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news you can trust I ** monDAY 16 march 2020 I vol. 19, no 520

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As CBN doubles down on naira peg

he naira strengthened against the dollar across Nigeria’s multiple foreign exchange markets Friday after the Central Bank signalled a day before that it was prepared to keep the exchange rate stable against all odds.

To keep the naira stable, the CBN must contend with the impact of the coronavirus outbreak on crude oil demand, the price war between Saudi Arabia and Russia which has sent prices tumbling and a resurgent dollar which is riding on renewed investor interest in the world’s favoured reserve currency.

A dogged defence of the currency in spite of current realities will come at a cost to external Continues on page 46

3M 0.00 2.87

NGUS feb 24 2021 367.00

Early calm returns to Nigeria’s FX market LOLADE AKINMURELE

fgn bonds

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Explosion renders hundreds homeless in Lagos ... several feared dead as over 100 houses destroyed … NNPC says fire triggered by gas explosion Joshua Bassey & Olusola Bello

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undreds of residents in Abule Ado area of Lagos were on Sunday morning rendered homeless following an explosion that rocked the area, resulting in uncontrollable fire.

The impact of the explosion was felt several kilometres away, as several buildings including those in Festac Town, were destroyed and their roofs blown off.

Continues on page 46

Inside

4 oil policy shifts that can lift Nigeria’s economy in era of low prices P. 2

A scene of the gas explosion at Abule Ado, Lagos, yesterday.

Insecurity: How son of ex-DMO DG, Igbere TV boss were murdered in Abuja P. 45

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news ANALYSIS

4 oil policy shifts that can lift Nigeria’s economy in era of low prices DIPO OLADEHINDE

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he outbreak of coronavirus, which has ravaged over 31 countries, infected some 121,061 people and caused low crude oil demand from China, has led to oil prices falling below Nigeria’s federal budget benchmark of $57 per barrel.

Brent crude, the international benchmark, fell by about 8.3 percent to $34.15 per barrel as at 8pm Friday, according to Bloomberg data.

Although the global slide in oil prices is bad news for the government, which would lose a sizeable fraction of estimated

oil revenue as a result, it could also be a good time to make major policy shifts

that could help lift its struggling economy.

Analysts say Africa’s biggest oil producing economy can embark on four major policy shifts to stay afloat.

JV divestment A major policy shift such as Joint Venture (JV) divestment will see the government slash its equity in upstream operations significantly to possibly as low as 40 percent, a decision private oil firms, particularly multinationals, are anxiously warming up to.

The Nigerian upstream operational structure is essentially divided between JV onshore and shallow water with local oil firms and multinationals. It also entails Production Sharing Contract

(PSC) between both parties in deep water offshore, which has attracted enormous interests and massive involvement of International Oil Companies (IOC) over the years.

If the deal works out, the upstream sector of the oil and gas industry will have more power to operate with less government interference.

Also, investors will be attractedtoputtheirmoneyinthelucrative oil and gas business, giving them a platform to leverage key opportunities while unlocking other latent opportunities in the exploration business.

Unbundling NNPC Unbundling NNPC will mean replacing the NNPC Act with the much-talkedabout Petroleum Industry Governance Bill (PIGB), a development which will see the corporation metamorphose

into commercially oriented and profit-driven petroleum companies.

“The NNPC needs to be unbundled first. The refineries need to be put in a competition mode,” Ode Ojowu, professor of economics and former head of National Planning Commission, said.

In effect, the assets and liabilities of the NNPC will be split between two new companies, namely, National Petroleum Company (NPC) and National Petroleum Assets Management Company.

The decision might be tough, but for Nigeria, unbundling the NNPC will not only drive huge capital accumulation in Nigeria but also means the country is going for market forces to determine

Continues on page 46

Huge haulage cost, terminal charges weighing on Nigerian importers … Ghana, South Africa pay less … Analysts blame bureaucracy, corruption, multiple checkpoints AMAKA ANAGOR-EWUZIE

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mporters in Nigeria, including manufacturers who bring in critical production inputs through the seaports, are breaking under the weight of heavy shipping charges, terminal handling charges as well as huge cost of transporting their goods from the port terminal to their warehouses.

Compared to their peers in Ghana and South Africa, importers in Nigeria are bearing heavier costs to stay in business, according to a recent report published by SBM Intel, Nigeria’s leading geopolitical intelligence platform.

Importers using Apapa Port in Lagos, for instance, pay about $374 as shipping charges on imports from European Union countries compared to $321 paid by their counterparts using Tema Port in Ghana and about $247 paid by importers using Durban Port in South Africa, SBM said.

Also, importers using Apapa Port pay $457 as terminal handling charges and $2,055 on local transport to their warehouses; importers

using Tema Port pay $284 as terminal handling charges and $285 on local transport to their warehouses, and those using Durban Port pay $180 and $208 as terminal handling charges and local transport to their warehouses, respectively.

Jonathan Nicol, president, Shippers’ Association of Lagos State, said cargo evacuation from the ports in Lagos has become difficult in recent times due to persistent gridlock on port roads.

The situation delays access into the port because the roads to the port have deteriorated so badly that it now calls for total restructuring of the administration of government agencies responsible for building road infrastructure, Nicol told BusinessDay on phone.

“The cost of moving containerised goods from the port started hitting the roof top when it became extremely tough for truck owners to do their businesses in the port. As a result, truckers continued to double the transportation fare in order to recoup the man-hour lost in accessing and departing either of the ports in Apapa with laden cargo,” he said.

DisCos’ cumulative losses now over N780bn … As FG spends N2trn on tariff subsidy ISAAC ANYAOGU

N L-R: Latif Busari, executive secretary, National Sugar Development Council; Francis Fadahunsi, member, Senate Committee on Industries; Ravindra Singh Singhvi, Ag. MD, Dangote Sugar, and Adebayo Osinowo, chairman, Senate Committee on Industries, during the facility tour of Dangote Sugar Refinery plc’s Refinery Complex at Apapa Wharf by the Senate Committee on Industries as part of its oversight visit/inspection of sugar refineries in Lagos.

Tier-one banks raked in N65bn from maintaining bank accounts in 2019 … 22.28% increase from 2018 figures

ENDURANCE OKAFOR

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ustomers of Nigeria’s tier-one banks paid a combined N65.5 billion to the lenders for maintaining their bank accounts in 2019.

Analysis of the banks’ 2019 financials revealed the five lenders received an account maintenance charge that was 22.28 percent higher than the N53.59 billion collected from customers in the corresponding period of 2018.

The banks’ record-high earnings from account maintenance were catalysed by the 11.33 percent surge in active bank accounts recorded in the

same year.

Nigeria’s active bank accounts increased to 79.28 million in December 2019, 8.1 million higher than the 72.21 million reported in the previous year, data from Nigeria Inter-Bank Settlement System Plc (NIBSS) show.

Yinka Ademuwagun, research analyst at Lagos-based investment advisory firm, United Capital plc, said this points to the fact that banks are leveraging financial technology (Fintech) to grow their customer base.

“Most banks are seen to be exploiting Fintech such as Chatbot, USSD and internet banking to penetrate the www.businessday.ng

economy and bank the unbanked,” Ademuwagun said.

Analysis of the lenders’ performance revealed Zenith Bank, Nigeria’s most valuable banking brand according to Banker Magazine Top 500 Banking Brands 2020, attracted the most from maintaining its customers’ bank accounts at N19.63 billion.

The earnings were N10.62 billion higher than the N18 billion it reported in the yearearlier period.

With a brand value of $287 million and market capitalisation of $1.62 billion, ranking 392 in the 2020 global ranking of banks, Zenith Bank, for the third year running, has been

ranked the number one banking brand in Nigeria.

Reaping the fruit of its merger with Diamond Bank, Access Bank, Nigeria’s largest retail bank, reported an increase by N7.57 billion to post N14 billion as earnings from account maintenance charges.

This was more than double the N6.43 billion it reported before the merger in 2018.

“Most banks are recording a significant increase in ATM issuances as well as transactions done by them. These remain significant drivers of these growths,” Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers, said.

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igeria’s 11 electricity distribution companies (DisCos) have recorded cumulative losses of N787 billion in their 2018 financials, a 10 percent increase from the previous year, indicating the power sector is still deeply troubled.

But the DisCos have managed to keep the lights on – however abysmally – because the Federal Government is picking the tabs, having been forced to pay over N2 trillion to assuage a lack of market price for electricity.

Through the Central Bank of Nigeria (CBN) and the Nigerian Bulk Electricity Trading Company (NBET), the entity that manages the money pool in the sector, the Federal Government is funnelling subsidies to the power sector to give Nigerians access to cheap electricity even if the inefficient operation hinders the sector.

In August last year, the Nigerian Electricity Regulatory Commission (NERC) issued an order which basically wrote off N1.75 trillion in DisCos’ debt that arose due to the Commission’s refusal to allow them charge market @Businessdayng

price for electricity.

When this figure is adjusted for accrued interests, the DisCos were awarded a subsidy of over N2 trillion helping to improve their balance sheet significantly in 2018.

For example, in 2018, DisCos reported combined loss of N464 billion, only 4 percent increase over N446bn reported in 2017. However, losses rose 64 percent between 2016 and 2017.

But this has not translated to improved power supply for many Nigerians. Investigations show that power supply has actually worsened across various DisCos’ franchise areas with consumers reporting blackouts that lasted for days.

The Federal Government compounds a dire economic situation marked by decline in crude oil earnings due to lower demand, especially from China where coronavirus has wreaked havoc leading to closure of factories and suspension of flights, by throwing money at DisCos. Some analysts have said the power situation of the country is gradually becoming irredeemable, as Discos, struggling with huge debts, rising costs and recurring losses, are on the brink of collapse.

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Pan African Towers raises N1.96bn debt fund

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an African Towers Limited (PAT), a telecoms infrastructure and wireless service provider in Nigeria, has raised about N1.96 billion in debt funding from the Nigeria Infrastructure Debt Fund (NIDF), managed

by Chapel Hill Denham.

The debt financing was issued to Pan African Towers to support the company in achieving its growth plan of ameliorating the connectivity challenges in Nigeria and deploying about 35,000 towers across Africa within the next few years to accelerate internet penetration and broadband services.

Evaluating the telecom infrastructure sector, Adebayo Shittu, Nigeria’s former minister of communication, and Umar Garba Danbatta, executive vice chairman of the Nigerian Communication Commission (NCC), believe that Nigeria requires at least 70,000 towers to ensure excellent performance and coverage for 4G and 5G technology. Nigeria has about 30,000 towers, which unravels a lot of opportunities for growth and development in the telecommunication infrastructure sector.

Nigeria Infrastructure Debt Fund, managed by Chapel Hill Denham, is Africa’s and Nigeria’s first listed infrastructure debt fund. The fund is structured to enable domestic long-term savings such as pension and retirement assets to be safely channelled into productive infrastructure assets in the country. While supporting commercially attractive projects, NIDF enables its investors to benefit from the foreseeable returns available from long dated infrastructure debt investments.

Reacting to this deal, Wole Abu, the CEO of Pan African Towers, thanked NIDF for this investment fund and said Pan African Towers was excited to have NIDF as its long-term financing partner.

The chief executive, who recently received the Nigerian Tech Innovation Telecom Award (NTITA ) for the Emerging Tower Company of the Year Award 2019 and the Quality World Alliance Award for the Leading Telecommunication Service Provider of the Year 2019 on behalf of his company, said, “A key aspect of the deal is that the funds are denominated in the local currency, which harmonises with our overall strategic goal of delivering affordable and financially sustainable telecom services to the Nigeria people.

“The NIDF team’s ability to structure bespoke transactions using global-standard project finance techniques, while working within an expedited timeframe, is extremely impressive. This is a remarkable milestone in our business, and we look forward to more synergies in the relationship”.

Dangote advocates made-in-Nigeria products to substitute for imported goods

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oremost industrialist, Aliko Dangote, has identified Nigeria’s large domestic market as an incentive to import substitution and diversification of the domestic economy.

Dangote, speaking in Abuja at the Roundtable parley with the CBN governor, Godwin Emefiele, with the theme ‘Going for Growth 2.0’, said the Asian Tigers are focused on exports because of the size of their markets, hence they produce for outside markets.

However, the business mogul said with the size of Nigeria’s domestic market, focus should be on import substitution, economic diversification and industrialisation so as to provide for the large domestic market and reduce the

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huge import bill, which stood at $47 billion as at 2019. He argued that if the nation can achieve 60 percent in import substitution and diversification, this will create millions of jobs and drive inclusive growth.

He identified agriculture and manufacturing sectors as the hub round which the nation’s economic diversification should be hinged to achieve the goal of sustainable national development. He also added that several countries have achieved industrialisation through backward integration.

He said, “We can diversify the economy through agriculture and manufacturing. Manufacturing creates a lot of jobs, creates middle class and transforms families.

These are the areas we need to focus on. But how do you diversify into manufacturing and make it an inclusive growth? You need to do more of backward integration or import substitution. Our economy is great because we have a local market.

“The economy of Asia is focused on exports. But we have a domestic market with about 200 million people apart from the ECOWAS market. Our import last year was almost $47 billion. It is not sustainable. We cannot have 200 million people growing at an average 2.7 percent and we are importing most of the things we consume.”

Calling for fast tracking of import substitution, diversification

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and industrialisation of the economy, Dangote cautioned that the risks are huge if the economy is not diversified as import bills would continue to mount especially in the face of declining oil prices. He added that if import substitution and economic diversification is fully implemented, revenue from taxation on produced goods will dwarf the one collected as import duties.

Dangote noted that diversification was possible, but, first long term funds with low interest rate should be given, as well as support by the CBN on foreign exchange. He lauded the CBN for its intervention in ensuring that the low interest rates were given to critical sectors.

@Businessdayng

To strengthen domestic manufacturing, he urged government to implement a number of policies such as local sourcing of raw materials, whereby manufacturing firms should source for local materials where available. Such a policy would reduce dependence on importation, increase production in the domestic economy and conserve foreign exchange, according to him.

He also advocated deliberate policies to improve infrastructure for firms engaging in backward integration, adding that dedicated industrial zones and clusters with access to roads, power, and rail if possible would reduce the cost of production and improve profitability.

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World stocks set for worst week since 2008 financial crisis

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orld stocks, weekend set for their worst week since the 2008 financial crisis, with coronavirus panicselling hitting nearly every asset class and investors fretting that central bank action may not be enough to salvage the situation.

European stock markets were slightly higher on Friday on hopes governments will step up spending, but only after several sessions of sustained, heavy losses as investors faced the possibility of a global recession that could be prolonged.

Warning signs still flashed, with Italian Government bonds tanking again on Friday, after suffering their worst day in nine years in the previous session.

Meanwhile, Italy and Spain imposed trading curbs, banning short-selling of dozens of stocks, to stem a market rout triggered by the coronavirus outbreak that saw European stock exchanges post their worst-ever losses on Thursday.

MSCI world equity index .MIWD00000PUS, which tracks shares in 49 countries, hit a threeyear low in Asian hours and down 16 percent so far, its worst run since October 2008, when Lehman Brothers’ collapse triggered the global crisis.

According to investec economist, Philip Shaw, markets are quite prepared for a period of falling output. The real fear is that you get second-round effects that result in a nastier, longer reces-

sion in the global economy.

“That is going to be very difficult to escape from given the monetary pedal is very close to the floor in many jurisdictions,” Shaw said.

MSCI’s main European Index .MSER was up 2.7 percent at the open, after having fallen more than 20 percent over the past week.

Earlier, Japan’s Nikkei N225 fell 10 percent before paring losses to close 6 percent lower.

Australia’s S&P/ASX200 had its wildest trading day on record, falling past 8 per cent before surging.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS wobbled 0.1 per cent higher by late afternoon after falling more than 5 percent in morning trade.

The slight recovery came as central banks from the US to Australia pumped liquidity into their financial systems and as hopes grew that US Democrats and Republicans could pass a stimulus package on Friday.

There was no such recovery in Italian Government bonds, with the benchmark 10-year yield, which moves inversely to price, raising another 16 basis points in early trade.

Italy is one of the worst-hit countries in Europe from the spread of coronavirus, with the death toll shooting past 1,000 people and the government ordering blanket closures of restaurants, bars and almost all shops.

NIWA unveils plans to curb boat accidents on Nigerian inland waters AMAKA ANAGOR-EWUZIE

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orried by the persistent occurrence of tragic accidents on Nigerian inland waters, the National Inland Waterways Authority (NIWA) has unveiled plans to ensure safety and security of passengers and cargoes on transit on Nigerian waters.

Speaking with newsmen at the weekend on the side-line of Stakeholders’ Meeting for Key Operators in Maritime Industry Dredging/Inland Waterways Transportation, George Moghalu, managing director of NIWA, said the authority under his leadership had a target to make water transportation a viable means of transporting, both for bulk cargo and human passengers.

According to Moghalu, NIWA intends to achieve the above mentioned target through constant clearing of waterways, removal of wrecks and water hyacinth, developing new jetties and rebuilding inland shorelines, in order to ensure safe and secured boat navigation.

“We are concerned about the level of accidents on our waterways and we have identified that most of these accidents happen in the night or very early hours in the morning. From our assessment, the principal reasons are the boats do not have enough

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navigational aid, are rickety or the boat drivers are either not qualify or not permitted to operate or there were no live jackets,” he said.

Moghalu, who stated that the authority was presently out to bring to the notice of Nigerians why it was important to operate safely, said NIWA had also given directive to its area managers to ensure that no rickety boats were seen on the waters. “No boat should operate on our waters, if it is not licensed to and if such boat is seen, it should be impounded,” he said.

He also stated that no unlicensed boat driver would be allowed to ride a boat on Nigerian waters, adding that the authority was building a database of qualified boat drivers in Nigeria, which would be circulated to all NIWA’s operational bases.

“We have also said that every vessel that does not have navigational aids will not be allowed to operate in the night or morning. We are going to resist it and no rickety boat would move on our waters. These are some of the steps that we have taken to ensure safe and secured navigation on Nigerian inland waters,” he stated.

The NIWA boss further revealed that the authority had signed a memorandum of understanding (MoU) with an American company to supply live jackets in order to make the jackets available at all Nigerian

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waterfronts.

“This is to ensure that nobody would give excuse of not having live jackets to wear before riding on the waters. We

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have a training facility in Lagos and Warri to train boat operators in order to be officially licensed before such persons can ride boats,” he said.

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Giving and misgivings – FG loans discordant with public sensibility

(Fifth in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

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latunji Dare delivered a speech at a Rotary dinner and reminded the audience: “You will have heard the perhaps apocryphal story of a young man who killed his parents and at trial asked the judge to show mercy because he was an orphan. That trope is the classic example of what is called Chutzpah (hootspah) in Yiddish. It means overweening impudence, unexampled (sic) temerity, in-your-face brazenness, outrageous effrontery, presumption of the most brazen kind and like conduct.”

Perhaps it was the final straw that provoked “The Guardian” newspaper and Wale Omole, Chairman of the Editorial Board to deliver the following front-page editorial on January 28, 2020. “Why that jumbo loan is evil.”

“This segment of our comment, which began yesterday scrutinises the quest for a jumbo loan by the Buhari administration and to raise questions that demand answers. After the Buhari administration failed to secure approval from the 8th National Assembly for super loan to finance government projects, it waited for a second term in office and strangely a parliament that is beholden to the executive to represent another borrowing request. It is important to note that the 8th Assembly objected as a result of the opaque nature of the request without appropriate paper trail.

However, the request for approval

resurfaced at the 9th National Assembly late last year, precisely November 28, 2019. The government wants to borrow $29.96 billion to ensure implementation, across the country, of key projects under the government’s External Borrowing Plan, 2016-2018, in the areas of infrastructure (including power, mining and roads), agriculture, health, education, water supply, governance and financial management reforms and poverty reduction through social safetynet programmes, among others. The 9th Assembly seems to be saying that the government has now done the needful in terms of appropriate documentation and would consider the request.

The quest for a jumbo loan by government strikes a discordant note with public sensibility. The chase for a loan by a government that has been unable to deliver on its campaign promises for five years on and has barely three years in office raises questions that will require convincing answers. The quest is coming at a time that the government is spending a huge percentage of national income on debt servicing. The country used $252,299.93 and N188, 831,956,580.68, to service the external and domestic debts, respectively as at June 30, 2019. Meanwhile, national revenues in the same period totalled N944.58 billion only. Its extant external debt obligation is $27.16 billion as at June 30, 2019. Both domestic and external debts combined, the country’s indebtedness stands at a whopping sum of $83.9 billion. This is not a joke, after all.

Intriguingly, despite warnings from International Financial Institutions (IFIs) such as the International Monetary Fund (IMF) that has prescribed for the government most of its internal measures for upping its revenue, the government appears recalcitrant and exhibiting weird hysteria to go for the loan. Basic arguments of government and those of organic intellectual in its

service are: One, that the government is under-borrowed when judged on the basis of debt to GDP ratio which is put at about 19.03 percent and falls within 30 percent sustainability threshold.

Therefore, it is a reason to travel down the debt alley. For effect, they argued that even the United States is the world’s most indebted nation and has continued to borrow. But often in this woolly argument, they forget the timely warning of Noreena Hertz, the author of the Debt Bomb. Speaking about the United States she noted: “The United States maybe the world’s most highly indebted nation, but it can afford to service its loans, for now at least. The world’s poorest countries, in Africa, Asia and Latin America, cannot – because to do so they have to pay an unacceptably high price, mainly at the expense of their poor or sick.”

The second, argument, preposterous in its logic, is that it is better to borrow now and avoid the predictable future spiral in terms of cost of loans and deal with the huge infrastructural deficits in the country once and for all and consequently unleash growth and development. This argument is dubious for an elite noted for thievery, misapplication and misappropriation of public funds.

The ruling elite in Nigeria simply do not have the discipline and integrity to manage such a huge loan even where willing creditors are available to take the Nigerian risk.

Indeed, the appetite of the Buhari administration for external loans is suspect and we are compelled to ask a number of questions. To begin, how much more external borrowing is needful and necessary for the country? How much is currently being expended on debt service and what will it translate to if the proposed loan is approved? How much revenue is accruing to the country and what per cent age of it is being used to repay and service existing debt obligations? Of what importance is the

‘

The quest for a jumbo loan by government strikes a discordant note with public sensibility.

The chase for a loan by a government that has been unable to deliver on its campaign promises for five years on and has barely three years in office raises questions that will require convincing answers

borrowing for which approval is being sought? If approval is given, what will the overall national debt profile look like and how sustainable will it be? What positive impact will the loan have on the socioeconomic growth and development of the country? Is borrowing this money the only possible and viable option to getting the intended projects and programmes executed? Given past experiences of the country in mismanaging borrowed funds, what guarantee do we have that the story will be different from past experiences? Does the volatility of the oil industry justify borrowing with an uncertain future and impossibility of repayment? Why is the government ignoring the warning from IMF about the country’s rising debt portfolio? Should we not as people sit back and reflect on the unsolicited pointer?

The answers to these questions are obvious to a majority of Nigerians, except of course, those with preference for perpetual self-denial. We have lost the historicity of the financial mismanagement that sent Nigeria into a debt-trap not too long ago. Today, the amount that is being sought, in one fell swoop, is the equivalence of what kept us in debt bondage from which the Obasanjo administration freed the country in 2005.

We are convinced that such jumbo loan over which approval is being sought will land the country on another round of debt slavery. As a consequence, the country will face the problem of repaying huge debts that will have no impact on the wellbeing of the citizenry in a context of a vitiated sovereignty. Need we remind ourselves that when a country defaults, the predictable response of the international financial market is to hedge out the defaulter like a leper. You may still wait for the conclusion of the whole jumbo loan matter tomorrow.

Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Exploiting smart well system for operation optimisation and field development cost minimisation

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n recent years, the smart well system is creating a paradigm shift in the oil and gas industry, gradually revolutionizing well completion in the oil field.

According to the Intelligent Digital Oil and Gas Field, 2018 report, a smart well is a well that uses mechanical devices, which allow control of pressure and rates down-hole, to optimise production performance and ultimately improve oil recovery from the reservoir. The smart well design also incorporates digital downhole sensors that transmit data to surface throughout the lifespan of the well and helping the operator to make data-driven production decisions.

Smart well, also known as intelligent completion, comprises of having one wellbore to produce more than one zone, thereby reducing the cost of drilling and completing multiple wells.

The smart wells give the operators the functionality to control multiple wells zones remotely, without intervention using rigs, wire lines or coiled tubing.

Records have indicated that during the past ten years, production decline rates have doubled.

At the same time as reservoirs get exploited, they become more complex and the reservoir model evolves. They are smaller, tighter, and more remote. As a result, reservoir recovery rates often decline over time to less than 35 percent.

The ultimate goal of many operators is to advance recovery rates to above 60 percent. The aggressive development of cutting-edge technologies has become essential, hence the emergence of intelligent completions.

In shallow waters where there are needs for production wellhead platforms, intelligent completion helps to maximise the use of the well slots

on the production platform. This prevents building more expensive platforms while maximising oil recovery from the reservoir.

A fundamental type of equipment used in smart wells is a down-hole mechanical valve called an interval control valve (ICV) or Flow Control valve (FCV), which is present with orifices with different hole sizes. The ICV/FCV is operated either using an electronic pulse connected to an electrical cable embedded with a feed-through packer or hydraulically through a control line embedded in the completion from the wellhead, through a feedthrough packer to the ICV. Another fundamental type of equipment used in the smart well is called the DownHole monitoring sensors, which often measure the pressure, temperature and flow at the zones thousand feet from the surface.

Smart wells combine a series of components that collect, transmit and analyse completion quality, production and reservoir data, control the inflow from the reservoir and provide selective zonal control to optimise the production process without operator intervention Away from technical details, what has drawn close attention to smart wells adoption over the years is the Capital Expenditure (Capex) on oil field development coupled with the ease of handling the field tasks. The expensive cost and production loss during an intervention is another key factor driving the need for smart wells. For example, an intervention on a subsea well would require deploying a rig to the well site which could cost up to $1.2 million per day operating time for such rigs. Since smart wells offer an intelligent and data-driven approach to oil and gas extraction, this one unique structure in place would deliver the supposed objective of many www.businessday.ng

conventional wells.

Smart well design and deployment come with some complexity as it is an integration of several completion technologies, solutions, remote-operated systems, and interfaces. There is a need for these integrated systems to have reliability for the lifetime of the well, which could be up to 35 years. The planning, design, engineering, and deployment are essential to the success of the well completion, avoiding non-productive time on the drilling and completion vessels.

However, experts have proffered that the adoption of project management methodologies would help to reduce the complexity in smart well implementation. Having project management in place helps simplify and modularise the planning, conceptualisation, design, preparation, and deployment of completion. Also, stressing that this applies to all environments from shallow waters to the ultra-deep-water situation.

It should be noted that while the smart well is the crux of the discussion, we cannot but put its economic implication as to the cynosure and compelling force behind its adoption.

The main objective of intelligent completion is to improve well productivity; by increasing contact with multiple reservoirs or zones and reducing the unit cost of drilling and production.

The number of multilaterals well completions has risen substantially in the last several years due to advancements in directional drilling and completion systems. Smart completion also helps to integrate these multilaterals into one wellbore.

Initially, intelligent completion was used in deep water wells, where intervention is expensive and high-risked. Intelligent completions have since proven their value in managing production

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Iheukwumere Amadi from multilateral wells, horizontal wells with multiple zones, wells in heterogeneous reservoirs, and mature tanks, and all these at relatively affordable costs.

Experts highlight smart well adoption to include reduction or elimination of extra wells, surface facilities, and intervention procedures; reduction in the water cut; as earlier mentioned.

Moreover, smart well also reduces operational expenses (OPEX) by looking after for fewer wells, extends the life of wells and reserves, and crossflow elimination and back allocation of commingled production for economic exploitation of marginal reserves.

A discussion on complete screening exercises or reviews by experts has proved to be the most convenient way to highlight the intelligentcompletion value and intelligent completion’s ability to enhance asset value in terms of production acceleration, increased, ultimate recovery, and reduced operating expenditure (OPEX) and capital expenditure (CAPEX).

Further comparison between vertical, horizontal, and smart wells shows that the desired production target that could be achieved in a particular field would require 150 vertical or 66 horizontals well. However, this would require the deployment of only 48 smart wells in the same field to meet the same goal. In monetary terms, it is cheaper to drill and complete one smart well than what is required to drill and complete two or three vertical or horizontal wells.

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Bargains for the long term Patrick Atuanya

L

egendary value investor Warren Buffett famously said that investors “should be fearful when others are greedy and greedy when others are fearful.”

It is certainly a fearful time for the markets this period as almost all asset classes are selling off globally, including equities, cryptocurrencies, oil, bonds, currencies and other commodities.

Across the world, most equity indices last week entered a bear market (which is defined as a decline of 20 percent or more from a recent high), a grim milestone for the decade long rally in stocks.

The Dow Jones Industrial Average (DJIA) lost 8 percent on Thursday morning, officially entering a bear market. Just a month ago, the Dow was at its all-time peak.

In Nigeria, stocks that got off to a great start for the year (after a disappointing 2019) have seen gains all but go up in smoke, as the twin shocks from the corona-virus and oil selloff begins to hit closer to home.

The Nigerian Stock Exchange

(NSE) All Share index has returned -27 percent in the past year and -15.3 percent year to date (YTD), with the selloff intensifying in just the past one week, mirroring global trends.

In that sense Nigeria is not alone as most Emerging Markets (EM) have seen funds flee from them including Brazil, India, South Africa, China and Indonesia.

While the panic selling is no doubt, unhelpful it is understandable why investors are suddenly rattled.

The novel corona-virus outbreak has spread from China to every continent around the world, forcing Italy into a lock-down, and disrupting daily life in the U.S. as well as much of the world.

Festivals and conferences have been cancelled or put on hold, and sports fans are being told to stay home (games will be played in empty arenas). The popular English premier league is the most recent casualty, with all matches suspended until April.

Americans are also increasingly cancelling trips and working from home in order to avoid exposure to the virus, which in addition to the slowdown from China, is a onetwo punch to the global economy, as the largest and second largest economies in the world calibrate towards total shutdown of economic activity.

The Naira has not been left out of the misery parade, with demand by Nigerians for a FX hedge growing, amid lackluster and lackadaisical leadership coming out of Abuja, leading to a surge in demand for

the greenback.

As such in the black market the Naira fell to as low as N420 to a dollar, while on the more formal Investor and Exporters (I & E) window it dropped to $/N374, before paring losses on Friday.

The Central Bank of Nigeria (CBN), came out with a head scratching statement on Friday that “market fundamentals don’t support devaluation.”

Whatever the CBN may think of the situation, the only fundamentals that market participants are focused on are the level of Central Bank reserves and direction of oil prices. Today both indicators are negative for the ability of the CBN to maintain its Naira peg at the official $1/N306.

The simple reason for this is that dollars flowing into Nigeria are becoming scarcer as oil prices slump, while at the same time demand for dollars is growing rapidly as foreign investors who seek to exit, sell down Naira assets.

So what should investors do in such a situation?

I ran a simple screen of the NSE looking for stocks which had solid earnings growth in the past year, but had been sold off the most in the current rout.

A few names standout.

The stocks include, MTN Nigeria (MTNN) whose stock is down -11 percent YTD, United Bank for Africa (UBA) -14 percent, Zenith Bank – 36 percent, and Guaranty Trust Bank (GTB) – 36 percent.

GTB grew its Net Income by 6.61 percent in 2019 to N196 billion.

Earnings per Share (EPS) for the

‘

The Naira has not been left out of the misery parade, with demand

by Nigerians for a FX hedge growing, amid lackluster and lackadaisical leadership coming out of Abuja, leading to a surge in demand for the greenback.

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

To your panic stations

M

y article last Monday was on the coronavirus and why we should have been worried not just about the virus getting here but on its effects on international markets, specifically the market for crude oil. I am not a prophet but one of our worst fears happened even before the article could be printed.

While trying to figure out a response to the fall in demand for crude oil because of the virus, OPEC plus (the fancy name for OPEC plus Russia) essentially fell apart. The two big fish could not agree on production cuts and the meeting deescalated into what now looks like an all-out price war. Russia essentially announced that everyone could pump as they liked as the deal was off. And Saudi?

Well they pumped as the liked, ramping up production and offering steep discounts. As a result, crude oil prices fell over 30 percent to as low as $34 a barrel. Since Monday the United States has added fuel to the fire placing a travel ban on much of Europe and essentially guaranteeing that the global economy will weaken even further. Which again put downward pressure on crude oil prices. As at writing this the price was just above $33 a barrel but who knows

ECONOMIST

what it will be by the time this is published.

Back home in Nigeria, as you might have guessed, panic hit. I watched part of the CBN’s roundtable tagged “Going for Growth” and you could almost see the panic in the room. Some even termed the day as Black Monday with lots of talk of emergency meetings and plans to respond to the “surprise” drop in crude oil prices. Although I do wonder how an event that happens relatively often could be a surprise. Also, what did the black colour ever do to anyone?

Why the constant association with bad events? But that is a story for another day.

The panic hit the financial markets too. The Nigerian Stock Exchange continues to witness significant exits, like most other stock markets around the world. Nigerian debt prices continue to rise with our sovereign debt interest rate rising from about seven to ten percent.

The exchange rate has also started doing like this and like that, but it is not me who will tell you what the black-market rate is.

So, how prepared are we for yet another oil price shock? On the fiscal side we are hopelessly ill prepared. The budwww.businessday.ng

lender also rose some 6.42 percent to N6.96 per share. Impressively GTB plans to pay a final dividend of N2.50 per share (up 2% compared to the N2.45 it paid in 2018) to investors whose names appear on the register as at March 19th, 2020.

The stock closed trading at N19 per share the lowest level in a year and equivalent to a dividend yield of 14.7 percent.

UBA for its part grew EPS by 14.5 percent to N2.52 on the back of a 13.3 percent growth in Net Income in 2019. A final dividend of N0.80 is proposed (up 23% compared to N0.65 paid in 2018). The stock closed trading at N6.15 on Friday, equivalent to a dividend yield of 16.4 percent.

MTNN now trades close to its listing price (when nobody could get their hands on the stock to buy as demand was through the roof ) even though fundamentally nothing has changed since then except an even more solid execution by the Telco. Net income grew by 38.7 percent in 2019, while revenues rose 12.5 percent to N1.16 trillion.

MTNN will pay a final dividend of N4.97.

Zenith has sold off even though it grew its bottom-line by 8 percent in 2019 to N208.84 billion, with EPS coming in at N6.65. A final dividend of N2.50 will be paid to shareholders today (March 16th), equivalent to a yield of 25 percent.

It may be time for brave investors to get greedy!

get, with its expectations of a near 100 percent increase in revenue, was already unimplementable. Most of the capital expenditure was not going to be funded anyway with no capital releases this year already. This new oil price matter makes it even more unimplementable. All the talk of cuts is interesting because there is really nothing else to cut unless they want to start firing civil servants. In terms of buffers the excess crude account is virtually empty and the sovereign wealth fund is mostly not liquid after being incentivised to put its money in infrastructure. The option of using debt to manage for a while is limited too. Debt servicing costs already ate up 65 percent of all revenue in 2019 and our debt has already increased massively over the last five years. There’s not that much space for more without going insolvent.

