Businessday 16 may 2018 by BusinessDay

news you can trust I **wednESDAY 16 may 2018 I vol. 15, no 55 I N300

Senate inflates 2018 budget by 6% to N9.1trn KEHINDE AKINTOLA & OWEDE AGBAJILEKE, Abuja; MICHEAL ANI & DIPO OLADEHINDE, Lagos

ix months after President Muhammadu Buhari presented a draft copy of the proposed 2018 budget to a joint session of the Na-

Largest ever federal budget

tional Assembly on November 7 last year estimated at N8.612 trillion; the Senate yesterday increased the budget by 6 percent to N9.12 trillion. BusinessDay investigation

shows that the Budget increase was the highest in six years since the 2012 increase of 6.2 percent by the legislative arm of government under the Goodluck Jonathan led admin-

istration. â&#x20AC;&#x153;It is not surprising that there was an increase of the budget, especially in light of the political cycle and recent increase in oil prices,â&#x20AC;? Rafiq Raji, Chief Econo-

mist at Macroafricantel. Oil prices have rallied some $78.6 per barrel as at Tuesday 15 May 2018, representing a 74.7 percent increase from the 2018 budget benchmark of $45 and a 67.2 percent increase from the $47 benchmark reversal that Continues on page 2

Senate inflates 2018 budget by 6%... Continued from page 1

for Statutory Transfer; N2.2 trillion for Debt Service; N199 billion for Sinking Fund for maturing loans; N3.5trillion for Recurrent (non- debt) Expenditure, while N2.9 trillion for development fund for Capital Expenditure. The report was laid in plenary by the Chairman, Senate Committee on Appropriations, Danjuma Goje, and comes six months after President Muhammadu Buhari presented the N8.612 trillion budget estimates to a joint session of the National Assembly.

was made. Bismarck Rewane, CEO at Lagos-based Financial Derivative Company said “A 6 percent increase in the budget is nothing compared to our GDP. So it is not significant, hence will make no impact.” The increase comes as the Senate received the longawaited report on the 2018 Appropriations Bill from its Committee on Appropriations on Tuesday. A breakdown of the proposal shows that the sum of N530 billion was earmarked

BusinessDay trend watch reveals that the National Assembly often increases the budget estimates given by the executive. For example, in an election year in 2011, data compiled by BusinessDay shows that the budget recorded a 17.8percent increase to N4.9 trillion from N4.2 trillion submitted by the executive. In 2013 under former president Goodluck Jonathan administration, the senate increased the budget by 1.4 percent to N4.99 trillion from N 4.92 trillion submitted. In an election year 2015, Continues on page 39

L-R: Chuka Mordi, CEO, CBO Capital; Uzoma Dozie, CEO, Diamond Bank; Iyinoluwa Aboyeji, co-founder, Flutterwave, and Wale Olokodana, director, enterprise commercial, Microsoft Nigeria, Pic by Pius Okeosisi at the Diamond Bank Techfest in Lagos, yesterday.

BUSINESS DAY

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FG oils wheel of patronage with crude contracts to 32 domestic firms W

As inflation continues slide, all eyes on next MPC meeting

…Headline figure now 1.52% below MPR onyinye nwachukwu & DIPO OLADEHINDE

STEPHEN ONYEKWELU & DIPO OLADEHINDE

he Nigerian National Petroleum Corporation (NNPC), Tuesday awarded 50 companies with contracts to buy Nigerian crude, with more than half being firms indigenous to Nigeria, spurring speculations it’s meant to win political points in view of 2019 general elections. Of the 50 companies, 32 were local companies, doubling the number of awards to Nigerian firms compared to 2017, foreign and Nigerian trading sources told Reuters. The NNPC also awarded contracts to supply crude to 12 governments, although it was not clear how many of the deals would be handled by the companies already on the list of awards. NNPC awards the oil purchase contracts annually, but the deals this year were for two years not one year. Analysts say this is partly because 2019 is an election year. “It is part of the Nigerian content drive. What the Nigerian government is trying to do particularly from the exploration down to crude trading is to get more Nigerian companies involved in the system,” Luqman Agboola, head of energy and infrastructure at Sofidam Capital said in a phone interview with BusinessDay. “Prior to this time, from 2011,

crude marketing arm was dominated by foreign companies, so what the government is doing now is to increase the amount of Nigerian companies participating in the field,” Agboola explained. The move by the Federal Government (FG) foreshadows the political atmosphere. Astute businesspersons in Nigerian have learnt how to navigate

the political land mines. And to stay relevant in business “you need to be politically correct” Agboola said. In January, 2018, 254 firms bided to lift Nigeria’s crude oil in the 2018/2019. At the bid event, Mele Kyari, the then group general manager, crude oil marketing division of NNPC outlined some of the conditions potential off-takers under

the 2018/2019 crude term contract were expected meet. These included a minimum annual turnover of $500 million for 2016 and net worth of $250 million for 2016. “I wish to remind the general public that the Crude Oil Term Contract is not a Procurement Contract, but a process of selecting

ith Nigeria recording its lowest inflationary rate in 26 months at 12.48 percent, the pendulum has now swung to the Monetary Policy Committee (MPC) of the Central Bank Nigeria which is scheduled to meet less than 7 days from now. The new inflation reports has set ball rolling for the next MPC meeting scheduled for the

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Inside Nigeria’s fertile deserts, cultivated under seige BusinessDay’s Investigative trip to Borno & Yobe reveals how Boko Haram has crippled the economy; farming, trading, in the Northeast P. 20 & 21

L-R: UK Eke, GMD, FBN Holdings plc; Oba Otudeko, group chairman, FBN Holdings plc; Adesola Adeduntan, MD/CEO, First Bank of Nigeria Limited; Bello Maccido, chairman, FBNQuest Merchant Bank Limited, and Kayode Akinkugbe, MD/CEO, FBNQuest Merchant Bank Limited, at the sixth annual general meeting of FBN Holdings plc in Lagos, yesterday. Pic by Pius Okeosisi

Investors remain optimistic about the Nigerian economy – Temi Popoola, Renaissance Capital CEO P. A10

What the new CAMA bill passed by Senate means for businesses HOPE MOSES-ASHIKE, ENDURANCE OKAFOR, BUNMI BAILEY, Lagos & Owede agbajilaka, Abuja

igeria may begin to witness increased investments, revenue generation and job creation as the Senate on Tues-

… Analysts see downside in one person running a company day, removed the regulatory bottlenecks for opening businesses, with the passage of the Companies and Allied Matters Act (CAMA). The repeal and re-enactment of the Companies and Allied

Matters Act (CAMA) passed by the 8th Senate yesterday, 15 May, 2018, is seen as one of the biggest business reform bills passed in Nigeria in over 28 years. The bill will help to make Nigeria’s business environment as

competitive as its counterparts around the world; allow business owners to now register their businesses in a faster and more efficient way — using technology; removes all the unnecessary regulatory provisions such as the

requirement for ‘annual general meetings’ and ‘company secretaries’; and reduce the minimum share capital for all companies and start-ups in Nigeria, which Continues on page 39

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BUSINESS DAY

4 BUSINESS DAY NEWS

Why $450m Lekki Airport is yet to attract investors JOSHUA BASSEY

any years after it was proposed, the $450 million Lekki International Airport, near Epe, in Lagos, has yet to catch the fancy of investors. This is in spite of several overseas trips and trade exhibitions by the Lagos State government to woo investors to it. BusinessDay gathers that investors are keeping distance from the airport project because they have not found it a viable business option for now. Five years ago, a consortium of investors which the state government sought to close a deal on the airport pulled out halfway. A source confirmed to BusinessDay on Monday that the investors withdrew from the airport project after discovering that the numbers, juxtaposed against the expected investment, wouldn’t add up among other socio-political factors. Situated about 10km from Lekki Free Trade Zone (LFTZ), the airport had been designed to take wide-body, double-deck, four

engine aircraft with capacity up to 500 seats, such as the Airbus A380 making it a Code F compliant airport with capacity for two million passengers per annum for a start, a number that may be difficult to attract given that there is existing airport in the state. A recent report obtained by BusinessDay revealed that only 11,221,617 passengers passed through the nation’s 32 airports in 2017, representing 26.3 per cent drop when compared to the preceding year which stood at 15, 232,597 passengers. Olayinka Oladunjoye, Lagos State commissioner for Commerce, Industry and Cooperatives, who shared the investors’ fear in an interview with BusinessDay, however, disclosed that with the spate of new developments around the Lekki axis, investors are again beginning to show strong interest in the project. “Airport is a capital-intensive project and often comes with foreign and local financing components. Investors always look at the numbers to see whether they add up. Often they consider political

FG oils wheel of patronage with crude... Continued from page 2

partners for the sale and procurement of NNPC Equity crude oil,” Baru said. On January 4, 2017 NNPC’s list of 2017/2018 crude term contract comprised 39 winners with 18 Nigerian companies, 11 international

traders, five foreign refineries, three National Oil Companies (NOCs) and two NNPC trading arms. A total of two hundred and twenty four (224) bids were submitted by companies seeking to purchase and lift Nigerian crude oil grades for the period.

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and socio-economic risks involved. “But we are currently in talks with two international investors who have local partners in Nigeria. We’re giving the assurance that the polity is stable and Lagos State is ready to partner them,” said Oladunjoye. If the airport comes to being, it will serve the fast growing residential cum industrial Lekki hub where several multi-billion dollar investments are springing up, including the LFTZ, Lekki Deep Seaport and Dangote 650,000bpd refinery, among others. Meanwhile, as investors adopt a wait-and-look option on the Lekki airport, the 3,000 hectares of land along the Lekki-Epe corridor, once cleared in anticipation of the takeoff of the first phase of the airport, is now thick bush. Four rated firms had worked as consultants to Lagos State on the airport project. They include Arup, a firm of consultant engineers, designers, planners and technical specialists; Norton Rose Fulbright, a global legal firm with 54 offices worldwide; Stanbic IBTC Capital, a member of Standard Bank Group, one of Africa’s largest banking groups, which was appointed sole financial adviser, and Banwo & Ighodalo, a Nigerian law firm. Efforts to bring the airport to reality under previous administration of Babatunde Fashola, the immediate past governor of Lagos, suffered a setback when investors who initially expressed interest withdrew from the deal which is proposed as a Public Private Partnership (PPP) project. This forced the government to return to the drawing board. The state government in the deal is providing the land and other complementary infrastructure, while the private partner with whom a concession agreement will be signed, will

undertake the construction of the airport on a Design, Build, Finance, Operate and Manage (DBFOM) basis, under a competitive tender process, and in accordance with international best practices. In 2011, as part of the competitive tender process for the construction of the airport, the Lagos State Government, through its consultants, advertised a Request for Pre-Qualification (RFPQ) and 33 Nigerian and international firms indicated interest to participate in the ambitious project. The companies had earlier submitted Expression of Interest (EOI), bidding for the project under a Public Private Partnership (PPP) arrangement, following a public notice advertised by the state government to that effect. Of the 33 firms, 20 were Nigeria- based. They were to compete against 13 foreign companies, including Munich Airport Germany, Hyundai Engineering and Construction Co. Limited and Canadian Commercial Corporation, among others. In 2013, three infrastructure developing consortium of firms, including Bouygues Batiment, Eko Global and Maevis, were again in the race for the first round of bidding for the development of the airport. Local and foreign representatives of the bidders were in the state for the preliminary processes of the bidding and held talks with the government and its team of consultants. They also visited the site for physical inspection. The preferred bidder was expected to be announced in April 2014, while the signing of a concession agreement and project documents was to take place in June 2014, with the financial close of deal expected in September same year, but this was never realised.

L-R: Aliyu Aziz, director-general/CEO, National Identity Management Commission (NIMC); Aliko Dangote, president/CE, Dangote Group, and Abdul-Hamid Umar, general manager, operations, NIMC, on a visit to present National Identification Number (NIN) Slip to Aliko Dangote, at the Dangote Group head office in Lagos.

Dangote, PSA France to set up Peugeot Assembly plant in Nigeria MIKE OCHONMA

he Dangote Group has invited tenders from members of the public for the construction of Dangote Peugeot Automobile Assembly plant to be located at Dutse, along the Kaduna-Abuja expressway, Kaduna, about 25 kilometers away from the present location of PAN Limited assembly plant in Kakuri industrial zone of Kaduna State . Dangote Peugeot Automobiles Nigeria Limited (DPAN) is a joint venture between Dangote Industries Limited, Kaduna State government and Peugeot of France (PSA Groupe) set up to construct and operate an automobile assembly plant in Kaduna State. The scope of work for plant when fully completed will comprise of an assembly plant, the administrative block, external works and services/ landscaping (including testing tracks, drivers and parking, external services and ancillary buildings that will include power generating house and a gate house. The planned construction of the new Dangote Peugeot Automobiles in Dutse, Kaduna State raises fresh questions on the status of the proposed sale of the existing PAN Nigeria Limited to private investors which is presently under the management of Asset Management Company of Nigeria (AMCON) with the end of 2018 as timeline to hand all assets and liabilities of the auto assembly plant over to a new owner. It would be recalled before this latest development, the Federal Government had since 2015 engaged in discussions with prospective investors, but as at the time of filing this report, report of such behind-closed-doors discussions has not been made public on which companies or consortium emerged as highest bidder for the Peugeot assembly plant. Last week Monday, BusinessDay got a response from AMCON on the reasons for the protracted delay in announcing the result of the bid for the sale of PAN Limited to the preferred bidder. In his response, Jude Nwuzor, Head of Corporate Communications of AMCON told our reporter that, the process of divestment can sometimes be long and winding. It is an on-going transaction, which would be announced to the public at the right time.

•Continues online at www.businessdayonline.com

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8 BUSINESS DAY NEWS FG, Lagos in fresh talks over National Stadium JOSHUA BASSEY

he Federal and Lagos State government are set to resume talks on the request of the later to have the National Stadium in Surulere handed over to it. The state governor, Akinwunmi Ambode, and the minister of sports, Solomon Dalung, had in March 2017, undertook the inspection of the National Stadium, with a view to ascertaining the level of decay and the state of its facilities following the request by Lagos to have it ceded to it. Discussions on the issue could, however, not proceed further after it was discovered that officials at the federal level were pushing to have part of the stadium concessioned to Lagos rather than completely handing it over to the state government. Governor Ambode was to later take advantage of President Muhammadu Buhari’s official to Lagos last month to reopen discussion on the issue, following which the President gave a verbal assurance to have the stadium released to Lagos. The Federal Government in 2017 similarly handed over the Presidential Lodge, Marina,

Lagos, and the Muritala Muhammed International Airport Road to Lagos government on the request of Ambode. Kweku Adedayo Tandoh, chairman, Lagos Sports Commission, confirmed to journalists on Tuesday that official communications with the Federal Government on the stadium would resume next week. The state government is looking to upgrading facilities at the stadium, which currently lacks maintenance and bears shame of a nation. Tandoh said: “You would recall that the Lagos State government signified interest in taking over the National Stadium and the governor did not just say it, he actually met with the minister of sports and a tour of the facility was carried out. “One thing later developed and there were signs and signals that the governor received that they were not actually ready to handover the stadium to us rather it seems as if they just wanted a concession agreement where the state government would spend the money, get it fixed while the Federal Government would still be in place but that is not what Lagos State government wants.

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Waste disposal infrastructure development may suffer setback as pressure piles on government CHUKA UROKO

he new waste management initiative in Lagos State, which involves developing collection and disposal infrastructure, may suffer setback arising from pressure being piled on the state government by existing waste operators, asking it to jettison the new waste management company in the state. Shortly after assuming office, Governor Akinwunmi Ambode launched the Cleaner Lagos Initiative (CLI), which, in addition to ensuring a clean environment in the state, seeks to expand and modernise the state’s waste disposal infrastructure to be provided by a new waste manager. But vested interests, including the Association of Waste Managers of Nigeria (AWAM), have been vociferous in their complaints against the new initiative, condemning government’s decision to put them out of

World Bank visit: Edo anticipates more project funding partnerships to accelerate growth

overnor of Edo State, Godwin Obaseki, says with the success of the visit of 10 executive directors of the World Bank to the state, his administration anticipates stronger and extensive partnership with the bank on development funding to accelerate growth in the state. Obaseki said, “The visit was a huge success. The World Bank Executive Directors saw the results of their partnership with Edo State across the broad spectrum of our partnership. “They took their time to appraise what they met on ground and it is safe to say that our relationship, which is anchored on development, has been further strengthened and more support is on

the way.” The governor, who hosted his guests to launch after a tour of the Edo-Azura 450 Power project, took the World Bank executive directors through the various social development and agricultural projects, including the Nigerian Erosion and Watershed Management Project (NEWMAP); Community and Social Development Programme (CSDP), FDAMA, among others. He noted, “Edo State’s commitment to best practice in projects that have rekindled economic growth, empowering youths and women; reforms in the public sector and massive investment in infrastructure have earned her a place of pride in the bank’s relationship with

development partners.” The governor said with the Edo-Azura power plant coming on stream, “we need to extend the benefits of this investment. Now that we have power, what are going to do with it. Power is the key to industrialisation and development. The next sets of projects are those that have to rely on this key infrastructure we have created.” He added, “We will be looking at the Benin Industrial Park, building infrastructure to encourage and support manufacturers to come in. We are looking at innovation hubs; we want to use the factor an advantage of the 24/7 electricity to encourage technology groups and companies to be located in Edo State.”

Dangote lists economic benefits of national identity card

itingtheeconomicbenefits of having a robust unified nationalidentitycardmanagement, Aliko Dangote, president of Dangote Group, has called on Nigerians to get enrolled in the ongoing registration for national identity cards being carried out by the National Identity Management Commission (NIMC). Dangote made the call as the NIMC disclosed that it had enrolledtilldate30millionNigerians, and that efforts were on to capture the entire population within the next three years. Dangote spoke when the management of the Commission visited him in his office in Lagos and presented him with his identity slip as well as a draft

report of the Strategic Roadmap for Developing Digital Identification in Nigeria. He explained that the national identitymanagementpolicyofthe Federal Government was pivotal to the economic growth strategy being implemented by the government, saying key government services would be delivered efficiently and effectively when government knew the categories of Nigeriansinneedofsuchservices. According to Dangote, critical government programmes relating to social safety net, education, financial inclusion, insurance cover as well as credible elections depend heavily on proper identification. He told the NIMC manage-

ment to copy from the India with alargerpopulationandwhichhad also successfully carried out Digital Identification of all its citizens and that with collaboration with partnersandadequateawareness campaign, the Commission can successfully accomplish the task of enrolling all Nigerians within the shortest possible time. Speaking earlier, Aliyu Aziz, director-general/CEO of the Commission, said the Commission was adopting an eco system just as India to liberalise the enrolment process by licensing state and local governments, business organisations, bodies and agencies to enrol the citizens while the Commission only regulate their activities.

business in order to pave way for the ‘intruding ’ waste manager. Despite the state government’s disposition to an amicable settlement that will see a win-win situation between the operators and the overriding interest of a cleaner Lagos, the operators are bent on a return to status quo ante, which means sending away the new manager and reinstating the operators. But Lagos residents see this return to the status quo ante or sending away Visionscape Sanitation Solution, which is the new waste manager in the state, as put on hold the development of waste disposal infrastructure such as landfills and transfer loading stations the company is undertaking. It is estimated that Lagos produces 13,000 metric tons of waste on daily basis, and to effectively dispose them according to global best practice, Visionscape has embarked on the construction of transfer Loading Stations, three service depots and one engineered

landfill. The company also provides recycled waste bags, residential waste bins and allows feedback mechanism for residential customers. With this infrastructure, it is hoped that the state would avoid the pitfalls of Olusosun dumpsite in Ojota area of the state, which caught fire recently and put the lives of residents of that area in danger until it was put out. The experience in other areas where there are dumpsites, particularly in Igando, Alimosho area of the state, is not any better as the existing operators—the private sector participants (PSP), litter the roads with refuse and pollute the environment, endangering the health of the residents. There is currently a new twist in the waste management initiative in the state as AWAM, playing the political card, has petitioned the former governor of the state and their grand patron, Bola Tinubu, who has assured that the matter would be resolved.

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FG to auction N70bn bonds May 23

ederal Government has offered for subscription by auction N70 billion worth of bonds in its May 23 auction, the Debt Management Office (DMO) said. The offer circular obtained from its website on Tuesday in Abuja, stated that it would sell N20 billion of a fiveyear re-opening issue maturing in April 2023 at 12.75 percent. It would also sell N20 billion seven-year reopening bond to mature in March 2025 at 13.53 percent and another N30 billion 10-year reopening bond at 13.98 percent to mature in February 2028. Nigeria issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

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10 BUSINESS DAY

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COMMENT SMALL BUSINESS HANDBOOK

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

he concept of transition economies is of fairly recent origin. It was a term used to characterize countries moving from the centrally planned economic system to the capitalist market system. When Communism collapsed in the late 1980s, the countries of the then Soviet Union of Russia and its allies, including Hungary, Poland and Bulgaria, abandoned their traditional Central Planning system and began to embrace the capitalist or market economic system. This change called for some kind of structural transformation to develop the requisite market structures, systems and institutions, particularly those driven by private initiative, necessary for the effective functioning of the market system. They were referred to as transition economies.The term has now taken wider meaning and dimension to include areas recovering from any kind of trauma. Transition economies or areas now also refers to those economies or places in a country in which the existing social networks have broken down, due largely to conflicts, have need to be restored and actually being fixed. These areas pose additional problems to microfinance service providers, because they not only need physical and psychological rehabilita-

OTISI UKAHA Ukaha, a financial analyst, writes from Lagos.

nyone who lives in a third world country can attest to the fact that they are always one emergency away from a catastrophe. Due to lack of certain infrastructure, poor systems, lack of planning and barely contained chaos, there are many ways in which Nigerians are just managing to keep their heads above water every day. At a business meeting last week, someone got a call from her driver who was on the way to pick her up. He had a flat tyre and upon inspection realized the source of the problem was a hole, but luckily, he had found a vulcanizer to fix it. The issue was that the vulcanizer was asking for N2,000 upfront, and he had no money to pay for it. She asked the driver if he had his ATM card as she could transfer him the money. He replied that he usually kept his card at home and only took the amount of cash he needed daily for food and transport. She then requested for the vulcanizer’s account details; again, he responded that he didn’t own a bank account and ran a cash-only business. A simple problem with a simple solution had suddenly become a complication

Wednesday 16 May 2018

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A note for microfinance providers in transition areas tion, they also need the provision of financial support not just to the economically active poor, but also to practically all residents in the area. Like joke, like joke, as they say in local parlance, Nigeria now has more transition areas than many countries in Africathat are prosecuting fullblown civil wars. While many areas in the country are engulfed in these undeclared civil wars, others face the threat of occupation by yet unidentified armed men, often referred to as armed bandits by the authorities. These areas have long since faced the challenge of rising poverty and destitution, which have now been compounded by armed unrest. Microfinance institutions operating in these troubled areas are already hard put to help solve the problem of massive poverty in these places, which are now characterised by misery, hopelessness andlarge numbers of out-of-school children. With war and banditry now at high ebbs, especially in the north, and almost becoming a permanent feature of the country,microfinance providers must seek alternative strategies to continue to be relevant in the face of continuous nullification of their achievements by internal conflict. The challenge in the Nigerian situation is that the dislodgement of the forces behind the mass destitution of the people does not appear to be the direct focus of public policy. At best it is tangential. We are forever producing research evidence on the sources of poverty in Nigeria but we continue to do the same things that breed poverty. As they say, we continue to do the same thing and expect a different result. For instance, there is abundant evidence that obscene income inequality is part of the causes of poverty in Nigeria. Now see how we solve income inequality – by “social investment” hand out of

Who does not know that the salaries and allowances which the legislators doled out to themselves is part of the sources of poverty in Nigeria? You use the commonweal to massage the greed of a few and you expect elections to ever be free and fair, and poverty to abate when victory means access to obscene wealth N5000 cash to each of a nepotically well selected few. Meanwhile, we know that Governors who stole their states dry get severance allowances of a house in “any part of Nigeria of their choice” plus a cash pension that can induce early labour in a healthy pregnant woman. This same ex-governor ends up in the Senate and will get another severance allowance when he leaves. Ostriches! Who does not know that the salaries and allowances which the legislators doled out to themselves is part of the sources of poverty in Nigeria? You use the commonweal to massage the greed of a few and you expect elections to ever be free and fair, and poverty to abate when victory means access to obscene wealth. Ever since I began to focus my research on development and entrepreneurship, I have discovered that there is no intension to actually narrow the resource gap among our people here. Research in that area is for the use of the international development community and hardly for domestic use. But as intellectuals, our domain is not to be limited to our countries but transcends the entire world. It is given unto man to always have the poor in his midst, according to the bible, but I do not think that what God

meant was the abjectly poor, even if we interpret that Biblical passage in the most literal manner. We can eliminate extreme poverty if the greed of our leaders can be curtailed. Until those who feed on the public treasury are kind enough or are forced to give up just a little bit of the resources, to which they have equated their electoral victory, for the masses, poverty will continue to ravage the ordinary people who unfortunately own the resources. And microfinance will continues to lag behind the rate of destitution. Accordingly, here are some tips that could help enliven and redirect the activity trajectory of microfinance providers, improve service delivery and positively impact outreach in transitional environments like Nigeria. Safety First: Minimum politicalsocial stability The first rule is safety. If an environment is not safe leave it for those charged with the protection of life and property. They know how to get in their partners in the area of aids. The aid agencies will cover the important needs of the time. There are no economically active poor people in war fronts. Operators must understand that microfinance is not a conflict resolution tool. Programme areas must be such that a reasonable degree of safety and security is offered for clients and microfinance institutions to function. This is a best practice standard applied everywhere. In the Democratic Republic of Congo, for example, the USAID and other aid agencies limited their microfinance efforts to areas considered safe pockets of stability. Stable Population. We cannot expect successful loan repayment if we are dealing with migrants and people of no fixed ad-

dresses. It is difficult to maintain timely loan recovery with mobile populations. You may test this hypothesis by making a loan to one of the herdsmen in your area. You will then understand why the parliament recently passed a law on the use of movable assets as collateral for bank lending (the Collateral Registry Law, 2017). One thing about movable assets is that they will surely move and that is where the trouble starts. With the advent of the Collateral Registry law, movable asset can still move but it is going no anywhere. So until we have a movable herdsman law to tract migrants, there should be no need for financial rascality in the form of lending on the security of moving cows. Microfinance does not create economic activity but follows it It is better for to focus on residents, internally displaced people, and returnees, rather than refugees, when we know that refugee communities are temporary. Sierra Leonean refugees wereprovided quick access to credit upon their return by the American Refugee Committee by certifying qualified entrepreneurs in the semi-permanent refugee camps in Guinea. This is possible when where the camp is semi-permanent and there is economic activity and a stable cash economy. The direction of causation between economic activity and microfinance is that microfinance follows economic activity and not the other way round. It enables the clientto take advantage of economic opportunities. Microfinance does not create economic opportunities.

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Creating a financially-inclusive ecosystem: What will it take? and source of frustration. This is the reality of an estimated 60 million unbanked and under-banked Nigerians today. That is a staggering amount of people excluded from the digital financial ecosystem and almost 50 percent of the population being excluded from basic financial services. The barriers to entry for the poor and uneducated in opening formal bank accounts often lack appeal for those who are not of a certain financial status, and due to lack of knowledge, there is a general mistrust of formal banking systems, with most opting instead for informal solutions. There is also the issue of living in areas where the closest banks are not easily accessible. All these factors contribute to low-income earners keeping their money in the form of cash which in turn cripples economic activity, while stunting their capital growth and investments. The Central Bank of Nigeria (CBN) recently announced its goal of 80 percent financial inclusion for Nigerians by 2020, but what does an inclusive financial ecosystem really look like? According to a report compiled by the International Finance

Corporation, a World Bank group, even in developed countries, many only have access to a limited menu of cost-effective products from financial institutions for addressing their financial needs. Billions of unbanked adults in the world lack access to basic financial services and another 57 percent have basic accounts but do not have access to diversified investment and savings options, low-cost payments systems, core household and business insurance, or credit. This means that it is not enough for Nigerians to simply make their money digital, other financial services must follow for them to truly be included financially. Financial inclusion has been touted to become the major driver of economic growth in poorlydeveloped countries with high levels of poverty. In this part of the world where mobile money has been met with a higher level of success than the west, the advent of the digital age, access to internet and mobile phone penetration has created opportunities and opened the mass population up to possibilities that were previously out of reach. CBN has pledged to partner with banks and financial institutions to grow a 500,000-strength agent network,

an independent network of petty traders, small business owners and popular sales outlets that are well trusted within certain communities to carry out financial transactions on behalf the providers. Paga, the first mobile money company in Nigeria to begin operations officially in 2012, has been ahead of the curve on growing agent networks, now boasting an impressive roaster of 15,000+ agents, the largest in Nigeria. As one of the partners of CBN’s SANEF initiative (Shared Agent Network Expansion Facilities), they should be able to rapidly expand their reach across Nigeria, especially the grossly underserved Northern regions. In a bold move, Paga recently announced its venturing into more digital service products, the first of its offering being a flexible savings wallet which garners interest even as you transact, with more offerings to come down the line. This is the right step towards financial inclusion for Nigerians. It is not enough to simply make and receive payments; everyone must be empowered with the tools for managing and growing capital, at a low cost. Over the next few years, it will be interesting to watch the developments in the mobile money space

to see if any of the key players will be able to replicate the success of Mpesa in Kenya. The fact that stands clear is that for there to be great strides in financial inclusion for the under-served population, mobile money services are just a piece of the puzzle. The rise of other financial institutions solving the problems of financial inclusion is also a key factor. Financial institutions such as micro lenders and micro insurers provide products that vastly improve the lives of low-income earners and micro, small and medium business owners. The gaps in financial literacy must be addressed, and similar products and services found in formal banking must be made available. This will result in proper financial management and growth and productivity for the individual, and increased economic stimulation. Low-income earners need to be further incentivized with customized plans and fees that match their income level, and products that will be tailored to their specific needs so they are able to integrate fully into digital financial services.

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Wednesday 16 May 2018

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On Lagos’s laudable pension policy TAYO OGUNBIYI Ogunbiyi of the Lagos State Ministry of Information & Strategy, Alausa, Ikeja

he contributory pension scheme was introduced in the Nigeria’s public sector in 1998 to address the limitation of the previous arrangement. In this scheme, both the employer and employee contribute a certain percentage monthly and were being managed by the Pension Commission. The arduous tasks that retirees undergo before collecting their hard earned benefits usually send jitters down the spine of those still in active service. Invariably, the period of retirement, purportedly meant for resting and relaxation, becomes the time of stress and anguish for the retirees. But then, in the face of several inhuman treatments and needless hassles usually experience by pensioners across the country, the Lagos State Government stands out in its attitude towards issues relating to the welfare of its pensioners. It will be recalled that the State Government domesticated the Pension Act and signed same into law on 19th March, 2007 and it is instructive to stress that ever since that period the State Government have never defaulted with regards to deducting its own part of the pension fund as at when due. Indeed, the current administration in the State has made prompt

payment of pension and gratuity one of its major obligations. For instance, between May 2017 and March 2018, it has paid N9.3 billion as pension to 2,466 retirees in the state. This was done through the Lagos State Pension Commission (LASPEC). Equally, from August 2015 to date, the sum of N35.92 billion has been paid into the RSA of 8,731 retirees, deceased and withdrawn staff. The state government had also been consistent in the Pension Reductions and Remittances with the help of automation of the payroll system. In last year alone, government had paid over N9 billion as terminal entitlements of retirees. There have also been regular deductions of 7.5 per cent of monthly basic salary, rent and housing allowances from the salaries of staff and corresponding 7.5 per cent by the state government into the Retirement Savings Accounts maintained by them with their appointed Pension Funds Administrators (PFAs). This has been achieved due to automation of the payroll which automatically ensures deductions/ remittances of pension contributions. In March this year, the sum of N1.24 billion was released to pay pensioners in the state. The money was released to pay 183 retirees under the Contributory Pension Scheme (CPS). Recently, at the 49th Benefit Bond Certificate Presentation, Governor Akinwunmi Ambode reiterated his administration’s commitment to pay pensioners in the state promptly. The state has been able to clear the backlog of outstanding pension obligations it inherited upon its inauguration and is equally forging

Pensioners who have spent the most active parts of their lives to serve their nation must not be subjected to ridicule or treated with disdain in their old age. Any society that treats its pensioners with contempt does so at its own peril ahead to ensure that fresh liabilities arrears from recent retirements are systematically cleared. It will be recalled that upon his inauguration, one of the earliest actions of Governor Ambode was the release of the sum of N11bn to pay off pension liabilities owed the mainstream retirees and the retirees in Local Government Areas. This is part of efforts by the present administration to find a holistic solution to the issue of payment of pension entitlements to retirees under the pay-as-you-go pension scheme which was discontinued in April 2007, as well as outstanding accrued pension rights due to retirees under the contributory pension scheme. Similarly, commencing from August 2015, the State Government developed plans to monthly disburse pension funds to Ministries, Departments, Agencies and Parastatals, including Local Government Areas and State Universal Basic Education Board (SUBEB). Also, between January and June, 2016, the State Government paid more than N41billion to over 9,000 retirees in line with her commitment to pay all pension arrears.

In a bid to acquaint both retirees and active workers on the details of the new current pension scheme, the State Government embarked on a fresh training series with relevant themes. Of the themes in the series, two actually stands out. These are the “I’m Alive” and “Pensioners’ Welfare” series. ‘I’m Alive’ is directed at enrolling the bio data and finger prints of pensioners under the old scheme of Pay As You Go in order to ascertain those who are alive and, therefore, entitled to receive payments under that scheme. The ultimate goal is to ensure that resources are prudently managed. It is also a statement in support of integrating technology into governance and it has brought extensive improvement in service delivery at the Civil Service Pensions Office (CSPO) such that, in most cases, pensioners now need to bring only their Lagos State Resident Identity Cards to the verification centres in order to revalidate their records. This is made possible because of the connectivity and synergies of government activities among different agencies. Without a doubt, welfare of pensioners holds a prominent place in the plans of the current administration in the State because of its conviction that one of the best means to ensure accountability, efficiency and productivity in the State public service is by taking proper care of the retirees. The underlining basis for this idea is that once those that are still actively engaged in the public service are aware that the system will take adequate care of them when they exit the service, they will definitely put in their best to move the State forward. It is, therefore, the firm conviction of government that its

timely intervention in pension issues will go a long way in not only ameliorating the sufferings of retirees in the State, but also in giving its current workforce the impetus to offer their very best in the service of the people. Pensioners who have spent the most active parts of their lives to serve their nation must not be subjected to ridicule or treated with disdain in their old age. Any society that treats its pensioners with contempt does so at its own peril. Indeed, in other climes, the prosperity and stability of the society is partly sustained on the experience, expertise and wisdom of pensioners. As for those who flagrantly tamper with pensioners fund that are kept in their care on trust, the following words of Suzy Kassem, American philosopher and author are rather instructive: “Anyone who values profit over human life is very dangerous, inhuman and a bad specimen of human beings.” True democracy cannot exist in a society incapable of supporting the aspirations of every segment of its people. A truly representative government must be able to create the enabling environment for its citizenry to freely express itself in positive ways so that the diverse potentials of its people could be easily harnessed for growth and development. If, indeed, the labour of our heroes past must not be in vain as the composer of the National Anthem puts it, governments across the land as well as all employers of labour must take a cue from the Lagos’ example by taking the issue pensioners’ welfare as a very sacrosanct concern.

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Katowice and a house divided against itself

CALEB ADEBAYO Caleb Adebayo is a lawyer and environmentalist working in Lagos. He is interested in the intersection of Energy, Finance and Environmental Law. He can be reached at calebadebayoc@gmail.com

n December, the world will convene in Katowice, Poland for the 24th session of the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties (COP) to discuss climate change, commitments to reduce emissions to 1.5 degrees below pre-industrial levels, to further the Talanoa dialogue, and to finalise on the Paris rulebook and implementation. This meeting will bring together government leaders, industry practitioners from the private sector, and non-profit players. One thing this anticipated COP seems to do is foist a dejavu of COP 19, the UNFCCC Conference of Parties held in 2013 in the same country, Poland, in its capital Warsaw, a

country which at the same time was playing host to the global coal summit. Poland has been listed as one of the EU’s most inefficient economies, with its carbon dioxide emissions per capita above the EU’s average emissions. In fact around 90 percent of the country’s electricity is derived from burning coal. According to a Greenpeace recent report, the coal-powered plants are responsible for almost 5,400 deaths a year and the massive Belchatow coal-powered station in Poland is the single largest polluter in the entire EU. COP 19 was not particularly successful, as we did not see any major progress on the Loss and Damage agenda, which was meant to be the one of the highlights of the summit. On the contrary, in the last few weeks before the COP in Warsaw, members of the Polish government in several official statements clearly stressed the role and the importance of continued coal use for the Polish economy and its competitiveness. Poland is also known for blocking any more ambitious climate policy instruments in the EU. Most alarming was the fact that the sponsors of the climate talks in Warsaw were big polluters; coal and crude oil companies, whose interests indeed came to fore at the nego-

tiations. One would have hoped that after the summit in Warsaw in 2013, the country will adopt a more progressive approach, cut down on the use of coal and make for a climate-friendly economy, yet the coal capital still continues to be thata coal capital. It makes one wonder why for the second time in five years, they have offered to host the COP. Indeed the agenda pushed at the COP 19, and at the coal summit that held concurrently during the second week of the COP in Poland was that of clean coal technologies and the future of Poland’s coal. Clearly, the coal capital was bringing everyone to its country to convince them that they would not drop their coal, but would try to make it clean. The question on everyone’s mind remains the same as what it was in 2013- what happens at the COP in Poland? The presidency of the COP 24 has been announcedPolish minister of Energy of a country where energy is dominated by the coal industry. Michal Kurtyka will be taking up the most critical role since the Paris Agreement in 2015 and will be playing a huge part in the furtherance of the Paris rulebook. What remains unspoken here is whether the politics and power play of coal and his role within the Polish government will determine his disposition during the talks, as

the climate politics of Poland is at the lower end of ambition. It is even more disturbing because the role of the presidency is critical; as critical, if not even more than the seat of the climate talks because the President steers the conferences and brokers deals when there are deadlocks. At COP 19 President, then Poland’s environment minister got fired because fracking was not happening fast enough. In other words, he was not pushing the country’s agenda fast enough. We await to see what will happen in December in the Silesian city of Katowice. The hosting of the COP 24 climate talks by Poland is akin to an unrepentant sinner playing priest, taking confessions of sinners from behind the confessional, and offering reprieve for their sins. Apart from it being antithetical that a coal-powered city is hosting the climate talks, it is simply the case of a house divided against itself, and usually such cannot stand. Either the country will take the hit from these negotiations or the negotiations will. Yet, some have argued that the climate summit happening in Poland might just be a harbinger of good things, as it may mean that the coal-powered country is ready to truly commit to curbing emissions and driving

a climate-friendly economy. We cannot forget too early however, that the Polish government has continued to iterate that it will continue to depend on coal as its major source of energy. Understandably, it is not an easy process to shift from the mainstay of a country’s economy, as it will affect jobs, energy supply and the economy in general, yet the demand is for countries like Poland to make conscious efforts towards reducing gradually their fossil fuel emissions by finding more low carbon and renewable energy options and giving them pre-eminence in the energy mix. More especially because coal is a much dirtier fuel than other fossil fuels, and apart from the environmental hazards, it places heavy demands on water resources, causes grave health hazards and emits more greenhouse gases than any other fuel. As the COP approaches, the apprehension of a conference that will be marred by conflict of interest and a coal agenda is palpable. However, optimism says to anticipate a better outcome in Katowice than Warsaw. Whatever, it is, it might be too early at this stage to tell.

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Wednesday 16 May 2018

BUSINESS

COMPANIES & MARKETS

DAY

South Africa, Kenya, Nigeria lead in Africa’s business digitalization environment

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C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

Investors upbeat on Sterling Bank’s growth Iheanyi Nwachukwu

nvestors in Sterling Bank Plc shares are impressed with the bank’s stock recording over 52percent year-to-date (ytd) price gain amid its impressive earnings in full year 2017 and firstquarter (Q1) 2018 records. Remarkably, the bank reported a profit after tax of N8.5 billion for the financial year ended December 31, 2017 as against N5.2 billion in 2016, representing an increase of 65 percent in profitability. Gross earnings increased by 19.8percent to N133.5 billion in 2017 compared to N111.4 billion in 2016. Sustaining the impressive performance, Sterling Bank reported a profit growth of 65.2 percent for the first quarter ended 31st March 2018. Analysts and stockbrokers at a recent Facts Behind the Figures session of the bank at the Nigerian Stock Exchange were unanimous in their verdict that the bank’s coherent strategy, business transformation initiatives, strong management team, and disruptive solutions will lead to better than expected future results for the mid-sized lender.

Abubakar Suleiman, chief executive officer, Sterling Bank Plc, affirmed the bank’s continued growth across key financial indices in Lagos Bourse while addressing stockbrokers, investment analysts and the media during the bank’s Facts Behind the Figures session at the NSE. Doyen of Stockbrokers in Nigeria, Willie Sam Ndata lauded Sterling Bank for explaining the facts behind the figures in its financial statements with the stakeholders in capital market. “The CEO of Sterling Bank has spoken to the numbers and we are hopeful that he will continue to provide the market with useful information. The solutions you have highlighted explain the increased customer growth recorded by bank. We are sure the bank will deliver value to all stakeholders going forward.” The lender’s 2017-2021 mid-term strategy indicates the intent to grow market share of deposits to 5percent, diversify its retail funding base, record nonperforming loans below its peer group average as well as Return on Average Equity (ROAE) above peer group average. Suleiman disclosed that

the bank is also looking to achieve diversified income streams with top quartile position in all its operating areas, double digit revenue growth on yearly basis and reduce cost of funds to less than five percent. On the bank’s long-term strategy, the CEO disclosed that Sterling Bank intends to become a globally competitive financial services franchise by financial and nonfinancial measures; adding that it would continue to operate a fully sustainable business model with institutionalized processes that would outlive the stewardship of current owners and managers. He also reiterated the bank’s commitment to its primary role of financial intermediation through intervention in sectors that will create jobs, improve living standard and bring about economic growth for the country. Abubakar Suleiman identified the priority sectors as Health, Education, Agriculture, Renewable energy and Transportation. Speaking on the bank’s strategic initiatives, Yemi Odubiyi, Executive Director, Operations and Services, said Sterling Bank would manage risk, balance sheet and capital to deliver supe-

L-R: China Igwe, director, Chemical Fibre & Environmental Technology, Gloria Elemo, director general/CEO, FIIRO, Segun Awolowo, executive director, Nigeria Export Promotion Council, and Veronika Orierie, deputy director, NEPC, during the visit of the agency to FIIRO.

rior returns to shareholders; create a learning organisation to optimise productivity as well as operations and technology to drive better control, manage costs, complexity and risk. He said all these would enable the bank to deliver excellent customer service and drive efficiency and sales through robust digital and payments

evelopments in and around the Lekki Free Tade Zone (LFTZ) has continued to swell as new and existing investors in that zone raise the stakes by increasing their investment and project portfolios. Buildcon Global Services Limited, developers of Pracht Garden, Pracht Cluster and Pracht Court is one of such investors. The company recently introduced another luxury and fully serviced estate, the Pracht Smart City, in Ibeju Lekki which is within the proximity of Lekki Deep Sea Port at the LFTZ. The LFTZ has, in the last couple of years, attracted big ticket investors including the Dangote Group who have together committed an

estimated $10 billion in such ventures as the Dangote Refinery, Petrochemical Industry, Fertilizer Industry, Lekki Airport, the New Eko Tourist Resort, etc It is hoped that Pracht Smart City, along with other real estate developments in this future business hub of the state, would reduce housing problem at the zone where there will be influx of foreign and local workers in the next two to five years in the area. Recently, the Federal Government assured of its commitment to enhancing business activities in the zone through the deep sea port and other investments such as the China Africa Lekki Investment. “We are positioning our projects to attract expatriates, senior executives and senior managers, hence the birth of

Pracht Smart City,” explained Bukunola Gadzama, Buildcon’s CEO. The estate is sitting on about 200 plots of land which will accommodate different house-types, ranging from apartments (flats), detached houses to terrace duplexes. Smart home appliances and complimentary amenities are expected in luxury homes to be delivered at the estate. The development boasts unique smart home appliances such as Amazon Echo Dot, Kwikset (smart entry locks), Ring Video Doorbell Elite, Sonos Wireless Speakers, Phillips Hue (Lighting) among others. “The proximity of the estate to investments at the LFTZ will offer access to an enormous consumer market across West Africa, as it is being developed as a logistics hub for the entire sub-region”,

ucts that are changing the ways they access financial services. He said the bank of the future must understand the consumer of the future and address their needs, adding that the bank will adopt agile methodology and journey thinking to improve speed to market and the customer’s experience.

