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nited States electric carmaker Tesla has introduced in Nigeria batteries that can power homes and businesses, which could worsen the pathetic situation of electricity distribution companies (DisCos) currently veering dangerously close to insolvency. Dissatisfied customers, especially industrial consumers who provide the big cheques to DisCos, may replace the back-up function they are currently relying on grid power for with Tesla’s batteries which have proven to be more reliable. Launched in 2015, Tesla’s batteries have the capacity to allow consumers get off a power grid or bring energy to remote areas that are not on a grid. In Nigeria, the model the company envisages is that it will work similar to how milk is delivered. The producer brings a full bottle to your door and takes your empty bottles with him. Two sources familiar with Tesla’s plans in Nigeria confirm that the company will initially concentrate heavily on the industrial sector, providing between 1Kilowatt hour to 1MW

capacity batteries, capable of powering an industrial complex or an industrial estate, or between 10,000 to 100,000 homes. Tesla plans to leapfrog Nigeria’s current electricity crises the way GSM cellular providers bypassed NITEL’s inability to

provide landlines to consumers despite massive demand, sources familiar with the matter tell BusinessDay. “It’s good for the sector as there is always space for new players,” Chuks Umezulora, chief operating officer of Auxano

Solar, a solar panel assembling plant based in Lagos, said by phone. Nigeria’s 11 DisCos do not share this optimism. First, the bulk of their customers, especially small businesses, Continues on page 38

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DisCos’ woes worsen as Tesla eyes Nigeria’s power sector ISAAC ANYAOGU

FGN BONDS

TREASURY BILLS

Private jets, charter operators gain from election campaigns …as some operators engage in unauthorised services …NCAA beams searchlight on charter operations IFEOMA OKEKE here is an appreciable increase in the number of private jets and charter aircraft currently operating in Nigeria as a result of ongoing election campaigns and depleting fleet size for commercial airlines. BusinessDay’s checks show that Nigeria’s eight commercial airlines which altogether had over 70 aircraft on their fleet are currently struggling with about 30 to 35 aircraft, thereby causing passenger glut. This has driven passengers, especially those travelling in

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Inside Insight into the N470.2bn disclosed PE deals in 2018

P. A2

Analysis The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty

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2 BUSINESS DAY NEWS Nigeria projected to maintain policy rate as global trends worry major central banks g

SEGUN ADAMS

igeria has been projected to maintain its current monetary policy rate of 14 percent at the end of 2019, according to Bloomberg economists, as major central banks remain skittish of global trends. In an analysis conducted by Bloomberg, based on the median estimates of the latest monthly or quarterly survey and recently collected forecasts, only 10 out of 24 central banks covered have been estimated to raise their policy rates in 2019 as most of the G7 countries, including the United States, have been tipped to tighten policy stance. “That outlook marks a change from last year where a majority of central banks raised rates and the European Central Bank ceased buying assets. Of course, if economies weather the latest challenges, policymakers may need to rethink anew,” Bloomberg Reporters said, as heightened uncertainty about the trajectory for policy normalisation and reduced divergence between the Fed and the other central banks were identified factors steering the 2019 central bank outlook. The report further showed a mixed result across the Frontier and Emerging markets with the likes of Brazil, South Africa and Indonesia to favour a contractionary policy while Russia and Mexico would be inclined towards loosening policy stance as Nigeria, India and China have been estimated to leave the rates at existing levels. Rafiq Raji, chief economist at Macroafricaintel, agrees with the projection for Nigeria by Bloomberg economists, explaining that there is no significant benefit for Nigeria in

hiking the rates in tandem with the Federal Reserve which has assured the markets of its cautious approach concerning US policy rates. “Carry-trade would still be attractive. Still high but moderating inflation expectations support keeping rates unchanged,” Raji said. “For hot-money types, it matters more to them that they are able to move their funds freely but they would proceed cautiously ahead of the upcoming elections. So, I wouldn’t be surprised if there are above-trends outflows in January,” he said. However, Johnson Chukwu, CEO of Cowry Asset Management, explained that if the trajectory of the determining variables remained unclear, the current estimates cannot be absolutely relied on. “For me, it would be too presumptuous at this stage to say they will keep the rate or it would move in any direction. A lot would depend on how the economy works, the inflationary pressure and whether the economy is growing well,” Chukwu said. The Central Bank of Nigeria (CBN) has maintained a tight policy stance since July 2016 when it moved the rate to 14 percent, the highest so far in the country’s history. However, fears of increased inflationary pressure stoked by election spending, the proposed increase in the minimum wage as well as the likely deregulation of fuel prices, have concerned analysts as they estimate that the inflationary pressure would start building up towards the end of Q1 2019.

•Continues online at www.businessday.ng

Apapa: Hope rising at rehabilitation, construction sites …but Apapa-Oshodi Expressway remains ‘highway to hell’ CHUKA UROKO

t the Apapa Trailer Park construction and the Ijora Bridge rehabilitation sites, hope is rising significantly as work is progressing in both cases towards completion latest by the end of the first half of this year. What this means is that respite is coming the way of residents, motorists, sundry commuters, port users, and business owners who, in the past four to five years, have been contending with congestion and gridlock in Apapa and its environs with heavy impact on their health, business and bottom-line. At the Trailer Park Tuesday, BusinessDay discovered that the main parking facility with the supporting amenities, including a police post, toilet facilities and an office building (to be used by the Nigeria Ports Authority) are ready. But whereas a fence that will protect the park from the expressway is about 80 percent completed, work has not started at all on the shoreline protection. “This fence remains just small to finish. We are waiting for cement to finish the work. Once we are through with the fence, we will start the shoreline protection,” a middle-aged man, who did not want to be named, explained to BusinessDay during the visit to the construction site. The man projected that the entire work, including the shoreline protection, would be done within the next

three months, meaning that by March or April, the park would be ready. But this, he reasoned, would depend on availability of materials (mainly cement) for work. “Again, the contractor does not bring many workers here; sometimes he brings only five workers,” the man said. At the Ijora Bridge rehabilitation site which stretches about 200-300 metres from the foot of the bridge at the Leventis end, BusinessDay observed that work was about 70 percent done. A site worker explained that they were almost through with the super-structure of the affected part of the bridge. “Once we are done with the third beam, we will do the reinforcement and the work is done. The casting has to be left to dry well, otherwise the bridge would be opened for use early next month. But latest by March, the bridge will be ready for use,” the sub-contractor assured. The Ijora Bridge, which was burnt by fire sometime ago, is one of the oldest bridges in Lagos and, according to Babatune Fashola, minister for power, works and housing, the bridge has not received any major maintenance in 40 years. This was why, until lately, the bridge posed a major threat to life with its broken beams, gaping joints and potholes. The Ijora Bridge is one of the only two major routes to Apapa, Nigeria’s

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Wednesday 16 January 2019

L-R: Yakubu Dogara, speaker, House of Representative; Bukola Saraki, Senate president; Yemi Osinbajo, vice president, and Muhammadu Buhari, president, during the Armed Forces Remembrance Day celebration in Abuja, yesterday. Pic by Tunde Adeniyi.

Market infraction: 13 complaints against stockbroking firms still unresolved IHEANYI NWACHUKWU

ational Council of the Nigerian Stock Exchange (NSE) may have done much in line with its zero tolerance policy on regulatory infractions, as evidenced in increasing level of compliance by dealing members, but efforts towards resolving the pending complaints against dealing member firms will be a plus. In 2017, the NSE carried out 267 enforcement actions, a remarkable decline from 328 recorded in 2016. Average compliance (rendition of regulatory returns) by stockbrokers increased from 76 percent in 2016 to 79 percent in 2017, while the number of rules breached stood at 11 in 2017, same as in 2016, BusinessDay checks show. In its bid to improve investor confidence in the market, the NSE commenced a strong campaign against market infraction by its dealing members by introducing dealing members’ compliance report, BrokerTraX. With BrokerTraX, investors can make more informed decisions about where to invest by viewing names of dealing member firms

that have been found liable for contravening market rules. The goal is to reduce contravention of market rules to its barest minimum in line with the deliberate and sustained effort to restore confidence. A closer look at the ‘BrokerTraX’ platform, however, revealed that no fewer than 13 complaints made against dealing member firms at the Exchange relating to unauthorised sale of investors’ shares and misappropriation of investors’ funds between January 2012 and January 14, 2019 are still unresolved. The dealing member firms whose complaints are yet to be resolved, according to the NSE, are Finbank Securities & Asset Management Limited, First Stockbrokers Limited, GMT Securities and Assets Management Limited, ITIS Securities Limited, and Lion Stockbrokers Limited. Others are Mact Securities Limited, Maven Asset Management Limited, Mutual Alliance Investments & Securities Limited, Options Securities Limited, Partnership Securities Limited, Royal Crest Securities Limited, Securities Solutions Limited, WT Securities Limited and Adonai Stockbrokers Limited.

In details, the NSE said First Stockbrokers Limited was suspended in line with Rule 11.10: Misappropriation of Clients’ Funds, of the Rule Book of The Exchange (Dealing Member’s Rules) in the sum of N 9,503,000 belonging to Edwin Okeke and for defaulting in the payment of the outstanding balance to Okeke on the first instalment in the sum of N 2,500,000 due on September 18, 2017 as directed by the Exchange. The NSE tagged this case as ‘Unresolved’ in its ‘BrokerTrax’. The NSE said GMT Securities and Assets Management Limited is yet to restitute the concerned investors, adding, “The firm is presently inactive as a result of being under suspension due to its violation of Market Settlement Guidelines of CSCS, noncompliance with SEC’s Minimum Operating Standards and violation of Rule 7.4: Submission of Financial Reports to The Exchange, Rulebook of The Exchange, 2015 (Dealing Members’ Rules).” According to the NSE, “ITIS Securities Limited is suspended and is before the Disciplinary Committee of Council of The Exchange. Lion Stockbrokers Limited was suspended on 16th of March,

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Microfinance banks roll out agency banking in response to increased competition ENDURANCE OKAFOR

he Central Bank of Nigeria (CBN) in December 2018 announced its plan to launch a National Microfinance Bank (MFB) in collaboration with the Bankers’ Committee and the 774 local Nigerian Postal Services offices. The presence of new countrywide MFB and recent mergers between existing banks are steadily increasing competition for Nigerian MFBs. To continue growing in their markets, MFBs are implementing new technology to deliver their services to more individuals in

remote, hard-to-reach communities through agency banking and delivery channels. With Oradian, the financial inclusion company delivering a specially designed core banking system through a Software-as-a-Service (SaaS) model in Nigeria, leading technology becomes affordable and accessible for not only commercial banks but microfinance banks and financial inclusion-focused institutions. With a SaaS model, MFBs in Nigeria are accessing global best practice through an affordable annual subscription or ‘pay-asyou-go’ payment model. Rather than making heavy upfront capital

investments on on-premise hardware and purchasing software, financial institutions pay an annual subscription to access the software that they need. “The market in Nigeria is evolving and the financial services that individual clients expect from their financial institutions are changing. For MFBs to meet the needs of their clients better, they must be flexible and able to quickly get ahead of these changes. Flexible, cloud-based core banking systems are enabling MFBs to meet their clients’ demands and future-proof their businesses,” Julian

•Continues online at www.businessday.ng

Wednesday 16 January 2019

BUSINESS DAY

Wednesday 16 January 2019

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Wednesday 16 January 2019

Iran sanction won’t lead to higher oil prices - US … as NNPC may spend less on fuel import OLUSOLA BELLO with agency report

s the global oil market becomes apprehensive that the further sanction on Iran may lead to higher crude oilpriceattheinternationalmarket, the United States of America has assuredthattheactionwillnotlead to increase in oil price. This may be good news for Nigeria given the fact that she is a net importer of refined petroleum products.Ifthepricesremainlowat the international market the Nigerian National Petroleum Corporation (NNPC) may not have to pay too much for imported products. DespitethefactthatNigeriaisa major producer of crude oil for the global oil market, it has not been able to refine products locally. Any spike in the price of crude means that the country spends more importingpetroleumcrudeproducts. TheFederalGovernmentbudgets about N305 billion for fuel subsidy in its 2019 budget. The country paid about N1.7

trillion on fuel importation in 2018. This is because the 450,000 capacity refineries have been in comatose for so many years. Brian Hook, the US’ special representative for Iran, stated this atanAtlanticCouncilforuminAbu Dhabi, saying, “All I can say is that certainly when we have a better supplied oil market, then that will put us in a better path to reducing Iranian crude exports to zero.” Nigeriahasbeenpayinghugely on importation of fuel because of theincreaseinthepriceofcrudeoil at the international market. Hook expanded on the US’ sanctions strategy, saying the Trump administration can continue to use the measures to pressureIranwhilemaintaininglowoil prices for consumers. Booming US output as well as increased supplies from Saudi Arabia, Russia and other major oil producers, prices have eased despite the Trump administration’s re-imposition of sanctions on Iran in November. But as OPEC and its allies im-

plementproductioncutstobolster prices, US officials say they will be closely monitoring the market in considering whether to extend waiversthatalloweightcountriesto continue buying Iranian oil. Thewaivers-forChina,Greece, India, Italy, Japan, Taiwan, Turkey and South Korea - expire in May. According to Platts, oil prices have rallied by about $9/b since Christmas Eve, with Brent futures trading at $59.34/b as of Monday this week. This is as Saudi Arabia signalled it had already slashed its production by some 400,000b/d in Decemberandwouldovercomply withitsquotaundertheOPEC/nonOPEC cut agreement, which runs for the first six months of this year. Asked why the US wants to keep the price of crude low while at the same time slamming sanctions on Iran, he said: “To date, we have and there’s no reason to think that we couldn’t continue to do that. US producers were able to increase production by 1.4 million b/d within that period, and that was production that we exported.

Economic activities in Benin receive a boost as airport gets landing aids IFEOMA OKEKE

conomic activities in Benin City, the Edo State capital, may soon get a boost following the commissioning of Category II Instrument Landing System (ILS) at the Benin airport recently installed by the Nigerian Airspace Management Agency (NAMA). Fola Akinkuotu, managing director of NAMA, said this was in line with an earlier pledge by the agency to upgrade navigational infrastructure in strategic airports across the country in a bid to boost socio-economic activities in such areas. Akinkuotu, who spoke at a town hall meeting with staff at the agency’s headquarters annex in Ikeja, Lagos, announced that the agency has equally installed and commissioned the ILS at Port Harcourt airport which was damaged by an aircraft last year, saying the flight commissioning which was handled by Omni-Blue Aviation Ltd indicated that the newly installed landing aids were operating at optimal capacity. Poor instrumentation at Nigeria’s airports has been a big issue for the industry over the years. Of the country’s 26 air-

ports, only five – Lagos, Abuja, Enugu, Kano and Port Harcourt – had navigational aids as at 2017. This meant that these five were the only airports where aircraft could fly in and out at night. Similarly, most of Nigeria’s airports operated with CAT I certification. As such, flights were unable to land or take off at the airports with visibility below 800 metres. Local airlines are estimated to be losing about 50 percent of flight operations due to poor visibility occasioned by the seasonal harmattan haze. Last year, NAMA equipped 14 airports across the country with Category II instrument landing systems costing over $6 million, aimed to aid airlines to take off and land at low visibility. Some of the equipment include Distance Measuring Equipment (DME), a navigation beacon usually coupled to enable aircraft to measure their position relative to that beacon, and VHF omnidirectional range (VOR). Abuja, Lagos, Kano, Port Harcourt, Kaduna, Ilorin, Gombe, Owerri, Sokoto, Uyo, Yola, Dutse, Calabar and Enugu airports already have ILS Cat II Approach and Landing Minima. The commissioning of Category II Instrument Landing System

(ILS) at Benin airport means that Benin now joins the ranks of other airports already enjoying the benefits. Sam Adurogboye, general manager, public relations at Nigeria Civil Aviation Authority (NCAA), said the implementation of these revised aerodrome operating minima (both takeoff and landing) would be based on compliance with applicable Standard Operating Procedures for Low Visibility Operations at the affected airports executed by flight crew, air traffic controllers (ATC), aerodrome operators and the meteorological agency. To ensure the seamless operation of these revised minima, Adurogboye said the Nigerian Meteorological Agency (NiMET) would continue to ensure prompt and regular provision of required meteorological information, including flight visibility and Runway Visual Range (RVR) values to all ATC units in the airports. As such, NiMET and NAMA would ensure constant updating of the automatic He also hinted that in the same vein, installation of CAT II ILS would commence at Maiduguri, Jos and Minna airports in the northern parts of the country.

Insurers secure NAICOM, CBN approval to digitalise marine certificate … look to double premium in 1 year MODESTUS ANAESORONYE

n a bid to ward off quakes and reduce prevalence of fake marine insurance policies in Nigeria, the insurance industry is set to digitalise the certificate issued to customers. On this note, the insurers have secured the approval of the National Insurance Commission (NAICOM) and the Central Bank of Nigeria (CBN) to go ahead with the plan. Besides, it is already working withsomepartnersliketheNIBBS todrivemarineinsurancethrough theUSSDcode,asithasdonewith motor insurance policies. Marine insurance business, usually reported together with aviation risks in insurers digest, contributedN22.09billionin2017, while N5.98 billion was paid as

claims during the same period. Tope Smart, chairman of NIA, whodisclosedthisduringaninteractive session with journalists in Lagos on Tuesday, said the effort would check and eradicate fake insuranceinmarinebusiness,and more importantly restore consumer confidence in insurance. “If people get the right cover, they will get their claims paid when the risk crystallises, and will definitelybringbacktoinsurance,” Smart said. According to Smart, “Getting this approval is a big development for the insurance industry, as this will enhance premium growth for the industry.” Having achieved some level of progress with motor insurance since it took off in June 2012, the scheme is poised to bring down the level of fraud in marine insur-

ance business, which the industry say is costing the sector huge millions of naira. NIA says experts have been engagedtocomeupwithappropriatepackageunderitsexistingNigerian Insurance Industry Data Base (NIID) that would ensure smooth take off the marine business, being the second phase of the initiative after motor insurance. NIID is targeting elimination of fake insurance documents, which has denied Nigeria the social and economic benefits of genuine insurance transactions. NIID is an Information Technology-based system that will facilitate easy collation and dissemination of statistical and other information relating to insurance on one hand, and also serve as a vehicle for easy identification of genuine insurance documents.

L-R: Martin Mabutho, chief customer officer, MultiChoice Nigeria; Wangi Mba-Uzoukwu, channel director, Africa Magic channels; Olufemi Osobajo, senior marketing manager, Bet9ja, and Busola Tejumola, executive head, content, MultiChoice Nigeria, at a media briefing on Big Brother Naija Season 4 announcement in Lagos, yesterday. Pic by Pius Okeosisi

Manufacturers expect naira stability, improved infrastructure to grow port business in 2019 … say election outcome to determine volume AMAKA ANAGOR-EWUZIE

tability of naira in the foreign exchange market, improved road infrastructure within the ports environs and outcome of 2019 general elections are expected to drive business at the nation’s seaports this year, importers and manufacturers have predicted. According to the importers, users of port services were faced with several challenges due to the deplorable state of infrastructure at the port over the past five years. Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), identified the poor state of roads leading to Apapa port as an issue of great concern to manufacturers. He noted however that manufacturers had high hopes that the situation at the ports would improve to enable operators undertake more business in 2019. “Manufacturers are one of the major stakeholders in the port because many of our members rely on port effectiveness for the continuity and sustainability of their businesses. In the past year, we had lots of challenges in the port because of the situation of road infrastructure in the port, but we have held interaction with the operators of the port like the Nigerian Ports Authority (NPA) and Nigerian Shippers Council (NSC). Ahmed said MAN was aware that a lot was being done by the government to alleviate some of the constraints particularly with respect to transport infrastructure and port services. He pointed out that the volume of business at ports could only grow if the government succeeded in removing the obstacles facing port users. “We also expect the econ-

omy to improve because the government projected that the economy would grow more than it did in 2018. If that happens, we should expect to do more business and the level of production in the manufacturing sector to increase,” Ahmed said. According to him, stable economic growth will encourage the importation of various inputs including raw materials, spare parts, equipment and machineries, adding that the stability of foreign exchange will also determine the volume at which manufacturers will be importing more input into the country. “We are aware that the economy is still at its fragile state as the price of oil continues to affect foreign exchange volatility. Our hope is that these things will improve to enable us do more business and bring in more imports particularly for the manufacturing sector this year,” Ahmed said. O n h i s p a r t , To n y Anakebe, managing director of Gold-Link Investment Ltd believes that the level of port businesses this year would depend solely on the outcome of the election, noting that the polls turn out “free and fair,” port activities would pick up from the good results recorded in 2018. Anakeb e p ointed out however that the incoming administration should relax some of the harsh import policies, to enable Nigerians do business at the ports. One of actions that government must take is the creation of a one-stop-shop system of operation at the ports. “We need to bring all the units, agencies and service providers at the port under one umbrella to enable them carry out cargo examination without delay. There is also need to do away with mul-

tiple divisions of Nigeria Customs Service (NCS) and other agencies like Standards Organisation of Nigeria (SON), National Agency for Food and Drug Administration and Control (NAFDAC) should be removed in order to allow people do their business and grow the economy,” he said. Anakebe argued that the multiplicity of agencies create avenue for corruption to flourish at the ports, said that if the incoming government could overhaul the system of cargo clearance at the ports, the port economy would grow. “Ngozi Okonjo-Iweala, a former minister of finance, streamlined the number of agencies at ports and she pushed for 48-hour cargo clearance as well as reduced cargo dwell time at ports to maximum of seven days. This move helped to improve ease of doing business at ports. Therefore, we want government to consolidate on this move and ameliorate the challenges of cargo clearance at ports,” Anakebe explained. On exports, Emma Nwabunwanne, a Lagosbased importer, predicted that Nigeria would witness a marginal increase in the volume of agricultural produce exported to other countries this year. “Our export might pick up a little but we want the farmers and the officers of the Nigerian Quarantine Services to put in more effort to ensure the crops are in good shape to ensure they are not rejected in the international market, which in the past has put Nigeria in bad light,” he advised. Nwabunwanne urged farmers to reduce the amount of chemicals in the farming stage because, according to him, too much inorganic fertiliser compromises the quality of the produce and lowers the standards in the international market.

Wednesday 16 January 2019

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Edo prioritises take-off of multi-campus Agric College, support for start-ups, erosion control in budget

ith the 2019 budget of the Edo State government duly signed into law by Governor Godwin Obaseki in late 2018, work has commenced on a number of projects and initiatives through which the government intends to create wealth, boost investment and improve the wellbeing of the people. The approved budget shows that the government is pursuing a number of new projects and continuing on a couple of old ones, with focus on infrastructural development, health care, education and investment, among others. Recall that during the presentation of the budget to the Edo State House of Assembly, Obaseki said, “The 2019 budget proposal reflects this administration’s intention to promote social inclusion and economic empowerment for Edo citizens, through the strengthening of structures that support, governance and security infrastructure; and through the implementation of initiatives that guarantee equal access to education, health care and social protection.” He highlighted the focus of the state’s 2019 budget proposal as: “Continued investment in the rehabilitation of existing (and the development of new) socio-economic infrastructure; Strengthen internal capacity for project execution and governance; Scale up investments in socio-welfare enhancement programmes (in education, healthcare and rural development); Continued invest-

ment in programmes/projectsfor job creation, particularly through Industrialisation, Agriculture, and Micro Small and Medium Enterprises (MSME) development as well as enhanced investment in Security and Administration of Justice.” Key among the projects lined up for the year are; the take-off of the multi-campus College of Agriculture in Uromi, Agenebode and Iguoriakhi; Erosion Control project with the Benin City Water Storm Master Plan; training of start-ups for increased productivity in the innovation technology sector as well as the development of Benin River Port, Gelegele; Benin Industrial Park and Free Trade Zone. “In the 2019 approved budget, the Ministry of Wealth Creation, Cooperatives and Employment will partner with the United Nations Industrial Development Organisation (UNIDO) to train start-ups to benefit from the booming technology ecosystem in the state.” For agriculture, there is provision for Administrative and AcademicBuildings,Auditorium, Laboratories, Libraries, Perimeter Fencing at Iguoriakhi, Agenebode and Uromi; treatment of water facilities at the campuses as well as the development work at the three campuses, which are scheduled to commence academic activities this year. The colleges are a product of the state governor’s ongoing revamp of the college of Agriculture Iguoriakhi, after it was closed due to mismanagement.

Expand tax base, dispose assets to solve Nigeria’s debt crises - experts ISRAEL ODUBOLA

xperts across Nigeria have advised the Federal Government to expand its tax base and dispose identifiable assets to end the country’s rising debt profile. Nigeria’s total public debt stock comprising external and domestic debts of the Federal Government, 36 states and the Federal Capital Territory (FCT) jumped by 0.22 percent to N22.429 trillion (or $73.213bn) in the third quarter of 2018, up from N22.38 trillion (or $73.208bn) recorded in the previous quarter, Debt Management Office (DMO) disclosed few weeks ago. The country’s debt to GDP ratio is over 60 percent and total fiscal deficits in 2019 proposed budget stood at N2.41 trillion, N461.2 billion higher compared with 2018 passed budget. Head of Banking and Finance Department, Nasarawa State University, Uche Uwaleke, urged the Federal Government to broaden its tax base to improve its tax-to-GDP ratio, stressing that the Federal Inland Revenue Service (FIRS) and Nigerian Customs Service (NCS) must step up to realise more tax revenue. Uwaleke berated the 6 percent tax-to-GDP ratio of the country, stating that the ratio was low given the large size of the economy, but encouraged the NCS to design new measures to tackle smuggling to boost revenue generation. Going further, he called on the government to dispose identifiable assets or privatise them in order to generate revenue

and lessen the country’s debt burden, adding that government needed to place more priority on agriculture and solid minerals to boost non-oil tax revenue, foreign reserves and exchange rate. Sola Oni, CEO, Sofunix Investment and Communication, said the country’s unabated rise in indebtedness was an indication that the country’s expenditure outweighed its revenue. “There is no crime if a country owes but on what basis? Is it for consumption or investment? This is why Nigeria cannot be compared to advanced economies where investment in infrastructure largely accounts for their debt profiles,” Oni said. To him, Nigeria debt could be better managed by reducing interest rates to spur economic growth, and this strategy has yielded positive results in some countries such as the UK and US. He said quantitative easing, which involves the central bank purchasing government securities or other securities from the market in order to lower interest rate and boost money supply, could be employed to reduce debt. Sheriffdeen Tella, a professor of Economics at Olabisi Onabanjo University Ago Iwoye, stated that the current debt level was very high for an economy like Nigeria that heavily depended on a commodity – oil. Allocating more than 20 percent of budget to service debts has negative implications on sustainable development and provision of social amenities to the populace, he noted.

L-R: Rotimi Oyekanmi, partner, APIS Partners/speaker; Peter Ashade, group CEO, United Capital/speaker; Ogho Okiti, CEO, Time Economics/founder, Nigeria Economic Outlook Conference (NEOC); Charles Robertson, global chief economist, Renaissance Capital/speaker, and Mustafa Chike-Obi, executive vice chairman, Alpha African Advisory/speaker, at the NEOC ‘19,’ theme’ Reforms, Investments, Jobs in Lagos. Pic by Pius Okeosisi

Adamu Mohammed: What does new IGP’s appointment mean? DIPO OLADEHINDE

resident Muhammadu Buhari on Tuesday decorated Abubakar Adamu Mohammed as acting Inspector General of Police (IGP), against speculations that he may extend the tenure of Ibrahim Idris, outgoing IGP, who has attained the mandatory 35 years in service or retirement age of 60. Even though the newly-decorated IGP has assured Nigerians of a level playing ground in the 2019 general elections, not all Nigerians believe he would keep to his assurances. “We are going to stick by the rules, we are going to do the right thing. We will not go outside the ethics of our job to do things that are untoward; everybody will be given level playing ground to play his or her politics,” IGP Mohammed said while briefing State House Correspondents in Abuja shortly after he was decorated by President Buhari. “On the elections, you have heard from the former IGP, adequate arrangement has been made to make sure that free and fair and credible elections take place in Nigeria. We are going to build up on the strategies put in place to make sure that we have hitch-free elections in the country,” he said. But some analysts who spoke to BusinessDay yesterday said the appointment once again highlighted President

Buhari’s penchant for ignoring due process in selecting IGPs. This view comes against the backdrop that to appoint Adamu Mohammed, President Buhari by-passed seven welltrained, exposed and tested Deputy Inspectors-General of Police who may be forced to go compulsory retirement. The affected DIGs include Joshak Habila, in charge of Department of Operations; Maigari Abatti Dikko, who heads Department of Logistics and Supply; H. M. Dagala, of Department of Criminal Intelligence and Investigations, and Emmanuel Inyang, who is in charge of Department of Training and Development. Others are Shuaibu Gambo, who heads Department of Finance and Administration; Ntom Chukwu of Department of Research and Planning, and Foluso Adebanjo, in charge of Department of Information and Communication Technology. Recall that a similar scenario played out in March 2016 when Ibrahim Idris, until then a commissioner of police who supervised the security apparatus for the controversial presidential election of 2015 in Kano, where President Buhari got nearly 2 million votes, was promoted to Assistant Inspector General (AIG) and then named the acting Inspector General of Police to take over from Solomon Arase. In that case, 21 DIGs had to be compulsorily retired. “It’s an unfortunate incident. It’s a waste of natural re-

sources expended on the training of those officers. It’s clear the criteria this present government applies in choosing IGP have to do with other considerations that are not visible to the people, which are obviously beyond professionalism and merit system,” Opeyemi Agbaje, CEO of RTC Advisory Services, said. Agbaje explained that the new pattern of appointing police chiefs will erode team work and professionalism in the police because it will entice police officers to become favoured godsons to politicians, which, he said, is a negative development. Timothy Olawale, director-general, Nigeria Employers Consultative Association (NECA), was more concerned about the position of the law than the personality appointed. “It’s the prerogative of the president to appoint whosoever he wishes among the senior echelon of the Nigeria Police to assume that position. The law did not say it must be the next person in line,” Olawale told BusinessDay by phone. “It’s unfortunate the appointment of both the outgoing IGP and recent IGP is claiming causalities of forced retirement.” Security experts are hard put to explain if the evolving scenario will affect the much-awaited change in the force, a change which many are clamouring for that will usher a new era where the hydra-headed monster of corruption would be grossly

checkmated in the force. On its part, the People’s Democratic Party (PDP) has charged the acting IGP to immediately commence the re-engineering of the Nigeria Police to restore professionalism and adherence to rules of engagement in the Force. In a statement on Tuesday, Kola Ologbondiyan, director, Media & Publicity, PDP Presidential Campaign Organization, described the outgone police boss, Ibrahim Idris, as the worst police boss in the nation’s history, adding that he must be held accountable for all the atrocities he committed while in office. “The PDP, therefore, urges the new police boss to learn a lesson from the shameful end of Idris as IGP by immediately setting up the process of reorientating and insulating the Force from partisan politics, while subjecting it to the tenets of democracy and the rule of law,” Ologbondiyan said. Until his appointment, the Nasarawa State-born Adamu Mohammed, an AIG by rank, was a directing staff member at the National Institute of Policy and Strategic Studies, Kuru, near Jos, Plateau State. A one-time director of peacekeeping operations, he has served with the United Nations and INTERPOL, was formerly police commissioner in Enugu, an AIG in charge of Zone 5 Benin, Edo State, and formerly deputy commissioner of Police (DCP) in Ekiti State.

FEC: Why we can’t disclose decision on minimum wage now - Lai Mohammed ... as FG reviews cost of e-Passport upward TONY AILEMEN, ABUJA

utcome of the Tuesday emergency cabinet meetingpresidedoverbyPresident Muhammadu Buhari was shielded from the media, as ministers kept decisions on the new MinimumWageBillscheduledfor presentation on January 23 secret. Minister of information and culture, Lai Mohammed, who presided over the briefing session, saiditwasimpropertodisclosethe outcome until the meeting of the NationalEconomicCouncilmeeting likely to take place this week. Asked to comment on the outcome of the FEC meeting and

decisions on the Minimum Wage, the minister who said the meeting was solely dedicated to Minimum Wageissue,however,saidhecould not disclose decisions arrived at “until after the meeting of the National Economic Council NEC. “l cannot because it is work in progress, since it will also be discussed at the NEC meeting before we come out with the decision, thereafter, we can brief the media,” he said. Minister of interior, Abdulrahman Danbazzau, however, while briefing journalists, said the 34 page, five years Nigerian ePassport would now cost N25,000 or $130, while the 64 page 10 years

e-Passport would be issued to Nigerians at N35,000 The 64 page e-Passport goes forN70,000forthe10-yearversion or $230. Only Nigerians of 18 years and above are allowed to hold the 10 years passport, he said. The interior minister also said the Federal Government had concluded plans “to produce the e-Passport locally with the Nigeria Security, Minting and Printing Company to create jobs locally and reduce costs.” BusinessDay gathered that the meeting was part of plans by the government to avert pending threats of Labour unrest ahead of the 2019 general elections.

Before the meeting, President Buhari had launched the new International Passport with 10 years validity before the commencement of the FEC meeting. The new passport is expected to save Nigerians in the Diaspora frequent visits to Nigerian embassies for renewal, and also has embedded enhanced and selftracking of application, express centre for urgent applications and is weather friendly. The passport complies with thelatestICAOstandards,andhas otherfeaturessuchaspolycarbonate technology that eliminates damage and enhanced security features.

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comment Small Business handbook

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

he Central Bank of Nigeria (CBN) recently made public its frustrations with the slow pace of disbursement of the many intervention funds dedicated to the SME sector, especially the one meant for agribusiness. Much of the fund hasremained with the central bank where it is domiciled for on-lending to operators. In order to fast track the disbursement of this and probably the other funds piled up at the CBN, it has proposed the establishment of a national microfinance bank to disburse the fund.The view of this column, which was published earlier, is that such a plan is another example of our culture of treating symptoms instead of diseases. Why are the funds not being accessed by operators? Is it the vehicle of disbursement (banks) or the terms of the facilities that we should twick? If it is the vehicle, should we replace it with a vehicle known to always malfunction? These are some of the issues we wish to address but from a different perspective – the perspective of the some unacceptable action of our entrepreneurs. We had suggested the use of the most successful microfinance banks in the country to handle the intervention. But we need to look at some other challenges that will continue to hunt both the funds and

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Still on SMEs and non-disbursement of facilities our entrepreneurs, even after the vehicle is replaced by other means. In that regard, we should look at the many shortcomings of our local businesses and see how to help them upgrade their conduct. There is a general lack of discipline across the nation. Part of the consequences of indiscipline, which has become a culture in Nigeria, is that people do not observe rules or obey the law. This is why there is a market on every street, and even in the most sacred of places but nobody wants to be in a proper market. The most important master plans, have been distorted because officials are induced to convert residential and recreational facilities to commercial use. Result: businesses need not be properly registered to win multimillion contracts. Documentation is a no no. Meanwhile, nothing formal, including access to funds can be done without these. This why SMEs always have their loan applications thrown out and they can hardly present a bankable project. This malaise has crept into every human endeavour in the country such that many government businesses are done with unregistered companies. Eventually most of the micro and small enterprises in the country operate without registration. When they hear of any freebee they rush to “buy documentation”. Some have no addresses. The starting point for improving the lot of the SME sector therefore is to help them to operate within the basic rules of business. Our entrepreneurs must learn to begin their businesses not as ad-hoc activities, which is what they do currently, but to follow time-tested processes of starting and running businesses. This deficiency is one reason for the nondisbursement of the funds. At the beginning of every year, many people enter the business world as entrepreneurs. These are people who have decided to do

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Our entrepreneurs must learn to begin their businesses not as ad-hoc activities, which is what they do currently, but to follow time-tested processes of starting and running businesses. This deficiency is one reason for the nondisbursement of the funds

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their own thing and brave the wind and weather of self-employment. Some will probably be doing so for the first time while for others, it may be like a Second or Third Missionary journey, having tried and failed before. People get into business for a number of reasons and in many different ways. While some people dream up an idea, go ahead to flesh it outand form a business around it, others wake up from a deep, smooth sleep devoid of any dreams, and print a business card. Without any hesitation, they launch into the murky waters of private enterprise. There may not be a predetermined end for the later set of businesses but the certainty of success weighs more on the side of the former – businesses that are properly set up. This is why we want to share some thought on the virtues of properly designed and executed entry to the world of business by the micro, small

and medium enterprises. The starting point on the journey to a successful entrepreneurial life is to have a niche that is yearning to be filled – an offering to be made to the public. The concept of value proposition comes handy in this regard. Marketing specialists are always focusing on value proposition, which is what someone or an entity brings to the discussion table. Every business entity must have a value proposition to its proposed clients - what they plan to bring to the market, either as a product or service?There must be a unique feature of the product or service that makes it able to solve problems for the clients. It is the promise an entity makes, regarding its ability to solve a problem. Value proposition is not a niche; it is the way and manner a niche is intended to be filled. It therefore follows that those entering into business must first define the niche they target to fill and have clear understanding of how to fill it. This niche definition is to be followed by properly establishing a vehicle to deliver it – the company. Every business must be properly documented, which includes the registration papers, books of accounts and procedures manuals. Information is central to the success of any business. We must get it before we lunch. Every business entity is the result of somebody’s assumptions about a state of affairs or a phenomenon. It embodies what the person thinks is missing and what he could do to remedy the situation. When a man sleeps and dreams up a business idea, he makes certain assumptions about the idea. For instance, anyone who proposes to set up a helicopter service between Lekki Phase One and Murtala Mohammed Airport must have assumed certain things. Some of the assumptions could be that the Lekki neighbourhood has the financial power to support such a service because the residents are mostly high income

business people. It could also be that they run businesses to which time is of the essence. In addition, he may also assume that the traffic situation in the axis is bad enough to justify such alternative mode of transport. On these basis, he may conclude that a helicopter service would sell. If these assumptions are incorrect, they will lead to a business still-birth or the formation of an entity that may be dead on arrival. How do budding entrepreneurs ensure that the assumptions they make and upon which they plan to build a business are correct? Research. Starting right involves a number of things, including information. Most successful entrepreneurs begin with a study of the market they propose to enter. Research does not always have to be done by the five star management consultants that are often unaffordable. There are different strategies for obtaining information about a product or service without breaking a bank. Information about the proposed business is important and that is why banks insist on a feasibility report. Unfortunately, many entrepreneurs do not place much value on this vital document. They have it all in their heads and, trust the banks, they refuse to go into anyone’s head to read his business plan. They are turned down for the uncertainty of their plans, which actually may be very sound and clear to the entrepreneur. It is just too hard to see what is in a man’s brains. Be careful how you treasure what is in your head. You may be the only person that know it exists, and there is little or no demand for goods and services the existence of which is not known to humanity. Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng

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Beyond Brexit: Nigeria wants a new trade deal with Britain

Atiku Abubakar Abubakar is a former vice president and presidential candidate of the People’s Democratic Party (PDP).

n August this year, Prime Minister Theresa May visited Nigeria. She spoke about increasing investment opportunities, a new trade deal and economic partnership, tackling human trafficking, and assistance to bolster the rule of law and the fight against organiSed crime. All of this is extremely welcome, and indeed necessary. Unfortunately for Mrs. May, the government that she met with led by President Muhammad Buhari ¬cannot deliver any of this. For Nigeria to move forward, a change is required. In the four years of President Buhari’s Administration, Nigeria has regressed by almost every domestic and international metric. We have fallen in the World Bank’s Ease of Doing Business report; we

have fallen in Transparency International’s Corruption Perceptions Index; we have fallen in the World Justice Project’s Rule of Law Index. And Nigeria suffered the indignity of being named officially the poorest country in the world: We now have more people in extreme poverty than any other country in the world. In the past four years, India and others have sprinted ahead in the race to reduce poverty. Nigerians are being left behind. The forthcoming elections in February offer the opportunity for a change. President Buhari has promised the international community that the elections would be free and fair, but there is little confidence amongst Nigerians that he will stick to this promise. What is needed is pressure from the international community to ensure that Nigerians have the right to determine their own futures, and to do so free from harassment, votesuppression or outright fraud. As a major funder of democracy initiatives around the world, the U.K. has a real stake in this process. Backsliding on democracy and freedoms has been a sad theme

globally in recent years¬ this cannot be allowed to happen in Africa’s largest democracy. The Federal Government, the Nigerian Election Commission (INEC), and local and State officials must understand that the international community is watching and will not accept anything less than a fully free and fair election. This must include an end to the government¹s ongoing use of state apparatus to hassle and harass opposition candidates and supporters. President Buhari’s track record proves that he cannot be trusted to safeguard democracy, if left to his own devices: he must be pushed by the international community to do the right thing. President Buhari’s regime is tired, and a truly democratic change is needed. That means re-establishing the rule of law, the respect for the courts, and a crackdown on corruption. A real anti-corruption process is required so that Nigerians, and foreign investors, can have confidence in our domestic laws, not show trials perpetrated as ‘crackdowns’ on corruption, where corrupt cronies were allowed to flourish. Equally, as our roads and railways

crumble, a new infrastructure programme is needed to revitalise them: such a programme would create jobs, stimulate economic activity, and provide long-term benefits to people across the 36 Nigerian states. Food security is also a major concern. President Buhari has done little to inspire Nigeria’s enormous agricultural potential. We can, and should, be the bread basket of Africa. Only with re-imposition of the rule of law, and a focus on attracting investment and innovation, will Nigeria’s agricultural potential be realised. And, of course, the question of oil looms large. Nigeria’s oil resources are not in themselves a curse ¬but neither are they a panacea. If oil alone could save a nation, then it surely would have saved Venezuela. Everyone can see for themselves the stark reality of that hypothesis. President Buhari has failed to diversify the economy it will be the responsibility of the next government to succeed where he has failed. What does this all mean for Britain, and the future relations between our nations? Taken together, my new agenda aims to increase the purchasing power of Nigerians across our country: providing economic security,

improving quality of life, reducing poverty. This, in turn, provides a platform of security and certainty for investors to take advantage of new opportunities for collaboration ¬not just oil ¬and a chance to work with a government that is serious about building a prosperous Nigeria. I foresee a new trade partnership between Nigeria and Britain, enhanced cooperation on security and counter-terrorism, and deepening our historic links of culture, family and language. This agenda will benefit ordinary Nigerians and Britons alike, as well as increasing mutual investment in our respective economies. President Buhari had his chance: but the international rankings do not lie. He has proven himself neither a leader who can elevate the domestic situation of the Nigerian people, nor one who can inspire foreign investors and international partners. The future relationship between Britain and Nigeria can be bright and prosperous ¬ but it requires a change of leadership in Abuja.

