BusinessDay 16 Jul 2018 by BusinessDay

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news you can trust I **MONDAY 16 JULY 2018 I vol. 15, no 96 I N300

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Nigerian Breweries exits exclusive N1trn market cap club again How PDP

lost the Ekiti election

Emeka Ucheaga

hen the stock price of Nigerian Breweries fell below N125 earlier in May, shareholders didn’t just lose billions that day; they also lost a symbolic status. For the fourth time since 2015, Nigerian Breweries is no longer a part of the select few Nigerian publicly listed companies

… party accuses APC of rigging Innocent Odoh & OWEDE AGBAJILEKE, Abuja

gainst earlier forecast by two different polls, the candidate of the All Progressives Congress (APC) Kayode Fayemi won the keenly contested Ekiti governorship election. Fayemi won the Ekiti governorship election with 197,459 votes followed by his closest ri-

Continues on page 42

Inside

France outclassed Croatia to win 2018 FIFA World Cup P. A16

Continues on page 42

L-R: Aliko Dangote, president, Dangote Group; Benedict Oramah, president/chairman, board of directors, Afreximbank, and Olukayode Pitan, managing director, Bank of Industry (BoI), during the signing of the $750m BoI facility agreement at the 25th annual general meeting of Afreximbank in Abuja at weekend.

Oando: London court orders Wale Tinubu to pay $680m to Volpi

FG N1.02trn bailout galore fails to impact power sector T ISAAC ANYAOGU

he Federal Government has committed the sum of N1.023 trillion in bailouts in the form of low interest loans and grants to Nigeria’s power sector within the last

Operators accused of misusing funds NBET owes GenCos N325.7bn, DisCos owe market N859bn

three years yet the country is unable to move the needle on stable power supply. In 2015, the Federal Govern-

ment through the Central Bank of Nigeria (CBN) provided the sum of N213 billion as Power Sector Market Stabilisation

Fund at a concessionary single digit interest rate to distribution Continues on page 42

he ongoing battle over the shareholding structure of Oando Nigeria Plc has entered a new phase as the London Court of International Arbitration (LCIA) has issued an award against the Chief Executive Officer of Oando Continues on page 42

World Cup Final France 4 - Croatia 2

2 BUSINESS DAY NEWS

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Monday 16 July 2018

Debt: AMCON takes over Sigma Beta Glass, Meyer, CAP cash conversion cycle jumps apartments in Abuja Olalekan Ipele & Sobechukwu Eze

DIPO OLADEHINDE

on. Justice B.F.M. Nyako of the Federal High Court Abuja Division has granted an order for Asset Management Corporation of Nigeria (AMCON) to take over Sigma Apartments owned by Sigma Engineering & Construction Limited. Sigma Apartment is promoted by Saidu Samaila Balarabe Sambawa, a former Minister of Sports and Social Development of the Federal Republic of Nigeria. The order came on the application of AMCON after the Corporation exhausted all avenues of peaceful resolution with the obligor regarding the huge debt, but was left with no other choice. Information on the website Sigma Apartments described the apartment as an epitome of refined living featuring 48 fully furnished service luxury apartments designed for those accustomed to the finer things in life. The apartment is conveniently located in the heart of Abuja metropolis midway between the northern and southern retail hub of the vibrant Abuja, downtown of Wuse ll. The site further describes it as a hospitality brand that provides extended stay accommodation for sojourners in Abuja. The promoter of Sigma Apartments and his directors have had running battles with AMCON over their inability to settle the huge debt of over N1billion. But despite the overtures and genuine efforts made by AMCON to reach an amicable settlement terms, the businessman and his co-promoters have remained recalcitrant,

thus pushing AMCON to seek legal solution to the issue. Accordingly the Corporation appointed Babatunde Alabi as the Receiver Manager to take immediate possession of the expansive property situate at Plot No.1376, Cadastral Zone, A07, Wuse 11, Federal Capital Territory (FCT), Abuja. In compliance with the court order, and with the support of the Inspector General of Police, and his deputies as well as the court Bailiffs, AMCON through its Receiver, Alabi took possession of the assets of Sigma Apartments, its right and in compliance with lawful authority. AMCON under Ahmed Kuru, Managing Director/Chief Executive Officer has maintained that there will be no sacred cows in its bid to recover the huge debts obligation of N4.8trillion in the hands of a few Nigerians. To deal with the situation however, AMCON has in recent times increased the tempo of its recovery activities using firmer resolution strategies as well as utilizing the special enforcement powers vested by the AMCON Act to compel some of its recalcitrant debtors especially those that are politically exposed and business heavyweights to repay their debts. AMCON therefore seeks the continued support of all well-meaning Nigerians most especially the judiciary, the legislature and the security agencies to enable it carry out its mandate to avoid the tax payer from taking the liability of a few. Presently, only 350 Nigerians owe AMCON (indirectly the tax payer) over N4trillion.

Economists expect Q2 2018 economic growth to underperform Q1 Omobola Adu, Emeka Ucheaga & David Ibidapo

consensus view on Q2 is correct, there could be a third consecutive quarter of declines in the pace of growth of the Nigerian economy since the exit from recession. Bismarck Rewane, CEO of Financial Derivatives Company told BusinessDay by phone that Q2 2018 economic growth will probably underperform expectation. He predicted that Q2 2018 economic growth may be slightly lower than Q1 2018 growth of 1.95 percent but will still remain positive. Rewane expects that sectors of the economy which are interest rate sensitive will struggle in Q2, sectors that are power dependent will underperform and sectors that are foreign exchange (FX) dependent will most probably experience the strongest growth due to FX stability. Johnson Chukwu, managing director of Cowry Asset Management said he expects economic growth in the second quarter to be marginally lower than in Q1. Chukwu cited reasons such as the drop in crude oil production in Q2 due to pipeline attacks as well as the displacement of farmers in the North Central during the planting season. He also said that although the crude oil price rallied in Q2, supply disruption means that the growth in crude oil sector may decline compared to Q1.

ising crude oil prices, declining inflation and foreign exchange stability has not been enough to convince economists that growth in the second quarter (Q2) of this year will be any better or nearly as good as Q1. Economists point to issues such as supply disruption in crude oil production in Nigeria, late passage of the 2018 budget, slow pace of employment growth and displacement of farmers in the North Central due to herdsmen-farmer crisis in the agriculture hub of the country as credible reasons why Q2 economic growth will remain under 2 percent or possibly decline below 1.95 percent growth recorded in Q1. Since coming out of the economic recession in Q2 2017, the Nigerian economy has experienced sluggish economic growth rates. The Nigerian economic recovery story has been a tale of fragile growth, eroded purchasing power of households and unfriendly borrowing rates which have inhibited economic expansion. National Bureau of Statistics (NBS) gross domestic product (GDP) report reveal that quarterly economic growth declined to 1.95 percent in Q1 2018 from 2.11 percent in Q4 2017. If the current Continues on wwwbusinessday online.com

he length of time, in days, that it takes for Beta glass, Meyer paint and Chemical and Allied Products (CAP) to convert resource inputs into cash flows amplified to 198, 32, and 82 days in 2017 from 99, -8, and 47 days in 2014 respectively showing some liquidity risks worry for growth and possible expansion. A cash conversion cycle is snapshot of the way a company’s working capital is being used. “The implication for these companies is that they would have elongated periods between paying for raw materials and receiving cash from goods sold. Consequently, these companies may witness higher finance cost on borrowings due to the longer periods of cash conversion cycle (CCC),” said Ayodeji Ebo, CEO of Afrinvest said in a mail to BusinessDay “The longer CCC may be attributed to slow movement of goods due to the depressed consumer spending. We expect the speedy

implementation of the 2018 bud- have one year returns of 57 perget would boost consumer spend- cent, 3.5 percent and -6.85 percent ing as well as campaigns spending. compared to the 17 percent return Nonetheless, these companies will of the broader market. continue to explore more options On his part, Tajudeen Ibrahim, to reduce cost of production as head of research at Chapel Hill well as operation to improve their Denham said “I think there’s been margins,” Ebo said. a need for them to allow for some BusinessDay analysis of some credit flexibility because of the companies that make up the in- consumer spending environment dustrial goods index, show that especially during the period the the CCC of Beta glass increased to country was in recession.” 198 days at the end of 2017 from 99 “For you to get your products days in 2014, meaning the time it out there and moving in the martakes for the company to get back ket, I think it is just natural for you cash from its operation increased to allow some flexibility in your by 99 days. credit policies but I believe that In the same vein, Meyers went managements of these companies from -8 days as at 2014 to 32 days are monitoring the trend.” at the end of 2017 in its CCC. “What matters is medium to For chemical and Allied Prod- long term cash flow generating uct, its CCC went up by 35 days, capacity of these companies, we with its inventory days rising by shouldn’t really be looking at the 38 days from 62 days at 2014 to short term because you can be 100 days at 2017. This means that it sure that in a one year period they takes it longer to sell its inventory. can declare and pay dividend and However it still enjoys a good line the companies in mention have of credit structure as it receives demonstrated a good track record cash from its debtors within 2 of dividend payment.” days, faster than it has to pay its creditors in 20 days. Beta Glass, CAP and Meyer Continues on wwwbusinessday online.com

R-L: Oscar Onyema, CEO, Nigerian Stock Exchange (NSE); Herbert Wigwe, GMD/CEO, Access Bank plc; Mosun Belo-Olusoga, chairman, Access Bank, and Joe Obiago, chairman/CEO, Global Energy Group during the Access Bank Charity Polo tournament held at the Guards Polo Club, Egham, Surrey, UK, at the weekend

C&I Leasing to continue bull run with recent acquisition DIPO OLADEHINDE

&I Leasing Plc, whose market cap has increased from N1 billion in March 2017 to N4.6 billion today, has concluded the buyout of additional 27.5 percent minority stake in C&I Petrotech Marine Limited making it a fully owned subsidiary of C&I Leasing Plc, positioning its shareholders for more profit in 2018. Andrew Otike-Odibi managing director of C&I leasing plc said the buyout will further the company’s drive to restructure and re-position its marine business for enhanced productivity. “The firm’s journey into marine sector as a service provider for the oil and gas sector actually started through CPML joint venture in 2010 and has over the years culminated in the ownership of over 20 vessels,” Otike-Odibi said. C&I Leasing Plc has been on

The Bull Run in the share price a positive growth trajectory since 2015 as BusinessDay analysis began in March last year after showed the firm recorded a 26 results from 2016 performance percent increase in revenue to showed that earnings per share N21.4 billion in 2017 from N17 bil- (EPS) had jumped from 8.61 kobo lion in 2016 while Profit after Tax in 2015 to 54.17 kobo in 2016. increased by 19 percent to N1.1 EPS for 2017 came in higher at Billion in 2017 from N920 million 65.85 kobo as the growth story in the company continued to gain in 2016. The firm has a strong EBITDA ground. The firm recorded a strong start margin of 59.25 percent in 2017 in q1 2018 as gross earnings incompared to 37.70 in 2016. Return on Assets (ROA) which creased to N6.4 billion compared to measures the efficiency of the firms N6 billion for Q1 2017. Profit before and in its ability to generate assets Tax also grew by 32.7 percent from from revenue recorded an increase N305 million in q1 2017 to N405 from 0.53 percent in 2015 to 2.59 million in q1 2018, while Profit after percent in 2016, while in 2017 it tax increased by 37.7 percent to N373 million from N270.8 million stood at 2.56 percent. Further investigation showed in q1 2017 “This was achieved through a Net margin, which can give a more accurate view of how profitable a combination of cost optimisation business is than its cash flow rose measures, more efficient utilisation from 0.96 percent in 2015 to 4.99 of assets and heightened focus on our ‘efficient productivity’ agenda,” percent in 2017. C&I Leasing has a total one year C&I leasing plc said. return of 281 percent and is one of Continues on wwwbusinessday online.com the best performers on the NSE.

Monday 16 July 2018

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BUSINESS DAY

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Monday 16 July 2018

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BUSINESS DAY

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Monday 16 July 2018

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BUSINESS DAY

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NEWS MARKETS

Will rising input costs halt rally in consumer stocks? BALA AUIGIE

espite rising production costs and ebbing gross margins, investors are upbeat about the growth potential in the consumer goods space as they continue to buy into the stocks of these firms. The question is how long the rally will last, as something has got to give. BusinessDay’s analysis shows that 80 percent of the largest consumer firms have outperformed the broad market measured by the Nigerian Stock Exchange (NSE) All Share Index (ASI), in the past year. Nascon Allied Industries Plc, Dangote Sugar Nigeria Plc, Dangote Flour Mills Plc, Nestle Nigeria Plc, and Unilever Nigeria Plc shares have gained 128.95 percent, 113.48 percent, 74 percent, 58.5 percent, in the past year,

outperforming the NSE ASI Index one year return of 17 percent. Also Guinness Nigeria Plc, Flour Mills Nigeria Plc, International Breweries Plc, and Northern Nigeria Flour Mills (NNFM) recorded one year returns of 54.97 percent, 30 percent, 26.9 percent and 19 percent respectively. Meanwhile the cumulative cost of sales otherwise known as input costs of the 13 largest firms in the industry increased by 19.81 percent to N899.15 billion in December 2017 from N750.20 billion as at December 2016, this compares with a 2.41 percent increase in the 2016 period while costs dipped by 1.05 percent in 2015. Cumulative cost of sales ratios increased to 47.12 percent in December 2017 from 45.15 percent as at December 2016. Johnson Chukwu CEO and managing director

of Cowry Assets Management said that investors recognise that consumer goods are a bellwether sector in the sense that it can survive any economic downturn. “Input costs may not come down because we may not likely see a reduction in energy costs like diesel and premium motor spirit (PMS). We should expect an increase in energy cost after the election as government may remove subsidy,” said Chukwu. “The problem is whether the purchasing power of people will improve for manufacturers to pass on the costs to consumers.” Beer makers were unable to hike prices because of the intense competition in the sector. On the other hand, the likes of Dangote Sugar and Flour Millers could easily pass on cost to consumers in form of a price hike.

ASI closes on a positive note halting a 3-day bearish trend SOBECHUKWU EZE

ast Friday saw the AllShare Index of the Nigerian Stock Exchange (NSE) closed on a positive note by 0.4 percent, halting a three-day bearish trend. According to the NSE weekly reports for the week

ending July 13, the index rose by 166.33 points or 0.4 percent to close at 37,392.77 compared with 37,226.44 posted on Thursday. The market capitalisation increased by 0.44 percent to close the day at N13. 545 trillion compared with the close of N13.485 trillion the previous day.

On sectorial performance, the industrial goods index gained the most by 3.3 percent, the oil and gas by 0.7 percent, consumer goods by 0.5 percent and the banking index closed with a gain of 0.4 percent. However, the insurance index was the lone loser with a loss of 0.4 percent.

Monday 16 July 2018

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BUSINESS DAY

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COMMENT

Monday 16 July 2018

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90 [ninety] candles for Dr. J.K. Randle BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

rime and fear are natural companions. However, our ancestors were fearless. Now we are afraid to die and scared to live. All around us are scary stories (not mere stories but harsh realities) of killings of Christians and Moslems all over our beloved country. What started as fiction developed into “isolated incidents” then gathered momentum to become widespread carnage inflicted by the dreaded Boko Haram insurgents who have recruited herdsmen armed with AK-47s as well as kidnappers, rapists, ritualists, drugtraffickers and money-doublers to hold not just the North-East of the country hostage, but gradually the whole country. Nowhere is safe. Our own personal grief is miniscule compared with the bereavement of a nation in mourning. That is why we opted to light ninety candles to mark the 90th Anniversary of the demise of our grandfather, Dr.

YEWANDE ENOBAKHAREADEWUSI Yewande is a financial inclusion and digital financial services strategy consultant

f Nigeria’s growing population of an estimated 186 million people, nearly 87 million are living in extreme poverty, according to the World Poverty Clock. And even more concerning is that the same monitoring tool indicates that the country’s poverty level is on a continuous and rapid rise, with about six people falling into poverty every minute. A lack of access to basic amenities such as food and water, an increased spread of diseases and mortality rates, against the country’s high corruption levels, poor educational system, and underutilization of resources are just a few of the factors which cause, make up, and enhance this dire situation. Despite the country’s economic growth, in February this year, it was reported by the AfDB that over 150 million Nigerians (81% of the population) live on less than $2 a day – a 20% increase in people since 2014. Access to financial services such as banking, lending services, microfinancing, and economic resources, i.e., financial inclusion have long been heralded as a way to reduce poverty. Increased banking deposits provide available credit for all people across countries, and enable increased consumption and investment, which help to drive economic growth, and in turn,

J.K. Randle. To keep matters out of the public glare and the mischief of detractors, we went underground – the basement bunker and nuclear-proof shelter of Chief J.K. Randle Memorial Hall, at Onikan, Lagos. While we were praying for divine intervention in the affairs of our nation, the government was furiously destroying the sacred monuments of our ancestors in the belief that those who are dead can neither rise up nor raise an army of soldiers (or lawyers!!) to defend their property. Injury is being piled upon injury while impunity is competing with vindictiveness and mendacity. It was our good fortune to have the benefit of the counsel of the former Archbishop of Canterbury, The Right Reverend and Right Honourable Baron Rowan Williams now the Master of Magdalene College, Cambridge University and his wife Lady Jane Williams who were gracious enough to become early converts to “fizzing” (the theoretical concept put forward by Professor Steven Hawking whereby if one could collapse both time and space which are the two elements which act as “re-agents” to distinguish and separate one individual from another, automatically there would be two indistinguishable versions of each individual). They provided rock solid challenge and balm for our woes by reminding us that the salvation of our nation lies in the sermon: “Let heart speak to heart,” which Dr.Rowan Williams

“The third-rate mind is only happy when it is thinking with the majority. The secondrate mind is happy when thinking with the minority. The firstrate mind is only happy when it is thinking” delivered in his Eucharist sermon at the General Synod in London on November 20, 2012: ‘All who are led by the Spirit of God are children of God.’ “In the name of the Father and of the Son and of the Holy Spirit, Amen. This morning is not the time for long sermons. So I’ll be brief, and pick out simply one theme from our readings; one theme that has to do with our prayer for the gift of the Holy Spirit. The Spirit teaches us, so we’re told. And in the collect for Pentecost, we thank God for teaching our hearts by the gift of the Spirit. Our hearts: in the Bible and in Christian usage, not just a way of talking about our feelings rather than our minds, but a way of talking about our centre. Something in the centre of our being, is what the

Holy Spirit addresses and brings alive. Something in the very centre of our being is what the Holy Spirit recreates in the likeness of Christ. When we ask for the Spirit to teach our hearts, when we remind ourselves that God has sent the Spirit of his Son into our hearts crying “Abba, Father”, we understand that what we’re trying to do is expose the very centre of who and what we are to God. And that, quite simply, is what we’re asking at this Eucharist. God, reach into the centre of who and what we are, and as we speak and act during this day, give us the grace and the freedom to speak and act from that centre. Not from all the feelings and ideas that may be threshing around alongside that and around it, not from the instantaneous reaction of the moment, but from the heart – the heart being renewed in Christ. “Heart speaks to heart” – Cardinal Newman’s metaphor and motto. And that’s what we’re praying, I dare say, for our debate today. Not, please God, just for an exchange of ideas; not just for a rival taking of positions. But somehow, that from the centre of myself and the centre of yourself, something will emerge that has about it a Christ-like character. Because in that speaking of heart to heart, and in that exposing of our hearts to God in prayer this morning and for the rest of the day, what we’re asking is that Christ come to birth in us, and that what the world sees when it looks at us

is Jesus Christ. By the end of today, whether the world will look at the General Synod of the Church of England and say “That looks like Jesus Christ” is a large prayer to ask. But it’s the prayer we have to be asking, because there is probably no other prayer worth praying for this Synod, or for the life of any church, any community, any disciple. Our prayer for the Holy Spirit to teach our hearts. During this day, give us the freedom and grace to act from this centre. Not from the feelings threshing around it, but from the centre – from the heart being renewed in Christ. In that heart to heart, and in exposing our hearts to God, we’re asking that Christ comes to birth in us. And from the centre of myself and the centre of yourself, something will emerge that has about it a Christ-like character, So let that be our prayer: teach our hearts. Enter into the centre of who and what we are so that when we speak and act, it will be from there that we’re seen and heard, in the renewal of our hearts in the likeness of Jesus Christ.” In addition, we were reminded by A.A. Milne that: “The third-rate mind is only happy when it is thinking with the majority. The second-rate mind is happy when thinking with the minority. The first-rate mind is only happy when it is thinking.” Send reactions to: comment@businessdayonline.com

How financial inclusion can ultimately reduce national poverty levels job creation. Ghana, Uganda and India have established and adopted financial inclusion strategies as a means to reducing poverty, and now find themselves seeing significant results. In Uganda, inclusion rates have been on the rise (from 28% in 2009 to 85% in 2017), and the government has developed its national financial inclusion strategy for 2017 to 2022 to accelerate this further. Ghana has had even more success in correlating its financial inclusion strategies with poverty reduction – from an inclusion rate of 41% in 2014, to 58% in 2017, also reflected in mobile money usage, which grew from 13% to 39% in the same period, the poverty population in Ghana declined from to 24% in 2013 to 13% in 2018. The Indian example provides an even stronger illustration of the alignment between financial inclusion and poverty levels – over an 8-year period ending in 2017, there was a 45% increase in the number of financially included citizens, and the country now has 65 people escaping poverty every minute. According to the World Poverty Clock, India has shown one of the fastest rates of poverty reduction in the world, and there are indications that poverty could be eliminated by 2030. India, which has had the highest global poverty rate (in terms of absolute numbers of people) for decades, has now been surpassed by Nigeria. At the end of May 2018, a study showed that in

comparison to India’s 73 million citizens (11% of the total population) living in extreme poverty, Nigeria, which has over 40% of its population living in extreme poverty, has now surpassed India. Furthermore, with a year-onyear population increase of 3%, and the overall number of Nigerians with access to financial services having dropped from 44% in 2014 to 40% in 2017, this report highlights an increased urgency for Nigeria to increase and improve its efforts in establishing stronger and more effective long-term approaches to financial inclusion. The progress made so far in India provides numerous lessons for achieving success and avoiding pitfalls in Nigeria’s financial inclusion strategy. India has a long history of efforts by various Indian governments to push for increased financial inclusion, but few approaches have had as much impact as Prime Minister Narendra Modi “Pradhan Mantri Jan Dhan Yojana” (PMJDY) – a wealth scheme launched in 2014.This scheme was established to increase the number of people with bank accounts in the country, which in 2014 was at 53% of citizens aged over 15. This effort was based on no-frills accounts and government subsidy disbursements and drove a large number of account openings – with over 260 million accounts opened between 2014 and 2016. However, this no-frills account structure – which allowed the maintenance of accounts with or with little or no minimum balances – created significant systemic issues.

These accounts were largely inactive and thus expensive to maintain, for no associated revenue, while lending done to the recipients quickly became non-performing, leaving significant liabilities on the bank’s balance sheets. To address these risks, and reduce the burden on the traditional banking sector, the government has established a new banking license – payment banks – in 2014. This license essentially gives companies who already serve the poorest members of the wider population the ability to offer financial services. Companies of this sort could range from FMCG distributors to telecommunications and retail companies. They provide customers with quick and easy access to a bank account, easy fund transfer, digital debit cards, and interest rates on savings accounts, which all combine to increase their attractiveness. The most successful is Pay TM, an e-commerce company that also operates under the payment banks license; in just two years of operations, they attracted 300 million customers. By April 2018, the Reserve Bank of India had given licenses to 11 banks, and there were six banks in operation. The successful adoption of these banks is indicative of a likelihood of being able to offer third-party products such as insurance, loans and mutual funds, in the near future. As with all successful development-driving activities, the Indian government ensured that their efforts

towards increasing inclusiveness was closely monitored, with clear benchmarks, such that all progress could be easily measured. The country launched its first financial inclusion index in 2013 – the CRISIL Inclusix – with the objective of becoming a critical gauge for measuring progress on financial inclusion based on branch penetration, deposit penetration, credit penetration and insurance penetration. This Index would also enable the government to see where an enhancement of tactics and changes in approach might be required. However, while enormous growth continues to be recorded in India, a neglect of direct financial literacy efforts have been reported by many, who have illustrated a limited awareness of financial solutions amongst lower income populations and tech-savvy youths. In addition, payment banks face challenges of over-competition, and an inability to lend money, which result in access limitations. Thus, while India’s approach presents a strong model to follow, the Nigerian market needs to adopt its ownmarket-tailored strategy, which accommodates all the various ways to develop a more inclusive society, from immediate banking access to enhanced literacy and awareness to an efficient leveraging of mobile and broadband technology.

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Diaspora cities: For what?

AMAMCHUKWU OKAFOR Okafor is a policy researcher and strategist with an M.Sc. from Friedrich Schiller University, Jena, Germany. He wrote via amam.okafor@gmail.com

simple internet search yields a common result that housing deficit in Nigeria is about 17 million units. But two important things have happened recently: the National Bureau of Statistics revealed that we are of 198 million people, and international agencies put current poverty figures at 87 million people. Intuitively, if population and poverty have increased, the number of people out of homes must have increased and the deficit in housing, worsened. It is so distasteful when you catch red-handedly the insensitivity of the government and its agencies. I have only recently learned about the Federal Housing Authority’s Diaspora City launched in 2017 to build houses and estates for Nigerians living in

the diaspora! The plan is a tripartite arrange among three government agencies – Federal Housing Authority (FHA), Federal Ministry of Works, Power and Housing, and Independent Corrupt Practices and Other Related Offences Commission (ICPC). So it is a wholly government initiative as they have shaken hands with the presidency. And the sole beneficiaries are Nigerians living and working abroad including those in the diplomatic missions. Planned in two phases, the Managing Director of FHA, Professor Mohammad AlAmin justifies that it would meet the housing needs of Nigerians in diaspora and foreign mission as well as serve as another non-oil revenue stream for the country. Describing the trend in diaspora remittances he implied that the government needs to extract its own portion of it. The ICPC chairman, Ekpo Nta claimed that the agencies cared so much about the stories of family members who swindle or embezzle funds repatriated by their relatives abroad for projects in Nigeria. Nice try guys, but we got you! Any discerning mind familiar with housing and settlement crisis in Nigeria would notice the sheer absence of sincerity, only cheap popularity through optically elegant projects. The discerning mind would also wonder why there is not a mention of housing deficit particularly for Nigerians in

The 17 million housing deficits does not include Nigerians “living” abroad, so what explanation could justify an initiative to build houses for Nigerians not living in Nigeria whereas Nigerians in Nigeria have no homes to live in? diaspora as necessity for this initiative. There is not one! Nigerians in the diaspora who can afford home ownership already own homes or know their ways around. I have argued in an earlier essay that there are numerous “ghost estates” largely unoccupied across the target cities of the Diaspora plan. Why are Nigerians abroad not buying them? The FHA should have pondered. The overt justification for this initiative is the greedy look at the diaspora remittances, and the covert strategy is to allocate land and properties to hand-picked agents of the establishment. Paraphrasing Fela Kuti, this is absolutely “government magic” in broad daylight. I am particularly still in distaste about the private-sectorled Eko-Atlantic city in collaboration with Lagos state government, and

now this? The 17 million housing deficits does not include Nigerians “living” abroad, so what explanation could justify an initiative to build houses for Nigerians not living in Nigeria whereas Nigerians in Nigeria have no homes to live in? The webpage of the FHA, exposes the intentions of the government: beside the diaspora city shenanigan, the list of current projects (as well as past projects) are luxury apartment buildings in Apo, Abuja. Where you would find low-cost housing, it is about bungalow projects in Otta, Ogun state. Even worse, you would find that the time span of its “future projects” is still 2009-2013 in 2018, five years after! Noticeably, there seem to be false cultural notionor synonymity between affordable housing and bungalow within governments: this is only convenient as in decent climes; affordable housing is almost synonymous with condominiums. Another important observation on the FHA webpage which resonates across other sectors of the economy is how funds are immediately available when governments and its agencies want to build luxury units or projects that yield easy returns, but when it is about lowcost housing or risky projects, funds become insufficient, they begin to seek partnerships. No wonder the Diaspora city plan is an inter-agency collaboration to

ambush the diaspora remittances. The glut of estate agencies and realtors in the country and the abnormal profits they continuously extract suggest that social housing scheme can also be profitable if the government ventured. But I wonder why government shy away from affordable mass housing projects. The only explanation would be poor comprehension of the importance of housing in enhancing standard of living and development. Housing is a major part of household consumption and savings motives in developing countries. Therefore, improving housing conditions and costs would have significant welfare implications. It is critical for city development and urban planning. Government needs to return to the housing market with the urgency to solve the growing housing and settlement challenges in the country. It would have to be consolidated on a social optimum model – it is disturbing to see private sector technocrats appointed to positions of public office using the same capitalist profit making models of the private sector in place of social/service models in public sector, being therefore practically unable to differentiate the philosophies of both sectors. This insincerity and penalization of the poor masses has to stop and now!

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Another perspective on the subject of independent directors

BISI ADEYEMI Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact badeyemi@dcsl.com.ng.

he effectiveness of corporate Boards through adherence to corporate governance best practices continues to receive a lot of regulatory attention and the requirement to appoint Independent Directors is one of the several interventions by regulators in this regard. A recurring provision in the various Codes of Corporate Governance is that the Board of a listed company should be comprised of at least one (1) Independent Director. The Securities and Exchange Commission (SEC) Code, the National Insurance Commission (NAICOM) Code, the National Pension Commission (PenCom) Code and the Code of Corporate Governance for the Telecommunications Industry (NCCCode)all provide for a minimum of one (1) Independent Director, while the Central Bank of Nigeria (CBN) Code provides for a minimum of two (2) Independent Directors on the Board. The intention of the requirement is that the Independ-

ent Director will exercise objective and independent judgement free from personal interests and external influence. The basic criteria stipulated by the codes is that an Independent Director should – not be a substantial shareholder (owns less than 0.1%); not be a shareholder representative with the ability to control management; not have been employed and is not related to a person employed by the company in the three (3) years immediately preceding his appointment; not have been a contractor or professional adviser to the company and should have the “ability to exercise independent judgement”. Proponents of the concept of Independent Directors have argued that the requirement for a Director specifically designated as “Independent” stems from the premise that Directors with business/personal relationships or equity stakes in the business may not be capable of objectively analyzing situations and taking decisions in the best interest of all stakeholders. The Independent Director is therefore expected to be a governance watchdog and a sounding board. Critics on the other hand have argued that by merely stipulating the qualification criteria for Independent Directors without any mechanism or means of determining an individual’s ability to not only exercise but constructively express independent judgment, regulators have unwittingly

created an ineffective governance tool forgetting that the independence of mind is not assured by the independence of an individual’s position. It is common knowledge that many companies and boards limit the search for new directors to the personal and professional networks of sitting/existing board members. Sadly, this is also how Independent Directors are appointed, meaning that ab initio, the Independent Director is not in the true sense of the word “independent” given his direct or indirect affiliation or relationship with a sitting Board member. It has been argued that the concept of independent directors is not realistic within the context of the peculiarity of our environment as it is impracticable to find individuals who can be said to be truly independent as contemplated by the Codes. A critical factor therefore to the issue of whether or not an individual so appointed as “Independent Director” is actually independent or not would be the process through which he or she is appointed to the Board. So, rather than tick the appropriate boxes against the criteria laid down in the relevant Code of Corporate Governance, the Board should look beyond these and ensure that the process of appointing the individual is transparent, objective and as independent of sitting Directors as possible as the inadequacies of the appointment process tends to detract from the utility of having independent directors on the Board.

The recommended best practice for appointing an Independent Director is to engage a consultant to recruit and recommend suitable candidates for consideration by the Nomination and Governance Committee for onward recommendation to the Board for approval. It is the responsibility of the Board, in addition to the criteria defined by the applicable Code of Corporate Governance to set out in clear terms the profile of the individual that would best fit the role. Whilst many public and regulated companies are in compliance with the requirement to appoint Independent Directors, the desired impact of having this type of Directors on corporate Boards is yet to fully materialize. Dr. Nat Ofo in his Article on Independent Directors in Nigeria: Myth or Reality(January 2013) is of the view that the various provisions of the Corporate Governance Codes in Nigeria are laden with inadequacies which are clear hindrances to achieving the purpose for which Independent Directors are required to be on the boards of public companies. He is of the view that the inadequacies are pointers to the fact that at present, independent directorship is still largely a myth in Nigeria particularly as their impact is neither felt nor appreciated. Ultimately, it is desirable that all directors should exercise objective and independent judgement as a Board composed of directors who are able to exercise

independent judgement is most likely to serve the best interest of all stakeholders. The regulatory framework for independent directors requires significant improvement. None of the codes sufficiently capture criteria by which the independent status of an independent director can be evaluated. Rather than a check-list than can be easily ticked off, global corporate governance practices point to the “independence of mind and character” as the ultimate test of independence. Given the peculiarity of the cultural nuances in our society, the test of affiliation is one which would appear quite relevant in the process of appointing an independent director and a criterion which regulatory authorities should take into account in future code reviews. Ultimately, the integrity of the process and the underlying intention to appoint a truly independent director for the value such an individual will bring on board are paramount. On Thursday, July 26th, 2018, We will be hosting a Corporate Governance Masterclass, themed “The Role of the Board in Business Sustainability” at the Fraser Suites, Abuja, where the topic “Safeguarding the Independence of Independent Directors” will be discussed extensively. Please contact ntaiwo@dcsl.com.ng for further details.

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Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

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

Monday 16 July 2018

As Nigeria misses the target for 80 percent financial inclusion

t appears the Central Bank of Nigeria (CBN) have given up hope on meeting the set 80 percent financial inclusion target which was projected to be achieved by the year 2020. The apex bank, in its refreshed exposure draft asserts that Nigeria is not on track to meet up with the 20 percent exclusion target as stated in the National Financial Inclusion Strategy (NFIS) of 2012. “Nigeria is not on track to meet the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012,” the apex bank disclosed in its website on Friday, 6 July 2018. According to CBN’s 2016 financial inclusion figures, just 58.4 percent of Nigerian adults were financially included with only 48.6 percent using formal financial services. This showed that Nigeria lagged in her inclusion targets of 80 percent (overall financial inclusion rate) and 70 percent (formal financial inclusion rate) of Nigerian adults by 2020. The NFIS though defined 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets, but

Nigeria still lags across all these measures. The reasons adduced for the inability to meet the target include economic recession, insecurity issues in the northern part of Nigeria, obsolete strategies, among others. The economic recession in the country as well as the insecurity in northern Nigeria is said to have hampered the progress of financial inclusion in the country, as they were never anticipated in the course of drafting the NFIS in 2012. Also, the slow uptake of digital financial services and limited rollout of national identity numbers restricted financial service providers to meet the knowyour-customer (KYC) requirements, as compiled from the CBN’s statement. Given that these difficulties exist, we feel they are far from the reasons why the country failed to achieve the 80 percent inclusion target. The reasons are more regulatory and not external factors as the CBN wishes us to believe. Despite the potential of digital finance to flourish in emerging economies because of the universality of telecommunication network coverage, it has been

very difficult to take off in Nigeria because of the retrogressive decision of the Central Bank of Nigeria to adopt a bank-led rather than a telecom-led approach to promoting digital financial inclusion of Nigerians. Nigeria has over 21 licensed mobile money operators but has been unable to replicate the digital financial services revolution that took place in Kenya, East Africa and other emerging markets. Also, the CBN’s regulatory bottleneck has continued to stifle the growth and flourishing of most fintech companies - which incidentally are start-ups that should be supported to grow – in Nigeria. For instance, a key CBN regulatory requirement for fintechs to be licensed to operate include 3 years tax clearance of each of the founders, draft agreements with technical partners, participating banks, switching company, merchants, telcos and any other party; payment of non-refundable application fee of N100,000 to CBN; and evidence of shareholders’ fund of N2 billion before a licence is issued. The initial capital requirement used to be N500 million but was recently jacked up to N2 billion. Should a mobile money start-

up even manage to provide the tax clearance, draft agreements from banks, telcos, partners, merchants and pay the N100,000 non-refundable application fee, where would it get the N2 billion shareholders’ fund just to be licensed? The requirements may also explain why over 80 percent of the licensed companies are based in Lagos. Meanwhile, the greater percentage of financially excluded Nigerians do not reside in Lagos but in the far interior of the country – where fintechs find it difficult to survive due to the strangling regulatory requirement. Currently, Nigeria has just 21 mobile money operators. If the CBN makes good on the revocation threat, the country will be left will less than 10 licensed operators servicing the over 60 million unbanked population in Nigeria. The new strategies outlined by the CBN for driving financial inclusion in Nigeria would not make any headway if the CBN does not embrace telco-led approach and creating of a robust regulatory environment for both big and small players in the industry to flourish and thereby help capture all the financially excluded in Nigeria.

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

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Monday 16 July 2018

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Monday 16 July 2018

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Labour party

Worker shortages could heal America’s economy Why a scarcity of labour is probably something to celebrate

INCE 2015 many hawks have continually suggested that the American economy is at or close to maximum sustainable employment. They have some explaining to do. Fully 5.8m more Americans are in work than in December of that year, when the Federal Reserve began raising interest rates. That is two-thirds as many as lost their jobs during the Great Recession. In May the unemployment rate fell to 3.8%, its lowest for 18 years (it has since risen back to 4%). Yet the economy has not yet overheated. Only recently has inflation hit or exceeded 2%, the Fed’s target, for three straight months—and that is partly because of a worldwide recovery in oil prices. Nevertheless, the hand-wringing has continued. The latest supposed problem is a labour shortage. For the first time since data began to be collected in 2000, there are more job openings than there are unemployed workers (see chart). Nearly 90% of small businesses who are hiring or trying to hire workers report that there are few or no qualified applicants, according to the National Federation of Independent Business. The shortage is reaching a “critical point”, read one recent CNBC headline. A lack of applicants for blue-collar jobs such as trucking and construction has received

particular scrutiny, as have states like Iowa where the unemployment rate is especially low (it is just 2.7% in the Hawkeye state). But portraying widespread labour shortages as an economic problem is misguided. While they may be bad for firms, they are a boon for society—so long as inflation remains contained. In fact, a labour market in which firms must compete for workers, rather than workers competing for jobs, should help resolve three of America’s biggest economic problems. The first is inadequate wage growth. From mid-2009 to the end of 2017, wages and salaries grew by only 2% a year on average. That outpaced inflation, but mainly because

petrol prices slumped in 2014. Today, however, paycheques are fattening faster. In the year to the first quarter of 2018, wages and salaries grew by 2.9%—equal to the average growth, though hardly the quickest, seen during the 2000s. Plenty of outside opportunities give workers negotiating power even without labour unions, which have been in near-terminal decline. In May 2.4% of workers quit their jobs, the highest figure since 2001—good news in an economy that has been plagued by falling dynamism. Jobswitchers are banking median pay rises of nearly 4%, according to the Atlanta Fed. In the jobs boom of the late-1990s, overall wage and salary growth reached 4.3%. At that time, fast productivity growth enabled wages to boom without provoking inflation. Yet the second benefit of economy-wide labour shortages is that they may precipitate faster productivity growth, which has been disappointing in America—and in other rich countries—since the financial crisis. If less profitable firms have to fold because they cannot pay enough to attract workers, their labour and capital can be put to better use. A similar process can take place within firms. Plagued by resignations, Dunkin’ Donuts, a purveyor of starch, sugar and caffeine, recently asked its ex-employees which tasks they disliked most, and then automated the dullest, such as writing labels and checking the quality of coffee grounds. Less prosaically, worker shortages might encourage firms to adopt path-breaking technologies such as artificial intelligence.

