BusinessDay 15 May 2019 by BusinessDay

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Nigerian macroeconomic outlook for new political dispensation

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g L-R: Haruna Jalo Waziri, CEO, CSCS; Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange; Kemi Adewole, CEO, Protiquette Consults; Godwin Emefiele, governor, Central Bank of Nigeria (CBN), and Michael Larbie, CEO, RMB Nigeria/regional head West Africa, at the 2019 Association of Assets Custodians of Nigeria conference themed ‘Nigeria – The Economics of the Capital Market’ partly sponsored by Rand Merchant Bank Nigeria in London.

CHARLES ROBERTSON

Global Chief Economist, Renaissance Capital

igeria’s growth forecast tends to cause as much debate as the country’s official population. But why? For a country belonging to a continent that, according to the IMF, is predicted to be home to four of the top-five fastest-growing economies in 2019, one would think that Nigeria’s growth forecast would be universally positive. Yet the IMF’s projection of c. 2 percent GDP growth in Nigeria in the coming years seems downbeat compared to high-flying Ghana’s 9 percent or Ethiopia’s 8 percent. Why is this? And why at Renaissance Capital are we more optimistic? According to our calculations, Nigeria can – and should – be capable of recording GDP growth of 7-11 percent. For this to happen, however, Nigeria must take very concrete steps to strengthen and diversify its economy away from oil. We will discuss this and some other key themes that are playing out in Nigeria and wider Africa with investors and leading companies at our upcoming 10th Annual

Tough times await travellers as US suspends visa ‘Drop Box’

Continues on page 38

Security, system overhaul among reasons for suspension – sources

OBINNA EMELIKE & IFEOMA OKEKE

he Embassy and Consulate of the United States in Nigeria has suspended the interview waiver “Drop Box” application process effec-

tive May 14, 2019, according to a notice posted on the US Embassy website seen by BusinessDay. This means that intending Nigerian travellers to the United States of America (USA) who usually take advantage of the easy renewal option of drop-box

for some classes of visas will no longer have such luxury. “All applicants in Nigeria seeking a nonimmigrant visa to the United States must apply online, and will be required to appear in-person at the US Embassy in Abuja or US Consulate

General in Lagos to submit their application for review. Applicants must appear at the location they specified when applying for the visa renewal,” the public affairs section of the US Embassy

Wednesday 15 May 2019

BUSINESS DAY

news Firms can’t escape macro woes as Q1 results reveal flat revenues, profit margins BALA AUGIE & OLUFIKAYO OWOEYE

inety-five firms have released first quar ter (Q1), 2019 results as at May 10, 2019 and the data showing slow revenue growth and flat profit margins signals that firms cannot escape what ails the wider Nigerian economy. The unpredictable macroeconomic environment means revenues are growing at a slow pace while rising operating costs are eroding profitability. Total revenue for the 95 firms increased by a mere 5.05 percent to N2.48 trillion in March 2019, from N2.36 trillion as at March 2018. Combined net profit followed the same slow growth trajectory as it rose by 4.65 percent to N379.22 billion, from N362.35 billion a year ago. Expectedly, cumulative average margins were flat at 15.73 percent, which means firms are beleaguered by operating inefficiency. Challenges bedevilling firms differ from sectors. A sector by sector analysis shows the listed banks in the country saw cumulative gross earnings grow by a mere 3.74 percent to N1.16 trillion in the period under review, as a drop in yields on short-term

government securities undermined interest income on loans and advances. However, the combined net incomejumpedby15.81percent to N260 billion as of March 2019, thanks to a reduction in impairment charges and improved efficiency or cost controls. Consumer goods firms recorded their worst results in five years as decrepit infrastructure like bad roads and gridlock at Apapa ports, energy costs due to unreliable power supply from thegrid,lowconsumerpurchasing power, and double taxation continue to undermine growth. Combined revenue fell by 1.21 percent to N340 billion in the period under review, while profit after tax fell by 14.45 percent to N30 billion. Only Nestle and Cadbury recorded margin expansion in the first quarter. While the industrial sector that includes Dangote Cement and Cement Company of Northern Nigeria saw an 18.56 percent increase in profit to N420 billion in the period under review, profit after tax fell by 15.19 percent to N70 billion. Energy and utility firms were underachievers in the first quarter as cumulative revenue increased by a mere 1.34 percent to N480 billion as at March 2019 while profit after tax reduced by 1 percent to N20 billion in the period under review.

Samuel Adewale, a Lagosbased stockbroker, said the 5 percent growth in total revenue meanssomecompaniesactuallygrewvolumesinsteadofprices and even those who raised prices only did so marginally. “This could translate into an improvement in the GDP figures when they are released next week,” he said. On the firms’ net profits that grew 4.65 percent, a slower rate than revenue, this suggests that costs either in the form of cost of sales, administrative expenses or finance cost grew during the period. According to Adewale, many companies have complained bitterly about the cost of doing business in Nigeria ranging from the cost of raw materials, the notorious Apapa gridlock, which is also reflective in their net margin which remained flat for the period. The PE ratio at a decade low of 7.14xs implies that prices of stocks relative to the earnings they are churning are very low. TheNSEASIalsodeclined8percent this year despite a relatively stable macro-economic environment and stable crude oil prices and stable exchange rate. “Admittedly, the market responded to pre-election jitters. However, it has been two months after the election and the market has not improved,” he said.

Offers fly in from investors ahead of MTN’s listing LOLADE AKINMURELE

nvestment bankers and buy-side analysts confirmed that MTN Nigeria’s much-awaited listing on the Nigerian Stock Exchange will happen this Thursday. They say offers have been flying in from investors looking to take position in the stock of what would be the secondlargest listed company in Nigeria by market capitalisation, and largest by revenue. “We are getting many requestsfrominvestorsaskingtobe kept informed of opportunities for retail clients to partake in the

listing by introduction,” a buyside analyst at a Lagos-based investmentbanktoldBusinessDay. “We assured that we will guide them accordingly before and after the process is completed Thursday,” the person who was not authorised to speak said. MTN Nigeria will be doing a listing by introduction. This means the chances of retail participation will depend onifthereareanyexistingshareholders that are willing to sell. MTN would be listing about 20.35 billion shares, at possibly an N80-90/share price range, according to the

consensus analysts’ estimates. That would value the stock at around 5 times Earnings Before Interest Tax, Depreciation and Amortisation (EBITDA). That’s almost half the frontier average, suggesting that at N90 per share, MTN will be undervalued compared to telecommunication companies in frontier markets. Analysts at Cordros Capital believe the stock is worth NGN194 per share, implying a 116-143 percent upside on the proposed listing price.

•Continues online at www.businessday.ng

NERC begins process to review electricity tariff next year ISAAC ANYAOGU

igeria’s electricity sector regulator, the Nigerian Electricity Regulatory Commission (NERC), has begun the process of implementing a review of the electricity tariff by asking electricity Distribution Companies (DisCos) to submit plans on how to improve their service. “The process will involve a review of the application of the capital expenditure

allowances in the MYTO model for compliance with Performance Improvement Plans (PIPs) to be prepared by the Distribution Companies (DisCos) and approved by the Commission,” NERC said in guidelines it released for performance improvement plans it published May 10. Under the current rules, the capital expenditure allowed for DisCos was N305 billion within five years, but this has proven unrealistic as the cost of metering alone for

customers in Nigeria would cost N299 billion, according to Sunday Oduntan, executive secretary, Association of Nigerian Electricity Distribution Companies (ANED), at a customer engagement forum in Lagos last week. So, the DisCos are unable to invest more than the N305bn in capital expenditure otherwise recovery of costs under MYTO will be impossible. The MYTO is a method-

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Nigeria’s long-standing multiple FX rate puts it in unwanted company … as window of opportunity opens for CBN Governor Emefiele LOLADE AKINMURELE

igeriaisoneofthevery few countries in the emerging and frontier world that still has multiple official exchange rates, along with Venezuela and Iran. Major oil producers, Venezuela and Iran, are two prominent and negative examples of multiple exchange rate practice, even though the former is in worse straits than Nigeria. The Venezuelan exchange

rate system offers six different rates, depending on who is buying.Butaftercreatingafalsesense of hope for Caracas, which introduced the several rates to soften the blow of a dollar crunch after oil prices hit a bottom in 2016, it has quickly backfired. The multiple rates not only worsened the dollar crunch and created anti-economic growth arbitrage opportunities, it contributed to pushing inflation to quadruple digits and deterred foreign direct inwww.businessday.ng

Analysis

vestment. The practice has also done Iran, already ailing from US sanctions, little favours. While good progress has been made in unifying the multiple rates in Nigeria which were as many as five in 2017, the elephant in the room is the Central Bank’s de facto N306 per US dollar rate which has a N54 spread compared to the more marketreflective rate of around N360.

The CBN has shrugged off the counsel of several analysts to dump the three-year-old practice which they say has stayed longer than necessary, after it helped ease the impact of a sharp decline in petrodollars. The CBN governor, Godwin Emefiele, who was nominated last week by President Muhammadu Buhari for a second five-year tenure as chief of the apex bank, has often argued that ditching the subsidised N306 rate would fan inflation

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which has stayed outside the bank’s preferred 6-9 percent band for four years. In the latest report by the National Bureau of Statistics (NBS), annual inflation accelerated by 11.25 percent in the month of March. However, the fact that state oil company, Nigerian National Petroleum Corporation (NNPC), is now the sole importer of fuel into Nigeria has been chipping away at arguments that the CBN is maintaining an artificial rate @Businessdayng

to keep retail petrol prices stable, thereby guarding against inflationary pressures. Before the oil marketers left the responsibility of importing petroleum products into the country to the NNPC, the CBN would hold special interventionsweeklywhereitsolddollars to the marketers at an artificial rate that was around 30 percent stronger than the market rate in order to keep petrol prices at N145 per litre.

•Continues online at www.businessday.ng

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NEWS

Malabu oil scam: Court adjourns hearing on arrest order on Etete, Adoke, others Innocent Odoh, Abuja

ustice Danlami Senchi has adjourned hearing to June 11, 2019, on the application brought by Duaziya Louya Etete a.k.a Dan Etete, Mohammed Bello Adoke and four others to set aside a warrant of arrest of the same court against them. A statement issued by Tony Orilade, acting head of media and publicity of the Economic and Financial Crimes Commission (EFCC), said Justice Senchi had ordered the arrest of Etete, Adoke, Ralph Wetzels, Casula Roberto, Pujato Stefeno, and Burrato Sebastiano on April 17, 2019, for not making themselves available for trial since 2017. Etete and others are facing prosecution by the EFCC for alleged fraudulent allocation of Oil Prospecting Licence, OPL 245 and OPL 214; conspiracy, money laundering to the tune of over $1.2 billion; forgery of bank documents, bribery and corruption against Malabu Oil and Gas Limited that belongs to Etete. Also standing trial are Shell Nigeria Ultra Deep (SNUD), Nigeria Agip Exploration (NAE) and their officials. Etete’s counsel, L.O Ikwegwe told the court that she had just been served with the EFCC’s counter-affidavit and would need time to respond to it. Joe Gadzama, who is representing the fifth, sixth and seventh defendants, told the court that he was in the same boat with his colleagues as he was yet to see the EFCC’s counter-affidavit and therefore would be asking for an adjournment, the statement said.

He told the court that he served the EFCC the defendant’s affidavit since April 24, 2019, accompanied with the hearing notice, adding that with the new issues introduced in the counter-affidavit, he would be filing additional processes. He therefore urged the court to make the prosecution an undertaking not to proceed with the arrest since there was a legal challenge to it, and also urged the court to put the order on hold since the matter was not heard. Faje Opasanya, representing the fourth defendant, also told the court that he was also constrained to ask for adjournment as new allegations were raised in the EFCC’s counter-affidavit. He also told the court to restrain the EFCC from carrying out the arrest order, and stated that if by the next date his clients were arrested, the essence of the application would have been defeated. Counsel to EFCC, Aliyu Yusuf reminded the court that the defendants’ applications were for stay of execution of the warrant of arrest and therefore prayed the court to reject the oral application for the stay. Justice Senchi adjourned the matter to June 11, 2019, for hearing. He noted that the oral stay of execution submission made by the defendants’ touched on the main application and ordered an accelerated hearing on the matter. He further ordered that any party that needed to file any processes must do so by June 5, 2019, and that no processes shall be accepted after the date, the statement added.

BusinessDay’s Okojie gets Metcalf Institute’s Fellowship

usinessDay’s journalist, Josephine Okojie, is among 10 journalists that have been selected to attend Metcalf Institute’s 2019 Annual Science Immersion Workshop for Journalists. Okojie and other fellows were selected from a competitive pool of applicants representing 17 nations around the globe. She will join others to attend the workshop in June to hold at the University of Rhode Island Graduate School Of Oceanography, United States, to explore ways in which climate change and other human activities affect global water supplies. “Local news has a significant influence on a community’s ability to make informed decisions about environmental issues, from planning for flood hazards to the adoption of policies to curb water pollution,” Karen Southern, communications director, Metcalf Institute, said. “In spite of the important role for local news, small to medium-sized news outlets have limited resources to support their journalists’ professional development. With that in mind, Metcalf Institute prioritised the selection of fellows from local and regional news organisations for the 2019 Annual Workshop,” Southern said. She noted that the selection of fellows for the institution’s annual programme is intended to emphasise the importance

of consistent, high-quality reporting on local environmental issues. Fellows will gain handson experience and insights from leading scientists, natural resource managers, and private and non-profit sector practitioners who are working to understand and project the interactions of climate change and water resources and investigating effective ways to communicate these challenges. They will also discuss links between water and climate systems, discover the value of long-term data collection, and explore techniques for measuring and addressing water quality and quantity problems that affect communities and aquatic ecosystems among others.

L-R: Hakeem Muri-Okunola, head of service, Lagos State; Akinwunmi Ambode, governor; Paul Kalejaiye, chairman/CEO, Lagos Ferry Services, and Ade Akinsanya, commissioner for works and infrastructure, at the commissioning of the newly built Bariga Waterfront Jetty and Ilaje Road, Bariga, Lagos, yesterday. Pic by Pius Okeosisi.

Cheaper Asian phones lift Nigeria’s smartphone penetration to 18% in 2018 ...Nigeria’s mobile subscribers projected to hit 200m by 2025 OLUWASEGUN OLAKOYENIKAN

igh inflow of cheaper mobile phones from Asian countries into Nigeria has been identified as a major driver of increased smartphone penetration in Africa’s largest economy. As at year-end 2018, Nigeria recorded more than 36 million smartphone users, representing a penetration of 18.37 percent, while the average price of smartphones in the country sustained its downward trend to $95 compared with $117 in 2016 and $216 in 2014, according to a new report published by Jumia, Nigeria’s largest online retailer. “The major driver of this trend is attributed to the influx of Asian brands specifically targeted for the Nigerian market,” Jumia said. “While the number of smartphone users might have increased yearon-year, its penetration is still very

Although data obtained from the National Bureau of Statistics (NBS) show that Nigeria imports most of its goods from Europe, China remained the country’s biggest import trading partner. China accounted for 25.1 percent of the total value of goods imported into the country in the last three months of 2018. The rising number of Asian smartphone brands in Nigeria came on the back of increased patronage owing to the continent’s Africa-specific strategy of introducing lower price point smartphones into the Nigerian market, according to the e-commerce firm. Some 700 million new mobile subscribers from various countries across the world are expected to join existing users to push the total number of global mobile subscribers to 6 billion by 2025. Nigeria is forecast to contribute 4 percent of the estimated 700 million new global mobile sub-

scribers, translating to 28 million new mobile subscribers projected to emerge from Nigeria between 2019 and 2025. This would bring the population of Nigeria’s mobile subscribers to 200 million. This makes Nigeria “the only country in Africa marked with a significant contribution to increasing mobile penetration in the world”, the report said. According to the report, Fero, Samsung, Nokia, Infinix and Tecno remained customers’ favourites having emerged the top-selling mobile brands on the retailer’s platform with Infinix sustaining its best-selling position among peers. As a result of the growth in internet connectivity buoyed by the availability of affordable smartphones, the number of active social media users rose from 17 million in 2017 to 24 million at the end of 2018. This represents a 12 percent penetration of the country’s population.

How businesses, residents pay price for Lagos’ bad roads JOSHUA BASSEY

or almost two days (Monday to Tuesday), vehicular movement along Oke Afa-Isolo road in Ejigbo area of Lagos State was at a standstill, as a fuel tanker coming from the NNPC Ejigbo depot, upturned near the Oke-Afa Bridge. The tanker, marked LSD 663 XB, was said to have been ascending the bridge when it fell at the bad portion of the road inward Pako Bus Stop at about 5:14pm on Monday, April 13. Traffic flow abruptly came to a halt, as fire fighters reportedly arrived the scene, while the content of the fell tanker was being transloaded into another tanker, forcing commuters and motorists to stay still till late in the night on the road. www.businessday.ng

insignificant.” Internet connectivity is on the rise in Africa’s most populous nation where a majority of its internet users depend on smartphones to access social media networks. Increased smartphone penetration in Nigeria means better potentials for the country in the e-commerce space, a development that could further accelerate growth in its economy, having contributed 7.4 percent to its total GDP in 2018. Nigeria recorded over 172 million mobile subscribers in 2018, accounting for a penetration rate of 87 percent of its population. When compared to 162 million subscribers recorded in the previous year, the figure represents a 6.4 percent growth, according to the report. Out of these mobile users, over 112 million Nigerians had internet access in 2018, indicating 14.32 percent increase from a year earlier and 56 percent of Nigeria’s total population.

The incident is one of several such recorded in Lagos, in the last one year, as a result of deplorable conditions of many of the city’s major and inner roads. A couple of months ago, precisely October 2018, a similar incident occurred at Barracks Bus Stop, on the abandoned Lagos-Badagry Expressway. A loaded fuel tanker upturned while manoeuvring through one of the worst portions of the expressway, and spilled its content, before exploding into flames. When the fire and hullabaloo that followed finally settled, two lives, seven private cars, including the fuel tanker had been consumed. A fully loaded tanker carries 33,000 litres of fuel and mostly paid for at depot at the price of N117 per litre. The losses in human and material resources had to be recorded

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before the government, few days after, attempted to fill the collapsed portion that had been left unattended for several months, with dire traffic consequences on the Lagos-Badagry road. The latest incident on Monday and Tuesday followed a similar pattern. The Oke Afa-Isolo road, linking Jakande Estate gate and Ejigbo LCDA secretariat, had been in a state of disrepair since last year. On Sunday, May 12, BusinessDay, in a story titled “Bad roads: Communities await action on Ambode’s directive” alerted to tragic nature of the road. The story was an attempt to draw the attention of the government to the fact that more than one month after Governor Akinwunmi Ambode issued a directive in April, to the Lagos State Public Works Corpo@Businessdayng

ration (LSPWC) to fill potholes on identified 87 roads across the state, including the Oke Afa–Isolo road, little or nothing had been done. The story had specifically identified the portion near Oke-Afa Bridge inward Pako Bus Stop, as requiring an urgent attention. A day after the story was published, Monday, April 13, a tanker fell. The following morning, Tuesday, April 14, a 14-seater bus manoeuvring through the tanker caught fire and was burnt beyond recognition with four persons escaping death by the whiskers. According to a witness, the commercial bus (Danfo) carrying 14 passengers was ascending the bridge at Oke Afa at about 6:30am. Four occupants of the bus injured were rushed to the Isolo General Hospital for treatment.

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news FG rallies World Bank, AfDB, AFD, EIB for construction of 9,000 rural roads RAZAQ AYINLA

s part of efforts to curb rural urban drift due to lack of critical infrastructure in the rural areas, coupled with avoidable post-harvest loss as a result of necessary amenities such as roads, the World Bank has mobilised four other international agencies to construct and repair 9,000 rural roads across the states of Nigeria. The high level partnership brought an eclectic approach involving the four authorities, namely, World Bank, Africa Development Bank (AfDB), French Development Agency (AFD) and European Investment Bank (EIB) ready to offer to the Federal Republic of Nigeria on the construction and reconstruction of 9,000 rural roads in the country for ease of doing farming, agribusiness and mobility of farm produce from farmland to market. This arrangement, according to an official statement, will ensure that markets along the corridors of the roads are rehabilitated or out rightly reconstructed to absorb the resultant farm produce glut for improved access and mobility by million of farmers in the country, including small holder farmers and large scale farmers. Eighteen states that have signed up for the road construc-

tion arrangement would rehabilitate or construct average of 500km roads, as participants in the project where each state is expected to contribute counterpart fund of three percent, to take advantage of the multilateral funding, the National Coordinator of the Rural Access and Mobility Project (RAMP), Ubandoma Ularamu, disclosed in Calabar, Cross River State capital at the close of a 5-day training workshop for Development Communication Officers of the states. Ularamu, who lauded the Federal Government for bringing up the programme and approving relevant training, said, “communication is not only key but central to giving visibility to the project before, during and even after its life span to encourage additional financing after expiration of the initial project lifecycle.” National coordinator, who is a director in the Federal Ministry of Agriculture and Natural Resources, advised contractors handing the rehabilitation and construction of rural roads across the country to observe the local content policy by not only engaging workers from project sites, but ensuring sourcing materials locally. He said, “One of the strategies we are impressing on contractors to beat the issues of kidnapping

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of contractors is engagement of unskilled workers within the communities and by keeping faith with the local content policy of government, by sourcing unskilled and semi-skilled workers from among the indigenous people around project sites”. Salamatu Faith, national communication specialist from the Federal Project Monitoring Unit, urged the participants to avail themselves of the magnanimity of the sponsors, which extends the training to all Development Communication and Management Information System Officers. She advised Development Communication Officers to “be creative, proactive and always think out of the box to solve issues around the project,” just as she stressed that “advocacy and proper communication can solve knotty issues like none-release of counterpart fund, even after approval by some governors”. Delivering a paper on strategic communication for developmental project, a Professor of Development Communication and Gender Studies, Abigail Ogwezzy-Ndisika, emphasised the engagement of professional lobbyists, ensure proper social mobilisation and effective programme communication to create what she termed a buy-in for the project.

Edo, Delta communities threaten to shutdown Oziengbe South Field operations Francis Sadhere, Warri

eople of Kolokolo, Ikara and Ajatiton of Edo and Delta communities on Monday threatened to shut down operations of Sahara Enageed Resource Limited, operator of Oziengbe South Field Operations, over alleged marginalisation. The communities in a protest held at the Benin River said they were giving the oil servicing firm seven days ultimatum within which to heed to their requests or face complete shutdown. They are demanding among other things: direct employment for indigenes from the three aggrieved communities; skill acquisition and empowerment for the youth and women. Other demands are: regularisation of the scholarship slots for the indigenes; contracts award to the indigenes as well as signing the GMoU between the communities and Sahara Enageed among others. While Kolokolo falls under Ikpoba Okha Local Government Area of Edo, Ikara and Ajatiton are in Warri North Local Government Area of Delta. The protesters, mostly

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youth, men and women from the riverine communities, held placards with different inscription like: “Ikara is host Community,” “Sahara# We demand a properly negotiated MoU,” “Respect human rights,” “Give peace a chance,” “Sahara Enageed is breaking the laws of Nigeria,” among others. Sunny Etchie, youth president-general of Kolokolo Community who spoke on behalf of the people, said Sahara Enageed’s management was marginalising the communities. He said Kolokolo Community was one of the host communities to Oziengbe South Field Operation in Ikpoba Okha Local Government Area. He said the field operations was formerly operated by the Nigerian Petroleum Development Company (NPDC) until its assets and liabilities were handed over to Sahara Enageed Resource Limited in 2015. “Aside the rice and goat we get from the Sahara Enageed Resource as end of the year gift, the only feasible project it has done for us is the wooden bridge crossing Kolokolo 1 to Kolokolo 2. “Kolokolo Community en-

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joyed scholarships, capital projects and other entitlements when the oil field was operated by the NPDC. “To worsen matter, the management of Sahara Enageed now defines boundary for host communities within and around the area,” he said. Oloma Eyewuoma, Ajatiton Community leader who also spoke during the protest, said none of the community indigene was engaged in the ongoing drilling operation in Ajatiton. A 92-year-old woman from Kolokolo community, Awawu Asokwaumi, described the attitude of the company as oppression. “The company refused to provide road for us, we pay barges to move our goods, this is oppression,” she said. Meanwhile, counsel to Kolokolo community, Casely Omon-Irabor, said he would institute legal action against the company to ensure the communities get what rightly belongs to them. Effort to reach the management of Sahara Enageed for comment was unsuccessful as security men attached to the company denied newsmen access.

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“Dangote still de find money”: Misunderstanding entrepreneurship Small Business handbook

Emeka Osuji

here is now so much interest in entrepreneurship that we need to continually educate our people and enhance their chances of succeeding in their efforts to create and innovate their way out of poverty and lack. Entrepreneurship is trending for so many reasons. For starters, the economy has not recorded any meaningful expansion over the past several years. At best, its growth has been unstable. There even appears to be a possibility that the growth projections for the current year may be unattainable. Already, there are expectations of much slower growth in the global economy than projected, as the trade war between America and China take root. The leading global financial institutions, particularly the IMF, have voiced out their southward expectation of global growth numbers. Specifically, Nigeria’s 2019 economic growth projections have even been downgraded by these institutions, for many reasons, signposted by the poor outturn of events in the oil sector. This declining growth trend has negatively impacted several segments of the economy leading to company failures, factory closures, more job losses and rising crime waves. The combined effect of these a stagnant economy that stagnates the

hopes of the citizens and regressed their economic well-being. In the final analysis, there are not enough jobs to go round those who need them, many of whom are not equipped with market-oriented competencies. So, more people are trying their hands on things that can keep them out of the job market, even if the things they do are not of any enduring interest to them – they are not passionate about what they do, being motivated purely by the need to sustain themselves. On the positive side, the changing times have created opportunities in the digital space for new business ideas and services to be floated. Many young people are therefore taking their chances in these areas. In other words, entrepreneurship is in vogue and should be overtly promoted. One way of doing that is to continually educate our youth on the real meaning and forces behind successful entrepreneurship to increase their chances of success. We had said in an earlier piece that entrepreneurs put ideas ahead of capital. By this we mean that a good business idea will attract the capital needed to realize it. Therefore, a sound business proposition is more important than the search for capital. This leads us to our next canon: the desire to make money and become famous. It is to be noted that desire to become financially rich does not necessarily led to successful entrepreneurship. It may lead to a business being formed and some money being made. However, such business and the money so made may fizzle out once this objective of making money is achieved. It is rather the intense or passionate desire to create a product of provide a service that leads to enduring enterprise. This what we

call passion. While our passion may not necessarily be or lead to a great money making business, the staying power that is behind all successful entrepreneurs come from passion. You have to love what you do to continue to do it, especially when the unexpected happen or even when success comes. There is always a need to recharge our energies and restore our strength, as things happen in the course of business. Passion is the tonic that keeps us going in difficult times. Now let’s come to the subject matter of this piece – “Dangote still de find money” - a line from the music of a . Some of our youth have been using what I consider a misunderstanding of the spirit behind the Dangote success to promote the wrong idea of entrepreneurship. Many of the youth are now under the wrong impression that Dangote’s continued expansion and venturing into different economic activities is driven by his pursuit of money and more money. This, in my view, is absolutely wrong. This wrong notion has unfortunately gained prominence among young people, with the release of a musical video that says something to the effect that Dangote is building more businesses because he is looking for more money. That being the case, as the musician thinks, then who is anyone of us to stop pursuing money, since we don’t even have anything compared to Dangote. To that extent, the musicians encourages youths to look for money, which is positive. Granted, there is nothing wrong in urging young people to go out there to make money, it is wrong to give the impression that what drives Dangote’s expansion is the love of money. This may shift our focus from the real drivers of the company’s growth – passion

‘

The raw hunt for money puts it on the lookout for “money hunters”. No animal stands while hunters approach. They flee as the Biblical Joseph, pursued by Portifer’s wife

to create and innovate, which is more enduring that simple hunger for cash. For a Dangote, the marginal utility of money must be very low. Something else must be driving his expansion. The youth must find it if they want to use, as they ought to, him as their beacon of success. What drives Dangote into new ventures must be something higher than additional cash that brings little or no utility. It must be his passion to create and innovate – the effervescent urge to bring to life a new product or service idea. Surely, money will follow such an idea, if it succeeds, but it is not the driving force. Dangote has made the Forbs list of the world’s wealthiest men. He is number 136 in the world and number one in Africa. His desire for more money or marginal utility for money has declined significantly that only his passion to explore new areas can sustain his interest in building new businesses. It is therefore important that young people understand that if money is the key driver of our enterprise, we may lose steam and focus when money comes. The raw hunt for money puts it on the lookout for “money hunters”. No animal stands while hunters approach. They flee as the Biblical Joseph, pursued by Portifer’s wife. This is why, those who look for money for its own sake hardly find it while those who seek to change lives through service and product more money than they could ever need. Find something your passion; think deeply around it; take the risk and work hard on your dream. Money is just a sure but an added frill. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

Universal health coverage in Nigeria: What else apart from funding is required? Mayowa Amoo

hen the citizens of a country are healthy, it shows in the growth and wealth of that nation. Universal Health Coverage (UHC) is critical to wealth creation, social equity and social inclusion. In Nigeria, as elsewhere, there are building blocks for achieving UHC other than financing only and these include adequate human resources and adequate facilities that are fully provided with essential drugs and equipment. This piece in no particular order addresses additional funding options, governance and people & infrastructure dimensions of achieving UHC in our country. The National Health Insurance Scheme (NHIS) commenced operations officially in 2005. It is generally believed that ongoing review of the enabling legislation of NHIS to make contributions compulsory rather than optional will cause national coverage to increase and hence enlarge the pool of health insurance funds. All true but it will take time and how much will be left after payments for services rendered to beneficiaries. Given the level of penetration already achieved in telecommunications, is it impossible to levy an amount of NGN100 per month per capita for every active line in Nigeria? At 80% penetration, that translates to about US$533 million per annum. (One of the mobile network operators offers health cover for a prepaid weekly fee of NGN250 that gives access to any of 6,000 health facilities in Nigeria twice

a month and maximum of seven times a year). This amount could be dedicated to retooling Primary Health Care centres (PHCs) across the country. If the taxation of mobile use is not attractive, then it may be time to consider a sugar tax on sugary drinks. Alternative funding sources are important because over the coming years, Nigeria due to its improving economic performance would become ineligible for a range of external health financing grants. The minimum 1% of Consolidated Revenue Fund being dedicated to Basic Health Care Provision Fund (BHCPF) is a very positive development that brings us closer to full implementation of the 2014 National Health Act, which itself empowers government to partner with the private sector for implementation. As a general principle, government and its agencies should focus on policy making, regulation and enforcement. All citizen facing and fund collection/management responsibilities should be handled by the private sector on behalf of government. All parties win – government focuses on what it does best, it earns steady, secure and transparent income from outsourcing arrangement (a very simple PPP type arrangement) while the private sector generates employment and provides prompt service to the public. On policy implementation and governance, this author is of the view that the primary responsibilities of health maintenance at the primary care level need to be in the first instance, handled by the Federal Government – it is at that level where we have the most need, most frequently and by the majority of our people. Inadequate attention at that level is what causes national health statistics to be very poor. Post retooling of PHCs, given reasonable

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guaranteed cash flows from private or public sector contributors, is it then impossible to sell down ownership of the PHCs to communities of healthcare professionals led by medical doctors resident in the PHC areas? Let doctors own the PHCs and maintain them under strict oversight of the Federal Government through the National Primary Health Care Development Agency (NPHCDA). The result will be job security for doctors and sustainable medical service provision. What purpose does it serve decentralising crucial health functions to the weakest tier of government that covers areas where almost 70% of our people (who have little means) live? Still on governance, do we need circa fifty (50) HMOs in Nigeria? Last year, all except one of the HMOs did not meet full accreditation criteria set by NHIS. Fewer, bigger, HMOs will allow for scale, ease of monitoring by regulators and will provide better service. Going even further, is it impossible to extend the role of pension fund custodians and administrators to offer separately, custody and administration of medical benefits? Reforms that build on existing structures or institutions that already work are more likely to succeed. With respect to the Basic Health Care Provision Fund, why for instance does the Ministerial Fund Oversight Committee (MFOC) which is solely appointed and constituted by the Health Minister have responsibility for emergency medical treatment for all Nigerians via ambulance services and designated emergency care facilities? How does a committee based in the Ministry of Health in Abuja respond swiftly to an accident that happens in Bama for instance? What we need is private businesses to create regional and/or national ambulance and emergency services networked

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to PHCs and secondary and tertiary health care facilities across the country through seamless information and communication technologies. Payments to these emergency services companies will be from either the HMOs or NHIS or even both. It is time we had an Independent Government Ethics and Accountability Office that would a-priori test laws, policies, rules and regulations for financial and organisational efficiency and effectiveness before implementation. For instance, why does NHIS receive public sector contributions while also being a regulator? What is medical infrastructure without people to man and run it? Medical and allied personnel (including teachers) need to be urgently classified, protected and remunerated tax free as “National Callings.” Women professionals will have super priority. Such action will motivate our best medical professionals mainly doctors to stay in Nigeria. One of the least cost methods of improving our health system is preventive healthcare anchored on public health education, access to and consumption of clean water, immunisation and maintenance of a clean environment especially devoid of open defecation. Proper implementation of preventive strategies can eradicate deadly communicable and non communicable diseases. In that regard, we need to create employment and bring back health and sanitation officers. Let us be known and respected globally for a great, functional health care system anchored on mass health education and sustainable universal coverage. Let’s get to work. As always, yes we can do this! Amoo is an investment banker based in Lagos

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Wednesday 15 May 2019

BUSINESS DAY

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The journey

Character Matters with Daps

Dapo Akande

o borrow a phrase from Pastor J.T Kalejaiye, “you must pass through to breakthrough. And to further reiterate what I said in an earlier message, success is the entire journey and not just the end point. You don’t arrive at success but you “become” successful. It’s the victorious culmination of all the experiences you garner along the way. King David, the greatest king Israel ever had and a progenitor of Jesus Christ was anointed three different times over some decades before he eventually ascended the throne of Judah and then that of a united Israel. He passed through the crucible of persecution from King Saul for no just reason. Joseph, the enigmatic dreamer and natural born leader who God so favoured had been thrown into a pit, enslaved and unfairly imprisoned before eventually taking his long ordained position as the Prime Minister of a foreign land, Egypt. The most powerful nation on earth at the time. Moses grew up in the palace of his enemies as a bona fide member of the royal household, learning along the way all about their customs, strengths and weaknesses only to later sojourn in the wilderness for forty years; all the while being prepared by God for the herculean task ahead of delivering the Israelites from the

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mighty Pharaoh. Paul wasted many years in the wrong line of business, persecuting God’s people instead of winning souls for the same God. Even Nebucadnezzer, though he acknowledged the brilliance of Daniel and his fellow Hebrew boys, knew they still needed a year or two of tutelage before meeting the mark to serve as his advisors. All these illustrious men of God paid their dues. They passed through the often painful learning curve to attain greatness. Samson on the other hand, born with superhuman strength that he didn’t have to work for, where did it get him? In terms of anointing he had skipped all the bus stops between A and Z (much like many of our youths nowadays who want to breakthrough overnight) and made no attempt to learn of anything in between which could have adequately prepared him for his divine assignment. His tragic end is legendary. A very apt biblical verse to buttress this is Proverbs 28:20 which says: “A faithful person will be richly blessed but one eager to get rich will not go unpunished.” This may sound a little cryptic but success actually has as much to do with our failures as it does with the things we get right. That’s why Dale Turner said, “Some of the best lessons we ever learn are learned from past mistakes. The error of the past is the wisdom and success of the future.” If you still don’t believe me then ask Thomas Edison who after failing for the 999th time didn’t regard it as failure but was grateful he had discovered 999 ways of how not to get a light bulb to work. This wasn’t the end for him. Far from it. The failed attempts only took him closer to his breakthrough. Hence why the Bible itself says, “ALL things shall work together for your good.” This includes the disappoint-

ments, the losses, the failures, the highs and the lows, everything. But if you are wise enough to learn the appropriate lessons from all of these, which Samson failed to do; with God as your guide and as He aligns you to His will, success is your sure heritage. It is said that out of every disappointment there is a latent breakthrough. The bible puts it like this in Proverbs 25:4a where it says, “remove the dross from the silver and a silversmith can produce a vessel.” Metaphorically this simply means from a heap of apparent garbage lies a precious diamond waiting to be revealed. Some years ago I asked my younger brother to come and stay with my family and I, as he was going through a rather rough patch. This was after I had a heart to heart with a good friend of mine, who said to me, “Dapo, your brother needs you at this time, ask him to come and stay with you for a while.” Thank God I listened. After asking my brother to come and stay, I went on my knees and asked God to make his stay with us a blessing to him and a blessing to us too. Me especially, as I was at a crossroad in my life where I knew in my spirit that I wasn’t doing what I had been created to do. To cut a long story short, his stay was a godsend as it berthed the idea for my initiative, M.I.N.D.S, though it was my wife who actually gave me the name. I had already been working on propagating my ideas on manners, integrity, discipline and success when my wife pointed out that all I needed was an “N” to form M.I.N.D.S and that’s how the acronym came into being. It couldn’t have been more appropriate as the critical thread that ties all my writings together and is also the desired goal of my initiative, to positively influence our collective mindset as a people. God in His divine manner used my brother to help me truly discover myself and my

‘

Good Success emanates from discovering who you are and your very essence in life; the essence of life itself

essence. God spoke to me through my brother as he recognised my passions, my strengths and my skills. Some of which, I must admit, I never consciously knew I had. All of a sudden I found myself excited, energised and driven by the sense of freedom that comes from knowing I’m finally taking those steps that will align me to God’s plans for me. The specific assignment my DNA has been wired for. Feeling blessed I found myself at a place where I could intuitively operate at my best. A wise man once said: “There’s something God wants done that makes your existence necessary.” I ploughed in the field of retail for 21 years in pursuit of Good Success but somehow, through God’s providence I’ve eventually found myself at my place of promise and here I am; teaching the younger generation in particular about the place of character and the role each of us must play if we truly desire to transform this society; highlighting qualities I believe will give our youths the right perspective on life; values that can only but benefit society and benefit them too, as the ultimate beneficiaries of a society that works for all. This is a concept otherwise known as the common good. Going further still to point out how the pursuit of the common good forms an integral part of fulfilling one’s purpose. This is Good Success. Good Success emanates from discovering who you are and your very essence in life; the essence of life itself (which is bigger than you) and the part you have been created to play in it. Note: The rest of this article continues in the online edition of Business Day @https:// businessday.ng Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Entrepreneurship education the Covenant University way: Lessons for other Nigerian universities Adams Adeiza

rom the entrance gate to lecture halls, to hostel rooms, to cafeteria, to the new Hebron Startup Lab - even the walk way, everything at Covenant University (CU) - the best university in West Africa - is deliberately designed to inspire, educate and propel students towards entrepreneurship. So, it’s no surprise that such high value startups as PiggyVest, ThriveAgric, KoraPay, PayStack, Wilson Lemonade and more than 100 others have come out of this high-energy campus, over just a few years. And when this university decided to be selfless and share their methodologies, nothing would stop me from grabbing the opportunity, not even the discomfort of spending significant part of my personal savings. The Covenant University’s entrepreneurship education methodology is actually simple, yet highly effective. It’s designed around the idea that if you can put in place a supportive ecosystem for development of entrepreneuriallyminded students, you’d reap a reward like having campus-originated startups like PayStack raising US$8million form foreign institutional investors like Visa, Tencent and Stripe, or PiggyVest which raises a Series A Round Funding of more than $1.1million from local Nigerian Investors. The CU’s entrepreneurship ecosystem has two major components - talents development and incentives. But beside those, there is this corporate philosophy exemplified by the Chancellor himself, Dr David Oyedepo and all the senior management team that drives entrepreneurship: they dream, speak and do entrepreneurship.

