BusinessDay 15 Jul 2019

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Nigerian banks feel the pain asCBNinvestors wonder what next mulls cap on investment in FG securities In push to return banks to core lending function

LOLADE AKINMURELE

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t began with an order to lend at least 60 percent of their deposits to small businesses. Then a measure that cut how much money lenders can keep in interestbearing accounts with the apex bank by 73 percent followed.

Yet, the Central Bank of Nigeria (CBN) may have more in its arsenal as it seeks to force bank lending in an effort to boost credit to the real sector and accelerate the pace of economic recovery in Africa’s most populous nation, which has been reeling from low growth and high unemployment since an economic contraction in 2016.

Banking analysts say more lending measures will follow, as the CBN makes good its earlier threat to go after deposit money banks that were not extending enough credit to cash-strapped businesses but were more attracted to government securities.

“We believe that the apex

bank is likely to introduce additional policies to complement the recently issued regulatory measures,” Jerry Nnebue and

Phillip Anegbe of the research unit of investment bank, Cardinal Stone Ltd, said in a July 11 note to clients.

Nnebue and Anegbe doubted whether the measures introduced by the CBN so far were enough to

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Foreign Reserve - $45.12bn Cross Rates - GBP-$:1.26 YUANY-N52.32 Commodities Cocoa

Gold

Crude Oil

US$2,503.00

$1,417.50

$66.85

Weaker global growth ominous sign for Nigeria’s sluggish economy OLUFIKAYO OWOEYE

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he signs of a looming global recession are getting stronger by the day.

In a recent report by the Brookings Financial Times TIGER indexes which track global economic recovery, economic growth is declining in all of the world’s major economies, fuelled by growing trade tensions, waning global demand, and geopolitical uncertainties.

In Asia and Europe, factory

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Inside L-R: Jim Ovia, chairman, Zenith Bank Plc; Aliko Dangote, president, Dangote Group; Godwin Emefiele, governor, Central Bank of Nigeria (CBN), his son Olise; Margret Emefiele, his wife; Kayode Fayemi, governor, Ekiti State, and Ifeanyi Ugwanyi, governor, Enugu State, during Emefiele’s thanksgiving service on his reappointment as CBN governor at the Catholic Church of Assumption, Falomo Ikoyi, Lagos, yesterday. Pic by Olawale Amoo

$4bn opportunity opens for Nigerian pig farmers as China faces shortages P. 44

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NEWS FG urged to leverage regional economic, monetary integration with AfCFTA SEYI JOHN SALAU

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ollowing the recent signing of the African Continental Free Trade Area (AfCFTA)

by President Muhammadu Buhari, the Nigerian Institute of Chartered Arbitrators (NICArb) has urged the Federal Government to leverage regional economic and monetary integration to position Nigeria as arbitration hub in Africa.

The institute wants the government to take proactive measures in ensuring that AfCFTA’s arbitration arrangements are favourable to Nigeria’s interest while making efforts at domesticating the continental free trade agreement in Nigeria.

“The institute called on the FG to leverage the regional economic and monetary integration through the signing and implementation of AfCFTA, and the African Union single currency initiative in positioning Nigeria and the West African sub-region as a major hub for international arbitration,” Shola Oshodi-John, the Registrar/ CEO of the NICArb, said at a recent press conference of the 40th anniversary conference and investiture of the institute themed, ‘Building a Culture of Arbitration and Sustainable Institutions in West Africa.’

According to OshodiJohn, there is a need to revamp Nigeria’s ailing industrial sector, hence the federal government must work to protect Nigeria interest and go beyond signing the continental free trade agreement.

“NICArb called on the current National Assembly to revisit the ‘Arbitration and Conciliation Act (Repeal and Re-enactment) Bill’ and ensure the passage of the original bill propose by the arbitration practitioners into law as Nigeria positions to leverage AfCFTA,” she said.

However, the institute also advised the government to revisit the arbitration awards against it, in the case of the Federal Government of Nigeria v Process and Industrial Development Limited (P&ID). The NICArb also offers to provide technical assistance through its membership base in pioneering initiatives for corrective negotiations.

Akin Ibidapo Obe, a member of the governing council of NICArb, said government should support initiatives to build up arbitration in Nigeria, as it was now the trend in solving commercial disputes.

Obe however urged the members of the arbitration community and the general public to take advantage of the forthcoming annual regional conference in November, and register on events.nicarb.org.

Tin-Can Customs grows export to 150,930.7MT with N68.89bn FOB value AMAKA ANAGOR-EWUZIE

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n line with Federal Government diversification drive, the Ni g e r i a Cu s t o m s Service (NCS), TinCan Island Por t Com mand, has recorded a total of 150,930.7 metric tons of export with free on board (FOB) value of over N68.89 billion in the first half of 2019, January to June.

This was 32,477.83 metric tons higher than the 118,452.87 metric tons of

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export, while the FOB also has over N5.778 billion higher than N63.12 billion recorded the same period in 2018.

Most of the exported items comprise of mineral resources and agricultural produce, including sesame seeds, cashew nuts and others.

Mba Musa, Customs area controller, Tin-can Island Port, said in a halfyear report sent to BusinessDay, the Command,

during the period under review, embarked on full automation of export procedures to enable seamless transactions for exporters doing business in the terminal.

According to Musa, automating export procedure in Tin-Can Island Port was due to the need to help Nigeria achieve balance of trade.

“The milestones recorded in the area of export are clearly indicative of

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awareness by stakeholders on the available opportunities inherent in export business. The command will continue to sensitise and encourage would be genuine exporters using Tin-Can Island Port,” Musa said.

The need for facilitation of legitimate trade, he said, is presently at the front burner, and this necessitated the creation of various platforms for expeditious of dispute resolution.

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“In the same vein, efforts will remain in top gear towards the removal of bureaucratic bottlenecks and impediments in the trade value chain. Our ultimate aim is not just to key into the presidential directive on Ease of Doing business, which is in line with World Customs Organization’s (WCO) trade facilitation agenda, but to be seen as vanguard for trade facilitation in Nigeria,” he assured.

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A hearty toast to prince Francis Oluwole Awogboro “VQB”

Bashorun J.K Randle • Continued from last week

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cannot thank them enough, especially as victory is in sight. I am not at liberty to say too much as one of my opponents has taken the matter to court. It is now “sub judice”. Unfortunately, his fellow judges are too pre-occupied with mundane matters such as the removal of the Chief Justice of Nigeria; disputation over the last Presidential election (Atiku Abubakar versus Muhammadu Buhari); Governorship elections in Osun, Kano, and four other States; State Police; Dame Patience Jonathan versus Economic and Financial Crimes Commission etc. to grant accelerated hearing and deliver their judgement on a matter that is clearly of national interest. My candidacy is anchored on the doctrine of necessity!!

I hope that, in twenty years’ time the old boys of St. Gregory’s College would have consigned to distant memory an event they would not let me ever forget.

There we were at the Lagos Motor Boat Club and a Minister who happens to be an Old Boy of King’s College came by. He barely said hello to us. After he departed, the St. Gregory College guys descended on me as if I was the one responsible for what they considered to be a clear demonstration of aloofness combined with haughtiness by the Minister. Their gripe was that no Gregorian would ever conduct himself in that manner. He would certainly have exchanged warm salutations of “Up GREGS!!” followed by what they consider to be the “Gregorian hug” – mafia style!!

Indeed, he would have seized the

opportunity to avail us of the challenges of the Government and the strategies/ options being considered. According to them, a Gregorian would have felt obliged to tarry awhile longer just to connect with his own kith and kin (so to speak) in a genuine endeavour to welcome suggestions and feedback as well as feel the pulse of eminent citizens.

Till today, the Gregorians who witnessed the event keep asking: if the Minister could treat a table overflowing with billionaires with such disdain, what will he do with peasants or jobless youths?

I urge you to start preparing in earnest for the celebrant’s centenary birthday.

Tokunbo has already commenced vigorous prayers. Her husband deserves at least twenty more years.

We can all testify that in all the years we have known him, we cannot ever recall him ever losing his temper or uttering an unkind word except when he lashes out at the deplorable state of King’s College, Tafawa Balewa Square, Lagos and the tardiness of its old boys in either equalling what the old boys of St. Gregory’s College have done for their college – or even surpassing it.

The celebrant’s son Kayode has just posted the photograph of his dad on instagram with the caption: “The bestdressed 80-year-old I know.” Well son, you ain’t seem nothing yet (as Americans would say). In twenty years’ time, your dad “Awo” will still be looking dapper and the swagger will still be there!

Longevity is in the family genes especially on the maternal side. Awo’s mother passed away peacefully two years ago at the ripe old age of 104 years and until the very last, she was still in good nick with all her senses intact. Her own mother was similarly fortunate; she died at the age of 98 years. She did not show any signs of wear and tear.

By every yardstick Awo has demonstrated beyond reasonable doubt that he is a man of destiny.

We have just witnessed Tokunbo lovingly interrupting Awo’s lengthy response to a toast that has not even been proposed yet! Her excuse was, to quote her:

“I just want you to know I love you.”

She did not need to repeat what had been captured on the video which we have just watched: “My prayer for you is that you will be around when our grandchildren start getting married.”

By my reckoning that should be around 2039. So we are on course.

The Almighty always answers the prayers of those he has chosen and we are entitled to look forward to savouring yet another sublime manifestation of his loving mercies and unlimited glory.

Tokunbo has promised Awo that come 2039, she will still be delectable and radiant for him. Those who know Awo would readily confirm that such an offer cannot be resisted regardless of the size of the insurance premium. It is only in Nigeria that insurance companies belch out the mantra: “No payment no cover.”

In any case Awo is more than ready to pay.

Let us conclude matters by reminding Awo that for entirely different reasons the police sealed up the office of Oando Plc, Wings Towers, Ozumba Mbadiwe Street, Victoria Island. Awo’s party was on the ground floor within the same complex on Friday night (28th June 2019). However, here we are on Monday (1st July 2019) morning and the police who came fully armed in riot gear are astounded that amongst those who have just responded to their orders which were delivered by microphone, megaphone and loudhailers – to evacuate the building immediately are revellers from Awo’s party.

When the police demanded their proof of identity, their response was: “We are old boys of St. Gregory’s College. Prince Francis OluwoleAwogboro VQB is one of us. On the invitation card it was boldly stated: Bar inexhaustible.

The only information we are willing to give the police is that at 80 he is a great guy and we are already planning his 100th birthday on Saturday 25th June 2039.

Again, on that occasion, the Bar will be inexhaustible.

In addition we want to publicly declare our support for the candidacy of

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I urge you to start preparing in earnest for the celebrant’s centenary birthday.

Tokunbo has already commenced vigorous prayers. Her husband deserves at least twenty more years

Bashorun J.K. Randle as the next president of our old boys association. This has nothing to do with the marathon boozing.

Drunk or sober, we remain steadfast. It is a matter of principle.”

Right in front of Wings Towers, the leader of the police squad, Assistant Commissioner of Police ArinzeAgbim (not to be confused with his famous namesake, the geologist/petroleum engineer) proceeded to launch an impromptu press conference: “Everybody calls me Yellow. Even when I was a sergeant, I would not see black and call it white; or vice versa. I always tell the truth. I never mince words.

We are here to carry out orders from above.

(At that point he was interrupted by a scatato message on his walkie-talkie. It was from the Inspector General of Police Mr.AbubakarAdamu Mohammed with Deputy Inspector General, Chief TaiwoLakanuand the Assistant Inspector General of Police of Zone 2, Mr.LawalShehuon the speaker phone. The message was cryptic: All officers remain at alert.)”

Mr. “Yellow” proceeded to explain that on May 31, 2019 the Securities and Exchange Commission [SEC] released findings from the forensic audit of OandoPlc conducted by a firm of Chartered Accountants (not J.K. Randle Professional Services). SEC imposed sanctions and set up an interim management team and Board of Directors with Eng. MutiuSunmonu as the Chairman. That was the point at which the police became involved and sealed the premises.

We have now been given orders to withdraw. However, before we leave let me repeat what I have told my bosses.

Nigeria cannot have a worthy police unless you pay policemen and women well enough so that they can afford to send their children to St. Gregory’s College. This was the case in the olden days.

The police barracks in Obalende is an eyesore and national embarrassment but it is directly opposite the pristine St. Gregory’s College.

Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Leaky big four accounting firms: Heal yourselves

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t is not yet a revolution but stakeholders are chafing against the spate of audit inefficiency especially by the world ‘Big Four’ Accounting Firms (Deloitte, PwC, KPMG and EY). In 2018, they had a combined revenue of approximately one hundred and forty-eight billion US dollars and over one million staff across the globe. Over the years, a long list of scandals has battered the image and sense of value of the Big Four. It has been a case of moral and ethical famine such that discussions about the future of the Big Four are no longer one of intense fascination but of despair and frustration. As the leaky bucket of integrity drips, it seems only a few stakeholders still maintain an optimistic view of the future of the Big Four- those who believe that things will get better and those who maintain bright outlook because the non-Big Four firms do not offer any viable alternatives worth considering. But for the majority of stakeholders, there is nothing good anymore to be expected from Nazareth of the audit profession.

The question, really is, are the so-called ‘the Big Four’ accounting firms really ‘big’ in the classical sense of the word? Are they not actually networks of local firms in various jurisdictions that have a claim to a common brand and exploiting that brand status to be of some disservice to the public interest? No wonder, some stakeholders are of the view that it is becoming evident that it might be better having small excellent firms than big mediocre ones in the audit market.

There is no organization righteous in the earth that keeps doing right things and does

not sin. But, where supposedly renowned audit firms are leaky in quality and guilty of other serious malfeasances, then breach of trust is inevitable. There is ample evidence that each of the Big Four firms has had some fingers in the pie of audit inefficiency at one level or the other and consequently, their outsize influence in the audit market is peeling away. They are fast losing the steely eye gaze over which they once prided themselves and could be headed for extinction. The malfeasances of the Big Four are a legion. For instance, one of the Big Four accounting firms was criticized in 2018 for signing off the accounts of Carillion and was also fined for misconduct in the sordid audit of Ted Baker in addition to charges imposed on Partners for stealing confidential information in the US. What of its audit of the Gupta family in South Africa!

It would certainly take the firm some time to crawl out of the hole it dug for itself except it does something that would result in a ‘wow’ reaction from stakeholders.

Another of the Big Four firms had its affiliate in Japan shut down sometime in 2007 and its Indian affiliate banned for two years from auditing clients. The same firm was fined recently over its weak handling of the audit of Redcentric Plc. Yet, another of the Big Four was also fined not long ago over the poor audit of one of the units of Serco Group Plc. Also on records is the misconduct of violating rules of independence by yet another member of the Big Four. The same firm audited the accounts of Tech Data and was found to have fallen short of required standards www.businessday.ng

and was fined heavily as a consequence. These portmanteau of misconducts are not edifying and no cheering news to the investing public.

Even though empirical evidence suggests that corruption and incompetence are reasons for poor audit exercise, stakeholders do not want any error or fault or evidence of corruption in any audit engagement as long as auditing, is first and foremost, an exercise in morality.

While errors and misjudgments cannot be totally eliminated in the course of an audit exercise, it is important, however, to free stakeholders of the misconception that all errors and misjudgments can be attributed to deliberate acts of omission and corruption. The audit profession is not a portfolio of crooks but a mixed bag as in other professions. Many of the failed audits that have resulted in heavy fines may just have arisen due to a series of unconsciously biased judgments and not deliberate acts of criminality.

Nonetheless, no matter how auditors screw up their eyes to look at clients’ records, the trend of poor quality auditing will continue as long as the responsibility for reporting on own performance rests with the boards and management of organizations. The board and management of organizations know where the ‘ills’ are domiciled in their organizations and they peep while the auditors try to unravel them. Besides, auditors have ‘good’ reasons to remain in the affection of the clients such that even the most honest and contentious among them can unconsciously fail in their duties.

The audit market is a rich ground for self-

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Francis .O Iyoha serving biases as at today and consequently, formalism in the context of applying Auditing Standards (national or international, low or of high quality) is not sufficient to reverse the trend of failed and failing audit engagements. Unfortunately, the narratives about Auditing Standards being of high quality has been taken to ludicrous proportion such that (i) the auditor is denied the role and sense of personal and professional responsibility in the discharge of his legal and imperative duties and (ii) the existence of biases which grow deeper as the auditors and clients become very intimate is not given due recognition.

This calls for fundamental changes in the way audit is carried out. But until such changes have been effected, having auditors to truly serve the public interest will remain largely a mirage.

Professor Iyoha is of the Department of Accounting, Covenant University and Research Fellow, the Institute of Chartered Accountants of Nigeria (ICAN). He wrote viafoiyoha@ican.org.ng

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Circular logic

Patrick Atuanya

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he Central Bank of Nigeria (CBN), released 2 circulars in the past week and a half that have the potential to alter the current landscape of the domestic banking sector.

On Wednesday July 3, the CBN issued a notice to all banks in a circular with reference number BSD/DIR/GEN/ MDD/01/045, signed by Ahmad Abdullahi, director, banking operations, directing them to maintain a minimum Loan to Deposit Ratio (LDR) of 60 percent by September 30, 2019.

It said the ratio “shall be subject to quarterly review.”

The apex bank warned that failure to meet the stipulated minimum LDR by the specified date “shall result in a levy of additional Cash Reserve Requirement (CRR) equal to 50 percent of the lending shortfall of the target LDR.” The LDR is ratio that is used in determining the amount of loans that a bank has out versus the amount of current deposits on hand.

A high loans to deposits ratio means that the bank is issuing out more of its deposits in the form of loans, while a very low ratio means that the bank is risk averse, and not issuing as much loans as it could compared to its level of deposits.

Our calculations show that as at the end of the First Quarter of 2019, a number of the big banks were below the 60 percent threshold for LDR, meaning they would need to boost loans to

comply with the guidelines.

The CRR refers to a certain percentage of total deposits the commercial banks are required to maintain in the form of cash reserve with the central bank.

Another Circular was released barely a week later on July 10th by the CBN, limiting the amount of excess cash Banks can park with it and earn interest on.

In the circular FMD/DIR/CON/ OGC/12/019 to all banks and discounts houses titled ‘Guidelines on Accessing the CBN Standing Deposit Facility (SDF)’, signed by Angela Sere-Ejembi, director, financial markets department, the CBN said the remunerable daily placement by banks shall not exceed N2 billion.

The SDF is basically a liquidity mop-up mechanism which the CBN uses without necessarily issuing government securities.

Prior to November 2014, banks could deposit as much liquidity at their disposal with CBN and be remunerated (paid interest) for same.

The CBN capped the minimum remunerated deposit through the window at N7.5 billion in November 2014, however banks could keep excess cash with the CBN earning zero percent as they wished.

With the new framework, the allowable daily deposit through the SDF that will now be paid interest on by the CBN is now capped at N2 billion at the applicable Monetary Policy Rate (13.5% today) minus 500 basis points, equivalent to 8.5 percent.

So what exactly is the CBN trying to achieve with these rapid issuance of Circulars?

Clearly the first Circular is designed to increase the amount of loans banks give out in relation to deposits, while the second one seeks to curb the incentive banks have to keep excess funds with the CBN earning 8.5 percent

per-annum, rather than lending those same funds out and earning higher rates (in double digits), which should be a no brainer for banks under normal circumstances.

But Nigerian banks do have a reason to be cautious or risk averse, since they are just coming out of a bad loan crises, which led to the formation of the Asset Management Corporation of Nigeria (AMCON), and also a number of bank failures, leading to intervention by the CBN. The CBN’s stated objectives in issuing the Circulars are to ramp up growth of the Nigerian economy through investment in the real sector, and to encourage SMEs, retail, mortgage and consumer lending, by banks.

We would not fault the CBNs goals as access to credit is a major problem in Nigeria, which is also limiting the ability of firms to grow and job creation.

However one question would be, could this have been done differently?

The question is pertinent because normally banking sector regulators introduce maximum LDR thresholds to limit risk taking by banks.

However, in Nigeria, this introduction of a minimum LDR by the CBN encourages banks to undertake more risk at a time when the macroeconomic environment remains weak.

The regulation also encourages banks to lend to sectors (mortgages, unsecured credit cards, SMEs) that they have historically been uncomfortable lending to, which could worsen asset quality.

Perhaps the CBN should look into cutting the CRR to 10%. It is currently officially at 22.5% but some banks say the effective rate is closer to 40%. In South Africa the CRR is 2.5%, Ghana 9.5% and Kenya 5.3%.

Cutting the CRR will immediately do two things.

One it will flood the system with liquidity, and secondly it would crash

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Perhaps the CBN should look into cutting the CRR to 10%.

It is currently officially at 22.5% but some banks say the effective rate is closer to 40%. In South Africa the CRR is 2.5%, Ghana 9.5% and Kenya 5.3%

interest rates (on government securities) to 5 percent or below, especially if the CBN simultaneously reduces its open market operations (OMO) issuance or liquidity mopping.

So far so good. Now those banks that see earning 5 percent as too low especially compared to their cost of funds will be incentivized to naturally begin to perform their core function of lending to the real economy.

However, there is still one problem, which is the impossible trinity, a concept in international economics which states that it is impossible to have all three of the following at the same time: a fixed foreign exchange rate, free capital movement, and an independent monetary policy at the same time.

According to the impossible trinity, a central bank can only pursue two of the above-mentioned three policies simultaneously.

In our case that may mean forgoing the stable exchange rate or fixed naira policy of the CBN, as lower rates on government securities may make current foreign portfolio investors to exit, leading to pressure on the naira, in addition to the earlier excess liquidity from a cut in CRR. Lower interest rates however, should stimulate economic growth and reduce the crowding out effect of government borrowing (as well as reduce the government’s interest expense).

Other gains from FX flexibility and low rates would be domestic export competitiveness.

There is no doubt that the CBN is in a pickle regarding boosting economic growth (dismal for now at 2%) and currently is getting zero lift from the fiscal side. However the best policy responses though are usually those made by taking tough decisions!

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

The Nigerian code of corporate governance, 2018 Principle 11: Board committees

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n effective Board is the hallmark of good Corporate governance. Board Committees enables the Board achieve greater efficiency in the performance of its oversight functions and strengthening the governance structure.

Principle 11 of the Nigerian Code of Corporate Governance 2018 provides that “to ensure efficiency and effectiveness, the Board delegates some of its functions, duties and responsibilities to well-structured committees without abdicating its responsibilities”.

Beyond regulatory compliance, Board Committees if properly structured are indeed quite useful to the overall efficiency and effectiveness of the Board. The need for Committees is premised on the need for the Board to focus on more strategic issues and leave Committees to deal with specific matters, take informed decisions within the framework of delegated authority and make recommendations to the Board. By delegating tasks to Committees, Boards can spend the time more efficiently on strategy. Committees are at liberty to seek independent professional advice at the expense of the company and seek clarification from senior management as required.

Committees prepare the groundwork for decision making and report at the subsequent Board meetings. All decisions and recommendations are placed before the Board for information or for approval.

An effective Board is composed of Directors with diverse experience, skills and expertise. To

maximize the benefits of this diversity, Committees should comprise of Directors with relevant skills and competences in specific areas. Membership of Committees also affords Directors the opportunity of gaining better insight into the business of the company in respect of which they have oversight responsibilities.

To ensure the effectiveness of the Committee structure, the Board should ensure that Committees are composed of Directors with the relevant skills and who are able to devote sufficient time to Committee work. The Board should also ensure that the requisite information is made available to its committees timeously. Below are some of the elements that would ensure Board Committee efficiency: Committee Charters: It is recommended that Board Committees have specific Charters or terms of reference setting out their roles and responsibilities in the area of membership, quorum, scope of work, as well as authority and reporting obligations.

Effective Committee Chairs: As with the Chairman of the Board, the role of the Committee Chairman is an important one and the effectiveness of the incumbent ultimately determines the effectiveness of the Committee. Thus the Board should carefully select Committee Chairs, taking cognizance of availability, strength of character, relevant skills set (knowledge, experience, proven leadership and people’ management) respect from peers, etc.

Accountability to the Board: The Board must clearly communicate to Committees, its expected www.businessday.ng

reporting format, substance and frequency of receiving such reports. Usually, the expectations of the Board are encapsulated in the Committee Charters. The Board should ensure that the performance of its Committees is evaluated annually to ensure that they continue to be effective.

An emerging trend that makes for even greater effectiveness is the attendance of non-Committee members of the Board at Committee meetings.

This practice ensures that deliberations at the Board meeting are more inclusive as the nonCommittee members would have had the benefit of the reasoning that went into recommendations by the Committee to the Board. To retain the utility of the Committee system, it is important that the composition be refreshed periodically whilst ensuring that Directors with relevant expertise and experiences are on Committees to which their experience and qualifications are best suited.

To facilitate adequate oversight, the Code recommends that the Board should establish committees responsible for Nomination and Governance, Remuneration, Audit and Risk Management .It may combine any of these responsibilities on Board committees, taking into consideration the size, needs and other requirements of the Bank.

Each committee should be composed of at least three members.

The Committee responsible for nomination and governance is to oversee the annual performance evaluation of the Board and establish a formal criteria and transparent process for Board appointments, re-appointment and recommendation of suitably qualified members to

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Bisi Adeyemi the Board or its committees as well as have an input into Succession Planning. The Committee should work with the Company Secretary to arrange induction and training programmes for Directors. A recent publication from the Institute of Chartered Secretaries and Administrators summarizes the role of the nomination committee as having three priorities: developing the talent pipeline; broadening the search for future directors; and looking at the longterm strategy and resourcing accordingly.

The Committee responsible for remuneration is required to develop and recommend to the Board, a formal, clear and transparent framework for the Company’s remuneration policies and procedures.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. For more articles, kindly download the DCSL Knowledge Hub via this link https://www.dcsl.com.ng/index/pages/page/dkhub

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EDITORIAL Publisher/CEO

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

Bashir Ibrahim Hassan

The feudal republic of Nigeria

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t is now 42 days since Mohammadu Buhari was declared re-elected as president for another term of four years by the Independent National Electoral Commission (INEC), following an election that tested all the fissures that hold Nigeria together, but the president is yet to name a cabinet.

To be clear, the constitution from which the president derives executive powers obligates him to govern with the aid of ministers. This compares poorly with countries like South Africa, India and others whose presidents had their cabinet merely days after being inaugurated.

The president operates as if this were a feudal system where a liege lord with many vassals serving at his pleasure, gives him the freedom to operate at a pace in sync with his whims.

To truly understand Nigeria’s warped democratic system, policy directives are now issued by Permanent Secretaries whose remit is to implement them. This gives them room to smuggle in strange directives, frame policy to suit their whims and allow them to run circles around a new but inexperienced minister when he is

appointed.

Recently, the Ministry of Power, Works and Housing issued farreaching policy directives to the Nigerian Electricity Regulatory Commission (NERC), the Bureau of Public Enterprises (BPE), the Nigerian Bulk Electricity Trading Company Plc (NBET) and the Transmission Company of Nigeria (TCN) which clearly were directives only a minister could issue.

Operators say the directives have no force because it violates the Electricity Sector Power Reform Act 2005, which gives the minister the power to make rules.

This inability to choose a cabinet comes at a huge cost to the economy. Since the beginning of the year, stocks are down 6.5 percent on average and the stock market is reeling. Policy inconsistency festers, the public sector which is unwieldy and unproductive lose focus and foreign investors without ministers to interface with and secure assurances on the security of their investments, stay away. This partly explains how Ghana attracted more foreign direct investments than Nigeria last year.

Some foreign government agencies and development finance institutions are not engaging with the government over a lack of ministers and this imperils

their plans. This fuels the perception that Nigeria is unserious.

The Nigerian government cannot afford to keep operating with a cavalier attitude and an entitlement mentality as if the world owes it something. Capital, investments, and talent move to serious economies. We spend an inordinate amount of time making routine decisions. We took forever to sign the African Continental Free Trade Agreement, waste so much time contemplating whether to sign bills into law and respond to foreign policy issues too late.

A president’s cabinet typically consists of reformers, accomplished people in various sectors of the economy from whom the president leverages on their skill, experience, and contacts to achieve his vision. Despite his character flaws, the American president Donald Trump has built a stronger economy because his cabinet was full of competent people. But in the feudal republic of Nigeria, the courtiers would rather be mediocre than it be said they had more colour than their Lord.

The feudal tendency of the president has permeated the states hence governors who spent months campaigning for office cannot name a cabinet to

assist them to implement policies they gleefully announced.

Babajide Sanwo Olu, for example, sat on many panels in Lagos discussing policy and governance, attended a programme at Harvard before inauguration yet failed at the most basic task of naming a cabinet though he governs a state with an economy larger than two-thirds of the states in Nigeria.

Last month, there were protests in Kaduna and Abuka over the re-appointment of Abba Kyari as chief of staff to the president, an indication of the emerging power struggle among Buhari’s courtiers who seem to be chosen not on the basis of aptitude but how convincing they can further the argument about the ‘emperor’s new cloth.’

Starved of a robust debate on policies including the chant to lift 100million people out of poverty, the consequence is an economy in tatters while a riotous band of paid sycophants celebrates on social media the president’s ability to use the latrine unaided as a landmark achievement, while he mortgages the future of a generation. Nigerians must realise that the world will move on with or without it; it must get serious or watch the country go the way of Venezuela.

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

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Nigeria’s signing of AfCFTA must be meaningful, not perfunctory global Perspectives

OLU FASAN

T

wo weeks ago, on 7 July, President Muhammadu Buhari signed the agreement establishing the African Continental Free Trade Area (AfCFTA) at the 12th Extraordinary Summit of the African Union in Niamey, Niger Republic.

This was, of course, well over one year after the AfCFTA was launched in Kigali, Rwanda, in March 2018. Notwithstanding, as someone who wrote several times in this column urging Nigeria to sign the AfCFTA agreement, I congratulate President Buhari for eventually, if belatedly, doing so.

Yet, Nigeria’s aberrant behaviour would make a good case study in African economic diplomacy and political economy.

Here is a country that has always played a critical role in developing a vision of Africa’s economic integration and that has been at the centre of the economic diplomacy and summitry aimed at actualising the vision, yet whose own domestic political economy has always led it to act at home in ways contradictory to the fulfilment of that vision. Truth is, when it comes to African economic integration, Nigeria always talks the talk, but rarely walks the walk!

Right from the establishment of the Organisation of African Unity in 1963, Nigeria was at the forefront of the advocacy for the economic integration of the continent and contributed significantly to the process of institutionally achieving that vision. For instance, Nigeria hosted, in 1980, the African Union’s summit that produced the Lagos Action Plan for African Economic Community and, crucially, the AU’s summit, in 1991, that led to the adoption of the treaty establishing the African Economic Community, known as the Abuja Treaty, which laid the foundation for formation of a continental free trade area, namely the AfCFTA. And, of

course, it was a Nigerian, Ambassador Chiedu Osakwe, who chaired the Negotiating Forum for AfCFTA and it was Nigeria’s trade minister, Dr Okechukwu Enelamah, who was responsible for the negotiations at the ministerial level.

Given Nigeria’s contributions to the successful launch and conclusion of the AfCFTA negotiations, it was not only deeply embarrassing but inexcusable that President Buhari refused to attend the launch of the AfCFTA in Kigali, let alone sign the agreement. But why?

Well, the answer lies in Nigeria’s political economy. Trade policy decisions in Nigeria is highly politicised and opaque, with successive presidents often ignoring the recommendations of formal institutions, such as the trade ministry, but listening instead to the views of politically well-connected individuals and interest groups. Recently, during the 2019 Mo Ibrahim Governance Weekend in Abidjan, Cote d’Ivoire, Alhaji Aliko Dangote openly opposed the AfCFTA, saying the priority should be on regional economic communities, such as ECOWAS. Truth is, the views of influential manufacturers like him, often expressed through informal channels, heavily influenced Buhari’s decision not to sign the AfCFTA agreement in March 2018 and his government’s subsequent dithering or vacillation on the issue.

President Buhari said Nigeria delayed signing the AfCFTA agreement because “We need the full support and buy-in of our private sector and civil society stakeholders and the public in general”. Few would disagree with the need to secure stakeholder buy-in for an agreement that has distributional consequences.

However, the truth is that there was nothing that emerged from the extensive year-long stakeholder engagement, which included several months of nationwide consultation and sensitisation exercise, an independent economic analysis and an impact and readiness study, that shouldn’t have been known or, indeed, that wasn’t known, a year ago!

For instance, the chairman of the impact and readiness committee, Desmond Guobadia, said when presenting his committee’s report to the president that, “The AfCFTA provides immense opportunities for Nigeria’s manufacturing and services companies to expand to Africa”. Buhari echoed that view at his signing of the

agreement, saying: “Our consultations and assessments reaffirmed that AfCFTA can be a platform for African manufacturers of goods and providers of services to construct a regional value chains for made-in-African goods and services”. But these are arguments that several analysts and commentators, including this column, have adduced since March 2018, and it shouldn’t have taken Nigeria well over a year, with possibly huge resources expended, to come to that simple conclusion.

That said, it is right, from a political economy point of view, that all critical interest groups, both refuseniks and demandeurs, must feel that their views have been heard. What’s more, President Buhari, himself a mercantilist, needed something like a comfort letter, which came in the form of the recommendations of the impact and readiness committee, to give him the necessary cover to be able to sign the agreement. Given all that, you might say that the long delay, if it produced a good outcome, was justified.

But it’s important to understand the political economy situation, because unless the signing of the AfCFTA agreement was a product of a genuine domestic consensus in favour of AfCFTA, it would be a meaningless exercise. The truth is that ex ante position can determine ex post behaviour. In other words, if Nigeria had to be dragged kicking and screaming, against strong resistance from powerful domestic interests, before signing AfCFTA, well over one year after the agreement was concluded, how would it behave with respect to the implementation of the agreement?

