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Nigeria’s fiscal headache N goes from bad to worse
LOLADE AKINMURELE
As debt service could top 100% in Q2
igeria may be facing a deeper fiscal crisis than expected with data from the budget office showing that the Federal Government spent N99 of every N100 earned paying interest to creditors in the first quarter of 2020. The data show that while the Federal Government earned Continues on page 31
BusinessDay’s national discourse on Nigeria’s COVID-19 response begins today Page 31 Inside
L-R: Edward Imoedemhe, deputy company secretary, Dangote Cement plc; Aliko Dangote, chairman, Dangote Cement plc, and Michel Puchercos, group managing director/chief executive officer, Dangote Cement plc, at the 11th annual general meeting of Dangote Cement plc in Lagos, yesterday.
Dangote says it owns Obu-Okpella Mines P. 30
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Economics of Aviation - why and how airlines should be bailed out Tolu Odutola
C
ommercial aviation has always been dealt with shock owing to acts of terrorism and economic downturns, but in the wake of the coronavirus pandemic, airlines are facing unprecedented crisis, both regionally and internationally. According to McKinsey & Company, during one of their briefings on COVID-19, it was noted that out of 30 key industries, air and travel, and commercial aerospace would be most severely affected for the duration of the pandemic and its effects. Generation of revenue for airports is directly proportional to traffic travels, save for cargo flights handling essential services, many airlines have been grounded at 90 percent of their flight capacity. By February 2020, commercial flights were connecting more than 20,000 cities, a situation that rapidly dropped to 6,500 by end of March. This follows the bans and cancellations on flights, as countries continued to close their boundaries, one after another. Unfortunately for airports, while employees may take pay cuts or be sent on unpaid leaves, little can be done to save the operational costs of airport infrastructure, given terminals and runways cannot be closed or relocated. Even for essential services aircraft, the normal landing and taking off is interdependent on many other aviation players, including equipment and firefighters on site. Global communications, tourism and trade, are all compromised by the absence of air travel. And while the health crisis is purely limited to COVID-19, thousands of people are not able to travel for specialised medical care for other ailments. Comparative change in the number of
flights tracked for same date, exactly a year before With grounded fleets, airlines are quickly running down their cash reserves. Technically, airlines are being driven into bankruptcy, many of them substantially positioned to breach debt covenants. According to IATA, more than 25 million jobs have been jeopardised around the world, both in aviation and related sectors. By end of April, this figure was distributed in the following estimates: 11.2 million (Asia-Pacific), 5.6 million (Europe), 2.9 million (Latin America), 2.0 million (North America), 2.0 million (Africa), and 0.9 million (Middle East). At this point, it is difficult for anyone to confidently project the timelines for resumption of international aviation. This impact will largely be mitigated depending on how long the pandemic persists, the intensity of the outbreak in various jurisdictions, the measure put in place to contain the crisis, the prevailing economic conditions of both individuals and institutions, as well as the confidence level of consumers on
air travel. With increased operational costs and reduced demand, the general path to recovery may be slow. In solidarity with airlines and their staff, urgent intervention measures are necessary, not only for the short-term, but also mediumlong-term. This is because aviation and viruses are like oil and water – they don’t mix well. An ordinary day at an airport is characterised with queues of people, close contact, going through security checks, buying foodstuffs and drinks, duty free shopping, clearing at the customs, boarding and alighting from planes. The virus is also said to live on hard surfaces, including wood and metal, which are very common sites in airports. All this is bound to change when operations resume, and will definitely come at a cost. Consequently, it is inevitable that airlines must be bailed out, to reposition them to the crucial role they play in both national and global economy. With limited bank support, government intervention as a last resort lender, insurer and
owner, will definitely be the way to go. For instance, the Chinese airlines are mainly funded by government, something that has seen their share prices only drop as slightly above 10 percent, compared to majority of other international airlines, which have seen a drop in share prices by 50 percent. Reasonably so, many airline unions are lobbying for government subsidies and massive bailouts. Already, the US has extended a $2 trillion package to assist the aviation, $78 billion of which is meant for loans and payroll support for workers and airlines. Others include EURO 300 million for British Airways from the UK government, NOK 3 billion loan guarantee for Norwegian Air by the state, the South African Airways looking for ZAR21 billion, a $70 million funding for Kenya Airways, and N500 billion for Nigerian Airlines by the Central Bank. While there are many ways in which various stakeholders can save the aviation industry from the wrath of this pandemic, the following creative solutions could save the day: Loans be extended at preferential rates; Governments to offer grants and subsidies; Airports and Airlines to access secured financing; Loan repayments be deferred on mutual agreement; Banks to offer guarantees; Governments to offer guarantee on loans between airlines and foreign lending agencies; Governments to offer cheaper federal loans; Tax relief; Measures to support corporate bond market. The role of airlines in the post COVID-19 economic recovery cannot be overemphasised. As they continue to coordinate repatriation of thousands of various nationalities and move essential goods like medical supplies, the earlier governments and financial institutions come on board to rescue the industry, the faster tourism and manufacturing hubs will be connected, boosting trade in virtually all aspects. It is a win-win situation for airports, airlines and the government.
Now that the WTO has accepted Ngozi Okonjo-Iweala’s nomination
O
n June 9, 2020, the WTO communicated on its website that ‘Nigeria, on 9 June 2020, nominated Dr Ngozi Okonjo-Iweala for the post of WTO Director-General to succeed the current Director-General, Mr Roberto Azevêdo, who has announced he will step down on 31 August 2020.’ The WTO’s acceptance and announcement of Nigeria’s Okonjo-Iweala came in the face of days of frenzied media speculations following the initial communication by President Muhammad Buhari on June 4, 2020 of the Government’s choice nominee. Concerns were raised that Nigeria might have lost her slot for nominating a candidate given the closure on 30 November, 2019 of the window set by the African Union. Before pundits will restart another media spar on the correctness or otherwise of the WTO’s acceptance of Dr Okonjo-Iweala candidacy, let’s see what the WTO Procedures say regarding the nomination process. WTO Procedures In a letter by David Walker, Chairman of the WTO General Council, dated 20 May, 2020 and available on the Organisation’s website, on the ‘Appointment of the Next Director-General: Communication from Chairman of the General Council to Members’, he shared some of the milestones for the appointment process as set out in the WTO Procedures. Furthermore, Mr Walker clarified key administrative details relating to the nominations and provision of supporting information, viz: “The appointment process will start on Monday 8 June 2020. In line with the Procedures, Members shall have one month after the start of the appointment process to nominate candidates. i.e. from 8 June to 8 July 2020. All nominations and supporting information must be addressed to me, as Chairman of the General Council, and must be received by 8 July 2020 at cob in Geneva. In line with the Procedures, the nominations and supporting information will be distributed to Members as they are received. Nominations and supporting information should be addressed to:
Chairman of the General Council World Trade Organization - WTO 154 Rue de Lausanne 1211 Geneva 2 Switzerland.” It is imperative to understand that nowhere in the Procedures was it required that WTO member countries needed to first go through any regional bloc to submit nominations; or seek the endorsement of individual member countries to put out candidates for the position of the Organisation’s Director-General. It then beggars the question why it became an issue that Nigeria had risked the displeasure of some countries by an ostensible tardy submission of Dr Ngozi Okonjo-Iweala’s nomination on 4 June, or even 9 June 2020 when same was received and accepted by the WTO. Clearly, President Muhammadu Buhari acted in full compliance of the WTO Procedures in submitting Dr Okonjo-Iweala’s nomination; and well ahead of the schedule too, since the deadline is still four weeks away, 8 July 2020 precisely. But all that speculations are behind us for good now. What should now be of primary interest to Nigeria and her friends is how to seize the moment and leverage on the golden opportunity to ensure the election of the first African, first woman, the region’s finest, and the globally acclaimed Dr Ngozi Okonjo-Iweala as WTO next Director-General. Why Ngozi Okonjo-Iweala Two developments in the past 12 months will be of seismic importance for the next generations of the African continent: the realisation of the need to proactively manage catastrophes such as the COVID-19 pandemic and natural disasters and the start of the African Continental Free Trade Agreement (ACFTA). In terms of the former, the world has strongly put its weight behind one of Africa’s egalitarian daughters, Dr Ngozi OkonjoIweala. Through her leadership of the GAVI, the Vaccine Alliance, world leaders have pledged an additional US$ 8.8 billion far exceeding the target of US$ 7.4 billion. These significant sums will see over 300 million children immunised over the next five years, including the creation and distribution of the COVID vaccine; the largest investment in immunisation ever made by lower-income
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countries mostly in Africa. The success at GAVI sets the stage for the next challenge, ACFTA, the most ambitious trade zone project in the world. The brilliance of the African Union Heads of States requires a collective ambition matched with global clout and outstanding diplomatic skills. No other region has tried to weld 54 countries into a single market and eventually a full customs union. It also flies in the face of the waves of nationalism, protectionism and populism surging around the world. The execution of which requires the experience for such negotiations can be gleaned from Dr Okonjo-Iweala’s successful debt cancellation of 60% of Nigeria’s external debt ($18 billion) with the Paris Club. The debt deal also included an innovative buy-back mechanism that wiped out Nigeria’s Paris Club debt and reduced the country’s external indebtedness from $35 billion to $5 billion. More on this below. At the beginning of the year, while the United Kingdom was finally divorcing itself from the European Union, a group of almost twenty African heads of states were invited to London. The purpose of the visit was to cement the trading relationship between the two continents. Similar advancements have been made by the French, Chinese and Russians to name but a few. The battle for the hearts and minds of the continent is heating up. This highlights the fact that the global trade conversation has moved from the periphery for the continent. In that regard, a steady and recognisable hand is required to steer the global dialogue. Brains and Mettle The rationale for her candidacy is transparent. Ngozi Okonjo-Iweala is a global finance expert, an economist and international development professional with over 30 years of experience working in Asia, Africa, Europe, Latin America and North America. She is Chair of the Board of Gavi, the Vaccine Alliance. Since its creation in 2000, Gavi has immunized 760 million children globally and saved thirteen million lives. She sits on the Boards of Standard Chartered PLC and Twitter Inc.
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Adedapo David Adamolekun She was recently appointed as African Union (AU) Special Envoy to mobilise International financial support for the fight against COVID-19 and WHO Special Envoy for Access to COVID-19 Tools Accelerator. She is a skilled negotiator and has brokered numerous agreements which have produced win-win outcomes in negotiations. She is regarded as an effective consensus builder and an honest broker enjoying the trust and confidence of governments and other stakeholders. Previously, Dr. Okonjo-Iweala twice served as Nigeria’s Finance Minister (2003-2006 and 2011-2015) and briefly acted as Foreign Minister in 2006, the first woman to hold both positions. She distinguished herself by carrying out major reforms which improved the effectiveness of these two Ministries and the functioning of the government machinery. She had a 25-year career at the World Bank as a development economist, rising to the No. 2 position of Managing Director, Operations. As a development economist and Finance Minister, Dr Okonjo-Iweala steered her country through various reforms ranging from macroeconomic to trade, financial and real sector issues. Ngozi Okonjo-Iweala is a firm believer in the power of trade to lift developing countries out of poverty and assist them to achieve robust economic growth and sustainable development. As Finance Minister, she was involved in trade negotiations with other West African countries and contributed to the overhaul of Nigeria’s trade policy enabling it to enhance its competitiveness. She has closely followed developments at the WTO, as she believes that a strengthened multilateral trading system is in the interests of all countries, particularly least developed and African countries.
Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Adamolekun, writes from Geneva, Switzerland
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What is left of the legacies of men? (2) STRATEGY & POLICY
MA JOHNSON
W
hy the eleventh commandment should not stand in any civilised society. As support grows globally for the Black Lives Matter Movement following the death of George Floyd, statues representing either cultural or racial oppression in some cities are being pulled up. Following George Floyd’s death confederate statues are coming down in the USA. New Zealand’s city of Hamilton removes the statue of British Naval Officer accused of killing indigenous people of Maori Tribe in the 1860s. Demonstrator’s chant of “Cecil Rhodes must fall” is resonating in the UK as Oxford protesters call for the removal of the imperialist’s statue. As statues continue to fall globally, this writer remembers something that happened in the United States of America many years ago. The US Supreme Court allowed a ruling, compelling a small town in Indiana to remove a monument featuring the Ten Commandments in front of its city hall. Some theologians say it was a tragic mistake. One of them, James Kennedy,
argued intensely that he would have made sure that the Ten Commandments were posted in every courthouse in the USA- and not only in America but all over the world! To drive home his point, he said he would make sure they were posted in a prominent location in every public school. As if that was not sufficient, one former Alabama Chief Justice and District Attorney, Roy S. Moore, popularly referred to as ‘Ten Commandments Judge’ displayed what a scholar refers to as courage by placing a granite monument bearing the Ten Commandments in the rotunda of the state Supreme Court building. But his conviction was put to rest in the year 2003 when a federal judge ordered him to remove the monument. Moore refused to obey the court order, citing the obligation imposed on him by his oath of office, and he paid the price. Chief Justice Roy S. Moore was removed from office by a state judicial body who felt he was trying to operate the eleventh commandment- “do your worst.” He was accused of sexual misconduct by several underage girls as a Republican nominee in a US Senate Special election in Alabama in 2017. He lost the election because the electorate considered him not fit for office. His legacy failed! This writer was amazed when the report titled “Inside the Vatican Scandal over a London Property Investment” was served fresh and hot in the digital version of BusinessDay on 11 June 2020. The question that came to mind after reading the report was: Where is the balance between grace and law? After, this writer wondered if this was not a case of “We are saved by grace through faith, so we are free to do whatever we want.” You can only do whatever you want under grace when you are operating on the eleventh commandment- “please yourself.”
As this writer thought about the recent Vatican story, what kept resonating in his mind was the undercover story in the book written by David Yallop titled “In God’s Name: An Investigation into The Murder of Pope John Paul I.” When this writer goes through the alleged Vatican scandal over a London property investment, it reminds him of the scripture in Matthew 23:29: “It will be bad for you teachers of the law and you Pharisees! You are Hypocrites! You are like tombs that are painted white. Outside they look fine, but inside they are full of dead people’s bones and all kinds of filth.” Without prejudice, one can reason that church finances have always been an issue in most places of worship globally. One question that this writer often asks himself is: “Can you name one thing you could do that would please God more than obeying His commandments?” There has never been a response to that question-it is always met with silence. Just the same way no one answered Jesus Christ when He asked His disciples’ one question: “When the Son of Man comes, will he find faith on earth?” This writer trembles with fear of the Creator when he reads the scripture: “So the one who thinks he is standing firm should be careful not to fall.” (1 Corinthian 10:12). It is on earth that the late Burundi’s President, Pierre Nkurunziza allowed national elections in the heat of the COVID-19 pandemic. He was one of the numerous sons and daughters of Africa who never believed that the pandemic was a threat to humanity. Whether you believe it or not, one of the late President’s spokesman was quoted to have said that the country “signed a special covenant with God. Who will mock God? “Please do not be deceived: God is not mocked, for whatever one sows, will he also reap.” Galatians 6:7
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It is on earth that the late Burundi’s President, Pierre Nkurunziza allowed national elections in the heat of the COVID-19 pandemic. He was one of the numerous sons and daughters of Africa who never believed that the pandemic was a threat to humanity
Reports have it that the late Burundi President did well for his country initially. When the spirit of greed took charge of him, he was drunk with power to an extent that in 2015 he announced that he would run for third term. This plunged the country into chaos during which many people died. May God save Africa and Africans from tinpot dictators who want tenure elongation by changing the constitutions of their countries with the use of force. Reports show that those who lost their lives in Burundi were gruesomely murdered by the youth wing of the ruling party and security forces. In an article by one Ketty Nivyabandi titled “I cry, not for Nkurunziza, but for the lives He Broke,” one can read the following lamentation: “My tears, instead, are for the lives forever bruised and haunted by the pain his regime caused. I cry for the country we could have had these past five years; for the blood that could have been spared; for the memories families could have built together; for the amputated limbs of our young protestors; for the elderly who walked kilometres to end their lives in refugee camps; for the million little broken pieces many of us have become.....” So many Burundians flee into exile. After 15 years in office, the late Burundian President was due to step down reluctantly next August, but the man died. What a pity? Can we say boldly that the legacy of the late President has failed? Yes, he left a failed legacy. For leaders who do not want their statues to fall, they should build a powerful legacy that will stand the test of time. A legacy deeply rooted in the love for humanity. It takes a generation of committed leaders to build a nation. Thank you Johnson is an author and a retired naval engineer who has passion for African development and good governance
Has Nigeria’s oil fortunes been breeding billionaires at the expense of combating poverty?
A
s of 2016, Nigeria has five billionaires on the Forbes list. Their combined net worth was 8.5 percent of their country’s national income, the highest share since 2008. But as the number of these billionaires and their share of national wealth soars, so is their country’s poverty rate. In 2004 68.7 million Nigerians were living in poverty with zero number of billionaires in the country. By 2010 these figures have risen: the poor to 112.47 million and the number of billionaires from zero to two. That means, for every additional billionaire that is made into the Nigerian Forbes’s list, there are about 22 million Nigerians that slipped into poverty. Could these facts be a coincidence? That the cost of producing a Nigerian billionaire is the shoving of over 20 million into poverty? The official figures show that the poverty rate in Nigeria between 1980 and 2010 rose by 153.6 per cent (or 62.76 percent if $1.25 poverty line is used in 2005 PPP, i.e. accounting for purchasing power parity, that is equivalent to
approximately 353 Nigerian naira per person per day based on the January 2019 consumer price index – enough to buy a light lunch, two haircuts or half a gallon of gas in Nigeria, but not a Starbucks coffee in the United States). In 2010, 7 out of 10 Nigerians were considered poor by this standard. Three of these billionaires mentioned oil business as their main/only source of fortunes and one into telecom. Yet, the oil industry is not performing as expected, e.g. over 80 percent of gasoline (or petrol) consumed in the country is imported. This is in addition to sporadic supplies and queues at local pump stations. Damningly, internet services are not robust let alone the availability of broadband connections. The question: How do these billionaires make their profits? When the system (or the market environment is not operating efficiently, and the rules being rigged?) Or something is not adding up? This question reminds me of George www.businessday.ng
Stigler’s claim in “The Theory of Economic Regulation”: “that the state has one basic resource which in pure principle is not shared with even the mightiest of its citizens: the power to coerce”. The government uses this power to compel its subjects to pay taxes and follow rules. That power of coercion can be deployed in such a way as to help some individuals and industries at the expense of others. By trying to influence how the state uses its coercive authority, businesses seek to “buy” one or more of government’s four main products: subsidies; control over competitive entry; regulation of product substitutes or complements; and the fixing of prices.” It should, however, be noted that billionaires should not be against provided the economic rules of the game are not being rigged – using the heavy hand of the government in tipping the balance of the scale – in their favour. In a fairer society, when the pie gets bigger and the income of the richest increased, the level of inequality should not be rising fast. That means billionaires are
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Zuhumnan Dapel
getting richer not through rent-seeking but by contributing to expanding the size of the national pie. “It should, however, be noted that billionaires should not be against provided the economic rules of the game are not being rigged – using the heavy hand of the government in tipping the balance of the scale – in their favour. In a fairer society, when the pie gets bigger and the income of the richest increased, the level of inequality should not be rising fast. That means billionaires are getting richer not through rent-seeking but by contributing to expanding the size of the national pie.”
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Kenya Banks – Impact of interest rate cap law repeal
Rafiq Raji
M
y column this week presents an article I wrote for African Banker magazine in the first quarter of 2020 about the impact of the repeal of Kenya’s interest rate cap law. At the time, African countries had not started to implement COVID-instigated lockdowns. With extraordinary measures now in place by most of the continent’s central banks to break the fall of their respective economies owing to the pandemic, the following allows an objective reflection on the state of Kenyan banks without any COVID-related bias. Of course, forecasts and ratings have since been reviewed mostly to the downside. But with the benefit of hindsight, it is astonishing how sunny the year looked back then. In November 2019, about three years since Kenyan banks could only charge no more than 4 percent on the central bank’s benchmark rate (cap was instituted in September 2016) on loans to their customers, and after lamentations by key stakeholders
and huge losses by banks, Kenya’s parliament finally repealed the constraining law. Not long thereafter, in late November, the Central Bank of Kenya (CBK) cut its benchmark rate by 50 basis points to 8.5 percent, having been constrained to do so hitherto due to the distortionary effects of the rate cap. For instance, small and mediumsized enterprises (SMEs) were reportedly denied loans worth about 300 billion shillings, about 1 percent of GDP, during the period. Furthermore, credit extension to SMEs as a percentage of total bank loans fell to 15 percent in 2019 from about 25 percent before the cap was instituted. Events leading up to the scrapping of the cap were not without some drama. President Uhuru Kenyatta refused assent to the initial version of the “Finance Bill 2019” that would have allowed the cap to remain. The Kenyan government was itself under pressure from the International Monetary Fund (IMF), which conditioned an extension of its standby credit facility on the repeal of the law. With the cap now scrapped, quite naturally, Kenyan banks, and indeed the economy, are expected to perform better in 2020. How well, though? Stronger earnings and loan growth Charles Robertson, global chief economist & head of macro strategy at Renaissance Capital, says the “[effects of the rate cap repeal] will start to show up in 2020 consumption and investment data [and] definitely should support growth – and help to compensate for a tighter government budget.” George Mutua, managing director & chief representative officer, Kenya & East Africa at Societe Generale,
agrees. “Kenya’s GDP growth, projected between 5.5 to 6 percent in 2020, would be driven mainly by increased credit growth, after the removal of the interest rate cap, as banks lend more to the private sector”, Mutua says. However, “banks will need to monitor non-performing loans (NPLs) closely to ensure they don’t breach acceptable thresholds on the back of [this] increased lending”, Mutua adds. In December 2019, Fitch Ratings announced a positive 2020 outlook for Kenya’s banking sector, an upgrade from stable in 2019. The repeal of the loan rate cap in November 2019 is a major reason why, which Fitch believes “will allow banks to take control of their pricing policy and underwrite new business at rates more in line with borrowers’ risk profile.” Fitch also sees “improving credit conditions” enabling “banks to execute growth strategies.” In fact, Fitch expects over 10 percent loan growth in 2020, a continuation of the recovery in 2019. “Kenyan banks received a huge boost in November when the lending rate cap was repealed by the government”, Mahin Dissanayake, senior director, Europe, the Middle East & Africa (EMEA) banks at Fitch Ratings, explains further in January. “We believe it will increase earnings and profitability on the back of loan repricing and stronger loan growth, with credit flowing back to key sectors like micro, small and medium enterprises and consumers”, Fitch’s Dissanayake adds. In the same vein, Constantinos Kypreos, senior vice President, financial institutions, at Moody’s, says “removing the rate cap no longer constrains lending as banks are able to better price their risks without a rate cap”.
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Events leading up to the scrapping of the cap were not without some drama. President Uhuru Kenyatta refused assent to the initial version of the Finance Bill 2019 that would have allowed the cap to remain
“This will mean increased lending to segments of the economy that have had subdued growth and access to credit, primarily small and midsize enterprises”, Kypreos adds. However, Moody’s Kypreos says he does not expect lending rates or profitability to return to early-2016 levels (banks’ return on assets declined to 3.4 percent in 2018 from 3.6 percent in 2017 and 4.0 percent in 2016); “given the authorities’ and banks’ focus on maintaining a low cost of credit”. Still, “Kenyan banks’ profitability will benefit slightly from loan and business growth [and] higher lending rates will increase net interest income, reversing the recent years’ trend of declining income and margins”, Moody’s Kypreos says. Fitch’s Dissanayake shares a similar view. “Margins and earnings are unlikely to return to pre-cap levels”, Dissanayake says. “This is partly because banks have indicated that they might limit any increase in the cost of credit to customers and partly because the policy rate is 1.5 percentage points lower than [the] pre-cap [level]”, Dissanayake adds. But “the full/positive impact on profitability will be felt only over time.” “In addition, since it was introduced, banks have successfully grown non-interest revenues to compensate for lower margins.” Dissanayake says he believes “private sector loan growth will rise by around 10 percent in 2020.” An edited version was published in the Q1 2020 issue of African Banker magazine “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”
The new normal – digital transfers and remittance in Nigeria
T
he coronavirus pandemic has, in no small way, affected many economies and industries across the world. It has also triggered a massive behavioural change amongst people, from how we interact with colleagues, friends and family to how we function in general. The impact is also witnessed across the financial services industry, causing a necessary and rapid adjustment in the way we send and receive money. Many experts predict that these changes will result in a new normal that will persist beyond the end of the pandemic and specifically, could mark the end of physical cash payments due to hygiene concerns. Studies have revealed that the materials that make up most banknotes provide the perfect environment for microbes to settle. Further findings identified the presence of harmful bacteria on banknotes including two life-threatening bacteria which have been linked to superbugs resistant to antibiotics. Research conducted by the London Metropolitan University in the UK showed that pathogens would survive on banknotes for up to 17 days. The World Health Organization (WHO) has suggested that people can get infected with the coronavirus through banknotes without observing proper hygiene, therefore it is widely agreed that at this time payments via digital money transfers are safer options. Governments across the world have implemented different measures including restriction of movement, gatherings as well as encouraging citizens to adopt alternative
money transfer channels. In an interview with the News Agency of Nigeria (NAN), the Director of Corporate Communications at the Central Bank of Nigeria (CBN) advised Nigerians to adopt alternative payment channels such as electronic and digital money transfer methods while limiting the use of cash as much as possible. To this effect, banks have begun to intensify digital operations in lieu of traditional channels, rapidly increasing their stake in FinTech while many businesses have begun to encourage customers to conduct transactions through available digital platforms. Elsewhere across the world, South Korea’s Central Bank took out of circulation all banknotes for two weeks to restrict the spread of the virus while deep cleaning banknotes at high temperatures and ultraviolet light. The British Retail Consortium announced that the contactless payment limits have increased from GBP 30 to GBP 45 and is now being implemented by its members. Prior to the spread of the virus, governments in Africa had introduced measures and policies to increase the use of digital money transfer technology. In Nigeria, the CBN announced in September 2019 that its cashless policy will take effect on April 1 2020. This amongst other policies will only continue to encourage users to embrace digital transaction channels and increase the number of financially included adults in the country. Development partners including the Bill and Melinda Gates Foundation and the African Development Bank (AFDB) have
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also been supporting electronic and digital financial inclusion across Nigeria and the rest of Africa. AFDB launched its Digital Financial Inclusion Facility last year with the intention of boosting digital financial inclusion across the continent. Digital services are having a transformative impact on low-income households, as they provide a path to greater financial security and prosperity. We have continued to see an increase in digital transfers, as social distancing measures are encouraging people to use digital transfer methods - mobile money, bank transfer and digital airtime top-ups. This method is cost-effective, saving money that can potentially be added to what the recipient receives, convenient for both sender and receiver and provides a safe and hygienic alternative to carrying physical cash. The GSM Association’s (GSMA) 2019 report indicates that mobile money use in Africa already showed strong growth indices. The continent’s mobile money accounts had exceeded $1 billion, with West Africa leading the charge. Deposit Money Banks (DMBs) also recorded a rise in e-payment earnings in Nigeria during the same period, which was also estimated to increase. These are all indicative of the substantial potential for growth in the industry even as COVID-19 cause people to explore digital payment channels. No doubt, remittances have contributed significantly to Nigeria’s Gross Domestic Product (GDP) and has served as a source of income for many to support household,
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Gbenga Okejimi
education and health bills amongst others. It is therefore important that this flow is not disrupted significantly. There is no better time than now to increase the awareness of these digital channels and encourage people to utilize them. Financial services and digital remittance organisations have continued to provide support to the digital transfer advocacy movement by offering different ways for friends and family to send money to loved ones across different borders. Whilst the coronavirus pandemic has led to the era of social distancing, it has also increased awareness about the many advantages of digital technology. As ever, we encourage Nigerians to continue to follow government advice and guidelines from the World Health Organisation (WHO) whilst observing safety measures including keeping mobile devices clean. Okejimi is Nigeria Country Director of WorldRemit. He has over a decade of experience in the money transfer business.
