BusinessDay 16 Dec 2019

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BusinessDay’s Man of the year 2019, Benedict Peters, Upstream Company of the year for 2019 Aiteo

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Monday 16 December 2019

BUSINESS DAY

Benedict Peters is BusinessDay’s Man of the Year 2019

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enedict Peters, Executive Vice C ha i r ma n o f Aiteo Group is embarking on a journey to change the narrative in Nigeria’s oil and gas industry; from one about pollution, corruption, conflict and dependence on foreign capacity to tales of bold innovations, social investments, and local capacity development.

He embarked on a quiet mission to revolutionise the oil and gas sector early in his foray into the sector 20 years ago. Today Aiteo is a proud Nigerian/African brand competing at the highest level of business with top brands around world, to project the African story.

For many Aiteo Group was not a name that rang a bell four years ago but the company has risen from obscurity to arguably Nigeria biggest indigenous oil producer, thanks to the leadership of Benedict Peters.

BusinessDay’s award to Benedict Peter is in recognition of the founder’s important contribution to oil and gas development in Africa, his visionary leadership, distinguished service and transformational disruption of a sector dominated by International Oil Companies (IOCs).

Under Peters’ leadership, the Aiteo Group’s 20-year evolution through Africa’s Oil and Gas sector has been exemplary as well as revolutionary – going from a downstream start-up to becoming a leading integrated energy conglomerate with strategic investments in hydrocarbon (or commodities), exploration and production.

Peters entered the oil and gas scene as an industrialist in 1999 and initially traded mainly in the downstream sector, thereafter in 2014, his company, Aiteo won the

bid for the largest onshore oil block in sub-Saharan Africa.

The bold acquisition has not only helped to ramp up Nigeria’s crude production to the 1.8million bpd level it was at, prior to militant attacks, it has also proven that indigenous companies can successfully operate oil assets.

The company also has several existing and ongoing

projects that could potentially grow its asset production to over 150,000bpd and 200 million standard cubic feet of gas daily in the near future.

Victor O koronkw o, Group Managing Director, Aiteo Eastern E&P Co, told BusinessDay that the firm’s current thrust is geared towards production ramp-up, leveraging on operational efficiency, work-over and well

intervention to further increase production to 125,000 bpd in the medium term.

“This expansive mandate will have a profound ripple effect in the Nigerian energy sector as professional skills from indigenous workers and contractors are employed to deliver results, enabled by technology. The knowledge and income transfer to indigenes in the

sector cannot be over-emphasized,” Okoronkwo said.

In 2019, Peter’s journey to the top in Africa’s Oil and Gas sector has been both inspiring and tumultuous.

On the positive side, In January 2019, The Vanguard Media Limited honoured him with the Businessman of the year award while BusinessDay also unveiled him as Business leader of the

Why Aiteo Group is BusinessDay’s Company of the Year 2019 Firm enters major energy transition with Benedict Peters at the helm DIPO OLADEHINDE

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n a few short years Aiteo Group has emerged as Nigeria’s largest independent oil producer.

It is no mean feat.

Aiteo currently produces about 90,000 barrels of oil a day and forecasts production of 250,000 barrels in five years under a multibillion dollar expansion plan. Daily natural gas production is also set to increase six-fold to 300 million standard cubic feet in the period.

The energy giant is clearly setting the pace for other local oil players to follow.

Aiteo was among Nigerian producers that bought oil

leases from majors such as Royal Dutch Shell Plc when international oil companies (IOCs) pulled back operations due to oil attacks on infrastructure.

Aiteo has a 45 percent share in Oil Mining Lease (OML) 29, with state-owned Nigerian National Petroleum Corporation (NNPC) holding the remainder.

OML29 stretches over an area of 983 square kilometres and includes the Nembe, Santa Barbara and Okoroba Oil Fields, including related facilities such as the Nembe Creek Trunk Line (NCTL) which is a 100 kilometres long pipeline with a capacity of 600 thousand barrels per day. www.businessday.ng

Aiteo Group currently holds a huge stake in Nigeria’s oil and gas sector as the highest oil-producing indigenous company, doubling its initial asset value to $6 billion within three years.

At the same time, Aiteo increased the NCTL availability from a capacity of 60 percent to over 80 percent within the same period.

This enviable performance was equally given impetus by the entrepreneurial spirit of founder Benedict Peters, who has a reputation as a strategic thinker, when even amidst collapsing oil prices, remained determined to demonstrate the tenacity of Nigerian entrepreneurship.

“This expansive mandate will have a profound ripple effect in the Nigerian energy sector as professional skills from indigenous workers and contractors are employed to deliver results, enabled by technology. The knowledge and income transfer to indigenes in the sector cannot be over-emphasized,” Victor Okoronkwo, Group Managing Director, Aiteo Eastern E&P Co said in a statement.

In the past few years of exploration, Aiteo like the IOCs had to contend with massive bleeding out of crude oil in the Niger Delta region. Crude theft remains nation-wide scourge plaguing the industry in Nigeria.

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The Nembe Creek Trunk Line to Shell’s Bonny export terminal, has been one of the hardest hit this year, with attacks halting flows through the link at least three times since January.

“Oil theft, a.k.a illegal bunkering and pipeline vandalism have resulted in significant loss of the nation’s revenue as well as the revenue and cash-flow of indigenous companies who, like the Federal Government, also have huge debts to service. Therefore, oil theft remains an issue for the indigenous producers,” Okronkwo said.

The theft costs the Nigerian Government and Continues on page 3 @Businessdayng

year 2019.

Frank Aigbogun, publisher and CEO of BusinessDay Media Ltd said the award was necessary to bring to limelight the great and innovative things happening in Nigeria whether they are in the private or in the public sector.

“For us, it took perseverance and painstakingness in selecting, evaluating and coming to a conclusion as to the deserving winners of the award,” Aigbogun said on a sideline during the award ceremony.

While on the negative side, Aiteo this year declared a force majeure on Nembe Creek Trunkline following a fire outbreak on it which had been enjoying smooth operations before the incident, raising suspicion that the fire may have occurred through an illegitimate, third-party breach of the functionality of the pipeline.

For a field that produces 90,000 barrels of oil per day, the shutdown was very critical and significant to Nigeria’s crude oil production.

Within two weeks however, Aiteo under the leadership of Benedict Peters successfully completed leak repair activities on all reported leak points on the Nembe Creek Truck Line while all injectors were realigned and start-up formalities commenced immediately.

The restoration of normal operations allayed fears of a major disruption of oil exports on the pipeline, which evacuates crude oil daily to the Bonny Oil Export Terminal.

Meanwhile the global energy transition is moving towards a low carbon-intensive scenario with major markets for petroleum products (China, India, Europe, etc.) all realigning their energy policies and economic dynamics in favor of low carbon-intensive sources, a development Benedict Peter’s is also well aware off.

“Over time, Aiteo is constantly scanning the global business landscape and evaluating it’s business portfolio to ensure we are wellpositioned as a company to evolve seamlessly with the global energy transition,” the firm told BusinessDay. In Nigeria the most popular source of renewable energy is solar due to the abundant sunshine. However, Aiteo understands the need to begin to structure a sustainable regulatory framework to encourage the penetration of solar into the national energy mix.

Beyond oil, Peters’ group has investments in mining, agriculture, infrastructure development, electricity generation and distribution, with a fast-developing retail distribution network which Continues on page 3

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What N122bn drop in banks’ credit to real estate means to investors, home seekers …as lending to sector shrinks to 5-year low A breakdown of bank lending to the industry shows that of the N16.25 trillion combined credit extended to 17 sectors by the Nigerian deposit money banks, real estate got N588.68 billion in the first three months ended September 2019. While the credit for Q3 2019 was N5.72 billion higher than the N582.96 billion for Q2, the former as a percentage of the gross loan, at 3.62 percent, was lower than the latter that reported 3.85 percent.

“The decline in bank lending to the sector again shows that it is struggling. Our paper on Unlocking Dead Capital from earlier this year showed clearly both the impact of a vibrant real estate sector,” said Andrew S. Nevin, chief

economist, PwC. The NPL posted by the real estate sector was down by a whopping N74.02 billion from N130.58 billion in the third quarter of 2018 to N56.56 billion in the corresponding quarter of 2019, which shows the sector should have been more attractive to the lenders.

For industry investors, the low credit to the sector may imply that they would have to concentrate on sourcing for funds outside the shores of the country. The repayment of such funds may come with an interest rate problem as the naira has remained less competitive to the US dollar, for example.

Benedict Peters is BusinessDay’s Man of the...

operations to different countries across Africa and beyond with emerging international presence in the DRC, Ghana, Guinea, Liberia, Zambia, Zimbabwe as well as offices in Geneva and Paris.

Aiteo Group currently holds a huge stake in Nigeria’s oil and gas sector as the highest oil-producing indigenous company, with peak production of almost 90,000bpd, doubling its initial asset value to $6 billion within three years.

The company plans to invest another $4.3 billion acquiring additional offshore assets with a projected total output of 250,000 bpd in the short to medium term.

In July Aiteo announced plans to spend as much as $5 billion to boost its oil and natural gas production in the next five years. It plans to drill new oil wells and re-open existing ones as it seeks to raise production. It will also seek to increase its stake in a joint venture with Nigeria’s state oil company.

Its Group Managing Director, Aiteo Eastern E&P Co, Victor Okoronkwo stated recently “We have a development plan which has been submitted to our joint venture partner NNPC.” “Our expectation is that in line with the joint venture agreement between us and the federal government, the existing partner will have the right of first refusal,” Okoronkwo said.

Aiteo has a share of 45 percent in Oil Mining Lease 29, with state-owned Nigerian National Petroleum Corp. holding the remainder.

ENDURANCE OKAFOR

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sizeable number of Nigerian real estate firms are left with the option of raising funds through equity to debt as bank lending to the sector has maintained downward trend in the last five years.

Despite reporting 56.69 percent drop in Non-Performing Loans (NPLs) in 2019, banks’ confidence in the sector waned as credit allocation to real estate tumbled to its lowest level since 2015, at 3.62 percent.

Sectoral credit allocation to real estate shed N121.52 billion year-on-year from N710.20 billion in Q3 2018 to N588.68 billion in the corresponding quarter of 2019.

Continued from page 2

is focused on serving the needs of communities across the continent, by leveraging a unique combination of a strategic asset base, technology, innovation, and some of the best technical and business minds across the industries it serves.

Peters is passionate about youth empowerment and has donated generously to support football on the African continent. Through Aiteo, he sponsors the Nigerian Football Federation, Aiteo Confederation of African Football (CAF) Awards, Aiteo Cup (The Federation’s foremost Cup in Nigeria) and a team in his company’s host community.

He has also assisted thousands of internally displaced persons in northern Nigeria while also supporting clean water sanitation initiatives in Africa in partnership with Face Africa, improving the lives of over 25,000 people in rural Liberia and more.

Peters has a keen interest in social and environmental issues in the agricultural sector. He chairs the Joseph Agro Foundation, which seeks to tackle high levels of unemployment and water shortage by creating job opportunities for farmers in Africa.

Evidently, Peters continues to inspire millions of Nigerian entrepreneurs who look to model his accomplishments in achieving global excellence and impacting society.

As a testament to his rising international profile, in September 2019, the U.S. Chamber of Commerce announced that Benedict Peters, Chairman and CEO of Aiteo, will serve on the Board of Advisors for the U.S.-Africa Business Center. The mission of the U.S.-Africa Business Center is to build lasting prosperity for Africans and Americans through job creation and entrepreneurial spirit, something that Peters has been active in on the continent for many years.

Welcoming Peters to the Board of Advisors, Chairman of the U.S.-Africa Business Centre, Scott Eisner, said: “We value and appreciate the insights from companies such as yours as they not only benefit the Center, but also play a pivotal role in strengthening the ties between the United States and countries throughout Africa.”

Peters joins CEOs from many Fortune 500 companies who have a strong presence in Africa, including Banco Prestigío, BP, Caterpillar, Chevron, IBM, MasterCard, Microsoft, and many others.

His company, the Aiteo Group is also focused on serving the needs of communities across the continent by leveraging a unique combination of a strategic asset base, technology, innovation, and some of the best technical and business minds across the industries, it operates in.

The group has been expanding rapidly, to extend its www.businessday.ng

•Continues online at www.businessday.ng

L-R: Devakumar Edwin, group executive director, strategy, capital projects & portfolio development, Dangote Industries Limited; Aliko Dangote, president/CE, Dangote Industries Limited; Dahiru Moyi, special adviser to the minister of finance on energy, power, oil & gas; Zainab Ahmed, minister of finance, budget and national planning, and Raghav Mathur, director of projects, Dangote Industries Limited, during the finance minister’s facilities tour of the Dangote Oil Refinery and Fertilizer Project, Lekki, Lagos, yesterday.

Why Aiteo Group is BusinessDay’s Company...

Continued from page 2

Aiteo as much as $2 billion per annum, according to estimates.

With the operation of the key national oil delivery infrastructure in Nigeria, the 100Km Nembe Creek Trunk Pipeline (NCTL) traversing the most difficult swamp environments in the delta, all injectors into this line are badly affected by the oil theft activities.

Aiteo however, continues to strengthen the security architecture on this key piece of infrastructure at considerable cost whilst making plans to develop alternative evacuation options.

According to inside sources, Aiteo’s alternative route project is hugely expensive and has, understandably, a long lead time given its financial, engineering and logistics demands and complexities.

Once the alternative evacuation process is fully implemented, it will also result in substantial losses for key participants in the transportation process currently in place, and those who have perfected the act of diverting crude at the expense of Nigeria’s struggling economy.

Some months down the line, this legacy achievement is impacting lives and has created significant direct and indirect employ-

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ment in Nigeria’s highly competitive oil and gas industry.

The company plans to invest another $5 billion in its operations to boost its crude oil production to 250,000 barrels per day in the next five year while daily natural gas production would increase six-fold to 300 million standard cubic feet in the period.

The Nigerian government has made changes to how operators can raise funds, moving away from the so-called cash call model whereby partners contribute in line with their stake in a joint venture. That gives operators more freedom to secure financing. Nigeria is also cutting its holdings in joint ventures in order to raise cash, a development Aieto Plans to explore in increasing its oil production.

“The Federal Government is well aware that exploration and production activities of indigenous companies especially in the FJV basket of onshore, swamp and shallow water would prove critical to the successful achievement of these targets, hence, FGN is more than ever before ready to offer necessary support to enable indigenous players thrive,” Okoronkwo said.

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ly developing a pipeline of power generation projects across the country with an ambitious five-year plan which includes transforming the oil-rich Niger Delta region into a power generation hub and ultimately tackling Nigeria’s power challenges through its legacy investments in the gas-to-power value chain.

“One of our main exploration targets, the Niger Delta basin, may contain as much natural gas as any reserve ever discovered.

Tapping this reserve will provide Aiteo with abundant resources to not only sell directly but also to fuel Aiteo electrical generation plants,” Aiteo said in a statement.

Aiteo Power is developing a gas-to-power strategy by leveraging its power and upstream capabilities.

It is utilizing the significant gas resources in OML 29 that would see the oil-rich Niger Delta region become a hub for power generation in Nigeria.

Aiteo Power is also a supporter of renewable, clean energy; developing multiple solar energy power projects within the sub-Sahara Africa region.

Beyond oil and gas, Aiteo is also committed to host community development by providing work opportunities, offering training programmes and supporting local businesses.

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Lady Maiden Ibru’s 70th birthday and my lucky (narrow) escape (1)

Bashorun J.K Randle

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ith the benefit of hindsight, I should have smelled a rat.

Ahead of Lady M a i d e n I b r u ’s 70th birthday on 20th November 2019, a powerful delegation (names withheld) of old boys (and girls) of St. Gregory’s College, Lagos turned up in my office to inform me that regardless of my being a “KCOB” (King’s College Old Boy), they had finally succumbed to popular demand by old boys of their school, especially those in the diaspora, that my election as the President of the Old Boys Association of St. Gregory’s College would be announced on the front page of “The

Guardian” newspaper of which Lady Maiden is the publisher on her birthday.

In addition, I had been nominated to inform the birthday girl that the old boys (and girls) of St. Gregory’s College had unanimously selected her as the “Guardian Angel”/ “Angel from The Guardian”. No problem, I assured them.

My special role at the birthday party would be to decorate her with the insignia of “Guardian Angel”.

No problem, I again assured them.

As confirmation that they were on a mission of peace and reconciliation, the delegation (names still withheld) presented me with two plaques. The first one read: “Hail Mary, full of grace, the Lord is with thee; blessed art thou amongst women, and blessed is the fruit of thy womb, Jesus. Holy Mary, Mother of God, pray for us sinners, now and at the hour of our death, Amen.” and the second one read as follows: “Success is not final, failure is not fatal; it is the courage to continue that counts.”

– Sir Winston Churchill.

In exchange, I gave them a plaque which contained the following quotation from Alhaji Muhammad Sanusi II, Emir of Kano (and an old boy of King’s College).

“They hail you ‘Rankadede’ now.

In a couple of years, they will throw stones at you.” However, matters started getting interesting just before the birthday party with anonymous telephone callers (names withheld) demanding my assurance that I would attend the birthday party on Saturday 23rd November 2019 and abide strictly with the dress code: “Black Tie”.

The invitation card duly arrived.

The party would be preceded by a thanksgiving service at St.

Saviour’s Church, Tafawa Balewa Square, Lagos. It used to be known as the Colonial Church (exclusively for Europeans and old boys of King’s College, Lagos!!). That is where successive governors and governor-generals of Nigeria worshipped and it was right bang in the middle of the route equidistant between the governor-general’s residence and King’s College.

For several decades, the vicar was a Briton. It was during the tenure of The Revd. Canon J. J. Payne who was installed as Chaplin of the Church in 1962 by the Bishop of Lagos, Rt. Revd. Adelakun Howells that a significant rise in the attendance of indigenous Nigerians was observed. He led the church for 24 years before his departure in 1986.

The church service was indeed a spiritual feast and a genuine demonstration of humility by the congregation (including Muslims and atheists) who had assembled to supplicate for the divine mercies, favour and protection of the Almighty for Maiden and her entire family.

It did not go unnoticed that her late husband Alex died on 20 November 2011. He was a victim of General Sani Abacha’s dreaded murder squad led by Sergeant Barnabas Jabila Mshiela aka “Sergeant Rogers” who waylaid him on Falomo Bridge, Ikoyi. They left him for dead. “Sergeant Rogers” later confessed to the Human Rights Violations Investigation Commission of Nigeria (Oputa Panel) that he was acting on the orders of Major Hamza Al Mustapha. Alex was rushed to St. Nicholas Hospital, which is almost on the same street as King’s College. Miraculously, he survived. He was never the same again. The physical, emotional and

‘

In exchange, I gave them a plaque which contained the following quotation from Alhaji Muhammad Sanusi II, Emir of Kano (and an old boy of King’s College), “They hail you ‘Rankadede’ now. In a couple of years, they will throw stones at you”

psychological damage was colossal – even after extensive medical care in Britain for three years and subsequently in the United States of America. May his soul rest in peace. Maiden became the champion of the legacy and vision which together they had crafted. The flagship of the vast business empire which encompassed property, hotels, printing/publishing etc. was (and remains) “The Guardian” newspaper and its cryptic motto: “Conscience nurtured by truth.”

For almost two and a half hours, the church which was packed full provided an oasis of shared bliss and sublime purposefulness from the wreckage of a nation at war with itself – rage versus vengeance in a vicious cycle of impunity, injustice and oppression in competition with kidnapping, drug trafficking, embezzlement and banditry.

The Bishop (name withheld for legal reasons) who conducted the service with superlative dexterity and divine inspiration left no room for those who have ever doubted the supreme majesty of the Almighty. The sermon which he delivered is a collector’s item – vintage stuff. It was a brilliant exhortation for reflection and introspection – why are we here and are we prepared for heaven?

He challenged the congregation to unite in demanding that the government should address the real problems facing the country – security, education, health facilities, power supply, poverty, ethnic/religious rivalry etc. facing the country.

(To be continued) Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

There’s talent in Nigeria, you’re just hiring wrong

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ike most people today, I get most of my news off Twitter. In my case, I use Twitter to feel the pulse of things happening in Nigeria, particularly in the technology and entrepreneurship spaces.

There is a notion, held by many employers in these spaces as well as outside, that (employee) talent is hard to find in Nigeria and Nigerian universities are largely useless.

I couldn’t disagree with this more.

I graduated from the University of Ibadan with First Class Honours in Mechanical Engineering at the end of the 2013 academic year.

That year, we had 9 First Class graduates out of a class of 42; to my knowledge, this is the most First-Class graduates produced from an engineering class since the university’s inception. These people, eight men and one lady, are some of the most intelligent people I have ever met in my life.

None of them currently work for a startup: three are maintenance engineers with Dangote, OLAM, and another company, three are finishing their PhD at Cranfield, AUC, and Howard, two of us are in the manufacturing industry in Canada, and the last one is an associate with McKinsey.

Post-NYSC we applied to different employers. In my case, I was a little picky as I wanted to work in product design and there just weren’t enough companies to apply to. Also, oil companies were not hiring at the time (the oil price was tanking), I had interned with Bristow Helicopters and Schlumberger as an undergraduate but none were hiring when I graduated. I ended up applying to, and interviewing with, OLAM International and Sahara Energy.

I had envisioned an interview as a discussion about skills and abilities, but I was wrong. If you have a First-Class Honours, your interviewers want to show you that you’re not very bright and find things you don’t know so they can say “and you got a first class?”. One interviewer spent five minutes interrogating me about the combustion properties of methane and butane gases.

Sahara Energy was particularly interesting, for the interview they asked us to bring the jersey that the Nigerian team wore to the USA 1994 World Cup. And on the eve of the interview, at 9.53pm to be precise, they asked us to wear certain colours: a touch of red for men and a touch of black or yellow for www.businessday.ng

ladies. I lived in Ibadan at the time and was already in Lagos for the interview when they sent that email.

Much smaller companies — run by entrepreneurs — are worse. I know of one where one of my former classmates worked that the starting salary was N35,000 but the company was doing large scale building services engineering design for hotel chains in Victoria Island and Ikoyi. The usual excuse? That new graduates are “still learning”.

A First-Class Honours degree does not mean a person is intelligent, but actually that the person is a fast learner. It is literally a certification that in a short time (14 weeks, a typical semester) the person can master (greater than 70 or 80 percent, depending on the A- grade) a new module.

Now, I can’t speak for all engineering departments in Nigeria, but the UI programme is really good. In fourth year, we took a compulsory Advanced Strength of Materials course, that content is taught at a Masters level abroad. The curriculum is wide on purpose, because graduates go on to do so many different things and jobs are not as available as they are abroad. We take an Engineering

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CHUMA ASUZU Economics course — for some people as early as third year.

Entrepreneurs need to know that there is talent, but these talents know their worth and demand it. You’re competing with multinationals who can pay better and have more intelligent staff to complement the new ones. And the interviews are fairer at these companies, and largely about the candidate’s potential — they are not there to defend their resumes.

The best interview I ever had? We talked about coffee table books and how nobody actually reads them while they are waiting.

I got the job.

Asuzu is a researcher and engineer. His writing focuses on technology in Africa and has appeared in OZY, The Prepared and Africa Is A Country

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Tapping global capital for domestic growth

Patrick Atuanya

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igeria faces a paradox of internal shortage of liquidity despite a world awash with it.

Its banking sector has remained largely transactional in nature and for the most part does not embrace giving out loans outside of the most blue chip of companies or the risk free sovereign.

The banks should probably not bear all the blame for this though.

Total banking sector assets are only equivalent to 20 percent of GDP, while a Cash Reserve Ratio (CRR), a specified minimum fraction of total customer deposits, which commercial banks have to hold as reserves with the central bank of Nigeria (CBN), is elevated at 22.5 percent, soaking up much of the extra firepower banks have to create new loans.

Oil export earnings, which usually is a good source of liquidity in most oil producing economies, have slumped some 71 percent in Nigeria from a high of $140 billion in 2012 to about $40 billion in 2018, as oil prices fell from its recent peak.

At the same time Central Banks have flooded the global economy with liquidity.

The world’s four biggest central banks – the U.S. Federal Reserve, European Central Bank, Bank of Japan and the Bank of England – have pumped around $13 trillion into the global economy since the crisis year of 2009, sharply expanding their own balance sheets of financial assets.

The surge in central bank liquidity has largely found its way into every asset class in global markets, from bonds and equities to real estate, in developed and emerging markets.

However Foreign Direct Investment (FDI) flows into Nigeria the past few years have been abysmally low, while Portfolio flows have only been attracted at a high cost of double digits interest rates.

So Nigeria has not gotten the benefit of global liquidity, while it suffers the consequences of low oil prices.

Ayo Teriba, CEO of Lagos-based Economic Associates, at an economic outlook session held last week in Lagos reckons that in recent years capital flows have overtaken trade flows, meaning that Nigeria cannot sit back and wait for exports alone (earned through trade), when it could aggressively court global capital/ liquidity by being innovative.

Teriba likens liquidity to the lifeblood of a system, and if that is the case, then the country should be prioritising policies that could lead to an inward surge in liquidity.

For Nigeria there are 3 major sources of external liquidity, including exports, diaspora remittances

and portfolio flows.

Of the three, diaspora remittances is the largest; however it probably receives the least attention from authorities.

The CBN’s annual economic report shows that in 2018 the total revenue from oil was $18 billion, while Nigerian emigrants sent home some $25.1 billion, the highest in four years.

The importance of remittances is growing as a new normal of low oil prices takes root amid a supply glut.

While oil revenue has fallen some 57 percent from the $42.7 billion recorded in 2014 when oil prices were as high as $100 per barrel, diaspora remittances grew 20.6 percent in the same period from $20.8 billion in 2014.

The funds Nigerian emigrants send back home could even be closer to $40 billion per annum when unofficial channels are counted, according to estimates by the African Development Bank (AfDB).

Sadly, while Nigeria dissipates a lot of energy trying to boost exports, nothing much is being done in the area of portfolio flows and remittances.

Take the policy of forcing citizens sending money home through official channels to exchange at a less than market exchange rate, which serves to discourage the same flows we seek to attract.

The CBN monetary policy committee meeting of July 23 acknowledged the problem when a part of its communique said: “The Committee also called on the Bank to intensify efforts to

‘

The world’s four biggest central banks – the U.S. Federal Reserve, European Central Bank, Bank of Japan and the Bank of England – have pumped around $13 trillion into the global economy since the crisis year of 2009, sharply expanding their own balance sheets of financial assets

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

What should agriculture policy look like?

O

ur agriculture policy has been in the news recently, mostly relating the border closure.

I am kind of tired of talking about the border closure and its effects to be honest. But agriculture policy does not begin or end with trade restrictions.

There is lot more to policy besides stopping or attempting to stop imports. So, what should agriculture policy also be focused on? A while ago I had a chat with a friend of mine who runs a farm and who has been able to do amazing things with his maize and tomato out-grower program. But before that, a little background to Nigeria’s maize farming industry.

Nigeria’s maize industry has grown significantly over the last two decades.

Since 1999 farmers have grown from using about 3.5 million hectares of land to grow maize to about 6.5 million as at 2017. Production, as expected, has grown just as much from about 5.5 million tons to a high of 11.5 million tons in 2016. The problem however is that yields, the amount produced per unit of land, has remained mostly stagnant. In 1999 our maize yield was about 16 hg/ha according to the Food and Agriculture or-

ganisation and all through the period to 2017 our yields remained at about 16 hg/ ha. Even though we used a lot more land for maize and increased our production a lot, we did not actually get better at growing maize.

For context, our maize yields on average are one of the lowest in the world.

Maize yields in South Africa are twice as large as ours. They are almost three times as large in Brazil and almost five times as large in the United States. This is particularly important when you consider the reality that the average farm size in Nigeria is about half a hectare. So, even though we have had a lot more production, it has been driven by a lot more people just using more small sized pieces of land. The combination of low yields and small farm sizes means that most farmers remain at or near poverty. The policy challenge is clear. How do you improve the yields of these small holder farmers?

Enter, Tomato Jos. Despite the name they do more than just grow tomatoes.

Their maize out-grower program has been of interest to me lately especially after seeing the results. As part of the program they work with some local farmers and try to www.businessday.ng

ECONOMIST

get them to increase their yield. At the last harvest this year their out growers ended up with yields that were almost four times as large as that of the average farmer in Nigeria. Their yields were even higher than that of the average South African farm.

For those farmers, this increase in yield means they probably doubled or even tripled their incomes and are probably now further out of poverty. How did they do it?

The out-growers were essentially handheld through the process from field preparation, to planting, to tending farms, to harvesting, to storage, to the sale of their produce. Plus, financial support to help the farmers make the needed investments. The outcome has been a win-win for all.

A farm can do this here and there but once you start to think about scaling this type of arrangement to small holder farmers across the country then you cannot avoid the policy question. One business can try to build their extension worker program but to do that for millions of farmers you need a proper extension services policy with training schools for those who will train the trainers. One business can try to organise the financing requirements for a few out-growers but

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encourage Nigerians in the diaspora to use official sources for home remittances, noting that the effort will complement other measures geared towards improving Nigeria’s current account balance. It enjoined the Bank to consider introducing incentives such as the reduction of charges on diaspora home remittances into Nigeria.”

The multiple exchange rate system and lack of commitment to privatisation of moribund and underperforming assets is also a repellent to portfolio flows.

Egypt recently unified its exchange rates and was able to boost its supply of forex as capital poured into the country.

Unlocking vast brownfield assets for private sector capital injections is a part of the solution. Everything from refineries, airports, smelting plants, steel mills and other decaying FG assets can be sold in full or parts to help raise capital.

The Nigerian Sovereign Investment Authority (NSIA), could be authorised to manage other Federal Government assets for optimal returns and could co-invest with other Sovereign Wealth Funds (SWF) to attract capital to such assets.

Nigeria must understand that the era of the commodity super cycle and the vast oil revenues that came with it is probably over for good. It’s now time to think outside the box to tap into the vast global liquidity pool for the benefit of domestic growth.

NONSO OBIKILI once you are talking of millions of farmers you need a financial system that can properly service the sector with interest rates that make investment feasible.

No, intervention funds by the central bank and an interest rate environment where the risk-free rate is 14 percent do not help. A business can try to help farmers market their extra output but once you think of extra output for millions of farmers then you need an export or domestic utilisation and storage strategy.

The experience with the Tomato Jos out grower farmers show that increasing yields as a strategy for reducing poverty for those in agriculture is possible. The question now is how to scale that and if the policy environment can focus on the things that really matter.

Dr. Obikili is the chief economist at Business Day

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EDITORIAL Publisher/CEO

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Halt the anomie from the rule of man instead of the state of law

A

ttorney-General and Minister of Justice Abubakar Malami scored a positive for the federal government Wednesday 11 December with the announcement that government was investigating the invasion of the court Friday 6 December 2019 by the Department of State Security. It was a carefully planned statement that should mollify critics bristling at the desecration of the courts by the security forces. It was also timely.

Nigeria earned ignominy globally as the government of President Muhammadu Buhari put into practice its theory of the greater importance of state security over the rule of law at a Federal High Court on 6 December 2019. On that day, officers of the Department of State Security overreached themselves and stepped into a courtroom where they forcibly extracted citizen Omoyele Sowore who the courts had

set free 24 hours earlier. It was barbaric and shameful.

More significantly, the outrage over the unfortunate incident demonstrates practically the global opinion on the divide: Nigeria is best served by following the rule of law tradition over any obsession with state security. The evidence points to regime and personal security as the driving force behind this focus. The Department of State Security should have a more wholistic view of its remit.

The state security mantra is a cover for the rule of man.

The rule of man hearkens to a discredited tradition. The king is the state and the state is the king’s to do as he pleases. It is anachronistic. Nigeria has joined the world to move away from such practices.

Twenty years into the Fourth Republic, a republic for which citizens fought, it is unacceptable to have Nigeria regress to the rule of man. Under the rule of man, the state formulates laws based on the anger or likes

of one man rather than on principles of general applicability.

The evidence is in Decree 4 of 1984 and the current attempts to push Hate Speech and Social Media control bills. Members of the first family have confessed their interest in promoting the obnoxious laws because of their personal interests.

Better and nobler motives should actuate legislation as well as executive action in a democracy. Bills and actions should consider the interest of the broader society. They should also reflect the aspirations and desires of the citizenry.

Essential elements of the rule of law are order and process.

In the recent matter of the DSS forcefully procuring an arrest in a court, it failed to observe order nor did it follow procedures and processes. It should not be that a player in the law enforcement institutions of Nigeria such as the DSS will wilfully ignore timehonoured and agreed methods for carrying out its actions.

There was no haste. Even ur-

gency is not a sufficient rationale for breaching procedures.

Malami’s action in ordering an investigation is an admission that something untoward happened.

Malami stated, “Whatever affects the integrity of the court is a worrisome issue for us. I can never be pre-emptive of an incident over which I was not a live witness to. But one thing I am certain of is that the government has put in place mechanism for investigation of the reported incident. So, I would not like to be pre-emptive in terms of a conclusion, one way or the other, without allowing the consummation and conclusion of the investigation process.”

The Attorney General should counsel the administration to walk the path of the rule of law as best practice upheld all over the world. Nigeria does not deserve regression to atavism and anomie. The Federal Government should find the courage to admit errors and walk back to the right path.

HEAD, HUMAN RESOURCES Adeola Obisesan

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Manoeuvrings for a Buhari third term debase Nigerians. Envy the British! global Perspectives

OLU FASAN

L

ast Thursday, on December 12, voters in the United Kingdom went to the polls to elect a new government.

They passed brutal judgement on the politicians, mercilessly punishing those they believed stalled the implementation of the 2026 referendum decision to take the UK out of the European Union. They also overwhelmingly rejected the party, Labour, which offered a radical socialist agenda of massive tax-and-spend and nationalisation. Instead, they rewarded Prime Minister Boris Johnson, of the Conservative Party, who promised to “get Brexit done” and to combine robust free market economy with social justice.

They gave his party a large majority of nearly 80 seats in parliament.

The outcome of the general election is a clear evidence that the British people cannot be taken for granted or treated as dim, gullible and easily biddable. Each of the 650 members of parliament that were elected following last week’s election owed their success entirely to the genuine will of the people, not to a godfather or to vote-manipulation. Surely, when you have such a competitive politics, with a very enlightened electorate, politicians will show respect, not disdain, for the people, knowing that they are their servant, not their master!

But that’s the case in Nigeria. Truth is, in this country, the politicians are the master; the people, the servant! Nigerian politicians are hubristic, self-interested, ferociously self-entitled and unbelievably arrogant. Sadly, because Nigeria’s politics is not genuinely competitive, and, thus, not responsive and accountable, it lacks the moral or ethical force to safeguard

the common good and embed the right values.

Let’s face it, Nigerian politics is utterly broken, beset by a deep crisis of legitimacy. Indeed, according to the World Economic Forum’s 2018 Index on “Trust in Politicians”, Nigeria ranked 130th out of 137, meaning that trust in Nigerian politicians is among the lowest in the world. Is that surprising? Of course, not.