Let’s face it, Nigeria has always failed to implement agreements it reluctantly signed. For instance, Nigeria was one of the unenthusiastic or reluctant participants at the Uruguay Round negotiations that led to the WTO agreement, and, to date, it has failed woefully to implement its WTO commitments, as Nigeria’s successive WTO Trade Policy Reviews have shown. Similarly, Nigeria was the last country to sign up to the ECOWAS Common External Tariff agreement in 2006, and, even today, it has not fully implemented the agreement. Truth is, Nigeria has not been faithful in the implementation of the ECOWAS Trade Liberalisation Scheme (ETSL). As one analyst put it, “Nigeria has displayed an absence of leadership in relation to the ETSL and

‘

AfCFTA is not compatible with Nigeria’s protectionist practices, such as import prohibitions.

However, free trade agreements often serve as external constraints on domestic protectionist pressures and as a trigger for farreaching domestic reforms

ECOWAS CET and has in the past behaved in an obstructionist fashion”. So, Nigeria’s signing of the AfCFTA agreement is Niamey was the easy part; the challenge is now implementation!

But what should Nigeria do now that it has signed the AfCFTA agreement? Well, I would suggest four things. First, it must ratify the agreement speedily; second, it must identify the institutions it would need to participate fully and beneficially in AfCFTA and work towards creating those institutions; third, it needs a new trade policy mindset and culture change that move away from protectionist thinking to economic liberalism and must reform its trade policy accordingly; and, fourth, it must challenge its manufacturing and service companies to begin to produce for the African market, to become exportoriented, and must support, not protect, those companies by removing the supplychain constraints that can limit their ability to produce quality goods and services for export across Africa.

However, the immediate action must be to ratify the AfCFTA agreement, because treaties are not self-enforcing in Nigeria. In its 2017 trade policy review, Nigerian officials cited “the difficulties in the domestication” of its WTO commitments for its failure to meet the commitments. Therefore, the 9th National Assembly must speedily domesticate Nigeria’s AfCFTA commitments.

What’s more, Nigeria must also create other relevant institutions and laws, including a robust trade remedies regime to deal with injurious trade practices, a key concern.

Nigeria must seek international support, such as within the aid for trade framework, to build those institutions.

But the biggest challenge is the policy mindset. AfCFTA is not compatible with Nigeria’s protectionist practices, such as import prohibitions. However, free trade agreements often serve as external constraints on domestic protectionist pressures and as a trigger for far-reaching domestic reforms. Thus, Nigeria must use AfCFTA to transform its domestic policies and institutions. That way, its signing of the agreement won’t be perfunctory, but meaningful!

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

Finally, we’re in the AFCFTA

A

fter months of deliberations and the work of committee after committee trying to evaluate the impact of Nigeria joining the African Continental Free Trade Agreement (AFCFTA), the administration finally bit the bullet and signed Nigeria up. About time really. Given that all but three African countries had signed up, Nigeria increasingly looked isolated as the only big holdout.

Officially the reasons given were to address key stakeholder concerns around the rules of origin and market access. These concerns are valid of course. Imagine a company based in Japan decided to import an almost fully built car into Cotonou, paint it, strap on some headlamps, and re-fit the tires, and then tries to brand it as a made in Benin Republic vehicle granting it tariff-free access to Nigeria. Now that would be ridiculous. Yes, I’m looking at you, national automotive policy. The potential for abuse of rules of origin was and is a very real problem. But this problem, and most of the others pointed out by the do-not-sign camp, apply to all the members of the AFCFTA. In fact, deliberations on rules of origin and other such details were only set to happen last June.

And how can you tackle these challenges if you are not at the table?

Unofficially, you didn’t need to be a conspiracy theorist to see why there was a bit of hesitancy in signing up. One of the popular slogans of this administration has been “we must produce what we consume”. That is philosophically at odds with the idea of free trade with anyone. You can’t shake off the protectionist leaning tint in policy making over the last few years.

To be fair this administration is not the first to dabble into the protectionist arts. Nigeria has historically been a high-import-tariff country with tariffs across a standard basket of goods roughly 10 percentage points higher than the sub-Saharan African average and double the Middle-East and North Africa average. There was a bit of trade liberalization around 2003 but the protections are rising up again. Given that background it is not surprising that there was some political opposition to Nigeria joining the AFCFTA. The National Labour Congress (NLC) even labelled it an “extremely dangerous and radioactive neoliberal policy initiative”. I did not know trade policies could be radioactive.

Still the fact that everyone else except Benin and Eritrea signed up and Nigeria risked becoming isolated in Africa probably put a lot of pressure on the administration to sign. Also, the work done but the National Office for Trade www.businessday.ng

Negotiations helped in convincing key officials.

Finally, we are in.

So, what do we get now that we are in? Well, nothing for now. The agreement is still quite some way from being implemented and there are still many things to negotiate. Don’t expect any overnight effects. Plus, there are many other trade challenges that the AFCFTA will struggle to overcome. But in the medium term there should be benefits. The first of which is that Nigerian consumers should have access to cheaper goods from across the continent. Given that a large fraction of the Nigerian population is poor then having access to cheaper stuff is a big deal. The productivity centred part of our industry should also be licking their lips at the opportunity for access to big African urban centres. Imagine if you somehow managed to be competitive in Nigeria today without any kind of government protection or support.

These are probably very exciting times for you.

The flip side to that, however, is with regards to those firms who have historically survived by convincing government to ban or restrict their imported competitors. All those journalists who write those “Nigeria loses x billion naira to imported y” articles may have to rethink their marketing strategy. The firms involved will have to start to think about productivity growth

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ECONOMIST

NONSO OBIKILI

or they might run into trouble. Note: we don’t’ have electricity is not a valid excuse. Given our unfortunate history with protectionism, those firms are not insignificant in number.

The big challenge for policy makers is to work towards enabling us to compete effectively. The lazy policy days of banning imports to boost local production are probably coming to an end. The AFCFTA means we are going to need firms that are as efficient as those in Ghana and as competent as those in Kenya.

This is Nigeria though. We can outperform anybody if we really put our minds to it.

Dr. Nonso Obikili is Chief Economist at Business Day.

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The most dangerous man in Europe

A Balkan Riding high betrayal

How to defuse the threat that Matteo Salvini poses to the euro

There needs to be a deal between the European Commission and Italy

O

N JULY 8TH euro-zone watchers breathed a sigh of relief. The zone’s 19 finance ministers backed the European Commission’s decision that Italy should not be penalised for allowing its public-debt burden to rise in 2018 in violation of the EU’s fiscal rules. Thanks to savings of 0.4% of GDP for the current year, cobbled together by Italy’s governing coalition, a damaging confrontation seems to have been resolved.

In truth, however, it has merely been postponed. The grim reality of Italy’s public finances remains unchanged. Its deficit is on course to exceed the EU’s threshold of 3% of GDP in 2020, its debt is sky high and, worst of all, it is plagued by a persistent absence of growth. If Italy is to dispel the ever-present air of crisis, a much more farsighted deal will be needed.

Since the euro was introduced, over 20 years ago, Italy has steadily fallen behind the rest of Europe.

The average citizen in Germany, France and Spain is a fifth better off, in real terms, than in 1999; incomes in eastern Europe have more than doubled. But the average Italian is no richer.

Dissatisfaction at this record has been skilfully converted into votes by Italy’s government, an unwieldy coalition between the Northern League and the Five Star Movement. The League’s leader, Matteo Salvini, has been able to whip up anger against two main enemies: the EU, which he says is a “gulag” that imposes wretchedness, and the inflow of migrants from Libya, which he also blames in part on the EU. Six years ago the League managed only 4% at the ballot box; today it is the country’s most popular party. Thus Mr Salvini has used the politics of grievance to make himself the most powerful man in Italy (see article).

America’s expansion is now the longest on record

What could bring it to an end?

A

ROUND THE world investors, businesses and central bankers are grappling with a startling fact: at the end of July America’s economy will have been growing for 121 months, the longest run since records began in 1854, according to the NBER, a research body. History suggests there will be a recession soon. And plenty of

He is not yet prime minister, but he surely intends to be.

This is a recipe for continual confrontation with Brussels. And that, in turn, is the EU’s most alarming problem. Italy’s public debt is a colossal €2.3trn ($2.6trn), or 132% of GDP. The country is too big to bail out. Its failure to grow makes its finances—and the banks exposed to them—fragile. A row over its budget last year unsettled markets before the coalition made hasty concessions. The latest uneasy truce is unlikely to last.

The Italian coalition says the EU’s fiscal rules choke off demand-led growth. Mr Salvini has promised huge tax cuts. Luigi Di Maio, his coalition partner, wants more welfare. Brussels says the problem is structural; anyhow, it has already granted Italy over €30bn of extra fiscal space since 2015, nearly 2% of annual GDP. This vexes northerners, who want the rules enforced.

Neither side is entirely in the right. Italy’s economy, hit by slowing global trade, is unlikely to be as near its potential as the com-

mission reckons. But the coalition’s attempt at stimulus last year backfired when markets took fright. Though interest rates have since come down, Italy’s borrowing costs, once near those of Spain, are now within spitting distance of Greek yields, which have fallen with the prospect of a new centreright government.

Many of the reasons for Italy’s bleak growth prospects date back decades. Courts operate at a glacial pace; bureaucracy is labyrinthine. The services sector is sheltered from competition. Countrywide pay agreements keep wages too high in the south, discouraging formal employment there. Far from tackling these ingrained problems, the government has ignored them and instead undone unpopular but necessary reforms to the pensions system. In light of all this, last-minute concessions to the EU’s fiscal rules solve nothing.

Confrontation is merely deferred until the next time the commission reviews Italy’s books. The threat of an accidental bond crisis never fully recedes.

Instead of haggling over tenths of a percentage point, the commission should enter negotiations over next year’s budget aiming for a more ambitious agreement.

It should be flexible over public spending, on the condition that Italy enacts growth-enhancing reforms. Those reforms are more likely to work if their implementation is supported by fiscal easing.

The public-debt ratio would then fall more quickly.

Such a deal offers something to both sides. Italy’s populists may ignore reprimands from Eurocrats, but they do worry about the markets. If they were to accept some curbs on their spending, they would regain some of their credibility with investors, and bank the electoral benefits of higher economic growth to boot. For Brussels, a deal along these lines would defuse the long-term threat that Italy poses to European financial stability. Eurocrats should remember that, as Italy falls further behind, the resentment that has fuelled Mr Salvini’s alarming rise will only grow.

people are gloomy. Bond markets have been sounding the alarm, as long-term interest rates sink below short-term ones, often a harbinger of a downturn. Manufacturing firms are wary; indices of business confidence are tumbling. Yet equity investors are still buoyant. The stockmarket is going gangbusters, rising by 19% so far this year. And in June America’s economy created a whopping 224,000 new jobs, more than twice as many as needed to keep up with the growth of the workforce. The result is a puzzle that matters a great deal. America’s economy accounts for a quarter of global output, so if it stumbles the world will, too. But if it proves able to extend the cycle a lot longer, it may be time to rewrite the rules for how all rich economies behave.

The conflicting signals reflect an unusually sluggish and stretched expansion. Some of that is to be expected after the worst financial crisis in 80 years, but as our briefing explains, it is also owing to deeper changes in America’s $21trn economy. Growth is slow but more stable as activity has shifted to services and intangible assets. Thanks to new regulations and the recent memory of the bust, there are few signs of wild mortgage lending, over-investment or reckContinues on page 19

Monday 15 July 2019

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In Association With

Ituri’s injuries

Killings in Congo’s north-east spark fears of a return to war Militias are killing and possibly eating civilians

A

S HE SLIPPED out of consciousness, Batsi Lokana watched the militiamen who had attacked him slice off his mother’s head. When he came to, her body was gone. “Either they ate her, or they threw her into the river,” he surmises from his hospital bed in Bunia, the capital of the Democratic Republic of Congo’s Ituri province. Given Ituri’s history of gore, it is not a far-fetched conclusion. The past two decades have seen civil war, mass killings, systematic gang-rape and a vile scramble for loot. For some militias, cannibalism is just another way to terrify one’s enemies.

Last month saw a reprise of the violence as Ituri’s cattleherding Hema and seed-sowing Lendu ethnic groups again turned on each other. Armed men emptied villages, burned down houses, hacked bits off their occupants and ripped the fetus out of at least one woman.

A mass grave found in the village of Tche contained 161 bodies, babies and small children among them.

At least 276 people have been killed, estimate activists in Bunia. Some 300,000 more have fled, aid workers reckon. Most of the victims have been Hema.

It was the worst violence since late 2017 and early 2018, when scores were killed and hundreds of thousands more fled before an uneasy calm returned.

Outsiders often assume that the fighting springs from ancient ethnic hatred. It does not.

True, the Hema and Lendu have been at each other’s throats for some time. But their enmity has been fostered, and perhaps even brought into being, by outside forces. Belgian colonists favoured the Hema, just as they did the Tutsi in neighbouring Rwanda. Mobutu Sese Seko, Congo’s post-independence dictator, gave plum posts to the Hema, who acquired much of Ituri’s finest land. The more populous Lendu looked on resentfully.

Such tensions are easy to exploit. Hema and Lendu militias have been armed in the past by outsiders with an eye on the gold that studs Ituri’s river-

beds and the oil beneath Lake Albert. Mr Lokana reckons that the men who killed his mother were members of CODECO, a Lendu agricultural collective established in the 1970s. Farming support groups are not normally peopled with killers. CODECO, however, is long believed to have had a sideline in mysticism and fetishism. Nursing land-related grievances against the Hema, it is also accused of radicalising and training Lendu fighters.

Hema representatives say that CODECO fighters have started much of the violence (although some Lendus have been killed too). Its fighters, some wearing hats with a bullet dangling from them as a charm, have been accused of ritually eating Hema flesh.

Many suspect that the group, which seems to have petrol, weapons and ammunition in abundance, is backed by one of Congo’s meddlesome neighbours. The violence was far from spontaneous, says Victor Ngona, a Hema leader in Bunia.

“This was planned. You don’t just wake up one morning and start cutting people up as if they are trees.”

Ituri was one of the bloodiest theatres of the second Congo war of 1998-2003. Militias butchered at least 55,000 people. Much of the violence can be blamed on the invading Rwandan and Ugandan armies. Both countries used proxy militias to plunder Congo’s mineral resources.

Uganda backed and armed Lendu militias. Rwanda threw

its weight behind the Union of Congolese Patriots (UPC), a Hema militia that had previously enjoyed Kampala’s support.

The tit-for-tat massacres reached a peak as Uganda, under international pressure, withdrew its troops from Bunia in 2003. Lendu militiamen, some wearing human livers round their necks, poured into the town. The UPC then displaced them. Each time Bunia’s civilian residents paid the price. Child soldiers sauntered drunkenly down streets lined with corpses that had been half chewed by Bunia’s dogs. Ducks gobbled up pieces of human flesh. Tens of thousands fled to UN compounds, but the peacekeepers, lacking a mandate to protect civilians, could do little—even when the militiamen taunted them by tossing bodies over the razor-wire.

With some people warning of genocide, foreign powers were galvanised into action. French troops cleared Bunia of the militias. Order was mostly restored, holding for more than a decade.

The International Criminal Court jailed Thomas Lubanga, the UPC’s leader, for 14 years in 2012. Bosco (“The Terminator”) Ntaganda, a commander in the militia, may face a life sentence after the court convicted him of war crimes on July 8th. Two Lendu militia leaders were also tried. One was acquitted.

Yet much was also left undone. Grievances over land and marginalisation have remained largely unaddressed. A

wave of land-grabbing in recent years has increased resentment among the Lendu. Although most of the militias were disbanded, little effort was made to reintegrate their members into society. Drifters from the conflict, skilled in pillage but unable to find gainful employment (of which there is little), have left a deep pool from which groups like CODECO can recruit.

Although there are officially no foreign troops on Congolese soil, Ituri is in danger of reliving its past. As in 2003, tens of thousands of terrified civilians are again sheltering in schools, churches and a handful of cashstrapped camps. Ebola, which broke out in neighbouring North Kivu province last year, is adding to the misery, killing 136 people in Ituri. New cases were reported in Bunia last month.

The Congolese army is a bit more disciplined than in 2003, when its soldiers in Ituri sold their weapons to Lendu rebels.

It recently chased the militiamen out of their hideouts in the woods. Halting the fighting will be tough, however. The army has dispatched some troops, as has the UN peacekeeping force in Congo, but most are pinned down by conflicts elsewhere in the country. The militiamen may have been beaten back, but they are still armed and hiding out. A desire to avenge recent attacks is likely to grow. Unless the violence can be checked, Ituri’s residents will fear that the ghosts of their recent past are being reawakened.

America’s expansion is now the longest on...

Continued from page 18

less financial firms. Inflation is remarkably subdued. These forces mean that a placid expansion can continue well beyond historical norms, but also suggest that the way it will eventually end will be different. Recessions used to be triggered by housing bubbles, price surges or industrial busts. Now you should worry about globally interconnected firms, a financial system addicted to cheap money and a political system that is toying with extreme policies because living standards are not rising fast enough.

Average GDP growth during this expansion has been a mere 2.3%, much lower than the 3.6% that was seen in America’s three previous expansions. That reflects some deep malaises. The workforce is ageing. Big firms hoard profits and invest less. Productivity growth has been slow. Robert Gordon, an economist, worries that America’s genius for innovation is flagging.

Emojis and bitcoins are no substitute for breakthroughs such as jet engines or the internet.

That is the bad news. The good news is that the economy may be less volatile. A third of America’s 20th-century recessions were caused by industrial slumps or oilprice shocks, according to Goldman Sachs. Today manufacturing is just 11% of GDP and each dollar of output requires a quarter less energy than in 1999. Services have become even more vital, at 70% of output. Instead of fickle factories and Florida condos, investment has shifted to intellectual property, which now accounts for more than a quarter of the total. After the searing experience of 2008, the value of the housing stock is 143% of GDP, well below the peak of 188%. Banks are rammed full of capital.

Most remarkable of all is very low inflation, which has averaged 1.6% over the course of the expansion. In many past downturns the jobs market overheated, causing inflation and leading the Federal Reserve to hit the brakes. Today

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Monday 15 July 2019

BUSINESS DAY

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Tech that

France’s digital tax riles the White House Another front in America’s trade wars may open

I

T CAN be horribly difficult to tax tech giants’ profits. They stash their intangible capital, such as intellectual property, in tax havens, booking only low profits elsewhere. There were screaming headlines in 2018 when it was uncovered that Amazon’s British subsidiary paid £1.7m ($2.2m) in corporate tax despite revenues of $11.4bn. Rich countries have haggled over how to reform the global tax system, making progress in a number of areas, but not on taxing tech. Now France, it seems, has had enough.

On July 11th it passed a bill allowing it to levy 3% on the French revenues of big internet firms—those with at least €750m ($844m) of revenue worldwide and €25m ($28m) within France.

That has not gone down well at the White House, which says the measure unfairly takes aim at American companies like Google and Amazon. On the eve of the French vote, the United

States Trade Representative said it would investigate France under Section 301, legislation that allows it to defend itself against discriminatory actions abroad, and which it has already used to levy tariffs on China. Expect similar measures, perhaps hitting French exports such as cheese, to follow.

Some think France’s unilateral action is mis-timed. Several European countries, Britain among them, are mulling digital-services taxes. But all say they would prefer

a global deal, which the OECD, a club of rich and middle-income countries, is trying to broker.

France’s action, critics say, could now undermine that multilateral process. What is more, a world in which different countries imposed different digital tax regimes would be horribly messy.

That may be true. Yet some European countries feel frustrated that America has dragged its feet over the OECD plans—precisely, they suspect, because it wants to protect its largest firms. A back-

up plan had been to levy a digitalservices tax across the European Union. But that move has been stymied in part because some smaller European countries also have an interest in maintaining the status quo, particularly those, like Ireland, whose generous tax regimes have helped them attract the European headquarters of big tech firms.

France says that its digital tax will last only until there is a global agreement that will replace it. Furthermore, says Bruno Le Maire, France’s finance minister, tax is a “sovereign matter”.

Such notions should hold sway at the Trump White House. The president is not a big fan of big tech firms (Jeff Bezos, the boss of Amazon, also owns the Washington Post, a newspaper that he detests). His administration and Congress are threatening greater regulation of Silicon Valley firms. But foreign governments demanding a slice of their profits or revenues may be a different

matter. A statement by Amazon declared: “We applaud the Trump Administration for taking decisive action against France and for signalling to all of America’s trading partners that the US government will not acquiesce to tax and trade policies that discriminate against American businesses.”

Underlying everything is a sense within America that Europeans, with few digital champions of their own, have reserved a special vindictiveness for worlddominating Silicon Valley firms.

The European Commission has in recent years levied billions in fines against Google over anticompetitive practices. The Irish government was ordered to claw back $15bn from Apple in 2016, after the commission ruled it had offered the firm a sweetheart deal.

Facebook, too, could be hit for alleged privacy breaches. All this at a time when America and the EU are discussing a trade deal. Those talks have hit a wall. France has just added another brick.

Acosted

Was Jeffrey Epstein’s plea deal fishy?

It was soft enough to jeopardise the job of a current Trump cabinet member

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HE INDICTMENT of Jeffrey Epstein on charges of sextrafficking described a pyramid scheme for the sexual abuse of minors. Mr Epstein would pay hundreds of dollars apiece for sexual encounters with adolescent girls at his mansion in Manhattan’s Upper East Side and then pay them to recruit other underage girls. When police searched the residence they uncovered hundreds of pictures of nude, young-looking women— some on CDs kept in a locked safe with names like “Misc nudes 1” and “Girl pics nude”. Three personal employees apparently aided in the scheme. This is all revolting, but it is hardly a great surprise.

More than a decade ago police and prosecutors stumbled across a similar pattern of conduct in Palm Beach, Florida, where Mr Epstein owns another mansion.

In a later civil case, the victims alleged that hundreds of young girls had been abused. Yet Mr Epstein got off remarkably lightly. His plea deal, which was not first shown to the victims as required by federal law, included charges of “soliciting prostitution” from a girl as young as 14 (and thus well below the state age of consent). He received a sentence of 18 months, of which he served 13 months in the private wing of a county jail. Mr Epstein was released for six days out of the week to go to

defence team included Alan Dershowitz and Kenn Starr, two lawyers skilled in defending the indefensible.

The evidence in the original case appears overwhelming. In an interview with the Miami Herald the lead detective recounted phone records, flight logs and instructions for delivering flowers to one of Mr Epstein’s young fixations—alongside her high-school report card. But the difficulties of securing convictions in cases of rape or sexual abuse are well known.

work. Harsher sentences are doled out for forging a check.

The case has thus come to symbolise something larger, about unequal justice for those with the right connections, or who can afford an all-star defence team. Mr Epstein is routinely described as a billionaire.

Forbes, which chronicles America’s nine-zeroed class, says he is not and points out that his money-management firm, registered in the Virgin

Islands, produced no public records and no list of clients. The magazine has never included him in its list of the 400 richest Americans. What is true is that Mr Epstein had money for private jets, a private island and a handful of houses. He was also on first-name terms with two presidents, Bill Clinton (“Jeffrey is both a highly successful financier and a committed philanthropist,” he once said) and Donald Trump (“I’ve known Jeff for 15 years.

Terrific guy. He’s a lot of fun to be with.

It is even said that he likes beautiful women as much as I do, and many of them are on the younger side,” Mr Trump told a magazine almost two decades ago). Since he was charged in 2006 both men have distanced themselves from Mr Epstein.

Wealth, child abuse and presidents are powerful ingredients for conspiracy theories. The truth may be more prosaic. Mr Epstein’s original

Monday 15 July 2019

BUSINESS DAY

COMPANIES & MARKETS

21

COMPANY NEWS ANALYSIS INSIGHT

Markets

Nigeria’s biggest companies shed N753.89bn in 7 months DAVID IBIDAPO

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igeria’s top five most capitalized firms on the equity market with the exclusion of MTN and Airtel Africa, so far in the year 2019 have shed significantly as a market rout takes a toll on the value of investors’ holdings, BusinessDay analysis show.

Not confident and optimistic in Nigeria’s fiscal policy to determine a defined path for the economy, investors’ sell off activities resulted in five bellwethers losing a whooping N753.89 billion in market value in the last 7 months.

Amongst the bellwethers is Dangote cement market value which lost in value N284.5 billion, stood as the worst performer amongst peers on the NSE30 index.

Dangote cement saw a huge correction in market price in May after a somewhat “market cap competition” with MTN Nigeria who came into the market through a listing by intro-

duction, forced prices down by 15.6 percent from N205 to current levels at N173 to reflect the inherent negative market sentiment.

This leaves the stock currently N3 naira away from its 1-year low levels of N170.

Stock of Nestle Nigeria which followed closely in market value behind MTN Nigeria and Airtel Africa on Friday dipped to its 1-year lowest price at N1225 after a 2 day continuous decline in price.

This saw the largest food company by revenue lose in market value a total of N194.2 billion in 7 months.

Nestle which recently announced a pilot program to track its supply chains using block chain, in order to have participation and traction with stakeholders and consumers closed bearish on Friday after plunging 4.30 percent, its biggest decline in the last 5 trading weeks.

Moreover, Nigeria Tier

one banks which stood as the most capitalised banks on the exchange within the banking industry collectively shed value to the tune of N275.12 billion in the last 7 months.

These banks which includes Guarantee Trust Bank, Zenith Bank and Access Bank came behind Nestle after losing N141.26 billion, N130.3 billion, and N3.55 billion in market cap respectively.

Coupled with the preva-

lent sentiments of investor, the recent loan to deposit ratio (LDR) revision of the apex bank CBN to 60% saw investors on the exchange negatively react seeing most banking stock nose dive.

The year 2019 has recorded so far some market moving activities ranging from the general elections, announcement of results which investors reacted negatively to, the introduction of MTN shares and Air-

tel shares which provided temporary market boost.

Going forward, analysts remain pessimistic towards the Nigeria equity market on the back of sluggish fiscal stance in determining economy direction and macroeconomic exposure to global shock.

“I think the market will remain choppy until we see bold policy statements and reforms from the fiscal authorities,” Gbolahan Ologunro, equity analyst at CSL stockbrokers noted.

“The silver lining may be the rate cuts from the US fed which should increase capital flow risky assets of emerging markets; however, I do not see Nigeria benefitting from this move on the back of trade concerns between US and China,” he explained.

While the coming earnings season may provide some respite for stocks that are currently hit by inherent market sentiment on the back of strong earnings, “this isn’t strong enough to provide a boost for the equity market,” Paul Uzum told BusinessDay.

OIL & GAS

GPPSL acquires new equipment, targets fresh pipeline projects FRANK UZUEGBUNAM

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lobal Process and Pipeline Services Limited (GPPSL), the only Nigerian company focused solely on process and pipeline services, has acquired three massive flooding pumps with the capacity of 3,150 USG per minute and close to 600 PSI each, together with three massive lifting pump (6,000 USG/Min.) each and other connections that go with the equipment spread.

“They are high pressure, high volume and no other company can boast of such flooding pumps in West Africa”, Engr. Obi Uzu, chief executive officer of GPPSL told select

9 July 2019

journalists on the sideline of the just concluded 2019 Nigerian Oil & Gas (NOG) conference and exhibition held in Abuja.

Nigeria is on the verge of completing the 48-inch pipeline - the Ajaokuta-Kaduna-Kano (AKK) pipeline, and there are also plans for another big pipeline project that will run from Nigeria to North Africa.

“Those are massive projects that will need our kind of equipment.

Besides there is also requirement for big pipeline services in-country”, Uzu said.

GPPSL also acquired 6 Air Loaders which include pneumatic suction pumps for cleaning of floating production and offloading (FPSO) tanks.

The FPSOs will require cleaning according to Department of Petroleum Resources (DPR) related regulation.

“We have gone ahead to make these massive investments to keep the game alive – those clients we have been working for are happy but we want to make sure that they are happier with the services they are getting today and in future compared to what they got yesterday” The GPPSL chief executive said that the company is also investing in solid organizational process and sustainable human resources. According to him, “we are pursuing new operational certification ahead of ISO-9001-2015 which we

have gotten already. We are getting into integrated management system (IMS) certification that will look at our Environmental, HSE and Quality compliance all together to make sure we improve on all our processes”.

On the human resources, he said that the company developed “what we call the “Career Tree” plan for our personnel – thus when you join from the root of the company, as you are growing, you can see the branch available for you to go and concentrate on that” or branch out along the way depending on your interest and performance. The company gives every staff an overview of plan and opportunities available to enable them to build

their carrier at their own pace and interest in the field operations, sales, engineering and administration.

While commending the organizers of the NOG, Uzu said that it is evident from the deliberations of the confer-

ence that the business environment is gradually improving for the investors adding that the ease of doing business is the surest way to increase gross domestic product (GDP), reduce unemployment and take care of insecurity in the country.

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

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Monday 15 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Company

SAHCO makes first loss in 3 years DAVID IBIDAPO

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fter a major bounce back in 2016 from a loss of N69.6 million witnessed in 2015, the aviation company began recording a decline in its net income in 2017, afterwards slipped into a loss zone in 2018.

Skyway aviation handling company (SAHCO), in 2018 witnessed a huge slump in its profit after tax (PAT) to a loss of N665.6 million, representing a decline by 406 percent from a profit of N217.7 million in 2017.

To this end loss margin stood at -11 percent from a profit margin of 4 percent in 2017. During the period, for every one naira invested into the business, SAHCO made a

loss of about N11.

The airline company recorded loss on the back of a sharp decline in its operating income, surge in its administrative expenses and tax expenses during the period under review, which rendered almost non effective its 23 percent increase in revenue during the period.

According to financials released on Thursday on the Nigeria stock exchange market (NSE), SAHCO’s operating income plunged 65 percent to N19.3 million in 2018 from N55.5 million in 2017. While in 2017, the airline company recorded a boost to its operating income on the back of foreign exchange gains to the tune of N49.4 million, none of such was recorded in 2018.

During the period, pro-

ceeds from the sales of scrap surged by 256 percent to N18.69 million from N5.25 million in 2018 which saw operating income surge by 220 percent to N19.3 million excluding foreign exchange gains.

Contributing to the effect of decline in operating income is SAHCO’s 23 percent increase in administrative expense to N2.7 billion in 2018 against N2.1 billion in 2017. To mention but a few is a surge by 149 percent to N108.4 million in value of gifts and donations expended during the period.

Also, Employee benefit expenses which accounts for about 29 percent of total administrative expenses increased by 13 percent to N797.6 million in 2018.

L-R: Jack Akpan, company secretary, Slot Systems Ltd; Nnamdi Ezeigbo, MD/CEO, Slot Systems Limited; Anthony Youdeowei, CEO, Ikeja Electric (IE) plc, and Bunmi Olukoju, chief financial officer, IE plc, at IE and Slot Foundation’s Youth Empowerment Programme (YEP) graduation in Lagos.

Pic by Pius Okeosisi

Technology

Nuture Technology launches online savings platform, moneybag.ng. ...Partners with Interswitch, GTBank, FBN Insurance, others JUMOKE AKIYODE-LAWANSON

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n a bid to grow a savings culture among the youth in Nigeria, Nuture Technology, an indigenous IT company has launched Moneybag.ng, an online savings platform that offers interest on money saved, to spur the growth of financial independence among the youth population.

Moneybag.ng is an online financial services platform that can be used by anyone regardless of age or profession with features such as savings, investments (“Baglocker” which helps you lock away funds for a set period with 9-13.5 percent per annum interest) and loans. It also has a lifestyle feature known as

“Cliquebag” designed to help friends save together.

The product which was unveiled to the media recently was described as an innovation that is set to gain popularity amongst Nigerians based on its expected high uptake.

According to Uchenna Okezie, the chief executive officer of Nuture Technology, “saving is an activity that is crucial to the financial independence of any individual and with Moneybag.ng, we have created a customised savings solution that is flexible for everyday use and transparent for comprehension”.

In his remarks, Lanre Fadayomi, chief operating officer of the company, said that low inclusivity and limited user-friendly financial service options were identified as the

main difficulties why people found it hard to save and that this was a critical motivating factor when Nuture Technology decided to create an easy way people could save regardless of their age, background or qualification.

“Majority of what we do is transaction based so it required us to be customer centric with the types of savings plans Moneybag.ng offers.

We also had to focus on a user experience that was easy to understand and interact with the needs of our customers while looking for ways to help customers appreciate the product better. We then infused lifestyle, investments and discipline in saving to help get customers interacting with the product,” Fadayomi said.

Gomarket launches first operation in Nigeria’s biggest commercial city MICHAEL ANI

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omarket, an online shopping platform, has kicked off operations in Nigeria’s commercial hub, Lagos, to satisfy shopping savvy customers across the country The online platform was designed to help the country’s increasing population, engaging in everyday buying and selling, to shop from physical markets in Lagos from the comfort of their homes.

“We saw a habit of shopping in Nigerians hence we decided to create an online platform that would make it easier. However the big game for us is that we follow the customer throughout the life cycle of the product from offering to maintenance,” Anthony Nwosa, chief executive officer for Gomarket said

at the launching of the platform in Lagos.

Nigeria is Africa’s most populous nation, home to some 200 million people, all of whom are expected to satisfy the basic need of life, from clothing, shelter and feeding.

Since the emergence of online shopping in Nigeria, there has been an influx of quite a few players within the sector the industry players boast of steady exponential growth with sales figures.

The current Ecommerce spending in Nigeria is estimated at $12 billion, and is projected to reach $75 billion in revenues per annum by 2025, according to global consulting firm McKinsey.

Desperate to make a mark within this rapidly growing industry, GoMarket seeks to address situations that complete

that perfect shopping experience while adding value and empowering its customers and all stakeholders alike.

The firm aims to supports Small and Medium Size traders and farmers by helping them reach customers all over Nigeria and beyond. All of the items sold on the platform are from local markets and farms that would otherwise not have had the visibility and reach.

Kicking of its first operation in Lagos, the firm currently has merchants and other operating centres across major cities across the states including Alaba International, Trade fair, Ikorodu, Ogudu , Ladipo, Mile 12 amongst others; it hopes to scale operations into other countries of the world and onboard more merchants into its platform to meet the growing demand of its customers .

www.businessday.ng

L-R: Alan Davies, MD, James Cubitt Architects; Subomi Balogun, founder, FCMB Group plc, and his wife, Abimbola Balogun, at a Customers Cocktail organised by FCMB Bank (UK) Limited in Lagos.