A labour shortage is also likely to reduce inequality. As wages stagnated, corporate profits—and stockmarkets—touched record highs. That has contributed to a feeling that the economy has tilted towards capital and away from labour. From 2000 to 2014 labour’s share of national income fell from just over 57% to below 54%. If rising wages reduce profits, labour’s share could yet rebound. Moreover, the biggest wage gains in a tight labour market tend to accrue to the poorest workers. Full-time employees at the 10th percentile of the income distribution are earning almost 4% more than a year ago. Firms are also reaching into untapped pools of labour. For years policy wonks have worried about rising disability rolls. Today nearly 10% of disabled workers who were outside the labour force a year ago are employed, a figure that has been steadily rising. There have been scattered reports of firms hiring more ex-convicts. Even a 30-year-old jobless man who recently gained notoriety after his parents went to court to evict him was offered work by a pizza chain as a publicity stunt. Some labour shortages are worth worrying about even while inflation is contained: those caused by restrictions on labour supply. Such barriers to entry are usually found at the top of the labour market rather than at the bottom. For example, extensive licensing requirements have shielded many higher-earning occupations from competition from immigrants. Foreign-born workers fill nearly two in five jobs in farming, fishing, forestry, building, groundkeeping and maintenance, but make up only 7% of lawyers and paralegals and 15% of skilled health-care workers. Burdensome rules needlessly require the involvement of American-trained professionals in simple processes. As a result, their jobs are unduly lucrative. Health care and law account for around one-quarter of the top 1% of earners. Whereas labour shortages spurred by a hot economy—while it lasts— may increase equality and boost productivity, restrictions on the supply of professionals act as a permanent regressive tax. To find a labour shortage worth worrying about, look in the hospital, not on the building site.

Freedom for one

China frees the widow of a Nobel peace-prize winner It shows no sign of easing up in its treatment of other human-rights advocates

IU XIA, the widow of China’s most renowned dissident of the 21st century, Liu Xiaobo, had been facing the grim prospect of commemorating the death a year ago of her husband while herself still having to endure house arrest in Beijing. But on the morning of July 10th, three days before the anniversary, the authorities allowed Ms Liu to board a Finnair flight to Helsinki for a connection to Berlin, where she has friends (she is pictured during her stopover in Finland). Germany had taken the lead among the many Western countries that had been pressing for her release. China’s prime minister, Li Keqiang, hap-

pened to be visiting Germany when news broke of Ms Liu’s long-awaited freedom. Her confinement began in 2010, days after her husband, then a year into an 11-year sentence for subversion, won the Nobel peace prize. Though never formally charged with any crime herself, she was usually prevented by security agents from leaving their apartment in Beijing, except under escort to buy groceries. She was allowed only limited access to telephone and internet services. Journalists who tried to visit were turned away. Officials said Ms Liu, 57, had gone abroad to seek medical treatment. This is often the reason given for allowing people in political disfavour to leave the country. Sometimes it is merely a face-saving excuse for freeing someone whose release could help China’s diplomatic efforts (in this case a likely aim was to butter up Germany as a potential ally in China’s battle with America over trade). “Thank you, Germans. Sorry for having delighted in your [World Cup] football loss,” wrote a blogger in Beijing to her nearly 50,000 followers on Weibo, a Chinese social-media platform. Censors deleted the message. But Hu Jia, a prominent dissident in Beijing, says Ms Liu’s medical needs are real. He says she has been suffering badly Continues on page 15

Monday 16 July 2018

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Jihad’s next battleground

The fight against Islamic State is moving to Africa Violent Islamist groups are gaining strength in the Sahel. A report from Nigeria and Niger

HEIR hair tightly braided, two young girls sleep head-to-toe in matching pink dresses with gold trim—a sight to gladden the heart were it not for the startling white bandages around their arms and legs. The beds in this ward are overflowing with patients, the rounded stumps of their amputated limbs pointing at the ceiling. Colour-coded tags hang near the door to sort casualties: red for the most urgent cases, black for those beyond help. They attest to the grim efficiency of the surgeons from the International Committee of the Red Cross (ICRC), gained from dealing with the unrelenting flow of bomb and gunshot victims. Their clinic is, perhaps, the only thing that works well in Maiduguri. Nigeria’s main north-eastern city is at the centre of a series of jihadist campaigns stretching in two broad belts across Africa on either side of the Sahara. The northern one hugs the Mediterranean, from Egypt through Libya and Tunisia to Algeria. The southern one extends from Somalia and Kenya in the east through Nigeria and Niger and on to Mali, Burkina Faso and Senegal in the west (see map). Such vast distances separate the different battlefields, that Dakar, in Senegal, is almost as close to Miami as it is to Mogadishu in Somalia. Much of the conflict is barely reported on, even though last year it claimed more than 10,000 lives, almost all of them civilian. It also involves a battle against what General Mark Hicks, the commander of American special forces in Africa, calls “probably the largest card-carrying group” of Islamic State (IS) members outside Iraq and Syria. The war has drawn in troops from America, France, Britain and Germany, and is attracting remnants of IS. Worryingly, it is a war that the jihadists seem to be winning. General Bruno Guibert, who commands

the French counter-terrorism effort in the region, Operation Barkhane, which has about 4,500 troops, claims that the campaign is making significant progress: “I can’t say the situation is getting worse, actually it is getting better.” Yet the statistics suggest otherwise: the number of violent incidents involving jihadist groups in Africa has increased by more than 300% between 2010 and 2017; the number of African countries experiencing sustained militant activity has more than doubled to 12 over the period, according to the Africa Centre for Strategic Studies, which is part of America’s Defence Department. Many Western officers are despondent. Without more troops “there is no question we will lose”, says a senior French officer. In the potpourri of jihadist groups, many pledge their loyalties to al-Qaeda or IS. They include al-Shabab in Somalia, Boko Haram and its factions in Nigeria, and Jama’a Nusrat al-Islam wal-Muslimin in Mali. In each country, conflict may be fuelled largely by local grievances. But the insurgents share some ideological traits. Many have been strengthened by the breakdown of Libya after the downfall of Muammar

Qaddafi’s regime in 2011. Weapons spilled out of Libya’s armouries, and smuggling networks for everything from people to drugs developed across the Sahara. There are signs that the jihadists are learning from one another and sucking money and support from militant groups in the Middle East. Emmanuel Macron, France’s president, warned: “The challenge for us is to manage the conflicts ... and stop them joining together.” The most important of the battles is Nigeria’s campaign against Boko Haram. With a land mass about as big as France and Germany combined, Nigeria is Africa’s most populous country (with perhaps 180m people) and its biggest economy. If a country with such resources cannot contain the jihadist virus, what hope for Africa’s poorer and less capable states? A retired general who once held a senior post at AFRICOM, America’s military command for Africa, puts it thus: “If Nigeria goes down it would make a giant sinkhole that would suck in six or seven other countries.” Nigeria’s difficulties, moreover, offer sobering lessons to many other African countries, and their Western allies. The Nigerian government insists that the war has already been won. “Boko Haram has been defeated,” says Tukur Buratai, Nigeria’s topranking general. Yet his assurance sounds hollow in the village of Kiribiri, about 20km (12 miles) from Maiduguri, where the limit of government-controlled territory is marked by a shallow ditch. A policeman points to the scrub beyond: “There is insecurity there,” he says. “That is Boko Haram’s.” Maiduguri was the birthplace of Boko Haram, whose factions make up the world’s deadliest terrorist group. It is so extreme that it sickens even IS and al-Qaeda. The group was founded by the followers of a charismatic Islamic preacher, Mohammed Yusuf, who had started a religious school and mosque in Maiduguri in 2002. “He was very convincing,” says one man who attended Yusuf’s sermons as a police informer. “He made me agree with everything he said.” Yusuf exhorted his followers to

reject the state (since it is created by man, not God) and “any type of knowledge that contradicts Islam”, including such notions as the world being round or that rain comes from evaporation. Although Nigeria’s northern states have long enforced sharia, or Islamic law, their interpretation was not strict enough for Yusuf. Among his demands was a ban on secular schooling (the group’s name, Boko Haram, means “Western education is a sin” in Hausa). By 2009 Yusuf’s men were attacking the police and army, and killing clerics who disagreed with his interpretation of Islam. The Nigerian police arrested and then killed Yusuf in front of a crowd outside the police headquarters in Maiduguri (the government insisted he was shot while trying to escape). Yusuf’s followers went into hiding before emerging under the command of Abubakar Shekau. In 2011 they blew up the headquarters of the Nigerian police and a UN building in Abuja, Nigeria’s capital. By the end of 2014 they had overrun large parts of three states in north-eastern Nigeria, gained international notoriety after kidnapping almost 300 schoolgirls from Chibok and were fighting their way into Maiduguri. Nigeria’s army, hollowed out by corruption, was in disarray. Units were filled by ghost soldiers whose pay was being pocketed by their commanders. One Western officer recalls how a company that should have had 100-150 soldiers consisted of just 20 men. Unlike IS in Syria and Iraq, which established civil administrations to run its self-proclaimed caliphate, Boko Haram did not at first try to govern. It preferred chaos. It bombed mosques and markets, massacred villagers and abducted women and children. Some girls were enslaved and sold. Others were pressed into being human bombs. A study by the Combating Terrorism Centre at West Point, a military academy, found that more than half of 434 such human bombs the group used between April 2011 and June 2017 were female.UNICEF, the UN children’s agency, says that last year Boko Haram strapped bombs to at least 135 children.

China frees the widow of a Nobel... Continued from page 14

from stress and depression. In May a Berlinbased friend of Ms Liu released a recording of his phone call with her in which she sobbed and spoke of wanting to die. She was, the friend wrote then, approaching “the brink of mental collapse”. It is remarkable that the authorities devoted so much effort for so long to silencing Ms Liu. She was not an activist herself, preferring other passions: art, photography and poetry. It was her husband who had angered the government with his long history of criticising the Communist Party’s rule. He was first jailed after being labelled a “black hand” behind the Tiananmen Square protests of 1989. His most recent incarceration was for organising the distribution of Charter 08, a manifesto that called on the party to respect human rights and allow truly democratic elections. His death was the first in custody of a Nobel peace-prize winner since that of an antiNazi dissident in 1938. Ms Liu’s release may remove an irritant in China’s relationship with Germany, but it will do nothing to convince it or other Western countries that China is easing up in its treatment of dissidents. A day after Ms Liu was freed, a court in the central city of Wuhan sentenced another dissident, Qin Yongmin, to 13 years in prison for subversion. It was one of the toughest punishments imposed for this offence in recent years. Mr Qin stayed silent throughout his trial, knowing what he faced. He has already spent 22 years behind bars for demanding democracy. The anniversary this week of the “709” crackdown of 2015, named after the date when hundreds of civil-rights lawyers and other activists were rounded up, was a reminder of how tough life remains not only for political dissidents, but even for those who try to use China’s laws to defend people against abuses of power. Many of those detained remain in custody. Even members of their families are sometimes harassed by officials. Such suffering, merely for kinship with someone disliked by the government, is unlikely to be over for Liu Xia’s family. She has left two brothers in Beijing. The younger one, Liu Hui, has been repeatedly jailed on fraud charges in recent years. Activists believe the real reason for his punishment is simply his ties with her. Hu Jia says the brother will be used as a hostage to ensure that Ms Liu minds her tongue in exile.

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Monday 16 July 2018 In Association With

Diligence disrupted

Law firms climb aboard the AI wagon Algorithms could relieve some of the legal profession’s tedium

ONG hours have been the bane of the legal profession for ages; few of them involve thrilling courtroom antics. As a junior corporate lawyer at Davis Polk & Wardwell, a law firm in New York, John Bick remembers spending most of his waking hours poring over contracts looking for clauses that could complicate or kill off a deal. Even once he became a partner he still had to pitch in on due diligence for large transactions. In 2015 nearly a third of British lawyers were looking to leave the profession, according to the job searches of more than 1,000 of them by Life Productions, a career-change consultancy, perhaps because of the drudgery. Such dissatisfaction may recede in future. Now on his firm’s management committee, Mr Bick is drafting in artificial intelligence (AI) to do the gruntwork—like many others at top law firms in New York and London. The shift could transform lawyers’ work and slash costs for clients. Prestigious firms make their money by throwing large numbers of bodies at huge stacks of paperwork. During discovery, a

pre-trial procedure in America, for example, both sides exchange heaps of documents that must be combed through for evidence. Junior lawyers dig up and compare judges’ decisions on similar cases, or arguments previously made by opposing counsel, to prepare for litigation. A growing number of legal startups now apply machinelearning techniques to these tasks. The algorithms can process much more paperwork than humans in a fraction of the time. They recognise clauses and point out anomalies. They might highlight contracts where liability is unlim-

ited rather than limited. They can even point out contracts where key clauses are absent. The latter is something that humans do not always reliably do, says Noah Waisberg, a former corporate lawyer who founded Kira Systems, a software tool that uses machine learning to review contracts. The potential gains are large. Due diligence can be so timeconsuming that it typically accounts for as much as half of the fees that lawyers charge for advising on deals. Many firms, including Davis Polk, as well as Freshfields and Clifford Chance in London, use Kira to help with

document review. The firm’s software is trained on a set of documents to recognise more than 450 clauses, such as “change-of-control” provisions which specify the termination of a contract in the event one of the parties is taken over. Lawyers can then tinker with it further to recognise more obscure clauses, or even those in different languages. Other software firms that use AI to review documents include Luminance and RAVN, both of which are based in London and count big law firms as customers. Machine learning can also help prepare for trial. It speeds up discovery, and assists lawyers in drawing up a litigating strategy. Lex Machina, a Silicon Valley startup now owned by Lexis Nexis, a legal-information provider, uses court documents from previous cases to make predictions about a particular case, such as its time to trial, its likelihood of success in various jurisdictions, and the damages it could win. Some tech firms are aiming at full disintermediation, developing “robot lawyers” to deal with certain tasks. LISA, a British AI tool,

helps people draw up non-disclosure agreements, removing the need for expensive human lawyers to be apprised of confidential (and perhaps embarrassing) details. Others aim to help people appeal against parking tickets or draw up rental leases without incurring legal expenses. The savings from using machine-learning software are often hard to predict. It is early days and every case is different, says Isabel Parker, chief legal innovation officer at Freshfields. But the time spent on document review can fall by as much as 80%, which is likely to translate into lower fees for clients. Will legal employment eventually shrink? The jury is still out. Some firms expect to employ fewer graduates. But others argue that cheaper services could encourage clients to consult their lawyers more. And although some tasks are automatable, many others rely on human judgment. AI might pinpoint atypical clauses in contracts, for example, but it cannot decide if the anomaly is a deal-breaker. In any event, lawyers should start to find their work more interesting.

The arc of justice

Brett Kavanaugh could shape the law for the next 40 years Donald Trump’s second Supreme Court nominee is sceptical about abortion rights and will rein in regulatory agencies

RETT KAVANAUGH, President Donald Trump’s second nomination to the Supreme Court in as many years, enjoys coaching girls’ basketball and feeding the homeless. He has twin degrees from Yale. He clerked for three judges, including Anthony Kennedy, the man he will probably replace. Since 2006 he has been a judge on the second-most powerful tribunal in America, the Court of Appeals for the District of Columbia Circuit. Mr Kavanaugh is highly qualified, an unremarkable choice for a Republican president. Jeb Bush or Marco Rubio might have picked him. Yet Mr Kavanaugh is also a political animal. He worked for Kenneth Starr, the independent counsel charged with investigating Bill Clinton’s liaison with Monica Lewinsky and the suicide of Vince Foster, a friend and colleague of the Clintons. Mr Starr’s report, partly written by Mr Kavanaugh, set out the case for impeachment. Mr Kavanaugh then worked in George W. Bush’s White House. Mr Bush rewarded this service by nominating Mr Kavanaugh to the DC circuit (his confirmation was delayed for years because Senate Democrats considered him to too partisan a choice). Mr Kavanaugh

has insisted that judges must always put party politics aside. His installation on the Supreme Court will test whether that is really possible. He has been vetted and vaunted by the Federalist Society, the conservative legal organisation that has cultivated talent since early in the Reagan administration, identifying candidates in law school and preparing them to enter the nation’s courts and stem the liberal tide. The nearly 300 opinions Mr Kavanaugh wrote as an appellate judge contain few surprises. Since the DC circuit court hears mainly regulatory and separation-of-powers cases

that tend not to make front-page headlines, he has taken only occasional and often oblique positions on divisive political questions. In a case that touches on one of the biggest questions likely to come before the court, over the legal status of abortion, Mr Kavanaugh’s opinion included a telling line. Garza v Hargan concerned a 17-year-old girl who was pregnant when she arrived illegally in America in September 2017 and then sought an abortion. The DC circuit court sided with the girl, provoking a dissent from Mr Kavanaugh. The decision to allow the girl to have the abortion was “based

on a constitutional principle as novel as it is wrong”, he wrote. His colleagues had wrongly invented “a new right for unlawful immigrant minors in US government detention to obtain immediate abortion on demand”. The scarephrase (“abortion on demand”) and redundant adjective (“immediate”) contained a message. By arguing that it is no “undue burden” to require a girl who is 16 weeks pregnant to wait another fortnight for an abortion, Mr Kavanaugh also signalled that he had interpreted Planned Parenthood v Casey, a case from 1992, as permitting the kind of onerous regulations used to shut down abortion clinics. In his dozen years as an appellate judge, Mr Kavanaugh has shown a willingness to curtail federal agencies. His has been a consistent vote to rein in the authority of the Environmental Protection Agency (EPA), for example. In 2012, he wrote that the EPA had exceeded its charge in policing greenhouse gases under the Clean Air Act. Two years later he said the agency had erred in failing to consider costs when regulating power plants. In 2016, Mr Kavanaugh wrote that because the Consumer Financial

Protection Bureau—established by Congress in 2011 in the wake of the financial crisis—had a director who could not be fired without cause, it unconstitutionally interfered with the president’s power. Independent agencies, he wrote, exert “massive power” in the “absence of presidential supervision” and thus “pose a significant threat to individual liberty”.

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EFG Hermes concludes advisory on ASA International 125mn pounds London Stock Exchange IPO ... firm’s extensive African footprint touches Nigeria, Ghana, Tanzania, others

FG Hermes, a leading financial services corporation in frontier and emerging markets (FEM), has concluded advisory to international microfinance lender ASA International (ASAI) on its GBP 125 million initial public offering on the London Stock Exchange (LSE). With a 12-country footprint spanning Asia and Africa, ASAI is one of the world’s largest private-sector microfinance institutions with 1.9 million clients. EFG Hermes was joint bookrunner on the transaction alongside Investec plc, while Citigroup Global Markets acted as sole global coordinator and Keefe, Bruyette & Woods (KBW) as lead manager. Shares of ASAI have been admitted to trading on the main market of the LSE with a premium listing under the stock ticker “ASAI.” The offering saw ASAI’s selling shareholder, Catalyst Microfinance Investors (CMI), offer 40,000,000 shares or 40 percent of ASAI to institutional investors at an offer price of GBP 3.13; accordingly, ASAI’s total market capitalization at admission today was GBP 313 million. “This is a milestone transaction for EFG Hermes and one that marks the firm’s first investment banking foray in

frontier markets following the launch of our frontier strategy in early 2017,” said Ali Khalpey, the London-based CEO of EFG Hermes Frontier. “In just over 18 months since we began building our frontier platform, we have directly entered three new frontier markets; established distribution and sales capabilities in New York, London, Pakistan, Kenya, and Bangladesh; expanded our execution to cover 95 percent of the MSCI Emerging & Frontier Markets Index; and were ranked as the number one frontier market brokerage firm in the Extel Survey 2018”. “With the successful conclusion of ASAI’s high-profile IPO, we have once again shown our ability to book build and transact in frontier markets with an unrivalled global distribution platform supported by world-class research, brokerage, and investment banking services,” Khalpey added. ASAI maintains a loan book with over 1.9 million clients comprised of low-income, predominantly female entrepreneurs across Asia and Africa. The global microfinance lender has outstanding loans of $ 300 million and serves its customers through a 1,400 branch network with some 9,000 employees operating in India, Pakistan, Ghana, Nigeria, Philippines, Kenya, Myanmar, Sri Lanka,

Uganda, Rwanda, Sierra Leone and Tanzania. The company recorded a pre-tax profit of USD 43.4 million in 2017, up 64 percent year-on-year. “EFG Hermes has again demonstrated its ability to tap a global client base and utilize its unrivalled network of MENA clients to raise demand

for compelling opportunities outside our traditional markets,” said Mohamed Fahmi, co-head of Investment Banking at EFG Hermes. “The investment banking division has consistently been the MENA region’s top-ranked ECM advisors by market share. Our vision is to repli-

Finance Banking Awards 2018 celebrates the institutions that can confidently proclaim they are part of a more responsible and sustainable industry than the one that existed ten years ago. Over the past 12 months, these organisations have helped set new benchmarks for the financial sector in terms of customer service and digital innovation.” One Bank that has recorded remarkable accomplishments in its very short years of operation is Coronation Merchant Bank. The Bank has established itself as a dominant player, sitting at the very top of the investment banking industry in its native Nigeria.” Commenting on the award, Abu Jimoh, group managing director/CEO of Coronation MB said, “we are delighted to be recognized as the Best In-

opened offices in Pakistan, Kenya, and Bangladesh and has acquired an FCA license to operate in the UK. These expansions have enabled the firm to offer a comprehensive suite of research, brokerage, and investment banking services to a broader network of domestic and international clients.

L-R: Bitrus Bako, permanent secretary, Ministry of Science and Technology; Ogbonnaya Onu, minister, science and technology, and Gloria Elemo, director-general, Federal Institute of Industrial Research Oshodi, FIIRO, at the World press conference on the presidential executive order No. 5 in Lagos

Coronation Merchant Bank wins Best Investment Bank at World Finance Awards eading African financial institution, Coronation Merchant Bank has been named the Best Investment Bank in Nigeria at the 2018 World Finance Awards. Since 2007, World Finance magazine has been celebrating individual and company achievements, innovation and brilliance through its annual awards. The judging panel boasts over 230 years of financial and business journalism, supported by a research team that works relentlessly to ensure its award winners are the most deserving in their sector. Every year, it provides a comprehensive coverage and analysis of the financial industry, international business and the global economy. According to Michael McCaw, group managing director of World Finance, “The World

cate our MENA success story into newly-entered markets through finding attractive investment plays that cater to the appetite of our global network of clients,” added Fahmi. EFG Hermes began executing its frontier expansion strategy in early 2017 and has since

vestment Bank in Nigeria. Our successes and achievements over the years is a reflection of the hard work and commitment of our staff, management and Board in ensuring we maintain our core values of integrity, innovation and excellence in service delivery”. He further stated that, “This award affirms that we are on course to achieving our longterm goal of becoming Africa’s premier investment bank”. Coronation Merchant Bank group was established to fill the gap in a long-underserved market segment, seeking to address the need for long term capital across key sectors of the economy. The Group offers investment and corporate banking, private banking/wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/

brokerage, asset management and trustees services via its subsidiaries; Coronation Securities Limited, Coronation Asset Management Limited respectively. Driven by its vision of becoming Africa’s premier investment Bank and with an asset base of over N130 billion, the Banking group is certain to leverage its privileged direction by some of Nigeria’s individuals who excelled and rose to the top of merchant banking sector at its height of excellence to become the industry model for risk management, corporate governance and responsible business practices. Coronation Merchant Bank’s quest for industry distinction is evident in its recently unveiled corporate identity which has been designed to communicate the Group’s vision, ambition and inner strength.

AOS Orwell completes actuator valve assembly for Abo FPSO on behalf of BW Offshore Nigeria DIPO OLADEHINDE

aharan Africa foremost indigenous oilfields service conglomerate, AOS Orwell has announced its significant achievement in the expansion of local content footprint in Nigeria. The company had embarked on locally assembling and delivering 16 No. Actuator Valves for use in the Abo Floating, Production, Storage and Off-loading (FPSO) project on behalf of BW Offshore. This feat was achieved in conjunction with AOS Orwell long standing strategic partners and original equipment manufacturers (OEM), Emerson – Bettis and KACE Valves. The Abo FPSO Life Extension Project (LEP) operated by BW Offshore on behalf of ENI Energy - Nigeria Agip Oil Exploration (NAE ) was designed to ensure extended operational design life for the facility. The project includes upgrades to the existing topside laterals, exterior, accommodation and marine systems. AOS Orwell

was contracted for the provision and supply of Actuated Valves – Shut down Valves (SDV) and Blowdown Valves (BDV) in the Main Gas Compressor (MGC) Trains B and C of the Abo FPSO. The scope of work comprise project management, design engineering documentation review, Valve and Actuator mechanical assembly and integration, customer witnessed Factory Acceptance Test (FAT), and delivering of assembled Valve and Actuator to the customer on schedule. General Manager, Services – Process Management Division (PMD), AOS Orwell, Abumenre Odigie said “This is a significant achievement in the vista of our operations and speaks to the position of our company as pioneers in the industry. The assembly of the 16nos Valves and Actuator locally, apart from saving time and money, has brought this activity closer to the customer to witness the Factory Acceptance Test (FAT) first-hand, the assembly, integration and functional tests of the Valves and Actuators while complying with global standards.”

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COMPANIES & MARKETS SystemSpecs sees technology adoption help insurers understand behavior, needs of clients Modestus Anaesoronye

echnology adoption will help insurance and other financial service providers understand the behaviour and needs of clients in the efforts to deepen penetration through financial inclusion John Tani Obaro, MD, SystemSpecs who made the observation at the recently concluded National Insurance Conference (NIC) held in Abuja. Obaro speaking on the theme “Leveraging technology for financial inclusion” said technology has demonstrated a strong potential to

help improve access to and quality of financial services for the unserved and underserved population. Obaro stated that Nigeria lags behind in inclusion targets across every measure and is not on track to meet the targets by 2020, as provided by the Central Bank of Nigeria. Target is that by 2020, the number of adults in Nigeria with access to payment services will increase from 21.6 percent to 70 percent; Savings will increase from 24.0 percent to 60 percent; credit will increase from 2 percent to 40 percent; Insurance from 1 percent to 40 percent and Pensions from 5 percent to 40 percent. “Exciting technology inno-

vation is happening in emerging markets and very much in Nigeria through new products and services launched by startups and through partnerships with banks and corporates.” Obaro also noted that if the financial institutions including insurance companies fail to exploit the advantages of technology, Nigeria might not achieve its NFIS targets in the nearest future. He identified greater technology collaboration between stakeholders, disruption of value chain, focus on smart data, open platform and APIS, and the use of alternative information as ways financial institutions can use technology to ensure that all households ir-

respective of income level have access to financial services. “By leveraging technology, many insurance companies will change the way they are presented. It will change the point of transaction.” Obaro also noted that appropriate financial services can help improve household welfare and spur small enterprise activity, stating that economies with deeper financial intermediation tend to grow faster and reduce income inequality. “Digital Technologies can play a key role in addressing the issue of poverty eradication within a balanced mix of Responsible Regulation, Relevant Skills & Accountable Institutions.”

L-R: Adekunle Ajanaku, special adviser on security and intelligence to the governor of Lagos State; Wale Olaoye, group managing director, Halogen Security Company Limited; Tajudeen Balogun, commandant, Lagos State Command, Nigeria Security and Civil Defence Corps; Michael Onyedikachi Akpa, deputy provost, College of Post Graduate Studies, Babcock University; Bash John, one of the graduands, and Wale Adeagbo, chief operating officer, Academy Halogen, at the maiden graduation ceremony of Academy Halogen’s Diploma in Security Management in Lagos.

C & I Leasing completes takeover of Petrotech Joint Venture

&I Leasing has concluded the buyout of the 27.5 p e r c e n t m i n o rity shareholdings in C&I Petrotech Marine Ltd where it has a Joint Venture with 6 vessels deployed to a long term contract with Shell Petroleum Development Company of Nigeria (SPDC). C&I Petrotech Marine Limited is now a fully owned subsidiary of C&I Leasing Plc with Wizer Advisory facilitating the transaction as

an independent advisor for the valuation of the shares for both parties. “Our journey into the Maritime sector as an oil & gas provider in the oil & gas sector actually started through the C&I Petrotech Marine Joint Venture in 2010 and has over the years culminated into twenty vessels” Andrew Otike-Odibi, managing director of C&I Leasing said in a press release. The managing director of the company, further reiterated that the buyout was targeted at driving the com-

pany’s restructuring and repositioning in its marine business to enhance profitability. “This clearly reiterates our commitment to growing our marine service business and gaining and gaining leadership in the field” Andrew said. C&I Leasing recently raised a N7 billion bond issue which the company claimed would be largely invested in expansion and restructuring of company’s debt over five years. This buyout transaction is an indication of the management’s commitment

onnect Nigeria, in collaboration with Union Bank, one of Nigeria’s most trusted financial institutions, has announced the release of the Top 100 Emerging SMEs list. The Top 100 Emerging SMEs initiative which was launched in February at the annual Connect Nigeria eBusiness fair for Small to Medium Enterprises (SMEs), aims to identify and celebrate some of Nigeria’s upcoming SMEs who have demonstrated laudable resilience by thriving in a challenging business environment. At the preliminary stage of the process over 13,000 entries were received, from which 2,460 unique SME nominees that met the stringent requirements emerged. The selection process to choose the final list of 100 emerging SMEs involved a combination of voters’ polls and an assessment of the SMEs by the consulting firm, Sawubona. This was based on criteria including innovation, scalability and business sustainability evidenced by the existence of business company registration, effective book keeping methods as well as branding and online presence. Over 27,500 votes were cast in the race to select the finalists. The British Council and Lagos Chamber for Commerce and Industry (LCCI) were also part of the initiative set up to honour some of Nigeria’s top SMEs. Speaking on the list, Emeka Okafor, chief executive officer of Connect Nigeria said: “Our passion is helping SMEs succeed. In addition to identifying and celebrating some of Nigeria’s top emerging SMEs, a major objective of this initiative was to demonstrate to the SMEs the need for the

adoption of proper business structures and documentation in order to build bankable businesses which allows them access much needed funds for growth.” Also commending the finalists, Paul Aseme, head of Retail Segments, Union Bank Plc said: “On behalf of Union Bank, congratulations to all the Top 100 emerging SME finalists. As a bank that has been around for over a century, Union Bank’s commitment to supporting Nigerian SMEs stems from our deep understanding of the challenges these businesses face. This is why our SME segment at Union Bank provides banking solutions tailored to meet their unique needs and provide these entrepreneurs with the guidance and support they need to succeed.” Union Bank’s sponsorship of the Top 100 Emerging SME initiative reiterates its continued support for Nigerian businesses. Through capacity building workshops for its SME customers across Nigeria, the Bank has helped provide much needed business advisory and support services to these growing businesses. Last year, in partnership with Co-creation Hub (CcHub), Union Bank launched a first-ofits kind business acceleration program ‘Start up Connect’ which provides an opportunity for Nigerian companies creating technology-based solutions for the next generation African market, to partner with CcHub and Union Bank for rapid growth. Union Bank’s commitment to SMEs has earned it the “Best Bank to Support Nigeria’s Small and Medium Scale Enterprises” award at the 2016 Business Day Annual Banking Awards.

Babington-Ashaye’s Presidential Valedictory lecture holds Wednesday

...takes 100 percent ownership of 6 vessels Oluwatosin Dokunmu

Union Bank, Connect Nigeria celebrates Top 100 Emerging SMEs

to business growth and expansion. C & I Leasing has been in operation for two decades and has evolved from being a simple consumer finance leasing company to diversified leasing business service providing support services to various organizations in West Africa. It operates along three lines which includes; Fleet Management, Personnel Outsourcing and Marine Services with two subsidiaries in Leasafric in Ghana and EPIC International FZE in United Arab Emirates.

unmi BabingtonAshaye’s Presidential Valedictory Lecture, as part of activities to mark the end of her tenure as the 48th President and Chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN) will hold on Wednesday 18th July 2018 at Oriental Hotels, Lagos. The lecture with the theme ‘Insurance and Generation Next: Meeting the needs of stakeholders will be delivered by Babington-Ashaye herself, which will chronicle her success in office and the

future of insurance industry in Nigeria. Ibukun Awosika, chairman of First Bank of Nigeria Limited will be the chairperson of the event expected to attract ‘cream-de-la-cream’ of the insurance and financial services industry. While discussants of the lecture will be Wole Oshin, group managing director of Custodian Investment Group; Yetunde Ilori, director general, Nigerian Insurers Association and Muda Yusuf, director general, Lagos Chamber of Commerce and Industry.

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COMPANIES & MARKETS Technology impact of modern transportation system in Lagos JOSHUA BASSEY

n the developed economies, intra-city commuting is not just convenient but fun. It is aided by well paved roads and, more importantly, deployment of smart technology like Intelligent Transport System (ITS) which offers commuters the luxury of planning their trips in a manner that time wastage is almost eliminated or reduced to the barest minimum. Technology gives the commuter an insight into the operations of buses and trains plying different intra-city routes. It captures the arrival and departure of each bus or train at designated stations. Commuters are able to work within the scheduled time; get to the station and board without long hours of waiting and sweating. Nigeria is known not only lagging behind in basic public transportation infrastructure, but also for sheer insensitivity to the essence of time in productivity. Commuters waste productive man-hours at bus stations resulting largely from unorganised public transportation system. As a consequence, workers in both public and private sectors arrive at work late and exhausted with grave implications on national productivity. In many of the urban cities, there are widespread complaints by commuters against poor public transportation system. It is worse in a city like Lagos with an estimated huge population of 21 million people with resultant road congestion. The Bus Rapid Transit (BRT) scheme was introduced in 2008 as an interventionist measure by the state government to address some of these challenges. The idea of building a segregated lane for the BRT buses was to ensure that commuters who choose to ride the buses are saved the agony of time wastage and high level inconvenience associated with other buses, especially the yellow colour commercial transport operators. Hence the preaching to car owners at the time to leave their vehicles at home and join the BRT buses to and from work. It all seemed to work well the first few years until the culture of lack of maintenance caught up with the operators and the buses started depreciating. At the official launch of the BRT scheme into the state public transportation system in May 2008 by the former governor, Babatunde Fashola, 126 new high capacity buses were introduced. The first operators

of the system- Nigerian Union of Road Transport Workers (NURTW) cooperatives would acquire additional buses to beef up the fleet to about 200 buses. However, by 2014 prior to Fashola’s exit in 2015, the fleet had depleted to about 80 buses. This was even as passengers’ patronage had increased significantly. It became obvious the operators could no longer cope, as new buses were not being injected to strengthen their operations. This was blamed majorly on lack of spare parts, as the operators resorted to fishing spare parts from carcasses of packed up buses within its garage at the Ojota loop to service those in operations. The old buses still in operations were fast becoming like the “molues” with passengers hanging at the doors. This was at the time BRT services were only available from Mile 12 to CMS on the Lagos Island. The scheme had since expanded its scope to Ikorodu town; a densely populated outskirts of the Lagos metropolis where residents are gravitating because of comparative advantage in home rental. Against the background of the deteriorating services by the NURTW, and the myriad of complaints by the commuting public, the new administration of Akinwunmi Ambode in November 2015 withdrew the BRT franchise from NURTW and vested same in Primero Transport Services Limited. Dayo Mobereola, Ambode’s commissioner for transportation at the time had justified the action: “The termination of the franchise agreement with the operator is sequel to breaches of the BRT operations Service Level Agreement (SLA) it signed with the state government despite years of discussions and engagement to ensure the SLA was adhered to. “Though the service level agreement requires a onemonth notice prior to its termination, the Lagos Metropolitan Area Transport Authority, (LAMATA), custodian of the agreement, had indeed given a three-month notice which the operator failed to honour.” He further explained the government’s decision was premised on the inability of the operator to offer good public transport services to commuters on the all-important BRT corridor. “This has led to incessant complaints by members of the public over poor services provided by the operator and the deployment of vehicles not safe for use by the commuting public.”

The flag off of operations by the new franchisee - Primero Transport Services Limited, with air-conditioned buses in November 2015 was a relief, as the introduction of 434 buses ensured that passengers no longer spent hours at bus stations before boarding. Recently, in an effort to add value to the system and woo commuters, Primero in partnership the Lagos Area Metropolitan Transport Authority (LAMATA), the regulator of the scheme, decided to introduce the intelligence transport system into the BRT operations. Abiodun Dabiri, managing director of LAMATA, said the ITS in addition to helping commuters plan their journeys would also enable the operators build a database for a robust and efficient service delivery going forward. “Commuters can plan their trips better using the BRT services. An application, Lagos BRT app, has already been developed to assist commuters in planning their journey. The app is on the Apple store and Google play store.” According to Dabiri, commuters can download the app on their phones to enjoy the benefit of planning their trips while monitoring the deployment of buses along the BRT corridor. He said: “In order to make the download easier, we have provided pull up banners with the quick response code to easily download the app.” Connected to the new technology is an electronic ticketing system. This, according to Dabiri, comes with a huge benefit to all stakeholders in the BRT family. Aside ensuring revenue security and providing veritable platform for data collection to both the operator and the regulator, the e-ticket also provides commuters the convenience of loading money on the card. “To use the e-ticketing system, there are two validators on the buses – the front for tap in and rear for tap out with the e-ticketing card known as the Lagos Connect. The front validator also validates the paper ticket which can be used for accessing BRT services. To load the cards, there are handheld devices for top up of cards or vend paper ticket at the terminals and bus shelters. The e-ticketing system runs on a robust platform with adequate security against hacking and information theft,” said Dabiri. Fola Tinubu, managing director of Primero Transport Services Ltd, also confirmed that the ITS and the e-ticketing was a win-win for the operator, patrons of the BRT service and the regulator.