Anchor Insurance beefs up marketing unit for better performance

Development increasing at LFTZ as Buildcon raises project portfolios CHUKA UROKO

capability. According to Odubiyi, Sterling Bank intends to become a consumer banking franchise of choice for Nigerians through the provision of customer-centric and disruptive solutions such as Farepay, Specta, Switch, Snapcash, Social Lender, Saf Retail and iinvest, among other prod-

Gadzama assured. For home buyers who would like to subscribe to this smart city development, the developer offers three years flexible payment plans. Gadzama explained that a two bedroom apartment sells for N9.8 million, three bedroom apartment goes for N11 million, while four bedroom terrace duplexes would be sold at N32 million. There is an upfront payment of 30 per cent and upon an initial deposit, a subscriber would be given a milestone agreement which shows the construction stages of the property. Subscribers can also own parcels of land at Ibeju Lekki. About 100 plots of land of 648 square metres in size are available with prices ranging from N4 million for outright payment to N5 million for one year installment plan.

etermined to take its business operations to another height, the Management of Anchor Insurance Company Limited, beefed up its marketing department with the appointment Jide Fasanmi as general manager, marketing. Fasanmi who joined the company from Staco Insurance Plc where he was an Assistant General Manager, Brokers/Branch Operations, holds a B.Sc in Management Science from Abubakar Tafawa Balewa University (ATBU) and a Master’s degree in Marketing and Strategic Management from the Lagos State University, Ojo. A rounded insurance practitioner with an experience spanning almost three decades in insurance underwriting and broking concerns, Fasanmi commenced his journey into insurance marketing at Guinea Insurance Plc in 1984. He later joined

Bluefield Insurance Brokers Ltd as the pioneer General Manager in 1992. Fasanmi had a brief stint in Crystal Insurance Brokers as the General Manager. He, thereafter, moved to Regency Alliance Insurance Plc where he served as Assistant Controller (Marketing) and later joined Refuge Insurance Co. Ltd in 2003 as Controller (Marketing/Business Development). In 2001, he left for Standard Alliance Insurance Plc where he spent 14 years re-engineering different segments of the company’s marketing division. He left as Regional Director, Western Business Region to join Staco Insurance Plc in 2015. Fasanmi is an Associate Member of the Nigerian Institute of Management (AMNIM), the Nigerian Council of Registered Insurance Brokers (ACIB) and the Chartered Insurance Institute of Nigeria (ACIIN). He is also a member of the Nigerian Institute of Marketing.

Politics & Policy

Herdsmen crisis will be big problem for Buhari in 2019 -UPN chair 17

Wednesday 16 May 2018

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BUSINESS DAY

2019: US-based Nigerian declares for Presidency ...Says current leaders are “brain dead” President, he will put the power sector under the presidency because of its strategic importance to the Nigerian economy.

INNOCENT ODOH, Abuja

A United States- based Nigerian consultant expert and strategic advisor, has declared his intention to run for the Presidency in the 2019 general elections, even as he described current leaders of the country as “brain dead” and unfit to lead Nigeria in the 21st Century. Okey Samuel Mbonu, made his intentions known during a world press conference in Abuja at the weekend, stressing that he is motivated by a desperate need to rescue the nation from the seeming eternal abyss into which past and present leaders have plunged the potentially rich country. Although he paid tribute to some past leaders for their struggle to gain independence for Nigeria, he argued that the time has come for a new thinking, new ideas and brand new leadership that will extricate Nigeria from underdevelopment and turn the potentials of the nation into actual wealth. “It is now time for a brand new leadership, the kind of leadership suitable for the 21st Century. You are looking at that 21st Century Nigerian leader with global credentials, international connection and untainted career in a vigorous environment with no enemies in Nigeria - that is me,” he said. He said “the people leading Ni-

L-R: Oboka Ikenna Clement, chairman board of Committee Mbonu 2019 Organizing, Okey Samuel Mbonu, Presidential Aspirant, Maureen Okoli, DG Campaign Nigeria and Danladi Abulu, member board of committee during the Mbonu 2019 Presidential declaration in Abuja. Picture by TUNDE ADENIYI.

geria now lack ideas and cannot give what they don’t have. They are brain dead because they rely on crude oil which is a passing phenomenon. Countries like China in the next 20 years will phase out crude oil as they are going into renewable energy to power their vehicles. So we must stop thinking about crude oil. There is a lot of biofuel resources now that will make crude oil obsolete and we need to be prepared for it, “he warned. He disclosed that his policy framework is anchored on re-

search done on five critical areas of the Nigerian economy, which include; security, electricity and related infrastructure, health care, youth and girl education and the political will to govern the country on the basis of equality and competence. He added he will focus more on intellectual property to grow the Nigerian economy. On security, the former Commissioner for Housing Development in Maryland, US, noted that he will improve the welfare of all the security agencies and work with traditional institutions

to improve security especially now that there is no state police. He also advised that ranching remains the best solution for the incessant clashes between herdsmen and farmers, which have led to the death of thousands and the displacement of many more. He explained that the solutions to the crisis of policy in the country will emerge under his leadership adding that he has the international connection and experience that can bring massive investment in the electricity sector. He noted that if he becomes

He said he will revamp education and align it with individual talents and passion adding that he will introduce a robust health policy that will enable Nigerians to process quality health care at affordable price. Mbonu blamed the Nigerian government for neglecting the youth, who he said are highly creative and hardworking, despite the challenges confronting them. He promised to increase the creative capacity of the vibrant Nigerian entertainment industry and make it a major source of export to all parts of the world. “Nigeria is the world capital of rhythm, that is music and the way it flows and produced. People travel from all over the world to learn music rhythm in Nigeria. Under my leadership, we will dominate performance world -wide, we will be the world’s biggest exporters of performance art,” he said. On the political platform under which he will run for office, Mbonu said he is consulting with parties that will align with his interest, which is to uplift Nigeria even as he admonished Nigerians to avoid zoning, which he said breeds mediocrity. He also urged citizens go get their Permanent Voters Card (PVCs) and vote wisely.

2019 presidential election will go for re-run—Perry Opara INNOCENT ODOH, Abuja

ational chairman o f Na t i o n a l U n i t y Pa r t y , N U P, Pe r r y Opara has predicted that no single political party will win the 2019 presidential election at the first ballot. He told journalists in Abuja at the weekend that only with the coalition of political parties that can bring about a winner at the end of the day noting that the realignment of forces by political parties, the days of the ruling party, the All Progressive Congress, APC are numbered. Opara who is the secretary general of IPAC said the fusion of the Obasanjo led Coalition of Nigerian Movement, CNM into the African Democratic Congress, ADC was a welcome

development even as he reassured the coalition was still intact despite the fusion.” It is not a bad move, they have right to join any party of their choice,” her said. Opara is the leader of the coalition of political parties which include, NUP, Rebuild Nigeria Party, Better Nigeria Peoples Party, BNPP, ADC, PANDEM, CAP and others maintaining that the consultative meeting with former president Olusegun Obasanjo will still continue. He added that the coalition will by the grace of God produce the next president of Nigeria. Opara said the north remains the battle field for the 2019 presidential election maintaining that Buhari has a cult followership in the far north while Kwankwanso has the strongest political movement in today’s

Nigeria. According to him, the Kwankwansiyya movement is political bulldozers that may uproot s h r u b s a n d t re e s a n d e v e n structures and win election.”

Perry Opara

On Atiku, Opara said he is loved by southerners ‘as a man who has capacity to unite the nation.He however explained that in the coalition, merger is not on the table because they believed it kills smaller parties. “Political parties in the coalition have agreed not to collapse into a single party, but will contest other elections and have a consensus candidate for the presidential election,” he said. He reaffirmed that 2019 presidential election would not be based on party but on personality of the individual candidate stressing that political parties will just be the vehicles while candidates will be the pas sengers. “In 2019, Nigerians will be more interested in the passengers than the vehicle that is why I am calling on Nigerians

to vote people that can perform and with impeccable credentials and track record. Above all age will be a factor in both managing political parties and running for elective election,” he said. He emphasized that Nigeria is in need of paradigm shift from the older generation to the new generation and everyone should embrace this wholeheartedly. On former president Olusegun Obasanjo, Opara who is also the President of West African Association of Political Parties,( WAAPP) described him as an enigma, “Obasanjo remains the political oracle that must be consulted at all time and whoever he endorses for 2019 is likely to be the next president irrespective of political party,” he said.

BUSINESS DAY

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Wednesday 16 May 2018

Politics & Policy

2019: Concerns mount over FG’s clampdown on media, lawmakers OWEDE AGBAJILEKE, Abuja

s the 2019 election approaches, concerns have been raised in some quarters over the incessant clampdown on critics of the government. Using the incessant arrest and detention of vocal federal lawmakers and journalists as case studies, some observers asserted that the move is meant to stifle opposition ahead of the forthcoming elections. Even more worrisome is the persistent disobedience of court rulings by the Federal Government. Critics of Buhari who have been detained, prosecuted or hounded include senators like Dino Melaye, Peter Nwaoboshi, Shehu Sani, Matthew Urhoghide, Isah Misau. Findings by BusinessDay revealed that journalists and bloggers who have been arrested and detained since May 2015 when the President assumed office and their dates of arrest include: Seun Oloketuyi (August 25, 2015), James Emeh (October 15, 2016), Ahmad Salkida (September 5, 2016), Midat Joseph (April 19, 2017), Jamilu Mubai (September 22, 2016), Bishir Dauda (September 2010), Luka Binniyat (February 6, 2017), Audu Maikori (February 17, 2017), Kemi Omololu-Olunloyo (March 13, 2017) and Austin Okai (March 13, 2017). Others are: Emenike lroegbu (September 6, 2016), Chris Nwan-

A cross section of newly-elected chairmen of local gvernment and Local Council Development Areas in Oyo State, during their inauguration by the Chief Judge of the state, Justice Munta Abimbola, at the House of Chiefs, Parliament Building, Secretariat, Ibadan... on Monday.

du (September 1, 2015), Abubakar Usman (August 8, 2016), Jones Abiri (July 23, 2016), Emmanuel Ojo (September 27, 2015), Desmond Chioma (October 2015), Kassim Afegbua (Declared wanted on 6th February, 2018), Tony Ezimakor (February 2018) among others. In a chat with BusinessDay, a political analyst, Frank Ugo, said the move is to instill fear on lawmakers and the electorates ahead of the general elections. This, he said, signals danger for the nation’s democracy.

According to him, the clampdown on vocal senators, coupled with the Federal Government’s directive on hate speeches by broadcast stations, are indirect ways of bringing back the obnoxious Decree 4, which was used by Buhari in his heydays as military head of state to gag the Press. “If the police could harass a serving senator like Dino Melaye with impunity and the IGP could shun Senate invitation for three times, with the backing of the Presidency, it is a clear indication that they will silence any form of

opposition. “Lawmakers no longer have impunity from what they they say in the hallowed chambers. “The government wants to perpetuate fear on lawmakers. And they have succeeded in doing so. Senators no longer have the courage to speak up since the incarceration of Dino Melaye. There is fragrant disregard for court orders by the Federal Government and homes of judges are being raided under the guise of fighting corruption”. He argued that the alleged

inhuman treatment meted out to Melaye will discourage electorates from meeting the embattled lawmaker to channel their grievances after his release from detention. “I think once he is released, he won’t be as vocal and he used to. He will be more circumspect,” Ugo added. Melaye was arrested and detained by the police since April 24, 2018. On his part, the Archbishop of the Catholic Archdiocese of Abuja, John Cardinal Onaiyekan has warned that the Church will resist further clampdown on the media by the Federal Government. The cleric advised the Buhariled government to be cautious in its campaign against hate speech and ensure that it does not gag the Press or impede on the freedom of speech of citizens. The Archbishop who disclosed this in Abuja on Sunday at the commemoration of the 52nd World Communications Day, said government must be careful not to infringe on the rights of citizens as it fights to contain hate speech in the country. “Government’s emphasis on hate speech may impede on freedom of speech; so we appeal to government to thread with caution on the issue of hate speech so that it does not gag the press in their editorials and reportage. “As we inch towards 2019, any attempt to gag the press will be resisted by the church,” the Cardinal who was represented by the Director of Social Communications in the Archdiocese, Patrick Alumuku, stated.

Fayemi will win Ekiti guber election, says Ajayi Olowo INNOCENT ODOH, Abuja

y Following the emergence of former Governor of Ekiti State, Kayode Fayemi as the flag bearer of the All Progressives Congress (APC) for the July 14 2018 Governorship election in the state on Saturday, one of the contestants in the rescheduled APC primaries, Ajayi Olowo, has expressed optimism that the APC would win the governorship election. Olowo told BusinessDay on Sunday that the dynamics of politics in the state will favour Fayemi adding that all the stakeholders in the state have resolved to work together to ensure that Fayemi wins the governorship. “If we work hard enough we will win the election especially of Fayemi carries everybody along,” he said. Recall that the APC primary was disrupted a week earlier. Fayemi, who is the Minister of Solid Miner-

als Development, will face Deputy Governor of the State, Olusola Eleka of the PDP in the July poll. Fayemi was defeated by current Governor Fayose four years ago, as an incumbent. On the boast by the sitting governor Ayo Fayose that the APC candidate will be trounced in the coming election, Olowo said that Fayose is just having an illusion stressing that the PDP is not doing well and will be swept away from office now that the APC has a credible candidate. “We (APC) stand a chance. I have already given Fayemi my support and he will surely leverage on it. We have to start the campaign right away,” he said. Governor Fayose while reacting to the announcement that his archrival Fayemi has secured the APC ticket, told Fayemi not to celebrate yet as his victory at the rescheduled governorship primary of the All Progressives

Congress held on Saturday is “Pyrrhic victory.” In a statement issued by his Chief Press Secretary Idowu Adelusi, on Saturday Fayose said Fayemi will suffer a far more humiliating defeat than he suffered in 2014. “In 2014 when he was the sitting governor and I was not in power, I trounced him mercilessly. I gave

Fayemi

him 16 – 0, defeating him in all the local governments, including in his home town. He did not win a single local government. “Now, I have been in power for more than three years and have served the people of Ekiti well. My legacy projects are there to speak for me, and for my party the PDP, as well as for our candidate in the July 14 governorship election, Kolapo Olusola Eleka. “Fayemi will suffer the worst defeat of his political career. After the July 14 election, he will go into political oblivion. “He has nothing to celebrate because of the electoral disaster awaiting him. The manner of his so-called victory also leaves much to be desired as it has turned many of their party leaders and followers against him.” Speaking further Governor Fayose noted that “Fayemi’s victory has made the condition of APC worse in Ekiti. The party leaders and members know that Fayemi

has no use for any of them beyond the July 14 election.” Fayose also urged aggrieved members of the APC, especially those formerly in PDP to return home, saying “PDP is your natural habitat. This is the time for you to escape from the APC’s sinking boat and return home to a rousing welcome. “We also invite other politicians not satisfied with the parlous state of affairs of our nation to join hands with PDP to rescue our nation. “APC is falling apart everywhere”, he said, adding that the party, which was dead before in Ekiti, has now been buried with Fayemi’s victory. “Fayemi is the final nail on APC’s coffin in Ekiti. He may deceive them in Abuja but he is a paper weight at home. His arrogance alienates Ekiti people and any serious politician from him. “He will meet his political waterloo on July 14”, he boasted.

Wednesday 16 May 2018

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BUSINESS DAY

Politics & Policy

Herdsmen crisis will be big problem for Buhari in 2019 - UPN chair The National Chairman of the Unity Party of Nigeria (UPN) Bankole Okuwa, avers that the inability of President Muhammadu Buhari to tame the incessant killings allegedly perpetrated by Fulani herdsmen across states in Nigeria especially the Middle Belt, might pose serious problem for the President in 2019 general elections. In this interview with INNOCENT ODOH, the Professor also carpets the Inspector General of Police for snubbing the Senate, advising that the IGP be removed from office. He also dismisses the African Democratic Congress (ADC) as powerless in the South West. Excerpts: What is your take on the deteriorating security situation under President Buhari’s administration? ecurity is very important to every individual, nobody wants to lose is life carelessly and nobody wants to be harassed by another person, everybody wants to have a safe. But the herdsmen have been making it difficult and President Buhari unfortunately has not responded very well. I was thinking that being former military man he should respond to all the security threats. This is the worst time we have in the country as far as I know. We have Boko Haram on one side, herdsmen on another side and we have kidnappers here and there. It is just terrible it is a major issue for debate for 2019 elections. Whoever is going to be president in 2019 must provide solutions to it.

the Alliance for Democracy (AD) to UPN and then to SDP. It is the same line of thought. But I don’t really know what is going on with the SDP now because they joined APC in the last government but I think they are not treated fairly now they are coming out. So far I don’t know if they even have any kind of network and structure on ground apart from Falae, who had been talking lately. But they are welcome if they want to join the UPN because we belong to the same political family.

What are the political implications of this unrestrained violence? A lot of people believe that if it is not tamed in record time it may lead to the breakup of the country. Do you share this view? I think to some extent people are correct but we have the resources to take care of all these things. What we need is a capable man, a visionary as president. But unfortunately Nigeria has not been a lucky country in terms of leadership. One would think that since most of our leaders today are former military men, they should understand security very well. This is the worst period and I am disappointed in Buhari. He is a man a respect for tackling corruption but he should have been able to tackle

Okuwa

insecurity very well. If he is going to run again for president in 2019, then he is going to have a very serious problem because of insecurity. There alliances going on in the country. Is your party in a form of alliance to contest the 2019 elections or is it going all alone? Yes, my party is in a form an alliance with others but our alliance revolves around Afenifere. The UPN is late Chief Obafemi Awolowo’s party, we toe his line, his thinking, his

thoughts, his ideas and I think we cannot go beyond Afenifere. The so called African Democratic Congress (ADC) I don’t think it can fly. May be it can fly in other parts of the country but not in Yoruba land. You also have Social Democratic Party (SDP) in the West, how does it work with the UPN? The SPD and the UPN are like twin parties because they are all derived from the concept of Awolowo’s parties from the Acton Group (AG) to

through some basic training. Now, if you turn to the states, most of them cannot stand if the Federal Government does not give them subvention, they can’t even pay salaries.

The Nigerian economy is in distress in this dispensation and what solution do you think your coalition can provide. What do you also see about the economy if Buhari continues beyond 2019? To be fair, I think Buhari can do well in the economy. As far as Buhari is concerned, I think he is handling the economy very well. All he needs to do is to get Nigerian economists and good advisers to follow good policies. Now that petroleum has increased in terms of pricing in the world, I think that between now and the election he can do well. I understand that we are making some billions of naira every day. All we need is economic planning. I hope the leaders understand what they are doing because many of our leaders don’t understand the national economy. If you go to the senate you will see that the so called lawmakers don’t know how to debate but they want to be senators and members of the House of Reps. Many of them have not done anything in the last four years, not even a motion, because they don’t understand. I think they should go

What is your take on the refusal of the Inspector General of Police to appear before the Senate to answer some questions on security? When you consider what is happening in Nigeria I think our problem is peculiar. I think the problem is mixing democracy with our culture. People feel that they are close and known to the president and therefore they circumvent what the law requires. Is it not this IG, who disobeyed the President and disobeyed the Senate? I think the senate should get him off. They should ask him to resign; if he does not resign they should put him aside and appoint somebody. Those who are leading should show good example. When they go overseas our leaders comply with the law over there, when they come back, they are too big to obey the law. So that is because of our culture, which is not in tandem with Western Democracy, the values are not the same. So we are living in between the backlash of our culture and democracy which is western. You don’t defy the Senate which is a very high institution. If the Senate goes ahead and passes a motion that the man is no longer recognized or he should resign then we are going to have a problem. The same IGP even disobeyed the president and he said nothing. This is a cultural problem. People at the top should know that they have more responsibility to protect our democracy.

Also, the party maintains that it willfill very qualified and credible Candidates for every electoral position in the forthcoming general election as well as campaign vigorously across the country. Moreover, the party is assiduously and painstakingly building massive political bridges and creating strong structures in every ward of the federation as well as enlisting membership, supporters and fellowship in every nook and cranny of the nation, the statement said. Meanwhile, APGA restates that it is not into merge talk with any political party for the so called “mega party” or “third political

force”, because the party with the present political reality in the country and its steady existential political evolvement and growth, is naturally an already circumstantial divinely inspired and created “political third force” that no serious and practising politician can ignore. “Therefore, other than APGA, Nigerians should stop looking for the imaginary and illusionary political arrangement that will never be there, that even if it is hurriedly put together, would be amorphous; a floppy mishmash and a pot -pourri that would not stand the test of time,” the statement added.

Why APGA is the best option for 2019 elections - NPS INNOCENT ODOH, Abuja

he National Publicity Secretary (NPS) of the All Progressives Grand Alliance (APGA) Henry Okolie Aboh, has beckoned on all Nigerians to adopt and vote for the party in the 2019 general elections because the part has the right framework to lead Nigeria away from its present economic and political quagmire. In statement made available to BusinessDay at the weekend Okolie – Aboh, noted that “the All Progressives Grand Alliance (APGA) with hindsight of the

Nigerianpolitical history and the lackluster performance in governance since the emergent of the present political dispensation, is arguably the most credible political platform and best option on ground to emancipate the Nigerian citizenry from the gross political maladministration and economic bondage they are in over the years.’’ He called on all true democrats, sincere progressives and patriotic Nigerians to extend hand of fellowship to the party in its genuine efforts and unwavering patriotic zeal to build a better and prosperous Nigeria that will be home for all its citizens, the black race and

good people of the world. “The party’s utmost duty is to salvage the country from the present political, social cum economic dark clouds it has enmeshed itself in,” he noted.

Henry Okolie Aboh

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 16 May 2018

MARITIME e-COMMERCE

Why PTML invested in developing access, operational management system Stories by UZOAMAKA ANAGOR-EWUZIE

he Ports & Terminal Multiservices Limited (PTML), a concessionaire in Nigerian port, invested hundreds of millions of Naira seven years back, to develop a state-of-the-art access control and operational management system in its terminal. As one of the largest RoRo terminals in West Africa, the company, which has it location in the Tin-Can Island Port, developed the system to profile port users and facilitate trade in its terminal, which handles a large chunk of cars that come into Nigerian seaports. The investment was to enable the terminal deliver on its obligation of ensuring a secure and safe business environment in line with the provisions of the International Ship and Port Facility Security Code (ISPS). Also, the system was aimed at controlling the flow of persons into the terminal through designated access points, by enabling scanning of cards to gain access. It also ensures that only authorised persons can transit through the restricted areas in the terminal

L-R: Philips Ojo, representative of the corporate affairs manager; Joy Itegboje, corporate affairs officer, SIFAX Group; Adewale Adetayo, general manager, SIFAX Haulage and Kayode Alatishe, operations manager, SIFAX Haulage at the 6th edition of the Nigerian Transport Awards where SIFAX Haulage and SIFAX Group’s Corporate Affairs Manager won awards.

in adherence to all relevant Nigerian regulations and in line with the provisions of Customs and Excise Management Act (CIMA). Confirming this, the Lagos Maritime Security Zone of the Port Facility Security Officers (PFSO), said that the issuance of port access cards by PTML terminal, was in line with the provisions of the ISPS Code. Ignatius Uche, chairman of the forum, who spoke

against the back drop of the recent threat of showdown by freight forwarders under the aegis of the National Association of Government Approved Freight Forwarders (NAGAFF), over the electronic access control cards, said that the ISPS Code provides that no facility should allow unauthorised persons access into its premises without profiling. He accused the agents of sycophancy and trying to

cause trouble. “Agents, who are against this, are those who want the port terminals to be like the old ports where people can even sleep inside the terminal. This time, we profile everyone that comes into the port for security reasons. Uche said the fee of N10, 000 for issuance of the card is reasonable as the amount was not up to the overhead cost of producing the card and each agency is entitled to seven of

will put an end to the agent going to the local market to source foreign exchange for settling charges incurred locally. Bello, who was represented by Samuel Vongtao, director, Legal Services of the Council, listed such charges to include those collected by the Nigerian Ports Authority (NPA); Nigerian Maritime Safety and Administration Agency (NIMASA); ship chandelling and others. Such charges, he said, were usually in foreign exchange since it was assumed that the principal must have wired the funds to the disbursement of account of the agent in foreign exchange. According to him, it was left for the agents to make

such payments in currency that was transferred to the disbursement account rather than going to the interbank market to source for foreign exchange. “It was wrong that in Nigeria the practice was completely different. Shipping agents apply to transfer all incomes to their principal while at the same time applying to CBN for Forex at interbank market to service local costs,” he added. Bello expressed delight that the CBN whose attention has been drawn to this vacuum by the Council had responded by setting up an investigative team that went to all banks to ascertain that there was no such account being operated by any shipping agent in the country.

ric access card, the whole process of cargo release is facilitated and secured such that a registered Customs agency does not have to present scores of documents to take delivery of consignment from our port. Rather, once an agency is registered with us and presents a Bill of Lading, he or she will not provide any other document or ID to do business with us,” Oko explained. Oko further said that the biometric card is a one-stopshop that gives the port user access to transact business with the terminal without delay. “As access is granted, it immediately hit both delivery and release sections to confirm that the person is a genuine agent from the agency that owns the cargo. This is why our delivery process is usually very quick.” The requirements for issuance of the card include a valid Customs accreditation, Corporate Affairs Commission (CAC) document, letter of introduction from the bank, evidence of existing addresses, valid NCS Form C30 and N10,000 for first time registration. This means that upon renewal of the access card, it is issued for free and it is renewed every year as the agency renews its Customs license and Form C30.

Ports & Cargo appoints new managing director

NSC, CBN to introduce disbursement account for shipping agencies he Nigerian Shippers’ Council (NSC) in partnership with the Central Bank of Nigeria (CBN) is planning to mandate shipping agencies to open disbursement accounts (DAs) that would enable them transact with their principals overseas, in line with the United Nations Conference on Trade and Development (UNCTAD) global operating standards for shipping agents. Hassan Bello, executive secretary of NSC, said at a meeting held recently in Lagos between the CBN representatives and industry stakeholders, that maintenance of a disbursement accounts as provided by ‘UNCTAD Minimum Standards for Shipping Agents’

the cards. Also, Steve Oko, Admin manager of PTML, said during an interactive session with BusinessDay in Lagos that the access control and identification management system became very critical to PTML because of the peculiarity of its business, which attracts huge number of touts claiming to be clearing agents and freight forwarders. “They constitute serious security threat to all governmental authorities, staff and other legitimate players working in the port. Reacting to the accusation that PTML initiated the access control to make money from freight agents, Oko said: “The fee of N10,000 is charge for the first time an agency is registering with us and it entitles it to register seven persons. We do not register an individual rather we register a corporate entity like a clearing and forwarding agency.” Continuing, he said: “This is a card that has several security chips in it and the production of the cards cost well over N7,000 per one, but we give seven of it for just N10,000. Our staffs also have their own access card and when they carelessly misplace it, the person will pay for it to be reissued to avoid misuse. “By using our biomet-

Saleh Jibrin, CBN deputy director, Foreign Exchange Management, Trade & Exchange Department, said the idea of meeting with stakeholders was to ensure that the disbursement account enjoys the support of those in the shipping industry. Jibrin stated that the CBN wants to listen to the stakeholders in order to make policies that will grow the shipping industry as well as the national economy. Dabney Shall-Holma, former director, shipping services of NSC, said the Disbursement Account when introduced will go a long way in improving the contribution of the shipping sector to the nation’s gross domestic product (GDP).

orts & Cargo Handling Services Limited, a subsidiary of SIFAX Group and the concessionaire in charge of Terminal C of the Tin-Can Island Port, Lagos , has appointed Denrick Moos as its new managing director. Moos holds a master’s degree in Maritime Studies from the University of Stellenbosch, South Africa and has over two decades of professional experience, including a 7-year stint as a combat officer in the South African Navy. He also has an extensive working experience in Europe. Moos started his commercial maritime experience at Ocean African Container Lines as a terminal superintendent and later joined the West Africa Container Terminal Nigeria Limited as the waterside & planning manager. He later became general manager, operations

in 2010. Between 2013 and 2015, Moos worked at the APM Terminal management BV Netherlands as the global transformation leader and head of Global Yard, Gate and Rail Operations. He returned to the West Africa Container Terminal Nigeria Limited in 2015 as the chief operating officer (COO) before joining PCHSL. On the appointment, John Jenkins, Group managing director, SIFAX Group, said Moos was given the mandate to improve market penetration, increase revenue and achieve greater operational efficiency. “We are convinced that we have made the right decision by bringing him on board. Our expectation is that he will surpass all the targets for the company to consolidate on its position as the leading indigenous terminal operator in Nigeria,” Jenkins said.

Wednesday 16 May 2018

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BUSINESS DAY

Tax Issues

Federal High Court rules on applicability of VAT on transactions with nonresident companies AKINBIYI ABUDU, OLUWATUMININU FAMILUSI, & NGOZI AGWU

n recent years, with the downturn in the Nigerian economy, particularly as it pertains to the reduction in revenue from oil and gas operations, the Ministry of Finance, supported by the Nigerian tax authorities has increased its focus on taxation. Particularly, the Ministry has focused on legislation, administration, and the collection of taxes. In the case of indirect tax, the initial strategy was to increase the Value Added Tax (VAT) rate and address perceived gaps in the taxation system through enactment of remedial legislation. However, efforts in this regard did not materialize as several issues and contentions were raised during the process, which prolonged and eventually halted the plans to amend the VAT Act. Presumably, in response to this failure to amend the VAT Act, the Federal Inland Revenue Service (FIRS) started to take a broader view in interpreting the VAT provision and employing more aggressive measures in its administration and collection of VAT. The implementation of such measures (which includes frequent desk examination reviews, tax audits and investigations as well as introduction of various schemes to increase the revenue generated from taxes) has led to increased challenges and controversies between the FIRS and taxpayers. One area of controversy pertains to the interpretation of the VAT provisions regarding the application of VAT on services provided by nonresident parties to Nigerian taxpayers. This controversy is apparent in the direct opposite rulings held by two tax tribunals of equal standing on essentially the same set of facts, i.e., in the case between Gazprom Oil & Gas v FIRS on one hand, and the case between Vodacom Business Nigeria Limited (VBNL) and the FIRS on the other hand. While the Abuja division of the Tax Appeal Tribunal (TAT) ruled in favor of the taxpayers, the Lagos division of the TAT ruled in favor of the FIRS. With respect to the Vodacom case, the Federal High Court (FHC or the Court), on 19 December 2017, upheld the ruling of the Lagos TAT and thus held that, the supply of bandwidth services by a nonresident company (NRC) is subject to VAT in Nigeria. Primarily, the ruling considered whether transactions with Nigerian companies carried out by foreign companies should be subject to VAT in Nigeria merely on the basis that these services were provided to customers in Nigeria. In this publication, we take a look at the judgment of the FHC, and the potential impact of the judgment on VAT administration in Nigeria, specifically as it relates to Nigerian companies involved in cross-border transactions. To summarize the background of the case, New Skies Satellites (NSS), a company incorporated in the Netherlands, entered into a contract with VBNL for the supply of satellitenetwork bandwidth capacities for

use in Nigeria. NSS issued an invoice to VBNL for the supply of the satellite network. There was no VAT charge on the invoice. VBNL paid for the supply net of VAT and did not remit any VAT to the FIRS. During a tax audit of VBNL, the FIRS assessed the transaction and issued a re-assessment notice to VBNL stating that the transaction should be subject to VAT. VBNL objected to the re-assessment notice and lodged an appeal at the Lagos division of the TAT. The Lagos TAT ruled in favor of the FIRS and upheld the FIRS’ additional VAT assessment on the supply of bandwidth charges. VBNL’s position In disagreement with the ruling of the TAT, an appeal was made by VBNL to the Court to set aside the TAT’s judgment. In requesting for a set-aside of the decision, VBNL set forth that: •The physical act of rendering the service was not performed in Nigeria. Specifically, since the bandwidth capacities were supplied from the Netherlands, the services should not be subject to VAT under the definition of “imported service” as outlined in Section 46 of the VAT Act. •NSS did not carry on business in Nigeria, thus, it had no obligation to register for and charge VAT on its invoices as outlined in Section 10 of the VAT Act. It also relied on the Gazprom case in its appeal to the FHC where the Abuja division of the TAT ruled that VAT was not applicable on services deemed to be rendered outside Nigeria. The FIRS’ position The FIRS responded to the appeal by relying on sections 2 and 10 of the VAT Act. The FIRS set forth that: •Section 2 of the VAT Act provides that VAT should be charged and paid on the supply of all goods and services except those specifically listed as exempt under the First Schedule in the Act for which “bandwidth capacities” is not included. • Section 10(2) creates two statutory duties which are the duty of the nonresident to include tax in its invoice and the duty of the consumer in Nigeria to remit the tax. It stated that these duties are separate, distinct and independent of each other such that once the service was received in Nigeria by VBNL, the liability to account for the VAT immediately arose, notwithstanding NSS’s failure to include VAT in the invoice. FHC judgment The Court ruled in favor of the FIRS and upheld the judgment of the Lagos TAT. It placed its reliance on Section 2 of the VAT Act which imposes VAT on all supplies except those exempt in the Act. Furthermore, the Court indicated that the location of the supplier is of no consequence, and what is important is that supply of goods and services is made into Nigeria for consideration. It interpreted this using the destination principle (as opposed to the origin principle) under the Organization of Economic Co-operation and Development (OECD) International VAT/Goods and Services Tax (GST) Guidelines

published on 12 April 2017 and indicated that Section 2 of the VAT Act suggests that VAT should be levied in the customer’s jurisdiction and not the jurisdiction of the supplier. The Court concluded that where an NRC has no place of business in Nigeria, the administrative burden of registering in Nigeria should not apply. However, to avoid the administrative burden of registration on the NRC supplying services in Nigeria and to ensure that VAT is accounted for, the Court held that a reverse charge mechanism, as described in the OECD International VAT/GST Guidelines, should be applied. The reverse charge essentially mandates that the local resident and VAT-registered customer and not the NRC supplier, account for the VAT on supplies received from the NRC. In summary, the Court, in interpreting the VAT provisions, made inference to the intent of the legislators in promulgating the provisions and specifically referenced the likely outcome of tax evasion in an alternative interpretation of such provisions. Analysis of the FHC judgment In reviewing the ruling by the FHC, it would appear the Court’s reasoning in arriving at the conclusions reached were both logical and

One area of controversy pertains to the interpretation of the VAT provisions regarding the application of VAT on services provided by nonresident parties to Nigerian taxpayers. This controversy is apparent in the direct opposite rulings held by two tax tribunals of equal standing on essentially the same set of facts, i.e., in the case between Gazprom Oil & Gas v FIRS on one hand

reasonable, particularly in protecting Nigeria’s interests as a taxing jurisdiction. Nevertheless, as reaching such conclusions requires reliance on inferences as to intent of the provisions and in some instances, application of tax concepts such as reverse charge which are not within the applicable law, one could also reasonably argue that the conclusions reached therein effectively expands the role of the judiciary to include promulgation and creation of law as opposed to being restricted to interpretation and enforcement of existing law. The judicial duty of courts to interpret laws was duly exercised in the case between Oando Plc. and Federal Inland Revenue Service where the provisions of section 19 of the Companies Income Tax Act (CITA) as written, effectively gave the FIRS the ability to tax previously taxed income (i.e., retained earnings), if such income is remitted as dividend in a year in which its current taxable income is less than such dividend. Specifically, although such an interpretation of the provisions appeared to be unreasonable given the courts’ agreement that previously taxed income in the form of retained earnings ordinarily should not be subject to additional tax, the court in making its ruling in the case, noted that as the provisions clearly did not consider or exclude retained earnings from its purview, it had no choice but to interpret the provisions as written. Another example of this approach is reflected in the judgment delivered by the Abuja division of the FHC, in the case between CNOOC Exploration and Production Nigeria Limited v Attorney – General of the Federation, FIRS and South Atlantic Petroleum Ltd. In the CNOOC case, the FHC ruled that since the contractual rights to

a production sharing contract in an oil mining lease, represent an incorporeal property, the assignment of these rights do not fall under the purview of the VAT and are therefore not subject to the assessment of VAT since such rights do not constitute a “good” or “service” upon which VAT should apply based on the VAT Act. Given this view, it follows then that although interpretation of the law as currently written would lead to loss of revenue and could in fact be contrary to the intent of the law, since evidence of such intent is not available via legislative history, one could reasonably infer an alternative and contradictory intent such as: •A deliberate attempt by legislators to offer a reduced scope for application of VAT on services rendered by nonresidents to mitigate the punitive restriction on offsetting of input VAT with output VAT for services •Use of the Origin principle as opposed to the Destination principle A strict and common interpretation of the provisions should be applied. Accordingly, it would appear a second attempt at amending the VAT Act to reflect the Revenue’s intent as to interpretation of the Act should be necessary. In conclusion, we anticipate that further appeal of the case to a higher court to ensure consistency and accuracy in interpretation of Nigeria’s tax laws, a condition essential to maintaining and increasing foreign investment into the country, should be required. Hopefully, this particular case and others like it, serve as evidence of an urgent need to ensure documentation and publication of legislative history for Nigeria’s tax laws. Abudu is Partner, International Tax Services; Familusi is Manager, Business Tax Services; while Agwu is Associate, International Tax Services, all of Ernst & Young.

BUSINESS DAY

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Wednesday 16 May 2018

COMPANIES & MARKETS South Africa, Kenya, Nigeria lead in Africa’s business digitalization environment …as Nigeria is ranked 100th out of 115 countries in the world Modestus Anaesoronye

outh Africa, Kenya and Nigeria have been named top three among 115 countries providing the environment for businesses to thrive in the digitalization era. Euler Hermes in its report Enabling Digitalization Index (EDI) 2018, illustrates each country’s ability to provide the necessary environment for business to succeed in an increasingly digitalized global economy. The index measured corporations’ ability to transform and thrive digitally. Five successful strategies to EDI ranking includes ability to develop digital regulation, build human capital, use pivot sectors and territories, bank on smart logistics, and reduce digital inequalities. According to the report, weak connectivity, trade infrastructure and knowledge ecosystem have proved to be the main shortcomings in Africa. The continent has attracted substantial amounts of foreign direct investment but businesses have not really thrived be-

cause of inadequate infrastructure and a small population of techno-savvy citizens. South Africa leads the African pack by occupying the 46th position, Kenya is in 70th position and Nigeria is ranked 100th out of 115 countries in the world. South Africa focuses on digital technology Being the leading business hub on the continent, South Africa, occupies the first position. The country is endowed with economic development and infrastructural sophistication. Over the years, many companies in South Africa have invested billions in the digitization of the economy. The country’s competitive advantage is explained by a major focus on digital technologies like sensors or connectivity devices, and on software and applications, such as manufacturing execution systems. However, with this impressive record, the report noted that the connectivity quality in South Arica still remains below average. Kenya boosts infrastructure Coming second after South Africa and 70th on the world ranking, Kenya is showing a steady increase in infrastructural development. Kenya is the business

L-R: Chinyelu Chikendu, head of strategy, Vatebra; Kunle Akinniran, MD; Lady Betty Obieri, founder, Living Fountain Orphanage; Mike Aigbe, DMD and Gbemisola Iyere, head, alliances during the Vatebra Walk for Charity to Living Fountain Orphanage home, Lekki, Lagos, an initiative of Vatebra to donate various items to the Orphanage home on Friday.

leader in East Africa with an economy estimated to be slightly over US$70 billion. The country also has an impressive trade infrastructure and a supportive business environment, which

Roche Nigeria unveils new medicine for cancer treatment SEYI JOHN SALAU

espite seems underway for cancer patients in Nigeria as Roche Nigeria, an oncology firm has unveiled what it call an innovative approach to cancer treatment with the launch of subcutaneous (SC) formulation of Herceptin, its flagship breast cancer drug in Nigeria. Known as Herceptin SC, the SC formulation allows the drug to be administered by injection instead of the more common intravenous (IV) administration. The SC is a ready-to-use liquid formulation that is administered as a 600 mg/5 ml fixed dose every three weeks. This simplifies healthcare procedures by removing the need for reconstitution or dose calculation according to the body weight of the individual. A loading dose is not required when using subcutaneous administration. This new innovation offers greater convenience to patients and simplifies healthcare proce-

dures by removing the need for reconstitution or dose calculation according to the body weight of the patient. Oladipupo Hameed, country manager, Roche Nigeria, in a statement said Herceptin SC represents the next level of innovation in breast cancer treatment, which will enable patients to spend less time in hospitals and more time getting on with their lives. “At Roche, we believe that patients in Nigeria should receive the same treatment as those in other parts of the world and the launch of Herceptin SC is testament to that belief. Research has shown that maintaining a normal life and spending time with loved ones can improve the wellbeing of women with breast cancer,” said Hameed. The launch of Herceptin SC in Nigeria is the first of its kind in sub-Saharan Africa. This further reiterates Roche’s commitment for innovation in the treatment of cancer in Nigeria. “We are very optimistic that Herceptin SC will be well embraced by healthcare professionals and patients in Nigeria and

will make way for many more innovative medicines in the near future,” Hammed stated. According to Hameed, Herceptin SC is one of Roche innovative medicines used to treat a particular kind of breast cancer that is very aggressive and can lead to lot of death in women with breast cancer, but he posits that SC changes that prevalence level in patients. “It makes response better, and outcomes are significantly better; the women can actually achieve a cure with SC. Now we are moving from 136 minutes infusion to a five minutes infusion, so it makes it more convenience for the patients and doctor, and also for those giving the medication. SC works for both early and late stages of breast cancer treatment,” said Hameed. Markus Germuend, Head Sub-Saharan Africa Sub-Regional for Roche said the company is working in partnership with the ministry of health and some state governments, especially wives of governors on the awareness and screening for breast cancer in Nigeria.

outweighs the country’s political instability. Like South Africa, Kenya also has a below average connectivity quality. Nigeria is big in technology consumption

Third on the continent and 100th on the world ranking is Nigeria. The country has alternated between the first and second position in terms of economic size in Africa. Nigeria

is Africa’s most populous country and that gives it the largest number of technology users. According to the report, Nigeria scored 100th out of 115 despite a substantial market score.