L-R: Adeyemo Adeonipekun, executive secretary, Junior Chamber International (JCI) Nigeria; Russell Brooks, public affairs officer, United States Consulate; Adetola Juyitan, 2019 national president, JCI Nigeria, and Wuraola Kunbi, nigeria senate chair, 2019 JCI, at a visit by JCI Nigeria to the US Consulate in Lagos.

L-R: Nkiru, founder of lighthouse; Obinna Abajue, CEO, Hygeia HMO; Eniola Edun, board member of the Lighthouse; Amaechi Okobi, group head, communications and external affairs, Access bank plc, and Osisiye Tafa, author, marketing and communications expert, at the 2019 Youth Empowerment workshop organised by Lighthouse recently.

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Monday 15 July 2019

BUSINESS DAY

COMPANIES&MARKETS FINANCIAL TECHNOLOGY

Riby takes the wheel in driving financial inclusion with group-based banking …targets 1.5m unbanked Nigerians ENDURANCE OKAFOR

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iby, a financial technology company aime d at lifting millions of Nigeria out of poverty through its adopted group-based banking model has launched its 1.5 Million Campaign with plans to deepen financial inclusion in 10 states.

As a digital platform for associations and trade groups, Riby has helped member of various cooperatives to achieve better financial access and stability, by assisting them with access financial services like savings and loans.

Through the Riby 1.5 Million Campaign, the company plans to provide support for cooperatives, communities and trade groups, both formal and informal across the country with the aim to digitize their operations and get access to loans, savings and other financial services through their digital online and offline platforms.

According to Salami Abolore, Founder and Chief Executive Officer of the company, “one system that has delivered financial stability solutions to Nigeria and other nations in Africa is groupbased banking through regimented economic models like, Isusu, Ajo, etc.”

Recall that on October 23, 2012, the Central Bank of Nigeria (CBN) in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from 53 percent in 2008 to 20 percent by 2020.

Less than six months to the projected deadline, about 36.6 million Nigerian adults do not have access to financial services.

“We are focused on working with a segment of the market that has been neglected for a long time yet has immense potential. Our aim remains to enhance our users’ ability to generate liveable income, support them in securing a lifetime savings system and help them in the future secure a home,” Salami Abolore, the Founder and Chief Executive Officer of Riby told BusinessDay during a recent media conference.

According to the Lagosbased Finetch Company, Riby’s train will first roll-out in 10 of the 36 states across all regions of the country and will recruit small Business Owners, Traders, Artisans and so on in these places. Some of the states include Kano, Kogi, Benue and Oyo. “Cooperatives are an important tool that Nigeria must put special focus us on if we

are to reduce the levels of poverty in our country. With over 83 million Nigerians reportedly living in poverty, there is a pressing need for intervention at several levels and Riby is strategically positioned to deliver services that contribute to the reduction the level of poverty,” Abolore said.

As part of the Riby 1.5M Campaign, the company will be implementing an innovative program that converts loan repayments into savings that grow over time as interest climb it, therefore converting every credit into a savings opportunity.

According to the 3 years old company, the Riby 1.5M scheme would empower many small businesses by removing the cumbersome process of obtaining loans from commercial banks, including credit history check and the likes.

Similarly, potential loan applicants will not have to go through the hassle of saving money with the bank before they are granted credit. Rather, they will be offered loans first after which they will make repayment and then save from the remaining fund.

Interestingly, customers, who are not digitally enabled, can approach any of the company’s agents across Nigeria to access services which their technologically savvy counterparts enjoy.

Stanbic IBTC pays decade-old N2.5bn settlement to Longterm Global Capital … firm assures continuous profitability despite payment OLUWASEGUN OLAKOYENIKAN

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tanbic IBTC Holdings Plc, the parent company of Stanbic IBTC Bank, said the bank has paid a total sum of N2.5 billion to Patrick Olayele Akinkuotu and his company, Longterm Global Capital Limited, to settle a judgment against it.

The payment became necessary after the Supreme Court of Nigeria struck out a case filed by Stanbic IBTC Bank and affirmed an appeal court ruling which dismissed the bank’s appeal with respect to a judgment by a Federal High Court sitting in Lagos.

With the apex court ruling, the “litigation, which has spanned a period of approximately 10 years, has now been brought to an end by the Supreme Court’s decision on the bank’s application,” Stanbic IBTC Holdings Plc said in a statement filed on the Nigerian Stock Exchange (NSE) on Friday.

The Federal High Court had in a suit no FHC L/ CS/1491/2009: Longterm Global Capital Limited & Mr Patrick Akinkuotu vs Stanbic IBTC Bank Plc, ordered Stanbic IBTC Bank to pay Akinkuotu and his company the sum of N2.5 billion for damages. www.businessday.ng

“Stanbic IBTC Bank has discharged its liability under the judgment by paying the judgment sum of N2.5 billion to the judgment creditors,” according to Stanbic IBTC Holdings Plc. The Group assured that the payment would not affect the lending subsidiary’s financial performance as it had made a full provision for the judgment since 2013 as required by the International Financial Reporting Standards (IFRS).

“The payment of the judgment sum has no impact on our banking subsidiary’s current liquidity position and profitability,” the firm said. https://www.facebook.com/businessdayng

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insurance today

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Listed insurers generate N78.44bn premium income in Q1 BALA AUGIE

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isted insurers were able to generate N78.44 billion in premium income in the first quarter of 2019; this represents an 18.o6 percent increase from N66.45 billion recorded the previous year.

However, experts are of the view that this growth may not be sustained all through the year, which is needed to absorb claims and underwriting expenses and deliver good returns to shareholders.

Analysis of the financial statement of these companies shows non-life business was the major driver of top lines (revenue).

For instance, cumulative premium income from non-life insurance increased by 20.90 percent to N32.47 billion from N20.18 billion as at March 2018.

A further breakdown of the figure shows combined Life Insurance surged by 93.18 percent to N20.18 billion in March 2019 from N10.43 billion the previous year.

“I don’t see anything spectacular happening by year end that will help underpin revenue because economic activities have been slow. For instance, the budget was not passed on time and we were just coming out of an election,” said, Owolabi Salami, executive director of Allianze Insurance Plc. “I see premium income growth of about 11 percent and 14 percent and that is slightly about the inflation figure,” said Salami.

Salami said there are a lot structural issues and that 70 per-

L-R: Rotimi Okpaise, partner in Actuarial Services, EY Nigeria receiving a plaque as chairman of Panel Discussion from Eddie Efekoha, chairman, Insurance Industry Consultative Council(IICC) during the 2019 National Insurance Conference held in Abuja.

cent of Nigerian budget are allocated to recurrent expenditure while the remaining 30 percent goes for capital expenditure.

He noted that there hasn’t been a remarkable improvement in crude oil price to support growth and propel insurance business.

In the last four years, insurance premium income has been growing at a slow pace, which validates a sluggish economy.

In the first quarter of 2018-17, gross premium income written was up 18.62 percent, which is nearly the same as the uptick in 2019.

However, cumulative revenue of listed insurers were up 20 percent in 2017-16 when the introduction of a new foreign exchange policy and rebound in crude oil price eased the flow of

www.businessday.ng

foreign exchange in the system and helped the country to exist its first recession in 25 years.

In the 2016-15 period, revenue was up a mere 1.50 percent to N46.70 billion, which was concomitant with the period when a precipitous drop in crude oil price that stocked a severe dollar scarcity and paralyzed business activities tipped the country in its first recession in 25 years.

However, premium income was up 20.15 percent in the corresponding period of 2015-14 before the slump in crude oil price began to take its toll on the economy.

Nigeria’s Gross Domestic Product (GDP) expanded by 2.01 percent in the three months through March from a year earlier, that compares with 2.4 percent expansion in the

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fourth quarter.

Insurance industry contributes less than one percent to the Nigerian economy.

According to the 4th Africa Insurance Barometer, a research report on African insurance industry that was launched at the ongoing 46th Conference & General Assembly of the African Insurance Organisation (AIO) in Johannesburg, South Africa, Nigerian lag other sunsharan Africa countries in premium growth.

According to the report, total real premium growth was positive in Egypt (+9.8 per cent), Namibia (+7.8 per cent) and Morocco (+3.0 per cent), stagnant in South Africa (+0.1 per cent) and negative in Nigeria (-10.5 per cent), Algeria (-2.8 per cent) and Kenya (-2.0 per cent).

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Analysts are of the view that retail insurance holds the hope for a major transformation of the insurance industry in Nigeria in terms of revenue growth, adding that a population of 200 million people is a market worth tapping into.

“Insurers should develop products that will be enticing to customers, but the impediment to retail end of the market is consumer spending,” said Oluseyi Taiwo, Chief Financial Officer of Wapic Insurance Plc. “In the real sense if people do not have money to spend then insurance will not be their priorities,” said Taiwo.

He noted that companies are not well capitalized enough to dive into such investment, which is why they have not been developing new products.

“Insurers should do more of retail business because it is more profitable and reduces risk. “You tend to retain more when you do retail because you cede less, Moronfola Monsuru - Actuarial Analyst - Wapic Insurance Plc. Some companies have started unveiling retail products to harness untapped opportunities in the industry.

FBN General Insurance Limited has launched the Auto Flexi Insurance, Flex Home, and Flexi Guard Insurance, which is designed to meet customer’s needs.

However, Taiwo said the impediment to retail business is low consumer purchasing power because in the real sense taking a cover is the least of the worries of the people.

He added that there has to be copious investment in this segment but lots of insurers are not well capitalized to dive into such investment.

Monday 15 July 2019

BUSINESS DAY

insurance today

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Perception that insurance companies are not able to pay claims kills our industry – Ghana CFI Ghana, just like Nigeria recently announced a new minimum capital requirement for insurance companies as part of the plan to achieve financial sector stability and grow their economies. Justice Ofori, commissioner for Insurance of Ghana in this interview with a select number of journalists at the sideline of the recently concluded National Insurance Conference in Abuja shared his thought on the exercise in Ghana, market reaction and regulatory expectations. Modestus Anaesoronye was there.

I

quirement is higher because Nigeria is bigger than Ghana. Nigeria is like five times Ghana and at the same time its economy is bigger.

In Africa, Nigeria has the largest population and a very strong market. I think it is the third or fourth when it comes to insurance.

So, definitely it is a big player and those who do business in Nigeria should be ready for the game. I wouldn’t say that Nigeria didn’t think through, they did a good job. Nigeria is a big market so let’s draw the comparism, different market different strategy.

I don’t know about the time frame that was given to Nigerian market operators even in Ghana the two years we gave people are still complaining that it is too short.

So, insurance business is such that whatever you do people must complain. What we are doing is that we have to give the right dosage. It’s like a child that is suffering from malaria and the medication you have to give him is chloroquine that is very bitter but you as parents would insist that the child takes the pills to recover. I believe that the insurance industry stakeholders should not see regulators as anti-insurance but the ones to support the industry. Like I said as a regulator, anything you do you step on somebody’s toes.

In terms of dollar value, what is your minimum capital requirement?

Our minimum capital would be like $10million. I think Nigeria should be about $20million plus.

And as I said Nigeria is about five times Ghana so if Ghana is ten million Nigeria should have gone to like fifty million dollars.

Is it the new requirement or the existing one?

It is the new one we raised it from $3million to $10million.

Does it cut across all arms of the industry?

It is for life and general business. For reinsurance we still have it at One Hundred and TwentyFive. I don’t know the conversion rate now, that of reinsurers is bigger.

What was the feeling of the operators after the announcement of the exercise?

We started the engagement with them on the recapitalization some two years ago and we never heard anything from them. We had mentioned the level of the capital that we were proposing www.businessday.ng

Justice Ofori

so they were aware just that they didn’t know when it was coming. I waited for them to go to South Africa for AIO before the announcement.

What is your assessment of the IICC conference here in Nigeria?

This conference is great. This is the first time I am attending it and

‘

I don’t want us to be doing the same thing because that will not help the growth.

We should allow people to specialise in the areas where they are good

‘

Insurance Commission of Ghana recently announced a new minimum capital requirement for insurance companies; give us an insight into it? n line with making meaningful contribution to the government’s agenda of stabilising the financial subsector so as to encourage t socio-economic development, we at the National Insurance Commission (NIC) took a bold step to review our market. We realised that there was need to revise our minimum capital.

Revising the minimum capital means that we expect the companies to be well solvent, we expect that companies have more money, invest in technology and manpower, we expect that there will be more money for investment and above all, issuing the minimum capital will improve claims payment culture.

We expect that our regulated entities should be well capitalised to bear the risks they have insured should the unforeseen happens.

So, basically that is what we are doing in terms recapitalisation.

The revision of the minimum capital is not the only thing we are doing; we are looking at other things like Risk Based Supervision (RBS).

But the challenge that we have is that while we talk about revising the minimum capital, the regulated entities are talking about Risk Based Supervision, but the risk based does not mean that you don’t need enough capital.

Minimum capital is there in addition to risk based capital. Now the minimum capital that we have done is what we want you to have to remain in the business depending on the nature of the risk you are going to take, it could be higher.

We believe that perception in insurance is key; the perception that insurance companies are not able to pay claims kills our industry. So, we want to deal with that problem. As I said minimum capital is one of the things we are looking at to actually change the market. We as regulators have the core mandate to protect the policyholders and secondly, to make sure that we have a very strong insurance industry.

In comparism, your required minimum capital is far below that of Nigeria and also the timing longer, what do you have to say about this?

Nigeria’s minimum capital re-

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I like the presenters. I don’t know where they got them from. The contribution is very good and the panel is good, it’s great.

As I said, this is my first time and when I get home, I will encourage much of the Ghanaian market to participate in such conferences. It’s a good conference, but I don’t want to duplicate it in Ghana. I want a situation that Ghana should do something different from what Nigeria is doing so that when it is being done here we have the opportunity to come and when we are doing something in Ghana Nigeria should also participate.

I don’t want us to be doing the same thing because that will not help the growth. We should allow people to specialise in the areas where they are good.

I think there should be a very strong relationship among English speaking markets in the West Africa especially between Nigeria and Ghana because without the two countries the English speaking West African society is dead.

And I expect Nigeria to play a very significant role in West Africa.

What is your key take-home from the conference to Ghanaian insurance industry?

The theme, ‘Disruption, Innovation and the Business Growth’ @Businessdayng

is good. Yesterday (Monday, July 1 2019) when we started, it took me time to understand the disruption because for me disruption was something negative, but here it means something that is new to the market.

Anything that is new to the market is disruption. Like the new capital requirement we speak about, is disruption because it is disrupting the normal trend but that is the way to grow. So when it comes what you need to do is to assess yourself and think of how best to take advantage of it and be innovative so that you can grow. There is always the need for paradigm shift, so we should stop thinking the old ways.

What are the major market challenges in Ghana?

The major challenge is perception; ability to pay claims and pay claims on time is one thing. We have to accept that there are some players who are not prepared to do the right thing, always giving excuses not to pay claims, that are one of the challenges.

Also I think that technology is one of them, the operators are so slow to adopt technology. They like doing things the old way, manual underwriting, but the technology is there. We do not want to form strategic partnerships. We should be able to form strategic alliances.

As we are talking about this recapitalisation it shouldn’t be a problem if we coexist. What’s wrong in teaming up with others so that we become stronger?

But in Africa instead of teaming up and get ten percent we rather prefer pumping money into entity that is making loses only to just feel like ‘I own this company.’ That is the problem we have.

What is the penetration rate in your country?

The penetration rate is between1.5 to 2per cent but access to insurance about 29 per cent of the population. We are second to South Africa with about 50 plus per cent. So, about 30 per cent of Ghanaians have one form of insurance or the other through micro insurance global initiative.

Are you doing insurance and pension together?

No, pension is being regulated differently.

What is insurance’s contribution to the Gross Domestic Product (GDP) in Ghana?

That is between 1.5 and 2per cent.

30

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32

Monday 15 July 2019

BUSINESS DAY

Access Bank Rateswatch

Market Analysis and Outlook: July 12 – July 19, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.01

Q1 2019 — lower by 0.38% compared to 2.39% in Q4 2018

Broad Money Supply (N’ trillion)

34.89

Decreased by 0.77% in May’ 2019 from N35.17 trillion in Apr’ 2019

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

24.86 2.11

Decreased by 0.13% in May’ 2019 from N24.89 trillion in Apr’ 2019 Decreased by 2.22% in May’ 2019 from N2.16 trillion in Apr’ 2019

Inflation rate (%) (y-o-y) Monetary Policy Rate (%)

11.4 13.5

Increased to 11.40% in May 2019 from 11.37% in April 2019 Adjusted to 13.5% in March 2019 from 14%

Interest Rate (Asymmetrical Corridor) External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

13.5 (+2/-5) 45.13 67.69 1.86

Lending rate changed to 15.5% & Deposit rate 8.5% July 10, 2019 figure — an increase of 0.18% from July start July 12, 2019 figure— an increase of 4.03% from the previous wk June 2019 figure — a increase of 7.47% from May 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 12/07/19

NSE ASI Market Cap(N’tr)

28,566.79 13.92

Friday

Change(%)

29,270.95 12.90

(2.41) 7.91

0.30

(66.36)

Value (N’bn)

1.46

1.83

(20.23)

Friday Rate

Change

MONEY MARKET NIBOR (%) 12/07/19 OBB O/N CALL 30 Days 90 Days

(%)

(Basis Point)

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

(%)

67.69 2.40

4.03 4.35

5.01 (21.47)

2494.00 106.70 63.10 12.39 518.00

1.38 (7.34) (6.05) (1.59) 0.78

28.82 (18.05) (18.58) (19.18) 19.49

1408.03 15.12 269.80

(0.44) (0.66) 1.64

6.87 (12.04) (17.69)

2.21

3.86

(165)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

2.93 2.85 10.86

4.57 6.69 11.64

(164) (384) (78)

Tenor

12/07/19

5/07/19

(131)

1 Mnth 3 Mnths

23 9.86

10.55 10.78

(132) (92)

6 Mnths 9 Mnths 12 Mnths

11.09 12.09 12.43

12.40 12.97 13.16

(132) (89) (73)

11.28

Friday (N/$)

12/07/19

12.58

Friday

1 Month

(N/$)

Rate (N/$)

5/07/19

12/06/19

Official (N) Inter-Bank (N)

307.00 360.79

306.95 360.82

307.00 360.50

BDC (N) Parallel (N)

0.00 360.00

0.00 361.00

0.00 361.00

Friday

Friday

Change

(%)

(%)

(Basis Point)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Friday

(%)

BOND MARKET AVERAGE YIELDS Tenor

YTD Change

5/07/19

FOREIGN EXCHANGE MARKET Market

1-week Change (%)

0.10

Friday Rate

12/07/19

5/07/19

Volume (bn)

Tenor

Indicators

Friday (%) 12/07/19

Friday (%)

Change (Basis Point)

5/07/19

3-Year 5-Year

0.00 13.42

0.00 13.52

0 (10)

7-Year 10-Year 20-Year

13.77 13.94 14.12

13.98 14.04 14.21

(20) (9) (9)

30-Year

14.31

14.31

0

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

Change

(%)

(Basis Point)

12/07/19

5/07/19

Index

2,970.29

2959.00

0.38

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

8.90 5.69

8.87 5.67

0.37 0.34

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

20.92 -34.92

20.46 -35.35

0.46 0.43

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day 182 Day

10,000.00 20,000.00

10.5 11.7

3-July-2019 3-July-2019

364 Day

58,857.01

11.91

3-July-2019

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

Global Economy In the US, the federal government's June budget deficit narrowed to $8 billion, the Treasury Department reported, down nearly 90% from the same month a year ago. The much-lower monthly figure was affected by shifts in the timing of certain federal payments, as well as receipts.. The deficit for the current fiscal year was $747 billion, higher than a $607 billion gap in the comparable fiscal year.

Inflation rate also dropped to 1.6% in June 2019 from 1.8% in May as food prices rose at a softer pace while energy cost continued to decline according to the bureau of labour statistics. The core inflation rate, which excludes volatile items such as food and energy, edged up to 2.1%, beating forecast of 2%. Elsewhere in the United Kingdom, the trade deficit contracted to GBP 2.32 billion in May 2019 from a revised GBP 3.72 billion in the previous month. The Office for National Statistics reported it as the smallest trade deficit since last September, as exports rebounded firmly boosted by machinery & transport equipment and fuels while imports declined for the second month in a row on the back of food, material manufactures, crude materials and unspecified goods. In a separate development, India retail price inflation rate increased to 3.18% year-on-year in June 2019, the highest since last October, from 3.05% in the previous month according to Ministry of Statistics and Programme Implementation.

Food prices were the biggest contributor to the price increase. Still, inflation remained below the Reserve Bank of India's medium-term target of 4% for the eleventh consecutive month.

Domestic Economy Data by the National Bureau of Statistics (NBS), revealed that the Federation Accounts Allocation Committee (FAAC) disbursed the sum of N616.20 billion among Federal, States and Local Governments in May 2019 from the revenue generated in April 2019. The amount distributed was from the statutory account, value added tax (VAT) and exchange gain differences comprising of N518.92 billion, N96.49 billion and N797.11 million respectively.

A breakdown of the sum disbursed among the three tiers, revealed that the Federal Government received N253.92 billion, states received N168.06 billion and the local governments received N126.28 billion. The oil producing states received N46.35billion as the 13% derivation fund. Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N5.38 billion, N6.78 billion and N3.12 billion respectively as cost of revenue collections. In a separate development, the Central Bank of Nigeria (CBN) introduced fresh rules for accessing its Standing Deposit Facility (SDF). Following the review, the Central Bank stated that “The remunerable daily placement by banks at the SDF shall not exceed N2 billion”.

The SDF deposit of N2 billion shall be remunerated and the interest rate prescribed by the Monetary Policy Committee from time to time. “Any deposit by a bank in excess of N2 billion shall not be remunerated. The provisions of the circular take effect from Thursday, July11, 2019.”

Stock Market Volatility on the Nigerian Stock Exchange continued last week as the market witnessed more sell-offs especially in the shares of newly listed Airtel Africa Plc. The index decreased by 2.41% to settle at 28,566.79 index points from 29,270.95 index points the previous week. In contrast, market capitalization rose 7.91% to close at N13.92 trillion from N12.90 trillion last week, majorly as a result of new listing by Airtel Africa. We expect investors to continue to tread cautiously this week in the absence of any definitive positive market triggers.

Money Market Money market rates declined during the past week reflecting the increased liquidity following the treasury bills maturity of N185 billion and the effect of the CBN's circular released yesterday that pegged remunerable bank deposit placement through its Standing Deposit Facility (SDF) at N2 billion. Shortdated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled at 2.2% and 2.9% from 3.8% and 4.5% respectively the preceding week. Similarly, the 90-day NIBOR declined to 11.28% from 12.58% the previous week. This week, we expect market liquidity to persist as the stance of the CBN is currently expansionary, rates would therefore remain at prevailing levels.

Foreign Exchange Market The local unit appreciated against the dollar across most major market segments last week.

The NAFEX window, saw a slight appreciation of 3 kobo to close at N360.79/$. Likewise the parallel market saw an appreciation as it went up

by N1 to settle at N360/$. In contrast, the official window saw a slight depreciation as it ended N306.7/$, a 5 kobo loss from the prior week. This week, we expect the naira to hover around prevailing levels at the various windows, boosted by the Central Bank's sustained supply of liquidity to the market.

Bond Market Bullish sentiments were noted at the bonds secondary market during the week's trading due to a kneejerk reaction to the expected impact of the recent CBN circular that reduced the remunerable daily placements by banks at the Standing Deposit Facility (SDF).

Consequently, buying interest was recorded across most of the long tenured maturities.

Yields on the five-, ten- and twenty-year debt instruments closed at 13.42%, 13.94% and 14.12% from 13.52%, 14.04% and 14.21% respectively. The Access Bank Bond index moved higher by 0.38 points to close at 2,970.29 points from 2,959 points the previous week. This new week, buying interest is expected to continue with caution from market participants.

Commodities Oil prices soared last week benefiting from the return of risk appetite driven by dovish Fed prospects. Crude is also climbing owing to supply shock fears surrounding adverse weather in the Gulf of Mexico and lingering tension with Iran. Bonny Light, Nigerian benchmark crude settled at $67.69 per barrel last week, 4.03% lower than the previous week.

On the other hand, precious metal prices declined as the US dollar climbed higher on expectations of a less dovish US Federal Reserve. Consequently, gold price closed at $1408.03 per ounce, down 0.44% from the previous week's close while silver declined slightly to $15.12 per ounce compared to $15.22 per ounce the prior week. Profit taking also gave the gold market bulls a brief pause.

This week, oil prices are expected to decline as the market reacts to OPEC's latest forecasts which showed that it will produce more oil than needed next year despite extending an agreement with Russia to cut back production.

For precious metals, we expect prices to nudge slightly higher as rising US inflation tilts markets expectations in favour of a US Fed rate hike.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Jul’19

Aug’19

361

362

362

Inflation Rate (%)

11.44

11.5

11.5

Crude Oil Price (US$/Barrel)

65

67

67

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

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Sept’19

Exchange Rate (Interbank) (N/$)

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Monday 15 July 2019

BUSINESS DAY

33

Start-Up Digest Olamide Ayeni-Babajide: Turning wastes into furniture In association with

ODINAKA ANUDU

W

hen was the last time you dumped your car tyres into drainages? If you did that in the past, think twice now.

Apart from its negative environmental impact, you can keep the tyres at home and make money from them, thanks to Olamide Ayeni-Babajide, chief executive officer of Pearl Recycling, a sustainable social enterprise that transforms solid wastes, especially tyres, into sustainable, eco-friendly products for everyday use. Pearl Recycling started in 2012, though it took off fully in 2016.

Olamide caught the vision while on a trip to the United Arab Emirates (UAE).

She walked into a decor store and bought some products, only to realise later that they were made from wastes.

“I was really sad when I discovered that the decor products were made from wastes,” she tells Start-Up Digest.

“I was still doing my 8 to 5 job, but trying my hands on some many creative things on weekends. But that realisation prompted me to start,” she says.

“You can imagine the amount of money I spent to bring them in. But I saw the opportunity and the numbers. We are almost 200 million people. I saw these raw materials every day and it was more like a motivation. But what validated the motivation was that when we started, we had a few people that patronised, but immediately we introduced the furniture, it was just like everyone was waiting to buy some cheaper furniture,” she says.

She explains that it was the patronage that confirmed her vision.

“The market moved us so fast and the support we got from international organisations actually moved us to believe that people see our vision,” she explains.

Olamide has a background in Computer Engineering. Before she started Pearl Recycling, she had worked for more than 10 years on designs. This was why the only place she could enter while in UAE was a decor shop— not a shoes or clothes shop.

Her vision was made simple by the proliferation of wastes in the country.

“One of the things I realised was that we generate a lot of wastes in Nigeria,” she says.

“Most of them end up in canals and on the streets,” she adds.

The entrepreneur says though Nigeria generates a lot of wastes, focus has been mostly on plastics wastes.

“We have some companies picking these wastes, but the focus has been on plastics. But something we are missing is the tyre waste. We have a lot of cars in Nigeria, but what happens to tyre wastes?” she asks.

She, therefore, saw the need to do some-

Olamide Ayeni-Babajide

thing about tyre waste. She also noticed that since the majority of Nigerians were poor, their major challenges were food, clothing, and then shelter.

“But the last thing among these choices is how their homes look,” she says “You enter some people’s homes but can’t sit down. People have chairs but don’t have furniture. That was why we started. We understand that a lot of people cannot afford luxury furniture; they can’t afford the high-priced furniture. So, we have to create quality at an affordable price. We had to create durable products that last longer than the normal furniture made in the country,” she explains.

Her business helps to preserve the environment and trees. Her furniture products are cheap for average Nigerians and low-income earners, she attests.

“You can buy our furniture from N3,000, N4,000 and upwards. You can imagine buying very nice stools for N15, 000. Average working class people love them because they also buy something that fit into their leather. Our ability to make customised products that fit into their leather has helped a lot.”

Between 2016 when Olamide started fully and now, a lot of things have changed.

“When we started 2016, we were battling cultural stereotypes. We could hardly get calls asking what we were doing. Three years down the line, we now receive at least six calls per day from people who want to know what we do. A lot of people want to dump tyres and sell. So they just call us to buy their tyres. The awareness and patronage have gone up. We

also did a lot of structural changes by incorporating B2B and B2C. What we were doing before was to sell to individuals, but we deal more now with corporate organisations and collaborations,” she tells Start-Up Digest.

Due to the impact her products make, the United States Embassy in Abuja and that of Lagos have supported her.

She is currently doing a programme in schools— funded by the U.S. government— where she donates 400 chairs made from

wastes to schools and trains 800 students.

“You can imagine what 400 chairs can do in the students’ consciousness. And then we train 800 of them who can go back and train their parents, friends and their communities.

The awareness has gone up. A lot of people are calling us to volunteer to learn,” she says.

The young entrepreneur believes that there is now a perception shift in Nigeria, as a lot of noise has been made concerning waste.

Olamide was selected as the Tech Women Emerging Fellow by the U.S. government in 2017. This is a programme where 100 women are selected to go to the Silicon Valley to intern for more than one month with top companies.

Last year, her work was showcased at the White House, the U.S., to many dignitaries.

Also in 2018, she was selected as the Most Outstanding Social Innovator by the Union Bank. She is also a 2016 Tony Elumelu Fellow.

“We have got a lot of grants from different organisations,” she admits.

Olamide does not keep this knowledge to herself as she trains a lot of people on the business of upcycling (turning wastes into quality products). She plans to start making interlocking tiles from plastics.

“We have raised a lot of change makers,” she says.

“We have trained over 250 women. Ford Foundation sponsored 250 women for training last year. These people came from Abuja, Osun State, Oyo State and many other places.

They are already doing these things in their communities and they are achieving the same purpose,” she discloses.

But how does Olamide get her raw materials—in this case, tyres?

She has partnered with a large number of volcanisers who keep tyres for her.

“We teach them the type of tyres we buy and we pay them N100 for one tyre. This encourages them to keep the tyres for us as they make extra income,” she explains.

“Our tyres go through a lot of processes. We disinfect and process them.”

Her products are becoming popular among Nigerians as she now has a shop at Jumia and markets through the social media.

Like other entrepreneurs, Olamide has challenges. First, she cannot export her products despite huge demand from several countries.

She laments that poor logistics chain in the country and Africa means cost of logistics is higher than whatever consumers are ready to pay.

She adds that banks do not understand her business and are reluctant to fund good businesses.

“Capital is not available. There seems to be little support for start-ups in Nigeria.

Start-up hubs are not available for us,” she says. “Environment should be conducive,” she recommends.

Number of MSMEs rises 12% to 41.5m in 4 years …as medium enterprises decline by 61% Josephine Okojie

T

he number of micro, small and medium-sized enterprises (MSMEs) in Nigeria has risen by 12.3 percent over four years, a new report by the National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) shows.

The number of MSMEs grew from 37million in 2013 to 41.5million in 2017, the 2017 National Survey, launched last Thursday, shows.

According to the report, micro enterprises

account for 99.8percent of the total businesses in Nigeria, while small and mediumsize enterprises both account for less than 1 percent each.

“Compared with 2013, both total MSMEs and micro enterprises grew by 12.1 percent while small enterprises grew 4.6 percent from 2013,” the report states.

“The number of medium-sized enterprises decreased significantly from 4,670 in 2013 to 1,793 in 2017, indicating a 61 percent drop,” the report adds.

Lagos, Oyo and Osun account for the highest gaining states for the growth in the number of MSMEs, while Kano, Rivers, Pla-

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teau recorded the biggest decline.

The report states that wholesale/retail trade, agriculture and other services activities make up 76.3percent of micro businesses.

Education, human health and social works are identified as sectors that require high numbers of employers or skilled labour with very low numbers of micro businesses.

Accommodation and food services are a preferred sector (top 5) across all business classification types, the report states.

“MSMEs generated 59,647,954 jobs as of December 2017. Five percent or 2,889,715 of those jobs were created by SMEs with males accounting for 57 percent compared with 43

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percent for females,” the report says.

The survey finds that the majority of the MSMEs operators source their initial capital from personal savings and 49.5 percent are able to access bank credit.

On priority areas where MSMEs need support, the report says that access to finance is tops for assistance, followed by power and water supply as well as tax rate reduction.

The MSMEs surveyed recommended that there should be review of the system of business classification, particularly the national policy and that targeted policy implementation should address the strength and challenges of each business types.

@Businessdayng

34

Monday 15 July 2019

BUSINESS DAY

Start-Up Digest

Meet Chy Onwuka, banker turned designer Josephine Okojie

I

n 2017, Chy Onwuka quit her banking job to start Fabrics.NG, a textile start-up focused on making quality fabrics accessible to businesses and creative individuals.

Chy was inspired to establish her business owing to constant frustration experienced when shopping for fabrics.

“As a young female professional, the idea came after being constantly frustrated whenever I had to shop for fabrics or the popular ‘asoebi’,” she said.

“It was unbelievable that for a fashion conscious nation such as Nigeria, there is no organised infrastructure for fabric sourcing and distribution. America alone has hundreds of structured online fabric stores,” she says.

She explains that markets for shopping fabrics in the country are disorganised with quality inconsistency and pricing issues biggest challenges.

To change the situation for others, she established Fabrics.NG in 2017 to design a structured online fabric marketplace where all types of fabrics would be sold.

“Basically, Fabrics.NG is an ‘Amazon’ for fabrics. The idea

Chy Onwuka

is that within five minutes, you can find and order the fabric you need,” she says.

“We have 1000+ fabrics and up to 100 new fabric designs uploaded weekly. Fabric sourcing is now truly efficient and delivery

is available worldwide,” she says.

The banker-turned-entrepreneur started her business small from personal savings, from family and friends.

The business has grown since starting and has continued to grow

Business Opportunity …Zeugnis to discuss recycling on August 24

Z

Gbemi Faminu

the overall cost of construction,” he explained.

“High-density polyethylene (HDPE) and polyethylene (PE) bags are cleaned and added with sand and aggregate at various percentages under intense heat to produce high quality and durable bricks/interlocking stones which are relatively cheaper to concrete types.