They have this philosophy that their students must be so molded that they don’t go back to their parents for anything after graduation. At the heart of CU’s curriculum are development of entrepreneurial mindset and great attitude in students. They don’t necessarily want everyone to be business owners but they do want to make sure that those who would rather work for others are job-ready and that they possess the attitudes that not only attract high-quality jobs, but also ones that keep them in the job when they do get one. This is one of the reasons they introduced CU Developer Circle, one of the most thriving in the country, where students acquire high premium digital skills that help them unlock Silicon Valley-like jobs while in school. This is also the driving philosophy behind their popular TTG (Towards a Total Graduate) program, where students are mandated to spend few extra weeks immediately after graduation learning critical attitudes, resume development, how to ace an interview, work ethics, being a productive worker, making a difference in the community and so on. Back to the two components of CU’s entrepreneurship ecosystem, they have a practical approach to entrepreneurial talent development. First, most of their entrepreneurship faculties are practicing entrepreneurs. Most are into consulting, monetizing their knowledge and skills by building a business around such. In this way, they understand what it takes to start, manage and scale a business. They understand the mechanics of identifying problems, building solutions, raising funds, discovering a market, managing people and scaling a proven concept. At CU, teaching entrepreneurship is more like saying: ‘you can give what you have’. With this, entrepreneurship is not necessarily taught, it’s inspired by people who are travelling the same road. Second, students ‘Get

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Out of the Building’ a lot, to try their hands on reallife businesses and projects. Third, CU draws on it robust network of successful alumni for regular Speaker Event to inspire, and as mentors for their students. And lastly, they have high-integrity system for tracking feedbacks and reviewing their curriculum and delivery. On the incentive side, several supporting infrastructures are on ground for both students and faculties to think and act entrepreneurially: free high-speed wifi, a startup lab, regular rewarddriven business model competition, institutional facilitation of access to markets and finance as well as sponsorship to Accelerator programs for startups looking to scale. By and large, i believe that most things in life are guided by laws. Like the law of gravity in science (whatever is thrown up will come down), there are specific laws, adherence to which leads to better outcomes, for entrepreneurship education. Outcomes at CU have shown that these laws include top leadership’s commitment, practical/experiential approach to talent development and provision of reasonable incentives in form of infrastructural supports for On-Campus enterprise creation. Do other universities in Nigeria have the right entrepreneurship ecosystem at the moment? The answer is, not yet. Can they ever get there? Certainly, if not beyond. But they must start as soon as today. Someone within the university, not necessarily the VC or the Dean of College of Business, but anybody at all who is passionate about entrepreneurship needs to champion the course. This must be an individual who is ready to unlearn, learn and relearn the right way to teach entrepreneurship. He or she must be an individual who would say that‘my students’ future is too important to wait until our ecosys-

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tem is right’ and then make a firm commitment to use whatever is available, starting wherever possible to improve things. At the Dangote Business School where I currently coordinate all Postgraduate Entrepreneurship Programs as well as MSMEs activities, I see myself as this kind of Entrepreneurship Champion. Even before travelling down to learn about CU’s system, I have embarked on some initiatives targeted at making entrepreneurship education practical and experiential. Our lectures have been scaled down from 2hours to only 1 hour and the other hour is for in-class interaction with practicing entrepreneurs or development of communication skills in our students. Once in a month, our students go out on field visits to enterprising organizations to network and learn firsthand what works and what doesn’t work. On day one, our students are assigned to mentors, a practicing entrepreneur who has achieved a measure of success in his/ her venture. And lastly (for now), our students now begin their internship much earlier so that they have ample opportunity to engage and learn from industry people. To conclude, I strongly believe that with active collaboration of stakeholders – top management of the university, faculties, alumni and privatesector players – public universities in Nigeria can produce students who will build Unicorns (startups with more than $1b valuation). More importantly, I believe that with the right supports and vibrant entrepreneurship ecosystems, Nigerian universities generally can produce students who will change the narratives of the country and make a dent in the universe. Yes, They Can! Dr Adeiza is of the Dangote Business School, Bayero University, Kano. @A1AAdams

Wednesday 15 May 2019

BUSINESS DAY

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

Multidimensional solution to the security challenges of the North and Nigeria

ll parties must support and work towards multidimensional and holistic solutions to the security challenges of the North, especially, and the rest of Nigeria rather than a focus on crackdowns. BusinessDay supports the call on Nigeria by the 73rd president of the United Nations General Assembly (UNGA) to do a comprehensive assessment of the situation and the solutions. Tackling the security issues in the North is a national emergency that requires focused attention from all stakeholders. President Muhammadu Buhari gave marching orders to the security chiefs on May 9 to ensure that Nigerians can sleep following months of growing insecurity. The presidential order decried the vulnerability in the land. However, the Chief of Naval Staff seemed to contradict the presidential concern when he claimed a reduction in kidnapping and banditry contrary to received wisdom of the populace. The presidential order and similar short-term measures would not suffice. Nigeria needs a roots and branch approach to the challenge that takes in all the issues. The comprehensive plan

would serve the nation better. UNGA president Maria Fernanda Espinosa Garces drew attention to the nexus between the crisis in the North and the effects of climate change in the Lake Chad Basin. She stated, “In this very region, the impact manifested in the decline of Lake Chad Basin and its cascading effects on the environment, on the insecurity and violence, displacement of refugees are all interlinked”. She made the remarks during meetings with Foreign Affairs minister Geoffrey Onyeama and President Muhammadu Buhari. President Buhari and his foreign affairs minister used the opportunity of the UNGA president’s visit to speak of the financial challenges of managing the security situation. Nigeria believes one leg of the holistic solution is to re-charge the Lake Chad Basin with water. Officials say Lake Chad has shrunk by 90 percent and displaced about 30 million people. Nigeria estimates it would cost US$50b to refill the lake using inter-basin water transfer from River Congo. Nigeria also sought financial support to manage our growing numbers of citizens in internally displaced persons (IDP) camps. Many issues arise from the breakdown of security in the North and in other parts of Nigeria. Tackling it must take note of the need

for development, inclusion and justice. The issues include firstly tackling the erosion of social order and norms manifested in terrorism, banditry. The unwillingness of security agencies to bring to book perpetrators of the crimes against communities has emboldened them so that North East and North West Nigeria now appear like lawless territories. Governors in the NorthWest and North East have cried out and complained of helplessness in the face of orchestrated violence and impunity. The North battles with a refugee crisis growing in intensity and proportion as the violence continues. There is the matter of education at the foundation of the crisis. Boko Haram, the instigator of the crisis, claims to fight against Western education but are at home utilising weapons and tools developed through the application of knowledge from western culture. Governments and citizens of the North must make up their mind on the place of education in their lives and worldview. They should then get practical by improving both access and quality of education in the region. Healthcare remains a challenge. Nigeria needs to improve both access and quality of healthcare in the North. It is even more so now with the destruction of various facilities

and the movement of people across towns and villages. The economic development of the North must be a top burner item. The violence has put agriculture under severe pressure. Farmers are afraid to go to their farms because of the marauders everywhere. The effects of the abandonment of the farms are manifesting and would get worse in a bit. Various relief measures, grants and aid to the North need activation to enable the delivery to the people. Then there is the matter of consequence management and justice. The violence exacerbated mostly because of insincere and indifferent justice administration. Officials pampered violators of the moral and criminal code instead of dealing promptly with them and throwing the book at them. Nigeria freed Boko Haram criminals and then offered them jobs in the security services, weakening the morale of fighting men. Enough of all that now. All arms of government should work collaboratively to ensure that the country begins the process of identifying and administering multidimensional solutions to the security challenges of the North. It is a sure way to restore sanity, justice and life to a significant portion of Nigeria.

Bashir Ibrahim Hassan

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Wednesday 15 May 2019

BUSINESS DAY

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Palm oil import from Malaysia rises 57% in Q1 despite increased production Josephine Okojie

espite increase in local palm oil production, Nigeria’s import from global top producer – Malaysia - rose by 57 percent in first quarter 2019, data from Malaysian Palm oil Council (MPOC) shows. O n a year-on-year basis, Nigeria’s crude palm oil (CPO) import from Malaysia increased to 112,480 metric tons (MT) in the first three months of this year from 47,974MT in the corresponding period in 2018. Experts say the country’s crude palm oil is less competitive to the imported ones owing to the high cost of production, infrastructural gaps, and high logistic cost among others. According to them, this makes local manufacturers who use CPO as raw materials for production resort to importing the product rather than patronising local producers. This is evident in the first quarter financial statement of Okomu Oil– Nigeria’s second-largest palm oil producer. The company reported its weakest first-quarter performance since 2014. The poor performance was due to weaker palm oil prices

and consumer demand as well as surge in lower priced CPO into the country. Okomu’s first-quarter financial statement shows that revenue declined by 42.5 percent to N4.2 billion in Q1 2019 from N7.3 billion in same period in 2018. Similarly, profit after tax declined sharply by 71 percent to N1 billion in q1 2019 from N3.5

Ekiti growers, saw millers call for tree planting intensification Akinremi Feyisipo, Ado-Ekiti

kiti State Tree Growers Association, Saw Millers and other stakeholders in the timber and wood i n d u s t r y hav e ca l l e d f o r t h e intensification of tree planting in the country to increase Nigeria’s forest cover, forestall deforestation and desert encroachment. Adio Afolayan, commissioner for Ministry of Local Government and Community Development gave the charge while playing host to the Association of Tree Growers, Ekiti State Chapter in his office in AdoEkiti recently. The commissioner who is also the vice-chairman of the association assured them of the state government’s support and readiness to accommodate genuine investors in tree processing in order to add value to their produce and also boost the internally generated revenue. He pleaded for the support of the present administration in order to deliver the dividends of democracy to all and sundry. In his own remarks, Ayoola Owolabi, permanent secretary of the Ministry, disclosed that one of the discussions at the retreat organised for permanent

secretary, Plantation Owners Forum of Nigeria (POFON), said in a statement. Since losing its position as one of the world’s largest palm oil producers, Nigeria is yet to recover and take its proper place in the comity of crude palm oil producing nations owing to the discovery of oil, which changed the country’s palm oil narrative of the 60s.

‘Castor farming can reduce unemployment, boost economy by 50%’

s e c re t a r i e s a n d t o p - r a n k i n g government functionaries recently in the state centred on growing the agriculture sector to drive the state’s economy. Ayo o la O w o lab i rea ssu re d the association of the state government’s support, saying they were operating in one the sectors that formed the four developmental agenda of the Governor Fayemi-led administration. Earlier, Olubunmi Olatilu, a member of the association, who spoke on behalf of others congratulated the commissioner on his appointment and appreciated G overnor Kayode Fayemi for appointing one of them as a member of his cabinet. He highlighted some of the challenges of the association to include unavailability of tree seedlings, bad road network to their tree plantations and members’ financial constraints to expand their business among others while pleading for government’s assistance in tackling them. Olatilu who noted that there are about three million stands of trees across Ekiti state as at then solicited government’s patronage, support and partnership, especially in getting machinery to process their wood to meet the international standard. www.businessday.ng

billion in Q1 2018. Presco, Nigeria’s largest palm oil producer is yet to release its first-quarter financial statement for the year. “Nigeria has significantly increased its production in the last 10 years but is still importing a lot of CPO into the country and much more is smuggled through the land borders,” Fatai Afolabi, executive

As a result, Indonesia and Malaysia have surpassed Nigeria’s production, becoming the global leaders in oil palm production. Henry Olatujoye, National President, National Palm Produce Association of Nigeria (NPPAN), s t at e d t hat t h e i nab i l i t y o f government to provide a reliable data for the industry has remained a major problem for the industry, saying that some foreign investors are taking advantage of that to deceive the government in allowing the importation of the produce into the country. Some experts attribute the increase in imports to the high population growth rate in the country that is fuelling demand. Nigeria’s population is rising rapidly but food production is not moving in same trajectory, causing gaps in major crop production including palm oil. Oil palm has the capacity to produce more oil than any other oilseed crop. About 90 percent of palm oil is used in the production of foods, while the remaining 10 percent is used by the non-foods industry, industry players say. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics are made from palm oil.

SIKIRAT SHEHU, Ilorin

olade Saheed Olawale, a castor farmer, based in Offa, Kwara State said that with the needed political will, government can reduce unemployment by 50 percent if adequate support is provided towards castor farming. Olawale, who specializes on castor planting and processing, pointed out that castor is an uncommon cash crop with a lot of residual income, adding that it is also a crude oil plant that can boost economy of Nigeria by more than 50 percent. Speaking with BusinessDay in

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a telephone interview, he stated that Nigeria farmers cannot meet industrial needs of castor oil in the next 50 years. According to him, castor is not prone to theft like other crops and it can be used to address the issue of farmers and herders clash in this country. Castor leaves he said are highly toxic thus, herdsmen avoid it like a plague because their cattle would die after eating leaves. “It is a tropical crop and so the world comes to Africa to look for it. It has over 3,000 uses. It is uncommon because we know next to nothing about it, yet it is living with us, right inside our homes and cars,” he said.

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“I stumbled on castor, I studied and researched, even went to seminars and workshops on it, now I have my castor farm running,” Olawale said. “If Nigeria is spending a whooping sum of N28 billion on castor oil...then, that is where I want to be, targeting a percentage of that total amount as my profit annually and you can do the same,” Olawale added. Explaining further, he described the crop as perennial and very dependable, pointing out that it does not grow in temperate or cool regions of the world. “It is a rugged crop and does not need too much of attention, castor plants only needs 4 rainfalls in all of it gestation period. One hectare gives 1 - 1½ tons. Current market price per tonne is between N320 - N350 thousand,” he disclosed. Olawale therefore called on youths to rise up to the challenge, stressing that all of us cannot get green collar jobs and that every one cannot be a government worker. He equally called on government to invest big on castor processing company in the state and empower the youths by providing mechanical equipment for farming, assuring that with these, there would be a better life for the farmers, the society at large and as well; there will be increase in the Internal Generating Revenue (IGR).

Wednesday 15 May 2019

BUSINESS DAY

AGRIBUSINESS ag@businessdayonline.com

HarvestPlus targets 200m Nigerians with bio-fortified crops by 2030 Josephine Okojie

arvestPlus Nigeria is targeting to provide bio-fortified crops to about 200 million households by 2030 in order to boost its contribution to the battle against malnutrition in the country. Paul Ilona, countr y manager, HarvestPlus Nigeria, made this known recently while speaking to members of the Food and Agriculture Writers Organisation of Nigeria (FAWON) in Ibadan, Oyo State. Ilona stated that in another 10 years from now, Nigeria’s p o pu l at i o n w ou l d hav e risen by about 40 per cent to about 280 million, hence HarvestPlus was targeting to provide bio-fortified crops to millions of farmers to produce crops with rich with essential nutrients for development.

Ilona revealed that although it was not an imposed target but an estimation of how HarvesPlus intended to affect the feeding and nutrition pattern of Nigerians with bio-fortified crops such as maize, cassava and orangefleshed potato. “Globally, we are targeting one billion people but

HavestPlus Nigeria is tasking itself to reach 200million in Nigeria out of that number by 2030,” he said. Most Nigerian families can hardly afford foods with high nutritional value, forcing them to feed mostly on starchy foods which are very high in carbohydrates and are often cheaper.

EZ-Farming emerges finalist in FedEx Small Business Competition Josephine Okojie

few months after winning the first prize in a pitch for African start-ups in Washington DC, United States, E Z -Far ming has emerged among the top 100 finalists in the FedEx small business competition. The agricultural startup, with offices in Nigeria and the United States of America (USA), is one of the few to make the mark in a competition in which over 13,000 start-ups across the world took part in and over 1.3 million votes cast on social media to select the finalists. EZ-Farming recorded this feat less than three months after clinching the first prize of $5000 and the peoples’

choice award at the 2019 Georgetown African Business Conference New Venture Competition. Adewale Oparinde, founder, EZ-Farming in a statement said the team and investors are elated with the feat and that it would push them to continue to deliver returns for the benefit of its key stakeholders. “We are indeed glad we made it to the top 100 from over 13,000 start-ups across the globe that competed in the competition and it was a delight that we recorded such an impressive feat in few months of operation,” Oparinde said. He noted that EZ- Farming will continue to improve its platform to deliver on its value proposition,

brahim Abubakar, a governorship aspirants on the platform of the People’s Democratic Party ( PDP ) in Kogi State has said that the state accounts for the highest volume of cashew nut export in the country. Abubakar, who disclosed this recently in Lokoja during a media parley organised

by the Nigerian Union of Journalists (NUJ), said that with proper coordination the State could transform its economy through the commodity. He equally disclosed that sorting, washing and processing of the crop which are done in other countries could be done in Kogi State to create jobs and improve revenue coming into the state. “Sorting of cashew seeds www.businessday.ng

millions of farmers who are cultivating bio-fortified crops. “We think that if w e strengthen the partnership with food processors it is going to add a lot more value. We have identified quite a number of multinationals and national food companies i n Nig e r ia w h o a re b i o fortification-friendly,” he said. “We w ill ensure that industries have access to biofortified raw materials and the products find their way to our target population. “So that we can truly contribute to alleviating nutrition deficit and eliminate ailments associated with malnutr ition and other challenges in the country,’’ he explained. Bio-fortification is a feasible and cost-effective means of delivering micronutrients to populations that may have limited access to diverse diets and other micronutrient interventions.

AgroNigeria in defence of NIRSAL over fraud allegations Josephine Okojie

assuring investors that the growing list of recognition is an acknowledgement of the firm’s commitment to excellence and creativity. “We appreciate our fans for supporting us to reach this great milestone and for supporting our vision to achieve double impact of empowering both youth and farmers through intergenerational exchange of expertise to create more commercial farms from small holdings,” he further said. EZ-Farming is a fastgrowing agritech start-up with a commitment to pulling investment from Africa and its diaspora to drive commercial farming in the continent and empower youths through the intergenerational transfer of agribusiness best practices.

Kogi State accounts for highest cashew nuts export, says Abubakar Victoria Nnakiaike, Lokoja

O w i n g t o t h i s, t h e re is a rise in the number of malnourished persons in the country, with available statistics indicating that over 90 percent of Nigerians experience diverse forms of malnutrition. This is coupled with the high rate of poverty which is not in any way showing

signs of decreasing due to the harsh economic situation, high unemployment rate and insurgency in the northern region of the country. To change the narrative of the burden of malnutrition in Nigeria, especially in children, HarvestPlus Nigeria have pioneered a simple but transformative technique to increase the nutritional value of staple food crops such as sweet potatoes, beans, maize, and cassava amongst others through the bio-fortification of these crops for farmers. These improved varieties of crops provide higher amounts of vitamin A, iron, and zinc— the three micronutrients identified by the World Health Organisation (WHO) as most lacking in diets globally. Ilona stated that the strategy to reach millions of Nigerians is to engage many more medium and large scale food processors who will become off-takers from the

is being done in South Africa, washing in Ghana and processing in India. All this can be done here in Kogi state with proper coordination to generate employment and improve revenue,” he said. He also emphasised that Kogi is blessed with much arable land and a high number of educated dynamic men, women and youths that could turn the fortune of the state through agriculture.

groNigeria, a leading agricultural media and communications entity in Nigeria, has insisted that the recent malicious and defamatory publications against the Nigeria Incentivebased Risk Sharing System for Agricultural Lending (NIRSAL) and Abdulhameed Aliyu, its chief executive officer, were untrue. AgroNigeria said in a statement made available to BusinessDay that there is a deliberate campaign of calumny being waged against NIRSAL by persons who have sinister, selfserving motives and have had their operations circumscribed by NIRSAL, in the course of the latter’s execution of its mandate. “To begin with, the main purveyor of the allegations: ‘Per Second News’ is a faceless online medium with no traceable address. It is trite that the ethical code of the media profession and the extant laws of the country make it unacceptable to re-broadcast unverified and injurious allegations,” Richard-Mark Mbaram, CEO, AgroNigeria, said. “A g r o N i g e r i a h a s investigated these allegations and found them to be baseless. In consideration of the fact

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that the subject of these allegations, NIRSAL, is an apex actor in the Nigerian agricultural sector and one which AgroNigeria has systematically followed from inception, the Editorial Board decided to subject the publication to an in-house investigation. “For instance, the s o - c a l l e d ‘C o r r u p t i o n Magazine’ in a post on the 24th of April, 2019 and captioned, ‘NIRSAL Caught up in Another N342m Misappropriation Scam’ alleged that “NIRSAL under the current leadership has... been accused of withholding N1bn intervention fund in Owerri, Imo State and another in Delta State,” Mbaram said. He stated that his news outlet sought to hear from the state governments the alleged expropriated funds belong to and found out that it was an exercise of fake news. Speaking on the transaction involving Hope Concepts Investment Cooperatives and Credit Union in which N342 million belonging to the entity was allegedly misappropriated by NIRSAL, AgroNigeria’s investigations revealed that the monies had since been returned to the coffers of the Central Bank of Nigeria, after the result of NIRSAL’s due-diligence revealed a @Businessdayng

number of questionable dealings which run foul of the de-risking entity’s predisbursement requirements. “A s t h e l e a d i n g agricultural media and communications entity in Nigeria, AgroNigeria is raising its voice in support of NIRSAL, an entity which today is an embodiment of the present administration’s resolve to drive job creation by fixing the agricultural value chain, thereby making it possible for the financial sector to provide services to a sector which has hitherto been starved of financing. “Indeed, we commend the foresight of the Central Bank of Nigeria (CBN), and in particular its Governor, Godwin Emefiele, for empowering NIRSAL to deliver on its mandate in the manner which it has done. “At this juncture, it should be noted that NIRSAL is, strictly speaking, not a lending institution. It is a derisking entity which provides third- party guarantee on transactions consummated b e t w e e n Pa r t i c i p a t i n g Financial Institutions (PFIs) and their customers. The role of NIRSAL is that of a catalyst for growth in the agricultural sector of the Nigerian economy. That this has so far been achieved at no extra cost to the Federal Government is absolutely remarkable,” he said

BUSINESS DAY

Wednesday 15 May 2019

BUSINESS DAY

COMPANIES & MARKETS

Unity Bank’s MD wins top 25 CEOs next bulls award

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

CONSUMERS GOODS

Consumers goods firms settle for “half-loaves” as cash margin shrinks ISRAEL ODUBOLA & SEGUN ADAMS

layers in the consumer goods space opted to trade more cash for credit in the first three months of 2019 in a bid to enjoy better customer patronage and bolster their shrinking revenue base. In the first quarter of 2019, efficiency of consumer gods firms in generating cash from sales dipped, according to data compiled from company financials, as the manufacturers settled for ‘half a loaf’ in getting their products off the shelves into households. Analysis of the operating cash of ten (10) players including Cadbury, Nestle, Vitafoam, Nascon, Dangote Sugar, Dangote Flour and Champion Brewery among others, revealed that cash flow to revenue turned negative to -37.54 percent in the first quarter of 2019 compared with 21.40 percent a year before, signalling worsened cash efficiency.

According to Yinka Ademuwagun, research analyst at Lagos-based United Capital Plc, consumer goods firms are embarking on aggressive credit strategy to retain their customers and boost top-line growth knowing fully well that customers’ wallets are stifled. “Consumer goods are facing a hard time. Any firm that can’t sell cheap or on credit in this current weak consumer wallet will suffer. That is why most of them are extending credit.” Of the ten players covered in the analysis, only Nigerian Breweries recorded better cash margin of 8 percent in the review quarter as cash flows from operating activities of the beer maker outpaced topline growth. The operating cash margin measures how firms are able to generate cash from every naira sales they make. It is obtained by dividing a company’s revenue or sales over a period by how much operating cash the said firm was able to make in the

L-R: Salah-Eddine Kandri, global head of education, International Finance Corporation (IFC), and Ani C. Bassey-Eyo, CEO, LANI Group and co-founder, Axiom Learning Solutions at the Launch of the IFC Digital Skills in Sub-Saharan Africa - Spotlight on Ghana recently in Accra, Ghana.

same period. A higher figure shows that a company was able to convert a higher propor-

tion of its sales to cash and a lower figure communicates the reverse. The ten firms covered,

collectively generated N40.2 billion cash from operating activities in first quarter of last year, but the

figure worsened to N4.6 billion cash only, in the review quarter of current year. However, since cash is king, the trade-off of cash for credit in bolstering sales, might affect the ability to meet obligations likes paying up credits and salaries unless ‘ the companies are able to negotiate longer payable days with their suppliers and creditors than it takes to get their debtors to pay,’ Ademuwagun said. Firms do not always receive value in exchange for their products at the point of sales to other participants’ down the distribution chain (wholesalers, retailers, and even consumers), in the same way they do not always make cash purchase from their suppliers. ‘If receivables grew and payables dropped, then it’s a problem as firms would be paying their suppliers before even receiving money from sales’ he furthered added although he explained the current credit sales strategy to be sustainable.

ICT

Chams in freefall despite impressive Q1 2019 outing …over N798 million wiped off market value in 4 days OLUWASEGUN OLAKOYENIKAN

hese are not the best of times for Chams Nigeria Plc as shares of the Infor mation and Communication Technology company repeatedly tumbled on the Nigerian Stock Exchange (NSE), despite recording impressive financial performance in the first three months of the year. After posting a 53 percent increase in bottom line in the first quarter of 2019 on Friday, May 3, the stock rallied to a five-year high of 53 kobo on May 7. However, Chams reversed the gains thereafter by falling consistently for four straight sessions to close at 36 kobo on Monday. As a result of the bearish performance which worsened with a 10 percent

depreciation on Monday, over N798 million has so far been wiped off Chams’ market value at the Lagos bourse, shaving its return since the start of the year to 80 percent. Chams Consortium Ltd, a subsidiary of Chams Nigeria Plc, had recently accused MasterCard of breach of contract over a national identity card project where it invested $100 million. In a statement issued on May 2, 2019 by the chairman of the company, Demola Aladekomo, the firm sought the federal government’s intervention over the matter in order to persuade MasterCard to accept wrongdoing, apologise for the breach of contract and pay $100 million compensation to Chams Consortium Ltd for accumulated losses over the project. It is therefore unclear if

shareholders of Chams Plc were reacting negatively to the dispute between its subsidiary and MasterCard as attempts to reach Chams Plc to speak on the matter proved abortive. Chams Plc grew sales by 70.4 percent to N1.26 billion in the first quarter of 2019 compared with N739 million recorded in the corresponding period of 2018, making the ICT firm record a gross profit of N410 million from N324 million. Ad m i n i s t rat i v e e xpenses rose by 17 percent in the review period to N245.6 million, but that was not enough to deplete its operating profit which increased to N183 million from N129.6 million. Consequently, pre-tax profit surged 41.2 percent to N182.9 million from N129.5 million, while lower tax expense resulted to N182.8 million after-tax

profit for the company between January and March, 2019. Total assets of Chams improved to N6.11 billion with declined liabilities, making its shareholders’

funds to grow by more than double to N1.95 billion as at the end of March 2019 compared with N704 million achieved in the same period a year ago. Chams Plc offers smart-

card technologies. It also offers a public access retail billing and collection system with internet access. Chams was incorporated on September 10, 1985 and listed on the NSE in 2008.

L-R: Oladele Adeoye, executive director, DataPro Limited; Adebisi Ajiboye, MD, Global Credit Rating Company and vice chairman, Association of Credit Rating Agencies of Nigeria (ACRAN); Isyaku Tilde, acting executive commissioner, Operations, Securities and Exchange Commission; Vivien Shobo, MD, Agusto and Co and chairperson ACRAN, and Henry Rolands, acting executive commissioner, Corporate Services, SEC, during a Meeting between Association of Credit Rating Agencies of Nigeria and SEC in Abuja.

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

Wednesday 15 May 2019

BUSINESS DAY

COMPANIES&MARKETS BANKING

Unity Bank’s MD wins top 25 CEOs next bulls award

ISRAEL ODUBOLA

he Managing Director/Chief Executive Officer, Unity Bank Plc, Mrs. Oluwatomi Somefun has won the 2019 Top 25 CEOs Next Bulls award in recognition of the bank’s stellar performance on the Nigerian Stock Exchange (NSE). The 5th edition of the ‘Top 25 CEOs &Next Bulls Award,’ which took place in Lagos on Friday, May 10 2019, is one of the stock barometer awards structured by BusinessDay Media in association with the Nigerian Stock Exchange. According to the organisers, Unity Bank ended the year as one of the companies with the best performing stocks, as its price opened at N0.53 and closed at N1.07, indicating a 101.89 per cent appreciation. As reflected in its theme, a bull is the condition in financial market where the prices of a group of securities are rising or expected to rise. Thus, among the entities listed on the NSE, Unity Bank stocks stood out making one of the top 25 equities in the 2018 bull market with favourable conditions and stocks’ increases in value. C o m m e nt i ng o n t h e award, the Bank’s dynamic Managing Director who was ably represented by the Executive Director, Finance and Operations expressed appreciation to the organisers for their independent and objec-

tive analysis of stocks that saw the bank emerge tops in the awards. The Bank in 2017 chose the tough but right path and resolved its legacy issues. “This bold action achieved notable points, including: reduction of NPL Ratio to zero per cent (0%); full de-risking of our balance sheet to remove toxic assets, total clean-up of our books and records as well as helping to fully mitigate the adverse impact of IFRS-9. The Managing Director added that with a strong efootprint in Agric Business, Retail and E-Business the lender is focused on Banking for the future. For Unity Bank, the 2017 financial year will forever be known as one in which legacy clouds were laid to rest and the Bank arose to a new invigorated dawn. This according to dealers is attributable to the bank’s efficiency in curtailing cost, better market focus, revamp of electronic channels and increasing customer centricity which restored market confidence in the brand. These strategic initiatives, amongst others, geared towards a complete transformation of Unity Bank and setting her up on the path of strong and sustainable growth and profitability, have endeared the lender to investors and contributed immensely to placing its CEO among top 25 that attracted the ‘next bulls” award. Evidently, the courageous action taken by the Bank to-

wards cleaning up observed issues, though resulted in temporary setbacks, but the Bank equally came out of the exercise a leaner, smarter and more dynamic Bank with a healthy Balance Sheet, Analysts have said. Analysts see the NPLs resolution initiative and series of recoveries being made by the Management of the Bank as two-pronged approach to boost the Bank’s financial performance and create wealth for all existing and prospective shareholders. These strategic initiatives according to industry experts rightly positioned Unity Bank, such that it successfully signed up 800,000 new customers and grew retail deposit base by 14 per cent in 2018 alone as a mark of growing customer conference. The bank also worked on 4 important pillars: deliberate improvement in risk management systems; improvement in internal processes; investment in technology and automation that helped development of products that customers have embraced for swift and convenience transactions. Specifically, in its audited financial statements for the year ended December 31st, 2018, the lender returned to Profitability posting PAT of N1.27bn compared with a loss of N14.9bn in 2017. The Bank’s Balance Sheet Size also grew from N156.51billion in 2017 to N235.98 billion, culminating in Gross earnings of N37.33 billion for the year.

L-R: Femi Adebayo, ambassador, Trophy brand; Annabelle Degroot, MD, International Breweries, Joseph Yobo (behind), ambassador, Trophy brand; Folorunsho Sunday, captain of the winning team, Scope FC, Lagos; Folarin Falana (behind), ambassador, Trophy brand; Tolu Adedeji, marketing director, International Breweries, and Seyi Akinwunmi (behind), first vice president, NFF, at the grand finale of Trophy 5-a-side tournament at the Campos Mini Stadium, Lagos Island, Lagos Pic by Pius Okeosisi

The Bank has continued to build business momentum with customer acquisition and improvement in deposit, thereby maintaining an upward trajectory in its Q1’19 results, posting a profit of N505m. It also achieved mileage on the back of cost containment policy. Unity Bank’s cost minimization focus yielded positive results as the lender recorded a 20 per cent reduction in Total Operating Expenses from N24.460 in 2017 to N20.217 billion recorded in the year under review. This reduction is primarily as a result of the drive of Management towards building processes that attract

efficiency gains in resource allocation throughout the Bank. It would be recalled that Unity Bank successfully partnered CBN and RIFAN (the Rice Farmers Association of Nigeria) to deliver on the longheld objective of ensuring self-sustainability in rice production in the country. The program is one of the biggest and most successful anchorborrower programs ever embarked upon, and it has so far succeeded in engaging over 500,000 farmers, cultivating over 270 thousand hectares of land with expected yield of 2 million metric tons of rice for the wet season alone.

The Bank is now well placed to leverage on current and emerging market trends, improve service delivery and boost e-business. Apart from the current award, Unity Bank has carted away other highly coveted awards and recognitions in recent times due to increasing market receptiveness to its growth focus. It won an Efficiency Awards in Fraud Reporting and prevention, Award of Sustainable Banking Transaction in Agriculture, Presidential Award as mover of Anchor Borrowers Programme at the 3rd anniversary of ABP, amongst others.

FINANCIAL SERVICES

HEALTHCARE

FSDH Research predicts 11.23% inflation rate in April

Global Fund, PharmAccess partners to accelerate health systems, disease treatment in Africa

HOPE MOSES-ASHIKE

SDH Research expects the April 2019 inflation rate to drop marginally to 11.23 percent from 11.25 percent in March, saying that Inflation rate may remain in the low double digit in the remainder of 2019. “Possible adjustments to the Pump price of Premium Motor Spirit (PMS) and electricity tariff may shift the inflation curve by 2.5 percent, Akinwunmi Ayodele, head of research, FSDH Merchant Bank limited said. The crude oil price (Bonny Light) rallied further to US$76.65/b on 25 April 2019, the highest prices since October 2018. The Organization of the Petroleum Exporting Countries (OPEC) production cut, insecurity in Libya and sanctions on Iran and Venezuela continue to drive the crude oil price high. However, there are growing concerns about the negative impact of the U.S and China trade dispute on global economy and demand for crude oil. A slowdown in the global economy may reduce demand for crude oil and lower

the crude oil price. These developments will have negative effects on the Nigeria’s fiscal position. FSDH on the other hand raised concern over low savings and investment in the country despite the growth in the savings and investment products. According to the firm, the ratio of Gross National Savings to the Gross Domestic Products (GDP) in Nigeria is one of the lowest among some selected countries including Nigeria, Kenya, South Afica, India, Malaysia, China, United Kingdom, and USA. The ratio of total investment to GDP in Nigeria is the lowest among the selected countries. In addition, despite the impressive growth in the mutual fund in Nigeria in the last five years, the ratio of mutual fund assets to the GDP estimated at 0.5 percent as at December 2018 is still very low. These numbers show that there are a lot of growth opportunities for saving and investment in Nigeria. Ayodele said this low savings in the financial system means low amount of money will be available for lending

purposes and the available funds will command high interest rate. Low savings and investment also limit the ability of a country to create wealth and lift its people from poverty, he said while presenting the monthly economic and financial markets outlook, titled ‘Investment Opportunities in the Nigerian Financial Market’. “It also means that government at all levels will have limited access to raise tax revenue to embark on development purposes while corporates will have limited access to capital to expand their businesses”. Some of the identified reasons for low savings and investment in Nigeria are: high unemployment, weak purchasing power and inadequate knowledge of investment products that are available and how they work for the benefit of investors. The investment products include the Federal Government of Nigeria Bond (FGN Bond), FGN Savings Bond (FGNSB), Nigerian Treasury Bills (NTBs), Commercial Papers (CPs), Mutual Funds, Real Estate Investment Trusts and Stocks.

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IFEOMA OKEKE

he Global Fund has signed a partnership agreement with Stichting PharmAccess Group to support African countries in building innovative, scalable health insurance models and extending coverage to people living with HIV by harnessing the power of digital technology. The signing ceremony took place on Thursday 9th of May 2019 at the on-going Financial Times Future of Health Conference at the KIT Royal Tropical Institute in Amsterdam, Netherlands. The conference organized by the Financial Times in partnership with the Dutch Ministry of Foreign Affairs and Joep Lange Institute brought together governments of several countries, multilateral organisations and global healthcare pioneers to explore how collaboration, mobile technology and innovation can accelerate inclusive and sustainable financing for Universal Health

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Coverage (UHC). This partnership will accelerate the achievement of the goal of universal health coverage and the SDGs by building resilient, sustainable and inclusive systems for health leveraging on digital technology which happens to be the main focus of this conference. Speaking at the signing ceremony, Peter Sands, the Executive Director of Global Fund, expressed his delight stating that the partnership will “pave the way for many Africans to access affordable and inclusive universal health coverage.” The Global Fund is the largest multilateral provider of grants to build resilient and sustainable systems for health, which underpin universal health coverage. System strengthening Interventions include investments in supply chain, data and service delivery integration. Monique Dolfing-Volgelenzang, the CEO of Stichting PharmAccess Group, at @Businessdayng

this landmark signing ceremony stressed the importance of the partnership aimed at “building country capacities in Africa on the implementation of health financing models with the use of mobile technology, pooling various types of funding, in order to fight HIV, TB and malaria and to reach Universal Health Coverage.” Jide Idris, the Commissioner of Health for Lagos State Nigeria, who was also p re s e n t a t t h e p a r t n e rship signing ceremony was pleased at this development because of the state’s strong relations with both organizations. “Lagos State is a Principal Recipient of the Global Fund and PharmAccess remains a trusted technical partner for implementing the grant to optimize the state health insurance scheme using digital technology,” Idris added. He hoped that the partnership between Global Fund and PharmAccess will be an inspiration to other States in Nigeria and countries.

Wednesday 15 May 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

CONSUMER GOODS

EU slams AB InBev $225 million anti-trust fine despite impressive Q1 2019

W OLUFIKAYO OWOEYE

o r l d’s largest b re w e r, A n heuserBusch InBev, AB InBev has been slammed with $225 million fine by an EU antitrust for preventing cheaper beer imports from the Netherlands into Belgium. Antitrust laws are regulations that monitor the distribution of economic power in business, making sure that healthy competition is allowed to flourish and economies can grow. According to the European Commission, the anti-competitive practice took place between February 2009 and October 2016. The Commission’s decision came after a threeyear investigation into the brewer’s most popular brand in Belgium, Jupiler, which has a 40 percent market share. Margrethe Vestager, EU Competition Commissioner said consumers in Belgium have been paying more for their favorite beer because of AB InBev’s deliberate strategy

to restrict cross border sales between the Netherlands and Belgium. The Commission noted that AB InBev’s strategy included changing the packaging of some Jupiler beer distributed to Dutch retailers and wholesalers, such as removing French language information from labels. This made it hard to sell the beer in Belgium. The company also restricted the volumes of Jupiler to Dutch wholesalers to prevent imports into Belgium and refused to sell some of its products to retailers unless they agreed to limit imports of Jupiler beer from the Netherlands to Belgium. Another anti-competitive tactic was to prevent Dutch retailers from offering customer promotions for beer to their customers in Belgium, the Commission. Recall that tech giant, Google was recently slammed with an antitrust fine totalling 1.5billion Euros. AB InBev kick off the year on an impressive note as figures from its first quarter for the period

ended 31 march show 5.9percent growth in revenue buoyed by volume growth of 1.3 percent, with own beer volumes up 1.0percent and non-beer volumes up 4.9percent, revenue per hl growth of 4.6percent, driven by healthy volume growth, global premiumization and revenue management initiatives. The brewer posted revenue of $12.59 billion in Q1, with combined revenues of its three global brands, Budweiser, Stella Artois, and Corona, grew by 8.5percent globally, and by 14.0percent outside of their respective home markets. Cost of Sales increased by 6.0percent in Q1 and by 4.6% on a per hl basis, with top-line result driven by healthy performances in several key markets, including Brazil, China, the US, Europe, Colombia, and Nigeria. AB InBev in 2017 acquired 72.17percent of SABMiller’s shares in International Breweries Plc, in a series of transactions which resulted in AB InBev acquiring controlling interests in the company

L-R: Udeme Ufot, GMD, SO&U Group, receiving a certificate of induction as a fellow of the National Institute of Marketing of Nigeria from the Tony Agenmomen, president and chairman of Council of the Institute, at the Institute’s Dinner and Award Night in Port Harcourt.

