BusinessDay 16 May 2019

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How Nigeria can avert a looming tsunami of poverty Noah Smith, Bloomberg

Iheanyi Nwachukwu, LOLADE AKINMURELE & Endurance Okafor

record upfront demand for the shares of MTN Nigeria Communications plc from potential investors ahead of its listing on the Nigerian Stock Exchange (NSE) today will cause the price to maintain upward trajectory in the near-to-medium term.

Investors place bids ahead of today’s listing at N90 Brokers say existing shareholders not willing to sell

The shares of MTN Nigeria Communications plc will today be listed by introduction on the Premium Board of the Nigerian Stock Exchange. The listing is anticipated to lift the overall

market capitalisation on the NSE and may trigger further primary market activities in the telecom space.

A CEO of one of Nigeria’s leading stock-broking firm told

BusinessDay that “almost all shareholders of MTN are not willing to sell”, adding that “even those that will sell are going to Continues on page 38

igeria is a much more important country than most people in the U.S. probably realize. With more than 190 million people, it’s Africa’s largest country by far (Ethiopia, the second-largest, has a little more than half as many).

And with a fertility rate of about 5.5 children per woman, among the world’s highest, Nigeria is only going to grow in importance — by the century’s end, the country is projected to have almost 800 million people, almost twice as many as the U.S. by then.

But as things stand, this African giant is failing to create the prosperity that will sustain that future population. Its oildependent economy has struggled after oil prices plunged five years ago.

The number of Nigerians in extreme poverty — generally defined as living on less than $1.90 a day — is estimated to Continues on page 38

Inside Slow growth, dual FX rates, macro stability top investors’ concern about P. 2 Nigeria – RenCap L-R: Kehinde Olugbemi, divisional head, enterprise risk management, Heritage Bank plc; Olugbenga Awe, group head, agric finance & export; Dike Dimiri, regional executive, Lagos & South-West Office; Jude Monye, executive director; Aliyu Abdulhameed, managing director, NIRSAL; Babajide Arowosafe, executive director; Ernest Ihedigbo, balance sheet financing & portfolio mgt, agricultural value chain finance & investment services; Sheriff Salawu, head, special duties, and Eze Nwakama, assistant GM, agric value chain finance & investment services, at a strategic partnership meeting between Heritage Bank and NIRSAL management at the bank’s head office, yesterday.

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news Technology expansion poses health, environmental risks as poor e-waste management persists Jumoke Akiyode-Lawanson

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s Nigeria becomes a mobile first nation with high importation of technology equipment, which means that used and obsolete electronic and electrical equipment easily find their way into the country, it is increasingly exposed to health and environmental risks as a result of poor electronic waste (e-waste) management.

In Nigeria, proper recycling and disposal of dangerous electronic components which contain mercury, lead, sulfur, phosphorus, copper, beryllium, etc are often ignored, and this poses a great danger to environmental health, hazards to humans, livestock and ecology.

Industry analysts say it is worrisome that Nigerians are unawareofthedangersinherent in careless handling of e-waste which is already leading to the deathofmillionsofpeopleinthe country and continent.

“There are major health hazards in the current disposal of electronic waste in this country. E-waste is the most rapid-growing waste stream in the world right now and in Nigeria, we are still importing dead electronics. In fact, companies actually export electronic waste to us on purpose, because it is cheaper and more beneficial for them to export to us instead of treating it within their own plants,” Ifeanyi Ochonogor, CEO, ETerra Technologies Limited and president, E-waste Relief

Foundation, told BusinessDay. According to him, every single piece of electronic device – whether it’s SIM card, ATM card, hard drive, or home electronics – is supposed to be destroyed in an eco-friendly way when it is not in use anymore.

“That is the enforced law in developed countries. Technology is not just to innovate, but also to properly dispose by closing the loop of recycling and also to engage the proper circular economy. Mobile phones and other electronics need to be disposed in an eco-friendly manner so that they don’t poison the environment and the people,” Ochonogor said.

Rapid technological growth leads to higher rate of production of electronics equipment.

This increases the need for ewaste management, in terms of awareness and opportunities in the sector.

Research carried out by Research Gate reveals that about 20 to 50 million metric tonnes of e-wastearegeneratedworldwide every year. In the United States alone, 14 to 20 million personal computers are thrown out each year, with an annual increase of 3-5percent.However,onlyabout 13-18 percent is recycled. In the end, the disused equipments end up in landfills where they pose environmental and health hazardstohumans,livestockand the soil. Some of these are incinerated,leadingtoenvironmental pollution from the fumes.

•Continues online at www.businessday.ng

Angola reaps oil reform benefits as Nigeria fiddles with PIGB

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ngola and Nigeria, two of Africa’s biggest oil producing countries, need foreign direct investments to grow their oil and gas industries, but whilst one is going ahead with significant reforms and pulling in investors, the other drags along.

With its upcoming marginal field bidding round, on-going licensing of several blocks from this year onward, and numerous opportunities across the gas value-chain, Angola has become one of the most attractive and lucrative markets for oil investors on the continent.

Production levels in Angola are expected to soar by 2020 following the country’s restructuring, including the reorganisation of the state oil company, Sonangol. This adds to a drastic revision of Angola’s legislation related to oil and gas. The government is determined to spur growth in the sector, encourage exploration in development areas, improve operation efficiencies, reduce taxes, empower the private sector, and attract investors.

“The creation of the new

Angola National Petroleum and Gas Agency officially launched through Presidential Decree 49/19 in February 2019 is one of the most significant reforms since 2017,” said Sergio Pugliese, the new African Energy Chamber President for Angola, a successful entrepreneur and oil executive, in an interview on May 13.

Creation of the ANPG is part of Angola’s efforts to streamline and overhaul the governance of its hydrocarbons sector. The agency will act as the country’s national concessionaire for hydrocarbon licences and be in charge of regulating the industry and implementing government policy. Up until now, state-owned Sonangol was responsible for such licensing activities.

Nigeria’sstorywithoilandgas sector reform efforts has been neither as significant nor as swift as what is happening in Angola.

On April 17, the Nigerian Senate reconsidered the Petroleum IndustryGovernanceBill(PIGB), which was rejected by President Muhammadu Buhari last year.

•Continues online at www.businessday.ng www.businessday.ng

L-R: Tomiwa Ogunbanwo, associate, Duale, Ovia and Alex-Adedipe (DOA) Law Firm; Adeleke Alex-Adedipe, partner, and Soibi Ovia, partner, at a press conference to announce the DOA 2nd annual business series in Lagos, yesterday. Pic by Olawale Amoo

Slow growth, dual FX rates, macro stability top investors’ concern about Nigeria – RenCap …tasks FG to raise adult literacy rate, provide 4m jobs annually DIPO OLADEHINDE, MICHEAL ANI & OLUFIKAYO OWOEYE

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oreign investors seeking to pump dollars into the Nigerian economy are confronted with three major challenges bordering on slow pace of the country’s economic growth, multiple exchange rates and macro-economic stability across board.

These bottlenecks are hurting their investment decisions, exacerbating worries in their hearts on whether Africa’s second-largest economy (supposing the marketdetermined rate of N360/$1) is a safe haven for investment decisions, global financial and investment banking firm, Renaissance Capital, said on Wednesday at its ongoing 10th Annual Pan-Africa 1:1 Investment Conference in Lagos.

“Whenever we engage with foreign investors who wish to invest in Nigeria, the biggest concern for them is on the pace of growth as they look out for

emerging economies growing at about5-7percentayear,”Charles Robertson, global chief economist and head of macro strategy, Renaissance Capital, told BusinessDay on the sidelines of the conference holding May 13-17.

“The issue of dual exchange rates hasn’t helped. The fact that you couldn’t get your money in and out easily due to FX shortages that happened in 2016 is still a problem. They are keen to understand the exchange rate in the country where they can get their money out easily,” Robertson said.

Africa’s biggest oil producer has held on to an exchange rate policywhereinvestorscouldseek dollars at a market-determined rate of N360/$ or an official window where the rates are held at N305/$. This is despite recommendations from the InternationalMonetaryFund(IMF)urging the government to remove the cap it placed on petrol prices and scrap its multiple exchange ratesthathaveovertimedeterred growth of businesses.

Since the country intro-

duced the multiple exchange regimes in 2015, direct inflows otherwise known as “sticky money” into the country have headed south. FDI into the country, at $2.1 billion in 2018, touched its lowest levels in 13 years while Ghana, Nigeria’s West African neighbour which economy could be likened to that of Lagos, attracted the largest inflow into West Africa, according to data from the United Nations Conference on Trade and Development (UNCTAD).

Aside from multiple exchange rates, Nigeria has seen weakened growth averaging about 2 percent, despite exiting an economic recession in the second quarter of 2017.

But RenCap analysts believe the country could bounce back with some rapid reforms.

“We do believe that further improvement in the business climate and a strong welcome to foreign investors are necessary for Nigeria to lift the investment rate. With some rapid reforms, a better value currency, accelerating growth

– Nigeria could become overweight again,” Robertson said.

Robertson explained that foreign direct investments tend to go up when an economy is growing well; hence countries growing at 1-2 percent, like Nigeria, do not get a lot more foreign direct investment.

“Industrialisation is not possible without raising the adult literacy rate from 60 percent in 2015 to 70 percent (perhaps in 2024?). Nigeria needs to more than double electricity consumption from the national grid, and double the investment share of GDP,” he said.

RenCap tasked President Buhari and CBN Governor Godwin Emefiele to put in place conditions that will provide jobs for 4 million Nigerians entering the workforce each year, noting, however, that industrialisation is probably required to achieve this in the long term, by pushing GDP growth up to 7-11 percent annually.

•Continues online at www.businessday.ng

Banks’ earnings from e-transactions jump by 199.22% in 5yrs …Bankers, analysts point to FinTechs, CBN’s policies HOPE MOSES-ASHIKE & ENDURANCE OKAFOR

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headventoftechnology is making huge positive impact in the financial sector as the earnings from e-transactions of the five systemic important banks grew by almost 200 percent in five years, from N33.42 billion in 2014 to N100 billion in 2018.

Nigerian banks have continued to introduce digital

products into the financial sector and their operations, driven by the need to eradicate long queues in banking halls, make cash transactions easier and faster and resolve other issues associated with payments and financial transactions. This is believed to have contributed to the growth reported in banks’ revenue from e-transactions.

BusinessDay’sanalysisofthe five-year annual financial reports of Nigeria’s tier-one banks

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revealed that the country’s largest banks grew their earnings from electronic transaction by 199.22 percent or N66.58 billion within the period.

According to the data from the financials of Nigeria’s biggest banks as analysed by BusinessDay, United Bank for Africa, despite having the second-highest revenue (N27.92 billion) from e-transactions in 2018, earned the most revenue in the five-year period with a total of N108.26 billion. @Businessdayng

The commercial bank recorded N27.92 billion from e-transactions in 2018, while in the year before it reported N20.92 billion. It attracted N30.47 billion, N17.19 billion and N11.76 billion as revenue from its e-businesses in 2016, 2015 and 2014, respectively.

This was closely followed

by First Bank, which reported a total of N107.7 billion in comparable period. The com-

Continues on page 38

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NEWS EFCC quizzes N/Assembly Clerk, seizes his passport

OWEDE AGBAJILEKE, Abuja

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he Economic and Financial Crimes Commission (EFCC)hasinterrogatedthe Clerk to the National Assembly, Mohammed Sani Omolori, on issues related to records of finances of the Assembly as well as the inaugurationoftheninthNational Assembly, BusinessDay learns.

Checks at the National Assembly on Wednesday revealed that Omolori was invited to the headquarters of the EFCC on Tuesday, May 14, 2019 and interrogated for six hours beginning from 11am to 5pm.

Apart from initial questions on records of finances of the National Assembly, it was gathered that Omolori was asked a specific question on the method of election of the Presiding Officers of the ninth National Assembly.

When contacted, authorities at the EFCC confirmed Omolori’s interrogation. The EFCC source however would not want his name mentioned because he was not authorised to speak on the matter.

Findings revealed that operativesoftheanti-graftagencyseized Omolori’s international passport.

It was also learnt that other key officials of the National Assembly including the Clerk of the Senate, Clerk of the House of Representatives as well as their deputies would be invited to the commission on Thursday.

Investigations showed that before Omolori’s invitation, the former Clerk to the National Assembly, Salisu Abubakar Maikasuwa, was equally quizzed.

A National Assembly source hinted that Maikasuwa was quizzed shortly before Omolori got to the EFCC office and the two met there.

FEC approves $1bn Chinese loan for Gurara ll Hydropower

Tony Ailemen, Abuja

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heFederalExecutiveCouncil (FEC) on Wednesday approved$1billionChinese loan from Chinese EXIM Bank for theGuraraIIHydropowerproject, whichhasthecapacitytogenerate 360 megawatts electricity.

The FEC has also approved about N10 billionfor the purchase of grains under the strategicgrains reserve programme.

Minister of water resources, Sulieman Adamu, disclosed this

while briefing State House Correspondents after the weekly FEC meeting presided over by President Muhammadu Buhari Adamu said the Council also approved N5.7 billion as revised total estimated cost for the completion of Nkari Dam in Akwa Ibom State, and also approved the appointment of a consultant for the resuscitation of the Gari Irrigation Project in Kano/Jigawa states.

The project, which was abandoned for about 17 years, was in 2017 approved for resumption with the same consultants who

were appointed in 1998.

The minister said the Council alsoapprovedtherevisedestimated total cost of N10.4 billion for the completion of Ile Ife Dam in Osun State, a project that was started in 2004 and later abandoned.

Federal Government has however given the contractors a completion period of 24 months.

Minister of information, Lai Mohammed, described the People’s Democratic Party’s (PDP) brand of opposition politics as posing great threat to Nigeria’s democracy.

Poor funding, dearth of equipment militate against reducing medical tourism - UBTH CMD IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

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he authorities of the University of Benin Teaching Hospital (UBTH) on Monday attributed the inability of the hospital to stem the tide of medical tourism in the country to lack of financial resources and equipment.

Chief Medical Director (CMD) of the teaching hospital, Darlington Obaseki, said this at a press briefing to reeled out activities lined up for the institution’s Inaugural Founders’ Day celebration with the theme, “Stymieing outward medical tourism in Nigeria: The responsibility and opportunity before teaching hospitals”.

The lecture is to be delivered by Peter Ozua, a UK-based consultant in pathology, and the first president of the UK alumni association of University of Benin graduates.

Obaseki, who said the occasion would be used to launch an endowment for the hospital, noted that the institution was blessed with world-class medical professionals that could compete favourably with their colleagues in the developed world.

“The main objectives of the founding fathers of the hospital was to attract other people to come from other countries and regions to seek medical care. But to that extent we are not ashamed to say we have not been able to do that. We have not been able to attract patients from other country to

seek medical attention in the hospital.

“Most people go outside the country to access healthcare that we should ordinary be providing. The reason was not because of lack of manpower.

We have personnel that have been trained outside the country to do open-heart surgery.

We also have neurologists to do renal transplant, among others. We have the skilled manpower that we need but the challenge is the lack of fund and equipment. That is what is resulting to this endowment.

“As we speak, we don’t have Computed Tomography (SCAN) machine. The only CT scan machine we have is the first generation type. The cost of a first grade CT scan machine is about N150 million.

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We don’t have such money.

We don’t also have Magnetic Resonance Imaging (MRI) machine. The cost is about $1 million, which is about N350 million,” he said.

He disclosed that a woman was delivered of ovarian pregnancy in the hospital, making it the 15th ovarian pregnancy to be delivered globally.

He explained that the hospital had broken several medical feats in the country in the areas of stem cell transparent, invitro-fertilisation, among others.

While appealing to members of the public to develop the culture of funding the health institution through endowment, he however, noted that public healthcare was not a profitable venture.

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news Reps, CBN disagree over N20trn stamp duties ... CBN says it collected N35bn James Kwen, Abuja

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ouse of Representatives and Central Bank of Nigeria (CBN) Wednesday disagreed on the alleged non remittance of N20 trillion stamp duty collections, as the apex bank insisted that it collected only N35 billion from the Nigerian banking public and not N20 trillion as submitted by the legislators.

Abubakar Kure, CBN acting director of banking services, gave this indication while addressing the House of Representatives Ad hoc Committee of Investigation on non remittance of N20 trillion stamp from 2010 to date.

Kure disclosed that the collection of stamp duties, standing at N35,240,916,338.54, commencing from February 3, 2016, to date have not been remitted to the Federation Account on behalf of the Nigerian Postal Service (NIPOST).

The CBN director stated, “We submitted bank statement from 2016 to date stating all the collection of stamp duties dated may 13th. Also submitted were details of bank-by-bank submission.

“Bank duties collected have not been remitted to the federation account as we haven’t received instructions from the account owners. And we’re also aware of a litigation pending at the supreme

court preventing the movement of the funds into the federation account and once that’s dealt with and instruction from relevant agencies such as NIPOST to remit same”.

Answering questions on why CBN has continued to collect stamp duties if they arere not remitting, he said as bankers, “we’re not authorised to move funds to customers accounts if there’s no instruction to that effect”.

Kure said the CBN had also not received any instruction to stop collecting stamp duties, and that if the supreme court ruling says the collected funds should be returned to those whose accounts were debited from, then the CBN in collaboration with relevant agencies and the deposit money banks will effect the directive.

Members of the Committee observed that there was no record of the collection in Jan 2016, with Kure saying that there was a secular in 2016 asking banks to remit all charges collected from stamp duties and that commercial banks have complied as they would not have violated such a directive that would attract stiff penalties to them.

Oladele Agboola, company secretary/legal adviser, Nigerian Inter Bank Settlement Systems (NIBSS) on his part, said, “Before 2016, no bank collected stamp duties from their customers because

there was no legal basis to do so, neither was there instructions for any bank to charge stamp duty on any transfer made electronically.

“However, NIBSS was engaged with the mandate to assist in weekly collation of stamp duty charges deducted from account holders in commercial banks from March, 2017 and has reported to the CBN to date and NIBSS doesn’t charge any fees for doing this.

“From March, 2017 to May 2019, NIBSS has collected the sum of N30,40,615,632.71 from commercial banks and remitted to CBN on weekly basis”.

On the disparity between CBN’s figures and those of NIBSS, Agboola said the gap from February 2016 to March 2017 must have accounted for the differences in figures.

Yakubu Dogara, speaker of the House represented by the Deputy Chief Whip, Pally Iriase while declaring the public hearing open said it was called to allow public participation in the investigation to facilitate fair hearing on the matter.

He noted that the CBN had upon the amendment to the Stamp Duty Act in 2004 directed deposit money banks to charge stamp duties on transactions above N500,000, “and since then, these charges which are meant to be remitted to the federal government coffers are alleged to have been kept away.”

US Mission elevates buyer-interest, confidence in Eko Atlantic City CHUKA UROKO

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he United States Mission in Nigeria, Wednesday, elevated buyer-interest and confidence in the upcoming Eko Atlantic City being developed adjacent to Victoria Island, Lagos, on land reclaimed from the Atlantic Ocean.

The Mission, at an agreement signing ceremony with South Energyx Nigeria Limited, developer of the 21st Century city, announced that the United States had acquired a site in the city for its new Consulate General in Lagos. A new American Consulate Office Building is to be developed on the acquired site.

F. John Bray, the US Consul General, told journalists at the agreement event that the new office building was not an immediate term project, explaining that Eko Atlantic was selected for the new office building because of the city’s world-class infrastructure.

“Purchase of land for a new Consulate General will ensure we can continue to work with Nigerians to provide opportunities for economic growth and development in Lagos,” Bray noted, adding, “the United States is proud to be participating in Eko Atlantic’s growth as part of our commitment to further enhance and strengthen the cooperation

between us and Nigeria.”

Gilbert Chagoury, founder/ chairman of the Chagoury Group, who confirmed the development, estimated the size of the parcel of the land acquired by the US Mission at 5,000 square metres, noting that the United States has always shown interest in the development of the Eko Atlantic City.

By this development, United States has joined the league of highprofile property buyers in Eko Atlantic City with its top-of-the-range and self-sustaining infrastructure.

Interest in the island city has been quite encouraging from both foreign and local investors. According to Ronald Chagoury Jnr, vice chairman, South Energyx Nigeria, activities had been slow in the city in the last three and half years, reflecting the economic slowdown in Nigeria, but have picked up dramatically in the last 12 months with average of three visits per day by potential investors.

Chagoury Jnr had told BusinessDay during a tour of the city that Eko Atlantic represented what was possible to bring a turnaround in Nigeria’s economy, explaining that all that the country needed to see growth was to get it right in the critical sectors of the economy including oil and gas, health, education, housing and infrastructure.

“We have provided prime land and infrastructure at no cost to the government. All that developers and investors need is to come and start planting houses”, he added, pointing out that the city was designed as mixed use development for residential, commercial and retail developments.

The Eko Atlantic project, which began in 2003, is a joint venture between the developers and the Lagos State government. It is aimed to provide permanent solution to protect the Bar Beach in Victoria Island from the effects of severe coastal erosion, and to safeguard Victoria Island from the threat of flooding.

The city is the most ambitious and comprehensive mixed-use development plan to come on stream in the West Africa sub-region in recent times. Modelled after the skyscraper District of Manhattan Island in New York City, it is expected that the new city will be home to no fewer than 500,000 residents, with commuter volume expected to exceed 300,000 people daily.

Eko Atlantic is designed to be self-sufficient and sustainable with state-of-the-art urban design, its own power, clean water, advanced telecommunications, spacious roads with about 200,000 trees to be planted in and around the city.

Prices of kerosene, diesel jump to twoyear high in April on higher oil prices OLUWASEGUN OLAKOYENIKAN

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L-R: Akinwunmi Ambode, Lagos State governor; Morenike Adesina-Williams, chairman, Igando-Ikotun LCDA, and Ade Akinsanya , commissioner for Works and Infrastructure, at the unveiling of the plaque to commission the newly constructed Agric Access Road, Egan, and flag off the construction of Egan-Ayobo Link Bridge in Igando-Ikotun LCDA, in Lagos, yesterday.

Pic by Pius Okeosisi

‘More benefits abound in FG’s full support of TSA’ SEGUN ADAMS

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ommendations have continued to trail the implementation of the Treasury Single Account (TSA) by the present administration in Nigeria.

Sylva Okolieaboh, TSA director in the ministry of finance, at a capacity building session with delegates from the Gambia, on Wednesday, in Abuja, lauded President Muhammadu Buhari whom he said deserved all the commendation for ensuring that the policy became a reality after years of planning and preparation.

The session, aimed at famil-

iarising the Gambians with the rigours and efforts invested by the Nigerian government and the payment gateway responsible for the smooth operation of the TSA, was part of activities lined up for the two-week study tour of the TSA in Nigeria by the Gambian government.

Okolieaboh had during Monday’s opening session told journalists that government’s support had been excellent and 100 percent, in that the President himself had done everything possible to see that the policy took flight and remained afloat.

Speaking today at the enlightenment session, he explained that government was committed to the reform such that it even held

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many unplanned benefits like job opportunities and revenue generation for individuals and organisations.

Though the TSA reform has today become the cynosure of other African countries, it is however not without a painstaking effort at enforcing compliance from Ministries, Departments and Agencies (MDAs), he said. ‘’Following the order by the President to MDAs to comply with the policy, we worked assiduously to ensure that the mandate was achieved in no more than two weeks. The rigour of executing this project belies its inherent complexities. It took painstaking efforts from the Presidency, Minister of Finance, Account

General of the Federation and other stakeholders to assuage the strain of the change on agencies thus making it as seamless as possible,’’ according to Okolieaboh.

Meanwhile, the Remita gateway has been described as an important tool that serves as a passageway for the TSA. Explaining how Remita connects to the CBN, commercial banks, micro-finance banks, card schemes and digital wallets in ensuring that authorised financial institutions and schemes can partake in the national payment scheme, Demola Igbalajobi, divisional head, Remita International Business, said, “the Remita payment gateway plays very indispensable role in Nigeria’s TSA.”

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h e av e r a g e p r i c e s paid by consumers for household kerosene and diesel in Nigeria rose to their highest levels in more than two years in April 2019, latest data from the National Bureau of Statistics (NBS) show.

After buying cheaper kerosene in the previous month, Nigerians bought a litre of the product at N316.26 on average, the highest price since February 2017, and this repres ent s a 13.57 p ercent increase from N278.49 paid a year earlier.

Similarly, the average price of diesel continued to increase, rising for the ninth consecutive month to N230.67 in April, the most e x p e n s i v e s i n c e Ma rc h 2017. When compared with the same period in 2018, the average price of the petroleum product rose by 12.88 percent.

Importation of petroleum products thrives in Africa’s largest producer of crude oil as its local refineries continued to function below optimal level, making the prices of kerosene and diesel susceptible to the volatility of crude oil prices in the international market since the removal of subsidies on the products.

Unlike the petroleum products, which increased as average crude prices jumped to $68 in April from $64 in March, cooking gas was cheaper for the third @Businessdayng

straight month in April.

The average cost of refilling a 5-kilogramme cylinder of cooking gas dropped to N2,046.53 in Apr il from N2,058.19 paid for the product in the same period last year and N2,064.45 in the previous month.

Likewise, the average price of petrol fell to N145.9 from N151.4 a year earlier, as 27 states including the Federal Capital Territory (FCT), Abuja, sold the product above government regulated price of N145, but that remained higher when compared with N145.3 paid by consumers in March 2019.

According to the statistics bureau, kerosene was most expensive in Plateau, Anambra and Enugu, while it sold cheapest in Nassarawa, Lagos and Gombe.

B o r n o, O s u n a n d Ni g e r were states with the highest average prices of diesel in April, while the product recorded its lowest average prices in Plateau, Rivers and Ekiti.

The average prices paid by consumers to refill a 5-kilogramme cylinder were highest in Bauchi, Adamawa and Borno, as consumers in Kaduna, Oyo and Osun enjoyed the cheapest averages prices, while Bayelsa top the list states with highest average prices of PMS in April, having sold at an average of N148.64 a litre as Katsina led states with lowest average prices at N143.50 a litre.

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NEWS

Emefiele decries Nigeria’s over-reliance on crude oil OWEDE AGBAJILEKE, Abuja

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overnor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has decried Nigeria’s overreliance on crude oil for government revenue, even as he expressed concern that economic saboteurs are bent on frustrating the policies of the present administration.

This comes as he dismissed media reports that Nigeria has multiple exchange rates.

Emefiele stated this on Wednesday in Abuja during his screening for reappointment as CBN Governor for a second term by the Senate Committee on Banking, Insurance and other Financial Institutions.

He said: “Part of the problem that we have seen in Nigeria is lack of respect for the policies of this country. Nigeria is very good at putting in place policies that are sound and workable. But implementation has always been almost zero. And it

... debunks report of multiple exchange rates

is arising because we see sabotage activities. We see people when policies are made, where they pick up the pieces of paper about the policy, what they think about is how do we circumvent this policy?

“The Central Bank of Nigeria, if given this mandate, will push very hard to ensure that those who seek to undermine the policies of Nigeria without respecting the laws of this country will be brought to book under any circumstances. And that is why I said please pray for us because the road ahead is still rough”.

According to the apex bank boss, a price of palm oil in the international market is more expensive than that of crude oil.

He disclosed that the CBN has disbursed over N190 billion to more than 1 million farmers in the country through its Anchors Borrowers Programme.

He added that by 2050, Nigeria would be the third largest population

in the world with 425 million people from the current 200 million. This, he noted, is a time bomb waiting to explode if there are no development driven policies that will drastically reduce the unemployment rate.

He, however, assured that the bank would use the Anchor Borrowers Programme to create employment and boost economic activity amongst the rural population.

On the country’s dependence on crude oil, he recalled that Nigeria, which controlled 40 percent share in the palm oil industry in the world in the 50’s and 60’s, has abandoned it for crude oil.

“We just came back from the IMF/World Bank programme in April. And in the World Bank’s/IMF’s World Economic Outlook, Nigeria is positioned as a country whose population will grow and rise to over 425 million people by the year 2050.

That will present Nigeria as a country with the third largest population in

the world after China and India and indeed surpassing the United States of America in population.

“I worry and I do think that we all should worry that a lot of work needs to be done to make sure that we are able to put in place policies that will make life good for this 425 million people when we are the third largest population in the world.

“So, we from the Central Bank of Nigeria from the monetary policy side, have come to realisation that using the instrumentality of the Anchor Borrowers Programme where assess to credit is being provided to our masses all over the country, that it will be a way to generate employment and boost economic activity amongst our rural population,” he said.

He said the apex bank will not only make finance available to Nigerians at low interest rate but will also make access to credit easy for the people.

L-R: Wale Ajibade, executive director, Sahara Group; Mohammed Barkindo, secretary general, Organisation of Petroleum Exporting Companies (OPEC), and Nicolaas Paardenkooper, chief executive officer, Brooge Petroleum and Gas Investment Co (BPGIC), at the ceremony that sealed the partnership between Sahara Energy and BPGIC towards the construction of a refinery that will produce IMO 2020 compliant fuels in the United Arab Emirates.

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Jumoke Akiyode-Lawanson

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ue to congestion in Nigerian court system, rising costs of litigation and delays, which continue to plague litigants, Alternative Dispute Resolution (ADR) has become more imperative.

The threat that unresolved conflicts pose to businesses and economic growth is inextricable to the importance of ADR awareness in Nigeria, because conflict unresolved has been identified as one of the most significant threats to sustainable development.

As a result, the Nigeria Association for Franchise Business Members (NAFBM), whose roles include: cooperating with government regulatory agencies to encourage conducive policies and interventions, and also to educate and cultivate ethical conduct in all transactions between franchise business actors, is urging businesses in Nigeria to unclog the judicialsystembyseekingalternative

methods of settling issues outside of the law court.

The term Alternative Dispute Resolution is used generally to describe the different methods and procedures used in resolving dispute, either as alternatives to the traditional dispute resolution mechanism of the court system or in some cases supplementary to such mechanisms.

The association has planned to further raise awareness of ADR opportunities through an event scheduled to hold in Lagos on Friday May 17, in collaboration with Africa Franchise Institute (AFI), Lagos Chamber of Commerce International Arbitration Centre (LAICIAC), Franchise Business Development Services (FBDS), Jackson Etti & Edu Law Firm, and GIZ NICOP. Franchise Business Members said;theeventwillfocusoneducating and exposing SMEs, professionals and other participants to the different methods available to themforsortingconflictinatimely manner.

Global food import bill to decline amid abundant supplies - FAO CALEB OJEWALE

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‘Health Insurance will cater for vulnerable persons, mulls Equity Trust Fund’ do State governor, Godwin Obaseki, says the proposed Health Insurance Scheme by the state government will ensure the aged, people with disabilities (PWD) and other vulnerable persons in the society have equal access to quality healthcare services.

The governor gave the assurance during a meeting with the chairman, Committee for the EstablishmentofEdoStateHealth InsuranceScheme,attheGovernment House in Benin City.

While commending members of the committee for a job well done, Obaseki said an Equity Trust Fund would be set up to raise funds that will take care of the health needs of vulnerable persons under the State Health Insurance Scheme.

“We will emphasise care for the weakest in the society by creating a structure that will attract the necessaryresourcestosupportthesustainabilityoftheEquityFund,”hesaid.

Thegovernorsaidpeoplewith the right competence and skills would be selected to ensure the implementation of the Health Insurance Scheme in the state, noting, “We are going to search all over the world to get the right

Seek redress through ADR, NAFBM urges businesses

people to implement this scheme because of the importance we place on health insurance.”

The governor noted that the revamp of 20 Primary Healthcare Centres (PHCs) across the state has restored the confidence of residents on the ease of accessing quality and affordable healthcare services in public healthcare centres.

He added that the Ward Development Committees would be mobilisedbythestategovernment tosensitisepeopleatthegrassroots to embrace the Health Insurance Scheme.

Earlier, chairman, Committee for the Establishment of Edo HealthInsuranceScheme,Mustapha Danesi, said the work plan developed by the committee would guide the state in establishingaworld-classHealthInsurance Scheme,addingthatauniquefeature of the scheme is that it would be guided with the principles of corporate governance.

Danesi urged for grassroots sensitisation and mobilisation to encourage people to key into the scheme, adding that a board of trustees should be set up for the Equity Trust Fund to allow for transparency. www.businessday.ng

8th National Assembly: Buhari laments Executive/Legislature conflicts Tony Ailemen, Abuja

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resident Muhammadu Buhari has lamented lack of cordiality in the relationship between the Executive and Legislature under the eighth National Assembly, saying, “It wasn’t the best.”

The President stated this while reviewing the relationship between the Executive arm of the government and the outgoing eighth National Assembly at a breakfast meeting at the Presidential Villa, and concluded that it wasn’t the best.

The President said the nation deserved better than it got under the outgoing leadership and hoped for a better working relationship between the two arms of government with the ninth National Assembly soon to come.

“Relations between the Executive and the Legislature were not the best in the 8th National Assembly. I sincerely hope each one of us will do his utmost to ensure there is a better working relationship between these two arms of government in the 9th Assembly so that we can serve the people better,” he said.

He argued that the principal task of the National Assembly “is to cooperate with the Executive so that together we can fashion policies that will lift our people out of poverty and out of illiteracy. I appeal to the Distinguished Senators and Honourable Members to subordinate all personal interests and ambitions to the imperative of working for the common good of our people.”

The President congratulated the members-elect on their success in winning their constituency seats and opined, “This is a great burden and a great responsibility placed on you by your people. Our citizens are faced with challenges of poverty.”

He assured the leaders that his doors remained open “to all of you who have genuine concerns or advice to improve the quality of governance and service delivery to our people.”

The President of the Senate, Bukola Saraki, assured the President that the National Assembly would maintain focus on national interest at all times.

Saraki and speaker of House of Representatives, Yakubu Dogara, attended the event.

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lobal food import bill is likely to decline in 2019, but the poorest and most vulnerable countries will not be the prime beneficiaries, according to a new UN report. Food and Agriculture Organisation’s (FAO) latest Food Outlook projects worldwide food imports to drop 2.5 percent in 2019 to $1.472 trillion.

Mostly developed countries would enjoy the lower costs, according to the report, while the import bill for sub-Saharan Africa is expected to rise. And while lower unit costs of food imports suggest that more food could be purchased for the same amount of money, that gain is cancelled out in almost all the Low-Income Food-Deficit Countries, whose currencies are weakening against the US dollar, the primary unit in international trade transactions.

Coffee, tea, cocoa and spices account for almost half the pre-

dicted decline, while the bills for sugar and cereals - despite declining international prices for the latter - would be broadly unchanged. Better news for vulnerable countries is the anticipated lower bills for vegetable oils, which typically are major imported items for them.

Published twice a year, FAO’s Food Outlook assesses market and production trends for an array of foods including cereals, fish, sugar, oil crops, milk and meat.

The current edition also has special reports on the global impact of the spread of African Swine Fever and the outlook for banana, avocado and other tropical fruit exports from the Latin American and the Caribbean region.

The new Food Outlook also offers FAO’s first supply and demand forecasts for 2019/20, with detailed assessments of market prospects for wheat, maize, rice, fish, meats, dairy, sugar, and various types of vegetable oils.

It also offers updated infor-

NUPENG urges Nigerians to resist coup against democracy JOSHUA BASSEY

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igeria Union of Petroleum and Natural Gas Workers (NUPENG), on Wednesday, called on Nigerians to resist anti-democratic elements calling for coup against democratically elected government in Nigeria.

Williams Akporeha, president of NUPENG, who fielded questions from journalists in Lagos, also urged civil society groups and allies of the labour movement to rise in unison against such moves.

Akporeha was reacting to the purported document in circulation, calling for the overthrow of President Muhammadu Buhari administration.

“The union condemns it and we urge all Nigerians irrespective of political, religious @Businessdayng

or tribal affiliations to rise up in one accord to berate these faceless individuals.

“We call on the people to assist security agencies in finding out those who are involved and where they may be hiding,” Akporeha said.

The union argued that the present democracy, whatever might be its shortcomings, was a collective struggle by all patriotic Nigerians.

According to the union, democracy has come to stay and can’t be threatened or usurped by military coup d’etat under any guise.

He said the removal of a democratic government through the barrel of gun was no longer acceptable or justifiable anywhere in the world and that Nigeria could not be an exception.

Thursday 16 May 2019

BUSINESS DAY

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Thursday 16 May 2019

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comment “Agriculture” is a fig leaf for “lack of ideas”

Send 800word comments to comment@businessday.ng

David Hundeyin

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was pleased to spend time on my farm in Daura, this morning. Agriculture will continue to be one of the priorities of our administration.

I’m proud of what we have achieved in domestic fertilizer production, financing for farmers and support and incentives for agriculture investors”.

This recent tweet from President Muhammadu Buhari is one of a series of messages from the present administration hammering on its vision of agriculture as a strategically important sector. On the surface, this is all well and good because food security is indeed one of the major issues facing Nigeria. There’s just one problem: Agriculture? What agriculture?

When an economist analyzing Nigeria’s industrial growth prospects says the word “agriculture,” and President Buhari or his Agriculture minister Audu Ogbeh use the same word, chances are the two people are talking about completely different things. To the economist, “Agriculture” is a large-scale, professional operation where terms like “supply chain,” “yield maximization,” and “futures contracts” are applicable.

To the president and his minister however, “agriculture” means something else altogether. To them, it is a

way of solving all of Nigeria’s economic and social problems by rounding up the youth of Nigeria and putting them to work in “the farm.” According to this mindset born out of the 1960s, prior to discovering crude oil, Nigeria’s economic mainstay was agriculture, ergo the key to removing Nigeria from overdependence on oil is to go back to “Agriculture,” whatever that is.

The problem with this simplistic and doe-eyed view of the economy is that first of all, there is a conspiracy of circumstances that makes agriculture much less attractive or even possible in many cases. For one thing, Nigeria is suffering the effects of climate change – reportedly losing over 3,000 sq km of land per year to the Sahara desert. Without any plan for dealing with creeping desertification, “agriculture” is just a buzzword with no policy substance backing it.

In the Middle Belt, where climate change is not so much of an issue, large scale insecurity makes the idea of agriculture somewhat ludicrous. If the government cannot (or will not) come up with a solution to the problem of large armed groups roaming through Nigeria’s essentially ungoverned countryside, then where exactly is the agriculture supposed to take place?

When those who were involved in agriculture before are forced to migrate to Lagos or become Internally Displaced Persons, then who exactly is going to farm?

These all pale into insignificance when compared to most important problem with the Buhari vision of “agriculture.” The emphasis on small scale farming is a solution for a world that no longer exists. Indeed, smallholder farming is an excellent way to ensure that a population cannot exit poverty.

Industrial agriculture is the solution to food insecurity in the 21st century, not rural smallholder farming in a country with terrible transport infrastructure and one of the longest and most inefficient routes to market in the world.

If you Google the term “Chinese vertical farming,” you will see that clearly, some are practicing industrial agriculture, and we are farming. Those are two different things entirely. As with so many other Chinese endeavours, they will inevitably be able to produce food for export that is so cheap that even Nigeria’s notoriously poor smallholders will be unable to compete. Then what will Nigeria’s government do? Ban Chinese food imports?

When in doubt, say “agriculture” The obsession with “agriculture” is not born of any desire to increase Nigeria’s economic productivity or to remedy its precarious food security situation, because as mentioned earlier, smallholder farming is good for nothing except entrenching people in poverty, and dealing with endemic insecurity across rural Nigeria will do much more for food security than handing out free money and fertilizer to an undefined group of “farmers.”