The behaviours of Nigerian politicians are so appalling that in civilised climes they would face public opprobrium.

In the British election, politicians were electorally ostracised for failing to carry out a very complex decision of the people: Brexit. Nigerian politicians have no such restraints!

Let’s take two of the current appalling shenanigans of Nigerian politicians.

The first is the jockeying for the 2023 presidential election barely six months after this year’s poll. The second is the manoeuvrings by some politicians to plot a tenure extension for President Muhammadu Buhari. These two issues – the jostling for 2023 and talk of a Buhari third term – are a clear evidence of Nigerian politicians’ utter disdain for the people.

Take the first. This country had a presidential election just over six months ago.

How could any politician with even a scintilla of respect for Nigerians be manoeuvring for 2023 now? Yet, that’s what politicians, particularly from Buhari’s party, All Progressives Congress, APC, are doing. Indeed, some have attributed the recent travails of the vice president, Yemi Osinbajo, who was stripped of his previous roles on economic management and social interventions, and whose close staff were sacked by the president, to the politics of 2023. Several prominent APC politicians are manoeuvring for 2023. Recently, the former Ogun State governor, now an APC senator, Ibikunle Amosun, had to dissociate himself from those circulating 2023 presidential posters on his behalf, saying: “There is a time for everything. The time to address 2023 is clearly not anywhere close”.

Of course, the time for 2023 is not anywhere close! Surely, the focus of the APC and President Buhari’s government should be on making a difference in the

lives of ordinary Nigerians in his second term. Yet, as the Financial Times said in a recent editorial, “So far, (Buhari) has disappointed”, adding that “Nigeria is going backwards economically”!

Truth is that Nigerians continue to experience harshness under the Buhari government. This country is the sixth most miserable in the world, according to the Economist Intelligence Unit, the “poverty capital of the world”, according to the Brookings Institution, and, as the World Bank said recently, Nigeria could account for 25 percent of the world’s total extreme poor population by 2030. Yet, the Buhari second term administration is strongly political in nature, with career politicians harbouring political ambitions holding sway in the cabinet. As a result, real policymaking and governance would take second place to the politics of 2023.

Let’s face it, it’s a display of absolute disrespect for Nigerians, an utter disdain for their intelligence, that politicians of the ruling APC, instead of governing, are prematurely jockeying for 2023. They are scornful and complacent, making themselves the master, rather than the servant, of the people. Politics is a demand and response process, where politicians identify and respond to the needs and aspirations of the people. But Nigerian politicians are only in it for themselves; they are selfish careerists!

Which brings us to what is certainly the most appalling of the politicians’ shenanigans: the manoeuvrings for a third term for President Buhari. Any talk, even in jest, of a third term for President Buhari debases the people of this country.

And if it’s a serious proposition, then it must count as a heinous crime against the Nigerian state. Any politician who advocates a third presidential term is thus an enemy of Nigeria, showing utter disdain for this country.

Yet, that’s what some members of President Buhari’s party in the National Assembly are doing, attempting to amend the Constitution to allow him to run for a third term. Indeed, one of them, Charles Enya, asked a federal high court to annul sections 137(1)(b) and 182(1) (b) of the Constitution, arguing that the Constitutional provisions “infringe on

‘

Let’s face it, Nigerian politics is utterly broken, beset by a deep crisis of legitimacy.

Indeed, according to the World Economic Forum’s 2018 Index on “Trust in Politicians”, Nigeria ranked 130th out of 137, meaning that trust in Nigerian politicians is among the lowest in the world

the fundamental human rights of the president and the governors who might wish to seek a third term in office”. Really?

So, a third term in office is now the human rights of a president and a governor. It’s utterly preposterous!

But that’s how disdainfully Nigerian politicians have always treated the people, putting their self-interest above the public and national interests. In their book “Too good to die: Third Term and the myth of the indispensable man in Africa”, Chidi Odinkalu and Ayisha Osori insightfully narrate how politicians, driven by selfish motives, attempted to amend the Constitution to allow President Olusegun Obasanjo to run for a third term in order to “continue the good work”. Similarly, selfish politicians want Buhari, who they see as Nigeria’s “saviour”, to have a third term so that he too can “continue the good work”!

Of course, President Buhari has denied having a third term plan, saying: “I am not going to make the mistake of attempting a third term”. But the question is not whether he wants to “make the mistake”, but whether he allows, even tacitly, others to make it for him. Given what this country went through with the Obasanjo third term agenda, which reportedly cost “in excess of $500m”, the APC should regard any of its members advocating a third term for Buhari as enemy of Nigeria and expel him or her from the party. But President Buhari is increasingly authoritarian, and few would vouch that he wouldn’t cross any line to retain power in 2023.

Surely, what all this shows is that Nigeria’s politics is utterly broken, not fit for purpose. If Nigeria were Britain, where the people are the master, not the servant, of the politicians, such reckless shenanigans as the premature jockeying for 2023 and talk of a Buhari third term wouldn’t happen. Which is why Nigerians should envy the Brits, but also copy them. They must let their politicians know who the boss is: the people!

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

The Nigerian Code of Corporate Governance, 2018 Principle 25 – Ethical Culture “The establishment of policies and mechanisms for monitoring insider trading, related party transactions, conflict of interest and other corrupt activities, mitigates the adverse effects of these abuses on the Company and promotes good ethical conduct and investor confidence” orporate leaders have to embrace, with significant commitment, the importance of ethical culture. At the forefront of this effort has to be the company’s Board and its Management team.

A fundamental aspect of this responsibility requires corporate Boards to define the company’s culture, measure, monitor, intervene and remediate when necessary. In the same way they adopt financial strategies designed to maximize revenue and minimise cost, companies have to deploy a similar mindset to in managing the company’s culture. A financial strategy without consideration of ethical culture often results in less than optimal and unsustainable performance.

The Board has a fundamental duty to oversee corporate culture, to exercise its authority when needed, and to ensure that appropriate monitoring controls are in place. A company that appropriately defines its corporate culture, aligns the culture to its overall purpose and strategic initiatives, and monitors culture, can increase its value through maximising its talent pool and

C

its intangible assets. It has been estimated that one-half of a company’s value is its intangible assets – its culture and reputation. Assuming this estimate is accurate, companies need to prioritize management and oversight of these assets. Boards that prioritize corporate culture, watch the red flags and set clear frameworks will encourage ethical behaviour throughout the company.

A major component of the framework as recommended by the NCCG is the conflicts of interest policy. Given that conflicts of interest may present in multiple forms, it is important that Directors are aware of the types of issues that could constitute real, perceived or potential conflicts situations. These may range from insider dealing, personal interest in transactions with the company, familiar relationships, etc. Directors are expected to identify and disclose their business or personal interest in any transaction, as disclosure affords the Board the opportunity to discuss and assess the impact of such conflict and ensure that the decisions reached are in the best interest of the company. Conflicts may also arise from receiving gratuitous gifts and as such the conflict of interest policy should detail what kind of gifts are acceptable and those that are not. It would be useful for Boards to review these policies periodically as issues of conflict are dynamic. www.businessday.ng

It is good practice to have Directors complete Declaration of Interest Questionnaires annually or as the need arises.

Apart from the requirement of disclosure

by Directors in conflict of interest situations, the NCCG also recommends the adoption of a policy to guide the Board and Directors when dealing with conflict of interest situations. Such policy should require the concerned Director to recuse himself/herself from discussions and voting on any matter that the Director may have an interest in. The Director is also required to seek clarity from the Chairman of the Board or the Company Secretary when he/she is in doubt as to whether or not a conflict has arisen. When the question arises before the Board as to the existence or otherwise of a conflict of interest it should be determined by a simple majority of the Board members and recorded in the minutes of the meeting. The Code further imposes a reporting obligation on Directors other than the concerned Director when they are aware of a real, potential or a perceived conflict of interest on the part of a fellow Director.

It is however important to highlight that disclosure of a conflict of interest will not always cure the conflict as there are situations where it will be in the best interest of the company not to proceed with the underlying transaction.

The Code recommends a three-year cool off

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Bisi Adeyemi period for a former regulator before appointment as a director on the Board of an institution that has been directly supervised or regulated by the said regulator.

The Code further recommends that the Board should ensure that insiders are precluded from buying and selling any security in breach of their fiduciary duty and other relationship of trust and confidence while in possession of material, privileged, non-public and price sensitive information from the company.

Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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On trial

Trump, impeachment and American democracy The president has forced an invidious choice on Congress

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N DECEMBER 10TH the House Judiciary Committee formally accused President Donald Trump of abuse of power and obstruction of Congress. It was a solemn moment, and the prelude to Mr Trump becoming only the third president to be impeached. It was also entirely predictable. Mr Trump will now almost certainly be indicted by the House and cleared in a trial by the Senate.

If a single legislator crosses party lines, it will be news. That enough to convict him will do so is inconceivable.

Mr Trump’s behaviour forced on Congress an invidious choice.

He deserves to be removed for attempting to tip the 2020 election.

But the impeachment that has unfolded over the past three months will leave Republicans unswayed, voters divided and Mr Trump in office. That is bad for America.

The main facts are not in dispute. Mr Trump ordered $391m of military aid to be temporarily withheld from Ukraine, which is fighting a Russian-backed uprising (see article). Using back channels, Mr Trump also promised Volodymyr Zelensky, Ukraine’s new president, a coveted meeting in the Oval Office if he announced investigations into Ukraine’s role in the 2016 American election and, more important, into whether Joe Biden, a potential rival to Mr Trump in the 2020 election, had corruptly protected his son, Hunter. Mr Trump’s claim was that Mr Biden, when he was vice-president, had prevented a Ukrainian prosecutor looking into a gas company that had Hunter on its board.

The law is clear, too. Impeachment involves “high Crimes and Misdemeanours”, threats to the state and violations of public trust that need not be crimes in themselves (see Briefing). Mr Trump’s manipulation of a foreign govern-

ment to smear his opponent is the sort of election-rigging that bothered the Framers. So much the worse that the president was also acting against the national interest by endangering an ally.

Instead, the arguments have been about what Mr Trump intended. The president’s defenders insist that he was not smearing Mr Biden. He had a legitimate concern about corruption, and was conducting relations with the new government in Kyiv in his own way—as is his right. Ukraine’s president, they say, did not even know about the delay to the $391m, which in any case was mostly disbursed eventually. They note that Mr Zelensky denies that the aid depended on his investigations—and no wonder, because Mr Trump never intended such a quid pro quo.

Intentions are hard to get at, especially with a man like Mr Trump who routinely contradicts himself. But this defence does not ring true. Ukrainian officials did in fact know about the delay, and Mr Trump released the money only after a whistleblower had complained about his behaviour.

Mr Zelensky’s statement is open to doubt, as he has everything to lose from getting mixed up in an impeachment while Mr Trump remains in power.

Moreover, Mr Trump did not take the Ukrainian allegations seriously. If he had wanted the Bidens investigated, the proper course would have been to refer the matter to the FBI, not to use a foreign government. Before charging ahead, Mr Trump could have asked whether the allegations were substantial. They were not. A Russia expert once on his own staff has warned that the story about Ukrainian meddling in 2016 was a Russian propaganda campaign. The Ukrainian prosecutor pushed out

by Mr Biden was shielding corrupt firms: the father was not protecting his son, but exposing him to investigation by a new prosecutor.

“Shall any man be above justice?” George Mason asked when drafting the impeachment clause.

“Shall that man be above it, who can commit the most extensive injustice?” Mr Trump wanted to tilt the 2020 election in his favour by tainting Mr Biden. Given a free hand, his illegal efforts to cling to power might continue from the Oval Office. That is why Mr Trump should be removed.

But he won’t be. To expel him, the Senate needs to vote against the president with a two-thirds majority. The Democrats, with 47 of 100 seats, would count it a victory to win a simple majority.

Public support for impeachment jumped in September when it was announced, to a little under 50%, but all the investigations and hearings since then have not shifted it.

Only 21 states have a majority in favour of impeachment (see our Graphic detail page).

Democrats argue that this is because the White House has refused to let staff testify, or to release documents to Congress, the basis for that charge of obstruction of Congress. Republicans, they say, abetted by Fox News and others, have thrown sand in voters’ eyes by mounting shifting and inconsistent defences.

The Democrats are right. The Republican refusal to take any allegations against Mr Trump seriously has been contemptible. In private, many Republican senators abhor Mr Trump and his methods.

But they will not risk their careers by breaking with him in the national interest.

The key to shifting them is public opinion—and it still has the potential to move against Mr Trump.

Pollsters report that a third of independent voters are undecided; some of those opposed to impeachment appear willing to reconsider. But the White House will not let the public hear from the witnesses closest to Mr Trump, such as John Bolton, a former national security adviser, and Mick Mulvaney, his acting chief of staff. Sworn testimony from the inner circle could have contained facts and insights with a unique power to change minds.

Democrats could have asked the courts to compel them to testify and turn over documents.

If Mr Trump defied the judges, Republican senators would be under severe pressure to break with him.

However, rather than submit to the grinding wheels of the law, the Democrats have settled for a vote simply to get it out of the way. They argue that they have already accomplished a lot. They have shown that the president did wrong, they

say. Because the House has sole power over impeachment, they do not need the courts to prove obstruction. Even if they fail to remove Mr Trump, impeachment is deterrent enough.

That is a counsel of despair. Nobody can say how long the courts would take. Democratic leaders cite the months needed to force witnesses to testify in other cases but, mindful of the electoral timetable, the judges could just as well choose to proceed swiftly. While they deliberate, the impeachment inquiry will hang over Mr Trump.

That will do more to restrain him from further abuse than a rushed process that is done and dusted early next year. Even if time ran out, the impeachment lapsed and Mr Trump was re-elected, the case might be revived and he might be removed from office. Democrats, however, are focused on the risk that their party will suffer in next year’s elections.

They are entitled to put their own electoral calculations first.

The Republicans certainly have.

But the Democrats should be clear that, even if their party benefits, America will bear the cost.

Mr Trump is getting off lightly.

When the Senate absolves him next year he will claim to have been vindicated. On the evidence, he is guilty of abusing his office.

Instead, he will stay—possibly for another term. There is little doubt that his sense of impunity will be further redoubled.

Impeachment was designed to be a last solemn resort, not another partisan tool. Settling for today’s doomed indictment ushers in tomorrow’s. Impeachment’s deterrent effect will erode, because it will be seen as a political gesture. The barrier to removal will rise because breaking with your party will be harder. Oversight will be weaker; the presidency more imperial. As the Senate trial draws near, America has nothing to celebrate.

Monday 16 December 2019

BUSINESS DAY

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In Association With

Britain’s election

Victory for Boris Johnson’s all-new Tories

The Conservatives’ capture of the north points to a realignment in British politics. Will it last?

B

RITAIN’S ELECTION on December 12th was the most unpredictable in years—yet in the end the result was crushingly one-sided. As we went to press the next morning, Boris Johnson’s Conservative Party was heading for a majority of well over 70, the largest Tory margin since the days of Margaret Thatcher. Labour, meanwhile, was expecting its worst result since the 1930s.

Mr Johnson, who diced with the possibility of being one of Britain’s shortest-serving prime ministers, is now all-powerful.

The immediate consequence is that, for the first time since the referendum of 2016, it is clear that Britain will leave the European Union. By the end of January it will be out—though Brexit will still be far from “done”, as Mr Johnson promises. But the Tories’ triumph also shows something else: that a profound realignment in British politics has taken place. Mr Johnson’s victory saw the Conservatives taking territory that Labour had held for nearly a century. The party of the rich buried Labour under the votes of working-class northerners and Midlanders.

After a decade of governments struggling with weak or non-existent majorities, Britain now has a prime minister with immense personal authority and a free rein in Parliament. Like Thatcher and Tony Blair, who also enjoyed large majorities, Mr Johnson has the chance to set Britain on a new course—but only if his government can also grapple with some truly daunting tasks.

On a rainswept night the Conservatives marched into constituencies long seen as Labour strongholds (see Britain section). Blyth Valley, an ex-mining community in the north-east where Tories have for generations been the enemy, fell before midnight. Wrexham, Labour turf for more than 80 years, declared for the Conservatives at 2am. Great Grimsby, a struggling northern port held by Labour since the second world war, was taken soon after. By dawn it was clear that the “red wall” of Labour constituencies, which stretched unbroken from north Wales to Yorkshire, had been demolished.

Mr Johnson was lucky in his opponent. Jeremy Corbyn, Labour’s leader, was shunned by voters, who doubted his promises on the economy, rejected his embrace of dictators and terror-

ists and were unconvinced by his claims to reject anti-Semitism.

But the result also vindicates Mr Johnson’s high-risk strategy of targeting working-class Brexit voters. Some of them switched to the Tories, others to the Brexit Party, but the effect was the same: to deprive Labour of its majority in dozens of seats.

Five years ago, under David Cameron, the Conservative Party was a broadly liberal outfit, preaching free markets as it embraced gay marriage and environmentalism. Mr Johnson has yanked it to the left on economics, promising public spending and state aid for struggling industries, and to the right on culture, calling for longer prison sentences and complaining that European migrants “treat the UK as though it’s basically part of their own country.” Some liberal Tories hate the Trumpification of their party (the Conservative vote went down in some wealthy southern seats). But the election showed that they were far outnumbered by blue-collar defections from Labour farther north.

This realignment may well last. The Tories’ new prospectus is calculated to take advantage of a long-term shift in voters’ behaviour which predates the Brexit referendum. Over several decades, economic attitudes have been replaced by cultural ones as the main predictor of party affiliation. Even at the last

election, in 2017, working-class voters were almost as likely as professional ones to back the Tories. Mr Johnson rode a wave that was already washing over Britain. Donald Trump has shown how conservative positions on cultural matters can hold together a coalition of rich and poor voters. And Mr Johnson has an extra advantage in that his is unlikely to face strong opposition soon. Labour looks certain to be in the doldrums for a long time (see Bagehot). The Liberal Democrats had a dreadful night in which their leader, Jo Swinson, lost her seat.

Yet the Tories’ mighty new coalition is sure to come under strain. With its mix of blue collars and red trousers, the new party is ideologically incoherent. The northern votes are merely on loan. To keep them Mr Johnson will have to give people what they want—which means infrastructure, spending on health and welfare, and a tight immigration policy. By contrast, the Tories’ old supporters in the south believe that leaving the EU will unshackle Britain and usher in an era of freewheeling globalism. Mr Johnson will doubtless try to paper over the differences.

However, whereas Mr Trump’s new coalition in America has been helped along by a roaring economy, post-Brexit Britain is likely to stall.

Any vulnerabilities in the

Tories’ new coalition will be ruthlessly found out by the trials ahead. Brexit will formally happen next month, to much fanfare. Yet the difficult bit, negotiating the future relationship with Europe, lies ahead. The hardest arguments, about whether to forgo market access for the ability to deregulate, have not begun.

Mr Johnson will either have to face down his own Brexit ultras or hammer the economy with a minimal EU deal.

As he negotiates the exit from one union he will face a crisis in another. The Scottish National Party won a landslide this week, taking seats from the Tories, and expects to do well in Scottish elections in 2021.

After Brexit, which Scots voted strongly against, the case for an independence referendum will be powerful. Yet Mr Johnson says he will not allow one. Likewise in Northern Ireland, neither unionists nor republicans can abide the prime minister’s Brexit plans.

All this will add fuel to a fight over whether powers returning from Brussels reside in Westminster or Belfast, Cardiff and Edinburgh. The judiciary is likely to have to step in—and face a hostile prime minister whose manifesto promises that the courts will not be used “to conduct politics by another means or to create needless delays”.

Led all that way for birth or

death?

There is no doubting the strength of Mr Johnson’s position. He has established his personal authority by running a campaign that beat most expectations. His party has been purged of rebels, and their places taken by a new intake that owes its loyalty to him personally.

Having lost control of Parliament for years, Downing Street is once more in charge.

Mr Johnson will be jubilant about the scale of his victory, and understandably so. But he should remember that the Labour Party’s red wall has only lent him its vote. The political realignment he has pulled off is still far from secure.

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Monday 16 December 2019

BUSINESS DAY

In Association With

Trouble brewing

A row over who owns Kenya’s land is making life hard for foreign firms Tea estates and big plantations face claims over colonial land-grabs

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ANY KENYANS still resent the British colonists who once ruled them, an attitude their schools encourage. The colonists bilked the natives of choice land and ruthlessly suppressed the Mau Mau rebellion, a land-related insurgency waged against them in the 1950s.

Land grievances remain a powerful undercurrent in Kenyan politics today. At independence in 1963 the departing British set aside money to buy back land in the “White Highlands”, which had been reserved for settlers, and redistribute it among landhungry Africans. Though many benefited, much of the land went to those with political connections. The family of Kenya’s first president, Jomo Kenyatta, was among the biggest winners. The politicians, however, were happy to let foreign companies own big tea and coffee plantations, so long as they got seats on the board and a share of the profits. The colonists had turned tea and coffee into mainstays of the economy; it was too risky to hand over all the big estates to cronies.

In the past land in Kenya was less explosive an issue than in some other African countries. In Zimbabwe and South Africa white farmers owned a far greater share of the best land, making them a visible sign of racial inequality and historical injustice, as well as an easy target for populist politicians. In Kenya this was not the case.

However, thousands of Kenyans have been killed in ethnic clashes linked to land, as tribal groups of smallholders face off against each other, often egged on by politicians.

Big commercial farms have largely escaped trouble. But times are changing and multinational firms that own large tracts of land are feeling the heat.

In 2010 Kenya adopted a devolved constitution that hands hefty powers to 47 newly created counties. It

also created a National Land Commission with a mandate to address “historical land injustices and recommend appropriate redress”. In addition it lopped a nine off the 999-year leases granted to foreign owners of big farms in the former White Highlands.

But it failed to specify when the 99 years started, allowing some governors to make the dubious claim that land confiscated by Britain before 1920 is now fair game.

Kericho, the capital of Kenya’s tea country, is a verdant spot. Emerald-green estates stretch as far as the eye can see, hugging the western escarpment of the Rift Valley. Set 7,000 feet above sea level, the climate is perfect for growing tea, Kenya’s biggest export, which fetched $1.4bn last year. For Paul Chepkwony, the governor of Kericho County, these plantations are a reminder of the way the British stiffed his Kipsigis tribe of their land.

Under British rule the colonists took half the land on which the Kipsigis grazed their cattle, turning it into tea estates. Mr Chepkwony demands that the British government pay compensation to 115,000 Kipsigis and their descendants, who lost their land. (It will not.) Mr

Chepkwony also says that a ruling in February by the new land commission allows him to increase land taxes on tea estates and demand a preposterous $20bn or so in profits that he claims were illegally acquired—equivalent to nearly a quarter of Kenya’s annual GDP. The burden, he feels, should fall primarily on three firms that grow tea on disputed land: Finlays, Unilever and George Williamson. If they cough up, they would be welcome to stay on as tenants of the Kipsigi people, he says.

To Mr Chepkwony’s irritation, the multinationals are not playing ball. They have resisted his demands to surrender their title deeds for inspection. They have also challenged the land commission’s ruling. Kimutai Bosek, the governor’s legal adviser, warns that such recalcitrance could prompt frustrated Kipsigis to take the law into their own hands. The tea companies do not take such threats lightly. In June the governor of a neighbouring county led an invasion of an estate, uprooting tea bushes.

Historic land disputes are vexing multinationals in other sectors, too. Kakuzi, a big British agricultural firm, and Del Monte Kenya, which

grows 13,000 acres of pineapples, have faced demands to surrender large chunks of their plantations.

County governors are also using their new powers to make life difficult off the farm. Tata Chemicals, an Indian soda-ash miner, has been slapped with a $166m land-tax bill it says it cannot pay. Local politicians are also complicating things for Tullow, an Anglo-Irish company trying to extract oil in northern Kenya.

All this leaves Uhuru Kenyatta, Kenya’s president and Jomo’s son, in a bind. Aside from fears that those with land grievances could one day turn to his family’s vast holdings, he presents himself as a champion of foreign investors. Yet, preoccupied by a power struggle in his government and wary of alienating voters ahead of an election in 2022, Mr Kenyatta has remained aloof. His silence may damage the economy.

Multinationals are not just big taxpayers but also sizeable employers. Del Monte is Kenya’s largest exporter of canned pineapples. Nearly two-thirds of tea processed by big firms comes from smallholders. When landless peasants organised by the ruling party seized big com-

mercial farms in Zimbabwe, the economy collapsed.

Some say Kenya’s land commission should look at under-utilised farms owned by politicians. Or that Mr Kenyatta could do more good by reducing corruption, boosting urban employment and helping smallholders make their farms more productive. Many Kenyans have legitimate land grievances, but making implausible demands of profitable firms does not seem the best way of addressing them.

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Monday 16 December 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

TRADE

Four things learnt from Nigeria’s Q3 trade statistics LOLADE AKINMURELE AND SEGUN ADAMS

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igeria’s latest trade statistics show that total trade grew by 6.8 percent on a quarterly basis and 1.33 percent from last year. Here are some key things you should know.

Tokunbo cars are Nigeria’s second-biggest imports: After Premium Motor Spirit, otherwise known as petrol, Tokunbo cars were the most imported items into Nigeria in the third quarter of 2019.

Nigeria imported N151.55 billion worth of used cars in the period, which accounted for almost 4 percent of total imports.

Imports of Tokunbo cars were down 15 percent com-

pared to the second quarter when a record high N177 billion worth of cars were imported.

In Q3, used Vehicles worth N120.6 billion were imported from the United States, Italy (N6.3billion), Belgium (N4.3billion), Germany (N3.9

billion) and Canada (N3.9 billion).

Agric exports fall 42% as oil remains king despite diversification efforts: The contributions of crude oil to total exports dropped by 15 percent points or N189bn

CONSUMER GOODS

PZ Cussons half year profit sinks deeper on weak consumer spending …as global CEO steps down OLUFIKAYO OWOEYE

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osmetics and s o a p m a k e r, PZ Cussons Plc, the parent company of PZ Cussons Nigeria reported a decline in half-year profit for the period ended 30th November on the back of a weak consumer spending in its major markets.

According to the makers of Nunu Milk, Imperial Leather soap and Morning fresh soap, its Africa revenue plummeted due to weakness in its massmarket Home and Personal Care brands offsetting strong growth in Electricals while profitability was impacted by continued consumer pricing pressure, continuation of charges associated with the port in Lagos and the closure of the borders limiting exports.

The company noted that in Europe & the Americas, whilst Imperial Leather and original source continued to demonstrate market share growth, continuing consumer uncertainty and welldocumented challenges in the UK high street adversely

impacted overall revenue and profit. Results remained solid in Beauty with continued growth in retail sales of St Tropez in the USA. PZ also reported lower revenue for the first half, but expressed optimism for the second half.

“A stronger second half is expected subject to no further worsening of the economic and trading environments across our key geographies,” the company said in a statement.

Still, full-year revenue and adjusted profit before tax is expected to be modestly below the prior year on a like-for-like basis, the company said It announced that chief

executive Alex Kanellis will retire from the company on 31 January 2020 after 13 years in the saddle.

During his tenure, he oversaw significant development of the group, including the operational restructuring of the business, the creation of the Beauty division, the development of the joint venture businesses in Africa and, most recently, the resetting of the Group’s strategy to begin the process of returning the Group to profitable growth Pending the appointment of the new chief executive officer, Caroline Silver, a nonexecutive chair will become executive chair with effect from 1 February 2020.

on a quarterly basis, and 10 percent points on a yearly basis to 71 percent of total exports in the third quarter of 2019. This is crude’s lowest export share in over 15 quarters.

However, low exports from sectors like agriculture and manufacturing under-

mine Nigeria’s diversification goals.

The National Bureau of Statistics (NBS) reported that agricultural exports decreased by 42.69 percent on a quarter-on-quarter basis and 7.30 percent from the same period last year. Re-exports as a percentage of manufacturing exports rose to 95 percent from 65 percent in the previous quarter. Adjusting for re-exports, manufacturing exports came to 0.8 percent of total exports.

Trade surplus at 5-qtr high: Non-oil exports from Nigeria rose by the most on record to hit a trillion Naira in Q3 2019, pushing the trade surplus to a five-quarter high.

Trade surplus or net trade is the difference between what a country exports and what it imports.

In the third quarter of

2019, non-oil exports grew 375 percent, the highest since 2014, according to available data from the National Bureau of Statistics (NBS).

No n - o i l e x p o r ts h i t N1.08trn for the first time on record accounting for 20 percent of total exports and pushing net-exports to N1.39trn, the highest since the second quarter of 2018.

Ghana emerges Nigeria’s biggest export destination in Q3: Neighbouring Ghana was Nigeria’s biggest export destination, displacing India from number one spot.

Ghana accounted for 17.18 percent of Nigeria’s total export compared to 14.67 percent by India, due to re-exports of Cable sheaths of iron and submersible drilling platforms.

Total exports to Ghana were valued at N908bn.

24

Monday 16 December 2019

BUSINESS DAY

COMPANIES&MARKETS

CSCS boss advocates increased domestic HARUNA JALO-WAZIRI, the Managing Director/Chief Executive Officer of the Central Securities Clearing System (CSCS) Plc, discusses the evolution of Nigeria’s premier Financial Market Infrastructure for the Capital Market and shares his views on why increased domestic participation is critical to the growth and sustainability of the market and the Nigerian economy at large, in this interview with BusinessDay’s Senior Analyst, LOLADE AKINMURELE. Excerpts:

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an you explain how the role of CSCS in the capital market and the Nigerian economy has evolved over time, from when you started operations in 1997 till date?

It is interesting how looking back often puts things in proper perspective, even for events that you experience personally. I recall my first stint at the Nigerian Stock Exchange (NSE) was in 1992, as a member of staff. At that time, Brokers used to write cheques to each other to settle trades, having fulfilled all relevant terms and approvals of transactions. Trades were consummated between Monday and Thursday; settlement was done on Friday, when brokers are required to write cheques to counterparties to clear approved trades. As you would expect, some trades only settled after weeks of consummating the transaction.

With that orthodox practice, there was a high level of settlement failure, arising from the inability of brokers to write cheques to clear trades previously done. In some instances, cheques were dishonored due to insufficient funds in the accounts on which the cheques were drawn. This settlement inefficiency heightens market risk and undermines liquidity. Hence, the birth of CSCS as the financial market infrastructure for safe depository and settlement of all capital market transactions, with the mandate to innovate for market efficiency and development.

With CSCS, the market transited to a T+5 settlement window, as capital market transactions were still largely manually executed at the time. Nonetheless, CSCS enhanced the settlement process and provided settlement assurance through its Delivery vs Payment (DvP) operations. In no time and of course with improved technology adoption in both the capital market and banking system, CSCS partnered with all relevant stakeholders to transit the Nigerian capital market to a T+3 settlement cycle, which also stimulated foreign investments into the economy and provided a strong lever for Nigerian companies to access domestic and foreign long term capital. With a T+3 settlement cycle, market liquidity gets better and the velocity of money becomes higher.

As a further step towards improving the efficiency of the capital market, in collaboration with the SEC and other market stakeholders, CSCS facilitated 100% dematerialization of all share certificates, a milestone which puts the Nigerian capital market in the league of fully digitized markets and facilitates efficiency of the DvP process.

Consequently, over time, by facilitating these pivotal enhancements, amongst others, CSCS has been instrumental in strengthening the fundamentals of the Nigerian financial market and the case for its inclusion in a number of global indices. More importantly, several of the developments enabled by CSCS in collaboration with other stakeholders, provide a strong foundation for market growth.

With our recent system upgrade to TCS BaNCS Market Infrastructure solution - a globally renowned and multi-year Gartner Magic Quadrant recognized leading technology, we are now in a strong position to serve the future needs of the Nigerian capital market, with multi-currency and multi-asset

capabilities supported by efficient straightthrough processes. We are optimistic on collaborating with our regulator, the Securities and Exchange Commission (SEC), and key stakeholders to transit the Nigerian equities market towards a T+2 settlement cycle in the near future, and perhaps T+1 cycle over the medium term. We, at CSCS, are operationally ready and would be happy to work under the steer of the SEC in transiting the market to a shorter settlement cycle, as this enhances the velocity of money and attendant liquidity in our markets. Interestingly, the CBN is also seeking to extend the timing of the RTGS windows and hopefully increase sessional access for all forms of transactions, thus reinforcing our optimism.

What role do you think you (CSCS) can play in the future?

Whilst this may not be the appropriate time to share our medium-term plan for the market, I think it suffices to say that CSCS, as the financial market infrastructure for the capital market will play a very active role in driving market efficiency towards achieving our collective goals, as encapsulated in the SEC Nigerian Capital Market Master Plan 2015 -2025.

First, we would be leveraging technology to improve market access and de-risk the system. We are investing in technology to give a whole new experience to our participants and ultimately retail and institutional investors in the capital market. We want to drive inclusion by strengthening investor confidence in the settlement system and stimulating active domestic and foreign investor participation.

We would be partnering with our client Exchanges in stimulating liquidity, through our robust, efficient, and proven post-trade operations. For instance, we are investing quality time and financial resources in enriching our collateral management services, leveraging technology and collaborative frameworks to de-risk transactions and automate operations. This should stimulate market activity, sweat idle assets and ultimately create value for all stakeholders within the capital market ecosystem.

We want to serve as the conduit for efficient integration of the money and capital markets, providing seamless access to alternative investments for Nigerians and foreign investors, who may like to take advantage of market opportunities and outlook in switching from one asset class to another. We are seeking to give more control to the investor and other market participants through our self-service and interactive platforms. We are excited to be the clearing and settlement institution for the Lagos Commodities and Futures Exchange (LCFE), which promises to formalize and deepen trading in commodities in Nigeria. In addition to fostering liquidity across our client Exchanges, we are partnering with relevant public sector agencies in driving efficiencies in public services, with particular focus on those services that directly or indirectly stimulate financial transactions and thereby create wealth.

Can you tell us more about your app and the key features?

The Mobile App is one of our new self-service channels aimed at giving investors a unique experience. We have a beta version on Apple Store, which is iOS, and also on Google Play

for Android phones. The CSCS Mobile App gives you direct access to your investments in the capital market through the phone, giving you unfettered access to your investment anytime, anywhere. It provides transaction history and portfolio valuation amongst others, thereby providing useful information that can aid investment decision making onthe-go. This provides complementary proof of stock holdings, in addition to the SMS alert on transactions, which the market knows as Xalert. Having enhanced the X-alert system, it is now real-time, with delivery of SMS to counterparties within seconds of executing trades on the Nigerian Stock Exchange. The Mobile App also allows users to watchlist stocks and set alerts. This is a part of our initiative on bridging perceived information gaps in the market and giving more control to investors over their investments in the capital market.

In the very near future, we would introduce email alerts for capital market transactions.

Where do you think CSCS ranks compared to peers in African markets?