L-R: Femi Adekunle, head, HR industrial/industrial relations, Lafarge Africa Plc; Ade Adesanya, graduating participant; Stella Ogbuishi, area manager, Industrial Training Fund (ITF); Moibi Gisanrin, Odofin of Sonyindo, Shagamu, and Folusho Samuel, director, projects, Nigeria Employers’ Consultative Association (NECA) at the 2019 Lafarge Africa Technical Apprenticeship Programme graduation ceremony in Ewekoro, Ogun State.

BANKING

BoI records asset growth of over N1 trillion in 2018 HARRISON EDEH

he Bank of Industry,(BoI)has recorded a 49% growth in the groups total asset which grew to N1.07‎ trillion from N713.3 billion in 2017. The Bank also recorded improvement in its total ‎equity which increased by 12.5% year on year to N258.3 billion from N241 billion in the prior year. Aliyu Abdulrahman confirmed this at the 59th annual General Meeting of the Bank held on Monday in Abuja. Also in 2018,the profit before tax was N37.7 billion, which is 39% higher than N26.4 billion that was received on the previous year. In the same light, the bank improved its developmental impact by achieving 130% growth on a year on year basis with respect to disbursement of new loans to N259.6 billion in 2018.

Specifically, N33.9 billion of the figure was disbursed to Micro, Small and Medium Enterprises, while the rest was deployed to support large enterprises. Speaking on the overall financial performance of the of the bank in the year under review, Aliyu Abdulrahman Dikko, the Chairman of the Board of the Bank of Industry informed that higher disbursement of loans also facilitated in the banks improved performance in profit after tax. On the bank’s target this year, he stated that the Bank is targeting N40bn disbursement to the small and medium enterprise development. “Targets for this year is that we are determined to do more SMEs. If we don’t double the figure of N33bn, we should do at least more than N40 billion to SMEs. Olukayode Pitan,the Managing director of the Bank said the Bank has rewww.businessday.ng

corded some milestone in its operations with the support of the professionals working with it. Kayode said, “For the first time in the history of the bank, we cross over N1 triillion asset base. The group profit is more than N36bn” “We raised to the tune of $750 million last year which has also assisted us in improved lending for our people .When we look back, 2018 is a great year for us. He stated further that the Bank is working to raise more fund to improve their lending to businesses, while generating employment to more Nigerians. “This year we would like to improve on the sales in the balance sheet, more than what we did last year. We want to add more Nigerians to employment raddar. Today we are paying more dividends to the government, and we also pay taxes. “he said.

L-R: Williams Odah, head, membership, Lagos Chamber of Commerce and Industry (LCCI); Rita Ogieguata, administrative officer, Petroleum Contractors’ Trade section (PCTS) of LCCI; Uzochi Nwagwu, outgoing chairman, Petroleum Contractors’ Trade section (PCTS) of LCCI; Muda Yusuf, director-general, LCCI; Ifeanyi Nwagbogu, incoming chairman, PCTS, LCCI and GMD, Schlumberger, and osario Osobase, commercial manager, Tenaris, during a courtesy Visit to the Lagos Chamber in Lagos

L-R: Norna Awoh, head, Palestine Capital; Oladipo Aina, MD/CEO, Signet Securities Limited; Jude Chiemeka, divisional head, trading business division, The Nigerian Stock Exchange (NSE); Adedapo Adekoje, president, Chartered Institute of Stockbroker (CIS); Sam Willie Ndata, Doyen of Stockbrokers and Patrick Ezeagwu, chairman, Association of Stockbroking Houses of Nigeria (ASHON) at NSE Retail Investor Coverage Workshop at the Exchange in Lagos

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Wednesday 15 May 2019

BUSINESS DAY

SPECIAL FOCUS on

BRANDS TO LOOK OUT FOR IN 2019

To safeguard the health and wellness of our consumers, we produce and market nutritious products fortified with micronutrients - Alarcon Nestle Nigeria Plc is an iconic brand and the biggest food company in West Africa employing over 2,300 people directly.The BusinessDay team of TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU engaged MAURICIO ALARCON,MD/CEO of Nestle Nigeria Plc who elaborated on the giant strides of the company.Excerps:

ould you give us a synopsis of the Nestle Nigeria Plc? Nestlé Nigeria Plc began simple trading operations in Nigeria in 1961 and has today grown into a leading food manufacturing and marketing company. The Company is the biggest food company in West Africa. Employing over 2,300 people directly. Nestlé Nigeria manufactures and markets some of Nigeria’s most loved brands, including MAGGI, MILO, GOLDEN MORN, NESTLÉ PURE LIFE, NESCAFÉ and CERELAC out of three world-class factories located in Ogun State and the Federal Capital Territory. Nestlé Nigeria is a recognized industry leader and a trusted partner in nation building in the West African region. The company contributes to the development of Nigeria through job creation, capacity building and community development. Enjoying a large market share, we have made viable investments in the Nigerian economy.

Through strategic collaboration, our goal is to make measurable impact, contributing to the attainment of the Sustainable Development Goals. We therefore aim to help families live healthier lives, improve livelihoods in communities directly connected to our business activities whilst striving for zero environmental impact in our operations – all by 2030. Quality is an important segment of business, how do you control your quality control and manufacturing standards? Quality and Safety for our consumers is Nestlé’s top priority. This applies to our entire portfolio, from foods and beverages to all our systems and services. We adhere to the highest quality standards throughout our production process, from the sourcing of raw materials to packaging, and from distribution to retail. We ensure that the right processes and

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Fola Tinubu, MD/CEO, Primero Transport Services Limited

We are aware that you have different iconic brands, could you tell us about your brands? What makes them unique in the market? Nutrition is at the core of our operations. To safeguard the health and wellness of our consumers, we produce and market nutritious products fortified with micronutrients. Nestlé Nigeria manufactures and markets some of Nigeria’s most loved brands, including MAGGI, MILO, GOLDEN MORN, NESTLÉ PURE LIFE, NESCAFÉ and CERELAC. Our products are based on research and are aligned to consumer needs and preferences. We have increased the volume of fiber and natural ingredients and significantly reduced sugar and salt levels in our recipes while simplifying our product labelling to aid better understanding of our product composition. Our focus on food fortification is to address the challenges of micronutrient deficiencies in our environment. Statistics show that 98.9 million people in Central and West Africa are malnourished, with 30% of West African people suffering from stunted growth because of micronutrient deficiency. To help combat this menace, we have fortified some of our food products including Golden Morn, Milo, Nestlé Pure Life Protect and Maggi with micronutrients and vitamins, including iron, which helps address high

Nestle has been nourishing Nigeria for over 57 years practices are in place to ensure the quality and integrity of our products from end to end. Please read more about Nestlé’s quality policy here and on our website. Mauricio Alarcon, MD/CEO, Nestle Nigeria Plc

incidences of anaemia in our region. Over 34 million households were reached with micronutrient-fortified products in 2018 Nestle Nigeria Plc is one of the most popular and enduring

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Our focus on food fortification is to address the challenges of micronutrient deficiencies in our environment

brands in Nigeria, how long have you been in Nigeria? Nestle has been nourishing Nigeria for over 57 years. Who are your target market? In line with our purpose of enhancing quality of life and contributing to a healthier future, Nestlé Nigeria provides nutrition for individuals and families. We want to help families live healthier, happier lives by making healthier food choices and leading more active lifestyles. Tell us about your creating share value principle (CSV) We believe that by creating sustainable value for the society and our stakeholders, we would ensure the

continued longevity and success of our business – a concept called ‘Creating Shared Value’. In line with our purpose, which is enhancing quality of life and contributing to a healthier future, creating shared value is embedded in everything we do. Our initiatives are founded on three pillars: Individuals and Families, Our Communities and The Planet. In Nigeria, we focus on Nutrition Education, Access to Clean Drinking Water, Environmental Sustainability, Rural Development and Responsible Sourcing as well as Women and Youth Empowerment. We work alongside partners and other stakeholders to create value for the individuals that grow our natural ingredients, the families that enjoy our nutritious products, the communities where we live and work and the planet upon which we all depend.

Effective distribution is key, how many outlets do you have in the country? Nestlé works with a distribution network of over 100 distributors and hundreds of retailers across Nigeria. Our committed sales force also works across modern trade and neighbourhood stores to ensure the last mile access to our products across Nigeria. Our brands can be found in every market across the country. How are you dealing with the problem of fakes & counterfeiting products? We take the issues of counterfeiting and adulteration very seriously as this has the potential to impact our consumers negatively. Where there are reported cases, we work closely with regulatory agencies and authorities to address the situation.

Wednesday 15 May 2019

BUSINESS DAY

Wednesday 15 May 2019

BUSINESS DAY

BRANDS TO LOOK OUT FOR IN 2019

We will not stop until we provide a world class service to Lagosians-Tinubu Primero Transport Services Limited registered its presence in the transport sub sector of Lagos State some few years back and has so far changed public transportation for good in the state. With regard to what to expect from the firm, FOLA TINUBU, MD/CEO, Primero Transport Services Limited highlighted innovative services the firm has come up with, new areas to be covered in the state, and his resolve to provide world class services to Lagosians an interview with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU. Excerpts:

indly give us a synopsis of the Primero Transport Services Limited What happened was that about five years ago, Lagos State government had placed an advert in the newspapers asking for operators that were willing to run the BRT. The Lagos Metropolitan Area Transport Authority (LAMATA) and Lagos State government had put in place a bus rapid transit (BRT) plan and all the modalities. A couple of us got together. We ran the figures and liked what we saw and decided to do something about it. We submitted an expression of interest and luckily our firm was picked by the Lagos State government via LAMATA. Remember this is a World Bank project and it was not just about the Lagos State government because the selection was done by Lagos State via LAMATA and the World Bank. We were instructed to make available 434 buses which we did and started operation in November 2015. We have been in operations since then. We have had a lot of challenges and issues but we are still here. You had an illustrious career in the United States, working in very senior positions in top financial institutions and eventually becoming the CEO of the fastest growing mortgage company in the United States. Why did you decide to come back home and become a transporter? I spent most of my adult life abroad. I went to school in England and moved to America, and was there for 21 years. I just believed it was time to come back home although there was family pressure too. I did not come back because of Primero. I came back about three years before Lagos State government put the RFP in the newspapers. I just came back to see where God would lead me and luckily I am where I am today. There is this perception that there is need for improved service delivery in terms of promptness, adequate number of vehicles, etc. What are you doing to raise the bar? Our customers should expect a much more improved service experience this year. We have been receiving positive feedback from some our customers and other stakeholders on our service delivery from January 2019 and we have been improving on this constantly. We would not rest until we achieve the level of world class service delivery that we aspire to provide our customers. We had some challenges last year and year before (2017). Part of the challenges was due to cash flow, and the other was due to the spare parts that we were sourcing locally which resulted in us getting less than the quality than we normally should have. We have been able to surmount this challenge as we were able to secure a loan that enabled us to bring in six months’ worth of Spare parts

Fola Tinubu, MD/CEO, Primero Transport Services Limited

in November last year and as a result, we have been able to roll out more buses for operations and we are still adding to the number. Right now we have about 250 buses on the road daily. Our goal is to have a minimum of 350 buses on the road daily. So, God willing by the end of April, we should have 300 to 320 buses on the road and sometime in May we should have 350 on the road and keep it that way. We are about to raise funds from the public through issuance of a private bond which just got approved by the SEC. We have been engaging virtually all the PFAs, telling our story and asking for their support. The reception we have been getting has been very positive. Once we close in on this, it will solve most of our cash flow challenges and we can be more aggressive on how we address the commuters’ needs. It will enable us to put at least 350 buses on the road daily and the fuel outage we have been experiencing would be a thing of the past. So, we see a very bright future. We expect that we would close on the bond by the end of April, 2019. Once this is done, we believe that our commuters would see a dramatic improvement in our services because there would be more buses on the road. We can then improve on our scheduling and reduce waiting time to the barest minimum. Information will be provided from time to time to commuters on buses, progress on trips, expected arrival time, departure etc. This will assist commuters in planning their trips too. Once we demonstrate that we are available (increased number of buses on different routes, reduced waiting time) and reliable (buses being available timely) customers that were lost earlier would definitely come back, leading to increased ridership and patronage for us. Last year, it took over an hour to board our buses but this year our commuters can testify that it takes much less. Despite the improvement I am still not satisfied and my goal is that nobody spends more than 10 to 15 minutes to board a bus. That is where we are headwww.businessday.ng

ing. Once we put the 350 buses on the road, people would get to the bus stop and within about 5 minutes the bus would be ready to leave. There would be an improvement in our services once we close on the bond by next month. You currently ply the IkoroduLagos Island route. How many buses are currently in your fleet? We have 434 (Four Hundred and Thirty Four) buses in our fleet at the moment. Can we have an idea on how buses are deployed? We actually use the Intelligent Transport System (ITS) to deploy our buses. We got the ITS in conjunction with the Lagos State Government and that is what we use to do our scheduling. We leverage on technology to make planning, scheduling and our commuter’s life easier. In the morning we have 23 different services and in the afternoon we have 27 different services. You have mentioned some; Ikorodu to Mile 12, Ikorodu to Maryland, Ikorodu to Fadeyi, Ikorodu to Costain, Ikorodu to Yaba Oyingbo, Ikorodu to TBS and the same thing from Agric, Mile 12, Ojota, Moshalashi too. So we have 23 different services on that single line in the morning (AM) and we have 27 services in the afternoon/evening (PM operations). We have introduced so many new things to bus services. Like the ITS at the bus stops which tells our customers when their bus will arrive because it is a live GPS system that is constantly changing. We have an app called “Lagos BRT” that you can download on your smartphone and plan your journey 24 hours ahead. We have also introduced the new ticketing system that allows for electronic payment and by end of summer, we envisage to making payments via card the standard because it makes planning easier for our customers and gives a high level of assurance around revenue collection. We are the first operator to introduce this payment system in Nigeria and West Africa, if not Africa.

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We have put free Wi-Fi on all our buses so we are constantly trying to innovate and come up with things that would make people’s lives easier and make the experience enjoyable so that they can always come back to patronize us. The biggest challenge we faced was inadequate supply of buses. This affected the waiting time for customers but as we roll out more buses and reduce the waiting time, commuters will experience a more reliable service. We will not stop until we provide a world class service to Lagosians. Currently, there is a BRT corridor under construction between Oshodi & Abule-Egba. Are you thinking of bidding for this route too? Well Lagos State Government informed us that the road should be ready by the end of the year. We have already submitted our proposal that we would like to be the operator there and I am happy to say we have received the state’s approval. I am waiting to receive the official confirmation and once we get that, we will bring in 350 buses to that axis that are different from the 434 we have right now. The people around that axis should look forward to great service because we have learnt from our mistakes on the present corridor that we manage .We expect a smooth ride /operation when we commence the Abule Egba to Oshodi, route. We are looking forward to commencing operations on the axis by the end of the year or first quarter of next year depending on Lagos State government and also, when the road is ready but we have contacted our bankers and we believe we would be ready to come up with the 350 buses when Lagos State is ready. Do you have plans to replicate the Lagos model in other states of the Federation? If yes, when? The answer is yes and no. No because right now we need to get the system right in Lagos, to perfect it and make sure it works well. Then again, Yes because eventually we plan to go to other major cities. We do not have plans to be intercity; running from one city to another, we just plan to be intra-city; to operate within a city like we are doing now. That is our goal; we want to be known as a BRT operator and BRT is within a city. So, we eventually see ourselves going out of Lagos. Lagos State government has 14 BRT corridors planned and the first is the one we are running now, the second is Abule Egba to Oshodi. So, before we even talk about expanding to other states, we have to perfect our operations in Lagos State. Lagos State is the heart beat of Nigeria, so we want to provide a world class service here first before we talk about other places. For now, Lagos is our focus but eventually we plan to go to other cities. You recently signed a memorandum of understanding with one of the biggest bus manufacturers in the world, Yutong, to establish a bus assembly plant in Lagos. @Businessdayng

Please tell us about this project? I can tell you for a fact that the new set of buses will be assembled in Lagos because the MoU that we signed with Yutong clearly says we would assemble our next set of buses in Lagos and from there onward any set of buses that Primero is going to buy would be from YP industries. YP initially will only couple the buses together, but would eventually get to a stage of actually building and doing everything in Nigeria. Our next buses would be assembled in Nigeria in conjunction with Yutong. Leading brands such as yours have effective CSR. How do you give back to the society? We are a young company that is still struggling but we have big plans to help the society. Our focus is education because if you train one person, you change the life of so many people around that person. Our energy is going to be around the education sector. At present we are trying to build classrooms for a school in Ikorodu and we would be very aggressive because our financing is much better in working with the Lagos State Government and helping to develop the education system. Our goal is to eventually open up scholarship to train children up to tertiary level anywhere in the world because the more people we educate, the better the society. All our CSR would focused on education. Any collaboration with Nigerian universities? Actually we are talking to some universities right now; we are talking to FUTA in Akure, LAUTECH in Ogbomosho, LASU and UNILAG in Lagos. We are in the transportation business. These institutions have full-fledged Transportation and Engineering Departments. We want them to send their Students to come and do their Industrial Attachment with us. We have also told them that anyone that gets a first class in any of the Transport Departments in these schools would have a job with Primero if he or she wants to work here. We have told them also that their academics can come and do research and use us as case studies. We are working with these four Universities. We may be signing an MoU with FUTA and LAUTECH anytime from now. We have been very selective about which schools we want to work with in this regard and we are already talking with these four schools and we believe we would further strengthen the relationship. Where do you see Primero Transport Services Limited in the next 5 years? In the next 5 years, I am expecting Primero to have a minimum of 2,000 buses on Lagos roads daily, picking up a minimum of one million people daily with a network all over Lagos State. Also in 5 years’ time I believe Primero would be a listed company on the Nigerian Stock Exchange. I also hope we get to Abuja or some other big cities in Nigeria.

Wednesday 15 May 2019

BUSINESS DAY

BRANDS TO LOOK OUT FOR IN 2019 I want Seven-Up Bottling Company to be the best company to work for in the next 5 years - Maalouf SABI at 7-Up is an acronym for Strive, Accountability, Bonding and Innovation. But how has 7-Up applied it for its progress? In this interview with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU, managing director of 7-Up, ZIAD MAALOUF took us through the achievements of the company since 1960 and how SBC has been able to sustain its quality. Excerpts:

ould you give us a synopsis of the Seven-Up Bottling Company Limited in Nigeria? The first bottle of 7-Up was produced at the Ijora plant in Lagos on October 1, 1960, the same day Nigeria got independence from the British rule. This is why Seven Up Bottling Company prides itself as the company with its destiny intricately intertwined with Nigeria. The growth of SBC has been phenomenal; from one small production plant in Ijora in the 1960s, the number of plants has increased to 9 in major Nigerian cities: Ikeja, Ibadan, Ilorin, Benin city, Enugu, Aba, Kano, Abuja and Kaduna. SBC employs over 2,500 skilled direct personnel with over 3,000 other indirect jobs along the value chain.SBC produces some of the most exciting and refreshing non-alcoholic beverages in the Nigerian market. The management team is led by Ziad Maalouf, who is assisted by a number of head of functions, general managers and other senior managers across departments. What are the different brands of SBC? Seven-Up Bottling Company Limited is the home of different brands with diverse flavours: Cola, orange, lemon, apple, pineapple, among others. Our brands include Pepsi, Mirinda Orange, Mirinda Pineapple, Mountain Dew, 7Up, 7Up free, H2oH, Teem Bitter Lemon and Aquafina Premium Water. These refreshing brands have appealed across consumer demographics from the youth to mature audience. Who is your target audience? We target everyone who desires to refresh themselves with quality brands that leave a good feeling thereafter. So whether they are youth or adults, our products are loved and consumed by all Nigerians. Quality is an important segment of business, how do you control your quality control and manufacturing standards? SBC Nigeria works under strict standards set by PepsiCo International. PepsiCo has a global quality assurance template from store to shop (inventory to sales outlets) which all member companies bound to operate with. So, the quality of Pepsi we consume in Nigeria is the same that is consumed in other countries. Besides, there are local regulators such as NAFDAC, SON, etc that ensures organisations like ours maintain global best practices.We

Ziad Maalouf, managing director, Seven-Up Bottling Company Limited.

are also very intentional about our quality assurance processes. How many outlets do you have in the country to guaranty effective distribution in key markets? We recognize that Nigeria is a very vast country in land mass and population. This ensures that we reach our consumers wherever they may be in all nooks and crannies of Nigeria. Besides, we operate a product distribution model that gives us the flexibility of partnering with reputable logistics companies in moving our products from the cities to the most remote villages. That is why we take pride in the fact that we are truly a Nigerian company. Our reach goes above 700,000 outlets panNigeria. How are you dealing with problem of fakes and counterfeiting products? Product faking and counterfeiting is a general global problem that cuts across

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industry vertically. It is not just a Nigerian problem. We have been lucky because we have not had issues of people trying to fake our products. As I said earlier, our quality assurance process is full proof and is in tandem with PepsiCo global best practices. Leading brands such as yours have effective CSR. How do you give back to the society? CSR is part of our corporate culture at SBC. We don’t do CSR just to get media mileage. Seven-Up Bottling Company Limited is a Nigerian company. We recognise the abundance of talents in this country whether in sports, entertainment, education, etc. Therefore, our CSR is geared towards harnessing these talents and nurturing them to get to the zenith of their chosen careers. It is this policy that informed the establishment of the Pepsi Football Academy (PFA) more than 25 years ago to discover and nurture young football talents that are able to play at the highest level for clubs and country. We are proud to reel out some of our

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notable football ambassadors who have served this country very well: Mikel Obi, Osaze Odewingie, Elderson Echejile, Chinedu Obasi, Onyekachi Okonkwo, among others. All these represented Nigeria at both youth and senior team levels and had distinguished club careers. In the creative industry, we have sponsored the Nigerian Idol, a music talent hunt that had produced so many young artistes. The Aquafina Elite Model Look Nigeria sponsored by SBC has produced the very first black African winner of Elite Model Look World in the person of Davidson Obennebo. In the area of education, the 7Up/ Harvard Business School MBA Scholarship which started 2010 as part of the 50th anniversary of SBC, awards a two-year full tuition scholarship annually to a deserving Nigerian to study in the prestigious Harvard University in Boston, Massachusetts, United States. These young Nigerians who have acquired global MBA are expected to come back to contribute to the political economy of Nigeria. I can go on and on. We strongly believe that education is the best way forward for Nigerians and that is why we support our host communities in the area of educational infrastructural provision as exemplified by upgrading several schools in Enugu, Aba etc. We have provided pipe borne water and boreholes for some of our host communities as well. All of these and many more projects have endeared us to our different stakeholders and host communities and continue to promote very cordial and mutual beneficial relationships across board. Where do you see Seven-Up Bottling Company in the next five years? I want SBC to be the best place to work for in Nigeria. I became the Managing Director in 2017 and I recognize that the only way we can be ahead of other competing organizationsis in the quality of our employees. So, we developed a concept called SABI which in pidgin English connotes ‘someone in the know’. It is an unconventional talent management programme to discover, develop, reward and celebrate talents and performing staff and encourage them to be innovative in the way they operate. So, SABI is an acronym for Strive, Accountability, Bonding and Innovation. We expect to see talents line up to join our company in the very near future. In terms of consumer satisfaction, we want to continue to delight and refresh our teeming consumers from our arrays of globally known, tested and trusted drinks portfolio.

@Businessdayng

BUSINESS DAY

Wednesday 15 May 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

People will remain excluded because they are financially disempowered - PFS Stories by Endurance Okafor

ccording to Precise Financial Systems (PFS), a Software company that provides software products and services to Nigerian financial industry, financial disempowerment is the reason why financial exclusion rate is high in Nigeria. Yele Okeremi, MD/CEO of PFS, disagrees with the claim by some people that the problem with financial inclusion is about creating products. “I do not think so; people will remain financially excluded because they are financially disempowered,” the MD disclosed to BusinessDay on Monday, in an interview session to mark the company’s 25th annual anniversary. “We still have large population living below two dollars a day, how do you want to include them financially?” the CEO questioned. According to World Data Lab, a predictive analytics social enterprise, Nigerians living in extreme poverty crossed the 83 million mark in 2018, surpassing India’s number of extremely poor at 73 million. This means that almost one out of every two persons living in Africa’s most populous nation is now living in extreme poverty. This is

despite India having more population at 1.35 billion than Nigeria, who population is about 201 million people. Nigeria currently has 36.6 million of its population excluded from the financial cycle. With 36.8 percent exclusion rate, the Central Bank of Nigeria (CBN) is left with a 16.8 percentage gap to attain its 80 percent inclusion rate. Ni g e r i a’s a p e x b a n k launched National Financial Inclusion Strategy (NFIS) on October 23, 201,; with the overall target to reduce the percentage of adult Nigerians excluded from access to financial services from 46.3 per cent in 2010 to 20 per cent in 2020. “Financial inclusion will be able to ease the level of poverty in Nigeria, in the sense that, when people

and small businesses are financially included, they can have access to credit, which will enable them to expand operations, employ more people, and achieve what they would have not been able to achieve prior to when they were not financially included,” Ayo Akinwumi, Head of Research FSDH, Merchant Bank, told BusinessDay. Aimed at driving home its course, the CBN on the 5th of October 2018 released an exposure draft guideline in which it proposed Payment Service Banks (PSB) directed at deepening financial inclusion in a country that is lagging its African peers on inclusion rate. Checks by BusinessDay revealed that at least 30 business names are currently undergoing registration as payment service

banks with the functions to: maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse. But months after the lender requested for submission of proposal by the interested businesses, the apex bank is yet to give mobile money license to those that have applied, at least as it the time of filling this report. “Apart from encouraging the collaboration between the telecoms and banks, through mobile money to spur financial inclusion,

there is need to reduce the cost of financial transactions, as mobile money is more expensive than core banking,” Wale Okunrinboye, head of Research at Lagos-based Sigma Pensions, said. According to Okeremi, the first solution to financial inclusion is financial empowerment. “When you have a situation where 90 percent of your population are engaged in meaningful work, financial inclusion will solve itself, that is the honest truth. Anybody that says something contrary doesn’t understand it,” the MD said. On how to financially empower Nigerians which will translate to growth in the country’s financial inclusion rate, Okeremi said egalitarianism was the way to go. “Egalitarianism means creating equal opportunities. Take for instance a situation where the financial industry is doing well, textile industry, the manufacturing, etc. as a result more jobs will be created,” he explained. According to him, what Nigeria needs to do is to make the country’s system to be in a way that “if anyone thinks and is innovative then he/she can eat. If you can work, you will make money, then you will see that Nigerians are actually

ingenious.” An indigenous software development company, PFS has innovative and worldclass solutions that are running thousands of computers, serving numerous clients both in Nigeria and in more than twenty-seven (27) countries in Africa. The company’s environmentally friendly software technologies include an integrated accounts reconciliation solution; cheque and e-payment processing, security & remittance solution; end-to-end outward and inward cheque clearing solutions; cheque MICRisation and personalisation solution; banking and finance solution; bonds and financial derivatives trading and monitoring solution; bureau de change solution; cooperative societies solution; stock brokering solution; billing and revenue collection solution. Others include card issuance and monitoring systems; self-service cheque, cash, & card deposit and withdrawal solution; pension remittance monitoring solution; project appraisal and monitoring solution. “Through these ingenious solutions, PFS has successfully positioned herself as a foremost force in the financial software development space of the nation,” the company said on its website.

tainable value to their lives using technology. With our Freedom Network we develop platforms that allow the unbanked easy access to basic financial services such as cash-in/cash-out, funds transfer, bill payments, savings and more. Thus, financially included,” Chibuzor said. He further asserted that SUSUBYU was a response to customers’ needs. The Central Bank of Nigeria, (CBN) in 2018 licensed 3Line to operate as a super-agent in the nation’s financial services system in order to boost financial inclusion in Nigeria. Since then, 3Line has

created innovative cutting edge solutions that have revolutionised retail financial services in Nigeria. The sole purpose of the Freedom Network is to tackle the challenges hindering financial services and inclusion in Nigeria. 3line intends to create more jobs by recruiting agents across the country. “Currently, we have over 2500 registered agents with kiosks in operation across the country. We plan to create a network of 50,000 active agents by the year 2024. This will not only drive financial inclusion but also provide jobs for the people.” Chibuzor concluded.

3Line to boost financial inclusion with SUSUBYU

Line Card Management, an innovative Fintech company, is set to boost financial inclusion by launching SUSUBYU, a digital savings product modelled after traditional informal thrift savings. When officially launched, SUSUBYU will enable seamless daily contributory savings into the customer’s thrift savings account. It is one of the products of its Freedom Network in partnership with commercial and Microfinance banks. The Freedom network is a CBN-licensed super-agent offering financial services

through its agents across the country. The platform was developed as part of its unswerving commitment to provide easy access to financial services for the financially excluded. 3Line leverages technology to foster a safe, easy, robust, and efficient contributory savings scheme popularly known as Esusu, Adashe, and Ajo across Nigeria with SUSUBYU. The product will also enable customers’ access to microloans instantly upon meeting the set criteria. Sibigem Chibuzor, Operations Manager, 3Line, reiterated that 3Line is keen

on impacting the people at the grassroots positively: making financial service conveniently available to

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them. “It has always been our goal to reach the people at the grassroots to add sus-

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@Businessdayng

Wednesday 15 May 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Motoring

Newly redesigned HR-V tackles segment rivals MIKE OCHONMA Transport Editor

istor y was made last week inside the Federal Palace Hotel, Victoria Island, Lagos following the launch of the all-new Honda HR-V completely redesigned to tackle the status quo in its segment The all new HR-V marks the presence of an entry level SUV from the Honda Range which combines luxury with affordability. Customer can experience the power of three SUVs made up of the Honda Pilot 3.5litre, CR-V 2.4Litre and now the HR-V 1.8Litre. The Hi-Rider RevolutionaryVehicle (HR-V) 5 seater is proudly assembled in Nigeria with keen adherence to the Honda global production standards during the assembly process. It has been positioned as a fun and sporty SUV which has been designed to change the industry norm and the automakers say, they want Nigerians to experience joy of an SUV that should be for everyone. In terms of exterior styling, the All New HR-V receives exterior styling that expands its appeal to the millennials. The grille is enhanced by a new interpretation of the “flying wing” rendered in dark chrome and extending over the new projectorstyle headlights. Under the chrome band the grille opening has been restyled to emphasize a wide look, and the fog light housings have been enlarged to give HR-V a more aggressive stance. Also in the front is a sporty

front bumper that gives an elegant yet rugged look combined with LED headlights and fog lights. In the rear, taillights with Integrated LED Light Bars give the HR-V a distinctive, sporty look. New to the SUV-B segment is the panoramic sunroof, in the leather grade, making the HR-V deliver the feel of a larger sporty SUV ready for the next adventure. The new vehicle is flanked by 16” alloy wheels for the Fabric grade and 17” alloy wheels for the leather grade. It boasts of a youthful vibe with unique styling touches, that is further enhanced with intuitively designed HR-V cockpit ensures that everything is where you need it. The elegant dashboard includes the very latest technology, it’s incredibly easy to understand and use. Black aesthetic combination (fabric & leather grade) gives the interior of the HR-V a premium comfort feel

beyond its class. The interior of the HR-V competes in a more advantageous position when compared with vehicle above its segment. Designed to adapt to customers lifestyle, the HR-V gives one a clever, comfortable and spacious interior. A centrally-mounted fuel tank provides the HR-V with a huge boot and the novel second – row magic seat are further evidence of smart thinking and, is designed to configure in lots of useful ways to increase its carrying capacity. The HR-V, has the feature of the 60:40 split rear seat. These ingenious 60:40 split seats can dive down to the floor, making a large space truly vast, or tip up to allow for sideways loading of awkward objects like a bicycle. With the new stay-spring mechanism for the hatch, it’s now easier than ever to access HR-V’s cargo space of 1456 liters. HR-V also offers up to 100.1 cubic feet of

passenger space with abundant rear seat head and legroom. The chassis incorporates a centrally mounted fuel tank, which provides perfect weight ratio and concentrates the mass in the center. This in conjunction with the amplitude reactive dampers give the HR-V excellent driving dynamics and minimizing body roll. Safety-wise, the 2019 HR-V also benefits from a standard list of active and passive safety features. This includes Vehicle Stability Assist (VSA) with traction control, driver and passenger front airbags standard on both grades, side airbags and side curtain airbags on the leather Grade only, Electronic Brake Distribution (EBD), Hill Start Assist (HSA) and Honda’s next-generation Advanced Compatibility Engineering (ACE) body structure. The leather Grade also features a multi-angle rearview camera with wide view feature.

Classic cars galore as Knysna Motorshow ends

he Knysna Motorshow has in grand style. Labelled South Africa’s premier motor show, the Knysna Motor Show was staged to attract about 400 classic and vintage cars. With the event being the Knysna Motor Show, it is organised by the Garden Route Motor Club and sponsored by Sanlam Private Wealth. The wonderful thing about this show is that, as far as possible, it caters for everyone’s motorised tastes. The cars range from the mega-expensive to affordable, as do the motorcycles. From the dawn of the motorised age 100 years ago and more, to the techno marvels of more recent times. But they have all been chosen because there is something about them that gives them a unique place in motoring history,” says chief organiser Peter Pretorius. Among other vintage cars, Bentley celebrated its centenary this year, with more than 20 vintage and classic Bentleys on display, the earliest being the 3.0L examples from 1922. Another major anniversary this year was the 60th birthday of Mini, including the iconic Cooper S model that was so successful in rallying between 1964 and 1967. That’s not all as organ turns 110 this year, so organisers marked the brands historic milestone with the presentation of about 18 of these iconic cars that was on display.

Revamped Everest reinforces Coscharis’ Ford model line-up …refreshed design, more luxurious interior, improved comfort

oscharis Motors has unveiled the new Everest XLT Range and Everest Limited at the just concluded 14th edition of the Lagos International Motor fair at the Federal Palace Hotel, Victoria Island, Lagos. The local dealership says that, the new Ford Everest is the most sophisticated Everest sevenseater sport utility vehicle (SUV) on the market. It is more appealing than ever with a range of styling, suspension and feature upgrades. As Ford’s premium offering in the rapidly growing SUV market, the New Everest puts the emphasis on quality, refinement and luxury matched to exceptional space and practicality. At the unveiling event shortly after the Motorfair was declared open, Abiona Babarinde, general manager in charge of marketing and communications at Coscharis Motors said, “We are excited the new Everest will be joining our local line-up. It will provide Ford an important position in the SUV segment. It is a segment which continues to grow in Africa, as well as around the

world. Consumers are opting for versatile, family-oriented vehicles that suit their active lifestyles,’’. The Everest have also raised the game even further by introducing subtle yet effective styling updates with the eye-catching exterior, providing a more refined and luxurious cabin environment. It has also added several new

trend-setting technologies to the already feature-packed range, and building on the outgoing model’s superb comfort and ride refinement with a revised suspension set-up. More so, the Everest comes in diesel engines, which is what some of our oil services customers have been yearning for, as it is more ideal for access into highly

inflammable locations than its petrol counterpart.” The new Everest communicates rugged off-road capability with a sense of refined artistry that takes Ford’s seven-seater SUV to a new level within the segment. The refreshed design emphasises exclusivity and capability. Its refreshed grille introduces a new level of depth to the design through the layering of three distinctive grille bars that exude exclusivity and luxury whilst presenting a sense of strength and robustness. As with the New Ford Ranger, the New Everest has benefited from numerous suspension improvements that further enhance ride quality and refinement. Most notably, the front-mounted stabiliser bar has been moved to the rear of the front axle, which allows for greater packaging and design freedom, along with an increase in diameter and stiffness to give the Everest improved roll control and handling performance. The New Everest provides premium levels of quality, outstanding interior space and maximum

versatility with a selection of new, richer materials and design details that emphasise luxury and style throughout. Overall suspension compliance has been improved, with three damper tunes being adopted for the New Everest range in place of the single set-up used previously. This ensures that the ride characteristics are better tailored to the engine and drivetrain configurations, resulting in a plusher ride over rough surfaces without impacting the Everest’s maximum towing capacity of 3 000kg with a braked trailer. The Everest Limited continues to set the benchmark for active driving features, including Semi-Automatic Parallel Park Assist (SAPPA) that uses ultrasonic sensors on the front and rear bumpers to search for and identify parking spaces that are big enough to parallel park the vehicle. A combination of the Everest’s electric power-assisted steering (EPAS) and sensors are used to steer the vehicle safely and perfectly into place, while the driver simply operates the gears, accelerator and brake.

Wednesday 15 May 2019

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BUSINESS DAY

TRANSPORTATION Motoring

ModernTravel

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Roads

RailBusiness

Infrastructural forfeiture not part of Nigeria’s loan agreement with China- FG ith countries like Sri Lanka, Zimbabwe,Djibouti, zambia, Namibia, Kenya and Angola among other countries presently at the verge of forfeiting their infrastructures to China over unpaid debt, Nigerias Minister of Transportation, Rotimi Amaechi, has said that infrastructural forfeiture is not part of Nigerian loan agreement with China Exim bank. Speaking at the 6th Annual East African Transport Infrastructure conference in Nairobi, Kenya, Amaechi on Monday, the minister reassured that the

is that, they are taking over to mange and get their money but its not so in Nigeria”. He stated. Amaechi lamented that, “If you don’t go to China, who will give you money! America is going to China even Russia, what is wrong if Nigeria goes to China, I think we should not be afraid of China”. The Minister expressed that nobody runs railway with passengers fare. You can never get one naira out of it. Nigerians just think railway is just to carry passengers but the problem is that the goods that should be on the rail are the ones on the road and its destroying the road. He said that once the rail projects

Chinese government would not take over the country’s Infrastructure over the inability of the Nigerian government to pay back loan collected from Exim bank. This assurance is coming at a time when many industry watchers are warning that the assistance from China will come with a price of economic take over if Nigeria is unable to repay their loan. Amaechi assured that the agreements between Nigeria and China Exim bank, does include property takeover. He added that the inability of some countries to pay back their loan has affected Nigeria in the area of loan assessment from the Chinese government. ‘’I don’t know the arrangement these countries made with Exim bank; I do not think we will have any problems with repaying our loans. The countries that they are talking about are Kenya, Somalia and Sudan. These are some countries that have not been able to repay their loans i think. So what they (China) are doing

are concluded and those goods are transferred to the rail that is when the money will be start coming in to pay debts. In a related development, Amaechi said government is entering partnership with another Chinese company CCRCCI. The company is to raise 10% of the equity; the federal government will raise 15%of the equity. The remaining 75% is to be borrowed not by the federal government but by the company because we formed a Special Purpose Vehicle (SPV) in which we use in running the contract. The SPV is a company that will run that contract. It will run the contract, complete it and run the business. They will borrow money to run the business and pay back the loan”. The federal government will give them a sovereign guarantee, for which they in turn will give a performance guarantee that is indicative of what we are not able to pay back and they call for the federal government guarantee, we call for their own performance guarantee. So back to back, the federal government is protected. He said.