“Also, colouring agents can be added to the mixture to attain desired forms or shapes. This technology is not new as it has been in existence in some African countries such as Uganda and Tanzania, among others, but new in our clime,” he said.

He added that adopting this recycling process in Nigeria would not only reduce the amount of waste in

Luther Kington Nwobodo www.businessday.ng

tion from us, our major focus is on the fashion industry,” she says.

In evaluating the Nigerian fashion industry, she states that despite the increase in global interest and demand for African textile, there is a need to addressthe numerous challenges in the industry for Nigeria to fully harness its potential.

Answering questions on the business expansion plans, she says Farbrics.NG plans to scale up its operation and fully integrate into textile production in the long run.

In the short run, she says the business plans to expand its product offerings and launch digital printing unit to make it possible for designers to customise their own unique prints.

Speaking on the challenges limiting the business, the young entrepreneur says that the huge infrastructural gaps have remained the major challenge facing the business.

She calls on the Federal Government to provide the needed infrastructure for businesses to thrive.

On her advice to other entrepreneurs, she says, “Build for the market. That disruptive idea might not be the solution your customers need at the moment. Listen and understand your customers’ needs.”

Audio Girl Africa set to begin Creative Accelerator Program

Making money from recycling eugnis International Limited will expose opportunities in waste recycling in Lagos on August 24. Venue is the Lagos Chamber of Commerce and Industry, Ikeja.

The firm promises to reveal secrets in making wealth from waste.

Handled by Luther Kington Nwobodo, a PhD student and CEO of Zeugnis International Limited, the training will teach participants how to recycle waste nylons, PET bottles and other plastics to bricks and interlocking stones, the firm said. It will also enable Nigerians to learn opportunities in waste, including how to improve the environment through recycling it added.

“On daily basis, Nigerians consume lots of pure water and soft drinks in PET plastic bottles which are thrown away to litter our environment,” Nwobodo said.

“Plastic wastes are increasing day by day and our environment is not spared from pollution. These plastic wastes being thrown away are not really waste as we term them, but can be effectively recycled into useful various industrial materials. Hence, with adequate knowledge and recent technology, these non-degradable materials can be recycled into high strength bricks or interlocking stones that possess thermal and sound insulation properties and reduce

its return on equity consistently.

“Our growth and performance indicators are positive. Though we don’t currently share our figures publicly, we have done double digits in asset turnover ratio and consistently grown our return on equity,” she says.

Chy tells Start-Up-Digest that Fabrics.NG emerged winner of the 2019 African Women in Technology Pitch and is a recipient of the 2018 She Leads Africa Accelerator programme.

The business currently has over four full time employees.

“Our team is made up of a senior management team of four and several other junior level skilled & competent employees.”

The young entrepreneur says she has a network of wholesale textile suppliers where she sources her raw materials from locally and internationally.

Speaking on what the Fabrics.

NG is doing differently to remain in business, Chy says that the business is seeking collaboration with existing fashion brands across the country and continent.

“The bulk of our customers currently are fashion brands and apparel companies. Although, we have other industries, such as furniture and interiors, which source their textiles needed for produc-

the environment but create jobs to reduce high unemployment situation estimated at 23.1 percent.

It would also reduce the huge cost of construction— that is government spending on construction of roads and other major projects that require bricks.

In the forthcoming training next month, Nwobodo and his team would be discussing recycling processes and conversion stages, including acceptable outcome of recycled wastes such flakes, and pellets, the firm said.

“A detailed process of converting waste plastics into interlocking stones and blocks will be unveiled, including machine sourcing and sources of raw materials,” he said.

He explained that return on investment is over 100 percent and participants will be introduced to partners.

“Anyone who wants to go into this business needs this training because it will reduce unnecessary waste of resources in machine sourcing and enable them to understand the difference in PET materials and be able to produce standard PET flakes,” he said.

He further encouraged those seeking lucrative businesses to invest in to give the training a try and learn the secrets of making money from waste.

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T

he Audio Girl Africa is set to begin its Creative Accelerator Program (CAP 2019) which is a one-month free intensive training in audio technology running from the 25th of July to the end of August. Partnering with Femme Africa, the programme is designed to identify, support and fund the next generation of Africa’s promising youths.

“The major aim of Audio Girl Africa is to train and inspire young women through carefully designed workshops, internships, engaging online contents and mentorship” says Phebean Oluwagbemi, coconvener of CAP 2019.

The programme is targeted at teenagers and youths between the ages of 12 and 25 who do not necessarily have prior experience in audio tech but must be Africans with a passion for audio technology. While the programme is mainly targeted at the female gender, the male gender is allowed to sign up for the online classes.

Outlined programmes include intensive training and mentoring on the use of technological innovation for audio production, VR Audio, Radio Imaging, Sound @Businessdayng

design ( film & game) Mixing, Live Sound production, Engineering, Disc Jockeying, and Lighting Design.

Participants will also be taken through a 2-week boot camp and will be given exclusive access to online and offline learning resources and mentorship from the Audio Girl instructors and some of Africa’s prominent creative experts.

After the one month program, participants will have various opportunities which include human networking, mentorships, internships, scholarships and career funding grants from Audio Girl Africa as well as master classes on crucial creative and business skills from top creative experts for one month.

After the one-month intensive training, participants will be given an opportunity to pitch their knowledge to a panel of investors and stakeholders, and the top 10 participants will have the opportunity to walk away with internships, scholarships, cash funding for their career while other participants will leave with intensive support and strong network.

Applicants for the programme are required to apply through the Audio Girl Africa website.

Monday 15 July 2019

BUSINESS DAY

35

real sector watch

Analysts call for caution on palm oil sanctions

FrieslandCampina WAMCO partners 2Scale to boost local milk production ODINAKA ANUDU

…as supply gap above 700,000 MT

Bunmi Bailey & David Ibidapo

A

nalysts say Nigeria must be cautious on meting out sanctions on firms importing palm oil as local production cannot meet a surging demand.

Buhari recently directed the Central Bank of Nigeria (CBN) to blacklist companies importing or smuggling palm oil and other products into Nigeria, according to Central Bank Governor Godwin Emefiele.

Analysts say sanctions should be meted on firms smuggling the product into Nigeria, but not those importing it legally for factory use.

Palm oil importers have been restricted from accessing foreign exchange in the official market since 2016, but they can obtain FX from elsewhere to import. But the restriction from FX market has made importation of the product difficult, prompting people to resort to smuggling.

Nigeria produces 930,000 MT to 1.3 million MT, but demand is about 2.1 million MT, industry sources say.

Mogaji African Farmer, head of agriculture and agroallied group, Lagos Chamber of Commerce and Industry, (LCCI) said such sanctions may do in consumer companies that depend heavily on

L-R: Bola Adebisi, company secretary, Beta Glass; Otunba Abimbola Ogunbanjo, chairman; and Darren Bennett-Voci, chief executive officer, at the annual general meeting of Beta Glass plc in Lagos recently

palm oil for production.

“How will they survive?” he asked.

“We are heavy consumers and light producers. So, this policy that they want to do is a ‘no no’ for me. And if you also ask the experts it’s a ‘no no’ for them too,” he said.

“What will other companies that make soaps and detergents and vegetable palm oil do? What will happen to them?

“With climate change, are we sure that we will get the yields that we require and almost all the palm oil companies are complaining of labour. Even if there is land, there may be conflicts from the community,” he added.

He said it is critical to give importers one or two years before implementing the policy.

“Are they releasing longterm capital? Can they buy the equipment required for processing? Government should get some accredited companies to grow those seedlings.

The real players need modern equipment,” he said.

A lot of investments have gone into oil palm plantations in recent times.

Santosh Pillai, managing director of PZ Wilmar, told BusinessDay that his firm’s investment in oil palm plantations in Cross River State alone is approximately $150 million.

Presco’s investment is valued at N75 billion. Its capac-

ity is 63 percent in the peak season and 24 percent in the lean season, Felix Nwabuko, managing director of Presco, told BusinessDay recently.

Okomu, another big investor in the industry, is planting 11,400 hectares at a new Extension 2 Plantation in Ovia North East Local Government Area in Edo State.

The palm oil maker acquired two additional 30 metric tons per hour mills, being built at $50 million.

Despite these investments, supply gap is still high as some of the oil palm plantations are yet to fruit.

Abiola Gbemisola, consumer analyst, Chapel Hill Denham, said there is a need

for deliberations between the importers and CBN. “On the back of what is happening, crude palm oil in the international market has declined and this is due to the fact that weather conditions have been favourable because the yield on palm oil is high. So, this led to glut. It will be easy for them to import through the Nigeria ports. But the reason why they cannot bring the palm oil into the Nigerian ports is that tariff is high— about 35 percent. So, that is why they are bringing it through neighbouring countries,” he explained.

“This is not the time for the ban. I will be fully in support of the ban if there is palm oil abundance in Nigeria. When you look at total production by local producers and you justapose it against local demand in Nigeria, you will see that there is a large deficit.

When there is deficit, people will import.”

He said already, Presco and Okomu recorded a reduction in revenue importation between last year and this year.

“The importers incur high cost. The ability to pass those costs to the final consumer is constrained due to the weak purchasing power in the economy. They might not be able to pass it to consumers and they might just have lower profit. Most companies that really use a bulk of it might suffer,” he explained.

Beta Glass grows revenue by 19%, plans furnace rebuild investment in Agbara Odinaka Anudu

E

fficient management of men and resources pushed up the revenue of Beta Glass plc by 18.6 percent, from N22.186 billion to N26.321 billion in the financial year ended December 31, 2018.

The growth was mainly driven by price increases in response to inflationary trends and partly by higher volumes, Otunba Abimbola Ogunbanjo, chairman of Beta Glass, said at the annual general meeting held in Lagos.

Gross profit was 24 percent of sales, which was 22 percent higher compared to previous year. Prudent deployment of resources boosted returns, improving profit before tax (PBT) to 27 percent of sales. Operating

income was strong at 22 percent of sales, showing a healthy improvement of 35 percent compared to the previous year. Finance income rose by 11 percent to N1.41 billion for the year, as net profit margin stood at a healthy 19 percent, remaining broadly steady compared to the prior year.

“Notwithstanding the increased capital expenditure (capex) needs, your company closed the year with a very robust cash position of N8.9 billion, auguring well for critical capex requirements in the coming years,” Ogunbanjo told shareholders.

“I am pleased to inform you that the glass business delivered on its plan and successfully completed the furnace cold repair faster than expected at the Delta Plant last year, thereby enhancing its efficiency and www.businessday.ng

capacity.

“We have also commenced preparations towards furnace rebuild in Agbara plant, which is scheduled for H1 2020. This furnace rebuild is a strategic project targeted at the transformation of the company’s glass capacity for Nigeria and the export markets, for the anticipated growth and demand for glass in Nigeria,” he stated.

The glass maker’s financials further show that shareholders’ equity improved

by N4.4 billion when compared with the previous year, resulting from the strong profit and adjusted for the dividend distributed during the year.

Ogunbajo disclosed that the board recommended a gross dividend of N1.30 kobo per share subject to the deduction of 10 percent

withholding tax.

This, he said, represents a 22 percent increase in value from last year’s dividend and is consistent with the company’s dividend policy to pay out 13 percent of net profit after tax.

Assessing the 2018 financial year, he said the expectation of stronger growth in the economy was dampened by contraction in the oil and gas sectors, contractions in the agricultural sector due to farmers-herders clashes, including increased political tension.

He pointed out that while the exchange rate was relatively stable in 2018 in different segments of the FX market, including the Importers’ and Exporters’ (I & E) foreign exchange window, businesses experienced severe logistics challenges owing to the state of Apapa and Tin

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Can link roads. “ The gridlock at the two functional ports in the country, the Lagos Apapa and Tin-Can Island ports, wreaked havoc on international trade, haulage, commuting and business activities. Traffic congestion on major road networks in Lagos took its toll on man hours while businesses dependent on importation and export, and big factories located within the Apapa/ Wharf axis of Lagos State, reported weaker volumes,” he recalled.

He expressed confidence that with the elections over, structural challenges confronting the economy in critical sectors such as oil and gas, power, infrastructure and healthcare would be addressed and resolved to move the economy to the next level of growth. @Businessdayng

F

rieslandCampina WAMCO and 2SCALE are partnering to deepen the inclusive model for local sourcing of fresh milk in Nigeria.

This is in line w ith FrieslandCampina WAMCO’s Dairy Development Programme (DDP), which improves the livelihood of smallholder dairy farmers, deepens the dairy market, creates employment and raises the volume of fresh milk from empowered dairy farmers.

Sigrid Kaag, the Netherlands minister for Foreign Trade and Development Cooperation, said given the consistent result FrieslandCampina WAMCO has recorded in local milk sourcing, Nigeria has the right partner to stimulate growth in the industry.

Kaag confirmed the progress of the dairy maker’s DDP and observed the integration of sustainability initiatives throughout the company’s operations during a visit to FrieslandCampina WAMCO Nigeria recently.

“I see FrieslandCampina WAMCO runs a stellar operation. You have changed the status quo in local milk sourcing and are playing a key role as a private sector partner in achieving the SDGs,” she said.

The minister witnessed the signing of the partnership extension agreement on the DDP between FrieslandCampina WAMCO, represented by Ben Langat, managing director, and International Fertilizer Development Center (IFDC) represented by Albin Hubscher, president and CEO. The aim of the agreement is to sustainably transform and lead the local dairy sector in Nigeria by supporting the transition of local dairy farming into modern dairy farming and developing key structures required for a sustainable value chain.

While discussing the DDP, Langat said, “As industry leader, FrieslandCampina WAMCO has established best practice models for local milk sourcing to thrive.

By signing this partnership agreement, we are demonstrating the need for partnerships in contributing to food security.”

36

Monday 15 July 2019

BUSINESS DAY

real sector watch

Sugar production highest in 7yrs amid land, smuggling hiccups …firms manage to make profits Gbemi Faminu

S

ugar production rose to 30,000 metric tons (MT) in 2018, the highest since 2012, but issues around land tenure system, smuggling and ports hurt the fledgling industry.

Production rose from 10,843 MT in 2012 to 30,000MT in 2018, according to the National Sugar Development Council (NSDC).

However, raw sugar import was 1.098 million MT in 2012, but rose to 1.216 million MT in 2018.

Though population may have risen since 2012, importation of raw sugar into Nigeria is still high, analysts say.

The data show that importing 1.216 million MT of sugar cost Nigeria $337.312 million. However, importation of 1.098 million MT in 2012 cost Nigeria $517.22 million.

“There are a lot of improvements in the sugar value chain,” Masur Ahmed, president, Manufacturers Association of Nigeria (MAN), said at a press conference in Lagos recently.

“Three companies are already developing significant sugarcanes as their raw

Olayinka Oluwatimehin, CEO, Amazon Energy explaining a point to Mele Kyari, GMD of NNPC, during the GMDs visit to the company’s booth at the just concluded Nigeria Oil and Gas Conference in Abuja recently.

material,” he added.

An analysis from Vetiva Capital explains that sugar farmers profit from high prices usually caused by the scarcity by selling to the millers and refiners at much higher prices, which implies higher margins for farmers.

“In most parts of the world, sugar milling is being integrated to sugar refining. More recently, most sugar refineries are acquiring sugar cane plantations to complete the value chain, entering the upstream seg-

ment and thereby riding the curve to minimize shocks from price uptrend,” Vetiva Capital says.

Dangote Sugar has invested over $1 billion in sugar plantations, making it the biggest investor in the chain.

The Golden Sugar Company of the Flour Mills of Nigeria is Nigeria’s second largest sugar maker the country, having one of the largest production facilities in the country. It has N40 billion sugar refinery where 750,000 tonnes of sugar are produced

daily. It also has about 10,000 hectares of sugar plantation and is involved in backward integration activities.

In Q1 2019, Dangote Sugar recorded a gross profit of N12 billion, marking a 20 percent increase from the corresponding period of 2018. The company’s operating profit recorded a 27 percent increase with N11 billion while its total profit was N7 billion with a 19 percent increase.

McNichols in Q1 recorded increase in its gross profit

by 7.06 percent with N41 million while its operating profit amounted to N19 million, with a 31 percent increase from the previous period. The company’s profit before tax stood at N10 million while its total comprehensive profit was N8 million, with 30 and 40 percent increases respectively.

Speaking at the AGM of the Dangote Sugar recently, Aliko Dangote, president of Dangote Group, complained that the industry is struggling with smuggling activities which caused a downturn in the activities of local sugar producers.

Dangote also said that smuggling also caused economic sabotage for the country as it hindered the employment of no fewer than 250 Nigerians.

Sadiq Usman, head corporate business development, Flour Mills, said in a telephone interview that various factors are hindering sugar production in the country.

“Documentation, planting issues, weak infrastructures and land rights pose big problems for us and these factors have continued to slow the pace of our development in boosting sugar production,” Usman said.

He disclosed that Flour Mills lost 75 percent of its sugarcane plantation owing to 2018 floods that ravaged the farmland.

“Last year, the floods wiped away a significant proportion of our sugarcane production. It affected close to 2,000 hectares of the 3,000 hectares we planted and now we are replanting again.”

Asides from the issue of smuggling, infrastructure deficit has hindered the potential of the industry. This is especially evident in the difficult access to necessary machinery and difficulty in moving products from one place to another Furthermore, due to soil content and location, sugar plantations are established in strategic locations, but according to Dangote, communal clashes between the host community and herdsmen, which are rampant in communities, affect the production scale as a clash can lead to companies closing down for some time.

Despite these challenges, the sugar producers still manage to keep their heads above the turbulent waters which reflect on their financial statements analysed by BusinessDay.

Gasco Marine completes pipeline network to feed manufacturers in Ogun, Lagos, Oyo RAZAQ AYINLA, Abeokuta

F

ollowing an inc re a s e d d e ma n d for compressed natural gas supplies prompted by the influx of manufacturing and power plants in some Southwest states, namely, Ogun, Lagos and Oyo states, Gasco Marine Limited has joined major natural gas suppliers such as West African Gas Pipelines Company Limited and Shell Nigeria to expand natural gas market with the establishment N2 billion gas plant in Abeokuta, Ogun State capital.

Gasco Marine Limited, subsidiary of Viathan Engineering Limited, inaugurated N2 billion compressed natural gas plant in Abeokuta where it is expected to supply power plants and manufacturing industries in

Ogun, Lagos and Oyo states, thereby improving gas supplies for which the existing major suppliers might not be able to undertake within the industrial hubs of SangoOta, Atan-Ota, Igbesa, Agbara, Isolo, Ilupeju, Oluyole Industrial estate, among others in the Southwest.

Gasco Marine Limited entered Nigeria’s midstream and downstream gas value chain to with 216,000 scm daily production capacity that is expected to improve much - needed natural gas to the manufacturing industries and to the independently - owned power plants, thereby broadening the already established competition among the producers and suppliers of natural gas in the country.

BusinessDay reports that Gasco Marine joins producers and suppliers of natural www.businessday.ng

gas in the country to establish a better and more effective distribution network for the supplies of gas to manufacturing industries and power plants in the three Southwest states in addition to the already established market created by six power plants operated by its sister energy company - Viathan Engineering Limited, in Abeokuta, Akute and Lagos.

Speaking at the inauguration of the N2 billion CNG plant located in Abeokuta by the immediate past minister of power, works and housing, Babatunde Fashola, managing director, Genco Marine Limited, Bukola Badejo-Okusanya, noted that the inauguration of the CNG would redefine compression and distribution of natural gas in Nigeria’s midstream and downstream gas value chain.

“Our company - Gasco Marine Limited-is a fully integrated indigenous gas company that specialises in the processing, transport, storage and sales of natural gas in Nigeria,” said BadejoOkusanya.

“Over the last five years, we have quickly evolved our operations and servicing capacity and we have grown our market share to almost 13 percent. Our processing and distribution infrastructure can deliver gas to power stations and other industries in Ogun, Oyo and Lagos states in an effective and efficient manner,” he said.

“Gasco Marine aims to become the industry benchmark for quality and affordable service - delivery and reliability in the sale and distribution of CNG and other gases in Nigeria, thus becoming a partner,

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uniquely positioned to be able to guarantee supply assurance.”

Babatunde Raji Fashola while cutting the tape to inaugurate the CNG plant in Abeokuta urged Nigerians to devise means by which the country could be better off in terms of economic, political and social contributions instead of annoying and fruitless discussions and complaints that take the country to nowhere.

Nigeria stands a chance with the like of Gasco Marine to a better country but all hands must be on deck to change the narrative for better “We can talk about climate change and how we need to convert bad fuel, coal, diesel into cleaner but it won’t go away by just talking. This group (Gasco Marine) has done something @Businessdayng

about that again by making sure there is cleaner fuel, there is cleaner source of fuel to use.

“I think by committing to producing and deploying more gas, Gasco and Viathan help Nigeria to protect the environment for the next generation. They have also helped to do so by contributing to our initiative as a country to reduce and ultimately, eliminate gas flaring from our country and I am happy to be part of the solution initiative.

“Secondly, it addresses the local and global concerns about employment.

When I was invited here, the first question I asked was, how many people have been employed during the building period, because what this is all about is to restore people’s dignity at the end of the day.”

Monday 15 July 2019

BUSINESS DAY

37

FEATURE

ART X Lagos: Far more than just an Art Fair TOBI ONABOLU

H

istorians trace the origins of art fairs back to religious festivals from the great ancient empires, including but not limited to the Roman and Greek Empires, the Aztec and Inca Kingdoms, and the Han-Dynasty, amongst others. The art fair model evolved from these religious festivals, linking up art dealers, professionals and collectors from distant regions over a certain period of time, creating a small world network, in the form of a trade show.

More recently, and to an extent, ART X Lagos adheres to the typical model of modern art fairs. It brings together leading galleries and artists from Africa and its diaspora, showcasing cutting edge African art for a number of days to local and international audiences. Since its inception in 2016, the fair has welcomed and exhibited the works of over 200 artists, including Yinka Shonibare CBE, Ben Enwonwu, Zanele Muholi, Victor Ehikhamenor, Emeka Ogboh, Cyrus Kabiru, Amadou Sanogo, and Sokari Douglas Camp CBE, as well as several other leading artists.

West Africa’s first international art fair, however, also aims to do much more: to stretch beyond the traditional scope of an art fair. When building ART X Lagos, Founder & Director Tokini Peterside was determined to design an art fair that captured the essence and spirit of Lagos, creating an experience that could attract various types of audiences. The platform describes itself as “Proudly Lagosian”, with

Lagos Drawings, an Interactive Installation created by a multidisciplinary collaboration led by Karo Akpokiere

a pan-African outlook, whilst aspiring to the highest standards of international art fairs across the globe, such as Frieze, Art Basel, The Armory Show, and The European Fine Art Fair (TEFAF).

As a result, in addition to the more traditional art fair programming, a lot of emphasis has been placed on the more unconventional elements of the fair.

Each year, ART X Lagos presents

a series of interactive projects, challenging the audience to experience variations of artistic expression. Since 2016, guests have been able to engage with multiple genres of art such as

L-R: Works by Armand Boua at the SMO Contemporary Booth; Yinka Shonibare CBE’s Special Exhibition at ART X Lagos in 2018.

ART X Live! Performers L-R: Aye! Of VSS with Ammarae at the 2018 show; Ladipoe at the 2017 show.

(L-R) Isaac Emokpae in his live painting studio; Mad Horse City, a multimedia experience created by Olalekan Jeyifous and Wale Lawal featuring virtual reality art www.businessday.ng

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virtual reality art, performance art, conductive art, witness live art studios, amongst other interactive forms.

At each edition of the fair, ART X Lagos also holds a Talks Program, inviting key stakeholders in Africa’s art economy to discuss important themes pertinent to the state and evolution of contemporary art in Africa. Notable speakers have included Aboubakar Fofana, Yinka Shonibare CBE, El Anatsui, Njideka Akunyili-Crosby, Professor Bruce Onobrakpeya, Chika Okeke-Agulu, and Peju Alatise. All guests at the fair have been able to attend these talks, which have proven to be a highlight of the fair.

Additionally, the penultimate night of the fair plays host to ART X Live!, the one-night-only live music and visual art showcase that young trendy Lagosians yearn for. The show has brought together emerging and underground talent in the region, presenting a dynamic collaboration @Businessdayng

where music fuses with art in innovative ways. For a number of past ART X Live! performers, the platform has served as a launchpad to boosting successful careers, with alumni including Ladipoe, Falana, Wavy the Creator, Tomi Thomas, and BOJ. The ART X Live! team also has a knack for onboarding talent just before they “blow”, with Teni “the entertainer” and Odunsi “the engine” as two perfect cases in point!

For many guests at ART X Lagos, Tokini Peterside’s brainchild is their only or first experience of an art fair. As such, all of the above may appear as rudimentary, and in line with how all art fairs should operate. However, ART X Lagos has a distinctively Lagos style but with a pan-African and international blend, featuring audience participatory art projects, talks with notable artists from Africa and live performances, which combine to make ART X Lagos totally unique - there is simply no other fair around the world like it. The aforementioned fairs abroad charge ten times the amount ART X Lagos does, to experience only a smidgen of the diverse programming it delivers. Comparatively, ART X Lagos introduced a concessionary N2,000 entry fee last year for the first time.

So what is the point of all of this: to complain about ungrateful guests, or find an excuse to hike up ticket prices? Far from it. What is perhaps the most exciting thing about ART X Lagos, is that it is a Nigerian entity, proudly so, and it is totally shaking up the model of art fairs worldwide. Contrary to stereotypes of our “follow follow” mentality, ART X Lagos is helping to show Nigeria’s potential as a taste-maker, a gamechanger, a trailblazer.

Ultimately, ART X Lagos was created to bolster the art sector in Nigeria, and offer a platform to talent across the continent, developing the professionalism around art, propelling African artists into the international arena. ART X Week has since become a key fixture on the arts and culture calendar, not only for Nigerians, but also for international guests. The satellite exhibitions that have emerged in response to the fair are undoubtedly indicators of Lagos’ position as a fast-emerging and exciting cultural hub.

Whilst ART X Lagos fulfills the requirements of a standard art fair, it prides itself on doing far more, and truly enabling Lagos to live up to its name as the number one cultural destination on the continent.

• Tobi Onabolu, a lifestyle and culture commentator and the Communications Manager for ART X Lagos

38

Monday 15 July 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Jony Ive and the myth that only certain people can design

R JON KOLKO

ecently, the big design buzz has been on Jonathan Ive leaving Apple. Much of the conversation is around the impact he’s had on the design of Apple’s products — on shaping the form of the things we want and buy.

Design is both a noun and a verb. For almost a century, we’ve enjoyed a consumer culture that brings objects of design into our lives. These are

artifacts of convenience, function and appeal; they are things, like chairs and shoes and stoves and cars.

Design, as a verb, is the

process of making things.

Sometimes, that process is about a curiosity and exploration of material, as with the work of Ray and Charles

Eames. Sometimes, the process is about solving a problem, as evidenced in the trend of design thinking. And sometimes, the

process is about inclusive democratization, as with the theme of participatory design — a Scandinavianinspired approach that shifts the creative spark from an external source to the “genius” of the people who will be using whatever ends up being made.

When design is something that’s done, not something that’s had, it is empowering. When we’re in the midst of a creative process, we lose the sense of ourselves, of our problems and anxieties, even

of our goals: we find flow, and in that flow, we grow.

The products designed at Apple under Ive’s leadership, for all of their beauty and sophistication, have reinforced the notion that design is about magic people making magic things. We can all make things. Let’s celebrate Ive’s impact on the world not by highlighting the stuff he’s made, but by finding inspiration in his ability to make them.

•Jon Kolko is a partner at Modernist Studio

How to fix 5-star rating systems JOSH BREINLINGER, ANDREI HAGIU & JULIAN WRIGHT

A

s currently implemented, five-star rating systems suffer from several shortcomings.

There are several options for providing users of a marketplace with a better sense of the relative ranking of suppliers.

One basic thing would be to show users the average score for all suppliers in the relevant category. They could even be shown (in a simple way) the distribution of scores within a category, indicating the current supplier’s position in that distribution. By seeing where the supplier fits in it, the user could quickly get a sense

of the overall situation.

Another way to help is to indicate when a supplier is in a top percentile group while not disclosing the status of other suppliers. This is akin to treating the top percentiles as badges, like eBay

and Airbnb have done with their respective “toprated seller” and “superhost” designations.

The second key measure we advocate is adjusting user ratings to reflect differences in reviewing behavior. Spe-

cifically, a given user’s review could be given a larger weight if there is a higher variance in the individual’s reviewer scores.

Going further, one should consider adjusting a user’s score by the average rating that user has given

in the past, so only relative differences across the ratings given by the user would shift a supplier’s rating. This would help adjust for differences between users who are intrinsically very generous in their ratings and users who are very demanding.

Other ways marketplaces could improve their reputation systems include using more private information (reviews and comments that are never revealed to the suppliers) and relative comparisons (how the supplier compared to the user’s previous supplier) to rank suppliers. They could also ask users questions whose answers will help the marketplace better match them to the right suppliers in the future

(C) (2017) Harvard Business Review. Distributed by New York Times Syndicate

Make this summer your best one ever With any of our FirstBank cards, you can enjoy a flexible summer in over 200 countries worldwide Visit any FirstBank branch for the issuance of your Summer Cards

(e.g., “What attributes of this supplier did you like/ dislike the most?”).

Rating systems may never be enough on their own to ensure trust and safety on online marketplaces. However, implementing these measures would go a long way toward making rating systems more robust while reducing marketplaces’ needs and the costs of providing these supplementary services.

•Josh Breinlinger is a managing director at Jackson Square Ventures.

Andrei Hagiu is an associate professor at Boston University’s Questrom School of Business. Julian Wright is a professor of economics at National University of Singapore

Monday 15 July 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

39

In association with

Price transparency in health care is coming to the United States — but will it matter? tween life and death. In these cases and many others, shopping is not an option.

Then there is the issue of physician relationships. If you have an orthopedist or neurosurgeon you trust for your back surgery and she uses Hospital A, which is more expensive, are you going to abandon her for another physician who uses the cheaper Hospital B? And finally, the distorting influence of insurance arises.

Price isn’t very important for patients whose costs are covered by insurance.

That said, price transparency has to be tried. Until it is, we won’t know the efficacy of markets as solutions to our health cost problem. While price opaqueness is indefensible, we would be wise to temper expectations about the therapeutic power of a dose of good price information.

DAVID BLUMENTHAL, LOVISA GUSTAFSSON & SHANOOR SEERVAI

T

here’s movement to make health care prices transparent in the United States. This would include not just the list prices that hospitals purport to charge but the actual, negotiated, discounted prices that hospitals agree upon with insurers. These negotiated fees have been treated in the past as tightly guarded trade secrets by hospitals and health plans. There’s no question that the tectonic plates of public policy are shifting on the issue of price transparency.

The question then is: Will price transparency lower health care costs? Economic theory and hospital opposition suggest it would, but the answer is not as straightforward as you might expect and could differ from market to market. Health care is a really strange economic sector, and it doesn’t always follow the usual rules.

There is also little evidence from the seven states that currently require hospitals to disclose prices that it results in

lower costs. Ironically, some research also shows that in the absence of understandable quality information, some consumers assume that high price means high quality and are actually drawn to higher-priced institu-

tions.

The complexity and urgency of hospital services are issues as well. And what if there’s an unexpected complication requiring antibiotics or a cardiology consultation?

Back surgery, if the underlying condition is not very severe, is a so-called shoppable service. But what about chest pain or stroke? The symptoms come on suddenly, and speed can make the difference be-

•David Blumenthal is president of the Commonwealth Fund, where Lovisa Gustafsson is an assistant vice president and Shanoor Seervai is a senior research associate and communications associate

Setting better sales goals with analytics one experiment after another.

By taking the steps outlined above and persevering through iteration after iteration, organizations can become higher performers with larger sales, better margins and a more motivated sales force.

DOUG J. CHUNG, ISABEL HUBER, VINAY MURTHY, VARUN SUNKU & MARIJE WEBER

S

ales compensation is a critical lever in motivating a sales force and driving growth in the business-to-business sector: A vital part of getting compensation right is setting the proper sales targets. Both academic research and our experience working with B2B companies in a variety of industries indicate that poorly set targets often misfire, failing to deliver the expected benefits and demoralizing the sales force in the process.

A few companies are finding solutions: They are using advanced analytics to identify the true drivers of business outcomes, applying big data and machine learning in order to understand customer demand at an unprecedented level of accuracy and granularity. Armed with more reliable projections, they can establish more meaningful targets.

IDENTIFYING THE RIGHT KEY PERFORMANCE INDICATORS: Every company must wrestle with this question: Should it base commissions and bonuses on sales figures, profits or some other metric? A

•Doug J. Chung is a professor at Harvard Business School.

Isabel Huber is a partner with the marketing and sales practice of McKinsey & Company, where Vinay Murthy is an associate partner, Varun Sunku is a knowledge expert and Marije Weber is a consultant

poorly chosen metric can lead to poor results. Big data and analytics can help identify the KPIs that are best aligned with business priorities and can help define granular metrics that can drive desired outcomes.

SETTING THE RIGHT TARGETS: As offerings proliferate and sales processes grow more complex, customer demand is becoming increasingly volatile and difficult to predict — and traditional top-down approaches to target setting may

fall short.

CHOOSING THE RIGHT FREQUENCY FOR REVISION: How often should targets be reset? Revise them too frequently, and your administrative costs and communication challenges increase; revise them too slowly, and you may lose responsiveness to market changes and undermine reps’ engagement.

MAKING IT HAPPEN: Companies should examine whether the metrics they use to reward reps are aligned with their stra-

tegic objectives. They should set individual targets based not on past performance but on the potential of each rep’s customer portfolio. And they can boost reps’ motivation by setting and revising targets in line with customers’ purchasing cycles while conducting experiments to arrive at the optimal frequency.

Along the way, companies may struggle with imperfect data and with skepticism on the part of reps or management, or both.

Success will probably require

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BUSINESS DAY

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Dangote Cement, CCNN have attractive valuations compared to African peers BALA AUGIE

D

angote Cement Nigeria Plc and Cement Company of Northern Nigeria (CCNN) have attractive valuations compared to their African peers as they continue to take advantage of the country’s infrastructure deficit to increase their market share.

