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news you can trust I **MONDAY 17 AUGUST 2020 I vol. 19, no 629

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In Nigeria, education is no longer enough to find a job de Abass spent a fortune funding his only son, Tunde’s, university education. He was not that accomplished academically and wanted to give Tunde a solid background that would earn him a well-paying white-collar job.

It is been six years since Tunde graduated from one of Nigeria’s top private universities and the dream of that white-collar job has not materialised. Instead, Tunde, now 30, works in a small supermarket owned by his father.

Taking orders for soft drinks and recording the amount of sales per day is hardly the future Ade envisioned for his son

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Lagos at crossroads over business model for owned multibillion theatres …experts urge for privatesector management …as facilities rarely host events Joshua Bassey & Obinna Emelike

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hile the Lagos State government has been commended for fulfilling its promise of supporting the arts and tourism and creating more employment opportunities in the sector through the construction of six communityContinues on page 29

Inside

R-L: Senior Special Assistant on Science, Technology, Engineering, and Mathematics (STEM) Education, Lagos State, Adetola Salau; group chief operating officer, FMDQ Group, Kaodi Ugoji; permanent secretary Education District 3, Ikoyi, Lagos State, Yinka Ayandele, and Lagos State commissioner for education, Folashade Adefisayo, represented by director of Public Private Partnerships, Ministry of Education, Olufunke Oyetola, during the presentation of pre-loaded educational tablets donated by FMDQ Group to Lagos State public school students.

Special Series on unemployment data P. A6 & A7

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As government looks away, Nigerians die on account of medical negligence in hospitals Godsgift Onyedinefu, Abuja

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unji Dimeji is still in so much rage and pain after his mother, who was battling a kidney condition was rushed to the hospital when her condition became critical, died because she was left unattended to for hours despite the urgency of her condition.

“When we got to the Wuse General Hospital Abuja, the doctors were just taking their time, ignoring the urgency of her condition. I had to get a stretcher from the hospital myself, placed her on it and moved her to the hospital corridor, where we waited. She died after she was finally admitted. I was mad! I just consoled myself and accepted that it was the will of God,” Dimeji tells BusinessDay. Another distraught Nigerian, Chukwu James, narrating a similar painful experience, says he was devastated when his mother, who took ill from a yet to be diagnosed condition, died because they were made to wait six hours for the doctor who gave them an appointment for 9am but came in at 3pm.

“After waiting, the doctor just strolled in, so casually and unperturbed. He asked

my mother a few questions and scribbled down some prescriptions and we were asked to go. My mother died on my laps on our way home. Government hospitals are death traps!

I am constantly reminded of the pain each time I see National Hospital, Abuja,” he cries out.

James was later to find out that this doctor who came late has a private hospital he services, saying that was probably why he was inexcusably late that fateful day.

James and Dimeji’s cases are instances of the thousands of helpless Nigerians with unpalatable experiences; many patients who get lucky to be alive often lose body part(s) or develop other critical conditions which they are forced to live with for the rest of their lives.

This level of growing negligence continues to escalate medical tourism as some Nigerians who can afford it continue to seek medical services abroad with attendant consequences for depleting foreign reserves. Though Nigerians with the financial resources often institute legal, several others, bitterly accept their fate as “the will of God.”

Poor corporate performance validates investors dumping stocks BALA AUGIE

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he protracted deterioration in corporate performance due to macroeconomic shocks validates investors fleeing Nigeria equity market in search of better investment elsewhere.

Trading in equities on the Lagos stock exchange slumped 57 percent in June from a year earlier, figures from the bourse show. The benchmark Nigerian stock index is heading for an annual decline for the fifth time in the past six years.

There are concerns that the small and mid-sized companies do not have the resources or strength to ride out whatever is thrown at them, and that stronger balance sheets and higher profit margins have helped insulate the larger companies’ profits.

“To lure investors back to the market, there has to be the harmonisation of the foreign exchange rate and the currency should be devalued. There has to be an enabling environment for busied to thrive,” Johnson Chukuwu, managing director/CEO, Cowry Asset Management Limited, says.

The priority of every gov-

ernment is to improve economic environment,” Chukwu notes, as the new Companies and Allied Matters Act (CAMA) that has just been approved by the president and the deregulation of the downstream oil and gas sector could lead to economic recovery.

Wale Okunrinboye, investment analyst at Sigma Pension, is of the view that the equity market has recovered because the Nigerian Stock Exchange (NSE) ASI index has improved to -6.12 percent as at Friday, from -20 percent in March.

“The market dynamics favour local investors because low interest forces them to buy stock, but the foreign ones are not involved,” notes Okunrinboye.

The shock to economic growth as had a particularly pronounced impact on firms, as investors and analysts have blamed the precarious situation on lack of transformation policy on the part government.

For instance, the border closure by government last year stoked inflation, as manufacturers are unable to ship their products out of the country. www.businessday.ng

L-R: Douye Diri, governor, Bayelsa State; Timipre Sylva, minister of state for petroleum, representing President Muhammadu Buhari, and Simbi Wabote, executive secretary, Nigeria Content Development and Monitoring Board, at the commissioning of the 17-storey Nigerian Content Tower in Yenagoa, Bayelsa State.

Congestion: Nigeria needs seamless cargo evacuation modes to decongest Lagos ports … Use of barges, rail, inland dry ports to enhance efficiency – analysts AMAKA ANAGOR-EWUZIE

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ith the alarming rate of congestion in terminals as well as persistent traffic gridlock on roads leading to seaports in Lagos, Nigeria needs to look inward to adopt a sustainable and seamless mode of cargo evacuation in order to enhance efficiency, analysts say.

For them, Nigeria must begin to use a combination of rail, barges on inland waters and road, to not only decongest Apapa and Tin-Can Island ports, but to also make the cost of haulage very competitive.

Presently, Apapa Port is experiencing 90 percent yard occupancy, which shows that there is congestion and longer dwell time for imports. This has also affected waiting time

of vessels, as ships now spend between 30 and 50 days on Nigerian waters before being able to berth at the port.

BusinessDay check shows that due to challenges in accessing the port to lift cleared cargoes, the costs of transporting containers from the ports in Lagos to importers’ warehouses have continued to hit the roof top.

For instance, shippers pay as much as N1 million and above to transport containers to nearby city like Ibadan, while haulage from port to warehouses in Lagos cost between N500,000 and N800,000, but with less than N400,000 a container can be moved by barge or rail.

Hadiza Bala-Usman, managing director, Nigerian Ports Authority (NPA), who is of the view that Nigerian ports cannot function well if 90 percent

of import and export cargoes are moved by road, says there is need for Nigerian importers to make use of intermodal transport system in evacuating their goods.

“Evacuating cargoes using the waterways and rail would be a very significant development that would strengthen intermodal transportation system. Economically, it would mean a lot to the nation’s economy, especially as regards to the fact that one of the major concerns for port users revolves around the huge revenue loss to congestion on the roads leading to ports in Lagos,” she notes.

According to Bala-Usman, the Port Authority believes that a certain percentage of Nigerian cargoes must be off the road for sanity to be restored within the port environment.

She further states that about 30 percent of cargoes that come into Nigeria must be moved through alternative transport system, such as inland waterways using barges and railway.

“Allowing all our cargoes go on the road is what keeps our roads in the state it is today.

Having a port that only evacuates cargo by road is inefficient, and will continue to create congestion,” she says.

Ibraheem Olugbade, executive director, SIFAX OffDock, who points to the need for port users to adopt the option of barge transportation for the movement of consignments, says the challenges of port congestion and persistent traffic caused by bad access roads would drastically reduce if alternatives to road transportation are encouraged by shipping lines and agents.

Nigeria drifts farther away from economic potential as recessionary gap hits five-year high DIPO OLADEHINDE & FAVOUR OLAREWAJU

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igeria’s economy is underperforming and it has got so bad that the country’s recessionary gap is now at a five-year high.

According to a presentation by Lagos-based Financial Derivatives Company (FDC) at a Lagos Business School (LBS) breakfast meeting, Nigeria has been plagued by a persistent recessionary gap for five years in a row, the highest being 11.8 percent estimated for the year 2020.

Recessionary gap is when a country’s potential gross domestic product (GDP) is greater than its real GDP, and this is often evident during economic recessions.

The implication is that the economy is growing below its potential, which translates to higher unemployment in a country already starved of jobs.

The FDC report explains that this gap between actual GDP and potential GDP is expected to persist till 2021, with real GDP at 1.8 percent while potential GDP is estimated for -3.6 percent.

“Nigeria already had a recessionary gap. What we are facing today is that we are going through a situation of stagflation, which is a recession plus inflation,” Bismarck Rewane, chief executive, FDC Limited, said.

Nigeria needs an investment multiplier within the range of $160 billion to $200

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billion, which will have a direct impact on poverty, people’s lives, growth and inequality, Rewane said.

In dealing with the pressure of recessionary gap, most economists say that Nigeria’s economy is not strong enough to encourage businesses to raise their demand for labour while consumer wallets is still under pressure owing to elevated costs of living, as businesses continue to grapple with tough operating conditions.

Others have said for government to solve the problem of recessionary gap, which comes with higher unemployment, there is a need for more auto-centric and pro-growth policies geared towards attracting and im@Businessdayng

proving private sector investment in critical sectors of the economy.

“Reducing the high cost of operation faced by businesses will go a long way in allowing them to divert such resources devoted to energy cost to expansion of their labour force,” they noted.

To escape the recessionary gap, Gbolahan Ologunro, a research analyst at Lagosbased CSL Stockbrokers, suggests that the solution lies in turning the exchange rate failure into a more flexible rate as determined by market forces, which will go a long way to attracting foreign direct investment (FDI) in critical sectors and subsequently increase employment opportunities.

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Samsung & SIMS Nigeria Celebrate 27 Years Partnership with Special Rewards for Customers 17 August, 2020

Air Conditioners with Windfree Technology, Refrigerators Samsung & SIMS Nigeria Cel- and Washing Machines with ebrate 27 Years Partnership improved functionality. This with Special Rewards for Cus- is clearly an exciting period tomers for our consumers,” Yu continued.

Samsung Electronics, West AfAlso speaking, Ike Eyisi, Exrica in partnership with one of ecutive Director (Operations), its major sales and distribution SIMS Nigeria, said “Custompartners, SIMS Nigeria, has aners are at the heart of our nounced the commencement of a loyalty promotion aimed at rewarding its consumers in commemoration of their 27 years of partnership. The nationwide promo will see consumers enjoy discounts, free delivery and installation, gift vouchers and other goodies on select Samsung electronics, purchased from SIMS Digital Centres. The offer will run from August 10 to August 31, 2020.

partnership with Samsung.

This commemoration is really about our customers who have made it possible for us to remain in business. So we implore our customers nationwide to avail themselves of this opportunity to purchase quality electronics between now and August 31 at discounted prices, receive gift

vouchers and obtain free delivery and installation of the appliances purchased. This is our way of saying thank you to our loyal customers for their unflinching support over the years.” he added.

The Samsung-SIMS Nigeria partnership is built around providing customers with a good shopping experience

and delivering excellent products and services to consumers nationwide in a convenient and exceptional fashion.

END About Samsung Electronics Co., Ltd. Samsung Electronics Co., Ltd. inspires the world and shapes the future with transformative ideas and technologies.

According to the Managing Director, Samsung Electronics Nigeria, Mr. Caden Chiyeon Yu, the success story of this strategic partnership and the achievements recorded over the last two decades, especially in fostering availability and access to the brand’s wide array of quality products will not be complete without the support and loyalty of its customers. The patronage received over the years has kept the partnership with SIMS Nigeria waxing stronger and the company is thrilled to celebrate this milestone by rewarding consumers for their loyalty to the brand as well as to SIMS Nigeria.

“Nigeria is a very important market with high potential and it is very rewarding to know that our consumers trust the brand and support our business. The longevity of the partnership with SIMS Nigeria is a testament to the strength and premium quality that Samsung represents as a brand in the country and the overwhelming trust and loyalty built over the years. We are honoured and elated to be celebrating this very important milestone of our journey here in Nigeria with our esteemed customers,” Yu said.

“In line with our commitment to continually avail consumers with ultramodern home and office appliances, Samsung is set to launch a range of exciting products into the Nigerian market. From new 2020 models of T-Series TVs that come packed with thrilling features, new sleek designs, exceptional picture quality and sound to www.businessday.ng

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The company is redefining the worlds of TVs, smartphones, wearable devices, tablets, cameras, digital appliances, printers, medical equipment, network systems and semiconductor and LED solutions.

For the latest news, please visit the Samsung Newsroom at https://news.samsung.com/ africa_en/

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Who really owns the railways in Nigeria: China or Nigeria? global Perspectives

OLU FASAN

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he recent controversy over the waiver-of-sovereignty clause in the rail construction contract between Nigeria and China was misplaced. It was wrongly focused on the technical issue of the waiver of sovereign immunity rather than on the underlying acute problem of Nigeria’s over-reliance on Chinese money and firms for its railway development.

Waiver-of-sovereign-immunity clauses are universal provisions in international contracts between private and sovereign parties. Private parties will usually seek such clauses upfront to prevent a sovereign party from invoking its sovereignty to shield its assets against any future enforcement of an arbitral award.

The position that a sovereign state should not use its sovereignty to deny a private party its entitlement in purely commercial transactions is well-established in English law. Lord Denning held in Trendtex Trading v Central Bank of Nigeria (1977) 1 QB 529, a case involving Nigeria and a private company, that if a government operates in the market place, it “should be subject to all the rules of the market place.”

But a waiver-of-sovereign-immunity clause in any contract between China and a developing country is a different matter. This is because it won’t be purely commercial transaction. Rather, China uses its Belt and Road Initiative (B&RI) as global investment and lending programme to trap vulnerable countries in unsustainable debt. As a global infrastructure development strategy, the B&RI is being used to fund infrastructure projects in developing countries that are not economically viable or affordable.

Yunnan Chen, a scholar at John Hopkins University, said, in a paper for the United States Institute for Peace, that the

modus operandi of China’s Export-Import (Exim) Bank is to help Chinese firms in winning overseas contracts, encouraging those state-owned firms to “push economically unviable projects with the backing of Chinese state finance.”

Even when feasibility studies do not support a project, even when multilateral lenders, such the World Bank and the IMF, refuse to lend towards a project, and even when bilateral lenders and private investors would not touch a project with a barge pool, China will always give loans for it, particularly with respect to railway constructions, a core focus of the B&RI. But while China uses cheap loans and lax conditions, including turning a blind eye to acute policy and institutional defects in a country, to secure rail construction contracts, it’s also willing to play hardball to collect the loans, using the waiver-of-sovereign-immunity in such contracts to force through its will.

The foregoing is the prism through which to see China’s role in Nigeria’s railway development. Chinese firms and finance play a monopolistic role in railway construction in Nigeria. This stems from the fact Nigeria, under President Buhari, is hungry for Chinese money to develop its rickety rail infrastructure, while China, the world’s second largest economy, is determined to use its money to gain influence around the world.

To be sure, successive Nigerian governments have always wanted to develop railway infrastructure. For instance, in 2002, President Olusegun Obasanjo commissioned a 25-year strategic vision to modernise the rail network; the vision was amended and ratified by President Goodluck Jonathan in 2012. But it is President Buhari’s ambitious plans for railway network connecting all the state capitals that have triggered a floodgate of Chinese money and firms in Nigeria.

The railway-related loans from China are probably close to $20bn. Recently, the transport minister, Rotimi Amaechi, said $1.6bn was needed to fix Lagos-Ibadan route; $5.3bn for Ibadan-Kano route; $3.2bn for Part Harcourt-Maiduguri route and $11.1bn for Lagos-Calabar route.

None of this spending comes from savings; none from private finance. Rather, it is to China that Nigeria turns for all the money. And China is always willing!

Already, it’s estimated that there are

17 different Chinese loans to fund different categories of capital projects. In 2017, China pledged to double existing investment (mainly loans) in Nigeria by another $46bn.

The American statesman John Adams famously said: “There are two ways to conquer a country. One is by the sword.

The other is by debt.” China is believed to have chosen the latter. But Nigeria has made itself a willing pawn in the Chinese debt-trap diplomacy.

Which brings us back to the antisovereignty clause in the railway construction contract signed in 2018 by the Federal Ministry of Finance, on behalf of Nigeria, and the Export-Import Bank of China. Article 8(1) of the contract says that “the borrower (i.e. Nigeria) hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5) thereof with the enforcement of any arbitral award pursuant thereof …”

Now, as stated earlier, there is nothing unusual about this clause. It’s the kind of the waiver-of-sovereign-immunity clause that exists in any contract between sovereign and private parties. Yet, the implication is that if Nigeria cannot pay back the Chinese loans, China can seize Nigerian assets, including assets linked to the railways.

What makes this scarier is that China is aggressive in enforcing such antiimmunity clauses. In 2018, when Sri Lanka could not service the loans it took from China to build its Hambantota port, China forced its government to hand over the port and 15,000 acres of land around it for 99 years!

The Buhari government says Nigeria will pay back the Chinese loans in 20 years. But how? Railways are only viable through large passenger numbers.

When the construction of the Crossrail in the UK started in 2009, Transport for London, TfL, said: “Once Crossrail is fully open, TfL expects total annual revenues from the line of nearly £500 million per year in 2022/23 (its first full year of operation) and over £1 billion per year from 2024/25.”

Can the government make similar projections about any railway route in Nigeria? In a country branded “the poverty capital of the world”, where over 50%

‘

There are two ways to conquer a country. One is by the sword.

The other is by debt.” China is believed to have chosen the latter. But Nigeria has made itself a willing pawn in the Chinese debt-trap diplomacy

of the population live below the poverty line, who will use the railways? Can they recoup their cost through user fees?

Absolutely not! Furthermore, with world oil prices and, thus, oil revenue, destined for permanent downward spirals, how would Nigeria, a mono-economy, repay the multi-billion-dollar loans? As Chen rightly notes in the USIP paper, “A longterm question remains over how the (Nigerian) government will service these loans.”

So, who really owns the railways in Nigeria? If you buy a house on a mortgage, it doesn’t belong to you until you have paid back all the money. Technically, it belongs to the bank, which, if you can’t pay back the loan, can sell the house to recover its money. Similarly, the Chinese-funded railways in Nigeria belong to China until Nigeria can pay back the Chinese loans. If it can’t, the waiver-of-sovereign-immunity clause allows China to claim ownership of the railways.

Previously, China tied its loans to Nigeria to oil acquisitions under the oilfor-infrastructure model. But now, with the so-called sovereignty-waiver clause, China will seize Nigerian assets if it cannot pay back its loans. President Buhari wants railway development to be his legacy, but he is willing to trap Nigeria in unsustainable foreign debt to secure that legacy.

Which is why Buhari’s recent renaming of railway stations in Nigeria after “prominent” Nigerians is curious. It’s a blatant attempt to disguise of the danger of Nigeria’s future subjugation to an expansionist foreign power through unviable debt-fuelled railway development.

Those prominent Nigerians have been implicated in the indebtedness and subjugation of Nigeria. For if Nigeria can’t repay the Chinese loans and China takes ownership of Nigeria’s assets, those Nigerians whose names are attached to the railway stations would be associated with the Buhari legacy!

What’s more, the railway stations named after them and the rail lines linked to those stations do not belong to Nigeria – at least, not yet! China has a claim to them!

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

Stakeholder engagement during a crisis – the role of the Board of Directors

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ood corporate governance practices are essential for efficient, viable and sustainable growth of companies and institutions, including governments. The contemporary view of business is that the Board of Directors and Management are responsible to not only shareholders, but to stakeholders. There are generally two main stakeholders to be considered- external and internal stakeholders. While external stakeholders comprise shareholders, debt holders, regulators, trade creditors, suppliers, customers and communities affected by the corporation’s activities; internal stakeholders comprise Board of Directors, Executive Management and other employees.

Each group has different interests and objectives and the essence of corporate governance is the ability of the Directors to manage the diverse expectations and interests of the various stakeholders to achieve overarching corporate objectives.

Effective communication during a crisis can make the difference between successfully handling or unintentionally exacerbating the situation. Minor mistakes in messaging can create significant reputational damage. In executing crisis communication plans, it is important to ensure that the Board coordinates and reinforces the purpose and image that the

organization would like to project. It is important to slow down during a crisis and really think through what the Board wants to have happen as a result of the crisis.

Many Boards and management teams just immediately react to the crisis rather than thinking through it strategically. Following the outbreak of the Covid-19 Pandemic, a few CEOs had gone to the press with messages that did little to reassure either their internal stakeholders or the larger public. Others have on the other hand, shown and communicated remarkable empathy that had the effect of providing comfort and giving hope in the midst of so much uncertainties.

The Board and Management should resist the pressure to respond prematurely, taking care to ensure that communication that flows to internal and external stakeholders is well thought through. In addition to assisting Management in effective communication about the organization’s response to the many dimensions of the crisis, many Boards will need to be prepared to effectively communicate how they have maintained their core fiduciary duties.

The Board should provide support to Management in articulating how the Company’s mission and values align with its response to the crisis and its message to stakeholders. It should review Management’s articulated themes for www.businessday.ng

communicating with stakeholders and help to ensure that the concerns of a wide variety of stakeholder groups are recognized. This includes communication to employees and key investor groups, as well as suppliers, customers, and critical communities. Given the nature of the current crisis, messages concerning the health and safety of employees continue to be of the utmost importance.

Also critical is investor communication as many investors will expect to be able to engage directly with Directors more frequently than they had before. Visibility into the Board’s understanding of the Company and its potential risks has become increasingly more important to investors. Investors also want to see increased disclosure on how the Board is providing oversight—this includes oversight of human-capital Management and ensuring that the Board is aligning Management’s short-term decisions with long-term business continuity.

There is also the responsibility owed to Regulators by way of appropriate disclosures, and compliance. In response to the Covid-19 pandemic, many regulators have granted waivers and extension of time for compliance. The Board should be aware of what these waivers are and to what extent the Company can take advantage of these. There should also be more regular engagement with regulators to ensure

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Bisi Adeyemi there is sufficient understanding of the peculiarities of the impact of the pandemic on the Company’s operations.