STELLA ENENCHE, Nairobi

W UK holidaymakers lose £7m to fraudsters in 2018 - ABTA MIKE OCHONMA

raudsters stole over £7 million from unsuspecting UK holidaymakers and other travellers in 2018, a new report has revealed. As a result of this, ABTA, Action Fraud and Get Safe Online are joining forces to warn the public about the dangers posed by holiday booking fraud and give advice on how to spot and avoid travel-related fraud. The report compiled by Action Fraud and the National Fraud Intelligence Bureau details the most commonly targeted areas of travel and the methods used by unscrupulous criminals to defraud the travelling public. Over 5,000 people reported to Action Fraud that they had lost a total of just over £7 million to holiday and travel related fraud, an increase on last year, when 4,382 victims reported losing £6.7 million. The average amount lost was £1,380 per person but, as in previous years, in addition to the financial cost, victims have also reported the significant emotional impact caused by this crime. The three campaign partners

also believe that, the actual total figures relating to travel fraud may be even higher, with many victims feeling too embarrassed to report. Over half, 53 per cent, of the crimes reported were related to the sale of airline tickets.These reports were made consistently throughout the year, however the largest individual loss, of over £425,000, was made in August 2018. The next most common fraud, at 25 per cent, is related to the sale of accommodation, with a peak in reported losses in October. This indicates that many victims report their loss after the end of the summer holidays, being the busiest time of the year for travel and a popular target for fraudsters. Mark Tanzer, ABTA chief executive, said: “ABTA sees at first-hand the damage caused by travel fraudsters after customers find out their much-anticipated holiday or trip to visit family and friends does not actually exist. “This is why ABTA, Action Fraud and Get Safe Online work together to make people aware of the steps they can take to avoid falling foul of a holiday scam”. In 2018 over 5,000 cases of holiday and travel booking fraud were reported

to Action Fraud. The most common types of fraud related to airline tickets as well as flights relating to holidays, fraudsters particularly target the visiting friends and family market with flights to Africa and the Indian subcontinent dominating the list of affected destinations. The campaign partners believe that fraudsters may be exploiting lack of knowledge of the strict UK regulations in place governing the sale of airline tickets. Accommodation fraud is another area where fraudsters are using increasingly sophisticated methods, with very professional and convincing websites offering upmarket villas for rent. Although some of these villas are fictitious many actually exist, but are being offered by fraudsters without the legitimate owner’s knowledge. Spain and France are the two destinations most commonly targeted. Religious trips are particularly attractive to fraudsters as the amounts of money involved especially during Hajj trips are substantial with the average loss totalling almost £10,000 per reported case.

GM recalls 368,000 Pickup trucks over fire risk

eneral Motors announced that, it is recalling 368,000 of those trucks. The best way to deal with the cold weather starting problem is to install an electric engine heater to ward off the worst effects of the cold. Plug it in and all the internals of the engine will be toasty warm at oh-dark-hundred when it’s time to fire up your truck and head off to work. The problem for GM is that a wiring defect in the engine heaters installed in some of those medium and heavy duty trucks can lead to fires under the hood. According to NBC News, the recall covers trucks equipped with the optional engine block heater. Some 2019 Chevrolet Silverado 4500, 5500, and 6500 trucks and 2017-2019 Chevrolet Silverado and GMC Sierra 2500 and 3500 trucks equipped with Duramax 6.6-liter diesel engines are affected. GM

has sold 324,000 of those vehicles in the U.S. Dan Flores, GM and spokesperson says there are no reports of injuries, accidents, or fatalities associated with the fires. A company engineer first discovered the

fire hazard issue while inspecting an engine block heater recovered from one of the fires. The company stopped building trucks with the engine block heater in April and is working with its supplier to fix the problem.

Wednesday 15 May 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Can the gig economy close the wage gap?

n discussions about the persistent inequities between men’s and women’s pay, factors such as managerial discrimination, a lack of transparency regarding salaries and women’s reluctance to negotiate dominate. A new study takes those things out of the equation by focusing on a novel data set: Uber drivers. The researchers examined data on all UberX and UberPOOL drivers in the United States (totaling more than 1.87 million) from January 2015 to March 2017. They learned that on average, men made $21.28 per hour (before expenses), while women pulled in just

$20.04 — a difference of 7%. Because fares are set by formulas that don’t vary from driver to driver, managerial discretion and employee bargaining styles cannot explain the disparity. Discrimination on

the part of riders was investigated and ruled out. Controlling for various other factors, the researchers found that the gap was entirely attributable to three things: where people drove, the depth of their experi-

ence on the platform and driving speed. Men tend to operate in more-lucrative locations — areas with higher crime rates and more drinking establishments, where fares are raised to compensate for risk. They log more hours each week and stick with the company longer, so they accumulate more experience and can make better decisions about where and when to drive and which trips to accept. And because men drive faster, they complete more rides in the same period of time. Judging from these findings, “there is no reason to expect the ‘gig’ economy to close gender differences,” the

researchers write. Still, they see reason for hope. “Overall, our results suggest that onthe-job learning may contribute to the gender earnings gap more broadly in the economy than previously thought,” they conclude. “Policies that could target changes in the time-use choices of men and women could narrow the gender pay gap by helping women move up the learning curve at the same pace as men.” ABOUT THE RESEARCH: “The Gender Earnings Gap in the Gig Economy: Evidence from over a Million Rideshare Drivers,” by Cody Cook et al. (working paper)

Is your corporate culture cultish?

WORK VS. LIFE ach company has its own “culture” — the values and norms that define what is and isn’t appropriate behavior for the organization. Culture guides how you work, and a healthy one enables companies to attract and retain highly motivated employees and unite them around a common goal, purpose or cause in pursuit of sustainable performance. But what starts out as voluntary alignment sometimes ends up looking like something more sinister. Healthy corporate cultures can easily turn into corporate cults, whether leaders intend for it to happen or not. Many of the companies we celebrate are treading that fine line; Apple, Tesla, Zappos, Southwest Airlines, Nordstrom and Harley Davidson are a few examples. They have all built a cultlike following among their customers and, increasingly, are encouraging cultish behaviors in their workforces as well.

What characterizes corporate cults is the degree of control management exercises over employees’ thinking and behavior. This starts with recruitment, where employees are screened for their “fit.” Once in, they then see that onboarding processes and incentive systems tend to reinforce the need for alignment. This drives the way people communicate, make decisions and evaluate each other; it also affects hiring, promotion and termination decisions. In such a climate, individualism is discouraged, and groupthink prevails. Some cultlike companies go so far as to position the workplace as a replacement for family and community, isolating their employees (perhaps unintentionally, perhaps deliberately) from those support networks. They encourage people to center their lives around their jobs, which leaves little time for leisure, entertainment or vacations. How can you tell when a

company is becoming a cult? Language is a big clue. Corporate cults typically create their own terminology to reinforce the sense of belonging. Rituals like compulsory cheers and singalongs are another warning sign — even if rituals in general are not always problematic. Red flags should go up when there are too many pep talks, slogans, special lingo, podcasts, YouTube clips, motivational team-building activities and songs. Any time there’s

a potential for people to feel excluded for how they think or feel, the organization has entered cult territory. And ultimately that will be bad for business. The rigidity of cult behavior stifles innovation, thereby endangering the company’s future. If you’re a senior executive, you should always be on the lookout for signs that your culture has become psychologically coercive. Ask yourself: Do employees believe in the company’s vision because they

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understand and agree with it or because that’s what they’re supposed to do? Does the company encourage them to have personal lives? Most important, does it encourage the individuality and nonconformism that drive breakthroughs? To be sure, alignment matters — and a great culture will involve learning from the past, agreeing on core values, finding people who both compliment and challenge one another, engaging in open communication, having fun and working as a team. But it is equally about healthy debate. When a culture ceases to embrace diversity and dissent, it becomes a cult.

Manfred F. R. Kets de Vries is a professor of leadership development and organizational change at INSEAD and the author of “Down the Rabbit Hole of Leadership.”

Wednesday 15 May 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

The executive director of a UN agency on running it like a business GRETE FAREMO

eading the United Nations Office for Project Services, which I’ve done since 2014, requires a daily walk across a political tightrope. But I try not to let politics distract me from my primary goal: helping the agency continue to become a self-funded, sustainable and entrepreneurial arm of the United Nations — staying true to our original mission even as we diversify to serve a wide array of clients and take on projects unlike what most people envision for a nongovernmental organization like ours. Not long ago the organization teetered near bankruptcy; today it’s growing smartly. UNOPS has been able to change dramatically, creating a culture of discipline and a measured approach to risk-taking. CONFLICTED INTERESTS UNOPS has an unusual history. Until the mid-1990s it was a project-execution department within the United Nations Development Program, which is comparable to other large UN agencies such as the International Children’s Emergency Fund and the World Food Program. UNOPS always charged other members of the UN family to cover the costs of projects, but as it grew, so did a seed of doubt. So a group of UN officials proposed forming a new, self-financed organization, independent of political and funding decisions, which would implement projects on the ground at the country level. The hope was that this would address the conflict-of-interest problem — and that moving away from the UN bureaucracy would also make the organization more efficient. UNOPS was spun off as an independent entity in 1995. It began bidding for work on infrastructure, project management and procurement for the UN and other public-sector entities. For much of its first decade, UNOPS was on a slow slide toward bankruptcy. It didn’t have enough experience to deliver on assignments efficiently, with the necessary quality, at the right cost. My predecessor as executive director, Jan Mattsson of Sweden, faced a make-or-break decision in June 2006. He and his deputy, Vitaly Vanshelboim of Ukraine, were given six months to either create a plan to radically transform the organization or shut it down. They chose to implement a turnaround. They began championing the concept of excellence and trying to benchmark UNOPS not just against its peers in the public sector but against the best of the private sector. MAKING TOUGH CHOICES When I arrived, in August 2014, my goal was to take this approach to the next level. My experience in the private sector and in government had prepared me for such a high-pressure assignment. In my first weeks there I realized I would need to make significant changes. Because of the perceived success of the

Michael B. Curry

organization’s initial recovery phase, complacency had started to creep in. Some colleagues were convinced of UNOPS’s invincibility and their personal infallibility. When I began talking about taking a fresh look at how we worked, they quietly attempted to undermine my efforts. I didn’t allow that situation to fester; some of those people, who were widely perceived as “untouchable” because of their roles and levels, had to leave the organization. I identified structural problems as well. Over the preceding years, a bureaucracy had developed. That’s not surprising: The UN loves bureaucracy. But I believed that the rules and regulations at UNOPS were too complex and overlapping for efficiency, so I set the team a challenge: Replace them. We also needed to improve the way we accounted for costs and set prices. Before I arrived, the organization had been using a simplified method: estimate overall costs and add 7% as a management fee. Cost-plus pricing is commonly used in government contracting, but as UNOPS began operating more like a private company, it needed more sophisticated pricing tools. DEALING WITH COMPLEXITY To understand how we’ve changed, one needs to appreciate the complexity of the work UNOPS is often asked to take on. Many of our projects carry risks beyond what a private company would be comfortable with. In the private sector, the competitor with the best price typically gets the job. Things are not always so straightforward in the public sector. Politics is a major factor. There are times when we believe

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that UNOPS would add the greatest value to a particular project, but we need to tread very carefully, because other players may believe that it should be assigned to a specific implementer for political reasons. To deal with all this complexity, I introduced better risk management to improve decision-making and accountability. I asked colleagues to do more monitoring and documenting of past projects, to learn what worked or did not and why. I emphasized listening to dissenting opinions and started to challenge some classic justifications organizations use for pursuing a project that may not make financial sense. I’ve had to grapple a lot with the issue of cost control. UNOPS’s finances have strengthened, but some on our team believe that we’re “awash in cash” and should go on a spending spree. I profoundly disagree. At every opportunity, I reinforce the message that our current solid performance is no guarantee of future results. Nonetheless, we’ve been able to grow at a time when the UN budget has been fairly flat, because governments have come to see us as the preferred partner. Our operational reserves have nearly doubled, and we’re investing in digitization. We’re also embarking on our most ambitious initiative to date: social impact investing. EMBRACING INNOVATION This next stage of our growth — in which we’ll partner with the private sector, share risks and go to market together — has a lot of potential, but it’s controversial. Instead of just winning contracts, we’re using our cash to invest in assets @Businessdayng

and put skin in the game. More than most private-sector companies, we help clients think long-term. For instance, we use data and a proprietary model to help governments better understand what to build, when and how — and even when not to build — to create a strategy for infrastructure needs over the next 30 or 40 years. UNOPS will always be about quality implementation. And we’ll continue doing business in places where many organizations hesitate to go — regions where governments are fragile and UN peacekeepers are required. Even as we move into investing in bankable projects, we won’t neglect our core. We will, however, pursue our goals with more discipline, risk management and cost consciousness than we have in the past — and we’ll keep saying no to projects that don’t make sense. Those things aren’t easy for an organization like ours, but they’re essential if we want to keep helping countries develop for many years to come. Grete Faremo is the executive director of the United Nations Office for Project Services.

Wednesday 15 May 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

NIMASA grows Nigerian-owned Cabotage vessels by 33% to 125 in 2018 …As Nigerian seafarers on-board vessels rise by 58% to 2,840 amaka Anagor-Ewuzie

ollowing its zero tolerance on g ra nt i ng ma n ning waivers, the Nigerian Maritime Administration and Safety Agency (NIMASA) increased the number of vessels owned by Nigerians by 33 percent between January-June 2018, says NIMASA 2018 half year report. The number of vessels registered by the agency to fly the Nigerian flag rose to 125 from the 94 vessels registered in 2017, according to the report. According to the halfyear report released by the agency, which was sighted by BusinessDay, vessels manned by Nigerians within the period under review also increased as a total of 2,840 Nigerian officers and ratings were recommended to be placed on-board Cabotage vessels in 2018. This represents a 58 percent increase as against 1,789 Nigerian seafarers recommended by the agency to be placed on-board Cabotage vessels in the same period in 2017. With this, there seems to be an increase in indigenous participation on Cabotage vessels manning, ownership building and registration,

Source: Nigeria’s Maritime Industry Forecast (2019 - 2020) and NIMASA attributed this gradual growth to zero tolerance on granting manning waivers. Also, within the period under review, the agency also introduced electronic software for vessels monitoring and investigation especially monitoring vessels on Nigerian territorial waters. Commenting, Dakuku Peterside, director-general of NIMASA, said the agency had been able to improve interface with the Nigeria Content Development and Monitoring Board (NCD-

MB) leading to a harmonised marine vessel categorisation standards to deliver a common database. “We have increased Port State and Flag State inspections leading to significant reduction of sub-standard vessels on our waters,” he said. “In the past two years, we have increased the number of vessels surveyed to ensure compliance to Flag State or Port State vessels. There has been tremendous increase, which has more than doubled, compared to what used to happen in

NPA seeks review of border post regulation by Customs to facilitate trade amaka Anagor-Ewuzie

o consummate the gains of the ongoing port reform process, the Nigerian Ports Authority (NPA) has called on the Nigeria Customs Service (NCS) to review its border post regulations to facilitate trade. Iheanacho Ebubeogu, general manager, Security of the NPA, who disclosed this in a statement, said the port reform was expected to go through three areas that include business model, institutional reform and infrastructural development. He added that for a total reform to be achieved, there was need for triangular Customs activities to be optimised. This, according to him, entailed striking a balance among revenue generation,

border posts regulation and trade facilitation. He also called for the review of Customs and Excise Management Act (CEMA) to achieve effective border posts regulation. “The revenue element had been taken care of, but we need to review the Customs laws so that the other two sides of the triangle are include border posts regulation and trade facilitation are also strengthened,” Ebubeogu said. On port reform programme, he said NPA had done well as it had gone half way in its own reforms initiative with a focus on the passage of the Ports and Harbour Bill. “The port as a complex wears two caps. One cap is marine logistics, which is what NPA has done. In this cap, we have the NPA, terwww.businessday.ng

minal operators, shipping companies and freight forwarders. So, NPA has gone half way in its own reforms. But Customs laws need to be reviewed to strike balance in the port system,” he added. Ebubeogu, who stated the NPA never questioned the integrity of government’s tax collection or the decency of Customs’ revenue collection, said government had ensured that tax payers’ money was handled well to encourage the culture of tax payment. “In terms of revenue, NPA has done well with Treasury Single Account (TSA) and has even gone further by coming up with various machineries which serve as dragnet to holding those who have not paid their taxes. Government has also done well with that,” he added.

the past,” said Peterside in a recent interview with newsmen. According to him, NIMASA had issued about 1,200 Certificates of Competency (CoCs) but in the past two years alone, it had exceeded 2,300 CoCs, almost twice the number of CoCs issued in the previous period, comparatively. “Issuance of Certificate of Competency to seafarers comes under our moderation because we examine and moderate seafarers to ensure that Nigerian seafar-

ers can compete with the best anywhere in the world,” he added. On manpower development, he said NIMASA had through the Nigerian Seafarers Development Programme (NSDP) invested in the training of many cadets while 1600 cadets are at various stages of completion of the programme, and 887 of which are ready for sea-time training. “We are currently tackling the issue of sea time head-on; via full sponsorship. With the full sponsor-

ship of seatime by NIMASA, about 150 cadets have commenced their on-board seatime training in phase 1 while another group of 89 cadets are now on-board training vessels facilitated by the South Tyneside College, UK, making a total of 239 cadets in the first phase of this programme,” he disclosed. On getting more Nigerian vessels participate in Cabotage trade, NIMASA had commenced talks with the Nigerian National Petroleum Corporation (NNPC) on affreightment of Nigerian crude oil. “Ever ywhere in the world, countries that are selling crude prefer Cost, Insurance and Freight as terms of trade while countries that are buying the crude prefer Free on Board (FoB), but in Nigeria it is the other way. “This was why we commenced engagement with the NNPC to change the terms of trade from FOB to CIF and we had far reaching conversation on the issue. We have agreed to set up a technical committee that is made up of stakeholders, NIMASA as regulator, other regulatory agencies and NNPC itself, which we have done and we hope something positive will come out of this,” he assured.

APM Terminals Nigeria appoints Ahmed as new MD

ohammed Ahmed has been appointed as the new managing director of APM Terminals Nigeria to oversee the operations of the company in Nigeria, Benin Republic and Ivory Coast. He is an experienced leader with a demonstrated history of delivering strong financial results in shipping, logistics, maritime, ports, towage, light-offshore and oil & gas services across a number of markets spanning Africa, Asia, Middle East and Europe. “Nigeria is a huge market with a great potential for growth. We will work with the Nigerian Ports Authority (NPA) and other government agencies to reposition Nigerian ports for optimum performance and ensure efficiency and prompt service delivery to customers,” he

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Mohammed Ahmed

assured. According to him, APM Terminals is committed to supporting the Federal Government’s export drive in order to diversify the nation’s revenue base and reduce overdependence on oil. Ahmed holds a BSc in Economics & Social Policy from Birkbeck, University of London and brings about two decades experience into his new role. Prior to his appointment, Ahmed served as the man@Businessdayng

aging director of Svitzer for Asia, Middle East, Africa and Russia (AMEA) from January 2016 to December 2018, where he supervised the operation of a modern fleet of 90 vessels operated by over 1,200 highly trained and professional crew and onshore staff. He also had full responsibilities for managing the company’s operations in India, Bangladesh, Saudi Arabia, Qatar, Bahrain, U.A.E, Sohar (Oman), Muscat (Oman), Angola, Egypt, Morocco and Russia, serving oil and gas majors and port operators. Ahmed had earlier served in Nigeria as general manager, Commercial Planning from 2008 to 2010 where he had responsibility for trade strategy, performance management, capacity, market intelligence, and business development, among others, in Nigeria, Ghana, Benin, Niger and Togo.

Wednesday 15 May 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Shareholders, workers express disappointment with performance of GWVSL mgt amaka Anagor-Ewuzie

he family of Late Romeo Itima (Captain), majority shareholder at the Global West Vessel Specialists Limited (GWVSL) have expressed disappointment over the alleged ‘lacklustre performance’ of the present management of the company led by Winfred Itima as managing director. Speaking on behalf of the family in an interactive session with about 30 workers of Global West and newsmen on Sunday, May 12, 2019, Kevin Itima (son of Late Romeo Itima), condemned the refusal of the management to pay the salaries of workers for about three years now. Kelvin debunked the claim that workers are not being paid because of the court case instituted against Winfred by the estate of Late Romeo Itima. “It has come to our attention that the managing director, Winfred Itima, has informed the workers that the civil lawsuit against him by the Estate of Romeo is

L-R: Zion Itima, son of Romeo; Kabowei Ojigbare, staff of Global West Vessel Specialists Limited (GWVSL); Kevin Itima, son of Romeo and Itoro Etim, staff at a meeting with the family of late Captain Romeo Itima, majority shareholder at GWVSL on Sunday in Lagos.

what is delaying the payment of their salaries. Winfred as managing director has not followed ethical business standards and not only has he placed the company within the sights of Economic Financial Crime Commission (EFCC) but has also left workers unpaid for over three years. He has also not paid shareholders their proper proceeds, which leaves the question of

what has Winfred done with Global West money?” Kelvin alleged. Stating that workers and shareholders should not continue to suffer as a result of the poor leadership, Kelvin said that Winfred should be held fully accountable for his actions during his tenure, adding that Winfred must relinquish his hold on the company. “Winfred should work

with employees’ legal representatives to make sure they are paid their full salaries. He should also reimburse the workers the legal fees incurred while fighting for their salaries,” he added. On behalf of the workers, Kabowei Ojigbare appealed to the estate of Late Romeo Itima to come to their aid, stating that they had suffered for too long. Ojigbare disclosed that

to raise fund to pay for the services of their lawyers in the court case against the company for not paying their salaries, Global West workers bargained to relinquish 7 percent of their salaries to their legal representative. According to him, workers ended up losing 15 percent of their salaries to the counsellor, when three months’ out of the three years’ salaries owed, were paid earlier this year. Recall that Global West Vessel Specialist Limited (GWVSL), a maritime security company, was established by late Romeo Itima, who was also the pioneer managing director/CEO in 2009. Unfortunately, he was killed at Escravos, Delta state on the 7th of August, 2012 by pirates. Winfred Itima, elder brother of the deceased, who was considered the closest family member, allegedly took control of the company shortly after his death without the consent of all family members. Dissatisfied with the way the company was being run, the Estate of Romeo Itima dragged their uncle, who

is the current managing director of GWVSL, to court over allegations of financial mismanagement and unprofessional conducts. He is being sued alongside other directors including O luwagbenga L eke Oyewole and Olabisi Idowu Afolabi, by the wife of Romeo Itima, Helen and two of her children, Zion Itima and Kevin A. Itima. On the other hand, Global West Vessel is presently being investigated by the EFCC over its waterway security contract with the Nigerian Maritime Administration and Safety Agency (NIMASA) during ex-president GoodLuck Jonathan’s administration. With the EFCC investigation, the company’s account was frozen in 2015. The workers however revealed that the account was opened in December 2018 on the instruction of EFCC to enable the payment of workers’ salaries and the clients, to pay the Global West what they owe it. Unfortunately, the available money was only able to cover for three months salaries of the workers.

lives of young people. The innovations that UNICEF is already working on can transform billions of lives and help us achieve United Nation’s Sustainable Development Goals (SDGs),” Jadesimi said. UNICEF works in 190 countries, with the aim of saving children’s lives, de-

fending their rights, and helping them to fulfil their potentials, from childhood through adolescence. LADOL is building the world’s first Sustainable Industrial Special Economic Zone (SISEZ), using UN’s SDGs to build a unique circular ecosystem, servicing a range of industries.

Amy Jadesimi, LADOL boss Joins UNICEF advisory group

my Jadesimi, managing director of Lagos Deep Offs hore L o gisti c s (LADOL) Base, has been nominated as one of the global leaders recently invited to join the inaugural Advisory Group for the United Nations Children’s Fund (UNICEF).

Jadesimi was selected as an important partner with unique expertise, who could help to expand UNICEF’s vital work to address the enormous challenges and rapidly changing environment faced by children across the world. The Advisory Group will serve as an independent

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sounding board and “thinktank,” to explore lessons learned and exchange fresh ideas and perspectives on top-line global issues and developments affecting children and young people worldwide. The inaugural meeting of the Advisory Group was held in New York at the

United Nations headquarters in the first week of May 2019. “It’s a great honour to be asked to join the UNICEF Advisory Group. Coming from Nigeria, a country where 41 percent of the population is below the age of 15, I am particularly keen to focus on improving the

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@Businessdayng

Wednesday 15 May 2019

BUSINESS DAY

INTERVIEW

‘Government needs to refocus attention to the people on urban planning issues’ RASHEED OSINOWO, Chief Executive Officer, Osinowo & Associates, and Assistant General Secretary, National Institute of Town Planners (NITP), Lagos State Chapter, spoke with BusinessDay’s ISRAEL ODUBOLA on the role of town planners in urban planning among others. Excerpts: Looking at the major cities in Nigeria, especially Lagos, you see that they are cluttered and improperly planned. From your perspective as a town planner, why is this so? ost of what we have now is inherited. There have been plan from government to make the city a livable place for all and sundry. By and large, the development is far going beyond planning. This is the first reason we have this planlessness. It is like planning is catching up with development. Population is growing and government does not have enough hands to handle most of these issues. In planning parlance, it is tagged as organic growth. People are growing organically without practical guide. Secondly, the government is not really doing enough. Whenever we talk to government about the way-out, they keep complaining about lack of resources. Even when we talk about getting more hands from the public sector, we are shocked to hear them say they don’t have enough funds to pay salaries. People have been looking at Lagos as a place to be, like a safe haven. People come to Lagos from all parts of the country to seek survival. Getting to Lagos whichever way, and by so doing, we have lots of buildings coming up organically.

on road transport. We should also look at pipeline mode of transportation. If there is a well-connected pipe network, the trailers on road won’t be there. I think it is the issue of diversification where we explore other modes of transportation. I will not lie to you, the Apapa port was not planned for the population we have today. This is why other ports need to be developed to de-congest Apapa.

For cities to thrive, there should be new approaches to urban planning by professionals like you. What are the modern tactics urban planners are adopting for better cities like what we see in New York, London, Paris and Chicago? It is not rocket science of a thing. It is for us to do what we ought to do; to make sure we change the status quo. There is need for orientation. We need to get people involved. We need to plan with people. We need to adopt the bottom-top approach to planning. We also need to disseminate information to people to make them see the reason they should have it right in terms of their environment and what they do, how they construct their structures. Secondly, stakeholders comprising government, urban planners and professionals need to work with the people. From the government point of view, it needs to refocus attention to the people. According to the United Nations, about 70 percent of Lagos residents are living in slums. So if this is the case, government should re-engineer priority on slum dwellers. That should be the focus. We should not be looking at the wealthy

Rasheed Osinowo

ones. For example, there are various housing schemes government is proposing, and some are completed. But on the average, it is unaffordable to the common man even though government keeps saying they are affordable. By affordability, I mean it is not affordable to the middle class, public servants and much more those who don’t have enough. By and large, government is not actually planning for the people, but it is important for government to plan for the people. The role of urban planners here is advocacy. It takes time. It is not within our purview to say we want to get everything right. Our own role is just to envision. Planning is futuristic, so we need to come out with suggestions and recommendations, and where government is not getting it right, we advise them. So at the end of the day, the state gets to the position we want it to be in terms of urban planning and environment at large. Building Collapse has reached an alarming stage in Nigeria. It is so bad that it occurs somewhere within the country every six months. Some people say town planners have got their share of the blame for poor service delivery. How true is this? A lot has been said about building www.businessday.ng

collapse from the professional point of view. It is not just the town planners. Everyone has a stake in building collapse one way or another. We talk about poor supervision. The so called building collapse starts from inception. Every building has a life span. If you go to Lagos Island, a number of structures have been in existence for over 100 years. From conception stage, there is a life span for those buildings, but people live there as if it will last forever. The nature of the land in those axes is not firm. Building collapse has a lot to do with the conception stage, supervision, building materials, and other aspects that can affect physical structures. But, by and large, I feel government has a role to play in this. Remember what I said earlier that 70 percent of Lagos residents live in slums. So, slum dwelling is not meritorious, it is not the wish of people to live there. This falls back to the fact that government has a role to play to curb the menace of building collapse, and how? They need to come up with schemes. Governments of developed nations do not leave housing to the people. They intervene by constructing housing units for people in all social classes. And to get this right, there are lots of modalities where government can partner with individuals, private

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sector, and to give them incentives to erect sound structures affordable to all. Apapa, Nigeria’s premier port city is today a failed and dysfunctional part of Lagos. As a planner, what do you think is wrong with Apapa? If you had the opportunity of replanning the port city and bring some sanity there, what would you do? The issue of Apapa has been there for time. I am happy to tell you that the genesis of the problem was those who occupy the ports are like they need to get out finding other places to have their consignment placed. It was from there onwards the Apapa issue started. One cannot proffer solutions to the issue of Apapa without talking about transportation. Transportation and planning go hand-inhand, and we call this circulation. The circulation of a thing is trying to diversify. We don’t need to focus on just one mode of transportation. Ultra-modern mode of transportation is what the government should look into, such as rail transport. Looking at Apapa those days, there used to be rail within the corridor of those industries. Instead of everyone plying by road, you go by rail. Rail transport is yet to be explored by the government, and this is an alternative to lessen the burden @Businessdayng

Some people say that given the many development coming up in Lekki area of Lagos including Dangote Refinery, Deep Seaport and other projects, Apapa might be a child’s play when these projects come on stream. What do you think can be done to avert this? For the fact that we have a deep seaport coming up in the Lekki Free Trade Zone, it is a plus. It will reduce the burden on Apapa. We still need to look at other means of transportation. The pipeline is there for them to utilize. Planning should be hinged on rail transport and other modes. We should explore all avenues of transportation so that we don’t just choke ourselves. Secondly, Diversifying to other means of transportation will help our roads. Our roads don’t last long because of the huge burden. There is another thing coming up which should also add up, that it nonmechanical transportation. As an executive member of NITP, Lagos State Chapter, what are the institute’s plans for the state in 2019? We have a lot of programmes for the year. We had a debate around before the elections where we have coalition of organizations championed by our chapter. The debate was an offshoot of our Change The City Project (CCTP). This is what we are looking at to give the state a turnaround across all sectors. It encompasses every aspects of the state including transportation, housing, etc. We have our professionals within the sub-groups to tackle the challenges we have in the state. That’s our plan for 2019. What is the body doing to have these goals achieved? We have rapport with the government. Within the chapter, we have elders that have connection with people in government. We know when it comes to policy issues, you cannot do it alone. It is a question of looking at people to champion the course. We are collaborating with relevant stakeholders to ensure our projects are achieved as they will have a long-lasting effect on the state.

Wednesday 15 May 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

Leapfrog breaks impact investing record, with $700m emerging markets fund MICHAEL ANI

eapFrog Investments has announced the largest-ever private equity fund by a dedicated impact fund manager, that will see the firm surging pass its $600m target to reach $700m. The new fund investing in healthcare and financial services companies aims to assist the firm in tapping into the demand from billions of emerging consumers in Asia and Africa, the firm said in a statement available on its site “It is time for a better kind of capitalism. LeapFrog was founded on a philosophy of Profit with Purpose, rejecting conventional trade-off thinking in financial markets. That has proved a winning strategy, driving strong growth and returns while changing tens of millions of lives,” said Andrew Kuper, Founder and CEO of LeapFrog Investments. “Today’s announcement marks an unprecedented level of commitment to independent impact investment managers, with a new fund backed by diverse best-in-class institutional investors. It also marks an important moment for responsible private equity. As our third fund and largest fund, it is a decisive demonstration that meeting the real needs of under-served people is a great business.”, Kuper added The fund will targets reaching 70 million emerging consumers and investors including many of the world’s leading insurers, pensions and asset managers, development finance institutions, foundations and family offices. According to LeapFrog, the success of the fund reflects LeapFrog’s outstanding track record of delivering both strong

financial results and large-scale social impact. “Prudential’s lead investment in LeapFrog’s latest fund underscores our conviction in the power of capital-based solutions to solve the financial, social, environmental, and economic challenges of our changing world,” said Charles Lowrey, Chairman and Chief Executive Officer of Prudential Financial, Inc. “We are pleased to partner with LeapFrog to realize the enormous potential for inclusive growth and shared prosperity in emerging Asia and Africa.” LeapFrog has invested in 26 businesses to date and has grown at an exceptional rate of nearly 40 per cent a year on average from the time of investment. The company now reach out to some 168 million people across 35 countries with healthcare or financial services. Over 136 million of those individuals are emerging consumers – defined by the World Bank as living on under $10 a day. Most are accessing quality insurance, savings, pensions, credit, remittances, medicines or healthcare services for the first time. LeapFrog’s new fund has already made five investments including health care companies such as WorldRemit, NeoGrowth; Goodlife; Pyramid Pharma and Meditech. WorldRemit is the leading digital remittances provider globally. NeoGrowth provides innovative unsecured-credit products to micro, small and medium enterprises across India. Goodlife Pharmacy chain is now the largest provider of healthcare services in East Africa. Pyramid Pharma is a distributor of medicines and diagnostic and surgical

equipment across Africa. And Ascent Meditech manufactures, delivers orthopaedic products across India that helps avoid crippling pain. “We want to substantially increase impact investing for a sustainable world – so we are delighted to be supporting the largest equity fund by a dedicated impact manager in emerging markets,” said Philippe Le Houérou, CEO of IFC, the private sector arm of the World Bank Group and a lead investor in the new fund. “By investing in this fund, IFC is expanding our long-standing partnership with LeapFrog and together we will drive this investment toward financial inclusion and health access. We want more and more investors who are looking to do well while also doing well.” This is LeapFrog’s third fund and it will once again be oversubscribed, the firm. Most backers are repeat investors with LeapFrog. They include: Global insurers Admiral, AIG, AXA XL, Everest Re, Hannover Re, Prudential Financial, QBE and Zurich Leading pensions and asset managers such as Ascension Capital, TIAA-Nuveen (USA), Kempen, Partners Group Impact, as well as Christian Super and HESTA (Australia) Leading development financiers such as Germany’s DEG, IFC and France’s Proparco; also a board-approved commitment from the U.S.’s Overseas Private Investment Corporation Major corporations such as Merck & Co., Inc., known as MSD outside U.S. and Canada, and foundations including PactWorld, the Ford Foundation and the Rockefeller Foundation

The new fund raised will take LeapFrog to $1.6bn of total commitments, sustaining its position as the largest private equity manager entirely dedicated to impacting investing. “As pioneers of commercial impact investing, our goal over the last decade has been to build truly differentiated investment vehicles, that present a compelling opportunity for top-tier investors to access emerging markets – and fulfil their financial and purpose objectives,” said Nick Moon, LeapFrog Partner and Head of Investor Relations. “We have been delighted with the enthusiasm for this latest fund from longstanding as well as first-time investors.” The fund also received strong backing from global leaders in development finance. David Bohigian, Acting President and CEO of OPIC says it is committed to supporting breakthrough investment in developing countries. “LeapFrog is a compelling fund manager and strong partner for deploying capital into successful companies to bring large-scale impact. Hence, “We are very pleased to be a lead investor in this new fund for emerging markets in Asia and Africa. This will expand the reach of development finance through investments in innovative portfolio companies that will serve millions of new consumers in the developing world.” Gary Brader, Group Chief Investment Officer, QBE says “QBE shares Leapfrogs’ passion for mobilising capital in order to both unlock value and drive better social outcomes through impact investing, and we are delighted to have this opportunity to partner with Andy and his team through this fund,“

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 15 May 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

NAICOM seeks to close skills gap as industry grapples with shortage of loss adjusters Stories by Modestus Anaesoronye

ndustry regulator, the National Insurance Commission (NAICOM) is making a new intervention that seeks to close skills gap of loss adjusters in the industry. The loss adjusting space over time has not been attracting fresh brains underlining a critical challenge that the sector will have to face if nothing is done now. According to analysts, that arm of the insurance industry has not been attractive in terms of remuneration for service (wages), making it unattractive for new graduates to take up employment in that space. While older professionals are aging, and no one is replacing them, raising concern as to what the future of the business entails. NAICOM during the past week engaged the country’s loss adjusters in a training on oil and gas, having partnered with BMK Advanced Corporate Training of South Africa. The three days training held in Abuja. Loss adjusting business according analyst were being hit hard by poor revenue, not only resulting from their low payment scale compared with their international counterparts, but were being fleece-off life by underwriting companies who utilise their services, but owe them uncontrollably. The implication therefore is that, the loss adjusting firms have become less sustainable, inability to pay quality remuneration, manpower shortage and increasingly less attractive to younger generation of job seekers. This development analyst’s fear could result in total disappearance of the profession in Nigeria if unchecked, as the country would have to pay higher to get such servicers from other markets giving that the local market currently is dominated by aging players. Loss adjusters are independent claims specialists who assist in the fair and just settlement of claims, including complex or contentious claims, on behalf of insurance companies and their clients, recommending appropriate amount for indemnity. Darlington Mgbojikwe, managing director/CEO, Crawford Loss Adjusters Limited

Participants and facilitators at the training on Oil and Gas Risk for loss adjuster organised by NAICOM in partnership with BMK Advanced Corporate Training of South Africa held in Abuja.

had told Business Day some time ago that loss adjusting profession in Nigeria was facing a difficult time, as it could hardly sustain itself. “This development is affecting the technical and skills regeneration since we can’t afford to bring in fresh graduates and pay them or offer necessary trainings for staff.” “In fact, we have a lot of aging adjusters and because the money we are making has not enabled us employ graduates that will take over from us, the profession is endangered.” Today available loss adjusters in the country are dominated by aging players who by design of faith could not seek for new careers by virtue of their age. So, their eventual exit could mean end of their business since it was becoming unsustainable and younger employees were leaving in droves for other professions, Mbojikwe stated. According to him, the Nigerian Insurers Association (NIA)/ Institute of Loss Adjusters (ILAN) scale of fees reviewed in 2011 after about almost 20 years to 10 percent increment is still not implemented across board. We are starved of revenue, and many of our members cannot change career at this

age, Mgbojikwe noted. While UK and other advanced markets underwriters pay between 6-7 percent of their premium for service charges to loss adjusters and lawyers, Nigerian underwriters still pay less than one percent of their premium, he hinted. According to him, some loss adjusting firms was owed debts for reports it had done years past, stating that such development was dangerous for the profession. Obinna Chilekezi, insurance lecturer and research expert said underwriting companies are they once killing the loss adjusters because sometimes they pay brokers commission, pay claims and don’t remember to pay loss adjusters for their service. It’s an industry problem and it is very unfortunate. Chilekezi noted that many people are not taking careers in loss adjusting because of the technicality of that area, which ordinary qualification in insurance is not enough to be a loss adjuster. “Insurance graduates may have requisite knowledge to practice brokerage or underwriting, but cannot practice loss adjusting, except after going through a

specilised course meant for it. It is highly technical, Chilekezi stated. Sunday Thomas, director general of the Nigerian Insurers Association had said the NIA agreed that every loss adjusting fees must be paid within 90-days of submission of report to ensure that loss adjusters are better off in their job, saying it was in line with international best practice. “This decision is necessary to ensure they do their work professionally and without compromise. It is also part of efforts to encourage compliance and adopt international best practice, Thomas stated. A loss adjuster is basically an insurance person who is trained to be able to handle insurance claims. By this I mean that you cannot be a loss adjuster without having a solid insurance background, that is, you cannot also be a high court judge without first of all being trained as a lawyer. Basically, a loss adjuster is an insurance person that has taking addition training in the handling of insurance claims. Handling insurance claims means being able to go the scene of the loss, investigate and with the claim submitted by the claimant relate what he claims as the loss to the actual loss.