Business Event

L-R: Funmilola Paseda, regional retail head, Lagos & South-west of First City Monument Bank (FCMB); Rachael Ajao, one of the new recruits into the Nigeria Police Force; Gbemisola Akinpelu, commandant, Police College, Ikeja in Lagos, commissioner of police; Emmanuel Comla, zonal head, Lagos Island, FCMB, and Omowunmi Kalejaiye, zonal head, Victoria Island, during the donation of tables and chairs by FCMB, under the Bank’s Corporate Social Responsibility, to the Police College in Ikeja, Lagos

L-R: Demola Sogunle, chief executive, Stanbic IBTC Bank; Babatunde Macaulay, executive director, personal & business banking, Stanbic IBTC Bank; Olufunke Amobi, country head, human capital, Stanbic IBTC, and Boye Ademola, partner & lead, digital transformation technology, KPMG, at Stanbic IBTC Bank PLC’s 2018 Work Place Banking Seminar in Lagos

L-R: Ifeanyi Madubuike, representative of ARM Trustees Limited; Eddy Eguavoen, chairman, Mixta Nigeria, and Kola Ashiru-Balogun, managing director, Mixta Nigeria, during the annual general meeting of Mixta Nigeria in Lagos

L-R: Ojoma Okotie, sales director, Lumos Nigeria, presenting one of the 100 units of the customized Lumos Solar Systems donated to the Nigerian Army to Tukur Buratai, chief of army staff, during the Nigerian Army week 2018 at the Monguno Army Barracks in Borno State

Monday 16 July 2018

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Managing

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GOVERNMENT

BUSINESS DAY

KEMI ADEOSUN

BUSINESS

Finance Minister

Interview with Public Sector Leaders

‘We cannot afford to be complacent’ - Adeosun As Nigerians still struggle to understand the economic policy direction of the Buhari led administration three years after, finance minister, KEMI ADEOSUN insists that the narrative has changed, though no room for complacency as she speaks to BusinessDAY’s John Osadolor, Onyinye Nwachukwu, Tony Ailemen and Harrison Edeh in this exclusive interview.

ou announced that over N1.5trn was released for 2017 capital expenditure, people are wondering what those monies were spent on? Accountability and transparency are what this president stands for, as a professional I think that any figure we put out, we can back up substantially. We have put out the capital releases now for the last two years of budget specifying which departments, agencies and ministries we have released funds to. Those figures can be verified, you can go to the ministries, the department and agencies to confirm. Now let me speak about some specifics. The National Economic Council which comprises the state governments and the federal government and chaired by his Excellency the vice president met, and each of the main ministers presented their budget. I was seated when the minister of power, works and housing said categorically that he is working in every of the 36 states in the federation and a couple of governors said no you are not in my state and he said specifically, no I am there, mentioning the contractors and the projects they are handling in each state. What is going on in capital projects is unprecedented, it spreads across the country. On the issue of visibility, if you go to Lagos- Ibadan you will not say we are not working, if you look at the airport here in Abuja you cannot say we are not working, if you look at the rail projects, I was in Lagos the other day, they have dug up the roads and you can see where the rail lines are, you cannot say that we are not working, I think it is unfair and disingenuous for someone to say that the figures are not real. These are real capital releases not allocation, they are cash backed, released to agencies and ministries. I want to challenge you to go to those ministries and say according to the ministry of finance these is how much you received, can you tell us where these projects are, these can be verified, the budget is transparent, it is on the budget website, these can be verified. You see the issue is this, for us to grow our economy, we have to fix our infrastructure, there is no way a country of our size, with its population, and geographical spread cannot fix its infrastructure and that is what is holding us back. Ask the manufacturers, they will tell you their biggest problem is power, even transporting goods is too expensive. So we find ourselves depending on imports. When we got into office, we said we have to fix this, we have been neglecting infrastructure for so many years. By the time we got in, in 2015 the total amount spent on road for the entire federation was N19 billion. I was a commissioner in a state and in one year we spent more than N19 billion,

what can N19 billion do, when you look at how big our road network is? So we have been neglecting infrastructure. When we got in, only 10% of government spending was on capital, 90% was recurrent, so we said we have to change it if we really want to get this economy moving and it is not an overnight thing, we cannot change from years of neglect to years where the policy of government as far as capital releases is concerned becomes first. You pay your salaries, then pay overheads, then pay debt and whatever is left capital, that was the situation before we came in, but we said no, no, capital first because what will grow the economy is sorting out the infrastructure. And I dare anybody to come up and show me an example of a country that was able to grow without infrastructure. People talk about India, China, the difference between them in terms of growth is that China deals with infrastructure led growth and India is very much service led. I think we must have to accept in Nigeria that look, unfortunately when we had high oil prices, and a phenomenal opportunity to have done these things, we didn’t do it, and we must be honest with ourselves. But this government is coming in to say look, we are at a tough time, the money is not there but we have to do these things. The other point which is very important and related to your point is that we have 36 states, every single person wants development in his state, we can’t concentrate on a few places, so our commitment to infrastructure spending is real, it is cash backed, we are serious about it, there is no alternative to it, if we do not fix our infrastructure we cannot unlock this economy. Agriculture is about 25% of our GDP, we are using hoes and cutlass, we hardly have tractors and yet we have 25%, so what happens if we fix our infrastructure? Let me use an example, what we call Irish Potato is actually grown in Plateau, we are about to launch a project there, we have 45% post-harvest losses because of the roads. By the time the farmers get the thing out, it’s rotten, no power to store, no power to process maybe into potato flour, to chips, nothing. But if you begin to put the infrastructure in place there, imagine what that will do. As bad as it is now, we supply potato to Ghana. Potato is exported from plateau to the west African region, what happens if we fix the infrastructure, imagine the impact on our GDP, on the farmers, on job growth, all these are driven by infrastructure, if you don’t have it you can’t do it. We are importing what we have capacity to produce, so it is a real change that we are trying to effect here and it is an infrastructure driven growth story, so those figures are real, I challenge you to go to the ministers, tell them the minister of finance said she released this amount to them, can you show

???????????? us the projects? We actually put signs out there to say that this project is funded by the sukuk. What I think and I will agree with you is that there is infrastructure deficit, so what we are doing is like a drop in the ocean but it has to start from somewhere. We got to crowd in the private sector and we cannot do it on our own, even if we devote our entire budget for capital spending, it is nothing. We are working with the private sector on the infrastructure tax credit which gives companies tax incentives to fix roads, and other infrastructure. Why that is important apart from the fact that it is bringing more money in is that it is bringing value. What happens is that the private sector says well, I do 10 km for X, then we will be able to go to our ministry and say why is yours costing more, it will give us a better value. I am very clear in my mind that as far as growth is concerned we must fix our infrastructure. Does that mean that we have to focus on certain things to the exclusion of others in the short term, unfortunately yes. There is no way round it, to create job opportunities for our huge population we need infrastructure, that is what is going to open up and make our states viable, that is what is going to stop this drift from rural to urban, that is what is going to solve

the problem of migration. I went to world bank spring meetings in Washington and they were talking of migration, that those people mostly come from Edo state, and I said to them, those people who are ready to cross the desert and risk their lives are my entrepreneurs, I need them in Nigeria to build my economy, but we also need the government to provide that enabling infrastructure for them to thrive. The average Nigerian is extremely entrepreneurial, what they have not had is opportunity, but here is a government that says look, we will enable you to fly, the Chinese does not have two heads, they are not in any way more hard working than Nigerians. How do you intend to implement over N2 trillion capital in 6 months, and fund the entire budget without extremely expanding our borrowing? On the issue of timing, the president, laying the budget in November made a very clear commitment that he wants it to return to the JanuaryDecember cycle, unfortunately that has not happened. So we had to continue to run the 2017 budget which is why we only released the capital figure recently to allow people to just keep spending, get your projects done, let’s try and run seamlessly

between 2017 and 2018. So it is not like the budget will be implemented for six months, many of the projects are multi-year projects which speaks back to question about where the projects are. The Lagos-Ibadan is not a six months project, Benin-Ore shagamu is not a 6 months project. I know that there is work going on there, the place that used to be rough is smooth and they have moved furthermore, that is progress. So there are multi-year projects that agencies were told to roll into 2018, I am not sure there won’t be pressure that you have to spend everything in 6 months. We have a medium term framework which is a 3 year framework and that is the whole thing about infrastructure projects, a lot of them are multiyear. The mambilla is multiyear project, a lot of the power projects, rail projects are not going to be finished in one year. When you say funding, one thing you will notice about this year’s budget is that the deficit is smaller than last year and that is consistent with what we have said. We say listen, oil price collapsed, we are in recession, we have borrowed big, wrap up our debt quite quickly for a couple of years and then begin to slow it down as revenue picks up. But this year, you see that the deficit is lower. Revenue aspirations are higher so what we are doing is focusing very strongly on revenue which is not just tax, but total revenue. We have set up a subcommittee on the economic management team called the central revenue committee which is going to meet every month just to discuss

revenue, what are the leakages, why are the monies due not coming in. We are beginning to address that in a very aggressive manner. We started that journey when we came in by insisting that agencies produce their budgets, limiting what they can spend, the independent revenue for 2017 budget is probably the highest we have done but it is not good enough, we are not satisfied with it and we think we can do more. So we inaugurated the central revenue committee which will be meeting on a monthly basis really drilling into making sure that we achieve our revenue target. The focus for 2018 budget in term of financing is to improve our revenue, we already seeing encouraging signs, FIRS figures are up, customs figures are up. However, we think significant work can still be done in some of our ministries, departments and agencies, so we are really zooming in now using TSA where necessary and if we have to debit agencies at source we will do so because it is public money, we are not interested in too many excuses. When you look at JAMB for instance where the revenues have gone up significantly, the difference is that we have a leader that is committed to what we are doing. The SGF said he is going to call all the head of the agencies and say listen, this is what is expected of you because it is public money, so that’s going to be a real big difference in 2018 and it is all part of the strategy of making value for every naira because it’s all public money.

Are you looking at any Eurobond issuance this year? The debt is split into domestic and international, ofcourse that is in line with our debt strategy which is to move out of the domestic market to reduce our cost of borrowing and to reduce our debt service to revenue ratio. We’ll look at the market and see the best optimum funding mixes, and the intention is to do external and domestic. We have become a regular issuer in the market as you know and every time we come into the market, the market has really boosted the economic story, we have been able to extend our yield and reduce our cost of borrowing. I think the market is very receptive to what we are doing in terms of the economy, as we can see Nigeria is really trying seriously to reposition its economy and I think from the feedback we get from investors there is a definite appetite for the Nigeria story. So if the markets are good, we move and if the markets are not good we look to other options. In pursuing infrastructural development, how is the government engaging the private sector? I mentioned that one of the pillars of Economic Recovery Growth Plan is partnership with the private sector, I have given example with the infrastructure tax credit. That is a PPP that we sat down with the private sector, investment bankers, manufacturers and asked what will it take for you guys to help us? Sometimes they are in clusters, take areas like Agbara where you have 10 -12 big companies and they are going on these bad roads, so I said if you wait for the budget to fix that road it will take a very long time because the 36 states and everybody has bad road and everybody wants everything done. So I said if you guys can get together and put money to fix the road and then we allow you to recover it overtime and they said great, they were very excited so that is the infrastructural tax credit. We have been working with the private sector on that, we designed it together, finally we are just waiting for the signature hopefully the next week or so and that is possibly one of the most ground breaking reforms of this administration because it is going to bring the private sector into an area where the private sector have never been. And the same with the presidential infrastructural development fund which is in the Nigeria Sovereign Investment Authority. We are saying look, it is not necessary that the ministry or government have to be the only provider, so the NSIA is bringing in private investors too, so once we have a bench mark, we are able to sit down and say we need better value for money, that is a really important partnership with the private sector and there are many examples where we are ofcourse partnering with the private sector

and working together. Most of the reforms that we put together, we sat down and we talked to them to try and understand their needs and how we can support better, therefore, partnering with the private sector is absolutely part of our strategy. Before, only 10% of government spending was on capital, government must not obligate its responsibility because all along we keep saying private sector will do it but their money is not free and for them to bring out money, they also need to see that the government is serious. What we said is that we will lead, we will show them that we are serious and the areas that we know that private sectors cannot handle, of course we have to do it but the areas we feel that the private sector can do like roads, we will open up to them. We are very much working in partnership with the private sector. For the infrastructure tax credit scheme, would there be a policy to guarantee that private investor does not lose investments on capital projects? Firstly, there’s an executive order, secondly, we are not going anywhere. We have respected many things that were done by the previous administration, we respect agreement and some of them are not even in our own view the best agreements but we must respect them than having investors lose confidence and like I said the reaction we have been getting has been very encouraging. It is tax credit, and the way we designed it, it is transferrable, so let’s assume that company X actually funded the road but does not have a tax liability you can transfer that tax credit to a company that has liability, you can say look I built this road but I don’t have any tax to pay this year but you have tax to pay, you know, so its tradeable and because it is tradeable that means the pension funds too can come in so it is going to carry significant money into infrastructure. For me it is really noble and the kind of people that have been part of it like the Dangote group, LNG, all the private sector. We have the presidential enabling business council so they said, this is what they have been waiting for, they say look, we are ready to go. LNG is doing the Bodo Borno road under this, they put Julius Berger to work and they are doing it. In fact we have not even signed the executive order but they are just so excited and signing on. So you can imagine when we begin to do that across the country, then that lifts the burden to do the roads and areas where the private sectors are most interested so it benefits everybody. Are there particular kind of roads that the infrastructure tax credit can fund? What will happen is that when the executive order is signed, the min-

istry of works will put out a list of the eligible roads. It is an existing tax provision but it didn’t work because it was only for one company. And what we found out was that it has only been used by two companies, one is Lafarge they are doing one road in cross river and I think maybe Dangote. So we said look not every company is as big as Lafarge and Dangote who can afford to do a road with huge funds, what if ten companies put 1 billion each, which equals 10 billion, that effectively is something, the extent to which you contribute is the extent to which you can get tax credit, so this is crowding in money. It’s a credit, so effectively it is treated like they are pre-paying tax, the industry is saying we can’t wait for you to fix these roads, if we fix it, it helps our business, so they are effectively in partnership with government, they said ok, let’s do it and we have to guarantee the roads not to avoid substandard job, that is the tax they should have paid, there was a lot of consultation that went into in and we are quite happy with it. What we are simply saying to tax payers is that we are giving you more choices as we are widening the tax base we know that people, and you know because of the trust deficit a lot of people say why should we pay tax when we are not getting anything and I say ok, you are getting something for your money, you can get more control over how our tax is being used, you are able to directly in-

fluence and fund and you are not thinking somebody is eating your money somewhere. I am not going to sugar coat that everybody has to pay their fair share of tax and there is nowhere in the world that people are not paying but what we are saying is that you can now participate in how that tax is deployed and you can directly influence areas that affect your business. So there are lots of very excited companies especially in those clusters, they are helpless and if they have to wait for the budget they could wait for 5 years until they are fixed, they put it in their balance sheets because it is going to totally impact their profitability, but the incentive is that they have a choice and they can participate in what government is doing. There are rising concerns on our increased borrowing, are you comfortable with the debt level? We have debt to GDP of 20%. When we came in, we took a decision as an economy to invest in infrastructure, we missed that opportunity to have done this when oil was $140. We didn’t have revenues and we said we need to borrow to stimulate the economy out of recession, get revenues flowing and get our counterpart funds. Now at 20% debt to GDP, we are low compared to our peers, and compared to the

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We cannot afford to be complacent... Continued from page 23 recommended limit for an emerging market, so as far as the level of debt is concerned we absolutely do not have any problem with that. Where we have a challenge and this is where we are trying to address is debt service to revenue, because the debt service as you know is a function of how much debt you have. Between 2010 and 2015, our debt doubled from N5 trillion to N10 trillion at a time when oil price was at the highest and capital investments at its lowest, that is the period we should have been very concerned about debt. We should have been asking why should we borrow, we are not doing capital projects, oil is at its highest, why has our debt doubled? The impact which that had, and the majority of that debt was domestic was that when interest rate went up, our debt service increased and at the same time, our revenue came down because oil price came down, so creating a real fiscal pressure. But we did two things, to restructure our debt portfolio. If you look at the debt portfolio when we came, about 73% were short term, we went to the DMO and got specialty bills, 91 days roll over, so all we were doing was compounding interest on interest. You can’t pay off this debt in 91 days, so it doesn’t make sense to borrow for 91 days, so we started with the debt management strategy that restructures that debt. The second issue was the cost of the debt, domestic debt is very expensive, we looked at the market overseas and said look, we are better off going into the Eurobond market, one, we stopped crowding out the private sector, this capital market is not deep enough for government to be borrowing so heavily, and the private sector too needs money, so we took a conscious decision to externalize a lot of our borrowing, and that also brought down the cost of our borrowing, that’s on the debt service side- take it longer and make it cheaper, you can see now that the interest rates have started to come down, that’s a deliberate policy. We went out, borrowed money, we refinanced. So that’s what we did on debt service. On the revenue, your debt service is too high then your revenue is too low, there is no way you can grow an economy at 6% to GDP, you can’t. Thailand has the same size of GDP as us, they have three times more revenue than us. South Africa which on paper is smaller than us have six times more revenue than us on a smaller economy. So that is why we say we must address this issue of revenue, we must face it and that was why we set up the revenue Committee, the works that we have done, optimizing oil, yes we want to focus on non-oil but we must also get every kobo from the oil. We must optimize oil and make every naira count. When the IMF said this is where the challenge is, we have been very honest to say yes, we have a challenge on debt service to revenue and this is what we are doing about it. We are trying to restructure our debt portfolio to reduce our cost of borrowing, we are trying to increase our revenue and we have started to see encouraging signs, it will take time because we have been building up that debt and continually rolling over the interest. If you look at that portfolio now, we have come out of the short term market completely and the cost is about 9%. So we have really come a long

way from where we started, some of those instruments were issued at 21%. There is obvious opportunity there, now that it has come down, we are going to take the advantage and that is a deliberate policy. If we had carried on borrowing in the domestic market the interest rate would have been like 20-26%, private sector could not breathe so as government we have to take a markup position to strengthen the macro, we think that our exchange rate will be stable, we are earning money in dollars which is something of an edge, we all see growth in non-oil export, which is something exciting for me, I was just seeing the figures from the NBS of about 24% in year-on-year in non-oil export, that’s not the oil that could go down that is a stable commodity and these are the areas which we want to accelerate, so we feel that our policy are an edge against those excesses but they are real and we must manage them and be cautious about them. We started saving again, in the last FAAC we insisted that there must be credit into the excess crude, so we started building up some buffer against our foreign exchange denominated expenditures. The other thing of course is that these are fixed interest instruments that were issued, in the bond market we are not taking floating rate instruments and also the fact that the majority of our external debt is still concessional, China in excess of 1.5%, world bank at 0.8%. If you look at the debt stock, the actual amount where there is real exposure is manageable at the moment. Tell us about the government’s tax amnesty programme – VAIDS- in terms of successes and lessons learnt? We have not finished compiling the numbers yet because as you know majority of that money is going to the states. Typical Nigerians often use the last minute, but what is really exciting for me is that we brought the message of tax into the front of national discourse in a way that we have not seen before. People shy away from tax, people say you call us for tax, there is no services, there is no light and we are very candid about it that this is something we need to address. The number of tax

payers that JTB now has in its data base as we counted was 13million but it’s now 19million, that is a significant increase. We have governors who for the first time are now queuing into the tax narrative, that is a sure change because in the past, you come to Abuja once a month to come and collect but now it’s like come and contribute. For example on a monthly basis when we go to National Economic Council, we show each governor, this is what is collected in your state, this is how many tax payers you have. Now the focus has changed, we have broken the narrative that people can’t say that they are not aware that they have to pay taxes. Of course we have had very good successes, we have had individual declarations, I just dealt with one the other day, where you get one company paying N4 billion, N5 billion, so clearly the message is out there. What happens from here is very important because we got to enforce, because people will not take us seriously until they begin to see how serious we are. We are able to say, ok this person who claims he is making just N2 million a year owns this property, we will invite him and say your truly, do you want to explain or do you have something you want to declare, so it has been a really fundamental exercise that we are quite happy with. Can you speak to the executive orders you recently presented at FEC and how it will help government and tax payers? The national tax policy is one of the reforms of this government and we want to have a national tax policy implementation committee which brings together private sector, the academia, FIRS and JTB to meet together on a monthly basis. Looking at our tax laws, one of the problems we found was that they were obsolete, many contradicting provisions and going through it on a systematic basis and reviewing of our tax laws. The executive order was the first outcome of that process and there were some areas where one tax law conflicted with another, let’s take insurance, there is a provision that limited how much the insurance company could claim, so if you pay that claim above a certain level it was not liable. That didn’t make sense, that is impunity, it was

unfair, so we moved that. In terms of applicability of taxes, take VAT for example, should an okada rider you a VAT? It does not make sense, so road passenger transport was removed. There is no need chasing after Danfo drivers whether they have registered VAT, the enactment of the law was being defeated by the fact that it was not specific enough, so we removed that obsolete provision. There was obviously reduction for companies, particularly for SMEs which is in line with our policy to stimulate SMEs. So if you are running a small company you should not pay same tax rate with the big companies, that is how it is done everywhere in the world. The work is continuing, the committee is still meeting and working on the next set of tax policies, in the past we were not updating our tax policy regularly, from time to time, we should signal to the tax payers what to expect and continue to update. FEC has approved them, we will go back again, fine-tune and then they will be submitted, you know that they need to be signed by the president, so they got to be checked. The private tax bills at the National Assembly now is not part of our strategy, our strategy is to make tax paying easier for the tax payers, be more stream lined, remove obsolete provisions and get things moving in the right direction. How are you addressing the issue of multiple taxation? The issue of multiple taxation is one of those terms Nigerians like to use without fully understanding it, because multiple taxation is when you tax one thing multiple times. We don’t have problem with multiple taxing what we have problem with is overlapping functions between the tiers of government, that is really the problem, multiple is you tax me three times on this no, it’s not, it is somebody claims I tax this, another tier of government comes, so there is a need for harmonization and that is one the things we are trying to do through NEC, to work very closely with the state governments. You know, I was in state, the local government will just wake up, get a plank and put on the road, as far as they are concerned, that is revenue mobilization. So

you know, we also have to carry the states along, tell them, see for the ease of doing business let’s all harmonize, let’s all work together. We are getting more co-operation, it will take time, as long as you have three tiers of government, and each of them has certain powers, in some cases those are legal and legislative issues. So those are not things I can solve administratively. It is very unfortunate, a lot of them think that they are collecting revenue, we have to also change that mindset, it’s going to take a little bit of time and it’s also when the states are financially a little bit more comfortable, if you want to take something away from somebody, you need to have something to give him. So again it speaks back to this issue of tax to GDP, look at VAT, 85% of VAT goes to states and local governments, in fact local governments have 50% of VAT, which should be their bread and butter, they should not be running around with planks, they should be getting their VAT and doing what they have to do. So when we begin to solve these problems we can then have very comfortable conversations with the governor’s and say look at what we have done in VAT collection, it has gone from this to this and incidentally it’s moving in a very strong direction. You were in China to meet with the officials of the Chinba Exim Bank, what were the outcomes of that engagement? It was a good trip. It was not just me of course, it was with the minister of power, works and housing, FCT, aviation, myself and the ambassador on sight, who was our host. We went to China because we wanted to negotiate a lot of projects particularly Mambilla, which is a very large project that will bring a significant capacity into the grid and of course you all know what power can do. We still don’t have enough capacity so it was a big project we went there to negotiate the terms of that loan. China Exim Bank were offering us blended not fully confessional funding for that hydro project. They did one in Ethiopia so we wanted to learn how they did it, so they told us the structure that they used, it is a major project and with major projects there are major risks and we don’t want a situation where we have gone out, brought the money and people start asking us where the power is. We don’t want that question so we wanted to learn from them what are the do’s and what are the don’ts, what are the kinds of structures to set up, what are the pitfalls, they have given us a really good structure. They told us this not what a ministry will do, we need to set up a Mambilla hydro company, put a proper management in charge and hold their feet to the fire so that as we are borrowing this money, we are confident of getting a successful project at the end of the day. This Mambilla project I think they said it has been discussed for 30 years or so, it’s a long time. Potentially, it is hydro, it is not fossil fuel and the amount of capacity it will bring unto the grid will be very significant and open up that area because you know Taraba is one the states incidentally in agriculture that have so much potential, incredible potential, because it is high land but their problem is power and roads. We also talked to them about the four airports, we had some meetings with the

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contractors on that to say look, we need to get this finished, they are nearly finished, some are 90% done, we need to accelerate and get them usable and workable. So it was successful meeting, but what I found very interesting was listening to them, when they were saying that where Nigeria is today is where they were 30 years ago, no infrastructure, but they infrastructure and business took off. Ofcourse their strategy was an export driven strategy totally driven by infrastructure, it was encouraging listening to some of them who have been bankers 30 years ago say oh, this place called Guangzhou was a fishing village, we put infrastructure in, we did business part of which is what the ministry of trade, industry and investment is doing in special economic zones, just put power, put water, let everybody work there and then businesses grow and then they started doing housing and everything else but their focus was get business going, once business is going everything else will fall in. So it was very interesting listening to them so I said OK that is the right way to go. Why do you need to create a special company for Mambilla since NSIA is coming in as part of the presidential infrastructure fund project? Yes, it’s part of the project. That’s one of the outcomes, because it is a multi-year project, it’s a seven year project, it extends beyond the life of any administration, so you need to have that continuity and that is one of the learnings we got from speaking to them. When you have a project, you need a team that stays and sees the project from end to end, that is a critical success factor, not that someone else comes in and starts reversing or there is some learning curve, a new director comes in to say oh let me read the file, no, there should be continuity. Yes, there will be a Mambilla hydro company, NSIA is just bringing in the counterpart funding, you know it is a China Exim loan, so then we also need to operationalize it because if you are debt funding a project, what are your revenues, what is your revenue strategy, that company will have all that but if you leave it in the hands of the ministry, they will just deliver a project and go home. So for us it’s part of our debt management strategy, one of the things we want to do hopefully before the end of the year is that for all our debt funding projects, DMO will need to have a delivery unit because those project have to be self-funding, if we are borrowing specific to that, then where is the business plan, because Mambilla when they produce the power it’s not going to be free, it’s going to be sold so it has to able to service the loan, so that is what we are going to be looking at. Are there timelines for the Mambilla project? It is about 7 years project, hopefully, and we are aiming September to be able to sign the final agreement. We had very fruitful discussion and we are very excited, so the project will then kick off but it needs its own structure, its own MD, you know, people that have done this kind of projects not someone coming to experiment because this is borrowed money. How is the government revisiting the power privatization since that process is yet to yield adequate results? I think government’s position in power privatization is that there is a need for investment in that sector.

What NERC did is a sign of where government is going, we own forty percent of these discos and I think that action sends a very strong signal that the government is not going to be passive, we will not attract the investment that we need if we don’t have the right players and I think that is very clear. In the power sector recovery program I think the minister made it very clear that it is a reform program, it is not just to give you money to carry on. So if you look at the power sector reform program, it is very specific, it is a reform program and government is part of that reform. People that are in that business must be able to meet the need of the industry and there are conditions to being in that business, yes we provide the liquidity, yes we provide the enabling environment but everybody have to play their parts otherwise it does work. Are there plans to bring in new investors? You see the thing about investors is that as you and I know, money is very clever, it looks for return, if money does not feel comfortable, it goes away, so if people feel that it’s governance issue, if people feel there is no enough transparency the investment will not flow, so I think we as government are showing our commitment in terms of what we are doing, improving distribution, the minister is working on the metering, doing quite a lot but you know the sector has been sick for a long time. What’s the update on the promissory note and bond to settle contractual obligations? It was read on the floor of the National Assembly I think recently, they called us, the ad-hoc committee for a hearing. But let me talk to you about what those obligations are, it’s quite important for us to understand this, it looks back to the issue of debt. So we came in as you will remember, we pumped money into the economy and started paying contractors, the contractors just took our money and sat down and we said what is happening and they say we have not been paid since 2012, so all that N2.6 trillion is inherited debt, not from this administration. When we went to the National Assembly they asked us and we gave them the bundles, listing the dates of the contract from small contractors and that was a fundamental burden on the economy. One, it was affecting investment because a lot of these are entrepreneurs, four, five years you did a contract for government and you have not been paid, you don’t have capacity to invest further, secondly, it was affecting banks, huge Non Performing Loans, it affected power, the oil marketers, the discos, pensioners, salaries and so on. So, it was really at the time when we were deep in recession so we said see, we have to deal with this issue and some of these debt got back eight years, even on the pay roll, some of them are on promotion, some people were promoted in 2012 but are still earning the same salaries, so you have given somebody promotion but you do not pay the person the salary increase. There were so many issues, so what we did was to aggregate everything and said to National Assembly, we need a special appropriation to deal with this and then we issue promissory note, an IOU sort of, it’s not the best but at least we are addressing some issues. So National Assembly, read it, set up an ad-hoc committee, they called us and we made submissions, we gave them details

because they wanted to know and do their own verifications to be sure the contractors truly did the job. We are waiting for them to give us appropriation so that is also going to affect the debt figure but it won’t affect our debt service, that is why we structured it zero. What we will also do is improve liquidity in the economy because they are discountable instruments which the CBN has agreed to give liquidity status to, it is going to improve the NPLs because many of these companies are owing banks, so if they are given this, they will be able to at least pay down some of their debt, so again it is a little stimulus to the economy but it will be sorting out a long standing problem of government. Can we get an update on the TSA? TSA as you said has been successful in terms of treasury management, it has reduced our day to day short term borrowing and allowed us to manage our treasury better but we want to now take it a step further and begin to use TSA to monitor revenue of our agencies. Because each TSA account have their own signatory just like the bank account, we can see everything so we are now saying as part of our strategy since we can see what you are earning why can’t we use that to ensure that your revenue is monitored very closely. So that has been a great success story. We still went on to find out through our whistle blowing tips that just before TSA some banks renamed accounts, so it’s government money but they renamed it, it was not swept under TSA. So we told agencies to show the bank accounts they have so we were remapping them, where is this balance, and if there is any strange movement just before then, we looked at it so that exercise is ongoing. Under IPPIS again that was a project we inherited, many agencies were refusing to sign on to the IPPIS and I really have to give President Buhari credit for this, many of them were the military and paramilitary and you know they are powerful, so what happened was the minister will just tell them I want to put you under the IPPI so just go to the president. So when it happened in this case, they went to the president and the president sent them back so they now came back and said, ok, we are ready. So mainly all the agencies are on now, we are just capturing the military, we have captured all the police, there were some challenges but we solving them, what is being done

again is to help us eliminate all the duplications, ghost workers, dead workers and it is really reducing our outflows in that area and improving our visibility and people get paid on time, the proper amount, no more deducting. So I think it has been a very good transparent tour for us. What is being done to ensure transparency in revenue generating agencies like the NNPC? On NNPC as an enterprise, we are very focused on revenue and for now, yes we are improving our tax collection, non-oil and others but for now NNPC is still the major cash cow so we have to put our attention to what is going on there. We have seen in the past very high oil price that did not translate to growth and that is a very big risk for us as a country. We sold oil for as high as N140 but we could not see any capital project or anything, so leakages anywhere is a problem for us right now and we are determined to spend time addressing them. Technology, better surveillance, better scrutiny, better governance, all of the above are being focused on through that central revenue committee. We are really drilling in and looking into the figures, we have had reconciliation meetings with NNPC, we sit down and look at the numbers, it is not just, you know how much is NNPC remitting, no, what was your gross revenue, what was the oil price, what did you sell at, are there any forward sales, was there any discount, so there is a lot of scrutiny now but it is going to increase. I think NNPC is cooperating with us because obviously we are all Nigerians, we are all in this national enterprise together, we all want to get it right, we have to continue to focus and make sure that everything Nigeria owns is properly accounted for. I don’t get too concerned when there is a standoff maybe it’s because I used to be in FAAC. When I was in FAAC, we would have a standoff and nobody would answer us, we will come month after month and nobody will even answer you, this one at least we are even getting answers, we might not like the answers but we are getting answers. Then we will just ask questions and we will be shouting, but now we are really drilling in and I think we are making progress. I agree that there is a long way to go but I really think we are on the right track and we are making progress, so we continue to focus, we will continue to reform. Everybody is going through some kind of reform programs so NNPC

BUSINESS to is evolving, what worked 3-4 years ago may not work now and I think that for me will be the final word, for us this period of relatively benign oil prices is an opportunity for Nigeria, we can’t afford to miss it because we sold oil at N28 and we didn’t die and if oil is now N70 plus we must make the best of this period because we know it may not last , in fact we know it will not last, we know it is temporal so we will be very foolish to relax and say oil has come up so let’s go back to where we were, that is what got us into trouble 3-4 years ago and we cannot afford to go back there. So we have to be very vigilant and that is not just NNPC, it is customs, it is FIRS, it is me, it is you and it is everybody. We have to be very vigilant if we really want to grow because we need that money for our infrastructure, we can’t afford to waste anything, so that will be my final word on the economy. Generally what I will say is that I think we are heading in the right direction, I agree that there are still considerable work to do, but as a government we have a strategy, we had a strategy from the beginning, we went through recession, we have come out of it, we have a strategy, if we will stick to it, we can really deliver on this economy. The oil is 10 percent of our GDP, how many states produce oil 6-7, out of 36, so what are the potential of the other states, what endowment do they have, everybody is struggling and that is the spirit. I think one of the challenges for us now and I think the acceleration will come in is, if we get more synergy from the state governments and the legislature so we are all moving in the same direction. If the federal ministry of power, work and housing is doing a road that is opening up Imo state, if the governor there is not opening up the industry then it is just a road, so that is where the NEC is really focusing on to say, if I am opening up, if I am being real to you on the other side, there should be farms opening, industries in the states, come and take free lands, I will give you incentives, that is the phase we are in now, we really need to see the harmony and synergy between states, local and federal, then you will see really considerable growth because there is potential, there is low hanging fruit. If you are able to do 25% of your GDP in agric using hoes and cutlass, what happens when you get a tractor, what happens when you an harvester, what happens when you get power, what happens when you get rail, so when you are able to do all these in Nigeria in spite of all the challenges, then what happens when you overcome these challenges. And to do that we need the state governments, federal government and legislators working hand in hand towards a common goal. I think in the next 6 months we will start to see a lot of projects being commissioned, people will now start getting the confidence, I am seeing it already because investors are coming in, last time I was with some people that are doing tomato paste in Kaduna, the other day I was with some people doing ethanol in Edo state, I did not even know that Edo was a big cassava state with massive land, two years ago, the only investors that were coming in were coming to copy what is Nigeria doing. Now it is like, can you help me call the Edo state governor, I am trying to get my C of O, so the narrative has changed and for me, it is the most gratifying thing and I think in the next couple of years, we’ll see the real changes if we keep our head, no matter what happens to oil price, we cannot afford to be complacent.

26 BUSINESS DAY

C002D5556

Monday 16 July 2018

INTERVIEW

Buhari Administration has settled over fifty percent of the N300 Billion it owed Construction Companies in Nigeria - Nasiru Dantata Eng. Nasiru Dantata, President of Federation of Construction Industry (FOCI) in this interview with BusinessDay’s Correspondent, KEHINDE AKINTOLA and select journalists, speaks on utilization of the N100 billion Sukuk fund, outstanding local debts, demand for refund of withholding tax, among other sundry issues in the construction industry. Excerpts:

tions, so it’s only about improving themselves. So, I will call on those companies to associate with our industry because with our organization (FOCI), because by associating with our organization, they will have access to the type of resources that will allow them to do quality jobs.

ctually for now, the situation is different I must say that most of our members have gotten substantial amount of the outstanding debts paid and also many of our members are being patronized by the current administration for new jobs. Some of these jobs are quite bold, such as the 375km AbujaKano and the administration is promising to fund itthrough many channels so the industry is being hopeful that this trend will continue. What are you doing to ensure that your challenges facing your members in getting the refund of WHT from Federal Inland Revenue? Many of the issues relating to how much is budgeted for this refund. So, if our members are having to collect N10 billion back and if the budget is only N10 billion, you can imagine it’s not only construction industry that is looking for refund. So what we are proposing for government is, since we are working in the area of development, most of the money is coming from government – state and federal; the best is to reduce the withholding tax on our activities for the construction sector. This was done briefly some years ago and it was reversed but we are discussing with the chairman of FIRS and he has assured us that what happened was there was a little of abuse and other sectors are trying to cash-in into it because they said they are also into construction. So if we can find a way to say only federal and state road projects will benefit instead of just to say construction companies, may be that will be a way out and we are discussing along those lines. How much is involved? The amount is in billions of course, but it depends on the work done by each company, which will be determined by the annual audit of the companies. So I don’t have the total. Do you know how Federal Government is owing local contractors? I don’t have the figures because not all contractors are members of FOCI, though we represent the bulk of the members but from the over N300 billion we presented to this administration when we came in, I believe over half at least must have been paid by now. As FOCI we have not collated this information but what I

On the issue of quality of jobs, going through most of the federal and state roads spread across the country, what will you say is responsible for massive failure of these roads? Most of the materials use in the construction of roads are local, stones are there, the laterite if it’s not good enough it is often improved either with cement, and so on, we only execute according to design and also we don’t regulate the usage. So if you build housefor 10 people, and you are allowing 100 people to use it, I don’t think you should ask the builder if it goes bad. Now in terms of our roads, firstly we have to look at how we design the roads. Look at Abuja for example, most of our roads in Abuja, were built by our members. Many other roads and they have been there 20, 30 years. The only way they can fail is that they will crack not that you will see potholes unlike other places. So one has to look at the design and also the usage of that road and I can guarantee you that it is not from our members. can say is that our members are busy working on several roads across the nation. What will be your reaction to the Minister’s allegation that some of the contractors have not returned to site? Like I said, we at FOCI don’t all contractors in Nigeria but I can assure you that those under the umbrella of FOCI are competent contractors that have competent hands and equipment and empowered to execute projects. I believe that that comment may not be relevant to FOCI members. Looking at the list of your members, we can identify some of them who embarked on mass disengagement of workers especially Nigerians. But what are you doing to salvage the situation? Like I said earlier, the situation in terms of employment is that we are employing. The main issue now is to actually find capable hands because we don’t have as

many trained professionals as we would like to have at the moment. And as a body we are looking also into training Nigerians so that whenever construction companies are expanding like the situation now, we would be able to find capable hands. At the moment, each company is struggling to find capable hands for the jobs at hand. But individually, we are doing some trainings and promotion to fill in the gaps. Are you saying that graduates being turned out by our institutions are not fit for the industry? No they’re employable; in the construction industry, we are not only looking for graduates in the construction companies. We employ few engineers but many artisans. So it’s the issue of the artisans, masons, carpenters, and operators of heavy duty machineries and these days if you buy new machineries, most of them are automated. There is a lot of improvement over the years in

terms of technology, heavy duty equipment. So both in the operating and maintenance of such machineries there is need for training, and not all the machineries that you find the dealers in Nigeria. There is also an improvement along those lines. Some people complaining often that federal and state governments do not like to patronize indigenous companies? I think they do, my own company is indigenous and we are benefiting from patronage of both federal and state agencies. By the way even the big companies are indigenous because they are registered in Nigeria, there are citizens of Nigeria some may have bit of foreign ownership but if you look at their books they employ Nigerians and for companies that you called indigenous, I will urge them to up their games to be able to perform up to the specifications. Some clients are very particular about specifica-

Finally, will you stop work on most of the ongoing projects considering the fact that the raining season is here? As you notice, this year’s budget has just been passed some works will naturally slow down because of the weather but in terms of our operations, I think there is no company that is scaling down work based on the weather. Most of our clients are behind those, the money is there. For example, the SUKUK fund of N100 billion, this fund has gone to our member companies, we are able to exhaust it and I’m sure the release of the 2018 capital expenditure will be good enough for the Ministry as it was in 2017. Our members are expected to continue to perform as much as possible even in the raining season. Look at terrain such as in South-South, Bayelsa and so on, you cannot just take the raining season as a vacation period so as diverse as Nigeria is, we have the equipment and the know-how to work even during raining season.