Directors should ensure that while supporting Management through the crisis, they are not neglecting their other fiduciary duties. The Board should not lose sight of cyber security – the risk of attacks will typically increase particularly at a time like this when employees are working remotely - sudden departure of senior executives (what plans are in place for succession?) and oversight of enterprise risk management. Indeed, Directors will constantly need to remind themselves of the critical role they have in ensuring that the Company survives the crisis as failure to do will impact all stakeholders.

Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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Resilience (forging ahead)

Bashorun J.K Randle

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n commemoration of the first one hundred days of the appointment of Professor (Ambassador) Ibrahim Agboola Gambari as Chief of Staff to President Muhammadu Buhari, Commander-In-Chief, Armed Forces of Nigeria, Resilience Television will on Friday August 21st 2020 devote prime time to a documentary on the President’s Chief adviser and ally.

Much of it is already well known to the public, especially the international community, courtesy of the website of the United Nations where he served as UnderSecretary-General.

“Ibrahim Gambari is an indigene of Kwara state in Nigeria. Gambari was the pioneer Chancellor of his state’s University Kwara State University [KWASU] in Ilorin.

Professor Gambari attended King’s College, Lagos and bagged his first degree from the London School of Economics, specialising in International Relations. He obtained his Masters and Doctoral degree in Political Science/International Relations from Columbia University, New York, USA. Over the years, Gambari has had an illustrious career spanning academia, government and international diplomacy.

He has held numerous leadership positions (both national and international) and gathered experiences that ratify his competency. Gambari was appointed Chairman of the United Nations Special Committee Against Apartheid in 1990, a position he held till 1994. He was also the Ambassador and Permanent Representative of Nigeria to the United Nations in 1990 serving there for 9 years.

Between 1999 and 2005, he served the United Nations as it’s first Under-Secretary-

General and Special Adviser to the Secretary-General in Africa. At about the same time, Gambari was the Resident Special Representative of the Secretary-General and Head of the United Nations Mission to Angola. He operated as the head of the UN Department of Political Affairs between 2005 and 2007. Professor Gambari also served as a one-time Minister for External Affairs (1984-1985), joining the African Union at the time as a national delegate.

Professor Ibrahim A. Gambari has received several academic and national honours including the “Commander of the Federal Republic of Nigeria” (CFR) and the “Order of the Champion of the Oliver R. Tambo” (OCORT) of South Africa.”

Following the formal announcement of his appointment on May 17, 2020, Professor Gambari was very clear about his job description: “I shall provide the President with advice, making sure the machinery of government runs smoothly. It is about the President and not the Chief of Staff.

I expect to be a loyal and dedicated man in terms of my priority to the President. The Chief of staff is not to be the head but to serve the President and carry out duties appropriately.”

That statement, for reasons which are not entirely clear, reminded many of what General Yakubu “Jack” Gowon who was Military Head of State of Nigeria (1966 to 1975) was alleged to have said: “There are no bad rulers. There are only bad advisers.”

The very cerebral Secretary to the Government of the Federation (1972 to 1975) Mr. Charles O. to Lawson who attended Corpus Christi College, Oxford University promptly delivered a heavily nuanced response: “Some leaders deserve the type of advice they get.”

As for General Olusegun Obasanjo who was Military Head of State (1976 to 1979) and civilian President (1999 to 2007), he was as combative and blunt as ever.

When swearing-in his advisers, he did not mince words: “You are free to give me advice but I am

not obliged to accept it.”

We are not privy to what advice Professor Gambari has been giving to Mr. President. Depending on the tradition and culture of the country, case studies reflect huge differences regarding the obligation of the Chief of Staff to the President to document and disclose his advice.

President Donald Trump of the United States of America has been vehemently adamant that it is covered by “Executive Privilege” along with his tax returns; his college transcripts and scores; military service/exemption; medical records etc.

Anyway, what is beyond doubt is that Professor Gambari’s credentials and temperament are formidable.

From the front page of “The Tribune” newspaper of 25th May, 2020 “Gambari: Why Buhari Made A Right Choice” “It is heart-warming to have such a quintessential gentleman, Professor Ibrahim Gambari, offering his services to Nigeria in the capacity of Chief of Staff to the President. Those that had the opportunity to encounter and relate with him while he served in diplomatic capacity can attest to his open-heartedness, impeccable character and integrity. This is a man that served the Nigerian nation for the most part of his life, who never compromised the interest and welfare of the Nigerian community in the United States of America. Having had the privilege of coming across and relating with him at close quarter on several occasions gives me the confidence to attest to his pedigree, capacity and ability to function optimally in his new office.

As a diplomat, Professor Gambari’s wealth of experience in Nigeria and offshore, gives him the credentials for the task ahead. Beyond his sterling performance as a diplomat, I was thrilled by his outstanding performances in two of the many assignments he was given while serving outside Nigeria. The first was when he served at the United Nations Special Committee Against Apartheid (1990) and the other, his service at the Joint African UnionUnited Nations Special Representative for Darfur (2010). The apartheid assignment made him to work closely with many Af-

‘

We are not privy to what advice Professor Gambari has been giving to Mr. President.

Depending on the tradition and culture of the country, case studies reflect huge differences regarding the obligation of the Chief of Staff to the President to document and disclose his advice

rican governments in the coordination of UN policy to eradicate apartheid.

Despite the weight that comes with his multifarious assignments, he believes that privilege comes with responsibility. He once said in an interview in an African newspaper that, “I regard myself as a teacher by training and diplomat by accident, long accident, but nonetheless accident! In many ways, I have been privileged and with privilege come a lot of responsibilities.”

With his responsibilities as Chief of Staff to the President, I am wishing Professor Ibrahim Agboola Gambari a successful tenure in office, and as you have always done, may you do well in your new assignment.” – Bukola Adetula We also have the benefit of his perception, perspectives and vision in his own words: “If we are to succeed in nationbuilding, we must have a leadership that is committed to the rule of law and has a demonstrable sense of fair play and democratic tolerance; a leadership with ability and integrity; above all else, we must have a leadership that can see beyond the ostentatious pomp of office.

We must have leaders who have a vision for a Nigeria which is better than the one they inherited; leaders who will lead by deeds and not by words; achievers, not deceivers.

Leadership is not everything, but it is an extremely important factor. Unless we have leaders with ability, integrity, commitment, and vision, we cannot succeed at nation-building.

In today’s world, skills, industriousness, productivity, and competitiveness are the determinant factors of national greatness. Not even the possession of the nuclear bomb is enough to make a nation great without reference to the industriousness and creativity of its citizens.”

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

How sustainable is the new normal?

T

he buzz words since the advent of the COVID-19 pandemic have been the two words: new normal, depicting clearly extraordinary times the world has found itself. Things don’t seem normal again as human beings grapple to adjust themselves accordingly.

Nigerians have since adjusted to the times. Jokes and serious matters centered on the pandemic have been spewed out as Nigerians are wont to do. The new normal has pervaded virtually all facets of life; ranging from economic through technological, educational, political, social, sporting to spiritual areas. Attempts will be made here to examine each area and how sustainable the changes wrought by the pandemic will be in the country, going forward.

Economic arena: Arguably, the most visible impact of the new normal appears to be in the economic sector of the Nation’s life. Save for those rendering essential services, many companies at the inception of the lock down occasioned by the pandemic were shut down. Even those on essential services never had and still do not have the full complements of their staff at work. With the easing of the lock down, many companies now engage in remote work schedules as many still encourage their staff to work from home. Meetings, conferences et cetera are now being conducted virtually.

From the situation so far, it is evident that the economic landscape of Nigeria will never be the same again. Companies shedding weight via job redundancies are now inevitable. Having everybody in the office on a daily basis will definitely be redefined. Interestingly, the new normal with

its perceived disruptive tendencies has inbuilt constructive appurtenances. New vista now exists for online traders and technologically savvy entrepreneurs.

Technology: As already indicated in the preceding arena, the new normal has brought in its wake the pre-eminent position of technology in this digital age. Companies now conduct most of their activities online ranging from scheduled to annual general meetings. Opportunities definitely abound for those willing to tap them as the future can no longer be meaningful without technology in its advanced form. Who has ever thought that ZOOM will ever be the rescuer for important meetings?

Education: There is no doubt that the new normal has asserted its full impact on the education sector. All categories of the education sector have been shut down and students and pupils are now on forced and endless vacation, save for those in exit classes in secondary schools that have just resumed for their terminal exams.

However, the pandemic has thrown up the importance of e-learning/distance learning which hitherto has been viewed as something esoteric.

Curiously, distant learning has been treated before now as something inferior, especially by the National Universities Commission (NUC). That impression will no doubt be a thing of the past, post Covid-19 era.

Politics: Though the political arena is yet to be impacted by the new normal even with the pending gubernatorial elections in Edo and Ondo states, the electoral umpire – the Independent www.businessday.ng

National Electoral Commission (INEC) – has started thinking of embracing electronic voting during the 2023 general elections. The electoral body explained that protocols required to keep the pandemic at bay have necessitated the rethink in its approach to conducting future elections.

It is therefore very clear that after many years of lukewarm attitude to electronic voting, INEC has been notched by the dictates of the new normal to have a re-think to what has been the clarion call for it to go digital with the times.

Social: That the new normal has redefined the social lives of Nigerians is to put it very mildly.

Weddings, anniversaries, burial activities are now conducted strictly within the dictates of the COVID-19 protocols. Violators in many states have not escaped without dire consequences.

Wearing of face masks and observance of social distancing are now the order of the day. However, whether the entire protocol would still be totally relevant, post COVID-19 era remains a matter for conjecture.

Sports: Due to body contacts associated with sports, it became understandably one of the first casualties of the pandemic. As in other countries of the world, many sporting activities are now on hold. Nigerian youths that are usually very boisterous especially on weekends watching football matches across the globe have since been silenced. Though other continental bodies have relaxed their bans on football matches, the body in Nigeria is yet to follow suit. Many other sporting activities are also still on hold, thereby bottling the energies of many Nigerian youths.

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Emeka Okolo

Spiritual matters: As emotional as spiritual matters may be, the new normal never spared them. At the height of the lock down, many states suspended worshipping of any kind in both churches and mosques and in its place, online and televisio n worship were instituted. Even with the easing in virtually all the states, the mode of worship has drastically changed; wearing of face masks, constant use of hand sanitizers, observance of social distancing etc. are now the order of the day. How long congregants are to live with the new normal as itemised remains to be seen.

In conclusion, based on the foregoing, it is intuitively reasonable to take the position that major changes will be seen on the economic, technological, educational and political fronts, post COVID-19 era. In other words, what is now touted as the new normal may in fact be the permanent normal. On the social, sporting and spiritual fronts, a likely return to the old order is envisaged, ceteris paribus.

Dr. Okolo is a Chartered Stockbroker and Management Consultant based in Lagos.

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Retail megastores and e-commerce in Nigeria, is the grass really green?

EIZU UWAOMA

A

t the advent of the tech ecosystem in Nigeria about a decade ago, there were high speculations that e-commerce was the future of the economy. However, these speculations might not have been entirely right because about a decade later, the majority of the online retail stores are still unable to thrive in the Nigerian economic sphere. In fact, a considerable number of such firms had either been acquired by other firms, divested or exited the industry altogether. For example, even after a decade of being in existence in Nigeria, Jumia still reported a N17.1 billion loss in Q2 as COVID-19 failed to boost revenue.

Although there have been various perspectives to this downturn in the economic situation of e-commerce firms, I strongly believe that the problem is as old as the inception of the industry itself. E-commerce was introduced in Nigeria through a “copy and paste model” in a bid to “be among” or for a better word, keep up with the pace of global economic trend and growth. However, special consideration was not given to our unique case and our realistic target market to ascertain the consumer behaviour and needs. Most e-commerce firms were purportedly introduced to Nigeria because of the perceived “green land” due to the high population index in the country. But it will be great to know that according to the NDIC, 98 percent of Nigerians have less than N500, 000 ($1,250) in their accounts.

And of course, you have to consider the

fact that the poorest Nigerians are unbanked and don’t have smartphones.

These two variables make it almost impossible for e-commerce to happen for anyone without them.

Strange but true to say that anything you are selling to the average Nigerian is competing with food. On average nearly 60 percent of a Nigerians income is spent on food. But this average is spread across all segments including the rich. So, we can assume that most Nigerians are spending 80 percent – 90 percent of their income on food.

With an average estimate of about one hundred and fifty-eight million individuals in 2010, the Nigerian land space seemed viable for any business on the surface. Most of these firms however neglect the importance of determining their target audience among these millions of individuals.

Nigeria, being a country that is traditionally accustomed to cash transactions for centuries, has over two-third of its population belonging to the middle class and lower class respectively. Among this huge portion of the total population, a relatively lower percentage can afford the disposable income for purchase of goods and services; with most of them preferring offline payment.

Despite the increase in online sales by 60 percent in Nigeria, with hourly orders on the rise, a digital trend report by HootSuite in 2019 put global average spending on ecommerce purchases at $499 with China in the lead. In Africa, South Africans lead with a spending pattern of $109. Egypt spent $96; Ghana $59; Nigeria $44; Kenya $42 and Morocco $41. With Nigeria’s average spending on e-commerce purchases pegged at $44, it indicates a shortfall of $65 and $455 on the African and global standards respectively. Conversely, Nigeria’s total population is thrice as much as South Africa’s but the latter has a higher purchasing power on ecommerce platforms. Hence, making it a better market than Nigeria.

From OLX, Efritin, Fero, Wiko, Wechat, Tambo, Easy Taxi to Opay,

several firms have tested the Nigerian industry and withdrawn due to their inability to scale. In terms of consumer behavior, we use online stores to check pricing, and then most times prefer to after it, close our laptop, and then cross over the street to the brick and mortar store to buy. So, we see more website hits than sales. Our foreign investors (who may not have even visited the streets of Nigeria) don’t see how population doesn’t equal sales.

In a high-profile case last year, Konga, one of Nigeria’s pioneer e-commerce companies was sold—likely at a loss for its investors—after failing to match expectations despite pulling in over $70 million in investment since it was founded in 2012.

The struggles of Konga was initially perceived in early 2017 when their staff strength was slashed by a whopping 60 percent. Konga’s predicament is just one amidst many business failures in Nigeria within the last two years.

OLX, a popular classifieds platform, Efritin owned by Saltside Technologies (Swedish Company), Dealdey which is an online discounts platform as well as Careers24 have all had their unfavorable share of the situation. This has made them to either scale back their operations, divest from e-commerce or shut down completely.

Several other factors have also contributed to the failure of e-commerce in Nigeria. Prominent among these factors is logistics. A lot of the ecommerce platforms have still been unable to ensure that the satisfaction of their clients is not compromised in terms of service delivery and quality of products. This has generated distrust, thereby making clients to either favour other firms such as Amazon and Alibaba or opt in for offline purchases.

The essence of e-commerce is to guarantee comfort and satisfaction but it seems like very few firms have gotten that strategy right in Nigeria.

Another salient barrier is the reliance of e-commerce firms on marketing to generate sales. It should be noted that marketing is basically for awareness, which in turns translates to sales if successful. There is a need

‘

E-commerce firms as well as other stores must carefully redesign their model to fit into the Nigerian context. No business thrives in Nigeria, except it is tailored to the Nigerian structure and unique peculiarities

Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

Four costly money myths debunked

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et’s take a look at four of the many infamous myths that have been created around money as we know it. They are total hogwash and I am more than happy to debunk them.

Get a job so that you can become rich Myth: When you have a job, you’ll be able to afford anything you want because you’ll have the resources.

Reality: First of all, you should still get a job- for experience, for sustenance, to thrive.

If you’re a salary earner, period? Then that’s it - you’re only a salary earner. But when you increase your capacity to do more with what you earn, that’s when you can become “rich”.

I learned early a simplified definition of being rich which means you spend less than you earn and make more than you actively work for. I’d like you to start exploring beginner investment instruments such as Money Markets or AgricTech.

You have to be rich to invest Myth: It is only people who have so much money that they don’t know what to do with it who start investing.

Reality: Because Money Market Funds have one of the lowest minimum investment amounts with interest compounded daily,

you can start small to test the waters and withdraw your money at any time with some interest. Some salary earners actually put all of their income in there as soon as they’re paid and just liquidate weekly for their expenses. All the while accruing daily interest to that account. If you don’t do right by what little you think you have, who’s to say what you’ll do when you think you have plenty?

Bottom line, start small and be consistent.

A savings account is an emergency fund account Myth: Saving money protects you when you have an emergency.

Reality: Saving money specifically for emergencies is what protects you when you have an emergency.

Get this – An emergency fund account is a savings account but a savings account is NOT an emergency fund account.

You can save for a new phone; your rent or school fees and you can save for the rainy day. A lot of us make the mistake of saving blindly such that when any emergency comes, we dip our hands in coffers meant to improve our lives and just like that, we’re left with nothing. Here’s what you can do www.businessday.ng

Historically, which problems/emergencies are most likely to pop up for you and when?

Put money away for those.

If it is not expensive, it is not good Myth: Good things come in expensive packages.

Reality: This doesn’t only apply to wearables but with everything else. You can buy a good car that isn’t a range rover, you can live in a good house that is not in Lekki.

Similarly, you can get the best returns on an investment even if it doesn’t give the best interest rates up front- because you understand compounding interest. The crux is to cut your coat to your size, and not bother with what the Joneses think. Avoid acquiring things of depreciating value just to impress people. Comparison is the thief of all joy.

In all, if you’re earning a salary of 30k Nigerian Naira, we don’t expect you to be focusing on buying a car in 6 months or to start sending your dependants on shopping sprees or buying luxury goods with no other source of income in sight. What I expect you do is to be strategic with your salary while you look for ways to improve your marketability to earn more money. Until you break the cycle of misinformation, money myths

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to push out valuable and appealing content as this is the magnetic force for a brand. But most e-commerce firms push unconvincing contents to their audience, especially on social media and expect brand loyalty or even an ignition. The only thing more important than what you are selling to a customer is what you make them believe they are buying. There are so many adverts out there, but very few of them have the required contents needed for the business to scale and grow.

The most recent of this pull out from the Nigerian space is the official press release of Shoprite Superstores Limited in July,2020. Shoprite, a South African firm which is also the largest superstore in Africa, commenced operations in Nigeria in 2005. The news of Shoprite intending to sell most or all of their shares came as a surprise to a lot of people. After all, no one would have expected Shoprite to be running at a loss! But the candid truth is that the firm has not been attaining profitability in Nigeria.

Poor macroeconomic economic situation, high cost of sales, a poor population that it services with low per capita income, inventory theft (by both the customers and staff), a lot of operational waste, and the Coronavirus pandemic have all contributed adversely to the growth of the firm. To add to this is the devaluation of the Naira which wipes out any significant progress in profit when converted back to dollars to pay foreign vendors. It is even harder for Shoprite to be dynamic in its operations due to the rigid and bureaucratic structure, which is identifiable with large superstores. Hence, the need to seek refuge before the Wall of Jericho falls completely.

Conclusively, e-commerce firms as well as other stores must carefully redesign their model to fit into the Nigerian context. No business thrives in Nigeria, except it is tailored to the Nigerian structure and unique peculiarities.

Money Brain with JR

JR Kanu

will continue to lead you down the opposite path to financial security. As we prepare for salary week, my next article will touch on the right way to optimise your salary. See you then.

Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www. reach.africa. His company builds software to help young people and companies to manage and grow their money.

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Monday 17 August 2020

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

Edo election: Caution as storm gathers and tempers rise No politician’s ambition is worth the blood of any Nigerian

DEPUTY EDITORS John Osadolor, Abuja Tayo Fagbule NEWS EDITOR Osa Victor Obayagbona NEWS EDITOR (Online) Chuks Oluigbo MANAGING DIRECTOR Dr. Ogho Okiti EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure ADVERT MANAGER Ijeoma Ude MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai COPY SALES MANAGER Florence Kadiri DIGITAL SALES MANAGER Linda Ochugbua GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

C

ome September 19, 2020, the people of Edo State, South South Nigeria, will partake in an election to decide who becomes their next governor.

Though there are 14 other political parties in the fray, the contest is apparently between the two dominant political parties in the country, the People’s Democratic Party (PDP) and the All Progressives Congress (APC) which have the incumbent governor, Godwin Obaseki, and Osagie Ize-Iyamu as their flag-bearers respectively.

So far, almost a month to the election, the campaigns have not only reached fever-pitch level, but also become stormy with threats and counter-threats that are not only making tempers rise, but also sending frightening signals of what will be the nature and colour of the process and the eventual outcome.

Already the storm is gathering and what is playing out in Edo should be seen as a comictragedy that needs to be guarded seriously and cautiously so that it does not snow-ball into a

conflagration that may consume not the contenders alone, but also innocent souls.

The language is that of war which shouldn’t be. The message is of violence which also should not be. Political actors, especially those appointed by their parties as campaign managers, are talking tough and threatening fire and brimstone forgetting that Edo and its good people will continue to exist after the election.

We urge caution and advise that, as obtains in civilised climes, contestation for political office should be done not in a theatre of war, but in a marketplace of ideas; it should not be about threats, nor violence as the chief protagonists are brandishing in the Edo circumstance.

Political campaigns should be issue-based and people-centred. For us, the September election should not be about personal or individual interests. It should be about Edo people. We advise that the people, their lives, interest and welfare should be the centre-piece of all contestations.

We, therefore, call on the political parties not to see the election as a do-or-die affair. They should

conduct themselves in a manner that shows our democracy is maturing.

Former President Goodluck Jonathan holds the view very strong that no politician’s ambition is worth the blood of any Nigerian. We cannot agree more.

We also call on both the Independent National Electoral Commission (INEC) and the security agencies to rise to the occasion.

Nigeria has got sufficient electoral laws that guide the conduct of elections. We expect INEC to muster enough moral courage to wield its big stick against any party that runs afoul of these laws.

Festus Okoye, INEC’s Commissioner in charge of Voter Education, stated recently at a media programme that the commission would not hesitate to cancel any election that is marred by violence.

That, for us, is the way to go and we hope this will be communicated to the contenders in the Edo election.

Security agencies should not offer themselves for sale. Utmost peace, safety of life and property in all nooks and crannies of Edo State should be their ultimate preoccupation now that electioneering campaigns are upbeat and also during

the elections. They should not take sides for whatever reasons.

We are aware that, until recently, the government in Edo was APC. The governor’s defection to the PDP has made the government assume the spirit and character of the umbrella party, but the APC hawks still see it as their government. For that reason, keeping a grip on the levers of power is vital to the broom party, more so as its opponents in the PDP draw attention to their failings at the federal level.