On the monetary policy side, the foreign reserves were already falling at an alarming rate even before this oil price shock. Thanks to the CBNs fixed exchange rate policy. And of the $36 billion or so in reserves an estimated $12.5 billion is essentially owned by foreign portfolio funds who have indirectly loaned CBN US dollars and may call it

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NONSO OBIKILI relatively quickly. And of course, all the administrative procedures and FX windows and all that are still in place so the room for more administrative measures is also limited.

So, are we prepared for this round of oil price shocks? It appears not. The real danger however is that we will double down on the types of polices we implemented in 2015 and 2016 and that will torpedo the economy again. We are already hearing the same stories. “The exchange rate must not change” and “we must produce what we consume” and others. But panic not, a set of solutions is being crafted as I write to insulate Nigeria from this global turmoil. At the very least we have a readymade excuse: “It was not our policy that caused it. It was the coronavirus”.

Dr. Obikili is the chief economist at BusinessDay

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16

BUSINESS DAY

Monday 16 March 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Cross River state and the non-appointment of a Chief Judge Denial of Justice Ikpeme raises troubling issues of rights, citizenship and the place of women

editor Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja 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

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

T

he refusal of the Cross Rivers State House of Assembly to honour the nomination of Justice Akon Ikpeme as Chief Judge because of her state of origin and “security threat” considerations raises many issues around human rights, citizenship, the rights of women and judicial processes. It is one of the cases that presents an opportunity for the National Judicial Council to make explicit recommendations. It also calls for national introspection.

The House of Assembly sitting in Nigeria’s first capital city, Calabar, voted on March 3, to deny confirmation as chief judge of the state to Akon Ikpeme who had served for three months as Acting Chief Judge. Their reason was that Ikpeme is genealogically from Akwa Ibom State, a state that was carved out of Cross Rivers State in 1987. She was born in Calabar, lived her life therein and married a man genealogically from Cross Rivers State.

Justice Ikpeme has a stronger claim to Cross Rivers State than to her ancestral home of Akwa Ibom State. Her father served in the

public service of Cross Rivers State, rising to the position of Permanent Secretary. She entered the state’s public service on graduation, rising to the Director of Public Prosecution. She chose to align with her husband and current state of origin when Akwa Ibom State was created and continued to serve in Cross Rivers State.

The National Judicial Council recommended the appointment of Ikpeme as the most senior person in the state’s judiciary. The Nigerian Constitution 1999 and judicial tradition favoured Ikpeme. But the House of Assembly, evincing clear proclivity for micro-ethnicity, decided otherwise and offered reasons that are at best ludicrous and throw up questions they and the nation must answer.

The CRS House of Assembly committed the most egregious form of discrimination in the denial of rights of a citizen. Section 42 (1) of the Nigerian Constitution is explicit and states that (1) “A citizen of Nigeria of a particular community, ethnic group, place of origin, sex, religion or political opinion shall not, by reason only that he is such a person:(a) be subjected either expressly

by, or in the practical application of, any law in force in Nigeria or any executive or administrative action of the government, to disabilities or restrictions to which citizens of Nigeria of other communities, ethnic groups, places of origin, sex, religious or political opinions are not made subject”.

The Justice Ikpeme case raises the matter of the place of the married woman. To what state or country does a married woman belong? Our traditions state that once a woman marries, she belongs to the place of her husband. How did it change conveniently in the case of Ikpeme?

It is critical for Nigeria to make clear pronouncements including constitutional amendments on the matter of state of origin. The records show that Ikpeme has been a Cross Rivers person more than one of Akwa Ibom State. She grew up and lived in Calabar, Cross Rivers State.

She worked there, as did her father.

Suddenly, because she is qualified to be chief judge, she must now revert to Akwa Ibom state. Absurd.

Most geographies of the world provide for citizenship by residence of at least ten years. Nigeria needs to consider and approve citizenship

by residence as the Nigerian norm in line with global best practice.

We could make ours 15-20 years to satisfy those who insist on many generations of a family living in a place as basis for such citizenship.

Cross Rivers State Governor Ben Ayede has gone ahead to appoint the next-in-line to Ikpeme, Justice Maurice Eneji, as Acting Chief Judge. Ayede did not revert to the National Judicial Commission for this appointment. The state runs the risk of suffering the Abia State censure where the National Judicial Council insisted on the sack of Justice Obisike Oji for accepting to serve as Acting Chief Judge without the imprimatur of the Council. It will amount to turning the seat of chief judge in Cross Rivers State to a revolving barber chair. Needlessly.

Cross Rivers State must take a second and critical look at the matter of Ikpeme and remedy the injustice done to her. She deserves to serve as Chief Judge of the State. The subethnic undertones that has seen the appointment of a Chief Judge from the same zone as the governor are beneath contempt and deserve no further mention. Please do the right thing in our nation’s founding capital.

HEAD, HUMAN RESOURCES Adeola Obisesan

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Monday 16 March 2020

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Nigeria faces a dire future with continued oil dependency global Perspectives

OLU FASAN

B

efore last week’s oil-price crash, there were several warnings about the perilous future of oil and the potential catastrophic consequences for oil-dependent countries. At best of times, oil is problematic for most oildependent countries as they are at the mercy of oil market vagaries and buffeted by oil price and oil revenue volatilities. But no country is more at risk than Nigeria, a country where oil accounts for 96 per cent of exports and over 75 per cent of government revenues; a country that has absolutely no resilience to oil price shocks. The truth is, if Nigeria’s future is tied to oil, it will be a catastrophic future indeed!

In her book Reforming the Unreformable, Dr Ngozi Okonjo-Iweala, two-time finance minister, said: “The Nigerian economy earned the dubious distinction of being rated one of the world’s most volatile”, adding that “Nigeria’s volatility was more than twice the median volatility for almost all the important economic variables”, such as terms of trade and per capita real GDP! Nigeria is Africa’s largest oil producer, yet it’s also the most vulnerable to oil price shocks. With over 75 per cent of government revenues coming from oil earnings, it’s not surprising that Nigeria’s economy is always out of kilter after an oil price crash.

In 2014, oil prices collapsed, with Brent crude falling from $140 per barrel to $40. Two years later, in 2016, the falling oil prices, coupled with economic mismanagement, sent Nigeria into a recession, the first time in 24 years. Now, another oil price plunge. Last week, the price of Brent crude tumbled from $68 per barrel to about $30 and may fall

even further. That puts Nigeria’s fragile recovery at risk and may result in the devaluation of the naira. But the immediate consequence of the oil price crash is on the government’s budget, given that oil earnings account for over 75 percent of government revenues.

Facing falling oil prices and dire financial straits, oil-dependent governments can take three immediate actions. First, those with large foreign reserves can dip into them, but, with less than $37 billion, Nigeria has no appreciable financial buffers. Second, they can increase domestic oil prices, but the government is unwilling to remove the petroleum subsidy. Lastly, you can reduce government spending. Well, the Minister of Finance, Zainab Ahmed, has warned that the N10.594 trillion ($34.6 billion) 2020 budget, which was based on an average $57 oil price, would be “drastically reduced”. That’s inevitable, although what the government cuts from the budget would be interesting – recurrent or capital expenditure?

But President Buhari will also use the oil crisis as an excuse to borrow more.

Even before last week’s oil price crash, his government asked the National Assembly for approval to borrow $22.7 bn to fund infrastructure projects. To be sure, the economic rationale for the proposed borrowing and spending sprees is questionable, not least because the proposed projects would have limited impact on economic diversification and growth, and none of them involves critical social expenditure, such as on education and health. But leaving that aside, how sensible is it for a country that faces diminishing earnings from a product that accounts for 96 percent of its export to be massively increasing external borrowings?

The truth is that Nigeria is at the mercy of oil prices. With a production quota of 1.776 million barrels a day, which, according to a recent report, could drop by 35 per cent, Nigeria is too insignificant to drive world oil prices; it is simply subject to the vagaries of the world oil market. Secondly, Nigeria is too irrelevant to shape global oil politics.

The key players are Saudi Arabia, Russia and the United States. For instance, the

current oil price crash was caused by a powerplay between Saudi Arabia and Russia. Following Russia’s refusal to coordinate production cuts with OPEC, Saudi Arabia retaliated with a “volume war”, threatening to increase crude output from 9.7 million barrels a day to 12.3 million, which would, of course, flood the market with oil and depress its prices.

But Saudi Arabia has the advantages that Nigeria doesn’t have. For a start, it’s production cost is very low at $7.50 a barrel, including capital expenditure; without capex, it’s as low as $4 or $5 per barrel. But “the best of Nigerian production is $17 per barrel”, according to Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC. “Today, there are countries which cost of production is classified at $30 per barrel and we are one of them”, Kyari said, adding: “If the oil price is $30 or $32 and you are producing at the cost of $30, you are out of business”. Indeed! With its high production cost, Nigeria certainly can’t compete on low prices.

Yet, a more serious problem is Nigeria’s lack of resilience to oil price shocks. External shocks are inevitable.

The question is whether a country can cope with them. Saudi Arabia can survive an oil price war and low prices for a long time because of its large foreign exchange reserves of $502 billion. Russia said it has firepower to survive the price war, referring to its $570 billion foreign reserve and its $150 billion national wealth fund. But what about Nigeria? Of course, Nigeria has no financial buffers; it squandered its oil wealth, estimated at $300 billion since the 1970s!

Today, everyone talks about Norway as an example of a country that has used its oil money well. Norway’s Norges Bank Investment Management is the world’s largest sovereign wealth fund. It was set up almost 25 years ago to manage Norway’s oil wealth; although it started with just $200 million, it is today an investment behemoth with $1.2 trillion in assets, with equity holdings equating, on average, to 1.4 percent stake in every listed company globally! By contrast, Nigeria can’t even save for the raining

‘

Sadly, Nigeria is doing virtually nothing to prepare for that future. Oil has been a curse rather than a blessing for Nigeria. First, it spurred massive corruption and a rentier economy

day, let alone invest in assets or run a successful sovereign wealth fund.

But the future is very bleak for oildependent countries. This is because of three challenges. First is the “age of oil abundance”, with a massive supply overhang as more reserves are identified. The surplus supplies would keep oil prices down.

Second, Western countries are investing heavily in green energy to tackle climate change. And as alternatives, such as electric cars, become readily available and cheaper, oil will become unattractive. Third, as we have seen with the effect of the Coronavirus on oil demand, oil is acutely susceptible to demand shocks, and this will increasingly happen as population growth slows in the West and as demand shifts in favour of more environmentally friendly energy.

Given the above factors, the IMF warned recently that “global demand for oil will peak by 2040” and said that “governments in oil-producing countries are dangerously under-prepared for global shift away from fossil fuels”.

This is certainly not alarmist. The Bible talks of “when money failed in the land of Egypt”. Well, oil too will soon fail and countries with oil reserves will be sitting on “stranded assets”. Venezuela is a classic example of an oil rich country – Latin America’s richest country – that became a humanitarian basket case due to the collapse of oil prices and, of course, economic mismanagement.

The IMF warned that “oil-exporting countries must be ready for a post-oil future sooner rather than later”. Sadly, Nigeria is doing virtually nothing to prepare for that future. Oil has been a curse rather than a blessing for Nigeria. First, it spurred massive corruption and a rentier economy. Then, due to the so-called Dutch Disease, it shifted attention away from the non-oil sectors, such as agriculture and manufacturing. But the age of oil is over, and unless Nigeria prepares for a post-oil future, it is utterly doomed!

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

What do Boards really do?

T

here are some common misconceptions about the role of the Board of Directors. Some people think the Board is a mysterious group of people who waltz into head office and shut themselves in the Boardroom every quarter with stern faces, attending long and boring meetings where they criticize and lambast Management. Another group believes the Board is just a motley bunch that meet once in a while to discuss company matters a little, drink tea and go home with fat cheques! There is also the school of thought who believes that directors are individuals who sit at the top floor of the corporation issuing directives on how the business should run without taking part in the execution. While bits of the foregoing are true, it does not entirely give an accurate picture of what the Board does. So, what does the Board really do?

The word “Board” in the 16th century originally referred to a table around which people met to discuss important issues. The meaning soon changed from referring to a piece of furniture to mean the important people seated around the table. In a business context the word “Board” is a collective reference to the directors of a company. According to Section 244 of the Companies and Allied Matters Act, Directors are persons appointed by the shareholders to direct and manage (where they are executives) the affairs of the company on behalf of the shareholders. (Lord Cranworth in in Aberdeen Rly Co. v blackie (1854) defined

the directors as “a body to whom is delegated the duty of managing the general affairs of the company”. Directors have a fiduciary relationship with the company, from which flows their duties, responsibilities and liability.

The Board is expected to define the reason why the Company exists - the vision and mission. Or as Ram Charan, Dennis Carley and Michael Useem put it in their book “Boards that Lead”, the Board defines “the central idea”.

It therefore follows that the Board must agree on the strategic direction of the business. To enable it deliver effectively on this responsibility, the Board will rely on the depth and diversity of the experience and skills set of its members. The first principle of the Nigerian Code of corporate governance provides that “A successful Company is headed by an effective Board which is responsible for providing entrepreneurial and strategic leadership as well as promoting an ethical culture and responsible corporate citizenship….”. It is no accident that the Code requires the Board to provide “entrepreneurial” leadership as a major responsibility of the Board is to support Management to deliver sustainable corporate success.

This responsibility also requires the Board to periodically review the mission in line with the changes in the business and political environment. It also entails putting structures and processes in place to achieve set goals and periodically evaluating these.

The Board is also responsible for the selecwww.businessday.ng

tion and appointment of its members and to that extent must ensure that it emplaces a robust and transparent process that includes defining selection criteria that takes account of required skills. The Board is responsible for its own effectiveness and it is in its best interest to ensure that all directors equally contribute to the effectiveness. Where they do not, appropriate steps should be taken to bring them up to speed or replace them.

A major responsibility of the Board is selecting the CEO who will have the Board’s mandate to execute the strategic goals set by the Board. To ensure the CEO remains on track, the Board will set Key Performance Indicators against which performance will be measured periodically. In pursuit of taking the lead road in achieving corporate success, the Board shall emplace appropriate policies including succession planning, business continuity, whistleblowing, internal control, internal audit, etc. The Board will necessarily delegate the performance of these responsibilities to Management and Board Committees.

Maintaining oversight and monitoring the financial performance of the enterprise are key responsibilities of the Board. The Board periodically considers financial reports and approves revenue and expenditure budgets.

To effectively carry out this responsibility, it is expected that Board members are financially literate, whilst not being finance experts.

However, it is preferable that the Board should have at least one member who is a financial

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Bisi Adeyemi expert.

Ultimate power lies with the Shareholders who appoint and necessarily can remove Directors. The Board is accountable to the shareholders and should ensure it periodically communicates the company’s performance to shareholders.

Bringing it all together and quoting Charan, Carey and Useem, the Board should “define the central idea of the company, ensure the right CEO is in place and potential successors identified, recruit directors that add value, root out board dysfunction, select a leader who deftly bridges the divide between management and the board and set a high bar on ethics and risk. A Board’s leadership can create value, and the absence an destroy value”.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 16 March 2020

BUSINESS DAY

In Association With

Covid-19

A Balkan betrayal V is for vicious

The politics of pandemics

All governments will struggle. Some will struggle more than others

T

O SEE WHAT is to come look to Lombardy, the affluent Italian region at the heart of the covid-19 outbreak in Europe. Its hospitals provide worldclass health care. Until last week they thought they would cope with the disease—then waves of people began turning up with pneumonia. Having run out of ventilators and oxygen, exhausted staff at some hospitals are being forced to leave untreated patients to die.

The pandemic, as the World Health Organisation (WHO) officially declared it this week, is spreading fast, with almost 45,000 cases and nearly 1,500 deaths in 112 countries outside China.

Epidemiologists reckon Italy is one or two weeks ahead of places like Spain, France, America and Britain. Less-connected countries, such as Egypt and India, are further behind, but not much. (For more coverage of covid-19 see our coronavirus hub.)

Few of today’s political leaders have ever faced anything like a pandemic and its economic fallout—though some are evoking the financial crisis of 2007-09 (see article). As they belatedly realise that health systems will buckle and deaths mount, leaders are at last coming to terms with the fact that they will have to weather the storm. Three factors will determine how they cope: their attitude to uncertainty; the structure and competence of their health systems; and, above all, whether they are trusted.

The uncertainty has many sources. One is that SARS-CoV-2 and the disease it causes, covid-19, are not fully understood (see article). Another is over the status of the pandemic. In each region or country it tends to proliferate rapidly undetected. By the time testing detects cases in one place it will be spreading in many others, as it was in Italy, Iran and South Korea. By the time governments shut schools and ban crowds they may be too late.

China’s solution, endorsed by the WHO, was to impose a

brutal quarantine, bolstered by mass-testing and contact tracing.

That came at a high human and economic cost, but new infections have dwindled. This week, in a victory lap, President Xi Jinping visited Wuhan, where the pandemic first emerged (see article).

Yet uncertainty persists even in China, because nobody knows if a second wave of infections will rise up as the quarantine eases.

In democracies leaders have to judge if people will tolerate China’s harsh regime of isolation and surveillance. Italy’s lockdown is largely self-policed and does not heavily infringe people’s rights. But if it proves leakier than China’s, it may be almost as expensive and a lot less effective (see article).

Efficacy also depends on the structure and competence of health-care systems. There is immense scope for mixed messages and inconsistent instructions about testing and when to stay isolated at home. Every health system will be overwhelmed.

Places where people receive very little health care, including refugee camps and slums, will be the most vulnerable. But even the best-resourced hospitals in rich countries will struggle.

Universal systems like Britain’s National Health Service should find it easier to mobilise resources and adapt rules and practices than fragmented, private ones that have to worry about who pays whom and who is liable for what

(see article). The United States, despite its wealth and the excellence of its medical science, faces hurdles. Its private system is optimised for fee-paying treatments.

America’s 28m uninsured people, 11m illegal immigrants and an unknown number without sick pay all have reasons to avoid testing or isolation. Red tape and cuts have fatally delayed adequate testing (see article).

Uncertainty will be a drag on the third factor—trust. Trust gives leaders licence to take difficult decisions about quarantines and social-distancing, including school closures. In Iran the government, which has long been unpopular, is widely suspected of covering up deaths and cases.

That is one reason rebellious clerics could refuse to shut shrines, even though they spread infection (see article).

Nothing stokes rumour and fear more than the suspicion that politicians are hiding the truth. When they downplay the threat in a misguided attempt to avoid panic, they end up sowing confusion and costing lives. Yet leaders have struggled to come to terms with the pandemic and how to talk about it. President Donald Trump, in particular, has veered from unfounded optimism to attacking his foes. This week he announced a 30-day ban on most travel from Europe that will do little to slow a disease which is already circulating in America. As people witness the death of friends

and relatives, he will find that the pandemic cannot be palmed off as a conspiracy by foreigners, Democrats and CNN. What should politicians do?

Each country must strike its own balance between the benefits of tracking the disease and the invasion of privacy, but South Korea and China show the power of big data and mass-testing as a way of identifying cases and limiting their spread. Governments also need to anticipate the pandemic, because actions to slow its spread, such as banning crowds, are more effective if they are early.

The best example of how to respond is Singapore, which has had many fewer cases than expected.

Thanks to an efficient bureaucracy in a single small territory, worldclass universal health care and the well-learned lesson of SARS, an epidemic of a related virus in 2003, Singapore acted early. It has been able to make difficult tradeoffs with public consent because its message has been consistent, science-based and trusted.

In the West covid-19 is a challenge to the generation of politicians who have taken power since the financial crisis. Many of them decry globalisation and experts.

They thrive on division and conflict. In some ways the pandemic will play to their agenda. Countries may follow America and turn inward and close their borders. In so far as shortages crimp the world economy, industries may pull back from globalisation—though they would gain more protection by diversifying their supply chains.

Yet the pandemic also puts doctors, scientists and policy experts once again at the heart of government. Pandemics are quintessentially global affairs.

Countries need to work together on treatment protocols, therapeutics and, it is hoped, a vaccine.

Worried voters may well have less of an appetite for the theatrical wrestling match of partisan politics. They need their governments to deal with the real problems they are facing—which is what politics should have been about all along.

How to deal with a new sort of financial shock The subprime crisis is not a good guide to markets today

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HEN FACED with a bewildering shock it is natural to turn to your own experience. As covid-19 rages, investors and officials are scrambling to make sense of the violent moves in financial markets over the past two weeks.

For many the obvious reference is the crisis of 2007-09. There are indeed some similarities. Stockmarkets have plunged. The oil price has tumbled below $40 a barrel. There has been a flurry of emergency interest-rate cuts by the Federal Reserve and other central banks. Traders are on a war footing—with a rising number working from their kitchen tables. Still, the comparison with the last big crisis is misplaced. It also obscures two real

financial dangers that the pandemic has inflamed. (For more coverage of covid-19 see our coronavirus hub.)

The severity of the shock so far does not compare with 2007-09.

Stockmarkets have fallen by a fifth from their peak, compared with a 59% drop in the mortgage crisis.

The amount of toxic debt is limited and easy to identify. Some 15% of non-financial corporate bonds were issued by oil firms or others hit hard by the virus, such as airlines and hotels. The banking system, stuffed with capital, has yet to seize up; interbank lending rates are under control. When investors panic about the end of civilisation they rush into the dollar, the reserve currency. That has not yet happened (see article).

The nature of the shock is different, too. The 2007-09 crisis came from within the financial system, whereas the virus is primarily a health emergency. Markets are usually spooked when there is uncertainty about the outlook six or 12 months out, even when things seem calm at the time— Continues on page 19

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In Association With

Mission accomplished

Should Jamie Dimon, Wall Street’s most celebrated boss, call it a day?

A health scare puts succession in the spotlight

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HEN JAMIE DIMON took the reins at JPMorgan Chase in 2005 he had, at the relatively tender age of 49, already earned himself a reputation. In the 1990s he was the wunderkind sidekick to the imperial Sandy Weill, then boss of Citigroup, the world’s pre-eminent bank. Still, while some peers described Mr Dimon as brilliant, charismatic, caring and dedicated, others complained he was abrasive, foul-mouthed and unpredictable. Plenty doubted he was well suited to such a large stage.

As we explain this week (see article), Mr Dimon has put paid to these doubters. JPMorgan weathered the financial crisis well and has since become the bank that all the others want to emulate. It is big, globally active, dominant in retail and investment banking, transparent, well capitalised and admirably profitable. Last year its return on equity was a handsome 15%. Its annual profits are now double the entire current market value of Deutsche Bank, once Europe’s pretender to the global investmentbanking throne.

However, another big question has remained unanswered: when Mr Dimon should leave and who will run the bank after he is gone.

It has been cast in sharp relief by the recent news that Mr Dimon has undergone emergency surgery for an “aortic dissection”, a rare heart condition. The bank says he is recovering well. But investors, the board, staff and regulators have had

a reminder that one day JPMorgan will have to have a different leader.

Wall Street’s biggest succession decision is tricky for several reasons. JPMorgan could benchmark itself against other banks: in 2018 the head of Goldman Sachs retired and a flurry of European banks have waved goodbye to their leaders in the past few months. But in all these cases the firms were performing below their potential. Aged 63, Mr Dimon is no geriatric—77 CEOs who are older than him are serving at firms in the S&P 500 index of America’s biggest companies. The most seasoned, Warren Buffett, is still, inadvisedly, clinging on at the age of 89.

Mr Dimon has served for longer than the typical American CEO, who lasts about a decade. Bob Iger, the boss of Disney, has just stood down after 15 years at the top. But tenure is not, in and of itself, a disqualifi-

cation. There are 66 S&P 500 CEOs who have been in place longer than Mr Dimon. Reed Hastings has run Netflix for over two decades and few reckon he should press stop.

So how to make a decision? Two tests matter. The first is that Mr Dimon is not blocking the path of an entire generation of successors who might end up leaving or becoming disillusioned. Inevitably, one cohort has already departed. A JPMorgan diaspora now run financial firms all over the world, including Wells Fargo, Barclays and Standard Chartered. It would be a mistake to let another generation go, too. Mr Dimon has two co-presidents directly beneath him who are both aged about 60. Beneath them is a broader group of half-a-dozen potential successors, most of whom are in their 50s and still being battle-hardened.

The second test is the likely time horizon of the strategic threats

and opportunities that the bank faces. These mainly arise from technology—the prospect that big tech firms might challenge the big banks, or that new payments firms win huge customer bases independently of the banks, as they already have in China, or that new digital currencies take the world by storm.

These trends will play out over a decade or more—and no one, not even Mr Dimon, thinks that he will stay that long.

Both tests suggest that Mr Dimon should leave the stage sooner rather than later. A good option would be for him to do so at the end of next year. By then the next generation of executives will have acquired the experience necessary to run the Western world’s biggest bank at a time of technological tumult, while not being so frustrated that they quit. Even if JPMorgan and Mr Dimon follow this advice, they and the shareholders should reflect on another succession. March 2nd saw the death of Jack Welch, the former chief executive of General Electric (GE), and perhaps the most celebrated American boss of recent decades. He retired from GE in 2001 on a high, but the firm soon slipped into brutal decline, reflecting in part long-standing problems that became clear only once he had left.

The best bosses face up to the reality that at some point someone else has to be in charge. But even then their legacy can only be assessed years after they have thanked their team, shed a tear and walked out the door with their head held high.

Vlad the indefinite

Russia’s president reluctantly agrees to 16 more years in power

Vladimir Putin has no plans to retire. Poor Russia

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HAT A CONVENIEN T thing a tame parliament is. On March 10th, acting on a proposal from the first woman in space (now a celebrity MP), the Russian Duma approved an amendment to the country’s constitution that would reset the clock barring anyone from serving more than two consecutive terms as president. As it happens, that would allow Vladimir Putin, at present ineligible to run for another term when his current one expires in 2024, to stay on for two more six-year terms after that date, assuming he can win two more elections on top of the four he has won already. By then, in 2036, he would be 83, and would have ruled Russia for 36 years, as long as Ivan the Terrible. Two of the world’s biggest military powers, China and Russia, now have what look like presidents-for-life.

Such leaders seldom improve with age.

A few technicalities remain (see article). Russia’s Constitutional Court still has to rule on whether Mr Putin’s changes are

indeed constitutional. It is a sign of how completely Mr Putin has packed and bent Russian institutions to his will that no one imagines that he will fail to get his way, just as no one imagines that Valentina Tereshkova, who took her giant leap for womankind back on June 16th, 1963, was acting off her own bat. The third hurdle is an “all-people vote” of doubtful legality on the newly adjusted constitution, which Mr Putin has scheduled for April 22nd. That, perhaps, is a little less in the bag,

but the Kremlin’s operatives are dab hands at suppressing protests and neutering the press. And the rest of the changes to the constitution are designed to enhance its popularity with tradition-minded Russians, for instance by stressing that Russian law must have primacy over international law, that state pensions must be inflationproof and that gay marriage will never be permitted.

None of this ought to come as a surprise. Mr Putin and his circle have made too many enemies and too much money for him to risk giving up power voluntarily.

The real question has been how he would dress up his intention to rule indefinitely. Once before he got around the two-term rule, by taking the supposedly less powerful post of prime minister, swapping jobs with the pliable Dmitri Medvedev who served as president between 2008 and 2012. Mr Medvedev then dutifully swapped back again, allowing Mr Putin to resume being president with his clock reset and the term extended from four years to six. Mr Medvedev was dumped as prime minister earlier this year, and the

Kremlin seems to have opted for an even simpler run around the rules.

The trick assumes that Mr Putin will be as weakly opposed in 2024 and 2030 as he was in 2000, 2004, 2012 and 2018. Is that plausible? The timing of the changes is ominous for him. This week’s collapse in the oil price will hurt the economy. Despite 20 years in charge and a clear global trend to find substitutes for fossil fuels, he has failed to do nearly enough to diversify Russia away from oil and gas. His government has built up enough financial reserves to last for years, but not for ever. Meanwhile, deep-rooted corruption and a lack of competition have hobbled the prospects for growth.

Mr Putin’s political actions—annexing Crimea, invading eastern Ukraine, meddling in other countries’ elections and presiding over the murder of opponents on foreign soil—have made his country a pariah, subject to sanctions that show no sign of being relaxed.

Import substitution since 2014 has bought him breathing space, but for ordinary Russians life is likely to get harder.

How to deal with a new sort of financial shock Continued from page 18

think of asset prices dropping in early 2008, long before most subprime mortgage borrowers defaulted. Today, the time horizon is inverted: it is unclear what will happen in the next few weeks, but fairly certain that within six months the threat will have abated.

Instead of tottering Wall Street banks or defaults on Florida condos, two other risks loom. The first is a temporary cash crunch at a very broad range of companies around the world as quarantines force them to shut offices and factories. A crude “stress test” based on listed companies suggests that 10-15% of firms might face liquidity problems (see article). Corporate-bond markets, which demand precise contractual terms and regular payments, are not good at bridging this kind of short but precarious gap.

In 2007-09 the authorities funnelled cash to the financial system by injecting capital into banks, guaranteeing their liabilities and stimulating bond markets. This time the challenge is to get cash to companies. This is easy in China, where most banks are state-controlled and do as they are told. Credit there grew by 11% in February compared with the previous year. In the West, where banks are privately run, it will take enlightened managers, rule tweaks and jawboning from regulators to encourage lenders to show clients forbearance. Governments need to be creative about using tax breaks and other giveaways to get cash to hamstrung firms. While America dithered, Britain set a good example in this week’s budget (see article).

The second area to watch is the euro zone. It is barely growing, if at all. Central-bank interest rates are already below zero. Its banks are healthier than they were in 2008 but still weak compared with their American cousins. Judged by the cost of insuring against default, there are already jitters in Italy, the one big economy where banks’ funding costs have jumped. On March 12th the European Central Bank promised additional liquidity for the banking system, notably to support lending to small and medium-sized firms (but did not cut interest rates). The danger is that it, national governments and regulators fail to work together.

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INTERVIEW

Nigeria needs to do more to contain the spread of Coronavirus – Prof. Nasidi AbduSsalam Nasidi graduated in medicine in 1977 from Ahmadu Bello University, Zaria. After his houseman-ship, he did his masters in epidemiology in the year 1979 and obtained a PhD in Virology in 1983. He then worked at the institute of Nigerian Institute of Medical Research (NIMR), Yaba, until 1986, when he was appointed by the Federal Ministry of Health to head its vaccine production centre from 1986 to 1990. He became Nigeria’s chief epidemiologist for 16 years. He was appointed director public health in the ministry 2008. He retired and by 2011, but was called back by the ministry to establish serve as its pioneer CEO of the National Centre for Disease Control (NCDC) because, according to him, “I brought the idea.” BusinessDay’s Bashir Ibrahim Hassan recently sat down with Prof. Nasidi on his experience in coping with health emergencies and the challenges presented by Coronavirus.

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hy was NCDC established?

W h a t did you achieve in the institution?

What we wanted was to have an independent organization that can act fast during public health emergencies and to empower Nigeria to have its own national public health institution (to deal with emergencies). It was what we agitated for at the regional level in Africa. Other regions started following us.

I pursued the idea because when I was the chief epidemiologist for Nigeria, I realized that we were always having delays. Outbreaks will occur and before you respond, it takes longer time, because you’ll have to write to the Permanent Secretary, the minister and so on.

It’s as if the outbreak is separate and the health system is separate; so there was this big gap.

In health emergencies, what is very crucial is the response time, the time within which you respond after the emergency has occurred. If it takes long, your ability to mitigate the impact of that emergency will be limited. For instance, if there is a very sudden outbreak of meningitis and they are calling you to come and help, and you need to write letter to the perm sec, it takes weeks or even more before you’ll go. But, with the NCDC, we are able to respond within 24-48 hours at any given time to any health Emergency in the country.

But the most important point on why we needed the NCDC was to help states build capacity in public health. By the time we started the ‘NCDC, Nigeria had less than 20 experts with master’s degrees in public health. So, when we established the NCDC, we established a training programme to empower Nigerians to grow to be specialists in public health. There were some states at that time that did not have any, like Zamfara, Bayelsa, etc.

The third point on why the NCDC was established is the need to increase our ability to do things for ourselves, to diagnose the outbreak, and a good example is again shown in this Coronavirus. Before now, if there was any outbreak, what we do is to wait, take the sample, ice it, box it and take to WHO in Geneva, London or Paris to diagnose. Before they do the diagnosis and send back to us, it’s about two to three weeks.

But now we have solid laboratories virtually in all the states and

we have VSL2 laboratories in all the zones of the country and VSL3 in about five locations. Each of them could diagnose Ebola and even Coronavirus. As you can see, when Coronavirus landed in Nigeria, within 48 hours, our laboratories had identified the virus; within five days, they had even sequenced the gene and shared it with WHO. That’s a feat -- nobody can tell us anything anymore. At least, with that, we have justified the establishment of the NCDC, of all laboratories and training of our indigenous experts that can do the job immediately How prepared do you think this country is to deal with Coronavirus pandemic?

First and foremost, the Coronavirus took the world by surprise.

We have experienced Coronavirus (outbreaks) before, and they were all contagious and killed people and they all jumped from animals to humans. This new one surprised the word because this Coronavirus (SARS COV2) jumped from animals to humans and it was not expected to behave the way it is behaving and up till tomorrow nobody can say the exact animal it jumped from.

Now, on the readiness of Nigeria, I will say we are lucky to some extent, because before this disease came, we had Ebola experience. The way we fought Ebola helped us prepare for similar outbreaks in the future. So, Nigeria had in place mechanism used to fight Ebola, which is now being used to fight the Coronavirus. But, that is just one aspect of preparedness.

On the other aspect of preparedness, we are not very ready.

For instance, we are using the laboratories that we established at LUTH to fight Ebola. It is what we are using to confirm the Coronavirus and sequence the virus, including the one at the NIMR. So, you can see that from the diagnostic point of view, we are ready, and in positioning manpower, we are also trying. At least we are using the NCDC team and the team in Lagos. You could see how active the Lagos ministry of health is.

But, when you come to our readiness to actually manage the patient, to handle the outbreak and to minimise the impact, we are not very ready. Let me list the reason why we are not ready to that extent.

We don’t have enough masks.

We don’t have enough facilities and gadgets to fight the spread of the disease. So, we are not

really ready to arrest the spread, from the point of having enough masks, respiratory machines, isolation facilities, disinfectants to decontaminate surfaces, we are not ready. In China and Italy, they are not only decontaminating surfaces, they are decontaminating cities.

We do not have enough laboratory reagents, beyond the ones that were donated by WHO and CDC (the US Centres for Disease Control and Prevention). But, we don’t have them enough to face this outbreak.

Let’s assume that we now have up to 500 cases. We have two now.

In America it was one and before you know it, they have up to 1,000 and this is a developed country with all their infrastructure.

They had only 6 deaths before; today they have over 31. If they are having this problem, you can imagine if we now have up to 200- 1000 cases and people begin to run helter-skelter. So, we need to be ready to provide everybody with masks. It’s very important.