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comment Character Matters with Daps

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

et’s try to reach out to others and also listen to them more. Let’s listen attentively to what they have to say and even harder to what they opt not to say. Globally, suicide was the 2nd highest cause of death for people between the age of 15 and 29 years in 2016, taking 800,000 lives. To bring this point closer to home, by 2018 Nigeria had placed 5th in the ranking of suicide capitals of the world. 15,000 out of every 100,000 suicides globally took place in Nigeria. Frightening. Yet another uncoveted laurel. I read a beautiful quote somewhere which said, “Let kind eyes meet desperate ones and strong hands help weak ones and watch God perform His miracle. Once we do our small part He will do the big part”. This “itiju” mentality that so

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Itiju: A sense of shame or shyness (Part 1) besets us in this society causes more harm than good, as far as I’m concerned. Many have departed this life because our culture of “itiju” simply didn’t permit them to speak out, cry out, reach out. “Itiju”, a Yoruba word for a sentiment and an ethos which bestrides the entire nation; north to south and east to west. The cross these hapless “victims” bore was just too heavy to carry all by themselves. Many bear secret pains which our culture insists must not be shared. Instead, they grit their teeth, hold on and wait for God to come down and deliver them. A lot of the time, it is not the problem itself that kills people but the bottling it up. How? Imprisoned by “itiju”, you’re constrained from “exposing” yourself, which reaching out to others for help shall surely do. How do you inadvertently admit to the whole world that you’re too “weak” to withstand the challenges of life which confront all and yet others seem to be coping with? The devastating consequences of this was painfully brought home not long ago when we lost a lovely, quiet lady who was just in her mid forties. From all indications, her heart could no longer cope with the vagaries of life. One cannot deny that she had a great job; a job most people would willingly give

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Mental health issues are real and the sooner we acknowledge this ticking time bomb the better. It is my strong belief too that if a thorough research was to be conducted out, it would be discovered that a significant number of mental health cases are in fact linked, directly or indirectly, to our stifling “itiju” culture

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their right arm for, but life had so cruelly thrown her a series of curve balls. God knows she did her best and so do we. Such a terrible loss. One cannot help wondering if things might have been different if only she felt it was okay to open up. Contrary to popular opinion, merely smiling through it all doesn’t always work. The oyibo man says a problem

shared is a problem halved or half solved but we say “no”, this can only bring shame. Shame for whom, may I ask? Is it for the woman who eventually gets battered to death by a spouse who had for long turned her into a punching bag? Or is it for the man who had lost his job or source of livelihood but continued to go “to work” at the same time every morning, to avoid the “itiju” of owning up to others that things had gone little awry? Still, is it the young girl subjected to sexual abuse for as long as she can remember by that despicable “uncle”. It may interest you to know that only 2000 cases of rape have ever been convicted in the history of Nigeria. Yes, just 2000! Does that not sound ludicrous to say the least? I imagine some level of indictment could be found at the feet of the judiciary and probably more at the feet of our security forces, who at times still betray a warped mindset of believing the appearance or actions of the victim somehow provoked it. Most times though, the culprit isn’t brought to book as the “itiju” of it prevents the victim or even her loved ones from coming forward to report the incident. Some, in the long run decide they can no longer continue and resolve to just end it all, as has become increasingly prevalent in our society lately;

while others, victims of financial reversals, fall easy prey to less legal ways of earning money. At times, just to keep up appearances. Or is it those whose mental state has been made the more precarious by debilitating circumstances? In these climes, you’re either totally sane or you’re mad. So, as long as your thinking appears to be rational, your speech coherent and your dressing decent, every other thing is spiritual. Unfortunately, the “itiju” attached to seeking professional help pushes one to seek divine intervention via deliverance instead, while ignoring the very real and often critical psychological issues. When such a person decides one otherwise ordinary day, to park his or her vehicle half way down Third Mainland bridge to “swim with the fishes”, everyone wonders why. Mental health issues are real and the sooner we acknowledge this ticking time bomb the better. It is my strong belief too that if a thorough research was to be conducted, it would be discovered that a significant number of mental health cases are in fact linked, directly or indirectly, to our stifling “itiju” culture. Changing the nation...one mind at a time. Send reactions to: comment@businessdayonline.com

Corporate governance systems as dynamic institutions

Zainab Dere Dere is with the Lagos Business School

he appropriateness of existing models of corporate governance which firms adopt in achieving their mission is being questioned for its inadequacies in reducing agency problems. Increasingly, there are calls for the adoption of a dynamic model of corporate governance given its inherent nature that might help overcome the problems and limitations of agency approach used in studying corporate governance systems. The US sub-prime mortgage crisis of 2007 and consequent global economic crisis further explicates the inadequacy of existing corporate governance systems. The corporate governance system remains popular among management scholars. In simple terms, it is defined as a system of rules, practices and processes within a firm through which it is directed and controlled to balance the interests of all stakeholders (especially shareholders and managers). It defines the division of wealth and

power in a corporation. The call for a dynamic model in this regard is targeted towards developing a globally acceptable framework that takes into account a balanced view of human nature and behaviour that can be applicable in varying business contexts. A popular framework in the context of corporate governance is that of Jensen-Meckling (J/M) model of agency which is operational based on the Shareholder Value Maximization (SVM), and the agency role of firm managers to articulate the principals’ objectives of maximizing their financial returns on investment. Principals possess the ultimate decision making rights concerning organizational goals, values, commitments, and identity; these are not just shareholders but the brains behind the establishment of the firm. On the other hand, the agents as fiduciary are expected to represent the best interest of the principals without recourse to self-interest. However, the existing framework of corporate governance systems in practice and academia has been delineated based on the agency assumption of the J/M model and studies have revealed the inadequacy of such arrangement. The J/M model emphasized the separation of ownership and control of a firm; the principals are differentiated from the manager. In such situation, there is high likelihood of conflict of interests between the goals of principals and agents and could lead to agency problems. The associated reduction in economic efficiency

of the firm consequently, reduces the firm’s financial performance. Hence, principals have to monitor, design, and implement financial incentives to reduce agency problems. Recent realizations have also stressed the inadequacy of the agency arrangement of the J/M model. Empirical studies over time have presented little evidence linking governance structure to firm financial performance. Also, the alignment of the agent’s utility with those of the principals appears to be really associated with firm market value. The use of incentives such as stock options, bonuses and other monetary incentives encourage agents to focus on short-term quarterly benefits for shareholders while the market value of the firm is being destroyed with consequential effect on the overall long run performance. However, in spite of the inadequacy of the J/M model, the agency problem cannot be completely written off between the principals and their agent. Hence, the need focus on an approach that looks into the realities as it concerns agency problems in corporate governance systems. One property of social science is that they are artificial realities knowingly or unknowingly synthesized by humans. This explains the Principle of Double Hermeneutic (PDH) which links knowledge developed by social scientists to their audiences’ decisions and designs. PDH implies that the knowledge developed by social scientists can become part of the knowledge that humans use in designing their artificial realities. Just like other social inventions of humans and

phenomena studied in social science are artificial realities that are modifiable to suit current realities, corporate governance systems as designed for the purpose of monitoring and guiding a firm’s control system are changeable to fit current realities. Therefore, it is important, that corporate governance systems are treated as evolving institutions which are designed to monitor, incentivize, and strategically guide agents to fulfill the mission of the firm as desired by principals. The dynamic model of corporate governance systems as suggested seeks to respect the nature of corporate governance systems as institutions which better explains the antecedents and consequences of corporate governance systems universally. Achieving a dynamic model of corporate governance system revolves around the firm’s mission as against the principals’ goal. The mission of the firm should be designed to capture not only the goals of the firm, but also the values, commitments, identity, and guiding principles for decisionmaking of the firm. This will embody the goals of principals (for example, what products/services of value should the firm offer to consumers, what should the firm be known for; what is its distinctive identity and competencies), as well as the goals of their human and capital providers. As a result, the firm becomes a human community pursuing a collective mission. Within the dynamic framework, the firm’s mission is such that it allows for flexibility in adapting to future opportunities and threats in changing organizational field

conditions. As such, the corporate governance system will be negotiated by both the principals and agents to protect the interests of all stakeholders. The principals perform their functions by monitoring and providing incentives, resources, and strategic guidance to agents. The agents perform their function by providing information about firm operations to principals, making strategy suggestions to principals, and implementing the firm’s mission. No doubt about the possible weaknesses of the dynamic model of corporate governance system as suggested, but it presents a holistic analytical framework for understanding the functioning of corporate governance systems. A firm is part of broader society and has its part to play in societal wellbeing. These corporate governance systems condition and guide agents’ choices within the firm, and are aimed at helping agents achieve the mission of the firm. • This article was originally published by DrChukwunonye Emenalo in African Journal of Business Ethics_6 (1):39 and has been adapted for you by Zainab Dere for the Christopher Kolade Centre for Research in Leadership and Ethics (CKCRLE) at Lagos Business School. CKCRLE’s vision is creating and sharing knowledge that improves the way managers lead and live in Africa and the World. You can contact CKCRLE at crle@lbs.edu.ng.

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Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua

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Onnoghen: Follow the constitution

he president started with wilful disobedience and disregard of court orders; but a greater segment of Nigerians urged him on or kept quiet believing he was on the right path in circumventing the law to deal with corrupt individuals. Then, he became bolder by ordering an illegal raid on the apartment of judges of the Supreme Court; still, we kept quiet and pretended the president was merely fighting corruption. Then he asked lawyers not to accept briefs from corrupt individuals and we all cheered. Again, he told a group of eminent lawyers at a Bar Conference that national security supersedes individual rights and individual rights could be sacrificed for national security. Yet none of the eminent lawyers could correct or reprimand him. Now, the presidency is gunning for the head of the judicial arm of government. Last week, the government, purportedly on the strength of a petition by an obscure organisation, the Anti-corruption and Research

based Data Initiative, whose leader was a former spokesperson to the President, hurriedly filed charges against the Chief Justice, Walter Onnoghen, at the Code of Conduct Tribunal for non and fraudulent declaration of assets. Worse, the government also took the unprecedented step, via a motion, requesting the Chief Justice to recuse himself and stand down from office until the case against him at the Code of Conduct Tribunal is determined. This is unprecedented in the history of Nigeria’s democracy that the presidency is seeking to remove the Chief Justice without regard to due process as laid down in the constitution and just a month before an important election. It will be recalled that in 2016, even after being made acting Chief Justice, President Muhammadu Buhari refused to forward Onnoghen’s name to the Senate for confirmation as substantive Chief Justice as was the norm, even when the constitution only provided for only three months within which the Cthat he could only act for three months in that

capacity. The Vice President eventually forwarded his name for confirmation on the eve of the expiration of the three months when the president was away on medical vacation. For the avoidance of doubt and without prejudice to the substance of the case against the Chief Justice, the constitution and made clear provisions for the discipline of judicial officers and procedures for the removal of the Chief Justice. Section 292 (1) of the 1999 constitution provided that the CJN can only be removed from office by the president acting on an address supported by two-thirds majority votes of the Senate. More significantly, in the case of Ngajiwa Vs FRN (2017), the Appeal Court held that any judicial officer accused of an offence must first be subjected to investigation and disciplinary action by the National Judicial Council (NJC) and after only that the judicial officer can be arraigned in court. The decision of the federal government to ignore both the constitutional provision and judgement of the court to ask the CJ to recuse

himself just one month before an election is giving rise to suspicion of political motifs. The Chief Justice is the head of the third arm of government, which should be insulated from executive control and inteferences. The presidency cannot and must not be aloud to remove and replace its leadership at will and without recourse to rule of law. Nigeria must avoid a regress to the rule of man where government officials have the discretion to choose which laws to obey, which statutes to follow and what rules with which to comply. Despite various shortcomings, Nigeria is better off under democratic governments than under military rule. Strengthening the rule of law is one sure way of ensuring we remain a democracy. We call on the government to withdraw the case instituted against the Chief Judge of the federation at the Code of Conduct Tribunal forthwith. If they are sure of the allegations against the CJ, they should follow the constitutional provision. We cannot fight corruption by breaking or circumventing the law.

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Wednesday 16 January 2019

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Bears take control of market as buying interest in Dangote Cement and Banking stocks sustains rally

Pg. 15

C O M PA N Y N E W S A N A LY S I S A N D I N S I G H T

BANKING

Union Bank, Okomu Oil, Sterling Bank lead NSE 30 so far in 2019 SEGUN ADAMS

tocks of Union Bank, Okomu Oil, and Sterling Bank have outperformed peers to lead the 30 most capitalised and liquid stocks in the Nigerian equities market so far in the year, at the close of trading on Monday, January 11. The strong performance of the three stocks in the NSE 30 index which measures the net performance of the thirty most valued stocks on the exchange including market bellwethers Dangote Cement, Nestle, and First Bank holdings, showed resilience despite the 4.85 percent decline in the NSE 30 index. Tier two lender, Union Bank of Nigeria gained 8.04 percent so far in 2019, following its strong financial performance in Q3 2018, to top the list while Okomuoil and Sterling Bank Plc. have amassed 7.61 and 3.68 percent each so far. Analysts however express divergent views on whether the performance has been sentiment driven or based on the fundamentals of the stocks. Aluko Paul, an analyst

at MBC Capitals explained that the underperformance of the more capitalised stocks in the category was as a result of the withdrawal of foreign investments from the domestic economy as the political risks remain elevated, adding that the performance of Union Bank, Okomu Oil and Sterling was based more on sentiments than fundamentals. ‘’ For Okomu Oil, UBN and Sterling Bank, there is no news propelling the stocks at the moment. I feel Investors just have positive sentiments towards the stocks especially as Okomu Oil paid N3 dividends last year’’ Paul told BusinnessDay. On the other hand, Gbolahan Ologunro, Analyst at CSL Stockbrokers explained that the earnings report of the NSE 30 leaders have been responsible for their current ranking. ‘’It is a function of their earnings growth in 2018, like Okomo which delivered better results than Presco. The same applies to Sterling Bank which outperformed Fidelity and Diamond. On the back of that, investors tend to price them higher compared to their peers,’’ He said. As of Monday, only seven

L-R: Pilsoon Han, vice president, Good Consulting Group; Emomotimi Agama, head registrar, exchange and market infrastructure, Securities and Exchange Commission (SEC); Mary Uduk, acting director general, SEC, and Choonglyol Lee, head of the South Korea Delegates to Nigeria, during a meeting between SEC and South Korea Delegates in Abuja, yesterday. Pic by Tunde Adeniyi

Source: Bloomberg

out of thirty stocks listed in the category were not in the negative as Unilever and National Salt Company stood at zero percent while Lafarge and International Breweries Plc had grown marginally. Access Bank had lost the most, shedding 16.91

percent Year to Day following increased selloff as the timeframe for the proposed merger with Diamond bank draws close. Flour Mill, Oando Plc and Seplat also lost heavily by 16.45, 14 and 10 percent each to rank the worst performing stocks in the category while Dangote

Cement lost 5.11 and Nestle depreciated by 5.65 so far in 2018. In Q3 2018, Union Bank Plc. reported an 18 percent increase in its Profit after Tax for 9 months ended, which grew from N12.4 billion to N14.7 billion in the corresponding period of

2017. Similarly, earnings per share (EPS) for Okomu Oil increased from N6.70 to N7.59 and a 7 kobo increase in Sterling Bank EPS as well as improved performance reported for 2018 Q3 has informed investors’ decision so far in 2019.

COMPANY SERIES

Little-Known companies on the exchange OLUFIKAYO OWOEYE

here are more than a hundred companies that are currently listed on the Nigerian Stock Exchange. But while some of them are quite popular with large market capitalization, the same cannot be said for the others. We present to you Arbico Plc a company which has been in existence for over 60 years and continues to remain relevant in the construction sector of the country. Shelter, no doubt forms a very essential part of human life. Perhaps, that explains why there is always an on-go-

ing building construction right on the next street. Despite the economic contraction that has seen the purchasing power of most Nigerians reduced, government at all levels have continued to invest in social housing schemes to help reduce housing deficit which has been put by expert at 17 million units. Arbico’s main services include pre-construction/estimating, designing, engineering, construction management just to mention a few. And in its over 60 years of existence has designed and constructed hospitals, hotels, industrial plants, residential estates and many more.

The company has also developed capabilities in the planning and construction of a broad spectrum of infrastructure projects for Federal and State Governments, Multinational Companies, Industrial Groups, and high net-worth individuals. No doubt Arbico is one of the oldest construction companies in the country and its shares were listed on the nation’s bourse in 1978. According to information in its 2017 financial reports, the company has three board categories of owners, R28 Limited, A.O.G Limited, and the general investing public. Interestingly, R28 limited owns 103 million units of shares

representing 70% of the shares, A.O.G Limited owns 14 million units of shares translating into 10% while other 20.3% are owned by public investors. Unknown to many, the chairman of the company is the famous Billionaire and Business Mogul Chief Kessington Adebutu, fondly called Baba Ijebu the patriarch of the famous Premier Lotto Nigeria Limited. While Mr. Alkimos Makaronidis, is the Managing Director, a Greek native with a background in Civil- Engineering with over 20 years of experience. A look at the company’s financial shows

that the construction company has been able to maintain some level of profitability in the past years. In its 2017 full year reports for the period ended 31st December the company’s revenue was put at N4.89 billion while for the corresponding period in 2016 the revenue was N3.41 billion representing a 43% surge in revenue. Profit Before Tax jumped by 146% from 43.5 million in 2016 to 107.2 million in 2017. Profit for the year stood at N61 million against a loss of N7 million in 2016. Sadly there has been no trading activity as the shares have remained flat at N4.79 on the floor of the Exchange.

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: CHINEDUM ONYEMA

Much like Arbico, other companies in the construction on the Exchange sector rely heavily on patronage from government contracts. This is influenced by the readiness of government to spend on capital projects and infrastructure. The nation’s annual budgets are often delayed and most times budgetary allocations for capital projects are lately released or not released at all. For investors, the thought that Arbico is largely controlled by the Adebutu dynasty suggests that it has a great potential that if the owners decide to leverage on its huge potentials.

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COMPANIES & MARKETS MARKETS

Meyer Plc reacts to reports of a shutdown by FIRS OLUFIKAYO OWOEYE

aint Maker, Meyer Plc has reacted to reports of a shutdow n exercise on its Head office by officials of the Federal In l a n d Re ve nu e S e rvice FIRS. The company noted that officials of the FIRS came to its office on Monday 7TH Januar y with a warrant of distraint which was dated 7th Januar y. In t h e sa i d wa r ra nt t h e tax agency accused Meyer Plc of owing company income tax arrears in the sum of N54 million in respect of 2016 Assessment. According to the company, this was later resolved after reconciliation of its tax books with the agency which led to the reopening of its office the same day. “ We s u b s e q u e n t l y furnished the relevant document showing tax returns and

payment for the year of assessment in question to FIRS and these were deemed sufficient for the enforcement team to reopen our office the same day.” I n i t s re c e n t l y re leased financial reports for the 9 months ended 30th September 2018, revenue drop slightly by 3% from N778 million in 9-months 2017 to N752 million in 2018. Profit before Ta x s t o o d a t N 1 8 6 million in 9 months 2018 against a loss of N 117 million in nine months 2017. While it recorded a loss After Tax of 156 million in 2017 against a profit after tax of N156 million in 2018. H o w e v e r, t h i s d e velopment has not affected the share price of Meyer on the Stock e x c ha n g e a s i t p r i c e remains flat at N0.59 w ith its one year return down by 3.28%. Meyer Plc is an offshoot of former Hagemeyer Nigeria

Source: Bloomberg

Limited, the manufacturer of Sigma Paints and Cosmetics. In 1994, Hagemeyer was bought

over by Dunlop Nigeria Plc, which led to the change of both the corporate and brand names to DN

Meyer Plc and Meyer Paints respectively. In July 2003, Dunlop Ni g e r i a P l c d i v e s t e d its controlling shares

from DN Meyer Plc to ACIMS Limited and DN Meyer Plc ceased to be a subsidiar y of Dunlop Nigeria Plc.

MARKETS

Moody’s says credit pressures to moderate in Sub-Saharan Africa in 2019 ISRAEL ODUBOLA

redit Rating Agency, Moody’s has predicted that credit pressures in some countries in the Sub-Saharan African region would moderate in 2019 on the backdrop that credit profiles rebounded at their lower rating levels. The global credit rating agency envisioned that economic activities would improve in the region this year, and projected a regional growth of 3.5 percent, which is 0.7 percent higher than the growth forecast of 2.8 percent estimated a year earlier.

Government debt ratios is expected to appreciate slightly or remain at existing levels in 2019, signalling the current fiscal consolidation efforts of some SSA countries to reduce their deficits and accumulation of debt stock. Furthermore, the on-going fiscal consolidation policies are expected to expand regional growth and decelerate debt profile. A number of sovereigns in the region, according to the top-notch credit rating agency, are susceptible to sluggish growth, exchange rate depreciation and contingent liability

risk from weak-state owned enterprises, adding that Out of the 21 sovereigns in the region rated by Moody, 15, which is approximately 71.4 percent have stable posture, and the other six have gloomy posture. “the region is expected to record a faster growth in 2019 and a number of the highly leveraged countries have been projected to grow hence there is a potential for debt burden to moderate in many of the countries. ’’ Omotola Abimbola, Fixed Income and Forensic specialist at Ecobank told BusinessDay.

‘’Despite that, the region still faces a problem of debt affordability across many of the countries affecting mainly the cost of servicing their obligation in a period of rising interest rate.’’ Another analyst, Nnamdi Olisaeloka, a fixed income analyst at Zedcrest Capital Limited, explained that the report would not improve the sentiments of investors in the market. ‘’we still have a negative outlook for most of the sovereign bonds. Moody in the report said the pressures are still there although they have eased slightly, so I don’t expect portfolio man-

agers would be overly bullish. We would see renewed interest but it would be marginal.’’ ‘’Global trade tensions, activities of the Federal Reserves and other global factors are critical issues that still cast uncertainties in the market’’ In a recently released Global Economic Outlook by the World Bank, it projected the region to grow by some 3.4 percent in 2019 with the growth rate estimated to increase to about 3.7 percent in 2020 and 2021. ‘’ This is predicated on diminished policy uncertainty and improved investment

in large economies, together with continued robust growth in non-resource intensive countries.’’ However, the World Bank warned of external headwinds which have intensified, as global financial conditions tighten, and trade policy uncertainty persists. For Nigeria, the Growth in Nigeria is projected to rebound to 2.2 percent in 2019 and 2.4 percent in 2020-21 as many analysts have explained that apart from global trends, economic outcomes for the country would be driven by the conduct of the election.

Wednesday 16 January 2019

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MARKETS

Bears take control of market as buying interest in Dangote Cement and Banking stocks sustains rally OLUFIKAYO OWOEYE

ontinued activities of bargain hunters have sustained the bearish trend of the market for the third time in a row since the market opened for the year. The market which rose marginally by 0.53 percent was driven by the b u l l i s h s e nt i m e nt s t o wards Dangote Cement (+1.69%), First Bank of Nig er ia (+1.35%), Diamond Bank Plc (+3.97) and some other Banking stocks. Consequently, the Year to Date loss in the benchmark index as at close of market on Monday, January 14 moderated to -4.66 percent with a market capitalisation at N11.174 trillion although 4.89 percent lower than it was at the beginning of the year. Top advancers for the d ay i n c l u d e Fi r s t A l u minium, United Capital, Mutual Benefit as well as Diamond Bank Plc. which gained 3.47 percent to close at N2.09. C o n v e r s e l y , I n s u rance Stocks performed the worst in the equities market as Linkage Assurance lost 9.23 percent, the most for any stock

that the end of the day’s trading ‘’ The pr ice to book value of Dangote hit an all-time low of N170 prov i d i n g s av v y i nv e s t o r s the opportunity to take position given its strong f u n d a m e nt a l . Th e re i s leeway for the stock price to still rise in the near term but there would still be profit taking on the stock’’ Gbolahan O logunro, Analyst at CSL Stockbrok e r s t o l d Bu s i n e s s D ay over the telephone. Following the decline of some 8.6 percent in Dangote stocks on last Wednesday, its biggest daily loss in two years, bargain hunters have continued to buy into the cement giant which has been driven price northwards. Gbolahan further explained that the upticks in yields and money instruments, as well as an increase in non-interest income have been seen as positive to drive Q4 2018 bank performance which has been the basis for their strong market performance in the year so far. Another analyst Aluko Paul from MBC Capitals explained that while the market has remained bullish, activities have been low evidenced by the low turnover in the

day’s market which he said was the poorest in months. ‘’ Market turnover was low today and the gains recorded today was basically a reflection of how D a n g o t e c e m e n t p e rformed. ’’ Paul explained. ‘’ looking ahead into the week, I expect a flat trading activity or that the market would go low. The market now is majorly driven by the bellwethers’’ Overall, analysts expect that improved performance in the short t e r m a l t h o u g h a b e a rish outlook is still maintained for the first quarter. In a related development, Trading on the floor of the Nigerian Stock Exchange encountered a technical glitch which impacted trading activities for about four hours. Head of Shared S ervices Division, NSE, Bola A d e e k o, s a i d t h a t t h e glitch was resolved and market transactions continued at 1:45 p.m. Due to the lost trading time, Ad e e ko e x p la i n e d t hat a decision was taken to extend the trading hours on Monday to 3:30 p.m, from the usual time of 2:30 p.m. He further confirmed that the root cause of the disruption has been fully rectified

L-R: Abubakar Bwari, minister of state for Mines and Steel Development; Georgina Ehuriah, permanent secretary, Ministry of Mines and Steel Development; Rafiu Adefuwa, special assistant on protocol to the Minister of State for Mines and Steel Development, and Shehu Sani, president, Miners Association of Nigeria (MAN), during the ministry’s Three Years Account of Stewardship in the Mining and Metal Sector, at the National Press Centre, Radio House in Abuja. NAN

L-R: Uaboi Agbebaku, company, secretary/legal adviser NB Plc; Onyebuchi Nwangwu, brand manager, Star Lager Beer, and Emmanuel Oriakhi, marketing director NB Plc., at Warri Again Concert Powered By Star Lager Beer recently.

MARKETS

Seplat petroleum development company plc extends closed period on its share dealings

eplat Petroleum a leading Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange and the London Counterpart has notified the public of the extension of its closed period following the scheduling of its board meeting for late February. In a notice signed by the Company secretary and sent to exchange on Monday 11, January, the Oil and gas company said

it would be extending the closed period by 24 hours more than it had previously stated. ‘’ Following the scheduling of a meeting of the Board of Directors of the company for 28th February 2019, the closed period is consequently extended to twentyfour hours (24 hrs.) after the audited financial statement has been released to the public. ‘’ the notice read. ‘’Accordingly, no Director, employee,

person discharging managerial responsibility, adviser(s) of the Company and their connected persons may directly or indirectly deal in the shares of the Company in any manner during the closed period.’’ Seplat had previously announced on December 27 in 2018 that its closed period would extend from the last day of 2018 through February 28 as it prepared to release its financial report for the year ended.

Yomi Adebanjo, company secretary, Fidson Healthcare Plc,; , Adedapo Adejoke, president/chairman, Chartered Institute of Stock Brokers and Member, PEARL Awards Board of Governors, and Eniola Fadayomi during the award ceremony recently.

L-R : Ademola Tosin, Khalid Mansoor, Liju Nediyankal, Arun Pillai, Mercy Olorunshola, Alausa Olakunle, Samuel Ogedazi and Nurudeen Abubakar all members of the Samsung Healthineers team (sales and engineering team) of Pacific Diagnostics Nigeria with the premier “Service and Maintenance Excellence award” received at the 2018 Siemens Healthineers Africa business partners’ event held in Nairobi, Kenya.

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Wednesday 16 January 2019

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Wednesday 16 January 2019

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Nigeria risks losing spot on cocoa rankings as floods, disease cut output Josephine Okojie

igeria may lose its position in the comity of cocoa producing countries as floods and diseases cut 2018 output in key cocoa producing states. The International Cocoa Organisation (ICCO) estimated Nigeria’s production in 2017/2018 season to reach 240,000 metric tons. But industry players say there will likely be a 15 percent decline in production capacity in 2017/2018 output when the numbers for the season are released. The Cocoa Association of Nigeria thinks that the poor output for the period might cause a decline in the country position in the global comity of cocoa producing states, while attributing it to extreme weather conditions and disease outbreak experienced in the cause of the year. “The high incident of last year’s floods would cut down the country’s 2017/2018 production by about 15 percent,” Sayina Rima, national president, Cocoa Association of Nigeria (CAN) said by phone from his farm in Ikom, in the South-South region. “The high yielding lowlands where taking over by floods and all this has affected our production to a loss of about 60,000 metric tons. This might affect our global cocoa rankings for the period,” Rima said. Africa’s most populous nation currently ranks joint fifth with

neighbouring Cameroon with 210, 000 metric tons production in the 2016-2017 season, data from the International Cocoa Organisation (ICCO) states. “Our 2018 output was low and farmers have less to invest in this year’s production and this is due to extreme weather conditions,” Robo Adhuze, chief operating officer, Centre for Cocoa Development Initiative, said in a telephone response to questions. In recent years Nigeria has failed to steadily increase its cocoa production over the years, despite

the commodity being the largest single foreign exchange earner after oil. This is as a result of a combination of factors, ranging from poor yield per hectare, low investments, ageing farmers and extreme weather conditions, BusinessDay’s investigation gathered. The average age of cocoa farmers in Africa’s largest economy is 60 currently, implying that the sector is yet unattractive to Nigeria’s young population. “The average age of a farmer in Nigeria today is 60 years. For a crop

that is highly labour-intensive, 60 years will not give the maximum impact in the industry,” Rima said. “Tree crops like cocoa suffer the most. We need to start making cocoa and the like attractive to the youths through incentives, because the investments in tree crops are very high and most youths cannot afford it,” he added. Als o, the countr y’s cocoa industry is currently plagued by low productivity of less than 0.350 tons per hectare, when other leading countries are producing about two to five tons per hectare of improved

variety, according to the Institute of International Tropical Agriculture (IITA). Experts agree that there is a need to increase Nigeria falling cocoa production. To achieve this, Anna Muyiwa, plant biotechnologist, Cocoa Research Institute of Nigeria (CAN), said the country must start rehabilitating old cocoa plantations and develop more hybrid varieties. “We need to rehabilitate our old cocoa trees in all cocoa producing states. A completely rehabilitated cocoa plantations of proven clone will produce as much as 2.5 tons per hectare,” Muyiwa said, stressing the need to develop more hybrid varieties “Nigeria’s cocoa average yield per hectare is among the lowest in the world and this is due to old age of most cocoa plantations,” she further said. Speaking on the outlook for the sector in 2019, the country’s cocoa association states that production for the year will surpass that of 2018. Nigeria has two cocoa harvests which include the smaller midcrop from April to June, and the main crop from October to December. The main crop normally accounts for about 70 percent of Nigeria’s cocoa output while the midcrop accounts for the remaining percentage. A metric ton of cocoa sells for $2,310 as at the time of writing, according to the International Cocoa organisation (ICCO).

10,000 smallholder farmers to benefit from $200m World Bank grant Victoria Nnakaike, Lokoja

ore than 10,000 smallholder farmers from Kogi and six states other are to benefit from a $200million grant under the World Bank-assisted Agro Processing Productivity Enhancement and Livelihood Support (APPEALS) project. Ab d u l l a h i O z o mat a, Ko g i state proje ct co ordinator of APPEALS, told newsmen recently in Lokoja that the project was aimed at promoting transition from subsistence to commercial agriculture in seven states, in which Kogi state is one of the states Ozomata equally disclosed that the World Bank grant, in line with the ‘Green Alternative’, is aimed at promoting value addition in three crops — rice, cassava and

cashew — in which Kogi state has comparative advantage. He added that the baseline study of the project implementation had been concluded while the needs assessment was on-going to identify production gaps in the crops’ value chain. He also stated that Kano, Kaduna, Enugu, Cross-River, Lagos and Kogi states were selected after a competitive selection process for the APPEALS project expected to last seven years. He emphasised that smallholder farmers having between one and five hectares will upgraded to between five and 10 hectares in the various crops’ value chain crops, saying existing data on farmers in the state would be subjected to validation to enable the project identify the real farmers. “We are looking forward to working with the real farmers

and not political farmers. The project is also going to look at rural

infrastructure and farm clusters so that it can enhance their farming

activities and livelihood. “Women and youths subcomponent also gives them the opportunity to partake in other farming activities within the priority value chain of the project,” Ozomata said. Ozomata also observed that the APPEALS project had five main components including production and productivity enhancement, primary processing, value addition, post- harvest management and Women/Youth Empowerment. He listed other sub-components are infrastructure support, technical assistance, knowledge and communication, management and coordination, adding that the sensitisation programme would include all stakeholders. He therefore, solicited the support and cooperation of the media and all other stakeholders for the project to thrive in the state.