GDL boss sees growth in financial sector from expansion of middle class Hope Ashike-Mosses

rowth and Development Limited (GDL) has stress the need to substantially remodel the Nigerian financial services industry to provide support for growth of the middle class. Kola Ayeye, managing director of GDL said this at official opening of the Mainland office. GDL is a nascent financial services group with interests in asset management, finance and stock broking. “A situation where critical social infrastructure has collapsed, the middle class is almost totally emasculated, but banking sector profit is approaching N1 trillion is

unacceptable”, he said. A major strategic intent of GDL’s asset management business is to create unique private-sector led frameworks to pool capital from both private and public sector and innovatively deploy same to deliver good financial returns while simultaneously solving problems that have defied government solutions notably education, healthcare and housing. The niche, which it has christened high-impact finance requires bringing the resources of both the public and private sector under private sector leadership to achieve both decent financial returns and compelling social dividends. GDL Asset management is licensed by the Securities

and Exchange Commission (SEC) to manage financial and non-financial assets through collective investment schemes and specialised vehicles. GDL finance and leasing, a subsidiary, will focus transforming medium scale and eligible small scale enterprises to trans generational institution; fully persuaded that prosperity is perpetuated and sustained by creating trans generational wealth through strong institutions. Ayeye, who voluntarily resigned his last position as an executive director at Asset Management Corporation of Nigeria (AMCON) said he felt compelled by the imperatives of middle class expansion and societal which are core to the GDL vision.

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Editorial PUBLISHER/CEO

Frank Aigbogun

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

Bashir Ibrahim Hassan

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

Towards greater financial inclusion

he benefits of the financial inclusion of all citizens can be phenomenal. It will create such a positive and unstoppable force that will propel a country’s economic growth. The tapping up of the huge and largely idle funds at the hands of the financially excluded would definitely promotes capital accumulation, credit creation, increased economic activity, and increased investment. Research has shown that over two billion individuals and 200 million businesses in emerging economies today lack access to savings and credit, and even those with access can pay dearly for a limited range of product. In Nigeria, it is estimated that about 40% of Nigerians are financially excluded. These unbanked and under-banked Nigerians are predominantly women and youth between the ages of 18 and 35. Some estimates suggest that Nigeria could

quadruple its growth if all its citizens are financially included. Since most of the financially excluded in Nigeria are the low income earners and those in rural settings, there is no greater or more effective and efficient tool of taking financial services to them than the use of digital technology or simply the mobile phone, which use has become quite pervasive. Indeed, research and experience has shown that through digital technology, financial services could reach billions of new customers quickly and efficiently. The success of M-Pesa, a mobile payments app in Kenya with 17 million active users conducting more than $50 billion in cashless transactions yearly, is nothing short of phenomenal and demonstrates the benefits of bringing digital financial services to all regardless of status, education or income as well as the power of technology to provide solutions to hitherto intractable problems. However, Nigeria, with a

teledensity of over 108% and 21 licensed mobile money operators have been unable to bring digital financial services to the 40% of Nigeria’s adult population excluded from financial services. This is a significant drawback. To our mind, the main reason for this failure is the decision of the central bank of Nigeria to adopt a bankled approach as against the telecom companies being the drivers. The main reason for this, as the CBN later explained, was because, mobile money will still be provision of banking services and it was better banks that are specialists in that field provide the services so people do not lose their money. Meanwhile, the telecom companies will provide most, if not all, the infrastructure for the scheme. But banks are unable to effectively market digital financial services without the cooperation of the telecom companies. Therein lies the dilemma. In contrast, Kenya that is the shining model of digital financial services, adopted

a telecoms company driven model. But the M-PESA actually started as a product from a Micro-Finance bank, which was looking for a cheap platform to reach out to its customers spread all over the country. It eventually struck a partnership with Safaricom and that led to the birth of M-PESA which is now widely used across Kenya by both the financially included and excluded. In Ghana also, the Bank of Ghana allowed the telecom companies to set up subsidiaries with own boards separate from their parent companies to provide mobile banking services. This has led to the relative success of digital financial services in the country. Clearly then, one of the reasons for the inability to scale lies with this approach. No matter how the CBN feel about it, the telcos and now fintech operators must be involved for digital financial services to work seamlessly and for the millions of financially excluded to be included.

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Nigeria’s fertile deserts, cultivated under siege “This fear is not felt only by me, but virtually all the farmers in Borno state. You cannot access your farm, orchard, garden, and even your livestock is not spared. So the whole concept of agriculture in Borno has died for a very long time,” Gambo added. Same could be said of the international cattle market in Potiskum where as Agwai explained “Cows coming to the market have been drastically reduced, likewise the number of customers coming to trade.” “Gunmen invaded this market and shot over 150 people to death. Till date there has been no show of support or concern from any agency of government,” Agwai said, speaking of horrors from the past, which still haunts many people and combined with losses suffered, limits the capacity to regain economic boom. Badamasi Umar, a farmer in Buni Gari, few kilometres from Buni Yadi where the Emir’s palace lies in ruins, lamented “there is fear and threat on farms to the east (of the local government area). Ironically, they are the most productive lands and are bigger than the ones we cultivate now. “The lands we cultivate presently are a little safe, and there is some confidence to farm, only that every farmer’s dream is to cultivate the banned farmlands. We are just managing these ones,” Badamasi said.

CALEB OJEWALE

nly the dead have seen the end of war, a quote with some controversy on attribution to either Plato or George Santayana, but laden with deep meaning, and a sad reflection of what Nigeria’s northeast and its economic prospects have become. On a trip to Borno and Yobe states for firsthand accounts of the situation in severely affected areas, it was evident that not only the dead have seen the end of war, but the living have also witnessed an unthinkable transformation of their fortunes. Many are happy not to be dead, but the economy and their sources of livelihoods have been far from lucky. It has become a classic ‘grace to grass’ story for many people who were wealthy, influential, and contributed to economic growth, but now, holding out bowls in the marketplace to beg for food. “Imagine coming from a village where you were so rich, with plenty cattle, food, everything, and within one hour you’re forced to run out with one cloth. You come here but no one cares about you, because many are like you. You see someone who was the richest person in their area, begging in the market here in Maiduguri. This is how bad it is,” said Abdulkadir Jidda, chairman, All Farmers Association of Nigeria (AFAN), Borno State chapter when we met in Maiduguri. In Yobe state, at the International Cattle Market in Potiskum, dubbed the largest in West Africa, similar tales of misfortune were told. Abubakar Agwai, Yobe state secretary of the Amalgamated Cattle Dealers Association of Nigeria revealed that; some people who in the past bought up to 15 cows and transported to places like Warri, Lagos, Enugu and other places (in the south), are now unable to buy anything and many are now labourers in the market, working for those coming to buy. Indeed, with an estimated 19 million heads of cattle in Nigeria, yet barely meeting local demand for meat and milk, the Southern part of the country has traditionally relied on the North for dairy supplies. Assuming N100,000 per cow, the cattle market could be estimated at N1.9 trillion. Jidda, giving some perspective to economic prosperity before insurgency, explained with nostalgia and a sense of grief in his voice, that “before 2009, one could say Borno was a hub of farming in the country. We held the first position in about ten commodities; especially livestock, fish, beans, groundnut, and people would come for these commodities from everywhere, up from Sudan (and neighbouring countries), and down to Lagos, in the southern part of Nigeria.” For the first (and only time) during what was a half hour interview, Jidda was able to smile when he said with pride “as someone from Lagos, you will know that (the popular) Borno fish is the best in the whole country. We also have beans; both red and white varieties, millet, sorghum, gum Arabic, groundnut, and wheat production (in which we were the first because of the Chad basin).” Jidda further explained that, “People who were prospering in Borno were especially farmers, as they were in control of almost all the wealth. Also, whether a person had a white collar job or some other paid employment; they usually would still farm. But now, you can’t see anybody, only dead bodies on the farms.” Also abandoned is 67,000 hectares of land previously used for wheat farming in the Chad basin, with watermelon also cultivated on land covering several kilometres along the shores of Lake Chad. The 67,000 hectares spreads across Ngara, Marte (the largest), to Baga, small pockets in Gamboru Ngala, and some other locations.

“But, nobody can go there now,” Jidda said. Yet, Nigeria remains food insecure with a food import bill of over $5 billion, and for wheat, spends an estimated $1 billion on importation annually. Land previously used for wheat cultivation is for seven years, wasting away due to the insurgency, and may not regain optimal productivity anytime soon. Not only crop production has suffered a hit, but even livestock production and trading. From Chad, Niger, Cameroun, and as far as Central African Republic, cattle was for decades brought into Nigeria through routes which have now been closed for years. Abba Gambo, a professor at the University of Maiduguri who also advises some Nigerian Governors on Agriculture, explained that “the Sahelian zone consisting of Chad, Niger and Nigeria has the major livestock there. So you find Gamboru Ngala in Borno state, sitting as a border town between Nigeria and the Republic of Chad. “Chad has plenty of livestock which they want to take out, but it is a landlocked country, so it must come through Gamboru Ngala. And then, Chad has a small land mass for agricultural purposes. The larger part of Chad is under the desert, just like the larger part of the Republic of Niger. They need food, virtually everything from Irish potatoes to beans, and even to processed items like magi cubes which are always gotten from Nigeria.

“At a time, 50 trucks will leave Maiduguri daily, carrying so many things from condiments to bathroom slippers, to plastic containers, mats, and at times even cars are put into the big trucks. All this is now history,” Gambo said. Lawal Ngalbia, acting secretary of Borno State’s AFAN, reiterating the once prosperous

cattle route from neighbouring countries, recalled with nostalgia how the Borno cattle market once flourished. But since the Gamboru-Ngala road got closed by the military, there has been no business. As we drove past the junction leading to the Gamboru-Ngala road from Maiduguri, Ngalbia points forward, saying the cattle market used to be somewhere along this road, but of course, we dare not venture into it.

Recently, they killed about 15 of our farmers. They came and reported to me and I asked; what can I do about it? It happened in Jere area where they went to clear their farms and gather some firewood. All of them were slaughtered on their farms, and there is nothing anybody can do about it

Farming, trading under the shadow of death Even though the city centres appear relatively calm, but like the sixth sense of a K-9 unit, the ever looming danger of possible terrorist attacks can be felt. Everyone is alert, on the edge, and as one travels farther away to more rural settlements where farmers live in villages, fear is heightened, and uncertainty is absolute. “Recently, they killed about 15 of our farmers. They came and reported to me and I asked; what can I do about it? It happened in Jere area where they went to clear their farms and gather some firewood. All of them were slaughtered on their farms, and there is nothing anybody can do about it,” said Jidda, Borno’s AFAN chairman, overwhelmed and saddened. Recalling when he had to run away from his own home, and flourishing farmland in Marte Local Government Area (LGA), which is still inaccessible, he said “it was a terrible thing for me, especially because I have a large family and being a leader of the farmers, now sitting idle for six years. “You can’t imagine the pain I am in, you just can’t imagine it,” Jidda said. Abba Gambo, who is also a member of the El Kanemi Royal Family, in an emotional interview, said 32 members of his (royal) family have been lost to insurgency, including Abba Ibrahim, a traditional ruler as district head of Gudumbali who was killed in his presence. He has been unable to visit his farm in the last five years out of fear, even though it is located about five kilometres from the University of Maiduguri, within the village called Dalori. Gambo said he also has “an orchard behind the Chad Basin Development Authority, with about 100 mango trees in it and they were fruiting very well. During the dry season when the river comes, I planted rice on the farm and used to get about 100 bags of paddy rice. But for the last five years, I could not step into that farm. I don’t know the people harvesting the mangoes, or whether they are planting something else there. And honestly, I do not have the guts to go there. I just do not have it.”

Displaced farmers sit under a shed in the Farm centre IDP Camp, Jere LGA, Borno

Homes are gone, and the ‘Brave Ones’ battle low productivity With 17 out of 27 Local Government Areas in Borno state captured by Boko Haram at some point, and at least four in Yobe, the ‘Brave Ones’; returnees to some of the liberated communities, however, struggle to rebuild their destroyed homes, and lack of inputs to resume work on the farm. At the Farm centre IDP Camp in Jere, closer to Maiduguri metropolis and not under much threat like other areas in the same local government, farmers sit under tents, as they wait, and hope for donors to come deliver food, and other aid items. “All the houses in our place have been destroyed. Even if there is no fear, we can’t go back because there are no houses to live in,” Jubril Abdulmumini now in his fourth year at the IDP camp, said in despair. Abubakar Ibrahim, who lived in Giremari village, Mafa Local Government, has for three years lived in the same Farm centre IDP camp with his wife and 11 children, but says there is no home for him to return to, much less regaining his six hectare farm where he cultivated millet, sorghum, groundnut, and beans. Visiting Buni Yadi in Gubja Local Government Area of Yobe state, the community could be mistaken for a ghost town, as abandoned, destroyed buildings line the expressway. What used to be a courthouse is now covered in shrubs; the college of agriculture is deserted, same for schools, and a police station. Even the Emir’s palace for the Gujba Emirates Council was not spared. The palace has been abandoned by the Emir for years, burnt by insurgents, and now a shadow of the once festive ambience most palaces have. Buni Yadi was once a successful town, driven by agriculture and a large grains market where traders and buyers from within and outside Nigeria transacted.

Farmers here produced mostly grains such as guinea corn, maize, millet, sesame and wheat. But today, the few ‘Brave Ones’ that have returned, are struggling to regain productivity on their farmlands. Muhammad Lawan, a farmer in Buni Yadi, speaking in Hausa language, said “agricultural activities have deteriorated very much, because a farmer who previously had the capacity to produce 50-100 bags can now only get 10-20 bags at most.” Similarly, Ali Modu, another farmer in Buni Yadi, said “since we came back, it was last year I started to farm due to fear. Before the crisis, I could get up to 100 bags of produce, but last year, I only got 10 bags in all.” Sabo Usman, a transport officer at Gujba LGA, who also says he is a vendor with the World Food Programme (WFP), said “there were (big) farmers who previously got up to 1000 bags of produce here, but presently cannot even produce 50 bags because of financial problems, lack of machinery, fertiliser, and improved seeds. Some farmers don’t even have money to pay labourers that will work on the farm for them.” Ibrahim Garba, the Sarkin Yaki, Gujba Emirates Council, sitting on a mat, in front of the destroyed, deserted Emir’s palace in Buni Yadi, reiterated the lack of capacity by many returnees wishing to resume farming. But beyond this, he noted that “fear prevails in the neighbouring villages.” Another palace chief, Lawan Ibrahim, the Zannah Sulhuma Gujba, also said in despair that “there is high threat and fear in our place. Only very few have returned, and they cannot even farm because it is not safe at all. Many have not returned and some do not even intend to return. “Even I sitting here, I am staying due to my position in the Emirate council, but things are not safe around us,” Ibrahim lamented. No light at the end of the tunnel “It will take at least two and half years for proper farming to start in Borno,” a Civilian Joint Task

For seven years there hasn’t been farming in the whole of Borno state, and we have been depending on the largesse of people like Dangote, and others, but for how long will Dangote feed Borno people with rice?

The Emir’s palace, Gujba Emirates Council, deserted after it was attacked by Boko Haram

Force (CJTF) commander in Maiduguri opined, on the condition of anonymity, and based on his experience working with security agencies to curtail the insurgency, Showing pictures on his phone where according to him they had to clear out terrorists from an area, he said, “How can a land owner in that kind of place come to the farm?” A less optimistic Usman, the Gujba LGA Transport officer in neighbouring Yobe, which is supposedly less hit by insurgents compared to Borno, said “farming activities may become normal in five or more years, but not less than five years.” And perhaps even less optimistic, Garba, the Sarkin Yaki, Gujba Emirates Council, said “it will take six to seven years before farming activities will continue like before, and this is according to our expectation if farming starts this planting season.” “Some farms are being cleared, and we are waiting for rainy season to set in. I even planted maize today as I am talking to you, because we had a good rain last night,” Garba added. But confidence to farm remains relative as Modu, a farmer in Buni Yadi said even though “there is peace of mind here, our surrounding villages have fear in farming especially eastwards. There are places where farming cannot even be practiced.” Lawan, also a farmer in Buni Yadi, said “we previously had about 50 villages ahead of us but which no longer exist. The indigenes were all farmers, but are no longer there because of insecurity.” Normalcy and peace appear to be more a figment of hope than reality, as many are willing to cling on to it and resume farming. Jidda, the AFAN chairman in Borno, on his part, said when farming activities can resume to normal is “not an easy question to answer.” “The insurgency is unpredictable. Nobody knows when they will stop, but if they stop even

during our interview in Maiduguri, as the station showing on the TV set aired montage of a marketplace in what appeared to be a western country. He continued, “From Bama a truck will be filled up with carrots, and move to Lagos, because it is so tender, succulent, and also very sweet. Unfortunately all those farms are no longer there, the carrots are not there, and now we are trying to take people back to their environments without giving them starter packs. We have not gotten it right.” The northeast with an estimated population of 25 million people, and landmass which is almost one-third of the country was a productive region where trade (formal and informal) especially established the economic relevance of Nigeria to the survival of many of her neighbours. But today, many historical trade routes have been shut. Nigeria’s northeast is now identified as being at high risk of famine in ‘State of Food Security and Nutrition in the World’, a 2017 report jointly authored by the Food and Agriculture Organization (FAO) of the United Nations, International Fund for Agricultural Development (IFAD), United Nations Children’s Fund (UNICEF), World Food Programme (WFP), and the World Health Organization (WHO). Buttressing this, another report, the 2017 global report on food crises by the Food Security Information Network, stated that an estimated 8.1 million people are food insecure in Northern Nigeria, with 4.7 million coming from the Northeast alone. “Hungry people are very many in Maiduguri now. All the people are hungry,” a rather distraught Mohammadu Rijiya, former president, Borno Chamber of Commerce and Industry had told BusinessDay before the northeast trip. “For seven years there hasn’t been farming in the whole of Borno state, and we have been de-

Internally Displaced Persons at the Farm Centre camp receive their monthly food ration

College of Agriculture lies in ruins along the road to Buni Yadi, deserted after it was attacked by Boko Haram

today, by next week you will not find even one farmer here in Maiduguri anymore. All of them are very eager to go back, just like Bama people. “Recently they opened Bama road, and up to 4,000 people have moved back. They are cautious but very eager to go back, and more are going by the day. But you can’t say when all the farmers will go back,” said Jidda. In what could be mistaken for excitement; “Caleb see carrot; look at it in bags. That is what we used to see in Bama. Bags and bags of carrots in Bama but today, even carrots are being imported into Maiduguri,” exclaimed Gambo

pending on the largesse of people like Dangote, and others, but for how long will Dangote feed Borno people with rice?,” said Gambo, visibly saddened by the fate of his people. Those who dare to farm could get lucky and make it back home, while others end up soaking their farmlands in their own blood. For now, no one knows when the region will return to economic prosperity even though the Boko Haram insurgents have according to the Federal Government been “technically defeated” by the Nigerian military. But then, that is a story for another day.

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China scrambles for Nigeria’s sorghum, soybeans as trade war heats up Stories by JOSEPHINE OKOJIE

s the United States and China trade war heats up, Chinese are now demanding for Nigeria’s sorghum and soybeans. Since the imp osition of a temporary tariff on US imports by the Chinese government, China’s importers of US grains such as sorghum and soybeans have begun looking at other markets for the importation of the crops. Audu Ogbeh, Minister of Agriculture and Rural Development while highlighting the opportunities in Nigeria’s agricultural sector during the recent BusinessDay’s Agribusiness conference held in Lagos, said that the China’s government is now making a demand for Nigeria’s soybeans and sorghum. “As a result of the trade war between the US/China, the Chinese are requesting for 2,000 tons of soybeans and sorghum,” Ogbeh said. Nigeria is a natural habitat for many varieties of sorghum and the world’s second largest producer and supplier of the crop, churning out 11 million metric tons per annum while demand is put at 12.5 million MT, leaving a gap of 1.5 million MT, according to data obtained from the

Federal Ministry Agriculture. Similarly, Nigeria is the largest producer of soybeans in sub-Saharan Africa with a production of 750,000 metric tons per annum. Like shea nuts, sorghum and soybeans have the potentials to be a huge export earner for the country,

Banks’ credit to farmers drops by 10% in Q1 2018

igeria’s money deposit bank credit to farmers in the country has declined by N54.8 billion from N556.5 billion in q1 2017 to N501.7 billion q1 2018, showing a 10 percent year-on-year decrease, data from the National Bureau of Statistics (NBS) banking report states. On a quarter on quarter basis, loan from the banking sector to farmers decreased by five percent from N528 billion in q4 2017 to N501.7 billion in q1 2018, according to the NBS report. Despite the country’s agricultural sector attracting more investments in recent years owing to the renewed commitment of the government and new entrance of farmers into the sector, Nigeria’s money deposit bank credit to the sector has declined. Industry players who spoke to BusinessDay stated that the percentage year-on-year decrease is not a welcome development, saying that farmers need finance to expand their production areas and boost productivity. “ We n e e d ch eap c re d i t to grow our agriculture. Farmers need quality seeds, technology

and the capacity to improve their productivity and all these requires finance. It will also help farmers drive down their production cost,” Tola Faseru, national president, National Cashew Association of Nigeria (NCAN) said. “This will make our agricultural commodities competitive in terms of pricing,” Faseru said. He urged the banking sector to increase its loan to the agric sector to help spur growth as lack of finance has continued to limit the potentials in the sector. According to the NBS report, the sector accounted for 3.2 percent of all the banking sector total credit for the period. “Lack of finance and high interest rate has been a major challenge limiting youths from venturing into agriculture. We would get nowhere with agriculture if we fail to address the issues of credit, access to technology and land acquisition,” Audu Ogbeh, Minister of Agriculture said dur ing the BusinessDay Agribusiness conference. “We are pushing for agricultural lending rates to be five percent,” Ogbeh said.

but years of low investment, lack of government support and natural vagaries has limited these huge potentials. “This will open up opportunities for our export to China because the major export to China from the US are agricultural commodities,”

Muda Yusuf , director general, Lagos Chamber of Commerce and Industry (LCCI) said in a telephone response to BusinessDay questions. “Since China is now taking a retaliation action in terms of trade against the US, it is likely to affect more of agricultural export from

US to China. This would create a gap in the Chinese market for agricultural imports, and this will create opportunities for a country like Nigeria to take advantage to fill the gap that is being created. “What is important for Nigeria now in all of this is to be able to deliver the right kind of quality and price for the commodities since we would be competing with our producing nations also eyeing the Chinese market. We need to position ourselves properly to take advantage of the opportunity,” Yusuf said. Sorghum an important cereal crop is fast booming in the Nigerian market as brewers in the country are now using a larger percentage of the crop in place of barley for brewing beer and malt drinks. As a result, brewers are making huge investment in sorghum plants in the country owing to their hunt for local substitutes. A l s o , N i g e r i a’s s o y b e a n s production has been on the rise owing to huge investments in the production of the crop, as it serves as the richest and cheapest means of protein for humans as well as for animals in the country. Data from the National Bureau of Statistics (NBS) shows that a total of N14.2 billion worth of soybeans was exported in 2017.

Dizengoff Nigeria tasks farmers on pest control

izengoff Niger ia has charged farmers across the country on the need to take the issue of pest control seriously during the preparation of planting fields. Stephen Adeniran, manageragrochemical, Dizengoff gave this charge to farmers in a recent chat on the progress made in the country’s agricultural sector to attain food security. “Going by the experiences of the recent past in the sector, it will be suicidal for any farmer to overlook or take the issue of pest control with levity not only during cultivation and after, but very importantly during the process of preparing the field for planting. It starts from there, and this also goes for other agric forms,” Adeniran said. “Pests are a great threat especially to any crop producing enterprise and it’s a serious issue. Because, they have capability to reduce and in some instances cause total crop failure, as we have witnessed in parts of this country in recent past where entire farming communities were devastated by the invasion of pests. “So pest control is an important integral part of crop production which must start with preparing the field for cultivation, and it is a key part of

the mix during and after planting. I will advise that farmers see it as such in order to achieve overall success during harvest no matter the farm type or scale of operation. Start with pest control,” he further said. Adeniran while addressing the issue of efficacy and safety of chemicals in dealing with the menace of pests however emphasized the importance of choosing the right type of agrochemicals, adhering by the label instruction on usage and using personal protective equipment (PPE). “Take maize crop farming for instance where farmers were caught off guard and experienced huge losses about two years ago due to the devastation of their farmlands by pests. The resulting bad harvest of that year was felt for a long time. So we say take enough precautions by using appropriate agrochemicals beginning with the land preparation stage to control the breeding of harmful insects before you cultivate your land. “There might be eggs of harmful insects hibernating in the soil and you need to get rid of them before planting. But of course care must be taken to get appropriate chemicals that will not harm or alter the nature nor contaminate the crop in the long run.” In the case of maize for instance, he singled out ‘Pyrinex 48EC’ which

he said could be safely used for land preparation before cultivation. According to him, Pyrinex 48EC from Dizengoff Nigeria could be used to ensure balance between efficacy and safety. “It is one such broad spectrum insecticide that has proven very effective for land preparation because of its dual qualities that is useful as an ovicide as well as a larvaecide.” He emphasized that the country has huge potentials to become a major agricultural producer within a short period time, calling for constant farmers’ education so keep them aware of new developments and breakthroughs in the sector in terms of techniques, chemicals and tools as well as processes that could accelerate production. “The farmer needs to be well informed about the ‘what’ and ‘how’ of the entire value chain of the agric production process. In terms of agrochemicals for instance, what chemicals are suitable for particular crops, how to apply them and then of course the issue of quality and efficacy.” Also speaking, Antti Ritvonen, CEO, Dizengoff called on farmers to partner with Dizengoff for the “success of their investment in agriculture and the achievement of a food secure Nigeria.”

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Wednesday 16 May 2018

BUSINESS DAY

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FG to replace GES programme with AIMS JOSEPHINE OKOJIE

he Federal Government is set to introduce the Agricultural Implement and Me chanisation Scheme (AIMS) as a substitute to the Growth Enhancement Scheme (GES). Audu Ogbeh, Minister of Agriculture and Rural Development disclosed this during the unveiling of the SMART model farm recently in Abuja. The GES which is a Federal Government initiative was aimed at transforming the countr y’s agricultural sector through the provision of subsidised farm inputs to farmers. It involves cost sharing on major agricultural inputs such as fertilisers and seeds between the FG, state governments and the farmers. With the agreement, FG and the state governments pays 25 percent each of the distribution costs of key farm inputs to farmers across the country, while farmers bear the cost of the remaining 50 percent. Ogbeh in a statement made available to BusinessDay, stated that the GES program is no longer sustainable owing to the failure of

most state governments to comply with their 25 percent counterpart fund. According to the minister, this has resulted in the accumulation of debt to the Federal Government. The minister stated that as

a result, the government will introduce the AIMS programme, whose focus will be on Agricultural Mechanisation and Provision of Farm Implement based on Public Private Partnership (PPP) to assist commercial and smallholder

farmers have access to hire or own tractors. He explained that sophisticated tractors will be acquired from John Deere International, saying that the tractors are capable of working up to 15 hours.

Ja s o n B ra nt l e y , ma na g i n g director, John Deere Tractors Manufacturing Company, in his opening remarks said that the tractors have a very strong horse power and are designed to solve the problem of Nigerian farmers and increase the level of productivity in the nation’s agriculture sector, which will result in ensuring food security. Also speaking, Mohammed B a b a n d i , d i r e c t o r, F e d e r a l Department of Agriculture in the Ministry, who was represented by Owolabi Olusegun, directorA g r i c u l t u ra l Me c h a n i z a t i o n , disclosed that the minister has been working tirelessly in search of partners that will supply tractors to Nigerian farmers and this prompted the department to explore possible ways in both software and hardware in proffering solutions to myriad o f p ro b l e m s f a c i ng Nig e r ia’s agriculture sector. Danladi Garba, chair man, Association of Tractor Owners and Hiring Facility of Nigeria,(TOFAN) stated that his association has been assisting Nigerian farmers across the six geopolitical zones in cultivating and harvesting with the few tractors at their disposal, saying that his association is ready to partner on this new initiative

Investing in floating fish feeds production OLUMAKINDE ONI

A Kogi ADP launches ICT, Agric Training Centre VICTORIA NNAKIAIKE, Lokoja

h e Ko g i A g r i c u l t u ra l D evelopment Proje ct (ADP) has launched its Information Communication Technology (ICT) and Agriculture Training Centre. The centre targets to train youths on general use of information technology such as microsoft office, database management, and software application to enhance agricultural business of Livestock, Crop Production, Fishery. The training which commenced recently was free for first 100 beneficiaries and was flagged off at the agency headquarters in Felele, Lokoja. Oyisi Okatahi, managing director, Kogi APD while flagging off the event said, “the knowledge

they will acquire during the 3 days training will equip them to be innovative, self-reliant and productive. A combination of information technology and agricultural skills is a potent tool that can be used for youth empowerment. The training will be more of practical than theoretical.” However, Okatahi, said due to the difficult economic situation the country and the state is facing ,the next batch of trainees will pay a token to access the scheme, as he called on the youths to contact the agency in person or online, to avail themselves of the golden opportunity. He also commended the state Governor, Yahaya Bello for putting in place such innovations that has transformed the agricultural sector in the State.

gricultural development can be equated to the process of expanding the capacity of farmers and resources within the sector in such a way that agriculture can play an effective role in accelerating economic growth and development as well as ensuring food security for the country’s large population size. Establishment of fish feeds production factory is seen as one those areas that can contribute substantially to the country’s agricultural development through the creation of jobs, income generation for investors and food

for the population. Fish feeds is a key input in fish farming and it constitute over 70 percent of the total cost in fish production. S o, investing in fish feed production is a great investment opportunity. Technical Information Fish feeds production involves procurement of ingredients such as maize, groundnut cake, starch, palm oil and fish meal. The ingredients are milled to the powdery form and mixed together in a recommended proportion with water to make it marshy. They are later fed into the pelleting machine for the purpose of getting them into pellets.

The pellets are later taken to the dryer for the purpose of drying. Effective equipment and production processing will guaranty the floatness of the pellets in the pond. The more pellets can float on ponds, the better. To establish the project, you need to get a good site, procure and install the machine including the utility items. This is followed by procurement of raw materials and project take-off. Serious minded investors can assisted to successfully set up the project. Cost Implication

N Pre-Investments : 100,000 Accommodation (Rental) : 500,000 Plant & Machinery : 3,000,000 Utilities/Working Capital : 2,000,000 TOTAL N5,600,000 ======== Profitability The plant has the capacity of producing 200 tonnes of Fish Feeds per annum. Net profit of N300,000 can be made on every tonne of feed produced. This translates to net income of N60 million per annum. This is another feasible and genuine means of livelihood for Nigerians. Author’s Contact : 08023058045, olumakindeoni2@ yahoo.com

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Wednesday 16 May 2018

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Banking sector records 117.15% increase in overseas investment flow Stories by HOPE MOSES-ASHIKE

apital importation through the banking sector rose significantly by 117.15 percent to $1.18 billion in the first quarter of 2018 from $543.4 million in the fourth quarter of 2017 according to the latest report of the National Bureau of Statistics (NBS). Standard Chartered Bank, recorded the highest share of capital flow, leading other deposit money banks in the country. It took over from Stanbic IBTC Bank plc, which accounted for 50.7 percent ($2,730.5 million) of the total share in fourth quarter of 2017. The amount of capital imported through Standard Chartered Bank accounted for 25.49 percent of the total foreign capital inflow (up from the 15.1% share recorded in the last quarter of 2017).

This was followed by Access Bank, which recorded 16.62 percent capital inflow, Ecobank 14.87 percent, Zenith Bank 10.48 percent, Stanbic IBTC Bank 9.12 percent, and Guaranty Trust Bank 5.32 percent. , A total of 81.90 percent of the foreign capital in first quarter of 2018 was imported through the six banks stated above. In the first quarter of 2018, Banking remained the leading sector for foreign capital Inflow which attracted the most considerable amount of capital investment. During the first quarter, $1.18 billion overseas investment flowed to the Banking sector, which accounted for 18.7 percent of the total Capital Importation. Financing exceeded Production, Servicing and Telecoms sectors to become the second leading sector to receive capital investment, attracting $485.41 million during the quarter.

The Central Bank of Nigeria (CBN) has directed that the processing of Certificate of Capital Importation (CCI) in Nigeria shall only be done electronically on the electronic CCI platform. This is in a bid to enhance transparency and efficient processing of foreign investment flows to the country. In a circular signed by

What Stanbic IBTC Bank is offering SMEs

or Small and Medium scale Enterprises (SMEs) to save on cost and optimize their Business margins/revenues, they need to embrace the bundled-benefit banking services offered by Stanbic IBTC Bank. The product, Biz-Smart Account, enables enterprises open and operate the account without paying maintenance fees and other related charges. Biz-Smart Account is a hybrid current naira account specially tailored to enterprises and offers the unique features of both a savings and current account. The account was developed to help Enterprises reduce to the barest minimum the cost of business, especially the ones that emanate from transactional accounts, Stanbic IBTC Bank says. The account offers zero account maintenance fees and it attracts interest based on the available deposit on the account. The account also gives the holder access to internet/ mobile banking channels and access to MasterCard Naira

Debit card. Other benefits include third party cheque lodgment, setting up of direct debits or standing orders for regular bills payment and receiving transfers, amongst others. This unique enterprise banking solution from Stanbic IBTC Bank is offered in two variants namely Biz-Smart account and Biz-Smart Plus account. The Biz-smart requires an opening balance of N60,000 and a daily minimum balance of N50,000 and enables the holder receive interest on their account. In addition to this, a maximum of four cash withdrawals is allowed at the branch. However, there are no limits for transactions on e-channels (ATM, Web payment, Mobile Banking, POS and Internet Banking) so applicable transaction fees for using these channels would apply. The Biz-Smart Plus on the other hand allows for monthly unlimited withdrawals but requires a minimum account opening balance of N520,000 and a daily minimum account balance of N500,000.

According to Ayodele Ojosipe, acting head, enterprise banking and trade Finance, Stanbic IBTC Bank, “We recognize the importance and pivotal role of Enterprises in the growth and development of our economy. Small and Medium Scale Enterprises are the key drivers of the economies of developing countries, creating thousands of jobs and enhancing GDP growth. This explains the efforts of Stanbic IBTC Bank Plc in supporting this critical sector with the ultimate aim of achieving entrepreneurial optimisation in the Nigerian economy. We call on all SMEs in the country to embrace this unique offering that would help in boosting their business continuity, growth and productivity”. Ojosipe noted that Stanbic IBTC Bank is very popular for its SME Capacity Building Series which holds annually in select cities across Nigeria and that the bank is fully committed and well experienced in the area of promoting Small and Medium Scale Enterprises.

Gotring W.D, director, trade and exchange department, the CBN said the e-CCI shall replace the hard copy CCI normally issued in respect of all capital inflows either in form of cash or machinery/ equipment. Certificates of Capital Importation are usually issued in respect of foreign exchange

inflows for loans, investments and capital subject to existing CBN guidelines. They are usually issued within 24 to 48 hours of confirmation of capital inflows into the country. Until this new circular, CCI have been issued as hard copy certificates. The main reason for the CCI is to guarantee access to

the official foreign exchange market for repatriations of capital and returns on investment – dividend, interest, and capital on divestments. The requesting company must present a copy of the CCI to the Nigerian bank to process a remittance. But sometimes investors have either misplaced their CCIs at the point of repatriation of their funds creating difficulties. Also, even though CCIs were to issue within 24 to 48 hours of capital importation, there are many instances where that rule was not met creating difficulties for investors seeking to remit their funds back home. Electronic CCIs will make it easier for investors to process transactions, ease the process of tracking transactions and make it easier to amend the CCI where an investor transfers investment in Nigeria to another investor.

Heritage Bank, CBN, ICC brainstorm on global trade operation systems

eritage Bank Plc, last week hosted the May 2018 edition of the banking technique and practice meeting of the International Chamber of Commerce Nigeria. The meeting held at the Victoria Island Office of the financial powerhouse attracted representatives of the ICC Nigeria as well as the experts on the trade desks of different banks operating in Nigeria and the apex bank in the country, the Central Bank of Nigeria. Welcoming the team, Dimitiri Dike, Chief Risk Officer for Heritage Bank, noted that the current dynamics in the trade and commerce nationally and internationally deserves urgent attention. He stated that policy summersault and the need for reviews of operation systems has posed a lot of challenges that the visiting team needed to look into and proffer appropriate solutions. Dike charged the trade experts to review the new global

order of international trade that now encourages an open account method of transaction in the global trade. An open account transaction in international trade is a sale where the goods are shipped and delivered before payment is due, which is typically in 30, 60 or 90 days. Obviously, this option is advantageous to the importer in terms of cash flow and cost, but it is consequently a risky option for an exporter. Responding, Raymond Ihyembe, Chairman, ICC Nigeria Banking Commission, warned that steps must be taken to tackle the possible effects of the current policy. This, he said, becomes imperative in cview of the fact that Nigeria’s economy depends solely on crude oil. According to him, any massive drop in the price of crude oil in the global market usually affects the aggregae economy greatly. Ihyembe therefore said in

such instances trade and commerce, which is supposed to be the safety net for the nation is again facing turbulence as a result of policy change. Corroborating the chairman’s views, Omolara Akanji, Vice Chairman, ICC Nigeria, Banking Commission, advised banks in Nigeria to always attend the global ICC events where policies are formulated. She expressed concerns that Nigerian banks were not at the ICC Banking Commission meeting held in Miami, USA in April 2018, where modalities of the new policy were discussed. According to her, their presence at such occasions would have helped to re-shape their orientation about the kind of reviews and adjustments their current structures require. Meanwhile, the bankers present were of the opinion that they were aware of the new policy, but their common fear is there is currently a gap between the apex bank and the Nigeria Customs.

Wednesday 16 May 2018

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Pension Today

BUSINESS DAY

In Association with

Opportunities for pension and other financial services growth in Nigeria is enormous - Collier Mark Collier was recently appointed the chairman of Sigma Pensions, a pension fund administrator in Nigeria. In this interview shares his thought on Nigerian pension industry, experience of other markets and future of sigma. Excerpts You have recently been appointed the chairman of the Company; tell us about yourself and your background? y name is Mark Collier and I have just been appointed the chairman of Sigma Pensions. I sit on a number of boards of financial services companies mostly in developing markets. For example, I sit on the boards of companies in India, South Africa, and Nigeria and previously in Brazil and Indonesia. So the value I bring to Sigma Pensions is the experience I have from more developed markets, where I used to work for two investment and pensions companies in the United States; one called Fidelity investments, which is a big asset manager and the other called Charles Schwab in San Francisco. So combined with that experience, and sitting on the boards of these emerging market companies, it is a great pleasure for me to be appointed chairman of a Nigerian company. You seem excited about being chairman of a Nigerian company, what are your thoughts on Nigeria? Nigeria I think is a fantastic country. The people are amazing and I have been coming to Nigeria once every three months in the last 2 years. The opportunities here both for the financial services industry and how

it develops going forward as well as the pensions industry are enormous. And this is just the beginning of what we should expect. One of the most important things for Nigerians or anyone in the world is to save for their long-term health and their long term welfare. Sigma is extremely well placed to do that and we are a very dynamic company. As you know, Dave Uduanu is our chief executive officer/MD who joined us about 12 months ago and already we are growing at a much faster pace than we had done previously. Also, with the recovery in the Nigerian economy, which we are already seeing a real sprout of growth. So Sigma Pensions is a fantastic company with great people, with a great management team, lots of talent and we are well on the way of being a world class pension administration business. What are your expectations in terms of perfor-

Mark Collier

mance? The marketplace and the demand will determine performance, but good PFAs will perform well, and we are going to do a lot of things. Firstly, we are going

We have some ambitious stretch goals that the management team has embraced obviously, which I can’t divulge, but we intend to be definitely within the top three pension administrator here by assets under management and by number of customer

RC634453

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

to help Nigerian understand the role of pensions in their lives and the reason for saving and how to make the most of their savings. More choices as you know coming into the savings market place with the introduction of multi funds, which is going to give Nigerians who are in pension fund the decision to decide which fund they would like to be in. So there is going to be a big role for education to help Nigerians understand what the best funds for them and how they should invest. Also this would sweep their personal lives as well because as Nigeria develops, people become more sophisticated and we realise we need to make provision for our working lives and save dur-

ing that process. So it’s all about customer service and servicing the needs of our clients, making sure they understand what they are investing in and making sure they feel good about their investment decision. You mentioned earlier you sit on boards of other Pension companies, other emerging markets some more advanced than Nigeria. If you were to compare Nigeria with some of these countries, what do you think Nigerian PFAs can do to perform better? Yes, I sit on the board of Alexander Forbes in South Africa and they have the right to claim that they are Africa’s largest pension administrator and investment Management Company as well, and therefore, it is very interesting to compare the two. Firstly, I have only spent a short period of time in Nigeria’s pension industry, whereas I have spent a longer time in South Africa. So there isn’t that familiarity yet about Nigeria or indeed the understanding of the Nigerian market. But if you were to contrast, South Africa with Nigeria, there is that gap in education about pensions. While the South African Pension Administration has done that well long ago, it is just beginning here in Nigeria. So there is probably 20 to 30 years gap but the interesting thing now is that modern technology today closes that gap dramatically. Therefore, the tools, which we have today - the web, ipads, digital information,

branch networks makes the difference and can close that gap in a short period. So within a few years, I fully expect the difference between the South African Pension environment and the Nigerian one would be completely closed. Nigeria is a much larger population and it has and would have a much larger economy over time so the opportunity here for the pensions industry and for Sigma particularly is very strong. I understand your company has some ambitious goals for the year 2020. Can you speak on them? We have some ambitious stretch goals that the management team has embraced obviously, which I can’t divulge, but we intend to be definitely within the top three pension administrator here by assets under management and by number of customer. So that is one of our top priorities and our goal, and at the same time help Nigerians really feel comfortable about their investments and how their money is being invested. What is your outlook for Sigma Pensions? For our outlook, I think continued prosperity for our customers by working hard to ensure that we manage their money very well and that they really understand us. So the future looks very bright along with the prospects for Nigeria along with the recovery in the economy and all the good things taking place in this country. I think is all good for everybody.