Thomas Murray, the foremost rating agency for financial market infrastructure recently upgraded our rating from A to A+, with a Positive Outlook. This is perhaps the highest, or at least one of the highest ratings for any FMI in Africa. It underscores and validates the strong governance in place at CSCS as well as the effectiveness of our systems and investments in technology for operations and risk management. Having pioneered a number of initiatives in Nigeria, we are a leading CSD

on the continent and play active roles in notable regional and global associations. We are an active member of the Africa and Middle-East Depositories Association, which is one of the regional CSD associations that comprise the World Forum of CSDs. We are one of the few FMIs in Africa with affiliate membership with the International Organisation of Securities Commission (IOSCO), and we are an active member of the West African Capital Market Integration Committee and the Association of Securities Exchanges in Africa. CSCS is the sole accredited issuer of International Securities Identification Number (ISIN) in Nigeria and Legal Entity Identifier by the Association of National Numbering Agency and the Global Legal Entity Identifier Foundation respectively. Without being immodest, these amongst other fundamentals, are rare combinations for any CSD in Africa. Perhaps this lends credence to CSCS being awarded the Continental Leader in Post-Trade and Custody Services in Africa this year.

There was the belief that with the de-escalation of political risk after the election, the stock market would rally. What would you say has impeded this stock rally?

Globally, market performance may be seen to be a leading indicator of economic performance, nevertheless it may be characterized by varying factors, including fiscal and monetary policies, global vulnerabilities and corporate performance. As you rightly know, the recovery of the economy has been somewhat weak. Notwithstanding the committed efforts of the fiscal and monetary authorities, certain structural challenges have undermined the growth of the economy over the past three years, with GDP growth printing at around 2.3% in the

Monday 16 December 2019

BUSINESS DAY

25

COMPANIES&MARKETS

participation in the capital market third quarter of the year, though stronger than the previous quarter, and reinforcing continued recovery in economic activities. With muted GDP growth, concerns around Naira stability and fiscal flexibility as well as an elevated sovereign yield environment, both domestic and foreign investors have taken solace in “risk-free” instruments, which have attractive tax equivalent yields. This reality has exacerbated the risk-off sentiment of investors, with an undue negative bias for equities.

More importantly, foreign investors are unduly skeptical that the biggest pool of domestic savings is not invested in the country’s real sector, thereby somewhat curtailing foreign portfolio investment (FPI) as well as foreign direct investment (FDI). As you may know, there is a positive nexus between FPI and FDI, with the former being a causal factor for the latter. Contrary to the trend across the world, domestic pension funds have less than 6% exposure to the equity market, compared to 72%, 33% and 29% equity allocation of pension funds in South Africa, Zambia and Ghana respectively.

Given the youthful demographics of Nigerian pension contributors and the brilliant framework around multi-fund structure regulation of the Pension Commission, it is apparent that domestic pension funds should have higher exposure to equities to better serve the retirement needs of the contributors, as against investing the funds in “risk-free” instruments, which currently generate negative real return. The current practice of investing long term funds into short dated instruments is an unusual asset-liability mismatch for the nature of these funds that often exposes Nigerian pension fund returns to volatilities in the yield environment.

With dividend yield on some value stocks hovering near 15%, higher than the yield on a 10-year FGN bond of 12%, there is a rare opportunity for pension funds and domestic asset management firms to seek alpha in the equities market. A number of companies, with strong fundamentals are trading at a discount to their respective book values, reinforcing the gross undervaluation of assets and the opportunity for retail and institutional investors to lock-in value ahead of the price correction.

We need to bring back our domestic pool of savings into the market to generate the right returns and effectively serve the retirement purpose for which the savings are meant. This is why I strongly advocate for a minimum exposure of pension funds to equity investment. It is important to democratize private sector investment in the real sector of the economy, as it indirectly exposes more Nigerians to the dividends of economic growth. Beyond the fact that renewed domestic investment in the equity market will trigger the appetite of foreign investors for Nigerian equities, increased domestic investor participation is also required to stabilize the financial system and enhance national security.

Can’t we argue that if the PFAs and other domestic institutional investors saw opportunities in the market they would naturally take advantage of it? Could it be that PFAs are scared of losing people’s money?

Markets often shape behavior of investment managers. In an environment where the tax equivalent yield on “risk-free” instruments is in the high teens, the incentive to roll up sleeves and do the hard work is never there. The clear example is the popular resource curse syndrome found across most oil-rich countries as well as most other economies that are rich in natural resources. There is always a disincentive to do the hard work required to sustainably and inclusively grow the economy because exploration of natural resources brings quick unevenly distributed wealth. I must commend Nigerian entrepreneurs, who have dedicated a lot of resources investing in the real sectors of the economy. The long term pay-off is always worth it, particularly for a country like Nigeria, which portends enormous growth potential. Whilst we cannot all be entrepreneurs, the capital market provides a conduit for us to participate in the wealth creation process and of course back-up quality management with capital to create sustainable wealth for everyone.

With lower yield environment, the search for higher yield should stimulate domestic investors’ appetite for equities going forward.

It is concerning that domestic institutional investors are often relatively late to the party.

It will be exciting to see domestic investors take good advantage of this bearish market to take good stakes in listed companies. The exposure of domestic institutional investors also helps to improve governance and overall performance of Nigerian corporates, as they add value to companies through positive engagements with the Management and Board.

What impact do you think the recent CBN policy barring domestic investors from investing in OMO bills would have on the equity market?

First, it is important that we all understand that the recent policy of the CBN on eligible participants in Open Market Operations i.e. OMO, is to do the right thing. OMO is a liquidity management tool of the CBN, used to either sterilize or improve liquidity within the banking system. Whilst other classes of investors have always participated in the auctions through the banks, it has weakened the monetary policy transmission mechanism of the MPC and the administrative measures of the CBN. Everywhere in the world, OMO auction is a bilateral transaction between banks and the central bank. With the impact of the policy on yield environment, there would be increasing appetite for alternative assets, as investors search for better returns on investment, given the negative real rates on treasury bills and even the short end of the bond yield curve. Hopefully, as we see more domestic savings being channeled to the equity market, and other alternative assets, FPI/FDI flows should improve and thus help to shore up the waning external reserves, which is pertinent to stabilizing the Naira.

What do you think is holding the regulators back from introducing that policy?

There are on-going discussions from a stakeholder perspective; some other stakeholders and I were at the National Assembly recently, and this was the same case we put forth to the Senate Committee on Capital Market. Some of the issuers are also involved in looking for solutions to the situation.

However, as a market infrastructure, we sit behind all the actors and we would support them to make the arguments.

How have you been able to inspire

confidence about the future of CSCS in the heart of your staff?

My confidence in transforming CSCS to an even greater institution is anchored on my people strategy. We are in a service business; as such CSCS’ priceless asset is our people.

I have a symbiotic relationship with my colleagues, who for me are part of my big family.

I must say that I am not surprised that they believe in me, because I do not only believe strongly in them but also demonstrate that confidence on an ongoing basis. We have over the past two years resourced the team, with very experienced and bright minds, with global exposure across the different segments of the financial services industry. The complementarity of our vast skills is great and rare in the industry. I believe we have forged an excellent team and I am excited about the possibilities ahead, as we set out to deepen our play as a critical market infrastructure, with the objective of catalyzing positive changes and new narratives in the Nigerian capital market. With our renewed market culture anchored on execution and agility, CSCS is well resourced and positioned for a great future.

Sincerely, I believe the commitment of the staff to the vision of the company is driven by a number of basic factors. First, we ensure we hire the right people, with requisite orientation and character. So, we have a clear definition of the CSCS person, and we do not compromise on that irrespective of the level. So, in our people search, the first order condition is for the candidate to have the right personality of a CSCS person. The soft skills are very important in building a team. Whilst technical skills can be acquired and adapted, it is always difficult remodeling soft skills after a certain age. So, we ensure we get it right from the hiring stage. Also, we have created a meritdriven environment for healthy competition and cooperation. More importantly, we are monitoring employee career progression and aspirations to ensure we align people’s aspirations with the corporate goal. It’s a whole talent management programme. I also think that people are happy and always willing to go the extra-mile in pursuing an organizational goal when they feel engaged and believe they are part of it. Everyone has a sense of collective and mutual progress.

Can you talk briefly on your partnership with Deloitte Touche and what you are trying to achieve with that?

It is about whistle-blowing. In every market where the market infrastructure sits, you need to have that independence for people to be

enabled to whistle-blow freely.

Taking that oversight from CSCS is what I believe is best practice. We have outsourced it and are not involved, so that anyone can go to the Deloitte platform and choose CSCS, and have the ability to whistle-blow even against us, which helps to increase transparency.

Are your efforts to increase transparency one of the drivers of your stock rally on the NASD Exchange?

I believe so; along with some other factors.

Investors need transparency and want to be assured of effective governance. There is strong governance in the institution, and that is a strong fundamental that discerning investors like to invest in. Strong governance enhances the sustainability and long-term value creation of an institution and that is one of the confidences that investors have in CSCS, as a great company. Two years ago, we shared our strategic objectives with the market and we are following through. Notwithstanding the relative lull in the capital market, the company is waxing stronger, leveraging human capital and technology to deepen its play across the capital market. In addition, we are diversifying our business to ensure resilient growth irrespective of economic and market cycles.

We also have a strong dividend policy, which ensures that we consistently pay dividends and grow returns to shareholders.

We are committed to consistently delivering superior returns to our shareholders.

Are there any other non-core services you are offering to boost revenue now and in the future?

We will be launching a few products next year, which would further deepen our play in the Nigerian capital market, enhance market efficiency and pioneer a new wave of offerings for African CSDs. We are working towards launching some products or services that will complement the initiatives of our client Exchanges in stimulating liquidity across markets. For instance, we have signed relevant agreements with Lagos Commodities and Futures Exchange to serve as its clearing and settlement institution and we will be working with the leadership in creating innovative offerings that will boost liquidity in the years ahead. We are engaging FinTechs to de-risk this burgeoning space and support the growth of the platforms.

Some of our imminent offerings will help to achieve our strategic objective of bridging the gap between the capital market and some sectors of the economy, as we seek to formalize and integrate markets, through innovative, value adding offerings.

CSCS in a special recognition for its contribution to the financial services industry was awarded the Continental Leader in Post-trade and Custody Services at the 7th Annual BAFI awards, can you tell us what the award means to you?

For us, an unsolicited award is good and coming from a reputed institution like BusinessDay is something we are proud of. It reinforces the fact that people are recognizing that this is a new CSCS and that we are making progress. More importantly, it is a clarion call for my team and I to do more, for the reward of good work is more work as we always say in our parlance at CSCS. We thank BusinessDay for the recognition and assure the investing public and our stakeholders that this is the beginning. It may have taken us a bit of time to lay this solid foundation but trust me, we are set to fly and would implore all stakeholders to join us on this progressive journey for our markets, and the economy at large.

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Monday 16 December 2019

BUSINESS DAY

cityfile

Lagos/Ogun: FRSC embarks on ‘Operation Zero Tolerance’

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he Federal Road Safety Corps (FRSC) zone RS2 command, comprising Ogun and Lagos States, on Friday said that it would embark on “Operation Zero Tolerance” from December 15 to January 19, 2020.

The FRSC’s zonal commanding officer, Samuel Obayemi, said in a statement issued in Lagos that the operation had become imperative of curb unnecessary road traffic crashes and fatalities during the yuletide season.

Obayemi said that the operation, tagged ‘Road Safety is a State of Mind-Stay Alert’, was in expectation of the end of the year’s increased traffic volume, road traffic gridlock and infractions committed by motorists.

According to him, the zone will enforce safety rules and regulations along all highways in Lagos and Ogun commands of the FRSC to prevent unnecessary deaths and injuries.

Obayemi, an assistant corps marshal, said that given the importance attached to the end of the year festivities and heavy movement of passengers and goods, the zone wanted to reduce accidents.

“The objective of the operation is committed to ensuring free flow of traffic, reduction in road traffic crashes and its fatalities, prompt response to road traffic victims to save lives, clearance of all forms of road obstructions among others within the zone.”

Edo: 50 in police net over sundry crimes

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he Edo State Police Command said it arrested 50 suspected in connection with various crimes in the last three weeks.

Lawal Jimeta, the Commissioner of Police (CP) in the state, told newsmen of the arrests in Benin while highlighting the command’s achievements since his assumption of office in November.

Those apprehended include 34 suspected cultists, six suspected fraudsters, five armed robbery suspects, four kidnap suspects as well as one suspect arrested for defilement.

According to Jimeta, two vehicles, two barreta guns, 10 cut to size guns as well as three axes, four toy guns and 60 cartridges have been recovered from the suspects.

The police chief urged residents of the state to be vigilant and report clandestine activities in their domain for prompt attention of the police and other security agencies.

He said security strategies have been devised to ensure safety of lives and property in Edo. NAN

Kwara: Task force distributes waste bins to markets SIKIRAT SHEHU, Ilorin

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wara State Governor’s Special Task Force on Environment has begun the distribution of waste bins as the state government steps up efforts to ridding Ilorin of indiscriminate waste dump.

Governor Abdulrahman Abdulrazaq recently paid for 528 waste bins for distribution as a stop-gap measure to address the challenge of refuse in major parts of the state capital.

Razaq Jiddah, head of the ad-hoc committee who led his team to present 10 of the bins to the Kwara State Government House, said that the distribution would be extended other parts of the city, especially areas with high refuse.

According to Jiddah, the bins have so far been distributed to densely populated areas like Oja Oba, Alanamu market, Mandate market, Ago market, Gegele market, Ipata market, and Ita Alanamu community after evacuating the huge refuse dumps there.

Inuwa Yahaya, governor of Gombe State (m), presenting a seedlings and ATM cards to beneficiaries of Gombe Goes Green, at Yamaltu NAN Emirate Council in Gombe State.

Police nab 21 suspected kidnappers, robbers in C’ River MIKE ABANG, Calabar

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he police in Cross River State have arrested 21 suspected kidnappers, armed robbers and others. The suspects are said to have committed the crimes between November and December this year.

Nkereuwem Akpan, the Commissioner of Police (CP) in charge of Cross River, who paraded the suspects, weekend, in Calabar, said they were arrested in different parts of the state.

Akpan explained that four of the suspects were arrested for kidnapping, eight for armed robbery, four for unlawful pos-

session of firearms, four for cultism and one for firearm manufacturing.

Akpan on assumption of office three weeks ago had read the riot act to criminals and charged them to have a change of mind over crime or be arrested and prosecuted.

“The suspected kidnappers have confessed to the crime and will be charged to court as soon as investigation is completed.

“Also, the arm manufacturing suspect was arrested by a team of detectives attached to the State Criminal Investigation and Intelligence Department.

“During the raid in his house in Calabar South, eight single barrels locally

made pistol and one fabricated locally made berretta pistol were recovered,” said Akpan.

He further explained that the suspected cultists were arrested for unlawful possession of firearms, adding that two locally made pistols with two live cartridges were recovered from them.

For the Christmas season, he warned those with intentions to commit crime to desist from it, saying that the police would not spare anyone involved in any form of illegality.

He, however, solicited for useful and timely information from members of the public to help the command respond to cases of emergency promptly.

Ebonyi communities cry out over lack of amenities

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diebor Ezza-Iyimagu, Ndieze and Mgbalaku autonomous communities in Izzi local government area of Ebonyi State have called on the government upgrade basic amenities in their areas.

Members of the communities, who spoke during a visit to the area, lamented how the dearth of social amenities has brought hardship on them, adding that they had lived in this condition for years.

Ogbonna Uguru, an indigene of Mkpumekwoku in Ezza-Inyimagu, said that the community of 23 villages lacks potable water, access roads and electricity.

“The entire village has one community secondary school, while the only facility that can be taken as a hospital in the area was not functioning optimally.

“It is saddening that in spite of our active participation in elections, all those we voted into power at all levels of government have neglected us,” he said.

Uguru said that the problem of roads which had made life unbearable for the people has caused several fatalities.

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“The roads linking the villages are so impassable that the people find it difficult to access Ezza-Inyimagu General Hospital in Mkpumekwoku village.

“This has led to the death of people who toiled to seek medical attention from the facility at Mkpumeokwu,” he said.

He added that the situation has caused serious health challenges to children, expectant and nursing mothers, saying the last time an immunisation was conducted in the area, was 1992.

“The situation led to the abandonment of a dry season rice production scheme at Ndibulegu Ominyi village funded by International Fund for Agricultural Development (IFAD).

“Public schools in the area are built with mud, while pupils and students sit on wood or bare floor to study,” he said.

A farmer and octogenarian, Nwaoga Omeru, said that the situation made it difficult for farmers to convey their produce to markets.

Omeru, an indigene of Ndiacha village lamented that roads linking the communities with other parts of the territory were in deplorable state too.

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“We are calling on the authorities to come to our aid with developmental projects to ease difficulties in the areas because we have been cut off from access to electricity for long.”

Another resident and a farmer in Ndiachi village, Theresa Nwiboko, said that residents of the communities depended on water from rain and pond for survival.

“We plead that the relevant authorities assist the communities with amenities and construct good roads to enable us access adequate health care and convey our produce to markets.

A community member, who spoke on the condition of anonymity, said that St. Paul Hospital which is the only private hospital in the area lacked adequate equipment and personnel.

“I call on stakeholders in these areas to show more commitment in the quest for the provision of amenities such as electricity because energy is critical for economic growth and sustainable development.

Lack of functional health facilities in the area has led to increasing infant and maternal mortality.”

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Monday 16 December 2019

BUSINESS DAY

insurance today

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E-mail: insurancetoday@businessdayonline.com

Investors’ appetite in insurance still high as Sovereign Trust records 72.5% success in Rights Issue Modestus Anaesoronye

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ar from some people’s expectation, investors are still willing and continually taking strong position in the nation’s insurance industry.

They are confident and putting down their monies, believing that the future of the financial services industry holds big in insurance sector, where penetration is still less than one percent despite the large population.

This can explain why Sovereign Trust Insurance Plc’s recent Rights Issue offer was 72.50 percent subscribed, which has been considered quite commendable by industry watchers considering the bearish nature of insurance stocks in the market in

L-R: Bankole Banjo, Brand, Media and Communications, manager; Akinwole Akinola, head, Human Capital Management; Funmi Omo, managing irector/CEO; Olabisi Adekola, executive director, Finance; Azuka Ochonogor, head, Group Life Business; Marcel Okorie, head, Individual Life, all of African Alliance Insurance at a recent press parley in Lagos

recent times.

The position will become firmly at the end of the indus-

try’s ongoing recapitalization with the level of flow of fund into the industry. The recapi-

talization is billed to end by June 30, 2020 expect the regulator says otherwise.

Following the successful completion of the Rights Issue Offer of Sovereign Trust Insurance Plc (Sovereign Trust or the Company), the Securities and Exchange Commission, (SEC) has given approval to the underwriting firm to make public to the company’s shareholders and other related parties the result of the offer which ended on August 21, 2019, after it was extended at the expiration of its initial closing date of July 31, 2019.

It will be recalled that a total of 4,170,411,648 ordinary shares of 50 kobo each at 50 kobo per share on the basis of (1) new ordinary share for every (2) ordinary shares of 50 kobo each held in the Company as at the close of register on January 15, 2019 was placed on offer to the Company’s shareholders.

Olaotan Soyinka, managing director of the underwrit-

ing firm has also reiterated the fact that the company has set a growth agenda which is aimed at positioning the insurance company as one of the top players in the industry, particularly, as the industry prepares for another round of recapitalization in the year 2020. He equally noted that the company is committed to creating exceptional value to all its Shareholders.

Segun Bankole, spokes person of the company stated that a total of 2,882,815,766 ordinary shares were fully renounced, while a total of 19,143,204 ordinary shares were partially renounced, bringing a total number of renounced ordinary shares to 2,901,958,970. Out of the 99 shareholders that accepted their rights in full, 57 shareholders applied for additional 1,755,190,040 ordinary shares and were allotted in full.

Allianz partners Cycology, donate materials, cash to Lagos Highway Cleaners Modestus Anaesoronye

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or the Highway Managers in Lagos, it was all smiles on the 26th of October as they received a friendly visit from members of Cycology Riding Club, sponsored by Allianz Nigeria Insurance plc.

“This group of people risk their lives on a daily basis to keep our roads clean, the least we can do is to support this kind of initiative that appreciates what they do” commented Bolade Odanye, sponsorship and events manager. He further disclosed that Allianz Nigeria intends to collaborate with other organizations inorder to create awareness on the need to ensure safe use of roads among all road users.

Close to 100 highway managers were recipients of this charitable exercise which included the donation of bags and cash gifts. “We feel honoured to be part of such a noble initiative that rewards our highway cleaners who work hard to keep our roads clean and safe for motorists and other road users” mentioned Walter Bossman, marketing director at Allianz Nigeria.

Still in an effort to promote a safer and more connected Lagos, he added that “Allianz just concluded a CARdiology initiative bearing the cost of free car check and service for motorists within Lagos’’.

“Allianz also recently emerged as the number 1 insurer in the world following the 2019 InterbrandBest Global Brands Ranking. This

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is a serious responsibility and we are determined to continue to optimize our service delivery to prove worthy of this enviable position”, con-

cluded Walter.

The Allianz Group is one of the world’s leading insurers and asset managers with more than 92 million retail

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and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property,

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life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 764 billion euros on behalf of its insurance customers. Furthermore, their asset managers PIMCO and Allianz Global Investors manage more than 1.6 trillion euros of third-party assets.

Thanks to our systematic integration of ecological and social criteria in their business processes and investment decisions, Allianz holds the leading position for insurers in the Dow Jones Sustainability Index. In 2018, over 142,000 employees in more than 80 countries achieved total revenues of 132 billion euros and an operating profit of 11.5 billion euros for the Group.

Monday 16 December 2019

BUSINESS DAY

insurance today

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Meristem Wealth highlights benefits of early retirement planning, Will, others Moderstus Anaesoronye

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L-R: Sulaiman Adedokun, managing director, Meristem Wealth Management Limited; Mercy Aminah, managing director, Meristem Trustees; Yomi Olugbenro, partner &West Africa Tax Leader Deloitte; Joseph Ariyo, founder, Telnet Group of Schools; Damilola Hassan, head, Meristem Wealth Management during a panel session on retirement, tax, wills and trust at the Meristem Private Breakfast Session held in Lagos.

Insurers recapitalisation bid strengthened as SEC offers to support long-term investments Modestus Anaesoronye

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nsurer’s effort to raise funds in the ongoing recapitalisation exercise initiated by the National Insurance Commission (NAICOM) has received the blessings of the Securities and Exchange Commission (SEC), who have promised to offer assistance to underwriters who will take advantage of long term investment in the capital market.

SEC has therefore advised them to take advantage of long term investment in the capital market.

These highlights enumerated at a meeting held in Lagos by members of the reconstituted Insurers’ Committee.

In a chat with journalists after the meeting, a member of the committee, Ebere Nwachukwu, revealed that not less than 10 companies had approached the capital market to seek assistance towards raising funds for the recapitalisation exercise.

She assured that the commission had equally promised to render the necessary assistance within its regulatory power to support the companies, stressing that insurers should take ad-

vantage of the capital market long term investment fund to boost their finances.

She said the recapitalisation exercise was intended to strengthen the financial position of the industry.

Nwachukwu also quoted the Acting Commissioner for Insurance, Sunday Thomas, as saying that the National Insurance Commission (NAICOM) had always partnered with SEC and other relevant agencies to seek palliative for the insurance industry.

Nwachukwu, who is also the Managing Director, NSIA Insurance, also revealed that the committee prepared the

minds of the operators toward the adoption of International Financial Reporting Standards 17 (IFRS 14), saying funds should be budgeted for training to make the adoption easier.

The committee also disclosed that the insurance industry rebranding had been put on hold due to poor financial response on the part of some members.

“The rebranding project has been stopped. We did because of issues regarding poor participation by operators. We have to come back to it. We are back on the drawing board,” the committee noted.

African Alliance sets new goal with investment in human capital Modestus Anaesoronye

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n line with her commitment to build a formidable workforce and grow the overall brand image, foremost life insurer, African Alliance, has made key appointments into its management cadre.

Speaking at a press familiarisation parley at the company’s headquarters recently, Funmi Omo, managing director/CEO, African Alliance, announced the appointments of Akinola Akinwole as Head, Human

Capital and Bankole Banjo as Brand, Media and Communications Manager. “Between Akinola and Bankole, we have two of the brightest minds in their fields. We all know a company is as good as the quality of its staff, we have brought in Akinola to help us reshape our workforce and put in place virile learning and development plans for the company.

Bankole, on the other hand, has been hired to help aggregate and drive our brand to greater heights following the recent rebranding. I am delighted to have them on board, they are confirmawww.businessday.ng

tions that we are doing many things right in African Alliance at this point,” she said.

Akinola Akinwole is an astute, resourceful human resources professional with demonstrated successes strategic HR management, organisational capability and change development, Talent Acquisition and Management amongst others. An alumnus of KPMG, Akinola joins African Alliance with 16-years’ cognate experience spanning HR consulting and financial services.

Bankole Banjo, on the other hand, is a transmedia

brand storyteller with a decade’s experience across advertising, content creation, brand and media management, corporate communications and storytelling. He has lent his creative expertise either as a copy manager, creative director or brand management executive to a myriad of brands across sectors including Toyota Nigeria, Star Lager beer, Samsung Electronics West Africa and FBNInsurance. Until recently, he was Communications Specialist at a coalition committed to changing the health narratives of Africa.

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e r i s t e m Wealth Management Limited emphasized the need for people to start early retirement planning as key to having a comfortable life at old age.

Issues around retirement, tax and wills were key planks of the discussion at the Company’s private breakfast session for clients at the Wheatbaker hotel Ikoyi Lagos.

The session themed: ‘Conversations you do not want to have,’ was aimed at discussing the important yet mostly averted issues around retirement planning, tax planning as well as wills & trust. The objective of the session sought to enlighten and help attendees make informeddecisions about the management of their wealth and its preservation over the long term.

Giving the opening remarks, Wole Abegunde, group managing director Meristem, emphasized the need for individuals to begin retirement planning at an early stage of one’s career. He stated that the key to a comfortable retirement lies in the time allotted to putting resources aside, so if you start early, retirement is a lot easier.

Taking the conversation further, apanel discussion featuring Sulaiman Adedokun, managing director Meristem Wealth Management Limited, Mercy Aminah, managing director, Meristem Trustees, Yomi Olugbenro, partner and West Africa Tax Leader Deloitte, Joseph Ariyo, founder Telnet Group of Schools ensued. The session which was moderated

by Damilola Hassan, head, Wealth Management Meristem, was designed to give the guests a platform to interact with members of the panel and get clarifications on retirement planning, tax planning, wills and trust.

Shedding light on retirement planning, Sulaiman Adedokun, Managing Director Meristem Wealth Management Limited highlighted that there are two @Businessdayng

phases of retirement “The active retirement which involves the desire to remain active and engaged - travel, take vacations,get involved in community and social causes.While thereisalso passive retirement which includes spending time with family, nursing health issues and generally winding down. These retirement phases are not inevitable and should be characterized by financial stability which must be accumulated early in one’s career”.He further explained that retirement planning should not be treated as an activity for the old or about to retire, but rather as a starter pack for a fulfilled career.

Also, speaking during the panel session, Partner and West Africa Tax Leader Deloitte, Yomi Olugbenro, addressed one of the pain points for attendees which bordered around understanding the tax regime in the country. He spokeon the benefit of the new finance bill for MSME’s and SMEs, he specified that “Prior to the amendment of the finance bill, all entities and companies in Nigeria have been mandated to pay company income tax on their income, but with the new amendment of the bill,micro and small enterprises are no longer automatically required to pay company income tax,where small businesses in this regard are classified as companies with an annual turnover of 25 million naira or less”.He further added that “while the VAT rate may have been increased, government is also encouraging MSMEs and SMEs to float their business through legal entities and in exchange their businesses can benefit from incentives.

The breakfast session was concluded with Mercy Aminah, Managing Director Meristem Trustees urging attendees to seek professional advice on the sensitive issues of Wills and Trusts while planning their Estate. Proper planning will ensure that the right tools are deployed, having considered unique individual and family circumstances.

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Monday 16 December 2019

BUSINESS DAY

Start-Up Digest

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4 businesses you can start with N50, 000 or less means you must have a lot of money. Not always so. Onyeka Goodness Ifendu, founder and CEO of Exclusive Courts, a real estate development company, started without money.

“I started with nothing.

I was just offering services to people. But today, we are building our own estate at Ikota Villa Estate Lagos,” he told Start-Up Digest.

ODINAKA ANUDU

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ith high unemployment rate estimated at 23.1 percent, a large number of Nigerians are seeking what to do with the little they have saved. Start-Up Digest has listed some of the businesses that can be started with just N50,000.

Fashion and Design What is basically needed before starting this business is training. You need at least 12 months’ training before delving into this business. If you wish to attract top clients, you may even extend the training to two years. Key to success in this business is to constantly look out for new designs on the Internet. You can start this business at home. All you need is a sewing machine, which costs less than N50, 000. It is, however, important to note that you can start this business with less than N50,000, but someone with deep-pocket can also start it with N5 or N10 million. It all depends on how much you have. Yejide Elugbaju, founder and CEO of Rivah Beauty Limited, told Start-Up Digest that she started her outfit in January of 2016 with N50,000.

Chidiebere Akpojotor, CEO of Chiky Fashions, said the industry is still small and there is a lot of gaps to be filled.

Online Business Here, we are looking at various ways you can make money from the Internet legitimately.

You can specialise in online marketing by growing your

blog and social media pages.

A majority of young people are on Twitter, Facebook and Instagram, and those who sell their products or market for others through these platforms make money. You may get a Google AdSense code on your blog (if you have one) so that you make money any time someone clicks on any

How the 2019 finance bill favours SMEs Gbemi Faminu

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resident Muhammad Buhari on the 14th of October submitted the Finance Bill to accompany the 2020 executive budget proposals and appropriation bill.

It proposes to introduce tax reforms that will help the government achieve its revenue projections for the 2020 budget worth N8.15 trillion.

The bill, which has been passed by the Senate, aims to achieve five major objectives which cut across supporting micro, small & mediumsized businesses (MSMEs) in line with the ease of doing business reforms; reforming domestic tax laws to align with global best practices; introducing tax incentives for investments in infrastructure and capital markets; promoting fiscal equity by mitigating instances of regressive taxation, and raising revenues for government to fund the 2020 budget.

Over the years, business owners, especially under the SME category, have had challenges bordering on multiplicity of taxes. However, the new finance bill has amendments that are expected to

correct the anomalies.

The 2019 Finance Bill makes provision for a VAT registration threshold for MSMEs with a turnover of less than N25 million per annum, as well as an incentive of two percent bonus for early tax payment made by mediumsized companies.

Furthermore, the bill allows for the reduction of the corporate tax rate from 30 percent to 20 percent for the MSMEs, especially for companies with a turnover between N25 million to N100 million per annum, while exempting firms with a turnover of less than N25 million annually.

Zainab Ahmed, minister of finance, budget, and national planning, said at a tax strategy forum that the finance bill proposes essential palliatives to support MSMEs and mitigate the impact of the VAT rate increase on the most vulnerable business communities and citizens in the economy.

Yomi Olugbenro, partner and West Africa tax leader, Deloitte, explained at a breakfast meeting that, “Before the revision of the Finance Bill, Nigerian firms were required to pay company income tax www.businessday.ng

on their income. Now, micro and small enterprises are no longer automatically required to pay company income tax, especially small businesses with an annual turnover of N25 million or less.”

An article compiled by Deloitte on Nigeria’s Finance Bill 2019, highlighting the Key changes and implications says, “The proposed Bill is a welcome development in the tax landscape of Nigeria.

It proposes provisions that have the capacity to boost the economy by stimulating the growth of small and medium scale enterprises and enticing foreign direct investment into Nigeria.”

Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), in a statement, said that the MSMEs, which constitute a greater part of the business environment, suffers from high tax rates and tax multiplicity which are partly hurting the capacity of these businesses to survive and to achieve their aims and objectives. He urged tax regulators aid MSMEs using concessionary tax rates, tax holidays and other favourable policies that will support their sustainability.

ad on your blog.

Bamidele Onibalusi is the founder of Deloni Enterprise, an online business. Onibalusi started the business with N15, 000, which he used to register his website and purchase hosting. Hear his testimony to Start-Up Digest: “I mainly deal with clients and customers in Europe,

America and other parts of the world. I also earn my income in dollars and convert at the current exchange rate.

This ensures that the recession in Nigeria has little or no impact on me.

Real Estate A lot of people believe that being in real estate business

Laundry You can start by servicing the needs of family and friends.

Here is a testimony of the Kwara State-born Abubakar Sodeek Arekemashe, a 28year- old student, who is now the chief executive officer of a laundry outfit called Sky Limit.

“When the idea came to my mind, I discussed it with my friends. I told them I wanted to start a laundry business. They called it an inferior business. But I let them realise that it was nothing to me and I started it on 24th February, 2017. It was easy for me because I had iron, laundry basket, regular water supply and electricity. Out of the money, I bought soap and starch, then started with three clothes. Today, I am getting a number of people who patronise me,” Arekemashe told Start-Up Digest.

Sandbox set to lower barriers for start-ups looking to invest in fintech Ifeoma Okeke

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andbox, a new industry innovation that will connect start-up innovators to regulators in order to responsibly bring new financial services solutions to the market, has been launched in Nigeria.

The Financial Services Innovators (FSI), a community of fintech enthusiasts passionate about driving innovation in the financial services industry, last week announced the launch of Sandbox, at the sidelines of EFInA’s Financial Inclusion Conference in Lagos.

The effort, which is supported by over N250 million in multi-year grants from Flourish and EFInA, is intended to lower the barriers to innovation within the financial services ecosystem.

“The time to change the narrative of the financial services landscape in Nigeria is here and I am excited to lead this charge at FSI, where we aim to build an inclusive ecosystem of fintech innovators”, Aituazobe Omoareloje Kola-Oladejo, former head of research and development at the Nigeria Inter-Bank Settlement System (NIBSS), who

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was appointed as the first FSI executive director, said.

Ade Shonubi, deputy governor of the Central Bank of Nigeria (CBN) said, “I am especially excited for the fintech Industry Innovation Sandbox, which will lower the barriers for early-stage innovators building and scaling global fintech innovation from Nigeria.”

“Like people, countries must evolve. We must create an environment which enables our people, young and old, as well as the country take control of our tech future,” he said.

To participate in the industry innovation sandbox, innovators need to register as members of the Financial Services Innovators and access a sandbox environment where they can build and test fintech products on technical infrastructure from the NIBSS. Before FSI, innovators who needed to access the right technical infrastructure to test the viability of their products were typically required to get a CBN license and spend months in meetings with banks, fintech players, and NIBSS to get pilots off the ground.

With the new industry innovation sandbox, regis@Businessdayng

tered members of the FSI can leverage the APIs to build a solution within the sandbox environment before seeking regulatory approval from the CBN or partnering with an existing financial services provider licensed by the CBN to take their product to launch.

“When regulators and start-ups engage in meaningful dialogue and mutual support, it is possible to balance innovation with stability and consumer protection,” Ameya Upadhyay, principal at Flourish, a venture of the Omidyar Group, said.