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Extension services: The weak link in Nigeria’s agric revolution plan Josephine Okojie

i g e r i a ’ s agricultural extension service is proving to be the weak link in the country’s plan of revolutionising the sector. Nig e r i a n s ma l l h o l d e r far mers have continue d to lag behind their peers, owing to their inability to raise productivity due to the collapse of the country’s agric extension service delivery. The inability of farmers to access vital information that is beneficial to them and inadequate dissemination of information by extension agents have reduced agricultural productivity in the country for decades. Agricultural extension service is the application of scientific research and new knowledge to agricultural practices through farmers’ education. The extension agents function as the link between farmers, research institutes and the government. ‘Since I started farming more than 10 years ago, extension agents have only visited my farmland twice,’ Samuel Sanondo, a farmer who farms 15 hectare of maize and yam in Donga local government area in Taraba State said. “I still far m w ith the farming methods I learnt from my father. The extension agent that is supposed to teach me new techniques has only visited my farm once,” Sanondo said. Sanondo’s case is similar

to what smallholder farmers across the country experience with the delivery of extension services in Nigeria. This agricultural extension services have been identified as an important part of the intended transformation of the agricultural sector. Experts say that the country’s agricultural sector will only become income generating commercial activity when extension s e r v i c e s t o f a r m e r s a re restructured to be efficient and effective. According to Antti Ritovnen, chief executive officer, Dizengoff Nigeria, has noted that lack of farmers education is the major challenge confronting Nigerian smallholder farmers, saying that farmers are yet to increase

their yield per hectare because they lack the information on good farming practices. Ritovnen called on the government to revive Nigeria’s agricultural extension service, saying it is the major way information is being disseminated to farmers mostly in the rural areas. Currently, farm extension service delivery in Nigeria is currently marred with lots of challenges ranging from poor funding, road infrastructures and aging agents as well as policy flip flop. Low government funding for extension services has led to the unavailability of input materials needed to support farmers such as 4WD vehicles, farmer’s skills acquisition c e n t r e s, d e m o n s t r a t i o n centres, demonstration kits

and low morale exhibited by the extension workers. According to experts, there exists a wide extension agent-to-farm ratio in Nigeria where it is estimated that there is one extension agent to 2,500 to 10,000 farm families depending on the state in the country. For more than a decade, there has been no recruitment of extension agents in most states of the federation and this has reduced the number of extension agents; with many approaching retirement age. “The issue of manpower is a very big problem. There has been no recruitment of extension agents in some states since the World Bank grant was exhausted in the 80’s,” Mohammed Khalid Othman, assistant director, National

Agricultural Extension Research Liaison Services (NAERLS) told BusinessDay. “We have a situation where some states have one agent serving 2,000 farming families,” Othman said. Othman noted that the countr y cannot improve farmers’ productivity when the ratio of extension agents given to farmers is as high as what we have currently in the country especially at a time were the government wants to diversify the economy through agriculture. In trying to address the issue of limited extension agents, some states have resulted to picking cooperatives and association heads and educating them on latest technologies and information necessary for the farmers in their communities who in turn are expected to pass the information to them under their cooperatives and associations. But this initiative has failed as most of the heads of such associations who attend such training can hardly translate what was learnt to other farmers upon return. “Any time the extension agents come, they pick selected farmers for training so that those farmers can come back and teach us what they have learnt but most of the farmers come back and are unable to explain anything to us,” said Abdul Sule, a tomato farmer in Alabata, Odeda, Ogun state Meanwhile, research institutes in Nigeria have blamed the government for the gap that exists between the farmers, research institutes and extension service.

The government needs to address the problem with the delivery of extension services in other to boost farmers’ productivity. Government has to make provision for bridging the gap between the lab and the farms, they complain. “When we come up with new technologies which should improve farmers’ productivity, it never gets to the farmers because the extension agents fail to transfer these technologies to them. And this is the case because the extension workers are not just there. The issue is because of the failed system and the gap created by the government,” Celestine Ikuenobe, director of research, Nigerian Institute for Oil Palm Research (NIFOR) said in a telephone interview with BusinessDay. Ikuenobe stated that the agents are not adequately funded and lack motivation. He stressed the need for government to address these issues of extension service delivery if the economy will be diversified through agriculture. In view of this shortfall, experts underscore the need for private-sector participation in the funding and delivery of agricultural extension services so as to meet the needs of the farmers. They argue that agricultural extension services have been dominated by the Agricultural Development Programme in Nigeria for a long time. The experts insist that the traditional extension services, linked with production objectives and blanket recommendations, can no longer meet farmers’ expectations.

Financial Implication A sum of N8.75 million will be required to set up this project. The breakdown is given below:

minded investors.

How to establish moringa tea bag processing factory Olumakinde Oni

oringa is a food, medicine and forage crop. Moringa cultivation is gaining popularity in Nigeria in recent times. Many Nigerians are now establishing Moringa plantations and consuming a lot of the products. The health benefits of moringa are limitless. Moringa has a strong antioxidant effective against prostrate and skin cancers. It is an anti-tumor and an antiaging substance. It modulates anemia, high blood pressure, diabetes, high serum or blood

cholesterol, thyroid, liver and kidney problems. It also has strong anti – inflammatory properties ameliorating rheumatism, joint pains, arthritis, edema and lupus. It is effective against digestive disorders including colitis, diarrhea, flatulence (gas, ulcer or gastritis. It is an anti-bacterial, antimicrobial and anti-viral agent, it is effective against urinary tract infection, typhoid, Syphilis, dental carries and toothaches, fungus, thrush, common cold, Epsetein-Barr virus, Herpes – simplex, HIV AIDS, warts parasites, worms, schistosomes and trypanosomes. It is a detoxifying agent, it

is effective against snake and scorpion bites. With all the health benefits of Moringa listed above, a Moringa tea produced in Nigeria, well packaged with aggressive marketing strategies will sell like hot cake. A moringatea production factory is nothing but a goldmine that will definitely turn around the fortunes of the promoters. Technical Information Moringa plantations are springing up in Nigeria and it has been well established that Nigeria has the potentials to grow millions of hectares of Moringa, hence the raw materials supply can never

pose any problem. Not only this, the awareness of usefulness of moringa is gaining ground every day. Moringa leaves are plucked, washed, sterilized and well dried. The dried leaves are later milled into powdery form and now flavoured. We can have different flavours such as strawberry, vanilla, ginger and others. The next step is to package in permeable tea bags. Tea bags are now stuffed in small packs. Attractive and good packaging is a pre-requisite to market acceptability. Serious minded investors can be put through the technicality.

• Pre-Investments - N250, 000 • Accommodation N2, 500,000 • Plant and Machinery N3, 000,000 • Utilities 2,000,000 • Take-off Working Capital 1,000,000 TOTAL N8, 750,000 ========== A well packaged feasibility report/Business plan is a prerequisite to project take-off and finance sourcing. This can be provided for serious

Profitability The project has potentials to generate a turnover of N300 million on annual bases with a minimum pre-tax profit of N130 million already computed. This is another income and job generating opportunity that has far reaching positive effect on the Nigerian Economy. Serious minded investors can be assisted in the establishment of this project. Contact author on 08023058045 orolumakindeoni2@ yahoo.com and nucleusventuresnigltd@ yahoo.com

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Wednesday 16 January 2019

Shaping people into a team

SurveyMonkey’s CEO on Creating a Culture of Curiosity

n May 2015 I flew to Mexico for a long weekend with a group of friends. We spent Friday afternoon beside the pool at a resort. Dave Goldberg, one of my closest friends, decided to go to the gym. His wife, Sheryl Sandberg, stayed with the rest of us by the pool. After a while, we all went back to our rooms. When we reconvened for a drink, Sandberg was looking for Goldberg. She and Goldberg’s brother, Rob, eventually found him unconscious in the gym. When I arrived at the hospital, I learned that he’d died. It was horrible and heartbreaking. Goldberg was the CEO of SurveyMonkey, a company that was changing the way people gather feedback through online surveys. I served on the board. There’s no playbook for what to do when your CEO dies suddenly at age 47. Everyone was in shock. Still, we had to keep the company operating. In addition to being a board member, I was working full-time in Los Angeles as a senior vice president at GoPro, the action camera company. SurveyMonkey’s board asked if I’d be willing to step in as interim executive chairman. I asked the CEO of GoPro for permission to split my time between GoPro and SurveyMonkey over the summer, and he graciously agreed. In July, after an extensive search, we hired Goldberg’s successor. Within a few months, however, it was clear that the new CEO’s strategy wasn’t aligned with the board’s. He recognized that the fit wasn’t right, so he volunteered to step down. The board asked me to consider taking his place. I had to do some difficult thinking: The team at GoPro had been very gracious to me after Dave’s death, and I felt loyal to it. But SurveyMonkey’s continued success was very important to me. I became its CEO in January 2016.

that I’m open to asking and answering them. I do that through regular skip-level meetings with people one level below my direct reports, where the conversation is open and nothing is off-limits. I believe that a diversity of people leads to better ideas and greater curiosity. Our board of directors consists of five women and five men. Five of the 11 members of our senior executive team are women. Women make up about half the company.

GETTING BACK ON OFFENSE I’d first heard about SurveyMonkey in 2008. Goldberg, whom I’d known for a decade, was talking with a private equity fund about finding a company he could invest in and run. The PE guys referred him to SurveyMonkey, a 10-year-old company in Portland with just under 10 employees that was still run by its founder. Goldberg invested in the company, became the CEO and moved it from Portland to Silicon Valley. He asked me to join the board. Before I became CEO, the company had been on a great trajectory. But after Goldberg’s death it wasn’t certain that would continue. I spent a lot of time helping employees process their feelings of grief, fear and anxiety. I also told people that we needed to get back on offense to remain competitive. Very quickly we decided to change our strategy. We laid off 100 people — more than 10% of our workforce. It was hard, but it put the company back on a solid footing. DEFINING THE COMPANY CULTURE

I continued to spend part of each day providing emotional support for employees and maintaining transparency about our strategy. We needed to find a way to turn the page. We set about defining the company culture, sending around a survey to ask what our employees thought. The result was a list of five employee values: Be accountable; trust the team; prioritize health; listen to customers; and celebrate the journey. With alignment on our values, the team was starting to get back on the horse. We ramped up our recruiting. We reintroduce ourselves as a company, we decided to ask our customers what they valued most about our offerings and our employees what excited them about coming to work every day. In these conversations one word came up repeatedly: “curiosity.” Every survey our customers make is driven by their curiosity about what others think. Every product innovation we’ve created has resulted from employees’ asking questions or looking at something differently. Recognizing that curi-

osity is at the heart of everything we do, we made it our new rallying cry. Today SurveyMonkey’s mission is to “power curious individuals and organizations to measure, benchmark, and act on the opinions that drive success.” CELEBRATING CURIOSITY We moved into a new headquarters building in December 2016, and that provided an opportunity to go all in to increase curiosity. We designed our new HQ, from the chairs to the names of conference rooms, almost entirely on the basis of employee surveys. Our goal was to make the new space open and collaborative to unlock creativity and innovation. We also started encouraging and rewarding curiosity across the organization. For instance, we conduct town hall meetings at which we celebrate the “question of the week,” chosen from employee surveys. We have a peer recognition program to reward people who dare to be especially candid. To foster a culture where questions are welcome, I need to show

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

GOING PUBLIC In September 2018, SurveyMonkey went public. For everyone involved, the process served as a reminder of how powerful curiosity can be. We filed a 250-page registration statement on Form S-1 with the Securities and Exchange Commission to explain everything there was to know about the company. When you’re pursuing an initial public offering, you put together a roadshow presentation to tell your story, which you present to potential stakeholders approximately 75 times over a two-week period. With all that repetition you get pretty good at delivering the presentation — but the real magic happens afterward, when smart people ask questions. For me the roadshow was an opportunity to learn about would-be investors’ hopes and concerns about our company. What risks did they see that we hadn’t? What opportunities were they curious about? Leaders need to find ways to help employees flex their curiosity. We want people to ask big questions — and we want to celebrate them when they do. We want them to think up experiments that haven’t been done before. If folks aren’t failing, they’re not asking hard enough questions or taking big enough risks. Curiosity can be like a muscle: Its strength will erode if it isn’t used often enough.

Wednesday 16 January 2019

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‘MFBs not connected to a switch is a barrier to financial inclusion’ Stories by Hope Moses-Ashike

hat most Microfinance Banks (MFBs) are not connected to a switch, raising processing time and costs of operation, is a barrier to achieving the financial inclusion target. Being connected to a switch is about making transactions for one bank to another through connecting platform such as the Nigeria Inter-Bank Settlement System (NIBSS) and Interswitch, among others. One of the operators of the largest microfinance banks based in Lagos confirmed to BusinessDay on Monday by phone that a lot of MFBs do not have such connection. The operator was concerned that many people do not understand the concept of microfinance banking as they take it to be commercial

banks. However the operator said many of the microfinance banks ride under their corresponding banks to connect to a switch. Last week, the Central Bank of Nigeria (CBN) released the revised National Financial Inclusion Strategy (NFIS) and the major goal of the revised strategy is to reduce the proportion of adult Nigerians that are financially excluded to 20 percent in year 2020 from it baseline figure of 46.3 percent in 2010. There is opportunity to capitalize on the potential of microfinance especially to serve women, rural people and youth. But according to the NFIS report, lack of Microfinance Institution (MFI) regulation results in occasional bad customer experiences and lack of trust. While basic entry requirements are low, MFBs are constrained by stringent

requirements, for instance, staff qualifications requirement limit MFB’s ability to expand their footprints – and therefore to make a broader anomaly impact. Another barrier to financial inclusion, which the private sector and civil society players can address include banks lack capital incentives to invest in recruiting, training and retention for poten-

Dedicating digital assets to support growth of MSMEs, the Ecobank way

atrick Akinwuntan, managing director, Ecobank Nigeria, has reaffirmed the bank’s commitment to the use its wide and versatile digital capacity to transform the entire value chain for micro, small and medium enterprises (MSMEs) in Nigeria. This according to him would engender more activities in the sub sector leading to the overall growth of the economy. Akinwuntan disclosed that it was part of the overall strategy of the Ecobank group to deploy its products with digital appeal to support business development. He listed some of these products to include Omnilite, EcobankPay. Ecobank is also providing Xpresspoints – which is agency banking in the neighbourhood. “Omnilite is an Ecobank internet banking platform

that allows entrepreneurs perform transactions, payments over the Internet through the Bank’s secure website. With Omni Lite, customers have easy access to their account(s) from anywhere in the world; Online real-time account monitoring facility; Convenience of conducting banking transactions from comfort of home/office; Secured online transactions; Easy Access to bank information and products; Effective, cheaper and easier way for our customers to communicate with the bank on a 24/7 basis”, he stated. Speaking on the EcobankPay, Akinwuntan said “EcobankPay, is a digital QR code that enables payments using the mobile phone, without the need for a plastic card. It is really very convenient as it is a one stop platform of Ecobank across 33 countries

in Africa. The uniqueness of our EcobankPay is that it has MasterPass, MVisa and Mcash options with a single merchant identity for each customer to transact across the three platforms. Our merchants on EcobankPay have a QR code that accepts all the three. Therefore, if the person that wishes to buy goods from you is coming from a bank that has MVisa, or Mastercard or Mcash, the same QRcode would accept your funds and vice versa. That creates interoperability and convenience for the merchants and as you know, the QRcode is much cheaper than having a point of sale (PoS). It also provides immediate credit to your bank account and not a day after as is on other acceptance platforms. Our products assist entrepreneurs achieve their goals whether it be payments or collections with more ease.

tial direct and third party networks. More, so people in rural areas may lack trust in agents, in particular when they are recruited from outside of the community’s language and culture. However, an analysis of financial inclusion status as at 2016 showed that the South West geopolitical zone had reached 18 percent exclusion

rate while South East and South-South recorded 28 percent and 31 percent, respectively. The exclusion rate for North Central geopolitical zone stood at 39 percent while that of North East and North West were 62 percent and 70 percent, respectively. The age dimension to financial inclusion in the country indicates that the most banked brackets are ages 26 to 35 and 36 to 45 as the percentage of banked stood at 44.2 percent and 45.6 percent respectively. Conversely, the least banked age bracket were 18 to 25 years followed by 56 years and above as they recorded 27.5 percent and 34.2 percent banked rate respectively. Financial inclusion performance by products, channels and enablers (2016) indicated that the percentage of adult Nigerians that had access to payments, savings,

credit, insurance and pension services stood at 38 percent, 36 percent, 3 percent, 2 percent and 5 percent as against the targeted figures of 56 percent, 46 percent, 29 percent, 25 percent and 26 percent, respectively. In the channels category (measured in per 100,000 adults), banks branches, MFB branches, ATMs, PoS terminals and Agents were 5.6, 2.3, 18.0, 116.3 and 18.8 in 2016 as against the targets of 7.5, 4.6, 46.2, 524.1 and 37.2, respectively. Furthermore, in the enabler category, the share of adult population that registered under the National Identity Number (NIN) scheme peaked at 15 percent as against the target of 67 percent in 2016 while the proportion of adult population that had Know You Customer (KYC) Tier 1 ID leaped to 60 percent compared to the targeted 67 percent.

Heritage Bank to deepen retail banking for sustainable growth

eritage Bank Plc has restated commitment through its growth strategy to deepen its full stream retail banking franchise to match the rapidly changing needs of its customer, as well give the unbanked, especially in the rural areas the opportunity to enjoy seamless financial services. The Ifie Sekibo, managing director/CEO, made this known recently in a statement, stating that the bank will continue to grow by appealing to key client segments especially in the retail space and also focus on under-penetrated banking segments while building loyalty amongst the bank’s existing customer base. According to Sekibo, one of the ambitions of the institution in the 2019 financial year is to emerge as a systemic important bank in the Nigerian banking industry, which

remains its underlying corporate growth strategy. He said Heritage Bank was committed to building an enduring and resilient banking franchise in the country, affirming that the bank was on a growth track and was not unmindful of the headwinds facing the political and economic environments. Sekibo stressed that the bank will continue to pursue its strategic aspiration of not only being stable but also being sustainable in earnings and profitability in its growth plan. “We are very optimistic that the Heritage Brand will continue to soar over the current economic tide through its collective efforts to remain an enduring institution,” he stated. Meanwhile, as its strategic growth to meet customers’ needs and revolutionalise the banking sector via its digital platform, the bank approved

the upward review of daily transaction limits for Octopus transactions to N200, 000 for Heritage Bank registered users. The bank explained that other Banks registered users will be able to transact on the platform within limits assigned their debit cards by their respective Financial Institutions. To give a voice to this, Sekibo described Octopus as “the best opportunity to experience a true, out-of-this world digital experience available across major platforms. Understand that this new adventure does everything differently” According to him, the platform is an intelligent digital experience that combines digital transactions and a community lifestyle that empowers customers with the power to build their world and perform digital transactions how they want.

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Wednesday 16 January 2019

Maritime e-Commerce

Shipping devt: Key undelivered promises of Dakuku Peterside in 2018 Stories by Uzoamaka Anagor-Ewuzie

hip owners in Nigeria have been passing through difficult times due to their inability to invest in acquisition of new and standard vessels that can compete favourably with their foreign counterparts. As a result, foreign owned shipping firms now dominate Nigeria’s shipping business worth over $8 billion annually. Bearing this in mind, upon his appointment as the director general of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dakuku Peterside, listed some key interventions, which his agency hopes to actualise towards finding lasting solutions to the problems limiting shipping development in Nigeria. Recall that at the Stakeholders’ Discuss organised by the Nigerian Ship Financing Conference and Exhibition (NISFCOE) in 2017, Peterside told newsmen that his agency was working to change Nigeria’s crude oil

trade policy; develop special interest rate and intervention fund for vessel acquisition and reduce cost of ship financing. Sixteen months down the line, these interventions still remain ‘unfulfilled promises’ that seem to exist only on paper and they include: Change of trade terms from FOB to CIF Peterside said NIMASA was engaging the Nigerian National Petroleum Corporation (NNPC) with the aim of pushing for the change of the nation’s crude oil trading policy from Free on Board (FoB) that enables buyers of Nigerian crude to engage their vessel of choice to Cost Insurance and Freight (CIS), that allows Nigerian ship owners to be responsible for freighting the crude to the buyers’ destination ports. According to him, this will create the right environment for Nigerians to benefit from the opportunities that exist in the nation’s shipping sector by creating more jobs for Nigerian owned vessels. “Since we started the clamor for a change of terms of trade from Free on Board (FOB) to Cost Insurance and

Dakuku Peterside

Freight (CIF) term of trade for the affreightment of Nigerian crude oil cargo, more stakeholders are now better informed. He said that NIMASA has approached the NNPC and a team has been put together by both organisations to review and come up with modalities for implementation. Despite raising the hope of Nigerian ship owners, the outcome of this committee

has remained unknown to Nigerians, whose companies have remained jobless for years. Special interest rate and intervention fund for vessel acquisition Shipping has a big problem that must be tackled, which is to make Nigerian financial institutions understand that ship acquisition is a peculiar business.

Bu s i n e s s Day u n d e rstands that shipping is capital intensive and has long gestation period, meaning that the current debt financing regime cannot support ship financing in Nigeria. In many countries, you get as low as 1 to 3 percent lending rate for ship acquisition, making it difficult for Nigerian ship owners that get the same facility at 25 percent unable to compete with foreign counterparts. Thus, Peterside disclosed that NIMASA was working on a special foreign exchange intervention for vessel parts acquisition and loan repayment processes to enable indigenous operators to compete favourably with their foreign counterparts. “We are also engaging with the CBN to deal with the issue of cost of financing and we have made appreciable progress so far. A committee has already been set up to work out modalities to implement the policy. Ironically, the impact of this move is yet to be felt as the agency, in partnership with CBN is yet to come up with the proposed special interest rate in order to reduce the heavy rate ship owners pay on loans

for vessel acquisition. Disbursement of CVFF Peterside, who noted that the high lending rates of banks to ships owners for vessel acquisition has been one of the problems of ship financing, also said that NIMASA is determined to disburse the Cabotage Vessel Financing Fund (CVFF), which has been in the agency’s custody since inception in 2003. Listing the benefits of CVFF, which is now over $100 million and seating with the CBN under the treasury single account (TSA) arrangement, Peterside said that the fund would crash the rate of borrowing from the bank because it comes at almost nothing, compared to that of banks. CVFF is ship owners’ contribution and does not belong to the government. Therefore, the role of government as the regulator is to ensure effective utilisation of the fund and not to squeeze life out of ship owners. Despite these listed benefits of CVFF, NIMASA under the management of Peterside has also failed to disburse the fund in 2018.

How Nigeria loses from berthing petroleum product vessels in Lome

ver the years, Mother Vessels laden with imported petroleum products, including Premium Motor Spirit (PMS), Automotive Gas Oil (AGO) popularly known as Diesel, Dual Purpose Kerosene (DPK) known as Kerosene, are first discharged in Lome before being shuttled to Nigerian seaports. Allowing these vessels to berth in Lome, analysts say, holds huge economic implications for Nigeria, judging by the volume of the above mentioned products that are brought into Nigeria annually. By estimation, about 85 percent of the total imported petroleum products that come to the West African sub-region are destined for the Nigerian market. BusinessDay understands that one of the major reasons these vessels are discharged in Lome, was due to the inability of the shallow depth of the water channels leading to Nigerian ports to allow passage of bigger ships. This means that when Mother Vessels get to Lome, the cargo would be

transshipped to Lagos, using lighter vessels that can berth in Nigerian jetties. Research has shown that vessels such as very large crude carriers (VLCC) with 200,000 to 325,000 dead weight tons; used mainly in the Mediterranean Sea, the North Sea, and near West Africa, have capacity to convey up to 2,000,000 barrels of oil at a go. While an ultra large crude carrier (ULCC) with 325,000 to 550,000 dead weight tons; used in the Persian Gulf to European and American to Asia, has capacity to carry up to 4,000,000 barrels of oil. But Nigerian oil jetties have capacity to receive vessels with the capacity to convey about 80,000 to 120,000 metric tonnes of products. Industry analysts have also blamed lack of adequate security in Nigerian waters for the inability of mother vessels to berth on Nigerian waters. This, according to them, was fueled by concerns over pirate attacks and other criminal activities that occur on the Nigerian waterways, thereby moving Nigerian shipping opportunities to more secure water channels.

Revenue loss: Nigeria is currently losing multi-million dollars worth of revenue to the neigbouring seaport of Lome in Republic of Togo for allowing Mother Vessels to berth in Lome port. Government revenue such as tax, tariff and levies, which Nigeria would have been collecting from such vessels, is being lost. On the other hand, Nigerian operators have also lost the lucrative bunkering business to Togolese operators, while Nigerian bunkers remain idle. Bunkering, which is the business of supplying fuels, food stuffs, water and other needs of ships and their crew, is a business that is legitimate in the international shipping business, and it can create sustainable wealth judging by the fact that Singaporean economy rakes in about $65 billion annually from bunkering. Loss of shipping business: Foreigners have taken over the nation’s shipping industry. Here, the same foreign shipping companies involved in bringing imported petroleum

products to the country are also the ones who distribute the wet cargoes. Nigeria, according to Temisan Omatseye, a ship owner, has lost its shipping business because as Mother Vessels remain offshore Lome, other smaller foreign-owned vessels are used in bringing in the petroleum products into Nigerian waters. This development, he said, has robbed the indigenous shipping companies of jobs and revenue. Apart from earning money from chartering ships, owning ships enables a country to make use of its own people, thereby creating jobs for Nigerian seafarers. Therefore, Nigeria as an oil producing nation must have plans to get value from selling crude oil just like other oil nations like Iran, Kuwait and so on that have ships for lifting their crude oil. These nations know exactly what they want to derive from the business of selling crude oil, Temilola Okesanjo, a shipping expert said. Loss of Seafaring jobs: The inability of imported petro-

leum products to directly come to Nigerian seaports, has also taken seafaring jobs away from Nigerians. This is as many foreign seafarers including those from India, Philippine and other countries, have taken jobs away from Nigerians. Currently, Nigeria, through the Nigerian Maritime Administration and Safety Agency (NIMASA), is building a crop of qualified seafarers from notable universities in different countries of the world including Egypt, United Kingdom, and others, but unfortunately, the jobs that are supposed to be done by these seafarers upon graduation, have been taken over by foreigners. For Omatseye, the training given to seafarers is wasted, if they can hardly find jobs since there were no ships to engage them. Lack of capacity development: The indigenous ship owners in Nigeria are currently finding it difficult to develop capacity to compete with their foreign counterparts, which was why the nation’s shipping business,

is largely foreign dominated. Poor manpower development: Nigeria is presently losing the opportunity to train her cadets, especially the graduates from the Maritime Academy of Nigeria (MAN) Oron, who supposed to undergo seatime training before they can be internationally certified as seafarers. Sea-time is a practical training experience that is required of any cadet, in line with the stipulations of the International Maritime Organisation (IMO), before such cadet would be issued with a Certificate of Competence (CoC) to enable him or her to work on oceangoing vessels. Though, most oil jetties in Nigeria are privately owned, the Federal Government through the Nigerian Ports Authority (NPA), needs to draw a master plan that would help develop a deep seaport for berthing of large crude carriers to limit the above listed economic losses and even make Nigeria a hub for oil cargo.

Wednesday 16 January 2019

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BIMCO seeks EU, China, US support in fight against piracy in Nigeria, Gulf of Guinea Stories by Uzoamaka Anagor-Ewuzie

orried by persistent pirate attacks in t h e Gu l f of Guinea (GG), which imposes a burden on seafarers and shipping companies, BIMCO has asked maritime powers in the EU, China and the United States to increase their presence and collaboration with countries in GG to curb piracy. According to BIMCO, around 40 ships have been attacked in the Gulf of Guinea in 2018, adding that six seafarers were also recently kidnapped from the MSC Mandy, which was on the way to Lagos, Nigeria. “We look towards the EU, China and the United States to join forces and deploy naval capacity in the Gulf of Guinea to end this constant threat to seafarers,” Jakob P. Larsen, BIMCO head of Maritime Security, says. Larsen, who said that BIMCO remains very thankful to the regional navies that are working tirelessly

and with great sacrifice to secure their seas, added that “While these efforts command our deepest respect, pirates in the Gulf of Guinea can still operate largely unchecked in the open seas, outside of the

territorial waters, and on occasion even strike inside territorial waters.” BIMCO further said that several capacity building initiatives have been started in the region since the Yaoundé Code of Conduct

was agreed, but the actual security situation in the Gulf of Guinea is still not good. “One of the reasons is that other security challenges in the region, such as land-based terrorist threats, generate a high demand for

law enforcement resources. It further noted that in addition to the strain put on seafarers; the current situation negatively impacts the economic potential of the sea of the countries in the region.

“It is time to step up law enforcement efforts, establish control of the sea in the Gulf of Guinea, relieve seafarers from the threat and the psychological pressure, and allow the countries in the region to harvest the full economic potential of the seas,” Larsen says. Larsen said that : “International sea and air law enforcement assets, such as naval ships with helicopters, will be able to deliver a concrete and rapid contribution to the maritime security situation. If such assets were supported by onboard regional law enforcement officials in charge of the law enforcement element, operations could be conducted without infringing on the regional states’ sovereignty. “While longer term capacity building efforts are commended, what is needed now is substantially more assets at sea and in the air. It is an obvious solution which can deliver the necessary effect with the desired speed, without compromising the territorial integrity of the countries in the region,” Larsen added.

Drewry expects African countries to invest in small-scale LNG export projects

European Investment Bank unveils first green support for European shipping

… Says strong demand for LNG to drive projects in 2019

he European Investment Bank (EIB) has signed the first agreement under its Green Shipping Guarantee Programme (GSGP) through Dutch bank ABN Amro. The EIB will contribute EUR 10.1 million (USD 11.6 million) to an ABN AMRO arranged facility to finance the construction of three cement carrier vessels for Eureka Shipping. It was said that the project vessels’ design represents an improvement to the overall environmental performance of the promoter’s fleet, as well as cement

m a l l -s c a l e L N G proje cts are expected to gain momentum and they would be driven by strong demand for LNG supply from small importers, along with reduced risk and lower investment cost compared to mega LNG export projects, Drewry, UK-based shipping consultancy, has predicted. As a result, Drewry expects countries in Africa to invest in small-scale LNG export projects in order to generate demand for appropriate shipping capacity, even as it also expects an increase in ordering of small LNG carriers (less than 50,000 cbm) in 2019 and beyond. Small projects, defined as facilities with production and re-gasification capacity of less than 500,000 tonnes per year, are an attractive investment opportunity for countries with low LNG consumption such as Gi-

braltar, which has already set up a small LNG import terminal with a total storage capacity of 5,000 cbm. Asian countries such as Indonesia, Philippines and China, along with some European countries will also see growth in the number of small-scale LNG imports terminals, Drewry also predicts. “On the export side, the list of LNG exporters will continue to diversify in the future as countries with moderate gas reserves develop opportunities to export LNG,” Drewry said. The existing fleet of small LNG vessels consists of 27 LNG carriers and 17 LNG/ LPG carriers, plus some LNG bunkering units, with majority of ships engaged in petchem gas trades, posing no competition to small scale LNG export projects. “In order to achieve first mover advantage, some shipowners have already started ordering small LNG

vessels. Five small-scale LNG carriers were in fact ordered in 2018 and in 2019 and beyond, we expect to see more orders for small LNG carriers. Small is therefore likely to become the new big for the LNG shipping market,” Drewry concludes. For instance, the most recent order saw Hyundai Mipo Dockyard secure an order to build 30,000 cbm LNG carriers for Norwaybased Knutsen OAS Shipping. It said that ordering of large LNG carriers, highly complex and expensive ships, has been dominated by securing of long-term charters, with a duration ranging from 10 to 30 years. Nevertheless, the market has been experiencing some shifts in the ordering patterns in the recent years driven by the development of commercial flexibility and shorter-term transactions.

carrier vessels currently operating in European waters. These new ships, which will be laid up in the Netherlands, will operate with significantly better fuel efficiency and reduced emissions of pollutants, according to the EIB. All three new ships will be built and operated in compliance with International Maritime Organisation (IMO) and European Union (EU) regulations and will operate under an EU flag. They will serve northern European ports, predominantly in the sulphur emission control areas (SECAs) of the Baltic and

North Sea. The EIB said the project will contribute to a ‘modal shift’ in which, instead of by road, goods are transported by sea, which is considered to be the most sustainable transport mode for this type of cargo. This will help to reduce the overall climate impact of transport, and specifically the company’s carbon footprint. It would be recalled that in 2017, the EIB and ABN Amro signed an agreement to support investments for greening the European shipping fleet. The framework guarantee agreement ensures that promoters of sustainable projects in the maritime transport sector can benefit from favourable financial terms. The facility is open for both retrofitting of existing shipping as well as for projects that envisage the construction of new vessels with a green innovation aspect and it applies to both inland shipping and seagoing operators.

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Linkage Assurance strengthens management, as NAICOM confirms Daniel Braie MD/CEO

I Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance (CHI) Plc (2nd left) flanked by Hyginus Omeje, Lagos sector commander of FRSC, Corps Commander(1st from right); and Mohammed Danladi, ACP, the Area Commander, Area, Nigeria Police, Lion Building at the recent Seasonal Road Safety Campaign Co-sponsored by CHI in Lagos.

Pricing, significantly a concern as insurers face 2019 renewals Stories by Modestus Anaesoronye

oing into 2019, an election year and when passage of the budget may likely be delayed for many reasons, pricing of insurance by operators will determine significantly how the industry performs at the end of the year. If the operators shun unhealthy competition in pricing, the industry will be able to surmount the challenges that the pre and post election activities will have on the business environment. But if they get it wrong by accepting anything for exchange of risk, then they should be prepared for a though year because claims will definitely go higher this year. Analysts have predicted that that election year will be challenging, as governance will be thrown by the side until after election and successful handover to a new administration, and if this stands, it means economy will have some issues to grapple with which may affect business and insurance will not be an

exception. Insurance industry watchers have persistently said that if pricing is right, insurance contribution to economy will be significant, while the players will be in better position to pay claims as at when due. Currently, insurance companies are engaging their clients and broker partners for the 2019 renewal, with different value propositions for retention and signing of new businesses. Underwriting companies are busy now lobbing brokers on new accounts and renewal of existing business, and also signing of reinsurance treaties with major reinsurance companies locally and internationally. But the unfortunate thing is that the rate war that has eaten deep in the industry in over time has continued unabated, and analysts fear it may impact negatively on the industry growth since claims have been on the rise in recent times. Chief Executive Officer of one of the life insurance companies said “Renewal is going on but the biggest challenge we have is rate war. Our people are killing the business, accepting any-

thing they see while claims are rising.” Another CEO also said “We have not had a serious problem with our renewals. But where broker’s brought rates that are not within our acceptable limit, we have asked them to take it back to their clients for increase or we turn our back”. The CEO further stated that, pricing is a big challenge for the market, but we must define our direction. Sunday Thomas, deputy Commissioner for Insurance, Technical at National Insurance Commission (NAICOM) said rate cutting is a regrettable act that must be addressed to increase insurance contribution to the nation’s Gross Domestic Product (GDP). He said there was a time in this market when 10 per cent for comprehensive insurance was sacrosanct, but later, it came down to five per cent and that became the standard. But you and I also know that it has gotten to a point that some operators were charging as low as one per cent “Also, there was a time that third party motor policy was N5, 000. You and I know that it came to a point where

people were charging N1, 000 and the market was producing N200 million premium income from this business. If they decide to charge N5000, what is the market likely to produce?” This challenge, he said, must be addressed by insurers to increase the stake of the industry to pay genuine claims as and when due, noting that, when a risk is underpriced, it affects the ability to promptly pay claims. In a new report on Europe, the Middle East and Africa (EMEA) for 2019 renewal , it was noted that reinsurance and retrocession contracts was not a flat affair for everyone, as sources suggest that those who held the line on pricing were rewarded with better rates and have in some cases built portfolios that promise higher returns as a result. More selective and discerning, really worrying about the fiduciary duty you have to shareholders or investors, then in many cases you’ve likely come away from the renewal relatively happy with some of the rate increases you’ve achieved and wondering why the brokers are calling the market flat to a little down again.

nsurance regulator, the National Insurance Commission (NAICOM) has confirmed the appointment of Daniel Braie as the managing director/CEO of Linkage Assurance Plc. The approval was communicated to the Chairman Board of Directors via a letter dated 28th December 2018. Braie was the Executive Director, Technical of the Company before he was elevated to the position of the Acting Managing Director earlier in 2018. A seasoned insurance professional, he has to his credit over 35 years work experience including at senior management levels across different companies in the industry. He is expected to bring to bear his wealth of knowledge and experience to transform the operations of the company for greater growth. Meanwhile, the company in line with its vision to enhance quality of operations has also announced the appointment of Okanlawon Adelagun, as executive director, Technical. Adelagun who appointment became effective 7th January 2019 is subject to the approval of NAICOM. He is expected to bring his wealth of experience to rejuvenate the technical operations of the company for efficiency and productivity. Daniel Braie, the managing director/CEO has four decades of professional experience in the insurance industry garnered from UNIC Insurance Plc, Trust & Guaran-

tee Insurance Company Limited, Crusader Nigeria Plc and Topflight Insurance Brokers Limited, where he held various managerial positions including: Deputy General Manager, General Manager, Company Secretary, Group Head and Chief Executive Officer. Braie is an alumnus of Enugu State University of Science and Technology (ESUT) and the West African Insurance Institute (WAII). He is also an As-

Daniel Braie, MD/CEO

Okanlawon Adelagun, ED

sociate of both the Chartered Insurance Institute of London (CII) and the Chartered Insurance Institute of Nigeria (CIIN).