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

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Wednesday 16 May 2018

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E-mail: insurancetoday@businessdayonline.com

L-R: Richard Borokini, DG, Chartered Insurance Institute of Nigeria(CIIN) ; Chu Heung Ming Stephen; Wilson Cheung Jiag, Tai Insurance Brokers; Funmi Babington Ashaye, president/chairman of Council, CIIN; Mayak Kumar Jha, chief operating officer, New India Assurance and Mufutau Oyegunle, chairman Education Committee of the CIIN during International Exchange Conference of CIIN in Hong Kong.

L-R: Tope Samart, MD, NEM Insurance; Adeyinka Adekoya, MD, Wapic Insurance; Edwin Igbiti, MD, AIICO Insurance and Owolabi Salami of Ensure at the recent African Insurance Organisation Conference in Accra Ghana.

Customer protection key in ‘Pay As You Go’ insurance - regulator Stories by Modestus Anaesoronye

s insurance operators in Africa digs deep on how to utilize technology to deepen insurance penetration, regulator has empahsised the need to ensure adequate protection of the consumer. At the recently concluded African Insurance Organisation Conference and General Assembly held in Accra Ghana, discussions hovered around digitalization, insure-tech and market penetration. Ray Ankra, board chairman, National Insurance Commission

(NIC), Ghana who moderated the session on ‘Pay As You Go Insurance’ said the insurance industry must embrace technology to entrench and deepen penetration. Ankra however observed the need for needed infrastructure to enable technology work effectively in different parts of Africa, stating that insurers must push on governments for infrastructure development. “Technology is the way of life and whether you like it or not, it has come to stay”. According to him, customers of today are technology savvy, and so have got choice to make when it comes to buying of insurance. But, George Onekhena, deputy

commissioner for Insurance, Finance and Administration who spoke on the sideline of the conference in Accra, said we are not against any insurance company doing Pay As You Go insurance in Nigeria market, but the basic fact is the necessary things for it have to be put in place. Onekhena described Pay as you go insurance as a variant of usage based insurance, which can be offered at different levels of sophistication. It is a product that offers insurance companies the opportunity to optimize their relationship with their clients through not only charging premiums that will more closely reflects risk they assume

but also offers their customers the opportunity to positively influence the premium they pay through appropriate behavioral and usages choices.” According to him, it is a product that is therefore mutually beneficial to both parties in the insurance contract provided a fool-proof arrangement can be made to determine usage and claims incidents. He said insurance companies can offer the product as long as they can make the business case for it, including evidence of facility to objectively determine customers’ specific behaviors and usage patterns. What the Regulator will be interested in are the logic in

the business case presented and adequacy of customer protection features. Onekhena said “Insurance companies have choice to offer the product to their customers. They however have to obtain approval from the Commission. The Commission will pass their request through the usual new product approval process and ensure they meet the test of reasonableness, commercial viability and adequacy of customer protection features. “ In terms of readiness of Nigerians, it depends on choice of insurance companies on the type of product they feel commercially motivated to offer, he stated.

Nigeria’s Fola Daniel joins African Insurance ‘Hall Of Fame’

igeria’s Fola Daniel, insurance icon and former Commissioner for Insurance was at the recently concluded 45th African Insurance Organisation (AIO) held in Accra Ghana decorated African Insurance “Hall of Fame”. The Award, an initiative of the African Insurance Organisation, and in its third edition now recognises individuals and companies for their outstanding contributions towards the growth of the African insurance industry. The second edition was awarded to Rajni Varia, former Managing Director of ZEP RE in Kenya. Fola Daniel, having won the 2018 edition of the award will be automatically nominated for the Insurance Hall of Fame, which is organised by the International Insurance Society (IIS). Nominees for the award must have made a broad encompassing and lasting contribution to the insurance industry in its broad sense

(insurance, broking, reinsurance and regulatory) and thereby exerting a substantial influence on the ability of the insurance industry to serve society. Fola Daniel, a veteran underwriter and an administrator of high repute studied in Nigeria and the United Kingdom. He is a Fellow of the Chartered Insurance Institute, London, the Chartered Insurance Institute of Nigeria (FIIN) and, the British Institute of Management. Prior to his appointment as Commissioner for Insurance in 2007, Daniel was the Managing Director of Globe Reinsurance Plc. With experience spanning over 30 years, he has worked in various capacities at Senior Management level. He was a Branch Manager and later Northern Area Manager of Great Nigeria Insurance Co. Ltd in 1986. In 1989, he joined Globe Reinsurance Plc as Underwriting

Manager. He rose to the position of Assistant General Manager (Technical) from where he was appointed by the Federal Government as Executive Director (Operations) of Nigerian Agricultural Insurance Corporation (NAIC). He was later appointed the Managing Director/CEO of the Corporation in 1994. During his tenure, the Corporation witnessed a phenomenal change in fortune from a hitherto loss position to a profit making organization. He returned to Globe Reinsurance Plc as Managing Director/CEO in 2004 after he successfully completed two-term tenure of 10 years at NAIC. He was a visiting lecturer and a Member of the Governing Board of the West African Insurance Institute, Banjul, The Gambia (WAII) as well as the Chartered Insurance Institute of Nigeria (CIIN). He was also a member of the Boards of Directors of Africa Re-

insurance Corporation, Nigeria Agricultural Insurance Corporation (NAIC), Nigerian Content Development & Monitoring Board (NCDMB) and the Economic & Financial Crimes Commission (EFCC), etc. He became the CFI in 2007 at a time the industry faced upheaval caused by a flawed consolidation exercise. As the industry struggled then to cope with the crisis, it needed a purposeful regulatory body with visionary leadership, which Daniel gave, to the satisfaction of many industry players. As commissioner for insurance he was able to reposition the Nigerian insurance industry for eight years. The commission under his leadership provided the needed regulatory platform upon which the quality of service to policyholders has improved significantly. The agency kicked-started the process of sanitising and transforming the

industry to meet international best practices in 2007 by first resolving all the problems associated with the recapitalisation/consolidation exercise. One of the major steps the commission took to ensure the emergence of a very vibrant and strong insurance industry that is capable of competing with its peers globally was the formulation of an initiative code-named Market Development and Restructuring Initiative (MDRI). Amongst the cardinal objectives of the MDRI was the deepening of insurance penetration in Nigeria and the commencement of the enforcement of compulsory insurances which have been made compulsory by law as enshrined in sections 64 and 65 of the Insurance Act 2003. This programme was launched successfully in the six geo political zones of the country including Lagos and Abuja and full implementation in September 2011.

Wednesday 16 May 2018

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BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

L-R: Thusang Mahlangu, MD, Allianz South Africa; Owolabi Salami, Ensure Nigeria; Delphine Maidou-Traore, COO, Allianz Africa and Sunkanmi Adekeye, Ensure Nigeria at the recent African Insurance Organisation Conference in Accra Ghana.

L-R: Emmnuel Achusim, chairman, Metro Risk Insurance Brokers; Uju Ngozi Chukwu, deputy DG Chartered Insurance Institute of Nigeria; Moruf Apampa, MD, Equity Assurance Plc; Leornard Akah, director, NAICOM; Supo Segelola, ED, Law Union and Rock Insurance; and Eddi Efekoha, MD, Consolidated Hallmark Insurance Plce at the recent African Insurance Organisation Conference in Accra Ghana.

The attraction for African insurance market Stories by Modestus Anaesoronye

here is a new drive to take advantage of growth opportunities in Africa, and this accounts for why many insurance companies across the world are making efforts to take a place in the continent. African continent has over a 1 billion people in 54 countries and yet there are low levels of uptake in insurance among the low-income population. This state can be attributed either to the lack of knowledge about insurance products and to an extent misunderstanding of the concept of insurance accounts. Most Africans cannot afford insurance premiums just yet. Mostly is a choice between fulfilling a basic immediate need versus signing a long term

beneficial need, in this case insurance. However, there are tremendous growth and opportunities which the continent has for the insurance companies, globally. Tapping into this industry, surely rewards the brave. Africa has massive opportunities for life and on-life insurers and according to the insights gathered by Legato Consultancy, the following regions highlight the growth insurance market potential currently available in the Africa continent: Angola: remains significantly underdeveloped and has immense potential for growth. Insurance is still dominated by the oil industry. It is expected that many people will be uplifted to the middle class as a result of the GDP and government’s enforcement of the compulsory 3rd party motor vehicle insurance. Nigeria: 60 percent of

insurance premiums are derived from the energy sector. Of the 169 million Nigerians in 2014, only 2.25 million had active insurance. The market is also dominated by 59 insurers all targeting the market share with penetration levels as far below as 1 percent. Ghana: the insurance market is seen positive growth and upward trajectory, with business insurance and life insurance taking the lead. The country has 45 registered insurers with 19 operating in the life segment. The development of the oil and gas sector and a positive economic outlook set to boost the insurance industry. Funeral insurance remains largely untapped in Ghana and funeral costs in the country can cost up to $20 000 and averages about $6 000. Morocco: has the second largest insurance market in Africa. 4 companies domi-

nate the market underwriting 70 percent of the risks. 13 smaller companies share the remaining 30% of the market. The continued success of Morocco insurance industry is largely attributed to a well-developed banking system; government positioning towards foreign direct investment and also the government’s active role in encouraging foreign companies to set up offices in their country. Egypt: despite a welldeveloped financial sector – insurance penetration rates still remain below 1% due to Islam being the dominant faith and growth in the private sector being stifled by the state owned enterprises. Namibia: is among the better developed in Africa, boosted by foreign direct investment and a greater portion of wealthy citizens contributing to good sustainable growth.

Premium Pension appoints Oluwashina executive director

oard of Premium Pension Limited has appointed Kemi Oluwashina as executive director, Business Development South & Strategy. This is in line with its strategy to achieve higher Business Development potentials aimed at repositioning the Company for greater heights. Her appointment is expected to enhance the reach of the Company in the Southern part of the country as well as to the de-

cision making at the higher level closer to clients. Oluwashina holds a Bachelor of Pharmacy d e g re e f ro m O b a f e m i Awolowo University, IleIfe, Nigeria and a Masters in Business Administration from Manchester Business School, United Kingdom. She also attended Leadership Development programs at Harvard Business School. She has over 18 years’ experience in Asset Management, Strategy and Investment consulting and

has extensive institutional and retail interaction. Umar Sanda Mairami , CEO of the Company expressed confidence that, the appointment of the new ED would further strengthen the Company for improved performance. Mairami described the unprecedented growth level achieved by the Company in the last decade as outcome of being customer centric, gender sensitive and richly endowed with executives with multi-dis-

ciplinary talents. Prior to joining Premium Pension Limited, she was an Executive Director at ARM Securities Ltd, a role she functioned in after a 10-year stint in the Pension Industry with ARM Pension Managers. Premium Pension Limited is a licensed Pension Fund Administrator Company which started operations in the year 2005, with current Assets Under Management (AUM) amounting to N548.55 Billion.

Babington-Ashaye led delegation to Hong Kong learns on market opportunities

perators in the Nigerian insurance industry at a recent International Exchange Programme in Hong Kong organised by the Chartered Insurance Institute of Nigeria (CIIN) came to terms that developing the services sector where insurance belongs could sustain and make the economy great, without natural resources. They also discovered that Hong Kong has paid attention to its services sector and so earns its major contribution to GDP from it. Funmi BabinhgtonAshaye, president and chairman of Council of the CIIN who led the Nigerian delegation to the conference said the choice Honk Kong for our exchange programme was informed by a number of factors. “Hong Kong is one of the greatest and biggest financial and trade hubs in Asia. It’s accomplishments in all spheres of human endeavour as islands clearly belie its small size. As one of the world’s leading knowledge centres, the achievements of Hong Kong in global commerce and international trade is at variance not only with its size but also provide a framework for learning and development.” She said with the most efficient and busiest maritime container port in the world, it is on record that Hong Kong dispatches one

container every 4 minutes to other parts of the globe. “In 2017, its per capita income reached $46,228.13 while its 2018 ranking on the global Ease of Doing Business is 5th”. “Besides these performance statistics, it was estimated that services, which include insurance and reinsurance services, contributed 91 percent of its Gross Domestic Product in 2016.The implication of the dominance of the service sector cannot be lost on us: nations can develop without natural resources.” The prosperity of this island is based on knowledge, its human capital. Therefore, there is a lot to learn from players in this environment so that we can positively impact our various organisations and by extension, our nation’s economy, Babington Ashaye said. “As we strategically plan to grow our businesses, we must take our bearing from the market place. Users of our services must define what we do. We must connect with and respond promptly to their needs efficiently and effectively. Our business model must be in tune with clients’ demands and the realities of our environment. If we choose to diversify, it should be into areas of shared services which can reduce operational cost and enhance efficiency and profitability.”

28 BUSINESS DAY

Wednesday 16 May 2018

Leadership SHAPING PEOPLE INTO A TEAM

Tips for reading the room before a meeting or presentation

n every conversation at work, there’s the explicit discussion happening — the words being spoken out loud — and the tacit one. To be successful in most organizations, it’s important to understand the underlying conversations and reactions that people in the room are having. But if you aren’t picking up on those subtle cues, how can you learn to do so? What signals should you be looking for? And what can you do to influence the unspoken dynamics? WHAT THE EXPERTS SAY “Knowing how to read between the lines is a critical workplace skill,” says Annie McKee, a senior fellow at the University of Pennsylvania, and the author of “How to Be Happy at Work.””You need to understand other people — what they want, what they don’t want, their fears, hopes, dreams, and motivations,” she says. “This builds trust. And trust is fundamental to getting things done.” In addition, you must be aware of your effect on others, according to Karen Dillon, co-author of “How Will You Measure Your Life?” “You need to be constantly assessing how other people are responding to you,” she says. “Some people find this easy and intuitive. For others, it’s a challenge.” The good news is that this skill can be learned. Here are some ways how. — OBSERVE The best way to read a room is to pay close attention to people — and not just what they’re saying. “If you’re relying [solely] on their words, you’re only getting half the picture,” McKee says. Upon entering a meeting, she recommends, do “a quick scan of the individuals,” noting “who’s next to whom, who’s smiling, who’s not, who’s standing, who’s sitting, and how much space is between people.” Next, try to pick up on “the almost invisible clues on how people are feeling” by looking carefully at “their facial expressions, posture, and body language.” Be

on the lookout for “quick microexpressions” such as “fleeting smiles, raised eyebrows, or even tiny frowns.” Vigilant observation will give you the information you need to interpret group dynamics. Dillon recommends identifying role models to further improve your social awareness. “Think of people you admire who are great at reading the room,” she says. “Isolate the things they do and try to emulate those.” — CONTROL HOW MUCH YOU TALK You can’t observe if you’re spending most of your time talking. You need to listen, Dillon says. “Be conscious of how much you are saying.” Whether you’re in a room with a large group of people, a small group, or you’re speaking with a colleague one-on-one, she advises taking frequent pauses “to really think about what the other person is saying” and watching out for the nonverbal cues. Don’t just wait for your turn to talk; there is “no shame” in silence. When the conversation is more intimate, Dillon says, you must strive to “make the other person feel heard.” Be present. Be engaged. Make eye contact. “Position yourself so that you’re not inviting others to butt into your

conversation. Help the other people feel confident that you are all in the moment together.” After the other person says something, paraphrase what they said to indicate that you’re paying attention. Similarly, “if the other person doesn’t seem to be hearing what you’re saying, and you start to realize that you’re talking at them, you should ask a question,” she adds. — INTERPRET YOUR OBSERVATIONS Once you’ve “tuned into the emotions and energy in the room,” you can “try to make sense of what you think you know,” McKee says. She recommends “generating multiple hypotheses about what’s going on.” Consider the people in the group more broadly and reflect on the possible reasons for their individual and collective emotional states. “What’s happening in their lives? What’s going on in their jobs? What do you know about these people?” If you don’t know much, this can be tricky, but you can still come up with hypotheses for what’s motivating people. At the same time, you shouldn’t project your feelings onto the group. “Keep your emotions in check,” McKee says, adding that this is a feat that “takes tremendous skill and self-control.” If, say, the room

is reverberating tension, don’t let yourself “be hijacked by negative energy, and don’t give in to your natural inclination to be frightened and angry.” Remember, too, that the emotions you perceive are not personal. “It probably doesn’t have anything to do with you.” — CHECK YOUR HYPOTHESES When you’ve developed a few explanations for what’s going on in the room, check your understanding. You can do this by continuing to gather further information, though you should continue to be open to what you’re seeing and sensing so that you don’t fall prey to confirmation bias. You can also ask people directly, in private, McKee says. When you’re in one-on-one conversations, you might say something like, “In the meeting I saw you furrow your brow when discussion turned to the xyz project — how do you feel about it?” Most likely, your colleagues will be pleased you noticed, she says. When you make note of people’s feelings and reactions, they “feel attended to.” Another tactic McKee suggests is talking with a trusted colleague, mentor, or coach. “Talk about what you’ve observed — not in a gossipy way, but as a learning opportunity,”

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

she says. “You want someone else to check ideas with” so that you can say, “What do you think is going on with that colleague? Or that coalition?” — PUT YOUR PERCEPTIONS INTO PRACTICE If in the midst of a meeting or interaction, you notice that things are getting tense or heated, you can “take the opportunity to shift the emotional reality of the room,” McKee says. “Use humor,” she adds. “Or empathize with the group — make them feel okay.” She recommends determining who in the room has “the most social or hierarchical capital” and then focusing on getting that person on your side. “It could be a person who has the most seniority, or the person who others are sitting closest to. It could be the person who’s telling jokes and has the ability to lighten the mood.” Principles to Remember: DO: Consider the people in the room more broadly and reflect on the possible reasons for their individual and collective emotional states. Look for microexpressions such as fleeting smiles or raised eyebrows. These offer clues to group dynamics and individual emotions. Isolate the behaviors that your socially aware role model exhibits and try to emulate them. DON’T: Be distracted. Maintain eye contact and be present and engaged in conversations with others. Make it all about you. Ask openended questions to help you uncover what’s really going on. Allow yourself to be hijacked by a room’s negative energy. Keep your emotions in check and do what you can to shift the emotional reality of the room. (Rebecca Knight is a freelance journalist in Boston and a lecturer at Wesleyan University.)

BUSINESS DAY

Wednesday 16 May 2018

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CRRC raises concern over additional US trade tariffs Page 31

New CEO takes over at Uber amidst litigations Page 30

Virgin Atlantic offers new ways to enjoy economy service

Fully globally automated metros hits 1000 km

Page 30

Page 31

Nigeria must focus on local parts cluster

Hyundai sales increase 11.1 percent year-on-year

Stories by MIKE OCHONMA

yundai Motor Company, South Korea’s largest automaker and number one selling Korean Automaker in the world, has announced its global sales results for April 2018, posting a total of 391,197 units sold, up 11.1 percent from a year earlier. The highest growth since December 2014 was led by strong sales of new SUV models - the allnew Santa Fe and Kona – while a recent sales rebound in the Chinese market also largely contributed to the growth. Sales in overseas markets totaled 327,409 units, representing an increase of 12.2 percent yearover-year. Sales increased significantly as the company’s popular subcompact SUV Kona expanded to key markets and demand remained strong in emerging markets such as Brazil, Russia and India. Korean market sales increased by 5.7 percent compared to the same period of the previous year, recording 63,788 units sold. The all-new Santa Fe became the bestselling model in Korea for the second consecutive month, posting 11,837 units sold. The automaker plans to maximize profitability by continuing its SUV sales momentum globally.

or Nigeria to be taken very serious towards a successful local assembly of automobiles, concerted efforts must be directed towards the local manufacture of auto spare parts. This was the submission of Ifeanyichu Agwu, managing director and chairman organising committee of BKG Exhibitions Limited. At the just concluded 13 th edition of the Lagos Motorfair tagged new products; best solutions; more options,”, Agwu reasoned that, it is only when attention is focused on growing the local components parts manufacture can locally assembled vehicles be affordable especially for the low and middle income earners. In conjunction with its foreign partners including SENEXPO International Fairs Inc of Turkey, China International Auto Products Expo (CIAPE) and others, BKG exhibitions brought many Original Equipment Manufacturers (OEMs)of autoparts, accessories, lubricant, financial institutions and others to participate in this edition to help auto buyers and even government work out rewarding and lasting business relationships with these companies engaged in the manufacture of these products and services. Ifeanyichu Agwu, managing director and chairman organising committee of BKG Exhibitions Limited stated the various brand new products/services on display during the motorfair the event as well as in the entire section served as multiple options to satisfying both the individual, corporate and

even public automotive needs. The central theme of this edition titled new products; best solutions; more options, was is informed by the fact that the enormous challenges facing the sector in recent times notwithstanding, the economy must produce, market and promote our (new) products which are the best solutions to the logistics needs of the people and government and are also the best to fasttracking economic diversification and development in Nigeria. Ifeanyi Agwu described Nigeria as very important to the global automotive business as virtually all brands in the industry compete to enter and capture the market. This is based on empirical evidences of the potentials of the industry as it continuously plays

strategic and catalytic roles in economic development; especially in the areas of employment generation, increasing Gross Domestic Product (GDP), small and medium enterprises development described as key to robust economic development. The country he argued obviously need to have internationally recognized auto shows to help in showcasing and opening this important market and its potentials to attract the much desired investments to develop the sector. He called on the the federal government to urgently address the myriads of challenges confronting the industry as doing so is the lasting secret to the nation coming out of the vicious cycle economic underdevelopment.

It should be an event that we all should always support and make the best of. These would help in unleashing the required synergies to enhance the development of the sector for the good and benefit of all. BKG Exhibitions solicited for the of the Federal and Lagos State governments, companies that operate in the sector as well as other stakeholders to give the annual motorfair a befitting show needed to support it. ‘’This support is important because exhibitions/fairs are one of the key drivers of rapid development of the sector and most importantly, no serious investment in this key sector is a waste, rather the multiplier positive effects are unquantifiable’’. He stated.

Debutant Escape rides on Ford’s global heritage

ith a robust 50-year heritage in the segment, the new Ford Escape has arrived in Nigeria following its presentation to the buying public recently. It offers one of the most technologically-advanced, smart sport utility vehicles (SUVs) with five-star safety and improved fuel efficiency. Ford is the second largest SUV in the world and every model is backed by the brand’s SUV expertise and with Coscharis, franchise owners of the brand thrilled with the new Escape joining its line up. In Nigeria, three specification levels are available in the new Escape range. The line-up starts with the Escape S, which incorporates an appreciably high level of standard equipment, along with an extensive range of optional features. In the words of Abiona Babarinde, GM Marketing and Communications at Coscharis Motors said, ‘’Our customers will be thrilled too’. With stunning new design inside and out, smart technologies, fuel-efficient yet pow-

erful engines, and five-star safety, it’s a vehicle that will be so many things for our customers.” He stated. As preference for SUVs continues to grow around the world, so too does the demand for greater choice. Ford has responded to customer demand with a broad line-up that includes Trend and Titanium models. Depending on market, a frontwheel drive version is available with a

six-speed manual gearbox, or the option of an all-wheel drive model with a six-speed automatic transmission. The new Escape features Ford’s latest design language for a bold, smart look that is shared with other Ford SUVs. Its large upper trapezoidal grille and a smaller lower grille are flanked by sleek new headlamps incorporating optional daytime running lights complemented by functional, stylish

fog lamps. “We know from customer feedback and research that vehicle design and style are key factors in the car buying decision process,” Babarinde added. “In many cases, it’s actually the top consideration which is why we’re particularly excited about the new Escape. In addition to being a very capable, functional SUV with a fantastic suite of smart technologies, it’s also a vehicle that will turn heads wherever it’s driven.” Restyled taillights complete the smart exterior look while a new range of standard 17-inch wheels (steel on the S) or optional 18- and 19-inch alloy wheel designs are available. Steeped in SUV expertise from around the Ford world, the new Escape designers’ objective was to combine stylish form with everyday function for the interior of the SUV. The designers of the Ford Escape went to great lengths to ensure the vehicle and its many different features, large and small, are smart yet provide welcome benefits to even daily routines.

The hands-free power tailgate, for example, is something customers have really grown to appreciate, and is available as an option across the range. No matter what you might find filling your arms, from sports gear to shopping bags or a toddler or two, the Power Tailgate can save the day. Escape drivers will find an array of new convenience features making the vehicle very user-friendly, including ISOFIX anchorage-points and improved storage in the centre console. An impressive range of additional standard items are included on the top-spec Titanium model, such as rear tray tables and rear air vents for enhanced comfort, and the electronic parking brake (optional on S and SE). In terms of space, the new Escape offers up to 1603 litres of cargo space with the rear stadium seating folded and ideal for weekend escapes. Steering wheel and air-conditioning controls operate through fewer and more easily distinguishable buttons and switches, making the controls easier to recognise and navigate.

30 BUSINESS DAY

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MTRAVEL

Wednesday 16 May 2018

odern

Exciting travelling experience in Lufthansa business class

Jamie Heywood

New CEO takes over at Uber amidst litigations Stories by MIKE OCHONMA

ber has poached former Amazon director Jamie Heywood and made him its Northern and Eastern Europe boss as the global car rental company is enmeshed in a host of legal battles to contend with in the role which covers the United Kingdom and 11 other countries. Following this development, Heywood will be responsible for Uber’s operations in 70 cities, several of which have had disputes with the company over issues ranging from sexual assaults to inadequate vetting and use of software to dodge regulators. Most recently, Brighton and Hove city council announced it would not renew Uber’s licence because of “significant concerns about the company’s data breach” as well as its lack of commitment to using only locally licensed drivers. Uber has been engulfed in a series of scandals including accusations of sexual harassment against

both employees and its drivers, who are defined as self-employed. The taxi company faces disputes over vetting, its response to sexual harassment allegations and use of software to dodge regulators The company also came under fire last year for its use of “Greyball” software that used personal data of individuals it believed were connected to local government. This ensured that its drivers would not pick them up if they requested a ride on the app, so that the company could dodge regulators and operate in cities where it was not fully licensed. TfL cited a “lack of corporate responsibility” when it announced its decision not to renew the taxi company’s licence last September. Uber’s approach to reporting criminal offences, obtaining of medical certificates and its compliance with Enhanced Disclosure and Barring Service checks on employees were also concerns, TfL said. Heywood worked for 15 years in telecommunications, including stints at Virgin Mobile and Orange, before joining Amazon in

2014. He will start his new role next month during what he described as a “time of exciting change and growth for the company”. The company is also attempting to implement a programme of broader cultural change under chief executive Dara Khosrowshahi, whose reign began last year amid the acrimonious departure of founder Travis Kalanick. Pierre-Dimitri Gore-Coty, Uber’s Europe, Middle East and Africa general manager said: “I’m delighted that Jamie is joining Uber to lead our operations across Northern and Eastern Europe. “His wide range of international experience in both regulated industries and scaling fast-growing businesses will be invaluable for the next phase of Uber’s development. “Jamie’s leadership will also be crucial as we implement major changes across Europe including more safety features, improvements for drivers and a new approach to partnering with cities.” Pierre-Dimitri Gore-Coty concluded.

ufthansa Business Class passengers on longhaul flights from now on can enjoy an even more relaxed night’s sleep with the ‘The Lufthansa Dream Collection’ with the mattress topper in addition to a new pillowcase and a large, warm blanket which allows for a comfortable sleep and beautiful dreams. Passengers can make themselves comfortable on night flights with the new sleep shirt from Van Laack. The soft and padded mattress topper was developed especially for Lufthansa in cooperation with the renowned German bed manufacturer “Paradies”. While the upper side is made of 100 percent cotton, the underside is made of non-slip terry cloth. It enables for an ideal air exchange, which prevents strong heat accumulation. A similarly soft filling is provided by the new blanket and pillow, which provide pleas-

ant warmth and comfort. Both the blanket and the pillowcase are designed in Lufthansa’s new brand design. Since Lufthansa is also setting standards in terms of environmental friendliness, the plastic packaging of the ceiling was replaced by a paper banderol. The increase in sleeping comfort in business class is symbolic of Lufthansa’s premium standard. Last December, the airline was the first western airline to receive the five-star seal from Skytrax, the British management consultancy specialized in aviation. The Dream Collection will be successively introduced on all other long-haul flights. From June, the Dream Collection from Germany will also be available on selected flight, with the other longhaul flights scheduled to receive the new blankets and pillowcases from autumn 2018.

Virgin Atlantic offers new ways to enjoy economy service

irgin Atlantic is launching three new ways to fly economy as part of a multi-million pound investment in the cabin “for the 21st century traveller”. From Spring 2018, Virgin Atlantic customers will be able to choose to fly “Economy Delight”, “Economy Classic” or “Economy Light”. All of these fares include food and drink and inflight entertainment and each seat will have a USB charger. This ticket makes long haul travel affordable and accessible for millennials, and customers jetting off on city breaks. In essence, you pack light and pay less. Choose your seat for free at check in, then sail through security with hand luggage only. All meals, drinks and snacks are included in the fare. Economy Classic provides extra reassurance for families and groups that they can sit together. Choose your seats in advance for free and each pas-

senger will have an allowance of one 23kg bag to check-in and enjoy free meals, drinks and snacks. Incidentally, if you have miles, you can upgrade using them. At a time when most airlines are packing seats onto planes, Virgin Atlantic is investing in extra leg room. The airline is retrofitting its fleet to provide up to 36 Economy Delight seats on every flight – offering customers an even comfier journey with a delightfully spacious 34 inch legroom. This ticket comes with priority check in and boarding so you get settled in sooner, as well as advanced seat assignment. It comes with an allowance of one 23kg checked bag, and meals, drinks and snacks included. The three new ways to travel are part of a wider investment in Virgin Atlantic’s Economy cabin – delivering innovations on the ground, and in the air:

All customers travelling in Economy will continue to enjoy a three course meal plus complimentary drinks and snacks – with a focus on supporting independent suppliers such as UK based Fairfield Farm Crisps, and the Grown Up Chocolate Company. More personalised service at the airport; For the first time Virgin Atlantic is introducing

automated bag drop at London airports, freeing up employees to provide a more personalised service where customers need it most. Four kiosks will open at London Gatwick this summer, followed by a further 18 kiosks at London Heathrow from winter 2018. Every single seat in Economy now offers a personal USB charg-

ing point, and every route offers access to high speed Wi-Fi (available at an additional cost) to help customers work and play on the go. From the spring period of 2019 , Virgin Atlantic are adding 12 new Airbus A350-1000 aircraft to the fleet offering unrivalled levels of comfort and reliability for customers, and a brand new Economy cabin designed with Virgin Atlantic’s customers in mind. Virgin Atlantic and Delta offer the leading transatlantic partnership, and the new economy products will offer a seamless experience for customers travelling with the airlines. Economy delight, classic and light will complement Delta’s Comfort +, Main Cabin and Basic Economy products – always offering a three course meal, Wi-Fi, hundreds of hours of inflight entertainment and excellent service regardless of the ticket type.

Wednesday 16 May 2018

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BUSINESS DAY

Local and global rail news as it breaks

‘FG will involve NRC workers over GE concession, says Minister

CRRC raises concern over additional US trade tariffs

commissioning of Abuja - Kaduna train service

Stories by MIKE OCHONMA

he federal government has assured that, it will involve the Nigerian railway corporation (NRC)workers when discussions on the full details of the main concession agreement with General Electric (GE), the concessioner of the narrow guage projects across the country gets underway. Rotimi Amaechi, Nigeria minister of transportation gave this assurance while responding to the purported compliants by the railway employees that, they are being marginalised in the ongoing talks with GE. He made this known at Papalanto, Ogun State at the end of the monthly Lagos-Ibadan standard guage rail project. Only recently, Raphel Okoro, president, African Union of Railway Workers said the Nigerian

Union of Railway Workers was not carried in the discussions between the federal government and the concessioner. Okoro posited that from experience there has not been any concession entered into by government without retrenchment and the country has not been better for it. “We are not saying government should not sell its property. What we are saying is that the welfare of workers in the interim and post concession must be discussed before going ahead to sign concession agreement with a foreign consortium that has basic interest of making profit,” he declared According to him, the railway all over the world is mainstay of any meaningful economic development capable of putting food on the table but that when it is concessioned to foreign concerns it will be operated based on the

terms of the foreign firms to the detriment of Nigerians. Rotimi Amaechi, the minister of transportation had at the only meeting held with the workers at Railway Institute Ebute-Metta, Lagos towards the end of 2017 promised that the Union will form part of the Committee to midwife the concession process as “Observers,” but Okoro insisted that, there was no invitation to that effect. However, it was learnt that the agreement, signed in Washington DC recently at a meeting attended by Minister of Transportation and some officials of GE is expected to increase the passenger frequency and the freight haulage capacity from the present 50,000 metric tonnes per annum to 500,000. Other companies involved in the agreement are SinoHydro, an infrastructure construction company and Transnet, a logistics infrastructure management

company. Between this May and June this year, GE will undertake a partial rehabilitation of this line. Currently the train runs abysmal distance of 16 to 18 kilometers per hour now. It is expected that after they rehabilitation of the lines by GE, there will be an increase of the train speed to 40 kilometers per hour. The rehabilitation job will include both Lagos to Kano to Funtua to Kaura Namoda and also rehabilitate from Port Harcourt to Maiduguri but that will require nearly about another $50m. ‘’GE is a consortium and they have about three to four companies that are doing it. While that is going on, we will continue with the construction of the standard gauge so that the economic and political pressures we are currently suffering will be resolved from different roads will be resolved’’. Rotimi Amaechi said.

Fully globally automated metros hits 1000 km

cross the world there are now more than 1,000km of fully automated metro lines with the last opening of the 6.7km-long. That is according to the International Association of Public Transport’s (UITP) Observatory of Automated Metros UITP isthe permanent body commissioned in 2008 to exchange best practice in automated metro lines which celebrated the landmark recently. In total, there are 63 fully automated operations (FAO) in 42 cities across 19 different countries, with the world’s first FAO line opening in Kobe, Japan, in 1981, And 29 years later, the total length of all FAO lines reached 500km. ‘Exponential’ growth has caused that figure to double in just eight years. Around 50 per cent of the world’s FAO are in Asia, 27 percent in Europe, 12 percent in North America, 9 percent in the Middle East and two per cent in South America, ac-

cording to data from the UITP. Ramón Malla, chair, Observatory of Automated Metros who is also strategic project director at the Barcelona metro said that, according to the body’s data, this trend will continue at an even faster rate in the next 10 years.

He added: “Fully automated metro operations is a proven solution which offers many benefits including safety, flexibility of operations, larger capacity, cost efficiency and more fulfilling jobs for staff, which lead to an enhanced customer service.

“Significantly, no city that has built an automated metro line has ever reverted to conventional mode afterwards; furthermore it is expected that conversions of conventional lines to fully automated operations will also multiply.”

he vice-president of CRRC MA, the rolling stock giant’s United States subsidiary, has spoken of his concern after rail equipment was included in a proposed new list of imported Chinese products that could be subject to additional tariffs. In a statement, the Office of the United States Trade Representative (USTR), responsible for developing US trade policy, said that the proposed tariffs are part of a response to “China’s unfair trade practices”. Rail-related products on the list include rails, electrical signaling, safety and traffic control equipment, and, significantly for CRRC MA which has a $95 million train manufacturing facility in Springfield, Massachusetts, self-propelled coaches and rolling stock parts. CRRC MA vice-president Jia Bo added: “The steel products that will be used in CRRC MA’s production partly come from the US and partly come from China.

“As rail equipment has been included into Section 301, we are concerned about whether it will affect the rail equipment [trade], and thus affect a whole market change later. “The company is dealing with the situation actively, coordinating with relevant US departments.” President Donald Trump announced in March that the US will impose tariffs on approximately $50 billion worth of Chinese imports and take other actions in response to “China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” The value is said to be proportional to the damage caused to the US economy caused by China’s policies and help with the “rebalancing (of )the USChina trade relationship”, according to USTR. Robotics, machinery, information and communication technology and aerospace industries have been targeted in the proposed new tariffs. This list is set to undergo a further review before USTR issues a final list. CRRC MA is currently manufacturing vehicles for Massachusetts Bay Transportation Authority’s Orange and Red lines.

32 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 16 May 2018

Supported by:

A stitch in time: Tackling fraud in financial services IBUKUN TAIWO & OLAYINKA DAVID-WEST

inancial fraud is bad news for the ecosystem. It has the potential to erode consumer trust in the formal financial service sector of any economy. According to a 2014 NIBBS report, the ATM and mobile channels rank high on the list of platforms with highest volume of reported fraud. Combined, both channels account for more than half of all reported occurrences of fraud within the ecosystem. The activities of fraudsters on the ATM channels is not news, especially for bank customers. For many years, banked individuals have been constantly educated by their providers about how to protect themselves - never share your debit (ATM) card PIN, ensure nobody is looking over your shoulder as you input your PIN, etc. However, with the increasing adoption of the USSD channel by providers and customers alike, it was inevitable that fraudsters would take an interest in this channel as well. True to form, in a recent

working group comprised of different stakeholders organised by the financial sector development agency, EFInA, it was revealed that there has been a surge in occurrences of fraudulent transactions over the USSD channel. A lot of effort has gone into lowering the barriers to entry for unbanked citizens. But we also need to complement our efforts by improving the dynamics of fraud prevention within the ecosystem itself. The Problem of Fraud The problem with a rising frequency of fraud within the ecosystem is that aside robbing customers of their hard earned money, it also builds a bad reputation for the formal sector. Customers respond to high fraud rates by avoiding/rejecting an innovation altogether. Fraud is also a headache for regulators. Regulators tend to respond to it with tighter regulations which could stifle other innovations and deter entrepreneurs and investors from venturing into the ecosystem. In short, when fraud thrives, nobody wins (except the fraudsters!). To be clear, there is no

country where we don’t have fraudulent activities. There will always be con men trying to game the system and make a quick payday. However, the ecosystem cannot afford to be playing catch up. We need to continuously have conversations around innovative ways to deter and mitigate their occurence. Mitigating Fraud In what ways can the ecosystem embrace forward thinking in order to plug the loopholes frequently exploited by fraudsters? First of all, there is a need to develop fraud prevention mechanisms. Is there a way to use real-time monitoring via geolocation data of the physical phone device while transaction is being conducted on the device? Google, Facebook and other internet companies do this all the time. Any login to your account from a new location that is unusual for the customer is flagged as suspicious activity and reported. Same technology would come in useful here and the user can then be asked to answer security questions in order to verify his/her identity. This

extra layer of security curtails any unauthorised remote access to the user’s account. Transactions over mobile, USSD in particular, are on the rise, therefore mobile channels have to be strengthened to minimise the risks. There are various avenues that make the USSD channel vulnerable to fraud - at the consumer’s end as well as the provider’s. Providers need to have appropriate protocols for data-at-rest and data-inmotion. The newly updated USSD guidelines released in April 2018 by the Central Bank of Nigeria (CBN) mandates encryption of USSD information within its environment by an auditable process. In fact, the CBN’s USSD guidelines has a host of mandates that are aimed at improving the security of the USSD channel such as mandatory 2-factor authentication for transactions above N20,000, installation of a Behavioural Monitoring System with capabilities to detect SIM-Swap/Churn status, unusual transactions at weekends, and so on, among a host of others. However, enforcement is required to

reduce vulnerabilities and ensure customer data are safe. In cases where the fraudsters have gained access to the customer’s account, in what ways can the customer be empowered to take action? At the moment, customers have very limited options. The deficiency of complaints resolution mechanisms is evident in the lengthy response times to reports about fraud or suspicious activity which plays to the advantage of fraudsters. Stakeholders have suggested a toll free USSD short code or a mandatory menu option in the DFS interface dedicated to reporting complaints. This enables the customer to immediately flag or block his/ her account in instances involving unauthorised access to the account. We also need to increase the speed of diffusion of information across the ecosystem as information sharing is the ecosystem’s best defense against fraudsters and hackers. It has been suggested that we create a digital platform where complaints and cases of fraud can be reported and described. Can such a platform be built on blockchain technology? Blockchain will enable us to decentralize the information being reported and ensures transparency, enabling everyone - operators, regulators and customers - is updated in real time of new shenanigans perpetuated by fraudsters. Whichever method or platform is adopted, what matters is that customers can easily and conveniently report fraud and this information is available to industry stakeholders. Thirdly, citizens need to be educated on ways to pro-

tect themselves while using mobile banking services. For example, how many bank customers using the USSD code for transactions lock their phone as well as their SIM cards? Not many. Nonetheless, locking your phone and SIM card is a really effective means of protecting yourself, even if your phone gets stolen. As with most things digital, there’s a learning curve and we need to provide customers with adequate sensitization and education on best practices, same way we did with ATMs a few years ago. Finally, we need to examine other markets and note the ways they are tackling issues pertaining to fraud so we are not trying to reinvent the wheel. A lot of markets across sub-Saharan Africa and beyond have gone ahead of us in terms of adoption of DFS. Studying their journey thus far helps us to be forward thinking and strategic in the fight against fraud. Obviously, in order to address these issues, we need a high degree of collaboration within the industry. Thus, fraud prevention and mitigation is a collective, ecosystem prerogative. At least, it should be. Do you have other ideas on how to mitigate fraud within the ecosystem? We would appreciate your feedback. Reach us by email: sustainabledfs@lbs.edu.ng or Twitter:@sustainabledfs

Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

Changing norms for improving women’s financial inclusion ENDURANCE OKAFOR

inancially including Nigerian women could do a lot more learning from how other sectors have achieved marginal progress. One important mechanism other sectors like the health and education sectors, which have to some extend experienced growth have used is deep understanding of how social norms impact attitudes and behaviors, as compiled from the Consultative Group to Assist the Poor (CGAP), a global financial inclusion partnership organizations . This has resulted to significant advances in women’s participation and corresponding behavior change by both men and women. There is therefore need for norm change to spur women financial inclusion in Nigeria,

as despite decades-long efforts by financial inclusion development practitioners, women continue to lag behind men in access to formal accounts in Africa’s largest economy. This is seen in the World Bank’s Global Findex Database, released April 19, 2018, which revealed a widening of the financial inclusion gap between the Nigerian male adults and that of the female in 2017. According to the data, 51 percent of male adults in Africa’s largest economy had bank accounts in 2017 compared to the 27 percent recorded for female. This signified that the Nigerian male adult were 24 percent more financially included than the female. Meanwhile, the 24 percent reported in 2017 was 4 percentage points wider than the 20 percent recorded in 2014 when the total male with ac-

count was at 54 percent while female was at 34 percent. New insights and approaches are therefore needed to close this gender gap. A lady from the Northern part of Nigeria by name A’isha said she is not permitted to go open a bank account or even leave the house to go do anything for herself, that she depends on her husband for everything and she was married to take care of the house and the children. This she also said is the culture and the believe of the people from her community. This was not different from the South East as a woman normally referred to as mama Nkechi, who fries bean cake at a junction in her community said she gives all her money to her husband, that she doesn’t see the need to open an account, since her husband is the head of the family. This is she also said was the same among most

of the women in the community. Social norms therefore refer to the rules and accompanying behaviors that govern social behavior, perceptions, and conduct. Social norms shape how people behave and how people expect others to behave. These informal rules are often highly gendered in that different norms apply to men, women, boys, and girls, and they impact and resonate in varying ways. Gendered social norms permeate actions, perceptions, and expectations at the individual, household, and community level. Such norms have profound impact on financial inclusion, such as limiting women’s ability to work outside the home, engage with male agents, or even own a phone. Mechanisms to address these kinds of barriers can take different approaches and should be em-

bedded into organizational programs, as gathered from analysts. Analyst pointed out workarounds for social norms as one important mechanism. For example, alternative data for credit scoring could be used in markets where women lack access to land for collateral because of norms regarding land ownership and use. Approaches that are transformational can be long-lasting and impactful. This might include, for example, changing the notion that women should not have access to mobile phones because their household roles do not require them to be informed and connected. If this is done rightly, analyst see it as a measure to bringing more women into the financial circle, as they make up the larger part of the financially excluded populace of the country.