“Through initiatives such as the industry sandbox, FSI will help accelerate the growth of Nigeria’s fintech ecosystem and bring about innovative services that will help improve Nigerians financial health,” Upadhyay said.

FSI was ideated during an innovators breakfast organised by the NIBSS and CBN in 2017 convening representatives from Nigerian fintechs and local tech hubs.

The organization is set up as a non-profit and governed by a board of trustees comprised of representatives from the CBN, the NIBSS, and chaired by an elected member representing the country’s fintech community.

Monday 16 December 2019

BUSINESS DAY

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real sector watch

BUA eyes 100,000 tons of sugar after December 2020 … as FG pledges to assist indigenous manufacturers SIKIRAT SHEHU, Ilorin

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UA G ro u p i s planning to produce 100,000 tons of sugar after the sugar refinery is completed in December 2020. The conglomerate is also expecting to feed the coming refinery from its sugarcane plantations in Kwara.

“What we are trying to do is to produce not only plantation of raw sugar but also refined sugar,” Abdulsamad Rabiu, chairman of BUA Group, said last Thursday at a tour of his sugar plantations by critical stakeholders.

“So, as you saw when we went round the factory, you will see that we have all the equipment for us to be able to complete this project by December next year, God willing. We have the equip-

ment to be able to produce 10,000 tons per day,” he further said.

The tour of the Lafiagi

factory/ plantation was embarked upon by Adeniyi Adebayo, minister of Industry, Trade and Investment;

Abdulrahman Abdulrazaq, Kwara State governor; Aliko Dangote, Africa’s richest man, and other top players

L-R: Ololade Ayoola, SON state coordinator, Rivers/Bayelsa states; Chibuzor Raphael Eze, executive secretary, MAN, Port Harcourt zone, and Pawan Takchandani, managing director, Cobef International Limited at the SON MANCAN award ceremony held recently in Port Harcourt

in the corporate business community in Nigeria.

Rabiu hailed Abdulrazaq for his ‘maximum support’ for the conglomerate and his drive to attract investments to Kwara State.

On his part, Adebayo expressed federal government’s readiness to assist manufacturers in Nigeria.

Adebayo, who observed that the factory aptly keys into the Muhammadu Buhari administration’s campaign for local content, food security and less reliance on importation of goods, commended BUA Group for the huge investment which would employ thousands of Nigerians when completed. “ The whole basis of this visit is for me to have first-hand knowledge of what is going on here.

This will enable me to sit

down (with my team) and see what we can do to assist you to fast track things, especially as regards what we are trying to achieve in the local sugar production,” Adebayo said.

In a statement by Rafiu Ajakaye, the governor’s spokesperson, said Abdulrazaq gave assurance that the state was open to business.

“I welcome you all to Kwara. We are open to business. Ours is to assist you and ease the business environment for you so that you can invest more in Kwara.

Our doors are open. We will make sure to keep you in Kwara,” the statement quoted the governor as saying.

The tour came a day after the governor had said the state would scale up its security arrangements as part of its overall strategy to attract more investments.

USAID to launch trade hub in Nigeria

12 companies receive MANCAP certification from SON

…As NACC celebrates 60th anniversary

ODINAKA ANUDU

Gbemi Faminu

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he United States Agency for International Development (USAID) is set to launch a West Africafocused trade and investment hub in Nigeria in order to spur trade and economic growth in the region.

This was disclosed by Claire Pierangelo, consul general of the US consulate, at the Nigerian-American Chamber of Commerce (NACC) annual dinner dance held recently in Lagos.

Speaking on the objective of the hub, she said the move was to further improve trade activities in Nigeria and grow investment into the African economy.

“USAID Trade Hubs work on the ground to reduce the cost and risk of doing business in Africa, levelling the playing field and cutting through red tape to make investment and trade freer and fairer for everyone,” Pierangelo said.

She further said that the USAID was engaging with partners across sub-Saharan

Africa to deepen regional economic integration and attract investment that drives commercial expansion within the region and to global markets.

She stressed that the hub would be located in Abuja, Nigeria and will begin operations in the coming year.

Commending the NACC, she said the chamber had played key roles in fostering and maintaining trade relationships between the United States and Nigeria, and this has further strengthened the bilateral relationship between the two countries.

In his address of welcome, Oluwatoyin Akomolafe, national president, NACC, said the chamber had been deliberately consistent in improving economic and trade activities in both countries in order to foster prosperity and spur growth.

On the activities of the chamber, he said, “Here at the Nigerian-American Chamber of Commerce, we have challenged ourselves to improve trade relations between Nigeria and the USA. As promised, we have conwww.businessday.ng

sistently mobilised to push the governments of both nations to create better trade deals and enabling environments in order to reduce our dependency on oil as well as our increasing engagements across other trade and investments,” Akomolafe said.

He further stated that NACC would consistently make moves to become a key institution for trade and investment partnering with leaders and leading institutions that would guarantee a more economical and developed future for the country.

He said in 2020, the chamber would mark its 60th anniversary in existence.

In his remarks, chairman of the occasion, Abdulsamad Rabiu, executive chairman of BUA Group, commended the chamber for its activities during the year, urging the leadership to intensify efforts in contributing to economic growth.

The chamber, at its dinner, inducted 24 new members comprising companies across different sectors, including construction, consulting, technology, agriculture, stock broking and law.

T

he Standards Organisation of Nig er ia (S ON ), Rivers/Bayelsa State office, Port Harcourt, has awarded 12 companies with the Mandatory Conformity Assessment Programme (MANCAP) Certification. While 10 of these firms are in Rivers State, two are in Bayelsa.

Osita Aboloma, director general/chief executive, SON, commended the companies for their quality consciousness and efforts in complying with the requirements of relevant Nigerian Industrial Standards.

Aboloma encouraged manufacturers to embrace the product certification schemes SON offered as this would strategically position Nigerian products for export and the African Continental Free Trade Area (AfCTA).

He said MANCAP was a mandatory product certification scheme put in place to ensure all locally manufactured products conform to the requirements of the

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relevant Nigerian Industrial Standard (NIS) before sale for sale or export.

The DG, who was represented by Ololade Ayoola, state coordinator, Rivers/ Bayelsa, stated that the programme started in 2006 with the aim of ensuring compliance of madein Nigeria products with minimum requirements of Nigerian Industrial Standards, thereby promoting fair competition at both domestic and international markets as well as safeguarding the lives of consumers. He said the ultimate result of that was economic and industrial development of Nigeria.

He noted that a number of studies carried out in developed countries such as Denmark, Germany, UK, France and Canada had investigated the connection between standards and economic growth and found that standards accounted for 1 to 4 percent of the growth of the Gross Domestic Product (GDP).

He said research revealed that a majority of organisations would primarily use standards because they were required to do so @Businessdayng

either by the government, market or their customers or by legislation. He said the same group of organisations responded that the use of standards offered a number of advantages such as acquiring knowledge and best practices, easier communication with customers as well as suppliers, higher quality and increased efficiency, Ofon Udofia, executive secretary/CEO of the Institute of Export Operations & Management ( IEOM), said the SON’s MANCAP scheme for locally manufactured products and the Standards Organization of Nigeria Conformity Assessment Programme (SONCAP ) scheme for imported goods should be seen and used as tools for industrial development and trade facilitation.

“It reduces technical barriers to trade and opens markets by making it easier to export and import products,” he stated.

The awardee companies appreciated the efforts of the SON in developing and improving the quality products manufactured locally.

36

Monday 16 December 2019

BUSINESS DAY

real sector watch

Shadows of the past Nigerian industrial clusters are in poor state, and something urgently needs to be done to rehabilitate them, writes ODINAKA ANUDU

T

he 2019 rainy season was bad news for manufacturing companies based in Agbara, Ogun State. A once bustling industrial cluster, it became a shadow of its former self, with potholes and gullies saluting visitors on entrance. Every day, trucks ferrying raw materials and finished products to and from factories got stuck in broken and muddy roads.

The big companies in the cluster all had their fair shares during this period.

Flour Mills of Nigeria, Nestlé Nigeria, Beloxxi, PharmaD e k o, a n d G re e n Te c h, among others, all suffered that fate. Logistics costs piled up. Cost of maintenance skyrocketed.

There was no solution in sight. Ibikunle Amosun, former governor of the state, proposed that manufacturers contribute 40 percent of the total cost of the road reconstruction, with the state bearing the rest of the cost.

It looked more like state abdication of responsibility, but many manufacturers were willing to key into the plan.

Levies and taxes were coming to the cluster in torrents, but the government of Ogun State was reluctant to do the least of its responsibilities—road rehabilitation.

“Whereas we are willing to collaborate with the government on this project, it is important that the government takes the lead in ensuring a proper and timely completion of this project,” Paul Gbededo, chief executive of Flour Mills of Nigeria, one of the companies in the cluster, said while addressing Dapo Abiodun, the then governor-elect of Ogun in April, 2019.

As I moved across the cluster in April, I appreciated why many Nigerians felt governments at all levels had failed them.

“We are job creators; we are foreign exchange earners; we are the growers of the economy, yet government is always unwilling to support,” a chief executive of one of the manufacturing companies in the cluster told me in anonymity.

various parts of Nigeria and West Africa, but a string of poor import policies has hurt this cluster, pushing it into non-existence. One of the features of early industrial clusters, including textile and leather clusters in Kano and Kaduna, was capacity to share resources and cut production costs.

Apapa cluster clogged by trucks

I came into the cluster in a commercial mud-spattered motorcycle. The rider and I found ourselves twice in muddy water. Ladies, gentlemen, villagers, and

Aba-Ikot Ekpene hit by bad road

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visitors had all suffered that fate many times. They also had to alight from motorcycles twice or three times to get to their destinations.

Today, all that is chang-

ing as work is ongoing on these roads. But the roads have done a lot of damage already, having been in a poor state for over two years.

Industry cluster defined The United Nations Industrial Development Organisation (UNIDO) defines a cluster as an agglomeration of interconnected companies and associated institutions. UNIDO said in a report that firms in a cluster produce similar or related goods or services and are supported by a range of dedicated institutions located in spatial proximity, such as business associations or training and technical assistance providers. In simple terms, industrial clusters involve manufacturing or industry-based companies situating in the same location. In a working paper, the Bank of Industry (BOI) said industrial clusters provide a platform for enterprises to share infrastructure, equipment and knowledge, and have led to the economic transformation of many Asian economies, including China, South Korea and Singapore.

Nigeria has over 30 industrial clusters which in-

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clude Aba Leather Cluster (Abia State) , Amuwo Odofin Cluster (Lagos), Apapa Cluster (Lagos), Ikeja Cluster (Lagos), and Sharada Cluster (Kano), Otigba Cluster (Lagos), Leather Cluster (Kano), and Spare Par ts C luster (Nnew i), among many others. Some free trade zones are also referred to as industrial clusters.

Clusters before Experts say Nigeria used to have a huge number of industrial clusters in 1960s. Then, the country had palm oil milling clusters at Umuagwo in Imo State, Ihiala in Anambra State and several others across the country. Nigerian controlled 45 percent of the global palm oil market, according to a 2016 research

by BudgIT, which aggregated data from Indexmundi, the United States Department of Agriculture (USDA) and Vetiva Research. But it only scratches 900,000 metric tonnes of palm oil per annum today, which represents just 1.52 per cent of global production.

Economists say Umuahia, the capital of Abia State, was once a garment cluster.

It supplied garments to @Businessdayng

Today’s clusters Industrial clusters in Nigeria today have more challenges than bright spots.

Apapa Cluster in Lagos hosts some of the biggest manufacturers such as Dangote Sugar, Flour Mills of Nigeria, Honeywell, and Kneipe, among many others. But it has been taken over by trucks hurrying to ferry fuel and imported products from Apapa and Tin Can ports.

Trucks stay on Apapa bridges for weeks, and manufacturers in the cluster struggle to move their goods to the market.

According to the Lagos Chamber of Commerce and Industry (LCCI), about 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day. The LCCI report said the ports were originally meant to accommodate only 1,500 trucks, but they now have over 5,000 each day.

“Government is trying to ensure it decongests the ports, but it is just the sheer volume that is the problem,” Paul Gbededo, CEO of Flour Mills of Nigeria, told BusinessDay recently.

“If we constr uct the roads, it makes orderly arrangements for trucks to enter, but it is still beyond the capacity. Technology needs to be employed and other infrastructures need to be deployed,” he suggested.

Manufacturers in the cluster source their water and energy individually.

The state of the cluster is already hurting other businesses.

An exporter shipping out 1,700 tons of commodities per day under normal circumstances when Apapa road was in good before 2015 struggled to ship beContinues on page 38

Monday 16 December 2019

BUSINESS DAY

37

Access Bank Rateswatch Market Analysis and Outlook: December 13 – December 20, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

35.26

Increased by 0.66% in Oct’ 2019 from N35.03 trillion in Sept’ 2019

Credit to Private Sector (N’ trillion)

25.80

Increased by 1.30% in Oct’ 2019 from N25.47 trillion in Sept’ 2019

Currency in Circulation (N’ trillion) Inflation rate (%) (y-o-y)

2.06 11.61

Increased by 2.51% in Oct’ 2019 from N2.01 trillion in Sept’ 2019 Increased to 11.61% in October 2019 from 11.24% in September 2019 Adjusted to 13.5% in March 2019 from 14%

Monetary Policy Rate (%)

13.5

Interest Rate (Asymmetrical Corridor)

13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

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

39.62 65.61 1.80

December 12, 2019 figure — a decrease of 0.96% from December start December 12, 2019 figure— an increase of 1.14% from the previous wk November 2019, figure — a decrease of 0.33% from October 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

NSE ASI Market Cap(N’tr)

Friday

Change(%)

13/12/19

6/12/19

26,536.21 12.81

26,855.52 12.96

Volume (bn)

0.16

0.20

Value (N’bn)

1.43

3.53

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

(%)

(%)

13/12/19

Indicators

13/12/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (21.16) Agriculture Cocoa ($/MT) (59.46) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Change Gold ($/t oz.)

Silver ($/t oz.)

(Basis Point) Copper ($/lb.)

(1.19) (1.19)

1-week Change

YTD Change

(%)

(%)

65.61 2.27

1.14 (6.20)

1.78 (25.72)

2539.00 139.40 67.58 13.61 532.75

(3.39) 10.77 3.60 3.34 1.48

31.15 7.07 (12.80) (11.22) 22.90

1472.74 16.98 281.20

(0.24) 0.12 5.28

11.78 (1.22) (14.22)

6/12/19

2.21

2.43

(22)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

2.79 2.85 12.73

3.07 2.85 11.07

(28) 0 165

Tenor

90 Days

13.66

11.01

265

1 Mnth 3 Mnths

10.57 10.21

11.11 9.84

(55) 38

6 Mnths 9 Mnths 12 Mnths

9.21 12.67 13.25

9.55 11.58 12.50

(34) 108 75

OBB

FOREIGN EXCHANGE MARKET Market

Friday

Friday

1 Month

(N/$)

(N/$)

Rate (N/$)

13/12/19

6/12/19

306.90 363.12

306.95 362.74

306.90 362.52

BDC (N) Parallel (N)

0.00 363.00

360.00 360.00

0.00 360.00

Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

0.00 9.79 11.11 11.02 11.52 12.44

(Basis Point)

6/12/19

ACCESS BANK NIGERIAN GOV’T BOND INDEX

AVERAGE YIELDS

13/12/19

Change

(%)

13/12/19

BOND MARKET

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

Friday

(%)

13/11/19

Official (N) Inter-Bank (N)

Tenor

Friday

6/12/19 0.00 10.78 11.24 11.69 12.34 13.09

0 (99) (13) (66) (82) (65)

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

Friday

Friday

Change

(%)

(%)

(Basis Point)

13/12/19

6/12/19

Index Mkt Cap Gross (N'tr)

3,369.73 10.53

3287.10 10.27

2.51 2.51

Mkt Cap Net (N'tr) YTD return (%)

7.03 37.18

6.79 33.82

3.49 3.36

YTD return (%)(US $)

-18.61

-22.00

3.39

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

91 Day

20,372.79

6.495

27-Nov-2019

182 Day

19,157.66

7.23

27-Nov-2019

364 Day

111,071.72

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

8.37

Date

27-Nov-2019

Global Economy In Europe, the European Central Bank (ECB) left its key interest rates and stimulus package unrevised during Christine Lagarde's first policy meeting in charge on December 12th, with the main refinancing rate remaining at 0% and the deposit rate at -0.5%. Policymakers said they expect interest rates to remain at their present or lower levels until the inflation outlook converges to their aim. The bank also cut its growth forecast for 2020, due to weak trade growth, while inflation is seen below the 2% target through at least 2022.

Elsewhere in Brazil, Central Bank of Brazil voted in one accord to trim its key interest rate by 50 bps to 4.50% during its December meeting. It was the fourth consecutive rate cut bringing borrowing costs to its lowest on record, amid the global economic slowdown and a recovery in the domestic economy. Policymakers said that the current stage of the business cycle needs caution in the conduct of monetary policy and added that next decisions will be data dependent. In a separate development, China's witnessed smallest trade surplus since August, as exports unexpectedly declined, while imports surprised forecasts by rising for the first time in seven months. Trade surplus contracted to $38.73 billion in November 2019 from $41.86 billion in November 2018.

Exports dropped by 1.1% year-on-year to $221.74 billion in November, following a 0.8% drop in the preceding month. This was the fourth straight month of yearly decline in overseas sales, amid weakening global demand and ongoing trade tensions with the US. On the other hand, imports shockingly rose 0.3% to $183.01 billion, compared to a 6.2% decline in October. This marked the first year-on-year import growth since April, as unwrought copper purchases were the highest since September 2018 Domestic Economy The Nigeria's total trade value stood at N9.19 trillion in Q3 2019 representing 6.77% increase over the value recorded in Q2 2019 and 1.33% increase relative to Q3 2018. The value of the export component (N5.29 trillion) increased by 15.02% against Q2 2019 and 8.97% when compared with the corresponding quarter in 2018.

On the other hand, the import component (valued at N3.90 trillion) decreased by 2.70% in Q3 against Q2 2019 and 7.47% against Q3 2018. The increase in exports coupled with the decrease in imports led to a positive trade balance of N1.39 trillion during the period under review. In Q3 2019, crude oil remained the dominant export, accounting for 70.87% (N3.74 trillion) of the value of total export, while non-crude oil exports amounted to 29.13% (N1.54 trillion). However, in Q3 2019, the value of crude oil exports was 4.7% lower than in Q2 2019 and 9.6% lower than the corresponding quarter of 2018. Major export partners are Ghana (17.18%), India (14.67%), Netherlands (9.82%), Spain (8.60%), and U.S.A (6.28%). Major import partners are China (31.34%), U.S.A. (11.35%), India (7.49%), Netherlands (6.8%) and Belgium (3.98%). In a separate development, the Federal Government has opened subscription offer for its December bond by reopening the APR-2023, APR-2029 and APR-2049 bonds, offering investors N50bn each across each tenor. The Debt Management Office (DMO) said in a notice last week that it was authorized to receive applications for subscription on behalf of the Federal Government. It said the N150bn bonds consisted of a re-opening of N50bn five-year bond at a rate of 12.75%, N50bn 10-year bond at the rate of 14.55% and N50bn 30-year bond at the rate of 14.80%. For re-opening of previously issued bonds (where the coupon is already set), successful bidders usually pay a price corresponding to the yield-to-maturity bid that clears the volume being auctioned, plus any accrued interest on the instrument. The circular said the bonds would be auctioned on December 18, 2019 and would be settled on December 20, 2019.

Stock Market The Nigeria Stock Exchange extended its losing streak last week pulling the NSE's benchmark AllShare index further southward. Market participants are reluctant to invest following recent downgrade of some Nigerian banks and Dangote Cement by Moody's; despite maintaining its rating at B2 for the country, there was a change in outlook from stable to negative. Consequently, the All Share Index (ASI) dipped 1.19% to end at

26,536.21 points from 26,855.52 points the preceding week. Similarly, market capitalization fell by 1.19% to N12.81 trillion from N12.96 trillion the prior week. We expect that investors to take advantage of the correctional profit-taking and low supply to position ahead of the year-end rally as capital flow and repositioning in value stocks continue.

Money Market Borrowing cost recorded mixed movements in the week ended December 13, 2019 even though the system was awash with liquidity from Open Market Operation (OMO) maturity of N650 billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 2.21% and 2.79 % from 2.43% and 3.07% respectively the previous week. The longer dated instruments such as the 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) settled at 12.73% and 13.66% from 11.07% and 11.01% the prior week. This week, short tenored rates are expected to hover around current levels due to OMO maturity of N506 billion.

Foreign Exchange Market The Naira went in differing directions last week as it appreciated at the official window and depreciated at both the Nigerian Autonomous Foreign Exchange (NAFEX) segment and parallel market.

The official market closed at N306.90/US$ from N306.95/US$ the prior week, while at the NAFEX segment the local currency depreciated by 38kobo to close at N363.12/US$ from N362.74//US$ the previous week. The parallel market closed higher at N363/US$ compared to N360/US$ the preceding week. This week, we expect the naira to hover around prevailing levels at the various windows, boosted by the Central Bank's sustained supply of liquidity to the market.

Bond Market The bullish sentiment at the bond market persisted attributable to the OMO maturity that came in last week. Consequently, market recorded demand for most maturities across the curve. Yields on the five-, seven-, ten- twentyand thirty-year debt papers finished at 9.79%, 11.11%, 11.02%, 11.52% and 12.44% from 10.78%, 11.24%, 11.69%, 12.34% and 13.09% respectively, the previous week. The Access Bank Bond index rose significantly by 82.62 points or 2.51% to close at 3,369.73 points from 3,287.10 points the prior week. We expect the coming week to resume with improved activity as market participants prepare for the last bond auction for the year.

Commodities The price of oil maintained their bullish run as U.S. President said that the United States was very close to some sort of a deal with China and as the U.S. has reportedly offered China to roll back some existing tariffs and cancel a new round of tariffs set to take effect on December 15. Bonny light, Nigeria's benchmark crude added 1.14% or 74 cents to close the week at $65.61 per barrel.

Precious metals prices went in varying directions last week. Gold prices waned as market sentiments improved with easing global tension – US agreement “in-principle” deal with China while Conservatives landslide victory in the UK polls. Consequently, gold lost 0.24% to $1,472.74 per ounce and silver rose by 0.12% to $16.98 per ounce due to increased demand. This week, oil prices will be determined by the USChina impending trade deal as the US waits on China to agree to its terms and condition such as buying big volumes of U.S. agricultural products.

The fate of precious metals also hinges on the outcome of the trade deal as a positive deal will send prices

MONTHLY MACRO ECONOMIC FORECASTS Variables

Dec’19

Jan’20

Exchange Rate (NAFEX) (N/$)

363

362

Inflation Rate (%)

11.80

11.90

Crude Oil Price (US$/Barrel)

65

66

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

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@Businessdayng

Feb’20 363 11.95 67

38

Monday 16 December 2019

BUSINESS DAY

real sector watch Shadows of the past Continued from page 36

tween 100 and 250 tons in 2017, Tola Faseru, president of the National Cashew Association of Nigeria, told BusinessDay in 2017.

Apapa is not the only cluster in chains. AmuwoOdofin, which hosts big manufacturing, companies such Nosak Distillery, Hongxing Steel Company, and Agary, among others, is also hard hit by truck drivers.

“Overall, it is estimated that over N20 billion is lost annually by manufacturers within the Amuwo Odofin and Kirikiri industrial zones as a result of dilapidated infrastructure, and this is not good for a nation that wants to open up its economy to trade with others in the continent,” Frank Onyebu, chairman, MAN, Apapa branch, said.

Osaro Omogiade, managing director of Nosak Distilleries, said the whole of Amuwo-Odofin has been taken over by trucks.

“They line up along the road and block everywhere.

To access our factory is a very big challenge,” he said.

“It is not just us, but all companies in Amuwo-Odofin. At times, you park your vehicles somewhere and walk down to the factory.

It is a huge challenge. The pains are enormous; the various players in AmuwoOdofin know what they are going through,” he further said.

In Agbara Cluster, there is common access to energy, but the challenge with the cluster is imposition of multiple taxes and levies.

According to the Manufacturers CEOs Confidence Index (MCCI) for the third quarter of 2019 compiled by the Manufacturers Association of Nigeria (MAN), 89 percent of CEOs of manufacturing companies identified multiple taxes and levies as a big snag to the growth of the manufacturing sector.

Apart from clusters in Lagos, others across the country are not better.

Aba L eather C luster hosts 80,000 leather makers who produce one million pairs of shoes each week.

It has a lot of potential, with traders from West African neighbours storming it every week to buy different products and designs.

dead. The Borno, Yola and Adamawa clusters are in comatose as Boko Haram insurgents continue to hit them hard. John Coumantaros, Flour Mills chairman, said in 2016 that his company had stopped operations in the war-torn Borno.

In 2012 to 2016 , the insurgents attacked Ashaka Cement and several companies in the clusters in the north.

Kano and Kaduna hosted over 50 textile makers in the 1970s and 1980s, but the number is now fewer than five owing to a string of poor policies.

“The hitherto manufacturing hubs in Kano, Kaduna and Lagos are now solitary camps with most of their factory sheds now used as event centres and warehouses to store smuggled textile materials,” the Manufacturers Association of Nigeria (MAN), which is an association of over 2,500 manufacturers in Nigeria, said in its review of 2018 performance of the sector.

Success Ebere J. Hebert working with a crude machine in Aba Leather Cluster

“We are already struggling to meet demands,” said Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016.

However, the cluster is operating in chaos, with poor road infrastructure, inadequate funding and lack of organisation hurting key players.

Small businesses in the cluster are poorly structured, with many not registered at the Corporate Affairs Commission. Exports are made informally, making tracking and planning difficult.

Their machines are crude and much of their work is still done by human labour.

“This is where the problem lies. We in Aba have no good machines,” Anyanwu of ALAIN said. www.businessday.ng

“The Bank of Industry has done its best by giving some of us N300,000 each, but it takes $250,000 to N750,000 to set up a standard shoe factory. So, what can N300, 000 do when the industry is capital intensive?” he asked.

Many roads, federal and state, in Aba are bad.

The Aba-Ikot Ekpene road which, links Abia to Akwa Ibom, two states in the oil-rich South-East and South-South regions of Nigeria, is in a bad state. In the 1990s, Aba shoe and textile makers ferried their products to Akwa Ibom through the road, but the road now looks as forlorn as its passers-by. The Aba section is overrun by dirty water. The middle of the section bordering Umuokpo and Onicha Ngwa communities in Obingwa Local Government Area is covered

by comfortably-sat green grass.

“They have abandoned us to our fate,” Nonso Obima, a shoemaker at Ariaria, who lives in Ogbor Hill area of the road, said.

“They have cut off the section through which we supply our shoes and textiles to neighbouring states and Cameroon,” he cried.

Also, clusters in Nnewi, Onitsha and Imo are hard hit by poor roads.

A 2019 survey by the Chartered Institute of Project Management of Nigeria says that there are 15,000 abandoned projects in the South-East; 11,000 in the South-South; 10,000 in the South-West ; 6,000 in the North-West ; 7,000 in the North-Central; 5,000 in North-East, and 2000 in Abuja.

Many industrial clusters in northern Nigeria are

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Cluster and the economy Since the crude oil boom of 1970s, the industrial sector has been on the decline, with the country suffering from what economists call ‘Dutch Disease’, which an expert describes as revenue from natural resources hurting traditional manufacturing or leading to its neglect.

Government policies were tailored towards promoting imports than exports. Policy mismatch became the order of the day, leading to factory closures.

At the 37th annual general meeting of MAN held in Lagos in 2009, Bashir Borodo, then president of MAN, disclosed that 820 manufacturing companies shut down or temporarily suspended production between 2000 and 2008.

A recent report by the World Bank Enterprise Survey said harsh business environment in Nigeria forced 322 firms to go under between 2009 and 2014, .

Bringing back the clusters Nigeria’s federal government says it is working to rehabilitate industrial clusters. Okechukwu Enalamah, former minister of Industry, Trade and Investment, said in 2017 that the Small and Medium Enterprises Development Agency @Businessdayng

of Nigeria (SMEDAN) was in the process of resuscitating 23 industrial clusters in the country. The minister is no longer in power and this promised has not been fulfilled.

But solutions are not farfetched. Mansur Ahmed, president of MAN, said the government needs to provide surviving industrial clusters with utilities that will enable them to cut costs.

“Areas like Kano have Sharada, which is an industrial cluster, but everybody provides energy, water, warehousing and other things themselves. So, you can’t call that a cluster,” he said.

“Government can partner with the private sector to provide power, water and other utilities in the clusters.

If you go to Ethiopia, you will see the way clusters are developed. Government does it alone or partners with the private sector. If you set up a common power facility, you can save half of the energy cost,” he further said.

“You can set up a water facility so that people can use it in common, rather than allow them to sink boreholes individually or provide water themselves.

This is what makes industrial clusters efficient. If these things are not available, the clusters will not be efficient, and you can’t call them industrial clusters,” he said.

Nigeria ranks 131 in 2020 World Bank Doing Business Index—a 15 step improvement from the 2019 position. But manufacturers believe nothing has changed as they still provide alternative energy to power their factories owing to the failure of the public energy system, and face crippling infrastructure crisis.

Ike Ibeabuchi, managing director of MD Services Limited, a manufacturing and services outfit, proposed industrial incentives and deliberate policies to improve industries.

“Cut the number of taxes manufacturers pay,” he recommended.

“Provide single-digit funds for manufacturers to pursue backward integration initiatives. Patronise locally-produced goods. If you do that, investors will know you are serious,” he said.

Monday 16 December 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

39

• Utilities • Managing your Tax

Money moves to make before 2020 monthly expenses saved in short-term money market securities. If you have no emergency savings at all, and you suddenly become unemployed, or need to pay important bills, you could be very vulnerable and this is an area you should pay attention to.

How much do you owe?

Are you in debt? Do you have a bank loan or did you borrow from family, friends or your community club.

List out all your debt at the end of the year so that you know exactly what your obligations are and build in a plan to address this in the new year.

Do you know your credit rating? Your borrowing behavior affects the lender’s attitude towards you, both now and in future. If you have had a good credit history, you may be in a good position to access credit.

When last did you check in with your investments?

Look at your investments; what are their prospects? What are the returns on your stock, bond, or mutual fund investments? Are you satisfied with their performance or is it time to make some changes? Should you continue to hold them all?

Should you take advantage of a dip in the market to buy some more shares since some are trading significantly below their true value? Do you have property? Is it earing decent rental income or is it empty? Is it in good condition?

Is your portfolio of the right mix to make it possi-

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‘

As the year draws to a close, look back on how you’ve done financially over the past year; take stock, review your mistakes and successes and put a plan in place to do better in 2020 ble for you to realise your short, medium and longterm goals? As your circumstances change, there may be a need to review things and make some adjustments. Find time to chat with a professional financial advisor who will guide you regarding investments that match your risk appetite, financial standing, goals and time frames.

What are you worth?

Ideally, your net-worth should be increasing each year showing that you are making progress and that your financial decisions are actually working. By tracking your assets and your liabilities, you have a fair indication of where you stand financially. If you can, compare it to your net-worth this time last year to see how it’s changed; what has worked and what hasn’t.

This information can influence your plans for 2020.

Give your insurance some attention Your age, family situation, health, and goals will influence the level of risk

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ith only a few weeks left of 2019, do find some time to get some clarity around your personal finances. Of course, with the spending frenzy, all the parties and activities, it is easy to put aside such a mundane task till next year, but don’t procrastinate.

The end of year is always a good time to take stock and to prepare yourself for a new year. Your personal finances need periodic attention. Spare a morning for your personal finances so you can start the new year 2020 with some clarity.

Here are some money moves to make before the end of the year. Start by mulling over these questions and the financial implication of each: How have you fared in your financial life in 2019?

Did you start a new job?

Did you leave full-time employment?

Did you start a business?

Did you get married?

Did you have a new baby?

Did you retire?

Did you get divorced?

Were you widowed?

Any other significant life events?

Where are your important documents?

An important part of managing your personal finances is keeping your financial records organized. Do you know where your important documents are? Are you a hoarder that keeps documents for years and years just in case you need them? Is your desk cluttered with old bank statements, bills and receipts? Avoid leaving sensitive documents lying around for an unscrupulous visitor to rifle through.

Your financial information is confidential. When your trash is picked up, you don’t know where it ends up–it can become prime targets for thieves.

There are some sensi-

tive, hard to replace legal and financial documents to be particularly conscious of. These include birth and marriage certificates, international passports, insurance policies, tax returns, your will, trusts, power of attorney, title documents for your assets such as your property, cars and so on.

These should all be kept securely, ideally in a fire proof cabinet or safe.

Paperwork piles up and consumes us all as it affects the environment. Scan and store electronic copies of your critical personal and financial documents as appropriate. Buy an inexpensive shredder for sensitive documents that you no longer need, to minimise the chances of the wrong person getting at your information. Save yourself the stress and get yourself organised.

Embrace technology Advances in financial technology make it easy for you to manage your banking and personal finances digitally; you can create a budget, pay routine bills, manage bank accounts, track every-day finances, make and monitor investments…If you haven’t already registered for your bank’s online banking, be deliberate about embracing technology and simplifying your finances in 2020.

Do you have any savings?

How much money do you have in the bank? How much did you save this year? Ideally you should have at least six months to twelve months of your

you can tolerate and the level of insurance you take on. Things happen; circumstances change. Most significant life events have financial consequences that need action. For example, if you got married, had a baby or other major life event, there will be changes in your insurance coverage which need to be re-evaluated, particularly your life insurance if you are the primary breadwinner.

At least once each year, gather your insurance records and review the adequacy of your coverage.

Be sure to evaluate all your insurance cover including health, life insurance, home-owners insurance, auto insurance, renters insurance, etc. and determine what changes might be required for the coming year.

Retirement Plans Ideally, you should have started planning for your retirement as soon as you started your first job. Is retirement looming? What is your retirement fund looking like? Your pension is unlikely to be enough to sustain you in the lifestyle you envision for yourself in retirement, so your investment portfolio needs to work for you–cash, mutual funds, bonds, stock, real estate, business interests etc.–to support that time when you no longer wish to work or can no longer work.

Do you have an estate plan?

Do you have a will, a trust, joint accounts, or any other estate-planning tool?

If there have been some major life events this year, a review of your documents, including your will, trust and insurance documents is important. Does your @Businessdayng

estate plan still fairly reflect your personal wishes for the distribution of your assets? Have the personal or financial circumstances or your beneficiaries significantly changed over the past year?

An estate plan evolves as circumstances change.

It helps you to structure any newly acquired assets appropriately in your lifetime, and also ensures that your family can be taken care of in accordance with your wishes for them. Keep documents up-to-date and make sure that your lawyer or other trusted persons know where they are.

Did you make an impact?

What impact have you had on others this year?

The joy of touching lives and changing is the greatest investment of all. If you didn’t manage to do much, it’s never too late to make a difference; just get started.