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Unhappy formal sector contributors eagerly waiting for take-off of micro pensions

he uncertainty following takeoff date of the proposed micropension scheme earlier planned for January by the National Pension Commission (PenCom) is unsettling expectations in some quarters, particularly with some formal sector contributors who want to switch over. Among those eager to see this happen are some people in the formal sector Contributory Pension Scheme (CPS) who are currently not getting the best from their employers or have been without paid employment for some time, but are earning income from other sundry activities and are willing to continue saving for retirement. This group of people

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Contributions under the Micro Pension Plan shall be managed as two separate funds namely: Micro Pension Contingent Fund (MPCF) for the 25 percent contingent contributions and Micro Pension Retirement Benefits Fund (MPRBF) for the 75 percent retirement benefits contributions

include registered contributors who probably earn other incomes that they could direct to voluntary contributions but cannot because the law does not allow such monies that did not pass through the employer; they are those who already have a PIN number in the formal sector CPS, but want to continue contributing as informal sector workers based on their current employment position (self employed); and a lot of others. A guideline that provides the window for transition into the informal sector, and allow those who have extra contributions to make will give a lot of reprieve to so many people, as that is their prayer to the National Pension Commission (PenCom). At the 2018 Media Retreat for pension journalist held in Lagos, stakeholders implored PenCom to find a means to accommodate these groups of people so that they could strengthen their safety net in the new micro pension scheme. Peter Aghaghowa, head, Corporate Communication, PenCom had said the Commission did not anticipate the lapses that has resulted due to non remittance by the employers, but assured that PenCom was taking note of the gaps and something will be done in respect of those gaps. Pension regulator, the National Pension Commission (PenCom) had said last year that the planned micro pension scheme aimed at expanding the Contributory Pension Scheme (CPS) into the informal sector will take-off in January 2019. The Commission says the necessary infrastructure needed to enable implementation of the micro pension scheme was almost completed, and whatever

L-R: Hakeem Balogun, representing the Vehicle Inspection Service (VIS), Lagos; Abel Omokade, representing commissioner for Insurance, NAICOM; John Meheux, zonal commanding officer, Ogun & Lagos, Federal Road Safety Corps; Yetunde Ilori, director general, Nigerian Insurers Association (NIA); Tope Smart, chairman, NIA; Lanre Iyanda, general manager, Courteville Business Solution Plc, and Niyi Alao, acting managing director, Nigerian Interbank Settlement Systems, during the NIA launch of Nigerian Insurance Industry Database, USSD code *565*11# in Lagos

left will be ready by end of September 2018. Aisha Dahir-Umar, acting director-general, National Pension Commission speaking at the 6th Conference for Directors of Pension Operators organized by the Commission in Lagos in2018 had said “the Commission was finalising arrangement for the introduction of the Micro Pension Plan, which seeks to extend the benefits of the CPS to the informal sector.” She said the Commission had received the approval of the Secretary to the Government of the Federation on the guideline, having put in place necessary infrastructure to implement the scheme. “We hope to achieve this latest by the first quarter of 2019 and we believe that the product would be part of efforts towards ensuring in the long term, the sustainability of the Federal Government’s social empowerment programme.” PenCom had released

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RC634453

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

the draft guidelines on micro pension scheme, bringing flexibility in eligibility for participation to enable many Nigerians in the informal sector benefit from old age protection, which the scheme promises to offer. The draft guidelines for the extension of pension coverage in accordance with section 2(3) of the PRA 2014 (Micro Pension Plan) 2018, requires that stakeholders and concerned publics make their inputs that will enable the PenCom come up with the final guidelines for the scheme. According to the document, persons not below 18 years of age with legitimate source of income shall be eligible for participation in the Micro Pension Plan under Section 2 (3) of the PRA 2014: Such persons must be self-employed persons that belong to a Trade, Profession or Business Association; self-employed persons with a business registration as a company, partnership

or enterprise; employees operating in the informal sector who work with or without formal written employment contract; as well as other self-employed individuals. According to the guidelines, notwithstanding the above, persons from 15 years and below 18 years may also participate subject to the approval/consent of their guardians. A unique feature of these guidelines is the flexibility it offers, as every contributor have the right of his contributions splited into two, to comprise 25 percent for contingent withdrawals and 75 percent for retirement benefits. Contributions under the Micro Pension Plan shall be managed as two separate funds namely: Micro Pension Contingent Fund (MPCF) for the 25 percent contingent contributions and Micro Pension Retirement Benefits Fund (MPRBF) for the 75 percent retirement benefits contri-

butions. The participation of the informal sector in the Contributory Pension Scheme as provided by Section 2(3) of the PRA 2014 is primarily to provide for retirement benefits. Withdrawals/ accessing benefits shall be two types reflecting the flexibility incorporated in the treatment of the contributions. The objectives of the CPS are: to (a) ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due; (b) assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age; and (c) establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the Private Sector.

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

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Wednesday 16 January 2019

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L-R: Muftau Oyegunle, treasurer; Shola Tinubu, council member; Edwin Igbiti, council member; Eddie Efekoha, president; Funmi Babington-Ashaye, past president; Sakiru Oyefeso, deputy president; Fatai Lawal, past president at the 2019 Elders Forum Party of the Chartered Insurance Institute of Nigeria (CIIN) held in Lagos recently.

Prestige Assurance Plc presenting claims cheque to client at the Company’s head office in Lagos

Insurers see challenges ahead as 2019 election draws closer Modestus Anaesoronye

perators in the business of risk management are not unaware of the challenges that this election year will pose on business, even as analysts have predicted that risks are high for investors in all fronts. Eddie Efekoha, president, Chartered Insurance Institute of Nigeria (CIIN) in his New Year Message to insurance professionals in Nigeria said “Indeed, the year 2019 will likely throw up a lot of interesting challenges as it is an election year.

Nevertheless, there still promises to be a lot of risk elements for Insurance outfits to take advantage of.” Efekoha advised the institute members to seize the initiative being pushed in the industry and as well exploit all areas of business generation that the year will present in various forms. “Creativity must come to the fore in offering products and services to your target audience. Most importantly, we must embrace professionalism and best practices and also uphold the Institute’s Ethics and Values in the course of our business dealings in 2019.”

We have entered a new year, 2019, that is so special to the Institute. In 2019, the Institute will be 60. It is a year of reflection on the Institute’s journey through the years and its evolution as the premier professional body in Nigeria. As a body, we are committed to the growth of the Insurance Industry and will not relent in our contribution to promoting the Insurance industry agenda. He said the CIIN has joined hands with all the stakeholders in the insurance industry to explore all avenues to re-position the sector for greater relevance in the nation’s economy by advocating for ethical

practice and constant professional development. “This is consistent with our mission to provide world-class manpower with the highest standard of professional and ethical training for operating effectively and efficiently in the Nigerian and International business environment.” The Institute belongs to all of us who wear the identity of Insurance Professionals. It is my hope that as stakeholders, we will continue to lift the Institute higher by actively participating to make the Institute’s programmes and activities in 2019 more successful than the previous year, Efekoha said.

Prestige Assurance pays N200m fire claims

restige Assurance Plc has continued to demonstrate avowed commitment towards prompt claims settlement as it recently paid out the sum of N200 million as an interim claim payment pending the submission of report in a single fire incident to one of its numerous customers, Kenvee Nigeria Limited.

The incident caused extensive damage to its plants and machineries, raw materials as well as finished goods. Similar fire incident happened in the year 2018 and 2017, where Prestige, as a co-insurer paid the sums of N750 million and N200 million respectively to Celplas Industries Limited and Rida Plastics. Balla Swamy, manag-

ing director of the company stated that over the years, the company’s prompt claims settlement has helped to strengthen its relationship with her customers across the country. He informed that the N200 million interim payment is to enable the insured resume his business immediately pending the submission of final report. Our quest in meeting the growing needs of our esteemed clients and assuring the insuring public of our desire to provide best cover, have seen us repackage our Reinsurance arrangement with the support of ‘A’ Rated Reinsurers across the globe such as Africa Re, Continental Re and WAICA Re. “In his words, we do not allow our customers to go through distasteful experience in the process of getting their claims settled. Our processes are hinged on

professionalism, speed, ethics and promptness”. Manoj Kriplani, chief executive of Kenvee Nigeria Limited, expressed his satisfaction for the timely claims settlement by Prestige Assurance Plc in restoring the company to status quo, to resume their operations. Swamy also reiterated the payment of Dana Aviation legal liability claims which was a major national calamity where $42,000,000 has been paid by the insurance industry with the support of the Regulator. He further noted the fact that the company is totally committed to settling all genuine claims within the agreed time frame. He said, “there is no compromise to genuine claims settlement in the company and that will always remain so to keep our customers always coming back.

Premium Pension appoints Sadi Abdu ED Operations, Services

n a Strategic performance-driven effort aimed at achieving immense potentials within the pension industry, the Board of Premium Pension Limited has announced the appointment of Sadi Abdu as executive director, Operations & Services. The appointment is expected to birth the much expected premium experience to members of Premium Pension. Sadi is a seasoned banker of repute, a distinguished member of the Chartered Institute of Bankers of Nigeria (HCIB), member of Chartered Institute of Public Finance and Accountancy (CIPFA) United Kingdom, Institute of Internal Auditors (IIA) as well as Certified Islamic Finance Analyst (CIFA).He holds a Bachelor of Science degree in Accounting from Bayero University, Kano (BUK). The new ED is a Chartered Accountant (ACCA) and Fellow of Institute of Credit Administration of Nigeria (FICA). He started his career as a lecturer with College of Arts & Sciences (CAS), Kano before moving to Messrs. Muhtar iDangana & Co Chartered Accountants as a trainee accountant in Lagos. As a professional banker

Sadi Abdu

of repute, he worked with the then FSB International Bankand was part of the team that handled the rebranding of the bank as part of its strategic plan. He later joined Access Bank and subsequently Unity Bank. While at the Unity Bank Sadi was a member of the team that repositioned the bank after the merger and consolidation exercise. Prior to joining Premium Pension Limited, the new ED Operations & Services was a pioneer management staff of Jaiz Bank and team leader in the Internal Audit of the bank. In that capacity he rendered immense contribution in the setting up of Operations, Financial Control, and Compliance departments of the bank. He also, actively participated in all the strategic committees including the IT Steering, Disciplinary, Technical & ALCO as well as Procurement committees. Umar Sanda Mairami, chief executive officer of Premium Pensions expressed confidence that, the appointment of the new executive director would further strengthen the operations of the Company for improved performance. Mairami described the unprecedented growth level achieved by the Company in the last decade as a feat tied to being customer/ member centric, hard work and richly endowed with executives with multi-disciplinary talents. Sadi acquired robust experience by heading strategic core banking activities including branch operations, management information system, financial control and audit units. He served as a member of the Investigative panel of the sub-committee on ethics and professionalism of the Bankers Committee.

Wednesday 16 January 2019

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CITYFile Plateau: NSCDC arrests 107 suspected vandals

Members of Ijaw youth protesting against the trial of the Chief Justice of Nigeria (CJN) at the CCT in Abuja.

PicbyTundeAdeniyi

igeria Security and Civil Defence Corps (NSCDC), Plateau command, said it arrested 107 suspected vandals and perpetrators of other crimes in the state in 2018. Obasa Tanimu, the command’s public relations officer disclosed this in Jos. Tanimu added that the command also sealed three illegal private security guard companies within the period under review. According to him, the command secured 21 convictions from the arrests made, with 27 cases currently on-going. He said that the three illegal private guard companies were sealed for failing to adhere to the guidelines for setting up such company. Tanimu advised the public against hiring guards from unregistered guard companies as they could constitute serious security threat to them. He further advised residents of the state to check with NSCDC before hiring a guard from any security guards company to ensure that they were registered. He said the command in 2018 organised a workshop on the benefits of violence-free elections, where youths drawn from the 17 local government areas of the state participated. He explained that the youths were sensitised to the benefits of violence-free elections and the implications of selling their votes.

Ondo Community raises alarm over increasing T petrol, gas stations in residential areas

300 community leaders for training in land laws

... demands functional fire station YOMI AYELESO, Akure esidents of Okitipupa, Ondo State, under the aegis of Eminent Elders Forum have raised an alarm over the increasing number of petrol and gas stations within their residential areas. The Elders Forum in a statement released to the media and signed by Smile Igbekele said the ‘strange development’ posed serious threat to the lives and properties of the residents, as the operators of the gas and petrol stations seemed to operate without any form of regulation by the concerned authorities. The said community given the danger

associated with these highly inflammable and explosive petroleum products, there was the need for both the federal and state authorities to check the indiscriminate siting of petrol and gas stations, to ensure the safety of the people. The forum also specifically appealed to Governor Rotimi Akeredolu of Ondo State to provide functional fire station within the area. According to the forum, a fire station in the area has become imperative in view of the recent fire outbreak in the area which led to the destruction of properties worth millions of naira. They noted that the latest fire outbreak in the area would have been curtailed if existing fire station in the area

was functioning. They lamented that equipment at the fire station located at Ode-Idepe was not in a good condition and called on the state government to do the needful in order to avert future occurrence. “The forum discovered that the fire station located at Ode-Idepe has for the past five years been left without any vehicle and necessary fire-fighting equipment. “The forum is also disturbed about the rising number of petrol and gas stations in-between residential buildings. The attention of the concerned authorities is therefore called to these issues, for prompt action to avert danger now and in the future,” the forum said.

FRSC decries smuggling on Idi-roko road

he Idi-roko command of the Federal Road Safety Corps (FRSC) in Ogun, has decried the activities of smugglers, which it described as a major challenge confronted its operations in 2018. Olugbenga Farinloye, the Idi-roko unit commander of FRSC, disclosed this on Monday. Farinloye said that most of the smugglers used motorcycles as means of transportation to convey rice and sometimes rammed into other articulated vehicles from the opposite side, in the process of avoiding FRSC officials. “Attempt for any enforcement agencies to arrest the smugglers along the Idi-roko

axis had resulted to accident that led to loss of lives and property,” he said. The unit commander said that the smugglers cultivated the habit of using unregistered plate number on their vehicles which made it difficult to identify when crime was committed. He said that the FRSC found it difficult to address the problem alone without the other relevant agencies, because officials of the corps were not armed. Farinloye also noted that some of the enforcement agencies along the Idi-roko axis could not arrest the hoodlums due to reason best known to them. He said that he had visited all the relevant enforcement agencies such as

Police, Nigeria Customs Service (NCS), Department of State Services (DSS) but all proved abortive. Farinloye called on all relevant agencies to come together as a special patrol to form a task force to stem the menace of smugglers. “There is a way we can collaborate to work as a team with all relevant agencies in tackling the activities of smugglers,” he said. He also said that FRSC had visited many places like churches, mosques, market places and paramount rulers, to sensitise them on why safety consciousness on the road should be a collective responsibility.

owulade of Akinale land, Olufemi Ogunleye, says no fewer than 300 community leaders in Ogun are to be trained on land laws and conflict resolution. Ogunleye, the convener of the programme said in Lagos that the training would make the participants conversant with all extant laws on land matters. He said that it would also help to reduce crimes associated with land disputes among communities. It would also check the rate of violence and communal clashes that usually arise from land disputes in the area, he said. The monarch, who said that the training had the approval of the state government, added that it would be jointly handled by VillageNetwork and some other non-governmental organisations. The public relations expert said that community leaders who resolved disputes among their subjects ought to be knowledgeable about land laws and conflict resolution methods. He noted that such leaders with knowledge relating to conflict resolutions would be able to achieve peace within their communities. “The one-day training is scheduled for January 31 at the Olusegun Obasanjo Presidential Library in Abeokuta. “We are looking for ways of curbing crime rate and settling land-related disputes in the communities, and we feel this is the best approach to start with. “Community leaders will be enlightened on the right measures to apply in resolving disputes at the community level. “The training will feature lawyers who specialise in land matters, property and estate management; while specialists in conflict resolutions will serve as the resource persons. “The roles of the law enforcement agencies, particularly, the police and the Nigerian Security and Civil Defence Corps (NSCDC) will be brought to the fore,” he said. NAN

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Lagos end of ongoing rail project critical- Minister Pg 31

Lexus LC grand tourer finally goes topless

xactly three years after the LC coupe made its debut at the Detroit Motor Show, Lexus is now finally showing off a drop-top version of the grand tourer. Technically, this is still a concept car, but the design looks so production-ready that one cannot imagine any major changing during its transition into a showroom car. The Convertible retains the basic proportions of the tin-top, with its long bonnet, swept-back cabin and low stance, and the concept rolls on 22-inch wheels. “This concept takes the unmistakable design of the LC coupe and re-imagines it as a future convertible,” says designer Tadao Mori. It blends all the best aspects of the original coupe with the dynamic swiftly decide which models design of an open-air convertible.” we are going to equip with There’s no word on engine speciwhat mix of all-electric drive, fications, but it is safe to presume plug-in hybrid drive or excep- that a production model would tionally efficient combustion share the coupe’s normally aspirated 5-litre V8 engine, which produces

BMW share insights on brand’s E-future and, in China, the BMW X1 xDrive25Le. “Plus, we have also anlectric cars are com- nounced new plug-in hybrid ing thick and fast, variants of the 3 Series Sedan with several new and BMW X5 for 2019 folmodels destined lowing the arrival of these to reach many re- new model generations. This gional markets in the com- number is set to grow to at ing months and years. For least 13 plug-in hybrid modthe fortunate who can afford els by 2025. Adding these them, you can choose from to the wide selection of allopulent, pure-electric Jags to electric cars - whose range is sporty Mercs and Audis in the due to increase substantially next year incidentally - will very near future. And, if you’re a BMW fan, bring the portfolio of electriyou might be wondering when fied vehicles to at least 25,” you’ll get a chance to buy he notes. Juraschek explains that, the something other than the ‘doomed-from-introduction’ BMW Group will start to fit i3. BMW Group’s vice presi- the next generation of battery dent of electric powertrain de- cells in the new, scalable and velopment, Stefan Juraschek, even more powerful vehicle said the German carmaker ac- batteries alongside the introtually played a pioneering role duction of the new electric in garnering electric mobility drive components. Global sales of electrified interest with BMW i. Currently, the premium BMW vehicles topped the auto manufacturer is the wid- 100,000 mark last year and est range of battery-electric will have grown by around vehicles and plug-in hybrids. 50% this year. Juraschek says BMW is currently producing a BMW is ready to deliver elecnumber of electrified models. tric cars to customers that These include BMW i3 (third want electric cars. Meanwhile, the BMW model evolution with 120 Ah capacity), i3s, i8 Coupe, i8 Group is already developing Roadster, 740e, 740Le, 530e, its fifth generation of electric 225xe Active Tourer, MINI drive systems, meaning that, Cooper S E Countryman ALL4 it has created an excellent

MIKE OCHONMA mikeochonma@gmail.com

foundation for the future. This latest generation will go into service as soon as 2020 in the BMW iX3. A crucial advantage of this fifth-generation system is that the electric motor, transmission and power electronics now form a single, highly integrated electric drive component. This extremely compact unit takes up far less space than the three separate components used in preceding generations. Its modular construction means that it is scalable, too, allowing it to be modified to suit all sorts of different installation spaces and power requirements. The modular “building block” concept will allow the new batteries to be incorporated flexibly into every vehicle architecture. Another highly integrated component will be added to the portfolio in the form of a DC/DC charger unit,” he stated. Juraschek says that on the one hand, BMW will have flexible vehicle architectures and, on the other, the scalable and modular building blocks for the electric drive systems. “This will bring about a lasting increase in flexibility. In future, we will be able to

engines. This will let us partially or fully electrify each model in accordance with market demand, creating the basis for the mass-market introduction of pure battery electric vehicles in the future,” he says. According to BMW, battery cell manufacturers in China, Japan and Korea have been investing enormous sums of money in cell development and future battery technologies for years now. So, will BMW play second fiddle to these companies? In his reaction, Juraschek says BMW does not consider any of its competitors to hold an advantage over the brand when it comes to the battery technology. “When all the characteristics are viewed together, our battery technology is on a par with or superior to the competition’s, depending on how you look at it. We have been dealing with the issue of battery cells since 2008 and are in a strong position today thanks, among other things, to an international network of collaborations’’.

351kW and 540Nm. The automaker doesn’t officially admit that a production version is on the way, but the announcement says the vehicle points to the “future direction” for the lineup, suggesting something like this open-roofed machine could arrive at dealers at some point. Until your eye reaches the roof, the LC Convertible Concept is identical to the existing coupe. The droptop looks elegant with its roof stowed away, especially thanks to the steeply raked windshield. Slicing off the top, forces Lexus’ designers to create a new rear deck for the machine. There are extremely subtle nacelles behind the seats, and the central part of the tail is flat but angular cuts make it taper down to the fenders. The cut lines in the back show where the roof would hide, but there isn’t a top to deploy at the moment. On the inside, the concept features a mix of white leather seats and a black dashboard. Yellow stitching adds a little color to the cabin.

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Hyundai’s WCC lights-up CES 2019 H

President and Head of Hyundai CRADLE, the carmaker’s venturing and open innovation business. “This technology goes well beyond emergency situations. People living with disabilities worldwide that don’t have access to an ADA (wheelchair) ramp could hail an autonomous Hyundai Elevate that could walk up to their front door, level itself, and allow their wheelchair to roll right in. The possibilities are limitless.” Elevate is the result of almost three years’ work in collaboration with industrial design consultancy, Sundberg-Frear, as part of Hyundai’s mission to create new ‘last mile’ mobility technologies and solutions. Elevate’s engineering features include: “By combining the power of robotics with Hyundai’s latest EV technology, Elevate

has the ability to take people where no car has been before, and redefine our perception of vehicular freedom,” said David Byron, design manager, Sundberg-Ferar. “Imagine a car stranded in a snow ditch just 10 feet off the highway being able to walk or climb over the treacherous terrain, back to the road potentially saving its injured passengers – this is the future of vehicular mobility.” Elevate is a product of Hyundai’s future mobility roadmap, showcased at CES 2019, highlighting the company’s strategy to create freedom in mobility for customers. Hyundai’s vision is based on three key areas: developments in ‘Open Innovation’, the company’s electric vehicle (EV) strategy, and its strategy to gain global leadership in connected mobility. Under its updated EV

strategy, Hyundai will introduce EVs built on a new and dedicated platform named ‘E-GMP. The platform, currently under development, incorporates the world’s first integrated drive axle technology, IDA (Integrated Drive Axle), to provide a quieter and more stable driving experience. “The dedicated electric vehicle models will offer customizable features, allowing drivers to alter the space and configuration of vehicles more efficiently than vehicles that are derived from traditional internal combustion architecture,” said Wonhong Cho, Executive Vice President of Hyundai Motor’s Customer and Marketing Division. “With our stateof-the-art ‘Style Set Free’ design concept, Hyundai Motor tries to provide a whole new experience to consumers

Mercedes posts eighth consecutive record year …Tops premium segment for third year

ercedes-Benz continues to be the leading premium auto brand in terms of unit sales. In a challenging year, the company with the three-pointed star increased its global car sales to 2,310,185 units in 2018, its eighth consecutive record year (+0.9%), making it the best-selling premium brand in the automotive industry for the third time in succession. The new sales record in the car division of Daimler AG was driven in particular by the brand’s success in the Asia-Pacific region and its core Chinese market there. Worldwide, models including the SUVs and the E-Class Saloon and Estate were able to generate significant sales impetus in 2018. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars said; “In 2018, it was at the top of the premium segment in the automotive industry for the third year in a row. In a highly competitive environment, we also remained at the top from

month to month, thanks in particular to double-digit growth in China and many new models that have delighted both existing and new customers worldwide’’. For Zetsche, he said, ‘’We promised that MercedesBenz will continue rejuvenating its portfolio systematically in 2019. We see the major suc-

cesses in our core business primarily as paving the way for shaping the individual mobility of tomorrow.” Mercedes-Benz completed its strongest-selling year also with the best quarter in the company’s history (595,098 units, +4.0%). In addition, a new December record was set last month with

sales of 206,532 units (+6.7%). In 2018, Mercedes-Benz maintained its position as the premium brand with the most new registrations in many markets, and secured market leadership in markets including Germany, France, Russia, Switzerland, Poland, Portugal, Turkey, Denmark, Hungary, Romania, South Korea, Japan, Australia, Thailand, India, Malaysia, Vietnam, Singapore, USA, Canada, Brazil and Argentina. “With more than 2.4 million vehicles delivered by Mercedes-Benz Cars in 2018, we once again surpassed our own sales record - for the eighth time in succession. In addition, despite a challenging year, we maintained our position at the top of the premium segment. The excitement for our models and the loyalty of our customers spurs us on to continue giving the best in the New Year,” said Britta Seeger, Member of the Board of Management of Daimler AG responsible for Mercedes-Benz Cars Marketing and Sales.

Wednesday 16 January 2019

Toyota’s modern technology aide’s accident avoidance

MIKE OCHONMA mikeochonma@gmail.com y u n d a i ’s E l e v a t e ‘walking car’ concept has emerged as an automotive highlight of the 2019 Consumer Electronics Show (CES) in Las Vegas. Described as the first Ultimate Mobility Vehicle (UMV), the design blends technology found in electric cars and robots, allowing it to traverse terrain beyond the limitations of even the most capable offroad vehicle. The concept is primarily designed to provide efficient, rapid, resilient transportation for disaster assistance, such as search-and-rescue and humanitarian aid missions. Wheels with hub-mounted electric motors are attached to extendable robotic legs, so the vehicle can drive, walk or climb over obstacles. At CES, engineers have used a working scale model to demonstrate the design in action. A full-size version could climb over obstacles 1.5 meters tall, or stride across a gap 1.5 meters wide. A variety of different bodies can be swapped on and off the modular chassis, depending on need. “When a tsunami or earthquake hits, current rescue vehicles can only deliver first responders to the edge of the debris field. They have to go the rest of the way by foot. Elevate can drive to the scene and climb right over flood debris or crumbled concrete,” said John Suh, Vice

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oyota is doublingdown on humans. That’s the answer to the questionToyota Research Institute (TRI) hasbeen doing in automated driving over the past 12 months. Using onboard cameras, sensors and 3D animation, TRI opened its portion at the annual CES show in Las Vegas with a vivid reenactment of a three-car crash on a California Interstate, where no one was injured. From its beginning three years ago, TRI has been committed to a two-track development approach to automated driving. Its ongoing Chauffeur development focuses on full autonomy, where the human is essentially removed from the driving equation, either completely in all environments, or within a restricted operational design domain

immediate environment. The big idea is that this control envelope is not a discrete on-off switch between the human and the autonomy. It’s really a near-seamless blend of both, working as teammates to extract the best input from each. Guardian is being developed as an automated safety system, capable of operating with either a human driver, or an autonomous driving system, provided by Toyota, or any other company. This is a key capability. As Akio Toyoda announced at CES last year, Toyota plans to include Toyota Guardian as standard equipment on all Toyota e-Palette platforms that the company will build for the MaaS – Mobility as a Service – market. By doing so, MaaS fleet buyers can use any autonomous system they choose, with

(ODD). Toyota Guardian, on the other hand, is being developed to amplify human control of the vehicle, not replace it. With Toyota Guardian, the driver is meant to be in control of the car at all times, except in those cases where Toyota Guardian anticipates or identifies a pending incident and employs a corrective response in coordination with driver input. One of TRI’s most significant breakthroughs this year was the creation of blended envelope control where Guardian combines and coordinates the skills and strengths of the human and the machine. The system was inspired and informed by the way that modern fighter jets are flown, where you have a pilot that flies the stick, but actually they don’t fly the plane directly. Instead, their intent is translated by the low-level flight control system, thousands of times a second to stabilize the aircraft and stay within a specific safety envelope. This blended envelope control is much more difficult to create in a car than in a fighter jet. That is because the control envelope for a car is not only defined by vehicle dynamics, but also by the vehicle’s perception and prediction of all things in its

Toyota Guardian acting as a belt-and-suspender redundancy for any self-driving Chauffeur system. Pratt stressed the importance of not underestimating the difficulty of developing an autonomous Chauffeur system, both technologically and sociologically. “Technically, how do we train a machine about the social ballet required to navigate through an ever-changing environment, as well as, or better than, a human driver? Sociologically, public acceptance of the inevitable crashes, injuries, and deaths that will occur due to fully autonomous Chauffeur systems may take considerable time.” “In the meantime,” stated Pratt, “we have a moral obligation to apply automated vehicle technology to save as many lives as possible as soon as possible.” That is why TRI’s primary focus last year has been to concentrate most of its effort on making Toyota Guardian a smarter machine. For Guardian to learn and get smarter, it must be subjected to difficult and demanding driving scenarios, “corner cases” that are simply too dangerous to perform on public roads.

Wednesday 16 January 2019

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Local and global rail news as it breaks

Lagos end of on-going rail project critical- Minister Export drive expected as Chinese market loses momentum

MIKE OCHONMA AND STELLA ENENCHE, Abuja

igeria’s Transpor t minist e r, R o t i m i Amaechi has reiterated the urgent need to hasten up work on the Lagos end of the on-going 157 kilometer distance of the Lagos-Ibadan standard gauge rail project being handled by the Chinese Civil Engineering & Construction Corporation (CCECC). The minister who was speaking at the end of the last project inspection tour of the Lagos-Ibadan standard guage rail project early this year was of the opinion that, getting to Abeokuta, there’s an improvement but the problem they have now is the civil work between Agbado and Iju which is critical, even as he frowned at a situation whereby passengers will be subjected to go on the way to Agbado to join the train. In expressing his dissatisfaction over the section between Iju, Lagos and Agbado area in Abeokuta, Ogun state, he explained that, his passion to get the project done, necessitated the marching orders he gave that the project be delivered

on the time frame as agreed between the Federal Government and the CCECC. ‘’I believe that, the closer we are to Lagos, the better for the rail and that is why I had to tell them to let me know what they will do about this before the next two weeks. Although there is a huge improvement up to this point, I want them to speed up the contruction from Iju to Agbado’’. He insisted. Amaechi who had at various stages of the project tour expressed mixed reactions on the rate of civil works, track laying, including quality and number of Nigerian engineers working with the CCECC, expressed the view, that, the closer the project is to Lagos, the better for the rail.

In his submission, that is why I had to tell them to tell me what they will do about this before the next two weeks, although there’s a huge improvement up to this point. I want them to speed up the construction from Iju to Agbado. On why the contractor had yet to bring in more equipment to hasten the pace of work, the minister stated that the excuse given by the firm was that the equipment were not offthe-shelf items that could be moved easily to Nigeria from abroad. Part of the solution to the congestion around Lagos sea port according to Rotimi Amaechi is an efficient rail line. ‘’You can argue that the narrow gauge is there, but it

is not efficient. But the moment you fix this, then those goods will be transferred to the rail and then the logjam will disappear’’. The Transport Minister expressed optimism that, the moment the section from Iju to the sea port is completed, then most of those goods, especially the ones going to Ibadan will be conveyed on the rail lines. Fielding questions on whether the government was being pressured by Nigerians to complete the rail project, Amaechi replied, “Of course, and it is also because of the speed, adding that it takes the passenger about 30 minutes to travel by rail from Lagos to Ibadan as against travelling for over one hour by road.

World rail freight news round-up

talian infrastructure manager RFI has completed a €2•1m remodelling of Monfalcone station on the Trieste – Venezia route to accommodate 750 m long freight trains as part of the Modulo 750 programme. Similar work was previously undertaken at Tarvisio, Carnia and Tarcento, and Gorizia station is to follow this year. Beacon Rail Leasing has acquired nine Bitrac electro-diesel locomotives from CAF for lease to SNCF Captrain España. ‘The acquisition of these Bitrac locomotives is a natural extension of Beacon Rail Leasing’s strategy and demonstrates our commitment to continue to support investments in dual-mode locomotives‘, said Chief Commercial Officer Rob Dee on January 11. ‘These Bitracs add to our existing portfolio of dual mode locomotives allowing us to continue to leverage our existing skills, expertise, and experience.‘ The Canadian Environmental Assessment Agency has invited public feedback

on North Thompson Rail Terminals Inc’s proposal to build a rail yard connected to Canadian National’s main line at Kamloops in British Columbia. This would have 41 tracks totalling 14.6 km, with facilities for wagon loading, storage and repair. On January 8 UK newspaper The Sun reported that the UK Department for Transport was holding talks with DB Cargo and GB Railfreight for the potential operation of additional freight trains via the Channel Tunnel in the event of a ‘no-deal’ Brexit leading

to disruption to logistics operations. ‘As the largest rail freight operator in the UK we are in continuous dialogue with the DfT about how we keep the nation’s goods moving whatever the eventual outcome of the government’s ongoing discussions about Brexit’, a DB Cargo UK spokesman told Railway Gazette. Work has begun on a connection between OmniTRAX’s Georgia & Florida Railway and a new GeorgiaPacific lumber and wood chip plant in Albany, Geor-

gia, which is expected to begin production this year and generate more than 1 250 wagonloads a year. Liberty British Aluminium has awarded GB Railfreight a three-year extension to its contract to use Class 66 locomotives to haul alumina from North Blyth to Fort William on six days a week. This ‘will ensure the continuation of rail freight on the West Highland line‘, GBRf Managing Director John Smith said on January 8. Daimler Trucks & Buses has dropped its lorry platooning programme after trials showed disappointing fuel savings. While the technology worked in laboratory tests, on-road trials found that platoon flow was frequently interrupted by surrounding traffic which resulted in more fuel being burned as the platoon tried to reengage. Daimler said it had learned a lot from the trials, and platooning may become viable in the future if it could dispense with the need for more than a single driver per platoon.

hile the demand for railway technology is expected to continue at a high level for the next five years, the Chinese market has lost momentum and is not expected to grow, according to a new study by German consultants SCI Verkehr. This may put pressure on Chinese suppliers to focus more on winning export business. In its analysis of the Chinese railway market, SCI Verkehr looks at current plans and development targets, as well as the level of orders for technology and services. Estimating the total market value at around €34bn, the consultants predict that this will grow by just 0•6% between now and 2022. Over the past decade, China has evolved into the largest and one of the most dynamic railway markets in the world, with huge

although still remaining at a high level overall. The study reports that substantial investment is being made in new rolling stock for delivery 2018-20, with around 900 high speed trainsets, 4 000 locomotives and 210 000 freight wagons to be procured over the three years. However, SCI Verkehr estimates that this sector of the market will decline at a cumulative rate of around 3•4% per annum after 2020, ‘mainly due to decreasing procurements in the high speed segment’. Thedeclineinprocurementof new vehicles will be offset by dynamic growth in after-sales business. This is expected to increase at 7.1% per annum, thanks to increasingdemandforspareparts andmaintenanceofthehugefleet and expanded rail network. SCI Verkehr warns that de-

levels of investment going into the rail sector, notably in the developmentofahighspeednetworknow totalling29000route-km.AccordingtoChinaRailwayCorpGeneral Manager Lu Dongfu, 4 368 km of new railway opened during 2018 alone, taking the total length of the network to 131 000 km, and another 6 800 km is predicted to open during 2019. In the early days, China’s expansion drive relied on a high degree of imported technology, but domestic manufacturers have become increasingly selfsufficient in many sectors. SCI Verkehr reports that expenditure on railway technology peaked at almost €120bn in 2010 and 2015, thanks to government economic stimulus plans. Since then, it finds that ‘a certain level of saturation has been observable’, with investment levels declining slightly

creasing demand for new procurement raises the risk of ‘significant overcapacity’ for Chinese manufacturers in the medium term, notably at the three large state-owned enterprises CRRC (rolling stock), CRCC (construction) and CREC (engineering). The report suggests that the companies will look to offset this by playingabiggerroleinthedomestic maintenance market as well as a stronger focus on international exports. Although all three groups have been able to secure contracts ‘in almost all regions of the world’ over the past few years, SCI Verkehr finds that Chinese suppliers ‘are still are not of key significance in larger regions such as Europe, North America and the CIS’. The overcapacity challenges at home could be starting to change that.

Global carriage of dangerous goods regulations updated

he latest version of the Regulation concerning the International Carriage of Dangerous Goods by Rail has came into force on January 1. The RID 2019 replaces the 2017 edition, which may continue to be used during a transitional period running to June 30. RID applies to the international carriage of dangerous goods by rail between 44 countries in Europe, Asia and North Africa, and also within EU member states. It is harmonised with United

Nations Recommendations on the Transport of Dangerous Goods, and there is close co-ordination with ADR regulations covering road transport and ADN for inland waterways. Changes in RID 2019 include the classification, packing and labelling of items containing dangerous substances, a revision of the classification codes for corrosive substances, new packing instructions for damaged or defective lithium batteries and destructive testing of gas cylinders.

32 BUSINESS DAY Financial Inclusion www.businessday.ng

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Wednesday 16 January 2019

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CBN restrategises amid barriers to attaining 80% financial inclusion target Endurance Okafor

works for DFS (except via the super agents’ license). New super agents’ framework is not yet trusted or fully understood, causing key players to hesitate,” CBN mentioned. On the financial inclusion challenge private sector can address, the apex bank mentioned that banks lack capital incentives to invest in recruiting, training and retention for potential direct and third party networks. “People in rural areas may lack trust in agents, in particular when they are recruited from outside of the community’s language and culture.” Nigeria has a bank led financial inclusion model unlike its Africa peers who through mobile money has achieved milestones in including their citizens into the financial cycle. “Many Nigerian lack national identity cards, limiting them to tier 1 accounts, NIMC is not yet allowed to use 3rd party licensing to drive NIN registration Restrictive tier 1 requirements limit the number of individuals that can access a full range of financial services,” CBN cited this as one of the barriers gathered from the review of NFIS. It also explained that one of the factors militating the country’s inclusion rate is the fact that few products are tailored to key excluded

groups : women, youth, people in the North, rural people, and SMEs Access to CBN intervention fund is limited due to restrictions and complexities “CBN intervention funds do not have (sufficient) non-interest windows.” Despite the fact that Nigeria is yet to attain its financial inclusion goals, some recent developments according CBN may help drive inclusion over the next two years. In mitigating some of the possible risk that will hinder the growth of inclusion rate in the country, CBN said five priority actions are to be pursued in order to address the identified critical barriers, and they are: create an enabling environment for the expansion of DFS. “DFS has proven to be a

low cost approach to reaching unserved and underserved customers,” It also mentioned that enabling the rapid growth of agent networks with nationwide reach, considering agents—particularly cash-in / cash-out (CICO) agents—act as the entry point for financial inclusion and facilitate the crucial conversion between cash and digital money. Another strategy is harmonizing KYC requirements for opening and operating accounts/mobile wallets on all financial services platforms. “Create an enabling environment to serving the most excluded,” so that inclusion efforts do not focus solely on the ‘lowest hanging fruit’ (and thereby increase inequality). Improving the adoption of cashless payment

the fact that Nigeria ‘Despite is yet to attain its financial inclusion goals, some recent developments according CBN may help drive inclusion over the next two years

‘

aced with barriers to attaining the set target of ensuring 80 percent of Nigerian adults have access to financial services, with less than 2 years deadline, the central bank of Nigeria has revised its National Financial Inclusion Strategy (NFIS) to spur inclusion rate. According to CBN’s new plan, its major goal is to reduce the proportion of adult Nigerians that are financially excluded to 20 percent in year 2020 from it baseline figure of 46.3 per cent in 2010, “The goal of this strategy therefore, is to promote a financial system that is accessible to all Nigerian adults, at an inclusion rate of 80percent,” the apex bank said. The lender said “the review of the NFIS identified a range of barriers to increased financial inclusion.” Some of the key barriers as compiled from the revised strategy includes; the fact that gent networks are insufficient to allow for expansion of financial services, especially in rural areas, and low cash in/cash out commission schedule weakens agent incentives. Meanwhile, no less than 30 business names are currently undergoing registration as payment service banks with the functions to; maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-boarder personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse. Speaking on other barriers that drags the country’s success in including more of its citizens into the financial cycle, CBN said rules against exclusivity discourage Mobile Money Operators/bank investment in agents. “Mobile network operator cannot use agent net-

channels listed particularly in government-to person and person-to-government payments, in order to- establish trust by leading by example was another way to go in tackling barriers, as compiled from the new plan. “Provide a sufficient load volume to drive the business case for building and growing distribution networks and put in place a compelling mechanism to include large numbers of unserved and underserved people,” the apex bank explained. Financial sector development makes two mutually reinforcing contributions to poverty reduction. This is through its impact in accelerating economic growth and direct benefits to the poor. Nigeria is currently the poverty capital nation of the world, with 6 of its citizens entering into extreme poverty every minute. Survey shows that appropriate financial services can help improve household welfare and spur small enterprise activity. There is also macroeconomic evidence to demonstrate that economies with deeper financial intermediation tend to grow faster and reduce income inequality. “There is therefore the need to act swiftly and collaboratively in pursuit of

financial inclusion objectives in Nigeria,” CBN said. According to a research conducted by McKinsey in 2016, the potential economic benefits of digital financial services alone as an essential component of financial inclusion include : Bringing 46 million new individuals into the formal financial system, boosting GDP growth by 12.4percent by 2025 (USD 88 billion), attracting new deposits worth $36 billion, providing new credit worth $57 billion, creating 3 million new jobs, and reducing leakages in government’s financial management annually by $2 billion The Central Bank of Nigeria (CBN) adopted the National Financial Inclusion Strategy (NFIS) in 2012. The Strategy articulated the demand-side, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators (KPIs) and established the implementation structure. Th e N F I S wa s bu i l t on four strategic areas of agency banking, mobile banking/mobile payments, linkage models and client empowerment. Four priority areas were identified for guideline and framework development namely, Tiered Know-your Customer (T-KYC) regulations, agent banking regulations, national financial literacy strategy and consumer protection. The Strategy defined a set of targets for products, channels and enablers of financial inclusion. The KPIs were defined, based on the various dimensions of financial inclusion, including access, usage, affordability, appropriateness, financial literacy, consumer protection and gender. T h e N F I S p ro p o s e d strategies for each of these elements, which included a comprehensive set of policy and regulatory changes as well as suggested business models. In the implementation of the Strategy, the targets were further tailored to reflect the needs and challenges of individual financial service providers (FSPs).

