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he Egyptian Pound was one of the world’s best performing currencies in 2019 and has started the New Year with a bang, with local banks seeing $1.7 billion of inflows in the five days through January 13 alone.

At 15.92 per dollar, the Egyptian pound has risen to its strongest level since March 2017.

Societe Generale SA expects the pound to appreciate another 3.7 percent by the end of the year, as the currency benefits from high yields on government securities and a raft of economic reforms undertaken by President AbdelFattah El-Sisi.

While the Egyptian pound is showing signs of strength, it’s a completely different tale some 2000 miles away in Nigeria where talk of a possible naira devaluation is on.

The naira has struggled for

Egypt reaps fruits of bold reforms

the better part of a year now.

Though the market rate has barely budged over the past two

years, it’s the level of external reserves that reflects signs of discomfort.

External reserves, where the CBN stashes foreign currency, Continues on page 35

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Here’s what Nigeria can learn from world’s best-performing currency LOLADE AKINMURELE

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Supreme Court declares APC-Uzodinma winner of Imo governorship election … a sad commentary on democracy – PDP … confusion as entrance to State House Owerri locked immediately news filtered in ... as Kano, Sokoto know fate January 29 Felix Omohomhion, Solomon Ayado, Abuja, & Godfrey Ofurum, Owerri

S

upreme Court Tuesday upturned the election of Emeka Ihedioha as governor of Imo State. The apex court said Ihedioha of the People’s Democratic Party (PDP) did not score majority of the lawful vote in the March 9 governorship election.

Continues on page 35

Inside L-R: Ahmed Kuru, managing director/chief executive officer, Asset Management Corporation of Nigeria (AMCON); Bolaji Owasanoye, chairman, Independent Corrupt Practices and Other Related Offences Commission (ICPC), and Modibbo R. HammanTukur, director/chief executive officer, Nigerian Financial Intelligence Unit (NFIU), at the first meeting of the new financial year by the Presidential Inter-Agency Committee on AMCON Debt Recovery at the Maitama, Abuja head office of AMCON, yesterday.

What N117bn infrastructure budget means to Lagos property market, economy P. 34

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BUSINESS DAY

news

Increase in Right of Way charges shows Nigeria’s unserious about broadband development

FG declares Amotekun Illegal

… as 14 states raise RoW … FG denies prior knowledge of over 1,200% hike in some states these decisions in the interest development in the states.

Jumoke Akiyode-Lawanson of Nigerians as well as for the “Our members which are he issue of non-unified socio-economic growth and principally telecom and ICT and high cost Right of development of the country. companies rely heavily on Way (RoW) has lin“We also draw their atten- the state governments and its gered unresolved for tion that these decisions, if agencies to make policies that years in Nigeria’s telecommu- implemented, will result in an promote further investment nications sector. However, the increase on the costs of opera- which would lead to building notice of increase in charges tions of the telecoms operators, more telecom infrastructures by over 1,200% in some states which will naturally be passed that are needed by the citizenry, on Tuesday, January 14, 2020, to the consumers,” Isa Ali Pan- governance and businesses to prompted kickbacks and disap- tami, minister of communica- deliver hitch free broadband proval by stakeholders. tion and digital economy, said. services but with the recent They say this damaging Industry watchers say un- upward review of the RoW, this act contradicts promises of fortunately policy flip-flops in might be difficult to achieve. We affordable internet for all, and Nigeria is crippling businesses therefore appeal for a reversal of is likely to harm the efforts of and could scare away potential the cost back to what is being Federal Government to deepen economic investors, as irra- charged before.” broadband penetration, which tional and immediate moves Teniola says in a telesubsequently undermines the such as sudden increment in phone inter view that 14 national target for a digital taxes for telecoms industry, states – Lagos, Ondo, Osun, economy. which contributes over 11.3% Anambra, Adamawa, Kano, News that 14 states, mainly to Nigeria’s Gross Domestic Kogi, Kaduna, Kebbi, Enugu, in the South East and South Product (GDP), is the same as Ebonyi, Cross River, and West, including Lagos State, “killing the goose that lays the Gombe have raised or plan have increased or plan to in- golden egg.” to raise RoW charges. crease RoW charges sparked In a statement sent to BusiNigeria’s telecom sector is several reactions, even as the nessDay, Olusola Teniola, the hardest hit by multiple taxFederal Ministry of Communi- president, Association of Tele- ies, increased levies and heavy cations and Digital Economy communications Companies fines. As at the last count, there disapproved the move in a of Nigeria (ATCON), notes, is a minimum of 38 different press statement, saying the “ATCON reiterates its commit- taxes and levies that are paid hike disregards the resolutions ment to work with the various by telcos. These exclude some reached by the National Eco- state governments and agen- of these taxes that are just levied nomic Council (NEC) on uni- cies in providing an enabling by local governments that creep form RoW charge of N145.00 environment for the establish- up on them. per linear metre of fibre. ment of more telecom and ICT Rotimi Akapo, a partner at “We are therefore calling on companies in the states but the Advocaat Law Practice and an all state governors, especially recent hike in the cost of Right of expert in telecoms law, says isthose that have made public Way (RoW) did not augur well sues like this only occur due to their decisions to increase the with the association because we the short sightedness of governRoW charges, to reconsider know it is going to slow down ment agencies.

Felix Omohomhion

T

www.businessday.ng

T

he Federal Government has declared as illegal the security outfit formed by the six states in the South West, saying they failed to seek clarification before forming the organisation.

The government declared this in a statement issued late Tuesday by Umar Jibrilu Gwandu, special assistant to the Attorney-General of the Federation and Minister of Justice, Abubakar Malami.

“The setting up of the paramilitary organization called “Amotekun” is illegal and runs contrary to the provisions of the Nigerian law. The Constitution of the Federal Republic of Nigeria 1999 (as amended) has established the Army, Navy and Airforce, including the Police and other numerous paramilitary organisations for the purpose of the defence of Nigeria,” the government said.

The government argued that the Federal Republic of Nigeria is a sovereign entity governed by laws meant to sustain its corporate existence as a constitutional democracy. It pointed out that Nigeria is a Federation

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of states, but with the Federal Government “superintending over matters of national interests”.

The states-Ekiti, Lagos, Ogun, Ondo, Osun, and Oyo- formed Amotekun in response to increasing cases of kidnapping and armed robbery that have been recorded in the region.

According to the statement, the division of executive and legislative authority between the Federal and State Governments has been clearly defined by the Constitution of the Federal Republic of Nigeria 1999 (as amended).

“It is against the same background that matters relating to the peace, order and good government of the Federation and in particular, the defence of the country, are enshrined in the Exclusive Legislative List,” it said.

It noted that the Second Schedule in Item 17 deals with defence. “This is a matter that is within the exclusive operational competence of the Federal of Government of Nigeria. No other authority at the state level, whether the executive or legislature has the legal authority over defence,” it said.

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Based on this, it said, no State Government, whether singly or in a group, has the legal right and competence to establish any form of organization or agency for the defence of Nigeria or any of its constituent parts. The government declared that this position was sanctioned by the provision of Item 45 of the Second Schedule of the Constitution of the Federal Republic of Nigeria (as amended), which authorises the Police and other Federal government security services established by law to maintain law and order.

“The law will take its natural course in relation to excesses associated with organization, administration and participation in “Amotekun” or continuous association with it as an association,” the Federal Government said.

The government noted also that the Office of the Attorney-General and Minister of Justice was not consulted on the matter. Had the minister been consulted on the mater, it said, “proper information and guidance would have been offered to ensure that Nigeria’s defence and corporate entity are preserved at all times”.

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comment Recognising and seizing your moment of leadership comment is free

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Small Business handbook

Emeka Osuji

“

E

ach generation must, out of relative obscurity, discovers its mission, fulfils or betrays it”- Franz Fanon The world is changing rapidly and so is our need, and even understanding, of leadership. Leadership students will remember the Great Man theory of the nineteenth century (1840s actually), which states that certain people are born with some special attributes that put them in a class of their own, when it comes to leadership. Such people have special traits that give them the capacity to do very easily what others cannot do, or do with much difficulty, the theory says. Under this theory a leader is a natural hero who accomplishes goals, even in the face of great odds, and in the interest of his group or followers. There are still modern theses, and new research, on genetic factors propelling leadership behaviour. Here, the leader is a hero, often thrown up by circumstances around him. Many famous scholars and thinkers such as Plato, Lao-tzu, Aristotle and even Machiavelli, contributed to this way of thinking - that a leader was born, not made. That thinking is still persisting in some schools of thought.

The Great Man theory of leadership however lost steam, overtime, as research began to show that even the traits that made the Great Man great, were not consistent. The real turning point came when Stogdill’s in 1948, carried out a

survey of 25 years of research work and came away with some key conclusions, including the fact that “a person does not become a leader by virtue of the possession of some combination of traits”.

This finding redirected the research on leadership towards external factors and away from internal or innate qualities.

As of now, the trend is that there is a correlation between certain personality characteristics, such as integrity, charisma, empathy, conscientiousness, the capacity to motivate followers, and leadership ability. While this is true, the use of traits to identify potential leadership capacity in an individual is not completely out of fashion.

Since the 1990s, certain theories on the role of followers have continued to emerge. The choice of some leaders to serve their followers has led to the Servant Leader theory. Some Nigerian Leaders found this topic very alluring.

One, it connotes a departure from the master-servant leadership mentality left behind by the colonial masters, and quickly adopted by their local successors. Two, it looks like a fitting term in places where sloganeering thrives.

Politicians have used it effectively to sufficiently deceive their ever-gullible followers. It was Robert Greenleaf, who in his 1970 work emphasized the Servant Leadership idea as the choice of certain leaders to “serve their followers, empowering them to live and work to their full potential”. Many governors in Nigeria touted this concept but their impact on the people, with regard to the real tenets of Servant Leadership – empowerment and development of the people – is anybody’s guess.

There have been many new ideas about leadership but what seems to be lacking in many entities, including governments of countries, is what James MacGregor Burns described as Transformational Leadership, in his seminal work, Leadership, published in 1978.

According to him, transformational lead-

ership is one embodying “...a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents”.

Evidently, many developing countries have remained what they are – developing in perpetuity – because their leadership does not stimulate the adrenalin of patriotism. It does not elevate the followers, nor does it inspire them. Therefore, followers have no possibility of being converted to leaders; talk less of leaders becoming moral agents. Undoubtedly, if a leader cannot be a moral agent, then the search for transformation of the entity, be it a corporate organization, a nation or its subnational components, is an exercise in futility.

There is even a much bigger challenge in leadership that we must recognise. I would like to call it the issue of Leadership Moment – that point in time when everything a leader stands for and everything he has put into his work comes calling for a decision – a decision he must make and make correctly, failing which all his labour is wasted and his name will never be written in gold. As Franz Fanon said, “each generation must, out of relative obscurity discovers its mission, fulfil it or betray it”. The moment a leader seizes the Leadership Moment and does the right thing his legend is born. Every enterprise or nation has its leadership moment. The challenge is how to get those leading these entities to recognise and then seize the leadership moment.

All over the world, and in history, many people have changed the course of events by their decision to seize the leadership moment. Roy Vagelos, who was chairman and CEO of the American pharmaceutical company Merck & Co, attracted research scientists who developed major drugs including one for River Blindness - Meetizan.

The drug came out at $3 each. Nobody with the sickness was going to afford it. It was a drug needed only by people who couldn’t afford it. The drug was

‘

Evidently, many developing countries have remained what they are – developing in perpetuity – because their leadership does not stimulate the adrenalin of patriotism. It does not elevate the followers, nor does it inspire them

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Ignorance is definitely not bliss

I

n our eager pursuit of goals, it’s easy for us to sometimes overlook the negatives and the potential unsavoury outcomes, and because of this, we often fail to make sufficient plans to combat such possible happenings. Our desperation may just blind us to the obvious dangers and unless we put plans in place to combat these problematic issues as they arise, they could be our undoing. They can cause us great pain and even losses of one kind or the other. We should always plan for eventualities rather than just pray they won’t happen.

We’re a people who often make plans based purely on hope and seldom on facts, even when the facts are obvious. So, we rely on “hope” that everything will go well and absolutely nothing will go wrong, causing us to overlook obvious dangers and dismissing various warning signals because “our hope is in God”. We choose to conveniently forget that this same God made a point of warning us to always plan effectively and sufficiently. It was not for nothing that He said, “Suppose one of you wants to build a tower.

Won’t you first sit down and estimate the cost to see if you have enough money to complete it?” And if I may take this a little further, wisdom dictates that you should prepare a budget which exceeds the exact sum calculated to complete the project, to take care of unforeseen expenses.

There will always be some. Failure to do this will ultimately lead to uncompleted projects, a colossal waste of time and resources, resulting in intense frustration. Foolishly ignoring Murphy’s Law which says “whatever can go wrong, will go wrong” doesn’t mean it won’t happen.

To achieve success in life requires enormous discipline and even more discipline is needed to sustain that level of success. According to Jim Collins, success is the cumulative effort of a

disciplined person having disciplined thoughts and taking disciplined action. Focusing with a fixating passion on that plan and its processes, refusing to be distracted by other “lucrative” transactions that people may bring your way and executing the plans with utmost faithfulness can only be achieved through discipline. So, you stare the “problems” in the face with utmost belief in yourself that you will overcome; all the while, basing your plans on facts, not just hope. This, Jim Collins termed “The Stockdale Paradox”. To quote him in his book, Good to Great, he said this is the ability to “retain faith that you will prevail in the end, regardless of the difficulties” while you also “confront the most brutal facts of your current reality, whatever they might be”.

This view aligns well with that of my initiative, MINDS Reform Initiative which has humbly set itself the objective of raising model Nigerian citizens, no matter how disadvantageous their background, by instilling in them the values and ideals of the MINDS acronym (Manners, Integrity, Neighbourly love, Discipline and Success) through experiential learning and equipping them to lead our tomorrow as exemplary MINDS ambassadors. A huge task I know, but someone has to do it. It’s not something that would be reasonable for us to expect their generation to teach themselves and I say this because I subscribe to the words of a wise man who once said, “one of the greatest gifts you can give younger people is your life’s story to help them repeat your successes and avoid your mistakes”. Many of us make the error of believing we’ve hashed life up so much that we have nothing to offer in terms of imparting knowledge. We do. Even if it’s to teach others to avoid our mistakes that would in itself represent a great success.

How many of our schools, Primary or Sec-

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ondary, conduct regular fire drills to prepare the pupils for that possible eventuality of a fire outbreak, should it ever come? How many have considered the benefit of putting their pupils through, so should the worst ever happen, every child will simply follow the well-rehearsed procedure he has been taught? Knowing exactly what to do would automatically guard against panic and potential pandemonium. How many schools make it compulsory for all pupils to take weekly swimming lessons? I’m not talking about a club activity which is purely voluntary, I’m talking about it being a must for everybody.

In these climes, many will interpret such precautionary measures and exercises as a lack of faith. “It’s not our portion” or “God forbid” are the most popular responses to such suggestions but how often have these helped us or prevented what will happen from happening? Will these eliminate man’s natural inclination to be careless or will they permanently suspend instances of high voltage?

Will they save your life if you find yourself in a literal “sink or swim” situation where a proficiency in swimming may be the only thing that stands between life and death, either for yourself or for another who needs saving? Oyinbo who does these things isn’t motivated by a death wish but by the very opposite, to save life. We’re too fond of turning our faces away from obvious realities and leaning 100 percent on the spiritual.

We need to ask ourselves if God made a mistake in endowing us with a mental faculty? Or does He actually expect us to use it? My people, if you only take one thing away from this article, let it be this; “tufiakwa” has never been and will never be a solution.

This same inclination to abandon our God given ability to think and to take the easier route

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an orphan – a term used in the pharmaceutical industry to describe drugs without economic value. Vagelos gave it away to the sick and save d humanity.

According to John F. Kennedy, “to be courageous is an opportunity that sooner or later will be presented to all of us”. How do we use it? With all the problems that befell Apollo 13, Eugene Kranz returned it to earth by a splitsecond great decision. The battle of Jena Auerstedt, fought on October 14, 1806 between the forces of Napoleon of France and the mightier army of King Fredrick William 111 of Prussia, ended in favour of Napoleon, who seized the Leadership Moment by empowering his army to freely decide how to deal with the problems in the field and not run to headquarters to get permission. King Williams ‘mighty army could not lift a pin if the King and the commanders at headquarters did not say so. Napoleon made that decision in a split moment.

Goodluck Jonathan’s Leadership Moment happened when he became the first Nigerian president to accept defeat in an election without a fight.

That decision, however one views it, saved Nigeria both human and financial resources of gargantuan proportions. Allen Onyema of Airpeace seized a leadership moment when he single-handedly evacuated stranded Nigerians from South Africa, thereby saving many lives. When is your leadership moment coming or has it come and gone without your knowing it? Life and death in the corporate battlefield often depend on the ability of the leader to seize his Leadership Moment. As we speak, Nigeria is in need and must seize the leadership moment that has appeared, so as to save it from losing the only country Africa can say has the real capacity to change the world.

Character Matters with Daps

Dapo Akande of “leaving” it all to God has in no small measure contributed to the mess we find ourselves in. Not to discount in anyway just how much grinding poverty can compromise our judgement, our “belief” that even if we sell our future for a pot of pottage at the ballot box, God can still somehow touch the heart of the unscrupulous candidate we foolishly voted for and transform him into the political messiah we’ve all be waiting for is one miracle that will never happen. Unfortunately, this way of thinking and mindset which distances our actions from their consequences appears to have been inculcated from a tender age. Truth is, if you vote for the wrong candidate, you will face the consequences. If you fail to plan, you will face the consequences. If you fail to prepare for potential adverse occurrences, you will only have yourself to blame. You must plan for the eventualities you desire while preparing against the ones you don’t. As discipline dictates and as success requires, you must do the right thing at the right time.

Changing the nation...one mind at a time.

Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

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How remote working increases cyber security risks A dispersed workforce gives rise to a variety of data management challenges

Hannah Murphy

W

e live in a world of increasingly sophisticated hackers and adversaries, out to steal data from people and companies for profit, knowledge or disruption. As businesses embrace digital transformation and new ways of working, keeping sensitive information safe is a growing challenge for employers and employees.

The workplace is changing fast, particularly offices. A 2019 study

by International Workplace Group, which operates serviced offices and co-working spaces, found that 50 per cent of employees globally work away from their office at least two and a half days a week. Some analysts predict that up to half of the workforce will be freelance within 10 years, as short-term work becomes more common. Meanwhile, many businesses have increasingly long — and global — supply chains.

Inevitably, these changes come with added cyber-security risks.

“It makes [cyber security] a lot harder when your attack surface — the culmination of all the networks and systems you use for work — is sizeable,” says Justin Harvey, global incident response lead in the security division of consultancy

Accenture.

Chris Miller, regional director for the UK and Ireland at RSA Security, a cyber-security company, points to the difficulty in knowing if someone is who they say they are online. “A new digitally enabled, dynamic workforce can operate from various locations, and these remote workers introduce new identity-assurance problems,” he says.

Many cyber-security advisers recommend businesses move their work applications to the cloud, so that data remains on company servers wherever staff are located.

“The use of virtual environments is key to providing capacity and flexibility, but this means placing applications in the public cloud for easier access,” says Alex Schlager, chief product officer in the cybersecurity group at US telecoms company Verizon. This means “traditional ‘physical’ perimeter security solutions that have protected critical applications in the past are no longer effective”.

In response, companies must tightly control who has access to their data, and for how long. For example, if a temporary worker leaves a project, access must be rescinded.

“Without having control over who has access to what, when and under which circumstances, data and the wider network will be put at greater risk of human error and malicious attack,” says Miller.

There are many software tools that provide “the means necessary to enforce good protections around data, such as access control and encryption”, says Eric Haller, vice-president of security operations at Palo Alto Networks, a US cyber-security company, adding that legacy systems may need to be updated.

But employers also need to provide training. Constructive criticism is encouraged. “Notify employees of bad behaviour at the time they do it,” says Amir BenEfraim, co-founder and chief executive of Menlo Security, another US cyber-security company.

Above all, the blurring of boundaries between home and workplace can be an unsettling factor. “One of the biggest risks of the new ways of working is ‘BYOD’,” or bring your own device, says Accenture’s Harvey. “Companies are paying millions of dollars a year to protect their systems,” he adds, citing firewalls, intrusion detection and antivirus software. “When you introduce BYOD, you are essentially trusting that your employees are taking the right precautions.”

Employees’ own computers do not have the same protections as work devices, nor the same capabilities for monitoring activity. If you are compromised while away from work premises, an attacker could “tailgate” you — that is, get into the systems in the building when you go into work the next day, says Harvey.

It can be difficult for businesses to formulate policy. Steven Booth, chief security officer at US cybersecurity business FireEye, notes that each approach is “highly dependent on the company”. Some workplaces, such as hospitals, have special laptops that can be used only in patient care. Others set a “whitelist” of websites that can be accessed on work devices.

Providing devices for home working can be costly, so many organisations rely on staff using their personal devices. “As a Silicon Valley tech company, I would have an attrition problem [if work on personal devices was banned]

‘

Companies are paying millions of dollars a year to protect their systems,” he adds, citing firewalls, intrusion detection and antivirus software

— people would quit,” says Booth.

Businesses such as FireEye typically introduce extra security measures, in particular mobile device management, sometimes via a third party. This might include introducing monitoring capabilities to a phone, or making sure that when staff check email from a personal device, it is one known to the company.

Employers also have to consider what happens if they accidentally capture employees’ personal data, says Sharon Chand, a principal in the cyber-risk practice at Deloitte, a consultancy. “The question of how employees can track and monitor their personal data is really driven from a privacy perspective — what right do employees have to privacy and knowledge of how their personal data is being used?” she says, adding that this will depend on the workplace culture and local regulation.

Employees should be alert to the usual pitfalls of day-to-day cyber security, such as poor password practices. According to a Verizon Data Breach Investigations Report this year, 29 per cent of breaches involved the use of stolen credentials.

Security advisers recommend two-factor authentication. Some point to the growing trend among employers for biometric security, such as fingerprint or facialrecognition identification. There are even more sophisticated tools coming to market, notes Verizon’s Schlager, such as asking users to type in a passphrase — a question and response. Software verifies the response but also “determines how a user types, using variables such as the speed between each letter”, he explains.

FT

Is Nigeria a nation that can work with her current formation?

O

ver 400 ethnic groups who don’t all love and trust one another.

There’s a lot of HISTORY in the mistrust; Religious people who don’t really know their foreign gods. So, they mix religion and their own culture; Foreign education without domestication.

We had our own ways of passing on trade and business that ensured there were no unemployed youths in any family, except a few miscreants.

With foreign education came “illiteracy”.

We do not have the structure on ground to employ people with foreign education.

It is local to farm when your contemporaries are building trains in China. So, farming, which was a major employer in

our history and such trades, have been left to how they were 100 years ago. And no one wants to do that amount of hard labour when you can obtain a foreign education and sit in AC as an accountant (just another example); counting other people’s money.

The only problem is, where is the money to count when the masses are poor?

So, many graduates, no employment.

We developed at the pace the colonialists pushed us to, without the right structures on the ground to keep growing at the same pace.

You can’t have 4 Universities to 20 million citizens if you want mass literacy.

Which offices are you educating millions of graduates to, each year?

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If rather than making moi moi (which was the family business), you educate ‘Jumoke to be a Lawyer; to work where?

There’s still a high demand for moi moi.

Do we have the same demand for lawyers?

The people who have stayed in their villages, providing moi moi or farming; who do not partake of your “civilisation” (no power, roads, hospitals, schools); can they be counted upon to make “informed” decisions during your democratic process?

Or is our democracy confused?

People respect traditional rulers more than the government. People fear Sango more than Jesus. So, they will swear by the Bible and still steal!

Does Nigeria need to Press a reset but-

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Alawode-James, OlaJumoke ton, break it all down and start afresh?

This time, taking everyone into cognition and asking us if we even want to be together.

Who will bell the cow?

OlaJumoke is the MD/CEO Oluwanoninyo Limited, a Media and Events Company based in Lagos.

Char Matt with

Akande author o journey de25@g

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Wednesday 15 January 2020

BUSINESS DAY

Editorial Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

Inequality in Nigeria: Elite can’t sit on the fence

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he distribution of income, wealth and opportunity in Nigeria, one of Africa’s well-endowed countries, mirrors Africa’s fragmented geography.

Africa’s physical geography is distinctive: natural resources are unevenly distributed and most countries on the continent are landlocked. Africa has the most number of poorly endowed countries: there are more landlocked, resourcescarce countries in Africa than any other continent.

Our failure to take advantage of our natural human and natural resources and location is part of the reason why many Nigerians are poor. Our position and resources are not being harnessed: terabytes of broadband have landed on our shores yet only few universities can boast of graduates with relevant IT skills.

Knowledge and skills are not evenly spread thus limiting social mobility. The swelling population of unskilled and poorly educated youth is a

major threat, politically, socially and economically.

Poorly trained and illequipped young Nigerians are a tinderbox. As more and more are left behind, as they watch the gains from economic growth concentrated in the hands of a few foreign-trained children of wealthy Nigerians, they will question the inequality and the widening gap in opportunities.

We have abundant oil resources yet we import petrol; an astronomical increase in vessels, jetties, depots, trucks and tank farms are clogging roads and are a threat to lives and property.

Nigeria’s demography, the real resource of the country, is one of the reasons businesses are attracted to the country.

However, we cannot consume way to and what economists call convergence. Convergence is anything but automatic; because developed economies continue to innovate, to attract the best talent in the world and based on these imported skills and knowledge boost productivity and grow their economies.

In New Lens Scenarios, a 2013 report put together by strategists at Shell, perspectives on the future of business describe two scenarios. In one scenario those at the top, who occupy the commanding heights, make sure things remain as they are, that is, a “steady, self-reinforcing, lock-in of incumbent power and institutions.”

In this scenario, the rich get richer and the poor stay relatively poor. A handful of prosperous people and their children monopolise the best schools and universities. Even foundations endowed by billionaires with a conscience won’t complement the little social safety net there is. Inequality is a major issue as gaps in skills, income and wealth increase.

What role can the elite of Nigeria play? Well, they must put hands and heads together, to promote policies and institutions that will begin to correct the social injustice of inequality.

Or are we waiting for a more catastrophic period in our history before we correct these wrongs? Are the well-to-do who

straddle the corridors of power, who have the ears of the powers that be, going to pretend to be blind, deaf and dumb?

An alliance of businesspeople and politicians with oligarchic control won’t be easily dislodged. With pressure from civil society, a more consensual approach that accommodates varying interests through reforms is the preferable alternative. This requires political will.

Rising inequality and the concentration of wealth in the hands of a few rich is bad for economic growth. Though economic growth in most of Africa has made the continent the darling of the investing world as patient capital is being rewarded with huge rates of return, the growth is not inclusive. Not enough people are benefiting from it.

With its demography, strategic adoption of technology, supported by reforms in health, and education Nigeria is uniquely positioned to be Africa’s economic powerhouse. We can do away with crony capitalism and corruption replacing it with entrepreneurial capitalism.

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

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

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Wednesday 15 January 2020

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Amotekun: Restructuring Nigeria on auto-pilot!

Franklin Ngwu

G

iven the pervasive insecurity situation in Nigeria, the successful launching of the Western Nigeria Security Network (WNSN) popularly known as “Operation Amotekun”, seems to be received with a sense of hope and relief by the people of South West Nigeria and beyond. A friend described it as most courageous, most needed and most commendable! It is a very clear demonstration of the weakness and inadequacy of our structure of governance and national internal security system. While the assertions of my friend are undeniably factual, the revelations and implications of Operation Amotekun are deep and central to the crises of underdevelopment and legitimation we are faced with as a nation. With Operation Amotekun, the imperativeness for a restructured Nigeria becomes most cogent. It seems that we are inadvertently returning to the good old days, another senior friend in his 80s elatedly stated.

Interestingly, why the people of South West are generally happy with the scheme, reactions from other parts of the country are mixed. While some perceive it as the military wing of Oodua People’s Congress (OPC), others are in support as it will be a reference point for the potential formation of other regional security outfits. According to the Attorney

General and Minister of Justice, Abubakar Malami, the federal government is reviewing the development and will soon make its position known. Clarifying further, he maintained that “it is about analysing the scope of functions of Amotekun within the constitutional spirit of exclusive legislative list or otherwise”.

While some Senior Advocates of Nigeria (SANs) have expressly vouched their support for the scheme, the Nigeria Bar Association (NBA) in its usual muted reaction has implored the Southwest governors and other promoters of Amotekun to make public the operational guidelines of the scheme. This will help in the proper review and constitutional clarification of Amotekun, the NBA maintains.

Before I return to the Attorney General’s reaction and NBA’s counsel, it is important to appreciate that those who oppose the scheme have valid reasons. First if not properly handled, it might lead to the proliferation of other regional security outfits. Second, as officers and agents being recruited into Amotekun are predominantly from South West, the concerns that non-South West indigenes might be intentionally or unintentionally targeted, exploited and persecuted cannot be ignored.

This is particularly valid given the deep mistrust and divisions that characterize an improperly integrated plural society like Nigeria.

As we await the position of the federal government, it is important that we all appreciate that a reactive approach to governance is neither good nor sustainable. Governance should be proactive and inclusive to be effective and impactful. It is difficult to understand how the Federal government is claiming to be studying a scheme with immense national security implications such as Amotekun when it was initiated, planned, funded and launched by six governors that are very high ranking

‘

I implored the APC led federal government to appreciate the mood of the nation cautioning that the time to restructure Nigeria has come and that it will be done irrespective of how willing or unwilling the federal government is

members of the government, Chief security officers of their states and members of key decision making committees of the government such as National Council of States. With the absence of heads of relevant security agencies such as Police, Department of State Security and Army during the launch of Amotekun, there are rumours that there is lack of agreement at the highest levels of government. Irrespective of how it is perceived, the undisputable fact emerging from recent developments such as Amotekun is that a serious discussion on the cogent need to rethink our governance structure is most imperative. Denying it is like postponing the judgement days that are manifesting through schemes like Amotekun!

In my previous articles, I implored the APC led federal government to appreciate the mood of the nation cautioning that the time to restructure Nigeria has come and that it will be done irrespective of how willing or unwilling the Federal government is. With the evident joy and elatedness across South West, I see in Amotekun an emerging repentance particularly on the part of APC South West governors to appreciate and act on the yearnings of the populace which in this case is the demand for restructuring. As a suggestion to the Attorney General and Minister of Justice stated, Amotekun is not the only issue to be addressed when reviewing the exclusive legislative list. There are many more.

With our plurality, complexity and increasing population, the exclusive list needs to be carefully reviewed with many items moved to the concurrent list to create a functional, devolved and productive economy.

Not only will it unleash the innovative capabilities of every part of the country, the focus will shift from the current competition for power to competition for development.

As security of lives and property

is central to any meaningful and sustainable economic development, the launching of Amotekun reveals that the development and growth of South West region cannot be effectively guaranteed with the federal government led and controlled security system. With Amotekun, the people of South West are saying that there is a need for their higher involvement and ownership in the security of South West for it to be effective. By implication, the norms and values (culture) of the people is an important element in formulating and executing development policies of societies. As these norms and values (culture) relate to the informal and formal laws of the society, it is expected that professional associations like Nigeria Bar Association (NBA) should be more impactful in their roles and contributions to a better society. Given that NBA is the foremost professional association of lawyers in Nigeria, her stand in this kind of very important issue should not be ambivalent. It should be clear and firm as many Nigerians rely on her views for guidance and direction.

The issue with Amotekun is not really about the letter of the law or its place within the constitution of Nigeria but on its functional importance and contribution to a better and secured South West Nigeria. If it is functionally relevant but somewhat constitutionally inappropriate, the question should be what constitutional or legal reforms are required to make it constitutionally acceptable and enhance its functional relevance. These are responsibilities that professional associations like NBA should significantly advocate and lead.

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.

E-mail- fngwu@lbs.edu.ng

Taking charge of your business compliance obligations early

I

t is a brand-new year and business activities are gradually picking up.

There are a number of statutory levies, charges and filings that are due at the beginning of the year depending on which sector a Business operates in. Some of the charges include Land use charges, Environmental development charges as well as practising fees payable to professional organisations which relevant staff of a business organisation belong to.

The demand notices for these statutory levies and charges are going to start pouring in soon. It is worthy to note that some of these levies and charges have cut-off dates for payment. However, there is a tendency for some of the demand notices to be pushed to the back and marked as KIV (Keep in view). At the end of the day, the cut -off dates for the payments and filings may be missed if there is no deliberate effort to monitor them. The implication of making some of these payments late is that a business organisation may incur monetary pen-

alties for not doing the needful at the right time. The best time to deal with demand notices is as soon as they are received.

On the alternative, if there are no funds readily available to settle them, keep a close watch on it to ensure that the cut-off date for payment isn’t exceeded. There are also times when an unfamiliar demand notice makes its way to your Business organisation. This does not mean that it should be ignored simply because it isn’t one of the demand notices usually received by the Business organisation. Necessary enquiries should be made to confirm the legitimacy of such charges and the needful should be done based on the outcome of such enquiries.

There are also some statutory filings that are due to be made with regulatory bodies at the beginning of the year or by the end of the first quarter of the year. It is also very important to start collating the required information for the filings from the relevant stakeholders and not wait till

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the last minute before collating the required information and making the necessary filing. More often than not, when information for these filings is hurriedly collated, the outcome is a report fraught with mistakes and misrepresentation of the true position.

The cut-off date could be missed in a bid to correct the mistakes. It is worthy to mention that late filings or incorrect filings that do not represent the correct position could all lead to heavy monetary sanctions from a regulatory body.

It is very important for every business organisation to start early in the year and be deliberate about its compliance policies.

Necessary structures should be put in place to close all compliance gaps. There should be a dedicated member of staff ensuring and monitoring compliance with regulatory obligations within laid down timelines.

This year every business organisation should be intentional about compliance.