Monday 16 July 2018

REAL SECTOR WATCH C002D5556

BUSINESS DAY

What Nigeria must do before signing AfCFTA

ODINAKA ANUDU

igeria’s President Muhammadu Buhari last Wednesday gave a hint that he would sign the African Continental Free Trade Area (AfCFTA) treaty soon. Buhari disclosed this after his meeting with South Africa’s president Cyril Ramaphosa at the Presidential Villa, Abuja. It is believed that Ramaphosa convinced Buhari of the gains of the AfFTA, having himself appended his signature on the treaty earlier in the month. Trade experts believe the AfCFTA will create a single market for Africa’s 1.2 billion people, exposing each country to a $3.4 trillion opportunity. However, findings show that some of the supporters of the trade treaty in Nigeria do not understand its elements. Experience at the stakeholder engagement in Lagos showed that some of the private sector players discussing the trade treaty were only looking at the benefits generically, without taking time to study various protocols associated with it. Discussions were basically on what Nigeria stood to gain. Little was

L-R: Bola Adebisi, company secretary, Beta Glass Plc; Abimbola Ogunbanjo, chairman, and Darren Bennett-Voci, managing director, at the Annual General Meeting of Beta Glass in Lagos recently

said about the AfCFTA’s associated risks. What this means is that there is a need for Nigeria’s chief negotiator Chiedu Osakwe and his team to educate critical stakeholders on the contents of Protocol on Trade in Goods, Protocol on Dispute

Settlement, and other relevant protocols. Secondly, there is a need for more engagement with Nigerian manufacturers that will be directly affected by the AfCFTA. Manufacturers have raised critical questions which need not be ignored.

NEPC strengthens capacity of 100 exporters ….identifies Kwara as highest producer of cashew SIKIRAT SHEHU, Ilorin

he Nigerian Export Promotion Council (NEPC) has organised an export awareness seminar for 100 exporters and potential exporters in Ilorin, the Kwara State capital. Speaking at the event, Andrew Okhiulu, trade promotion adviser, NEPC, Kwara State, said the programme was aimed at sensitising and training exporters and potential exporters on the nitty-gritty of the procedures, terms and rules of export business, in a bid to enhance exporting activities across various states in the federation. “We are looking at encouraging people to participate in the

export business, thereby generating more income for the country and improving our balance of payment. This is because these products being exported are showcasing the quality that we have,” Okhiulu said. “We also discovered that we are improving the qualities of our products because they are competing with other products outside the country,” he stated. He noted that doing export increases foreign exchange and income, while also improving the economy. “We are creating more employment for entrepreneurs, small and medium scale enterprises and other businesses in that category,” Okhiulu stressed. According to him, Kwara State

A cross section of participants at an export master class organised by Nigerian-American Chamber of Commerce (NACC) in Lagos recently

is endowed with many mineral resources that can be transformed for export to make more income for the state and individuals. “Kwara State is the highest in terms of cashew production. The derivatives from cashew alone are enormous. The state is also the highest producer of soya beans and these are two notable products apart from maize and cassava. “We also have a very large terrain of arable land that can be used to cultivate some of these products and enhance export. We are trying to drive a system where we can have producers (farmers), processors and exporting the value chain products,” he added. In his submission, Babatunde Agboola Kwara State commissioner of commerce and cooperatives, urged local exporters to approach government agencies on assistance to enhance their activities. He called on entrepreneurs to use the opportunity available, as the state is blessed with abundant resources. He stressed the need for entrepreneurs to be part of the export value chain. A cross section of the participants who spoke with journalists lauded the organisers for the timely programme as they promised to seek their technical advice regarding export businesses.

The Manufacturers Association of Nigeria (MAN) says, for instance, that the adoption of the 90:10 percent market access ratios, which are expected to be achieved in five years lacks empirical basis and evidence of due consultation. MAN says there is a need for

an Offensive Export Market Discovery Study to reveal specific manufactured products which might be in high demand in each African country; products demands that may be satisfied by Nigeria’s manufactured products (now and near future); tariff and non-tariff related market access constraints which currently limit Nigerians from exploring opportunities available in the continental export market, and extent of AfCFTA tariff liberalisation needed to realise the opportunity. It adds that Nigeria must conduct a Defensive National Economic and Industrial Priority Study to reveal the specific products that may be negatively impacted or threatened by import liberalisation in Nigeria in the context of AfCFTA; consequences of continental import penetration on Nigerian firms; and impact on government and the economy, among others. While signing the AfCFTA is a no-brainer for Nigeria, there is a need for Nigeria to have data-driven evidence that will support gains of the trade treaty. This is because the AfCFTA is not all about gains; it also comes with associated risks.

NACC working with stakeholders to promote AGOA—DG ODINAKA ANUDU

oyce Akpata, director-general of the Nigerian-American Chamber of Commerce (NACC), has said the chamber is working closely with relevant stakeholders to promote the African Growth and Opportunity Act (AGOA). Akpata, who stated this at a two-day Agro-Commodity Export Master Class organised by the chamber in partnership with Multimix Export House recently, said AGOA offers the potential of boosting commodity export from Sub-Saharan Africa to the United States. She said Nigeria is blessed with commodities for export and entrepreneurs can leverage their abundance to create jobs, increase foreign reserves and foster socio-economic growth and development. The master class held between June 30 and July 7 in Lagos and it focused on export commodities such as sesame seeds, ginger, cashew nuts and products, shea nuts/butter as well as processed vegetable & food products. It was designed for produce merchants, infant exporters, exist-

ing exporters, commodity brokers, foreign buyers, investors, financiers, government export facilitating and inspection agencies. A statement by the chamber quoted Obiora Madu, CEO, Multimix Export House, as saying that the International market is ruthless, selective and fiercely competitive. “Well-constructed corporate alliances help partners pool expertise, enter new markets, share financial risk and get products and services to market faster. In a world of globalisation and rapid change, the best route to business goals often involves a partnership,” Madu was quoted as saying. The master class involved interaction with experienced stakeholders in the agricultural export chain as facilitators were drawn from among value chain practitioners. Real life case studies, discussions and presentations for knowledge dissemination were used. It looked at critical areas in the export business such as managing international payment risks & documentation, sourcing finance for export trade, commodity sourcing and logistics, and AGOA opportunities, among others.

BUSINESS DAY

Monday 16 July 2018

C002D5556

REAL SECTOR WATCH

How Ogun can regain lost industrial glory

ODINAKA ANUDU

ntil 2017, Ogun State had been Nigeria’s industrial hub. But BusinessDay analysis, published last Thursday, showed that the state was second choice in terms of industrial investments and expansion in 2017. Lagos overtook Ogun State, its closest rival, in terms of real sector investments, as manufacturers preferred to set up new plants and expand frontiers in Nigeria’s economic capital in 2017. Between 2014 and 2016, more than 70 percent of investments in agro processing, heavy and light manufacturing went to Ogun, while Lagos, which mainly made up of Ikeja and Apapa industrial zones, often attracted less than 20 percent of the total, according to data from the Manufacturers Association of Nigeria (MAN). H o w e v e r, t h e t re n d changed in 2017 as data show that the state posted only 28.59 percent of all the

From left: Taiwo Shekon, group head, International Trade Services, First City Monument Bank (FCMB); Omolara Akanji,vice chairman, Nigeria International Chamber of Commerce (ICC) Banking Commission;Yemisi Edun, executive director, Finance, FCMB; Olubunmi Osuntuyi, secretary general, ICC Nigeria Banking Commission and ) Raymond Ihyembe, president of the body, during the ICC Nigeria Banking Commission meeting, hosted by FCMB, recently in Lagos.

investments last year, whereas Lagos got 50.11 percent of total investments that year. The data show that out of N329.94 billion invested by manufacturers in the first half of 2017, 32.9 percent (N108.87 billion) went to

Apapa zone. Ogun zone attracted 28.4 percent (N93.76 billion), while Ikeja got N67.27 billion (20.4 percent of total investment). In the second half, manufacturers made investment estimated at N176.69 billion.

While 28.9 percent or N51.11 billion worth of investment went to Ogun zone, 24 percent or N42.46 billion was channelled to Ikeja, while 20 percent or N35.33 billion went to Apapa zone. In the first and second

half, Ogun got N144.87 billion out of the total N506.63 billion, representing 28.59 percent. However, Apapa got N144.2 billion (28.46 percent, while Ikeja got N109.73 billion (21.65 percent). This means that Ikeja and Apapa got N253.93 billion, representing 50.11 percent. But before 2017, Ogun alone often dwarfed both Apapa and Ikeja put together. Manufacturers in Ogun, interviewed by this newspaper, wanted the state government to make processes clearer for investors. They said government should pay more attention to keeping already existing investors through incentives rather than just focusing on getting new ones. “It should not just be about revenue drive but about reducing various taxes and levies paid by investors,” a chief executive of a manufacturing firm in Otta axis, told BusinessDay. Manufacturers in AgbaraIgbesa, a major industrial cluster, want roads in that axis rehabilitated. Obi Ezeude,CEO of Beloxxi’s Industries, complained on February 8 this year, during a factory com-

missioning, that poor state of roads in Agbara was hurting manufacturers as vehicles often got stuck. Speaking at the 9th quarterly interactive Session with Ogun State government in Abeokuta in March 2017, Wale Adegbite, chairman, Manufacturers Association of Nigeria, Ogun State Chapter, had noted that apart from poor state of roads which were causing economic and man-hour losses, multiple taxation were also rife in the state. He had urged the state government to tackle them head-on in order to increase production capacity of manufacturers. Manufacturers in the state also said that things were becoming more predictable in Lagos and less so in Ogun as many government agencies are now asking for the similar fees and levies in Ogun. They say Ogun, which, in the past, benefitted from proximity to Lagos and poor doing business in Nigeria’s economic capital, must begin to do more in order not to lose existing investors and discourage incoming ones.

Good pesticides enhance acceptability of Nigerian products abroad—SON …as SON joins league of global quality management auditors ODINAKA ANUDU

he Standards Organisation of Nigeria (SON) has carried out a sensitisation exercise for Nigerian farmers on the dangers of using adulterated pesticides on their farms. Osita Aboloma, director general, SON, said at a oneday sensitisation workshop organised for farmers and agro-chemical dealers in Kano that good pesticides enhance acceptability of Nigerian export products in the global market. Tagged, ‘The Dangers of using Sub-standard, Adulterated Pesticides’, Aboloma said the move was targeted at eradicating rejections of Nigeria’s farm produce at the international market. “The reason why most of our farm produce is rejected at the global market scene is due to the high level of residue on our farm products, making them unsafe for consumption,’’Aboloma said. ‘‘This is why we are sen-

sitising our farmers on the need to always produce to meet global best practices while also driving the nonoil export sector,’’ he said. According to him, the Federal Government had directed SON, other regulatory agencies and Department of Agriculture in the country to strengthen the regulatory approach on the manufacture, sales and distribution of unwholesome pesticides in the market. He stated that the directive was also meant to get rid of the criminal network involved in the trade malpractice of adulterated pesticides and other related products. The DG, who was represented by Felix Nyado, director of operations in the agency, added that SON would continue to monitor the performance and sale of the products in the market to guarantee the safety of farmers using them, consumers of the farm produce as well as to protect the environment. He pointed out that producing more food from the increasingly depleted soil

was a major concern, not only to farmers but also to large food production companies and governments in the country. “Cu r re n t w o r l d w i d e trend shows an increase in the sale of pesticide products that are sub-standard (contain contaminated contents or do not contain active ingredients). “Therefore, investigation

by the SON on the agrochemical product markets confirmed that Nigeria is not immune from the above global trend,” he said. Aboloma stated that substandard, falsified, adulterated, illicit or counterfeit, untrusted and unregulated pesticides were found all over the place and innocent farmers were being wooed to buy them because they were

cheap. “The government of President Muhammadu Buhari is investing in agriculture to make the country self-sufficient in food production as well as export the surplus to improve the economy,” he said. Also, Yunusa Mohammed, Kano and Jigawa states coordinator of SON, said the programme would further strengthen collaboration

L-R: Ike Chioke, GMD, Afrinvest; Yvonne Chioke, head, business development, Vlisco Nigeria; Emmanuelle Dankwa, West Africa Rhodes scholar - elect, Ghana & St. Peter’s; Toluwalase Awoyemi, West Africa Rhodes scholar -elect, Nigeria & Christ Church; Oby Onwe, director, Fitness Factory; Chizzy Nnamchi, CEO, Niburu Shoes; Jide Taiwo, chief operating officer, Fitness Factory; Abibat Taiwo and Nnamdi Ebu, CEO, Springhurst, at 2018 Oxford and Cambridge Club of Nigeria Alumni recently in Lagos

with stakeholders in unleashing an extensive campaign against the sale and use of substandard, adulterated and spurious pesticides in circulation. In another development, the standards body recently joined the league of global quality management auditors, a development that would make the agency one of the global professional bodies advancing the practice of quality management in all sectors of the economy. The certification was given to SON Training Centre recently by Chartered Quality Institute (CQI), a chartered body for quality professionals improving the performance of organisations by developing their capability in quality management. Receiving the award, the DG explained that the feat would give the agency the opportunity to offer a portfolio of courses designed to suit employers’ needs, audit quality-related knowledge, and skills which were increasing demand across many industries in Nigeria today.

Monday 16 July 2018

C002D5556

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: July 13 - July 20, 2018

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

1.95

Q1 2018 — lower by 0.11% compared to 2.11% in Q4 2017

Broad Money Supply (M2) (N’ trillion) Credit to Private Sector (N’ trillion)

25.17 22.21

Increased by 2.64% in May 2018 from N24.52 trillion in Apr’ 2018 Decreased by 0.21% in May 2018 from N22.25 trillion in Apr’ 2018

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

1.93 11.61 14

Decreased by 1.36% in May 2018 from N1.96 trillion in Apr’ 2018 Declined to 11.61% in May’ 2018 from 12.48% in Apr’ 2018 Raised to 14% in July ’2016 from 12%

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

14 (+2/-5) 47.70 77.02

Lending rate changed to 16% & Deposit rate 9% July 11, 2018 figure — a decrease of 0.17% from July start July 13, 2018 figure— an increase of 0.39% from the previous week

Oil Production mbpd (OPEC)

1.66

June 2018 figure — an increase of 1.84% from May 2018 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 13/07/18

NSE ASI

37,392.77

Market Cap(N’tr)

13.55

Volume (bn) Value (N’bn)

0.21 3.24

Friday

Change(%)

37,625.59

(0.62)

13.63

(0.62)

0.32 3.07

(33.40) 5.30

Friday Rate

Change (Basis Point)

(%)

13/07/18

6/07/18

8.92 9.42

11.33 12.92

(241) (350)

CALL 30 Days

9.95 12.84

16.06 13.80

(611) (96)

90 Days

13.39

14.76

(136)

OBB O/N

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

6/07/18

13/06/18

13/07/18 Official (N) Inter-Bank (N)

305.80 346.82

305.70 346.17

305.90 342.71

BDC (N) Parallel (N)

361.00 361.00

360.50 361.00

360.99 362.00

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

YTD Change

Tenor

Friday

Change

(%)

(Basis Point)

13/07/18

6/07/18

3-Year 5-Year

0.00 13.64

0.00 13.57

0 7

7-Year 10-Year 20-Year

13.94 13.85 14.10

13.90 13.88 14.15

4 (3) (5)

19.48 (8.38)

2479.00 110.90 87.47 10.99 490.00

2.61 2.69 6.61 (3.17) (2.83)

28.05 (14.82) 12.86 (28.31) 13.03

1241.34 15.81 276.40

(1.08) (1.56) (2.00)

(5.78) (8.03) (15.68)

Friday

Change

(%)

(Basis Point)

6/07/18

11.50 11.75

12.07 11.39

(57) 35

6 Mnths 9 Mnths 12 Mnths

12.64 12.79 12.95

12.66 12.99 13.09

(1) (20) (14)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Change

(%)

(Basis Point)

13/07/18

6/07/18

2,666.49

2,658.35

0.31

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

8.49 5.50 8.55

8.47 5.49 8.22

0.28 0.16 0.33

YTD return (%)(US $)

-46.68

-46.96

0.28

Index

TREASURY BILLS (MATURITIES) Tenor

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

0.39 (1.41)

13/07/18

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

77.02 2.80

1 Mnth 3 Mnths

AVERAGE YIELDS Friday

(%)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

1-week Change (%)

NIBOR Friday Rate

13/07/18

6/07/18

MONEY MARKET Tenor

Indicators

Amount (N' million)

Rate (%)

Date

91 Day 182 Day

5,395.70 20,000.00

10 10.3

20-June-2018 20-June-2018

364 Day

14,614.11

11.5

28-June-2018

Global Economy In China, data from the General Administration of Customs showed that exports increased 11.3% year-on-year in June, slower than the 12.6% rise seen in May. At the same time, annual growth in imports slowed to 14.1%, well below the 26% increase in May. Consequently, the overall trade surplus surged to $41.61 billion in June from $24.9 billion in May. The data comes as China and the US are embroiled in a bitter trade dispute. In India, manufacturing sector activity in June grew at the strongest pace this year, supported by rise in domestic and export orders, according to a monthly survey. The Nikkei India Manufacturing Purchasing Managers Index (PMI) rose to 53.1 in June from 51.2 in May, registering the fastest improvement since December 2017. This is the 11th consecutive month that the manufacturing PMI remained above the 50-point mark—a score above 50 means expansion, while below that denotes contraction. In Japan, confidence among the biggest manufacturers slipped for the second straight quarter, a key central bank survey showed. The Bank of Japan's Tankan report - a quarterly survey of about 10,000 companies showed a reading of 21 among major manufacturers in its June survey against 24 in the March report. The manufacturers surveyed include automakers and electronics companies that are the mainstay of Japan’s economy. The poor result was blamed on labour shortages, the rising price of raw materials, and growing concerns about trade protectionism. In Brazil, the consumer price index rose 4.39% in June year-on-year, gaining strength from the previous month, when the index increased 2.86%, according to the country's statistics office (IBGE).This marked the fastest annual inflation rate since March 2017, when the consumer price index rose 4.57%. The strong increase was largely due to a trucker drivers' strike, which led to shortages of food and fuels and consequently to price increases in the beginning of June. Local Economy The Central Bank of Nigeria (CBN) revealed in its monthly business expectation survey report that the confidence index on the macro economy for the month of June 2018 stood at 34.7 index points. This is an improvement over the previous month (28.9 index points). The confidence index has steadily risen over the past five months (Feb: 14.5, Mar: 24.5, Apr: 28.9, May: 28.9). The optimism on the macro economy was driven by the opinion of respondents from the services, industrial, construction and the wholesale/retail trade sectors. The surveyed firms identified insufficient power supply, high interest rate, unfavourable economic climate, financial problems, unclear economic laws, insufficient demand and unfavourable political climate as the major factors constraining business activity in the current month. In a separate development, the apex bank has disclosed that the 2020 targets set out in the National Financial Inclusion Strategy (NFIS) of 2012 are unlikely to be met. This was contained in an “Exposure Draft of the National Financial Inclusion Strategy Refresh,” that was posted on its website. The original NFIS document outlined two financial inclusion targets for the year 2020, namely: an overall financial inclusion rate of 80% of the adult population and a formal financial inclusion rate of 70% of the adult population. However, according to CBN’s 2016 financial inclusion data, only 58.4% of Nigerian adults were financially included with only 48.6% using formal financial services. In addition, Nigeria still lags 15 targets for channels and products as well as 22 key performance indicators (KPIs) related to these targets. Stock Market It was another downward trend on the floor of the Nigerian Stock Exchange (NSE) in the week ended June 13, 2018 as most stock prices depreciated, causing the market volume and value traded to plummet by 33.40% and 5.30% respectively to 212.9 million trades and N3.24 billion in that order when compared to the previous week. The bearish performance was due to negative market sentiments. Market breadth also came out

negative as decliners (26) outweighed advancers (17) in the market. Similarly, the All Share Index (ASI) slid by 0.62% or 232.82 points to 37,392.77 from 37,625.59 points the previous week. Likewise, market capitalization declined by 0.62% to N13.55 trillion from N13.63 trillion the preceding week. The week’s downturn was subject to losses in the stocks of companies in the consumer goods and industrial goods sectors. This week, market sentiments may improve in anticipation for the expected Q2 2018 financial scorecards. Money Market Rates moderated slightly across all tenors in the week ended July 13, 2018 on the back of buoyant market liquidity. Liquidity was boosted in the market from an inflow of about N313 billion in Open Market Operation (OMO) maturity during the week. Open Buy Back (OBB) and the Over Night (O/N) rates slipped to 8.92% and 9.42% from 11.33% and 12.92% respectively the previous week. Longer tenured interbank rates did likewise. The 30-day and 90-day Nigerian Interbank Offer Rates (NIBOR) stood at 12.84% and 13.39% from 13.80% and 14.76% respectively. This week, rates may remain around current levels in the absence of any major inflows or outflows. Foreign Exchange Market Foreign exchange rates settled in varying directions in the preceding week. The interbank window depreciated to N346.82/$ from N346.17/$ representing a drop of 65kobo. However, the parallel market rate remained stable at N361/$. The official rate retreated by 10 kobo to N305.8/$ after four consecutive weeks of marginal appreciation. Dollar liquidity remained stable last week with lenders selling export proceeds to customers. This week, the naira is expected to remain around prevailing levels, driven by exporters selling dollars on the interbank currency market and the liquidity provided by the apex bank. Bond Market Average bond yields trended northwards on the short to medium end of the curve even as they trended southwards on the long end of the curve. Buying was majorly seen at the long end of the curve. Yields on the five-, seven-, ten- and twentyyear debt papers finished at 13.64%, 13.94%, 13.85% and 14.10% from 13.57%, 13.90%, 13.88% and 14.15% respectively the previous week. The Access Bank Bond index ticked higher by 8.13 points or 0.31% to close at 2,666.49 points from 2,658.35 points the previous week. This week bond yields may decline slightly as current attractive yields spur increased demand on the short to medium end of the curve. Commodities Crude oil prices nudged higher driven by ongoing concerns about supply disruptions from OPEC member Venezuela and a strike by two Norwegian oil workers’ trade unions that disrupted production at Shell’s Knarr field. Bonny light, Nigeria’s crude oil benchmark, gained 30 cents a barrel to settle at $77.02. In contrast, precious metal prices slipped as the dollar firmed against the yuan after the United States threatened to impose additional tariffs on Chinese goods, escalating trade tensions between the world's two largest economies. Gold fell 1.08% at $1,241.34 an ounce, while silver was 1.6% lower at $15.81 an ounce. This week, oil prices may likely come under pressure from concerns about global trade tensions and an announcement from Libya that oil production was recovering after weeks of unrest. For precious metals, we anticipate the Federal Reserve’s hawkish tightening cycle, a strong economy, and a higher U.S. dollar will weigh on prices even further. MONTHLY MACRO ECONOMIC FORECASTS Variables

Jul’18

Aug’18

Exchange Rate (Official) (N/$)

346.90

347.02

348

Inflation Rate (%)

9.34

9.00

Crude Oil Price (US$/Barrel)

76.75

76.00

77.00

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

Sept’18

BUSINESS DAY

Monday 16 July 2018

This is M NEY A daily guide to your Personal Finance

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Internships & money matters

hat are your teens and young adults doing this long holiday? Of course after a gruelling academic year, there is a need to unwind, rest and rejuvenate, but they don’t need to spend close to 3 months and more holidaying. The long holidays should be more than just a vacation; it is a career opportunity. Grades do matter but… From a very young age, students are trained and expected to get the best grades possible. However, the truth is that having good grades doesn’t necessarily translate into a job or make you a great employee. Employers don’t consider academic grades as the be all and end all for candidates anymore. Of course your ‘A’ grades will win you accolades (particularly from Nigerian parents), but employers look for work experience in addition to exam or coursework grades and an array of extracurricular activities and interests in their search for top candidates. An internship often gives students an edge. Theory and Practice It is on the job that you can truly hone some professional skills and gain hands on real world experience outside the classroom focused largely on the theoretical. Theory is important but it comes alive when you are

given an opportunity to put that knowledge into practice. This prepares you to go back to school equipped with greater understanding and fresh perspectives on the subject matter reinforcing classroom concepts. Interning offers opportunities for you to work closely with others in a team. This throws up many aspects of character, leadership, collaboration, technical skills, managing deadlines, responsibility etc. It is from this that a sound work ethic can be built. Get a foot in the door An internship can lead to a full-time job at your host company. If you’ve left a great impression that you are hardworking, committed, intelligent and capable, you are certainly in a more competitive position to be considered than even those with far superior grades since your bosses are already familiar with your work ethic. Internships have been described as an “audition in disguise,” an ideal way for both employer and intern to test the waters for a short time before committing to it fully. If you’ve impressed them, you’ll probably make the final list. Is this the right path for you? So many young people embark on a path only to find after considerable time and expense, that they do not wish to pursue that direction. It’s best to know as early as possible. An internship usually lasts for about 3 – 6 months. This is a great opportunity to test out a job or career path with enough time to learn whether or not it is a good fit without a long-term commitment. If you have not yet decided which direction to go, try various sectors dur-

This presents a wonderful opportunity to set aside at least part of your income and begin the journey to financial independence. Mutual funds are ideal for small savers with entry as low as N5,000; the key is to be consistent and to think long term. And a word for parents… Going out to work every day is usually the first step to financial responsibility. It is not the amount of money your child earns, but the lessons learned that counts. The sense of independence and accomplishment provides a child with a solid foundation for their development and when they leave home, you can be confident that they can step out into the world and fend for themselves.

ing each vacation; different careers demand varying skill sets. This way, you get a wide range of experience under your belt and can begin to narrow down your choices as it highlights your strengths and where you tend to struggle. Apart from the formal roles, there are numerous other opportunities to consider; from volunteering and community service, helping at a summer camp, waiting tables in a restaurant, sales clerk at a local store. This is also an ideal time to consider setting up and running your own business, which impresses employers no end. Relevant work experience Ideally an internship you are choosing should be related to the field that you wish to pursue. If you already have an idea of the path that you wish to pursue, select a firm in that field which will help equip you to prepare for future interviews and direction by gaining invaluable indus-

try knowledge. Employers prefer to choose candidates that have some experience that is relevant to the position they are actually hiring for; this puts you up on the learning curve and helps you settle into a new role with ease. Your network is your net worth Professional connections are among the most valuable networks that you can have in your life. Even if you are not retained for a fulltime position, the networks that you build from the stint can be invaluable whether for providing mentoring and support as you grow, or for career advice, references or recommendations for your next job. Find and latch on to a mentor, but remember that a senior colleague will take an interest in an interested, committed, hardworking intern and not someone that it always late, unresponsive, and adds little or no value. Should money be a fac-

tor? Naturally, some students might have to turn down an excellent but unpaid internship opportunity; this significantly limits available opportunities. As far as possible, try not to let money be the deciding factor when you are thinking of interning. Gaining useful experience should be your goal for the value it will bring to your resume and your personal life. Financial responsibility One of the greatest benefits of interning is earning and learning to manage your own money. Money that you have earned from your own sweat tends to have more meaning than with “free” pocket money or allowances. Hard work builds frugality; when the money comes out of your own pocket, you are more selective about purchases and are less likely to spend it frivolously. Time is a fundamental ingredient of successful investing as funds set aside have time to appreciate in value.

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

Monday 16 July 2018

Stocks

Currencies

C002D5556

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

BUSINESS DAY

Watchlist

P.E

ECONOMY

SHORT TAKES $210mn

Snap shot of Cement makers’ Q1 results BALA AUGIE

Q1 Cost of Sales Ratio (%)

nvestors who wish to invest in industrial goods stocks should pay attention to the analysis below as it gives an insight into the financial health of the major players in the sector. For the first three months through March 2018, the cumulative sales of the three bellwether firm operating in the sector- Dangote Cement Nigeria Plc, Cement Company of Northern Nigeria (CCNN) and Lafarge Africa Plc- increased by 11.68 percent to N328.15 billion from N293.68 billion the previous year. CCNN and Dangote Cement were able to record expansion in profit margins as they continue to turn each Naira invested in sales into higher profit amid a tough and unpredictable macroeconomic environment. CCCN’s gross profit margin increased to 41.95 percent in the period under review as against 37.48 percent the previous year. Dangote Cement’s gross profit margin increased to 59.79 percent in March 2018 from 57.87 percent as at March 2017. Improved efficiency can be attributed to a change in energy mix that helped underpin the bottom line as firms switched from gas to coal to power plant at the factory. However, Lafarge Africa’s gross profit margin fell to 22.32 percent in the period under review from 25.69 percent as at March 2017; the firm was hard hit by rising production

Q1 EBIT Margin (%)

0.777

0.429

0.580

0.402

0.263

0.078 Dangote

CCNN

Lafarge

Dangote

Source: Company Financials; Markets and Intelligence

CCNN

Lafarge

Source: Company Financials; Markets and Intelligence

Q1 Net Income Margin (%)

Q1 Gross Profit Margin (%)

0.298

0.598

0.201

0.223

-‐0.025 CCNN

Lafarge

Source: Company Financials; Markets and Intelligence

costs and slow sales. Dangote Cement’s net income was up 26.83 percent in March 2018 as against N55.86 billion the previous. Similarly, CCNN’s net income increased by 11.80 percent to N1.08 billion in the period under review as against N513.73 million as at March 2017. However, Lafarge Africa fell of the cliff as it recorded a loss after tax of N2.0 billion in March 2018 from a profit position of N5.16 billion recorded the previous year. Cement makers are less susceptible to financial risk-except Lafarge Africa- as evidenced in a low leverage ratio. This means their balance sheet is financed with equity capital. Dangote Cement’s time coverage ratio is

Dangote

9.90 times earnings while CCNN’s is 44.43 times earnings. Lafarge Africa’s time has a coverage ratio of 0.67 percent times earnings as the firm continues to grapple with hug3e debt brought on by foreign exchange risk. The company expects its leverage ratio, which measures the level of

CCNN

Source: Company Financials; Markets and Intelligence

debt incurred by a business against its assets, to drop to between 60 percent and 70 percent over the next 18 months, from more than 100 percent, Mobolaji Balogun, chairman of Lafarge Africa. The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest

Time Coverage Ratio (%) 44.506

9.901 0.680 Dangote

Lafarge

CCNN

Source: Company Financials; Markets and Intelligence

Lafarge

Nigeria’s central bank said on Wednesday 20th June that it had injected $210 million into the interbank foreign exchange market, extending efforts to boost liquidity and alleviate dollar shortages. The bank said in a statement it had released $100 million earmarked for the wholesale market, $55 million for small businesses and individuals, and $55 million for certain dollar expenses such as school fees and medical bills.

IV funds

0.420

Dangote

on its outstanding debt. The interest coverage ratio may be calculated by dividing a company’s earnings before interest and taxes (EBIT) during a given period by the company’s interest payments due within the same period. The lower a company’s interest coverage ratio is, the more its debt expenses burden the company. When a company’s interest coverage ratio is 1.5 or lower, its ability to meet interest expenses may be questionable. 1.5 is generally considered to be a bare minimum acceptable ratio for a company and the tipping point below which lenders will likely refuse to lend the company more money, as the company’s risk for default may be perceived as too high.

A breakdown of the new fee structure showed it was divided into IV t fund segments. Fund one is an optional fund, which means interested contributors, must write to take part in it. Fund two and three are the default fund for contributors aged 49 & below, and aged 50 & above respectively. The fund four is for retirees, as stated by PENCOM

2018-2020 The fee structure for Nigeria pension industry was revised by the National Pension Commission (PENCOM), and it is valid for the period between 2018-2020, as compiled from the commission’s statement,released last week Thursday, 21 June 2018. The revised fee structure which will be effective from 1st of July, 2018 cover charges by the commission, Pension Fund Administrators (PFAs), Pension Fund Custodian (PFCs) and the commission itself

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: DIPO OLADEHINDE, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: DAVID OGAR )

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

BUSINESS DAY

C002D5556

Monday 16 July 2018

Markets Intelligence ECONOMY

SkyeBank tops H1 market liquidity among Penny Stocks on the NSE ABDULLATEEF ENIOLA-GIWA

nvestors looking for short term gains in a market where the political uncertainty has reduced the security of blue chip, have invested in penny stocks and the most traded among these stocks priced below N1 in the half year has been SkyeBank. BusinessDay analysed the stock volumes since the beginning of the year to identify the liquidity of penny stocks in the first half of the year. Due to the equity market rally in Q1, 2018, 2 Billion SkyeBank shares were traded in that period which represented 85 percent of the total volumes traded in the stock and 5 percent of the total overall volumes traded on the NSE Main Board. The volumes dropped to 442 million shares in the second quarter of the year as foreign portfolio investments started reducing and the overall market looked gloomy. Wema Bank followed second with a total of 1.3 Million shares traded which was weighted 75 percent in the first quarter also buttressing the downward trend Q2. Japaul had the lowest weight of volumes amongst the 5 stocks in Q1, 2018 as 40 percent of its total volumes of 945 million was from the second quarter of 2018. AIICO and WAPIC completed the ranking with about 620 million shares each and weightings of 67 and 63 percent respectively. Paul Uzum, a stock broker at Golden securities Ltd explained that the ac-

tivity on penny stocks are due better bargains in market as there is a and short term investment decisions to take advantage of the current market situation. “In January, there was a general rally market rally that affected all the banking stocks including the tier 2 Banks, Skye bank rose from a low of 50 kobo and went over N1 and I think there is a Director buying up shares to take a strategic move” he explained as the reason for the high volumes of the banking penny stocks. ‘There are some of these stocks that some people are looking at, there might be some takeovers due to prices

falling below 20 kobo and some people might see a possibility of taking controlling interest with the current prices of some of these companies” BusinessDay survey of Analyst also explained the buying up of WAPIC shares by Aigboje Aig-Imoukhuede, the former CEO of Access Bank, as the driver of rising volumes in WAPIC and high Japaul volumes can be attributed to the announcement of the merger with Milost Global in the Q1, 2018. The insurance index also performed best in H1, 2018 and AIICO was one of the leaders in the index explaining its position on the top 5 most traded penny stocks in that period.

In the first half of 2018, the 5 stocks opened the year with 50 kobo and positive gains were recorded on the Banking penny stocks with Wema gaining 46 percent to N0.73 and Skye Bank 33 percent to N0.69. AIICO gained 13 percent from its opening to N0.61 as WAPIC was understandably flat and Japaul shed 24 percent to its current price of N0.36. The NSE shifted the minimum price of stocks from 50 kobo to 20 kobo this year and is to further remove the cap entirely. This will increase the danger of buying into penny stocks as it can lead to a total wipe out of an investment position.

Treasury bill yields edge higher

n addition to foreign investors selloffs across the money market space, average treasury bill yields edged higher by 69bps to 13.25%, largely supported by higher CBN’s FX sale and selloffs by banks. For context, CBN’s FX intervention to the various segment of the market rose 20.2% MoM to $2.2 billion in order wade off depreciation on the naira. This in addition to its decision to increase its frequency of dollar sales to the BDCs (from 2 to 3 times) strained liquidity from the market. Furthermore, the market also witnessed flashes of selloffs from banks as they unwind ahead of H1 18 financial reporting. Based on the foregoing, average stop rates at the June NTB auction (June: +17bps to 10.6%) tracked higher despite lower paper issuances (-20% to N40 billion in June).

For the second consecutive time this year, the US FED raised interest rate by 25bps to a range of 1.75% - 2% at its June FOMC meeting. Also mirroring patterns from the FED dot plot, the mon-

While this decision resounds FED’s commitment to gradually increase interest rates to historical normal levels, the major driver reflects heightening concern over looming inflationary pressures in the US over 2018 stoked by impressive growth—Q1 18 GDP (2.2% YoY) reading and ebbing jobless claims. To buttress, economic projections of the Federal Reserve Board Members reveal upward revision to 2018 Real GDP estimates (to 2.8% from 2.7%) as well as Inflation (to 2% from 1.9%), and downward review to Unemployment rate for 2018 to 3.6% from 3.8%. This cascaded into FPI flight from etary authority signaled addiNigeria’s FI (fixed income) martional two rates increases this year ket with knock on effect driving which could bring total rates hikes average yields higher by 50bps to to four in 2018 (vs three times 13.38% in June 2018 as FPIs take earlier signaled at the start of the advantage of attractive yields in year). the US.