Wednesday 16 January 2019

NATIONAL DISCOURSE

VINCENT NWANMA

igeria will continue to wobble and take uncertain steps in its march as a nation until an authentic configuration of the nation’s social reality emerges. But that point may remain elusive for as long as there is no common ground on which a characterisation of what can be called our nature or character or being is agreed upon with a national consensus. Social reality is the cumulative stock of what a society has been in terms of the values that have been built up over the years. It reflects man’s efforts at creating a human environment. This reality arises from the thoughts and ways

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Institutionalisation of our reality as panacea for this fractured polity of doing things that have been passed on from generation to generation through the process of socialisation using the instrumentality of language. These thoughts in the process get ingrained in the minds of individuals and ultimately define their perspectives to issues, even their attitudes to other stakeholders in a society such as Nigeria. For now, Nigeria’s social reality is protean or at best nebulous. And that is because it has rarely been the outcome of a conscious process designed with an original intent to produce a system that applies to all without fear or favour. A protean social reality is a potent weapon deliberately placed within the reach of opportunistic elements lurking around dark corners to exploit every situation. It is subject to erratic redefinitions and thus becomes an elastic ruler. An elastic measuring instrument gives one measurement in the south and a different reading in the north, east or west for the same distance and under the same weather conditions.

Nigerians must collectively define what constitutes our objective reality so that everyone’s submission to it will not be left to guesswork or subjective interpretation. In modern societies, the standards of acceptable behaviour, or what is acceptable and what is unacceptable, are no longer left to variable interpretation. Interpretation of what is good or bad is no longer the preserve of an all-knowing, all-seeing king, or an imperial lord whose mood is the effective barometer for deciding what is good or bad: wherever his mood swings to, that will determine what happens in a particular situation. Man is a social product, and the ultimate target of man’s social activities or evolution is the creation of a social order. In their seminal book, The Social Construction of Reality: A Treatise in the Sociology of Knowledge’ Peter L. Berger and Thomas Luckmann argue that social order exists only as a product of human activity. In other words, social order is man-made and not part of natural order. The import of this is,

of course, that man must act to impose order for it to exist. It must be pointed out, however, that while man creates a social order, this in turn begins to detect or mould man’s behaviour. The social order created by man, being an objective environment, turns around to define man’s conditions for existence and standards of behaviour. And because this is an objective condition, man cannot easily alter it or wish it away. He must conform to the provisions of the social order in every area of human life. This is the work of institutionalisation of human society. Nigeria’s social reality as of today cannot be described as an objective one, to the extent that the institutional controls do not apply uniformly to individuals in the society. It cannot be described as objective reality to the extent that laws and their enforcement are, or seem to be variable. Institutionalisation of man’s social activities or processes is the ultimate point in the creation of social order or human environment. Often

the concept of institution or institutionalisation is vaguely presented and thus its meaning is lost to many. Berger and Luckmann explain that to institutionalise any segment of human activity is equivalent to saying that that aspect of human life “has been subsumed under social control”. It means, they point out, that: “The institutions are there, external to him, persistent in their reality, whether he likes it or not. He cannot wish them away.” The points above raise pertinent questions. If institutionalisation is meant to control all members of the group uniformly, how come then that some individuals or agents are able to live outside the boundaries set by the institution? Is this a sign of weakness of the institutions or of the society as a whole? The answer to this lies in the fact that, as the authors quoted above further point out, if in an institutionalised framework additional control mechanisms are still needed, then the institutionalisation process has been less than successful.

NEWS

Oil prices rise on supply cuts, but global slowdown looms ANEEJ applauds Obaseki for leading open governance campaign in South-South OLUSOLA BELLO and agency report

il prices rose on Tuesday amid supply cuts by producer club, OPEC and Russia, although a darkening economic outlook may soon weigh on growth in fuel demand. Brent crude oil futures LCOc1 were at $59.47 per barrel at 0950 GMT, up 48 cents, or 0.81 percent from their last close. Nigeria’s 2019 budget benchmark is put at $60 per barrel with a proposed daily crude oil production of 2.3 million barrels per day. Industry watchers have criticised the Federal Government for using these assumptions to prepare the budget because they are not reliable in view of the volatility of crude oil price and inter regional politics in the Middle East. Also, Nigeria, which is a net importer of petroleum products, will as usual suffer the brunt of spike in the price of crude oil because of her unwise economic decisions in support of subsidy. The government budgeted about N305 billion in support subsidy in the 2019 budget. This is against the popular opinion, which favours total deregulating the downstream sector of the petroleum sector. According Muda Yusuf, direc-

tor-general, Lagos Chambers of Commerce and Industry (LCCI), said perhaps the biggest fiscal burden on the economy today was the petroleum subsidy regime. “It is a big hole in the finances of government. It puts tremendous pressure on the foreign reserves and the foreign exchange market, just as it exerts immense stress on the nation’s treasury. It remains a cause for concern that the subsidy regime had subsisted, especially at time when the economy is facing unprecedented fiscal challenges; at a time when productivity in the economy is constrained by acute infrastructure deficit; at a time when public institutions are finding it hard to pay salaries. There cannot be a better example of resource misapplication,” he said. According to the minister of state for petroleum, Ibe Kachikwu, Nigeria spent N1.4 trillion on fuel importation in nine months, from January to September 2018. Analysts believe that it would have been up N1.7 trillion by the end of 2018. Brent crude oil futures LCOc1 were at $59.47 per barrel at 0950 GMT, up 48 cents, or 0.81 percent from their last close. US West Texas Intermediate (WTI) crude futures CLc1 were at $50.92 per barrel, also up 0.81 percent or 41 cents.

“OPEC-led cuts and declining U.S. rig counts have bolstered market sentiment in the new year,” Singapore-based brokerage Phillip Futures said. The Middle East-dominated Organisation of the Petroleum Exporting Countries and allies including the world’s number two producer Russia agreed in late 2018 to cut supply to rein in a global glut. In the US, the number of rigs looking for new oil production has dropped from a 2018 peak of 888 to a still-high 873 in early 2019. The rig data, released on Friday, pointed to a potential dent in production growth which was at more than 2 million barrels per day last year, making the US the world’s top oil producer. Meanwhile, the US last November re-imposed sanctions against Iran’s oil exports. Although Washington granted sanctions waivers to Iran’s biggest oil customers, mostly in Asia, the Middle Eastern country’s exports have plummeted since. However, Japan expects to restart oil imports from Iran as early as this month, the Nikkei business daily reported on Tuesday, with some Japanese banks notifying customers they will resume transactions for oil purchases.

frica Network for Environment and Economic Justice (ANEEJ) has applauded Edo State governor, Godwin Obaseki, for leading the campaign on open governance in the South-South region with his administration’s implementation of policies that promote transparency and accountability in governance. Leo Atakpu, deputy executive director, ANEEJ, made the submission during a meeting between the governor and members of the State Steering Committee on Open Government Partnership, at Government House, in Benin City, Edo State. He noted, “Governor Obaseki is the first governor in the SouthSouth who signed on to the Open Governance Partnership (OGP). The Civil Society Organisations (CSOs) in the state are happy with the development, ease of doing business, access to government information and justice reforms in the state.” Responding, Governor Obaseki said his administration was running a transparent and accountable governance to build and win the trust of Edo people, adding that the state government signed and deployed open government portal

in partnership with the World Bank eight years ago. He said, “Our emphasis as a government is to go back to OGP, reopen it and feed the portal with information from across various spectrum of governments. Our premise rests on the principle underlying the open government initiative. “We believe that we must run government transparently to build and win the trust of our people, to be able at any point in time, tell them what we are doing in terms of resources that come into the state and what we are doing and how we spend the state’s resources.” The governor said his administration was working hard on deploying energy and resources on the easy of doing business, embracing Information Communication Technology (ICT) to make the process easy and transparent, which would enable his administration to be accountable to the people. He averred that the fundamentals to open government was opening up the process and procedures within government itself, noting that, technology would play a major role in enabling the process, which was why his administration had adopted the use of ICT for transparency and accountability.

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Wednesday 16 January 2019

New IGP must guard against partisanship as election knocks ODINAKA ANUDU

he 2019 elections are fewer than five weeks away and Nigerians are expecting the new inspector-general of police to be non-partisan and fair to all political parties and groups. Muhammadu Buhari, Nigeria’s president, on Tuesday replaced the outgoing Ibrahim Idris with Mohammed Abubakar Adamu from Nasarawa State. Adamu will oversee the tense 2019 elections, which begins with the presidential leg on February 16. The outgoing Ibrahim Idris is seen by opposition political parties, especially the People’s Democratic Party (PDP), as partisan, citing the cases of Ekiti and Osun gubernatorial elections as well as treatment of some top opposition politicians. “Security agencies have shown so much partisanship in recent times,” said Emmanuel Edegar, a Benue State-based medical doctor, who is also a lawyer. “In this administration alone, you saw the way the police insulted our governor, Samuel Ortom, just because he was asking them to do the needful by arresting the marauding Fulani herdsmen. You also saw the way Bukola Saraki, Dino Melaye and some opposition legislators

Mohammed Adamu, new IGP, being deborated by Muhammadu Buhari, Nigeria’s president

were treated under IGP Idris. This is not the type of police we want to see during the elections,” Edegar said. He explained, however, that there was abuse of police force during the previous administrations but admitted that the police under the outgoing idris would go down as one that is most partisan and unfair.

Lat year, the police under the outgone Idris asked Saraki to answer questions regarding his alleged role in a bank robbery in Offa, Kwara State. This is the first time the head of legislature in Nigeria is linked with robbery openly. The homes of Saraki and Ike Ekweremadu, deputy Senate president, were barricaded by the

police and the Department of State Security (DSS) in July 2018, drawing the ire of most Nigerians. On January 11, Saraki accused the police of supervising the invasion of his house. “Yesterday (Jan 10), these same APC thugs shielded by policemen went to my family quarters in Agbaji in Ilorin,

and vandalised houses, shops and inflicted wounds with machetes on three people. “For me, personally, I believe the decision to attack people and property in my family’s ancestral compound is a direct affront and attack on my person. And whatever signal these APC elements with support from the police believe they are sending is definitely sinister, uncivilised and unfortunate. “All these destructions took place in the presence of policemen who came with them but watched without any care, as the All Progressive Congress (APC) thugs and supporters unleashed violence on our people.” Analysts say it portends danger to perceive the police as partisan when elections are close, urging the new IGP to break with the past. “In 2017, the US police had to openly disagree with President Donald Trump when he alleged that they were roughing up people they arrested. I am not saying the new IGP should disagree with his APC or Buhari, but he needs to write his name on the sand of time by saying ‘no’ to undue pressure at this time,”Eche Ume, a US-based human rights activist, said. “I do not also want the new IGP to disobey his master when he is asked to go to Benue,” he added.

Economy trumps politics at Lagos gubernatorial debate Odinaka Anudu

conomic issues took a front seat at the Lagos gubernatorial debate organised by the Lagos Chamber of Commerce and Industry(LCCI) last Friday. Babajide Sanwo-Olu, the All progressives Congress (APC) candidate in the state and his People’s Democratic Party(PDP) counterpart Jimi Agbaje gave good accounts of themselves in terms of what they had in stock for Lagosians in the areas of power, Apapa, traffic gridlocks and transportation, among others. Addressing issues of traffic and transport management, Sanwo-Olu said that government was a continuum and vowed to continue all projects started by his predecessor for the benefit of citizens. He said that his plan for traffic was holistic, from road repairs and construction to opening up more means of transportation through waterways and rail, to training and empowerment of traffic officials. “For years during the PDP rule, we asked the Federal Government for access to the existing railway corridor, but it was denied. This led us

to create the Blue line railway from Okokomaiko to CMS,” he said at the private sector dialogue moderated by Frank Aigbogun, publisher/CEO of BusinessDay. “We need to complete the track because Lagos needs a transportation system outside roads that can move thousands of people daily,” he said. Responding, Agbaje said that for 20 years of APC governance in the state, residents were still grappling with traffic congestion, especially issues with trailers parked on bridges along Costain to Apapa. He said Lagosians often lost man hours in traffic owing to poor transport infrastructure. “Lagos is one of the two mega cities in the world that do not have a multi-modal transportation system. It is time we started thinking of multi-tiered roads. The world is moving, we cannot afford to be different,” he said. Agbaje pointed out that the rail project had been on for too long, stressing that governorship candidates should have big ideas to address problems peculiar to Lagos. “The way things are presently is not sustainable and it has failed to deliver the sort of impact on the

lives of ordinary citizens that should be expected from an economy of Lagos’ magnitude,” he said. Agbaje said that the sort of development that Lagos required should be anchored on improving liveability, expanding the economy and retooling it for the 21st century. On the issue of power, Sanwo-olu pledged to take Lagos out of the national grid within six months and provide additional 1,000 megawatts to its current level. He said that he would partner with distribution companies to ensure they upscale their power supply to the state, noting that prepaid meters would be provided to residents to ensure accountability and transparency. On his part, Agbaje said he would improve power by 1,000 megawatts within his first 18 months and encourage investment in embedded power projects toward enhancing power supply. Speaking on health, Sanwo-olu noted that the Lagos Health Insurance Scheme would ensure access to affordable healthcare for Lagosians and help build a health care structure to be proud of. Agbaje countered, criticising the

present Health Insurance Scheme, saying making it mandatory was another form of taxation that had been making life difficult for the masses. He said his administration would have significant developments on health, waste management, education, transportation management and in technology to solve problems. Agbaje promised to develop an ocean economy and a knowledgedriven economy to enhance the economic well-being of the state and its citizens. But Sanwo-olu was not done, as he said that his administration would be innovative about Internally Generated Revenue (IGR) in a way that would not exert pressure on the citizens. He noted that the private sector remained the engine of economic growth and would continue to create an environment for the private sector to thrive in the state. “As a former commissioner for commerce & industry in Lagos, I know that proper collaboration with the private sector leads to more job creation, improved industrial harmony and boosts investment,” Sanwo-olu said. Babatunde Ruwase, president of

LCCI, said Lagos State was very strategic to the Nigerian economy, being the commercial capital of the country and fast evolving into a megacity with a population of over 20 million. “The private sector in Lagos state is a major stakeholder, having regard to its contributions to the state’s internally generated revenue, job creation and the general advancement of the economy of the state. As in most economies, the private sector is the engine of growth in Lagos State,” he said. He explained that bringing the two candidates together was very crucial because the quality of political governance had profound implications for the quality of investment environment. “Without conducive environment for business, there cannot be meaningful economic progress. And this could impede the capacity of the private sector to create jobs and support revenue growth of government.” He said the LCCI had offered similar platforms for the candidates of the two leading political parties in the state to interact with the organised private sector on issues bordering on private sector development in Lagos State.

Wednesday 16 January 2019

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BUSINESS DAY

How my governorship ambition was conceived - Akinlade RAZAQ AYINLA, Abeokuta

dekunle Akinlade, the governorship candidate of Allied People’s Movement (APM) in Ogun State has revealed how Adams Oshiomhole, national chairman of the All Progressives Congress (APC) and Ken Nnamani, former Senate president, prevailed on Governor Ibikunle Amosun to support him as the next governor of Ogun State. Akinlade said Oshiomhole and Nnamani played very crucial roles in ensuring that Governor Amosun accept his ambition to run for the governorship seat of the state in APC until it went awry in Ogun State chapter over the alleged imposition of Dapo Abiodun by a combination of external and internal forces within APC as against his own mandate which he claimed to have been given by the majority of APC members during the last nationwide primaries of the party. Akinlade, who was adopted at the eleventh hour by the APM as its governorship candidate in Ogun State, reacted to the allegation making the rounds that Governor Ibikunle Amosun attempted to impose him

Adekunle Akinlade

as the governorship candidate in Ogun State was a desperate effort on the part of the governor to perpetuate himself in power, saying that the governor never considered him as his successor as being rumoured but that the intervention of Oshiomhole and Nnamani was the political

background on which his ambition is based. Recall that Akinlade, Yewa/Awori man in Ogun west senatorial district, Governor Amosun’s preferred governorship candidate initially contested primaries in All Progressives Congress (APC) but lost out to

APC mobilises for Sanwo-Olu, others in Ejigbo JOSHUA BASSEY

he ruling All Progressives Congress, (APC) is mobilising thousands of members in Ejigob Local Council Development (LCDA) of Lagos State for a door-to-door campaign to ensure victory for its candidates in the 2019 general election. The APC is presenting President Muhammadu Buhari as its presidential candidate and Babajide Sanwo-Olu in Lagos as governor among others in the general election. The Mandate Movement (TMM), an arm of the party, in Ejigbo says the mobilisation is necessary to secure landslide victory for all its candidates at both federal and state levels. At a rally tagged ‘get-out-and vote for APC’ held in Lagos on Tuesday, Kehinde Bamigbetan, leader of the TMM in Ejigbo, said they were irrevocably committed to the principles and agenda of the APC. According to Bamigbetan, who doubles as commissioner for information and strategy in Lagos, the

role of the group is to act as energisers at critical periods, interpret the party’s manifesto in a manner that advances its interests and the full development of the populace. “We are aware that the general elections are near. On February 16, we shall go to the polls to elect our president, our senator, our member of the Federal House of Representatives. On March 2, we shall return to the polling booths to elect our governor and member of the House of Assembly. He said the APC needed all the supports it could muster to accomplish the task of wining the elections. “We are competing with over 60 parties nationwide and no fewer than 40 parties are contesting with us in the Oshodi-Isolo constituency 2.” He said although it was normal for other parties to struggle for votes during elections, it was, however, incumbent on APC to win given its trajectory of performance in Lagos since the days of Bola Tinubu as governor. “We want to assure you that the

antics of other parties of are just the efforts of the cobweb that says it will not allow an elephant to pass. As our people say, even it is predicted that an animal with horns will knock one to death, it cannot be the ambition of a snail,” he added. Bamigbetan noted that the achievements of the APC in Ejigbo were legendary of which the establishment of the Ejigbo LCDA was one. The APC, he added have also executed several projects in the area, some of which are Ejigbo Multipurpose Centre, modern secretariat, Bola Ahmed Tinubu Primary School, Oladele Alake Primary School, Primary healthcare centres at Onaiwamimo, Free meal, Free uniforms, Free GCE forms, free JAMB forms, free vocational education, among others. He said the APC, therefore, had more than enough to convince Ejigbo people to vote the party on February 16 and March 2, but noted that party supporters could not sit at home and expect miracles on these election days.

Dapo Abiodun, Ijebu/Remo man from Ogun East senatorial district as governorship candidate loyal to APC caucus of former governor, Segun Osoba in the party primaries riddled with controversies which fuelled the party’s crisis. Speaking at a media parley held at his house in Abeokuta, Akinlade clarified that it was his former colleague in the House of Representatives who is now the deputy governor of Edo State, Philip Shuaib that connected him with Adams Oshiomhole that prevailed on Governor Amosun to allow him to run, having thought of running for Ogun State governorship seat. He added that he had to contact Ken Nnamani, the former Senate president who presided over the National Assembly when Amosun was a senator in the 4th National Assembly in addition to Adams Oshiomhole’s intervention, to still prevail on Amosun before Amosun could have a rethink on his governorship ambition, saying it was God’s doing for him to be considered and not imposition as being rumoured by some people. “What people are saying here and there is that Governor Amosun imposed me and he is the one that sponsors me for this governor-

ship. That is not correct, Governor Ibikunle Amosun never thought of picking me as governor, but the idea of becoming governor came from me and I decided to pursue it. “I told my colleague who was in the House of Representatives together then and who is now the deputy governor of Edo State, Shuaib and he connected me with Adams Oshiomhole. He talked to my governor on my behalf but the governor told me that I should go and sit down since it was not my turn yet, I should go and relax. “After that, I know Ken Nnamani was the Senate president when Governor Amosun was in the Senate and I approached him too to help me talk to him and the former Senate President told Governor Amosun and he gave me the feedback. Nnamani told me that your governor likes you and he commended you that you are a good man, highly cerebral and intelligent but it was not yet your turn. “Then I knew that I could do it and the governor has seen such qualities in me and I had to try more. It is just like when you see a healthy king and you go to him that when he dies, you will replace him. For anybody to say that the governor imposed me on anybody; it is a big lie.”

Your sacrifices are immeasurable, Atiku tells Armed Forces

ormer Vice President and the presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar says the sacrifices of the members of the Nigerian armed forces are too enormous to be measured or quantified. Atiku made the declaration shortly after a special prayer session for members of the armed forces, at the PDP secretariat in Akure, Ondo State. The prayer, in honour of the fallen heroes who died in the line of duty was for the commemoration of the Armed Forces Remembrance Day. A statement signed by Paul Ibe, media adviser to Atiku Abubakar, quoted the presidential candidate as saying that “The greatest and most heroic sacrifice is to lay down your life in defence of your country and its citizens.” According to Atiku, “No monetary reward can ever adequately pay back members of the armed forces who put themselves in the line of fire in

order to protect their country against its enemies. “Our military personnel have faced tough challenges in recent years in view of the terrorist campaign of violence against innocent people and soldiers, but I am impressed by their gallantry and indomitable will to face the enemy without losing their commitment to their professional calling.” The former Vice President explained that “confronting an unconventional army of terrorists and bandits who have no regard for the rules of engagement has presented a new warfare challenge for members of our armed forces.” “I am, however, greatly delighted”, he said, “that despite these new warfare challenges, you have proved yourselves and stood up resolutely to these unconventional enemies.” According to him, “Our military personnel need total support and constant prayers for their unquantifiable sacrifices in the service of Nigeria.”

Monarchs blame politicians for hitting up polity, recruiting fake security agents Victoria Nnakaike, Lokoja

oliticians all over the country have been blamed for sponsoring electoral violence through the use of thugs in police and Army uniforms. Kogi State monarchs stated this in Lokoja during an interactive session organised by the Independent National Electoral Commission (INEC) in the state.

The President, Kogi State Council of Chiefs and Attah of Igala, Michael Ameh Oboni, who led the chiefs to the occasion, said politicians had always preferred the use of odd means to get reelected or ensure their party wins an election, adding that said traditional rulers had little or no role to play because government and politicians had never helped matters. According him, politicians should

be saddled with the responsibility of eradicating electoral malpractices and violence, as traditional rulers can only give fatherly advice and not to go to the polling booths to control violence. On the case of vote-buying and invalid votes, Attah Igala equally blamed the system for using hunger and poverty as weapon to discourage electorate from participating, saying government should fix all the odds that has made electorates to move away from being

patriotic due to poverty. He decried a situation where large figure of invalid votes were recorded in some polling booth, due to mistakes in thumb printing from hungry or alcoholic electorate. “You have a situation where someone went to bed without eating anything and wakes up with empty stomach to the polling booth, and when he is approached with money to sell his vote, he will gladly do it

because at the end of it, he will have no stake in the victory. You also have a similar situation where a hungry looking electorate, out of hunger, does not have the strength in his or her eyes to vote properly. With these many invalid votes will be recorded.” The Attah Igala further advocated that INEC should consider some mistakes in the thumb print that was either on a party logo or a little bit out of the thumb print check box.

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Wednesday 16 January 2019

Live @ The Exchanges

Nigerian stocks hit new high on increasing buy decisions â&#x20AC;Śmarket cap gains N65bn Stories by Iheanyi Nwachukwu

igerian s t o c k s reached new highs on Tuesday January 15 as investors moved into Custom Street buying value stocks that are priced low. Topmost on the bargain hunters list are the shares of the cement maker, Cement Company

of Northern Nigeria Plc which led the league of 21 companies that gained as against 13 losers. The year-to-date (YtD) returns currently stands at -4.11percent. At the sound of closing gong for stock trading on 9th floor of the Nigerian Stock Exchange (NSE), the All Share Index (ASI) increased to 30,137.53 points as against the preceding day close of 29,964.79 points while Market Capitalisation closed at N11.239 trillion

as against preceding day close of N11.174 trillion, representing an increase of about N65billion. The share price of Cement Company of Northern Nigeria Plc gained N2 or 10 percent, from N20 to N22. It was followed by that of Stanbic IBTC Holdings Plc which increased from N46.15 to N47.5, adding N1.35 or 2.93percent; while C& I Leasing Plc stock price increased from N8.29 to N9.04, adding 75kobo or 9.05percent.

Dangote Sugar Refinery Plc stock price also gained, from N14 to N14.55, adding 55kobo or 3.93percent; while that of Oando Plc rallied from N4.3 to N4.55, adding 25kobo or 5.81percent. Total Nigeria Plc recorded the biggest loss on Tuesday. The share price of Total declined from a high of N200.2 to N195, losing N5.2 or 2.60percent; followed by Newrest ASL Nigeria Plc which decreased from N7.9 to N7.15, losing 75kobo or

9.49percent. Guinness Nigeria Plc declined from N65 to N64.75, down by 25kobo or 0.38percent; University Press Plc decreased from N2 to N1.9, losing 10kobo or 5percent; while that of Neimeth Pharmaceuticals Plc lost 6kobo, from 70kobo to 64kobo, thereby losing 8.57percent. The volume of stocks traded increased by 126.60percent, from 132.40million to 300.03million, while the total value of stocks traded

increased by 199.13percent, from N1.086 billion to N3.248 billion in 3,760 deals. The Financial Services sector led the activity chart with 267.49million shares exchanged for N2.69billion; followed by conglomerates with 8.95million shares traded for N16million. Diamond Bank Plc, GTBank Plc, UBA Plc, FBN Holdings Plc and Zenith Bank Plc were actively traded stocks on the Nigerian Stock Exchange.

FMDQ report shows fixed income, currency market turnover up 49.33% year-on-year

he turnover in the Fixed Income and Currency (FIC) market for the month ended December 31, 2018 was N17.71trrillion, representing 9.09percent (N1.77trillion) monthon-month (MoM) decrease on the turnover of N19.48trillion recorded in November, and a 49.33percent (N5.85trn) year-on-year (YoY) increase, FMDQ OTC Monthly shows. Treasury bills (T. bills) and Foreign Exchange (FX) remained the major drivers of turnover in the FIC market, jointly accounting for 76.48percent of turnover in December and higher by 3.47 percentage points (ppts) from their level of contribution in November (73.01percent). FX Market Total FX market turnover in December was $11.01billion, representing a 17.22percent ($2.29billion) MoM decline from the turnover recorded in November ($13.30billion). Turnover at the Investors & Exporters (I&E) FX Window recorded an

CHANGE OF NAME

I, formerly known and addressed as Chinemelu Ujunwa Joy Uchechukwu now wish to be known and addressed as Ojinuka Ujunwa Joy Uchechukwu. All former documents remain valid. General Public please take note.

CHANGE OF NAME

8.50percent ($460million) MoM decrease to close at $4.95billion from the $5.41billion recorded in November. YTD turnover at the I&E FX Window closed at $59.75billion as at December 31, 2018. The decrease in FX turnover in December was attributed to the 41.96percent and 2.66percent decline in Member-Clients and Inter-Member trades which was only partly offset by the 6.75percent increase in Member-CBN trades. Analysis of FX turnover by product type showed that FX Derivatives was the main driver of the overall MoM decline in FX turnover, with a MoM increase of 41.33percent ($2.73billion), driven mainly by an 84.79percent rise in FX Swaps turnover. Contrastingly, FX Spot recorded a MoM decrease of 74.75percent ($5.01billion). In De-

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I, formerly known and addressed as Idumwonyi Aladin Henry now wish to be known and addressed as Ogbochie Ehboramen Fidelis. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Ifeoma Kate Obiorah now wish to be known and addressed as Mrs. Ifeoma Kate Nwanze. All former documents remain valid. Southern Sun Ikoyi, Banks, National Housing Fund, Stanbic IBTC Pensions, Nigeria Immigration Services, Embassies, High Commission & General Public please take note.

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I, formerly known and addressed

I, formerly known and addressed as

as Omokan Dayo now wish to be

Folorunsho Michael Olanrewaju

known and addressed as

now wish to be known and addressed

Omokan Temidayo Oluwaseun.

as Folorunsho Micheal Omotola. All

All former documents remain valid.

former documents remain valid. Gen-

General Public please take note.

eral Public please take note.

cember, the 30th Nairasettled OTC FX Futures Contract (NGUS DEC 26, 2018) with total open contract of $664.78mm matured and was settled on FMDQ, while a new 12-month Futures contract (NGUS DEC 24, 2019) with a notional principal of $1billion and futures price of $/ N366.24 was listed on the OTC Exchange. In December, the Nigerian Naira appreciated against the US Dollar at the I&E FX Window, with $/N rate decreasing by 10 kobo to close the month at $/N364 (from $/N364.10 recorded in November), while the CBN Official Spot rate depreciated by $/N0.20 to close at $/ N307.00 (from $/N306.80 recorded in November). The $/N rate at the Parallel market also appreciated between December and November by N8 to close

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I, formerly known and addressed as Ekaette Akpan Ben now wish to be known and addressed as Ekaette David Akpan-Udofia. All former documents remain valid. General Public please take note.

CONFIRMATION OF NAME

This is to inform the general public that Damilare Suliyat Abosede, Adetoro Suliyat and Adetoro-Isiaka Suliyat and Adetoro-Isiaka Suliyat refers to same and one person. All former documents bearing any of the two names remain valid. Banks & General public please take note.

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I, formerly known and addressed as Elizabeth Olumayowa Ogunleye now wish to be known and addressed as Elizabeth Olumayowa Ogunmuyiwa. All former documents remain valid. General Public please take note.

at $/N362 from $/N370. Fixed Income Market (T. bills and FGN6 Bonds) Total T. bills and FGN Bonds outstanding recorded a MoM decrease of N1.13trillion and increase of N100billion to close at N12.39trillion and

N8.26trillion respectively as at December 31, 2018. Also, the split in sovereign debt between long and short-term debt as at December was 40:60 (long vs. short term), as against the planned ratio of 75:25 outlined in the Debt Man-

agement Strategy (2016 -2019) Monthly Trading Intensity in the T. bills and FGN Bonds markets decreased from 0.61 and 0.11 in November, to 0.49 and 0.09 in December respectively.

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38 BUSINESS DAY NEWS

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Wednesday 16 January 2019

Private jets, charter operators gain... Continued from page 1

Godwin Obaseki (m), governor, Edo State; Taiwo Akerele (2nd r), chief of staff; Yinka Omorogbe (r), chairman, Edo State Open Government Partnership (OGP)/commissioner for justice and attorney general; Henry Idogun (l), managing director and chief executive officer, Edo State Public Procurement Agency (EDPPA), and Leo Atakpu (2nd l), deputy executive director, Africa Network for Environment and Economic Justice (ANEEJ), during a meeting between the governor and members of the State Steering Committee on Open Government Partnership, at Government House, Benin City, Edo State.

DisCos’ woes worsen as Tesla eyes... Continued from page 1

petrol stations, banks, and estates are now relying heavily on alternative energy solutions. Coupled with DisCos’ poor collection record and unsustainable tariff, losses could go through the roof. Many are already in a sinkhole as their most current published financial statements of 2016 show, when the DisCos reported operating losses of over N196.23 billion. This is why Alex Okoh, director general, Bureau of Public Enterprise (BPE), said in July last year that many DisCos are technically insolvent with current liabilities in excess of assets. “They need to improve infrastructure that consumers can pay for, but technically they do not have the capacity to do so,” Okoh said. Tesla’s introduction could take advantage of palpable outrage in a country where over 190 million people share barely 4000MW of power. Elon Musk, chief executive of Tesla, said the batteries would have the capacity of storing solar energy and serve as a back-up system for consumers during blackouts. “Tesla Energy is a critical step in this mission to enable zero emission power generation,” the

company said in a statement. The rechargeable lithium-ion battery unit is built using the same batteries Tesla produces for its electric vehicles, analysts said. The system is called Powerwall and Tesla will sell the 7kWh unit for $3,000 while the 10kWh unit will retail for $3,500 to installers. The company last February said it would triple the amount of energy storage it deployed the previous year. Tesla’s energy storage and solar group had 2017 revenue of $1.12 billion, a small piece of Tesla’s total $11.7 billion in revenue last year, according to a Wood Mackenzie research. Bolade Soremekun, CEO of Rubitec Solar, however, says Tesla batteries would be priced at a premium considering the cost of top range batteries in Nigeria. High-end European brand like Hoppecke (German) with 12amps capacity is sold for around N250,000 in Nigeria. “Tesla brand could be higher but it will have a significant impact on the power sector,” Soremekun said. Tesla has demonstrated the power of its batteries in South Australia, a state with over 1.6 million residents, when it completed a 100MW battery at the cost of $66 million and began supplying power to the grid. In less than six months the com-

Market infraction: 13 complaints against... Continued from page 2

2011 and is going through the Exchange’s disciplinary process. Mact Securities Limited is suspended and is before the National Council of The Exchange. “Maven Asset Management Limited was sanctioned in line with Rule 11.9: Prohibition of Unauthorized Sale of Securities, Rule Book of The Exchange, 2015 (Dealing Members’ Rules) and is to restitute the complainant in full not later than 6 May 2016. Mutual Alliance Investments & Securities Limited restitution of investors’ shares is ongoing.” Also, Options Securities Limited restitution of the investors’ shares is ongoing, according to the

NSE in its BrokerTraX. Partnership Securities Limited was suspended on October 18, 2016 in line with Rule 11.10: Misappropriation of Funds, Rule Book of The Exchange, 2015 (Dealing Members’ Rules). The complaint is still not resolved. Royal Crest Securities Limited was suspended on March 6, 2017 for failure to resolve investors’ complaint (in line with the SEC Complaints Management Framework) on alleged unauthorised sales of shares. Securities Solutions Limited is suspended and is before the Disciplinary Committee of Council of the Exchange. WT Securities Limited was suspended on October 31, 2011 and

pany has made up to $17 million. Tesla’s energy model is broken into converting sunlight captured by photovoltaic cells into energy, storing the energy through its innovative Powerwall system, and accessing 24/7 backup power every time. Tesla announced in December that it was opening a store in South Africa to distribute its Powerball home solutions, a sleek and bright-coloured selfpowered battery pack that combines solar energy and inverter system to independently power the home day and night. During the day, solar panels may produce more energy than the home uses. Powerwall stores that excess solar energy and makes it available on demand, even after the sun has set. Through a Tesla app on mobile phone, customers are given full visibility into the self-powered home. According to details on the company’s website, two packs of the Powerwall including cost of installation goes for $14,500 (N5.2 million) which guarantees 30kWh/day. Tesla had a 16-percent market share for residential solar in 2017, way down from its 33-percent share in 2015, according to Wood Mackenzie Research. This is largely due to inability to keep up with demand as acquiring batteries continues to impact on its delivery timelines. is going through the Exchange’s disciplinary process. The NSE said complaints against Adonai Stockbrokers Limited are yet to be resolved, adding that the “firm was suspended on the 19th June 2018 following its violations of The Exchange’s rules including, but not limited to: Rule 11.9: Prohibition of Unauthorized Sale of Securities, Rule 11.3: Prohibited Practices, and Rule 11.8: No Unauthorized Use of Client Funds; Segregation of Client Funds, of the 2015 Rule Book of The Exchange (Dealing Members’ Rules)”. Recall that 35 stockbroking firms were last month expelled by

•Continues online at www.businessday.ng

groups, to charter operators. A source close to the Nigeria Civil Aviation Authority (NCAA) who craved anonymity told BusinessDay that the number of private jets and charter aircraft has increased from about 90 to over 160 in the last three years, equivalent to a 77.7 percent increase. Data provided to BusinessDay by NCAA show that Nigerian registered charter operators with Air Operating Certificates rose from 22 in 2016 to 28 in 2018. Harold Okwa, managing director of Jetseta, a private jet rental and helicopter charter flight company, told BusinessDay that Jetseta has experienced an increase in its charter services from the fourth quarter of 2018, adding that its business jets increased from 50 in 2016 to 90 currently. Okwa, who tied the increase to recent election campaign rallies and growing demand in commercial operations, explained that slots for commercial airlines most times do not fit in well with the campaign rallies, and so various parties have to make alternative arrangements to ensure that the rallies can go on as planned. “Another reason for the rising preference for charter jets is the increased demand in commercial operations. This has created a lot of pressure for the operators and resulted in delays and cancellations. As a result, passengers who are ‘cash rich and time poor’ are forced to make other arrangements to ensure their plans do not suffer,” he explained. Nigeria’s leading airline, Air Peace, in a space of one year acquired six 50-seater Embraer 145 jets which it currently uses for both charter and commercial operations. The airline also owns one Dornier private jet, specifically for charter operations. A recent visit by BusinessDay to ExecuJet Africa situated at the Murtala Muhammed International Airport showed a display of various charter and private jets numbering above 50. ExecuJet Africa offers maintenance, charter and aircraft management services. BusinessDay’s checks show that flying a business jet which shuttles the Lagos, Abuja, Port

Harcourt routes costs about N70,000 (about $200) a seat, while on a commercial airline, it costs between N25,000 and N35,000. John Ojikutu, member of Aviation Round Table (ART), an aviation industry think tank group, said as the tempo of electioneering campaigns increase, chartered flights are expected to increase in numbers too, possibly higher than they had been in the last two years. Ojikutu, who is also chief executive officer of Centurion Securities, noted that private aircraft operators not licensed for charter are most likely to cash in on the electioneering campaign season to make quick money at the expense of the licensed operators and NCAA. A source at NCAA, however, told BusinessDay that since the campaigns commenced, private jet owners not licensed to carry out commercial operations have continued to violate NCAA laws by engaging in unauthorised services to make quick money. NCAA on Monday issued a stern warning to operators, stating that any operator caught engaging in such unauthorised services will have its Air Operator Certificate suspended or revoked. Sam Adurogboye, general manager, public relations at NCAA, explained that holders of Air Transport Licence (ATL) and Airline Operating Permit (AOP) with valid AOC are the only authorised operators to carry out charter operations. This, he said, is in line with the NCAA’s statutory responsibilities of safeguarding the interest of the general public and that of the investors in the aviation sector. Adurogboye noted that any members of the public transacting business with any unauthorised operators would be doing so at a high risk as such operations may not have valid insurance cover. The Nigerian Civil Aviation Regulations (Nig.CARs) 2015, Part 18.2.3.1 states, “No person shall use any aircraft in Nigeria for hire and reward in public transport category to provide non-scheduled or charter air service unless such a person holds an ATL or Airline Operating Permit (AOP) issued by the Authority.”