Concerted efforts should be made to ensure that a chunk of its earnings is not spent on

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ULOAKU EKWEGH

incurring penalties due to failure to comply and meet up with its statutory/ regulatory obligations.

Ekwegh is a private legal practitioner with over 15 years legal experience in law firms and as in-house counsel.

She is also a fellow of the Institute of Management Consultants.

Email: uloekwegh@yahoo.com

@Businessdayng

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Wednesday 15 January 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

ECONOMY

10 points from the Finance Act and how it affects your company OLUFIKAYO OWOEYE

C

ompanies are now divided into three: A. Small companies with less than N25m revenue, are exempted from Company Income Tax B. Medium company between N25million and N100m revenue, are to pay 20percent as Company Income Tax C. Big company with revenue above N100m, are to pay 30percent as Company Income Tax Hence, this relief given to small and medium-sized companies will encourage them to come forward and disclose their revenue and enjoy the benefits. However, it may give rise for some companies who may fall into the medium scale to window dress their accounts so that they fall into the small scale business that

would not be liable to tax.

2. The overlap created in commencement rule and cessation rule have now been removed. Hence CIT 29 (3) and (4) have been replaced. This is done to ensure that double tax is not charged on the same income due to overlapping period. The advantage of this is that a new business may pay little or no tax in the third year of business and that the right of election may not be exercised after all.

3.Insurance companies are now allowed to carry forward their losses indefinitely like other businesses.

Previously they were allowed to carry their losses for four years only after which any losses recouped are deemed lapsed. This provision will encourage those in the insurance sector.

4.After-tax dividends are now exempted from tax again when dividends are paid out.

Previously when dividends are paid out to shareholders and these are higher than chargeable or total profits of the business, the dividend paid out was deemed to be the chargeable profit and a tax a rate of 30% was charged. If dividend is a residual income available to shareholders after tax has been charged, charging tax again when the dividend was paid out amounts to charging tax on an after-tax income, thus leading to double taxation.

With the new finance bill, this provision of charging tax from dividend is now removed.

5.Minimum tax computation will now be based on revenue alone. It will now be charged on 0.5percent of turnover. The revenue mentioned here must be at least N25m since companies with revenue of N25m are exempted from CIT. Previously minimum tax used to be computed as

follows: 0.5percent of Gross Profit; 0.5pecent of Net Assets; 0.25percent of paid up capital; 0.25percent of revenue ; 0.125percent of revenue in excess of N500,000 6. VAT rate to be increased by 50percent from 5percent to 7.5percent.

The items exempted from VAT are basically essential items and others listed in the VAT exemption list.

7. Stamp duty of N50 will be applied to items that cumulatively worth N10,000 and above.

Hence it’s better to buy items in bulk and pay just N50 than to split the items up.

For example, its better to buy items in bulk from a supermarket at once worth N50,000 and pay just N50.

Total amount paid will be N50,050.

If you were to split it up and by the items in multiple of N10,000 each purchase,

it means you will have to make five different purchases of N10,000 each and pay N50 for each purchase (making it N50 x 5 times = N250). Total items payable is N50,250 when you split it.

The only way to avoid the N50 POS stamp duty charge is to split up the purchase to an amount less than N10,000. Assuming you split it to a multiple of N5,000 for each purchase it will mean 10 different invoices or transactions and no N50 will be charged on the transactions.

8. If company income tax is paid early (90 days before the due date for the company to pay tax or 3 months after the end of an accounting year of the company), the company gets a bonus: a. 2% for a medium size company. A medium size company is one with turnover of between N25m and N100m. Instead of the company paying 20% tax rate, they get a 2% bonus thereby

paying 18% tax rate; b. 1% for any other company (big company or foreign company). They pay 29% instead of 30%.

Note that small company have a 0% rate. So no bonus is available to them.

However if a small company fails to file tax returns early they pay a penalty.

Thus, in order to avoid penalty all companies are advised to file before the due date. All medium and small companies are advised to file with 3 months after their account year ends to get the bonus.

9. Section 60 of PPT Act has been repealed or ended or removed. Hence dividend paid out of PPT to individuals (under the PIT regime) is now subject to WHT. The repealed section 60 of PPT Act exempted it previously.

10. Email communications with the tax authority is now accepted as a valid means of communication.

EQUITIES

Nigeria moves from bottom to top in early lead against big African bourses SEGUN ADAMS

N

igerian stocks have left African peers behind in an early 2020 rally which seems to be reversing fortune for one of the continent’s worst-performing bourse last year.

The Nigerian Stock Exchange (NSE) returned a 10 percent year’s gain to investors Monday after extending its bull-run to a record 11 days. The Lagos bourse which lagged peers like Egypt, Nairobi, Casablanca and Johannesburg in 2019 is now ahead.

The Kenyan, Moroccan and South African exchanges have delivered less than four percent this year, while Egypt has subzero returns.

In 2019 Morocco gained 8.38 percent, Egypt gained 7.33 percent, South Africa gained around 8 percent Kenya declined by 6.33 percent compared to Nigeria’s almost 15 percent decline.

Off to the best start in more than a decade, Investors on the NSE are said to be taking early positions in fundamentally sound

stocks ahead full-year corporate earnings disclosure and dividend declaration.

The gaining-streak is expected to be followed by

profit-taking, analysts say.

However, the market has closed in the green in all the 2020 trading sessions up to Monday.

L- R: Femi Odugbemi, academy director, MultiChoice West Africa; Aderonke Adeola, film maker/producer and Caroline Oghuma, executive head, corporate affairs MultiChoice Nigeria during the screening of the docufilm “AWANI” by Ms. Adeola at one of the MTF Academy 2020 Film Appreciation Class

Beyond the interest seen in early trading this year, the big question is whether the market will turn the corner to halt two straight years of decline that has seen the market shed more than 30 percent.

In his 2020 outlook presentation, the NSE CEO Oscar Onyema on Monday said the exchange would work to ensure current positive sentiment remains.

“We intend to work closely with our stakeholders to sustain this growth trajectory,” said Onyema.

“As African Champions, we will maintain momentum in executing the NSE’s 2018 - 2021 Corporate Strategy in our efforts to elevate the prominence of Africa’s global financial markets.”

Analysts at Lagos-based investment bank United Capital in an outlook report said they expect NSE to return 5.3 percent in 2020.

“Our Base case scenario

sees equities market return at 5.3 percent, driven by low rate environment and increased system liquidity in 2020,” United Capital said in its annual outlook report.

While base scenario projects 5.3 percent gain, a best-case scenar io suggests a 23.6 percent rally while the w orst-cas e s cenar io would be -16.3 percent, they said.

Tepid macroeconomic environment and uncertainty about policy directions were major weights on stocks in 2019, despite a relatively uneventful conclusion of the general elections.

Beyond, technical analysis, the analysts say that Nigerian equities are attractive enough for investors with a medium to long-term view.

However, for an attractive market valuation to trigger a rally, the macro picture must look good to spur domestic and foreign investment, they said.

Wednesday 15 January 2020

COMPANIES&MARKETS

BUSINESS DAY

Business Event

15

OIL&GAS

Aramco raises $29.4bn from IPO after greenshoe option OLUFIKAYO OWOEYE

O

i l - g i a n t , A ramco has raised a total of $29.4billion from its initial public offering after it exercised its ‘greenshoe option’ to sell additional 450million additional shares.

The world’s most profitable company, initially raised $25.6 billion, which was a record high, in its December IPO by selling 3 billion shares at 32 riyals ($8.53) a share. But it had indicated it could sell additional shares through the over-allotment of shares.

The greenshoe option or over-allotment, allows companies to issue more shares in an IPO when there is greater demand from participants in the initial offer.

Investors were allocated the additional shares during book-building, Aramco said.

Less than a month after Aramco’s trading debut, Aramco shares have been volatile amid heightened tensions between the United States and Iran, which lies across the Gulf from Saudi Arabia.

The turmoil in the region since the United States killed Iranian military commander Qassem Soleimani in a drone attack in Iraq has driven home the Saudi oil company’s vulnerability in an unstable region, contributing to a near 12percent drop in the share price since hitting a peak on Dec. 12 that briefly valued the company at more than $2 trillion.

Fears that Saudi Aramco, guardian of Saudi Arabia’s vast oil wealth, could be caught up in any conflict

between Iran and the United States have outweighed the boost to the oil company’s revenues from a surge in the oil price since Soleimani was killed The IPO is the cornerstone of Saudi Crown Prince Mohammed bin Salman “Vision 2030” plan to diversify the Saudi economy and lessen its reliance on oil.

But initial plans to sell up to 5% of Aramco shares on an international exchange to raise up to $100 billion were abandoned in favour of a listing confined to the Saudi stock exchange of Tadawul.

In its IPO prospectus, one of the risks cited by Aramco was the risk of cyber-attack.

Back in 2012, thousands of computers at Saudi Aramco were disabled by a cyberattack that some security experts blamed on hackers working on behalf of Iran

Faruk Yahaya (3rd r), general officer commanding (GOC), 1 Div., Nigerian Army, Jamil Sarham (3rd l), assisted by commandant, Nigerian Defence Academy (NDA); Samuel Adebayo.(2nd r), chief of military intelligence, and Musa Mukhtar (r), Air Officer Commanding Air Training Command, AVM to cut the Tape, at the inauguration of newly renovated Blocks of flats by the Nigerian Army at 81 Barraks, Ribadu Cantonment in Kaduna

ENERGY

So Energy enhances access to Petroleum Products in Ghana OLUSOLA BELLO

S

o Energy Ghana, an affiliate of Sahara Group, has commissioned a retail station located at Alajo, in the center of the city of Accra to promote seamless access to world-class petroleum products in Ghana. The station bears the characteristic modern So Energy design which has become a brand associated with reliability, efficiency, convenience and safety in Ghana.

The new retail station will serve both private and commercial vehicles in Kotobabi, Alajo, Circle and other suburbs in and around Accra. The operation of the So Energy station will also enhance availability of petroleum products in the region, with projected sale of

a minimum of 200,000 litres of Automotive Gas Oil (AGO) and Premium Motor Spirit (PMS) monthly.

At the commissioning of the station, Yvette Selormey, managing director, Sahara Downstream Companies in Ghana stated that “with the addition of this station, So Energy will continue to provide exceptional services to its customers, sell quality products delivered at good pump levels and competitive prices”. She added: “expanding our retail network across the major cities in the country is in line with our vision of bringing energy to life by providing access to clean, safe and exceptional petroleum products to drive economic growth and development in Ghana.”

Selormey said So Energy,

in keeping with the dedication to providing premium customer experience, remained committed to working with the government and good people of Ghana to enhance the growth of the energy sector as well as contribute to empowering lives through support for the Sustainable Development Goals (SDGs).

“So Energy has since become a notable corporate citizen in Ghana with remarkable interventions in education, health, youth empowerment and entrepreneurship. We are delighted that the So Energy brand is household name amongst private and commercial drivers in Ghana as they would drive long distances just to purchase fuel from a So Energy Branded Station.”

Banks switch fintech focus; Salaryfits goes for employers; Monzo founder’s alpacas Banks go big in the hunt for fintech success STEPHEN MORRIS

B

ig banks are making major changes to the way they invest in fintech companies, turning to fewer, but larger, investments as they look for partners who can help them turn around their core businesses.

In the early years of the fintech boom, banks invested widely and indiscriminately, starting internal venture-capital firms and “accelerators” that ran competitions to find the most promising start-ups. These were then nurtured in purpose-built hipster workspaces in exchange for priority access to their technology.

Some were successful at the margins, but few materially changed the business models and practices of the legacy banks funding them.

Nowadays, with cash more constricted as big lenders are forced to spend more to upgrade their own creaking systems, the trend is towards far fewer, but bigger, investments.

Increasingly, partnerships are favoured over majority ownership stakes.

Chris Schmitz, European fintech lead for EY and a lecturer at the Frankfurt School of Finance, sees three main reasons for the shift in approach.

In the past two years many fintechs have been switching their business models to B2B from B2C because of the prohibitively high costs of acquiring hundreds of thousands of new customers, Mr Schmitz said.

Many start-ups’ primary clients are now other financial institutions, so taking controlling stakes is difficult for large

banks because it would result in the fintech losing many of their other clients due to conflict of interest rules.

“The second reason is prices for the established, more mature fintechs have gone through the roof… [as] money floods into European markets from China, the US, venture capital, even private equity,” Mr Schmitz said. “When paying such a lot of money for something unproven, it’s hard to calculate the returns on a strategic level.”

German mobile app bank N26 is now valued at €3.5bn and UK counterparts Monzo and Revolut could be worth more than £2bn and £4bn respectively. “No bank has spent that much on their own technology in recent years,” he said. “They have to earmark spare cash to improve their own infrastructure first.”

L-R: Adeseye Ayobanjo, commandant of Naval War College, Nigeria; David Adeniran (r), assisted by the Flag officer commanding eastern naval command of the Nigerian Navy, to presenting a plague to retired Thaddeus Udofia, at the inaugural lecture of Command Level Officers’ Course 3 at the Eastern Naval Command in Calabar.

Sharon Ikeazor (m), minister of state for environment; Ipalibo Harry-Banigo (2nd r), deputy governor of Rivers Ibukun Odusote (2nd l), permanent secretary, Federal Ministry of Environment; Idris Musa, director-general, National Oil Spill Detection and Response Agency (NOSDRA), and other participants,

L-R: Sam Onyemelukwe, MD, Trace TV; Ghislain Noumbessy, ,MD, Robert Bosch Limited, Nigeria; Boris Dolkhani, vice president, brand management and marketing communication, Robert Bosch GmbH; Frank Nweke Jr., chairman, advisory board, ICreate Africa, and Ajayi Samson, retail and user marketing manager, Bosch Power Tools, Nigeria, at the opening ceremony of National Finals of ICreate Festival 2019 in Lagos

16

Wednesday 15 January 2020

BUSINESS DAY

AGRIBUSINESS

In association with

ag@businessdayonline.com

Five things to impact farmers’ productivity in 2020 enabling environment that will spur investments in seed production while enforcing stronger regulations to protect local investments.

Framers seek hybrid seeds owing to their productivity advantage, but most of them are imported, leading to the high cost of production of farm produce and high prices of food items in the country.

Josephine Okojie

N

i g e r i a’s farmers’ productivity in 2020 depends on these five things that have continued to impact farmers’ productivity and the sector’s contribution to the country’s economic growth and development.

As a result, BusinessDay’s agribusiness will be taking a look at these issues: Climate Change From the wildfire in Australia to the floods in Dubia airports extreme weather events are putting pressure on the ecosystem that farmers depend.

This impact will be greatly felt in 2020 across countries and continents as the global temperature continues to get warmer.

The Nigerian government has constantly failed to act on climate change as yearly flooding in the south and droughts condition in the north highlights the government monumental failure in taking issues of changing climate.

Nigeria currently lacks the policy to tackle the climate change crisis, either to minimise the scale of climate destruction or to adapt to the new normal.

As a result, extreme weather events have continued to impact negatively on Nigeria’s agricultural activities in recent years and 2020 would not be different.

Experts who spoke with BusinessDay have predicted that climate change will play a key role in farmers’ 2020 productivity.

The experts say that extreme weather conditions are likely to affect not only the outcome of 2020 farming seasons but also the government’s plans to stop food importation which has been valued at over N1 trillion annually or at least reduce it to the barest minimum.

The extreme weather condition does not just only affect crop production, but also livestock and fish production.

“The sign of climate change has become evidence daily in our lives and the impact has been massive in the agricultural sector.

The weather conditions will affect the quality of crops and the pricing,” said Desmond Majekodunmi, an environmentalist.

Access to agro-finance Nigeria’s expectation from its agricultural sector may never crystallise if banks remain unwilling to lend to the sector.

Lack of access to ade quate financing by farmers and other actors in the sector has remained a major impediment that prevents investments in basic farm inputs needed to raise productivity and sustain the growth of the non-oil sector.

As a result, yields have failed to increase significantly, leading to pervasive hunger and poverty.

Similarly, agro entrepreneurs seeking to build businesses that could boost food production has continued to remain at a subsistence level in the country.

“Funding is the biggest problem we have in Nigeria’s ag r i c u l tu re,” He i n e ke n L o kp o b i r i , Mi n i s t e r o f State for Agriculture and Rural Development says at a breakfast meeting with bank CEO’s held in Lagos in 2017.

“We need finance to put all the factors of production together to drive growth in the sector. We know that banks are still finding it difficult to fund agriculture but until we have the money to fund agriculture at the production, processing and marketing level, we would not achieve anything from the sector,” Lokpobiri says.

Nigeria’s agricultural fundamentals are robust and include an estimated 84 million hectares of arable land out of which only 40 www.businessday.ng

percent is cultivated and only 10 percent of the 40 percent is cultivated optimally.

But with adequate financing, the country can put its 84 million hectares of arable land to productive use, experts say.

Inputs Prices of key inputs such as seeds, herbicides, pesticides, fertilisers, and agro machinery will be the determinants of food prices in 2020.

Also, access to adequate, secure and timely supply of quality seeds is also a major hurdle on the nation’s quest to return to its heydays with agriculture.

Poor seeds have been identified as the major challenge facing farmers’ cultivation of crops efforts and reducing their yield per hectare.

Despite efforts of successive government to give farmers access to improved seeds, farmers are still unable to get access to good and quality seedlings.

Nigeria’s failure to invest in the seed industry has created a yawning seed gap estimated at N525 billion, leaving farmers’ to lowquality inputs that portend danger to crop production and the country’s foodsufficiency target.

“Most of the seeds in the market today are imported and this is because we do not produce enough seeds.

The research institutes that are mandated to produce improved varieties of seeds are not doing anything,” Abiodun Olorundenro, a farmer said.

“There are lots of adulterated seeds in the

countr y today because demand is much higher than supply. The level of investments in the industry is low. To bridge the gap, a lot of merchants are importing these seeds for farmers,” Olorundenro said.

Despite the growth recorded in the numbers of seed companies in Nigeria, investments in the subsector is still low as farmers still find it difficult to easily access improved seeds and seedlings to cultivate.

The total national seed requirements for eight major crops, including maize and rice, in Africa’s most populous country, stood at 388,690.64 metric tons (MT) in 2015, while the quantity available was 126,173 MT, leaving a yawning gap of 262,518 MT. Experts in the agricultural sector say that the government needs to prevent the supply-availability gap from widening further to prevent creating a fertile ground for the proliferation of unregistered and incompetent operators who flood the market with fake or poor quality seeds.

They explained that legal backing from the National Assembly would empower the National Agricultural S e e d s Cou n c i l (NA S C ) to carry out its statutory mandate of regulation and supervision of seeds more effectively and seamlessly.

To b r i d g e t h e ga p s, experts have called for collaborations between the government and the private sector to drive investments in seed production in the country.

The experts also urged the government to create an

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Infrastructural deficits Indubitably, some of t h e g re a t e s t p ro b l e m s confronting rural farmers and communities in Nigeria are the absence of critical i n f ra s t r u c t u re s u c h a s motorable roads, storage facilities, and irrigation facilities amongst others.

Fa r m e r s c o nt i nu e to suffer low le vels of agricultural productivity due to infrastructural deficit across the country, which reduces their profit and impact on their capacity to increase productivity.

The provision of critical infrastructure is a prerequisite for enabling Nigeria to stimulate e conomic growth and to reach the targets for economic diversification and food security.

Ma d u O b i o r a, C E O, Multimix Academy said that Nigeria does not have an effective agricultural infrastructure, stating that the country’s export drive can only be successful with adequate infrastructural facilities such as storage, good road networks amongst others, stressing that the lack of it has made cost of food production higher.

“The costs of logistics are also very high. It is cheaper to transport a commodity to Europe than to transport the same commodity within the country,” Madu said.

After a few days of heavy rainfalls, most farming areas and markets become totally impassable and this has continued to impact negatively on the prices of food items across the country.

Despite Nigeria ranks top in the production of some crops, the infrastructures needed to store the excesses are lacking.

“Post-harvest losses in Nigeria are huge due to inadequate storage facilities in the country, stating that the country’s post-harvest losses are enough to feed the West Africa region,” said Mawuli Coffie, team leader, West Africa Food Markets @Businessdayng

Programme.

According to Abiodun Olorundenro, manager, AquaShoots, the problem with Nigeria agriculture is infrastructure, stating that the countr y is growing enough to feed its people but most of what is grown often rot in the field because it is difficult to move them easily from the farms and the facilities to store them are lacking. “ We c a n o n l y f e e d ourselves when the infrastructures needed to boost productivity across the value chain are there.

We can even move our foods from the farm to the market easily,” Olorundenro said.

He stated that developing agriculture is very critical in the country’s efforts to diversify, which he said can only be achieved when heavy investments are made in infrastructures.

Investments in t h e c o u n t r y ’s p r i m a r y agricultural infrastructures will help integrate poorer sections of the population into a sustainable process of economic growth and development, experts say.

In turn, this will reduce poverty by providing jobs, directly and indirectly, that will serve as a stimulus to the economy and the agricultural sector.

Security crisis Apart from the impact of Boko Haram in the NorthEast, which has displaced t h o u s a n d s o f a g ra r i a n c o m m u n i t i e s, f a r m i n g activities have also come under threat in the middle belt region and other regions in Nigeria due to conflicts between farmers and herdsmen.

The 2018 attacks by herdsmen in Benue, Enugu, Bayelsa, Ekiti and Adamawa among others have impeded agric output in the affected states and market development.

“The crisis has implications for the agricultural sector and employment generation. It is a major risk to the growth of the sector,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry.

“This is also a threat to raw materials for industries.

The agric sector provides the raw materials that feed on industries especially the food and beverage industries. This conflict is happening in a period of FX shortage,” said Yusuf.

Wednesday 15 January 2020

BUSINESS DAY

17

AGRIBUSINESS ag@businessdayonline.com

SmartFarm Nigeria, Psaltry International collaborate to train cassava farmers, create market access …set to cultivate 5,000 acres Josephine Okojie

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n a bid to boost cassava production in the country, SmartFarm Nigeria – an agritech company has collaborated with Psaltry International Limited to train cassava farmers on good agronomy practices and postharvest losses.

The aim of the partnership is for the cultivation of about 5, 000 acres of cassava for Psaltry International newly installed cassava processing plant.

Also, the partnership is targeted at training over 1,000 smallholder farmers and connecting them with the market for their produce, thereby impacting their livelihood positively.

“We are excited to partner with SmartFarm Nigeria to provide technolog ydriven farm-practices that will help farmers increase productivity,” Yemisi Iranloye,

CEO, Psaltry International Limited said during the signing ceremony of the Memorandum of Association (MoU).

“This partnership will improve the livelihood of farmers and increase

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yo state government has partnered with the National Horticultural Research Institute (NIHORT) to drive agricultural revolution in the state.

O j e mu y i w a O j e ku n l e, the State Commissioner for Agriculture, disclosed this while playing host to NIHORT governing board, led by its chairman Muhammad Garba.

Ojekunle stated that NIHORT has always proffered solutions to agricultural issues, adding that the present administration was ready to explore all opportunities to foster mutual collaboration and cooperation towards a successful agric policy implementation in the state.

Ojekunle said that the economy of Oyo state under the leadership of Governor Seyi Makinde placed a high priority on agricultural development as a key strategy to industrialise t h e s t a t e ’s e c o n o m y while creating jobs for the unemployed and opening up Oyo for investments.

“We are happy to declare our readiness to go into partnership with NIHORT towards fostering our desired agricultural revolution in Oyo. We recognise the impact of

into the processing and sales of the finest quality cassava derivatives such as starch, flour, and sorbitol among others, adding that SmartFarm Nigeria would provide the business 150,000metric tons of cassava

L-R: Yemisi Iranloye, CEO, Psaltry International Limited and Modupe Oyetoso, founder, SmartFarm Nigeria at the signing ceremony of the Memorandum of Association (MoU) between both companies in Ado-Awaye, Oyo state recently.

Oyo partners NIHORT on Agricultural Revolution REMI FEYISIPO, Ibadan

commercialization of Cassava in Africa,” Iranloye said.

She stated that Psaltry International is exploring every innovative approach to improve the country’s cassava value chain.

She says Psaltr y is

tubers for its new factory yearly.

Also speaking during the MoU signing, Modupe Oyetoso, founder, SmartFarm Nigeria said that there is a disconnect between smallholder farmers and large agro-processing factories needing their produce owing to issues around quality.

“Farmers produce then l o o k f o r ma rke t, w h i l e processors find it difficult to get the raw materials they need because what the farmers produce does not meet the desired quality or the volume produced is too low,” Oyetoso said.

“Our goal is to bridge this gap by leveraging on technology to organise, monitoring and empower farmers to cultivate crops that will meet the need of local processing companies so they would not have to depend on imported farm produce,” she said.

She added that Psaltry

International is committed to producing world-class finest cassava derivative and that her organisation is excited to partner with them in achieving this noble goal.

A c c o r d i n g t o h e r, S ma r t Fa r m t h rou g h i t s crow dfunding platfor m will connect farmers to finance to enable them to access key farm inputs and mechanisation services to maximise their yield per hectare.

She says that her orgainsation uses remote sensors to track crop progress throughout the farming season so that it can provide farmers with the needed advice to improve their farm efficiency and maximise the use of inputs.

Oyetoso added that investors on its platform earn as high as 40 percent by investing in a cassava farm through the SmartFarm Nigeria’s website on www. smartfarm.com.ng.

NABG, PAN, Premier Agribusiness collaborate to deepen agripreneurs capacity on business sustainability

the research institution on the nation’s economy and in sustaining the drive to banish hunger,” he said.

“It is part of the promise made by the Governor Makinde to revive the state’s economy and engage a substantial percentage of our youths in agriculture,” he further said.

“Ad e q u ate f u n d i ng o f mechanized farming is the target, it has started and we will not look back,” he added.

Ojemuyiwa declared that the present administration was on a mission to make Oyo economically strong and viable without having to depend on oil proceeds to develop its critical sectors, adding that the determination to take Oyo state to an enviable height among other states of the federation in terms of revenue and employment generation was made clear by governor Makinde from the onset.

Garba, chairman of NIHORT governing board appreciated the commissioner for receiving them on behalf of the governor and added that the visit was a courtesy call to seek ways of mutual collaboration and cooperation towards successful implementation of agricultural development in the state and by extension, Nigeria. www.businessday.ng

Josephine Okojie

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he Nigerian Agribusiness Group (NABG), Poultry Association of Nigeria ( PA N ) a n d o t h e r m a j o r stakeholders in the sector have expressed their desire to partner with the Premier Agribusiness Academy in deepening the capacity o f ag r i p re n e u r s t o g row sustainable agribusinesses.

This was made known recently at the just concluded leadership training organised

by Premier Agribusiness Academy in Lagos.

Manzo Daniel Maigari, d i re c t o r- g e n e ra l , NA B G, who was a participant at the executive programme of the institute said that the sector is not well structured and agripreneurs will require efficient leaderships training like the ones organised by the academy to make critical investment decisions that will help to scale their businesses.

Maigari applauded the quality of training and facilitators at the Premier Agribusiness Academy.

“I do not think there is any other academy providing toplevel management training like this in the sector. Premier Agribusiness Academy has come in handy to fill a gap that

no one has been able to identify let alone meet,” he said in a statement made available to BusinessDay. “The academy has created a niche for itself that nobody may be able to compete with both in terms of the quality of training and the trainer. The founder, Toromade Francis is a renowned and one of the best agribusiness experts in Nigeria,” he added.

Another participant at the training, Veronica Obatolu, executive director, Institute of Agricultural Research and Training (IAR&T) commended the academy and highlighted ways the research institute can collaborate with the school while expressing the desire to do so.

“There are so many ways our organisation can collaborate with Premier Agribusiness Academy especially in the area of value chain development,” Obatolu said.

“Our institute conducts research on various agricultural crops so there are so many ways we can collaborate in the area of livestock, processing and capacity development for farmers,” she noted.

Explaining the importance of the training programme, she noted that the training had provided her with a new perception regarding decision

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making, adding that both critical and creative thinking are to be applied to make good business decisions.

Similarly, Egbebe Godwin, chairman, PAN, Lagos State chap te r w h o wa s a l s o a participant said he is delighted to have attended because it has helped in bridging the gap between agr iculture a n d b u s i n e s s t o e n s u re the successful practices of agribusiness.

“A lot of people do not know how to bring the concept of science and business together.

They only know agriculture but there are ignorant of the business aspect of it,” he said.

Olufemi Oladunni of the Agricultural and Rural Management Training Institute (ARMTI), revealed that functioning efficiently as a chief executive requires a lot of creative and critical thinking to solve problems especially in agriculture and rural development sector of the Nigerian economy.

He expressed his intention to collaborate with the academy by introducing agribusiness components into the agricultural value chain, through the training of young members in experiential learning adding that, this knowledge will help them in delivering their mandate to the @Businessdayng

institute and country at large.

On his part, Humphrey Akanazu, country director, Rome Business School, the knowledge impacted in Premier Agribusiness Academy training are skills that can be applied in any business environment not only agriculture.

P re m i e r A g r i b u s i n e s s Academy is a school designed to bridge the gap between agriculture and business management in the Nigerian agricultural sector through quality training on human capital development, business ma nag e m e nt, ma rke t i ng and sales of agricultural products, production, logistics, distribution among others.

Speaking on the upcoming t ra i n i n g t h e m e, F ra n c i s Toromade, director-general of the academy, said that creative thinking and problem-solving skills for decision making is a course that is transforming agribusinesses in the country.

“The purpose of the course is to help participants develop their creative thinking ability and use it as a tool to effectively make excellent business and organizational decisions,” Toromade said.

Registration for another training session which is scheduled to hold 16th January 2020 in Ikeja, at Lagos Sheraton Hotels is ongoing.

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Wednesday 15 January 2020

BUSINESS DAY

BANKING Banking sector positions to explore untapped area in economy Stories by HOPE MOSES-ASHIKE

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o doubt, tough times are beckoning, but the Nigerian banks are not perturbed as they are positioning to explore the untapped areas of the economy.

One of the unexploited markets that banks are delving into is the creative industry. In October 5, 2019, President Mohammadu Buhari gave his go ahead for the reconstruction of the National Theater, Iganmu Lagos into a world class convention center , for the development of creative sector in diverse areas including entertainment, movie, music, fashion and ICT. Under the new arrangement, the national asset built in 1976 for the purpose of celebrating the Festival of Arts and Culture, FESTAC,

Uche Olowo

will be in control of the Bankers Committee and the Central Bank of Nigeria (CBN).

“The banking industry is now open to creative minds that are ready to ex-

plore untapped areas in the economy,” said Uche Olowu, president and chairman of council, Chartered Institute of Bankers of Nigeria (CIBN).

According to him, the

issue of Non-Performing Loans (NPLs) has been taken care of at the top level in the industry as there is no hiding place for serial loan defaulters.

The non-performing loans ratio dropped dramatically from 9.4 percent in August 2019 to 6.6 percent in October 2019 which is now very close to the regulatory benchmark of a 5 percent maximum.

“This has somewhat increased the confidence in the banking system despite the October 2019 marginal drop in the capital adequacy ratio to 15.3 percent from the August 2019 level of 15.8 percent. The growth in total assets by October 2019 when compared to earlier months and largely driven by growth in credit is quite remarkable as it also suggests that credit conditions especially for small and medium enterprises have responded to new Central Bank regulatory policies especially the

loan to deposit ratio and the sector targeted quantitative easing measures,” Robert Asogwa, member of the Monetary Policy committee said in his personal statment.

Olowu further stated that Nigeria’s economy would experience a gradual growth in Gross Domestic Product (GDP) as impact of agric investments begin to materialize.

The banks are determined to make profit amid challenging times of complying with some of the directives the CBN, which seems not be favourable to them.

The CBN on December 20, 2019 released two regulatory guidelines- a revised Guide to Charges by Banks, other financial and nonbank financial institutions, to replace the one issued in May 2017, and Consumer Protection Regulations to implement the principles prescribed in the Consumer Protection Framework is-

sued in November 2016.

Olowu, who spoke at the Finance Correspondents Association of Nigeria (FICAN), 2020 Economic Outlook powered by Polaris Bank Limited, in Lagos, said as soon as the economy is diversified, the country will see higher accretion to the foreign reserves and improved confidence in the economy.

He said opportunities in the agricultural sector should be explored to improve the country’s capacity to export agric products.

He said the country has so much to gain by investing in agriculture, which will boost foreign reserves.

Olowu added that access to credit is also a key factor that will lead to economic growth and development.

The CIBN president also spoke to the Federal Government’s policies in 2019, saying bankers are now deploying manpower to get highest returns.

Ecobank plans to disburse N80bn to participants in agriculture value chain

BDCs raise alarm over France involvement in Eco currency

cobank Nigeria has announced an Agriculture Businesses Finance Scheme where it plans to disburse additional loan of N70 Billion for practitioners in different value chains of Agriculture within the next two years.

The announcement is coming just as the bank is set to organise Nigeria’s biggest agribusiness and food summit in February 2020. The Agribusiness summit is part of its determination to further showcase the potentials in the agricultural sector of the nation’s economy in partnership with Vanguard newspapers, The Economic Forum Series and Nigeria Agribusiness Group (NABG).

The summit with the theme: Unlocking productivity and investment opportunities across the Agribusiness value chain is scheduled for February 13, 2020 in Lagos.

Mojisola Oguntoyinbo, head, Agribusiness, Ecobank Nigeria, said the summit is part of the bank’s continuous contribution to the growth and development of the agriculture sector of the nation’s economy. According to her, a pool of notable thought leaders and industry experts have been assembled to address

he Bureau De Change operators have raised alarm over the involvement of France in the Eco currency project, saying the Federal Government should be wary of this.

Aminu Gwadabe, president of Association of Bureaux De Change Operators of Nigeria (ABCON) gave the advice while giving a review of the Association’s Quarterly Review for the fourth quarter (Q4) of 2019.

He described the recent decision of the francophone countries to change the name of their common currency to ECO as worrisome and should be seen as an attempt by France to continue its dominant control of the Francophone West Africa country’s economies.