BUSINESS DAY

Monday 16 July 2018

Start-Up Digest

In association with

Inside Oluwatomisin’s Regalo Kitchen ODINAKA ANUDU

ood business is becoming increasingly profitable in Nigeria. The reason is simple: Population is growing at 2.6 percent each year and these people must be fed. Nigeria is today the most populous country in Africa, with 198 million mouths to feed. Eagle-eyed entrepreneurs are already occupying Nigeria’s food space, making millions from creating value for everyone. One of the people occupying this space is Oluwatomisin Adewumi-John, founder and head chef of Regalo Kitchen and Confectionery. A graduate of Sociology from Bowen University Iwo, Osun State, Oluwatomisin started this business in December 2015. The entrepreneur is a member of the Young African Leaders Initiative (YALI), with a passion to build capacity within her community. She has served in various leadership roles over the years, which helped her in building capacity to lead Regalo Kitchen and Confectionery Limited. She is also a director at Regina La Meilleur Limited, a management consulting company located in Lagos. Oluwatomisin’s passion to contribute to poverty eradication, zero hunger and economic development led her to kick off Regalo Kitchen Cake Baking Master Class, with registration currently on-going. Regalo Kitchen is a fully Nigerian company with a goal to help clients eat right in line with their health needs. The firm’s vision is different from any other. This is because it does not just bake, cook and train, but it does these as part of its contribution towards Sustainable Development Goals (SDG) 1, 2, 3 and 8. The United Nations’ SDG 1 focuses on ‘No Poverty’, while SDG 2 targets ‘Zero Hunger’. More so, SDG 3 is targeted at ‘Good Health and Wellbeing’, whereas SDG 8 is all about ‘Decent Work and Economic Growth’. These are Oluwatomisin’s vision. She has trained about 100 young graduates and undergraduates since inception. “We kicked off in 2015 and have since built a steady client base within Lagos and outside Lagos,” she tells Start-Up Digest. “We have been privileged to serve individuals and corporate organisations at various levels ranging from Guaranty Trust

Oluwatomisin Adewumi-John

Bank, Stanbic IBTC Bank, Stanbic IBTC Asset Management Limited , Stanbic IBTC Pensions Mangers, Fidelity Bank and many others,” she discloses. She says the market has been good, especially in Lagos where people have a problem of having time to cook. The entrepreneur has focused on solving this problem of lack of time in Lagos by giving residents readymade food. “We also offer families and homes ready-made pot of soups and stew in different sizes and combinations,” she reveals. How did Regalo Kitchen kick off? Oluwatomisin provides an explanation. “I noticed that cooking wasn’t just another chore but a passion. I started cooking as early as when I was eight and have since developed capacity to upscale by attending various trainings to ensure I am at the top of my game. “I also believe so much in SDG 3, which talks about Healthy Wellbeing, and as such, I help my clients and community eat right to stay healthy and strong for the day’s task,” she explains. The entrepreneur says she decided to convert her passion into a stream of income. “The training part came from a mind-shift to empower people around me to be self-reliant and independent in line with Sustainable Development Goal 8. I

believe we all have a role to play towards nation building, especially if we intend to achieve the SDGs by year 2030,” she states. The entrepreneur did not really start with money, as she had to use kitchen utensils and wares belonging to her parents. “My line of business only needs you to get someone who trusts you to deliver,” she explains, adding that “you get part payment and on delivery get your balance.” Oluwatomisin points out that Nigerians complain a lot about capital, forgetting to look inwards to what can be achieved with available resources. She is not underestimating the importance of capital, but believes that one can always start from where one is with available resources. “For example, I cook, bake and train from home due to high cost of renting a dedicated space in Lagos. This second half of the year, I would be training about 100 participants in cake baking and issue them certificates upon completion of training. All this would be done with the available resources while we continue to apply for funding opportunities,” she says. For her, food is a necessity and not a luxury, which is why the industry is thriving. “If we should look at Abraham Maslow’s Theory of Need/Want, we would find out that food

forms the basic need of man. Apart from the fact that you can see the direct impact of your activity, you get instant feedback from your clients and build sustainable relationships over time. Food business is highly lucrative and can never be over saturated as different food vendors have different target markets,” she magnanimously discloses. The entrepreneur further says that Regalo Kitchen is open to collaborations and partnerships. “Over the weekend, I attended a pitching session where investors offered funds in return for equity holdings. Regalo Kitchen is open to such similar partnership in order to upscale and service more customers,” she states. “A partnership with the Lagos State Employment Trust Fund (LSETF) and other arms of government would also be vital towards training and empowering more youths across Lagos. We, however, would continue to do what we know best with the available resources until this opportunities and partnerships show up,” she adds. Oluwatomisin ia tapping expansion but notes that capital is key to achieving Regalo Kitchen’s expansion goal. “The long-term goal basically is to expand to all major cities across Nigeria within the next five years and then we can start thinking of outside Nigeria once

our business model has been tested and trusted to work in different geographical location,” she projects. The entrepreneur is looking forward to future talks with the Lagos State Employment Trust Fund once the application portal is open. Oluwatomisin wants collaboration with the LSETF, especially in the training and empowerment angle, stating that she believes a safer and productive Lagos can only be achieved when residents are well empowered. She commends the Lagos State Government for various projects being executed to make doing business easy and environment safer for entrepreneurs like her. Regalo Kitchen sources its raw materials from Mile 12, Eko Market and Ijora. For foodstuffs, the firm patronises Mile 12 Market majorly but sources her chicken and turkey from Ijora Market. The firm also sources some inputs from outside Lagos. She believes governments at all levels are working tirelessly to promote SMEs and ease of doing business in Nigeria. “I would, however, like to say they need to do more and improve public awareness to ensure people at the grassroots benefit from many of their initiatives,” she recommends. Oluwatomisin has a piece of advice for upcoming entrepreneurs. She wants them to be consistent and competent. “Rome was not built in a day and neither can any business be successful overnight. You need to build traction and set milestones and while working to achieve each milestones, there is the need to also build competence through self-development along the way in order to constantly deliver top-notch ser vice to your clients/customer base,” she states, adding that a satisfied customer is a potential marketer for a firm.

Start-Up Digest Team ODINAKA ANUDU Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Angel James Joel Samson Graphics

BUSINESS DAY

C002D5556

Monday 16 July 2018

Start-Up Digest

Gbubemi Aibangbee: Providing affordable food for Nigerians through technology ENDURANCE OKAFOR

b u b e m i Ve ra Aibangbee is the co-founder and managing partner of Madam Sabi Market Services, a pioneer online-based foodstuff shopping website in Nigeria (www.madamsabi.com). It is a premier shopping solutions provider that offers a platform for easy and convenient shopping of top quality Nigerian food staple at cheap prices. Madam Sabi Market offers products such as palm oil, fresh tomatoes, beans, green apples and stockfish, among others. It services a clientele base of private individuals and corporate organisations. Gbubemi worked for several years before setting up this firm. After her National Youth Service Corps in 2001, she worked for a telecommunication multinational and later left to raise a family. She had her fair share of failures, but these turned out to be the learning curve. Every business has an inspiration. What exactly inspired Gbubemi to set up this business? “When Madam Sabi was conceptualised, the idea was to create a value proposition to support the lives of working women and overwhelmed mothers,” she explains. “We also wanted an identity that hinted a feminine association, a business name with an indigenous ring to it and yet not tied to any particular ethnicity,” she adds. Gbubemi says that ‘Madam Sabi’ in local parlance captures the essence or attitude of a knowledgeable woman with a wealth of experience. According to the entrepreneur, the business wanted confidence to shine forth through its brand name.

Gbubemi Aibangbee

“Every Pidgin-English speaking Nigerian knows what to ‘Sabi’ means. However, new facets and possibilities for the business soon emerged and we discovered the potential to do so much more with the brand. It has evolved beyond providing a reliable local service to powerfully impacting the businesses of female farmers and foodstuff traders,” she states. The founders started out with personal assets such as our computers, personal vehicles, basic appliances used in the kitchen and the Internet. They also built a website to facilitate the product

offering. ‘Madam Sabi’ at the beginning started off providing services to a handful of customers. But as online shopping for foodstuff gradually became more acceptable, the reputation of credibility it had built over the years began to pay off. “Now it has become a question of who gives the most value in this industry and we are proud to say we are right in the fore-front of being the most preferred,” she proudly says. She explains that her vision for the next level includes an expand-

ed clientele base and financial partnership. Every business has (or has seen) peculiar challenges. For ‘Madam Sabi’, the first challenge was gaining the trust and confidence of customers. However, the firm was able to overcome this by providing consistent and transparent services to its customers. “With consistency and transparency over the years, we proved ourselves in that regard and built a reliable reputation in this field. The other significant challenge we encounter is that of expensive cost of power supply and the diffi-

culty/unpredictability of logistics. Sometimes things do not always go as smoothly as we hope,” she says. The entrepreneur tells Start-Up Digest that continuous improvement and strategy innovation are keys to overcoming many challenges. “We keep challenging ourselves to do better than our last work. We measure our output through customer feedback and continuously devise new methods to do things better,” she says. Gbubemi wants the government to create an enabling environment for entrepreneurs like her to thrive. “Our major operations for now are in Lagos and Madam Sabi, like all other businesses on the go, suffers the same issues arising from the lack of an enabling environment to do business such as inadequate infrastructural amenities like power supply and poor transportation network. With most roads in poor shape, the available decent roads are over-used and often congested,” she points out. She says it is important that government find a lasting solution to the power supply situation in the country, as the cost of privately providing power to operate a business often defeats the purpose for starting the venture in the first place. She recommends that government should explore the possibility of utilising the waterways for faster logistical commute for small businesses and the like to ease the pressure on the roads. On what she would you tell her younger self, she says, “I love what I do and I have no regrets about how my career path has progressed thus far.” However, Gbubemi says she would tell her younger self to have an early formal and informal exposure to business education.

Ventures Platform, USNC announce capacity fund for entrepreneurs, start-ups ODINAKA ANUDU

n a bid to boost the capacity of Africa’s entrepreneurs, Ventures Platform, in partnership with the United States Nigeria Council (USNC), has set-aside corporate leaders’ fund to support proven Nigerian entrepreneurs. The entrepreneurs to be supported are those building innovative start-ups to solve enterprise challenges. The Ventures Platform - USNC corporate leaders’ fund will target post Minimum Viable Products (MVP) stage companies, with

the potential to follow on in later rounds. MVPs are early stage start-ups. The fund is expected to give Nigerian enterprises the opportunity to participate in the next wave of companies that will define the country’s future as an industrialised nation. A statement says that this announcement is coming on the sidelines of the recent investment and technology summit held at Silicon Valley in the United States (US) targeted at promoting Nigeria’s growing tech ecosystem and finding stronger ways to synergise with the Valley’s tech ecosystem players around capital, mentor-

ship and capacity development. The high powered Nigerian delegation of senior policy makers and young tech ecosystem actors was led by Yemi Osinbajo, vice president, during which the agreement was signed in the U.S. Speaking about the partnership, Kola Aina, founding partner of Ventures Platform said, “We are really excited about the opportunity to get Nigerian corporations and corporate leaders involved in supporting the inevitable future, and we’re pleased to have such an important organisation as the USNigeria Council join us to make this journey possible.” With the participation of se-

lect corporate partners, leaders and executives of major Nigerian organisations and members of the US-Nigeria Council, Aina said that the funds were aimed at supporting them with smart capital to power growth. He explained that investee companies would be strategically aligned with objectives of the fund’s corporate backers who were primarily members of the US-Nigeria Council. Beyond capital, the company’s founding partner also noted that the fund would provide investee companies with access to market and distribution, growth support and partnerships, talent develop-

ment, technology, and expertise from the fund backers and partners. In his own respond, Eliot Pence, USNC executive director, said: “We see the partnership with Ventures Platform as an important step towards USNC’s mission of advancing US-Nigerian commercial relations. The fund will further align the interests of corporations with entrepreneurs and investors. Ultimately, our goal with this partnership is to deepen, diversify and develop the commercial activity in the tech ecosystem and accelerate investor outcomes. We are thrilled to work with Ventures to advance that.

BUSINESS DAY

Monday 16 July 2018

Start-Up Digest

Ononobi: Redefining consumer rewards for African businesses JOSEPHINE OKOJIE

adonna Ononobi is a cofounder of Thank U Cash, an online business that helps customers to get cash reward on their purchases within a registered community. Through her online platform, Madonna along with Simeon Ononobi and Suraj Supekar, her fellow co-founders, established a cash network for businesses to grow their sales. The network enables customers to get cash reward for each transaction within the community of businesses. Madonna and other cofounders were inspired to establish Thank U Cash in August 2017 to help businesses grow and retain their customers through a reward system. “We found out that businesses were not growing because they did not have the right target of people either shopping with them or increasing returning

customers. So, we started giving customers some cash-back whenever they spent at these merchant locations,” Madonna says. “What this did for the merchants was that it ensured they knew exactly who was buying from them and also were able to share customers from one pool called the Thank U Cash community. With these, merchants got more awareness for their products, more customers and increase in sales,” she explains. The economist-turnedentrepreneur states that her initial start-up capital was raised from family members and friends. She notes that the business has grown steadily since starting, adding that the enterprise has constantly been growing by 10 percent on a month-on-month basis since starting. The entrepreneur discloses that the business now has 19, 000 shoppers on board in Lagos. “ W h o d o e s n o t l i ke cash?” she asks, rhetorically.

Madonna Ononobi

“Since inception, we have grown 10 percent m o n t h - o n - m o n t h . We have been able to generate 19,000 shoppers in Lagos and we are still growing. With advertising and more partnership, we intend to increase the number tremendously,” she says. She adds that the business does not provide e-

payment solutions but a platform for enterprises to give reward for purchases made by their customers. Madonna tells StartUp-Digest that the unwillingness of customers to embrace change remains the biggest challenge confronting the business. She calls on Nigerians to embrace change and

always seek knowledge on new technologies. Also, she states that the huge infrastructural gap is also a major problem confronting the business. Madonna calls on the government at all levels to bridge the country’s huge infrastructural gaps and ensure that businesses have the right environment to

thrive. The young entrepreneur also urges governments at all levels to create platforms for partnerships for entrepreneurs. “Government should create more avenues for businesses like ours to partner with relevant government bodies, increase support and funding for new and innovative businesses like ours,” she notes. Speaking on expansion plans, Madonna says her business intends to spread its operations to other major African countries. She points out that the country’s technology sector has the potential to diversify Nigeria’s economy, adding that it is ICT that drives the growth of other sectors. On her advice to other entrepreneurs, Madonna says, “The road will always be tough, but it does not mean you should give up. Nothing good comes easy, which means consistency is vital for you to survive. So, stay strong; as long as you are on the right part you will win in the end.”

‘Consistency in quality of leather is a major challenge for shoe makers’ Kehinde Oduniyi is the chief executive of Kenniefit, a Lagos-based business that creates unique leather shoes. Kehinde has a Bachelor of Science degree in Social Work from the University of Lagos. She sits down with BUNMI BAILEY to talk about her leather business and how she copes with few challenges. Tell us about your business? started my shoe business when I was an undergraduate student in the University of Lagos. I ventured into the shoe business as an alternative means of survival. I started as a retailer whereby I would get readymade shoes and resell. After a while, I picked up interest in producing and making shoes because I had a passion for that. On that note, I registered for a shoe training class around Sabo Yaba, which is very close to Unilag. While I was attending my training classes, I still did my usual buying and selling of footwear. As God would have it, I was able to gather some capital together to get a small place for my business, and to God be the Glory, I started my shoe business and started making it myself. As time went by, I formed a legal entity by registering my brand name, setting my business personal account and I registered for

taxes. The brand name is called Kenniefit. Why I chose that name was because the brand itself could still go into other businesses that have to do with wears. How long have you been running your business? Four years now.

Secondly, my products have good quality. What are some of the challenges that your business faces? One of the major challenges

to get a very good material for a particular production, you might not be lucky to get that same material for continuity. We are also faced with the challenge of capital. This is the father of all because without capital, no objective can be actualised. How can government address these challenges? Government should assist with the creation of refined and leather manufacturing factory. They should also endeavour to create an atmosphere whereby loans and grants are opened to all individuals. They should also help with the creation of vocational training for interested individuals and assist them with basic equipment for the actualisation of the trainings.

Apart from shoe-making, are there other services or products you offer? We train individuals who have the drive to succeed. We help in providing jobs for undergraduates that have minimal means of survival, and we also help in nurturing our team by providing an environment that is conductive for creative thoughts. What was your initial startup capital? My initial start-up capital was N300, 000. What is unique about your business? The uniqueness of my shoe business is that it is lucrative.

I personally face in this business is that we don’t have access to quality structural equipment. We also have challenges with maintaining quality work and services. For instance, if you are lucky

Kehinde Oduniyi

How can the leather industry contribute more to the Nigerian economy? It is already contributing to job creation and gross domestic product. But like

I said earlier, government should assist with the creation of refined and leather manufacturing factory. They should also endeavour to create an atmosphere whereby loans and grants are opened to all individuals. How would you say your business has grown since you started? To an extent, the brand has two branches located at Mushin and the other at Sabo, both in Lagos. The brand has also been able to train more than five persons over the years. It has also been able to employ three other apprentices. What would you tell others like yourself who want to go into the leather business? My advice to those that want to venture into shoe business is that they need to keep to these watchwords: Patience, perseverance and focus .Rome was not built in a day. No matter the setbacks, keep fighting.

BUSINESS DAY Harvard Business Review

Monday 16 July 2018

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Why do toxic people get promoted? KLAUS J. TEMPLER

ometimes the wrong people get promoted. They might be deceitful and unscrupulously manipulative, or impulsive and thrill-seeking without any sense of guilt, or egotistically preoccupied with themselves. It can be frustrating for honest and humble people to watch these employees get ahead. Why, given their toxicity, do they rise through the ranks? How do such people manage to succeed? In a recent research study published in Personality and Individual Differences, I looked at the influence of political skill among employees. Political skill is defined as a positive social competence that helps

people network, influence others, demonstrate social astuteness and appear sin-

cere in their dealings with others. I surveyed 110 employees

in Singapore in a variety of industries and positions, asking them how they

viewed their political skill in the workplace. I also determined their scores on the H-factor of personality. High scores indicate honesty and humility; low scores are associated with the trio of dark characteristics described above. Finally, I also surveyed these employees’ bosses. I noticed that toxic employees whose political skills were highly rated by their supervisors were more likely to have a high performance rating. In other words, while not all toxic people possess political skill, those toxic people who use political skill effectively in the eyes of their bosses are seen as better performers. And as we all know, those who are seen as top performers are more

likely to be promoted. Is there a way to prevent toxic people from moving up? Organizational psychologists who are knowledgeable in personality and behavioral assessments may help identify toxic personalities early, but if the employee possesses political skill, this task is difficult. If you are one of these honest and humble people who feel left out, this research suggests you can make a run for the same promotion by acquiring political skill. While demonstrating it is easier for some, it can be learned.

(Klaus J. Temple is an associate professor at the Singapore University of Social Sciences.)

Most people are supportive of #MeToo. But will workplaces actually change? CANDACE BERTOTTI

he #MeToo and #TimesUp movements continue to create a tidal wave of media activity and increased awareness of sexual harassment and misconduct. But have they created positive changes in workplaces? Are people seeing healthy and lasting improvements in their organizations? To answer these questions, we asked 1,100 people in an online opt-in survey about the changes, if any, they’re seeing in their workplaces. Nearly two-thirds (63%) of the respondents in our survey describe #MeToo as “healthy,” and 45% say talking about harm they are experiencing is

now safer. In fact, 41% of the women in our survey know someone who has shared their story of harassment since these movements began, and 28% have shared their own story. However, about half of the women (48%) reported that they have a story they haven’t shared. The men in our survey confirm the magnitude of the problem: Nearly half say they’ve done something in the past that today might be labeled as sexual harassment or misconduct. Of course, the ultimate goal of these movements is to make workplaces safe from sexual harassment. Here the results are mixed. While 56% say there’s been some improvement,

bers of the opposite sex without creating discomfort or running the risk of false accusations. These strategies also need to be part of a larger effort. If you don’t hold leaders accountable, have people throughout the organization help lead the change, and give them the practical skills they need to address problems when they arise, you won’t see lasting change.

only one in three say the improvements have been more than “small.” Leaders must create environments where people feel safe to report bad behavior and have confidence that concerns will be handled fairly and effectively. Below are three

ways we’ve seen companies do that. HOLD LEADERS ACCOUNTABLE. Consider evaluating managers by adding questions related to sexual harassment to culture or engagement surveys. BE CHAMPIONS FOR

CHANGE. Encourage leaders and influential employees to volunteer to become champions for eliminating sexual harassment and misconduct. TEACH SKILLS. People need to know how to coach, mentor and meet one-on-one with mem-

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(Candace Bertotti teaches negotiation at Georgetown Law School and communication at Harvard’s Kennedy School. David Maxfield is an author and social scientist for business performance.)

BUSINESS DAY

Monday 16 July 2018

Enugu probes killing of monarch

nugu State government has put in place a judicial commission of inquiry into the killing of Stephen Nwatu, a traditional ruler at Ogbozinne Akpugo community in Nkanu West local government area of the state. Nwatu was recently allegedly killed by members of his community. C e c i l i a E z e i l o, t h e deputy governor of the state, while inaugurating the panel on Friday, said that the government was determined to establish the remote and immediate causes of the killing. Ezeilo said that members of the panel have 12 weeks to unravel the circumstances that led to the incident

as well as make appropriate recommendations. “ We a r e c o n f i d e n t t hat m e mb e r s o f t h i s panel will deploy their wealth of experience to discharge the work s a t i s f a c t o r i l y ,’’ s h e said, urging them to discharge their duties without fear or favour. Benedict Akpata, a retired judge and chairman of the panel, said the members would not want to misplace the confidence reposed in them. The community was on June 11, 2018 thrown into turmoil leading to the killing of Nwatu. The civil unrest by some sections of the community also led to the destruction of property in the area. NAN

Cleric donates relief items to Plateau IDPs

gnatius Kaigama, the Catholic Archbishop of Jos, has donated relief materials to Internally Displaced Persons (IDPs), in Kassa, in Barkin Ladi local government area of Plateau. T h e d o nat i o n , F r i day, was done through t h e Ju s t i c e D e v e l o p ment and Peace Commission (JDPC), a nong overnmental orga n i s at i o n u n d e r t h e archdiocese. Presenting the items, Stephen Akpe, a reverend father and an assistant coordinator in the commission, said the gesture was to cushion hardships being faced by the displaced persons.

The cleric urged the IDPs to continue to pray for return of total peace in the state, and other areas affected by crisis in the country. He called on the government to intensify efforts at e n su r i ng t h e ea rly return of the displaced persons to their homes. Items donated include 25 bags of rice, 30 bags of maize, six bags of beans, six cartons of seasoning, five bags of salt and 25 bags containing used clothes. Over 12,000 persons were recently displaced and proper ties wor th millions destroyed following attacks by gunmen on communities in the area. (NAN)

Drug abuse: NDLEA takes campaign to Abuja park

he National Drug Law Enforcement Agency (NDLEA) is engaging the management of Jabi park, Abuja in furtherance of its campaign against the consumption of illicit drugs especially by drivers. Vice chairman of the taxi branch of the park, Lawrence Fadipe said “the agency has been helping us in the motor park in the campaign against drug abuse by organising seminars to educate drivers on the dangers of the menace.

“Recently, we held a s e n s i t i s at i o n p ro gramme to that effect and it was conducted by the NDLEA. We call on NDLEA whenever we come across people indulging in such act within the park. He said that the NDLEA also called on the park`s management whenever they had information on any of the park’s drivers. “We do not allow sale of alcohol and illegal drugs within the park,” Fadipe said.

A cross-section of physically challenge persons, during elibrary computer training organized for them in Bauchi. NAN

Groups count losses as clashes claim 73 lives in Taraba

ontinued hostilities between the Hausa-Fulani and Yandang communities in Lau local government area of Taraba State have led to the death of over 73 persons with about 50 houses burnt down in less than two weeks. The state chairman of Miyetti Allah Cattle Breeders Association of Nigeria (MACBAN), Sahabi Mahmoud, told journalists in Jalingo, the state capital that the hostilities, which started on July 5, has claimed the lives of more than 23 of his members. According to him, over 3,000 displaced persons mainly women and chil-

dren, who fled the area, are currently taking refuge at the Muslim Council Secretariat in Jalingo and other neighbouring local government areas. On his part, an elder of the Yandang community, Aaron Artimas, said more than 50 persons from the side of the Yandang and other tribes in area had been killed since the conflicts broke out. Artimas noted that the Hausa-Fulanis, Yandang, Mumuye and Yoti, among other tribes, had lived in the area as brothers and sisters without problems for centuries. He blamed the recent recurring conflicts on incitement from people outside the area who wanted to

remain relevant politically. “S o m e m i l i t i a f ro m neighbouring Adamawa State have infiltrated into Babagasa, a border village between Taraba and Adamawa, and have been wreaking havoc on all the surrounding villages in Lau local government in Taraba. “Villages such as Tikule, Bariki, Santuraki, Budong, Mbonding and Panti-Ladda, among others, were burnt by the militia. “Over 2,000 displaced persons from the affected villages are currently taking refuge at the Central Primary School, Jalingo. “Some are in other villages like Sunkani, Apawa, Zing and Bali all in Taraba, while several others fled to

Gorobi, Sabon-Gida, Bujum and Mayo-Belwa in Adamawa State. “Since the arrival of IDPs in their current locations, they have been living at the mercy of God and good spirited individuals who have been taking food to them. “As I speak, since the conflicts erupted in Lau local government on July 5, there is no presence of security while the people continue to kill themselves,’’ he explained. However, the Taraba police public relations officer, David Misal, who confirmed the incident last Friday, said the number of casualties was still being compiled, while normalcy has been restored in the affected areas.

Residents, sellers lament as tomato price soars SIKIRAT SHEHU, Ilorin

ome residents of Ilorin in Kwara State have lamented the soaring prices of tomato in the state, saying the commodity was going out the reach for many families. This is as tomato sellers in the state capital have blamed the development on the lack of irrigation farming to ensure all- yearround cultivation of the commodity. Most of the sellers, who spoke on Friday at Mandate Market, Ilorin, said that the state also lacked sufficient tomato farmers. Kunle Adewusi, auditorgeneral, Perishable Goods Sellers Association, said that most of the farmers did not have access to water, so they use the manual method of wetting their farms,

which was very tedious. “The local method is tedious because the farmers trek long distances to fetch water from the streams for their plants. “They usually start the process of manual labour from March to May before the rainy season begins. The few farmers that can go through the stress are the ones that will supply the tomatoes to the market. And little supplied will not be enough for the population in Kwara. This is the reason for the high price,” he said. Abdul-Fatai Oladimeji, a farmer, said that the cost of tomato production was very high, while the price of fertilizer had also increased. According to him, a 50 kg of NPK fertilizer which formerly sold for between N3, 500 and N4, 000, is now N7, 500 and the insecticide

and fungicide that was N8, 000 a tin, currently goes for N18, 000. “Also on the irrigation problem in the state, we spend more money on labourers that wet the plants, morning and night,” he said. Abdul-Awwal Jumaida, a supplier and seller, complained of the stress and pain of planting tomatoes in the state, reason he travels to the north and south-west to get tomatoes. “I travel to the northern parts of the country from December to June, then from July to December, I travel to Osun, Ekiti, and Oyo, to get tomatoes,” he said. Jumaida said traveling across states to get tomatoes put one’s life in danger. “Sometimes, our vehicle will develop fault on the way, causing delay for two to three days, which will

lead to shortage. “All this are put into consideration in the cost of tomatoes, so from December to June, the cost of a small basket of tomatoes is between N1,500 to N2, 500 and the big basket is between N18,000 to N25, 000 depending on its availability in the market. “By August there will be more tomatoes in the market, till the end of rainy season, it will be very cheap, as many farmers will be rushing to sell their product to avoid wastage. ”The bounty season lasts till around November-December when the price of tomatoes will rise again,” he said. He called on government to assist farmers by providing boreholes, which would increase production and encourage youths to embrace farming.

BUSINESS DAY

Monday 16 July 2018

Live @ The Stock Exchange Top Gainers/Losers as at Friday 13 July 2018 GAINERS Company

Market Statistics as at Friday 13 July 2018

LOSERS Opening

Closing

Change

Opening

Closing

Change

NESTLE

N1500

N1527

FLOURMILL

N30.5

N29

-1.5

SEPLAT

N635

N650

N30.2

N28.9

-1.3

WAPCO

N34.5

N37.5

CADBURY

N12.3

N11.15

-1.15

VOLUME (Numbers)

CUSTODIAN

N6.8

N6.12

-0.68

VALUE (N billion)

ETERNA

N6.8

N6.4

-0.4

CAP

N35

N37

DANGSUGAR

N17

N17.5

0.5

Company

ASI (Points) DEALS (Numbers)

…assured of competitive returns on investment

he shareholders of Conoil Plc have approved for the Board to proceed in payment of total dividend of 200kobo per share which amounts to N1.4billion. At its 48th annual general meeting of the nation’s total energy provider, held Friday in Uyo, Akwa Ibom State, the company assured its shareholders that conscious efforts will be directed at achieving better execution of valueadded products and services especially in the areas of marketing and customer management. Spurred by shareholders’ words of encouragement after the meeting had ratified a total dividend cash payment of N1.4 billion, the company promised to explore opportunities in the coming years to deliver solid financial results and increase competitive returns on its shares.

Conoil Plc also reiterated its resolve to maintain its leadership position in the downstream petroleum sector by building a stronger financial position and creating higher values for its shareholders. While noting that 2018 would be tough given the current state of the nation’s economy, it however, expressed optimism that it would strive hard to maintain profitability. At the meeting, the shareholders received and adopted the company’s

statement of financial position as at December 31, 2017 together with the statement of profit or loss and other comprehensive income for the year ended on that day and the report of the auditors and the audit committee thereon. Conoil financial result at a glance shows revenue grew by 35.9percent from N85.023billion in 2016 to N115.513billion in 2017. Mike Adenuga (jnr), Chairman, Conoil Plc was quoted in a statement as saying the company was fully

charged to consolidate its competitiveness in the different segments of its business by exploring and developing emerging markets while holding its grounds in areas where it has competitive advantage. Towards this goal, the company announced the introduction into the market, another brand of quality engine oil, Conoil Crown Heavy Duty Oil manufactured specially for the mass market of car owners. “With the introduction of this product”, Adenuga said, “we are poised to fill the yawning void in the industry as a pragmatic marketer of first choice”. The company expressed gratitude to its stakeholders for their support for the modest progress it recorded in spite of the odds and the unfriendly business environment it operated last year. Going forward, it promised to re-channel its resources with a view to strengthening its business for the long haul.

Coronation Merchant Bank wins best investment bank in Nigeria

oronation Merchant Bank has been named the Best Investment Bank in Nigeria at the 2018 World Finance Awards. Since 2007, World Finance magazine has been celebrating individual and company achievements, innovation and brilliance through its annual awards. The judging panel boasts over 230 years of financial and business journalism, supported by a research team that works relentlessly to ensure its award winners are the most deserving in their sector. Every year, it provides a comprehensive coverage and analysis of the financial industry, international business and the global economy. According to Michael McCaw, Group Managing Director of World Finance, “The World Finance Banking Awards 2018 celebrates the institutions that can confidently proclaim they are

part of a more responsible and sustainable industry than the one that existed ten years ago. Over the past 12 months, these organisations have helped set new benchmarks for the financial sector in terms of customer service and digital innovation. One Bank that has recorded remarkable accomplishments in its very short

Abu Jimoh, group managing director/CEO, Coronation Merchant Bank

years of operation is Coronation Merchant Bank. The Bank has established itself as a dominant player, sitting at the very top of the investment banking industry in its native Nigeria.” Commenting on the award, Abu Jimoh, Group Managing Director/CEO of Coronation MB said, “We are delighted to be recognized as the Best Investment Bank in Nigeria. Our successes and achievements over the years is a reflection of the hard work and commitment of our staff, management and Board in ensuring we maintain our core values of integrity, innovation and excellence in service delivery”. He further stated that, “This award affirms that we are on course to achieving our long-term goal of becoming Africa’s premier investment bank”. Coronation Merchant Bank group was established to fill the gap in a long-underserved market segment, seeking to address the need for

3,143.00 212,876,424.00 3.235

MARKET CAP (N Trn

Conoil shareholders approve payment of N1.4bn total dividend Stories by Iheanyi Nwachukwu, Uyo

37,392.77

long term capital across key sectors of the economy. The Group offers investment and corporate banking, private banking/wealth management and global markets/treasury services to its diverse clients. It also offers securities trading/brokerage, asset management and trustees services via its subsidiaries; Coronation Securities Limited, Coronation Asset Management Limited respectively. Driven by its vision of becoming Africa’s premier investment Bank and with an asset base of over N130billion, the Banking group is certain to leverage its privileged direction by some of Nigeria’s individuals who excelled and rose to the top of merchant banking sector at its height of excellence to become the industry model for risk management, corporate governance and responsible business practices.

13.545

AXA Mansard introduces more payment channels

XA Mansard Plc, a member of the AXA Group and global leader in insurance and asset management, has introduced more payment channels to eliminate challenges customers may have experienced in the past with regards to payments. This development is in line with company’s strategy of easing the pain points of her teeming customers, With the introduction of these multiple payment platforms, users will have easy, quick and convenient mode of premium payments. The payment processes have been digitised and automated for improved customer service and reduced turnaround time for all transactions. With the latest innovation, Customers will be able to make payments on various platforms, which include Quickteller (Website and Mobile App); PayDirect; GT Collections; and the Point of Sales (POS) terminal. Others include the AXA Mansard Website; cheques, bank drafts and internet banking platforms of selected banks. Commenting on the new multiple payments initiative, Kunle Ahmed, Chief Executive Officer,

AXA Mansard Insurance Plc noted that, “In order to serve our customers better, we have introduced new payment channels that will help simplify the processes through which they can make premium payments for their new and renewed policies.” “With the payment channels, all the encumbrances associated with premium remittance from clients have been resolved and reconciliation challenges will no longer impede service delivery to our clientele,” Ahmed said. AXA Mansard is registered as a composite company with the National Insurance Commission of Nigeria (NAICOM). The Company offers life and non-life insurance products and services to individuals and institutions across Nigeria whilst also offering asset/investment management services, health insurance solutions and pension fund administration through its three subsidiaries - AXA Mansard Investments Limited, AXA Mansard Health Limited and AXA Mansard Pensions Limited respectively. The parent company was listed on the Nigeria Stock Exchange in November 2009.

C&I Leasing completes acquisition of Petrotech Marine

&I Leasing Plc, a leasing and business service conglomerate has just concluded the buyout of 27.5percent minority stake in C&I Petrotech Marine Limited - a Joint Venture (JV) company with six vessels presently deployed to a long-term contract with Shell Petroleum Development Company of Nigeria (SPDC). The buyout transaction of C&I Petrotech Marine Limited minority shareholders is evidence of C&I Leasing’s commitment to investing in its business growth and expansion. The parties engaged Wizer Advisory as an independent advisor for the

valuation of the shares. As a result of this transaction C&I Petrotech Marine Limited is now a fully owned subsidiary of C&I Leasing Plc. It would be recalled that a few weeks ago, C&I Leasing Plc recorded a successful N7 billion Bond issue- the first series in a N20 billion debt issuance programme. The company had stated that the funds raised would largely be invested in business expansion and restructuring of the company’s debts over a period of five years among other initiatives which will guarantee increased profit margins and returns for shareholders.

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NEWS

Return of over £20m stolen artefacts opens investment opportunity in museum business OBINNA EMELIKE

smuseumsaround the world mull returning stolen Nigerian artefacts in their possession, especially the British Museum, the development is opening several business and job opportunities for investment in world-class museums, hotels, facility maintenance, supply of artefacts, craft and souvenirs, exhibitions, tour guides, among others. At present, there are over 8,000 stolen Nigerian artefacts in museums around the world and in the hands of individual collectors, including the over 4,000 pieces of artefacts stolen from the ancient Benin Kingdom. The Benin works alone are valued at over £20 million, while specific works such as Queen Idia, the original Festac 77 mask, still draws thousands of visitors and researchers to the British Museum where it is allegedly kept for safety. The sustained excuse by foreign museums for not returning these works had always been the lack of appropriate facilities, especially modern museums to house them in Nigeria, maintenance, and security. However, going by the crit-

icism that followed the recent plan by the British Museum to return some of stolen Benin artefacts on loan, those who insisted that the works should be unconditionally returned are now challenged to offer facilities and incentives that will ensure safety of the works. The major facilities needed are world-class museums, which cities across Nigeria lack. Though there are museums across the country, including the National Museum in Benin City, and the Edo State government is planning a Royal Heritage Museum in partnership with Oba of Benin, Oba Ewuare II, to hold stolen artefacts when they are eventually returned. But the reality is that most of these museums hardly woo enough visitations because of the poor management, lack of promotion of the works, failed attempts at stealing the works by supposedly visitors, less appeal to visitors, among others challenges. These challenges, according to many arts stakeholders, are reasons government should offer the private sector opportunity to invest and run museums as business in order to maximise its potential, which cut across preservation of cultural heritage, tourism,

research and impact on GDP. According to Efe Isekpe, a gallery owner, the Federal Government and Edo State in particular, should not consider building museums to house the works, rather partner private investors who will commit their resources in building, maintaining and promoting the museums. “You need from N50 million to build and stock a standard art gallery in Nigeria, but a museum is far bigger than gallery in all ramifications. So, you are looking at from half a billion naira investment, which is better raised by crowd funders and not government,” Isekpe said. Isekpe assured on good return on investment as gallery visitations had improved in the last five years with many art exhibitions, related events, growing willingness of artists to trust their works with galleries, soaring patronage of indigenous works, among others. Bruce Onobrakpeya, a foremost artist and professor of Fine Arts, noted that museum was now a big business and no longer a prerogative of government; hence, requires investment from the private sector who would put all the necessary controls in place to safeguard their investments.