We need to provide enough hand washing Facilities and make available hand sanitisers, hygiene gadgets and disinfectants especially at places of work.

We are now in containment period and what do we do to contain the outbreak? In this respect, the ministry of information, NOA and ministry of health play more important roles (to raise awareness among the masses).

Everybody must play his or her role by washing his hands and other precautions prescribed

by NCDC and WHO. You and I understand what Coronavirus is and means, but what about our people in the villages, in the markets, who can’t speak English and don’t understand what you are saying? If you don’t reach them and tell them exactly what to do, we are in big trouble. This was what happened in some areas affected in Italy. They felt it’s just common cold. When it became serious, the whole country has been locked down. I don’t want Nigeria to be locked down. That’s why I say we are not very ready, and we need to double up.

Do you think the Coronavirus case in the country can go worse?

Yes, it’s very possible and if you are lucky it might not. I’ll give you three reasons. One, the Lagos state government and the NCDC tried very well to get the patient, isolate the patient and start working hard to do contact tracing to get all the people that came in contact with this primary

case. But, in epidemiology, there are things we call tracking the primary contacts and tracking the secondary contacts. The primary contacts are those the patient came in contact with.

The secondary contacts are those the first contact came in contact with. Unfortunately for us, we are not able to track all those who are supposed to be his primary contact, who came in that plane with him. So, it’s possible that the virus might have escaped and it’ll be worse.

Secondly, we’ve not been able to test everybody, in order to isolate suspected cases and help reduce transmissibility of the virus. If we don’t identify and isolate quickly, the viral load will multiply in a patient’s body and he’ll become more and more infectious. So, with these things on ground, it will be difficult to say that the virus will not spread.

If it does, we don’t know how far it will go.

If this virus spreads, what social and economic impact do you foresee?

When it started in China, December last year, by mid-January, I

started shouting that this will affect our economy, because we have a monoeconomy based on one product -- oil.

One of the biggest buyers of our product is China. Wuhan is one of the industrial parts of China and they use a lot of our oil. So, if they are grounded, demand for our oil will diminish and it will affect our revenue. That’s why the minister of finance is saying that it’s affecting our revenue.

The second is that most of the infrastructure projects being pursued by government are handled by the Chinese experts. The delivery date of the LagosIbadan railway construction will be extended. The Mambilla power station is being handled by the Chinese and will definitely be affected by the pandemic.

What is the important aspect of epidemic prevention generally and what do you think the Nigerian government can do, in terms of legislation, to prevent epidemic?

There must legislation that says if you provide wrong public health information, you are liable. That would address the situation where almost 40 percent of those who were on the same plane with the Italian gave wrong information and so have not been tracked. This something we should pursue quickly

and get that law in place.

Then the second is that we should invest in health promotion, including health education. Individuals should

know what to do to protect themselves.

Also, at the community level, they can also come together to decontaminate their compound, their surfaces, jointly buy disinfectants. They don’t need to wait for government. This is happening in many Countries already. In New York, the mayor has brought a strategy, 100 meters social distance. Anywhere that is a cluster, 100 metres, they giving social pass, and if they have temperature they push them back, that’s a way you can fight this disease.

Now, at the national or state level. State governments have not started yet. Many of them are just paying lip service, they say they have isolation ward, they are waiting for it to happen, they think it’s meningitis. The states need to do higher. At the state level, they need to identify all these communities and see how they can empower them, prepare health promotion material in the various language that their people can understand and also start empowering the health care workers Also, the state government should work with the federal to start decontaminating the surfaces. The state government should start increasing capacity in terms of bed spaces in hospitals. What counties did was to identify a particular hospital where they take case to. If Lagos did not have Yaba isolation centre, where will they take this patient to? So states that do not have facilities like IDH Yaba should immediately identify

hospitals where they will empty and prepare it for this.

What are other countries doing? They are hiring hotels. Liberia, as poor as they are have four hotels taken over by government.

All passengers are taken to the hotel and quarantined, not to report. Those doing self-isolation are the secondary contacts not primary contacts.

Even the isolation centre in Abuja is not ready?

Yes, the one in Gwagwalada here is not ready. And that’s supposed to be the best in the country.

It is very important that it’s the president that leads this fight.

After the senate president went there (Gwagwalada), he said they should release the money, they released the money, but is it ready?

Generally, what advice do you have for the NCDC, the Nigerian government on diseases like this. What are we not doing, what are we not doing and that we are supposed to do?

If we start with the NCDC, I can tell you that they are doing maximmaly well from what they have. They are doing well. This is because even with the limitations they are able to diagnose the disease, they have been able to sequence the virus, position workers and establish emergency operating centres. They have done very well, no doubt about that, but they need to be empowered to do more and they need

to be given funds for the matter.

At the ministry of health level, I can say that the minister has actually taken the lead, very impressive! Everyone is so impressed that the minister has done so well, taking the risk, gone to the places affected, gone to the wards, and is talking to the nation. But he is also limited, he has no funds to get wherewithal to do the fight. So, they are limited, but they can do more, if they are empowered.

But what we should have in mind now is that the virus is here and it’s not the issue of the ministry of health only. The task force is made up of ; ministry of health, SGF office, DSS humanitarian ministry, ministry of information, ministry of interior. But if there is no proper coordination, there will be a big problem. I hope that there will be very good coordination.

And, what we did with the Ebola, that type of Committee quickly came up with a budget on what they’ll need to fight the disease, which was approved by the then president Jonathan, who actually led the war against Ebola.

He immediately declared a state of emergency, he gave funds, he was virtually calling for meeting every day. I keep agitating that I will love to see our president leading the war, it very important.

So that people will not joke, they will work! and he should talk to the nation.

We have not acquired all we need to fight the disease. From preventive point of view, the masks, the protective gears and the disinfectants are in short supply.Then, we have not done much on providing drugs.

So, why are we deceiving ourselves that we are ready?! We are not ready!

We are not ready!

Lastly, we can’t be jumping from one outbreak to the other and relying on everything imported, we should start thinking of manufacturing these things ourselves. For instance, we don’t have masks now, there are no enough masks in the country none! There are just few. Go the chemist and ask, none! If they give you, it’s the fake one. If you go to H-medix they will give you paper masks, because the real one is all exhausted.

Let’s assume, China that exports masks is now buying masks.

Some countries have banned exportation of masks. Italy has Iran has, all these countries have banned exportation of masks.

So, if they don’t sell do we just stay like that and start acquiring the virus. We should start manufacturing, immediately! Government should call some textile industries even if it’s Aba or Kano market to start manufacturing.

Let’s get the materials The last is on drugs, there are some drugs that they have found to reduce the respiratory attack and all. Some of the centres that they plan to take these patients to don’t have it, and those who have, don’t have enough, are we going to deceive ourselves? These are the things I think we should do to make Nigeria come out. We can do it, we’ve done it with Ebola, we can do it now again. But, keeping quite is not helping the people and the government. Let’s talk, let’s tell them what is on ground, where we are and let’s stimulate them to do the right thing.

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Monday 16 March 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

TELECOM

MTN says market conditions not yet conducive for Nigeria IPO MICHAEL ANI

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elecommunication giant, MTN says current macroeconomic conditions are not favourable to carry on the planned Initial Public Offering (IPO) of its Nigerian unit.

The telecommunication giant is planning on increasing the participation of Nigerians in owning its company from the current 21 per cent shareholdings to 35 per cent, but for the coronavirus pandemic which has dimed global outlook, that might not be on the cards for the company anytime soon.

“It is important for market conditions to be conducive before launching our IPO so that we can get a fair rating for the value of the asset,” said Ralph Mupita, Group CFO for MTN, “It is a very valuable asset and investors would expect us as management to proceed when we believe that we will be able to attract the right valuations to place the shares in local hands,” Mupita said.

MTN has shown interest in throwing its shares open on the floor of the Nigerian stock exchange for local investors to subscribe and become shareholders in the company, as part of an agreement reached by Nigerian telecom regulators in 2015 after it was fined $1 billion for failing to meet a deadline to

disconnect unregistered SIM from its network. MTN later paid $500 million.

The planned IPO in the market slowed after the telecommunication company in 2018 was accused of repatriating about $8.1 billion in dividend through illegal documents. MTN denied any wrongdoing but ended up paying $53 million as out of court settlement

As if the case with the Central Bank wasn’t enough for Nigeria’s biggest non-oil foreign direct investor, MTN was asked

by Nigeria’s Attorney General (AGF), Abubakar Malami to pay $2 billion as tax backlog, used in importing equipment and payments to foreign suppliers from 2007 to 2017. MTN dragged the office of the Attorney to court The above saga culminat-

ed into further slowing down MTN’s plan of an IPO in the Nigerian market, rather, the company listed by way introduction, a situation where existing shareholders of the firm sell the share to whoever they choose to sell to. MTN listed its Ghananian unit by way of IPO that same year. Despite the troubling time for the company, MTN said it is committed to carrying on with the planned

L-R: Abiodun Ayodeji, head of marketing; Anders Einarsson, managing director; Olakunle Ayeni, head of sales, and Mario Russo, commercial director, all of Promasidor, at the Launch of SunVita Choco Crunch Cereal in Lagos. Pic by Pius Okeosisi

TELECOMMUNICATION

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n a bid to become A f r i c a’s p re f e r re d exchange hub, the Nigerian Stock Exchange announced plans to demutualize. As part of events leading to the final demutualization, members of the nation’s bourse have passed a resolution for the demutualization at a court-ordered Extraordinary General Meeting.

The management of the bourse also held an analyst briefing last week.

What does demutualization affect the current structure Demutualisation of an Exchange is the process of transforming an Exchange from a non-profit, a mutually-owned organisation to for-profit and investorowned company.

By implication, the demutualisation of Nigerian

to be issued so we can make good progress with our mobile money business,” Mupita said in an interview with CBNC. He noted that while preparatory work for the IPO is still on, the company is closely watching the direction of macroeconomic fundamentals which has been hammered by the fallout from the Coronavirus. “The preparatory work of the IPO is on-going as we have a team of investment and legal advisers working so that when the conditions are conducive, we can then launch but for now the market is not,” Mupita said.

The MTN boss said the country is well prepared and has put various measures in place to ensure that the impact from the endemic outbreak doesn’t affect its business.

“There will be some effect but we think they are manageable as our balance sheet is resilient to whether any shock,” he said while noting the company has done some gearing that would create space for financial flexibility. Mupita noted the country has taken care of supply chain disruption drawing from experience when it had a challenge with some of its Chinese vendors.

“We have been able to do a dry run to get stock levels up in terms of network equipment hence, in the short to medium term, I think we will be fine and our network will be okay,” he said.

BANKING

What you need to know about NSE demutualisation OLUFIKAYO OWOEYE

IPO after Nigeria’s attorney general in early January withdrew the $2 billion tax demand against the South African telecoms giant.

“We have said last year that there are two issues that we are focused on before we proceed on the IPO. One was resolving the AGF matter which has now been dealt with and the other is the preference for the Payment Service Banking (PSB) licence

Stock E xchange would result in the conversion of the Exchange to a company limited by shares from a company limited by guarantee with re-registration in the name Nigerian Exchange Group Plc. A new subsidiary, Nigerian Exchange Limited (NGX), will also be registered and the securities exchange licence of the NSE will be transferred to this subsidiary of NGX Group, while a separate company, NGX Regulation L imite d (NG X Re gulation), will be registered and be charged with the regulatory functions of the Exchange.

A total of 1.96bn shares will be issued to t he d ea l ing a nd o rdinar y members in the ratio 78:22, with a further 40.08mn shares set aside as claims review shares.

Each of the 255 dealing members and the www.businessday.ng

177 ordinar y members will receive 6.00mn and 2.44mn shares respectively.

How does this affect investors Upon the completion of the demutualisation process, it would free up liquidity for members as they become shareholders, with a possibility of an Initial Public Offer to raise capital to fund projects which would be supported by domestic and institutional investors.

Corporate governance of the Exchange is also expected to improve as e x t e r n a l s h a re h o l d e r s will be represented on the board. The separation of ow nership and trading rights also give the Exchange greater independence from members with the interests of the owners being aligned w i t h t h o s e o f t h e E xchange.

T h e Ni g e r i a n S t o c k Exchange NSE will become the 57th exchange to demutualise among the 70 members of the World Federation of Exchanges, as at 27 June 2019, adding a major positive reference to the Exchange.

Apart from exchanges in developed markets in Europe, North America and Asia, exchanges in Africa such as the Johannesburg Stock Exchange, t h e Na i r o b i S t o c k E xchange and the Dar es Salaam Stock Exchange in Tanzania are also demutualised.

Interestingly, some of these exchanges raised capital via Initial Public O f f e r i ng s ( I P O s ) , w i t h the latest being Boursa Ku w a i t , w h i c h r a i s e d US$33mn in an IPO that was oversubscribed by over 8.5 times in December 2019.

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First Bank silent on merger talks with Polaris, Heritage Banks

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i r s t Ba n k Ho l d ings has reacted to media reports suggesting that there are ongoing merger talks between its subsidiary First Bank, Polaris Bank Ltd, and Heritage Bank Plc. In a notice to the exchange, inorganic growth remains a strategic consideration for all financial institutions. “From the bank’s perspective, it will only consider it when it value accretive to shareholders and other key stakeholders,” the bank said.

The bank did not categorically confirm or deny the supposed involvement in the reported ongoing merger talks with Polaris Bank Ltd, however, the bank said it would continue to scan banks in the Sub-Saharan Africa for possible acquisition.

On Thursday, March 12, major daily newspapers pub@Businessdayng

lished a report claiming that First Bank of Nigeria Ltd is set to merge with Polaris Bank Ltd and Heritage Bank Plc. Polaris Bank Ltd, which became a bridge bank following a 2018 restructuring, is currently under the management of the Asset Management Corpora­tion of Nigeria (AMCON).

In October 2014, Heritage Bank acquired 100percent shareholding in Enterprise Bank Limited, a nationalized financial services provider with over 160 branches and US$1.6 billion in assets. Heritage paid AMCON $340 million in cash, for the acquisition. Heritage Investment Services Limited (HISL), the investment arm of Heritage Banking Company Limited (HBCL), was the winning bidder out of 24 Nigerian and International companies who competed for the acquisition of Enterprise Bank.

Monday 16 March 2020

BUSINESS DAY

COMPANIES&MARKETS

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Business Event

REAL ESTATE

Haven Homes partners Seso Global in new estate launch ENDURANCE OKAFOR

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aven Homes, a real estate d e v e l o p e r, has partnered Seso Global, a property sales and marketing company for the launch of the second phase of Richmond Pearl Estate.

Located in Lekki, the new phase of the project introduces 2, 3, 4 and 5 bedroom homes to meet increased demand at the fully serviced estate, which includes a clubhouse, swimming pool and tennis court.

Tayo Sonuga, CEO Haven Homes, said with Phase One of the estate sold out, the firm has already seen good uptake for the second phase.

“We are looking forward to showing the quality of our products to a wider audience during this launch on March 28 from 12 till 5 pm and believe we offer something unique to Lagos,” Sonuga said.

The lunch of the new estate which held at Richmond Gate is designed to showcase the

real estate products the developers have in stock and also gave families the opportunity to tour the homes. Popular musician and entertainer, Falz, was billed as a special guest at the launch which took place recently in Lagos.

“This is an exciting time for Haven Homes and we are looking forward to the open day,” Daniel Bloch, CEO of Seso Global said adding that “working with such a trusted developer is important to us; and we believe the special open day price provides great value for those wishing to live in a dream development.”

Seso Global entered the Nigerian real estate space in 2018, utilising blockchain technology to unlock the increased value in the real estate industry. Its online marketplace is one of the leading real estate and property listing websites with private, commercial property and houses in Nigeria for rent and for sale.

According to Sonuga, Heineken and Rite Foods have also partnered with the developers to provide refreshments

to participants at the launch.

Haven Homes started off in 2006 with its first development and has quickly established itself as a developer of quality homes within a serviced and ordered estate.

Phase 1 of Richmond Pearl Estate is fully completed with phase 2 constructions well underway.

Housing anywhere else in the world is a basic necessity, which in the order of human needs, ranks third after food and clothing but in Nigeria, the country with the most population in Africa, its homeownership rate is one of the lowest in the world.

Nigeria’s homeownership level is at 25 percent, the largest economy in Africa is a laggard when compared to the 84 percent homeownership rate in Indonesia, 75 percent in Kenya and 56 percent in South Africa.

With a housing deficit of more than 20 million units, Nigeria’s property market requires an estimated N170trillon to N200trillion to bridge its housing gap.

L-R: Sam Ndata, doyen of stockbrokers; Onyinyechukwu Ezeagu, chairman, Association Of Securities Dealing Houses Of Nigeria, (ASHON); Henry Olayemi, former president, Chartered Institute of Stockbrokers, (CIS); Akin Akeredolu-Ale, managing director, Lagos Commodities and Futures Exchange, (LCFE), and Fatima Lawal, company secretary, LCFE, at the breakfast meeting organized by Lagos Commodities and Futures Exchange (LCFE) to Introduce The Company to Senior Stockbrokers, In Lagos

L-R: Marilyn Maduka, people director, International Breweries (IB) Plc; Bolanle Austen-Peters, managing director, Terra Culture; Wilfried Fameni, procurement director, IB Plc and Florence Justus-Oni, procurement manager, IB Plc, at the 2020 International Women’s Day celebration hosted by IB Plc at its head office in Lagos.

CSR

FCMB’s SheVentures gets thumbs up as lender empowers 2,000 women entrepreneurs MICHAEL ANI

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o fewer than 2,000 Small and Medium Scale Enterprises (SMEs) have so far benefitted from the First City Monument Bank (FCMB) SheVentures, an empowerment initiative for women-owned businesses, launched in March 2019.

The SheVentures which comes with a unique feature of giving out soft loans to women at a zero percent interest rate for a period of three months is anchored on supporting women with vision.

The benefits of the initiative cut across a mentoring, capacity building and zero-interest loans, ranging from N500,000.00 to N5,000,000.00.

It connotes confidence, independence and the courage required by women to fulfil their aspirations, the lender said.

Speaking at the event to celebrate the first anniversary of FCMB SheVentures, the Group Chief Executive of FCMB, Ladi Balogun, described the initiative as a game-changer in the quest of the lender to upscale the

performance of SMEs. SheVentures is designed to engage, inspire and equip potential and existing women entrepreneurs to take bold steps that would enable them to become much more competitive, productive and profitable thereby contributing significantly to national development.

The event formed part of activities of FCMB to commemorate this year’s International Women’s Day, and was graced by the First Lady of Ogun State, Bamidele Abiodun; managing director, Rose of Sharon Group and executive vice-chairman, Famfa Oil, Folorunsho Alakija; a former Deputy Governor of Lagos, Sarah Sosan; and other top personalities from various walks of life and several entrepreneurs.

The SheVentures initiative was created for the sole purpose of ensuring that women-owned businesses are not left out in the development of the country’s economy through their collective and individual contributions as business owners.

The FCMB Group Chief Executive further stated that ‘’as shown in our ranking as the number one in SME Banking in Nigeria by www.businessday.ng

KPMG, we are not just focused on the basic banking procedures when it comes to our customers, but also fully committed to delivering services and offerings that ensure that they derive good returns from their relationship with us.

We are excited to note that with FCMB SheVentures, we have expanded the frontiers of support to businesses in a manner that is ushering them into prosperity, Balogun said.

In her presentation titled, ‘’Women Supporting Women’’, Alakija, who is rated as Africa’s richest woman, commended women entrepreneurs for their resilience.

According to her, “It is gratifying that women have continued to break barriers in the business and corporate world, despite the challenges. Nigeria has the highest number of women business owners in the world, but only 2 percent have access to capital.

Irrespective of this situation, women need to collaborate with one another.

We must be ready to share information and assist each other. When women support each other, incredible things happen’’.

L-R: Stephen Shofu, marketing communications manager, Rosabon Financial Services; Chidinma Ezeani, CEO, Classy Glam Make-up; Taiwo Temitope, CEO, Naomi Apparels Fashion; Nkechi Njoku, CEO, Josypat Affairs, and Vivian Chiokwa, lead, financial product development, Rosabon Financial Services, during the presentation of the Rosabon One Million naira Grant cheque to MamaMoni Empowerment Foundation in Lagos.

L-R: Ambrose Oruche, acting director general, Manufacturers Association of Nigeria (MAN); Shuaibu Umar, representing permanent secretary, ministry of science and technology; Mansur Ahmed, president, MAN; Isaac Ade-Agoye, national treasurer, MAN; Dr Olugbemi, representing the DG RMRDC, and Usman Ibrahim, chairman, MAN Power Development Company, at the closing ceremony of the 3Day NME/NIRAM 2020 Expo in Lagos.

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BUSINESS DAY

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Insurers worried over recapitalisation exercise …as analyst see coronavirus triggering global recession Modestus Anaesoronye

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am worried about the current fall in oil price, as well coronavirus, and hope it does not lead to another recession, because it does, then we will have problems in the ongoing recapitalisation exercise, an Insurance CEO said.

“We are headed for another recession; this is my biggest worry now, another insurance CEO. Insurance industry in Nigeria is going through a recapitalisation exercise that will require operators shore up their paid-up share capital to as much as 300 percent.

The exercise, which commenced on 20th May 2019 and to end on 31 December 2020, requires that life companies increase their paid-up share capital from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion.

But the current continuous fall in oil prices, the fall in naira and the global coronavirus disease is feared would affect raising funds at this time, as inflows in the course of the

“

L-R: Yetunde Ilori, director general of the Nigerian Insurers Association (NIA); Tope Smart, chairman; and Kola Fashoyin, representing the tutor-General and permanent secretary, Education District 2 at the Commissioning of the School Hall of Baptist Junior High School, Obanikoro which was undertaken by the Association.

recapitalisation exercise has been from private equity investors both within and outside the country.

The pressure on the local currency intensified on Thursday as one dollar traded for N410 at the black market, though returned at N375 on Friday over news that the Central Bank of Nigeria was not going to embark on recession.

Foreign exchange users were buying up the dollar to hedge against imminent devaluation of the naira as the

price of oil has slumped below $34 per barrel.

Swiss Re Institute had stated weekend that it’s expecting to see a global recession in 2020 as the coronavirus outbreak continues to cause major disruption around the world, putting pressure on already weak economic resilience.

Swiss Re analysts noted that the recession will likely be mild in a historical context, although economic growth will likely decelerate quite abruptly in Japan and the

Eurozone, including in Italy, France and Germany.

“We expect a global recession with economic risks having intensified abruptly,” said Jérôme Haegeli, group chief economist at Swiss Re. “Fact is: the coronavirus is hitting the global economy when economic resilience is already weak to start with.”

The US and China are forecast to remain more resilient, although the risk of both a US recession and a China hard landing has risen to a very

high 40 percent.

Swiss Re also foresees further monetary easing, but said that central bank action will need to be coordinated with forceful fiscal expansion to be effective.

It noted that few fiscal measures have been proposed thus far outside of Asia, with coordination among the G7 countries most likely if the situation deteriorates further.

In addition, global bond yields will remain even lower as US rates are quite likely to temporarily go below zero percent.

Given market dynamics, Swiss Re forecasts US 10year yields to remain below 1 percent until end of 2021, possibly going as low as zero or below temporarily, even without a technical recession domestically.

The coronavirus outbreak in the EU and US is still intensifying with the whole of Italy under quarantine, but analysts believe that the spread of the virus in China appears to have peaked, with early signs of normalising activity.

In China, Swiss Re has lowered GDP growth to 4.8 percent in 2020 and 5.5 percent in 2021, with a strong rebound in growth anticipated in the second quarter of the year.

AIICO canvases women visibility in workplace Modestus Anaesoronye

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IICO Insurance Plc is leaving no stone unturned in promoting gender balance and equal opportunity for women. To mark the 2020 International Women’s Day, the company organized a women’s conference themed “Women’s Visibility in the

Workplace”, in Lagos.

Speaking at the event, AIICO’s Head of Retail Life Operations, Titilola Okunlola said the company is committed to promoting women’s visibility, and providing the enabling environment for women to thrive and be their very best.

Also, Abimbola Shobanjo, head, Corporate Responsibility and Sustainability said “gender equality as one of

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the United Nation’s Sustainable Development Goals is a priority area for us at AIICO; Management provides necessary support for causes and initiatives that align with it.

The company, in its bid to promote gender parity, has organized this conference to lend its voice to the global call for equality, empowerment and increased visibility for women.”

The guest speaker, Glory Edozien, a public speaker and a thought leader on women’s empowerment, challenged women not to rest on their oars but accomplish more, break limits, showcase their skills and capabilities and to improve their career.

She stated further that speaking out is one of the ways to promote visibility.

“You can’t be visible if you

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don’t tell people about what you do or what you can do.

You must be heard.” She advised women to pitch for opportunities, sell their value and network within and outside of the workplace.

Participants, which cut across women of different social calibre, also had the opportunity to share their thoughts during the interactive session.

@Businessdayng

FBNInsurance trains retail staff for higher productivity Modestus Anaesoronye

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BNInsurance Limited has held its quarterly Retail Managers Training for its Area sales Managers, Senior Sales Managers and Retail Sales Managers respectively in Uyo, the Akwa Ibom State capital.

The firm undertakes the quarterly exercise to serve two purposes: to continuously improve the sales knowledge and capacity of its Retail team, and also to align the sales team with the firm’s corporate strategy; a formula that has been working quite well for the company. The firm recognizes that the Retail sales team, with it’s over 3000 sales force is crucial to the company’s growth and its positioning as the insurance company to beat in the retail space. The Val Ojumah, Company’s managing director/CEO, commended the efforts of the Retail team and spoke about the sacrifice the team has made to put the firm in the top spot.

“The Retail team is the company’s potent sales force.

This team of over 3000 vibrant men and women from all over Nigeria has sold insurance under the sun and in the rain to ensure the company stays ahead in the retail space.”

Every company that has set its eyes on being the best recognizes the importance of having Managers who can inspire their subordinates to be even more diligent; and that is yet another reason for the existence of the FBNInsurance quarterly training.

Ojumah is well aware that motivation is vital to the provision of exceptional service and its subsequent rewards, and key to this, is training. “It is pertinent for us as a company to continuously train Managers of the retail team on managing the retail workforce as well as addressing issues confronting the company, with a view to providing exceptional service to our customers, as well as motivating the Retail sales force to strive for more.”

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BUSINESS DAY

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Here are reputational damage trends that companies have to watch Modestus Anaesoronye

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ompanies can potentially face reputational damage or legal liabilities if they fail to appropriately manage environmental, social and governance (ESG) issues.

Allianz Global Corporate & Specialty’s ESG team identified key trends to watch: climate change, water management, preserving biodiversity degradation and saving resources, prevention of exploitation in supply chains and good corporate governance policies.

For companies today, it is no longer enough to focus only on delivering profits and creating value for shareholders, they also need to show that they are making a difference to the environment and society.

As demand for business to demonstrate its sustainability credentials grows, companies are being held accountable by consumers, investors, regulators and other stakeholders and increasingly face reputational damage or legal

L-R: Henrietta Maduogwu; Abiola Adegbesan; Bisola Elias; Titilola Okunlola; Sarah Adeniran; Abimbola Shobanjo; Mojisola Ogundipe; and Jovita Njepuome, all women of AIICO Insurance Plc when the insurer marked the 2020 International Women’s Day with a conference in Lagos.

liabilities if they fail to appropriately manage ESG issues.

Allianz Global Corporate & Specialty (AGCS), the corporate insurance carrier of Allianz SE, hosts Allianz Group’s ESG Business Services team has identified five key trends that will im-

pact businesses’ ESG footprint in 2020 and beyond: climate change, water management, biodiversity degradation, exploitation in the supply chain and increasing scrutiny on corporate governance.

Combating climate change is the key challenge

Insurance trade group extends CSR to Secondary School in Lagos Modestus Anaesoronye

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orried by the deteriorating learning condition and dilapidated infrastructure in Baptist Junior Secondary School Obanikoro, Lagos, the Nigerian Insurers Association(NIA) has renovated the School Hall to improve the learning condition of pupils and provide a convivial environment for advancement of knowledge.

Speaking at the commissioning of the project which was renovated by NIA as part of its Corporate Social Responsibility Initiatives Tope Smart, chairman expressed hope that the facility will be put to good use and charged the school authorities and students to maintain the facility so as to encourage other corporate bodies to invest in similar projects in the school.

The chairman said the Association was moved by the inhuman learning condition in the school which is dotted by dilapidated classrooms, leaking roof and other decrepit facilities and made the intervention to assist the pupils fulfill their academic potentials in a conducive learning environment even as heemphasized the need for a strong maintenance culture in Nigeria to protect the facility from decay.

He said” As a responsible corporate organization, we were moved by the unfavourable learning condition we met during the global money week; the hall was in a state of disrepair that no meaningful activity can take place there.

So, when the management of the school approached us for assistance, we had to oblige them and we are happy that we did. This is our modest contribution to the advancement of learning and we are www.businessday.ng

sure the students and teachers appreciate this intervention”.

Emphasizing the need for the staff and students of the school to keep the facility in top shape, he noted that there is a need for all and sundry to change their attitude towards maintenance of public facilities as lack of good maintenance culture remained a huge problem in the country.

“We need to change our attitude to maintenance of our valued assets and change the narrative in this regard so as to give confidence to corporate organizations who would like to embark on CSR initiatives. The problem with us in Nigeria is that we do not have a strong maintenance culture. I think you can be an agent of change in this regard so that when we come here in two or three years, we would be happy that you have kept faith by keeping this hall in good condition” he added. ??

of the coming decade. It ranks 7th in the Allianz Risk Barometer 2020 – its highest-ever position – and is already affecting businesses in many ways, such as an increase in physical losses from more severe weather events or potential market and regulatory impacts such

as carbon-emissions offsetting. There are also litigation risks as climate change cases targeting ‘carbon majors’ have already been brought in 30 countries around the world, with most cases filed in the US. By 2050, the world’s population is expected to reach

9.7 billion, while global water demand is expected to increase by 20 percent to 30 percent, mainly due to demand in the industrial and domestic sectors.

Currently over two billion people are living in areas of high water stress and almost half of the global population – about four billion people – experience severe water scarcity during at least one month of the year. “Water is a big issue for citizens and companies, alike,” says Bonnet.

“Not just concerns about its abundance, but also its purity, its scarcity in a warming climate and its over-use and poor management.”

Protect biodiversity and finite resources Oceans are full of plastic waste, species extinction and severe land degradation due to storm, drought or increasing industrialization, as demonstrated in the felling of the Amazon rainforest, are just some of the most obvious examples of the deterioration of the planet.

Sustainable consumption practices can slow future biodiversity loss.

Anchor Insurance boss calls for govt. patronage of insurance Modestus Anaesoronye

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he Managing Director/ CEO of Anchor Insurance Company Limited Ebose Augustine has called on government at all levels to patronize insurance as a major risks management tool for successful governance.

He pointed out that insurance industry need the partnership of government to grow the business and support economic growth and development.

Ebose who made the call in Lagos when his company received award for good performance said this company was being celebrated after just a little above a year in office with his new team, stating that “we were just doing what we felt should be done to take the company to another level but we never knew people were taking records.”

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Anchor Insurance Company Limited, weekend emerged the Insurance Company of the Year, having been described as the “fastest growing insurance company in 2019, The selection committee specifically recognized the Company for its giant stride in the past one year, especially in its risk management and claims administration approach which have always been a source of delight for its teaming policyholders.” “we are also impressed by the company’s turnaround record of performance in the last @Businessdayng

one year. It is noteworthy to say that the company under the new Management team generated the highest premium income after 29 years of its existence, recording 72 per cent growth in one calendar year, the awardees said.

According to the Independent, “the new Management team’s ability to revitalize the Anchor Insurance brand and reposition the company for the statutorily induced recapitalization has further proven the organization as one that is ready to shock the insurance sector of the nation’s economy.”

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BUSINESS DAY Harvard Business Review

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Use data to revolutionize project planning Yael Grushka-Cockayne

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he California bullet train. Lockheed Martin’s Joint Strike Fighter program.

Berlin’s Brandenburg Airport. Inaccurate forecasts involving durations, costs, resources and benefits are clearly a major source of risk for leaders’ careers and organizations’ growth opportunities. Late or pricey projects can also affect the health of the economy at large.

Forty years ago, psychologist and Nobel prizewinner Daniel Kahneman, along with long-term collaborator Amos Tversky, noted that humans tend to suffer from a “planning fallacy”: They overpromise and underdeliver by offering unrealistic forecasts of projects’ objectives. Today, changing attitudes toward data collection, datadriven prediction and decisionmaking offer unprecedented opportunities in the field of project planning.

In the U.K., the HM Treasury’s Green Book provides guidance on how project proposals should be appraised before significant public funds are

committed. The appraisal procedure includes an explicit adjustment to account for systematic optimism, sometimes referred to as “optimism bias,” which is the overstatement of benefits and the understatement of durations and costs.

In a study I conducted for the U.K.’s Department for Transport, along with researchers from University College London, Erasmus University Rotterdam

and Warwick Business School, we found that rail infrastructure projects require anywhere from a 64% optimism adjustment (for projects in early definition stages) to a 4% adjustment (for projects that have already completed detailed designs).

In the U.S., the Program Management Improvement Accountability Act was signed into law in 2016. The act, which aims to improve program and project

management practices within the federal government, establishes initial guidance for coordinated and governmentwide approaches to strengthen project management practices.

In both of these examples, the set of projects that are considered in the reference class is identified by human judgment.

What if artificial intelligence could help perform this role?

Using detailed project-plan-

level data with information on individual tasks, deep learning and artificial intelligence can identify patterns of similarity among project tasks, hierarchies and precedent relations. A London-based startup, nPlan, is doing this now. The company uses data from tens of thousands of construction projects involving millions of tasks combined with natural language processing techniques to predict project durations and delays. The combination of rich data and proprietary AI capabilities allows nPlan to generate highly accurate and useful forecasts for project completion dates, including information about the risks of delay. Here, AI algorithms learn which patterns are most useful for predicting delays, relaxing the need to declare a reference class upfront.

Some suggest the availability of data and AI technologies will introduce a “seismic shift” in project planning. Let’s hope this shift will finally enable us to overcome the planning fallacy, too.

(Yael Grushka-Cockayne is an associate professor at Harvard Business School.)

Improving care for high-need, high-cost medicaid patients Farhad Modarai, Brian W. Powers, Sandeep Palakodeti, Vivek Garg and Sachin H. Jain

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or roughly two decades, health care organizations have been aggressively experimenting with programs to improve care for high-need, high-cost patients.

In an article in the new issue of the American Journal of Managed Care, we published encouraging results from a complex-care-management program serving high-need, high-cost Medicaid patients in Memphis, Tennessee. The program, built on top of an existing integrated-care model, lowered total spending by keeping patients out of the hospital.

An early analysis of our patient population revealed that spending was remarkably concentrated: The costliest 5% of patients incurred roughly 70% of all spending.