“Nigeria must not adopt the currency with France or Euro as the background promoters to avoid enslaving West Africa economically”.

Gwadabe said if the prime objective to facilitate cross border trade and economic development of the member states is still to be achieved, the structure of

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key and current issues in the agricultural space as it relates to current economic developments and participants will also be given the opportunity to exhibit their products and services within the agriculture value chain.

“This maiden edition of the Ecobank Agribusiness Summit is to stimulate discussions, examine critically the opportunities with the intent of unlocking the growth potentials in the entire value chain of the agric sector. The full day event will include keynote speakers, panel discussion sessions and exhibition of Agro and Agro-allied products where marketplace experience will be created for buyers and sellers to interact and make sales. Between 400 to 450 companies, regulators and other stake holders in Agric-business are expected to attend and participate at

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the event. This will create opportunity for networking among the industry players.”

She noted.

Further, Oguntoyibo noted that the Summit would amongst other things examine the potential impact of agriculture technology investment in fixing low productivity in Nigeria’s food production; how government policy, laws and regulatory framework can drive effective public private partnership; evaluate existing traditional agriculture finance models in Nigeria and the role and impact of technology enabled commodity exchange trading across the agriculture value chain, and the role of developmental partners and international agencies in driving funding and investments across the agriculture value chain.

Jude Ndu Co-Founder, the Economic Forum Series and Director, Vanguard Conferences says ‘we are delighted to be partnering with Ecobank Nigeria on the conceptualisation, strategy and execution of this high profile event in line with the Central Bank of Nigeria (CBN) agriculture policy and the Economic Recovery and Growth Plan (ERGP) of the federal Government.

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Aminu Gwadabe, ABCON president

the system must be built on fundamentals in the sub region to complete with other economic blocks.

“Government is encouraged to pursue the project with sincerity of purpose based on sound policies devoid of interference from any economic block. The Central Bank of the sub region should be independent to invest the reserves in any world currency to satisfy the interest of constituent states”.

However, ABCON has called on the Central Bank @Businessdayng

of Nigeria (CBN) to address the various factors threatening the profitability of BDC business in the country, particularly, “a market structure that exposes a BDC firm to unconventional structure, unfair competition and risk”.

Stressing that the CBN should allow BDCs to determine what to buy and sell, Gwadabe said: “Monetary authority determines the BDC firm’s buying rate, but unconcerned with open end of selling rate even though there is a cap. They should be free to determine what to buy and sell like in any market structure.

“Very clearly, the BDC firm’s selling rate is still largely determined by the parallel market rates which are higher in liquidity without any restraint from the authorities to curtail their activities.

“The firm is still largely exposed to several operations and systemic risks which require the appropriate articulation and design of structural adjustments to place the BDC firm on the right part during the new decade.”

Wednesday 15 January 2020

BUSINESS DAY

19

FINANCIAL INCLUSION

& INNOVATION

Future of payment service banks in limbo, 14 months after Stories by Endurance Okafor

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year and two months after the Central Bank of Nigeria (CBN) loosened its policy to accommodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear.

Since October 2018 when the apex bank requested that industry players should apply for the licence to operate as a Payment Service Bank (PSB), only three firms; Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB have been issued Approval-in-Principle (AIP).

Attempt by BusinessDay to get the three firms and the CBN to comememnt on the current state of the young industry was unsuccessful as they were yet to respond at the time of filling this report.

Telecommunication operators’ push to offer mobile money services in Nigeria received the official nod of the regulator, the Central Bank with the issuance of guidelines for players to apply for the licence.

A PSB license will allow the companies to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit

and prepaid cards; and operate an electronic purse or wallet.

“The roll-out of Payment Service Banks guidelines that allows licensing of telco subsidiaries is welcome and should be implemented,” International Monetary Fund (IMF) said in April 2019.

Before October 2018, only banks and licensed financial institutions were allowed to provide financial services.

Although telecom operators and other Fintech companies indicated interests to operate in the market, the CBN policy would not allow them. The regulator eventually shifted because of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access.

The apex bank has a target to ensure that 80 percent of the country’s adult population is financially included in the financial cycle by the year 2020. The CBN had in a circular on July 2018, lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy.

Not only was the country not meeting its targets, but it was also declining in growth.

For instance, while Nigeria achieved 60.3 percent in 2012, it declined to 58.4 percent in 2016 against a target of 69.5 percent translating to financial exclusion of about 41.6 percent.

The World Bank Global Findex Report 2017 estimates that of the 1.7 billion adults who are unbanked and financially excluded worldwide out of the esti-

mated world adult population of billion, Nigeria has 3.4 percent even though its population is 2.6 percent of the world population.

In a bid to grow the number of financially included people, the CBN released an exposure draft 14 months ago in which it proposed the PSB aimed at deepening financial inclusion in Nigeria.

At least 30 business names applied for registration as PSBs as of December 2018, according to data from Corporate Affairs Commission (CAC) which BusinessDay saw.

The latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning as much as 36.8 percent of adults still lack access.

Telco-led financial inclusion model in African countries has led to tremendous

progress in the number of people with access to financial services owing to the already existing large customer base of the Telcos.

Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more population numbers, remains at 1 percent owing to its bank-led model.

Ghana’s decision to have a Telco led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014.

This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent.

Ivory Coast has the fifth highest rate of mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania (32 percent), according to Brookings Institute, a Washington-based nonprofit public policy organization.

Kenya also improved to 81.6 percent financial inclusion rate in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent and South Africa increased marginally to 69.2 percent from 70.3 percent.

“It is safe to say that Nigeria is playing catch-up

when it comes to achieving inclusion and must look to learn from success stories like Ghana and Kenya if we are to achieve our goal of 80 percent inclusion by 2020,” said Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON) centered on Financial Inclusion.

Data by Nigerian Communications Commission (NCC) shows that the country’s telecommunications industry has a reach of 86 percent, and with 182.7 million customers, the industry has the single largest customer base in Nigeria.

With combine presence in 773 local government areas across Nigeria, industry players are optimistic that the Telco industry can provide access especially the hard to reach areas of the country.

The communication service providing companies in Nigeria also have about 1million nique agents already in place, selling airtime across the country, and analysts say this can quickly be converted to establish mobile money agent networks which can help reach out to the unbanked Nigerians especially those in the rural areas.

According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs).”

Nigeria rides on Fintech to secure top investment destination in Africa

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igeria was ranked the top startup investment destination in 2019, thanks to its attractive Fintech industry with raised most of the funds, an annual funding report by WeeTracker shows.

Africa’s largest economy was ranked top both for number of deals done and for their value as startup investment received grew nearly fivefold compared to 2018.

Nigeria accounted for 49.5 percent share of African venture capital in 2019, by

country. This was followed

by Kenya’s 32 percent and Egypt’s 5.9 percent.

“The bumper rounds were largely recorded in fintech with the sector dominating startup funding yet again thanks to sustained interest from global payments giants backing African fintech companies,” WeeTracker said.

In November 2019, Visa paid $200 million for a 20percent stake in Nigerian payments processor, and also Interswitch made it Africa’s first Fintech unicorn.

Nigeria and Kenya were

the continent’s top startup investment destinations, jointly accounting for 81.5 percent of investment received in 2019.

Egypt also recorded strong growth with investment more than doubling in the last year, largely thanks

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to the funding raised by Swvl, the bus hailing company, which raised $4 million in June and has also expanded across and beyond the continent.

In contrast, South Africa, typically a top startup investment destination,

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recorded decline in 2019 with both the number and value of deals dipping.

In gathering the data, WeeTracker’s used a methodology that covered private companies that raised investment to operate in Africa irrespective of where they are headquartered. It also only covered deals that were verifiable via press release, the startup or investor or regulatory filings.

New interest in African Fintech emerged from China with OPay and PalmPay, two new payments companies in Nigeria, jointly @Businessdayng

receiving over $210 million in funding predominantly from Chinese investors.

Last year, startups operating in Africa received a total of $1.3 billion in startup funding. Going by to Weetracker’s methodology, it’s the first time annual Africa-focused startup funding has crossed the $1 billion mark.

Analysis of the data revealed that the sizes of funding rounds also got bigger in 2019 as 26 deals (equaling 6% of the deals total), accounted for 83percent of total funding raised in 2019.

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Wednesday 15 January 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

LADOL boss seeks new financial regulations to drive wealth creation amaka Anagor-Ewuzie

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m y Ja d e s i m i , managing director of Lagos Deep Offshore Logistics Base (LADOL), has called for new global financial regulations to encourage investment in businesses that would create long-time as well as stable wealth for populace.

Such wealth, she stated, can be created through trading and complex financial instruments that no longer relate to the real performance of the underlying companies or assets.

“A regulatory framework would drive investment to Africa – which has both the youngest and the most locally underserved population, with vast untapped opportunities to create new products and solutions for the local market,” Jadesimi stated at the OECD Africa Forum.

According to her, countries like Nigeria are full of untapped, easily addressable business opportunities that can create new low cost, high return businesses through innovation and value-added solutions for the local market.

She noted that the companies of the future and the

most profitable companies are those that are sustainable, adding that companies that fail to embrace sustainability may soon become unviable.

She stated that success of LADOL has proven the efficacy of the United Nations Sustainable Development

Goals (SDGs), as a framework for the development of new economy businesses and for maximising local content in low income high growth countries.

The LADOL boss however cautioned that the road to sustainably industrialise Africa will be a long one but

L-R: Aisha Musa, director, Admin and Human Resources; Bashir Jamoh, executive director, Finance and Administration; Dakuku Peterside, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA); Rotimi Fashakin, executive director, Operations, and Rita Uruakpa, director, Special Duties, Reform Coordination and Technical Cooperation, at a recent press conference ahead of NIMASA’s Corporate Dinner and Awards ceremony.

SIFAX Group moves to support Nigerian farmers on export of produce amaka Anagor-Ewuzie

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IFAX Group, a conglomerate with diverse investment interests has assured Nigerian farmers of its willingness to aid the export of agricultural produce to countries of choice.

This pledge was made by the SIFAX Group management team at the just concluded ‘Meet The Farmers Conference’ held in Dubai, United Arab Emirates.

Taiwo Afolabi, Group Executive Vice Chairman, who doubles as the guest speaker at the conference, said the company has the capacity – experience, equipment and workforce, to help farmers export their goods either through the sea or air.

“SIFAX Group is your onestop export services company. We pride ourselves as one of the few companies in Nigeria with complementary logistics supply chain services for export to various parts of the world,” said Afolabi, who was represented by Mariam

that it will inevitably lead to peace and prosperity for the continent and the world.

“The first step is to get international support from governments and investors because they were companies that will create the jobs. Over time, organisations such as LADOL,

Afolabi, executive director, Compliance, SIFAX Group.

He noted that there are not many organisations in the country that offer a bouquet of services across the logistics value chain that cut across port terminal management, shipping, clearing and forwarding, warehousing, haulage, off dock services, stevedoring, aviation ground handling, passenger handling, cargo/mail handling, ramp handling, among others.

According to him, SIFAX Group is positioned to function as a one-stop multimodal company that delivers complimentary services to the delight of clients. “What that means is that whatever the logistics needs of our clients, whether basic or complex, right from the point of origin to point of delivery, we have developed the capacity to attend to such demands.

“This has given us a lot of leverage with our clients as we take the stress off them.

They just sign into our comprehensive package, instead of engaging different agencies www.businessday.ng

and companies to handle different services. This has entrenched our company in the logistics industry as a leading player,” he said.

On his part, Adekunle Oyinloye, Group Managing Director, SIFAX Group, who was one of the panelists at the conference, explained that SIFAX Group has invested in the right mix of human and equipment to meet the expectations of its clients.

“At both the seaport and airport, we have positioned the company as the first choice for all exporters in Nigeria. We have a long list of clients we service and also have exported produce to almost all countries in the world,” he said.

He stated that at the airport, SAHCO Plc has the best warehouse in West Africa and also has strong partnerships with world major international airlines while at the seaport, shipping lines from across the world such as MSC, MOL and others call the terminal which has four berths and located at Tin-Can Island.

which can support commodity focused industries will diversify and expand, and become increasingly sustainable until we reach net zero,” she said.

Ja d e si m i a l s o u rg e d Western countries to better regulate the actions of their companies and institutions in Africa – where many multinationals have been proven to instigate, promote and participate in practices that cause harm to the economies and the citizens in countries across Africa.

“In as much as we recognise threat the regulatory environment across Africa needs to improve, we should not continue to have conversations about regulation in Africa unless we also discuss how wealthier countries can better use their own laws and regulations to police the activities of their companies and representatives in Africa,” she said.

While stating that financial regulation is long overdue stating that there are trillions of dollars currently invested in low yielding assets in only 10 financial markets across the world.

She hopes to see the development of a “sustainability credit” rating – that will be universally accepted and give investors the ability to

invest in market driven business models.

This, according to her, will channel funding into new companies with the potential to transform Africa, but which could never meet today’s definitions of “bankability” as applied in Africa.

“This was critically important as none of the largest companies in the world today would exist if they had to fund their companies from inception based on high hurdles which African companies are being forced to adhere to and scale.”

On the African Continental Free Trade Agreement (ACFTA), she said that it was only good for Africa if countries in Africa insist on real local content being adhered to, meaning that “we need the products and services being traded in the Africa Free Market to be primarily if not entirely home engineered and manufactured.

“International companies can start engineering and manufacturing in Africa now, not only because they will get access to1.5 billion Africans, but also because there are local and public sector companies and facilities through which they can set-up and operate locally,” she said.

NIMASA set to honour maritime stakeholders to encourage investors amaka Anagor-Ewuzie

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he Nigerian Maritime Administration and Safety Agency (NIMASA) is set to honour stakeholders at the annual dinner and awards night scheduled to take place in Lagos on Saturday, January 18, 2020.

Dakuku Peterside, director general of NIMASA, who spoke ahead of the event, said the annual programme was to encourage industry players to keep striving to ensure global best practices in their various activities, attract more investors that will help open up the blue economy and to also ensure compliance to maritime regulations.

“Over the years, our stakeholders have made us proud and put us on our toes as there will be no NI-

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MASA without the shipping community and vice versa.

There have been times of criticisms, sanctions and enforcement; all these were geared towards ensuring the right thing is done and laid down rules and regulations are adhered to. We must, therefore, encourage more investments in the maritime sector by appreciating those who have done well,” he said.

Peterside further stated that this year’s award will focus on various categories to include; Most Compliant ISPS Offshore and Onshore Facility; Best Terminal and Jetty Operator; Best Maritime Training Institution; Best Shipping Company (Marine Environment Management).

Other categories include Overall Shipping Company; Best Cabotage Operator; Company with Largest @Businessdayng

Combined Tonnages and Best Maritime Financing Banks among other categories of awards.

He also said that the event will provide opportunities to expose both local and international stakeholders to the inherent opportunities that abound in the nation’s maritime sector.

In order to ensure transparency in the process of selection for the various award categories, the management of the Agency engaged an independent panel of judges, headed by Adebayo Sarumi, a former managing director of the Nigerian Ports Authority (NPA).

He also described the members of the independent panel of judges as persons of proven integrity and distinguished careers in their various disciplines.

Wednesday 15 January 2020

BUSINESS DAY

21

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Again, WACT successfully handles another gearless containership amaka Anagor-Ewuzie

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arely one month after handling its first gearless vessel and the largest containership to call at Onne Port, Rivers State; leading container terminal operator, West Africa Container Terminal (WACT) has handled another large gearless containership deployed by leading Far Eastern shipping line, Pacific International Lines (PIL).

Before now, only the ports in Lagos were able to handle such class of vessels in Nigeria.

The PIL gearless vessel named KOTA KAST URI with a capacity of 3,081 TEU (twenty equivalent units of containers), berthed at WACT terminal, Onne Port, Rivers State, last Wednesday.

Noah Sheriff, commercial manager of WACT, while speaking during a reception for the vessel, said the berthing of gearless containerships at the terminal supports the desire of Federal Government to open up ports outside the

L-R: Noah Sheriff, commercial manager, West Africa Container Terminal (WACT); Zaw Zaw Mvo Oo, master of the ship, and Mohammed Rezk, operations manager of WACT, onboard the PIL containership, KOTA KASTURI that berthed at WACT terminal, Onne Port, Rivers State on Wednesday.

Lagos area in order to create new opportunities and possibilities for importers and exporters in the Eastern part of Nigeria.

According to him, WACT can handle gearless and large containerships in line with modern trend due to its investment in the acquisition of two Mobile Harbor Cranes (MHCs) worth $10 million and other sophisticated cargo handling equip-

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ment worth $4 million last year.

“The significance of our ability to handle these large gearless vessels is that it is opening a new chapter for us such that in the future, more of these vessels will come to Onne. We are going to get four more cranes, so we will have six cranes here that will be able to handle such gearless vessels within the shortest vessel

turnaround time,” he said.

According to him, “Over t h e l a s t f e w y e a r s, w e reached out to the Nigerian Ports Authority (NPA) for the dredging of the channel because of increase in cargo volumes. They have been very supportive, and I believe that this year we will see dredging in Onne.

That will enable us to take up to 11.5 metres draught vessels and handle much

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larger ships.”

Sheriff said the berthing of gearless vessels at Onne port means the terminal will handle more cargos and would also bring about timely delivery of containers to consignees and subsequently to the market.

“The main value for bigger vessels calling WACT is for the benefit of our customers. At the end of the day, it is for the cargo to get to the customer’s warehouse in the fastest possible time. With zero waiting time here in Onne, the bigger vessels will give the shipping lines opportunity to come with higher volume for us to handle, while customers can pick up their cargoes in a timely manner and go to the market,” Sheriff stated.

On his part, James Joshua, East Nigeria Manager for Pacific International Lines (PIL), said the shipping line deployed the vessel to Onne because of the availability of modern cargo handling facilities at WACT and to evaluate future deployment options.

“WACT now has the kind of equipment that can handle gearless vessels.

@Businessdayng

Vessels with gear for us are only used on our rotation to West Africa and if we have to use these vessels with gear, it limits a whole lot of opportunities. So, having the kind of equipment like Mobile Harbor Cranes that can actually operate on gearless vessels opens up many more possibilities for future growth,” Joshua said.

Zaw Zaw Mvo Oo, Master of the ship, , who was on his first call to Onne Port, said, “We came from China route to Singapore to Cairo then to West Africa. First place was Lome in Togo. The second place was supposed to be Lagos, which is Apapa and Tin Can but because of the congestion, we came to Onne.”

The ship captain and other officers onboard said they were happy with the overall performance of WACT staff during the KOTA KASTURI first voyage to East Nigeria. They were particularly impressed with the professional handling and the swift turnaround of the vessel by WACT. The ship finished its discharge and loading operations on Saturday and sailed from the port.

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Wednesday 15 January 2020

BUSINESS DAY

PENSION today

In Association With

Giving payment of accrued rights a priority Paddy Ezeala, a communication and development specialist based in Abuja reviews issues around nonpayment of accrued rights, calling on government to make declare state of emergency on the problem.

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The truth of the matter is that the retirees bear the brunt of the technical hitches emanating from these delays. With the current economic challenges, it becomes inhumane to obstruct workers income in the guise of retirement

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lot of the federal government and state employees that left service about a year ago were yet to start receiving their pension payments from their Pension Fund Administrators. This was due to delay or nonpayment of their accrued rights from their employers. Some of the retirees have died without collecting their entitlements. Current workers are also not that hopeful that they would be receiving their entitlements as and when due as result of this lingering problem.

Unfortunately, this were offshoots of the old Defined Benefit Scheme, which has put much burden on the Government, while the Federal Government has continued to battle to offset the backlog of accrued rights of retired workers.

The lateness in the payment of Accrued Rights to retiring or retired workers is bringing untold hardship to retirees who have to wait for several months before accessing their entitlements.

While Accrued Rights are largely entitlement of workers before the advent of the private sector – driven Contributory Pension Scheme (CPS), its late payment by especially, the various tiers of government makes it difficult for Pension Fund Administrators to do the needful with regard to paying retirees. This is because Accrued Rights have to be lumped into Retirement Savings Accounts (RSAs) before lump sum and Programmed Withdrawals can be paid to retirees. All the workers now retiring from government establishments must have worked under both the old Defined Benefit Scheme and the new Contributory Pension Scheme. There is no doubt that the complications arising from harmonising the entitlements of this category of workers is affecting the smooth running of the new pension scheme. Those who do not understand these intricacies would conclude that the new pension is saddled with so many challenges. But it is not so.

For a proper understanding of the difficulty in which Pension Fund Administrators (PFAs) somehow find themselves, more light should be shed on Accrued Rights or Benefits. Accrued Rights is a total amount of a pension plan as on a specified

date. They are usually in agreement with the terms of the pension plan and are based on the participant’s salary package and length of service. In Nigeria, it is not different. It is a term used to describe what the Government owes its workers who have been in service before the advent of the Pension Reform Act, 2004 (Reviewed in 2014). It is recognised as an amount acknowledged through the issuance of Federal Government Retirement Benefits Bonds. When the Government employee retires, the bonds are liquidated and added to the retiree’s balance in his/her Retirement Savings Account (RSA) managed by a PFA. It is the addition of these two that makes up the retiree’s entitlement. Sometimes, the Government finds it difficult to cash back Retirement Benefits Bonds domiciled in the Central Bank.

The truth of the matter is that the retirees bear the brunt of the technical hitches emanating from these delays. With the current economic challenges, it becomes inhumane to obstruct workers income in the guise of retirement.

It should be pointed out that it is only the Federal Government and a few states

that are making efforts to offset these Accrued Rights. Many states still do not see any reason to do so. Some states have not even seen any reason to key into the CPS. In some of these states the thought of the new Contributory Pension Scheme comes to mind only when it becomes mandatory for the state to do so in order to access some financial benefits. It is only then that some state governments set up committees to assess PFAs in exercises defined by some weird criteria and extortionist propensities.

Some of these interactions have not yielded any fruits till date. The welfare of the retired workers continues to be relegated to the background.

Another bunch of retirees that have not fared any better is the workers abruptly disengaged from establishments privatized by the President Obasanjo administration.

It seems that the new investors acquired the assets and not the liabilities. While the Pension Transitional Arrangement Directorate (PTAD) has done a great job of sorting out discrepancies and resolving them and also facilitating payment of deserving retirees, many are getting too old and some others have since died leaving behind their entitlements. A typical example is the Delta Steel Company (DSC) Aladja in Delta State. The place called DSC Township in Ovwian, Aladja has become an abode of poverty and its extended consequences. “Wives have begun to run away from their husbands, children have become miscreants, poverty and sickness have eaten deep and life has come generally unbearable” said one of the former workers of DSC who craved anonymity. “PTAD has been doing a great job, but more is expected so that things don’t get out of hand.”

While accepting that the Contributory Pension Scheme is to a great extent taking care of current workers, we should not lose sight of the liabilities accumulated under the old scheme which is increasingly making life unbearable for a weak segment of our population. The situation qualifies for a national emergency. It should also be noted that paying these entitlements is altruistic and also a way of injecting liquidity into a sagging economy and stimulating productive activities. Not all those retired are tired.

IS NOW RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State.

Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@accesspfc.com Website: www.accesspfc.com

www.businessday.ng

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@Businessdayng

This section is created to increase awareness and deepen knowledge about the Contributory Pension Scheme.

If you have enquiries or contributions, send to this e-mail: accesspfcbusday@yahoo.com

Wednesday 15 January 2020

BUSINESS DAY

23

insurance today

E-mail: insurancetoday@businessdayonline.com

Finance Act 2019 relives insurers of unfair tax burden Modestus Anaesoronye

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he signing into law on Monday of the Finance Bill 2019 has brought a sigh of relive to insurance companies in Nigeria, as this has removed certain clauses in the tax law that were unfair tax burdens to their operations.

With this Bill now into law, insurance companies would be able to carry forward losses indefinitely as opposed to the 4-year restriction currently in place.

Life and non-life businesses would no longer be liable to special minimum tax provision and all wholly, exclusively, reasonably and necessarily incurred expenses will be tax deductible.

Furthermore, “taxable investment income” would be limited to “income derived from the investment of shareholders’ funds”. This seeks to clarify taxable income and limits it to income accruing to the insurance company as against income accruing to the insurance fund., according to experts analysis.

According to experts, this is game changer in ensuring the fair taxation of insurance companies.

Insurers in the course of pushing for this amendment had engaged KPMG to help resolve tax burdens placed on insurance companies operations by section 16(2) (a) of the Companies Income

Sunday Thomas, acting commissioner for Insurance

Tax Act (CITA).

This taxation analysts believed had undermined the insurance sectors capability to pay dividend to shareholders, improve profitability and achieve expected growth.

They also believe that taxation on insurance premium, commission to brokers and agents, as well as claims and management expenses amounts to multiple taxation, and lacks merit when you consider what obtains in other market.

With KPMG professional services, the industry got the listening ear of the Federal Inland Revenue Services that temporarily suspended that section of the law pending

Tope Smart, chairman NIA

before its final amendment in the new Finance BILL 2019.

Below were the relevant sessions of the tax law that were pushed for amendment.

In Section 16(2)(a) of the CITA, the profits of a life business insurance company are calculated by taking management expenses, including commission, subject to subsection (8)(b) of the Act from gross income (investment income and revaluation surplus).

For non-life businesses, section 16(1)(b) states that profits will be calculated for tax purposes by deducting the reinsurance cost and a reserve for unexpired risk

(the premium corresponding to the time period remaining on an insurance policy), subject to subsection (8)(a) of the Act from a gross premium, interest and other income receivable in Nigeria.

The relevant subsections of CITA are listed below “(8) An insurance company, other than a life insurance company, shall be allowed as deductions from its premium the following reserves for tax purposes: (a) for unexpired risks, 45 percent of the total premium in case of general insurance business other than marine insurance business and 25 percent of the total premium in case of marine cargo in-

surance; (b) for other reserves, claims and outgoings of the company an amount equal to 25 percent of the total premium, so that, after allowance under the Second Schedule to this Act as may be restricted, has been allowed for in any year of assessment, not less than amount equal to 15 percent of the total profit of the company for tax purposes.

(9) An insurance company, in respect of its life insurance business shall be allowed the following deductions from its investment incomes and other incomes: (a) an amount which makes a general reserve and fund equal to the net liabilities on policies in force at the time of an actuarial valuation; (b) an amount which is equal to 1 percent of the gross premium or 10 percent of profits (whichever is greater) to a special reserve fund and accommodation until it becomes the amount of the statutory minimum paid-up capital; (c) all normal allowable business outgoing, except that after allowing for all the outgoing and allowance under the Second Schedule to this Act as may be restricted under the provisions of this Act for any year of assessment, not less than an amount equal to 20 percent of the gross incomes shall be available as ‘total profit’ of the company for tax purposes.”

For both life and non-life insurance businesses, the basis for computing minimum tax seems punitive at 20 percent of gross income and 15 percent of total profit, correspondingly. To compound the tax burden little solace was given to the industry when they suffer losses.

A thorough review of subsection (8) in the CITA Act exposes the inadequacy of parts (a) and (b). The former imposes a limit on unexpired risk while the latter restricts the deductibility of expenses. Section 16 (9) (c), in the case of life insurance business, introduces a new basis for minimum tax. In practice, the newly introduced minimum tax usually exceeds the minimum tax provisions of section 33 in the CITA. This puts the insurance industry in an unfair situation of paying a higher minimum tax than their peers in other industries in cases when the loss or a total loss of profits result in no tax being payable, or a tax charge that amounts to less than the minimum tax.

Section 16(7) of the CITA restricts insurance companies to carrying forward tax losses for a maximum of four years. Losses that are not fully relieved after four years by an insurance company cannot be carried forward.

Companies are made to pay taxes irrespective of the losses accumulated from preceding years.

Expert highlights capacity reduction at Lloyd’s London market 2020 renewals

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illis Re, the re i n s u ra n c e arm of global insurance brokerage Willis Towers Watson, has commented on the January 2020 renewals for the Lloyd’s and London reinsurance markets, highlighting a meaningful reduction in capacity, according to reinsurance news.

Analysts at Willis Re said that this reduction in overall capacity had come as reinsurers scaled back casualty portfolios in the midst of prior year dete-

rioration.

There was also some shift in appetite from excess of loss to pro rata as reinsurers sought to catch original rate improvement, they added.

Commenting on the reduction in casualty capacity, James Kent, Global CEO at Willis Re, said that it had been “compounded

by Lloyd’s continued remedial action leading to a few syndicates not trading forward.” “Furthermore, capacity for managing general agents (MGAs) and other similar structures www.businessday.ng

requiring delegated underwriting authority, including funds at Lloyd’s capital, has been squeezed with client and risk selection paramount,” Kent explained.

Willis Re also believes that Lloyd’s remedial actions over recent years and the resulting reduction in capacity in some areas of the market are driving higher re/insurance pricing in some niche cases.

With some Lloyd’s syndicates going into run off and others taking firmer positions on rate increases, authorized capacity in the

Lloyd’s and London markets decreased.

However, analysts noted

James Kent, Global CEO at Willis Re

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that this decrease was replaced by new capital and a strong supply from existing markets.

Capacity for transactional liability (such as warranty and indemnity, tax, etc.) has similarly retracted considerably for 2020 given concerns of aggregation and price erosion.

Looking specifically at casualty business, Willis Re believes that pro-rate commission business renewal pricing was down -2 percent to flat, while loss from excess of loss business was flat to up 5 percent, @Businessdayng

and loss affected excess of loss casualty renewals at Lloyd’s were up 5 percent to 20 percent.

Willis Re previously highlighted a divergent and late January renewal season which saw some considerable price increases in certain lines of business.

Overall, it said that reinsurers had been judicial during the January 1st renewal season, resulting in significant pricing and capacity variance depending on geography, product, loss record and also individual client relationships.

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Wednesday 15 January 2020

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Insurers positive on growth, reaffirms commitment to meeting claims obligation Modestus Anaesoronye

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nsurance industry operators are positive about business prospects in the New Year, expecting that early passage of the 2020 budget will spark economic activities.

They believe that early passage of the budget as far back as December, which is unprecedented in the history of the country; portend a positive signal that economic activities will take off early in the year.

They are also optimistic that when economic activities across the sectors pick up, it will translate to insurance buying for protection and risk management.

Tope Smart, managing director/CEO, NEM Insurance Plc told Business Day during an interview, that “I believe very strongly that 2020 is going to be much better than 2019, particularly so when you look at the budget for this year that was passed in December. That has not happened in a long while, meaning that we expect activities to pick up even from January.”

“Of course, where the economy is doing well definitely insurance will also do well. So basically, I expect that insurance will ride on the activities in the economy and do much better than it did the previous year.”

Smart, who is also chairman of the Nigerian Insurers Association (NIA) assured insurance consumers of the commitment of the

L-R: Adelodun Olaiya, chairman Meristem Trustees; Sulaiman Adedokun, managing director Meristem Wealth Management; Mubo Olasoko managing director, Meristem Registrars and Probate Management Services; S.I.C Okoli, celebrant and board member, Meristem Securities Limited; Ngozi Okoli, celebrant’s wife; Wole Abegunde, group managing director, Meristem Securities Limited during a breakfast party hosted by Meristem Securities Limited to celebrate S.I.C Okoli’s 80th birthday in Lagos.

industry to continue to meet their claims obligations.

“The assurance we are given to insurance consumers is that they should place their confidence on the insurance industry, and we are assuring them that they should take up policy with any licensed insurance company and that their obligations will be met.”

For the players, he noted that a lot of initiatives were ongoing which is intended to increase market penetration.

“There are so many initiatives we are doing at the NIA, we expect that all the players will come together and join hands to deepen

penetration of insurance in Nigeria.”

We also expect that that our members take advantage of the opportunities that will be coming up from the different sectors of the economy through early release of funds in the 2020 budget to increase penetration, Smart said.

Edwin Igbiti, managing director/CEO, Niger Insurance Plc said the early implementation of the 2020 budget will impact the economy and insurance can benefit.

He said, fortunately for the insurance industry, we are no longer in the era of receivables; it is now cash and carry. So, early implementation of the budget

means there will be early release of funds, and this will impact on all the sectors and trickle down to insurance.”

Igbiti however noted the importance of government realizing the role of insurance in achieving economic growth and project executions, stating that insurance is catalyst for economic growth.

“Construction works can go on without interruption because insurance will guarantee funding and completion of project on agreed time.

Government should hand over this to insurance, then go and sleep. This situation of repair one road today, nest year the

same road will not come to play because there is always an agreement.”

He noted that ‘Construction All Risks’ takes care of that agreement. Premium is paid and adequate cover is given, and when things go wrong insurance bears the liability. By so doing, insurance will be working, and the economy will be growing.

He also called on insurance underwriters to do more by developing skills to the level of paying claims promptly, stating that this will energize the people and they can tell one another that insurance is paying claims.

Daniel Braie, managing director/CEO, Linkage

Assurance Plc expects that insurance should be given its right of place in the economic plans of government.

“I expect government to understand that every sector has their role to play in terms of contribution to economic growth, and that is what applies in other climes, as they respect the importance of the insurance sector.”

“I expect that government having spent money to build infrastructure, should transfer the risks to the insurance companies and once they do that, if anything happens, the insurers will be there to pay. But if government spends money to provide infrastructure and don’t insure it, it means that if anything happens, they will deep hands into tax payers money to fund such repairs and that in itself is an economic waste, as such monies should have been used to do some other things.”

But on whether insurance has played its role effectively in the economy he said, we have not yet scratched the surface looking at the level of penetration.

“In terms of the role insurance is suppose to play in the economy, we are yet to scratch the surface as the penetration level is still below one percent.

Don’t forget that the foreign insurance companies that have come into our market are seeing that space and that is why they are coming. They are looking at our population demographics, Braie said.

NCRIB canvasses need for insurance, commends support for Akesan Market fire victims

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he Nigerian Council of Registered Insurance Brokers (NCRIB) has bemoaned the fire disaster that ravaged Akesan Market, (Oja Akesan) in Oyo town, where properties worth millions of naira were destroyed.