Apapa: Hope rising at rehabilitation, construction ... Continued from page 2

premier port city. The second is the Apapa-Oshodi Expressway which has become a major ‘highway to hell’. Commuting on the expressway is the riskiest venture known to man as the only means of movement on the expressway is commercial motorcycle, popularly called ‘okada’. At any given time, there are over 1,000 ‘okadas’ weaving in and out of traffic and snaking through uncountable trailers and tankers mindlessly parked on the expressway, denying access to other road users. In spite of the recent palliative work on the expressway preparatory to its total reconstruction by the

Dangote Group, the indiscriminate parking of trucks has made that effort a huge waste of time and resources. The expressway has completely collapsed right from the Tin Can gates to Sunrise-Beachland Estate junction. Concerned about the impact of this rot on road users, Apapa residents, business and the economy at large, Dangote Group has undertaken the reconstruction of the expressway and this is to cost the group an estimated N73 billion. The reconstruction of the 32-kilometre expressway will last for 24 months and will be done with concrete pavement.

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BUSINESS DAY

Analysis

The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty ...The Power of Outsiders CLAYTON M. CHRISTENSEN, EFOSA OJOMO & KAREN DILLON

very industry would do well to have outsiders—or those that are not yet experts—in it. Outsiders are able to ask simple questions that many experts, often for good reason, may not think to ask. These outsiders are not yet immersed in a pool of expertise and assumptions that sometimes lead to cognitive capture or cognitive tunnelling, a phenomenon of inattentional blindness where observers are too focused on particular tasks and not on the environment. Consider, for instance, the case of Malcolm McLean. Many of us have never heard of him, but we owe a lot of our ability to more efficiently trade globally to this former truck driver–turned-millionaire who only had a high school degree. McLean was a North Carolinian truck driver who found himself waiting for hours at a loading dock the day before Thanksgiving in 1937, when inspiration struck. As McLean was thinking about how fast he could leave the port to get home in time for Thanksgiving Dinner, a time-honoured tradition in the United States, he realised that the dominant

shipping method at the time, break-bulk cargo, was very inefficient and quite dangerous. McLean thought, surely there had to be a better way. He asked a foreman, “Why don’t you just take my whole truck and put it on the ship?” The foreman, a bit unsure of what that would even entail, laughed at McLean. At the time, every shipper knew that the fastest way to move products from one place to another was to build bigger and faster ships. “But McLean thought the key to a more efficient transport system was not to build faster ships, but to build faster docks. Since McLean was not an expert in shipping, he wasn’t taken seriously. But it was precisely because McLean was an outsider that he could see what the others could not.” Today it seems obvious, but it wasn’t until 20 years later, after McLean bought his own shipping company and built a special boat and equipment for loading and unloading containers, that several others began to buy into his vision. McLean’s innovation— containerisation—reduced shipping costs from approximately $6 a ton to just 16 cents, and he reduced the loading and unloading time of a ship from one week to eight hours. Safety on ship-

ping docks was also a big concern, but McLean’s technology of shipping whole containers without unloading drastically reduced injuries on shipping docks. When McLean died, he had not only revolutionised global trade, but he was also worth roughly $330 million. Not bad for a high school graduate from North Carolina. Containerisation, a process that seems so obvious in hindsight, was laughed at because it went against the

norm. It was not how things were done. But McLean and containerization are not alone when it comes to going against conventional wisdom, especially when it has such great potential in fundamentally changing the way we do things in society. In a similar way McLean saw things differently, an entrepreneur in Nigeria is currently doing the same. Here’s the story of Tomato Jos. Nigerians love tomatoes. From the internationally

popular dish jollof rice, to the country’s many soups that use tomatoes as a base, Nigerians have become the largest importers of tomato paste in the world. The West African country imports 100 percent of the tomato paste it consumes, amounting to approximately $1 billion of tomato paste imports annually. At the time of this writing, no single can of tomato paste was produced in the country, which is populated by 180 million people. What’s particularly striking about the Nigerian tomato market today is that Nigerian farmers grow over 2 million metric tons of tomatoes annually, but more than half their harvest rots before getting to the customer. This goes back to our point about the fact that a product must be both affordable and available in order to adequately target nonconsumption and create a new market. Also, the average Nigerian spends more than half their income on food, making access to tomatoes somewhat of a luxury, with more than half the Nigerian market for tomatoes underserved. Considering Nigeria’s low per capita income, infrastructure challenges, and the fact that the country’s middle-class isn’t growing as fast as experts thought, conventional wisdom suggests there is either no opportunity here, or whatever opportunity ex-

Christensen, Ojomo and Dillon are of the Clayton Christensen Institute for Disruptive Innovation

break even. They argue that if the local producers incur higher cost than the landing

cost of imported ones, there will be no incentive to produce in the first place.

ists is too risky. But when we use a different lens to assess the landscape, we see vast market-creation opportunity that can be addressed. One Nigerian company, Tomato Jos, has begun capitalising on this opportunity. Mira Mehta, CEO of Tomato Jos and Harvard Business School graduate, understands the significant potential of this market. First of all, Nigeria needs not import tomato paste. That by itself represents a $1 billion opportunity. Second, improving the affordability and availability of tomato will increase the actual size of the market as more people, especially nonconsumers, will get access to fresh tomatoes and tomato paste. At the moment, this production gap between what the country can consume and what is produced is valued at more than $1.3 billion. Third, Nigeria is a microcosm for other African and low-income countries. If Mehta’s Tomato Jos is able to capitalise on this opportunity, she will transform the lives of many people in Nigeria and will also make her investors very happy. In 2018, the company closed a $2 million investment round.

Soaring cost of newsprint blamed on low internet penetration, imports DANIEL OBI

ike endangered species, the traditional print media in Nigeria seem to be moving from one challenge to the other, all aimed at ensuring its extinction. From low readership leading to reduced circulation, lower advertising revenue, and some print journalists migrating to online platforms, it now faces another hurdle: high cost of newsprint. It is a puzzle however that the price of newsprint used in producing newspapers is soaring in a digital age, when it should actually be falling. Late 2018, a ton of newsprint sold for about $875 against $550 in 2016 and about $200 in 2014. This is happening when a number of readers are turning to online for content, as many news organisations move to online platforms. When exchange rate of the naira was N170 to a dollar, the price of newsprint per ton moved from $200 to $400. Late last year also, it moved to $875 per tonne but in 2017 it was about $550 per ton. The price movement is the reflection of both the exchange rate

movement and the increase in demand. Since then, the value of the naira has continued to fall. The local currency now trades at N360 to the dollar at the parallel market, which has further raised the prices at which newsprint is imported. Analysts offer some reasons on this trend, arguing that it is happening because internet penetration is still low in Africa. In emerging markets, including Nigeria, they point out that internet penetration, though growing, is still low. According to figures from the Nigerian Communication Commission (NCC), internet users in the country are currently 103 million. The National Population Commission (NPC) puts the latest estimate of Nigeria’s population at 198 million, which translates to an internet penetration rate of 61 percent. Further, the analysts note that while the number of Nigerian internet users is growing, a large number of both internet and non-internet populace still rely on newspapers for credible and authentic information. This therefore accounts for the use of large quantity of newsprints to produce newspapers for content in Africa’s

most populous nation. Unfortunately, according to a media analyst, who works in one of the leading newspapers in Nigeria, and prefers anonymity, these newsprints are imported. Nigeria is largely an import-dependent economy and newsprint is one of the products imported mainly from economies such Finland and Sweden, where internet penetration is about 90 percent. In these markets, the use of newsprint may not be as high as in emerging economies. “Producers of newsprint in those economies may have shut down some production lines as they now produce on demand for local and more for international market where there is high demand for newsprint,” the media analyst said. Even the producers of newsprint are finding a way to regulate it to avoid glut in the market, the analyst pointed out. “They don’t produce and keep. They produce as you need and with this they are regulating the quantity of the product in the market,” the analyst explained. Another factor that has raised the price of newsprint and challenged the tradi-

tional media is the difficulty of accessing Lagos ports to evacuate imported items. For over three years, gridlock on the roads leading to the Apapa ports has compounded the woes of traditional media, as transporters have jerked up their haulage fares from Apapa ports to inside Lagos by over 300 percent. They now charge about N700,000 against N150,000 four years ago to convey goods to anywhere in Lagos. The newspapers will find it difficult to transfer the cost of high newsprint to consumers because the per capita income of the average consumer is still low in Nigeria, and many consumers cannot afford to buy newspapers daily, the analyst further pointed out. With the high cost of newsprint, traditional print media houses make sure they produce what goes to the market in order to avoid unsold copies. For newspapers, the product is content and much of the content is perishable when compared with books, which can stay over time. Other observers have expressed apprehension that local production of newsprint at this time may not be the answer, as producers may not

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LegalPerspectives

With

people that wish to object to its grant to do so and file caveat. One person cannot be granted letter of administration. It must be at least two people. The procedure in Lagos is as highlighted below1. An application letter is written to the probate registrar. The letter must contain the following details- a. the full names of the deceased b. date when the deceased died c. where the deceased was resident before he died d. the names of the people who are to be the administrators e. death certificate of the deceased must be part of the application 2. Some forms will be given upon submission of the application. The forms are- a. particulars of landed properties left by the deceased b. oath of admin-

istration by the people applying c. administration bond d. Bank certificate e. Inventory f. Affidavit/declaration as to next of kin g. Passport photographs of next of kin h. schedule of death and funeral expense i. justification for sureties. 3. The forms are to be submitted after filling them 4. Publication is to be made in the newspaper or gazette. The purpose of this is to inform the member of the public that administration is about to be granted over a deceased person’s estate and for anybody who has objections to the grant to file caveat. 5. Once no objection is raised within the required period and the estate duties have been paid the letters of administration would be granted.

Locus classicus Long v Lloyd [1958] 1 WLR 753

he claimant saw an advert of a lorry in a newspaper. The lorry was described as being in exceptional condition in the advert. He called the seller to arrange to view the lorry and he was told that it was in first class condition. He viewed the lorry the day after he called. During the viewing, he was told that the lorry is capable of doing 40 mph and 11 miles to the gallon. The claimant decided to test drive the lorry and during the test drive he discovered that the speedometer was not working and that he had to pull a wire for the accelerator as this was not working. After all these, the claimant still proceeded to buy the lorry. The claimant noted

on the first journey that some things were wrong with the lorry. He contacted the defendant/ seller and the seller agreed to

Wednesday 16 January 2019

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Procedure for obtaining letters of administration

h i s p ro c e d u re i s mostly adopted where someone dies intestate i.e. without a Will. The law recognizes some set of people who are entitled to apply for letters of administration in order to be able to take over and administer the deceased person’s estate. In essence, it is a legal authority conferred by the probate court on a person called administrator or administratix to administer the estate or property of a person that died without a will. The procedure being discussed here is with regards to Lagos State. It must be noted that letters of administration will not be granted within three months of the death of the deceased person. The application will be published to enable

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pay half of the money spent on the repairs. The claimant accepted this offer. However, the lorry broke down completely when it embarked on another journey. The claimant wanting to rescind the contract decided to bring an action against the seller for innocent misrepresentation. The court held that the claimant by accepting to be paid half of the money spent on the initial repairs of the lorry after he became aware of the defects lost his right to rescind. He has affirmed the contract.

Voluntary winding up of a company in Nigeria

inding up of a company refers to the process of dissolution of a company i.e. making a company to cease to exist. The focus here is voluntary winding up of a company with focus on section 457-485 of the Companies and Allied Matters Act (CAMA). Section 457 of CAMA states that –“Any company may be wound up voluntarily‐ (a) when the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs, on occurrence of which the articles provided that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily; (b) if the company resolves by special resolution that the company be wound up voluntarily and references in this Act to a “resolution for voluntary winding up” means a resolution passed under any of the paragraphs of this section.“ The above quoted section establishes two scenarios for voluntary winding up of a company. The first one is where there is a fixed period in the article for the existence of the company or a stipulated event which is to mark the end of the company occurs and the company at a general meeting passes a resolution for it to be wound up voluntarily. Secondly, where a company by special resolution decides to wind up voluntarily. Two procedures can be adopted for the purpose of voluntarily winding up a company. The one to choose depends on whether the company can pay its debt or not. The procedures are broken down below1. Section 464-470 of CAMA provides for members voluntary winding up- this is in a situation where the company is solvent and as such can pay its debt. The procedure for this area. Special resolution proposing to wind up the company is passed at a general meeting. b. Liquidators are appointed at the meeting where the special resolution for winding up is passed. c. Notice of the special resolution is given to CAC within 14 days and advertise same in the official gazette or two newspapers. d. Within 5 weeks before the passing of the special resolution for winding up, the directors or majority of the directors are to make a statutory declaration of solvency. e. The company is to stop business after the special resolution is passed and the directors cease to exercise powers after the appointment of liquidators except the company in a general meeting or liquidators permit it. f. If the process of liquidation goes beyond a year, the liquidator at the end of each year is to call a meeting which is to be advertised

in official gazette and some newspapers in Nigeria. g. Liquidator is to hold the last meeting at the end of the liquidation of the company. A copy of account/return of the meeting is to be sent to CAC within 7 days of the meeting for registration. h. When the affairs of the company are fully wound up, the liquidator is to convene a meeting for the purpose of presenting the financial account of the winding up. i. The liquidator is required to keep record of all its activities and transactions for at least five years or as directed by CAC. j. After 28 day of the meeting, the liquidator shall send copies of the account and statement of holding of meeting and dates for registration to CAC. k. The liquidator is then expected to apply for a dissolution order and send same to CAC. l. The company is deemed dissolved after three months of the registrationof the accounts/ returns with CAC. 2. Section 472-478 of CAMA provides for creditors winding up- this is where the company is not solvent and the creditors are to take charge of its assets in order to satisfy the debt owed by the company. The procedures area. Company and creditors are to hold separate meetings to propose for winding up of the company. b. The company must call meetings of creditors same day or next day after their meeting. c. The creditors and company at their separate meetings can nominate who is to be the liquidator. The person nominated by the creditor is to be the liquidator if the person nominated by the company is different. An aggrieved person can approach the court for the court to order otherwise. d. The creditors may appoint a 5 committee of inspection, the company can also do same. The creditor is entitled to reject the committee appointed by the company. e. The liquidator is to publish his appointment in two newspapers and official gazette within 14 days after he is appointed. f. Liquidator is to make publication of notice of final meeting and the account of liquidation must be laid before the meeting and approved. g. The liquidator is to send a copy of copy of the account and return holding of the meeting to CAC within 7 days after the meeting above. h. The company is considered dissolved 3 months after the registration of accounts and returns with CAC. i. The court can defer the date when the dissolution is to take effect upon an application by the liquidator, member or creditor.

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OIL

West Africa: Europeans seek Nigerian crude as Chinese demand for Angolan heats up Page 42 GAS

L-R: Debo Fagbami, chairman of SPE Nigeria Council; Bank-Anthony Okoroafor, chairman, Petroleum Technology Association of Nigeria (PETAN) & Patricia Simon-Hart, a council member of PETAN during Society of Petroleum Engineers (SPE) Nigeria Council courtesy call to PETAN executive members in Port Harcourt recently.

West Africa: IRENA/ADFD project facility backs West Africa renewables drive Page 43 Market Insight

Debrief

Nigeria may miss out of anticipated strong global demand for LNG FRANK UZUEGBUNAM

Oil rises more than 4 percent on US-China trade talk hope, OPEC cuts Page 47 OPEC weekly basket price DAY

PRICE

11/1/19

10/1/19

59.46

9/1/19

58.22

8/1/19

56.09

7/1/19

56.42 Source: OPEC

s Nigeria dithers with the much anticipated final investment decision (FID) on the Nigeria Liquefied Natural Gas (NLNG) Train 7, which ought to have taken place before the end of 2018, the country might miss out of the anticipated strong global demand for liquefied natural gas (LNG) which is projected to commence this year. Other countries are moving ahead and this might lead to a record amount of LNG production getting the green light in 2019 in the bid the meet up with the projected strong global demand, especially from China. The potential new projects are expected to come from Russia, Australia, East Africa, US in addition to expansion projects from top 2018-LNG exporter, Qatar.

According to Giles Farrer, Wood Mackenzie’s research director for global gas and LNG, FID could be taken on more than 60 million tonnes per annum of LNG capacity this year, well above the previous record of about 45 million tonnes in 2005 and triple last year’s 21 million tonnes. “If you have seen the potential demand for LNG, you have seen costs where they are now... that is motivating companies to push projects forward and motivating buyers to come forward to support some of these projects,” Farrer said. The LNG projects that could get FID this year include the $27 billion Arctic LNG 2 project by Russia’s Novatek, at least one project in Mozambique and three in the United States, Woodmac said in a report. The three potential US projects are Qatar Petroleum’s Golden Pass joint-venture with Exxon Mobil Corp and ConocoPhillips,

Venture Global LNG’s Calcasieu Pass project, and Cheniere Energy’s Sabine Pass train 6, the consultancy said. A threetrain expansion in Papua New Guinea are among the projects awaiting FID this 2019. “Now is a good time to invest. If you look at industry costs, they have really come off a cliff from 2 to 3 years ago. So if you’re investing now, you’re investing in the bottom of the cost cycle,” said Farrer. Sources of the anticipated huge increase in LNG demand are being expected from China’s demand growth as part of a programme to shift households and factories from coal to gas, increased LNG import dependency in Europe, and a backlash against dirtier coal is driving optimism in the industry. It is understood that the NLNG Train 7 FID will not take place until after the completion of the Front End Engineering Design (FEED )which is

expected to give investors a fair idea of what would be needed financially to complete the project. However, non-signing of the FID does not mean that other commitments or activities that would facilitate the construction of the plant are not going on behind the scene, a source close to the company told BusinessDay. Tony Attah, managing director, Nigeria LNG Limited was quoted to have said that the company would take FID on Train-7 by December 2018, having signed its FEED. A financial adviser had equally been appointed by the company ahead of the expected FID. Train 7 is expected to produce eight million tonnes per annum (MTPA) LNG. The sale and purchase agreements (SPAs) for the new volumes had been locked down with offtakers since 2007, but its terms would need to be concretised before the FID is achieved.

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ing to Nigerian grades. The typically slow trading pattern of the first full week of the year appeared to be tailing off after two major grades changed hands at their highest since September. Tenders by India’s IOC and Turkish refiner Tupras have kept offers fairly thin on the ground

Wednesday 16 January 2019

oil

West Africa: Europeans seek Nigerian crude as Chinese demand for Angolan heats up

e m a n d for Nigerian cargoes from European customers and Angolan crude from Chinese independent refiners has breathed life into the West African market, traders said. A drop in freight rates for shipping West African crude to China is partly behind the pickup, but predominantly, it is the teapot refineries that have started stocking up again after a lull during December, traders said. The benchmark VLCC rate for the WAF-Asia journey is around its lowest since September, having hit three-year highs in November, which dealt a blow to demand particularly for Angolan crude. A shortage of distillaterich crudes in the Mediterranean because of the drop in Iranian exports following US sanctions has redirected some supply of the likes of Urals, Azeri or CPC away from northwest Europe, where refiners are instead turn-

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and potential buyers have said that any indicated prices were simply too high given that there are plenty of cargoes available for both Angolan and Nigerian grades. Qua Iboe has changed hands at a premium of $1.75 to dated Brent, its highest in months, while supply of similar grades

such as Forcados and Bonga were said to be virtually sold out. There are around a dozen Nigerian cargoes still believed to be available for sale but this is down from closer to 20 at the start of the week. Around 10 cargoes of February-loading Angolan crude were still believed to be available for sale.

Brief Saudi Arabia announces rise in oil reserves after external audit

op oil exporter Saudi Arabia announced a slight rise in its crude oil reserves after they were independently audited, providing more detail about the size of deposits shrouded in secrecy for decades. Saudi Arabia’s reserves of easily recoverable oil have long been the world’s largest but few details were public. The external audit was started as part of preparations for the initial public offering of state oil company Saudi Aramco. The Saudi Energy Ministry said in a statement that Saudi Arabia’s proven oil and gas reserves stood at around 268.5 billion barrels of oil and 325.1 trillion standard cubic feet of gas as of the end of 2017. “The results point out that the kingdom’s reserves of oil and gas are bigger than what we have been announcing,” Saudi Energy Minister Khalid al-Falih said. The audit will dispel scepticism in the oil industry about the size of Saudi reserves and provide assurance for potential investors in Aramco investors, should the initial public offering which has been delayed eventually go ahead.

The 2017 figure for crude reserves is larger than the total 260.8 billion barrels Aramco reported in its 2016 annual review. “This certification underscores why every barrel we produce is the most profitable in the world and why we believe Saudi Aramco is the world’s most valuable company,” Falih said in the statement. Aramco’s cost of production is a mere $4 a barrel, he said, giving a rare insight into a key metric not usually disclosed. Industry experts say it can cost between $30 and $50 to produce a barrel of US shale oil. For almost 30 years despite rising production, large swings in oil prices and improved technology, Riyadh had annually reported the same number for reserves at around 261 billion barrels, according to a statistical review by BP.

Ghana: Boost for Ghana’s oil production as Aker Energy completes successful drilling operation of Pecan-4a Appraisal

ker Energy, operator of the Deepwater Tano Cape Three Points (DWT/CTP) block, announced that it is about to complete a successful drilling operation of the Pecan-4A appraisal well offshore Ghana. The well was drilled at the Pecan field in the DWT/CTP block approximately 166 kilometres southwest of Takoradi in Ghana, to a vertical depth of 4,870 meters in 2,667 meters of water. The DWT/CTP block offshore Ghana contains seven discoveries, of which Pecan is the main discovery to date. The main purpose of Pecan-4A appraisal well was to confirm Aker Ener-

gy’s understanding of the geology in the area and to identify deep oil water contact in the Pecan reservoir. This was successfully proven.

“We are pleased to announce the well results, confirming our understanding of the area, as well as the resource base and upside potential in

the DWT/CTP block. Based on these results, we will optimise the Plan of Development for the Pecan field. There is still a lot of work to be done, including to conclude the phasing of the development, the size of first phase and detailing of the concept. Our most important priority going forward is to deliver a robust field development plan to the Ghanaian authorities,” says Jan Arve Haugan, Chief Executive Officer at Aker Energy. Based on existing subsurface data from seismic, wells drilled and an analysis of the Pecan-4A well result, the existing discoveries are estimated to contain gross contin-

gent resources (2C) of 450 – 550 million barrels of oil equivalent (mmboe). Aker Energy estimates that with the next two appraisal wells to be drilled, the total volumes to be included in a Plan of Development (POD) have the potential to increase to between 600 – 1,000 mmboe. In addition, there are identified multiple well targets to be drilled as part of a greater area development after submission of the POD. “Aker Energy sees great potential in this promising area offshore Ghana. We see the foundation for a phased development producing through several production units. Since we became the operator less than a year ago, we

have established an open, inclusive and transparent collaboration with Ghanaian authorities. This partnership will enable us to unlock the vast potential in the area to the benefit of both the Ghanaian society and our license partners. We are looking forward to continuing and further strengthening this partnership to develop the Ghanaian oil and gas industries,” concludes Haugan. Aker Energy is the operator of the DWT/CTP block with a 50 percent participating interest. Aker Energy’s partners are LUKOIL (38 percent), the Ghana National Petroleum Corporation (GNPC) (10 percent) and Fueltrade (2 percent).

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ENERGY intelligence

Brief EU looks to secure long-term gas role in low carbon economy

he European Commission has launched a study looking at coupling with the power sector to produce renewable and decarbonized gases, and is planning further studies on improving the EU’s gas market rules and aligning them with the power market. The aim is to build a limited list of recommendations which could be developed into formal proposals to change the EU’s internal gas market legislation, an EC source said in December. What happens next depends entirely on the incoming EU commissioners, who start a new five-year mandate in November. They will decide if and what changes are needed, which makes formal legal proposals unlikely before 2020. The EC will be looking at sector coupling to see what kind of regulatory framework it can offer to incentivize developing renewable gases, the EC’s internal energy market director Klaus-Dieter Bor-

require grid operators to be kept separate, unbundled. from energy generating companies. The study is due to be published in April, with a public workshop likely in February. The EC plans to commission five studies from external consultants looking at how to improve the EU’s gas market rules. This will not lead to “a revolution of our gas market design, because gas markets are more or less functioning,” Borchardt said. “We are looking into very specific issues, like commodity or capacity release programs for those markets which are still foreclosed, and tariff pancaking,” he said. The study into tariffs is set to start in April or May, and will focus on issues that have not been resolved by the EU’s harmonized gas transmission tariffs network code, which started applying in April 2017. These include preferential routing as well as tariff pancaking, and the study will look at further

Ghana: Govt sets August to complete infrastructure to offtake ENI-led OCTP gas

hana has set August 2019 to complete the installation of gas infrastructure to offtake gas from the ENI-led OCTP Sankofa fields. The announcement came after the minority in Parliament accused the government of causing a recurring loss of GH28 million monthly for failing to offtake the gas due to lack of infrastructure. But Nana Kofi Damoah, Head, Communications at the Energy Ministry,

said the cost could have been higher but for pragmatic steps taken by government since assuming office. Ghana’s agreement with ENI requires that it pays for 90 percent of the gas produced whether it takes the gas or not, an undertaking underpinned by a takeor-pay clause, already activated since October last year. Adam Mutawakilu, Minority spokesperson on Mines and Energy, maintains that the cost being

incurred could have been avoided. “It is also important to note that in order to ensure the maximum use of the ENI gas in the western enclave, the previous John Mahama ledgovernment had planned that the four hundred and fifty megawatt Karpower plant was to be stationed at Takoradi and not to be brought to Tama,” Mutawakilu said. He accused the government of failing to continue arrangements put in place by the NDC

administration to ensure the required infrastructure would be in place ahead of the OCTP production. “The Karpower plant relocation project is currently ongoing and we are looking at the end of August 2019, but let me state also that the gas is not gas that is being wasted, though it is been paid for, due to the uncompleted infrastructure we are storing (it) such that when the people of Ghana need it we can get it from the producers,” Damoah added.

Trade war cuts US LNG exports to China in 2018

chardt said in November. “It is clear that natural gas as we know it today can stay as a back-up fuel for quite a while, but there will be a point in 2035, 2040 when it will not be part of the solution unless it is decarbonized,” he said. The study started in September, and aims to identify regulatory barriers to linking power and gas markets, and to deploying renewable and low-carbon gases. For example, grid operators would like to be able to operate power to gas facilities, said the EC source. But they are not allowed to as EU rules

harmonizing EU transmission tariff rules. Another study will focus on licensing issues, and whether these are a barrier to market entry in some EU countries. It will look at whether standardized EU rules are needed, such mutual recognition or a passport approach. The EC is also keen to ensure Europe is an attractive destination for global LNG supplies, and so there will be a study examining the regulatory framework for LNG terminals. The EC wants to check if local differences are impacting individual terminals’ competitiveness.

he number of US liquefied natural gas vessels that went to China in 2018 fell by around 20 percent from the prior year as the trade war between Beijing and Washington heated up. In recent weeks, however, that dispute has cooled somewhat with talks in China between Chinese and US trade teams raising hopes additional tariffs can be avoided.

As the trade war escalated during the last six months of 2018, only six LNG vessels went from the United States to China, down from 25 during the same period in 2017. China imposed tariffs on US LNG in September. That happened even though Chinese LNG purchases last year reached all-time highs and the United States sold record amounts of the fuel. China, the fastest grow-

ing consumer of the fuel, became the world’s second biggest LNG buyer in 2017 as the government weans the country off dirty coal to reduce pollution. The United States, meanwhile, is on track to become the world’s third biggest LNG exporter by capacity in 2019 as additional export terminals enter service. In total, 24 US vessels went to China in 2018, mostly during the first half of the year, versus 30 in

2017. Companies proposing new US LNG export terminals expressed optimism a new US-China trade agreement could help advance their projects. The US LNG export industry has been particularly vulnerable to the US-China trade war, Mike Sommers, head of the American Petroleum Institute industry group, said, adding that he hopes negotiators will soon resolve the dispute. China imported about $447 million of LNG from the United States in 2017, about 15 percent of the LNG the US shipped that year, making it the third biggest buyer of the fuel from the United States. Prior to the slowdown, China was on track to import 141.6 billion cubic feet (bcf) of US LNG in 2018, up from 103.4 bcf in 2017 and 17.2 bcf in 2016. It imported no LNG from the United States in 2015.

44 BUSINESS DAY WEST AFRICA ENERGY intelligence www.businessday.ng

Tanzania: Tanzanian gas supplier secures deal with TPDC and TANESCO

anAfrican Energy Tanzania (PAET) has signed a short-term sales agreement with the Tanzania Petroleum Development Corporation (TPDC) and the Tanzania Electric Supply Company (TANESCO) for the immediate supply of gas to TANESCO of up to 35 million standard cubic feet per day (MMscf/d). PAET explained in a statement that these additional volumes are being processed and transported through TPDC’s National Natural Gas Infrastructure (NNGI) and will allow TANESCO to generate increased and more stable power to meet emerging demand. According to PAET, the first gas flowed through the NNGI on 24 December 2018 and production averaged 20 MMscf/d in the first ten days of operation. Total additional gas sales, including those

through the Songas gas processing and transportation system, averaged 56 MMscf/d over the same period. This compares to an average for the third quarter of 44 MMscf/d. “Together with TPDC and TANESCO we have focused our efforts to ensure the timely availability of Songo Songo natural gas to meet Tanzania’s growing electricity and industrial demand. Signing this agreement is a clear demonstration of the company’s cooperation with its stakeholders and our commitment to meet the energy needs of the country,” David Roberts, PAET ‘s managing director said. The agreement provides a mechanism for the parties to agree to one-month extensions for a maximum term of six months and is expected to be superseded by a longterm agreement. PAET is supplying these additional volumes from its existing wells. Two wells, SS-11 and SS12, are connected to the NNGI and SS-10 will be connected if required to meet demand. PAET is currently in the process of installing a refrigeration package in the Songas processing facility to ensure that gas can continue to be processed at the plant’s capacity. It is expected that this will be operational by mid- 2019.

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Wednesday 16 January 2019

power

West Africa: IRENA/ADFD project facility backs West Africa renewables drive

bu Dhabi Fund for Development (ADFD) and the International Renewable Energy Agency (IRENA) have announced the selection of renewable energy projects in three West African regions to receive funding from the ADFD. Guyana, Liberia and Togo have been selected to receive these funds as part of the sixth cycle of the IRENA/ADFD Project facility. With ADFD committing $350 million over seven funding cycles to the IRENA/ADFD project facility since 2013, this announcement, during the Ninth Session of the IRENA Assembly, brings cumulative funding to date to $245 million. The facility helps developing countries access low-cost capital for renewable energy projects to increase energy access, improve livelihoods and advance sustainable development. “The projects selected this year will contribute towards meeting national energy access targets and will transform lives for the better,” said IRENA Director-General Adnan Amin. “They will take advan-

tage of cost-effective renewable energy to help reduce poverty, enable income-generating activities, and provide electricity to healthcare facilities and educational institutions, which will create jobs, empower women, and strengthen local communities.” In Guyana, a project will receive a loan of $8 million to install 5.2MW grid-connected solar PV systems in the hinterland regions to reduce fossil fuel consumption and increase the reliability of electricity supply. An es-

timated 34,700 people in the target areas will benefit and around 120 direct and indirect jobs are set to be created throughout the project lifecycle. In Liberia, the loan of $8 million will contribute to the construction of a 2.1MW run-ofriver hydropower plant on the Gee River. The project will benefit over 30,000 people by providing a clean, reliable and affordable source of energy to households, schools, health facilities and small businesses, enhancing living condi-

tions and helping to reduce poverty. In Togo, a 30MW gridconnected solar PV plant will be constructed with the investment of a $15 million loan. The project aims to bring clean, reliable power to around 700,000 households and small businesses and reduce greenhouse gas emissions by 9,242 tonnes/year. Local communities will benefit from greater access to drinking water, education and healthcare as well as job creation that prioritises women.

this year. Additional four primary sub-stations are planned to be built in Kotobabi, Korle-Gonno, Achimota and Kanda to enhance power distribution in Accra. Furthermore, EsonBenjamin said another bulk supply point would be built in Kasoa to supply reliable power to surrounding communities. The MiDA CEO also disclosed that there would be refurbishment of power transmission lines to ensure efficiency in power distribution, while a data distribution centre would

be built in Accra to coordinate power transmission and monitor faulty lines of the Ghana Electricity Company (ECG). A Metre Monitoring System, he said would be constructed in Accra to coordinate the 14 different metering systems in the country for easy tracing of illegal power connections and detect faulty lines for prompt repairs. Eson-Benjamin said that these infrastructure developments would turn around the operations of the ECG for efficient service delivery.

Ghana: Ghana could benefit from a third Power Compact

he chief executive officer of the Millennium Development Authority (MiDA), Martin Eson-Benjamin recently announced that Ghana has been nominated for a third Power Compact under the Millennium Challenge Account (MCA) alongside Burkina Faso, Ivory Coast, Benin and Niger. Eson-Benjamin underlined that Ghana only stands a good chance of being selected, if the country successfully implements the ongoing Power

Compact II. He urged the implementing entities and stakeholders under the Compact to support MiDA in executing quality projects so that the West African could benefit from the $536 million grant. The MiDA official also revealed that there is 32 months left till the end of the Power Compact II, noting that 60 percent preliminary works have been done in the past two years. Negotiations are ongoing for the commencement of work on the largest electricity bulk supply point at Pokuase in March

Wednesday 16 January 2019

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ENERGY intelligence

Oil Price: Despite pessimism, a downturn is not yet established FRANK UZUEGBUNAM

hough it is still early, the year which began with some degree of uncertainties, a downturn in oil prices is not yet an established fact. Oil is officially back in a bull market as confidence grows over both the strength of the global economy and the willingness of OPEC+ to adhere to its production cut agreement. Oil entered a bull market having gained 20 percent since the low point reached in December. WTI rose above $52 per barrel, while Brent moved above $61. At its last meeting in December 2018, OPEC and its non-OPEC partners agreed to curb output by 1.2 million b/d for the first six months of this year. Given rising US output and the deepening gloom overhanging the global economy, this was regarded by the market as inadequate, causing oil prices to plum-

met from just over $60/bbl in mid-December into the low $50s towards year’s end. There are indicators it will not be a bleak year after all for oil producers. The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as US crude output has surged to a record 11.7 million bpd. Khalid al-Falih, Saudi Arabia’s energy minister said he was confident that action to rein in output would bring the oil market into balance. Al-Falih also said he would not rule out calling for further action. It is clear the US-China trade war is hurting both sides, thus, a deal was reached in December to delay the imposition of further tariffs. Chinese and US officials started new talks on January 4. The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on issues including Chinese purchases of US farm and energy commodities. State newspaper

China Daily said Beijing was keen to end the trade dispute, but that any agreement must involve compromise. It may be difficult to gauge the impact of a reduction in trade tensions between China and the US but a subdued tension could change the economic outlook for 2019, and thus the demand outlook for oil, quite radically and fairly quickly. The supply side appears to

be helping prices too. Saudi Arabia appears to have followed through on promises to cut oil production in December, despite the new OPEC/non-OPEC agreement only coming into effect from January. According to a Reuters survey, OPEC output fell by 460,000 b/d in December, Saudi Arabia accounting for 400,000 b/d. Riyadh appears once again to be willing to over comply, po-

Snapshot There are indicators it will not be a bleak year after all for oil producers. The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as US crude output has surged to a record 11.7 million bpd

tentially supported by the UAE and Kuwait, suggesting that OPEC as a whole may deliver more than it has promised and sooner. Brent crude is bumping along in the mid-$50s, but US marker West Texas Intermediate is a good $9/bbl lower putting it in the high-$40s, a sea change from the first 10 months of last year and not a price level that will sustain the expansion of 2018. If the fourth-quarter pause continues into the firstquarter 2019, the EIA’s forecast of a rise in US crude production from an average 10.9 million b/d in 2018 to 12.1 million in 2019 will almost certainly be revised down. There are in effect two shortterm corrective factors in the oil market; OPEC/non-OPEC producers’ willingness to agree and implement cuts and US shale production. While the actions of one counteract the actions of the other, both are price responsive, which results in an imperfect, jerky synchronicity.