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BUSINESS DAY
EDITORIAL Publisher/Editor-in-chief
Frank Aigbogun
Nigeria COVID-19 daily count not league table Trust deficit, under-testing ridicule reality of spread
editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)
Bashir Ibrahim Hassan
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he consistent daily surge in Nigeria’s COVID-19 patients is very worrisome and should provoke proactive measures to contain the spread of the deadly virus. These numbers should not be treated like a “league table” with the Nigerian states competing with Lagos, the hotspot of the contagion. The pandemic is a public health and socioeconomic crisis, a threatening situation which needs urgent solutions. How individuals and governments interpret and act upon the numbers reported daily by the Nigeria Centre for Disease Control (NCDC) will not only help us stay safe but will ultimately be necessary to end the coronavirus pandemic. The coronavirus numbers being reported are not reflective of the facts on ground – but they are the best we’ve got. We believe these numbers do not reflect the Nigerian reality given our very low testing capacity. As at the 13th of June, the NCDC had conducted only
92,924 sample tests which account for a meagre 0.04 percent of a population estimated at 200 million. Meanwhile, Nigeria reported 501 patients with Lagos accounting for 39 percent. Total confirmed patients is 15,682 of which 10,174 are receiving care, 5,101 have been discharged and 407 have died. Just like much about the disease remains unknown, it’s striking that the proportion of patients whose exposure to it is unknown (74%), as against contacts (24%) and travel history (2%). This shows community transmission of the disease is full blown and there could be more as lockdown measures are eased gradually by the federal and state governments. The NCDC is behind its 3000 daily testing targets. Meanwhile, the Nigerian federal government has set a target of testing two million people in the next three months. To achieve this, the NCDC must conduct at least 22,000 tests daily. Also, Nigeria lags peers like South Africa which has now tested over 178,000 people, according to Worldometer, a website which
tracks real-time statistics. Meanwhile states like Kogi and Cross River have refused to conduct tests, while others are being clever with the extent of the spread of the disease. Besides, people can be infected with the disease without showing any symptoms, the so-called asymptomatic. In some cases, those who show symptoms refuse to get tested out of the fear of being stigmatised. Nigerians believe these figures are exaggerated. Some also say, the virus is non-existent but a ploy by the government to squander funds. Either way, Nigerians do not trust the government. If there was ever a time when we needed clear and reliable data, it’s now. Although no single dataset exactly represents the reality on the ground. Every day, thousands of healthcare workers, government agencies and researchers are collecting, processing and sharing what they know about the virus. The goal is to gather the most reliable data that can help people understand the outbreak as it evolves.
At current testing capacity, Nigeria is nowhere close to the COVID-19 reality and may hinder adequate and proactive planning to curb its spread. The federal government must be committed to improve investment in boosting the testing capacity of the NCDC. Viruses, including COVID-19, tend to spread at an exponential rate, which means they multiply really quickly. On March 6, the world had 100,000 confirmed cases, one month later there were one million confirmed cases. Given the lackadaisical attitude of most Nigerians to stay protected and the poor state of the Nigerian healthcare system, only improved testing capacity will reveal the true extent of the spread and inform preventive measures. According to the World Health Organisation, African countries risk prolonged years of battling the COVID-19 pandemic due to poor healthcare systems. Nigeria’s daily coronavirus counts will become meaningless and treated like a league table if the healthcare system, starting with testing capacity, isn’t improved.
GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu HEAD, HUMAN RESOURCES Adeola Obisesan
EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong
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Tuesday 16 June 2020
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Bayelsa promises cordial relationship with corporates
Obaseki’s reforms: Edo Poly wins Canadian’s grant for gender, STEAM research
… as SPDC donates medical equipment to state
do State Polytechnic, Usen, has won a research grant for an explorative research programme aimed to advance gender equality in Science, Technology, Engineering, the Arts and Mathematics (STEAM). The programme is funded by Canada’s International Development Research Centre (IDRC) and is to be implemented in collaboration with Carleton University in conjunction with multidisciplinary experts in Canada and the Edo State Polytechnic. Rector of the polytechnic, Abiodun Falodun, a professor, who disclosed this in an interview with journalists in Benin City, said the institution’s Centre for Gender Studies and Women Development was established as an academic research unit to advance studies in gender mainstreaming, women em-
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ayelsa State governor, Douye Diri, has pledged his administration’s resolve to cement existing cordial relationship with well-meaning corporate organisations to foster peace, stability and sustainable development. Diri made the pledge on Monday during a courtesy visit of Osagie Okunbor, managing director of Shell Petroleum Development Company and country chair, Shell Companies in Nigeria, represented by Igo Weli, external relations manager, Shell Nigeria, to Government House, Yenagoa. Diri’s acting chief press secretary, Daniel Alabrah, quoted the governor as having expressed gratitude to Shell for sustaining the long-standing relationship with the state that hds blossomed over the years. Diri, who described SPDC and its joint venture partners as strategic partners in the development and progress of the Niger Delta states, stressed the need to continually nurture such relationship to improve the living conditions of the people. “The essence of government is the security of lives and this includes safeguarding the health of the people to whom it is accountable. As a new government, this kind of relationship should blossom. “The history of Bayelsa can-
not be complete without mentioning Shell in and around the state. It was in Bayelsa that Shell first struck oil in commercial quantity at Oloibiri. So the history and story about Shell in Nigeria is tied to Bayelsa. “Crude oil has been the mainstay of our economy, which has immensely profited multinational oil companies but Bayelsa has not been fairly treated. “Our government is, however, prepared to work closely with all corporate bodies that are committed to the welfare and development of our people,” he said. The governor lauded the SPDC for identifying with the state government’s untiring efforts in tackling the COVID-19 pandemic. In his remarks, Igo Weli highlighted a number of medical equipment targeted at enhancing the testing for COVID-19 in the state. They include a compatible PCR machine, extraction kits for 1,000 tests, intensive care unit ambulance, 16 KVA electricity generator, suction machines, infra-red thermometers and other critical equipment to operationalise the state’s isolation centre. Others are 10 critical care hospital beds and mattresses, respiratory nebulisers, hospital grade oxygen cylinders, face masks and hand sanitizers.
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powerment, girl-child education, among others. According to Falodun, “We are elated that the Centre for Gender Studies and Women Development has just attracted this grant to the school. This is a result of our focus on equipping our people with the right skills for grants seeking to expand the resource base for us to conduct impact research as an institution. “The Edo State Government was quite clear when it gave us a mandate to make this school an international resource centre for research and development. This grant, which extends our academic reach to researchers and resources in Canada and other Low- and Middle-Income Countries (LMIC), is a major boost. We expect more of such grants in the coming months.”
Relief coming to Lagos ports as 5,000 vehicles expected in PH port monthly when ports fully resume … as RoRo system soon to start in PH Ignatius Chukwu
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he chaos at ports in Lagos State may reduce drastically as over 5,000 vehicles in varies vessels would come over to Port Harcourt port as soon as full operations resume in no distant time. This was disclosed Monday, when the newly posted Commissioner of Police Eastern Port Command, Tami Evelyn Peterside, paid a familiarisation visit to the comptroller of Area One Port, Awwal Baba Mohammed. The command seems to be in high spirit to begin clearing vehicles from Eastern ports, something that has not been done since the end of the civil war, and the comptroller said his men were ready to ensure efficient and quick clearing operations. Mohammed assured that by September 2020, when the ports
would be in full operation again, the vehicles would start to arrive from Lagos to Port Harcourt in Rivers State. This move is expected to reduce traffic jam and chaos on Apapa Port. According to Mohammed, the plan to divert vehicles to Port Harcourt came as latest measure to decongest Lagos ports, as the Command is ready to carry out quick clearing. He mentioned some of the measures being used to reduce tension in Eastern ports and tune the Customs personnel to be of sound mind and in professional mood at all times. On staff welfare, he promised to reactivate the social activities in the officers’ mess where personnel of all security agencies can come and unwind and recreate so as to build greater bond and create rapport as well as ease tension after hectic hours.
PAC Foundation supports frontline workers
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n a bid to support frontline workers as the lockdown eases, PAC Foundation, as part of its Covid-19 intervention, has distributed branded face masks to divisions of the Nigeria Police Force in the Etiosa Local Government Area of Lagos State. Recipients include the Victoria Island Division and
Ikoyi Headquarters Division. While handing over the face masks, Michael Ebbi, ag. executive secretary of the Foundation, reiterated on the need to encourage frontline workers like the Police through gestures of this nature. He also applauded other NGOs and private organisations for rising
to the occasion in combating the pandemic. This is one of many interventions being delivered by the Foundation, Ebbi noted. CSP Isah Lawal of the Victoria Island division, while receiving the face masks in his office, thanked PAC Foundation for the gesture, stating that
such contributions go a long way in the delivery of community policing. PAC Foundation, launched in 2019, focuses on health, education, environment and economic empowerment. It is the Corporate Social Responsibility (CSR) expression of Pan African Capital Holdings.
NOGASA rolls out operations in South West ... reiterates readiness to sanitise Nigeria oil, gas sector
SEYI JOHN SALAU
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atural Oil and Gas Suppliers Association of Nigeria (NOGASA), has rolled out the Lagos Zone (South West) operations. The roll out, which marked the commencement of its South West operations, took place at Sagamu Industrial Area Unit in Ogun State, on June 12, and was led by Philips Yemi Fatuyi, the Lagos Zonal chairman, NOGASA. To ensure smooth takeoff, Fatuyi also unveiled the NOGASA Trustway Bill and Supplier Trust Receipt, which would be issued at industrial area units to help checkmate sharp practices and promote efficient delivery of products to the end users. “We formed this association to maintain the integrity of members through flushing out of bad eggs and making sure there are no irregularities. We are tired of complaints of low quality, scarcity of petroleum products and stories of diversion of products to neighbouring countries,” the zonal chairman explained. Fatuyi further reiterated the readiness of NOGASA to sanitise Nigeria’s oil and gas sector by working to ensure and support government’s effort at stopping vandalism of pipelines and promote transparency along the supply value-chain of the oil and gas sector.
Als o sp eaking at the event, Abimbola Okuneye, chairman, Ogun State chapter of NOGASA, said with the commencement of its operation in the state, NOGASA would work to prevent all forms of products adulteration and ensure members buy petroleum products from government approved depots nationwide. According to Okuneye, NOGASA would collaborate with various security agencies to stop activities of pipeline vandalism. “As part of our objectives, we shall work against every form of fraud and malpractices in the oil and gas sector. We shall also protect the interest of all our members so as to ensure quality service to the final consumers,” said Okuneye. The flag-off ceremony was also witnessed by Benneth Korie, national president, NOGASA, who was represented by Adebayo Bello, national vice president, South West, and other state chairmen in the South West Zone comprising; Osun, Ekiti, Lagos, Oyo and Kwara states. In his remarks, Korie decried the increasing rate of adulterated petroleum products in the country, and pledged the cooperation of the association to always source products from oil depots that are duly licensed by the Department of Petroleum Resources (DPR). Another highlight of the flagg-off was the commissioning of three industrial unit offices in Sagamu, Ogere and Mosimi depot by Fatuyi. www.businessday.ng
L-R: Peter Olumuji, field coordinator, FCT Covid-19 Taskforce; Kaka Bello, head of operations, FCT Covid-19 Taskforce, and Attah Ikahro, chairman, FCT Covid-19 Taskforce, at the Drive-In Concert “Naira Marley Live at Jabi Mall during the sealed off of Jabi Mall for violating the regulation of Covid-19 and social distancing in Abuja. Pic by Tunde Adeniyi
NECA, labour agree on terms to sustain businesses, save jobs post COVID-19 JOSHUA BASSEY
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n what is seen as positive development in employers/employees’ relationship, the organised private sector (OPS) and labour have agreed to work in sync towards business sustainability and job security as the nation’s economy continues to grapple with the impact of COVID-19. A memorandum of understanding (MoU) signed in Abuja on Monday between the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), and Nigeria Employers’ Consultative Association (NECA) seen by BusinessDay, agreed that going forward,
there shall be no disruptions of businesses by labour while employers on their part would consult among themselves on any issue to avoid job losses going forward. This, the parties said, will guarantee business continuity and job security in post COVID-19 as the economy gradually re-opens. The MoU witnessed by Dennis Zulu, director, International Labour Organisation (ILO), Abuja office, was signed on behalf of the OPS by Timothy Olawale, directorgeneral of NECA, as well as Ayuba Wabba, president of the NLC, and Quadri Olaleye, president of the TUC.
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The parties in the MoU agreed to work together for a collective understanding of the impact of COVID-19 on the health of employees and companies. And in doing so, identify joint actions and initiatives aimed at limiting the deterioration of economic activities and creating the conditions for a viable post COVID-19 rebound of businesses and avoid disaster in terms of employment. They also agreed to jointly prevail on the government to provide necessary economic stimulus packages to businesses, particularly, in the most hit sectors: aviation, hospitality, tourism, manu@Businessdayng
facturing and transportation. They further agreed to initiate joint reflections, accompanied by proposals on strategies for creating and developing employment in Nigeria for onward presentation to the government. The social partners also agreed to work together to prevent further loss of jobs in the private sector by engaging companies in a bid to get them to adopt more humane options, provided that, such engagement would be in tandem with social dialogue principles, respect for rights of each parties and in conformity with labour standard practices
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How socially-led innovation can bring positive change in unchartered times Muhammad Nabil
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here is an old and somewhat overused saying attributed to Winston Churchill that is nevertheless appropriate in these uncertain times: never let a good crisis go to waste. A global pandemic certainly qualifies as a crisis, but what good can we generate from this exceptional challenge? In my work with Microsoft 4Afrika, I have had a front row seat to the innovation and creativity many African startups have employed to address pressing economic and social gaps and needs. Whether it is using agri-tech to improve farmer crop yields, using technology to deliver finance solutions to the previously unbanked or pairing solar power and IoT to solve power reliability issues, African innovation is alive and thriving, and the Covid-19 pandemic has only fanned these flames of ingenuity. Crisis drives socially-drive innovation As the Covid-19 pandemic continues to unfold, it’s been inspiring to support and work with startups who are adapting their businesses and creating new platforms to support relief efforts. We offer technical and business support to startups, hackathons and ideation sessions hosted by our partners, and work with partners throughout Africa to help them adapt and develop their solutions to address the current situation. In Egypt, the local angel investor network Cairo Angels ‘We’ve got your back’ campaign has helped one startup develop a platform that connects vulnerable elderly people with volunteers who do their shopping and run errands for them, while a three-day Wild Card hackathon Microsoft 4Afrika supported saw SMEs and startups participating head to head to develop response systems designed to deliver social relief for those suffering Covid-19 disruptions. In South Africa, Zindi, the first data science competition platform in Africa, has rolled out a series of weekend hackathons to a data science ecosystem of engineers, scientists, academics, companies, NGOs and institutions, targeting a set of Covid-19-related datasets. And #Africa Vs Virus, an African Development Bank Ideathon supported by Microsoft, addressed challenges presented by the Covid-19 pandemic. We’re also looking at other ways to support entrepreneurship and innovation at this time. Our partnership with the Cairo Angels Investment Readiness Programme will see us introduce five of our partner startups across Africa to Cairo Angels, with the aim of matching them to investors for long-term gains. We’ll also be matching startups and providing mentorship through the Gemini Uplift Initiative, which aims to help startups maintain operational continuity and financial sustainability through three tracks, money, matching and mentorship, linked to the UN Sustainable Development Goals. We’ll continue to explore new ways to support social enterprise startups and hopefully ensure their success and sustainability. What the Covid-19 pandemic has highlighted is that unusual times require an unusual response, and it can’t be business as usual. It’s clear that as we move into uncharted territory, we need a new approach, not only for how we live our lives, socialise and move around, but also for how we
approach business. In Africa there is a prime opportunity for the continent’s business economy to race towards social entrepreneurship. An agile and dynamic business ecosystem is a vital trigger for effective social enterprise. Enterprise for good Social entrepreneurs identify issues and uplift those communities most vulnerable to the effects of disruption. Driven by the desire to identify and address the inequalities of the day, these entrepreneurs are well-placed to fill the gaps between government and the markets to promote a more sustainable and inclusive economy in times of crisis and beyond. Earlier this year, Microsoft announced its intention to support social entrepreneurship through its Global Social Entrepreneurship Programme. Social entrepreneurship bridges the gap between what society needs, and what business needs in the form of profits. Our Global Social Entrepreneurship Programme recognises these entrepreneurs who are purposefully contributing to positive change in their communities. Inspired by the commitment of social entrepreneurs, the programme actively seeks to support startups with diverse perspectives and backgrounds across a variety of impact sectors. And we’re not alone in our belief that social entrepreneurship needs nurturing. In January 2020, the World Economic Forum, during its 50th Annual Meeting, called for businesses to adopt the concept of stakeholder capitalism to overcome income inequality, societal division and the climate crisis. It’s simple – we have to move away from shareholder capitalism if we hope to equitably address the concerns that threaten our planet. Neither is this a new concept – the Davos Manifesto of 1973 set out for the first time the stakeholder concept that businesses should serve the interests of society rather than simply their shareholders, and the Davos Manifesto 2020 builds on that, providing a vision for stakeholder capitalism that touches on a range of important issues of our time. Leveraging power of social entrepreneurship This work is already happening with startups that are creating new businesses, built around powerful technologies, and designed to make the world a better place. Upepo Technology in Kenya is one such example, a firm that develops IoT (Internet of Things) solutions for the country’s water sector. The company partners with utilities to deploy smart water metering devices that provide real-time monitoring of water infrastructure, moving towards a more holistic view of water consumption in Kenya, with the ultimate goal of providing access to water for people across the country. ICE Commercial Power in Nigeria is another – the company deploys modular, cloud-connected solar power systems (called microgrids) to provide clean, reliable electricity to small businesses. To achieve this strategy at scale, ICE incorporates strong community engagement in target communities by training and employing local youth to participate in the development of their communities. The ICE strategy delivers sustainable impact and job creation in communities that need it most. Muhammad Nabil is head of Partners & Startups Development at Microsoft 4Afrika www.businessday.ng
FG, stakeholders differ on Nigeria’s housing deficit figures CHUKA UROKO
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he Federal Government and stakeholders in the housing sector of the Nigerian economy have differed sharply and significantly over the figures put across as the size of the housing deficit in Nigeria. While developers, investors, analysts and sundry stakeholders say the country has a wide housing demand-supply gap estimated at 17 million units, citing World Bank and United Nations report, the Federal Government is of the view that the figures do not exist anywhere. This controversy explains partly why housing delivery, especially for low income earners, is not of top priority for government and even private developers who target the up market that is already saturated. Babatunde Fashola, Nigeria’s minister for works and housing, says he is at a loss where the deficit which, according to him, is un-clarified, unverified and unproven, is coming from. “The last time Nigeria held its census was 2006. Since then, we have not held another. Then, where did we get this figure?
Where did we get the 17 million housing deficit?” Fashola wondered, adding, “Some people say it is from the World Bank. I have asked the World Bank and they have disowned that figure, saying it did not come from them.” Continuing, the minister explained, “My understanding of housing deficit is that it is largely an urban problem—people migrating to the cities. If you go to the rural areas, you will see houses owned by people living in the cities. These houses are locked up. We cannot be talking about housing shortage when we have many houses that are empty.” But the stakeholders object to the minister’s reasoning, insisting that, as at today, the United Nations and the World Bank have some facts about the housing deficit in Nigeria. “Presently, Nigeria is estimated to be 200 million in population and the number of houses being built is far below the population growth in all ramifications,” notes Africahousingnews.com, an affordable housing advocacy platform in Nigeria. The housing advocacy group says, should the government be doubtful about the international agencies’ figures in spite of the
bare truth of homelessness of millions of Nigerians, it will be a welcome arrangement for the government to engage the World Bank that has served us these projected figures of the housing deficit to know how they arrived at the figure. “We also recommend that an independent survey on the available housing deficit should be commenced by the Federal Ministry of Housing to ascertain a more realistic figure,” the group said in statement obtained by BusinessDay in Lagos. The group recalled that when Leilana Fartha, UN Special Rapporteur on the Rights to Adequate Housing, visited the country recently, she came up with her own information on the number of unoccupied houses in Nigeria’s major cities and reasons many were homeless, pointing to the fact that the houses being built were not adding value to the system. “It is not rocket science for the federal government to know by now that the population of the country is increasing geometrically while the houses being built are far below the level of estimated progression,” the group noted.
Similarly, the Nigerian building and roads research institute (NBRRI) says the country has housing deficit more than the stated figure, citing findings by Worldometer, 2017, which noted that from 2012 to 2018, Nigeria’s population increased from 168,240,403 to 191,835,936, showing a significant addition of 23,595,533 people to the population. “The housing deficiency has, therefore, climbed and is likely to worsen in the nearest future if urgent steps are not taken by the government in conjunction with all stakeholders to address the problem”, an official of the institute, said at a forum in Abuja. Erejuwa Gbadebo, an architect and estate manager, told BusinessDay in an interview that Nigeria needed dependable data on its housing sector. “One of the biggest problems that we have is lack of data. People still quote 17 million units because there is no other data to prove or disprove it. “We talk of homes demolished, burnt or new ones built, but the question is who is taking record of the number of houses that are being built and the ones we are losing?”, she queried.
Godwin Obaseki (r), governor, Edo State (APC), with Udom Emmanuel, governor, Akwa Ibom State (PDP), after a meeting at the Government House, Uyo. APC screening committee had on Friday disqualified Obaseki, from participating in the primary election of the party for the forthcoming governorship poll in Edo.
FG steps up action against rape, as 799 arrested from 717 cases - IGP Tony Ailemen, Abuja
...blames COVID-19, ritualists for escalating rape
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affairs, Pauline Tallen, to FEC for approval, following the outrage that has greeted the high cases of rape and gender-based violence in the country as a result of lockdown necessitated by the outbreak of coronavirus (COVID-19). The IGP blamed rape cases on the lockdown occasioned by the global coronavirus pandemic. “The Nigeria police so far from January-May 2020, have recorded about 717 rape incidents that were reported across the country, about 799 suspects have been arrested, 631 cases conclusively investigated and charged to court and 52 cases are left and under investigation. “It has come to the public knowledge now that because of the COVID-19 restrictions, we have surge in cases of rape and gender-based violence. “These are cases that are now coming up but we want to
nspector General of Police (IGP), Mohammed Adamu, on Monday, said Federal Government was stepping up action against rape, as Police arrested 799 culprits from 717 reported cases. Adamu stated this while speaking with State House correspondents after briefing President Muhammmadu Buhari on the increasing rate of sexual and gender-based violence, particularly in Nigeria. The Federal Government had at last week’s meeting of the Federal Executive Council (FEC), said it would take action to deal with rape cases including domestication of the Violence Against Persons Prohibition Act (VAPPA) of 2015, in all the 36 states of the federation in order to ensure rapists face deserved punishment for their actions. The action arose from a memo from minister of women
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let members of the public know that, rape and gender-based violence has been there. The law enforcement agents have been dealing with these cases. In most cases, members of the public are not aware of the actions that the law enforcement agents have been taking.” The increase in rape cases, the police chief said, had increased interagency collaboration between the police and other security agencies, including nongovernmental organisations. “We want to see to it that these cases of rape and gender-based violence are dealt with,” he said. He noted, “NGOs and CSOs that have the capacity to deal with this kind of offenses have been cooperating with law enforcement agencies in capacity building, management of victims of rape and similar offenses and procedures for collecting evidence, towards successful pros@Businessdayng
ecution.” According to Adamu, the “government has taken the matter to another level now because of the scourge we have noticed.” He appealed to Nigerians that had come across any victim of sexual offenses or rape or genderbased violence to quickly report to the law enforcement agents, “Because, keeping it without reporting it will give room for the perpetrators to continue to commitment the offenses.” “It is a very wicked offense, it is a very serious offense, it is very wicked of an individual to engage in rape or defilement. “And there are a lot of causes, some are doing it for ritual purposes, some are doing it because they are within the family and they see the victims and have the urge to go into it and do it. But such people should not be allowed to go scot free.