Lloyd’s firm up market conditions with new guidelines

he specialist Lloyd’s of London insurance and reinsurance marketplace has warned that failure to meet its expectations regarding harassment, bullying, discrimination or misconduct related to alcohol or drugs, could result in deregistration from the marketplace. As Lloyd’s continue to modernise, it recently published a bulletin introducing an updated set of rules applicable to pass holders accessing the building. The bulletin noted that a pass holder must not enter (or attempt to enter) the premises during working hours under the influence of alcohol or any illegal drug. In relation to this and the market’s

increased focus on tackling harassment, bullying or discrimination, Lloyd’s has produced a bulletin outlining how it expects its members to behave in relation to the above, and what the consequences will be if standards aren’t met. Lloyd’s states that it expects companies that operate in the London market to have appropriate policies in place to prevent and, if necessary, deal with such behaviour; Report any such issues to Lloyd’s where they may amount to misconduct (see paragraph 4 of the Lloyd’s Enforcement Byelaw); and, take robust and appropriate action. Lloyd’s said that failure to meet these expectations might result in Lloyd’s taking www.businessday.ng

action against the firms themselves, as well as any individuals involved. For Lloyd’s brokers, this could be removal of an individual’s Annual Subscriber pass, and in the most serious cases, the deregistration of the firm as a Lloyd’s broker. Cover holders that fail to meet the standards Lloyd’s expect also face deregistration as an approved coverholder, or the imposition of conditions on its approval. For Lloyd’s members, the marketplace states that the consequence will be membership revocation, or the imposition of conditions on their continued membership. “In relation to all of the above, it is important to emphasise that Lloyd’s can and

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will have regard not only to the actions of individuals, but also to the actions of the firms that employ those individuals. While it is important to tackle the acts of individuals when they arise, of equal importance is the culture of the firm for whom the individual works and whether it supports or tolerates a culture of unacceptable personal behaviour towards others. “Therefore, where there is found to be inappropriate behaviour involving harassment, bullying, discrimination, drugs or alcohol it would normally be expected that there is some consideration of the culture of the firm that employs the individual,” says Lloyd’s

@Businessdayng

Wednesday 15 May 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Embarking on building construction, take insurance Stories by Modestus Anaesoronye

onstruction sites either for building or other useable structures are possible death traps and injury prone environments, which poses danger for site workers and passers bye. This is worsened where quacks and non building professionals take up construction works in other to make ends meet, therefore making construction environment more risky for workers and other people around. In Nigeria today, like many other developing countries, building construction is very much on the increase particularly as result of the yawning gap for more housing and infrastructure development, which shortfall experts say is close to 16 million units. But the danger here really is during construction, where, as a result of the anomalies in the system there have been records of building collapse resulting to injuries on the workers or third parties or in some cases death. When things like this happen, there is the tendency that jobs at site are distracted and in many occasions stopped indefinitely, pending when cases arising from the accident is settled, and in most cases usually in court. While the court case lasted; in some occasions you find the project abandoned because the builder

or contractor would have used the money meant to continue the project to pursue the case in court; pay damages; medical bills and even pay for death benefits in extreme cases. At the end of the day, there is huge economic loss on the part of the builder or the contractor, because he would have used the resources meant to complete the building to pursue court cases and pay for damages that result from the accident Purchasing a liability insurance policy there-

fore could offer your business the protection that you need from lawsuits resulting from unintentional mistakes, including at construction sites. If, for instance, a bricklayer at a construction site mistakenly drops load of concrete and accidentally this falls on somebody at the ground floor, then the insurance policy would pay for any loss caused by the mistake” Builders liability insurance Builders Liability Insurance also called construc-

tion insurance is one of the compulsory insurance policies in Nigeria covered by the Insurance Act 2003. The insurance policy was meant to protect the site workers against any construction related risks. The site workers whom the insurance policy seeks to protect include- bricklayers, artisans, welder, architects, engineers and carpenters. It also covers third parties and members of the public from all construction related risks including collapse of building under construction.

Section 64(1) of the 2003 Insurance Act states that “No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer, his liability in respect of construction risks caused by his negligence or the negligence of his servants, agents or consultants, which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the public. According to the law,

the duty to insure under subsection (1) of this section shall arise when a building is under construction. Subsection three states that a person who contravenes subsection (1) of this section commits an offence and on conviction shall be liable to a fine of N250, 000 or imprisonment for three years or both. Builders and construction workers who operate their own business need quality liability protection to provide peace of mind.

L-R: Emmanuel Otitolaiye, chief finance officer; Okanlawon Adelagun, executive director, Technical; Anthony Saki, head, Oil and Gas; and Moses Omorogbe, company secretary, all of Linkage Assurance Plc during the BusinessDay top 25 CEOs and Next Bulls Awards held in Lagos

Linkage MD, Braie named among top 25 CEO’s on investor impacting firms on NSE

aniel Braie, managing director/ CEO of Linkage Assurance Plc has been named among Top 25 CEO’s whose companies impacted positively on investors at the Nigerian Stock Exchange in the 2018 financial year. The Top 25 CEOs & Next Bulls Awards Organised by Business Day Media Limited in partnership with the Nigerian Stock Exchange

(NSE), which debuted in 2012 seeks to recognize chief executive officers of Institutions who distinguished themselves by adding value to the investments of shareholders. “These companies have been honoured for contributing to the growth of the market capitalisation of quoted firms in 2018, in spite of the overall market performance ending in the negative territory, while www.businessday.ng

others were celebrated for inculcating good corporate governance, innovations and raising the standards of their organisations to a point where it would be seamless if they were to be listed on the NSE today, the organizers said. Okanlawon Adelagun, executive director, Technical, Linkage Assurance Plc who represented the Managing Director/CEO, Daniel Braie received the award on

behalf of the company. Daniel Braie commenting on the award thanked the organizers for recognizing the efforts that the Board and Management of the Linkage Assurance Plc were making to ensure value creation for shareholders. He said, as a company “we are committed to sustaining the rules and regulations of the capital mar-

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ket, ensure regulatory compliance and good corporate governance practice” Braie noted that the company will continue to deploy strategies and measures to increase insurance penetration and grow the business such that its shareholders will continue to earn good returns on their investment. According to Braie, the potential of the insurance industry is huge, @Businessdayng

calling on the general public to embrace insurance as the most effective and efficient means of managing their risks against unforeseen circumstances. Linkage Assurance Plc in the 2018 financial year recorded a 31 percent increase in gross premium written, moving from N4.10 billion in 2017 to N5.39 billion , while its total assets closed at N23. 15 billion.

Wednesday 15 May 2019

BUSINESS DAY

PENSION today

In Association with

As PITAD ends nationwide pensioners verification exercise in Lagos …Ndume, others seek cooperation of pensioners

he ongoing nationwide verification exercise embarked upon by the Pension Transitional Arrangement Directorate (PTAD) to enhance payment of pensioner’s monthly entitlement, as well as rid the system of fraud, which also received the backing of Government including members of the National Assembly has ended in Lagos. The exercise, according to PTAD was planned to take care of 104,133 Pensioners and Next of Kin (NoK) of 270 Federal funded Parastatals, Agencies and Institutions under the Defined Benefit Scheme (DBS). The exercise is planned to take place across the 6 geopolitical zones having commenced in Lagos on April 23, and will cover pensioners from Nigeria Aviation Handling Company ((NAHCO); Assurance Bank; Nigerian National Shipping Line (NNSL) and Aluminium Smelter Company Of Nigeria (ALSCON). Ali Ndume, chairman, Senate Committee on Establishment and Pensions, who inspected the verification exercise organized by PTAD for pensioners in Lagos called on Nigerian pensioners to be patient and cooperate with officials of TAD to ensure a seamless and hitch-free verification exercise. Ndume said it is only when they (Pensioners) are bio-metrically captured that their pension can be paid to them promptly and correctly. He said that the ongoing data harmonization and verification exercise by PTAD is a step in the right direction to ensure that pensioners receive their correct pension and on time. Ndume who said that President Buhari desires the best for all Nigerians including the pensioners also disclosed that he is an advocate of pension being given a first line charge in the nation’s scheme of things, adding that when the law on this is finally passed, the issue of delayed pension will become a thing of the past. He said this year he has personally written to President Buhari on the issue of pension, aimed at ensuring that adequate funds are made available for the payment of pension. Ndume who blamed the delay in pensions payment on the paucity of funds, expressed displeasure that Nigeria as a nation is still borrowing to fund its budget, saying this is not the way to go. He called on government at all levels to

Ali Ndume, chairman, Senate committee on Establishment and Pensions during a visit Pensioners verification Centre recently in Lagos.

improve on its tax system which he described as “not effective” and “not properly exploited.” Also speaking, Kabiru Yusuf, deputy director, Parastatals Pension Department and Project Coordinator, PTAD, called on pensioners who have lost their career document and have been referred to their agencies for a letter of administration to adhere to the instruction, that there is nothing PTAD can do about that. “It’s taking quite a bit of time for pensioners who do not have their records to get back to their agencies but there is virtually nothing we can do about that. We are encouraging them to adhere to the instruction,” Kabiru said. When he was asked if an agency is defunct and what will happen to the pensioners under that agency, he said “If an agency is defunct, another agency would have been responsible to taking it into what I will call sunset. For the

most of the defunct agencies that we have cause to verify, Bureau of Public Enterprise has been the agency that was responsible for privatization or their dissolution at any point in time. So we have worked with the Bureau of Public Enterprise to get the details of these pensioners.” What to achieve during the verification according to PTAD includes - validation of inherited payrolls from the various defunct pension boards and offices which was handling payment to pensioners under the Defined Benefit Scheme; Ensure that only qualified, bio-metrically verified pensioners are on the database and payroll system; substantially reduce complaints from pensioners and create a comprehensive digital database of pensioners and facilitate easy access and retrieval of records for prompt complaints resolution. Other reasons for the verification are to

allow for integration of all pension payroll to ensure “one pensioner equals one pension”; consolidate all valid cases of multiple pension pay-points to one payroll/payment point; ensure monthly pension is accurately calculated and reflects application of relevant pension statutes, policy and salary structures; prevent and/or reduce the incidence of pension payment to deceased pensioners and provide the foundation for the eventual adoption of the “I’m Alive” programme. PTAD advised that this verification exercise is not for Customs, Immigration and Prisons Pensioners, Civil Service Pensioners or Police pensioners. The exercise, according to PTAD is also not for Parastatals Pensioners who have already been verified including those from the following agencies: Delta Steel Company (DSC); NITEL/Mtel; NICON Insurance; Nigeria Reinsurance; New Nigeria Newspapers; Savannah Sugar Company Ltd; Federal Housing Authority (FHA) and Nigerian Defense Academy (Civilians). “The Directorate has reiterated that the verification of pensioners and NoK will be done in phases across the country, calling on Pensioners to please note that they do not have to travel to the state they retired from to be verified, adding that they will be verified in the state they currently reside. The first phase of the verification exercise , which commenced in Lagos from Tuesday April 23rd, 2019 on May 9th of May, 2019 in 5 centres located in Ikeja, Ketu, Akoka, Ebute Metta and Lagos Island. Other phases of the exercise will be held in states in the different geopolitical zones on the following dates: South South (May 20th – June 1st, 2019); South West (June 10th – June 26th, 2019); South East (July 8th – July 24th, 2019); North East (August 5th – August 9th, 2019) North West (August 19th – September 2nd, 2019) and North Central (September 16th – October 2nd, 2019) PTAD said there is arrangement on ground for Mobile Verification to be conducted for sick and infirm Pensioners and called on pensioners to come with original pension documents to the verification venue together with proof of infirmity for authentication, before mobile verification can be scheduled. PTAD said it will never request for cash to process your pension. Pension payment is free.

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

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Diamond Pension Fund Custodian Limited

1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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news Tough times await travellers as US... Continued from page 1

in Abuja said in a statement

on Tuesday. “Processing of diplomatic and official (A, G, and NATO class) visa applications will continue unchanged,” the statement said. The drop-box service offers interview waiver at the US embassies across the country to applicants seeking visa reissuance under the B1/B2, F, M, L and H visa classes. Those attempting to renew their visas must now attend visa interviews like first-timers. “Those who have already submitted their passports via ‘Drop Box’ to DHL for processing either at the US Embassy in Abuja, or the

Consulate General in Lagos, will not be impacted by this change,” the statement said. The development is expected to impact on the visa processing system, especially the number of applications and time of processing them. Already, Lagos handles over 2,000 applications a day, while Abuja handlesabout500aday.Aswell, more backlog of unprocessed applications and delays are expected with the suspension. On the reason for the suspension, the US Embassy in Abuja said, “Mission Nigeria’s processing procedures are regularly reviewed in order to assess our ability to quickly, efficiently, and securely process visa applications. The U.S. Mis-

sion is taking this step to provide more efficient customer service and promote legitimate travel, and will continue to facilitate applications of established travelers to the best of its ability.” Informed insiders, however, said the suspension was due to security challenges and need to overhaul the visa processing system in Nigeria. Some of the insiders think that the US home affairs and immigration believe that visa processing and granting have become easy in recent time and needs to be firmed up. According to them, easy access to the United States poses a major security threat to the country. The suspension, according to an insider, may last over a year until the US scrutinises those already given visas when they reapply, pass new appli-

cants through stricter measures and ensure that every Nigerian granted a US visa qualifies for it. Ikile Adams, a lawyer and immigration expert, said the suspension was also due to the mass exodus to Canada by many Nigerians who use the US route to cross over to Canada, seeking asylum and causing diplomatic row between both countries. However, Mike Oniga, a frequent traveller who cannot now travel to New York as scheduled due to the drop-box visa cancellation, said that the suspension will not stop Nigerians from applying for US visas because America holds a lot of dreams and promises for them, and there are millions of Nigerian families between the two countries that need to connect. Adams, similarly, thinks

that US universities are still open to aspiring Nigeria undergraduates who will apply until they are offered visas. “Thedropboxwasabigrelief for many Nigerians that they didn’t have to go through the process all over again, thereby wastingprecioustimeandmoney,” Chinyere Nkem-Aribodor, a travel consultant and CEO, Optmserve Travels and Tour Limited, told BusinessDay. “The suspension will make the process more cumbersome and expensive for many Nigerians, especially those who travel often, but on the whole the impact on the number of Nigerians seeking visa to US is likely going to be minimal as US still remains a destination that is less complicated to obtain a visa when compared to other first world countries,”

Nkem-Aribodor said. Bankole Bernard, president, National Association of Nigeria Travel Agencies (NANTA), said the decision is not a welcome idea, adding that everywhere around the world countries are trying to make the world borderless where people can have free movement and access to visas is one of the ways to make this possible. “By suspending the dropbox, the US is going to increase the number of people going to one location, all to just go and queue up for interviews and this is going to frustrate a lot things, including stretching the US Consulate manpower,” Bernard told BusinessDay.

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Nigerian macroeconomic outlook for new... Continued from page 1

Pan-Africa Investor Conference on 13-17 May, 2019 in Lagos, Nigeria. In this column, we present our key thesis and highlights. Before looking at where Nigeria must improve, a degree of credit must be given to how far it has come. When oil prices crashed in the 1980s, Nigeria’s economy shrank by c. 10 percent a year in three different years within the space of half a decade. To put this into context, the contraction of the Nigerian economy in this period was worse than the US during the Great Depression. In contrast, in 2014-2015, when oil prices crashed, Nigeria only shrank by 1.6 percent in just one year. Why was it so much better in 2014-2015? Education. Over the years we’ve seen a dramatic change in adult literacy, with human capital in the country improving and this stimulating an increase in FDI across the board. This has left the economy less correlated to oil prices and thus in a much stronger place. What does Nigeria need to do to improve its growth forecast? So why is Nigeria still only recording2percentgrowthforecasts? Because the government must not rest on its laurels. First and foremost, Nigeria must continue to pivot away from oil. After all, you can have high growth without high oil, as demonstrated by China, Taiwan and Korea. Whilst undeniably less correlated to the price of oil than it was in the 1980s, the economy still depends heavily on the price of crude. In 2019, the majority

of federal budget revenues and over 90 percent of exports will be from the energy sector. This is a problem, considering there is relatively little oil per person – 9 barrels for export per 1,000 people, according to our estimates. If we take the price of a barrel at c. USD60, and factor in that half the income will be given to major oil companies, that means just 30 cents per barrel per person per day. The economy simply cannot rely on this and the government must look at investing in other sectors. To support the investment into other sectors, literacy rates must also continue to improve. To diversify the economy into manufacturing or high productivity services, adult literacy in any language in Nigeria needs to rise from 60 percent in 2015 to 70 percent (which we hope it will reach in 2024) and ideally 80 percent (we see 75 percent in 2030 according to our model). Nigeria must accelerate the rise of adult literacy, aiming for at least 80 percent as soon as possible. Exchange rate reunification Improving literacy rates and investing in wider sectoral development, however, undeniably takes time. One area where Nigeria can unlock its economic growth potential quickly is by reunifying its exchange rates in 2019. Nigeria is one of the very few countries in the emerging and frontier world that still has multiple official exchange rates. Venezuela and Iran are two other prominent (and negative) examples. While it is a policy that is surprisingly easy to get used to, it does carry

NERC begins process to review electricity... Continued from page 2

ology for determining electricity tariff in the Nigerian Electricity Supply Industry (NESI) and sets out tariffs for the generation, transmission and distribution of electricity in Nigeria. It employs a unified way to determine total industry revenue requirement that is tied to measurable performance improvements and standards.

According to the guidelines for the Performance Improvement Plans (PIPs) set by NERC for DisCos, it will cover the 2020-2024 tariff period but it will be subject to the contractual provisions of the Performance Agreements executed between the core investors and the Bureau of Public Enterprises in respect of the allowances for capital and operating expenditure www.businessday.ng

L-R: Vice President Yemi Osinbajo; Hameed Ibrahim Ali, Comptroller-General of Customs, and Itse Sagay, chairman, Presidential Advisory Committee against Corruption (PACAC), at the PACAC Summit on Corruption in Abuja, yesterday.

costs. Interestingly, Nigeria is well positioned now to make a success of unification. The forthcoming change of government and the renewal of the Central Bank of Nigeria (CBN) governor’s term from 2 June could be perfect triggers for that. According to the IMF Article IV, the Nigerian authorities are ready to do this soon. Nigeria has achieved the (usual) primary goal of multiple exchange rates, which is to smooth the impact of a commodity shock. What has happened in so many countries before, and Nigeria itself in the 1980s and again in the 1990s, is that the authorities then hold onto the multiple exchange rate regime for too long. The gap between an official fixed rate and a market-based exchange rate

rises due to inflation. Eventually, stresses build up that lead to a shocking devaluation of the fixed rate, high inflation and considerable pain for the poorest in society. This is the outlook for Nigeria in the 2020s if there is no shift in the FX regime. One clear lesson from the past is that countries often hold onto multiple exchange rate regimesfortoolong.Thefloating rate gets weaker and weaker in nominalterms(duetoinflation), and the discrepancy with the official rate becomes more and more attractive to those with less-than-honest intentions. The good news is that Nigeria is well placed to unify its exchange rates today. The World Bank report ‘Parallel exchange rates in developing countries: Lessons from

eight case studies’ published in March 1994, by Miguel A. Kiguel and Stephen O’Connell, showed how to successfully reunify exchange rates. Three conditions made success likely: (1.) When the gap between the rates was not wide (i.e., more like 20 percent than 2,000 percent); (2.) When the fiscal deficits were not massive and financed by central banks, and (3.) When the unification happened as part of an overall reform package. We think Nigeria meets the first two conditions, which makes the third condition less necessary. If the CBN unifies the exchange rates, it could unlock business growth and potentially increase the FDI flow, which is so much needed to drive overall economic

growth. This could then help lift the share of total investment in the economy, which needs to double from 13 percent of GDP in 2017 to at least 25 percent if Nigeria wants to sustain high single-digit GDP growth. It is our view that 2019-2023 will be tougher for Nigeria, than for countries such as Vietnam, Morocco or Egypt, which are already ready to industrialise and achieve 4-5 percent real per capita GDP growth. Probably only a higher oil price can deliver that for Nigeria in the next few years. However, making a big push on the right reforms now (as outlined above) would make the mid-2020s and beyond a much easier time to run Nigeria, and Lagos could become an even greater success story within Africa.

in the remaining term of the agreement. NERC will use the PIPs to define performance standards for DisCos in the next five years with emphasis on improvement in energy throughput and delivery by DisCos, reduction in aggregate technical/ commercial losses and overall improvement in service delivery to customers. The PIPs will form the basis for revenue requirement projections and also serve as the

companies’ service charter with the consumers to which they will be held accountable by the Commission, according to the guidelines. “The Commission expects an output-based plan that states the target outputs over the planning horizon, the programmes and activities that will lead to the realisation of those outputs, the human and material resources required, the projected costs and analysis of the risk factors

and the proposed mitigation measures,” NERC said. Based on the PIPs, the regulator will be able to assess DisCos’ performance in terms of loss reduction reliability and availability, metering, customer satisfaction, network expansion, safety and social responsibility. The DisCos would show not just running cost but provide explanations for costs under the new rules. This will check abuse as the

regulator routinely accuses the DisCOs of keeping more revenue collected from customers than they should. DisCos pay other players in the value chain – power generation companies (GenCos), Transmission Company of Nigeria (TCN) and gas producers – through the Nigerian Bulk Electricity Trading Company (NBET).

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Wednesday 15 May 2019

BUSINESS DAY

news AGF advocates Asian funding model for Nigeria’s OPEC: Nigeria’s April oil production bleeding auto industry increases by 92,000bpd MIKE OCHONMA

or Nigeria’s fledging automotive industry to be back on track again and increase its production capabilities, the country must draw experience and lessons from the funding structure of India, China and South East Asia. Speaking at a day stakeholders conference organised by the National Automotive Design and Development Council (NADDC) at the Transcorp Hilton Hotel, Abuja, Ahmed Idris, accountant-general of the federation in a speech tagged, ‘The Impact of the Automotive Industry on the economic growth of Nigeria: Lessons from China, India and South East Asia,’ he identified seven key sources of funding model the Nigerian government can adapt to development the automotive industry. Idris said advanced economies funded the development of their automotive industries through 100 percent equity participation, public private partnership (PPP), foreign direct investment (FDI) and Outward Foreign Direct Investment (OFDI). Other sources are through the establishment of automotive fund, joint venture (JV) agreement and equity partnership through 100 percent ownership. He regretted that the progress made during the boom era of local

auto manufacturing by Peugeot Automobile Nigeria (PAN), Volkswagen of Nigeria Limited (VWoN), Lagos, Anambra Motor Manufacturing Limited (ANAMMCO) and Steyr Nigeria Limited, Bauchi, National Trucks Manufacturers (NTM) Kano, and Leyland Nigeria Limited, Ibadan, was short lived as most of the plants were now shut down. The establishment of the assembly plants in the country at that period created a lot of job opportunities across all segments of the population and across every occupational groups such as artisans, professionals, secondary, postsecondary graduates and graduates of tertiary institutions. The AGF lamented that the country’s automotive sector plundered into the present precarious situation as a result of poor policy implementation, high tariffs, poor economy, lack of refunds, epileptic power supply and poor leadership by success administrations. He said lessons from China indicated that according to Chinese Automobile policy, a Chinese automobile company could form joint ventures with multiple foreign car manufacturers. Instead of exporting cars to China, foreign car companies can form JVs with Chinese carmakers to directly produce cars in China. This accounted for two thirds of the passenger vehicle

market. As a result, vehicle prices dropped by 33 percent from 2004 to 2009. The decrease in mark-up from intensified competition accounted for about one third of this change and the rest came from deductions through the learning curve experience. The AGF called for the replication of the Chinese experience in Nigeria byinvitingOEMstoformJVswithlocal auto assemblers, even as expressed optimism that, the vibrant market existsinthecountrytopersuadethese firms to establish in Nigeria. There is also need to close the nation’s borders against vehicle importation from abroad; government should as a matter of policy revamp the iron and steel industry that is a necessary pre-requisite for the survival of the automotive industry. Furthermore, he advocated that, the enabling environment/ infrastructure like electricity, road, rail network and security are very essential for the industry, while the need to sponsor an automotive bill to ensure continuity and consistency of the funding policy of the automobile industry should be pursued with vigour. This way, the funding policy will outlive any government and ensure continuity irrespective of the government in power.

… cartel expects more 2019 demand DIPO OLADEHINDE

espite internal production crises, global efforts to curb oil glut and bolster crude prices; latest report from Organisation of Petroleum Exporting Countries (OPEC) reveals Nigeria’s records the second biggest oil production increase by 92,000bpd in April to 1.8 million bpd. According to independent sources, the 14-member OPEC said Nigeria’s crude oil production increased from 1.72 million bpd recorded in March to 1.82 million bpd recorded in April 2019 by 92,000bpd. OPEC said on Tuesday that world demand for its oil would be higher than expected this year as supply growth from rivals including U.S. shale producers slows, pointing to a tighter market if the exporter group refrains from raising output. Also, the Vienna-based OPEC trimmed its estimate of oil supply growth from outside the group in 2019 and said the rapid rise in production of US tight oil, another term for shale, was moderating. “Supply growth is likely to be

slower than last year amid the expected weaker global economic growth,” OPEC said on Tuesday. “US tight oil production is increasingly faced with costly logistical constraints in terms of out-take capacity from landlocked production sites.” The OPEC report showed producers are cutting much more supply as OPEC’s share of agreed cut stood at 800,000bpd while overall April output fell by 3,000 bpd month-on-month to 30 million bpd. Thanks to Saudi Arabia’s and Iraq willingness to aggressively cut production and a further drop in Iran and Venezuela’s sanction-hit supplies, OPEC’s output fell by 3,000 bpd in March to 30.02 million bpd, according to independent sources cited by the group in its monthly report which is the lowest since February 2015 when the group pumped 29.97 million bpd. The world biggest oil exporter, Saudi Arabia took another 45,000 bpd off the market in April, bringing output to just less than 9.7 million bpd and delivering its Energy Minister Khalid al-Falih’s vow to pump well below 10 million bpd. In April, Iraq recorded the big-

gest declined by 113,000 bpd to 4.6 million bpd, while Venezuela’s output plunged by just 28,000 bpd, recording a decline to 768,000 bpd compared to March of 740,000 bpd. According to OPEC, Crude oil futures prices increased further in April to a level not seen since last October on improved market sentiment and robust oil market fundamentals amid oil supply outages. “Prospects for tighter global oil supply due to renewed geopolitical tensions pushed the ICE Brent front month to over $74/b despite mixed economic signals and a downward revision of the IMF’s 2019 global economic growth forecast,” OPEC said in its May 2018 report. OPEC noted that oil futures retreated in late April and early May, after traders took profits following a steep rally earlier in April, while renewed trade tensions between the US and China raised worries about global energy demand, further weighing on the market. OPEC pumps about a third of the world’s crude, and the biggest of its 15 members is Saudi Arabia, one of America’s closest friends in the Middle East. While the group doesn’t target a specific oil price, it adds or removes supplies in the market and therefore can affect the cost of crude.

NNPC confirms recovery of over N489bn from firms fleeing its subsidiary HARRISON EDEH, Abuja

L-R: Abiola Ajimobi, governor, Oyo State; Jerome Pasquier, France ambassador to Nigeria and ECOWAS; Lauret Polonceux, consular general of French Embassy in Nigeria, and Seila Mathieu, cultural attachee, French Embassy in Nigeria, during the visit of the Ambassador to Governor Ajimobi at the Government House in Ibadan. NAN

Infrastructural forfeiture not part of Nigeria’s loan agreement with China - FG STELLA ENENCHE, Nairobi, Kenya

ith countries like Sri Lanka, Zimbabwe, Djibouti, Zambia, Namibia, Kenya and Angola, among other countries presently at the verge of forfeiting their infrastructure to China over unpaid debt, Nigeria’s minister of transportation, Rotimi Amaechi, says this is not part of Nigeria’s loan agreement with China Exim Bank. Speaking at the sixth Annual East African Transport Infrastructure conference in Nairobi, Kenya, Amaechi on Monday reassured that the

Chinese government would not take over the country’s infrastructure over the inability of the Nigerian government to pay back loan collected from Exim Bank. This assurance is coming at a time when many industry watchers are warning that the assistance from China will come with a price of economic takeover if Nigeria is unable to repay their loan. Amaechi assured that the agreements between Nigeria and China Exim Bank did not include property takeover, adding that the inability of some countries to pay back their loan www.businessday.ng

had affected Nigeria in the area of loan assessment from the Chinese government. ‘’I don’t know the arrangement these countries made with Exim Bank; I do not think we will have any problems with repaying our loans. The countries that they are talking about are Kenya, Somalia and Sudan. These are some countries that have not been able to repay their loans, I think. So, what they (China) are doing is that, they are taking over to manage and get their money, but it is not so in Nigeria,” he stated. The minister lamented, “If you don’t go to China, who

will give you money! America is going to China, even Russia. What is wrong if Nigeria goes to China, I think we should not be afraid of China.” Nobody runs railway with passengers’ fare, he said, saying you can never get one naira out of it. Nigerians just think railway is just to carry passengers, but the problem is that the goods that should be on the rail are the ones on the road and it is destroying the road. He said that once the rail projects were concluded and those goods transferred to the rail “that is when the money will start coming in to pay debts.”

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igerian National Petroleum Corporation (NNPC), on Tuesday said it had recovered $1.6 billion, about N489.6 billion, from some companies fleeing its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC). Speaking in Abuja, during a visit by officials of the Chartered Institute of Forensic and Investigative Auditors of Nigeria (CIFIA) to the NNPC, Maikanti Baru, group managing director of the corporation, disclosed that the NNPC had made significant inroads in terms of fraud detection, prevention and control. During the visit, Baru, who did not mention the name of the companies, was conferred an award of honorary Fellow and Patron of CIFIA. The NNPC boss explained that the recovery became possible to its insistence that all its staff and business partners

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I, formerly known and addressed as Basil Obinna Nwajiaku now wish to be known and addressed as Basil Henson Obi Nwajiaku. All former documents remain valid. General Public please take note. @Businessdayng

imbibe transparency in all areas of operations. He said the NNPC was able to resolve the case with IPCO Nigeria Limited, noting that out of the $400 million the company was seeking to obtain from the NNPC, the corporation ended up settling the issue with only $37.5 million. He said, “There is a lot of sanity that has happened in the industry as a result of this. Recently, due to the work, we were able to get the Atlantic companies who were fleecing the NNPC subsidiary, the NPDC, and we got an award for them to refund $1.6 billion to the NPDC, through the arbitration process. This is just one. “We have also been able to stem fraud. High profile court cases were been set up to defraud the NPDC. If you see the amount of money involved, if you do not have people who are determined to fight corruption, our chances would have been compromised by over $1.6 billion.

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I, formerly known and addressed as Bassey Ukeme now wish to be known and addressed as Bassey Ukeme Ability. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Nwokedi Chike Clifford now wish to be known and addressed as Nwokedi Chike Chris. All former documents remain valid. General Public please take note.

Wednesday 15 May 2019

BUSINESS DAY

NEWS

US commends Obaseki’s transparency, as state invites US firms to invest in agric, industries, tech ISAAC ANYAOGU

… as Airtel seeks long-term partnership

he United States government has commended Governor Godwin Obaseki for running a transparent and accountable governance model that attracts investors and assures greater opportunities for residents. This submission was made by visiting American Deputy Assistant Secretary of State for African Affairs, Whitney Baird, who noted that the governor had taken bold steps to curb irregular migration and human trafficking, hitherto rampant in the state. She said the US government was an ally and partner in developing human capital, boosting investor confidence, and entrenching democratic values in the state. Governor Obaseki, on his part, said since assuming office he had focused on revamping basic edu-

cation and teacher training; use of technology in the primary school curriculum and boosting investors’ confidence. Noting that a lot of planning and resources have gone into improving rural infrastructure, primary health care and security in the state, the governor insisted that at the core of his governance model is the determination to ensure transparency and accountability in governance. He added that efforts are being strengthened to entrench global best practices in agriculture and food security for all citizens. The governor used the opportunity to invite American firms to invest in Edo State, especially in the area of industries, manufacturing, solid minerals, agriculture and technological transfer. He said the state was the right in-

vestment destination because it was home to one of the most educated, trainable young people in Nigeria, in addition to being a strategic logistics hub, with access to close to an 80-million population market within a 400-kilometre radius and less than three-hour drive from major markets such as Lagos, Port Harcourt, Onitsha. He also noted that the state was a major power-generating hub, with close to 1,000 megawatts, a factor in production and security of investment. The US envoy was accompanied to the session by the US ambassador to Nigeria, W. Stuart Symington. Also, Airtel Networks Limited has praised Governor Obaseki for the state’s knowledge-driven reforms and prioritisation of innovative technologies in engendering

sustainable development in the state. Regional operations director, South, Airtel Nigeria, Oladapo Dosunmu, who said this during a courtesy visit to the Government House, in Benin City, noted: “I acknowledge the infrastructure development and milestone achievements in the state under your dynamic leadership. Coming into the city, one can see the footprint of your good work. I urge you to continue with the excellent job, in order to sustain the love and respect of your people and continuous development of Edo State.” The service provider is seeking a long-term strategic partnership with Edo State Government in the area of Information Communication Technology (ICT) development and enabling environment, which will provide room for expansion of the company’s operations in the state, he said.

NCC to host summit on repositioning Nigeria’s telecoms industry for future challenges Jumoke Akiyode-Lawanson

igerian Communications Commission (NCC) is hostingthemaidenedition of the Nigerian Telecom Leadership Summit with the theme: “Repositioning the Nigerian Telecom Industry for future challenges and prospects,” in line with its commitment to improve the investment climate of the industry. The summit, holding in Lagos on May 23, is geared towards sustaining a robust collaborative regulatory environment where current and future challenges are addressed. As part of the programme of collaborative regulatory atmosphere, the summit presents a unique opportunity for NCC to interact with key stakeholders to discuss pertinent issues affecting the industry with a view to profferingsolutionstoaddresschallenges. It is also designed to critically analysethecurrentstateoftheindustry and make recommendations for sustaining a healthy Nigerian telecom industry.

Vice President Yemi Osinbajo is expected as special guest of honour, while Omobola Johnson, former communications technology minister, will deliver the keynoteaddressonthetopic,“Best fitinfrastructureinvestmentchoice for an emerging market.” According to the NCC, eminent panellists who have been carefully selected for the summit will discuss “The challenges facing the Nigerian telecoms industry, way forward and the role of the regulator,” and “Implications of multiple taxation on telecom investments in Nigeria”, after a presentation of the latter subject byDoyinSalamioftheLagosBusiness School. OlusolaTeniola,president,Association of Telecom Companies of Nigeria (ATCON), and Gbenga Adebayo, chairman, Association of Licensed Telecom Operators of Nigeria(ALTON)willalsobepanel members, while Fabian Ajogwu, a senior advocate of Nigeria, will speak on “The role of the mandatorycodeofcorporategovernance in the Nigerian telecom industry.”

Lagos Assembly probes LASPOTECH crisis Iniobong Iwok

L-R: Brian Hammond, director, Afreal Limited; Idris Etti, chief operating officer, Newhomes.ng; Alero Ladipo, executive head, marketing, Old Mutual Nigeria; Chris Ogbechie, chairman, Afreal Limited; Maurice Okoli, managing director, Afreal Limited, and Jeff Duru, managing director, Old Mutual Nigeria, during the press briefing to announce the partnership between Old Mutual Nigeria and Newhomes.ng in Lagos, yesterday. Pic by Olawale Amoo

France, US to return another $500m stolen funds within months HARRISON EDEH, ABUJA

pecial assistant to President Muhammadu Buhari on justice reforms, Juliet Ibekaku, on Tuesday said the Nigerian government alongside the French and the United States government were working to return $500 million starched away in their countries within months. Ibekaku, who is part of the negotiating team for the fund, which is spearheaded by the Office of Attorney General and the Minister of Justice, said the funds would be returned within months, as the Nigerian government had advanced discussion with the respective countries. Ibekaku gave the information at a pre-open Government Partnership, OGP Global Summit for National Dialogue, held on Tuesday in Abuja. “We are negotiating with these governments on the restitution of $500 million starched away funds. What is critical today is that the civil societies are strong partner in these process of restitution and disbursement, and also interrogating the government

and ensuring that the beneficiaries from Lokoja to Sokoto to Nsukka have a voice,” she said. David Ugolor, executive director, African Network of Environment and Economic Justice (ANEEJ),‎ said at the National Dialogue that the civil society partners had worked with over 500 monitors in 11 states to monitor the disbursement of the $322.5 million recovered Abacha loot for conditional Cash Transfer Programme. Specifically, Ugolor noted, “As at December 2018, when ANEEJ carried out field monitoring of the returned loot, otherwise known as Abacha 2, a little above N6 billion have been paid to beneficiaries comprising 80 percent from $322.5 million recovered Abacha loot and 20 percent from Federal Government contribution.” Mariam Uwais, special adviser to the President and the National Coordinator on Social Safety Programme,‎ said working more closely with the National Assembly, the Federal Government would be spreading and expanding the social safety scheme for the benefits of more Nigerians. www.businessday.ng

Stop Buhari’s inauguration, Hope Democratic Party tells Election Tribunal Felix Omohomhion, Abuja

ope Democratic Party (HDP), Tuesday, urged the Presidential Election Petition Tribunal to stop the swearing-in ceremony of President Muhammadu Buhari slated for May 29. The party, in its submissions at the tribunal sitting in Abuja, said it would be unfair and unjust to inaugurate Buhari on the ground that the validity of the election that produced him was in contention at the tribunal. HDP in a motion on notice filed on May 9, 2019, prayed for an order of the tribunal to stop the president from presenting himself “for inauguration on May 29 or any other date until all petitions challenging his election have been fully settled.” The party also prayed for another order stopping the Chief Justice of Nigeria (CJN), Ibrahim Tanko Muhammad, from inaugurating or administering oath of office and oath of allegiance on Buhari until all court actions against him were determined. In the motion brought pursuant to Sections 1, 6, 139, 239 of the 1999 Constitution and Sec-

tions 26 and 138 of the Electoral Act 2010, HDP and its Presidential candidate, Ambrose Albert Owuru, the two petitioners, claimed that unless Buhari was stopped from being inaugurated, he would foist a state of hopelessness on the tribunal. In the motion signed by Mike Okoye, the two petitioners said they were challenging validity of Buhari’s election on the allegation of non-compliance with the electoral laws. They further averred that a petition, dated March 7, 2019, had been dully served on Buhari, Independent National Electoral Commission (INEC) and the All Progressives Congress (APC), who are the first, second and third respondents, respectively, questing the return of Buhari as the President-elect and that parties had exchanged pleadings. The two petitioners claimed that, in spite of the pendency and scheduled hearing of their petition against Buhari’s election, Buhari had been making frantic efforts and preparations to be sworn in and inaugurated on May 29 by inviting the CJN and the general public.