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Foreign nations to improve investments in Nigeria ... as Germany, Nigeria bilateral trade volume hits €3.5bn DAVID IBEMERE

elegates from Austr ia, G ermany and Switze r l a n d have disclosed plans to improve their businesses investment in the country. This is coming as the delegate of German Industry and Commerce in Nigeria, Marc Lucassen, disclosed that Austria, Germany and Switzerland companies in Nigeria would increase headcount before the end of 2018. In his presentation at the third Austria-GermanSwiss Business Outlook (AGSBO) in Lagos, Lucassen said, “The three major factors affecting investment activities in Nigeria are the supply of foreign exchange, transportation infrastructures, and overall security. “Many of the AGS companies management in Nigeria are optimistic about the economic climate of Nigeria. Most expect a strong growth in their businesses and headcount in 2018.” Also, Alexandra Herr, the Deputy Consul General of the German Consulate General in Lagos, said: “Indeed Nigeria is Germany’s largest trading partner in the ECOWAS region with a bilateral trade volume of €3.5 billion, more than 85

German companies are currently active in Nigeria. “There is already a long history of partnerships and business connections between Nigeria and Germany spanning over 160 years and cutting across sectors like agriculture, food processing, and manufacturing. “I am confident that the interest in the Nigerian market will continue to translate into a series of initiatives, visits of trade delegations etc. in the months to come. We will continue to work tirelessly in order to promote our bilateral trade relations.” In the same vein, Yves Nicolet the Consul General of Switzerland in Lagos, said: “Despite the fact that Switzerland already has about 45 companies registered in Nigeria, the Consulate General of Switzerland continues to promote the economy and the investments of Switzerland in Nigeria. “Our activities were very tense during the last six months and will continue to be. Two weeks ago, we had the visit of a business delegation, composed of six companies, which are not yet present in Nigeria but intend to establish strong business relations with this country.”

Benin Republic to reap from Nigeria’s growth in coming years

R BUNMI BAILEY

ecovery from economic recession of Nigeria, Africa’s biggest economy, may s u p p o r t growth rate of its neighbour and trading partner, Benin Republic, in the coming year, an S&P Global report says. S&P Global Incorporated is an American publicly traded corporation headquartered in New York City that provides high-quality market intelligence in the form of credit ratings, research and thought leadership. “We believe Benin’s economic activity will remain highly vulnerable to the

economic development in Nigeria, its main trading partner,” the report noted. “The economic slowdown in Nigeria between 2014 and 2016 had substantial spill-overs on Benin’s economy and its external and fiscal policy. However, Nigeria’s recovery should support Benin’s real GDP growth in the coming years.” The Republic of Benin as it is officially known is a small country in West Africa. It is bordered by Togo to the West, Nigeria to the East, and Burkina Faso and Niger Republic to the North. The majority of its population lives on the small southern coastline.

nternational Air Transport Association (IATA) says as part of its support for the UN’s Sustainable Development Goals (SDGs), it will introduce new pricing of most of its training courses to make them more accessible to developing nations. “Aviation is the business of freedom and a catalyst for development. A well-trained aviation workforce is essential to realising the industry’s potential to support social and economic growth - critical enablers of the UN’s SDGs. “By making IATA training more accessible in developing nations we are helping airlines nurture the talent they need to support growing demands for connectivity. And we are helping individuals to enrich their career opportunities in aviation,” Guy Brazeau, IATA’s director of training, said. From July 15, 2018, almost all of IATA’s aviation training catalogue, including more than 350 courses in 17 subject areas of the business, will be offered at a 30 percent discount to aviation professionals residing in one of the developing nations.

Each year, IATA helps to train over 100,000 aviation professionals around the world. IATA offers more than 40 different diploma programmes many in partnership with top academic institutions around the world, created to help aviation businesses operate safely, efficiently and sustainably. This decision also enhances IATA’s solid commitment to the “No Country Left Behind” initiative of the International Civil Aviation Organisation (ICAO). Moreover, IATA and its 290 member airlines make annual contributions to the International Airline Training Fund (IATF), which sponsors learning and development opportunities for aviation organisations in areas of the world where it is most needed. “By making our training offering more accessible in developing nations, we are helping to achieve the ‘No Country Left Behind’ objective to ensure that all states have access to the significant socio-economic benefits of safe and reliable air transport. Key to that is global standards, which are at the heart of IATA’s training curriculum,” Brazeau said.

The economy of Benin Republic relies heavily on its informal re-export and transit trade to Nigeria. The informal re-export and trading make up roughly 20 percent of Benin’s GDP. “The economy of Benin Republic is highly tied to the Nigerian economy. It serves as a transit port for goods coming into the country. A lot of goods consumed in Benin Republic are produced in Africa with majority of these goods originating from Nigeria,” Johnson Chukwu, CEO, Cowry Asset Management Limited, told BuinessDay in a telephone interview. “Nigeria serves as an export market for goods that

transit through Benin Republic and also as a source of import for a lot of locally made Africa goods. So, Nigeria economic health situation is a major factor in the economic health of Benin Republic,” Chukwu said. The economic slowdown in Nigeria’s GDP from 6.3 percent in 2014 to a low of -1.6 percent by end-year 2016 had substantial spillovers on Benin’s economy as the tiny West Africa country saw a significant drop in its GDP from 6.4 percent in 2014 to 4.0 percent in 2016. However, with a 0.83 percent growth in 2017, Nigeria has succeeded in navigating the storm of the recession.

L-R: Kama Rogo, head of health in Africa initiative, World Bank Group; Njide Ndili, country director, PharmAccess Foundation, and Jide Idris, commissioner for health, Lagos State, during the sensitisation workshop on access to finance and medical equipment leasing scheme in Lagos State, held in Lagos, at the weekend. Pic by Pius Okeosisi

IATA enhances N/Assembly expresses satisfaction over commitment to UN’s SDGs ongoing Lagos-Ibadan rail project quality IFEOMA OKEKE

41 NEWS

BUSINESS DAY

… as CCECC asks for extension of delivery date MIKE OCHONMA

igeria’s National Assembly Joint Committee on Land Transport has expressed satisfaction on the progress and quality of job at the ongoing LagosIbadan rail project, but cast doubt on the December 2018 deadline for delivery by the Chinese Civil Engineering and Construction Company (CCECC). Speaking after a joint committee from the Senate and House of Representatives at the end of inspection tour of the Lagos-Ibadan standard gauge rail project, Gbenga Ashafa, chairman, Senate Committee on Land Transport, accompanied by Aminu Sanni,chairman,HouseCommitteeonLandTransport,said the House of Representatives landtransportcommittee,also said the contractor had asked for an extension of the project timeline. According to Ashafa, “After all said and done, after the inspection today, I can say categorically that the

December 2018 deadline won’t be a reality. This is understandable giving the quality of job that is being done. “I have been told that the contractor handling the project, the CCECC, has made a request that the deadline of the project be extended to around the middle of 2019.” He stated that, if the Lagos to Abeokuta leg of the project was fully completed by February or March 2019, then it would be a laudable feat. He expressed delight that the job was a legacy project that all Nigerians should be proud of, adding that the standard gauge was a step up from the narrow gauge Nigeria had been operating for years. “I am very happy that the Lagos State government was working in tandem with the Federal Government on this project. At the Lagos end of the project, the state government is working closely with the Federal Government to ensure all problems there are resolved.

Texem holds training for on Strategic Leadership Executives

aced with a difficult and turbulent times characterised by political uncertainty, increasing insecurity, rollercoaster paced product innovation, stiff competition, depressing customer income and increasing cost of operation, Texem executive training is organising a workshop to help senior executives deal with these issues. Current challenges require an urgent need for unusual leaders who are strategic, agile, who can build resilience, develop values that endure and develop an entrepreneurial culture that fosters high performance. Based on this volatile, uncertain, complex and ambiguous landscape in Nigeria, TEXEM UK, presents her forthcoming executive development programme tailored to help senior executives develop requisite leadership quotient. Delegates will develop competence in forging strategies that create a competitive edge in turbulent times. Participants will become more aware of their

leadership style, strengths and blind spots and how to effectively inspire diverse stakeholders and develop actionable frameworks for stimulating superlative; individual and organisational performance World-renowned Professor Rodria Laline will deliver this programme on Developing and Leading High-Performance Organizations for Superlative Results on July 18 and 19, at Eko Hotel and Suites, Victoria Island, Lagos. Professor Rodria Laline (visiting Professor at Harvard, Insead and IESE and chair of Intrabond Capital). Professor Rodria Laline has been CEO of global research and development collaborations with IBM, ING, Hewlett-Packard, Digital Equipment Corporation, Honeywell Bull, Elsevier Science, Oracle Corporation, Siemens, and Philips. She was Co-founder of the Global Chipcard Alliance and Board member of the Open Software Foundation and developed the intellectual property that is used on every ATM card globally.

42 BUSINESS DAY NEWS FG N1.02trn bailout galore fails to impact... Continued from page 1

company’s (DisCos) and power generating company’s (GenCos).

Two years later, the government created a N701 billion payment assurance guarantee through the CBN for the Nigerian Bulk Electricity Trader (NBET) to pay for gas supplied to power generation companies (GenCos). Early this year, the government also said it has taken advantage of the new Meter Asset Provider (MAP) regulation by the Nigerian Electricity Regulatory Commission (NERC), to provide a grant of N37 billion to private sector operators who would provide prepaid meters to interested DisCo customers. Last month, the government again committed to invest N72 billion for the procurement of equipment and installation to help get the 2,000 MW it said the DisCos routinely reject to consumers who need them. However, these bailouts have had limited impact on the sector. Between 2015 and 2018 Babatunde Fashola minister of Power, Works and Housing said generation has moved from 4,000MW to 7,000MW but Nigeria’s generation capacity has always been about 7,000MW which could not be unlocked due to absence of gas feedstock.

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The actual new generation is the 954 MW comprising 455 MW (Azura); 215 megawatts (Kaduna), 240 MW (Afam III); 40 MW (Kashimbilla) expected to the added to the grid later this year. About 1,150MW are also projected for 2019 including 700 MW (Zungeru) and 480 MW (Okpai II). Transmission capacity has increased from 5,000 MW in 2015 to 7,124 MW in December 2017 but the grid is still unstable and unable to wheel all the power generated. In 2017 alone the national grid collapsed fifteen times. Distribution capacity has moved from approximately 2,690 MW in 2015 to between 3,000MW and 4,000MW in real time, but it is inconsistent and DisCos are accused of rejecting power due to poor collections and dilapidated distribution assets. The operators granted these bailouts have treated them with disdain or abused the purpose for which they were created, stakeholders tell BusinessDay. “Regrettably because of the source of funds, conditions such as the opening of Letters of Credit were attached to secure performance of the purpose for which the money was meant; some DisCos have not taken the money and instead have gone to court thereby frustrating full disbursement, and recently the NERC has revealed unauthorized use

of the money by Ibadan DISCO and taken some regulatory actions,” said Fashola in a press briefing on July 9. Meanwhile the power sector is bogged down by debts. The DisCos who are meant to pay NBET from which other market operators would be settled have been keeping more for themselves from what they collect hence their debt have risen to N859 billion according to the Minister. DisCos claim they are being owed about N70bn by Federal Government Agencies but after reconciliation, the minister said the figures were exaggerated and it came to only N27bn which he said would be set off from the huge debt the DisCos owe NBET. Through the provision of the N701bilion guarantee for GenCos, about 80 percent of their market invoices were being settled until the government began paying Azura Power from the same fund. Fearing, calamity, the GenCos went to court to stop the payment. NBET owes GenCos N325billion. “The danger with all these bailouts is that Nigerians will still pay for these money as it is tax payer’s money. Many of these bailouts are given without the consent or knowledge of market operators,” said Joy Ogaji, executive secretary of Association of Power Generation Companies at the BusinessDay Future of Energy Conference in Lagos on Thursday. Continues on wwwbusinessday online.com

How PDP lost the Ekiti... Continued from page 1

val, Olusola Eleka of the People’s

Democratic Party who got 178,121 votes. Ahead of the election, Eleka was leading by a wide margin two different surveys by NOI polls. The turnaround on election day has surprised many close observers of the Nigerian electoral space. But money looks to have played a key role in the outcome of the final results. Both the PDP and the APC were involved in the direct procurement of votes on the election day. It is rumoured that Ekiti state civil servants got N3,000 credited to their accounts a day before the election. BusinessDay has not confirm this allegation. Also on election day, agents of the APC were seen handing over N5,000 for votes cast for the party. However, sources say that it was not just money. Fayemi’s decision to pick 74 year old Adebisi Egbeyemi as his running mate in the election is also said to have boosted his chances in the election while Fayose’s relationship with certain traditional rulers in Ekiti is also said to have negatively impacted on PDP’s chances in the election. There was also a strong coalition of local forces in Ekiti state that touted the PDP’s chances in the election. Meanwhile, the APC congratulated its candidate over his victory in the keenly contested election which now means that all the South West states are now controlled by the ruling APC. APC noted that Fayemi ran an effective and positive campaign focused on his agenda of rebuilding the economy of the state and

returning its lost values of integrity, prudence and decency. Bolaji Abdullahi, APC National Publicity Secretary in a congratulatory message to Fayemi said, “the Party commends the Independent National Electoral Commission (INEC), security agencies, local and international observers, as well as other stakeholders, for their admirable role in making the Ekiti gubernatorial election one in which the people’s will has prevailed”. APC thanked, “the Ekiti electorate for voting en masse for our Party’s candidate. “This is a demonstration of their trust and confidence in Kayode Fayemi’s ability to deliver on his campaign promises and a rejection of the crude and pedestrian politics of the Peoples Democratic Party, PDP”. “We assure the people of Ekiti, and indeed all Nigerians, that our Party is best placed to move the country forward and resolve the seemingly intractable problems that have held us back”, the APC Spokesman stated. But the Peoples Democratic Party (PDP) has rejected Saturday’s governorship election in Ekiti State, insisting that the poll was rigged in favour of the All Progres-

sives Congress (APC) candidate, Kayode Fayemi.

The party insisted that its standard bearer at the poll and Deputy Governor of the state, Kolapo Olusola Eleka, won the exercise, stressing that the Independent National Electoral Commission (INEC) altered the results at the collation

centers.

Nigerian Breweries exits exclusive N1trn... Continued from page 1

L-R: Remi Babalola, former minister of finance; Ade Bajomo, executive director, IT and operations, Access Bank; Prasanna Burri, group head, IT, Dangote Industries Limited; Bunmi Akinyemiju, MD, Venture Garden Group; Dinesh Balsingh, head of digital, Airtel Nigeria; Dipo Odeyemi, MD, Cavidel Limited, and Kunle Elebute, senior partner, KPMG Nigeria/chairman KPMG Africa, during the 2018 KPMG Alumni cocktail with the theme, Digital Disruption: Implications for Business in Lagos. Pic by Pius Okeosisi

Oando: London court orders Wale Tinubu... Continued from page 1

Plc, Wale Tinubu and his deputy, Mofe Boyo to pay a total debt of US$680 million (equivalent of

N244.8 billion) to Ansbury Investments Inc, which is owned by Gabriele Volpi. The award is equivalent of 91 percent of the company’s total outstanding equity as at March 2018. This new development would come as shock to shareholders of Oando Plc who believed the company’s shareholder disagreement has been settled. In January, the Emir of Kano Muhammadu Sanusi II, had brokered a peace deal with another shareholder of Oando, Dahiru Mangal. But sources say that the settlement with Mangal has no bearing on the new judgement obtained by Volpi against Oando. In a ruling on July 6, 2018, the LCIA held that Ocean and Oil Development Partners (OODP) British Virgin Islands, which owns 55.96% of Oando Plc through a holding company named Ocean and Oil Development Partners (OODP) Nigeria

Ltd, is indebted to Ansbury Investment Inc. to the tune of US$600 million (equivalent of N216 billion). An international lawyer and Counsel to Ansbury Investment, Andrea Moja, confirmed the LCIA award in a press release on Sunday. According to Moja, the Arbitration Court also held that a company known as Whitmore Asset Management Limited, whose ultimate beneficial owners are Wale Tinubu and Mofe Boyo, are indebted to Ansbury Investment to the tune of another US$80 million (N28.8 billion). This brings the total debt owed by the Oando managers to Ansbury Investment to US$680 million. Documents obtained from the LCIA, which is reputed to be one of the world’s leading international institutions for commercial dispute resolution, identified the family of a Nigerian-Italian, Gabriele Volpi as the ultimate beneficial owner of Ansbury, while Wale Tinubu and Mofe Boyo are the ultimate beneficial owners of Whitmore Assets Management Limited. The London Arbitration Court

held that an existing “Third Shareholders Agreement” between the parties is fully and legally binding on the parties as claimed by Ansbury Investment. The documents indicate that a Final Award in which the Court will pronounce on accrued interests on the debts owed and legal expenses incurred by Ansbury will follow in the next few days. The LCIA award has been communicated to the parties concerned since July 9, 2018. Whitmore and its ultimate beneficial owners, Wale Tinubu and Mofe Boyo have been locked in a battle at the LCIA with Ansbury over a lingering disagreement concerning the shareholdings of Oando PLC. In 2012, Ansbury reportedly invested about $700 million in O c e a n a n d O i l D e ve l o p m e nt Partners Limited (OODP BVI), a special purpose vehicle registered in the British Virgin Islands by acquiring a 61.9 per cent stake in the firm, while a company

owned by Tinubu, Withmore Limited, held 38.10 per cent of the stake in OODP BVI. Continues on wwwbusinessday online.com

with a market capitalization in excess of N1 trillion. The surviving members of this club as at Friday, 13 July are GTBank (N1.16 trn), Nestle (N1.21 trn) and Dangote (N3.86 trn). Zenith Bank which was briefly a member of the N1 trillion group in early 2018 has also been pushed out of the exclusive club by market bears after its share price fell below N32 back in March. The elite club is currently made up of one bank, one consumer goods Company and one industrial firm which shows that the successes of the companies are not concentrated within one industry. The dramatic fall in the share price of Nigerian Breweries began around a year ago, after the stock hit a record high of N193 per share in August 2017, profit taking induced gravity into the price level of the stock and by year end, NB shares had fallen to N134 per share, a drop of around 30.6 percent. Despite profit growth of 16.2 percent in 2017 from its 2016 level, it was still not enough to improve investor sentiment in the blue chip company as competition tightened within the brewery space in the past year with the introduction of Budweiser by ABInBev, owners of International Breweries (IB). “We revise our estimates for NB post increased beer pricing and negative volume growth in 1Q18. We now forecast that NB

will report an 11.2% decline in volume in 2018 and a 3.0% decline in 2019, thereby losing market share. NB’s pricing strategy and IB’s incursion into Lagos and the southwest remain a concern. NB’s strategy of defending market share has clearly not worked since 2012 and it is difficult to see how IB’s advance can be stalled, especially with IB continuing to offer quality brands at discounted prices,” said Adedayo Ayeni, an analyst at Renaissance Capital, in a July 3 note. As at Friday, 13 July, the market capitalization of Nigerian Breweries was N879.65 billion which still keeps the firm among the largest publicly listed companies in Nigeria but N130 billion short of the N1 trillion mark. If the bearish sentiment continues, it is not unlikely that GTBank and Nestle will also exit the N1 trillion club sometime later this year leaving Dangote Cement to reign supreme. Dangote Cement which is Nigeria’s largest listed firm boasts more than 3 times the market capitalization of Nestle which the second largest company in Nigeria by market capitalization. Interestingly, Dangote Cement is larger than the market cap of Nestle, GTBank and Nigerian Breweries combined today. Analysts expect that investors will probably be net sellers in the equity market up until the general elections in 2019. Market sentiment is expected to improve after Continues on wwwbusinessday online.com

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Dangote signs $650m refinery loan deal with Afreximbank Oil slump causes decline in helicopter logistics as construction, agric gain traction MICHEAL ANI IFEOMA OKEKE

emand for helicopter aviation logistics, mostly for the Nigerian oil and gas industry, has dropped sharply as international oil companies reduce exploration and production due to reduction in oil prices. BusinessDay checks reveal that the amount of helicopters flying in the country has dropped and some expatriates have been fired since operators can no longer meet up with overhead costs. “The effect of the decrease in oil price is tremendous because it has drastically reduced the number of hours flown by companies,” Femi Adeniji, chief operations officer, Tropical Arctic Logistics Limited, a helicopter logistics firm, told BusinessDay. Adeniji explained that the contracts the helicopter operators sign usually had a retainer ship and operational charges component. The retainer ship is usu-

ally used to settle salaries, while the operational charges are used to offset cost of maintenance, depending on the number of hours flown. Oil companies are however now reducing the amount of hours flown from about 100 hours a month on average to less than 50 hours a month today, and we find two or more oil companies using the same helicopters to do their various operations to reduce costs, according to Adeniji. The cost of operation of the AW139 helicopter, which is $1,750, has not changed even with the drop in oil price, leaving operators with the challenge of coping with cost of operations. In a bid to cope with the situation, companies in this direction have had to adapt to the VIP version of helicopters, which includes the crane helicopters and the heavy lifting helicopters that can perform diverse functions across various sectors of the economy. Harold Demuren, former director-general, Nigerian Civil Aviation Author-

ity (NCAA), said helicopter logistic firms in Nigeria had supported the oil industry and similarly, there were other industries that were growing now that would need the support of such firms. “The mining and construction sectors are areas that need helicopter and small aircraft support. All over the world that is what happens. Nigeria has an excellent environment for helicopter business to thrive since they do not need major runways, all they need is where they can land and take off,” Demuren said. He noted that all operators need to do was mapping the areas that needed to be mapped, adding this was a new frontier and new opportunities to enhance the economy. Some helicopter logistics firms operating in Nigeria include Bristow Helicopters, Caverton Helicopters, Alpha Helicopters Limitetd, Paramount Airlines and Travel Services Limited, Domakafe Global Limited, and Germys Industries Limited.

resident of Da ngote Group, Aliko Dangote, weekend in Abuja signed a seven-year $650 million loan facility with the African Export-Import Bank (Afreximbank) for his oil refinery project in Lekki, Lagos, Nigeria. Ac c o rd i n g t o f a c i l i t y terms read out during the signing, the loan was signed after a $750 million facility was signed with Nigeria’s Bank of Industry (BoI), and will attract a moratorium of five years. Devakumar Edwin, executive director, Dangote Group, had told Reuters last week that the oil refinery would cost around $10

billion and should be completed by December 2019. To finance the project, he said the company would borrow $3.3 billion, arranged by Standard Chartered Bank, while the remainder would be in the form of equity and export agencies. Dangote had on June 30, last year during Afreximbank’s 24th annual general meeting in Kigali, Rwanda, signed an agreement to provide financing of up to $1 billion to the African conglomerate. The MoU provides for collaboration between Afreximbank and Dangote Industries Limited in respect of proposed funding of transactions, which could involve the provision of short and long-term liabilities for trade-related

projects in Africa. A brief on the MoU said utilisation of the facility would boost intra-African trade volumes, enhance continental value chains and increase production and export of goods and services across Africa. The refiner y and petrochemical complex is located on 25,000 hectares of swampy land with a jetty to ferry products by sea within Nigeria and abroad, including an undersea pipeline to transport gas. It would account for half of Dangote’s sprawling assets when it is finished next year. Dangote intends to process different grades of crude to meet local demand for refined petroleum products and also target export markets abroad.

Afrexim achievements proof of Africa’s capabilities - Buhari TONY AILEMEN, Abuja

resident Muhammadu Buhari has described the successes of the Africa Export and Import Bank (Afrexim) achievements as a demonstration that Africa can create and maintain a world-class financial institution.

The bank, formed about 25 years ago, had the mandate super charge Africa’s economic base. Buhari, speaking at the bank’s annual general meeting at the weekend, called on African countries to increase support for the bank to achieve its mandate of creating enabling environment for infrastructure inclusive

growth. “The 25th anniversary of the Afrexim Bank clearly demonstrates to the world that Africa can create and maintain a world class organisation. Since inception, Afrexim Bank has grown to become a global powerhouse for the development, facilitation, promotion and financing of African trade.

Abimbola Olashore DON LULU Foundation become president debuts in Abia ON LULU Foundaof IAPM tion debuts in Abia

L-R: Trevor Ward, managing director, W Hospitality Group; Bankole Bernard, president, National Association of Nigeria Travel Agencies (NANTA); Ahmed Rufai Mohammed, president/chairman, governing council, Institute of Director, and Valentine Ozigbo, managing director/ chief executive officer, Transcorp Hotel plc, during the Institute of Directors 2018 Tourism and Hospitality forum, Theme Domestic Tourism as a Catalyst to the Growth of Nigeria Economy in Lagos.

23 Nigerian soldiers missing after Boko Haram attack

wenty-three Nigerian soldiers are missing after Boko Haram jihadists ambushed a convoy in the remote northeast of the country, said military and civilian vigilante sources on Saturday. “Up until now, 23 troops have not been accounted for. They include five officers and 18 soldiers,” a military officer in Maiduguri, the capital of Borno State, told AFP on condition of anonymity. “They came under attack from Boko Haram terrorists in Balagallaye village in the Boboshe area outside Bama,”

the officer said. The officer said that on Friday afternoon the soldiers had received a report that “around 100 terrorists” had gathered in Boboshe and that the “troops mobilised to fight them. “Only three vehicles have made it back to Bama, the remaining eight and scores of soldiers are still missing. Their fate is still unclear,” he said. We lost eight vehicles. That’s a lot,” the officer added. A member of the civilian militia confirmed the officer’s account, saying that “dozens” of soldiers are still missing. “It is not known if they

escaped into the bush, were killed or captured,” he said. “You know it is now rainy season and the roads are water-logged. The convoy got stuck in the mud and Boko Haram opened fire. It was a perfect ambush and the soldiers were on the defensive,” he said. “So far, three vehicles have returned. The other eight have either been destroyed or captured by Boko Haram.” The group’s Islamist insurgency has devastated the region since 2009, leaving at least 20,000 dead, displacing more than two million others and triggering a humanitar-

ian crisis. Despite persistent attacks, President Muhammadu Buhari maintains that Nigeria is in a “post-conflict stabilisation phase.” The former military ruler came to power three years ago on a promise to defeat Boko Haram, which is aligned to the Islamic State group and threatens security in the Lake Chad region. But while there have been clear military gains since a counter-insurgency was launched in 2015, suicide bombings and raids remain a constant threat, particularly to civilians.

ssociation of Investment Advisers and Portfolio Managers (IAPM) witnessed change of leadership as Abimbola Olashore takes over as president/chairman of Council of the Association following the retirement of its erstwhile president, Oluwatoyin Sanni. Olashore is an engineering graduate of the University of Hull, UK, and a master degree in Business Administration from IESE Business School, Barcelona, Spain. He is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), Fellow Chartered Institute of Taxation, Fellow, Institute of Directors (FioD), Fellow of IAPM, among others. A seasoned investment banker, and as over the years acquired in-depth knowledge and experience in the capital markets as well as financial advisory services in the public and private sector. Olashore was one time or the other managing director of Lead Bank Group, executive director of Ecobank Nigeria, managing director, Lead Capital. He has held many board positions, among which are, Director of Kakawa Discount House Limited, Finance Institutions Training Centre (FITC), Nigerian Interbank Settlement System Plc., Crusader Sterling Pensions Limited.

State to bring relief to humanity, especially, the less privileged in the state. June 27, 2018, was a great day for the people of Abia State and Nigeria at large, as businessman Lucky Igbokwe celebrated his birthday with the official launch of his foundation - DON LULU Foundation in Ohuhu Umuahia North Local Government Area. An important highlight of the ceremony was the commissioning of projects executed by the Foundation. On hand to officially commission them was T.A Orji, former governor of the state and present lawmaker representing Abia Central at the Senate. Projects commissioned were a foundation laying for a block of classrooms at the Central School, Umuawa Alaocha, Ohuhu Umuahia North LGA, three two bedroom completed bungalow houses built for the less privileged, a 300mw capacity of electricity power transformer, a N40 million interest free revolving loan facility accessible to artisans and traders, as well as the empowerment of widows and physically challenged. The ceremony was also attended by top dignitaries like Kelechi Onuzuruike (member representing Umuahia North State Constituency in the Abia State House of Assembly), Iyke Kalu, a businessman, and a host of others.

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Why homeownership level in Nigeria remains low at less than 5% Edo farmers mull establishment of N450m ethanol plants CHUKA UROKO

espite efforts by both the government and private sector operators at giving more Nigerians homes to live in and, by so doing, narrow the supply deficit, homeownership level in the country remains low at less than 5 percent. This level becomes very disturbing when compared with what obtains in other countries of the world. Analysts have adduced many reasons for the low level of homeownership in Nigeria, highlighting absence of functional mortgage system as a major cause. Mortgage availability, accessibility and affordability, they note, remain big issues in the country’s housing market. This means that home seekers are unable to buy houses through mortgage because where mortgage available, it is neither accessible nor affordable to many people who are either unemployed or under-employed, judging from what they earn as salary. “Nigerians are unable to access or afford mortgage because 95 percent of deposits in mortgage institutions are short-term call money; the remaining 5 percent of deposit has tenure of less than 365 days. Again, there is poor savings culture as a result of poor economy such that people live from hand to mouth. There is also lack of funds, which results in high interest rates,” Chudi Ubosi, principal partner, Ubosi Eleh + Co, said at a forum in Lagos. Sonnie Ayere, CEO, Dunn Loren Merrifield, agrees, noting that in comparative analysis of what obtains in Nigeria, Ghana and South Africa, whereasmortgagecontributes about 40 percent of housing finance in South Africa, and 3 percent in Ghana, our much smaller West African neighbour, it is less than 1 percent in Africa’s largest economy.

Houses are few and largely unaffordable in the country because both development and delivery are fraught with challenges including unstructured and informal housing market, legal and regulatory issues, poor institutional framework and the need for relevant government interventions. “From all these, it becomes clear why the housing market growth rate in Nigeria is still very low”, said a mortgage expert who did not want to be named. The expert also attributed low homeownership level in Nigeria to difficulty in registering a property in the country which takes an average of 12 procedures, lasts nearly four months (except in Lagos State which has improved on this) and costs about 15 percent of the property value. This, the expert noted, contrasted sharply with what obtains in neighbouring Ghana, where it requires just five procedures, 34 days and 1.3 percent of the property value. In New Zealand, property could be registered online in two days at a cost of 0.1 percent of property value. Because of this coupled with difficulty in doing business and poor regulatory environment in the country, private equity firms which could have invested in large scale housing production are staying away. This is why, as against 80 inter-regional

private equity firms looking to invest in South Africa’s real estate market, 30 in Egypt and 40 in Kenya, only 16 of such companies are interested in Nigeria’s real estate market. “Though on account of demographics and strong buying power, Nigeria is seen as a green field and an investment destination, investors are slow in moving into the market due to unfavourable business environment,” the expert stated. But Ubosi assured there were creative ways through which Nigerians could own homes without waiting for mortgage that will never come. One of such ways, he said, was to buy land, wait and sell at a later date. He explained that appreciation in the value of the land gives bulk sum to reinvest and purchase elsewhere. Another way, according to him, is to team up with three, four or five people to set up a special purpose vehicle for crowd-funding aimed at buying property. “You can buy land and develop gradually; you can buy off-plan which can be 30-40 percent cheaper ; you can also buy shell units and finish at your pace with choice of materials. You can also join a cooperative, or investment club,” Ubosi advised, adding, “but be realistic about your needs and budget.”

… target 30,000 litres from plants IDRIS UMAR MOMOH, Benin City

assava farmers under the aegis of Nigeria Cassava Growers Association (NCGA), Edo State chapter, mull plans to establish N450 million ethanol plants in the three senatorial districts of the state. Donatus Imaghodor, state chairman of the association, said this in an exclusive interview with BusinessDay at a day training for 300 cassava farmers on farm mechanisation and good agricultural practices in partnership with Dizengoff Nigeria Limited in Benin City, weekend. Imaghodor, the managing director of Lentus Foods, specialist in processing of cassava into flour for industrial use, said, “As one of the national executive members of Nigeria Cassava Growers Association (NCGA), we are planning to set up what we called modern ethanol plants because we discovered that we can get a whole lot of ethanol from cassava. “Even if we have a glut

of cassava today, plan is already on ground to establish a minimum of 10,000 litres of ethanol plant in some areas. That definitely will trigger the industrialisation of Edo State. “We are planning to set up the ethanol plants in each of the senatorial districts as part of pilot project. It is the national body of the association initiative, but the Edo State chapter is also buying into it. The establishment of each plant is estimated to cost about N150 million. We are already working on it and also do feasibility study, as soon as we are through with the other workings we will commence the construction.” He also said an indigenous investor had concluded plans to establish a cassava processing plant in Sabogida Ora, Owan West Local Government in addition to the existing factories, while Wilbahi Investment planned establishment of an ethanol plant in Ubiaja in Esan South-East Local Government Area of the state. He listed the cassava pro-

cessors operating in the state to include Lentus and Agrofood at Ugo in Orhionmwon Local Government, Idaewor Food at Iraokhor in Etsako Central, Amidal Investment at Iruekpen in Esan West, Santa Maria at Eyean in Benin City, and other plant located at Ugbowo in Egor Local Government Area. The chairman, who said the association had a strength of about 8,000 registered members across the 18 local government areas of the state, however listed some of the immediate challenges confronting cassava farmers to include access to land, access to finance, access to market, among others. He however called on the state government to assist the farmers in opening up about 3,600 hectares of farmland in rural areas across the state with 200 hectares in each of the local government to be able to transport cassava tubers to the city centres, with a view to meet up with the demands of cassava processors in the state.

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States Competitiveness and Good Governance Awards 2018 What are the awards all about?

They are meant to engender good governance at the grassroot; encourage state governments to open up rural economies for businesses with a view to making agriculture a lucrative business; promote judicious use of our scarce resources and ensure that each state has infrastructure that will aid the ease of doing business objectives. Before 1999 the conditions of the Nigerian economy and state economies were pathetic, as infrastructure was in a bad state. The Nigerian economy remained mono-product driven with the oil and gas sector as the major source of over 80 percent of the nation’s revenue; the export of nonoil goods was fairly non-existent while unemployment was very high. To ensure that the Nigerian citizens get value for their money, and in order to ensure the judicious use of the scare resources, West Africa’s premier financial and business newspaper, BusinessDay, decided that some metrics

that capture developmental strides in all the states must be set to gauge the performance of public officials, most especially, state governors. This informed the coming on board of the States’ Competitiveness and Good Governance Awards. The motive of the project is to engender competition among state governments in Nigeria so that Nigerians can get the real dividend of democracy. The quantitative aspects of the awards are anchored by BusinessDay Research and Intelligence Unit (BRIU), while the qualitative aspects such as onsite inspections, interviews, interactions with the people and government officials are carried out by the Awards Committee which, comprises the editorial team and distinguished Nigerians. The state governors who have distinguished themselves are nominated for different award categories after an extensive research by BRIU and the Awards Committee.

Icons of Good Governance

Governor: Ezenwo Nyesom Wike, Rivers State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc, LLB, BL Ezenwo Nyesom Wike was born 24th August, 1967 to the family of Reverend and Mrs. Nlemanya Wike. He is a native of Rumuepirikom in ObioAkpor, Rivers State, Nigeria. He holds degrees in Political and Administrative Studies as well as Law. After a brief working period with private legal practice, Chief E.N. Wike was elected as the Executive Chairman of Obio/ Akpor Local Government Area for two terms from 1999 to 2002 and 2004

to 2007. While in office, he served as Deputy President, Association of Local Governments of Nigeria, ALGON, in 2004 and was later elected the President of ALGON. He also represented Africa as a member of the Executive Committee of the Commonwealth Local Governments Forum. Between October 26, 2007 and May 28th 2011, Chief N.E. Wike served as the Chief of Staff, G ov e r n m e nt Hou s e, Port Harcourt under the then Governor Amaechi’s tenure and was also appointed the DirectorGeneral of his re-election Campaign Organization. On 14 July 2011 President Goodluck Jonathan appointed him as the Minister of Education of State of Federal Republic of Nigeria. Rivers State has emerged one of the leading destinations of investments in Nigeria measured by capital importation, FDI, bilateral MoUs enhanced through the promotion of the ease of doing business. His administration has constructed and rehabilitated over 11 major roads; raised the standards of primary healthcare centres and hospitals while thousands of jobs have been created in agric, SME and other sectors.

Governor: Akinwunmi Ambode, Lagos State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc, M.Sc, FCA Akinwunmi was born on June 14, 1963 in, Epe, Lagos State. He began his education at St. Jude’s Primary School, Ebutte Meta in Lagos in 1969. In 1974, while still in Primary 5, he sat for the National Common Entrance Examinations and was admitted to Federal Government College, Warri in the same year. Ambode spent 7 years in Warri, where he completed his Ordinary and Advanced Levels and had the distinction of achieving the second best result in all of West Africa in the Higher School Certificate Examinations in 1981. Ambode proceeded to the University of Lagos where he studied Accounting, graduating at the age of 21 in 1984. He completed his mandatory National Youth Service Corps year serving with the Central Bank of Nigeria (CBN) in Sokoto State. Ambode commenced his career at the Lagos State Waste Disposal Board (now LAWMA)

as Accountant Grade II. He enrolled for the Institute of Chartered Accountants of Nigeria (ICAN) exams and at the same time was awarded a Federal Government Scholarship to pursue a Masters Degree in Accounting at the University of Lagos. By the time he was 24, he had qualified as a Chartered Accountant and had completed his Masters Degree programme in Accounting, specializing in Financial Management. In 1998, Ambode was awarded the US Fulbright Scholarship for the Hubert H. Humphrey Fellowship program, in Boston University, Massachusetts, USA. His Fellowship Year was spent studying Public Leadership with emphasis on Finance and Accounting. During this programme Ambode had professional internships at The Federal Reserve Bank of Boston, the Cabinet Office of Administration and Finance (Governor’s Office), and City of Boston Treasury Office as well as with the World Bank and IMF. Ambode became the governor of the largest state economy in Nigeria and the fifth biggest economy in Africa, Lagos State in 2015. He has left no stone unturned in his bid to transform the state into the third biggest economy in Africa. To achieve this, infrastructure development and urban renewal is key. He has since constructed the over 100 roads, lay-bys, bridges particularly the Pen Cinema Flyover, the world class Oshodi Transport Interchange, new Art Theatres, Epe and Badagry Marina projects, Airport Road, Abule-Egba to Oshodi BRT lane, LAKE Rice project, among others. More importantly, the night economy has returned in Lagos, the centre of excellence.