For instance, Dangote Cement and CCCN are both trading at 7.3x and 7.0x 2019E EV/EBITDA respectively, a discount to 11.2x for the Middle East and Africa (MEA) peers. This means they are strong gains for investors that invest in these stocks.

EV/EBITDA stands for Enterprise Value to Earnings before Interest, Taxes, Depreciation and Amortisation (and Exceptionals).

It is similar to and often used in conjunction with - the PE Ratio but it is capital structure-neutral by including debt and taking earnings before the payment of interest.

As a general guideline, an EV/ EBITDA value below 10 is commonly interpreted as healthy and above average by analysts and investors.

Investors have been dumping the shares of Dangote and other NSE 30 firms as they fret about

the lack of policy direction of President Muhammdu Buhari’s administration.

Dangote Cement’s share price closed at N173 2:00 pm on Friday (July 12 ), this compares to N234 the corresponding period of 2018, N235.35 in 2017, N180 in 2016, N171 in 2015, and N232 in 2014.

CCCN’s share price closed at N14.50 2:00 pm on Friday (July 12), this compares to N31.50 the corresponding period of 2018, N9.22 in 2017, N7 in 2016, and N9.50 in 2015, and N14.17 billion in 2014.

The dominant players in the building material industry are poised to take advantage of the country’s infrastrucute deficit and

housing deficit as they have embarked on organic and inorganic strategies.

market in the North West region of the country and strong exports potential to neighbouring countries, especially Niger, according to analysts at Cordros Capital Securities Limited.

Analysts at Cordros Capital said CCNN’s is a top pick in their coverage universe and they set a target price of N28.71 and an expected total upside of 105 percent on current market price.

“Against production ramp up in its new line, we expect the company will deliver solid earnings in 2019E with both EBITDA and PBT growth of 95.1 percent and 131.6 respectively,” said analysts at Cordros Capital.

Dangote Cement maintains its position as a market leader because it controls 60 percent of the market. It continues to enjoy

P.E

SHORT TAKES 3.75 billion Airtel Africa Plc, the second largest telecom firm in Africa by subscriber base listed 3.75 billion shares on the Nigerian Stock Exchange (NSE) on Tuesday, July 9, 2019. The telco is Nigeria’s thirdmost capitalized firm with a market value of about N1.2 trillion.

$8.56 billion Capital importation to Nigeria in first quarter of 2019 stood at $8.49 trillion. This represents 118% increase over $3.9 billion reported in similar quarter in 2014, and 35 percent more than $6.3 billion realized similar quarter in 2018.

N3.97 trillion

For instance, CCNN’s new cement plant in Sokoto is, the best cement plant in Nigeria, due to the high level of technological configurations which makes end products cure and dry faster.

The company has a unique geographical positioning that gives its seamless access to the

superior margin on account of strong energy efficiency and lower maintenance costs.

Dangote Cement recorded gross profit margin of 59.12 percent as at March 2019, this compares with CCNN, (46.45 percent), and Lafarge Africa, (22.12 percent).

The Nigerian 36 states plus the Federal Capital Territory jointly grew their total domestic debt by 3.1 percent to N3.97 trillion as against N3.85 trillion recorded as at December 31, 2018.

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

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

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Monday 15 July 2019

BUSINESS DAY

41

MARKETS INTELLIGENCE Commercial Banks NPL could exceed N1.6trn on the back of new regulations Ifeanyi John

I

ndustry analysts are worried that risk managers in the banking sector might get complacent with new loans to be created before September on the back of the new Loan to Deposit Ratio regulations. The need to maintain a Loan to Deposit ratio not less than 60 percent could push the total non-performing loans in the banking industry above N1.62 trillion if the industry NPL ratio remains at current level by year end.

Analyses of the Q1 Banking financials show that there is a deficit of N1.84 trillion loans that would need to be created by 8 banks before September. When these loans are created, the total banking industry loans to customers would grow from N15.5 trillion to N17.34 trillion. If the current NPL ratio of

all the commercial banks listed on the stock exchange remain at 9.36 percent at the beginning of Q3, 2019, that would mean a total

industry non-performing loan of N1.62 trillion.

Obinna Uzoma, a Lagos based economist explained that, “The

Industry Earnings Yield rises as GDP per capita declines in Nigeria Ifeanyi John

I

n the past few years, earnings yield for publicly listed companies has been rising as improved earnings performance has been met with a deepened broad market selloff in the local bourse. With most investors scratching their head to understand why the market selloff which began early 2018, some economists now tie the poor market performance and declining equity valuations to the protracted decline in GDP per capita levels in the country.

Between 2015 and 2018, market valuation as measured by PE ratio (the inverse of earnings yield) has more than halved, falling from 17.01x in 2015 to just 7.47x at year end 2018. While valuations began declining due to the economic recession in 2016, they have still not recovered despite the economic recovery. Economists say the recovery has been too slow, causing economy to remain in austerity as

GDP per capita continues its fouryear march downwards.

Analysis of the market valuation of the NSE 30 shows the earnings yield in the Nigerian equities market currently hovering around 13.39% which is a significant increase from its levels in 2015 which was about 5.88%. “Since the economy tumbled into a recession in mid-2016, there has been a persistent decline in company valuation as investors’ confidence has been heavily eroded due to the economic contraction and slow pace of economic recovery” said Tochukwu Okafor, Lecturer in Banking and Finance at Covenant University.

Maju Eldad, a Nigerian economist explained that “Since 2014, economic growth has more than halved as the Nigeria’s oil driven economy has failed to rebound amidst headwinds such as poor execution of public policies, delayed budget approvals, poor budget performance and an erosion of both consumers’ and that has led to a decline in investors’ confidence.”

regulations would bolster fresh capital supply to the real sector but this would have to be done before September so there is a likelihood of complacency by risk managers. If that is properly managed, the loan book of banks would rise as against the downward trend over the last few years and lead to improved profitability, but if the NPLs are not carefully managed, these banks could report weaker earnings” Access Bank, United Bank of Africa, Guaranty Trust Bank, and Wema Bank are the banks to watch in the next two quarters as they are the banks that need to give out the most loans while trying to put their NPL ratio below the regulatory limit of 5 percent. As at the end of the first quarter of the year, Access Bank reported an NPL ratio of 10 percent and an LDR of 52.8 percent, Herbert Wigwe and his team would need to add over N280.26 billion in loans

while trying to cut the NPL ratio by 500 basis points.

United Bank of Africa reported an NPL ratio 5.3 percent, slightly above the regulatory limit but with the new LDR target, the bank has to create over N400 billion in loans before September to keep up with new regulations. This might push the NPLs further away from the regulatory benchmark if the risk protocol in issuing out new loans is compromised.

Guaranty Trust Bank recorded an NPL ratio of 7.03 percent in the first quarter of the year and has to create new loans N216.93 billion.

Wema Bank is also slightly within the regulatory target, but has to create N230 billion new loans.

“The recent selloff after the announcement of the regulation shows that investors are skeptical about the banks’ ability to manage these risks and maintain or grow profitability” Uzoma added.

Investors must not become blinded by easing potential Rate cuts buoy markets but reflect ugly threats to global economy Michael Mackenzie, FT Notwithstanding the slight improvement in economic growth in 2018 when the economy expanded by 1.9 percent which was about 2.3x better than the growth rate in the preceding year, investors’ confidence in the market further eroded with analysts pointing to the persistent decline in GDP per capita since 2015. With the economy expanding at a slower pace than the population growth rate of around 3.25%, Nigeria which is currently the poverty capital of the world may be finding more space at the bottom to accommodate millions of citizens who may fall into the poverty category as average income per citizen as measured by GDP per capita continues to erode. Investors knowing that the shrinking average household income could affect company’s performance as selling off stocks to preserved suffering further market losses.

However, the pace of the broad market selloffs now seems rational considering both economic performance and rising treasury yields in the country.

Using the fed model, equity yields should be greater than treasury yields to provide investors with an equity risk premium on their investment. Economists opine that earnings yields for stocks move with long-term risk-free rates and expected inflation. With inflation and treasury yields now hovering between 11-12% in Nigeria, it is only normal to see earnings yield rise and stock prices fall to regenerate an inflation and equity risk premium for investors.

Analysts therefore expect that as GDP per capita improves, the stock market will gradually improve also with price to earnings ratio increasing and earnings yield declining.

G

overnment bond markets have set a cracking pace this year and leading central banks are preparing to deliver a summer policy easing, but fund managers should be alert to the potential for disappointment and wary over what policymakers’ concerns imply about the health of the global economy.

Falling bond yields since January have reflected harsh winds blowing from trade tension and a slowing engine room in the form of China tempering excessive borrowing. This week Jay Powell, the Federal Reserve chairman, flashed a green light for a US rate cut at the end of this month that will start affirming the dramatic drop in Treasury yields.

From the perspective of the bond market, Mr Powell has silenced the debate as to whether the Fed will ease this year, with the current question shifting to the scale and timing of

eventual cuts. This week, interest rate futures implied around 0.75 percentage points of easing by early 2020.

This illustrates how bond markets are veering beyond the idea of one or two “insurance” rate cuts that nurtures the current expansion.

With expectations so entrenched, that leaves government yields looking vulnerable to a sharp rise — as seen in late 2016 — should the global economy regain enough momentum to force only modest easing this summer.

With the S&P 500 index breaking beyond 3,000 for the first time after Mr Powell’s testimony to Congress, sentiment on Wall Street leans towards a burst of insurance easing that extends the business cycle, and bolsters business and consumer confidence.

The view singing out from Mr Powell’s remarks, from the Treasury and from the bond markets, is that plenty of easing may be needed, an outcome that would prove more challenging for equities and a swollen credit market.

Junk bond funds garner $11bn in inflows in past five weeks Investors bid-up riskier debt in search of yield Adam Samson in London, FT

I

nvestors have poured more than $10bn into junk bond funds since early June, highlighting the intensity of their hunt for yield amid a big rally in the bond market.

Net inflows into the asset class registered $2.3bn in the week to Wednesday, according to EPFR data.

That brought the boost over the past five weeks to $10.6bn, the largest increase over any such period since 2017.

Money managers have poured money into riskier investments, including speculative-rated bonds that generally have a higher probability of default than their invest-

ment-grade counterparts, over the past few weeks. Emerging market assets, which also typically carry a higher perceived risk, have also been in vogue.

Sebastien Galy, strategist at Nordea, said, “the riskier part of the fixed income market is a bet that there is no recession ahead, priced to some perfection.”

The shift into riskier corners of the market comes as large gains in the price of higher-rated debt have sent yields lower. Germany, for instance, this week sold Bunds that offer no regular interest payments for the first time since 2016. Meanwhile, some $600bn in corporate debt globally now trades with a negative yield, according to Deutsche Bank data.

42

Monday 15 July 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

Travel tips for the holidays

MONEY MATTERS

Nimi Akinkugbe

T

he holidays are almost upon us.

Whether you are travelling abroad or staying closer to home, here are some travel money tips to help you save and manage your holiday money.

Make a travel budget Have you planned for this holiday or are you just going to dip into your savings and head off no matter the cost?

How much can you really afford to spend? Set an overall spending limit and then determine where it can take you; try to stick to it. There is so much involved - accommodation, transport fares, food, shopping, entertainment, gifts, telephone calls, excursions, and so on.

Book early You really ought to have booked long before now to get the best deals. Fares can vary considerably depending on the time, day or month of travel. The long school vacation attracts very steep fares as families across the world embark on their summer holidays. If you are on a tight budget, avoiding weekend travel often results in huge savings; mid-week travel is much cheaper than the weekend.

If you travel off-season, you are bound to get better deals than if you go at Christmas time or during school holidays. Not only will fares be much cheaper and air mile tickets readily available, but destinations will also be less crowded. Indeed, now is a good time to book your Christmas travel!

Must you fly direct?

It is so much more convenient to fly directly to your destination, but if you have time to spare, there are significant savings in considering a flight with a stop over or two. Some passengers have passed through Dubai from Nigeria, or through Ethiopia on excellent Ethiopian Airlines to get to Europe and the Americas at very decent fares and with good service.

Inform your bank or credit card company of your travel plans Don’t forget to inform your bank or credit card provider if you are travelling abroad. If they see unusual transactions from a foreign land, to secure your account from fraud, they may block your card. It is also best to take along more than one card, in case you experience some problems with one of them; sadly this is still a com-

• Utilities • Managing your Tax

mon occurrence with some Nigerian debit and credit cards. Even though we like to be cashless, it always pays to have some cash on you, just incase the card is declined for whatever reason.

Always keep your bank’s international customer service number handy as well as an individual name; you might need it. There is nothing worse than being stranded without money in a foreign land.

Separate your money Don’t keep all of your cash and cards in the same place incase you are a victim of theft. You might have a card in your wallet but have another card and cash in a separate bag, just in case.

Cash is king. If you lose your wallet, your cards are declined, or the ATM has run out of money, you will be so glad that you had some cash on you. But, avoid having too much cash on you, as it may not be covered by your travel insurance if it’s lost or stolen.

Avoid borrowing to go on holiday There is so much pressure to keep up appearances; children in school want to show their friends that they travelled “abroad” and with “everyone else” travelling, you just cannot “afford” to stay at home. Some will even go as far as borrowing to finance an expensive holiday. Avoid this unless there is the absolute certainty of an impending inflow of funds or a compelling reason to do so.

Remember that your focus should be on your goals and not on other peoples’ goals; we don’t really know “the Jones” story but they are usually broke and trying to keep up with you!

Buy travel insurance A medical emergency can literally wipe out your savings. Always take out travel insurance. For a small premium, protect yourself and your family should one of you fall ill or have an accident during your travels. This sounds obvious but so many people just don’t bother to purchase travel insurance, and end up losing a lot of money when things go wrong; this could rage from cancelled flights, lost money, baggage or getting ill far from home.

Make transport arrangements You are at your most vulnerable when you first arrive at a new destination. That first airport taxi ride from the airport may be one of your most expensive so do plan ahead.

Try to research the lower-cost alternatives including train, coach, etc. If you are staying in a fairly decent hotel, they will usually have a free shuttle service; remember to ask about this when you are making your booking. It makes you feel safe as well particularly if you are travelling alone.

It’s best to figure all of this out before your trip; when you arrive tired and with tons of luggage, the last thing you need is to be ripped off by an unscrupulous driver or enter an unauthorised vehicle and put yourself in an uncertain situation when you’re far from home.

Secure your valuables Protect valuable documents. If you have ever lost your passport when you are travelling, you will know that it is a horrid experience. You can be completely stranded and insecure; identity is critical. Having most of your important documents and photos backed up is essential. Keep both digital and physical photocopies copies of your passport, visas, driver’s license, birth certificate, health insurance card, and important phone numbers on you, just in case.

Avoid carrying very expensive items including jewelry when you travel particularly if you cannot afford to lose them either financially or emotionally. Make use of the hotel safe and put valuables away.

Cheaper accommodation Over the last few years, there has been so much innovation in holiday rentals. Local residents can rent out their rooms, even entire apartments. “AirBnB”, for example, has transformed accommodation options. Many travelers actually find this experience more rewarding as it is usually more spacious and cheaper than hotel accommodation.

Be conscious of the exchange rate Doing a little research on the local exchange rate against your home currency can make a huge difference.

Quickly do your mental arithmetic before you make a purchase; it helps you make more efficient purchase decisions.

Roaming can cost you How much could a few texts, a few email checks, social media updates and downloads on the go possibly cost per day? A lot! Purchase an international roaming plan that will cover your travels as roaming charges can result in a staggering telephone bill when you return home.

They are a source of huge expense when you travel and must check emails and download on the go; don’t forget to keep data switched off until you need it. Be sure of what you will be paying both for making and receiving

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calls. Pay your bills in advance so that you don’t get cut off whilst you are away.

Switching to a local sim card as soon as you arrive at your destination is a good idea; it is always cheaper to make local calls. Make sure that your loved ones colleagues and key contacts have the number so that you don’t miss important calls.

Pay for a good internet package unless you will be in a connected environment most of the time.

Secure your finances Be careful when it comes to making online transfers or dealing with sensitive transactions in public places, as many hotspots are not at all secure. If you must use them in an airport in transit for example, be sure to log out completely to protect your self from identity fraud.

What is the essence of a vacation?

Remember the essence of a vacation; it is really about spending quality time with loved ones, and having time

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to rest and rejuvenate. This may just be the time to simply stay at home, a time to revisit your passions, hobbies, pastimes, and sports.

A vacation need not be that expensive. Don’t attempt to pay for what you cannot afford. You do not have to travel abroad; rediscover your own environment by visiting places close to home with your children. Have you visited Idanre Hills in Ondo State, the Ogbunike Cave in Anambra State, Obudu Ranch Resort in Cross River State, Yankari Game Reserve in Bauchi State or Abraka Turf Club in Delta State? Let us get our children to know more about our beautiful country.

If we don’t visit our heritage sites, we cannot expect foreigners and tourists to visit, spend valuable foreign exchange and create jobs.

With careful planning, you can find a balance between having an enjoyable vacation without breaking the bank.

Have a great holiday!

@Businessdayng

Follow Nimi Akinkugbe on: Twitter and Instagram: @ MMWithNimi, Facebook: ‘Money Matters With Nimi’ Send an email to info@ moneymatterswithnimi.com Or visit her Website www. moneymatterswithimi.com Nimi Akinkugbe has extensive experience in private wealth management.

She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 15 July 2019

BUSINESS DAY

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44

Monday 15 July 2019

BUSINESS DAY

news Dangote refinery key to Africa’s economic transformation – Stakeholders DIPO OLADEHINDE

W

ith a wobbling Gross Domestic Product (GDP) of $1.8 trillion, countries in sub-Saharan Africa are on the cusp of economic transformation with the imminent coming on-stream of the $12 billion Dangote refinery and petrochemicals complex.

The region is expected to benefit directly from the 650,000 barrels-per-day refinery as the project is expected to drastically reduce fuel imports into the countries in the region majorly from Europe with expected impact on foreign exchange outflows, according to oil and gas stakeholders at this year’s Ghana International Petroleum Conference (GhIPCON) in Accra.

The conference, themed ‘Regional Collaboration: A Catalyst for Transformation’ and organised by Ghana’s Ministry of Energy and the National Petroleum Authority, is designed to actively bring to the fore the operating industry’s perspective and guidance on issues of governmental and regulatory policy, as well as

best practices for the advancement of the industry across West Africa.

Sub-Saharan Africa currently boasts of over 132 trillion barrels of proven oil reserves, more than 8 percent of the world’s supply. Yet, it exports most of this oil to overseas refineries.

This has for long denied the region of the huge opportunity for economic transformation.

The inability of sub-Saharan African countries to locally refine their oil has taken a huge toll on their economies, with 48.5 percent of the region’s population living below $1.25 per day and life expectancy hovering at 56 years.

However, in this context, the African region, whose economic growth has combined national output equivalent to the GDP of Spain, would be a major beneficiary of the economic transformation arising from the operation of the world largest single train refinery in the world being built in Ibeju-Lekki, LagosNigeria, by Africa’s richest man, Aliko Dangote.

•Continues online at www.businessday.ng

Delay in Form M processing, PAAR issuance stifling businesses at ports …importers decry rising cost burden AMAKA ANAGOR-EWUZIE

T

he long delay in processing of Form M and issuance of PreArrival Assessment Report (PAAR) to importers by the Nigeria Customs Service (NCS) is stifling businesses at the ports.

Importers, manufacturers and other businesses that depend on the nation’s seaports to bring in both critical production inputs and finished products told BusinessDay that the delay in the processing of Form M, which is sent to Customs and the Central Bank of Nigeria (CBN) for approval through an authorised bank, means that goods ordered by Nigerian importers would not be shipped to the country. If it takes one month for Customs to approve Form M, the goods would be delayed for that length of time. The supplier would keep the goods in his warehouse in the originating country and the Nigerian importer would be made to pay the demurrage such goods

would have accumulated before they would be shipped to the country.

In the event that the goods are shipped – that is, if the supplier in the originating country had already loaded the goods, the ship would bring them to Nigeria as expected – they could get trapped at the ports as the importer cannot clear them until he gets all the documentation right. The importer would have to pay demurrage on the goods depending on how long they spend at the ports. All these constitute additional cost to the importer.

E-Form M is an online mandatory document introduced by the Federal Government through the Federal Ministry of Finance to monitor goods that are imported into Nigeria as well as enable the collection of import duties at the arrival of the goods.

L-R: Herbert Wigwe, group managing director/CEO, Access Bank plc; his wife, Doreen; Muhammadu Sanusi II, emir of Kano; Ofovwe Aig-Imoukhuede, and her husband, Aigboje Aig-Imoukhuede, chairman, Coronation Capital, at the presentation of trophies to the winners of the 2019 Access Bank Polo held at the Guards Polo Club, Windsor, England, UK... weekend.

$4bn opportunity opens for Nigerian pig farmers as China faces shortages CALEB OJEWALE

T

here is an opportunity for pig farmers and pork producers in Nigeria to expand their reach to Asia, particularly China and some of its neighbouring countries, where an outbreak of the African Swine Fever has depleted pig stocks by as much as 20 percent.

African Swine Fever (ASF), a contagious disease affecting domestic and wild pigs, is spreading within East and Southeast Asia, threatening the livelihood and food security of millions of people, particularly vulnerable subsistence pig farmers. In China (Mainland), the disease has been reported in 32 out of the 34 provincial level administra-

tive divisions as of mid-June, and more than 1.1 million pigs have perished or have been culled, noted the Crop Prospects and Food Situation Quarterly Global Report published this month (July).

Additionally, the disease has been reported in Viet Nam, Cambodia, Mongolia, the Democratic People’s Republic of Korea and the Lao People’s Democratic Republic, with official estimates indicating that millions of pigs in these countries have already died as a result of ASF. BusinessDay interactions with some pig farms and stakeholders in Nigeria suggest that at present, the China and Asian market is not one that has been actively explored. However, with the current shortages being expe-

rienced, it may be time for the Nigerian pig producers to start looking towards Asia.

“Exporting pigs from here to China?” Hilary Asiegbunam, who manages Jessam Farms in Enugu, asked in a phone interview, surprised at the prospect of exporting to China.

At the beginning of the conversation, he had interpreted it as importation of pigs, saying it was not going to be feasible, but after getting the point, he said, “We are interested in exporting if we can get customers with orders, pay the transport and we export.”

The farm in Enugu, he explained, has over a thousand pigs, representing one out of hundreds of farms with room for expansion if a solid demand-market can be devel-

CHUKA UROKO & ISRAEL ODUBOLA

U

nlike port cities around the world, Apapa, Nigeria’s premier port city, is not making the most of its position compared to port cities around the world.

Major port cities of the world, including London, Amsterdam, Shanghai in China, Rotterdam in Holland and •Continues online at Singapore, are business hubs www.businessday.ng where thriving business activities lead to increased construction and industrial production, wealth generation, job creation,

and high property values.

Ports play a substantial role in the economies of metropolitan areas. BusinessDay checks show that in Rotterdam, for instance, port-related activities accounted for 74,000 direct jobs and 13 percent of total metropolitan GDP in 2007. In Shanghai, the number of jobs related to port activities reached 840,000 in 2012, up from 347,000 in 2002. Shanghai’s port accounted for 7.6 percent of the city’s GDP in 2012.

Ports are not operating efficiently in Nigeria where maritime activities account for

a paltry 0.05 percent as against 3 percent in South Africa, 7 percent in Singapore, 10 percent in China and 13 percent in Holland, according to Organization for Economic Cooperation and

ANALYSIS Development (OECD).

OECD notes that while maritime activities contribute so much to economic output in these countries, Africa’s biggest economy loses about N20 billion daily to the perennial Apapa gridlock, threatening the country’s diversification efforts

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Apapa: How congestion, gridlock deny port city of business hub benefits

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oped, such as the opportunity in Asia.

China is the world’s largest producer and consumer of pork, the country’s most popular meat, and the top global importer, boosting its supplies with cheaper pork from abroad. Its total imports were worth about $4 billion in 2017, Reuters reported.

China’s imports of pork from the United States more than halved to about 263,000 tonnes in 2018, according to customs data, after Beijing imposed hefty tariffs on the meat as part of a trade war.

The faceoff between China and US already created a vacuum for other countries to fill, and with the supply of pork now exacerbated by the

Buy

Sell

$-N 358.00 361.00 £-N 457.00 463.00 €-N 400.00 4060.00

Market I&E FX Window CBN Official Rate Currency Futures

($/N)

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fgn bonds

Treasury bills

Spot ($/N)

3M

360.79 307.00

0.39 10.32

NGUS sep 18 2019 361.03

6M 0.30

0.00

10 Y 0.01

20 Y 0.27

11.26

14.27

14.05

14.34

5Y

NGUS dec 24 2019 361.48

NGUS jul 29 2020 362.53

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to boost non-oil revenue.

Before now, Nigeria and Brazil were at par in terms of port development. But now, unlike Nigeria, Brazil has recognised the need to improve its port infrastructure with US$3 billion allocated to port investments under the government’s Growth Acceleration Programme, and another US$14 billion earmarked for port upgrade, leading to wealth generation and job creation.

Emmanuel Ameke, a port operator, notes that unlike other port cities, the number of jobs that has been lost since Apapa became what it is over 10 years ago and how that impacts negatively on Lagos economy can only be left to the imagination.

Today, Apapa as a port city with N20 billion a day economy is as good as ‘dead’. Besides property value which, according to Uche Chiejina, an estate manager, has fallen by over

Continues on page 45

Monday 15 July 2019

BUSINESS DAY

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news Weaker global growth portends ominous...

Continued from page 1

activity tanked last month while the US showed a slight economic expansion. According to the International Monetary Fund, Asia is the world’s growth engine and contributes more than 60 percent of global GDP. Asian powerhouse, S i n g a p o r e ’s e c o n o m y performed poorly in the second quarter, with the slowest annual growth in a decade and sharp shrinkage from the previous three months as its manufacturing sector continued to decline.

Singapore is often held up as a proxy for global demand given its heavy reliance on foreign trade.

On a quarterly, seasonally adjusted and annualised basis, GDP shrank 3.4 percent in April-June from the previous three months, the biggest quarterly contraction in nearly seven years, since a 4.1 percent fall in the third quarter of 2012 from the quarter earlier.

Also, the world’s seco n d - l a r g e s t e c o n o my , China, did not fare better as trade figures show that export fell 1.3 percent

last month while imports tanked more than expected by 7.3 percent.

Sadly, all these tell of things to come, especially in emerging markets such as Nigeria, given dearth of macroeconomic policy alternatives to stimulate economic growth and buffers to cushion the effect of any impending recession.

Nigeria’s recent economic recession, the worst in 29 years, saw oil prices crashing, reaching lows that many had not seen in decades. If the downturn in global economy persists, there could be a drop in oil prices and foreign remittances, and a selloff in stocks coupled with a flight to safety from emerging markets to developed markets.

Nnamdi Olisaeloka, an analyst at Zedcrest Capital, said the major concern for Nigeria should be the likely impact on global oil demand which may tend to make the price of crude oil more volatile towards the downside and impact government revenues and earnings.

•Continues online at www.businessday.ng

Apapa: How congestion, gridlock deny port ....

Continued from page 2

50 percent in both residential and commercial segments, many businesses in the port city have been forced to close down, throwing many of their staff back to the labour market.

Wharf Road and Commercial Road used to be the ‘Central Business Districts’ of this port city where high net-worth firms and banks had their offices and branches, respectively. A walk through these ‘districts’ shows that most of the banks have either relocated or have the number of their branches reduced.

On Wharf Road alone, more than 10 banks and two eateries have shut down their branches due to the pain and difficulty in accessing these branches, leading to loss of substantial customers in the area.

Unity Bank, for instance, which used to have four branches, now has two. Ecobank with eight branches has reduced to four and Access Bank with seven branches also cut down to four.

Tetrazini, an eatery, has shut down; Tantalizers with three outlets has reduced to one, and the only Mr Biggs eatery in Apapa on Creek Road is now out of the market. Film House Cinema inside Apapa Mall has also shut down.

Property value has come down to a point where a buyer can easily get 2,500 square

metres of land for as ‘low’ as N150 million and according to Chiejina, house rents have also dropped significantly from N5 million per annum two years ago to between N3 million N2.5 million per annum. “And that is if you see tenants,” he said.

Rotimi Steven, broker at International Estate Partners, affirms, stressing that “a significant number of residential properties in Apapa are empty, with vacancy rate well above 50 percent”.

“Owners slash rent as much as 60 percent to lure buyers, yet interest is poor; where a property has a price tag of N3 million in Ikeja GRA, the same property struggles to sell for N1 million in Apapa,” he said.

The Apapa story simply validates a recent report by PricewaterhouseCoopers (PWC), a consulting and advisory firm, which estimates that Nigeria holds at least $300 billion or as much as $900 billion worth of dead capital in residential and agricultural real estate alone.

Though the report titled ‘Bringing Dead Capital to Life: What Nigeria Should be Doing’ refers to dead capital as an economic term relating to property that are informally held, and not legally recognised, this correlates with the waste of assets and loss of values in Apapa as a port city.

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

Nigerian Banks feel the pain as investors...

Continued from page 1

significantly boost credit to the real sector. “Overall, the recent revision of standing lending facilities (SDF) guidelines is unlikely to drive material credit creation in isolation,” they said.

Two senior banking sources said the CBN has held meetings with executives in the sector where the possibility of placing a cap on how much banks can stash in government securities was discussed. They were not able to confirm when the CBN plans to implement the measure.

“The CBN is well aware that raising LDR to 60 percent and capping banks’ interest-generating deposits at N2 billion are not enough to materially boost lending to the real sector,” one of the sources who didn’t want his name mentioned said.

“The end game is to place a cap on how much banks can invest in government securities. Foreign investors know that this plan is on the table and that’s why banking stocks are selling off over fears

that industry profitability will take a hit from such a measure,” he added.

One of the country’s biggest banks with strong exposure to foreign investors, Guaranty Trust Bank, has since fallen to a 52-week low on sustained investor sell-off.

Other tier-one banks like First Bank and United Bank for Africa are also trading lower than they were prior to the announcement of the CBN’s lending order.

CBN spokesperson, Isaac Okarafor, didn’t return two phone calls seeking comment. International ratings agency, Moody’s, also thinks the CBN’s directive regarding interest payment on bank deposits is unlikely to force banks to grow their lending “aggressively”.

“Assuming banks would lend out amounts above the new N2 billion placement ceiling, the additional lending would be only N5.5 billion per bank, and will likely be less than 1 percent of total loans outstanding,” Peter Mushangwe, a banking analyst at Moody’s, said in an exclusive comment to

BusinessDay. In the view of Moody’s, the additional liquidity will likely move to the interbank market rather than lending. “The amount is not a lot so we don’t expect it to significantly affect the banks’ credit profiles,” Mushangwe added.

Nigerian banks’ revenue is largely influenced by their interest income on their loans and advances, Treasury Bills and bonds, and fee and commission income. Income from their deposits with the apex bank in the Standing Deposit Facility (SDF) is negligible, according to CBN data.

Banks’ deposits in SDF pales in comparison to their placements in investments securities from a size and interest rate standpoint.

For context, total banking sector investments in CBN bills amounted to N3.9 trillion as at March 2019 (December 2018: N3.9 trillion) compared to SDF of N68.9 billion.

The CBN had said at its last monetary policy in May that it was working on mechanisms that

would limit how much the banks can invest in government securities, which has been the biggest distraction for lenders who have been willing to lend to government for a juicy double-digit return since 2016, rather than gamble on private lending in a riskladen economy and watch gains made in reducing non-performing loans in the thick of the economic crisis fizzle out.

Yields on government securities have averaged 15 percent since 2016, allowing banks make some profit even though their loan books shrank.

Treasury Bill yields have since cooled to around 11 percent after the government cut back on domestic borrowing in favour of foreign debt to manage its interest payment costs.

However, at 11 percent, banks are still piling cash into one of the highest returning government securities in emerging markets.

The impact of Nigerian banks’ risk averseness has been telling on the economy which has not grown fast enough to create new jobs for burgeoning population.

L-R: Alhassan Suleiman Tampuli, CEO, National Petroleum Authority, Ghana; Mahamadu Bawumia, vice president, Republic of Ghana, and Babajide Soyode, technical adviser to the president/CE on refinery and petrochemical projects, Dangote Industries Limited, during the visit of the Ghanaian vice president to the Dangote Refinery stand at the Ghana International Petroleum Conference (GhipCon 2019) in Accra, Ghana.

$4bn opportunity opens for Nigerian pig farmers as China ...

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rampaging disease, Nigeria could step up to get its share of this market.

“It is an opportunity for us to earn foreign exchange,” said Femi Malomo, CEO, Pigfan Nigeria Limited, who is also secretary of the Pork Producers Association of Nigeria.

According to him, pork producers in Nigeria already export to Benin Republic and some other neighbouring countries. However, to expand to China and take advantage of opportunities in the Asian market, he said, the farmers would need “an unbroken cold chain from the farm to

the seaport or from the farm to the airport when we want to export.

“We would also need equipment for processing, and power supply is very important to achieve all of these,” he said.

Big Dutchman, a leading company in providing feeding systems and housing equipment for modern pig and poultry production since 1938, observed in a statement after a seminar in Nigeria last year that Nigerian farmers interested in pig production face many challenges. Capital shortage, high feed costs, lack of knowledge about efficient production methods, but

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also the tropical climate, have the effect that many farmers cannot use the full potential of their livestock. Problems include low daily weight gains, diseases and a high mortality. For sow managers, piglet losses of up to 50 percent due to overlying are an issue.

If these challenges are adequately tackled, the country would be able to meet not only local and regional demand, but also that of distant international markets such as Asia.

The Food Outlook, a Biannual Report on Global Food Markets by FAO this year (2019), noted global pig meat production is forecast at 115.6 @Businessdayng

million tonnes, a decline of 4.0 percent from 2018. The contraction principally reflects a sharp fall in China, which is expected to outweigh expansions especially in the United States of America, Brazil and the Russian Federation.