Poverty has always played a major role in escalating violence during elections as it influences a great deal people’s behaviour, decisions and choices. We are therefore urging Edo people to look beyond money, conduct themselves with maturity, go out there and vote for whoever they think will put the interest of the people first.

We also urge the people not to be cowed but resist the strong and powerful politicians who will be leaving their states in peace and coming to cause trouble and confusion in Edo in the name of election.

Such politicians are no friends of the people. They should be identified and resisted.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Imo Itsueli Mohammed Hayatudeen Afolabi Oladele Vincent Maduka Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Mezuo Nwuneli Charles Anudu Tunji Adegbesan Eyo Ekpo Wiebe Boer Paul Arinze Boye Olusanya Ayo Gbeleyi Haruna Jalo-Waziri Clement Isong Konyin Ajayi

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COMPANIES&MARKETS DEALS

In landmark deal, Network buys Apis-backed DPO Group LOLADE AKINMURELE

I

n a landmark deal for Africa’s payments space, Network International, a leading enabler of digital commerce across the Middle East and Africa (MEA), has acquired DPO Group, a high-growth online commerce platform in Africa.

Dubai-based Network International will pay $288 million to acquire 100 percent of DPO group.

The acquisition, which will be concluded in the fourth quarter of 2020, will be financed almost entirely by a 10 percent equity placing, $50 million vendor consideration sales issued to private equity firm, Apis Partners, and cofounders consideration shares.

The balance will be funded by existing debt facilities, according to a document seen

by Business Day. The acquisition will support the expansion of Network International’s presence across Africa, one of the most under-penetrated and fastgrowing payments markets in the world.

Africa’s nascent payments space has been subject of international attention in recent

years. Last month, pan-African cross-border payments gateway, MFS Africa, acquired Beyonic in an undisclosed deal.

The African digital payments market is expected to grow at 18-20 percent per annum in the next 5 years, according to data from global consulting firm, McKinsey.

While overall e-commerce penetration in Africa remains very low, there are forecasts for strong growth as the Covid-19 pandemic accelerates the transition to digital payments and help close the gap between payments digitisation on the continent and developed markets.

In a McKinsey consumer survey, 30 percent of respondents said they were increasing usage of online and mobile banking tools during the pandemic.

“This deal represents a significant milestone for the pan-African payments landscape and the customers and businesses we serve,” Eran Feinstein, CEO of DPO Group, said.

“Combining the two companies will allow us to broaden our offering for new and existing customers, signifi-

cantly improving capacity for Africa’s merchants to do business not only across the continent but in the Middle East as well as globally,” Feinstein said.

Simon Haslam, Network International’s Chief Executive Officer said the Londonlisted firm also aired his excitement on the deal.

Excited by the acquisition because it will strengthen Network’s “strategic framework by combining both of our businesses’ activities across the African market.”

“Together, we have a powerful combination to accelerate digital payments across our regions and offer a one-stop-shop solution for merchants, with multiple payment acceptance methods,” Haslam said.

DPO Group is already a high growth business, with a compounded annual growth in revenue of c.40 percent from 2017-2019, according to the company.

Offer Gat, DPO Group’s Co-Founder and Chairman credited the role of Apis Partners in growing the DPO Group into one of the leading pan-African payments companies.

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Standard Chartered and Airtel Africa form partnership to drive financial inclusion across Africa

S

tandard Chartered Bank and Airtel Africa have today announced a strategic collaboration to drive financial inclusion across key markets in Africa by providing customers with increased access to mobile financial services.

Through the collaboration, Standard Chartered and Airtel Africa will work together to co-create new, innovative products aimed at enhancing the accessibility of financial services and, ultimately, better serve people across Africa. In line with this, Airtel Money’s customers will be able to make real-time online deposits and withdrawals from Standard Chartered bank accounts, receive international money transfers directly to their wallets, and access savings products amongst other services.

Standard Chartered’s corporate clients will also be able to make rapid and secure bulk disbursements, such as payroll payments, directly into the Airtel Money customers wallet.

This reduces the risks associated with travelling long distances for cash

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payments and instead customers can go to any Airtel Money agent, kiosk, or branch to cash-out their funds.

Commenting on the collaboration, Sunil Kaushal,

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Regional CEO, Africa and Middle East said: “By collaborating with innovative organisations like Airtel Africa, we are accelerating our mobile and digital-led strategy to provide best .

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Monday 17 August 2020

BUSINESS DAY

COMPANIES&MARKETS

Business Event

Transgreen inroads into US markets excites Nigerian pharmacists offshore Modestus Anaesoronye

T

he Nigerian Association of Pharmacists and Pharmaceutical Scientists in the Americas (NAPPSA) has expressed its readiness to help Transgreen Nigeria Limited create a path for the introduction of its World Health Organisation (WHO)-standard O-Care medical face masks in the United States. Transgreen recently commissioned the first medical face masks factory in Nigeria with the capacity to produce 240,000 masks daily.

NAPPSA revealed this in its goodwill message sent by Anthony Ikeme, its president to Transgreen Nigeria Limited during the unveiling of the OCare medical face mask factory in Lagos. NAPPSA said its proposed support for Transgreen is in line with its objective to help Nigeria build local capacity for the manufacturing of pharmaceutical and medical products in the country thereby ensuring less reliance on medical supplies from China and India.

“We commend the staff and management of Transgreen on the commissioning of a factory to produce medical face masks in Nigeria, the first in the country. NAPPSA considers this a huge accomplishment not just for Transgreen as a company but for Nigeria as a country,” Ikeme says. “NAPPSA is committed to create a pathway for this product and other such products to be marketed in the US to help create foreign income earnings for these com-

Anthony Ikeme panies and also grow the sector,” he adds.

Ikeme expressed his delight that the commissioning came shortly after NAPPSA reiterated the call for Nigeria to look inwards for its medical and pharmaceutical needs.

At the donation of COVID-19 diagnostics, PPEs and other medical consumables to the Nigerian Centre for Disease Control (NCDC) in Abuja last month, the association had called on stakeholders to “facilitate the creation of a national strategy for medical and pharmaceutical manufacturing in Nigeria” as a way to prepare for future health emergencies and also position the country “to earn foreign revenue as an alternative source for medical and pharmaceutical supplies.”

According to the NAPPSA president, the net effect of local production capacity is to guarantee the nation’s health security by making available much needed medical and pharma-

ceutical products, boosting employment generation and foreign exchange earnings from exportation.

“We are very proud to see that there is an industrialist in Nigeria who is well ahead of this curve by setting up a medical face mask factory,” Ikeme says. “NAPPSA’s belief is that if Nigeria is to be a major player in the global pharmaceutical economy, if we are to lift the pharmaceutical sector to be a major driver for economic growth and for employment, more industrialists must follow in the footsteps of Transgreen and set up factories of this kind,” he adds.

NAPPSA believes the coronavirus pandemic has exposed the folly of the world, including Nigeria, in “putting their eggs in one basket, depending on China almost exclusively for all their medical and pharmaceutical products. The COVID-19 pandemic revealed the great risk this portends to our national healthcare security.”

At the unveiling of the factory, Cyprian Orakpo, managing director of Transgreen, said that as long as COVID-19 continues to ravage, facemasks and other medical devices will remain national security products.

Babajide Sanwo-Olu, Governor of Lagos State, who commissioned the factory, says, “We are going to support this company because this is a strategic production line that is important to us in our existence as human beings.” The governor placed the first order of 250,000 masks “on behalf of people of Lagos State.”

L-R: Kehinde Olesin, CEO, March Media; Biola Laseinde, lead consultant, Ednisal Consulting Limited; Wale Laseinde, director, and Elvis Ukpaka, CEO, Vision Drivers Management Consultants Pic by Olawale Amoo Limited, during the launch of CIO awards in Lagos.

L-R James Oluwatoyin; Itimi Hephzibah; Austin Ejima; Lion Blessing Umebali, Convener of Lagos Classic Lions Club; Lola Olufemi; Ademuyiwa Seun; Lion John Oriazowan, Zone 6A Chairperson and Tolulope Olufemi all at the informational meeting of the Lagos Classic Lions Club over the weekend.

MAX.ng to facilitate farmers’ access to market with launch of electric motorcycle Endurance Okafor

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etro Africa Xpress (MAX), a logistics and mobility platform for commuters and businesses, has launched electric motorcycle in Nigeria to enable farmers transport their produce from farm to the market.

According to the technology-driven Mobility Company, the initiative, which is first of its kind in Nigeria, has kicked off in a rural community in Ogun State.

“We are piloting electric motorcycle in rural communities to facilitate access to the market for farmers through a more affordable means of transportation,” Guy-Bertrand Njoya, CFO of MAX, says in a recent interview with BusinessDay. With the mission to make mobility safe, affordable, accessible and sustainable for all Africans, MAX’s new electric motorcycle initiative,

which is scheduled to kick off in August, has already been piloted in a rural community in Ogun State.

“We have partnered with a mini-grid operator that will be in the community to provide solar energy and we have deployed electric motorcycles there with a stop in stations,” Njoya states, adding that MAX has provided about 20 motorcycles to a combination of farmers and transport operators in the community.

MAX explains that through the new electric motorcycles it is driving economic activities in the host community.

“Now they have access to electric bike; they do not need to ride hundreds of thousands of miles to have access to the closest filling station. They now have access to clean and cheap energy, so we are solving many problems at once,” he says.

Explaining why it has not launched the electric motorwww.businessday.ng

cycle in other states in Nigerian, the CFO notes: “When we come into a new market we try and understand how the market operates.”

While MAX has highlighted that it will leverage the electric motorcycle to solve the problem of access to energy, access to market while also solving the problem of sustainable and robust means of transportation, he states that the company wants to gather some data and learn from the experience of the product pilot in Ogun State before replicating it in other states.

“We’ll replicate and scale it in other regions across Nigeria,” Njoya says, adding that the electric motorcycle will lead to improved income generation for farmers, which is in line with the plans of MAX to push back poverty, include more excluded Nigerians into the economic net, and thus, boost financial inclusion. https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 August 2020

BUSINESS DAY

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Monday 17 August 2020

BUSINESS DAY

Start-Up Digest

In association with

How Adekeye Rashidat grew Royale Affairs into successful jewellery brand Odinaka Anudu

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he year 2012 will remain memorable for Rashidat Adekemi Adekeye.

It was the year she took a hard decision to quit her paid employment in order to be with her growing family.

The decision was informed by the insecurity in Kano, a city she worked at the time.

For her, the 2012 decision was a huge sacrifice because she was not used to being idle or financially dependent.

Moreover, getting a job back then that could make her balance home and work life was difficult despite being successful in many interviews.

While she continued her life as a stay-at-home mother, Rashidat found herself on the edge of depression while trying to adapt to the new life.

However, in the midst of her dilemma, the tide changed. In 2013, she struck gold in jewelry business and, today, runs a jewellery company called Royale Affairs,

which specialises in jewellery sourcing, training, and consultancy for high net worth individuals.

“On this fateful day, I was engaging as usual with my phone on the internet and I found a post on a popular website that caught my interest talking about importation. Though very sceptical, I gave it a try. I used the last N15,000 on me to place orders. It was a risk I had to take, but I had to pray not to be scammed,” she says when asked how she came about the business idea.

The Royale Affairs founder says her risk paid off, knowing full well that life is an opportunity and one must take a chance when it comes.

She went further to learn the ropes of importation from the promoters of the opportunity and opted for jewellery till her goods landed safely in Nigeria.

“Facebook was the first platform I used to sell and luckily the items got sold out almost immediately,” she says.

“This gave me the confi-

Adekeye Rashidat

dence to continue and, to the glory of God, the jewellery business has grown to what it is today.”

Sharing a little of her background and how it gave her soft- landing in entrepreneurship, the entrepreneur says she has a bachelor’s degree

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embers of t h e P ro f e s sional Event Planners and Vendors Association of Nigeria (PEPVAN) have been advised to reposition their brand now and beyond the pandemic as the world grapples with the reality of the new normal.

This advice is coming on the heels of the second edition of the association’s annual two-day ‘Eventpreneurs Conference,’ which held recently. It had as its theme ‘Repositioning your brand now and beyond the pandemic.’

According to Adeife Abiodun-Adeyemi, TEC head of planning committee, the conference came at the right time to help members of the body to think beyond the current global challenge and see how they could pivot to other businesses to survive the times.

She said the conference attracted over 200 participants from Nigeria, Zimba-

bwe and US. Abiodun-Adeyemi said, “It has become necessary for every professional to wake up to the realities of the times we are in and reposition strategically to remain relevant in the event industry.”

Bisi Sotunde of BusyBee Events, one of the conference speakers, emphasised the need for planners and vendors to build a strong brand beyond the pandemic. She stressed the need to carve a niche, track perception, market dynamics and consumer preferences, as these would be key to building resilience during and after the pandemic.

Azeez Balogun of Event Emergency, who is an event safety expert, spoke on the need to keep events safe and crisis-free at this time, urging participants not to wait until emergencies happen but must prepare for them always. He advised event planners to design their events and work spaces to reduce crowd, insure their events, have a medical team on standby and also www.businessday.ng

the Right Suppliers?’ aimed at showing the way to those who want to pick up the business.

She urges women, especially stay-at-home mothers who want to learn the art of sourcing for quality jewelry and accessories, to start a jewelry business to connect with her on social media.

The jewelry entrepreneur says her business has contributed to the nation’s economy through her mentorship sessions, thereby reducing unemployment.

“So far, I have trained over 700 women to start jewellery and other related businesses, and they have subsequently recorded milestones in their respective areas of specialty. I do this through the use of both physical and virtual training avenues. In these challenging times of COVID-19, my Facebook training communities—The Entrepreneurship Africa Trybe and Jewelry Business School—have served as avenues for entrepreneurs to get the necessary strategies and tools to stay afloat the challenges,” she says.

How Graduate Advancement Programme is empowering youths with skills for future work

Event entrepreneurs urged to reposition for new normal Odinaka Anudu

in Business Administration, which helps her to navigate the tide.

“I am also a certified human resource person. Little did I realise that years down the line, the knowledge I had acquired in paid employment would someday help me navi-

gate my path in entrepreneurship,” she notes.

She says that working in paid employment has helped her to stay above the numerous challenges that have come with running a business.

On the progress made so far in her journey as an entrepreneur, she explains that Royale Affairs is committed to helping women look confident, classy, and outstanding in any gathering.

“We achieve this by sourcing for unique, high quality jewelry and accessories. As a business consultant, I also take the stress off starting a jewellery business by consulting for high net worth individuals who want to setup a jewellery business for themselves or family members.

In addition, I help fashion entrepreneurs who struggle with selling on social media to scale-up their business growth.”

As a way of contributing to the entrepreneurial learning space, Rashidat says she has authored a book, ‘Dear Jewelry Seller, Have You Found

be abreast of government safety protocols which must be observed by all staff and guests in order not to err on the side of the law.

Sharing his thoughts on networking in the postpandemic era, Opeyemi Bello of Oomph Events said the participants should be conversant with virtual meetings.

He said they must be intentional, strategic and visible in their approach. He advised them to be courteous and project the impression they want people to have of them. He also spoke on the need to build trust, have a support system by creating or belonging to a tribe in order to get the best out of networking.

According to Mayowa Oloyede, president of PEPVAN, the objectives of TEC were to bring event practitioners together to learn, relearn, unlearn, interact/ network with one another and get informed/exposed to new business trends and strategies that would help them build and sustain their businesses for the long haul.

Josephine Okojie

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he Knowledge Exchange Centre (KEC) is training and equipping Nigerian youths with relevant skills needed for the future work through its Graduate Advancement Programme (GAP).

The initiative, which is a three-month programme, is designed to strategically address unemployment issues in the country.

It seeks to address three key areas; lack of job-relevant skills, unemployment/ underemployment, and poor social networking skills that are critical factors in addressing Nigeria’s issues of unemployment.

“The vision of KEC is to bridge the country’s academic curriculum to meet requirements needed by industries,” Charles Nwodo, executive chairman, KEC, said during an online webinar with the theme ‘Developing Job Relevant Skills in the Digital Economy.’

Nwodo stated that future work would require highly sophisticated people skilled in digital technology, urging

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youths to adjust to the current realities.

He said that the current realities of the global economy owing to the disruptions caused by the COVID-19 pandemic have shown that digital skills are relevant in the workplace.

According to him, job skills are critical in the labour market and new entrants into the workforce would require retooling, training, and education to be relevant.

Sp e a k i ng ab ou t t h e GAP programme, Ajibade Adedapo, project officer, KEC, said the programme comprises of a month intensive employability training and two-month internship.

He noted that 43 trainees have been trained over the last three years with 80 percent of them now gainfully employed.

He added that the organisation is set to select 100 youths for its next training programme while urging interested participants to visit its website to register.

In his keynote address, Babatunde Fajimi, managing director and chief executive, Kairos Business Services Limited, stressed that digital @Businessdayng

skills are critical for jobs and social inclusion.

“We live in a post-literate digital society that is driven by the Fourth Industrial Revolution (4IR). We are familiar with the Internet, but most of us are oblivious of its enormous digital impact on the economy and how we can position ourselves to thrive in our careers?”

Fajimi asked.

“Our Fourth Industrial Revolution (4IR) is characterised by intense competition for life, and work, and by extension your career.

There is increasing deployment and utilisation of new technologies, such as the Internet of Things (IoT), artificial intelligence, among others,” he added.

Also speaking, Yetunde Arobieke, Lagos commissioner, Wealth Creation, and Employment, said with the increasing unemployment challenges, the state is trying to create jobs.

She said the future of jobs has been at the top of the agenda of the state government, adding that several policies and marketbased solutions have been adopted to address the high rate of unemployment.

Monday 17 August 2020

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21

real sector watch

Tough times for brewers as margins hit by social restrictions Gbemi Faminu

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igeria’s brewers have managed to survive the COVID-19 pandemic in the first half of the year, but not without recording losses and revenue decline.

COVID-19 has forced governments at the federal and state levels to shut down bars, night clubs and social gatherings to curb the spread of the virus. But this has come at a huge cost to brewers who now struggle to make profits as a result of poor sales.

Nigerian Breweries (NB), a giant brewer controlling over 50 percent beer market, recorded a revenue decline of 11 percent to N151 billion in the first half (H1) of 2020. The firm’s profit after tax declined by 58 percent, from N13 billion in H1 of 2019 to N5.5 billion in the same period of 2020. Consequently, poor revenue forced the company to cut its administrative and marketing expenses as the situation demanded, NB’s financials show.

Similarly, International Breweries experienced revenue decline of 12 percent, recording N60 billion in H1 of 2020 as against the N68 billion in the previous year.

It further recorded N9.3 billion in its loss after tax, representing a 37 percent increase in its loss profile.

Guinness as well is showing signs of struggles as its most recent financials for the period ended March 2020 recorded revenue decline by 18 percent, earning N27 billion in Q3 2019 as against the N33 billion realised in Q3 2018.

Furthermore, the firm’s profit after tax dropped to N46 million in the period under review, representing a 97 percent decline from the N1.6 billion realised in

the corresponding period of 2018.

This, however, cannot be tied to the pandemic but to Nigeria’s poor economic fundamentals.

Analysts also attribute brewers’ general margins decline to shift in consumers’ lifestyle and spending.

Ambrose Oruche, acting director general, Manufacturers Association of Nigeria (MAN), in a phone conversation, said that the impact of the pandemic varies on the subsectors due to the type of services the sectors render, which explains why some made losses

while others recorded marginal profits or boom.

“The pandemic boosted sales of essential products which were very necessary during the lockdown, especially the food and healthcare subsectors,” Oruche said.

Vincent Nwani, investment and business consultant, explained that early in the year, one of the top brewers projected an output of 4 million liters in the first quarter of 2020 but was only able to achieve 600,000 liters in volume,

which is a direct consequence of the pandemic and the lockdown.

He further said that consumers’ lifestyle was impacted especially as social activities were on hold, thereby hurting demand and sales volume. He predicted that the situation would linger on into the year.

“Despite easing the lockdown and the gradual resumption of activities, people’s lifestyle and habit have changed. You find out that many people are trying to keep fit and healthy and as a result stay away from alcohol.

Consequentially, demand for their product will not be as much as expected as people try to stay safe,” Nwani said.

On his part, Akinloye Ayorinde, consumer goods analyst at CSL research, said the poor financials were driven by the decline in demand caused by the closure of clubs as well as the restriction on social gatherings. He said despite the excitement of the reopening of bars and clubs, brewers may still face problems as people may not be comfortable sitting in bars or be inclined to resume social activities during a pandemic.

“Going forward, sales in Q3 and Q4 may not be as bad as Q2 but will not be as good as the previous year,” Ayorinde projected.

Proforce manufactures military products to support Nigeria’s insurgency fight Josephine Okojie

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de Ogundeyin, chief executive officer of Proforce Limited, manufactures mine-resistant ambush-protected vehicles (MRAPs) for security operatives in the country.

He also produces bulletproof vests desperately needed by security operatives.

MRAP is a term for United States military light tactical vehicles designed to withstand improvised explosive device attacks and ambushes, says Wikipedia.

The firm, which operates at Ode-Remo in Ogun State, has developed a vibrant market for security and mobile protective products within Nigeria and Africa.

Ogundeyin was inspired to incorporate the business in 2008 as a total defense solution provider, specialising in armoured vehicles and personal protection. He was first approached by a Colombian company to help them sell their armoured vehicles in Nigeria.

He said he wanted to partner with the company instead of being their sales representative, but it turned down the request.

“We wanted a partnership with

them but the firm disappointed us and, coincidentally, the company folded up within three months and we brought the equipment there into the country,” he said in a recent Journalists Hangout edition at TVC. In addition to the third burner that can stand variance for stress, the vehicle also has a 360-degree camera.

It weighs 15 tons and can reach a speed of 120kilometer per hour on road and 110kilometer per hour off-road.

The vehicles have been designed and built by Proforce to assist Nigerian troops in the war against terror in the northeast and other parts of the country.

It has a height of 3.4meters and the engine is 400-horse power. The underbelly can withstand and deflect explosive weighing as much as 10 kilograms.

The MRAP has twin fuel tanks that take 440litres, meaning that the vehicle can run for 1200 kilometers without any need for refuelling.