Meanwhile, the World Bank’s Global Findex Database revealed a slump in the level of financial inclusion in Nigeria in 2017, this is despite the global rising of financial inclusion as reported by the World Bank. A breakdown of the report shows Nigerian adults who are 25 years and above with bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017. This was not different with account holders over 15 years, as the account was down 4 percent basis points from 44 percent in 2014 to 40 percent in 2017, as compiled from the World Bank’s Global Findex Database report released 19, April 2018. Although, the Central Bank of Nigeria (CBN) have a set target of financially including 80 percent of the Nigerian adults, thereby reducing the excluded to 20 percent by the year 2020.

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BUSINESS DAY

Nigeria’s rice conversation: Beyond politics 36

‘Education and healthcare tourism are capabilities that make Malaysia distinct’ 34

Why cereal maker Kellogg plans to invest $420m in Nigeria 34

US$1bn business deals signed at Indonesian African Forum 2018 – Ishmael Balogun 35

Coconut water’s big profile …The palm tree family product that can compete in the world’s US$10 billion market for sports beverages. SIAKA MOMOH

he palm family has over 2500 species with sizes from 12 inches to massive varieties which can reach heights of 150 feet. The vast majority of palm trees grow naturally in tropical areas of the world, with more than half of the known species coming from tropical Asia. Nearly 1,000 species are native to the American tropics, with lesser numbers of species occurring on islands in the Indian Ocean near Africa and in Africa itself. The specie in question here is the coconut tree from which we can obtain coconut water and coconut oil. The palm, physically and spiritually, is

wealth. Every part of the palm tree - stem, branches, fruits and nuts, etc, is money. The Holy Bible tells you, ‘You will flourish like the palm tree’. According to Coconut Research Centre, the coconut provides a nutritious source of meat, juice, milk, and oil that has fed and nourished populations around the world for generations. It states that in many islands coconut is a staple in the diet and provides the majority of the food eaten and that nearly one third of the world’s population depends on coconut to some degree for their food and their economy. Among these cultures, the coconut has a long and respected history. Of concern to us today is coconut water, that water in coconut’s hollow space that is often thrown away by consumers of raw coconut. Coconut water contains the following among many other attributes: • Organic compounds possessing healthy growth, promoting properties than have been known to help; • Keeps body cool at the proper temperature; • Orally rehydrates your body, it is an all natural isotonic beverage; • Raises metabolism;

• Promotes weight loss; • Cleanses digestive system; • Detoxifies and fights viruses; • Controls diabetes; • Treats kidney and urethral stones. How do we bottle coconut water for sale? The Food Agricultural Organisation (FAO) has done some work on this as follows: A simple cold preservation process keeps bottled coconut water fresh for up to three weeks... The traditional method for extracting coconut water is extremely simple: 1) climb a coconut palm; 2) hack an immature coconut from the bunch; 3) trim off the husk and chop a hole in the top; and 4) drink the contents (steps 3 and 4 are best done on terra firma). Among people in tropical countries with ready access to coconut palms - or to fresh coconuts sold by urban street vendors - coconut water is renowned as a refreshing, highly nourishing drink with a delicate aroma and flavour. But, despite coconut water’s potential as a competitor in the bottled beverage market (see box below), attempts to capture those qualities in a commercial product have been largely unsuccessful. Once exposed to air, coconut water begins to ferment, and rapidly loses most of its organoleptic

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and nutritional characteristics. To eliminate the risk of bacterial growth, commercial bottlers are forced to sterilize the product using hightemperature/short-time pasteurization (the same technology used in long-life milk), which destroys some of coconut water’s nutrients and almost all of the flavour. After more than five years of research and testing, FAO has announced a simple cold preservation technology appropriate for small and medium-sized agro-industries that allows them to produce bottled coconut water which, under refrigeration, stays fresh for from 10 days to three weeks. That is long enough to satisfy domestic retail markets and to allow export to developed countries, where good quality coconut water is in growing demand. FAO is also finalizing publications on a more technologically sophisticated microfiltration technique for cold sterilization and a low-tech system that can be used by street vendors. Training guide The mid-range technology, developed in Ja-

Continues on page 35

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Capacity Building

Encounter with a Malaysian Supply Chain academic

‘Education and healthcare tourism are capabilities that make Malaysia distinct’ Professor PREMKUMAR RAJAGOPAL of Malaysia University of Science and Technology’s area of specialization is Supply Chain. His PhD is in Supply Chain. He has had about 14 years experience working in the Electronic Industry - specifically in the area of Logistic and Supply Chain Planning. He worked in Intel Technology. His university is partnering with DR OBIORA MADU’s Multimix Academy running Logistics and Supply Chain Study in Nigeria. The Malaysian don spoke to SIAKA MOMOH during his recent 4-day working visit to Nigeria.

Science and Technology n Malaysia, almost all universities are science and technologybased. The prof recounts: “We have got over 60 universities in Malaysia – 21 owned by government and 46 are private universities and then we also have international branch universities like Newcastle, Southampton, etc - universities in the UK and Australia. Most of the universities are highly focused on research. They are all technical-based universities. We have some universities focusing on Arts like Management and so on. But most of them are technical universities. And they are all researchbased universities. “In Malaysia University of Science and Technology where I am from, we are highly focused on research. We have got about 172 PhD students with us working on research. And we have got about 400 students working in Masters Research. We have students who are sponsored by the Chinese government to do PhD with us. China wants to have international exposure in countries where foreign investments are heavily on ground. So they see Malaysia as appropriate for this.”

up the education hub, and now we are investing in healthcare tourism. These are the capabilities that make Malaysia to be very different.” Opening up the economy In the early years of the seventies, according to the prof, Malaysia was not really doing well in terms of international business. “Then in 1976 when Malaysia allowed foreign investment, FDI, to come into Malaysia (China did in the year 2000). For example, Intel came into Malaysia in 1976. What Malaysia did was zoning specific areas for industries. We have three zones in Malaysia for industries. Those international companies operating in Malaysia, inside the zone, were given tax exemptions. Some of them enjoyed free land to put up their manufacturing plants. That actually attracted FDI into Malaysia. Until today, Malaysia stands to be the most attractive country in Asia when it comes to FDI.” Economic turn around

Challenges faced transforming Malaysia For him, the country is small; whatever it produces, it needs to sell outside. And its population is only 30 million! “So how much can we sell?” he asked rhetorically. “We therefore need to be competitive enough to take our products to the outside world. Today, we have the tal-

Madu

ent to take our products and services overseas. Recently, Malaysia invested in healthcare tourism. We have many specialists in medicine. So we open medical hospitals to cater for inter-

national patients. People from Saudi Arabia come over to Malaysia for health screening. They come from Indonesia for health screening. It is very cost effective for us. So Malaysia has built

He argued that this policy really helped to turn around the economy because FDI came in, and Malaysians were motivated by the FDI, and they went on to upscale themselves – built their proficiency and government supported building the skills of the people and they were able to provide the needs of the foreign investors. Malaysia and palm oil Palm oil is a very big challenge for Malaysia. Rajagopa explained: “We

are doing very well. We are the second largest producer in the world. Exporting palm oil is a big challenge. The European Union has come up with a policy that if we want to export to Europe, we must meet their requirement of sustainability – RSPO – Roundtable on Sustainable Palm Oil. So this has become a challenge for us. We have plan of working towards the direction, but until now, we are not really able to achieve it. Indonesia managed to. There are some discussions going on. If EU remains firm on its stand, it will mean a big loss to us.” What Premkumar Rajagopal is offering Nigeria “Malaysia University of Science and Technology is bringing in education. We are focusing on Logistics Supply Chain. Our university in Malaysia is very well known for Logistics and Supply Chain study. So we are bringing in this field of study. With the support of Dr Obiora Madu of Multimix Academy, we are now having 50 students in Nigeria who are doing our MBA in Supply Chain Management. We come in here and take the classes for them. We fly in to conduct the class. It is expensive but it is a bilateral understanding that we want to honour with Dr Madu.” Partnership duration The relationship with Malaysian University of Science and Technology started August last year. “This will continue because the demand is very good”. ‘It started with 18 students and has grown to 45 students.

Agribusiness

Manufacturing

Africa needs to transform the cocoa value chain, says Akinwumi Adesina, AfDB president

Why cereal maker Kellogg plans to invest $420m in Nigeria

SIAKA MOMOH

n spite of producing almost 75 per cent of the world’s cocoa, Africa gets only five per cent of the US$100bn annual chocolate market value, said AfDB President Akinwumi Adesina. “Africa has been unable to extract a larger share of the global chocolate market value because it exports just raw cocoa beans,” said Adesina.” Peter O. Aikpokpodion, PhD, of the University of Calabar, Cross River State, Nigeria Crop Improvement & Agri-Commodities Value Chain Development Specialist Principal Partner, Commodities Enterprise Development International, spoke in the same vein, at Agra Innovate two-day event at Landmark Centre, Lagos few months back. He advised a paradigm shift as follows: • We must move from Comparative advantage to Competitive Edge; • We must move from being Cocoa Farmers to Cocoa beans Entrepreneurs; • Move from selling Cocoa Beans to making Chocolate Bars; • Move from Farm-gates status to Boutiques’.

He argued: • If you transform 22 metric tonnes of cocoa beans worth N17.2 million to chocolate bricks you will earn N84.1 million (389% profit)! • If it is chocolate bars to confections – bars worth N144.2 million, you will earn 1.2 billion (716% profit)!

• Cocoa beans to confection give 6,751% margin! So, according to the don, the economic benefits are Increase in forex earning; job creation; attracting new generation of farmers; education and capacity building; vertical integrated business.

ighlighting the falling demand for cereal in the United States, Kellogg recently announced a $420 million investment in Nigeria’s Tolaram Africa Foods, its distributing partner in Africa, which makes noodles in addition to cereal.’ Fruit Loops cereal maker Kellogg Co topped Wall Street forecasts for first-quarter profit and sales few weeks back, boosted by stronger sales of snacks including Pringles chips and protein bars, according to Reuters report. Though Kellogg has lowered the sugar content in many of its popular cereals to win back health-conscious customers, much of the Battle Creek, Michigan-based food company’s business today is driven by sales of snacks such as Pringles chips and RXBARs. Highlighting the falling demand for cereal in the United States, Kellogg on Thursday also announced a $420 million investment in Nigeria’s Tolaram Africa Foods, its distributing partner in Africa, which makes noodles in addition to cereal. It is the latest in a handful of deals Kellogg has sealed in the past few years to diversify its business, including the acquisitions of protein bar brand RXBAR

and Brazilian snacks group Parati. The company did not disclose additional financial terms of the Tolaram investment. “Cereal consumption remained soft, though the company made progress toward stabilizing the key health and wellness brands, including Special K,” Kellogg said in its earnings statement. Kellogg’s sales rose 5 percent in the first three months of the year, the third consecutive quarterly increase, as shoppers also bought more Eggo waffles and veggie patties in addition to snacks. Overall sales of $3.40 billion topped analysts’ expectations of $3.30 billion, according to Thomson Reuters I/B/E/S. Kellogg said it expects net sales to rise between 3 percent and 4 percent in 2018 on a constant currency basis. The forecast includes gains from the Tolaram investment and translates to sales of $13.31 billion to $13.44 billion. Kellogg’s net income rose to $444 million in the first quarter of 2018 from $266 million a year earlier. Excluding one-time items, Kellogg earned $1.23 per share, handily beating expectations of $1.08. Reuters/CNBCAfrica

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Trade&Investments

US$1bn business deals signed at Indonesian African Forum 2018 – Ishmael Balogun ‘Indonesia-Africa Forum is an embodiment of the commitment of Indonesia and African countries to advance and prosper together and where Africa and Indonesia can meet and discuss concrete cooperation involving various stakeholders’ SIAKA MOMOH

he Indonesia African Forum which held in Bali, April 2018, culminated into the signing of USD1.067 billion business deals between Indonesia and African countries in attendance, Non-Oil Digest can reveal. According to Ishmael Balogun, President Nigerian-Indonesian Chamber of Commerce and Industry (NICCI), who led a delegation of Nigerian business persons and government functionaries to the forum, “All the attendees from 53 African countries and the African Union recognized they were unto something phenomenal as business deals worth over USD1 billion was signed with several African countries and these businesses cut across various sectors of industries from Agriculture, Mining, Finance, Transportation, Mining, Manufacturing, Defense etc.” He explained, “The opening ceremony culminated with business deals signed between Indonesia and African companies worth USD 568.56 million in trade and investment partnerships. On the second day, additional business deals worth USD 499.2 million were signed. The forum also recorded 11 business deals announcements with a total potential value of USD 1.3 billion. The Nigerian delegation to the forum included the Edo State Governor Godwin Obaseki, Oyo State Government, Federal Ministry of Mines and Steel, Olam Nigeria, Tradenet, Greentech Industries Ltd, Topwide Investments Ltd, Hyperloop Transportation, to mention a few. Ishmael Balogun said on the first day of the event, Vice President Jusuf Kalla of Indonesia officially opened the first Indonesia-Africa Forum (IAF 2018) in Bali Nusa Dua Convention Center and said “Indonesia and Africa

Ishmael Balogun and Governor Obaseki

have a long history beginning with the organizing of the Asian-African Conference (KAA) in Bandung, 1955”. According to Balogun, “The opening ceremony witnessed the opening speech by the Indonesian Minister for Foreign Affairs H.E. Retno Marsudi who disclosed that ‘Indonesia-Africa Forum is an embodiment of the commitment of Indonesia and African countries to advance and prosper together and where Africa and Indonesia can meet and discuss concrete cooperation involving various stakeholders’”. Balogun gave more details: “The day proceeded with panel discussions between the Indonesian Minister of Foreign Affairs H.E. Retno Marsudi and her counterparts from Madagascar, Cameroun, Mozambique, and Ghana etc. One of the visits witnessed the signing of a multimillion dollar MoU between Topwide Ventures Ltd of Nigeria and PT. TIMAH (Indonesia state owned mining company, a MoU between Indonesia and Ethiopia to commence direct flights from Indo-

nesia to Africa. Ethiopian Airlines is expecting to kick off its inaugural direct flight connecting Jakarta and Addis Ababa this month. The highlight of the meetings also witnessed strategic partnership MoU’s between African corporations and Indonesian organizations such as Exim Bank, Standard Chartered Bank, PT Timah, PT Wijaya, KaryaTbk, PT. (Wika) etc.” He added that the Indonesia Eximbank/ (LPEI) along with Foreign affairs Ministry of Indonesia launched a book titled ‘Road to Africa’. The book, according to him, contained a comprehensive review regarding the opportunities of cooperation between Indonesia and countries in Africa. “The other half of the day witnessed the panel discussions themed “Policy Makers’ Perspective” and a business forum involving the participation of 39 speakers from Indonesia and Africa. The executive Governor of Edo state, Governor Godwin Obaseki was one of the panelists at the event. An exhibition was held on Indonesian industries and products, which was open to the public,” he said. Day 2 of the forum witnessed panelists discussing the theme ‘Connectivity’. The speakers were Minister of Transport for Indonesia, CEO of Ethiopian Airlines, CEO Lion Air, CEO PT. INKA, and Minister for Trade, Zambia. Other sessions according to Ishmael Balogun, were on Digital Economy, Indonesia’s Economic Diplomacy to Africa and Agriculture, Service and Manufacturing and Strategic Industries.

BUSINESS DAY

Editor’s Note Rethinking agriculture is yielding fruits; good fruits. That coconut products now occupy pride of place in consumers’ shopping list is a confirmation of this statement. According to Coconut Research Centre, the coconut provides a nutritious source of meat, juice, milk, and oil that has fed and nourished populations around the world for generations. Did we know this? It states that nearly one third of the world’s population depends on coconut to some degree for their food and their economy. Did we know this? Coconut water can compete in the world’s US$10 billion market for sports beverages! Did we know this at all? I do not think so. Rethinking agriculture has brought about a paradigm shift. Our cover story tells the rest of the story. In these hard times, there is need to make ends meet. I remember quite well the story of my statistics lecturer at the University of Lagos. He set up a team of boys to wash cars at car parks in the campus and made good money to augment his earning. I see a replica of this today at the Marina car parks in Lagos Island. Enterprise Strokes has more on this. We know Malaysia for palm oil. Recall that years back, Malaysians came to Nigeria, took some of our

Siaka Momoh

palm oil seedlings, added value to it, and it is today world number two producer of palm oil and was at a time world number one. But there are some aspects of Malaysia’s profile that we don’t know: education and healthcare tourism. Malaysia is earning big from this, exporting these services to countries in Asia, Africa, etc. Premkumar Rajagopal, Professor of Supply Chain, Malaysia University of Science and Technology, was in Nigeria in April on account of this. He spoke to Siaka Momoh. Read this and more in your ever captivating monthly magazine. Welcome on board.

For advert placements, sponsorship, reactions editorial contributions, please contact SIAKA through siakamomoh@yahoo.com; 2348061396410; 23408023033988.

Coconut water’s big profile... Continued from page 33 maica in collaboration with the University of the West Indies, the Coconut Industries Board and the Scientific Research Council, is described in a FAO training guide, Good practices for the production of bottled coconut water, published in English, French and Spanish early in 2007. Says Rosa Rolle, an FAO food biochemist who coordinated development of the process: “While microfiltration can guarantee a commercially sterile product, it requires skills and investments that are often beyond the capacity of small and medium-scale processors. What we aimed for was a technology that is easier to implement and costs less, but ensures good quality and reasonable shelf-life in a convenient format that satisfies consumer demand for a ‘natural product’.” The starting point is selection of

coconuts suitable for processing. FAO-funded research indicates that coconut water of good drinking quality is clear and colourless, with pH of 5 to 5.4 and a Brix level (a measurement of sugar concentration) of 5 to 6.5. Per millilitre, it should have a total microbiological count of less than 5,000, less than 10 of coliform bacteria, and zero faecal coliform. For smallscale processors without access to a laboratory for microbiological testing, the manual recommends some simple measures, such as checking the product for traces of fermentation or foreign objects, and giving it a “nose test” - a rancid odour, for example, indicates that the small quantity of fats in the liquid have oxidized. The guide points out that “coconuts are living material”, and continue to breathe after harvest: “The higher the temperature of a coconut at harvest, the more rapidly will it respire in

the post-harvest phase and the more rapidly will its constituents undergo physiological changes, leading to deterioration.” A range of other factors can negatively affect the quality of coconut water. During production, they include contamination by pesticides residues, and heavy metals entering the fruit through soil or water. Post-harvest, micro-organisms can be introduced through improper handling and processing, leading to rapid fermentation. Rapid cooling Now comes the easy part: extracting the precious liquid. That is done by first trimming the husk with a sanitized stainless steel cutlass, then opening the shell. The water inside is decanted into a sanitized container equipped with a strainer lined with a sanitized silk screen or cotton cloth. The filtered water should be promptly

transferred to a cooling tank and cooled to 4°C, or placed in a freezer for three to four hours. Where large volumes of coconut water are to be bottled, the use of a refrigerated cooling tank for rapid cooling is highly recommended. Waste material - mainly husks - must be removed from the processing environment and promptly disposed of. The water must be quickly bottled and sealed - in bottles that have been rinsed in potable water and sanitized for 15 minutes - then stored in a chiller at 4°C. The bottling facility needs to be clean and “free of animals, insects, dust or garbage”, and physically separate from area where the coconuts are cut open. “Bacteria and yeasts are the main micro-organisms that threaten freshly bottled coconut water,” the FAO guide says. It is critical, therefore, that the temperature of the bottled water be

kept at between 0 and 4°C during transportation in order to preserve quality and to prolong shelf-life. Finally, the manual advises, processors need to make sure that their product is handled with care after delivery: “Monitor retail outlets to ensure that the bottled coconut water is stored at the correct temperature and away from direct light”. Processing technology for street vendors Designed in collaboration with the Philippines ‘ Industrial Technology Development Institute, the unit is insulated with a mixture of ice and salt, which cools freshly collected coconut water to below 4°C. Instead of hauling coconuts from rural areas into cities, vendors can collect the water “at source”, reducing both their transport costs and the quantity of urban garbage.

COMING IN JUNE EDITION: Coconut Oil: Now a must brand in homes across the country

BUSINESS DAY

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Agribusiness

Nigeria’s rice conversation: Beyond politics ADE ADEFEKO

nvestments in Nigeria’s agricultural sector have taken an upward spin. Take the recent commitment of 1 billion USD to the sector on the part of the Federal Government for example. Such outlook on a sector hitherto starved of public funds is, to put it mildly, commendable. However, it is not only the public sector that has been in the business of spending to improve Nigeria’s agricultural prospects, private entities have also demonstrated a willingness to “put their money where their mouth is” all with the intent to ensure that the Country makes steady advancement in harnessing its steep agricultural economic potentials. A good example in this regard is AgroNigeria. Over the last eleven years, the Company has, in a manner embodying true patriotism and commitment to selfless service, dedicated itself to a systematic campaign targeted at galvanizing productive interest in Nigeria’s agricultural sector. Unlike many in the communications space, Richard-Mark Mbaram, AgroNigeria’s CEO has insisted on specific focus on the agric-sector, resisting the temptation to go elsewhere, even when it called for personal sacrifice, to enhance the “AgroCause”. A member of Nigeria’s “Generation X”, Mbaram has blended intellectual power with qualitative communication and management capabilities. AgroNigeria recently concluded a High-level Conference focusing on the rice crop. Proficiently choreographed to equal international convening standards, the event was, in every respect, well packaged. The thematic outlay, betrayed a savvy consciousness of the realities prevalent in Nigeria’s rice sub-sector, which is not unexpected as AgroNigeria prides itself as the “Voice of Nigeria’s Agricultural Sector”. Thus, the presentations and discussions at the Conference served to ignite innovative ideas towards addressing the varied challenges bedeviling the rice sub-sector in Nigeria. It was not a time to sugar-coat, everyone faced up to the realization that despite the gains made, a lot more work had to go in, if Nigeria is to be self-sufficient in rice production. With the presence of a key figure in Nigeria’s rice sub-sector, Alhaji Abubakar Bagudu, the Kebbi State Governor and arrow-head of the Nigerian government’s food security drive, the president’s agricultural strategy was aptly presented. The Governor was keen to engage in plenary discussions, particularly that which sought to hatch a framework for public – private cooperation in the rice self sufficiency efforts of the country. The Kebbi State helmsman gave credence to his widely acknowledged reputation for developmental leadership. His pointed characterization of the subversive actions of countries bordering Nigeria as “economic warfare” was a high point in the dialogue and marked

a robust departure from the erstwhile milquetoast governmental stance on the issue. The Rice Conference brought to the fore the immense progress made under the present administration. As Alhaji Musibau Azeez, The Director of Agribusiness in the Federal Ministry of Agriculture and Rural Development, who represented the Minister at the conference pointed out, Nigeria is well on her way to attaining the objective of Self Sufficiency in rice production. The one that really moved the needle in terms of scale was the panel discussion by my humble which reaffirmed Olam’s pre-eminent position as the largest player in the Rice Value chain space with capacity of 190, 000 metric tonnes and doing this in two locations Nasarawa (120 million dollar rice farm and mill and home of Mamas pride and Kano where we do tolling and home of Mamas choice. The next big-

currently enjoying were sown under the immediate past Minister of Agriculture, Dr. Akinwumi Adesina who supervises a rigorous overhaul of the nation’s rice seed architecture, introducing varieties like FARO 44, 52 and 61. The current administration built on this framework in a historic demonstration of policy consistency and this was applauded by stakeholders at the conference. The above notwithstanding, the menace of smuggling also engaged the attention of stakeholders, given that in the absence of a well thought out and deliberate strategic solution to Nigeria’s leaking borders, the Rice Self sufficiency bid is dead on arrival. In this regard, the Nigerian Customs Service reiterated its plea for better funding and equipping to carry out its mandate of securing Nigeria’s borders. It must be stated that the conditions under which the department of Customs

Rice conversation

gest competitor is around 70 to 100 thousand tons. Equally important to state is the number of Rice farmers which has risen from 5.8 million thereabout to slightly over 12 million. This is not about optics but genuinely true. This reality throws up yet another key point, regarding the need for successive governments to resist the temptation of policy somersault. Hitherto, in Nigeria’s Agriculture history, successive governments had been adept at discontinuing with the policies of their predecessors. The Buhari Administration broke this jinx by building on the foundation of its predecessor. In the words of the Director, Seed Certification & Quality Control of the Nigerian Agricultural Seed Council (NASC), Alhaji Shaq Khalid, the seeds of the rice revolution that Nigeria is

and Excise operate currently, they are configured to fail. It therefore goes without telling that both the Executive and the Legislative arms of government must as a matter of urgency address the needs of the Nigerian Customs Service in order to ensure the attainment of Nigeria’s rice Self Sufficiency drive. Mainstreaming the Voice of the Private Sector into this conversation is therefore imperative. To this end, there was a comprehensive endorsement of the Strategic Rice Alliance for Nigeria. This initiative was hailed as a vital medium by which the Private Sector can contribute its voice to the country’s rice discourse – which many believe to be public sector dominated. Nigeria’s rice revolution is well underway and all hands must be on deck to ensure that it does not run out of steam.

Making ends meet

e are going through tough times these days. Yes we are. This is on everyone’s lip. The jobs are not there; there is hunger in the land and by extension, high incidence of crimes on the streets, in work places, etc. If you want to feel the pulse of the nation, talk to the man on the streets, talk to local bar patrons engage in chit chats at hair salons, talk to market women, talk to housewives, you will get it right. Sure, you will. The other day, I was chatting with my plumber who called at my instance to do some fixing for me. On occasions like this, he kicked up arguments – arguments on the nation’s political economy. If you think it is only our erudite scholars, grounded in Economics, Politics /Political Science, Philosophy, Sociology, etc, that can rightly and confidently discuss national issues, you are wrong, very wrong. This reminds me of late Siaka Giwa, one of my political elders back home in Ikare, Ondo State. Siaka Giwa was not lettered but he was a home grown rabble rouser, a man of the people whose oratory in the local dialect compelled all to listen. He was natively intelligent and he carried the people along. What else would qualify one to be a local political champion? But Siaka Giwa died midstream; he died when we needed him most. Back to my plumber, Stanley story. Stanley had a little stint with education and veered into plumbing and he is making ends meet with it. I knew he would come up with an issue and he did. “Them say Buhari say Nigerian youths be lazy people.” My response: But Buhari media adviser say he no mean all Nigerian youths, but some Nigerian youths.” He snapped: “Abeg make I hear word. All that na gramma, all na turenchi. He say we de lazy. We no de lazy. Na work no de. Which work him provide for us?” He is right to some extent. Though some jobs have been created, government’s effort is still a drop in the ocean. It would be recalled that Nigeria’s apex bank, the Central Bank of Nigeria (CBN), has set aside the sum of N1 trillion as part of the efforts to promote lending to the real sector and stimulate the economy. CBN Governor, Godwin Emefiele told newsmen at an event in Ibadan that the approach to real sector development was in three areas. He identified agriculture, Micro, Small and Medium Enterprises (MSMEs) and infrastructure as areas of interventions by the apex bank. Said he: “The interventions included the N300 billion Real Sector Support Facility RSSF; the N220 billion Mi-

cro, Small and Medium Enterprises Development Fund, MSMEDF; the N213 billion Nigeria Electricity Market Stabilisation Fund; N500 billion Non-Oil Export Stimulation Facility; and the N75 billion Nigeria Incentive Based Risk Sharing for Agricultural Lending, NIRSAL.” The end result of these interventions is job creation. And the jobs will not come in one day. But my plumber wants to see the jobs now. He and his friends on the streets have no patience with you telling them investment in the real sector will bring about the required jobs. But before the right jobs will come, we can go for making ends meet. I remember quite well the story of my statistics lecture at the University of Lagos. He was a lecturer but saw a business opportunity right there at the campus. He looked at the array of cars parked at car parks on the campus and decided to set up a car washing team. He did and approached owners of these cars as they parked, offering them his services. He was not doing the washing himself, his company did whilst he continued with his duty in the lecture rooms. I see a replica of this today at the Marina car parks in Lagos Island. The lecturer, from Akwa-Ibom or is it Cross River? (I am not sure which of these two sister states) needed some extra cash to meet his needs. I once told a cousin of mine, a Physics/Education graduate who needed a job desperately that he could approach the local government back home with a proposal to collect trash for the LGA. He did not go for it perhaps because he saw it as a dirty job. But he forgot shit business is good business. He needed late Otunba Gadaffi (Mr Durojaiye) of the shit business fame (DMT) to give him a lecture on this. Back in Jesse in present Delta State in the 1960s (Delta and Edo States were part of Western Region then) my foster father, Late Francis Omoerere Okotete, was headmaster in the village. He hunted bush-meat (porcupine and grass-cutter) to augment our feeding need. Making ends meet. He did this, as well as fishing, with me as helping hand, in Oghareki in present Delta State. I would go early in the morning before school time to bring out the net from the river, release the fettered fishes and bring them home for pepper soup, yam and plantain breakfast. Making ends meet. And what am I doing now with Non-Oil Digest? Making ends meet after retirement from routine journalism. Retired but not tired. One important note: Yours sincerely needs your ad patronage and segment sponsorship, to make the project a success.

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BUSINESS DAY

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BUSINESS DAY

What the new CAMA bill passed by Senate... Continued from page 2

will encourage more investments and create new jobs. CAMA will also create the Limited Liability Partnership (LLP) which is a new form of legal identity for businesses in Nigeria, targeted at increasing foreign investment in the country as well as give legal backing to enable Nigerians register their businesses from anywhere in the country through e-Registration system. Speaking after the bill passed Third Reading at plenary on Tuesday, Senate President, Bukola Saraki, stated that the enactment of CAMA was a significant milestone in the 8th Senate’s Legislative Agenda. He said the 8th Senate has made history with the repeal and re-enactment of the Companies and Allied Matters Act (CAMA), adding that this is biggest business reform bill ever passed by any legislature in the country. “With the passage of CAMA, which is by far the biggest and one of the most far-reaching legislation ever passed in any legislature in our country, we have now put in place a regulatory framework to promote the ease of doing business and reduce regulatory hurdles.” “This is a pro-business law. This bill that we have just passed will show the audacity that we have to move Nigerian businesses into a new era of success and development,” Saraki said. “We are truly now walking the talk,” the President of the Senate said, “With the passage of CAMA, we are saying to the rest of the world that Nigeria is ready for business and the government of Nigeria is ready to support small scale industries to promote innovations, and encourage enterprise” Analysts see the amendment of CAMA as a step further to attaining a better doing business environment in Africa’s largest economy, which in the long term can spur economic growth. “The re-enactment of the CAMA will make the ease of doing business in Nigeria to be much more convenient, and this further compliments the efforts by the ease of doing business committee championed by Yemi Osinbajo, the Vice president of Nigeria,” Bismarck Rewane, MD of Financial Derivatives said. The new CAMA bill is expected to make Nigeria’s business environment as competitive as its counterparts around the world. “This is an excellent bill and the right “law” to be in the country. I also believe it will help to generate tax revenue for the government as more business entities can now be created in a form of company from which government can earn taxes,” Ayodele Akinwunmi, head of research, FSDH Merchant Bank limited said in an emailed response to BusinessDay. Another benefit of the amended CAMA bill is that it will allow business owners to now register their businesses in a faster and more efficient way- using technology. “Any law that supports ease of registering business is welcomed, as it will support economic growth in a long run,” Ibrahim Tajudeen, Head of Research at Chapel Hill. Entrepreneurs in the country are expected to welcome the new development. “I believe the first direct impact

would be on the growth of the economy. Now unregistered startups can now register easily and new start-ups can now spring up,” Dayo Tinkerman , C.E.O, BrandieGroup said on phone. “These would provide more employment opportunities and more taxes for the government,” Tinkerman further added. The new development is widely believed would help to further improve the current position of the country on the ease of doing World Bank rankings “Really this will ultimately be positive on my business by the time it is implemented. I will be able to register some other business ideas I have without having to go through all the rigorous processes in the present registration system and since I can have all the information I need online it would be better for me,” Tolu Craig, CEO, PTwebs said “And it will make people begin to trust the act of doing business transactions the more online,” Craig further added Typically, businesses in the country necessarily starts with the company law of Nigeria. In 1912, the first company law was the Companies Ordinance of 1912. This was a local enactment of the Companies (Consolidation) Act 1908 of England. Thereafter, Nigeria had the Companies Ordinance 1917 and five years later, the Companies Ordinance 1922. The next major change was in 1968 when the Companies Decree 1968 was promulgated and that decree remained in force until the coming of the Companies and Allied Matters Decree No 1 of 1990. That decree is (with amendments) still the company law of Nigeria but it is now known as the Companies and Allied Matters Act 1990 Also business start-ups said that this new bill has three key developments that will impact positively on their businesses. Firstly, with the amended bill, one individual can now open and run a company-unlike before when two or more people are required to run a business. This is especially good for start-ups and young entrepreneurs. Secondly the ease of access for company registration will now be better because start-ups and small scale businesses can now register their businesses online from the comfort of their homes or offices. And lastly, the limited liability partnership was formerly practised only in Lagos where a legal partnership has a corporate personality but now the new bill will expand the access throughout the country thereby increasing the potential for more development in the space. On the downside risk of the bill, Johnson Chukwu, managing director/CEO of Cowry Asset Management limited pointed out that one individual owning a company defeats the law of legal entity. Tajudeen of Chapel Hill said the ability of one person to open and register a company will reduce the potential of good governance that can be experienced in an establishment compared to when there are two or more shareholders in the company, as the one person may choose to run the company in any way that best appeals to him or her. But overall, he sees the bill as positive.

L-R: Kemi Adeosun, minister of finance; Vice President Yemi Osinbajo; Udoma Udo Udoma, minister of budget and national planning, and Winifred Oyo-Ita, head of civil service of the federation, during Nigeria Economic Recovery and Growth Plan (ERGP), Focus Labs Open in Abuja, yesterday. NAN

As inflation continues slide all eyes on next MPC... Continued from page 2

May 21 and 23 as expectations heighten after Aishah Ahmad, Edward Adamu, and the two other newly confirmed members of MPC shrugged off pressure to cut rates to stimulate economic activity at its last meeting. The scope is wider for the MPC to cut its benchmark interest rate from 14 percent at the meeting next week, according to analysts at Investment one research. Johnson Chukwu CEO of cowry asset management said the MPC will look at other economic indicators including the 2018 first quarter GDP report before deciding whether to maintain price stability or expand growth. “The MPC will be very careful because the upcoming political activities will endanger the injection of liquidity into the economy and the velocity of money,” Chukwu said by phone. Headline inflations figures are however now 1.52 percent below the monetary policy rate (MPR), at 14 percent. Godwin Emefiele, CBN Governor, had said, at the last MPC meeting, that the key macroeconomic variables, which the Committee believes to have continued to evolve in a positive direction, “should be allowed more time to fully manifest” in line with the current stance of macroeconomic policy. “The continued slowdown in the increase in consumer prices should be a positive for business and consumer sentiment,” Investment one research report said. The inflation rate grew to a double digit of 11.38 in February 2016 when the nation’s economy

plunged into recession and rose to 12-year high at 18.72 percent in January 2017. Since then, the rate has taken a downward trend, decreasing to 12.48 per cent in April, making it the 15th consecutive disinflation (slowdown in the inflation rate though still positive) in headline year on year inflation since January 2017 which represents 0.86 percent points less than the rate recorded in March 2018, which was 13.34 percent. Chukwu maintained that moderating food inflation is the most important factor to watch out for, however he expects the trend to continue till the last quarter of this year. Analysts at Financial Derivatives Company had already the forecast a 12 percent inflation rate, therefore its CEO Bismarck Rewane was not surprised. “However it’s important to note is that headline month inflation is increasing which means that it won’t last for long before it translates to the general economy as a whole,” Rewane told BusinessDay. According to Nigeria Bureau of Statistics (NBS), on month-onmonth basis, the headline index increased by 0.83 per cent in April 2018, up by 0.01 percentage points from the rate recorded in March. “Historical inflation is not as important as anticipated inflation; the point is that inflation will start to increase very soon and the only answer is to increase output,” Rewane added. The MPC would be meeting on the direction of MPR, which determines the rates at which banks give out loans, at its next meeting.

Senates inflates 2018 budget by 6% to... Continued from page 2

the senate increased the budget by 4.5 percent to N4.49 trillion from the N 4.3 trillion submitted by the executive. Under the current administration of president Buhari, in 2016, the senate reduced the budget by 0.3 percent to N6.06 trillion from the N6.08 submitted. In 2017, the senate increased the budget by 1.9 percent to N7.4 trillion from the N7.2 trillion submitted by the executive. In Nigeria, the normal financial year starts in January and ends in December in line with the provisions of the 1999 Constitution. In the last nineteen years of democracy, budgets have always been delayed.

With this development, the January to December budget cycle would not be obtainable with the 2018 budget. It would be recalled that President Buhari had submitted the proposal to a joint session of the National Assembly on November 7, 2017, with a call on the legislature to quickly pass the proposal and return to January to December budget cycle. The president, who announced the 2018 budget as “Budget of Consolidation”, said the projected expenditure would drive rapid economic recovery. He said at the session that with a benchmark of 45 dollars per barrel at an exchange rate of N305 to

Speaking in April in Washington CBN Governor had expressed excitement that inflation concerns were gradually ebbing at the back of the apex bank’s monetary policy stance, and signalled the regulator could begin monetary easing soon. “At this time, yes, we are still in the mode of tightening...but I can assure all of us that we will not tighten perpetually, that at some point, we will begin to loosen and I believe that those financial accommodation period are coming on very, very soon,” Emefiele stated. Investment one research report noted that given the recent sell-off by foreign investors in the secondary fixed income market, on the back of rising yields in the US and heightened geopolitical tensions, the CBN is aggressively tightening system liquidity to defend the local currency. The CBN has being tackling excess liquidity in the interbank money market which worsened last week by inflow of N290 billion. The apex bank mopped up N454 billion from the market by selling secondary market (Open Market Operations, OMO) treasury bills last Friday. Nigeria’s statistician-general, Yemi Kale said inflationary pressures could come from higher spending in the second half of the year, before general elections scheduled for February 2019. The economy turned the corner in the second quarter of 2017 after five straight quarters of contraction and the government is bent on boosting spending to stimulate economic growth in Africa’s most populous nation. The economy grew 0.8 percent in 2017, but average incomes have gone nowhere since 2015, in a country that produces people at an average of 3 percent annually. a dollar in 2018, the budget would consolidate on the achievements of previous budgets to aggressively steer the economy to the path of steady growth. However, the Senate had on several occasions accused Ministries, Departments and Agencies (MDAs) of not keeping to appointments with the various standing committees to defend their budgets. BusinessDay had earlier reported that the 2018 budget is the most delayed since Nigeria returned to democratic rule in 1999, with May 15, 2018 marking 190 days from November 7, 2017 when President Buhari presented it. The budget is however expected to be passed by Wednesday or Thursday this week.

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FG to settle inherited debts via promissory notes, bonds issuance HOPE MOSES-ASHIKE

he Federal Government is to settle inherited debts and contractual obligations to local contractors between 2006 and 2015, and terminal benefits of ex-Nigerian Airways workers through promissory notes and bonds issuance. Minister of finance, Kemi Adeosun, said this Tuesday, while appearing before the Senate Ad-Hoc Committee on “Promissory Note Programme and Bond Issuance,” chaired by the deputy chief whip, Francis Alimikhena. The minister explained that thedebtsowedtovariousclasses of contractors, including the terminal benefits of ex-Nigerian Airways workers, would be repaid through promissory notes and bonds issuance. She said the unpaid Federal Governmentobligationsconstituted a drag on economic activity across many sectors, adding that the present administration was determined to address the problem. She listed the unpaid obligations to include obligations to pensioners and salary and

promotion arrears to civil servants; obligations to contractors and suppliers who in turn, owe banks increasing the quantum of non-performing loans, and unpaid electricity bills by the Ministries, Departments and Agencies (MDAs). Others are: exporters owed funds under the Export Expansion Grant Scheme and unpaid refunds due to state governments in respect of projects undertaken on behalf of the Federal Government. “The Federal Government is working towards settling these inherited debts. The Small and Medium scaled Enterprises are the lifeline of our nation. The Federal Government will be stimulating the economy by paying these legacy debts,” Adeosun told members of the Ad-Hoc Committee. According to Adeosun, the Federal Government has approved the issuance of promissory notes and bonds to settle its contractual obligations subject to the approval of the National Assembly. On the ex-Nigerian Airways workers, she said their terminal benefits were rec-

onciled and agreed at N45 billion following verification, but debunked claims by the ex-workers that there was a presidential approval for the payment of terminal benefits of N45 billion to the workers. “There has been a misconception in the media that the President had approved the payment of N45 billion terminal benefits to the workers. There is no presidential approval and no appropriation yet for the payment of N45 billion to the ex-workers,” she said. Earlier, the representative of the Accountant General of the Federation, Mohammed Usman, had told members of the Senate’s Ad-Hoc Committee that the Government paid N34.2 billion to clear the promotion arrears to workers in the MDAs. Usman, who is the Director of Funds in the Office of the Accountant General of the Federation,addedthatthepayment process was still ongoing. “These payments were made to the accounts of the beneficiaries in the MDAs after detailed verification of all documents attached as proof of promotion,” he said.