Most had multiple chronic medical conditions, often with co-occurring behavioral

health disorders. Many also had significant social needs, ranging from housing instability to food insecurity. CareMore developed a program aimed at providing hightouch, comprehensive care for these complex patients.

We augmented our primary care physician-led medical home model with a full-time community health worker and greater support from social workers. Patients who enrolled in the program un-

derwent a comprehensive, multidisciplinary assessment of their medical and social needs, the results of which were used to create a tailored care plan.

Patients in the program received frequent, structured follow-ups. The community health worker contacted patients weekly to check in and evaluate progress. The community health worker, social worker and primary care physician reviewed the care

plan weekly. Patients returned to CareMore care centers monthly for in-person visits with the entire team. The community health worker accompanied some patients to specialist visits and social-service appointments. The social worker provided counseling for behavioral health needs, helped navigate social services and arranged for necessary referrals and medical equipment.

We found that the program led to a $7,732 (or 37%) reduction in total medical spending per patient per year. This was driven primarily by decreases in hospital utilization: Patients were less likely to be admitted to the hospital (50% decrease), and when they were admitted, their hospital stays were shorter (62% decrease).

We also saw a small decline in specialist visits, possibly due to more active management of chronic illnesses by the primary care physician.

Patients were highly satisfied with the program: Its net promoter score (measured three months after enrollment in the program) was 100 out of

100.

Here are lessons for others: — Precise patient targeting can improve effectiveness and efficiency.

— Programs with an integrated model for addressing medical and social risk may be most effective.

— Focus only on the most relevant drivers of poor outcomes.

— Partner with community-based organizations and social-safety-net institutions such as food banks and housing authorities.

What’s needed now is a better understanding of which program elements work best for specific patient groups and what it takes to rapidly scale successful interventions.

(Farhad Modarai is an associate regional medical officer at CareMore Health, where Brian W. Powers is director of population health strategy and analytics, Sandeep Palakodeti is a regional medical officer and Vivek Garg is chief medical officer. Sachin H. Jain is president and CEO of CareMore and Aspire Health.)

Monday 16 March 2020

BUSINESS DAY

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Aisha Raheem: Transforming Nigeria’s food system with artificial intelligence Josephine Okojie

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isha Raheem is the founder of Farmz2U, a s t a r t- u p t h a t employs artificial intelligence and machine learning to optimise and address issues of food waste and nutrition.

“Our USP is the use of consumer data—not limited to end-consumers and distributors— to provide trend analysis in supporting a farmer’s production planning,” she says.

Aisha was inspired to establish Farmz2U owing to a personal healthcare scare, and desire to address societal issues around food and nutrition.

“After discovering a lump, I changed my lifestyle with greater focus on nutrition gained mainly from food,” the young entrepreneur explains.

“Through this journey, I became aware of the challenges in the food industry, and the interrelation of poor nutrition and food waste,” she adds.

To address these societal issues, Aisha was prompted to establish Farmz2U in 2017.

Her entrepreneurship

Aisha Raheem

journey started in 2014 but became a business model that was incorporated in 2017.

She started the business small and has invested about $85,000 since starting. The business has been funded through her private funds and grants.

Her business has continued to grow owing to its adoption of technology to drive food sustainability and address society’s problem of food waste and malnutrition.

She currently has three

full-time employees and three freelancers.

On the business expansion plans, she says that Farmz2U in the short-run plans to scale its solutions to more farmers in Nigeria by the second quarter of 2020.

“The Farmz2U solution is currently available to a select few farmers through our closed beta testing exercise.

However, we aim to provide this solution to more users through our soft launch with a target date in Q2 2020,”

she says.

“We will have a staged release to more users over time through a waiting list system,” she notes.

“Similarly, we are working with local and international agricultural cooperatives and extension systems to provide Farmz2U’s services to farmers,” she adds.

Evaluating Nigeria’s agricultural sector, Aisha says poor technical expertise, fragmented markets and low use of mechanisation have

continued to limit farmers’ productivity.

She notes that it is very vital for Nigerian farmers to embrace innovation and technology if they ever want to grow enough food for the population.

She identifies low awareness and cost as the major factors hindering farmers in the country from adopting technology.

She notes that with the solutions Farmz2U is providing, farmers can get a flexible pricing structure to address some of their challenges while getting evidencebased case studies on how technology can boost their productivity.

Aisha tells Start-Up-Digest that inadequate funding and farmers’ low knowledge on the importance of technology in boosting their productivity remain major hurdles to cross.

She notes that the business is trying to overcome the challenge by regularly conducting training sessions for farmers.

“With limited funding, we have managed this challenge by operating a lean cost structure and bootstrapping.

And in managing the knowledge gap among users we regularly conduct training

sessions,” she says.

She urges the government to encourage the adoption of innovation and technology in the country’s agricultural systems.

“There is an incentive to increase Nigeria’s agricultural output for the government and the people. Apart from reducing the food import bill, there will be more revenue through exports,” she says.

Aisha’s business – Farmz2U- is a recipient of several awards and grants such as recognition as a leading African and Diaspora-led SME by the African Union; Changemaker for the EIT Food; Code of Good Scholarship from Cambridge Consultants, and recognition as a leading female-led innovative start-up by the Royal Academy of Engineering among others.

On her advice to other entrepreneurs, Aisha says, “The world has many problems and too few solutions. If you want to start a business, make sure it is solving a problem and be clear about what that problem is.”

“Be resilient and committed to the positive impact you wish to create. Everything else will follow organically,” she adds.

Lagos State eyes better infrastructure to support entrepreneurs ... As Maduka, Ezeude win EY entrepreneurship awards Odinaka Anudu

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agos State government has pledged to boost infrastructure in Nigeria’s economic capital to support entrepreneurs.

Speaking at the EY Entrepreneur Award held recently, Babajide SanwoOlu, Lagos State governor, said his administration was committed to supporting the ambitions and aspirations of entrepreneurs, innovators and business leaders.

Sanwo-Olu, who was represented at the event

by Femi Hamzat, deputy governor, said entrepreneurs were key drivers of the economy of the state and the nation.

“We will continue to invest heavily in infrastructure, especially in the transport sector, as we are

receiving support from the Federal government in major areas of transport, power and agriculture,” SanwoOlu said.

“Lagos would not have attained the enviable status of being the economic hub of Nigeria and the biggest sub-national economy of Africa if not for the entrepreneurs who translated their dreams into reality,” Sanwo-Olu said.

“Anyone who has started a business knows that it is not an easy thing to do. It also does not get easier and every stage of the growth of a business comes with its own unique challenges and issues,” he further said.

He pointed out that though the environment could be challenging for various reasons, many entrepreneurs had continued to put in hard work and sacrifice to build, grow, expand and innovate. www.businessday.ng

He said there could never be safety of lives and property without security, stressing that security remained a priority in his government.

“We have identified the private sector as a vital partner providing support through the Lagos State Security Trust Fund,” he noted.

The governor commended the six shortlisted finalists at the EY West Africa Entrepreneurs Award 2020, pledging to create the environment to enable entrepreneurs overcome some of the operating challenges faced by business owners in the state.

At the event, Michael

L-R: Henry Egbiki, EY country leader and regional managing partner for West Africa; Cosmos Maduka, founder, Coscharis Group, and Femi Hamzat, deputy governor, Lagos State, at EY Entrepreneur Award in Lagos recently. https://www.facebook.com/businessdayng

Olasubomi Balogun was honoured with the Lifetime Achievement Award as the doyen of banking in Nigeria and Africa while Cosmos Maduka, founder/chief executive officer, Coscharis Group, emerged winner in the Masters’ category of the EY West Africa Entrepreneur Award 2020. He will represent West Africa in the EY World Entrepreneur Award of the Year in Monte Carlo. Obi Ezeude, managing director/CEO, Beloxxi Industries Limited, won EY West Africa Entrepreneur of the Year in the Emerging Category.

Henry Egbiki, EY country leader and regional managing partner for West Africa, said the award was the 6th edition in West Africa.

“The EY Entrepreneur of the Year award was instituted to recognise and celebrate unique sets of men and women in West Africa @Businessdayng

who use their entrepreneurial energy and passion to reshape our world with their innovation thus create economic and social values in the business world through creating job opportunities,” he said.

“The EY Entrepreneur Award started in the United States in 1986 and had since become a global programme covering more than 70 countries. The West African edition of the award commenced in 2011. Cosmas Maduka will join 65 other winners from across the world to vie for the EY World Entrepreneur of the Year,” he noted.

Maduka will fly the West African flag in Monaco in June where he will battle with other Master Category Winners drawn from over 70 countries worldwide.

Ezeude is the CEO of Beloxxi, which manufactures cracker biscuits.

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Monday 16 March 2020

BUSINESS DAY

Start-Up Digest

How construction startup plans to reform multi-billion naira real estate sector JOSHUA BASSEY

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amson Adeosun is a young Nigerian entrepreneur who is making his mark in the construction industry in the United Kingdom (UK) where he’s been based for several years.

Adeosun and his friend Dayor Adeniyi are cofounders of ASQ – a training and assessment business with a specialisation in construction. They are planning to bring skills found in the UK into the Nigerian construction industry to eliminate the continuous quest for foreign skills.

The young entrepreneur says ASQ is looking at extending its frontiers to the Nigerian market and that they hope to build a training institute and galvanise graduates and O’ level certificate holders to take up career in various aspects of construction.

The young entrepreneur and his friend were both motivated by the success they have recorded in

the UK to establish a Nigerian arm of the business.

According to them, ASQ in the last two years has trained about 5,000 people who are making an impact in the UK’s construction industry.

“We also train people on health and social care.

These are National Vocational Qualifications (NVQ) in the UK,” Adeosun says.

Commenting on the training offered by ASQ, Adeosun says it ranges from level 1 (basis) to level 7 which is the highest— an equivalent of a master’s degree.

“Those entering level 1 are people who can read and write. These are the people we refer to as skilled workers. They include carpenters, bricklayers, and tillers among others,” he says.

“Level 2 to level 3 are the supervisors and it goes on like that to the manager level which are those on level 7,” he adds.

“What we are seeking to do is to see how we can bring the same quality of training to Nigeria. We

Mr Samson Adeosun, Director at ASQ Training and Assessments

have been certified to deliver the same training and we’re quite excited about that,” they both explain.

Another aspect of what

LCCI’s SMEs Support Center to offer entrepreneurship advisory services Odinaka Anudu

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he Lagos Chamber of Commerce & Industry (LCCI), a leading Nigerian private sector advocacy group, has launched a support center to enable entrepreneurs and SMEs operators get quality and affordable advisory services from consultants.

In her remarks at the e ve nt w h i c h h e l d la st Thursday,Toki Mabogunje, president of LCCI, represented by Michael OlawaleCole, deputy president, said the initiative was part of efforts of the chamber to support businesses by providing professional services to entrepreneurs.

She said more than half of Nigeria’s labour force worked in the SMEs space and the increasing rate of business failure among SMEs was partly associated with their inability to

access quality consulting services.

The support center is aimed at creating a platform where SMEs operators can consult experts in various sectors regarding the challenges they are confronted with, Mabogunje said.

“The center will equally assist SMEs to develop strategies for their business and avail them of necessary information that would make them operationally active in their respective sectors,”she explained.

The LCCI president was optimistic that the high mortality rate among small & medium-sized businesses would reduce once operators had access to information.

On his part, Okumura Makiko, chief representative of Japan International Cooperation Agency (JICA) at Nigerian Office, said that the initiative was the brainchild of the Knowledge Cowww.businessday.ng

creation Program (KCCP) organised by the agency.

“Today, we witness one of the outcomes of the KCCP whereby a trainee acquires some skills and uses it to support SMEs “The trainee, which is among the four LCCI staff JICA has supported to participate in the programme a couple of years back, was trained on Financial Access for SMEs,” Makiko disclosed.

He maintained that the initiative would enhance knowledge transfer and assist many businesses in the art of financial management.

The event gave SMEs the ample opportunity to meet professionals from SIAO, Skill Enhancement Center, Mquad Consulting, Michael Steven Consulting and law firm- Udo – Udoma & Belo Osagie, among other experts who were in attendance.

Adeosun and Adeniyi are looking to encourage in Nigeria is in health and social care, as Nigeria presently lags behind in social care.

“A lot of people trying to do this in Nigeria are not certified,” they observe, adding that in the UK the social care sector is totally different.”

“We want to train people to take this up as a career. We’ll like to expose Nigerians to this space so that they become the best they can be as social caregivers. That’s why we believe the government must play its role by putting infrastructure in place,” he says.

They believe that since a chunk of the Nigerian population can read and write, all they need is a little training to bring out their best as obtained in the advanced economies.

The entrepreneurs intend to actualise these plans in Nigeria by liaising with the relevant authorities at federal, state and local government levels.

Adeosun says that the business’ short term plan is to acquire land in Lagos where it will build the institute and site office.

“It is going to be a satellite office that will liaise with our London office.

Our examinations, qualifications, and certification will come from the UK,” Adeniyi says.

He explains further that once the Lagos office is set up, ASQ will be recruiting young graduates with IT skills and further train them to fit into ASQ’s operation.

This, both entrepreneurs say, will be the first phase to drive their operations into the Nigerian market and settle down for the onerous task that lies ahead.

The second phase will be to acquire a sizeable piece of land that will be used to train people on how to operate heavy-duty machines such as cranes and forklifts at construction sites.

The whole idea, they explain, is to ensure that young Nigerians acquire skills that make them marketable home or abroad.

They strongly believe that such skills and the certification they carry are urgently needed to address burgeoning unemployment among the youth population.

Proparco, FCMB sign agreement to support N245 MSMEs

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roparco, the French Development Agency’s private sector financing arm, and First City Monument Bank (FCMB) have signed a N2 billion risk-sharing facility agreement, which will cover up to N4 billion worth of loans granted by FCMB to Nigerian micro, small and medium-sized enterprises (MSMEs).

MSMEs represent 96 percent of all businesses in Nigeria, testifying to their critical role for the Nigerian economy. However, most SMEs still lack access to appropriate sources of financing needed to develop their activity, a statement by Claude Abily, political/ press counselor of Embassy of France in Nigeria, said.

Created in 1982, FCMB c u r re n t l y ra n k s a m o n g Nigeria’s top 10 banks. As part of its growth strategy, FCMB eyes supporting SMEs through tailored products and services to entrepreneurs.

Proparco’s support will help FCMB extend its financing to a greater number of SMEs in Nigeria. It is esti-

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mated that this risk-sharing facility agreement could support close to 245 MSMEs in the country and contribute to create or maintain more than 440 jobs, the statement said.

“This is Proparco’s second operation with FCMB. In 2012, Proparco granted a $25 million loan to the Nigerian bank in order to support the bank’s lending activity to the infrastructure sector,” the statement further said.

This project contributes to the French initiative ‘Choose Africa’, launched by the AFD Group in 2019, which ambitions to dedicate €2.5Bn to accelerate the growth of MSMEs in Africa by 2022.

Proparco is a subsidiary of Agence Française de Développement (AFD) and is focused on private sector development. It has been promoting sustainable economic, social and environmental development practices for 40 years. Proparco provides funding and support to both businesses and financial institutions across Africa, Asia, Latin America and the Middle-East, according to the statement.

It seeks to partner proj@Businessdayng

ects in key development sectors, with a specific focus on renewable energies, agribusiness, financial institutions, healthcare and education, – and to boost the contribution of the private sector to achieving the sustainable development goals adopted by the international community in 2015. As a means to this end, Proparco finances businesses that are instrumental in creating decent jobs that pay decent wages, in supplying essential goods and services and in battling climate change.

On the other hand, FCMB Limited is a member of FCMB Group Plc, which is one of the leading financial services institutions in Nigeria with subsidiaries that are market leaders in their respective segments.

Having successfully transformed to a retail banking and wealth management led group, FCMB expects to continue to distinguish itself through innovation and the delivery of exceptional services, while enhancing the growth and achievement of the personal and business aspirations of our customers.

Monday 16 March 2020

BUSINESS DAY

35

real sector watch

Are Nigerian manufacturers ready for Fourth Industrial Revolution?

Gbemi Faminu

T

he Fourth Industrial Revolution is an era of development characterised by digitisation and disruptions.

It is a new chapter in human development, enabled by extraordinary technological advances corresponding with those of the first, second and third industrial revolutions, according to the World Economic Forum (WEF).

Adoption of the Fourth Industrial Revolution has fostered significant changes in the activities of human beings, fuelled by elements such as artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies.

Since the beginning of technological and digital disruptions, Nigerian manufacturers seem to be losing out on the opportunities it presents as well as the support it provides for businesses.

This is understandable given the challenges faced in the economy: Poor infrastructure, high cost of credit, multiple taxation, insecurity and poor port system. But the level

L-R: Ambrose Oruche, acting DG, Manufacturers Association of Nigeria (MAN); Shuaibu Umar, representative of permament secretary, Ministry of Science and Technology; Mansur Ahmed, president of MAN; Isaac ADE-Agoye, national treasurer of MAN; Dr Olugbemi, rep of DG, Raw Materials Research and Development Council (RMRDC) and Usman Ibrahim, chairman, MAN Power Development Company, at the closing ceremony of NME/NIRAM 2020 Expo on March 12,2020 in Lagos

of disruptions coming from China, India and developed countries show that everyone must be ready for it.

Industry captains and stakeholders discussed the impact of the slow adoption and its impact on the industry at the 5th edition of the Nigeria Manufacturing and Equipment expo organised by the Manufacturers Association of Nigeria (MAN) co-located with the Nigerian Raw Materials Exposition

(NRME), themed ‘The Fourth Industrial Revolution and the Nigerian Manufacturing sector.’

Mansur Ahmed, president, MAN, said in his address that in line with development practices, the trend among developing countries had been to use industrialisation as a growth tool to drive and transform their economies as well as improve their standards of living. This, he said, had func-

Falling oil price continues to threaten dollar-dependent manufacturers ODINAKA ANUDU

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he price of Brent crude was trending $32 to $34 on Friday, which is a significant hit for oil-dependent Nigeria that has failed to diversify its economy and sources of revenue.

With Coronavirus and the price war between Saudi Arabia and Russia, crude oil price is seen falling further.

S&P 500, known as the stock market index that tracks the stocks of 500 large-cap U.S companies, has shed 13 percent since the start of the year, with Goldman Sachs last

Tuesday cutting its midyear forecast for S&P 500 on the back of a further fall in the market index.

The Dow Jones Industrial Average, an index that tracks 30 large publicly-owned companies trading on the New York Stock Exchange (NYSE) and the NASDA, is also not left out as the index has shed over 16 percent year –to-date. The Nigerian Stock Exchange is taking a new dimension of heat.

Nigeria depends on crude oil for over 90 percent its foreign exchange and more than 70 percent of revenue.

Africa’s largest oil producer is already struggling

AG Leventis (Nigeria) plc celebrating International Women’s Day with female staff in Lagos recently www.businessday.ng

to sell over 50 of its oil export cargoes already exported, according to statement by Mele Kyari, group managing director(GMD) of stateowned oil company, the Nigerian National Petroleum Corporation (NNPC). This could be attributed to glut and low demand in the international market, owing to low purchases by China which is battling Coronavirus.

The Nigerian manufacturers who are exposed to foreign exchange will be hurt by the situation.

And this includes pharmaceutical companies, chemical firms, flour millers, sugar producers and other critical sectors that need dollars to import inputs.

The last time a similar thing happened in 2015/16, more than 200 firms shut down.

In August 2016, the Manufacturers Association of Nigeria (MAN) and the NOI Polls reported that 222 small-scale businesses closed shops, leading to 180,000 job losses.

This did not include 54 manufacturing firms that went under.

tioned as expected.

“The emergence of new technology, changing markets and the upcoming African free trade market call for stakeholders’ collaboration to anticipate and respond appropriately to the evolving manufacturing eco-system which is been ushered in the rapid adoption of these new and innovative technology,” Ahmed said.

During the stakeholders’ forum, Frank Onyebu, chair-

man, MAN, Apapa branch, said change was a constant activity and the power of technology had continued to change into more advanced accomplishments, with Nigeria lagging behind.

“Right from the First to the Third Industrial Revolution we have lost out as a country and we could not do anything about it. The Fifth Industrial Revolution is on the way and we are still not prepared to adopt it. It will be unfair and irreversible for us not to get a hold of the Fourth Industrial Revolution before the Fifth,” Onyebu said.

He said the Information and Communications Technology (ICT) remained one of the most thriving sectors due to its increased use of technology and digitalisation process, adding that the manufacturing sector ought to take a cue and follow through as it would improve and foster a seamless process for businesses.

DanAzumi Ibrahim, director general, National Office for Technology Acquisition and Promotion (NOTAP), said the manufacturing industry was based on foreign technology which Nigeria paid heavily to access, and improved the quality of life, economic and business activities.

He stated that to improve the sector, there was a need for heavy investments in research and development which would translate into the products and services rendered. “As a nation, we cannot develop as we want if we do not fully optimise the different industrial revolutions before pegging onto others,” he said.

“We should leverage on what people have done and engage in various research and development if we want to remain afloat with other countries,” Ibrahim further said.

Jean Bakole , regional director, United Nations Industrial Development Organization (UNIDO), represented

by Lola Odebiyi, said it was important for Nigeria and Africa generally to incorporate elements of the Fourth Industrial Revolution as it was critical for sustainable growth and development.

“UNIDO’s industrial development report 2020 suggests that advanced digital production technologies associated with the Fourth Industrial Revolution are critical for inclusive and sustainable industrial development. Thus, Africa and Nigeria cannot afford to lag behind,” Bakole said.

Soulmate launches mayonnaise to capture Nigeria’s hair market Gbemi Faminu

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oulmate Industries, a giant player in the hair care and beauty industry, has launched hair mayonnaise brand in Lagos, with a view to expanding its market tentacles and achieving consumer satisfaction.

Justin Akalezi, general manager, marketing, in an interview with BusinessDay, said the launching of the hair mayonnaise and other beauty care products was a move to continue satisfying consumers and providing products that addressed a need in the industry.

Akalezi said the product was suitable for all hair types, including children’s, as it made the hair soft and easy to plait.

He also said the company was in tune with new trends and would continue to satisfy consumers going forward.

He further said that this would easily be achieved,

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given the firm’s position as a research developmentbased company.

“We are not just in the market to make profit alone,” he said.

“We are also there to address needs. We have a research and development department in the company, so as we continuously research and identify needs, especially regarding hair and body. We will continue to address it,” he said.

“As we launch our products, we are promoting creativity, drawing from our core values. We promote hair and health with the use of quality hair products. While we present our products, we also want to impact knowledge,” Akalezi said.

He said Soulmate had been able to retain its leadership position in the market despite competition, stressing that this had been possible owing to the high quality of its products, affordability and product variety which the company offered its consumers. @Businessdayng

“Quality is our culture.

The quality of our products has remained consistent.

This has endeared us to our customers and has helped earned their loyalty,” he added.

He urged the government to help boost the industry by coming up with helpful policies and actions to make the business environment more conducive for business operations.

Speaking to BusinessDay, Abimbola Isiba, deputy general secretary, Lagos State Barbers, Hairdressers, Cosmetologists Association (LABHCA), said Soulmate had been one of the manufacturing companies which had successfully managed to consistently produce quality products despite many challenges. Isiba said this had helped the company to retain a leadership position in the market.

She urged them to continue delivering value to clients while also being aware of new trends and development in the industry.

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Monday 16 March 2020

BUSINESS DAY

real sector watch

We have moved from 53% local sourcing to 80% in 2 years — Guinness MD Baker Magunda is the managing director of Guinness Nigeria plc. He has worked in several markets in Africa and beyond.

In this interview with Odinaka Anudu, he spoke on the company’s performance in the first half of 2020 (Note that Guinness financial year starts in July), the beverage industry in Nigeria and what should be done to lift the sub-sector.

You recently released your 2020 first half (H1 2020) financial results. Tell me, what stands out in the financial performance?

The team at Guinness and I are proud of the results we delivered for the first six months.

I am happy about that and could not have asked for more from my team. I am excited about some of the things we have been doing together. The first half confirmed to us that the strategy we have chosen to run is the right one, and that it’s beginning to come through in the numbers. We have chosen a Total Beverage Alcohol (TBA) approach, which gives us an opportunity to serve more consumers and offer the widest choice to them. Total Beverage Alcohol means we are the only company in the industry with a portfolio of brands catering to all, with non-alcoholic beverages, spirits, lager & beers. So, this gives us an edge.

When you look at the growth profile we delivered for H1, strong top-line growth, volumes especially in quarter two, you will notice the improvement in areas where we want to grow.

Scotch Whisky is back to growth after a difficult period. Our Ready-to-Drink (RTD)portfolio is really growing and we are currently the leaders in the RTD segment. We made huge investments into spirits three years ago, and it is also growing very strongly. Our spirits grew by double-digit in the half-year.

Our innovation brands, especially the high-end brands like Singleton, Johnnie Walker Gold and Johnnie Walker 18 are all growing very strongly. So, from the point of execution of strategy in terms of innovation and spirits, I think that the second pillar was delivered very well.

We have had six months of furthering our objective to prevent drink driving, galvanising the industry and amplifying the voice of ‘don’t drink and drive.’ A lot of work was done in terms of underage drinking in schools with our colleagues in the industry as well. Through the Beer Sectoral Group, we came together— the three leading voices in the industry— to speak with a single voice and let people know what we do not accept as an industry, even though we are competitors. We put up what I think was a very important campaign—all of us saying the same thing and speaking with one voice.

Also within the space of communities, we had a very good day in Abuja where we

recommitted to our partners the work we had been doing with small-scale farmers. All we were saying to the partners is, “We have been in this for some time; we will continue to be here; and we want to share the success we have achieved with you.”

We have put together programmes that distinguish us, setting us apart in the industry and more generally as a private sector employer. We are the first company to launch six months fully-paid maternity leave for females and four weeks fully-paid paternity leave for males. This is for all legal ways you choose to have your babies, not just biological. People have asked us, “How do you fund this?”

Our response is that it is not just about money, this is about enabling our employees to be the best they can at home and at work. Our goal is to be an equal opportunity employer, and this is a bold decision which looks to the future.

We are beginning to see an acceleration of female hires and internal promotions. This is showing up in the increasing number of women at all levels in the organisation.

We are beginning to export talent too. In the last six months, we had people move from here to the UK, US, Europe and our African sister companies within the Diageo Group. We hope that they not only come back with positive sense of development but improved as stronger leaders. It is our stated objective that Nigerians are at the helm of this business. Presently, we have only three non-Nigerians out of eight in our leadership. We are only 11 non-Nigerians out of a workforce of 826 full-time employees and 3000 contract employees. We want to make sure that we develop the talents we have to take on the roles as we evolve.

Our code of business conduct is our North Star in a difficult environment like Nigeria.

We always want to ensure that we are doing things the right way. We are an active member of the Nigerian Stock Exchange (NSE).

Performance is beyond the numbers. It is about the dedicated people working here, the community in which we work, the shareholders who we serve, and maintaining a long-term view of how we want to shift our business.

We are working in a sector that is under pressure now.

Despite the muted growth in the industry, we delivered a www.businessday.ng

is not good for Nigeria and it cannot be good for Nigerians.

The second thing is that inflation accelerated. Another point is that when you walk around stalls in the informal sector, you see many empty market stalls. They no longer have the kind of sales they used to have.

I do believe that Africa is stronger when we trade with each other and the informal sector should be helped to formalise in order to move goods across the borders. I do not think it is something we cannot resolve at government level.

Baker Magunda

strong volume growth. We saw an improvement in cost control and our cost of goods was good.

In a country where inflation is 12 percent, we grew the cost of sales by only two percent.

The big challenge is about cash. Many of our distributors are small to medium enterprises. Unfortunately, access to cash from the banks has been too difficult for them. The cash squeeze permeated through the industry and has led many FMCGs, not just alcohol, into fairly high trade debts.

Going through those challenges, however, has not diminished the faith we have in Nigeria. The management and the board remain committed to continuing investing in Nigeria.

We have been there for many decades and we are unfazed by things that are going on now.

We have a committed team and we believe better times will return.

What steps have you taken to mitigate economic and operational challenges in the country?

What we do is innovate. You have to innovate because in an economy like ours, there will always be people wanting to buy luxury. We innovate at the high end of the market because the premium category is growing.

There is significant margin decline in mainstream brands. The second thing is investing locally to mitigate import challenges.

We used to import some of the brands two or three years ago, but we now produce them locally.

This backward integration has created jobs and you can hit the margins because you do not have to face the daunting challenges at the ports. We will continue to substitute imports with local production. We have moved quickly

from 53 percent local sourcing two years ago to about 80 percent of total production.

Next is embedding everyday efficiency in all parts of the business. We are looking at every cost and how to drive it down. This is now waded into the DNA of our organisation.

Everybody looks at every cost to make sure that they do not spend money that we do not have to or look at a better way of doing that. We have looked at new technologies of brewing and converting at low costs. The final thing we have been trying to do is to make everyone love working at Guinness Nigeria.

Everybody thinks, ‘If this were my business.’

On utilities, which are the final big cost area, we make sure to find the best value energy.

We have been working with the power distribution company to make sure we have cleaner energy. Therefore, we have been looking at everything in terms of cost as we remain prudent in the troubled economy. At Guinness Nigeria, we do not travel in business class; we all travel in the economy class.

What is the position of Guinness on the closure of NigeriaBenin border by the federal government?

The position of Guinness is that the government may have to reconsider the border closure in the interest of some other economic considerations and implications of the closure. I think the government has to speak with the member countries in the West African region on the existing issues and challenges in order to open the borders.

The Nigeria Bureau of Statistics confirmed that the consumer price index has gone up since the border was closed. It

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Is the African Continental Free Trade Area (AfCTA) a good idea? Again, is Guinness ready for it?

Nigeria took some time to decide if it was a good idea to join the AfCFTA. Nevertheless, the government has decided that it’s a good idea for Nigeria, and I think we should now follow through to operationalise the agreement.

However, regarding our readiness as a business, we are ready and have been exporting for a long time. Challenges still exist at Apapa ports, and if we do not improve this, we will not be able to supply and compete.

In addition, adequate infrastructure is critical to export.

The infrastructure problems need to be dealt with to make us competitive. The help we need from government is to speed up incentives for exporters. We currently have the Export Expansion Grant (EEG) through which exporters can get some grants. However, when it takes seven to 10 years to get the credits, it defeats the purpose for which it was put in place.

How will you assess the policies of the Central Bank of Nigeria (CBN)?

We believe that the policy direction of the Central Bank is going the right way and we support it.

The governor is saying, “Lend more money to the sectors where there are real economic activities and where there is value to be created.” The real economy is in the informal and small-scale sector— the man converting hides and skins into shoes or cotton into fabrics.

That is where the money should be lent. When those people cannot access money, it becomes a problem. We like the policy direction of the CBN and we are waiting to see how that comes through the commercial banks.

What is your perspective on Nigeria’s lending rates?

We are excited about the direc@Businessdayng

tion of the CBN, and we believe if that translates into lower interest rates and better access to credit, the whole thing will be better for all.

What is your outlook for your spirit business?

Our strategy is to grow spirits faster than beer. We would like the spirits part of our business to grow to 25 to 30 percent; and we are seeing the shift we want.

We will be producing more spirits here. Like I said earlier, it allows us access to better price points, brings better quality for Nigerian consumers and gives us an opportunity to produce locally and create more jobs, import less and avoid some of the challenges at the ports.

Can you speak on Guinness’ Integration Programme with 30,000 smallholder farmers?

Yes, we have a team that works with a wide range of partners to provide technical services, farming knowledge, financing, insurance, processing and harvesting to enable over 30,000 small-scale farmers move from basic to more efficient and productive yields. The team helps them to get high-yielding seeds and to have confidence in financial matters so that when they get money, they can make better choices. In our view, it is a contribution that is beyond buying seedlings. We assure them of the market for their produce. As you are aware, African farmers have issues with a reliable market. Therefore, being able to assure them of the market gives them confidence.

What is your message to Guinness’ consumers and shareholders?

My message to the consumers is that Guinness Nigeria remains committed to innovating to invent brands that will excite them. In doing that, we appreciate their support over the last 70 years and we do not take that for granted. We have more innovations lined up building on the last six months when we launched Gordons gin, Guinness Gold, Guinness Smooth and Baileys Delight.

We will remain focused on responsible consumption and be the voice that leads calls for moderation in this country.

We will continue to support our communities as we know that we only thrive when those around us do, and finally we will encourage and support the efforts of the government to improve the ease of doing business in Nigeria.

Monday 16 March 2020

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37

Access Bank Rateswatch Market Analysis and Outlook: March 13 – March 20, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.55

Q4 2019 — higher by 0.27% compared to 2.28% in Q3 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

Inflation rate (%) (y-o-y)

12.13

Increased to 12.13% in January 2020 from 11.98% in December 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

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

36.16 33.15 1.77

March 12, 2020 figure — a decrease of 0.28% from March start March 12, 2020 figure— a decrease of 36.18% from the previous wk January 2020, figure — an increase of 1.42% from December 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday 13/3/20

Friday

Indicators

Change(%)

NSE ASI Market Cap(N’tr)

22,733.35 11.85

26,279.61 13.70

(13.49) (13.49)

Volume (bn)

0.73

0.36

103.05

Value (N’bn)

10.22

4.28

138.94

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

MONEY MARKET NIBOR Tenor

Friday Rate

Friday Rate

Change

(%)

(Basis Point)

(%) 13/3/20

6/3/20

OBB

3.29

11.71

(842)

O/N CALL 30 Days

4.00 10.42 10.96

12.86 12.19 9.95

(886) (177) 101

90 Days

11.44

10.08

Friday

Tenor

136

(N/$)

Friday

1 Month

(N/$)

Rate (N/$)

13/3/20

6/3/20

13/2/20

Official (N) Inter-Bank (N) BDC (N)

306.95 367.74 0.00

307.00 365.90 0.00

306.90 362.45 0.00

Parallel (N)

380.00

360.00

360.00

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

Friday

Change

(%)

(%)

(Basis Point)

13/3/20

6/3/20

0.00 8.39 11.34 11.91 12.08 13.96

0.00 7.41 10.23 9.99 10.96 12.56

0 98 111 192 112 141

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

(%)

33.15 1.87

(36.18) 7.47

(48.57) (38.81)

2493.00 108.85 59.13 11.75 502.50

(3.30) (3.67) (5.69) (11.45) (2.76)

28.77 (16.40) (23.70) (23.35) 15.92

1563.19 15.64 244.75

(7.14) (10.32) (4.34)

18.64 (9.02) (25.34)

Friday

(%)

(%)

Change (Basis Point)

13/3/20

6/3/20

1 Mnth 3 Mnths

3.22 3.09

3.06 3.41

15 (32)

6 Mnths 9 Mnths 12 Mnths

4.13 4.58 5.59

3.75 4.47 5.22

38 11 37

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS Friday

YTD Change

(%)

Friday

BOND MARKET Tenor

1-week Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

FOREIGN EXCHANGE MARKET Market

13/3/20

6/3/20

Friday

Friday

Change

(%)

(%)

(Basis Point)

13/3/20

6/3/20

Index

3,640.80

3804.12

(4.29)

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

11.38 7.62 48.21 -7.60

11.89 8.14 54.86 -0.97

(4.26) (6.39) (6.65) (6.63)

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

91 Day

1,800

2.49

11-Mar-2020

182 Day

14,002.52

3.78

11-Mar-2020

364 Day

70,501.22

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

Rate(%)

5.3

Date

11-Mar-2020

Global Economy The European Central Bank left the key interest rate on the main refinancing operations unchanged at 0% during its March 2020 meeting. The marginal lending facility was also kept at 0.25% and the deposit facility at -0.50%. However, the central bank announced a stimulus package aimed at injecting money in the economy and support bank lending to small and medium companies. The package includes additional longer-term refinancing operations, more favourable terms for the targeted longer-term refinancing operations (TLTROs) from June 2020 to June 2021, and additional net asset purchases of €120 billion. The ECB is also relaxing the capital rules on banks as the economy faces difficulties. Pressure has been building on Europe and the ECB to come up with a coordinated response to combat the negative impact of the Covid-19 pandemic. In a separate development, the Japanese economy contracted 7.1% on an annualized basis in Q4 2019 according to Cabinet Office Japan, following a downwardly revised 0.1% growth in the previous three-month period. This was the biggest slump in GDP since the Q2 2014 as private consumption dropped 10.6% due to a sales tax hike in October which weighed on spending. Business spending declined by 17.3%, the most since the Q1 2009. Elsewhere, China reported a trade deficit of $7.09 billion in JanuaryFebruary 2020 combined. This was the first trade gap since March 2018, reflecting the severe impact of the rapid spread of COVID-19 outbreak on the country's economy. Year-on-year, exports dropped 17.2% to $292.49 billion, while imports slumped 4% to $299.54 billion. China's trade surplus with the US for the first two months of the year stood at $25.37 billion, much lower than a surplus of $42.16 billion in the corresponding period a year earlier.