As the year draws to a close, look back on how you’ve done financially over the past year; take stock, review your mistakes and successes and put a plan in place to do better in 2020. Even a small step in the right direction could make all the difference. No matter how busy you are, make the time.

Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.

For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

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Monday 16 December 2019

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

How to break up with your bad habits JUDSON BREWER

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Breaking habits is hard. ut simply, rewardbased learning involves a trigger (for example, the feeling of hunger) followed by a behavior (eating food) and a reward (feeling sated).

These three components show up every time we smoke a cigarette or eat a cupcake. This is especially true at work. Each time we try to soothe ourselves from a taxing assignment we reinforce the reward, to the point where unhealthy distractions can become habits.

My time spent studying the behavioral neuroscience of how habits form, and the best way to tackle them, helped me find a surprisingly natural way to break habits: mindfulness.

By using mindfulness training to make people more aware of the “reward” reinforcing their behavior, I can help them tap into what is driving their habit in the first place. Once this happens, they are more easily able to change their association with the “reward” from a positive one to a more accurate (and often negative) one. The reward value of the habit decreases because it isn’t as gratifying as people re-

member.

Mindfulness training can help workers improve their productivity, morale and overall performance by teaching them how to overcome the habits that may be holding them back from thriving.

Here’s how to get started:

— MAP OUT YOUR HABIT LOOPS: The first step to breaking a habit (no matter what it is) is to figure out your triggers.

— SEE WHAT YOU ACTUALLY GET OUT OF THOSE ACTIONS: The next step is to clearly link up action and outcome. Pay attention to how

you feel when you partake in your habit.

— REPLACE THE REWARD WITH CURIOSITY: Find a new reward that is more rewarding than the existing behavior. The brain is always looking for that bigger, better offer.

If you’re curious to see how

well this might work for you, now is a good time to give it a try.

(Judson Brewer is the director of research and innovation at Brown University’s Mindfulness Center.)

The AI roles some companies forget to fill AND AI TRANSLATOR ROLES: AI groups also need someone at the intersection of business strategy and AI methods. Such a person, usually a somewhat senior executive, is able to translate strategic objectives and business models into the types of AI that can advance them. The businessperson who fills this role does not need to become a programmer, know the best AI tools from vendors or delve into the nuances of neural networks versus logistic regression. He or she does, however, need to understand the basics of how different types of AI work and the data sets that will be deployed with them.

MEGAN BECK, THOMAS H. DAVENPORT AND BARRY LIBERT

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rtificial intelligence is almost everywhere in the news today, and the drive to create and implement AI solutions is creating an enormous talent gap.

However, AI talent goes far beyond machine-learning Ph.D.s. Equally important and less understood are the set of talent issues emerging around AI product development and engineering. Most firms have not filled these roles, and their AI projects are suffering as a result: — THE AI ENGINEER ROLE: Most companies need engineers to help develop products and production applications, rather than a researcher to help push the boundaries of AI technique and technology. These engineering skills include creating technology architectures that scale, writing and deploying bulletproof software and

integrating AI capabilities with existing systems.

— THE AI DATA CZAR ROLE: This is typically a position that is created over time through experience rather than filled by someone hired right out of school, although edu-

cation in computer science or statistics can be very helpful.

The role encompasses such capabilities as: knowing what data sources are useful to address an AI question or problem; being aware of how data is used in algorithms; assessing data qual-

ity; cleaning and treating data; having a focus on detail (and being a stickler for data quality); possessing the strength to push back at technical teams; and knowing the typical ways to transform data.

— THE BUSINESS LEADER

(Megan Beck is chief product and insights officer at Open Matters, where Barry Libert is chairman. Thomas H. Davenport is a professor at Babson College.)

Monday 16 December 2019

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

41

In association with

Are businesses ready for deglobalization?

DAMBISA MOYO

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s we enter a new decade, characterized by rising economic complexity and geopolitical divisions — U.S.-China tensions, populism and nationalism in Europe and the looming risk of a global recession — forward-thinking business leaders are developing strategies to mitigate the longerterm risk of deglobalization. It is increasingly understood that this ever-more siloed world directly affects three pillars of global corporations: technology, global recruiting and the finance function.

In recent years corporate leadership has rightly prioritized cyber risks, the threat of technological obsolescence and the rise of the jobless underclass stemming from increased automation. However, there are now mounting concerns about the emerging “splinternet” — an increasingly fragmented internet with competing China-led and U.S.-led platforms.

The shift in the U.S. and Europe toward more stringent immigration intensifies the war for global talent. The risk of further restrictions on immigration has climbed in importance on the

leadership agenda as it threatens the corporation’s ability to hire across borders.

Global companies derive enormous benefits from a centralized finance function. In most cases, this more centralized model means corporations are able to borrow at a lower cost than they would if their re-

gional and national subsidiaries had to confine themselves to local currency markets, which tend to carry greater risk and volatility. A more siloed world means corporations will struggle to extract their investment capital and return profits to shareholders.

Ultimately, the way for-

ward will depend on whether a company’s leadership views deglobalization as an enduring phenomenon or a passing fad. If business leaders believe deglobalization is here to stay, then real consideration must be placed on upending the prevailing global corporate structure to make it better match the

deglobalized world.

(Dambisa Moyo is an international economist who serves on the boards of Barclays Bank, Chevron and Seagate Technology.)

The two big reasons that digital transformations fail lenge entirely by building internal “innovation factories” inside the larger organization to develop and expand pilot projects.

When companies anticipate the challenges we’ve outlined here, they’re better positioned to make a compelling case for funding.

And they’re much more likely to succeed with their innovations.

MIKE SUTCLIFF, RAGHAV NARSALAY AND AAROHI SEN

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lenty of cash is flowing into digital initiatives at large, industrial companies. In fact, the executives we surveyed recently at 1,350 of these businesses globally reported investments in digital reinvention totaling more than $100 billion between 2016 and 2018.

Most of the leaders we surveyed (companies representing 17 countries and 13 industries) reported poor returns on their digital investments. The primary reason: unsuccessful efforts to scale digital innovations beyond early pilot work.

What are the companies that are experiencing better returns on digital investments doing differently from the rest? To answer this question, we asked the executives in our study to tell us in detail about their returns on digital investment. Then we looked at how well companies across our sample had scaled projects from the proof-of-concept stage. When we mapped those two critical parameters — higher-than-average

(Mike Sutcliff is the group chief executive of Accenture Digital.

Raghav Narsalay is a managing director at Accenture Research in Mumbai. Aarohi Sen is a manager at Accenture Research in Delhi.) returns and more successful scaling — we saw that 22% of our sample had demonstrated both.

We then dove deeper into that group to learn what they did differently. Two critical challenges — and their remedies — emerged from that analysis: — UNSPOKEN DISAGREEMENT AMONG TOP MANAGERS ABOUT GOALS: If top managers aren’t on the same page, it makes it difficult for their direct reports

to agree on what to prioritize and how to measure progress. The remedy: Define and articulate not only the opportunity but also the problem it solves, and how the company will build the organization around the desired solution before investing.

— A DIVIDE BETWEEN THE DIGITAL CAPABILITIES SUPPORTING THE PILOT AND THE CAPABILITIES AVAILABLE TO SUPPORT SCALING IT: When

this problem isn’t addressed, companies may face a choice between accepting long delays in ramping up production or attempts by leadership at rapid, unwieldy change to meet what they have promised. The remedy: Look outside to close gaps or nurture pilots internally, ramping up digital capabilities across the organization from the get-go.

Many of the leaders in our study have sidestepped this chal-

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INTERVIEW Our growth strategy has always been to provide bespoke and professional trusteeship services to clients – Ekundayo Persistence in the face of headwinds is one virtue that has helped STL Trustees position as a leading trustee in Nigeria. FUNMI EKUNDAYO, MD/CEO STL Trustees Ltd speaks on the company’s growth in this interview with BusinessDay journalist SEGUN ADAMS.

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ow has STL T r u s t e e s evolved over time in the capital market and the broader economy and how that journey has been?

STL Trustees has evolved exponentially over the years, when you consider where we started from and the fact that we became independent of the Banking Group Structure someway along the line.

The journey has not been without its challenges, but we have been able to pull through and even surpass expectations despite all odds.

How have you been able to position yourself for leadership in the corporate trusteeship industry; what is responsible for your impressive growth?

No magic at all. It is simply the hard work and resilience of my dependable Team, the professionalism we employ in all that we do as well as the realizing the need to constantly reinvent ourselves as a Financial Services Provider to meet the ever-changing needs of our clients.

As a leader in the corporate trusteeship industry and one that has been operating since 1991, what trends can you say have shaped your industry in the last two decades and what emerging trends are there today?

The Trusteeship industry has come a long way. Trends that have shaped the industry can be categorized into regulatory and structural. At a time in Nigeria, most of the Trust companies were largely owned by Banks with many in that category being just a desk or at most a department within the structure of those Banks. However, the Central Bank of Nigeria (CBN) regulation changed this completely as ownership of non-banking subsidiaries (including trust companies) by banks became a non-permissive asset except in situations where the parent Bank was willing to adopt the Holding Company (“HoldCo”) structure.

This singular policy changed the face of the trusteeship business and we are now witnessing more players entering the industry thereby leading to steady growth in participation in the industry.

Additionally, the reactivation of the Bond market is another trend that has shaped the industry in the last twenty years thereby leading to significant growth in project financing and overall development of the Issuing States/entities.

An emerging trend in the industry is the use of Technology in providing Trusteeship Services, particularly in the area of Estate Planning which is another way

of encouraging people to take the issue of estate planning more seriously and making it seamless for them to set up.

Boosting economic growth has been on the front burner of discussions for a while now, how has the slowpaced growth impacted your business and what role does STL Trustees play in helping to revamp the economy?

Like most businesses in Nigeria, STL has indeed been hit by the slow-paced growth of the economy, as not many Capital Market Transactions have been successfully closed over this period of slow growth.

Having said that, by acting as intermediary between Lenders/ Investors and Business Owners/ Governments in need of Funding, we are able to provide Lenders and investors with the necessary comfort to enable them focus on the objective of advancing facilities to businesses and also investing in issued debt instruments respectively, thereby boosting economic activities, which goes a long way in revamping the economy.

Asides being a Trustee, you are authorized by SEC to carry out Funds/Portfolio Management functions. Can you talk briefly about the Funds/Portfolio Management business and how you combine both?

STL’s Fund/Portfolio services span across veritable/guaranteed money market instruments at competitive interest rates. We structure a portfolio of investment mix taking our Clients’ investment

objectives into consideration.

With our experience/expertise we are able to ensure that our Clients’ funds are safe and secure whilst also returning a decent yield on the investment.

Our license to carry out Funds/ Portfolio Management functions positively impacts our role as Corporate Trustees, as we are able to effectively manage Bond Sinking Funds for several State Governments, portfolio of HNIs as well as funds of corporate organizations towards giving our clients the best service at all times.

You offer products tailored to meet the needs of clients whether for retirement, children education trust or saving towards predefined targets. Can you briefly highlight these?

Answer: In order to simplify the concept of trusteeship for our customers and make same readily available no matter an individual’s income level, we have a bouquet of customized retail products tailored to meet the needs of individuals across a broader spectrum.

Three of these stand out: First is STL CRV. This is an acronym for Controlling your Retirement Voluntarily, STL CRV is a savings product which has been designed for income earners who are mindful of preparing ahead for post-retirement from paid employment, in addition to the mandatory Pension Contributions under the Law as well as self-employed individuals who want to secure their future, when they would be less active and earn lower income. The product

is targeted at the middle to lower income group and ensures that they are able to maintain a lifestyle akin to what they enjoyed while active. It is pertinent to also add that this product has an insurance benefit and the contributor gets a specified amount on the happening of certain events. The insurance premium is separate from the funds contributed and the income generated from the management of the funds and the premium for the insurance is paid

by STL Trustees.

The second is STL Target. This product is specifically designed for persons who would wish to set aside some funds to meet a need at a predetermined time in the future. The advantage of this product is that it simplifies savings for events by the client and ensures that the funds are available for the required purpose.

The third is STL CET. This is an acronym for Child Education Trust, STL CET is an educational product designed to enable you set up a Trust Fund for the education of your child or children.

STL Trustees will hold such funds under a trust instrument as trustees to the named beneficiaries and preserve the funds, including all accumulated income thereon in trust for your named beneficiaries.

What is your investment and strategy for future growth?

Our growth strategy has always been to provide bespoke and professional trusteeship services to our various clients. It has worked for us in the past and is still working, as happy clients often refer prospective clients to us, hence enhancing our growth.

Essentially, our work speaks for us.

What is the significance of the recent recognition of STL Trustees as Trustees of the Trustees of the Year at the 2019 BAFI Awards?

We feel truly honored for this recognition having won the same award during the debut of that award category last year. However, as we all know, the reward for good work is more hard work. In effect, STL Trustees is mindful of the expectations that accompany such recognitions as the BAFI award, and we are set to work harder to surpass these expectations.

A successful organization is proof of good leadership. Aside the BAFI recognition, you’ve received numerous other recognitions such as the Trustee CEO of the Year award at 2018 edition of the Nigeria Finance Innovation Awards. How do you transmit your leadership values across the team to remain at the top of their game?

We run an open-door policy at STL. Irrespective of the hierarchical system, every member of the team is welcome to express their views and ideas on how to move STL forward. I personally ensure that I lead by example. I only ask of others what I am prepared to do and take responsibility for. This sends a strong message about the values that are encouraged, and what managers are expected to do.

As we count down to a new year, can you share how has 2019 been for STL Trustees and what your outlook for 2020 is: 2019 has been quite eventful for STL. We had our high moments and we also had our challenges, borne out of the general economic slowdown. We are optimistic that the year 2020 would be a lot better for STL and the Trust Industry in general in every business ramification.

PROFILE OF FUNMI EKUNDAYO (MD/CEO STL TRUSTEES LIMITED) Funmi Ekundayo is an Alumna of the Harvard Business School and a member of the Institute of Chartered Secretaries & Administrators, UK and Nigeria.

She holds Bachelor of Law degree and Master of Laws degree from the University of Lagos.

Funmi is a member of the Nigerian Bar Association and a Fellow of the Institute of Chartered Secretaries & Administrators of Nigeria (FCIS) where she also serves as a member of the Governing Council.

Funmi began her career with the Law Firm of Bentley, Edu & Co. before she joined the then NAL Asset Management & Trustees Limited. She later moved to UBA Trustees Limited as Head, Business Development & Marketing.

Thereafter, she joined STL Trustees as AGM, Business Development, from where she rose to become the MD/CEO. Funmi has distinguished herself as a seasoned Trust specialist engaging in the structuring of complex Legal, Financial and Trust instruments.

Funmi is the Immediate Past President of the Association of Corporate Trustees of Nigeria; Fellow, Institute of Investment and Portfolio Managers and Fellow, Portfolio Management Institute (Chartered).

She is an Alumna of the Lagos Business School (Chief Executive Programme) and the IESE Business School, Barcelona, Spain.

She is a member of the Institute of Directors and an Independent Director on the Board of Law Union & Rock Insurance Plc; In recognition of her impact in the Financial Sector and Trusteeship sub-sector, Funmi was awarded the TRUSTEE CEO OF THE YEAR 2018 by the Nigeria Finance Innovation Awards 2018.

44

Monday 16 December 2019

BUSINESS DAY

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

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

MTN, Airtel Africa earn 35% of NSE-30 profits as at Q3

SHORT TAKES 3-yr

…may be investor’s best bets amid stock market rout BALA AUGIE

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or investors seeking where to park their funds amid falling stock prices and fixed income yields, the t e l e c o m mu n i cat i o n s stocks could be a good bet.

This is because MTN Nigeria (MTNN) Plc and Airtel Africa Plc- the largest players in the terrain- are taking advantage a youthful population and the growing adoption of mobile internet services to underpin earnings.

Little wonder they have earned BUY ratings from different investment houses, an attestation of consistent earnings growth and solid balance sheet.

The combined net income of the two major industry players stood at N230.40 billion as at September 2019, which is 34.84 percent of the total profit (N661.12 billion) of Nigerian Stock Exchange (NSE) 30 firms.

The NSE 30 Index is the list of the most capitalized and liquid firms on the bourse, but the two telecoms giants are not on it.

Analysts say the two bellwether firms will soon be included on the list, given their robust market value.

MTNN, the most capitalized firm in Nigeria, had net income of N148.32 billion as at September 2019, making it the most profitable company in the country.

MTN and Airtel Africa have cumulative revenue of N1.44 trillion, which is about 1.23 percent of the country’s gross domestic product (GDP).

While other sectors are reeling from a harsh and unpredictable macroeconomic environment, the telecommunications industry is a

calm eye in the mist of the storm as continues to thrive.

The positive momentum in Nigeria’s telecommunications sector continued into the month of October as the latest data released by the Nigerian Communications Commission (NCC) for the month of October showed that, the number of mobile and Internet subscribers grew to 180 million and 123.6 million in October from 179.2 million and 123.2 million in September respectively.

Notably, broadband subscription recorded the highest expansion,

growing 7.0 percent month on month and 27.0 percent year on year (y/y) to 72.3 million subscriptions in October.

The strong growth in broadband subscriptions pushed broadband penetration to an all-time high of 37.8 percent, the highest level since January 2017 when Nigeria Communications Commission (NCC) began compiling the data.

In terms of the positioning of the industry players based on subscriber base, MTN remained the biggest player with a subscriber base of 65.8 million (market share; 36.6 percent)

P.E

trailed by GLO NG with 50.3 million subscribers (27.9 percent) then Airtel Nigeria with 49.1 million subscribers (27.3 percent).

On the other hand, 9mobile sustained its seventh consecutive month of losing subscribers with its subscriber base now at 14.8 million (8.2 percent) from 16.4 million (9.4 percent) at the start of the year.

The industry players are investing aggressively in network infrastructure to accelerate the 3G/4G bandwidth coverage.

Airtel Africa in partnership with Intercellular Nigeria recently acquired additional 10 MHZ spectrum in the 900 MHZ band for N25.20 billion.

Between them, MTNN and Airtel Africa have a combined N694 billion in cash flow from operating activities, as they continue to increase capital expenditure spend in a cash crunch economy.

Analysts at Chapel Hill Denham Limited have retained their BUY rating on MTNN, thanks to 4G expansion and improvement in network service quality.

MTNN currently trades on FY-20E EBITDA and EPS multiples of 4.9x and 11.5x compared to its SSA/EM peers average of 6.8x and 15.9x respectively.

Analysts at Chapel Hill Denham expects MTNN to take advantage of the low interest rate environment to raise short term debt, considering that the interest rate on its short term borrowings are currently in the 13.314.1 percent range, based on 3-month NIBOR. MTNN closed trading at a share price of N115.3 per share on Friday, 13 December 2019 and market cap of N2.347 trillion, Airtel Africa share price closed at N298.80 valuing it at N1.12 trillion.

How the board of Obu Cement would look like after merger BALA AUGIE

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hree months ago, Cement Company of Northern Nigeria (CCNN) merged with Obu Cement to form a single entity. Obu will be listed by January 8, 2020.

After the exercise, BUA cement’s (parent company of Obu and CCNN) total capacity hit 8 million metric tonnes, making it the third largest producer of the

The value of Nigeria’s total trade jumped 6.77 percent to N9.18 trillion in the third quarter, up from N8.60 trillion recorded in the previous quarter second quarter.

The value of the export component increased by 15.02 percent to N5.28trillion when compared to second quarter and 8.97percent when compared with the corresponding quarter in 2018, this is the highest in three years.

The import component however, stood at N3.89 trillion a 2.70 percent drop when compared to performance in the second quarter and 7.47 percent when compared to the third quarter in 2018.This means the Nigeria’s trade balance increased a high N1.38 trillion.

By implication, this means the country’s trade balance, which is the difference between the value of export and import, increased N582.3 billion on the back of a fall in imports.

$65 Oil rose above $65 a barrel for the first time in almost three months after the U.S. and China agreed on the text of a partial trade deal, giving a boost to the fragile outlook for global oil demand.

Futures climbed as much as 2.2% in New York, to the highest level since Sept. 17.

Chinese officials said the countries agreed not to impose tariffs set to go into effect Dec. 15, and China will increase imports from the U.S. as part of the deal.

Prices slipped briefly earlier after U.S. President Donald Trump in a tweet disputed a story that said tariffs would be rolled back.

-15.57% The stock market is down by almost 16 percent so far in the year, after trading closed 0.13 percent lower on Friday. The bourse trades around 7x PE compared to 11.8x of frontier market and 14.7x of emerging markets.

Continues on Page 45

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

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BUSINESS DAY

45

MARKETS INTELLIGENCE

IFEANYI JOHN

T

he 8 largest oil companies on the Nigerian stock exchange look set to post improved profitability in 2019 despite generating lower sales during the year as improved cost efficiency within the oil industry appears to be increasing bottom-line financial performance this year.

The eight oil companies include Total Nigeria, 11 Plc, Seplat, MRS, Conoil, Forte, Oando, Eterna. Excluding Seplat, all other companies typically generate most of their profits from the downstream business. Among these companies only Conoil will see their revenue and profitability improve this year by 23% and 26% respectively. Seplat is expected to post a revenue decline of 11% but higher profit growth of around 68%. While Eterna will post higher revenue growth of 11% but will likely

post a profit decline of 80%.

All other oil companies will see both their revenue and profit decline this year based on annualized performance on Q3 financials.

In the first nine months of the year, the oil giants generated a total of around N1.24 trillion in revenue which when analysts forecasted a full year perfor-

Nigeria’s housing debacle continues as banks refuse to lend BALA AUGIE

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ack of affordable housing is gradually becoming a debacle in a country beset by huge infrastructure deficit.

To further exacerbate the situation, banks have refused to turn on the tap of lending to the sector.

According to data published by the National Bureau of Statistics (NBS) , commercial banks’ credit to the real estate sector dropped by 17 percent year on year (y/y) to N588.7 billion in the third quarter (Q3) of 2019 from N710.2 billion in the corresponding period of 2018.

The data also revealed that the real estate share of banking sector credit fell to 3.62 percent in the third quarter (Q3) 2019 from 4.56 percent in third quarter (Q3) 2018.

The major culprit of poor housing stock is weak consumer purchasing power as over 50 percent of a population of 200 million live on less than $1.98 a day.

Also, the country’s unemployment rate of 23.80 percent, the highest in 8

years, means the demand for accommodation will remain weak unless government formulates transformational policies that will accelerate economic activities.

The implication of low household income is that real estate developers are put in a tight corner as banks will refuse to extend credit to them, for fear of piling Non Performing Loans (NPLs).

Lenders now pay attention to sector they lend money to as they avoid high risk assets.

Analysts at CSL Stock Brokers Limited say high cost of obtaining mortgage financing has been a major deterrent to middle income earners, majority of who now opt for rented apartments.

Looking ahead, we believe commercial banks will continue to limit their exposure to the real estate sector considering the bottlenecks.

“We believe the reduction in the cost of credit triggered

by CBN’s regulatory actions may spur significant demand from the upper echelon of the middle class consumers who currently opt for expensive rental payments,” said analysts at CSL Stock Brokers Limited. www.businessday.ng

mance translated to an annualized sales performance of N1.66 trillion which is less than the N1.97 trillion revenue achieved in 2018.

However, lower cost of sales so far this year has helped the industry grow its gross profit margin to 15.42% as at Q3 2019 from 15.18% in FY 2018 while net profit margin rose from 4.69% in 2018 to

5.71% in Q3 2019.

Based on annualized performance, analysts expect that oil industry will generate a profit of around N94.9b in 2019, representing a growth of around 2.3 percent from N92.8 billion achieved in 2018. As at the end of Q3 2019, the oil industry generated about N71.2 billion in profit after tax.

“I think what we are seeing in the oil industry and an improvement in cost efficiency due to dollar stability and investment in technology. The oil companies are price takers whether they are upstream or downstream and the only thing in their control is how much money they spend. It is always going to be easier to increase cost efficiency than grow revenue and we are starting to see improvement in cost efficiency which is having a strong impact on industry profitability,” one oil analyst told BusinessDay. The final three months of the year is expected to be a boom period in the oil industry and transportation activities tend to increase during the festive period. The industry could see revenue improve but analysts say it is unlikely that the 8 oil giants will be able to generate as much as N800 billion during the final three months of the year to make 2019 a superior year in sales than 2018.

US stocks flat after China reveals trade deal progress China agrees to gradual reduction in tariffs as part of ‘phase one’ trade deal with US Peter Wells, FT

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S stocks pulled back from their record highs of the morning session, which were struck after Chinese officials announced they have agreed to a gradual reduction in tariffs as part of an interim trade deal between Beijing and Washington.

The S&P 500 was flat towards the end of lunchtime in New York on Friday but had oscillated in and out of negative territory. The benchmark rose as much as 0.5 per cent to an intraday record as Chinese trade negotiators conducted a press conference in Beijing, revealing the developments they said were designed to boost confidence in global markets.

The Nasdaq Composite was up 0.2 per cent, while the Dow Jones Industrial Average was 0.1 per cent higher. Both gauges had been up as much as 0.6 per cent this morning to notch intraday peaks.

On Thursday, the S&P 500 and Nasdaq both closed at record highs after President Donald Trump tweeted that a trade deal with China was “VERY close”.

Government bonds rallied, pushing yields lower, having been weaker overall through Asian and European trading. The yield on the benchmark 10-year US Treasury was down 7 basis points at 1.8313 per cent, walking back from a onemonth high on Thursday.

The dollar index, tracking the greenback’s gains against a basket of global currencies, trimmed ear-

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lier declines to sit 0.2 per cent lower for Friday’s session.

Strength in the British pound, as UK Prime Minister Boris Johnson’s Conservative party secured a crushing general election victory, was a primary contributor to the buck’s weakness.

Sterling was up 1.3 per cent at $1.3333 in US trade.

It gained as much 2.7 per cent to more than $1.35 during Asian trading hours after exit polls suggested the Conservative party was in the box seat, and reinforcing Mr Johnson’s resolve to take the UK out of the EU in January.

L o n d o n ’s F T S E 1 0 0 closed 1.1 per cent higher, as did Europe’s broad gauge of equities, the Stoxx 600.

Germany’s Dax added 0.5 per cent and France’s Cac 40 rose 0.6 per cent. @Businessdayng

Continued from Page 44 building material in Africa’s largest economy. Its planned expansion stood at 3.0 million metric tonnes.

It is interesting to note that the merger has changed the ownership structure of the enlarged entity.

From a 12.6 percent ownership stake in CCNN, minority shareholders will now hold an 11.0 percent stake in the enlarged Obu Cement, while BUA Cement Company Limited and Abdulsamad Rabiu will hold 33.9 percent and 55.1 percent stakes, respectively, according to a report by Cordros Capital Limited.

“We understand that 13.1 billion-unit shares of CCNN will be merged with the enlarged entity in a ratio 1-for-1. However, Obu Cement shares of 40 million

‘

We understand that 13.1 billion-unit shares of CCNN will be merged with the enlarged entity in a ratio 1-for-1.

However, Obu Cement shares of 40 million will be reconstructed to 518 for every unit held, which will be equivalent to 20.7 billion units

‘

Oil industry could see profits grow this year despite revenue slowdown

How the board of Obu Cement would look like ...

will be reconstructed to 518 for every unit held, which will be equivalent to 20.7 billion units,” said analysts at Cordros Limited.

If 13.14 billion shares are issued at a value of N460.02 billion, it then means that the new entity will have a share price of N35.0, with -premium to current market price.

The merger is coming at a time the industry is poised to benefit from copious capital expenditure by the Federal Government, which will further accelerate demand for cement.

The Buhari-led government earmarked N2.14 trillion for CAPEX spend in 2020, albeit a short fall from N2.93 trillion budgeted in the prior year.

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Monday 16 December 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 13 December 2019

Top Gainers/Losers as at Friday 13 December 2019 LOSERS

GAINERS Company PRESCO

Opening

Closing

Change

N41.45

N43.5

2.05

Company MTNN

N16

N16.55

0.55

GLAXOSMITH

WAPCO

N13.5

N13.95

0.45

UBA

ETI

N6.55

N6.9

0.35

OANDO

PZ

N5

N5.25

0.25

CAVERTON

DANGSUGAR

Opening

Closing

Change

N118

N115.3

-2.7

ASI (Points) DEALS (Numbers)

N5.8

N5.25

-0.55

N6.85

N6.6

-0.25

VOLUME (Numbers)

N3.8

N3.62

-0.18

VALUE (N billion)

N2.55

N2.45

-0.1

MARKET CAP (N Trn)

26,536.21 2,773.00 155,346,614.00 1.431

Global market indicators FTSE 100 Index 7,368.46GBP +94.99+1.31%

Nikkei 225 24,023.10JPY +598.29+2.55%

S&P 500 Index 3,164.58USD -3.99-0.13%

Deutsche Boerse AG German Stock Index DAX 13,290.14EUR +68.50+0.52%

Generic 1st ‘DM’ Future 28,102.00USD -28.00-0.10%

Shanghai Stock Exchange Composite Index 2,967.68CNY +51.98+1.78%

12.807

Oando signs two gas supply agreements with NLNG

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L–R :Jude Chiemeka, Head, Trading Business Division, The Nigerian Stock Exchange (NSE); Oscar N. Onyema, Chief Executive Officer, NSE; Bola Adeeko, Head, Shared Services Division, NSE and Olatunde Mohammed Amolegbe,1st vice President, Chartered Institute of Stock Brokers (CIS) during the induction ceremony for newly qualified dealing clerks at the Exchange in Lagos.

Stock investors caught in web of over N150bn loss Stories by Iheanyi Nwachukwu

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alue erosion seen recently at the Nigerian stock market extended into the trading week ended Friday December 13, 2019. This caused investors to book additional loss in excess of N155billion. The record loss in the review week created an entry window for investors to buy value stocks at

lower prices.

The value of listed equities which opened the review week at N12.962 trillion decreased to N12.808trillion at the end of the week.

The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased from 26,855.52 points to close the review week at 26,536.21points, down by 1.19percent.

The market recorded a total turnover of 1.044 billion shares worth N14.628 billion in 14,974 deals in contrast to a

total of 952.697 million shares valued at N12.774 billion that exchanged hands the preceding week in 17,279 deals.

Eighteen equities appreciated in price during the review trading week, lower than 19 equities in the previous week. Forty-four equities depreciated in price, higher than thirty-five equities in the preceding week, while 103 equities remained unchanged, lower than 111 equities recorded in the preceding week.

The Financial Services in-

dustry (measured by volume) led the activity chart with 556.905 million shares valued at N5.678 billion traded in 8,267 deals; thus contributing 53.33percent and 38.81percent to the total equity turnover volume and value respectively.

The Healthcare industry followed with 215.030 million shares worth N122.603 million in 412 deals; and Conglomerates industry with a turnover of 89.601 million shares worth N466.294 million in 874 deals.

ando Plc through its upstream subsidiary Oando Energy Resources has signed two Gas Supply Agreements (GSA) with the Nigeria Liquefied Natural Gas Limited (NLNG).

The agreement is on the renewal of gas supply for the existing Trains 1-3 for a term of 10 years and for gas supply for the impending Train 7 for a term of 20 years.Today, under the terms of the current agreement the NAOC Joint Venture (JV) made up of NNPC/NAOC/ Oando has a total supply obligation of 850MMScf for Trains 1–6. The JV is specifically responsible for supplying a Daily Contract Quantity (DCQ) of 344.6MMscf/d for Trains 1-3 and 505MMscf/d for Trains 4-6, making the NAOC JV the second largest gas supplier to NLNG. The first GSA is a renewal of the gas supply terms for Trains 1-3.

In addition to the JVs current supply to trains 1-6 and under the terms of the second agreement the JV will be responsible for supplying a DCQ of 294.7MMScf/d for Train 7.

Train 7 is expected to come on stream in 2024, and will bring the JV’s total supply obligation to 1.1Bcf. The execution of these agreements also effectively monetizes ca. 3.3Tcf of gas for the NAOC JV of which 666Bcf will be net to Oando.

The NLNG GSAs were signed by Tony Attah, Manag-

ing Director, NLNG; Massimiliano Bertona, General Manager Commercial & Negotiations, NAOC, representing Managing Director of NAOC; Mansur Sambo, Managing Director, NPDC and Wale Tinubu, Group Chief Executive, Oando Plc and the event was chaired

by Mele Kolo Kyari, Group Managing Director, NNPC. Commenting on the agreement Tinubu said: “We are particularly pleased to be the only indigenous company party to the NLNG supply agreement, testament to the potential of local players.

The NLNG vehicle will support the Federal Government’s efforts to grow reserves, boost the country’s gas footprint and market share in the global LNG market and in-turn positively develop the Nigerian economy – a goal that we are aligned with and have always wholly endorsed. The signing of these two agreements confirms and consolidates our long-term partnership with NLNG; furthermore it is a validation of NLNG’s confidence in our operational track record.

The execution of the GSA is another positive stride in our journey to becoming the leading independent exploration and production company; being a 20 year guaranteed income stream it will strengthen our financial position as well as demonstrate to our key stakeholders the Company’s growth potential.

ASHON, NASD in partnership talks

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he Association of Securities Dealing Houses of Nigeria (ASHON) and National Association of Securities Dealers (NASD) Plc have commenced talks on strategic partnership in the area of trading in securities and market development.

As a prelude to this emerging relationship, the governing Council of ASHON had recently held a closed door meeting with the management of NASD, the first In the series, on a range of issues, including product development, the need for more engagement of NASD with stockbrokers, compliance officers, risk managers and other key market participants, involvement of

stockbrokers in NASD’s various committees and regular quarterly meeting between the two institutions among others.

“ASHON has started engagements with all Exchanges and Trade points in Nigeria in order to expand the scope of operations and the income stream of her Members. We are extending this new initiative to include other markets outside Nigeria as evident in our participation in the formation of the African Stockbrokers and Securities Dealers Association (ASSDA) which is part of the African Linkage Project.

“We want to formally engage the management of NASD on how we can improve and streamline our relationship www.businessday.ng

through regular discussion with the utmost aim of improving the market. The 4th Industrial Revelation is powered by Fintech and there is a need for us to be ready for its disruptive tendencies,”, said ASHON’s Chairman, Onyenwechukwu Patrick Ezeagu Responding, the NASD’s Managing Director and Chief Executive, Bola Ajomale explained that partnership between ASHON and NASD was long overdue. According to him, the equity market is threatened and constantly dwindling due to the fact that the world is changing.

Ajomale noted that firms should be encouraged to come to the market.

L-R: Ade Omolehinwa ,chief executive officer, Ademola Omolehinwa & Comapny; Uwakwe Abugu, Lecturer, Faculty of Law, University of Ilorin; Mike Itegboje, past president, Chartered Institute of Stockbrokers, (CIS); Oluwole Adeosun, 2nd vice president, CIS; Solomon Adebola, deputy vice chancellor, Adeleke University, Ede; and Chukwudi Nga, CIS’ Head, Training and Continuing Professional Development (CPD), , at the CIS’ stream Three Executive Conversion Programme in Lagos .