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The ‘New Normal’: The Nigerian COVID-19 Response and What Our Post-Lockdown Society Should Look Like Occasional Paper 01
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he unprecedented global COVID-19 pandemic is changing the face of human society and its systems, from healthcare to education, consumption patterns, the world of work, value systems, political regimes and legal systems. The condition was first reported in Nigeria in February 2020, and within a few weeks of its onset, we had entered the community transmission phase. Today, there are more than 16,000 confirmed cases of COVID-19 across 35 States and the FCT, and over 400 deaths and counting. How Nigeria recovers from the effects of the infection will depend on the innovations we are willing to introduce and the reforms we are committed to implementing in the various sectors of our society. Our considerations: A. Assessing the initial national response and the transition to intelligent lockdowns As the infection started to take its toll and the number of new cases and deaths increased globally and across the country, the Federal Government and several States implemented total lockdown policies in order to isolate people from the virus, as was the practice in most other countries at the beginning of the pandemic. This essentially entailed closing our national borders to international travellers, closing all government offices, schools, businesses, religious and worship centres and suspending large social gatherings. Only a few essential services were exempted. This was accompanied by testing of symptomatic patients; isolation and treatment of confirmed cases; tracing and quarantining of suspected cases. There was also enhanced public education on the need for social distancing and the adoption of good hygiene practices by all citizens using a variety of traditional, electronic, print and social media channels. The lockdown policy went on for weeks across the country, despite challenges and breaches and with several extensions of the initially announced duration. However, as the pain of a national lockdown grew intolerable, especially on the part of the least well-off, and coupled with rising insecurity of lives and property occasioned by the activities of miscreants who could not earn a daily living, a new consensus gradually emerged which held that managing, rather than defeating the disease would be a more realistic option. This heralded the era of intelligent/partial/eased lockdowns. In the first phase of the partial lockdown that lasted 4 weeks, several sectors of the economy were advised to reopen under strict guidelines (use of cloth face coverings in public, physical distancing, frequent hand washing/use of alcohol-based hand sanitisers, cough etiquette promotion, enforcement of overnight curfews and ban of interstate travel), with a view to holding all the gains of the periods of prolonged lockdowns. These included the banking sector, small and medium scale businesses, public transportation, some government offices and local/neighbourhood markets. Business hours were restricted, and overnight curfews were enforced between the hours of 8pm and 6am. However, schools at all levels, places of worship, night clubs, cinemas, party arenas and large markets remain closed. Despite a daily announcement of new cases by NCDC and a rising death toll from COVID- 19, in early June 2020, the Federal Government introduced the second phase of the national containment strategy. This would involve a cautious and progressive easing of the lockdown across the Federation over another 4 weeks, with a stronger focus on high- burdened local government areas within identified States. The goal of this phase was to gradually restore economic activities across the country to protect livelihoods, whilst balancing public health considerations. A nationwide set of minimum
safety guidelines were provided for States to build upon to strengthen their local prevention strategies against community transmission. In this second phase, several other public and private sector institutions are expected to have a re-opening plan that is safe and practicable, in full compliance with NCDC safety advisories and containment guidelines, with clearly spelt out codes of conduct and rules of engagement that will define the “New Normal” society. Some relief has been given or promised to labour and industry, domestic air transportation and the faith communities. However, there is still a nationwide travel ban across State borders except for the most essential services. Similarly, all categories of schools, cinemas, clubhouses, gyms and bars are to remain closed. The nationwide overnight curfew also remains in place, but the effective hours have been revised to between 10pm and 4am to allow for more daytime business hours, thus reducing overcrowding which the ill- advised shorter business days and the more stringent curfew caused. B. Assessing possible exit strategies out of lockdowns Epidemiological and evidence-based exit strategies out of lockdowns include the following:
Facts about the new reality: • COVID-19 is caused by an RNA virus called SAR-Cov-2, in the family of Corona viruses that were responsible for the SARS and MERS epidemics in 2003 and 2012 respectively; • Not all infected people will exhibit symptoms; some infected people (asymptomatic) will go through the infection without ever exhibiting symptoms; • Both symptomatic and asymptomatic people can shed the virus and transmit it, and that makes it particularly difficult to control in the absence of an effective vaccine; • Even for symptomatic people, research shows that in almost 50% of all cases, the peak period of infectivity and viral shedding is 2-3 days before the onset of symptoms, when patients are largely undiagnosed; • There is presently no proven cure or vaccine for the condition, and patients are treated symptomatically, with supportive therapies only; • A myriad of drug therapies and combinations of therapies are being reported by various interest groups in different settings as possible preventive and treatment options for the condition. However, there are no completed randomised trials of sufficiently large samples that have upheld the efficacy or otherwise of any of these therapies to date; • The WHO is presently supporting a multi- country SOLIDARITY trial of at least 4 therapy regimens in which Nigeria is participating, among over 100 other countries. Until there is sufficient evidence, WHO cautions against recommending or administering any of these unproven treatments to patients with COVID19. Of course, self-medication must be discouraged because it can lead to serious harm; • Infection rates are higher indoors than outdoors
i) Wait for herd immunity to take hold, whereby 60 -80 % of the population becomes infected, and so natural transmission of infection will cease. This is still far-fetched, as no country, not even the worst hit on the globe, has achieved this yet; ii) Wait for the R naught (R0), i.e. the possible number of new infections from an infected patient, to fall to 1 or less than 1. This will not happen until the infection has peaked, the curve flattened and transmission risk tremendously reduced in the population through a combination of strategies. Nigeria is yet to achieve this milestone; iii) Introduce massive antibody testing that can serve as immune passports for the re-entry of individuals into work and society. Antibody testing, although relatively inexpensive, compared with molecular PCR testing, is fraught with limitations as an exit strategy, because this testing modality is more accurate in locales where disease prevalence is above a certain threshold and could generate false negatives in locales where the disease prevalence is low. Furthermore, the degree of immunity conferred by antibody presence in COVID-19 is not yet understood. The WHO has therefore warned against using rapid antibody tests as immunity passports towards reopening the economy in order to avoid a false sense of security; iv) Wait for a widely available vaccine. Despite optimistic projections to the contrary, the prospects for this could take up to 1 to 2 years. Lockdowns are simply not sustainable for the amount of time it will take to develop a vaccine; and v) Follow the 5-component WHO exit lockdown guidelines: a. COVID-19 transmission must be under control; b. The capacity of the health system must be sufficiently built to detect, test, trace and isolate cases; c. Spread must be minimised in hot- spot areas; d. Preventive measures must be in place in schools, workplaces and other places of interest; e. The community must be sufficiently disciplined to comply with social distancing and personal hygiene guidelines. The WHO-recommended intelligent lockdown ap- and resultant social unrest supersede the intended benefits of a pears to be the most plausible strategy towards our lock- continuous lockdown. In order to strike a balance between lives down exit in Nigeria today. and livelihoods, a policy of intelligent lockdown is already in place countrywide. But Nigeria has not met the 5 components of the C. Situational assessment and intelligent lock- WHO “exit lockdown guidelines” enumerated above (B v). Our down risk mitigation scenarios epidemic is not under control as is, and is yet to peak. The capacity An intelligent lockdown is appropriate for countries of our health system is not yet sufficiently strengthened to detect, where the combined risk of spiralling economic decay test, trace and isolate all cases of COVID-19, nor are our stockpiles
of PPE sufficient for the use of all frontline health workers. There are also competing political pressures that mitigate the transparent reporting of COVID-19 infection rates. This under- reporting has been observed in Asia, Europe and the Americas and albeit less evident in Africa, is most certainly at play here. Therefore, we must accept that the infection rate is grossly underestimated in Africa in general, and in Nigeria in particular where a couple of states have vehemently opposed testing and where the exact cause of death is hardly ever determined. As such, our risk mitigation approaches should be calibrated to this understanding, to avoid complacency, driven by a false sense of security, cognisant that the infection in Africa appears to have been moderated by a combination of epidemiological, ecological and demographic variables. Community spread of a pandemic infection in an intelligent lockdown scenario is dependent on a number of risk mitigation correlates: the degree of a country’s public health policy enactment; governance and performance accountability; the degree of collective discipline or indiscipline of a citizenry, community education of diligence around personal hygiene, effective social distancing and utilisation of PPE as deemed appropriate; the efficiency and agility of the prevailing incountry public health infrastructure to implement effective “identify, track, trace and respond processes”; and the access of most of the citizenry to healthcare facilities and resources. Nigeria must be prepared for the infection to run its “natural history” of disease progression. While eased locked downs will reduce economic, social and political pressures in the absence of significant economic palliatives at scale, there will inevitably be collateral damage by way of increased infection among the general population, increased disability within some 20% of the infected population and death within, at current best-guess estimates, around 3 - 5% of the infected population. This wider community harm should be anticipated, accepted and considered as uncontrollable collateral damage under the prevailing local circumstances of an intelligent lockdown. Our recommendations: Key options should focus on messaging for prevention, risk mitigation and behaviour change; these must be our “vaccine” for now. This will entail: • Government at all levels, civil society and all relevant partners/stakeholders investing heavily in Behaviour Change Communication (BCC) interventions to bring the public to a shared understanding of the risks and repercussions of COVID19 infection. This will involve greater investments in time, money and professional expertise of behaviour change scientists to lead the campaign. Government must also lead by example; by practicing what they preach. • Building a high level of trust among the people, and between the people and government institutions to aid adherence to official recommendations and guidelines for COVID-19 prevention. Trust is the currency of public health. We must motivate people to take personal responsibility for their health and wellbeing and dispel the myth of resilience against COVID-19 circulating in certain segments of the society. • Educating and empowering the citizenry to strike a balance between remaining at home where possible and venturing out where necessary. • A review of our national containment guidelines,
particularly with regard to religious and large indoor social gatherings. It is our opinion that lifting the suspension on these (as recently announced by PTF) was premature; without the successful buy- in of the entire community for physical distancing, wearing of mouth and nose cloth coverings and general hygiene etiquette, there has already been a significant uptick in the daily number of recorded cases of infection. • Establishing and maintaining nationwide community-led public health monitoring to support continued adherence to guidelines for social distancing and personal hygiene across sectors, even beyond the present outbreak and COVID19 becomes yet another endemic communicable disease. We note there is an army of existing but underutilised community health workers and local government workers across the country that can be gainfully deployed in this regard. • Decentralising the national response in favour of streamlined partnerships between the State governments, private health sector, national and international NGOs and development partners in various components of the response. (To include partnering for testing, contact tracing, isolation, treatment, surveillance, training of health staff, and community mobilisation and empowerment.) • Ramping up testing and contact tracing which are essentially the main technical tools left available to us as we have neither treatment nor vaccine for now. We must improve on our testing numbers and our result turnaround time in all 36 States of the Federation and so Cross River and Kogi States must take steps to catch up with the rest of the Country. • Establishing testing and contact-tracing protocols, leveraging all the support of local and international partners that we can. Conclusion The present system of centralised response led by the NCDC only is often attended by late response to calls/ citizen requests and a lot of dissatisfaction and citizen distrust of the system. The NCDC will be overwhelmed as the number of confirmed cases rises daily. The few dedicated NCDC and/or Government isolation facilities are also getting filled. There is equally a concentration of untapped expertise and human capital across the various teaching and specialist hospitals and private hospitals in the country that is largely uninvolved in the current national response because their health facilities have no specified roles—even when routine services are put on hold in many of them—due to the lack of adequate supplies of PPE and standard precaution facilities. There is a generalised concern that patients who need these routine services might be experiencing more complications at home, and mortality figures from their non-Covid health conditions might surpass those from COVID-19 at the end of the pandemic, if nothing is urgently done about this. The Federal Government should therefore be more preoccupied with funding and standards setting, training and supplies and demonstrating best practices, and enacting appropriate new protocols for different sectors, whilst leaving much of the day-to-day implementation in the hands of the other relevant stakeholders who have
traditionally played such roles effectively for other pandemics, notably HIV and AIDS. This will shorten response time, improve accountability and help to build trust in the national response. It is the considered opinion of the Anap Foundation COVID-19 Think Tank that establishing a COVID-ready state in Nigeria requires: 1) the full and willing participation of the people; 2) a high level of organisation within communities; 3. strong and decentralised public health services which include an efficient testing, tracing and isolation capacity; 4) continuing to limit large religious, sporting and social gatherings of all kinds – especially indoor gatherings; 5) Behaviour Change Communication (BCC) strategies customised to local languages and cultures; 6) implementation of new and safer protocols across most economic activities instead of simply attempting to shut them down for several months, as PTF and some State Governors currently advise, because the latter is unsustainable and directly threatens livelihoods, thereby also indirectly threatening life; and 7) COVID-ready hospitals, health care facilities and isolation centres in all 36 States of the Federation. The survival of many of us will depend on both our individual conduct and that of the collective.
KEY TO ABBREVIATIONS 1) AIDS – Acquired Immune Deficiency Syndrome. 2) FCT – Federal Capital Territory 3) HIV – Human Immunodeficiency Virus 4) MERS – Middle East Respiratory Syndrome 5) NCDC – Nigeria Centre for Disease Control 6) NGO – Non-Governmental Organization 7) PCR – Polymerase Chain Reaction 8) PPE – Personal Protective Equipment 9) PTF – Presidential Task Force on COVID-19 10) RNA – Ribonucleic Acid 11) SARS – Severe Acute Respiratory Syndrome. 12) WHO – World Health Organization
A Publication of the Anap Foundation COVID-19 Think Tank. The Anap Foundation COVID-19 Think Tank was established on 22 March, 2020, to help Nigeria respond to the Coronavirus Disease 2019 (“COVID-19”) pandemic. The Think Tank is comprised of 18 members drawn from across the 6 geopolitical zones and the diaspora (USA & Germany). Collectively, the Think Tank comprised of volunteers, has decades of expertise in medicine, logistics, e-commerce, economics, finance, law, communications, religious knowledge, academia, mobilization, advocacy, sustainability, governance, grant making, accountancy, actuarial science, health management and international disaster management. The members of the Think Tank are: Atedo Peterside CON (Chairman), Abubakar Siddique Mohammed (Vice Chairman), Obinnia Abajue, Konyin Ajayi (SAN), Innocent Chukwuma, Adwoa Edun, Leo Stan Ekeh, George Etomi, Buti Sam Kputu (Reverend), Matthew Hassan Kukah (Bishop), Dudu Manuga, Ayisha Osori, Yinka Sanni, Lambert Shumbusho, Salamatu Hussaini Suleiman, Ibrahim D. Waziri, Yele Aluko (Dr – US based International Medical Advisor) + Kayode Ijadunola (Professor and Adviser on Epidemiology) For more information on the Anap Foundation COVID-19 Think Tank, please visit www.anapfoundation.com
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Tuesday 16 June 2020
BUSINESS DAY
Business schools enjoy rise in demand for finance courses The FT’s annual survey of postgraduate qualifications in finance shows pandemic has lifted demand JONATHAN MOULES AND ANDREW JACK
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usiness schools are reporting an increase in applications for specialist finance masters programmes because of the qualification’s value for students graduating in a dire jobs market. The FT on Sunday published its annual ranking of masters in finance pre-experience and post-experience programmes, the most popular specialist postgraduate business degrees, according to entrance exam administrator the Graduate Management Admission Council. Demand for these courses, like other postgraduate management qualifications, had been falling for several years as a decade of economic growth and student visa curbs discouraged potential applicants from leaving the job market. However, the economic turmoil caused by the coronavirus crisis is convincing many of those due to graduate this year to continue in full-time education. Business qualifications
are among the most popular choices, according to school admissions teams. Applications are up 55 per cent year-on-year for the fulltime masters in finance degree at London Business School, which tops the FT’s post-experience ranking of courses for people who have worked for a few years. Demand has increased. That took us a bit by surprise Marwa Hammam, Cambridge Judge Business School However, conversion of offers to a firm acceptance will be harder to achieve in 2020 than in previous years because of travel restrictions for overseas applicants and students choosing to take their chances
in the current employment market rather than taking on more debt, according to Arnold Longboy, executive director of recruitment and admissions at LBS. “We are cautiously optimistic that we will achieve, or come very close to achieving, our target class size of 120 students,” Mr Longboy said. “We should meet our targets because of our leadership in offering masters in finance programmes that offer a strong, global view of finance on a flexible, customisable full- or parttime programme that can be tailored to suit students’ career goals,” he added. The impact of the coronavirus lockdowns on international
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Demand has increased. That took us a bit by surprise Marwa Hammam, Cambridge Judge Business School
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travel is a concern for masters in finance programme directors because the course is particularly attractive to overseas students looking to relocate for work. Only 13 per cent of applicants to European masters in finance courses last year were domestic students, according to GMAC. Belgium-based V lerick Business School, which has been among the FT’s top 30 MiF providers since 2012, has been able to offer a record number of places for the course starting this autumn because of the volume and quality of applications it has received. It has also noticed a rise in domestic demand. “ We h a v e b e e n o v e rwhelmed by applications in the weeks following the lockdown,” said Wouter De Maeseneire, programme director of the masters in financial management course at Vlerick. “Students who might have gone to Paris or London to study are now deciding to stay at home because of the travel restrictions,” he added. Gerry George, dean of Sin@Businessdayng
gapore Management University’s Lee Kong Chian School of Business, said he had 52 per cent more applications than last year for his school’s upcoming masters in finance course, made 25 per cent more offers and had 40 per cent more acceptances. He pointed to the demand from Chinese and other Asian students to remain in the region. “Our yield has improved. Students are choosing to stay regional,” he said. Heidi Pickett, assistant dean for the masters in finance programme at MIT, said she would have a record 140-strong class for the forthcoming intake after a small rise in applications for the upcoming intake, after declines in the previous three years. Marwa Hammam, executive director of the master of finance programme at Cambridge Judge Business School, said: “Demand has increased. That took us a bit by surprise.” See full rankings list for pre-experience programmes: http://rankings.ft.com/businessschoolrankings/masters-in-finance-pre-experience-2020
Tuesday 16 June 2020
BUSINESS DAY
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How Covid-19 is attracting investors to US health ventures From drugmaking to virtual doctors, start-ups are luring a rush of investors MILES KRUPPA
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ot for the first time, Jason Karp has found himself in the right place at the right time. He had the good fortune to be in the hedge fund industry during its boom following the 2008 financial crisis. He grew his fund, Tourbillon Capital Partners, to a sizeable $4bn in assets. Then last year, he wound down the New York-based business, moved with his family to Texas and decided to devote his entrepreneurial energies to the health sector. Now aged 43, Karp was inspired to act by his own experience battling autoimmune diseases that had threatened to leave him blind two decades earlier. But his timing could not have been better, with the Covid-19 pandemic highlighting the importance and investment potential of healthcare and health-related businesses. Karp’s venture, HumanCo, is styled as a Berkshire Hathawaylike holding company focused on good-for-you consumer goods. Karp plans to make new investments in products such as his Hu line of chocolate bars, which are made without refined sugars and other additives, and the Oura Ring, a sleep-tracking device. “I’m more excited than ever that the world needs this, and I think the crisis is a wake-up call,” says Karp. Karp’s story is one example of how Covid-19 has created new opportunity for wealthy individuals directing their money to health-related ventures. For some it is all about money, but for others, including Karp, the projects blend profit and a desire for social impact. “What [the investment community] needs to do is pour money into research,” says Ron Conway, the prolific Silicon Valley start-up investor and philanthropist who has made early bets on companies including travel group Airbnb. “If it’s a not-for-profit, they need to get out their personal pocketbook and donate. And yes, every [venture capitalist] I know is doing that.” Deep-pocketed backers are seeking opportunities in everything from remote-healthcare apps to new drugs targeting coronavirus, and they have capital at the ready. Tiger 21, a US-based club for multimillionaires, estimates that wealthy investors in its network started the year with 12 per cent of their assets in cash, out of a total of $72bn. Healthcare is already familiar territory to many. The sector has been a popular trade in the past decade, outpacing even the strong
Well-timed intervention: Jason Karp says the Covid-19 crisis has been a ‘wake-up’ call
bull market for US stocks. Healthcare companies in the S&P 500 index rose 240 per cent in the decade to mid-May 2020, compared with 140 per cent for the index as a whole. Ageing populations in the developed world, advances in medical technology and expensive blockbuster drugs targeting cancer and other diseases have all drawn investor attention, both to listed companies and risky start-ups. In the first quarter of this year alone, healthcare start-ups raised more than $14.6bn globally — the highest levels since 2018, according to the data provider CB Insights. Total healthcare funding reached almost $54.7bn last year. The healthcare sector has held up even as the pandemic triggered shocks in financial markets. By late May, healthcare stocks in the S&P 500 were up almost 6 per cent on the year, compared with a slight drop in the broader index. Meanwhile, companies with promising products linked to Covid-19 have soared, including biotech groups such as Gilead Sciences and Moderna, which have announced positive news on vaccine developments. Their popularity is fuelled by the overwhelming drive to tackle Covid-19, combined with a huge increase in government healthcare spending. Even before the pandemic, consultancy Deloitte forecast a 5 per cent annual increase in global health spending in the years to 2023. “With Covid, we see that healthcare and life sciences companies are going to have a tailwind behind them,” says Chris Ivey, head of the European private client practice at Cambridge Associates, the US investment company. Ivey says his wealthy clients are especially interested in backing start-ups www.businessday.ng
creating new products that could become acquisition targets for big pharmaceutical groups. But some investors warn that new ventures such as vaccine developers are risky bets, and startups aimed at preventing diseases such as the new coronavirus have so far produced little financial return. “Anti-infective drug development has been a terrible place to invest for about 10 years,” says Bryan Roberts, a California-based partner at venture capital firm Venrock, which invests in healthcare. Before the pandemic, several well-funded start-ups in the sector, such as Achaogen and Melinta, filed for bankruptcy. “The commercial model is really hard,” says Roberts. If you have a great vaccine, there’s probably not enough money in therapies Bryan Roberts, partner at venture capital firm Venrock Others are betting that with Covid-19 it will be different. Swiss private banks Julius Baer and Pictet both invested in Moderna before its initial public offering two years ago, giving their wealthy clients an early foothold in what is widely considered to be one of the leaders in the race for a vaccine. Meanwhile, Jim Simons, the billionaire founder of hedge fund Renaissance Technologies, drew headlines in February for supporting the rival vaccine developer Codagenix through his family office Euclidean Capital. Conway, the Silicon Valleybased investor, says his SV Angel funds have invested in “very nascent technologies that are working on Covid and other related diseases” which have yet to launch officially. They are also evaluating companies working on drugs to treat Covid-19, having previously made few investments
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in therapeutics ventures. Other investors see an approach focused narrowly on Covid-19 as too risky. A successful vaccine would quickly eliminate the need for most treatments, with fewer people catching the disease. “One of the risks of investing in this space is, how long-lived is the product?” says Roberts. “If you have a great vaccine, there’s probably not enough money in therapies on a go-forward basis because not many people get it.” Instead, Roberts and other healthcare investors have targeted companies benefiting from an expected broad increase in healthrelated spending they think the pandemic will bring. Karp is one such investor. He came to the health sector after suffering from illnesses before the age of 30 that forced him to reconsider his life and adopt a healthier lifestyle. He cut out caffeine, alcohol, refined sugar and other processed foods, and taught himself how to sleep again after developing insomnia. He then turned his attention to the role of large food conglomerates in the American diet. With his brother-in-law Jordan Brown, a property developer, he consulted food experts on launching a restaurant and a line of packaged goods that used minimally processed ingredients. “The evolution over the last 50 years has been toward what shareholders have wanted, which is scale, shelf life, low price and distribution,” Karp says. Citing a University of North Carolina study, Karp says just 12 per cent of Americans are considered metabolically healthy, creating a large market opportunity for HumanCo to supply better-quality products he says will improve wellbeing and lower future healthcare costs. @Businessdayng
Working from his new Texas home, Karp now finds himself evaluating at least one new business proposal every day. In January, HumanCo received $15m in backing from more than 30 investors, led by Karp and his college friend, Brian Sheth, the billionaire president of Austin-based software investment firm Vista Equity Partners. K a r p t h i n k s Hu m a n C o’s healthy foods can help prevent the chronic conditions that put people at greater risk of dying from coronavirus. “What’s clear is when you have a lot of bodywide systemic inflammation, your body’s ability to fight and heal is just inferior,” he says. Meanwhile, other venture capitalists are predicting online apps can upend the healthcare system. Under the broad moniker of “telehealth”, these companies do everything from delivering primary care over the internet to shipping medication directly to consumers. While some such companies have been around for years, the Covid-19 crisis has sped up their development. Telehealth start-ups completed 103 funding rounds totalling $1.6bn in the first quarter of 2020, more than double the number of deals that took place in the fourth quarter last year, according to CB Insights. Some big names are backing the sector, notably Amazon chief executive Jeff Bezos, whose Bezos Expeditions family office has invested in ZocDoc, an online registry allowing users to book doctor appointments and remote check-ups. Many remote-healthcare providers have seen a surge in demand as authorities encourage patients to avoid hospitals and doctors’ surgeries. Medici, a US tele-health start-up, posted a 1,409 per cent increase in patient registrations between February and April, when it raised $24m in new funding from billionaires including property investor Barry Sternlicht and hedge fund manager Ken Griffin. Roman Health and Hims & Hers, two rival US start-ups that sell cosmetic and sexual health prescriptions online, have both looked to raise new funding since the epidemic broke out, according to people briefed on their plans. Hims & Hers, known originally as just Hims, focused initially on the male market, but co-founder Hilary Coles has led the introduction of products targeted at women, including hair-loss treatments and sexual disorder drug Addyi. The company, which last year reached a $1bn valuation, in May began shipping an at-home Covid-19 test approved by the US Food and Drug Administration, offering it on an at-cost basis of $150.