Domestic Economy According to the newly released foreign trade report by the National Bureau of Statistics (NBS), the total value of Nigeria's merchandise trade in Q4 2019 was N10.1trillion. This represented an increase of 10.2% and 25.9% from the figure recorded in Q3 2019 and Q4 2018 respectively.

The value of total imports rose 37.2% in Q4 2019 compared to Q3 2019 and 49.34% over the corresponding quarter of 2018. The value of total exports in Q4 2019 decreased by 9.79% against the level recorded in Q32019 but 7.06% higher than its value in Q4 2018. The faster increase in imports resulted in a negative trade balance of N579.06 billion during the quarter under review which marked the first since mid-2016. Nigeria's major exporting trade partners were India (13.17%), Spain (10.35%), France (7.78%), Netherlands (7.74%) and Ghana (7.40%). The nation's major importing trade partners were India (22.57%), China (20.49%), USA (9.05%), Netherlands (8.61%) and Belgium (5.76%). In a separate development, the National Bureau of Statistics (NBS) in its recent quarterly report said the total value of investment inflows into Nigeria in the Q4 2019 was estimated to be $3.80 billion. This represents a decline of 32.42% compared to Q3 2019 and 77.67% increase compared to the Q4 2018. The report titled Nigerian Capital Importation (Q4 2019), revealed that the total value of capital importation into Nigeria in the year 2019 grew by 42.69% to $23.99 billion from $16.81 billion in 2018. The report further revealed that the largest amount of capital importation by type was received through portfolio investment, which accounted for $16.37 billion or 68.22% of total investment inflows, followed by “other investment”, which accounted for $6.69 billion or 27.89% of total investments in year 2019. The report also stated foreign direct investment followed as it accounted for $0.93 billion or 3.89% of total capital imported in 2018. In terms of country of destination, the NBS report revealed that the United Kingdom (UK) emerged as the top source of capital investment in Nigeria in 2019 with $11.01 billion, accounting for 49.20% of the total capital inflow in year 2019.

Stock Market The All Share Index (ASI) declined last week as crash in crude oil prices triggered panic sell-offs.

Consequently, the ASI tanked, shedding 13.49% to close at 22,733.35 points from 26,279.61 points the prior week. Similarly, market capitalization

pared 13.49% to N11.85 trillion from N13. 69 trillion the prior week. This week, we expect investors to remain skittish as there appears to be no end in sight to the stand-off between Russia and Saudi Arabia for the oil price trajectory.

Money Market Lenders charge whittled last week as systemic liquidity significantly improved following Open Market Operation (OMO) maturity of N223 billion and Retail Secondary Market Intervention Sales (SMIS) refund of N200 billion. Short-dated placements such as Call, Open Buy Back (OBB) and Over Night (O/N) rates closed lower at 10.42%, 3.29% and 4% from 12.19%, 11.71% and 12.86% previous week. The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) settled at 10.96% and 11.44% from 9.95% and 10.08% the prior week. This week, rates are expected to oscillate around current levels.

Foreign Exchange Market The Naira weakened against the dollar across most market segments. Lower foreign reserves as well as speculations from investors that the naira would devalue led to faux scarcity of the greenback. Naira at the Nigerian Autonomous Foreign Exchange (NAFEX) window depreciated by N1.84 kobo to close at N367.74/US$, while the parallel market lost a whooping N20 to settle at $380/US$. The official window saw a marginal gain, it ended N306.95/$, a 5 kobo appreciation from the prior week. Rates are expected to trade within a tight band this week as the CBN sustains its intervention program.

Bond Market The bearish behaviour witnessed in the bond market persisted for the second consecutive week as the market recorded sell-offs in 2027, 2028 and 2049 securities. Yields on the five-, seven-, ten- twenty- and thirty-year debt papers finished at 8.39%, 11.34%, 11.91%, 12.08% and 13.96% from 7.41%, 10.23%, 9.99%, 10.96% and 12.56% The Access Bank Bond index shed 163.32 points to settle at 3,640.80 points last week. We expect the sell-off to continue as market participants maintain a risk-off stance on long term Nigerian securities.

Commodities The price of oil plunged further last week as the Organization of Petroleum Exporting Countries (OPEC) and non- OPEC members, including Russia, failed to agree on export curbs to shore up prices in light of the coronavirus outbreak which affected global demand for crude oil. An all-out price war was declared by Saudi Arabia after Russia refused to partake in the proposed oil production cut which was aimed at boosting prices. Bonny light, Nigeria's benchmark crude fell 36.18% or $18.79 to close the week at $33.15 per barrel. Likewise, precious metal prices were hammered after global equities saw a meltdown worse than the one during the 2008 financial crisis. The virus that is spreading rapidly outside China, the country from where the outbreak began, triggered panic in international markets.

It seems margin calling pressure also affected precious metals. Consequently, gold lost 7.14% to settle at $1,563.19 per ounce while silver dipped 10.32% to $15.64 per ounce. This week oil prices will remain pressured by the oil price war and a seemingly over supplied market as Saudi Arabia and United Arab Emirate promised to flood the market with an additional 3.6 million bpd at a time of depressed oil demand. Precious metal might decline further as profit booking continues and markets try to cover margin globally following heavy weakness in equity market.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Mar’20

Apr ’20

367

366

365

Inflation Rate (%)

12.20

12.25

12.27

Crude Oil Price (US$/Barrel)

33

35

40

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

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May ’20

Exchange Rate (NAFEX) (N/$)

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Monday 16 March 2020

BUSINESS DAY

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

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Going! Going! Gone

Big Banks’ attractive yields means they are a buy BALA AUGIE

T

he recent sell off in stocks by equity investors due to a sharp fall in crude oil price and concerns over the effects of coronavirus on global economy is a blessing in disguise for the big five banks as record high dividend yield means their stocks are cheap.

Analysts say whoever invests in these portfolios will make money when the economic fundamentals changes, but they warn that investors will have to be patient to reap the dividend of such investment.

“Once the rout settles the share price will double. It’s an opportunity to buy if you are a patient person. You need to wait and see that the macroeconomic environment stabilize before you buy,” said Wale Okunrinboye, investment analyst with Sigma Pensions Limited.

“Saudi Arabia and Russia may agree on an output cut and a cure may be found for coronavirus pandemic before the end of the year. That means oil price could rebound,” said Okunrinboye.

Zenith Bank has a dividend yield (DY), 23.36 percent; United Bank for Africa (UBA), 16.95 percent; Guaranty Trust (GTBank)

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

5

Bank, 14.75 percent; Access Bank, 12.04 percent, and First Bank Holdings, 6.26 percent.

The dividend yield is the amount of money a company pays shareholders (over the course of a year) for owning a share of its stock, divided by its current stock price.

Banks’ stocks are cheap or undervalued as evidenced in a low price to earnings ratio (another buy opportunity), and industry share index have shed -32.23 percent, as investors apathy toward

Nigeria’s equity market despite dividend declaration by bellwether companies.

Zenith Bank has a price to earnings ratio of 1.77 times; GTBank, 2.73 times; FBNH, 2.78 times; Access, 1.78 times, and UBA, 2.44 times.

Nigeria banks have continued to reward their owners out of distributable profit as they paid a combined N220.79 billion in dividend for 2019 financial year.

Despite the level of unpredictability in the earnings stream of

Nigerian banks, investment house Renaissance Capital has placed Buy ratings on GTBank and Zenith Bank.

The currency in Africa’s top oil producing country, which relies on crude sales for 90 percent of foreign exchange earnings, has come under pressure after oil prices plunged over the weekend following a disagreement between Russia and Saudi Arabia over a deeper production cut. The coronavirus outbreak has also hit global demand for oil.

Nigerian big Banks’ profit hits N4.27trn in 7 years BALA AUGIE

I

n the last seven years, Nigerian largest banks have raked in a total profit of N4.27 trillion despite turbulence period of macroeconomic uncertainties and harsh regulatory environment.

A breakdown of the figures shows combined profit for the 10 largest lenders was N811.53 billion in 2019, a 7.61 percent increase from N754.18 billion recorded in 2018.

The charts shows companies posted a combined profit of N909.10 billion in 2017, the highest in 7 years, when banks parked their money in government bonds and securities.

The introduction of a new foreign exchange policy in June of that year

P.E

helped lift the country out of recession ease the flow of foreign exchange in the system.

It was a good year for them as

Unity Bank posted a profit of N2.18 billion from a loss of N149.17 billion in 2016.

Nigeria devalued its currency in

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn 2014 due to a sharp drop in crude oil price that rattled oil producing countries across the world, but the policy was a boon to lenders as they made money from gains in foreign exchange revaluation. Of course, a weak currency bolsters dollar denominated assets in the balance sheet.

Interestingly, the gaps between the haves and have nots is widening as the rich are getting richer, and the poor, poorer.

The cumulative profit of the five largest lenders is N654.22 billion as at December 2019, that’s 80.61 percent of the combined industry figure of N811.52 billion.

On the other hand, the combined net come of small and midsized Continues on Page 41

Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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41

MARKETS INTELLIGENCE Consumer goods firms aren’t efficient as gross margins slump BALA AUGIE

A

s a result of a result of weak discretionary consumer spending, rising inflation, and a slow growing economy, consumer goods firms are struggling to produce and sell their products as gross profit margin deteriorates.

The average gross profit margin of the 10 largest companies quoted the bourse fell to 20.84 percent in December 2019 as against 32.67 percent the previous year.

This means after deduction total production costs from revenue, they have little left to cover operating expenses, finance cost and exceptionally items.

Gross profit margin is a profitability ratio that calculates the percentage of sales that exceed the cost of goods sold. In other words, it measures how efficiently a

company uses its materials and labor to produce and sell products profitably.

Nascon Allied Nigeria Industries isn’t earning enough Naira on sales as

gross profit margin fell to 21.34 percent in the period under review as against 30.19 percent the previous year.

The brewers, the hard-

est hit from an economic lethargy, suffered the most deterioration in margins.

Champion Breweries’ gross margin reduced to 27.89 percent in December 2019 from 75 percent the previous year while International Breweries’ ratio fell to 33.84 percent in the period under review from 41.21 percent the previous year.

However, Nestle Nigeria and Vitafoam bucked the trend as gross margins increase by 10.71 percent and 45.11 percent in December 2019 from 3.08 percent and 47.78 percent respectively.

Lack of transformation policy on the part of government has continued to stifle growth of consumer good firms as a border closure by government hindered a lot companies from shipping their products to neighbouring African countries.

The menacing gridlock at the Apapa Ports means trucks are trapped at terminals for an indetermi-

nate period of time, which disrupts production and results in huge cost.

Inflation in Nig er ia quickened to a 21-month high of 12.30 percent in January as food shortages caused by border closures continued to drive up the price of staples Over 50 percent to Nigerians live on less than $1.98 a day, while unemployment rate is at an all-time high of 23 percent.

Consumer goods firms may struggle to maintain margins as a precipitous drop in crude oil price due to the coronavirus and disagreement between OPEC and its allies over price are expected to stock inflation and result in high cost of production.

That compounds the woes of an industry grappling with slower sales and poor valuations. Analysts from sundry investment houses have advised clients to dump shares.

Unilever and International Breweries recorded losses as they capitulated to rising costs and spiralling debt that eroded shareholders value.

Analysts say the devaluation of the currency on the back of continued depletion of the external reserve will erode the purchasing power of consumer and hurt the revenues or output of companies.

There is definitely a risk if the central bank fails to hold the currency the way they did the last time.

“A base devaluation will make people poorer and companies will bear the brunt as they are finding it difficult to pass on high input cost inform of higher prices to consumers,” Onyeka Ifeoma, equity research analyst at Vetiva Capital Management Limited.

Onyeka added that high cost of raw materials in the case of a deviation could result in cost push inflation.

naissance Capital in a research note.

“Thus, the banks are likely to continue to bear the cost of macro stability. This has strategic implications for how the banks approach the future,” said the analysts.

Currently, the novel coronavirus that has killed 0ver 4,000 people and infected 114,000 is ravaging global economy and undermining oil output. That’s another conun-

drum for banks the current macroeconomic headwinds could result in deteriorating asset quality if the virus paralyzes business activities.

The currency in Africa’s top oil producing country, which relies on crude sales for 90% of foreign exchange earnings, has come under pressure after oil prices plunged over the weekend following a disagreement between Russia and Saudi Arabia over a deeper production cut. The coronavirus outbreak has also hit global demand for oil.

The stock market dipped into negative territories in intra-day trade Friday after posting early gains that suggested a possible relief for investors in the last trading day of a tumultuous week; Bonds holders have become jittery over dwindling external reserves and currency volatility, raising concerns

about looming devaluation.

Last week, JP Morgan said it expected the naria to be devalued by around 10 percent to N400 per dollar by the end of June.

However, the central said the current fundamentals do not support currency devaluation as it has rolled fiscal and monetary measures to protect the economy from shocks.

Further analysis shows Zenith Bank posted a net income have been growing steadily in the last seven years. For instance, profit was N208.84 billion in 2019, that compares with N91.58 billion recorded in 2013.

Guaranty Trust (GTBank) Bank, the largest lender by market value, followed the same growth trajectory as it posted net income of N196.84 billion in December 2018, which compares with N90.02 billion the previous year.

Nigerian big Banks’ profit hits N4.27trn ...

Continued from Page 40 banks was N175.30 billion as at December 2019, which is 13.90 percent of the total industry figure.

The small players do not have the capital buffers like the big five because they are still grappling with deteriorating asset quality as they were more vulnerable to the economic downturn of 2016.

A slew of stringent policies by policy makers have been squeezing lenders since the start of last year, further casting a pall on future earnings growth. There are concerns by experts that these laws could balloon bad debts, a remainder of the dark days of 2016.

The slew of 2019-2020 regulations that : 1) have forced the banks to achieve a higher loan-to-deposit ratio,

2) pushed local private and institutional investors out of the OMO market, and 3) hiked the cash reserve ratio (CRR) to 27.5 percent , have enabled the CBN to raise even more zero-cost funding from the banks.

“We conclude that the CBN is likely to hold out on FX strategy changes for as long as possible, meaning the chances of further unorthodox policies are high,” said analysts at Rewww.businessday.ng

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Live @ The Exchanges Market Statistics as at Friday Friday 12 March 2020

Top Gainers/Losers as at Friday 13 March 2020 LOSERS

GAINERS Company

Opening

Closing

Change

SEPLAT

N605

N544.5

-60.5

NB

N29.7

N28

-1.7

INTBREW

N6.35

N5.75

-0.6

0.9

CADBURY

N5.5

N4.95

-0.55

0.55

ACCESS

N5.85

N5.4

-0.45

Opening

Closing

Change

N55.3

N60

4.7

FLOURMILL

N19.8

N21.4

1.6

ZENITHBANK

N10.85

N11.9

1.05

GUARANTY

N18.1

N19

N5.6

N6.15

OKOMUOIL

UBA

Company

ASI (Points) DEALS (Numbers) VOLUME (Numbers)

22,733.35 6,703.00 733,198,932.00

VALUE (N billion)

10.215

MARKET CAP (N Trn)

11.846

Global market indicators FTSE 100 Index 5,333.83GBP +96.35+1.84

Nikkei 225 17,431.05JPY -1,128.58-6.08%

S&P 500 Index 2,510.36USD +29.72+1.20%

Deutsche Boerse AG German Stock Index DAX 9,122.76EUR -38.37-0.42%

Generic 1st ‘DM’ Future 21,268.00USD +324.00+1.55%

Shanghai Stock Exchange Composite Index 2,887.43CNY -36.06-1.23%

Nigeria stock market declines by 13.49% in one week ....concerns over N1.85trn loss Stories by Iheanyi Nwachukwu

N

igeria’s stock market was down by 1 3 . 4 9 p e rc e nt in the trading week ended March 13. In value terms, this represents a loss of about N1.85trillion in the review trading week.

As Coronavirus (COVID-19) continues to spread around the world, the virus is not only infecting people but also financial markets.

The Nigeria stock market has entered the bear zone with record negative return of -15.30percent year-to-date (YtD).

Notably, the pressure on financial markets escalated on the rewiew week after the OPEC+ meeting ended in a deadlock, with Saudi Arabia commencing a full-blown crude oil price war.

As a ripple effect, the spot

L – R: Frances Akpomuka, company secretary/HOD Corporate Resources, Red Star Express Plc; Auwalu Babura, executive director, Finance & Administration, Red Star Express Plc; Sola Obabori, group managing director/chief executive officer, Red Star Express Plc; Olumide Bolumole, head, Listings Business Division, The Nigerian Stock Exchange (NSE); and Victor Ukwat, executive director, Sales & Marketing, Red Star Express Plc during the Closing Gong Ceremony to commemorate the success of their rights issue and listing of additional shares at the Exchange in Lagos.

Brent crude oil price dropped to a 4-year low (sub $40/barrel levels), prompting investors to pull out funds from risk-assets to safety assets like gold and government

treasuries.

The NSE All Share Index (ASI) decreased from week open high of 26, 279.61 points to close the week at a record low of 22,734.07 points.

Likewise, the value of listed stocks on the Nigerian Stock Exchange (NSE) dipped from N13.695trillion to a new low of N11.846trillion.

“Though no fatal case of

COVID-19 has been recorded in Nigeria, the equities market has not been spared from the wrenches of the growing panic”, notes United Capital research analysts.

“Notably, foreign as well as local investors ignored the attractive dividend yield some stocks offered and traded against stock-specific fundamentals, as fears of an imminent naira devaluation (key foreign investors’ concern) and contraction of economic activities (key local investors’ concern), among others, amplified risk-off sentiment”, United Capital research analysts noted further.

“The current realities around the virus outbreak, to estimate how long this will last is difficult, given how much is still unknown about the spread of the virus and the lack of a historical precedent.

“However, given the fact that the current bearish trend is largely event-driven

(COVID-19 outbreak), we believe the equity market will be poised for a swift rebound once the impact of the event dissipates. Thus, we advise investors to cautiously take advantage of the dip to average down cost, especially in the fundamentally sound stocks,” the analysts added.

Also in their March 13 note to investors, Vetiva research analysts said “the domestic bourse was significantly battered during the week as a result of overhanging uncertainties in the global and macro-economic environment, leading to most fundamentally stocks trading at multi year lows.”

However, with most counters trading at deep discounts to their expected fair value in the face of massive sell pressure during the review trading week, Vetiva analysts expect a number of stocks to enjoy positive investor patronage at the start of this week.

Access Bank thrust for 2020 is to significantly improve SEC acting DG urges women to break stereotypes omen have been ties whenever they arise and not in competition with each cost of funds, productivity, others - Wigwe urged to con- mentor them. Supporting one other, it is always our happi-

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ccess Bank Plc recently released its audited full year results for the period ended December 31, 2019.

The bank’s gross earnings rose 26percent year-on-year (y/y) to N666.7billion in FY 2019, (FY 2018: N528.7billion), with interest and non-interest income contributing 81percent and 19 percent respectively. Interest Income grew by 41percent to N536.8billion in full year (FY) 2019 (FY’18; N380.9billion), largely driven by the growing efficiency of our enlarged balance sheet.

On the other hand, NonInterest Income decreased by 12percent y/y to N129.8billion in FY2019 from N138.2billion in FY2018, driven by our strategic intent to grow income sustainably through traditional banking. Profit before Tax (PBT) for the period was N115.4billion (+12percent; FY2018 N103.2billion) while Profit after Tax (PAT) increased

by 3percent to N97.5billion from N95billion in FY2018.

Return on Average Equity (ROAE) stood at 17.7percent with a Return on Asset (ROA) of 1.6percent in the period.

Speaking on the result, Herbert Wigwe, GMD/CEO, Access Bank Plc said: “Access Bank in 2019 completed the merger and business combination of the erstwhile Diamond Bank making the bank the biggest bank in Nigeria by Total assets and number of customers as well as a significant retail footprint and infrastructure”.

“The business combination allowed us complement our existing strong wholesale business with Diamond’s extremely developed retail business. In October 2019, we achieved full integration of both bank’s operating system, which further stabilized us for growth across all our platforms.

“Our financial perforwww.businessday.ng

mance in 2019 was significantly influenced by the merger, as we recorded a modest growth in profitability.

However we saw a temporary dip in our metrics as we sought to create excess capacity and IT redundancies to ensure that we continue to provide seamless service to our customers throughout the integration period”, he noted.

“Having completed this phase, we are now seeing positive and sustainable momentum across all our business lines. Our thrust for 2020 will be to significantly improve our cost of funds, productivity and efficiency of people and resources whilst optimising our cost.

The asset base of the bank remained strong and diversified with growth of 44percent YTD in Total Assets to N7.15trillion in December 2019 from N4.95trillion in December 2018.

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tinue to break stereotypes that impede their progress in the socio political set up of the country in a bid to make meaningful impact.

Acting Director General of the Securities and Exchange Commission (SEC), Mary Uduk who stated this during the commemoration of the 2020 International Women’s Day in Abuja, last week said this is given the continuing need for more progressive thinking and inclusive behaviours globally.

She said, “Women must be ready to challenge stereotypes. We must remove barriers that stand in the way of the progress of women and consciously take giant strides towards the emancipation of women.

“When we stand together, we can achieve anything and any obstacle can be pulled down. We must support women for emerging opportuni-

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another is a duty we owe and must carry out every time for women to move on.”

Uduk enjoined all whether women or men, sisters or brothers to consciously take giant strides towards the emancipation of women in all spheres of life as the rise of a woman is never the fall of men.

According to her “Those of us who are older women should consciously look down and mentor our sisters, our upcoming sisters, our children so that as they grow up, we are

Mary Uduk, acting Director general of the Securities and Exchange Commission @Businessdayng

ness to see that those that we mentor surpass us, they do better than us, just like we like our children to do better than us.

“Therefore, I charge all of us in this room, to please look down at all times and pull up your younger sisters, your children and bring them up to speed in the way you would like your own children to be.

“If you are not a woman, you have a daughter, or married or a girl child, therefore it is for everyone. It then provides an opportunity for us to reinforce the fact that everyone, both women and men have a role to play in building and sustaining a more gender balanced world.

Uduk said International women’s day is for celebrating the achievements of women and on calling for gender parity, as historically the role of Nigerian women has differed depending on religious and geo graphic factors.

Monday 16 March 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

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• Utilities • Managing your Tax

The seven critical assets for business longevity The Solid Wealth Messenger

Grace Agada

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he desire of every successful business owner is to Extend the Life of their business beyond the first generation. Although this desire is a common desire. It fails 90% of the time. According to global research, only 10% of family businesses. Will celebrate their 100th year anniversary. This massive death of businesses is due to the loss of certain critical assets you will discover here today. To build a lasting legacy.

Family Business leaders must transfer the seven critical assets to the next generation. But before I show you these assets. Let me first show you how these assets are formed.

The process of building a successful business from scratch. Does something to the founders of businesses. That transforms them from ordinary Men to extraordinary Men. These extraordinary Men develop certain abilities on their journey to wealth. That has now become critical assets. These assets must be transferred to the next generation for the life of a business to be preserved. The loss of these assets is the reason why successive generations fail. Ordinary Men do not create or preserve businesses. It takes the reproduction of extraordinary men. Across successive generation to keep businesses alive. When the founder of a business dies without transferring these assets. A death sentence is cast on the Business. Businesses that stand the test of time. Have founders that have mastered the art of reproducing in the next generation. The seven assets that made them extraordinary.

When successive generation develops these assets. It becomes easy for them to create their own colossal shoes. It is the timely transfer and development of these assets. That transforms the next generations from consumers of wealth to producers of wealth. This is the only way to make a business last for many generations.

So, what then are the seven critical assets that transform Men? First is a Wealthy Mindset. The second is Unshakable Values. The Third is a Good Reputation. The Fourth is a Personal Philosophy.

The Fifth is a Personal Longevity Health Habit. The Sixth is Wealthy Relationships. And the Seventh asset is a Profitable Business Asset. To understand how each of these assets affects business longevity. Let look at

them in more detail.

First, a Wealthy Mindset. Founders of businesses have a certain way of thinking that is uncommon among ordinary men. This unique way of thinking is what supports the creation and preservation of wealth. Critical elements of a business owner’s wealthy mindsets include-an undying belief in possibilities. Confidence in their abilities.

A never quenching hunger to solve problems. A Selfless act of Service and contribution. And so on. While ordinary men see impossibilities, barriers, and limitations. Successful Business Men turn impossibilities to possibilities. For successive generation to recreate wealth. And preserve family assets. They must develop a Wealthy Mindset.

Next is a set of Values. Successful Business owners commit to a certain set of values. That guides their business decision. And govern the way they interact with other fellow men. These values are a selfimposed standard that directs how they do business. Although the business environment challenges these values. They are willing to defend it and pay the price. They pay the price because they know that paying the price is easier than violating their own values. These values not only guide them in business. It also protects them from making regrettable mistakes. One of such values is integrity. Integrity is not Perfection. But the ability to integrate one’s words, deeds and actions. Extraordinary business Men stand for something that they are proud to defend. Successive Generations must get help to develop these kinds of values.

Next is Reputation. Reputation is the Public Perception Consumers have about a Business. And the respect they have for the business leader. A good reputation is built over years of sacrifice, sweat and

tears. And must be guarded with care. To ensure long-term profitability. Successive Generations must know how to boost and sustain a good reputation. And how to stay away from things that destroy it.

Reputation is the consumer’s own reality and once it is destroyed. A Business bleeds to death.

Next is a Personal Philosophy.

A Personal Philosophy is a series of conclusions. A person makes from their own experience and their understanding of the world. Business owners have a well of experience.

That they can draw conclusions from. Reflecting on their life’s journey. And extracting certain critical conclusions and lessons is helpful for the next generation. It eases their decision-making process.

Serve as guiding principles for them and reduces the repetition of mistakes. Great philosophies are not just tactical wisdom that changes with time. There are fundamental principles that are evergreen in nature. Examples of philosophies that are helpful to the next generation are. A difficult decision-making Philosophy. A Crises Management Philosophy. A Business Partnership Philosophy. A family Unity Philosophy. A lasting Marriage Philosophy.

And so on. Leaving the next generation with a pocket of evergreen philosophies. Will cut-down the repetition of wealth dissipating mistakes.

Next is a Personal Longevity Health Habit. The greatest asset in life is health. Losing a family or critical business member to preventable sicknesses and disease. Due to unhealthy lifestyle choices is the greatest Tragedy in life. It is unhealthy for a family and unprofitable for a business. Although life is limited its length can be negotiable. Its length can be negotiated through deliberate health habits. Business leaders must demonstrate good health habits. And they must also create a

‘

True Business Longevity is achieved when a business focuses on equipping its Human Capital with these seven Assets

culture that promotes the longevity of life. This is the only way to preserve the human capital that drives a business. Successive generations must know how to live long, healthy and productive lives.

Next is a Wealthy Relationship.

To get to a certain level of wealth.

Business leaders had to seek the help of other people. This means that every successful business leader has valuable networks. That is beneficial for the next generation.

But these relationships will not just pass on to the next generation. They have to be deliberately cultivated to keep them Fresh and beneficial.

Successive generation must know how to expand the critical relationship pool of business. Nurture them and extract value from them. Without the creation and maintenance of critical relationships. It is hard for the next generation to lift the business beyond the laurels of its founders.

And last but not least is a Profitable Business Asset. Not all businesses are set up to extend beyond the Founders generation. Certain businesses if critically analyzed by independent investors. Will be classified as liabilities and not assets. Dumping a liability on the next generation is cruel. To pass on businesses that will last. A business owner must be willing to analyze his business through the eyes of an investor.

Businesses Investors reject or cut down their value have certain fundamental flaws that must be fixed.

To make them viable for the next generation. Business Leaders must thus prepare their businesses. And hand over Assets and not liabilities.

Building a company that lasts is not an easy feat. Businesses with staying power continually innovate.

Adapt to changing market conditions. And embody these seven critical assets that keep them breathing for many generations.

True Business Longevity is achieved when a business focuses on equipping its Human Capital with these seven Assets.

Grace Agada is the First indigenous Family Business Longevity and Legacy Expert. With unique expertise in helping Self Made Business Men Transition from Vanishing Mortals. To Men with Indestructible Name, Wealth and Legacy. Grace’s philosophy is simple. Successful Business Men do a lot of good in the world. This good should Expand.

Receive great recognition and extend beyond life. Her goal is to help Family business Men Eliminate factors that murder Businesses. Differentiate and deepen Customer value. Create, Own and Dominate New Market Space.

Lead Innovation. And reinvent their Businesses for Generational Relevance. To learn more about how Grace can help you send an email to info@createsolidwealth.com.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

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@Businessdayng

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Monday 16 March 2020

BUSINESS DAY

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Monday 16 March 2020

BUSINESS DAY

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news

Air Peace deploys measures to protect passengers, workforce against coronavirus IFEOMA OKEKE

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ir Peace has announced measures to protect its passengers and staff against the spread of coronavirus. Godfrey Ogbogu, the airline’s safety manager, made this known in a statement made available to journalists at the weekend.

Ogbogu said all passengers of Air Peace would be subjected to a thorough hand sanitisation at the boarding gate, adding that the airline had introduced temperature checking for all passengers before boarding.

Any passenger whose temperature reads above 38 degrees will not be allowed to board while a refund will be issued, he said.

According to Ogbogu: “We wish to state categorically that any passenger who fails

to cooperate will be declined boarding on any of our flights”.

Assuring the passengers that these exercises will be seamlessly carried out, Ogbogu said the passengers would not be inconvenienced in any way.

He enjoined all passengers to cooperate with the airline to this end, as the World Health Organisation (WHO) had declared COVID-19 a pandemic, saying the airline’s aircraft was extensively sanitised before flying each day.

Air Peace is cooperating with the Federal Government in fighting the incidence of the pandemic, he said, saying, “We use this opportunity to thank all our customers for making us their airline of choice; the safety of our passengers and workforce is our priority, and this we shall pursue vigorously”.

Covid-19: Ill-equipped Abuja isolation facilities show FG’s unpreparedness …Expert says Nigeria will be overwhelmed in an outbreak JAMES KWEN & GODSGIFT ONYEDINEFU, Abuja

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igeria is not adequately prepared to contain the spread of coronavirus despite assurances from the Federal Government that it is has the capacity to respond to the ravaging virus.

The coronavirus, or COVID-19, which has been declared a pandemic by the World Health Organisation (WHO), has infected over 120,000 people around the world.

Findings show that the proposed isolation centres announced by the government are still under rehabilitation, and an expert told BusinessDay in Abuja that Nigeria would be overwhelmed in case of an outbreak.

Osagie Ehanire, minister

of health, has repeatedly told Nigerians not to panic as the country has full capacity to respond to the virus. Ehanire boasted that Nigeria has the needed diagnostics capacity in terms reagents, laboratories and isolation centres as well as preventive capacity.

Senate President Ahmed Lawan’s recent visit to the isolation facility at the University of Abuja Teaching Hospital in Gwagwalada, however, found the centre highly unprepared to receive any patient as required facilities were not in place. But Ehanire was swift to reassure later that all concerns raised

by Lawan had been addressed.

But these assurances do not tally with the reality as a BusinessDay visit to the otherwise highly regarded referral centres at the University of Abuja Teaching Hospital, Gwagwalada, and the National Hospital

Abuja shows utter absence of infrastructure, equipment and manpower.

At Gwagwalada, though work was ongoing at the supposed state-of-the-art infectious disease centre, the temporary isolation centre, still within the vicinity, was still not ready as contractors were seen installing windows and carrying out repairs.

When a worker was asked whether the facility was ready to receive patients, he disclosed there were no health workers yet.

“I don’t know, I’m just doing my part of the job,” he said.

Two weeks after it was opened by the Federal Capital Territory Administration (FCTA), the proposed isolation ward at the National Hospital Abuja was still in tatters when BusinessDay visited. The about six-room ward allocated for

the isolation centre was an eyesore as nothing was on ground except ongoing efforts to rehabilitate the apartment which appeared to have been abandoned for a long time.

“As you can see, work is ongoing. The place was used for Ebola and since then, it has not been used again so there is need for serious renovation.

You can also see that this place has only plaster but now it has to be tiled,” some staff at the centre, obviously from the maintenance/construction section, told BusinessDay on condition of anonymity.

The staff said the rehabilitation process was the major factor delaying the take-off of the centre, as at least few machines and beds were available and could be fixed as soon as the tiling was completed. They assured the ward would be ready within one week.

COVID-19: Nigerian Embassy in US suspends passport interviews, biometric capturing

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igeria’s diplomatic missions in Washington, New York and Atlanta, United States, have suspended passport interviews and biometric data capture over the coronavirus crisis.

The suspension, which takes effect from Monday, is until further notice, the missions said in separate statements made available to the News Agency of Nigeria on Sunday.

According to the statements, the decision is part of precautionary measures to protect the “health and wellbeing of all passport applicants” and staff.

However, they will continue to issue Emergency Travel Certifi-

cate (ETC) to those who need to travel urgently, but through mail.

“Applicants for ETC should forward their applications by mail, attaching the relevant documents and self-addressed mailing envelope,” the Nigerian embassy in Washington said.

The consulate in Atlanta added that the ETC would be processed and mailed back to the applicants.

On Friday, President Donald Trump declared a national emergency over the disease, which has rattled the world.

As at Sunday morning, the virus had infected no fewer than 2,815 people and killed 59 others in 49 states across the US, including the capital Washington, DC.