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@Businessdayng

Monday 16 December 2019

BUSINESS DAY

47

news

Team Offshore Nigeria’s investment in Court restrains NERC from cancelling DisCos’ licences Banking professionals advocate entrepreneurship drive across professions amid economic headwinds NERC’s sanctions new vessel acquisition gets applause … as six Discos may escape cording Index report where Nigeria DAVID IBIDAPO to the Agreement.

AMAKA ANAGOR-EWUZIE

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inister of state for transportation, Gbemisola Saraki, has commended the efforts of Team Offshore Nigeria in its multi-million dollar investment in acquisition of new vessel to increase indigenous tonnage in the nation’s shipping business.

Saraki made the commendation in Lagos recently during the commissioning of a newly acquired vessel, Team Beleuzi by Team Offshore Nigeria, a leading offshore support service provider in the nation’s oil and gas industry.

She assured Nigerians of the Federal Government’s commitment to enhancing ease of doing business by creating enabling environment and removing bottlenecks to smooth business operations that limit economic growth.

Team Beleuzi, a wholly Nigerian-owned vessel, is a Platform Supply Vessel (PSV) built in 2019 and designed to transport supplies and equipment to and from offshore installations, in addition to supply drilling equipment, drilling bulks, fluids and pipes.

Represented by Chinwe Ezenwa, former acting managing director, National Inland Waterways Authority (NIWA), Saraki also commended the company for its contribution to local content development and other achievements.

She however urged the company to continue to maintain the drive towards meeting local content requirements in Nigeria.

“With your track records and investment that you are injecting into Nigeria’s economy since you started operation in 2017, we are convinced that you have confidence in Nigeria and the administration of President Muhammadu Buhari,” she said.

She also said Team Offshore Nigeria had in its fleet 14 specialised vessels flying Nigerian flag and contributing to local content development, with average fleet age of 6.5 years, and 2018, 2019 built vessels in its fleet.

“All these have been made possible by a 100 percent Nigerian ownership and a workforce of 90 percent indigenous personnel that have also shown commitment towards achieving a minimum of 70 percent Nigerian content in its various operations,” she said.

CBN classifies BVN into lite and premium

ISAAC ANYAOGU & Harrison Edeh

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Federal High Court Abuja has restrained the Nigeria Electricity Regulatory Commission (NERC) from cancelling the licences of eight power Distribution Companies (DisCos) adjourning the matter till January 17 for consideration.

The plaintiff, Registered Trustees of African Initiative Against Abuse of Office approached Federal High Court Abuja to restrain NERC and the relevant Distribution Companies (Discos) from cancelling the licenses of the distribution companies.

According to them, the reason provided by NERC as basis for issuance of Notice of Intention to Cancel License of the Discos are contractual issues between the Investors of the Discos and the Bureau of Public Enterprises which should not be used to punish electricity consumers.

They argued that by virtue of Section 62 of the Electric Power Sector Act 2005, once the license of the relevant Discos are cancelled, they will no longer have the capacity to provide electricity to their esteem customer and by law, it is a crime for them to continue electricity distribution once the license are cancelled.

They contended that, the issue of remittance of tariff being a contractual issue in the Discos Performance Agreement with BPE should be dealt with ac-

They argued that the issue of collection of tariff and remittances to the market is one of the key obligations of the Core Investors of the Discos in the Performance Agreement they signed with BPE which also provides for consequences including the Core Investors losing their Investment to Federal Government of Nigeria.

Justice Ijoema Ojukwu, who presided over the matter adjourned to the 17th of January 2020 for hearing on the substantive matter to allow the respondents including NERC, Bureau of Public Enterprises and others present their own side of the argument.

Meanwhile, the NERC has revealed that six out of eight DisCos have substantially complied with the approved minimum remittance threshold in the Order for July to September 2019, which could enable them escape possible sanctions.

The regulator confirmed this development in a notice sent to the affected companies. The notice dated December 12 was signed by Dafe Akpeneye, commissioner, Legal Licensing and Compliance, NERC. According to the notice, only Enugu Electricity Distribution Company plc and Port Harcourt Electricity Distribution Company Plc failed to comply with the remittance directive in the period under review.

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etailing the plethora of challenges faced by the Nigerian economy is no longer a newsflash, cutting across sluggish economic growth, rising inflation, high debt levels, revenue challenges, shrinking consumer wallets, rising unemployment, bleeding stock market, negative real investors’ returns etc. to mention but a few.

However, the question is whether or not these challenges have eroded possible economic opportunities individuals can seize to succeed despite a pitiable economic state.

Given the persistent rise in unemployment levels to 23 percent and a bleak outlook between 30 percent and 33 percent in 2020 by respectable authorities, the option of entrepreneurship remains vital to opt out from the pool of individuals that would make up the unemployment numbers.

“We still have a majority of our citizens living below the poverty line in spite of the great potential and our steadily growing GDP. It would not be wrong to say that Nigeria is yet to achieve inclusive growth,” Kayode Pitan, managing director, Bank of Industry (BoI) said in a keynote address.

This is also evidenced by the World Economic Forum 2018 Inclusive Development

... to digitise tax payment Hope Moses-Ashike

C

entral Bank of Nigeria (CBN) at the weekend disclosed plans to classify the Bank Verification Number (BVN) into lite and premium.

The move is part of efforts towards getting the financially excluded into the financial system and increase the rate of financial inclusion.

Godwin Emefiele, governor of CBN, said this on Saturday at the end of the 11th Bankers’ Committee retreat in Ogun State, saying the Know Your Customer (KYC) information was part of what would be migrated into the BVN Lite.

“There are people who are currently financially excluded, like people in our rural communities that carry phones, but not having financial services. With the collaboration of NCC, we are putting this BVN arrangement to allow them conduct minimal financial services.

“It should be possible for us to migrate this people into the BVN lite arrangement where they can conduct minimal financial services, not just banking services, but minimal financial services, insurance and anything you

want to conduct in terms of finance whether epayment, or anything, you can do it with the aid of your phone.”

Emefiele also disclosed plans to invest in security operation centre, which will serve as a gateway for banks and security agencies.

“On our part in CBN we are looking at investing in security operations center that will act as a gateway not only for banks. Unfortunately, we are all naked today as a result of internet and cyber and we all have to do everything to protect ourselves,” he said.

He said the banks must invest massively to reduce cyber-attacks. He also said the bankers committee have agreed to put in place measures such as panic alert to mitigate cyber-attacks.

He said cyber risk, which today is growing in different parts of the world, the banks, the CBN, and the government; everybody needs to do something about it.

The banks were advised to do more in their management and control of cyber risks. The banks were also advised to invest more money in tools whether soft or hardware that will help them in containing cyber risks in their operational environment. www.businessday.ng

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@Businessdayng

is ranked 63rd out of 103 economies.

While there have been notable attempts by international agencies and other institutions to combat the growing malaise of increasing income inequality and rising unemployment in Nigeria, “it is my belief that the attainment of growth that is sustainable and inclusive can only occur when the largely disadvantaged groups are able to participate actively in the economy,” Pitan buttressed.

In his view, a key way of ensuring this is through entrepreneurship across the various groups that are currently economically excluded.

Sadly, according to a recent report by SMEDAN, of over 41 million entrepreneurs in Nigeria today, less than 2 percent are running a successful business. One may be quick to ascribe the failure or inadequacies of others to the precarious economic situation of Nigeria however another factor to consider maybe the inadequate entrepreneurial skills and knowledge of these business owners.

“Amid several economic challenges, opportunities abound and only those who can think big can become successful in these trying times,” Femi Pedro, former deputy governor of Lagos State and SMEDAN chairman.

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Monday 16 December 2019

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news

Lagos to test-run blue line rail December 2020 Joshua Bassey

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agos State government is to test-run the first phase of its 27km blue line rail system by December 2020.

The first phase of the project spans from Mile 2 to OrileIganmu.

It has taken the state government more than 11 years to construct the rail project started in 2009 under the administration of Babatunde Fashola (now minister of works and housing).

The initial cost of the blue line was put at $1.2 billion. It is not officially clear how much the state government has so far invested in the project, but an unofficial sources put it at over N100

billion.

Lagos, Nigeria’s largest city by population (estimated at 21 million), lies prostrate to congestion. The blue line rail project was initiated as part of measures to address the perennial congestion of the city from the western flank, linking Marina from Okokomaiko, but has struggle over the 10 years without a breakthrough.

But speaking with journalists on Sunday as part of activities to mark the 200 days in office of the Babajide Sanwo-Olu’s administration, Gbenga Omotosho, the commissioner for information and strategy, said the first phase would roll in December 2020.

Omotosho also informed that some international companies had shown interest in partnering the state government in the project, but he did not disclose the identities of the companies.

Also, within the last 200 days of the administration, Omotoso said, eight multinational construction firms were mobilised to carry out massive repair on critical highways in what was christened “Operation 116.”

“This was followed by extensive palliative and maintenance works, especially by the Public Works Corporation, which has rehabilitated hundreds of roads and cleared several drainage channels in various parts of the state

Power minister assures of support for indigenous manufacturers to bridge metering gap KELECHI EWUZIE

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inister of power, Saleh Mamman, says the Federal Government of Nigeria remains committed to support indigenous manufacturers in the power subsection to bridge the metering gaps in the country.

Mamman, who gave this assurance during a courtesy visit to a meter manufacturing plants, Momas Electricity Meters Manufacturing Company Limited (MEMMCOL) in Lagos, said there were Nigerian companies with the capacity to meet the metering manufacturing challenges in the country.

“The government is willing to assist local meter manufacturers, at the same time we

need to allow other investors to invest. But in doing so, we have to give consideration to Nigerian manufacturers,” Mamman said. Kolawole Balogun, chairman/CEO, MEMMCOL, while commenting on the challenges of local meter manufacturers, said funding remained constant because the Discos require recapitalisation.

According to Balogun, “They need adequate funding to be able to buy efficient meters for the consumers. Liquidity and insufficient funding in terms of single digit from the institution of borrowing is not available that is why the metering requirements are not met, this is what the meter access providers are facing.”

Balogun said the visit of the minister presented the com-

pany the opportunity to showcase to the world that they have the ability to deliver metering solution and be able to meet all the needs in terms of metering requirements in Nigeria.

“All we now need is government’s intervention to make liquidity available for local manufacturers to produce on a larger scale for the populace that require meters,” he said.

Commenting on his observation after the facility tour which afforded him the opportunity to see things for himself and assess the state of infrastructure on ground, the minister said, “I am impressed to see a Nigerian company producing meters at such a commendable scale to help address the metering gaps in the country.”

Shobanjo gets honorary doctorate degree at OAU, Ile-Ife

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bafemi Awolowo University (OAU), Ile-Ife at the weekend honoured Biodun Shobanjo, chairman of Troyka Group, with a doctorate degree.

The honorary doctorate degree was conferred at the 44th Convocation of the university.

Eyitope Ogunbodede, vice chancellor, while conveying the university’s Governing Council’s approval to the honoree, said the Governing Council “has approved that an honorary degree of Doctor of Letters (D. Litt.) Honoris Causa of the University be conferred on you at the 44th Convocation ceremonies scheduled to hold on December 14, 2019”.

“The conferment of the honorary degree on you is in recognition of your outstanding corporate achievements, unique contribution to the media and communications industry, humane social activism and passion for the development and promotion

of ideals, vision and mission of the Obafemi Awolowo University, Ile-Ife,” Ogunbodede said.

An elate d Sho banj o thanked the university, particularly the Governing Council, for finding him worthy of such honour.

“Knowledge alone is not enough,” Shobanjo told those graduating from the university.

“Except you are very passionate about what you do, very visionary, and can discover new grounds, knowledge will not be able to make you impact society.”

Offering the graduating students his recipe for success, he said, “Irrespective of all the years spent in the university, you have to be able to bring it to bear on society. Textbook knowledge would not suffice, without impacting on people and society daily, because at the end of it all, what society will remember us for is what we have been able to make a difference at, and how it is delivered.”

New book provokes thoughts on customer-centric approach to businesses IFEOMA OKEKE

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n e w b o o k ‘A Smarter Way to Do Business’ brings to light a new dimension to sustaining and remaining relevant in business, which is being customer centric.

The new book, launched in Lagos last week, is authored by Carlos Wanderley, who is also head of retail banking business at Union Bank.

Speaking during the launch, Wanderley says very few companies in Africa including Nigeria have customers at the centre of what they do, making it difficult for them to understand customer behaviours, problems, anxieties and issues.

He stresses on the need to treat customers specially, adding that only companies who have customers’ needs at the centre of what they do have stood the test of time.

“In 2011, I wrote a prototype of this book because I saw a lot of companies that were in the right direction on a customer centric way using technology in terms of database to enrich knowledge and move back to a customer centric approach.

“Because of the crisis we had in 2007 where companies and people lost a lot of money, people forgot about the customers and only thought about how they can get more money. The companies that didn’t do that are currently dominating the world”. www.businessday.ng

L-R: Muminu Adekunle Badmus, MD, Lagos Water Corporation; Ayodele Hamzat Subair, chairman, Lagos State Internal Revenue Service (LIRS); Hakeem Fahm, Lagos State commissioner for science and technology, and Akin Doherty, MD, Alpha-Beta Consulting LLP, at the LIRS/Alpha-Beta stakeholders forum on e-Tax in Lagos.

Manufacturing export gets boost on stable exchange rate, FX policies Cynthia Egboboh, Abuja

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t N996.8 billion Nigeria recorded 839.44 percent increase in the value of manufactured goods export in third quarter of the year, boosted by a stable exchange rate and FX policies of the Central Bank of Nigeria (CBN), experts say.

According to report from the National Bureau of Statistics (NBS), the increase was driven by export of Cable sheaths of Iron and steel valued at N750.3 billion exported to Ghana, floating and submersible drilling platforms exported to Ghana and valued at N117.4billion, as well as Vessels and other floating structures for breaking up worth N41.7 billion was exported to Cameroon.

Figures indicate that the value of total exports in Q3, 2019 stood at N5.288 trillion, representing a 15.02

percent increase compared to the previous quarter. Crude oil component amounted to N3.7478 trillion (70.84%) of total exports during the period under review while Non-crude oil export grew significantly in Q3, 2019 and was valued at N1.5407 trillion (29.13%).

“Increase recorded was due to the re-exports of high value Cable Sheaths of Iron, as well as submersible drilling platform, Vessels and other floating structures, transportation equipment; petroleum & coal products; furniture & related products; electrical equipment; plastics & rubber products; food, beverage and tobacco products; nonmetallic mineral products; printing & related support activities; cement; fabricated metal products; primary metal; chemical and pharmaceutical products; and textile, apparel, leather & footwear,” National bureau of statistics

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data revealed.

The NBS figures apparently confirms CBN’s Manufacturing PMI in the month of November stood at 59.3 index points, which indicated expansion in the manufacturing sector for the thirty-second consecutive month.

The index grew at a faster rate when compared to the index in October, the CBN had noted in the report.

Also, at 60.1 points, the production level index for manufacturing sector grew for the thirty-third consecutive month in November, indicating a faster growth as against its level in October 2019.

Speaking with BusinessDay, Chijioke Ekechukwu, former director-general, Abuja Chamber of Commerce and Industry (ACCI), attributed the increase to the government policies as well as the stable exchange rate which has promoted exportation of locally produced @Businessdayng

goods in the country.

He said the government in the last four years has heightened efforts through the central bank policy as well the national export promotion council to promote exportation and improve the balance of trade.

“In the last four years we have the government undergo programs aimed at boosting the small and medium enterprise, through financing, and trainings to improve the standard of our local production.”

The exchange rate has been a major factor that is driving the exports as the stable exchange rate is to the advantage of export trade”.

Prior to this period, our products have suffered rejection and under-priced but now it is accepted because the NEPC gives training to entrepreneurs to improve the standard of goods produced in the country.

Monday 16 December 2019

BUSINESS DAY

news

49

‘Mining sector key to Nigeria’s development’ JOSHUA BASSEY

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overnor Babajide Sanwo-Olu has called on players in both public and private sectors to prioritise the mining industry, as it is critical to the development of Nigeria.

According to Sanwo-Olu, there is also the need for strong collaboration between the federal and state governments for a sustainable development in the sector.

Sanwo-Olu spoke while receiving Olamilekan Adegbite, Nigeria’s minister of mines and steel development, who was in Lagos to converse with the governor on Federal Government’s plans for the mining sector.

Such collaboration, SanwoOlu believes, should be targeted to encourage growth and diversification of the economy, noting that the outcome would be victory for the people.

“Nigeria needs to see how development can happen in the mining sector, and it has to be an inclusive one. As much as possible, we need to push for transparency there. It has to be a development that truly reflects our federating state and the minister has assured that it is an area they want collaboration.

“As a state we must also trust and see that we are on the same page. For us it should be about development for the people, the nation, growth and diversification of the economy.

It’s really an opportunity to take our state and our nation to a greater height,” he said.

The governor commended the minister’s team and assured that his administration would ensure full cooperation with the Federal Government for the benefit of the general public.

Adegbite explained that the Federal Government was desirous of creating job opportunities in the sector, but lamented long time neglect of the sector, but expressed the joy that attention was gradually shifting to the mining.

The team will visit all the states across Nigeria to enlighten them on new developments, with Lagos being the first state to visit, the minister said, saying, “We are in Lagos in furtherance of the issues that arose from the NEC meeting held last week, during which we discussed the potential of the mining industry towards diversifying the economy of Nigeria and creating more employment opportunities.”

NNPC hinges trading surplus of N5.20bn in August on subsidiary impact … supplies 1.92bn litres of petrol Olusola Bello & HARRISON EDEH

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n what looks like an improvement in its balance sheet, the Nigerian National Petroleum Corporation (NNPC) has announced an increased trading surplus of N5.20 billion for August 2019.

This is reflecting an increase of 22 percent when compared with the N4.26 billion-surplus posted in July 2019, according to the August 2019 edition of the NNPC Monthly Financial and Operations Report (MFOR) of the Corporation.

The report attributed the appreciable increase of 22 percent within the period under review to, largely, the improved surplus posted by the Nigerian Petroleum Development Company (NPDC).

It explained that the percentage increase in performance of the company evened out with the decline in the performance of Nigeria Gas Company (NGC) vis-à-vis July, 2019 figures, even as it added that the increased surplus posted

by Duke Oil and the reduced deficit by the Nigerian Pipelines and Storage Company (NPSC) equally bolstered the figures for the month, according to the report.

Samson Makoju, NNPC’s acting group general manager, group public affairs divi-

sion, while stating a summary of NNPC’s group operating revenue and expenditure for August 2019, said the report indicated that it increased by 7.58 percent at N540.60 billion, reflecting an increase of N38.10 billion compared with the previous month’s performance.

It further stated that the expenditure for the month followed a similar trend with increase of 7.46 percent or N37.16 billion, to reach N535.40 billion during the year under review, declaring that the proportion of expenditure to revenue was almost at par for the current month as well as in July 2019.

In the Downstream Sector of the corporation’s operations, the NNPC MFOR stated that N233.42 billion was made on the sale of white products by the Petroleum Products Marketing Company (PPMC), the Downstream subsidiary of the National Oil Company, in August 2019, compared to N214.70 billion sales in July, 2019.

Total revenues generated from the sales of white products for the period August 2018 to August 2019 stood at N2,687.29 billion, with PMS contributing about 95.19 percent of the total sales valued at N2,558.13 billion. www.businessday.ng

L-R: Ernest Esada, GM, employee relations; Jennifer Abuah, head, cocoa sustainability; Mukul Mathur, president/country head; Shaibu Muhammed, head, business controller; Damilola Adeniyi, corporate affairs manager, and Teven Fairbain, head of external affairs , all of Olam, at the 30th anniversary celebration of the company in Lagos.

Pic by Pius Okeosisi

FID on train 7 to be signed this week, as NLNG signs 20-year gas supply agreement … to generate $9bn, 10,000 direct jobs Olusola Bello

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he Final Investment Decision (FID) on Nigeria LNG Train 7 will be signed this week, as a 20-year gas supply agreement for the project was sealed last weekend with gas producers.

The gas producers are Nigeria Agip Oil Company (NAOC), Nigerian Petroleum Development Company (NPDC) and Oando plc. The signing of the gas agreement is a critical step towards the realisation of the Train 7 project of the Nigeria Liquefied Natural Gas (NLNG).

The potentially $7 billion project is expected to move the production of the company from 22 million

tons per annum (mtpa) to 30mtpa. In addition to this, its execution will create over 40,000 direct and indirect jobs, and deliver 100 percent engineering of all noncryogenic areas in-country.

Speaking on the significance of the execution of the Gas Supply Agreement, Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), said with the agreement in place, all was set for the takeoff of the project, stressing that the FID on the project would be taken this week.

A release by NNPC acting group general manager, Group Public Affairs Division, NNPC, Samson Makoji, stated that on the impact of the project to the national economy, the NNPC boss said it would boost the Fed-

eral Government’s revenue by $9 billion and generate about 10,000 direct jobs and 40,000 indirect jobs to ease the youth unemployment challenge in the country.

Also at the event, Osagie Okunbor, country chairman of Shell Group of Companies in Nigeria and managing director of Shell Petroleum Development Company (SPDC), expressed appreciation to Mele Kyari for his purposeful leadership that saw the partners coming together to sign the Gas Supply Agreement.

He, however, urged the partners to look beyond Train 7, adding that it was time to move into action.

Wale Tinubu, group chief executive, Oando plc, on his part, expressed gratitude to the Federal Government

for creating policies that encouraged indigenous companies like his to join the league of gas suppliers to NLNG, and thank the NNPC chief executive for his leadership and support.

On his part, Patrick Olima, who represented managing director of Total Nigeria, pledged the company’s commitment to making gas available for the NLNG and executing other big projects in the country like the Egina Project.

The managing director of Nigerian Agip Oil Company (NAOC), who was represented by Massimiliano Bertona, also thanked Kyari for the skilful way he drove the process leading up to the signing of the Gas Supply Agreement and pledged the commitment of the company to supplying gas to NLNG.

AXA Mansard promotes Industry leaders honoured as Entrepreneurship Summit held in Lagos financial inclusion in Nigeria GBEMI FAMINU

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very year, the Leadership Roundtable Summit has been a platform where young people learn about leadership, development and entrepreneurship, and this year was no different as the theme of the summit was, ‘Enterprise Leadership: The Roadmap to National Development.’

In the past four years the summit has taken place, it has played host to leaders in different industries, which include individuals like Jimi Agbaje, Demola Ogunbanjo, John Obidi, Spirit of Saco, and several other dignitaries. This fourth edition, held at Lagos Oriental Hotel, equally had in attendance speakers and guests like the commissioner of youths and sports, Oyo State, Seun Fakorede,

Kemi Lewis of KLS Naturals, Akindele Gbogboade, Moni Adanijo of Naveen Healthcare, Onyeka Akumah of FarmCrowdy, and several others.

Chairman of the planning committee, Yvonne Adewumi, when welcoming guests mentioned that the host company, Global Leadership Institute (GLI), had reached out to over 3000 youths and entrepreneurs through the yearly summit and several other workshops.

While addressing participants at the summit, Seun Fakorede encouraged members of the audience, especially the youths, to make the global standard their standard of measurement and not that of their local environment, as that was the only way an individual could compete on a global scale.

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XA Mansard plc, a member of the AXA Group, a leader in insurance and asset management, in a bid to promote financial inclusion and deepen insurance penetration participated at the recently concluded 2019 Enhancing Financial Inclusion and Access (EFinA) conference.

The conference, themed ‘Unlocking the Potential in Every Nigerian: The Path to Inclusive Economic Growth’ had in attendance select players from the financial space.

The conference aims to examine the transformative power of financial inclusion and its potential to accelerate inclusive economic growth through poverty reduction, employment generation, and wealth creation.

Commenting on the event, Alfred Egbai, head of Emerging Customer at AXA Mansard Insurance, said, @Businessdayng

“We at AXA Mansard are very excited to be a part of an event like this. This will not only be of benefit in terms of financial inclusion but also on our drive to increasing insurance penetration in Nigeria, which is abysmally low at less than 0.4%.

“At the event, AXA Mansard was present and exhibited its array of products for savings and investments, health insurance, property and life protection and retirement planning. Participants in the conference were engaged and put through important steps in overall financial planning.”

Egbai concluded by saying, “AXA Mansard is very much aligned with the focus of EFinA to drive financial inclusion in Nigeria, hence the aptness of our partnership. Through research, data gathering, customer need identification and bespoke product tailoring.

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Lawan, Tallen flag off Wuye Market trade fair Cynthia Egboboh, Abuja

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L-R: Adekunle Mokuolu, president, Nigerian Society of Engineers (NSE); Seyi Makinde, governor, Oyo State, and Babagana Mohammed, deputy president, NSE, during the 13th Fellowship conferment lecture of NSE, themed ‘Engineers in Politics: Panacea for Accelerated Development’ held in Abuja. Picture by Tunde Adeniyi

Aliyu sues for unity, integration among African oil producing nations James Kwen, Abuja

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he Federal Capital Territor y (FCT) Minister of State, Ramatu Tijjani-Aliyu has called for unity and integration among member countries of African Petroleum Producers Organisation (APPO) with a view to maximizing the developmental and welfare benefits accruable from petroleum exploration activities.

Aliyu who made the call at a dinner of the extra-ordinary session of the Council of Ministers of APPO in Abuja said for the continent to compete favourably with Saudi Arabia, Russia and the United States, member countries must put an end to the disunity and hyper-balkanization that characterized today’s Africa and further promote

its integration.

She tasked African leaders to assist member countries in creating more synergies in their oil and gas industries, noting that such synergies will strengthen Africa’s influence in world markets and enable it to better meet its own energy needs.

The Minister further noted that despite the challenges across the entire oil industry value chain, the APPO with 18 member countries, accounts for nearly 95 percent of Africa’s oil production and accounts for at least 13 percent of world production.

“There is no doubt in my mind that Africa’s oil and gas potential can compete today with that of any other region in the world. If Africa were to be considered as a single producer, it is certain that our continent

would challenge Saudi Arabia, Russia and the United States.

“However, to properly compete, we must put an end to the disunity and hyper-balkanization that characterized today’s Africa and further promote its integration”, he said.

Aliyu noted that Africa has proven itself as a host of mega discoveries with a wealth of untapped and undiscovered potential, stressing that Africa oil and gas producers are of course globally competitive, and the investments are already beginning to pick up with the rebound in the oil price.

“Today most African countries are silos doing things their own ways, building their own refineries, plants and gas turbine.

This should not be the way to go. Rather we should extend hands of infrastruc-

tural relationship across Africa; build joint pipeline, plants and refineries; begin to protect the African market, then we would have taken a huge step, not only in the development of Africa, but to the stabilisation of independent countries,” the Minister maintained.

In the same vein, Secretary General of APPO, Omar Ibrahim noted that there was the the need for the organization to build trans-boarder infrastructures for the benefit of the continent, stressing that if the organization can put its resources together, greater success will be achieved.

He commended the role Nigeria has played in the growth and development of Africa and its contributions to African Petroleum Producers Organization since inception over three decades ago.

Nigeria has less than 1% foreign students in tertiary institutions - Jega Godsgift Onyedinefu, Abuja

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hairman of the Committee for Internationalisation in Nigerian Universities, Attahiru Jega has said Nigeria currently ranks low on the internationalisation index as a survey carried out by the Committee in August 2019 indicated that the percentage of all foreign students in Nigerian tertiary education system as at 2018/2019 session was 0.16 percent.

Jega who made this known in Abuja during

a presentation of the report of the Committee explained that in the 194 institutions that responded, there were 1,856 foreign students out of 1.132 million students and there were 437 foreign academic staff from a total of 5,604 in the institutions including universities, polytechnics and colleges of education.

He noted that Nigeria has the largest tertiary education system in Africa and should be active player in the internationalisation of education in the continent and the word through the process of adwww.businessday.ng

missions amongst others.

Responding, Is-haq Oloyede, Registrar of Joint Admissions and Matriculation Board (JAMB) urged the Nigerian government to develop a national policy to attract and increase the number of foreign students and academics in Nigerian universities as the country scores low on the internationalisation index.

Oloyede said internationalisation in tertiary institutions has been one of the major issues in Nigeria education system, stressing that countries

which have high percentage of foreign students took deliberate actions and developed a policy to internationalise higher education.

“Without a policy, what are we doing? in other places, they deliberately take active actions to internationalise. There are countries of the world that their tertiary education is populated by non citizens, and their economy is better. The report of this Committee will be used to form a national policy on internationalisation of tertiary education”, he said.

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he Senate President, Ahmad Lawan and the Minister of Women Affairs and Social Development, Paulline Tallen have declared opened the third edition of the Wuye Market Trade Fair organized by the Managing Director of All Purpose Shelter, Yemisi Suswan.

The Senate President represented by the Chairman Senate Committee on Power, Gabriel Suswam and other guests were exposed to various goods and farm produce displayed at the trade fair with the theme, “Ensuring Food Security For All.” Speaking at the ongoing Trade Fair at Wuye Market, Abuja, the Minister who was represented by Mary Ekpanyong lauded the efforts of the organizer and appealed to Nigerians to patronize goods at Trade the Fair.

She urged women particularly to take advantage of the various intervention programmes of government to grow their businesses as-

suring that the Ministry will support the Trade Fair.

The Minister who said Wuye Market is a reflection of a modern market put up by all purpose properties urged the people to patronize the market, adding that micro small and medium enterprises are the driven force of the economy.

In his remarks, the Director General of Abuja Investment Development Company Limited, Abubakar Saleh commended Suswam (Mrs) for organizing the fair describing it as ‘amazing.’

Encouraged by the design of the market, Saleh said that the Abuja Investment company would partner with private investors to build more markets in new Districts of the capital city.

He said, “we are having a partnership to develop markets in all the Districts in Abuja to reduce the traffic in Wuse Market. We have to engage the private sector to develop these markets. Our relationship with All Purpose Shelter is cordial.”

Abuja chamber targets business development to deepen economic growth Harrison Edeh, Abuja

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he President of Abuja Chamber of Commerce (ACCI), Adetokunbo Kayode has said the Chamber is focused on businesses development in order to drive economic growth, stating that it will be mobilising both international and national partners to carry out several activities, functions and programmes to that effect.

Kayode who spoke in Abuja at the award and dinner ceremony of the Chamber said it has succeeded in mobilising both local and international investments into the country using business friendly activities.

“It has been a very busy year for us and we have every reason to celebrate. The primary focus of Abuja Chamber this year has been to continue and complete our legacy projects.

“Next year, our target is business development. We want to be able to enlarge and widen our businesses.

We want to deepen our relationship with international and national partners so that businesses will continue to flourish in Nigeria.

“Nigeria’s economy is expected to grow next year. And it will not happen unless all of us here take the issue of business development very seriously. And that is what we will do next year.

ACJMC trains SARS officers on application of criminal justice law

Godsgift Onyedinefu, Abuja

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s part of efforts to curb cases of illegal arrest and detention by law enforcement agencies, Officers of the of the Police Special Anti Robbery Squad (SARS) have been trained on the administration of the criminal justice Act (ACJA) 2015 by the Administration of Criminal Justice Monitoring Committee (ACJMC).

Peter Omenka, a Consultant at the Rule of Law and Anti corruption (RoLAC) programme, speaking at a two-day training organised by the RoLAC and funded by the European Union and Brut@Businessdayng

ish council in Abuja said the training became necessary to address cases of gross human rights abuse during arrest and detainment of suspects.

He explained that Magistrates under the new ACJA visited places of detention to inspect how arrest were made and why, adding that Magistrates reviewed the cases in SARS and discovered that over 200 detainees were releases in less than a week and moved to various prisons.

“This means the period of their stay had elapsed going by the law, the law says within a certain period they should be released even if investigation is going on”, he said.

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Randle family holds thanksgiving, memorial service for late patriarch

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he annual Thanksgiving and Memorial Service for late Chief J.K. Randle; M.V.O. Lisa of Lagos will hold December 17, 2019, at the Cathedral Church of Christ, Marina, Lagos at 2pm.

He died December 17, 1956, at the age of 47 years, shortly after his return from Melbourne, Australia. He was the Chiefde-Mission of the Nigerian Olympic Team to Melbourne, while the Captain of the team was Alhaji K.A.B. Olowu. The 10 athletes on the trip were captain and 100m and long jump athlete, K.A.B. Olowu, R.A. Oluwo, a pole vault athlete; J.O. Chigbolu, V.O. Gabriel, the late E.A. Ajado, 100m and 4x100m relay; T.A. Erinle, T. Obi, A.K. Amu, P. Esiri (deceased) and former Attorney-General, P.B. Enigo, who participated in the triple and long jump events of the 1956 Games.

The accompanying officials, all deceased, were Randle, (Chef-De-Mission), A.A. Ordia (coach), J.A. Enyeazu (assistant coach) and Arthur Cooper, Nigerian Attache,

Melbourne.Chief J.K. Randle was also the Chairman of Lagos Island Club and the Lagos Racing (Horse Racing) Club as well as a member of Lagos Town Council and member of the Lagos Executive Development Board. Following the demise of Alhaji KAB Olowu on 14th August, 2019, all members of the team have died. KAB was the last of the Titans.

Chief J.K. Randle was a businessman, politician, philanthropist and outstanding all round sportsman (cricket, football, boxing, athletics, draughts etc). While still a student at King’s College he played cricket at the international level as a member of the Nigerian team against Ghana (then known as Gold Coast) in 1929 and scored a century.

Incredible!!

Special prayers will also be offered for the abducted Chibok girls who would have been in captivity for years on that day. The sacrifices of the soldiers/security forces and the tragedy of victims of insurgency will also merit prayers.

NIRSAL facilitates N6bn fertiliser, grain investments by Stanbic IBTC Bank Cynthia Egboboh, Abuja

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he Nigeria IncentiveBased Risk Sharing System for Agricultural Lending (NIRSAL) says it has facilitated over N6 billion into strategic projects in the pre-upstream and midstream segments of the agricultural value chain financed by Stanbic IBTC Bank in Kaduna State.

Specifically, NIRSAL has provided Stanbic IBTC Bank with Credit Risk Guarantee (CRG) cover on a credit facility worth N875 million to Hulhulde Nigeria Limited – a fertiliser Super Agro Dealer, as well as N3.6 billion and N1.72 billion facilities for LoryB & DP Ventures Limited and Nalmaco Nigeria Limited, respectively, both grain processing companies.

NIRSAL’s partnership with Stanbic IBTC Bank nationwide has led to the facilitation of a total of N23.1 billion in agribusiness loans under its CRG cover in line with its In line with its core mandate.

Authorities say the part-

nership continues to set the pace in NIRSAL’s relationship with commercial banks as it pursues its goal of significantly increasing total bank lending to agriculture.

NIRSAL’s 75% CRG cover on Hulhulde’s facility supports its value chain financing logic, by allowing access to reliable and affordable fertilizer to the thousands of smallholder farmers served by the Super Agro Dealer.

Also, the issuance of 50% CRG cover to the LoryB & DP Ventures Limited and Nalmaco Nigeria Limited creates guaranteed markets for the local smallholder farmers who supply the grain processors.