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Tuesday 16 June 2020
BUSINESS DAY
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Tuesday 16 June 2020
BUSINESS DAY
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EDUCATION Weekly insight on current and future trends in education
Primary/Secondary
Higher
Human Capital
Ortom signs bills for conversion of two colleges to polytechnics •Seek speedy regulatory approval from NBTE MARK MAYAH
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enue State Governor, Samuel Ortom has signed two bills for the conversion of Alfred Akawe Torkula College of Advanced and Professional Studies (AATCAPS), to Alfred Akawe Torkula Polytechnic Makurdi and Akperan Orshi College of Agriculture Yandev to Akperan Orshi Polytechnic Yandev. Ortom who assented to the bill at Benue Peoples House
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FG may consider litigation option against striking universities lecturers KELECHI EWUZIE
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he labour face-off between the Federal Government and the Academic Staff Union of Universities (ASUU) may take a a new dimension, as Government is threatening to drag ASUU to the National Arbitration Panel and the National Industrial Court if it fails to respond to invitation for negotiation. ASUU, the umbrella body of university lecturers had on March 9, 2020 declare an indefinite strike over the Federal Government decision to withhold the February salary of their members who refused to enrol on the Integrated Payroll and Personnel Information System (IPPIS), adding that they prefer the University Transparency and Accountability Solution (UTAS). Chris Ngige, the Minister of Labour and Employment said that should the lecturers fail to respond to invitation to return to the roundtable for negotiation, the Federal Government may be forced to drag ASUU before the National Arbitration Panel and even the National Industrial Court. Ngige who pointed out that he had invited the leadership of the union for a Zoom meeting, but they insisted on meeting him face to face. According to him, “I invited ASUU for a zoom meeting in compliance with World Health Organisation (WHO) and Nigeria Centre for Disease Control (NCDC) Covid-19 guidelines, but they insisted on meeting me face to face. We
have labour laws,” The leadership of ASUU had however said that negotiations via Zoom will not be able to produce the desired solution to the lingering dispute. ASUU insists that before it calls of the strike, the federal government must make substantial progress in addressing their key demands which include payment of arrears of earned allowances, revitalization fund, and constituting visitation panels for federal universities. Ngige while speaking in his hometown Alor in Anambra State warned that if the union refuses to come to the roundtable, the federal government may resort to labour laws to see what can be done. Emmanuel Nzomiwu, Media aide to the minidter, in a statement disclosed that the ASUU strike was all about the Integrated Payroll and Personnel Information System (IPPIS), adding that “any other reason given by ASUU is an alibi.” Ngige accused the leadership of the union of deceiving the members and not telling them the truth. “We have hierarchy of arbitration. There is the National Arbitration Panel. If I am tired,
Adamu minister
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I can refer it to the National Arbitration Panel. If I am tired, I can refer it to the National Industrial Court. The better thing for them is to come and negotiate on first-hand basis where we are not bringing an external arbitrator,” Ngige said. The former governor of Anambra State said that the federal government has complained that it was losing a lot of money paying lecturers from the Government Integrated Financial Management Information (GFMIS) platform, which only transmits money for your salaries to the university system through the Bursar’s office, from where they are paid. He observed that there were several anomalies with the former system as some of the people on that payment platform are ghost workers, adding that they don’t exist at all but their names exist and they are drawing money from the Federal Government. The minster further said some times the shortfalls in tax deduction accumulated to over N 800 billion and JTB penalised the federal government for these monies not paid to the state. He added the federal government from the office of the accountant general of the federation paid over 800 billion to states. He said the government side recommended that ASUU should migrate to the IPPIS while waiting for their researchers to conclude work on UTAS and bring it for integrity test for all parties to agree, but the union refused to return to the roundtable.
Makurdi, on June 11, 2020 expressed optimism that the state “is moving towards achieving her educational advancement He said the two institutions were part of his administration’s deliberate efforts to reposition the education sector to meet challenges of the 21st century. The Governor stated that the assent was only the beginning of the process and that proactive steps would be taken to secure the necessary regulatory approvals to admit, train and gradu-
ate people who would add greater value to the state. He urged the Benue State Executive Council to speedily approve recommendations contained in the report on the polytechnics and called on host communities to take advantage of opportunities created by siting of the institutions in their areas. Speaker of the Benue State House of Assembly, Rt. Hon. Titus Uba while presenting the bills to the Governor for assent, acknowledged the enormous benefits that would be de-
rived from the initiatives and solicited sustained support of the people. Commissioner for Education, Dennis Ityavyar(Prof ) congratulated Governor Ortom on the feat and for his determination to uplift the standard of education in the state, giving assurance that the Ministry would hasten the process for accreditation of the two institutions. The National Board for Technical Education (NBTE) is the regulatory institution, overseeing polytechnics in Nigeria.
Uniport, Bayero university, others jostle for 116 PhD scholarship opportunities KELECHI EWUZIE
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n spite of the current industrial action by lecturers in public universities in Nigeria, aspiring scientists from University of Port Harcourt, Bayero University and select African universities will jostle for 116 PhD scholarships slots from Regional Scholarship and Innovation Fund (RSIF). The doctoral scholarships under the Partnership for Skills in Applied Sciences, Engineering and Technology (PASET) will be offered in selected African priority areas in the applied sciences, engineering and technology, and are tenable at leading African universities across Africa. Moses Osiru, regional coordination, Unit manager. RSIF notes that this is one of the greatest numbers of PhD scholarships offered by a Sub-Saharan Africa programme that fully covers costs for PhD training. Aside from candidates from the University of Port Harcourt and Bayero University, candidates from universities of Nairobi and Kenyatta in Kenya, Sokoine University of Agriculture and Nelson Mandela African Institution of Science and Technology in Tanzania, University of Rwanda, the University of Ghana, Senegal’s Gaston Berger University, and Côte d’Ivoire’s Félix HouphouëtBoigny University will also
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be participating. Osiru notes that the scholarship will cover costs of research, a stipend for up to four years, internship at an advanced research institution anywhere in the world, and tuition fees. Successful candidates will also benefit from RSIF research grants. According to Osiru, “The competitive scholarships will contribute to strengthening teaching and research capacity in universities since the programme will prioritise teaching staff in institutions. “The scholarships highlight the commitment of the founding members of PASET – the governments of Kenya, Rwanda, Ethiopia, Senegal and Côte d’Ivoire – to support the building of science capacity on the continent,” he said. The organisers announced that 15 June is set as the final date for application, but the proper awards will take place in September. “The selection process is expected to proceed smoothly online despite the COVID-19 emergency. The International Centre of Insect Physiology and Ecology (ICIPE), which hosts the programme, have in place @Businessdayng
measures to ensure safety of programme staff for continuous implementation during the crisis, Osiru said. Since the establishment of the PASET-RSIF initiative, Ghana and Burkina Faso have also joined, while Nigeria, Benin, South Africa, Mozambique, Zimbabwe, Zambia, Tanzania, Mauritius and Uganda have all expressed interest. Each government makes a minimum contribution of US$2 million to the programme used for supporting PhD scholarships. Key external partners to the programme include the government of South Korea and the World Bank. While students from across the continent are eligible to apply, the majority of scholarships will go to contributing member countries. Priority will be given to women and young academic faculty who do not have a PhD. The scholarships cover a period of three to four years, including up to 24 months ‘sandwich’ placement at an international partner university, research institution or private company.
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Tuesday 16 June 2020
BUSINESS DAY
Media business Nigeria upgrades as indigenous firm, Diversay Solutions manufactures full- body disinfection tunnel
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Daniel Obi
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iversay Solutions Ltd, a strategic business has developed and manufactured a full body disinfection solution that eliminates the external impact of pathogens; viruses, bacteria, and fungi. This is a commendable and timely innovation as the economy and businesses in various sectors gradually re-open after several weeks of lockdown to check the spread of Covid-19. The disinfection solution, according to the company in a statement, is a combined supply of the Disinfection Tunnel (DDT) and its Disinfectant. Customers enjoy the ease of getting the disinfectant solution quantity they require along with the Tunnel from the same source. The DDT as it now fondly called is built with aesthetics and global standards, it allows flexibility in features to fit existing premise branding, the statement said. This laudable and proudly Nigerian solution can be used to sanitize people in high traffic areas; private and government offices, banks, malls, hospitals, religious centers, markets, motor parks, schools, parks, factories, construction
Coca-Cola celebrates World Environment Day as employee action becomes community passion
sites, farms, hotels, quick-service restaurants, cafes, saloons, amongst others. It is also ideal for quarantine areas, housing estates, and other crowded locations. The company posits that it is designed to prevent and limit the spread of infectious diseases, including the current COVID-19 pandemic which has infected millions of people with thousands of fatalities globally. Diversay Solutions Limited affirmed that its disinfectant provides safety for people everywhere when everyone goes through
this tunnel before entering the offices or shared public space. The main DDT unit has a hand sanitizing basin and automatic sanitizer dispenser on entry and misting nozzles that spray the disinfectant liquid over the entire body to eliminate all viruses, bacteria, and fungi. The floor is also produced with a material that allows the soles of the shoes to be disinfected along with the entire body upon entry. The solution is designed for personnel sanitization and so the size of the tank from which the disinfectant is pumped will
be proportional to traffic flow. It comes with a lot of benefits including, a solid unit built with lightweight materials that enhances its portability for any location, free 5KG disinfectant liquid, with a unique measuring tool for the first 200 DDT orders. This free pack will cater for 5,000 users at the initial usage of the tunnel. With the DDT, firms and businesses can protect their workforce and customers against the deadly COVID-19, other infections, and prevent the business environment from being contaminated.
he World Environment Day is the United Nations’ principal vehicle for awareness and action for the protection of the environment. Over the years, the celebration marked every year on June 5th, has come to serve as a global platform for public outreach and deep reflection focused on the challenges of the environment, growing annually with participation from over 143 countries. The Coca-Cola System, on its part, has committed to reduce waste by helping to collect the same amount of packaging it sells for reuse, help communities identify and better understand their existing recycling and collection challenges; and motivate consumers to recycle their packages. In line with this vision, employees of Coca-Cola Nigeria Limited decided to lead by example by collecting used plastic/PET bottles on a weekly basis from their homes and neighborhoods, depositing same to a designated collection center created at the company’s official car parking lot, from where program partners, RecyclePoint, would evacuate for onward processing. The modest initiative began
Why Lagos State estate authority re-branded …Reiterates promise to prosecute deceitful real estate agents Daniel Obi
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agos State Estate Agency Regulatory Authority, LASRERA which operates under the Ministry of Housing since its establishment in 2015 in the enforcement of the state’s housing agency regulatory law has rebranded into a full agency status to enable it operate effectively. It is believed that as a department under the Ministry of Housing, the authority had some restrictions but as a full agency , LASRERA has the full requirement of the law to go after whoever does anything wrong in the real estate business in the state. It has also created a whistle blowing section to enable individuals report what is going on in their areas in the state. The agency’s mandate is to ensure the creation of an innovative and sustainable environment to promote Lagos as a real estate investment destination in Africa. “We want everything about
housing and real estate in Lagos to be well regulated. We want to know the agents and their offices. For agents who shortchange people, we want to ensure that we go through the full length of the law to get them prosecuted”, Special Adviser to the Governor on Housing, Adetoke Benson-Awoyinka explained. He regrets that the trend of fraudulent practice in real estate sector by developers and agents in the state is on the increase and this is reflected in the number of complaints received by the agency in recent times, adding that the move is to curb these fraudulent prac-
Babajide Sanwo-Olu www.businessday.ng
tices. Any practitioner who defrauds will be “charged to court under the criminal code of the law and the agency will make sure the court system prosecutes such person and the properties are forfeited. That’s the big punishment for whoever is defrauding people, but also a relief for our people as they can be sure they will get their money back. That is why we are here. Those that have been defrauded in the past can come into our offices to lay their complaints with information that can help. We will investigate and would do our best to make sure we bring the culprits to book”, Benson-Awoyinka. Under its mandate, the agency also maintains register of estate agents, sanction unlicensed estate agency practitioners, collate data on property transactions, investigate complaints and petitions with aim of resolving such issues as well as ensure the payment of fees and other necessary charges on property transactions. On possible training of
agents, he said the agency has private sector organisations coming to train the brokers who want to be agents. “We want to make sure that not everybody on the streets of Lagos is an agent. Anyone who wants to be in a profession must have minimum knowledge of what they are doing. That’s what we want to enforce in the state”. The agenc y has also launched its official website, registration portal and social media handles, as part of stringent regulatory measures to tackle fraudulent activities of real estate agents and developers in the state. The move is in line with the commitment of the Babajide Sanwoolu led Government of Lagos State to improve technology infrastructure, and make Lagos a ‘Smart City’ where services will be digitally ready and available to the masses. “In line with the commitment of the Government of Babajide Sanwoolu to improve technology infrastructure, today we are unveiling a website and social media
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handle and registration portal for effective management and communication among stakeholders. The website will enhance our post-COVID compliance initiatives to promote transparency and become a one-stop-shop to stakeholders and government. “We are out to sanitize the industry. As the trend of fraudulent practice in real estate and developers increase and is reflected in the number of complaints received by the agency in recent times. Residents are falling victim to fake real estate practitioners and property developers Adetoke further stated that Lagos State government remain committed to providing an enabling environment and a transparent real estate sector, conforming with international best practices while safeguarding the interest of stakeholders and citizens of Lagos. The ultimate aim she said is to ensure creation of an innovative and sustainable environment to promote Lagos as a real estate investment destination in Africa.
with just a few bottles and cans collected monthly, but then began to gain traction as associate volunteers from the CokeCARES team began to drive active collection and participation in the initiative. This drew the attention of onlookers and community bystanders who curiously enquired to know more about the plastic collections and recycling activities. This provided an opportunity for proper but timely education on the importance of the careful management and responsible disposal of post-consumer waste, especially PET. That was the turning point. Leading this year’s collection drive, Abidemi Salau, a widowed mother of three, has since January, single handedly collected over 1 ton of PET bottles and other recyclables. In her words she said, “I am happy that the small proceeds I get from this supports me and my family and this is my little way of contributing to a cleaner environment”. In her closing remarks, the Public Affairs, Communications and Sustainability Manager for Coca-Cola Nigeria Limited, Nwamaka Onyemelukwe, in a statement expressed gratitude to these unsung heroes and reflected on the journey to a more sustainable world.
COVID-19: Market2U set to unveil operations
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arket2U is set to launch a live market where buyers will have access to sellers for all kinds of products ranging from household materials and tools to fastmoving consumable goods, fashion and accessories, food items, and a whole lot of other goods with direct delivery to buyers’ doorstep. The live show is fixed to debut. It will stream live on Facebook,Twitter, Instagram and on YouTube via Market2U Nigeria. Market2U will air online, to solve the daily needs of users who will take advantage of the opportunity to make their buying decisions virtually to avoid the boisterous contacts within open markets. It will help to ensure and achieve the social distance order of the Federal and state government by encouraging people to stay at home, stay safe, and still get all their purchase needs met.
Tuesday 16 June 2020
BUSINESS DAY
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Branding
Godwin Emefiele, CBN governor
Nnamdi Nwizu
Steve Osho
Tosin Osunkoya
When Comercio Partners strengthens role of investment banking in modern economy The role of financial advisors and asset managers is crucial to decision making in organisations. In this report, Daniel Obi looks at this role as Comercio Partners Limited, established in 2016, offers trading, financial advisory and asset management services for the growth and profitability of companies and subsequent growth of the economy. balization is not only the internet and telecommunications, it is also the more traditional fare of economists: trade in goods; and trade in assets.” The world being a global village with funds moving across borders, the role of boutique investment firms with financial advisory and asset management capacity has become even more important. With about 200 million population, the largest market in Africa, Nigeria’s economy offers investors an array of opportunities from banking to manufacturing, real estate, agriculture, Oil and Gas, transportation, logistics, education, bonds and stock investments among others. For instance, government riskfree securities such as Treasury Bills and Bonds offer investors as much as 10% to 14% in returns yearly. Investors with large capital outlay and risk appetite can invest in Corporate Bonds which offer a premium to the sovereign. Stock market also offers another opportunity for investment as it could deliver good returns. There are clearly untapped small-scale business opportunities in every industry both in Nigeria and across the world. Such investments in capital market or any other industry require experts’ advice that competent advisory and asset management companies like Comercio Partners offer. As observed, both local and international investors are interested in investing in Nigeria but the lack of knowledge of high yielding investments, fear of ROI, ungrounded understanding of the political and capital market environment and distrust are some of the limiting www.businessday.ng
factors. To bridge the gaps of knowledge of where to invest for returns, fear, distrust and access to capital which have restricted many firms from gaining advantage and increasing their revenue – the services of an investment firm such as Comercio Partners Limited that focuses on trading fixed income securities, derivatives, alternative assets and equities, and provides financial advisory and asset management are needed. In Nigeria, such companies like Comercio Partners for instance helps organisations grow by offering them expert advice and insight into the Equity Capital Market (ECM) and Debt Capital Market (DCM). The firm also trades principal funds such as fixed income securities, equities, and derivatives, and executes mandates on behalf of its clients. Seeking the help of an asset management expert helps to manage and grow wealth. Comercio Partners Asset Management builds portfolio based on clients’ appetite for risk with a keen understanding
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Many Nigerians are either not aware of the financial asset products available to them or lack the knowledge to build a diversified investment portfolio for the rainy day
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ajor issues that keep CEOs and CFOs awake are d e c l i n i n g re venue, increasing operational cost and consequently, declining profit. This often happens in a difficult economic environment worsened by wrong investment decisions. To turn things around, CEOs are therefore frequently searching for financial advisors that could help to access funds, restructure balance sheet and capital structure of the company, provide regular updates on the economic environment and advise how to navigate the terrain. Failure to engage competent advisor as and when necessary puts the company at great risk. Many make the assertion that Nigerians have a lax propensity to saving. However, this is not necessarily true. What we mostly lack is the ability to make the right investment decisions. Many Nigerians are either not aware of the financial asset products available to them or lack the knowledge to build a diversified investment portfolio for the rainy day. The challenges of both personal investment and corporate capital raising and structuring can be solved by a single financial institution that offers financial advisory and asset management. These financial institutions oil the wheels of commerce by bringing together those that need capital with those that have capital. In the words of Stanley Fischer, First Deputy Managing Director International Monetary Fund, “Glo-
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of the difference between willingness and ability to take risk in helping their clients earn superior return in challenging markets. Comercio also ensures that its clients’ portfolio is diversified into various asset class and currencies and leverages its link to the tech industry to build investment platforms that enable investors execute trades efficiently. It recently added Real Estate arm to its growing business. The five year old company is leveraging over 40 years of combined experience in Fixed Income Trading and Investment Management by its Managing Partners and other competent and driven staff with vast experience in Investment Management. The firm is led by Steve Osho – Co-Managing Partner, and MD/ CEO at Comercio Partners Capital; Tosin Osunkoya - Co-Managing Partner and MD/CEO at Comercio Partners Asset Management; and Nnamdi Nwizu - Co-Managing Partner and Head of Trading. Prior to setting up the company, Steve was an Assistant General Manager and head of Interest rates sales and FI Business at Stanbic IBTC Bank; Tosin worked at Rand Merchant Bank, UBA, Zenith Bank and Kakawa Discount House while Nnamdi worked at Citibank, Axa Mansard, Zenith Bank and GTBank. They work with other management staff who garnered relevant experiences from other reputable companies. The company is chaired by Ibrahim Dikko who worked as Executive Director in Resourcery Plc and Vice President (Regulatory and cor@Businessdayng
porate affairs with EMTS Limited (trading as Etisalat Nigeria) and former Chairman of FSDH Merchant Bank. Speaking on behalf of the firm, Ibrahim Dikko said, “By leveraging on our wealth of experience, skills and knowledge of the market, we continually explore opportunities to create significant value for our clients. As portfolio managers, we design investment strategies based on our clients’ investment objectives, risk appetite and time horizon.” Some of the principal advisory activities of the firm include:- N100 billion debt capital raising for Lagos State Government(Joint Issuing House), $50 million Debt Capital Raising for a Downstream Oil & Gas Company (ongoing); ₦1 billion Private Debt Capital Raising for a Real Estate Development Company; $35 million Equity Capital Raising for a UAE-based Manufacturer of Copper Products (on going) and $50 million Debt Capital Raising for a Digital Out-Of-Home Advertising Company. Others are $10 million Debt Capital Raising for a Physical & Onlinebased Retail Shopping Company (ongoing) and $3 million Equity Capital Raising for a Poultry-based Agricultural Company (on going). The entrance of Comercio Partners to complement other financial and asset managers in Nigeria is to assist in the growth of the Nigerian economy and drive employment opportunities through well-structured boutique investment firm that focuses on trading, advisory services and asset management.
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Tuesday 16 June 2020
BUSINESS DAY
Markets + Finance
‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’
Why Leadway Assurance remains largest insurer in Nigeria? BALA AUGIE
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eadway Assurance Limited remained resilient as its giant strides were sustained in 2019 even amid weak economic growth and a myriad of challenges hobbling the industry. The consistent earnings growth and improved underwriting income came as surprise to investors because operators in the industry were from reeling low premium income as penetration remains very much lower compared to peers across Africa and Europe. The Nigerian economy has been growing sluggishly since the country existed a recession 2016, and the renewed clashes between farmers and herders-men (that has claimed thousands of lives contributed) undermined Agriculture GDP. As a result of a border closure imposed by Federal Government in order to curb smuggling of rice and other products, and consequently, headline inflation rate spiked as price of food skyrocketed. Investors’ apathy towards the equity market gathered momentum in 2019 as they dumped shares due to lack of transformation policy on the part of government and poor corporate results. Investors are still dumping shares and investing packing their money in emerging market countries with benign macroeconomic environment and stable foreign exchange policy. Since the start of last year, yields began a precipitous drop, and the dip gathered steam in the last quarter of the year when the central barred individuals and local corporates from investing in Open Market Operations (OMO) auctions. According to the Q1-2020 GDP report published by the National Bureau of Statistics (NBS) on 24 May 2020, economic growth slowed to a nine-quarter low of 1.87 percent yoy from 2.55 percent yoy in Q4-2019 and 2.12 percent
Hassan Odukale, CEO, Leadway Assurance
yoy in Q2-2019. Additionally, the statistics body added that capital importation for the first quarter (Q1) 2020-the total amount of foreign investment inflows into the Nigerian economydeclined by 31 percent year on year (y/y) to $5.85 billion in the first (Q1) 2020 from $8.51 billion in Q1 2019. Notwithstanding the indices that shaped the global economy in 2019 and the attendant macroeconomic challenges in Nigeria, Leadway Assurance recorded 26.53 percent jump in net incocme to N9.19 billion in 2019 from N7.26 billion in 2018. The growth in profit was largely driven by strong investment returns and excellent asset allocation. And the insurer’s solid liquid position gives it the leeway to invest in government securities to magnify shareholders earnings. Leadway Assurance’s investment income increased by 38.84 percent to N31.80 billion in December 2018 from N22.90 billion as at December 2017. Its N90.60 billion grow premium written is the highest in the industry, dwarfung
Aiico Insurance’s premium of N50.11 billion, Custodian Investment Plc, N47.20 bil-
lion; AxA Mansard, N43.62 billion, and Zenith Insurance Limited, N16.14 billion.
General Insurance business and Special Risk Report have been a one of the major drivers of Leadway Assurance gross premium written growth. Leadway Assurance is the most profitable and efficient insurers as it continue to control costs and maximize the wealth of shareholders. Combined ratio stood at 78.37 percent as at December 2019, the lowest in the industry. The combined ratio is typically expressed as a percentage. A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums. With adequate underwriting, the insurer can write any risk as it has hoard of assets that it uses pay claims as at when due. Claims expenses were up 11.78 percent to N38.46 billion in December 2019 from
Largest Insurers by GPW (N’m) ) Dec 2019
Largest insurer by total Asset (N’m) Dec 2019
BD MARKETS + FINANCE Analyst: BALA AUGIE www.businessday.ng
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N34.41 billion as at December 2018. Loss ratio increased to 54.23 percent in the period under review from 48.13 percent the previous year. The significant increase in claims expense was cushioned by recoveries from reinsurers, salvage and subrogation. While other companies are struggling with huge expenses that erodes profitability, Leadway Assurance’s management expenses reduced by 14.84 percent to N7.18 billion in the period under review from N6.38 billion as at December 2018. Notwithstanding the distribution of the non-insurance subsidiaries, the company’s total assets recorded 25.28 percent growth to N396.30 billion in 2019 from N316.33 billion as at December 2018. The drivers of the significant growth in asset can be traced to the significant increase in annuity premium invested majorly in government debt securities, increase in fair value asset at fiar value by 52.83 percent to N238.42 billion in December 2019 from N156.0 billion the previous year. “We continue to demonstrate our commitment to our loyal customers through our customer services delivery channels, underpinned by a motivated team, outstanding brokers and agents, innovations and technology,” said Tunde Hassan Odukale, the managing director/CEO of the company. “I am proud that we have transmitted the principle of devoted customer-focus into a five-decade legacy that would continue to be the compass with which we steer the next half-century of operational excellence. With our balance sheet strength and technological innovations, we are confident of maintaining market leadership, whilst deepening insurance penetration to our youthful African population,” odukale said. Analysts say Leadway Assurance has the ammunitions or financial strength to weather the coronavirus headwinds.