Award Categories

1. Promotion of Made in Nigerian Goods 2. SME Development 3. Economic, Social and Youths Development 4. Ease of Doing Business 5. Sports Development 6. Agriculture Development 7. Tourism Development 8. Healthcare Development 9. Rural-Urban Infrastructure Development 10. Housing Development 11. Transparency in Governance 12. Peace and Security 13. Education Reforms & Development 14. Governor of the Year (Overall, North, South) Venue: Transcorp Hilton Hotel Abuja Date: July 19, 2018

Governor: Ibrahim Hassan Dankwambo, Gombe State

Educational qualifications: BSc, PGD, MSc, PhD, FCA, FCIB, FCIT, FNIM Political Party: Peop l e ’s D e m o c r a t i c Party(PDP). Ibrahim Hassan Dankwambo was born on 4th April 1962 at Herwagana Ward in Gombe City, Gombe State. He attended the Ahmadu Bello University Zaria and Graduated with Bachelor of Science degree in accounting. Later, he bagged a Doctor of Philosophy Degree (Phd) from Igbenideon University, Okada. No doubt, Dankwambo has transformed Gombe State going by his numerous programs for

the different sectors of the State’s economy. Despite the proximity of the state to Borno, he has ensured that the state is insulated from crisis. In addition, he supported farmers by procuring quality seeds, thrasher machines, water pumps, and Nap sack sprayers while distributing fertilizers to farmers at highly subsidised rates. His administration has constructed a technology incubation centre for SMEs in the state, recruited graduates as teachers in secondary schools, and NCE holders as teachers in primary schools; this is in addition to procuring and distributing the tricycles and Suzuki cabs and buses as poverty alleviation measures. Dankwambo added the New Snake Bite Hospital, an ultra-modern women and children hospital, and a cottage hospital in Hinna to boost the State’s health sector. He also built modern primary schools for IDPs, and a government girls’ secondary school to reduce the pressure on existing ones.

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Icons of Good Governance

Governor: Ogbeni Adesoji Rauf Aregbesola, Osun State

Political Party: All Progressives Congress Educational qualifications: HND, FNSE, FNIM, FNATE, FCMCIN Ogbeni Rauf Aregbesola was born on 25th May 1957. He had his primary and secondary education in Ondo State, and later attended The Polytechnic, Ibadan, studying Mechanical Engineering and graduating in 1980. Rauf Aregbesola has a wealth of exp er ience garnere d through wide exposure in the private sector, such as the Nigerian External Telecommunications, now Nigerian Telecommunications Ltd. and Lagos Airport Hotel, before establishing his own Engineering Services Com-

Governor: Udom Gabriel Emmanuel, Akwa Ibom State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc, ACA, ACTI Udom Gabriel Emmanuel was born 11 July 1966 in Akwa Ibom State, Nigeria. He attended Secondary Commercial School, Ikot Akpan Ishiet; School of Arts and Science, Uyo, and the University of Lagos where he obtained his bachelor’s degree in Accounting, in 1988. In addition to his academic laurels is a certificate in Advanced Management

pany, Aurora Nigeria Limited, in 1986, handling numerous projects for both government and private organizations in most States of the Federation. He is a Fellow of the Nigerian Institute of Management (FNIM), Nigerian Society of Engineers (FNSE), Nigerian Association of Technological Engineers (FNATE) and Certified Marketing Communications Institute of Nigeria (FCMCIN). A reformer, in spite of paucity of funds, Ogbeni Aregbesola has changed Osun’s status from a primarily rural economy to an emerging urban economy which now has one of the lowest unemployment rates in the country. He was able to achieve these through rural-urban infrastructure development which opened up the opportunities in the state’s rural economy to investors, education reforms, social and economic empowerment. His massive empowerment projects through OYES, OYESTECH, OREAP has led to the engagement of thousands of residents in the state in income-generating ventures. Above all, his administration registered 24,000 cooperative societies in order to boost economic growth in the state.

Program he obtained at INSEAD Business School in Fontainebleau, France. He is a Chartered Accountant by profession and trained with Price Waterhouse Coopers as well as a Fellow of the Nigerian Institute of Management. His industry experience spans several firms including Diamond Bank and Zenith Bank. He also served as a audit manager of Price Waterhouse Coopers; Executive Director Africa Finance Corporation (AFC); Director, Nigerian Inter-Bank Settlement Systems (NIBBS); NonExecutive Director, Zenith Bank, United Kingdom; Zenith Bank- Gambia ; Zenith Bank-Sierra Leone; Zenith Insurance; Zenith Pensions and Custodian; Zenith Securities; Zenith Trustees and Zenith Registrars. A sports promoter, Gov. Emmanuel has turned Akwa Ibom to the home of the Nigeria Supper Eagles; successfully saw the establishment of Nigeria’s first ever electric metering firm; syringe factory just as he has passionately promoted youth and sports development in his state.

Governor: Rt. Hon. Aminu Waziri Tambuwal, Sokoto State

Political Party: All Progressives Congress Educational qualifications: LLB, BL Rt Hon. Aminu Waziri Tambuwal was born on January 10, 1966 to Waziri Tambuwal in Tambuwal Village in Sokoto State. He attended the Usman Dan Fodio University, Sokoto, where he studied Law, graduating with an LLB (Hons) degree in 1991. He completed his one year compulsory legal studies at the Nigerian Law School, Lagos, from where he obtained the BL degree and was subsequently called to the Bar in 1992. He has attended several courses

Governor: Oluwarotimi Odunayo Akeredolu, SAN, Ondo State

Political Party: All Progressives Congress (APC) Educational qualifications: LLB, BL Work Experience: • Secretary NBA, Ibadan Branch 1985-1986, • National Publicity Secretary NBA 1988-1989 • Vice Chairman, NBA Ibadan Branch 1992-1994 • Member, Council of Legal Education 1997-1999 • Attorney General and Commissioner for Justice, Ondo State 1997 • Chairman, Legal Aid Council of Nigeria 2005-2006 • National President NBA, 20082010 • Member, Council of Legal Education 2008-2010 • Member of Council, International Bar Association 2008-2010 • Member of Council, Pan African Lawyers Union 2008-2010 Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc Umaru Tanko Al-makura was born in Lafia, Nasarawa State, on the 15th of November, 1953. He attended Dunama Primary School, Lafia; Government Teachers College, Keffi ; Advanced Teachers College, Uyo, (1972-75) and Ahmadu Bello University Zaria (1975-1978), where he graduated with Bachelor of Education Degree with specialization in Social Studies. Almakura was a teacher at the Government College, Makurdi, and later worked as a journalist after his graduation as an assistant producer, news and current affairs at the then Broadcasting

abroad, including International Legislative Drafting in Tulane University in 2005. He attended the Stanford Graduate School of Business in 2008, and the Kennedy School of Government at the Harvard University, USA. Governor Tambuwal gave education the highest attention with the allocation of the lion share of the State’s budget to the sector in 2017 in line with UNESCO’s recommendation. It is also not surprising that his administration has trained 300 indigenes on grain/food security at the Henan University of Technology. He has also established a leather industrial cluster in Sokoto in partnership with UNIDO and set up a textile factory and the Kware Cement Factory through PPP arrangement. Also, the agricultural sector got a boost under his administration as the Kware Irrigation Scheme abandoned for close to 90 years has been resuscitated. He developed grazing reserves to enhance meat and milk production and to end clashes between farmers and herdsmen. • Member, National Judicial Council, 2010-2012 Profile Oluwarotimi Odunayo Akeredolu, Aketi as fondly called, was born on 21st July, 1956 in Owo, Ondo State to Late Rev. J. O Ola Akeredolu of Owo and Lady Evang. Grace Akeredolu of Igbotu Ese Odo Government Area of Ondo State. He started his primary School education at Government School Owo before proceeding to the famous Aquainas College Akure in 1968. He also attended Comprehensive High School Ayetoro for his higher Secondary School Certificate. Oluwarotimi proceeded to the prestigious University of Ife now Obafemi Awolowo University (OAU) IN 1974 where he obtained his LLB degree in 1977 and BL from the Nigerian Law School in 1978. Since graduation from the Law School, he has had a tremendous law career. In 1998, and as a mark of recognition of his industry, erudition, service and brilliance, he was conferred with the title of the Senior Advance of Nigeria, (SAN). In a bid to restore Ondo State’s lost glory in education, the state government has embarked on the reforms of the education sector, ease of doing business just as the state has recorded a number of new investment inflows.

Governor: Umaru Tanko Al-makura Nasarawa State

Corporation of Northern Nigeria (BCNN) which later became part of NTA Kaduna. He established Almakura Nigeria Limited, a civil and building

Governor: Professor Benedict Bengioushuye Ayade, Cross River State

Political Party: Peoples Democratic Party (PDP) Educational qualifications: LLB, B.Sc, M.Sc, MBA, PhD Senator Benedict Bengioushuye Ayade was born in March 2, 1969. He attended the prestigious University of Ibadan for his doctorate programs where he won the Best Doctoral Dissertation Award in Environmental Microbiology. He was a member of the Nigeria Association of

Petroleum Engineers and the Cross River State Poverty Alleviation Board. As a man of the people, he has constructed 5,000 housing units for the internally displaced people of Bakassi, constructed a garment factory that has created thousands of jobs, and another 21 megawatts power plant to ensure regular supply of electricity for businesses in the state. In addition, his administration is credited with the completion of Sub-Saharan Africa’s first monorail that connects the Calabar Convention Centre with Tinapa Business and Leisure Resort, while his policies have enhanced investment-friendly policies that has attracted investments to the state. He recently inaugurated the 260 km dual carriage CalabarKatsina-Ala superhighway.

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc (First Class), PGD, LLB, MBA, D.Sc (honoris causa) Work Experience: CEO/Founder, Project Management Consulting Firm Worked in AT & T; Motorola Inc., Network Systems International BV Director General, Bureau of Public Enterprises (BPE) Minister, the Federal Capital Territory from 2003 to 2007 Profile: Mallam Nasir El-Rufail was born in 1960 in Faskari LGA of Katsina State. He obtained his first degree in Quantity Surveying (First Class Honours) from Ahmadu

Bello University Zaria. He then founded and successfully ran a Project Management Consulting firm from 1982 to 1988 with his partners, handling civil engineering projects across Nigeria. He also held management positions in two internatinal telecommunications companies, AT&T Network Systems International BV and Motorola, Inc. The appalling state of education in the state before assumption of office propelled him to reform the state’s education system. The results may not be immediate, but there is a consensus of opinions that the decision was in the right direction and it is in the interest of all Nigerians. In addition, the current administration in Kaduna State has facilitated the regulation of the water sector, checked substance abuse, and ensured better primary healthcare services for the people. He has also curtailed street begging and hawking, given a facelift to the Kaduna Master plan, and the strengthened the State Vigilance Service. In terms of empowerment, Mallam El Rufai’s administration has recruited several teachers, KATELEA marshals, and health workers. The state now parades international brands such as Olam, Vicampro, Flour Mills and the Dangote Group.

engineering company which in addition imported, sold and serviced agricultural and industrial machinery. This successful businessman and entrepreneur was elected into the Constituent Assembly in 1988 - 89 to represent Lafia - Obi Federal Constituency of the then Plateau State. In 1980, two years after he ventured into politics, Almakura emerged as the Youth Leader of the then National Party of Nigeria (NPN) in the then Plateau State, today’s Plateau and Nasarawa State. As NPN Youth Leader and in line with the party’s constitution, he automatically became a member of the National Executive Committee (NEC) of the defunct NPN in the second republic.

Between 1990 - 92, he served as the State Secretary of the defunct National Republican Convention (NRC) party in the then Plateau State. Almakura is presently the Executive Governor of Nasarawa State under the platform of APC elected in 2011 and 2015. Convinced that without adequate infrastructure no meaningful development could take place in the state, Governor Al Makura introduced a scheme the identified infrastructure that must be developed to convince investors both local and foreign that the state meant business. Some of these projects include Kwandere-keffi road, Lafia-Keffi new road, Doma Barracks, support for reducing housing deficit in the state, power sub-station, among others.

Governor: Mallam Nasir El-Rufai, Kaduna State

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to the Minister of Defence. 2009-2011: Executive Secretary of Chad Basin Commission. 2011-2015: Deputy Governor of Kano State. 2015-Date: Executive Governor of Kano State

Icons of Good Governance

Governor: Okezie Victor Ikpeazu, Abia State

Political Party: Peoples Democratic Party (PDP) Educational qualifications: B.Sc, MSc, PhD Work Experience: Deputy General Manager, Abia State Environmental Protection Agency (ASEPA) General Manager, Abia State Passengers Integrated Manifest and Safety Scheme Chairman, Obingwa Local Government Area Adjunct Senior Lecturer,Biochemistry Dept, Ebonyi State University HOD,Applied Biochemistry Dept, Enugu State Universityof Science & Technology Admin Manager, Cash Bond Investment & Credits Ltd, Lagos Lecturer, Calabar Polytechnic

GA, Science Laboratory Technology Dept; University of Maiduguri Profile Okezie Victor Ikpeazu was born in 18 October 1964 to the family of Late Pa Ishmael and Deaconess Bessie Ikpeazu of Uhuebere in Umubiakwa Village, Isialaukwu Mbato community in Obingwa Local government Area of Abia State, Nigeria. He was at the University of Calabar where he lectured while pursuing a doctorate degree in Biochemical Pharmacology. He obtained his PhD in 1994. He served as a Masters’ Degree External Examiner, to the Department of Biochemistry, University of Nigeria. His programs have cut across all the facets of Abia State economy. The schools of nursing and midwifery at Aba, Umuahia and Abariba have been given a facelift just as the Child/ Maternal Healthcare Centre at Abia State University Teaching Hospital has been renovated. He is at the forefront of championing SME development and ‘Buy Made in Aba’ Campaign which has generated over N3 billion revenues to Aba entrepreneurs in the last two years.

Governor: Muhammadu Badaru Abubakar, FCNA, Jigawa State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc, NIPSS Muhammadu Badaru Abubakar was born in 1962 in Babura town of Jigawa State. He obtained a Bachelor of Science degree in Accountancy in 1985 from Ahmadu Bello University. In 2006, Alhaji Abubakar went to the prestigious National Institute for Policy & Strategic Studies, (NIPSS), Kuru Jos. His administration’s emphasis is on openness, accountability and transparency. He has made some giant strides in leadership, recording such major achievements as attracting $100m investment for sugar production from the Lee Group, commissioning Danmodi Rice Mills, and establishing a computer-based training (CBT) centre at Binyaminu Usman Polytechnic, Hadejia. In addition, he rehabilitated the College of Health Science and Technology, Jahun; he has also empowered women through micro-credit schemes.

Governor: Godwin Nogheghase Obaseki, Edo State

Political Party: All Progressives Congress (APC)

Educational qualifications: BA, MBA, CFS G o d w i n No g h e g h a s e Obaseki was born on 1st of July, 1959 in Benin City, Edo State to the families of Obaseki and Gbinigie of Owina Street, Ogbelaka Quarters. He attended the prestigious Columbia University and Pace University both in New York where he bagged an MBA in Finance and International Business respectively. Obaseki is a Fellow of the Chartered Institute of Stock Brokers, Nigeria. He is also an alumnus of the Lagos Business School’s Chief Executive Program.

Governor: Mohammad Abdullahi Abubakar, Bauchi State

Political Party: All Progressives Congress Educational qualifications: LLB Barrister Mohammad Abdullahi Abubakar was born on 11 December 1956 . He began his career in the civil service where he rose through the ranks to become the Bauchi State Attorney General and Commissioner for Justice. He ran for public office as Governor of Bauchi State in 2015 under the platform of the All Progressives

He established Afrinvest West Africa Limited (then SecTrust) in 1995 and the company was later appointed correspondent stockbroker for Nigeria by the International Finance Corporation (IFC) in the same year. He leaves no one in doubt as regards the focus of his administration with the numerous successes he has recorded. # For instance, he has signed a technical capacity development agreement for “Electrify Edo Program” with Siemens AG, Ossiomo Power Limited, and Benin Electricity Distribution Company (BEDC), to train youths on the practical aspect of electrical and electronics engineering. In addition, he has engaged 4,200 youths across the state in employment and established the Edo State Ministry of Mining. Governor Obaseki’s administration has rehabilitated 35 strategic roads within seven months in office, and kick-started the development of a seaport at Gelegele.

Congress, the state’s opposition party. Due to negligence overtime, Bauchi State lost its place as the headquarters of West Africa’s tourism industry. This is already changing for the better. On assumption of office, Barrister Abubakar set in motion eforms that have made the different wildlife resorts in the state tourists’ delight. Above all, partnership with Arik’s Air now ensures that tourists can fly directly into the state from Lagos, the nation’s commercial capital. The state is endowed with Sumu Wild Life, home to Zebras, Giraffes, Wildebeests, Impalas, Monkeys and other herbivores; Yankari Resort and Safari, the home to critically endangered West African lions, buffalo, hippopotamus, roan and hartebeest; and the tomb of Alhaji Sir Abubakar Tafawa Balewa, the first and only Prime Minister of Nigeria.

Governor: David Nweze Umahi,

Ebonyi State

Political Party: People’s Democratic Party (PDP) Educational qualifications: B.Sc Dave Umahi Nweze was born on 1st January 1964 in Ebonyi State. He attended Umunaga Primar y S chool in Ubur u from 1971-1977 where he

Governor: Rt. Hon. Lawrence Ifeanyi Ugwuanyi, Enugu State

Political Party: People’s Democratic Party (PDP) Educational qualifications: BSc, MSc, MBA Rt. Hon. Ifeanyi Ugwuanyi

Governor: Abdullahi Umar Ganduje, Kano State

Political Party: All Progressives Congress Educational qualifications: NCE, BSc, MA, MPA, PhD Work Experience: 1975-1976: NYSC, Teacher at Oleh College, Delta State. 1976-1976: Education Officer II, Ministry of Education, Kano State. 1976-1978: Gumel, Lecturer I, Advanced Teachers College. 1978-1979: Lecturer II, Bayero University Kano. 1979-1981: Personnel Manager, Norait Limited Kano. 1981-1993: Federal Capital Development Authority (F.C.D.A). 1994-1998: Commissioner, Ministry of Works, Housing and Transport. 1999-2003: Deputy Governor of Kano State. 2005-2006: Special Assistant

bagged his First Leaving Certificate with Distinction. Engr. Umahi started his secondary education at Ishiagu High School in 1978 and in 1979, transferred to the prestigious Government Secondary School, Afikpo, passed his WASC Examinations in Division 1 grade with excellent Alpha performances in all his subjects.

Profile: Abdullahi Umar Ganduje was born on December 25, 1949 at Ganduje village in the present day Dawakin Tofa Local Government Area of Kano State. An erudite Ganduje has two master’s degrees; he also has a PhD in Public Administration from the University of Ibadan. Since he assumed office, he has focused programs on transforming Kano State into the commercial nerve centre of Nigeria. His reforms ensured that the Kano State gross domestic product (GDP) stands at about $20 billion and that makes it the second largest state economy in Nigeria. Enhancement of ease of doing business in the state has engendered strong and diverse SMEs which contribute about 70 percent of the state’s output and employment ; infrastructure development leading to the construction of Nigeria’s first ever 3-level flyovers/underpass, housing development and inter-state business promotion.

He got admission into the Anambra State University of Science and Technology where he obtained a Bachelor of Science Degree in Civil Engineering in 1987. Between 1988 and 1989, he did his National Service in SAIPEM SPA in Benin City. Gov. Umahi worked

with SCC Nigeria Limited; an Israeli Company (Water Engineering Giant) and rose to the position of Project Engineer. It was here that his managerial and technical competence was brought to the fore in his supervision of the historic Umuahia Water Project and the Ndie g oro Aba Flood Control Measures between 1988 and 1990. Since becoming the governor, Gov. Umahi’s touch can be felt in every segment of the state particularly in areas of infrastructure, healthcare and t ou r i s m d e v e l o p m e nt. This has changed the state of transport, agriculture and healthcare ser vice delivery in the state.

was born in Enugu on March 20, 1964. He holds an MBA in Finance and another MBA in Accountancy from the Enugu State University of Science and Technology (ESUT). Before he went into politics, he was the Chief Executive Officer of Premier Brokers Limited, the prime Insurance broking firm in the South East zone of the country owned by the five states in the zone and ACB Bank. His programs have touched

every sector of the state’s economy. Among the major projects executed by his administration are roads construction and rehabilitation across the state. He commissioned the Enugu Free Trade Zone, procured and distributed ICT equipment to all the states’ secondary schools; empowered traders towards reducing poverty and crime in the state while the Heliu Estate was inaugurated through the PPP scheme.

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States Competitiveness and Good Governance Awards 2018

Icons of Good Governance

Governor: Senator Umaru Jibrilla Bindow, Adamawa State

Political Party: All Progressives Congress (APC) Educational qualifications: National Diploma Senator Bindo Umaru Jibrilla was born on June 16, 1963 in Adamawa state. He holds a National Diploma in Business Administration. He is an industrialist who has established three companies in Mubi, employing about four hundred people. He was elected as the senator representing Adamawa North senatorial district in the senate and was the Vice Chairman of Senate Committee on Defence and Army/ Science and Technology.

Governor: Abdulfattah Ahmed Kwara State

Political Party: All Progressives Congress Educational qualifications: B.Sc, MBA Alhaji Abdulfatah Ahmed was born on 29 December 1963 in Share, Ifelodun Local Government Area of Kwara State. He had his secondary school education at Government College, Funtua, Katsina State (1973-1978) and then proceeded to the School of Basic Studies of Kwara State College of Technology (now Kwara State Polytechnic), Ilorin (1978-1980) for his ‘A’ Levels. He earned his B.Sc. in Chemistry in 1986 from the University of llorin and a Master of Business Administration (MBA) degree in 1992 from the same university. He was an Assistant Manager at District Savings and Loans, Lagos, between 1991 and 1993;also worked for Guaranty Trust Bank Plc as the Head of Institutional Banking Group for the Northern region in 2003. Before, he became the governor, he had served in

Governor: Willie Obiano, Anambra State

Political Party: All Progressives Grand Alliance (APGA) Educational qualifications: B.Sc, MBA Willie Obiano,a native of Aguleri in Anambra East Local Government Area, was born on August 8, 1957. He attended the Holy Trinity Primary School and Christ the King College, both in Onitsha, for his primary education and West African School Certificate Examination. He proceeded to the University of Lagos where he earned his B.Sc. in Accounting Second Class Upper in 1979 and an MBA in Marketing in the year

different capacity such as Commissioner for Finance, Planning and Economic Development, among others. He was appointed as the commissioner for Finance and Economic Development at the start of Abubakar Bukola Saraki’s Kwara State Administration till 2009. H He was appointed a member of board of directors of the International Aviation College, Ilorin, Chairman of the Millennium Development Goals implementation committee and Chairman of Songhai Farms Holdings Ltd. Gov. Ahmed has undergone several courses including Corporate Governance course at the Manchester School of Business (2006), Capital Budget Strategies and Techniques, London (2004) and Public Finance Management Course at J.F. Kennedy School of Government, Harvard University USA (2004). From roads, water, to agriculture, health, housing and education, Government Ahmed’s administration has recorded giant strides in Kwara Statein spite of paucity of funds, the present administration in Kwara State has continued to invest in urban and infrastructural development in the state. The state government also intervened on some Federal roads to ease the economic activities of the state. The roads include: Patigi-Kpada-Rogun Road (On-going), dualization

1993. He won the John F. Kennedy Award for Essay. Apart from academic award, Willie Obiano has also bagged several professional awards such as Distinguished Banker of the Year 2012 Award. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN); Member, Harvard University, USA CLASS, Member, Harvard Business School, Boston USA and Stanford University. Governor Obiano’s vision for agriculture in the state has started to materialise. His partnership with the International Fund for Agricultural Development(IFAD), the Federal Government and Anambra East, Anambra West, Ayamelum, Awka North and Orumba North local government areas, as well as other top-notch agric projects, has transformed agriculture in Anambra State through jobs creation, vegetables export among others. His magical touch is also felt in infrastructure development, healthcare service delivery and education development in the state.

of Offa Garage-Dangote Road (South link road); Ilorin, Fate Road to GSS Roundabout, Kaiama-Kishi Road (Ongoing) and Ilesha-BarubaGwanara road.

Governor: Kashim Shettima, Borno State

Political Party: All Progressive Congress (APC)) Educational qualifications: B.Sc, M.Sc Alhaji Kashim Shettima was born on 2nd September 1966 in Shettimari, Shettima Mustafa Kuttayibe, Borno State. He attended the Lamisula Primary School Maiduguri between 1972 and 1978, and Government Community Secondary School, Biu in 1978 where he got the West African School Certificate Examinations (WAEC) in 1980. He was admitted into the University of Maiduguri where he obtained the Bachelor of Science (Honours) degree in Agric Economics. He then attended the University of Ibadan from 1990 to 1991, gaining a Master’s Degree in

Governor: Hon. Henry Seriake Dickson, Bayelsa State

Political Party: People’s Democratic Party (PDP) Educational qualifications: LLB, BL

Governor: Yahaya Bello, Kogi State

Political Party: All Progressives Congress Educational qualifications: B.Sc, MBA Yahaya Bello was born on June 18, 1975 in Agassa, Okene LGA. He had his primary education at the LGEA Primary School, Agassa. He enrolled at Agassa Community Secondary School in Agricultural Economics. He was promoted to lecturer II in the Department of Agricultural Economics, University of Maiduguri in 1993, although he started lecturing by 1991. Gov. Shettima worked with the Commercial Bank of Africa as an Agricultural Economist at its Ikeja Office, Lagos State (1993-1997). He then became a deputy manager, later manager, at the African International Bank Limited, Kaduna Branch (1997–2001), and was appointed Deputy Manager/Branch Head of the Zenith Bank’s Maiduguri Office in 2001, becoming General Manager five years later. In mid-2007, he was appointed Commissioner of the Borno State Ministry of Finance and Economic Development. Later, he became Commissioner in the Ministries of Local Governments and Chieftaincy Affairs, Education, Agriculture and later Health under his predecessor as Borno Governor Ali Modu Sheriff. Housing deficit in his state was aggravated by Boko Haram insurgency and his administration has risen to the occasion through infrastructure development such as roads, bridges, hospitals and construction of affordable housing units for the residents of Borno State.

Hon. Henry Seriake Dickson holds a Bachelor of Law (LLB Hons) degree from the Rivers State University of Science and Technology, Port Harcourt. He was called to the Bar in 1993, having earned his Barrister of Law (BL) from the Nigerian Law School, the same year. His Excellency had a stint as a Police Officer with the Nigerian Police Force before his voluntary withdrawal from service to actively practice Law. Governor Dickson served as Attorney General and Commissioner for Justice, Bayelsa State from 2006 - 2007. He also served as a member of the Federal House of Rep-

resentatives, representing Sagbama/Ekeremor Federal constituency of Bayelsa State from 2007 – 2011. Hon. H. S. Dickson is a Member of the Nigeria Bar Association, International Bar Association, Chartered Institute of Arbitrators (U.K) Nigerian Chapter and a Member of the Chartered Institute of Taxation of Nigeria. Hon. Dickson has touched every sector of the Bayelsa State’s economy particularly the health sector which now boasts of an internationally recognised specialist hospital which can reverse stroke, Bayelsa Diagnostic Centre, and referral hospitals in some of the local government areas.

1989. Changing school five times, he finally settled in at Government Secondary School, Suleja, Niger state, and sat for his Senior Secondary School Certificate Examination (SSCE) in 1994 at the school. He got a Bachelor’s degree in Accounting and a Master’s degree in Business Administration from Ahmadu Bello University (ABU) in 1999 and 2004 respectively. He became a Chartered Fellow of the Association of National Accountants of Nigeria (ANAN) at Jos in 2004. He spent his NYSC year at the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) in 2002 and was retained. He was subsequently appointed as Revenue Officer and then promoted to Accountant within a short

period. He later attained the post of Assistant Chief Accountant before leaving the commission. He is the managing director of FairPlus International Limited and the chairman of Kogi Youth Arise Forum. Many states in the North Central geopolitical zone have had their fair share of attacks from insurgents. Kogi State, being the confluence state and the melting points of tribes and ideas, has sustained peace and ensured security of lives and property. This is coming from no less a person than His Excellency, Yahaya Bello, the Executive Governor of the state, through his ingenious mobilisation of the grass root and provision of support for the nation’s security apparatuses.

Governor: Abubakar Sani Bello, Niger State

Political Party: All Progressives Congress (APC) Educational qualifications: B.Sc Governor Bello was born on 17 December 1967. He is the eldest child of the Nigerian billionaire and former military Governor of old Kano State Col. Sani Bello (rtd) . He attended St. Louis Primary School, Kano between 1974 and

1979. He later went to the Nigerian Military School from 1980 - 1985 after which he was given admission into the University of Maiduguri where he graduated in 1991 with a B.Sc degree in economics. Bello has worked in several parts of the country starting from his NYSC days where he was posted to serve in Port Harcourt in the marketing department of NICOTES Services as a supervisor. Prior to becoming the governor of Niger State, he was involved in various businesses. On assumption of office, he left no one in doubt about his desires to empower the people of Niger State. This he started doing through the $450 million sugar production MoU between the state and Dangote plc; the N18 billion MoU with the Hungarian investor, Osetertrade Engineering on the integrated farming project; the $3.25billion MoU with All States Investment Limited on fish farming; and the UNICEF’s N1.3bn with the state for the provision of basic necessities of life for children and women, among others.

Monday 16 July 2018

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FINANCIAL TIMES How business is capitalising on the millennial Instagram obsession

Bond markets signal early end to Fed rate rises

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World Business Newspaper

Indictments cloud Trump and Putin’s Helsinki summit Leaders play down expectations but others express concern over US president’s moves DEMETRI SEVASTOPULO AND HENRY FOY

onald Tr ump and Vladimir Putin have warned of unrealistic expectations about their Helsinki summit on Monday against a backdrop of indictments of Russian intelligence officers, disarray in the western alliance and the US president’s freewheeling approach to grand diplomacy. Mr Trump said on Friday he was “not going in with high expectations”, adding that special counsel Robert Mueller’s investigation into alleged collusion between his campaign and Russia was damaging ties with Mr Putin. “It really hurts our relationship with Russia,” he said. Shortly after his comments came the indictment of 12 Russian intelligence officers for hacking into Democratic groups during the 2016 elections. Mr Trump told CBS in an interview broadcast Sunday that he would consider asking for the Russians to be extradited to the US. “Well, I might. I hadn’t thought of that,” he said, before repeating his criticism of previous president Barack Obama’s administration for not doing more to prevent the hacking. The Kremlin is no more upbeat about the state of US-Russia relations. Yuri Ushakov, Mr Putin’s foreign policy adviser, said they were “very bad”, adding that the two countries had “to start to set them right”. It is a marked change from 20 months ago when Mr Trump’s election sparked giddy anticipation in Moscow about friendlier ties with Mr Putin, the Russian president. Ahead of the summit, Kremlin officials are cagey about deliverables and relieved by the mere fact that the meeting is being held. European leaders last week welcomed the Trump-Putin meeting, even as they reeled from criticisms that Mr Trump fired at his Nato al-

lies at the most divisive summit in the organisation’s history. In another stark example of US-EU tensions, Mr Trump told CBS that the EU was “a foe”. Some European diplomats have signalled deep disquiet about what Mr Trump might agree with the Russian leader. In Washington, there is mounting anxiety. One concern is that Mr Trump will cosy up to Mr Putin after the uproar at the Nato summit. “For 70 years the Soviet Union/ Russia tried unsuccessfully to rip apart the western alliance. Then along comes Trump. He’s done more damage to the alliance than they ever could,” said Brendan Boyle, a Democratic congressman. The Nato spectacle will have been closely watched in Moscow. “There is an element of joy when you see your adversaries . . . bickering,” said Dmitri Trenin, head of the Carnegie Moscow Centre.“[Trump] doesn’t believe in the standard western thesis that Moscow is a threat to the eastern flank of Nato . . . Putin will be trying . . . to maximise any benefits he can accrue from those changes.” The two leaders are expected to discuss a wide range of issues, from Syria and the 2014 Russian annexation of Crimea to arms control. Some US politicians believe that Mr Trump should not reward Mr Putin with a summit just days after the indictment of the Russian intelligence officers. John McCain, the Republican Arizona senator, said that if Mr Trump “is not prepared to hold Putin accountable the summit . . . should not move forward”. Critics also worry that Mr Trump will be outplayed by Mr Putin, just as he was, they claim, outfoxed by North Korean leader Kim Jong Un at a summit last month in Singapore. Mark Warner, vice-chairman of the Senate intelligence committee, and other top Democrats have urged the US president to cancel a scheduled one-on-one meeting with Mr Putin at the summit.

May attempts to revive her Brexit plan amid Tory Prime minister reveals Trump urged her to ‘sue the EU’ and scrap negotiations JIM PICKARD

heresa May struggled to breathe new life into her Brexit plan on Sunday, insisting her proposal to stay close to Brussels regulations was necessary to avoid a “chaotic” EU departure even as critics within her own party launched new assaults against the compromise. The prime minister said the UK needed a “common rule book” with the EU in order to maintain trade links with the continent following a decision by the European Commission that her previous plan to give

Britain more regulatory leeway was “non- negotiable”. “I’ve got to be hard-headed and practical about this and do it in a way that ensures we get the best interests for the UK,” Mrs May said on BBC’s The Andrew Marr Show. “What this ‘common rule book’ does is it protects those jobs and livelihoods that do depend on those integrated supply chains.” Mrs May’s attempt to regain her political footing, which took severe hits last week from two ministerial Continues on page A2

Donald Trump, US president, said on Friday that he was ‘not going in with high expectations’ over a summit with his Russian counterpart, Vladimir Putin © AFP

Boeing holds decision on middle-market jet until 2019 Timing has led to questions on whether the new aircraft launch will happen PEGGY HOLLINGER AND PATTI WALDMEIR

oeing will not decide until next year whether to launch a new “middle of the market” aircraft to bridge the gap between its biggest narrow body passenger jet and the 787 Dreamliner twin aisle. Dennis Muilenburg, Boeing chief executive, told the Financial Times that the US aerospace group had to ensure that there was a “solid” business case before pressing ahead with the long-mooted aircraft. “We don’t feel rushed to make a decision,” he said in an interview ahead of the Farnborough air show this week. “I would anticipate to make a launch decision next year.” A decision in 2019 would “be consistent with a 2025 entry into service,” he added.

Boeing has for several years been mulling the launch of a new aircraft that would replace the discontinued 757 jet, seating between 220-270 passengers and with a range of about 5,000 nautical miles. The company has identified a market for up to 5,000 aircraft in this segment and, after initially targeting an entry into service range of between 2024 and 2025, the group has now settled on a date of 2025. However, the delay in establishing the business case for the aircraft is prompting some to question whether Boeing will in the end launch the aircraft. “The problem is the longer they delay [the decision] the more tenuous the business case becomes,” said Scott Hamilton of the Leeham aviation consultancy. Mr Muilenburg insisted that Boeing had established that there was demand for a new, clean sheet aircraft. “It’s a market that cannot be

directly addressed with derivatives of existing airplanes,” he said. This would not be an aircraft that pushes the limits of technology, he said, perhaps in reference to the difficulties experienced in building the 787 Dreamliner which was the world’s first jet to be more than 50 per cent composite materials. “It is going to be more about the production system of the future trying to push the technology on the aeroplane,” he said. As part of the group’s work on the business case, Boeing would examine where to build the new aircraft, he added. Producing it in Boeing’s original factory in Washington state was not a given, he suggested. The final location would depend on costcompetitiveness, access to talent and the supply chain. “We haven’t made a decision yet on geography so we are keeping our options open,” he said.

Disrupter-in-chief brings turmoil on European trip After turbulent Nato summit, Trump launches unprecedented intervention in UK politics DEMETRI SEVASTOPULO AND MICHAEL PEEL

s Donald Trump departed the White House for Europe, the US president said that his summit with Russian president Vladimir Putin in Helsinki on Monday could end up being the “easiest” part of his seven-day visit. It was an odd quip given that Mr Trump was heading to Brussels for a Nato summit with European allies and then to the UK — which likes to boast of its “special relationship” with the US — for tea with the Queen and meetings with prime minister Theresa May at Chequers. Over three turbulent days, however, Mr Trump turned his own prediction into reality. He stunned Nato leaders with a string of unprecedented attacks on the members, particularly Germany. As the other 28 Nato countries were left reeling from what was the most divisive summit in the 69-year history of the alliance, Mr Trump flew to London for what was billed as a much more

amicable affair. More turmoil followed. As Mr Trump and his wife Melania joined Mrs May on Thursday for a black-tie dinner at Blenheim Palace, the ancestral home of Winston Churchill, the Sun newspaper was preparing to publish an explosive interview, in which the US president described the way Mrs May was handling Brexit as “very unfortunate”. Even by the standards of Mr Trump, his intervention was unprecedented. With Mrs May politically vulnerable, Mr Trump insulted her by suggesting that Boris Johnson, the recently resigned foreign secretary who may challenge Mrs May for the Conservative party leadership, would make a “great prime minister”. John Negroponte, former US deputy secretary of state, said Mr Trump’s performance highlighted how he liked to be “the disrupter” and make the story all about himself. “Everybody wrings their hands, and then he either grudgingly or

reluctantly ends up coming out in a better place. It is sort of baked in these days. He comes somewhere and his interlocutors say, ‘What is he going to say now?’” Mr Negroponte said. “[But] his comments about Theresa May were just blatant interference in a British political debate . . . It is not as if Roosevelt has come over to buck up the British people.” Nicholas Burns, a former US ambassador to Nato who later was the third-ranking state department official, said Mr Trump had been “a wrecking ball” during his first legs in Europe. “He picked a public fight with Germany, disparaged Nato and the EU, undermined [prime minister Theresa] May in the UK,” said Mr Burns, who now teaches at Harvard University. “This has to be the most chaotic and disputatious trip by an American president to our European allies. He has weakened us — the credibility and trust the allies have in us — in the process.”