Wednesday 16 May 2018

World Bank reels out investment plans on $350m loan to Ogun RAZAQ AYINLA, Abeokuta

orld Bank has designed a five-year investment plan centred on how the $350 million loan Ogun State government is seeking from it would be spent. According to the bank, the $350 million loan will be invested in five key socio-economic areas that include agriculture, business environment and industry, skill development and education, governance as well as project management. Speaking on a presentation made at the Chambers of Ogun State Executive Council, Governor’s Office, in Abeokuta

on Tuesday, Kofi Nouve, task team leader of World Bank, said agriculture would gulp $120 million, business environment/industry, $100 million; skill development (education), $100 million; governance, $20 million, and the remaining $10 million would be expended on project management. Earlier, the State Executive Council also received at the meetingtheprogressreportofthe Public Service Transformation Office (PSTO) on the reformation of its civil and public service sectorforoptimumresultsinline with world best practices. The leader of the Department For International Devel-

opment, David Ukagwu, who noted that the Bureau of Land and Survey was being used as a pilot study, stated that the committee would soon move to other ministries, departments and agencies. Responding, Governor Ibikunle Amosun assured of his administration’s desire to institutionalise a system driven environment across MDAs for effective and efficient public service that would promote optimum output in governance. The governor however mandated relevant agencies of government to make available documents for the executive order, to fast track the process.

Wapic Insurance holds conference call as performance improves ENDURANCE OKAFOR

apic Insurance plc holds a teleconference call for investors and analysts today at 1pm in Lagos, with its senior management to announce the unaudited financial results for the period ended March 31, 2018. There will be an opportunity at the end of the call for management to take questions from investors and analysts. The Nigerian insurer continues to make an efficient underwriting capacity as premium income covered all of claims and

underwriting expenses, resulting in favourable combined ratio. For the first three months through March 2018, Wapic grew gross premium written by 18.30 percent to N4.46 billion from N3.77 billion the previous year. The rise in revenue was largely on the back of significant rise in Motor Insurance segment, which surged by 81.75 percent to N761.86 million in the period under review, and revenue from non life of N823.69 million in the period under review. Gross premium income increased by 17.67 percent to N2.53 billion in the period under review

as against N2.15 billion the previous year, while net premium income grew by 23.62 percent to N1.57 billion in March 2018, from N1.27 billion as of March 2017. Wapic is efficient and there is no threat to going concern, as combined ratio (CR) of 64.33 percent is lower than the 100 percent regulatory threshold. The 64.33 percent CR resulted in real underwriting performance of N560.01 million real underwriting profit. Under writing profit was up 81.40 percent to N772.60 million in March 2018, from N425.91 million the previous year.

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FG, AfDB embark on lifeline projects in Anambra communities EMMANUEL NDUKUBA

he Agricultural Transformation Support Programme Phase One (ATASP -1), an agency of the Federal Government, has put smiles on the faces of the people of Ndiowu, Omoghor and Ogbunka, all in Orumba North Local Government Area of Anambra State. This follows the completion of agricultural projects, classroom blocks, water projects and health facilities in the communities. The agency, collaborating with the African Development Bank (AfDB), is currently executing projects in 33 local government areas in seven states of the federation. The states are Anambra, Enugu, Niger, Kano, Jigawa, Kebbi, and Sokoto. Under the programme, the benefiting state governments were required to pay counterpart funds as a requirement for executing the projects in their areas. Projects implementation units were also established in the benefiting communities and over time, officials of ATASP -1 organised capacity building programmes for members on innovation platforms, business plans development and ways of achieving maximum benefits from the programme. After two years of operation of the five-year programme, officials of the agency were in Anambra

and Enugu states last week on a mid- term review of its activities, during which they inspected projects funded under the programme and interacted with the beneficiaries on the best way to sustain the projects. Among the projects visited were the completed classroom block at Eastern Primary School, Ndiowu, health and water projects at Omoghor and agricultural projects in all the communities. Emmanuel Erimie, who led the inspectionteam,alsointeractedwith the Anambra State commissioner for agriculture, Afam Mbanefo, and the chief of staff to Governor Willie Obiano, Primus Odili, to solicit the state government’s continued supportfortheprogramme. Erimie said during the visit to the government officials that the agency’s ultimate aim was to develop roads, irrigation, markets, health centres, schools and water projects in rural areas where such amenities were lacking, as well as to support rural farmers with inputs that would lead to high yield. At the Eastern Primary School, Ndiowu, where a classroom was constructed by the agency, the manager of the school, Reverend Father Augustine Okeke commended the agency for coming to their aid. He said the school was lucky to be selected, explaining that it was done by ballot and the person who represented the school at the ballot ceremony picked the project.

Lagos leads 8 African megacities committing to deliver share of Paris Agreement

agos, Accra, Addis Ababa, Cape Town, Dakar, Dar es Salaam, Durban, Johannesburg and Tshwane have revealed their commitment to bold climate action and pledged to deliver on their share of the Paris Agreement. The commitments were made Tuesday in Lagos, at the launch of the C40 Climate Action Planning Africa Programme. C40’s Climate Action Planning Africa Programme will provide direct support to the nine African cities in developing unprecedented, robust and evidence-based long-term climate action plans that align with the ambitious objectives of the Paris Agreement. The support will include a dedicated city advisor based in each city, a series of workshops, and access to expert technical advice as needed. Nairobi and Abidjan have also joined the programme and are anticipated to submit their climate action commitments soon. The launch event was attended by the governor of Lagos, Akinwunmi Ambode; Mayor of Accra, Mohammed Adjei Sowah; senior city representatives of the participating cities, and Mark Watts, executive director, C40 Cities. The C40 Climate Action Planning Africa Programme is part of the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a

decision adopted by the German Bundestag. “Cities in Africa are the fastest growing anywhere in the world,” Anne Hidalgo, Mayor of Paris and chair of C40, said, saying, “The commitment of these nine mayors to bold climate leadership will deliver a sustainable future for these dynamic, and outward looking cities. It once again proves that cities are getting the job done and concretely delivering on the Paris Agreement to secure a bright future for all our citizens.” “The realities of climate change and its effects on our collective survival and ability to thrive are being realised by all. Our citizens are becoming more aware of these impacts,” M. Adjei Sowah, Mayor of Accra, said. “We cannot ignore the implications of what will befall us if we do not act now. A business as usual approach to our quest for socio-economic development will not aid in addressing the threat of climate change. “Part of the actions we need, is the creation of a vision that embodies our passion to plan and implement initiatives that mitigate the negative effects or aids us to be able to adapt to the impacts. Lagos has given us the opportunity to come together as African Cities leading the way to interpret the Paris Agreement for the understanding of every man, woman and child in our local communities. There is more beyond this meeting; and those are the things we must prepare to address,” he said.

L-R: Brent Omdahl, commercial counselor, US Mission to Nigeria; Tunde Ayaye, GMD, IFS Group; Obafela Bank-Olemohon, special adviser to the Lagos State governor on education; Oluwatoyin Ogundipe, vice chancellor, University of Lagos; Babatunde Fashola, minister of power, works and housing, and Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), at the policy dialogue with the theme “Effective Maintenance as a Tool for National Development” in Lagos, yesterday. Pic by Olawale Amoo

Crack in Rivers Assembly as lawmaker demands speaker’s resignation over N600m from governor IGNATIUS CHUKWU

crack has emerged in the highly united Rivers State House of Assembly where a member has asked for the resignation of the speaker over N600 million he alleges the governor gave to the House for renovations. The member representing Ahoada East Constituency 1, Martins Mannah, has therefore called for the resignation of the speaker Ikuinyi Uwaji Ibani, for allegedly mismanaging the affairs of the House and failing to cater for the welfare of staff of the Assembly. His major grouse is that despite the N600 million, the House of Assembly complex and the staff quarters have not received a brush. The lawmaker, while briefing journalists in his office after plenary on Monday, lamented over what he termed the absence of adequate training and workshops for lawmakers, saying this had affected their performance. He stated, “Over 80 percent of the members of this Assembly are new and as a legislature we are expected to go for seminars, workshops, and conventions to

improve our capacity. Unfortunately, since we resumed, this is our third year; we have only travelled once for the Commonwealth Parliamentary Association (CPA) meeting. “We have only gone for only one seminar, whereas other states that produce only onions and water melon are able to sponsor their lawmakers to all seminars, workshops, and CPA meetings, even to foreign countries. “The speaker has failed to deliver these trainings to members. Now, as new members, how do we contribute on the floor of the House when we have not been adequately trained? Some members do not even know how to move motions.” The lawmaker also complained that for 17 months staff members at the assembly had not been paid, lamenting over the level of decay at both the Assembly complex and staff residential quarters He said, “For 17 months staff have not been paid; our staff have literally turned to beggars. This edifice was built by former governor Peter Odili, yet cannot be maintained by this speaker. Even when

the present governor, Nyesom Wike, gave N600 million to the speaker to renovate both the quarters and the complex, the speaker never did it. Look at how the complex is in a mess, everywhere smells; then someone would ask us not to talk.” The member said; “So, today I felt that while we are talking about the protection of Rivers people against the Federal Government, there is also need for us to remove the wood in our own eyes before removing the spec in other people’s eyes.” According to Mannah, “If this is what we have to offer, I want to dissociate myself from this kind of Assembly. This is not a proper Assembly. We have three arms of government; the executive is functioning very well, the judiciary is functioning very well, but look at the Rivers State House of Assembly, is this actually an assembly? Most people don’t even know their left from their right. “We have kept quiet for too long and now the tenure is ending, nothing has been achieved. The only thing we know how to do is when the governor sends bills, we deliberate on the governor’s request and that is all. It is bothering me.”

Entrepreneurship: Edo to train 200 youths on solar panel installation, photography, others

do State government has concluded plans to partner the After Graduate Development Centre to train 200 youths on solar panel installation, photography and cosmetology. The training programme, conducted through Edojobs, is aimed at equipping the youths with in-demand vocational, business intelligence and financial literacy skills. Youths will also be mentored to apply for business funding during the programme. The trainees are to be drawn from Edo North, South and Central senatorial districts.

Senior special assistant to the state governor on skills development and head of EdoJobs, Ukinebo Dare, expressed her gratitude to Governor Godwin Obaseki for attracting the programme, funded by ACT Foundation to the state. She said the training would fast track the realisation of the governor’s promise of creating a minimum of 200,000 jobs. She also noted that it would also equip the 200 participants with skills and resources to be selfreliant, as trainees would be guided to access credit from the Bank of Industry (BoI).

She also noted that the state’s Ministry of Science and Technology was recruiting new hands for its Technical and Vocational Education and Training (TVET) and encouraged job seekers to get details and apply on the EdoJobs Portal. According to Dare, “application for the 200 slots on the training being run by EdoJobs in partnership with AGDC (After Graduate Development Centre) is ongoing and individuals desirous of becoming brand names in the different fields, should apply right away on edojobs. edostate.gov.ng”

‘Poor development outcomes reflect enduring challenges in natural resources governance’

frica has been slow to convert its natural resources endowments to tangible development outcomes because of weaknesses in governance, according to the fifth edition of the African Governance Report published by the UN Economic Commission for Africa (ECA). The report launched during the ongoing ECA Conference of Ministers in Addis Ababa (Ethiopia) argues that the good governance of natural resources in Africa requires institutions that have both the proper mandate and capacity to manage resources efficiently. They also require the capabilities to formulate, implement and enforce sound policies and regulations. Abdalla Hamdok, ECA deputy executive secretary/ chief economist, said although natural resources had become a central activity on the continent, there remained serious challenges to achieving sustainable and inclusive growth with value-added outputs. Hamdok explained that good governance was the key to enabling resource-rich countries to effectively transform their economies. “Africa is very rich in minerals but has very little value addition to them, leading to less revenues generated by countries from natural resources,” Hamdok said, when commenting on the common strategy of exporting commodities in their raw form. He added: “Countries need to critically think on the importance of value addition for their exports if they want to benefit fully from it.” Adam Elhiraika, ECA director of the Macroeconomic Policy Division, said ownership rights to natural resources were the major challenge to good resource governance in Africa. In relation to economic diversification, he remarked, “African countries’ dependent upon natural resources that are limited lead to economies with an inability to spread growth to other sectors and across the population.”

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NEWS

FG targets $22.5bn investments, 5m jobs with ERGP focus labs CYNTHIA EGBOBOH, Abuja

he Federal Government now expects the Focus Labs for its Economic Recovery and Growth Plan (ERGP) to bring in total investments worth $22.5 billion and create 513,981 jobs by 2020. Vice President Yemi Osibanjo said in February that the labs launched to drive the effective implementation of the ERGP could generate up to $24 billion worth of investment for the country, majorly from the private sector. At an open-day event that basically marked the conclusion of the ERGP Lab in Abuja on Tuesday, Osinbajo said the project had achieved the objective of creating channels for sustained and diversified economic growth, adding that the lab would be followed through to ensure sustainability and complete implementation of plans. According to Osinbajo, “The Focus labs forecast investment worth of $22.5 billion and creation of more than 500,000 jobs in 2020.” The Vice President, stressing the need for the private sector participation, said efforts had been made to tackle the identified challenges surrounding the sector, saying, “Our focus was to deal first with the issues facing the private sector as the needed fund for the

desired economy is mainly driven by the private sector.” Udoma Udo Udoma, minister of budget and national planning, said the focus lab, which involved close collaboration between agencies, private sectors and civil societies, had over the period helped to translate the high levels plans into detailed operational activities with specific deliverables and timelines. According to Udoma, the initial set of the lab is aimed at unlocking the private investments commitment in the agriculture and Transport, Manufacturing and Processing as well as Power and Gas sectors and create more jobs for Nigerians. He said, “On the whole, the lab which is aimed at unlocking the private sector investment was able to identify 164 projects spread out over all the 6 geopolitical zones of the country with a total potential investment worth $22.5 billion and 513,981 jobs by 2020, of the total amount projected, $10.9 billion worth of private investment are categorized as most ready to go adding.” The minister further stressed that $4.73 billion worth of investment have been identified in the Agriculture and Transport labs with a potential to create about 129,000 jobs; $9.25 billion investment with a potential of 378,000 new jobs was identified in the manufacturing and pro-

cessing labs while $8.57 billion worth of investments from power and Gas with the potential of creating up to 7000 jobs. Udoma speaking further said that the investment projects identified in the lab will span beyond 2020 adding that by projection, the cumulative investment value of the projects could rise up to $39.12 billion by 2025 and create about 716,079 jobs. He said “This is not the end process but the beginning of a new chapter in our development trajectory, there is no doubt that by tackling the constraints to growth; by leveraging on the power of the private sector and by allowing markets to function, we are placing Nigeria firmly on the path of diversified, inclusive and sustainable growth.” President Muhammadu Buhari, in March, launched the Focus Labs as part of the strategies being put in place to ensure implementation of the ERGP as successfully used in other countries to boost their economies. The government identified 59 projects and initiatives for execution under Growth Plan. “The Labs in Nigeria are designed as closed-door investment platforms to identify and accelerate highimpact projects with significant impact on Gross Domestic Product (GDP) and job creation,” the president said at the time.

Edo, Indonesian, Malaysian envoys brainstorm on poverty eradication at Rome confab ... seek removal of trade barriers in palm oil trade

he Edo State governor, Godwin Obaseki, on Tuesday joined the ambassador of Indonesia to Germany, Arif Havaz Oegroseno, maritime coordinating minister of Indonesia, Luhut Binsar Pandjaitan, and Malaysian ambassador to the Vatican, Tan Sri Bernard Gilgal Dompok, at an international conference on poverty eradication in Rome, Italy, to proffer solutions to the myriad of factors bedevilling efforts to fully harness the gains in the agricultural sector to eradicate poverty in developing countries. According to Obaseki, there is a strong correlation between poor agricultural policies that inhibit growth and development and poverty, urging stakeholders to come together with broad minds and adopt policies that are not discriminatory. He showcased the growing confidence of inves-

tors in Edo State, which accounted for the expansion of plantations by Presco plc, Okomu Oil plc and other companies in the state. The governor commended the organisers of the conference and reinforcing the nexus between agriculture, specifically, the plantation industry and poverty eradication with the conference themed: “Eradicating Poverty Through the Agriculture and Plantation Industry to Empower Peace and Humanity.” The Indonesian delegation noted that the European Union’s discrimination against Indonesia’s crude palm oil (CPO) products has prompted the industry and government to synergise intensively with governments and communities in the European region. The Indonesia envoy, Luhut Binsar Pandjaitan, explained that the Govern-

ment of Indonesia was very transparent in addressing environmental issues associated with the development of oil palm plantations and CPO derivatives industries. He added that his country had adopted sustainable palm oil standards and adheres to certification schemes in export destination countries. Experts at the conference held inside the Auditorium of the Pontifical Urban University in the Vatican, Rome, shared experiences of their home countries and states, citing the roles of oil palm plantations and the agricultural sector in poverty reduction. The well-attended event, attracted policymakers, heads and representatives of governments, members of the diplomatic community, the academia and industry players.

BUSINESS DAY

C002D5556

Tuesday 15 May 2018

NEWS Igbo youths protest Okorocha plot to impose son-in-law as governor JAMES KWEN, Abuja

ofewerthan100members of Igbo Youths of Nigeria, ImoStatechapter,Tuesday afternoonbarricadedthemaingate of the National Secretariat of the All Progressives Congress (APC) to protesttheplotbyGovernorRochas Okorocha to make his son-in-law, Uche Nwosu, the next governor of the state. The youths, who were not allowed entrance into the APC secretariat by security operatives, were chanting protest songs such as; “Rochas we no gree, Rochas your son-in-lawcannotbeourgovernor, Okorocha we are tired with you.” The protesters also carried placards with different inscriptions, some of which read: “Rochas, Imo people are no more with you. Okorocha, Imo State is not for you alone. Okorocha, Imo people say capital NO to your son-in-law. Okorocha, stop fighting everybody.” Anthony Chinedu, vice chairman of Igbo Youths of Nigeria who led the protest, told BusinessDay that they were in the APC headquarters to register their grievances overtheplanofGovernorOkorocha to impose his son-in-law on the people in 2019 when, he (Okorocha) would leave.

India to invest $4bn in Nigeria LAIDE AKINBOADE-ORIERE

he Federal Government on Monday said the India government was set to invest $4 billion in Nigerian economy. Minister of communications, Adebayo Shittu, said this in Abuja, while briefing journalists on the planned Indo-Africa Information Communication Technology (ICT) expo 2018. The minister said the two-day expo would help Nigeria’s start-ups, entrepreneurs and businesses to form partnerships with their foreign counterparts. The fourth in the series is organised by both the government of India and Nigeria in Lagos, between May 22 and 23. According to Shittu, “Last year, the India government made a commitment to invest $4 billion into Nigeria economy. This expo is very important to Nigeria because the twoday national and international forum falls under my ministry purview. “Nigeria being the fastest growing ICT market and with a young population that have capacity

and innovative mind, we stand to partner and learn from India. The Federal Government’s campaign to encourage the patronage of locally produced goods and services is on course. “The Federal Government has also put the spotlight on local manufacturers when, via three strategic Executive Orders, it compelled all government parastatals to channel at least 40 percent of procurement to locally made services. These executive orders, signed were to promote patronage of local products, transparency and ease of doing business in Nigeria.” He therefore assured potential India investors t h a t t h e re w e re m a n y untapped resources and potential markets in Nigeria, saying, “There are immense opportunities for small businesses and small cooperation to pitch and partner with Indian corporations in order to expand their businesses. “It might interest you to know that Nigeria is among the fastest growing markets in Africa and by extension the world, improving

macroeconomic indicators, conducive business environment, larger, younger and more affluent population, rising middle class-all are among indicators of not only of capital but also of job creation and skills development.” Nagabhushana Reddy, India high commissioner to Nigeria, said the choice of Lagos for the event was the recognition of the vast potential existing in Nigeria, and also of its importance as a gateway to the West Africa and other parts of Africa. He said the Indo-Africa ICT Expo 2018 would be a platform for convergence of technology and business exchange. “The business should bring together over 300 companies/delegates from India and Africa for the conference and attract 3,000 visitors for the exhibition. This mega event encapsulates strategies and learning that transcend the two most important present day industries, having potentials of unlocking huge demand of ICT services across multiple domains. It is the place to network, meet and shape the future,” he said.

Environment ministry: Reps place exclusion of $4.9m, N1bn from TSA on further inquiry KEHINDE AKINTOLA, Abuja

ouse of Representatives’ Ad-hoc Committee investigating the status of Treasury Single Account (TSA) on Tuesday placed on further inquiry two accounts in which $4.9 million and about N1 billion were domiciled in breach of TSA policy. Abubakar Nuhu Danb u ra m, c ha i r ma n a n d members of the ad-hoc committee, insisted on sighting President Muhammadu Buhari’s approval (memo) that Abba Kyari, chief of staff to the President acted on. The lawmakers had during the previous hearing requested for similar approval granted by the President to exclude Nigeria National Petroleum Corporation (NNPC) from TSA. Speaking earlier, managing director of Stanbic IBTC Bank, Demola Sogunle explained that the bank obtained a presidential approval that was conveyed to them via a letter signed by the Chief of Staff to the President.

In response to the inquiry by the ad-hoc committee, Sogunle, explained that the bank did not have any other document personally signed by the President. To this end, the ad-hoc committee issued oneweek ultimatum to the managing director of Stanbic IBTC Bank to produce the evidence. Meanwhile, the committee threatened to issue a warrant of arrest against the managing director of First Bank Nigeria, Adesola Adeduntan, for failing to honour its several invitations to respond to issues bothering on various TSA accounts operated with the bank. To this end, the lawmakers mandated Adeduntan to appear before them next Tuesday. The aggrieved lawmakers who cited relevant sections of the 1999 Constitution (as amended) noted that the House and any of its Committees were granted the powers to summon any person in the country as well as investigate anomalies with a view to encouraging good governance and exposing waste.

Nigeria requires N3.65trn to increase housing stock by 730,000 units annually HARRISON EDEH & CYNTHIA EGBOBOH, Abuja

L-R: Clare Omatseye, president, Health Care Federation of Nigeria; Toyin Saraki, founder, Wellbeing Federation Africa, and Jasper Westerlink of Phillips, at a round table on the state of health care in Nigeria, in Lagos.

CBN enhances inter-bank liquidity with $210m HOPE MOSES-ASHIKE

n another round of intervention, the Central Bank of Nigeria (CBN) on Tuesday, injected $210 million into the interbank Foreign Exchange Market to boost liquidity in the system. A breakdown of the forex allocation indicates that it allocated the $100 million

CHANGE OF NAME

I, formerly known and addressed as Miss Eucharia Chinenye Obianigwe now wish to be known and addressed as Mrs Eucharia Chinenye Ukachukwu Nwosu. All former documents remain valid. General Public please take note.

to dealers in the wholesale sector, just as the Small and Medium Enterprises (SMEs) segment and invisibles each received the $55 million. However, naira traded at a weakening level on Tuesday as it lost marginally by 0.01 percent to close at N361.61k per dollar as against N361.57k traded the previous day at the investors and exporters forex window, data from the

CHANGE OF NAME

I, formerly known and addressed as Oluwayemisi sherifat Kusimo now wish to be known and addressed as Oluwayemisi Sherifat Ibiwoye. All former documents remain valid. General Public please take note.

FMDQ show. Also at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX), the naira depreciated marginally by N0.02k to close at N361.20k per dollar on Tuesday from N361.18k the previous day. Validating the releases, acting director of corporate communications department at the bank, Isaac Okorafor, said the continued interven-

CHANGE OF NAME

I, formerly known and addressed as Miss Gladys Ogbueghu now wish to be known and addressed as Mrs Gladys Ogadinma Nnadi. All former documents remain valid. General Public please take note.

tions in the interbank foreign exchange market was mainly to ensure sustained liquidity and stability in the market.

CHANGE OF NAME

I, formerly known and addressed as Adewale Felicia Oluwayemisi now wish to be known and addressed as Abodunrin Felicia Oluwayemisi. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Okonkwo Jessica Amaka now wish to be known and addressed as Mrs. Nwoko Jessica Koyeni. All former documents remain valid. General Public please take note.

ormer managing director of the Nigeria Mortgage Refinance Company, Charles Inyangete, Tuesday, said to forestall a housing crisis in the country in the next couple of years, Nigeria would require N3.65 trillion to increase housing stock by 730,000 units annually. Speaking at a Facility Management forum in Abuja, to mark the World Facility Management Day, Inyangete said the country currently had a housing stock of 21 million units, adding that going by the current growth rate, there would be a significant housing deficit unless efforts were geared towards addressing the gap. At the event organised by the International Facility Management Association (IFMA), and sponsored by Total Facility Management Limited, Inyangete argued that in total, the country would require $363 billion, about N111.08 trillion to meet current housing deficits in the country. He added that Nigeria was faced with poor infrastructure not only in the area of inadequate housing, but also in access to electricity and internet facility and poor road network. He said, “Only 25 percent of our population has access to electricity; 51 percent of Nigerians have access to internet; while only 18 percent of Nigerian roads are paved. These poor infrastructures pose serious negative ramifications for the country.” Specifically, he said the poor infrastructure facility was reduc-

ing national economic growth by 2 percent and business productivity by 40 percent. To this end, he said facility managers had a crucial role to play in addressing these challenges, stating these professionals were expected to enhance their contribution to the sustainable cities agenda and also develop tools for the purpose of monitoring the performance of facilities. To bridge this gap, he noted that efforts should be geared towards opening the capital market to enable facility managers raise fund seamlessly, as this would deepen their contribution to building sustainable cities. He said, “Government cannot do it alone. There is increasing need for Public private partnership to address Nigeria’s economic growth.” Also speaking, Lawal Magaji, chairman, IFMA, Abuja chapter, emphasised the need for facility managers to be involved at the conception and design stages of any building or facility project, to ensure cost-effective management and maintenance of the facilities. He further highlighted the need to commercialise some facilities in the country to help raise foods that would ultimately be used for the maintenance of the facilities and also generate funds for the government. In addition, a communiqué issued at the end of the forum described facility management as a multi-disciplinary function that integrates people, place and process within the built environment with the purpose of improving the quality of life of people and productivity of the core business.

Wednesday 16 May 2018

C002D5556

BUSINESS DAY

Live @ The Stock Exchange Top Gainers/Losers as at Tuesday15 May 2018 GAINERS Company

LOSERS Opening

Closing

Change

N1530

N1573

ZENITHBANK

N122

N124.8

2.8

CAP

N38.9

N40

ETI

N20.7

NPFMCRFBK

N1.78

NESTLE

Market Statistics as at Tuesday 15 May 2018

Company

Opening

Closing

Change

N28.75

N27.6

-1.15

FBNH

N12

N11.5

-0.5

1.1

OANDO

N7.75

N7.4

-0.35

N21

0.3

GUARANTY

N44.3

N44

-0.3

N1.85

0.07

DANGFLOUR

N11.5

N11.25

-0.25

ASI (Points)

40,615.42

DEALS (Numbers)

4,090.00

VOLUME (Numbers)

203,359,534.00

VALUE (N billion)

4.427

MARKET CAP (N Trn

14.712

Nigerian stock market maintains downward trend

Avast begins trading on London Stock Exchange

...Year-to-Date return lowers to 6.20%

Stories by Iheanyi Nwachukwu

igerian stock m a r k e t maintained downward trend on Tuesday May 15, 2018 as 25 stocks lost their values against just 12 gainers. Zenith Bank Plc, FBN Holdings Plc, Oando Plc, GTBank Plc, and Dangote Flour Mills Plc respectively led the basket of loser while Nestle Nigeria Plc, Nigerian Breweries Plc, Chemical and Allied Products Plc, Ecobank Transnational Plc, and NPF Micro Finance Bank Plc stocks rallied most. Stock investors lost approximately N23billion on Tuesday. At the close of trading session on the Nigerian Stock Exchange (NSE), the All Share Index (ASI) decreased further by 0.15percent pushing the Year-toDate (ytd) return lower at 6.20percent. The All Share Index closed at 40,615.42 points against the preceding day close of 40,677.61 points while Market Capitalisation stood lower at N14.712 trillion against preceding day close of N14.735 trillion. Zenith Bank Plc lost

eimeth International P h a r m a ceuticals Plc has appointed Bashirat Odunewu as an Independent Director in compliance with the statutory requirement for good corporate governance. Odunewu, a chemistry graduate of the University of Manchester Institute of Science and Technology, also holds a Master of Science degree from the University of London. She is a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), and a member Chartered Institute of Arbitrators (MCIArb). Odunewu has over twenty years experience in the financial services

L-R: Olumide Obayomi, chairman, ABC Transport Plc; Tinuade Awe, executive director, Regulation, The Nigerian Stock Exchange (NSE) and Frank Nneji (OON), managing director/ CEO, ABC Transport Plc during a Closing Gong Ceremony to commemorate their 25th Anniversary at The Exchange.

N1.15 or 4 percent of its day open price of N28.75 to N27.6; FBN Holdings Plc share price dropped from N12 to N11.5, down by 50kobo or 4.17percent; Oando Plc declined from N7.75to N7.4, down by 35kobo or 4.52percent; Guaranty Trust Bank Plc (GTBank) dipped from N44.3 to N44, down by 30kobo or 0.68percent; while Dangote Flour Mills Plc decreased from N11.5 to N11.25, down by 25kobo or 2.17percent. On the gainers table, Nestle Nigeria Plc rallied most after its share price

advanced from N1530 to N1573, up by N43 or 2.81percent; Nigerian Breweries Plc increased from N122 to N124.8, up by N2.8 or 2.30percent. Chemical and Allied Products Plc gained N1.1, from N38.9 to N40, up by 2.83percent; Ecobank Transnational Incorporated Plc gained 30kobo, from N20.7 to N21, up by 1.45percent; while NPF Microfinance Bank Plc rose from N1.78 to N1.85, up by 7kobo or 3.93percent. GTBank Plc, United Bank for Africa Plc, Fidel-

ity Bank Plc, Zenith Bank Plc and Oando Plc were actively traded stocks on Custom Street. The volume of stocks traded decreased by 7.05percent, from 218.773 million to 203.360 million, while the total value of stocks traded increased by 98.47percent, from N2.231 billion to N4.427 billion in 4,090 deals. As usual, the Financial Services sector led the activity chart with 159.8million shares exchanged for N2.751 billion; followed by Consumer Goods with 16.8million shares traded for N1.503 billion.

Neimeth appoints independent director, as profit before tax grows by 115% sector. She is currently the Group Executive – International Banking at First Bank Nigeria Limited. Meanwhile, the Board of Directors has accepted the retirement of Adekola Olugbenga Balogun as Non-Execu-

tive Director with effect from April 25, 2018. Balogun joined the Board in February 2004 and made tremendous contributions to the growth of the company. Neimeth International Pharmaceuticals Plc’s half-year (H1) report re-

leased to Nigeria Stock Exchange (NSE) shows it achieved 115percent significant growth in Profit Before Tax (PBT) over the same period last year 2016/2017. This is an indication that company has overcome the tragic fire incident of March 2017. There was appreciable growth in turnover from N602million in March 2017 to N877million in March 2018. The company is positioned for a rapid recovery having overcome the consequences of the fire that occurred in March, 2017.

…one of top five largest tech IPO of all time

ondon Stock Exchange has welcomed Avast, a leading global cybersecurity provider, to the Premium Segment of the Main Market which raised $200million in primary proceeds and $616.6million in secondary proceeds with a valuation of $3.23billion. Avast is the largest tech IPO across Europe in 2018 to date and one of the five largest tech IPOs of all time on London Stock Exchange. To celebrate the listing and start of conditional trading, Vincent Steckler, CEO, Avast was welcomed by Tom Attenborough, Head of International Business

Development, London Stock Exchange Group, to open trading this morning at London Stock Exchange. Vincent Steckler, CEO, Avast: “Today, Avast began trading on London Stock Exchange in what I am proud to say is the largest European tech IPO of the year. As the number of cyber threats around the world continues to dramatically increase, our focus on developing award-winning security products to help protect people’s digital lives has enabled us to grow our business into the number one global consumer cybersecurity company, with more than 435 million users worldwide.

IOSCO resolves to focus on key challenges facing securities regulators

nternational Organization of Securities Commissions (IOSCO) has resolved to focus on key issues affecting regulators worldwide and proffer ways of tackling the challenges. This was part of the resolutions reached at the organisation´s 43rd Annual Conference in Budapest, Hungary. The conference also featured meetings by the IOSCO Board, IOSCO´s Growth and Emerging Markets (GEM) Committee, the four Regional Committees and the Affiliate Members Consultative Committee (AMCC). The public sessions of the conference deliberated on four key issues: (1) the sale of unsuitable products to retail investors; (2) the challenges of Fintech and digitalization, (3) the shift from active to passively managed collective investment schemes, and (4) SME access to funding through capital markets. In his remarks, Ashley Alder, Chair of the IOSCO Board, said: “IOSCO members have

taken important steps this week to advance IOSCO´s priority work in focused areas such as market resilience, financial technologies, and information sharing among securities market regulators, while addressing the biggest risks to investor protection, market integrity and financial stability.” The Board discussed how best to approach the continuing growth of Initial Coin Offerings (ICOs). It agreed to develop a Support Framework to assist members as they consider how to address the domestic and cross-border issues stemming from coin offerings that could impact investor or consumer protection. Mary Uduk, Acting Director General, Securities and Exchange Commission (SEC) Nigeria pledged the determination of the SEC in advancing the initiatives which she said are aimed at protecting investors, ensuring fair, efficient and transparent markets, and mitigating systemic risk.

PRIVATEEQUITY & FUNDRAISING A6

People & Perspectives

Wednesday 16 May 2018

BUSINESS DAY

C002D5556

ANNOUNCED PE DEALS IN PRIVATE 2018 EQUITY DEALS IN 2018 MONTH ACQUIRER/FUND MANAGER JANUARY AFFELKA

ACQUIREE 7 UP

SECTOR Manufacturing

JANUARY ATLAS MARA UNION BANK JANUARY INTEGRATED DIAGNOSTICS HOLDINGS & MAN CAPITAL ECHO SCAN

Banking Healthcare

JANUARY AMAYA CAPITAL PARTNERS

Energy

RENSOURCES

STAKE AMOUNT (n'bn) 26.80% 21.45 6.6 9

3.50%

1.2

FEBUARY ZINOX GROUP KONGA E-commerce FEBUARY AFRICAN INFRASTRUCTURE INVESTMENT MANAGERS STARSIGHT POWER UTILITY Power

100%

12.6 10.8

FEBUARY RESERVIOR CAPITAL CORPORATION MARCH ALTA SEMPER CAPITAL LLP

KANJI POWER HOLDING LTD Power HEALTH PLUS LIMITED Healthcare

60% N/A

MARCH MARCH

SAHEL CAPITAL ECHO VENTURE CAPITAL PARTNERS

COSCHARIS FARMS MYPADI.NG

Agriculture Technology

APRIL

DE UNITED FOODS INDUSTRIES LIMITED

MIMEE NOODLES

Consumer Goods

APRIL APRIL

ECHO VENTURE CAPITAL PARTNERS TPG GROWTH

LIFE BANK CELLULANT

Healthcare N/A Financial Technology N/A

6.4 N/A N/A

N/A

0.775

100% 0.061.2

14.5 Total: N83.4 bn

Dangote gets Peugeot franchise as AMCON delays on N11bn bid for Kaduna plant MIKE OCHONMA

liko Dangote, Africa’s richest man and CEO of the Dangote Group, has obtained a franchise from Peugeot of France (PSA Groupe) to set up an assembly plant north of Nigeria in Kaduna, after an N11 billion bid to snap up a controlling stake in a separate Peugeot plant, also located in Kaduna, from the Asset Management Corporation of Nigeria (AMCON) was fraught with unending delays. The fee incurred by obtaining the franchise was not disclosed. A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business’s (the franchiser) proprietary knowledge, processes,

and trademarks in order to allow the party to sell a product or provide a service under the business’s name. In exchange for gaining the franchise, the franchisee usually pays the franchisor an initial startup and annual licensing fees. “Dangote got the franchise from Peugeot France to operate a plant,” one source familiar with the matter said but could not confirm how much was paid for the license. The source however could not immediately say if this arrangement leads Dangote to drop his interest in acquiring the PAN plant in Kaduna, which was supposed to be a joint venture between Dangote, the Kaduna State government and some private investors, but has stalled for more than a year.

PRIVATE EQUITY WORD FOR THE WEEK Data room A secure, digital location where potential investors can review confidential information on a target company, including financial statements, compensation agreements, intellectual property and client contracts.

As deduced from an advert published Tuesday, May 15, the Dangote Group has now gone on to invite tenders from members of the public for the construction of a new Peugeot Assembly plant to be located at Dutse, along the Kaduna-Abuja expressway, Kaduna, about 25 kilometers away from the present location of PAN Limited assembly plant in Kakuri industrial zone of Kaduna State. Dangote Peugeot Automobiles Nigeria Limited (DPAN), a joint venture between Dangote Industries Limited, Kaduna State government and Peugeot of France (PSA Groupe), will construct and operate the new plant. The scope of work for plant when fully completed will comprise of an assembly plant, the administrative block, external works and services/land scaping (including testing tracks, drivers and parking, external services and ancillary buildings that will include power generating house and a gate house, according to the advert. AMCON is yet to hand over the existing assets and liabilities

of the existing PAN auto assembly plant to a new owner, as the clock ticks toward a 2018 deadline. Sources familiar with the matter say some N11 billion was put on the table as take-over bid amount for the assembly plant by a consortium of Dangote Industries, PSA Groupe of France and the Kaduna State government and others. However, the N11 billion was said not to have met the threshold to convince AMCON to sell the plant. The consortium was however not guided in the transaction as to the basic acceptable ceiling price. The Federal Government has since 2015 engaged in discussions with prospective investors, but as at the time of filing this report, report of such behindclosed-doors discussions has not been made public on which companies or consortium emerged as highest bidder for the Peugeot assembly plant. Last week Monday, BusinessDay sort to get a response from AMCON on the reasons for the protracted delay in announcing

the result of the bid for the sale of PAN Limited to the preferred bidder. In his response, Jude Nwuzor, Head of Corporate Communications of AMCON told our reporter that, the process of divestment can sometimes be long and winding. It is an on-going transaction, which would be announced to the public at the right time. ‘We have transactional experts working on the matter and their mandate is to get the best option for AMCON. We get bidders for most of the assets in our portfolio all the time. But as you know, bidders must match their bids with action,’’ he stated. When prodded to provide more details on the identity of the reserved bidders of PAN Nigeria Limited, the AMCON spokesman said, ‘In all sincerity, we have non-disclosure agreement in our processes just to avoid unnecessary influences and pressures. So we do not disclose issues such as this until our transactional advisers conclude their assignment. Once they do, we will publicise the result (s).

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 16 May 2018

PRIVATEEQUITY & FUNDRAISING

C002D5556

BUSINESS DAY

Companies & Markets

Why The Rise Fund is staking $47.5m in Cellulant FRANK ELEANYA

he Rise Fund owned by private equity firm TPG Growth, led a $47.5 million investment in Cellulant, an African digital payments provider with operations in Kenya and Nigeria. The deal which includes Endeavour Catalyst and Satya Capital and was announced on Monday, 14 May, is the first of its kind in Africa not just for the firm but it is the largest involving a fintech company that does business in Africa. The last time a fintech company received equity investment exceeding two digits was in 2017 when Flutterwave secured over $10 million. “This accelerates the company’s goal of becoming the number one digital payments and financial services provider,” Bolaji Akinboro, co-founder of Cellulant and CEO of Cellulant Nigeria said on Twitter on Monday morning. Cellulant was established in 2004 by Ken Njoroge (Kenyan) and Bolaji Akinboro. Initially, the founders focused the company in providing music and news content on mobile to

consumers in Kenya and Nigeria. The company began to diversify into mobile money services in 2005. It was awarded a mobile payment license by the Central Bank of Nigerian in 2014 which helped to facilitate its partnership with the Nigerian government to supply fertiliser to farmers using a mobile wallet scheme. Cellulant has operations in 11 countries including Ghana, Tanzania, Zambia, Zimbabwe, Uganda, Liberia, Malawi, Botswana, and Mozambique, with 94 banks and seven mobile money platforms that have a combined potential customer base of 130 million. Much of the new investment will go into expanding Cellulant’s most popular mobile platform, Agrikore. Agrikore is ablockchain-based mobile platform that serves more than 7 million farmers across the African continent, connecting them to the market and helping them easily sell their products to a broader spectrum of buyers. “We are scaling up our existing payments products in the agriculture sector, digital banking and internet payments; as well as introducing consumer-focused

products to complement the enterprise products we already have,” Akinboro said, “This will allow us to increase access to payments for the millions of Africans who are still unbanked, despite the financial inclusion revolution.” In 2017, Cellulant revealed that Agrikore has partnered with the Afghanistan Ministry of Agriculture as part of its bid to expand operations in Asia.

“With Agrikore, the financier is insulated from the intricate system consisting of farmers, aggregators, offtakers, agro-dealers, insurers, and commodity buyers that create value in the form of produce, from agricultural inputs because the technology provides the transparency, integrity and immutability that grows the confidence of remote actors in the system,” the firm explained in a statement.

For The Rise Fund expanding easy-to-use and low cost mobile banking offers immense potential for impact across Africa. “We are excited to invest in African entrepreneurs like Ken and Bolaji, to help them grow their businesses and expand their impact on society,” Bill McGlushan, CEO and co-founder of The Rise Fund said, “Cellulant is a perfect partner for The Rise Fund’s first investment in Africa.”

EchoVC strikes second Nigeria deal in 2018 blood components and rare drugs as well as expand its coverage across Nigeria, choVC Partners, a particularly to Northern seed and early-stage Nigeria, where reaching venture capital firm the last mile remains a very that invests in technology pressing issue. Also participating in the companies around North America and Sub-Saharan Africa has led an investment in LifeBank, a technology logistics company operating in the Nigerian healthcare sector. The deal value was undisclosed and comes on the heels of an earlier investment this year in myPadi.ng, a real estate startup providing off-campus accommodation for university/college students in Nigeria. The investment in LifeBank will enable the company to refactor the medical supply chain in Africa, by extending its supply chain to include oxygen, vaccines, ENDURANCE OKAFOR

round was CcHub Growth Capital and Fola Laoye, a healthcare angel investor. Launched in 2016, LifeBank has over 41 authenticated blood banks on its online platform and has delivered to 167 hospitals.

LifeBank’s optimized supply chain has helped save over 1,000 lives so far. Its smart logistics system includes specially designed cold chain boxes that retains temperature for up to 30 hours, color-coded

temperature strips for additional quality assurance and Bluetooth-enabled locks to guarantee security. The company was founded by Temie Giwa-Tubosun, who previously worked in the public health sector with institutions like WHO, UNDP, DFID, Fairview Health Systems and with the Lagos State Government managing health facilities. Temie was listed as one of the ‘100 Women Changing the World’ by the BBC in 2014, and as an African Innovator by the World Economic Forum in 2017. The company’s efforts have also been recently recognized by New Yorklisted Merck & Co. Inc., which made LifeBank the first African company to be invited into the Merck Global Accelerator Program.