Tuesday 16 June 2020
BUSINESS DAY
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Sophos unveils advanced solution for secure IT operations, cyber security risk reduction Jumoke Akiyode Lawanson
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ophos, a popular nextgeneration cybersecurity company has unveiled an updated version of its Endpoint Detection and Response (EDR), the first solution designed for both security analysts and IT administrators. Significant advancements and new capabilities make it faster and easier than ever before for security analysts to identify and neutralise evasive threats, and for IT administrators to proactively maintain secure IT operations to reduce risk. Sophos also published new research, “An Insider View into the Increasingly Complex Kingminer Botnet,” underscoring the use of servers in carrying out attacks and the importance of threat intelligence in detecting such activity. The opportunistic Kingminer botnet attempts to gain server access by brute-forcing login credentials, and Sophos now finds that it’s using the infamous EternalBlue exploit in an attempt to spread malware among other attack mechanisms. The new version of Sophos EDR offers a custom-built query engine to detect indicators of compromise. Kingminer shares many of the attributes that advanced ransomware attackers use to gain access, evidence of the need for EDR with the ability to hunt active attacks. As Sophos recently discovered in its
‘state of ransomware 2020’ survey, only 24 percent of organisations breached in a ransomware incident were able to detect the intrusion and stop it before it was able to encrypt their files. Its new EDR capabilities help security and IT teams detect threats and breaches that could otherwise take months to uncover. “Cybercriminals are raising the stakes, stopping at nothing to capitalise on expanded attack surfaces as organisations increasingly move to the cloud and enable remote workforces. Servers and other endpoints are all too insufficiently pro-
tected, creating vulnerable entry points that are ripe for attackers to exploit,” Dan Schiappa, chief product officer, Sophos, said. “Sophos EDR helps identify these attacks, preventing breaches and shining light on otherwise dark areas. Live querying capabilities only available with Sophos EDR in Intercept X enable organisations to search for past indicators of compromise and determine the current system state. This level of intelligence is critical in understanding changing attacker behaviors and reducing attacker dwell time,” he said.
Sophos EDR now provides powerful visibility across an organisation’s entire estate, enabling security and IT practitioners to quickly answer critical threat hunting and IT security operations questions, and easily respond. New features include: · Live Discover: Pinpoint past and present activity with up to 90 days of data retention. Out-ofthe-box ready SQL queries allow administrators to answer threat hunting and IT questions, and can be selected from a library of prewritten options and fully customised by users.
· Live Response: Remotely respond and access endpoints and servers using a command line interface to perform further investigation and remediate issues; easily reboot devices, install and uninstall software, terminate active processes, run scripts, edit configuration files, run forensic tools, isolate machines, and more. “Sophos EDR is a force multiplier that gives me the tools I need to do the job of an entire team without adding additional headcount,” Ryan Miller, chief information security officer, Mission Search, said. “This new version drastically reduces the time it takes to detect and respond to incidents, saving me on average four to five hours per day. Easy to use SQL queries simplify the previously complex and time intensive process of investigating suspicious activity, and allow me to perform searches that are completely unique to my network. Unlike other EDR tools that are limited in what they can see and report on, Sophos EDR provides complete visibility into all of my endpoints with vast capabilities not available anywhere else. As the chief information security officer of a Joint Commission certified healthcare staffing firm, I am extremely sensitive to any time delays in receiving warnings related to suspicious activity that could be a precursor of a malicious attack designed to obtain sensitive data,” he said.
Stiff competition in Nigeria’s ride hailing market as Ekocab launches service Jumoke Akiyode Lawanson
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s more players make their way into the app based taxi/ cab hailing business in Nigeria, the market expansion is causing tighter competition among companies jostling for market share. Latest entrant, Ekocab, a car hailing service that recently announced its official launch into the Nigerian market has positioned itself to offer unique, never seen before services such as no surge charge, and the op-
portunity for drivers to work to own their cars. The company say that the platform and service is designed to cater to the needs of a diverse group of people; to help both drivers add an additional source of income, also a more reliable commute for passengers to ensure they get value for their money and a car hailing service they can always rely on. Ponmile Alabi, chief marketing officer, Ekocab, says “Ekocab was incepted to provide customers with an
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enhanced and improved car ride experience. We aim to make adequate, reliable car hailing services accessible to all. By doing this, we are set to simplify payment processes, reduce the costs of trips, and bring a community-based approach to the car hailing service.” One of the goals of Ekocab is to create a positively intimate car riding experience. It promises to change the face of traditional car hailing services in Nigeria by providing secure, transparent and honest transactions.
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The inceptors of the idea Segun Cole and Nathan Gideon during some research gathered that Nigerians are tired of unfair charges for trips and not being able to hop on a ride whenever they like due to surge and there being a limit to the drivers on the road. The Global pandemic has effected the economy greatly and some of us have seen salary cuts, job loss and the likes. Ekocab has taken the intiative to provide for such people who might be interested, by providing a
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platform where drivers can earn a living but also provide the tools they would require. “We have partnered with financial services companies as well as car dealers to ensure that our drivers have access to a car up to 2million naira once they join our platform as a driver and we have also partnered with the authorities that we help all our drivers with the necessary registration to ensure that they can drive freely and under the Lagos code of conduct”, Alabi added.
Tuesday 16 June 2020
BUSINESS DAY
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FEATURE
FBN Holdings: Consolidating category leadership through divestment HOPE MOSES-ASHIKE
ued banking brand, the increasing dynamism in the sector has seen the bank cede some part of its sectoral leadership to a couple of other institutions that gained market shares following their emergence as new generation banks in the 1990s.
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ivestment, or divestiture as it is called by some, is the deliberate business process of letting go of an asset or investment by the owner or investor to another company or investor. It is an age-long business practice usually undertaken for a diverse number of reasons. It could be as a tactical restructuring exercise, or some necessary measure necessitated by business survival or the desire to harness and optimise potentials. ‘Divestment: Strategy’s Missing Link’, published in the ‘Harvard Business Review’ of May 2002, illustrates the power that can be unleashed with the deliberate adoption of divestment as a focus-strategy. The article notes how “smart apple farmers routinely pick and discard some perfectly good apples, ensuring that the remaining fruit gets the energy needed to reach full size and ripeness. Only through such careful, systematic pruning does an orchard produce its highest possible yield”. The lesson is that managers and corporate entities need to embrace divestitures by pruning off non-core business units to achieve greater operational efficiency. Famous author, Zig Ziglar, affirms same in one of his bestsellers. “You will never realise more than a small fraction of your potential as a wandering generality. You must become a meaningful specific,” he notes. Broken down, this counsels that one needs to subject one’s aspirations to the difficult virtue of single-minded focus to unlock fully the most returns on one’s core skills and competencies. Creating greater shareholder value A McKinsey & Company study of the performance of the 200 largest US corporations from 1990 to 2000 revealed that companies that actively combined divestment in managing their business portfolios created substantially more shareholder values than those that passively held their businesses. Some legendary executives that leveraged tactical divestiture programmes to remarkably
enhance the fortunes of their organisations, according to the Harvard Business Review earlier cited, include Jack Welch. He is on record to have divested 117 business units during the first four years of his tenure as CEO at General Electric. In the process, Welch transformed the performance of the energy giant to levels unprecedented before his stewardship. Proactive divestment fast becoming a trend Unsurprisingly, major organisations across markets and sectors worldwide are increasingly embracing divestment to strengthen their hold as market leaders. Some of the significant corporate decisions of the past six to 12 months are evidence. In September 2019, General Electric (GE) commenced the process of offloading its 50.4 percent ownership in Baker Hughes, an oil and gas company, in continuation of a series of strategic divestments from non-core business concerns to focus on its core business of manufacturing of jet engines, power plants and renewable energy. Sweden’s auto giant, Volvo AB, in December 2019 announced plans to sell its Japanbased UD Trucks business to Isuzu Motors as part of efforts to improve its cash pile and refocus the company to where it is most potent. Kellogg Co in March revealed plans to sell some assets, includwww.businessday.ng
ing cookie brands Keebler and Famous Amos, as well as its fruitflavoured snacks, pie crusts and ice-cream cones businesses to Nutella maker Ferrero Group to focus on its core strength of cereal and snacks businesses. In April 2020, FBN Holdings revealed it was in discussions to divest from its insurance business as part of a broader strategy to focus on the group’s core business of banking. Strategy imperative to financial services sector challenges Current realities in the financial services sector headlined by the incursion of smart FinTechs, resources-rich Telco operators, and nimble Mobile Wallet providers leveraging a plethora of technological innovations to meet the financial services demands of the ‘NOW’ marketplace are forcing many traditional banks to reconsider their operations in the new competitive landscape. Marketplace exigencies demand they execute a fundamental shift in their operating structures and customer engagement models to an always-on approach to be able to earn and retain today’s 24-7/365 demanding customer. However, this shift requires new tools and massive investments. Like FBN Holdings, more banks are turning to divestments as a strategy that will unlock both the greater efficiency required to cope through a streamlined business model and the invest-
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Smart leadership and solid strides in digital economy In pursuit of its brand purpose to always put customers, partners and stakeholders at the heart of its business while standardising customer experience and excellence in financial solutions across sub-Saharan Africa, the management at FBNH has taken strategic steps at reclaiming category leadership of the banking sub-sector in recent years. One such measure has been the deliberate re-tooling of its operational models with technology and inments essential to the adoption of novations. This committed effort to uprequisite technologies and tools. The Ernst & Young 2020 Global scaling its digital banking in Corporate Divestment Study Nigeria has been quick to yield finds that 85 percent of financial commendable results: First Bank was the first to isservices respondents plan to divest businesses, assets and port- sue over 10 million debit cards folios within the next two years. in Nigeria. It has over 228 million And according to Tim Buckley, users on its USSD banking service director of Energy Finance Stud- through the nationally acclaimed ies at Australasia, in the IEEFA Re- *894# banking service. First Bank port for 2019, “Over 100 globally pulled in over 3.4 million users on significant financial institutions its Firstmobile platform. have divested from thermal coal.” Primed for full banking secFBNH: Pivoting to core tor leadership However, these substantial banking Following FBN Holdings’ just strides are about to get better concluded divestment from FBN for the Nigerian banking public Insurance, the Group GMD, U. K. going by the words of Adesola Eke, stated that “the successful Adeduntan, CEO of First Bank. divestment is one more step in Commenting on the bank’s perthe direction of our medium to formance in the 2019 financial long-term strategic objective of year, he said, “Overall, we are focusing on our area of core com- pleased with the progress that petence, for greater efficiency, has been made in our digital and deliver greater value to all journey as over 85 percent of our customer-originated transactions our stakeholders”. The core competence he re- are now processed on digital ferred to is the banking business channels. We will continue to levwhich has been contributing erage technology to offer superior the most to the Group’s bottom customer service and enhance line. In the financial report for operational efficiency.” With this divestment, therethe year ended 2019, First Bank contributed 88.2 percent to gross fore, the apple farmer has pruned earnings, and 85.2 percent to the the vineyard, letting go of a perfectly good insurance business profit before tax of the Group. apple. The FBNH orchard is about New generation and shared to deliver bountiful harvests of first-class modern banking soluleadership For over a century, First Bank tions in a technology-immersed held sway as the leader in Ni- future to the youth and the youth geria’s financial services sector. at heart. Though it remains the most val@Businessdayng
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INTERVIEW ‘To meet Nigeria’s power needs, our available capacity must translate into electricity that meets customers’ needs’ CHRISTOPHER EZEAFULUKWE is the MD/CEO of Transcorp Power Limited (“Transcorp Power”), a leading power generation company (GenCo) in Nigeria and a subsidiary of Transnational Corporation of Nigeria plc (Transcorp). An alumnus of Lagos Business School, IESE Business School, Spain, University of Lagos and the Nigerian Law School, Ezeafulukwe is a member of the Association of International Petroleum Negotiators, the Nigerian Bar Association and the Institute of Chartered Secretaries & Administrators of Nigeria, amongst others, and has served as a member of the Executive Committee of the Association of Power Generation Companies. In this interview with DIPO OLADEHINDE, he highlights the challenges facing Nigeria’s power sector and Transcorp Power Limited’s plans. Excerpt:
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ou have spent about three months as the new MD/CEO of Transcorp Power Limited. How do you find your new role and what kind of challenges have you faced? Leading one of the largest power generation companies in Nigeria, Transcorp Power, which is also a significant member of the Transcorp Group, comes with huge responsibilities, given the wide spectrum of stakeholders whose interests must be taken into consideration in every decision you make and every action you take as the MD/CEO. Prior to my appointment as the MD/CEO, I supported Transcorp Power from the Group as the executive director, Business Development and Legal. I was equally a non-executive director of Transcorp Power. Both roles prepared me for my current position, as I have always been an integral part of Transcorp Power’s business. So, fitting into the new role was not a challenge. It was a kind of widening the scope of leadership responsibility one had. Having said that, I must also admit that as the MD/CEO, I no longer play only supporting roles to the power business of Transcorp, rather the buck now stops on my desk, and I have the overall responsibility of ensuring excellent execution of the business strategies formulated by our Board. What this means is that I have become a bit more of everything, which is the first thing every CEO who wants to succeed must do: I have become a bit more of a mechanical, electrical, instrumentation and control engineer, operations, health and safety, financial, human resources, administration, relationship management and legal executive. With these, I have a deeper understanding of the power generation business and the electricity markets both local and international. It has been an interesting experience. Regarding the challenges, my team and I have had to deal with issues of gas pipeline vandalism, which impacts our power generation, given that gas is our feedstock as a gas-fired power generation plant. We are also dealing with the issue of inadequate gas supply in terms of volume. and at times, quality of gas. The good news, however, is that working with key stakeholders, including our gas suppliers and transporter, we have reasonably addressed the challenge of
Christopher Ezeafulukwe
gas pipeline vandalism, and have made significant progress in addressing gas volume and quality issues. The result is the increased generation which we have continued to experience from the end of first quarter of 2020. Liquidity is a major challenge arising from the significant debt owed Transcorp Power for electricity which we have consistently generated at our cost and put on the national grid, and which has been consumed by Nigerians and Nigerian residents. We are engaging government, key operators and stakeholders in the power sector towards addressing the liquidity challenge. I must also acknowledge the recent improvement in payment by NBET and state that if the trend is sustained, and the older debts paid, Transcorp Power will be in a better position to make even more significant contributions towards addressing the power needs of Nigeria. And we are eager to do just that. Finally, I had the ‘luck’ of taking over the leadership of Transcorp Power at the point the coronavirus outbreak happened in Nigeria. COVID-19 came with its own challenges, given the unprecedented impact it had on the Nigerian economy. Fortunately for us in Transcorp Power, we had proactively put in place a Contingency Plan under our Business Continuity Strategy. The Plan ensured that we carried all our key stakeholders along, letting them know how we intended to remain operational during the lockdown period, and www.businessday.ng
brush to paint the entire privatisation exercise. The records are there to show how GenCos have increased their available capacity from 2013 when the assets were privatised to date. The real question to be addressed is why it is that only about 50 percent of the available capacity of GenCos gets to Nigerians. It has been said times without number that if 80-90 percent of the current available capacity of GenCos can effectively be transmitted and distributed to Nigerians, there would be significant improvement in the lives of Nigerians, and by extension, in the economy. This, in my view, explains why the focus of the first two phases of the Siemens deal is on achieving the transmission and distribution of existing generation capacities in the sector. To meet Nigeria’s power needs, our available capacity (as GenCos) must be translated into electricity that meets customers’ needs. It is only when the stranded capacities in the sectors are sustainably utilised that the GenCos (including Transcorp Power) and their investors would have economic justification to venture into additional capacity expansion. These real issues need to be addressed in a sustainable manner.
more importantly, notifying them of the level support we would be needing from them during the lockdown period. This paid off very well. We also implemented a residency programme for our key operations and support team members, which ensured that Transcorp Power is still they remained safe and healthy owed over $150 million by during the lockdown. This in turn the government. How has ensured their availability on-site the debt impacted your opfor the continued operation of our erations? plant, given that power generation Typically, as a GenCo, Transcorp is an essential service. As at date, Power has its own obligations, we have updated and adjusted which it must meet to remain our Contingency Plan to meet the operational and in business, and health, safety, security and envito meet its own strategic objecronmental requirements of the tive of being responsible for the workplace in the post-lockdown generation of at least 25 percent era. This has ensured the safety of of Nigeria’s power needs. The our team members as well as opsignificant amount owed us has timal productivity against all odds. effectively restrained us from meeting our payment obligations Recently, the Senate presito our (a) gas suppliers; (b) operadent called for a review of tions & maintenance contractors; the power sector privatisaand (c) lenders and bankers. It has tion as Nigerians are yet to also impacted our planned capacfully see the benefits of the ity expansion negatively. We have exercise. What’s your take? managed to continue operations There is no gainsaying that the under the excruciating burden of Nigerian power sector is very chalthe inevitable losses arising from lenged, and those challenges need these curtailments. This is so beto be dealt with urgently in order cause our investors are patriotic to truly unleash the potentials of Nigerians who have continued to the sector. Remember that we are demonstrate ability, willingness all electricity consumers, so we and readiness to partner with all are dealing with our respective government and key stakeholders share of the impact of the current to fix the power sector, knowing state of things in the power sechow critical it is to the Nigerian tor. Against this background, I economy. It is, however, imperatry to understand the frustration tive that government expedites which might have informed the action to pay the debts owed us, comments credited to the Senate and work with key stakeholders to president. However, my perspecput a sustainable payment system tive is that we should not use one in place, as we find it increasingly
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difficult to continue operating under these conditions, given their dire consequences for power generation in Nigeria. What is the current status of your acquisition of Afam Electricity Generation Company (Afam Power plc and Afam Three Fast Power Limited)? The acquisition of 100 percent stake in Afam Power plc and Afam Three Fast Power Limited by the Transcorp Consortium (of which we are a member) has reached an advanced stage, and is expected to be completed soon. The Afam assets remain a strategic fit for us, given our earlier stated strategic objective of generating at least 25 percent of Nigeria’s power generation need. We look forward to the completion of the transaction. Finally, beyond the executive management changes at the subsidiary level, which led to your appointment, there was equally a change of your president/CEO at your corporate centre. What vision does the new leadership team have for Transcorp in the short and medium term? Indeed, a new generation of leaders took charge of the affairs of the Transcorp Group and subsidiary businesses towards the end of the first quarter of 2020. This leadership team is led by Owen Omogiafo, president/Group CEO of Transcorp plc. The synergy has been amazing in the last three months, notwithstanding the peculiar challenges foisted on our operating environment by COVID-19 pandemic. As a Group, we recently unveiled our five-year strategic business goals which include the expansion of the investment portfolio of the Transcorp Group through strategic acquisitions; deepening the market share of the existing businesses, and diversifying into the manufacturing sector, to help realise our vision of improving lives and transforming Nigeria’s economy. Deepening the market share of our existing power business will be achieved through organic and inorganic growth. Thus, we intend to, amongst other things, optimise our current available capacity, increase same, complete the acquisition of the Afam GenCo, diversify our energy mix by venturing into renewables and explore other investment opportunities in the power value chain. We are long-term players in the power business.
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Tuesday 16 June 2020
BUSINESS DAY
news Nigerians stuck with cash transactions despite growing digital options FRANK ELEANYA
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ocial distancing measures didn’t cause the throng of customers that besieged banks after the lockdown was eased, it didn’t bring back tally numbers either; hundreds desperate to withdraw cash did. The queues, sporadic breakdown of terminals or dormant channels and the persistent transaction failures accompanied with long resolution periods across banking halls confirmed how cash still rules transactions in Nigeria and how digital banking still has a long way to go. A new report by Mastercard released on Thursday shows that cash continues to enjoy 80 percent patronage of all transactions in Nigeria from bank customers. Nigeria has one of the most diverse digital banking channels in sub-Saharan Africa. Both retail banks and fintech firms are aggressively leverag-
ing the different channels including mobile bank transfers, USSD, mobile money, and PoS terminals. Banks have also invested heavily to upgrade their digital banking infrastructure in recent years. The audited reports of 10 Nigerian banks showed that as of December 2018, they cumulatively invested N120 billion building and upgrading their software. This represents a 55 percent increase from 2016 when the banks collectively reported N77.35 billion investment in software technology. Their investment notwithstanding, the number of active ATMs, PoS, and mobile wallets are still not enough to cater for the growing banking population in Nigeria. While the number of BVN accounts is over 40 million, the country has a total of 17,518 ATM terminals as of December 2019, according to data from Nigeria Interbank Settlement System (NIBSS). The number of PoS
terminals is 449,998 as of January 2020 and only 306,409 of these terminals have been deployed. Nigeria also has 25 licensed mobile money operators (10 are bank-led and 15 non-bank led) catering for 15.3 million customers as of December 2019. The shortage in capacity means that the malfunction of an ATM terminal or PoS terminal easily compounds the pressure on the remaining terminals, thereby increasing traffic inside the bank halls. Hence, despite the slashing of e-transaction charges by the CBN in recent times, cash transactions continue to be preferred by many Nigerians, contributing to the recent surge in long queues on banks premises. A bank official who did not want to be named to enable him to speak freely said there could be other reasons customers prefer coming to the bank halls. “I once went around our bank halls asking customers
why they would not use their phones to make their transactions. One customer said to me, ‘I just want to see my money.’ Many of them do not trust the digital channels and prefer to stay on queue all day for a transaction they would have easily completed using their phones,” the bank official told BusinessDay. Steve Chinemere, a construction worker in Lagos, told BusinessDay he had gone to the bank to retrieve his ATM card after he received a message that it was ready the previous day. On getting to the bank located within Lekki/Ajah axis, he met a long queue with people sitting two metres apart from each other as a measure to observe social distancing. “I ended up spending three hours before I was attended to,” Chinemere said. An official of United Bank of Africa (UBA), who pleaded anonymity, told BusinessDay
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Dangote says it owns Obu-Okpella Mines
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he management of Dangote Group on Monday denied the claim by the BUA Group to the mining sites in Obu, Okpella, Edo State, refuting the ownership claim by the latter which said it relied on the recent judgment by the Federal High Court in Benin. Dangote advised the regulatory agencies to disregard completely what it called the unfounded and mischievous claim and publication by the BUAGroup,sayingitwasriddled with misrepresentations and deliberate distortions of facts. Dangote Group, in a statement signed by Devakumar Edwin, group executive director, yesterday explained that the Dangote Group through its lawyers had vigorously defended the suit filed by the BUA Group seeking a perpetual Injunctive Order against further interferences with their purported fundamental rights to property and privacy. He said the Group has appealed the High Court judgment and until the Appellate Court rules, BUA cannot lay claim or even operate on the mining site. Giving details of the case, Edwin recalled that in 2014, the Dangote Group and AICO entered into an agreement for the transfer of 2541ML from AICO to Dangote Group. “AICO thereafter applied to
the Ministry of Mines for the approval of the Transfer vide a Mining Lease Transfer Form dated 11 July 2014. In 2016, the Ministry of Mines wrote to the Dangote Group to convey the approval of the Ministry for the Transfer/Assignment of 2541ML from AICO to Dangote Group with effect from 03 February 2016. Following the approval of the Ministry, the Dangote Group became the legal holder and owner of the Mining Lease No. 2541ML. The 2541ML Certificate was thereafter endorsed to reflect the transfer from AICO to the Dangote Group,” he added. Dangote Group, therefore, warned the general public and those working with BUA Group not to take any steps to enter, mine or interfere with the disputed mining leases pending the determination of the Appeal and/or the two suits pending before Umar J. as any such steps will be considered a contempt of court. He noted that the Supreme Court in the case of Governor of Lagos State v. Chief Ojukwu (1986) 1 NWLR (pt. 18) 621), has held that: “Once a party is aware of a pending court process, even when the court has not made a specific injunctive order, parties are bound to maintain the status quo pend-
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Edo Guber: E.K Clark urges PDP to adopt Obaseki as candidate
--- as group backs his re-election bid Churchill Okoro, Benin
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Austin Obidi (l), special adviser to the governor on health, Delta State; Ifeanyi Okowa (2nd l), governor, Delta State; Mele Kyari (3rd l), group managing director, NNPC; Mordi Ononye (r), state commissioner for health, and others, during inspection of the 70-bed state-of-the-art Oil and Gas Industry intervention’s COVID-19 Isolation Centre commissioned in Asaba, Delta State.