T h e Co u n c i l c o m -

m e n d e d t h e p ro m i s e made by the State Governor, Seyi Makinde to provide succor to the victims of the incident, as well as the promise to provide firefighting equipment to forestall a repeat of such ugly incidents Bola Onigbogi, NCRIB president, who stated this, www.businessday.ng

decried the spate of incessant fire disasters in the country, noting that such occurrences were preventable by government than those often concerned.

She used the forum to underscore the pivotal place of insurance in disasters management in the country.

According to her, risks are part of the inevitable circumstances of life which effect could be better managed by engaging insurance as it is practiced in advance countries of the world.

However, Onigbogi noted that to maximize the value of insurance, the

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best option for existing and potential clients was to engage the services of insurance brokers who are in the position to advise clients on best possible type and rate of insurance as well as assist them to make their claims when a loss occurs.

She called on govern@Businessdayng

ment to always embrace insurance for effective prudential management and to assist the citizens by shifting the burden of compensation to insurers when loses occur to them as against government attitude of giving succor to the victims which in most cases may be inadequate.

Wednesday 15 January 2020

Harvard Business Review

BUSINESS DAY

25

MANAGEMENTDIGEST

Why boards should worry about executives’ off-the-job behavior DUIs, TRAFFIC TICKETS AND OTHER FACTORS CAN RAISE ON-THE-JOB RISKS. n the mid 2000s the United States was reeling from a wave of corporate scandals: Think of WorldCom, Enron, Tyco and AIG. For Aiyesha Dey, then an assistant professor of accounting at the University of Chicago, those episodes fueled a question: Did leaders’ lifestyles affect outcomes for their firms, and if so, how? “There were all these articles about how executives at those companies were throwing parties for millions of dollars,” Dey recalls. So she and colleagues embarked on a series of studies linking leaders’ off-the-job behavior with their actions at work.

In deciding what behaviors to focus on, the researchers drew on findings in psychology and criminology. They settled on two: a propensity to break the law, which is tied to an overall lack of self-control and a disregard for rules, and materialism, which is associated with an insensitivity to how one’s actions affect others and the environment.

Across four studies, Dey — now an associate professor at Harvard Business School — and her co-authors examined correlations between one or both of those behaviors and five on-the-job issues.

Dey and her co-authors found that materialistic CEOs took more risks: Their institutions had higher outstanding loans, more noninterest income (which could reflect greater trading activity) and more mortgage-backed securities (known for their riskiness) as a proportion of assets. Using a standard index composed of factors such as whether the firm had a chief risk officer, they found that banks helmed by materialistic CEOs had weaker risk management than others. And cultural indicators, such as whether other executives in the firm reaped abnormally high returns from trades during the Great Recession’s bank bailouts, indicated that materialistic CEOs were likelier than others to run loose ships in this regard, too.

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INSIDER TRADING In their most recent paper, the researchers looked at whether executives’ personal legal records — everything from traffic tickets to driving under the influence and assault — had any relation to their tendency to execute trades on the basis of confidential inside information.

Using U.S. federal and state crime databases, criminal background checks and private investigators, they identified firms that had simultaneously employed at least one executive with a record and at least one without a record during the period from 1986 to 2017. This yielded a sample of nearly 1,500 executives, including 503 CEOs. Examining executive trades of company stock, they found that those

were more profitable for executives with a record than for others, suggesting that the former had made use of privileged information. The effect was greatest among executives with multiple offenses and those with serious violations (anything worse than a traffic ticket).

Could governance measures curb such activity?

Many firms have “blackout” policies to deter improper trading. Because the existence of those policies is hard to determine (few companies publish data on them), the researchers used a common proxy: whether the bulk of trades by a firm’s officers occurred within 21 days after an earnings announcement (generally considered an allowable window). They compared the trades of executives with a record at companies with and without blackout policies, with sobering results: Although the policies mitigated abnormally profitable trades among traffic violators, they had no effect on the trades of serious offenders.

The latter were likelier than others to trade during blackouts and to miss SEC reporting deadlines. They were also likelier to buy or sell before major announcements, such as of earnings or M&A, and in the three years before their companies went bankrupt — www.businessday.ng

evidence similarly suggesting they had profited from inside information. “While strong governance can discipline minor offenders, it appears to be largely ineffective for executives with more-serious criminal infractions,” the researchers write.

All this led Dey and her co-authors to wonder: Why do boards hire — or fail to fire — executives who have broken the law? To that end, they more closely analyzed the CEOs in their sample. It didn’t appear that companies where the CEO had a record had fewer independent directors, or that the directors had legal records themselves.

Nor did those CEOs generate superior returns. Noting that most committed their first offense after taking office, Dey says, “It could be they’re not monitored as much if they came up from within the firm and are doing an OK job — not better than average, but not worse.” In informal conversations, some senior executives and directors told her, “I don’t care what they did, especially if it was a long time ago.”

FRAUDULENT REPORTING In an earlier study, Dey and her co-authors identified 109 firms that had submitted fraudulent financial statements to the Securities

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and Exchange Commission.

Comparing those companies’ CEOs with the heads of comparable firms that had clean reporting slates, they found that far more leaders in the fraud group had a legal record: 20.2%, versus just 4.6% of those in the control group.

FIRMWIDE REPORTING RISK The same study looked at whether executives other than the CEO submitted fraudulent financial statements or made unintentional reporting errors. It turned out that CEOs’ legal histories had no effect on this measure — but their materialism did. Leaders with lavish personal consumption habits (the researchers used property and tax records to identify CEOs who, relative to their peers, owned unusually expensive homes, cars or boats) ran lax operations in which reporting errors of both kinds were prevalent. This often worsened during their tenures, as they made cultural changes associated with higher fraud risk: appointing materialistic chief financial officers, increasing equity-based incentives and relaxing board monitoring.

A PROPENSITY TO TAKE CHANCES In a study focused on banks,

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CORPORATE SOCIAL RESPONSIBILITY Psychologists have shown that people who prioritize material goods are less concerned about others and less likely to engage in environmentally responsible behaviors. The researchers expected this to be true of materialistic CEOs, and they were right: Those leaders got lower overall CSR scores than other chief executives and had fewer CSR strengths and more weaknesses.

The researchers hope their findings will alert boards to the perils of ignoring red flags raised by executives’ lifestyles — and of trusting that governance mechanisms will avert any potential problems. “Prior researchers have assumed that deterrence policies will have the same effect on all executives in a firm,” Dey says, but this work shows that individuals have very different appetites for taking chances and breaking rules. “Simply having governance structures in place may not be enough.

One size does not fit all, even within the same firm.” She and her co-authors recognize that their work has looked only at downsides and that these executives might also bring unusual strengths to the table — a topic they are investigating in their current research.

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Wednesday 15 January 2020

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Future of smartphones impact on automotive industry Cloud, Amazon, Microsoft Corp computing giants in collaborative push

MIKE OCHONMA

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MIKE OCHONMA Transport Editor

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ith emerging technological innovations feuling challenges as well as creating opportunities for multiple streams of income, few technology companies are presently transforming smartphones and into continuous fountains of revenue. Today these big technogy companies are increasing collaborating with automakers to do the same thing for that car you drive.

With the widespread rollout of autonomous vehicles still years away, two industries are forming strategic alliances on the idea of cars providing services and features delivered over the same wireless data networks used by smart phones.

Cloud computing giants Amazon. com Inc (AMZN.O) and Microsoft Corp (MSFT.O) are currently on the forefront, chasing the opportunity to manage torrents of data flowing to and from connected vehicles.

Both auto and technology companies used the just concluded big CES technology show to showcase their determination to make the vision of vehicles as connected revenue machines a reality.

With all these ongoing inventions, there is no doubt that, those services such as streaming video, vehicle performance upgrades including dashboard commerce could answer a pressing need for automakers.

They need to learn how to milk their hardware for revenue long after vehicles roll off dealers’ lots, with technology companies seeing cars and the time people spend in them as a new frontier for growth.

For Mark Reuss, president, General Motors Co (GM.N), the opportunities to generate revenue after a vehicle is sold is absolutely huge by providing streamed services and over-the-air upgrades facilitated by GM’s new high-capacity onboard electrical system.

More crucial to this develop-

ment is that, the pivot comes at a time when global automakers are looking for fresh revenue sources as sales slow and as rising costs to comply with tougher emissions standards threaten profit margins.

In 2019, shares of legacy automakers such as Ford Motor Co and GM badly lagged broader market indexes. The contrast is Tesla Inc (TSLA.O), whose market cap for the first time exceeded Ford and GM’s combined market values.

Tesla pioneered the model for charging for over-the-air upgrades, now asking customers to pay $6,000 to turn on the full self-driving option. Other automakers are eager to try their hand at turning cars into upgradeable, revenue-generating gadgets.

Chinese carmaker Byton’s new M-Byte sedan features a 48-inch screen as a dashboard, as well as a steering-wheel display and a digital tablet for passengers. When parked, the car can be an office, enabling video conference calls, or a roadside cinema.

BMW (BMWG.DE) showed at its CES display a concept of its future interior with reclining lounge chairs and a windshield with augmented reality built in to annotate the road ahead.

BMW executive Klaus Froehlich

told Reuters the automaker is seeking approval from the National Highway Traffic Safety Administration to get U.S. approval for the seats, but could not say when they would appear in production.

Checks also reveal that tech companies and suppliers are working towards accelerating the transformation of vehicles into subscription bundle-ready machines by helping automakers sort out the tangle of computer chips that make most current vehicles difficult or impossible to upgrade over the air.

Glen De Vos, chief technology officer of auto supplier Aptiv plc (APTV.N) said the current crazy cover of vehicle processors “is not cost effective, and it is hard to get (vehicles) developed and launched so that everything works all the time,”. Aptiv solution is a new Smart Vehicle Architecture that consolidates most computerized functions.

While AWS announced at CES a partnership with BlackBerry to develop a new software platform for connected vehicles, other technology firms like Harman, a unit of Samsung Electronics Co Ltd (005930.KS), is also pushing a similar digital platform to control the flow of data in and out of the car.

A centralized system the Dinesh

Etihad Airways, Sixt sign airport chauffeur deal

Paliwal chief executive said would help protect the car against hackers, who would have only one way in rather than dozens.

Harman, which supplies some of the technology that automakers including Tesla use to deliver the over-the-air upgrades, plans to sell its new vehicle computing brain with cybersecurity features builtin but some car buyers will have to pay to turn it on.

Qualcomm Inc (QCOM.O), which already provides the cellular modem chips that allow vehicles to connect to the internet, introduced a more comprehensive computing system that can manage in-vehicle entertainment and help the car drive itself.

One element is a much easier way for automakers and their partners to deliver feature upgrades, such as unlocking a better sound system already built into the car.

NXP Semiconductors (NXPI.O) is working on a chip that would serve as a gateway between the car and the cloud, to help automakers cope with the massive amounts of data that sensors and digital cockpits will create. That data has to be stored and managed, and that’s where cloud computing providers such as Amazon Web Services come in.

tihad Airways and Sixt, an international mobility service provider, have announced a new partnership to provide airport transfers to passengers globally.

With this new strategic thinking, customers can now book the extra transfer service online for their flight via the Etihad website immediately after purchasing their airline ticket or even up to one hour in advance.

The new service covers various car categories from limousines to SUVs - all operated by professional chauffeurs. Jamal Al Awadhi, Etihad Airways vice president product and guest experience, said: “It is important that our renowned Etihad experience exists across the entire customer journey.

“This new service enhancement provides a seamless transportation experience for our guests from their home to the airport and then upon arrival at their destination.”

Etihad is the national airline of the United Arab Emirates and is considered the World’s Leading Airline in first class service by voters at the World Travel Awards.

“Our companies are not only two strong brands in the travel and tourism industry, we also operate globally across Africa, Asia, Australia, Europe, the Middle East and North America.” Said Vinzenz Pflanz, president corporate sales, Sixt, Sixt offers a unique, integrated range of mobility services in the areas of car rental, car sharing and ride services. For Sixt, there are over one million trained drivers worldwide ready to pick you up from the airport and provide safe transports. It is considered the World’s Leading Business Car Rental Company at the World Travel Awards.

Hyundai presents Smart Mobility Solution at CES The company will also accelerate the implementation of its brand vision ‘Progress for Humanity’ and transform itself into a ‘Smart Mobility Solution Provider’.

Working closely together, UAM, PBV and Hub play key roles in vitalizing

MIKE OCHONMA

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yundai Motor Company has unveiled at CES 2020 its innovative vision for urban mobility to help vitalize humancentered future cities.

To realize the vision, Hyundai Motor showcased three mobility solutions, comprising Urban Air Mobility (UAM), Purpose Built Vehicle (PBV) and Hub, a place for mobility transfer and community activities.

Based on these mobility solutions, the Korean automaker aims to free future cities and people from

constraints of time and space and allow them to create more value in their lives. www.businessday.ng

human-centered future cities and enriching people’s lives.

UAM connects the sky and the

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ground, while PBV links people to people on the road. These two smart mobility solutions connect at the Hub, which will be installed across future cities to form a mobility ecosystem.

With this smart mobility vision built around the UAM-PBV-Hub network, Hyundai has outlined its commitment to provide customers seamless mobility and a differentiated mobility experience.

The vision is also in line with the company’s mid-term innovation plan ‘Strategy 2025’ to shift to its business structures based on two pillars called ‘Smart Mobility De@Businessdayng

vice’ and ‘Smart Mobility Service’.

“For our smart mobility solutions, we considered what truly matters in cities and in people’s lives. UAM, PBV, and Hub will revitalize cities by removing urban boundaries, giving people time to pursue their goals, and creating a diverse community’’.

Our goal is to help build dynamic human-centered future cities and continue our legacy of progress for humanity. CES 2020 is just the start and we will continue to realize this vision,” said Euisun Chung, executive vice chairman of Hyundai Motor Group.

Wednesday 15 January 2020

BUSINESS DAY

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TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Cullinan SUV sales central to Rolls-Royce record year

FMoT, NRC team in China on 44 coaches acceptance test

MIKE OCHONMA Transport Editor

…Abuja-Kaduna, Lagos-Ibadan corridor to be refleeted

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hen an automaker declares that it sold just 5,152 cars total in one year, any critical industry follower might think it was a pretty tough year. But when that automaker’s vehicles’ prices start in the low $300K price range, and escalate in amounts multiple to that, it becomes much of a different story.

And that’s what luxury automaker Rolls-Royce Motor Cars did last year, with it posted a selling record of 5,152 cars to customers in over 50 countries across the globe, representing a 25 percent jump from the previous high set in 2018.

Now 25 percentage sales growth is not an insignificant figure when considering how pricey these cars can be.

It reflects the strength of the product offering balanced with the exclusivity that Rolls has cultivated over the years.

Not surprisingly, in achieving these numbers, Rolls-Royce reported sales growth in every one of its key global markets, led by North America (around a third of

the series of joint stakeholder meetings between the federal governments represented by the Federal Ministry of Transportation with its Chinese government counterpart with the China Civil Engineering & Construction Corporation (CCECC); the contractor handling the standard gauge rail projects in the Nigeria.

With Hussaini Adamu, the director of procurement in the Federal Minitsry of Transport as leader of delegation and some officials of the Nigeria Railway Corporation, the team travelled to China to finalise plans to take delivery of the said 44 coaches and wagons in other to increase the number of passengers and trip frequencies especially on Abuja-Kaduna passenger train service.

Passenger preference for the Abuja-Kaduna train service has been on the rise on the wake of reported frequent cases of kidnapping along the Abuja-Kaduna road.

The increase in number of travellers by rail with shorage of coaches has resulted to increase in train fares with ticket racketeering by the railway staff becoming an embarrassment both to the federal ministry of transportation and the management

thousands of passengers that troops out to the train station everyday.

The then 8th Senate advised the Nigeria Railway Corporation (NRC) to understudy the train fare in relations to cost with a view to reviewing the amount downward.

Members of the red chambers noted with concern, the undue pressure on the existing facilities at the Abuja-Kaduna railway line, saying most passengers turned to the train services as a safer means of transportation.

The train service which was supposed to be for the poor masses is being taken over by the elite due to insecurity on the road. This has contributed to abrupt hike in ticket fares and consequent ticket hoarding and racketeering in the system.

During his regular inspection visits on tour of the Lagos-Ibadan standard gauge rail project, Rotimi Amaechi, Nigeria’s minister of transportation has always reitetade federal government’s commitment towards injecting more coaches and improving the AbujaKaduna passenger service and completing the LagosIbadan standard gauge rail project and opens it for commercial use by April this year.

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global sales), followed by China and Europe.

In a statement, RollsRoyce’s CEO, Torsten MullerOtvos said, “While we celebrate these remarkable results, we are conscious of our key promise to our customers, to keep our brand rare and exclusive”.

Key to that growth was the debut of one of its most important vehicles: the Cullinan SUV. This posh brute was the brand’s fastest-selling new model in its history, although not without some criticism leveled by a few critics, and some of Rolls’

more traditional fans.

Rolls Royce did take a page out of every luxury automaker’s playbook and came out with an SUV, and its looks are a little controversial, but the fact that a huge part of the company’s sales growth in 2019 is due to the Cullinan speaks for itself.

In addition to the Cullinan, another key component of growth for RollsRoyce in the future will be its Black Badge line of vehicles.

The brand recognizes the key to success is going after younger affluent buyers.

The all-chrome looks and

“magic-carpet ride” nature of traditional Rolls vehicles is not the millennials’ cup of tea, so designers replaced the shiny bits with black, onyx-like materials, stiffened the suspension and upped the power, giving these cars a sportier look and feel.

Reports say, the average age of the Black Badge buyer is significantly lower than the traditional Rolls-Royce buyer. Whatever is the case, the queation remains whether Rolls Royce can keep up the sales growth and maintain that all-important exclusivity 2020.

Toyota’s ‘Hydrogen City’ eyes cutting-edge tech interaction MIKE OCHONMA

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lans are underway by Toyota to build a hydrogen-powered test city beginning next year at the base of Japan’s Mount Fuji to study the interactions of a number of cutting-edge technologies, including autonomous transportation, robotics and artificial intelligence.

The huge project, called Woven City, is being personally championed by Toyota CEO Akio Toyoda, who is currently discussing the plans with his team.

Woven City which will be roughly the size of Apple’s circular campus in Cupertino, California, is being designed by renowned Danish architect Bjarke Ingels, CEO of Bjarke Ingels Group and designer of Google’s new headquarters, 2 World Trade Center in New York City and a number of other high-profile projects globally.

The cost of the project was not revealed, but it is expected to be in the billions of dollars. Toyota says estimated 2,000 people employees and their families, retired couples,

o urgently address the lingering shortage of passenger coaches on the 186.5 kilometer AbujaKaduna standard gauge rail service and the planned commencement of full passenger service on the nearly completed Lagos-Ibadan 156.5 kilometer standard gauge rail service, a 7-man delegation from the Federal Ministry of Transportation (FMoT) and the Nigeria Railway Corporation (NRC) is due back in the country from China today at the end of a trip for the final acceptance test of 44 units of coaches and locomotives.

The visit being one in

of the Nigerian railways.

In May 2019, the Senate called on the federal government to deploy more coaches to the Abuja-Kaduna rail line with a view to ameliorating the sufferings of passengers. It also demanded for increase in frequency of the train services in order to accommodate more people as the current four trips per day were grossly inadequate.

In a motion by Ali Ndume, APC senator from Borno state, he said the insecurity on the Abuja-Kaduna road had compelled a lot of people to abandon the road and resort to following the train and noted that, the current number of coaches could not accommodate the

MIKE OCHONMA

retailers, visiting scientists and industry partners are expected to inhabit Woven City initially when completed.

“Building a complete city from the ground up, even on a small scale like this, is a unique opportunity to develop future technologies, including a digital operating system for the city’s infrastructure,” Toyoda said in a written statement. “With people, buildings and vehicles all connected and communicating with each other through data and sensors, we will be able to test connected AI technology in both the virtual and the physical realms and also maximize its potentials.” www.businessday.ng

The statement said.

Before now, Toyota has spent decades studying and promoting cutting-edge technologies in alternative energies, robotics and AI. Some of those technological advances make their way into practical applications in vehicles, such as the Toyota Mirai hydrogenpowered vehicle introduced in 2014, while other projects concentrate elsewhere.

Currently, Toyota researches and tests artificial intelligence, mobility, robotics and other technologies in labs around the world, Toyoda, the Toyota Motor Corporation chairman said.

“It occurred to us: What if

we had the opportunity to do it all in one place?” he said.

“In a real-life environment, instead of a simulated one?

This was on our mind when we were making plans to close a factory in Japan and we were wondering what to do with this soon-to-beavailable land near Mt. Fuji.”

Woven City will be built on a site Toyoda called “a prototype town of the future where people live, work, play and participate in a living laboratory.This will be a truly unique opportunity to create an entire community or city from the ground up,” he said, “and allow us to build an infrastructure of the future.”

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28

Wednesday 15 January 2020

BUSINESS DAY

INTERVIEW

‘To manage crises in Nigeria, drawn-out strategies don’t always work’ KEVIN JOHNSON-AZUARA, head, investor relations & corporate communications at Axxela Limited, a natural gas shipper on the West African Gas Pipeline (WAGP), previously worked as a journalist and PR executive in the US, and was a communications executive at Oando Plc. He shared some insights with CALEB OJEWALE on excelling as a media professional in the Nigerian landscape, describing his communication career as focused on making an impact on society. Excerpts:

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ou have spent your entire career in communications (from the US to Nigeria), so I am assuming there must have been a passion from the beginning.

What was the motivation for you?

The inclination after my first degree (in Political science) was to go straight to law school, but I was offered a scholarship within the field of communications. There were other prestigious institutions that I could have gone to but I chose to stay in my alma mater, which is Howard University. Within the sphere of communication, studying it from such a theoretical point of view, you get to know a lot from case studies, theories to go by, research papers you do and then having certain internships with leading public relations organizations such as Ogilvy and Edelman.

These experiences really brought to the fore for me, the power of communications. So, I think my education played a huge part in my practical and early experiences in the PR industry, and also pushed me along the path which I find myself on today.

After schooling in the US, you worked there briefly before coming back to Nigeria. What informed that decision?

I have always regarded myself as a Nigerian first and foremost, and I think the blend of Nigerian that I am which is Igbo and Fulani has always given me a very diverse view of things. For me I always felt that I could make a mark within the communications sphere in Nigeria.

Speaking with a lot of people there was a lot of talk around the change that we, as my generation could drive and obviously that change cannot be driven from afar. You have to be on ground and be willing to toil and do what you can, so that was how my journey to come from the US down to Nigeria started.

I was afforded the opportunity to come and work with Oando, a prestigious indigenous player in the oil and gas space. Oando is an amazing brand, a very aspirational brand for a lot of people. If I did not understand that fully prior to joining the company, when I joined the company, it definitely hit home. So it was an opportunity I couldn’t turn down or I would have questioned myself if I never accepted. So I transcended that, I accepted the opportunity and I came over to Nigeria in 2012.

Would it be fair to say the offer was probably better than anything you could have gotten in the US at the time?

It actually was not. I actually took a pay cut to come to Nigeria, but I think it was just understanding where I was at that time in my

Kevin Johnson-Azuara

life and the challenges I was willing to encounter. I wanted to take up a challenge and not have to look at myself, two to four years down the line and be like ‘I wonder if my life would have been better’.

How would you describe working as a communications person in the oil and gas industry in Nigeria?

As a professional, what do you think you were able to accomplish that other aspiring professionals can learn from?

I think the first thing before you even start to speak about accomplishments or achievements, you have to understand the traits you have to bring to the job. A part of you has to be an amazing communicator, you have to be someone that has a tremendous tenacity. What does it mean to be tenacious? Tenacious is being able to go from point A to point B with relentless strength. You just keep pushing on and you are never tired.

Even if you are tired mentally, you tell yourself you are not tired.

So being tenacious, being relentless, being resilient, I think these are some of the traits that come into play and I say these things because the oil and gas space is very unpredictable.

And the easiest example I can give is when we had the last drop in oil prices, and we saw how severely it affected not just Nigeria, but the global economic space.

The preparedness of a communications professional has to be similar to the symmetry required when preparing for surgery. This trait is required to effectively manage crisis, and to always be able to put forward an endearing message or narrative that people can always recall or remember. The underlining goal of all these is ensuring that your organisation or your brand, that is if you have reached that spectre, is easily recognizable. That the brand recall is high and the brand affinity is one that people feel deeply about.

Can you give an instance or more that you think there was something, not necessarily a scandal, but something of public concern that had to be managed and what exactly you did? Any communication strategy that stood out?

I think one scenario that is easy to address, is the idea of oil bunkering.

Usually, people within the Lagos Metropolis tend to forget that due to issues in the Niger Delta, power supply is also affected when gas supplies

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are affected and so on.

They forget that the supply of gas is only secured if we can properly secure what is going on in the Niger Delta. So we have had several occasions that we did not necessarily want to lay blame of the activities in the Delta on certain individuals. At the same time, we had to come up with a strategy to actively manage every stakeholder. From clients to regulators, even one’s employees, information is crucial but it is also sensitive at the same time and there are certain terminals that we may not be able to speak about or gas plants. For instance, once inflow is disrupted from a place, we may not get the required gas to power certain distributing companies over here (in Lagos).

We had to actively create strategies whether from a PR point of view or engaging media, and ensuring that appropriate strategies follow in telling the narrative as it should be told, not putting any spin to it (and I hate that word) but again actively engaging and telling the focal points of the story.

Using this oil bunkering for instance, which affects gas supply that in turn affects power generation, and of course the average Nigerian consumers, how were you able to tell any of those narratives?

Again, the key to doing a lot of this is engagement of the media. The more we engage the gatekeepers in this information flow, as the fourth estate, as you will in any democracy, the more we constantly engage and come up with impact figures and impact scenarios. Also, educating people internally within our organi-

“

I actually took a pay cut to come to Nigeria, but I think it was just understanding where I was at that time in my life and the challenges I was willing to encounter

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zation, so they have a firmer understanding of what they are doing on a day-to-day basis and how what they are doing is impacting what we are trying to achieve.

If there are any issues regarding supply, for instance, things we would do obviously would be to work with the sales and marketing team to get information out as quickly as possible to customers that will be immediately impacted.

It’s a thing of looking through a strategy document, understanding who your stakeholders are, what their touch points of engagement are; are these people you can easily reach via social media? Are these people you can easily reach via traditional media, whether it’s print or television?

Of course, another thing from my experience in Nigeria is that Drawnout strategies do not work. It’s very quick, very almost machinegun like.

People deal with bite-sized information. They want the information now.

The longer you dwell on that piece of information you have, you have already lost the war or battle before it already begun. The quicker you can get it out informed and impactful, the better for you, the better for the end-user, the better for everyone in general. It just sets the story straight and you are able to pinpoint it.

What would you say to the average fresh graduate or some other young person that is looking to build a career in communications and/or public relations?

I would say to whoever is trying to break in, never believe that whatever you are doing is too little. There was a time in my life literally what I was doing was consulting for people and I was well, a news editor for a politics website. That was what I was actively doing for a short period in my life.

I meet a lot of people who may be waiting for an opportunity and I ask them; so what are you doing at the moment? And they’re like, oh, I’m still trying to get into this. And I’m like, yeah, but what else, are you writing? Are you reading? What is the last book you read? A communications professional needs to know a lot of random things. That is one thing you have to understand. If you hear of Michelle Obama’s book; why are people talking about it? Don’t ask that question. You should be able to answer that question. You should have read the book, find the book, read it, read a lot.

If you don’t know a word, look it up and understand how it’s being used. Never act as if you are the smartest person around. There is already a fundamental problem if you are (always) the smartest person in a room.

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Wednesday 15 January 2020

BUSINESS DAY

FEATURE El-Rufa’i moves to put Kaduna back on Nigeria’s mega-city top league Nabilah Hassan Umar

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lobally, urban renewal has been embarked upon by public officials and private institutions to improve cities’ structures to enhance their economic, cultural and social qualities.

After the Great Depression of the 1930s, President Franklin D. Roosevelt, in trying to address the immediate economic crisis of America, came up with the urbancentered New Deal Program which used public-works jobs to reduce unemployment, stimulate local economies, and subsidize state and local relief for the unemployable poor while bringing some changes in the structure and design of the cities.

In 19th Century England, rapid industrialization of cities brought about cramped and unsanitary living conditions for the urban poor.

Therefore, the concept of urban renewal emerged as a method for social reform with the belief that better housing conditions in a city would increase the capacity to reform its residents morally and economically.

According to Business Dictionary, Urban Renewal is defined as ‘the process where an urban neighbourhood or area is improved and rehabilitated. The renewal process can include demolishing old or rundown buildings, constructing new, up-to-date housing’.

More recently, the term has also come to cover the general objectives of higher social inclusion and sustainable development. Massive investments in infrastructure and outstanding policies to maintain and sustain the investments have been the one factor that has set societies apart in terms of development.

In Nigeria, two places that come in mind, in terms of infrastructural development are Abuja, the Federal Capital Territory, and Lagos State.

In evidence in these cities are expansive road networks, modernized building structures, availability of relaxation spots, quality schools, advanced and accessible healthcare facilities and tourist attractions.

With all its reputation as the political centre of the north, Kaduna has lacked such infrastructures. Yet, the state’s population is currently approaching 10 million, with an estimated 4 million of them living in the Kaduna urban area. It is projected that by 2050, the population will rise 12.96 million based on a 3.18% growth rate, with about 7-8 million people living in the State’s urban settlements. This underscores the urgent need for a coordinated and sustainable Urban Renewal Project.

In his remarks at the Launch of the Project, on June of 2019, the

Governor, Malam Nasir Ahmad El-Rufai said: ‘The Kaduna Urban Renewal Project responds to the accelerated urbanisation of Kaduna City. Our state capital now straddles four local government areas: Kaduna North, Kaduna South, Chikun and Igabi. This metropolitan area is projected to be home to more than half of the state’s population by 2050. Kaduna Renewal seeks to make Kaduna a friendly home to its residents, a safe place to live in, equipped to support and promote the livelihoods of our citizens.’

The first phase of the Urban renewal is targeted at Kaduna metropolis, and focuses on road expansion/maintenance, housing and improved land use, mass transit, parks and recreational centres, market and neighborhood centres.

Its execution adheres strictly to the 1967 Max Locke Master Plan of Kaduna. The Urban renewal project will subsequently be extended to Kafachan and Zaria, the two other major cities in the State.

To start with, 7 new roads totalling 23.7km have been identified that will significantly have multiplier effect on housing, businesses, unity and social development. One of such new roads that stands out is the Kabala Costain Aliyu Makama road in Barnawa. The 1.4km road, which will pick up from Independence Way, will cut through Kabala Costain; cross over River Kaduna with a bridge of 230mm; and link up with Aliyu Makama road in Barnawa. The project will significantly reduce traffic across the historical Stadium roundabout - Station Market bridge.

Over the years, residents of Kaduna have had to bear with the constant time-consuming traffic on the historic River Kaduna bridge, especially during rush hours as people move to and from their places of work. The completion of this new road and bridge will provide an alternative route for residents, reducing time travel and the traffic burden on the former bridge.

Another project that will greatly improve traffic in the State when completed is the road from Rabah Road by Arewa House to the Rigasa Train station. This road will pick up from the Arewa House junction and pass through Unguwan Kanawa, to burst out on Nnamdi Azikiwe Express Way, and continue through Eye Centre resettlement layout to connect with Rigasa Train Station. Linking Eastern to Western bypass, the road will feature a flyover and underpass for maximum efficiency. The flyover will pick up from the Rabah road across the Arewa House junction and over the rail line running parallel to the road, to descending at Unguwan Kanawa. While the Underpass will pick up at the edge of NDA old site golf course, go beneath Nnamdi Azikiwe Express Way linking to the www.businessday.ng

Governor El-Rufa’i

other side of the road in Eye Centre.

Governor El-Rufa’i has shown commitment to ensuring that train commuters in Kaduna encounter as little hurdles as possible. Apart from the dualization of Rigasa road from Nnamdi Azikiwe Express Way to the train station, which was completed early 2019, he also initiated and completed the construction of a link road from the train station, to the roundabout leading to the Airport, reducing travel time and serving as an alternative route for commuters.

Similarly, a new road linking Millennium City to Yakowa Way has been highlighted for construction. This road, to be called Urban Shelter Road, will save commuters the trouble of having to return to Unguwan Rimi before going to and from the two roads. It will be a direct link for residents of Kamazo, Karji, Jan Ruwa and Unguwan Maigero to Millennium city.

Apart from the new roads being constructed, some existing roads have been penciled for dualization or other appropriate forms of improvement due to the strategic role they play to residents. A couple of them, including Katuru Road that links Isa Kaita to Rabah and Alkali roads, from Ali Akilu way to Race Course, are almost at completion stage and have been open to road users. Other roads currently undergoing dualization include Waff Road starting from NEPA round about to Essence junction (Sultan road), Yakubu Gowon Way from Leventis roundabout passing through Barau Dikko Hospital to link back to Waff Road. Other roads set for dualization include Aliyu Makama road in Barnawa, Poly road from Government House roundabout to Dutsenma road

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through Kasuwan Barci, Rabah road from Arewa House junction to Water board while the UNTL Flour Mill Nassarawa road to Western Bypass will be a 4km single lane with asphalt.

Worthy of mention also is the commencement of the conversion of the Kawo flyover bridge to a double three-lane flyover bridge with three rotaries (roundabouts) underneath. The bridge will also be extended in length to begin from Hayin Banki and end at 1 Div gate while the three rotaries will serve commuters from Hayin-Banki, Kawo and Mando each. The creation of alternate roads has already begun, to ease traffic when work begins in earnest.

Beyond road construction, other components of the urban renewal programme have been going on simultaneously. The historical Gen Hassan Usman Katsina Park is undergoing total reconstruction to give it the befitting status it deserves.

The park will house a movie theatre, a sports arcade and the zoological garden, which will be stocked with more animals. There will also be a Go-Kart track as well as three different water parks, one of which has been completed and open to the public.