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INTERVIEW ‘Investors remain optimistic about the Nigerian economy’ Temi Popoola is the CEO of Renaissance Capital, which is having its 9th Annual Renaissance Capital Pan-Africa 1:1 Investor Conference today. In this interview, he tells Olalekan Ipele and Michael Ani, analysts at BusinessDay, what to expect at the conference. He also shares his views on issues in the capital market as well as the Nigerian economy. Here are excerpts from the interview What to expect from 9th Annual Renaissance Capital Pan-Africa 1:1 Investor Conference? he conference is a Pan-African Conference with a specific focus on West Africa. It is one for a range of global conferences that we host annually. We use this event to provide an opportunity to broaden and expand the narrative around investing in West Africa and we hope to use it to improve capital flows into and out of the region. One of the things you frequently observe when it comes to investing in Africa is that people do a lot of talking with very little understanding of the finer details of what it takes. The conference is an opportunity that we use, as a firm, to broaden these discussions and make this kind of visibility happen. Secondly, Renaissance Capital is in the business of facilitating capital flows. We use this conference as a means to further accelerate this objective by bringing members of the ecosystem together whether they are investors, corporates, regulators, decision makers or indeed, those people who just have a passing interest in the subject. This conference is an unparalleled opportunity to provide that platform and make such dialogues happen. We are proud to host this year’s event now in its 9th consecutive year as it is a sign of our commitment to the region and the continent as a whole. We have a range of top international investors who have travelled from various parts of the world to participate in the conference. We will be having one on one discussions with corporates, panel sessions and a regional site visit, coupled with regional trips to Ghana and Cote D’Ivoire.

What do you want to achieve with this conference? There are two major objectives for us. There is a long term, broad objective of fulfilling our mission to providing solutions to our clients and ensuring

we remain an innovative and ever-evolving partner to them. Secondly, we hope to bring more visibility to the region and help facilitate increased capital inflows whether those are portfolio or direct investors. How much inflows have come into Nigeria on the back of the Rencap conference? That is a tough one to answer as it is difficult to measure the direct correlation of our success in West Africa with this conference. In essence, we are beneficiaries of a wider ecosystem and our success is dependent on other players doing their part

I slightly disagree that there has been no innovation Temi Popoola

right. A big part of our success is attributable to this. For example, if you do not create the right enabling environment, nobody will bring capital here whether you host a remarkable conference or not. Going back to your question directly, what I will tell you is this: investors welcome an opportunity to visit and interact directly with the companies they invest in and this has a material impact on how much premium they value on our product offering. Last year, as an example, we were responsible for close to US$700 million worth of transactions on the Nigerian Stock Exchange with a big portion of these being inflows from international investors. We were also involved in several capital raising exercises for corporates with some of these being private transactions that didn’t get a lot of coverage. Would drop in yields encourage more debt issuance? The natural and perhaps logical answer to this is an emphatic yes. With close to 40% decline in government yields, corporates are eyeing the debt markets as a potential opportunity to lower

their cost of capital. You may of course wonder why we aren’t seeing a significant pick up in corporate bond issuance yet. There are 2 reasons for this: many investors are trying to catch the bottom of the rate cycle with expectations that interest rates may go into single digit territory. Perhaps more importantly, it does take a bit of time to arrange a deal and bring it to market. We have been wondering why there seems not to be a lot of

We are proud to host this year’s event now in its 9th consecutive year as it is a sign of our commitment to the region and the continent as a whole

innovation in terms of available options in raising capital in the market. Is this a regulatory issue or is this a lack of knowledge issue? I slightly disagree that there has been no innovation. One of the deals we arranged last year was on behalf of a privately held power company who successfully raised long term local currency financing at a level that was only a few basis points higher than the comparable sovereign. We managed to get that deal over the line because of the innovation involved in the structuring. I can point at a few more deals that were put together by competition which also involved some innovation. Furthermore, there is a handful of transactions that are structured privately and quite a few of these require some innovation and creativity. These are not much talked about because they aren’t public transactions but require quite a bit of work and innovation. Nonetheless, I agree, broadly, with you. There is a lot of room for some disruption within the financial markets in West Africa and for innovation to replace some traditional solutions that

currently exist. What drives innovation is Research & Development (R&D). If you picked an average corporate in Nigeria today and asked how much they spend on R&D, you will find out that in some companies, it is not in their line item at all. In that case, you need no other leading indicator to forecast that our level of innovative abilities will suffer as a result. We have a huge pile of local currency level the pension funds still sitting down there, and we are looking for innovative ways to tap into this pension funds to channel them into infrastructural purposes, where do you think the challenges are, do they still boil down to lack of innovation or is it a regulatory issue? I think it is misplaced to think that pension funds are sitting idle to be invested in infrastructure. The reality is, this huge pension fund money is already sitting in assets. it is not like you have this pile of cash in a bank account and you can decide on what to do with it. A big portion of these funds is sitting in government bonds, government treasury bills. So

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even if you bring up the best infrastructure project, you are either asking the asset manager to reallocate, which will have implication, for example, on your cost of funding, if you are the government. My view is that, what is holding pension fund flows to infrastructure projects, has more to do with innovation/comfort around deals. Based on my experience, fund managers do have a desire to fund infrastructure projects and are acutely aware of the social responsibility they have. They understand that if you look at the demography in Nigeria, it is a very young population, and it really doesn’t add up not to invest long term. But the question really is if there are well structured, bankable projects that they can put money into. Unfortunately, there haven’t been that many deals that fit this profile The other bit is on the part of the regulations. While I think its commendable how regulators have made sure that the pension industry is immune from some of the downturn that we are seeing in Nigeria, but the truth is that they can be accountable for forcing fund managers to be short term in their thinking. So, for example, if you are looking for daily returns and you are trying to benchmark all the managers on a daily basis, it forces them to think through investment structures that gives them short term safe returns. I think for me it is a mixture of both on one hand, innovation and the regulatory side on the other hand. Where in your opinion should investors be looking into in the Nigerian Economy? When we say investors, you have investors who are short term in their approach, and those who are long term. You have those investors who are constrained with the size of deals they are putting money into, and you will also have investors who have constrains around other issues. If for example, you look at listed equity investors today, just by nature of the listed shares on the Nigerian bourse, there are so many things you can look to put your money into. Agriculture, for example, is not well represented, Healthcare, Technology/ Fintech. All things considered, I think these are three sectors that regardless of the correlation of the investment in question, most people are looking for ways to get exposure in these spaces. But in the capital market for instance, it is pretty much

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My view is that, what is holding pension fund flows to infrastructure projects, has more to do with innovation/ comfort around deals difficult it to get well enough exposure and players in these sectors (agriculture, fintech and health care). If you are a portfolio investor, the honest answer is, you are constrained. However, that is changing. As there is hopefully, a few IPOs expected to hit the market that should help making that decision easier. Speaking to investors, local and international alike, how optimistic are they about the growth and prospects of the Nigeria Economy? That question you can answer in two ways, another way to put that question is the outlook for the Nigeria. If you look at the question relative to the past 18 months to 2 years, you’ll get a picture that is different from when you look at it in absolute terms. Starting with just a relative comparison, I think everyone is very optimistic. Nigeria is looking great. GDP is growing, current account is now at a surplus. We have seen growth in the oil sector for the first time in six years, services sector also grew for the first time in like two to three years, Quarter on Quarter to Year on Year inflation comparison looks great, reserves are doing good…

Today, there are fears around rising US interest rates. You can’t really look to invest in Nigeria without this external view

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all across, the picture of today from two years ago on most matrix is much more decent. However, when you take an absolute approach to answer the question, you look at Nigeria vis-à-vis, where a country like this should be, based on demography or just the things that go into the Africa rising or Nigeria rising narrative, then you start to get a little more disappointed. You ask yourself, what sort of reforms are happening today? How diversified the economy is (still largely a crude oil play) regardless the rhetoric, or you look at education, electricity… things that should drive the economy and industrialization process of Nigeria, you find that there’s still much to be done. On a short-term basis, it is more of an optimistic sense for investors. What are the biggest fears of investors about Nigeria? If we leave out all the big Nigeria challenges we already know, the rest are actually external in nature. Today, there are fears around rising US interest rates. You can’t really look to invest in Nigeria without this external view. The US 10-year bond are the strongest they have been in almost six seven years. Every time in the past that this has happened (most notably in 2004, 2005, 2006, 2007.) where yields have corrected dramatically in the US, you will see emerging markets selling off aggressively, as a result of risk of trade. Everyone is just trying to take money from emerging and frontier markets back to the US and this is what we are seeing today. The other thing is the stronger US dollar leading to capital flight. This I will say are the foremost worry of investors about Nigeria. Secondly, there are the increasing political / current socio-cultural type trends in the country (the herdsmen farmer clashes). But having said that, the back drop is not negative, oil prices are fairly strong, local interest rate are falling, and these are some of the macro-economic variables we are looking at What are the prospect of new IPOs hitting the market soon with regards to how the Capital market have rebounded significantly? It is hard to draw a very strong direct correlation between the speed with which the Nigerian market has rebounded and the number of expected listings. It takes about one year sometimes to prepare a deal and bring it into the market. Though we have

seen a few months of recovery, it would not translate to more IPOs immediately. However, there are more questions being asked today by corporates about capital market listing options. Also, we advise clients to, on the back of how the market has been doing, to look to the capital market as a credible solution for raising funds. Basically, IPO discussions are currently featuring more in our discussions with clients. What are the three biggest reforms you’ll like to see in the economy and especially in the capital market? In the capital market, the sorts of reforms we will want to see are ease and efficiency with which one can bring transac-

tions to the market. These can be optimized, to avoid multiple layers of regulatory requirements that sometimes overlap with themselves as you engage the regulators when a company wants to list or raise debt. On the broader economy side, the biggest reform we would love to see is making sure the oil economy and the players in this critical sector get significantly optimized. Whether this is the national oil company, the subsidy situation or the PIB itself, we think that a lot of things are dependent on this sector. We believe that if things can be gotten right in this sector then a lot more other positive outcomes will be seen. Also, reforms in the power sector must be considered as crucial.

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FINANCIAL TIMES Vodafone chief executive Vittorio Colao to stand down

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World Business Newspaper

US and China ‘still very far apart’ on trade, says US ambassador Washington wants timetable for meeting demands on trade and investment GABRIEL WILDAU AND EDWARD WHITE

he US and China are “still very far apart” on disputes over trade, technology and market access, the US ambassador to China said on Tuesday, managing expectations ahead of a visit to Washington by a senior Chinese official. Speaking at a conference in Tokyo, Terry Branstad said his country wanted to a see a “specific timetable” on market opening, following demands presented by a US delegation that visited Beijing earlier this month. Mr Branstad was one of seven US representatives who participated in the trade talks. “The Chinese have said ‘we want to see the specifics’. We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for,” he said, according to Reuters. “We’re still very far apart.” Mr Branstad said China had not met pledges to open financial services and cut auto tariffs. “There are many areas where China has promised to do but haven’t. We want to see a timetable. We want to see these things happen sooner or later,” he said. The US has threatened tariffs affecting up to $150bn on Chinese exports, and China has said it would retaliate with comparable duties of its own. President Donald Trump has asked Beijing to reduce the US bilateral trade deficit with China by $200bn. The deficit for goods and services was $337bn last year. According to people briefed on the negotiations, the two sides will discuss a possible “mini deal” this week in which the US would reduce sanctions on ZTE Corp, the Chinese telecommunications company, and China withdraw threatened retaliation measures against American ag-

ricultural exports. Mr Branstad said Mr Trump would like to see a “dramatic increase” in food exports to China. “We’d like to see China being just as open as the United States,” he said. Liu He, China’s vice-premier and top economic adviser to President Xi Jinping, will travel to Washington on Tuesday for at least three days of talks. Discussions in Beijing earlier this month yielded no deal, but the two sides agreed to keep talking and have held off on actually imposing most new tariffs. In addition to the call for deficit reduction, the US also wants China to end subsidies for strategic industries and strengthen intellectual property protection. US businesses have privately expressed fears that Mr Trump was prepared to strike a quick deal on cutting the bilateral deficit that does not address these broader issues. Mr Trump’s promise to ease sanctions on ZTE as part of a wider trade accord has fuelled those concerns. “[Our members] don’t want tariffs,” Tom Donohue, head of the US Chamber of Commerce, said at a press briefing in Beijing. “On the other hand they desperately want to get systemic problems [in China] resolved.” Last month China’s securities regulator issued new rules permitting foreign investors to take majority stakes in local securities companies. No foreign bank has yet achieved majority control, but the regulator last week accepted JPMorgan Chase’s application to establish a new, majority-owned venture. On autos, China’s state planner has issued a timeline for letting foreign automakers take majority control of their local manufacturing units, but it has not yet followed through on a separate pledge to lift tariffs on imported vehicles.

Erdogan vows to take greater control of Turkey’s monetary policy Lira hits record low as president restates commitment to lower interest rates LAURA PITEL AND JONATHAN WHEATLEY

he Turkish lira hit a record low on Tuesday after Recep Tayyip Erdogan vowed to take greater control of monetary policy if he wins elections next month. Speaking on a visit to London, the Turkish president restated his commitment to lower interest rates and said that, after the country’s transformation from a parliamentary to a presidential system comes into force following snap polls on June 24, he

would have greater control over the economy. “When the people fall into difficulties because of monetary policies, who are they going to hold accountable?” Mr Erdogan said in an interview with Bloomberg Television. “They’ll hold the president accountable. Since they’ll ask the president about it, we have to give off the image of a president who’s influential on monetary policies.” He admitted that his greater role “may make some uncomfortable”, Continues on page A14

Soros foundation office to pull out of Hungary Operations moved to Berlin in face of ‘increasingly repressive political environment’ NEIL BUCKLEY

illionaire George Soros’s philanthropic foundation is closing its Budapest office and shifting operations to Berlin as it faces what it called an “increasingly repressive political and legal environment” in Hungary. The Open Society Foundations pledged to continue supporting the work of civil society groups in Hungary but said it would in future channel funding from the German capital. Mr Soros and his foundation have come under huge pressure from the rightwing Fidesz government of prime minister Viktor Orban, which has alleged the billionaire is behind

a “Soros plan” to flood the EU and Hungary with millions of mainly Muslim migrants. The claims — rejected by Open Society and independent analysts as fictitious — were a central part of Fidesz’s successful re-election campaign which saw it win a third consecutive term in office last month with nearly 48 per cent of votes. Mr Orban has signalled a priority for the new term will be passing a so-called “Stop Soros” package that would impose further restrictions on non-governmental groups, and which activists warn could have a dampening effect on civil society more broadly. “The government of Hungary has

denigrated and misrepresented our work and repressed civil society for the sake of political gain, using tactics unprecedented in the history of the European Union,” said Patrick Gaspard, president of the Open Society Foundations. OSF had said last month it would consider shutting its Budapest operations if the Stop Soros package was passed. The package would force nongovernmental organisations dealing with migration to seek licences from Hungary’s interior ministry, involving vetting by security services. If granted a licence, an NGO would have to pay a potentially crippling 25 per cent tax on foreign funding.

Senators ditch plan to review US outbound investments Lobbying by GE and IBM clears way for strengthening Cfius mandate SHAWN DONNAN

enior senators have ditched a controversial plan that would have made US companies’ outbound investments to China and other countries potentially subject to national security reviews, after months of lobbying by General Electric and IBM. The move appears to clear the way for legislation on strengthening the mandate of the Committee on Foreign Investment in the US to clear Congress this summer, amid bipartisan calls in Washington to increase scrutiny of Chinese investments. It also comes as the US Treasury is preparing recommendations to create its own investment restrictions to protect strategic US sectors such as artificial intelligence and robotics from Chinese ownership. That move is part of a broader investigation into Beijing’s alleged systematic theft of US intellectual property launched by the Trump administration that has raised trade tension with China. The push to reform Cfius and the new Treasury measures are aimed at addressing growing concerns in Washington over China’s push to buy up important technologies as part of an

innovation race between the world’s two largest economies. The original Cfius provisions on outbound investment were seen as a radical move that would have potentially given the secretive committee a veto over a wide array of US companies’ investments overseas. Currently, Cfius is only allowed to review inbound transactions to the US for potential national security threats. But proponents in Washington had argued that the outbound measures were necessary to protect US companies from being forced to hand over vital technologies to foreign joint venture partners by governments as a cost of doing business in a country — one of the Trump administration’s main complaints about China. Opponents including GE and IBM argued that the move would have represented a threat to even their most benign offshore investments and hurt their competitiveness internationally with rivals not facing similar scrutiny. It also would have increased the number of transactions reviewed by Cfius from a few hundred to thousands each year, critics claimed. But a new draft bill circulated by Senate banking committee chair Mike

Crapo and his Democratic counterpart Sherrod Brown last week would abandon the plan to have Cfius review outbound transactions. Instead, it orders the Trump administration to update a list of products and technologies subject to traditional export controls to reflect new concerns over “emerging critical technologies”. The banking committee is due to consider the text of the bill formally next week in a sign that Mr Crapo believes he has the votes needed to pass the legislation. It also has received a cautious welcome from Senator John Cornyn, the Republican co-sponsor of the original bill and an advocate for greater scrutiny of US investments into China. A spokeswoman for Mr Cornyn on Monday refused to say if he would fully endorse the new version. “I look forward to continuing to work with [co-sponsor Democratic] Senator [Dianne] Feinstein and the banking committee as we move forward on this important legislation,” the senator said in a statement. Lobbyists and others tracking the bill said they were cautiously optimistic that the compromise included in bills in both the House and Senate would garner enough support.

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Europe faces limited options on US threat on Iran sanctions History offers small comfort as EU grapples with Washington’s vast international reach MICHAEL PEEL AND SAM FLEMING

he EU faces a tough call on whether to hit back against a US squeeze on European companies’ dealings with Iran — but history offers the bloc only small comfort that it can prevail. John Bolton, national security adviser of President Donald Trump,

warned at the weekend that European companies could be hit by US sanctions if they defy Washington’s call to sever commercial links with Tehran. European diplomats and analysts say the 28-member bloc could deploy a mixture of retaliatory sanctions, a World Trade Organization complaint and euro-denominated credit lines to limit exposure to financial curbs

imposed by the US. The stakes are much higher than the fortunes of a few European multinationals and the growing — but still modest — trade between Iran and the EU. “It’s not just about Iran and it’s not just about the business interests of some European companies,” said Cornelius Adebahr, an Iran policy expert at the Carnegie Europe think-tank. “It’s

about what the transatlantic relationship stands for.” As Europe seeks to thrash out a response to the US’s actions on Iran, the French, German and British foreign ministers are due to meet Mohammad Javad Zarif, their Iranian counterpart, on Tuesday, with EU leaders holding an evening summit in Sofia the following night.

Geely seeks $30bnplus valuation for Volvo Cars in IPO

Erdogan vows to take greater control of... Continued from page A13 adding, “but we have to do it. Because it’s those who rule the state who are accountable to the citizens”. The lira, which has lost more than 12 per cent of its value since the start of the year, plunged to its lowest ever point against the dollar following the publication of Mr Erdogan’s remarks. It lost 0.6 per cent to trade at 4.3942, Bloomberg said. After a turbulent few weeks for the Turkish lira, foreign investors hoped that the Turkish leader would use his three-day visit to London to reassure the City that he would allow the central bank to step in to support the currency, curb double-digit inflation and tame GDP growth amid increasing concerns that the Turkish economy is overheating. Instead, he doubled down. Mr Erdogan has for years harboured a deep antagonism towards high interest rates, taking the unconventional view that they cause rather than curb inflation. Last week, he warned that they were “the mother and father of all evil”, fuelling concern that he would not allow the central bank the freedom to raise rates. The Turkish president told Bloomberg that cutting interest rates would lower inflation. “The lower the interest rate is, the lower inflation will be,” he said. “The moment we take it down to a low level, what will happen to the cost inputs? That too will go down . . . you will be able to get the opportunity to sell your products at much lower prices . . . The matter is as simple as this.” According to attendees, Mr Erdogan made similar “astonishing” comments about interest rates at a private event in London on Monday. Several people present told the Financial Times that Mr Erdogan outlined his thinking about interest rates and inflation at Chatham House, the international affairs think-tank. Asked if the Turkish president’s remarks on Monday had reassured him, one representative of an international fund management company said “not at all”. He added: “When you hear things like that, you really start to wonder.” Mr Erdogan also told Bloomberg that his frequent interventions on interest rates influenced the central bank, and stated his intention to continue. “Of course our central bank is independent,” he said. “But the central bank can’t take this independence and set aside the signals given by the president, who’s the head of the executive. It will make its evaluations according to this, take its steps according to this. And I believe this will result in very beneficial steps in the future.” Asked about reports in the Turkish press that the deputy prime minister Mehmet Simsek, who has a close relationship with foreign investors, may leave government after the elections, Mr Erdogan sidestepped the question.

The threatened US measures jeopardise more than €20bn of annual EU-Iran trade and big contracts for companies including oil group Total and carmaker Renault. Even more importantly, they put at risk the economic benefits to Tehran that Europe sees as essential to keeping alive the multilateral 2015 nuclear deal that Mr Trump abandoned last week.

Chinese group prices Swedish brand at 10 times earnings and higher than bigger rivals

PETER CAMPBELL

Vodafone chief executive Vittorio Colao to stand down Chief financial officer to take helm at telecoms group after Italian’s decade in charge NIC FILDES

ittorio Colao, who helped build Vodafone into one of the world’s largest telecommunications groups, will step down as its chief executive in October after a decade at the helm. Chief financial officer Nick Read, 53, has been promoted to the top job, having been groomed as the preferred internal candidate. He joined Vodafone in 2001 and, before becoming CFO in 2014, headed the UK business and was responsible for Africa, Asia and the Middle East. Vodafone shares opened down nearly 4 per cent after the announcement on Tuesday morning, at just under 200p. Mr Colao’s decision to stand down comes only days after the company sealed an €18bn takeover of Liberty Global’s German and eastern European cable companies, Vodafone’s biggest takeover of his tenure. It also comes ahead of the merger of its struggling Indian business with Idea Cellular, a deal that is expected to close in June. The 56-year-old Italian said

that the time was right to move on with most of the “reshaping” of Vodafone, now complete following the recent spate of deals. “The chapter Vodafone is starting to write is completely different,” he said. “After India, after Liberty, this is a new story that will take five years to be written.” Mr Read, who has spent 12 years working alongside Mr Colao, said that his job will be to get the most out of the “embedded champions” within Vodafone and to deliver “efficiencies and greater returns” by integrating the Liberty and Idea. Gerard Kleisterlee, chairman of Vodafone, said Mr Colao’s tenure had been “outstanding”. “He has been an exemplary leader and strategic visionary who has overseen a dramatic transformation of Vodafone into a global pacesetter in converged communications, ready for the Gigabit future,” Mr Kleisterlee said. Dhananjay Mirchandani, an analyst with Bernstein, said that while Mr Colao’s exit was not expected, it was not a surprise. “We always thought he had one major

deal in him, before he moved on to his next corporate adventure. With the Liberty deal announced and India set to close, he leaves behind a strategically well-positioned portfolio for his successor Nick Read who we think is a safe pair of hands,” he said. The announcement accompanied full-year results from Vodafone that showed revenue dipping 2.2 per cent to €46.6bn. Service revenue rose 1.6 per cent driven by broadband growth. Earnings before interest taxation, depreciation and amortisation grew 12 per cent to €15bn, beating its forecast, while free cash flow was €5.6bn hitting its promise to exceed €5bn. Mr Colao said that his departure should not overshadow what he called a “strong financial performance” when Vodafone beat expectations that it upgraded during the year. Vodafone grew in 20 out of its 25 markets, according to Mr Colao. Performance in the UK has started to improve but India, another under-performing unit, continued to struggle.

US sports betting expansion is no slam dunk Supreme Court decision to allow wagering on games sets up battle on dividing the spoils KADHIM SHUBBER AND MURAD AHMED

ritish bookmaker William Hill made a bet in New Jersey this year, wagering that a longrunning legal battle over sports betting in the US state would result in the legalisation of gambling on lucrative games such as football, basketball and baseball. Joe Asher, who runs its US arm, ordered his team to lay the groundwork so that William Hill could offer sports betting at Monmouth Park, New Jersey’s coastal racetrack, within weeks of a decision. On Monday, the bet paid off as the US Supreme Court ruled in favour of New Jersey in its longrunning effort to introduce sports betting, striking down a 1992 federal

law that banned all but a few states including Nevada from promoting gambling on sporting events. The ruling placed the decision of whether to allow wagering on competitive games firmly in the hands of state legislatures, putting New Jersey at the forefront of what could become the widespread legalisation of sports betting across the US. But while gambling on sports could come to Monmouth Park as early as next month, the Supreme Court’s ruling is just the beginning of a broader tussle between states, gambling companies and sports leagues about how the betting would work in practice and how to divide up the spoils. “We’re going to have an epic celebration tonight,” said Mr Asher

on a call with reporters on Monday as William Hill’s share price jumped 10.7 per cent. “Then tomorrow the hard work’s going to begin.” The potential prize is the illegal sports betting market in the US. The gambling industry estimates that $150bn is wagered on sports in the underground market each year, a significant source of money for organised crime that advocates of legalisation hope can be diverted to legitimate businesses that pay tax. The task of drawing customers away from illegal sports bookies with whom they may have long relationships will be a tricky one as states, along with the sports and gambling industries, try to maximise their revenues without pushing punters back into the black market with high costs.

olvo’s owner Geely will only proceed with an initial public offering if it achieves a valuation of more than $30bn for the Swedish carmaker, according to two people familiar with the details. The Chinese group, which also controls Lotus and black taxi maker LEVC, told banks applying to be lead underwriter on an offering that it wants to achieve a $30bn-$40bn valuation for the company. The owner will not sell if the value falls below $30bn, the banks were told, in spite of the figure being considered lofty by industry standards and high compared with many of Volvo’s larger competitors. It would value the carmaker at 10 times its earnings, which compares to 2-3 times for BMW and Daimler, the owner of Mercedes, according to calculations from Arndt Ellinghorst, analyst at Evercore ISI. Geely said an IPO remains an option but declined to comment further. Progress will be laid out at a Volvo Cars board meeting this month. If an IPO goes ahead, Geely will sell down its shares, although it will remain the largest shareholder in the company, said the people, who declined to be named. The bulk of the proceeds from the IPO will be re-invested into Volvo’s efforts to develop electric and self-driving capabilities. The carmaker has made an ambitious pledge that every new model will only contain electric or hybrid technology from next year, although as a smaller player in the market it needs to invest disproportionately more into the technology compared with its bigger rivals who can spread investments across a larger number of vehicles. Mr Ellinghorst said: “We don’t see a higher multiple for Volvo as totally unreasonable, given the potential for growth which will undoubtedly be the key pillar in the equity story.” But Volvo “won’t be immune to the challenges of regulation (ie: electrification) and digitalisation that drag down valuations of traditional premium carmakers”, he added. Volvo last year sold 570,000 cars, much smaller than sales of about 2m enjoyed by its larger German rivals. But Volvo has the advantage of unfettered access to the Chinese market, which is the world’s largest region for car sales and also a huge basket of profit for the industry.

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FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

BlackRock sticks with US equities despite lack of ‘cheer’ FEDERICA COCCO

oncerns about trade tensions and increased economic uncertainty are spoiling the party from a strong US corporate earnings season, according to BlackRock. Investors appears to be in a sulk about US equities, despite corporate earnings far exceeding expectations in the first quarter of the year. But the world’s largest asset manager, which has nearly $6tn under manegemtn, says “fears of peaking earnings are overdone.” Companies listed on the S&P 500 posted earnings growth of 24.9 per cent - the highest growth since the third quarter of 2010, according to data published by Factset. So far 90 per cent of the companies in the index have reported results. Much of this growth is explained by last year’s tax reforms, which took effect in the first quarter. But trade tensions have increased economic uncertainty and overshadowed the strong results, according to analysis by BlackRock.

“Macro uncertainty has also increased amid trade tensions and US fiscal stimulus at a late stage in the economic cycle. Growth and policy fears, it seems, have overshadowed current strong company fundamentals,” says Richard Turnill, BlackRock’s global chief investment strategist. Despite a sharp spike in analysts’ expectations for earnings per share at S&P 500 companies in the first earnings season of the year, the index itself “has not followed suit, a break from the recent past when market moves mirrored earnings upgrades”. Yet BlackRock believes corporate spending on buybacks, mergers and acquisitions and capital investment will be boosted thanks to US companies being “flush with cash from strong profits and lower taxes”. Although equity prices do reflect these prospects, Mr Turnill says: We believe companies will maintain a tight grip on expenses to shield margins from rising costs. With solid corporate health across regions, our base case is that the cycle has room to run.

AirFrance-KLM appoints stopgap leadership following CEO’s exit DAVID KEOHANE

ir France-KLM put in place an interim leadership team on Tuesday following the shock resignation of the airline’s previous chief over a pay dispute with staff earlier this month. A three person management committee has been set up led by Frédéric Gagey, group chief financial officer who will now also serve as the group’s chief executive officer. The other two members of the committee, which will take decisions collectively, are Franck Terner, the CEO of Air France and Pieter Elbers, the CEO of KLM, who will both serve as deputy CEOs. Existing board member Anne-Marie Couderc will act as non-executive chairman. “This transitional governance structure is established for the shortestpossible period,” said the group in a statement, adding that the “Air France CEO does not have a new mandate to take decisions that would jeopardise the growth strategy approved by the Air France-KLM board of directors.” “This basically postpones any restructuring and any big investment decisions . . . But it’s a safe pair of hands and it might allow some progress with unions,” said Daniel Roeska at Bernstein. At the beginning of May, JeanMarc Janaillac, now the former chief executive of Air France-KLM, said he would leave the group after losing a staff vote over a pay deal which had already been rejected by the Air France unions. The pay deal has been responsible for some 15 days of strikes, which

have cost the airline close to €400m, dragging down its financial results and putting its long term viability under a spotlight. The airline, formed by Air France’s merger in 2004 with Dutch KLM, now has to search for a permanent replacement for Mr Janaillac capable of restructuring the company. The search could take several months according to people familiar with the matter. The state, which owns 14 per cent of Air France-KLM’s share capital but has 23 per cent of the voting rights, will have a crucial role to play in that appointment — and it might be an important test of President Emmanuel Macron’s reformist tendencies. Shareholders and analysts have suggested that the appointment of the Dutch Mr Elbers might send a “powerful” message. Andrew Lobbenberg at HSBC said in a recent note to clients: The outgoing CEO Jean-Marc Janaillac was appointed under the Hollande government. He joined the company on an explicit mandate to improve labour relations, adopting a markedly less confrontational stance towards unions than his predecessor. Since his appointment, a new government is in place under President Macron, seeking to reform French labour practices and not backing down in its current industrial relations dispute with French railways. Delta and China Eastern are newly invested, each with 9 per cent stakes and board representation. Given the changes to both board and politics, we expect the new CEO to be appointed with a mandate to restructure rather than appease.

UK sees strong demand in long-term gilt sale KATE ALLEN

he UK has seen strong demand for the sale of debt that will not mature until 2071, with £37bn of orders for the £6bn of bonds on offer. The syndicated debt, which extends the UK’s yield curve by 3.2 years, is the longest-duration fixed interest rate UK debt on offer, and pays a 1.625 per cent coupon. A bond’s duration relates to how long it takes investors to recoup their initial investment. The new 2071 gilt has a duration of 35.7 years, almost six years longer than the previous longest-duration gilt available, the 2065 paper, according to Rakesh Girdharlal, a

portfolio manager at Aviva Investors. This period of time appeals particularly to pension funds and other investors with long-dated liabilities which they are seeking to match. Minutes of the UK Debt Management Office’s meeting with investors and banks, which sell its debt, earlier this year showed strong support for the sale of more longer-dated debt. Mr Girdharlal said the bond sale “presents pension schemes with an opportunity to accelerate or restructure the existing hedging programs with a view of making them more effective” by matching their long-term liabilities. Vatsala Datta, UK rates strate-

gist at RBC Capital Markets, said there had been little softening in gilt prices ahead of the debt sale, indicating that investor demand remains strong for long-dated gilts. “Rising equities and gradually rising gilt yields have led to a marked improvement in the aggregate defined-benefit [pension scheme] funding levels, implying further incentive to lock in longterm rates,” she said. Barclays, Deutsche Bank, Goldman Sachs and NatWest acted as joint leads on the deal. The UK is rated Aa2 with a stable outlook by Moody’s, and AA with negative outlook by S&P and Fitch.

Dollar buoyed as US 10-year yield back above 3% Turkey’s lira at record low while global stocks paring losses; Brent oil around $79 MICHAEL HUNTER AND STEPHEN SMITH

hat you need to know • 10-year Treasury yield back above 3 per cent as investors sell sovereign bonds • US futures indicating a weaker opening on Wall Street • Dollar index higher as attention turns to US retail sales data • Stocks lack momentum in European trade after falls in Asia • Global oil prices above $79 • Turkish lira slides to fresh record low after Erdogan remarks • Japanese yen weakens to 3-month low “While markets are confident that the Fed will raise rates again in June, any signs of spending weakness in [Tuesday’s] April’s US retail sales report perhaps related to higher oil prices, might cause some questioning of subsequent rate moves and keep US Treasury yields from going significantly above 3 per cent” — Chris Iggo, chief investment officer, fixed Income, Axa Investment Managers Hot topic Investors are watching US yields and the dollar, with both climbing ahead of retail sales data that will play into the outlook for the pace of rate tightening at the Federal Reserve. The yield on 10-year US Treasuries is back over the closely monitored 3

per cent mark, up 3 basis points on the session to 3.03 per cent as investors sell the debt. It crossed the 3 per cent line for the first time in four years in late April and has been above it on just four occasions since, after starting the year at 2.43 per cent. The two-year Treasury yield, which is more sensitive to the immediate outlook for monetary policy, is up 1bp at 2.56 per cent, having been at 1.91 per cent in January. The sharp rise for both yields over 2018 implies that the bond market is expecting the Fed to lift rates in the relatively near term and leaves investors refining expectations of further such action in the year ahead. This hawkish outlook has helped the dollar. Ahead of retail sales data — due at 1.30pm London time and expected to show a month-on-month rise of 0.3 per cent — the index tracking it is up 0.4 per cent to 92.945, taking it about 4 per cent higher off its 2018 nadir touched in April. Equities Global stocks are reversing early losses in European trading but momentum remains subdued. The Europewide Stoxx 600 is up 0.1 per cent but Frankfurt’s Xetra Dax is flat. According to futures trade, the S&P 500 will fall 0.1 per cent in opening trade. London’s FTSE 100 is a modest outperformer with the benchmark rising 0.3 per cent. Equities were lower in Asia after

an apparent easing of US-China trade tensions barely managed to boost the S&P 500 index into positive territory on Monday as signs of fatigue began to emerge following last week’s solid gains. But the CSI 300 index of Shanghai and Shenzhen-listed stocks rose 0.4 per cent after index provider MSCI unveiled its list of 234 China-traded stocks that will go into its Emerging Markets index, which will compel a wide range of index funds to buy the shares. Forex and fixed income Turkey’s lira hit a fresh record low after remarks from the country’s president, Recep Tayyip Erdogan, that he could exert more influence on monetary policy if re-elected in June. The lira weakened as much as 2 per cent to a record TL4.4610 per dollar on Tuesday after the comments made by the president on Bloomberg TV.s The euro is down 0.4 per cent at $1.1876 while the pound is 0.3 per cent softer at $1.3515. Japan’s yen is also 0.4 per cent weaker at ¥110.08 per dollar, its lowest level for three months. Yields on 10-year German Bunds are moving 2bp higher to 0.64 per cent. Hawkish comments at the start of the week by François Villeroy de Galhau, governor of the Bank of France, implying faster rate rises in the eurozone were overshadowing lacklustre economic data in the currency bloc today, highlighted by first-quarter GDP slowing to 0.4 per cent.

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BUSINESS DAY

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Wednesday 16 May 2018

RESEARCH & INSIGHT A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

research@businessdayonline.com

08106395676

Nigeria’s proposed minimum wage: A utopian goal in a destabilised entity … Improve public service delivery for workers not wage rise, analyst says KELVIN UMWENI

he issue of a national minimum wage for workers has been heavily debated among labour movements, trade unionists and policy makers in recent times. Presently, the National Minimum Wage (Amendment) Act, 2011 provides for a national minimum wage of N18,000 per month – an amount that current economic realities have tested and proved to be grossly inadequate. Though there is deceleration in the rate of inflation, which would ordinarily have served to boost real wage, the peculiarity of Nigeria’s economic landscape prove a case that defiles such universally acceptable theoretical economic aphorism. The clamour by organised labour for a new minimum wage got a boost in November, 2017 with the setting up of the Tripartite National Minimum Wage Committee by President Buhari comprising the government, labour and the private sector and was to be headed by erstwhile Head of Service of the Federation cum ex-Minister of Housing, Amal Pepple. The Committee’s mandate is hinged on providing a platform for receipt of ideas from relevant stakeholders that will serve as a vital input in the process of preparing an executive bill to amend the existing minimum wage structure. It is not uncommon in Nigeria that policy makers and employers are quick to dispel any attempt to increase the wage rate. Interestingly, given that the general election is just around the corner, the political gladiators are beginning to subscribe to labour’s struggle perhaps to score cheap political point and advance their popularity. The question of what has stalled the process of reviewing the minimum wage since 2015, which was the original date set for its revision is one that calls for us to ponder upon. However, one issue that remains is what many believe is the dysfunctional political arrangement of the country, which is anchored conspicuously on the fact that constituent sub-national governments are treated as though they possess equal financial muscles to offset huge recurrent expenses like the payment of workers’ salary. One obvious consequence of this debacle is the upsurge in backlogs of unpaid salaries (including the staggering debt profiles) of some state governments for the simple reason

that they do not have the financial wherewithal to execute what they will rather describe as a “seemingly lofty but over-ambitious idea” at this point in time. Some states’ internal revenue generation capacity is so deficient and weak that they depend largely on allocation flows from Abuja to stay afloat: a sort of “banana republic” arrangement. This quagmire has led to a call for restructuring, fiscal federalism or any other befitting nomenclature that could succinctly capture the clamour for a change in the existing status quo of Nigeria’s governance structure. In South Africa, Africa’s second largest and most industrialised economy, minimum wage is pegged at R20 per hour according to Reuters. That amounts to N496 per hour using the official exchange rate of N24.8 to 1 Rand as at 14th May2018. This compares to N75 per hour in Nigeria. More so, the case of India, one of the world’s fastest growing economy, is quite interesting. The International Labour Organization (ILO) stated that there exist over 1,500 minimum wage rates termed “schedules” set at the state level for selected industries and occupations. The central government sets a non-binding indicative national floor level (160 rupees per day). In Nigeria, despite having the process that unambiguously articulate periodic minimum wage review, it’s unfortunate that when the day of reckoning beckons the government tactically or recalcitrantly relapses to fabricating fables; this is a sort of subtle non-commitment gesture to honouring previous agreement reached with organized labour. As an instrument of last resort, Nigeria Labour Congress (NLC) has gone on countless number of strikes to press home their demand for increased minimum wage, better welfare conditions and a conducive work environment for workers. The economy-wide implications of strikes are colossal: shut-down in businesses, reduction in production, loss in investors’ confidence, price hike due to panic buying and so on. This difficulty in getting government attention to reviewing the minimum wage in the light of prevailing economic realities is buttressed by a somewhat underground scheme to perpetually short-change the vast Nigerian workers. Proposed minimum wage is unsustainable The NLC initially proposed a N56,000 minimum wage but later

raised it to N66,500 which they term “the average of the wages arrived at under four categories: minimum wage for some African countries; analysis based on the minimum cost of providing basic needs; a living wage approach and analysis based on rising cost of living.” The long term sustainability of the proposed N56,000 has been questioned on certain grounds Dolapo Ashiru, Managing Director, Asset Management at Lagos-based Mega Capital Financial Services Limited aptly stated, “Our minimum wage is a joke but presently we cannot afford the proposed new minimum wage.” On his part, Soji Apampa, Chief Executive Officer of The Convention on Business Integrity cautioned stakeholders on the need to learn from history noting that when there was the 1976 Udoji awards, prices skyrocketed in the marketplace. Fundamentally, the dilemma of a wage-price spiral will rear its ugly head in the scheme of things following the implementation of a new minimum wage. The problem is compounded given the weak industrial base of the country. This ultimately will birth a situation whereby the real wage either deteriorates faster or remain unchanged depending on the speed of a rise in the general price level. “If you say the proposed minimum wage is N56,000, that means every workers’ wage has to be recalibrated in proportion to the hike from N18,000 to N56,000 so that there is no disparity between workers in different level. This is what makes the proposed new minimum wage unsustainable”, Apampa said. The incessant vulnerabilities of the economic terrain to volatilities

in key macroeconomic magnitudes such as the spiralling food prices exacerbated by widespread poverty; and the unstructured social safety net to cushion the effect of a low wage especially among poor households are pertinent factors that underpinned the hardship faced by Nigerian workers. However, the insolvency of states, which underpins their inability to pay is a critical stumbling block to achieving this lofty idea of increasing the minimum wage. Using personnel cost figures from the annual reports of the CBN and based on the assumption that each of the employees received N18,000 minimum wage, BRIU estimated roughly, the total number of employees in the public service in each states. Having obtained the population of public servants in each state, we multiplied the figure with the proposed minimum wage of N56,000 to arrive at the proposed personnel cost for public servants in the different states. This was compared with the 2018 budgeted personnel costs of states to have a bird’s eye view of states’ capability to pay the proposed minimum wage when it comes on stream. Given the fact that most state governments hide their budget from public domain for various reasons, we made do with states that publicized their budget. Such states included Delta, Edo, Kaduna, Katsina, Kogi, Kwara, Lagos, Ondo and Plateau states. Our analysis shows that none of the states can pay the proposed N56,000 minimum wage, not to talk of organized labour’s upward review of same to N66,500. Lagos state, the nation’s nerve

centre, recorded the lowest gap between the projected personnel cost and the budgeted personnel cost (N35billion) while Delta states had the highest difference to the tune of N194billion. The possibility is high that some states that cloaked their budget from the public will have a big gulf between BRIU’s proposed personnel cost and budgeted cost. “The long term solution is not predicated on wage increase. Elevating welfare is not a function of wages alone. This is a time to look at all the components in workers’ packages and change to a better package to ensure that all other things needed in the package are present even if the cash component is low”, Apampa said. “We need to produce and improve public services because if there is good health insurance policy, scholarships and mass transit, cost of health, education and transportation will reduce and there would not be any need to clamour for wage increase”. Execution of welfare laws that could have acted as shock absorbers is still very poor. Save for the Pension Reform Act (2004), implementation rate for such laws as the National Health Insurance Act, Universal Basic Education Act, and the National Housing Act etc. are at low ebb with minimal impact on workers’ welfare. Unquestionably, the situation of workers in Nigeria is pathetic. It therefore becomes a matter of utmost importance for the relevant stakeholders: the government, labour leaders and activists, trade unions and even international labour movements to form a united front towards prioritizing the needs of workers across board.