COVID-19: NLNG targets 2022 to begin remarketing Trains 4-6 output ISAAC ANYAOGU
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he Nigerian Liquefied Natural Gas (NLNG) will begin remarketing the second tranche of its LNG trains 4, 5, and 6 from 2022 as one of the consequences of the outbreak of the coronavirus pandemic which has slowed down the industry and most economies. The company’s facility located on Bonny Island has six trains, with the first tranche being Trains 1, 2 and 3. It recently won a final investment decision for its 7th Train. Tony Attah, the company’s managing director, in a video conference interview with Pat Roberts, managing director, LNG Wordwide Ltd, on the
theme ‘Spotlight on Nigeria LNG’s Train 7’, said the company was counting on the pandemic running its full course before it begins remarketing it second set of trains. “COVID-19 has brought some pressure going by what we went through to remarket 7 million tonnes but we have learnt a lot,” said Attah. The NLNG boss said the company took the decision to start remarketing early based on the lessons learned from previous efforts. “We are more prepared now, we have learnt a lot over the remarketing of the first two trains; 4, 5, 6 will go through the same format,” Attah said. “But the offtakers for Train 7 are guaranteed and we hope www.businessday.ng
that by 2022 when efforts begin fully to remarket Trains 4-6, COVID-19 should have been out of the way, there would have been sufficient understanding about how to eliminate the virus,” said Attah. NLNG sells its output through long-term contracts of at least 10 years to markets in Europe and Asia but has struggled to renew contracts for its previous volumes (Train 1-3). An LNG train is the facility where natural gas is liquefied and purified for sale. In January, the NLNG and Total Gas & Power (TGP) signed a Sale and Purchase Agreement (SPA) for some volumes from NL NG’s Trains 1, 2 and 3. The agree-
ment guaranteed the supply of 1.5mtpa for a 10- year term on a delivered ex-ship and Free on Board (FOB) basis. It also signed similar agreement with Eni. Shortly thereafter, it also signed an agreement with Galp Trading SA to supply 1 million tonnes of LNG per year. The deal ensured the company received a 10-year supply on a delivered ex-ship basis from Trains 1, 2 and 3. The NLNG is a Nigerian gas company with 49 percent stake held by Nigeria through the Nigerian National Petroleum Corporation (NNPC); Shell has the second highest stake of 25.6 percent. Others are Total (15 percent) and ENI (10.4 percent).
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dward Clark, leader, South-South and senator of the second Republic, has called on the People’s Democratic Party (PDP) to adopt Edo State Governor, Godwin Obaseki as its candidate in the forthcoming September 19, 2020 governorship election if president Muhammadu Buhari fails to intervene in his disqualification by the All Progressives Congress screening committee. Clark made the call on Monday in a statement titled, “Edo State APC Crisis: No IndividualisBiggerthanNigeria”. The Ijaw leader’s call came shortly after a socio-political group, under the aegis of Esan Youth Coalition, threw its weight behind the re-election bid of the Governor. The former federal minister of Information, who condemned the disqualification of Governor, Godwin Obaseki by the APC screening committee under the leadership of Ayuba Jonathan, appealed to the national leadership of PDP to take advantage of the situation to adopt him as its governorship candidate. He opined that the adoption of the state governor @Businessdayng
as the party’s candidate is a golden opportunity for the party to reclaim the political leadership of the state. ‘If the leadership of the All Progressives Congress, APC, including Mr. President, fails to intervene in this unfortunate crisis in the Edo State, I would appeal to the opposition, People’s Democratic Party, PDP, to take advantage of the situation. “I repeat, PDP, should take advantage of this unfortunate crisis in APC, to adopt the incumbent Governor of APC, Governor Godwin Obaseki, as their candidate. It is a golden opportunity for the PDP to take over Edo State because GovernorObasekihassofar,donewell. “I want to believe that he will continue the good work if given a second chance. I also appeal to the people of Edo all over the world to support him to achieve his second term bid, and to PDP aspirants to also sink their interest for now in the overall interest of their Edo State”,he said. He however, advised Governor Godwin Obaseki, to in the overall interest of Edo people, declare for the People’s Democratic Party, and contest for second term, to complete his job to the people, adding that he won’t be culpable of any blame if he defect to PDP.
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news Nigeria’s fiscal headache goes from... Continued from page 1
N950 billion in the first quarter, it spent as much as N943 billion servicing debt within the three-month period. That puts the government’s debt service costs as a percentage of revenue at 99.2 percent, the highest since at least 1999. The figure is up from an estimated 60 percent in 2019, 60.1 percent in 2018, 61.6 percent in 2017, and 44.6 percent in 2016. Nigeria’s debt service cost is rising at a time when the government is faced with a double whammy in the form of lower oil prices and the coronavirus pandemic. Oil revenue, which contributes more than half of government revenue, is projected to slump 80 percent, according to government’s projections, while the economy could contract by between 3.5 percent and 8.9 percent. The impact of lower oil prices and the coronavirusinduced lockdown which affected the country’s oil and non-oil revenues only took a soft toll on government in the first quarter. “The real impact of low oil prices and the COVID-19 didn’t kick in until the second quarter. I believe the debt servicing costs got worse in Q2,” said Ayodeji Ebo, managing director at Afrinvest Securities. “This means the Federal Government doesn’t have room to borrow as much and needs private capital now more than ever,” Ebo added. The biggest implication of rising debt service costs is that the government will increasingly find it hard to implement capital projects needed to boost economic growth. It also limits how much the government can spend on essential services from education to health. “Nigeria is faced with a fiscal crisis, that’s the best way to describe it and it does explain the rush to go to the IMF,” one economist said. As at Q1, the Federal Government’s revenue was 52 percent below the budget target but expenditure powered on only 2 percent down. “This happened before the real effects of the collapse in crude oil prices hit the budget.
Oil income was only down 30 percent from the budget target,” the economist said. “It also makes me believe that the higher debt service cost has something to do with regularising the debts owed to CBN which had previously been hidden from the budget,” another economist said. “In Q2, when the full oil price impacts should hit revenue, it is going to be something to behold.” According to the data by the budget office, the country earned N950.5 billion in revenue compared to a prorated budget of N1.9 trillion, representing a whopping shortfall of 52 percent. Oil revenue was N464 million, representing a shortfall of 30 percent when compared to budget, while non-oil revenue was N269 billion representing a shortfall of 40 percent. Despite the revenue shortfalls recorded, government recurrent expenditure (debt and non-debt) remained in line with budgetary expectations. According to the data, debt service for the first quarter of the year rose to N943.1 billion divided into domestic debt (N594.23 billion), Foreign Debt (N129.51), and Interest on Ways and Means (219.38 billion), respectively. Recurrent non-debt expenditure was N1.1 trillion, largely in line with budget expectations. However, actual capital expenditure was N139.7 billion, 71.3 percent off target. Nigeria’s fast depleting revenue continues to raise questions around the solvency of the Nigerian economy. It also queries the government’s real capacity to borrow. Debt sustainability is typically explained using either debt to GDP or debt service to revenue ratio. With Nigeria’s total public debt below 30 percent of GDP, the country’s debt burden appears to be relatively light compared with many other countries. Meanwhile, debtto-GDP is not regarded as the best indicator of debt sustainability, especially in a country where tax-to-GDP is low. For Nigeria, a better indicator of debt sustainability is the debt service-to-revenue ratio, which in Nigeria has in recent years risen to levels analysts
L-R: Lai Mohammed, minister of information and culture; Mohammea Adamu, inspector-general of police, and Pauline Tallen, minister of women affairs, briefing State House Correspondents on the increasing number of rape cases and government’s efforts to curb it at the Presidential Villa in Abuja, yesterday. NAN
BusinessDay’s national discourse on Nigeria’s COVID-19 response begins today
that many of the customers are traders who come to deposit the money they have accumulated over the three days per week the government allows for markets. Part of the guidelines for easing the lockdown was that markets are only allowed to open Mondays, Wednesdays and Fridays. A BusinessDay investigation had shown how banks were resorting to issuing tallies to customers to deal with the crowd. Banks also have well-arranged
seats in their premises where customerssittowaitfortheirturn to be allowed inside the banking hall for their transaction. Part of the challenge is that many banks are yet to reopen all their branches despite a CBN directive to do so following the second phase easing of the lockdown.Afewbankshavealso been closing down branches. David Hundeyin, social media influencer and columnist on BusinessDay, had observed on Wednesday how a Standard Chartered Bank www.businessday.ng
Mansur Ahmed, president, Manufacturers Association of Nigeria (MAN); Ofovwe AigImuokhuede, director, Africa Initiative for Governance, and Philip Asiodu, former minister of petroleum. Also expected to speak at the digital dialogues are Yemi Kale, statistician-general, National Bureau of Statistics; Peter Obi, former governor of Anambra State; Charles Robertson, global chief economist, Renaissance Capital; Abubakar Siddique Mohammed, vice-chair, ANAP Foundation COVID-19 Think Tank; Sutura Aisha Bello, PPP component lead, UK Nigeria Infrastructure Advisory Facility (UKNIAF), among others, while Olisa Agbakoba, senior partner, Olisa Agbakoba Legal; Frank Aigbogun, Publisher, BusinessDay Media; Chinny Ogunro, CEO, WellSpring Health; Tolu Oyekan, principal, Boston Consulting Group, among others, will moderate the panel sessions. The programme is sponsored by CSCS, FBNHoldings, Hadiel, Jobberman, Nigeria Natural Resources Charter, Upfield, and Union Bank.
he stage is set for the national discourse on Nigeria’s response to the coronavirus pandemic being organised by BusinessDay, West Africa’s leading business news and intelligence provider. Tagged ‘A National Conversation: Mapping Nigeria’s Response to COVID-19’, the two-day digital dialogue scheduled for Tuesday, June 16 and Wednesday, June 17, with registration on-going at https://conferences.businessday.ng//anc2020, will host leaders in the private and public sectors to make sense of the country’s response to the novel coronavirus outbreak and provide clear directions on where the economy is headed. The virus outbreak, which has ravaged economies globally, has exposed Nigeria’s weaknesses, necessitating a collaboration by leaders in both the private and public sectors on ways to save the country from its current precarious state.
Business leaders, technocrats and economic experts from across various sectors will, therefore, beginning from 11am today (Tuesday) brainstorm on the best fiscal and policy response that would provide clear directions and liberate the economy from the shackles the pandemic has thrown it into. The digital event will address the front-burner issues as Nigeria reopens its economy as well as position participants to filter through the noise and take advantage of opportunities in the country. Conversations at the digital dialogues will be led by luminaries such as Zainab Shamsuna Ahmed, minister of finance, budget and national planning; Paul Collier, professor of Economics and Public Policy in the Blavatnik School of Government and director of the International Growth Centre; Akin Abayomi, Lagos State commissioner for health, among others. The digital discourse will feature nine panel sessions, four of which will hold today (Tuesday), with a fireside chat with Bola Onadele.
Koko, CEO, FMDQ Group. The panel sessions include ‘COVID-19: How is Nigeria and Africa’s trajectory different from the rest of the world?’, ‘Governance and optimising Nigeria’s response to COVID-19’, ‘Mapping Nigeria’s fiscal strategy and response’, and ‘Global economic crisis: How deep and protracted will the recession be?’. The second day of the digital discourse will feature five panel sessions that include ‘Fuelling economic diversification: Reigniting Nigeria’s energy sector’, ‘Nigeria’s education system in the era of virtual classrooms’, ‘Safeguarding the nation: Agricultural credit and national food security in an economic downturn’, ‘Investing in Nigeria’s future’, and ‘Success stories in Nigeria’. Other speakers include Ibukun Awosika, chairman, First Bank of Nigeria; Obiageli Ezekwesili, member, advisory panel, Nigeria Natural Resources Charter/former VP, World Bank Africa; Aliyu Abdulhameed, MD/CEO, NISRAL; Doyin Salami, chairman, Economic Advisory Council;
branch at the junction of Lateef Jakande and Acme Road, Agidingbi, Lagos, was converted to a Chicken Republic outlet. The bank also closed a branch at Allen Avenue, Ikeja recently. System failures and the unendingnumberoffailedtransactions also contribute to customers going back to bank branches. For instance, during the lockdown,mostATMswerenotfunctioning and mobile transaction failureswentunresolvedbecause the CBN had frozen resolution of failed transactions until the lockdown was lifted. Also, the rate of failure on
Point of Sale (PoS) transactions went on a steady rise from May 2020. Data from NIBSS showed that transaction failures rose to 15.31 percent between May 2 and 8, the week COVID-19 lockdown was eased. In an effort to bring relief to frustrated customers, the CBN had in June directed all banks to resolve the backlog of all ATMs, PoS and web customer refunds within two weeks. Unfortunately, the apex bank is silent on what it is doing to improve payment infrastructure which is a primary barrier for financial inclusion at the grassroots.
Dangote says it owns Obu-Okpella ...
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Nigerians stuck with cash transactions... Continued from page 30
MICHAEL ANI
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ing the determination of the court process”. Insisting that BUA Group does not have any right to the mining sites, Edwin recalled that though the BUA Group claimed to have title pursuant to Mining Leases 18912 and 18913, “However, as recently as 09 October 2019 while its wholly incompetent Fundamental Right Suit was still pending, the BUA Group through its subsidiary (Edo @Businessdayng
Cement Company Ltd) applied to the Director-General of Mining Cadastre Office & Centre, Abuja for the renewal of the said Mining Leases Nos. 18912 and 18913. In response to the BUA Group’s renewal Applications, the Mining Cadastre Office, in Abuja in its letters dated 18 October 2019 wrote back to BUA Group to inform them in very categorical terms that the Mining Leases Nos 18912 and 18913 were nonexistent and were not valid Mineral titles.”
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Investments
ENERGY INTELLIGENCE
Market Insight Companies Commodity Tracker Policy
OIL
GAS
PETROCHEMICALS
POWER
Boosting power supply in an era of gas disruptions ISAAC ANYAOGU
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hen the stay-athome directive of the Federal government was announced in March 2020, one of the major concerns of residents in Lagos, Ogun and Abuja was the state of power supply. The prospect of over 20 million people in two of Nigeria’s most industrialised states and the Federal Capital Territory being confined to their homes without steady power supply was a source of concern. Indeed, a day after the stay-athome order was announced, the Transmission Company of Nigeria (TCN) in a statement signed by Ndidi Mbah, its General Manager, Public Affairs, confirmed that gas supply remains a major encumbrance to power supply in the country. Nigeria’s power sector architecture is built around thermal plants which are fuelled by gas. But according to the TCN, several power plants including Geregu NIPP, Sapele NIPP, Delta II and IV, Egbin Power Plant and other independent gas-powered plants were, and continue to, suffer from inadequate gas supply. Even though no reason was given for the insufficient supply of gas, the implication was clear; tit was responsible for a reduction in the amount of electricity transmitted to Nigeria’ eleven electricity distribution companies and millions of households across the country. The two major challenges facing gas supply in Nigeria have been: poor enforcement of contracts in terms of payments to gas suppliers; and constrained production of associated gas related to crude oil production and potent vandalism. Gas supply assurance requires putting in place measures to pre-
vent sabotage and ensuring consistent payment for gas supply. On 15, April 2020, the Federal government approved the payment of N200 billion to the power sector to boost the supply of gas to the electricity generation companies (GenCos). Whilst the payment is welcome, a sustainable solution that will prevent a payment backlog buildup is more desirable for the long term. Energy analysts have said that one of the critical elements necessary to overcome the gas deficit in Nigeria is investment to boost gas production and supply capacity. In an era where oil supply projects face increasing threats, investment flow is sluggish but a number of companies operating in the country are going the extra mile to make gas available to power Nigeria’s electricity plants. For instance, Savannah Energy, a British energy company has invested over US$1.2 billion in upstream non-associated gas production, midstream gas processing and transportation through its subsidiary, Accugas. Also, Seplat
Petroleum Development Company Plc, in collaboration with Shell, has set out to deliver the US$700m Assa North /Ohaji South (ANOH) gas and condensate field project which is expected to significantly boost power supply in the country. Savannah Energy’s investment has been significantly impactful with regard to power generation in Nigeria. From commencement of the lockdown Accugas, has ensured a steady and reliable supply of gas to its customer, Calabar NIPP, which enabled the generation of 470 MW of electricity to the grid. The CEO of Savannah Energy, Andrew Knott, has committed to further investment in Nigeria. “We continue to expect to increase production levels further during the course of this year as we add new customers, such as First Independent Power Limited, who we announced earlier this year. Savannah is, and will continue to be, the partner of choice for customers seeking reliable gas-for-power in Nigeria”, he said. Savannah has demonstrated
its capacity to sustain gas production and ensure that customers’ demand is adequately met. From end of March, Accugas supplied a daily average of 114mmscfd and a daily peak of 123mmscfd to its customers. According to Oge Peters, Savannah’s Head of Commercial “Savannah has been producing gas at an increasing rate throughout this crisis to our current customers and is currently speaking to other power stations about Accugas stepping in to meet their current gas volume deficiency. We’ve proven ourselves to be a very dependable source of gas supply through this crisis.” Savannah Energy holds an 80% interest in Accugas, with 20% owned by private equity investor African Infrastructure Investment Managers (AIIM). Accugas has one of the most significant gas processing and transportation infrastructure in southern Nigeria. According to the Minister of Power, Nigeria’s power sector has lost no less than N117.8 billion to gas shortages and other factors between January to March 10,
2020. Natural gas is the source of over 87.5% of Nigeria’s power supply. The sector lost as much as N2 billion daily in some days during the period under review, with the lowest loss pegged at N1.47 billion on February 4, 2020. The Nigerian Electricity System Operator, commonly known as SO, put the nation’s installed generation capacity at 12,910.40MW, available capacity at 7,652.60MW, transmission wheeling capacity at 8,100MW, and the peak generation ever attained at 5,375MW. This is against an estimated peak demand forecast of 28,570.00MW. Unfortunately, Nigeria is only able to generate around 4,000 MW on most days, which is grossly insufficient, leading to economic losses. These losses have a significant impact on the overall wellbeing and quality of life in the country. Therefore, it is imperative to encourage gas investors by way of providing a conducive environment for their operations and for further investment in the sector. The enforcement of contracts and the protection of gas infrastructure are key to ensuring that gas suppliers are able to run their businesses profitably. Energy experts have advised that gas is critical to achieving stable power supply in Nigeria. At a time when Nigerians are desperate for stable power supply, anything worth doing to ensure steady gas supply for improved power generation is worth doing well. Considering natural gas accounts for over 87.5% of Nigeria’s power supply, a significant amount of investment is required in gas production, processing and transportation to bridge the gap between the current national generation levels of 4,000MW and the peak demand forecast of 28,570MW.
Explainer: why government’s move to regularise artisanal refining raises more questions than answers STEPHEN ONYEKWELU
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n what seems revolutionary, the Federal Government is initiating a process to clean up the artisanal refining industry in Nigeria facilitating its regulation and integration into the country’s petroleum products value chain. Stakeholder Democracy Network’s (SDN) on the ground research in the Niger Delta (Nigeria) shows that the informal economy of crude oil theft from pipelines, and camps that artisanally refine this into the finished product, is booming. Increased organisation and production capacity within the informal sector has improved its coordination with the formal oil sector infrastructure. One example of this is the illicit oil which flows into official supplies at petrol stations in Nigeria and abroad. Artisanal refining is a small-
scale or subsistent distillation of crude petroleum over a specific range of boiling points, to produce useable products such as kerosene, fuel and diesel. The artisanal refineries were developed to satisfy local demands for energy in the face of an unreliable national grid, high costs and sporadic scarcity of consumer fuels. It involves mostly traditional knowledge skills with little reliance on high-end technology. This practice relies on stolen crude as the primary raw material. In recent years, artisanal refining has become widespread in the Niger Delta and it is associated with severe environmental pollution. In a policy brief titled “Stemming the Increasing Cost of Oil Theft to Nigeria” Nigeria Extractive Industries Transparency Initiative estimated that Nigeria lost $38.5billion on crude theft alone, $1.56billion on domestic crude www.businessday.ng
and another $1.8billion on refined petroleum products between 2009 and 2018. Other estimates say the country loses 400, 000 barrels daily to crude oil theft. Whilst artisanal refiners may not account for all the crude oil theft, a substantial part of this ends up in these local illegal refineries. “The operators of these illegal refineries revealed to us that they have been taking the crude oil, refined and sold the oil without paying to the Federal Government but pay along the way to some illegal institutions,” Ita Enang, a Nigerian senator and senior special advisers to the president on Niger Delta Affairs told journalists in Abuja last week. Enang said efforts to legalise the operations of illegal refineries has reached an advanced stage, “if it was ever 50 percent necessary, it is now 100 percent necessary,” to get this done.
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According to people familiar with the industry, on the average, a typical artisanal refinery produces about forty to sixty drums of diesel and seven hundred and forty litres of premium motor spirit (PMS) also called petrol per day. The bush refinery varies in sizes. Small scale sites tend to attract women and people with low levels of capital to invest, while large scale sites are usually owned by entrepreneurs because they are usually capital intensive. However, artisanal refining raises some serious questions in addition to crude oil thefts from pipelines. Amongst other concerns, growth in the industry leads to environmental damage from oil spills via breached crude oil pipelines and refining camps and sometimes violent competition over resources. It has a huge potential of contributing to high levels of respira@Businessdayng
tory health conditions and ‘soot’ from the use of poorer quality fuels. These problems are layered upon, and a result of the ongoing environmental damage, economic underdevelopment and insecurity resulting from the oil industry and weak governance in the region. According to SDN an increasing proportion of illicitly refined oil is consumed within Nigeria, highlighting the health concerns for people living in Nigeria, amidst burgeoning demand for cheaper fuel. The growing profits within the informal sector have not been passed onto workers who continue to be pushed into the precarious informal oil industry through a lack of livelihood alternatives. The current response of, sometimes brutal, militarised crackdowns is not only failing to end the informal industry but provoking militancy in those areas and destabilising the region.
Tuesday 16 June 2020
FT
BUSINESS DAY
33
FINANCIAL TIMES
World Business Newspaper
Germany to take stake in Covid-19 vaccine hopeful CureVac
Economics minister Peter Altmaier says government wants to give the group ‘financial JOE MILLER AND CLIVE COOKSON
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er many plans to invest €300m in the private biotech company CureVac, giving Berlin a 23 per cent stake in the developer of a potential coronavirus vaccine that attracted interest from Donald Trump’s White House in March. The company is due to start clinical trials for a Covid-19 vaccine this month and is one of a handful of companies working with mRNA technology, which can produce a vaccine more swiftly than traditional methods. “We want to give [the company] financial security,” Peter Altmaier, Germany’s economics minister, told reporters on Monday. “For me, and for the federal government, it is elementary from an industrial point of view that we maintain and strengthen key industries in Germany,” he said. “Germany is not for sale. We do not sell our silverware.” The hunt for a vaccine is central to global efforts to vanquish the virus, but fears are growing of it sparking geopolitical battles if countries act in narrow selfinterest rather than take a more collaborative approach. Over the weekend a European alliance led by Germany, France,
CureVac is due to start clinical trials for a vaccine this month © Andreas Gebert/Reuters
Italy and the Netherlands struck a deal with drug giant AstraZeneca to secure up to 400m doses of a Covid-19 vaccine being developed with Oxford university. CureVac, which is based in Tübingen, south-west Germany, has yet to bring a vaccine to market. It is 80 per cent owned by SAP co-founder Dietmar Hopp and counts the Bill & Melinda Gates Foundation among its investors. In March, a German newspaper reported that the US government had sought to take over the group in an effort to secure supply of a potential vaccine after its then chief executive Daniel
Menichella met Mr Trump at the White House. Ministers in Berlin reacted with fury but the company’s management later denied that there had been an approach from the US administration. In a magazine interview, however, Mr Hopp did not deny it, and Mr Menichella has now left the company. “It goes without saying that a German company should not be developing a vaccine for exclusive use in the US,” Mr Hopp had said at the time. The European Commission has already offered CureVac €80m in funding, with its president Ur-
sula von der Leyen expressing her hope that the company could have a product ready “perhaps before autumn”. CureVac was one of the early starters in the vaccine race, but eight other groups have begun clinical trials on humans ahead of it. First into the clinic was Moderna, a US biotech group with an mRNA vaccine. Imperial College London also has a strong mRNA contender and is due to start human testing this month. Altogether, more than 100 coronavirus vaccines are at various stages of development around the world.
In a statement, CureVac said the German government would have no influence on corporate decisions, despite its investment, which will be made via the stateowned development bank, KfW. Mr Hopp said he hoped the government’s stake would help contribute to the growth of life sciences in Germany and Europe and that a “blueprint for further engagement of public and private investment will be created here”. Mr Altmaier said the investment would not need approval from competition authorities in Brussels because it was similar to the German government’s decision to buy 20 per cent of energy company 50Hertz in 2018 to prevent it being acquired by a Chinese group. “At that time, we acted very quickly to ensure that we did not lose control of critical infrastructures, and [approval from the European Commission] was not relevant,” he said. mRNA vaccines use the virus’s own genes to instruct the human body to make proteins that will provoke an immune response. Another group of vaccines use a different technology, employing other viruses that are genetically engineered to carry coronavirus components into human recipients. A third type of vaccine injects coronavirus proteins into patients to stimulate an immune response.