The Centenary Park, named in honour of Kaduna marking 100 years, is far gone in construction and was the venue for the first ever Kaduna New year Count-down celebration, which has been termed by many as successful in enhancing unity in the State. Upon completion, the park will house a Go-Kart track, two football 5-aside pitches, an event centre and an amusement park for kids.

Construction of the Galaxy Mall, @Businessdayng

a standard shopping mall located on Waff Road, has been progressing steadily and has already attracted investors like Shoprite and leading cinema operators like Silverbird. It is set to be completed in December 2020. Through the Kaduna Markets Development Company, regular markets are also being constructed and rehabilitated across the state.

One of such is the Kasuwan Magani Market in Kajuru LGA. The overcrowded Sabon-Gari market in Zaria is to be demolished and reconstructed into a modern market capable of answering the needs of the people and ensuring their safety.

In the same vein, Murtala Square Complex has been shut down for total upgrade and rehabilitation.

The popular square, which has been a place for recreation and sporting activities, is to be upgraded, while the multipurpose indoor sports hall is also being renovated early enough for the February 2020 annual KADINVEST. Ultimately the benefits of these urban renewal projects to the people of Kaduna is immeasurable, and include job opportunities and overall economic growth, in terms of increase in the value of property and increased IGR. In the first four years of El-Rufai’s administration, he focused on creating institutions to support the urban renewal efforts. The Kaduna Investment Promotion Agency KADIPA was established to attract and create an investor -friendly environment in the State. Also established is the Kaduna Internal Revenue Service, which since its establishment has exponentially increased the State’s IGR from N800 million before the El-Rufai led administration to 44 billion in 2019.

The Kaduna Geographic Information Service, KADGIS plays a vital role in El-Rufai’s Urban Renewal vision in Kaduna. KADGIS has been mandated to digitize all land allocation services in the State, drastically curbing issues of double allocation, shady deals, and allowing land owners acquire genuine bankable documents in the easiest manner possible. Bold policies have also led to extensive reforms in the Education and Health sectors.

The task of turning Kaduna State from its static and outdated self to a progressive modernized place is no small feat, and Malam Nasir ElRufa’i seems to have held the bull by the horn.

A few years from now, Kaduna State will look nothing like its old self as the few projects mentioned here are said to be just a tip of the iceberg. Full-blown, they will result in a Kaduna of which great countrymen like Sardauna will certainly be proud of.

Nabilah wrote this from Sir Kashim Ibrahim House, Kaduna.

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‘Innovation, resilience key to consolidating leadership in Nigerian luxury space’ OBINNA EMELIKE

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xecutive director, Polo Limited, Jennifer Obayuwana, has disclosed that innovation and resilience have been the driving force for Polo’s leadership in the Nigerian luxury space.

Speaking at the Financial Times Luxury Conference in London recently, the executive director of Polo Limited expressed gratitude to the organisers of the conference for providing a platform for luxury custodians to share insights and give balanced perspective of their unique markets, especially those within the African luxury market space.

According to Jennifer, the success story of Polo Group, Nigeria’s foremost luxury company, which began the journey three decades ago into the luxury space, is one with fair share of hiccups since inception.

Despite the organisational and external challenges, which had threatened to disrupt the growth of the Polo brand within the growing Nigerian luxury market, she revealed that the innate resilience and commitment by the business drivers in fulfilling the vision of enriching lives and adding beauty to the way of life of Nigerians through premium pieces that define their persona, changed

the game within the Nigerian luxury market.

“What has given Polo an edge within the Nigerian luxury space since the 1980s, is the confidence by high-end Swiss watch making brands such as Rolex, Cartier, Piaget, Chopard and Omega, who understood the fragmented competitive environment of traders and brokers in the luxury space.

They identified with the common goal and interest shared with the Polo brand in forging strategic partnerships and focused at making luxury a way of life for Nigerians,” she explained.

Bearing in mind the everchanging consumption behaviour of Nigerians who are fashion enthusiasts and defined by the latest trends, she further stated that, “In over 34 years of operation, innovation has led the foray of the business’s strategic direction, which has been aimed at adapting to the ever changing economic landscape, increasing the market penetration drive and diversifying the unique offerings of the group in servicing the growing fashion market with the subsidiary called Polo Avenue, which attracted the partnership with international brands such as Gucci, Bottega Venetta, Valentino, Jimmy Choo, Alexander McQueen, Billionaire, among others”.

Lekoil’s shares slump on back of Qatari loan fraud STEPHEN ONYEKWELU

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hares of the exploration and production company, Lekoil Limited, resumed trading on Tuesday barely 24 hours after suspension, but its shares have taken some hits. Shares slumped by 70 percent on Tuesday in London.

The AIM-listed energy company, which Mark Simmonds, the United Kingdom’s Africa minister under David Cameron, joined as non-executive director last week, said it would be “contacting the relevant authorities” to investigate what seems to be “an attempt to defraud Lekoil.”

In a note sighted by BusinessDay the company says it is currently seeking to establish, alongside its legal counsel and nominated adviser, the full facts of the matter, and pending this clarification, the company’s ordinary shares were suspended from trading on AIM at 7.37am on January 13, 2020.

“The facility agreement can no longer be considered to be legally binding or enforceable and it should therefore be assumed that none of the funding, as set out in the announcement of 2 January 2020, will be forthcoming,” the company states.

Lekoil has also confirmed that no capital commitments

have been made based on anticipated drawdowns, and that the company will cover the cost of the site survey (estimated at $4m) on Oil Prospecting Licence (OPL) 310 as announced on January 10, 2020, from a mixture of existing cash resources and income from operations at Otakikpo.

A c c o rd i n g t o p e o p l e familiar with the matter, Lekoil’s advisers were approached on Sunday by representatives of the Qatari Investment Authority (QIA) questioning the validity of a $184 million loan agreement announced on January 2.

After investigating, the c o mp a ny c o n f i r m e d o n Tuesday that the early January loan had been entered into “by a company with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA.” The company confirmed that its financial exposure is limited to approximately $600,000 being the amounts paid in good faith as initial arrangement fees, some of which it will try to recover.

Lekoil was notified by QIA on January 12 that a different party falsely presented their credentials as QIA representatives to secure funds for the appraisal drilling and initial development programme activities on Lekoil’s Ogo field off Nigeria. www.businessday.ng

L-R: Funsho Elulade, general manager, Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA); Babajide Sanwo-Olu, governor, Lagos State, and Bisoye Coker-Odusote, deputy general manager, LASIMRA, during the Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA) Stakeholders’ Conference at The Agip Recital Hall, Muson Centre, Onikan, yesterday.

SSA’s Eurobond issuance drops 12% in 2019 amid monetary easing BUNMI BAILEY

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ub-Saharan African (SSA) economies raised fewer funds from the dollardenominated debt market in the just-concluded year 2019 amid monetary accommodation in advanced economies.

According to a report published by Lagos-based financial services company, United Capital plc, SSA economies raised $16.5 billion in 2019, representing some 12 percent decline from $18.6 billion issued in the preceding year.

The number of new issuances by South Africa, Angola, Ghana, Benin, Kenya, Ivory Coast and Mozambique dropped to seven in 2019 compared to eight issuances in 2018.

“Surprisingly, despite a

more accommodative monetary policy environment in the developed market, primary market issuance by SSA countries failed to touch 2018 levels,” the report stated.

Gbolahan Ologunro, a research analyst at Lagos-based CSL Stockbrokers, attributed the reduced Eurobond issuance among SSA nations change in monetary policy stance of US central bank which has raised bets on further downward adjustments in global interest rates.

“Emerging markets might be seeking to maximize the tapering of refinancing risk associated with Eurobonds, given the moderation in global yields. Hence they will prefer to hold off on further issuances to allow the US Fed to continue with its ‘hawkish’ rate cut will enable them to is-

sue Eurobond at a lower cost compared to 2018,” he said.

Eurobond is a special type of bond that is issued in a currency other than the issuer-country’s home currency. Since it is issued in a foreign currency and its target investors are foreigners, it is considered one way that a country can raise foreign pubic debt.

SSA countries are faced with financing challenges including the need to fund infrastructural gaps, but domestic high-interest costs are pushing the governments to look outwards to tap into lower-cost funds.

This has led to rising exposure by these countries to the financial markets of the developed economies and SSA countries seem to have positioned itself as an attrac-

tive investment destination as seen by the improving macroeconomic conditions.

In 2019, South Africa, Nigeria, Angola, Ghana, Kenya, Senegal, Ivory Coast, Mozambique, Benin and Seychelles issued $5 billion, 0, $3 billion, $3.0 billion, $2.1 billion, 0, $1.9 billion, $0.9 billion, $0.6billion and 0 respectively.

At the later part of last year, analysts had predicted that the total issuance by SSA countries by 2019-end may not surpass the all-time high of $18.6 billion seen last year.

“It may not match up to 2018 level due to factors like trade tensions which could affect investment decisions by companies,” said Tosin Ayanfulu, a fixed- income analyst at Lagos-based Zedcrest Capital.

Stakeholders task NPA, terminal operators on port efficiency to solve Apapa gridlock CHUKA UROKO

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igerian Ports Authority (NPA) and terminal port operators have been charged to improve operations at the Apapa and Tin Can Island portsinLagosasameansofsolving congestionandgridlockproblems in Apapa, Nigeria’s premier port city.Over the last five to 10 years, congestion and gridlock have becomethedefiningfeatureofApapa, making the port city a loathsome destinationwhereresidentsaresuffocating and groaning, businesses are dying, and the economy, both local and national, are bleeding.

The stakeholders, who gathered in Apapa on Tuesday for a meetingconvenedbytheNigerian Shippers Council to discuss ways to end the gridlock and restore order in Apapa, noted that though Nigerian ports generate about 70 percentofallportsrevenueinWest Africa, none of them was mentioned in a recent global maritime report on ports efficiency.

“There should be a standard operational efficiency which the

terminal operators should comply with. On their part, the operators should tell us how many trucks they can take in a day,” noted Cajetan Agu, who represented Hassan Bello, CEO of the Shippers Council.

Aguexplainedthatinefficiency inportoperationsisamajorreason trucks are all over the place on port access roads. He canvassed alliance with the Lagos State governmentforamobilecourtthatshould try traffic offenders and send them to jail if convicted.

Besides inefficient operations, the stakeholders also accused the terminal operators, especially the major ones, of exploiting importers. The specifically mentioned AP Moller which, they said, exploits Nigerians by deliberately making their equipment breakdown to slow operations.

Though Kayode Opeifa, the executive vice chairman, Presidential Task Team (PTT) on the Restoration of Order in Apapa, insisted in his presentation at the meeting that there was no gridlock in Apapa, some stakeholders

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reasoned differently.

Frank Agbogun, publisher/ CEO, BusinessDay, stated that, as a resident and business owner in Apapa, he was a major victim of Apapagridlock.Hedescribedwhat is happening in Apapa as a shame for all the stakeholders, advising that they needed to do something quickly to save the shameful situation.

The publisher noted that operational costs for businesses have skyrockedashaulagecosthasgone up by over 500 percent in the last 24 months.

“We should tell ourselves the honest truth that there is gridlock in Apapa. Let’s make no pretence about this; the media should get deeperintotheApapamess;name andshamethosebehindthemess,” Aigbogun said, calling for unity of purpose among major stakeholders in the port city.

Earlier, Funmi Olotu, the port manager at Apapa Port, who represented the NPA managing director, Hadiza Mohammed, had canvassed synergy between the terminal operators and the ports @Businessdayng

authority.

The port manager noted that there was gridlock in Apapa and condemned the activities of uniformed men and truck drivers on the roads. She pointed out that there were today such clichés as ‘flyingtrucks’and‘marchingbreak’ on the roads.

She explained that whereas uniformed men were promoting ‘flying trucks’ by driving or escorting the trucks, manufacturers’ trucks were involved in ‘marching break’, meaning that they allow other trucks to move ahead of them for a fee which, she said, was as high as N20,000 per truck. “In some cases, you see a truck driver making up to N80,000 on a single trip for marching break,” she said.

Olotu was not comfortable with the activities of government agencies, especially the Customs which also contribute to the gridlock. She did not understand why Customs should clear a consignment inside the ports only for the same Customs to stop the truck carrying the consignment at the port gate for re-examination.

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How Finance Act will help insurers take on more risk BALA AUGIE

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he new Finance Act that allows insurers carry forward their losses infinitely will enable them take on more risk and thrive amid economic lethargy.

Hitherto, companies were allowed to carry their losses for four years after which any loss recouped is deemed lapsed.

Analysts say the only thing that will stop insurers from using suchreliefisiftheydonotgenerate incomeintheforeseeableincome.

“It would help the industry because claims are taxed,” said Akinjide Orimolade, former managing director/CEO of Law Union and Rock plc.

Even if they report charges in the financial statement, they won’t recognise the expenses for tax purposes until they have actually been incurred.

If companies record more deductions than income, they can generally carry forward the write-offs they didn’t take in the form of net operating losses (NOL). They can then use those NOLs to shrink the amount of their profits, subject to tax in later years. So, even if they do not turn a profit again for years, it can hold onto the losses and deploy them later to shield those future profits from tax.

It is an incentive for insurers as government wants to encourage them to do more and take on more risk,” said Yinka Yinka Ademuwagun, research analyst - United Capital plc.

“When they were making losses they were paying taxes but not until they make the profit that losses are allowed to be recouped. It will lead to a lot tax savings for them,” said Ademu-

wagun.

Nigeria’s insurance industry is in need of reformative reforms that will help propel it to growth so that it contributes more to the economy.

The country has a penetration rate of less than 1 percent (which means less than 3m people out of a population of 200m have a cover). That compares with India (with a similar GDP with Nigeria) 3.69 percent; South Africa, 16.79 percent, and Kenya, 3 percent.

Analysts say the penetration rate may not change in long while, but operators should be more concerned about industry performance in relation to rate of growth in inflation.

They add that government needs to create an enabling environment that would attract the desired investment, and that players should explore the retail space since millions of Nigerians are locked outside the insurance net.

The industry should be growing at a fast rate of between 30 percent and 50 percent so that at the end of 10 years we have a penetration rate of 1.50 percent.

A number of insurers are trading below N0.50k par value of shares, suggesting that mergers with bigger players may be their only chance of survival.

Because insurers have weak profit, they are not able to pay bumper dividend to shareholders as investors apathy towards their shares lingers.

“That’s why the regulator has mandated that insurers shore up their capital. You need the capital to invest in technology, infrastructure, distribution, and the people that can make things happen,” said Owolabi Salam, executive director, Allianz Nigeria Insurance plc.

Profit-taking ends record 11-day rally as NSE sees first loss in 2020 SEGUN ADAMS

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nvestors took profit Tuesday ending an impressive 11-day bull-run that had marked NSE’s best start to any year since 2013, at least. The market declined 1.18 percent in the day’s trade after investors took profit on blue-chip stocks including Dangote Cement and MTN Nigeria.

The 11 trading sessions are the longest the market has consistently gained since a 16-day gaining streak in 2017.

“There was an impeding slow-down on the back of profit-taking activities. This is nothing to worry about,” said Gbolahan Ologunro, equity analyst at Lagos-based CSL Stockbrokers Limited. “The market would likely decline tomorrow and the day after, with the possibility of a bargainhunting by Friday.”

MTNN declined by 2.66 percent to N124.2 per share after a record maximum gain Monday, while Dangote Cement shed 1.16 percent to N170 a unit, with newcomer BUA also down in the day. Year’s return is now at 9.09 percent.

Tourist Company of Nigeria led the laggards in the day after the hospitality shares plunged 10 percent in the day.

NEM Insurance lost 9.69 percent, NPF Microfinance

dropped 9.56 percent, Consolidated Hallmark Insurance was down 9.52 percent, while Nigerian Breweries lost 8.83 percent on Tuesday.

Outperformers include BetaGlass, which gained almost 10 percent, C&I Leasing up 8.89 percent, EkoCorp 7.22 percent higher, while Forte Oil and Cadbury gained 5.62 percent and 5.26 percent each.

The Nigerian Stock Exchange, until Tuesday, had gained in every trading session since a late Santa-rally commenced after Boxing Day. A mix of end-of-year portfolio rebalancing, a recent rally in oil price fuelled by a US-Iran tension and early positioning in high-dividend yield stocks ahead earnings disclosure have contributed to sustaining interest in Nigerian stocks after an abysmal 2019.

With the latter driver being more influential, year’s return on Lagos bourse has remained positive with YTD crossing 10 percent by a little Monday.

Expectations, however, had been for investors to take profit, a signal that was seen in the market on Friday before bulls pushed the day’s gain to 0.07 percent, while MTNN’s resolution of a tax dispute with the Attorney General of the Federation helped the market close in the green on Monday. www.businessday.ng

‘Signing FID for $10bn NLNG Train 7 not a guarantee for take-off’ Olusola Bello

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espite signing the final investment decision (FID) for Nigeria LNG Train 7, the project still has a major hurdle to cross, as investors are demanding that the provisional letter that contains the commitment of the government that it will not tamper with the fiscal regime of the project should be backed by law.

Sources close to the project say otherinvestorsinthecompanyare apprehensive that midway into the operations of the project the governmentmayinterferewiththe fiscal regime governing it, because itmaywanttoincreasetheamount of revenue accruing to it.

To avoid this, other investors, it islearnt,furtherimpresseditonthe government that the law backing the letter of commitment should be in place by first quarter of this

year from the National Assembly, otherwise there would be no deal.

Thegovernmentcommitment tothefiscalregimeshouldbeabove 20 years, which is the usual tenure for LNG contractual agreements.

But the management of NLNG has said it is always committed to the projects.

“NLNG remains fully committed to realising the Train 7 project, which is expected to increase its productioncapacityby35%aswell as boost its competitive edge in the global LNG market.

“As part of activities leading to the FID, NLNG recently signed GasSupplyAgreementswithitsgas suppliers. Other activities leading to achieving FID are in progress.”

An oil and gas industry source told BusinessDay that the other equity shareholders in the Nigeria LNG, which has 51 percent equity in the project, took such step to forestall a situation whereby any

government could come in future and change the fiscal regime just because it needs more revenue from the project.

They cite the review of the Deep Offshore and Production SharingActbytheFederalGovernment,whichtheyclaimedwasnot fair to the companies operating under such contract in terms of returns on their investments.

The international oil companies had kicked against government signing into law the new fiscal regime governing the Deep Offshore and Production Sharing Act, saying it is not fair to them as thegovernmentwouldhavemore revenue accruing to her through the new law.

They have also said it would serveasdisincentivetoinvestment on the remaining projects that have been slated for execution in deep water A major section of the Deep

Offshore and Production Sharing Act gives incentives for deep offshore drilling to oil companies such that those drilling beyond 1000 meters paid zero percent royalty until such as time as the price of crude went beyond $20.

While the $20 benchmark has been crossed since 1993, the Federal Government failed to activate this clause resulting in substantial loss of revenue. When it decided reviewtheinvestorskickedagainst.

Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2019 would make Nigeria $1.5 billion richer by2020,accordingtoSenatepresident.

It was on account of this situation, the source notes that equity holders in Nigeria LNG are trying to avoid the same fate that befell those operating Deep Offshore andInlandBasinProductionSharing Contract.

L-R: Hassan Abdulkadir, Indomie major distributor; Abubakar Bashir Sidi, Indomie major distributor; Yusuf Zailani, deputy speaker, Kaduna State House of Assembly; Nasir Ahmad el-Rufai, governor, Kaduna State; Adesh Jain, chief operating officer, Dufil Prima Foods plc; Mohammed Dattijo, chief of staff to the governor, and Umma Aboki, executive secretary, Kaduna Investment Promotion Agency (KADIPA), during the governor’s courtesy visit to Dufil Prima Foods state of the art Factory in Kaduna.

2020 UTME: Remita recommended for JAMB ePINs purchase GBEMI FAMINU

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rospective candidates seeking admission into tertiary institutions in Nigeria can now easily purchase their Universal Tertiary Matriculation Examination (UTME) ePINs using Remita, an electronic payment platform from SystemSpecs.

This follows a recent announcement by the Joint Admissions and Matriculation Board (JAMB) of the commencement of the 2020 UTME form ePIN sales from January 13 to February 17, 2020.

To start the process, candidates are to create their profiles by sending their surname, first name and middle name (where applicable) by SMS to JAMB’s short-code - 55019.

They would thereafter receive a 10-character confirmation code on their phone.

The candidate then visits Remita website, www.remita. net and clicks ‘Buy JAMB form.’ They select ‘UTME’ and input their confirmation code and other necessary details.

Alternatively, they can complete the process by visiting JAMB’s portal where they would choose Remita as their payment option.

Thereafter, the candidate would proceed to make payment using their debit/credit card, Internet Banking, Remita partners or designated agents nationwide. Once payment is completed, PIN is delivered to the candidate’s phone number and also displayed on their Remita receipt.

“It is our desire to ensure that every candidate for the 2020 UTME has a seamless experience. To achieve this, we have provided our electronic payment system to enable them easily purchase their PIN at any time and from anywhere,” David Okeme, divisional head, Applications and Vertical Markets of SystemSpecs, said.

Remita is a leading payment platform in Nigeria that helps individuals and businesses to easily send and receive funds and also settle bills of various kinds.

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Concern grows over poor sanitation in Lagos markets JOSHUA BASSEY

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takeholders within the Lag o s env iro n ment have raised concerns over poor sanitation of markets in the state, with the wife of the governor, Ibijoke Sanwo-Olu saying wives of government officials would be drafted into cleaning the markets alongside market women and men.

In the last few months, a number of markets in the state had been shut and reopened by the state ministry of the environment/water resources, and Lagos Waste Ma n a g e m e n t Au t h o r i t y ((LAWMA) due to spill-over refuse and noncompliance with environmental laws of the state.

There are about 2,000 markets in Lagos, out of which 1,500 are said to be operating illegally. The situation is more worrying, as some of the illegal markets continue to extend their activities to major roads, @Businessdayng

thereby constituting environmental nuisance, and impeding vehicular traffic flow in Nigeria’s most populous (estimated 22 million residents) state.

The state government has, however, refrained from closing down the illegal markets due to what officials say would impact thousands of people negatively.

The consequence of the high number of markets in the commercial city is increased waste generation. It is estimated that over 12 metric tons of waste is generated in the state daily, with the markets contributing significantly to this. Stakeholders fear possible outbreak of an epidemic and other health related hazards if the situations in the markets are not arrested.

Wife of the state governor, Ibijoke Sanwo-Olu, believed that the sanitation of the markets can be better managed through collaborative efforts with all stakeholders.

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FG to engage more Reps request to suspend electricity tariff to qualified teachers - Buhari worsen power sector debt problem ... seeks to harness creative minds Tony Ailemen, Abuja

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ndications emerged on Tuesday of plans by the Federal Government to engage more qualified teachers as part of plans to narrow the teacher-to-pupils ratio across Nigeria.

Nigeria currently has about 2million registered teachers, even as education experts believe that less than 60% of the teachers have requisite qualifications to practice.

President Muhammadu Buhari, while receiving leadership of the Nigerian Union of Teachers on Tuesday, dropped hints of Federal Government’s readiness to engage more qualified teachers to increase the teacher-to-pupil ratio in the country.

This is just as the President also assured teachers that government would work to harness creative talents by increasing resources for research and development.

The President acknowledged that Nigeria had a deficit of teachers, which his administration is addressing

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through the N-Power Teach Volunteers scheme under National Social Investment Programme (NSIP).

“Almost every day, Nigerians are inventing new products or improving existing ones. It is, therefore, our collective duty to continue to encourage and cultivate these minds, by increasing resources available for research and development and improving work environment,’’ he said.

In a statement by presidential spokesman, Femi Adesina, after the closed-door meeting, the President stated that government was leveraging on the N- Power to narrow the gap in the education sector.

“We have created a dedicated platform under the National Social Investment Programme called N-Power Teach, which engages qualified graduates to man the gaps of basic education delivery in Nigeria. ‘‘These N-Power Teach Volunteers are deployed as teacher assistants in primary schools across Nigeria to support existing teachers.

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awmakers who are members of the House of Representatives Committee on Power have asked the Nigerian Electricity Regulatory Commission (NERC) to suspend any tariff increase.

This is likely to worsen the sector debt problem, analysis shows.

Aliyu Magaji, the committee chairman, told NERC to issue a directive suspending the upward review pending proper consultations on the matter.

Magaj i a l s o d i re c t e d Ahmed Abdul, acting permanent secretary, Ministry of Power, to send correspondence to relevant agencies regarding the directive.

Joy Ogaji, executive secretary, Association of Power Generation Companies, in an interview, said debts by the Nigerian Bulk Electricity Trader (NBET), who buys power from and sells to DisCos, were over N1 trillion.

DisCos, who retail electricity to households and

businesses, say rates are not cost-reflective and often remit about 30 percent of the market invoices to other operators.

In June 30, 2019, the DisCos had accumulated losses of about N1 trillion while payables to both the NBET and the Central Bank of Nigeria (CBN) and debts of their core investors to Nigerian banks used to purchase the DisCos would put their exposure to over N2 trillion.

This situation has forced the government to continue subsidising the sector through direct intervention funding, which the CBN expressed displeasure that it was not yielding desired outcomes.

However, these bailouts have not benefited both the operators and customers. A 2014 World Bank study found that the continued flow of funds from lenders to “insolvent distribution companies” reduced their willingness to make urgently-needed performance improvements.

“Unless utilities are permitted to function as commercial entities, service deliv-

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Nigeria to sign MoU with Russia on Ajaokuta Steel completion by month end MICHAEL ANI

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ig e r ia w i l l sig n a Memorandum of Understanding (MoU) with the Russian government to facilitate the completion of Ajaokuta Steel before the end of January, according to Olamilekan Adegbite, minister of Mines and Steel Development.

Speaking in an interactive session with business editors and correspondents in Lagos, Tuesday, Adegbite said the completion would be on a government-to-government basis.

The MoU, he said, was fallout from a trip made

by President Muhammadu Buhari to Russia in October last year.

“By the end of this month, an MoU with the Russian government with be signed in order to enable us complete the project,” he said.

According to the minister, part funding for the project would come from Afreximbank while the repayment would come from the Ajaokuta project when it starts operations fully.

A f re x i m b a n k w i l l b e pumping in $1 billion while the Russian government is bringing in $460 million with an interest payment less than 5 percent, the minister said.

He noted that the project would be on Built, Operate and Transfer (BoT) basis. The Russian government would complete the project, operate it for an agreed period of time and then transfer it to the Nigerian government.

On the benefit of the project, he said it would create

jobs for the country’s population and help in achieving the government’s mandate of lifting over 100 million people from poverty in 10 years.

Adegbite noted that the ministry has two mandates which is to diversify the country’s revenue source away from oil as well as create jobs for Nigerians.

To drive these mandates, he said the Buhari-led government is focusing on seven strategic minerals out of 44.

These minerals include coal, Iron Ore, Bitumen, Gold, Led, Limestone and Lead Zinc.

The ministry has also begun the collation of data on exploration activities in the industry. This data he said, would help in ensuring transparency and giving confidence for direct investment to come in.

According to him, the sector has been largely dominated by informal artisans, who carry out mining activities, without the government getting revenues from their activities, and this is hurting investment from coming into the sector.

“Everybody is aware that Nigeria is blessed with vast mineral resources but foreign direct investors are shy of coming to invest because of the risk involved as they want to be sure that when they invest, they would get the needed return,” he said.

Adebgite said in order to drive more investments in the sector, the Federal government is giving tax wavers and duty exemption for players in the industry.

https://www.facebook.com/businessdayng

ery will not get the attention necessary and the financial sustainability of utility operations will remain an afterthought, leading to periodic bailouts,” said Sheoli Pargal, economic adviser, in the World Bank Group’s South Asia Infrastructure Department, and one of report’s authors said at the time.

Nigerians often promised cheap electricity by politicians’ wince at paying for electricity seeing it as a social service. Since 2013, announcements of tariff review have spurred widespread criticism, protests and lawsuits.

But operators say current tariffs are not sustainable as all the assumptions that determine rates including inflation, gas prices, power generation capacity and exchange rates have all changed.

Cu r re n t t a r i f f s w e re agreed since 2013 when gas prices were less than $2 dollars per… and exchange rate hovered around N197/$1.

An analysis of the 2017 financial statements of 10 Nigerian power distribution companies (DisCos)

shows combined accumulated losses or retained earnings of N713.63 billion, from N288.85 billion as at December 2016.

In accounting, a firm with negative retained earnings has recorded more losses than it has made a profit since its existence.

The DisCos are yet to fully repay the loans used to buy the utilities and are unable to meter their customers, and often cite a lack of costreflective tariff as a factor in failing to fulfil their performance obligations.

Analysts call for more positive focus after the tariff review to hold DisCos accountable.

“Reviewing tariff is an important step and NERC should build on this by making sure the market is efficient,” Chuks Nwani, a Lagos-based energy lawyer, said.

While NERC’s tariff review is retroactive to cover for lack of increases for the past four years according to the terms of the Multi Year Tariff Order, the electricity pricing template in Nigeria, it is still not cost-reflective but analysts say it is a good start.

2019 Finance Bill becomes an Act of parliament

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resident Muhammadu Buhari on Monday in the StateHousesignedthe2019 Finance Bill into law. This is sequel to the passage of the Bill by the National Assembly and the subsequent forwarding of the Bill by the legislature to the President for assent.

Mr. President submitted the Finance Bill, 2019, on October 14, 2019, to accompany the 2020 Executive Budget Proposals and 2020 Appropriation Bill, which proposes to introduce tax reforms thatwillhelpGovernmentachieve itsrevenueprojectionsforthe2020 Budget (N8.155trn).

It would be recalled that President Buhari, while presenting the 2020 Appropriation Bill to the National Assembly, had also presented the Finance Bill and said: “This Finance Bill has five strategic objectives, in terms of achievingincremental,butnecessary, changes to our fiscal laws.”

“The finance bill strategic objectives include the following: Promoting fiscal equity by mitigating instances of regressive taxation (such as tax reforms for the insurance sector); Reforming domestic tax laws to align with global best practices (such as taxes of digital business and e-commerce); Introducing tax incentives for investments in infrastructure and capital markets (such as targeted incentives for real estate investment trusts (REITs) and securities lending in the capitalmarket);Supportingmicro, small and medium Enterprises (MSMEs) in line with the ease of doing business reforms such as Value Added Tax (VAT) threshold and lower company income tax (CIT)ratesforMSMEs;andraising revenues for government to fund @Businessdayng

the 2020 Budget. There is a VAT rate increase and excise duty on imported excisable goods.

Though the draft Finance Bill proposes an increase of VAT rate from five percent to 7.5 percent, it is important to note that a large sum of money realised from the taxation would rather go to the people; the States and the Local Governments Areas (LGAs) are to get 50 percent and 35 percent respectively while only 15 percent willgototheFederalGovernment.

The 2020 Finance Bill is a peoples Bill considering the expansion of VAT exemption list which includes: basic food items (agro and aqua based staple foods) such as additives, cereals, cooking oils, culinary herbs, fish of allkinds(otherthanornamented), flour and starch, fruits, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, and water; Locally manufactured sanitary towels, tuition (primary, secondary and tertiary education); and services rendered by Microfinance Banks.

In a statement issued by Femi Adesina, special adviser to the President(mediaandpublicity),it is stated that with the assent, there will be more revenue to finance key government projects, especially in the areas of health, education and critical infrastructure.

In her reaction, Minister of Finance, Budget and National Planning, Zainab Shamsuna Ahmed, commended the President for ensuring that “the strategic objectives in the finance bill recognise the crucial relationship between fiscal policy, the regulatory environment and the strong capital market we all seek to effect in Nigeria.

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Wednesday 15 January 2020

BUSINESS DAY

news Lekoil’s elaborate governance structure couldn’t save it from fraud

L-R: Frank Onyebu, chairman, Manufacturers Association of Nigeria (MAN), Apapa branch; Catejan Agu, director, consumer affairs, Nigerian Shippers’ Council; Olufunmilayo Olotu, port manager, Lagos Port complex, Nigerian Port Authority (NPA), and Kayode Opeifa, executive vice chairman, Presidential Tax Team, at the stakeholders meeting convened

by Nigerian Shippers’ Council on Apapa gridlock and restoration of order in Apapa, held in Lagos, yesterday.

Pic by Pius Okeosisi

ISAAC ANYAOGU

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ne of the justifications for governance structures within a publicly listed company is to save it from the exact situation, Le-

What N117bn infrastructure budget means to Lagos property market, economy CHUKA UROKO

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ut of its N1.169 trillion 2020 budget, Lagos State government will be spending N117.248 billion on roads and infrastructure. This is the secondhighest allocation in the budget after Education, which received N136.100 billion.

The pride of place given to this sector in the budget tagged ‘Budget of Awakening’ underscores the importance the state has attached to critical infrastructure which, at the moment, is in a dire situation in the state in particular and in Nigeria as a whole.

A Nigerian Infrastructure Master Plan (NIMP) estimate shows that the country has an infrastructure deficit valued at $3 trillion, requiring about N100 billion annual investments for the next 30 years to bridge.

An analysis of the Lagos 2020 budget which comprises N711 billion for capital expenditure and N457.5 billion for recurrent expenditure, giving a 61:39 capital to recurrent expenditure ratio shows that infrastructure represents about 10 percent of the total budget and 16 percent of total capital expenditure.

This, experts say, is a good development, not

only for the state’s property market, but also for its economy as they see growth, improved homeownership level and increased revenue for the state.

“If budget discipline is anything to go by and the present administration chooses to be disciplined in implementing the 2020 budget, the upside will be an upward review of property prices which will, in turn, generate more income for the government by way of internally generated revenue (IGR),” said Olisa Ebigwei, CEO, Soe Properties, a Lagosbased real estate investment company.

Damola Akinsulire,

managing director, Alpha Mead Development Company, agrees, adding that the state’s decision to spend N117 billion on infrastructure means a deliberate plan to decongest certain locations and open up new town development opportunities.

“This means improving the transit premium of these locations and making them attractive for real estate investment. So, in the short term, I see an increase in demand for land assets in key locations witnessing major infrastructure development,” he said.