BUSINESS DAY

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NEWS YOU CAN TRUST I WEDNESDAY 16 MAY 2018

Opinion

The redemption of Nick Leeson OPEYEMI AGBAJE opeyemiagbaje@rtcadvisory.com

ick Leeson (full names-Nicholas William Leeson) was the “rogue trader” who caused the catastrophic collapse of the United Kingdom’s then oldest merchant bank, Barings Bank in February 1995. I recall the sensation and hoopla at the time as reports that a twentynine year old trader had brought down a 233 year old eminent merchant bank founded in 1762 went across the global financial markets. I headed the financial institutions business of a Nigerian bank at the time and I recall our shock (and perverse excitement?) as my then deputy CEO and I pondered the dimensions of the affair and possible implications for our institution. Barings Bank was a distinguished merchant bank based in London. It was at the time the second oldest merchant bank in the world, owned by a

Germanic family of bankers and merchants in the UK. Nick Leeson on the other hand was a young derivatives trader who was sent to Singapore in 1992 to head futures trading as general manager in charge of Barings trading operations on the Singapore International Monetary Exchange (SIMEX). Over the next three years, Leeson ran up unauthorized and undisclosed trading losses amounting to GBP 827million by February 26 1995 when the bank was declared insolvent. The losses reportedly started small, from a genuine error by another employee of just GBP20,000 who had sold rather than buy securities as instructed by a client; reaching GBP2million by the end of 1992; and GBP208million by the end of 1994; and GBP 827million by February 1995. Nick Leeson had “hidden” these losses in an illegal “error account” until they reached four times the bank’s capital; and fled when his activities were exposed leaving behind a simple but tragic note “I’m sorry”. L eeson had enjoyed a remarkable rise until his earth-shaking fall in Februar y 1995. He had

only gotten a high school education before joining the “Queens Bank”, Coutts and Co and then head-hunted to Morgan Stanley before he joined Barings in London in 1989. He had apparently been a star until he was sent to Singapore where just three years later, both he and Barings came crashing down. He was repatriated back to Singapore as he fled to Malaysia, Thailand and Germany where he was tried and jailed for his crimes. You may t h e n w o n der why the board of the Convention on Business Integrity/The Integrity Organisation, which I chair, chose Nick Leeson as key note speaker at this year’s 5th Annual Christopher Kolade Lecture on Business Integrity held last Thursday June 29th 2017 in Lagos! Nick Leeson spoke to the theme, “Prevention is Better than Cure” a theme that resonates with CBi’s focus on strategic and preventive approaches in the fight against the cancer of corruption that continues to subvert Nigeria’s development and social stability. He spoke about the lax risk management in Barings in Singapore; about several

…at least Nick Leeson owned up to his actions and has tried to make some good out of the tragedy of the collapse of Barings Bank. He compared Leeson’s post-crises actions to those individuals responsible for the failure of many Nigerian banks, none of whom could be found to speak honestly about their roles in those matters!:

people-internal auditors, external auditors, supervisors, colleagues, regulators and others within and outside Barings who for three years failed to ask the simple questions that might have led to earlier detection of his fraudulent schemes; and others who simply lacked the business understanding that would have enabled them raise an alar m against his unauthorized “error” account. He spoke about the psychological urges and fear of failure that led him along a three-year doomed path of denial and deception that prevented him from doing the sensible thing-stopping his fervent digging of a larger and deeper hole, instead worsening his and the institution’s fate by continuing to incur larger trading losses. Yet he accepted

full responsibility for his actions and indeed served time in prison for them. I had a second opportunity to listen to Nick Leeson in Abuja the next morning as co-panelists on a CBi/ACC A/CIBN/ PACAC (Presidential Advisory Committee on AntiCorruption) discussion on financial system stability. In a private conversation, I asked Nick whether he ever reflected on how his life’s journey may have b e e n d i f f e re nt ha d h e decided to disclose the original loss of GBP20,000 (which by the way was not his fault) instead of hiding and worsening them? I could understand his response-it was a pointless exercise and could only perpetuate feelings of regret, powerlessness and maybe suicide. Instead Nick Leeson accepted his fate, served his time in jail, wrote two books about his experiences (“Rogue Trader: How I Brought Down Barings Bank and Shook t h e F i n a n c i a l Wo r l d ” (1996) while in prison and “Back from the Brink: Coping with Stress” (2005). “Rogue Trader” was made into a film in 1999 and his story formed the focus of a TV Documentary in 1996. The event in Lagos was very graciously attended

by Lagos State Deputy G ove r n o r D r. O l u ra nt i Adebule and Acting President Yemi Osinbajo, a co-founder and former Chairman of CBi/Integrity who remarked that at least Nick Leeson owned up to his actions and has tried to make some good out of the tragedy of the collapse of Barings Bank. He compared Leeson’s postcrises actions to those individuals responsible for the failure of many Nigerian banks, none of whom could be found to speak honestly about their roles in those matters! The broader context was however Nigeria’s anti-corruption effort and the message (which our honoree, Dr. Christopher Kolade loudly emphasized) that it was probably more effective to focus on preventive approaches to fighting Nigeria’s hydra-headed monster of corruption. The other implications may be for our banks, financial institutions and other corporates-that poor governance and lax risk management eventually exact a high, even calamitous price on institutions that perpetrate them! •This article was first published on Wednesday July 5, 2017

Radioland, Nigeria and our democracy CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

hy did the government of General Ibrahim Babaginda approve the opening of the media space in 1992 by allowing private broadcasting? Initial licenses went to friends of the general who wanted to stay on as president. It also came against the run of play for a government that was giving the media a hard time with bans, shutdowns as well as arrest and detention of journalists. The conspiracy theory on the matter of the liberalisation of the Nigerian broadcasting space at the time it happened posits that it was part of the sit-tight plan of

this veteran coup plotter. Until then, radio was the primary means of communicating a successful coup plot and even of legitimising it. Grab the studios of the Federal Radio Corporation of Nigeria, and you can make your announcement. Gideon Orkar took charge of radio as did Bukar Sukar Dimka and those who succeeded. Alternative broadcast organs would break the monopoly of the public broadcaster and provide a counter-narrative should something happen. Why did Babangida do it at the time he did? Whatever the actual motive, liberalisation of broadcasting has brought many benefits to citizens and the media. As a critical component of the media, broadcasting is one of the pillars of the creative industries. The economy around radio and television is vast and increasingly diversified. It is growing in several new areas in programming, distribution and channels. Approximately 380 radio stations operate across the country. Lagos alone accounts for 32 stations, enabling the entire SouthWest

to dominate the radio scene with 104 stations across the six states. The North Central follows with 63 stations, including the 19 in the Federal Capital Territory. The SouthSouth has 56 stations while the South East accounts for 53. The North West has 56 stations and North East 26. Add the 17 community radio stations licensed by the regulator. Nigeria is now effectively Radioland. The multiplicity of channels provides an opportunity for the airing of news, sharing of information, debate and discussion. The multitude of channels and voices should be a useful antidote to coups and dictatorship. More significantly, radio as a grassroots medium should be in the forefront in promoting and teaching values and attitudes that support democracy. This medium with the broadest reach to the masses is the one best equipped through strategic programming to nurture this system of government as Nigeria enters a significant milestone of 20 years of democratic government in 2019. Radio should

join the print media in really applying the injunction of Chapter 2, Section 2, subsection 22 of our constitution to hold government accountable to the people and ensure implementation of the Fundamental Objectives and Directive Principles of State Policy of Nigeria. It is interesting how we got to this point. Decree 38 of 1992 established the National Broadcasting Commission and charged it to accept and screen applications for the issuance of licenses for private participation in broadcasting in the country. Decree 38 created a significant paradigm shift. Until then, the government was the only player in broadcasting in Nigeria. The history of broadcasting in our country also contains an interesting paradox. Broadcasting commenced with a citizen initiative by the staff of the Posts and Telecommunications (P&T) department in 1935. They provided the successful test-run for a service that the government soon appropriated. Rediffusion served the interests of the Empire. The colonial government created the Nigerian Broad-

casting Service in 1951 and turned it into the Nigerian Broadcasting Corporation in 1957 as a body corporate with rights and privileges. Chief Obafemi Awolowo introduced regional radio and television in 1959 in response to the denial of airtime on national radio. In that competitive era, the other two regions soon commenced radio and television organs to inform citizens and amplify their messaging. Regionalisation of broadcasting made Nigeria unique in Africa as the only one with a two-tier ownership structure of federal and regional, later state-government-owned, organs. We have added to that a structure of federal, state and private ownership of radio and television operations. Nigeria today is a step ahead of the African Charter on Broadcasting (Windhoek 2001), promoted by UNESCO, that prescribes a “three-tier system for broadcasting: public service, commercial and community”. Save that community broadcasting needs to transit from mere approvals of about 17 stations to actual practice. The government of Olusegun Obasanjo intervened

again in 1975 and 1976 to centralise principal broadcast organs, creating the new Nigerian Television Authority and the Federal Radio Corporation of Nigeria. More than ever, Nigeria needs to tap the benefits of liberalisation. These include broadening the public arena for discourse, enhancing the practice of the democratic ideal of freedom of expression, and broader latitude in programming. It has also improved professionalism in broadcasting, though many in the old school doubt this. Other benefits include the expanded options available to audiences. Then there is healthy industry competition and specialisation, with radio stations focusing on specific interests such as sports, women and music. The power, reach and influence of broadcasting means that it has always held the attention of citizens but also the intervention of government. We cannot state enough the strategic role of the media in the days ahead. Radio and broadcasting would be central and contributory. Would it be positive?

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 16 May 2018

C002D5556

BUSINESS DAY

INTERVIEW

‘Lack of clarity around fiscal policies coupled with upcoming elections makes it a difficult climate for M&A in oil, gas sector’ Page 5 finance people appointments

L-R: Hillary Akpan, general manager, Gas Division, NAPIMS/NNPC, Akwa Ibom State Governor, Udom Emmanuel and Paul McGrath, MD/chairman ExxonMobil at the ground-breaking ceremony of 3 community assistance projects by NNPC/MPN JV at Mkpat Enin, Akwa Ibom recently.

Debrief

US re-imposed sanctions on Iran: Winners, Losers FRANK UZUEGBUNAM

Sudan in talks with Saudi Arabia on five-year oil aid agreement

Page 6

OPEC weekly basket price DAY

PRICE

11/5/18

73.5

4/5/18

70.75

27/4/18

70.92

20/4/18

69.5

13/4/18

67.66 Source: OPEC

S sanctions on Iran will go back into force from November 5, meaning buyers have a six-month period during to “wind down” oil purchases. US Treasury Department has instructed countries to make significant cuts to their imports over the next six months to be considered for potential sanctions relief. Here are winners and losers of the US re-imposed sanctions on Iran; Winners – Nigeria, other OPEC countries, US Shale OPEC, along with 10 nonOPEC allies led by Russia, are in the midst of a 1.8 million b/d supply cut agreement that is scheduled to run through the end of 2018, aimed at supporting prices and working down the glut of glob-

al oil inventories. Any loss of Iranian barrels would squeeze an already tight oil market further. Thus, it is an opportunity for Nigeria and other OPEC members to ramp up production with attendant increase in revenue amidst spike in prices. “Saudi will work closely with major OPEC, non-OPEC producers and with key consumers to mitigate the effects of any supply shortages”, Khalid al-Falih, Saudi Arabia’s energy minister said in a tweet. Definitely, all producers will benefit from rising prices but US shale oil are in a better position to benefit more than OPEC countries. As oil prices are expected to increase next year, more shale drilling rigs will be deployed. Losers: Iran, Key buyers, IOCs Iran has boosted its oil production nearly 1 million b/d since the nuclear deal lifted Western sanc-

tions in January 2016. It produced 3.83 million b/d in April this year, which is about 4 percent of the world’s oil. The country exports about 450,000 barrels per day (bpd) to Europe and around 1.8 million bpd to Asia. Bijan Zanganeh, Iranian oil minister said President Donald Trump’s decision to quit a multinational nuclear deal would not affect Tehran’s oil exports. “Trump’s decision will not have any impact on our oil export ... that era is history now,” Zanganeh said. Analysts think otherwise as an estimated 500,000 b/d of Iranian exports will be disrupted by November this year. Key buyers of Iranian crude will also feel the impact as they will suffer when looking for new sources of supply. In the first quarter of 2018, China imports of Iranian crude averaged around 700,000 b/d, India imports ranged be-

tween 500,000 b/d - 700,000 b/d, South Korea imports was around 300,000 b/d. Other key buyers include; Japan with about 100,000 b/d, Turkey - 250,000 b/d, France between 70,000-100,000 b/d and Greece - 120,000 b/d. Amongst the International oil companies (IOCs), Total’s South Pars phase 11 development will be heavily impacted. Total has spent a little under $100 million on South Pars so far out of a potential $2 billion budget for phase one of the project, which also involves China’s CNPC and Iranian company Petropars. Apart from Total, Shell, and Japan’s Inpex are among dozens of companies to have signed memorandums of understanding showing willingness to develop giant Azadegan oil field ahead of a formal tender procedure. Italy’s Eni has also signed preliminary agreements with Iran.

02 BUSINESS DAY WEST AFRICA Outlook Namibia: Namibia emerging as next African oil frontier

amibia is gradually emerging as the next African oil frontier. Canadian-focused Calima Energy took a 56 percent stake and will serve as the operator of an exploration block in the Orange River basin off the southern coast of Namibia. Several West African countries to Namibia’s north, like Senegal, are fast emerging as bright spots for future oil producers. The broader West African basin is gaining a reputation as an emerging producer, and Senegal in particular could hold more than 1.5 billion barrels of oil off its coast. The main focus for Calima, for now at least, is in the Montney shale formation in British Columbia, where it said it planned to

drill “several” wells later this year. With Exxon Mobil and Total taking an interest in Namibia, the company said its share-

holders now hold a more prestigious position. “This investment in Namibia provides shareholders with an interest in a

high-profile emerging hydrocarbon province alongside major oil companies,” according to the company’s official statement. The four-year term of the agreement obligated Calima to a minimum investment of $2 million. By comparison, Conoco Phillips in April spent $120 million to acquire 35,000 net acres in the Montney shale play in British Columbia to move alongside Calima. Calima under the initial terms of its agreement in Namibia commits to acquiring seismic data of the offshore area in order to get a better understanding of the reserve potential. “The investment obligations associated with the agreement are comfortably within the company’s financial capabilities,” Calima’s statement read.

Nigeria: Nigeria oil production rebounds to 2.07 million b/d in April

igeria’s oil production rebounded to 2.07 million b/d in April this year, after it slipped to 2.02 million b/d in the preceding month, according to estimates released by the oil ministry. The ministry figures showed that oil production including condensates averaged 2,069,784 b/d in April, up from March and about 11 percent higher than 1.85 million b/d for April last year. Nigeria has continued to ramp up production following the lull in militancy in the country’s main oil-producing Niger

Delta region. However, after several months of steady growth, output slipped in March, which industry officials attributed to pockets of illegal tapping into pipelines in the delta. Oil accounts for around 80 percent of Nigerian government export revenues. The government set a production assumption of 2.3 million b/d for this year’s budget from which it hopes will earn around $8 billion in revenue. “Government will continue to sustain a peaceful environment for companies to be able to operate at their maximum capacity,” the ministry’s spokesman said.

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oil

Brief

Morocco: Long shutdown casts shadow over sale of Moroccan refinery

orocco’s only refinery will find it tougher to find a buyer the longer it stays closed as equipment ages and qualified staff move away, industry sources say, almost three years after operations were halted due to heavy debts. Sources said courtappointed trustees had received offers for the 200,000 barrel-per-day Samir plant, controlled by Saudi billionaire Mohammed al-Amoudi’s Corral Holdings and shut by the government in 2015 over unpaid taxes. But he said trustees had failed to agree terms with potential buyers of the plant, which has total debts estimated at $4.7 billion, the equivalent of about 4 percent of the North African nation’s gross domestic product. Shuttering the plant, which court-appointed experts value at 21.6 billion dirhams, has left Morocco reliant on imported refined products and sparked protests by workers. Energy imports cost Morocco 70 billion dirhams in 2017. “The longer the crisis drags on, the more difficult it will be for Samir to find a buyer,” said the source adding that “not only due to the piling up of debt but also because equipment is getting old and some of the best human resources are tired of

waiting and have sought other jobs.” Other industry sources and parties interested in the plant have previously said idling the refinery, which the government said owed 13 billion dirhams in unpaid taxes, made it more difficult to find a buyer. Some staff at the refinery, which had directly employed 850 people, still show up for work, mainly to maintain the plant. But salaries have been slashed, hurting the economy of the town and prompting protests and sit-ins over the shutdown. Trustees first invited bids for the refinery in February 2017 and have extended the deadline for offers. Industry sources said in May 2017 that Swiss trader Glencore and US private equity firm Carlyle Group teamed up to bid, aiming to recoup about $600 million in loans. “Most offers are from parties whose capacity to relaunch Samir is shrouded in doubt,” said energy expert El Mehdi Fakir. “The complicated legal proceedings and debt are making it hard to sell.” Corral, with a 67.26 percent stake in the plant, has sought international arbitration against the government, saying it breached an investment agreement and demanding compensation for the decision to liquidate Samir.

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Wednesday 16 May 2018

gas

ENERGY intelligence

Morocco: Gas discovery ‘significantly exceeds’ pre-drill estimates

ing completed as a conventional natural gas producer and will be perforated and tested approximately 30 days after the drilling rig has left the site. “We are very pleased with the results of this exploration well as it has significantly exceeded our pre-drill estimates for both reservoir quality and pay sand thickness,” Paul Welch, president and CEO of SDX, said in a company statement. “Once the rig has departed the location we will conduct an extensive test of this well. Given the deeper source rock, the heavier gas elements and fluorescence seen in the cuttings we are anticipating production of condensate during the test which could add some significant value to the production established in this area,” he added.

Equatorial Guinea: Equatorial Guinea in LNG sale talks as Shell deal winds down

quatorial Guinea is in talks to sell liquefied natural gas (LNG) supply from its Punta Europa project to independent and state-backed oil companies and traders from 2020 as it winds down an exclusive deal with Royal Dutch Shell. Gabriel Obiang Lima, Minister for Mines and Hydrocarbons, said he is seeking to lift royalties from future LNG deals to 50 percent compared with 12.5 percent under existing arrangements with Shell. Lima said talks are progressing with China National Offshore Oil Corporation (CNOOC), Russia’s Lukoil, France’s Total, trader Vitol, a joint venture of Lukoil and NewAge and also Shell. Supply deals will be offered for 3-5 years from

WEST AFRICA

Brief

orth Africa focused oil and gas company, SDX Energy Inc, has made a conventional natural gas discovery at its LMS-1 exploration well on the Lalla Mimouna permit in Morocco. LMS-1 was drilled to a total depth of 3,799 feet and encountered 54 feet of net conventional gas pay sands. The well is now be-

BUSINESS DAY

2020, Lima said. The country’s LNG plant, operated by Marathon Oil Corporation, is currently fed by the depleting Alba gas field, which faces a cliffedge dip in output from 2019/2020, he said. Future production will be underpinned by pooling supply from the country’s and wider region’s stranded gas fields, raising the prospect of eventually boosting LNG output.

Adopting the PPP investment approach to West Africa gas development KELECHI EWUZIE

igeria and a handful of other West Africa countries collectively account for 75 percent of all the known gas reserves on the region and each are at different stages of developing the industry. Figures show that in the last few years, the regions reserves increased by almost 40 percent, and over the last 10 years the picture is even rosier, with a 145 percent increase. A cursory look at West Africa’s gas potentials indicate that Nigeria is home to over a quarter of the region’s gas reserves. This gives her the potential to produce abundant cheap energy, and drive an industrial revolution, while also solving the environmental problem of excessive gas flaring from the oil industry. Those who know in the gas industry observe that major discoveries of gas reserves by several West African countries seemed to herald the prospect of an additional export product to boost foreign currency income. They opine that although currently the picture is very different having been stalled by West Africa’s general infrastructure challenges, but the underlying catalyst for change remains. To enable investment into this industry, the government created Public Private Partnership (PPP) legislation, a PPP regulator, and initiated the Nigerian National Integrated Power Project (NIPP). This gave some (but arguably not sufficient) clarity in terms of legislation,

policy and regulations. Private investors and the Nigerian government became involved with the gas field exploration, building of pipelines and finally the construction of power stations. According to report, Nigeria’s major structural problems across its gas supply chain could result in an inadequate electricity supply over the next 10 years? Industry close watchers observe that the risk posed by the volatility of commodity and the risk of terrorism, has large impacts and are difficult to predict in terms of timing. According to them, “the double blow of realising both these risks at the same time, made the impact devastating. The slow upward creep of the oil price and the stabilisation of the currency seem to be slowly reviving interest in this programme”. Industry close watchers opine that in order to get the buy-in of private investment into the gas

Snapshot

2.5TCF Estimated annual gas output from Nigeria

industry, it is crucial to governments across the West Africa region move away from the previous state monopoly and set up a natural gas regulatory authority as this will open competition in the industry. They argue that with private investment into the gas industry, the region may well become a net exporter of gas during certain periods of the year. It could also result in West Africa attaining energy

self-sufficiency, increasing its regional security. Those who know in the gas industry observe that in all the markets across the continent, the industry faces the same issues related to West Africa’s general infrastructure. Wide-spread private investment into the gas industry is currently in the early stages. They opine that the development of this industry requires time, effort and engagement with all stakeholders to create the eco-system that is truly conducive for private investment. As with many things in West Africa, there is slow but encouraging, steady development. There is no doubt that the combination of private investment and recent discoveries of gas reserves on the region can transform economies and strengthen nations. With much of the region still unexplored, there may well be more undiscovered resources that will further drive its development.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Will DISCOs heed to Fashola’s service improvement call amid financial hiccups? KELECHI EWUZIE

he call by Babatunde Raji Fashola, Minister of Power, Works and Housing to Power distribution companies (DisCos) on the need to improve on their service delivery, collection of revenues without extortion through estimated bills is good only to the extent that such calls are heeded to. Fashola at the 26th monthly power sector operators meeting held at the Ohiya transmission substation, Umuahia, Abia state stated that in order to improve service, Discos must accept their respective responsibilities and this is important for the purpose of identifying our respective roles and tasks. As forthright as this admonition is, operators in the industry continue to see things differently. Those who know in the power industry observe that the entire electricity sector is faced with huge revenue shortfalls. The implementation of cost reflective tariffs, access to long-term debt capital and equity injection, will still not address the revenue shortfall to the system in the short term. They insist that underpinning any debt or equity capital raise is a sustainable and cost reflective electricity tariff and a long-term tariff path. Without cost reflective electricity tariffs, the electricity sector is not likely to attract and sustain the much needed investments.

Ayodele Oni, a lawyer with special interest in Energy sector in a recent article explains that MYTO’s methodology fundamentally relies on the power value chain. According to him, electricity which “powers” the value chain can only generate revenue for the entire sector from the consumer end of the chain, where the distribution companies operate.

Snapshot

N183.19bn Total debt of power distribution companies to service providers in Nigeria

Oni opines that these retail tariffs determine the overall profitability of the power sector. “Without consumers paying their bills, the Discos are unable to pay NBET. In the absence of further capitalisation of NBET, this will eventually lead to NBET’s inability to pay the generating companies (which means they are unable to pay sums owed to gas suppliers). Essentially, failure of consumers to pay retail tariffs will lead to the entire value chain starving for lack of funds”. Explaining further on the retail tariffs which he noted are not entirely cost reflective, the energy expert observed that it is difficult for the distribution companies to generate the necessary revenue to make their activities profitable as well as making the necessary investment. “The base tariff structure is one which seeks to have the sector (par-

ticularly Discos) run at a loss for a number of years before being ultraprofitable much later in time; a structure referred to as sculpting”. He said. A large percentage of the over 180 million citizens in Nigeria have never had it so bad when it comes to the issue of electricity supply in recent times. Minister of Power, Works and Housing promised to do his best to keep track of developments and challenge NBET to improve on the timelines it takes to process payment to the DisCos. According to him, “The truth is that if NBET cannot pay her bills to the GenCos, the DisCos will have no business because the bulk of their power comes from NBET. Therefore, the DisCos must, in their own very best interest see NBET as the goose that lays their golden egg, which must not die”.

Wednesday 16 May 2018

power

Egypt: Egypt signs MOU with China’s GCL for $2 bln solar panel factory

hina’s GCL Group has signed a memorandum of understanding (MOU) with Egypt’s ministry of military production to build a solar panel facility at a cost of up to $2 billion. Under the MOU, the facility will manufacture panels capable of producing 5 gigawatts (GW) annually, it said, without mentioning the location or timeframe of the project. Egypt in 2014 announced extensive plans to develop renewable energy targeting 4.3 GW of wind and solar projects to be installed over three years, but many investors pulled out following contract disputes. Egypt aims to meet 20 percent of its energy needs from renewable sources by 2022. President Abdel Fattah al-Sisi, a former general who took office in 2014, has promised to revive the

economy, which has struggled since a 2011 uprising scared away investors and tourists, Egypt’s main sources of foreign currency. He has called in the military to assist in major infrastructure projects and with distribution of subsidised commodities to help curb price rises. The economic weight of the military, which produces everything from bottled water to macaroni, has long been a topic of speculation in Egypt but official comment on its economic activities is rare.

South Africa: MIGA approves guarantees for three SA wind farms

IGA, a member of the World Bank Group, announced guarantees of $73 million in support of the construction, operation and maintenance of three wind farms in South Africa, namely, Noupoort, Khobab, and, Loeriesfontein 2 wind farms. The wind farm projects will have a collective

generation capacity of 360MW, and were selected as preferred bids during the third round of the South African Renewable Energy Independent Power Producers Procurement Programme (REIPPP). “The wind farms will help diversify the country’s energy mix, and directly benefit local communities,” said MIGA executive Vice-President and CEO Keiko Honda. “Such large power generation capacity also provides opportunities for South Africa and its neighbours to further realise their development potential,” Honda added. Noupoort wind farm began operations in 2016, while the Khobab, Loeriesfontein 2 wind farms followed at the end of 2017.

Wednesday 16 May 2018

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Interview

BUSINESS DAY

‘Lack of clarity around fiscal policies coupled with upcoming elections makes it a difficult climate for M&A in oil, gas sector’ SARAH SHAW is a corporate partner at Hogan Lovells in London. Her responsibilities includes public and private mergers and acquisitions, joint venture and equity capital market operations and company restructuring with particular focus on Africa’s energy sector; upstream, midstream and downstream oil and gas. In this interview with FRANK UZUEGBUNAM, editor, West Africa Energy Intelligence, Sarah talks about emerging trends in the oil and gas sector amongst other issues. Excerpts: Let us start by knowing you and what your job entails am a corporate partner at Hogan Lovells in London. My practice includes public and private mergers and acquisitions, joint venture and equity capital market operations and company restructuring. I focus on the energy sector including upstream, midstream and downstream oil and gas. I have a particular focus on Africa where my experience includes acting for Shell when they sold their downstream assets across 19 different countries in Africa, as well as for a number of DFIs such as CDC on their portfolio acquisitions and joint ventures in the power infrastructure space, for example the acquisition of the Globleq power portfolio from Actis. Most recently, I advised Harith Partners and Africa Finance Corporation on the merger of their power and renewable asset project portfolios including some of the largest energy projects across Africa. Looking at the emerging trends in the oil and gas sector, could you please give a brief overview of the happenings in this sector within the last four months? On a global level, we have seen a return of interest in the oil and gas sector in the last few months principally due to the increase in the oil price, reaching its highest level in recent weeks since the collapse of 2014. There have been a number of significant strategic deals such as Total’s recent acquisition of Maersk Oil. We also have seen a lot of consolidation in the oil field servicing industry - the sector probably hit hardest by the oil price crash - and we are seeing some new players emerge in the upstream sector. In the North Sea, for example,

we have seen the emergence of financial investors such as Chrysaor, Siccar Point and Neptune. In Nigeria, there have been a number of downstream transactions such as Helios and Vitol buying assets from Oando. On the upstream side, there is currently a lot of uncertainty due to the Petroleum Industry Bill (PIB) – this is promising in the medium term as it should create greater regulatory certainty and transparency which will help to facilitate investment, but there is still a lack of clarity around fiscal policies in particular. When coupled with the upcoming elections, this makes it a difficult climate for M&A in the country. However looking beyond these uncertainties, we have cause to be more optimistic in Nigeria - it will be very interesting to see how the regulation develops especially after the elections – it has the potential to create the transparency and certainty the country needs to attract international investment. Do you see oil prices increasing to $100 per barrel? An interesting question given Trump’s recent decision on Iran. We currently have the highest levels since 2014. There are a number of global political and economic factors interplaying here which makes it very difficult to predict but I think it is unlikely we will return to $100 in the near term. Is there a possibility that with the nuclear deal and US imposing sanctions on Iran and with OPEC bringing in more member countries that the prices will go up? It is certainly possible and these factors are having a positive impact on the market, but again it is difficult to predict with any degree of certainty and our clients certainly remain

Sarah Shaw

cautious in this regard when it comes to pricing their deals. You have spoken a lot about mergers and acquisitions in the downstream sector. Why were there no such mergers in the upstream sector in Nige-

We have not seen a lot of activity in the oil and gas sector in Africa recently and I think that has been largely due to the continued pressures since the oil price crash

ria? Do you think the PIB is a factor? The PIB and the uncertainty that the new bill brings is certainly a factor, though once the PIB is enacted, and once there is clarity on the fiscal regime, it may create a more stable framework that could facilitate M&A. IOCs have been looking to diversify in recent years and that is partly because of the regulatory uncertainty. Again, due to the global factors that we talked about earlier and the vandalism in Niger delta, which has not been helpful, this market is perceived as high risk for international players. The lower oil price in recent years has pushed international oil and gas companies to focus on more stable economies. However, with oil prices now in

the $ 70 - $ 80 range, we would expect Nigeria and other African countries with under developed resources to come back into play. This will especially in Nigeria be the case if international players perceive there to be greater stability around the economy with favorable regulatory dynamics as well as a reduced risk of violence. Do you see more mergers and acquisitions emerging in the next few years across Africa? We have not seen a lot of activity in the oil and gas sector in Africa recently and I think that has been largely due to the continued pressures since the oil price crash. With today’s higher prices we would expect Nigeria and other countries with under developed resources in Africa, such as Ghana and Angola, come back into focus. Apart from the uncertainty with the PIB, what do companies tell you is their fear in the Nigerian oil and gas sector? It is the lack of regulatory certainty and stability as well as the unpredictable nature of the environment – companies are concerned about the lack of a clear and well defined process to ministerial consent to transfer of an asset or shares in a company that holds an asset, as well as absence of transparency and the fear that processes may be clogged with bottlenecks and bureaucracies that delay or prevent transactions from happening. With the elections looming, this adds to the general levels of uncertainty. IOCs have of course also suffered from security issues in the Niger delta region which, together with the global downturn in the oil price and the movement towards the local content requirements in the oil and gas sector in Nigeria, has pushed them to look to exit the country.

06 BUSINESS DAY

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WEST AFRICA

ENERGY intelligence Brief Algeria’s Sonatrach to sharpen focus on petrochemicals

lgerian state energy company Sonatrach will focus on petrochemical deals to reduce the North African country’s fuel imports while boosting revenue, its chief executive said. Sonatrach said it planned to buy ExxonMobil’s 175,000 barrel per day (bpd) Augusta refinery in Sicily, Italy, and it signed a $1.5 billion deal with France’s Total deal to build a polypropylene plant in

Algeria. “Definitely petrochemicals are a top priority as we need to do more with less, to get more revenue with less oil and gas. The best way is petrochemicals,” Abdelmoumen Ould Kaddour said. The OPEC oil producer’s oil and gas revenue amounted to $33 billion last year, compared with $60 billion in 2014 before crude’s protracted price slump. However, the recent upturn in prices gives Sonatrach a little more acquisitive muscle. “The surplus in revenue due to a recent rise in the oil price should be used to buy more assets overseas. We need to be business oriented,” he said. “The good thing is that we have the full support of the presidency.”

Conoco authorized to seize $636m in Venezuela PDVSA assets

Curacao court has authorized ConocoPhillips to seize about $636 million in assets belonging to Venezuela’s state oil company PDVSA due to the 2007 nationalization of the US oil major’s projects in Venezuela. The legal action was the latest in the Caribbean to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC) over the nationalization. Conoco earlier this month moved to temporarily seize PDVSA’s assets

on Aruba, Bonaire, Curacao and St. Eustatius. That threw Venezuela’s oil export chain into a tailspin just as Venezuela’s crude production has crumbled to a more than 30-year low due to underinvestment, theft, a brain drain and mismanagement. PDVSA is seeking ways to sidestep legal orders to hand over assets. The Venezuelan firm has transferred custody over the fuel produced at the Isla refinery to the Curacao government, the owner of the facility. PDVSA transferred ownership of crude to be refined at Isla to its US unit, Citgo Petroleum, one of the sources said. For the time being, PDVSA has suspended all oil storage and shipping from its Caribbean facilities and concentrated most shipping in its main crude terminal of Jose, which is suffering from a backlog.

Wednesday 16 May 2018

finance people appointments

Sudan in talks with Saudi Arabia on five-year oil aid agreement

audi Arabia would supply Sudan’s energy needs for five years on credit under an agreement being discussed by both governments, Sudan Oil Minister Abdulrahman Othman said. Othman said the deal would provide about 1.8 million tonnes of oil a year to Sudan, which in recent months has been hit by a sharp foreign currency crisis and an acute fuel shortage that has forced people to queue at gas stations for hours. Once an oil exporter, Sudan was forced to begin importing it after the south seceded in 2011, taking with it three-quarters of the country’s oil output and its main source of foreign currency. A source in the presidency’s office in Khartoum said the final agreement is expected to be signed within days. Sudan’s foreign currency crunch arose from decades of US sanctions that were lifted last year, but new

sources of foreign currency have failed to materialise. Khartoum has been expecting financial support from wealthy Gulf Arab allies but little has trickled into

the sprawling country of 40 million people. The potential oil deal comes after Sudan’s defence minister told parliament that the government

was reconsidering its military participation in Yemen, where Sudan has sent at least 3,000 ground troops to support a Saudi-led coalition.

Cyprus-Egypt gas pipeline to cost about $1bn

planned pipeline connecting Cyprus’ Aphrodite gas field to Egypt’s liquefied natural gas (LNG) facilities will cost between $800 million

and $1 billion, Egyptian Petroleum Minister Tarek El Molla said. Egypt has rapidly increased its production of natural gas and hopes to become a hub for exporting to Europe after making a series of big discoveries in recent years. Molla, speaking at a joint news conference with Cyprus Energy Minister Yiorgos Lakkotrypis, said Cypriot gas would be used in part for domestic consumption and in part for export. Molla said last month that Egypt aims to sign an agreement with Cyprus for a pipeline to transport gas from the Aphrodite field to its LNG facilities.

Lakkotrypis said a final agreement on the pipeline would be signed as quickly as possible but did not specify when. Egypt hopes to halt gas imports by 2019 and achieve self-sufficiency. Egypt has an extensive pipeline network and two idle gas liquefaction plants ready to export new gas as it arrives. The country believes its strategic location straddling the Suez Canal and the land bridge between Asia and Africa and its well-developed infrastructure will help turn it a trading and distribution center for countries in the region and beyond. Molla said that domes-

tic gas production has increased to 5.7 billion cubic feet per day as a result of new production coming online, up from 5.5 billion in February. It has rapidly increased its production of natural gas in 2017 with four major new gas production projects coming online, some ahead of schedule. It’s newly discovered fields include the mammoth Zohr field discovered by Italy’s Eni in 2015. Egypt is targeting about $10 billion in foreign investment in the oil and gas sector in the 2018/19 fiscal year that begins in July, Molla said last month, matching the figure expected for the current year.

07 WEST AFRICA ENERGY intelligence

Wednesday 16 May 2018

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marketinsight

Oil holds near multi-year highs on Iran supply concerns

lobal benchmark Brent crude stabilized near 3-1/2-year highs as the prospect of new US sanctions on Iran tightened the outlook for Middle East supply at a time when global crude production is only just keeping pace with rising demand. US crude slipped slightly as domestic production continues to surge. The United States plans to reintroduce sanctions against Iran, which pumps about 4 percent of the world’s oil, after abandoning a deal reached in late 2015 that limited Tehran’s nuclear ambitions in exchange for the removal of US and European sanctions.

The global oil market is balanced, with top exporter Saudi Arabia and No.1 producer Russia having led efforts to curb oil supply to prop

up prices. Brent crude was flat at $77.47 a barrel, just below the $78-level, its highest since November 2014. US light crude was down

16 cents at $71.20, having touched a 3-1/2 year high of $71.89. Many analysts expect oil prices to rise as Iran’s exports fall. There are signs, however, that other members of the Organization of the Petroleum Exporting Countries (OPEC) will raise output to counter the Iran disruption. Outside OPEC, soaring US crude oil production could help to fill Iran’s supply gap. US oil output reached another record high last week, hitting 10.7 million bpd. That is up 27 percent since mid-2016 and means that US output is creeping ever closer to that of top producer Russia, which pumps about 11 million bpd.

IEA ‘ready to act’ if needed over oil market impact of US sanctions on Iran

he International Energy Agency said it stands “ready to act” to alleviate any oil market supply shortfall in the wake of the US move to reinstate sanctions on Iran in the coming months. President Donald Trump announced the US would withdraw from the Iran nuclear deal as “powerful sanctions go into full effect,” a move that could cut global oil supplies by up to 1 million b/d by the end of the year. Noting tighter oil market conditions in recent months, the Paris-based agency, whose mandate is to safeguard global energy security, said it was monitoring the market situation “very closely.” “The restoration of sanctions on Iran, which

exports 2.5 million b/d of oil and is the world’s fifthlargest exporter, may have implications for the market balance,” the IEA said. “As ever, the IEA stands ready to act if necessary

to ensure markets remain well supplied.” A key function of the IEA since its creation in 1974 is the coordination and release of emergency oil stocks among its

members to mitigate the impact of a sudden or potentially severe oil supply disruption by providing additional oil to the global market. The IEA last released emergency oil stocks in response to the prolonged disruption of oil supply caused by the Libyan Civil War in 2011. Re-imposing US sanctions on Iranian oil buyers will likely have an immediate impact of less than 200,000 b/d and block less than 500,000 b/d after six months but some analysts expect a substantial supply disruption of up to 1 million b/d. Iran produced 3.83 million b/d of crude in April up from 2.91 million b/d in January 2016, when the Joint Comprehensive Plan of Action took effect.

BUSINESS DAY

OPEC Flakes OPEC in no hurry to decide if extra oil needed to offset Iran

PEC is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new US sanctions, saying any loss in supply would take time. The Organization of the Petroleum Exporting Countries has a deal with Russia and non-OPEC producers to cut supplies that has helped erase a global glut and boosted oil prices to their highest since 2014. Officials are considering whether a drop in Iranian exports and a decline in supply from another OPEC member, Venezuela, demands adjusting the deal that runs to the end of 2018. Ministers meet in June to review the policy. US sanctions on Iran

will have a six-month period during which buyers should “wind down” oil purchases, meaning any loss of supply will not be immediately felt in the market. Oil reached $78 a barrel, its highest since November 2014, two days after President Donald Trump said the United States was abandoning an international nuclear deal with Iran and would impose new sanctions.

OPEC to stay on course with output cuts despite Iran sanctions

audi Arabia said it will ensure stability in the oil market, even as the UAE indicated that OPEC was committed to its output cuts despite the US’ withdrawal from the Iran nuclear deal and re-imposition of sanctions. “The kingdom would work with major producers within and outside OPEC, as well as major consumers, to mitigate the impact of any potential supply shortages,” the Saudi Press Agency quoted an unnamed energy ministry official as saying. “Saudi Arabia remains committed to supporting the stability of oil markets for the benefit of producers and consumers alike, and for sustaining growth in the global economy,” the of-

ficial added. OPEC, along with 10 non-OPEC allies led by Russia, are in the midst of a 1.8 million b/d supply cut agreement that is scheduled to run through the end of 2018, aimed at supporting prices and working down the glut of global oil inventories. Any loss of Iranian barrels due to re-imposed US sanctions would squeeze an already tight oil market further.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 16 May 2018

talking points

In association with

The future of energy could be offshore ISAAC ANYAOGU

aris-based energy think tank, the International Energy Association (IEA) forecasts that energy produced offshore would become an important source of renewable energy as more crude exploration activities move offshore. Currently, more than a quarter of oil and gas supply is produced offshore, mostly in the Middle East, the North Sea, Brazil, the Gulf of Mexico and the Caspian Sea. While offshore oil production has been relatively stable since the year 2000, natural gas output from offshore fields has risen by more than 50 percent over the same period. Offshore electricity generation, mainly from wind, has increased rapidly in recent years, notably in the relatively shallow coastal waters of Europe’s North Sea. Offshore wind is a rising force says the IEA, but remains for the moment a relatively marginal one at 0.2 percent of global electricity generation; wind and other marine tech-

nologies face stiff competition from a range of onshore options, including other low-carbon sources of generation “In our projections to 2040, the amount of energy-related offshore activity is poised to increase in both scenarios, although the fortunes of oil, gas and wind power vary depending on the policies in place. This resilience is good news for the offshore supply and services industry; the world’s continued need for offshore energy is also good reason for regulators to pay close attention to operational and environmental performance. “In the New Policies Scenario, in which we explore the evolution of the global energy system in line with existing policy frameworks and announced intentions, offshore oil production edges higher, while gas surges ahead to become – in energy-equivalent terms – the largest component of offshore output. Generation from offshore wind rises by more than ten times to 2040, helped by supportive policies in Europe, China and elsewhere. The organisation further says that in a Sustainable Development Scenario, in which the world gets on track to attain its climate, air quality and energy access goals, the balance

of offshore activity shifts, but the overall level remains substantial. By the 2030s, offshore investment in this scenario – currently heavily weighted towards oil – is split into three roughly equal parts as oil and (to a lesser extent) gas output growth is lower than in our main scenario, while offshore electricity generation grows twice as fast and provides 4 percent of global power generation by 2040. However, the costs of many offshore oil and gas projects have come down sharply in recent years, as companies try to ensure their viability in a shale-inspired lower price environment. In the aftermath of the oil price fall in 2014, proposed new deepwater projects were generally among the first to be delayed or cancelled as the industry moved towards shorter cycle investments, including shale. But offshore projects are now coming back into the picture, IEA says and typically looking much leaner and fitter than they did before: only the best projects are going ahead, but capital investments in the Norwegian offshore and in the US Gulf of Mexico that once required a breakeven oil price of $6080/barrel are now claimed to be robust at

$25-40/barrel. It avers that designs are being simplified, standardised and (in some cases) downsized, and a large overhang in the market for offshore services and equipment is also helping to exert downward pressure on costs – although this could be reversed as activity levels pick up. “Digitalization of offshore operations is being widely pursued as the next frontier for efficiency gains and cost reductions. Compared with the slump years of 201517, a significant near-term rise in offshore hydrocarbons investment is essential to balance the market to 2025 in both scenarios,” says the IEA. In a world in which natural gas demand rises by almost 50 percent to 2040 and oil consumption continues to grow, the interest in offshore hydrocarbon resources remains strong. Shallow water oil production from more mature basins falls in the New Policies Scenario, but this is offset by a rise in deepwater output. Although exploration activity has tailed off recently, deepwater has accounted for around half of discovered oil and gas resources over the last ten years.