It has long flat tyres which enable it to travel for 50 kilometres even when the tyres are fired at.

According to him, the Nigerian government at all levels has no business importing any kind of arwww.businessday.ng

moured vehicles because the ones produced here are better, stronger, and have no overheating issues.

“The majority of the MRAPs you see out there have overheating engines and do not have long flat tyres, but in our own MRAPs this doesn’t happen,” he says.

“They have been tested in the North-East. It has been able to withstand the test of time,” he

further said.

There is always the tendency to underrate anything made in Nigeria but with what Proforce has achieved with the country, that notion is gradually changing.

The Nigerian army has been making orders for Proforce’s MRAPs along with its spare parts.

Speaking of major challenges confronting the business, Ogunde-

Ade Ogundeyin

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@Businessdayng

yin said poor electricity supply and FX volatility have remained the main issues for Proforce.

According to him, the business imports some spare parts, stressing that accessing FX has been very challenging.

He said poor power supply has continued to impact the business negatively as it spends a lot on diesel to power its factory, thus raising its cost of production.

The business currently has Chad, Rwanda, and Niger as its clients.

“Most of the MRAPs we are currently producing are going to Chad.

The government has concluded that our MRAPs are the business in this environment,” he said.

The employees are being trained locally and internationally specifically for the jobs. Through that, the business is increasing its capacity locally and providing the platform for locals in the rural community to work with an international firm like Proforce.

On the organisation’s future plans, he said the business, in the long run, wants to be on the international stage where its armoured vehicles will be in every country on the continent and also used on the international scale to fight terrorism.

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Monday 17 August 2020

BUSINESS DAY

INSIGHT

Global pandemic versus global debt crisis Dr. Okafor T.C.

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As a consequence of direct fiscal measures, they are estimated to see an increase in deficits of around 7% of GDP globally, and that’s concentrated really among developed or advanced economies where the increase is expected to be around 11% of GDP and much lower increases in emerging economies.

In terms of debt stress and default, there’s a difference between the higher-rated emerging economies, the developed economies on the one-hand, versus frontier markets. Emerging economies are losing market access in an environment like this and they have very high external debt payments coming due in coming years.

In 2009, the size of the global debt market was about $80.9 trillion, as with any global financial market, the US dominated making up about 39% of the global market, with the European Union (EU) coming second with about 30% and the Emerging Markets (EM) constituting 5% of the global market while the UK and Japan gobbled up the remaining 21% of the global market cumulatively; 9 (Nine) years later in 2018, the size of that market had increased to $102 trillion and the majority of the growth was in the Emerging Markets (EM) with a relative increase in size of 10% (from 5%-10%) and that came primarily at the cost of the European Union (EU) which shrank as a proportion by 9% www.businessday.ng

(30%-21%). Although almost all of the market commentary we see are about the equity market, it however is smaller than the Global bond market, hence the equity market as at 2018 was about $74.7 trillion while the

‘

The current economic benefit of this debt relief is premised on the fact that free available fiscal resources that ordinarily would have gone into debt servicing would now be channelled into dealing with the health issues of COVID-19 as well as the current economic challenges that accompany the current global pandemic

‘

t began as a biological crisis, a new and highly infectious virus which started spreading around the world and subsequently transitioned into an economic crisis. Governments around the world locked down their economies and spent trillions of dollars on rescue packages. That in turn sparked fuels that the debt crisis will worsen, which could affect the global economy for many years to come.

Before the COVID-19 pandemic, the world was already deep in debt. According to the International Monetary Fund (IMF), government debt in developed countries/economies was $US60 trillion before the outbreak, which was approximately 105% of Global GDP however, the IMF estimates that those figures would spike to $US66 trillion at the end of 2020 which would be approximately 122% of Global GDP. Many developed countries/ economies are among the most indebte d e c onomies in the world. Emerging and developing countries/economies borrow less as a proportion of their GDP, but emerging markets with weak financial positions such as Nigeria are at a greater risk of defaulting on their debts. They cumulatively currently owe more than $US8.4 trillion in foreign currency debt or about 30% of the developing world’s GDP. This is the 4th (fourth) debt crisis the world has seen in the past 5 decades (1982, 1997, 2008 and 2020). The first 3 (three) caused massive downturns in economies around the world.

The World bank now says “this wave could be worse than anything we have ever seen”, at least 102 (a hundred and two) Nations have already asked the IMF for help, that’s over half of the IMF’s membership.

Economists around the world have been inquisitive on this topical issue and have spewed their concerns regarding the crisis with the following questions, “Will the COVID-19 pandemic exacerbate the Global debt crisis and how will it be paid for? Plus is there a way forward? With the amount of debt that is being accumulated with the rise of this pandemic, is there a real possibility that some countries/ economies might /might not tank into default”.

One of the consequences of the pandemic has been that governments have been increasing their debts at an alarming rate.

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Global bond market was about $102 trillion Moody’s Investment service put out a report saying that Non-investment grade Emerging Markets (EM) and frontier market sovereigns are going to face a sharp economic downturn following the coronavirus pandemic with recovery taking 2 years (2022) or beyond. They also stated that recovery will vary widely depending on the various governments’ policy measures and economic resiliency. On the average, they say that growth is going to fall by 7% for Emerging Markets and the Countries/ economies which would be particularly hard-hit are the countries which depend on tourism and commodity exports for income. They concluded by rating 76 Emerging Markets (EM) and frontier markets at Ba1 or below with Nigeria inclusive.

The IMF has come up with a similar warning where it shows that for low income developing countries, they expect the interest to tax ratio to increase dramatically by end of 2020. So basically, the cost of paying interest for low income countries is going to absorb a very large proportion of their tax income.

Hence, the data impact would be much greater than developed markets where that ratio is much closer to 10% and the 2 countries which they indicated as being problematic are Zambia and Nigeria. @Businessdayng

Nigeria’s debt currently stands at $27.67 billion, with $9.69billion from IDA World bank group, $2.6billion from the African Development Bank (ADB) group and the balance being accrued to bilateral debt with China accounting for about $3.17 billion in line with France, Japan, India and Germany; and all these are within the purview of China and G20.

The African Union Economic Social and Cultural Council (AU) made a case for Nigeria, calling for a debt relief or an allowance of a 2 year moratorium on repayment of debts and responses were gotten from the IDA World bank group ($9.69 billion), Germany (N8.9 billion), African Development Bank (ADB) group ($2.6 billion) and subsequent bilateral debt groups. The current economic benefit of this debt relief is premised on the fact that free available fiscal resources that ordinarily would have gone into debt servicing would now be channelled into dealing with the health issues of COVID-19 as well as the current economic challenges that accompany the current global pandemic.

So, while developed markets have taken on a huge amount of debt, they can probably grow their way out of that and reduce their debt to GDP ratios over time. But in emerging markets that could take much longer and that could eventually lead to a sovereign debt default.

Monday 17 August 2020

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INSIGHT ‘Examining the corporate governance implication of changes to the Companies and Allied Matters Act 2020’

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Introduction he Companies and Allied Matters Act (CAMA) can be accurately described as the bible or grundnorm of corporate dealings and governance in Nigeria, which should account, in part, for the pomp and pageantry ensuing the August 7th, 2020 presidential assent of the CAMA 2020 Bill into law. As it signifies the first major overhaul of the CAMA 1990 (its predecessor) which was crafted in line with the English Companies Act of 1985 and although its English compadre has undergone numerous amendments since its inception, the CAMA 1990 continued its reign, which accounts for the overwhelming buzz following its repeal.

The other reason can be cited from the innovations embedded in the Seven (7) Part, Eight Hundred and Seventy (870) sections of the CAMA 2020, with about 167 new sections, some of which could not have come at a better time. This is so, seeing as boards and management alike have been thrown into unique perplexing positions as they continue to navigate their corporations through the unusual normal brought about by the COVID 19 pandemic and efforts to flatten the curve of infected cases.

For instance, one of the unique perplexing positions for corporates was, could companies hold AGMs virtually in Nigeria? To which, the CAMA 1990 did not clearly prescribe the mode of conducting such meetings. Hence, leaving eager companies, at the time, to fall to the cardinal principle of law, that what is not expressly forbidden is permitted. CAMA 2020 remedies this as it provides for remote or virtual general meetings. This is just one of several innovations inserted into the new Act. This explains the thrill surrounding its presidential assent and reasons as to the expectations of these new sections as well as the amendments to our body of corporate law.

This paper provides an insight and analysis of relevant introductions of the CAMA 2020 as it relates to governance and postulates how these provisions will affect corporate governance going forward.

2.0 Corporate Governance introductions of the CAMA2020 2.1 Membership of the Board of the Corporate Affairs Commission The board composition of the CAC, just as any government agency, is essential. As board members of government agencies help ensure the agency is appropriately governed and fulfills its mandate.

As regards, the CAC, to administer the CAMA. Therefore, the membership increment of the CAC’s governing board is highly commendable. This

in writing, the particulars of such control. The Act further provides a number of definitions for who is considered to be in significant control.

is because, the drafters of the new Act, (it can be deduced) attempted and succeeded, in ensuring that the ‘voice of the private sector’ was included in the mix of board members, through the addition of a member of the Nigerian Association of Small and Medium Enterprises, representing small and medium enterprises, for whom, novel provisions were included and geared towards their ease of doing business; a member of the Institute of Chartered Secretaries and Administrators of Nigeria, representing company secretaries who are one of the leading customers of the Commission’s services.

These new additions will undoubtedly allow for accountability and enhance board diversity and knowledge specialization, thereby increasing the Commission’s effectiveness in carrying out its functions.

2.2 Number of Directors and Single Member Companies Addressing the topic on the minimum number of directors in a company, the CAMA 2020 retains its predecessor’s provisions by stipulating a required minimum of two directors. However, it vies against the former minimum requirement of members needed to incorporate a company by reducing the previous requirement of two people to one individual.

Also important is that is in line with one of the implied drivers of the Act, to wit, to promote and support small and medium scale enterprises, the Act makes it possible for the creation of single- member and single director companies, provided the company falls within its description of a small company.

2.3 Company Secretary As in the case of the number of minimum directors, the CAMA2020 makes an exception for small companies, as while all companies must have company secretaries, small companies are exempted.

2.4Annual General Meetings The CAMA 2020 exempts small companies and companies with a single shareholder from holding anAnnual General Meeting.

2.5 Virtual Meetings As mentioned in the introduction, the new Companies Act makes www.businessday.ng

provision of virtual meetings for private companies so long as it is conducted in accordance with the Articles of Association of the Company.

2.6 Disclosure of Significant Control In line with global best practices, there is an introduction of a requirement to disclose persons with significant control. This is another laudable inclusion, as hitherto, this obligation was only placed on public companies but Section 119(1) of CAMA 2020 brings its application to all companies. Also, it will go a long way to ensure that companies are not used as Special Purpose Vehicles for fraudulent activities.

It is also worthy of note, that the CAC is mandated to keep a register of persons disclosed as having significant control which is an addition to the prior status quo, which placed the obligation only on companies.

2.7 Independent Directors in Public Companies The trend of appointing independent directors can be traced to the need, for the avoidance of possible conflicts of interest on the board. Hence, the introduction of independent directors by the CAMA 2020 which was not mentioned in the repealed Act. The 2020 Act doesn’t just introduce the concept of independent directors by stating out requirements for an independent director which is in tandem with international best practices, but it mandates all public companies to have at least three independent directors.

2.8 Separation of the Chairman from CEO Following the avoidance of possible conflicts of interests on the board, international best practices dictate that the CEO should be distinct from the Chairman. This provision has been introduced into our jurisdiction by the codes of corporate governance of regulatory agencies, due to its omission in the erstwhile companies Act, which has been remedied by Section 265(6) of CAMA 2020. As it expressly provides that the Chairman of a public company cannot act as the chief

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executive officer of such company.

2.9 Multiple Directorship and its Disclosure The issue of multiple directorships is another area of the possible conflict of interests on corporate boards as well as poses the question of to the availability and attention of a director in such a category.

The provisions in the CAMA 1990 did not assuage the issue, providing for no limit on multiple directorships as it allows same provided that it does not derogate from the directors’ fiduciary duties to each company it serves. However, Section 307 restricts the number of multiple directorships to five for public companies and provides that any person currently a director in more than five public companies should, within two years, come into compliance with the section.

Furthermore, the CAMA 2020 imposes a duty on prospective directors to disclose any position held as a director in another public company. While the CAMA 1990 recognized multiple directorships, there was no specific duty imposed on directors to disclose their positions.

2.10 Disclosing Remuneration of Managers The disclosure to members as to the compensation of managers of the company is yet another introduction of the new corporate law, which, together with the disclosure of director’s remuneration, would consolidate in the minds of the shareholders, the company’s remuneration policy vis-à-vis its implementation.

2.11. Disclosure of Substantial Shareholding in Public Companies The 2020Act redefines the definition of a substantial shareholder as it changes the shareholding percentage required to fall under the definition of a substantial shareholder from 10% to 5%.

2.12. Disclosure Capacity by Shareholder Whilst the 1990 CAMA made no specific provisions for disclosures in this regard, the 2020 Act provides that every person with significant control over the company shall within seven days of becoming so indicate to the company @Businessdayng

3.0 Reflections As the new companies Act brings forth a new era, companies can exist with a sole director as its board, which will usher in limited liability for such directors, ease of doing business and enlarge access to finance and credit for such companies. On the flip side, this may call for amplified checks and balances regarding the distribution of power among the directors, management, and investors to protect the company by ensuring that it remains an efficient organisation.

There is also, the matter of succession and continuity, in the event of death of the sole director.

Also, the further concession given to small companies concerning appointing a company secretary could be viewed from two sides.

One, whilst, the law’s drafters attempt to ensure that its provisions amplify ease of doing business, the company secretary has a key role to play in ensuring that board procedures are both followed and regularly reviewed. The Chairman and the board also look to the company secretary for guidance on what their responsibilities are under the rules and regulations to which they are subject and how these responsibilities should be discharged.

Therefore, the wiggle room as to whether or not to appoint a company secretary might defeat the prime and evolved roles of the company secretary in the corporate governance framework.

4.0 Conclusion In conclusion, the CAMA 2020 is laudable as it provides statutory backing to erstwhile corporate governance practices.

Also, as it shows the international community that the nation is geared up in acclimatizing to its role as the largest market in Africa.

Furthermore, the introduction of novel provisions, especially those championing the concept of transparency and the need for full disclosure.

Borrowing the words of J.O. Irukwu, the element of full disclosure, apart from the fact that it promotes the concept of transparency, has a positive effect in promoting public confidence in the corporate governance practices of Nigerian companies.

Lastly, it is hoped that as business and corporate governance practices continue to evolve, that the CAC through its governing board would utilize its powers to ensure that the provisions of CAMA keep with the times so as to avoid another stagnant lengthy corporate legislation.

- Socieity for Corporate Governance Nigeria

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Monday 17 August 2020

BUSINESS DAY

feature COVID-19 Crisis: We need more than monetary policy to rescue the economy Omobola Adu

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he outbreak of COVID-19, a health pandemic, sent the global economy into a state of panic as health professionals and policymakers grappled with measures to curb the spread of the novel virus. Prior to the outbreak, the International Monetary Fund (IMF) projected the global economy to grow by about 3.3 percent in 2020, but this has recently been revised downwards to -4.9 percent to reflect the severe consequences of the virus on the economy.

Two common government policy responses to the virus globally has been the announcement of “lockdowns” to halt the spread, and interest rate cuts by monetary authorities to cushion the impact of the economic slowdown on businesses. Nigeria was not left out in this as the government introduced a 5 weeks mandatory lockdown from March 30 to May 04, and the Central Bank of Nigeria (CBN) reduced her monetary policy rate (MPR) by 100 basis points to 12.5 percent in a bid to support the economy. Despite these strong responses, the Federal Government still anticipates a 4.4 percent contraction in Nigeria’s economy this year.

In this week’s insight, we explain the channels of transmission of the COVID-19 pandemic on the Nigerian economy, present a macroeconomic model that is able to capture some of the dynamics of the effect of the virus, and finally we look at CBN policy responses and review its effectiveness.

Effect of COVID-19 on Nigeria’s Economy The outbreak of COVID-19

enues to fund government spending, and the dollar proceeds from crude oil sales make up a significant proportion of the country’s external reserves which is essential for the CBN to support the stability of the Naira. Hence, the decline in oil prices is expected to pile pressure on the apex bank’s ability to keep the exchange rate stable amidst reduced capital inflows from both foreign portfolio and direct investment.

Inflationary pressures are also expected to build up due to supply chain disruptions – the high cost of transporting items during the lockdown; and pressures emanating from exchange rate adjustments that the CBN has implemented. In June, Nigeria’s inflation rate rose to a 26-month high of 12.56 percent as COVID induced inflationary pressures continue to escalate.

On the demand side, due the restriction of movement and closure of businesses, the demand for goods and services is expected to fall (consumer spending), adversely impacting businesses especially in trade, manufactur-

sion Mechanism of COVID-19 Pandemic and Monetary Policy Response To simulate and understand the transmission mechanism of COVID-19 and how monetary policy should respond, we adopt a simple Quarterly Projection Model (QPM) calibrated to fit the data for the Nigerian economy.

The adopted QPM consists of two major blocs: domestic and foreign blocs, where the domestic bloc allows us to capture changes in aggregate demand, inflation, interest rate, exchange rate and monetary policy actions; and the foreign bloc captures the external environment.

We consider a situation where an economy is hit by a 3 percent and 5 percent adverse demand shock which means a decline in consumer spending that impacts the economy negatively over two quarters.

The decision to consider a scenario with 3 and 5 percent consecutive quarter-on-quarter (QoQ) decline in consumer spending is based on the assumption that, the impact on consumer spending in the last

of a prolonged economic recession.

In response to the contraction in demand and output, the central bank needs to gradually cut interest rate over three quarters. However, the reduction in interest rate comes at a cost as it further builds up inflationary pressures which is seen to last for several quarters.

As a result of the cut in interest rate amidst a high and rising inflation, this may cause real interest rate to fall into negative territory.

Real interest rate refers to the difference between lending interest rate and inflation. This essentially means that investors would continue to earn negative real investment return on their investment for the foreseeable future.

The nominal exchange rate gradually depreciates due to rising inflationary pressures and falling interest rate on domestic assets which is expected to induce capital outflows. As inflation continues to rise beyond target level, the central bank will begin a gradual monetary policy tightening to curb monetary-induced inflation which usually means raising interest rates.

led to a unique situation that simultaneously impacted the demand and supply of goods and services globally. Lockdown measures to halt the spread of the virus unavoidably caused a supply glut, while demand level globally shrunk, thereby negatively impacting commodity markets, especially crude oil prices. Oil demand is projected to drop by about 9 percent in 2020, the most since 1965 according to IEA, largely due to reduced travelling.

The combination of both demand and supply shocks induced

by COVID-19 is expected to manifest themselves through diverse channels with varying impacts on the Nigerian economy.

As an oil-exporting economy, Nigeria heavily relies on oil rev-

ing, entertainment, and tourism.

Consequently, companies have responded by implementing wage cuts, laying off workers or both, implying a rise in the unemployment rate. Furthermore, individuals are now experiencing reduced purchasing power as inflation rises and real wages fall.

In summary, the reduced earnings from crude oil, fall in external reserves, declining capital inflows, weaker government revenue, exchange rate and inflationary pressures are expected to lead to a slowdown in economic growth, culminating into an economic recession in 2020 which the IMF expects to linger on for 3 years.

Possible Channels of Impact of COVID-19 on Nigeria Modelling the Transmis-

economic recession in 2016/2017 would be at the minimum doubled because of COVID-19. In Q2 and Q3 2016, National Bureau of Statistics (NBS) reported that aggregate household expenditure contracted by about 1.63 percent and 2.39 percent, respectively.

Scenario Results: The Effect of a 3% and 5% Consecutive QoQ Reduction in Aggregate Demand Our projections show that two consecutive QoQ decline in aggregate demand which could be explained by the expected fall in household income level and consumer spending causes the economic output growth to fall drastically below its potential and remain in negative territory for several quarters (up to 2022Q4), thereby indicating the possibility

In summary, from the simulated results, we find evidence that the central bank may be moving into a monetary policy trap because by raising interest rates they hurt the economy but reduce inflation, by reducing rates they boost the economy but raise inflation and by doing nothing they allow the full impact of COVID-19 to hurt economic growth and trigger inflationary pressure.

Thus, we find that monetary policy alone may not be highly effective in combating the effects of the pandemic. Fiscal policy measures will therefore be required to subside some of the unintended consequences of monetary policy decisions to ensure its success.

The Reality of the Simulation and How CBN Has Re-

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sponded so far One key indication from the projection is that it could take up to 3 years before an economy like Nigeria returns to Pre-COVID growth level if we solely rely on the CBN. As seen from the graph, output gap is expected to negative till 2022 without any significant changes or improvements in macroeconomic conditions.

From our estimates, when supplemented with fiscal policies that spurs consumer spending, attracts investment and reduces number of new COVID-19 infections, we expect the output gap should turn positive in 2021.

Our projections also indicate that the monetary authority would have to ease interest rates till at least till 2021Q1 in order to support the economy. While we have seen the CBN respond by reducing the MPR by 100 basis points to 12.5 percent, the apex bank was unwilling to cut interest rate further instead opting to leave rates unchanged, citing the need to strike a balance between supporting output growth and maintaining price stability.

The reality of the situation is that the CBN cannot afford to go on an easing spree like some other countries without huge implications for mobilising domestic and external investment to support the economy, and also for inflationary concerns.

South Africa’s Federal Reserve Bank on the other hand has cut its benchmark rate for the fifth time this year. June inflation rate is only 2.2 percent in the country, giving the Reserve bank enough room to ease aggressively.

Further cuts to the interest rate in Nigeria could reduce the

attractiveness of government securities at a time where 1-year treasury bill is trading below 3 percent in the secondary market and could dampen the demand for OMO bills. We believe that a successful implementation of the government’s Economic and Sustainability Plan (ESP), a N2.3 trillion stimulus plans, would be crucial for the economy to cover half of the production hole the virus will cause Nigeria’s economy.

The only way to save the economy from a prolonged recession will have to be a much bigger stimulus plan and getting the nation back to productive work safely.

• Omobola Adu, Research Analyst, Growth and Development Asset Management Limited

Monday 17 August 2020

BUSINESS DAY

Government Enterprise & Empowerment Program

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How much impact can GEEP micro loans make?

