost double to meet these goals, to nearly USD 550 billion per year by 2030. “The decline in global investment for renewables and energy efficiency combined could threaten the expansion of clean energy needed to meet energy security, climate and clean-air goals. While we would need this investment to go up rapidly, it is disappointing to find that it might be falling this year,” says Fatih Birol, executive director, IEA. Overall, the past year recorded some success for the sector accounting for a record two-thirds of power generation investment. In emerging markets, the average size of awarded solar PV projects in auctions rose by 4.5 times while that of onshore wind rose by

half over 2013-17, helping to support economies of scale. In Europe, tendered large projects are mainly concentrated in offshore wind; auctions have generally not resulted in large, land-based renewables projects. Capital costs fell by nearly 15 percent for solar PV and by 5 percent for onshore wind, indicating that consumers were buying more for less. While better pricing for key technologies, such as PV modules, supported these economies, there was also a shift in deployment towards regions with lower installation costs says Michael Waldron, an energy investment analyst in a commentary for IEA. Waldron argues that these factors have supported generation-cost reductions – and in emerging economies, increased scale – for projects awarded in renewable auctions. Cheaper

debt and bigger turbines have helped lower generation costs for offshore wind in Europe. “The perceived maturity of renewables and better risk management is also facilitating more off-balance sheet financing structures, from a diversity of financial sources, beyond the United States and Europe. These trends are creating more opportunities globally. “But data for 2017 also reveal warning signs for trends in capacity, new generation and future investment, in part due to a concentration of deployment in markets with policy uncertainty, such as China,” said Waldron. Putting all low-carbon power generation investments together, their expected new annual output fell by 10 percent in 2017, the second straight year of decline, and did not keep pace with demand growth.

Snapshot

$550bn

The worth of investments in new renewable energy generation needed every year till 2030 to meet the UN sustainable energy goals

This spells a worrying trend for power sector-related CO2 emissions, which grew by 3 percent in 2017, on the back of a rise in China and India, where renewables deployment was large, but coal power filled the supply-demand gap. This highlights the need for governments to facilitate investment, across a portfolio of

technologies, in line with sustainability goals, and with capital from a diverse set of industry and financial actors, including public financial institutions. Governments also need to ensure the value of these investments, through greater system flexibility, and manage the impact on consumers according to Waldron.

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ENERGY intelligence Brief

Ghana replaces sacked energy minister

hana’s President Nana Akufo-Addo replaced his sacked energy minister in a reshuffle that still maintained the West African country’s high number of ministers — 110 in total. Akufo-Addo sacked Energy Minister Boakye Agyarko last week, and in

the reshuffle he replaced him with John Peter Amewu, former minister of lands and natural resources. Reports said Agyarko was removed because the president was unhappy with his handling of an extension to a five-year deal with United Arab Emirates-based AMERI Energy for a 300MW emergency power plant. Ghana became an energy producer in late 2010, and pumps out around 180,000 barrels of oil per day from three main fields. But large amounts of this revenue are spent on government salaries, while Ghana has suffered from falls in commodity prices in the past three years that forced it to go to the IMF for a bailout. It is now in its final year of the $918 million credit deal signed in April 2015 to fix its economy, dogged by high deficits, inflation and public debt.

Wednesday 15 August 2018

finance people appointments

AOS Orwell Strengthens Leadership Team with Key Strategic Appointments

OS Orwell has announced three key strategic appointments, as the foremost oilfield conglomerate re-energizes to optimize performance and execute its strategic growth plans. The appointments have taken effect. The appointees are Charlotte Essiet, Government Relations Director; Anthony Nwosu, Country Manager, Wellbore Construction Division; and Kelly Shideler, Country Manager, Oiltools Africa Limited/ Titan Tubulars Nigeria Limited OAL/ TTNL. According to AOS Orwell, the appointees bring a solid combination of profound commercial and operational experience which would be instrumental in further repositioning the company to take advantage of emerging opportunities in the oil, gas, electrical and power sectors. “I am delighted to welcome the new team to

these very important roles in AOS Orwell,” Femi Omotayo, Managing Director of the company stated. “They are not only the right entrants with the requisite experience, their collective expertise and leadership capacity will help the company to the next level as we continue the process of building AOS Orwell for growth and profitability. With these key appointments, leadership has been brought closer to our strategic business units (SBUs)” In her role Essiet will manage and coordinate engagements with Government Agencies/Authorities, NNPC, NAPIMS, DPR, NCDMB and other key external stakeholders. She has joined the company in this new position following over 14 years’ experience in managing Sales, Business Development, Government/External Affairs and Nigerian Content. Also, Essiet’s career history includes exposure to Strategy and Business Development

in Europe, UAE, Equatorial Guinea and Nigeria. Charlotte holds an MBA in Engineering Business Managers from Manchester Business School, United Kingdom and an Executive Professional Certificate in Strategic Marketing Management (SMM) from Stanford Business School, USA. Anthony Nwosu will be accountable for the overall growth of the Wellbore Construction Division

(WCD) business in AOS Orwell and meeting the Division’s financial targets by effectively implementing a fit-for-purpose strategy, managing customers and stakeholders and supervising Divisional Sales Managers and Business Segment Managers (BSMs). He has joined the company following over 16 years in various Operations, Sales and Leadership positions in the Oilfield Services Industry.