L-R: Ayuli Jemide, vice chairman, Nigerian Bar Association-Section on Business Law (NBA-SBL); Seni Adio, chairman; Felicia Kemi Segun, managing partner, ACAS-LAW; Tosin Okojie, consultant for Business Law Competency Framework, and Funke Agbor, senior partner, ACAS-LAW, during the NBA-SBL business law competency framework launch, in Lagos, at the weekend.

Pic by Olawale Amoo

COVID-19 hindering market expansion opportunities

Insecurity: How son of ex-DMO DG, Igbere TV boss were murdered in Abuja

… as conferences, exhibitions are cancelled

Innocent Odoh, Abuja

GBEMI FAMINU

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he outbreak of coronavirus has resulted in a downtrend in economic activities globally with companies shutting down, mobility reduced and, in some cases, restricted, while interaction with individuals is being reduced to the barest minimum.

According to a statement about the impact of coronavirus on the economy from the Lagos Chamber of Commerce and Industry (LCCI), signed by the director-general, Muda Yusuf, due to the panic, easy spread and critical condition of the virus, events, conferences and trainings are either being cancelled or postponed.

“Many events and conferences in Nigeria and around the world have been cancelled as a result of the coronavirus scare.

For most of these events, huge sum of money and resources have been committed to the organisation, planning and logistics. These translate into huge losses to the promoters of these events.

“Many manufacturers and

service providers in the country are already experiencing acute shortage of raw materials and intermediate inputs. This has implications for capacity utilisation, employment generation (and retention) and adequacy of products’ supply to the domestic market,” the statement reads.

The downside to this is that potential market opportunities are lost and deals that should have been sealed from business interactions made possible by these events remain a mere wish than reality. The impact on the general economy can only be best imagined.

For example, the Next Einstein Forum (NEF) global gathering, which was to hold in Kenya from March 10 to 13, was cancelled due to the scare of the virus. Social media platform, Facebook cancelled its annual F8 software developer conference scheduled to hold in California following the outbreak of the virus.

Going forward, experts believe that more events and conferences will be cancelled if the reach and impact of the virus does not subside. www.businessday.ng

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buja, the nation’s capital, is now beset by a frightening level of insecurity as unreported killings and abductions have heightened in recent months.

On Sunday, March 8, 2020, the son of former directorgeneral of the Debt Management Office (DMO), Abraham Nwankwo, Chinzu, was reportedly stabbed to death in Abuja by suspected hoodlums.

Though information regarding Chinzu’s death has so far been sketchy, the administrator in the Financial System Strategy (FSS2020) where the late young man worked confirmed to BusinessDay at the weekend, during a visit to the office, that the late Chinzu was on leave when the sad incident happened.

The administrator, who preferred anonymity, also confirmed that a delegation from the FSS2020 office had paid a condolence visit to the Abraham Nwankwo family in Abuja last Thursday. He did not give further details.

BusinessDay gathered that the director of FSS2020, MD Suleyman, led the staff of the secretariat in a condolence visit to the family, as one of the staffers, who preferred anonymity, said, “It was a sad new for all of us here. The young man was full of life. It is tragic that he died at the prime of his life”.

At the time of filing this report, the Nwankwo family was yet to speak on the death of their son as they are reportedly still in grief.

When contacted on this incident and the rising spate of insecurity in Abuja, the public relations officer of the Federal Capital (FCT) Police Command, Anjuguri Manza, told BusinessDay that the police would investigate the matter, get to the root of it and bring the perpetrators to book. He gave no further details.

Meanwhile, earlier on Friday, March 13, Igbere TV boss, Emeh James Anyalekwa, who was said to have been abducted after he went for a meeting had been reportedly murdered in Abuja.

Anyalekwa has been at loggerheads with Justice

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Okon Abang of the Federal High Court Abuja, who ordered his arrest following a publication by the Igbere TV, which allegedly implicated the court over a case involving former Benue State governor, Gabriel Suswam, who is standing trial over alleged N3.1 billion fraud.

The TV had published on February 1 that Justice Abang, who is presently presiding over the trial of Suswam, allegedly had prior contact with the prosecution team of the All Progressives Congress (APC) officials in respect of the case.

A distraught Abang then ordered the Inspector General of Police (IGP), the Department of Security Services (DSS) and the Economic and Financial Crimes Commission (EFCC) to arrest the Igbere TV boss.

The Igbere TV boss was also said to have published reports, which infuriated some security agencies in the country recently and has been allegedly brazen in his support for opposition elements.

Anyalekwa was said to have announced his going @Businessdayng

to Abuja, where he met his death. He left behind a wife and a daughter.

Worried by the spate of insecurity, especially targeted killing of individuals in Abuja, a security expert and public affairs analyst, Dahiru Majeed, described the situation as “disturbing.”

He said Abuja being the FCT and the seat of power should at least have some level of watertight security of lives and property.

“So, when you have incidents of such targeted killing of individuals in the FCT it simply reveals the sorry state of security in Nigeria as a whole, because if people are not safe in Abuja, where else can they be safe in Nigeria,” he asked.

He called on the authorities to urgently redesign the security arrangement of Abuja, saying, “I think for a long time we have not had a review of the security master plan of the FCT and Abuja has grown in population and more land in Abuja has been developed. So the existing security arrangement can no longer contain the insecurity in Abuja.

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Monday 16 March 2020

BUSINESS DAY

news Early calm returns to Nigeria’s FX ...

Continued from page 1

L-R: Nkiru Omuzulu, deputy director/coordinator, National Lottery Regulatory Commission, Lagos zonal office; Herbert Wigwe, CEO, Access Bank plc; Folashade Mojisola, winner, and Victor Etuokwu, executive director, retail banking, Access Bank plc, at the presentation of cheques to the winners at the DiamondXtra Season 12 launch in Lagos.

Pic by Pius Okeosisi

4 oil policy shifts that can lift Nigeria...

Continued from page 2

oil production, retail price for products and proper deregulation of the oil sector.

Expansion of gas infrastructure Period of lower oil price is also the best time to leverage on its huge gas assets reserves for which the country has been described as a gas province with a sprinkling of oil.

According to data from the NNPC, the country has around 202 trillion cubic feet (TCF) of proven gas reserves plus about

600 TCF unproven gas reserves.

A policy shift to gas infrastructure is expected to create thousands of new jobs, spur domestic gas demand, generate electricity,createanopportunity to diversify revenue of the Nigeriangovernment,strengthenthe country’s revenue base and turn Nigeria into a dominant geopolitical player in Africa, using its gas resources, just like Australia, Russia or Qatar.

“Significant opportunities exist in the gas value chain either in upstream, midstream

Explosion renders hundreds homeless...

Continued from page 1

Churches in Festac

Town, including Living Faith Church (Winners Chapel) located at 7th Avenue, as well as Ark Parish of the RCCG, located on 1st Avenue were affected.

It could not be ascertained what led to the explosion that occurred at about 8:50am.

However, chairman of Amuwo-Odofin Local Government Area, Valentine Buriamoh, ruled out pipeline vandalism.

There were, however, speculations that it might have been caused by ruptured gas pipeline. Figure of casualties involved in the explosion could not also be ascertained as at the time of going to press.

But, Femi Oke-Osayintolu, managing director, Lagos State Emergency Management Authority (LASEMA), said the actual figure of persons affected would be released after investigation into the occurrence had been concluded.

“It is too early to ascertain the casualty figure, until there is empirical data. We have rescued some people but I can’t give you figure now. All the stakeholders are still here and working together. As you can see the situation has been brought under control,” OkeOsayintolu said.

However, some of the

eyewitnesses said over 40 persons were rescued alive and taken to the hospital, with several dead as at 11am.

Particularly hit by the explosion was Bethlehem Girls College, said to be owned by the Catholic Church.

Two reverend fathers were said to have been rescued alive and rushed to the hospital by emergency responders, which include the Lagos State and federal fire services, the Red Cross, police, navy and army personnel who were still on ground at the time of this report.

Some students lodged in the school hostel were said to have also been trapped when the building collapsed under the impact of the explosion while some escaped unhurt.

A victim, identified as Japheth, told BusinessDay that he only moved into the area in November 2019, but had now been rendered homeless.

Solomon Ogbonna, president of Ohaneze, Lagos, who spoke with BusinessDay, said there was the need to conduct deeper investigation into the explosion, which he said could be a bomb, saying the government must immediately do all that was necessary to avert a future occurrence of any similar incident.

“Iam calling on Lagos State government to investigate this and not dismiss it as mere gas explosion. The scale www.businessday.ng

and downstream with incentive already codify into law,” KPMG said in its Nigeria oil and gas outlook content.

Subsidy removal With oil prices down some 22 percent this year alone, the cost of importing petroleum products has dipped, translating into an opportunity for the cash-strapped Federal Government to save billions in potential subsidy payments.

Every time oil prices rise, the subsidy bill grows, creating a headache for the government which should be cheering higher government revenue as

a result of high oil prices.

If Nigeria had announced an end to fuel subsidy programme, the pump of price of fuel would have seen only a marginal increase as crude oil has fallen.

Over the years, Federal Government has reported it incurred more costs to subsidise the importation of refined petroleum products. Refined petroleum products, which are understandably in high demand by millions of Nigerians, are typically imported because Nigeria’s state-run refineries are not functional.

of damage looks like a bomb,” Ogbonna said.

Lagos State government has urged the residents to keep calm over the explosion as the situation was being handled.

Commissioner for information and strategy, Gbenga Omotosho, in his twitter handle on Sunday morning, also confirmed that the LASEMA had fully mobilised to the scene, and was battling the fire.

“Pipeline explosion at Abule-Ado. LASEMA is fighting the fire. Please, be calm,” Omotosho said.

Meanwhile, the Nigerian National Petroleum Corporation (NNPC) Sunday said the fire was as a result of gas explosion that occurred after a truck hit some gas cylinders stacked in a gas processing plant located near the corporation’s system 2B Pipeline Right of Way. In a press release signed

by NNPC group general manager, group public affairs division, Kennie Obateru, the corporation explained that preliminary findings indicated that the impact of the explosion was so huge that it led to the collapse of nearby houses and damage to NNPC pipeline on which efforts were being made to curtail the resultant fire.

Mele Kyari, group managing director of NNPC, and other top management of the corporation departed to Lagos this evening (Sunday evening) for an on-the-spot

assessment at the scene of the incident.

Obateru stated that following the report of the explosion, the corporation quickly halted ongoing pumping operations on the Atlas Cove-Mosimi pipeline that was active at the time.

The release explained that the NNPC had already mobilised its in-house combined team consisting of Health Safety Environment experts, Medical and Security personnel from its nearby Satellite Depot in Lagos, even as Lagos State Fire Service was also rallied to extinguish the fire.

The release said more fire fighting personnel and equipment were mobilised from the NNPC Mosimi Area Office to provide extra fillip to the ongoing operation.

While assuring members of the public and residents of the affected communities to remain calm, the NNPC’s spokesman assured that the temporary shutdown of the petroleum products pipeline would not affect the normal supply of products to Lagos and its environs.

He said the fire, currently burring at controlled condition, was being fought headlong, saying a detail assessment of the incident was underway to establish the extent of damage to the pipeline.

Kyari commiserated with the victims of the incident, praying that God provide them succour at this hour.

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reserves and could lead to higher interest rates and rising inflation in an economy still trying to recover from a record contraction in 2016.

The currency in Africa’s top oil producer appreciated by 1.6 percent against the dollar to $368 at the Investors and Exporters window from a record low N374 a day before.

The naira also gained 7 percent to N380 per dollar at the parallel market after weakening to as low as N410, traders said.

The panic-buying that hammered the naira cooled after the CBN said it had no plans to devalue the naira and threatened to rein in on what it called “speculative activities by unscrupulous players in the foreign exchange market” by charging them for economic sabotage. The apex bank declared it had enough reserves to meet legitimate foreign exchange demand.

That has sparked a divergence of views among market watchers.

Some traders and analysts say there are signs the dollar will appreciate in the coming weeks. Others say any naira appreciation amid the turmoil in the oil market will have to be driven by the CBN artificially propping the naira, which they say is unsustainable with the current level of reserves.

Down some 20 percent to $36 billion from $45.1 billion as of June 30, 2019, the CBN may only have firepower to hold the naira stable for so long.

The CBN governor told investors last November that the country could meet all FX demand as long as the external reserves stayed above $30 billion and oil prices above $45 per barrel.

The reserves are still $6 billion higher than the mark but crude oil price is fast tearing away from the bank’s preferred level.

Oil price (Brent Crude) fell to $34 per barrel on Friday, 34 percent down from the peak of $68/barrel in January 2020, and is below the $57/barrel budget benchmark of the Nigerian government.

“It’s impossible for an oil currency to hold steady when the price of crude oil is down by a third and there are obvious challenges with demand,” one fund manager told BusinessDay. “Investors following the oil market and Nigeria’s external reserves will not be convinced that the naira can be stable irrespective of what the CBN says, especially with the bank’s track record of always trying to resist the inevitable,” the person said. @Businessdayng

“By saying market fundamentals don’t support a naira devaluation, the CBN is insinuating that the plunge in oil prices and the coronavirus pandemic are nonevents and that’s naive.”

Nigeria is also struggling to sell its oil cargoes which are stranded as a result of the weak demand for the commodity.

Global investment bank, Goldman Sachs, said Friday that the oil market could see a record surplus of about 6 million barrels per day by April, considering a biggerthan-expected surge in lowcost output, while a slump in demand was “increasingly broad” triggered by the coronavirus outbreak.

The double whammy of falling oil prices and weak demand makes the task of the CBN to keep the naira stable more difficult given that Nigeria relies on oil exports for more than 90 percent of foreign exchange earnings.

Currencies of oil exporters from the Russian rubble to the Brazilian real have all slumped since the plunge in oil prices. The Saudi riyal has also declined, according to Bloomberg data.

That’s despite these countries having larger external buffers than Nigeria. Saudi Arabia for one has about $500 billion in external reserves.

That’s more than Nigeria’s GDP and 14 times the size of its external reserves.

“The CBN can decide to stave off a naira devaluation for the time being but it will come at a steep cost to the already thinning external reserves which is not good for the economy,” an investment banker who did not want to be quoted said.

“This only adds to the uncertainty surrounding Nigeria. With the troubles of 2016 fresh in their hearts, no investor will want to bring money into the country without clarity around the naira,” the person said.

The CBN fought off a naira devaluation for 15 long months before succumbing in 2016 after an fx demand backlog of $7 billion left the apex bank with no options.

There are fears the CBN could again resort to capital controls to resist devaluation before finally biting the bullet.

Backed by high oil prices since, the CBN has managed to keep the exchange rate stable for more than three years but insists the rate will remain.

A money manager said the CBN would need to raise interest rates considerably to attract the dollar inflows that will soothe the naira.

Despite Friday’s relief, the naira was down across all three markets on a weekly basis.

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abujacitybusiness Comprehensive coverage of Nation’s capital

Benue indigene designs first Nigerian smart phone

L R: Osai Ojigho, country director, Amnesty International; Osasu Igbinedion, executive director, The Osasu Show Foundation (TOSF); Pauline Tallen, minister of women affairs and social development, and Hamza Lawal, CEO, Connected Development (CODE), during a press briefing on the presentation of Strategy Decade of Action for TOSF tagged ‘January 2020-December 2030: Partnership for Results and Impact’ held in Abuja.

Pic by Tunde Adeniyi

Benjamin Agesan, Makurdi

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normal phones but majorly to promote Benue and Nigeria artists.

“The idea of designing and developing smart phones was conceived in 2013 and executed in 2014 and has come to reality in this year 2020”, Agbem emphasized.

He also said TAP is in to design and construction, TAP construction and has constructed many structures for several clients in Benue state and Nigeria at large.

Agbem who expressed appreciation to Governor Samuel Ortom and his wife, Eunice urged Benue people, especially the youths to be courageous and steadfast in all their doings and should look outside politics by venturing into businesses that will better their lives.

FCTA pledges support for implementation of Aviation roadmap

he Chairman/Chief Executive of TAP Group of Companies, Paul Agbem has disclosed that apart from China who designs and develop Tecno phones, Benue is the first to design and develop phones in the country.

Agbem, a graduate of Computer Science told BusinessDay in Makurdi that TAP technology has so far designed two phones namely, Genius ‘C’ series and Companion.

He stated that the kinds of phones designed and developed by TAP technology are unique and the best in the whole world, adding that the phones are meant for different purposes as other

... Partners Humitarian Affairs Ministry on IDPs welfare

Customs promote 2,974 officers

James Kwen, Abuja

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inister of the Federal Capital Territory (FCT), Muhammad Bello has assured that the FCT Administration will provide complementary infrastructure services to ensure that the Nigerian Aviation Sector Roadmap is successfully implemented in the Territory.

Bello who gave this assurance when a delegation from the Aviation Ministry, led by the Minister, Hadi Sirika paid him a courtesy visit in his office described the Aviation Roadmap as a

legacy project that would have immense impact on the economy of the FCT and country as a whole.

The Minister said as part of efforts towards improving the city’s aviation landscape, the FCT Administration recently rehabilitated the nearly two kilometers stretch of road leading to the Nnamdi Azikiwe International Airport in order to cater for the ever growing need of the airport.

The Minister of Aviation, Sirika earlier said the aviation industry need of the country is on the increase with overall air passengers rising from 12 million in 2015 to 18 million,

adding that the number of air passengers in the FCT has also increased from two million to five million within the same time period and could further rise to eight million by the time a national carrier becomes operational.

Similarly, the FCT Minister has pledged the support of the Administration towards improving the welfare of Internally Displaced Persons (IDPs) in the Territory.

Bello who made the pledge when he received a delegation from the Ministry of Humanitarian Affairs, Disaster Management and Social Development led by its Minister,

Sadiya Umar Farouq, on a courtesy visit to the FCTA. He implored the Humanitarian Affairs Minister to take advantage of training facilities owned by the FCTA to train IDPs on various skills needed to empower them economically. The Minister added that FCT owned orphanages were also at the disposal of orphans of IDPs. Earlier, Farouq had solicited the support of the FCTA for the improved welfare of IDPs in terms of rehabilitation of the settlements so that they can have befitting living environment in terms of water, health and education.

Cynthia Egboboh, Abuja

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he Nigeria Customs Service has announced the approval of promotion for 2,974 junior officers to various ranks.

In a statement issued by the Service, the promotion was strictly based on merit, as the cumulative marks of annual performance evaluation scores, written examination, seniority and availability of vacancies formed the basis for the promotion.

According to the statement, 897 Assistant Inspectors of Customs were promoted to the tank of Inspector of Customs1, 426 were promoted to Assistant Inspector of Customs, 123 Customs Assistant

were promoted to Customs Assistant while 5 Customs Assistant 111 were promoted to Customs Assistant 11.

“21 Assistant lnspectors of Customs were promoted to the tank of Inspector of Customs, 208 Customs Assistant to Assistant Inspector of Customs, 263 Customs Assistant to Customs Assistant I while 31 Customs Assistant were promoted to Customs Assistant II”.

While giving his approval for the release of the promotion, the Comptroller-General, Hameed Ali, congratulated all promoted personnel and expressed the hope that these elevations will serve as motivation to effectively discharge their duties.

Youths are stakeholders in digital economy – DG NITDA Stakeholders to proffer solutions on improving varsity education at 2020 NHEF in Abuja

James Kwen, Abuja

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he Director General, National Information Technology Development Agency (NITDA), Kashifu Inuwa Abdullahi has urged youths to consider themselves as critical stakeholders and major players in Nigeria’s drive towards diversification of the economy from natural resources economy to digital or knowledge based economy.

Speaking in Abuja at the official Closing Ceremony of Photography a n d C i n e mat o g rap hy Skill Training organised by Abuja Enterprise Agency, (AEA), Abdullahi said Nigeria’s greatest resource is not natural resources but human resource.

According to him, the youthful population the

nation is endowed with provides her with competitive advantage to be a key player in global digital economy: “Our greatest resource is not natural resources rather the human resource; that is where our strength lies; what we know and the knowledge we have. Our people, not oil and gas is our strength.”

“This training on Photography and cinematography can sprout you to be employers of labour.

The world is going digital now and we now have digital media where you can leverage on Information Technology (IT) to market your contents.

You can use the power of pictures to dramatize your content which can be communicated to the world online”.

Abdullahi while advising the youths to be

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mindful of creating jobs using Technology said, “the future is great with this kind of skill acquisition because everything is becoming electronic and the market is becoming promising. I challenge you to grab this opportunity to become job creators.

“To get a photographer to cover an event in Abuja today cost N150,000 to N400,000 and getting like four events in a month can earn them almost N450,000 which is difficult to get as salary if you are a fresh graduate in government employment”.

Arabi Tukur, the Abuja Enterprise Agency’s Managing Director in his remarks revealed that government is ready to support good business ideas and has created platform for easy registration of businesses.

Godsgift Onyedinefu, Abuja

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he Committe of Vice Chancellors (CVC) will convene hundreds of stakeholders and key decision makers in Nigeria at the National Higher Education Forum (NHEF) 2020 to interrogate issues confronting the Nigerian university system with a view to proffer lasting solutions to the issues in the knowledge sector.

BusinessDay’s Managing Director, Ogho Okiti among other stakeholders are expected to speak at the forum with the theme:“Competiveness, Endowment and Partnerships: A path to excellence and sustainability” in which over 600 important decision makers, innovators and influencers from academia, industry and government

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are participating.

The Secretary General of CVC Yakubu Ochefu, during a media chat with the forthcoming forum’s media partners said it is co-hosted with the Centre for Higher Education, Innovation and Development and the Nigerian Academy of Letters.

He explained that the conference is designed to provide a platform for stock taking to ascertain where Nigeria is in higher education system, from the perspective of innovation, solving real life problem that affects our day to day experience and more importantly, taking advantage of new developments especially in terms of new technologies as they apply to teaching, learning and research in New German higher education space.

“The conference will bring @Businessdayng

together people form different backgrounds to interrogate these three basic issues, to look at trends analysis of what is being done out there and how Nigerian and African researchers can take advantage of the growing use of certain technologies in terms of how to advance knowledge. The way we teach and the way we learn has changed rapidly over time, individualised, customised, departmentalised learning has now become the buzzword.

“We are bringing in high profile researchers to come and share their experience, with other researchers in Nigeria, who are struggling with laboratory findings and are not able to commercialize it or distribute the contents of their research that will solve problems in the society”, he explained.

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Monday 16 March 2020

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Over 1.9m candidates vie for less than 150,000 admission slots in tertiary institutions

Makinde harps on unity at South West meeting

… as JAMB records hitch-free UMTE exams

… says region‘ll set example for others on internal democracy, party cohesion

Mark Mayah

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relatively successful Unified Tertiary Matriculation Examination (UTME) was recorded by Joint Admissions and Matriculation Board (JAMB) nationwide at the weekend with the exception of minor logistic hitches in some centres in Lagos, Nasarawa, Niger and Oyo states.

No fewer than 1.9 million candidates are vying for less than 150,000 slots in all the nation’s tertiary institutions in the one week long examination.

The institutions are: Universities, Polytechnics and Colleges of Education belonging to federal, states and private.

In most CBT examination centres visited within Lagos metropolis, between 8am and 9am, the examination had begun.

But examination could not start early in some centres visited at Agege, Iyana Ipaja, Ikeja, Oshodi and Mushin due to power failure, system malfunctioning and late arrival to these centres by invigilators.

The situation was same in some centres in Nasarawa, Niger, Oyo and the Federal

Capital Territory (FCT), Abuja.

There were no reported cases of examination cheats and malpractices before and during the exercise.

A senior JAMB management staff, who didn’t want his name in print, hours after the first segment of the week long examination, confirmed to BusinessDay: ‘’So far, reports reaching the board’s headquarters at Abuja indicated that there was a hitch-free conduct during the first day exercise. The exercise is expected to end on March 20, 2020.

Although, he said, it was too early to ascertain the outcome of the whole exercise, as reports were still being expected from states and Abuja, but quickly noted that telephone messages so far received from some states indicated ‘’there are no malpractices.’’

However, reports from Nasarawa, Niger, Oyo and FCT said candidates complained of lateness in the commencement of the examination and conflicting examination centres.

These anomalies, our correspondent gathered were promptly taken care of by JAMB officials.

REMI FEYISIPO, Ibadan

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overnor Seyi Makinde of Oyo State has asked members of the People’s Democratic Party (PDP) in the South-West geopolitical zone to unite and work together to reposition the party and reclaim its glory.

Makinde, who made the call while speaking at a South-West Stakeholders’ meeting of the PDP held at the Government House, Agodi, Ibadan, noted that he had already dedicated himself to the cause of uniting all tendencies in the zone, adding that a united South-West PDP would rub off positively on the national outlook of the party.

A statement by the chief press secretary to the governor, Taiwo Adisa, quoted the governor as saying that the history of politics in the country had shown that once the SouthWest was united and it thrived, the entire country would enjoy peace and would also thrive.

He added that the same

could be said of the PDP, where the unity and wellness of the party in the South-West have always been tied to its progress at the national level.

He said: “If the South-West can be organised, then Nigeria will be organised. I am not a saint neither am I a devil. What we are dealing with is a game of number and we have to accommodate one another. Let us not assume some people are bad, because they have their own roles to play in this too. So, I am for unity in the South-West and I have donated myself to pursuing unity for our region.

“The only message from me is that of unity for the SouthWest zone. I am harping on the unity for our zone, because if we go down the memory lane, we will know that when the South-West is thriving, unified, the entire country is unified and thriving. So, we have to work extremely hard to unify all the tendencies.

“In Oyo State, we have experienced disunity before and we know the implications. After

the 2015 general election, we came back together and we said to ourselves that we must not tread on that path again. I try to be frontal, because I believe we have to play a different brand of politics.

“When we got to Ekiti, I said to everybody that the two gladiators in the state; Governor Fayose and Senator Biodun Olujimi are the main issues and I have been talking with them.

“I have the pleasure to also let you know that we are planning a unification rally on the 18th of March here in Ibadan and we would be using Mapo Hall. At that unification rally, the former governor of Osun State and former national secretary of our great party, Olagunsoye Oyinlola, would be coming back formally into the party. So, I am using this opportunity to invite all the stakeholders from all the states in the region to mark that date to celebrate the party. Let us send a very strong signal out that the South-West is ready to lead the charge again.”

The governor also used the

occasion to comment on the ongoing congresses in Ekiti and Ondo states, stating that the zonal congress where a new set of leadership for the zone would be formed will soon take place.

He said: “Finally, there are congresses going on in some of Ekiti and Ondo states respectively. We are also having the zonal congress coming up soon. Yes, some people have been there for four years and we need an agreement and alignment within the zone. Those who have interest can indicate because we don’t want people to just go ahead and buy forms. We need to apply wisdom in the arrangement.

“Each state will nominate a candidate and the leaders will go through the process in terms of zoning. They join two states together to form an office. We will follow that existing procedure. So, I will seek your support to come together, zone the offices and we go into the congress as a united body to select the people that will run the South-West zone for us for the next four years.

NEITI confirms solid mineral sector earned N69.47bn in 2018 … sector contributes over N400bn in 12 years HARRISON EDEH, Abuja

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igerian Extractive Industries and Transparency Initiative (NEITI) has confirmed that the solid minerals sector contributed N69.47 billion to the federation revenue in 2018, the highest so far since it commenced reconciliation of payments in the sector.

The figure shows an increase of N16.71 billion representing 31.67% over the 2017 revenue of N52.76 billion. The earnings (N69.47bn) also accounted for 16.69% of the total revenues (N416.3bn) that accrued to the sector from 2007 to 2018.

This information is contained in the latest audit report of the solid minerals sector released by the NEITI and obtained by BusinessDay on Sunday.

The audit report, NEITI notes in a statement by Orji Ogbonnaya Orji, its director of communications and advocacy, explained reconciled companies’ payments and government’s receipts from the sector in 2018 as well as tracked production volumes and trends of revenues from the sector to the federation account from 2007 to 2018.

Breakdown of the receipts showed that taxes to the Federal Inland Revenue Service (FIRS) accounted for N65.69 billion (94.56% of the total) while fees and royalties paid to the Mines Inspectorate Department (MID) and Mining Cadastre Office (MCO) accounted for N2.21 billion (3.18%) and N1.57 billion (2.26%), respectively.

According to the NEITI report, “Nigeria has published eight cycles of solid minerals audit reports since it signed up to the EITI. “The sector has contributed N416.32 billion in revenues to the federation in 12 years. Over half of this figure or (N279bn) was earned between 2015 and 2018”.

This shows that there had been a remarkable increase in revenues accruing to the Federation from the solid minerals sector over the years.

The just released report further highlighted that the sector had over the years also witnessed fluctuations in revenue earnings. For instance, in 2015, N64.46 billion accrued to the federation, while in 2016, the earnings dipped to N43.22billion. It would be recalled that 2016 was also the year that the Nigerian economy slid into recession.

The report disclosed that the main sources of revenue flows from solid minerals remained various categories of taxes, royalty, permits, annual services and sub-national payments.

The report also stated that sub-national payments and other taxes accounted for “N1.54 billion representing about 2.23% of total government revenue from the sector”.

On production, the NEITI 2018 Solid Minerals Report disclosed that 46.68 million metric tons of minerals valued at N47.87 billion were produced in Nigeria during the period. “The production data was based on minerals either used or sold during the year”.

L-R: Francis Ebuchi, group executive, sales and marketing , Investment One; Oluwapelumi Joseph, group head, investor relations and research, Africapractice; Moses Ahmed, research analyst, Investment One Financial Service Limited, and Akindele Ogundepo, head, private banking and trust, Investment One, at the investment seminar with the topic ‘Market Outlook for Q2 and beyond’ in Lagos.

Pic by Pius Okeosisi

Multichoice consolidates on Talent Factory gains at 7th AMVCA Obinna Emelike

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hile the seventh edition of the Africa Magic Viewers’ Choice Awards (AMVCA) threw up many surprises and revelations of talents across different segments of the African movie industry, the awards enabled Multichoice Africa, the organiser, to consolidate on the success of Talent Factory, its shared value-initiative launched in May 2018 to create a pipeline of skilled and talented movie professionals that produce high quality locally relevant, content that resonate with African viewers.

At the awards, which held on Saturday at the Eko Convention Centre, Eko Hotel and Suites, Lagos, Multichoice Talent Factory (MTF)

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was among the categories of awards given out to deserving African movie industry stakeholders for their individual and collective contributions to the growth of movie business on the continent.

The new award category was fiercely contested by regions across Africa and at the end, East Africa won the Multichoice Talent Factory Film category with its enthralling entry entitled ‘Promises’ and making history as the first region to win the category.

East Africa, which entered ‘Promises’ and ‘Ensulo’ in the new category, beat ‘Life of Bim’ and ‘DreamChaser’, two movies produced by the inaugural class of MTF West Africa, and Savannah Skies and The Painting, both from Southern Africa.

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The win was a boost to the young film makers from East Africa and a challenge to other aspiring movie makers from other regions to hone their skill further.

Multichoice is also expressing its commitment to African talents with series of partnerships with global leaders in the movie business, one of which was the recent partnership between MTF and the New York Film Academy College of Visual and Performing Arts (NYFA), a world-renowned visual and performing arts school.

At the unveiling of the ground-breaking collaboration, Femi Odugbemi, MTF Academy director (West Africa), explained that it was in line with MTF’s mission of igniting Africa’s already established creative industries through @Businessdayng

training and skills development as well as foster new and original programming.

As well, there are MTF Masterclasses now including series of workshops intended to increase MTF’s purpose of upskilling film and TV creatives.

The masterclasses, which kicked off in January 2019, are supported by various industry partners and take place across various cities in the regions.

However, Living In Bondage won the most awards (seven) at the 7th edition of AMVCA, including the Best Overall Movie. Peter Igho, veteran TV producer, won the Industry Merit Award, while Swanky JKA won the Trail Blazer Award. Other awardees include Ramsey Noah, Funke Akindele, Abraham Kabwe, Sarah Hassan, Steve Gukas, among others.

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Sanusi: Buhari threatened state of emergency in Kano - presidency

Tinubu explodes, says 2023 ambition responsible for plots to remove Oshiomhole

… says president tried to stop Ganduje’s action

... describes 2023 virus as worse than coronavirus

Tony Ailemen, Abuja

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ndications emerged Saturday that President Muhammadu Buhari may have imposed a state of emergency on Kano State over the crisis generated by the deposition of the former Emir of Kano, Sanusi Lamido Sanusi, by Governor Abdullahi Ganduje.

This is as presidency outlined the fruitless efforts made

by President Muhammadu Buhari to save Sanusi from being dethroned, revealing that at a point, he threatened to impose a state of emergency on the state as a result of the feud between Governor Umar Ganduje and Sanusi.

A top presidency source disclosed in Abuja on Saturday that Buhari’s intervention led to the setting up of the different reconciliation committees whose efforts came to nought.

The source attributed the current outcome to the intransigence of both sides to the conflict.

But the revelations is coming after an earlier position by the presidential spokesman, Garba Shehu, that washed Buhari’s hands off the former emir’s travail.

But the presidency source said contrary to allegations of collusion to remove former Sanusi from office, the presidency had intervened at many stages of the conflict to avoid escalation in the last two years “but the efforts collapsed because of the intransigence of the two sides to shift ground.”

The source informed State House correspondents that Ganduje made up his mind to remove Sunusi as far back as 2017, saying: “The governor informed President Buhari of this decision.”

The source explained: “He however asked for advice and guidance. Out rightly, President Buhari said it was inappropriate and requested that the plan be shelved.

“This meeting was followed with a written letter to the Governor dated 17th November, 2017 in which the President’s advice was clearly stated.

“The President directed his Chief of Staff, Abba Kyari to follow up for a peaceful resolution of the crisis of confidence between the two.

“This led to the setting up a Committee made up of five state governors led by that of Ekiti State, Dr. Kayode Fayemi. They did their best. Calm returned but occasional flare-

ups continued and were aggravated by the tense situations under which the governor reemerged for his second in the 2019 general elections.

“In the course of that period, Governor Fayemi, his Jigawa State counterpart, Abubakar Badaru and to some extent the Inspector General of Police made several expeditions to Kano, to prevail on the Governor to not remove the Emir in those tense moments in the interest of peace and security. The main grouse of the administration was that the Emir had failed to stay above the fray of partisan politics, especially as it related to the Governor’s re-election.

“In reaction to the various suggestions by senior citizens including Generals Babagida, Wushishi and Abdulsalami Abubakar, among others, the Chief of Staff sought for permission and gave the green light for the commencement of work by the Abdulsalami Abubakar committee.

“The committee members sat down with the President at the Villa to discuss their mission. At this meeting, the President outlined the efforts he put into the resolution of the conflict in Kano and said he had had enough.

James Kwen, Abuja

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he national leader of the ruling All Progressives Congress (APC), Bola Tinubu, has opened up on the recent crisis rocking the party with the removal of the current chairman, Adams Oshiomhole, as the last resort.

Tinubu in a statement he signed on Sunday blamed the crisis on those having the ambition to become President in 2023, but see Oshiomhole as a stumbling block to the realisation of their ambitions.