When in 2009 the state government decided to Continues on page 38

Mobile transfer volumes surge by 463% in 2019 as more Nigerians go digital … cheque volumes reduces by 13.3 % BUNMI BAILEY

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ore Nigerians are emb ra c i ng t h e convenience of using smartphones for mobile money transfers as it rose by 463 percent in the full year of 2019, a BusinessDay analysis shows.

According of data obtained from the Nigeria Interbank Settlement System (NIBSS) released Tuesday, the volume of transactions (transfers) via mobile devices rose to 41.1 million in 2019 from 7.3 million in 2018.

Also, the value of mobile transfers rose by 184.1 percent from N291.6 billion in 2018 to N828.3 billion in 2019.

“It is an indication of the growth in terms of mobile subscription and the usage of smartphones, because mobile transfers are

done either through USSD codes or mobile apps,” Ibrahim Tajudeem, head of research, Chapel Hill Denham, said.

“Also, it means that Nigerians are increasing embracing convenience of banking with mobile devices and I expect this to improve in the medium and long term partially given the convenience that it brings in terms of bank transactions,” Tajudeem further said.

Nigeria has the largest mobile market in Africa with over 172 million mobile subscribers in 2018, accounting to a penetration rate of 87 percent of its population and represented a 6.4 percent growth increase, compared to 162 million subscribers in 2017, according to a report released by Jumia, Africa’s online retailer.

Also from Jumia, at end www.businessday.ng

of 2018, there were over 36 million smartphone users, representing a penetration of 18.37 percent year-onyear. The availability of lower-price point phones still remains the major driver of smartphone penetration.

The increased penetration or use of mobile banking had an impact on the volume of bank cheques as it reduced by 13.3 percent to 7.8 million in 2019 from 9.0 million in its previous year.

Damilola Adewale, a Lagos-based economist and independent consultant, said, “Consumers are finding it easier, faster and more convenient to do transfers than cheques.

Second, it’s a sign that financial inclusion is improving and more people now access financial services at the comfort of their phones. I expect this to

further increase in 2020 on reduction in bank charges for electronic transfer mandated by Central Bank of Nigeria (CBN).”

The CBN has been intensifying its efforts to ensure financial inclusion of Nigerians. Last year, the apex bank moved the financial inclusion target from 80 percent in 2020 to 95 percent in 2024.

Also, Nigerian banks are trying to catch up with their counterparts in other parts of Africa in the provision of online and mobile banking facilities as part of efforts to deepen financial inclusion in Africa’s most populous country. Banks also have cut the cost per a mobile money transaction to N52.50 per transfer, down from N100.

According to Ayodele

•Continues online at www.businessday.ng

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ence covering oil and gas sector, legal and financial services Olalekan Akinyanmi, the company’s CEO, for example, has over 20 years’ experience in the oil and gas industry, including six years spent at Al-

Analysis

koil, one of Nigeria’s local oil company found itself – avoiding being scammed.

Details regarding how the London Stock Exchange listed company was separated from $600,000 of its funds remain sketchy, but this development callsintoquestionthecompany’s elaborate governance system administered by the board.

Governance is board function “The Board will meet regularly and be responsible for strategy, performance, approval of any major capital expenditure and the framework of internal controls,” the company states on its website.

Lekoil’s Board makes decisions on matters relating to major capital expenditure, management structure and appointments, strategic and policy considerations, corporate transactions and finance.

The company’s Board is composedofseasonedbusiness people with a range of experi-

lianceBernstein L.P. in New York,

a research analyst and portfolio manager covering Energy and Materials worldwide.

Akinyanmi has held senior positions at UBS Investment Research and has been involved in successfully negotiating and raising the first round of equity capital for the company’s operations.

According to the company, its Board meets monthly and approves any major capital expenditure and the framework of internal controls and company’s performance. It also adopts and reviews comprehensive annual budget for the group and examines monthly results against the budget and monitors deviations.

The Board also maintains and identifies major business risks faced by the Group and determinestheappropriatecourses of action to manage them.

Since a system of internal financial control can only pro-

Continues on page 35

Insurers play cautious on intake of new annuities as risks become weighty …PenCom, NAICOM review regulations to protect subscribers …as insurers receive N353.69bn from CPS annuity Modestus Anaesoronye

I

nsurance companies involved in managing annuity policies as provided in the Pension Reform Act 2004, as amended in 2014, are playing cautious on intake of new businesses as a result of rising risk profile.

BusinessDay findings show that the cautious game is coming on the heels of increasing lifespan of subscribers, falling returns on investment instruments including bond yields and treasury bills, as well as shortage of longterm instruments to invest the funds.

According to some players, when people who retire at age 50 or more now live for extra 40 years, it means a lot of pressure will mount on annuity managers, who now must make sure these risks are properly managed to save the managing institutions as well as being able to meet payment obligations to subscribers.

Annuity for Life Policy is a retirement instrument option for retiring employee offered by a Life Insur@Businessdayng

ance Company licensed by the National Insurance Commission (NAICOM).

Annuity for life, as it is popularly called, is a type of annuity contract that provides, in return for a lump sum, a monthly or quarterly payment starting immediately after retirement and continuing for the rest of the retiree’s life.

The contract is often purchase by retiring persons who want an income that is guaranteed to last for the rest of their lives, no matter how long that might be.

S. 7 (1a) Pension Reform Act 2014 states that: “An employee on retirement shall procure Annuity for Life Policy or Programmed Withdrawal.” The lump sum for the procurement of Annuity for Life Policy or Programmed withdrawal must have been accumulated through series of employer/employee contributions into the Retirement Savings Account of the retiring employee throughout his/her working career.

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Wednesday 15 January 2020

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news Supreme Court declares APC-Uzodinma...

Continued from page 1

In his place, the apex

court ordered that Hope Uzodinma candidate of the All Progressive Party (APC) be immediately sworn in as the duly elected governor of the state.

In a landmark judgment delivered by Justice Kudirat Kekere-Ekun, the apex court agreed that results in 388 polling units were unlawful excluded during the collation of the final governorship election result in Imo. Justice Kekere-Ekun said with the addition of the result from the 388 polling units, the APC governorship candidate polled majority lawful vote and ought to have been declared winner of the election by the Independent National Electoral Commission (INEC).

Consequently, Justice Kekere-Ekun in the unanimous judgment voided and set aside the unlawful declaration of lhedioha as the winner of the 2019 governorship election.

The court ordered that the certificate of return wrongly issued to lhedioha be immediately withdrawn by INEC and a fresh one issued to Uzodinma as the elected governor.

Justice Kekere-Ekun in the judgment set aside the judgment of the state elections petition tribunal and that of the Court of Appeal, both of which had refused to recognised and accept the votes of the 388 polling units as being unlawfully excluded in the general collation.

Uzodinma and APC had in their appeal pleaded with the apex court to review the judgment of the two lower courts against them and restore their victory in the March 9 governorship election.

It was a total confusion in the state as the entrance gate to the Imo State Government House Owerri was immediately locked, as the news filtered into state. There is uneasy calm in Owerri and other parts of state, as Imolites are yet to come to terms with the Supreme Court judgment.

Emmanuel Eke, a civil servant, observed that the development would drag Imo backwards.

According to Eke, Ihedioha won the last election, which all Imolites acknowledged, “How can a candidate, who came fourth in an election be declared winner. Supreme Court needs to explain to Nigerians how they arrived at their decision.”

For Uwakwe Okoro, a retired civil servant, “This decision of the Supreme Court is not good for Imo people.

They want to remove a governor that has remembered pensioners.”

Meanwhile, the PDP said the judgment was a very sad commentary on the nation’s democratic order.

The party through its National Publicity Secretary, Kola Ologbondiyan, said in a statement, “The party finds it difficult to understand how Senator Hope Uzodinma/ APC, who came 4th in the March 9, 2019 governorship election, with just 96,458

votes, will suddenly, by the token of the judgment of the Supreme Court, defeat Governor Emeka Ihedioha/PDP that scored 276,404 votes.”

The PDP stated it was at lost and that most Nigerians do not understand the basis upon which the Supreme Court arrived at its decision.

“The party says it is lamentable that the destiny of the people of Imo state is being taken from the governor they chose and voted for and handed over to individuals and a political party that do not have their blessing and mandate and which they rejected at the election.

“The people of Imo state are now confronted with the challenge of having a government that they cannot identify with and which cannot connect with them, having not emanated from them.

“Moreover, all the gains, including the development and stability already achieved by the people-based government, under Governor Emeka Ihedioha/PDP administration in the state are now heavily jeopardised,” it said.

According to Femi Fani Kayode tweet, “Would someone please explain to me how a candidate that came 4th in the election suddenly became the winner? The Supreme Court has a lot of explaining to do! The people of Imo did not deserve this nonsense!”

From INEC results, PDP: Emeka Ihedioha 273,404; AA: Uche Nwosu 190,364; APGA: Ifeanyi Araraume 114,676; APC: Hope Uzodinma 96,458, and YPP: Ikedi Ohakim 527.

Furthermore, the candidate of Action Alliance (AA) and son in-law to former state governor, Rochas Okorocha, Tuesday, lost his bid to upturn the election of Imo State governor, Emeka Ihedioha.

This is as the Supreme Court struck out his appeal on the ground that he was not qualified in the first place to contest the election.

Chief Justice of Nigeria, Ibrahim Tanko Mohammad, the presiding Justice of a seven member panel sitting in the appeal in Abuja, struck out the appeal following an oral application for withdrawal by counsel to Nwosu and his party, AA, Solomon Umoh.

Nwosu and his party are among three candidates in the March 2019 governorship election in the state, seeking the nullification of Ihedioha’s election on allegations of malpractices and non-compliance with the electoral laws.

However, when the matter was called, counsel to the appeallants, Umoh informed the court that based on the decision of the apex court delivered on December 20, 2019, to the extent that Nwosu was not qualified to participate in the governorship election in the state, he advised them that the appeal be withdrawn.

Umoh accordingly moved to withdraw the appeal. It was not opposed by respondents in the appeal.

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

L- R: Chichi Emenike, financial secretary, NGA/head of Gas, NECONDE; Dada Thomas, NGA council member/CEO, Frontier Oil; Timipre Sylva, minister of state for petroleum resources; Audrey Joe-Ezigbo, president, Nigerian Gas Association/co-founder and executive director, Falcon Corporation, and Ed Ubong, NGA council member/MD, Shell Nigeria Gas (SNG), at an NGA meeting with minister of petroleum resources in Abuja.

Here’s what Nigeria can learn from world...

Continued from page 1

shed $4.5 billion in 2019 alone, sliding 10 percent to $38.6 billion in December 2019 from $43 billion in January 2019.

The decline was due to increased interventions by the CBN in the foreign exchange market.

External reserves have continued to fall this year and at $38.2 billion are now

within $8 billion of the level where the CBN Governor Godwin Emefiele said last year that he may be forced to pull the plugs on the naira.

Although Emefiele also said it will take a $45 per barrel oil price to get to that point.

Though oil prices have been closer to $65 per barrel this year, the threat of a devaluation is dominating boardroom discussions.

The naira has shed 125 percent in the past five years, causing untold hardship for Nigerians who have had to balance rising inflation with shrinking incomes.

Egypt’s bold reform path continues to cast an uncomfortable spotlight on Nigeria with Egypt looking the country to have made the winning call when both nations were

faced with tricky paths in 2016.

Egypt opted to float its currency while Nigeria dithered.

But it’s Egypt that has killed off speculations over currency devaluation, something that still trends in Nigeria.

The matter here is less of whether the naira should have been floated in 2016 but more of Nigeria taking a longer term view with its monetary policy, rather than going with a short-term fix that still displays considerable loopholes three years later.

“The lesson is not much about whether Nigeria should have floated its currency or not like Egypt did but that we should have taken a long-term approach to our monetary policy like Egypt,” one investment banker told Business Day. “We have given investors the room to doubt if we know what we are doing with the currency and the possibility of a devaluation this year is one of those symptoms that no one has long-term confidence in what we are doing,” the investment banker who did not want to be quoted to speak freely said.

Nigeria’s problems stretch beyond functional monetary policies to the lack of sustainable fiscal policies.

Egypt’s currency floatation

Lekoil’s elaborate governance structure...

Continued from page 34

vide reasonable, not absolute, assurance against material misstatement or loss, the Board regularly reviews the system of internal financial control operated by the company.

According to regulatory announcement on January 13, the fraud was brought to the attention of the company

by Qatar Investment Authority who came to confirm the details of the loan with the company.

Why corporate governance failed Analysts wonder why such an elaborate system couldn’t carry out a careful due diligence on a company purported to be assisting the

group procure a loan.

“When engaging consultants, a company conducts due diligence on their track record, find out about similar projects and even confirm that these projects were satisfactorily completed. It is not clear how much of this was done,” says Chuks Nwani, a Lagos-based energy lawyer.

Lekoil Limited through its subsidiary Lekoil 310 engaged Seawave Invest Limited to arrange $184 million financing for the development of Ogo fields, but it is unclear how thorough the due diligence conducted had been.

“Lekoil’s due diligence on the parties involved in the Transaction included, inter alia, meetings with individu-

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was backed with reforms that included the gradual phasing out of energy and petrol subsidies and incentivising private investment.

In Nigeria’s case, nearly a trillion naira was spent in 2019 alone on an expensive petrol subsidy while schools, roads and hospitals decay.

“Nigeria’s problem is bigger than our exchange rate policy, it’s the fiscal policy makers that need to pull their weight,” said Ayodeji Ebo, managing director at Lagosbased investment bank, Afrinvest Securities Ltd. “Egypt’s success is not hinged on floating the pound alone but implementing economic reforms that opened up the economy to FDI. While Egypt is phasing out subsidies, we are digging ourselves deeper into it which is inimical to the economy,” Ebo added.

Not only has the Egyptian pound turned the corner after weakening to as much as 30 pounds per dollar after the float in 2016, inflation rate has collapsed and businesses are heaving a sigh of relief after pain.

When Cairo followed up its floatation of the Egyptian pound by raising taxes almost immediately, it sparked runaway inflation, the very problem the Nigerian monetary authorities were trying to

avoid when the central bank kept the naira pegged to the dollar at the official window.

But today, inflation in Egypt is lower than Nigeria’s.

Egypt’s annual consumer price inflation rate rose to 7.1 percent in December 2019, the highest since August, from 3.6 percent in November.

Inflation in Egypt has stayed within single digits since June 2019.

In Nigeria, however, inflation probably touched 12 percent in December 2019 from 11.85 percent in November.

“Another lesson to be learnt here for Nigeria is the need to implement big ticket economic reforms that will spur confidence in the economy and the naira,” one business leader with knowledge of the matter said on condition of anonymity.

The source however admits that the political cost of non-populist reforms like an upward review in electricity tariffs and petrol prices make it difficult for the government to go the route of bold reforms.

There was little opposition in Egypt when the currency was devalued, because they practise a dictatorial system of government, the source said. “So it’s not entirely the same as Nigeria, but that is no excuse for government to drag on reforms.”

als who, the Company now understands falsely presented their credentials as QIA representatives and interaction with individuals purporting to be carrying out legal and technical due diligence on behalf of the QIA (again, falsely).

“In addition, at the behest of the Company’s Non-Executive Directors, a third party due diligence report, based predominately on open source information, was commissioned by Lekoil on Seawave Invest Limited (“Seawave”) in its capacity as introduceroftheCounterparties and lead adviser to the Company in relation to the Facility Agreement. In addition to the work of its in-house specialists, Lekoilalsosoughtadvice inrelation to the Transaction from its retained UK legal counsel,” the company states.

The company further notes: “Lekoil is urgently seeking to establish, alongside its legal counsel and Nominated Adviser, the full facts of this matter, and pending this clarification, the Company has requested that its ordinary shares be suspended from trading on AIM with immediate effect,” after paying $600,000 as initial arrangement fee to Seawave.

Nwani also says most companies pay “very limited upfront fees” at this stage of an arrangement.

Nigerian companies including banks have often failed to institute strong governance structures, which have led founders raid the corporate till when they feel an itch.

@Businessdayng

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Wednesday 15 January 2020

BUSINESS DAY

news

Commission to engage HMOs, others as Edo health insurance scheme kicks off

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s the Governor Godwin Obaseki-led administration kicks off the Edo State Health Insurance Scheme, the state’s health insurance commission has opened application for qualified Health Management Organisations (HMOs) and Health Care Providers to partner the Commission in providing quality and affordable health care services for residents in the state.

In a statement, directorgeneral of the Edo State Health Insurance Commission, Rock Amegor, reassured residents of the commitment of the state government in ensuring an allinclusive access to responsive, affordable and efficient health services.

The Edo State Health Insurance Scheme, pioneered by the Governor Obaseki-led administration is targeted at attaining Universal Health Coverage (UHC) under the Edo Healthcare Improvement Programme (EdoHIP), a holistic framework to overhaul and improve healthcare services in public health institu-

tions, as well as guarantee access to affordable and quality healthcare services across the state.

According to Amegor, vacancies exist for HMOs that will be responsible for risk management, enrolment administration, claims processing and administration, as well as the provision of payment administration for the ongoing health insurance scheme in the state.

He said for health care providers, applicants can apply as primary health care providers, responsible primary health care services provision and referral to Secondary Health care; Secondary health care provider, responsible for Secondary health care services provision; Pharmaceutical services, responsible for the provision of safe and effective quality medicines; Diagnostics Medical Laboratory services, responsible for General Medical laboratory services including Haematological services provision ; and Radiological services responsible for X-rays, Ultrasound, MRI Services etc.

According to the statement,

“Applying HMOs must have accreditation from National Health Insurance Scheme (NHIS) and regional accreditation for SouthSouth or Local accreditation for Edo State; physical office space(s) in Edo State; at least 4 departments in their Edo State office including, finance, health services, quality assurance and standards, human resources and administration and information and communications technology; vehicles for operations, and office in the Local Government Area where HMO intends to operate.”

It also noted that Health Care Providers must be accredited

by Edo State Ministry of Health and registered with their various Councils.

It added, “Applicants are to pick up forms at Health and Managed Care Association of Nigeria (HMCAN) office in Lagos or the reception of the Benin office, while completed form are to be submitted at the Edo State Health Insurance Commission, Edo Specialist Hospital, Plot 2, Sapele Road, Benin City.”

Measure SDG, not GDP to improve healthcare delivery, PwC tells Lagos ANTHONIA OBOKOH

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s Lagos State seeks to improve healthcare delivery outcomes, Andrew S. Nevin, Partner and Chief Economist, Pricewaterhousecoopers (PwC) Nigeria, has advised that the state should measure more on Sustainable Developmental Goals (SDGs), not Gross Domestic Product (GDP).

Lagos is doing well with GDP figure but performing poorly in SDG metrics, Nevin said in a presentation as the keynote speaker on economy, human development index and big tech changes for deepening technology and impact healthcare ecosystems in Lagos and across Nigeria.

SDGs are 17 goals set by the UN to be achieved across the globe by year 2030 in the world’s search for real development and include an end to absolute poverty, eradication of hunger and equal education.

“The large economic size of Lagos is not applaudable if it does

not reflect improved welfare of an average resident of the state, adjudging by the discrepancy between the prevailing level of human development and SDG,” Nevin declared at the Lagos State three-day eHealth conference holding from 14th- 16th January.

The conference is focusing on the future of healthcare delivery in Lagos and ways in which digitalisation will impact the technology-driven health service.

Also speaking at the conference, Akin Abayomi, commissioner of health, Lagos State, gave an overview of the sector saying that 66 percent of Lagosians stay in shanty environment and need to be planned for.

“We are experiencing importation of massive population in the state because it is an attraction due to it opportunities, but we have severe shortage of human resources for facilities and our population is doubling.”

“We are far away from international bench mark for health.

We still lack infrastructure and in-

adequate power supply is quickly overwhelmed and no sustainable data,” he said.

According to Abayomi, the world is going through the Fourth Industrial Revolution, the hallmark is data. “We are converting issues to data and data to discovery,” he said, noting that genetic composition is based on data, which are to generate a discovery on effective healthcare.

Meanwhile, Nevin says that it is not possible to deliver healthcare effectively in Lagos without eHealth solution which would combine the following technologies: blockchain, drones, artificial intelligence, and internet of things, virtual reality, robotics, animated reality, and 3D printing.

“Health system should implement technology in commitment towards improving health outcomes. No matter the support you give to a State, if you are unable to implement technology, you won’t go far,” said Njide Ndili, PharmAccess Nigeria’s Country Director.

RMB optimistic on Nigeria’s debt sector DAVID IBIDAPO

… says there is room for growth

igeria’s debt capital markets are proving resilient in a challenging environment. Confidence building over the last few years and strong market liquidity has resulted in noteworthy transactions from previouslyunrepresentedsectors.

However, there is still a lot of room for growth.

This was reinforced at the Fourth Annual Bonds, Loans and Sukuk programme, the country’s only credit market event featuring various issuers, investors, regulators and business leaders, which was held recently in Lagos and sponsored by Rand Merchant Bank (RMB).

RMB recognises the importance of sponsoring these pro-

grammes, not just within Nigeria but in other parts of the world in order to bring thought leaders together to debate the current state of the Debt Capital Markets and how solutions that would catalyse development and deepen the markets thereby leading to further sustainable growth can be proffered.

Speaking at the event, deputy CEO and head, Investment Banking, RMB Nigeria, Dalu Ajene, said the Nigerian Debt Capital Markets remained burgeoning as investors continue to show interest in many sectors, such as power, telecommunications and financial services.

Ajene explained: “Nigeria’s debt capital markets proved resil-

N

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ient in a challenging environment over the past year as noteworthy transactions have contributed to the steady development of the Nigerian market.”

RMB, he said, would continue playing an important role as an intermediary in the debt capital markets and as a facilitator of transactions by working closely with issuers,investorsaswellasregulators.

Senior transactor, DFG, RMB Nigeria, Ikechukwu Omeruah, said: “The Annual Bonds and LoansSukukConferenceprovides an avenue for all stakeholders of the debt markets – issuers, borrowers, advisers, investors, lenders, and regulators to meet and discuss ways we can further develop our markets. https://www.facebook.com/businessdayng

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Wednesday 15 January 2020

BUSINESS DAY

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Wednesday 15 January 2020

BUSINESS DAY

POLITICS & POLICY

50 years after, has Nigeria learnt any lessons from the civil war?

Innocent Odoh, Abuja

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omorrow the Nigerian government will mark the Armed Forces Remembrance Day to commemorate the sacrifices of the military to peace, unity and stability of the nation.

This year’s celebration also coincides with the 50th anniversary of the end of the Nigerian Civil war otherwise known as the Biafra war. This ended precisely on January 15, 1970, when the instruments of surrender were officially received by the government of General Yakubu Gowon, the then Nigerian military head of state.

The fratricidal war, which cost about two-and-half million lives and property worth billions, was caused by a chain of events. The most prominent triggers of the war were the January 15, 1966 coup and the counter coup of July 29, 1966.

Following the ethnic tension, power struggle, rancor and violence that rocked post-independence Nigeria, group of young army officers mostly of Igbo extraction, led by Chukwuma Nzeogwu, a major in the army, who thought they had answers to the myriad of crises, staged a coup on January 15, 1966 and destroyed the First Republic.

Nzeogwu and his men killed the then Prime Minister, Abubakar Tafawa Balewa; the powerful Premier of the Northern Region, Sir Ahmadu Bello; Premier of the Western Region, Samuel Akintola and other prominent people mostly of northern extraction including senior army officers.

The fall out of this coup angered elements in the north as they felt shortchanged that most of the per-

petrators of the coup were Igbo while their victims were mostly non-Igbo especially northerners. This caused bitter feelings, suspicions and the desired for revenge.

The coup was wrongly interpreted as an Igbo attempt to seize power and dominate the rest of the country. The counter coup then followed as the northern army officers staged their own coup on July 29, 1966 and carried out a purge of Igbo officers in the army beginning with the killing of Igbo head of state, Aguiyi Ironsi, who had taken over as the military head of state after the collapse of the First Republic.

The crisis deteriorated further as innocent Igbo civilians living in the north were also targeted and killed in their thousands by northern mobs. This pogrom threatened the Igbo and other easterners and they moved in large numbers back to the east their traditional homeland as the government of Yakubu Gowon, who took over after Ironsi was killed, appeared to have failed to provide security for them.

Gowon also disagreed on several issues with the Eastern regional governor, Emeka Ojukwu. The issues were later taken to Aburi in Ghana, where agreements were reached by Gowon and Ojukwu. But on their return to Nigeria both men subjected the agreement to different interpretations and the stage for war was set. On May 30 1967, Ojukwu, probably fearing more massacre of Easterners, announced that the Eastern region had seceded from Nigeria. Gowon then vowed that no part of Nigeria shall be allowed to secede; he declared war to bring back the east to the country. The war started on July 6, 1967 and ended on

Muhammadu Buhari

January 15, 1970.

But fifty years after the war, questions are being asked if the right lessons were learnt from the tragedy.

Speaking to BusinessDay on Tuesday, public affairs analyst, Katch Ononuju, said Nigeria has not learnt anything from the war. “All across the world after every war historically the people will sit down to look at the remote and primary causes of the war and try to mitigate a recurrence but Nigeria did not,” he said. He added that the triple “Rs” of Reconstruction, Reconciliation and Rehabilitation initiated

by General Gowon after the war did not work, alleging that the money was not spent in the war-ravaged eastern region dominated by the Igbo.

“The reconstruction money was not spent in the east. The money was used to rebuild Lagos and when the reconstruction started happening outside the east, easterners started leaving

the east to the other areas where the reconstruction happened. As for the reconciliation, the defeated people were forced to toe the line of government,” he said, stressing that there was no rehabilitation.

He also alleged that the government of President Muhammadu Buhari has also divided the people of Nigeria with alleged nepotism and lopsided appointments, giving his Fulani ethnic group a clear advantage which he warned may force other groups to realign against the Fulani, which has a potential threat to the unity of the country.

When reminded that Nigeria achieved some success in the war at least by sticking together as a nation, he said “Staying together and you don’t progress it does not make sense. Staying together became a strategy to mitigate the progress of people. “If you stay together not based on merit you cannot progress, why should staying

together not bring progress?

“How come all the things we use to have before we don’t have them anymore, Nigerian Shipping Line, Nigerian Airways, Unity Schools, they were all destroyed,” he said.

In one of his articles, former Governor of the old Anambra State, the late Christian Onoh, lamented that Nigeria should have been greater in science and technology if only they imbibed the technological achievements of the Biafra side during the war. He regretted that Nigeria destroyed what would have been an opportunity to put the country on the map of technology.

“At the end of the World War 2, the British and Americans were scrambling for the scientist in Germany. It was these scientists that develop the atom bomb. When the Nigerian civil war ended instead of Nigeria adopting the same system, they proceeded to destroy everything that is related to the Igboman. We produced Ogbunigwe, they destroyed it, Uli airport, was destroyed; everything the Research and Production (RAP) Biafra produced they destroyed,” he said.

Despite the bitter experience of the war, the issues that led to the war are still very much alive. Ethnic tensions, religious crisis rancorous politics have led to death of many and heightened divisions across the country. The Boko Haram menace, which had succeeded the multiple religious crises in the north, coupled with the rampaging activities of the Fulani herdsmen have aggravated insecurity in the country and deepened bitterness and divisions.

This development prompted some prominent

leaders to converge in Lagos for ‘Never Again Conference 2020’ organized by Igbo think-tank, Nzuko Umunna, and Ndigbo Lagos, in collaboration with civil society organisations.

In a video message, Gowon was among those who warned leaders to take measures to forestall any future war. He demanded total and patriotic commitment to Nigeria adding that leaders must ensure the wellbeing of the country in politics, economy and security. He urged citizens to reconcile their differences to avert another war.

No b e l L au re at e Wo l e Soyinka in a presentation said the tragic death of about two and a half million people in the war should provoke sober reflection. He also demanded for the entrenchment of democratic principles to forestall war.

“No nation has ever survived two civil wars. The sovereignty of the country is non-negotiable and the wisdom of not holding a banknote over a flame is not a justification to tempt fate.

We need to ask, are we being heard?” he said.

In his address, the chairman of the occasion, Prof.

Anya O. Anya, demanded that justice for all as an important principle for the nation’s survival. “A proposition could be made that we went to war because of the failure of leadership, and marginalisation. Let Nigerians eschew violence because ‘those who lead by the sword shall die by the sword’.

We haven’t learned lessons from our past. Germany fought a war and in less than 30 years after, became the strongest economy. Losing a war doesn’t mean economic backwardness,” he said.

Ogun-Lagos border towns back Isiaka’s defection to APC Iniobong Iwok

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group made up of indigenes of Ogun-Lagos State border towns has backed Gboyega Nasir Isiaka’s defection to the ruling All Progressives Congress (APC).

Isiaka, who is a threetime gubernatorial candidate in Ogun State, said his defection to the APC was to align with the Governor of the State, Dapo Abiodun

who he contested against in the 2019 gubernatorial election in the state, while working with him towards the development of the state.

Th e O G L A B O T t e a m is an independent group whose members cover several wards in seven (7) Local Government Areas with message motto centering on quality social services and expanding Ogun State economy using the close proximity of Lagos as the economic driver.

Speaking at the declarawww.businessday.ng

tion venue in Abeokuta, the coordinator of the team, Okeowo Oluwaseun Simeon who was Ogun waterside House of Assembly candidate on the African Democratic Congress (ADC) in the last general election said the action of the former gubernatorial candidate was worthy of emulation.

“This is simply an exemplary action of a great leader; real leaders must be ready to sacrifice all for the freedom of their people and the GNI I know has this

great attribute,” he said.

The group’s spokesperson, Olatuyi Alfred said the group would support Isiaka’s decision to join the APC and work with him towards moving the state forward.

According to him, “We, as a group, are loyal to the GNI political movement, and we are formally switching our political membership status to a great part, the APC, with a notion of building together the great Ogun State we all prayed for.

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“We promise to bring in our values and competencies to move the party forward while we continue to push for the infrastructural development of Ogun-Lagos border towns,” he said.

Th e n e e d t o re va mp and upgrade development a ro u n d t o w n s s u c h a s Mowe, Ibafo, Omu, Aseese, Ofada tow n, Or unkole, Arigbabuwo, Loburo, Yotomi, Magboro, Ishefu, Arepo, Abaren, Abule Oko, Adesan, Agbara, Akute, Alagbole, Aro Lambo, Ayawo@Businessdayng

Ele, Ayetoro and the rest communities and town is necessary.

“That they may enjoy full advantage of their nearness to the nation’s commercial Lagos State is important.

“Lagos being the commercial and industr ial gateway to the commercial nerve centre of Nigeria is strategically being positioned for greater opportunities in the years to come, the importance of which cannot be overemphasised,” Olatuyi said.

Wednesday 15 January 2020

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

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Here are Nigeria’s top 6 M&A deals of 2019 Stories by MICHAEL ANI

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he year 2019 saw some of the biggest Mergers and Acquisition (M&A) deals in Africa’s biggest economy, more than any year in time past.

Despite the tough time within the period following the 2019 general elections, which was a keenly contested one, it still didn’t stop major deals from falling through.

From banking to fast-moving consumer goods down to the oil and gas sector, Nigeria took centre stage to beat the record of having some of the biggest M&A deals that happened in the continent.

In this article, we note six such deals that shocked the investment landscape in Nigeria and Africa at large.

1) Coca Cola/ Chivita Soft drink giant, Coca Cola, in 2019, snapped up full ownership of Chivita. The complete takeover, came three years after Coca Cola first acquired a 40 per cent stake in the juice and snacks producing firm.

Although both parties failed to disclose the amount of the deal, sources familiar with the deal said it is worth about $500 million, making the deal the biggest in the year.

2) Access/Diamond Tier 1 lender, Access bank, in April 2019, swallowed Diamond bank in a deal estimated at $200 million.

The acquisition of the lender catapult Access bank to become the biggest bank in Nigeria by asset. The bank also occupies the space of being the largest retail bank in Africa, servicing over 29 million clients across three continents and 12 countries.

The merger which was completed three months before the anticipated deadline signified an increased market reach and customer convenience through an expanded network of over 600 branches across Nigeria with over 3, 100 ATMs complemented by the strengthened distribution

AFEX Commodities Exchange Limited (AFEX) signs investment deal for an undisclosed with Consonance Investment Managers

of world-class mobile and digital channels.

The fusion of Access Bank, leading wholesale banking business and Diamond Bank, prominent retail banking franchise, provided benefits to all stakeholders, including customers, shareholders and staff.

The bank unveiled a new logo, incorporating the defunct Diamond bank, with the slogan “tomorrow is here”.

In the new entity, customers can access more opportunities, more benefits, more products and an even stronger and faster digital platform.

Access bank is still eying to expand operations into fourth other countries in the continent this year, according to a statement by Herbert Wigwe, managing director/CEO of the bank.

“By this time next year we would probably have added about four more subsidiaries, most of them greenfield”, Wigwe said in 2019, in an investor conference

call, following the release of the company’s latest earnings report for the nine months ended September 30th, 2019 3. Olam international/ Dangote Flour Mills In November 2019, leading food and agri-business company, Olam International Company completed the acquisition of Dangote Flour Mills Plc, in a deal worth N120 billion.

The deal saw Olam snap up a 100 per cent stake of all outstanding and issued shares of Dangote Flour Mills through a Scheme of Arrangement.

Olam said then that the decision to acquire Dangote Flour Mills was part of its strategy to strengthen its portfolio after it unveiled a six-year strategic plan to invest $3.5 billion in several key business areas — including grains and animal feed — while divesting four businesses, part of the company’s 2019-24 plan.

The story currently operates

wheat milling, flour and pasta manufacturing in Nigeria and SubSharan Africa.

4) Prudent Energy/ Forte Oil In June 2019, prudent energy made plans to acquire a 74.02 per cent equity stake in Billionaire Businessman, Femi Otedola’s Forte Oil Plc downstream operations.

The deal was valued at about N64.4 billion and was necessitated after Otedola moved to divest his asset from the oil and gas sector.