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ENERGY intelligence Brief Crude exporters opt for VLCCs over traditional Aframax for USGC-UKC route

igh rates in the Americas for Aframax vessels, which typically carry crude cargoes from the US Gulf Coast to Europe, have charterers looking toward larger ship classes, VLCCs and Suezmaxes, to move cargoes across the Atlantic as the cost of taking a VLCC is currently 52.2 - 63.9 percent of the cost of an Aframax. There have been at least six Suezmaxes and three VLCCs placed on subjects to carry crude from the US

to Europe since the market returned from the long holiday weekend January 2, compared with only four for Aframax vessels, according to S&P Global Platts fixture logs. European refiners typically prefer the 500,000 barrels carried on Aframax vessels, with Suezmaxes becoming increasingly more popular, dependent on rate economics. There were 146 Aframaxes and 52 Suezmaxes booked for

the USGC-UK Continent or Mediterranean route in 2018. VLCCs rarely make the move to Europe, with most such large vessels, typically loading 2 million barrels of crude in the Americas heading for discharge in Asia. No VLCC had carried a cargo to Europe until the Olympic Lady set sail from Corpus Christi Lightering heading to Rotterdam with an Occidental Petroleum cargo December 24. Since then, Oxy, ExxonMobil, Vitol and Shell have all been seen working VLCC-sized USGC-based cargoes for discharge in Europe. Looking at the most current fixtures, the cost of carrying crude on this route currently sits at a range of $10/mt-$12.59/ mt on 270,000 mt cargo basis. Including the current cost of reverse lightering, which is necessary for VLCCs loading in the USGC, the cost would include an additional $5.37/ mt for three full-service Aframax lighterings of 700,000 barrels each or $6.22/mt for four full-service Aframax lighterings of 500,000 barrels each. Freight for Aframax vessels have climbed over the past month on tight tonnage availability as charterers worked to cover cargoes ahead of and following the holidays, rising $8.52/mt to $29.42/mt or Worldscale 160.75.

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Wednesday 16 January 2019

finance people appointments

Ghana made $464m from oil in first half 2018

espite cont i n u e d challenges with information sharing and documentation regarding payments in the oil sector, in the first half of the year 2018, Ghana made a total of $463,569,064.38 in petroleum revenue, according to the latest report of the Public Interest and Accountability Committee (PIAC). The Committee is mandated by law to monitor oil revenue and expenditure and report to the citizens. The amount it reports, was paid into the Petroleum Holding Fund (PHF) for the period. For the period under review, PIAC indicated that Carried Interest yielded the most revenue of $168,575,887.49 being 43 per cent of total revenues, followed by Royalties, $151,754,754.45 representing 39 per cent and Additional Participating Interest of $69,685,300.69 representing 18 per cent. “Other revenues from Surface Rentals, Corporate Income Tax, and Interest Income accounted for $73,553,119.72 being 16 per cent of the total,” it said. It notes further that an amount of $203,102,174.08 was deposited into the PHF from the Jubilee pro-

ceeds, $134,567,820.03 from the TEN Field and $63,030,602.08 from the Sankofa Gye-Nyame (SGN) Field. The PHF, it added, received $372,511.72 in Surface Rentals from seven companies and $72,422,752.49 million for Corporate Income Tax. Undistributed funds in the PHF earned interest of $757,855.51. The report found that for the period under review, Ghana National Gas Company (GNGC’s) indebtedness to Ghana National Pe-

troleum Corporation stood at $45,170,192.14, with an outstanding opening balance of $230,315,198.37 bringing the total indebtedness to $275,485,390.51. Cumulatively, receivables due Ghana Gas as at June 2018 stood at $873,767,914.87 (including interest charges for the period January to June 2018), the report said. “Between January and June 2018, GNGC sold processed gas with total invoice value of $160,648,513.18. This amount comprised ex-

pected revenue from the sale of Lean Gas ($137,248,841.58), representing 86 per cent, expected revenue from LPG, $19,723,641.34 (12 per cent) and condensates, $3,676,030.26 (2 per cent). Even though GNGC received $46,342,944.10 as proceeds from gas revenues, it made no payment to GNPC in respect of gas supplied, for which reason no gas receipts were realised in the PHF. The GNGC explained that it used the realised revenues to cover its operational cost,” PIAC said.

Saudi Aramco to issue bonds in Q2 2019, list in 2021

audi Aramco will issue bonds in the second quarter of 2019, Khalid al-Falih, Saudi Arabia’s energy minister said. The Saudi oil giant has considered issuing bonds to help finance its planned acquisition of a controlling stake in petrochemical maker SABIC. The deal is expected to involve the purchase of all or nearly all of the 70 percent stake in SABIC held by the Public Investment Fund (PIF), the kingdom’s top sovereign wealth fund. That implies a deal value of roughly $70 billion, though the acquisi-

tion price has not been made public yet. Al-Falih said Aramco will release its financials and reserves when it issues the planned bonds, which will be denominated in US dollars, but added that the expected bond issuance is not linked to the SABIC acquisition. “The bond issue is intended to give Aramco multiple sources of capital,” Falih said. “With or without the SABIC transaction a company the size of Aramco, its capital program and its capital spend is going to be from $40 to $50 billion a year, it’s very prudent

they have access to the capital market.” Aramco is working with JP Morgan and Morgan Stanley on the SABIC acquisition, according to sources. The two banks, along with others, were working on the planned stock market listing of Aramco before the plan to list the company and offer a 5 percent stake to other investors was pulled last year. Falih said that the state oil giant will be listed by 2021. The valuation of Aramco would depend on the market but petroleum reserves would be one of the bases for establishing its value, he said.

Wednesday 16 January 2019

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marketinsight

mediate (WTI) crude futures rose $2.49 to $52.27 a barrel, a 5 percent gain, the first time this year that WTI has topped $50. Brent crude futures gained $2.55, or 4.3 percent, to $61.27 a barrel. The trade talks in Beijing were carried over into an unscheduled third day, amid signs of progress on

ENERGY intelligence

issues including Chinese purchases of U.S. farm and energy commodities. State newspaper China Daily said Beijing was keen to end the trade dispute, but that any agreement must involve compromise. Oil prices also have received support from supply cuts by the Organization of the Petroleum Exporting

Countries and allies including Russia. The OPEC-led cuts, which officially began in January, are aimed at reining in an emerging glut as US crude output has surged to a record 11.7 million bpd. Khalid al-Falih, Saudi Arabia’s energy minister said he was confident that action to rein in output would bring the oil market into balance. Al-Falih also said he would not rule out calling for further action. Data from the US Energy Information Administration (EIA) showed domestic crude stockpiles fell less than expected. Gasoline and distillate inventories rose more than anticipated. Crude inventories fell by 1.7 million barrels, smaller than the 2.8 million-barrel draw analysts had expected.

India’s Iranian oil imports slide in December under US pressure

ndia’s oil imports from Iran fell by 41 percent in December to 302,000 barrels per day oil (bpd), ship tracking data reviewed by Reuters showed, as pressure from US sanctions took effect. The United States introduced tough sanctions

aimed at crippling Iran’s oil revenue-dependent economy in November but gave a six-month waiver to eight nations, including India, which allowed them to import some Iranian oil. India is restricted to buying 1.25 million tonnes per month, some 300,000

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Oil rises more than 4 percent on US-China trade talk hope, OPEC cuts il prices jumped more than 4 percent as the extension of US-China talks raised hopes of easing trade tensions between the two superpowers, while OPECled crude output cuts also provided support. US West Texas Inter-

BUSINESS DAY

bpd. December imports from Iran were 9.4 percent higher than November when some cargoes were delayed due to lack of ships, the tanker arrival data showed. Iran was the sixth biggest oil supplier to India in December compared

to third position it held a year ago and last month Tehran’s share of India’s overall imports declined to 6.2 percent from 11.7 percent a year ago, the data showed. After abandoning the 2015 Iran nuclear deal, US President Donald Trump is trying to end Tehran’s nuclear ambitions and ballistic missile programme and curb its support for militants in Syria, Yemen, Lebanon and other parts of the Middle East. In 2018 India shipped about 13 percent more oil from Iran at 531,000 bpd as refiners boosted purchases ahead of the US sanctions drawn by discounts offered by Tehran, the data showed. Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19, its oil minister Bijan Zanganeh said in February last year, and had offered almost free shipping and an extended credit period to boost sales to India. In the previous fiscal year that ended on March 31, 2018 India refiners had cut purchases from Iran due to a dispute on the award of development rights of a giant gas field.

OPEC Flakes OPEC cuts have oil market on path to rebalancing

he oil market is on its way to rebalancing, and the 1.2 million b/d in supply cuts by OPEC and its allies will be enough to finish the job in the first half of this year, Suhail al-Mazrouei, UAE energy minister said. “We have seen the correction in December, in January definitely we will continue correcting the market,” Mazrouei said at the Gulf Intelligence UAE Energy Forum in Abu Dhabi. OPEC crude output fell 630,000 b/d in December to a six-month low of 32.43 million b/d, according to the latest OPEC production survey released. But the 11 members who have quotas for 2019 still need to reduce supplies by 950,000 b/d to become fully compliant with the deal, which went into force January 1. Mazrouei, who served as OPEC’s president in 2018, noted that even though the agreement exempts sanctions-hit Iran and Venezuela, he expect-

ed output declines in both countries will factor into OPEC’s market rebalancing efforts. The deal also exempts Libya, whose production has been volatile due to disruption by militants. Mazrouei added that the US may need to recalibrate its position on oil prices if it wants to maintain a healthy economy. OPEC has been under pressure from US President Donald Trump to keep prices low by pumping more crude, but Mazrouei said US producers would suffer. “Low prices are not good for the US economy,” Mazrouei said, adding that growth in shale production “is not going to happen if the price is not right.

Russia starts gradual oil output cuts as OPEC+ deal kicks in

ussia is gradually reducing oil production in line with the OPEC+ deal and is on track to get about a fifth of the way toward its pledged cut this month. Preliminary data show the nation’s output has already fallen by more than 30,000 bopd relative to October levels, Energy Minister Alexander Novak said. “The companies have said they can decrease total production by 50,000 bopd in January,” he told reporters in Moscow Russia has agreed with the Organization of Petroleum Exporting Countries to gradually implement a cut of 228,000 bopd by the end of the first quarter, compared with October production of 11.418 MMbopd. The country opened the taps before the restrictions began, pumping a postSoviet record of 11.45 MMbopd in December, meaning the month-tomonth output drop will be steeper. In the OPEC+ accord, Russia was allowed to make the cuts gradually

since the harsh climate and complex geology of Siberia, its main oil province, prevent swift field shutdowns. In contrast, Saudi Arabia said it has already fully implemented its production cut and even gone a little deeper, pumping 10.2 MMbopd. Russia’s reductions are modest compared with the cuts from some

of its partners. In December, before the agreement to curtail supplies even started, OPEC production plunged by 530,000 bopd, the most in almost two years. The OPEC+ alliance agreed to trim output by a total 1.2 MMbopd in the first half of 2019.

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Wednesday 16 January 2019

talking points

Despite vast gas reserves, power plants still experiencing famine DIPO OLADEHINDE

espite boasting of one of Africa’s biggest reserves, most of the Nigeria’s gasfired power plants which are responsible for over 70 per cent of the energy being generated continue to suffer gas shortages as the country records huge gap between installed capacity and operational capacity. Nigeria has around 181 trillion cubic feet of proven gas reserves plus much more in undiscovered gas resources. But despite having the largest gas reserves in Africa, only about 25 per cent of those reserves are being produced or are under development. Data from Nigeria Association of Petroleum Explorationists (NAPE) revealed the country is endowed with large oil, gas, hydro and solar resource, and it already has the potential to generate 14,000 MW of electric power from existing plant which consist of hydro- 1938 MW and Thermal 12,200 MW), but most days is only able to operate around 4,000 MW, which is insufficient. “It’s a sad story and a combination of several factors which cut across the value chain; apart from the fact that there is no enough gas to power those plants, there is transmission and distribution infrastructure problems so until we solve that we won’t be able to bridge the operational and installed capacity gap,” Luqmon Agboola head of energy and infrastructure at Sofidam Capital said. Agboola noted that the cost of bringing gas to the market is as expensive as the cost of bringing oil to the market unfortunately the price of gas equivalent to barrel of oil is

not as high as oil so everybody will prefer producing oil rather than gas. “Incentives to produce gas and being to the market is not there because the people who are supposed to be using it don’t have money to pay,” Agboola noted. Agboola explained that the solutions is in a combination of factors such as consistent regulatory laws, more foreign investment, boarder technical capacity and incentives to attract private funds. “When the price is low or not commercially viable no one would do business with you, for a long time we have always have the problem of gas infrastructure most especially pipelines installations,” Ayodele Oni energy partner at Bloomfield Law practices said. Reacting on how to bridge the gap between Installed capacity and operational capacity, Oni said, “The key is having the right reflective price and enabling environment for quality investment.” “A lot is being done like the AjaokutaKaduna-Kano (AKK) pipeline, Government need to be consistent with his policy and also enhance the grid system,” Ayodele Oni told BusinessDay. Recall early this year, NNPC awarded the Engineering Procurement Construction (EPC) contract for the $727 million Ajaokuta – Abuja portion of the AjaokutaKaduna-Kano (AKK) pipeline project to Axxela Limited, formerly known as Oando Gas & Power, and Oilserv Limited. The AKK Pipeline Project was the first phase of the gas transmission system conceived under the Trans-Nigeria Gas Pipeline (TNGP) initiative to evacuate natural gas from Qua Iboe Terminal in Akwa Ibom State and Cawthorne Channel in the Niger Delta region.

The AKK project, when completed, will be the largest gas pipeline in Nigeria, and is expected to improve connectivity between the eastern, western and northern regions of Nigeria. Apart from pipeline infrastructures; Nigeria also still flares significant quantities of gas, sufficient to fuel 6 GW of power at a 70 percent load factor. According to the Nigerian National Petroleum Corporation’s (NNPC) latest monthly report, total gas supply for the period August 2017 to August 2018 stood at 3,093.71BCF out of which 465.84BCF and 1,325.28BCF were commercialized for the domestic and export market respectively while Gas –Injected, Fuel gas and Gas flared stood at 1,302.59BCF. The corporation said the daily average natural gas supply to gas power plants scaled at 668mmscfd, equivalent to power generation of 2,510MW. NNPC’s monthly report also noted that National Gas production for August 2018 stood at 251.44BCF translating to an average daily production of 8,381.29mmscfd. This represents 9.16percent increase compared to the previous month of July 2018. Nigeria’s inability to harness additional gas resources to solve domestic or regional power generation deficiencies as other Africa countries with relative low reserves looks set to overtake Nigeria despite accounting for 81 percent of proven reserves identified in 14 countries in sub-Saharan Africa. According to data from a Norway based independent energy research and business intelligence institution Rystad Energy; in Africa’s market share, Nigeria’s LNG production will shrink to a less than 10 percent by 2029 from having a huge junk of 50 per-

cent in 2019, while another Africa country Mozambique by 2029 will dominated the market share with at least 65 percent by 2029 from absolutely nothing in 2019. Although, data from the Norwegian based research institute showed Africa’s production capacity is almost expected to double over the next decade, however the data also revealed North Africa and the Middle East which include Djibouti, Egypt, Libya and Algeria are also expected to miss out in the market share from 50 percent in 2010 to less than 10 percent in 2019. Leading consulting firm PricewaterhouseCoopers (PwC) in its Power and Utilities Roundtable note explained that delivering energy indiscriminately through the value chain without a conscious plan around optimizing energy mix and geographic coverage will create challenges of over-reliance on one fuel source and an unfairly skewed power delivery map. As such, diversification needs to be focused by enhancing the development of renewable energy alongside the gas-to-power program. PwC explained that delivering energy indiscriminately through the value chain without a conscious plan around optimizing energy mix and geographic coverage will create challenges of over-reliance on one fuel source and an unfairly skewed power delivery map. As such, diversification needs to be focused by enhancing the development of renewable energy alongside the gas-to-power program. “The solutions that will enable the Nigerian power sector’s turnaround are a complex web of interconnected initiatives that require careful and deliberate planning and implementation across a myriad of stakeholders,” PwC said in its note.

Wednesday 16 January 2019

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PrivateEquity & fundraising 50 BUSINESS DAY Companies&Market

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Wednesday 16 January 2019

Insight into the N470.2bn disclosed PE deals in 2018 MICHEAL ANI

of deal, that is worth $3 million in a Nigerian ISP start-up Tizeti and its consumer facing brand, wifi.com.ng. This follows on from the company’s Seed investment of $2.1M in 2017.

he year 2018 was indeed an eventful year for Limited partners and Private Equity (PE) players, as the sell offs recorded in both the equities and bond markets on the backdrop of a tightened global financing conditions, intensified trade tensions, political risk and significant financial market stress, witnessed in emerging markets and developing economies, had little or no effect on PE deals. A total disclosed amount of N470.2 billion worth of deals were recorded across different sectors of the economy in the year 2018, according to data compiled by BusinessDay, with the amount and stakes of some others, not let out to the public for some reasons dimmed fit by the parties involved. The consumer goods and the Fintech sectors recorded the highest number of deals with 7 deals each. This was followed by the healthcare and the banking sector where a total number of three deals were recorded. Similarly, more deals were attracted into the country during the second quarter of the year, while less were recorded in the fourth quarter. Highlights on some of those deals whose amounts were “disclosed” include. AFFELKA & 7UP (N21.45 billion) On 11 January 2018, Affelka S.A, the majority shareholder of Seven–Up Bottling Company PLC, increased its stake from 73.2 percent to 100 percent in the soft drink bottling company by acquiring all the outstanding and issued shares of SBC that were not currently owned by Affelka. The takeover deal which was worth about N21.45 billion saw the delisting of SBC from the stock exchange after a rough year that made the consumer goods firm witness slow demand on the back of a recession that worsened currency crisis and stifled importation of raw materials. ATLAS MARA & UNION BANK (N8.25 billion) Atlas Mara Limited, a sub-Saharan financial services group acquired an additional 280, 956, 166 shares of a Nigerian tier II lender, Union Bank, in a deal worth N6.6 billion. The firm also increased its again stake by injecting another N1.65 billion in UBH, summing the combined deal to N8.25 billion The said deal saw the Bod Diamond sub-Saharan private equity firm raise its combined direct and indirect shareholding in UBN from 48 to 49.0 percent, just 1 percent shy away from the 50 percent takeover possibility. Amaya capital Partners & Rensources (N1.2 billion) Amaya capital, a Mauritiusbased private equity firm, invested about $3.5 million in Rensourse, a Nigerian based renewable energy startup firm to enable the energy providing firm expand its Nigerian operations into kano and Abuja.

Global Innovation Fund & PAGA (N3.1 billion) Nigerian mobile payment company Paga last year, closed a $10 million financing deal led by UK-based investment fund Global Innovation Fund (GIF). The financing took the total amount the mobile payment company has raised since inception in 2009 to $35 million.

Zinox Group & Konga (N12.6 billion) Zinox group, an integrated ICT solutions and equipment manufacturers, acquired a 100 percent stake in konga, an ecommerce powerhouse in a deal worth $100 million. The deal conferred rights on Zinox to assume total ownership of the e-commerce group including its online mall, konga.com; konga pay, a CBN licensed mobile money platform with over 100,000 subscribers as well as kOS-Express, a digital- driven logistics company with advanced delivery capabilities for Konga and other structured companies nationwide. African Infrastructure Investment Managers & Starsight Power Utility (N10.8 billion) African Infrastructure Investment Managers (AIIM) in partnership with Helios Investment acquired the stake of Starsight Power Utility Ltd in a $30 million (N10.8 billion) investment deal. The deal was done through AIIM African Infrastructure Investment Fund 3 (AIIF3), primarily to invest across the power, transportation and energy infrastructure sub-sectors in Sub-Saharan Africa. Alta Semper Capital LLp & Heath Plus Limited (N6.4 billion) Alta Semper Capital LLp committed some $18 million to acquire stakes in one of Nigeria’s leading retail pharmacy and beauty outlet, HealthPlus that will allow the London-based private equity firm to expand its retail foot print and enhance its competitive position. DE United Foods Industries Limited & May&Baker (N775 million) May & Baker Nigeria PLC, a leading player in the Fast Moving Consumer Goods (FMCG) industry and health care space, on Thursday 26th April 2018, sold its food production line, worth N775 million to DE United Foods Industries Limited (DUFIL), owners of Indomie noodles. The deal was a 100 percent acquisition of May and Baker’s food division under the brand name, Mimee

Noodles and less than 10 percent of its total balance sheet size, according to Sandra Aduba, May and Baker’s head of Communication Department. TLcom Capital & Terragon (N1.8 billion) An African venture firm TLcom Capital last year made a $5 million (N1.8 billion) investment into Terragon Group, Nigerian-based Company that is into developing of software analytics service for customer acquisition. TLcom’s commitment is the second from its $40 million TIDE Africa Fund for early and growth-stage digital companies. TPG Growth & Cellulant (N14.5 billion) In what was described as its first and largest ever deal in Africa, The Rise Fund (TPG), a global impact investing fund managed by growth equity platform TPG Growth alongside Endeavor catalyst and Satya capital made a $47.5 million (N14.5 billion) series C investment deal to acquire a stake in Cellulant, a leading digital payments provider that reaches 40 million people across 11 African countries. Standard Bank Group & Stanbic IBTC (N52.61) South African based financial company, Standard Bank Group in June last year acquired an additional 11.35 percent stake in Stanbic IBTC Holdings Plc in a deal worth about N52.61 billion. The said deal increased the equity stake of standard bank in the Nigerian tier two lenders from 53.09 percent to 64.44 percent through an acquisition of additional 1.142 billion shares in an off-market transaction. Standard bank Group did the deal through its wholly owned subsidiary, Stanbic Africa Holdings Limited. Daimler Group, Korelya Capital, Transfer wise & Taxify (N63 billion) A consortium of investors led by a German automaker Daimler group, along with European venture fund Korelya Capital and TransferWise made a $175 million worth of investment in Taxify to enable the

online transport company develop its technology and further penetrate its existing regional market. Lead Path & Piggybank (N397 million) Nigeria’s Piggybank last year secured a $1.1M seed funding from a consortium of investors led by LeadPath Nigeria along with Village Capital and Ventures Platform making contributions. LeadPath Nigeria said it made a commitment of $1m while Village Capital and Ventures Platform contributing $50,000 each. Duet Capital & Ajeast (N15.3 billion) Duet Private Equity Limited (DPEL), in August invested in the acquisition of a majority stake in AJEAST Nigeria Limited, sub-Saharan Africa subsidiary of AJE Group, in a deal worth $550 million. The Proceeds of the investment is said to be used in accelerating select international territories, facilitate the launch of new products and brands, and increase AJEAST’s production capacity and volume. Eaton Acquisition Ltd & NEM Insurance (N52 million) Eaton Acquisitions Limited, increased its stake in NEM Insurance Plc to 9 percent, after it announced the acquisition of an additional 4 percent of the insurer, in a deal worth N52 million. The acquisition makes it the single largest shareholders and puts it within a distance of its 10 percent acquisition target it hopes to achieve. TPG Growth & Mines (N3.98 billion) Nigerian fintech startup, Mines, closed a Series A round deal of $13 million to continue growth in Africa, expand to South America and South-East Asia. The Series A funding round was led by The Rise Fund, a global fund managed by TPG Growth. 4Dx Ventures & Tizeti (N918 million) A consortium of investors led by 4DX Ventures with participation from existing investors Y Combinator Continuity, Lynett Capital, Social Capital, Western Technology Investment, Friále and Golden Palm Investments, closed a Series A round

Stripe, Visa, Tencent & Paystack (N2.4 billion) Paystack, a Nigeria-based startup that specializes in providing payments tools to businesses in Africa, sealed an $8 million Series A funding, led by Stripe, and includes Visa, Tencent and Y Combinator, as well as angel investors Tom Stafford. This brings Paystack’s total investment to date to more than $10 million. Kelloggs & Tolaran (N153 billion) Kellogg Company, invested another $420 million to strengthen and expand its joint venture interests with its West African partner, Tolaram Africa Foods. Kellogg’s tie-in with Tolaram Foods began in September 2015 through a deal that also saw the company acquire a 50 percent stake in Multipro, a leading sales and distribution company in Nigeria and Ghana. Naspers & Frontier Car Group (N32.5 billion) Internet giant Naspers, invested about $89 million in a Series C stage funding round for Frontier Car Group, an online and offline retailer of used cars. The investment was made through its early stage investment arm OLX Ventures with the proceeds to be used in expanding into new markets including Nigeria, Mexico, Chile, Turkey, Pakistan, and Indonesia and in turn, enhance cash services for its users. Allianz & Africa Reinsurance (N29.6 billion) Allianz Group entered an agreement sometime in June last year to acquire an 8 percent stake in Africa’s leading reinsurer Africa Reinsurance in a deal worth $81 million. Sigma Bidco & Unilever (N2.24 billion) On 1st July 2018, Unilever Nigeria sold its Spreads business (Blueband margarine) and all the assets attached to the business to Sigma Bidco B.V, an entity incorporated by KKR & Co LP, in a deal valued about N2.24 billion. The entity was then incorporated in Nigeria as Sigma Silver Foods (Upfield Foods) Nigeria Limited. Actis, Westmont& Four Point Sheraton (N5.83 billion) Actis, a private equity house and Westmont Hospitality Group, a Canadian investment firm, acquired the 231-room hotel of Four point Sheraton, at $16 million, excluding debt.

BUSINESS DAY

C002D5556

Wednesday 16 January 2019

Companies&Market

PrivateEquity & fundraising

Nigeria leads African countries attractive for PE investment over next 3 years …as 65% of LPs prefer investment in Africa than developed market

Attractiveness of African regions for PE investment over the next three years

Endurance Okafor

higher proportion of Private Equity (PE) investors see Nigeria as the most viable destination for investment over the next three years, survey by African Private Equity and Venture Capital Association (AVCA) shows. Nigeria is viewed by 58 percent of Limited Partners (LP) as an attractive country for PE investment in Africa, followed by Kenya’s 40 percent and Egypt’s 31 percent of LPs. South Africa came fourth most popular option amongst LPs; an improvement from 2017, when the country was the 8th most popular option amongst LPs. A limited partner is a third party investor in a private equity fund, and private equity firms raise private funds in general partnerships where they manage the capital as the general partner. Rafiq Raji, the chief economist at Macroafricaintel, while responding to the survey said Nigeria is an idea destination for PE investors, due to its vast amount of untapped resources. “Demographic is one of the reasons why Nigeria is viable for PE, alongside aspirational culture as there are untapped sectors like tourism and outsourcing/back-office services which is virtually a potentially lucrative opportunity,” Raji told BusinessDay. The survey revealed that LPs’ appetite for African PE has remained steady, with 53 percent of LPs planning to increase their PE allocation on the continent over the next three years. In relation to specific sectors, consumer-driven industries – such as Financial Services and Consumer Goods – were chosen

the most by LPs as attractive sectors for General Partners (GPs) investment. “This signifies that the consumer theme is still persistent on the continent and drives investors’ interest,” AVCA cited. This is also in line with Raji’s opinion as he said “of course, not all sectors are attractive but those that involve partnership with well-grounded local entrepreneurs tend to succeed. Financial services is attractive; that is, despite the challenges.” On the most preferred region for investment on the African continent was West Africa as 85

percent of LPs see it as an attractive region for PE investment over the review period. This is followed by east Africa with 72 percent West Africa’s performance in the 2018 survey represents an improvement by 9 percentage points from AVCA’s 2017

LP Study, as the region was selected by 76 percent of survey respondents. Also, nearly two-thirds of LPs (65 percent) view Africa as more attractive for PE investment than developed markets over the next ten years. “Overall, most LPs believe in the medium

to long term attractiveness of Africa compared to developed markets,” the report reads. A breakdown of the report in respect to LPs’ preferences on the geographic focus of funds when investing in African PE revealed that 74 percent of LPs say they have invested in African PE via pan-African or sub-Saharan African funds. Of these, 81 percent plan to increase or maintain their African PE allocation over the next three years, with 70 percent of them selecting diversification as the main driver behind their investment plans. Among those LPs that plan to increase or maintain their exposure to African PE over the next three years, 63 percent and 60 percent view performance and diversification respectively as the main drivers behind their investments plans. The percentage of LPs saying that Africa will have the same level of attractiveness over the medium to long term has increased significantly this year compared to AVCA’s 2017 LP Survey, from 36 percent to 47 percent over a five-year time horizon, and from 35 percent to 42percent over a ten-year time horizon. This aligns with findings in AVCA’s 2017 Annual African Private Equity Data Tracker which show that West Africa has attracted the greatest share of PE deals reported in Africa between 2012 and 2017. Within this period, Nigeria outperformed South Africa and Kenya to record a total of 112.14 deals amounting to $7.8 billion in the five year period leaving South Africa to record $2.8 billion while East Africa’s largest economy raked in $1.17 billion.

Afrinvest, Syntaxis launch N12bn Private Equity Fund to Bridge SMEs Financing gap HARRISON EDEH, Abuja

n a determined move aimed at closing funding gaps for small and medium enterprises, Syntaxis Capital Africa has partnered with Afrinvest Asset Management Limited to launch the Syntaxis Nigeria Growth Fund, a N12 billion private equity fund to meet the funding needs of SMEs in Sub-Saharan Africa. The fund which was launched in Abuja on Thursday in the presence of key capital market stakeholders including the acting director general of Securities and Exchange Commission, (SEC) Mary Uduk is expected to cover

a variety of sectors including manufacturing, agriprocessing, healthcare, education and financial services. Speaking at the event, the Group Managing Director of Afrinvest, Ike Chioke, indicated that, the focus of the fund is on deepening and widening financial inclusion for SMEs by providing patient capital. The fund provides a viable option for SMEs who are looking for growth. Partner and Managing Director, Syntaxis Capital Africa, Adesuwa Okunbo while speaking on the benefits of the fund said, “we see the fund as a vehi-

cle for rapid economic growth and development. By providing access to capital to SMEs, we are giving businesses the power to scale their activities, which will in turn increase productivity, create new jobs and generate taxes for the government. “In addition, the fund has a unique focus on supporting women-owned or managed businesses in order to improve the ratio of women in the workforce and enhance the standard of living across board.” The Managing Director, Afrinvest Asset Management, Ola Belgore in his remarks on the noteworthy benefits of the fund said,

“The fund has been constructed as a portfolio of cash-generative African private equity investments diversified by sector and geography. Qualified investors can therefore, expect high level of contractual income combined with significant minority equity stakes, superior risk adjusted returns, strong equity upside, and capital preservation.” Syntaxis Capital Africa, the sponsor of the fund, has a 30year track record of successfully managing private equity funds, having raised up to US$300 million from global institutional investors and deploying two private equity funds in other emerging

markets. Afrinvest Asset Management Limited, the fund manager, is licensed by the Securities and Exchange Commission (SEC), Nigeria, as a portfolio manager with several listed funds including the Nigeria International Debt Fund; as well as the Afrinvest Equity Fund. Available statistics from the World Bank shows SMEs contribute up to 60 percent of employment opportunities and up to 40 percent to the national Gross Domestic Product (GDP). Yet, access to funding remains a critical drag on the performance of many of these businesses.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

52 BUSINESS DAY

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Wednesday 16 January 2019

Tax Issues

Paying Taxes 2019 sees technology transform Govt, businesses approach to tax IHEANYI NWACHUKWU

he results of ‘Paying Taxes 2019’ underline the benefits that technology can bring to taxpayers and tax authorities alike. Amongst the key findings from the Paying Taxes 2019 is that technology is already making tax compliance easier in many economies, but more can be done to unlock its full potential. The global average results for the report case study company are almost unchanged from last year, and yet 113 economies recorded tax reforms. The steady reduction in both the number of hours it takes to file taxes and the number of payments companies have to make reflects the increasing use of technology across the world both by corporates and tax authorities. Since 2004, which is the first year for which Paying Taxes data began, the global average for the time to file has decreased by 84 hours, and the number of tax payments has

reduced by 10.3. As the cost of technology falls, more companies are using tax software, and more tax authorities are creating easier-to-use online portals to simplify compliance. “The use of technology in tax compliance is a hot topic for government and businesses. Regardless of size and sector, all

businesses are having to come to grips with technology,” said Christopher Kong, PwC Global L e a d e r, Ta x R e p o r t i n g a n d Strategy, PwC Canada said in the report coauthored by PwC and World Bank. “The impact of technology goes far beyond tax administration; it will also affect the in-

come streams that are available to be taxed. We are already seeing technology driving changes in the employment skills which are needed, in business and employment models and in the ways in which businesses operates across geographic boundaries. All of these changes mean governments need to reassess

how they raise taxes from available sources of income and wealth,” according to Rita Ramalho, senior manager, global indicators group, World Bank Group and Andrew Packman, leader, tax transparency and total tax contribution, PwC UK. “For the smallest businesses, this may be a transition from keeping receipts in a ‘shoebox’ to recording transactions on spreadsheets. For the largest businesses, spreadsheets are yesterday’s technology, and sophisticated data mining and analysis tools are being to extract data from central accounting systems, to analyse it and present it to in different ways to meet a range of business requirements. “As governments increasingly push the burden of compliance to taxpayers, all businesses need to leverage technology to meet as efficiently as possible the demands placed upon them,” Kong said. Paying Taxes 2019 also shows that new systems can be timeconsuming to implement and, once they are in place, taxpayers need a period of adjustment to become familiar with them.