Why then, does our government seem unable to speak three sentences without mentioning “agriculture?” The answer to this is the same answer to the question “Why does our government think that banning imported Indian incense and wheelbarrows will keep the Naira stable?” It is that policy in Nigeria is being formulated by individuals who have not updated their knowledge for over half a century.

These individuals believe that Nigeria can be remade into the country of their childhood, complete with groundnut

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The obsession with “agriculture” is not born of any desire to increase Nigeria’s economic productivity or to remedy its precarious food security situation, because as mentioned earlier, smallholder farming is

pyramids, capital controls and socialist oil-boom government spending.

Consider this quote from President Muhammadu Buhari. Speaking at the National Economic Council’s economic retreat in 2016, Buhari said: “When I was a schoolboy in the 1950’s, the country produced one million tons of groundnuts in two successive years. The country’s main foreign exchange earners were groundnut, cotton, cocoa, palm kernel, rubber and all agro/forest resources. Regional Banks and Development Corporations in all the three regions were financed from farm surpluses. In other words, our capital formation rode on the backs of our farmers. Why was farming so successful 60 years ago? The answers are simple: access to small scale credits, inputs (fertilizers, herbicides etc) and extension services.”

The above quote shows that President Buhari genuinely believes that economic salvation for Nigeria in the 21st century lies in the world of the 1950s. His world and that of those around him has not expanded over the past 60 years, and now Nigeria is to become the proving ground for a ruinous economic theory of smallholder agriculture.

This means that for those of us with greater ambitions in life than smallholding destitution, we are very much on our own. If you are a young person who wants to fit into the Nigerian government’s vision for Nigeria, your best bet is to pick up a hoe and register for some free fertilizer.

The rest of us can just go to Canada I guess….

David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance.

He tweets @DavidHundeyin.

The game is the game Feyi Fawehinmi

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iverpool lost the league by 2 points from 7 point lead. Manchester City won its 2nd successive Premier League title. But this post is not about politics.

What motivates footballers on the pitch to put in a good performance for their country? If a team does well and fights to come back from 2 goals down in the quarter final to win 3–2, what motivated them to put in such a performance?

The easy answer that ‘makes sense’ is to say they love their country and that love pushed them to deliver such a performance.

But not really. Here’s one of the most important things I learned reading The Righteous Mind last year: In September 1941, William McNeil was drafted into the US Army. He spent several months in basic training, which consisted mostly of marching around the drill field in close formation with a few dozen other men. At first McNeil thought the marching was just a way to pass the time, because his base had no weapons with which to train. But after a few weeks, when his unit began to synchronize well, he began to experience an altered state of consciousness: Words are inadequate to describe the emotion aroused by the prolonged movement in unison that drilling involved. A sense of pervasive wellbeing is what I recall; more specifically, a strange sense of personal enlargement; a sort of swelling out, becoming bigger than life, thanks to participa-

tion in collective ritual.

McNeil fought in World War II and later became a distinguished historian. His research led him to the conclusion that the key innovation of Greek, Roman, and later European armies was the sort of synchronous drilling and marching the army had forced him to do years before. He hypothesized that the process of “muscular bonding” - moving together in time - was a mechanism that evolved long before the beginning of recorded history for shutting down the self and creating a temporary super organism. Muscular bonding enabled people to forget themselves, trust each other, function as a unit, and then crush less cohesive groups.

If two members of that team hate each other’s guts and are not on speaking terms, that kind of issue will trump any love of country. They will sabotage the team’s efforts, knowingly or unknowingly, and the team will never perform to the level it is capable of. This explains why team managers put a lot of emphasis on things that help to bond the team together — wearing the same suits, eating meals together, using secluded locations away from the public, getting players to share rooms and generally trying as much as possible to avoid any kind of preferential treatment for individual team members, no matter how talented they might be.

This can help to explain why some teams can perform really well even when their country has treated them abysmally. Getting the team members to bond and be ready to fight for each other is far more important than love of country or any other consideration.

Ok, I lied — this is actually about politics.

Conversations about politics in Nigeria that have been bubbling underneath the surface for

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3 or 4 years, usually take on more urgency once the starting gun for the election has been fired.

So something that keeps getting discussed a lot is how to change the political system in Nigeria. No reasonable person disagrees that the system needs changing — the question is the ‘how’.

Probably the most common view is that ‘good’ or better people need to get their hands dirty by going into the system and changing it from within.

That is, entryism or the long game of infiltration.

This solution accepts that the problem is the abandonment of politics to bad people (I’m sure there is an ancient philosopher who said something about that) who naturally do only what they can.

Once these better people enter the system, they can form a critical mass and change it from within.

It is not easy to fault this argument — it sounds about right and makes sense. But when you tease out the underlying assumption, you can see the problem with it.

The first major assumption is that the people who are entering the system are part of a team.

That is, they will remain committed to the team even when they are having to play somewhere else. Because without this commitment, the strategy makes zero sense. Why will anyone go through the hell and torture of climbing through the ranks of a Nigerian political party and then work to overturn it either by working with other sleeper agents in the system or bringing more agents into the system?

And that’s the problem — the ties are not strong enough, the bonds are too weak from the outside before going inside. As such, they snap very quickly once the person is on the inside.

The only way this strategy can work is if there are some strong bonds forged before the people go inside the system. To use one example — consider

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the Vice-President who is/was a Pastor in RCCG before he got picked as President Buhari’s running mate. No one is counting, but I can name a number of RCCG Pastors who are now in government in various capacities since he got in. Coincidence?

I think not.

Or cults. We can never tell how many people are in the system based on their membership or affiliation to one cult or the other day. As another random example — back in 2013 when a vicious fight broke out in the Rivers State House of Assembly, people remarked that they could see and hear some of the lawmakers making cult signs with their hands.

And so what is the point of all this? If you settle on a strategy of sending in good people into the current system, be prepared to lose them to the system once they go in. Whatever ties them to you is not that strong and will break as soon as it comes in contact with the system.

There’s a way for you to know once you have lost them. Listen out for when they start telling you ‘you don’t understand how the system works’.

Once you hear that, it’s done.

The best strategy still remains creating an alternative structure that solves a lot of the problems that have been entrenched in the old order — actual direct democracy to select candidates and not delegate system, clean and easily accessible register of party members, clear system of resolving disputes internally. These three things alone, believe it or not, will go a long way in changing how Nigerian politics works.

But doing this is such bloody hard work that I honestly don’t blame anyone for not trying it.

Feyi Fawehinmi is an accountant and social commentator

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Time to end the “Nigeria is rich” myth Remi Adekoya

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igeria has a smaller national budget than Algeria, Angola, Egypt, Libya, Morocco and South Africa. All these countries have fewer citizens, yet significantly more money to spend on them. While Nigeria’s 2019 budget amounts to $29 billion, South Africa, with a population almost 4 times smaller, will spend $130 billion. Egypt has a $90 billion budget with 100 million people. Elsewhere, countries like Pakistan, Bangladesh and Vietnam have larger budgets than Nigeria. No one considers these nations “rich”. Yet, among Nigerians, there persists a stubborn myth that Nigeria is a wealthy country. Who planted this idea and why does it survive?

It started with Nigeria’s 1950s proindependence leaders who needed to mobilize popular opinion against colonialism to push the British out. So, they regularly emphasized Nigeria possessed abundant economic resources being carted away by the British. “Help us drive them out and we will use these vast resources to transform your lives”, was their essential message.

Many Nigerians believed these often exaggerated claims of abundant wealth awaiting distribution and duly mobilized for independence. By 1960, then Governor-General Nnamdi Azikiwe was constructing national pride on the idea that thanks to her resources and population size, Nige-

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ria was already an “African power.”

And this was before crude-oil exports really took off in the mid-1960s. By the 1970s, General Yakubu Gowon was telling Nigerians their country’s problem was not money, but “how to spend it”.

Whatever Gowon’s intentions, his words were interpreted by many Nigerians to mean theirs was a rich country, period. Over 20 years later, during my secondary school days, we would often recall Gowon’s famous statement. Anytime someone brought it up, we would all laugh with some delight. It made us feel like part of an exclusive members-only club; the club of rich nations. Sorry, no poor countries allowed.

It also gave us a sense of hope and relief because it meant that all the problems we observed around us – no water, no light, new slums everyday – these were all easily solvable. Nigeria had the money to make all these disappear fast. The minute an honest government took over, it would be farewell problems, hello prosperity. There is great comfort in believing solutions to your problems are within arm’s reach. That all it takes is for X to happen. That’s why demagogues and charlatans will always have followers.

The first time someone challenged my belief I was from a rich country I became agitated. It was a girlfriend of mine who wasn’t Nigerian, one of those annoying types who know things they have no business knowing. I mentioned Nigeria was rich. “No, it isn’t. I checked. It has a smaller economy than some countries with just 5-10 million people like Sweden or Norway and a lower GDP per capita than the likes of Albania, Guatemala or Mongolia which are all considered poor countries,” she retorted. I struggled to contain my anger. What kind of rubbish was this girl telling me? That my entire national self-concept was wrong? Impossible!

I think many Nigerians are still psychologically reluctant to accept Nigeria’s true position in the global pecking order today. Our sense of national self is largely built around the notion that we are a country very rich in natural and human resources, just one good government away from greatness.

Some optic illusions further render this belief hard to shake.

In every state, there are a few dozen people (usually involved in politics) who possess such visibly stupendous wealth, we can be forgiven for assuming there is a lot more where that came from. Thing is, there isn’t. If you shared Nigeria’s 8.83 trillion naira national budget equally among Nigerians, each citizen would receive a paltry 45,000 naira or so; hardly enough to keep you in Panadol for the year Of course, states have budgets too, but even Lagos, by far Nigeria’s richest city, has a modest 852 billion naira ($2.4 billion) to spend on 15 to 20 million residents this year. For comparison, Johannesburg has double that budget for fewer than 5 million people. And it still struggles to provide basic social services. What we have in Nigeria is a few hundred people looting and squandering such a disproportionate amount of Nigeria’s modest resources that an illusion of plenty is sustained among the populace.

Another factor fuelling this “there is money in Nigeria” belief is that many people pretend to have more of it than they actually do. My friend who runs a crèche in one of the most expensive neighbourhoods in Lagos says she has lost count of the number of parents who drive the most expensive Range Rovers yet struggle to pay their children’s nursery fees on time. Of course, aspirational Nigerians don’t live above their means just because, they do so in response to societal pressure for them to prove they are “somebodies”; worth talking business to, hanging out with

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The Nigerian state, currently viewed by many as a fat cash-cow, is actually a very skinny cow in desperate need of some serious grass in order to stay alive

and treating respectfully. Raise your hand if you have ever pretended to have more money than you really do so as to be treated respectfully somewhere in Nigeria (my hand is raised high).

But the end result is that when you combine the authentic and visible wealth of a few hundred Nigerians living off the state with the lifestyles of all those trying hard to appear rich, the rest of society can be forgiven for believing there must be a lot of money in Nigeria.

This is bad because it encourages many intelligent people to focus not on thinking of how to create wealth, but on how to corner their own “share” of this fabulous national cake. Either by getting into government or by winning a government contract and then behaving as though the pockets of the state are bottomless.

Another consequence of this illusion is that it diminishes the sense of urgency required to tackle the existential threats Nigeria faces, ranging from mass poverty and unemployment to uncontrolled population growth and growing insecurity. At the back of many minds seems to be the implicit assumption one needn’t worry too much. Things will sort themselves out.

There is money in Nigeria.

But Nigeria is not rich. And with its rapidly-expanding population leading to ever scarcer resources, only a furious national focus on wealth-creation can save the country. The Nigerian state, currently viewed by many as a fat cashcow, is actually a very skinny cow in desperate need of some serious grass in order to stay alive. Else, one day, it will simply stop breathing.

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

The diaspora resource control Positive Growth with Babs

Babs OlugbemI

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he establishment of the Nigerian Diaspora Commission (NDC) and the subsequent appointment of Mrs Abike Dabiri-Erewa as the pioneer chief executive officer of the commission is a welcome development. I see this event as a significant attempt to tap into the enormous capacity of Nigerians in other countries in the effort toward creating sustainable policies and building our society. In my opinion, this is a form of diaspora resource control with enormous benefits for Nigerians.

Nigeria is widely known as one of the significant oil producing countries in the world. This is because we are exploring and exporting oil in its different components. However, Nigeria is better known as a gas-rich country going by the number of untapped gas resources. Nigeria should by her gas endowment be what Russia is to the European countries in terms of gas supply, revenue generation and influence within the continent.

Let’s review some tidbits on why the creating of the Nigerian Diaspora Commission is a form of external resource control and one of the best policies of the current administration. The number of Nigerians in diaspora according to

the National Commission for Refugees, Migrants and Internally Displaced Persons (NCFRMI) was about 17million as of 2018. Given this enormous number of skilled and semi-skilled Nigerians in the diaspora, the home remittances from the diaspora group were $25.1billion in 2018 as noted in the World Bank Migration and Remittances Data. The 2018 diaspora inflow of $25.1billion is one of the dominant indicators of the existence of foreign human assets and resources the Nigerian government must focus on except if the figure is in isolation of other economic data.

In the first instance, the diaspora remittance has been growing in the last ten years with a 3.2% compounded annual growth rate. It witnessed the highest growth rate of 14% in 2018 if compared with 2017 when the amount was $22billion.

The second analysis is revealing. The diaspora remittance for 2018 was $6.9billion greater than the gross oil revenue generated by the government in the same year. On the assumption that oil revenue is the highest source of income to fund our national budget, Nigeria is, therefore, the human capital producing country. This is further justified if you know that the 2018 remittance by the diaspora Nigerians was more than the 2018 Capital Importation by $8.3billion, and was 84% of the federal government budget for 2018.

In the same year 2018, the diaspora remittance contributed $17.6billion and $7.6billion to the local consumption and investment respectively.

The average per capital annum income for the diaspora remittances stood at $1,475 as stated by the Afrinvest Research.

The above expatiation is to erase the doubt in people as to the need for a separate commission to focus on the diaspora Nigerians. If you once

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breed and own a cow, and you find out your cow is producing milk for another person. Will you lay claim to the cow if there is no encumbrance to ownership?

The Nigerians in the diaspora were once raised in Nigeria or had our blood flowing in their veins.

We cannot lay total claims to their development but must have contributed to their sojourn in life.

Therefore, there is no harm if we could provide the right platform and enabling environment for Nigerians in any part of the world to contribute their quota to their nation of origin if they are willing.

Without a doubt, we need the skills and expertise of our diaspora human resources especially in science, technology, engineering and mathematics as well as in other fields of human endeavour.

The work of the Nigerian Diaspora Commission is, therefore, to implement the national policy on diaspora matters by creating the avenues to tap into the wealth and experience of Nigerians wherever they are including those living in Nigeria.

The focus area is broad and extensive. It includes all spheres of life where the input and the knowledge of Nigerians abroad could help in developing our nation. One major area where human diaspora resources are needed is education. The foundation and the work of Lee Kuan Yew in transforming Singapore was the focus on learning. Thirty years after, Singapore was rated first out of seventy countries in the Programme for International Students Assessment for 2016.

A focus on education is a focus on development.

Recently, a Nigerian Dr Dayo Olukoshi made a massive impact in the United Kingdom when he transformed a local and average public secondary school into a school that produces students with top-grade results in the university

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entrance examination. The Brampton Manor Academy in East Ham got forty-one of its students (mostly from disadvantaged backgrounds and ethnic minority groups) on the admission list of Oxford, Cambridge and the other Russel Group universities. Dr Olukoshi is an example of our diaspora resource we cannot overlook if he is interested in contributing to his motherland.

There are more of Dayo Olukoshi of Nigerian origin and some of the Historic African Diaspora who are willing and waiting for the opportunity to contribute their skills and resources to the development of Nigeria.

The Nigerian Diaspora Commission has a wide range of financial and non-financial deliverables to ensure the success of its creation.

These among others include the creation of a reliable database of Nigerians in other countries with robust information on their capacity and area of specialization. The awareness to erase any negative impression on the country is necessary to create an interest in serving Nigeria for those who had been feed with wrong news.

The government needs to improve the safety of Nigerians at home to make a profound statement to Nigerians in the diaspora. There cannot be a willingness to contribute to a society where the security of the potential contributors is not guaranteed.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

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The next four years in the South East-1 The Public Sphere

CHIDO NWAKANMA

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rom May 29, most governments in Nigeria would earn a Begin Again as they prepare for a fouryear life programme. It takes four years to earn a bachelor’s degree that serves as a ticket for life for most citizens. What would the governments of the South East be able to do for their citizens in four years?

Four years is a significant period.

In four years, the late De Sam Mbakwe accomplished so much in the old Imo State in education (Imo State University), agriculture, rural industrialisation, infrastructure of water schemes and electricity and more. Chief Jim Nwobodo did the same in Anambra State with the first state university of technology where Professor Mobisson led a team to develop home grown computers. In Lagos, Alhaji Lateef Kayode Jakande laid the foundation of today’s Lagos. I was recently at a retreat in Badagry and just as we drove in, I told my colleagues this must be a Jakande legacy. So it was: a well-laid out rest house with ample groundsto which the government is adding a hotel with conferencing facilities.

What would happen in the South East?

We will be tackling this question here.

Ahead of that, readers on social media have been pointing me to our thoughts last year as the foundation for this fresh

thinking. I thought therefore to refresh and then go forward.

Exploring and activating The Awka Exposition Many challenges confront the South East as Nigeria approaches the 20th year of its Fourth Republic. It is essential in the view of this column to tackle first the internal matters rather than the focus on the external that has characterised engagement on the Igbo challenge. For the Igbo today and into the foreseeable future, charity must begin at home.

We have noted that the Awka Declaration has within its prescriptions an opportunity for the South East to take its own medicine. Commence the process of registering persons who have spent a minimum of 10 years in states other than their ancestral roots within the South East as citizens of where they reside. It strengthens the case for national adoption of the recommendation of citizenship by residency canvassed by Ohanaeze Ndigbo.

Distinguished economist and thought leader Charles Soludo set a new benchmark with his characterisation of the Igbo as a global race. His 2017 Awka Exposition used the term race as a positive social and cultural construct for a people. Many possibilities arise from that descriptor and the mindset that it should engender.

South East states should pursue regional economic integration. The South East should do all that is necessary to position and establish as the Start-Up Region of Nigeria, with Anambra as a lodestar.

From Onitsha through Nnewi, to Awka and Aba, this can quickly happen if the Governors focus on providing enablers in policy, infrastructure, integration and linkages. As the National Competitiveness Council of Nigeria noted in its recent report, infrastructure is fundamental to enabling growth and development.

How productive are the South East states with their endowments and the factors of production they can provide or attract? It is about competitiveness, innovation and productivity. It is about managing the micro-economic factors that each state controls within the broader macroeconomic environment of the country. States through their policies and actions influence the operations, innovativeness and expansive capacity of businesses in their domains.

As it stands, the statistics are promising.

Three of the five states of the region fall within the Top Ten in the sub-national competitiveness rankings released in November 2017 by the National Competitiveness Council of Nigeria. The key drivers of competitiveness are human capital, infrastructure, institutions and economy.

Human capital looks at education, healthcare, and ability to attract external human capital. The scores see Enugu leading at number 3 nationally. Anambra places 4th, Abia 8, Ebonyi 11 and Imo 21.

The overall scores on the sub-national scale see Abia at 3, Enugu, 8; Ebonyi, 10; Anambra, 1 and 1mo, 28.

Science, technology, engineering and mathematics (STEM) are critical to enable the South East to overcome the disadvantages of policy and geography over the years. The states must develop and integrate a strategic map on developing capacities in science, technology, engineering and mathematics. Start with increasing the number of science and technology institutions at the secondary school level.

Power is next. In this age, power is a critical enabler. The South East should be articulating a plan to pluck the low-hanging fruit in the new policy direction of the Nigeria Electricity Regulatory Commission on mini-grids that says groups can

‘

There should now be closer collaboration between the merchant class and the educated class in the South East

work on independent power projects up to 1MW capacity (NERC Minigrid regulation2016). Power must be to the South East what acquisition of western education was in the 1920s through to independence. The region entered an original race in pursuit of the golden fleece. Communities taxed and tasked themselves to build schools, grant scholarships and do whatever was needful to produce the educated workforce for the new economy.

The need has arisen again, this time in developing capacity in power generation.

STEM is impossible without power. Focus on ICT is impossible without power. Communities and groups must mobilise to take advantage of the new policy environment to #PowertheSouthEast or #LightUpTheSouthEast.

What is in place to make Akulueno more than an emotional appeal? Those to whom Governors and leaders direct the call work with verifiable indices as entrepreneurs. They want to be able to see policies and procedures that would make investment sense.

There should now be closer collaboration between the merchant class and the educated class in the South East. When our firms, mostly medium and small scale, collaborate with scientists, engineers, mathematicians and liberal arts scholars in the many universities in the East they would identify and solve significant problems. The synergy of the Big Corporates and SMEs with the academia could unleash Ogbunigwe Version2 or the reinvention of science and technology in Eastern Nigeria.

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.

Sustainability and transportation in Nigeria

Festus Okotie

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he essence of the term sustainable is that which can be maintained over time .This implies that any society or structure that is unsustainable cannot be maintained for long and will cease to function at some point.

From an environmental stance, the term refers to the potential longevity of vital human ecological support systems such as the planet’s climatic system ,systems of industry, forestry ,agriculture ,fisheries and human communities in general and the various systems on which they depend.

The basic definition of sustainability relates to society, economy and environment .The present day Nigeria transportation structure is far from the above expectations which leads us to highlighting the importance of a good sustainable transportation system which is pivotal to the growth and economy of any successful nation.

The importance of this topic and its ability to ensure continuity and longevity of our transport system is of extreme importance at this time especially because of the consistent decline of our transport infrastructures, lack of professionalism within the industry, use of obsolete technology systems, poor information system and lack of modern security systems to monitor and detect some of the inherent

leakages and anomalies within the system. Fixing and plugging some of the leakages within the systems which cause us to lose billions of dollars annually has the potential to create massive employment opportunities and open up the nation ailing economy.

To achieve sustainable transportation requires knowledge of its effects on economy, environment and society. This present scenario indicates that transportation is unsustainable in Nigeria because of the excessive number of fatalities and injuries due to accidents on our roads, poor transportation infrastructure, lack of professionalism within the transportation sector, regular traffic congestion bordering on gridlock on our roads, high level insecurity in the nation, high pollution rate ,lack of proper maintenance of our transport facilities, ocean pollution due to oil spills and other major challenges been experienced in our nation.

Economy and transportation are two members of the same body that cannot be separated from each other. With proper planning, suitable foresight, discipline and determination we as a nation can collectively fix all the major challenges we are experiencing and increase the economic progress and sustainable future of generations yet unborn.

The negative challenges of deep corruption we have been facing for decades has eaten deeply into the core nucleus of the economy, society and our present culture seems to abhor it. All these have impacted negatively on our image and reputation globally which contributes to the negative effects on our economy and reputation of our nation in the international community.

Transportation and its economic factors interact easily with each other. The transport sector is one of the most important component of the economy of any nation impacting on development and the welfare of populations. When transportation systems are efficient, they provide social and economic op-

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portunities and benefits that result in positive multiplier effects such as better accessibility to markets, employment and additional investments. When transportation systems are incomplete in terms of capacity or reliability, they can have an economic cost such as decreased or missed opportunities. Efficient transportation reduces costs, while inefficient transportation increases costs. Transportation also carries an important social and environmental load, which cannot be neglected.

Thus, the economy of any nation has two impacts on transportation; direct, and indirect. Direct impacts relates to accessibility change where transport enables larger markets and enables costs savings, saves time and ensure safety. Indirect impacts relates to the economic multiplier effects where the price of commodities, goods or services drop or their variety increases. Business and trade also increases, there is improvement in agriculture, extension services and products, thereby causing increased transportation demand in the nation.

Efficiency of the transportation sector has effect on increasing productivity in the economic system of our nation, these two boost each other continuously.Investments in transportation sector has a big role of increasing the GDP of our nation, add value to the quality of life and living conditions of our People.

Since the transportation system was created to solve human needs ,its Performance should be strategic in order to meet the needs of the industry and our nation at large, so there should not be discrimination of who leads the transportation sector and its agencies in our nation, the best man qualified for the job should be given the opportunity in order for the sector to be sustained and perform its statutory function for which it was created.

Greater efforts should be made by this current administration to ensure professionalism, equity, fairness in appointing well experienced

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and seasoned professionals in transportation to all our transportation parastatals and its agencies in our nation.if the desire to explore the great opportunities in the transportation sector are genuine and we must also review some of the old policies because of the changes that has occurred over the past years ,we must also adapt and adjust our policies to be dynamic to blend with the current changes in our nation today.

Sustainable transportation refers to the broad subject of transport that is sustainable such that it impacts positively on social environment and climate improvement and encourages continuity of energy supply. Some of the components for evaluating sustainability include the type of vehicles used for road, water or air transport while the source of energy and the infrastructure used to accommodate the transport are good road network, railways, airways, canals and terminals.

Transport operations and logistics as well as transit oriented development are also involved in evaluating the strength and performance of the sustainable transport of any nation, it is also largely measured by transportation system effectiveness ,its efficiency as well as the environmental and climate impacts on its immediate society.

We all will agree that our nation lags behind in all the above mentioned areas because of our lack of determination, discipline resulting in inefficiencies in our transport system and therefore we summarize that the way forward,is for us to go back to the drawing board by highlighting all our grey areas and also organize a national transportation stakeholder forum which will address all our challenges within the industry, organize a brainstorming session and have a blueprint as a guide for a lasting solution to our nation’s transportation challenges.

Okotie, a maritime transport specialist, writes via fokotie. bernardhall@gmail.com, Fokotie@bernardhallgroup. com

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Thursday 16 May 2019

BUSINESS DAY

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Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Mr President, please sign the waiting bills into law

T

o convince Nigerians that this administration is reform minded, President Muhammadu Buhari needs to sign some critical reform bills, already pass ed by the National Ass embly and awaiting his assent. Some of these bills include the Petroleum Industry Governance Bill, PFIB, the electoral act 2010 (amendment) bill and the Companies and Allied Matters bill.

The PIGB is one of the oldest bills in the Nigerian legislature and is one of four parts of the Petroleum Industry Bill (PIB), which seeks to reform the petroleum sector along sound corporate governance and institutional best practices. It has suffered delays, antagonism and nitpicking and was only passed recently by the Eight National Assembly. However, it was rejected by president Buhari in July 2018 on the excuse that it reduces his powers as the minister of petroleum, among others.

Als o redrafted is the electoral act 2010 (amendment) bill, rejected four times by the president, over the inclusion of card

readers and other contentious issues.

The National Assembly, even with over 500 bills still pending in the two chambers, bent over backwards to rework the bill, with six others, to address concerns rais e d by pre sident. Although most of them disagreed with the president, but due to political exigencies, the National Assembly could not muster the majority to override the president and pass the bill into law. They were therefore forced to rework the bills to address the concerns of the president.

As the Senate leader, Ahmad Lawan, indicated, “the rationale for withholding assent on the bills have been addressed by the technical committee of the Senate.”

Now that the President’s c on c erns hav e b e en a ddressed, he has no reason to continue to withhold assent to the bills. These are critical bills that will improve transparency in the petroleum sector and improve the efficiency and integrity of elections in Nigeria. Sadly, if the bills fail to become law before the Eight National Assembly prorogues, the bills will lapse and the process begins afresh with the Ninth assembly. Nigeria cannot af-

ford that rigmarole.

Another critical bill that has been waiting for presidential assent for a while now is the revisedCompany and Allied Matters Act, CAMA, Bill 2018, which was meant to replace the CAMA Act 1990 to improve Nigeria’s doing business environment and activate growth and kickstart expansion in the fledging MSME subsector.

The CAM 2018 bill is perhaps one of the single most important legislation passed by the National Assembly to reform Nigeria’s opaque business operating environment and laws. It was achieved through a conscious effort and collaboration among the Presidential Enabling Business Environment Council (PEBEC) chaired by Vice-President Osinbajo and the Enabling Business Environment Secretariat (EBES), the National Assembly Business Environment Roundtable (NASSBER) which was created as a platform for the legislature and the private sector to engage, deliberate and take action on a framework that will improve Nigeria’s business environment through a review of relevant legislations and provisions of the Constitution, the Nigerian Eco-

nomic Summit Group and Nigeria Bar Association’s Section on Business Law, supported by the defunct ENABLE II programme of the UK Department for International Development (UK-DfID).

It then beggars belief that the same presidency that facilitated the passage of the CAM bill 2018 is withholding or delaying assent to the bill.

President Buhari has so far refused assent to 41 bills passed by the Eight Assembly. Some of the reasons he gave for withholding assent are not altruistic enough, and even at that the National Assembly had done its best to address most of his concerns. He needs to be prevailed upon to sign these critical bills into law before the expiration of the tenure of the Eight Assembly, else it will be a monumental waste of critical resources and time and the postponement of critical reforms necessary to transforming Nigeria’s economy and business environment. We cannot be so relaxed and postponing reforming governance and business environment while others who are doing far better than us are busy further reforming their economies to attract more investments.

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Thursday 16 May 2019

BUSINESS DAY

BUSINESS TRAVEL Emirates posts profit of $631m, 44% down from previous year Stories by IFEOMA OKEKE

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he Emirates Group has posted a profit of AED 2.3 billion (631 million dollars) for the financial year ended 31 March 2019, down 44 percent from last year.

The Group’s revenue reached AED 109.3 billion (29.8 billion dollars), an increase of 7 percent over last year’s results.

The group’s cash balance was AED 22.2 billion (6.0 billion dollars), down 13 percent from last year mainly due to large investments into the business, including significant acquisitions and payment of last year’s AED 2 billion (545 million dollars) dividend.

In line with the overall profit, the Group declared a dividend of AED 500 million (136 million dollars) to the Investment Corporation of Dubai for 2018-19.

Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group, said: “2018-19

has been tough, and our performance was not as strong as we would have liked. Higher oil prices and the strengthened US dollar eroded our earnings, even as competition intensified in our key markets. The uptick in global airfreight demand from the previous year appears to have gone into reverse gear, and we also saw travel demand weaken, particularly in our region, impacting both dnata and Emirates.

“Every business cycle is different, and we continue to work smart and hard to tackle the challenges and take advantage of opportunities. Our goal has always been to build a profitable, sustainable, and responsible business based in Dubai, and these principles continue to guide our decisions and investments. In 2018-19, Emirates and dnata delivered our 31st consecutive year of profit, recorded growth across the business, and invested in initiatives and infrastructure that will secure our future success.”

In 2018-19, the Group col-

lectively invested AED 14.6 billion (3.9 billion dollars) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and staff initiatives, a significant increase over last year’s investment spend of AED 9.0 billion (2.5 billion dollars).

In February, Emirates announced a commitment for 40 A330-900s and 30 A350-900s worth 21.4 billion dollars at list prices in an agreement signed with Airbus, to be delivered from

2021 and 2024 respectively.

The airline will also receive 14 more A380 deliveries from 2019 until the end of 2021, taking its total A380 order book to 123 units.

Dnata’s key investments during the year included: the acquisitions of Q Catering and Snap Fresh in Australia, and 121 Inflight Catering in the US; the buy-out of shares to become the owner of Dubai Express, Freightworks LLC; and a 51 percent majority stakeholder of Bolloré Logistics LLC, UAE; the build of new

Dana Air joins call for stem cell donors for cancer patient

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ana Air has joined the search and call for donors of stem cell for a patient diagnosed with cancer of the blood.

Astrid, 41, a Nigerian- German mother, is in need of a stem cell transplant to survive a disease she was diagnosed with in September 2018, after

visiting the doctor for sore throat.

Speaking on Dana Air’s call for donors, Kingsley Ezenwa, the Media and Communications Manager of Dana Air, said ‘’Project PINK BLUE, a cancer fighting non-governmental organization that we have been supporting for years now in partnership with Bone Mar-

row Registry Nigeria (BMRN) and The SunFlower Fund is organizing donor drive events across Nigeria and we are calling on Nigerians to help save Astrid by registering and signing up as donors.’’ ‘’To stay alive, Astrid needs a matching stem cell donor and anyone who is healthy and between the 18-45 years

L-R: Ibrahim Oloriegbe, Senator-Elect for Kwara Central; Njide Ndili, country director, PharmAccess Foundation; Peter Sands, executive director, Global Fund; Monique-Dolfing Vogelenzang, CEO, Stichting PharmAccess Group; Jide Idris, Commissioner for Health in Lagos. www.businessday.ng

cargo and pharma handling facilities in Belgium, the US, the UK, the Netherlands, Australia, Singapore and Pakistan; the acquisition of German tour operator Tropo, and a majority stake in BD4travel, a company providing artificial intelligence driven IT solutions in the travel sector.

Across its more than 120 subsidiaries, the Group’s total workforce increased by two percent to 105,286, representing over 160 different nationalities, mainly influenced by dnata’s new acquisitions and

its international business expansion.

Sheikh Ahmed said: “In 2018-19, we were steadfast with our cost discipline while expanding our business and growing revenues. By slowing the recruitment of non-operational roles, and implementing new technology systems and new work structures, we’ve improved productivity and retarded manpower cost increases.”

He concluded: “It’s hard to predict the year ahead, but both Emirates and dnata are well positioned to navigate speed bumps, as well as to compete and succeed in the global marketplace. We must continually up our game, that’s why we invest in our people, technology, and infrastructure to help us maintain our competitive edge. As a responsible business, we also invest resources towards supporting communities, conservation and environmental initiatives, as well as incubating talent and innovation that will propel our industry in the future.”

NAHCO expands export warehouse capacity to handle increased cargoes

old can help by registering as a potential stem donor by attending the donor drive taking place at: GIZ Office, 592 Idejo Street, beside Development Bank, Victoria Island, Lagos.

11am-5pm, or visit www.helpastrid.com. The registration takes only a few minutes and doesn’t hurt or involve any cost implication.’’

The search for her genetic twin is very difficult.

The chance of finding this match is 1:100 000 and the best chance of a match is within your same ethnic background. There is only a 25 percent chance that a sibling will be a match. The remaining 75 percent chance depends on an unrelated matching donor being found.

As part of its broad corporate social responsibility (CSR), Dana Air has been in the forefront of supporting sickle cell and cancer awareness programs across Nigeria.

The airline has also been supporting one of the organizers of the events –Project PINK BLUE, in its drive to create awareness about cancer, and assist survivors across the country.

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ahco aviance has expanded the size of its export warehouse, as part of plans tailored at increasing capacity to take of growing cargo volumes.

The new facility, comprising three sections; Annex Extension, the Canopy Area and the Ramp Area is coming on the heels of expanding airfreight volume in the country.

The Annex extension has a dimension of 270 square metre; the Canopy area 352 square metre and the Ramp area 55 square metre.

The facility provides adequate space for packaging rising cargo exports by clients who have demonstrated preference for nahco as their handling partner of choice Published reports showed that export tonnage for Q1, 2019 stood at 3,679,283. This is 950,308 more than the Q1, 2018 figure of 2,728,975 square metre. The trend is widely expected to continue.

Nahco handles more than 65 percent of export cargo in the country. The company is the favoured choice of leading airlines like British Airways, Delta, Emirates, Ethiopian and Turkish Airlines.

Commenting on the new facility, Olatokunbo Fagbemi, @Businessdayng

the Group Managing Director/CEO, said the company will continually upgrade on its facilities and modernize its operations as a matter of policy.

“We are constantly improving and innovating and we are happy our clients are delighted about what we are doing. The new nahco aviance is one that plays by the rules and ensures that all its processes meet international standards. We will continue to delight our clients in many more ways and guarantee them great satisfaction.”

According to her, NAHCO is doing all it can to support the Federal Government in its export drive and would support all exporters, both big and small, in order to help achieve this.

NAHCO’s ultra – modern warehouse, the first of its kind in the West Africa sub-region, was commissioned in 2012 as part of efforts by the company to offer excellent cargo services to its clients.

Only recently, the Company received an award for consistent payment of dividends. The Award, one of several for the Company, was in recognition of the Company’s persistence in rewarding its shareholders who have put their faith in NAHCO.

Thursday 16 May 2019

BUSINESS DAY

RESEARCH&INSIGHT

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In association with

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

briu@businessday.ng

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How three regions account for 71 percent of the Nigerian economy TELIAT SULE

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he Nigerian economy realised N1.103 trillion from internally generated revenue (IGR) in 2018. At the rate of N360/$, the total revenue generated would amount to $3.07 billion. The story is not in which state generated what; it is in the fact that over seventy percent of the total IGR came from three regions. This has implications for so many things. Internal migration or inter-state relocations will continue until there is some equilibrium is reached, because as human beings, Nigerians will continue to move to regions or states where there are more economic opportunities.

Knowing the regions that contributed the most to the total IGR required that we regrouped the states in Nigeria along seven geopolitical zones or regional economies. The 36 states in Nigeria (Excluding FCT Abuja) were divided into seven economies or regions, with Lagos State, the commercial nerve centre of the nation and Africa’s fifth biggest economy treated as a region on its own. The essence is just for a more comprehensive analysis with a period of reference between 2016 and 2018. Thus, we have Lagos, South West (SW), South East (SE), South-South (SS), North Central (NC), North West (NW) and North East (NE). The major parameters adopted are the internally generated revenue (IGR), its growth rates among states, regions and the share of each regional economy in total IGR of the 36 states in focus.

Beyond the fact that the 36 states in Nigeria made N1.103 trillion as internally generated revenue (IGR) in 2018, which was 17.83 percent higher than N936.47 billion IGR made in 2017, we can also unveil more insights into the financial performance of states in Nigeria; including the IGR figures as they revealed a lot of weaknesses that states or regions must urgently addressed.

For instance, within the south east regional economy, why should Enugu State generate more IGR than Anambra, which is an industrial state with many billionaires? Still in the south

Source: NBS, BRIU east, Abia State has a very vibrant SME clusters within the Aba market, and assuming we measure the size of a state economy by measured by its IGR, Enugu State’s economy will be bigger than Abia and Ebonyi states combined (using 2018 IGR).

In the south west regional economy comprising Ogun, Oyo, Ondo, Osun and Ekiti states; the combined 2018 IGR of Ondo, Ekiti, Osun and Oyo states is N66.27 billion, much lower than N84.55 billion IGR realised by the Ogun State last year.

Oyo, Enugu and Kaduna states were the capitals of the then western, eastern and northern regional governments. In 2018, Kaduna State accounted for 24 percent of the IGR from the north west regional economy. Enugu State accounted for 29 percent of south east regional economy. On its part, Oyo State’s share of south west regional economy was just 16 percent, meaning the state made the least contribution to regional growth in 2018 among the states that were the defunct regional capitals.

Sokoto, Ondo, Imo, Jigawa and Gombe

How much of the total IGR did each region realise?

If the IGR of each region were to denote its economic size, then Lagos State, which contributed 37 percent of the total IGR in 2016; accounted for 36 percent in 2017 while in 2018, 35 percent of the total IGR made by the 36 states came from Lagos, would automatically occupy the first position.

It is followed by the south-south regional economy. In 2016, this region realised 24 percent of the total IGR of the 36 states. It also made 23 percent of the total IGR in 2017 while in 2018; the SS region contributed 23 percent of the total IGR made by the 36 states in Nigeria.