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round 1970s, Muhammed Yunus, a Bangladeshi professor of economics, began to give micro loans to poor people. He lent $27 (856 take) to 42 women in a village called Jobra. The women returned with a profit of $0.02 each on the loan few weeks after. By late 1983, the project had begun as a full-fledged bank for poor Bangladeshis and was renamed Grameen Bank. As little as the loan was in those years, the Grameen bank lifted millions of Bangladeshi out of poverty. By 2013, the bank claimed it had lifted 50 million people out of poverty.

Bangladesh, once ridiculed as one of the poorest in the world, has today raised millions of entrepreneurs who are producers and exporters of fabrics and textiles.

In 2018, Nigeria’s total nonoil export earnings from more than 25 commodities amounted to $3 billion, according to the National Bureau of Statistics (NBS), but Bangladesh earned $33 billion—10 times that from exporting one product—textile.

Bangladesh has 5,000 garment factories today, employing about 20 million people, mostly women, pushing the extreme poverty index down to 12.9 percent, according to the World Bank, as against Nigeria’s 40-45 percent.

Ya l e e c o n o m i s t A h m e d Mushfiq believes that Bangladesh’s recent economic success is attributed to the flourishing

garment manufacturing industry, due partly to the micro credit provided by Yunus and his team of bankers.

Yunus’ model has been copied and replicated all over the world and it continues to prove that micro lending to the poor can lift them out of poverty.

Nigeria’s government through the Government Enterprise & Empowerment Program (GEEP) is hoping to replicate the economic revival Bangladesh experienced by giving micro loans to people at the bottom of economic pyramid.

It was set up to start the economic revival from the bottom of the pyramid by providing access to credit for Nigerians who contribute to the economy but have been neglected over the years. In four years, Tradermoni, Marketmoni & Farmermoni have provided loans ranging from N10,000 to N300,000 to petty traders, artisans, small businesses and farmers. This has seen over 2 million Nigerians significantly receive boosts to their businesses.

GEEP has been implemented in 36 states of the federation and the FCT with a spread of over 2,600 market clusters.

These loans are not given out at random. Instead, they are done through existing clusters and associations in various markets across the country.

This helps in proper tracking of the loans and provision of easy repayment options for the beneficiaries.

GEEP has also been able to provide this access to credit to IDPs in the North East. This has provided the IDPs with a viable way to get back on their feet

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Vice President Yemi Osinbajo

while also contributing to economic development. To ensure that these loans get to the target audience, market visits are done across the country to engage with beneficiaries as they go through the process.

The programme has become critical due to the prevailing economic situation worsened

by COVID-19. Today, 82 million Nigerians live on less than $1 per day, representing 40 percent of the population, according to a recent report done by the NBS. Unemployment rate is estimated at 23.1 percent, meaning that almost one out of every four Nigerians is unemployed.

“It is a good initiative that can make a huge impact on the poor,

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‘

It is a good initiative that can make a huge impact on the poor, especially those at the bottom of the pyramid which we find every day on the street

‘

odinaka Anudu

@Businessdayng

especially those at the bottom of the pyramid which we find every day on the streets,” Ike Ibeabuchi, a manufacturer and social commentator, said.

There are millions of Nigerians at the bottom of the pyramid. A 2019 report by the NBS and the Small and Medium Enterprises Development Agency (SMEDAN) said that the number of micro, small and medium, enterprises (MSMEs) grew from 37million in 2013 to 41.5million in 2017.

However, micro enterprises comprised 41.469 million (99.8 percent).

Small enterprises comprised 71,288 (0.2 percent), with medium-scale businesses only 1,793 (0.004 percent). This is an indication that GEEP is targeted at the majority poor who mostly do not have access to funds to expand their micro businesses.

Jumai Bello, a merchant of perfumes and beneficiary of the GEEP loan in Bauchi, explained how much impact GEEP loan has made on her business.

“I learnt about the GEEP Marketmoni scheme through my association, the Development Exchange Centre (DEC) in Bauchi State. In my business, I have people who help me sell.

I keep detailed records of every product. I applied for the Marketmoni loan and I got a loan of N50,000. I have used the loan to purchase more raw materials for my scents in bulk rather than buying in bits like I used to. There is not much else to say but to thank the Federal Government for this programme. I hope to see more of this kind of people-oriented programmes.”

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BUSINESS DAY

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Monday 17 August 2020

BUSINESS DAY

Global Economy In the UK, gross domestic product contracted by 20.4% in Q2 2020, the most since comparable records began in 1955 a cco r d i n g to t h e O ffi ce fo r N a t i o n a l Statistics (ONS). This is the second consecutive quarterly decline in GDP, officially entering a recession, due to the COVID-19 pandemic and the government measures taken to reduce transmission of the virus. Private consumption accounted for more than 70% of the decline in the GDP, down by 23.1%; there were also notable falls in gross fixed capital formation (-25.5%) and government consumption (-14.0%). Net external demand contributed positively as imports fell more than exports. In a separate development, the Eurozone's trade surplus widened to €21.2 billion in June 2020 from €19.36 billion in the corresponding month of the prior year. According to the European Statistical Office (EUROSTAT), imports plunge 12.2% to €149.1 billion, as purchases fell for mineral fuels, lubricants & related materials; Exports dropped 10% to €170.3 billion, as sales went down for machinery & transport equipment; manufactured goods and raw materials. Elsewhere, India's Ministry of Commerce and industry revealed that India's trade deficit contracted to $4.83 billion in July 2020 from $1,343 trillion in the same month last year. Exports dropped 10.21% led by sales of petroleum products, gems & jewellery, leather & leather products.

At the same time, imports tapered 28.40% as purchases were down for coal, coke & briquettes, machinery, electrical & nonelectrical and electronic goods. Considering April to July, the trade gap contracted to $13.95 billion from $59.39 billion in the same period of the previous fiscal year.

Domestic Economy Unemployment in Nigeria jumped to the highest in at least a decade in the second quarter as the coronavirus pandemic made it tougher for output growth in Africa's largest economy to keep up with its growing population. According to the National Bureau of Statistics report, the jobless rate rose to 27.1% in Q2 2020. That compares with 23.1% in the Q3 2018, which was the last period the agency released labour force statistics. The unemployment rate more than doubled over the last four years as the country struggled to recover from a contraction in 2016. The underemployment rate increased to 28.6% in Q2 2020 from 20.1% in Q3 2018. In a separate development, the World Bank Board of Directors has approved a $114.28 million funding to help Nigeria prevent, detect, and respond to the threat posed by the COVID19 pandemic, with a specific focus on statelevel responses. The facilities include a $100 million credit from the International Development Association (IDA), and another $14.28 million grant from the Pandemic Emergency Financing Facility (PEFF).

Through the COVID-19 Preparedness and Response Project (CoPREP), the Federal Government would provide grants to the 36 states, and the Federal Capital Territory (FCT), as immediate support to break the chain of COVID-19 local transmission and limit the spread through containment and mitigation strategies.

Stock Market

Money Market The debt market experienced tight liquidity following the Cash Reserve Ratio (CRR) debit and retail Secondary Market Intervention Sales (SMIS) Auction. The debit led to a spike in rates as short-term lender's charge such as the Open Buy Back (OBB) and Overnight (O/N) climbed to 17.6% and 19.8% from 6.33% and 7.17%, respectively. Longer tenored rates such as the 30-day Nigerian Interbank Offered Rate (NIBOR) also notched up to 4.91% from 4.49%. This week, rates are expected to oscillate around current level due to the sharp reduction in system liquidity.

Foreign Exchange Market The naira was stable across most major market as both the parallel market and official window were unchanged from previous week figures while the naira depreciated against the dollars on the Nigerian Autonomous Foreign Exchange Rate (NAFEX). The NAFEX rate closed at N386.50/US$ from N386.23/US$ as demand continue to outweigh supply of funds in the market. The official and parallel market rates were unchanged at N381/US$ and N475/US$, r e s p e c t i ve l y. We d o n o t fo r e s e e a ny significant movement in FX rates this week barring any major injection by the CBN into the forex market.

Bond Market T h e B o n d m a r ke t t r a d e d w i t h m i xe d sentiments last week, but we witnessed d e m a n d fo r s o m e s e l e c t m a t u r i t i e s , particularly the 2049 and the 2050 securities as market expectations suggests a further drop in yields. Yields on the 15-, 20- and 30year papers declined to 9.33%, 8.76% and 9.9% from 10.50%, 9.16% and 10.46%, in that order. Consequently, the Access Bank Nigerian Government Bond Index increased by 28.77 points to 4,470.7 points. We expect the mild buying interest to be sustained in the market for the near term.

Commodities Oil prices pulled back last week after the International Energy Agency (IEA) slashed its 2020 oil demand forecast amid reduced air travel as coronavirus cases continue to rise, its first downgrade in several months. OPEC's monthly report also showed that world oil demand will likely drop by 9.06 million barrels per day this year, more than the 8.95 million bpd decline previously expected. Bonny light, Nigeria's benchmark crude dipped 0.42% to close at $44.63 per barrel. In the same vein, precious metal prices were bearish as expectations of further US coronavirusrelated fiscal stimulus and positive economic data boosted risk appetite. Consequently, gold prices shrank 4.11% or $83.29 to finish at $1,944.888 per ounce from $2,028.17 per ounce. Silver settled at $26.77 per ounce, a 2.69% drop from previous week price. This week, we anticipate that oil prices would recover supported by industry data that US crude stocks dropped more than expected, raising hopes that fuel demand in the country could improve. The American Petroleum Institute said that crude stocks in the US fell 4 million barrels last week. We expect that the bullion might come under further pressure following the Russia's President speech that the country had become the first to grant regulatory approval to a virus vaccine after less than two months of human testing.

Indicators at the local stock exchange were positive week on week as the bulls reigned supreme. Blue chip stocks in the healthcare, financial and service sector were majorly responsible for the uptrend in performance indicators. Consequently, the All Share Index (ASI) and market capitalization closed at 25,199.84 points and N13.14 trillion from 25,041.89 points and N13 trillion, respectively the preceding week. The stock m a r ke t m i g h t m a i n t a i n t h e u p w a r d momentum as investors reposition their portfolio ahead of release of half year financial scorecards.

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Seplat’s share price rises despite weak revenue and gross profit performance …Oil Company reports 80% decline in gross profit between Q1 and Q2 2020

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by almost 43 percent in a single quarter and slowed its impairment loss by 83.3 percent. Gross profit fell 80 percent between Q1 and Q2 and without the miracle of steep declines in administrative expenses and impairment loss, Q2 could have been an absolute disaster for the oil company.

Year on year, the company recorded a revenue decline of 26.5 percent as revenue dipped from N108.97 billion in H1 2019 to N80.10 billion in H1 2020. Net profit in the period under review moved from N37.49 billion in H1 2019 to –N37.78 billion

in H1 2020 representing a 200 percent profit decline.

In a chat with Titobioluwa Okunade, Head of Equity Market Research at EUA Intelligence an investment advisory firm based in Lagos, Okunade explained that the poor financial performance of the oil company can be attributed to the twin oil price shocks of COVID-19 oil demand drop and KSA-Russia crude oil price war.

“We can expect to see what is happening with Seplat across the industry with some companies even coming

out worse than Seplat.” Okunade said. Multinational Oil explorers, ExxonMobil production business and Chevron posted losses of $1.7 billion and $8.3 billion respectively according to Reuters.

Okunade further explained that the global lockdown which crippled global oil demand hurt sales performance in H1, however, H2 may be much better for oil producers as OPEC+ production cuts and gradual reopening of the world economy has helped boost oil prices in recent months.

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were even higher in the eurozone, where the number of people in work dropped 2.8 per cent in the second quarter.

The 5.5m job losses in the EU, which included 4.5m job losses in the eurozone, were “the sharpest declines observed since [the] time series started in 1995”, Eurostat said.

There were 209.1m people employed in the EU at the end of the first quarter, including 160.4m in the eurozone.

The coronavirus pandemic dragged the eurozone economy into a historic recession in the second quarter, as gross domestic product fell by a record 12.1 per cent compared with the previous three months.

However since May there have been signs that the economy is recovering faster than expected. Eurostat

said on Friday that exports from the eurozone rose almost a third between May and June, although they remain 10 per cent below the level of a year ago. Purchasing managers’ indices pointed to a strong rebound in activity for manufacturing and consumer industries across the eurozone in July.

Charles Hepworth, investment director at GAM Investments, said: “Whilst we are seeing a rebound in activity, it is clear it will be a slow and fragmented process as consumers still remain in a state of nervous exhaustion with the effects of the pandemic and potential lockdown re-impositions.”

A number of governments have reimposed quarantine and testing requirements on travellers returning from popular holiday destinations

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

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

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

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

N23bn

Coronavirus led to a 2.6% reduction in employment across the bloc in second quarter

he EU labour market shrank by a record amount in the second quarter, as the number of people in employment fell by 5.5m.

The 2.6 per cent quarterly reduction reported by Eurostat on Friday underlined the dramatic impact coronavirus has had on the region’s job market. Many companies have shed large numbers of staff or placed a significant portion of workers on government-backed furlough schemes.

Eurostat said the job losses, which exclude most of the tens of millions of people on furlough across Europe,

N312m

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EU labour market suffers record loss of 5.5m jobs Martin Arnold in Frankfurt and Richard Milne in Oslo, FT

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

BALA and IFEANYI JOHN eplat share price has now jumped 24 percent since the release of the company’s H1 2020 results despite posting a deep loss after tax of around N37 billion in the first 6 months of 2020.

The stock price closed on Friday at N385, representing a 24.19 percent return for investors from the N310 share price on the date of their H1 result release.

The oil company was negatively impacted by the sharp decline in crude oil price and lower demand for oil products due to prolonged city lockdowns in Nigeria and around the world. However, all that seems to be forgotten as investors seem to be snatching up shares in the company as the depressed stock price which now appears to be a bargain after seeing what analysts are now describing as a “better than expected result.”

The company’s losses appeared to have slowed down in Q2 2020 after crude oil price began a modest recovery. In the first quarter of the year, the company reported a loss before tax of N31.1 billion compared to a loss before tax of N18.7 billion in Q2 2020 despite an 11.1 percent slide in company’s revenue between Q1 and Q2 2020.

Losses in Q2 2020 slowed down after the company managed to cut its general and administrative expenses

P.E

after coronavirus cases rose sharply in many European countries, including France, Spain, the Netherlands, Portugal and Greece.

Latest coronavirus news Follow FT’s live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.

The Nordic region has avoided the worst of the economic fallout from the pandemic, as underlined on Friday when Finland and Denmark both published quarterly GDP figures that were better than most other European countries.

Finland’s GDP fell 3.2 per cent in the three months to the end of June compared with the first quarter, while Denmark’s dropped by a record 7.4 per cent.

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

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

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

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

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News Lagos at crossroads over business model...

Continued from page 1

based theatres across the state, stakeholders in the sector fear that a wrong business model in the operations of the theatres could jeopardise the objectives of the projects.

This fear comes as the state government seems to be at crossroads as to what business model to adopt in profitably managing the theatres to which several billions of public funds had been sunk by the immediate

L-R: Damilola Aloba, partner, strategy and transactions, Ernst and Young; Alex Okoh, director-general, Bureau of Public Enterprises; Mariam Katagum, minister of state for industry, trade and investment; Adeniyi Adebayo, minister, industry, trade and investment, and Nasir Sani-Gwarzo, permanent secretary at the ministry, after the signing ceremony for the reform of Calabar and Kano Special Zones in Abuja. NAN

In Nigeria, education is no longer enough to find...

Continued from page 1

or even Tunde’s plan as well. “There was no need to pay exorbitantly to see him through university if he was going to end up as my assistant,” Ade says.

His former assistant, the person Tunde now works with, has an incomplete secondary education.

Tunde retains hope of finding a better job and has not stopped his frequent job applications.

Tunde is not the only one waiting to land a job that suits his academic qualification.

His plight, along with those of other educated Nigerians, shows that even the most academically qualified people are not guaranteed of jobs in Nigeria, where some 21.8 million people are without jobs and a further 22.9 million are underemployed.

The struggle by educated Nigerians to find jobs marks a departure from an era when a university degree was always enough to land a good job.

These days, the likelihood that you have a job is lower if you have gone to university.

This claim can be backed by data published Friday by the National Bureau of Statistics (NBS).

The data show that in the second quarter of 2020, Nigerians with university first degrees and higher national diplomas accounted for the highest number of unemployed people (40.9%) after those with only primary education, which account for 46.2 percent of the total unemployed persons.

Meanwhile, Nigerians with vocational skills, which require little or no formal education, had the lowest rate of unemployment at 17.9 percent.

While the numbers imply that formal education no longer provides the assurance of getting a job in Nigeria, it also suggests that vocational

skills deserve more attention if Nigeria is to reduce its unemployment rate.

That is however hard to take for parents striving to put their children through school, students extending themselves to get a degree, and the government seekpng to build an economy with a productive workforce.

When BusinessDay divided the categories of unemployed Nigerians into those with whose highest education was at junior secondary level and compared with those with senior secondary education up to doctorate degree holders, the latter formed the larger part of unemployed people.

People whose highest form of education was junior secondary accounted for 38 percent of the total number of unemployed persons while those with post-secondary education accounted for 62 percent.

That is a marked change from 2015, when those with post-secondary education accounted for 54 percent of unemployed people while people who barely had primary education accounted for 46 percent.

Even the most academically qualified Nigerian workers are struggling with unemployment. The same NBS data show that unemployment among doctorate degree holders was at an all-time high of 23.3 percent in the second quarter of 2020.

What that means is that of the 76,000 doctorate degree holders in the country, as many as 20,000 were without jobs.

That doubles the 10,000 unemployed doctorate degree holders in the third quarter of 2018, which was the last time the NBS published unemployment data.

These numbers imply that education no longer provides the assurance of getting a job in Nigeria.

Bongo Adi, a PhD holder, www.businessday.ng

who is also a senior lecturer at the Pan Atlantic University, refutes the statistics for unemployed PhD holders but admits that unemployment is rampant among educated Nigerians.

“It is hard to believe that so many PhD holders are without jobs, the only explanation for that is that perhaps they are taking a break from work to focus on their studies, which could be very demanding,” Adi said.

“Other than that, there is a shortage of PhD holders in the academia, which contradicts data suggesting PhD holders are not able to find jobs,” Adi said.

The number of unemployed PhD holders may be contestable; however, what is certain is that Nigeria is reeling from a lack of sufficient formal jobs to accommodate educated Nigerians.

Nigeria creates less than 300,000 formal jobs per annum, whereas popular estimates show that Nigerian universities produce 500,000 graduates annually.

Nigeria needs to create at least 3.3 million jobs per annum to cater for new labour market entrants, according to estimates by the Nigerian Economic Summit Group (NESG), a private sector think-tank.

That is impossible without the private sector, according to economists.

“The government needs to create an enabling environment for private businesses to thrive since they are also the biggest employers of labour, it’s the only way to reduce unemployment,” said Ayodeji Ebo, an economist and managing director of Afrinvest Securities Limited.

The biggest factor responsible for high unemployment rate in Nigeria is tepid economic growth.

When not contracting, the economy has grown at a tepid 2 percent rate compared to average population growth rate of 2.6 percent.

That has led to five straight

quarters of negative GDP per capita growth, an indication the economy is not growing fast enough to create jobs.

The last time Nigeria had a positive Per capita GDP was in 2014, as the economy has struggled since a lengthy collapse in global oil prices that began in mid-2014.

The economy grew 2.5 percent in 2015 before contracting by 1.6 percent in 2016. As oil prices recovered, the economy turned the corner on its first recession in a quarter of a century by growing 0.8 percent in 2017 and a 1.9 percent growth in 2018.

In 2019, the economy grew 2.27 percent, capping five years of an economy that did not grow fast enough to create new opportunities for a rapidly growing population.

“The government needs to double down on policies that help the private sector to create sufficient jobs,” said Omotola Abimbola, an analyst at Lagos-based investment bank, Chapel Hill Denham.

Niger ia’s young and growing population heaps more pressure on the economy as there are too many people chasing too few jobs.

While Nigeria’s labour force grew by nearly 4 percent between 2010 and 2017, jobs grew at a rate of 1.6 percent, according to the latest job creation report by the NBS. In 2020, however, the labour force shrank from 90.4 million to 80.29 million.

Another reason why Nigeria has so many educated and jobless people is that there is a mismatch between the skills that workers have and the skills needed in the jobs available.

This is often attributed to the poor alignment between labour market needs and the curriculum the education system teaches. There is a wide gap between theory and practice in universities, such that it becomes difficult to apply taught courses to realworld issues.

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past administration of Akinwunmi Ambode.

Checks at some of the theatres located at Igando, in Alimosho; Oregun, in Ikeja; Epe and Badagry, among other locations, reveal locked up facilities, with weeds already growing within the premises, even after completion.

Industry stakeholders and residents in adjoining neighbourhoods of some of the theatres say before the outbreak of the coronavirus in February, the facilities seldom hosted events.

The special adviser to Babajide Sanwo-Olu, Lagos State governor, on Arts and Culture, Bonu Solomon Saanu, admits there have been low activities at the theatres, but blames it on coronavirus that has impacted the sector due to the need to observe social and physical distancing.

“We are the one who made the law; we must abide by the law. That is why the theatres are not hosting events,” says Saanu who, however, discloses that the government is still considering the best and most effective model to run the theatres.

“We have considered concessioning the theatres. But then our experience with the private sector managing our similar facilities in the state is that of not remitting anything to the government’s coffers.

All the same, five private firms have indicated interest in the concessoning of the theatres,” the special adviser states.

Bode Adeniyi, a performing art practitioner and stage director, says the Lagos theatres should not run on government grants, they should be able to create exciting activities and business that would enable them pay their bills.

“If Lagos wants these theatres to thrive, it should give them out to private companies that would draw and follow up on their plans to make the theatres self-sustaining,” he notes.

Citing the success story of Terra Kulture Studio Limited, part of the firms that built the theatres, Adoki Efema, a choreographer and artistic director of a dance company, suggests that Lagos State can also handover the theatres to Terra Kulture to manage or source reputable art management companies to run the @Businessdayng

theatres.