Speaking during a tour of the premises of the benefiting companies, Aliyu Abdulhameed, NIR SAL managing director/CEO, pointed out that the CRG cover gives a boost to the beneficiaries’ businesses in more ways than one.

“Firstly, it eliminates complex collateral requirements in accessing the fa-

cility by using inventory as security; secondly, it will reward good loan behaviour with Interest Drawbacks of up to 40%, effectively reducing the cost of capital,” Abdulhameed stated.

“These incentives ultimately improve the companies’ bottom-lines, enabling them to engage more labour and generate more output,” he said.

Leveraging on its $300 million Risk Sharing Facility with which it secures up to 75% of agricultural loans, NIRSAL continues to woo banks to increase lending to Agribusiness by investing in a risk-free, profitable financing ecosystem.

With the current low pricing of financial assets, NIRSAL’s call becomes more resonant given that the real sector now presents banks with the best opportunities for higher earnings.

In addition to guaranteeing agribusiness loans, NIRSAL deploys its project monitoring mechanisms aimed at ensuring the suc-

cess of projects and the preservation of NIRSAL’s balance sheet.

According to Abdulhameed, NIRSAL structures financing deals that are collateralized by inventory, making access to finance easier and smoother for borrowers.

He also noted that the organization has developed financing frameworks that speak to different commodity value chains, most notably for fertilizer and grains (Fertilizer Financing Framework & Grain Financing Framework).

Wole Adeniyi, the deputy chief executive, Stanbic IBTC Bank, restated the Bank’s commitment to supporting the real sector of the economy – especially agriculture – to aid the diversification of the Nigerian economy.

He said it was for this reason that Stanbic IBTC Bank dedicated a financing portfolio of N10billion in partnership with NIRSAL for projects across the agricultural value chain in 2017.

Dangote, NB win IoD corporate governance awards 2019 SEYI JOHN SALAU

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angote Cement plc and Nigerian Breweries (NB) plc, two of Nigeria’s leading players in the manufacturing sector and on the Nigerian Stock Exchange (NSE), were recently conferred with the Institute of Directors’ (IoD) Nigeria Corporate Governance Awards 2019 for their roles in deepening corporate governance practice in the manufacturing sector of the economy.

“The Corporate Governance Award is a collaborative effort between the Nigerian Stock Exchange and IoD Nigeria to promote and inculcate compliance to good corporate governance and best practices in the companies listed on the exchange. We are grateful to the leadership of the Nigerian Stock Exchange for their support in this regard,” said Chris Okunowo, president/chairman of Governing Council, IoD Nigeria, at the annual

directors’ dinner and awards night 2019, held in Lagos.

According to Okunowo, the IoD Nigeria annual directors’ dinner and award offers the institute an opportunity to recognise and confer various honours on deserving institutions and individuals, who have distinguished themselves in their respective fields of specialisation.

The 2019 financial year has been very challenging for many corporate organisations owing to the harsh operating environment. However, Okunowo was of the opinion that Nigerians have again proved to the world that as a people we can manage our affairs.

“Recent statistics released by the National Bureau of Statistics indicate that our economy is headed in the right direction, even though there is still, of course, a long way to go.

“Our mindset is to lead a new vista of engagement with government, which will eschew confrontation but embrace diplomacy and partnership”.

Turkish Airlines pledges to freight passengers’ baggage before Dec. 17 Ifeoma Okeke

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onsequent upon the suspension of Turkish Airlines operations into Nigeria, Abdullahi Sidi, acting director-general of the Nigerian Civil Aviation Authority (NCAA), met with the management of Turkish Airlines at the NCAA office in Abuja on Friday.

At the end of the meeting, the Airline’s executives

pledged to commence immediate freight of all left over passengers’ baggage in Turkey to Nigeria.

According to them, this will be achieved by instantly upgrading the Boeing 737 – 800 being used and found inadequate to a larger Airbus A 330 and Boeing 737 – 900.

The programme of clearance will be carried out from December 13 to 17, 2019. www.businessday.ng

L-R: Nicholas Emeka, recipient of MTN-MUSON Scholarship; Aishatu P. Sadauki, director, MTN Foundation; Reginald Okeya, director, MTN Foundation; Louis Mbanefo, chairman, MUSON; Dennis Okoro, director, MTN Foundation, and Rita Uzoma, recipient of MTN-MUSON Scholarship, at the MTN-MUSON Donors Appreciation Concert in Lagos.

Seven years after, Ministry of Aviation abandons construction of transit hotel IFEOMA OKEKE

...as conveyor belts at D-wing Lagos international airport breaks down

even years after the commencement of construction of transit hotel at the Murtala Muhammed International Airport (MMIA), Lagos, the Ministry of Aviation has abandoned the project.

The hotel, which construction commenced in 2012 by Stella Oduah, the erstwhile minister of aviation, had remained abandoned by succeeding ministers in the sector.

Oduah had said the government intended to build the transit hotel, situated on the third floor of the terminal, only for transit passengers who were travelling beyond Nigeria to other parts of the

world.

Apart from Nigeria, other major airports across the world like London Heathrow, Gatwick, Dubai International airport and several other European, American and African airports have transit hotels for passengers waiting to travel beyond the present point.

During the foundation laying ceremony of the hotel, Oduah had said the government would earn more revenues from the service, while it would make Nigerian airports to favourably compete with its counterparts.

She lamented that most passengers with connecting flight had to either sit on the

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floor at the airport or drive outside the terminal to rest before the arrival of their flights.

In late 2015, during the maiden tour of the Murtala Muhammed Airport, Rotimi Amaechi, minister of transportation, and Hadi Sirika, then minister of state for aviation, had promised to continue with the project, concurring that it would improve the revenue generation for the government.

But, seven years after the commencement of the construction and four years after the tour of the facility by this government, the project had remained abandoned. @Businessdayng

Investigation revealed that some workers at the airport now used the abandoned facility as their rest place. Further investigation indicated that the construction, which was at the demarcation and fitting stages since 2014 when Oduah was removed, still remained same till date.

A source close to the terminal wondered why a hotel, conceived for commercial purpose, could be abandoned by succeeding ministers in the sector.

The source, who does not want his name mentioned, attributed this to policy summersaults in the sector.

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news Nigeria’s real estate receives major boost Despite Child Rights Law, cases of child SEGUN ADAMS

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s Nigeria and the rest of Africa step into a new decade of anticipated growth, development and possibilities, the future of Nigeria and Africa’s real estate is about to change forever.

DBillions PV City Nigeria Limited, developer of Nigeria’s foremost fully solarpowered real estate masterpiece (DBillions PV City), has concluded and signed a partnership and investment arrangement with Aspire World Investment (AWI) LLC, a leading investment management outfit in Dubai, UAE, with over $1.35 billion invested capital across the world.

With an ‘undisclosed’ equity investment by AWI, DBillions will be utilising the new investment to wrap-up its flagship project, DBillions PV City, located in Ibeju-Lekki region of Lagos State, Nigeria, and replicate across strategic cities in Africa and the UAE. The DBillions PV City is an ultra-modern mix-use development providing an eco-friendly environment with the most sophisticated amenities that supports a balanced and healthy lifestyle. It

includes smart homes apartments, commercial spaces, state-of-the-art shopping mall, clinic, Montessori school, automated sewage system, community recreation hub, fibre-to-the-home infrastructure for high-speed internet connectivity, autogarage and a masterpiece 16-floor skyscraper with a rooftop pool and helipad.

In parallel, the partnership sealed with AWI enlists DBillions as the Nigeriarepresentative and exclusive local organiser of the Aspire World Expo – the biggest and largest Middle East investors platform for local and international markets – gathering 48 countries, 48 embassies, 48 chambers of commerce, 4,800+ investors and 48,000+ attendees annually.

Munir Ahmed Chaudhary, president of AWI, buttresses the importance of the partnership with DBillions, stating the partnership will help achieve sustainable growth in the MEA (Middle East and Africa) real estate sector, as both companies aligned focus on developing healthy living environment lends credence to the realisation of the Sustainable Development Goals of the United Nations.

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abuse on the rise in Nigeria - experts Godsgift Onyedinefu, Abuja

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t is been 17 years since the Federal Government of Nigeria passed the Child Rights Act, but experts in child right and advocacy matters have decried that despite the law, cases of violence, abuse against the Nigerian child are on the rise while their voices are still being stifled.

Ugonna Ezekwe, a child expert and a consultant for the Rule of Law and AntiCorruption (ROLAC) programme, says the Act, passed in 2003, has suffered low implementation because government lacks the political will to, and public awareness on the act is poor among others.

Ezekwe, who spoke at the end of a two-day training of police officers and investigators in handling children in conflict with the law by ROLAC and supported by the British Council and European Union, states, “The law has not been implemented, passing the law is one thing, implementing it is another, incidence of child abuse have been increasing in the society.

“Government do not see the issue of children as a priority, which is very unfortunate, because these are the

children who are our future, but they don’t prioritis issues relating to children maimed because, children cannot speak for themselves, they don’t have a voice,” Ezekwe says.

Ezekwe informs that one goal of the training is to increase knowledge and awareness around the Act for efficient implementation, noting that the Child Rights Act prescribes some standards in dealing with children or handling cases that involve children.

She says, “For the past two days we’ve been training police officers mainly investigators, prosecutors and officials of the specialised police children’s unit and handling of cases that involves children.

“This training was informed by the fact that we have a child right Act in Nigeria that was passed in 2003, but an assessment was done and we found that the law was not being implemented and most people were not aware of the law and some were not aware of the roles they have to play under the law.

“So, ROLAC took it upon themselves to try to ensure that at least the project allows that the law would be implemented for the good of children and for the good of the Nigerian society.”

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AfDB to make Oyo agroprocessing zone - Makinde ... says will sustain tempo of development REMI FEYISIPO, Ibadan

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overnor Seyi Makinde of Oyo State has disclosed that the Africa Development Bank (AfDB) is set to name the state an agroprocessing zone, adding that such a development will provide employment opportunities for the teeming youths in the state.

According to Makinde, we are also focusing on security and expansion of our economy through agriculture and agric-value chain. “ We k n ow t hat i t i s through agribusiness that our teeming youths can get jobs and I am pleased to announce that AfDB has agreed to include Oyo State in the Agro-processing zone and that will get the needed support,” he said.

The governor, who was speaking at his investiture as a Distinguished Member of the Ibadan Progressives Union (IPU) during a Special Reception held at the Government House, Agodi, Ibadan, declared the readiness of his administration to sustain the high tempo of

@Businessdayng

development he instituted in the state since his assumption of office in May 2019.

He said his administration had so far executed some landmark projects without accessing any borrowed fund.

A statement by the Chief Press Secretary to Governor Makinde, Taiwo Adisa, talked about the unprecedented level of development his government had brought to bear in the state in six months.

He had declared that he was not about to lift his legs off the pedal, adding that his administration would sustain the tempo of development.

He said: “The civil servants are here and I make bold to tell you all that we have not accessed one Kobo of borrowed money on the things we have done in Oyo State up till this moment.

“Now, on the issue of sustainability, I am an Engineer and if you see an Engineer digging a hole in front of your house, he already knows how the structure he will build on it would look like. So, we will sustain the tempo.

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Monday 16 December 2019

BUSINESS DAY

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Monday 16 December 2019

FT

BUSINESS DAY

57

FINANCIAL TIMES

World Business Newspaper

LAURA HUGHES AND CHRIS GILES

T

he leadership of Britain’s opposition Labour party has apologised for its “catastrophic” performance in Thursday’s election but refused to accept that radical leftwing policies were to blame.

In the wake of the party’s worst election result since 1935, the shadow chancellor John McDonnell said Labour’s agenda was the “correct one” and still “holds sway” among members.

His comments echoed those of party leader Jeremy Corbyn, who has said he was “proud” of Labour’s campaign and insisted that its policies “are popular”.

Speaking to the BBC’s Andrew Marr Show on Sunday, Mr McDonnell also appeared to endorse Rebecca Long-Bailey, the leftwing shadow business secretary, as a potential successor to Mr Corbyn when he steps down in the new year.

The party is bracing itself for a bruising leadership race between “true Corbynistas” who would maintain the party on its hard-left trajectory and moderates who want to tack back towards the political centre ground.

Strong contenders from the “soft left” could include Keir Starmer, shadow Brexit secretary, or backbenchers such as Jess Phillips, the MP for Birmingham Yardley, and Lisa Nandy, MP for Wigan.

Corbyn loyalists have blamed a combination of Brexit and hostile

Labour leadership apologises for catastrophic election result

Party braces for leadership race between ‘true Corbynistas’ and moderates

John McDonnell accepts blame for Labour’s defeat but stands by its radical leftwing policies © Charlie Bibby/FT

coverage in the mainstream media for a humiliating set of results that saw the party lose an unprecedented swath of seats in its northern heartlands to the Tories.

But numerous Labour MPs have said the rout vindicated repeated warnings that the party’s lurch to the left would risk electoral disaster.

In an open letter to the Sunday

Myanmar leader’s journey from human rights icon to UN’s top court makes for jarring contrast

A

ung San Suu Kyi warned during her 2012 Nobel Peace Prize acceptance speech in Oslo that those who ignored human distress sowed the “seeds of conflict, for suffering degrades and embitters and enrages”.

Critics of Myanmar’s de facto leader accuse her of doing exactly that during an extraordinary visit to Europe this week during which she has defended the country against claims of genocide against Rohingya Muslims.

Aung San Suu Kyi’s surprise choice to appear before the UN’s top court this week made for a jarring contrast with the acclaim she drew in Norway. Her defiance at the International Court of Justice deepened her estrangement from international admirers who once revered her for her resistance to Myanmar’s brutal military dictatorship.

Brad Adams, Asia director of Human Rights Watch, said Aung San Suu Kyi had shown herself to be a “cold, calculating politician” rather than someone who “protected the weak and the vulnerable”.

“She came and defended the Burmese military — the same one that persecuted her and her followers — from accusations of the worst crimes imaginable,” said Mr Adams, who watched proceedings in The Hague. “People have not been able to get it in to their heads that she is part of the problem. I think this is

going to change that.”

A visit to the Dutch parliament for talks on the Rohingya crisis was cancelled on Friday at the last minute.

The military crackdown launched in 2017 after attacks by Rohingya militias on security forces has driven more than 700,000 people out of the country and generated allegations of large-scale abuses, including murder, rape and arson.

Yet Aung San Suu Kyi’s rejection of the court genocide claim made by the west African nation of Gambia had disturbed those who held out hopes that she might give ground on her previous near-unqualified backing for the military’s actions.

In the sober setting of the neoRenaissance Peace Palace, which was opened just before the first world war, she styled the Rohingya’s plight as the fallout from the conflict in western Myanmar between the army and militant groups.

Many observers see her unyielding position — and her decision to lead Myanmar’s defence personally and draw huge publicity to the case — as an effort to tap domestic support in her Buddhist-majority country ahead of elections due next year.

Wearing Myanmar traditional dress and her trademark flowers in her hair, Aung San Suu Kyi dealt in a single sentence of her near half-hour opening speech with the “sufferings of the many innocent people whose lives were torn apart as a consequence of the armed conflicts of 2016 and 2017”. www.businessday.ng

Also apologising on Sunday, Mr McDonnell said: “It’s on me, let’s take it on the chin, I own this disaster so I apologise to all those wonderful Labour MPs who have lost their seats and who worked so hard.

“I apologise to all our campaigners, but most of all I apologise to those people who desperately need a Labour government. Yes, if anyone’s

Climate talks break up with no agreement on carbon trading

Genocide defence seals Aung San Suu Kyi’s international alienation MICHAEL PEEL

Mirror Mr Corbyn accepted blame saying that he was “sorry that we came up short”. But in a separate article for The Observer, he defended Labour’s policy agenda saying: “I am proud that on austerity, on corporate power, on inequality and on the climate emergency we have won the arguments and rewritten the terms of political debate.”

to blame it’s me, full stop.”

Labour’s National Executive Committee will decide on the leadership election timetable, but Mr McDonnell said he expected both himself and Mr Corbyn to step down within eight to 10 weeks.

Mr McDonnell also said Ms LongBailey “could be a brilliant leader”, before heaping praise on other loyal shadow cabinet ministers Angela Rayner, Richard Burgon and Dawn Butler. Ms Nandy, who said on the Marr show that she was “seriously thinking about” running for the leadership, did not feature on his list of preferred candidates.

Mr Burgon, shadow justice secretary, also backed Ms Long-Bailey as a future leader on Sky TV’s Sophy Ridge on Sunday and said he was “considering” running as her deputy if she threw her hat in the ring.

On the same Sunday politics show, Caroline Flint, who lost the seat she has held for 22 years to the Conservatives, laid into Mr Corbyn for not accepting enough responsibility for Labour’s devastating defeat.

At the Doha Forum in Qatar, Peter Mandelson, former minister and one of the architects of the party’s 1997 election victory told the Financial Times that the party’s mauling at the polls was “deserved”.

Longest-ever round of negotiations fails to make progress on key issue LESLIE HOOK

T

he UN climate talks in Madrid ended in stalemate on Sunday, with the negotiations running two days over time as countries squabbled over rules for a new global carbon trading market.

The talks, known as COP25, ran for 14 days and set a record for the longest-ever climate negotiations, but failed to produce any agreement on trading in carbon credits.

This year global carbon dioxide emissions rose to record levels, millions of students marched in climate protests and leading economies adopted new net zero emissions targets. But none of that translated into measurable results at the negotiations.

Jennifer Morgan, executive director of Greenpeace International, said the outcome was “totally unacceptable”.

“It is not adequate to just come back next year and say you are going to do more,” she said. “Governments need to completely rethink how they do this.”

The failure of COP25 to agree on the carbon market rules will complicate the task facing the UK, which takes over the presidency of the next UN climate talks in Glasgow next year.

Geopolitical tension and the low profile of the US and China, the world’s two biggest emitters, severely handicapped the negotiations, which descended into open

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bickering on the plenary floor in the final hours. Delegates appeared to be exhausted after all-night negotiating sessions on Friday night and Saturday night as negotiators raced to salvage a deal.

The Paris climate accord, which aims to limit global warming to well below 2C, has been signed by 197 countries.

But the agreement operates only by consensus and the original 2015 deal left many details to be worked out in future climate summits — a task that has been made much more complicated by fraying multilateralism and US opposition to the climate deal.

The US is in the process of withdrawing from the Paris accord on the instructions of President Donald Trump, and this year is the last it will participate as a signatory.

The withdrawal of the US, and efforts by Brazil and Australia to water down the outcome, all helped lead to a result that many countries said was dismaying.

António Guterres, UN secretary-general, said he was disappointed with the result of the COP25 talks. “The international community lost an important opportunity to show increased ambition on mitigation, adaptation and finance to tackle the climate crisis,” he said.

Farhana Yamin, an activist with Extinction Rebellion and former climate negotiator, said the Madrid talks had been a “setback”.

“The world is seeing how difficult it is to get countries to self@Businessdayng

agree on something they don’t want to agree on,” she said. “It is not the failure of the agreement itself, it is the failure in many countries, reflecting a return to the climate denial agenda.”

The EU delegation also said it was disappointed that the meetings failed to find agreement on carbon markets.

“This COP did not deliver all we came here for,” the EU said in its final statement, adding that it was “deeply concerned” that countries’ existing climate targets were far off track from what was needed to achieve the goals of the Paris accord.

As the UK prepares to take charge of next year’s climate talks, its handling of the summit is poised to be one of the biggest diplomatic initiatives for Boris Johnson, prime minister, after Brexit, which is scheduled for the end of January.

As president of the Glasgow talks, the UK’s job will be to rally more countries to adopt new climate targets for the middle of the century and to pick up the pieces on carbon markets.

Claire Perry O’Neill, the UKappointed president of next year’s talks, said she welcomed the challenge of sorting out the carbon markets issue.

“No deal is definitely better than the bad deal proposed,” she said, referring to the carbon markets framework discussion. “We will pull no punches next year in getting clarity and certainty for natural carbon markets.”

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Monday 16 December 2019

BUSINESS DAY

NATIONAL NEWS

FT Mayor Pete’s story makes him an ideal presidential candidate

Running a city may be the right kind of experience for those who want to govern in this complex age BRUCE KATZ

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ete Buttigieg, the mayor of South Bend, Indiana, has been one of the big surprises so far in the 2020 US Democratic presidential primary. A few recent polls show Mayor Pete, as he is commonly known, leading in both Iowa and New Hampshire, the first two states in line to vote for the nominee of the Democratic party.

This defies conventional wisdom on several fronts. At 37, Mr Buttigieg is young and mayor of a small city (about 100,000 people).

With the exception of former general Dwight Eisenhower and Donald Trump, modern presidents have previously served as vice-presidents, US senators or state governors.

Mr Buttigieg’s personal history combines traditional values and new territory: a person of deep faith and an Afghanistan war veteran, he is also gay and recently married, multilingual, a Harvard

address one of the key issues in this campaign: how to help urban and rural places left behind by globalisation. He hails from a former industrial city that lost its main manufacturing employer, the Studebaker auto company, 56 years ago, forcing the community to seek a new raison d’être with minimal state or federal help.

Mr Buttigieg has repositioned South Bend, which is home to the University of Notre Dame, as a “beta city”, for new technologies and policies such as life-long learning. The former Studebaker factory is now home to start-up and scale-up companies driven by local research, talent and investment from the university. One of his signature accomplishments was demolishing or rehabilitating 1,000 abandoned houses in 1,000 days.

Mr Buttigieg’s age, military service and work history have exposed him to the power and possibilities of technology, as well as the disruptions that are coming from

A customer pays in CFA francs in an Ivory Coast market. Critics of the currency say it hampers development in Africa © Bloomberg

Emmanuel Macron signals rethink on French-backed Africa currency Discussions to be held over CFA franc, which critics say is colonial relic

DAVID PILLING AND NEIL MUNSHI

F Beyond policy, Pete Buttigieg has attracted voters with a mix of authenticity, high-mindedness, intelligence and steadiness © AFP via Getty Images

graduate, a Rhodes scholar and a former McKinsey consultant. His rise reflects the changing nature of American politics and society.

Many voters want Washington to work more like cities or counties, where elected officials are expected to solve problems, and are routinely turfed out if they fail to get projects done. To this end, running a city may be the right kind of experience for those who want to govern in this complex age.

Mayors play a unique role in American governance. They often have to be pragmatic rather than rigidly partisan. To succeed, they must connect the dots between real-world problems, horizontally linking housing, environment and transportation rather than managing vertically-organised bureaucracies, as in the federal and state governments. The best ones work across sectors, bringing together corporate, philanthropic and university leaders to design, finance and deliver solutions.

Citizens expect mayors to show empathy as their cities face the carnage of gun violence, the ravages of the opioid crisis and the tragedy of homelessness. And good city leaders must exhibit intellectual agility to tackle persistent problems such as poverty and new challenges such as climate change. Mayors embody the bottom-up, networked, and interdisciplinary problem-solving that Jeremy Nowak and I studied and dubbed, “the new localism”.

Second, Mr Buttigieg’s record puts him in a good position to

artificial intelligence, robotics, autonomous vehicles, genomics and a host of other technologies.

His candidacy raises the intriguing prospect that federal policy will be reverse-engineered (with local innovations driving federal programme design) and hyper flexible, allowing local leaders to fit federal resources to local priorities rather than the other way around.

Beyond policy, Mr Buttigieg has attracted voters with a mix of authenticity, intelligence, and steadiness. Those qualities position him as the complete opposite, in temperament and character, of Mr Trump. In many respects, that is his pitch in this contest.

The Democratic race remains highly fluid. The Iowa caucuses will be held on February 3 — a lifetime away in politics. The first two states to vote are not emblematic of the changing demographics of the nation. Polls suggest that Mayor Pete has yet to resonate with black and Latino voters, who play a larger role in later primaries. The late entrance of another mayor, Mike Bloomberg, who ran New York for 12 years, may also shake up the race.

But one thing is clear: Mr Buttigieg’s rise reflects not only his personal appeal but also the emergence of cities and city leadership as driving forces of national renewal. American federalism — the way the US governs itself — is changing in fundamental ways. As with South Bend’s old Studebaker factory, there is no going back. www.businessday.ng

rench president Emmanuel Macron is this week expected to signal a possible rethink on the French-backed CFA franc used by west and central African states but that critics see as a colonial relic.

Alassane Ouattara, president of Ivory Coast, the region’s biggest economy, has been a strong defender of the euro-pegged currency, but has come under pressure from regional politicians and activists to challenge the arrangement. Mr Macron is due to meet Mr Ouattara in Abidjan this week and is expected to discuss the concerns.

Established in 1945, the CFA franc is used in two African monetary zones, one for eight west African countries and the other for six mostly petro-states in central Africa. Since 1999, it has been pegged to the euro, giving the member states monetary stability while supporting trade with Europe.

In return, the members have to keep half of their foreign reserves in France, on which the French treasury pays 0.75 per cent interest.

A French official sits on the board of the regional central bank in both zones, and the currency is printed by France.

Under Mr Macron, France is losing appetite for the system, according to a member of a panel that has briefed the president on the issue. The structure causes political friction, the adviser said, and fits poorly with Mr Macron’s vision for a postcolonial relationship with francophone Africa.

“The optics are so bad I don’t think it is sustainable for France to continue this arrangement,” the adviser said. “There is such a strong demand from African youth to take back their monetary

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independence.”

“The political costs may be outweighing the economic gains,” said Carlos Lopes, high representative of the Commission of the African Union, who said the currency’s stability had benefited French exporters and investors.

“Macron is not espousing the traditional French treasury attitude of keeping the status quo,” he said. “He means what he says when he says he is ready for changes, even radical changes.”

Defenders of the arrangement point to the stability of the CFA franc and the region’s success in controlling inflation, in contrast with neighbouring countries outside the currency zones.

Being in the monetary union has also helped keep a lid on fiscal indiscipline, said Amaka Anku at Eurasia Group, a political risk consultancy: “You don’t see [the] crazy fiscal slippages in any of the CFA countries you see in, say, Ghana.”

The French presidency, finance ministry and French central bank declined to make any immediate comment on the currency at what one official called a “delicate moment”.

But French officials said the decision lay with the African nations that used the system and that Paris was open to any changes proposed, for example to the deposit requirements.

Asked whether France would be ready to scrap it altogether, one senior official said: “It’s more a question of evolution.”

The CFA franc, particularly the obligation for member states to keep half their reserves at France’s central bank, has long provoked resentment. Opponents say it prevents countries from devaluing to counter external shocks and has hampered industrialisation by keeping the exchange rate artificially high. @Businessdayng

This month, Nathalie Yamb, an adviser to an opposition party in Ivory Coast and a Swiss-Cameroonian activist, was deported to Switzerland after she spoke out against the currency. In 2017, Kemi Seba, a French-Beninese activist, was arrested in Senegal after burning a 5,000 CFA franc note in front of hundreds of demonstrators.

Some African heads of state have also become more vocal. Last month, Patrice Talon, president of Benin, defended a proposal to repatriate some of the reserves kept in France.

“Psychologically, with regards to the vision of sovereignty and managing your own money, it’s not good that this model continues,” he said.

The eight countries in the west African region already intend to rename the CFA franc the “eco” next year. They hope to eventually replace it with a single west African currency which could include other west African states.

Laureen Kouassi-Olsson, who runs the Abidjan office of Amethis, an Africa-focused fund manager, said Mr Macron was a “new generation” of French leader, without nostalgia for France’s colonial ties. “His position is that, if the western African heads of state do not want the CFA franc any more, they should be able to exit that currency providing they have the means of doing so.”

But she added that she had concerns about a “monetary revolution” that she likened to the Arab spring, referring to the uprisings in the Middle East and north Africa that started in 2011.

“People are arguing from a very romantic and passionate angle,” she said. “We should take a very cool approach to it. A volatile currency is by no means a driver of growth.”

Monday 16 December 2019

BUSINESS DAY

59

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Russian web company Nginx complains over police raid Company under criminal investigation as it battles with Rambler MAX SEDDON

T

he founders of Nginx, the world’s most popular web hosting software, have complained at their treatment after their office in Moscow was raided by police and they were interrogated for several hours.

Maxim Konovalov, one of the founders, said armed policemen searched his apartment, and the home of the company’s other founder Igor Sysoev, at 7am on Thursday, interrogated them for four hours, and seized their mobile phones and electronic equipment.

The raids came after Rambler, Russia’s third largest internet company, made accusations last week that it owned Nginx’s source code, which was written by Mr Sysoev when he was a Rambler employee.

A copy of the arrest warrant posted on Twitter said police were investigating if Mr Sysoev had conspired to steal Rambler’s intellectual property and defraud it of Rbs51m ($811,000).

“Nginx was developed by Igor Sysoev starting in the early 2000s as part of his working relationship with Rambler, so any use of this program without Rambler Group’s approval violates our exclusivity,” said a Rambler spokesperson.

Mr Konovalov said: “Nobody ever talked to us about this, no questions, no lawsuits, nobody even approached us about agreeing, deciding, or saying we have a problem. We only found out about this through the criminal case. All of these accusations are groundless and the criminal case is also groundless.”

Nginx (pronounced “engine x”), was sold to San Francisco-based F5 in March for $670m, and hosts 38 per cent of the world’s websites on its servers, according to the internet research company Netcraft. Mr Sysoev developed its software in the early 2000s, making it freely available in 2004. He then left Rambler in 2011 to set up Nginx as a network services

provider.

F5 said it was working to “confirm the full nature of the investigation” but that following the raids it had promptly taken steps to ensure that all of its master software for Nginx is stored on servers outside Russia.

Igor Ashmanov, former Rambler chief executive, wrote on Facebook that he had agreed that Mr Sysoev could pursue developing Nginx when he hired him in 2000.

“He was a system administrator at Rambler. Developing software wasn’t part of his job description at all,” said Mr Ashmanov. “I don’t think Rambler can come up with a single piece of paper, never mind a non-existent task to develop a web server.” Rambler did not comment on Mr Ashmanov’s claim.

A leader among the first wave of companies on the “Runet” — Russian internet — in the 1990s, Rambler’s interests stretch from search to online media and streaming entertainment.

Billionaire Alexander Mamut, the former owner of Waterstones, bought control of Rambler in 2016, then sold a 46.5 per cent stake in the company to Kremlin-run banking giant Sberbank this year.

Sberbank first deputy chief executive Lev Khasis, chairman of Rambler’s board of directors, told the FT that he was “surprised” to learn of the charges and claimed the bank had discovered nothing relating to an investigation when conducting due diligence dating back to 2016. Mr Khasis said he would hold an emergency board meeting this month to discuss the issue.

Rambler said it had transferred the right to pursue the dispute to Lynwood Investments, a Cyprus-based holding company linked to Mr Mamut. A spokesperson for Lynwood said: “Rambler’s rights were violated. This conclusion was made on the basis of an investigation on the basis of which we approached law enforcement. Any company in such a situation would defend its rights.”

UK regulators step up external probes of financial groups

Reviews rise for first time in 4 years amid money-laundering and white-collar crime fears CAROLINE BINHAM

T

he number of independent investigations ordered by UK regulators into financial institutions has risen for the first time in four years, driven by concerns around money-laundering and white-collar crime, according to new data.

Regulators demanded 51 socalled skilled persons’ reports in the 2018-19 financial year, a 16 per cent increase on the previous 12 months. The reports, undertaken typically by a law or accountancy firm, are ordered when the Financial Conduct Authority or the Bank of England have particular concerns about an element of a financial company’s business.

The company under scrutiny typically has to pay for such investigations, which can cost upwards of £100,000, even if no breach is found.

The aggregate number of reports ordered has been gradually dropping off since the high of 140 in 2010-11 in the wake of the financial crisis but the most recent

figures herald a halt to that decline.

BDO, the accountancy firm that gleaned the data, expects more such reviews in the coming months. Concerns about the City’s controls against financial crime have been a particular focus, with 14 of the 51 reports relating to failings in this area.

“Regulators have been increasingly using these reviews to crack down on companies where there is a higher risk of money-laundering activities,” said Fiona Raistrick, a BDO partner.

“Online trading firms have come under particular pressure from regulators in this area. The FCA has urged them to tighten transaction monitoring to help reduce their exposure to potential money laundering and fraud.”

The FCA and BoE declined to comment.

Skilled persons’ reports, also known as Section 166 reviews, serve as an initial exploratory step and as such are typically kept confidential but can be used by the regulators to launch full enforcement investigations.

Such reports gained notoriety after a scandal at Royal Bank of

Scotland’s now-defunct restructuring division GRG. The FCA bowed to political pressure last year and handed the 166 report into GRG to the Treasury select committee, which published the report detailing “certain widespread inappropriate treatment of SME customers” between 2008 and 2013 that “should also be considered to be systematic”.

Ultimately RBS escaped an FCA penalty because, the regulator argued, commercial lending is unregulated.

Section 166 reports have become an increasingly important weapon in the FCA’s arsenal. When the FCA took over from the Financial Services Authority in 2013 it also gained the power to appoint directly the expert to lead such reports, rather than leaving it up to the companies involved in some cases.

That led to an increase in law and accountancy firms jostling to win a coveted position on the regulator’s approved panel of experts.

The fees earned by the experts can range from £4,000 to £4.4m, with costs for large financial institutions typically in the upper range.

Martin Guzman shows a better way to deal with debt crises

Toscafund scoops up 12% of troubled retailer Ted Baker

For too long, the economics profession has rewarded people who are better at maths than morality

JONATHAN ELEY

RANA FOROOHAR

O

ne of the major economic lessons of the past decade is that austerity doesn’t work.

As countries from Greece to the UK have found, you can’t create growth when both the private sector and the public sector are cutting spending. The mathematics simply do not work.

But, while politicians and the public have largely come to embrace this wisdom, economic policymakers and the financial markets have not — until now.

Last week’s appointment of austerity critic Martín Guzmán as the new economy minister of Argentina, and the subsequent stabilisation of both Argentine bond prices and the peso, marks an important turning point in the conventional wisdom about how to fix failing nations.

It also marks another step in the most important economic shift of

our time — the transition from an era of wealth accumulation that began in the 1980s, to one of wealth distribution.

At first glance, it might seem that the market optimism around Mr Guzmán makes no sense. He is, after all, someone who has argued for rules that would make it tougher for some creditors to be paid (in the short term).

An economist at Columbia University and protégé of the Nobel laureate and IMF critic Joseph Stiglitz, Mr Guzmán understands that if struggling nations need sufficient breathing room to grow. If they are locked into unrealistic debt repayment programmes, they will be more likely to default again. He co-edited a book with his mentor arguing that sovereign debt restructuring tends to come too little, too late, which is one of the reasons that more than half of them are followed by another restructuring or default within three to seven years. www.businessday.ng

Hedge fund now second-biggest shareholder behind departed chief executive Ray Kelvin

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hedge fund run by one of the City’s most aggressive managers has taken a stake of nearly 12 per cent in troubled retailer Ted Baker, intensifying speculation about its future.