According to the Chinese Ministry of Agriculture and Rural Affairs, by March 2019, the hog inventory had declined by 18.8 percent, and that of the breeding sow by 21 percent year-on-year. In view of these developments, China’s pig meat output is anticipated to fall by at least 10 percent in 2019, to 6 million tonnes.

•Continues online at www.businessday.ng

46 BUSINESS DAY

Monday 15 July 2019

NEWS

Glo rewards customers with free data on Samsung smartphones from open market SEGUN ADAMS

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elecoms service provider, Globacom, has rewarded its subscribers with data bundle offer on Samsung smartphones bought in the open market across Nigeria.

Globacom’s data bundle offers were hitherto applicable to smartphones from Gloworld, the company’s one-stop shops. Tagged Smart Phone Data Bundle Offer, customers who buy Samsung hand-held devices from the open market will qualify for the free data bundled smartphones.

Globacom is renowned for numerous consumer-friendly offers such as the Smartphone Festival, which still gives the best deals on the latest smartphones and accessories with exciting rewards.

“In conjunction with Samsung, the Smart Phone Data Bundle Offer would be available for our customers who prefer to purchase selective

Samsung devices in the open market across the country. All qualifying devices will carry Glo sticker to reflect the data bundle offer that should be available on them,” the company said in a statement from its Lagos head office.

In addition to this, the new offer will go to subscribers who buy select Samsung smartphones worth less than N80,000, an instant 500 MB data and additional 500MB every 30 days for additional 5 months upon a cumulative recharge of N500 per month.

Subscribers who buy Samsung smartphones, which cost between N81,000 and N150,000, receive 750MB and an additional 750MB per month for the next five months.

In the same vein, purchases of Samsung smartphones worth more than N 150,000, attract instant 1GB free data and additional 1GB free data every month for additional five months.

Appeal Court president bars justices from annual vacation Felix Omohomhion, Abuja

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resident of the Court of Appeal, Justice Zainab Bulkachuwa, has barred justices of the Appeal Court from going on 2019 annual vacation.

A statement by the media officer of the Court of Appeal, Saadatu Kachalla, on Sunday, gave the enormous petitions the court was currently faced with as reason for the cancellation.

“2019 being an election year, it became obvious that we have to forfeit our annual vacation to enable us entertain and determine all appeals arising from the various Election Petition Tribunals transmitted to the Court,” the statement quoted Bulkachuwa as saying.

In a two-page circular signed and transmitted to all Justices on July 2, 2019, Justice Bulkachuwa noted that since these appeals were time bound, and would arise within the period of the

court’s vacation on July-October, the need therefore arises for them to be heard and determined within the said period.

To enable the Court meet these targets, the President of the Court of Appeal gave explicit directives to the Presiding Justices of the various divisions to draw up a roaster in consultation with the president to allow the Justices with medical appointments or other pressing family issues travel for not more than 15 days within the period, adding that the roaster that would be drawn should be arranged in such a manner that at any given time there is a three member panel on ground in every division to hear and determine appeals.

She states that in divisions with three Justices, only one justice can travel at a time and the office of the President of the Court of Appeal is to be immediately notified to form a panel in that justice’s absence should the need arise.

NAMA commences installation of prefabricated pilot joint briefing offices IFEOMA OKEKE

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fforts by the Nigerian Airspace Management Agency (NAMA) to digitalise the nation’s aeronautical information service (AIS) have received a boost astheagencyrecentlycommenced the installation of prefabricated pilotjointbriefingofficesnationwide.

The installation team, which has completed work at Murtala MohammedInternationalAirport Lagos, has proceeded to another airportandisexpectedtocontinue the installation in 21 airports and three aerodromes nationwide.

When operational, the prefabricated offices will provide a onestopshopattheairsidewherecrewmembers can obtain AIS briefing, meteorological information and make necessary payments at a single point in compliance with International Civil Aviation Organisation (ICAO) Standard and RecommendedPractices(SARPs).

The facility will also accom-

modate the equipment room for the VSAT network, which is simultaneously being installed by the contractor.

Speakingonthisdevelopment, Fola Akinkuotu, the managing director of NAMA, said this is part ofcontinuouseffortsbytheagency to enhance seamless and sustainable communication in the upper airspace, adding that the Satellite Lineup for the VSAT node at NAMA headquarters in Lagos will be completed within the week, while that of Abuja, Port Harcourt and other stations would follow in the next couple of days.

The NAMA boss revealed that the installation of 14 new Very High Frequency (VHF) radio sites, which will ride on the new VSAT network is to commence simultaneously with these installations, even as he expressed gratitude to theFederalGovernmentforitssupportandinterventionleadingtothe finalclearanceoftheagency’sVSAT equipment at the Apapa port. www.businessday.ng

Sanwo-Olu transmits 25 commissioners, special advisers to state assembly for screening JOSHUA BASSEY

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n fulfilment of his election promise to accelerate his administration’s development agenda, Lagos State Governor Babajide SanwoOlu, on Sunday, transmitted a list of commissionerdesignates to the House of Assembly for ratification.

The list contains names of 25 people who are to assume duty as commissioners and special advisers upon ratification by the legislature.

A statement by the governor’s deputy chief press secretary, Gboyega Akosile, says Sanwo-Olu carefully picked the nominees based on their cognate experience in their respective professions.

The nominees are Rabiu Olowo Onaolapo, Folashade Adefisayo, Akin

A b a y o m i , I d r i s S a l a k o, Tu n j i B e l l o, Gb e nga Omotoso, Toke BensonAw oy i n k a, B o l aj i Da d a, L e re O d u s o t e, F re d e r i c Oladeinde and Gbolahan Lawal.

Others are Adekemi Ajayi, Femi George, Wale Ahmed, Moyo Onigbanjo, Hakeem Fahm, Ajibola Ponnle, Aramide Adeyoye, Segun Dawodu, Uzamat AkinbileYusuf, Sam Egube, Ruth Bisola Olusanya, Aderemi Adebowale, Tunbosun Alake, and Afolabi Ayantayo.

These, Akosile said, are technocrats and politicians who understand the challenges of the state, noting that the painstaking and laborious selection process was aimed at constituting the best team that will serve Lagos in line with the agenda of the Sanwo-Olu administration’s vision of delivering

a city-state that will rank among the top most liveable cities in the world.

“We took our time to pick the best hands for the tough job Lagosians have elected us to do. The nominees for the twenty five Commissioner and Special Adviser positions include women and men who have made their mark and at the zenith of their professional callings.’’

Governor Sanwo-Olu’ media aide states further that the current list is first batch, saying that consultation was going on with regard to the complete number of the cabinet members.

He further discloses that the new cabinet would be unique, because of its diversity. Quoting Governor Sanwo-Olu, he says Lagos would continue to take the lead in innovation, genderbalance and youth inclusion

in the administration of the state.

“We have a blend of youth who are under 40 among nominees for Commissioners and Special Advisers.

Women too are well represented in the list. We believe Lagos deserves the best and we cannot give the people anything less than that,” the statement said.

Breaking down the list of nominees, there are 17 men and eight women that will be sworn in as members of the State Executive Council.

Also in keeping his promise of millennial’s inclusion, Governor Sanwo-Olu included youths in their early and mid-thirties in the list of nominees.

The State House of Assembly is expected to carry out a screening of the nominees to set the machinery of governance in full swing.

L-R: Ayotunde Jegede, head, human capital, RMB Nigeria; Bayo Ajayi, executive director/CFO, RMB Nigeria, and Yemisi Ogunbodede, corporate marketing manager, RMB Nigeria, during the 6th annual awards ceremony of the Great Place to Work Institute® where RMB Nigeria received a formal certification as a great place to work, recently.

NDDC has failed Niger-Delta region - Osibanjo Francis Sadhere, Warri

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ice President Yemi Osinbajo on Friday said the Niger Delta Development Commission (NDDC) had failed the people of the region as it had not been able to meet the expectations of the people of the region.

Osinbajo said this during a courtesy call at the palace of the Ebenanaowei of Ogulagha Kingdom, HRM, Joseph Timiyan I, in Obotobo, Burutu Council Area of Delta State.

The Vice President lamented the inadequacy of the performances of the development agencies created to fill gaps in the region, promising to concentrate on the development of the region in the next four years.

The vice president, who was in Delta State to perform some official assignments, including the 20.29km Obotobo 1- Obotobo 11 – Sokebolou

– Yokri Road in Ogulagha Kingdom, Burutu Council Area and the Main Axial Road in Okerenkoko, Gbaramatu Kingdom in Warri SouthWest Council Area, said the Federal Government would sit with the state government to determine areas in need of development.

“The NDDC in many respect has not met the expectations of the oil producing states; a lot of money is invested in NDDC and the Ministry of the Niger Delta because the real reason they were created is to speed up the development of oil-rich communities. We will sit with the Delta State Governor to look at specific areas to develop in the creeks,” he said.

Meanwhile, while commissioning the road in Ogulagha Kingdom, the vice president said “I want to commend Governor Okowa for his achievements in a

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neighbourhood and area that has not had this type of road.

“We commend him also on several other initiatives in this kingdom in particular, because this has been a very peaceful community and its a host to several of our oil and gas assets.

“So, its really is a special pleasure to commission these roads and also thank His Royal Highness (Elder, Capt) Joseph Timiyan, who has maintained the peace in this neighbourhood and who has shown true leadership by the way he has conducted the affairs of this area”, he said.

On his part, the Delta State governor, Ifeanyi Okowa, disclosed that the Vice President was invited to commission the projects because he visited the creeks in the pursuit of peace and the enabling environment for oil and gas production.

“It is not just the length @Businessdayng

of the road that makes this project unique; it is that the road is located right beside the Atlantic Ocean with all the human, material, ecological and financial implications that this difficult terrain presents; we did not know we could get this length of road in the creak until the King drew our attention to it.

“I am happy about the progress we have made so far; this has greatly helped to ensure peace in the State, which bodes well for uninterrupted oil production and the health of the national economy; we are continuing to use various structures and initiatives to ensure that the peace we have enjoyed in the last three years is sustained,” the governor said.

Osibanjo also commissioned the phase 1 and II of Okerenkoko Township roads in Warri South West Council Area.

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news GCB Africa says police most corrupt institution globally MIKE OCHONMA

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he tenth edition of the Global Corruption Barometer (GCB) Africa has revealed that the police service is considered the most corrupt institution worldwide.

Released on African AntiCorruption Day, the GCB report reveals that a global average of 47 percent of people believes that most or all police are corrupt and in South Africa, this figure rises to 49 percent.

Transparency International in partnership with Afrobarometer conducted the survey between the end of July and September 2018.

As in the 2015 edition of the GCB for Africa, the police consistently exhibit the highest bribery rate across the continent. The GCB is the largest, most detailed survey of citizen views on corruption and bribery in Africa.

According to the report, the range of corruption challenges that African citizens face is complex and multifaceted, requiring fundamental and systemic changes.

Meanwhile, Corruption Watch explains that of the 47,000 citizens surveyed in 35 African countries, more than half believe corruption is getting worse in their country, while 59 percent think their government is doing badly at tackling corruption.

The survey is titled: “Global Corruption Barometer Africa 2019: Citizens Views and Experience on Corruption.” It is the 10th edition.

According to Transparency International, corruption is hindering Africa’s economic, political and social development.

“It is a major barrier to economic growth, good governance and basic freedoms, such as freedom of speech or citizens’ right to hold governments to account.

“More than this, corruption affects the well-being of individuals, families and communities. While it varies extensively across countries and public institutions, corruption harms hundreds of millions of citizens by undermining their chances of a stable, prosperous future.

This 10th edition of the Global Corruption Barometer – Africa shows that the range of corruption challenges that African citizens face is complex and multifaceted.

About 69 percent of those who participated in the survey ticked the police as the most corrupt institution, 60 percent went for members of the parliament, 51 percent went for judges, while 43 percent chose the executive arm of government.

Others are local government officials (55%), government officials (54%), NGOs (40%), business executives (44%), traditional leaders (35%) and religious leaders (20%).

Mobile transfer volume skyrockets by 126% in H1 2019 on low cost, convenience, others BUNMI BAILEY

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he volume of mobile money transfer through mobile devices in Nigeria grew significantly in the first half (HI) of 2019 (January - June), buoyed by digitisation of bank products, increased mobile penetration, cost, convenience, efficiency and speed, economic experts say.

Analysis of data sourced from the Nigeria Interbank Settlement System (NIBSS) shows that volume of mobile

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transfers spiked 125.7 percent to N7.9 million in H1 2019 from N3.5 million in the same period of 2018. Value of transactions jumped 62.9 percent from N140.4 billion in H1 2018 to N228.8 billion in H1 2019.

Gbolahan Ologunro, an equity research analyst at Lagosbased CSL Stockbrokers, says the increase in the volume of mobile transactions shows how consumers are beginning to see the value of using electronic channels in carrying out their transactions, and the advancement in technology as against

traditional banking services.

“Financial players in the banking industry have been able to invest a sizable amount in technology infrastructure in electronic channels, which has made it less expensive, convenient, efficient and fast over the traditional method of going to the bank to carryout transactions,” Ologunro also states.

In 2012, the Federal Government, through the Central Bank of Nigeria (CBN), introduced the cashless policy meant to curb excesses in the

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handling of cash and to reduce the volume of cash in circulation. Most importantly, the policy was introduced to drive development and moderniSation of payment systems capable of placing Nigeria among the top 20 economies by the year 2020.

“I think convenience is a huge driver, while the rest are mobile telecommunications improvement and the ability of the banks to digitalise their products and services. So, if it is digitalise but not convenient, people may not use it,” Ibrahim

@Businessdayng

Tajudeen, head of research at Chapel Hill Denham, notes.

Before May 2017, the average charge for inter-bank funds transfers across Nigerian banks was N100 per transaction. But the CBN reduced the average charge to N50.

Other electronic transactions like Point of Sales (POS) activities via mobile devices also increased. Its volume rose by 55.5 percent to N187.7 million in H1 2019 from N120.7 million in same period of its previous year. Also, its value rose by 18.2 percent

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news

Apapa: Trailer Park largely full, but challenges abound CHUKA UROKO

Though work continues on the Tin Can Trailer Park being constructed along the Apapa-Oshodi Expressway with the contractor and sub-contractors struggling to put in place the necessary facilities, the park is about 90 percent occupied by trailers of various shapes and sizes.

A visit to the park shows that the challenges associated with using it are quite enormous. Besides the absence of water, electricity and toilet facilities, which have been the excuse for the delay in officially commissioning the park, chaos, disorder, and indiscriminate waste disposal are ringing a bell at the park.

“I don’t know why the government is forcing open an uncompleted park with little or no logistics in place. Basic facilities such as light and water are not there. We don’t even have toilets here. I have told the drivers to be using the river bank for their convenience; what do you expect them to do?” queried a traffic controller who, from his reflexive jacket, looked like a transport union official.

The traffic controller,

who spoke with BusinessDay during a Friday morning visit, complained about the trailers being forced into an uncompleted park, noting that government did not want the trucks on the road any longer, yet adequate provision was not made to make that possible.

“Another problem here is that the drivers are not only rude, but also unruly.

Many of them don’t want to listen to instructions; they are very impatient.

Just see how they have littered everywhere with all sorts of refuse; I am afraid that they will soon start doing what they were doing on the road here,” the traffic controller, who did not want to be identified, said.

An official of the Nigerian Ports Authority at the park shared this view, adding that the cause of the problem was not the trailers and their drivers. “I think the problem is from the terminal operators who lack the needed capacity for efficient container handling. They seem to be more concerned with their profit than operational efficiency,” the official noted.

But Kayode Opeifa, the executive vice chairman of the Presidential Task Force

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on Apapa gridlock, assured that all these challenges would soon be over as members of the Taskforce were discussing with the terminal operators to ensure that the trailers don’t stay at the park for more than 24 hours, since the park was meant to serve as a transit camp for the trucks.

Opeifa, who spoke with BusinessDay on phone, explained that the contractor was also doing its best to ensure that the park was completed with all the necessary facilities in place, pointing out however that because it is a contract, there was little or nothing the task force could do to hasten delivery.

“Our mandate is to ensure that there are no trucks on Apapa roads and bridges and I am happy we are delivering on our timelines. The trailers have to move into the park even though work is still going on there,” he said, estimating that Ports and Cargo Handling Services Limited handles 1,000 trucks a day whereas the trucks at the park are not up to 300. So, the trucks shouldn’t stay more than a day at the park,” he said.

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news

NIBOX, SystemSpecs to deepen financial inclusion, extend services with self-service payment terminals Jumoke Akiyode-Lawanson

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IBOX,amulti-platformpaymentsolutionprovider,has partnered SystemSpecs, developer and provider of Remita financialtechnologysolution,toextendfinancialproductsandservices to the banked, underbanked and unbanked on NIBOX’s self-service payment terminals strategically located throughout Nigeria, and onlinethroughitsinnovativemobile platforms.

Through this partnership, services such as Federal and State governments payments, electricity recharge token, airtime and data phone top-up, cinema tickets purchase,insurancepremiumpayment,cashtransfersandotherutility bills will be accessible on NIBOX touch points.

NIBOXalreadyhas55terminals deployed in Lagos and Abuja, with aplanneddeploymentofadditional 500terminalsinLagosandAbujaby theendof2019.Transactionscanbe conducted round-the-clock on the NIBOX terminals using electronic or cash payments.

“Wearegladtobecollaborating with SystemSpecs to deliver new services to customers. Indeed, the value proposition and attainments of the Remita brand are a boost

for this partnership and would ultimately be to the advantage of theend-user,whowouldnowhave improved access to various services and products across Nigeria,” GeorgeManuwuike,CEO/founder, NIBOX, said.

“This partnership is also in line with our aim of becoming the fastest and most convenient platform for cash payment for broad-based goods and services for public and privatesectors,”Manuwuikestated.

Available in public spaces such as shopping malls and leading supermarkets, NIBOX Payment Terminals do not require the presence of an agent or operator to function. Each self-service kiosk is equippedwithabolduserinterface and a touchscreen for easy user interaction.

Commenting on the development, Demola Igbalajobi, SystemSpecs’ divisional head, payment gateway and infrastructure, said; “At SystemSpecs, we understand thataccesstofinancialservicesiskey to the development of a strong and efficientfinancialecosystem,which facilitates economic growth. It is therefore a delight for us to partner withNIBOXtofurtherbringRemita services closer to customers at their point of convenience using NIBOX touchpoints.”

Killing of Fasoranti’s daughter must not be used to divide Nigeria - Tinubu YOMI AYELESO, Akure

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ational leader of the All Progressives Congress (APC), Bola Tinubu, on Sunday said the killing of Funke Olakunrin, daughter of Afenifere leader Reuben Fasoranti, must not be used to cause division in the country.

The former governor of Lagos State, who spoke during a condolence visit to Pa Fasoranti in Akure, the Ondo State capital, noted that the killing was sad and unacceptable.

He said kidnappings and killings were not only being committed by herdsmen, saying Nigerians must not add ethnic and political colorations to the insecurity challenges facing the country.

“I am extremely concerned about security but I don’t want a stigma. I can go through history of kidnapping in Nigeria and we know how and where it all started, there are a lot of copycats. There are cases of kidnapping and killings in the country. Is Evans too who was arrested and made disclosures also a herdsman? I don’t want to be political, but I will ask, where are the cows?” Tinubu

said.

“We must not use this incident to divide ourselves but we must use it as a cure to the security problems. Additional police, additional patrol, and additional security reinforcement along Ore road and various flashpoints across the country are necessary and I have discussed this among the various authorities.

“The governor is eminently aware and being proactive about this. The security challenges are numerous across this country and to fight it we are going through that, more police are being recruited and it takes time to train and deploy them to various areas, nobody prepares more than necessary for this,” he said.

The APC chieftain further noted that he is a nationalist and the securtity concern and challenge right now must be faced squarely throughout Nigeria.

“The incident that affected one member of our family, Mrs. Olakunrin, is seriously sad and unacceptable but nobody can return her alive, she has answered the call of her creator,” he said.

Fashola to chair book launch tomorrow

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ormer governor of Lagos State and immediate past minister of power, works and housing, Babatunde Raji Fashola, will on Tuesday, July 16, 2019, at Civic Centre, Lagos, chair the launch of a book titled, “Frontier Capital Markets and Investment Banking: Principles and Practice from Nigeria.”

The book authored by Temitope Oshikoya and Kehinde Durosinmi-Etti discussed in details the role of capital markets and investment banking in Nigeria, the largest frontier market e conomy in the world by both population size and gross domestic product. Offering a systematic framework combining conceptual principles with real practice, the book enables the reader to gain useful insight into how capital markets and investment banking work in the real world of a frontier market.

It provides a synopsis of the economic attractiveness, financial systems intermediation and capital markets, as well as the regulatory

framework within a frontier market. It explores capital raising through equity and underwriting and private equity, paying particular attention to putting capital to work on mergers and acquisitions, project and infrastructure finance and real estate finance.

Furthermore, it analyses asset management, pension industry and securities trading in a frontier market.

The author use detailed case studies from Nigeria to illustrate the operations of investment banking in frontier markets.

To review the book are MD/CEO Vetiva Capital, Chuka Eseka, managing partner, Olaniwun Ajayi, legal practitioners, Konyin Ajayi, and Ndubuisi I. Nwokoma of the Department of Economics, University of Lagos.

Several captains from the banking, finance, real estate, stockbroking and insurance sectors of the economy as well as finance industries regulators are expected to be at the book launch.

Our system was not hacked – Wema Bank

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ollowing a recent report in the media that a teenager allegedly withdrew N4,076,600 after hacking into a Wema Bank account, it has been confirmed that the said sum was fraudulently withdrawn from the Wema Bank account of Maxwell Odoemenam without his consent, after investigation.

However, the investigation reveals that the fraudster did not hack into the bank’s server as alleged but fraudulently swapped the customer’s SIM card through the telecom company to commit the fraud.

The SIM card swapped was due to failed controls on the part of the telecoms firm who did not carry out due diligence before allowing the SIM card swap. This is beyond the control of the bank, as they do not issue SIM card to customers.

The investigation further reveals that the customer had initially visited our Lawanson branch on 20/12/2018 to request for the balance in his account and when he was availed his account balance, he discovered that there was a shortfall of N20,100.00 in his balance. Further review of his statement of account revealed that the sum of N19,000 was transferred from his account via USSD platform into the account of one Amadi Promise in Union Bank, while the balance of N1,100 was used to purchase airtime recharge for his mobile line.

He however claimed that he did not register for USSD or any online platform with the bank thus, the transactions were fraudulent and not at his instance.

Upon interrogation of the customer, he explained that he had earlier visited Airtel Office to complain of network down-

time on his phone number (08121730557), which he registered with the bank and he was notified by a staff of Airtel Office that someone had tampered with his SIM card, hence, he visited our Lawanson branch to request that his phone number be changed to another.

The staff of Lawanson branch (Wema Bank) who attended to the customer claimed that he advised the customer to allow the bank to place a debit restriction on his account to avert further fraud on it but that the customer did not agree with her but rather requested for a change of telephone number on the account because it is his business account and that he did not want any restriction on it so as not to disrupt his business.

Hence, restriction was not placed on his account but his profile was deactivated on the USSD platform. The customer however denied the assertion that he rejected the Officer’s advice on placing a restriction on his account.

Unknown to the customer, after the initial N20,100 transactions, the fraudster(s) had already enrolled the customer on ALAT platform using the customer’s telephone number and other BVN details. The telephone number was fraudulently swapped at the Telecommunication company which gave them access to the customer’s BVN details on NIBSS platform.

Upon the successful enrolment of the customer’s account on the ALAT platform, funds totalling N4,056,500.00 were fraudulently transferred to Adanna Mary Opara (N210,000.00), Okeke Favour (N100,000.00), Onumba Peter (N3,646,500.00) and Anyanwu Chinonyerem (N100,000) in Access, Union and GTBank, respectively. www.businessday.ng

Tokunbo Abiru, managing director/CEO, Polaris Bank (2nd r), in a handshake with Tosin Bamiro, country manager, Small World Global Money Transfer (2nd l); Innocent Ike, executive director, technology and services (l), and Adebimpe Ihekuna, group head, products and markets development, during a business visit by the country manager to Polaris Bank headquarters, Lagos on Friday.

FG approves evaluation report of gas flare commercialisation committee HARRISON EDEH, Abuja

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he Federal Government has approved the Statements of Qualification (SOQs) EvaluationReportpresented by the Inter-Ministerial Committee of the Nigerian Gas Flare Commercialisation Programme (NGFCP).

Folasade Yemi-Esan, permanent secretary, Federal Ministry of Petroleum Resources, gave the information while she also informed each applicant on the Nigerian Gas Flare Commercialisation Programme (NGFCP) will receive an email while successful

applicants will attain Qualified Applicant status in line with the designoftheRequestforQualification (RfQ )and will subsequently beinvitedtosubmittheirproposal for flare gas utilisation through the Request for Proposals (RfP) phase of the NGFCP. ‎Recall, over 850 interested parties registered their interest in the NGFCP while 238 Applicants submitted Statement of Qualification (SOQs) in response to the Request for Qualification (RfQ) published by the Department of Petroleum Resources (DPR).

The permanent secretary in a statement signed by Justice Derefaka, the Programme man-

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ager, Nigeria Gas Flare Commercialisation programme said: “A total of 238 SOQ documents were evaluated in accordance with the provisions of applicable Regulations,Guidelines,Standard DPR Practices for bid evaluation, and were adjudged either a ‘Pass’ or ‘Fail’ status.

“Following a rigorous exercise conductedinlinewithestablished protocol and using the Electronic Evaluation Tool (EET), 205 Applicants emerged successful (attaining a ‘pass status’) while the remaining 33 Applicants did not meettheminimumrequirements and thus attained ‘fail status’. @Businessdayng

She noted further that: “The PEC in the next stage, which is the Request for Proposals (RfP), will evaluate proposals submitted by the Qualified Applicants (QAs) to determine those Bidders that achievePreferredBidder(PB)and ReservedBidder(RB)statusinline with the criteria of the Request for Proposal (RfP) package. Ahead of the Request for Proposal stage, an NGFCP Qualified Applicants’ Workshop is scheduled to hold soon.

She clarified further that those that have not been successful wouldalsobeadvisedthroughthe NGFCP portal.

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Nigeria to launch sex offenders’ register to tackle rising sexual violence Desmond Okon

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s sexual offences surge in Africa’s most populous country, with rape being the most prevalent, Nigeria will be launching a Sex Offenders’ Register to put a stop to the incidences of sexual violence, (particularly rape), said Amina Salihu, senior programme officer, MacArthur Foundation.

Salihu said this weekend at a media lecture held in celebration of the 85th birthday of Nobel Laureate, Wole Soyinka, at Muson Centre, Lagos.

“Nigeria will be launching a Sex Offenders’ Register in the coming weeks. The initiative is meant to name and shame offenders,” she said.

According to Salihu, the 2015 Violence Against Persons Prohibition Act (VAPP), which prohibits violence and abuse of bodily integrity, requires the establishment of a sex offenders’ register by the National Agency for the Prohibition of Trafficking in Persons (NAPTIP). Hence, NAPTIP is facilitating the development of the Sex Offenders’ Register for Nigeria.

“In the next few weeks therefore, you are going to see a register that is digital, in the sense that it’s going to be linked to the NAPTIP website, it’s going to have three sets of data—those who are convicted—so people who have gone to court and a judge has said

you are guilty of the crime, their names, biometrics, the court, the kind of offense, and date will be on that database.

“Secondly, you are going to have the cases of those who were arraigned, so if were arraigned, whether you were convicted or not, the fact that you went to court and the case was brought up, your name will be on that database. However, there will be a clause that says you were discharged and acquitted,” she said.

The third category of data, she said, would include cases where rape or sexual violations have been reported, stating that if it is in the media, they already have the rights to take it and put it on the database so that it could be accessed by anyone anywhere in the world.

“Even if you change your name, you can’t change your photo; if you change your photo, you can’t change your biometrics. So we are trying to think about all the risks and ways in which people can circumvent the law, which is very common in our country, to ensure that that register is very protected,” she said.

Asked if it would mirror the American Sex Offender Register where one needs to report to his neighbour that he is a registered sex offender if he moves into a new neighbourhood, she expressed hopes that it would get there.

Indigenous oil, gas producers conclude plans to inject 10scf of gas into domestic market ... power sector to benefit more Olusola Bello

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orried by the persistent complaints of lack of gas to service the power and other sectors of the economy, indigenous oil and gas producers in Nigeria have taken up the challenge by given themselves a production target of 10 trillion standard cubic feet (scf) of gas that will service the domestic market within the next 10 years.

This target amounts to 30 percent of total gas production in the country and would be achieved through the seven critical gas projects of the Federal Government.

The seven Critical Gas Projects are one of the aggressive plans by the Federal Government to boost power generation to attain national energy sufficiency by generating 15GW of electricity or 15,000 megawatts.

The current epileptic power supply being experienced in Nigeria has been attributed to a lack of gas supply to the power plants, occasioned by inadequate infrastructure.

Some of the indigenous producers in an interview with BusinessDay say they are ready to fund the projects and bring the gas on stream.

Ainojie ’Alex’Irue, chief operating officer, Oando Energy Resources, confirms this development when he states that Oando has shown its commitment by its drive to increase gas production through the seven critical gas projects, the development would be funded and the gas would come on stream.

As indigenous producers, he says: “We can do more and

we also recognised that responsibility is ours but there must an enabling environment.”

The Oando boss, who spoke with BusinessDay on the sideline of the Nigerian Oil and Gas Conference, also confirms that there is an overall gas agenda put in place by indigenous oil and gas producers, adding that they have prioritise domestic gas production because they know it will have a great impact when it gets it into the system.

Ebiaho Emafo, managing director of Eroton Exploration and Production Company, says the indigenous producers want the government to create an enabling environment for the companies to succeed because a lot of them have taken huge loan facilities from the banks to finance the investments.

The government should address security and community challenges, and should get involved. This he says will enable the companies grow productions and help the communities in which they operate in terms of social-economic developments.

He states that the government needs to play its role just as indigenous operators should do the same.

Ladi Bada, managing director of Shoreline Natural Resources, says Shoreline is at the final stage of working with NNPCC in developing 300 billion standard cubic feet of gas plants, stating that working will start by the end of this year, in spite of all the challenges they are facing.

Over the years, many of the nation’s gas-fired power plants, responsible for over 70 percent of the energy being generated, continue to suffer gas shortages. www.businessday.ng

L-R: Rotimi Bankole, managing director/CEO, SBI Media Limited; Jeff Tang, marketing manager, Tecno Mobile Nigeria, and Chidi Okonkwo, general manager, Transsion Nigeria, for the Phone of the Year award presentation for Tecno Spark 3 at the 2019 Africa Information Technology & Telecoms Awards (AITTA) held recently in Accra Ghana.

Lagos-Ibadan Standard Gauge Rail begins commercial activities September MIKE OCHONMA

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he Nigeria Railway Corporation (NRC) says commercial activities on the ongoing modernised Lagos-Ibadan Standard Gauge Railway project will begin in September this year from Agege in Lagos to Ibadan, the Oyo State capital.

Already, 53 coaches, 30 locomotives, 200 wagons of different standards have been ordered to arrive in batches in preparation for the kick-off.

Fidet Okhiria, managing director, NRC, disclosed last week during a routine inspection of the project. “ T h e re a re d i f f e re n t classes of coaches such as business, economy and luxury, which passengers can choose from according to taste or ability to pay. The standard gauge railway locomotive is designed to run at a speed of 150 kilometres per hour,” Okhiria said.

For example, there are those that have only 24 seats that can be collapsed into beds, rotated to up to 180 degrees, and those to be used as conference rooms’ coaches.

“When they come we will add more coaches to Abuja-Kaduna. We will reinforce Itape-Warri, and the beauty of that is that there are coaches of different standards,” the managing director said.

The NRC boss stated that action on another phase of the standard gauge railway project had begun from Lagos end towards the Apapa seaport, saying, “Work is going on from Ebute Metta towards the ports. They are relocating the narrow gauge to have more rooms for the standard gauge. That is what is going on right now.”

New bridges will be built

to replace the ones marked for demolition before the destruction of the old ones to give way to the project, stressing, “We don’t want to throw Lagosians into chaotic

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situation,” by first demolishing bridges before building alternatives, he pointed out.

He described the project as a long time plan, which had been realised. “What

@Businessdayng

you are seeing now is not a dream of yesterday. It was a dream of as far back as 1995, when the survey was done.

2006 was contract awarding year,” he said.

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HENNY SENDER, SUE-LIN WONG AND NICOLLE LIU IN HONG KONG

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ong Kong’s chief executive Carrie Lam has offered to resign on several occasions in recent weeks over mass protests in the territory but Beijing has refused to let her stand down, according to two people with direct knowledge of the situation.

The demonstrations were sparked by an attempt by Ms Lam to push through an extradition bill that would allow criminal suspects to be sent to mainland China for trial, with public opposition so heated protesters stormed the territory’s de facto parliament this month.

The situation has escalated into the territory’s deepest political crisis since its handover from British to Chinese sovereignty 22 years ago, prompting Ms Lam’s offer to stand down over her handling of the bill, the people with direct knowledge of the situation said.

Beijing, however, has insisted that Ms Lam “has to stay to clean up the mess she created”, according to one person with direct knowledge of the situation. “No one else can clean up the mess and no one else wants the job.”

The demonstrations began this year, culminating in Hong Kong’s biggest protest on record last month involving up to 2m people.

Initially, they were focused on the extradition bill but have expanded to encompass other issues worrying Hong Kong’s population.

Hong Kong chief Carrie Lam offered to step down over protests Beijing has refused to accept resignation from territory’s leader despite political crisis

On Sunday, tens of thousands of protesters marched through an area popular with mainland Chinese shoppers in Sha Tin, northern Hong Kong. After a tense stand-off between riot police and demonstrators, there were clashes in a nearby shopping mall, with a small group of protesters throwing objects at the police, who used pepper spray and made arrests.

The clashes came a day after confrontations at a demonstration near the territory’s border with the Chinese metropolis of Shenzhen against what Hong Kongers see as an invasion by small traders from mainland China.