SoftBank invests in Credit Suisse funds that finance its technology bets Japanese conglomerate engages in circular flow of financing to Vision Fund start-ups
ROBERT SMITH AND ARASH MASSOUDI
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oftBank has quietly poured more than $500m into Credit Suisse investment funds that in turn made big bets on the debt of struggling start-ups backed by the Japanese technology conglomerate’s Vision Fund. SoftBank made the investment into the Swiss bank’s $7.5bn range of supply-chain finance funds, said three people familiar with the matter. Credit Suisse touts these funds to professional investors, such as corporate treasurers, as a safe place to park their cash in the short-term debts of seemingly diversified companies. Marketing documents sent to investors show that these funds have ramped up their exposure to several start-ups in the Japanese group’s $100bn Vision Fund over the past year. This has coincided with a disastrous stretch in which $18bn was wiped off the equity value of these technology bets. At the centre of the circular flow of funding is Greensill Capital, a Vision Fund-backed company that says it is “making finance
were funding themselves.” SoftBank, Credit Suisse and Greensill Capital declined to comment. Marketing documents for Credit Suisse’s main supply-chain finance fund show that, at the end of March, four of its top 10 largest exposures were to Vision Fund companies, accounting for 15 per cent of its $5.2bn assets. This included companies hit hard in the coronavirus crisis, such as Indian hotel business Oyo and struggling car subscription start-up Fair. A separate document shows Credit Suisse touts the funds to professional investors as a safe place to park their cash in the that Santa Monica-based Fair was short-term debts of seemingly diversified companies © Bloomberg also the second-largest exposure in Credit Suisse’s “high income” supply-chain finance fund at the fairer”. The London-based firm, companies. which employs former British This means external investors end of last year. In October, the car subscription prime minister David Cameron also bear the risk of these comas an adviser, selects all of the as- panies failing to pay their debts, company’s founder and chief exsets that go into the Credit Suisse which one person familiar with ecutive resigned shortly after anfunds under an agreement dating the arrangement said could prove nouncing plans to cut 40 per cent back to 2017. problematic if they were unaware of its workforce. Audited accounts The arrangement has allowed of SoftBank’s substantial interest. for both funds show they had no SoftBank effectively to provide “You thought you were in an exposure to Fair at the end of that financial assistance to other Vision arm’s length arrangement where month, suggesting that they only Fund companies by paying their all your fellow investors had a began financing the company afsuppliers upfront but through pure financial interest,” he said. ter its difficulties came to the fore. Clients have withdrawn more a fund commingled with other “Imagine you then found that, in investors and financing other fact, some of your co-investors than $1.5bn from these supplywww.businessday.ng
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chain finance funds this year, after a string of Greensill Capital’s clients defaulted on their debts in high-profile corporate collapses and accounting scandals, such as former FTSE 100 company NMC Health. Credit Suisse has told investors that a group of insurers and Greensill itself are covering losses in the funds. Australian financier Lex Greensill founded the company in 2011 and cemented his status as a paper billionaire last year when SoftBank’s Vision Fund invested $1.5bn into his eponymous firm. Greensill Capital specialises in supply-chain finance, where businesses borrow money to pay their suppliers. This week the British Business Bank approved Greensill to provide so-called “invoice finance” through the UK’s Coronavirus Large Business Interruption Loan scheme. “Making sure capital reaches the real economy, where it is needed most, is integral to Britain’s broader economic recovery,” Mr Greensill said of the decision.
34 BUSINESS DAY
Tuesday 16 June 2020
FINANCIAL TIMES
COMPANIES & MARKETS
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Developing economies borrow more despite debt relief initiative G20 appeal for investors to restructure fizzles out as capital inflows return JONATHAN WHEATLEY
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merging economies have raised more than $83bn through the international bond market since the beginning of April, just weeks after a push by the G20 to offer many poorer nations debt relief. Data collated by the Institute of International Finance, an industry association, show that developing economies are financing their coronavirus-driven deficits by accessing the global financial markets, rather than by attempting to restructure their existing borrowings. This marks a turnround from the panic that gripped markets in March, when debt issuance froze and foreign investors withdrew a record $83bn from stock and bond markets in the 30 largest emerging economies, according to the IIF — outflows that dwarfed those experienced in the financial crisis of 2008-09. Some $23bn has found its way back into emerging economies in April and May, IIF figures suggest. “There has been a rebound, and funding conditions are normalising,” said Robin Brooks, chief economist at the IIF. In response to the liquidity crunch, the G20 group of wealthy nations offered to let 73 of the world’s poorest countries postpone repayments on official bilateral loans until next year; about half the countries have expressed interest and are expected to defer about $12bn of payments this year. But although the G20 appealed to banks and bondholders to offer relief on similar terms, as yet there have been no reports of private sector involvement. Some countries have expressed concern that
Foreign investors are returning to Brazil after the coronavirus-driven sell-off in emerging markets © Bruna Prado/Getty
any restructuring of private sector debt could damage their access to financial markets, undermining their ability to borrow more. Much of the recent issuance has come from countries with investment-grade credit ratings such as Israel, Saudi Arabia, Qatar and the United Arab Emirates, which between them have raised more than $50bn. But non-investment-grade countries have also issued bonds, including Guatemala, Paraguay, Serbia, Egypt, Albania and Brazil. “In May, we had record issuance of emerging market hard currency debt [issued primarily in dollars and euros],” said Uday Patnaik, head of emerging market debt at Legal and General Investment Management. “It has been predominantly investment-grade but in the past two weeks we’ve seen the market open up for [speculative-grade sovereign and corporate] issuers in sub-Saharan Africa and Latin America.” Gabriel Sterne, Oxford Eco-
nomics Brazil was among the latest to come to market, raising $3.5bn this month by selling a five-year bond paying interest of 3 per cent and a 10-year bond paying 4 per cent — lower rates than expected. It came as foreign investors made a tentative return to the country’s stock market after months of heavy outflows. Analysts attribute the improvement in financial conditions to the US Federal Reserve’s action to pump dollars and extra liquidity into global financial markets — both by buying securities via its quantitative easing programme and by the rollout of dollar swap lines to leading central banks. “The Fed fire-hose has reached emerging markets,” said Jim Barrineau, head of emerging market debt strategy at asset manager Schroders, adding that rising risk appetite and a tentative resumption of economic activity in some countries was helping to return the market to normal conditions.
“If it comes to the point where more broadly non-investmentgrade countries and companies can issue [debt], then the whole voluntary [G20] standstill becomes moot,” he said. Nevertheless, analysts warn that the outlook for economic growth remains bleak, which could further increase countries’ need for finance. The IMF is expected this month to revise downwards its global economic forecasts, having already predicted the worst recession since the 1930s. Kristalina Georgieva, the fund’s managing director, warned last month that developing countries would need more than the $2.5tn in fiscal support it first estimated would be required to see them through the crisis. “Undoubtedly, fundamentals are materially worse than they were six months ago but offsetting that is monetary policy. That is the key lever that could allow
countries to refinance themselves at reasonable levels . . . They will have to test the water slowly,” said Jared Lou, a portfolio manager at William Blair Investment Management. Analysts also worry about the forthcoming burden on countries’ healthcare systems as the pandemic continues to spread, and the legacy of much greater debt burdens that await developing countries when their economies eventually return to something like normality. “Many countries will be looking at budget deficits in the high single figures [as a percentage of gross domestic product] or higher,” said Stuart Culverhouse, chief economist at Tellimer, an emerging market research company. “Their financing needs are going to be large and the ability of some countries to issue at that size is going to be stretched . . . You can’t rule out a full-on debt restructuring for some.” But Gabriel Sterne, head of macro research at consultancy Oxford Economics, said it was reasonable in an environment of low global interest rates for developing countries with strong institutions to borrow more, even to raise the size of their debts relative to GDP to levels previously regarded as dangerous, in order to fund their recoveries. Warnings about the failure to learn from previous debt crises should be set aside, he said. “The mantra of ‘this time is different’ has been taken too far,” he said. “People have railed too much against debt and the result has been stagnation. But this time really is different because debt service costs are lower and will stay lower for ages. The legacy of not taking on debt is excess savings, which has been terrible for the world.”
US shale producer Extraction files for bankruptcy
After a surge in its shares last week, the once high-flying shale producer files for bankruptcy protection DEREK BROWER AND MYLES MCCORMICK
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xtraction Oil & Gas, whose share price soared threefold during a frenzy of buying last week, declared bankruptcy late on Sunday, making the large US shale producer the latest victim of the worst oil-price crash in decades. The Denver-based company filed for Chapter 11 protection as a 30-day grace period on a bond interest payment expired, leaving it in default. Extraction is the second big US shale producer to go bankrupt during a crude price collapse triggered by soaring Saudi supply and the collapse in global energy demand prompted by the pandemic. Whiting Petroleum filed in early April. “After months of liability management and careful analysis of
our strategic options, we determined that a voluntary Chapter 11 filing with key creditor support provides the best possible outwww.businessday.ng
come for Extraction,” said Extraction chief executive Matt Owens. The company’s liquidity deteriorated sharply after plummeting
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oil prices hit cash flows and shortterm lenders reduced the group’s credit facility. Extraction warned investors in May that it might not survive as a going concern. The cuts in capital expenditure the company set out did not reassure analysts, who said this would worsen its liquidity by cutting output. Extraction produces almost 100,000 barrels a day of oil equivalent from shale wells in Colorado’s DJ Basin. But its expansion efforts, including developing infrastructure for pipelines, and share buybacks left a debt pile of about $1.6bn against assets of $2.7bn in the first quarter. The restructuring, which did not receive the backing of all of its creditors, will include a debt-forequity swap, leaving unsecured noteholders in control of the company. @Businessdayng
The group said on Sunday that it had obtained a commitment of $125m debtor-in-possession financing, made up of $50m in fresh funds and a roll up of $75m of existing loans. Extraction was founded in 2012. Its listing in 2016 was the energy’s sector’s biggest initial public offering following the 2014 oil price crash, but its market capitalisation surpassed $4bn shortly after the IPO. On Friday, it was less than $100m. Last week, retail buyers briefly drove Extraction’s share price up by almost 300 per cent. On Friday, the Financial Times reported that the company’s bankruptcy was imminent. The oil crash had triggered 18 shale patch bankruptcies by the end of May, according to law firm Haynes & Boone. Seven came last month.
Tuesday 16 June 2020
BUSINESS DAY
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property&lifestyle
Reasons LASG is in aggressive push for improved environment, infrastructure CHUKA UROKO
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esides the pursuit of its THEME Agenda which includes Traffic Management and Transportation, Health and Environment, Education and Technology, the Lagos State government is also on a race towards becoming a 21st Century Economy in which businesses will thrive and residents prosper. To achieve this, the state government is not only creating an enabling environment but also building efficient roads, rail and waterways infrastructure that will support private businesses and also attract foreign direct investment (FDI) that will contribute to actualizing the Greater Lagos dream. Unarguably, Lagos is a peculiar city-state with an estimated population of 20 million which is projected to hit 30 million in the next decade. This is despite it being the smallest state in Nigeria with a land area of 3,577 square kilometers (sqkm), about 0.4 percent of Nigeria’s land area of 923,768sqkm. The National Bureau of Statistics (NBS) once reported that about 260,000 people come into Lagos daily, noting that only about 20-25 percent
of this number goes back to their original places. The implication of this is that the existing infrastructure and facilities are overstretched, necessitating an urgent need to be innovative and proactive in providing more. For those reasons, coupled with the understanding that infrastructure affects the quality of lives and the development of any society, the present administration in the state being piloted by Governor Babajide Sanwo-Olu, has, in the last one year, been pushing aggressively to provide the needed infrastructure. “Good roads infrastructure remains key to the economic development of any nation as it is vital for smooth socio-economic activities. The economic impact that good infrastructure has on any society cannot be over-emphasised. It gives direction to the developmental plan of any society,” Sanwo-Olu said in his address to mark his one year in office. Continuing, the governor said, “we are working to make our roads better. Several roads have been rehabilitated while others are at various stages of completion. The OshodiAbule- Egba BRT Corridor, the Pen Cinema Bridge, the Lagos-Badagry Expressway, the Agric-Ishawo Road and
the four junctions’ improvement projects at Allen Avenue, Maryland, Ikotun and Lekki among others would soon be ready for public use.” According to him, a major highlight of their intervention in roads was the commissioning of a network of 31 roads at Ojokoro area in December 2019, assuring that they were
not resting on their oars as more completed projects have been slated for commissioning in the coming days. These include the Intelligent Transportation System (ITS) for the Bus Reform Scheme at Ikeja and Oshodi Bus Terminals; Oyingbo Bus Terminal; Concrete Jetty with Shoreline Protection and Waiting Shelter at Baiyeku,
Housing deficit in Nigeria is an urban problem, says Minister CHUKA UROKO
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igeria’s Works and Housing Minister, Babatunde Fashola, has said that housing deficit in the country, which has remained a subject of contention and controversy, is simply an urban problem arising from people migrating from the rural and semi-urban areas to the cities. For too long, there have been speculations and even conclusions on the size and depth of Nigeria’s housing deficit. Some people estimate the deficit at 17 million units, citing World Bank and/or United Nations report. An unconfirmed report on ‘The State of the Housing Market in Nigeria’ estimates the deficit at 20 million, stressing that the deficit is both quantitative and qualitative. This means that the
available housing stock is not enough while even some of those available are below acceptable standard. But the minister thinks differently. He says the figures being bandied about are figments of people’s imagination because, according to him, these figures are “unclarified, unverified and unproven.” Fashola, who spoke at a Channels TV programme, Politics Today, recently, recalled that “the last time Nigeria held its census was 2006. Since then, we have not held another. Then, where did we get this figure? Where did we get the 17 million housing deficit? Some people say it is from the World Bank. I have asked the World Bank and they have disowned that figure, saying it did not come from them.” “My understanding of housing deficit is that it is
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largely an urban problem— people migrating to the cities. If you go to the rural areas, you will see houses owned by people living in the cities. These houses are locked up. We cannot be talking about housing shortage when we have many houses that are empty,” he explained The minister pointed out that, in every city in Nigeria, there is one empty house or another, asking if the figure everybody is running after includes all those empty houses. “The deficit is not accurate if it does not factor in what we have that is not used,” he insisted. He hopes however that when next the country conducts another census, it will be able to dimension how large its housing deficit is, arguing that if a proper diagnosis is not done, the treatment will also be wrong in terms of wrong prescription and wrong dose. Reviewing the activities of his ministry in the last five years, Fashola noted that it is difficult to get the full picture of housing prosperity in the country if attention is focused only on what the federal government is doing as the state governments and the private sector are also doing their bit. Be that as it may, the minister said government was approaching housing in Nigeria
from a broad spectrum of developments. According to him, government is building houses directly through the ministry in 34 states. The first phase of the development has finished and they have started the second phase, employing hundreds of people. “Apart from that, the federal mortgage bank of Nigeria (FMBN) is also intervening in housing development by funding estate developments. I can tell you that the bank is funding over 5000 housing units across the country. It has granted over 5,301 mortgages worth over N38 billion. It has also granted home refurbishment loans to over 42,000 people valued at N34 billion. “The FHA is also building across the country. In addition to that, there is also what we call site and serviced scheme because not everybody likes to buy fully built government property. But they want government land to build their own. That is going on in states like Edo, Abia and Imo where we are giving land and providing infrastructure,” he said In the last two years, the minister disclosed that he has personally signed 3,450 certificates of occupancy (CofO) and more were coming in, believing that a house is not worth its value unless it has CofO.
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Ikorodu LGA; Fadipe/Salami/ Eyiowuawi/Odubanjo Streets in Shomolu LGA; Alhaji Akinwunmi Street in Mushin LGA; and Adagun-Imeke-IworoAjido-Epeme Road in Badagry LGA. As a way of linking communities and promoting local economies and enterprise, the state has also done repairs on a
good number of critical roads in what it called ‘Operation 116 Roads’. This cut across the 20 local government areas and the 37 local council development areas to the delight of the residents who have at various times commended the state government for the good work. “I write on behalf of the Igbogbo community to express our deep appreciation to the Lagos State government and the public works corporation for the rehabilitation of Oba Omolaja Ogunlewe Road which was last done in the early 1980s. God bless you abundantly,” Olorunfunmi Basorun, the Asuwaju of Igbogbo, prayed for the state in gratitude. Similarly, Awojirin Sijibomi Abiloa, a resident of Ejigbo, thanked both the state government and the public works corporation for the good work done in rehabilitating IyanaEjigbo and NNPC junction. Consistent with the THEME Agenda which has Traffic Management and Transportation as its first leg, the Sanwo-Olu administration is has not stopped at roads infrastructure alone. Bearing in mind the pivotal role of transportation as a major driver of socio-economic activities, the governor stated that their goal was to develop a reliable intermodal transportation system.
Gtext Homes empowers real estate entrepreneurs through mentorship, N1m grant ENDURANCE OKAFOR
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aving empowered Nigerian entrepreneurs in several industries through grants and training, Gtext Homes, one of Nigeria’s respected real estate companies, recently extended its kind gesture to the real estate industry as it gave cash prize and mentorship to young industry players. After receiving entries from hundreds of realtors and real estate marketers across the country for Gtext Homes 1 million pitch contest, the Lagos-based real estate company selected three winners who, due to their passion for the property industry, were able to meet the requirements for the prize. According to Gtext Homes, the three days mentorship class which was part of the winners’ package would enrich the young consultants with the knowledge that will enable them to succeed in real estate marketing while the N1 million cash prize will serve as a catalyst in enabling them to achieve their goals. “The idea of the 1 million pitch contest is to empower young real estate marketers. The initiative is to help train and equip passionate real estate realtors with knowledge @Businessdayng
and funds that would enable them to attract more sales and become more successful,” Emmanuel Ikechuwku, Manager, Gtext Homes said. Explaining how the 1 million pitch contest will impact the three winners, Ikechuwku said the training and cash prize were targeted at empowering the realtors by giving them leverage to become more competitive in the industry. Meanwhile, the three winners were given the cash prize of N1million with the overall winner taking home N500,000, while the first and second runner up got N300,000 and N200,000 respectively. “I am an independent realtor and the winner of Gtext Homes 1 million pitch contest. I am very excited about the opportunity,” Maureen Ibeh, one of the winners of the competition said at the cheque presentation, adding that she was “going to invest the money in promoting what she knows how to do bestmarket and sell real estate.” The 1 million pitch contest by Gtext Homes, a subsidiary of Gtext Global, a group of companies managed by, Stephen Akintayo, is coming after the company’s Upgrade Summit of 2020, a similar initiative that made three SMEs N1 million richer.
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Tuesday 16 June 2020
BUSINESS DAY
news
Analysts heighten calls for refineries’ sale as AEDC/AQUIVIS launch smart high-tension fault 2018 financial report portrays them as liability detector to reinforce grid stability, management HARRISON EDEH, Abuja
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nalysts in Nigeria’s oil and gas sector have made an urgent call for the sale of Nigeria’s three main refineries on heightened concerns of their persistent loss and liability to the nation’s economy. The Nigerian National Petroleum Corporation (NNPC) has published audited financial statements online in a bid to improve transparency around its operations. In the report, the corporation’s three refineries in Warri, Port Harcourt and Kaduna reported a combined loss of N154 billion with the Kaduna refinery recording zero revenue for that year. The statements published on the company’s website on Sunday were for 2018, and were signed by Mele Kyari, the NNPC CEO. The NNPC also published audited accounts online of its 20 subsidiaries and business divisions for the first time. Henry Ademola Adigun, an oil sector governance expert, tells BusinessDay that there is no point keeping the refineries
since they are constituting huge burden to the government, and urges the government to sell them off. According to the published report, the National Petroleum Investment Management Services (NAPIMS) is the group’s most profitable division. It reported revenue of N5.04 trillion ($13bn) in 2018 and profit of N1.01 trillion. That compares with a loss of N1.65 trillion in 2017. The report shows total assets managed by NAPIMS at N18.6 trillion, with the oil and gas components valued at N14.2 trillion. Its oil production subsidiary, the Nigerian Petroleum Development Company, reported a post-tax profit of N179 billion in 2018. Timipre Sylva, Nigeria’s minister of state petroleum resources had earlier in the year disclosed of government’s plans to engage Original Equipment Manufacturers in an Operate Manage and Maintain strategy. But analysts insist selling off the refineries and total deregulation of the downstream sector would be better than the poorly run Nigeria state-owned oil firms.
Union Bank, TEDxLagos collaborate to host virtual gathering
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nion Bank recently partnered the organisers of TEDxLagos to host entrepreneurs, social advocates, innovators and thought leaders at the virtual TEDxLagos event tagged ‘Upside.’ TEDx is a global platform created in the spirit of TED’s mission, “ideas worth sharing.” The virtual gathering was a celebration of brilliant ideas and inspiring talks from an interesting line-up of speakers that included medical practitioner, Folakemi Ezenwanne; venture capitalist, Chika Nwobi, and environmental and climate governance guru, Chukwumerije Okereke. Top on-air-personality, BellaRose Iyere-Okojie, was also on hand to entertain the audience in her role as event host, while music sensation, Di’Ja thrilled participants with a musical performance. Speaking on the bank’s partnership with TEDxLagos, the head of corporate communications and marketing at Union Bank, Ogochukwu Ekezie-Ekaidem said, “Union Bank is pleased to partner with TEDxLagos for
the third consecutive year. Now, more than ever before, we believe that great ideas and collaboration are key to moving Nigeria, and indeed, our world forward. Therefore, this partnership with TEDx, a platform known to unravel and amplify brilliant ideas, is one we have identified as a worthy cause, especially in these times.” A major highlight of the day was the session Rise: Innovating in Uncertainty, hosted by the bank. This aspect of the programme was designed to shine the spotlight on individuals and groups who are innovatively rising in the face of the difficult times the world faces today. Speakers in this session included Simi Nwogugu, Trustee of Project Ark and executive director, Junior Achievement of Nigeria, and two winners from the ongoing Union Rise Challenge - Katfwang Fwangkat, the CEO Yen Express, a telemedicine and mobile pharmacy platform, and Adams Bamigbose, founder, AGL Artistry, a social enterprise focused on converting waste into Art, Furniture and more recently, mobile hand washing devices.
Businesses to benefit from simpler payments with ‘ALAT for Business’
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s businesses around the world resume despite the COVID-19 pandemic, ALAT for Business is set to offer more value to businesses through its digital solution. The application, which is the corporate version of ALAT, has a broad transaction limit of up to 2 Billion Naira, allowing businesses to carry out as many transactions as they require. Speaking on its most notable features, Samuel Robson, head, ALAT for Business, disclosed that the application allows account holders with single and multiple signatories operate their account virtually, without stepping into the banking hall to authorise transactions. “This is a time for businesses to leverage secure platforms that
allow them to get on with their businesses virtually as this will help to keep their businesses afloat and keep them safe,” Robson said. Speaking further, he disclosed that with ALAT for Business, entrepreneurs can now schedule payments to as many as 5,000 beneficiaries at once. “This will free up their much needed time and allow them to carry out more tasks,” he added. With the new feature, business owners can now carry out transactions without stepping into the banking hall. Robson explained that this is one of the ways Wema Bank is leveraging digital technology to provide solutions to customers and help fight the spread of the COVID-19 pandemic. www.businessday.ng
HARRISON EDEH, Abuja
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EDC and Aquivis Technologies Limited, a company in Africa’s energy sector, have announced the deployment of a smart high-tension overhead line fault circuit locator in Nigeria, a step that is key in ensuring grid and feeder management and stability, while enabling easier fault detection. This smart grid outage management solution deployed for the Abuja Electricity Distribution Company (AEDC) is first of its kind in Nigeria, and is a pilot AEDC seeks to address the long time it takes to repair faulty high tension circuits and prolonged outages such as the 11KV and 33KV overhead feeders The solution, it would be noted, has been deployed in countries like United States of America, Canada, United Kingdom and Scotland, United Arab Emirates as well as South Africa. Industry players say the solution could not have come at a better time than now in the Nigerian Electricity Supply Industry (NESI), when customers are becoming increasingly concerned about the service delivery in the sector, especially in the area of feedergrid management where outages trigger the loss of power supply to numerous customers of different categories including homes, offices, medical and educational facilities which are just beginning
to recover from the debilitating effects of the COVID-19 pandemic. Oyebode Fadipe, general manager, corporate communications in AEDC, in a statement, notes that this step has demonstrated the company’s continued commitment to the reinforcement of its distribution network and the improvement of its services to customers. The engagement of Aquivis to deploy the high-tension faults clearing solution, he says forms part of AEDC’s initiative to reduce its Aggregate Technical Commercial and Collection (ATC&C) losses as well as improve network reliability of the 11kV and 33kV overhead feeders as well customers’ satisfaction. The statement discloses that the deployment of the solution by AEDC is part of its network reinforcement programme. The deployment of the real-time overhead fault detection monitoring solution has brought about improved network visibility, reliability and operational efficiency in AEDC. Managing director of AEDC, Ernest Mupwaya, confirms in the statement that the successful implementation of the smart overhead fault detection monitoring solution by Aquivis Technologies Limited has enabled AEDC to address the operational challenges of incessant tripping, fault detection and prolonged outages on both the 11KV and 33KV feeder infrastructures where it was deployed in the company’s network.
Stakeholders list path for growth, recovery, prosperity for gas industry after COVID-19 OLUSOLA BELLO
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takeholders have suggested ways by which Nigeria’s gas industry can survive after experiencing COVID-19, as they urge the government to stimulate the industry to engender competition, get a regulator that will oversee the activities of operators to stimulate gas market and framework. According to them, the challenges of gas price, infrastructure and gas transmission should also be comprehensively addressed to create a vibrant industry. The stakeholders, who spoke at a webinar conference organised by the Nigeria Gas Association (NGA) with a theme “Natural Gas Road Map for Nigeria’s Recovery, Growth and Prosperity,” stated that fiscal system and terms for gas anchored on stimulation of supply growth would be the way out of the doldrums already created by COVID-19. Austin Avuru, managing director of Seplat Petroleum Development Company, says there is the need for the completion of the various infrastructural projects embarked upon so many years ago, mentioning the OB3 gas pipeline, Ecravos -Lagos Pipeline 2, which there non-
completion early enough has affected companies’ investment in the gas sector. He says Nigeria must have a change of mind set that sees oil and gas as a rent seeking asset to an enabler of the economy, just as he states that there is need to encourage domestic gas consumption. This is the time to fixing loose end, as regards gas infrastructure is important, he states. Commenting, David Ige, former group executive director, Gas and Power, Nigeria National Petroleum Corporation (NNPC), notes that currently the economy faces a tough outlook with declining revenue. He says if we want a vibrant gas industry something must be done about the cost of product of gas upstream, which is not acceptable, and that there must be a targeted policy intervention that supports secondary industries for the purpose of the county’s industrialisation. The gas infrastructure should be attended to so that the commodity can be taking to where it need for use for industry purposes, he says. The power sector challenges, he stresses, should be addressed so that the sector can be serviced effectively by gas sellers.