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he Lagos State House of Assembly (LAHA) has directed its committees on Education and Judiciary to probe the lingering crisis rocking the Lagos State Polytechnic and report back in two weeks. This followed the prayer raised in a motion by the Majority Leader of the House, Sanai Agunbiade under matters of urgent importance. Agunbiade urged the House to invite the warring factions with a view to proffering a lasting solution to the crisis, noting that efforts by prominent personalities in the area to resolve the crisis had not yielded positive results. He explained that the crisis, which bordered on issues relating to the welfare of staff, was already taking its toll on the students as academic activities had been stalled. The lawmaker warned that if not tackled with accelerated action, the crisis might

further plunge the institution into chaos as it had already degenerated into criminal activities and assault between the management and the union. Earlier at plenary, the lawmakers observed a minute silence in honour of late Oba Muftau Hamzat, the father of the deputy governor-elect of Lagos State, who died on Sunday while the speaker, Mudashiru Obasa directed the Clerk to send a condolence letter to the family of the deceased. The House also committed several Bills to various committees to report back to the House. Academic Staff Union of Polytechnics (ASUP) in the institution has been at a loggerhead with the state government over the implementation of the CONTISS 15 polytechnic salary arrears and other entitlements. This disagreement has led to industrial action by ASUP, and other unions in the institution.

Peak 456 unveils new video to celebrate mums on Mother’s Day

eak 456, Nigeria’s foremost ‘growing up milk’ is celebrating mothers on Mother’s Day, with the unveiling of a heart-warming video that expresses the incomparable bond between a mother and her child. Shared via the Peak 456 Facebook and Instagram pages, the video, which depicts the unique mother-child relationship, has accorded many children opportunities to appreciate maternal care by answering random questions about their mums, while wishing them a Happy Mother’s Day. Speaking on the campaign, Akon Imoh, senior brand manager for Peak 456, said, “Peak 456 growing up milk is an expert partner that supports mums’ ambition to raise smart @Businessdayng

children that stand out. For children to grow and achieve their potential, mothers play an important role in maintaining a strong presence, encouraging their dreams and acknowledging their little successes. The new video campaign reflects the deep bond that exists between mother and child.” Peak 456 is targeted at children between the ages of four and six years and is one of the products of FrieslandCampina WAMCO. The growing up milk is formulated with DHA to support brain development and contains all the necessary vitamins, minerals and other nutrients which enable children stay strong and smart – at work or play.

Wednesday 15 May 2019

BUSINESS DAY

cityfile

Lagos tackles infectious diseases

L L-R: Femi Banwo, partner, Banwo & Ighodalo along with his children, Damilola and Tunde Adesokan, Demilade Banwo and Sunmimade Banwo at the Redeemed church Oniru ceremony to celebrate the life of their wife and mother Mrs. Efunwunmi Olubanwo who passed away recently.

Man to die for killing brother in Lagos

n Ikeja High Court, Lagos, on Monday sentenced to death a 33year man, Abiodun Allen, for killing his immediate younger brother, Wale, with a broken bottle. Abiodun, who was first arraigned on October 6, 2015, was convicted of killing Wale by stabbing him in the throat and stomach. Raliatu Adebiyi, the presiding judge, while convicting Abiodun, said that the prosecution had proved its case beyond reasonable doubt and all the necessary ingredients to secure a conviction for murder had been established. The judge noted that the testimonies of the four prosecution witnesses (Sunday Abogunrin who is a family friend of the

convict and three police officers) corroborated the confessional statement of Abiodun to the police. She noted that the convict during his testimony acted strangely and the defence never raised the defence of insanity. The judge said that Abiodun might have been acting strangely to get a favourable sentence from the court. Convicting Abiodun, the judge said: “Abiodun Allen is hereby found guilty of the murder of his brother Wale Allen, I so hold.” Counsel to the convict, Y. A Ajayi told the court that she was not going to give an allocutus (plea for mercy) on behalf of the convict. Sentencing the convict, Adebiyi noted that section 221 gives a mandatory

death sentence and does not give the court discretionary powers while meting out the sentence. “Abiodun Allen having been found guilty of murder is hereby sentenced to death. May God the giver of life, have mercy on your soul,” she said. Upon hearing the sentence, Abiodun remained expressionless as he left the dock to be led away by prison officials. During the trial, Abogunrin (PW2) had testified before the court that Abiodun was notorious in the community for ingesting illegal substances, beating up people and randomly killing animals. Abogunrin, who is also the landlord to the Allen family, said that in the early hours of the morning of the incident, he caught Abiodun dragging the

body of the deceased to the bush behind their residence to secretly bury it. Abiodun, however, was the only witness to testify in his defence. In his testimony, the convict claimed he was a student and that the aunt whom he had been living with for over 20 years claimed he had killed her son and that following her claims; he was apprehended by some youths in the community. He also denied that the deceased was his brother and claimed that his mother was a Chinese. The prosecution, led by O. R Ahmed-Muili, said that the convict committed the offence at 11p.m on February 20, 2013 at Imudo village, Oto Awori, Lagos following years of toxic sibling rivalry between the pair.

CAN laments incessant killings in Taraba

oordinator of the Christian Association of Nigeria, (CAN) in Jalingo local government area of Taraba, Lawrence Tata, has expressed lamented the endless killings among ethnic groups, herdsmen and farmers in the state. Tata said on Monday that the killings have halted meaningful development in Taraba, and it was high time stakeholders came together to find a

lasting solution. He believed that security agencies also needed to redouble their efforts towards ending the violence, as the killings have destroyed the peace and unity the state was known for. “The latest report we got is that trouble started when a Fulani man with his cattle entered the maize farm of a Kona man and the cattle ate off the crops. “We gathered that the www.businessday.ng

Kona man approached the Fulani man for compensation and then trouble started. “This is so disheartening. We condemn this act in totality. “It’s unacceptable and we are calling on the government to beef up security to stop these acts because some evil-minded individuals are already trying to turn the scenario into a religious crisis. “The Jalingo local gov-

ernment chapter of CAN rejects the evil motive of individuals who intend to make it a religious crisis,” he said. The coordinator also condemned the lingering dispute between Jukun and Tiv people in Wukari local government area of the state. He described the situation as the handiwork of some desperate individuals out to disrupt the peace and progress of Taraba.

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agos State government says it is set to adopt a onehealth approach to enhance response to biological threats including Ebola and Lassa fever, among others. Jide Idris, commissioner for health, who stated this, added that the government was developing a bio-banking capacity and a bio-security framework along the lines of the one-health model and the global health security agenda for optimal health outcomes. According to Idris, onehealth recognises the interconnection between people, animals, plants and their shared environment and documents that six out of every 10 infectious diseases in human are transmitted from animals. “The global approach in the preparedness and response to emerging and re-emerging infectious diseases involves the implementation of one-health model as part of the bio-security agenda of the state. “It is a collaborative, multi-sectoral, trans-disciplinary approach operating at the local, state, national and global levels with the goal of achieving optimal health outcomes,” he said in a statement by the Lagos State ministry of health.

The commissioner said that part of its prevention and containment response to biosecurity threats led to the government’s establishment of its biosecurity and research capability. He said that lessons learnt from the Ebola outbreak in 2014 led to the inauguration of the state Ebola Virus Disease Research Initiative (SEVDRI) committee. According to him, the committee has the mandate to conduct research for the development of prevention, control and management measures to mitigate against a future outbreak of the disease. “One of the recommendations of the committee was the establishment of a Biosafety Level 3 Laboratory which led ultimately to the collaboration with Global Partnership Programme (GPP), Canada. “The collaboration resulted in the establishment and commissioning of the Lagos State Biobank, a facility that will provide a safe storage of biological and environmental samples. “The facility will also enhance prompt diagnosis of infectious diseases and act as a research centre for cutting edge researches for researchers within and outside Nigeria for improvement of global public health,’’ Idris said.

NDLEA gets rehab centre in Gombe

24-inmate capacity rehabilitation and treatment centre built and equipped by the Gombe State government for the National Drug Law E n f o rc e m e n t A g e n c y (NDLEA) has been inaugurated. Inaugurating the centre in Gombe, Governor Ibrahim Dankwambo, said the facility was a demonstration of commitment to eradicating drug abuse particularly among the youths. D a n k w a m b o, r e p resented by his deputy Charles Iliya, said the state deemed necessary to build and equip the centre because of the menace of drug abuse in the state. “It is against this backdrop that the state government deemed it necessary to build and equipped the centre. This is the first of its kind in the @Businessdayng

North East sub-region to compliment the efforts of NDLEA,” he said. Aliyu Adole, the NDLEA commander in Gombe, said the centre was equipped with ICTs, tailoring and sporting facilities, and would offer free feeding to all the admitted inmates. Adole, however, said that prior to the equipment of the centre built in 2014, the agency had counseled and rehabilitated 138 drug addicts in the state. “We tagged this occasion ‘Partner with Us: Drug Addicts Need help.’ Indeed drug addicts just as any sick patients need help from care givers to enable them to be whole again,” he said. He commended the state government for its assistance to the agency which he said had enhanced its operations.

Wednesday 15 May 2019

BUSINESS DAY

POLITICS & POLICY

Lai Mohammed’s kinsmen want him retained in Buhari’s cabinet SIKIRAT SHEHU, Ilorin

he All Progressives Congress (APC) Elders Consultative Forum in Irepodun Local Government Area of Kwara State on Tuesday appealed to Muhammadu Buhari to retain the Minister of Information and Culture, Lai Mohammed. Hezekiah Oyedepo, chairman of the group, who stated this at a media briefing in Ilorin, noted that Mohammed had carved a niche and justified the confidence reposed in him in various offices he has occupied. According to the group, the commitment and sense of responsibility of Mohammed have solidified unity among the old and new members of APC following the defection of Bukola Saraki from APC to People’s Democratic Party (PDP). The minister, who hails from Oro in Irepodun Local Government Area of the state, said that the minister worked in collaboration with other stakeholders to ensure the victory of the APC in Kwara

Lai Mohammed

State in the just concluded general election, pointing out that the recorded victory might have been extremely difficult without him. Oyedepo noted that the former APC National Publicity Secretary, within his stint as minister, attracted numerous projects to the people of the state, adding that his credible performance as an appointee of government and at party level was sufficient to

earn him reappointment in the next cabinet. Oyedepo, who led other chieftains of the party at the briefing, pleaded with the leaders of the party to prevail on the President to see that Mohammed retains his position in the federal executive council. “Due to the demonstrable and inherent usefulness of our son, Lai Mohammed, to his party, the Federal and

State Government, the fact that God has used him to deliver Kwara State from the clutches of the wicked into the fresh air of APC, Lai Mohammed should be retained as a minister. “S o u n d m a n a g e m e n t thinking, which dictates that you do not change the star of a winning team midway expects no less. “We appeal to the authorities, particularly the President, Vice President, National Chairman of APC, National Leader of APC, Asiwaju Bola Ahmed Tinubu and all other authorities concerned to retain our son as a member of a new cabinet to be constituted by President Muhammadu Buhari in the next cabinet. “A synergy with Lai Mohammed will doubtlessly more than double the Federal Government potential projects and programmes in Kwara State come 2019. “Lai Mohammed is our son, an illustrious son for that matter. We cherish him in Irepodun LGA of Kwara State. We are proud of him and proudly associate with his achievements,” Oyedepo said.

Stop inauguration of Buhari, Hope Democratic Party tells tribunal Felix Omohomhion, Abuja

he Hope Democratic Party (HDP), Tuesday, urged the Presidential Election Petition Tribunal to stop the swearing-in ceremony of President Muhammadu Buhari slated for May 29. The party, in its submissions at the tribunal sitting in Abuja, said it would be unfair and unjust to inaugurate Buhari on the ground that validity of the election that produced him is in contention at the tribunal. HDP in a motion on notice filed on May 9, 2019, prayed for an order of the tribunal to stop the President from presenting himself “for inauguration on May 29 or any other date

until all petitions challenging his election have been fully settled.” The party also prayed for another order stopping the Chief Justice of Nigeria (CJN), Ibrahim Tanko Muhammad from inaugurating or administering oath of office and oath of allegiance on Buhari until all court actions against him are determined. In the motion brought pursuant to Section 1, 6, 139, 239 of the 1999 constitution and Section 26 and 138 of the Electoral Act 2010, HDP and its Presidential candidate, Chief Ambrose Albert Owuru, the two petitioners claimed that unless Buhari is stopped from been inaugurated, he will foist a state of hopelessness on the

tribunal. In the motion signed by Mike Okoye, the two petitioners said that they are challenging validity of Buhari’s election on the allegation of non-compliance with the electoral laws. They further averred that a petition, dated March 7, 2019, had been dully served on Buhari, Independent National Electoral Commission (INEC) and the All Progressive Congress (APC), who are the first, second and third respondents, respectively, questioned the return of Buhari as the President-elect and that parties have exchanged pleadings. The two petitioners claimed that in spite of the pendency and scheduled hearing of their petition against Buhari’s elec-

tion, Buhari has been making frantic efforts and preparations to be sworn in and inaugurated on May 29 by inviting the CJN and the general public. They therefore, insisted that restraining order by the tribunal is appropriate to preserve the subject matter of their petition and prevent Buhari from foisting a fait accompli and state of hopelessness on the tribunal and render their petition nugatory. In the petition marked CS/ PEPC/001/2019, the petitioners “The law is settled that once the question of the validity of election of any person is challenged as to whether he is validly elected or not, that person is not competent to take office or assume the seat of power.

Five bills pass second reading at Lagos assembly Iniobong Iwok

bout five bills scaled through the second reading at the Lagos State House of Assembly (LAHA). The first bill is a Bill for a law to amend the Lagos State Public Finance Management Law, 2011 and for connected purposes. The bill was committed to the House Committee on Finance to report back in two weeks. Likewise, the second bill that scaled the second reading is a bill for a law to amend the administration of physical planning, urban development,

urban regeneration and building control in Lagos State 2015 and for connected purposes. The transport sector reform bill titled ‘A bill for a Law to amend All Laws Relating to the Transport Sector’; to provide for the development and management of a sustainable transport system in Lagos State and for connected purposes was the third bill that scaled the second reading’. While the fourth bill named: ‘Bill for a Law to Amend Lagos State Employment Trust Fund and For Connected Purposes’, scaled through the second reading. www.businessday.ng

Lastly, the Lagos State Electric Power Sector Reform bill title: ‘Bill for a Law to Amend Lagos State Electric Power Sector Reform Law’ was equally read for the second time. Meanwhile, the lawmakers have commiserated with the Governor-Elect Obafemi Hamzat, over the death of his father, Oba Mufutau Olatunji Hamzat. Dayo Fafunmi, representing Ifako Ijaye at the plenary, brought the news on the floor of the House. Fafunmi stated that the late Hamzat was a father to all and lived a fulfiled life and will for-

ever live on in our hearts. Another lawmaker, who spoke on the demise of the late Hamzat, Rasheed Makinde said he was a successful and a very religious man. In his contribution, another lawmaker, Tunde Braimoh, eulogised the late Oba, stating that the late traditional ruler, who was the Afowowa kingdom in Ewekoro Local Government in Ogun State lived a fulfiled life and will always be remembered. The Speaker, Mudashiru Obasa directed the Clerk to write a letter of condolence to the family and a minute silence was observed.

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My WAEC certificate is authentic, says Adeleke Felix Omohomhion, Abuja

enator Ademola Adeleke on Tuesday told the Court of Appeal sitting in Abuja, that his West African Examination Council (WAEC) certificate he presented to the Independent National Electoral Commission (INEC) to secure clearance for the gubernatorial election, is authentic. He said he never forged the certificate as alleged by his opponents. Adeleke was the candidate of the People’s Democratic Party (PDP) in the September 2018, governorship election in Osun State. Adeleke insisted at the appellate court that the certificate attached to his nomination form CF 001 was lawfully issued to him and as confirmed by WAEC in its affidavit evidence submitted to the Federal Capital (Territory FCT) High Court. He therefore, pleaded with the court to set aside the judgment of Justice Oathman Musa of an FCT High Court which erroneously held that his certificate was forged as alleged by two chieftains of the All Progressives Congress (APC). In the final adoption of his brief of argument by his lawyer, Kehinde Ogunwumiju (SAN), Adeleke told the 3-man panel of the court presided by Justice Adamu Jauro, that what he presented to the electoral body to secure qualification for the gubernatorial election was exactly what the examination body presented before the lower court when it was or-

dered to do so by Justice Musa. He insisted that results, scores and contents in both certificates are the same, adding that the only difference was the format it was presented. Adeleke further told the appellate court that Justice Musa erred in law when it ignored document he ordered to be presented before in reaching his decision that Adeleke did not possess requisite academic qualification for the office of governor, adding that there was no case of non-qualification or forgery against Adeleke before the lower court. He consequently urged the Appeal Court to set aside the judgment of the lower court and dismiss the suit of the two APC chieftains for being incompetent and lacking in merit. Similarly, the PDP in its own appeal argued by Emmanuel Enoidem, urged the appellate court to dismiss the suit for being incompetent and statute-barred. The PDP legal adviser said the suit was caught by the Fourth Alteration Act to the 1999 constitution, having not been filed within the 14 days allowed by law. According to Enoidem, the suit was filed after 44 days the cause of action arose while, judgment was delivered outside the 180 days prescribed by law for a pre-election matter. The PDP had conducted its primary on July 21, 2018, while the plaintiffs who are respondents in the appeal had filed their case on September 4, 2018 and judgment delivered on April 2, 2019.

French Ambassador visits Oyo governorelect, pledges support in agric, education REMI FEYISIPO, Ibadan

he French Ambassador to Nigeria, Pasquier Jerome yesterday said his country was ready to collaborate as well as develop a robust relationship in some areas that will be of benefit and bring development to Oyo State in particular and the country at large. Jerome made the pledge while speaking with journalists after a brief meeting with the Oyo State Governor-Elect, Seyi Makinde and his deputy, Raufu Aderemi Olaniyan in Ibadan. The ambassador noted that France intends to build a productive relationship with Nigeria in areas of economy, sports, agriculture, culture, education and politics. “I am very happy to have met with the Governor-elect; we are looking forward to developing more French presence in Ibadan, Oyo State. We want to develop cordial relationship with Nigeria in different fields like political, economic, sports, @Businessdayng

cultural, education and all types of activities. “We have so many French companies who are willing to do business here in Nigeria and the state at large, as we discussed the question of renewable energy, agriculture and agro-businesses with the governor elect because as the state has and arable lands,” he said. In his remarks, Makinde commended the French ambassador for the visit, saying that the state will cooperate with the programmes and businesses coming from France for maximum development, “If at this level, we already have the French ambassador here, they don’t have a lot of time to play around; you must know it must be something very serious. So, we are hopeful that Oyo State will cooperate with the programmes and businesses coming out from France to carry out some of our programmes when we come in,” he said.

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Wednesay 15 May 2019

BUSINESS DAY

Live @ The Exchanges Stock investors lose additional N23bn as sell pressure continues Stories by Iheanyi Nwachukwu

he Nigerian stock market’s yearto-date (YtD) returns stands at -9.57percent as sell pressure further weighed on list equities. The equities market closed Tuesday May 14, 2019 on a negative note as the All Share Index (ASI) depreciated further by 0.22percent to 28,422.76 points against preceding day high of 28,484.44 points. Twenty (20) stocks gained against 16 losers. Also, the value of listed stocks which opened at N10.701trillion decreased to N10.678trillion, down by N23billion. Nestle Nigeria Plc stock price declined most by N51.5 or 3.48percent, from

N1481.5 to N1430. Seplat Plc followed after its share price lost N2 or 0.38percent, from N522 to N520. Lafarge Africa Plc made the top-three losers league, from N11 to N10.7, down by 30kobo or 2.73percent. On the top-three gainers table, Mobil Oil Nigeria Plc advanced most by N9 or 5.45percent, from N165 to N174; GTBank Plc stock price also moved up from N31 to N31.6, adding 60kobo or 1.94percent; while UAC of Nigeria Plc stock price increased from N7 to N7.3, adding 30kobo or 4.29percent. In 3,600 deals, stock dealers traded 200,075,304 units valued at N2.690billion. The Financial Services sector led the activity chart with 149.4million shares ex-

changed for N1.94billion; followed by Conglomerates with 12.5million shares traded for N62million. GTBank Plc, Zenith Bank Plc, Access Bank Plc, UBA Plc and FBN Holdings were actively traded stocks Tuesday on the Nigerian Stock Exchange. In their view on what shapes the market on Wednesday, research analysts at Lagos-based Vetiva Capital said: “Save for the performance of NESTLE, sentiment was generally positive on Tuesday and market would have closed in green, hence barring any surprise outings by heavyweight stocks, we expect to see a neutral to positive performance with mixed sentiment being the general tone”,.

NSE delists entire issued share capital of Newrest ASL

he Nigerian Stock Exchange (NSE) on Monday May 13, 2019 delisted the entire issued share capital of Newrest ASL. This development is further to the NSE market bulletin of February 27, 2019 with reference number: NSE/ RD/LRD/MB17/19/02/27 where it notified Dealing

Members of the Nigerian Stock Exchange’s approval of the application for voluntary delisting of the entire share capital of Newrest ASL Nigeria Plc and subsequent suspension of trading in the shares of the Company. Newrest ASL Nigeria Plc, founded as Catair in 1996, the French Compa-

ny chaired by Olivier Sadran and Jonathan StentTorriani sells its expertise in numerous countries around the world. Newrest is actively functional in all catering and related hospitality segments, including Inflight, buy on board, duty-free, Catering and Remote site, Rail, Retail and support services.

First Aluminium shares for suspension ahead voluntary delisting

rading on the shares of First Aluminium Nigeria Plc will be suspended tomorrow, Wednesday May 15, 2019 in preparation to the voluntary delisting of its entire Issued Share Capital from the Daily Official List of The Exchange. This was solicited by

Asset Limited on behalf of First Aluminium. In view of the above, the Nigerian Stock Exchange (NSE) in a May 13 notice signed by Godstime Iwenekhai, Head, Listings Regulation Department said Dealing Members will be notified of further developments regarding the delisting of the Company.

First Aluminium Nigeria plc, often referred to as FAN. FAN started with the production of aluminium sheets and has introduced aluminium roofing in Nigeria. The Company took its present name First Aluminium Nigeria Plc in 1991 and became quoted on the Nigerian Stock Exchange in 1992.

Expert urges investors to leverage on low prices of stock

nvestors have been urged to take advantage of prevailing low equities pricing in the stocks market, to boost their investments in the market in order to take opportunities of market reversal commencing possibly by end of second quarter (Q2). Uche Joe Uwaleke, a professor of Finance & Capital Market, who is also the head, Banking and Finance Department, Nasarawa State University, Keffi gave the advice on Wednesday in Lagos, as guest lecturer

at the Capital Market Correspondent’s Association of Nigeria (CAMCAN), quarterly forum. Unveiling higher earnings opportunities in the Nigerian stock market, Unalike expressed optimism that the stock market would rebound in the third quarter. He said that the country’s market PE ratio ranks lower that established PE ratio index of established global investment firms, therefore establishing greater room for growth. Uwaleke, who lec-

tured on the theme ‘Stock Market in the first quarter 2019 and postelection prospects” said that that the Nigerian market which ranked as the world’s third most rewarding market in 2017, ranking only after Turkey and Argentina, and became bearish subsequently, is poised to enter into another bullish era. On the factors that will drive market in the third quarter, Uwaleke said that unfolding internal and external factors would impact the equities market positively.

Wednesday 15 May 2019

BUSINESS DAY

tax issues NESG rallies stakeholder engagement for tax reforms ...to launch ‘Better Tax’ initiative Iheanyi Nwachukwu

igeria Economic Summit Group (NESG) is set to unveil the findings of its nationwide survey on tax perception and drive government-citizen engagement for sustainable fiscal reforms through the launch of its Better Tax initiative. Better Tax, scheduled for launch in Lagos today May 15, is a product of the Private sector Think-Tank’s Fiscal Policy Round-table commitment to building a globally competitive Nigerian economy through fiscal consolidation that impacts the citizenry and drives holistic national development. It seeks to create a platform for discourse between government and the citizenry that will reshape tax perception. It is expected to transform tax from being perceived as a burden to a tool for socio-economic development. Experts have long advocated a refocus on the non-oil sector of the Nigerian economy following the 2014 crash in global oil prices. Reinforcing this argument, Federal Inland Revenue Service

(FIRS) Chairman Babatunde Fowler disclosed that the non-oil sector outpaced the oil sector with a 54% contribution to the N5.32 Trillion revenue generated in 2018. Aligned with this development, government has set a policy priority to significantly boost the share of non-oil revenue by 2020. However, Nigeria’s low tax compliance levels thwart the realisation of this revenue mobilisation objective. In 2018, FIRS

disclosed that about 6,772 billionaire businesses in Nigeria do not pay tax, adding that this category of organisations have between N1billion and N5 billion turnover in their accounts, but had no Tax Identification Number (TIN). A whopping 57 million Nigerians are economically active, but the vast majorityare not registered to pay Personal Income Tax. “Better Tax sets a radically different tax reform agenda for Ni-

geria that is impactful and proffers evidence-based solutions to address the twin-problem of low tax morale and compliance that Nigeria continues to grapple with. The research component of “Better Tax” is holistic and cuts across the six geopolitical zones. It includes all stakeholders across the tax revenue value chain such as the government, taxpayers and tax officials. The overarching objective of the project is to

drive mutual collaboration and action among all stakeholders which will, in turn, see Nigeria transform its tax strategy and grow its revenue significantly in record time.” According to Sarah Alade, Chairman, NESG Fiscal Policy Roundtable: “Project Better Tax is distinct from previous tax reform initiatives because it adopts a multi-pronged approach to easing the tax burden. The project leverages the findings of nationwide surveys to cascade information on Nigeria’s current fiscal position in a concise manner designed to educate stakeholders on the role of taxation, and the dual responsibility of citizens and the government to actualise the social contract envisaged through strict tax compliance and fiscal responsibility as obtains in developed economies.” Experts expected at the event include Chairman (NESG) Fiscal Policy Roundtable Sarah Alade; and Co-Chair (NESG) Fiscal Policy Roundtable Doyin Salami. The event will also feature a panel discussion on “Making Taxation work for Nigeria” Issues, Solutions and Priorities; Panelists include the President Manufacturing Association of Nigeria; Ahmed Mansur, Executive Director Enough is Enough Nigeria, Yemi Ademolakun amongst others.

Taxation of Not-For-Profit Organisations – matters arising Isah Aruwa and Cynthia Ibe

Introduction ot-for-Profit Organizations (NPOs) are organizations formed for promoting a common cause, e.g., human rights, environmental conservation, improving health care services/ delivery, girl child education, developmental work, etc., without a profit motive. They are mostly funded by donations and grants, and run by its promoters and volunteers under the supervision of a management team. The Management Team (MT) is responsible for the day-to-day administration of such organizations. In most cases, the MT, usually led by an Executive Secretary, an Executive Director, or whatever nomenclature is adopted by the NPO, reports to the Board of Trustees (BOT) who takes strategic decisions for achievement of the NPO’s overall goals. NPOs are organized on a local, national or international level, focusing on specific issues/areas. In Nigeria, there are two forms of registration adopted by NPOs. They could be registered as an Incorporated Trustee (INT) or a Company Limited by Guarantee (CLG). The Companies and Allied Matters Act (CAMA), 2004 refers

to NPOs registered as INT as: “… community of persons bound together…” by a common objective other than profit, while those registered as CLG are viewed as organizations formed for promoting a common cause, for which the income and property are applied strictly towards promoting the defined cause. This article focuses on NPOs formed under the CLG structure. We will review the income tax filing requirements of this type of NPOs, the level of disclosures required on the returns submitted to the Federal Inland Revenue Service (FIRS) and the need for the FIRS to revisit the statutory income tax

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filing obligations of the NPO, given the nature of their operation and tax exemption status. Taxation of NPOs in Nigeria NPOs in Nigeria, similar to their taxable corporate counterparts, are required to submit companies’ income tax (CIT) returns to the FIRS annually, by virtue of the provision of section 55 of the Companies Income Tax Act 2007 Cap. C 21 LFN 2004, (CITA). The CIT returns should contain, amongst other things, the following documents: • The audited accounts, tax and capital allowances computation for the year of assessment, and a true and correct statement in writing, containing the amount of profit from

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each and every source computed; • A duly completed selfassessment form as may be prescribed by the FIRS, from time to time, attested to by a Director or Secretary of the company; and • Evidence of payment of the whole or part of the tax due into a bank designated for the collection of the tax (where applicable). The above provision requires NPOs to submit their CIT returns with financial statements (FS); which forms an integral part of the returns. While there are no specific International Financial Reporting Standard (IFRS) for preparing NPOs’ FS, the FS are typically prepared based on the provisions of “IFRS for Small and Medium –sized Entities (SMEs)”. The Standard defines SMEs as entities that: a) do not have public accountability ; and b) publish general purpose financial statements for external users. Examples of external users include owners who are not involved in managing the business, existing and potential creditors, and credit rating agencies. It is the provisions of this standard that are applied in preparing the FS of NPOs in Nigeria. Given that NPOs’ primary objective is “not-for-profit”, their operations at the end of a financial year could either result in a surplus (excess of income over expenditure) or a defi@Businessdayng

cit (where the expenditure exceeds the income). Consequently, their “surplus” (or income) is exempted from CIT by virtue of the provision of section 23(1c) of CITA, unless such profits/gains were earned from a trade or business carried on by the NPO in the course of executing their mandate. Pursuant to this requirement, NPOs operating in Nigeria are required to register with the FIRS, comply with the provisions of section 55 of the CITA, and maintain the relevant books of account for purpose of compliance with the relevant provisions of the CITA applicable to their operation. The FIRS would impose penalties on any NPO that fails to comply with the above requirement based on the relevant provision of CITA. Matters arising Sections 24 to 27 of CITA provides for treatment of tax-deductible and non-deductible expenses. While the list of the tax-deductible expenses is not exhaustive, the underlying basis for evaluating items not specifically mentioned is the test of whether the item is “wholly, reasonably, exclusively and necessarily” (WREN) incurred in generating the “income” or “profit” of an organization. Aruwa and Ibe are both from KPMG Advisory Services To be continued next week

Wednesday 15 May 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

IMF’s reputation on the line in Argentina

Some fear fund’s largest bailout is fraying and might not survive an electoral jolt COLBY SMITH AND BENEDICT MANDER

hen the IMF completed its third review of Argentina’s economy in early April, managing director Christine Lagarde boasted that the government policies linked to the country’s record $56bn bailout from the fund were “bearing fruit”. Less than a month later, amid darkening political prospects for incumbent president Mauricio Macri, the country’s currency crisis reignited and bond yields spiked, threatening not only the IMF’s Argentina programme but its reputation and that of its leader. Argentine assets have stabilised somewhat in recent weeks, with the country’s central bank now allowed to use IMF resources to intervene in the peso. But many analysts and investors are concerned that the programme is fraying and could collapse if the populist opposition, led by former leftist president Cristina Fernández de Kirchner, wins the presidential election in October. A victory would be devastating for the IMF given its strong backing of Mr Macri.

“This is the biggest single programme that they’ve ever put up, and their reputation is on the line,” said Bill Rhodes, a former top Citi executive with wide experience handling past Latin American debt crises. Even for mer s enior fund officials are concerned by the organisation’s exposure to Argentina, and the potential fallout should its biggest ever programme implode. “Lagarde has really gone out on a limb for this programme and has been supporting it wholeheartedly,” said Claudio Loser, former head of the IMF’s western hemisphere department during Argentina’s historic debt default in 2001. A failed programme would lead to a “loss of credibility” for the fund, he adds. Plans have already veered off course significantly, with Mr Macri forced to return to the IMF to revamp the deal scarcely three months after the original agreement was unveiled in May last year. In September, the IMF announced it would lend an additional $7.1bn to Argentina and allow the country to receive more cash upfront in exchange for a harsher austerity

WhatsApp voice calls used to inject Israeli spyware on phones

vulnerability in the messaging app WhatsApp has allowed attackers to inject commercial Israeli spyware on to phones, the company and a spyware technology dealer said. WhatsApp, which is used by 1.5bn people worldwide, discovered in early May that attackers were able to install surveillance software on to both iPhones and Android phones by ringing up targets using the app’s phone call function. The malicious code, developed by the secretive Israeli company NSO Group, could be transmitted even if users did not answer their phones, and the calls often disappeared from call logs, said the spyware dealer, who was recently briefed on the WhatsApp hack. WhatsApp, which is owned by Facebook, is too early into its own investigations of the vulnerability to estimate how many phones were targeted using this method, said a person familiar with the issue. As late as Sunday, as WhatsApp engineers raced to close the loophole, a UK-based human rights lawyer’s phone was targeted using the same method. Researchers at the University of Toronto’s Citizen Lab said they believed that the spyware attack on Sunday was linked to the same vul-

and we feel a sense of responsibility in trying to help the country in this effort.” Yet on other metrics, Argentina has struggled. Inflation remains elevated at nearly 55 per cent, despite the central bank tightening the monetary screws. Poverty levels have also skyrocketed to more than 30 per cent of the population, dredging up haunting memories of past crises and IMF programmes.

Price of Brent rises even as kingdom insists there is no disruption to production or exports AHMED AL OMRAN , ANJLI RAVAL AND SIMEON KERR

nerability that WhatsApp was trying to patch. NSO’s flagship product is Pegasus, a program that can turn on a phone’s microphone and camera, trawl through emails and messages and collect location data. NSO advertises its products to Middle Eastern and western intelligence agencies, and says Pegasus is intended for governments to fight terrorism and crime. NSO was recently valued at $1bn in a leveraged buyout that involved the UK private equity fund Novalpina Capital. In the past, human rights campaigners in the Middle East have received text messages over WhatsApp that contained links that would download Pegasus to their phones. WhatsApp said teams of engineers had worked around the clock in San Francisco and London to close the vulnerability. It began rolling out a fix to its servers on Friday last week, WhatsApp said. All users should update to the latest version of WhatsApp, which was issued on Monday, the company said. “This attack has all the hallmarks of a private company known to work with governments to deliver spyware that reportedly takes over the functions of mobile phone operating systems,” the company said. “We have briefed a number of human rights organisations to share the information we can, and to work with them to notify civil society.” www.businessday.ng

balance, which has swung from a large deficit to a surplus of $1.18bn as of March, amid a deepening recession. “There have been significant changes in the Argentine economy — from reliable official data to important fiscal and external sector improvements — and we want to help Argentina continue this process of transformation,” said one IMF official involved in the programme. “It is challenging

Saudi Arabia’s oil infrastructure targeted in drone attack

Messaging app discovers vulnerability that has been open for weeks

MEHUL SRIVASTAVA

programme. The deal required Argentina to run a balanced budget by 2019 and to shrink its external deficit. On both counts, the country has seen success. By the end of last year, the primar y fiscal deficit sat at 2.6 per cent of GDP — lower than the IMF’s target and a far cry from the 3.8 per cent level posted in 2017. Argentina has also made strides on the trade

wo Saudi Arabian oil pumping stations were targeted in a drone attack on Tuesday, the kingdom’s energy minister said, as fears rose about the security of Saudi oil infrastructure. The incident comes shortly after Yemen’s Houthi rebels said they had launched assaults on installations in the kingdom and a day after Saudi Arabia said two of its oil tankers were among those damaged by assaults off the coast of the United Arab Emirates on Sunday. Khalid al-Falih, Saudi energy minister, said the attack on the pumping stations, which sit on the vital East West Pipeline, resulted in a fire in one facility, leaving limited damage after the blaze was controlled. The latest assault elevated worries about threats to oil infrastructure and shipping routes around Saudi Arabia, the world’s largest exporter of oil. Charles Hollis, managing director of Falanx Assynt, a risk consultancy, said the attack was “likely connected” to the Sunday tanker assault near the Strait of Hormuz, a vital waterway. “The location is not coincidental, with the target underlining that the Straits of Hormuz are not the only vulnerable Saudi oil export route,” he said. “However, the Houthis’ capabilities remain

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nascent and they are unlikely to be able to significantly disrupt Saudi export capabilities.” State oil company Saudi Aramco has suspended operations on the 1,200km-long pipeline, which transfers crude from the kingdom’s Eastern Province to Yanbu port on the Red Sea coast, while the damage is being assessed. “As a precautionary measure, the company temporarily shut down the pipeline, and contained the fire which caused minor damage to pump station 8,” it said. The attack on the pipeline is significant because it represents one of the ways Saudi Arabia is able to send oil abroad without using the Strait of Hormuz. “This is an attack targeting an alternative route to the Hormuz Strait,” said Anas Alhajji, an adviser to oil companies and producer countries. “It cannot be a random attack, this is a very sophisticated operation that requires knowledge and planning.” The kingdom said oil production and exports from the country are continuing without disruptions. Still Brent crude, the international oil benchmark, rose $1.09 to $71.32 a barrel. Amy Myers Jaffe, director of the program on Energy Security and Climate Change at the Council on Foreign Relations, said the attacks in Saudi Arabia were the latest risk to oil prices at a time of rising tensions in the market, with supplies already lost from Iran and Venezu@Businessdayng

ela because of US sanctions. “History has shown that when oil traders dismiss so many geopolitical risks at once, it can portend a large price move later on,” said Ms Myers Jaffe. Before the statements from the Saudi authorities, a television channel owned by the Houthi militia group in Yemen said on Tuesday that the Iran-backed group had carried out attacks on Saudi targets using seven drones, without providing details. The TV report said the operation was a response to “continued aggression” and that more strikes could follow. “The Kingdom of Saudi Arabia condemns this cowardly attack,” said Mr Falih, adding that “these attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran”. A spokesman for the Saudi State Security said authorities were investigating the drone strike. According to tanker tracking firm Kpler, the port of Yanbu, where the pipeline terminates, has only been exporting a little over 100,000 barrels a day of crude in 2019, down sharply from last year when it was regularly exporting 500,000 to 700,000 b/d. The majority of the crude it has exported this year has gone to Asia. Last year, when exports were higher, much was being shipped to Egypt for likely transshipment on to Europe.