Toscafund Asset Management emerged as a significant shareholder on December 10, the day Ted Baker revealed that profits for the full year would collapse to no more than £10m and said its chairman and chief executive would leave. The fund’s holding at that point was 5.9 per cent as a result of purchases made four days earlier.

That soon expanded to 11.9 per cent, making Toscafund the secondlargest shareholder after founder Ray Kelvin. Ted Baker declined to comment and Toscafund did not respond to a request for comment.

Conventional long-only fund groups such as Invesco and Baillie Gifford have been reducing their holdings in the company, which has warned on profits four times in the past year.

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Toscafund was founded in 2000

by Martin Hughes, a former portfolio manager at Tiger Management, and has around $4bn under management.

“He likes to buy stuff that is very cheap and kicks off if it doesn’t go up,” is how one person who knows Mr Hughes well described the fund’s modus operandi. “He has been extremely shrewd over the years in buying up assets other people didn’t want and being very patient.”

The person added: “I expect he has bought into Ted Baker because it’s trading at a tenth of its former price and he thinks it is fixable.” Ted Baker shares closed on Friday at 373p, down from a peak of almost £35.

Although Toscafund is not explicitly an activist, it has not been afraid to intervene at companies where it has invested in the past. In 2016, it tried unsuccessfully to oust Speedy Hire executive chairman Jan Astrand.

It also has a history of investing in companies run by founders with significant equity stakes. In 2012, it backed an attempt by Steve Morgan to take housebuilder Redrow private, @Businessdayng

though the bid was later withdrawn.

Two years later it helped founder Matthew Riley take telecoms provider Daisy private.

It currently owns shares in TalkTalk, where Carphone Warehouse founder Charles Dunstone is executive chairman, and IWG, the serviced office provider run by Mark Dixon.

A person with knowledge of the matter said that there had so far been no contact between Ted Baker and Toscafund.

The involvement of the hedge fund comes amid speculation that Mr Kelvin might attempt to take the company he established in 1987 private in order to facilitate his return in some capacity.

A spokesman for Mr Kelvin declined to comment.

One banker said it was unlikely that a conventional private equity house would back a buyout by Mr Kelvin owing to the circumstances of his departure from Ted Baker. He quit as chief executive in March this year amid allegations — which he has strenuously denied — of inappropriate behaviour towards staff.

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Monday 16 December 2019

BUSINESS DAY

FT

ANALYSIS

UK dealmaker Robey tops £100m in pay since leaving Morgan Stanley Latest results for Robey Warshaw show M&A trio earned £48m last year ARASH MASSOUDI

S

imon Robey has personally earned more than £100m since leaving Morgan Stanley to start a rival corporate advisory firm that has worked on some of the biggest UK mergers and acquisitions.

An FT analysis of five years of results from Robey Warshaw, the 13-person firm he runs with two partners, shows that profits paid out to the former senior Morgan Stanley investment banker have reached £104.6m.

Total profits to the firm’s three partners reached £189.1m in that period, meaning Sir Simon’s colleagues — ex-UBS banker Simon Warshaw and former Morgan Stanley banker Philip Apostolides — have divided the remaining £84.5m.

The results make the trio some of London’s highest earning bankers over that time and highlight why several veteran investment bankers have taken their prized Rolodexes from Wall Street institutions and set up their own private advisory firms.

In the UK Robey Warshaw has emerged as the most successful of these so-called advisory kiosks, winning several high-profile FTSE 100 advisory mandates on large scale takeovers.

That work has typically flowed to top investment banks such as Goldman Sachs or JPMorgan Chase, which are staffed with teams of

bankers. But the smaller kiosks led by dealmakers with senior corporate relationships have been able to nibble away at their dominance and land blockbuster payouts for their work.

Other successful examples include firms started in New York by ex-Citigroup banker Michael Klein and former Goldman Sachs banker Gordon Dyal.

Most recently, Robey Warshaw has been advising the London Stock Exchange Group on its $27bn acquisition of data provider Refinitiv and the subsequent defence of the LSE from a hostile takeover bid by Hong Kong Exchanges & Clearing.

The FT calculation for Sir Simon’s earnings include his most recent payout of £27.7m in the year to the end of March 2019, up from £12.1m a year ago.

That figure was released in Robey Warshaw’s most recent annual accounts, which provides a breakdown of the sum “provisionally attributable to the Member with the largest entitlement to profit for the year” without making direct reference to Sir Simon.

Sir Simon has the largest stake in the firm and is the member in question, the FT understands. Robey Warshaw declined to comment.

The firm’s full-year profits climbed to £48.4m in the year to the end of March, up from £21.3m.

Turnover in the period rose to £60m from £29.6m.

Head of Bundesbank warns against ‘fetish’ of balanced federal budget Political mood is shifting against long-running attachment to fiscal surpluses MARTIN ARNOLD

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he head of Germany’s central bank has added his weight to growing pressure for the country’s government to increase public investment and warned its commitment to a balanced federal budget should not become “a fetish”.

The comments by Jens Weidmann in an interview with Süddeutsche Zeitung published on Saturday underline how the political mood in Germany is shifting against its long-running attachment to fiscal surpluses after the economy slowed down markedly this year.

The government’s promise to maintain a budget surplus has come under fire from economists and from the ECB. But recently the political debate on the issue of the “schwarze null”, or “black zero”, has intensified.

Finance minister Olaf Scholz said recently that he supported the new leaders of his Social Democratic party in their push for higher public investment that should not be impeded by the promise to maintain fiscal prudence.

Mr Weidmann’s interview indicates he is becoming more supportive of the ECB’s policies under its new president Christine Lagarde than he was under her predecessor Mario Draghi as he made rare statements about the benefits of negative interest rates.

“One must also ask what would have happened if monetary policy had not been expansionary,” he said.

“It is important that we do not remain trapped longer than necessary in this low-interest phase.”

Widely considered a leading opponent to the ECB’s ultra-loose monetary policy, Mr Weidmann pointed

out that Berlin was saving €55bn a year on servicing its debt compared to what it would have paid if interest rates had stayed at 2007 levels.

“Yes, it is difficult to invest money safely and profitably,” he said. “But monetary policy has a broader effect. It has supported the economy and helped to raise employment and wages.”

He added that “at times there were negative real interest rates on [German] short-term savings deposits in the 1970s, 1980s, 1990s and 2000s”.

Having previously sounded sceptical about Ms Lagarde’s promise to make tackling climate change a priority for the ECB under her presidency, the Bundesbank boss sounded a more positive note.

“I agree with Christine Lagarde that we must better understand how climate change and climate policy affect our core tasks,” he said, while adding: “But central banks cannot make climate policy themselves. That is up to governments and parliaments.”

Once dismissed by Mr Draghi as Nein zu Allum — No to everything — Mr Weidmann has spent many years resisting the ECB’s increasingly unconventional policies that have flooded markets with cheap money.

But he appeared to soften his opposition to key ECB policies on Saturday, adding his voice to calls

by Ms Lagarde for countries with strong fiscal positions to use them to increase public investment, a move she says would make monetary policy more effective.

“There is nothing to be said against using short-term budgetary leeway to strengthen the basic conditions for growth through investment or to relieve the burden on citizens,” said the Bundesbank boss. www.businessday.ng

Macau: lessons for Hong Kong from Beijing’s ‘good student’ There is growing anger over inequality in the former Portuguese colony, so why are the people not protesting?

SUE-LIN WONG

J

ust across the Pearl River from Hong Kong sits what the Chinese Communist party believes is a model for ending the crisis in Asia’s main financial hub: Macau.

The former Portuguese colony, which was returned to Chinese rule 20 years ago this week, was praised by a senior official on December 3 for having grasped the “spirit of the central government”. The implicit message was that Hong Kong, after months of often violent pro-democracy protests, had not.

On the surface Macau and Hong Kong have a lot in common. The two former colonies are the only parts of China governed under “one country, two systems”, which grants them a “high degree of autonomy” including freedom of speech, a free press and a more robust legal system than mainland China. But during the past 20 years, Macau — one of the richest places on earth in per capita terms — has trodden a different path to its neighbour, which is experiencing its worst political crisis in decades.

Just over 30 sq km and with a population less than one-tenth of Hong Kong’s, Macau has long been portrayed

by Beijing as the “good student” compared with the former British colony, which is seen as the more unruly one.

Macau overtook Las Vegas as the world’s largest gambling hub in 2006, but its economy is even more dependent on China than Hong Kong, with more than 70 per cent of the 40m tourists who visited last year coming from the mainland.

Around 80 per cent of government revenues in Macau, the only place in China where casinos are legal, come from the gaming industry. But it is poised for its first fall in gaming revenues since 2016 due to China’s economic slowdown, the US-China trade war, a weakening renminbi and the Hong Kong protests.

“Macau matters more than its size conveys because Hong Kong, and even Taiwan, can look at what Beijing wants its future to be by looking at what Macau has become,” says Jorge Menezes, a prominent Portuguese lawyer in Macau. “These are cascading social experiments and Macau has been the first to fall because it is weaker and less demanding. Beijing can do whatever it wants here.”

Government officials from mainland China have long used Macau to hide and launder money, says Icy Kam, head of the pro-democracy group New Macau Association. That role acts as an added incentive to pacify local residents.

Both Macau and Hong Kong are pawns, says Sonny Lo, a political scientist who has studied the two cities.

Chinese president Xi Jinping’s ultimate goal, he says, is the “great rejuvenation

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of the Chinese nation” — including reunification with Taiwan, which split away from mainland China after the 1949 revolution.

Mr Lo says Beijing does not want to make concessions on universal suffrage under the one country, two systems model originally conceived as a blueprint for the reunification of Taiwan before talks begin with Taipei.

Macau has both a weaker civil society and sense of local identity than Hong Kong, analysts say. The city has always been more compliant than Hong Kong and passed national security legislation in 2009 which, when floated in Hong Kong in 2003, brought half a million people on to the streets and persuaded the local government to scrap the bill.

“The Macau model will take at least 20 to 30 years to realise in Hong Kong,” says Mr Lo. “And I don’t think even 30 years will be enough.”

Since sweeping to power six years ago, Mr Xi has tightened his political grip across China, including through the steady erosion of the one country, two systems framework in Macau and the freedoms it allows, say academics, lawyers and journalists.

“In theory we can criticise the government, but in reality we don’t,” says one veteran Chinese journalist in Macau who spoke on condition of anonymity. “We’ve learnt that criticising the [Macau] government, the Chinese Communist party and Beijing only brings us trouble. They can pull advertising or send the triads to beat us up; it’s been really bad since Xi came to power.”

The authorities in Macau did not respond to requests for comment.

“Over the past six months, we’ve really felt Beijing ramping up the pressure in Macau because they are terrified the Hong Kong protests will spill over,” says Ms Kam. Local activists have tried to hold demonstrations in Macau in support of the Hong Kong protests on four separate occasions this year. All were banned, including one against alleged police brutality. Macau’s Court of Final Appeal ruled in September that allowing such a demonstration would interfere with Hong Kong’s internal affairs.

“The ruling was totally absurd. If a group of people want to demonstrate in favour of or against the police, they are not interfering in decisions made by the Hong Kong government,” says Paulo Cardinal, who was the chief legal adviser specialising in constitutional affairs in Macau’s Legislative Assembly for 26 years before his contract was cancelled last year. “This is the first time we saw a CFA decision rely on such weak legal grounds. It’s a decision that worried many in Macau’s legal and academic communities.”

Neither Hong Kong nor Macau has universal suffrage so freedom of protest plays an outsized role in enabling residents to voice their discontent. The last large-scale protest in Macau, in 2014 @Businessdayng

against lavish retirement packages for top officials, forced the thenchief executive to withdraw the proposal.

Mr Cardinal and Paulo Taipa, who was the chief legal adviser on gaming laws, were both dismissed last year by Ho Iat Seng, the then head of Macau’s legislature, who said their departures were due to “restructuring”. Mr Ho, the sole candidate to run for chief executive this year, will be formally sworn in as Macau’s leader on December 20, the 20th anniversary of Macau’s handover. Mr Xi is expected to attend the ceremony to announce policies aimed at diversifying the gambling hub’s economy into a financial centre.

“The two Paulos were excellent, brilliant advisers. These were political sackings, no doubt about it,” says Mr Menezes. “Neither of them were able to find jobs anywhere in Macau afterwards, not at casinos, not in the government, not in law firms, not at universities.”

Chart showing that Macau’s citizens are some of the richest in the world. GDP per capita, $’000s, selected countries.

Mr Taipa, who helped write many of Macau’s gaming laws in the 1990s, is now an adviser to the Portuguese government. “How could Paulo Taipa not find a job in a casino? He’s one of the best gaming lawyers in Macau. It’s because the casinos were all afraid because politics and business are one and the same here,” says Mr Menezes, who has brought cases including for breach of contract against casino groups in Macau such as Sands, Galaxy and Wynn.

The Macau government did not respond to a request for comment.

In 2013 Mr Menezes was the victim of a premeditated attack as he walked his son to school. The assault, which he blames on the triads, almost cost him his life. One person was convicted and Mr Menezes subsequently moved his family to Portugal. “The police never investigated the person who ordered the attack because this person was too powerful to be investigated,” says the lawyer.

The Macau police did not respond to a request for comment.

Aside from attacks on lawyers and the rule of law, Macau has also witnessed a rapid rise in the use of security legislation, surveillance technology including facial recognition, and police powers. Multiple pro-democracy lawmakers, lawyers, activists and scholars from Hong Kong have been barred from entering the territory. Immigration officials in Macau even blocked a baby who shares the same name someone on the blacklist. Two senior figures from the American Chamber of Commerce in Hong Kong were also prevented from entering Macau this month following the passage of legislation in Washington to scrutinise China’s human rights record in Hong Kong.

BD Money

Monday 16 December 2019

BUSINESS DAY

COVER

Commodities

Nigerian Millennial who built $2000 cryptoportfolio in one year shares lessons

This ‘cash-cow’ seed has managed to elude investors

The name- sesame seed might be strange to some Nigerians. The seed – In the next decade many young people who will inherit wealth from the older popularly called Benne seed in the Northern part of Nigeria is an important generations will have to decide where to invest some of their fortune. One 25- crop to the Nigerian agricultural sector and non-oil sector. The crop is largely year old who started his crypto-investing journey a year ago with just $40 tips cultivated in the country, thriving in relatively poor climatic conditions.

Cryptocurrencies for good returns.

Page 62 www.businessday.ng

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Page 63 @Businessdayng

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Monday 16 December 2019

BUSINESS DAY

Monday 16 December 2019

BUSINESS DAY

Cover Story

Commodities

Nigerian Millennial who built $2000 cryptoportfolio in one year shares lessons SEGUN ADAMS

This ‘cash-cow’ seed has managed to elude investors Why is the demand for this small seed huge?

Sesame seed has numerous uses, one of which is in being a very good source of vegetable oil that contains no cholesterol, making it the most demanded vegetable oil in the world. It can be used in pharmaceuticals, confectionery, cosmetics and many industries for paints, soaps, lubricants, shampoos, etc. Sesame seeds contain 50.5% oil and 25% protein.

Has Nigeria tapped into the sesame value chain?

Sadly, Nigeria only engages in the exportation of the seeds and does not extract the oil at commercial scale. Contract cleaning facilities are available in Lagos, nevertheless, there are no hauling operations.

Currently, the exportation of sesame seeds in Nigeria is led by three companies: Olam, Kelani Ark Poter Hamlet Ltd, and Greenwen International Resources.

Olam is an Indian agribusiness multinational company operating from seeds to shelves in over 60 companies. Olam also exports cash crops like cocoa, coffee, etc. Kelani Ark Poter Hamlet Ltd is a seasoned exporter of most agro-allied products from Nigeria. Other leading sesame seed exporting companies include Errand Horse Ltd, Paveway International Traders Ltd, etc.

Although, Nigeria’s Sesame seeds holds value for exports and is currently in hot demand throughout the world because oil extracted from the seeds is better than any other oil in the whole world. Nigeria manufacturers can better make use of this seed if they can engage in value addition process to the seed.

No doubt this small sesame seed can be termed a diamond in the rough, which can earn Nigeria billions of dollars in foreign exchange annually if government pay more attention to the seed and encourage investment in its value chain. Also, its oil could be extracted on a commercial scale, with much value addition.

OLUFIKAYO OWOEYE

I

n the next decade many young people who will inherit wealth from the older generations will have to decide where to invest some of their fortune. One 25year old who started his crypto-investing journey a year ago with just $40 tips Cryptocurrencies for good returns.

Edward (not real name), our millennial crypto-enthusiast, made his first investment in EOS and it grew nine-folds in two months. Since that time, he has put money into other types of crytpos with Bitcoin, Zedcash, Ethereum, and Litecoin as his largest holdings although Wanchain is his personal favourite cashspinner for now.

If all these names are flying at you do not panic because the very first step to becoming successful at investing in Cryptocurrencies is researching.

Education first, invest in knowledge Edward says hundreds of hours spent reading books on Cryptocurrencies, watching Youtube videos and discussing with people who have a “skin in the game” is a good first step.

“Warren Buffet advises against investing in businesses you do not understand,” Edward said. “Even if you’d have someone manage your investment, understand the market yourself.”

The 25-year old investor listens frequently to Cryptolak and Michael Novogratz and has Chris Ani, C.E.O. CryptoHub, and Gaius Chibueze, C.E.O, abitttrade, as mentors.

No Quick Money-buy for belief not money Design-thinking, which is a mental picture of you want to do and a longterm strategy, is the next thing you should work on according to Edwards.

“You should not invest in Cryptos for the money,” he says. “Invest in the technology and the potential. Invest in your belief.”

According to Edward, investing for money would make one jumpy. It would set one up to lose out on the long-term benefit of investing in Cryptos, which

T

in the future would have greater acceptability, and its underlying technologyBlockchain-which is a revolutionary technology with positive future prospects.

Invest in coins that solve problems Similar to the previous point, the $2000 crypto-rich investor says the choice of the cryptocurrency is important because some coins do not have long-term value while others are strategically positioned for long-term value delivery.

“Different coins that play different roles in market,” Edward said. “Bitcoin, Altcoins and Tokens have distinctions that can be useful when you are investing.”

Edward however says one should not put all of one’s eggs in a basket-of course, after studying tokens that do well.

Bloody market is good entry Don’t go into the market when it is all green. You just may get burnt if you join www.businessday.ng

63

the market just because it is gaining, Edward warns. “The market might just be at its peak.”

Instead, investors should enter when the market is declining especially when you are sure it is close to its bottom (i.e won’t decline further).

Like other assets, you should buy low and sell high to make profit, he said.

Don’t be overly optimistic-stop loss That you’re investing in Cryptos shows you have a higher risk-tolerance than someone investing in many other asset classes but you should always set a limit for the loss you can tolerate rather than let your portfolio enter a free-fall mode in a bear market.

A stop-loss is an order you place for a certain price below which you would sell-off a poorly performing asset.

You can count on Cryptos In Nigeria the stock market has been disappointing year-long. With the recent decline in treasury bills rate, restriction

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“

Even if you’d have someone manage your investment, understand the market yourself

from high-yielding OMO bills, and lower bonds yields, alternative investments and asset-classes are options being explored by investors.

Bitcoin, the most popular cryptocurrency, has jumped about 47 percent-even though it has been coasting down since its June year-high of almost $13,000.

@Businessdayng

he name- sesame seed might be strange to some Nigerians. The seed – popularly called Benne seed in the Northern part of Nigeria is an important crop to the Nigerian agricultural sector and non-oil sector. The crop is largely cultivated in the country, thriving in relatively poor climatic conditions.

According to the Foreign Trade Statistics Q3 2019, the seed ranks top on the list of traded Agricultural products ahead of cocoa beans and cashew nuts.

The total value of sesame exports in Q3 2019 was 14.83 billion, according to the Foreign Trade Statistics Report for Q3 2018 released by the National Bureau of Statistics (NBS).

Due to the drought-resistant nature of the sesame plant, it thrives excellently in the Northern part of the country and averagely in some parts of South West states.

Sesame seed production probably began in the Middle Belt region of Nigeria before spreading to other states.

The leading producers of the seeds are Jigawa, Nasarawa, Benue, and Sokoto.

Other sesame cultivating states include Yobe, Kano, Katsina, Kogi, Gombe, and Plateau states.

However, the seed can also thrive in some parts of the South East and South-South, since it has been successfully cultivated in Ebonyi State and the Northern part of Cross River State. Sesame also grew when planted in Delta State, but its hybrid did not yield many seeds, although the leaves were bigger.

Checks by BusinessDay shows that sesame seed is cultivated in about 26 states across the country with good returns for sesame farmers, buoyed by the huge demand by importers, its cultivation is expected to increase and spread to other states soon. www.businessday.ng

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@Businessdayng

Monday 16 December 2019

BUSINESS DAY

Market Wrap-up

D

uring the week, profit-taking activities continued in the equities market as the selloffs from the previous week persisted.

With losses recorded on three of five trading sessions of the week, the All-share index shed 1.2percent

to settle the YTD loss at -15.6percent.

A total turnover of 1.044 billion shares worth N14.628 billion in 14,974 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 952.697 million shares valued at N12.774 billion that exchanged

hands last week in 17,279 deals.

The Financial Services industry (measured by volume) led the activity chart with 556.905 million shares valued at N5.678 billion traded in 8,267 deals; thus contributing 53.33% and 38.81% to the total equity turnover volume and value respectively.

The Healthcare industry followed with 215.030 million shares worth N122.603 million in 412 deals.

The third place was Conglomerates industry with a turnover of 89.601 million shares worth N466.294 million in 874 deals.

Trading in the Top Three Equi-

Tender

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@Businessdayng

ties namely, Union Diagnostics and Clinical Services Plc, United Bank for Africa Plc and Guaranty Trust Bank Plc. (measured by volume) accounted for 379.095 million shares worth N3.066 billion in 1,704 deals, contributing 36.30% and 20.96% to the total equity turnover volume and value respectively.

Monday 16 December 2019

BUSINESS DAY

67

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 13 December 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 334,125.12 9.40 1.62 172 8,481,660 UNITED BANK FOR AFRICA PLC 225,716.18 6.60 -3.65 197 42,592,126 ZENITH BANK PLC 588,684.26 18.75 1.08 258 13,740,786 627 64,814,572 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 233,319.40 6.50 -0.77 210 8,519,248 210 8,519,248 837 73,333,820 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,346,875.35 115.30 -2.29 49 819,972 49 819,972 49 819,972 BUILDING MATERIALS DANGOTE CEMENT PLC 2,385,671.04 140.00 - 45 541,004 LAFARGE AFRICA PLC. 224,703.75 13.95 3.33 42 678,127 87 1,219,131 87 1,219,131 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 323,467.98 549.70 - 19 100,085 19 100,085 19 100,085 992 75,473,008 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 11,873.80 4.45 - 4 25,790 4 25,790 4 25,790 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 1 60 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 1 60 1 60 5 25,850 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 2,560 51,988.10 54.50 - 12 8,184 OKOMU OIL PALM PLC. PRESCO PLC 43,500.00 43.50 4.95 24 263,840 38 274,584 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 -5.88 5 212,500 5 212,500 43 487,084 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 1,032.44 0.39 8.33 3 102,933 JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 40,241.51 0.99 1.01 69 7,486,582 U A C N PLC. 25,643.54 8.90 1.14 121 4,156,950 193 11,746,465 193 11,746,465 BUILDING CONSTRUCTION ARBICO PLC. 577.67 3.89 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 25,080.00 19.00 - 64 687,405 ROADS NIG PLC. 165.00 6.60 - 0 0 64 687,405 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 2 3,437 2 3,437 66 690,842 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,281.43 0.93 - 3 20,000 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 64,616.29 29.50 - 34 95,210 INTERNATIONAL BREWERIES PLC. 86,818.21 10.10 - 7 71,345 NIGERIAN BREW. PLC. 421,436.74 52.70 - 66 1,638,173 110 1,824,728 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 198,600.00 16.55 3.44 85 1,863,592 FLOUR MILLS NIG. PLC. 79,137.33 19.30 - 46 331,983 HONEYWELL FLOUR MILL PLC 7,850.90 0.99 - 14 327,470 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 37,092.14 14.00 - 20 244,803 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 165 2,767,848 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 18,594.20 9.90 - 14 47,616 NESTLE NIGERIA PLC. 1,030,453.13 1,300.00 - 39 17,626 53 65,242 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 100 VITAFOAM NIG PLC. 4,878.29 3.90 0.26 19 515,344 20 515,444 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 20,845.00 5.25 5.00 38 1,012,622 UNILEVER NIGERIA PLC. 105,995.35 18.45 0.27 31 727,021 69 1,739,643 417 6,912,905 BANKING ECOBANK TRANSNATIONAL INCORPORATED 126,611.90 6.90 5.34 54 1,432,439 FIDELITY BANK PLC 60,267.58 2.08 1.46 59 4,850,346 GUARANTY TRUST BANK PLC. 859,390.43 29.20 0.69 113 6,818,612 JAIZ BANK PLC 19,741.05 0.67 6.35 28 926,625 STERLING BANK PLC. 56,429.22 1.96 0.51 48 2,209,299 UNION BANK NIG.PLC. 189,284.89 6.50 3.17 26 225,888 UNITY BANK PLC 8,182.54 0.70 - 8 198,842 WEMA BANK PLC. 25,844.89 0.67 3.08 29 2,266,299 365 18,928,350 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 100 AIICO INSURANCE PLC. 4,851.14 0.70 -2.78 15 2,067,153 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 13 3,975,390 CONSOLIDATED HALLMARK INSURANCE PLC 3,170.70 0.39 - 2 100,000 CONTINENTAL REINSURANCE PLC 22,820.04 2.20 - 0 0 CORNERSTONE INSURANCE PLC 9,721.48 0.66 6.45 5 380,900 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 19,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,830.86 0.25 - 7 430,344 LAW UNION AND ROCK INS. PLC. 2,362.98 0.55 - 0 0 3,920.00 0.49 2.08 8 1,130,540 LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 3 45,200 NEM INSURANCE PLC 10,296.98 1.95 -2.50 9 816,633 NIGER INSURANCE PLC 1,547.90 0.20 - 2 600 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 1 89 1,333.75 0.20 - 3 500,500 REGENCY ASSURANCE PLC SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 9 308,456 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 3 2,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 5,100 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 1,000 WAPIC INSURANCE PLC 4,416.30 0.33 -2.94 28 2,566,674 113 12,349,679 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,629.63 1.15 - 1 10,000 1 10,000

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,200.00 4.10 - 27 200,412 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 15 315,716 DEAP CAPITAL MANAGEMENT & TRUST PLC 600.00 0.40 - 0 0 FCMB GROUP PLC. 35,644.88 1.80 -0.56 74 2,861,164 1,337.80 0.26 -3.70 10 383,863 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 378,091.62 36.10 - 15 44,152 UNITED CAPITAL PLC 13,320.00 2.22 1.37 52 1,183,700 193 4,989,007 672 36,277,036 HEALTHCARE PROVIDERS EKOCORP PLC. 2,069.19 4.15 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 - 5 11,835,000 5 11,835,000 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 3 1,812 3 1,812 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,467.72 3.10 - 22 660,728 6,278.35 5.25 -9.48 31 1,916,333 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,692.00 2.14 - 2 16,000 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,253.44 0.66 - 5 53,103 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 60 2,646,164 68 14,482,976 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 - 2 80,000 2 80,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 0 0 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 1 3,000 1 3,000 PROCESSING SYSTEMS CHAMS PLC 1,408.82 0.30 -3.23 28 5,654,268 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 2 350 30 5,654,618 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 6 296 6 296 39 5,737,914 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 24 30,401 CAP PLC 16,800.00 24.00 - 35 93,964 CEMENT CO. OF NORTH.NIG. PLC 247,097.82 18.80 - 16 149,096 MEYER PLC. 286.87 0.54 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 75 273,461 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,395.40 1.36 0.74 13 581,326 13 581,326 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 3 3,125 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 3,125 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 91 857,912 CHEMICALS B.O.C. GASES PLC. 2,539.09 6.10 - 1 1,000 1 1,000 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 1,000 1 1,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 1 6,650 1 6,650 3 8,650 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 10 728,910 10 728,910 INTEGRATED OIL AND GAS SERVICES OANDO PLC 45,001.71 3.62 -4.74 44 906,209 44 906,209 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 15 9,363 CONOIL PLC 12,838.11 18.50 - 17 41,490 ETERNA PLC. 3,912.43 3.00 - 2 11,200 FORTE OIL PLC. 23,574.91 18.10 - 32 97,369 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 1 2,000 TOTAL NIGERIA PLC. 37,652.97 110.90 - 18 7,546 85 168,968 139 1,804,087 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 247.03 0.21 - 1 2,000 1 2,000 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 1 1,060 TRANS-NATIONWIDE EXPRESS PLC. 464.16 0.99 - 2 32,595 3 33,655 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 100 1 100 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,120.37 1.02 - 5 169,600 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 1 1,250 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 6 170,850 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,320.00 0.36 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 964.31 1.25 - 2 23,230 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 2 1,410 UNIVERSITY PRESS PLC. 569.46 1.32 -2.22 5 200,000 9 224,640 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 729.39 0.44 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Company IN FOCUS

BUSINESS DAY Monday 16 December 2019 www.businessday.ng

Cap plc: An upcoming disrupter in the African paint market?

OLUWASEGUN OLAKOYENIKAN

C

hange is the only c o n st a nt i n l i f e, and one’s ability to adapt to those changes determines the person’s success in life.

These are the words of American-born Benjamin Franklin several decades ago, and reflect the current efforts of Chemical and Allied Products (CAP) Plc to significantly grow its business amid a myriad of headwinds.

While the Nigerian paint industry is faced with unflinching obstacles and harsh operating environment, the paint-making subsidiary of United Africa Company (UAC) of Nigeria plans to create a solid base for its business by investing massively in information technology (IT), not only to overcome the challenges but also to deepen its footprint in the African marketplace.

CAP plc started the journey with a restructuring process in August 2019 which delivered for the paint maker a new leadership. Specifically, the Board of Directors of the company in a notice filed on the Nigerian Stock Exchange (NSE) announced the appointment of Awuneba Ajumogobia as a non-executive director and chairperson of the board; David Wright was appointed as the managing director; Udo Okonjo was chosen as a non-executive director of the firm.

These board changes came next after the appointments of Muhibat Omobolanle Idowu Abbas and Bolarin Okunowo as the firm’s non-executive directors.

Based on the profile of each of the new board members, it is apparent that they come from diverse backgrounds, but a unifying factor observed among them is the fact that all their experiences are linked to the business of CAP plc.

For instance, Ajumogobia is a Fellow of the Institute of Chartered Accountants of Nigeria and has more than 30 years of broad professional experience spanning several disciplines including finance, accounting, external audit, taxation, marketing, and business performance optimization.

Wright has extensive business and manufacturing experience with leading international paint companies, while Okonjo is experienced in the area of negotiating and advising on multi-milliondollar real estate transactions on behalf of clients, including multinationals, listed corporates, privately held companies, and high net-worth clientele.

More so, Abbas possesses over 30 years’ experience in internal audit, financial accounting, management account-

ing, treasury management and pension fund administration, while Okunowo has extensive experience in debt restructuring and recovery for complex transactions most notably in the wake of the 2015 oil price crash.

No doubt, these impressive profiles as well as the enthusiasm and determination the new board members have displayed probably gave Wright the assurance that they “are going to create a company that’s going to grow significantly in the future.”

CAP’s latest plans In an exclusive interview with BusinessDay, David Wright said now that the new board is in place and perhaps hitting the ground running, the company will be investing heavily in the coming year which would probably begin to yield some significant gains towards the end of 2020.

The managing director mentioned some specific investment plans such as an upgrade of CAP’s IT systems to SAP HANA in the cloud. “This gives us access to our business systems

and from any location, which means we can then implement Point of Sale data capture,” he said.

Besides this, there are plans to move to Microsoft 360. This AI model provides structure to the digital transformation planning of companies. Also, it creates a platform for businesses to engage in productive conversations with customers, optimise operations, transform products and services, among others.

The investment in IT structures will also be supported by some investments at the distribution end. CAP will be increasing the number of its Dulux colour sensors from 25 to 27 just before the end of this year. But that’s not all, its target is to add at least 12 more Dulux colour sensors in the year 2020.

“The focus is that we have a good product, we have a good top-of-mind recall for the Dulux brand, but at the end of the day, you’ve got to get the product in front of the customers,” Wright said. “We will be investing in distribution quite significantly

and we will probably be investing significantly in Caplux, which is our second brand.”

Furthermore, the paint maker hopes to introduce some new functional products such as anti-mosquito paint, damp shield and anti-mould paints, both in its flagship Dulux range and the Caplux range.

All this attest to the fact that the coming years will see new products and services from CAP which are necessary for any Nigerian company planning to become a significant player in the African paint market.

However, it is not sufficient to introduce new products to become a major player in the continent particularly for a paintmaking company that only plays in the decorative range, it is also essential to expand its business geographically to reach out to more customers and increase sales significantly.

The paint maker has consistently grown sales over the past five years except in 2016 when the Nigerian economy slumped into a recession. From

a turnover of N6.99 billion in 2014, the company made as much as N7.77 billion as sales proceeds in 2018, as its variant products enjoyed increased patronage. This is despite playing only in the highly-competitive Nigerian market which it’s yet to dominate.

“We first need to look at dominating the Nigerian market,” said Wright. “We intend to grow that so we become by far the major paint company in Nigeria.”

While CAP aims to lead the Nigerian paint market, there are plans to tap into the African market by exporting its Dulux and Caplux brands into its export territories in sub-Saharan Africa before the end of 2020, and perhaps expand into other regions in Africa over the coming years.

It is evident that the future of this paint manufacturer looks bright as paints manufactured by the company are patronised by both everyday Nigerians seeking to paint their homes, as well as construction companies and real estate firms that build homes for commercial purposes.

The planned big-ticket projects in Nigeria, economic recovery in the real estate sector even though it still remains sluggish, and the passage of the 2020 budget, should have positive effects on the paints sector.

Also, the implementation of the African Continental Free Trade Agreement expected to become effective on July 1, 2020, might give CAP easy access to other territories in Africa in line with the goals of the pact.

AfCFTA aims to establish a single market for goods and ser vices across 54 African countries, allow the free movement of business travellers and investments, and create a continental customs union to streamline trade – thereby attracting long-term investment.

CAP plc is the technological licensee of AkzoNobel for Nigeria. It was established originally as Imperial Chemical Industries (ICI) investments limited in 1957, but became ICI Nigeria Limited in 1965.

How e ve r, f o l l ow i ng t h e promulgation of the Indigenization decree in 1972 and 1977, ICI Nigeria Limited at first sold 40 percent, and then 60 percent of its share capital to the Nigerian public, and changed its name to Chemical and Allied Products Limited.

In 1992, ICI Nigeria Limited finally disposed of its minority 40 percent shareholding in CAP Plc when it sold 35.7 percent of its equity to UAC of Nigeria Plc. and the rest to the Nigerian public on the floor of the NSE. Currently, UAC of Nigeria Plc holds about 50.09 percent of the company’s equity.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.