The SW region contributed 14 percent of the total IGR in 2016; this was followed by 13 percent in 2017, and in 2018, the contribution of the region stood at 14 percent. So, if economic vibrancy in Nigeria is captured by the amount of IGR state governments make, the Nigerian economy is just

Recommendations An overhauling of state’s IGR collection scheme There is a need for some states to overhaul their IGR collection mechanism. Ordinarily, one would have expected a state such as Anambra to be the leading IGR state in the south east. That is not the case today as Enugu State is clearly in the lead. Anambra State, with the Onitsha and Nnewi industrial estates, needs to increase it tax base so that those that have the means to pay taxes truly pay. Similarly for Abia which is reputed for the Aba market and its astute entrepreneurship base. In 2017, it was reported that Aba traders exported N1 billion worth of goods weekly. That amounted to N52 billion in that year. With much trade promotions by the state government, Aba market is now a force to reckon with, and as a result, we do not expect that export revenue in 2018 will be lower than its level in 2017. This implies that even if the state government imposes 5 percent tax on N52 billion, it would have generated about N2.6 billion as direct assessment tax. However, Abia State Government generated just N750 million in 2018 as direct assessment tax. This is a far cry when compared with N1.05 billion Edo State generated as direct assessment revenue; N2.45 billion in Imo; N1.59 billion in Kwara; N5.14 billion in Ogun; and N3.58 billion in Oyo State.

Furthermore, for regions, particularly the northern regional economies not to continue in the shadow of the southern regional economies, the National Assembly needs to change the constitution to a point where states and regions will be allowed to develop at their own pace. This includes allowing states greater access to mineral and other natural resources in their domains.

12734BDN

Source: NBS, BRIU

states show prospect During the reference period, that is, from 2016 to 2018, the national IGR growth rate was 15.96 percent. Nineteen states outperformed the national IGR growth rate while 17 states trailed the outperformers.

Sokoto State recorded the highest IGR growth rate among the states during the period. It grew its IGR by 98.40 percent in 2017, and further recorded 108.03 percent growth in 2018, thus ending the 3-year period with an IGR growth rate of 103.22 percent.

Ondo State posted 25.83 percent IGR growth rate in 2017, and 126.83 percent increase in 2018, thus it ended the period with a 76.33 percent IGR growth rate.

Imo State’s IGR grew by 16.69 percent in 2017 and 117.26 percent in 2018. Its 3-year IGR growth rate was 66.98 percent. Jigawa State recorded 63.57 percent IGR growth rate within the 3-year period, while Gombe State grew its IGR by 59.26 percent. These are the five states with the highest IGR growth rates between 2016 and 2018.

among three regions-Lagos, South-South and South West; the rest are not in the equation. The three aforementioned economies, Lagos, SS and SW, contributed 75 percent of the IGR in 2016; 72 percent in 2017, and 71 percent in 2018.

This is because, the north central accounted for just 7 percent of the IGR each year from 2016 to 2018. The north east accounted for 4 percent of the total IGR in 2016; three percent in 2017 and another 4 percent in 2018. No doubt, the north west didn’t rest on its oars during the period. From 8 percent share in 2016, the region increased its share of the total IGR to 11 percent each in 2017 and 2018.

In spite of this, the three economies in the northern region-NW, NE and NC, when combined, resulted in 19 percent in 2016; 21 percent in 2017, and 22 percent in 2018; is not as big as the south-south regional economy which contributed 24 percent of the IGR in 2016, and 23 percent each in 2017 and 2018.

But the northern economy is slightly bigger than south west regional economy (excluding Lagos), which accounted for 14 percent of the total IGR in 2016; 13 percent in 2017; and 14 percent in 2018.

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Thursday 16 May 2019

BUSINESS DAY

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

briu@businessday.ng

08098710024

Nigeria air transport statistics: bright prospect in the pipeline ISAAC ESOWE

N

igeria transport system comprises road (which is widely used), water ways, rail and air transportation. The aviation sector – comprising the airlines together with the airports, air navigation and other essential ground services– the sector has 31 functional airports—5 international and 26 domestic airports, with 9 domestic airlines and 34 international airlines all of which amounted to 43 airlines operational in Nigeria.

The recent harmonized data of the aviation industry shows a positive outlook for air travel business, improved safety, stability, robust regulatory oversight, increase passenger volume, more applications and renewals of the Air Operators Certificate (AOC) among others, according to the data released by the Nigerian Civil Aviation Authority (NCAA) and National Bureau of Statistics (NBS).

The Nigerian aviation sector experienced a steady rise in air passenger traffic in 2018. This was revealed in the latest Air Transport Report 2018 as released by the NBS. Various components of the air transport industry witnessed significant growth in the year under review as against its state in the preceding year. Interestingly, improvements in the sector are evident as a total of 17.2 million air passengers passed through the Nigerian airports. International passengers hit 4.4 million as against 4.05 million passengers in 2017 representing 9.42 per cent growth. On the other hand, the total number of domestic passengers also increased by 23.19 per cent to 12.8 million in 2018.

The total number of air passengers who flew on domestic airlines within Nigeria in Q4 2017 amounted to 3.6 million. This figure grew by 4.89 per cent YoY and declined by 0.56 per cent quarter-on-quarter QoQ. Steady growth in the number of domestic and international passengers at 6.46 per cent and 1.01 per cent respectively was recorded in Q4 2017.

For the first time in the year, the sector recorded more arrivals than departures for both domestic and international travellers in Q4

Source: NBS, BRIU

2017. Arrivals and departures in all Nigerian airports in the reviewing quarter were 1.8 million and 1.3 million respectively. Lagos, Abuja, Port Harcourt, Owerri, and Kano airports served over 92 per cent of total passengers in the Q4 2017.

The NBS report also showed that international departures rose by 13 per cent in 2018 YoY as against 1.99 million in 2017. The aviation data further indicated that 2.25 million international travellers departed Nigeria in 2018. This implies that more international travellers departed Nigeria in 2018 than in 2017.

Similarly, air passengers’ arrival also increased to 2.18 million in 2018 as against 1.94 million in 2017. Judging by the figure, this increase

indicates a 12 per cent YoY rise in international air passengers.

In the same way, domestic travellers both departures and arrivals rose by 23 per cent in 2018. For domestic travellers, arrivals increase by 6.4 million people. In 2018, the number of domestic departures was 6.37 million passengers compared to 5.18 million in 2017, this represents 23.19 per cent increase YoY. Findings from the harmonized aircraft movements (domestic and Foreign) between January and March 2019 showed that no fewer than 3.3 million air travelers passed through Nigeria. This was achieved through the activities of 30 airlines on the international routes which operated a total of 3,872 flights and flew 946,639

passengers while domestic airlines operated a total of 14,735 flights and flew 22.3 million passengers across the country. Domestic passenger movements represented 71 per cent of the passenger traffic while international routes accounted for 29 per cent.

A further break down showed that aircraft traffic reached 290,328. The total number of international aircraft traffic recorded was 55,961 in 2018 as against 40,328 in 2017.

This amounted to 38.92 per cent growth rate.

Similarly, the total number of domestic aircraft traffic was 234,367 in 2018 compared with 210,693 in 2017. This represented 11.24 per cent growth rate.

However, a growth of 1.94 per cent was recorded in 2018 in total cargo traffic as against 2017. Similarly, there was 19.96 per cent increase in total mail traffic recorded in 2018 when compared to the same period last year.

Aviation sector’s contribution to GDP The aviation sector’s contribution to GDP in 2018 increased to 0.10 per cent in the preceding year. NBS data on air transport contribution to (GDP) at current basic price shows that air transport contributed ₦105.8 million which represents 0.09 per cent to Nigerian GDP at the end of 2017. In 2018, air transport contributed a total of ₦149.3 million meaning that is contribution grew by 0.4 per cent YoY. The improvement recorded by the sector can be attributed to an increase in the sale of tickets within the country. However, this feat was only possible because of the relatively stable economic conditions for the past few years and the naira maintaining a reliable margin to the Us dollar and other globally traded currencies.

Consequently, air transport within Nigeria creates economic benefits, the connected cities and markets, which are important infrastructure assets that enable foreign direct investments, business clusters, specialization and other spill-over impacts on an economy’s productive capacity.

Source: NBS, BRIU www.businessday.ng

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Thursday 16 May 2019

BUSINESS DAY

COMPANIES & MARKETS

17

Tier-one banks most traded as stocks record longest bear run in 8 months

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

MARKETS

Slump in rights issue mirrors struggling Nigerian economy DAVID IBIDAPO

S

low-down in rights issuance of listed companies on the Nigerian Stock Exchange (NSE) market in the first quarter of 2019 is a mere reflection, amongst other factors, the struggling state of the Nigerian economy and current trend in the Nigerian equity market.

So far into 2019, the NSE approved two rights issues

by Fidson Healthcare Plc and Sovereign Trust Insurance with total issues valued at N5.08 billion in January respectively.

This is low compared to N90.6 billion worth of right issues recorded in the first quarter of 2018 when the economic grew 1.95 percent and all share market index picked up

8.52 percent before factors surrounding political uncertainty began setting in.

Analysts believe that slow-down in economic activities in Nigeria could see companies not motivated to raise more funds for expansion purposes except for the reason to clear up debt obligations, especially with companies having high leverage ratios.

Evident in the Nigerian GDP report released by the National Bureau of Statistics (NBS), since the country exited recession in the second quarter of 2017, GDP growth has barely struggled to hit a 2 percent growth.

While investors on the Nigerian stock exchange (NSE) market may have watched values for their investments erode due

to the persistent bearish trend in the equity market space, listed companies are also faced with the challenge of persuading shareholders to subscribe cash for new issues due to lower share price levels.

Current bearish trend in the market may see companies apply brake on the move to raise more cash either to settle debt obligations or for expansion through rights issue this year as against the year 2018.

The year 2018 recorded rights issues which amounted to N237.6 billion initiated by 6 companies listed on the exchange as stated on the X-compliance report published on by the NSE in 2018.

These companies included Flour mills with a rights issue worth of

N39.9 billion, Morrison Industries (N502 million), Lafarge Africa plc (N131.7 billion), UAC of Nigeria Plc (N15.4 billion), Consolidated Hallmark Insurance (N500 million) and Union Bank plc (N49.7 billion).

The NSE approve d rights issue of 750,000,000 ordinary shares of N0.50 each at N4.00 per share of Fids on amounting to N3 billion in worth, w h i l e r ig ht s i ssu e o f 4,170,411,648 ordinary shares of N0.50 each at N0.50 per share, amounting to N2.08 billion for Sovereign trust.

However, the Nigerian equity market has not witnessed any rights issue after the conclusion of the 2019 general elections, which agreed with analysts’ stance on the fact that there will only be more rights issues on a change of government.

Explaining the idea behind right issues, “the reason why most companies have not gone ahead with right issues is because of the pricing of stocks.

Stock prices are currently down and market is currently down. Companies would prefer to issue rights when prices are favourable” Paul Uzum, a Lagos based stockbroker told BusinessDay. Since the conclusion of the 2019 general elections, negative sentiments of the market have driven the all share index performance down by 13.05 percent to 28,430.37 points as at the close of market on Tuesday, 4.95 percentage points lower than FY 2018 bearish market performance of 18 percent.

Meanwhile year to date analysis have also shown that performance of the NSE is down 9.34 percent

grossly underperforming other markets in sub-Saharan Africa and emerging markets.

“When market picks up we will see a lot of right issues, however, the current administration doesn’t look like a stimulating factor for market uptick. A change in administration after the 2019 elections would have seen a market boost in which companies would take advantage of in right issues” Uzum added.

While investors awaits a clear policy direction which should boost market sentiments positively hence, translate into better prices which listed companies can take advantage, current market conditions aren’t suitable for right issues.

Listed companies are therefore faced with the challenge of persuading shareholders to subscribe cash for new issues.

REAL ESTATE

Union Homes sees Q1 net income dip on lower interest income SEGUN ADAMS

N

et income of Union Homes Real Estate Investment Trust, a Lagos-based real estate fund manager, dipped in Q1 2019 on the reduction of interest income in the period.

Union Homes posted a net income of N80.13 million for the period compared to N96.37 for the first quarter of 2018 where it recorded an upsurge of 68.61 per cent in bottom-line.

The slower momentum in 2019 was on account of the fund’s interest income falling to N40.45 million, 36.55 per cent lower than Q1 2018 figures. Interest income was the second largest revenue segment for Union Homes in the quarter, contributing 33 per cent to the business compared to 44 per cent in the same quarter of 2018.

Income from rentals of property, its largest segment, declined in the period-albeit marginally-

at 0.43 per cent to N81.55 million in the review period. Union Homes grew its sundry income by 220 per cent to N960,000 in Q1 2019.

Distribution, Administration and other expenses fell in the period by 13.68 per cent to N42.83 million compared to N49.62 million.

Despite the decline in expenses, Union Homes was unable to present a stellar performance for its first quarter like it did the

year before as earnings per share fell by 17.95 per cent in the review period due to the impact of lower net income.

Total Asset of Union Homes rose quarter on quarter in March 2019 to N11.06 billion from N10.97 billion in December of 2018.

The increase was driven by an improvement in Investment properties from N9.12 billion in December 2018 to N9.24 billion in March 2019. Financial As-

sets also grew to N1 billion in the recently concluded quarter from N970.95 million noted in December of 2018 while trade receivables and other assets improved by about 2 percent in the same period.

On the other hand, total current liabilities dropped to N1.24 billion from N1.18 billion over the review period while Net Asset or Unitholders’ Equity saw an uptick of 0.33 per cent to N9.82 billion as against N9.79 billion.

Union Homes Real Estate Investment Trust is a close-ended Fund registered by the Securities and Exchange Commission under the investment & Securities Act 2007 and primarily involved in acquiring investment properties which are held for capital appreciation.

The fund’s activities are managed by SFS Capital Nigeria Limited. Shares of Union Home have remained at N3.02 since June of 2016.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

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Thursday 16 May 2019

BUSINESS DAY

COMPANIES&MARKETS BANKING

Tier-one banks most traded as stocks record longest bear run in 8 months OLUWASEGUN OLAKOYENIKAN

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igeria’s biggest lenders were the toasts of investors on Tuesday as bargain hunters approached major sectors of the Nigerian Stock Exchange (NSE) to take advantage of cheap valuations and high dividend yields, even as selling pressures in some large-cap stocks slipped the market into its longest bear run in 8 months.

The country’s mostcapitalised bank, Guaranty Trust Bank Plc, was the most traded stock by volume on the Lagos bourse after 33 million shares valued at N1.03 billion exchanged hands. Zenith Bank trailed with a turnover of 27 million shares worth N537.8 million, while 23 million units of Access Bank’s shares valued at N156 million were transacted.

“Their dividend yields were attractive after the close of business on Monday,” said Gbolahan Ologunro, an equity research analyst at CSL Stockbrokers Limited. “There was a broad-based selloff on most of the banks’ stocks on

Monday.”

Similarly, 19.4 million units of United Bank for Africa’s (UBA) shares worth N120 million were traded, while 8.89 million shares of First Bank of Nigeria Holdings valued at N64.6 million were bought and sold at Tuesday’s trading session.

Banking stocks recorded the biggest gain of 1.29 percent. The NSE Oil & Gas sector rose by 0.68 percent, while insurance stocks gained marginally by 2 basis points.

Guaranty Trust Bank jumped 1.94 percent from its two-year low to close at N31.60. Zenith Bank rose by 1.52 percent from its lowest level in 8 months to N20, Access Bank gained 1.49 percent to N6.80, while UBA appreciated by 2.50 percent to settle at N6.15 per share.

The high volume of trade recorded by Access Bank and UBA came after the Morgan Stanley Capital International (MSCI) downgraded the stocks to low cap in its recent review of the frontier market index, a move which may have prompted investors to rebalance their portfolios, according to Ologunro.

The MSCI Frontier Markets Index captures large

and mid-capitalised stocks across 29 frontier markets counties. The index includes 116 constituents, covering about 85 percent of the free float-adjusted market capitalization in each country.

However, First Bank of Nigeria Holdings reversed its previous gains, shedding 3.33 percent to close N7.25 at the sound of closing gong on the NSE. This, alongside a 3.48 percent decline in Nestle Nigeria to N1,430, triggered the general bearish performance recorded at the stock market, causing it to fall 47 basis points to book its longest losing streak since September 2018.

As a result, the year to date return of the market worsened to 9.5 percent with investors losing N23.2 billion as the market capitalisation of traded equities, which opened at N10.7 trillion, fell further to N10.67 trillion.

In spite of this, analysts at Lagos-based investment house, Afrinvest Securities Limited, expressed optimism over a market rebound this week owing to strengthened market sentiment as 20 stocks advanced as against 16 that declined.

BANKING

IIF forecasts easing in bank lending conditions in emerging markets for Q2 …Q1 EM composite lending condition index up 1.3pts ISRAEL ODUBOLA

T

he Washington-based International Institute of Finance (IIF) expects further moderation in bank lending conditions in the emerging market space in the second quarter of the current year.

In a recent report published by the global finance body titled “EM Bank Lending Conditions Survey 2019Q1”, bank lending conditions improved marginally in the first three months of 2019, driven by improvement in the five constituents of the index namely credit standards, demand for loans, funding conditions, trade finance and non-performing loans.

The composite EM banking lending conditions index grew by 1.3 points to 49.4 points in the first quarter of 2019, from 48.1 points in the previous quarter. While lending conditions moderated in EM Europe and Asia, it remained stuck within

tightening territory in Latin America and Middle East and North America (MENA).

According to the report, the global finance revised downwards its 2019 emerging market growth forecast to 4.4 percent from 4.5 percent, due to slower growth in EM Asia and Europe, while expecting a 4.7 percent rebound next year fuelled by improved business data and United States’ Federal Reserve dovish policy stance.

The index for credit standards sustained improvement ow ing to lessened stringency of terms on loan particularly in the MENA region. However a decline in other regions kept the overall metric within the tightening region of 47.6 points. SubSaharan Africa (SSA) is the only region experiencing easing credit standards.

Demand for loan index was in the easing territory in the review quarter owing to 5.2 points rebound in EM Asia’s index, which is above the benchmark. How-

ever, declines in SSA and Latin America caused the overall index to grow slowly. IIF expects improved demand for loans across all regions except in Asia.

The emerging market space witnessed better access to domestic funding in the first quarter buoyed by sharp increase in Asia, SSA and EM Europe. All regions except SSA expects better funding conditions.

International funding conditions eased for the very first time in the emerging market since 18 previous quarters.

This was achieved given the tangible upticks in EM Asia, Europe and MENA, while SSA saw its index shed 1.9 points.

Funding conditions for international use is expected to moderate generally in the emerging market, although region-specific factors differ. MENA is envisioned to experience better international funding, the converse for EM Asia, while pessimism about access to foreign lending abounds in EM Europe.

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L-R: Oscar Onyema, CEO, Nigerian Stock Exchange; Niyi Adenubi and Gbenga Omolokun of VFD Group Plc, and Frank Aigbogun, publisher/CEO, BusinessDay Media, at the presentation of the Next Bulls Award to VFD Group in Lagos.

APPOINTMENT

Odulate joins International Breweries’ board as non-executive director

ISRAEL ODUBOLA

T

he Board of International Breweries Plc has ratified the appointment of Olutoyin Odulate as independent non-executive director of the company.

This was disclosed in a release the beer maker filed with the Nigerian Stock Exchange on Tuesday May, 14.

Odulate is a seasoned consumer goods expert with over 16 years of corporate experience in retail management & distribution, supply chain optimization, strategic development, operational planning, risk management and product development among others.

The consumer goods guru also sits in similar position on the Board of Lagos-based Afrinvest Securities, and has held past senior managerial role at MTN Nigeria, L’Oriel, Accenture and most recently Danone ELN, where she was the Regional Director Anglophone West Africa.

She is the founder of Olori Enterprises Limited, an African multi-brand cosmetic manufacturing start-up situated in Lagos. The firm was among the Companies to Inspire Africa 2019 report by the London Stock Exchange Group.

The beer maker is yet to file its 2018 earnings full year scorecards at the Lagos bourse.

However, snapshot its financials for last year’s first-nine months revealed that company incurred N7.1 billion losses triggered by elevated finance cost. The company took N153.8 billion long-term loan within the period.

Finance cost, which indicates the cost, interest and other charges involved in the borrowing of money to fund business activities, soared some 61 percent year-on-year to N11.2 billion as at September, 2018. A significant slice of this cost, which equates 87 percent or N9.8 billion, was expended on interest charges, and N1.4 billion on exchange

loss.

Top-line of International Breweries grew 128 percent to N83.3 billion in the review period, but failed to keep pace with production cost which soared 170 percent to N54.6 billion, thereby weakening gross margin by 1000 basis points.

The beer maker was able to retain N35 from every hundred earned as revenue before settling indirect costs, tax expense compared with N45 a year before. Operating margin equally shed 8 percent points to 3 percent due to higher operational expenses. Marketing expenses and administrative expenses grew 29 percent and 173 percent respectively to N6.7 billion and N19.1 billion.

The core business model of the company encompasses brewing, packaging & marketing of beer, alcoholic flavoured/non-alcoholic beverages and soft drink. It was enlisted on the Lagos Exchange twenty-five years back.

ENERGY

CWG set for new opportunities in metering business, as NERC certifies firm for IBDC

MODESTUS ANAESORONYE

N

iger ian E lectr icity Regulatory Commission (NERC) has certified CWG Plc as meter service provider adding credence to its position to enhance services in Nigeria’s rural electrification project. This certification puts CWG Plc on a global map of the few certified metering solutions experts in Nigeria that will provide services to IBDC. Just two weeks ago, the NERC gave approval to CWG as a Meter Asset Provider (MAP) for IBEDC. CWG came top among the 7 approved MAP

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Vendors for Ibadan Electric.

This was a competitive process involving over 120 MAPs licensee out of which CWG was certified and approved among the 30 MAPs for engagement with the Discos in Nigeria. These milestones are due to the collaborative effort of the CWG Utility Team, led

by Daniel Shoban-Das, vice president, Corporate Development, CWG, the company management said.

“This breakthrough avails us the opportunity to be part of the major drivers of NERC’s vision in eliminating estimated billing and cover the metering @Businessdayng

gaps of over 5m within the electricity supply value chain in Nigeria”, the company said.

Meanwhile, the company was recently invited to be part of the Mini grid initiative of the Federal Government financed by the World Bank. A preliminary expository discussion of the project held between April 1-3rd and was attended by Daniel Shoban-Das and Emmanuel Ilori, business development manager, CWG, in a bid to understand the basic expectations of the partnering entities on the initiative that is set to light up 250 communities off the National Grip.

Thursday 16 May 2019

COMPANIES&MARKETS

BUSINESS DAY

19

Business Event

TECHNOLOGY

Maersk to extend digital trade finance services to South African customers

M

AMAKA ANAGOR-EWUZIE

aersk has perfected plans to launch its new digital trade finance solution known as ‘Maersk Trade Finance’, which is aimed at providing customers with easy access to capital in foreign currency to fund their international trade, in South Africa.

Introduced to simplify customers’ supply chain needs, Maersk Trade Finance represents a different way of financing containerised shipments. It is a simple, end-to-end digital solution that removes the paper trail from traditional financing options, and ensures faster release of funds at gate-in.

According to the company, the solution has since 2016, disbursed $0.7 billion in loans to over 200 customers worldwide and it focuses on Small and Medium Enterprises (SMEs),

known as the productive drivers of inclusive economic growth in South Africa and around the world.

Researchers estimated that South Africa SMEs make up 91 percent of formal businesses, provide employment to about 60 percent of the labor force and total economic output accounts for roughly 34 percent of GDP. “Focusing on small and medium sized enterprises (SMEs) represents a strong opportunity for Maersk to introduce more customers to our end-to-end supply chain and logistics products, services and solutions. In that sense, South Africa is a critical market for us,” explains Vipul Sardana, global head of Trade Finance for Maersk.

While contributing significantly to the economy, SMEs often face difficulties in accessing finance such that the ICC Banking Commission puts the trade finance gap in Africa, be-

tween USD110 billion and USD120 billion.

“While trade finance has been a catalyst for expansion, for most SMEs, access to funds has been restrictive due to strict collateral requirements and credit background checks.

As digital trade finance develops into an essential alternative, SMEs will be able to access additional capital for their growth,” explains Dirk Van den Berg, head of Maersk Trade Finance in South Africa.

“In other words, this one-stop-shop provides a more effective way to manage the ocean leg of end-to-end global supply chains, both financially and operationally,” adds Van den Berg.

The growing Maersk Trade Finance network of offices stretches from India to Netherlands, Singapore, the United Arab Emirates and the United States (all states other than California).

ENERGY

OVH Energy rewards customers with Oleum scratch and win promo

L-R: Abiodun Adebimpe, member, Association of Asset Custodians of Nigeria (AACN); Taiwo Sonola, president, AACN; Godwin Emefiele, governor, Central Bank of Nigeria; Adebola Adedeji, financial secretary, AACN; Akeem Oyewale, ex-officio, AACN, and Benjamin Adomokai, secretary, AACN, at the 8th Annual Nigerian Investors Day organized by AACN in London.

L-R: Omowunmi Ogunkua, executive secretary, The Federal Nigeria Society for The Blind (FNSB), Nicholas Obot, principal, FNSB, and Adeola Obagun, executive council member, FNSB, at The Federal Nigeria Society for The Blind Press Conference For Annual May Ball 2019 Event, At the Vocational Training Centre, Lagos

…car, generator, motorcycles, prizes worth millions of naira to be won FRANK UZUEGBUNAM

O

VH Energy Marketing Ltd, licensee of the Oando retail brand and Nigeria’s leading provider of trusted petroleum products and services, has launched a promotional campaign to reward its loyal lubricant customers. The campaign, called ‘Oando O leum Awoof!’, will give customers an opportunity to win amazing prizes worth millions of naira including a brand new car, television sets, motorcycles, tricycles, power banks, airtime and much more across Oando retail stations and distributors outlets nationwide.

The ’Oleum Awoof!’ promo, which is set to run from Monday, May 13, 2019 until Saturday, August 31, 2019, is open to all who purchase any 4 litre or 25 litre Oando Oleum Lubricant (Engine Oil) across Oando retail stations and distributors outlets nationwide. The participants are required to scratch the silver foil

and text the secret code and location (state) to the SMS short code 38353 for a chance to win at the regional raffle draws.

“Oando Oleum has become a staple in the Nigerian automobile lubricant space and this is only possible because of our loyal customers. This promotion is a platform for us to appreciate them. We believe that using the right lubricant is an essential element of auto care that is why we invest time, expertise and innovation into creating high quality lubricants suitable for petrol and diesel automobile engines,” Lilian Ikokwu, Head of Oleum Lubricants at OVH Energy Marketing Ltd, said while stressing the importance of rewarding loyal customers.

“As the sole licensee of the Oando retail brand in Nigeria, we are enriching the forecourt experience of our customers in our stations and continue to ensure high quality products and service delivery www.businessday.ng

nationwide. We care about our customers and as often as we can we give back to them. Last year, we ran the 4 for 4 Oleum Lubricants promo to reward our loyal customers. We are definitely looking forward to putting smiles on the faces of our customers with this promo and strengthening our relationship with them”, Babafemi Olabiyi, Chief Marketing Officer (CMO), OVH Energy Marketing Ltd, said.

OVH Energy continues to shape industry standards as it provides trusted petroleum products and services in Nigeria. The Oleum range of high quality lubricants is formulated to the highest specifications to meet all modern engine requirements; guaranteeing maximum engine protection, increased fuel efficiency and optimal engine performance.

The Consumer Protection Council and the National Lottery Commission approves the Oleum Scratch & Win promo.

L-R: Nikhil Das, brand manager, Indomie; Girish Sharma, chief operating officer, Dufil Prima Foods; Tope Ashiwaju, group public relations and event manager, Dufil prima foods and Aramide Folorunsho, media relations manager; Indomie, at the 2019 indomie independence day awards press conference in Lagos.

L-R: Patricia John, area sales manager (East), FrieslandCampina WAMCO; Kate Nnwaobi, grand prize winner; Veronica Ihemanma, grand prize winner; Chinwe Iroapali and brand manager for Three Crowns Milk, Akeem Audu, at the Three Crowns African Queen Mother’s Day event in Owerri, Imo State.

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Thursday 16 May 2019

BUSINESS DAY

INTERVIEW

How we are lifting SMEs with funding, advisory services, by SEL Capital CEO Funding and provision of financial advisory services for Small and Medium Enterprises (SMEs) and investment advisory services to High Net-worth Individuals (HNIs) are priority areas for SEL Capital Limited. Speaking during the opening of the company’s head office in Victoria Island, Lagos, its Managing Director/CEO, Segun Opaleye speaks with Bala Augie on the company’s expansion plans, support for SMEs and goal of transitioning into a merchant bank in the next three years.

Could you tell us the business that SEL Capital Limited specializes in? will start by saying that SEL Capital Limited was incorporated to seize emerging business opportunities in the financial services sector. Our vision is to become a leading Pan-African financial institution, offering financial advisory, wealth management & investment advisory services and provision of funding solutions to individuals, Small and Medium Enterprises (SMEs).

We also help project promoters to create bankable projects and access funding for their projects. Our aspiration is to be the gateway and catalyst for mobilizing capital for growth and development across Africa.

And that is essentially, the way we are structured. We are starting off with consumer finance, SMEs structured finance, all advisory services around project finance, corporate finance and wealth management.

We are one-stop funding solution. We want to leverage our transactions experience working in one of the biggest financial institutions in Africa to drive business growth, which we believe is the required catalyst for growth and development in any economy.

Regarding funding for SMEs, are there special approach you are deploying to achieve your vision within that segment of the market?

One of the major challenges facing SMEs is that a lot of times, the business is not in a position where one can go to sleep as a lender or a potential equity investor. What we usually do for them is to start them off with the advisory services, helping them to understand exactly how the business should be structured for easy access to capital.

So, we take so much time in guiding them through what is required to run a proper business. We try as much as possible to help them create a structure that clear the usual doubts about SMEs. Although everybody talks about providing support to SMEs, but the question is are you really giving them the solutions that set them apart from the pack? First and foremost, you have to get them to the point where the structure supports transparency, good governance and sustainable business. That is what we are doing: guiding them through the process and helping them to fund and grow their businesses.

You also talked about the High Net Worth Individuals (HNIs). What advisory supports are you providing to this group

I

Segun Opaleye

‘‘

We want to leverage our transactions experience working in one of the biggest financial institutions in Africa to drive business growth, which we believe is the required catalyst for growth and development in any economy www.businessday.ng

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of people?

We provide investment advisory services to them. We all know that HNIs understand some of the market dynamics. Based on our experience, we provide them with the requisite insights that will help them in making better investment decisions and spotting compelling investment opportunities.

We see that you are expanding. This should be your second outlet and headquarters?

Yes. We started out last year from Parkview Estate Ikoyi, Lagos. We believe we needed a bigger space, a befitting corporate head office and that was what informed this head office in Victoria Island, Lagos. This has

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Thursday 16 May 2019

BUSINESS DAY

been in the works for the past six months.

Now, it is ready, and so we are ready for more business.

With the opening of your head office, are you likely to lend more to deepen your market penetration? What will you be doing better?

The whole idea is to increase our clientele base across all our touch points, be it our physical locations and e-channels (SEL Mobile App and Web Access). We have also in the short period, been very instrumental in capital raising for clients’ projects in key growth sectors of the economy. For instance, we just concluded a $12 million capital raising for a captive power plant project for a client.

We are also lending to businesses and individuals as well as helping SMEs to meet their funding requirements. We are helping SMEs to establish Letters of Credit (LCs), fund their Purchasing Orders (POs) and support their treasury management needs.

On the wealth management side, we have a few new products and at the appropriate time, we will let you know about some of these products as soon we get the regulatory approvals.

Can you tell us about your financial inclusion project and how you are exploring opportunities in the retail market space?

As part of our financial inclusion strategic drive, we are planning to float a N2 billion SME Fund. We are starting with tranche one of N1 billion which is expected to close within the third quarter of this year.

Can you give us overview of your growth trajectory?

Our plan as an institution is to move from this initial phase, and in the next three years, translate to a merchant bank.

So, some of the things we are doing today are geared towards ensuring that we can easily move into the merchant banking space, which is our end game. We believe that with the support of our customers and other key stakeholders, we are on track to achieving this goal.

While, we acknowledge it is a tough order, but if you see what we have done in the last one year, everything is geared towards that goal and we are poised to achieving it.

Are there special plans you have to deepen your operations in the oil and gas sector?

I will not sit here and say that we can compete with the big players in that market.

We define what we can do based on our understanding of the market. So, our goal is to support every SME business across sectors.

Like I said earlier, we are also planning to become a merchant bank where we can take on the bigger players within that market.

What do you think gives you an edge over your competitors given the highly competitive environment you are playing in?

For us, the business model is very clear.

You really cannot support customers if you do not know their business. We do not intend to play in a sector we do not understand.

Remember what I said earlier concerning the SMEs space. You can lend to anybody.

But the question is are you creating value for your customers? Value creation is the only way to create emotional connection with

your customer.

In our own case, what we do first is to create value through our advisory services.

The same thing goes with our other lines of business. We work with them, give them the best by understanding their needs and being able to provide the solution that meets their specific needs as demonstrated in the example I gave you concerning the power plant. It is all about providing solutions. If you do not provide solutions to their issues, there is no way you can keep them.

We know that this economy needs a lot of electricity to thrive. But many operators within the power sector always complain that they are not getting the right result from the sector. What risk do you see in funding the sector?

The major problem in the power sector is illiquidity. When you look at the entire value chain, you have the Gas Company (Gasco), the power generation companies (Gencos), and power distribution companies (Discos) and government agencies as well. For example, you have a Genco that is supplying about 900 mega watts to the grid but getting paid half of that due to Aggregate Technical, Commercial and Collection (ATC & C) losses.

So, today, no investor will want to lend to any sector that is plagued with illiquidity. For us, we are very careful and that is why we support captive power plant projects.

With captive power plant, there is a willing buyer and a willing seller. So, you are only taking the risk of the off -taker or the buyer.

If you see any power project getting funded easily, it is most likely to be a captive power plant because all the illiquidity challenges are not there. So, you really will not go wrong with such.

As long as those challenges in the sector are not addressed, the sector will not be attractive to funding.

We also have a funding gap in consumer finance segment, which you also want to explore. What do you think has improved in that sector to enable you take such risk?

Consumer finance is a very massive market and very risky business as you rightly pointed out. But again, you are taking the risk of the individuals. So, we find out the risk of lending to you and that will determine the

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‘‘

Some of them understand the problems in developing nations. There is a premium they require for the foreign investors to find your economy attractive. If you keep the rates low and you do not get what you need to reflate the economy, it is big problem rate you will get. Of course, there are some cases where the proposed borrower does not meet our risk management criteria. In that case, we cannot go forward. We developed a proprietary algorithm that enables us sieve out the people we cannot lend to.

But if you are in lending business, you will still have some bad loans, but a good collections structure and your ability to sieve those that will not payback help reduce the nonperforming loan rate. It is a tough market, but if you understand the market very well, you will do well.

What are you doing for start-ups?

The fact is most of the start-ups are SMEs. According to the International Finance Corporation (IFC) nine out of 10 new jobs worldwide are created by small businesses.

Therefore, for an economy to develop, such economy must develop the SMEs space.

At SEL Capital, we help business owners to create a sustainable business and make

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23

their business more bankable.

If we understand what you are doing as a business, then the question is, is it in a sustainable/ bankable state that equity investors or lenders will be comfortable to fund the business? So, we guide you through the process to ensure you get the needed support.

For someone that is not yet your customer, what will the SEL Mobile App do for such a person?

If you download the SEL Mobile App from Google Play Store, it asks you whether you want a loan, you have a business idea that you are seeking capital for, or you want to invest with us, or you want to take a personal loan as a consumer. So, it allows you to do your Know Your Customer (KYC) and of course, you are up.

Many SMEs have complained about the high cost of loans. How are you addressing that, and do you think they can get better lending rates?

Let me take you back to the commercial banks today. In commercial banks today, as a non-prime borrower, you will probably get loans at 20 per cent plus. The question has always been, why have we not achieved single digit lending rate?

The truth is that the same customer that wants you to do a single digit lending is the same person that will bring funds to you and be asking for 20 per cent. And remember, financial institution’s role is purely intermediation.

The good news is there are government initiatives and policies geared towards supporting SMEs. Why is it difficult to bring down the Monetary Policy Rate (MPR) to the level where the funds will be cheap to achieve lower lending rates?

It is not as if the Central Bank of Nigeria is not mindful of the need to have a lower lending rate. But the reality is that we are a nation that depends on a lot of Foreign Direct Investments (FDIs) and Foreign Portfolio Investment (FPIs). And one of the things you can do to encourage these investors is high yield.

Some of them understand the problems in developing nations. There is a premium they require for the foreign investors to find your economy attractive. If you keep the rates low and you do not get what you need to reflate the economy, it is big problem.

There must be strategic direction and plans and at the minimum, it is a three to five-year plan. It is not a knee-jerk response, otherwise you will kill a lot of things.

You see, with the Investors’ and Exporters (I&E) Forex Window, a lot of money is coming in. So, the question we should be asking ourselves is where have we been all this while that we did not think through that?

And we need consistent policy, and continuity to be able to do things. There are economic plans that you do not truncate even if a new government in place. It must be independent of politics.

And that is how we can achieve this type of thing. I know the economic managers are looking at it, but it will not happen overnight.

Clearly, we need the right economic team in place, and a framework that ensures that economic policies are not truncated due to change of government.

@Businessdayng

24

Thursday 16 May 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open 03 – 05–19

31,924.51 29,212.00

N10.979 trillion

2,100.96

Week close (10 – 05–19)

28,847.81

N10.842 trillion

2,064.03

Year Open

2,241.37

The NSE-Main Board

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

1,330.62

806.91

120.73

671.05

279.70

2,087.91

1,100.74

1,119.27

806.91

1,313.28 1,294.53

380.81

1,319.69

370.27

118.63

669.53

264.90

2,070.60

1,096.75

1,094.61

-0.36

-2.20

1,456.29

Percentage change (WoW)

-1.25

-1.76

-0.82

0.00

Percentage change (YTD)

-8.22

-9.35

-8.34

1.65

-1.43 -8.65

-2.77 -7.19

-1.74 -6.21

-0.23

-5.29

-10.59

-12.35

-0.83 -7.31

-11.40

-9.35

Concerns over rising spate of voluntarily delisting from NSE Iheanyi Nwachukwu

I

n the wake of increasing efforts to attract more companies to list their shares on the Nigerian Bourse, the spate at which the already listed companies are exiting calls for attention. While some companies have already exited, others are in the process of achieving similar objective.

The term “delisting” of securities means removal of listed securities from The Exchange. Consequently, the securities of an affected Issuer will no longer be traded on The Exchange and the Issuer’s name will be removed from the Daily Official List of The Exchange. The decision to delist a security is taken only after thorough and careful analysis.

While voluntary delisting is the withdrawal of an Issuer’s securities listed on The Exchange with the express approval of the holders of its securities, after complying with relevant requirements in that regard, regulatory delisting refers to the removal by The Exchange of an Issuer’s securities for noncompliance with the Listings Rules of The Exchange or for breach of the terms and conditions of the General Undertaking executed by the Issuer when its securities were listed by The Exchange.

Some analysts are linking the relatively lacklustre performance seen lately at the Nigerian to lack of foreign interests, adding among other factors that “inactivity at the primary market segment has continued to

make the market less attractive to foreign portfolio investors (FPIs).”