NLNG graduates 84 youths under its Youth Empowerment Scheme

ighty-four youths have become the latest batch of trainees to emerge from Nigeria LNG (NLNG)’s skill acquisition and capacity building programme, Youth Empowerment Scheme (YES). YES is one of NLNG’s numerous initiatives designed to make youths y in its host communities self-reliant as well as economically and socially responsible through guided technical and managerial development training. At the graduation ceremony in Port Harcourt, the 84 Graduates were awarded with National certifications - NABTEB and Trade Test

II in the fields of Welding, Automotive, Photography/ Videography, Farm Management and Hospitality (Catering/Hotel Management). Speaking on the key success factors of the scheme, Sadeeq Mai-Bornu, Deputy Managing Director of NLNG, represented by the General Counsel and Company Secretary, Aka Nwokedi, said “during the training, Nigeria LNG initiated a monitoring scheme to inspire the trainers and the trainees to be focused on the main objective of the programme. The result is that all the 84 trainees for the 2018 scheme are graduat-

ing with excellent grades. Nigeria LNG considers this a 100 percent success rate. We are recording this first in the history of the programme.” Sadeeq also said that NLNG also introduced start-up mentoring programme beyond procurement and hand-over of starter packs to ensure that the youths are self-reliant as well as employers of labour on graduation. Regarding making it big in their chosen careers, Sadeeq charged the graduating youths to form partnerships that will enable them work as a team and stabilise in the business, rather than go into splinter

groups that may not have the strength to survive as new businesses. YES was launched in 2004 as a sustainable development initiative aimed at youths (18-35 years old) within NLNG’s over 100 host and pipeline communities. Since its inception, more than 900 youths from these communities have benefitted from the scheme through vocational modules in hair-dressing and cosmetology, catering and events management, fashion and design, photography and video production, welding and fabrication, wood work and furniture making and most recently, farming techniques.

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Wednesday 15 August 2018

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marketinsight

Oil up on Iran sanctions but set for weekly decline

rude oil prices rose more than 1 percent as US sanctions against Iran looked set to tighten supply, but futures contracts posted a weekly decline as investors worried that global trade disputes could slow economic growth and hurt demand for energy. Benchmark Brent crude oil settled 74 cents higher at $72.96 a barrel. US light crude was 82 cents higher at $67.63 a barrel. Escalating trade disputes between the US, China and other countries have dimmed the outlook for economic growth and boosted the US dollar, making oil more expensive for consumers using other currencies. Currencies of major emerging economies including China, India and Turkey have slumped. Despite these worries, prices got a boost from

US sanctions against Iran, which from November will affect oil exports from that country. Although the European Union, China and India oppose the US sanctions against Iran, many are expected to bow to US pressure. Analysts expect Iranian crude exports to fall by be-

tween 500,000 and 1.3 million barrels per day, with buyers in Japan, South Korea and India already dialing back orders. The reduction will depend on whether buyers of Iranian oil receive waivers that would allow some imports. The International Energy Agency said the oil

OPEC Flakes Iran writes OPEC on crude oil output quotas market could see more turbulence. “The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA said in a monthly report. “As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging.” Investors are wary of the trade dispute between Washington and Beijing. In the latest round of levies, China said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports. Although crude oil was removed from the list, replaced by refined products and liquefied petroleum gas, analysts say Chinese imports of US crude will fall significantly.

IEA says calm in oil markets could be short-lived

il markets have entered a brief period of calm but a storm might be looming later this year when new US sanctions are poised to slash supplies of Iranian oil, the International Energy Agency said. “The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA, which oversees the energy policies of industrialised nations, said in a monthly report. Oil prices have rallied close to $80 per barrel, their highest since 2014, on concerns about supply

shortages but cooled in recent weeks as Libya regained some lost production and Washington signalled it could give Asian buyers of Iranian oil some exemptions from sanctions for next year. However, the United States said it was still seek-

ing to force Iran’s oil customers to stop purchases completely in the long run. Iran is OPEC’s thirdlargest producer, with output at around 4 million barrels per day (bpd) or 4 percent of global supply. “As oil sanctions against Iran take effect,

BUSINESS DAY

perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion,” the IEA said. The IEA kept its 2018 oil demand growth forecast unchanged at 1.4 million bpd but raised its 2019 forecast by around 110,000 bpd to 1.49 million bpd. “Another factor to consider is that trade tensions might escalate and lead to slower economic growth, and in turn lower oil demand,” the IEA said, referring to a trade dispute between the United States and China.

he six-country OPEC/nonOPEC committee overseeing the agreement improperly attempted to redistribute crude oil production quotas at its July 18 meeting in Vienna, Bijan Zanganeh, Iranian oil minister wrote to UAE energy minister and OPEC President Suhail al-Mazrouei. Should the committee persist in its efforts, Zanganeh said he would request an extraordinary OPEC meeting to resolve the conflict. The committee, called the Joint Ministerial Monitoring Committee, and its subsidiary Joint Technical Committee are only charged with assessing member compliance with the agreement, Zanganeh wrote in a letter posted online by Iran’s oil ministry news service Shana.