46 BUSINESS DAY

Wednesday 15 May 2019

NATIONAL NEWS

Disney to take full control of Hulu in Comcast deal Agreement would give video streaming service a minimum valuation of $27.5bn ANNA NICOLAOU, JAMES FONTANELLA-KHAN AND ERIC PLATT

alt Disney has struck an agreement with Comcast to take full control of Hulu, the video streaming service that rivals Netflix in the US. Comcast will sell its 33 per cent stake in Hulu to Disney as early as January 2024 at a minimum valuation for the streaming service of $27.5bn. The put/call deal will allow Disney to take operational control of Hulu immediately, while giving Comcast the chance to maximise its investment in a company it believes will continue to grow over the next five years. “Disney was keen to be the sole driver of the business and Comcast was willing to give them that in exchange for the economic upside of being a silent partner,” said a person close to the two companies. Comcast had been wrestling for several months over whether to retain a minority stake or sell its entire holding, according to one person briefed about its strategy. The person close to both companies said Tuesday’s deal was the best compromise the groups had managed to agree. Hulu was conceived in 2006 as a joint venture among traditional media companies NBCUniversal and News Corp, which were looking to get into the online video business.

It has grown into a formidable rival to Netflix and Amazon, luring in subscribers with original hits such as The Handmaid’s Tale and licensing rights to old favourites including Seinfeld. The Hulu deal comes as Disney pushes into streaming with its own services due to launch this year. Bob Iger, the media group’s chief executive, said Disney was “now able to completely integrate Hulu into our direct-to-consumer business”. For Comcast, Tuesday’s agreement is a way to bet on Hulu’s continuing growth. Disney executives said last month they expected Hulu to grow from 28m subscribers to 40m-60m by 2024. Disney expects it to become profitable in 2023 or 2024. Comcast will have the option to continue investing in the business alongside Disney over the next five years, but if it decides to reduce its capital in Hulu, its stake will be diluted accordingly. The two companies said on Tuesday that whether Comcast participated or not in future investments in Hulu, its stake in the company would not fall below 21 per cent., guaranteeing it at least $5.8bn from Disney when it takes full ownership by January 2024. AT&T last month sold its 10 per cent stake in Hulu back to the company in a deal that valued the streaming service at $15bn. As part of Tuesday’s agreement, Comcast and Disney will split AT&T’s stake.

Four killed in clashes with Sudan security forces Violence signals split in military administration, raising fears for democratic revolution TOM WILSON

t least four people were killed in Khartoum on Monday night in clashes with the security forces that helped to oust President Omar al-Bashir, shaking public faith in the democratic revolution many hoped was unfolding in Sudan. Mr Bashir was removed in a coup on April 11 after four months of demonstrations but talks between the popular movement that led the protests and the military officers that seized power quickly stalled. The clashes erupted after the transitional military council on Monday said it had reached an initial deal with the popular movement on a transition to civilian rule, a sign, experts said, that the interim military administration may be split. Three protesters and one policeman were killed in the violence, according to state television. But the Sudan Doctors Committee, part of the association of professionals that has spearheaded the protests, said at least six people were killed, according to local press reports. In a press conference late on Monday night the military council said the armed forces had not fired “a single shot at the people” and that “other forces” must have infiltrated the protest movement seeking to derail the process. Rashid Abdi, an independent expert on Sudan and former Horn of Africa director at the International Crisis Group, said that there was “nothing new” in Suda-

nese leaders blaming unknown elements and warned that the military council was playing “a dangerous game”. “This is a huge protest movement and we have seen from the past that they are not going to be cowed by killings, so it will simply escalate the situation rather than de-escalate it.” Eyewitnesses told local press that the shots were fired by members of the Rapid Support Forces, a paramilitary group headed by the military council’s second-incommand, Lieutenant General Mohamed Hamdan Dagalo, better known as Hemeti. The council denied that the RSF was responsible. Integrated into the armed forces by President Bashir, the RSF has since vied with the army and the intelligence services for power and influence. “Clearly, the army is deeply fragmented and I think the danger is that this division could quickly turn into an armed clash between the different factions in the military,” Mr Abdi said. The military council said it would continue talks on Tuesday to reach a “final solution” on the form, structure and timing of the transition. But the violence has provoked further calls for the military to hand power directly to civilian leaders. “Last night’s violence also makes clear why agreement on a civilian-led transition is so urgent,” Irfan Siddiq, UK ambassador to Sudan said on Twitter. “The ongoing uncertainty creates risks of further instability.” www.businessday.ng

Sarah Friar, former finance chief at Jack Dorsey-led payments company Square, joined Nextdoor as its new chief executive last year © Bloomberg

Local social network Nextdoor raises $123m at $2bn valuation Start-up will use new funds to ramp up expansion in Europe TIM BRADSHAW

extdoor, a social networking site for local communities, has raised $123m in new growth funding at a $2bn valuation, as it continues its expansion into Europe. This week sees San Franciscobased Nextdoor launch in Denmark and Sweden, extending its network of more than 236,000 active neighbourhoods into a total of 10 countries. The new financing comes six months after Sarah Friar, former finance chief at Jack Dorsey-led payments company Square, joined Nextdoor as its new chief executive. “I think there is more we can do in Europe but also globally,” Ms Friar said of its new financial firepower. Nextdoor is also building a new self-service advertising platform catering to smaller, local businesses such as handymen or neighbourhood restaurants. At the moment Nextdoor’s advertisers are primarily large national brands, such as John Lewis in the UK,

which are looking to reach a local audience. While Ms Friar would not provide revenue figures, she said that sales doubled last year and were on track to double again this year. “From a product perspective, I really want to see us lean into the local business opportunity,” Ms Friar said. “Nobody to date has done local well.” Though the company, which has 300 staff, is not yet profitable, that is “really a choice”, she added, as Nextdoor invests in international expansion. Riverwood Capital, a tech-focused private equity firm, is leading the new round, with existing investors including Benchmark and Kleiner Perkins also participating. The new equity takes the eight-yearold company’s total financing to more than $400m. “We believe Nextdoor represents the future of local community and commerce,” said Chris Varelas, cofounder and managing partner of Riverwood Capital, who is joining the company’s board of directors. Nextdoor has seen its valuation almost double since 2015. But in that

time, the company has seen competition increase from rival community apps such as Amazon-owned Neighbors, which is built around the ecommerce group’s Ring security cameras, and social news start-up Citizen, as well as Facebook and Google, which are both investing to expand their local businesses. “People don’t need two local social networks, so it’s a fairly strong moat we’ve built around ourselves,” Ms Friar said. While three quarters of Nextdoor’s communities are based in the US, Nextdoor faces less intense competition in Europe, she added. “Nobody else is anywhere near our scale,” she said. “We have the balance sheet to make sure we own the opportunity.” Nextdoor has also been able to capitalise on a “backlash” against more traditional online social networks that “hide everyone behind a pane of glass” and have been linked to social isolation and anxiety, Ms Friar said. “Technology needs to find a better way and Nextdoor is that better way.”

Nissan warns profits to fall to lowest level in more than a decade Tokyo prosecutors revise charges against former chairman Carlos Ghosn KANA INAGAKI

issan has warned that its operating profit will fall to the lowest level in more than a decade after the Japanese carmaker abandoned an expansion pursued by its ousted chairman Carlos Ghosn. Hiroto Saikawa, Nissan’s chief executive, placed the blame squarely on a Ghosn-era expansion policy in the US and emerging markets. He promised a break from the past, laying out the broad outline of a restructuring plan that would involve a cut of 4,800 jobs and a 10 per cent reduction in capacity globally. “This is the bottom for us. If you can give us two or at most three years, we will bring Nissan back,” Mr Saikawa said at a news conference. “Our top priority is to escape from this slumping financial performance.” For the fiscal year ending in March 2020, the company forecast its operating profit would fall 28 per cent from a year earlier to ￥230bn ($2.1bn), the lowest level since the company booked a loss for the 20082009 fiscal year. The forecast was well below analyst expectations. In longer term targets, the company said it would aim for an operating profit

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margin of 6 per cent by 2023, compared with its earlier target of 8 per cent announced in November 2017 and its current margin of 2.7 per cent. “The bigger issue for Nissan is that they’ve lost quite a lot of senior managers,” said Janet Lewis, analyst at Macquarie. “Before you even see an improvement in profit or sales, it is how Mr Saikawa rebuilds the management team that he should be judged on.” In the past five months alone, Nissan’s Infiniti brand has lost two chiefs and a string of other executives have left, including sales and marketing boss Daniele Schillaci, and José Muñoz, Nissan’s former chief performance officer. Analysts have also warned that the weak performance could undermine Nissan’s negotiating power with Renault, which owns 43 per cent in the Japanese group and has pushed to resume merger talks as soon as possible. Mr Saikawa said he had differences in opinion with Renault chairman Jean-Dominique Senard on the alliance and remained opposed to a full merger that he claimed would have more negative implications than benefits for Nissan. @Businessdayng

Earlier on Tuesday, Japanese prosecutors revised charges levelled against Mr Ghosn, alleging that a brokerage account held by his private asset management company received $20m from an unnamed company, which people close to the investigation said was the company of Saudi businessman Khaled al-Juffali. Prosecutors did not explain further what impact the $20m had on the case, but they have earlier alleged that Mr Ghosn tried to address unrealised losses from a derivatives transaction totalling ¥1.85bn ($16.7m) incurred by his asset management company, by transferring them to Nissan at the height of the financial crisis in 2008. When the contract was transferred back to his asset management company four months later, Mr Ghosn is alleged to have made a series of payments totalling $14.7m from a Nissan subsidiary to Mr Juffali, who is an investor and partner in Nissan’s joint ventures in the Middle East. People with knowledge of the investigations have said Mr Juffali helped Mr Ghosn arrange a letter of credit to a bank that demanded additional collateral on the currency swaps agreement.

Wednesday 15 May 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Bayer pins hope on appeals after losing third US weedkiller lawsuit Group’s legal woes from $63bn Monsanto deal continue as cases and costs mount TOBIAS BUCK

hree cases down, more than 13,000 plaintiffs to go — and the costs for Bayer are piling up fast. The verdict delivered by a jury in Oakland, California, on Monday marked a new low for the German aspirin-to-seeds group in its increasingly desperate legal battle over glyphosate. For the third time in a row, jurors found that glyphosate-based weed killers were responsible for the plaintiffs’ cancer — and that Bayer’s Roundup was to blame. The sting this time came in the size of the damages awarded: more than $1bn each for Alva and Alberta Pilliod, an elderly couple suffering from non-Hodgkin lymphoma after years of exposure to Roundup. The two previous glyphosate rulings against Bayer involved substantial but much smaller damages of about $80m each. With at least 13,400 plaintiffs waiting for similar trials in the US, the prospect of more rulings against Bayer prompted a fresh drop in the share price. Bayer stock fell 3 per cent to a new seven-year low on Tuesday, and is down more than 40 per cent since the group’s $63bn deal to buy Monsanto, which brought Roundup and the related litigation into the Bayer orbit in the first place. The combined group is now worth less than Bayer paid for its US rival only last year. “The verdict shows again that with this acquisition Bayer bought into substantial legal and financial risks that are hard to quantify today,” said Markus Manns, a portfolio manager at Union Investment, a Bayer shareholder. Sebastian Bray, an analyst at Berenberg, said the situation at Bayer was now so dire that some investors were hoping for wholesale change. “We are reaching a point now where some in-

vestors are starting to see Bayer’s legal woes as a way to force management changes or to push for a break-up of the company. That is another reason why shares are down only 3 per cent.” Mr Bray said he thought it was unlikely that chief executive Werner Baumann would leave in the near future, but added: “Bayer management has been good at operating and integrating the assets of Monsanto. But the fact remains that the share price has collapsed in a way that is pretty rare in German corporate history. And the feeling among shareholders is that the management that has presided over this collapse will struggle to regain credibility.” Investors and analysts were quick to point out that the $2bn damages award in the Oakland case was unlikely to stand, and would probably be reduced by the presiding judge in the post-trial phase. Indeed, the US Supreme Court has ruled in the past that punitive damages should not exceed compensatory damages by a factor of more than nine. In the Pilliod case, the punitive element — $2bn in total — exceeds the compensatory award of $55m by a factor of 37. The question facing the Bayer board back at the group’s Leverkusen headquarters is what it can do to turn the legal tide. Judging by the group’s response to the Pilliod verdict, the answer is: not much. Bayer insisted it remained convinced that glyphosate was safe and that the initial verdicts would be overturned on appeal. The group pointed out that Monday’s ruling conflicted with a recent assessment by the US Environmental Protection Agency as well as the “consensus among leading health regulators worldwide that glyphosate-based products can be used safely and that glyphosate is not carcinogenic”.

US and European stocks rise as trade war fears ease PETER WELLS, MICHAEL HUNTER AND DANIEL SHANE

tocks bounced back from their worst day in months on Tuesday as President Donald Trump reiterated China still wanted to ink a trade deal with the US, allaying some of the market fears over the sharp flare up in tensions between the world’s two largest economies. In a series of tweets on Tuesday morning, Mr Trump said “When the time is right we will make a deal with China”. He went on to say a deal “will all happen, and much faster than people think!”. However he also said while his “respect and friendship with President Xi is unlimited”, any agreement must also “be a great deal for the United States or it just doesn’t make any sense.” His slightly more optimistic remarks come after China hit back on Monday with its own retaliatory tariffs on about $60bn worth of US goods and sharply escalated the trade war between the two countries. On Wall Street, the S&P 500 was up 1.1 per cent, recovering less than half of its 2.4 per cent drop on Monday, its biggest one-day fall since January. The Nasdaq Composite was up 1.3 per cent, following its 3.4 per cent

fall yesterday, while the Dow Jones Industrial Average added 1.2 per cent. While in hot demand amid Monday’s stock market sell-off, Treasuries cooled a touch on Tuesday, pushing yields higher. The yield on the benchmark 10-year US Treasury was up 1.2 basis points to 2.4174 per cent from yesterday’s six-week low. London’s FTSE 100 rose 1 per cent amid demand for its mining stocks. Frankfurt’s Xetra Dax 30 added 0.8 per cent. But pressure remained on Asian indices, where weakness continued into Tuesday after Beijing’s retaliation, although China’s currency also found support. Hong Kong’s Hang Seng index sank 1.5 per cent as traders caught up with the latest trade-related drama following a holiday on Monday. China’s CSI 300 fell 0.6 per cent and Japan’s Topix was down 0.4 per cent. China’s offshore renminbi suffered its worst day since July on Monday, weakening more than 1 per cent against the dollar. It was slightly firmer against the dollar on Tuesday. Donald Trump confirmed on Monday that he would meet his Chinese counterpart, Xi Jinping, at a G20 summit in Japan next month. Some think markets could stay volatile in the meantime. www.businessday.ng

The decline of Germany’s economic model casts uncertainty over the future relationship between chancellor Angela Merkel and French president Emmanuel Macron © Kay Nietfeld/dpa

US plaintiffs Alva Pilliod, left, and his wife Alberta, second from right, with their lawyers on Monday after a jury had awarded them $2bn in damages © AP

US-China trade battle to sting Deere as tariffs hit farmers, JPMorgan warns MATTHEW ROCCO

immering tensions between the US and China will take their toll on equipment giant Deere, with farmers caught in the crossfire of the trade battle, JPMorgan warned on Tuesday. Ann Duignan, the investment bank’s analyst, downgraded Deere’s stock to underweight — the equivalent of a sell rating — from neutral, warning fundamentals in US agriculture are “rapidly deteriorating”. American farmers are facing numerous headwinds, including a fresh round of tariffs, weak Chinese demand for soyabeans, a global oversupply of crops and the potential for crop yield losses in the Midwest. These challenges are bad news for machinery manufacturers such as Deere, whose sales can ebb and flow along with spending in the farming and construction industries. President Donald Tr ump slapped China with higher tariffs on $200bn worth of goods last week, as US officials accused Beijing of “reneging” on promises made during trade negotiations. In response, China increased tariffs on about $60bn in US goods. It had already imposed tariffs

on US commodities including soyabeans last year in addition to reducing imports. Mr Trump has vowed to protect farmers from the impact of the trade battle. He tweeted on Tuesday that if China does not continue to buy US crops, the country will be “making up the difference” by purchasing farm products. The comments came after Mr Trump said on Monday his administration was considering a plan to provide $15bn in aid to farmers. JPMorgan said farmers face a difficult choice to either designate “prevented planting” or plant in conditions that are not ideal. “Even if aid is made available, it would likely be determined by crops harvested (weighing on planting decisions)”, Ms Duignan wrote. Tariffs have weighed on US soyabeans since last year, contributing to a 27 per cent drop in exports year-over-year, JPMorgan noted. In China, the spread of African swine fever has thinned the hog herd by around 30 per cent and may “significantly” reduce the country’s import demand for soyabeans even further. Soyabeans are used in hog feed. US farmers must also contend

with close to record soyabean and corn crops this year in Brazil and Argentina, weighing on prices, while planting across the Midwest has been delayed due to heavy rainfall. The 18 largest corn-producing states have planted 30 per cent of their acres, below the five-year average of 66 per cent by this time of the year, according to the US Department of Agriculture. A strong dollar also makes US produce less competitive in the global market. “Overall, this is a perfect storm for US farmers and the fundamentals for [Deere] are now skewed to the downside, in our view,” Ms Duignan wrote. JPMorgan maintained its price target for Deere at $132. The company is scheduled to report fiscal second-quarter earnings on Friday. Meanwhile, the bank issued an upgrade for Duluth, Georgiabased equipment maker AGCO, citing its limited exposure to the row crop sector in North America. Ms Duignan rated the stock overweight with a price target of $77. Shares in Deere were up 0.4 per cent at $147.05 on Tuesday. AGCO was trading 0.7 per cent higher at $71.17.

Vale weighs plan to increase capacity at its biggest iron ore mine Latest stage in a ferocious fee war waging among asset managers NEIL HUME

ale, the world’s biggest producer of iron ore, is weighing plans to increase the capacity of its giant S11D mine in the Amazon rainforest, as the Brazilian miner seeks to move away from operations that use tailings dams. The Rio de Janeiro-based company is reeling from a deadly dam breach at one of its mines earlier this year that is likely to have killed more than 230 people. It has been forced to curtail production at several operations in Brazil by regulators. Some of these mines producer large amounts of wet tailings, or waste material, that are stored in huge earth dams.

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Vale’s new chief executive Eduardo Bartolomeo told investors at a conference in Barcelona on Tuesday it was considering increasing the capacity of S11D to 150m tonnes after 2020 to “increase our strength in dry processing and reduce of the use of tailings dams.” S11D is the highest grade iron ore mine in the world. It also uses a water-free processing technology to screen and sift the ore before it is placed in giant stockpiles. This means it does not need a tailings dam to store waste material, and will probably be looked upon more favourably by regulators in the future. Vale had previously said it would increase the capacity of the mine to 100m tonnes by @Businessdayng

2022. Analysts says the tragedy at Vale’s Córrego do Feijão mine has underlined the need to move away from operations that produce high volumes of wet tailings. The disaster has made some investors wary of owning mining shares and they are demanding companies provide detailed information on every tailings facility under their control. Vale is already decommissioning all of the dams built according to the upstream construction method — the same design used at Córrego do Feijão. Vale said last week it will take two to three years to reach the annual output target of 400m tonnes it had originally set for 2019.

Wednesday 15 May 2019

BUSINESS DAY

ANALYSIS

How foreign groups fare in China’s slowing two-track economy Data show some multinationals buck trend as angst mounts for others and job security fears

oreign companies operating or selling in China bucked the country’s slowdown trend last year, even as the world’s second-largest economy appears to have decelerated more than official figures suggest. China’s biggest economic slowdown in three decades is provoking angst among companies that have become used to its booming economic expansion. The pain is not evenly spread, however, as a Financial Times data analysis shows. Overall, the revenues of 2,891 foreign non-financial companies grew 19.8 per cent last year, compared with 13.9 per cent in 2017,

Institution estimated rate Rust-belt north-east first to be affected Even if the official GDP growth rates are overstated, they still identify trends. A look at gross regional product (GRP) over the past decade paints a picture of which regions are bearing the brunt of slowing growth. They show the slowdown starting in the rust-belt north-east, a region where state-owned enterprises dominate. An ageing population and reliance on oldfashioned smokestack industries exacerbate these trends. The east coast, including the Yangtze and Pearl river deltas, remains more prosperous. Lessdeveloped regions in central and

according to data from financial intelligence provider FactSet. Within this group, 54 per cent of companies posted faster growth rates in 2018 compared with 2017, counterbalancing the deceleration or outright revenue decline of the rest. Energy and healthcare were winners, with growth accelerating at multinationals such as Melbourne-based BHP and Cambridge-based AstraZeneca in 2018. But those exposed to China’s consumer, retail and automotive sectors, such as Frenchbased retailer Carrefour, suffered. Apple’s sales in China grew nearly 18 per cent in its fiscal year ending September 2018, but contracted 27 per cent during the three months to December. In the graphic below, the FT analyses revenue growth for foreign multinationals earned in China in 2018, broken down by sector: Beeswarm chart showing multinational companies’ China-derived revenues and growth rates Economy slowing more than figures suggest Last year, according to official figures, China grew at the slowest pace since 1990 and held at 6.4 per cent in the first quarter of this year. That may be the soft version of events. Many Chinawatchers believe its official data understates the true extent of the slowdown. Official figures may have overstated inflation-adjusted gross domestic product growth by an average of 2 percentage points a year from 2008 to 2016, according to recent research from the Brookings Institution, a thinktank. Line chart showing the gap between China’s official GDP growth rate and the Brookings

western China are looking to catch up these coastal regions. Internet searches show workers are worried Worries over job security can signal hardship in any economy, but China’s official unemployment rate is widely ridiculed as useless. It barely budges even when other data show large swings in the economy. Data from internet search giant Baidu offers an alternative view. The volume of keyword searches using the Chinese term for “lay-offs” (caiyuan) shows a marked upturn in late 2018 and early this year. Line chart showing increases in Baidu searches for “layoffs” since 2008 Excavators index suggests old economy is labouring Extraction, heavy industry and massive infrastr ucture projects helped build China’s economic miracle. Now, though still a driver of growth, their relative importance is falling as the economy shifts towards services. Digging machines are used in mining and construction, making them a useful proxy for activity in heavy industry. Excavator sales slowed sharply in late 2018 and January 2019, but picked up in February as the impact of the Chinese government’s infrastructure stimulus began to take hold. Employment trends reveal a country in transition As China shifts towards services, the composition of the labour force is also changing. Beginning in the mid-1990s, the number of Chinese working in services surpassed those in industry. That trend has widened over time, accelerating rapidly from 2012 onwards.

GABRIEL WILDAU AND DAVID BLOOD

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Israel’s NSO: the business of spying on your iPhone

Software that has hacked WhatsApp has also been accused of helping governments spy on dissidents MEHUL SRIVASTAVA AND ROBERT SMITH

s Apple rolled out an advertising campaign last month touting the impenetrability of the iPhone — “Privacy. That’s iPhone”, the commercials promised — a secretive Israeli company called in its sales people to talk about an important update designed to thwart that very privacy. According to one person at the meeting, the executives from NSO Group made a bold claim: using just one simple missed call on WhatsApp, it had figured out a way to “drop its payload”, a piece of software called Pegasus that can penetrate the darkest secrets of any iPhone. Within minutes of the missed call, the phone starts revealing its encrypted content, mirrored on a computer screen halfway across the world. It then transmits back the most intimate details such as private messages and location, and even turns on the camera and microphone to live-stream meetings. The software itself is not new — it was the latest upgrade to a decade-old technology so powerful that the Israeli defence ministry regulates its sale. But the WhatsApp hack was an enticing new “attack vector”, the person says. “Great from a sales point.” It was an illustration of the sales pitch that NSO has made to governments around the world — and which have helped give a tiny and discreet company a market valuation of around $1bn. NSO’s few hundred engineers claim they have managed to manoeuvre around whatever obstacle Apple, the world’s most valuable company, has thrown in its way. Apple declined to comment for this article. At an investor presentation in London in April, NSO bragged that the typical security patches from Apple did not address the “weaknesses exploited by Pegasus”, according to an unimpressed potential investor. Despite the annual software updates unveiled by companies such as Apple, NSO had a “proven record” of identifying new weaknesses, the company representative told attendees. NSO’s pitch has been a runaway success — allowing governments to buy off the shelf the sort of software that was once thought to be restricted to only the most sophisticated spy agencies, such as GCHQ in the UK and the National Security

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Agency in America. The sale of such powerful and controversial technologies also gives Israel an important diplomatic calling card. Through Pegasus, Israel has acquired a major presence — official or not — in the deeply classified war rooms of unlikely partners, including, researchers say, Gulf states such as Saudi Arabia and the United Arab Emirates. Although both countries officially reject the existence of the Jewish state, they now find themselves the subject of a charm offensive by Prime Minister Benjamin Netanyahu that mixes a shared hostility to Iran with intelligence knowhow. The Israeli government has never talked publicly about its relationship with NSO. Shortly after he stepped down as defence minister in November, Avigdor Lieberman, who had responsibility for regulating NSO’s sales, said: “I am not sure now is the right time to discuss this . . . I think that I have a responsibility for the security of our state, for future relations.” But he added: “It is not a secret today that we have contact with all the moderate Arab world. I think it is good news.” The NSO Group says Pegasus has been used by dozens of countries to prevent terrorist attacks, infiltrate drug cartels and help rescue kidnapped children. But two lawsuits against the company, which have been filed in Israel and Cyprus, and build on investigations by human rights groups, claim it tracked the software to the phones of journalists, dissidents and critics of governments from Mexico to Saudi Arabia, including a researcher at Amnesty International, the wife of a murdered Mexican journalist and anti-corruption activists. As the company has grown in influence, it has been tracked by researchers at the University of Toronto who have shadowed Pegasus. They believe it has been used in 45 countries including Bahrain, Morocco, Saudi Arabia and the UAE. Half the group’s revenues come from the Middle East, according to an investor at the April presentation, although the company also told the gathering that it had contracts with 21 EU countries. NSO’s technology has become a trophy weapon in the rivalries that consume the Middle East. The Israeli lawsuit says the UAE, an NSO client, asked a company representative to hack the mobile phones of Qatar’s emir, a rival Saudi @Businessdayng

prince and the editor of a dissident newspaper in London. The murder of Jamal Khashoggi, the Washington Post columnist, in Istanbul by Saudi government hitmen brought deeper scrutiny of the company. Omar Abdulaziz, a Canadabased vocal critic of the Saudi government, and a friend of Khashoggi, alleges in one of the lawsuits in Israel that his phone was infiltrated by Pegasus, and was used to track Khashoggi’s conversations with him before his death in October. NSO has offered a hedged response — saying publicly only that its software was not used by any of its clients to infect Khashoggi’s phone itself and that it only sells to responsible countries after diligent vetting, and with the approval of the Israeli government. The company declined to comment on the record. But on the question of its software being used by clients to monitor dissidents or journalists instead of legitimate terror targets, a person familiar with NSO says it does not see any of the data collected by its customers. Instead, it has designed a firewall between its software, which it regularly updates and maintains, and the data it collects, which sits in separate servers located in the customer country, the person says. NSO has also turned down potential business worth $150m in the past three years, and declined to pursue a further $250m in deals after work done by an ethics committee, which vets the customer government, its agencies, the human rights risks and the spy agency itself, the person says. Few of the company’s critics are assuaged by these assurances. “Its talk about careful customer selection seems like a joke, because it already has many contracts with states with very problematic human rights records, like Saudi Arabia,” says Alaa Mahajna, a Jerusalem-based human rights lawyer who is representing Mr Abdulaziz and a group of Mexican journalists and activists in two lawsuits against NSO. In a previously unreported detail, NSO has been selling the ability to hack mobile phones in any part of the world — most recently using WhatsApp — with geographical software limitations decided by the Israeli government, according to a person familiar with the company. That means that a spy agency in one country can theoretically hack phones well outside their jurisdiction.

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OIL

Uganda: Uganda launches second round of competitive bidding for oil blocks Page 50 GAS

Ghana: Eni makes new gas, condensate find offshore Ghana Page 51 Market Insight

Bello Rabiu, chief operating officer, Upstream (representing GMD) cutting the tape to the Nigeria Pavilion during the opening ceremony at 2019 Offshore Technology Conference (OTC) in Houston, USA.

Debrief

Angola teaches Nigeria’s oil industry how to behave FRANK UZUEGBUNAM

Oil prices rise as Middle East tanker attack increases supply concerns Page 58 OPEC weekly basket price DAY

PRICE

10/5/19

70.66

9/5/19

69.66

8/5/19

69.88

7/5/19

70.45

6/5/19

70.23 Source: OPEC

ollowing the worst fuel crisis to hit Africa’s second-largest crude producer recently, President, Joao Lourenco, bit the bullet by sacking Carlos Saturnino, chairman of Angola’s state-oil company, Sonagol. Lourenco did not stop at that. Other board members were fired and few directors were reinstated to the board. The fuel crisis was attributed to “difficulties in accessing currencies to cover the costs of importing refined products,” according to Sonagol. Unpaid debts owed to the energy company by industrial clients was also blamed. Angola is Africa’s secondlargest oil producer behind

Nigeria. Despite producing around 1.5 million barrels of oil per day, the country relies on imports for 80 percent of its demand for refined products such as petrol and diesel due to insufficient in-country refining capacity. There are lessons for Nigeria from the Angola action. Despite its vast crude oil resources, Nigeria still witness persistent fuel shortages yet nobody or group has been held responsible by government even when it is obvious that Nigeria’s state-oil company, Nigerian National Petroleum Corporation (NNPC) and the Petroleum Ministry lacked initiative and were bereft of ideas. Lessons from Angola are not limited to whipping the state-oil company into line. It also includes industry reforms. Angola’s recent energy reforms span from deep changes

in tax law to changes in concession contracts and the opening of marginal fields to African independents. Its Ministry of Mineral Resources and Petroleum quickly put together a task force comprised of both international and domestic stakeholders, including the Ministry of Finance, the Office of the President, Sonangol, BP, Chevron, ENI, Esso, Equinor, and Total. The task force proposed improvements in several areas, including: simplifying the oil concessions management process; implementing incentives for investment in marginal fields; and creating a natural gas regulatory framework. The reforms were aimed at benefitting all Angolans and increase the ability of employers to generate more opportunities for Angolan citizens, investors and the region.

The measures appear to be working and there are results to show. Angola has seen a slight rise in investor confidence lately as more attractive terms are being offered in the country’s oil and gas developments. Mega oil and gas projects have achieved final investment decision since 2018, and several more are headed for FID in 2019 and 2020. A new licensing round is expected to attract new international explorers to the country, as well as promote the participation of Angola’s domestic sector by offering incentives for marginal fields. The World Bank’s economic outlook for Angola released in December 2018 predicts GDP will grow by 2.2 percent in 2019, the first time the country will have seen positive growth since 2014. An improved investor environment is listed as a cause for the improvement.

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Uganda: Uganda launches second round of competitive bidding for oil blocks

ganda has launched a second round of competitive bidding for five oil exploration blocks in the west of the country, where it has already discovered commercial crude reserves, the energy ministry said. “The licensing round is expected to be concluded with the award of Petroleum Exploration Licenses to successful firms by December 2020.” the statement said. The ministry said a total of 4,928 square kilometres would be offered in the new round with Irene Muloni, the country’s energy minister, inviting investors to take up the blocks adding that many exploration companies were expected to show interest in the blocks, especially with the current relatively high price of crude oil which makes the investment attractive. Uganda launched its first oil block auction in 2015, covering six exploration areas measuring 2,674 square kilometres. Prior to that, the country handed out blocks on a first-come, first-served basis. Two of the firms that participated in the first round, Australia’s Armour Energy Limited, and Nigeria’s Oranto Petroleum, went on to sign production sharing agreements (PSAs) with the government. Uganda first discovered oil in 2006 in

the Albertine rift basin which straddles its border with the Democratic Republic of Congo. Government geologists have said crude reserves of 6 billion barrels have been confirmed with 1.4 billion barrels recoverable. China’s CNOOC, France’s Total and the UK’s Tullow jointly own the existing

Brief

fields but commercial production has been repeatedly delayed and is currently seen starting only in 2022. Uganda, which is landlocked, has signed an agreement with Tanzania for a crude export pipeline which will terminate at Tanzania’s Indian Ocean seaport of Tanga.

Chad: Doba crude hits record high on demand for low sulfur grades

had’s low sulfur Doba crude, which has been rising consistently in value this year as new specifications and higher quality boosted buying interest, has hit a record high. Doba rose 50 cents/b to Dated Brent

Angola: Angola overtakes Brazil as top crude supplier to China’s independent refineries

plus $2.00/b, the highest level since Platts started assessing the grade in August 2015. It stood at Dated Brent minus $3.00/b on January 2. All Doba’s June loading program, which was one cargo shorter than May, were cleared within two weeks into the

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East as a result of strong demand from independent Chinese refineries for heavier sweet barrels, traders said. Doba is a popular crude for Chinese refineries, along with Angola’s Dalia and Pazflor and Republic of Congo’s Djeno, as its heavy but sweet properties offer attractive yields. “The new Doba field is superior and produces ultra-low sulfur crude,”a West African crude trader said. That is a quality particularly sought after by refiners ahead of the global sulfur cap for marine fuel being cut to 0.5 percent on January 1, from 3.5 percent, as per International Maritime Organization regulations. Doba’s low sulfur content of 0.09 percent makes the grade particularly interesting for refineries ahead of the new regulations. Doba, which began production in 2003, has historically had a small customer base due to its high acidity, meaning it could only be refined by complex refineries that had the required equipment to deal with such crude.

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ngola has risen to be the top crude supplier to China’s independent refineries in April surpassing Brazil, having supplied around 2.17 million mt of crude during the month. Angolan imports, which surged 72.7 percent from a month ago, hit a fresh record high in April. The last high of 1.9 million mt was recorded in January 2018. The rise in Angolan imports was generally in line with the pickup in overall imports for the sector. A total of 13 Angolan grades arrived last month, shared among 12 buyers, the most number of buyers as compared with buyers of Brazilian crudes. “The African grades were getting expensive in April, but those grades from the Middle East were even higher, so some chose to import African ones,” a source at an independent refinery said. Following Angola, crude imports from Brazil and Russia were also higher in April compared with March, at 1.988 million mt and 1.618 million mt, respectively, taking the top second and third places. Total imports from the top three suppliers amounted to 5.77 million mt, or 63.5 percent of the combined imports for the sector. Nevertheless, Brazil was the top supplier over January-April at around 7.766 million mt, surpassing even Russia, who prior to 2019, was traditionally the top crude supplier to independent refineries. Platts’ survey covers barrels imported by 38 refineries with quotas, and others without quotas, through ports mostly in Shandong province, Tianjin and Dalian in northeastern Liaoning province. These refiners were awarded a combined 76.22 million mt to-date in 2019, accounting for 84.2 percent of the county’s total allocation for independent refineries, including the first batch as well as supplemental volumes. The barrels include those imported directly by refiners and trading companies, which will be used by the independent sector. Only cargoes discharged over the month, including those that arrived in previous months, were counted as imports for the month. Meanwhile, Qingdao and Dongjiakou ports have received around 4.62 million mt of crudes in April, or 50.8 percent of last month’s overall imports. Imports arriving via both these ports rose 7.1 percent month on month from March.

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gas Brief Mozambique: Anadarko’s final investment decision on Mozambique LNG project due on June

nadarko Petroleum, the US independent energy group in the midst of a takeover battle, said it was ready to make a final investment decision on its $20 billion liquefied natural gas (LNG) project in Mozambique on June 18. Chief executive Al Walker met Mozambique President Filipe Nyusi, a statement from Anadarko said. A final investment decision on the Mozambique LNG project would be the largest outside of North America since 2013. “With commitments for financing in place, off-take secured, and all other issues under negotiation successfully addressed, we are excited to take the next step with the expected announcement of a Final Investment Decision (FID) for the Mozambique LNG project on June 18,” Walker said. Anadarko had been finalising the fi-

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ENERGY intelligence

Ghana: Eni makes new gas, condensate find offshore Ghana

taly’s Eni has made a new gas and condensate discovery with its first exploration well in the CTPBlock 4 offshore Ghana, which if developed would help maintain production rates at the existing Sankofa production hub the company said. The Akoma-1X well found estimated volumes of 550-650 Bcf (16-18 Bcm) of gas and 18 million-20 million barrels of condensate, Eni said in a statement. “The discovery has further additional upside for gas and oil that will require further drilling to be confirmed,” Eni said. Eni already produces oil and gas from the Offshore Cape Three Points (OCTP) license, home to the Sankofa production hub. Gas is piped from the hub to an onshore receiving terminal and used domestically in Ghana. The Akoma-1X well is about 12 km northwest of Sankofa where the John Agyekum Kufuor floating production, storage and offloading vessel is located. The well was drilled in a water depth of 350 meters and reached a total depth of 3,790 meters. It proved a single gas and condensate column in a 20-meter thick sandstone reservoir interval. “Akoma-1X is the first well drilled in CTP-Block 4 and represents a discovery of a potentially commercial nature due to its close distance to the existing

infrastructure,” Eni said. “The discovery can be put on production with a subsea tie to the FPSO with the aim to extend its production plateau,” it said. Eni is operator of the CTP-Block 4 with a 42.469 percent stake. Its partners

are trader Vitol (33.975 percent), stateowned GNPC (10 percent), Woodfields Upstream (9.556 percent) and Explorco (4 percent). Eni’s gross production in Ghana is currently some 60,000 b/d of oil equivalent.

West Africa: Kosmos realigns Interests in the lucrative gas project

nancing for the huge LNG export terminal when Chevron Corp announced a bid for the company. That bid was quickly followed by another from Occidental Petroleum, which went on to agree with Total SA to sell Anadarko’s Africa assets to the French oil major should it succeed in taking Anadarko over. The LNG project, together with another export terminal planned by Exxon Mobil close by, will turn Mozambique into a top global LNG producer. Anadarko’s partners in the Mozambique LNG project are Mitsui , Mozambique state energy company ENH, Thailand’s PTT and Indian energy firms ONGC, Bharat Petroleum Resources and Oil India.

merican upstream oil and gas company Kosmos Energy has commenced the process of scaling down its stake in the lucrative Greater Tortue Anheyim gas project on the Senegal/Mauritania maritime border as the firm seeks to entrench its position on even more strategic offshore resource assets in West Africa. Andrew Inglis, chairman and chief executive officer said Kosmos Energy, which also has a foothold in Ghana and Suriname, has received “significant industry interest” following its intention to sell down its position in Mauritania and Senegal to around 10 percent. “We have commenced a formal process, with bids expected by the end of summer,” he said during the release of 2019 first quarter results. Earlier, Inglis had confirmed “Kosmos has received unsolicited interest from a number of third parties concerning Tortue and our wider Mauritania and Senegal discoveries.” He told shareholders as he announced the 2018 full year results, the company management believes “now is the right time to reduce our position given the increased scale of this strategic resource.” “We intend to retain around a 10 perwww.businessday.ng

cent working interest across the basin, or equivalent to 5-10 trillion cubic feet in resource and around 3 MTPA of LNG capacity, a highly material stake for Kosmos,” he said.