While major bourses across Emerging and Frontier markets have witnessed a positive turnaround relative to 2018, the Nigerian Stock Exchange appears missing in action, as a surprise interest rate cut in March, some impressive corporate announcements and a relatively peaceful pre-and post-election period failed to stimulate the buyside of the market.

As at 31 March 2019, total transactions at the nation’s bourse

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reduced by 41.46percent from N188.08 billion (about $613.9 million) recorded in February 2019 to N110.10 billion (about $359.3 million) in March 2019.

The total transactions executed between the review month of March and February 2019 revealed that total foreign transactions reduced by 43.31percent from N98.94 billion in February 2019 to N56.09 billion in March 2019.

The market recently opened this week on a negative note hitting new low as stock investors bearish

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sentiment dominates the Bourse.

First Aluminum to delist from NSE after 27 years Trading on the shares of First Aluminium Nigeria Plc were yesterday Wednesday May 15, 2019 suspended in preparation to the voluntary delisting of its entire Issued Share Capital from the Daily Official List of The Exchange. This was solicited by Asset Limited on behalf of First Aluminium.

First Aluminum Plc had explained to shareholders its intension to voluntary de-listing from the

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main board of the Nigerian Stock Exchange after 27 years of being a listed company.

Pursuant to the resolution of the board of directors of First Aluminum Nigeria Plc duly passed at the meeting of the board of directors of the Company which held on August 8, 2018 the board of directors approved and resolved to recommend to the shareholders of the Company the delisting of all the ordinary issued share capital of the Company, 2,110,359,242 units from the Daily Official List and from trading on the Main Board of the Nigerian Stock Exchange.

It said the delisting will afford the company “to carry-out an imminent Corporate Restructuring exercise to take advantage of emerging opportunities and may consider relisting the company in the future if the market conditions are favourable.”

Interestingly, the shareholders of the Company at its annual general meeting which held on September 25, 2018 approved the proposal for voluntarily Delisting via a poll vote supported by 99.87percent of members present and voting. “The Voluntary Delisting will thus become effective upon the obtainment of the written approval of the Nigerian Stock Exchange”, it noted.

First Aluminum Nigeria Plc is one of the first Nigerian listed companies.

The company commenced operation with the production of Aluminum sheets. The company has since introduced Aluminum roofing in Continues on Page 25

Thursday 16 May 2019

BUSINESS DAY

Investor

25

Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

NSE-ASI test new 2019 low as MTN make-ready to list

T

he Nigerian equity market recorded back-to-back losses during the week ended May 10 as investors continued to have a hard look at the Nigerian economy in the absence of cheery news.

Accordingly, the NSE ASI shed -1.2percent week-onweek (w/w) reaching a new low of 28,823.1 points in 2019 while year-to-date (YTD) return worsened to -8.2percent.

Consequently, investors wealth shrunk as market capitalisation shed N146.8billion to end at N10.8trillion. Activity level was mixed as the average value of stocks traded inched lower by -5.2percent to N2billion while average volume traded surged +202percent to end at 266.5million units.

Attributing market performance across respective sectors, Oil & Gas (-5.3percent) names saw the largest loss for the week as price declines in MOBIL (-2.3percent) and SEPLAT (-10percent) dragged the index.

The Banking (-2.8percent), Insurance (-1.7percent), Agricultural (-1.5percent), Industrial (-0.4percent) and Consumer Goods (-0.2percent) sectors also trended southwards owing to sell-off in GUARANTY (-4.3percent), DANGCEM (-0.6percent), CCNN (-3.5percent), AIICO (-10.3percent), OKOMUOIL (-2.8percent), ZENITH (-4.8percent), NB (-1.1percent) and CADBURY (-6.8percent).

In other news, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) confirmed the application of MTN Nigeria Communication Plc for registration of 20.4bn units of ordinary shares on the stock exchange. The company aims to list by introduction on The

Exchange and we expect this to further deepen the equity market.

Investors’ sentiment for the week in review as gauged by market breadth was underwhelming as it closed at 0.4x; only 18 stocks advanced against 48 decliners. Looking ahead, the proposed MTN listing seems to be the only game in town. With the calm reaction that followed the announcement of the CBN Governor’s reappointment, we do not expect a major shift in sentiment in the sessions ahead.

Money Market: A largely liquid week Liquidity conditions improved significantly as sizable inflows from the April 2019 FAAC credit (above N300billion), retail FX refunds to banks and OMO maturity (worth N196.4billion), buoyed overall liquidity levels. The improved liquidity status spurred the CBN to heighten its pace of liquidity mop-ups during the week. In addition to the weekly wholesale FX funding sales conducted on Monday and the bimonthly retail FX funding sales conducted on Friday, the Apex bank mopped up further naira liquidity, worth c.

N613.3bn via OMO issuances during the week. Additionally, activities at the CBN’s Standing Lending Facility (SLF) reduced to its lowest thus far in 2019 as interbank players were awash with liquidity. In all, average interbank funding rates (Open Buy Back and Overnight rates) tracked the direction of system liquidity, starting the week on a high of 11.7percent before moderating to 9.6percent at the close of the week.

Further analysis shows that demand at the OMO auction conducted during the week was positive as bids worth 1.7x the total initial offered amount of

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N570.0bn, turned up - skewed largely to long-dated bills with a bid-cover ratio of 2.4x. Thus, average stop rates at the auction cleared lower when compared to previous levels though still more attractive than NTB’s [91-day (11.72percent versus 11.80percent at the last auction), 182-day (12.77percent versus 12.90percent at the last auction) and 364-day (12.82percent versus 13.03percent at the last auction)].

In the secondary Nigerian Treasury Bills (NTB) market, market bulls outweighed the bears as average yields declined w/w by 21 basis points (bps) to close at 12.9percent, amid improved levels of investable liquidity.

This week, OMO maturities worth N149.6bn is expected to hit the system plus a N33.8billion NTB maturity scheduled to be rolled over

by FG - which in addition to the existing liquidity profile from the week, should further spur CBN’s tightening stance.

Furthermore, the outstanding DANGCEM (N35billion) and FSDH (N15.1billion) commercial paper IV and VIII is scheduled to mature this week. In all, we expect money market rates to undulate around the level of liquidity in the system.

Bond Market: Africa’s Eurobond lovefest set to continue with Kenya Naira liquidity influx into the system found its way to the secondary bond market, spurring buying activities during the week. This was as market players priced positively, reports of the reappointment of the current CBN governor for another 5-year term. Thus, bulls outweighed the bears in the market as average bond yields trended lower by 21bps w/w to close at 14.1percent.

In the Eurobond market, interest in FGN Sovereign Eurobonds turned bearish due to poor foreign interest in Emerging Market (EM) assets that tracked the deterioration in US-China trade negotiations.

Accordingly, average yields trended northwards by 15bps w/w to close at circa 7percent.

Similarly, sentiments for Corporate Eurobonds stayed bearish as average yields inched higher by 69bps w/w to close at c. 10percent.

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators?

Let us know and investor will help you investigate and report back.

E-mail: iheanyi.nwachukwu@businessdayonline.com

Concerns over rising spate of voluntarily ...

Continued from page 24 Nigeria as well as marketing Aluminum products needed in the engineering industry as well as for packaging. The Company took its present name First Aluminium Nigeria Plc in 1991 and became quoted on the Nigerian Stock Exchange in 1992.

In 1991, First Aluminum Plc took its present name, First Aluminum Nigeria Plc and was listed in the daily official list of the Nigerian Stock Exchange in 1992.

Reason for delisting The company said that over the last 7 years, there has been little or no trading activity on the shares held by the minority shareholders.

“The purpose for listing First Aluminum was to raise capital for the Company as well as provide liquidity to its shareholders. The current illiquidity nature of the market has rendered this primary corporate objective unattainable for First Aluminum.

“Over the last 12 months, there has been a significant fall in average daily trading volumes to 2,918 units between July 2017 – June 2018 and further dip to 2,816 units (July 2018 - Dec 2018).

Neither the Company nor any shareholder is benefiting from the continued listing on the NSE”, First Aluminum Plc said.

“The share price was stuck at 50 kobo for about six years between June 2011 and June 2017, and thereafter experienced further diminution, both in share price and trading volumes. Over the last eighteen (18) months daily average volume ranged between 2,815 to roughly 2,918 units during the period July 2017 to December 2018”, the notice to shareholders reads.

“Shareholders are not benefiting from the continued listing as they are not getting exit opportunities and their investments have been locked up, thereby finding it difficult to dispose of their shareholding. Neither the company nor its shareholders have benefitted as the company’s shares continue to trade at a significant discount to the intrinsic value”, it noted.

Newrest ASL Nigeria The Nigerian Stock Exchange (NSE) on Monday May 13, 2019 delisted the

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entire issued share capital of Newrest ASL. Newrest ASL Nigeria Plc, founded as Catair in 1996, the French Company chaired by Olivier Sadran and Jonathan Stent-Torriani sells its expertise in numerous countries around the world. Newrest is actively functional in all catering and related hospitality segments, including Inflight, buy on board, duty-free, Catering and Remote site, Rail, Retail and support services.

Newrest ASL Nigeria had through its Stockbroker, Helix Securities Limited, submitted an application to the Nigerian Stock Exchange (The Exchange) for voluntary delisting of the entire 634,000,000 ordinary shares of the Company from the Daily Official List of The Exchange.

The company’s decision to delist from the NSE resulted from the inability of Newrest ASL Nigeria Plc (formerly Airline Services & Logistics Plc), to meet up with the 20percent free float requirement of The Exchange.

Companies listed on The Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities.

The free float requirement for companies on the ASEM Board is a minimum of 15percent of issued and fully paid up shares while that of the Main Board is a minimum of 20percent of the issued and fully paid up shares.

Great Nigeria Insurance In August 2018, the NSE was notified that the shareholders of Great Nigeria Insurance Plc (GNI) at its Extra-Ordinary General Meeting (EGM) held on Wednesday July 25, 2018 approved for the company to voluntarily delist its shares from @Businessdayng

the Nigerian Stock Exchange (NSE). The reason being that Great Nigeria Insurance Plc has continued to struggle over the past years to meet up with NSE post-listing requirements which include not submitting its financial reports as required and inability to meet the free float requirement.

“Over the last five years, there is little or no trading activity on the shares of the company held by the minority shareholders. There has also been a considerable fall in trading volumes over the last twelve 12 months with an average daily volume of circa 1,200 units during the period March 2017 to March 2018.”

Seven-Up Bottling Company On Monday March 12, 2018, the entire shares of SevenUp Bottling Company were delisted from the Daily Official List of the Nigerian Stock Exchange. The delisting of the entire issued share capital of Seven-Up Bottling Company followed its shareholders’ approval of a Scheme of Arrangement to restructure and delist from The Exchange.

The majority shareholder, Affelka S.A. acquired the outstanding 26.8percent shares of the company and increased its ownership of the Company to 100percent.

What are the rules supporting voluntary delisting?

The relevant rules are found in Rule 25 of the Amendments to the Listings Rules. On Voluntary Withdrawal or Delisting, they provide as follows: An Issuer shall not voluntarily withdraw its listing on The Exchange unless: i. the shares have been listed for a minimum period of three years and the company has filed its audited financial statements for those years.

26

Thursday 16 May 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Wema: Shareholders smile as bank rethinks digital strategy Iheanyi Nwachukwu

T

o remain competitive in the financial market, banks need to be innovative. Without doubt, one will notice that product A which is in one bank, is also in another bank.

On Wednesday May 8, 2019, shareholders of Wema Bank Plc, Nigeria’s oldest indigenous lender agreed to the proposed N0.03 dividend payment proposed by the management of the bank, amid celebration, as the shares of the bank listed on the Nigeria Stock Exchange (NSE) traded at 73kobo per share.

The shareholders at the annual general meeting (AGM) celebrated the proposed N0.03 per share dividend payout, not just because of a payout ratio of 34.79 percent but also because it was the first time they were getting any return from Wema Bank.

No doubt, year 2018 was a major milestone for Wema as it declared dividend for the first time in 14 years.

“For us, we want to be an idea bank. We want to be known for innovation and we want to be very agile. For you to make a mark in this space, you need to be very agile and speak to market with products that appeal to customers”, these among others are the words of Ademola Adebise, Managing Director/ Chief Executive Officer, Wema Bank Plc who spoke recently to INVESTOR and other senior financial journalists.

Wema Bank believes that its shareholders are interested in returns and so “we must ensure that we deploy limited resources in a way that would benefit all stakeholders.

So, for us we have a clear digital journey…”, according to Adebise, who added tha,t “We said we want to be an innovative bank and innovative banking has to do with generating new ideas.”

The bank started from 2009 with the transformation plan, called Project LEAP, which was basically a strategy to take the bank out of the woods which was what led to the payment of dividend. The last time dividend was declared in Wema Bank before last year, was during the era of Tunde Lemo.

Wema Bank, founded in 1945, had survived different reforms and restructuring in the country’s economy and financial services industry.

Following the 2008 banking crisis in Nigeria which saw the collapse of many banks, the Bank had negative capital in excess of N66 billion and was declared a bank in grave financial situation by the banking industry regulator in Nigeria but years of effective leadership have turned around the fortunes of the Bank.

While the work to rebuild the Bank was ongoing, shareholders had to forfeit their annual dividend as the Bank was in no position to do so. However, following its capital reconstruction, a major constraint to Wema Bank’s dividend payment ability was lifted.

The journey to recapitalize Wema Bank, return it to profitability and consistently grow has been an arduous one for the management of the Bank and the shareholders alike, who year after year had to put up with the Bank’s reasons for not paying dividend.

Nevertheless, they were strong in their belief of the path the Bank has chosen to ensure growth.

For the management of Wema Bank, it

Cross section of Wema Bank shareholders at the annual general meetings

was going to be difficult to get the kind of results needed for exponential growth with the traditional banking methods, which every lender in the industry already use to serve their customers. Chances of getting bank customers to choose a new bank are getting slimmer as it was becoming very difficult to present any unique proposition. Therefore, any Bank that was keen about growth had to, either run after the unbanked and hope that would be enough, or think up something new altogether. That was what Wema Bank did.

After years of research, the management of Wema Bank concluded that the only way to achieve the kind of growth needed to deliver value to all its stakeholders was to build a bank of the future today.

In 2017, Wema Bank launched ALAT, which offers branchless banking services.

It is Africa’s first digital bank and it changed everything that banking was all about in Nigeria before its arrival. It got other financial services providers thinking, with many introducing similar products/services and retooling existing infrastructure to deliver more value to customers.

While ALAT might not have been able to corner the millennial/digitally savvy consumer market for itself, it got some who did not join ALAT to start asking their banks for more.

With more than a million active customers who are enjoying the digital bank that is fast becoming part of their lifestyle, Wema Bank has through a rethink of its digital strategy which birthed ALAT, changed the game in the Nigerian banking industry and achieved its quest for exponential growth.

“We intend to be a strong retail bank, le-

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veraging technology and innovation. For us, what we have said is that in the next two years we will try to double our key indices of assets, deposits, profit, so that by 2020, we would have achieved the doubling of our numbers and we would then embark on looking at opportunities in Mergers and Acquisition (M&A) for inorganic growth.

“We have key sectors of the economy that we have mapped out to achieve this growth.

We are also trying to ensure that we have well-trained and remunerated staff to be able to achieve this vision and we are very committed to it,” the CEO had noted.

At the annual general meeting, the shareholders received and adopted the bank’s audited financial statement for the year ended December 31, 2018 together with the reports of the directors, auditors, and audit committee thereon.

The bank’s 2018 financials Wema Bank Plc group financial scorecard shows it recorded improved performances, as gross earnings in 2018 grew by 9.6 percent from N65.27 billion in 2017 to N71.53billion.

The group profit before tax (PBT) and profit after tax (PAT) increased by 59.47 percent and 47.35 percent respectively to N4.80 billion and N3.33 billion as against N3.01 billion and N2.26 billion in 2017.

The bank’s total assets as at December 31, 2018 stood at N488billion representing a 26 percent increase over the N387billion recorded in the corresponding year of 2017 as loans to customers rose by 16.65 percent to close the 2018 year at N252 billion from N216 billion recorded in 2017. Impressively, the bank during the year maintained its non-performing loans (NPLs) at 4.98percent, below the regulatory limit of 5percent,

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despite the challenging macro-economic environment.

Furthermore, Wema Bank continues to record growth in its retail deposit drive, as the bank gains continued acceptance.

Savings deposit grew by 26.2percent from N49.83billion to N62.89billion while current account deposit grew by 46.80percent from N12.47billion to N18.30billion.

ALAT played a huge role in seeing savings deposit grow by 26.2 percent to N62.89 billion in 2018 from N49.83 billion in 2017. Current account deposit also grew by 46.80 percent from N12.47 billion in 2017 to N18.30 billion.

Chairman speaks Babatunde Kasali, Wema Bank’s Chairman said that the bank remained highly committed to uing it “technological edge to drive and deliver on our goals for the year”.

He added that the bank would also deepen its focus on the commercial and corporate business while it continues to leverage technology to get ahead of competitors, even in the retail space.

“Consistently, our aim as a bank is to scale up and improve market share through various initiatives and it is particularly pleasing to note that in 2018, the bank made significant strides in this direction,” Babatunde Kasali, chairman, Wema Bank Plc told the shareholders.

“As we go into 2019, we will deepen our focus on the commercial and corporate business while we introduce a renewed focus on our retail business. The above will help to continue to reinforce our commitment towards balance sheet optimisation, efficient processes and operations as well as value creation for our esteemed customers and shareholders,” he said.

@Businessdayng

Thursday 16 May 2019

BUSINESS DAY

Corporate Social Impact

27

Onuwa Lucky Joseph (08023314782) Editor.

RCCG boosts living conditions of Lagos police dogs ONUWA LUCKY JOSEPH

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olice Dogs do a lot of sniffing. And now, thankfully, the place where Lagos Police dogs are quartered is nothing to be sniffed at. The do over is courtesy of the Redeemed Christian Church of God, Lagos Province 47 which took up the responsibility as part of what it calls its Christian Social Responsibility mandate.

Good one, if you ask us. Animal care is an area easily overlooked and has indeed been overlooked for decades. Pastor Femi Obaweya said the church saw the need for rehabilitation upon the realization that what they saw at the Canine Division of Area F was far from befitting for the Nigerian Police Force.

He said that when he visited the facility sometime back he was taken aback by the deplorable state of things. For instance, “I observed that there was no direct water supply to the facility, which also was a challenge to the effective running of the place”, upon which he “promised that the church would look into the challenges there”.

And true to his word, he and his people did. As witnessed by the

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numerous people who attended the commissioning ceremony, aside the physical attention to the broader frame of the facility, the church erected a borehole and provided a 3.8KVA generator to power the surface tank.

Obaweya said “we have replaced all the metal gadgets with new ones for

the training of the dogs”.

True, the Nigerian Police has its many issues and is never short of traducers. However, they are still our police and without them security in the urban jungles we live in would be a major nightmare. The Special Assistant to the General Overseer of

the RCCG on Christian Social Responsibility, Pastor Idowu Iluyomade mirrors this thinking when he said that refurbishing the canine facility was in appreciation of the good work that the Nigerian Police is doing in Lagos.

A grateful CP Aishatu Abubakar of Force Headquarters, Abuja, said

the gesture would no doubt “enhance effective policing of the state.

We at CSI, join the many giving the thumbs up to RCCG for this effort. It is significant that the church seems to have picked up the tempo on its social intervention initiatives. According to Iluyomade, while commissioning another RCCG project in Jos, this time, an intensive care unit at the Jos Specialist Hospital, he declared that “CSR is a matter of life and death, and the church has committed itself to giving succour in six specific areas of health, education, feeding, social enterprise, rehabilitation and prisons.” Across that spectrum, the poor and needy are well and truly represented.

And we see in that a systematic approach to ensuring that the set objectives are met and hopefully within time frames that serve the overall purpose. A country like Nigeria where millions profess faith in God via Christianity or Islam needs to witness more social and environmental impact from religious organisations, as was the case with missionaries and the schools and hospitals they founded in the early days of this country, most of which are still standing today.

That is the legacy of faith that all can see and thank God for.

To legislate CSR or not to: That is hardly the question ONUWA LUCKY JOSEPH

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very once in a while, someone comes up who believes the corporate sector ought to (be made to) contribute more than they are currently contributing to the development of the country. This is generally consequent on the quarterly and annual pre and post-tax figures, humongous and mind blowing as they seem, that corporate organisations post as they are statutorily required to.

The logic goes something like: if the companies make so much from this country, what stops the government from extracting a little more from them in order to ensure that millions of their needy compatriots who wake up hungry and go to bed still destitute are properly looked after?

One of those who recently made this call is Chief Sunny Onuesoke, an Oil and Gas expert who is based in the Niger Delta region. He believes it is the right thing that a legislative framework be designed by the National Assembly for the implementation of Corporate Social Responsibility (CSR) as a bounden duty by corporates.

This was said, though, with specific reference to the often fraught relationship between oil and gas operators and their host communities in the Niger Delta region.

And Onuesoke would seem eminently qualified to share his views on the matter, he being the Chairman

of DAS Energy Services Limited, Effurun, Delta State. His position is that legislating CSR would make it a legal and enforceable commitment thereby ensuring that oil companies no longer sidestep their responsibilities to their host communities.

While making his presentation on ‘Host communities’ Relationship with Oil Operators’, at a seminar in Port Harcourt, Onuesoke stressed that “The fact that there is no legal backing for accessing CSR by host communities from oil operators, gives room for inadequate and lackadaisical implementation of CSR. He therefore argued that the need for the legislation of CSR was paramount due to the heavy damage done to the environment of the host communities by oil operators.

Citing the Indian precedent, he said “Nigeria can take an example from India which is the only country in the world with legislated CSR under the India companies Act 2013”.

This debate will not end anytime soon, and it is not happening in Nigeria only. In many countries where people are pissed off with the swinish excesses of big business, the calls have not stopped coming. The Indian government heeded and many nations might yet go that route seeing especially as it is a populist position on which vote seeking politicians might decide to stake their potential for electability.

Why it might be hard to do, however, www.businessday.ng

is that candidates are also, more often than not, beholden to big business, relying on them for support and in some cases funding that is usually not captured on any page of company reports.

What is doable is for government to diligently to do its regulatory oversight work and ensure that reports as well as spot monitoring is conducted for those businesses whose business have potential for disrupting the environmental equilibrium. What is the effort being made to mitigate the impact on the environment? Companies owe that to

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government, to civil society as well as to the general public. And that question is at the intersection where corporate governance melds seamlessly with CSR. With regards to ‘general CSR’ as captured in the public imagination, which speaks to the provision that organisations make for addressing socio-economic and development issues; to insist that a set percentage of revenue for this purpose be set aside and to be regulated by government, that only creates room for a new strand of corrupt practices. Inevitably, govern@Businessdayng

ment officials can be counted on to spot loopholes for hijacking a good chunk of the money.

That is the sad story of many government intervention projects. The ones who are entrusted the responsibility of implementation end up pocketing the goods. And that’s why we think legislating CSR would be a bad idea. Governments do not have any silver bullets in their armoury. If the regulatory work is properly done, host communities can rest in the knowledge that their long term welfare is assured.

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Thursday 16 May 2019

BUSINESS DAY

Corporate Social Impact

Timberland, Wrangler and the VF foundation Schneider Trains Electricians to support regenerative ranching practices Meet Quality and Safety Standards F irst off, we must say we are in total opposition to the Federal Government’s plan for cattle colonies all over Nigeria. The arguments against the plan have been well marshaled and so won’t be made here. However, this story is about ranching and how corporates that cater to the lifestyle apparel needs of the rugged outdoors-inclined have seen it fit to partner on research into regenerative ranching practices.

If the Nigerian government won’t do it, then maybe organisations, local and international can conduct such studies which have potential for cooling down tempers in a flared up Nigeria.

On May 10, 2019, the VF Foundation in collaboration with Timberland and Wrangler brands announced $150,000 in grants to researchers at seven U.S. universities, including Arizona State University and

ONUWA LUCKY JOSEPH

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ynonymous with electricity worldwide, Schneider has been working at innovativeness to ensure that power is taken much further than what was originally envisioned by Thomas Edison and his co inventors. Even as electricity has evolved over the years, Schneider has stayed in the thick of the different milestones recorded.

Increasingly, clean sustainable energy is what the Schneider name is becoming associated with. And that is how it should be. The ramifications change everyday as what is deemed sustainable today might have import for the living conditions of the people it is supposed to serve. Which then necessitates another take at the challenge until something is arrived at which serves the best good of all.

The Nigerian power situation is a special case, might we say. Despite Kainji and Shiroro and Egbin in Ikorodu, amongst others, power has been an intractable problem for as long as anyone can remember. It’s not readily accessible, it’s not cheap (although that’s not what the operators say), and there’s the DISCO/GENCO disconnect that ensures that power is, for the most part, hardly ever there.

That matter will be treated comprehensively another day. What we consider topical and relevant at the moment is that Schneider, working alongside the French Development Agency AFD, and the National Power Training Institute of Nigeria (NAPTIN), is deploying its institutional knowhow towards effort to bridge the technical skills gap in the country. This in short order will help improve the quality and safety standards for domestic instal-

lations. And safety, as we all know, is where the rubber meets the road for households and offices.

Fires and other kinds of domestic tragedies are standard when half-baked electricians passing themselves off as experts do their thing with fake wires, substandard materials and fake expertise.

The opening ceremony for the training took place on Monday the 6th of May at NAPTIN Event Centre in Surulere, Lagos and was followed by a visit to NAPTIN Training Centre, Lagos.

The goal is to develop a flexible and af-

fordable training to encourage young Nigerians in domestic installations and electrical practices to improve the quality and safety standards in the country.

This is very useful at a time when vocational education is sorely lacking and when certification programmes like the City & Guilds which used to be de rigueur for entrants into the profession is no longer available or not affordable Schneider aims, under the programme, to train over 300 students in a year across NAPTIN Centres in Lagos, Abuja and Port Harcourt.

Why does the World recognize Imam Abdullahi Abubakar?

ONUWA LUCKY JOSEPH

for peace.”

President was scheduled to honour him, at least that’s what Governor Simon Lalong made us believe. We don’t know, as at the point of this publication, what progress has been made in that regard.

Imam Abubakar’s example should be the reference in a country where people die needlessly over their faith or ethnic stock.

Honours from outsiders and the private sector are good. We are still awaiting word from Abuja. That symbolic image of Buhari and Abubakar together is bound to send the right message.

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ssentially because he is a decent human being. He didn’t just sermonize and get all pedantic about morality and the unending fight between good and evil. He preferred rather to love his neighbor as himself. Such deeds are the seed that prevent the world from going unhinged.

The United States Mission in Nigeria, amongst others, has celebrated Imam Abubakar for saving over 300 hundred Christians during an attack in Plateau state on June 23, 2018.

Abubakar, the Chief Imam of Nghar village in Gashish District in Plateau state, has been widely lauded by people in and out of the country for his bravery, selflessness and self-effacing demeanour, all qualities cited when he was awarded the Nigerian Star by the US Embassy in Nigeria “in recognition of achievement and service to Nigeria and Nigerians”.

The Mission described the Imam as a peace-builder who along with his deputy put their lives on the line to save over 300 of their Christian neighbors at Nghar Village, Barkin Ladi LGA, Plateau on June 23, 2018.

The Imam’s personality and motivation can be gleaned via an interview he conducted with David Young, Deputy Chief of Mission of the United States Embassy.

His take on diversity is well informed and inclusive, and worthy of emulation by all: “Alhamdulillah (praise be to God). We should all reflect on the fact that God created us, some as whites, others as blacks,

some, tall and others, fat, and so on. God had a reason for creating us as diverse humans.

“No one has a reason to question the existence of the other. If God had wanted otherwise, He would have created us the same.

“We must embrace the diversity that God has created and strive to live in peace with one another everywhere in the world.

If God had wanted us to be the same, He would have done so but He brought us all together, mixed us together, I don’t know how to explain it, but, you know, He brought us together to create harmony so that we can live in peace together.

God wants us to live together in peace. If He had wanted, we would just be the same and there would be no difference. My message to the entire world and to everyone is that we should all respect one another, follow the rules and be selfless advocates www.businessday.ng

Michigan State University, that are conducting the first comprehensive research into regenerative ranching practices.

Through this multi-year, interdisciplinary research, teams will evaluate if regenerative ranching yields meaningful improvements by comparing its impacts with those of continuous ranching practices. Initial, isolated studies of regenerative farming practices are promising, indicating these techniques could lead to significant environmental, social and economic benefits.

Ranchers and farmers who use regenerative ranching practices mimic the natural movement of herd animals by intensively grazing dense cattle herds in relatively small areas before moving them to other similarly-sized areas. Such grazing allows for more rest and re-growth of the grasses not in use, which can lead to better food for livestock and healthier soil, as these grasses pull carbon out of the atmosphere and store it in the ground. In theory, this makes the land more productive with greater resistance to both drought and heavy rain.

“The Wrangler brand was born out of the American West way of life, so it is important to us to support farmers and ranchers in the challenges they face such as land productivity, development pressures, and loss of biodiversity,” said Tom Waldron, Global Brand President, Wrangler. “Whether it’s funding research or building new supply chains, we’re proud to improve the lives of people who make

their living off the land.”

The systems-based research project focuses on 12 interrelated topics including soil carbon and water, greenhouse gas emissions, and livestock well-being and resilience. Of interest to both the Timberland and Wrangler brands is the farmer well-being portion of the study, which focuses on the aspects of ranching that are likely to yield financial benefits for farmers, potentially leading to rapid adoption and future scale. This robust socio-economic study will be linked with the ecological data gathered to provide a holistic view of the social and environmental opportunities.

“As we look to the future, one key element of Timberland’s sustainability strategy is moving beyond minimizing negative impact to strategically create social and environmental benefits within our supply chain,” said Jim Pisani, Global Brand President, Timberland. “We’ve only begun to truly understand the environmental, economic, social, and humane benefits of regenerative grazing. We are energized by the prospect of a net-positive leather source, and incredibly proud to be leading the way in supporting this important research.”

The Timberland® and Wran gler® brands are working to pilot a leather supply chain based on traceable hides from U.S. farms using regenerative practices, with the goal to launch leather product collections incorporating leather from this supply chain in 2020.

VF Corporation established the VF Foundation in 2002 for charitable, scientific and educational purposes. The Foundation supports organizations working in the arts, community services, education, families and children, health care, environmental sustainability and science.

(Courtesy 3BL Media

Salesforce Billionaire Marc Benioff gives $30M to study homelessness

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AN FRANCISCO — A San Francisco billionaire is donating $30 million to the University of California, San Francisco, to research root causes of homelessness and potential solutions.

Salesforce CEO Marc Benioff, a city native, has embraced homelessness as a philanthropic cause, pumping millions into a 2018 city measure to tax wealthy companies to pay for homeless services.

The five-year initiative funded by Benioff and his wife, Lynne, will conduct academic research, provide testimony and fact sheets, and train people who have been homeless as expert speakers.

The UCSF Benioff Homelessness and Housing Initiative will be part of the UCSF Center for Vulnerable Populations,

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led by Dr. Margot Kushel.

The $30 million contribution is the largest-ever private donation to fund homelessness research, ac-

cording to Salesforce.

“The world needs a North Star for truth on homelessness,” Benioff said in a statement. The initiative “will be that North Star, providing the latest research, data and evidence-based solutions to ensure we’re investing in programs that will help solve the homelessness crisis.” @Businessdayng

Some San Francisco residents are frustrated with technology companies like Salesforce, a cloud-based software business, saying they contribute to inequality with high-paying jobs that drive up housing prices.

More than 4,000 people sleep on the streets every night in the city, where the median price of a two-bedroom home is $1.3 million. A family of four earning $117,400 a year is considered low-income in San Francisco.

Benioff approached the university because he wants officials spending tax money to make decisions with the best data available, Kushel said. The plan is for researchers to provide neutral, trusted analysis of the data.

Thursday 16 May 2019

BUSINESS DAY

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LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

Overview of the NERC consultation paper on development of a regulatory framework for electricity distribution franchising in Nigeria

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n April 18 2019, the Nigerian Electricity Regulatory Commission (“NERC”), published a consultation paper on the development of a regulatory framework for electricity distribution sub-franchising in Nigeria (the “Consultation Paper”). The Consultation Paper was published to intimate the general public regarding NERC’s unwavering intention of improving the access of Nigerians to efficient power supply and comments were to be provided to NERC, by interested parties no later than May 6, 2019.

The writer understands that, the precursor to the proposed regulatory framework was a particular electricity distribution company which wanted to undertake a pilot, in relation to sub-franchising and in its wisdom; NERC sought to have a comprehensive framework for the entire distribution arm of the entire electricity value chain.

According to the United States Agency for International Development (USAID) Fact Sheet on Nigeria (last updated March 12 2019), only 36% of people living in rural areas have access to electricity with 55% of people living in urban areas having access to electricity. Additionally, the Nigerian Power Baseline Report 2015 (developed by the Advisory Power Team, Office of the Vice President, Federal Government of Nigeria in conjunction with Power Africa) estimated that 95

sitated NERC, as the regulator of the Nigerian Power Sector, to consider alternative options to bolster access of Nigerians to electric power supply. The Consultation Paper issued

by NERC, sets out the regulator’s strategy at increasing the number of Nigerians with access to electricity. The aim of this paper is to set out the elements of the Consultation Paper and consider its potential impacts on the Nigerian Electricity Supply Industry (“NESI”).

As a starting point, it is pertinent to note million Nigerians (approx. 55% of the population) have no access to electricity and those who are connected to the grid face extensive power interruptions.

The Power Generation Report dated February 28 2019 released by the Federal Ministry of Power indicates that the peak power demand for the country currently stands at 23,960 mw (per day) with data from the Office of the Vice President showing that about 4,002 mw (per day) was generated during the month of April 2019.

This power deficit has neces-

that the Consultation Paper is a precursor to the regulation which is to be implemented by NERC upon receipt and further consideration of the theme of the Consultation Paper. As such, the Consultation Paper is not law, but is merely indicative as to what can be expected to be in the regulation to be issued to give the necessary legal regulatory framework.

Key Elements of the Consultation Paper a. Disco Franchising Structure &

Exclusivity The Consultation Paper sets the tone for sub-franchising of disco operations to improve efficiency.

According to the Consultation Paper, sub-franchising means “the business model applied by a Disco to authorize a 3rd party to provide electric distribution utility services on its behalf in a particular area within the Disco’s area of supply”. The franchising arrangement, thus, contemplates that Discos may engage 3rd parties to undertake activities which ordinarily be within the Discos scope such as electricity supply, metering, billing and collection.

This franchising arrangement may be initiated by either the Disco itself or the community (through registered association) within the Disco’s area of operation.

The franchising arrangement may include the following: • The Disco supplying electricity to the Franchisee at an identified injection point for a pre-determined fee; • The Franchisee supplying power to identified customers of the Discos at a tariff approved by NERC; • The Franchisee may undertake metering, billing and collection activities or manage the distribution system (including operations, maintenance and upgrade) of the Disco’s system; • The Franchisee retaining a

portion of the revenue collected from the consumers after the Franchisee has paid the full cost of bulk energy to the Disco; • The Franchisee shall work within the ambit and restrictions of the Disco’s licence; • The Franchisee may also procure additional generation from off grid sources to augment the Disco’s power from the Grid; The Franchisee may also sell surplus power to the Disco Prior to the issuance of the NERC Eligible Customer Regulations 2017, the Discos were under the assumption that the areas allocated to such Discos in their licence terms and conditions was to be their exclusive preserve. As such, only they could deal with such customers with respect to electricity transactions. Following the enactment of the Eligible Customer Regulations, many of the Discos had claimed that it would not be feasible to comply with the projects and estimations in the Performance Agreements they executed with the Federal Government.

Nothing in the law or the licences of the Discos grants them exclusivity and the Consultation Paper further confirms that the Discos have no exclusivity in terms of the customers within their area of operation. With the Consultation

Continues on page 30

How justice sector partnerships have provided Lagosians with greater access to justice

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he Lagos State Attorney General and Commissioner for Justice, Adeniji Kazeem has attributed the current access to justice enjoyed

by Lagosians to dynamic law reforms and support received from the State House of Assembly, the Judiciary, the Police, the Prison Services and other security operatives in the state.

Speaking to law editors recently in Lagos, the Attorney General disclosed that the successful implementation of its programmes was achieved through the combined effort of all these agencies He said, “We have been able to collectively ensure that our state is a safe and secure environment for all, regardless of our different tribes, religious and political affiliations.”

Kazeem, whose first assignment as Attorney General was the expansion and functionality of the Mobile Court, success-

fully ran the system to reduce street trading, traffic congestion and unethical/anti-social conducts on the roads with the help of the Lagos State Judiciary. This many believe, has significantly impacted on the socio-economic well being of residents of Lagos State.

“We also recognised the importance of creating awareness of the Laws that were being passed by the Lagos State House of Assembly, therefore, we created a web portal where all Laws & Regulations of Lagos State are available online,” the AG said.

The dedicated web portal is regularly updated with new laws and regulations and has since the launch recorded an average of 100,000 user hits every month and over 10,000 downloads of the Laws of Lagos State.

The Lagos State Ministry of Justice has also been applauded for its ability to curb the activities of “Land Grabbers” who are also www.businessday.ng

Adeniji Kazeem

known as ‘Omo Onile’ in the state, with the creation of a Special Taskforce on Land Grabbers, known as the ‘Omo Onile Taskforce’.

The task force, whose mandate is to rid the state of notorious persons, has since its establishment, received several petitions and carried out countless criminal prosecution cases against suspected land grabbers – with several of these cases currently ongoing in different

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Courts.

Speaking about the task force and its operations, the AG said, ‘We are all witnesses to how the activities of Land Grabbers popularly known as ‘Omo Onile were almost completely stifling commercial activities in the State before we came on board.

There was need to check this menace,” he said.

According to him, the creation of the task force has been highly instrumental to the elimination of this practice by these miscreants who use force and intimidation to dispossess or prevent any person or entity from acquiring legitimate interest and possession of property, to the barest minimum.

Similar notable justice sector developments in Lagos state include, a DNA Forensic Centre; a viable system for monitoring the prosecution of Sexual offences in the State; a Sexual Offences and Child Justice Unit; @Businessdayng

an online platform for the Lagos Public Interest Law Partnership (LPILP) to give room for accessibility; a Rapid Tax Prosecution Unit, to support the work of the Lagos State Internal Revenue Service (LIRS); and new courts in Ajegunle and Badagry.

Other are, the introduction and utilization of the Plea Bargain Protocol, which has reduced the time spent on criminal cases towards achieving Prison and Court decongestion; the introduction of the E-Real Estate Litigation Database; as well as an effective collaboration between the Ministry of Justice and Prison Fellowship to explore the adoption of restorative justice measures as part of sentencing options for designated relevant offences, amongst others.

Residents have expressed hope that the administration of justice in the state would continue to improve at the pace it has been in the last few years.

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Thursday 16 May 2019

BUSINESS DAY

INDUSTRYFILE

BD

LegalBusiness

FCCPC collaborates with stakeholders to prevent forced food ripening with CaC2 that the commission had received credible information that chemicals were used as forced and artificial ripening agents for fruits, vegetables, and other food items. Notable also, was the use of calcium carbide to hasten the ripening of oranges and mangoes.