“The theatres are lasting legacies for the arts by the state government, but they will soon become white-elephant projects if government dabbles into their management. For me, Lagos State has no business in running them, let the experts do that while government gets the taxes accruing to it from private business ventures that use the facilities,” he states.

In line with Efema, Adeniyi says hence the commissioner has explained that the choice of Terra Kulture Studio Limited for the construction works was as a result of the impeccable track records of the company among other household names in the arts and culture industry, the state should also allow Terra Kulture manage the theatres the way it has successfully managed Tera Kulture Arena, its theatre, in Victoria Island, Lagos.

Jonas Onah, a business owner at Freedom Park, Lagos Island, thinks that the park, equally owned by the Lagos State government, is self-sustained because it is managed by the private sector, which adopted a sustainable business model since inception, amid delivering huge profit to the state.

It would be recalled that at the handing-over ceremony of four Lagos Theatres early this year by Terra Kulture Studio Limited at Alausa, Ikeja, Uzamat AkinbiIe-Yusuf, Lagos State commissioner for tourism, arts and culture, said the theatres were huge investments in the tourism sector by the present administration. As well, Rabiu Olowo, the state commissioner for finance, in his remarks, stated that the new theatres would contribute significantly to the revenue of the state.

To ensure the anticipated revenue, stakeholders are urging the government to do the needful by adopting the model that has seen Tera Kulture and Freedom Park selfsustained since they opened to the public few years ago.

Expressing her opinion on the management style, Bolanle Austin-Peters, managing director, Terra Kulture Studio Limited, advises that the theatres should be selfsustaining after working with the take-off grant.

“The management should be free to adopt any commercially viable form of partnership under a strictly secular arrangement. Companies can provide grants solely for enjoying lasting corporate benefits, such as naming individual halls after them with added advantage in branding.

Management can also form a partnership with advertising agencies in a bid to attract outdoor, indoor, screen and publication advertisements for the facility,” she states.

30

Monday 17 August 2020

BUSINESS DAY

In Association With

Out of the closet

Israel and the UAE make their quiet affair public But the agreement to establish formal diplomatic relations, historic as it is, may not reshape the region

I

T WAS MOMENTOUS and yet somehow anticlimactic. On August 13th President Donald Trump announced—via Twitter, of course—that Israel and the United Arab Emirates (UAE) would establish full diplomatic ties. It would be Israel’s first formal relationship with a Gulf state and its third with any Arab country. In exchange Israel would shelve plans to annex parts of the occupied West Bank, which the prime minister, Binyamin Netanyahu, promised to do during his three most recent election campaigns. “This normalisation of relations and peaceful diplomacy will bring together two of America’s most reliable and capable regional partners,” read the statement accompanying the president’s tweet.

The gravity of the moment seemed lost on the president: an hour later he was tweeting about college football. His counterparts could not agree on what they had agreed on. Muhammad bin Zayed, the crown prince of Abu Dhabi and de facto ruler of the UAE, was cautious, saying the deal was merely “a road map” to a relationship. Mr Netanyahu was more ebullient: he said there would be embassies and direct flights between the two countries.

The timing was a surprise, the details unclear—but the outcome was not. Israel has spent years cultivating ties with Gulf states.

Spymasters and military officers share intelligence. Gulf monarchs snap up Israeli-made surveillance kit. Some bilateral relations have been conducted in public, too: in 2018 Miri Regev, then the minister of culture and sport, visited Abu Dhabi to watch an Israeli team take part in a judo tournament. Mr Netanyahu himself made a public visit to Oman in 2018 to meet the late Sultan Qaboos.

For Mr Trump the announcement is a diplomatic victory—not the sort that swings an election, but a success at a time when his administration, battered by covid-19 and a dismal economy, has few others. It will be a temporary boost for Mr Netanyahu as well, who may

AFree Balkan betrayal exchange

Has the ECB found a way around the lower bound on interest rates?

Its cheap loans to banks could help kickstart inflation

I

MAGINE BEING locked in a dark room. Fearful of slamming into a wall or tripping, you inch forwards, arms outstretched. That is roughly how the European Central Bank (ECB) has approached interest-rate cuts since it first ventured into sub-zero territory in 2014. It knows there is a limit to how low rates can go, and that the limit is near, but, like the economics profession more broadly, it has no idea when it will hit the wall. With growth and inflation subdued, it cut rates gingerly, by 0.1 percentagepointsatatime.Evenbeforecovid-19 struck, its deposit rate was down to -0.5%. Rather than cut rates further, it has since relied on unconventional measures, such as bond-buying. Much of its stimulus has come from expand-

soon finagle a fourth election in order to dissolve a power-sharing deal with his former rival, Benny Gantz. The agreement with the UAE lets him duck the question of whether to annex territory, a dream for his right-wing allies but one that brought much international opprobrium.

It will also shore up a strategic partnership, though perhaps not the one Mr Trump thinks. America sees Israel and the UAE as linchpins of its effort to contain Iran. But the UAE does not fear Iran the way Israel and its Gulf neighbours do: Iranian firms do business in Dubai and travellers fly back and forth.

The Emiratis worry more about political Islam. Their arch-rival in the region is not Iran but Turkey, which backs Islamists across the region and maintains a garrison in Qatar, the bête noire of the Gulf states that is friendly to the Muslim Brotherhood. Israel, too, shares Gulf leaders’ concerns about Islamism.

The UAE’s willingness to let Mr Trump act as midwife to diplomatic ties may reflect a belief that he is not long for his office. The UAE and other Gulf states have embraced the president as someone who would give them free rein in

the Middle East and not ask too many pesky questions about human rights. He has fulfilled those expectations, though he has not been the sort of steadfast ally they hoped for: Gulf leaders were jolted by America’s non-response to a string of Iranian attacks last year, particularly the drone-andmissile strike on Saudi oil facilities in September.

Their support for the president has cost them with America’s Democrats. Still, the UAE is adept at the Washington game, and has begun to prepare for a possible change of power next year. Last summer it withdrew most of its troops from Yemen, where they had fought for four years in a Saudi-led campaign against the Houthis, a Shia rebel group that receives support from Iran. The UAE had its own reasons for leaving—the war was at a stalemate—but the withdrawal also distanced it from a conflict that has become deeply unpopular in Washington. Now it has established ties with a country that still retains much bipartisan support in America, despite Mr Netanyahu’s close embrace of Mr Trump, positioning it well for a post-Trump era.

Ignored as ever are the Pal-

estinians, who say they were not informed in advance. “May you never be sold out by your ‘friends,’” Hanan Ashrawi, a senior official, angrily tweeted at the Emirati crown prince. Gulf rulers are unlikely to care. They tolerate no dissent at home. Some Emiratis, particularly younger ones, harbour no animosity towards Israel nor much sympathy for the Palestinians, an attitude shared across the Gulf kingdoms, where many remember the Palestinian leadership’s support for Iraq’s invasion of Kuwait in 1990.

When Egypt made peace with Israel in 1978, it reorganised the region: the biggest military threat to Israel had been neutralised. Egypt, the Arab world’s political and cultural heart, was ostracised for abruptly quitting the decades-long fight against the “Zionist entity”.

The UAE was never part of that fight. Latterly, its ties with Israel were secret in name only. And it did not demand any real concessions to make them official—merely that Israel not do something it may not have done anyway. Instead of changing the region, the agreement between Israel and the UAE simply reflects how the region has already changed.

ing its loans to banks, and decoupling thescheme’sinterestratefromthemain policy rates. With the introduction of dual interest rates, the ECB could well escape its locked room.

Cuts to interest rates are aimed at encouraging firms and households to spend by making borrowing more attractive, and saving less so.

But when rates are negative their transmission to the real economy breaks down. Depositors can always choose to hold their funds in cash, which has an effective interest rate of zero. Banks worry that if they pass on negative rates, customers will yank their money out and stash it under mattresses instead. The result is squeezed net interest incomes for banks, a hit to their profitability, and, potentially, a reduced willingness to lend. Economists reckon that at a certain point—the so-called reversal rate—the stimulative effect of an interest-rate cut will be offset by the strain placed on banks. Fear of reaching this point helps explain why no central bank has gone deep Continues on page 31

Monday 17 August 2020

BUSINESS DAY

31

In Association With

Kamala Harris

What Kamala says about Joe Joe Biden’s choice of running-mate reflects well on him

J

OE BIDEN’S strategy so far has been to stay out of the way as far as possible.

The more the news cycle is filled with President Donald Trump, covid-19 deaths and economic misery, the better for Mr Biden’s campaign. So far it has worked: he is nine points up in our average of polls. Democrats have a shot not just at taking the presidency and retaining the House but also at capturing the Senate, which earlier this year had looked out of reach. With that trifecta comes the power to change America.

But to what end? Mr Biden’s stealth campaign is fine as an approach to winning the election in November, but it has not revealed much about what sort of president he might be. His choice of Senator Kamala Harris as his running-mate is different. Because this is the first big call he has had to make, it says something about how he would make decisions in the White House. It also gives an indication of the ideological leanings of a future Biden administration.

The pick reflects well on the former vice-president, who spent eight years doing the job he has

recruited Ms Harris for. Mr Biden has chosen the person who went at him hardest during the primary debates; he has not held a grudge.

And he has picked someone who, for all her mould-breaking qualities as the first African-American woman and the first Asian-American on a presidential ticket (her parents are from Jamaica and from India), has come up through the conventional route to high office. Ms Harris has been chief prosecutor in San Francisco, state attorney-general in California and is now a US senator (see article). Mr Biden promises a return to competent governing.

His running-mate’s CV reinforces the pitch.

What does the choice say about what a would-be Biden administration might do? Like Mr Biden, she comes from the Democratic Party’s centre. That means pursuing progress on climate change, health care and the relationship between business and the state through incremental change rather than cheerleading for a revolution.

Her main drawback, for both libertarians and progressive Democrats, is her record as a prosecutor. California suffers from overcrowded prisons and a

dysfunctional probation system.

Ms Harris did not make either better. She opposed the legalisation of cannabis and prosecuted non-violent crime aggressively.

But if this becomes a law-andorder election, which is the fight Mr Trump would like, this record would probably be an advantage.

She would be hard to paint as soft on crime, which matters in a year that has seen a sharp rise in murders in America’s big cities.

Ms Harris is not particularly ideological, a quality which could also be an asset in November. The Trump campaign was hoping for a crazed leftist; the president’s first attack ad has had to settle for going after “phoney Kamala”.

As often with Mr Trump’s insults, there is an element of truth to the charge. During the Democratic primary Ms Harris seemed willing to abolish private health insurance when the wind appeared to be blowing that way. Then, when the scheme began to look like a gift to Mr Trump’s re-election campaign, she ditched it, sort of, in favour of an unworkable, cobbled-together hybrid. This suggests a lack of fixed ideas. It also suggests a kind of flexibility that can be a useful attribute in Washington dealmaking.

Taking a fall

After the blast, Lebanon’s prime minister quits But real change is yet to come

T

HE DEAD were still being buried, victims treated, rubble cleared. But less than a week after the massive explosion at Beirut’s port on August 4th, which devastated much of the city centre, Lebanon’s leaders had returned to their usual priority: self-preservation.

The prime minister, Hassan Diab, announced his resignation six days after the blast. He will linger on as a caretaker until the country’s political leaders choose a replacement. They are determined to escape blame for a disaster of their own making—and, despite the horror, many Lebanese fear they will succeed.

Everyone can agree the blast was caused by stunning negligence. For six years authorities stored at the port 2,750 tonnes of ammonium nitrate, a chemical used in bombs, despite many warnings that this was not a good idea. It may have been heaped in a hangar along with fireworks and other combustible materials.

More than 200 people were killed and thousands wounded when the warehouse exploded. An estimated 300,000 people are homeless. Fixing the ruined city could cost $15bn, a quarter of Lebanon’s GDP in 2019.

No one wants to be held responsible for the negligence, however.

The judge supervising an investigation is a relative by marriage of Nabih Berri, the parliament’s speaker,

whose Amal party wields influence at the port. President Michel Aoun brushes off calls for an international probe. Instead politicians were keen to blame the cabinet, stocked with political outsiders, which took office only in January. Mr Diab beat them to the punch by resigning (under pressure from his own ministers).

His going may not change much.

It will not force early elections, which require the approval of Mr Aoun and powerful factions such as Amal and Hizbullah, the Iranian-backed political party and militia. All oppose the idea. Instead it will cause a repeat of what happened in October, when the previous prime minister, Saad Hariri, quit amidst big protests. Lawmak-

ers took two months to agree on a replacement.

Lebanon can ill afford such delay.

Apart from the humanitarian crisis, the economy is sinking. The currency has lost 80% of its value since October. Inflation is at 90%. The country defaulted in March. The cabinet put forward a well-received economic plan to reduce debt and clean up the insolvent financial sector, only to back-pedal under pressure from bankers and MPs. Efforts to restructure debt worth perhaps 170% of GDP have stalled: bondholders do not know whom they are negotiating with. Talks with the IMF about a $10bn bail-out have led nowhere.

Yet it may be difficult to find a can-

didate both acceptable to parliament and willing to take charge of a collapsing country. Some MPs hope to bring back Mr Hariri. The return of a man who led the country for six years, at the helm of governments widely seen as corrupt, is not much of a change.

A few other names are being floated, such as Nawaf Salam, a diplomat and judge with a clean reputation. But he would face the same problems as Mr Diab, an academic, who was brought in not to implement reforms but to defuse protests.

While politicians argue, citizens deal with the explosion’s aftermath.

Volunteers throng the streets of east Beirut helping to clear debris.

Universities have sent teams of engineers to check the structural integrity of damaged buildings. The vast diaspora has contributed money and materials, such as 138 tonnes of glass.

Cleaning up may prove the easy part. To rebuild will require money that Lebanon does not have. A summit on August 9th raised €253m ($297m) for health care, food and other necessities. A bigger aid package will probably require political reforms of the sort Mr Diab failed to implement. The IMF says any bail-out must be linked to changes: a recapitalisation of the banks, with the burden on shareholders and large depositors; a capital-controls law; and an audit of the central bank.

Has the ECB found a way around the lower bound on...

Continued from page 30

into negative terrain.

In order to get around the problem, the ECB has souped up its long-term repo operations (LTROs), which lend to banks. When introduced during the euro area’s sovereign-debt crisis in 2011, they were meant to quell fears about banks’ funding shortfalls. Since thentheyhavecomeinseveralflavours, from VLTROs—“very long-term”—to three rounds of TLTROs, or “targeted” operations, to PELTROs, for the “pandemicemergency”,announcedinApril.

And the intention behind them has changed. TLTROs are a way to encourage banks to lend to the private sector.

The more a bank lends to households and businesses, the lower the rate at which it can access TLTRO funds, according to a sliding scale set by the ECB. Andinthetopsy-turvyworldofnegative rates, the ECB is paying banks to extend credit to the economy.

This sort of scheme is hardly unique. The Bank of England has something similar. But one feature makes the ECB’s set-up novel. Until March the TLTRO rate was tied to the ECB’s benchmark interest rates.

But the link has since been severed, and banks that meet the lending criterion can access funds at a much lower interest rate of -1%. The result is that banks can now get super-cheap funding, making a profitable spread when they use the proceeds to make new loans. Meanwhile deposit rates remain closer to zero, preventing savers from running to the door.

So far it seems that TLTROs have been popular and effective. Whereas the Fed this year has mostly focused on supporting capital markets, lending to banks has made up the bulk of the ECB’s stimulus—hardly surprising given the much bigger role banks play in intermediating credit in the euro area. By August 7th the ECB had lent €1.6trn ($1.9trn or 13% of euro-area GDP) through its lending schemes. In June alone banks borrowed €1.3trn. Once you add these in, finds Frederik Ducrozet of Pictet Wealth Management, the ECB’s balance-sheet has expanded more quickly this year than the Fed’s (see chart). In a speech in June Philip Lane, the ECB’s chief economist, reckoned that the measures alone, by averting a liquidity crisis, may prevent output in the euro zone from falling by three percentage points over 2020-22.

32 BUSINESS DAY

Monday 17 August 2020

news

New hybrid media launch targets $80m investment, jobs in Nigeria BUNMI BAILEY

Ibok-Ete Ibas (l), chief of Naval Staff, with Abubakar-Abba Bello, managing director, Nigerian Export-Import (NEXIM) Bank, during the signing of Memorandum of Understanding between the Nigerian Navy and NEXIM Bank in Abuja. NAN

Nigeria records highest unemployment rate in 6 years at 27% in Q2 2020 ...as more than 50m persons without job Endurance Okafor

T

he number of jobless people in Nigeria, Africa’s largest economy increased to 50 million in the second quarter of 2020, the highest the country has reported since the National Bureau of Statistics (NBS) started collating the data in 2014.

At a record-high of 27.1 percent in Q2 2020, Nigeria’s unemployment rate has risen for 23 consecutive quarters since Q4 2014, as analysed from the NBS labour force

statistics released on Friday.

Exacerbated by the outbreak of Covid-19, the Q2 2020 unemployment rate is 4 percentage points higher than the 23.1 percent reported in the last NBS labour statistics published in Q3 2018 and 19.7 percentage points more than 7.4 percent recorded in Q2 2014.

Considered by economists as an important economic and social indicator used in the analysis, evaluation, and monitoring of the economy; the labour market; and a wide range of government policies, Nigeria’s current unemploy-

ment data shows that the country is producing more people than it can feed.

In the last five years, the Nigerian economy has been growing at a pace slower than the country’s population growth rate and with more jobless population amid poor economic output, the spending power of millions of Nigerians is nowhere near the global requirement, perhaps explaining why the World Data Lab said Africa’s most populous country crossed the 83 million poverty mark in 2018, surpassing India’s number of extremely poor at

remaining would have their accounts credited in the coming days Sanni, who was speaking at one of the prize presentation ceremonies in Kano, noted that the promotion was to encourage the customers to continue patronising the product, which, according to her, is the best in the country.

She said the company had been making efforts to satisfy its teeming customers to the fullest, adding that apart from the premium quality of the product, the firm has also introduced several customer-driven promotional offers in order to keep their relationship intact.

According to her, a customer could only win the N1 million cash prize on collection of the scratch cards that each carries letter D, A, N, G, O, T and E to make up the name DANGOTE. She added that other prizes to be won include motorbikes, tricycles, TV sets, recharge cards, among other prizes in the promotion that will end on November 5.

AMAKA ANAGOR-EWUZIE

73 million.

Breakdown of NBS data shows that Nigeria’s unemployment rate skyrocketed in the first quarter of 2015 after a decline to 6.4 percent a quarter earlier.

Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants.

N

igeria may soon experience a major inflection in the Over The Top (OTT) media landscape as investigations reveal major private sector disruption in the digital ecosystem by a new start-up based in Lagos.

The initial project investment, according to finding, is projected at over $80 million.

The investment pool covers indigenous talent, local capital injection and foreign partnerships across the United States, the Scandinavians and East African hubs.

The new digital media business, which has already received the attention of the Federal Government, is expected to provide a unique convergence of services in e-broadcasting, virtual business support services, media, marketing and business intelligence. The business is expected to be launched anytime from now.

In recent years, the African market has experienced a shakeout in the OTT market with Kenya producing a $2.2 billion in Video on Demand VOD revenues in 2017. With the advent of COVID-19 this figure is expected to grow above $3.3 billion by 2021 at a CAGR of 9.10%. Whereas Nigeria recorded Subscription Video on Demand (SVOD) revenues of $671 million within the same period and it is expected to rise to $729 million by 2021.

Video advertising has also demonstrated huge potential

in both these markets, showing a huge sign of growth from $72 million to $151 million in Kenya and $292 million to $417 million in Nigeria between 2017 and 2021, according to statistics. In all, African SVOD revenue is projected to reach $1,055 million by 2025.

The multi-platform solution according to sources is expected to further deflect the excitement currently enjoyed

by African youths from Netflix; or work-collaborative benefits of the Zoom platform, Google Meet and other collaborative platforms. However, In addition to its fun enabling solutions, their business model is also said to offer a robust, cross-media platform covering Subscription Video On Demand (SVOD), Transactional Video On Demand (TVOD), Advertising Video On Demand (AVOD), and Video on Demand VOD and other forms of linear programming.

For instance the platform will enable corporate organizations seeking owned business platforms to buy a space on demand, to launch their TV channel, talk shows as well as help them monetize their content. It also provides a robust descriptive and predictive analytics engine which ensures that business subscribers are able to generate rich insight for retargeting and continuous marketing of their customers.

This feature, which is a first of its kind in sub-Saharan Africa, is expected to help businesses to be able to track their customers on the go and allocate resources to where it’s best appropriate.

Compare to Nigeria, Egypt still reaps 60 new artisans emerge millionaires Akeredolu receives Outline Business reward of 2016 reforms Case on Ondo deep seaport in Dangote Cement Promo …as inflation slows to 4.2% in July state, Nigeria and indeed

GBEMI FAMINU

S

ixty people have so far emerged millionaires nationwide in the ongoing Dangote Cement Bag of Goodies Promo Season 2, with the management of the foremost cement company saying no palliative could be better than the prize money won by the customers in this era of coronavirus pandemic.

The company’s director of marketing, Funmi Sanni, explained that the promo was deliberately designed to cushion the negative effects and impact of Covid-19 on businesses and families and that more winners are expected to emerge in the coming weeks.

She stated that of the 60 winners, 35 of them have been presented with their symbolic cheques during which their accounts were credited with a million naira each at the presentation ceremonies held in several cities across the nation, while the remaining ones are to receive alerts this week. The

www.businessday.ng

O

ndo State governor, O l u w a r o t i m i A keredolu has received the Outline Business Case (OBC) for establishing a seaport in Ondo State, which is one of the critical requirements preceding port declaration and showcases the project as a multipurpose deep seaport.

At the occasion in Akure, Akeredolu expressed satisfaction with the level of cooperation by his administration at establishing Port Ondo, saying that the enthusiasm being displayed by the consulting firm on the viability of the project was a pointer to its eventual success.

The governor said the resources the state was blessed with, within its riverine communities coupled with the fact that the state has the longest coastline in Nigeria, would make the proposed port the hub for the West Africa sub-region.

“This port is important to me, to the people of the

West Africa. We are going to pursue this dream with vigour,” he said.

Pointing to lack of continuity and abandonment of projects by successive administrations as the greatest problem retarding the development of most states in Nigeria, Akeredolu said if the vision of the Olusegun Agagu administration on establishing a seaport for Ondo State had been kept alive by the immediate past administration, Ondo State would by now become a critical player in the maritime sector.