Iran, which has steadfastly maintained that the deal does not allow members to produce above their individual quotas, attended the committee meeting as a non-voting observer. “To our dismay we witnessed that some members attempted to redistribute over-conformity in production adjustment level among themselves, and attempts to hand over OPEC countries’ overconformity to non-OPEC countries,” Zanganeh wrote.

Compliance with OPEC+ deal eases to 97 percent

ompliance with the Vienna Agreement, envisaging oil output cuts has eased to 97 percent in July as output cuts were relaxed, the International Energy Agency (IEA) said in its August Oil Market Report. Global oil supply rose by 300,000 barrels per day in July to 99.4 million barrels per day, 1.1 million barrels per day above a year-ago, according to the report. The IEA estimates that non-OPEC production is expected to grow by 2 million barrels per day in 2018 and by 1.85 million barrels per day next year. “OPEC crude oil output was steady in July, at 32.18 million barrels

per day. An unexpected decline in Saudi Arabian supply was offset by higher production from the UAE, Kuwait and Nigeria. OPEC compliance was unchanged in July at 121 percent,” said the report. Global refinery throughputs in 2H18 are expected to be 2 million barrels per day higher than in 1H18, according to the IEA.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 15 August 2018

talking points

In association with

How feasible is NNPC’s commitment to 5bSCf daily supply of gas? STEPHEN ONYEKWELU

he Nigerian National Petroleum Corporation (NNPC) has committed to supply 5 billion standard cubic feet (SCf) of gas daily to Nigeria’s domestic gas market to drive willing buyer, willing seller pricing model but this plan might hit a cul-de-sac. Investors have stayed away from Nigeria’s domestic gas market due to opacity of fiscal terms, lack of functional gas infrastructure and high entry barriers, which have in turn kept the market underdeveloped and impacted gas utilisation. “To ensure there is willing buyer, willing seller model in the domestic gas market, the NNPC decided that to supply 5 billion standard cubic feet of gas daily to the market will be able to sustain supply and sufficiency of gas to the domestic market” Bello Rabiu, Chief Operating Officer, Upstream, Nigerian National Petroleum Corporation (NNPC) said. “Part of the reason for the gas master plan is to make the domestic gas market viable and reduce entry barriers.” For incentives, the NNPC have stipulated variable gas prices for different sectors of the economy to drive investment inflows and competitiveness. There is one gas price for power, one for industries and another for industries that use gas a feedstock to manufacture fertilizers and petrochemicals. In this sense, a Nigerian fertilizer manufacturer should be able to compete with other fertilizers makers around the world. “The economics of natural gas development and utilisation are driven by the high cost of gas production and transport facilities, and the need for economies of scale. Therefore, to drive an increase in private-sector led activities, government have to execute at the least, the gas infrastructure blueprint as contained in the GMP” Chijioke Nwaozuzu, deputy-director at Emerald Energy Institute, University of Port-Harcourt stated in a news-

paper article published May 31, 2018. The Nigerian Gas Master Plan (GMP) specified a revised transitional pricing structure for gas to power projects in 2010, and ultimately a price of $2.50 per million British thermal unit (MMBTU) was set in 2014 for contracts that are supplied under the domestic gas supply obligation (DGSO) scheme. The price by 2010 was $1.99 per MMBTU. The GMP also imposed penalties for noncompliance with the DGSO which includes: payment for volumes not supplied, or a penalty price of $3.50/Mscf, whichever is higher; and disqualification from supply of gas to any export projects. “Gas is a big source of economic diversification. It can transform agro based industries and boost food production through the use of fertilizers. But to attract the needed

investment, we need fiscal terms that incentivise investors. Some companies have supplied gas but have not been paid. We also need fiscal terms that encourage small and medium term projects” Jeffrey Ewing, chairman and managing director, Chevron Nigeria Limited said. To achieve the target of developing Nigeria’s domestic gas market, huge upfront infrastructure spending is needed. The oil and gas sector needs $20 billion to $30 billion annually to maintain production. As long as there are no pipelines to move the gas from where it is produced to where it is utilised, the domestic gas market will continue to suffer. “An initial phase of about 2,500km of gas pipeline infrastructure was planned to be completed by the end of 2018. This target,

when achieved, will boost investor’s confidence in natural gas market in the country” Nwaozuzu said. Experts say some pipelines that need attention include: expansion of the EscravosLagos Pipeline System (ELPS) from 1.1 Bscf/ day to 2.2 Bscf/day. The Trans Nigeria Pipeline Project (TNPP) needs to be completed. TNPP aims to connect the gas pipeline systems in Nigeria to create an inter-connected system that will provide flexibility and better management of gas supplies. The framework of this system is an integration of the three gas pipeline systems: Obiafu-Obrikom-Oben (OB3) system with a flow capacity of 2.0 Bscf/day, the CalabarAjeokuta-Abuja system with flow capacity of 3.0 Bscf/day, and the Abuja-Kaduna-Kano system.