Tax treatment of dividends paid out after tax holiday period (2) …the Nigerian electricity supply industry case study EWERE IKEM & OGADINMA ASOGWA

ow, from the above, one may be inclined to wonder whether: • P ro f i t s c o m pletely exempt from taxes based on a clear tax incentive (in this instance, a tax holiday) can be categorised as no total profits or total profits less than dividends paid •The provisions of Section 19 should apply to dividends paid out after the tax-free period, considering that such dividend is paid out of tax exempt profits. would it be counterproductive to assess such profits/dividend distributions to CIT? The key consideration here is whether EDT as prescribed in Section 19 of the CITA will be triggered where “no tax is payable” due to profits for that year of assessment being explicitly exempt from tax. An argument could be made that although the dividends being paid exceeds the total profits in the relevant year of assessment, the distribution arose from the retained earnings of the Company, which were exempt from tax. As such the dividends should not suddenly change in character and

become taxable by the mere effluxion of time. This is based on the fact that the intention of the law cannot be to grant an exemption from taxation in one section and thereafter subject the same stream of income to tax under a separate section of the same statute. Another argument would be that, based on the trite rules of statutory interpretation, which grant judicial preference to latter provisions over earlier provisions, Section 39 of CITA (introduced in 1998) should prevail over Section 19 (Introduced in 1996). Furthermore, in the circumstances of subsequent re-enactment of both provisions in the 2004 compilation of the Laws of the Federation of Nigeria, the provisions of Section 39 are later in time to Section 19 and should prevail. This matter was recently addressed in the case between Oando Plc, a major player in the Nigerian oil and gas sector, and the Federal Inland Revenue Service (FIRS) where the FIRS assessed Oando Plc to additional CIT in the years where the dividends paid out exceeded the total profits. In the said case, Oando Plc had paid dividends in excess of its taxable profits for the 2005, 2006, and 2007 years of assessment. The dividends

were paid out of retained earnings, which would have been subjected to CIT in the prior years. The FIRS invoked Section 19 of the CITA and assessed Oando Plc to EDT (i.e., tax at 30%) on the difference between the dividends and the total profits. Oando Plc’s position was that EDT should not apply as the company could prove that the dividends were paid out from prior year profits, which had suffered tax. This notwithstanding, Oando Plc lost at the Tax Appeal Tribunal and subsequently at the Federal High Court (FHC). Notably, the judge in the FHC, ruled in favour of the FIRS stating that Section 19 would apply on the dividend paid out irrespective of the source of the profits. Similarly, in a recent FHC case between Olokun Pisces Limited (OPL) and the FIRS, OPL had been assessed to tax under the EDT rule. Accordingly, OPL argued that the company ought to have been exempt from the payment of tax by virtue of Section 23 (1q) of CITA which states that “the profits of any Nigerian company in respect of goods exported from Nigeria, provided that the proceeds from such export are repatriated to Nigeria and are used exclusively for the purchase of raw materials,

plant, equipment and spare parts.” In the court’s view, OPL was unable to provide substantial evidence to prove that the exemption referred to in Section 23 (1q) will be applicable and on this basis, dismissed the case. Considering that the court, in dismissing the appeal, predicated its judgement on the fact that OPL was unable to adequately prove the applicability of the exemption, it then begs to question what the ruling of the court would have been had the sufficient proof been provided. These rulings are enough to trigger the concern of companies in capital intensive industries who are very likely to be affected by the interaction between Section 19 of CITA and profits earned during the PSI/GUI tax exempt periods. This is especially as dividends may be declared in subsequent years, with the dividend paid being higher than its total profits in the specific year of declaration. Conclusion It is understandable that Section 19 of CITA, as an anti- tax avoidance provision, seeks to ensure that the government is not in any way short-changed and therefore, receives every sum due to it. Notwithstanding, it is clear that CITA may not have contemplated the

issues articulated above. Therefore, it is imperative that this section be reviewed and modified to clearly specify situations where the EDT rule should (and should not) apply in order to address these uncertainties. Our position is also affirmed by the progress report submitted by the National Tax Policy Implementation Committee. The Committee had, as part of its recommendations, made a case for the amendment of Section 19 of CITA to specifically exempt franked investment income, capital gains and income exempt under other provisions of the law. The aim of this proposition being to avoid double taxation of retained earnings on which tax has been paid and exclude exempt profits from excess dividend tax. It will be in the interest of the tax authorities, tax payers, and other stakeholders that clarity on this be provided especially as significant foreign investment particularly in the Nigerian Electricity Supply Industry, is being carried out. The effect of this is likely to be experienced in the near future. Ewere Ikem and Ogadinma Asogwa are both managers, tax, regulatory and people services, KPMG Advisory Services

Wednesday 16 January 2019

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BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Congo voting data reveal huge fraud in poll to replace Kabila

FT analysis of 2 voting databases shows Martin Fayulu won the presidential election Tom Wilson, David Blood and David Pilling

artin Fayulu was the clear winner of the Democratic Republic of Congo’s presidential elections last month, a Financial Times analysis of two separate collections of voting data shows, contradicting claims from authorities that rival contender Felix Tshisekedi had won the historic vote. The analysis points to huge fraud in the first change of power since Joseph Kabila took over the presidency of the mineral-rich central African nation almost 18 years ago. It is likely to embolden critics of Mr Kabila who suspect the Congolese leader is seeking to cling on to power through a deal with Mr Tshisekedi. According to a trove of election data seen by the FT and representing 86 per cent of total votes cast across the country, Mr Fayulu won 59.4 per cent of the vote. Rival opposition candidate Mr Tshisekedi, who was declared the surprise winner last week, finished second with 19 per cent, according to this set of data. An FT analysis of a separate set of voting results collected manually by the Catholic Church’s 40,000 observers and representing 43 per cent of turnout shows that Mr Fayulu secured 62.8 per cent of this sample of votes. The results gathered across 28,733 polling points match almost perfectly the more extensive set of official results seen by the FT. The larger set of data, a spreadsheet containing more than 49,000 records, contains the true electronically-fed results that authorities have sought to conceal, according

to a person with direct knowledge of how the data were obtained. The person, who is close to Mr Fayulu’s camp, asked for anonymity because the data contradict the electoral commission’s official declaration. The figures provided are electronic tallies from 62,716 voting machines across the country and were obtained from the electoral commission’s central database before the results were announced last week, the person said. An FT analysis of the tallies shows a near perfect correlation with the Church’s partial results — with a correlation coefficient ranging from 0.976 to 0.991 for each of the three leading candidates (1 representing a perfect match). Bubble chart showing that corroborating data sets (leaked electoral commission data and Catholic Church data) point to massive Congo election fraud. Bubble chart showing that corroborating data sets (leaked electoral commission data and Catholic Church data) point to massive Congo election fraud. The new figures support the Church’s assertion last week that the electoral commission published false results. “It is extremely difficult to believe . . . that tens of thousands of lines of data could have been fabricated on short notice to produce these results without signs of tampering,” said Jason Stearns, director of the Congo Research Group at the Center on International Cooperation, a New York think-tank, who also reviewed the leaked data. “This highlights the need for a full, scrupulous audit of the election tallies.” The electoral commission denied

Carlos Ghosn’s bail request rejected by Japanese court Ousted Nissan chief executive faces more months in prison Kana Inagaki and Leo Lewis

arlos Ghosn is expected to spend at least another few months in prison on top of the eights weeks the ousted Nissan chairman has already spent behind bars after a Tokyo court rejected his request for bail. Motonari Otsuru, head of Mr Ghosn’s Japan-based legal team, said they would immediately appeal Tuesday’s decision, which comes amid growing international criticism of Japan’s justice system and its reliance on long periods of pretrial detention that often extracts a confession from defendants. Mr Ghosn, who remains chief executive of France’s Renault and has maintained his innocence since his arrest on November 19, became eligible for bail after Tokyo prosecutors on Friday indicted him on two fresh charges of financial misconduct. In Japan, there is no release on bail without formal charges. The latest court decision came as Nissan rapidly expands the scope of its own investigation into Mr Ghosn’s financial dealings worldwide, which are actively being

shared with Japanese prosecutors and could potentially lead to new charges against its former boss. People familiar with Nissan’s internal investigation said that one increasingly heavy focus was the many ways in which the company now believes it ended up paying for services, properties and other expenses that appeared to solely benefit Mr Ghosn and his family. Nissan’s investigators are looking into more than a decade’s worth of consultancy fees paid to Mr Ghosn’s older sister and the multimilliondollar renovation of a house in Beirut, according to the people. Mr Ghosn’s legal team did not immediately respond to a request for comment. In his first court appearance last week to seek reasons for his prolonged detention, Mr Ghosn denied all of the allegations against him, saying he had dedicated two decades of his life to reviving Nissan and had “always acted with integrity”. Although the sole focus of Nissan’s investigation appears to be on the activities of Mr Ghosn, analysts Continues on page 54

its results were fraudulent. Barnabé Kikaya Bin Karubi, chief diplomatic adviser to Mr Kabila, said it would be up to the constitutional court to decide on the validity of the election and declined to comment on any potential fraud. Gilbert Kankonde Nkashama, a spokesman for Mr Tshisekedi, said it was impossible that Mr Fayulu had won the election and questioned the independence of the Catholic Church. Mr Fayulu is seeking to overturn the result in the constitutional court, although the court’s impartiality has also been questioned. Congo, a former Belgian colony of 80m people, has held only four elections since independence in 1960 and has never before had a

transfer of power through the ballot box. Mr Kabila was due to step down in 2016 but elections were delayed until street protests and regional pressure forced him to hold the vote. Mr Kabila’s ruling coalition had sought to retain control of the presidency through Emmanuel Shadary, his chosen successor. Mr Fayulu’s supporters have alleged that when voters failed to come out for Mr Shadary in sufficient numbers — he finished third — the election commission was told to install Mr Tshisekedi instead. According to the results seen by the FT, Mr Fayulu received more than 9.3m votes, 3m more than the electoral commission announced, and won in 19 of Congo’s 26 prov-

inces, including the capital Kinshasa and the heavily populated eastern provinces of North Kivu and South Kivu. In contrast, Mr Tshisekedi scored 3m votes, the data indicate, 4.1m fewer than the electoral commission showed, while Mr Shadary secured 2.9m votes, or 1.5m votes fewer than the published tally. The data show the results of 15.7m out of the 18.3m votes that were cast on election day, but the missing votes could not have resulted in a different winner. Malfunctions in voting machines meant that not all vote tallies were transmitted to the central database, the person with knowledge of the database said.

Democrats seek to block lifting of Oleg Deripaska sanctions

Schumer wants vote on US Treasury’s plans for groups owned by Russian billionaire Courtney Weaver

enate minority leader Chuck Schumer on Tuesday will seek to block the US Treasury from lifting sanctions on companies tied to Russian billionaire Oleg Deripaska, the latest flashpoint over the Trump administration’s Russia policy. Mr Schumer said he would force a vote to block the Treasury’s measure, which would relax sanctions on three companies controlled by Mr Deripaska — En+, Rusal and EuroSibEnergo — in exchange for substantial governance changes intended to reduce the Russian tycoon’s control. In a speech on the Senate floor and subsequent letter, Mr Schumer strongly urged his colleagues to join him in blocking the measure. Under the Countering America’s Adversaries Through Sanctions Act, the US Senate and House of Representatives have a 30-day review period to examine the Treasury’s proposed plan, and decide whether to try and block it. That 30-day review period ends on Friday. In his speech Mr Schumer claimed that the timing of the Treasury’s deal was “suspect”, noting that Mr Deripaska had ties to Paul Manafort, Donald Trump’s former

campaign chairman, who has been found guilty on bank and tax fraud charges brought by Robert Mueller, the special counsel investigating alleged Russian interference in US elections. Mr Schumer pointed out that Mr Manafort had been in the news last week, after an improperly redacted court filing inadvertently revealed that Mr Manafort had passed on Trump campaign polling data to a Russian associate in 2016. “We don’t know what the special counsel Mueller knows,” Mr Schumer asserted. “And the timing — at a time when these things are coming forward — to undo the sanctions on Rusal? Very suspect.” For the Treasury’s agreement with En+ to be scuttled, the bill would need to either pass both chambers and then be signed by the US president, or else pass both the House of Representatives and the Senate with a veto-proof majority. Regardless of whether Mr Schumer’s resolution ends up passing, the Treasury’s agreement with En+ is likely to add more fuel to an ongoing political fight about whether Mr Trump and his administration have been too soft on Russia. In his Senate floor speech, Mr

Schumer asserted the deal with En+ did not do enough “to sufficiently limit Mr Deripaska’s control and influence” over the companies in question. Mr Schumer noted that while Mr Deripaska’s stake in En+, his London-listed holding company, would be reduced from a majority stake to a 42 per cent financial stake following the deal, two relatives of Mr Deripaska — his ex-wife and his ex-wife’s fatherin-law — owned a collective 7 per cent financial stake in the company. Under the terms of the Treasury deal, Mr Deripaska’s voting rights in En+ would be capped at 35 per cent. The billionaire, his former wife and former fatherin-law would see their voting shares handed over to a Treasuryapproved independent third party, as would VTB, the Russian bank, which would also assume part of Mr Deripaska’s stake as part of the deal. The Treasury has defended the merits of the deal, noting that the plan would give it the right to reinstitute sanctions on all three of Mr Deripaska’s groups if the tycoon attempted to re-exert control over the company.

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NATIONAL NEWS

FT Mozambique’s ruling party closes ranks over ...

US companies fear fallout from government shutdown

Continued from page 55

believe that the range of revelations it has produced are increasingly highlighting fundamental corporate governance problems that infused the company over many years. Company officials have repeatedly said they did not know about these problems. Tokyo prosecutors, who appear focused on Mr Ghosn’s pay and his trading losses in the wake of the financial crisis in 2008, have declined to comment on whether they would pursue other allegations. One of the two new charges on Friday was an extension of an earlier indictment where Mr Ghosn was charged for under-reporting his pay in financial documents. The second charge, known as “aggravated breach of trust”, revolves around the transfer of his personal trading losses to Nissan and payments that were made to a Saudi businessman. Without a confession, defendants indicted on aggravated breach of trust in Japan are rarely released on bail before the trial opens. In Mr Ghosn’s case that could be in six to 12 months’ time.

Liberty Latin America approaches Millicom in possible EM telco tie-up Peter Wells

he Latin American telecommunications company spun out from media billionaire John Malone’s Liberty Global has made an approach for rival Millicom International Cellular in a deal that could boost its reach in emerging markets. Luxembourg-headquartered Millicom, a provider of cable and mobile services in Latin America and Africa, confirmed in a statement it had received an offer from Liberty Latin America for all the shares in the company. Although the news helped push its share price higher, Millicom said there was no certainty a transaction would materialise, and that the proposal from LLA was preliminary, highly conditional and non-binding, without providing further details. Millicom, via its Tigo brand, counts more than 53m mobile subscribers across 13 countries in Latin America and Africa. The company reported net income of $85m on revenue of $4.13bn in 2017, its most recent full-year. The company’s Nasdaq-listed stock closed 4.9 per cent higher to $70.55 on Monday following the news, giving it a market capitalisation of close to $7bn. Earlier in the day, the company’s Stockholm-listed shares closed 3.9 per cent lower. LLA launched as an independent publicly traded company in January last year after completing a split from Liberty Global. It has operations in more than 20 countries in Latin America and the Caribbean, providing services to some 6.6m homes and 5.3m mobile subscribers. The company reported a net loss of $778m on revenue of $3.59bn in 2017 LLA shares finished 1.6 per cent higher at $16.90, giving the company a market capitalisation of nearly $3.1bn.

Wednesday 16 January 2019

Product approvals and import licenses among casualties of Washington stand-off Kiran Stacey and Andrew Edgecliffe-Johnson

Nigeria lawyers challenge legitimacy of chief justice’s trial Opposition criticised for politically motivated move as elections loom Neil Munshi

awyers for Nigeria’s chief justice challenged his trial on criminal charges on Monday in a case that has been slammed as judicial intimidation one month before a presidential electioninAfrica’smost-populousnation. The trial of the chief justice for allegedly failing to disclose assets and foreign currency bank accounts has been criticised as a political plot by Atiku Abubakar, the main opposition presidential candidate, as well as civil society groups and political analysts. Walter Onnoghen, the chief justice, is head of Nigeria’s judiciary and would play a key role in adjudicating any legal challenges to the results of the presidential race between Mr Abubakar, a former vice-president, and President Muhammadu Buhari. In a statement over the weekend, Mr Abubakar, a former vice-president, accused the Buhari administration of attempting to “usurp the role of the judiciary” ahead of a February election it had “shown every intention to manipulate”. In the hearing on Monday Mr Onnoghen’s attorneys challenged the jurisdiction of the court hearing the case, Nigeria’s Code of Conduct Tribunal. The judge postponed the trial until January 22.

Nigerian elections have a long history of rigging and vote buying, and foreign diplomats have expressed alarm over a pair of recent state elections that were marred by irregularities and voter intimidation and suppression. “Those were a dry run for February,” said one senior diplomat, who added that both main parties are likely to attempt to manipulate the vote in the states they govern. Mr Buhari’s victory in 2015 was the first time an opposition candidate had won power since democracy returned to Nigeria in 1999. Mr Onnoghen, who did not appear in court in the capital Abuja, has denied wrongdoing while acknowledging that he mistakenly failed to disclose some assets and accounts, according to local media. The charges against Mr Onnoghen stem from allegations filed last week by a former aide to Mr Buhari. The Nigerian Bar Association, the main trade group for the country’s lawyers, called the six-count indictment “an assault, intimidation and desecration of the judiciary . . . aimed at emasculating that arm of the government and intimidating our judges ahead of the 2019 national elections”. Idayat Hassan, director of the Abuja-based Centre for Democracy and Development, said the speed at which the case was moving and

the “timing this close to the election raises huge suspicions that this was premeditated, that this was not done in the interest of justice”. She said “the position of the law is very clear” that “a judicial officer cannot be indicted until he has been pronounced guilty by the National Judiciary Council”, which appears not to have happened in this case. As a result, she said, “everybody is construing it . . . [as] an attempt to the get the chief justice of the federation out of the way because of the elections.” In 2017, the Buhari administration delayed confirming Mr Onnoghen as chief justice for undisclosed reasons following the retirement of his predecessor. Mr Buhari’s ruling All Progressives Congress defended the trial and described accusations that it was trying to compromise judicial independence as a “baseless conspiracy theory”. It said it was committed to ensuring that 2019 sees “one of the freest, most credible and peaceful elections in the country”. The president was elected on an anti-corruption platform and is widely seen as personally clean. But those close to him have been accused of graft, and his anti-corruption crusade has been criticised for targeting opposition politicians but rarely members of Mr Buhari’s party.

Reclusive Huawei founder: we don’t spy for China Ren Zhengfei speaks out after arrest of his daughter in Canada Yuan Yang

uawei founder Ren Zhengfei hit back at claims that his company is used by the Chinese government for spying, using a rare meeting with the media to defend the telecoms group following the arrest of his daughter in Canada last month. Mr Ren was speaking to journalists in Shenzhen on Tuesday after Meng Wanzhou, his daughter and Huawei’s chief financial officer, was arrested in Vancouver following an extradition request from the US. Huawei has been accused of violating sanctions by selling US-made equipment to Iran. The reclusive former Chinese army officer said Huawei had “never received any request from any government to provide improper information” and missed his daughter “very much”. “I still love my country, I support the Communist party, but I will never do anything to harm any country in the world,” he said, echoing earlier dismissals of allegations that Huawei was involved in espionage. Ms Meng’s detention came against a backdrop of heightened interna-

tional concern over Huawei’s alleged links to the Chinese government, and amid broader US angst over China’s rising technology capabilities. Several countries, including the UK, Australia and the US, have tightened oversight of the company and in some cases blocked its involvement in building their 5G next-generation telecoms networks. Last week, a Huawei executive was arrested in Poland on allegations of spying for China’s secret service. Huawei subsequently fired the employee. In an overture to Donald Trump, who has said he would be willing to intervene in Ms Meng’s case to secure a trade deal with China, Mr Ren described the US president as “great”, and noted that his tax cuts had been good for American industry. “The message to the US I want to communicate is: collaboration and shared success. In our world of high tech, it’s increasingly impossible for any single company or country to sustain or to support the world’s needs,” Mr Ren said. In response to fears over the security of Huawei’s equipment, Mr Ren said “no law in China requires any

company to install mandatory backdoors”. He added that the company has had “no serious security incident”. Mr Ren also downplayed the risk Huawei faced from being blocked from the rollout of 5G by some countries. “It’s always been the case, you can’t work with everyone . . . we’ll shift our focus to better serve countries that welcome Huawei,” he said, adding that the company had 30 contracts globally to build 5G networks. Seeking to shed some light on Huawei’s opaque ownership, Mr Ren said he owned 1.14 per cent of the company’s shares. Huawei says that the company is wholly owned by its employees. Ms Meng’s arrest has sparked a sharp backlash from Beijing. Chinese officials have since detained at least two Canadian citizens and just this week a Canadian man convicted of drug smuggling was sentenced to death by a Chinese court, overturning a previous 15-year sentence. Mr Ren maintained that the alleged Chinese hacking of the African Union headquarters, revealed last year, had “nothing to do with Huawei”.

S companies are struggling to get decisions on everything from licences to new regulations, as business groups warn that the longest government shutdown in US history will soon start taking a toll on profits. Businesses say they have not been able to secure approval for new products, obtain key import licences or get clarity on incoming rule changes for the past few weeks because of the political row that has brought Washington to a prolonged standstill. While individual companies are hesitant to speak openly about their problems for fear of becoming embroiled in politics, executives are privately discussing the issues that are now hindering daily business. “We cannot get approvals for new imports to come into the country,” said one executive at a multinational company. “And that means products we are developing which require those imports are going to be delayed.” Eminence Griffin, senior director of federal procurement at the Information Technology Industry Council, said: “Contract renewals and purchases aren’t able to move forward given the uncertainty of funding. Companies are having to factor the delays into their balance sheets, [which will probably] result in higher costs for the same service or product once the government fully reopens.” Large parts of the US government have been shuttered since the end of last year as President Donald Trump argues with Democratic congressional leaders over funding for border security. Unlike previous closures, this one has now gone beyond three weeks and shows little sign of ending, raising concern among business leaders that this will be more than a temporary blip. One major consequence is that 800,000 government employees have not been paid, leading to a slowdown in consumer spending. “Based on prior shutdowns, we believe the economic impact could be at least $2bn per week,” Zachary Fadem of Wells Fargo recently told clients. Past shutdowns hit discretionary spending on items such as electronics and home furnishings, he noted. Last week, the US Chamber of Commerce wrote a letter to members of Congress in which it listed the shutdown’s adverse impact on business. This includes imports not being processed, product launches being delayed and mortgage approvals not going through. Others say they are worried about big government decisions being delayed, such as getting congressional approval for the new North American trade deal. Before that vote is held, the agreement must first be reviewed by the International Trade Commission, one of the government bodies that is now closed. One sector that has been particularly badly hit is small alcohol manufacturers, many of which rely on speedy licensing decisions to be able to launch seasonal products such as new craft beers.

Wednesday 16 January 2019

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Ford and VW announce collaboration via new ‘global alliance’ Automakers will also explore potential co-operation on EVs, self-driving cars Peter Campbell

ord and Volkswagen have announced a “global alliance” that will see the two carmakers collaborate on a range of projects from commercial vehicles to the potential to offer new services. The alliance, which will not see either company take a stake in the other, will be run by a joint committee led by Ford chief executive Jim Hackett and VW chief executive Herbert Diess, alongside senior executives from both companies. The two groups also signed a memorandum of understanding to find ways to collaborate on the development of electric vehicles, self-driving technology and new transport services. The pair are also “open to considering additional vehicle programs in the future,” the companies said. As a first step, Ford and VW will work on joint pick-up truck and commercial vehicle projects, with the aim of launching new products in 2022, and increasing the profits of both companies from 2023. Carmakers are seeking breadth to invest in a range of new technologies such as electric or self-

driving systems at the same time spending on their current vehicle development, something that is forcing many manufacturers to seek out partnerships to spread the costs. Mr Hackett said: “Over time, this alliance will help both companies create value and meet the needs of our customers and society. It will not only drive significant efficiencies and help both companies improve their fitness, but also gives us the opportunity to collaborate on shaping the next era of mobility.” Mr Diess said: “Volkswagen and Ford will harness our collective resources, innovation capabilities and complementary market positions to even better serve millions of customers around the world. At the same time, the alliance will be a cornerstone for our drive to improve competitiveness.” Through the alliance, Ford will engineer and build medium-sized pick-ups for both companies which are expected to go to market as early as 2022. Ford also plans to engineer and build larger commercial vans for Europe for both groups, while Volkswagen intends to develop and build a city van.

VodafoneZiggo snafu shakes credit derivatives market Failure of oversight causes credit default swap prices to tumble Robert Smith

nvestors are asking fresh questions over whether the $8tn market in credit derivatives offers any true protection against debt default, after an obscure quirk threatened to render contracts relating to telecoms company VodafoneZiggo completely worthless. The price of about $600m worth of credit-default swaps on the Dutch company has tanked over the past four days, nearly a year after problems first occurred with the contracts, which are designed to pay out if a borrower defaults. The slip-up marks the latest in a string of mishaps that have undermined confidence in the market, particularly since last year brought a high-profile furore over “manufactured defaults” by companies — a money-spinning trick that drew condemnation from regulators on both sides of the Atlantic. “It’s yet another example of why CDS is a broken product,” one hedge fund manager said. CDS written on VodafoneZiggo’s bonds act like an insurance contract on the debt, paying out a lump sum if the company defaults. But market participants have belatedly spotted the potential flaw, people familiar with the matter said, sending the cost of the contracts falling to 164 basis points on Monday, after they began the month trading at 290bp. That means it now costs an annual $164,000 to insure $10m of the debt against default for five years. The glitch stems from a collective failure of oversight in the CDS market, which sprang up in the early

1990s as a way for banks to hedge their exposure to large companies. CDS contracts are written in highly legalistic terms and always relate to a specific entity within a company where the debt sits. If bonds are moved around in a corporate reorganisation or a merger, however, this can result in a phenomenon known as “orphaning”, where the CDS contracts end up referencing an entity that no longer has any debt. Normally, market participants spot that the debt has been moved and flag it to supervisors within 90 days. But in the case of VodafoneZiggo, the Netherlands’ largest cable operator that was formed in 2016, no one noticed that a unit previously backing the debt had been wound down in March 2018. The problem went undetected until the company filed a set of Dutch accounts last month. One credit hedge fund manager said that up until last week, investment banks had been big buyers of the swaps, as these lenders have large amounts of exposure to the telecoms company that they have needed to hedge. “It’s one of the most traded names in the whole European highyield CDS market,” said the hedge fund manager. For VodafoneZiggo, traders are now hoping that the Determinations Committee — the panel of representatives from banks and investors that rules over disputes in the CDS market — may be able to fix the issue. This is the first time the panel has had to rule on whether it can use a potential fix it devised in 2014, which would allow a new entity to assume the liability.

Collaboration between the two carmakers would come amid the constraints of operating in a capital intensive industry © Dreamstime

German economic growth cools in 2018 to lowest rate in five years Europe’s powerhouse may avoid technical recession in second half of year, economists say Claire Jones

ermany’s economic growth slowed substantially in 2018, but the eurozone’s economic powerhouse appeared to have avoided a technical recession in the fourth quarter as strong domestic demand countered weaker export sales. The German economy grew by 1.5 per cent in 2018, the weakest rate since 2013, the Federal Statistics Office said on Tuesday. That follows growth of 2.2 per cent in 2017 and brings the pace of the country’s economic expansion closer in line with the long-term average of around 1.2 per cent. The 1.5 per cent figure suggests growth was positive in the fourth quarter after the economy contract-

ed in the third quarter. “If there are no revisions to past data, then the 1.5 per cent suggests at least 0.3 per cent quarter on quarter,” said Jörg Krämer, chief economist at Commerzbank. Fears of a technical recession, or two-straight quarters of economic contraction, had emerged last week after industrial production plunged between October and November, highlighting the problems facing the country’s manufacturers. Gross domestic product had fallen 0.2 per cent in the third quarter from the second, according to official data. Fourth quarter figures are due next month. Makers have been hit by poorer sales following signs of a world economic slowdown and political uncertainty surrounding Brexit and

the trade war between the US and China. The UK, US and China are all among German makers’ biggest markets. Export sales sank in the second half of the year on the back of weak external demand — leaving import growth outpacing them and placing the trade balance into negative territory for the year. Germany is the most reliant of all of the major global economies on trade and signs that the world economic cycle is past its peak has led to an outbreak of pessimism among the country’s manufacturers. However, a strong labour market has helped boost domestic demand. Unemployment is now at its lowest level since the re-unification of East and West Germany.

Market turbulence weighs on JPMorgan Q4 earnings Profits miss analyst expectations as fixed income trading revenue tumbles Laura Noonan

PMorgan Chase grew net income by 34 per cent on an underlying basis in the fourth quarter but fell short of analysts’ expectations after fixed income trading revenues fell sharply amid December’s market turmoil. The bank — America’s biggest by assets — became the second of Wall Street’s giants to report earnings overshadowed by markets woes, after Citi posted a 21 per cent fall in fixed income revenues in its results on Monday. At JPMorgan, fixed income revenues fell 16 per cent to $1.9bn, in a quarter when revenue across the firm rose 4 per cent to $26.8bn on a managed basis. Analysts polled by S&P Global Intelligence had predicted firm-wide revenues of just

over $27bn for the quarter. The bank blamed the fixed income result on “challenging market conditions” in credit, trading, rates and commodities, which was only partially offset by strong results in emerging markets. Chief executive Jamie Dimon said the bank had done well overall, increasing revenue and profits in each of its businesses in 2018, as firm wide net income rose to $7.066bn for the final quarter. “As we head into 2019, we urge our country’s leaders to strike a collaborative, constructive tone, which would reinforce already-strong consumer and business sentiment,” he said, in a thinly-veiled reference to the US government shutdown which has just entered its fourth week. “Businesses, government and communities need to work together

to solve problems and help strengthen the economy for the benefit of everyone.” Across divisions, JPMorgan’s corporate and investment bank suffered a 4 per cent fall in net revenues for the quarter versus a year earlier and a 15 per cent fall in net income, driven by the fixed income result. JPMorgan’s consumer and community bank increased revenues by 13 per cent year on year to $13.7bn, and Mr Dimon said the bank was seeing “terrific results” from its new bank openings. The fourth quarter’s net income was up 67 per cent on the fourth quarter of 2017 on a reported basis, and up 34 per cent on an underlying basis after stripping out the $2.4bn tax hit JPMorgan took last year because of America’s corporate tax cuts.

Groups drag their feet in preparing to ditch Libor Switch deadline less than 3 years away but many institutions not ready Katie Martin

ompanies and investors in the UK have largely failed to prepare for the switch-off of the London interbank offered rate benchmark underpinning financial contracts, a survey suggests. Risk management consultancy JCRA and law firm Travers Smith said that 83 per cent of companies had not yet started making changes to their contracts ahead of the death of Libor, which is scheduled for the end of 2021. Of the 100 groups surveyed, including asset managers, property developers and banks, 15 per cent were in the early stages of prepara-

tion, while 2 per cent had finished it already. The survey, which was focused on users of derivatives, also found that 9 per cent of companies were not aware of whether their contracts would be affected by the discontinuation of the outdated Libor. “The numbers tell their own story,” said Joshua Roberts at JCRA. “There is going to be a huge amount of renegotiation of contracts in the next few years, and we are concerned that many firms may leave this to the last minute. This will create a significant issue of capacity as there is only a finite number of legal advisers with the expertise necessary to renegoti-

ate these contracts.” The switch-off of the borrowing benchmark, which underpins the price of debt and derivatives products worldwide, is described by some lawyers as “bigger than Brexit” in terms of the work required to adjust. The UK’s Financial Conduct Authority would like banks and institutions to move to other benchmarks by the end of 2021 after numerous raterigging scandals. Some parts of the debt market are making progress, in particular with a growing new type of debt pegged instead on the Sterling Over Night Index Average, or Sonia, benchmark rate.

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Opinion

Nigeria in 2019 OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

igeria is at another of its four-yearly crossroads around the electoral calendar in 2019. Just like 2015, political risks around elections are conjoined with economic uncertainty-in 2015 due to sharp declines in global oil prices and investor reticence; this time much of the economic woes are results of wrong policy choices.The economy is in a weak place – GDP did not reach 2% in any of the three quarters reported in 2018 (1.95% in Q1; 1.50% in Q2;and 1.81% in Q3); in the last reported quarter, non-oil economic sectors grew combined 2.32% while the oil sector returned to negative territory in the last two quarters, contracting by -3.95% and -2.91% in Q2 and Q3 respectively. In spite of resurgent oil prices, full year 2018 GDP growth is unlikely to reach 2% while population grows by around 2.8%. Most economic sectors remain muted-agriculture grew by 1.19% and 1.91%

in Q2 and Q3 respectively; solid minerals by 2.86% and 3.58%, manufacturing by 0.68% and 1.92%; construction sector growth crashed to 0.54% in Q3 after growing by 7.66& in Q2; trade barely grew 0.98% in Q3; hotels and restaurants(accommodation and food services) only grew by 2.66% in Q3; the real estate sector remained in a long term contraction; just as the financial sector also recorded a quarterly contraction of 4.81%. Other sectors did poorly as well-education, health and public administration, with the key exceptions being transport, telecommunications and utilities. Our economic recovery post-recession (if it can be called a recovery) is at best tepid, and risks of a second recession remain! Economic reforms have essentially been suspended since 2015-downstream deregulation in the oil and gas sector has not happened; the legislative attempts to reform the upstream have been undermined by the president; the power sector has not substantially improved in three and a half years and policy regression is likely; there has been no significant privatisation; and no worthwhile sectoral reforms have been carried out. The current government

is evidently not well disposed to or at best ambivalent about private capital and prefers state control or crony capitalism if recourse must be had to the markets as some recent transactions illustrate. There are difficulties beyond the economic front, arguably with security and corruption as well-Boko Haram is strongly resurgent in the North-West, deadly banditry reigns in Zamfara, Kaduna and Katsina in the North-West, and herdsmen have decimated North Central Nigeria and increasingly threaten communities in the South; and the anti-corruption effort has since lost much credibility; in spite of all these, Buhari remains more likely than not to be re-elected. His poor and largely uneducated base in the North-West and North-East though confused, may still vote for him. He may also still carry the crucial South-West vote and if things get difficult, the evidence so far suggests Buhari is not unwilling to deploy strong arm tactics in order to retain office. The evidence of recent elections in Ekiti and Osun States and the travails of the current Chief Justice of Nigeria, Walter Onnoggen are instructive in that regard. Atiku Abubakar cannot be written-off however and may

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Nigeria’s social context is very dire-poverty, unemployment, insecurity, quality of education and health and living standards have all gotten much worse in recent years; and insecurity due to the activities of boko haram, Fulani herdsmen, so-called bandits in Zamfara and other parts of the NorthWest, cult groups, vigilantes, militant groups and violent transport unions could reach a head in the midst of disputed or controversial elections

yet spring a surprise-his alliance with fellow presidential aspirants in the opposition PDP have strengthened the party’s hand in the NorthWest states of Kano, Jigawa, Sokoto and even Buhari’s home state of Katsina; Buhari

appears to have completely lost the Middle-Belt; and the South-South and South-East remains strongly pro-PDP. The outcome of the vote, in the end will be decided by voters in the mainly Yoruba South-West. The elections will be close, and the international community may have a role to play in the aftermath! Nigeria’s social context is very dire-poverty, unemployment, insecurity, quality of education and health and living standards have all gotten much worse in recent years; and insecurity due to the activities of boko haram, Fulani herdsmen, so-called bandits in Zamfara and other parts of the North-West, cult groups, vigilantes, militant groups and violent transport unions could reach a head in the midst of disputed or controversial elections. Nigeria’s short and medium term scenarios remain plodding along with suboptimal growth and unused potential in both political and economic terms or soaring to its true potential if strong economic and political reforms are implemented;but if the country mismanages it’s politics and elections in 2019 or down the road in 2023 or allows ethnic and religious fault lines to continue to expand while socio-economic condi-

tions deteriorate, a meltdown scenario is easily possible! The IMF and World Bank projects 2.3% and 2.2% GDP growth respectively for Nigeria in 2019 (population growth will outstrip economic growth again this year, so poverty will likely increase and per capita income will reduce) while the Federal Government of Nigeria foresees growth around 3.0% in its budget-the World Bank/ IMF are more likely to have the more accurate estimate. Global oil price projections for 2016 by the International Energy Agency, OPEC, IMF and World Bank range from the IMF’s conservative $50.30 per barrel to the World Bank’s quite optimistic $74, while IEA projects $56.25 for Brent Crude-the projections suggest Nigeria’s budget oil price benchmark of $60 per barrel may be very optimistic! And Nigeria may not get an oil price rescue from our macroeconomic and fiscal challenges! The country enters 2019 with a handful of risks around oil price shocks, budget deficits and sovereign debt servicing (Nigeria now expends 66% of its revenue on debt service!), growth and politics; after the elections in February and March 2019, policy must move decisively to avoid fiscal and economic crises.

2019 economic crisis: Feasible simple solutions FRANKLIN NNAEMEKA NGWU (PHD)

Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

hat a further loan of about N1.649 trillion will be secured to fund the projected N1.859 trillion deficit in the proposed 2019 budget even with the cries and warnings of our increasing unsustainable debt is difficult to understand. With the additional borrowing which will escalate our total debt to N24 trillion, our debt servicing alone for 2019 is put at N2.4 trillion from N2.0trillion in 2018. In addition, as about 21 million Nigerians remain unemployed and oil price likely to fall further, our economic problems including the foreign exchange challenge are likely to worsen! In the current efforts to manage the foreign exchange challenge and to diversify our economy, a fundamental question is how to identify and effectively utilise our comparative advantage(s) to provide short to long-term solutions. Excitingly, one of

them is the huge population of Nigerians in the diaspora who have continued to maintain the values and culture of Nigeria in their different places of residence. If the CBN can pay about 12% on treasury bills mainly to foreigners, why can’t they pay 10% to incentivize the high population of Nigerians in the diaspora to invest in ‘Dollar Denominated Savings Account’ which can be used to provide more foreign exchange to our businessmen and women. With the current low savings rate in most developed societies (below 1% in the UK for instance), the payment of about 5-10% and flexibility to withdraw from the account either in dollars or in Naira will create the required incentive for Nigerians in the diaspora to effectively patronize and invest in Nigeria. Given that we have over 15 million Nigerians in the diaspora, a significant pool of foreign currency can be generated which can be used to support the Naira. If properly planned, marketed and managed, it is an idea that can generate over $50 billion of investible funds every year. Without any incentive, Nigerians in the diaspora remitted about $22 billion in 2017, $19.64 in 2016 and $21 billion in 2015. From 2011 to June 2014, over $63

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Another way through which Nigerians in the diaspora can be used to provide short term to long term foreign revenue is through the supply of food products consumed by Nigerians in the diaspora

billion (about N21 trillion) was sent back to family and friends. Another way through which Nigerians in the diaspora can be used to provide short term to long term foreign revenue is through the supply of food products consumed by Nigerians in the diaspora. The main reason why these foods that are in very high demand are not sourced from Nigeria is the lack of internationally accepted packaging centres in Nigeria. This is a challenge which the government can quickly address and which I had earlier asked the banks to provide possibly as part of their Corporate Social Responsibility. With about 15 million Nigerians in the

diaspora, it is a business with a potential annual revenue of over $81 billion (about N30 trillion). A brief illustration will be helpful. A food expenditure of about $15 by each of the 15 million Nigerians in diaspora translates to about $225 million everyday and about $81 billion every year. As only a very small quantity of the foods consumed by Nigerians in diaspora is sourced from Nigeria, the above is sadly the amount of money that Nigerians in diaspora send to other countries especially in South America and Asia every year. To further illustrate, the UK imports plantains and bananas from Argentina, Ecuador and Uruguay. The flight time between these countries and the UK is about 14 hours compared to six hours from Nigeria. As food products supplied from Nigeria are not adequate to meet the demand, they are very expensive. The products imported from Asia are equally expensive primarily because of the flight time to the UK. Conversely, Ethiopia exports over £1million worth of fresh flowers to the UK every day. This is surprising but true and I mean “normal” flowers for expressing love, for condolences, birthdays, etc. So, this is a big opportunity for Nigeria to gener-

ate revenue. The benefits are endless! Nigerians will always have a preference for foods imported from the homeland so there will be little or no competition especially if these are sold at slightly lower prices compared to the products from Asia/South America. As a major problem is the absence of packaging centers that meet international standards, the government can immediately invest in this vital area by establishing packaging centers in major cities in Nigeria. To ensure prompt take-off and success, distribution centers in major European and American cities will be needed to ensure efficient distribution to all other cities with significant Nigerian/Afro-Caribbean populations. This venture will improve the Naira’s value, generate foreign revenue and bring about financial inclusion. Not to mention employment generation and economic empowerment especially for the women and the poor. It will provide the required stimulus for the much talked agricultural revolution. Not only will it lead to better revenue for Ozor Nwanjiam of Abakaliki, it will also increase his life span due to the psychological satisfaction that his yams are sold and con-

sumed in London and America (Obodo oyibo!). It will help Mrs. Abuse of Vandekiya village of Benue State to train her kids through the export of mangoes that are in abundance and wasting in her village. Alhaji Aminu from Fagge in Kano State will live in peace with Joshua in Jos as they are both involved in the export of carrots and groundnuts to Canada. Mr. Gbadamosi will prefer to live in Ogbomosho than in Lagos due to his Amala processing plant which provides him with good income. Imagine the yearly impact of about N30 trillion on the economy especially the less privileged Nigerians! In the long term, it is important to start thinking of how to create a better and more effective economic/ monetary policy framework or model to jumpstart our industrialization process. It will require either the adjustment of our failed neo-liberal model to suit our socio-economic and political peculiarities or the creation of a new model that will be suitable to our peculiarities and context. This will ensure a better coordination and integration of our monetary, fiscal and supply side policies to create a sustainable, industrialized and inclusive economy with annual growth of over 10%.

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