Following mass protests in June, Ms Lam suspended the proposed extradition law, saying it was “dead” and admitting that her administration’s work on the bill was “a total failure”.

But demonstrators have continued to demand the full withdrawal of the proposed legislation.

When asked by the Financial Times if Ms Lam had attempted to resign, her office said: “The chief executive has made it clear in pub-

Slow growth and global risks point to need for accommodative policy, says David Lipton

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avid Lipton, the acting IMF chief, has backed new monetary stimulus by the world’s top central banks to sustain the flagging global economy — in a thinly veiled nod to the US Federal Reserve and the European Central Bank as they consider easing policy.

In an interview with the Financial Times as G7 finance ministers and central bankers prepare to meet this week in France, Mr Lipton said that “in light of sluggish growth and downside risks, it makes sense for monetary policy in the major central banks to remain accommodative”.

Mr Lipton said he did not want to comment on specific decisions in individual countries, but added that central banks should not shy away from loosening policy — if it was justified — because of fears of losing ammunition to combat a future downturn.

“Our view is that if the economy needs support, you provide support — but not inappropriate policies that contribute to the slowdown, just in order to be in a position to fight

the very slowdown that has been created,” he said.

Mario Draghi, ECB president, recently signalled the eurozone may move to strengthen its commitment to low interest rates or even resume bond purchases to tackle weak inflation, while Jay Powell, the Fed chairman, has indicatedtheUScentral bank might cut rates as early as this month because of “uncertainties” in the outlook.

The IMF in April downgraded its forecast for global growth this year to 3.3 per cent, but predicted a rebound to 3.6 per cent in 2020.

“We see some acceleration next year but that presupposes a few very important things, including that trade tensions continue to be resolved rather than intensify, and that a number of countries that had extreme stress recover somewhat,” Mr Lipton said, referring to Argentina, Venezuela, Turkey and Iran.

Mr Lipton, a former Clinton and Obama administration official who has been the first deputy managing director of the IMF since 2011, took the helm this month after Christine Lagarde was nominated to lead the ECB at the end of Mr Draghi’s term later this year. www.businessday.ng

lic that she remains committed to serving the people of Hong Kong.”

The Hong Kong and Macao Affairs Office, Beijing’s government department in charge of supervising the territory, did not respond

to a request for comment.

On Thursday, Wang Zhimin, head of Beijing’s liaison office in Hong Kong, publicly backed Ms Lam, saying the central government “firmly supports” the chief

executive and her government, Reuters reported.

The bill was Ms Lam’s initiative and not Beijing’s, the people with direct knowledge of the situation said.

ESG money market funds grow 15% in first half of 2019

Acting IMF chief backs monetary easing by central banks JAMES POLITI IN WASHINGTON

Carrie Lam, Hong Kong’s chief executive, has been the target for public criticism among Hong Kongers © Reuters

Big asset managers are launching more socially responsible options to meet investor demand

BILLY NAUMAN IN NEW YORK

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oney market funds that incorporate environmental, social and governance metrics are growing rapidly, with a spurt of activity by big asset managers such as State Street Global Advisors, BlackRock and DWS. Assets in the sector rose 15 per cent to $52bn during the first half of 2019, after growing 1 per cent through all of 2018, according to research from Fitch Ratings.

This pool of assets is still very small compared with the total $6tn money market sector. However, the expansion is striking and financiers predict further rapid growth given that investors from both the public and private sectors seem keen to explore more ESG options.

Investor interest started picking up late last year, after DWS, a key participant in the sector, converted an existing US money market fund to be an ESG fund, said Alastair Sewell, senior director of funds and asset management at Fitch.

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Amundi is the largest provider of ESG money funds and the majority of the market is based in Europe, but Fitch expects that to start to change.

BlackRock and SSGA launched US funds in January and July, respectively.

“In Europe, there are certain public sector bodies where they are strongly encouraged by regulators to choose an ESG variant where there is one available,” Mr Sewell said.

On the private side, more companies are looking for ESG funds since they are coming under pressure to show shareholders, employees — and sometimes their own board — that they are trying to align their investments with their corporate values. The range of companies doing this has widened, Mr Sewell said, citing Starbucks as one company that is seen to be eager to purchase ESG funds.

Some observers doubt whether the growth is durable: Peter Crane of Crane Data, who tracks money market funds, said that the topic might be a “fad” and it was telling that the largest money fund provid@Businessdayng

ers such as Fidelity were still waiting on the sidelines.

Still, the trend for ESG money funds mirrors the increasing flows to ESG products overall. Sustainable funds attracted an estimated $8.9bn in net flows in the first six months of 2019, surpassing the $5.5bn in flows for all of 2018, Morningstar, a data provider, said in a report last week.

Flows into these sustainable funds have set calendar-year records for each of the past three years and appear to be heading for a fourth, Morningstar said.

The money market funds using ESG criteria are prime funds, which invest in commercial paper and other private instruments rather than treasuries or other government securities. This means their primary exposure is to the financial sector. As such, governance — one of the three pillars of ESG — has always been an implicit consideration in the fund managers’ investment decisions, Mr Crane notes, questioning the need for ESG labels in the first place. “If everyone’s doing ESG, then why do you need ESG funds?” he asks.

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Von der Leyen faces knife-edge vote for commission presidency German defence minister drafts programme to meet demands of sceptical MEPs JIM BRUNSDEN AND MICHAEL PEEL IN BRUSSELS

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rsula von der Leyen is mounting a final push to convince members of the European Parliament to rally behind her bid to become the next president of the European Commission, with the EU facing an institutional crisis if she fails to win a confirmation vote on Tuesday.

The German defence minister spent the weekend pulling together a policy programme intended to answer core demands from MEPs on issues such as fighting climate change, upholding the rule of law and retargeting EU funds, in the hope of securing the endorsement of the assembly’s main proEuropean factions. She is facing a potential knife-edge vote if she cannot win round enough centreleft lawmakers.

Under the bloc’s rules, Ms von der Leyen must win the support of an absolute majority of the parliament’s members to become president, meaning she needs backing from 374 MEPs. EU capitals will be closely following the vote in Strasbourg, aware that rejection would unleash a political crisis at the heart of the union only two weeks after national leaders reached a package deal on filling the commission presidency and other top institutional jobs.

Ms von der Leyen, a political ally of German chancellor Angela Merkel, emerged as a compromise choice during 50 hours of summit talks in Brussels in early July, forming one element of a deal that also included Christine Lagarde’s nomination as president of the European Central Bank.

But the decision has proved controversial with MEPs, notably within the parliament’s socialdemocrat, leftist and green groups, which have slammed the leaders’ decision to opt for Ms von der Leyen rather than one of the official candidates for the commission presidency who ran in May’s EU elections.

The greens and far-left groups have already formally ruled out supporting her, both because of the manner of her appointment and what they see as an insufficiently ambitious programme.

The decision has also been bitterly received by Ms Merkel’s social-democrat coalition allies in Berlin, sending discord through the German government that have led some to question how long the alliance can continue.

EU officials note that a refusal by the parliament to back Ms von der Leyen would take the bloc into uncharted waters, especially given that other parts of the jobs package are now difficult to unwind, and the difficulty of finding another candidate who could rally sufficient support from national

leaders.

Ms von der Leyen — who only discovered via a phone call halfway through the summit that she was a serious contender for the commission presidency — has since been on an extended charm offensive with MEPs, including lengthy hearings with the parliament’s different political groups.

EU officials are quietly confident that Ms von der Leyen should be able to secure the numbers once she has delivered her speech on Tuesday morning. She already has the explicit support of her own political group, the centre-right European People’s party, which has the assembly’s single largest cohort of MEPs. The parliament’s social-democrat and liberal groups have made their support conditional on Ms von der Leyen signing up to an array of commitments in her speech, with each sending her separate letters last week listing their demands.

With their combined backing, the German should in theory easily clear the required threshold, although a significant split in the social-democrat ranks could leave the vote tight.

Spokespeople for the two groups made clear on Friday that one factor that would weigh heavily in the balance would be Ms von der Leyen’s commitment to uphold the rule of law.

Both want firm commitments that she will continue the current commission’s pressure on countries such as Poland and Hungary over their governments’ creeping authoritarianism.

“Very clearly we wouldn’t accept any step back from the work of the last commission on the rule of law,” a spokesman for the Socialists and Democrats group said.

Their concerns have arisen in part because central and eastern European member states, notably Poland and Hungary, played an important role in opening the way for Ms von der Leyen by blocking Frans Timmermans, the socialist candidate for the commission presidency.

Mr Timmermans, the current EU commission’s first vice-president, is responsible for protecting the rule of law in the EU, and has clashed with the Polish and Hungarian governments.

The European Conservatives and Reformists, an anti-federalist group that includes Poland’s ruling Law and Justice party, has underlined that it will oppose Ms von der Leyen unless she takes a different approach to the issue — notably ending what it sees as the unfair targeting of certain countries.

“I think if the attacks continue, the treatment continues the way it has done, the double standards continue, it’s certainly going to push us in a negative direction in terms of supporting her,” an ECR spokesman said. www.businessday.ng

Ursula von der Leyen has been nominated as European Commission president © Reuters

Tech crunch could herald US ‘earnings recession’ Quarterly results from US blue-chips could show second successive fall in profits RICHARD HENDERSON IN NEW YORK

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quity investors are bracing for a second successive drop in US quarterly profits, led by the technology and materials sectors, that could undermine a record-breaking run in the stock market.

Blue-chip companies across America are expected to reveal a 2.8 per cent drop in earnings per share for April to June, following a first-quarter contraction of 0.3 per cent, according to FactSet data. If this happens, the two back-to-back quarters of shrinking earnings would constitute an “earnings recession” — a phenomenon equity investors have not witnessed since mid-2016.

Contracting corporate earnings would underscore concerns over US economic growth, coinciding with the trade dispute with China and recent disappointing manufacturing data. The end of the decade-long US expansion could prompt investors to reduce risk by shifting assets into bonds to weather a downturn.

Despite the first-quarter earnings contraction, US shares have

continued to soar. Last week the S&P 500 index of US companies touched 3,000 points after comments from Federal Reserve chair Jay Powell reinforced the market’s view that the central bank will clip interest rates later this month.

Technology stocks appear particularly vulnerable to a drop in earnings. Analysts estimate earnings per share at tech companies will shrink by just over 7 per cent on average compared to the second quarter last year, tying with materials as the worst sector by earnings growth forecasts, according to Credit Suisse.

The tech sector — which, after an index reshuffle, no longer includes social media groups such as Facebook and Google’s parent company Alphabet and is instead dominated by hardware companies — is suffering a squeeze on its profits due to a tightening labour market, according to Goldman Sachs. Labour costs amount to about 16 per cent of revenues for the information technology companies, the second highest level after the industrials sector, according to the bank.

“The margin pressure for large tech companies is what is driving the drop in earnings,” said Patrick Palfrey, senior equity strategist for Credit Suisse. “There is earning pressure but it’s not universal — it’s being felt among a few companies, but they happen to be very large.”

Not all analysts are convinced earnings will fall. US companies typically offer dire guidance to prompt analysts to lower earnings predictions — creating a low bar that is easy to surpass when results are officially released. This occurred in the first quarter, when predictions of a 4.6 per cent drop in earnings based on company guidance eventually became a 0.3 per cent drop.

The impact of share buybacks will also soften the impact of lower earnings on a per share basis. Company stock repurchases remove shares from the market, so earnings are spread across fewer shares.

First quarter stock buybacks for S&P 500 companies hit $205bn and if the pace continued in the second quarter, companies will be on course to surpass last year’s record $806bn.

UK at highest risk of recession since 2007, says think-tank Resolution Foundation says policy makers are ill-prepared and calls for an end to complacency CHRIS GILES IN LONDON

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ritain is facing the highest risk of a damaging recession in 12 years and is illprepared to cope, the Resolution Foundation said on Sunday.

UK recessions occur on average every decade, reducing living standards by £2,500 per household in today’s prices and raising unemployment by 1m, the thinktank said.

The downturn may not be preventable, the Foundation said, but ministers and officials have failed to draw up plans to respond to it.

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Calling for an end to complacency about the economy, James Smith, research director at the Resolution Foundation: “The UK’s recession risk is at its highest level since 2007, with growth slowing at home and abroad, and widespread uncertainty around Brexit.

“Policymakers can’t prevent recessions from happening, but they can limit their damage with the right policy response. The problem for the incoming government and the Bank of England, however, is that many of the tools used to fight the last downturn are either spent or severely blunted.” @Businessdayng

In recent weeks, the economic data has taken a turn for the worse in the UK and across much of the world. The PMI surveys of manufacturing, construction and services activity fell to levels where a majority of companies were saying output was falling.

The latest official data also suggests that growth in the second quarter will tumble from the first quarter rate of 0.5 per cent close to zero. Not much additional bad news would be needed to show a contraction on the quarter. A recession is defined as two negative quarters.

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Trump stokes anger with comments ahead of immigration raids President tells lawmakers to go back to ‘crime infested places from which they came’ KIRAN STACEY IN WASHINGTON

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onald Trump has told “progressive D e m o c rat c o n gresswomen” to “go back and help fix the totally broken and crime infested places from which they came”, as the president stoked racial tensions ahead of planned raids on immigrant families.

The US president tweeted on Sunday that these congresswomen “originally came from countries whose governments are a complete and total catastrophe”, and accused them of “loudly and viciously” telling the US how to run its government.

“These places need your help badly, you can’t leave fast enough,” he added. “I’m sure that Nancy Pelosi [the Democratic leader of the House of Representatives] would be very happy to quickly work out free travel arrangements!”

Mr Trump did not name the members of Congress he was talking about. But his comments appeared to be aimed in part at fuelling splits in the Democratic party between Ms Pelosi and four women known

as “The Squad”.

The four — Alexandria Ocasio-Cortez, Ilhan Omar, Rashida Tlaib and Ayanna Pressley, all of whom are US citizens — have clashed with the Democratic leadership in recent months over various issues. Ms OcasioCortez appeared to escalate the row earlier this week when she accused Ms Pelosi of “singling out . . . young women of colour”.

Mr Trump on Sunday united the Democrats at least temporarily in outrage at his comments.

Ms Pelosi tweeted: “When @realDonaldTrump tells four American Congresswomen to go back to their countries, he reaffirms his plan to ‘Make America Great Again’ has always been about making America white again.

“Our diversity is our strength and our unity is our power.”

Ben Ray Lujan, a member of Congress from New Mexico, called the president’s remarks “a racist tweet from a racist president”. Bill de Blasio, the Democratic mayor of New York who is also running for president, called them “another effort to divide people along lines of religion, ethnicity, origin, and create a country where there can’t be unity”.

Pakistan PM Imran Khan hit by strikes over IMF programme Islamabad grapples with opposition to austerity plan and order to pay $6bn to miner FARHAN BOKHARI IN ISLAMABAD AND BENJAMIN PARKIN IN MUMBAI

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fforts by prime minister Imran Khan to bolster Pakistan’s faltering economy have suffered twin blows after his IMF-led austerity plans sparked a national strike and an arbitration panel ordered the country to pay $5.8bn in damages to a mining company.

Hundreds of shops across Pakistan closed at the weekend as business owners protested against his government’s plans to boost tax revenue aggressively and cut government subsidies to qualify for a $6bn IMF bailout announced this month.

The shutdown came as the World Bank’s arbitration body, the International Centre for Settlement of Investment Disputes, ordered the country to pay $5.8bn in compensation to Tethyan Copper Company, a joint-venture between Canada’s Barrick Gold and Chile’s Antofagasta.

Tethyan launched the case in 2011 after it was denied permis-

sion to develop the rich Reko Diq gold and copper mine in Pakistan’s western Balochistan province despite investing $220m in the project.

Leading businessmen said that the dual blow of the unfavourable international ruling on the mine and mounting popular resistance to the government’s IMF programme represented the most serious threat yet to Mr Khan’s efforts to stabilise the economy.

“This is probably the most challenging time for the government since it was elected last year,” said the president of a private Pakistani bank. “The pressure is mounting very rapidly. Right now, there seems to be very little breathing space”.

Pakistan is facing a balance of payments crisis made increasingly acute by sliding exports, a rising fiscal deficit and higher inflation on the back of a depreciation of the rupee against the dollar. The Pakistani currency has lost more than 50 per cent of its value since late 2017. The IMF expects growth to fall to 2.4 per cent in the coming financial year. www.businessday.ng

Protesters against the US immigration enforcement in Chicago this week © Getty

Saudi Arabia set to allow women to travel without male permission Kingdom plans change to guardianship rule as scrutiny intensifies over social curbs AHMED AL OMRAN IN RIYADH

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audi Arabia plans to grant women the right to travel without a male guardian’s permission as the government moves to relax social restrictions in the kingdom’s maledominated society.

The move, confirmed by two well-placed Saudi figures including one close to the Royal Court, comes amid growing international scrutiny over women’s rights in the country after several young Saudi women fled the kingdom in recent months to escape family control or an overbearing government, seeking asylum abroad.

Women of any age and men under 21 currently need a guardian’s permission for international travel. A government committee has been instructed to reconsider the restrictions and is expected to change the rules to allow men and

women to travel without the consent of a designated male family member after they reach 18.

An official announcement of the amended laws, first reported

by Saudi daily Okaz on Tuesday, could be made before the end of the year, one of the people familiar with the plan said.

Gaining the freedom to travel would represent a major victory for women in the conservative kingdom. Human rights organisations have long lobbied the government to end male guardianship, saying the current system treats women as “perpetual minors”.

Saudi Crown Prince Mohammed bin Salman has sought to promote female empowerment as part of his plans for economic and social reform. The kingdom lifted a ban on women drivers last year and stripped power from the religious police who used to harass women over how they dress and

act in public.

But the authorities also cracked down on female activists who called for more rights, raising questions about the government’s commitment to empowering women.

Female unemployment in Saudi Arabia stands at 32.5 per cent.

In May 2018, just weeks before the driving ban was officially lifted, a group of activists who called for an end to male guardianship were detained and they remain on trial over charges related to their human rights work.

The kingdom’s restrictions on women came under the spotlight this year when 18-year-old Rahaf al-Qunun fled overseas to escape from her family, saying she feared for her life. She barricaded herself in a hotel room at a transit zone at Bangkok’s airport and used Twitter to seek protection. Ms Qunun was later granted refugee status in Canada.

France follows US to set up military space command Emmanuel Macron announces new doctrine ahead of Bastille Day parade VICTOR MALLET IN PARIS

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rance will create a new military space command as part of the modernisation of its armed forces, following similar moves by other countries including the US, President Emmanuel Macron has said.

“We will strengthen our understanding of the situation in space, we will protect our satellites better, including in an active manner,” he told military commanders on the eve of the Bastille Day military parade.

“The new military and space doctrine proposed to me by [defence minister Florence Parly], which I have approved, will allow us to assure our defence of space and from space,” Mr

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Macron said, noting that space was a “real national security challenge” given the potential for conflict.

The new space command will be launched in September under the air force, which will be renamed “the air and space force”. French military operations in space, including the launch of surveillance satellites, are already budgeted to cost €3.6bn over the next five years.

President Donald Trump ordered the creation of US space command at the end of last year.

Nato, of which France is a member, is also set to launch its first space strategy for the alliance to confront the growing military capabilities in space of China and Russia. @Businessdayng

The US Defense Intelligence Agency says Beijing and Moscow are developing jamming and cyber-capabilities in space, directed-energy weapons and ground-based missiles to target satellites. In March, India successfully tested an anti-satellite missile.

On Sunday, Mr Macron presided over the annual military parade down the Champs-Elysées, the main avenue in Paris, in the company of 10 ­­European leaders, including Germany’s chancellor Angela Merkel. The emphasis was on European defence co-operation, with aircraft, equipment and troops from Britain, Germany and Spain and other countries joining the fly-past and the march.

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Ford and Volkswagen to share costs on electric and self-driving cars Agreement between carmakers deepens transatlantic co-operation PETER CAMPBELL, MOTOR INDUSTRY CORRESPONDENT IN LONDON

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ord and Volkswagen have significantly expanded their global alliance with agreements to collaborate on electric vehicles and self-driving technology, as they look to bulk up against the storms battering the global auto industry.

The deepening of the alliance will see VW invest $2.6bn in Argo AI, the Ford-backed driverless technology start-up, in a deal that values the group at more than $7bn. VW will also begin testing self-driving cars in Europe.

The agreement between Ford and VW will also see the US company build a mass-produced electric vehicle in Europe using the German group’s in-house development and manufacturing system for battery cars. The pair have promised annual savings for both companies by allowing them to avoid duplicating investment costs.

Car companies are seeking scale to combat falling sales in Europe, the US and China as well as the investment demands of new technologies such as electric and hybrid cars to meet tightening emissions rules. Toyota has joined forces with Subaru and Suzuki to invest in electric cars, while the

Renault-Nissan alliance, despite recent difficulties, claims it benefits both carmakers.

“Our global alliance is beginning to demonstrate even greater promise, and we are continuing to look at other areas on which we might collaborate,” said VW chief executive Herbert Diess.

Ford and VW launched their global alliance in January with the development of commercial vehicles and a pick-up truck. Together, the two sell close to 16m cars a year, or almost one in five vehicles sold globally.

VW will give $1bn in funding to Argo AI, as well as folding Audi’s self-driving team at AID into Argo’s new Munich office, which will also continue to hire. Ford and VW will both have equal stakes, and together hold a “substantial majority” of the shares, with the remainder held by employees.

Following the investment from VW, Argo AI will begin testing vehicles in Europe, as well as adapting its software to operate in different cities and regulatory environments. Both companies will integrate Argo’s systems into their own purpose-built vehicles, rather than working on a single combined project. The groups did not provide details of which vehicles or brands would be used.

Drugmakers braced for opioid crisis reckoning Reckitt Benckiser’s $1.4bn settlement is the largest penalty so far linked to the epidemic HANNAH KUCHLER IN NEW YORK

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ritish consumer goods group Reckitt Benckiser has agreed to pay up to $1.4bn to US authorities, resolving investigations into how a former subsidiary marketed a drug used to treat addiction to painkillers.

It is the largest penalty linked to the country’s opioid epidemic, which has devastated communities across the US. Two million Americans are now suffering from opioid use disorder and the outbreak of opioid overdoses has even pulled down average US life expectancy.

What caused the opioid crisis?

Andrew Kolodny, co-director of opioid policy research at the Heller School of social policy and management, said the crisis is directly linked to pharmaceutical companies pushing doctors to believe they were neglecting patients in pain — and convincing them their products were not addictive.

“The Center for Disease Control has made it very clear: the reason so many Americans are addicted to opioids is that the medical community began to prescribe very aggressively starting in the mid-90s. As prescribing went up, addiction and overdose deaths went up directly in parallel,” he said.

What penalties have been handed out so far?

Reckitt Benckiser’s $1.4bn settlement is by far the largest related to the opioid crisis — but it is quite different from the pending cases. Indivior, the former Reckitt subsidiary,

is accused of mis-selling Suboxone, not an opioid but a drug used to help treat opioid addiction — and importantly, the US government is not claiming that it is responsible for the crisis.

Indivior shares rose on Thursday on stronger than expected sales of Suboxone, but Citi analysts said it was difficult to value the stock with a large potential fine hanging over it.

A small number of cases have settled so far. Insys, the maker of Subsys, a spray based on the very powerful opioid fentanyl, settled a case for $225m last month. Purdue Pharma, owned by certain members of the wealthy Sackler family, settled a case with Oklahoma for $270m earlier in the year. It also settled a larger case of $600m back in 2007, where three executives pleaded guilty to misleading and defrauding physicians by claiming that OxyContin was less addictive than it was. Distributors, who are meant to monitor how pharmacies are prescribing pills, and doctors, have also been involved in settlements.

What court cases are coming?

Harry Nelson, managing partner at law firm Nelson Hardiman and the author of The United States of Opioids, said the opioid cases are at a “really critical juncture”. In October, a large case is due to go to trial that combines thousands of claims, mainly from US cities and counties, against 22 opioid manufacturers, distributors and pharmacies.

“I think the pressure is rising on the pharmaceuticals to start to move settlements forward,” he said. www.businessday.ng

Middle East’s power struggle moves to the Horn of Africa Gulf states are investing heavily in the region, but the crackdown in Sudan has put their interventionist policies under scrutiny TOM WILSON IN KHARTOUM AND ANDREW ENGLAND IN LONDON

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fter troops launched a deadly night-time raid on Sudan’s prodemocracy protesters, blame immediately focused on the Rapid Support Forces. The notorious paramilitary unit, made up of remnants of a militia that wreaked havoc in war-torn Darfur in the 2000s, had led the June 3 assault, victims said. Demonstrators were beaten, shot and raped. The bodies of dozens of the 100 people killed — according to local estimates — were tossed into the Nile.

The crackdown suggested the country’s military leaders, who have ruled since the protests triggered a coup against Omar al-Bashir in April, were sending a deadly message that they would not bow to popular pressure and accept a transition to civilian rule. But it was not just the RSF and the generals who faced scrutiny: as the body count mounted, attention intensified on their regional backers — Saudi Arabia and the United Arab Emirates.

Many Sudanese activists even asked whether the powerful Gulf states gave the green light for the raid.

Two days after the attack, the US state department issued an unusually curt readout of a call between a senior US official and Prince Khaled bin Salman, the Saudi deputy defence minister and brother of Crown Prince Mohammed bin Salman, the kingdom’s de facto leader. David Hale, undersecretary of state for political affairs, described the crackdown as “brutal” and told Prince Khaled of the “importance of a transition from the Transitional Military Council to a civilian-led government”.

Saudi Arabia and the UAE strongly deny prior knowledge of the raid, diplomats say. And

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both insist they are promoting stability in the region and have a long history of economic and political ties to Sudan, a country that bridges the African and Arab worlds and has a long coastline along the Red Sea. Nevertheless, the crackdown raised scrutiny over the countries’ role in Sudan, while fuelling wider debate about the interventionist polices being pursued by assertive Gulf states at a time when they are spending hundreds of millions of dollars buying concessions to manage ports and other infrastructure in the Horn of Africa.

“All our problems are about Saudi Arabia, the UAE and Egypt,” says Salman Osama, a 27-year-old surgeon who has been on the frontline of the Sudan protests and treated wounded people during the RSF raid. “They were supporting the [Bashir] regime that was oppressing us and they are supporting this regime too.”

Just 10 days before the attack, Lieutenant General Mohamed Hamdan Dagalo, who heads the RSF and is considered Sudan’s most powerful military leader, was hosted by Prince Mohammed in Jeddah. The same week, Lt Gen Abdel Fattah al-Burhan, the head of Sudan’s military council, visited Sheikh Mohammed bin Zayed, the crown prince of Abu Dhabi and the UAE’s de facto leader.

The kingdom and the UAE — its closest regional ally — have pledged $3bn to Sudan’s Transitional Military Council since Mr Bashir was ousted, the two joining Egypt as the generals’ most important backers. For many protesters the Khartoum crackdown reinforced their fears that the foreign powers were bent on keeping their regime allies in power at the expense of democracy.

In its wake, Saudi Arabia and the UAE both called for “constructive dialogue” among Sudanese parties. But it is the generals @Businessdayng

they appear to be banking on to protect their interests, including Sudan’s deployment of troops in Yemen as part of a Saudi-led coalition fighting Iran-aligned Houthi rebels.

“The Saudis and Emiratis know Burhan and Hemeti [Lt Gen Hamdan] well due to their command of Sudanese forces in the Yemen war,” the International Crisis Group said in a report. “They trust the generals to shepherd the country through a managed transition from one military-led regime to another, avoiding the interlude that occurred in Egypt [in 2011] — elections with uncertain outcomes followed by brief Muslim Brotherhood rule — by sidelining those favouring more wholesale reform among civilian protesters.”

Lt Gen Salah Abdel Khalig, one of the seven military officers running Sudan, denies there is anything nefarious in the Gulf states’ support. “They stand with us politically because they want to get rid of this Islamic system that was ruling Sudan,” he says, referring to the Islamists that consolidated power with Mr Bashir in the 1990s.

Those demanding democracy have largely been young and secular. But Adel al-Jubeir, the Saudi minister of state for foreign affairs, hinted last month at Riyadh’s concerns about the potential influence of Islamists.

“The Muslim Brotherhood has been opportunistic, they hijacked the changes in Egypt in 2011,” he said. “I believe they may be trying to do the same in Sudan.”

Since the 2011 Arab spring, Riyadh and Abu Dhabi have pursued assertive foreign policies in a bid to mould the region in their image. The uprisings sent shockwaves through the Middle East as autocrats, including Egypt’s Hosni Mubarak and Libya’s Muammer Gaddafi, were ousted and conflicts erupted in Syria and Yemen.

BD Money

Monday 15 July 2019

BUSINESS DAY

PERSONAL FINANCE

INVESTING

COVER STORY

EQUITIES

10 tips to get almost anything at the best price

What you need to know before investing in a friend’s business

Africa’s wealthiest five are over 4 times bigger than Rwanda’s economy

A bloody H1 tests nerves of value investors

Bisi, 25, a nutritionist wants a Toyota Corolla; it is the kind of automobile everyone says balances affordability with quality, and she knows getting a car would put an end to queuing at the bus stop just to get to work several miles away.

When two or more people decide to venture into a business, their finances are most likely going to be entangled. It is worse when the parties involved are into one form of relationship or the other such as friendship, romantic or even family relationship.

Bloomberg Billionaires’ Index has placed Nigeria’s Aliko Dangote as the only African in its top 100 ranking.

According to ranking as at Friday, the fortune of Africa’s five...

The first half of the year 2019 has seen significant erosion in the value of investors’ holdings, largely on the back of negative sentiment inherent in the market, as investors perceive retroactive measures from fiscal policy makers.

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@Businessdayng

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Monday 15 July 2019

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Personal Finance 10 tips to get almost anything at the best price SEGUN ADAMS

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isi, 25, a nutritionist wants a Toyota Corolla; it is the kind of automobile everyone says balances affordability with quality, and she knows getting a car would put an end to queuing at the bus stop just to get to work several miles away.

But there is just one problem: The car costs N5 million whereas she can only afford N4million at the moment.

Bisi wants to ask the salesman to agree to her price but she doesn’t know how to start the conversation, so she walks away hoping to raise an additional N1 million, and get out of bed early the following morning if she doesn’t want to miss her bus to work.

Learning to bargain effectively is a skill that is useful not only when a determined salesperson stands between you and your dream car. Being able to negotiate can be useful in many other instances, including at your workplace, the grocery store, bidding for contracts etc.

The first three (3) tips were given in the first part of this article published last week.

Do your homework: Know the product, the alternative price offering by competitors. Understand how seasonality affects the price and try to appear knowledgeable about the product- it prevents the seller or other parties from exploiting you.

Understand your seller: What is the motive of the seller? Is s/he selling only to get rid of the property? Also, know the cost of the item to the seller and if possible the margin so you can bargain to price points the trader finds acceptable.

It is “give and take”, incentivise your seller: Convince the other party that selling to you brings more benefit than money.

Sometimes people can be willing to make short term losses if it promises longer-term benefits. Make a value proposition; it could be promising patronage in the future.

At the end of the day, a great deal is one in which you leave the other party feeling like they make a good decision to agree to your terms.

Build rapport: It is bargaining, not war! Being friendly and subtle usually helps when it comes to

sealing the deal. You want the seller or other parties to see that you are “on their side” and you want them to make a sale- although you must never say you are helping them.

Using friendly and kind words, perhaps trying to find common groups outside the immediate deal might help.

Imagine learning that you and the other party support the same cause, attended the same school or come from the same part of town?

Of course, you must avoid acting too nice or polite as it might irk the other party.

Avoid the crowd: Cutting you a deal would cost the seller to an extent and s/he would not want to keep incurring the same cost on every buyer that walks into the store or showroom.

On account of that, it is never a good idea to start a bargain in front of other customers.

Merchants are usually less likely to consider a counteroffer if it would force them to grant the same terms or conditions to their other customers.

Know when to make the first offer: Negotiating well involves a lot of attention to details and proper timing, like knowing the right moment to drop your cards.

Conventional wisdom tells us to allow the other party name a price then bid lower.

It usually works that way and especially if

you don’t know what a fair price is- else you blurt out a price only to find the seller enthusiastic about your proposition.

However, “going for first blood” could give you the advantage of anchoring the price. This is how anchoring works: Bisi walks to the car dealer and sees an N5million sticker on her dream car. If she chooses to negotiate, the bargain would likely revolve around N5million which is the anchor, reference or starting price (point).

For certain types of deal, you can steal this power if you make the first propositionjust make sure your initial offer is lower than you actually intend paying so you can appear to make concessions paying what is actually a fair price to you.

Something you could do if the seller makes the first proposition is to ignore the anchor and try to avoid revolving around that price.

Use Silence, Stories strategically: Use stories to get the seller on your side.

This is not the long and boring irrelevances to fill in awkward moments of silence but as a way of showing you are familiar with the product and can give your “expert” opinion on it.

Consider this scenario: Bisi wants to buy a car but she doesn’t just tell the dealer “I

want a car” instead she says “My xyz car broke down last week but I think it’s time I replaced it with a newer one, can I see your abc model?”

However, you should avoid rambling else the other party would see through the smoke and take your loquaciousness as a sign of failing confidence.

Also, avoid the temptation of asking “so what is it going to be?” during moments of silence else you would seem desperate.

Just keep quiet and the seller might eventually give in just to avoid the awkwardness of moments. Salespeople have to talk to make sales, hence are not used to or comfortable with silence.

Ask open-ended questions: Putting the other party on the spot where they have to answer “yes or no” to your question can be counterproductive.

Instead of asking questions like “will you sell this for me at XYZ?” try “This product really seems nice but it is slightly more than I had hoped. How can you help me?”

Do not make the other party dismiss your offer in one or two words by asking binary questions, keep them in a position where they have to explain everything.

Look for leverage: Bargaining chips or leverage are potential concessions or other factors which can be used to advantage in negotiations.

For instance, if the product has a little defect, you should factor that into your pricing and make the seller know you would have to be compensated for such inconvenience.