Ekong Etim, head of the consulting firm, OIM-FBS Consortium, said the OBC was essentially a confirmation of the governor’s vision that the port business is worth venturing into through public-private ownership structure it is designed for.

“We are happy that our report confirms that the governor’s vision is viable. Its viability has been carefully assessed technically, legally, financially, and economically,” the consultant said.

https://www.facebook.com/businessdayng

MICHAEL ANI & FAVOUR OLAREWAJU

A

nnual inflation in Egypt slowed to 4.2 per cent in July, the lowest since November as the country continues to enjoy a raft of economic reforms it took on in 2016.

From floating the Egyptian pounds to reducing the ballooning budget deficit and phasing out unsustainable subsidies, Cairo kick-started reform programmes, as part of the conditions in accessing a $12 billion International Monetary Fund (IMF) loan after its economy suffered huge external imbalances owing to years of political tension.

But it was not too long before these bold reforms paid off. Improvements have been seen in several macroeconomic indicators including inflation, GDP growth and exchange rate that have restored competitiveness, place the budget deficit and public debt on a declining path, boost growth and create jobs while protecting vulnerable groups. @Businessdayng

The rate at which goods and services are sold eased to 4.2 per cent from a year earlier in July, compared with 5.6 per cent in June, according to data published on Monday by the state-run statistics agency, CAPMAS. Real GDP growth for the Northern African nation has also averaged around 5 per cent in the last five years, while its ballooning budget deficit which at the time was around 12 per cent of its GDP, has improved greatly.

But some 3,048 Kilometres away is Nigeria, which for a larger part, has been battling with a twin evil of spiralling inflation and a real GDP growth crawling behind its population, largely because it has failed to take on bold reforms that would move the needle for its over $400 billion economy Headline inflation accelerated at its fastest pace in more than two years to 12.56 per cent in June from 12.4 in May, driven by a surge in food prices.

Monday 17 August 2020

BUSINESS DAY

33

news

Consumers less optimistic on Nigeria’s economic recovery - McKinsey BUNMI BAILEY

C

onsumers in Africa’s biggest economy are becoming less optimistic about the country’s recovery prospects than they were in March, despite relaxations in lockdowns and gradual reopening of the economy.

A recent survey by McKinsey, a global consulting company titled “Nigerian consumer sentiment during the coronavirus crisis” showed that confidence rate dipped 800 basis points as the percentage of respondents hopeful about an immediate rebound from Covid-19 induced economic crisis fell to 40 percent in June from 48 percent in March.

“A higher proportion of consumers witnessed a decrease in income, savings, and spending levels. They intend to be mindful of spending in the coming weeks and are on the lookout for savings, while increasing spending on essentials, entertainment, and fuel,” the survey stated.

The survey data collected from June 16–18, 2020, checks back for regular updates on consumer sentiments, behaviours, income, spending, and expectations.

“The decreasing optimism

among consumers is somewhat expected. At the peak of the pandemic, the expectation was that normality would be restored almost immediately and jobs will be recovered, and salary cuts will be reversed.

However, the hope for a V-shape recovery is gradually being dashed,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, said.

He further noted that the reasons for the less optimism from consumers are not farfetched as they are reluctant to spend as usual due to the severe uncertainty in the economy. Businesses in turn are careful in hiring, wage increases and capital spending due to the slow recovery in economic activities and the economy was already slowing before the pandemic hit due to long term bottlenecks.

“The existence of these bottlenecks or structural concerns makes it much more difficult for the Nigerian economy to stage a big rebound,” He said.

According to a maiden report of Covid-19 pandemic impact monitoring survey by the National Bureau of Statistics (NBS), the effect of the virus on employment and income of Nigerians have been widespread.

Prepare for heavy rain, flood in September, Lagos alerts residents JOSHUA BASSEY

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agos State government on Sunday alerted the public to an impending heavy rainfall in September and October, warning the residents to be wary of possible flooding in some parts of the state.

Tunji Bello, the state commissioner for environment and water re s o u rc e s, w h o s t a t e d this at a session with journalists, relied on the earlier fore cast by the Nigeria Meteorological Service (NIMET) that Lagos would experience 240-270 days of rainfall this year.

The expe cte d heavy rainfall, according to Bello, would be aggravated by the release of 18 million cubic litres of water in September and 23 million cubic liters in October from the Ogun-Osun River with Lagos bearing the brunt.

“We have already gone through June, July and

now in August, but more rainfall is expected in September. According to the data provided by the Nigerian Hydrological Services (NHS), the month of June is usually the period of effective rainfall and the beginning of a new hydrological year, the River Niger Basin which covers nine countries such as Benin, Burkina Fasso, Cameroon, Chad, CoteD’ Voire, Guiness, Mali, Niger and Nigeria.

“Nigeria is downstream of all the Basin. The months of July, August, September and October are also known as JOSA months, signifying heavy rainfall, flooding and flood disasters in most parts of the country.

“The floods are often aggravated by the trains boundary inflow of River Niger and Benue from outside the country before they empty into the Atlantic Ocean in Nigeria,” Bello said.

He noted that states like Ogun, Kwara, Rivers and Lagos experienced

heavy rainfall which led to flooding, adding that while the above states suffered from urban and river flooding, Lagos was at the receiving end due to its peculiarities of its location.

The commissioner sa i d that stati sti cs re leased by authorities of Oyan Dam indicated that residents of Kosofe, Ajeg u n l e, O w o d e O n i r i n , Isheri North, Agboyi Ketu, Giliti all in Lagos, should be at alert whenever it rains and water released from the dam.

He n o t e d , h ow e v e r, that the state government would intensify the dredging of canals and channels and warned residents against indiscr iminate dumping of refuse on waterways.

Bello also sympathised with residents who lost their loved ones and property in the heavy rainfalls of the past months.

He disclosed that the government has provided additional pumping stations in some low lying

Wike signs N15.8bn flyover contract Ignatius Chukwu

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overnor Nyesom Wike of Rivers State has brushed off criticisms and went ahead to award a

fifth flyover contract in Port Harcourt, the state capital.

The governor had said last year in the heat of criticisms of developing only the state capital and Ikwerre area of the state that if he found

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more funds, he would build more flyovers.

The funds came when the Federal Government approved the refund of N78.9 billion being cost of federal roads constructed by the Rivers government, and Wike moved to award the fourth flyover with two link roads for N18 billion. Now, he has awarded the fifth at almost N16 billion.

The governor while signing the contract reiterated commitment to providing quality infrastructure that would enhance the development of the state. He said that he would not allow ‘political talks’ to deter him.

Many argue that the roads to other parts of the state especially the one to Okehi in Etche local council road that leads to Okpala in Imo State have been ignored. Others want youth empowerment and entrepreneurship to be given attention.

Instead, Wike awarded a contract to construct the GRA junction flyover in Port Harcourt. According to him, the provisions of critical infrastructure would not be politicised because Rivers people deserve the best.

“Today, we have signed the papers for the award of N15.8 billion contract for the GRA flyover and also the dualisation of the Ezimgbu link road up to Stadium road, and from Genesis Eatery axis of Tombia road up to Ikwerre road. https://www.facebook.com/businessdayng

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areas with risks of high intensity rains in readiness for the heavy rainfall predicted in September.

“The government is presently working on over 222 secondary channels out of which over 80 per cent are in various stages of completion. Also 46 primary channels are receiving attention presently.”

Bello assured the residents of areas like Aguda, Shomolu, Surulere, Oworonskoki and Idi Oro complaining of not feeling the presence of government in terms of clearing of canals that their areas would be reached.

“It is important to note that for coastal city like Lagos, once it rains consistently for a minimum of eight hours, we are bound to have flash flood caused by increasing inability of high rise of the Lagoon which brought about a rise of the ocean water,” he said, but added that the drainages have been dredged to allow for better of storm waters.

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Monday 17 August 2020

news

Over 19,943 farmers benefit as NIRSAL deploys agro model to support N’East economy Onyinye Nwachukwu, Abuja

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ome 19,943 farmers in Nigeria’s Northeast, cultivating rice, maize and soybean on 29,919 hectares of farmland in Borno, Adamawa, Taraba and Gombe States have benefitted from various incentives and inputs from the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) to aid their 2020 wet season farming.

Through the Central Bank of Nigeria’s (CBN) Anchor Borrower programme, under which NIRSAL is a participating financial institution, the farmers got access to 748 metric tons of improved seed varieties, 8,974 metric tons of fertiliser and 239,352 litres of crop protection chemicals, in addition to mechanisation services.

NIRSAL is leveraging its Agro Geo-Cooperative (AGC) model in this project which supports the Federal Government’s efforts at restoring socio-economic stability in the insurgency-torn region.

At the weekend, NIRSAL officially launched the AGC model and the CBN’s ABP 2020 wet season in Biu Borno State where 2,987 maize farmers are being supported with essential supplies, structuring, trainings and supervision during the 2020 wet season farming operations.

The farmers were structured into a group named the Maize Dealers and Marketers Association of Nigeria (MDMAN) Farmers AGC and linked with financing under the CBN’s Anchor Borrowers’ Programme (ABP).

After a tedious process of mapping and delineating individual farmer plots, the grouped farmers were then supplied with 59.74 metric tons of certified maize seeds and 896 metric tons of fertiliser. The farmers were also supplied with 23,896 litres of crop protection products with

one knapsack sprayer per hectare for their application.

NIRSAL’s AGCs present viable, safe and controlled investment environments for investor funds, whilst equipping smallholder farmers with incentives to produce and sell more through comprehensive farm mechanisation and the crowding of other value givers and takers in one project.

“In the Northeast region alone, a total of 19,943 farmers belonging to 70 AGCs, cultivating rice, maize and soybean on 29,919 hectares of farmland spanning Borno, Adamawa, Taraba and Gombe states have got access to 748 metric tons of improved seed varieties, 8,974 metric tons of fertiliser and 239,352 litres of crop protection chemicals, in addition to mechanisation services,” NIRSAL noted in a statement on Sunday.

Till date, over 104,000 AGCs have signed up for the initiative, which is a system of primary production that invites farm neighbours into contiguous 250-hectare partnerships for the purposes of producing at scale and gaining easier access to finance, training, inputs, markets among other incentives.

At the launch in Biu, Borno State, Aliyu Abdulhameed, NIRSAL managing director/ CEO, said the project would contribute to recovery efforts in response to the double socioeconomic impact of Covid-19 and insecurity in the region.

“We could have gone to any one of 29 states across the country where we are supporting farmers to have this event; however, we chose Borno State to help increase the confidence level of citizens as they attempt to resettle themselves into their communities and leverage on agriculture to improve their livelihoods,” Abdulhameed noted, justifying the choice of Borno State for the launch.

Pregnant women barred as churches reopen in Ogun

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regnant women were barred on Sunday as churches in Abeokuta, the Ogun State capital, reopened, with most complying with the protocols to check the spread of coronavirus in the state.

In some of the churches visited, automated handwashing units, hand sanitisers and infrared thermometers were deployed.

Many churches also displayed the bold inscription, “No Mask No Entry,” at entrances, with officials taking the temperature of worshipers wearing facemasks.

Social distancing was observed by worshipers with stickers to show distance spacing.

At Living Faith Church (Winners Chapel) on Querry road in Abeokuta, three services were held with an impressive turn out of Christian faithful.

Security agents as well as members of the state task force on Covid-19 were present in many churches to monitor compliance. Pregnant women and children were not allowed into

churches.

At St. Leo Catholic Church, Otun Abeokuta Diocese, a cleric, Lawrence Ogundipe, told reporters that only parishioners with face masks were allowed into the church to observe the holy mass.

Ogundipe added that parishioners all had their temperature checked and washed their hands before being granted access to the church.

He said messages had earlier been sent to parishioners through church platforms to inform them on the Covid-19 protocols and how the services would be conducted.

The cleric advised parishioners to adhere to government’s precautionary measures against Covid-19.

According to him, all government guidelines against the spread of the virus were fully observed during services.

At the Redeemed Christian Church of God, Jesus Centre Family, Omida area of Abeokuta, there was, however, a low turnout of Christian faithful.

Edorodion Oye Erimona (3rd l), commissioner for physical planning and urban development, Edo State; Isoken Omo (5th l), executive chairman, Edo Development and Property Agency (EDPA); Ifueko Alufohai (6th l), focal person, Edo State Sustainable Development Goals (SDGs) Office; Anthony Osas Okungbowa (7th r), head of service, Edo State, representing Edo State governor; Kelvin Uwaibi (4th l), head of Edo State Investment Promotion Office (ESIPO), with other participants at an event held to mark the International Youth Day (IYD) themed “Youth Engagement for Global Action,” in Benin City, the Edo State capital.

Dollar crunch puts CBN’s FX unification in peril — analysts Gbemi Faminu

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nalysts say scarcity of dollars and oil market lows make the Central Bank of Nigeria’s (CBN) efforts to unify the foreign exchange market difficult.

The CBN is planning to unify the country’s exchange rate across board in line with loan conditionalities given by the International Monetary Fund (IMF) and the World Bank.

While this may seem appealing to the business community and investors, analysts and manufacturers raise concerns over the implementation and sustainability of the plan due to the scarcity of dollars caused by the Covid-19 pandemic.

Covid-19 has pushed down oil price in the global market, prompting acute dollar shortage in Africa’s biggest economy.

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Anthony Ajulo, executive director, Colton Group of companies, a manufacturing outfit, said in a phone conversation with BusinessDay that availability of foreign exchange had been a big problem for manufacturers over the years, which was yet to be solved. He explained that oil price, being the country’s major source of foreign exchange earnings, had crashed significantly aggravating the problem, stating that his company applied for dollars from the CBN but was unable to get it until after three months “The policy is ill-timed, as it is coming at a time when the federal government and even the CBN are short of dollars. We understand that this was caused by the impact of the pandemic on the global economy,” he further said.

Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), also said in an interview that it was imperative for the ex-

change rate to reflect the market fundamentals in order to ensure sustainability and promote efficiency in allocation mechanism. This, he said, was critical for investor confidence.

Aminu Gwadabe, president, Association of Bureau De Change Operators of Nigeria (ABCON), said at the ABCON sensitisation meeting in January 2020 that though there had been efforts to achieve sustained exchange rate stability, it was necessary to checkmate volatility in the foreign exchange market by unifying the FX market.

Manufacturers and other critical players are seeking dollars to import inputs and machinery. But it is not readily available due to oil price lows, questioning Nigeria’s over-reliance on minerals for FX. Crude oil and minerals are responsible for 85 to 95 percent of Nigeria’s FX. Akinloye Ayorinde, equity research analyst at CSL Stock-

brokers Limited, said that unification of exchange rate was good for business in the long run but its sustainability was not assured.

“First of all, the CBN will have to implement a significant devaluation of the naira to have unification. Looking at various rates, if the CBN makes an average standard of N400 - N450, it will not be pleasant for manufacturers that engage in imports of raw materials and machinery as it will lead to significant increase in cost for them.

However, it will be better in the long run,” Akinloye said.

Speaking on the sustainability of the unified exchange rate, Akinloye said, “It may not be sustainable because looking at the history of the naira and its devaluation, there is no vote of confidence that the CBN will be able to maintain unified exchange rate especially when it is driven by oil prices which is volatile.”

ganisation to stay relevant, they must be ready to adapt quickly to the changes presented by the Covid-19 pandemic. A major landmark of our current environment is the high dependency on technology to transact business, carry out social interactions and conduct religious services,” Alakija said.

The programme anchored

by Nkem Udechukwu, senior coordinator of ROSF had in attendance youths from across the country.

While speaking, Adeoti Temitayo, business development, procurement and human resources expert described competency as a never-ending cycle that must be updated to remain relevant in the 21st century.

“By the year 2022, at least 54 percent of the global workforce would need to update or entirely change their skills to remain relevant in their careers, businesses and professions due to technological advancement and digitalisation. Therefore, the future does not belong to the well-meaning, it belongs to those who are very good at what they do,” Adeoti said.

Joy Owo, lead consultant, Epic Joy Consulting spoke on the human ability to adapt to change despite the magnitude of any challenge faced by mankind.

“Life is being reshaped by major trends and events such as globalisation, terrorism, climate change and in recent times Covid-19. Consequently, life

will not give you what you deserve but what you demand.

So, understanding your area of specialisation and building skills that will enable you to grow as well as succeed in your chosen profession is essential,” Owo said Enoch Oyeduntan, head of partners relations, Christian Broadcasting Network Africa stressed on the need for youth to identify their strengths, weakness, opportunities and threats to enable them employ available technology to develop as well as leverage on their competencies and stand out. He advised youth on the importance of developing customer relationship skills as this is essential for succeeding in any career, business or profession.

Rose of Sharon Foundation encourages youths to explore opportunities amid COVID-19 BUNMI BAILEY

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he Rose of Sharon Foundation (ROSF) at the weekend gathered business and human resource development experts to coach youths on success path amid the Covid-19 challenges.

The youth empowerment programme in its sixth edition was held online with the theme ‘building personal competence to harness existing opportunities in the time of change’.

Speaking at the event, Folorunso Alakija, founder of the foundation, emphasised the importance of technology as the society adjusts to the new normal triggered by the coronavirus.

“For any individual or or-

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Monday 17 August 2020

BUSINESS DAY

Live @ The Exchanges

Nigeria’s stocks see N82bn gain on increased buy pressure Iheanyi Nwachukwu

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n the trading week ended Friday August 14, Nigeria’s stock market recorded value increase in excess of N82billion amid increased activities on the buy-side of Bourse.

The market rallied on the back of gains in Consumer Goods (+2.25 percent) stocks as well as that of Oil & Gas (+5.92 percent), and Insurance (+1. 12 percent) as more investors took position in fundamentally at-

tractive counters as against pockets of profit taking activities in Banking sector (-0.03 percent) and Industrial Goods (-2.71 percent).

Despite the record positive sentiment in the market, analysts foresee limited upward price movement next week because investors will route to take profit on stocks that have seen significant share price appreciation.

Week-on-week (WoW), the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation appreciated by +0.63 percent to 25,199.84

points and N13.145trillion as against week-open low of 25,041.89 points and N13.063 trillion respectively.

“As COVID-19 restrictions are further eased, expectations for corporate performance appear to brighten up from the pessimism expected earlier in the year. Although pre existing risks remain, investors have reacted positively to results that were resilient in half-year (H1) 2020 and show promise of dividend payment”, according to Lagos-based analysts at Meristem.

H1’20: LSEG demonstrates strong operational resilience Iheanyi Nwachukwu

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he interim halfyear (H1) results of London Stock Exchange Group (LSEG) showed strong operational resilience across the Group’s trading, clearing and data platforms during unprecedented period.

The Group’s irganic growth combined with new product development and investment continued throughout the period.

Like in Nigeria and other major markets, the majority of LSEG employees continue to work remotely due to Covid-19 pandemic.

In the six months to June 30, it’s total revenue went up 4percent to £1,058 million (H1 2019: £1,018 million); total income up 8percent to £1,235 million (H1 2019: £1,140 million).

FTSE Russell revenue was up 5percent to £330

million (H1 2019: £315 million) with growth in subscription revenues and flat asset-based revenues reflecting lower levels of Exchange Traded Funds (ETF) Assets Under Management (AUM).

Post Trade revenue was up 9percent to £372 million (H1 2019: £342 million).

Capital Markets revenue went down 4percent on a reported basis to £217 million, and up 12percent on a like-for-like basis excluding the one-off benefit of an IFRS 15 adjustment in prior year Adjusted operating expenses, before depreciation and amortisation, were up 8percent (up 5percent on a constant currency basis) and up 1percent compared with H2 2019 Adjusted operating profit went up by 8 percent to £575 million (H1 2019: £533 million); operating profit was down by 2 percent at

£391 million (H1 2019: £399 million); while profit before tax stood at £362 million (H1 2019: £363 million); and profit after tax at £261 million (H1 2019: £265 million) “The Group has delivered a good financial performance and demonstrated strong operational resilience. During this unprecedented period, we have focused on ensuring the welfare of our employees and on continuity of services to our customers, maintaining access to our markets and clearing venues, with record volumes executed across our services”, said David Schwimmer, CEO, LSEG. “We are making good progress on the proposed transaction with Refinitiv, securing a number of regulatory approvals and engaging constructively with authorities on remaining approvals.

FMDQ lists LAPO MFB’s N6.2bn bonds HOPE MOSES-ASHIKE

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MDQ Securities Exchange successfully listed on its platform, the LAPO Microfinance Bank Limited (MfB) SPV PLC N6.2 billion 13percent Fixed Rate Series II Senior Unsecured Bonds.

This according to the company remains a commendable development characterised by the towering levels of confidence demonstrated by both issuers and investors as they continue to tap the market to meet their short- and long-term business and investment objectives, respectively.

A premium microfinance institution in Nige-

ria, LAPO returned to the Capital Market for the second time in 2020 for a N6.2 Billion debt capital raising through bonds issuance. The bonds were oversubscribed

by N.2bn, an unprecedented feat in the subsector, in spite of market uncertainties. This shows a demonstration of confidence by investors given the strong corporate governance and fundamentals of the Microfinance Bank.

Cynthia Ikponmwosa, managing director, LAPO Microfinance Bank reiterated that, “LAPO Microfinance Bank Limited remains committed to its goal of economic empowerment of low-income households through access to finance.

This additional capital will be deployed to enhance our capacity to meet the needs

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on August 21.

Expected participants at the CMC meeting include Chief Executive Officers (CEOs) of all registered capital market firms (i.e. Broker/Dealers, Investment Advisers, Custodians, Fund/Portfolio Managers, Receiving Banks, Issuing Houses, Rating Agencies, Registrars, Reporting Accountants, Trustees, and Capital Market Consultants, etc.); Chief Executive Officers of: the Nigerian Stock Exchange (NSE); National Association of Securities Dealers (NASD); FMDQ Group Plc; Africa Exchange Holdings (AFEX); Nigeria Commodity Exwww.businessday.ng

of micro and small enterprises, especially actors in the rural economy”.