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FT May attempts to revive her Brexit plan...

Argentina learns to live with its inflation dragon

Continued from page A3 resignations and a broadside from US President Donald Trump, suffered a new blow from David Davis, who described her plan as a “profoundly dangerous” policy that would leave the UK as a rule-taker from Brussels. In his most direct challenge to the prime minister since quitting as Brexit secretary just six days ago, Mr Davis wrote in the Financial Times that Mrs May’s “halfway house” plans jeopardise the opportunities offered by leaving the EU. The proposals agreed by the cabinet earlier this month at Chequers, the prime minister’s country residence, would raise questions over whether the UK was still a “functioning democracy”, he argued. “British democracy is now at stake.” Most hardline Brexiters, led by Conservative MP Jacob Rees-Mogg, continued to stop short of challenging Mrs May’s leadership, saying they believe they can get the prime minister to change her policy. But Mr Rees-Mogg said on Sunday that she risks splitting the party if sticks to the Chequers plan and fails to push Brussels to change its position to allow for Mrs May’s original plan, which called for a “mutual recognition” of regulations between Brussels and London. “This seems to me a hopeless way to negotiate, that you accept what the other says at an early stage of the negotiations as Holy Writ, and we’ve done that the whole way though,” Mr Rees-Mogg said on the BBC’s Sunday Politics. “It’s why I think she is a ‘Remainer’ who has remained a ‘Remainer’.” Mrs May also revealed on Sunday that Mr Trump had suggested she take legal action against the EU rather than engage in Brexit talks. “He told me I should sue the EU. Not go into negotiation, sue them,” she said. The prime minister’s white paper envisages a deal with the EU whereby Britain would keep regulatory alignment with Brussels on goods while having more flexibility on service industries. The idea of a common rule book — which is anathema to many Eurosceptic Tory MPs — been “in gestation for some time”, Mrs May admitted. Mr Davis insisted Mr Trump, who warned that prioritising ties with the EU over trade relations with the rest of the world could “kill” prospects of a US-UK trade deal, had been correct to warn the UK over the white paper. “Under this plan . . . Britain would have to obey EU regulations, follow EU rules on how all goods are made and on a huge range of interconnected areas such as competition and state aid,” he wrote. “As Donald Trump aptly pointed out, it would ‘kill’ the prospect of a US-UK deal.” The prime minister said the policy — which still needs agreement from the EU, which has remained lukewarm towards it — would solve the Northern Ireland border issue since it would ensure common rules on both sides of the Irish border. But she still believed that no deal was better than a bad deal. She also acknowledged that many in her party and among the wider public were sceptical of her plans. “I have voices on all sides: there are hundreds if not thousands of different views that people have on what we should be doing,” said Mrs May. “Let’s just keep our eyes on the prize here: the prize is delivering leaving the EU in a way that’s in our national interests.”

Monday 16 July 2018

Mauricio Macri is all but ignoring stubbornly rising prices as he searches for growth

BENEDICT MANDER

Fed chair Jay Powell

Bond markets signal early end to Fed rate rises While the central bank hails strength of US economy, traders are not so sure JOE RENNISON

ond traders are anticipating that an end to the Federal Reserve’s cycle of monetary policy tightening could come as early as next year, facing down policymakers that expect to raise interest rates for longer. While the Fed expects to raise rates into next year and potentially the year after — a point that could be reiterated by chair Jay Powell when he gives testimony this week to Congress — current prices in US interest rate markets suggest that the central bank will stop its hiking cycle sooner. According to the median prediction by policymakers, the Fed policy rate will rise to 3.375 per cent in 2020. In contrast, eurodollar futures suggest rates may plateau in 2019. The differences come as despite strong corporate earnings growth and positive economic data, investors are factoring in the risk of a slowdown in the economy. “The markets are telling us that there is a pretty high risk of economic slowdown or recession at the end of 2019,” said Guy LeBas, chief fixed-

income strategist at Janney Capital Management. Fed funds charts The yield on futures expiring in December 2019 stood at 2.97 per cent on Friday, and on futures expiring in March 2020 it was an almost identical 2.975 per cent. The yield falls to 2.96 per cent for December 2020 eurodollar futures. “The market is saying that the Fed is wrong,” said John Brady, managing director at RJ O’Brien. This is only the fifth time since 1989 that there has been an inversion in the eurodollar futures yield curve, where longer-term rates are below shorter-dated rates. Each time it has been followed by the Fed pausing its policy tightening. The Fed has been stressing the strength of the economy in its recent communications but trade concerns have amplified fears that companies may begin to slow capital expenditure, while some analysts say that the boost from tax reform will begin to erode in 2019 as year-over-year growth comparisons will be set at a higher bar. A second market measure of interest rate expectations, fed funds

futures, which are less heavily traded than eurodollar futures, is showing a similar plateau in 2019, although it is not inverted. The pattern can also be seen in the difference between two and 10year Treasury yields, with the 10-year struggling to sustain levels above 3 per cent. When shorter-dated yields rise above longer-dated yields it is seen by many investors as a sign of a coming recession. The spread on Friday between the two Treasury benchmarks stood at just 24 basis points, the lowest level since 2007. A majority of Fed policymakers expect two more rate rises this year. With further moves early next year, that would put the Fed close to its median estimate of the neutral interest rate, at which monetary policy neither stimulates nor cools the economy. Policymakers are intensely debating whether to push beyond that level or call a halt there. Complicating deliberations is the Fed’s balance sheet, which some officials think may be artificially flattening the yield curve and making it a less useful indicator than in previous economic cycles.

Robert Mueller charges 12 Russian intelligence officers Indictment in Russian meddling probe revealed three days before Trump-Putin summit KADHIM SHUBBER AND COURTNEY WEAVER

obert Mueller, the special counsel investigating alleged Russian election meddling, has charged 12 Russian intelligence officers with hacking Hillary Clinton’s campaign and the Democratic National Committee during the 2016 presidential election. Mr Mueller alleged that the 12 Russians stole and leaked emails as part of a Russian government effort to interfere with the election. The charges come just three days before Donald Trump and Vladimir Putin are scheduled to meet in Helsinki, Finland. The announcement will put greater pressure on the US president to publicly call out Russia for its alleged interference. The indictment released on Friday named the Russian intelligence officers and identified the units for which they worked. Mr Mueller said the agents employed “spearphishing” — a hacking technique involving the use of deceptive email addresses — to trick Clinton campaign and DNC staffers and hacked into the election database of a US state.

Rod Rosenstein, the deputy attorney-general overseeing the investigation, said there was no allegation in the indictment that any Americans had committed crimes or that the efforts altered the vote count or changed the election result. He added that the investigation was ongoing. “When we confront foreign interference in American elections, it is important for us to avoid thinking politically as Republicans or Democrats and instead to think patriotically as Americans,” he said. The indictment offered the clearest indication to date that Russia tried to interfere in the 2016 US election — an assertion US intelligence agencies have made for more than a year and which Mr Trump has repeatedly questioned. Mr Rosenstein said he had briefed Mr Trump “earlier this week” on the impending indictment. On Friday, before the charges were announced, Mr Trump called Mr Mueller’s probe a “witch hunt”. The president said he would “absolutely” bring up Russia’s election meddling with Mr Putin

when they met, but cautioned he did not believe it would lead to anything. “I don’t think you’ll have any ‘Gee, I did it, I did it, you got me’,” the president said at a press conference in the UK. A White House spokesperson said the new charges contained no allegations that the Trump campaign was involved in the hacking or that it had affected the outcome of the election. “This is consistent with what we have been saying all along,” said the spokesperson. Yuri Ushakov, Mr Putin’s foreign policy adviser, dismissed suggestions of Russian meddling in the 2016 election as “hype”, saying: “I want to reiterate on the eve of this [Helsinki] meeting that the Russian state has never interfered and is not going to interfere in internal affairs, especially in the electoral processes in the US, to influence the US elections.” Democrats seized on the indictment as vindication of Mr Mueller’s probe. Chuck Schumer, the Democratic leader in the US Senate, called on Mr Trump to cancel his meeting with Mr Putin in the wake of the charges.

here is a look of tired resignation on Mariano Vallejo’s face as he pulls up at his local petrol station in Buenos Aires. Glancing at the price for a litre of fuel, which has doubled over the past two years and is about to go up again, he sighs. “If it’s not petrol, it’s something else. Prices just keep on rising relentlessly. But that’s nothing new — this is Argentina,” he says bleakly, asking the pump attendant for just half a tank, and resolving to use his car a bit less. A recent run on the peso is pushing inflation ever higher. Prices could rise by as much as 30 per cent this year — or about triple the rate that President Mauricio Macri was hoping for in 2018. But for most Argentines, this is business as usual. With the exception of a currency board experiment in the 1990s that ended with a disastrous financial crash in 2001, Argentines have lived with punishingly high inflation for longer than most can remember. Many have developed an unusually high tolerance for an economic phenomenon that consumers elsewhere are often scarcely aware of. “Consumers here are well trained in the art of coping with inflation,” said Marcos Novaro, a sociologist at the University of Buenos Aires, who said that economic prosperity and employment were greater concerns than inflation. Whether it is identifying the best moment to buy a given product because it is relatively cheap, purchasing goods in as many instalments as possible since they get cheaper over time, or simply saving in dollars given inflation’s destructive impact on the value of the peso, such practices are second nature to Argentines. “Inflation is a problem, sure, but we are used to it. Personally, I buy dollars whenever I can,” said Gloria Carrasco, a housewife who still shudders as she recalls the bout of hyperinflation in 1989 when prices rose by 3,079 per cent. These days she is far more worried about crime. Businesses have learnt to live with inflation too — and even profit from it. “Companies can always just pass higher costs on to consumers. There’s no doubt that some take advantage of volatile economic situations and bump up prices more than they need to. And that’s assuming they even need to at all,” said one executive. Trade unions too can thrive in inflationary environments as members come to depend on their ability to negotiate higher pay during annual rounds of wage bargaining — a practice which persists in few places outside Argentina. Given the deeply ingrained culture surrounding inflation in the country, Mr Macri is calculating that he has breathing room to concentrate on reviving economic growth while putting the battle against inflation on the back burner, given that economists expect a technical recession in the second and third quarters of 2018. Not only is the economy being hit by the contractionary effects of the devaluation, but the farming powerhouse has also suffered the worst drought in decades this year. Furthermore, the extra cuts to the fiscal deficit that the government pledged in order to secure a $50bn loan from the International Monetary Fund last month are likely to stunt growth.

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@ FINANCIAL TIMES LIMITED

Euphoria around China tech clashes with reality Xiaomi’s tepid listing reflects wariness over high valuations and its lack of profits HENNY SENDER

he share market debut of Xiaomi this week in Hong Kong has cast a lengthy shadow over the listing prospects for other Chinese tech groups and the boom in private valuations enjoyed by the sector. Xiaomi, which debuted at half the $100bn valuation it originally sought, illustrates the risks surrounding the great China tech boom. As companies enter the public realm, sky-high private valuations face a test. Some investors already have reservations about the prospects for Meituan-Dianping, which started life as a kind of Groupon, and ride-sharing service Didi Chuxing. Among prospective listings are two lithium companies, Tianqi and Ganfeng, each seeking $1bn, Nio, an electric vehicle specialist, aiming for $2bn, Shanghai Tasly Pharmaceutical seeking $1bn, while WeLab, a financial tech outfit, hopes to raise $500m. The massive queue of tech companies planning to list in Hong Kong in the next few months, with giants such as Ant Financial close behind, comes as liquidity in China is tightening. The recent reserve rate cuts in China have not done enough to counter an overall tightening of monetary policy. The cost of funds for investors has risen as much as 2 percentage points. “The euphoria around China tech is clashing with the reality of deleveraging in China,” said one major tech investor. “Valuations have been driven by too much money.” Another reason for investors becoming far more selective about the bulging initial public offering pipeline reflects how many recent tech listings in Hong Kong, such as ZhongAn Online and PingAn Good Doctor, are trading about 23 per cent and 17.5 per cent below their respective offer prices. “Neither the Hang Seng index nor the Hong Kong market is about the new economy,” said Eddie Tam, the chief executive of Central Asset Investments in Hong Kong. “Hong Kong needs new

blood. But only at the right price.” For many investors such as Mr Tam, Xiaomi, even at a valuation of $50bn, is too expensive, a reflection of the greed of both the entrepreneurs and their backers. “The main problem is the venture capital game has been too easy,” he added. “They leave no upside for the public market investors. If they pushed down the valuation, it would improve sentiment in the public market.” Another reason for Xiaomi’s disappointing listing at a price of HK$17 — it ended the week up 26 per cent at $21.45 — was the absence of profits. Investors in the public sphere viewed it as a lowend smartphone maker whose story was more about India than China; a company that could only list in Hong Kong because it received a waiver from rules requiring three years of profits. The lack of profitability could spook the impending listings of both MeituanDianping, whose founder Xing Wang seeks a $60bn dollar valuation, and Didi. Meituan is seen listing in the second half of the year, while Didi is expected early in 2019. Still, those companies with a better or simpler story, such China Tower with a sole Hong Kong listing, are faring better. And their prospects improve markedly when they have strong backing from a powerful sponsor or plan a listing in New York, such as Tencent Music. Many investors are optimistic about the prospects for Tencent Music, which is seeking a valuation of $30bn, a figure that reflects real demand. Shares had already been exchanging hands at that valuation in the grey market for secondary trading, said one Tencent board member. The music-streaming arm of Tencent also has the strong support of the group. But, above all, Tencent’s prospects reflect the depth of the New York market. Despite all of Beijing’s vaunted desire to bring home the listings of its national tech champions and their offspring, “The Nasdaq of China is not Shenzhen or Shanghai,’’ said Mr Tam. “The Nasdaq of China is still New York.”

JPMorgan reports 18% rise in net profits in second quarter America’s biggest lender sees ‘good economic growth’ and strength in capital markets ROBERT ARMSTRONG

PMorgan Chase kicked off the Wall Street earnings season with strong second-quarter results that will provide reassurance to investors who have sold off shares in the big US banks over the past six months. The New York-based bank, which has $2.6tn in assets on its balance sheet, reported revenue of $27.7bn and earnings per share of $2.29, up 6 per cent and 26 per cent from a year ago, respectively. The consensus estimate among analysts had been for revenue of $27.6bn and EPS of $2.22. Net profits increased 18 per cent to $8.3bn. Net interest income was up 9 per cent, “driven by the impact of higher rates and loan growth,” JPMorgan said. Jamie Dimon, chairman and chief executive, said: “We see good economic growth, particularly in the US, where consumer and business sentiment is high . . . Capital markets were open and active, leading to strong fee and markets revenue

performance.” The investment banking and markets businesses were particularly strong. Investment banking fees, at $2.2bn, were up 17 per cent. Markets revenue was up 16 per cent, excluding certain items, while fixed income markets trading revenue climbed 12 per cent on the same basis. Equities trading revenue jumped 24 per cent. Revenues from mortgages and credit cards were both down significantly, however. Devon Ryan, banking analyst at JMP securities, said that “the traditional banking and credit card businesses were in line with expectations, but banking fees and trading were much better than what [Wall Street] was looking for — fixed income was resilient and JPMorgan seems to be taking market share in equities.” The results were particularly striking, he said, given that the company had indicated in late May that trading revenues would be up only in the single-digits.

Blow to KPMG as Old Mutual appoints second auditor UK and South Africa-listed group adds ‘big four’ rival Deloitte to review its accounts MADISON MARRIAGE

ld Mutual has dealt an embarrassing blow to its longstanding auditor KPMG by appointing a second firm to review its accounts in response to a damaging corruption scandal in South Africa that has undermined confidence in the incumbent. The UK and South Africalisted financial services group has added rival “big four” accounting firm Deloitte as its second auditor — an unusual move given that KPMG has been its sole auditor for 19 years. The addition of Deloitte means that KPMG’s audit fee from Old Mutual — which came to £18.1m last year — is likely to be halved. Old Mutual paid KPMG another £1.8m last year for non-audit services. Over the past decade, Old Mutual has paid KPMG £182m for audit and non-audit work. The financial services group said in September that it was engaging with KPMG over the firm’s involvement in the corruption scandal before deciding what action to take. The engagement process started after KPMG began losing clients amid fierce criticism of its work over the past two decades for businesses run by South Africa’s controversial

Gupta family. The Guptas have been accused of using their ties to former president Jacob Zuma to manipulate ministerial appointments and state contracts in favour of their businesses — allegations they have denied. Old Mutual said: “Old Mutual has been continuously engaging with KPMG International and KPMG South Africa on concerns regarding the ongoing challenges raised in their South Africa business. KPMG has noted and discussed with us clear actions to address these challenges. “Until these challenges are resolved, Old Mutual believes it is prudent to appoint a joint auditor.” KPMG audited companies linked to the Guptas for 15 years but ended its relationship with them in March 2016 as the political scandal over the family’s links to Mr Zuma deepened. Last year the firm apologised and dispensed with eight senior executives after it wrote off a lavish Gupta wedding as a business expense and wrote a report, since retracted, rubbishing one of South Africa’s most respected ministers. KPMG’s reputation in South Africa was further tarnished this year when the auditor became embroiled in one of South Africa’s most high-profile bank collapses. The bank, VBS, collapsed in

March. A central bank-appointed curator said in April it had found a R900m ($66m) hole in the bank’s deposit base, against liquid assets of only R24m. KPMG South Africa did not raise any irregularities when it signed off on the bank’s accounts for the last financial year, regulators have said. Old Mutual has additionally discussed contingency plans with KPMG South Africa in case the firm becomes “unable to carry out its work on the [Old Mutual’s] South African operations in the short or medium term”, according to the group’s latest annual report. The financial services group also requested that a senior UK KPMG partner review the quality of the 2017 audits of its South African business to ensure the audit “was delivered to the quality we expect”. KPMG South Africa said: “We respect Old Mutual’s decision and will work with the new joint auditor to continue to deliver the highest quality audit.” KPMG said in June it would parachute in senior executives, cut hundreds of local jobs and close several offices in a bid to rescue its South African business. The firm remains under investigation by IRBA, the South African accounting watchdog, and the South African Institute of Chartered Accountants.

US stock futures flat as focus turns to big banks PAN KWAN YUK

S stock futures struggled for direction on Friday, oscillating between small gains and losses as trade war jitters took a back seat to the start of bank earnings season. With about 90 minutes to go before the markets open, futures for the S&P 500, the Dow Jones Industrial Average and the Nasdaq 100 were all largely unchanged. JPMorgan Chase kicked things

off for the bulge bracket banks, delivering a stronger than expected rise in second-quarter revenue and profits. The shares were up 1 per cent in pre-market trading. Citigroup and Wells Fargo, both of which are also due to report their results later this morning, were up 0.8 and 0.7 per cent respectively. On the data front, import prices are due out at 8:30am EST, followed by consumer sentiment at 10am. Elsewhere, the US’s rumbling trade dispute with China remains

a focus. Following a report on Wednesday that the two superpowers could be ready to resume talks, Treasury secretary Steven Mnuchin told lawmakers on Thursday that talks with Beijing had “broken down” and suggested it was now up to China to come to the table with concessions. The dollar is 0.4 per cent higher at 95.14 while the yield on the 10year Treasury note was a fraction of a basis point lower at 2.8472 per cent.

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France outclassed Croatia to World Cup Result win 2018 FIFA World Cup ...Modric, Mbappe, Kane, Courtois win FIFA Golden Ball Awards â&#x20AC;Ś Russia transfers hosting right to Qatar ANTHONY NLEBEM, MOSCOW

rance comfortably dispatched Croatia in the final of the 2018 FIFA World Cup played yesterday at the Luzhniki Stadium with 78,011 fans in attendance. France took the lead when Croatia forward Mario Mandzukic, who scored the extratime winner over England in the semi-final, headed home an Antoine Griezmann free kick in the 18th minute for the first own goal in a World Cup final. Croatiaâ&#x20AC;&#x2122;s Ivan Perisic, who had also scored in the semifinal, levelled up with a powerful shot in the 28 minutes after France had failed to clear a Luka Modric free kick. Perisic conceded a penalty for handball that was given following a VAR decision and Griezmann converted the spot-kick in the 38th to put the French back in front. VAR seemed to disappear in the knockouts in Russia 2018, but it returned with a vengeance in the final as France played Croatia. At 1-1 in the first half, a cross from France struck the arm of Ivan Perisic, entirely accidentally given he had no time to react when the ball flicked off the head of a France player. But shockingly, after much deliberation, the penalty was given by referee Nestor Pitana. Paul Pogbaâ&#x20AC;&#x2122;s curled a powerful shot in that left Croatia goalkeeper Danijel Subasic rooted to the spot and puts France 3-1 up in the 60th minutes of the second half. Lloris lazily trying to touch the ball around but plays it to Mandzukic foot and right back past him into his net to make it 4-2. France added another goal in the 65th minutes when Kylian Mbappe, the 19-yearold who is making his World Cup debut made it 4-1 for the Blues, as he pulls a shot left and past Subasic, who is left no chance. France were the first to secure their place in the World Cup showpiece, after Didier Deschampsâ&#x20AC;&#x2122; men put Belgium to the sword by a goal to nil courtesy of a header from Samuel Umtiti on Tuesday night. Croatia, meanwhile, got the better of England in their own final-4 outing, with Mario Mandzukicâ&#x20AC;&#x2122;s half volley in extra-time having proved the difference between the sides on Wednesday. FIFA has named Luca Modric, Kylian Mbappe, Harry kane and Thibaut Courtois award winners for the 2018 FIFA World Cup. Despite the defeat to France, Croatiaâ&#x20AC;&#x2122;s Luka Mo-

dric was awarded the Golden Ball as the tournamentâ&#x20AC;&#x2122;s best player. Modric, 32, becomes the fifth-straight winner to hail from a nation that did not lift the World Cup Trophy. Lionel Messi, Diego Forlan, Zinedine Zidane, and Oliver Kahn won the previous three, with Brazilâ&#x20AC;&#x2122;s Ronaldo the last to claim it via a World Cup winner in 1998. Harry Kane won the Golden Boot, as expected, with six goals, while Spain won the Fair Play Award. The best young player is no shock: French forward Kylian Mbappe. The Golden Glove went to Belgiumâ&#x20AC;&#x2122;s Thibaut Courtois. Meanwhile, Russian President Vladimir Putin on Sunday handed over mantle of the World Cup host to the emir of Qatar whose country will stage the 2022 edition of the tournament. The ceremony marked a handover from the worldâ&#x20AC;&#x2122;s largest country by landmass to one of the smallest. Qatar has a population of 2.3 million people and an area slightly smaller than the US state of Connecticut. Qatarâ&#x20AC;&#x2122;s size, as well as its broiling temperatures and lack of ready stadium infrastructure, have prompted some to question the decision by FIFA, soccerâ&#x20AC;&#x2122;s world governing body, to make it host. Qatarâ&#x20AC;&#x2122;s rulers, however, say they will rise to the challenge, with hours to go until the final between France and Croatia that will bring down the curtain on Russiaâ&#x20AC;&#x2122;s hosting of this yearâ&#x20AC;&#x2122;s tournament. Qatari Emir, Sheikh Tamim bin Hamad al-Thani, joined FIFA chief Gianni Infantino and Putin at the Kremlin ceremony. Putin, at the ceremony, expressed gratitude to footballers and fans alike. â&#x20AC;&#x153;Russia is handing over the relay baton for hosting the FIFA World Cup to Qatar. We are proud of what we did for fans of this wonderful sport. â&#x20AC;&#x153;We ourselves, the whole country, got an enormous amount of pleasure from interacting with soccer, with the world of soccer and with the fans that came here from all over the globe. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m sure that our friends from Qatar will be able to host the 2022 FIFA World Cup on the same high level. We are, of course, ready to share the experience we acquired in hosting the World Cup this year along with our friends,â&#x20AC;&#x2122;â&#x20AC;&#x2122; the Russian President said. At the climax of the ceremony, Putin handed an official World Cup ball to Infantino, who then handed it over to the emir.

Access Bank wins Euromoney excellence awards

ccess Bank plc has emerged winner of the 2018 Euromoney Awards as â&#x20AC;&#x2DC;Africaâ&#x20AC;&#x2122;s Best Bank for Corporate Social Responsibility.â&#x20AC;&#x2122; This award was presented in recognition of the bankâ&#x20AC;&#x2122;s unwavering commitment to embedding sustainability into its core business strategy as it carries out its business operations. Speaking at the presentation ceremony in London, Access Bank CFO, Seyi Kumapayi, said the award validated the bankâ&#x20AC;&#x2122;s continuous efforts and commitment to the sustainable development of Nigeriaâ&#x20AC;&#x2122;s financial industry. â&#x20AC;&#x153;Access Bank is honoured to be recognised as Africaâ&#x20AC;&#x2122;s Best Bank for Corporate Responsibility,â&#x20AC;? Kumapayi said, saying, â&#x20AC;&#x153;This serves as a testament to the Bankâ&#x20AC;&#x2122;s resolute efforts in financing sustainable economies in the societies in which we operate. â&#x20AC;&#x153;As such, we believe the net impact of our business activities must be positive to accelerate our drive towards the achievement of the sustainable development goals and the development of a resilient and vibrant economy across Africa.â&#x20AC;? This award also highlights the bankâ&#x20AC;&#x2122;s impact in applying global best practices, pioneering and setting standards to foster sustainable development in Africa. Access Bank began its sustainability journey in 2008 and has led various initiatives in line with the United Nationâ&#x20AC;&#x2122;s Sustainable Development Goals (SDGs). In 2012, the bank championed the implementation of the Nigerian Sustainable Banking Principles, which have now been adopted nationwide. The bank was also the first indigenous Nigerian bank to join 25 leading global banks to develop the Global Sustainability Banking Principles that set out to align the sector with the UN SDGs and the Paris Climate Agreement. â&#x20AC;&#x153;The bank has continued to demonstrate excellence through innovative strategies, making positive impacts in the society and creating a sustainable future for itself, its customers and the African economy,â&#x20AC;? Omobolanle Victor-Laniyan, head of sustainability, Access Bank. The award ceremony was attended by top management executives, CEOs of leading global banks, principal officers and key stakeholders in the financial industry from Africa, Europe, America and other continents across the globe.

ASAI eyes Nigeria, Africa expansion with ÂŁ125m IPO on LSE HOPE MOSES-ASHIKE

SA International (ASAI), an international microfinance lender has concluded its ÂŁ125 million initial public offering (IPO) on the London Stock Exchange (LSE). ASAI, which has an extensive African footprint, including Nigeria is one of the worldâ&#x20AC;&#x2122;s largest private-sector microfinance institutions with about 1.9 million clients in 12-countries spanning Asia and Africa. â&#x20AC;&#x153;This will lead to the growth of microfinance banks in Africa including Nigeria,â&#x20AC;? the managing director of one of Nigeriaâ&#x20AC;&#x2122;s leading microfinance banks told BusinessDay by phone. EFG Hermes was joint bookrunner on the transaction alongside Investec plc, while Citigroup Global Markets acted as sole global coordinator and Keefe, Bruyette & Woods (KBW) as lead manager. Shares of ASAI have been admitted to trading on the main market of the LSE with a premium listing under the stock ticker â&#x20AC;&#x153;ASAI.â&#x20AC;? The offering saw ASAIâ&#x20AC;&#x2122;s selling shareholder, Cata-

lyst Microfinance Investors (CMI), offer 40,000,000 shares or 40 percent of ASAI to institutional investors at an offer price of GBP 3.13; accordingly, ASAIâ&#x20AC;&#x2122;s total market capitalization at admission on Friday was GBP 313 million. Microfinance remains a key growth area in Africa. In Nigeria alone there are over 1,000 microfinance banks serving the low income earners. BusinessDay reported in June about plans by A European investment bank to invest in Grooming Micro finance Bank in Nigeria. In April FMO, a Dutch development finance institution organized a syndication of deal where they gave to Access bank over $100 million to increase their agricultural lending portfolio. Furthermore, FRAGG Investment Management Limited in collaboration with Development Finance Institutions rolled out funds for debt and equity investment in financial institutions, particularly, Micro Small and Medium Enterprise (MSMEs) last month. ASAI maintains a loan book with over 1.9 million clients comprised of low-

income, predominantly female entrepreneurs across Asia and Africa. The global microfinance lender has outstanding loans of about USD 300 million and serves its customers through a c. 1,400 branch network with some 9,000 employees operating in India, Pakistan, Ghana, Nigeria, Philippines, Kenya, Myanmar, Sri Lanka, Uganda, Rwanda, Sierra Leone and Tanzania. The company recorded a pre-tax profit of USD 43.4 million in 2017, up 64 percent year-on-year. In Nigeria ASAI operates under the name ASHA microfinance Bank Limited with Main Branch in Ikeja. According to the 2017 first half year report by the Central Bank of Nigeria (CBN) total assets of the 999 licensed microfinance banks (MFBs), based on provisional data at end-June 2017, stood at N375.17 billion and represented 6.0 per cent increase over the level at end-December 2016. Similarly, paid-up capital and shareholdersâ&#x20AC;&#x2122; funds of MFBs increased by 1.0 per cent and 14.4 per cent to N63.50 billion and N91.24 billion at end of June 2017, respectively.

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Opinion Mismatch between power and identities weakens Nigeria GLOBAL PERSPECTIVES

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

rom the medieval times of Plato and Aristotle to the present day, there has been recognition of the causal relationship between political stability and sustainable development. Political stability is a critical precondition for economic and social progress. But at the heart of political stability is the relationship between power and identity. A mismatch between power and identity in any county would severely undermine its stability and progress. My argument is that there is acute misalignment between power and identities in Nigeria, which impedes its stability and progress. In this context, power is the ability of a government to direct the internal affairs of the state; the ability to raise and collect taxes, to maintain law and order, to ensure national harmony and social cohesion etc. Put simply, it’s the ability of the state to get its own way! Identity is about group characteristics that people attach to themselves. For instance, if push comes to shove and people must choose, which takes precedence: their ethnic or national identity? Now, power and identity are misaligned if, for instance, power lies at the centre and identities lie at the subnational levels. Several studies have established that when there is mismatch between power and identity, it’s difficult to turn power into authority. As Professor Paul Collier of Oxford University put it, “authority is where people chose to obey without a lot of effort, where compliance becomes semi-automatic”. But compliance won’t become semi-automatic when those required to be compliant don’t share identity with the people in power. There is indeed a major problem with voluntary compliance with authority in Nigeria. This is because of the big mismatch between power and identities, which is why the government can’t effortlessly stem ethnic tensions and militancy across the country. A related reason is the erosion of state legitimacy, which results from government failure and the fact that organisations, such as Boko Haram and the killer herdsmen have interests that are at variance with those of the Nigerian state. But it’s extremely dangerous when the state cannot

turn power into authority, because that often leads to one of three things. First, the state can repress people to force compliance. Second, if people push back, as they often do, there can be open conflict. And, third, the government can simply give up, resulting in a state of anarchy. All these three have happened in Nigeria. Last year, for instance, the federal government used military force, under so-called “Operation Python Dance”, to force compliance with its orders following militant agitations by the Indigenous People of Biafra (IPOB). Indeed, successive Nigerian governments have used repression to force compliance with authority. But people often pushed back, resulting in open conflict and the deaths of thousands of Nigerians. But there are also situations where the government simply gives up, creating a state of anarchy. For instance, the failure or refusal of the Buhari government to stop the incessant violent herder/ farmer clashes is clearly a surrender. The herdsmen repeatedly ignore the government’s orders to stop their killings and violence. Yet, perhaps out of share incompetence or duplicity, the government has done nothing. The result is an open theatre or a state of anarchy, with the criminal herders murdering farmers at will and with impunity. So, we know what could happen when there is mismatch between power and

move the structure of identities towards the structure of power. This, in other words, means building a shared national identity, where the people regardless of their ethnic identities define themselves primarily in terms of a common identity. However, this approach usually only succeeds when adopted at the birth of a nation rather than when separate identities have been fully formed and entrenched. It was the route followed by Julius Nyerere and Lee Kuan Yew in meshing together their respective countries, Tanzania and Singapore, despite the diverse ethnic identities in each country. As the founding president of a country, a medley of several tribes, arbitrarily put together by the colonialists, Nyerere was determined to create a common national identity. He introduced a common national language, Swahili; created a national curriculum that taught a common narrative history; changed the capital from Dar es Salam to Dodoma to bring it to middle of the country; and decreed that civil servants must not work in their ethnic areas. Lee Kuan Yew did similar things in Singapore. The result is that Tanzania and Singapore have a sense of common national identities and are peaceful, stable countries devoid of malign ethnic tensions. Of course, Nyerere’s socialist policies harmed Tanzania economically.

But it’s extremely dangerous when the state cannot turn power into authority, because that often leads to one of three things. First, the state can repress people to force compliance. Second, if people push back, as they often do, there can be open conflict. And, third, the government can simply give up, resulting in a state of anarchy identities, and when the state can’t turn power into authority: it is either repression or open conflict or theatre or all the three. And the above is just about security; there are many areas where the Nigerian government is struggling to secure voluntary compliance from the citizens. But no state can develop and make progress under such circumstances. Voluntary or semi-automatic compliance with authority is necessarily to achieve stability and progress. That’s why it is critically important that power and identity are aligned in any country so that power can be turned into authority. Which brings us the key question: how can this be done? Well, there are two approaches, supported by empirical evidence. The first is to

By contrast, Nigeria did not follow the Tanzanian or Singaporean model. At independence in 1960, Nigeria’s founding fathers owed primary allegiance to their ethnic groups, just as Jomo Kenyatta, Kenya’s founding father, did. Nigeria later tried to do some of what Nyerere did to promote national unity. For instance, it introduced the National Youth Service Corps, under which tertiary education graduates are required to serve for one year outside their ethnic areas; it also moved its capital from Lagos to Abuja to locate it in the middle of the country. But none of these has worked. Nigeria is as ethnically divided today as it was in 1960; it’s hard to see a common symbol that unite the disparate ethnic groups.

Of course, Nigeria is not Tanzania or Singapore. Nyerere and Lee Kuan Yew forged common identities with force; they operated a repressive one-party state. The United States is, however, a country that has managed to weave together a plethora of nationalities and ethnicities without force. But America was not constituted by people who defined themselves by ethnic characteristics rather by immigrants, who, arriving in the land, subordinated their original identities, Jewish, Irish, Spanish etc, to a common American identity, even though they still owe primordial allegiance to Israel, Ireland, Spain etc. Secondly, America’s federalism, which entrenches a real balance of power between the centre and the states and under which every nationality or ethnicity gets equal opportunities and fair material treatment, makes it easier to forge a sense of national identity. I mean, Barack Obama, a mixed-race from the tiny state of Hawaii, became President of the US! Whereas politics in Nigeria is a struggle by the different ethnic nationalities for or against domination. The truth, let’s face it, is that most multi-ethnic states cannot become like Tanzania or Singapore or America. Even in Britain, forged together 300 years ago in 1707, the British identity is still weaker than the people’s core identities of either English or Scottish or Welsh or Northern Irish. Why? Because the core identities were formed and entrenched a long time before Britain came together. The same is true of Nigeria: its proud and strong ethnic nationalities, Igbo, Yoruba, Hausa/Fulani etc, predate the cobbling together of the country by the British, which is, like Britain, the Nigerian identity is weaker than the underlying identities. Which brings me to the second approach to aligning power and identities, namely to move the structure of power towards the structure of identities. Basically, this means decentralisation or devolution of power. Radical decentralisation is the route followed by developed countries, such as Switzerland, Belgium and Canada, and by countless other multi-ethnic countries. This approach has guaranteed peace, stability and progress worldwide. Every nation must either move identity towards power, by building a common, centralised identity, or move power towards identity, through decentralisation; otherwise it’s chaos. Of course, Nigeria must build a shared identity, but radical decentralisation is its best way forward. Nigeria must move power significantly towards the locations of identities in the country by returning to regionalism. That’s the best way of aligning its mismatched power and identities and ensuring its stability and progress.

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Fascinating business facts

100m

CB Group, Kenya’s biggest bank by assets, will look at partnering with a local bank in Ethiopia, where a potential liberalisation of foreign investment rules could open up a market of 100 million people. KCB opened an office in Addis Ababa three years ago to be ready in the market when opportunities arise, Chief Executive Officer Joshua Oigara said in an interview. Currently there are restrictions in Ethiopia that bar foreign banks from making an investment.

$60m

wiss authorities have released around $60 million of funds seized in an investigation into the suspected laundering of money diverted from Angola’s sovereign wealth fund and its central bank, federal prosecutors said on Friday. Switzerland’s Office of the Attorney General (OAG) opened criminal proceedings in April in response to reports that assets held by the National Bank of Angola and the Fondo Soberano de Angola, the sovereign wealth fund, had been misappropriated. Prosecutors had said in May that authorities had raided several locations in Switzerland. “In these proceedings, which are still ongoing, the OAG initially froze around $210 million of assets.

ith the Federal Reserve still boosting interest rates and President Donald Trump still raising tariff threats, the bottom for emerging markets remains some way away, market players say. The selloffs in developingnation currencies and stocks are likely to continue in the second half of 2018, a survey of 20 investors, traders and strategists by Bloomberg shows.

12%

ondon’s biggest law firms have posted rises in profits this year and say they are prepared for Brexit due to their international structure and cross-border work. The big four “magic circle” firms make a large proportion of their revenues outside the U.K. and Europe and say that Brexit won’t significantly change their business plans. Freshfields and Clifford Chance posted profit increases of 12 percent or more, with Freshfields’ net income rising to 683 million pounds ($904 million), and Clifford Chance partnership profit rising to 626 million pounds. At Allen & Overy, profit growth slowed to 3 percent after a record last year, in part due to a stronger pound, while at Linklaters profit held steady at 676 million pounds. Revenues at all four firms stood at around 1.5 billion pounds.

95m

he first US government forecast incorporating the agricultural fallout from its trade war with China has come to a firm conclusion on soyabeans: China will import less, American farmers will lose business and Brazil will be a beneficiary. The US Department of Agriculture, in monthly supply and demand estimates published on Thursday, cut its forecast for China’s soyabean imports from 103m to 95m tonnes in the coming marketing year, reduced its outlook for US soyabean exports by nearly 11 per cent from 62.3m to 55.5m tonnes and raised its estimate of Brazilian exports from 73m to 75m tonnes, a record high

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