“Calcium carbide (CaC2) is a chemical compound containing arsenic and phosphorus, which have been scientifically proven to contain harmful carcinogenic properties that are harmful and capable of serious adverse effects and possible fatalities associated with consumption of food containing them,” he revealed.

The commission thus advised consumers, retailers, farmers, and others in the produce value and distribution chain to desist from this harmful practice, and to be vigilant in order to prevent

THEODORA KIO-LAWSON

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ollowing intelligence report on the use of forced and artificial ripening agents for fruits, vegetables, and other food items, the Federal Competition and Consumer Protection Commission (FCCPC) has expressed its commitment to work with other relevant regulators and stakeholders in the food security value chain to prevent this continuing practice, as well as interdict and confiscate produce already otherwise compromised by exposure.

Speaking on the importance of this collaboration, the Chief Executive Officer of the commission, Babatunde Irukera in an advisory message shared with BusinessDay disclosed

Babatunde Irukera

consumption of artificially ripened produce, using CaC2.

He further disclosed in his message that one way to detect fruits or produce artificially ripened in this manner was careful physical examination before purchase.

“Forcefully ripened fruits usually do not have uniform colours, appear with yellow and green patches, are hard in texture, low in flavor, less juicy and often will not be as sweet as they should be,” he said.

The commission has also warned consumers to exercise caution and vigilance by examining what they purchase and intend to consume, stating that, it was helpful to make routine inquiries before purchases.

“Wait till the peak seasons for specific fruits arrive, and thoroughly wash farm produce before consumption,” it advised.

Overview of the NERC consultation paper...

Continued from page 29 Paper, there is a possibility that the Discos may further clamour that their ability to inject CAPEX and OPEX to undertake their obligations under the Performance as well as reap sufficient revenues may be impeded by the Consultation Paper. The necessary response to this would be that to the extent that, the Consultation Paper contemplates that the Franchisee would pay the Disco the full cost of bulk energy, the Disco’s revenue stream would be sufficiently protected. b. Franchisee Models A cursory review of the Consultation Paper reveals the key franchise models that NERC is proposing for the purpose of the Distribution Franchising. These models are: Model 1: Metering, Billing and Collection (MBC): This Distribution Franchising Model contemplates that the metering, billing and collection of a 33kV or 11kV or a cluster of feeders may be outsourced to a third party, with a view to supplying electricity to rural, semi-urban or urban areas.

M o d e l 2 : Total Management of Electricity Distribution (TMED): Under the TMED Model, the Franchisee is allowed to maintain the electricity distribution system. Responsibilities of the Franchisee under this arrangement includes meters, distribution transformers, breakers, MBC functions, amongst others.

The Franchisee would also be required to undertake rehabilita-

tion and upgrade of the distribution system by investing its own funds and recovering same via a Project Agreement executed with the Disco Model 3: Distributed Generation based Electricity Distribution (DGED): With respect to DGED Model, the Franchisee can undertake procurement of more energy either through bilateral arrangements over the transmission network or embedded at local distribution networks level to meet the electricity deficit of customers within the franchise area.

It would be essential to understand how these 3 models would be implemented (particularly Model 1 and Model 3 in view of other NERC Regulations being in effect. In respect to Model 1, there is already the NERC Meter Asset Regulation 2018 which permits Discos to appoint Meter Asset Providers for the purpose of providing metering services which may include meter financing, procurement, supply, installation, maintenance and replacement. In the light of this, it may be argued that there is overlap between the Model 1 and the MAP Regulations.

It would be crucial for NERC to clarify if the MAP Regulations have been rendered redundant, since the Disco can basically franchise the role of the meter asset provider to a Franchisee.

However, it must be noted that the meter asset provider may be blended with the Model 1 such that meter asset providers may be able to qualify as franchisees and undertake metering, billing and www.businessday.ng

collection on behalf of the Disco.

In respect to Model 3, the Consultation Paper seems to imply that the Franchisee can indeed supply power to the Discos. It is germane to reiterate that the section 62(2) of the Nigerian Electric Power Sector Reform Act (EPSRA) 2005 states that no person shall own or generate a power generation facility without obtaining a licence from NERC. Thus, where the Franchisee is supplying the Disco with power above 1mw, such Franchisee would be required to obtain a generation licence from NERC (except if NERC grants a derogation in this regard). If this is the case, we are of the view that the whole licensing regime under the Franchisee arrangement may be blurred and cause confusion among prospective investors.

It is also crucial to note that even the Franchisee obtains a generation licence, the licence terms and conditions issued to generation licences prohibit generation licensees from engaging in distribution activities. Thus, from a legal perspective, it may not be workable for the franchisee who obtains a generation licensee to supply power to the Disco to also undertake its obligations as a “mini-distributor” under the franchise arrangement. NERC must take note of these dynamics and potential conflicts that may arise from the implementation of Model 3. c. Franchising Contractual Framework The element elucidated on, in items (a) and (b) would be out-

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lined in a Franchise Agreement to be executed between the Disco and the Franchisee. According to the Consultation Paper, the Franchise Agreement would provide for

meter asset providers would be required to also obtain franchise permits in order to participate in the franchise arrangement.

• Performance delivery/ performance parameters; • Asset register; • Ownership of assets; • Investment plan; • Frequency and mode of payment; • Payment guarantee; • Default events and conditions of termination; Other parameters inclusive of contract period, baseline data, energy NERC is yet to issue a draft/ template Franchise Agreement which would provide potential investors with more clarity as to the how the franchising contracting structure would work. In order to ensure industry contribution to the proposed franchising arrangement, NERC should invite members of the NESI to comment on the draft Franchise Agreement so as to tackle any bankability issues arising therefrom.

Franchisee and Independent Electricity Distribution Networks

Other Considerations.

The Consultation Paper indicates that the distribution franchisee shall be required to operate and maintain electricity distribution infrastructure as well as invest in distribution infrastructure. Section 62 of the EPSRA indicates that, where any entity is to undertake the distribution of power of 100kw or above, such entity shall obtain a distribution licence from NERC. Thus, to the extent that the distribution franchisee is obligated to install, operate and maintain distribution infrastructure, it would be essential for the Regulator to confirm if the Franchisee would be required to obtain distribution licenses when distributing power of more than 100kw.

Competitive Procurement of Distribution Franchisees

To be continued next week

The Consultation Paper indicates that the distribution franchisees would be engaged through a competitive procurement process which would culminate in such franchisee being issued a Franchise Permit. However, in view of Model 1 (described in item b above), it would be necessary for NERC to clarify as to whether

Ayodele Oni {ayodeleoni@outlook.com}, a solicitor, specializes in international energy (oil, gas and electricity) investment law and policy.

He holds a mini-MBA in power & electricity.

@Businessdayng

Thursday 16 May 2019

BUSINESS DAY

31

BD LegalBusiness JEE SECTORINSIGHT Essentials of attracting private equity funding

rency A ADEKUNLE SOYIBO

ccessing adequate capital to scale up a business can be a daunting task. Great ideas, innovation and market opportunity would waste in the absence of capital. Such Ideas, innovation and opportunity would migrate to firms with adequate capital or the capacity to attract it. Suffice to say that underpinned in most business failures is the lack of adequate funding. The entrepreneur as the driver of business must be able to anticipate funding requirements for the respective stages of the business as well as grow the business to attract the needed capital throughout its life. The early and growth stages of the business being the most critical to put the business on firm footing.

Most entrepreneurs are able to raise the needed capital to kick start their business but would usually face challenges raising capital to scale up. The question is usually whether the business will be able to “attract” the required funding for expansion. The key word, therefore, is “attract”. In other words, the business must be interesting enough to catch the attention of would-be investors with the financial war chest to take a bet and risk their funds

es

on the business. This is typically the case with most institutional investors including private equity funds. Today, private equity funds are a good source of funding for firms that are seeking to grow and expand their business. Nigeria and other Africa countries have been beneficiaries of private equity investments. A good number of the private equity funds that are being raised on the continent are also seeking viable investment opportunities in Nigeria and across the African continent.

terials from or invest in may obtain Naira or Naira nated loans from Chinese o pay for their imports or ents.

ues arising from Swap

On this note, it would be important to share with entrepreneurs seeking to grow and expand their business in Nigeria, across West Africa and indeed the continent some of the essentials of attracting private equity funding.

funds will seek out to invest in businesses with capacity to grow and return money in multiples of capital invested over a period of time; the businesses with the potential of making higher returns on investment within a short payback period will be the most attractive. The ability of the business to scale up within the short to medium term is therefore essential. The sweet spot for the investment horizon is about three to five years by which time the business should have expanded and returned on the investment.

In any case, where it is justifiable, private equity investors are willing to wait for longer periods of time to actualise the investment.

In making the investment, t h e p r i vat e e q u i t y i nve s t o r may (a.) take up shares, debt or a mix of equity and debt for the investment ; (b.) have management oversight of the business through the board, board committees and/or executive committees; (c.) insist on appointing key management personnel of the business. The rationale is to have some level of oversight and/or control on the management of the business to ensure that the business is being steered in the direction of growth

sided balance of trade between Nigeria and China. According to How Private Equity Investthe National Bureau of Statistics, ment Works Private equity funds, like any other financial will apart between 2013 and 2016,investor, Nigeria’s from providing capital, also have goal of making trade deficit withthe China wasreasonable USD returns on the investment. These 16.9 billion, therefore anyfirm, further A publication by the law Jackson Etti & Edu. increase on the import side of trade will worsen Nigeria’s position on the Trade Chart.finance with a view to creating a encourage growth and the devel-

DOA law firm set for ABS 2.0

and profitability.

What Private Equity Investors Look For 1. Entrepreneurial Spirit and Strong Management Team The private equity fund will not be involved in the daily management of the business and therefore will seek out for sponsors and management teams that are eager to advance the course of the business, are hands-on, resilient, embracing innovation and new way of thinking, ability to attract talents as well as other traits that distinguish entrepreneurs. The management team’s track record will be subjected to scrutiny to affirm the strength and resilience of the team at delivering growth and profitability.

The experience of the management team and the ability to deliver the future of the business is also critical. The investor will want to be comfortable with the management team’s ability to craft and execute on the strategy of the business, leverage on relationships and alliances, enhancing efficiency by leveraging on technology as well the motivation and cohesion within the management team.

To be continued next week

ph of consumerism ous sectors of the economy. The ommercial law firm, Duale platform for Fintech companies, opment of skills in key sectors of Firm has specialist skills in areas reativityO via and Alex-Adedipe including Telecommunication, private equity firms, potential the economy.

(DOA) is set to host the investors, regulators and other For this edition, the firm has Media and Technology, Banking of the Renedition of its stakeholders to discuss invest- partnered with Bluechip Technol- and Finance, Company Secregeria’ssecond penchant forAnnual con- Round Tripping Business Series with the theme, ments in TMT and growth capital. ogies Limited, Cantagali Limited, tarial, Capital Market, Energy and ‘Developing opportunities and There will also be an array of MUVE Logistics, Assets Microfi- Natural Resources, Litigation and minbi n of foreign goods, Experts challenges in the Telecommunispeakers, panelists and delegates nance Bank, Lout Capital, VFD Dispute Resolution, Taxation, Real and Construction. cations, Media and Technology up of thought Nigeria has hadmade a tough timeleaders, ad- Group and PiggyTech Global Estate ned that the BCSA The firm is recognised in Tele(TMT) Market in Nigeria’.may be policy makers, and more players Limited and a host of others.

The event which will take place in these industries.

DOA is a bespoke full-service communication, Media and Techdressing the problem round at the Wheatbaker Hotel, Ikoyi, In its second of edition, the DOA commercial law firm in Nigeria nology (TMT), finance, as well as vourable to Chinese busiLagos on Monday, 20th May 2019 Business Series has become a providing a wide range of expert in the Real Estate and Constructripping especially with USD. legal services to a highly diversi- tion space by Legal500, IFLR will once again bring together platform for the the cross-pollination whichexperts mayinflood the NigeTelecommunication, of ideas between the legal and fied client base both local and 1000, Law Digest Awards, and the Media, Technology ( TMT ) and business communities, so as to international operating in vari- Nigeria Legal Awards. been structured ket with Chinese products The regulation has aper rate, thereby pushing to eliminate round tripping by GLOBALREPORT ntry to abandon its growing providing for payment directly to faces contempt charges for alleged failure to show up for client hearings law and firmssettle report ‘exceptional’ year Lawyer sellers operating in China.

Despite cturingTech sector for n the latest sign of health in DUI lawyer in Virginia says he In addition, Fisher was fined UK’s commercial law sector, plans to reduce his caseload the above, the CBN must set up ef$100 in March for being late to mer nation status.

Thames Valley technology after he was accused of cona hearing and sanctioned $500 specialist Boyes Turner has ancourt for missing client for swearing at a prosecutor and ficient modalitiestempt to ofprevent round nounced strongly growing profits hearings and failing to produce threatening to sue his office. Fishand a recruitment drive, including a client’s driving record. er told the Roanoke Times that tripping by Authorised Dealers who partner level.

Blacksburg lawyer Jonathan P. anceatof Chinese Prodhe won’t appeal the conviction In the year ending 31 March preFisher, 42, told the Roanoke Times and sanctions, which stem from tax profits rose 22% to £4.2m on will be allocated the Renminbi for the scheduling problems led Andrew Chalkley, chief execu- that disagreements over a plea deal. when he took time off for a brorevenue up 8.3% to £15.5m. It is the tive, said: “It has been an excep- him to reach out to Lawyers HelpFisher told the Roanoke Times first time that the firm’s turnover tional year. We have a strong busi- ing Lawyers, a nonprofit, where ken arm last fall. that sessions with Lawyers Helpdisbursement to customers.

Fisher is appealing two conmore,hasthe deal£15m. when fullyness with a good base of existing he is attending group sessions led tempt convictions for missing ing Lawyers helped him realize exceeded The figures are still subject to audit. clients and an encouraging flow of by a mental health professional. court dates and has two other that sometimes lawyers focus so Core sector teams inincrease technolo- new work coming through which nal will secure an Fisher has had more than 50 much on helping clients that they gy, development and housebuild- promises further profitable growth broken bones because of brittle upcoming hearings for alleged forget to take care of themselves. failure to appear and failure ing and leisure and hospitality all in the current bone disease, and the injuries year.”

“You’ve got to take care of your ailability of Chinese goods The lawConclusion to produce the driving record, performed well, the firm said. A firm of Boyes Turner has have left him with post-traumatic the article reports. Five other own self, or you can’t take care of recruitment drive, including at 22 partners, stressthe disorder, he told thereRoasix legal directors Taking a cueandfrom positive contempt charges have been other people,” he said. igerian market.

When thismore than partner level, has begun to meet noke Times. He said his schedul50 other lawyers -ABA JOURNAL dismissed or deferred, according a rise in new instructions for the ing problems began to worsen -LAW SOCIETY GAZETTE firm’s corporate team. competition between the ception of the BCSA by the public to the story. d goods and our locally and private sector participants ctured product will be dif- in the economy, we expect busi-

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32

Thursday 16 May 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Dangote, two other companies lead world expansion programme for Ammonia production Olusola Bello

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he completed but yet-to-be commissioned Dangote Fertilizer Company, Nagarjuna Fertilizers and Chemicals Ltd in India and Nakhodka Fertilizer Plant in Russia, are the topthree companies expected to contribute to the planned capacity additions worldwide for Ammonia production over the next nine years period.

Global ammonia capacity is expected to experience considerable growth over the next nine years from around 230 metric ton per annum (mtpa) in 2018 to more than 280 mtpa by 2027.

More than 95 planned and announced ammonia plants are expected to come online, primarily in Asia and the Middle East over the next nine years.

The fertiliser plant which

is located at Lekki Free Trade Zone is set for inauguration anytime soon this year. The official commissioning date is yet to be fixed according to sources close to Dangote group Aliko Dangote, Africa’s richest man and chairman

of the Dangote Group, said the ongoing investment in refining, petrochemicals, fertiliser and gas was driven by the desire to bring innovation and efficiency into all aspects of Nigeria’s oil and gas sector.

He said the 650,000-bar-

Oil supply crunch to test OPEC’s spare capacity Ahmad Ghaddar

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he rise in crude pipeline vandalism and leakages in Nigeria couple with the situations Iran, Libya and Venezuela could make Oil production capacity could fall to under one percent of global oil demand by the end of the year if OPEC compensates falling production from Iran and Venezuela, leaving oil prices exposed to sharp swings in the event of unplanned outages, analysts say.

Spare capacity is the extra oil a producing country can bring on stream and sustain at short notice, providing global markets with a cushion in the event of natural disaster, conflict or any other cause of an unplanned supply outage.

Very few oil producers hold spare capacity, with Saudi Arabia, the largest producer in the Organization

of the Petroleum Exporting Countries, and the world’s biggest oil exporter, holding the lion’s share.

As the oil market faces major supply crunches this year, largely due to U.S.-imposed sanctions on OPEC’s Iran and Venezuela, analysts say there’s enough spare capacity to compensate for their lost production.

Production from the two countries has already fallen by a combined 1.85 million bpd from 2018 peaks, according to Reuters estimates, but production is expected to fall further, especially in Iran.

While analysts expect Venezuelan production to more or less stabilize at current levels of around 700,000800,000 bpd for the rest of the year, Iranian oil production is forecast to fall further after as the United States seeks to completely choke off its exports.

“Iran is around 2.5 million bpd right now and we see it down to around 2 million bpd

rels per day capacity refinery being built would become the world largest single train refinery on completion, describing it as a boost to Nigeria’s economy.

According to him, the group is also constructing the largest fertiliser plant in

West Africa with a capacity to produce 3.0 million tonnes of urea per year.

“Nigeria will be able to save $0.5bn from import substitution and provide $0.4bn from exports of products from the fertiliser plant. Thus, the supply of fertiliser from the plant, which is set for inauguration before the second quarter of 2019, will be enough for the Nigerian market and neighbouring countries,” he said.

The Dangote Fertilizer complex consists of Ammonia and Urea plants with associated facilities and infrastructure, to produce 3 MMTPA Urea.

The complex comprises: 2 x 2,200 MTPD Ammonia Plants based on Halder Topsoe technology, 2 x 4,000 MTPD Melt Urea Plants based on Snamprogetti technology, 2 x 4,000 MTPD Urea Granulation Plants based on Uhde Technology.

A Captive Power plant comprising of 3 Steam Turbine generators of 40 megawatts (MW) capacity each.

Total 120 MW 3 Auxiliary Boilers for 40 steam generation of 200 capacity each Unit No, Unit Name 10, 20 Urea Train -1 & 2 11,21 Ammonia Train -1 & 2 19,29 Urea Granulation Train -1 & 2 Unit No Unit Name 12 Water Treatment System 13 Steam & Power Generation System, 14 Cooling Water System 15 Natural Gas System 16 Nitrogen Production & Storage. 17 Instrument & Plant Air System, 18 Potable Water System 22 Emergency & Power Diesel System, 23 Effluent Treatment Plant 24 Fire Fighting System, 25 Ammonia Plant Flaring System Unit No Unit Name 30 Ammonia Storage System 31 UFC Storage System 32 Urea Bulk Storage 33 Urea Handling System 34 Urea bagging process plants .

Power industry operators tackle TCN over cause of system collapse

by the end of the year,” Energy Aspects geopolitical analyst Riccardo Fabiani said.

Goldman Sachs forecasts that Iran exports will stabilize at 400,000 bpd, 900,000 bpd lower than April levels.

“While Saudi Arabia, UAE and other OPEC countries will likely fill the gap created by lower Iranian exports, albeit more reluctantly than last year, it will come at the cost of a significant reduction in the spare capacity and also increase the risks of a potential conflict in the Middle East,” Barclays said in a note.

If spare capacity drops to below 1 million bpd, or around 1 percent of global oil demand, oil prices will be left exposed to big swings if oil production in places like Libya and Nigeria were to fall.

Tw o Ni g e r i a n c r u d e grades are suffering significant disruptions amid recurring pipeline outages in the country’s oil-rich Delta region.

he transmission Company of Nigeria has heaped the problems of system collapse on the distribution companies that have refused to take the loads that are allocated to them.

Us ma n Mo ha m m e d , managing director of TCN in an interview with Channels Television said the refusal to take allocated loads by the He blamed on 11 Electricity Distribution Companies for rejecting load thereby forcing TCN to Ram down their Load with attendance damages to the Transmission & Generation components of the Nigerian Power Grid Infrastructure However some industry players are of the believe that massive load rejection can cause system collapse but that the distribution companies do not have such

massive load that can cause system collapse supplied to them at any point in-time. “I cannot think of such massive rejection from the distributing companies”, a source disclosed to BusinessDay. They said that there could be some obstructions to the transmission lines by trees which may have fallen on the lines because of serious storms or heavy rain. When such tree falls on transmission lines they said it may cause a trip in the system which may cut off supplies from the machines in order to protect machines.

They still put the problems squarely at the door step of TCN. Usman Mohammed, who also spoke extensively on several investments made

by Federal Government of Nigeria viz the Transmission improvement drive of the present administration however admitted that there are gaps in the critical components of the Grid .

He said Federal Government has secure funding to procure SCADA to reinforce the communication backbone of the grid as a part of a comprehensive Roll Map of National Grid Automation.

He also said that in days to come, TCN will acquire Spinning Reserve.

“However, all of these are subject to timely approval of the request by Nigerian Electricity Regulatory Commission ( NERC)” He said the revenue accruable it is on the basis of ratio 20: 80, adding that with less than 30% the Transmission Company is seemingly incapacitated financially.

The TCN he said has been up to date in three years cycle of audited account in line with Global best practices.

He said this has made TCN bankable, globally competitive and attractive to foreign direct Investment and other forms of Institutional Investment.

transport infrastructure also contributed to bolster gas penetration in key markets.

China became the largest net importer of natural gas in the world before Japan.

Chinese net imports jumped by 32% and accounted for

more than 80% of the global increase in net imports, once again highlighting the crucial role of China in absorbing global gas production.

Like in 2017, the expansion of natural gas demand was part of a substantial global growth in

world energy demand, driven by a robust global economy and extreme weather conditions.

Strong gas demand growth in Asia contributed to a rise in market prices in key areas and prevented the formation of a global LNG bubble.

Olusola Bello

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Natural gas supply and demand grew at their fastest pace since 2010 -report

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lobal natural gas demand surged 4.7% to 3.850 trillion m³, driven by the US and China. The US was the standout performer, accounting for 45% of the global increase in both the consumpOlusola Bello, Team lead,

tion and supply of natural gas.

The period 2018 marked the second year of strong growth of natural gas demand, after a 3.5% rise in 2017. It also recorded the highest growth of gas demand since the postcrisis rebound of 2010.

Graphics: Joel Samson.

This fast expansion was driven by the abundance of competitive gas supply, especially in the US and in Russia and by supportive energy and environmental policies, in some countries, particularly in China. Investment in

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Thursday 16 May 2019

BUSINESS DAY

33

ENERGYREPORT

’NERC can revoke licences of non-performing Discos’ Stories by Olusola Bello

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abatunde Fashola, minister of power, works and housing, says the Nigerian Electricity Regulatory Commission (NERC) has the power to revoke licences of non-performing electricity distribution companies (DisCos).

Speaking at the 2019 Punuka annual lecture in Abuja, Fashola maintained that the regulatory body, not the minister, could either cancel or amend the licences of the DisCos upon consumers complaints.

The minister said the powers of NERC is applicable to all licensed authorities, including the transmission companies, generation companies, distribution companies and others under the act.

He said that state governments are also empowered under the constitution to generate, transmit and distribute electricity in areas not covered by the national grid.

“The power not to renew or to revoke operational licence of any of the authority is in sections 73 and 74 of the

L-R: Igo WelI, general manager external relations of Shell Petroleum Development Company (SPDC); Bayo Ojulari, managing director, Shell Nigeria Exploration and Production Company (SNEPCo); Osagie Okunbor, managing director, SPDC and Country Chair, Shell Companies in Nigeria; and Ed Ubong, managing director, Shell Nigeria Gas, at the Launching of the 2019 Shell Nigeria Briefing Notes.

Act and so, there is no monopoly granted any agency unless it is endorsed on their licence,” Fashola said.

“So, there is nothing that stops the regulator from licensing another person to do the same activities within their territory as DisCo. “If you are not serving an area well, you will get a notice that consumers in the area are not happy and you will be

given a time limit to deal with the problem.

“Upon failure to address the problem, the regulator can amend your license, take the area out of your territory and license it to another person or cancel the entire license.”

The Nigerian electricity distribution sub-sector has been considered the weakest link in the value chain since

privatisation of the power sector in 2013, as it has failed to live up ...... Power sector privatization process in retrospect: Twenty-one companies were prequalified on Wednesday to have their financial bids opened for the 10 distribution companies created from the unbundling of the Power Holding Company of Nigeria,

known as PHCN. The National Council on Privatisation, after a meeting presided over by its chairman, Vice President Namadi Sambo, approved their eligibility for the exercise billed to hold on October 10 in Abuja.

The meeting approved 10 distribution companies, codenamed DISCOs, to bid for distribution in Ikeja. The companies include Honeywell, Oando, Western Consortium, Integrated Energy, Amperion Power Distribution Company Limited, Vigeo Holdings, Gumco, African Corporation AFC & CESC, Kepco/NEDC Consortium, West Power and Gas, and Rockson Engineering Limited.

In the case of Eko DISCO, six companies were pre-qualified comprising Oando, Integrated Energy, Sepco-Pacific Energy Consortium, Honeywell Energy, Kepco/NEDC, and West Power and Gas. Three bidders, Western Consortium, Integrated and Kepco/NEDC Consortium, were approved to bid for Ibadan DISCO. For Abuja DISCO, Kann Consortium Utility Company Limited and Interstate Electrics Limited made the

cut-off mark, while four companies - Rensmart Power Limited, Proglobal Power International Consortium, Interstate Electrics Limited and Eastern Electric Nigeria Limited - were prequalified to bid for Enugu DISCO. Aura Energy Limited made the cut-off mark to bid for Jos DISCO; Sahelian Power SPV Limited was prequalified for Kano DISCO; Power Consortium and Rockson Engineering Limited were pre-qualified for Port Harcourt Disco; while Integrated Energy was the sole bidder pre-qualified for Yola DISCO. Four companies were also pre-qualified to have their financial bids opened for Benin DISCO. They are: Southern Electricity Distribution Company, Rensmart Power Limited, Vigeo Power Consortium and Rockson Engineering Limited.

When we look back today at the performances of these companies almost six years after they were handed the assets they are below expectations. They attributed the challenges to policy summersault which have crippled their efforts.

Fossil fuel to account for 53 percent of world energy demand up to 2040 – Seplat boss

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ith the global energy transformation defining the energy landscape and world economies, fossil fuel will still account for 53 per cent of the world energy demand even up to 2040.

This was made known by the Chief Executive Officer, Seplat Petroleum Development Company Plc, Austin Avuru, while speaking on a panel session at the 2019 workshop hosted by Petroleum Technology Association of Nigerian (PETAN) at the Offshore Technology Conference (OTC), with the theme: ‘Global Energy Transformation - The Effect and Future of the African Oil Industry and Economy’ in Houston Texas, United States.

According to him, “Even up to 2040, fossil fuel will account for 53 per cent of the world energy demand. So what we are seeing today is a gradual decline in the total contribution of fossil fuel to the energy mix over time. It is not an overnight elimination of fossil fuel.

Speaking further, Avuru noted that the global trend in energy supply would seem to suggest an alarmist way, adding that, “The impression is generally given that the world is fighting a spirited battle to make sure that fossil

fuel becomes irrelevant; and in that context, for countries like Nigeria that are endowed with fossil fuel, some people seem to be saying Nigeria is going to wake up one day and find out there is no use for its crude oil and natural gas.

“This impression also suggests that Nigeria will become a worthless country because its fossil fuel endowment will become completely useless to the world.”

However, Avuru affirmed that, “As we move beyond 2030, 2040 and 2050, the energy mix will continue to be guided by availability, commercial consideration; which means, even for fossil fuel, countries will pay attention to cost because fossil fuel will have to be able to compete the same way renewable will have to be able to compete.”

He explained that fossil fuel was always known to be a finite resource which means that the world, even over the last 100 years, knew that we will come to a point where there will be a decline in the supply of fossil fuel as energy source.

“Those days in the 70s, there was a prediction by the International Energy Agency (TEA) that between 2012 and 2015 we would get to peak oil.

Peak oil means that beyond that point, we will begin to see a decline in the world www.businessday.ng

production. Thanks to technology. That date has been shifted forward. Peak oil will come. We have only shifted it forward because of technology,” the Seplat boss said “Today technology has enabled us to get crude oil and natural gas out of shale. Those of us who are geologists have always known that, there was crude oil in shale but shale didn’t have the permeability to release it. What technology has done through tracking is to induce that permeability to release the crude oil and natural gas from shale. Thanks to technology because we have seen additional sources of crude oil and natural gas that moved backwards the date for peak oil.”

He stressed that energy needs keep increasing by three percent on a yearly basis. If that 11 percent accounted for by renewable energy were not there today, the demand for crude oil and natural gas would have driven the cost of crude oil to about $200 per barrel.

“Invariably, what we are seeing is a gradual transformation that should not be seen as a curse but as a solution that is being provided to the world that by the time we get to the point of decline in the supply of fossil fuel, there will be alternatives to fill the vacuum,” he noted.

EIA revises its crude oil price forecast upward as supply expectations change

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n its May 2019 edition of the Short-Term Energy Outlook (STEO), EIA revised its price forecast for Brent crude oil upward, reflecting price increases in recent months, more recent data, and changing expectations of global oil markets.

Several supply constraints have caused oil markets to be generally tighter and oil prices to be higher so far in 2019 than previous STEOs expected.

Members of the Organization of the Petroleum Exporting Countries (OPEC) had agreed at a December 2018 meeting to cut crude oil production in the first six months of 2019; compliance with these cuts has been more effective than EIA initially expected. In the January STEO, OPEC’s crude oil and petroleum liquids production was expected to decline by 1.0

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million b/d in 2019 compared with the 2018 level, but EIA now forecasts OPEC production to decline by 1.9 million b/d in the May STEO. Within OPEC, EIA expects Iran’s liquid fuels production and exports to also decline.

On April 22, 2019, the United States issued a statement indicating that it would not reissue waivers, which previously allowed eight countries to continue importing crude oil and condensate from Iran after their waivers expired on May 2. Although EIA’s previous forecasts had assumed that the United States would not reissue waivers, the increased certainty regarding waiver policy and enforcement led to lower forecasts of Iran’s crude oil production.

Ve n e z u e l a — a n o t h e r OPEC member—has experienced declines in production and exports as a result @Businessdayng

of recurring power outages, political instability, and U.S. sanctions. In addition to supply constraints that have already materialized in 2019, political instability in Libya may further affect global supply. Any further escalation in conflict may damage crude oil infrastructure or result in a security environment where oil fields are shut in. Either situation could reduce global supply by more than EIA currently forecasts.

In the May STEO, total OPEC crude oil and other liquids supply was estimated at 37.3 million b/d in 2018, and EIA forecasts that it will average 35.4 million b/d in 2019. EIA assumes that the December 2018 agreement among OPEC members to limit production will expire following the June 2019 OPEC meeting.

34

Thursday 16 May 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

E-COMMERCE

Jumia denies wrongdoing in share listing as Q1 2019 revenue surged 102% OLUFIKAYO OWOEYE

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-commerce giant, Jumia has denied fraud allegations levelled against it by Citron Research regarding irregularities in its listing document, last week, Jumia shares lost a quarter of its value.

Sacha Poignonnec, cochief executive and cofounder Jumia, said the company “completely stands by” the numbers it included in its initial public offering filings, which were questioned by Citron.

“We will not be distracted by those who seek to create doubt to profit at our expense and that of our longterm stakeholders,” According to Poignonnec, the discrepancies between a private investor presentation and its official filings that Citron claimed as evidence of fraud were actually examples of figures from different time periods, and in some cases

Profit also exceeded fulfilment expense in Q1 2019.

Leveraging on its brand awareness and localized marketing approach, Jumia was able to achieve an improved 2.05% of marketing efficiency in Q1 2019, bringing the Sales & Advertising expense own from 7.2% of GMV in Q1 2018 to 5.1% in the Q1 2019.

However, the problem that still makes the books sour, is the persistence of cash purchases which Poignonnec says the company is addressing frontally in 2019 by increasing digital transactions to reduce the incidence of returned items and purchase cancellation.

Jumia, which operates in 14 African countries, reported a loss of €45.4m in the first quarter, against a €34.2m loss in the same period a year earlier. Revenues rose 12.3 per cent from a year earlier, to €31.8m. The company also announced a partnership with Mastercard for its payments system JumiaPay.

2019, from €152 million in Q1 2018, on the back of improved numbers of active consumers and spend per active consumer which has seen its marketplace revenue grow by 102.3 percent. Brand recognition and gradual migration of Nigerian consumers to digital shopping improved revenue and merchandising volume.

The company’s active consumers increased from 3m in Q1 2018 to 4.3m in Q1 2019, representing a rise of 43% Year-on-Year while on a Quarter-to-Quarter basis active consumers grew from 4m in Q4 2018 to 4.3m in Q1 2019.

Increased Monetisation of the order-to-delivery process was a robust 102%. Market place revenue rose from Euros 7.9m to Euros 16m in absolute terms.

Gross Profit margin as a percentage of Gross Merchandise Volume GMV increased from 5.6% in Q1 2018 to 6.5% in Q1 2019, as a result of the increased GMV monetization rate. Jumia’s Gross

describing different aspects of the business, being inaccurately compared.

He added that the cochief executive Jeremy Hodara did not profit from the sale and repurchase of the company’s Tanzania business, which was another issue raised by Citron.

“Jeremy did not profit from these transactions,” he said. He said the company was “looking at our options”, including regulatory and legal options, in response to the allegations.

Andrew Left editor at Citron said that he welcomed an official challenge from the company. “There’s nothing that would make me happier — I would walk into the SEC office tomorrow, me against Jumia,” he said.

The Africa-focused ecommerce company released its Q1 2019 results which showed strong momentum in gross merchandise volume (GMV) growth of 57.6 percent year on year (yoy) to €240 million in Q1

CONSUMER SPENDING

Influx of Asian smartphone brands into Nigeria market drags price BUNMI BAILEY

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he influx of Asian brands specifically targeted for the Nigerian market is the major driver for the continuous decline in the average price of smartphone to $95 (N34,200) in 2018 from $117( N42,120) in 2016, and $216(N77,760) in 2014, according to the recently released 2019 Jumia mobile report.

From the report, Asian brands have consistently enjoyed massive patronage due to their Africa-specific strategy of introducing lower price point smartphones into the Nigerian market.

“In 2018, Fero, Samsung, Nokia, Infinix, and Tecno remained the customers’ favourites and the top selling mobile brands on Jumia. It is interesting that a one-time

king of mobile phone, Nokia is gradually returning to the limelight, riding on its durability claim. Infinix continues to lead the pack, year on year,” the report further stated.

Also the availability of lower priced phones still remains the major driver of smartphone penetration as it increased by 87 percent in 2018 from 84 percent in 2017.This shows that out of an estimate of 201 million Nigerians by the United Nations Organization, there are over 172 million mobile subscribers in 2018 from 162 million in 2017.

While the number of smartphone users might have increased year-on-year, its penetration is still very insignificant.

Gbolahan Ologunro, an equity research analyst at Lagos-based CSL Stockbrokers said, “MTN has embarked on the production of smartphone and that has

driven down the cost of smartphones in the market given its affordability when compared to other brands.

Additionally, the production of improved or more advanced brands has been accompanied with moderation in the prices of existing brands, leading to lower prices for smartphones.”

“Most companies in the

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smartphone manufacturing business in a bid to incorporating technological advancement in their existing smartphones tend to release new and or upgraded brands, leading to a moderation in the market value of the existing brand as consumers shift to the usage of the newly released brand,” Ologunro further added.

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Nigeria has been predicted to be among the various countries across the world that will push the total number of global mobile subscribers to 6 billion between now and 2025.

“Nigeria has been identified among these countries, with others being India, China, Pakistan, Indonesia, USA, and Brazil. It is predicted that

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Nigeria will contribute 4 percent of the estimated 700 million new global mobile subscribers, making it the only country in Africa marked with a significant contribution to increasing mobile penetration in the world,” “By this quota, it is expected that 28 million new mobile subscribers will emerge from Nigeria between 2019 and 2025, that is, an average of 7 million new mobile subscribers annually, if the country is to meet its quota,” the report further said.

Also from the report, the Telecommunications and Information Services, a subsector of the Information Communications Technology, contributed 77 percent of the sector’s contribution to the GDP. Overall, the mobile telecommunications sub-sector contributed 7.4 percent to the country’s total GDP in 2018, compared to 5.5 percent in 2017

Thursday 16 May 2019

BUSINESS DAY

Retail &

35

consumer business

CONSUMER SPENDING

Why it’s more expensive to prepare meal in Abuja than Lagos, Akwa Endurance Okafor

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ccording to SBM Intelligence, an arm of SB Morgen, that tracks prices of key household items across major markets in Nigeria, it has become cheaper to prepare a meal in South Western Nigeria than the in north central.

The cost of cooking items to prepare for example jollof in markets in Abuja are more expensive than what they are selling in markets in Akwa and Onitsha, BusinessDay’s analysis of the SBM report show.

SBM’s visit to two markets in Abuja to collect the Jollof Index data –revealed that Wuse Market is the most expensive place to make Jollof in Nigeria.

“Asked why Wuse has remained expensive, most respondents claimed that was intentionally planned to retain only those who can afford a higher cost of living,” SBM said.

The report explained that the cost of transporting food item to Wuse is the same as the cost transport to Nyanya, but food items go up in Wuse because of costs such as rent.

On the other hand, SBM visit to markets in Onitsha and Awka revealed that Jollof is cheapest to make in that region of the country.

The prices of making Jollof in the South East trended downwards because asides from meat that is not a large scale business for the people from South East, many people in the zone farm every other food item.

“These days, almost every home has a farm, and they produce more than what they

consume, bringing the excess to the market.

Respondents also noted how the South East markets work: there are days set out for market.

Things are usually sold at a cheaper price in such market days,” the report by the research firm stated.

Prior to April 2018, the prices in Wuse were close to Nyanya, with Wuse always being marginally more expensive. However, from April 2018 onwards, the disparity became much wider, and by February 2019, it cost 25 percent

more to make Jollof with ingredients bought from Wuse market than it did in Nyanya market, owing to among other factors, cost of transportation, SBM data analyzed by BusinessDay show.

“We also must fix our transportation and logistics of moving foodstuff across the country.

For instance, eight small pieces of tomatoes cost only N50 in Kano. A mere five hours away in Abuja, the same eight tomatoes cost N200, four times their Kano price,” SBM noted.

Figures by the National Bureau of Statistics

(NBS) as analyzed by BusinessDay revealed that Nigeria’s inflation rate has decelerated for the third consecutive month in March 2019 to reach its lowest level in six months.

The CPI, which measures the composite changes in the prices of consumer goods and services purchased by households over a period, slowed by 11.25 percent on year-on-year (yoy) basis in March 2019, representing a 0.06 percentage points drop from 11.31 percent recorded in February 2019.

This was largely driven by the continuous decline in food inflation, which dropped for the fourth straight month to 13.45 percent in March from 13.47 percent in February, even as core inflation, which excludes the prices of volatile agricultural produce, also declined by 9.5 percent from 9.8 percent.

However, data by SBM revealed that Nigerians currently spend between 56 percent and 60 percent of their income on food on the average.