5) Canal+/ Rok Studios French pay-TV group Canal+ has acquired African film and television studio ROK, marking the first international acquisition in Nigeria’s film industry, popularly known as Nollywood.

The deal was valued at $50 billion and would help in strengthening the firm’s foothold in the fastgrowing African entertainment industry.

Under the deal, Canal+ acquired ROK’s production, content distribution and publishing channels, from IROKO Ltd, Africa’s digital content distributor for Nigerian films. ROK founder Mary Njoku will continue as general director of ROK Productions.

Following the deal, ROK will produce Nollywood content for Canal+ group’s French-speaking African audience, to be distributed via IROKO’s subscription videoon-demand app.

6) Ohara Pharmaceuticals/ Fidson Healthcare Plc: A pharmaceutical firm, Fidson Healthcare Plc, in 2019, entered into a strategic partnership with Japan’s Ohara Pharmaceutical that will see the latter’s stake in the Nigerian company increase.

The deal, estimated to worth about N700 million, involves a right issue which grew Ohara’s shares in Fidson Healthcare to 21.75 per cent.

Andersen Global Strengthens Presence in Nigeria with TNP

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ndersen Global has entered into a Collaboration Agreement with Lagosbased law firm, The New Practice (TNP), increasing the global organization’s footprint in Africa and strengthening its presence in Nigeria.

Founded in 2007, TNP’s practice includes Office Managing Partner Baba Alokolaro and more than 20 legal professionals.

The firm provides a large range

of commercially oriented legal services in several disciplines including capital markets, commercial dispute resolution, corporate finance, infrastructure, construction, real estate, energy and natural resources, corporate, commercial, mergers and acquisitions, private equity, Fin Tech, technology, e-commerce and business advisory.

“We are driven by the firm belief in doing things better and

exploring new ways to deliver results and solutions to our clients, which is why we feel so strongly about our collaboration with Andersen Global,” Baba said.

“This is an opportunity for us to strengthen our service offerings and expand our global platform in a seamless manner that aligns with our firm’s values.”

Mark Vorsatz, Andersen Global Chairman and Andersen CEO, added, “This is another

strategic group that is relevant to our strategy in Africa and rounds out our platform in Nigeria. Baba and his team demonstrate our organization’s values of stewardship and transparency as well as a commitment to providing their clients with the best-in-class services. The TNP team has a close working relationship with our Andersen Tax team in Nigeria, which is instrumental as we continue our expansion in Africa.”

Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world. Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 5,000 professionals worldwide and a presence in over 166 locations through its member firms and collaborating firms.

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

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Wednesday 15 January 2020

BUSINESS DAY

tax issues Finance Bill 2019: Welcome development in Nigeria’s tax landscape Iheanyi Nwachukwu

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that the Finance Bill is welcome development in the tax landscape of Nigeria noted that its provisions have the capacity to boost the economy by stimulating the growth of small and medium scale enterprises and enticing foreign direct investment (FDI) into Nigeria.

“We urge stakeholders to be aware of the underlying challenges and procedures to counter such challenges. For example, tax authorities and relevant government parastatals may commence preparation of administrative notes, enlightenment guides, effective compliance aid and other implementation guides. As a matter of urgency, taxpayers are advised to evaluate how the Bill would impact their operations, review their tax compliance requirements and strategise for effective tax planning,” they noted.

Here are major changes captured by experts in the Finance Bill 2019.

The overlap created in commencement rule and cessation rule have now been removed hence CIT 29 (3) and (4) have been replaced. This is done to ensure that double tax is not charged on the same income due to overlapping period. Advantage of this is that a new business may pay little or no tax in the third year of business and that the right of election may not be exercised after all.

Companies are now divided into three: Small companies (less than N25million revenue, CIT is zero percent); Medium www.businessday.ng

company (between N25million and N100million revenue, CIT is 20percent); while Big company (revenue above N100million, CIT is 30percent).

Analysts see this relief given to small and medium sized companies to encourage them to come forward and disclose their revenue and enjoy the benefits. The major concern is that it may give rise for some companies who may fall into the medium scale to window dress their accounts so that they fall into the small scale business that would not be liable to tax.

Insurance businesses are now allowed to carry forward their losses indefinitely like other businesses. Previously they were allowed to carry their losses for four years only after which any losses recouped are deemed lapsed. This provision will encourage those in the insurance sector.

After tax dividends are now exempted from tax again when dividends are paid out. Previously when dividends are paid out to shareholders and these are higher than chargeable or total profits of the business, the dividend paid out was deemed to be the chargeable profit and a tax a rate of 30percent was charged. Experts noted that if dividend is a residual income available to shareholders after tax has been charged, charging tax again when the dividend was paid out amounts to charging tax on an after-tax income, thus leading to double taxation. With the new finance bill, this provision of charging tax from dividend is now removed. Minimum tax

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computation will now be based on revenue alone. It will now be charged on 0.5percent of turnover.

The revenue mentioned must be at least N25million since companies with revenue of N25million are exempted from CIT. Previously minimum tax used to be computed as follows: Higher of (a,b,c,d): (a) 0.5percent of Gross Profit; (b) 0.5percent of Net Assets; (c) 0.25percent of paid up capital; (d)

‘

Analysts see this relief given to small and medium sized companies to encourage them to come forward and disclose their revenue and enjoy the benefits

‘

resident Muhammadu Buhari on Monday January 13, 2020 assented to the Finance Bill 2019 which now makes it a law. The Bill has the following strategic objectives: promoting fiscal equity; reforming domestic tax laws to align with global best practices; introducing tax incentives for investments in infrastructure and capital markets; supporting MSMEs; and raising revenues for government.

PwC Nigeria had on Tuesday November 26, 2019 hosted over 200 business leaders with the Minister for Finance, Budget & National Planning in attendance were they discussed salient issues contained in the Bill.

Specifically, it has wider implications for taxpayers which signaling imminent changes in related tax laws. The law treats the deficiencies of major primary tax legislation having amended the obsolete and contentious provisions as suggested by the President Enabling Business Environment Council (PEBEC) and the National Tax Policy Implementation Committee.

“We commend the National Assembly and the Executive for the speedy passage of the groundbreaking Bill, which is the first of its kind since Nigeria returned to democracy in 1999. Our expectation is that the Executive will continue the practice of submitting a Finance Bill along with the Budget to the National Assembly in subsequent years in accordance with global best practice”, according to Wole Obayomi, Partner and Head of Tax, Regulatory and People Service (TRPS) Practice of KPMG in Nigeria. “We will issue our detailed publication on the Act in due course”, he said in a note following the signed Finance Bill.

Also, Yomi Olugbenro-led team of tax experts at Deloitte had in November noted key changes that the Finance Bill 2019 brings and its implications. This includes Companies Income Tax (CIT) Act, Personal Income Tax Act (PITA), Value Added Tax Act (VATA), Customs and Excise Tariffs etc (Consolidation) Act (CETCA), Capital Gains Tax (CGT) Act, Cap. C1, Laws of the Federation of Nigeria (LFN), 2004 (CGTA), Petroleum Profits Tax Act (PPTA), and Stamp Duties Act (SDA).

In the Finance Bill 2019, email communications with the tax authority is now accepted as a valid means of communication.

Deloitte experts who noted

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0.25percent of revenue; and (e) which is only for company with turnover higher than N500,000) ie 0.125percent of revenue in excess of N500,000.

Value Added Tax (VAT) rate has been increased from 5percent to 7.5percent. The items exempted from VAT are basically essential items and others listed in the VAT exemption list. Stamp duty of N50 will be applied to items that cumulatively worth N10,000 and above. Therefore it is better to buy items in bulk and pay just N50 than to split the items up, analysts noted. For example, it’s better to buy items in bulk from a supermarket at once worth N50,000 and pay just N50. Total amount paid will be N50,050. “If you were to split it up and by the items in multiple of N10,000 each purchase, it means you will have to make five different purchases of N10,000 each and pay N50 for each purchase (making it N50 x 5 times = N250). Total items payable is N50,250 when you split it,” an expert said.

“The only way to avoid the N50 POS stamp duty charge is to split up the purchase to an amount less than N10,000. Assuming you split it to a multiple of N5,000 for each purchase it will mean 10 different invoices or transactions and no N50 will be charged on the transactions.”

If company income tax is paid early (90 days before the due date for the company to pay tax or 3 months after the end of an accounting year of the company), the company gets a bonus: a. 2percent for a medium size company.

A medium size company is one with turnover of between N25million and N100million. Instead of the company paying 20percent tax rate, they get a 2percent bonus thereby paying 18percent tax rate; 1percent for any other company (big company or foreign company). They pay 29percent instead of 30percent. Recall that a small company has a 0percent rate. So no bonus is available to any of such companies. But if a small company fails to file tax returns early they pay a penalty. In order to avoid penalty, tax experts advise that all companies file before the due date. All medium and small companies are advised to file with 3 months after their account year ends to get the bonus.

Section 60 of PPT Act has been repealed or ended or removed.

Hence dividend paid out of PPT to individuals (under the PIT regime) is now subject to withholding tax (WHT). The repealed section 60 of PPT Act exempted it previously.

41 BUSINESS DAY

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Wednesday 15 January 2020

FINANCIAL TIMES

World Business Newspaper ANDREW ENGLAND, AND MICHAEL PEEL

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he UK, France and Germany have triggered a dispute mechanism in the 2015 nuclear agreement with Iran, their most robust response yet to Tehran’s decision to abandon the uranium enrichment limits set in the accord.

The European move pushes the agreement closer to collapse and comes amid escalating diplomatic tensions between the west and the Islamic republic.

The three countries, known as the E3, said in a joint statement they had been “left with no choice, given Iran’s actions” but to trigger the dispute mechanism.

The move could ultimately lead to the reimposition of UN sanctions on the republic. European diplomats say they are not yet at that stage and insist they are still working to save the deal, which is deemed critical to restricting Tehran’s ability to develop the capacity to build nuclear weapons.

“We do this in good faith with the overarching objective of preserving the JCPOA [nuclear accord] and in the sincere hope of finding a way forward to resolve the impasse through constructive diplomatic dialogue,” the E3’s foreign ministers said. “In doing so, our three countries are not joining a campaign to implement maximum pressure against Iran.”

But they also want to register their concern over Iran’s announcement this month that it would end limits on the number of centrifuges used for enrichment. Tehran took the decision — which means it no longer abides by any of its commitments on uranium enrichment — days after a US drone

European powers step up pressure on Iran over nuclear deal

UK, France and Germany trigger dispute mechanism after Tehran abandons enrichment limits

A demonstration in front of the British Embassy in Tehran on Sunday. The Islamic republic has threatened to expel the UK ambassador, alleging he participated in an illegal anti-government gathering © AP

strike killed Qassem Soleimani, Iran’s most powerful military commander.

The nuclear accord’s signatories — which also include China and Russia — will now meet within 15 days to discuss their concerns. Diplomats describe the mechanism’s process as “flexible” and “extendable” and it could drag on for months.

France, the UK and Germany have been battling to save the deal since Donald Trump unilaterally withdrew the US from the accord in 2018 and

It is wrong to assume that prices reflect a genuine ‘view’ about growth prospects

Some issuers offshore and on the mainland say new requirements are a waste of time

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he ethical investment trend that has swept the developed world is making its mark in China, where authorities are urging companies to say more about their environmental, social and governance (ESG) risks.

The effort is in keeping with President Xi Jinping’s call for the development of “green finance”, including the mandatory release of environmental data, in a bid to draw more foreign investment into the world’s secondlargest economy.

That could be a struggle for companies, some of which have already objected to early moves from Hong Kong’s stock exchange, saying such reports are a waste of time. But analysts say some kind of standardisation is essential. For now, they say, the quality of information is uneven, making it hard for investors with an ESG mandate to make judgments on suitability. People reading some of the older ESG reports would probably “laugh at the content”, said Peiyuan Guo, chairman and cofounder of SynTao Green Finance, a Beijing-based data provider in which Moody’s bought a stake in October.

Hong Kong made the first move last month, requiring that, from fiscal years starting in July 2020, all exchange-listed companies produce a statement set-

ting out the board’s consideration of ESG risks, as well as how it determines what ESG matters are material to the business.

That materiality assessment is significant, according to Morgan Stanley analysts, because it is likely to force executives to fully integrate such disclosures into their business strategy “instead of merely a box-ticking requirement”.

The stock exchanges of Shanghai and Shenzhen are expected to follow Hong Kong’s lead this year, and require all issuers to increase ESG disclosures.

The China Securities Regulatory Commission (CSRC) has announced such a plan, but has yet to provide details for the more than 3,000 companies affected.

Column chart of $bn showing Top green bond issuance by country More and better information is needed, said Mengran Zhao, lead ESG analyst at Beijing-based China Asset Management, which has about $150bn in assets. Once the CSRC code kicks in, she said, “we can make more quantitative decisions instead of only qualitative decisions”.

Momentum has been building for a while. In 2013, the Hong Kong Stock Exchange recommended ESG reporting and three years later, the CSRC required heavily-polluting companies to disclose certain information on their environmental impacts. www.businessday.ng

Under the accord, the Islamic regime agreed to curb its atomic activity in return for many western sanctions being lifted, but Washington’s punitive measures have strangled its ability to export oil and driven the republic into its worst recession for decades.

The Trump administration’s “maximum pressure” policy has heightened tensions across the region, with Washington accusing Tehran of conducting attacks on Saudi Arabia’s oil infrastructure and tankers in the Gulf.

Fundamentals simply do not matter in China’s stock markets

Chinese companies get to grips with tougher ESG disclosures PATRICK TEMPLE AND NIAN LIU

imposed crippling economic sanctions on Iran. The decision to trigger the dispute mechanism comes as Tehran is threatening to kick out the UK ambassador, alleging the British diplomat participated in an illegal anti-government gathering in the Iranian capital.

Iran has been increasing its nuclear activity in stages since May as it complains that it is no longer receiving the economic dividend it was promised when it signed up to the deal.

The E3 share the US’s concerns about Iran’s support for regional militant groups and the development of its ballistic missile programme. But they believe the nuclear deal is vital to avoiding a regional arms race and maintaining diplomatic channels with the republic.

Josep Borrell, EU foreign policy chief and co-ordinator of the Iran nuclear deal, said he expected all parties to make “intensive efforts in good faith” now the dispute mechanism had been triggered.

“The JCPOA is a significant achievement of sustained multilateral diplomacy following years of negotiations,” he said. “In light of the ongoing dangerous escalations in the Middle East, the preservation of the JCPOA is now more important than ever.”

The US sanctions have, however, stymied European efforts to keep open finance and trade lines with Iran to ease the economic pressure on the regime.

Iran says it is still committed to the accord, and has continued to allow the International Atomic Energy Agency, the watchdog, to monitor its nuclear activity. It says that all the steps it has taken, including increasing its stockpile of enriched uranium and ramping up its nuclear research and development, are reversible if the republic receives the economic benefits it expects.

MICHAEL PETTIS

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t is tempting to try to find meaning in the so-called “A-share premium”. This is the persistent valuation gap between the shares of Chinese companies that trade in Shanghai or Shenzhen (known as A-shares) and the shares of the same companies that trade in Hong Kong (H shares).

For much of 2019 the A-share premium has been roughly 20-30 per cent, meaning that A-shares are 20-30 per cent more expensive than equivalent H shares.

Some companies, such as Chinese brokers, trade at several times the price of their Hong Kong equivalents. While this premium has persisted for years, it can vary greatly, from 100 per cent in the great “pre-Olympic” stock market rally of 2007 to much smaller premiums, and even to small discounts, as happened briefly on three occasions.

Normally, when onshore and offshore markets are separated by capital controls — and arbitrage is restricted, as is the case in China — onshore markets trade at a discount to the major offshore markets. This makes the Chinese A-share premium all the more anomalous. So why is the same share worth so much more on the mainland than it is offshore?

One theory is that it reflects dif-

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fering views on political risk, with mainlanders less worried than foreigners about the risk of a political “event” disrupting business prospects. Another theory is that it shows that mainland investors are more optimistic about Chinese growth prospects than offshore investors. A third theory is that it reflects an information asymmetry in which onshore investors have access to a higher quality of information than offshore investors, and so are able to discount future growth prospects at a lower rate.

But none of these explanations makes any sense. They all assume, incorrectly, that prices in the Chinese stock market reflect a fundamental “view” about growth prospects, measured as the present value of future expected cash flows.

They do not, and never have. It has been almost impossible during the past few decades to find a credible correlation between the performance of the Chinese stock market and any measure of growth prospects or profitability. Monthly surges or drops of 10-20 per cent or more occur far too often to suggest any relation with normal economic volatility.

It should not come as a surprise that mainland markets are so detached from economic fundamentals. A well-functioning stock market is one in which buying and selling is driven by an appropriate @Businessdayng

mix of at least three different types of investment strategies: fundamental or value investing, relative value investing, and speculation.

It is the first two that really align prices with growth expectations and that enforce consistency of pricing across assets. Speculative decisions to buy or sell, on the other hand, are driven by market technicals, investment fads, momentum trading, margin lending, and other factors that are irrelevant in aligning share prices with growth expectations or relative pricing consistency. What is more, speculative investing tends to be driven by expected changes in the market consensus, rather than by expected shifts in economic growth prospects.

The problem is that in a market in which macroeconomic data is questionable, financial statements are not credible, corporate governance is unclear, government intervention is unpredictable, and interest rates are repressed, it is impossible to be a fundamental investor except at very low prices, driven down by the high discount rates all this uncertainty requires. Investors whose effect is to drive capital according to its most productive use, in other words, are pretty much priced out of the mainland markets. That is why, for all the promises by local fund managers of their sophisticated fundamental selection process, mainland markets are wholly speculative.

Wednesday 15 January 2020

FT

BUSINESS DAY

NATIONAL NEWS

France to send more troops to combat Islamists in Sahel Macron and African leaders bolster campaign against militants after recent setbacks VICTOR MALLET IN PARIS, NEIL MUNSHI AND MICHAEL PEEL

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rance and five African nations have announced a plan to relaunch their struggling military campaign against Islamists in the Sahel, with President Emmanuel Macron sending 220 extra soldiers to bolster France’s 4,500-strong Operation Barkhane.

“We have no choice. Now we must have results,” Mr Macron said at a summit in Pau in south-west France.

Only weeks earlier he had threatened to pull French troops out of the region of northern Africa if he did not receive support from Sahel governments, where politicians and even senior officials have suggested that Paris is an unwelcome neocolonial presence.

Islamist militants have scored several victories over their government opponents in recent weeks.

Eighty-nine soldiers from Niger were killed in an attack on a military camp near the Mali border last week, and 13 French troops died in a crash involving two helicopters in Mali in an anti-terrorism operation in November — the deadliest incident for French forces in more than three decades.

“Today more than ever, the results that we are achieving . . . are below the expectations of our people,” President Roch Marc Christian Kaboré of Burkina Faso said in Pau after the meeting. The other leaders present were from Chad, Niger, Mali and Mauritania.

France relies heavily on US intelligence and surveillance for its Sahel operation. Paris fears losing that if President Donald Trump decides to cut US military engagement in Africa,

and is also seeking more military help from its European partners.

Charles Michel, head of the European Council, and Josep Borrell, the EU’s foreign affairs representative, were to attend a post-summit dinner and discussion in Pau on Monday night, along with António Guterres, the UN secretary-general.

France and the Sahel leaders said they planned “a new political, strategic and operational framework which would mark a new stage in the struggle against terrorist groups in the Sahel and the taking of collective responsibility”.

They announced the formation of a new Coalition for the Sahel to include France, the five Sahel states and others who wanted to participate.

The coalition has four aims: counter-terrorism with improved military co-ordination, including a future group of European special forces called Task Force Takuba; more training and logistics help for Sahel armies; the return of government control and the rule of law in neglected areas; and economic development.

Some governments have abandoned territory to the Islamist militants, leaving schools and health centres closed and prompting the flight of nearly 1m people from their homes last year. Burkina Faso, once a paragon of stability, has seen government control collapse in large parts of the country.

Casualties from attacks in Burkina Faso, Niger and Mali have jumped roughly fivefold since 2016, with more than 4,000 killed last year alone — the highest annual death toll since 2012, according to research from the Armed Conflict Location Data Project and the International Crisis Group.

Lekoil’s shares tumble 70% after it reveals alleged fraud Nigeria-focused oil producer said it might have been tricked over non-existent Qatari loan HARRY DEMPSEY

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hares in Lekoil fell by more than 70 per cent on Tuesday as investors responded to news that the Nigeria-focused oil producer had fallen victim to alleged fraud over a non-existent $184m loan.

Trading in Lekoil was suspended on Monday after the Aim-listed company said it had not secured cash from the Qatar Investment Authority and might have been tricked by individuals “masquerading” as its representatives.

The company said it had paid $600,000 to Seawave Invest, a Bahamas-based consultancy, for brokering the loan, claiming it had undertaken due diligence including a third party report “based predominantly on open source information.”

The potential scam came to light after the QIA approached Lekoil over the validity of the loan agreement to fund appraisal well drilling in the Ogo field in Nigeria.

Seawave’s website and brochure include no names of its executives and several companies listed as its partners said that they had no knowledge of the consultancy when contacted by the FT. The signing of the loan agreement on January 2 and the addition of Mark Simmonds, the UK’s Africa minister under David Cameron, and Tony Hawkins, chief executive of another

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London-listed energy group and formerly of Centrica, to the company’s board last week helped to double its share price from 4.65p to as much as 10.5p.

As part of last week’s board changes, Greg Eckersley, who was the oil producer’s interim chief financial officer and used to work for a Middle Eastern sovereign wealth fund, left the company.

Mr Simmonds confirmed that he would stay on the board until the facts surrounding the case are established.

Lekoil is conducting an investigation and it has contacted the authorities in multiple jurisdictions.

Analysts at Numis, which acts as a joint broker for the group, said that “the result is that Lekoil has no funding for the Ogo appraisal on block OPL310, has most likely lost $600,000 in fees it paid related to securing the loan, and we think has serious question marks hanging over it in terms of the lack of permanent chief financial officer and due diligence capacity.”

The company said that it is seeking alternative funding to develop Ogo but it may have to sell its stake in the oil block if it cannot secure $10m to pay its local partner and show its ability to raise an estimated $28m by February to contribute to drilling one appraisal well.

Shares in Lekoil fell by as much as 70 per cent before recovering to trade 6.10p lower at 3.29p.

Africa reduces industrial activity as Asia grabs market share Reliance on agriculture as high as in 1981, even as its importance tumbles elsewhere STEVE JOHNSON

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ub-Saharan Africa is just as dependent on agriculture as it was 40 years ago, even as the sector’s importance in the economy of every other region in the world has plummeted.

Potentially worse still, the manufacturing sector’s share of overall economic activity has almost halved in Africa over the same period — an almost unprecedented example of deindustrialisation occurring in a poor region with a surfeit of low-income workers.

“Sub-Saharan Africa’s economic development model has contrasted with that of other developing regions,” said Giancarlo Perasso, lead economist for the Ceema region at PGIM Fixed Income, who compiled the figures, based on World Bank data.

“Regional production shares tend to shift from agriculture to industry and/or services as economies develop and become more integrated. Compared to other developing countries, subSaharan Africa is the only region with an increasing agricultural share of the economy,” Mr Perasso added, alluding to a slight uptick in the share of agriculture from 16.2 per cent of regional gross domestic product in 1981 to 17.8 per cent in 2018.

In contrast, agriculture’s share of output has plunged from 27.6 per cent to 7.9 per cent in east Asia over the same period, from 9.9 per cent to 5.6 per cent in Latin America and, since 1989, from 19.5 per cent to 5.6 per cent in Europe and central Asia, illustrated in the first chart.

Globally, agriculture accounts for just 4 per cent of GDP, according to calculations by Oxford Economics.

Line chart of Agriculture share (% of nominal gross valued added) showing Betting (on) the farm François Conradie, head of research at NKC African Economics, said a big issue in Africa was that the sector had been slower to mechanise than in the rest of the world, so a large chunk of the population was still living on the land and reliant on agriculture for their livelihood.

Mr Perasso was a little more upbeat, arguing that Africa boasted not just a competitive advantage but an absolute advantage for crops that cannot be grown in much of the rest of the world, such as cocoa, coffee, tea and flowers, making it a natural strength for the continent.

However, he argued that this strength was hobbled by low productivity, with plots becoming ever smaller and inefficient as they were typically divided among all of a smallholder’s children.

Moreover, Mr Perasso argued that price volatility in the agricultural sector tended to be higher than for manufacturing or services, meaning a farm-heavy growth model “can impair the ability of countries to meet external debt obligations”, a growing concern across much of the continent.

A young cow herder guides cattle near the Danoa dam in north-eastern Ivory Coast.

Sub-Saharan Africa has not reduced its reliance on agriculture in the past 40 years. © AFP/Getty Images

The simultaneous sharp decline in the importance of manufacturing across sub-Saharan Africa mirrored the “collapse in output” in central and eastern Europe in the 1990s after the collapse of communism, Mr Perasso said.

Manufacturing accounted for just 10.4 per cent of sub-Saharan GDP in 2018, down from 18.1 per cent in 1981 and comfortably below the levels seen elsewhere in the developing world, as shown in the second chart.

Line chart of Manufacturing share (% of nominal gross valued added) showing Rust belt “Why develop the manufacturing sector when you can export oil, flowers, cocoa?” Mr Perasso asked.

Charles Robertson, chief economist at Renaissance Capital, an emerging markets-focused investment bank, said a number of African governments had prioritised manufacturing in the 1960s and 1970s.

“They thought that if they had big universities and manufacturing plants as in the west they would be as rich as the west, but they didn’t have the level of education,” he said.

At the time, high commodity prices allowed many countries to subsidise a lossmaking manufacturing sector, Mr Robertson said, but the 1980s commodity price crash brought this house of cards tumbling down.

“There was premature industrialisation in the 1960s and 1970s.

It was decades too early,” he said.

“There was a large, unsustainable manufacturing sector in the early 1980s that was inevitably going to crash, and it did.”

Although he argued that most African states had raised their education levels sufficiently to support large-scale manufacturing in the past decade, Mr Robertson said the main problem now was an inadequate power supply.

“You can’t industrialise without electricity,” he added.

Line chart of Services share (% of nominal gross valued added) showing Slow progress David Hauner, head of EM cross-asset strategy and economics at Bank of America Merrill Lynch, instead pointed the finger at “massive” competition from Asia, which had taken much of the market share Africa had managed to build up in the 1960s and 1970s.

“There have been complaints that China and other Asian countries are sucking all the manufacturing out of Africa because they are cheaper and more competitive, even when exporting these goods to Africa,” Mr Hauner said.

“The competition from Asia was vigorous and there seems to be a lot of evidence of excess supply in China. The whole thing about dumping that is driving the tension with the US and Europe probably applies to Africa, it’s just that these countries have much less power to fight back,” Mr Hauner added.

Mr Conradie agreed: “Imports are simply more competitive than we can produce at home.”

He argued that this was in part due to the commodity cycle. When raw material prices are high, the currencies of African exporters rise and the resultant Dutch disease forces manufacturers out of business. When the cycle reverses “it’s hard to set up a business and start again,” he added.

Mr Conradie said this trend was exacerbated by the likes of Nigeria and Angola keeping their currencies artificially strong “because so many wealthy and middle-class families depend on imports for everything they buy”.

“The governments move heaven and earth to prop up their currencies, so you don’t get the benefit to domestic producers you should have,” he said, while the dollars governments receive from commodity exports “are not as valuable as they should be for funding infrastructure”.

Sub-Saharan Africa’s reliance on commodities shows no sign of diminishing any time soon, with most economies just as reliant on natural resource exports as they were in the mid-1990s, depicted in the final chart.

Commodity exports (per cent of total goods exported) This lack of economic diversification is particularly problematic because “it’s very difficult to increase the value-added of commodity products”, Mr Perasso said. “It’s very difficult for Ghana to increase the value added of cocoa because of how expensive electricity is.”

Mr Robertson argued that commodity dependence simply will not fall until African countries “get the manufacturing story up and running”.

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Wednesday 15 January 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Google to phase out most invasive internet tracking Chrome browser will make third-party cookies obsolete amid calls to boost web privacy ALEX BARKER AND MADHUMITA MURGIA

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oogle sounded the death knell for the most invasive internet trackers on Tuesday as it said its Chrome browser would phase out the use of cross-website cookies, which have underpinned digital advertising for 25 years.

Heeding calls “to fundamentally enhance privacy” on the web, Google will aim to make “obsolete” so-called third-party cookies that follow internet users from site to site, sometimes tracing their browsing for months at a time.

The changes to Chrome, which launched just over a decade ago but now dominates the desktop browser market, will restrict the flow of data to ad agencies and brokers.

But like many of the privacyfriendly reforms being introduced in the US and Europe, the move may further strengthen the position of Google and other big gatekeepers of the internet, such as Amazon and Facebook, which hold vast amounts of internal data about their users that will become increasingly valuable.

The gradual revisions to Chrome, which is used by more than twothirds of desktop internet users, follow more severe restrictions introduced by Apple, Mozilla and Microsoft — a trend that digital marketers refer to as “the cookie apocalypse”.

In a blog post on Tuesday, Google said it hoped to develop alternative tools that better protected the privacy of users and “sustain an adsupported web” in a way that would “render third-party cookies obsolete”.

Lukasz Olejnik, a research associate at the Centre for Technology and Global Affairs at Oxford university, said the move would “severely” curb the ability of companies to ex-

tract “private and sensitive insights” about web users.

Websites will still be able to tag individuals with “first-party cookies” to record their behaviour on their site.

But other third-party sites will not be able to place their own cookies to profile users as they move across the web.

The change comes as Ireland’s data protection authority investigates Google’s online advertising exchange, known as Authorized Buyers, which sits at the centre of the bidding process for online ads. Following complaints from Brave, a browser, the regulator is looking into whether Google’s online advertising exchange illegally taps into sensitive personal information about internet users.

By making consent a more important factor in the transfers of personal data on the web, the changes could also help online publishers and media businesses, whose ad sales have suffered because their readers can be traced and targeted easily on other websites.

While the ad industry has been preparing for the demise of the thirdparty cookie, the phase-out will be disruptive, hitting the concept of an open web for online advertising that has dominated the market since the invention of the cookie in 1994. It will require changes across the entire supply chain of digital advertising.

Google has been gearing up to tighten its privacy rules for some time.

In August it launched a “privacy sandbox” to develop tools to work around the need for cookies. Last month it announced other changes to Chrome that limited the use of certain types of third-party cookie.

In his blog post Justin Schuh, the director of engineering at Chrome, said he hoped developers could provide alternatives that would allow Google to phase out support for thirdparty cookies “within two years”.

Centamin shareholders might welcome another golden opportunity Canadian group Endeavour has walked away but consolidation among gold miners will continue KATE BURGESS

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ndeavour of Canada has abandoned efforts to take over Centamin, the UK’s biggest standalone listed gold miner.

It has walked away from its £1.5bn bid for the Egyptian group, blaming Centamin’s reluctance to agree to extend the bid deadline again and hand over the information it asked for.

In fact, Centamin — strongarmed by shareholders — did agree to extend the bid timetable to January 14. And it did swap information with Endeavour, just not enough to overcome the heavily indebted Canadian group’s difficulties in raising its offer.

It was always going to be tricky for the Canadian miner to win over Centamin’s investors with a bid representing a big discount to the UK group’s asset value. It became harder still after Centamin announced last week that it had

extracted record amounts of highgrade gold in the fourth quarter, and last month recruited former fund manager Jim Rutherford to replace founder Josef El-Raghy as chairman next year. Investors like seeing one of their own on boards.

Even after Endeavour walked off on Tuesday, Centamin’s market capitalisation did not fall below £1.5bn, aided by it sugaring the pill with a hefty $6 per share final dividend.

Still, shareholders will grumble if the old production glitches re-emerge and Centamin’s all-in production costs — currently swelled by toppy salaries and expenses to more than $900/oz — don’t fall.

More broadly, investors are nervy about the risks in operating a single asset in one country. They want diversity. Consolidation is in the air. Any bidder brandishing an offer of 130p a share will get a hearing from investors, if not Centamin’s board.

The German government’s plan is to vastly increase the number of customers using Deutsche Bahn’s long-distance trains from 148m in 2018 to 260m by 2030 © John MacDougall/AFP/Getty

Germany unveils landmark €86bn investment to modernise rail network Deal establishes Deutsche Bahn as central to Berlin’s ambitious plans to fight climate change GUY CHAZAN

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he German government moved to dispel its reputation for not spending enough on the country’s infrastructure as it unveiled a 10year, €86bn investment programme for the German rail network — the biggest in its history.

The plan foresees a 54 per cent increase in spending compared with the previous funding round, with much of the money earmarked for modernising Germany’s tracks, railway stations, signal boxes and energy supply systems.

“This is the biggest growth, investment and modernisation offensive in the more than 180-year history of the railways [in Germany],” Richard Lutz, Deutsche Bahn’s chief executive, said on Tuesday.

The plan comes with Chancellor Angela Merkel’s government under growing pressure to abandon its commitment to a balanced budget, the so-called schwarze Null, and raise government spending.

Even some of Germany’s more hawkish economists have said that in a time of bumper tax revenues and low interest rates the government should be investing much more in the

country’s schools, roads and bridges.

The investment programme also establishes Deutsche Bahn as central to Berlin’s ambitious plan to fight climate change and shift consumers to less carbon-intensive forms of travel.

Germany has committed to cutting its transport sector CO2 emissions by up to 42 per cent by 2030, and wants to increase the number of customers using Deutsche Bahn’s long-distance trains from 148m in 2018 to 260m by 2030. Last year ministers moved to make rail travel cheaper by reducing value added tax on long-distance train tickets.

But the Bahn suffers from an image problem in Germany, with frequent complaints about the quality of the service. Just 76 per cent of its longdistance trains were on time in 2018, well below the official punctuality goal of 82 per cent.