The former Lagos State governor absolves Oshiomhole of his alleged sins as he was human and bond to err, stressing that the party had internal mechanisms to handle all grievances and not in court at the first instances.

Tinubu described the inordinate ambitions of some elements in the APC who contributed less than him to bringing the party on board as an old virus worse than the coronavirus pandemic with no known cure yet.

“While Coronavirus has been presently contained in Nigeria, we must be alert to another sickness that seems

rampant within a certain segment of society. That sickness is old ambition-virus 2023.

This illness afflicts many in the political class along with their allies in the media.

“The more a person obsesses over and constantly engages in political manoeuvring is a warning sign. Not only is he prone to the 2023 virus. He likely has little to offer in the way of good governance. He wants to hold public office that you might serve him not he serves you.

“For if he had adequately studied and been acquainted with the ways and means of progressive governance, he would be focused on that important task at the present moment. He certainly would not drown himself and all around him in harmful political intrigue.

“It is against this backdrop that we should view the present ploys and plots to undermine the APC National Chairman.

The chairman is human; thus, he has his merits as well as his flaws. Yet his humanity cannot be grounds for his dismissal.

If so, the position will forever go vacant.

“The chairman has been a tireless campaigner and mobiliser for the party. He has

SCENE OF GAS EXPLOSION AT ABULE ADO, LAGOS

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steered the party through difficult elections. His contributions should not be undervalued now that the bulk of elections are behind us. To do so would be an act of ingratitude.

It is no secret that the chairman and Edo Governor Obaseki are in dispute. This is unfortunate.

“However, the party has moved through proper procedures within the proper organs of the party to hopefully resolve this spat. All party members know this. Such decisions are part and parcel of internal party governance.

Yet, motivated by ambitions that have nothing to do with the quality of the Chairman’s performance, people shunned the agreed party reconciliation mechanism and resorted to other means to oust him. These self-help attempts are unwarranted. These attempts reveal more about the mala fides of their perpetrators than they do about the Chairman.

“The plotters launched their attack solely because they perceive the chairman as an obstacle to their 2023 ambitions. People went to court knowing full well the party constitution prohibits such action because these people had not yet exhausted all internal disciplinary procedures.

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cityfile Police nab 98 suspects, recover 15 AK 47 rifle JAMES KWEN, Abuja

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he Federal Capital Territory (FCT) police command has arrested 98 suspected criminals and recovered assorted weapons and 26 bags of Indian hemp at different operations from January to date.

Commissioner of Police (CP) in charge of the command, Bala Ciroma listed the recovered weapons to include 15 AK 47 rifles, 21 locally made pistols and 379 rounds of ammunitions as well as 17 different cars.

Also recovered were four pairs of military camouflage, 18 bottles of codeine syrup, three packs of diazepam, four packs of exol and 79 cell phones in the course of anti-crime operations.

Ciroma said that the command was raiding all black spots identified as hibernating points for criminals.

He assured the public that the command would continue to review its strategy to meet up with the expectations of the FCT residents.

Ciroma, therefore, called on community and religious leaders, residents and other stakeholders to support the police in fighting crime and making Abuja safe.

“All communities in FCT must rise up against criminals by exposing their activities to the police,’’ Ciroma said.

He commended the FCTminister, Muhammad Bello for supporting the police with logistics needed to fight crime and protect lives and property in within the FCT.

NAF launches assault on insurgents

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igerian Air Force (NAF) says it destroyed insurgents’ meeting venue at Kadi Wanzama on the fringes of the Sambisa Forest in Borno.

Ibikunle Daramola, NAF director of public relations and information disclosed on Friday in Abuja.

Daramola said the latest attacks carried out by the Air Task Force (ATF) of Operation LAFIYA DOLE, was part of the ongoing NAF Air Interdiction Operation, codenamed “DECISIVE EDGE’’.

He explained that this was accomplished on March 8, sequel to Intelligence, Surveillance and Reconnaissance(ISR)missionswhichestablished that the Kadi Wanzama Settlement, characterisedbyactiveinterconnecting tracks linking various terrorists’ locations, was being used as a BHT staging post for planning attacks.

“The ATF therefore, dispatched an appropriate Force Package to engage the location, completely destroying the target compounds within the settlement.

“The air strikes also eliminated several of the insurgents as they hid out in the target structures, further contributing to the attainment of the overall mission of Operation “DECISIVE EDGE’’, which is to destroy their capabilities before they can be brought to bear on our troops or innocent citizens,’’ he said.

Daramola said the NAF, in furtherance of the objective of restoring peace and security in the North East and operating in concert with surface forces, would continue to carry out air interdiction missions against “the enemies of our nation.’’ NAN

DCP. Olatunji Disu, commander, Rapid Response Squad (RRS), painting an art work during slum art foundation day at Ijora Badiya, Lagos on Friday.

Ibii: Mineral rich Ebonyi community decries neglect NKECHINYERE OGINYI, Abakaliki

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bii, an agrarian community in Afikpo North local government area of Ebonyi State is made up of two clans, eight villages with an estimated population of over 15, 000 people.

The community is blessed with different untapped mineral resources. But for over 20 years, it has been in darkness, and also without portable water supply.

Ibii has been cut off from its neighbouring communities of Akpoha, Amasiri and Afikpo town as a result of bad road.

Francis Egwu Otu, the traditional prime minister of Ibii, while interacting with Cityfile, decried government’s neglect and called for the provision of necessary amenities for the community. According to Otu, the community’s road was bulldozed last September and abandoned in its worst stage,

thereby further worsening accessibility to Ibii.

“We tax ourselves to provide most of our requirements in the community. We want government’s intervention because the people are mere peasant farmers and petty traders.

He spoke further: “We do not have electricity and reliable source of water supply. Our people go to the stream to fetch water because there is no functional borehole. The boreholes scattered in the community are not working. These boreholes have limited lifespan,” the monarch said.

Mining Site: Otu observed that in spite of the community’s richness in natural resources, little or nothing has come from these resources to lift Ibii.

“The government will say if you see anything that is not good, report it. But if you do, they will turn back and make a caricature of you. If the government had intervened since

2014 when we started having problem with the miners in this community, things might have not gone this way. Maybe one of these miners could have handled these deficient requirements in our community.

“I do not know whether the government is waiting for us to fight and shed blood before they will come to our aid.”

The traditional prime told Cityfile that some time in the past, the community reported a case of a company which came into their community without following a template that the government gave, but the government refused to act on it, leading to free for all during a communal meeting.

“They are fighting over who will take control of the mining site. Since 2014, the mining site has been lying fallow because of squabble over who will control the mineral resources,” he lamented.

Otu said Ibii was blessed with lots of agricultural pro-

duce; cassava, yam, potatoes, tomatoes and others but lacked the road to take them out.

Corroborating the monarch, Beatrice Imo, a retired primary school teacher said the community was known for agriculture but presently faced with myriad of challenges.

“We specialise in rice, cassava and melon production.

If you want to buy melon, you buy it here in quantity. We use motorcycles to convey our farm produce to Afikpo town for sell.”

However, she lamented the effect of bad road and the lack of electricity, saying it was hindering their business. “ E a c h f a r m e r p ro d u c e s about 200 bushels of rice annually. We can double this if we have good road.”

Imo called on the state government to urgently provide the community with good road.

“Our community is hard working all we need is government to give us necessary amenities,” she said.

Obaseki assures timely completion of NYSC camp IDRIS UMAR MOMOH, Benin

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overnor Godwin Obaseki has assured of timely completion of the National Youth Service Corps (NYSC) permanent orientation camp being constructed at Okada in Ovia North East local government area of Edo State. www.businessday.ng

The governor gave the assurance when he inspected ongoing construction of the orientation camp, noting that his administration was working towards completing the project within six months.

According to him, the project is being revived 16 years after it was started.

He said his administration has completed the documentation pro-

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cess for the contracts and mobilised contractors to site and would be making additional funds to them.

“I am optimistic that work will progress before the rains,” he added.

He noted that the permanent orientation camp would be used as training venues by paramilitary agencies in the state, adding, “We have the Public Work Volunteers (PUWOV) and we @Businessdayng

are going to have the community neighborhood, vigilante groups and community policemen and these facilities will be available for their training here.”

Edo State coordinator of the NYSC, Adebayo Ojo said on completion of construction, the NYSC would provide the necessary facilities to facilitate smooth camping at the site.

Monday 16 March 2020

BUSINESS DAY

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BD Money

Monday 16 March 2020

BUSINESS DAY

PERSONAL FINANCE

Investing

Cover Story

Stock

How not to overspend when shopping

OMO yield rises to 16.75% amid no offer in one week

Personal finance lessons from Nigeria as economy faces COVID-19

On a sunny Saturday morning, Ronke Adewale, a Lagos based banker decided to go shopping at a popular Lagos Island market for new dresses and shoes.

The average Open Market Operation (OMO) yield has in the last one week risen by 3.7 basis points to 16.75 percent on Friday from 13.05 percent last week.

Nobody could have predicted the outbreak of the Coronavirus and its impact on global economies, but the very first rule of life is to expect the unexpected. It is the wisdom in “saving for the rainy day� but one Nigeria failed to heed.

Why Cost Averaging can be your best bet in a coronavirus-hit market

Page 60

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Testing a river with both feet is never a good idea. But when stocks are down to their lowest in years, it is very hard to resist jumping on cheap valuation.

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Personal Finance How not to overspend when shopping

BUNMI BAILEY

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n a sunny Saturday morning, Ronke Adewale, a Lagos based banker decided to go shopping at a popular Lagos Island market for new dress-

es and shoes.

The market provides a bouquet of commodities ranging from shoes, bags, cloths, jewelleries and other consumable commodities. The attractions from the market forced Ronke on an unplanned decision where she overstretched her budget by using most of her savings on the items that she unplanned for.

This typically happens to every Nigerian who fails to abide by the rules on avoiding impulse buying that is unplanned purchase.

To avoid being in Ronke’s shoes, here are few simple tips to help you dodge the temptation to overspend.

Survey the market or shops: The first thing that you need to do before going to market is to survey for prices that you need for the items. This is very important as it helps you to know the prices and to plan your budget based on those prices. You can make the trip to the market few days or weeks before your shopping.

Prepare a shopping list: Before you run your errands, make a list of everything you plan on buying. The rule is that you’re not allowed to buy anything unless it’s already on your list. It’ll help keep your impulse shopping to a minimum.

Make a budget and stick to it: Making a budget will help you know how much to spend. With a plan in place, you’ll be less likely to give into overspending.

Watch where you shop: Make sure you shop at a place where there is no temptation to over spend. Locate a place where there are good, quality and limited items that you need.

Bring the cash that you only need to spend: Try and make sure to bring the money that you budgeted for, for your shopping.

Let that money cover all the expenses that you’re doing. If the money runs out, you’re shopping spree’s done for the day. Don’t spend what you don’t have.

Shop alone or bring someone with you: If you are comfortable shopping alone, then try not to go with friends or family members that will pressure you to overspend. And if you don’t trust yourself to shop alone, go with a sibling or friend who is willing to get tell you to your face not to buy something that you don’t need or not on the list.

Avoid taking your debit or credit cards: Most people that do impulse buying are that ones that take their credit of debit card to the market. To avoid this, try and put them in a place that is not readily accessible to you. You can keep them at home.

And also keep your mobile devices that you can use to do money transfers for purchase.

Keep your goals in mind: Always keep your goals in your mind. If you are buying that particular item, let it be just that item. Giving into impulse buying won’t help you achieve your goals. Overspending will eat up any extra money you were saving to put toward those goals.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Olufikayo Owoeye; Graphics: Fifen - Famous www.businessday.ng

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Investing

OMO yield rises to 16.75% amid sell off , no offer in one week HOPE MOSES-ASHIKE

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he average Open Market Operation (OMO) yield has in the last one week risen by 3.7 basis points to 16.75 percent on Friday from 13.05 percent last week.

Akintunde Olusegun, financial market analyst at Polaris Bank Limited attributed this sell off majorly on the long end of the curve as a result of the impact of corona virus and Saudi/Russia price war on the price of crude oil.

The Central Bank of Nigeria (CBN) had in October 2019 directed banks to restrict individuals and local corporates from investing in OMO instrument.

Since the outbreak of coronavirus in China, Oil price (Brent Crude) has fallen to as low as $34 per barrel on Friday, from the peak of $68/barrel in January 2020, which is below the $57/ barrel budget benchmark of the Nigerian government.

Oil revenue accounts for the largest chunk of forex inflow. Aggregate foreign exchange inflow into the economy amounted to US$36.36 billion in the fourth quarter of 2019, according to the CBN’s economic report for fourth quarter 2019.

Over the past five years oil and gas related inflows into the CBN have become less important in relation to no-oil inflows.

Non-oil inflows range from FPI purchases of CBN OMO bills, Treasury bills and government bonds, to government receipt of sovereign Eurobond and other foreign loan proceeds, Coronation Merchant Bank Limited stated in a report.

Analysts at Coronation said if the CBN cannot sell sufficient OMO bills to foreigners in early 2020 then this could present challenges to its foreign exchange reserves.

The CBN acts as a backstop provider of US dollars to foreign exchange market in order to prevent participants driving down the naira in the parallel market. The CBN’s gross supply of US dollars to the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) market in the second half of 2019 was $5.18 billion.

Olusegun, said the immediate concern

of the CBN would be how to sustain the FPIs from capital flight as the current reserve level might not have enough buffer to withstand this. This he said might include increase in yield to reflect the current risk.

Foreign Portfolio Investment (FPI) holdings of OMO bills likely account for over US$5.0 billion of the CBN Foreign exchange reserves, according to Guy Czartoryski, head, research Coronation Asset Management.

In the OMO market on Friday, average OMO yields increased by 33 basis points (bps) to 16.75 percent as against the Thursday’s close of 16.42 percent, a report by FSDH research revealed.

Selling pressure was witnessed across short-term and long-term maturities with average yields widening by 361 bps and 12 bps, respectively. Yields on 25 bills fell with the 27-Aug-20 maturity bill recording the highest yield decline of 452 bps, while yields on 13 bills advanced with

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the 9-Aprr-20 maturity bill registering the highest yield increase of 722 bps.

The Nigerian Treasury bills market ended the trading session on a positive note on Friday with yields declining 13 bps to 3.87 percent as against 4.00 percent on the previous day. The average yield across long term maturities declined by 28 bps.

The fall in average yields across long term maturities was led by the NTB 12Nov-20 (-81 bps), NTB 29-Oct-20 (-63 bps), and NTB 15 Oct-20 (-44 bps) maturity bills, which witnessed maximum buying interest.

In the primary market, NT-bills worth N378.92 billion will be maturing during 20second quarter 2020, and the CBN will auction an equal amount of NT-bills during the same period across 91-day (N90.45 billion), 182-day (N63.79 billion), and 364day (N224.68 billion) tenors.

At the FX market on Friday, naira appreciated to N375 per dollar from its de-

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cline to N410/$ on Thursday, after the CBN ruled out the possibility of devaluation at this time.

Investigation by BusinessDay show that the greenback was traded at a selling rate of N375/$ and buying rate of N365/$ across black market areas in Lagos.

For fear of not losing out completely, some Nigerian who bought dollars to hedge against devaluation, were seen selling back to black market operators, after the Apex bank’s announcement.

At the Investors and Exporters (I&E) forex window, the naira was quoted at the rate of N368.47 to the dollar, gaining 1.48 percent over N374.00k/$ traded the previous day, data from FMDQ show.

The local currency remained stable at N306.95k per dollar at the official (CBN) window. However the foreign exchange daily turnover rose to $156.42 million on Friday from $106.04 million recorded the previous day.

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Cover Story

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Economy

Personal finance lessons from Nigeria as economy faces COVID-19

Here is what CBN can do to tame impact of coronavirus on Nigerian market MICHAE ANI

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SEGUN ADAMS

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obody could have predicted the outbreak of the Coronavirus and its impact on global economies, but the very first rule of life is to expect the unexpected. It is the wisdom in “saving for the rainy day” but one Nigeria failed to heed.

Despite the brilliant response to the virus threat by Nigeria health officials, the government’s economic response has left much to be desired especially since the country’s economic defence system had been deteriorating before now.

These are some lessons the country can teach us in our own personal finance.

Diversify your income The crisis Nigeria risks facing largely emanates from the shock to the price of oil, a commodity that accounts for around 90 percent of foreign exchange earnings for Nigeria and a significant portion of government earnings.

Oil fell to as low as $31 per barrel which put both the Central Bank of Nigeria and the Federal Government on the edge because all of Nigeria’s egg (or dollars) are in a basket – in this case, oil.

Relying on a mono-source of income is never a wise thing to do whether as a country, an organisation or an individual.

One could suffer significant damage to financial status should anything unexpected events affect the source of one’s income. It is much dire if there is no plan B to fall back on.

Prepare for the rainy days It is either Nigeria is an optimistic country or a reckless one.

In 2016 the country suffered its first recession in a quarter-century because oil price crashed.

While one would have thought the country would have been better prepared

for another oil downturn (because Nigeria cannot determine oil price), it drained its Excess Crude Account (ECA) down to around $70 million just before the oil market crashed again in 2020.

There is no need saying “God forbids it” because, after sunny days, the rainy ones follow.

You should endeavour to save and invest at least 20 percent of your monthly income to prevent unpleasant outcomes.

Use debt wisely Debt is not bad, per se. It is one of many ways companies around the world raise money to do business, make money and expand.

Many of the world’s richest people are indebted too because, for people and corporations, debt is a relatively cheap capital.

This doesn’t mean you should go www.businessday.ng

around borrowing because debt can also be a burden, especially if used for wrong and unproductive purposes.

Nigeria over the years has amassed debt which cost over 50 percent of the government’s revenue just to pay interest.

In the third quarter of 2019, Nigeria paid $263m as interest fee on its Eurobond, according to DMO. The dollar debt of around $10bn would spike (in naira terms) if the country devalues its currency should the CBN be unable to hold the fort.

For individuals, “Ideally, lenders prefer a debt-to-income ratio lower than 36 percent, with no more than 28 percent of that debt going towards servicing a mortgage or rent payment,” says Investopedia.

Hope for best, prepare for worst Assuming that all will be well is not of-

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ten a wise thing to do if you critical factors that affect your wealth are beyond you.

Nigeria in its 2020 budget, assumed a seemingly conservative oil price benchmark of $57 per dollar, but a budget deficit of around N2.4 trillion was met with puzzled faces of analysts and economists.

Their scepticism has turned out to be grounded on reality while attempts by the government to revise the budget in the light of new realities showed the lack of foresight and their over-optimism.

When preparing your budget or planning ensure you consider the worst-case scenario.

Ask the “what-ifs” and create a plan B should those events materialise.

Granted, it is not possible to tell how events would unfold, but preparing for those kinds of deviations can help reduce shock when they occur and unlike Nigeria which has been slow to react to the threats to the economy, you would be able to improvise almost immediately.

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he global market has been sent in disarray due to the Coronavirus pandemic, and the Nigerian economy has not been spared.

The coronavirus which started in China, the world’s most populous nation, has spread to over 67 countries killing over 4000 persons and infected no fewer than 120,000 people, as of Friday last week, including most of the big names in the World.

This has brought a devastating effect on the entire globe with many economists forecasting the world may be on course for a global recession as economic and social activities slow down.

Many countries have placed travel restrictions on flights coming in and out of their countries, while major companies have halted their operation as the coronavirus continues to double its spread further into more countries.

The international market is already feeling the hit of the virus spread with major markets witnessing massive sell-offs as investors take out their money to get a proper clue on what how far the impact of the pandemic could go.

Major central banks have exercised a dovish stand in other to support economic activities. Both the Federal Reserve and Band Of England (BOE) has cut-rate by as much as 50basis points each, the highest rate cut since 2008, many analysts say rate cut may not still be sufficient to save the global economy from another downturn.

The slowdown in airline travels accompanied by the closure of operations of major companies in China, which happened to be the biggest buyers of crude oil, has culminated into causing a drop in crude oil prices.

In a bid to push up the price of oil, members of the Organization of Petroleum Exporting Countries (OPEC) and its allies, resolved to enact a 1.5 million barrel per day cut to support an already 2 million barrel per day that had been enacted before.

The cartel and its allies believe that by cutting instituting a new supply cut, this would help in supporting the prices of crude which were trading at $45.

The global market witnessed a new round of heightened panic after two of the World’s largest oil exporters (Saudi Arabia and Russia) failed to reach an agreement on the cut, but rather Saudi Arabia started an oil war but pumping in more oil while still slashing its price to attract buyers.

This singular act sent crude price tumbling further by 40 per cent to as low as $31 per barrel, its biggest daily drop since the Gulf war in 1991.

This led to further sell-offs on Wall Street with virtually all stocks indices closing in the red.

Back home in Nigeria Back home, Africa’s largest economy is already having a www.businessday.ng

hard time being that crude oil sales from where it gets over 85 per cent of its dollar liquidity, and over 70 per cent of its entire revenue, is trading below the $57 mark which it pegged its budget.

Falling oil prices do not align well for Nigeria as it would make the government handicapped in carrying out its planned expenditure and also put pressure on the Naira.

Already, the country has blown over $8 billion of its reserve as it continues to defend the naira from falling against the dollar.

It can also worsen the country’s trade balance and current account as oil constitutes a major chunk of the country’s export.

But it isn’t a 100 per cent bad for the Nigerian economy if some measures are enacted to help in reducing the impact of

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the falling oil price on the country, according to analysts at Investment and financial services firm, Investment One. Investment One, while addressing the investing public last week cited various opportunities that abound for investors in the wake of current economic reality.

The investment firm outlined four major strategies that the Central Bank can apply to cushion the outflows witnessed in the market by foreign investors.

This strategies the firm noted includes Increase interest rate for Foreign Portfolio Investors (OMO stop rates); placing more items on ban from accessing the official FX market; the use of the nation’s reserves to defend up to another devaluation trigger point of US$30billion; and lastly devaluing the currency to bring confidence to the market.

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Stock

Why Cost Averaging can be your best bet in a coronavirus-hit market SEGUN ADAMS

T

esting a river with both feet is never a good idea. But when stocks are down to their lowest in years, it is very hard to resist jumping on cheap valuation.

The stock market last week saw record declines with investors losing close to N2 trillion in four trading days, that has turned out to be the worst on NSE in four years.

The spread of the Coronavirus and the massive drop in oil price perplexed the market as the price of stocks like MTN Nigeria, Guaranty Trust Bank and Nestle, among others fell to new lows that seem to signal significant capital gains whenever positive news on the Coronavirus or oil market is announced.

With the direction of the market still uncertain despite Friday’s marginal gain, naira-cost averaging would be a great strategy to help minimize risks when taking a position in cheap but fundamentally sound stocks.

Cost averaging simply means buying a fixed amount of shares periodically, thus reduces the effect of swing in price over time.

The advantage of naira-cost averaging (typically referred to as dollar-cost-

averaging or constant dollar plan) is that it prevents investors from jumping into the market at a wrong time.

How naira cost averaging works Let’s assume you are an investor that wants to invest in company Anticorona which a very erratic stock price.

Let assume you want to invest naira average N100,000 by investing the same fixed amount for the next five months.

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The chart below shows the stock price in each of those five months and how many units you were able to purchase based on that price.

From the table, you can see that spending N20,000 on anti corona stock regardless of the price will result in total units of 12,912.698 and an average share price for you at the end of five months.

Without cost averaging, you would have

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spent N100,000 to buy 10,000 units at N10 per share which is lower than using cost averaging by almost 3,000 units.

While the price has fallen to as low as N6, the 12,912.698 units will be worth N77,476.188 but when you compare the return on 10,000 units (without averaging) you would get a portfolio value of N60,000.

Both positions have yielded a loss (given our pessimist example of consistently falling share price) but cost averaging clearly preserves value better, with the investment N17,476 higher than just jumping into the market.

For investors seeking to take advantage of a currently low price on the Nigerian Stock Exchange (NSE), this strategy could result in even higher return when current pressure on stock on the back of oil decline and the Coronavirus ease.

Some stocks have delivered good results in 2019 despite challenging operating environment while others have very attractive dividend yield. This means investors would be looking to position in those stocks as soon as positive developments emerge.

While cost averaging might sound exciting, it is only useful when there is high volatility in the market especially in a downward spiralling one.

Investors can find themselves with a lower return than they invested at once if the market is steadily gaining over a period.

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Market

Coronomics: 5 charts showing the impact of coronavirus on markets and commodities Natural gas prices year-to-date trend (US$/mmbtu)

OLUFIKAYO OWOEYE Nigeria’s All-share Index year-to-date trend

Copper futures 1-yr trend (US$/MT)

Brent crude oil year-to-date trend (US$/barrel)

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Monday 16 March 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

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total turnover of 3.964 billion shares worth N43.703 billion in 26,054 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.814 billion shares valued at N26.008 billion that exchanged hands last week in 23,494 deals. The Financial Services industry (measured by volume) led the activity chart with 3.547 billion shares valued at N33.623 billion traded in 19,150 deals; thus contributing 89.48% and 76.94% to the total equity turnover volume and value respectively.

The Consumer Goods fol-

lowed with 91.135 million shares worth N6.007 billion in 2,341 deals. The third place was Conglomerates industry, with a turnover of 88.406 million shares worth N132.508 million in 679 deals. Trading in the Top Three Equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc (measured by volume) accounted for 2.448 billion shares worth N29.563 billion in 12,301 deals, contributing 61.75% and 67.64% to the total equity turnover volume and value respectively.

The NSE All-Share Index and Market Capitalization both depreciated by 13.49% to close the week at 22,733.35 and N11.847

trillion respectively.

Two equities appreciated in price during the week, lower than thirty-six equities in the previous

week. Sixty- four equities depreciated in price, higher than twenty- five equities in the previous week, while Ninety- seven equi-

ties remained unchanged, lower than one hundred and two (102) equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week

In the Ahead first off-cycle monetary global financial crisis of 2008, the Bank Week (Monday, 8th policy April –meeting Friday,since 12ththe April, 2019)

Market halts bear-run as global stocks see relief

of England (BOE) followed the U.S. Fed’s recent action by unanimously electing to reduce its benchmark rate by 50bps to 0.25%, from 0.75%. The move was aimed at limiting the negative impact of the coronavirus on economic activities.

Also, on the fiscal side, a GBP30 billion (USD39 billion) economic stimulus program was unveiled to boost banking loans and provide cheap consumer credit in a bid to reduce the hardship caused thus far. In the week ahead there would be several risks to the economic growth outlook, however, a combination of the preemptive fiscal and monetary intervention should provide a needed breather in the short-to-medium term.

For the first quarter 2020, the uncertainty caused by the coronavirus outbreak has cast a shadow on the Euro area economy. Further out into the year, export dependent countries among member states are likely to contract, as the global trade outlook remains benign.

Nigeria Economy Against the unrelenting naira asset sell-offs by foreign investors, capital flows into Nigeria’s economy tempered in Q4-19 by 32.4% q/q to USD3.80 billion, on account of global growth concerns, volatile crude oil prices, and an unimpressive domestic macro landscape. Specifically, Foreign Portfolio Investment (FPI), which constituted 49.5% of the total inflow, plunged by 37.8% q/q, following disappointing outturns across the board. However, Foreign Direct Investment (+24.5% q/q) surprised positively, recording the first growth in four quarters, following higher inflows into the equities market.

Over 2020, the bias is for capital inflows to remain tame, on account of a benign global growth outlook as the coronavirus continues to spread, and weaker domestic macros, as a decline in crude oil prices continue to spur fears of currency devaluation.

According to the Q4-19 foreign trade statistics report, the trade balance recorded the first deficit since Q3-16 and the largest in history, as imports ran ahead of exports. Specifically, exports fell by 9.8% q/q, driven by a moderation across both non-oil exports (-43.9% q/q) and oil exports (-3.2% q/q). We highlight the border closure in August 2019 as the key driver for the former.

On the other hand, the decline in oil exports was driven by lower crude oil production (-1.5% q/q) which masked the slight gain recorded in crude oil prices (+0.6% q/q). Elsewhere, higher increases recorded across non-oil (+57.9% q/q) and oil (+3.0% q/q) imports set the stage for a 49.3% q/q expansion in overall imports. Over 2020, we expect export earnings to moderate, as the risks to crude oil prices are firmly tilted to the downside. Elsewhere, given the recent devaluation fears, we believe the CBN will resume its FX management strategy by excluding more items from eligible non-oil imports, which portends a downside risk to overall imports www.businessday.ng

Nigerian stocks gained 0.17% Friday to post first gain in five trading sessions as stocks of big banks made a come-back after shedding heavy during the week.

UBA gained 9.8%, Zenith gained 9.7% and GTBank gained 5% to move the market.

FirstBank remained flat while Access Bank fell 7.7%.

Gain on the Lagos bourse comes as global stocks see reprieve with US Dow Jones index up 4.25%, S&P 500 up 3.59%, Nasdaq composite index up 4.58%, NYSE and S&P/TSK composite index up 3.42% and 3.9% respectively.

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Monday 16 March 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

EU to toughen cross-border coronavirus health checks

Tensions grow over moves by some member states to all but seal frontiers Michael Peel and Richard Milne

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russels is planning an emergency EU anticoronavirus package to toughen cross-border health checks and ease the movement of goods and people, as tensions grow over decisions by some member states to all but seal their frontiers.

The European Commission is drawing up the proposals after countries including Denmark, Poland and the Czech Republic ignored its calls for co-ordination and instead imposed blanket border closures to halt the spread of the virus.

German media outlets reported that Germany will close its borders with Austria, Switzerland and France from 8am on Monday.

The unilateral national shutdowns prompted a weekend of rolling frontier clampdowns in the Baltic states and stoked a backlash over the lack of co-operation and the risk that the radical measures would prove ineffective and cause serious economic damage.

Artis Pabriks, Latvia’s deputy prime minister and defence minister, said the Covid-19 pandemic had shown that the EU was “not fit and designed to react fast in times of crisis, either health, security or war”.

Marko Mihkelson, vice-chair of the Estonian parliament’s foreign affairs committee, said in a tweet: “EU member states are acting in

Danish borders were closed to control the spread of the coronavirus © John Randeris/EPA-EFE/Shutterstock

their national lockdowns without any visible coordination between each other. This is [a] serious stress test for the future of EU. Our citizens must see and feel real help and action from EU in dealing with [the] outbreak of Covid-19.”

Coronavirus business update How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces?

Stay briefed with our coronavirus newsletter.

Sign up here The proposed commission guidance, which is expected to be an-

nounced over the coming days, is an attempt to shift the response of the 27 EU countries towards improved medical screening and more targeted border controls, officials said.

Ursula von der Leyen, commission president, warned on Friday that general travel bans were “not seen as being the most effective by the World Health Organization” and would “disrupt people’s lives and business across the borders”.

The commission was still working on details of its plan on Sunday but a main priority was to improve capacity for triage of possible coro-

navirus symptoms through temperature checks and visual assessments at EU external and internal borders, officials said. Brussels and member states are also reviewing whether any additional frontier controls are needed at the external border of both the EU and the 26-country Schengen passport free travel zone, which includes several non-EU states.

“The whole point is really coordination,” said one EU official.

“We want to avoid new cases being brought in — and we also want to avoid exporting this to other parts

of the world.”

Italy has the second highest number of confirmed Covid-19 cases in the world after China. On Sunday Spain, Germany, France, Switzerland and the UK were all among the 10 most affected countries.

Brussels is preparing further measures to help deliveries of goods within the EU after reports in past days of disruption, including traffic queues of up to 80km at the Brenner Pass between Austria and Italy, once Vienna shut the frontier.

The tailbacks built up even though the closure made exceptions for through and goods traffic.

The commission is looking at measures to allow cross-border commuters and foreign employees in essential services to continue their work in other EU countries, in the face of frontier controls restricting access to non-nationals. One example is people from central and eastern European countries who work in Slovakia, which announced tight border restrictions on Thursday.

Brussels also wants to free up movement of coronavirus protection equipment around the EU after heavy criticism of export bans imposed in some countries.

Thierry Breton, the bloc’s internal market commissioner, on Sunday welcomed decisions by Germany and France to ease their national restrictions.

Mali violence escalates as peace accords crumble Growing tensions threaten to destabilise Africa’s wider Sahel region

Neil Munshi

T

he imam and the women, the elders and the youths, each spoke of violence and terror — all in a place where they had been promised there would be peace.

In a dusty room on the edge of town, Gao’s civil society leaders vented. A women’s activist mourned the many sons, brothers and fathers who had died. A youth leader lamented the explosion of armed and jihadi groups in northern Mali five years after peace accords with separatist rebels were supposed to have brought stability.

In recent weeks, several local leaders have been assassinated for co-operating with the UN and France, whose combined 20,000 troops are in the west African country to keep the peace and fight terrorists respectively. With the Malian government having little formal presence in Gao, “the form of the insecurity has changed: it used to be state symbols that were targeted, but now it’s the community leaders who are the victim”, a young man

said, declining to give his name for fear of reprisal.

A decades-long battle for independence by ethnically Tuareg separatists reached boiling point in 2012, when Tuareg rebels and jihadis captured northern Mali, a region twice the size of Germany. The jihadis swiftly took over, prompting a French intervention that beat back the insurgency and resulted in the 2015 peace accords between Tuareg rebel factions and the Malian government.

But with independent observers warning that only a fifth of the commitments made have been kept, the peace accords are crumbling. This threatens to further destabilise the western Sahel, a vast region that has attracted an influx of foreign fighters since the collapse of Isis in the Middle East.

“I think we will soon be in a situation where we are not implementing any more anything and the terrorists will gain again the space . . . and the government will withdraw,” said Mohamed Ould Mahmoud, spokesman for the CMA, one of the rebel groups that signed the agreement.

“I don’t think [the French] can any www.businessday.ng

more control anything, and [the UN stabilisation force] Minusma will just be a kind of witness to what’s going on . . . and maybe we will restart ourselves to claim independence.”

“It’s like the agreement has been put aside,” said Harouna Toure, spokesman for the Platform, the other Tuareg rebel signatory group.

“The primary consequence is what we are living now, a lack of government, health centres, schools . . . and insecurity.”

If the agreement fails, warned Ntole Kazadi, head of the Bamako office of the independent observer Carter Center, “the signatories could take up arms and go to Bamako or they could launch a new rebellion”.

Legislative elections planned for March 29 could exacerbate the situation. The government said it will only be able to hold polls in some northern areas because of insecurity. “We will never accept this, because the whole rebellion was completely about political issues and representation,” said Mr Mahmoud of CMA. Members of the UN Security Council have expressed frustration at the targeting of peacekeepers

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by jihadis, leaving the UN mission Minusma vulnerable to having its mandate pulled or limited. More than 200 peacekeepers have been killed. At a security council meeting last year, a Trump administration official suggested peacekeeping wasn’t the right approach to a region still in conflict.

“If the Security Council decides to limit [Minusma’s] scope, I think it would be [prudent] to make a risk assessment on the areas we’re reducing and ideally there would be others who would step in to fill the void,” said Lt Gen Dennis Gyllensporre, head of the peacekeeping force.