It is often useful in fact to give them an estimate of how much cost would be involved in repairing the item or restoring it to perfect condition. Just make sure the cost is expressed in terms of time (effort) and money.

In addition, if you want to buy more than one unit of a product, start the bargain on that unit then, later on, offer to buy more than one if there would be a discount.

Be willing to walk away: Do not be afraid to leave the table unless you cannot afford to lose the opportunityeven then do not show it.

Sometimes you have to pretend to walk away to test the true limit of the other party’s resolve. However, it should be as last resort because if the other party doesn’t bulge and you return to the negotiation table, you lose your bargaining power.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

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Monday 15 July 2019

BUSINESS DAY

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Investing

What you need to know before investing in a friend’s business OLUWASEGUN OLAKOYENIKAN

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hen two or more people decide to venture into a business, their finances are most likely going to be entangled. It is worse when the parties involved are into one form of relationship or the other such as friendship, romantic or even family relationship.

Regardless of who is in the equation, when money is involved, the relationship can easily be soured.

Some have lost their friends and/or spouses to shady transactions, money borrowed or invested in a wrong manner. So, to sustain your relationship, it is wise to stay away from such deals because an attempt to combine the business with your relationship may cost you both.

This is based on the fact that a good friend may not necessarily guarantee a good businessperson, implying a financial commitment to the business of your best friend who is a terrible manager could deliver no return and dampen your relationship.

However, if you decide to take a cue from friends, couples, families or even groups of people who have successfully partnered in businesses and investments, and you’re convinced that would not pose any threat to your relationship if you consider being part of a friend’s venture, then it is important to take note of these points to avoid burning your fingers or mitigate the risks.

The first on the list is a proper evaluation of your friend’s capability to run the business. While conducting the assessment, a look at previous ventures run by your friend would help form a good judgement, were the businesses successful? If they were, the planned business stands a good chance to flourish.

However, for someone who is yet to run any business, you may focus on his expertise and professional qualification, even though the two are not sufficient reasons to put your hard-earned money into the

“

If you decide to take a cue from friends, couples, families or even groups of people who have successfully partnered in businesses and investments, and you’re convinced that would not pose any threat to your relationship if you consider being part of a friend’s venture, then it is important to take note of these points to avoid burning your fingers www.businessday.ng

business.

Secondly, you need to understand the vision of the business, this and the details of the business must be clearly spelt out.

These details should include your role in the business which should be clearly separated from your friend’s duties to avoid misunderstanding.

Are you expected to invest only or invest and also be fully involved in its operations?

You need to find answers to this.

Request for a business plan and critique the plan to understand how the business would create return as well as the value of return it would most likely generate for investors in a defined time frame.

Just like other forms of investment, having an idea of the risks in the business might likely face is necessary. Your business partner who is a friend, in this case, should be transparent about the possibilities of failure, and a forward-looking plan on how possible losses would be shared

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should be stated clearly. This is based on the assumption that you are aware of the amount your friend intends to put into the venture.

It is equally important you have a legal agreement backing every aspect of the business partnership, it doesn’t matter how cordial your relationship is currently.

You are also expected to have copies of these legal documents in your custody for future references.

Finally, as stated early, every business, particularly a startup, has a tendency to fail, implying that you should invest an amount you can afford to lose, and if you do not have such disposable money, the best idea would be to let go.

If you find yourselves as partners in the business, you should at all times put your friendship aside and treat yourselves as business partners, this would ensure you sustain your relationship and the life of the business.

@Businessdayng

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Monday 15 July 2019

BUSINESS DAY

Monday 15 July 2019

BUSINESS DAY

Cover Story Africa’s wealthiest five are over 4 times bigger than Rwanda’s economy Israel Odubola & Segun Adams

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loomberg Billionaires’ Index has placed Nigeria’s Aliko Dangote as the only African in its top 100 ranking.

According to ranking as at Friday, the fortune of Africa’s five wealthiest people ($42bn or N13trn at N306/$) is similar to the entire market capitalisation of the Nigerian Stock Exchange (NSE). The billionaires are also worth the equivalent of Rwanda’s $9bn economy.

Aliko Dangote $16.3bn Fun fact: At N306/$, Dangote’s wealth is equivalent to 7 percent of Nigeria’s economy in 2018.

Dangote is doubtless Africa’s richest person and 77th in the world. The 62 year old is the only African to feature in the top 100 on Bloomberg’s big money list.

The self-made billionaire is the owner of the Dangote Group which owns Dangote Cement, the biggest cement producer in sub-Saharan. Although Dangote has other businesses in sugar, salt, flour, fertilizer and packaged food. Dangote’s cement business is the worth N3 trillion on the Nigerian Stock Exchange (NSE).

Dangote is currently building a refinery capable of producing 650,000 barrels of crude per day. The facility is situated in Lagos and would be the biggest Refinery, taking over from South Africa’s Sapref Refinery upon completion.

Naguib Sawiris $5.20bn Fun fact: At 306/$, Sawiris’ wealth is more than the combined current market value of Nigeria’s two biggest lenders Naguib, the Egyptian billionaire mogul is fifth wealthiest in Africa and 362nd in the world. He chairs the Board of Wind Telecom, a telecommunication firm headquartered in Amsterdam, Netherlands.

Since joining Orascom, his family business in 1979, Sawaris has contributed to the growth and diversification of the company into what it is today as Egypt’s largest and

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most diversified conglomerates and the country’s largest private sector employer.

The business magnate built the railway, information technology and telecommunication sectors of Orascom. He also led the acquisition of La Mancha Resources Inc through a tender offer launched by Weather Investments II. The company is an international gold producer based in Canada with operations, development projects and exploration activities in Africa, Australia and Argentina.

Foreign portfolio investment rises by 305.8% in 3 months … CBN to auction T-bills worth N107.05bn this week

Johann Rupert $7.34bn Fun fact: Rupert’s wealth can buy 137 million barrels of crude oil.

Rupert is the second richest African and 221 in the world. He is 69 and built his wealth by investing in businesses across different industries. Rupert inherited his wealth, he is the eldest of busi-

Nicholas Oppenheimer $7.08bn Fun fact: At 306/$, Nicky would have to pay N30,000 to 72.22 million Nigerians to exhaust his wealth Nicky, as fondly called, is Africa’s third and world’s 232th wealthiest man whose fortune came majorly from diamond.

The 74 year old was formerly the chair-

man of De Beers Diamond Company and subsidiary, the Diamond Trading Company, and former deputy chairman of Anglo American. His family, the Oppenheimer, are one of the richest in South Africa.

Nicky, the heir to his family’s fortune sold his 40 percent stake in diamond firm DeBeers to a mining group Anglo American for $5.1 billion cash in 2012.

Natie Kirsh $6.22bn Fun fact: At 306/$, Kirsh can create 1.9 million Nigerian millionaires Nathan Kirsh, 87, is a self-made South African/Swazi business magnate. He heads the Kirsh Group, which holds a majority stake in New York cash and carry operation Jetro Holdings.

The Group holds equity and investments in Australia, Swaziland, United Kingdom, United States and Israel.

Natie, 283rd richest person globally,

founded his corn milling business in Swaziland, and expanded into food business after apartheid in South Africa. He acquired wholesale food operations in 1970, and transformed it as a cash and carry business that makes it as the country’s black-owned local grocery stores.

He later expanded his ventures to real estate, and sold 49 percent of the conglomerate to insurance firm, Sanlam, which has about 90 Restaurant Depot and 10 Jetro Cash and Carry stores.

ness typhoon Anthony Rupert.

The South African’s biggest asset is the Cie. Financiere Richemont, the world’s largest luxury watchmaker, which he controls the through a family trust. He chairs the board of CFR as well as Remgro, South-African based investment holding firm.

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@Businessdayng

HOPE MOSES-ASHIKE

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oreign portfolio investment (FPI) into the country increased by 305.8 percent to $7.1 billion in the first quarter of 2019 from $1.7 billion in the fourth quarter of 2018.

On a year-on-year basis (Y-o-Y) the FPI also increased by 56.5 percent from $4.6 billion the first quarter of 2018 to $7.1 billion in 2019.

FPI dominates the capital inflows, accounting for 84 percent of the total inflow.

This is an indication of foreign investors’ appetite for the Nigerian securities according to analysts at FSDH research, an arm of FSDH Merchant Bank Limited.

Capital inflows into Nigeria in Q1 2019 was the highest first quarterly figure in five years. Foreign capital inflows increased in Nigeria because of low yields in international market.

The FPI inflows although at a slower rate provided short-term support for the foreign exchange. Capital inflows through the Investors’ and Exporters’ foreign exchange Window (I&E Window) stood at $1.42 billion in June 2019, which was a decline compared with $2.33 billion recorded in May 2019.

The June 2019 figure was the lowest figure recorded since July 2017.

Total inflows from inception of the I&E Window in April 2017 till June 2019 stood at US$66.35 billion. FPI is the single largest contributor to the total foreign inflow since inception of the I & E Window, accounting

for 47.96 percent of the total inflows from inception.

Analysis of Foreign Inflows through the I and E window since April 2017 to June 2019, show that non-bank corporates contributed $1.48 billion and accounted for 2.22 percent of total inflow, other corporates contributed $0.31 billion and accounted for 0.46 percent, the Central Bank of Nigeria (CBN) contributed $11.29 billion and accounted for 17.01 percent of total.

The CBN’s economic report for the month of May 2019 show that aggregate foreign exchange inflow into the economy amounted to US$10.22 billion, showing an increase of 3.2 percent above the level at the end of the preceding month, but contrasted with the decline of 4.0 per cent

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below the level in the corresponding period of 2018. The increase was as a result of 4.3 per cent and 2.6 per cent rise in inflows through the Bank and autonomous sources, respectively.

According to the report, aggregate foreign exchange outflow from the economy, at US$3.97 billion, fell by 18.5 per cent and 22.9 per cent below the levels in the preceding month and the corresponding period of 2018, respectively.

This was attributed, mainly, to the 15.8 per cent and 37.8 per cent decline in outflows through the Bank and autonomous sources, respectively.

Inflow through autonomous sources, rose by 2.6 per cent to US$6.21 billion in May 2019, compared with the level

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at the end of April 2019. Outflow from autonomous sources, on month-on month basis, fell by 37.8 per cent to US$0.37 billion, reflecting the decline in both visible and invisible imports.

Accordingly, foreign exchange flows through the economy, resulted in a net inflow of US$6.26 billion in the review period, compared with US$5.04 billion and US$5.51 billion at the end of April 2019 and end of May 2018, respectively.

However, aggregate sectoral utilisation of foreign exchange fell by 29.7 per cent to US$2.83 billion in May 2019, compared with the level in the preceding month. The invisible sector accounted for the bulk (63.7 per cent) of total foreign exchange disbursed in the review month, followed by components of the visible sub-sector listed in descending order as follows: Industrial sector, 15.7 per cent ; manufactured products, 7.5 per cent; food products, 5.9 per cent; minerals and oil, 5.2 per cent; transport, 1.6 per cent; and agricultural products, 0.4 per cent.

The CBN will this week auction Treasury Bills worth N107.05 billion. This consists of 91-day bills worth N5.85 billion, 182-day bills worth N26.60 billion and 364-day bills worth N74.60 billion.

“We expect their stop rates to decrease marginally due to increase demand amid boost in system liquidity which, in addition to maturing T-Bills worth N41.68 billion, is also expected to result in decline in Nigeria Inter-Bank Offered Rate (NIBOR)”, analysts at Cowry Asset Management Limited said.

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Monday 15 July 2019

BUSINESS DAY

Equities

A bloody H1 tests nerves of value investors DAVID IBIDAPO

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he first half of the year 2019 has seen significant erosion in the value of investors’ holdings, largely on the back of negative sentiment inherent in the market, as investors perceive retroactive measures from fiscal policy makers.

As at the end of trading on Friday, the Nigerian all share index (ASI) moved closer to its 1 year lowest point after market dipped further by 0.31 percent, after a significant decline by 1.9 percent the previous trading day.

Analysis of year to date performance of Nigeria’s ASI shows that investors’ on the nation’s bourse have shed -8.93 percent in total market value.

Nigeria market bellwethers have also taken a hit losing a whooping N620 billion in market value as of the last day of trading on Friday, each close to their 1-year low on the back of sell-offs.

While prices of these stocks may appear cheap now, analysts envisage that in-

“

The stock market will continue to sustain its bearish trend in for the remaining part of the year on the back of sluggish fiscal stance and exposure of the economy to external shocks despite the coming earnings season may provide some respite to some stocks like the banking stock

vestors who intend to invest short may get their fingers burnt as necessary impetus to market is not visible.

To this end longer term investors are in

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the best position to take advantage of lowest prices of value stocks with strong and promising fundamentals.

Proven by analysis by BusinessDay ana-

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lyst, the Nigerian equity market have historically followed a pattern where shorter term (1-2 years) investors become worst off while longer term (3-4 years) investors become better off. Also analysis further revealed that gains of investors begin to reverse when held for the 5th year which most times falls within the general elections.

While the introduction of MTN provided what we could term as an “artificial boost” for the stock market which saw overall market capitalization rise by N2.9 trillion to N13.6 trillion in 5 trading days, MTN stock price have reversed, closing at N129.65 from N99 listing price.

“MTN is still at its price discovery stage, hence we can’t say for sure whether current price is its intrinsic value,” Gbolahan Ologunro told BusinessDay. In contrast to Airtel Africa dual listing on the London stock exchange and Nigeria stock exchange market, analyst have raised concerns over company’s fundamentals ranging from high balance sheet leverage and stock being pricey.

This was evident on the LSE as stock traded lower against its listing price of 80 pence on the first trading day. Also while stock gained 10 percent upon listing on the NSE, gains reversed 10 percent consecutively in two trading sessions, closing at N323.50 on Thursday.

“The stock market will continue to sustain its bearish trend in for the remaining part of the year on the back of sluggish fiscal stance and exposure of the economy to external shocks despite the coming earnings season may provide some respite to some stocks like the banking stock,” Gbolahan Ologunro, equity analyst told BusinessDay.

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BUSINESS DAY

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Data

Federal government eurobond Yields on Eurobonds rose by 0.11 percentage points week on week from an average of 6.23 percent when the market closed last week to 6.34 percent as investors sold-off on Nigeria’s Sovereign Eurobonds.

Corporate eurobond Yields on corporate Eurobonds fell by 0.42 percent points as mixed performance characterised the corporate Eurobond market. Average yield fell from 7.998 percent last week to 7.58 percent. www.businessday.ng

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Monday 15 July 2019

BUSINESS DAY

Equities Have these stocks on your watchlist as they may pay interim dividend soon (1) OLUFIKAYO OWOEYE

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e are well into the earnings season which is the period when listed companies publish interim and audited accounts for the period ended June 30th, 2019.

It is also a period where investors evaluate their portfolios based on the results released by these companies. For companies with a track record of great results, it is likely that you see their share price surge while those that post weaker results could see their share price tank.

Another item of importance of the period is the interim dividend typically declared in this period. June 30th typically represents the half-year period for most companies and is also when they decide to declare interim dividends. Dividend is a critical factor in also deciding how shares get valued.

For long-term investor in the stock market, owning stocks that pay dividends regularly should always be part of your portfolio. For shorter-term speculative investors, dividend payments is not an important factor in their decision-making as all they are after is cashing out on the value created when the share prices increases.

GTBANK Tier one bank, GT bank has a track record for paying interim dividends, as it has done so in the past 10 years. The bank’s board is scheduled to meet on 24th July for approval of the bank’s audited accounts and financial statements and also, consider issues concerning the bank’s half-year dividend.

The bank had last year paid an interim dividend of 30 kobo per share, and this year may not be different.

The bank’s unaudited Financial Results for the quarter ended March 31, 2019 show gross earnings for the period surged 1.2%

Week Ahead Week Ahead(Monday, 15th July – Friday, 19th July, 2019) Week Ahead (Monday, 8th April – Friday, 12th April, 2019) Commodity Oil: Brent likely to trade between $65 and $67 per barrel in near term on OPEC’s output cut extension and geo-political tensions. However, concerns about a weak outlook for global oil demand could put pressure on prices.

Fixed Income Commercial paper worth N3.22 billion issued on April 26, 2018, by Flour Mill of Nigeria Plc at 14.2% issue yield will mature on Tuesday, July 16.

Commercial paper worth N1.17 billion issued on October 22, 2018, by Flour Mill of Nigeria Plc at 15% issue yield will mature on Thursday, July 19.

Data Release The National Bureau of Statistics will on Monday, July 15 release June 2019 Inflation report. Snapshot of May’s report revealed that headline inflation increased to 11.40%, from 11.37% in April fuelled by food inflation which jumped to 13.79%. FSDH Research predicted inflation will moderate to 11.32% in June.

Currency The naira is expected to trade against the dollar at current level on the Investors & Exporters window owing to the sustained intervention of the Central Bank in the foreign exchange market.

Event Economic Associates will host a one-day conference on Nigeria’s Economic Outlook on Wednesay, July 17 at Radisson Blu Hotel and Anchorage, Ozumba Mbadiwe Avenue, Victoria Island, Lagos. www.businessday.ng

to ₦110.3billion from ₦109.0billion posted in March 2018. Profit before tax improved to ₦57.0billion from ₦52.6billion recorded in the corresponding period of March 2018, representing a growth of 8.3%. Customers’ deposits also rose by 6.0% to ₦2.410trillion in March 2019 from ₦2.274trillion in December 2018.

ZENITH BANK Zenith Bank In a notice sent to the Nigerian Stock Exchange (NSE), hinted that its directors scheduled to meet on 23rd July to consider the group’s audited interim financial result and also consider

possible interim dividend payment for shareholders.

The bank, last year paid an interim dividend of 30 kobo per share, in the first quarter ended 31 March 2019, the bank recorded improved numbers across key metrics, driven by a solid performance in all its business segments.

This resulted in a Profit before Tax (PBT) of ₦57 billion, representing a 6percent growth over the ₦54 billion achieved in the corresponding period in 2018.

UBA This is another stock that has a tradition of consistent dividend payment. UBA last year paid an interim dividend of 20 kobo per share. In its unaudited first quarter results for the period ended March 31, 2019, gross earnings grew by 10.3percent to N131.67bn from N119.37 in the previous quarter. Interest income grew 9.1percent from N90.33bn in Q1 2018 to N98.56bn in Q1 2019 while Profit After Tax grew by 20.8percent to N28.66bn Access Bank Access bank is the country’s biggest lender after the completion of merger with Diamond Bank. The bank had between 2013-2016 has consistently paid at least 25 kobo as interim dividend. In a notice sent to the NSE early this month, the bank hinted that its directors would consider the possibility of paying an interim dividend.

Chart of the week Bharti’s Airtel joins MTN on Lagos bourse as Telecos play big

On Tuesday Airtel Africa Plc listed more than 3.75 billion ordinary shares on the daily official list of the Nigerian Stock Exchange (NSE) and the share price rose to N399.3 from a listing price of N363, with a total trade valued at N39.9 million. However, a source at the NSE said 100,000 units of shares were traded, intended to move the price.

Airtel has a market capitalisation of $1.2 as of Friday, and is the third biggest company on the exchange, edging Nestle out of third place. Two mobile network operators now feature on the list of top 5 Nigerian public companies by market capitalisation.

Since its listing, Airtel has dwindled losing 10 percent in two consecutive trading sessions following its debut and closing flat at N323.5 on Friday.

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abujacitybusiness Comprehensive coverage of Nation’s capital

FCTA flags off 2019 flood risk assessment in area councils James Kwen, Abuja

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ederal Capital Territory Administration (FCTA), has flagged off the 2019 assessment of flood prone areas in the Area Councils in the Federal Capital Territory, Abuja with a call on residents to desist from dumping refuse in drainage channels, farming on river banks and building on water ways.

Chinyeaka Ohaa, FCTA

FCTA will not relent on its plan to remove houses built on waterways.

He added that potential buyers or renters of properties in the FCT should always find out from the relevant authorities in the FCTA if the developers have met the masterplan requirements before taking possession of properties.

Earlier, Abbas Idriss, Director General of FCT Emergency Management Agency (FEMA), expressed delight that government’s intervention has restored

Permanent Secretary who performed the ceremony in Abuja blamed the attitude of residents for the reoccurring flooding incidents in the FCT and condemned the activities of estate developers who deliberately contravene provisions of the master plan and build houses on flood plains and natural courses and channels of rivers.

Ohaa warned residents against further violation of the laid down environmental and development laws in the FCT, saying that the

the Walko-Ashara link bridge between Abaji and Kwali Area Council which hitherto was cut off by flooding.

Also speaking, the Chairman of Kwali Area Council, Danladi Chiya thanked the Permanent Secretary for his immense support to the FCT Area Councils and appreciated FEMA for their quick intervention in the restoration of the Ashara-Walko bridge linking Kwali and Abaji Area Councils which was destroyed by flood.

Flooding: FCTA begins demolition of 121 illegal structures in Lokogoma District James Kwen, Abuja

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s part of measures to address the perennial problem of flooding in the Lokogoma District of the Federal Capital Territory, Abuja, the Federal Capital Territory Administration (FCTA) has embarked on the demolition of 121 illegal structures built on waterways.

The exercise commenced after the expiration of a twoweek ultimatum given by FCTA Permanent Secretary, Chinyeaka Ohaa for owners of buildings, obstructing flood plains and natural water channels at the Lokogoma District to evacuate such properties.

Mukhtar Galadima, Director, Department of Development Control in the FCTA

disclosed that the exercise would last for one month considering the difficult terrain their equipment will have to navigate through.

Galadima said legal action might be taken against offending developers as the Department is working closely with the Legal Secretariat of the FCTA to consider its legal options, as the offending developers will not go scot-free.

He revealed that all the structures being removed had received stop-work and demolition notices long before the exercise commenced but the developers ignored such warnings, adding that, the exercise will also be carried out in other mass housing districts of Kafe and karsana where such violations also exist.

FCTA flags off 2019 flood risk assessment in area councils James Kwen, Abuja

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L-R, Felix Egbamuno, chairman FEMRO 3 Nigeria Limited, Godwin Emefiele, governor of CBN, Grace Adereti, president Nigeria Textile Manufacturer Association and Joel Omegbe, representing the chief of army staff (COAS) during the meeting of the CBN Governor with Service Chiefs, Head of Uniformed Services in Nigeria held in Abuja.

Picture by TUNDE ADENIYI.

ICPC, EFCC warn Benue govt officials Groups pass vote of confidence against diversification of public funds on Wukari Federal Vasity VC Benjamin Agesan, Makurdi

T

he Independent Corrupt Practices and other Related Offences Commission, ICPC and Economic Financial Crime Commission, EFCC have warned people in charge of public offices in Benue to against diverting public funds meant for public infrastructural development to their personal needs.

Heads of the anti graft agencies in Benue gave the warning in Makurdi at the commemoration of 11th July as an African Union (AU) Anti-corruption Day. Adebayo Obaniyi, Benue State ICPC Commissioner, disclosed that the agency intends to use provisions of its law, especially on nonconviction based asset forfeiture to deny corrupt persons the use of whatever they have

stolen from public purse.

Obaniyi said it is germane that Nigeria adopts the strategy of asset recovery and return to the source as one of the cardinal points of her national anti- corruption strategy, in line with the theme adopted by AU for the 2019 anti-corruption day: “the opportunity cost of corruption and the value of asset recovery”.

He said that the new policy focus of the Commission is to ensure effective utilisation of budgetary allocations to social welfare and human development, which will lead to improvement in social indicators.

Babalola Johnson, EFCC Commissioner in the State, on his part said that they have join other African brothers to create awareness on the menace of corruption and engender collective action against it.

Nathaniel Gbaoron, Jalingo

J

ukun Youth Development and Cultural Association (JYDCA), National Youth Council of Nigeria (NYCN) and National Association of Wapan Students (NAWAS) have passed a vote of confidence on the Vice Chancellor, Federal University Wukari, Abubarka Kundiri.

The groups at a joint news conference in Jalingo urged the Vice Chancellor to stay focused on his development trajectory for the university and not to be distracted by those who are bent on slowing down the pace of development in the institution.

Audu Ishaya-Gani Organising Secretary of JYDCA who spoke on behalf of others said, it has become expedient for the groups to take their position to encourage Kundiri who has brought remarkable development to the University and to cau-

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tion those who are trying to politicise the citadel of academic excellence.

“The University of Wukari has today become a beacon among the forth generation federal universities in the country, under Professor Kundiri. The university is ensuring the enthronement of global best practices in administration, community development, research, teaching and learning.

“Since Kundiri resumed as the Vice Chancellor here, the university has experienced remarkable development both in terms of infrastructure and quality of teaching and learning. We have additional four faculties and the full accreditation of the twenty seven undergraduate courses offered by the university.

“We find it absurd that some persons are desperately working to undermine the good works going on in the university”.

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ederal Capital Territory Administration (FCTA), has flagged off the 2019 assessment of flood prone areas in the Area Councils in the Federal Capital Territory, Abuja with a call on residents to desist from dumping refuse in drainage channels, farming on river banks and building on water ways.

Chinyeaka Ohaa, FCTA Permanent Secretary who performed the ceremony in Abuja blamed the attitude of residents for the reoccurring flooding incidents in the FCT and condemned the activities of estate developers who deliberately contravene provisions of the master plan and build houses on flood plains and natural courses and channels of

rivers.

Ohaa warned residents against further violation of the laid down environmental and development laws in the FCT, saying that the FCTA will not relent on its plan to remove houses built on waterways.

He added that potential buyers or renters of properties in the FCT should always find out from the relevant authorities in the FCTA if the developers have met the masterplan requirements before taking possession of properties.

Earlier, Abbas Idriss, Director General of FCT Emergency Management Agency (FEMA), expressed delight that government’s intervention has restored the Walko-Ashara link bridge between Abaji and Kwali Area Council which hitherto was cut off by flooding.

Over 98 million Nigerians are living in multidimensional poverty-UNDP Cynthia Egboboh, Abuja

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he United Nation Development Programme (UNDP) has announced that over 98 million people are living in multidimensional poverty in Nigeria.

UNDP latest report indicated that, multidimensional poverty spread across poor health care system, lack of education, inadequate living standards, disempowerment, poor quality of work, the threat of violence, and living in areas that are environmentally hazardous.

According to the report, over 46 percent of Nigerians are poor based on income while over 50 percent are considered poor based on @Businessdayng

other factors.

It also showed that a total of 1.3 billion people are multi-dimensionally poor, with 886 million living in the middle income countries, whole half of the population are children under age 18.

“For instance, in Nigeria, even though the national average shows that around 50% of Nigeria are multidimensionally poor, state and local government levels will reveal a completely different scenario, higher or even lower levels”, UNDP revealed.

The report identifies how people are being left behind across three key dimensions: “health, education and standard of living, comprising 10 indicators”.

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BUSINESS DAY Monday 15 July 2019 www.businessday.ng

What does Airtel Africa listing mean for investors on NSE? David Ibidapo, Israel Odubola & Segun Adams

Airtel Africa’s Profit ($mn)

A Overview

irtel Africa Plc, subsidiary of India-based Bharti Airtel Limited, is a leading provider of telecommunications and mobile money services, which is active in 14 African countries particularly in West, East and Central Africa.

The Group provides integrated suite of telecommunication solutions to its subscribers including mobile voice, data services and mobile money locally and internationally. The telco giant also offers traditional mobile voice services, with an increasing focus on data and non-voice services through the expansion of its 3G and 4G networks.

Airtel Africa also plans to roll out fixed wireless broadband solutions, B2B offerings and fibre sharing to build further content partnerships.

The Group was Africa’s second biggest mobile operator by subscriber base as at 31st December 2018. The telco has diversified presence, serving 99 million subscribers and 14 million mobile money customers across its footprints as at 31st March 2019.

Indian national, Raghunath Mandava, oversees the daily affairs of the Group as the Chief Executive Officer, and Segun Ogunsanya heads the Nigerian subsidiary.

Airtel Nigeria is headquartered at Banana Island, Ikoyi in Lagos.

Nigeria’s Telecommunications Industry Nigeria’s Telecommunications industry is structured along oligopolistic lines with the biggest three Telco’s controlling 90 percent of the mobile communications (GSM) market. In Nigeria, Airtel Africa is the third biggest operator with 45.64 million subscribers or 26 percent of the market, as of May 2019, behind MTN Nigeria (64.81m) 37 percent of market and Globacom (46.47m), 27 percent of the market.

The telecommunications sector is the largest segment of the Information and Communication sector contributing 77 percent of the sector’s Gross Domestic Product in 2018. The sub-sector improved its contribution to aggregate GDP up to 7.4 percent in 2018.

The mobile telecommunications segment has grown faster than the broader economy over the last six years at a Cumulative Annual Growth Rate (CAGR) of 2.16 percent compared to 2 percent recorded in the economy.

In 2015 the Nigerian telecommunication sector grew by 4.49 percent after a decline of 4.3 percent in the prior year.

However when Nigeria’s economy contracted by 1.58 percent, the telecommunications sector cut growth by half owing to a slowdown in the second half of 2016 which hindered the ability of operators to scale up.

A double whammy hit the sector, one from the devaluation of the Naira in 2016 which increased costs for operators and affected ability to import technology to upgrade operators and the other from weaker demand due to thinning consumer wallet which reduced household spending.

The decline continued into 2017 and

resulted in a 2.04 fall in the output of the telecommunications industry.

However in 2018, the telecommunications industry grew 5.87 times faster than the rest of the economy as telecom output grew 11.33 percent to N6.6 trillion. The performance in 2018, the best for telecommunications industry in the six-year period, was followed by a 12.18 percent growth in the first quarter of 2019 while the economy expanded by 2.01 percent.

The mobile telecommunications sector continues to benefit from Nigeria’s improving broadband penetration, increasing adoption of smart phones, and the country’s youthful and growing population.

According to a recent survey by Jumia, Nigeria’s mobile broadband penetration is forecast to rise to 55 percent of the population by 2025, with 70 percent having 3G connectivity and 17 percent having access to 4G networks.

In addition, the report states that 5G network with the 26 GHz, 38 GHz and 42 GHz spectrum bands will be rolled out by 2020.

Despite the positives which would drive growth, the sector is still bedevilled by the infrastructure gaps in the country.

Also the increasing use and availability of messaging, voice and video call applications and social media has provided an alternative to traditional SMS and calls.

The trend has intensified competition among operators forcing them to lure customers by offering data at relatively cheap rates. The sector is also confronted by exchange rate and credit challenges affecting other segment of

the real sector.

Financial Performance According to the figures stated in the Group’s prospectus (June 2019), revenue of Airtel Africa grew 5.7 percent to $3.08 billion in the year ended 31st March, 2019 from $2.91 billion in the previous corresponding period, up 6.7 percent from $2.88 billion as at 31st March, 2018.

Revenue in Nigeria ($1.106bn) contributed 35.9 percent to the Group’s top-line, with the East African region ($1.102bn) and other African nations ($888mn) accounting for 35.8 percent and 28.9 percent respectively in Airtel Africa’s revenue.

Other income of the Group rose to $26 million in the year ended 31st March 2019, representing 5.3 percent increase over $17 million reported in the previous period, and nearly quadrupled from $7 million two years earlier.

After reporting losses in two consecutive financial periods, the telecom giant moved to profit path as bottom-line accelerated to $450 million thanks to $167 million tax credit received within the period.

Airtel Africa expended $2.37 billion in the review year, with network operating expenses($558mn), access charges ($345mn) and depreciation & amortization ($573mn) accounting for 63 percent of sum spent. The telecom giant is highly leveraged given the fact that equity was negative at $998 million and $1.32 billion in the year ended 31st March 2017 and 31st March 2018 respectively. Shareholders’ equity jumped to $2.43 billion in the review period.

Road to market The anticipated initial public offering of Airtel stocks on the London and Nigeria stock exchange market finally came through on the 28th of June and 9th of July respectively as a dual listing. The listing was intended to help the second biggest Telco in Africa deleverage its balance sheet.

Upon listing on the LSE, stock price of Airtel Africa slumped steeply by 16 percent on its first day of trading, hence joining the list of worst debuting stocks in Europe.

While Airtel may have highly leveraged balance sheet compared to peers, analysts believed that a more attractive valuation multiple could have bred a better response from investors towards shares of the telecommunication firm.

Reaction of investors to the stocks of Airtel upon listing on the London stock exchange market (LSE) was anticipated to signal a likely behaviour of Nigeria’s high net worth individuals (HNI) and institutional investors towards firm’s listing on the Nigeria stock exchange market (NSE).

However, the first trading day on the NSE saw a 10 percent jump in stock price from N363 upon listing to N399.3 barely five minutes to the end of trading.

A source who pleaded anonymity told BusinessDay that a trading house bought about 100,000 units of Airtel shares upon listing.

This according to him was the reason for the jump in price, however a reversal of the gains was expected going forward to reflect the trend witnessed in London when left to be decided by market forces.

The listing if Airtel Africa finally took place last Tuesday and it emerged as the 3rd most capitalised company on the Nigeria stock exchange, behind Dangote and MTN Nigeria.

The last 3 days of trading on the NSE played out to the expectations of the Telco’s stock price. As at the end of trading on Friday, Airtel stock price closed at N323.5, 10.8 percent below its listing price.

Analysts’ in neutral mode on Airtel Africa stock The pre-eminence of negative market sentiments in the Nigeria equity market which have resulted to major Bellwethers nearing their 1 year low prices, may see investors apply brake to the purchase of Airtel stock.

“The market currently isn’t looking good and investors are cautious,” Paul Uzum a Lagos based stock broker stated.

“There is no excitement whatsoever towards Airtel’s shares, while prices may pick up slightly we expect a reversal almost immediately.”

According to him, there is no strong market demand pursuing the stock, to this end going forward the price is expected to reverse and converge with prices on the London Stock Exchange Market since it’s a dual listing.

On the LSE, Airtel Africa’s stock had shed -9.6 percent in its market value since it listed in June, closing at 71.50 GBp on Friday.

“Going by Airtel’s historical performance and the fact that their balance sheet is highly leveraged which investor’s will price into future earnings, I think Airtel is neutral,” Gbolahan Ologunro, CSL stockbrokers told BusinessDay.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.