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Inglis was optimistic that with Kosmos Energy’s original BP carry still in place “the goal is for Mauritania and Senegal to provide a self-funded, longterm, growing source of cash flow for the company.” Kosmos, had in 2016 signed an agreement with London-based British multinational oil and gas company, BP, to co-develop the Greater Tortue project, the deepest offshore project in Africa, which is sandwiched between Block C8 in Mauritania and Ahmeyim gas field in Saint-Louis Profond Block offshore Senegal. The move by Kosmos Energy to reduce its interest in the Senegal/Mauritania project comes at a time when nearly all major contractors have been awarded for the first phase that involve the production of gas from deep-water subsea systems and mid-water FPSO to a floating liquefied natural gas facility at a nearby hub located on the Mauritania/Senegal maritime border according to previous reports by Kosmos. BP, which took over operatorship of the Mauritania and Senegal assets from Kosmos in 2018, had earlier in March picked a contractor for the subsea umbilicals, risers and flowlines (SURF) and also subsea production system equipment as the gas project’s construction activity kicked off.

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Wednesday 15 May 2019

BUSINESS DAY

power

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Morocco: IEA provides insight into Morocco’s energy policies

T West Africa: Investment platform open for solar plants in West Africa

est African solar energy company, Daystar Power, has partnered with Trine a Swedish investment platform to finance solar plants in West Africa. The partnership opens up investments in Daystar Power’s solar power installations, previously limited to large-scale investors, to the wider public. Daystar Power and Trine initiated their partnership by opening a round of debt investments for a total of €500,000 for Daystar Power’s latest captive power installations for commercial customers in Togo and Senegal

This financing round allows individuals and companies to invest in Daystar Power’s projects with a minimum investment amount of €25. “We are excited about our partnership with Trine, as it will allow a new class of investors to invest in our solar power plants in West Africa. In Trine, we have found a partner who is as passionate about impact investing and solar power as we are,” Christian Wessels, executive chairman of Daystar Power said. Traditionally, investments in solar power plants in Africa have been reserved for large institutional investors. However, this partnership is changing

the norm by enabling individuals and companies to participate in financing the expansion of solar power. The current financing round will help Daystar Power expand its footprint of installations from Ghana and Nigeria to Togo and Senegal. “We are happy that with Daystar Power, we have found our first partner company which is active in the commercial and industrial space of solar power. We are confident that through our loans, Daystar Power will be able to make significant contributions to protecting the environment and fostering local job creation,” Christoffer Falsen, CFO and cofounder of Trine, added.

he International Energy Agency (IEA) has released the latest review of Morocco’s energy policies, welcoming the institutional, legal and fiscal reforms undertaken to promote the sustainable development of the country’s energy sector. The report was presented in Rabat by Fatih Birol, the International Energy Agency’s Executive Director, in the presence of Morocco’s Minister of Energy, Aziz Rabbah. The report is the IEA’s second indepth review of Morocco’s policies after a first edition was published in 2014. Morocco joined the IEA Family as an Association country in 2016. Since the last review, the IEA noted the government’s positive efforts to boost renewable investment, provide access to electricity, and phase out of subsidies for fossil fuel consumption. With the exception of bottled butane, fuel prices are now linked to the international market. Morocco is pursuing an ambitious energy transition pathway. But reductions in greenhouse gas emissions by 2030, in line with the country’s commitments to the Paris Agreement, will require the scaling up of private and public investments, the IEA said. The IEA’s review provides detailed recommendations to maintain the momentum for reform and increase ambitions for the country’s energy transition. It notes that Morocco has ample opportunities for efficiency improvements and more renewables deployment. For now, the country still relies on oil, gas and

Sudan: Sudan delivers fuel to power stations

udan said it has delivered fuel supplies to power stations and is working on solutions to address some of the main triggers

for mass protests that led to the ouster of President Omar al-Bashir last month. General Ibrahim Jaber, a member of Sudan’s ruling Transitional Military

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Council (TMC) said “fuel has been delivered directly to power stations and they have started working.” Most residential areas in the capital experience near-daily electricity outages for hours. The increasing blackouts occurred as Khartoum’s temperatures soared to 47 Celsius. Jaber also said the TMC was considering issuing special cards for citizens to purchase fuel as a way of coping with the cash shortages that had plagued the country for months. Bashir’s government had run up enormous budget deficits by subsidising fuel, bread and other products. To cover the deficit, it expanded the money supply. Sudan had suffered a total power blackout across the country following a sit-in protest by thousands close to the presidential palace in Khartoum. Protesters from across the country have upped their call on embattled President Omar Al-Bashir to leave office after three decades in charge. The protests started in December 2018 and have been ongoing since then.

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coal imports for 90 percent of its energy needs. In power generation, coal accounts for 54 percent. The world’s largest concentrating solar park at Ouarzazate illustrates Morocco’s ambition and technological capability. To develop the country’s large renewables resources, the government is pursuing power sector reform, creating a national electricity regulatory authority, developing new interconnections with Spain and Portugal, and planning to boost power trading and integrate its electricity market regionally. “I am very pleased to count Morocco as a member of the IEA Family,” said Birol. “It was the first country in the Middle East and North Africa to join us. Morocco’s success in moving towards universal access and phasing out fossil fuel subsidies is a role model for many countries, making it an ideal partner to host regional training and capacity building programmes that help to improve energy policy making across Africa.”

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Wednesday 15 May 2019

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Oil, gas firms need Artificial Intelligence and make most of it - EY DIPO OLADEHINDE

mbracing new technology can help both indigenous and international oil and gas companies address age-old problems around efficiency and talent. This was the focus of a report released by Ernst & Young (EY), a multinational professional services firm headquartered in London, England. Apart from volatility in oil prices and disruption in production, loss of talent is another significant challenge for the oil and gas sector as a whole. Firms operating in the sector are always faced with the challenge of an aging workforce with many key workers nearing retirement and taking with them valuable knowledge that might take time to develop. According to EY, “Artificial Intelligence can help automate mundane and repeatable processes that require limited cognitive attention, making work more meaningful and create more opportunities for employees to leverage their creative and problem-solving skills.” “Artificial Intelligence does not just reduce the volume of work, rather it cre-

ates many opportunities for new types of jobs which require a slate of new technical, design and operational skills. Such as next generation programmers, data scientists and engineers, trainers and managers for robots, “EY said. EY said oil and gas companies’ needs to improve its return on assets (ROA) efficiency by bringing in more data and more sophisticated analysis to bear on

their business, leveraging and extracting additional value from their assets. “Oil and gas companies need to put data generated by their own assets to work with Artificial Intelligence and use it to improve efficiency which will translate to greater predictability in exploration, accuracy in drilling and completions, efficiency in production, reliability in maintenance,

The opportunities are great, but AI transformation won’t come overnight. There is no fixed recipe for implementing new technology, and for the oil and gas industry to make the most of Artificial intelligence www.businessday.ng

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throughout refining, and optimization in transportation and distribution,” EY said. If deployed effectively, EY who is also one of the largest professional services firms in the world said Artificial Intelligence technologies could have a transformative effect on the industry, ultimately allowing oil and gas organizations to build smaller, more elite teams, that can help deliver value more effectively and efficiently, and position for growth. “The opportunities are great, but AI transformation won’t come overnight. There is no fixed recipe for implementing new technology, and for the oil and gas industry to make the most of Artificial intelligence,” EY said. EY said the first issue to tackle is data siloes as upstream organizations may need data or insights generated from data from midstream or downstream units, and vice versa, to really understand how opportunities and threats are evolving and respond quickly and appropriately. Finally, the report noted that just like many new technologies, there may be some reluctance and skepticism of AI’s potential at first and which can take some time to overcome.

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Chevron walks away from Anadarko takeover fight

Brief

Angolan president fires Sonangol chair, board members amid fuel shortages

ngolan president Joao Lourenco began a major shake-up at state-owned Sonangol, dismissing Carlos Saturnino as chairman and removing other top executives “for public service convenience,” as the country suffers from severe fuel shortages, according to a statement from the president’s office. Alongside Saturnino, board members were also fired and only some directors were reinstated to the board. This is the second time in less than two years that Lourenco has shuffled the leadership of Angola’s oil company, which has been under financial pressure over the last five years. Africa’s second-largest oil producer, which is heavily reliant on refined product imports, is experiencing a fuel crisis due to a lack of foreign exchange. Sonangol said “difficulties in accessing currencies to cover the costs of importing refined products” had caused the shortages. Angola depends on refined product imports for more than 80 percent of its total demand due to insufficient refining capacity. Sebastiao Gaspar Martins was named the new chairman.

Martins served as the chairman of oil company Somoil between 2015 and 2017, and before that was on the Sonangol board for three years. Late last year, cash-strapped Sonangol secured a $1 billion debt facility to help finance its restructuring program. Sonangol’s economic woes have mirrored those of Angola, with both hit by the significant fall in oil prices since mid-2014 as well as a steady decline in oil output. But the OPEC member has seen a slight rise in investor confidence lately as more attractive terms are being offered in the country’s oil and gas developments. Angolan crude production has fallen by 200,000 b/d in the last year, with output averaging 1.44 million b/d this year, according to S&P Global Platts estimates. Declines at mature fields brought production down to 1.44 million b/d in April, the lowest level since it joined OPEC in 2007, even with the new Kaombo field coming online. In 2015, crude output averaged 1.76 million b/d. The fall in output is mainly due a lack of new upstream investment and incentives. www.businessday.ng

hevron Corp abandoned its pursuit of Anadarko Petroleum Corp after being outmaneuvered by a higher rival bid of $38 billion that included more than three times as much cash. The decision leaves Occidental Petroleum Corp as the likely victor in a contest that again proved the allure of US shale. Anadarko’s board had considered Chevron’s $33 billion bid superior to Occidental’s initial offers, pointing to a signed agreement and joint planning meetings. Chevron’s finance chief signaled the company would be able to put more cash into its existing offer. But that did not happen. The No. 2 US oil producer now stands to receive a $1 billion breakup fee. “Winning in any environment does not mean winning at any cost,” Michael Wirth, Chevron Chief Executive Officer said. “Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal.” Investors have sold off shares of oil companies that increased spending on drilling, punishing them for not using the cash to finance shareholder returns. They have pressed the indus-

try to use capital discipline, defined as increasing production by 4 percent a year and maintaining a 4 percent dividend with flat spending. The bidding war for Anadarko underscored the value of its prized assets in the lucrative Permian Basin of West Texas and New Mexico. The vast shale field holds oil and gas deposits that can produce supplies for decades using low-cost drilling techniques. Occidental has said it plans to shed most of Anadarko’s nonshale properties in a deal. The company has made a deal with French oil giant Total SA to take most of Anadarko’s international assets, including a liquefied natural gas project in Mozambique estimated to cost

up to $25 billion to complete. Total agreed to pay $8.8 billion for the assets once the merger goes ahead. Chevron declined to revise its offer after Occidental boosted the cash portion of its $76 per share bid. Chevron’s $65 per share offer comprised 75 percent stock and 25 percent cash compared with Occidental’s revised offer that had a 78/22 cashstock split. A 7 percent decline in Chevron’s share price had reduced the value of its April 12 offer to $31 billion. Shares of Occidental fell 6 percent to $56.50 before the bell, while Anadarko shares were down 2.6 percent at $73.90. Chevron shares were up 3 percent at $121.23.

Tanker owners resort to idling VLCCs as returns fall below operating costs

he lingering oversupply of vessels in the VLCC market has left shipowners weighing options to either idle, reduce sailing speed extensively or take on only short voyages as freight

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returns are seen below operating costs. The Time Charterer Equivalent (TCE), which is the earnings accrued, for a modern VLCC has slumped to around $7,000/day on key

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Persian Gulf to North Asia routes, which hardly covers the daily running cost of the vessel, according to market participants. To tide over the staggeringly low earnings period, two shipowners told S&P Global Platts that they have resorted to drifting their vessels to save fuel cost. When a vessel is made to drift in a safe location, the power to the main engine is switched off to save on fuel expenses. “It makes no sense for owners to accept further lower freight levels at the current TCE levels,” a VLCC owner said. Some shipowners are contemplating to avoid working on any cargoes until the freight returns improve to levels that would cover the operating expenses. “With earnings so low, a few shipowners are doing short voyages, so that the pain is over a lesser amount of time. Not everyone can afford to stop ships,” a shipbroker said.

Wednesday 08 May 2019

BUSINESS DAY

marketinsight

WEST AFRICA

ENERGY intelligence

Oil prices rise as Middle East tanker attack increases supply concerns

il futures rose on increasing concerns about supply disruptions in the crucial producing region of the Middle East even as investors and traders fretted over global economic growth prospects amid a standoff in the SinoUS trade talks. Brent crude futures were at $71.00 a barrel, up 38 cents, or 0.5 percent, from their last close. US West Texas Intermediate (WTI) futures were at $61.73 per barrel,

up 7 cents, or 0.1 percent, from their previous settlement. Saudi Arabia said that two Saudi oil tankers were among vessels targeted by a “sabotage attack” off the coast of the United Arab Emirates, condemning it as an attempt to undermine the security of global crude supplies. Saudi Arabia and the UAE are the largest and third-largest producers, respectively, in the Organization of the Petroleum Exporting Countries (OPEC), according to the latest survey by Reuters.

Markets have been supported by Washington’s bid to cut Iran’s oil exports to zero and reduce exports from Venezuela, where infrastructure problems have also cut output. The United States re-imposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers last year. Investors are also focused on tightened supplies following OPEC-led production cuts since the start of the year. There is a consensus that OPEC and its producer allies will extend the six-month output-cut agreement when they meet in June. But the trade friction between Washington and China, which has intensified will keep a lid on prices, said Kumar. The United States and China together accounted for 34 percent of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed. The trade turmoil has prompted hedge funds to cut their bullish wagers on US crude oil to the lowest level in a month and raised their bets on Brent crude to the highest in nearly seven months, US government data showed.

Saudis willing to meet all orders from ex-Iran oil buyers

audi Arabia, world’s biggest oil exporter, has received moderate requests from customers for shipments next month, including from former buyers of Iran’s oil, according to sources. Saudi oil production for June is expected to remain below the kingdom’s ceiling under an agreement between the Organization of Petroleum Exporting Countries (OPEC) and its allies limiting output until the end of next month, the person said. Saudi Arabia pumped about 9.8 million barrels a day in March and April and has an OPEC quota of 10.311 million. The kingdom will continue to export less than 7 MMbopd in June, the person said. OPEC+, as the producer coalition is known, will respond to any actual shortage once it materializes by increasing supply, the person said. Saudi Energy Minister Khalid Al-Falih said last month that he sees no need to take immediate action in the oil market, signaling a cautious response to the US decision to tighten sanctions on Iran. Washington’s May 2 an-

nouncement that it would not renew waivers permitting imports of Iranian oil marked a reversal from last November. At that time, the US blindsided Saudi Arabia by granting the waivers as it sought to damp fuel prices ahead of mid-term Congressional elections. Crude prices have been bolstered as exports from several suppliers including Iran face disruption. Geopolitical tensions in the oil-rich Gulf have also inten-

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sified as the US sent an aircraft carrier strike group to the region and Iran threatened to resume uranium enrichment beyond agreed limits. Riyadh is treading a fine line between keeping its key US ally happy while preserving OPEC+ unity. To prevent a possible spike in crude, Washington expects Saudi Arabia and other OPEC members to help make up for anticipated losses in Iranian exports.

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OPEC Flakes

OPEC in the dark over supply outlook as Russia, Iran cut exports

PEC is in the dark on the oil supply outlook for the second half of this year, with Iranian and Russian outages looking increasingly significant but Saudi Arabia reluctant to pump more due to fears of a price crash, sources in the organisation said. An oil contamination forced Russia to halt flows along the Druzhba pipeline, a key conduit for crude into Eastern Europe and Germany, in April. The suspension left refiners scrambling to find supplies and its duration is unclear. Iran’s oil exports are likely to drop further in May as the United States tightens the screw on Tehran’s main source of income. Shipments from Venezuela, also under US sanctions, could fall more in coming weeks. The dearth of information is a headache for OPEC and allies led by Russia, which gather in

June to decide whether to renew a supply-cutting deal. A panel of ministers meets on May 19 in Saudi Arabia to discuss the market and make recommendations. Two delegates from the Organization of the Petroleum Exporting Countries said the Russian outage, on top of Iranian and Venezuelan export losses, would be discussed at the Jeddah meeting and it seemed more than a short-term technical glitch. Still, the delegate added, the price of Brent crude, close to $70 a barrel, down from a 2019 high of $75.60 last month, suggested traders saw no major risk of any shortage. Other OPEC sources said there were conflicting views on the significance of the Russian outage, and that the complexity of Russia’s pipeline system meant the issue was not straightforward.

Iraq to uphold OPEC production cuts

raq will remain committed to the OPEC+ deal struck in December 2018 to cut production by 1.2 million barrels per day, according to the nation’s oil ministry. A statement published on the ministry website noted that “Iraq does not take an individual decision to increase production to compensate for the shortage of oil supplies, whatever the reasons, because it respects the collective decision of the organization”. This follows the expiry of eight US waivers surrounding the import of Iranian oil. With US sanctions against Iran in full effect, Saudi Arabia has promised to fill the supply gap, and US government officials have noted that both the Saudis and UAE will contribute to maintain market balance. Meanwhile, Iraq is shifting its focus to gas. Rystad Energy forecasts that gas development @Businessdayng

in Iraq will overtake oil projects in 2019, measured in resources sanctioned for development, flying in the face of historical norms for the upstream industry in the country. New developments are on track to triple the country’s gas production from just over 28.3 million cubic meters per day in 2017 to about 85 mcm a day in 2022.

Wednesday 15 May 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

Nigeria lost 633kb/d modular refining capacity to licence expiration …government policy uncertainty, investor apathy fingered STEPHEN ONYEKWELU

igeria’s planned modular refining capacity has shrunk thanks to licencees who got licences to establish but failed to go beyond the first stage of the process. Refinery licensing for both conventional and modular types happens in three stages. Sector’s regulator, the Department of Petroleum Resources (DPR) first awards a licence to establish with 24 months validity. Then comes the approval to construct (ATC) and the final stage in the process is the approval to operate (ATO). A total of 633, 000 barrels per day refining capacity were lost to the inability of the promoters of these projects to make them take off. The lost planned capacity nearly equals Aliko

Dangote’s 650, 000 bpd refinery under construction. Out of 45 refining licences issued by the DPR as contained in the agency’s refinery update as of April 2018, 39 were for modular refineries. “The objective of modular refinery is to ensure that the big capital requirement, which seems to be the major reason why refineries are not established, is overcome by building small size refineries,” said Rabiu Suleiman, senior technical adviser to Nigeria’s petroleum minister on refineries and downstream infrastructure, in a recent interview with the Guardian, Nigeria. Experts say industrial sabotage, crude oil theft, illegal refining operations, pipeline vandalism and piracy present significant challenges in Nigeria’s oil and gas industry. And that modular refinery investors can be swayed by the security condition of the country as investors would, more

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often than not, desire an environment, where their investment is not only safe but also secure. According data obtained from DPR’s website, the companies whose licences to establish expired in 2017 got them in 2015. They included, Kaiji Resources Ltd., Eko Petrochem & Refining Company, Hi Rev Oil Ltd, Frao Oil Nigeria Ltd, Epic Refinery & Petrochemical Industries Ltd, Masters Energy Oil & Gas Ltd, Cross Country Oil & Gas Ltd, Grifon Energy Limited and Sifax Oil & Gas Company Ltd. Others are, Capital Oil & Gas Industries Limited, All Grace Energy Ltd, Green Energy International Ltd, Fresh Energy Ltd, Chyzob Oil & Gas Ltd, Aiteo Energy Resources Ltd and Associated Worldwide Company Ltd. Only Amakpe International Refinery Inc. got its refining licence early than 2015, which was in 2007. “Building a petroleum refinery,

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whether conventional or modular is capital intensive. So, funding is likely the major challenge preventing companies who got licence to establish but failed to break ground before their licences expired” Bode Lukan, chief executive officer of Bodeni Energy Ltd. said. “Uncertainty of government policy is another factor.” Although Nigeria is a leading producer of crude oil and gas, the country has remained the only oil producer that relies completely on the importation of refined petroleum products to meet local need. This has given rise to economic challenges, infrastructure shortfall, unemployment, budget deficit as well as poverty, especially as government struggles to pay subsidy on over 55 million litres of premium motor spirit (PMS) also called petrol consumed daily, a system fraught with high-level corruption.

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Wednesday 15 May 2019

BUSINESS DAY

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Wednesday 15 May 2019

BUSINESS DAY

BANKING

In Association with

Access Bank targets 100,000 subscribers of XclusivePlus proposition Stories by HOPE MOSES-ASHIKE

ccess Bank Plc is planning to raise its XclusivePlus subscribers from the current number of 11,000 to 100,000 by the end of December 2019. The XclusivePlus, a premium subscription is an amazing lifestyle offering specifically designed to provide clients with exceptional service and exclusive privileges that they deserve. The move is in line with the bank’s effort to go beyond banking in serving its customers better and impacting on their lives. “We did a survey of what our customers want and discovered a rise in customer spend in the past few years for luxury travel, luxury experiences and luxury products, hence the introduction of the proposition”, Dolapo Orelaja, head, consumer proposition, said in an interview with journalists in Lagos. Orelaja explained that customers stand to benefit immensely once a customer gets upgraded to a visa signature card in which he or she would have access to 800 premium lounges globally, access to 36 exclusive lounges within Nigeria which are also located in branches or at the airport, free multi-trade travel insurance and medical assistance, free movie tickets monthly and quarterly. “This proposition was launched in October 2018 and as at today we have up to 11,000 customers who have subscribed to this proposition.

Herbert Wigwe, CEO, Access Bank, plc

So people are enjoying this offering and we keep growing and we want to ensure that our customers are being catered for and join this special benefit. “So we are deepening our relationship with our customers as this proposition is our own little way of adding value to our customers. Our vision for this proposition is to grow the base to 100,000 subscribers by December and i believe that we are going to exceed that number because with the merger, we will ensure our customers

get to partake in this proposition”, Orelaja said. To have access to the lounges 24 hours, VIP treatment in over 900 hotels and other benefits, there is a monthly subscription fee of N5,999 for the Xclusive Plus. Customers can also choose to do quarterly subscription which is about N17,997, the bank offers a 20 per cent discount to customers who would want to subscribe annually which is about N57,599 rather than pay N75,000”. Adeola Rojaye, proposition manager, who also spoke to journalists, said Access bank customers would need to walk into any of the Bank’s branches and subscribe to the Xclusive plus proposition, adding that if customers feel it is no longer enhancing their lifestyle, they can opt out. Ifeoma Nwigwe, one of the beneficiaries of the proposition, who is a Fitness instructor, said the proposition is cost effective and that she would recommend the proposition to her friends. “There was a girl managing my account and it was just a regular diamond bank account and she told me about the xclusive account which i did not as at that time think much about it after she explained about the benefits. Few months i had to travel out of Nigeria and it wasn’t until i got to the airport, I remembered that it was an Access bank lounge at the airport and I went in and gave them my card and I felt like I was flying business/first class because it was an xclusive lounge in which I had drinks on the flight”, Nwigwe said.

EY to engage banks’ audit committee members on governance issues

rnst & Young Nigeria (EY) has concluded plans to engage banks’ audit committee members across board, to brainstorm on governance related issues, bringing into perspective, the evolving demands of business, regulators and investors alike. The Forum with the theme ‘Innovating the Audit to drive quality and Value’, which holds May 15, 2019, in Lagos will provide a unique opportunity for experts in financial sector to unpack the many issues around the Code of Corporate governance and the role of the Audit Committee. According to Anthony Oputa, head, financial Services, EY West Africa, the Audit Committee parley is specifically put together to deliberate on the alignment of audit committee agenda with bank’s priority areas, present compliance matters as well as new reporting standards, among other pressing issues bordering on audit. Other areas of interest to focus on include, among others, the Cyber breach response, Digital transformation as well as Audit Committee oversight of financial reporting and effectiveness. Continuing, Anthony says: “In our journey to build a better working world, we are continually innovating to support Audit committee members to carry out their governance role to better meet the evolving demands of business, regulators and investors’.

Rand Merchant Bank engages stakeholders at Investor Day in London

o promote foreign portfolio investment (FPI) inflows into Nigeria, Rand Merchant Nigeria participated alongside other players in the 2019 Annual Investor Day which took place recently in London, UK. The theme of the conference was Nigeria – The Economics of the Capital Market. The panel sessions dissected Nigeria as a case study in terms of the push and pull of investment opportunities, the capital market opportunities available, the safety of investments and the role of custodians, fund managers, broker dealers, and regulators in up-scaling the market. The conference partly sponsored by Rand Merchant Bank Nigeria and organized by the Association of Assets Custodians of Nigeria focused on stimulating foreign investors’ interest by convening a forum for market participants,

institutions and regulators. The panellists discussed Nigeria as an attractive investment destination, recent developments in the Nigerian Securities Markets, capital markets regulations and the role of key securities market operators. Reiterating the strength of Nigerian banks and the broader banking system, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) stated that the central bank has a strong bias for monetary policy that is conducive for growth and ensures a stable currency during his session at the conference. Speaking on the side-lines of the conference, Nadia Zakari, head of Global Markets, RMB Nigeria stated that the addition of custody services to the product offering of the bank will further deliver end to end efficient trading and post trading experience of the bank’s existing

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and future clients. Abiodun Adebimpe, head of Custody, RMB Nigeria added that the recent developments in the securities markets such as CSCS’s risk management assessment upgrade from A to A+, stable and liquid FX markets, launch of FMDQ Clear to support derivatives, among others, are testaments to the fact that Nigeria is open for business and is a market that welcomes and listens to investors. Gbenga Sholotan, head of Research for RMB Nigeria Stockbrokers also noted the role of key securities market operators in providing a forum to drive healthy debate and prompt action by market regulators and operators in creating a sustainable, transparent and efficient market. He concluded that Nigeria’s investment environment will continue to experience growth given

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the focus of key market operators in the areas of cutting edge product development to enhance market liquidity. Michael Larbie, CEO RMB Nigeria and Regional Head West Africa, whilst speaking during his panel session emphasized that despite the recent economic headwinds, Nigeria remains an attractive investment destination. He noted that efforts in ensuring a conducive business environment is yielding some positive results, evidenced by Nigeria moving up 23 places in the World Bank’s ease of doing business ranking to 146 in 2019 from 169 of 190 countries ranked in 2016. RMB Africa research also confirmed the improved attractiveness of Nigeria as an investment destination, with Nigeria moving up 5 places to 8th position in its annual Where to Invest in Africa report.

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Wednesday 15 May 2019

BUSINESS DAY

BANKING Union Bank highlights projects embarked upon in CSI report

nion Bank has announced the release of its third Citizenship, Sustainability and Innovation (CSI) report, an annual compilation which details the financial Institution’s strategic focus, initiatives and impact across these three areas during the year. Highlighting the Bank’s focus on transparent reporting of its CSI efforts, the report was prepared in line with Nigerian Sustainability Business Principles (NSBPs) and the Global Reporting Initiative (GRI) standards. Assurance of the report was also conducted by independent auditing firm, Deloitte. According to the CSI report, in 2018, Union Bank continued to expand it efforts in sustainability and citizenship by deepening key partnerships and strengthening its support for charities and local com-

munities. The report showcases the Bank’s efforts in these key areas by highlighting various projects it embarked upon, including women empowerment initiatives like seminars for female entrepreneurs;

the distribution of hygiene care products to girls on International Day of the Girl Child and partnership with Pearls Africa to organize the Girls Coding Summer Camp, among others. In line with its focus on boosting financial in-

clusion, Union Bank also provided inclusive banking services to Nigerians through the provision of 430 agent banks across the country. Also, the Bank and its employees joined forces to sponsor and distribute 8,000 care bags to people

in underserved communities under the UnionCares umbrella. During the year, Union Bank made significant progress in its efforts to minimize its environmental impact through expansion of its recycling initiatives and the installation of energy saving facilities across its branches. Speaking on the release of the report, Emeka Emuwa, chief executive officer, expressed his satisfaction at the achievements of the Bank in the areas of citizenship, sustainability and innovation in the past year and the direction of the bank for the ongoing year. “This annual report lends credence to Union Bank’s positioning as an institution truly committed to improving the communities in which we operate. CSI is central to our core business and commitment to the triple bottom line of responsible financial,

environmental and socioeconomic development”, he said. With innovation as a priority, the bank deployed various innovative solutions and initiatives such as the Robotic Process Automation (RPA) technology, the first of its kind in the Nigerian banking industry, as well as Ideas Bank and Union X, both in-house initiatives to encourage employees’ contribution to the digital transformation drive of the Bank. Last year, Union Bank was named ‘Best Company in Environmental Excellence’ at the 2018 SERAs CSR awards, endorsing the impressive strides it made in these areas. The release of the third edition of its CSI report underscores Union Bank’s commitment to maintaining its leading position as a sustainability champion and a socially driven and responsible corporate organisation.

tion, our interaction level will increase, there would be more exchange of ideas, beliefs and cultural traits et al. We are extending an open arm to other cultures and encouraging a healthy

exchange of cultures and our residents. We are learning to understand our beliefs and values better,” he said. Niboro disclosed that the MRA had concluded plans to make the event more elaborate next year, as residents from other estates like Banana, Magodo Phase 1 and others would be invited to grace the occasion. The Magodo Cultural Day, tagged “Unity in Diversity” was created in a bid to raise the level of cultural consciousness and awareness in the estate, while simultaneously encouraging interaction and continuous conversation between the residing tribes. With that vision in mind, Magodo cultural day is seen as a means to bring together the diverse tribes residing in the estate to celebrate their different cultures while also celebrating each tribe for its own unique norms, cultural and moral values.

Heritage Bank promotes cultural diversity

eritage Bank PLC, Nigeria’s most innovative banking service provider, has aligned forces with Magodo Residents Association (MRA) to promote cultural diversity and ensure the success of the maiden edition of Magodo Cultural Day 2019. Speaking at a two-day event in Lagos, Abiodun Agbaje, regional head, Lagos Island, Heritage Bank, said his management was impressed with the response and participation of the residents and others in the cultural exhibition and celebrations. Agbaje disclosed that, at inception, the Heritage Bank management opted to focus at those areas that other banks had neglected with a view to making a difference and impacting positively on the financial needs of its prospective customers and the society. His words: “Things that are difficult for bigger banks,

Heritage Bank has done it successfully. We are open to assisting any investor that share vision and mission with us.” He said that in line with its mission to create, preserve and transfer wealth across generations, Heritage Bank decided to support this year’s Magodo Cultural Day with the belief that diverse community promotes creativity networking and success. Agbaje therefore, assured the audience at the event that as long as the MRA members were ready to patronize Heritage Bank, his management would be glad to support the cause again next year and beyond. Impressed by the success of the outing, Jade Niboro, Chairman, MRA; noted that for the first time, residents were able to come together, connecting. He said that the cultural exposition created the avenue for different families living www.businessday.ng

in the estate to publicly interface with diverse cultures. “Our culture outlines our identity and influences our behavior. Celebrating our cultural diversity will

better make us acknowledge, incorporate and relate with others in the estate. We used the recently concluded Cultural Day event to embrace our diversity. With this celebra-

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BUSINESS DAY Wednesday 15 May 2019 www.businessday.ng

Uber IPO: The long ride to profitability

The billions raised from the listing will help its strategy, but how much longer can it continue without making a profit?

Richard Waters & Shannon Bond

ber has broken a lot of rules in its 10-year history. So why should its debut on Wall Street on Friday, in the biggest US tech flotation since Facebook, be any

different? Even by the standards of ambitious, lossmaking technology start-ups, burning through $2bn in cash a year this late in its existence seems wildly extravagant. But in their meetings with investors in recent days, the company’s bosses gave no indication when they expect to make a profit. Instead, they sought to sell the ridehailing company as a once-in-a-generation opportunity: a chance to back a business with the potential to fundamentally change transport and transform markets that Uber — with typical immodesty — values at about $12tn. Each era of tech can lay claim to its defining initial public offering. The arrival of Google, Facebook and Alibaba were all landmark stock market events over the past 15 years, signalling in turn the rebound of the consumer internet after the dotcom crash, the rise of social media and the arrival of China’s internet powerhouses on the world stage. There is a good chance that Uber’s stock market debut will define the era of the “unicorns” — the large number of tech start-ups valued at $1bn or more that have been pumped up by money flooding into the private financing markets. If so, it could mark a more problematic moment in financial history. Uber’s first minutes as a public company were not auspicious. Its shares opened $3 below its IPO price on Friday, a rare flop for such a hotly anticipated share sale. Yet the scale of its ambition seems almost unbounded. The automobile industry, restaurants, haulage companies: all of them, according to the San Francisco-based company, are about to have their worlds disrupted by an app that lets users summon a ride, order food or arrange road freight. Dara Khosrowshahi, the smooth-talking salesman brought in to clean up the mess left when co-founder Travis Kalanick was shown the door two years ago, is not shy about his ambitions. He wants Uber to be seen as an Amazon for transport — a company that may have started out in ride-hailing but which is bent on changing the sector as a whole, just as Amazon extended its reach throughout ecommerce and logistics. There is a purpose to the self-serving comparison. Two decades ago, Wall Street was sharply divided over whether

Opinion ERGP or next level: Constrained & unachievable! – Franklin Ngwu P. A4 Too little, low quality education: Can PPPs help? P. A4 – Bongo Adi

Dara Khosrowshahi, CEO, Uber

Amazon would go bust before it even managed to make a go of its original online bookstore. Last year, its stock market value touched $1tn. But Mr Khosrowshahi’s efforts could backfire. Roger McNamee, a veteran tech investor, calls it “a ludicrous comparison” that, if anything, only serves to highlight Uber’s weaknesses. “There are no barriers to entry here at all — they don’t have equipment and they don’t have employees,” he says. “Amazon built distribution and changed the perception of online commerce.” He might have added that Amazon only burnt through about $1.1bn before turning free cash flow positive for good in 2002 — less than a tenth of what Uber has spent, with no end in sight. Also, its founder, Jeff Bezos, did not boast about the new markets he planned to conquer before even proving his original business idea could work. In Uber, by contrast, Wall Street has just welcomed an $70.4bn giant with a voracious appetite for cash to match its spending addiction. From the start, Uber followed a simple plan to dominate the ride-hailing market. It bet that the company with the most drivers on the road would be able to promise the shortest waiting times, attracting more passengers and drivers. With fewer gaps between rides, drivers would be prepared to accept lower fares, since their overall earnings would be higher. And lower fares would bring more riders, feeding a cycle that eventually forced rivals out of the market. The catch: it would take subsidies to both drivers and riders to get this flywheel turning. And the payments might need to be maintained for a long period. In Uber’s case, that has meant raising an astonishing $25bn in equity and debt over the past decade, including the $8.1bn in new capital from Friday’s IPO. Mr Khosrowshahi has tempered Uber’s confrontational, winner-take-all style. It is no longer intent on destroying competitors or fighting with regulators. But his strategy still depends on “winner takes most”, a belief that the ride-hailing company with the largest market share will walk off with a disproportionate chunk of the industry’s profits. So far, things have not worked out that way. Far from the competition being sidelined by a war of attrition, local rival Lyft has just pulled off an IPO of its own, and despite its shares losing value now has $4bn on hand

to keep up the fight. Didi Chuxing, which dominates the ride-hailing market in China, has taken on Uber in Latin America. Europe, where Uber has enjoyed an easier ride, is likely to be next, says Dan Chung, chief executive and chief investment officer of Alger, a New York investment group. There is no reason why Uber’s rivals will not target its most profitable markets, he adds. Yet, investors seem happy to keep feeding cash into both ride hailing and food delivery networks — the second market on Uber’s list, with Uber Eats. “We are concerned with the large funding that Postmates, DoorDash and Didi are using to compete aggressively in Uber’s most attractive markets,” says Walter Price, a tech investment manager at Allianz. It does not help that, just as it was lining up its long-awaited IPO, Uber’s business hit a wall. Quarter-to-quarter growth rates that had been running at nearly 20 per cent two years ago fell to 6-7 per cent last year before plunging to 1-3 per cent in the past two quarters. Critics argue that the slowdown has revealed fundamental weaknesses in Uber’s business. Michael Cusumano, a professor of management at the Massachusetts Institute of Technology, says the mistake has been to regard the company as a “platform” business — a reference to the dominant internet companies that succeed by attracting large amounts of activity to their websites and mobile apps. “I think it’s a bad example of a platform — it’s a mystery to me why it’s had such hype,” he says. Platforms exist to solve imbalances in particular markets, he says: users are prepared to pay for the benefit of reaching others who can provide them with what they need. Uber, by contrast, has to subsidise both riders and drivers to keep them coming back. “The bigger they get,” says Mr Cusumano, “the more countries they go into, the more money they burn.” Uber’s performance in the months before the IPO lent weight to the doubters. It has had to ramp up the incentives it pays to drivers to attract them to its network. As a result, the share of fares it keeps for itself — its “take rate” — has steadily fallen and its growth has threatened to flatline. This year, it has been paying around $100m a month in inducements to drivers over and above the fares they collect.

Its supporters claim this is a temporary phenomenon, the result of a buoyant US economy that has brought better employment opportunities elsewhere. Santosh Rao, an analyst at Manhattan Venture Partners, says the large amount of data the company collects on the 91m users of its service each month should allow it to generate more loyal — and profitable — customers. But he concedes that, after a decade, investors will wonder why Uber has not been working on solving this problem before. Another warning sign for investors is that the “network effects” that were supposed to underpin its business — making the service more valuable the more people use it — have not turned out to be as strong as the company had hoped. Drivers and riders can use multiple apps at the same time, making it difficult for any one network to get an edge. And even if Uber ends up with a large part of the ride-hailing market, it will still face plenty of competition that will limit its ability to raise fares. “In most cities, public transport is an option. Walking is an option. There are bike sharing services. Taxi services are [developing] apps,” says Mr Chung. None of this means Uber cannot carve out a profitable business or go on to have a profound impact on transport. But it does leave a big question over what a stable, profitable model would eventually look like. Based on a range of outcomes, the median valuation for Uber would be four to five times next year’s revenues, says George Ortega, lead analyst on Uber at Alger. With annual growth now slipping below 20 per cent, that implies a valuation of about $60bn. Others suggest it might be a lot less. To turn a profit consistently, it would probably have to set higher prices, says Mr McNamee: “That’s almost certain to shrink the market.” Uber’s boosters claim that ultimately autonomous cars will change its business for the better. A belief that the driverless future “comes relatively soon and reduces costs significantly” underpins the optimism of many Wall Street analysts, says Mr Price at Allianz. Even if the technology is adopted on the most optimistic timetable, though, it may not do enough to bail out Uber’s business model. Building its own fleet of cars would be “a huge capital cost” that outweighs the savings from not paying driver incentives, says Mr Cusumano. A new wave of competition could also erode any benefits. With big tech and auto companies hoping to launch robotaxi fleets of their own — including Tesla, the Alphabet subsidiary Waymo and General Motors — prices are likely to fall quickly, says Mr Price. These doubts have not been enough to seriously dent Uber’s stock market debut. At $70.4bn, it is a testament to what Mr McNamee calls a “momentum-driven stock market”, where professional investors are jumping on a bandwagon to avoid missing out. But beneath the razzmatazz at the New York Stock Exchange on Friday, this has been a sobering moment. Uber’s IPO valued it at around a third less than the most optimistic predictions in recent months. Investors who paid $45 a share this week were getting them for nearly $3 less than Uber sold them for in a private funding round three years ago — a lifetime for a tech start-up. This suggests that, though stock market investors have just refilled Uber’s war chest, wariness about the company has risen and money will be harder to come by. The day when Uber has to face up to the reality of building a sustainable business is finally drawing near.

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