But there is little prospect for a replacement for Minusma. With almost 5,000 soldiers in Mali, France is overstretched, analysts say, and its European allies have shown little appetite for troops on the ground. Moreover, the US has discussed withdrawing from Africa altogether. The poorly-equipped Malian army — which has about 10,000 troops — has retreated to larger, more fortified camps after a series of attacks that left scores of soldiers dead. @Businessdayng

Many analysts believe that members of the rebel groups that signed the accord are still working with jihadis. They have deep family ties.

But a Minusma security official in Gao said it goes beyond that: “they aren’t just family — they’re the same people.”

For instance, CMA includes a group that was once closely tied to the al-Qaeda-linked Ansar Dine, a jihadist group that took over the north. “You can see in the areas controlled by the CMA, there are no real problems between the populations and the terrorists,” said another UN official. “Officially they are fighting the terrorist groups,” the official said.

“But in reality, they aren’t.”

All of this has increasingly left civilians at the mercy of the extremists.

Once Minusma secures a village, it leaves, only for the terrorist groups to roll in again. “It’s very, very difficult — [peacekeeping troops] can’t stay in all these localities, or stay in them at all times,” said a senior Minusma official in Gao. “So anything can happen. And everyone in Gao has a weapon — they say to protect themselves because [the Malian army] can’t protect them.”

Monday 16 March 2020

BUSINESS DAY

68

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

The week the world changed: how a markets wobble turned to mayhem Five days that brought the post-crisis bull run to an end — and left investors fearing what comes next

address fanned investors’ fears rather than allaying them.

Blaming a “foreign virus”, he banned all travel from Europe — and initially mistakenly stated it included imports of goods. US stocks dived as he spoke, sending the Dow Jones Industrial Average into a bear market for the first time since the financial crisis, and the S&P 500 index teetering on the brink of one.

Perhaps most unnervingly, even US Treasuries — the ultimate haven at times of market stress — were hit on Wednesday evening, unnerving many analysts and investors, and presaging what proved to be one of the most tumultuous days for

markets in history.

Thursday On Thursday, investor fear reached a peak. Asian markets collapsed as soon as they opened for trading. While the European Central Bank unveiled a series of stimulative measures, its efforts were overshadowed by ECB president Christine Lagarde saying that it was not the central bank’s job to keep eurozone government borrowing costs in line with each other.

Ms Lagarde subsequently scrambled to walk back her comments, but it still triggered the biggest ever one-day jump in Italian bond yields, and accelerated the European stock market rout triggered by president Trump’s comments the previous evening.

In the US, investors grew increasingly nervous about what they said was a “broken” Treasury market, with ballooning spreads between different types of US government debt hinting at serious issues in market plumbing. “Liquidity in the Treasury market was worse than any time in 2008,” said Gershon Distenfeld, co-head of fixed income at AllianceBernstein.

Alarmed, the Federal Reserve unveiled a multitrillion dollar operations to soothe the stresses.

But after a brief rally, the US stock market sank like a stone, eventually suffering its biggest one-day fall since the 1987 “Black Monday” crash and formally ending the postcrisis bull market.

Friday, down from roughly $64 a barrel when the company listed its shares.

This is Saudi Aramco’s first earnings announcement since its record $29.4bn offering that valued the company at $1.7tn.

In the lead-up to the company’s stock market offering last year, Saudi Aramco tried to present itself to potential investors as no different to any other international energy major. But the latest measures by the kingdom and the impact on Saudi Aramco’s operations and inner workings emphasise the extent to which it is an arm of the state, which owns 98 per cent of the company.

Ahead of last week’s Opec meeting, Saudi Arabia had pushed for a steep cut in production in response to a collapse in demand from the global spread of coronavirus. But its plan was opposed by Russia, its ally in a three-year oil pact.

In turn, the energy ministry instructed Saudi Aramco to slash prices for its crude and issued a

directive to the company to supply the market with 12.3m b/d.

That is 2.6m b/d above recent production levels and implies that oil from storage will be used to flood the market. It was also told to raise its maximum production capacity.

“The recent Covid-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape,” said Amin Nasser, Saudi Aramco’s chief executive.

“We will ensure that we maintain the strength of our operations and our finances.”

While the company might be able to offset some earnings losses amid an oil crash with higher volumes, Saudi Aramco — like its peers in the sector — is likely to suffer a massive financial hit.

Shareholder payouts are now in focus. Saudi Aramco said it paid a dividend of $73.2bn in 2019, and still intended to declare a cash dividend of $75bn in 2020 as it had pledged ahead of its stock market listing.

Robin Wigglesworth

T

he coronavirus outbreak has been shaking up markets for the past month. But in the past five trading days, those wobbles turned into chaos.

“This was a week where so much in the world changed,” said Kristina Hooper, chief global markets strategist at Invesco. “It was almost like a switch that was flicked . . . It’s like a collage with elements of lots of different crises.”

Monday Markets were already on edge, but Saudi Arabia’s decision to start an all-out oil price war with Russia set up a week that will live long in the memories of traders, investors and policymakers desperately scrambling to shore up confidence.

Crude oil immediately tumbled by the most in almost three decades when markets opened on Monday. Energy companies and oil-exporting countries were hammered — ExxonMobil slid more than 14 per cent to its lowest since 1999 — but the moves were so violent, their effects rippled through the financial system.

Traders said the sell-off had been fairly orderly up to that point, but on Monday stresses first started to appear in a number of markets.

Tuesday The next day brought some respite, with some investors betting that the ferocity of Monday’s global market rout — the biggest

The week began with an all-out surprise war on oil price © AP

one-day slide since the financial crisis — was overdone. Even oil prices rebounded.

“This is not 2008,” BlackRock, the world’s biggest asset manager, argued in a report on Tuesday.

“The economy is on more solid footing and, importantly, the financial system is much more robust today than going into the crisis of 2008. We don’t see this as an expansion-ending event — provided that a pre-emptive and co-ordinated policy response is delivered.”

President Donald Trump on Tuesday also fuelled hopes of robust action, promising to unveil a “very dramatic” series of measures to cushion the economic impact.

Unfortunately, these hopes were soon dashed.

Wednesday Markets initially continued to cautiously rally on Wednesday, with an expansionary UK budget release and an emergency half percentage-point interest rate cut from the Bank of England nurturing hopes that policymakers would act aggressively to buttress economic growth.

But nervousness continued to simmer, not helped by Goldman Sachs predicting that stock markets would likely slide further. Then the World Health Organisation officially labelled the coronavirus a global pandemic and president Trump’s televised

Saudi Aramco slashes spending as oil price war rages

Capital expenditure expected to fall 23% at state energy company Anjli Raval

S

audi Aramco will cut capital spending as it prepares for a prolonged period of lower crude prices after its largest shareholder launched an oil price war.

Saudi Arabia’s decision to flood the market with additional supplies after Russia declined to participate in co-ordinated output cuts will have an outsized effect on the kingdom’s energy company.

Saudi Aramco, which has seen its shares fall 11 per cent below its float price of SR32 in December, said on Sunday that it would cut spending by as much as 23 per cent in response to falling oil prices.

Yet, as part of the oil price war, Saudi Aramco has been told to increase its maximum production capacity to 13m barrels a day, up from the current level of 12m b/d, which would require billions of dollars to overhaul how the company manages, processes and exports its oil.

As part of the oil price war, Saudi Aramco has been told to increase its maximum production capacity to 13m barrels a day © Reuters

It is still unclear how the company will be able to cut spending and raise production capacity from its current output levels and whether the government will allocate additional funds for this expansion.

Capital expenditure was $32.8bn in 2019 and it is expected to fall to $25bn-$30bn in 2020, Saudi Aramco said. “Capital expenditure for 2021 and beyond is currently under review,” it added. www.businessday.ng

The spending cut came after Saudi Aramco took a big financial hit in 2019. Net income was down 21 per cent year on year to $88.2bn, it said, after crude prices fell due to supplies from the US and elsewhere outpaced cuts from Opec and its allies. It also suffered from lower chemicals and refining margins.

After one of the largest oneday falls on Monday, Brent crude had dropped to $34 a barrel by

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@Businessdayng

Monday 16 March 2020

BUSINESS DAY

FT

69

ANALYSIS

Ineos: why Jim Ratcliffe is mixing petrochemicals and sports Amid charges of greenwashing from activists, the private company is investing in football, cycling and other ventures Murad Ahmed and Michael Pooler

T

he adulation was real.

Thousands of OGC Nice football fans in full-throated song, chanting the name of the new club owner who they hope will turn their side from a midsized French Ligue 1 team into a European giant capable of challenging for the Champions League.

The object of this outpouring at the Allianz Riviera stadium was Jim Ratcliffe: a 67-year-old publicity-shy Briton who has made his fortune, estimated to be £18bn, from petrochemicals. October’s raucous reception — ahead of Nice’s match against Qatar-backed Paris Saint-Germain — came just weeks after Ineos, his industrial group, completed its €110m takeover of the club.

“You’re stood on the pitch and you hear this noise . . . it’s pretty special,” says Bob Ratcliffe, Sir Jim’s brother and chief executive of Ineos Football. “10,000 fans chanting [his] name. You realise you’ve bought a pretty significant sporting asset.”

Nice is not the only asset bought over the past three years. Ineos also owns the Tour de Francewinning cycling group formerly known as Team Sky; funds the UK’s America’s Cup sailing team led by Olympic sailing champion Ben Ainslie; owns Swiss football club Lausanne-Sport ; is lead sponsor of the Mercedes Formula One team; and funded the successful attempt by Kenyan Eliud Kipchoge to run a marathon in less than two hours. In total the company has spent around £400m on its sporting enterprises. And it could spend more yet.

These endeavours bear little relation to its core business: a privately owned collection of refineries, offshore gasfields and chemical works with $60bn in turnover that employ 22,000 people. Ineos is one of the biggest suppliers of the basic building blocks for ev-

eryday products such as plastics, paint and medicines. Jim Ratcliffe owns 60 per cent of the company, the remainder shared between co-founders Andy Currie and John Reece.

Other businesses have spent more on a portfolio of teams, but few have gathered such a wide array of sporting assets and in such a short period of time.

Those involved at Ineos suggest they are working towards a new model for sport: a constellation of professional athletes, coaches and experts who assist one another to win the world’s toughest contests.

This strategy is being watched closely across elite competitions.

“There is a common theme in what they are trying to do in terms of performance and technology and linking it to the Ineos brand,” says Tim Crow, an independent sports marketing adviser. “The scale of what it is doing is pretty spectacular.”

But environmental activists, critical of the company’s core business, believe the Ineos boss may have an ulterior motive.

They argue that he is attempting to use sport to “greenwash” his company’s image and divert attention from its environmental impact. An operator of inherently polluting industries, Ineos has drawn fire from campaigners for its ecological impact and support of shale gas extraction via fracking in the UK. In 2018 one of its sites in England received the lowest possible compliance score — though six others were given A or B ratings.

“He uses sports to greenwash his fracking [and] dirty plastics business,” says Andy Gheorghiu, a policy adviser at Food & Water Europe, an NGO. “[It] has worked . . . A lot of people know Ineos but only because of their sports investments and we have to tell them what this company is really about.”

Campaigners allege that this approach mirrors the “sportswashing” strategy that human rights www.businessday.ng

groups accuse countries such as Qatar, which is hosting the 2022 football World Cup, of employing.

Ineos rejects the charges, saying it is a responsible environmental actor and that it achieved its “highest safety performance ever last year despite acquiring more businesses whose procedures and rules on safety and standards often differ”.

The group insists its investments are about “a love of sport”. It argues that, if anything, the sports investments draw unwanted attention to a company that executives once joked was “the biggest company you’ve never heard of”. The Ineos logo now regularly appears on television screens, splashed across the jerseys of famous athletes.

Sir Jim declined to be interviewed for this article, but those close to him say the spending is best seen as the passion project of someone who became rich late in life. A fan of Manchester United, he is also a keen marathon runner, skier, cyclist, mountaineer and sailor.

“Why is Ineos involved in sports?” asks Bob Ratcliffe. “Because Ineos has been a very successful company, the guys that own it are interested in sport and it’s a way of spending dividends . . . I think to go in the car when you’re on the Tour de France is amazing. To frighten yourself to death when you’re on a boat with Ben Ainslie, it’s pretty enjoyable . . . [Ineos’s owners are] not opera guys.”

A decade ago Sir Jim came close to losing everything. A chemical engineering graduate who founded Ineos in 1998, he was late to entrepreneurialism but knew how to rapidly expand his business. He used expensive debt such as junk bonds to buy unwanted chemical production assets from companies such as ICI, BP and BASF. More recently Ineos expanded into North Sea oil and gasfields to become an integrated energy-to-chemicals conglomerate.

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But in 2009, banks and hedge funds had set their sights on breaking Ineos up. It was still generating cash and had not missed any interest payments, but the sharp fall in oil prices after the global financial crisis meant the group was technically in breach of rules set by lenders. It survived by renegotiating its $8.5bn debt pile, but ended up paying hundreds of millions of pounds in extra interest charges and fees — as a result Ineos reduced its reliance on borrowing.

Making waves: Ineos in sport £60bn In annual turnover for the Ineos group, which makes everything from plastics to paints and medicines 60% Owned by Jim Ratcliffe, who cofounded the petrochemical group in 1998 £400m Spent by Ineos on sports teams from football to cycling and F1 in the past three years Over time Sir Jim has established a reputation for ruthlessness. “He’s a hard negotiator,” says one investment banker who has worked with him. “You want to do business with him, but you also feel a little bit nervous when they [Ineos] are involved because of how competitive and aggressive they are.”

His relative anonymity was blown in 2010 when Ineos relocated its headquarters to Switzerland after the then Labour government rejected a request to defer a £350m VAT bill after sales were hit in the recession. The move saved the group — which has since returned to the UK — £400m in tax over five years but angered unions.

The conglomerate is spending €3bn to build new plants at its vast petrochemicals complex in Antwerp which it says will reduce emissions and replace imported raw materials for its chemical plants.

“Sponsoring sports doesn’t do anything for his chemicals @Businessdayng

business,” says Graham Copley, founding partner at C-MACC an industry research firm. “The average punter doesn’t know what Ineos does, and it doesn’t affect his sales as a chemicals producer.

[But] it is throwing an awful lot of positive PR at the company.”

Ineos’s first move in sport was a disaster. Just months after buying Lausanne-Sport in 2017, the club was relegated from the top tier of Swiss football.

“We now look back and say there was a certain naivety about our approach,” says Bob Ratcliffe, a former finance and insurance executive. “We made some mistakes but we made them at a single-digit level in terms of buying headline players, overpaying, overcompensating and not finding the right people to give us good advice.”

Ineos changed tack. Sir Jim scoured Europe, searching for another team that could more regularly compete in the Champions League — the continent’s premier tournament — while adopting principles that had served well in its chemicals business. Behind the privately owned group’s success is a relentless focus on keeping costs down.

Ineos executives toured the training grounds of English Premier League club Chelsea, but balked after owner Roman Abramovich demanded a price in excess of £2bn. A bid was considered for Newcastle United — the subject now of a separate £350m takeover offer from a consortium that includes Saudi Arabia’s sovereign wealth fund — but rejected as uneconomical.

“How do you get to a £2bn plus valuation for [a club in] a league with total revenue of £5bn and total net operating profit before tax of £500m,” says Mr Ratcliffe. “How does that ever reconcile itself?”

Believing the smart money looks beyond the overpriced Premier League, Ineos settled on Nice. Its executives think that

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Monday 16 March 2020

BUSINESS DAY

FT

NATIONAL NEWS

How coronavirus became a corporate credit run Central bankers are going to have to keep the money taps on Rana Foroohar

I

t was only hours after US president Donald Trump told us, in an address from the Oval Office last week, “this is not a financial crisis”, when markets began acting very much as though it was.

Investors dumped assets resulting in the worst trading day since 1987. Bond markets seized up, putting pressure on banks, and the US Federal Reserve swooped in with yet more emergency funding for short-term borrowing markets (known as repurchasing or repo markets), a tactic which suggests we may see quantitative easing to infinity — and beyond.

So when exactly does a coronavirus-triggered corporate market meltdown officially turn into a full-blown financial crisis? That’s a question many market participants, and banks in particular, must be asking themselves.

If there has been any silver lining to the current market shock and the recession that is likely to follow, it is that it hasn’t been a 2008-style banking crisis — of the kind that jumps like a virus between highly leveraged global financial institutions and causes them to bleed dry.

The Dodd-Frank and Basel III regulations that followed in the wake of the subprime crisis were designed to mitigate that risk.

Banks, required to hold larger quantities of high-quality assets, were made to do less trading, and more traditional lending.

That worked, up to a point.

The virus-induced brake on consumer activity and labour markets, which has in turn triggered a corporate credit run, is what caused the market panic

this time, rather than risky trading on the part of global banks.

Today, it is not Wall Street financial institutions, but companies in a variety of industries that are stressed, as a simultaneous supply and demand shock means they need to tap credit lines to pay their bills. With flights halted, supply chains disrupted and the consumer economy gutted, companies are trying to stockpile cash, whether they need it immediately or not.

It’s one thing for the aircraft manufacturer Boeing to draw down its entire $13.8bn credit line. It’s another for multiple big corporations to draw theirs at the same time. Still, as a recent Credit Suisse report pointed out, “we now have a global banking system where all major banks have to pre-fund 30-day outflows” with high-quality liquid asset

portfolios. This is one important reason why these corporate funding stresses haven’t caused a real time banking crisis in the way that the 2008 subprime crisis did. Another reason is that the Fed is backstopping the banking system with its repo operations, as banks exchange Treasury bills for cash.

All of this underscores a fundamental truth — regulators usually tend to fight the last war.

The dollar deposits that corporations are currently drawing down are one of the highestquality types of funding for banks, the same kind that the Basel III rules stipulate they should keep on hand.

Nobody assumed that a pandemic would result in huge credit drawdowns by many companies all at once. Losing these deposits so quickly threatens the liquidity

profile and regulatory compliance of banks themselves. And that is before we start to see the spike in corporate downgrades and defaults that will create even more funding pressure.

The fact is that the banking system has already been pulled into the corporate credit crisis that many people predicted would be the cause of the next big market downturn. It’s all too easy to see how the problems of individual companies — technology firms, retailers, airlines and insurance companies — could be passed to individual banks and then to countrywide banking systems. Ultimately, they could spread throughout the global financial system, leaving central bankers once again the lender of last resort, standing between us and another global financial crisis.

That is pretty much what is already happening, and we haven’t even seen the next phase of falling dominoes — the meltdown of passive and algorithmic investing, the unwinding of exchange traded funds, and the sale of even the highest quality assets by people who are desperate to raise cash in the midst of a liquidity crisis. All this means that central bankers will have to keep the money taps on, and probably increase the variety of assets that they are buying or backstopping.

We shouldn’t mistake all that easy money for a cure. As Credit Suisse managing director Zoltan Pozsar points out, “QE isn’t a vaccine for this outbreak.” Even if the Fed can offset pressures within the banking system, that doesn’t replace the loss of private-sector spending. What’s needed is something more akin to a wartime fiscal stimulus programme, in which the government replaces lost consumer demand, ideally with a major public health spending programme. We might start by bolstering the number of available hospital beds in the US, which is woefully behind other developed countries. Sadly, the only wartime reference in Mr Trump’s ill-advised speech was to the US “fighting a foreign virus”.

Covid-19 is, of course, an equal opportunity pandemic.

Being asymptomatic doesn’t mean you aren’t contagious.

The corporate crisis roiling the markets has already infected the banking system.

Whether unlimited central bank injections of liquidity are enough to keep it healthy over the next few weeks and months, as both the pandemic and the market crisis plays out, remains to be seen.

Ineos: why Jim Ratcliffe is mixing petrochemicals and sports Continued from page 69 relatively little spending on players can push the club — sixth in the league before matches were suspended on Friday due to coronavirus — towards qualifying for one of the country’s three Champions League places.

In contrast to many big corporations, Ineos runs a lean central office, staffed by just 40 people.

Mirroring the structure in the group’s chemicals arm, its sports teams are considered part of this “federal” network of businesses, each controlled by powerful managers. But Sir Jim is hands-on, and meets each team leader every six weeks to grill them on progress.

Teams are encouraged to help one another and share expertise.

Meteorologists from the sailing team informed the decision of

when Mr Kipchoge should start his attempt on the sub-two hour marathon. The cycling team is being advised by the Mercedes F1 group on how to improve aerodynamics, while some cyclists have trained at Nice’s facilities.

“Every company has its CEO and leadership team, but they run their business fairly independently,” says David Brailsford, principal at Team Ineos cycling.

“But if there’s something that you feel like you’re leading in or something that you’re learning, you’re expected to share that across the other companies,” he says. “That’s the model he’s promoting with us in sport.”

In football, Mr Ratcliffe says Ineos will evaluate bids for other European teams in the future.

This could allow it to replicate the multi-club ownership model www.businessday.ng

deployed by the likes of Red Bull Salzburg in Austria, which also has heavy influence over the running of RB Leipzig in Germany, and City Football Group, which controls Manchester City alongside a network of sister clubs worldwide.

The concept is that all football clubs in the network benefit from shared scouting networks, data analysis teams and coaches. But at Ineos, each club could get an extra edge from experts in different sporting disciplines, such as nutritionists, physiotherapists and other technical experts.

Not everybody is convinced.

“Successful businessmen — always men — usually believe that they can manage a football business better than the managers who came before them,” says Stefan Szymanski, professor of sport

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management at the University of Michigan.

“History shows that this belief is almost always false. The problem is that the secret of a profitable business is typically the discovery of a mechanism to isolate it from the forces of competition — but this formula does not extend to football, where intense competition is inescapable.”

There are risks beyond losing matches. Ineos took over the road cycling team only after the broadcaster Sky announced in December 2018 it would stop backing it amid allegations that it manipulated medical rules to allow riders to use drugs within the bounds of regulations.

Ineos has stepped in to fund it despite fierce criticism from UK parliamentarians and clean sport advocates about the team’s @Businessdayng

approach to anti-doping procedures.

Sir David — who has faced criticism from anti-doping and cycling officials for his leadership of the team since its inception in 2009 — says Ineos has drawn a “line in the sand” on past controversies, but added: “What comes under our time with Ineos and under our watch, that is very much something we discuss and look at.”

The company insists there are no financial risks. Ineos does not expect to make money from sport.

People close to him say Sir Jim is chasing emotional returns over financial ones. It is a luxury that few sporting outfits can afford.

The only “risk is you don’t achieve your objectives”, says Mr Ratcliffe, the billionaire’s brother.

“And [that] we talk about it more than we deliver.”

Monday 16 March 2020

BUSINESS DAY

71

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 191,944.22 5.40 -7.69 436 20,770,585 UNITED BANK FOR AFRICA PLC 208,616.47 6.15 9.82 560 73,690,690 370,478.63 11.90 9.68 1,497 161,144,377 ZENITH BANK PLC 2,493 255,605,652 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 143,581.17 4.00 -3.75 579 120,089,184 579 120,089,184 3,072 375,694,836 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 1,897,040.62 93.20 - 162 654,887 162 654,887 162 654,887 BUILDING MATERIALS DANGOTE CEMENT PLC 2,607,197.63 153.00 - 65 657,237 LAFARGE AFRICA PLC. 171,548.02 10.65 -0.47 133 7,148,016 198 7,805,253 198 7,805,253 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 320,408.06 544.50 -10.00 4 1,527,022 4 1,527,022 4 1,527,022 3,436 385,681,998 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,538.46 3.20 - 2 5,258 2 5,258 2 5,258 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 2 5,258 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 57,234.60 60.00 8.50 22 277,422 40,450.00 40.45 - 7 254,064 PRESCO PLC 29 531,486 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,650.00 0.55 - 4 63,006 4 63,006 33 594,492 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 28,453.59 0.70 -1.41 93 23,020,421 U A C N PLC. 21,609.72 7.50 - 48 325,407 141 23,345,828 141 23,345,828

BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 26,664.00 20.20 - 21 319,849 ROADS NIG PLC. 165.00 6.60 - 0 0 21 319,849 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,468.48 0.95 3.26 17 359,100 17 359,100 38 678,949 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,107.01 0.78 - 0 0 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 18 220,221 INTERNATIONAL BREWERIES PLC. 154,456.89 5.75 -9.45 13 464,561 NIGERIAN BREW. PLC. 223,913.26 28.00 -5.72 76 27,938,298 107 28,623,080 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 121,800.00 10.15 4.10 61 992,457 FLOUR MILLS NIG. PLC. 87,748.12 21.40 8.08 100 3,484,361 HONEYWELL FLOUR MILL PLC 6,582.06 0.83 - 11 378,498 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 25,169.66 9.50 - 13 100,194 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 185 4,955,510 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 9,297.10 4.95 -10.00 45 500,477 NESTLE NIGERIA PLC. 725,518.27 915.30 - 243 2,520,268 288 3,020,745 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,015.88 4.01 -5.24 23 366,539 23 366,539 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 14,889.29 3.75 - 23 111,743 UNILEVER NIGERIA PLC. 66,929.31 11.65 - 32 103,386 55 215,129 658 37,181,003 BANKING ECOBANK TRANSNATIONAL INCORPORATED 84,407.94 4.60 4.55 60 756,616 FIDELITY BANK PLC 48,677.66 1.68 9.80 68 12,990,642 GUARANTY TRUST BANK PLC. 559,192.41 19.00 4.97 1,132 162,148,655 JAIZ BANK PLC 12,669.63 0.43 -2.27 29 1,153,231 STERLING BANK PLC. 31,669.46 1.10 -4.35 49 7,223,368 UNION BANK NIG.PLC. 174,724.52 6.00 - 18 183,246 UNITY BANK PLC 4,675.74 0.40 -6.98 12 1,081,099 17,358.51 0.45 -2.17 43 1,786,656 WEMA BANK PLC. 1,411 187,323,513 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 8,271.05 0.73 8.96 22 1,451,886 AXAMANSARD INSURANCE PLC 17,325.00 1.65 9.27 22 2,848,603 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 1 86 CORNERSTONE INSURANCE PLC 7,806.64 0.53 8.16 4 365,781 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 50,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,464.69 0.20 - 12 3,438,489 LAW UNION AND ROCK INS. PLC. 4,296.33 1.00 - 0 0 LINKAGE ASSURANCE PLC 3,200.00 0.40 - 2 132,425 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 1 5,000 NEM INSURANCE PLC 7,603.92 1.44 -10.00 14 717,247 NIGER INSURANCE PLC 1,547.90 0.20 - 1 5,396 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 2 500,000 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 10,000 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 50,000 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 6,477.75 0.27 -7.41 47 23,801,361 131 33,376,274 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 1,943.64 0.85 - 2 3,000 2 3,000

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,671.82 1.36 - 0 0 2,265.95 0.20 - 0 0 RESORT SAVINGS & LOANS PLC UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 6,480.00 3.24 -10.00 63 2,795,211 29,409.32 5.00 1.01 5 600,000 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 3 3,000 FCMB GROUP PLC. 30,892.23 1.56 4.00 192 13,019,665 1,131.98 0.22 - 0 0 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 307,795.54 29.30 0.51 130 5,504,940 12,000.00 2.00 5.26 130 6,227,143 UNITED CAPITAL PLC 523 28,149,959 2,067 248,852,746 HEALTHCARE PROVIDERS EKOCORP PLC. 2,742.30 5.50 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 1 1,324 1 1,324 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,111.58 2.45 - 2 1,000 4,125.77 3.45 - 31 348,478 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,709.26 2.15 - 4 80,003 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 759.66 0.40 - 3 3,220 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 40 432,701 41 434,025 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 1 30,000 1 30,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,088.46 0.37 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 237.60 2.20 - 0 0 NCR (NIGERIA) PLC. TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 986.17 0.21 4.76 17 12,557,978 10,962.00 2.61 - 2 504 E-TRANZACT INTERNATIONAL PLC 19 12,558,482 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 3 283 3 283 23 12,588,765 BUILDING MATERIALS BERGER PAINTS PLC 1,767.92 6.10 - 3 2,064 BUA CEMENT PLC 1,195,411.70 35.30 - 3 440 CAP PLC 13,965.00 19.95 - 4 575 244.37 0.46 - 0 0 MEYER PLC. PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 10 3,079 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,043.13 1.16 - 6 402,400 6 402,400 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 2 1,100 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 1,100 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 10 1 10 19 406,589 CHEMICALS B.O.C. GASES PLC. 1,685.79 4.05 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 1 1,000 1 1,000 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 1 1,000 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 5 5,391,564 5 5,391,564 INTEGRATED OIL AND GAS SERVICES OANDO PLC 24,862.82 2.00 5.82 105 6,788,540 105 6,788,540 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 52,827.21 146.50 - 13 2,207 ARDOVA PLC 19,927.96 15.30 - 4 1,195 CONOIL PLC 10,131.70 14.60 - 17 35,988 ETERNA PLC. 2,634.37 2.02 - 7 62,493 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 3 364 TOTAL NIGERIA PLC. 36,328.84 107.00 - 4 1,208 48 103,455 158 12,283,559 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,779.06 3.00 - 2 53,000 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 2 53,000 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,058.01 0.99 -9.17 5 214,972 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 1 1,000 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 6 215,972 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 1 34 LEARN AFRICA PLC 771.45 1.00 - 1 10,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 388.27 0.90 - 3 10,550 5 20,584 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 497.31 0.30 - 1 3,995 1 3,995 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 1 111

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Company IN FOCUS

BUSINESS DAY Monday 16 March 2020 www.businessday.ng

GTBank’s planned switch to Holding Company seen unlocking more value for shareholders SEGUN ADAMS

T

he new decade might see Tier-1 lender Guaranty Trust Bank (GTBank) revert to a Holding Company structure, a move that could result in faster growth, better valuation and better returns for its shareholders.

The bank’s CEO Segun Agbaje during its 2019 full-year Investor Conference Call said GTBank was considering a U-turn on a decision made about ten years ago to shed all its subsidiaries and focus solely on banking, as current environment warrants more diversified business model for better value-creation.

“Everything we have seen in the last 2 to 3 years has told us that it’s time to have a bit of a re-think,” said Agbaje, whose tenure is expected to end around the middle of next year.

Agbaje said the rethink was informed by the fact that most banks (with focus solely on banking) were growing at a rate of 5-7 percent “which is not good enough while their valuation is not very encouraging,” he said.

However, other activities in the financial services industry like in the payments services and the pension fund administration space are lucrative, supporting lenders with a diversified stream of income, as the landscape has become more competitive in the last decade.

“As an organisation, with the approval of the board, it is time to consider a holding company structure,” Agbaje said. “...it is all subject to the approval of all the regulators concerned as well as shareholders.”

GTBank’s approach for a HoldCo structure in the new decade will entail the acquisition of companies within the Pension, Insurance, Asset Management, Payment Solutions and Financial Technology sectors, said Chapel Hill Denham in a recent report on the bank’s announcement.

According to the analysts, the HoldCo structure will allow the

current MD, to maintain his influence on overall performance which has improved since 2011 based on the ROAE measure.

To maximize value, Chapel Hill Denham said that the acquisition of “a tier 2 Pension Fund Administrator (those with over N400bn in assets under management, given we consider Stanbic IBTC Pensions as a tier 1 PFA) will be value accretive from scale and ROE perspectives as lower-tier PFAs have less attractive ROEs.” Chapel Hill also said it believed that insurance companies, particularly those with Life licenses will be value accretive, given the growth opportunities from annuities.

“We believe management’s efforts on strategic acquisitions should ensure GTB’s ROE stays above the 30 percent base it has consistently achieved in the past 3 years,” Chapel Hill Denham said.

Upon realisation, GTBank will join the likes of Stanbic IBTC Holdings, FBN Holdings and FCMB Group as lenders with HoldCo structures.

Company Financials GTBank grew its profit for 2019 full-year by 7 percent, reflective of an improvement in the bank’s asset quality and cost efficiency with cost of fund dropping to 2.4 percent in the year compared to 3.4 percent in 2018.

GTBank reported a gross earnings increase of 0.1 percent to N435.31bn while interest income was challenged by a low-interest environment although net interest income grew 4 percent to N231.36 billion in the year accruing to the bank’s financial report.

Last year, GTBank saw a net loans and advances growth of 19 percent to N1.5 trillion while total deposit of the bank rose 12 percent to N2.6 trillion in the year.

The lender’s retail strategy focused on innovative digital solutions served as a catalyst for consistent low-cost deposits drive and low cost of attracting fund in the year.

The bank reported a net interest margin of 9.28 percent compared to 9.23 percent and improvement in its cost-to-income ratio to 36.11 percent in 2019 from 37.09 percent in the previous year.

The bank’s liquidity position remained strong at 49.33 percent, “backed by robust Capital buffers with full IFRS 9 impact capital adequacy ratio of 22.5 percent, well above the regulatory minimum of 16 percent,” it said.

Amid a challenging market and intense competitive environment,

the Group was able to deliver Post Tax ROE of 31.2 percent, Post Tax ROA of 5.6 percent and Net Interest Margin of 9.3 percent.

Outlook for 2020 For 2020, GTBank said it expects profit before tax to grow to N235 billion, 1.42 percent more than it recorded for the year.

The lender plans to slow loan book growth to 13 percent after a surge of 19 percent last year.

Tightening economic conditions, with Nigeria, predicted to grow 2 percent in 2020 and the need to maintain asset quality, seems to have informed the bank’s projections for the year.

However, GTBank is optimistic of driving bad loan ratio to under 5 percent compared to 6.5 percent in 2019.

Analysts at Chapel Hill Denham say GTBank is well-positioned to deliver decent earnings in 2020

despite challenging economy.

They forecast profit growth of 3.0 percent noting the low-interestrate environment and revised bank charges which were lowered by the CBN late last year.

Chapel Hill Denham said asset quality of the bank is expected to remain strong despite risks of lower oil prices.

“We forecast GTB’s cost of risk and NPL ratio at 0.4 percent and 5.0 percent respectively vs. 0.3 percent and 6.5 percent in 2019,” the analysts said.

Market performance Shares of GTBank gained 5 percent Friday to N19 a unit following heavy sell-off last week that characterized trading in banking stocks as fears of the Coronavirus spread and record oil declines spooked investors.

The bank’s stock fell to the lowest in over a year, shedding over 30 percent last week.

Analysts say a dividend yield of 15.38 percent and an attractively low price of the bank’s stock could see investors gain big although there is yet no telling if the market has hit its bottom.

About the Company Guaranty Trust Bank plc is a foremost Financial Institution with business outlays spanning Anglophone and Francophone West Africa, East Africa and Europe.

The Bank presently has an Asset Base of over N3.287 trillion and employs over 10,000 professionals in Nigeria, Cote D’Ivoire, Gambia, Ghana, Liberia, Kenya, Rwanda, Uganda, Sierra Leone, Tanzania and the United Kingdom.

Guaranty Trust Bank Plc. provides commercial banking services to its customers. The Bank’s services include retail banking, granting of loans and advances, equipment leasing, corporate finance, money market activities, and allied services, as well as foreign exchange operations. The bank’s only subsidiary is involved in funds and portfolio management services.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.