This, according to the report, is among the highest in the world.

“Nigerians continue to manage funds by buying ingredients in smaller bits as opposed to bulk buying and storing which may reduce cost of the foodstuff,” SBM noted.

Thus, reductions or increases in the price of food have an outsized impact on the quality of life of Nigerians, and by extension, on how much Nigerians have as income to allocate to other essentials such as clothing, housing, transportation, healthcare and schooling, and then discretionary income “We believe that it must be a strategic imperative for the government of Nigeria at all levels to make food cheaper for Nigerians,” SBM

CONSUMER SPENDING

Nigerians may pay more for food in 2019 BUNMI BAILEY

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griculture experts say Nigerians may experience higher food prices in the later part of the year as farmers are yet to commence the 2019 planting season due to the irregular rainfall and intensity of heat weaves in the ecosystem.

Mogaji African Farmer, head of agriculture and agro-allied group, Lagos Chamber of Commerce and Industry, (LCCI) said, “the sun intensity is extremely heavy and we are not having rainfall and so it will affect the availability and sustainability of food across boards.”

“Some farmers that started planting due to the rain that fell in January- February regretted it because the heavy rain swamped the whole area which made them loss their crops and because of that most farmers have delayed their planting because they are being careful,” Mogaji further said.

Earlier in the year, the Nigerian Meteorological Agency (NIMET) which undertakes Seasonal Rainfall Prediction (SRP) predicted

that the country is expected to experience below normal- to-normal rainfall season.

“The 2019 Seasonal rainfall prediction by NiMet is based on a warm ENSO phase (El Nino year) as predicted by the international ENSO prediction centers,” “Since there is a very high probability of a warm phase persisting from January to JulyAugust-September season, it is expected

that the predominant warm phase will moderately suppress rainfall in the country during this period particularly in the North while normal rainfall is expected from the predicted neutral phase towards the end of the season from September 2019,” the Agency stated in its website.

In Nigeria, there are two distinct seasons namely; rainy and dry season. While the rainy

season starts in April and ends in October with generally lower temperatures, the dry season starts off in November and ends in March.

And also planting season varies in the country. In the Northern part, it starts around July-August while the Southern region, it starts around ending March- April.

Aboidun Olorundenro, Operations Manager, Aquashoots Nigeria said that there has not been rainfall making some farmers to give up for the year and those that have planted have gotten their hands burnt because the intense heat withered their crops.

“We are almost in the middle of May and there is no rain. For example, the local farmers will tell you that there is a different time to plant white corn and yellow corn. And some that plant the white corn will tell you that they cannot plant again because even if the rain comes in now, it may not be enough to feed the population,” “I feel that this may not be food crisis because the government may import food crops into Nigeria but we may pay a little extra. This is almost the tenth of May and there is no rain,”Olorundenro said.

Analyst: Bunmi Bailey Graphics: Fifen Eyemisanre Famous www.businessday.ng

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36 BUSINESS DAY

Thursday 16 May 2019

MADE in aba Aba manufacturers, artisans upbeat as Geometric plans to roll out this year

GODFREY OFURUM

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ower remains a major challenge to manufacturers and artisans in Aba, the commercial hub of Abia State. However, the hint that G e ometr ic p ow er plant, currently under construction at Osisioma area of the city, would be completed sometime this year is already generating interest among the business community.

They believe that improved power supply will bolster economic activity as well as bring about the restoration of comatose industries in the area.

The power plant, spearheaded by Geometric Power Limited, an independent power p r o v i d e r, w o u l d b e dedicated to Aba and its environs.

Eleanya Okoroji, former president, Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA), affirmed that improved power supply would have a great impact on commercial activities in Aba, noting that the business community is eagerly waiting for the day the plant will be turned on.

He said constant power supply will not only resurrect dead industries, but also attract fresh ones.

“All these industries

depend on power. There is no way you can run a big factory without power.

If you depend on your own generator, it will be expensive for you. You will notice that the price of diesel has gone up; a litre now sells for N250. And you don’t talk about diesel alone; you’ll also talk about oil for the giant generators,” Okoroji said.

“Some people use 1,500 kva generator and some can

even use about ten of that size at a time, depending on the size of your factory, which means if you are consuming 33,000 litres per week, if you multiply it by N250 per litre, you are talking about millions of naira, just to provide power for your factory,” he added.

For Julius Ndukuba, chief operating officer (COO), Starline Industries Limited, improved power supply in the area will bring down

the cost of production and increase the production capacity of manufacturing firms. He is of the view that production will be cheaper than now that manufacturers are providing their own power using heavy-duty generating sets.

He also observed that constant breakdown of machines as a result of power fluctuation would be reduced.

In his words, “With

improved power supply, your cost of maintenance will reduce, because you w o n ’ t h av e i r r a t i o n a l power supply. Then when you are now talking about expansion, assuming you have a bigger market, you don’t need to spend money to acquire big generators as we are doing now, which means that the money you would have sunk into generator, you can now use to increase production or

for expansion.”

“The tendency is that you can now produce more at a cheaper rate, because one of the biggest and important inputs for every production is power,” he affirmed.

Manufacturers spent N24.28 billion less on alternative energy sources in 2018, according to data from the Manufacturers Association of Nigeria (MAN).

Expenditure on alternative energy sources fell from N117.38 billion in 2017 to N93.1 billion in 2018, MAN’s economic review says.

“Paucity and high electricity tariff have posed d i s ma l c ha l l e n g e s f o r Nigeria’s manufacturing sector over the years,” MAN says. “However, electricity supply appears to have slightly improved in the second half of 2018 at it stood at 10 hours per day as against nine hours per day recorded since the second half of 2017,” MAN explains.

H o w e v e r, e n e r g y remains a major challenge for manufacturers across the country.

It occupies 40 percent of manufacturing expenditure, according to players in the sector.

Many multinationals no longer rely on power distribution companies as they see the DisCos as unreliable.

Aba shoemakers see tanneries as roadblocks to input access ODINAKA ANUDU

S

hoemakers in Abia State industrial city believe that tanneries in Nigeria’s north are not making their access to raw materials easy.

They say tanneries prefer to export animal skins to earn dollars rather than sell to local manufacturers.

“What happens is that the tanneries in Kano and Kaduna process animal skins and sell them as leather in the global market, earning foreign exchange,” said Chinatu Nwagbara, coordinator of Made-in-Aba Project, who produced shoes for Olusegun Obasanjo in 2016.

“So we go to China and other countries to buy.

Sometimes, we buy our products and re-import,” he said.

Weakened local currency encourages tanneries to own large herds of cattle and goats in the north and then

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process their skins for export to their largest markets in Europe and Asia. Naira has lost more than 60 percent value since 2016 when the economy went into recession. One dollar exchanges for N360 in the major markets.

Export of animal skins, however, forces shoemakers in Aba to seek dollars regularly to import same, especially synthetic leather.

Nigeria has 131 million cattle, goats and sheep, according to the Federal Ministry of Agriculture (2011 figures). But herders are threatened by the dry-up of the Lake Chad Basin, which has forced them to move down south.

Aba shoemakers use synthetic leather, soles, rubber, adhesives, cardboard sheets, magnetic hammer, utility knife and pincers, among others, as inputs.

But synthetic leather and adhesives are often imported from China.

Shoemakers admit that

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some of the inputs they import from China are substandard, though cheaper than European prices.

Ken Anyanwu, national secretary, Association of Leather and Allied Industrialists of Nigeria (ALAIN), told BusinessDay that export of raw materials needed locally de-industrialises Nigeria.

He said such export hurts shoemakers in Aba and also the finished leather sector in Lagos and Onitsha.

Local raw materials utilisation in the manufacturing sector averaged 60.29 percent in 2018, representing 2.92 percentage point decline when compared with 63.21 percent recorded in 2017, according to MAN. @Businessdayng

This was ascribed to the general sluggishness of the economy and a renewed ability for importation of raw-materials by manufacturers, especially as the foreign exchange market stabilises, MAN said in an economic review.

One million pairs of shoes are produced in Aba each week by shoe and bag makers that number more than 80,000. The industry is estimated at N120 billion, contributing significantly to the gross domestic product (GDP).

More than 80 percent of the shoe makers are micro and small players but produce shoes that sought-after across the world.

Thursday 16 May 2019

BUSINESS DAY

37

Live @ The Exchanges Market Statistics as at Wednesday 15 May

Top Gainers/Losers as at Wednesday 15 May 2019 LOSERS

GAINERS Company

Opening

Closing

Change

Company

N7.3

N7.55

0.25

FO

N13.6

N13.85

0.25

CCNN

UCAP

N2.4

N2.45

0.05

DANGFLOUR

CHAMS

N0.33

N0.36

0.03

DANGCEM

JAIZBANK

N0.46

N0.48

0.02

UBN

UACN DANGSUGAR

Opening

Closing

Change

N34.95

N31.5

-3.45

N15.3

N13.9

-1.4

N17

N16.25

-0.75

N178.5

N178

-0.5

N7

N6.75

-0.25

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

28,286.08 3,294.00 176,741,695.00 2.076

Global market indicators FTSE 100 Index 7,296.95GBP +55.35+0.76% S&P 500 Index 2,855.71USD +21.30+0.75% Generic 1st ‘DM’ Future 25,670.00USD +100.00+0.39%

10.626

Deutsche Boerse AG German Stock Index DAX 12,099.57EUR +107.95+0.90% Nikkei 225 21,188.56JPY +121.33+0.58% Shanghai Stock Exchange Composite Index 2,938.68CNY +55.07+1.91%

MTN to reawaken buy-side of Nigeria stock market Iheanyi Nwachukwu

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mid lingered sell pressure at the Nigerian Stock Exchange (NSE), the listing of MTN Nigeria Communications Plc today (Thursday May 16) will no doubt rekindle the buy-side of the equities market.

MTN Nigeria has historically aimed to maximise dividends and in the medium term, it targets a dividend pay-out ratio of at least 80percent of its distributable net income subject to board discretion, according to the Telco in its first-quarter (Q1) analyst’s presentation.

The shares of MTN Nigeria Communications Plc are to be listed by introduction on the Premium Board of the Nigerian Stock Exchange. The listing is anticipated to lift the overall market capitalisation on the NSE and may trigger further primary market activities in

L-R: Olumide Bolumole, divisional head, Listings Business, The Nigerian Stock Exchange (NSE); Isaac Igbanoi, director of Administration, Neimeth International Pharmaceuticals Plc; Roseline Oputa, executive director, sales & marketing, Neimeth International Pharmaceuticals Plc; Oscar N. Onyema, chief executive officer, NSE; OON; Matthew Azoji, managing director/CEO, Neimeth International Pharmaceuticals Plc; Mmeje Chris, finance director, Neimeth International Pharmaceuticals Plc; Florence Onyenekwe, company secretary/Gen Mgr. finance, Neimeth International Pharmaceuticals Plc; Adekunle Adebowale, plant business manager, Neimeth International Pharmaceuticals Plc, and Jude Chiemeka, divisional head, Trading Business, NSE, during the Closing Gong Ceremony to introduce the new managing director to the market at the Exchange.

the telecom space. MTN listing by introduction brings forth N1.83trillion ($6billion) worth of equities to the Nigerian Bourse, thereby boost-

ing the value of listed stock by approximately 17 percent to N12.52trillion from its current low.

The stock market year-

to-date (ytd) negative return printed at -10percent on Wednesday despite that the All Share Index traded positively briefly at the beginning

of the session but sentiment quickly turned negative and never recovered till close of trading by 2.30pm.

The value of listed stock declined from N10.678trillion to N10.626trillion, representing a decline of about N52billion. The All Share Index (ASI) decreased by 0.48percent to 28,286.08 points from a high of 28,422.76 points the preceding trading day.

Forte Oil Plc was the biggest loser Wednesday on the Bourse after its share price declined from N34.95 to N31.5, losing N3.45 or 9.87percent. It was followed by Cement Company of Northern Nigeria Plc which recorded price decline from N15.3 to N13.9, after losing N1.4 or 9.15percent.

On the gainers table, Dangote Sugar Refinery Plc advanced most, from N13.6 to N13.85, adding 25kobo or 1.84percent; followed by UAC of Nigeria Plc which

was up from N7.3 to N7.55, after adding 25kobo or 3.42percent.

Week-to-date (Wtd), the stock market has lost 1.95percent of its value. In 3,294 deals, stock dealers exchanged 176,741,695 units valued at N2.076billion. Access Bank Plc, UACN Plc, UBA Plc, GTBank Plc, and Zenith Bank Plc were actively traded stocks on the NSE. Nigerian investors own 19.4percent of MTN Nigeria, while 78.8percent is owned

by South Africa’s MTN Group.

“The lack of market catalysts is the reason for the persistent declines observed on the bourse. However, we expect to see some respite for the market on Thursday as MTN lists its Nigerian shares on the Exchange by Introduction. We expect the listing to buoy investor interest in the market and boost overall market performance”, said equity research analysts at Vetiva Capital.

pre-paid customers.

Although data share of revenue was only 17percent, its share of revenue is up from c.13percent in 2017. Voice revenue is expected to remain strong going forward, however, management expects data revenue along with revenues from digital and fintech to grow strongly (though from a small base) in the medium term.

The company’s 2018 EBITDA margin is strong at c.44percent compared with 45percent in 2017.

MTN’s adjusted free cash flow (AFCF) also grew by 21percent y/y to N223billion. PBT and PAT were also up by 105percent y/y and 80percent y/y to N221bn and N145bn respectively.

Strong returns profile with ROE and ROA of

c.89percent and 16percent respectively.

4G and smartphone penetration are still low at penetration levels of 24percent and c.40percent respectively.

One of the key strategic thrusts going forward is to expand network coverage to the underpenetrated segments of the market. In a bid to drive smartphone and by extension data penetration, the company has introduced an affordable feature phone with some smart phone capabilities to market.

Nigeria’s low data usage estimated at around 250MB per month compared with 844MB and 3.0GB for South African and Western Europe respectively portends great opportunity for growth for this segment of the market.

FBNQuest Research:

MTN Nigeria announces share listing on the NSE Event: MTN Nigeria listing finally happening mplications: Given the market is down year-to-date (ytd) because investors have ignored most positive catalysts, we think MTN is likely to test the market’s lethargy given its strong growth story.

Assuming it is listing at N90/per share (and that 20 billion shares are listed), the implied current P/E multiple is 9.1x, which looks decent versus most companies we cover given MTN’s earnings growth outlook is likely to remain in the double-digit territory in the near term.

MTN Nigeria, Nigeria’s largest telecoms company has just announced the listing of its shares on the Nigerian Stock Exchange.

Newswire reports indicate that the deal is valued at

I

around $6billion. Following the announcement, the company will begin trading tomorrow and also hold a fact behind the figures.

Key highlights gleaned from the company’s recent analyst presentation are below.

Largest Nigerian Telecoms operator with 50percent of value share and c.39 percent market share of subscribers; also the largest network by market penetration, distribution and broadband spectrum.

Relatively modest debtto-capital ratio of 0.4x down from c. 0.7x in 2017.

The firm raised about N200billion worth of debt in 2018. MTN will be in the market to seek additional debt finance (including commercial paper) of N200billion in 2019. www.businessday.ng

Management disclosed that the company will be making a final payment of N55billion (of its N330billion regulatory fine) by the end of this month (May).

MTNN’s target dividend distribution is around 80percent, subject to board approval. The company always seeks to maximise dividend distribution, in other words, have a high dividend payout.

The company is still growing its revenues by high double-digits. 2018 revenues grew by 17percent year-on-year (y/y) to N1.04trillion, making it the largest non-oil company in Nigeria by revenue and the first to hit the trillion naira mark. Firstquarter (Q1) 2019 revenue also advanced by 13percent y/y to N282billion.

Voice revenue is still

the biggest driver, accounting for c. 75percent of the company’s total revenue. Growth in voice revenue continues to be driven by strong y/y growth in number of subscribers which were up by around 15percent y/y in 2018. Presently, MTN accounts for c.39percent of total number of mobile phone subscribers. Globacom, Airtel and 9mobile have market shares of 26.2percent, 25.6percent and 9.2percent respectively.

In terms of value share, MTNN’s share is even larger at c.50percent compared with 22percent, 17percent and 11percent for Airtel, Globacom and 9 mobile respectively. The company’s revenue structure is largely pre-paid as about 95percent of revenue streams come from

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38

Thursday 16 May 2019

BUSINESS DAY

news MTN stock set to rally on perceived...

Continued from page 1

offer the units that cannot

meet the high demand”.

“The demand will automatically lead to a rally for the stocks. I can tell you now that I have over 1 billion units of demand for MTN stocks but I am yet to see a shareholder that is willing to sell,” the CEO said.

MTN listing by introduction will add N1.83 trillion ($6 billion) worth of equities to the Nigerian Bourse, thereby boosting the value of listed stocks by 17 percent to N12.52 trillion, from N10.68 trillion.

The telco eyes debt and equity capital raise after listing.

MTN Nigeria has historically aimed to maximise dividends and in the medium term, it

targets a dividend pay-out ratio of at least 80 percent of its distributable net income subject to board discretion, according to the telco in its first-quarter (Q1) analyst’s presentation.

In his response to request from one of the prospective investors in the shares of MTN Nigeria Communications plc, a broker from one the country’s investment house said, “I doubt if it will be available tomorrow (that is today) but I can try and put you on the queue for next week. The truth is none of the shareholders is willing to sell.

Hopefully they sell but I am sure it will be a small unit.”

A market analyst who asked not to be quoted said the share price will to continue to rally

once it is listed on NSE. “For the short term, I can assure you that it can be up at least 30 percent and it will be hard for potential investors to tap from the goldmine, owing to the fact that the shareholders will want to cash out and as such they will hold on to it for a while and with the continuous demand for the stocks, its price will maintain upward trajectory,” the Lagosbased market analyst said.

Ayo Akinwunmi, head of research at FSDH Merchant Bank, said the demand for MTN stock may lead to a decline in the share prices of other large capitalised stocks.

“MTN is one of the biggest companies that are coming to the market, so there will be high demand for the stocks, and there will be portfolio

adjustment. The high demand for MTN may lead to decline in the share price of other growth stocks on the bourse, which will be a good opportunity for them (investors) to buy such stocks,” Akinwunmi said.

On the Premium Board, MTN joins other companies like Access Bank plc, Dangote Cement plc, FBN Holdings plc, Lafarge Africa plc, Seplat Development Company plc, United Bank for Africa plc, and Zenith Bank plc.

Most analysts believe investors will be looking to the company’s free float as this will go a long way in determining the level of activity at the secondary market, going forward.

Free float represents the portion of shares of a company that are in the hands of public investors as opposed to locked-

in stock held by promoters or controlling-interest investors.

Companies listed on the Premium Board are required to have a free float of a minimum of 20 percent of issued and fully paid-up shares or the value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list.

Nigerian investors own 19.4 percent of MTN Nigeria, while 78.8 percent is owned

by South Africa’s MTN Group.

The listing by introduction means that the shares of existing MTN Nigeria shareholders will be listed without an additional public sale of shares.

From this point, all MTN Nigeria shareholders will be free to trade their shares on the NSE. MTN will be listing its 20.35 billion units at N90 per share;

thereafter, the company will also addresscapitalmarketstakeholderswithaFactsBehindtheListing presentation at 8am today.

The company’s valuation works out to an enterprise value that is 5 times of Earnings Before Interest Tax, Depreciation and Amortisation (EBITDA) and 9 times of earnings. That compares to the frontier peer average of 11 times EBITDA and 20 times earnings.

These numbers suggest the company is undervalued.

When BusinessDay adjusted the company’s valuation to reflect that of its frontier market peers, MTNN should be pricing around N150 per share. That means the stock trades at a discount slightly over 60 percent.

•Continues online at www.businessday.ng

How Nigeria can avert a looming tsunami...

Continued from page 1

be increasing by six every

second.

Meanwhile, the country’s economic institutions are failing, with rising unemployment and debt levels.

In the long run, Nigeria needs to wean itself from dependence on oil by spending energy revenues on education, health and infrastructure.

But that plan might take decades to bear fruit in the best of circumstances. In the short run, Nigeria needs jobs.

One of the best ways to create those jobs would be to increase international trade, promote higher levels of inward investment which Nigeria is capable of to boost economic activity in a country of natural entrepreneurs.

And the quickest way to boost trade would be to join the African Continental Free Trade Area, the planned free trade zone of the African Union (an organization dedicated to forging closer cooperation between African states).

The AfCFTA now includes 52 countries and more than $2 trillion of economic activity.

Entering that agreement, which would eliminate tariffs on 90 percent of goods, would open up plenty of new markets for Nigerian-made products.

But Nigeria’s where those in government or in the business community live in denial.

For instance leaders of Nigeria’s manufacturers group see the AfCFTA as more of a threat than an opportunity.

Frank Jacobs, former president of the Manufacturers’ Association of Nigeria, recently declared that “when they open our borders for all manner of products to come into this country, most of our industries will be out of business.”

The Nigeria Labor Congress, an umbrella organization of trade unions, called the AfCFTA an “extremely dangerous and radioactive neo-liberal policy initiative.”

As a result of this political opposition, Nigeria has balked at joining the agreement.

There is some justification for reluctance. Though the current accord is mainly about reducing tariffs between African member states, the AU plans to follow it up with a push for a customs union and a single currency.

This latter step would be a bad idea. As Europe discovered so disastrously in the financial crisis, a currency union can exacerbate local recessions, since it makes it impossible for countries with weak economies to depreciate their currencies and become more competitive.

A monetary union without fiscal integration makes sovereign-debt crises like the one in Greece much more likely

CATEGORY Foreign direct investment ($bn) Unemployment rate (%) Gross Domestic Product GDP growth (%) Debt to GDP (%) Debt service to revenue (%) Transparency corruption raking Source: IMF, World Bank, UNCTAD

2014 5 8 6 12 27 138

2018 2 25 2 25 60 144

Banks’ earnings from e-transactions jump...

Continued from page 2

mercial bank earned the highest income on its electronic products in 2018 (N34.03 billion), while it recorded N24.99 billion, N21.84 billion, N15.37 billion and N11.47 billion in 2017, 2016, 2015 and 2014, respectively.

The result by the tier-one lender largely reflects FBN’s strong digital banking foot-

print with 9.4 million digital banking customers as at the end of 2018, data from the bank’s financials show.

Bankers and financial analysts point to the emergence of the FinTechs and the ebanking policies of the Central Bank of Nigeria (CBN) as the reasons for this increase.

Jude Monye, executive director, Heritage Bank, attributed the growth of e-banking www.businessday.ng

L-R: Temitope Popoola, CEO, Renaissance Capital Nigeria; Shamsudeen Usman, former minister of national planning; Yewande Sadiku, executive secretary/CEO, Nigeria Investment Promotion Commission; Christophe Charlier, chairman of the board, Renaissance Capital, and Charles Robertson, global chief economist, Renaissance Capital, at the Renaissance Capital Investor Conference held in Lagos, yesterday. Pic by David Apara

and damaging. Africa should avoid making the same mistakes that Europe made.

And Nigeria, especially, should be wary of a currency union — its natural resource exports tend to push up the value ofitscurrency,thenaira,making non-oilexportslesscompetitive, meaning the country needs to push its currency down in order to restore balance.

But signing on to the AfCFTA wouldn’t oblige Nigeria to adopt the later stages of the AU plan. For now, the priority should be opening the country to trade. Nigeria now is highly protectionist. Its list of prohibited or restricted imports is long, including items such as carpets, shoes, handbags and most types of furniture.

The government also makes a large number of imports, such as textiles and clothing, ineligible for foreign exchange at the central bank’s official window, making it

harder to import these items.

In her book “The Next Factory of the World: How Chinese Investment Is Reshaping Africa,” McKinsey & Co. researcher Irene Yuan Sun argues that these import restrictions have damaged Nigeria’s manufacturing sector.

The obstacles to importing textiles have made it difficult for Nigeria to develop a competitive clothing-export industry of the type now growing in Ethiopia.

And the impediments to importing labor-intensive manufactured goods like furniture, shoes and carpets, though it has shielded Nigeria’s manufacturers in the short term, has had the longterm effect of preventing them from learning how to compete in international markets.

This is a drag on growth.

Labor-intensive manufacturing is still almost certainly the best and quickest path for na-

tions to escape mass poverty.

Journalist Joe Studwell argues in “How Asia Works” that exporting raises productivity and encourages the import and adoption of advanced foreign technology.

And Harvard University economist Dani Rodrik argues that promoting exports helps countries to discover what they’re good at doing, allowing them to invest with confidence and to establish a stable niche in the global economy.

Maintaining an insular, protectionist stance is often tempting for a country as large as Nigeria, whose manufacturers are always clamoring for the prize of a captive domestic market. What makes Nigeria’s case worse is the current government’s obvious disdain for private enterprise.

But the government’s approach merely provides a crutch that ultimately preserves industrial weakness.

Instead of hiding behind trade barriers and statist policies, Nigeria should focus on aggressively promoting manufactured exports and the private capital that drives this.

Gaining access to nearby African markets would be one step toward doing that. Courting foreign-direct investment, depreciating the currency and pushing companies to export are other important steps.

From whichever you look at it, Nigeria must now quickly end its scandalous petrol subsidy and free badly needed capital for the social investment the country needs to mitigate rising social tension that is fueled by poverty.

And in the long run, investments in education, health and infrastructure will make Nigeria an attractive platform for laborintensive manufacturing. This is the giant African country’s best hope for escaping a looming tsunami of poverty.

transactions to the success of the cashless economy, the CBN’s focus on e-banking across board, global transition to e-business and the advent of the FinTechs.

Zenith Bank, Nigeria’s largest lender by asset, ranked the third on the list of the country’s tier-one banks with the highest revenue from e-transactions. The bank reported accumulated revenue from electronic transactions to the tune of N60.23 billion

in the five-year period. It reported N20.42 billion in 2018, while for 2017, 2016, 2015 and 2014 it recorded N14.15 billion, N12.28 billion, N10.69 billion and N2.69 billion, respectively.

Earnings from e-transactions for both GTB and Access Bank also grew in the review period. GTB reported a total of N51.04 billion for the five-year review period, while Access Bank attracted N41.74 billion from the same channel.

“First of all, the cashless economy is key. Every successive government is pursuing cashless economy. The second one is the focus of the CBN. The CBN is highly focused on pursuing e-banking, bringing the right policies, environment, incentives, to ensure that we transit to pure e-business environment,” Monye said.

The CBN introduced the cashless policy in December 2011 and it was kick-started in

Lagos in January 2012.

“There is e-business globally. E-business provides convenience, ease, it’s fast and everything. I will also add the financial inclusion drive of the CBN, which has ensured that many who did not put their money in the bank before now put their money in the bank.

These people use the card and use the mobile platform.

So, it’s all these that contribute to the growth of e-banking,” Monye said.

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@Businessdayng

Thursday 16 May 2019

BUSINESS DAY

39

news analysis

Apapa: How far can Osinbajo’s new taskforce go?

CHUKA UROKO

I

f information available to BusinessDay that Vice President Yemi Osinbajo has set up a new taskforce aimed to deal with Apapa gridlock is anything to go by, Apapa with its traumatised residents and their degraded environment might soon rewrite their current story of woes.

BusinessDay was told exclusively by Ladi Lawanson, Lagos State commissioner for transportation, that the gridlock currently being experienced in Apapa would disappear “in the next 21 days”.

“I can tell you categorically that within 21 days the Apapa gridlock will be revolved permanently,” Lawanson assured, explaining that the permanent solution was expected from the initiative taken by Vice President Osinbajo.

For an average Apapa resident, business owner or port user, this is good news but one received with reservations. To them, this is one taskforce too many because Apapa has seen too many taskforce initiatives for anyone to be excited about a new one.

The question on every lip, therefore, is how far the Vice President can go with the new taskforce which, the Lagos commissioner said, has only 21 days to clear the gridlock.

The question becomes all the more imperative given that the taskforce set up by the same Vice President last year ended up being counter-productive.

At the peak of the gridlock and congestion that paralysed all business activities not only in Apapa but also in Lagos generally, Osinbajo as Acting President touched down in Apapa in August 2018 and gave a 72-hour presidential order for the gridlock to be cleared. A taskforce comprising the army, navy, police, LASTMA, FRSC, the transport unions and other stakeholders followed almost immediately to effect the order.

But that order was never complied with even for one day. The gridlock persisted and was made worse by the unwholesome activities of the taskforce who saw their assignment as opportunity for other purposes than controlling traffic. The gridlock escalated and government seemed indifferent.

It remains a matter for the imagination what difference a new taskforce is coming to make in Apapa. Already, the Lagos commissioner, who revealed he was a member of the taskforce with the responsibility of making sure there’s free flow of traffic on Lagos roads,

is complaining of infrastructure challenges.

“Part of the challenges is that some of the infrastructure needed to ease Lagos traffic are owned by the Federal Government. There are federal roads to which Lagos State government has no authority,” he said.

A close look at Apapa gridlock shows that whatever will bring permanent solution to the problem goes beyond infrastructure. Unless the taskforce, which includes the chairman of Apapa GRA Residents Association (AGRA), Sola Ayo Vaugham, will not be one that will mount checkpoints for toll collection, the success of Osinbajo’s second coming to Apapa remains hazy and seemingly unachievable.

Any solution to Apapa problem must look beyond just stopping trucks coming into the port city mid-way into their journey. A functional railway system that will take over all haulage activities in the port city is the way to go coupled with the opening of new transit parks and an efficient, fool-proof call-up system.

Additionally, government must demonstrate commitment and sincerity of purpose in implementing short-term measures being explored by the stakeholders, which includes the government. The completion of the trailer park being constructed along the Apapa-Oshodi Expressway is one such measure.

The contractor handling the project explained to BusinessDay last week that the delay in opening the park was as a result of the delay in approving funding request they made to the government. This is after the same government assured that the park would be open for use a week earlier.

Besides following through the new temporary measures in place which are yielding observable results, the new Osinbajo taskforce should also concern itself with long term measures that will return Apapa to its good old days. Though relocating the numerous tank farms in Apapa will take great effort and enormous political will, it is doable and the next best thing to do.

Until this is done along with a functional rail system, the hope of driving through, as before, straight from Mile 2 to Apapa Wharf to link Eko Bridge into the Island will remain a day-dream no matter the kind of resurfacing Dangote Group in their magnanimity will give Apapa-Oshodi Expressway. www.businessday.ng

L-R: Bola Lofindipe, national sales manager, Brian Munro; Rilwan Shofunde, brand manager, Campari; Paul Wilson, MD/CEO, Brian Munro Limited; Onyenanu Emeka, 2nd position Distributor Award 2018, and Nwachukwu Nkechinyere, marketing manager, Brian Munro Limited.

CBN’s FX transactions rise by 62.34% to $25.7bn in 2018 HOPE MOSES-ASHIKE

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oreign exchange transaction (spot sales) by the Central Bank of Nigeria (CBN) rose by 62.34 percent to a total of $25.7 billion in 2018 from $15.8 billion in the preceding year.

The spot sales comprised $3.4 billion at the inter-bank, $1.6 billion for invisibles, $1.3 billion for Small and Medium Enterprise (SMEs) and $8.3 billion at the Investors’ and Exporters’ (I&E) window.

On the other hand, the CBN purchased a total of $7.8 billion at the inter-bank market in 2018, which was 27.9 percent lower than $6.1 billion purchased in 2017.

The CBN’s annual activity report for 2018 released on Tuesday indicated that net sales by the bank amounted to $17.9 billion in the year under review compared with $9.7 billion in the previous

year of 2017.

In 2018, the CBN maintained its direct intervention in the interbank foreign exchange market to cushion demand pressure and ensure exchange rate stability.

Meanwhile, forwards sales amounted to $11.1 billion in 2018 as against $11.2 billion in 2017.

The sum of $10.4 billion matured at the forwards segment, while $2.8 billion remained outstanding at the end of December 2018.

This show a decline as the sum of $10.7 billion matured at the forwards, while $1.9 billion remained outstanding at the end of December 2017.

The increased volume of transactions in 2018 was attributable largely to the bank’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year.

“Nigeria’s foreign exchange pol-

Nigeria’s NFIU directive on LGs account gets commendation SEGUN ADAMS

N

o Alternative To Buhari-Osinbajo 2019 (NATBO 2019) has lauded latest directive from the Nigerian Financial Intelligence Unit (NFIU) banning any transaction by any local government account without money first reaching the local government account.

According to Vincent Uba, nationalcoordinator,NATBO2019,“The latest directive from the NFIU, which was recently separated from EFCC, will ensure that all local governments ‘allocations are to be paid directly into their respective bank accounts.”

The NFIU has set June 1 as the takeoff date for its new directive, banning any transaction by any local government account without money first reaching the local government account, thus all local governments ‘allocations are to be paid directly into their respective bank accounts.’

Additionally,theNFIUdirectedthat nocashwithdrawalinexcessofN500,000 per day should be made and has forwardedtheguidelinetotheCentralBank of Nigeria (CBN), the other anti-graft agencies such as EFCC, ICPC and other financial institutions with a provision for sanctionstoanydefaultinginstitutions.

Uba noted that the NFIU found that

thecashwithdrawalandtransactionsofthe state and joint local government accounts posedthebiggestcorruption,moneylaunderingandsecuritythreatatthegrassroots levelsandthecountryasawhole.

“With the creation of joint local government account, the governors practically become in charge of local governmentfunds.Thefinancialautonomy of this third tier of government disappeared and most state governments routinelydivertedthefundsallocatedto the local governments,” Uba said.

The association therefore urged the President to give NFIU all the necessary support and encouragement it required to fully implement this latest decision that had received applause from across the land, since it was made public by the agency.

It also appealed to the state governors as a matter of patriotism not to frustrate the move, even though it would obviously be a drain in their personal resources as it currently obtained, for the good of the populace they govern, adding, “One cannot but be happy for this turn of events as the local government can finally be free from the hegemony of the governors who hitherto saw the local government funds as free money. A new lease of life has consequently come to the local governments.”

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icies are not popular with devotees of the free market (if such exists) but should be viewed in context. The country’s voracious appetite for imports has contributed to placing FX related policies on the FGN’s front burner,” said analysts at FBNQuest.

According to a report by FBNQuest, turnover at the window amounted to $60 billion in 2018, with the CBN supplying 28.3 percent of the total. But year-to-date, total forex inflows via the I&E window stand at $14.8 billion, with foreign portfolio investors (FPIs) accounting for 62 percent.

“We note that exits by FPIs recorded in Q4 were mainly due to the US policy normalisation at the time as opposed to macroeconomic slippage or potential political risks,” the analysts said.

At the Naira-Settled Over the Counter Foreign Exchange Futures, the CBN’s report revealed that a total of $7.9 billion was traded at the

futures market at the end of December 2018, as against $5.5 billion in the corresponding period of 2017.

Similarly, $6.4 billion matured, while $4.8 billion remained outstanding in 2018, whereas $5.8 billion matured, while $3.3 billion was outstanding in the preceding year.

The increased level of activities at the futures market was due to improved confidence in the economy, as investors’ perception about future exchange rates remained optimistic.

The exchange rate at the interbank market remained relatively stable in 2018 due to the improved liquidity in the market. At the interbank segment, the rate opened at N306/$ on January 2, 2018 and closed at N307/$ at end-December 2018. The monthly average exchange rate opened at N305.78/$ in January, marginally appreciated to N305.61/$ in April and depreciated to N306.92/$ in December 2018.

WHO recommends steps to reduce risk of Dementia ANTHONIA OBOKOH

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ementia has increased astronomically in Nigeria (400%) in the last two decades, notes a recent study published by the Journal of Global Health Reports, University of Edinburgh.

However, the World Health Organisation (WHO) has released its first guidelines for reducing risk of dementia and cognitive decline, advising that people may lower their risk by getting regular exercise, not smoking, avoiding harmful use of alcohol, controlling their weight and eating a healthy diet.

Dementia is an illness characterised by deterioration in cognitive function beyond what might be expected from normal ageing. It affects memory, thinking, orientation, comprehension, calculation, learning capacity, language and judgment. Dementia results from a variety of diseases and injuries that affect the brain, such as Alzheimer disease or stroke.

In the report issued on Tuesday, Tedros Adhanom Ghebreyesus, the WHO director-general, said the number of people with dementia was expected to triple over the next 30 years, highlighting the condition @Businessdayng

as a global health priority.

While age is the strongest known factor for decline, it is not an inevitable consequence of aging, the report found.

“We need to do everything we can to reduce our risk of dementia,” Ghebreyesus said. “The scientific evidence gathered for these Guidelines confirm what we have suspected for some time that what is good for our heart, is also good for our brain.”

This first national comprehensive study equally reveals that several communities in Nigeria still link dementia to a normal process of ageing, with many patients stigmatised and abandoned in the belief that the condition is beyond any medical intervention. Thus, many of those affected delay seeking medical care and endure poor outcomes.

The guidelines provide the knowledge base for health-care providers to advise patients on what they can do to help prevent cognitive decline and dementia. They will also be useful for governments, policymakers and planning authorities to guide them in developing policy and designing programmes that encourage healthy lifestyles.

40

Thursday 16 May 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Nigerian Tech startups and the ‘curse’ of stereotypes FRANK ELEANYA

N

early all the tech businesses in Nigeria today were non-existent the year the legend of the ‘Nigerian Prince’ was born.

The most popular version of that legend goes as far back as the 1990s.

According to an online version, the supposed benefactor is a Nigerian royal, government official or business executive whose fortune is hostage to war, corruption or political unrest. The desperate personage needs only your bank account number (to transfer the money for safekeeping) or a relatively small advance payment (to cover taxes, bank fees or well-placed bribes), or both.

People who fell for the story got their hands badly burnt.

Over the years, the legend was to be used severally in describing persons and sometimes online businesses operating from Nigeria. Then, every young man in any of the cyber cafes littered across the country or with a laptop and browsing on the internet was classified as ‘Yahoo Yahoo’ as it is known in local parlance.

Although the ‘Nigerian Prince’ is millions of miles away from an appropriate comparison to any Nigerian tech startup dead or alive, last

week that phrase was again employed in a most brutal fashion by Citron Research, a known activist stock short seller in a bid to warn investors off Jumia Technologies equity listing on the New York Stock Exchange (NYSE) Andrew Left, founder of Citron Research in the report which cited Nigerian media articles, alleged that it had uncovered a “smoking gun” and went ahead to show why it thought Jumia’s equity was “worthless”. Citron alleged that Jumia increased its reported active customers for 2017 in the IPO prospectus, when compared with previous investor presentation.

“Not even that elusive Nigerian prince can cover this one up,” he wrote.

Jumia which lost significant share price – down nearly 15 per cent at $20.86 - as soon as the market saw the report, issued two rebuttals on Monday and Tuesday.

Prior to the seven-day loss, Jumia stock was up more than 220 per cent.

Sacha Poignonnec, cochief executive and cofounder, on Monday, said the company “completely stands by” the numbers it included in its initial public offering filings.

“We will not be distracted…by those who seek to create doubt to profit at our expense and that of our longterm stakeholders,” he said.

Juliet Anammah, CEO of Jumia Nigeria, also spoke to CNBC on Tuesday, calling the

How Nasarawa State could become global electric car manufacturers’ beautiful bride FRANK ELEANYA

R

ecently, Nigerian lawmakers struck down a bill proposing that Nigeria speed up adoption of electric vehicles by setting a timeline of 2035 within which the country will phase out petrol vehicles. According to Ben Murray-Bruce, the sponsor of the bill and who claims he has been using an electric car for the past five years, they are generally cheaper to maintain and durable.