Thanks to the injection of funds from the deal, which was signed by Andreas Scheuer, Germany’s transport minister, Mr Lutz and Ronald Pofalla, Deutsche Bahn’s head of infrastructure, that should now improve.

“We have the task of creating a modern rail network that is more punctual, more reliable, more efficient, with more passengers and freight travelling by rail,” Mr Scheuer said.

Olaf Scholz, Germany’s finance minister, who was also at the signing ceremony, said: “The big issue right now is how to stop climate change, and we’ll never be able to do that without an efficient rail infrastructure.”

Under the agreements, the German government will pay €62bn towards the investment programme, and Deutsche Bahn itself €24bn. Deutsche Bahn’s dividends will also be completely reinvested in the business.

The money will go towards modernising 2,000km of rail track and 2,000 switches a year. Some 2,000 bridges will be refurbished by 2030, while €7bn alone will be invested in signal boxes.

But the main railway trade union, EVG, has criticised the figure of €86bn as inadequate. Alexander Kirchner, the union’s head, said last year that the railway network had been neglected for decades and that had resulted in a “huge investment backlog that is currently running at €60bn a year”.

Calls for greater investment across the board increased after the finance ministry revealed on Monday that it had recorded a €13.5bn budget surplus for last year, the highest on record — partly as a result of lower interest payments. The previous record, in 2015, was €12.1bn.

Tesla valuation nears Elon Musk’s bonus trigger of $100bn Chief to receive first tranche of $50bn pay award if carmaker’s share price continues to rise PETER CAMPBELL

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esla’s soaring share price has put Elon Musk within touching distance of the first tranche of a $50bn incentive package designed to keep him at the helm of the electric car maker.

The company’s shares broke through $534 on Tuesday, valuing its equity at $96bn, a higher market value than Ford and General Motors combined.

If the stock reaches $554.80, Tesla would hit a valuation of $100bn. If it holds that level for six months, it would unlock the first of several potential share-based payments to Mr Musk, worth just under $350m.

The award would count as one of the largest bonuses in the corporate world but is overshadowed by the increased value of Mr Musk’s 18.9 per

cent stake in Tesla, which has doubled in six months to $18.3bn.

The surge has been propelled by higher delivery numbers, positive profitability and a rising industry-wide acceptance of the need for electric vehicles to meet emissions targets.

On Tuesday, investment bank Jefferies raised its target price on the company to $600, calling Tesla “the only carmaker engaged in a positivesum game in EVs amid rising market acceptance”.

Mr Musk’s potentially lavish rewards scheme was put in place in 2018, replacing any regular salary, bonus or share scheme with the promise of ever-greater payouts if exceptionally stretching targets were hit.

To unlock the full $50bn by 2028, Mr Musk would have to increase Tesla’s annual revenues to $175bn, from about $24bn today, as well as raise underlying earnings to $14bn, from about $2bn

today, and its market cap to $650bn.

At the time the scheme was introduced, Tesla was valued at $59bn, and was barely profitable.

The first payout, worth just under $350m, comes after the market cap reaches $100bn, and the business has either reported revenues of $20bn or adjusted earnings of $1.5bn.

Another payment will come if the market value reaches $150bn, and again at every further $50bn up to $650bn, if additional financial targets of higher revenues or fatter profits are also hit. To qualify, Mr Musk also has to remain as chief executive.

Tesla is on an expansion drive, promising to build a factory and research centre in Berlin as well as its new Shanghai facility, while intending to broaden its product range to encompass a smaller sport utility vehicle called the Model Y, a full-sized haulage lorry and a pick-up truck.

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Wednesday 15 January 2020

BUSINESS DAY

ANALYSIS FT Libya’s military strongman walks US economy: the Federal away from ceasefire agreement Turkey furious with Khalifa Haftar after he refuses to sign deal brokered by Ankara and Moscow HEBA SALEH, HENRY FOY AND LAURA PITEL

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n attempt by Russia and Turkey to broker a ceasefire between the warring sides in Libya has foundered after Khalifa Haftar, the military strongman fighting to seize control of the country, refused to sign the agreement in Moscow.

Russia’s foreign minister confirmed that the ceasefire talks had failed after Gen Haftar left Moscow on Tuesday, hours after Fayez al-Sarraj, prime minister of the UN-backed Government of National Accord in Tripoli, signed the agreement.

“We will continue our efforts on this track, because no definitive result has been achieved so far,” Sergei Lavrov, Russian foreign minister, told reporters during a visit to Sri Lanka on Tuesday. He added that Moscow had sought

and Ankara’s attempts to present themselves as arbiters in the Libyan conflict. It also calls into question the survival of a shaky ceasefire observed by the Libyan factions since Sunday and undermines prospects of a breakthrough at a Berlin peace conference due to be held this weekend. .

The Russian authorities had summoned Mr Sarraj and Gen Haftar to Moscow on Monday and presided over several hours of indirect talks between them in order to formalise the ceasefire.

A Moscow-based diplomat said Gen Haftar had been uneasy about language in the draft ceasefire agreement that could be interpreted to require him to pull back troops from positions he controls in the suburbs of Tripoli. This refers to a provision in the deal about agreeing “a line of battle contact” between the two warring sides in order to ensure “a sustainable ceasefire”.

Khalifa Haftar, second from right, is greeted by Russian defence minister Sergei Shoigu before talks in Moscow on Monday © Reuters

to “encourage all Libyan parties to agree, and not continue to sort things out by force”.

Recep Tayyip Erdogan, the Turkish president and a co-sponsor of the ceasefire initiative, appeared to issue a warning to Gen Haftar, threatening retribution for his actions. “In the days ahead, we will closely follow the choices made by the putschist Haftar and . . . if the attacks on the country’s legitimate government and our Libyan brothers and sisters continue, we will not hesitate to teach the putschist Haftar the lesson that he deserves,” said Mr Erdogan.

Gen Haftar is backed by Egypt, the United Arab Emirates and Russian mercenaries. He controls vast swaths of Libya’s east and south, including its oilfields, and his forces have been trying to seize the capital, Tripoli, since April 2019.

On Tuesday Mr Erdogan called on Moscow to do more to resolve the conflict. “We did our duty,” he said, adding that “the next part is up to” Russian president Vladimir Putin.

“We never go back on our word. In this case, too, we will stand behind our promise until the very end.”

The Turkish parliament voted earlier this month to send troops to Libya and Ankara supports and arms the UN-backed government in Tripoli.

The decision by Gen Haftar to walk away from the ceasefire agreement is a blow to Moscow

The diplomat said Gen Haftar was also understood to be unhappy with plans for Russia and Turkey to be involved in monitoring the ceasefire. “Haftar’s problem was Turkey’s role,” said the diplomat.

He added that the draft was “tilted towards the GNA” even if Gen Haftar was still going to be in the stronger position entering negotiations.

Claudia Gazzini, senior analyst at the International Crisis Group, said Gen Haftar would have been reluctant to pull out of any positions he occupied or to be treated on the same footing as his opponents in a committee set up to observe the ceasefire. “The language was too ambiguous for Haftar as it puts into question his control of some of the positions he now holds,” she said.

Ms Gazzini added that Gen Haftar would not have wanted to send representatives to a joint military commission set up by the agreement to sit alongside GNA representatives. “It would mean that Haftar accepts to negotiate with a counterparty he considers to be militias,” she pointed out.

Wolfram Lacher, Libya analyst at the German Institute for International and Security Affairs, said: “There are now very limited prospects for a negotiation in Berlin.”

“Yesterday a lot of things seemed possible. Haftar’s rejection of the agreement may have to do with the fact that it was mediated

by Russia and Turkey and his backers, the United Arab Emirates and Egypt, were not happy with this.” www.businessday.ng

Reserve’s reality check

The US central bank’s events with small business and community leaders are beginning to influence monetary policy BRENDAN GREELEY

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n October, Jay Powell hosted guests at the Federal Reserve’s Marriner Eccles building in Washington. They sat at the boardroom table where the Fed’s Open Market Committee makes its decisions about interest rates and the Fed’s balance sheet.

Silk-walled and chandeliered, the room served as a secure meeting place for UK and US military staff during the second world war.

After several hours of conversation, Mr Powell, chair of the Fed’s board of governors since February 2018, said: “We think our inflation is a little bit lower than we’d like it to be.

But we realise for many people that sounds a little bit crazy.”

He explained to his guests — representatives of non-profits, community groups and small businesses — that if inflation falls too far, the Fed loses its power to encourage banks to lend more. Then, smiling a bit, he asked them: “Do you have any ideas on how to explain that to the public?”

The guests broke into laughter. “I think you’re going to need another three hours for that,” said one.

This summer, the Fed will release the results of an 18-month review of how it carries out and talks about monetary policy. While President Donald Trump has badgered the central bank to lower rates, the bank itself has been discussing something more fundamental: the tools at its disposal. As part of that review, Fed staff organised 14 “Fed Listens” events, where they invited business and community leaders at least once to every regional Fed bank and the board of governors’ meetings in Washington.

Mr Powell came to several of these events, and seemed to enjoy them — asking questions and taking notes. Over the past year the FOMC has lowered its policy rate three times by a total of 75 basis points, and indicated that it has no plans in 2020 to raise them again. The Fed eased for several reasons: it was concerned about a slowdown abroad and a lack of inflation at home. It also appears to have paid attention at its Fed Listens events.

Two messages came through in particular. First, there is more “slack” than the Fed had thought — more people who could still come into the labour force, particularly in poorer areas. Second, most Americans are more worried about increases in the cost of housing and medical care than they are about low overall inflation. Unlike the Fed, in fact, Americans do not seem to be worried about low inflation at all.

The meetings took place at a time the Fed has been rethinking the nature of the post-crisis economy. Evidence from the Fed Listens events has also crept into the standardised language that Mr Powell and his vice-chair, Richard Clarida, use to describe the state of the economy. That language, in turn, sends a signal to markets about the future path of interest rates. This means that long before the Fed finishes its review, the events have already become a tool

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for the Fed’s “forward guidance” — hints about what’s coming in monetary policy.

Graphic showing the hierarchical structure of the Federal Reserve system, including a list of the 12 Federal Reserve banks.

“People who live and work in low- and middle-income communities tell us that many who have struggled to find work are now finding new opportunities,” Mr Powell said at his press conference in December. “These developments underscore for us the importance of sustaining the expansion so that the strong job market reaches more of those left behind.”

After the laughter died down in the Fed boardroom, Denise Scott, from the Local Initiatives Support Corporation, a non-profit that identifies investments in poorer areas, agreed with Mr Powell’s point — that higher inflation would help to stimulate growth in the long run.

“But for many of our communities, the distance to the long term, we don’t — we just don’t survive that, that’s part of the problem,” she said. “The business closes. People don’t get to make the choice, say, for higher education. Families just can’t buy the milk today. I think that’s the challenge.”

All of the Fed’s monetary tools are intended to work on the same basic principle: to create economic growth, the central bank pushes down rates for a time, making loans more attractive. For the last several years, though, the Fed has been increasingly worried about the effectiveness of its tools.

A graphic with no description The “natural rate” — an estimate by the New York Fed of what commercial interest would be without any central bank action — has been dropping steadily for years. The Fed cannot undercut something that is already on the floor.

Another way to accomplish the same thing would be to generate more inflation, reducing inflationadjusted interest rates. But that’s been dropping, too. Since the Fed set its inflation target of 2 per cent in 2012, it has only reached it once, in the summer of 2018.

The Fed has a ritualised process for gathering data before its policy meetings, but the Fed Listens events have already begun to supplement this process and help define new areas of policy research.

And according to the minutes of the Fed’s December meeting, some policymakers said they would like @Businessdayng

the events to continue, something Mr Powell has also suggested will happen.

What could have been a feel-good part of a one-time review, then, has become a serious research habit.

“The individual reserve banks will continue to do these type of events,” says Robert Kaplan, president of the Dallas Fed. “But I think it’s a good thing for the Fed in a more formal, organised way to be doing these Fed listens events on some regular basis.”

“I’ve been pleasantly surprised at how meaningful they were,” Neel Kashkari, president of the Minneapolis Fed, says.

It’s not quite fair to say the Fed had never encountered regular people before. As well as running a nonprofit group, since early 2019 Ms Scott has served as chair of the New York Fed’s board of directors.

But there are two novelties about her conversation with Mr Powell. First, it took place not at a regional Fed bank but in the boardroom of the Eccles building, in front of three governors.

Second, they were not talking about how to boost local community development. They were talking about the policy decisions of the Fed’s ratesetting committee.

“There’s always been an aspect of the Federal Reserve that has been tied to community,” says Claudia Sahm of the Washington Center for Equitable Growth. “It has not ever been a part of monetary policy.”

The Federal Reserve has several jobs. It carries out monetary policy.

Like the Bank of England, the Bank of Japan or the European Central Bank, the Fed has to keep prices stable.

Uniquely among them, however, it’s also required to pursue “maximum employment” — it defines this as making sure that anyone who wants a job can get one, hence the focus on slack in the US economy.

The Fed also makes sure that banks are lending without prejudice and to encourage growth within their own cities, a function it calls “community development.”

The trained economists at the Fed have tended to stay cloistered in their own departments, separating the macroeconomics research that guides monetary policy decisions from work on community development. Ms Sahm, who ran consumer and community research at the Fed’s board of governors until October of last year, says the community development research staff had seen early warnings of the financial crisis, but did not know how to package what they had seen for policymakers.

Wednesday 15 January 2019

BUSINESS DAY

45

cityfile

Plateau to spend N15bn on improved water supply

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The ongoing rehabilitation work on Liverpool Road in Apapa, Lagos, generally believed that when completed will go a long way to decongest traffic in that axis.

Pic by Pius Okeosisi

Lagos under pressure to back down on enforcement against motorcycles, tricycles?

JOSHUA BASSEY

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s Lagos State government under pressure to back down on enforcement of its Road Traffic Laws, especially the aspects touching on the operations of commercial motorcycles (Okada) and tricycles (Keke Marwa) on restricted roads and bridges across the metropolis?

This is the question begging for an answer following the new position by the state government, as revealed by Gbenga Omotosho, commissioner for information and strategy, who briefed State House reporters, after the state security council meeting on Monday, January 13, at Government House, Ikeja.

The Lagos Road Traffic Law was promulgated and signed into effect in 2012 by the administration of Babatunde Fashola, and revised in 2018, by the administration of Akinwunmi Ambode, with more severe penalties introduced.

The traffic laws bar ‘Okada’ and‘KekeMarwa’fromsomeareas of the state, highways, major roads, and bridges. The legislation equally prohibits Okada from carrying more than one

passenger, pregnant woman or operatingwithouthelmets,both for the rider and the passenger.

Of the various provisions of the law, the most flouted is the aspect that disallows operations on highways, major roads and bridges as well as riding without helmets. Today, every part of the metropolis, including highways and bridges have been taken over by motorcycles and tricycles.

The traffic law was Fashola-led administration’s direct response to increased cases of accidents involving motorcycles, with resultant deaths and maiming of the residents.

A recent statistics from the state ministry of information and strategy had shown that motorcycle and tricycle related accidents remain a growing concern in Lagos eight years after the traffic laws were first promulgated.

According to Gbenga Omotosho, the state commissioner for information and strategy, over 1,500 accidents involving tricycles and motorcycles were reported between 2015 and 2019, with 689 victims dead and over 250 injured across the state.

To check this carnage, Babajide Sanwo-Olu’s government, in December, 2019, had

said it would be announcing new measures to curb the excesses of Okada and Keke in the new year.

The government explained that the measures became necessary following flagrant abuse of the laws by motorcycle operators, stressing that the menace “can no longer be condoned.”

“The violation of traffic laws by commercial motorcyclists is unacceptable, thereby necessitating the enforcement of the state traffic law to pave the way for the implementation of the present administration’s transportation project,” Omotoso said in 2019.

But the government, on Monday, January 13, 2020, after a four-hour security council meeting chaired by Governor Babajide Sanwo-Olu, and attended by commanders of various security agencies in the state, shocked reporters, when it said it would not take a definitive action against illegal operations of commercial motorcycles and tricycles on restricted routes across the state.

Gbenga Omotoso, information commissioner, who briefed anxious reporter after the meeting, said the government’s decision to delay action against the motorcycles and tricycles

was informed by the need to achieve a generally acceptable solution to the menace.

Omotoso disclosed that relevant parties and stakeholders had reached out to the government with suggestions and representation that could be adopted to proffer a winwin solution on the matter.

The security council, according to Omotosho, is considering the suggestions and recommendations submitted to the government before coming up with definite plans on the Okada menace.

“We have just concluded our routine security meeting, during which the issue of motorcycles and tricycles was discussed exhaustively.

For now, no major decision will be taken on the matter.

There are several factors for this development, but the main reason is to reckon with various opinions expressed by stakeholders.

“So many people have made representations to the government concerning commercial motorcycles and tricycles, including human rights groups, unionists and traders.

They came up with many reasonable observations; all their views have been collated and are being considered.

Udom reads riot act to contractors ANIEFIOK UDONQUAK, Uyo

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overnor Udom Emmanuel of Akwa Ibom State has warned contractors handling projects in the state to return to sites as well as raise the standard of work without any further delay.

This is against the background of complaints of poor quality of work done by the contractors, the engagement

of local contractors without proven competence as well the slow pace of work by the contractors.

It is not clear whether the contractors had been fully paid for jobs they had executed and why they had waited to be ordered back to site by the governor.

The governor also made it compulsory for soil test to be conducted on all projects with proper documentation to www.businessday.ng

ascertain quality and suitability of work done, warning that anything short of this would be unacceptable by the government.

Emmanuel, who spoke through Ephraim Inyangeyen, his commissioner for works, during a meeting with contractors and engineers handling government projects, disclosed that there are 57 ongoing projects so far in the state.

Noting that some of the projects were nearing com-

pletion, the governor stated that the government would release funds for the completion of the projects It was gathered that the ongoing projects are in three categories, with category ‘A’ being those nearing completion, ‘B’ for those at 40 to 70 percent completion, while ‘C’ is from 10 - 40 percent completion.

Emphasising that the state government was determined to fund the projects and en-

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lateau State government has allocated over N15.7 billion for the implementation of various water projects in 2020.

Sylvester Wallangko, the commssioner for budget and planning disclosed this during a budget breakdown on Monday in Jos. According Wallangko, the figures represents 19.9 per cent of the entire total budget, adding that the ministry was allocated the highest amount.

He explained that the monies would be used to ensure provision of water and energy to all parts of the state, as well as promote sanitation and hygiene.

“The water resouces, energy and sanitation sub sector has an allocation of over N15.7 billion, represent ting 19.9 per cent of the total budget.

“These monies will go into the rehabilitation of Mangu regional water projects, ex-

pansion of water pipeline distribution network in Jos and Bukuru, green city power project and construction of multiple dams at Baushe.

“Acquisition of water treatment chemicals, counterpart contribution for water and energy, building of Earth dams with mobile treatment plant in Langtang South, Kanke and Pankshin, among other projects “We are determined in promoting hygiene and sanitation in the state, and so, part of the allocation will go into that area,” he said The commissioner also said that government had allocated N13.5 billion for the implementation of various projects under the ministry of works.

According to him, the figures allocated to the works ministry represented 17.2 per cent of the total budget size. He added that the amount would be used in the completing all ongoing roads projects in the state.

Fire guts N21m goods in Abuja market oods worth N21 million have been destroyed by fire which gutted 39 shops and furniture at the Kugbo Furniture Market, Abuja in the early hours of Monday.

Some of the affected furniture makers and shop owners told journalists that they were alerted at about 12 midnight by the security guards on duty and informed about the incident.

According to chairman of the furniture market, Austin Onuh who is also a victim, the incident occurred late in the night when all the shop owners had closed, regretting that most of the furniture burnt were given to them on contract by their customers.

“We are yet to determine the cause of the inferno but furniture worth over N21 million have been burnt by the fire.

“Some of us here just returned from Christmas and new year celebrations, and

started work that our customers gave us, but this morning we only came to see ashes” Onuh lamented.

He, however, appealed to the Federal Capital Territory Administration (FCTA), public spirited individuals and corporate organisations to support them.

The Kugbo furniture market chairman also called on the government to help the furniture makers provide measures that will prevent fire outbreaks in the market.

Timothy Eze, one of the affected furniture makers said he has lost not less than N8 million worth of furniture in his shop, noting that part from the furniture, industrial machine, generators with several working equipment that worth millions were also burnt” Another victim, Vincent Ngutsen said over N7million finished and unfinished furniture were burnt in his shop, despite efforts by the people around the area and the fire fighters.

sure their completion in the next two years, he urged all contractors to work assiduously to ensure that they deliver on deadline.

“It is compulsory that soil test should be conducted on all projects sites with proper documentation to ascertain quality and suitability of work done,’’ warning that anything short of this will be unacceptable to the state.

“We’ve evaluated the performance of the Ministry’s projects implementation and we will ensure that all projects

undertaken in the state are completed before the deadline.”

The state government had assured that the contractors would make use of the dry season to complete some of the ongoing road projects but many had been disappointed that nothing seemed to have been done.

Some of the roads which were initiated more than four years ago have yet to be completed. They include the Nsit Attai-Okobo road, the Ikot Ekaidem-Ikot Ibritam road and several others.

James Kwen, Abuja

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46

Wednesday 15 January 2020

BUSINESS DAY

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Wednesday 15 January 2020

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Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 14 January 2020

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. 373,224.87 10.50 -0.47 458 37,329,921 282,145.23 8.25 -5.17 336 38,787,638 UNITED BANK FOR AFRICA PLC ZENITH BANK PLC 668,745.32 21.30 -1.84 683 69,716,501 1,477 145,834,060 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 251,267.05 7.00 -3.45 327 21,974,830 327 21,974,830 1,804 167,808,890 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,528,030.52 124.20 -2.66 514 11,956,423 514 11,956,423 514 11,956,423 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 -1.16 147 4,977,354 LAFARGE AFRICA PLC. 241,616.93 15.00 4.67 215 7,970,303 362 12,947,657 362 12,947,657 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 346,005.40 588.00 - 17 13,167 17 13,167 17 13,167 2,697 192,726,137 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,338.94 3.50 - 3 15,093 3 15,093 3 15,093 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 3 15,093 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 4 555,600 62,958.06 66.00 - 51 215,859 OKOMU OIL PALM PLC. PRESCO PLC 52,250.00 52.25 - 9 74,547 64 846,006 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,650.00 0.55 -6.78 31 966,501 31 966,501 95 1,812,507 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,867.43 1.03 -2.83 93 19,756,365 U A C N PLC. 31,838.33 11.05 -0.45 212 10,899,706 305 30,656,071 305 30,656,071 BUILDING CONSTRUCTION ARBICO PLC. 521.24 3.51 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 28,842.00 21.85 - 35 390,995 ROADS NIG PLC. 165.00 6.60 - 0 0 35 390,995 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 4 24,071 4 24,071 39 415,066 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,672.91 0.98 - 1 25,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 66,149.56 30.20 - 31 138,739 INTERNATIONAL BREWERIES PLC. 79,081.93 9.20 - 42 1,700,147 NIGERIAN BREW. PLC. 408,641.69 51.10 -8.83 56 483,633 130 2,347,519 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 177,600.00 14.80 - 54 398,330 FLOUR MILLS NIG. PLC. 98,409.11 24.00 3.00 134 7,085,317 HONEYWELL FLOUR MILL PLC 8,168.10 1.03 0.98 29 1,643,149 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 39,741.58 15.00 - 31 448,679 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 248 9,575,475 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,782.02 10.00 5.26 41 283,356 NESTLE NIGERIA PLC. 1,165,125.42 1,469.90 - 41 101,157 82 384,513 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 6,104.12 4.88 - 36 875,534 36 875,534 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,227.29 5.85 - 17 85,807 UNILEVER NIGERIA PLC. 103,410.10 18.00 - 39 335,118 56 420,925 552 13,603,966 BANKING ECOBANK TRANSNATIONAL INCORPORATED 143,126.50 7.80 - 61 703,003 FIDELITY BANK PLC 60,847.07 2.10 -6.67 117 9,573,121 GUARANTY TRUST BANK PLC. 930,025.26 31.60 0.32 282 15,722,482 JAIZ BANK PLC 18,857.12 0.64 -3.03 34 907,174 STERLING BANK PLC. 54,701.79 1.90 0.53 65 4,310,834 UNION BANK NIG.PLC. 179,092.63 6.15 0.82 90 536,539 UNITY BANK PLC 8,416.32 0.72 - 11 89,139 WEMA BANK PLC. 28,159.36 0.73 1.39 27 885,129 687 32,727,421 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 1,900 AIICO INSURANCE PLC. 5,336.26 0.77 - 28 1,930,500 AXAMANSARD INSURANCE PLC 22,470.00 2.14 1.90 6 700,498 CONSOLIDATED HALLMARK INSURANCE PLC 3,089.40 0.38 -9.52 10 1,745,978 CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 7,806.64 0.53 -3.64 13 1,082,442 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 28,280 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,977.33 0.27 -6.90 28 4,770,950 2,148.17 0.50 - 0 0 LAW UNION AND ROCK INS. PLC. LINKAGE ASSURANCE PLC 3,840.00 0.48 - 5 138,089 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 6 2,623,909 NEM INSURANCE PLC 10,825.03 2.05 -9.69 13 1,353,921 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,906.58 0.54 -1.82 9 565,853 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 39,500 SOVEREIGN TRUST INSURANCE PLC 2,500.18 0.22 - 5 57,528 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 2,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,817.79 0.36 5.56 34 904,763 163 15,946,111 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,812.56 1.23 -9.56 12 722,730 12 722,730

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,200.00 4.60 - 55 1,057,322 CUSTODIAN INVESTMENT PLC 34,997.09 5.95 - 5 98,891 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 FCMB GROUP PLC. 38,021.20 1.92 1.56 125 8,367,567 ROYAL EXCHANGE PLC. 1,697.97 0.33 - 2 11,558 STANBIC IBTC HOLDINGS PLC 446,461.11 42.50 - 24 2,340,712 UNITED CAPITAL PLC 15,660.00 2.61 0.38 92 4,227,318 303 16,103,368 1,165 65,499,630 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 7.22 6 310,010 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 746.16 0.21 5.00 7 340,210,007 13 340,520,017 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,737.49 2.75 - 19 141,640 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,696.91 5.60 -0.88 33 651,292 MAY & BAKER NIGERIA PLC. 3,743.76 2.17 - 9 93,175 968.57 0.51 - 10 176,730 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 71 1,062,837 84 341,582,854 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 -8.33 14 5,086,500 14 5,086,500 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,323.81 0.45 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 437.40 4.05 - 2 157,467 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 2 4,116 4 161,583 PROCESSING SYSTEMS CHAMS PLC 1,596.66 0.34 -2.94 17 2,094,345 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 17 2,094,345 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 0 0 0 0 35 7,342,428 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 4 1,170 BUA CEMENT PLC 1,319,016.59 38.95 -0.13 269 5,989,966 CAP PLC 17,500.00 25.00 - 42 107,074 MEYER PLC. 265.62 0.50 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 3 4,040 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 318 6,102,250 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,518.69 1.43 - 5 21,500 5 21,500 PACKAGING/CONTAINERS BETA GLASS PLC. 29,498.35 59.00 9.67 48 667,402 GREIF NIGERIA PLC 388.02 9.10 - 0 0 48 667,402 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 371 6,791,152 CHEMICALS B.O.C. GASES PLC. 2,289.35 5.50 - 4 14,804 4 14,804 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 3 5,130 3 5,130 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 7 19,934

ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 -4.76 23 1,258,652 23 1,258,652 INTEGRATED OIL AND GAS SERVICES OANDO PLC 47,239.37 3.80 -3.80 66 850,978 66 850,978 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 8 15,970 CONOIL PLC 13,879.04 20.00 - 31 21,436 ETERNA PLC. 4,694.92 3.60 - 7 59,096 FORTE OIL PLC. 23,249.29 17.85 5.62 56 1,074,243 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 15 75 TOTAL NIGERIA PLC. 36,328.84 107.00 - 36 98,380 153 1,269,200 242 3,378,830 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 2 4,001 421.96 0.90 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 2 4,001 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 1 5,000 IKEJA HOTEL PLC 2,328.25 1.12 - 1 5,000 7,076.28 3.15 -10.00 3 335,337 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 33,821.80 4.45 - 4 10,090 9 355,427 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 3 3,000 3 3,000 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 2 80,730 LEARN AFRICA PLC 933.45 1.21 - 5 40,648 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 560.83 1.30 - 10 27,507 UNIVERSITY PRESS PLC. 17 148,885 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 745.97 0.45 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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BUSINESS DAY Wednesday 15 January 2020 www.businessday.ng

The diverging fortunes of Africa’s oil kings Profound differences in governance style will impact the speed and development of future energy projects across Angola and Nigeria Nick Branson & Ed Hobey-Hamsher

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dominant role.

Once this process is complete, Sonangol intends to launch an initial public offering (IPO).

Although set for 2022, we anticipate this to be delayed, barring a sudden uptick in the oil price or a dramatic improvement in Angola’s hard currency reserves.

Decades of opaque bookkeeping currently preclude Sonangol from pursuing an international listing, while low trading volumes on the local stock exchange point to the difficulties of raising capital in Luanda.

Lacklustre leadership In marked contrast to the shake-up in Angola, President Buhari has actively blocked regulatory reform in Nigeria.

Investors were left disillusioned when they learned in

August 2018 that he had secretly vetoed the Petroleum Industry Governance Bill (PIGB) a month earlier but neglected to consult parliament or investors.

Nigeria has retained the overly-centralised style of leadership associated with Buhari as military leader in the 1980s.

Chief of staff Abba Kyari is said by many business leaders to be seemingly obstructionist, limiting investor access to the president.

Investors complain that contracts can remain unsigned on the presidential desk for months.

The Nigerian parliament is now under the leadership of members of president Buhari’s party, the APC. A more amenable legislature will facilitate the passage of key bills, although

‘‘

While the amnesty looks set to placate the Niger Delta Avengers, dilapidated infrastructure means even a relatively minor increase in theft and sabotage could increase production disruptions to 300,000400,000bl/d

‘‘

he 2014 oil price collapse hit Nigeria and Angola hard.

Successive years without final investment decisions (FIDs) left sub-Saharan Africa’s top two oil producers confronting maturing fields and declining production.

In Nigeria, president Muhammadu Buhari has done little to rekindle investment since assuming office in 2015—operators now face another three years of his slow-moving administration.

By contrast, Angola’s head of state, Joao Lourenco, was quick to enlist the support of oil majors after assuming power in September 2017.

The countries’ trajectories will continue to diverge in 2020 as Lourenco’s reforms reap rewards and Buhari continues to dither.

Regulatory reforms Key to reviving Angola’s fortunes has been a series of 2018 presidential decrees. These allowed Angola to establish new fiscal incentives for the development of marginal fields in costly ultra-deepwater.

Legislation permitting drilling within development areas to rejuvenate exploration was also passed and the country’s first terms for IOCs relating to gas have enabled companies to commercialise the Kwanza Basin.

Angola also renewed its institutional landscape, with a new national agency for petroleum, gas and biofuels (ANPG) assuming responsibility for licensing and negotiating PSCs. This will reduce investors’ exposure to Sonangol, and the high levels of graft long associated with the state-owned oil firm.

Verisk Maplecroft’s Corruption Index projections point to an 88pc chance of corruption risks in Angola decreasing by the second quarter of 2020.

Foreign investors will also seize the chance to increase their equity stakes in existing blocks, as Sonangol divests to repay its debts.

The privatisation of Sonangol’s prized E&P arm, as well as downstream interests, offer an opportunity to reduce the NOC’s

Buhari’s backing for a speedy passing of the PIGB remains unlikely.

An opaque NNPC, unreformed by the PIGB, perpetuates the patronage system which underpins Nigerian governance.

Foreign investors will remain concerned that the legislation may retain provisions from an earlier draft that exposed them to debt repayment risks.

That version of the PIGB planned to spin-off NNPC’s liabilities to a separate entity not backed by state guarantees.

There is little prospect of new laws such as those which facilitated Angola’s gas bonanza.

Instead, Nigeria’s president and parliament are intent on imposing stricter fiscal terms.

A new uniform 10pc royalty was signed into law in November 2019, eliminating the more favourable rates enjoyed by deepwater operators.

An additional price-based royalty will see IOCs pay a further 2.5pc when oil prices are low, rising to 4pc when crude exceeds $60/bl.

The revised terms are set to render deepwater projects uncompetitive by increasing breakeven costs.

Only five new deepwater licences have been awarded in Nigeria in the last decade.

In contrast, Angola launched the first of six annual licensing rounds in October 2019.

Investment opportunities in the Kwanza and Namibe basins will enable Angola to attract new entrants, hot on the heels of Maurel & Prom, now backed

by Indonesia’s Pertamina, which entered in 2018.

Reform spurned NNPC has remained an unreliable partner for IOCs, and our corruption outlook for Nigeria indicates the country will remain an extreme risk location. Buhari shows no willingness to expedite projects that might rekindle hydrocarbons development.

Nigerian leaders are seemingly content with personally controlling distribution of the existing pie rather than taking steps to grow it—given that the latter might enable others to benefit financially and undermine their power.

Control over petroleum rents is central to Buhari’s strategy for managing militancy in the Niger Delta. Attacks by militant or criminal groups targeting oil infrastructure have significantly decreased since a 2016 peak, when fiscal pressures threatened to end amnesty payments.

The 2020 federal budget provides for continued financing of the amnesty and the improvement in security should continue for now.

While the amnesty looks set to placate the Niger Delta Avengers, dilapidated infrastructure means even a relatively minor increase in theft and sabotage could increase production disruptions to 300,000-400,000bl/d.

Sonangol has served as a potential model of reform for NNPC and will continue to make Angola an increasingly attractive investment destination in the regional race for capital expenditure.

Buhari’s approval of the PIGB in 2020 would also be a step in the right direction for investors, although they will likely remain frustrated by the pace of contract and project approval while Buhari remains in office.

*Nick Branson and Ed Hobey-Hamsher are senior Africa analysts at Verisk Maplecroft

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.