L-R: Ayodeji Joseph, member of House of Representatives from Apapa Federal Constituency; Babajimi Benson, member, representing Ikorodu Federal Constituency and chairman, House Committee on Defence; Abdulwasiu Omogbolahan Lawal (Abisogun II), new Oniru of Iruland; Femi Gbajabiamila, speaker of House of Representatives, and Rotimi Agunsoye, member representing Kosofe Federal Constituency, during their congratulatory visit to the new Oniru of Iruland, in his palace in Lagos State.
Mystery deaths: Bonny Chamber works with multinationals to protect businesses, workers … as BOCCIMA approaches CBN for interventions in Bonny SMEs Ignatius Chukwu
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or about a month now, mystery deaths had caused panic in Bonny, the host island of multinational oil corporations and the Nigeria Liquefied Natural Gas (NLNG), which is set to begin construction of the $10 billion Train 7 project. Both state and national health officials descended on Bonny to investigate the cause. Covid-19 was blamed for about 60 percent of numerous deaths while resistant strains of malaria and typhoid caused the rest. Now, the Bonny Chamber of Commerce, Industry, Mines and Agriculture (BOCCIMA) says it has stepped in to co-
ordinate series of activities to bridge the gap of awareness and explore opportunities for interventions for businesses on the island. In an interview, Constance Nwokejiobe, director-general of BOCCIMA, says the Chambers is working hard to create support for businesses on the island, saying the BOCCIMA has already guaranteed the applications of SMEs in the area for the N50 billion Central Bank of Nigeria (CBN) loan support as palliatives to small businesses. “We are currently discussing with CBN on other interventions that can be done to cushion the projected recession envisaged and the impact
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on businesses,” she says. These apart, the Chambers continues to encourage the multinational corporations including the NLNG to roll out medical and other interventions. The NLNG particularly has been visible in the efforts to save Bonny as the pandemic rages. The managing director, Tony Attah, told Governor Nyesom Wike of Rivers State what the NLNG was doing in Bonny so far on COVID-19., noting, “As a company, we triggered critical preventive measures in our operations very early and promptly initiated engagements with relevant Rivers State and Bonny Local Government authorities. The objective @Businessdayng
was to proactively identify urgent intervention programmes to ensure the safety of all lives on Bonny Island. “The outcome of these engagements brought Nigeria LNG to the forefront of implementing interventions in the Kingdom and included: Food palliatives for the community to alleviate hardship in the midst of restrictions on movement and business activities; Establishment of a well-equipped 10-bed Holding Centre for Covid-19 patients at the Bonny Zonal Hospital to accommodate a potential outbreak and need for isolation. This facility is presently being upgraded to a Treatment Centre on the advice of Rivers State government.”
Tuesday 16 June 2020
BUSINESS DAY
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Tuesday 16 June 2020
BUSINESS DAY
COMPANIES & MARKETS
COMPANY NEWS ANALYSIS INSIGHT
ECONOMY
Afreximbank re-appoints Nigeria’s Benedict Oramah as president, raise $500mn equity OLUFIKAYO OWOEYE
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hareholders of Afreximbank have voted and re-appointed Benedict Oramah as President of the PanAfrican multilateral financial institution for a second 5-year term. The decision was announced in Cairo, following Afreximbank’s 27th Annual General Meeting of Shareholders which was held by the circulation of resolutions due to the COVID-19 pandemic situation. In his acceptance statement released shortly thereafter, the re-appointed President told shareholders that the Bank’s ultimate goal under his second
term in office was the realization of Africa’s strategic ambition to create an integrated market. “We want an Africa where the foundations of the African Continental Free Trade Agreement (AfCFTA) are laid expeditiously so that the 84,000 kilometres of borders that have divided us for ages can begin to come down. AfCFTA would drive the industrialization of Africa, support the emergence of regional value chains, turn Africa’s creative and cultural assets into engines of growth, grow jobs for the continent’s youth, convey respect to Africans wherever they may be and better prepare the continent to compete more effectively in the
global markets,” he said. Oramah noted that between 2015 and 2019, Afreximbank disbursed more than $30 billion in support of African trade, with over $15 billion channelled towards the financing and promotion of intra-African trade. A resolution proposing the re-election of Stefan-Luis Francois Nalletam as a director representing Class A Shareholders, and Kee Chong Li Kwong Wing as a director representing Class B Shareholders was also approved by the meeting. The shareholders also approved the 2019 audited accounts as well as the proposal to raise an additional $500
million in equity within Afreximbank’s current strategic plan called Impact 2021 Africa transformed. The Bank was established in Abuja, Nigeria in October, 1993 by African Governments, African private and institutional investors as well as non-African financial institutions and private investors for the purpose of financing, promoting and expanding intra-African and extra-African trade. The Bank, headquartered in Cairo, the capital of the Arab Republic of Egypt, commenced operations on 30 September, 1994, following the signature of a Headquarters Agreement with the host Government in August, 1994.
L-R: Wesley Kafidiya, district governor, Lions Club International Association, 404B2 Nigeria; John Oriazowan, president, Ikeja Metro Lions Club; Kayode Oshinuga, 2nd vice district governor, Lions Clubs District 404B2 Nigeria, and Blessing Umebali, region 6 chairperson, during the Lions Clubs International Association Region 6 Mark of Excellence Awards in Lagos
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terling Bank Plc, Nigeria’s commercial bank, has offered a safe option for investments in its Doubble.Ng product to discerning investors seeking double-digit investment income and safety in this period of heightened market volatility and unpredictable macroeconomic environment. Doubble.Ng is an investment product which is denominated in Naira and Dollar with short and long-term options. According to Adekunle Feyisitan, product manager, Sterling Bank, Doubble.Ng was designed to address the concerns of individuals who are looking to accumulate savings and regular investment
JUMOKE AKIYODE-LAWANSON
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mile has announced some significant changes to its data plans as a measure to cushion the negative effect of the COVID-19 pandemic on its customers and the nation’s economy. On offer, is a range of data plans with tenor that range from daily, weekly, monthly and yearly. The daily and weekly offers boast of varying validity periods of one day, two days and seven days. The price tag, in this category, ranges from N300 to N1,500 for data of up to 1GB to 6GB. For the monthly offer the validityperiodis30dayscanbeused at anytime of the day and night. The prices range from N1,000 to N18,000 with data volumes and is between 1.5GB and 100GB. The validity period for the BumpaValue plans offer three options of 60days, 90 days and 120 days with data volume of 50GB, 80GB and 100GB. For the one year data plans with price range of N8,000, N16,000, N36,000, N70,000 and N120,000, customers can get data volumes of 15GB, 35GB, 90GB, 200GB and 400GB According to Abdul Hafeez, chief marketing officer, Smile,
the company’s resolve to revamp its data plans is to lessen the burden on families whose wards have been taking online classes at home and businesses whose workers have been working remotely by availing them the most competitive data offers in the market. “We are revamping all our data plans making them the best value and usable anytime of the day” Hafeez said. A number of customers on the Smile network have commended the company for introducing more value, anytime use and greater affordability through the revamped data plans. According to Oluseyi Balogun, a Smile customer based in Anifowose Area of Ikeja, the revamped data plans will help cushion the biting effect of the inclement economic times. He gave kudos to Smile for always looking out for the best interest of its customers. Ngozi Madukor, an undergraduate in one of the Higher Institutions in Lagos opined that the revamped data plans is pocket friendly and exactly what is needed by the teeming Nigerian youths whose disposable income is daily being depleted by contending needs.
GNI partners Ogun State Security Trust Fund to boost safety MODESTUS ANAESORONYE
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Doubble.Ng offers investors 100% investment income, safety HOPE MOSES-ASHIKE
Smile revamps data plans for better value to customers
income over a specific timeline to plan for future business or lifestyle needs. He listed benefits of the product options to include guaranteed income stream and growth for a fixed period of time, safety from market volatility, ability to access loan facilities against balance and opportunity to transfer the annuity to a spouse or any other named beneficiary. Feyisitan said, “With Doubble.Ng, a customer can choose to invest either a lump sum in one contribution or in smaller monthly contributions, which could be for the duration of 12 to 120 months with all pay-outs remitted either monthly or as a lump sum once target is achieved to named beneficiaries. “It empowers individuals
to plan towards future consistent cash outflows such as payment for children’s further education, mortgages or funds for business start-up. Doubble.Ng is actually the perfect investment vehicle for those planning to transition from paid employment to owner-businesses and need to plan the cash flow in the business growth years”. The product manager added that Doubble.Ng target option allows the beneficiary to set target saving and interest income in Naira or Dollar over a specified period while additional voluntary contributions can be made into the investment account apart from the regular contributions based on the initial set date because an investor is at liberty to take up multiple plans.
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He assured customers of efficient and prompt service delivery and urged those in active employment as well as entrepreneurs to take advantage of the high-income growth product to maximise returns on investment at this volatile and uncertain time. The product offers four variants to discerning investors, including 3, 5 and 10 year plans as well as short-term target investments. With a 3-year contract plan during which the investor makes monthly contributions for the first three years, Sterling Bank will pay out the invested amount plus returns to the beneficiary every month for the following three years. It has returns on investment of 125 percent.
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ne of Nigeria’s foremost underwriting firms, Great Nigeria Insurance Plc has partnered with Ogun State Security Trust Fund (OSTF) as part of its Corporate Social Responsibility (CSR) initiative. The Company supported the Ogun State Security Trust Fund (OSTF) through donations to enable the agency discharge its duty of securing the lives and properties of indigenes and residents of the state. Cecilia O. Osipitan, managing director/CEO of the Company commenting on the donation mentioned that as a socially responsible corporate entity, the company’s donation was the fulfillment of the organization’s resolve to support causes that will help create a safer and better society. She stated that the partnership with the government is focused on ensuring that the desired security stance is maintained within the state and its environs. She also said that the donation was informed by the need to boost the Security Fund’s operation, as security is very essential to economic development; considering the fact that no investor will commit funds into an unstable economy @Businessdayng
characterized by lawlessness, disorderliness and chaos. She reaffirmed continuous support to the Ogun State Security Trust Fund (OSTF) in actualizing its main objective which is to maintain the security and welfare of citizens in building a safe community. Cecilia O. Osipitan commended the Government of Ogun State for encouraging an enabling environment for businesses to thrive, pointing out the remarkable improvement in security across the state. According to Osipitan, the Ogun State Security Trust Fund has witnessed great re-engineering by Governor Dapo Abiodun which will greatly impact the operations of the security initiative, urging private sector stakeholders to increase their contribution in funding the state’s security initiative. The Ogun State Security Trust Fund was established in 2011 by the Ogun State Government as a public-private partnership for the improvement of security in Ogun State and refined in 2019 by Governor, Prince (Dr.) Dapo Abiodun (MFR). Since October 2019, Great Nigeria Insurance Plc has supported the Ogun State Security Trust Fund in line with fulfilling its obligation to support its host community.
Tuesday 16 June 2020
BUSINESS DAY
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Live @ The Exchanges Market Statistics as at Monday 15 June, 2020
Top Gainers/Losers as at Monday 15 June, 2020 LOSERS
GAINERS Company
Opening
Closing
Change
N3.3
N3.63
0.33
REDSTAREX
Company MTNN
Opening
Closing
Change
N118
N116
-2
N3
N3.3
0.3
BUACEMENT
N41.5
N40.75
-0.75
UBN
N6.15
N6.4
0.25
ZENITHBANK
N16.65
N16.2
-0.45
MANSARD
N1.85
N2
0.15
GUARANTY
N24
N23.6
-0.4
MAYBAKER
N3.05
N3.16
0.11
ETI
N5.45
N5.05
-0.4
FIDSON
ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)
24,954.32 4,808.00 237,652,864.00 1.609
N
igeria’s equities market opened the new week on a negative note (-0.90 percent) supporting our earlier view that sell pressure may outweigh bargains as risks to sustained rally remain. Investors lost N120billion on Monday June 15, 2020 fueled by profit taking in large cap stocks like MTNN Nigeria, BUA Cement, Zenith Bank, GTBank and ETI. Before now, the performance of the equity market was largely driven by bullish sentiment especially on mid-to-large cap stocks. The Nigerian Stock Exchange (NSE) All Share Index (ASI) and Market Capitalisation both depreciated from 25,182.67 points and N13.137 trillion to 24,954.25 points and N13.017trillion. The market’s year-todate (ytd) negative return increased to -7.03 percent; while this month the market has decreased by 1.23percent. In 4,808 deals, equity investors exchanged 237,652,864 units valued at N1.609billion. MTNN Plc dipped most after its share price moved
from N118 to N116, losing N2 or 1.69percent. BUA Cement decreased from N41.5 to N40.75, shedding 75kobo or 1.81percent. Zenith Bank share price dropped from N16.65 to N16.2, losing 45kobo or 2.70percent. GTBank share price was also down from N24 to N23.6, losing 40kobo or 1.67percent; while that of ETI decreased from N5.45 to N5.05, shedding 40kobo or 7.34percent. “Our expectation this week is premised on the increased possibility of profit taking on counters that have gained thus far. “While we do not rule out bargain hunting on stocks that have remained
flat, we expect the overriding sentiment in the market this week to be bearish”, said Meristem research analysts. In the absence of corporate actions or any significant catalyst that could spur the market to a positive close, Meristem research analysts expect the local bourse to reverse the gains recorded last week. Also, Access Bank economic intelligent group expects that investors will engage in aggressive profit taking “due to saturated market which is currently on the ‘over-bought’ region.” “Looking ahead, we expect the market to remain
volatile, as investors lock funds in cheap and fundamentally sound stocks, while taking profit on some stocks that gained last week”, said Lagos-based United Capital research analysts. “With speculations around the possible impact of the second wave of the coronavirus hitting countries around the world, as well as the declines in prices of crude oil due to weak demand, we expect some level of jittery and negative reaction at the start of this week, barring any positive event that is capable of uplifting sentiment”, Vetiva research analysts said. “In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions”, said analysts at Lagos-based Cordros. They continued to advise investors to trade cautiously this week “and seek trading opportunities in only fundamentally justified stocks.” Afrinvest research analysts said in the June 15 note that they expect last week’s bullish streak to be sustained this week “as investors position in attractive stocks and sentiment improves due to a rebound in global oil prices.”
Custodian & Allied Insurance says keen on delivering innovative products Modestus Anaesoronye
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ustodian & Allied Insurance (CAIL) is keen on developing and delivering innovative insurance products that best satisfy customer needs, says Toye Odunsi, managing director of the Company. Odunsi stated that the company has also been operating a highly profitable, efficient, re-
sourceful and ethical organization that will survive well into the future and be a valuable asset to its shareholders. According to him, the company has been able to achieve an efficient service to the insured because of its strong Board which comprises individuals who have proven track records in their various fields of endeavor, thereby bringing several years of experience to bear upon the Board. He said: “Our vision is to www.businessday.ng
be Africa’s insurer of choice. We also aim to develop, and deliver innovative insurance
Toye Odunsi
products that best satisfy customer needs, whilst operating a highly profitable, efficient, resourceful and ethical organisation. “We position ourselves strategically in the market to be perceived as a modern, dynamic and resourceful underwriter, while we strike a fine balance between the businesses of sound underwriting, cost control and service on one hand and investment on the other”, Odunsi added.
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FTSE 100 Index 6,064.70GBP -40.48-0.66%
Nikkei 225 21,530.95JPY -774.53-3.47%
S&P 500 Index 3,034.89USD -6.42-0.21%
Deutsche Boerse AG German Stock Index DAX 11,911.35EUR -37.93-0.32%
Generic 1st ‘DM’ Future 25,340.00USD -58.00-0.23%
Shanghai Stock Exchange Composite Index 2,890.03CNY -29.71-1.02%
13.017
Investors lose N120bn as MTNN, BUA Cement, others spur stock market’s new lows Iheanyi Nwachukwu
Global market indicators
NSE lists Dangote Cement N100bn bond
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he Nigerian Stock Exchange (NSE) earlier on Monday June 15, 2020 listed the Dangote Cement Plc N100billion bond. The 5 Years bond at a coupon of 12.50percent Fixed Rate due 2025 is under the N300 billion Debt Issuance Programme
of Dangote Cement Plc. The Bonds were 100percent subscribed. Meristem Stockbrokers Limited is the stockbroker to the listed bond. The bond’s coupon payment is semi-annually, on October 30 and April 30, of each year commencing on April 24, 2020 until the maturity date.
Sogunle now Chief Executive of Stanbic IBTC Holdings as Sanni becomes Regional Chief Executive (West Africa) for Standard Bank Group
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tanbic IBTC Holdings Plc, a member of Standard Bank Group, has notified the Nigerian Stock Exchange (NSE) the following changes on its Board as well as the Board of its banking subsidiary – Stanbic IBTC Bank .This follows the appointment of Yinka Sanni as Regional Chief Executive (West Africa) for Standard Bank Group. In this role, Sanni will continue to have oversight responsibilities for Nigeria, Ghana and Cote d’Ivoire as Regional Chief Executive, as well as the delivery of Standard Bank Group’s strategy across the region. In line with the Group’s seamless succession strategy, Demola Sogunle has been promoted to Chief Executive, Stanbic IBTC Holdings Plc subject to receipt of all required regulatory approvals. Prior to this promotion, Demola was the Chief Executive of the Bank, and previously served as Deputy Chief Executive of the Bank. Prior to his appointment as Deputy Chief Executive of the Bank, he was the Chief Executive of Stanbic IBTC Pension Managers, a position he held from August 2011 to December 2015. He also served as the Bank’s Head of Risk Management, Chief Compliance Officer, as well as Head of Treasury and Financial Services. Demola holds a FirstClass Honours degree in Agricultural Science and a Ph.D. in Land Resource Evaluation and Management, both from the University of Ibadan, Nigeria. He obtained an MBA in Banking and Finance from ESUT Business School, Nigeria and has completed the Advanced Management Program (AMP) of the Harvard Business School, Boston, USA. Demola also holds a Treasury Dealership Certificate from the Chartered Institute of Bankers of Nigeria (CIBN) and he is a member of the Global Association of Risk Professionals. @Businessdayng
Demola will also continue to serve as a Non-Executive Director on the Board of the Bank. Also, following the appointment of Demola Sogunle as Chief Executive, Stanbic IBTC Holdings Plc, Wole Adeniyi has been promoted to the Chief Executive position in Stanbic IBTC Bank. Until his latest appointment, Wole was the Deputy Chief Executive of the Bank, and served previously as Executive Director, Personal and Business Banking. Adeniyi is a First-Class graduate of Business Administration from the University of Benin, Nigeria. He has an MBA from the Manchester Business School of The University of Manchester, UK. He is also a Fellow of the Institute of Chartered Accountants of Nigeria (FCA), and a Certified Information Systems Auditor (CISA). With the appointment of Wole Adeniyi as Chief Executive of the Bank, Remy Osuagwu has been promoted to Executive Director, Personal and Business Banking, subject to receipt of all required Regulatory Approvals. He takes over from Adeniyi in the execution of the retail strategy of the Bank and in his new role he will oversee the growth of both the Personal and Business Banking segments of the Bank. Osuagwu previously served as Head, Business Banking. He holds a bachelor’s degree in Banking & Finance, as well as an MBA. He has had extensive experience in banking and financial services, spanning a period of over 20 years. The Boards of Directors of Stanbic IBTC Holdings Plc and Stanbic IBTC Bank have expressed their immense thanks and appreciation to Yinka for his exemplary leadership and wish him success as he continues with his Regional Role. They have also extended their warm congratulations to Demola, Wole and Remy on their new appointments.
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BUSINESS DAY Tuesday 16 June 2020 www.businessday.ng
Ademola Adeyemi-Bero: Providing direction for Nigeria’s indigenous oil firms DIPO OLADEHINDE
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ith over 34 years’ experience in the Petroleum Industry, Ademola AdeyemiBero, the managing director of First Exploration & Petroleum Development Ltd (First E&P) is embarking on a journey in making Nigeria oil and gas sector open to indigenous participation and value retention. Ademola Adeyemi-Bero is the CEO of First E&P Ltd, the company are the owners of Anyala and Madu fields, both estimated to contain combined reserves of 193 million barrels of oil (MMBBls) and 0.637 trillion cubic feet (Tcf ) of gas. Unlike in time past when only international oil companies run the show in Nigeria’s petroleum industry, Ademola Adeyemi-Bero is leading a chain of indigenous oil companies in replicating the model that will invigorate indigenous participation in Nigeria’s oil and gas sector. As the current Chairman of the Independent Petroleum Producers Group (IPPG), Adeyemi-Bero leads a group of about 25 Nigerian Indigenous Upstream E&P companies who are increasingly relevant players in the upstream oil and gas development and production dynamics of the Nigerian Petroleum sector. Indigenous Nigerian oil producers including First E&P currently pump about 10 percent of national output and have invested billions of dollars in the past 10 years to position themselves for growth, and to play a bigger role in the sector dominated by International Oil Companies (IOCs). For many, First E&P was not a name that rang two decades ago but the company is gradually rising from obscurity to arguably a major player in the upstream sector. As typical of emerging giants in the sector, the Company under the leadership of AdeyemiBero is primarily focused in the upstream industry, harnessing exploration and production opportunities in the African continent with current emphasis on the Niger Delta Petroleum Province and the West African sub-region. Adeyemi-Bero is a seasoned and respected Oil and Gas Executive with experience spanning the international and national business environment and can be regarded as one of leading oil and gas professionals in Nigeria. He brings integrity, sound busi-
Adeyemi-Bero
ness head and a wealth of invaluable leadership experience and capability to the Nigerian Petroleum Industry. Before embarking on the entrepreneurial journey, Adeyemi-Bero spent 5 years with British Gas Exploration and Production Company Nigeria as President/Managing Director with responsibility for the Integrated Gas, Exploration & Production businesses of the British Gas Group in Nigeria. Adeyemi-Bero also spent 20 years with Shell, where he occupied several significant roles in several countries. His roles in Shell included Business Director / Board Executive of Shell Petroleum Development Com-
pany Nigeria Limited (SPDC) and Vice President – New Business Development in Africa within Shell International E&P. In these executive roles, he provided leadership over diverse technical and commercial teams, focused on value creation and supporting Business Governance objectives. As CEO of First E&P, he leads the company’s drive towards the attainment of a sustainably successful integrated oil and gas business. Under the leadership of Adeyemi-Bero, First E&P received Nigeria’s first floating production storage and offloading vessel (FPSO) modification and upgrading project in 2020 from
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As typical of emerging giants in the sector, the Company under the leadership of Adeyemi-Bero is primarily focused in the upstream industry, harnessing exploration and production opportunities in the African continent with current emphasis on the Niger Delta Petroleum Province and the West African sub-region
a shipping company based in Singapore, Keppel Off-shore & Marine. The FPSO called Abigail-Joseph has a processing capacity of 50,000 BPD of oil and 60,000 BPD of liquid. It also has a gas compression capacity of 34 MMscf/d and a storage capacity of not less than 550,000 bbl of oil although Malaysia’s FPSO operator Yinson’s website shows 870,000 barrels. FPSO Abigail-Joseph scheduled for work at Anyala and Madu discoveries in Oil Mining Leases (OML) 83 and 85 is designed for 15 years of operations without dry-docking and is been chartered by First E&P on a seven-year contract with options to extend. According to information published on Keppel Offshore & Marine website, the span of the project included refurbishment and life extension work, engineering and procurement, fabrication and installation of new structures including the helideck and riser balcony, as well as the installation, integration, and completion of topside modules. The bareboat charter deal is also accompanied by operations and maintenance (O&M) deal, with the total value of both deals up to $901.79 million. According to the Offshore Engineer, the estimated aggregate value of the contract is based on the assumption that the extension options are fully
exercised, comprising the bareboat charter contract of $617.09 million. The deal also includes the Operation and Maintenance (O&M) contract of $284.7 million (N87.36 billion). The FPSO is expected to commence operations at the Anyala and Madu fields by the fourth quarter of 2019. Last year, Adeyemi-Bero led First E&P to spud its first well in development of the Anyala and Madu fields for a two-year contract running from April 2019 to April 2021. The fields will be drained by 20 wells in total. The agreement to develop Madu and Anyala (discovered by Texaco, which was bought over by Chevron) was signed between Schlumberger, NNPC and First E&P, as far back as June 2017, with Schlumberger committing to provide technical services, as well as funding the $724Million for the project. First E&P acquired approximately 900km² of 3D seismic data over both licenses between October 2017 and January 2018 while Aquaterra Energy was contracted to design, develop and install two offshore platforms for the project. First E&P, which was established in 2011, said its mission is to be a deeply technical, commercial and entrepreneurial organisation, with full delivery capability across the entire upstream oil and gas value chain. OML 83 covers and aerial extent of 125 sq. km, with Anyala field as the only discovery within the acre-age while Madu field which is the main discovery within OML 85, has an aerial extent of 521sq.km. Anyala field is located at a water depth of 55m, about 45km off the coast of Bayelsa State. The Anyala and Madu fields are estimated to contain combined reserves of 193 million barrels of oil (MMBBls) and 0.637 trillion cubic feet (Tcf ) of gas. In line with current realities, there is also the fact that many local companies including First E&P have been hard hit by the effects of COVID-19 and the ensuing significant decline in oil prices. The implication of this is that these local oil companies may not have sufficient cash flows nor be able to raise needed funds from both local and international banks. Apart from First E&P led by Adeyemi-Bero, there are at least 50 small to mid-sized Nigerian producers pumping between 1,000 and 100,000 barrels each day.
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