Nigeria may have lost an opportunity to be part of a new world that is consistently and persuasively shifting its focus and dependability from fossil fuel, but nothing stops a state like Nasarawa from plugging into the evolving market and become a major player. All the state requires to achieve that is its abundance of Lithium mineral.

The entire global electric car market rests majorly on

battery technology. Half of the cost of an electric car goes to the battery. Over the years, while the price of batteries have significantly gone down, they are still not cheap enough to put the overall cost of a green car on par with a regular one. The average price for batteries at the end of last year in China was near $180/kwh, down 11 per cent from a year earlier but still higher than experts and analysts’ expectations.

The most common battery type in modern electric cars is lithium-ion and lithium polymer battery. Lithium is a metal and is soft with a silvery-white colour which changes to a dull silvery-grey colour and then black tarnish on exposure to moist air and this occurs due to corrosion of the surface. Nasarawa State has the largest deposit of the mineral in Nigeria.

Demand for lithium has soared over the years and

producers are frantically searching for new sources of supply. Prices have also doubled since 2016, rising as high as $16,500 per ton.

And the biggest demand is in lithium-ion batteries used to power electric vehicles.

In January, 2018, lithium-ion battery sales were projected to grow at an annualized rate of 13.7 per cent, rising to $67.6 billion by 2022.

It is also projected to grow further by $36.20 billion in 2018 to $109.72 billion by 2026.

Currently, China, the US and the European region have accounted for maximum sales of electric vehicles. Roughly 1.6 million electric cars were on the roads in China in 2018, followed by 810,000 in the US. With some good leadership, Nasarawa State can put its many squabbles behind and be part of a trend setting technology that the world needs.

allegations “selected, biased and unverified facts with a clear intent of damaging the brand.”

Prior to Jumia’s response, Citibank had released an 11page statement challenging some of the allegations made

by Citron. The bank however said Jumia needed to be more transparent about some of the issues raised, particularly whether active user numbers were inflated and about a related-party transaction involving one of its co-chief executives.

Besides Citibank, many founders in the Nigerian tech ecosystem also did not find the entire episode particularly appealing.

The dust of where it originated stirred by Jumia’s

listing document, where it designated itself a “German company” still lingers. The debate had raged for weeks both on social platforms and in the media whether it is possible for Jumia to be listed as a “German company” and still bear the nomenclature of an “African company” considering its very significant investment in the ecommerce space in Africa.

Interestingly, Citron ignored both the “German company” and “African company” claims and settled for Jumia as the “Nigerian company.”

“Despite what they are writing, making Jumia now a Nigerian company, the people who produced that report are Germans, in Germany,” Ndubusis Ekekwe, a tech expert and chairman of Fasmicro, wrote on LindkedIn. “Germany cannot win IPO and Nigeria now to pick the scandals; it will not happen.”

Bosun Tijani, co-founder of the Co-Creation Hub (CcHUB), like Ekekwe, said that the association of Nigeria with fraud not only dents the image of the country but also that of tech startups in the country. He went as far as signing a new petition ‘US Securities and Exchange Commission: SEC enforcement to investigate Andrew Left of Citron Research.’

“I am not a fan of Jumia,

Visa completes $321m acquisition of Earthport CALEB OJEWALE

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isa has completed its acquisition of Earthport, which barring any changes to earlier reports will pay $321.45 million for the cross-border payments service provider. Earthport provides cross-border payment services to banks, money transfer ser vice providers and businesses via the world’s largest independent ACH network, and with this acquisition Visa’s network of customers are to benefit from this network.

The deal had some setback when Britain’s Competition and Markets Authority (CMA) launched an inquiry into Visa Inc’s planned acquisition of Earthport Plc to determine if it would reduce competition in the country.

Last week, CMA ruled the acquisition does not qualify for investigation, clearing the path for Visa and Earthport to conclude the deal.

Visa currently enables

payments to be sent to or from Visa cards, and this acquisition will make it possible for Visa clients to enable individuals, businesses and governments to utilize Visa to send and/ or receive money through bank accounts around the world. With the acquisition of Earthport, Visa expects to be able to reach the vast majority of the world’s banked population and allow them to easily, quickly and securely move money worldwide.

According to Visa in a statement, nearly $80 trillion of money is sent via a wire transfer or bank account globally today, but the process is harder and more complex than it should be.

Money can take days to arrive because of outdated, inefficient and costly methods. “ Visa is modernizing the way we move money by making it quicker, safer and easier to pay and be paid than ever before,” said

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

but dragging the tech ecosystem in Nigeria to achieve a rubbish objective is not acceptable,” he tweeted to his followers and urged them to sign the petition. As at the time of publishing this report the petition had 598 signatures to reach its target of 1,000.

Some Nigerians have also noted that the Citron allegations could indirectly be aimed at Nigeria as a country.

“As much as I think Jumia’s valuation did not show its true position, that report (by Citron) was written not to show the facts of the matter but just to say that anything out of Nigeria is fraudulent. And this take is becoming tiring,” Otarigho Omorh tweeted from the handle @o_omorh.

The SEC is yet to issue an official statement on its position but there is no gainsaying the importance of getting the narrative right. A probe from SEC on “fraud” allegations could have dire consequences for other startups from Jumia’s “native” country, Nigeria. Konga for instance, is believed to be nursing dreams of listing on the NYSE. What extra price would it need to pay for carrying a “fraud” badge? In another sense, would investors become more critical of Nigerian tech startups they may like to fund?

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@Businessdayng

Bill Sheley, head of global push payments, Visa. “The acquisition of Earthport unleashes the power of Visa by taking us ‘beyond the card,’ empowering us to enable our clients to make payments through bank accounts around the world.”

Earthport’s technology will allow Visa to further expand and scale Visa Direct’s rapidly growing portfolio of use cases, including funds disbursements, peer-to-peer payments, cross border payments, marketplace payouts, and bill payments. Over the last 12 months, Visa Direct’s transaction count growth has continued to be over 100% - showing the demand for faster, smarter money movement among consumers and businesses around the world.

This transaction, it says, can solve for many use cases including payroll and international person-to-person and business-to-business remittances.

Thursday 16 May 2019

FT

BUSINESS DAY

41

FINANCIAL TIMES

World Business Newspaper

Labour warns Theresa May it will not back Brexit deal in crunch vote PM told to make more concessions and ensure that any cross-party agreement is ‘Boris-proof’ GEORGE PARKER AND JIM PICKARD

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abour warned Theresa May on Wednesday it will not support her Brexit deal in a showdown vote in early June unless the prime minister makes more concessions, including on ensuring any cross-party agreement is “Borisproof”.

Labour is concerned that a Eurosceptic Conservative successor to Mrs May — notably former foreign secretary Boris Johnson — could rip up any compromise Brexit deal agreed by the government and the opposition party.

The prime minister told Labour leader Jeremy Corbyn on Tuesday that she would ask MPs to vote on June 4 or 5 on the withdrawal agreement bill that would implement her divorce agreement with Brussels.

Mrs May is hoping that talks with Labour on a compromise Brexit deal — focused on the UK’s long term relationship with the EU — will result in the opposition party voting for the bill.

But John McDonnell, shadow chancellor, told the Financial Times’ Brexit and Beyond conference: “We don’t believe that — on a number of issues — the government has moved sufficiently to persuade our

own side it’s worth supporting.

“Even if we could come up with a deal in the next week or so, within weeks you could have a new leader in place and the deal could be ripped up.”

The government and Labour have been in talks for about six weeks about a compromise Brexit deal after MPs rejected Mrs May’s EU withdrawal agreement three times.

As well as wanting any compromise to be “Boris proof”, Labour is pushing Mrs May to agree to its proposal for a permanent customs union between the UK and the EU. Labour’s demands for more concessions are ominous for Mrs May, because she already risks losing the support of Brexiter Tory MPs who think she has given too much ground, particularly on the customs issue.

Mr McDonnell said the opposition of Eurosceptic Conservatives including Mr Johnson to a close customs arrangement had fuelled Labour concerns that any agreement with Labour might not be worth the paper it is written on.

He suggested that any crossparty agreement would have to be enshrined in British legislation or even in an EU treaty to give some kind of protection against a new

US companies will be effectively prohibited from using telecoms equipment made by Chinese group

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resident Donald Trump is poised to issue an executive order as early as Wednesday that would effectively prohibit US companies from using any telecoms equipment manufactured by China’s Huawei.

One person familiar with White House planning said Mr Trump would issue the order on Wednesday afternoon, just days after the US and China failed to reach a deal to end the trade war between the two countries.

China hawks in the Trump administration have been pushing the president for months to sign the executive order amid rising alarm within US security and intelligence agencies about the vulnerability of Huawei-supplied wireless networks to Chinese spying. Mr Trump has been resisting, partly because he did not want to jeopardise a potential trade deal with China.

The person familiar with the order said it would not mention any countries or companies by name.

It would instead create a review process that would allow the US commerce secretary to review any transactions involving companies that are viewed as posing a security threat to the country, which would include Huawei.

David Wang, executive at Huawei, said the company was not aware of the order but that the US was not big market for the group.

“We are a company with global operations. So even with fluctuations

in any country, we will still be able to have stable operations,” he said at a product launch.

The decision to move forward with the order was first reported by Reuters.

In February, Mr Trump suggested he would not sign the executive order, saying in a tweet that he wanted the US to win the 5G ultrahigh speed mobile telecommunications race by competition and “not by blocking out currently more advanced technologies”. That was widely seen as referring to Huawei.

“American companies must step up their efforts, or get left behind.

There is no reason that we should be lagging behind,” Mr Trump wrote at the time.

The move against Huawei comes as Sino-US relations continue to deteriorate. Mr Trump upped the ante on trade by announcing on Friday that he would increase tariffs to 25 per cent on $200bn of Chinese products. Beijing retaliated this week by saying it would raise tariffs on $60bn of US imports.

At the same time, the US national security establishment has been pushing other countries to bar Huawei from 5G networks.

Australia and Japan have joined with the US in barring Huawei from involvement in 5G, and New Zealand’s intelligence services have also expressed concern. But the UK and Germany have indicated they will allow Huawei to provide equipment for their 5G networks, in decisions that have sparked anger in Washington. www.businessday.ng

Brexiter Tory prime minister tearing it up.

Labour officials are especially concerned that the Conservatives are only prepared to keep Britain in a customs union with the EU until 2022: a situation already envisaged in Mrs May’s withdrawal agreement, which says a transition period could extend until that year.

Liz Truss, Treasury chief secretary, confirmed at the FT conference that the offer of a customs

arrangement was only temporary when she said she saw it as “a bridge” to a fully independent UK trade policy after Brexit.

Although Mr McDonnell is seen

by Conservatives as being open to a compromise Brexit deal — the shadow chancellor is keen to move Labour’s attack on to the government’s economic record — he is also highly aware of the political risks.

Scores of Labour MPs want to

reverse Brexit through a second referendum, while Mr Corbyn will be wary of throwing a lifebelt to a prime minister who is flailing around in search of a way out of the Westminster impasse over her withdrawal agreement.

A Labour spokesman said the party would not sign up to a deal that might soon be abandoned by a new prime minister: “We are not in the business of getting into a car without knowing where it’s going.”

US evacuates diplomatic staff from Iraq

Trump to sign executive order laying ground for Huawei ban DEMETRI SEVASTOPULO , KIRAN STACEY AND NIAN LIU

Theresa May at prime minister’s questions on Wednesday © UK parliament/PA

Employees in Baghdad and Erbil ordered to leave as tensions rise between US and Iran CHLOE CORNISH AND NAJMEH BOZORGMEHR

T

he US is evacuating all but essential staff from its embassy and consulate in Iraq as tensions rise between the US and Iraq’s neighbour Iran in the volatile Gulf region.

The US state department said on Wednesday it had “ordered the departure of non-emergency US government employees from Iraq”, from its highly fortified embassy in the federal capital Baghdad and its consulate in Erbil, capital of Iraq’s northern Kurdistan region.

Unease is mounting in the region days after Saudi Arabia said two of its oil tankers in the Gulf were attacked and Saudi pumping stations were hit by drones sent by Iran-backed rebels from Yemen. It remains unclear who attacked the tankers.

Mike Pompeo, US secretary of state, decided on the withdrawal because of “the increased threat stream we are seeing in Iraq”, said a US embassy spokesperson. “We are confident in Iraqi security services’ determination to protect us, but this threat is serious and we want to reduce the risk of harm.”

The spokesperson declined to say how, when, or how many staff were leaving, citing security reasons.

The US said last week it was deploying an aircraft carrier strike group and other military assets to the region, citing what

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it claimed were Iran’s “escalatory actions”. Mr Pompeo flew to Baghdad for an unscheduled visit last week. According to the US embassy spokesperson, Mr Pompeo shared the US’s security concerns with the Iraqi government during the visit.

Speaking after meetings with Russian leaders in Sochi on Tuesday, Mr Pompeo said the US “will continue to apply pressure on the regime in Tehran until its leadership is prepared to return to the ranks of responsible nations that do not threaten their neighbours or spread instability or terror”.

Ayatollah Ali Khamenei, Iran’s supreme leader, said on Tuesday night that the country was not seeking a military confrontation.

In comments quoted by state media, Mr Khamenei framed the conflict as a battle of wills, saying “our resoluteness is more unwavering than theirs”.

“Neither we are looking for a war, nor they are, as they know that it will not be in their interests,” said Mr Khamenei. Iranian officials say the attacks were worrisome and suspicious.

Negotiations with the Trump administration, Mr Khamenei said, would be “doubly poisonous” and “ridiculous”.

“The definite option in front of the Iranian nation is resistance against the US,” he said, “which will [eventually] be forced to retreat.”

US officials have given no de@Businessdayng

tails about the threat they say is escalating in Iraq. But the US accuses Iran of spreading malign influence in the Middle East via proxy groups.

A plethora of Iraqi Shia militias are backed by Tehran. But many have also been made part of the Iraqi state’s official security forces after combating the Sunni extremists Isis, regularised as the Hashd al-Shabi or Popular Mobilisation Forces.

However, the British deputy commander of the anti-Isis coalition, which is led by the US, said on Tuesday that Iran was not upping aggression through the militias it backs. “There’s been no increased threat from Iranian-backed forces in Iraq and Syria,” said Major General Christopher Ghika. “There are a substantial number of militia groups in Iraq and Syria and we don’t see any increased threat from many of them at this stage.”

The US central command contradicted Maj Gen Ghika, saying in a statement that his comments “run counter to the identified credible threats available to intelligence”, adding that foreign troops combating Isis in Syria and Iraq were “now at a high level of alert” after the US military “increased the force posture level”.

The US shut down its consulate in Basra late last year, after mortars landed near its office close to the airport when protests over basic services devolved into riots. Its consul relocated to Baghdad.

42 BUSINESS DAY

Thursday 16 May 2019

NATIONAL NEWS

FT WhatsApp spyware company’s private equity backer pledges reform

Novalpina Capital says it will bring Israel’s NSO Group in line with UN privacy guidelines MEHUL SRIVASTAVA

T

he UK private equity fund that owns a large stake in NSO Group, the Israeli spyware company whose products were used to hack WhatsApp, has pledged to bring its partner into compliance with UN principles.

Novalpina Capital said it would reform the governance of NSO to create “public transparency” about the use of its surveillance technology that was “limited only by legal requirements and legitimate commercial confidentiality constraints”.

It said its products should be used when prescribed by law and without undermining the right to privacy and freedom of opinion and expression according to the International Covenant on Civil and Political Rights.

In an open letter to Amnesty, the human rights campaign groups, Novalpina’s co-founder Stephen Peel wrote: “We are determined to do whatever is necessary to ensure that NSO technology is used for the purpose for which it is intended . . . and not abused in a manner that undermines other equally fundamental human rights.”

NSO sells commercial spyware to intelligence agencies that remotely monitor smartphones, but its software has been tracked to the phones of human rights defenders, journalists and dissidents.

On Sunday researchers at the University of Toronto tracked an attempt to breach the defences of a UK-based lawyer involved in lawsuits against NSO, which was valued at about $1bn when Novalpina bought a large stake in it earlier this year.

“Our intention is to establish a new benchmark for transparency and respect for human rights in full compliance with the UN Guiding Principle,” said Mr Peel. “The intended outcome is a significant enhancement of respect for human rights

to be built into NSO’s policies and procedures and into the products sold under licence to intelligence and law enforcement agencies.”

After the FT reported that the company’s software had been used to exploit a vulnerability in WhatsApp’s widely used encrypted messaging system to hijack phones, Facebook — owner of WhatsApp — issued a global update to fully patch the weakness.

NSO’s software, nicknamed Pegasus, is able to hijack a target’s phone, turning on cameras and microphones and read messages. The company says its product is invaluable to intelligence agencies seeking to stop terror attacks and criminal activity, and it sells only after careful vetting and approval by the Israeli government.

Novalpina pledged to create a governance framework that would keep the privacy of human rights defenders and “members of civil society” safe from being violated by clients.

Researchers at the University of Toronto’s Citizen Lab have tracked the software to about 170 phones belonging to journalists in Mexico, dissidents in the Middle East and other critics of repressive governments, including that of Saudi Arabia.

The UK-based lawyer whose phone was unsuccessfully targeted on Sunday is involved in lawsuits in Israel against NSO that it shares liability for the abuse of its software

by Saudi Arabia and Mexico. NSO has said that its software is designed in such a way that it cannot monitor how client countries use it or on whom.

Novalpina said: “We abhor any form of misuse of any form of surveillance technology by any government, agency or individual, and we particularly condemn without hesitation any such misuse directed at people who are vulnerable simply as a consequence of their commitment to report on, speak out for or defend human rights.”

Sudan’s army agrees deal with protesters on three-year transition Deal on move to a fully civilian administration follows ousting of President Omar al-Bashir

TOM WILSON

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udan’s military leaders have reached an agreement with the country’s popular opposition movement for a three-year transition to a fully civilian administration after President Omar alBashir was toppled in a military coup last month following four months of demonstrations.

At a joint press conference in the early hours of Wednesday the military council said that a deal would be signed within 24 hours, which would include the formation of two ruling bodies — a sovereign council and a 300 member legislature — to run the country until elections are held.

“We agreed on a transitional period of three years,” Lieutenant General Yasser al-Atta said, according to Al Jazeera. “We vow to our people that the agreement will be completed fully within 24 hours in a way that it meets the people’s aspirations.”

Two-thirds of the seats in the legislature would go to members of the opposition movement that spearheaded the protests, the Declaration of Freedom and Change Forces, while the rest would be taken by groups not part of the alliance, Lt Gen Atta said.

The announcement came after at least four people were killed on Monday in new clashes between protesters and the security forces. Many in the protest movement remain suspicious of the military leaders, most of whom had loyally served President Bashir for decades.

Talks between the sides had previously stalled over the protesters’ demand that the transition is led by a civilian, a contentious point that is yet to be agreed.

Despite the new tone of cooperation, Lt Gen Atta did not say whether the sovereign council would be headed by military or civilian leaders. www.businessday.ng

Kenya has borrowed heavily from China to fund a $4.8bn railway scheme, the country’s largest infrastructure project since independence in 1963 © Reuters

Kenya expected to sell $2bn of eurobonds as public debt rises Country’s debt service-to-government revenue ratio set to top 33% this year STEVE JOHNSON

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enya looks set to sell $2bn of eurobonds as soon as Wednesday May 15, raising questions about the east African country’s ability to service its mounting debt burden.

Kenya is expected to sell a 12year bond and a seven-year-weighted average-life security — its third such issuance in five years — partly to repay a $750m eurobond due to mature in June. It has dropped plans to issue a 31-year tranche it had marketed.

Kevin Daly, emerging market bond fund manager at Aberdeen Standard Investments, said he expected the 12-year bond to price at about 8 per cent, above the 7.25 per cent coupon a 10-year bond Kenyan bond carried when the country last came to the market in February 2018.

Public debt has risen to close to 60 per cent of national output, up from below 40 per cent in 2013, as Kenya has borrowed heavily from

China to fund a $4.8bn railway scheme, the country’s largest infrastructure project since independence in 1963.

As a result, Kenya’s debt serviceto-government revenue ratio will top 33 per cent this year, according to the Nairobi-based Institute of Economic Affairs.

With half the debt pile in foreign currencies, some analysts are sounding alarm bells about the Kenyan shilling, which the IMF said last year was 17.5 per cent overvalued in real terms and which has remained largely flat against the dollar since, despite inflation hitting 6.6 per cent in the year to April.

“Kenya’s debt worries have been building for some time,” said John Ashbourne, senior emerging markets economist at Capital Economics.

“Pressure on the currency will probably grow this year as a poor harvest pushes up food imports and puts pressure on the current account deficit. Were the currency to weaken against the dollar, the foreign debt burden would rise sharply.”

However Mr Daly attributed

the likelihood of a higher yield to a broader souring of sentiment towards emerging markets, as well as rising supply, rather than any deterioration in Kenya’s economic fundamentals.

“I don’t think you can argue that the credit has deteriorated that much; it’s just that the market has changed,” said Mr Daly. “We saw a lot of issuance from sub-Saharan Africa last year and a little bit this year, so there is added supply there. “[Kenyan] growth has rebounded above 6 per cent [following a drought], the fiscal deficit is going in the right direction, import cover is the highest it has ever been and the current account deficit is declining and is financed by FDI [foreign direct investment] and remittances,” he added.

Lucie Villa, vice-president in the sovereign group at Moody’s, which downgraded Kenya to B2 with a stable outlook last year due to a long-running rise in debt and decline in government revenues, said the eurobonds would aid Kenya’s foreign exchange liquidity.

Democrats harden their stance on China US presidential contenders face a conundrum as trade war intensifies DEMETRI SEVASTOPULO

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growing number of Democratic presidential contenders are taking a tougher stance on China, as they slam President Donald Trump for not working with US allies to take on Beijing.

As Mr Trump claimed on Twitter at the weekend that China was “dreaming” that one of the 22 Democratic contenders would win the White House next year, Cory Booker, the New Jersey senator, and other candidates campaigning in New Hampshire — the state that holds the first primary in February — struck an increasingly harsh note on China.

Speaking in Berlin, a city in the north of the state that has lost much of its industry, Mr Booker described China as a “totalitarian regime” that had to be faced down.

“The Chinese have been taking advantage of this country and other nations on Planet Earth,” Mr Booker told voters in a county that backed Barack Obama in 2012 but voted for Mr Trump in 2016. “They do not fight fair. They steal our intellectual property. They force the transfer of technology . . . We need to take them

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on. We need to fight them.”

Mr Booker accused Mr Trump of creating rifts with allies instead of working with Japan, Canada and the EU to counter China over its trade practices. “Trump is . . . using bluster and not strategy. He’s using threats and toxic tweets, and not unity and strength.”

Shortly after Mr Booker left Berlin, Mr Trump tweeted: “China is DREAMING that Sleepy Joe Biden, or any of the others, gets elected in 2020.

They LOVE ripping off America!”

In 2016, Mr Trump made China a core part of his campaign, vowing he would not allow it “to rape” the US. Over the past year, he has waged a trade war that has escalated in recent days after the US and China failed to reach a deal. On Wednesday, M Trump will sign an executive order effectively banning US companies from using telecoms equipment made by Huawei, the Chinese telecoms group, in a move that will probably aggravate tensions.

The trade war has created a conundrum for Democrats. This is partly because the mood towards China among voters has become more negative, but it is also because @Businessdayng

the tariffs are viewed differently in different swing states.

While the spat is unpopular in agricultural areas such as Iowa that have been hit by retaliatory Chinese levies on soyabeans, separate US tariffs on steel and aluminium have met with praise in industrial states such as Pennsylvania.

Mr Booker was not the only Democrat campaigning in New Hampshire to take a hard line on China. John Delaney, a former congressman, accused China of being “pirates” while also slamming Mr Trump for creating divisions with key US allies.

“They steal intellectual property, they created illegal islands, they engage in disinformation campaigns,” Mr Delaney said in Concord. “I don’t want to go to war with China, but we have to realise what we’re dealing with.”

Among Democrats, Bernie Sanders, Vermont senator, has consistently been the most critical of Chinese trade practices. He recently slammed Mr Biden, the former vice-president and frontrunner for the party’s nomination, for saying China was not a threat to the US.

Thursday 16 May 2019

BUSINESS DAY

43

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

US homebuilder confidence hits 7 month-high in May MAMTA BADKAR

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gauge of homebuilder confidence climbed to its highest level in seven months in May as lower mortgage rates and solid sales boosted optimism among America’s homebuilders.

The National Association of Homebuilders’ Housing Market Index rose three points to 66 in May and topped economists’ expectations for 64, according to a Thomson Reuters survey. That marked the highest level since October 2018.

“Builders are busy catching up after a wet winter and many characterise sales as solid, driven by improved demand and ongoing low overall supply,” said NAHB chairman Greg Ugalde. However, he added that affordability chal-

lenges remain an impediment to home sales.

Mortgage rates have clambered down this year and are currently hovering around 4 per cent — having peaked near 5 per cent in the fourth quarter — after the Federal Reserve in March ditched its forecast of at least two rate rises this year. Fed chair Jay Powell reiterated his wait-and-see stance after he said earlier this month that the central bank sees no immediate need to move interest rates in either direction.

Lower rates and higher incomes have boosted housing activity but ongoing labour and land shortages and rising material costs are holding back inventory and pushing up home prices.

Homebuilder exchange traded funds ITB and XHB were both little changed after the report.

Stocks turn negative as trade rebound falters MICHAEL HUNTER AND SIDDARTH SHRIKANTH

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all Street and European stocks fell on Wednesday while government bonds rallied after economic data in China and the US chimed with worries about the impact of the deepening trade war.

The S&P 500 fell 0.6 per cent at the New York open after weaklooking retail sales data and lacklustre industrial production numbers added too a rising sense of angst.

Demand for the relative safety of sovereign debt pushed yields on eurozone and US bonds lower.

Germany’s benchmark 10-year Bund yield fell to it lowest in more than two years, at minus 0.124 per cent, down 5.3 basis points. The US 10-year Treasury yield fell under 2.4 per cent for the third consecutive session, down 5.1 basis points at 2.3679 per cent.

The move away from risk ended a rebound rooted in hopes for a trade detente on optimistic comments from President Donald Trump. As the European session developed, metals stocks and carmakers were under pressure, with the region-wide Stoxx 600 down 0.5 per cent overall after earlier marginal gains.

China also published retail sales and industrial producition data, which missed forecasts, although stock indices there rose.

The gains in Shanghai and Shenzhen stuck on hopes that stimulus measures from Beijing could brighten the outlook there. The CSI 300 rose by over 2 per cent.

Sterling got caught up in the move away from risk as the UK’s cross-party talks designed to agree a parliamentary majority for a deal on the terms of Brexit faltered. The pound hit its lowest level since February, down 0.5 per cent to $1.2834.

Sterling touches lowest since February as Brexit uncertainty drags on UK currency tracks investors’ unease over cross-party talks in London SARAH PROVAN AND MICHAEL HUNTER

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he pound brushed its lowest level since mid-February as the UK currency tracked a deepening sense among investors that Westminster’s cross-party talks seeking a consensus on a Brexit agreement were faltering.

At the same time, a move away from risk across global markets left sterling looking exposed, and sent it towards the lower end of its trading range.

Sterling on Wednesday fell 0.5 per cent to trade at $1.2838 in afternoon trading in London, close to its lowest level since February 15. February’s intraday low was $1.2770.

As talks between Theresa May and the opposition leader in London flag, the prime minister

challenged Jeremy Corbyn to make up his mind on whether to back her Brexit compromise plan.

She meanwhile prepared to put her job on the line in a House of Commons vote in the first week of June.

Mrs May told the Labour leader the government would bring forward legislation to ratify a revised Brexit deal on June 4 or 5. Defeat would probably mean the end of the road for the prime minister and her attempt to take Britain out of the EU. In talks lasting about an hour on Tuesday night, Mrs May said the government would propose a close customs arrangement with the EU and uphold workers’ rights and environmental protections, meeting some of Labour’s demands. www.businessday.ng

Treasury yields fall to lowest in months following soft US data PETER WELLS

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reasury prices extended their rally after a soft batch of data raised concerns about the health of the US economy and sent short-dated yields to their lowest level in more than a year.

Readings on Wednesday morning that showed retail sales and industrial production both contracted in April pushed yields even further towards multi-month lows, and kept one closely watched indicator in the bond market in territory suggestive of an impending economic recession.

The yield on the benchmark 10-year US Treasury was down 4.8 basis points at 2.3715 per cent, bringing it towards intraday levels from March that were the lowest since December 2017.

The yield on the two-year Treasury, which is more sensitive to monetary policy expectations, fell 5 bps to 2.1534 per cent and its lowest level since February 2018 in the aftermath of the stock market’s

volatility-induced sell-off.

The so-called yield curve remained inverted, with yields on short-dated 3-month T-bills higher than those on 10-year Treasuries for the fourth time in five sessions and the 11th time this year. An inverted yield curve has preceded every recession since the second world war.

Joshua Shapiro, chief economist at MFR, said recent retail sales readings have been erratic, and that “with a strong labor market and solid real earnings growth providing sturdy support, overall consumer spending ought to remain on a moderate growth path over time.”

However, he cautioned that trade wars and stock market tumbles “are not great recipes for confidencebuilding” and these could weigh on the consumer spending in coming weeks and months.

A soggier outlook may prompt the Federal Reserve to refrain from tightening monetary policy any time soon, and after this morning’s data, the probability of the

US central bank delivering a 0.25 percentage point rate cut had risen to 77.4 per cent, compared with 59 per cent a week ago, according to options pricing tracked by Bloomberg.

The data added to an already cautious mood over recent trading sessions that has buoyed demand for the relative safety of government debt, as well as other popular bolt-holes in times of market stress, such as gold, the Japanese yen and Swiss franc.

The S&P 500 on Monday had its biggest one-day drop since early January as Washington’s decision to raise tariffs on Chinese imports prompted retaliatory action from Beijing, and progress towards a resolution of the trade war between the world’s two biggest economies remains unclear.

Market volatility, as measured by the Cboe’s Vix index, has also ticked up, and was sitting at reading of 18.57 on Wednesday. Gold was up ¼ of 1 per cent at a onemonth high of $1,300 an ounce.

British Land and Landsec shrug off Brexit thanks to London elite Vote to leave the EU has widened the commercial split between London and the rest of England MATTHEW VINCENT

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ritish Land and Landsec, two of the UK’s largest property groups, know all about the Brexit effect. Their shares fell 28 and 24 per cent respectively in the two days after Britain voted to leave the EU, on fears of an office exodus.

They have had to warn of Brexit uncertainty closing shops, and shoppers’ wallets, ever since.

On Wednesday British Land was again mindful of “the ongoing Brexit uncertainty”, and “companies slowing investment decisions in the context of a possible ‘no deal’ scenario”. A day earlier, Landsec bemoaned “political gridlock and the well-publicised difficulties in the retail market”.

But the companies’ fortunes are arguably more closely linked to another Brexit effect: the emergence of two entirely different countries: London and the rest of England.

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Just as the capital has become politically separate from an ever more nationalist nation, so it has commercially. And the listed landlords seem to know where they’d rather be. British Land contrasted a “healthy” London office market with a “challenging” retail environment at all points north (or south, east and west, for that matter). “We expect the London market to remain active, as occupier demand for the highest quality space continues to be firm,” said Chris Grigg, chief executive, while reaffirming a target of having 60 per cent of the group’s portfolio in “campusfocused London offices” within five years. Landsec reported that 65 per cent of its assets by value and its entire £3bn pipeline of development opportunities were in London, and that “over the coming years the business will be more concentrated in the capital”. Chief executive Rob Noel said London had “shrugged its shoulders at Westminster”, @Businessdayng

and apparently shrugged off the Brexit downturn.

For the investors in London’s EC4 and E14 postcodes, this matters. British Land’s solely London-based office campuses delivered a 1.4 per cent annual rise in rental value, which meant their portfolio valuation rose 1.1 per cent — partly offsetting an 11.1 per cent fall in its shop valuations nationally. Little wonder it is now working on a 53-acre “new urban centre for London” at Canada Water, combining offices with 3,000 homes. Landsec’s London offices managed a 1.9 per cent annual increase in rental value, which limited the fall in its office portfolio valuation to 0.1 per cent — partly offsetting an 11.7 per cent decline in national shopping centre valuations and a 15.5 per cent slide for retail parks. Its central London shops also seemed to be based in another country, falling only 3.6 per cent in value in the past year.

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Thursday 16 May 2019

BUSINESS DAY

ANALYSIS FT China’s LNG tariff threatens Trump energy export goal A 25% levy means US liquefied natural gas would probably have to go elsewhere GREGORY MEYER

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hina’s move to increase tariffs on $60bn in US goods targets a commodity central to the Trump administration’s goal of exporting more energy: liquefied natural gas.

Trade in gas condensed for shipment on ocean vessels has boomed in the past five years, reaching a record 316.5m tonnes in 2018, according to the International Gas Union. China has become the world’s secondbiggest LNG importer as it seeks

since completed five trains, or liquefaction units, at Sabine and the first train at another terminal in Corpus Christi, Texas. Another plant opened in Cove Point, Maryland, last year, with Cameron and others set to begin exporting this year.

The higher tariff in China would exacerbate the effects felt since the first one took effect.

From September 2018 to April, the US delivered four cargoes to China, down from 35 cargoes in the same eight-month period of 2017-18, Wood Mackenzie said in a note. The slowdown came

European elections: is the party over for the centre-right?

Dominant in EU politics for two decades, the EPP fears a backlash from populist rivals at next week’s polls ALEX BARKER

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he political alliance that dominates Europe took shape on a cold March night in 1998, over dinner in a bungalow in western Germany. Around Helmut Kohl’s table were a gaggle of premiers and backroom fixers, the German chancellor’s trusted circle on European affairs. It was to be a fateful night for EU politics, whose heavy hangover Europe’s centre-right is wrestling with before next week’s elections.

They gathered at the Kanzlerbungalow in Bonn because Kohl’s continent-spanning ambitions for the European People’s party were floundering. Europe’s centre-right was in the throes of an identity US president Donald Trump visited the Cameron LNG terminal in Louisiana. The first exports crisis. Through years of personal effort, Kohl had slowly opened of US LNG outside of Alaska left Louisiana in early 2016 © AFP up the EPP — a pan-EU alliance a cleaner alternative to coal to even though China’s imports launched in 1976 with deep Chrisgenerate electricity. and US exports each grew tian Democrat roots — to other strands of centre-right thinking.

Liquefaction plants sponsored about a third, the consultancy But by 1998 the expansion was not by energy majors such as Exxon- noted. keeping pace with electoral reality.

Mobil and independent com“A 25 per cent tariff is probThe centre-left was ascendant panies such as Cheniere Energy ably going to mean that no US across much of Europe, while promise to make the US an im- LNG will be going to China,” the EPP’s traditional Christian portant LNG exporter, following said Nikos Tsafos, senior fel- Democrat parties were reeling. In the EPP faced a defining test: its ascent as the premier natural low at the Center for Strategic Italy Silvio Berlusconi, a vote-winning gas supplier after shale drilling and International Studies in populist who having crushed the transformed its production.

Washington.

Christian Democrats in Rome China’s 25 per cent tariff on He added that the effect on was seeking to outflank the EPP US gas has jolted that trajec- current LNG facilities would be with a new rightwing group. Wiltory. The duty, announced this minimal because “the market fried Martens, an EPP founding week in retaliation for added has already adjusted and the US father who attended the dinner, described it as a matter of “life tariffs from the White House, LNG will be going somewhere and death” for the centre-right is a rise from an earlier 10 per else”. movement. cent levy that China imposed The bigger impact may be “More than anyone else Kohl last September. It is due to take on projects for which con- feared a scenario in which the effect on June 1. tracts have not yet been signed. EPP would be split into a left and The escalation creates ten- Companies seeking to finance a rightwing,” the former Belgian premier wrote in his autobiograsion between the US attempt LNG plants must first obtain phy. “You could have the best proto apply pressure on China to long-term commitments from gramme, but if you did not have reform trade practices and its customers. the numbers there was little you hope of using energy exports to “In addition to the short- could do, [Kohl] believed. It was exert influence in international term impact, tariffs also have clear as daylight that the EPP had affairs. Underlining the signifi- the ability to make long-term to undertake a counter-offensive.”

Colleagues recall a frustrated cance of LNG, President Donald contracts more difficult to ne- Kohl saying the Christian DemoTrump on Tuesday visited the gotiate,” said Charlie Riedl, crats did not rebuild Europe “to newly constructed Cameron executive director of the Center hand it over to the Socialists”. The LNG terminal in Louisiana. for LNG, a trade group. counter-offensive hatched that “The US has positioned its The only Chinese company night came to be called “the bunganatural gas resource as hydro- to have signed a long-term sup- low memo” — a seven-point bluecarbon freedom — the admin- ply agreement with a US LNG print for a centre-right takeover of Brussels. The disagreements were istration has taken that stance. project was a division of China plain, but the will to cement power But the fight for freedom has National Petroleum Corpora- trumped ideological coherence: “If gotten a little bit more dif- tion, which last year commit- we limit ourselves . . . we will never ficult,” said Kevin Book, man- ted to buy gas from Cheniere achieve a majority position,” the aging director at ClearView through 2043. Underscoring US memo said.

It was the final touch to a specEnergy Partners, a consultancy concerns, a division of CNPC tacular turnround for the party, a in Washington. and the Chinese state-owned big-bang expansion through the The first exports of US LNG oil company Cnooc last month 1990s that would make the EPP outside of Alaska left Cheniere’s took stakes in the proposed an unrivalled network of influence plant at Sabine Pass, Louisiana, Arctic LNG 2 led by Novatek in the EU — particularly for German Chancellor Angela Merkel. in early 2016. Cheniere has of Russia. www.businessday.ng

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Its formidable political machine remains on top in Brussels, seemingly defying gravity. It holds less than a third of seats in the European Parliament and around the EU summit table, yet operates with outsized heft.

But its fortunes are fading, its ranks of leaders diminished, its member parties bleeding votes to extreme nationalists, populists and liberals. Whether it can renew its hold on power is one of the most important tests of next week’s European elections and their aftermath.

Kohl’s party gained strength by embracing Berlusconi’s Forza Italia, French Gaullists and Nordic conservatives while reaching a working pact with Britain’s Tory MEPs. Two loose criteria for membership prevailed: a distaste for socialism, and allegiance to the EU project. Looking east, it drew in the centre-right of soon-to-be member states where Christian Democrats were marginal — including a liberal reformer in Hungary called Viktor Orban.

By 1999, this political M&A spree, had helped create the biggest party in the European Parliament, knocking the Socialists off the top spot for the first time.

Within a decade, its representation around the EU summit table grew from two of 15 leaders to 16 of 27 in 2012, precooking positions on treaties, bailouts and assorted EU disputes.

“The EPP didn’t win through elections,” says Steven Van Hecke, a professor at KU Leuven, Belgium. “It won by taking in parties.”

Its influence translated into jobs. Since 2004 the EPP has held a stranglehold on the presidency of the European Commission or European Council, Brussels’ most important positions.

That generation of EPP leaders in Brussels are leaving office this year, just as the EPP’s grip looks shaky. The conservative parties the EPP embraced during the 1990s — from Spain, Italy and France — are all faltering. Mainstream political parties, both left and right, are feeling the squeeze.

Voters are expected to return a more divided European Parliament, with a slimmer pro-European majority, fragmented between multiple parties and hemmed in by populists who want to bring the EU house down. Some senior EPP figures even fear an upset where their party lead is overturned.

Kohl’s EPP nightmare is again a possibility: a party split between left and right, short of the numbers to be effective, playing second fiddle to Socialists and populists.

And this time the threat to the right is not from Silvio Berlusconi, but the far-right Matteo Salvini of Italy’s League and Mr Orban, the @Businessdayng

illiberal Hungarian premier and EPP bad boy.

“We will be much weaker, that is for sure,” says one central figure in the EPP expansion. “We’ve been dominant for 20 years. But this is not automatic, it is not a law of history.”

On its way to becoming Brussels’ party of government, the EPP picked up two traits from Germany’s Christian Democratic Union party: its take-all-comers breadth, and its effectiveness as a political machine.

The CDU was unique among the five Christian Democrat governments involved in launching the six-country European project in 1957. Its model of politics was synthesis, a lesson drawn from the dangerous Catholic-Protestant divide in prewar politics of the German right. The CDU sought to treat all traditions equally, be they conservatives, liberals or from the Christian Social wing. The priority: to monopolise the right, and keep it bound to the centre.

This approach to centre-right reconciliation after 1945 became the EPP’s model for keeping up with the European project, as it expanded beyond Christian Democrat heartlands to the Protestant north and conservative east.

Kohl injected a sense of purpose and fraternity. From an early stage the German chancellor took a keen interest in the EPP’s development, promising to respond personally to faxed policy proposals within 30 minutes, usually with a one-word scrawl in thick pen.

In the mid-1980s he initiated the tradition of pre-summit gatherings of EPP heads of government, to share problems and develop common approaches, a custom extended to party leaders in opposition and in applicant member states.

“It became a political family to me,” says Jyrki Katainen, a commission vice-president and former premier of Finland. This collective spirit is something Mr Katainen sees as distinguishing the EPP from the Socialist group, which struggled to rally its big stars in government, such as Britain’s Tony Blair, Gerhard Schröder, his German counterpart, or François Hollande of France.

For the EPP, co-ordination and discipline meant power. Witnesses marvel at how today’s national leaders — some of the most powerful men and women in Europe — sit attentively at gatherings while Joseph Daul, EPP president, delivers “finger-wagging lectures” to the group. Whether on the question of job appointments, new treaties, the eurozone crisis or specific national concerns of member parties, party leaders and ministers try to act as a caucus, with broad positions socialised and prepared before

Thursday 16 May 2019

BUSINESS DAY

51

cityfile Ayade cancels cocoa farm allocation MIKE ABANG, Calabar

G Members of the Nigerian Conservation Foundation with some school children after a walk to commemorate the 2019 World Migratory Bird Day, in Calabar on Tuesday.

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Monarch raises alarm over phantom project in Ogun RAZAQ AYINLA, Abeokuta otimi Fagbenro, the tradition ruler of Oke Odan town in Yewa South local government area of Ogun State, has raised an alarm over the listing of a non-existing project as a completed one by the Sustainable Development Goals (SDG) centre, Abuja.

Fagbenro, who briefed newsmen his palace in Oke Odan, said the inclusion of a completed police station project in Oke Odan as part of the SDG projects facilitated by the senator representing Ogun West, Gbolahan Dada, came to him and the people of the town as a rude shock.

He explained that he had championed the calls for a modern and bigger police station for the town to beef

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up security in the town as a result of its proximity to the border town between Nigeria and the Republic of Benin.

The traditional ruler stated further that all his efforts to ensure that the project was given consideration by concerned authorities proved abortive, until Dada was able to include it in last year’s budget of the Federal Government.

He added that an expanse of land had since been cleared for the construction of the police station and mini barracks for the police.

The monarch, however, said he was bewildered to learn that it was posted on the WhatsApp message of the senator that the police station had been facilitated and even inaugurated in Oke Odan, courtesy the SDG centre.

The Olokeodan said that when he contacted the senator on the issue, he (senator) said he was unaware that such project was carried out by SDG centre in the town.

“When I became the Olokeodan fourteen years ago, one of the things I thought we needed here was a bigger police station and I wrote several letters to relevant authorities, but nothing came out.

“But when Gbolahan Dada became our senator, I and some chiefs of the town went to him in Ota to table our request. I personally went to him in Abuja and impressed the importance of the project on him.

Eventually, he was able to include the project in the budget of the Federal Government, to be facilitated by the Sustainable Development Goals Centre, Abuja.

“We were, however, shocked when we learnt that on the WhatsApp message of Senator Dada, that a police station had already been facilitated at the cost of N8 million for our town by the SGD centre. And when the senator was contacted, he said he was unaware of such development, noting as far as he was concerned, SDG centre had not awarded any contact to that effect,” the monarch said.

Fagbenro disclosed that several petitions had be written to the appropriate quarters, which included office of the president of the Senate, speaker of the House of Representatives, Economic and Financial Crimes Commission (EFCC) and the office of the Ogun State governor, to unravel the mystery surrounding the phantom project.

Oyo renames roads, public institutions REMI FEYISIPO, Ibadan yo State government has approved the renaming of some roads and public institutions.

The approval was given by the state executive council on Tuesday just as legal processes to give backing to the move are being activated by the state government.

Toye Arulogun, the state commissioner for information, culture and tourism, said that the decision by the executive council was to recognise individuals’

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contributions to the development of Oyo State, their chosen career and the humanity.

According to Arulogun, sequel to the exco’s decision, the first flyover by a civilian administration in the state, constructed at Mokola, is now named Transformation flyover; Challenge - Efunsetan road to be known as Lam Adesina road; Ijokodo-Apete road is to be called Ambassador Olu Sanu road; the newly constructed Zonal Mediation Centre, Ogbowww.businessday.ng

mosho, will be named Justice Atilade Ojo Mediation Centre, the Ilorin Express Junction-Ikoyi-Takie – Palace – Ogbomoso Grammar School road, is now Soun Oyewumi Ajagungbade road, while the Ibadan-Oyo Expressway/Iseyin-Owode with spur to Akesan-Palace and Old Ibadan-Oyo road, is now Alaafin Lamidi Adeyemi III road. Eleyele-Dugbe ANCE road is now Oba Saliu Adetunji road and Idi-ApeBashorun Akobo road is now Abiola Ajimobi way.

Arulogun added that

Ibarapa Polytechnic Eruwa will now be called Adeseun Ogundoyin Polytechnic; Eruwa, College of Agriculture, Igboora, will be Lam Adesina College of Agriculture; Igboora, Maternal &Paediatric Centre, Olodo Ibadan, is named Abiola Ajimobi Maternal &Paediaitric Centre; Elebu road is now Alao-Akala way; MonatanOlodo road now Rashidi Ladoja; Onireke-Agbarigo road is now known as Onikepo Akande road and Festac road, Mokola now Adebayo Faleti road.

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overnor Ben Ayade of C ro s s R i v e r has directed that the recent allocation of cocoa farms carried out by the state Cocoa Allocation Committee be cancelled.

Christian Ita, the governor’s media aide, quoted Ayade in a statement that the cancellation takes effect immediately.

There have been series of complaints by the state chapter of the Cocoa Farmers Association of Nigeria, who also appealed to the governor to

reschedule the allocation of the cocoa estate till 2020 in order to recoup their investment.

A letter to the governor by the association dated March 20, 2019 was cosigned by its chairman and secretary. In the letter, the members urged Ayade to halt the sale of the properties, as announced by the allocation committee.

They further intimated that over ten thousand of its members have rented out portions of their farms to peasant farmers, and therefore needed to recover money invested before being ejected, or they lose millions of naira.

Police nab job racketeer in Abuja

T

he Federal Capit a l Te r r i t o r y (FCT) police command says it has arrested a suspect, Egbunu Onuche, 25, for job racketeering.

Bala Ciroma, the Commissioner of Police (CP) in the FCT, disclosed this to newsmen while briefing on how the command is tackling crimes in Abuja.

He said the suspect was arrested on May 7, after allegedly collecting N200,000 from one Ijeoma Ebenje with a promise to secure her employment with the Nigeria Immigration Service.

Ciroma said that upon interrogation, the suspect admitted to the crime and explained that one Musa told him that if he had anybody looking for a job that he could assist.

According to Onuche, he then informed his friend who was Ijeoma’s brother who then told her about the offer.

The suspect admitted that 16 other people paid him amounts ranging from N200,000 to N300, 000 for employment into the Nigeria Prison Service and Nigeria Immigration Service.

He explained that crisis @Businessdayng

started when on the date of the said interview and collection of appointment letters, the man who was supposed to facilitate the process asked for additional N450,000 from all the victims.

In a related development, Ciroma said the command also arrested two suspects for the production of local drink popularly known as monkey tail.

According to him, the suspects were arrested on May 7 during a raid at Apo Mechanic village, Abuja.

The police chief said effort was being made by the command to checkmate activities of drug dealers and peddlers because it was fueling crimes among youths.

The commissioner said that the command also arrested four suspected drug dealers in Jikwoyi, Apo, Galadimawa and Gwagwalada areas of Abuja.

He said that all the suspects would be charged to court on completion of investigation and called on the public to promptly report suspicious movements to nearby police stations. NAN

46

Thursday 16 May 2019

BUSINESS DAY

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Thursday 16 May 2019

BUSINESS DAY

47

Live @ The STOCK Exchanges Prices for Securities Traded as of Wednesday 15 May 2019 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 239,930.27 6.75 -0.74 164 35,764,152 UNITED BANK FOR AFRICA PLC 205,196.53 6.00 -2.44 293 18,781,253 ZENITH BANK PLC 627,929.88 20.00 -0.25 311 12,779,530 768 67,324,935 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 260,240.87 7.25 0.69 148 5,085,113 148 5,085,113 916 72,410,048 BUILDING MATERIALS DANGOTE CEMENT PLC 3,033,210.32 178.00 -0.28 84 340,732 LAFARGE AFRICA PLC. 172,353.41 10.70 - 36 144,591 120 485,323 120 485,323 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 305,991.17 520.00 - 10 6,431 10 6,431 10 6,431 1,046 72,901,802 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 70,589.34 74.00 - 4 5,080 PRESCO PLC 58,000.00 58.00 - 7 21,071 11 26,151 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 511.20 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,800.00 0.60 - 7 49,732 7 49,732 18 75,883 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 741.24 0.28 - 5 81,778 JOHN HOLT PLC. 182.90 0.47 - 2 19,276 S C O A NIG. PLC. 1,903.99 2.93 - 1 2,500 TRANSNATIONAL CORPORATION OF NIGERIA PLC 47,151.67 1.16 0.87 74 3,004,566 U A C N PLC. 21,753.79 7.55 3.42 223 21,513,436 305 24,621,556 305 24,621,556 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 30,360.00 23.00 - 16 83,811 ROADS NIG PLC. 165.00 6.60 - 0 0 16 83,811 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,897.59 1.50 - 11 107,839 11 107,839 27 191,650 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 10,100.05 1.29 -9.79 9 141,287 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 109,519.14 50.00 - 38 512,241 INTERNATIONAL BREWERIES PLC. 171,917.24 20.00 - 4 2,670 NIGERIAN BREW. PLC. 519,798.63 65.00 - 65 458,324 116 1,114,522 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 81,250.00 16.25 -4.41 134 5,207,734 DANGOTE SUGAR REFINERY PLC 166,200.00 13.85 1.84 91 2,480,302 FLOUR MILLS NIG. PLC. 65,606.07 16.00 -0.31 45 829,657 HONEYWELL FLOUR MILL PLC 8,723.22 1.10 - 27 701,250 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 1 2,280 NASCON ALLIED INDUSTRIES PLC 47,557.42 17.95 - 18 165,208 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 316 9,386,431 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,721.12 10.50 - 32 131,667 NESTLE NIGERIA PLC. 1,133,498.44 1,430.00 - 107 255,225 139 386,892 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,940.83 3.95 -4.30 43 1,531,257 43 1,531,257 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 33,749.05 8.50 - 9 48,002 UNILEVER NIGERIA PLC. 178,095.17 31.00 - 11 37,878 20 85,880 634 12,504,982 BANKING ECOBANK TRANSNATIONAL INCORPORATED 187,165.42 10.20 - 44 387,289 FIDELITY BANK PLC 52,444.38 1.81 -0.55 82 10,643,997 GUARANTY TRUST BANK PLC. 930,025.26 31.60 0.63 260 17,440,770 JAIZ BANK PLC 14,142.84 0.48 4.35 16 1,733,679 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 71,976.05 2.50 -5.66 16 1,059,080 UNION BANK NIG.PLC. 196,565.08 6.75 -3.57 47 670,223 UNITY BANK PLC 8,416.32 0.72 - 14 92,540 WEMA BANK PLC. 25,459.15 0.66 -2.94 38 2,299,907 517 34,327,485 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,712.54 0.68 - 18 317,458 AXAMANSARD INSURANCE PLC 18,900.00 1.80 -0.55 12 469,626 CONSOLIDATED HALLMARK INSURANCE PLC 2,357.70 0.29 - 2 20,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 18 1,011,392 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 100,000 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,123.80 0.29 3.45 10 4,054,071 LAW UNION AND ROCK INS. PLC. 1,890.39 0.44 - 4 10,000 LINKAGE ASSURANCE PLC 3,520.00 0.44 -2.22 2 200,123 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 4.76 7 326,210 NEM INSURANCE PLC 11,617.11 2.20 - 8 76,997 NIGER INSURANCE PLC 1,547.90 0.20 - 4 23,381 PRESTIGE ASSURANCE PLC 2,691.28 0.50 - 8 164,992 REGENCY ASSURANCE PLC 1,333.75 0.20 -4.76 3 207,000 SOVEREIGN TRUST INSURANCE PLC 2,085.21 0.25 - 2 2,520 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,912.00 0.21 5.00 3 407,000 4,817.79 0.36 -10.00 26 560,805 WAPIC INSURANCE PLC 128 7,951,575 MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 3,064.09 1.34 - 4 24,100 4 24,100

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 1 10 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 10 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,640.00 3.82 - 44 287,652 CUSTODIAN INVESTMENT PLC 38,232.12 6.50 - 6 9,928 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 33,862.64 1.71 0.58 70 3,474,183 FCMB GROUP PLC. ROYAL EXCHANGE PLC. 1,131.98 0.22 - 3 14,345 451,096.36 44.05 - 10 9,176 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 14,700.00 2.45 2.08 57 2,053,463 190 5,848,747 840 48,151,917 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 817.22 0.23 - 13 1,390,536 13 1,390,536 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 6,900.00 4.60 - 7 13,350 FIDSON HEALTHCARE PLC GLAXO SMITHKLINE CONSUMER NIG. PLC. 10,762.89 9.00 - 11 37,849 4,002.54 2.32 - 17 82,878 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,158.49 0.61 1.67 8 377,709 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 43 511,786 56 1,902,322 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 852.48 0.24 -7.69 6 1,149,035 6 1,149,035 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 648.00 6.00 - 4 13,514 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 5 50,125 9 63,639 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 9.09 38 3,564,500 E-TRANZACT INTERNATIONAL PLC 11,088.00 2.64 - 0 0 38 3,564,500 53 4,777,174 BUILDING MATERIALS BERGER PAINTS PLC 2,130.20 7.35 - 6 20,300 CAP PLC 23,800.00 34.00 - 12 38,162 CEMENT CO. OF NORTH.NIG. PLC 182,694.66 13.90 -9.15 15 175,881 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 1 2,000 1,959.74 2.47 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 34 236,343 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 3,170.38 1.80 - 10 150,500 CUTIX PLC. 10 150,500 PACKAGING/CONTAINERS BETA GLASS PLC. 34,473.07 68.95 - 2 508 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 508 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 46 387,351 CHEMICALS B.O.C. GASES PLC. 1,731.58 4.16 - 4 5,334 4 5,334 METALS ALUMINIUM EXTRUSION IND. PLC. 1,803.64 8.20 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 63.80 0.29 7.41 1 200,000 1 200,000 5 205,334 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,753.56 0.28 -6.67 53 5,798,516 53 5,798,516 INTEGRATED OIL AND GAS SERVICES OANDO PLC 58,427.64 4.70 1.06 56 3,274,275 56 3,274,275 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 62,743.58 174.00 - 14 15,196 CONOIL PLC 13,948.44 20.10 - 10 31,848 ETERNA PLC. 4,890.54 3.75 - 11 38,344 FORTE OIL PLC. 41,028.15 31.50 -9.87 9 65,170 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 3 1,491 TOTAL NIGERIA PLC. 55,002.54 162.00 - 27 16,594 74 168,643 183 9,241,434 ADVERTISING AFROMEDIA PLC 1,997.57 0.45 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 376.43 0.32 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 1 1,500 361.01 0.77 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 1 1,500 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 3,014.25 1.45 - 4 18,890 7,862.53 3.50 - 0 0 TOURIST COMPANY OF NIGERIA PLC. TRANSCORP HOTELS PLC 41,042.18 5.40 - 1 200 5 19,090 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 2 5,000 LEARN AFRICA PLC 941.17 1.22 - 2 84,950 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 720.45 1.67 - 16 247,403 20 337,353 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 447.58 0.27 8.00 8 867,769 8 867,769 SPECIALTY INTERLINKED TECHNOLOGIES PLC 764.54 3.23 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 2 10,000 2 10,000

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48

Thursday 16 May 2019

BUSINESS DAY

Garden City Business Digest Garden City Premier Business School debuts • Set to groom 20,000 experts to win back oil industry to Niger Deltans • Bayelsa-born Silva Opuola-Charles says cost-benefit analysis of oil industry does not favour the oil producing region Ignatius Chukwu

A

t the most prestigious section of Port Harcourt, the Garden City, stands a news structure with glittering ambiance and settings. The Garden City Premier Business School has emerged to address an area of study expected to critical manpower gaps which many say had been deliberately created to keep the oil region at the background of the hydro-carbon industry.

The founder and president, Bayelsa-born Silva Opuola-Charles, sees himself as a man on a rescue mission. The one-time commissioner for finance and later commissioner for budget and planning in Bayelsa State thinks Port Harcourt is sinking like Warri (Delta State) did and believes that all Port Harcourt boys, irrespective of one state of origin, must rally round to save the Garden City. To him, this should not be by use of weapons and militancy but by strategic intellectual resource-deployment, just as he has just done. He thinks if about 20,000 bright brains can be ‘cloned’ in the unique business school to think outside the box, they could rescue not just the Garden City but the oil economy and the Niger Delta.

In an exclusive interview with BusinessDay in his office at Number 13 Herbert Macaulay Street, he said the school is basically to address entrepreneurship. “We want to create global business leaders using local skills and entrepreneurship. Our people are very enterprising people. Our forefathers are the ones who carried palm oil and other to the white men around the Brass and Bonny areas. We are not lazy people.

The issue is we want to create values.”

Port Harcourt now has three solid business schools but Opuola-Charles says Garden City Premier Business Schools is about top quality for a sensitive task for the oil region. He thinks the rescue task is fundamental because the oil industry was skewed against the interest of the oil region and this must be addressed, now.

“What happened is that instead of encouraging education from oil, it was not done. Education is important to make our people take charge. The spin-off of oil should be to educate our people and employ them back into the oil industry.

That should have been the plan from day one.

The plan was just to come here, extract oil and transfer the money back home. Giving scholarships to some persons was not comprehensive plan.”

He went on; “They have a JV, but why cant they have a plan for the Niger Delta. If all the oil companies come together for a development plan for about 30 years, it would have been good. Passing the buck to government is wrong because Government is to provide security and environment. The oil companies are the beneficiaries. There should have been a synergy between the private and public.

“If you go to other parts of the world, what the oil companies are doing is different. See the massive amounts they spent in the spill of Gulf of Mexico. They build community within community where they have oil. They have everything in that community. Why don’t they do this where. They give a development that does not make sense. The assets are depleting ones and there are environmental issues which may make us suffer for life. The aquatic resources have collapsed.

“In terms of what the region gives Nigeria and what it gets, the cost benefit analysis shows that the region is grossly shortchanged. We hardly get up to one per cent of what we give because even the 13 per cent is taken back through the back door. There is huge capital flight in the region. It is getting late but that is why this school has come. Violence will not be the answer but to build intellectual capacity to engage the oil corporations. If we train our people , they can proficient to engage the oil corporations and become major force that will transform society.

That is what we want to achieve here. We are saying we want to transform minds here. If we do so, they begin to reflect on the environment and the society. What is happening in Lagos and others is their level education and exposure they

have given to their people over time. They have produced thinkers and technocrats that can be in state executive cabinet and brainstorm for over 12 hours at a time.”

He thinks Lagos has been made to give huge gap to Port Harcourt. “They have moved from N690m in 1999 and now over N34Bn per months. It happened by planning and thinking out of the box, not by miracle. We can train our people to have new perspectives, thinkers, etc.

Thinking is what brings research and development and people begin to think out of the box.

We should not be blaming ourselves. Things will begin to move in the direction of the government. We need to invest and take responsibility.

I have taken responsibility to set up this place because that if we do it right, there will be spin off that will begin to make things happen automatically for our people.”

About the school, he stated; “The idea is simple and I always believe in education and propagate research. I gave scholarships when I was outside the school business. The idea of setting up this school is to reinforce my belief in the society.

“The vision is to create global business leaders through growing local skills and entrepreneurship. We will achieve that in different dimensions by providing cutting edge education. Education is in three dimensions: academic, policy, and industry. We are providing the three dimensions of scholars here. We plan that within five years, if we put ourselves together working with governments and other stakeholders, we will provide 20,000 skills for the oil industry. We also will give skill to people in the lower levels to become financially skilled in their professions and businesses.

The ones operating in the south east and south-south especially PH to Ahoada are a special breed. They have uncountable gangs now like hunters parcelling out the road between PH and Bayelsa. They rush to the road, stop vehicles especially branded buses (they say big men now use buses and leave their cars at home) and capture many and march them to the bush.

Each gang has its own rules. One particular gang says no raping.

When your person is kidnapped and you do not hear from the kidnappers, they are mining the account numbers, withdrawing by instalments. They are also harvesting information about his/her relations; where they work, where they live, etc. After, they carry out kidnap value assessment and put values on each victim. Some gangs are not in a hurry because they feel the sums must come. Some give out one pure water to three persons. How to know where kidnap victims are is possible; the nearest food seller (mama put) will see young boys coming to buy many food packs in foils and one bag of pure water. The victims are nearby.

Note also that the kidnapers are not always well coordinated in terms of SOP (standard of procedure) motive, ambition, satisfaction, etc.

Some within a gang want to rape but the boss may not want it. Some want to kill and taste blood but it may be his personal desire. The result is that the victim is at the mercy of the interchange of both personal and group desires.

Note that you do not flaunt your religion at them. Some will tell you how they go to church more than you. One showed a man of God the video he made at his last church sermon. They know a genuine pastor more than we do. They reveal your records as a pastor to you. Could this be judgment here

on earth? One particular pastor who goes as ‘bishop’ was well treated. They said, ok, they would not touch him. Another was wife of a man of God, they eventually refused to take any money, refused to rape her, and asked the husband to pray for them, that the man was a true man of God. They also have serious native doctors who alert them through African magic what your people are doing.

One last thing to note, for today’s briefing; they take you very far in the bush and you meet victims of other gangs, like the days of slave trade. They stop, admire the victims especially the female ones, like commodities. They express winks at some women and yab the captor how he must have ‘enjoyed’ well, well. Meanwhile, these are ruffians who may not have bathed nor brushed for weeks.

The point is, the forest is full of danger. When a gang releases you, they advise you on how you will trek and how to keep safe. One problem even the kidnappers have not solved is how to protect their freed victim on the way home. They confess that they did not have receipt to give you so another gang doesn’t re-kidnap you. Soon, they may solve it by giving marks and/or receipts so the victim would be left alone in the forests as he/she sojourns back home. For now, you must bear with them.

In all of this, please understand that you are between life and death, in fact nearer death than life. Even if your abductors did not intend to kill you, many things can go wrong. They are always on drugs, so their moods can swing. Too, the one keeping an eye on you may fall asleep due to heavy dose and fatigue. Should you take your chance and try to flee or be obedient and allow him wake? Don’t wait for my advice. Follow your heart!

Silva Opuola-Charles

Understanding your kidnapper Port Harcourt

by Boat

IGNATIUS CHUKWU

T

he first mistake any Nigerian will make is to conclude that he is safe where he is today. Reason? If you listen to lucky victims, you will realise that kidnappers have plans for everyone and for everywhere.

Also, if they do not get you because you are fortified, you may get a phone call to bail your person, that way, you are running around. Do you know you can be a co-signatory to a fat account and if your partner is in their hands, and they need your signature, they will come for you anywhere? This is what they told a vice chancellor they kidnapped.

Another important feature is to know that nobody is a kidnapper, but all kidnappers are bandits and criminals who have found kidnapping to be more lucrative. So, kidnapping is a convergence of crimes and groups with various backgrounds, grievances and methods. That is why robbery seems archaic and outdated. Some years, ago, this column predicted that armed robbery would soon die. Now, it has been replaced.

Also note regional perceptions and styles.

The kidnappers in the north-east are mostly BH fallouts. The ones in Kaduna-Abuja axis are

terrorists from the Zamfara breakaway that are dominated by Fulani herdsmen who actually are former stragglers and rustlers. They speak Hausa language to victims but speak strange Fulani to each other. They are comfortable with AK-47, phone manipulation, cash transfer, etc. They have no patience for burdens (those whose people are not bringing cash quick).

They waste them. They point their guns at helicopters flying overhead and dare them.

They are ready to open fire on their captives.

They have been threatening to find how to hijack a train. That is how daring. They seem to be channelling the ransom to their main duty, terrorism. So, we are funding terrorism without knowing it because of millions we pay everyday to them. Nigeria has been infiltrated and we are busy winning and losing elections, struggling for power and monthly allocations.

Listen to the kidnappers on Abuja route first!

Another thing to note is that there seems to be nothing like debriefing of victims. In crime fighting, anyone who escaped from kidnappers or robbers or ritual killers is first the guest of police criminologists. There, you tell them everything you know. This is sieved and passed on to form an intelligence bank that the police use to devise new ways of understanding and interpreting the offenders (kidnappers, robbers, ritualists, etc). The former governor of Rivers State (Chibuike Amaechi) called for this approach when the national NUJ officers kidnapped in Akwa Ibom were released in Abia (Obingwa) forests. There is no evidence that this is being done. They free you or you escape, you head home, hospital, and later to your church to pour the details. The police remain without the sensitive details.

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Thursday 16 May 2019

BUSINESS DAY

49

Investing in Rivers State Mercy Bello Abu and the women of Diobu • Work while at home scheme arrives Diobu to create wealth to housewives • EPI founder says; ‘Real life begins when you begin to give back to society’ Ignatius Chukwu

H

ousewives and other women in Diobu, Port Harcourt, Rivers State, who before now believed that the area would never be remembered in terms of empowerment and entrepreneurial upliftment may have been numbed by what has just hit them.

Mercy Bello Abu, Managing Director of IHP Consulting Services, top member of the Port Harcourt Chamber of Commerce, Industry, Mines and Agriculture (PHCCIMA), former chairperson of NECA’s Network of Entrepreneurial Women NNEW), and above all the Global Founder of the Entrepreneurial Platform Initiative (EPI), seems to wake on a side that has favoured them.

Abu is smarting from her induction as Fellow of the African Institute of Strategic Managers and is marking her birthday with a landmark scheme in Diobu to rescue wives, widows and other women who seem to know nothing more than house chores. Now, the entrepreneurs coach is set to transform over 80 of them to small scale entrepreneurs that would use what is around them to start businesses.

Abu is the Publicity Secretary/ Chairperson of Media/Publicity Committee of Port Harcourt Chamber of Commerce. She is a graduate of the English and Literary Studies, Edo State University and an MBA degree from the University of Nigeria Nsukka. The woman sees herself as a woman with a life of impact and legacy and has been involved in entrepreneurship, capacity building, training, and personnel development for over 20 years.

She is a member of various professional bodies including the Chartered Institute of Personnel Management (CIPM) and the Nigerian Institute of Public Relations (NIPR).

She is also chairman of PHCCIMA Staff Welfare Committee, chairman on entertainment and strategic planning of the PHHCIMA International Trade Fair Committee. Among others, she is the president of HIW Women, an NGO that caters for women and the less privileged in the society. its a charitable organization. She has won several awards is happily married with four children. She took time off to reveal what May 17 and 18, 2019, mean in her life

Mercy Bello Abu; Founder, EPI (Moving to rescue Diobu women)

and the ordinary women in Diobu.

What programme is coming up on May 18th?

I learnt of the plight of numerous women in Diobu and I said, how can we make a difference? We are not trying to touch everybody but at least some. So I want to see how we can impact on them and build entrepreneurial spirit. I want to help people build and sustain entrepreneurial careers. I discover that the only way to sustain this wonderful life is to create a cause, else, you live a flat life. You must say yes, to life.

The Diobu project: We learnt that there are so many widows and orphans there, so we decided to create an outreach programme for them. It coincided with my birthday (May 17) and so we want to touch lives. It is a give-back project. We are not being funded, so its from personal effort. In spite of our challenges, we are trying to make their lives better; baking, tailoring, fashion, fascinator making and gele (head-tie). We have been going to prepare and sensitise them, get their needs, etc, about 80 of them. They are very keen. The northern community there is ready. We realize they are many there.

For most of them, their husbands go out everyday to look for daily bread and they stay at home. So, it is easy to be idle but our scheme is trying to tap the idle hours into productive time.

We asked them what they would want to learn and many said they www.businessday.ng

want to cook for sale. This can be done in their frontages. So, we are offering them catering exercise to learn basic skills of cooking and selling. Some want to learn gelemaking, fascinators that women can wear to church, etc. The strategy is to groom them in what would not require shops and rents so money does not discourage them. We want a situation where each person that learnt a skill will start doing something right away.

On that day, May 18, we would unleash four skills including sewing (how to take measurement, cut, etc). When we see the seriousness, we upgrade them to our various entrepreneurial centres for continuation. After full apprenticeship, we do graduation ceremony and empower them to start something. This programme is to seek out those really interested and committed.

We have also come to reaslise that poverty is more of a mindset.

Once you are held down, it is difficult to let go. Also, certain beliefs matter and thus trying to take someone out of it may be difficult.

There is the story of a lady that makes and sells moi-moi that most persons like to buy One of our resource persons who works where the woman comes to sell advised her to increase the price and upgrade to sell more and increase her turnover. The seller saw everything wrong with the advice, saying she did not believe the customers would offord it. No strategy to persuade her could work and

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she remained where she was, until competition caught up with her.

People love moi-moi in leaves instead of in plastic cups.

She was filling a gap and that is what entrepreneurship is all about; see a gap, fill it. Instead, the moi-moi woman started avoiding our resource person who actually had big plans for her. There was to upgrade her and make her an employer, and help her upgrade from N2,500 profit per day to over N15,000 at least, but her mindset held her back, satisfied with her small level.

So, we will train the Diobu women but we will see their level of commitment and determination. This is an EPI programme dedicated to my birthday as Global Founder. We want to see how we can make a difference in the lives of these women so they can be more useful to their children and families.

We do not like to celebrate without making impact on impact lives.

Who are you, why should somebody trust you?

I am Mercy Bello Abu, a consultant and trainer. I love to impact knowledge and to see women build up capacity. I studied at Edo State University for my first degree and later had my Post Graduate Diploma (PGD) and my Masters in Business Administration (MBA) in the University of Nigeria (UNN).

I look forward to starting my doctorate very soon. Above all, I am a conference speaker and entrepreneurial coach.

People who come close to me tend to trust me because I appear real to them. I am real to myself.

I say it the way it is, and we do not have airs around us. We are consumed by passion and I want to see women do better. I want to see a society where women are treated well not because they are wives or mothers but because they add value to society.

The most annoying is that some women do not even know their place. For you to start competing means you do not know your essence. We say, open your eyes because you have all it takes to live a worthy life. I want to see women live lives of impact, making impact in people by their actions and by the fact that you take the focus off you and put it on another person.

That is who I am.

Does this your personality bring you good all the time or you have had to make sacrifices?

Most times, it brings me sacrifices because some will look at me and suspect me. It is about the next @Businessdayng

person, and the satisfaction I get is to see a woman that had no hope, that was timid and shy, to now stand bold and hold her ground. I love that. For most of them nobody gives them this kind of platform.

We have a lot of people that have so much on the inside but no place to showcase this uniqueness. If the essence of my life is to provide this platform to showcase this uniqueness, I would have done a fantastic job. If it brings me pain, that is life.

Definitely life has those for you and against you. I had contact with Funke Adejumo Luis, the popular tele-evangelist, and in a one-and-one meeting, she told me; they have told me you are a mentor to so many women, but I want you to take this as fact; these same people you are called to will be the ones to make you angry and fight you. They are also same people that will fight for you. Do not think everybody will stand for you. No, no.

The ones am called to and God wants me to transform, they will be good to me. Others will come because of who you represent, they will flock around but may fizzle out. When they see so much work and stress, they will run. You need to exert pressure to achieve anything in life. That is it.

At what point would you say you have succeeded?

Success point? It is when I see women able to express themselves. It is not about you but about somebody else. Once you begin to live a life of impact, you have taken attention from you to others. Nobody is free of challenges but in spite of all this, you still take the focus off to make sure somebody else succeeded.

Then you would know you are living a life of impact. I want to be known as a woman who created a platform to make women make impact, not just about I, me and myself. Let our voices be heard.

If you can say, I can make a difference.

Any other matter?

I always tell women that life is all about personal development and entrepreneurship. I encourage them to discover why they are in the world and find out what value to add to life. You can contact EPI to get it right. Once you discover your life, every other thing falls into place.

Real life begins when you start giving back. We bring our different gifts in life to make impact in the society. Let us try and build capacity and make impact. For you to come out, you must do extra things.

industry Insight

BUSINESS DAY Thursday 16 May 2019 www.businessday.ng

The drive for local input sourcing in manufacturing sector ODINAKA ANUDU& GBEMI FAMINU

O

ne common denominator among economic commentators in Nigeria is to assume that the local manufacturing sector imports more inputs than it sources locally.

From economic to investment analysts, down to investors, many assume that since manufacturers agitate more for dollar availability in the foreign exchange market, they must be importing more raw materials than they source in the local market.

But the point is that local input sourcing is not equal among all sub-sectors.

For instance, while food and beverage firms get more of their inputs locally, pharmaceuticals get more from outside.

Another explanation is that there could be over 20 inputs needed to manufacture just one type of drug. While some of the inputs may be locally available, others may not be in the required quality and quantity.

Data from the Manufacturers Association of Nigeria (MAN), comprising about 2,500 members, show that local input sourcing rose from 47 to 52 percent between 2014 and 2015. Since 2015, this number has passed the 50 percent mark.

Ordinarily, when local input sourcing is less than 50 percent, as in 2014, it means that manufacturers import more than they source locally. And when it exceeds the 50 percent mark, then manufacturers source more locally.

In 2016, local raw materials sourcing stood at 60.4 percent. It further rose to 63.2 percent in 2017. Last year, manufacturers’ local input preference stood at 60.3 percent, according to MAN. In fact, since 2016 when dollar scarcity and economic recession struck, manufacturers have been forced to look more inwardly for inputs. In simple terms, local sourcing has stood above 60 percent mark since the foreign exchange crisis of 2016.

In 2016/2017, Frank Jacobs, the then president of MAN, had told BusinessDay that manufacturers were becoming aggressive in local input sourcing, fabricating machines at local institutes such as Federal Institute of Industrial Research Oshodi (FIIRO) and the Projects Development Institute (PRODA).

But the story does not end there.

Companies are driving local sourcing

Local Sourcing Of Raw Materials by Manufacturers In Nigeria

70%

60.4%

60% 50%

47%

63.2%

60.3%

52%

40% 30% 20% 10% 0%

2014

2015

2016

2017

2018

Source: MAN, BusinessDay in what is generally known as backward integration.

A typical example is what FrieslandCampina WAMCO does in five

communities in Oyo State.

The dairy maker supports herdsmen to stay in these communities and produce raw milk from their cows. The dairy maker then buys the milk and uses it as input.

The herdsmen do not move their cows about, thereby guaranteeing sound health for the cows. The system eliminates clashes between farmers and herdsmen, which have become commonplace in many communities.

The Nigerian Breweries is also in this party. At the annual general meeting (AGM) held two weeks ago in Lagos, Jordi Borrut, managing director, said hundred percent of the brewer’s packaging materials come from Nigeria while 60 percent of its raw materials are sourced locally.

Nigerian Breweries is the biggest buyer of cassava starch from Psaltery International Limited, followed by Nestle Nigeria Plc and Yale Foods, Ibadan.

NB’s supply chain director Martin Kochl corroborated Borrut’s claim by saying that as sorghum constitutes 70 percent of the company’s raw materials, the company is making plans to explore other substitutes like barley which can be found in the northern part of the country.

Guinness Nigeria sources some of its sorghum and malt extract locally through various local chains suppliers.

“Currently, our local content sourcing is 75 per cent, and we plan to increase this significantly within the next couple of years,” Baker Magunda, managing director/chief executive officer, Guinness Nigeria, said in January.

Manufacturers scrambled for dollars in 2016 when the country fell into an avoidable recession. Some of their inputs are not found locally and it makes sense to get them from any part of the world where they are available.

About 64 small-scale manufacturers shut down in eight months to end of 2016 as they could not produce or stay afloat.

At least 222 small-scale businesses closed shops, leading to 180,000 job losses, according to a report by NOI Polls.

The trend has forced manufacturers to begin to pump billions into local inputs to beat future dollar crunch.

Nestlé Nigeria, a food manufacturing giant, sources 80 percent of its maize, sorghum, millet, soya, cassava starch, cocoa powder, and palm olein from more than 41, 600 local farmers and processors scattered across the country. These crops serve as inputs for the Fast-Moving Consumer Goods (FMCGs) giant.

Nestlé Cereals Plan project has over 30,000 farmers who supply 100 percent of the grain requirement for Golden Morn Maize. Through its Sorghum and Millet in the Sahel (SMS) project, now called Nestlé Nigeria & IFDC / 2Scale Project Sorghum & Millet, the food and beverage giant has engaged up to 10,671 farmers.

More so, PZ Wilmar has continued to plant oil palm to serve as input for its vegetable oil and other products.

Santosh Pillai, managing director of PZ Wilmar, told BusinessDay that his firm has pumped approximately $150 million into oil palm plantations in Cross River State.

Findings show that most food and beverage firms today buy sugar, an essential input, from Dangote Sugar and Flour Mills’ Golden Sugar Company.

Flour Mills of Nigeria (FMN) has on its part, invested billions into oil palm, wheat, sugar and cassava, among others.

Through its Premium Cassava Products Limited (PCPL), FMN sources HighQuality Cassava Flour (HQCF) used in further production.

Dangote Group has also been among the biggest investors in backward integration.

Banks are also seeing the impact of rising local input sourcing.

“Local corporates are supporting out-grower schemes to support farmers for their inputs. In paper and packaging, operators are recycling used cartons as against importing tons of craf paper from across the globe,” said Bolatiti Ajibode, head, conglomerates and industrials, Stanbic IBTC Bank PLC, told BusinessDay. To help shore up local production and input sourcing and also cut imports, the CBN restricted 41 items, from palm oil to margarine, from accessing the FX market. This pushed up local sourcing and raised production.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.