The success of this journey is largely due to the support of African Local Currency Bond (ALCB) Fund (two-time anchor investor) and other parties to the Issue; FBN Quest Merchant Bank and Coronation Merchant Bank who served as Lead and Joint Issuing House/Book Runner respectively. LAPO Microfinance Bank Limited is already standing by owners of micro and small enterprises who are determined to overcome the set-back of the COVID-19 pandemic. In the months of January to July the microfinance bank delivered N59.4 billion to micro and small enterprises.

I-invest empowers equities investors to execute trades, control their portfolios

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ew and experienced retail investors can now own a piece of the companies listed on The Nigerian Stock Exchange (NSE) using the i-invest app on their smartphones from the comfort of their offices or homes.

The secure investment app, which revolutionized fixed-income trading, now empowers investors in the equities market to execute trades during trading hours; it gives them full control of their portfolios.

Oluseye Olusoga, Managing Director, Parthian Partners, who dis-

Nigeria’s SEC to hold first CMC meeting in 2020 igeria’s Securities and Exchange Commission (SEC) has announced that the first Capital Market Committee (CMC) meeting in 2020 will hold from Thursday August 20 to Friday August 21, 2020.

A CMC Meeting planned for April 2020 could not hold due to the prevailing lockdown imposed by Federal Government during the period.

Due to established protocols on COVID-19, the meeting will hold virtually through Zoom with key stakeholders in the capital market meeting on August 20, while a press briefing, on the outcome of the CMC meeting, will hold

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change (NCX); Central Securities Clearing System (CSCS); as well as representatives of relevant financial sector regulatory agencies, among others According to the SEC, “Attendance to both events is strictly by invitation.

Invited participants will be sent unique links with which to join the meeting.”

The CMC was primarily established to serve as a medium for exchange of ideas among market stakeholders as well as an avenue for providing feedback to the SEC on how to continuously address challenges, improve market operations and enhance the regulatory framework. https://www.facebook.com/businessdayng

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closed this in Lagos, said the convenient access to real-time equities trading on the NSE offered by i-invest is in line with Parthian Partners and Sterling Bank’s innovative approach to offering stress-free services to millions of Nigerians at home and in the Diaspora.

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Monday 17 August 2020

BUSINESS DAY

SPECIAL SERIES ON UNEMPLOYMENT DATA

High unemployment tips Nigeria into 6th most miserable country globally DIPO OLADEHINDE & ENDURANCE OKAFOR

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igeria’s latest unemployment rate of 27 percent means Africa’s most populous nation now ranks among the top six most miserable countries in the world.

Nigeria, with a misery index of 39.66 percent, is not only reeling from rising unemployment but also a stubbornly high inflation rate which accelerated to a 26-month high of 12.56 percent in June 2020, an indication that there is a mismatch in between the cost of living and the earning capacity of people in Africa’s most populous country.

The above development means Nigeria has the sixth highest misery index in the world behind Turkey of 50.6percent, Brazil of 52.3 percent, Iran of 75percent, Argentina of 136.1 percent and Venezuela of 7,459 percent.

It also means Nigeria has the highest misery index of any other African country.

The misery index is an indicator that is used to determine how economically well off the citizens of a country are. It is the sum of the unemployment and underemployment rate and the inflation rate of the particular period.

These factors are important because they pose economic and social costs to the average income earner.

“Nigerians are actually going very difficult economic times; No wonder we have seen a lot of social issues

in country like suicides, increased level of crimes and other negative social vices,” Johnson Chukwu, CEO at Cowry Asset Management Limited said.

He further explained that the figure should be a wakeup call for the government. “They should realize that for you to have improved level of social stability people must be engaged in society.”

“More than ever policymakers should intensify their efforts in implementing policies that will strengthen the SMEs due to their contributions to employment,” Ayo-

deji Ebo, Managing Director, Afrinvest Securities Limited said.

Other economists expect consumers to face an even deeper dwindling in purchasing power, as their incomes, can only buy less of their usual consumption basket which implies the poor will become poorer in real terms, while the middle class will thin out.

“Climbing misery index implies declining economic activity and reduced consumption,” Charles Akinbobola, an analyst at Sofidam Capital said.

This is because unemployed

people are underutilized and rising prices will discourage rational consumers from spending which can cause or complicate an economic slowdown or contraction.

When in 2015 Muhammadu Buhari was soliciting for votes from Nigerians, he said “Jobs, jobs and jobs” were going to be his focus. But five years down the line, the unemployment rate has continued to trend upward from less than 7 percent five years ago.

Instead, Nigeria overtook India as the country with the highest number of people living in extreme

poverty with an estimated 87 million Nigerians living on less than $1.90 a day, coupled with her failure to enact some growth-stimulating reforms across key sectors of the economy.

Exacerbated by the impact of COVID-19, Fitch Solutions Country Risk & Industry Research, a subsidiary of Fitch rating expects Nigeria’s per capita income to slide further as it expects the economy to contract by as much as 6 percent in 2020.

“This will be mostly due to a sharp fall in private consumption spending due to lockdown rules, tighter fiscal policy, and declining oil income,” Fitch Solutions said, adding that activity will strengthen in 2021, “but growth will probably remain slow.”

In real terms, Fitch Solutions says output will not return to the level seen in 2019 until 2023. “We expect that headline growth will remain very weak over the coming years, with the country falling behind regional peers.”

Since 2017 when oil-dependent Nigeria emerged from its economic recession, not only has the country’s economic growth been sluggish but only a few sectors triggered the expansion, further undermining the country’s capacity to create enough jobs to meet the growing number of labour market entrants, and thus alleviate poverty “To achieve a reasonable level of unemployment, the need to industrialize - adding value to our natural resources. Beyond this, with less number of labour force amidst rising population is a call for concern,” Ebo said.

In 6 Numbers: Here’s what we learnt from Nigeria’s Q2 unemployment report 21 million ccording to the NBS report for Q2, the unemployment rate is reported at 27.1%.

This means that presently, over 21 million people in Nigeria, willing and able to work, after searching for jobs, remain jobless. This marks the highest unemployment rate in the country in 6 years since the NBS started collating unemployment data. Although this is not entirely surprising given the current economic state due to COVID-19 conditions, it is not any less alarming from the already high reported unemployment rate of 23.1% in 2018 Q3.

The disparity in the Nigerian given unemployment rate of 27.1% in comparison with the unemployment rate of 11.7% lies in the difference in definition; where the definition of unemployment in Nigeria typically applies to situations comprising of lower than 20hours of work done per week, differs from the international definition.

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34.9% It is glaring from the report that the youth are the largest sufferers of the worrisome employment situation

in the country with an unemployment rate of 40.8% in the 15-24 years age bracket and a 30.7% rate in the 25-34 years age bracket, resulting in an aggregate of over 13million people aged between 15 and 34 years unemployed. This marks a youth unemployment rate of 34.9% rising significantly from the 29.7% reported in 2018 Q3.

This is, without a doubt, vital information given the highest proportion of the labour force lies in the

25-34years age bracket and as such have a large bearing on the unemployment rate.

compared against the 22.9% mark for men with about 9 million men unemployed.

31.6% The worsening economic state appears to be taking a harder toll on women. There are 3 million more unemployed women than men with a female unemployment rate of 31.6%.

Women make up over 12 million of the total unemployed of about 21 million people with a notable gap

23.6% The relationship between education levels and unemployment remains a grey area as only about 23.6% of those without formal education are unemployed. Those with vocational/ commercial education recorded the lowest unemployment rate of 17.9% whilst the number of unemployed

Source: NBS Q2 2020 Unemployment report www.businessday.ng

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graduates stands at 2.96million.

28% Rural dwellers unemployment rate rose from 23.9% in Q3 2018 to 28% now in Q2 2020 which is not a far cry from a similar unemployment situation in urban areas which recorded a 25.4% rate for Q2 2020; a 4.2% increase from the 21.2% reported in Q3 2018.

48.7% The Imo state report of a 48.7% unemployment rate, is a far cry from its South-Eastern counterpart, Anambra, which reported the lowest unemployment rate of 13.1%.

However, conclusions from comparing the state rates must be drawn with caution, given the volatility, as the numbers are prone to fluctuations, mainly due to the ease of movement between state borders.

In addition to this; considering the concentration of both extremes of unemployment rate reports situated in one region of the country; the relationship between development and poverty levels with relation to unemployment becomes slightly more difficult to ascertain.

Monday 17 August 2020

BUSINESS DAY

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SPECIAL SERIES ON UNEMPLOYMENT DATA

South-West Nigeria stands out as region with lowest unemployment rate in Nigeria Oluwafadekemi Areo

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igerian South-Western States emerged as the region with the lowest unemployment and poverty

rates.

South-West Nigeria which is made up of Ekiti, Lagos, Ogun, Ondo, Osun and Oyo recorded an unemployment rate of 17.3 percent and a poverty rate of 13.2 percent, according to the just released NBS Abridged Labour Force Survey Under Covid-19.

Philip Alege a Professor of macroeconomics at Covenant University encapsulated the reasons for the low unemployment rate in South-West as: high literacy rate in the region and the concentration of industries.

The Nigerian Ports Authority (NPA) is located in the South-West

Source: NBS Abridged Labour Force Survey Under Covid-19.

and it is a large employer of labour, says Alege.

On the other hand, during the period under review, the SouthSouth region recorded the highest unemployment rate of about 34.6 percent, although the region ranked the second lowest in terms of poverty, about 20.3 percent.

According to Johnson Chukwu,

MD/CEO of Cowry Asset Management Ltd, the South-South region has been faced with so much insecurities especially kidnapping, which has hindered the level of economic activities and is a major reason why the region has the highest unemployment rate.

Johnson also mentioned that the South-West is an active industrial

Youths record highest unemployment rate Mercy Ayodele

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igeria’s workforce, 25-34 recorded the highest unemployment rate among the age group classification by NBS with 7 million persons unemployed, higher than the 6 million people recorded in Q3 of 2018.

The number of persons in the labour force, people within ages 15-64, who are able and willing to work was estimated to be about 80

million of which those within the age bracket of 25-34 were highest, 29.1% of the labour force.

According to data from the NBS, the total labour force who are youths, between the age of 15-34 declined from 44.2 million in Q3 2018 to 40 million in 2020.

As at Q3 2018, the calculated youth unemployment rate was 13.9 million, representing an increase from the 13.1 million that was recorded in 2020.

The report shows that the high-

Source: NBS

est employed persons fall within the age group of 25-34 and 35-44 with 16.1 million and 16 million people employed in the age groups respectively.

The age group between 45-54 records the next highest rate of unemployment with about 10.8 million persons employed. The age group between 15-24 and 55-64 has about 9.8 persons and 5.6 persons employed respectively.

The labour force between the age group of 15-24 and 25-34 records the highest number of unemployed persons of about 6.8 million and 7.1 million respectively.

The least unemployment was recorded by the age groups within 45-54 and 55-64 with 4 million and 2 million unemployed respectively.

The youth underemployment rose from 25.7 percent in the Q3 of 2018 to 28.2 percent in Q2 2020 while underemployment within the age group of 25-34 also increased from 20.7 percent in Q3 2018 to 26.5 percent in Q2 2020.

base in Nigeria and Lagos and Oyo state have the highest number of Small and Medium Scale Enterprises (SMEs) which aids in providing employment for the youths in Nigeria.

The methodology used to capture those who are regarded as unemployed and underemployed made use of working hours and if we are to look at workers in the SouthWest of Nigeria, they work for the longest hours, says Olaolu Boboye of CSL Stockbrokers.

Boboye further explained that a significant proportion of the persons living in the south-south are business people who do not necessarily work for long hours but are still making their income.

“If the number of hours business people in the South-South work are trackable, it is possible that they are not necessarily unemployed so their poverty rate would not be high”.

According to the NBS report, “not everyone who is unemployed or underemployed is living in poverty and not every employed person is living outside poverty”.

Disaggregating the data on a state-by-region basis, evidence shows that in the South-East region, Imo state recorded an unemployment rate of 48.7 percent despite ranking the lowest in poverty levels (29 percent). Whereas, Anambra despite recording the lowest unemployment rate in the region, the state ranked highest in terms of poverty, about 80 percent.

Omobola Adu, research analyst at Growth & Development Asset Management explained that for one, being employed does not translate into escaping poverty. He added that based on the NBS report on living standards, 4 out of 10 individuals in Nigeria has real per capita expenditures below 137,430 Naira per year.

Women account for highest unemployed Nigerians Mercy Ayodele

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he recently released report on unemployment in Nigeria by the National Bureau of Statistics (NBS) shows women are the worst hit with 12.2 million unemployed females and 9.5 million unemployed men.

The number of persons in the labour force, people within ages 15 -64, who are able and willing to work was estimated to be 80 million of which males are about 41.6 million while females are 38.6 million.

Female unemployment has risen to 31.6 percent from 26.6 percent in the third quarter of 2018 while male unemployment also rose to 22.9 percent from 20.3 percent in the same period.

Similarly, the number of female underemployed was highest with 7.1 million while 5.2 million males were reported to be under employed.

Underemployed males in Nigeria are 26.3 percent in 2020 compared with 15.4 percent in 2018 while under employed females in Nigeria

have risen from 25.9 percent recorded in 2018 to 31 percent in 2020.

A total of about 21.1 million males were reported to be fully employed (working for 40 hours+), a decline from the 31.9 million recorded in 2018 while about 14.4 million females were said to be fully employed, which is also a decline from 19.4 million recorded in 2018.

A total of 10.9 males were recorded to have be employed part time (working from 20-39 hrs), an increase from 7.6 million males recorded in 2018 while a total of about 11.9 females were recorded to be employed for just 20-39 hrs, also an increase from the 10.5 percent recorded in 2018.

According to the data by NBS, about 4.3 million males are under employed working for 0 hours while under employed females working for 0 hours was reported to be 5 million.

As shown by the data, 5.2 males are under employed working for just 1-19 hrs while 7.2 million females work for the same number of hours.

Here are the educational degrees with highest unemployment rate Favour Olarewaju

T

he National Bureau of Statistics (NBS) Q2 2020 report revealed that unemployment rate in Nigeria has increased from 23.1% in Q3 2018 to 27.1% in Q2 2020, thereby implying a rise in unemployed persons by various categories including the education classification.

Of these educational groups, below primary education had the highest degree of unemployment at almost half of the entire unemployed

persons in Nigeria. This is closely followed by BA/BSc/Bed/HND and NCE/OND/Nursing holders with 41% and 31% unemployment rates respectively as at Q2 2020.

This does not really differ from statistics of Q3 2018 where NCE equivalent holders had the highest unemployment rankings as well as Q4 2016 which had post-secondary school holders as the greatest proportion of unemployed persons.

Interestingly, PhD holders are ranked 7th place out of 11 total education rankings (that is, 23.3% or 17,831 persons) in the proportion of www.businessday.ng

unemployed Nigerians as at Q2 2020.

This signifies worse placement than that of Q3 2018, which was the 9th and least category of unemployed persons (that is, 13.6% or almost 9,832 persons).

Meanwhile, Vocational/Commercial apprentices have the least unemployment level at 17.9% in 2020.

Surprisingly, those who do not fall into any of the educational categories have the highest volume of underemployed persons, amounting to 39% of the labour force.

However, those with equivalent of BSc degree constitute the least por-

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tion of underemployed individuals at 19.5% of the labour force in Q2 2020 while MSc holders had the least unemployment as at Q3 2018 and those with less than primary education were the least number of underemployed persons in both Q4 2016 and Q4 2015.

Again, not far-fetched is the fact that those who have never attended school take the lead among underemployed Nigerians in preceding periods of Q3 2018, Q4 2016 and Q4 2015.

Underemployed PhD holders rank 8th position out of 12 places @Businessdayng

(that is, 25.2% or 58,695 persons), which is lower than that of unemployed persons based on educational qualification in Q2 2020.

These unemployment statistics show that although those who have never attended school have the most chances of being underemployed, attaining higher levels of education is not a solid guarantee of better employment chances. This is seen as the number of highest qualified individuals that are unemployed (PhD holders) went up from ranking last place in Q3 2018 to 7th place of 11 positions in Q2 2020.

38

Monday 17 August 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Russia says it is ready to provide Belarus with military support Kremlin’s backing comes as opponents of Lukashenko take to the streets for eighth day of protests James Shotter in Warsaw

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ussia said it was prepared to provide security support to Alexander Lukashenko, as tens of thousands of opponents of the Belarusian strongman took to the streets for an eighth day, calling for him to step down.

The Kremlin said President Vladimir Putin had spoken to his Belarusian counterpart taking into account “pressure exerted on [Belarus] from the outside”, and had offered to provide assistance “if necessary” through a collective defence security pact of former Soviet states.

The Kremlin’s backing, a reaffirmation of commitments it has made under existing treaties, came as Mr Lukashenko delivered a defiant speech to a rally of his supporters in the Belarusian capital Minsk, in which he accused Nato of massing on the country’s western border, and insisted that he would not rerun last week’s presidential election.

“If someone wants to give away the country, even when I am dead, I will not allow it,” he said, according to the state-run news agency, Belta. “Remember: I have never betrayed you and I never will betray you.”

However, Mr Lukashenko’s rally was overshadowed by a huge opposition gathering around the Stela second world war monument in Minsk, where thousands

Tens of thousands of Belarusian opposition supporters gather in Minsk calling for Alexander Lukashenko to step down © AFP via Getty Images

of protesters rallied chanting “Leave! Leave!”, amid a cacophony of blaring car horns.

The eastern European nation has endured a tumultuous week since Mr Lukashenko claimed a landslide election victory, and then unleashed a savage crackdown on Belarusians who took to the streets to protest that the vote was rigged.

The clampdown, during which at least two people died, hundreds were injured and nearly 7,000 detained, amid a widespread internet blackout, initially seemed to quell the protests.

But as details began to emerge of how detainees had been beaten and tortured, protests gathered steam again on Thursday, and have mushroomed into the most serious challenge that the former collective-farm boss has faced since he took power in 1994.

“I don’t remember anything like this since 1994 or even 1991.

In 2010, there were protests, but they were just 12,000 or 15,000 people and they were just from the opposition. But today it is not just the opposition — it is the people, who simply want changes,” said Eugen from Minsk.

“And we hope, and do everything, that these changes happen.

I hope that Lukashenko will be strong enough to say ‘OK, new free and fair elections’ or he will simply go away — anywhere. But he is afraid because if he leaves, then he will be in court in The Hague.”

As well as the rally in Minsk, expected by organisers to be one of the biggest demonstrations in Belarus’s independent history, protests against Mr Lukashenko took place in cities across the country.

“Absolutely everyone come out!

The time has come!” opposition organisers urged on the Nexta Telegram channel, adding that their demands were the departure of Mr Lukashenko, the immediate release of political prisoners and those detained this week, and that those responsible for the violence be held to account.

Organisers have also urged participants to be peaceful and warned them to beware of provocations.

In recent days, there have been signs of cracks in Belarus establishment. Several high-profile presenters have resigned from state TV. On Saturday, the independent Nasha Niva website posted a video in which the Belarusian ambassador to Slovakia, Igor Leshchenya, expressed his “solidarity” with protesters.

Str ikes have als o spread through Belarus’s state-owned companies, which were traditionally the bedrock of Mr Lukashenko’s support.

Opposition candidate Svetlana Tikhanovskaya, who fled Belarus last week under pressure from the security services, is setting up a co-ordination council to work towards a transfer of power. Her allies are trying to persuade the EU to recognise her as president.

Amid the mounting pressure, Mr Lukashenko issued a desperate plea to the Kremlin for support on Saturday, warning that the protests that have swept Belarus this week threatened the stability of Russia as well.

Trump says postal voting will leave election in limbo President steps up campaign against ‘catastrophic’ mail-in ballots after post office warns of delays Katrina Manson in Washington

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onald Trump has claimed mass postal voting could make it impossible to know the results of November’s presidential election “for months or for years” as he stepped up his campaign against universal mail-in voting.

The president made his remarks the day after the US Postal Service warned nearly every state in the country it might not be able to process postal votes in time for November 3 presidential polls.

Mr Trump, who is facing defeat at the election according to the latest polls, warned votes could be lost, discarded, or subject to fraud — found “in piles” or “be gone” — adding there would be no way to know when to cut off the vote count.

“You are going to have a catastrophic situation with universal mail-in votes,” he told reporters at a press conference on Saturday, saying the US could not send out millions of votes. “It is going

© REUTERS

to make our country a laughing stock,” he said.

Louis DeJoy, America’s new postmaster general, has been criticised for dismantling mail sorting machines, cutting overtime and removing post boxes since the presidential appointee — a Trump donor — started the role in June. The post office says structural changes and budget cuts are needed to put it on an www.businessday.ng

operational footing as dwindling revenues tumble further during the coronavirus pandemic.

But critics argue Mr Trump is seeking to depress voter turnout in a bid to boost his share of the vote and to undermine the credibility of the election result should he lose.

Top Democrats accused Mr DeJoy in a letter on Friday of using funding shortfalls to “justify

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sweeping operational changes that experts warn could degrade delivery standards, slow the mail . . . and potentially impair the rights of eligible Americans to cast their votes through the mail in the upcoming November elections”.

A crowd of protesters demonstrated outside Mr DeJoy’s home in Washington earlier on Saturday, accusing him of gutting the service to hinder postal voting.

Some posted fake mail-in ballots through the grate on his front door.

Mr Trump defended Mr DeJoy, arguing he was trying to “streamline the process” and blaming Democrats for failing to agree the terms of a stimulus package which he claimed could fund the post office.

“He needs money to operate if you’re going to hit him with millions of ballots,” he said, adding Mr DeJoy wanted “to make the post office great again”.

“If they [Democrats] can’t get the money they need for universal mail-in voting, I don’t see how they can have it,” said Mr Trump, adding the main problem with @Businessdayng

mail-in voting was that “you’re never gonna know when the election’s over”.

Democrats in Congress have pushed to include $25bn in emergency funding for the postal service in stimulus legislation, warning that coronavirus will make postal voting more important at this election than ever.

“Everyone depends on the USPS,” Barack Obama, the former Democratic president, tweeted on Friday. “Seniors for their Social Security, veterans for their prescriptions, small businesses trying to keep their doors open. They can’t be collateral damage for an administration more concerned with suppressing the vote than suppressing a virus.”

Politico on Saturday reported that Democratic leaders were considering cutting short the August recess and bringing the House back into emergency session over the issue. One option would be to vote on a bill that would prevent the post office from implementing some of its structural changes.

Monday 17 August 2020

BUSINESS DAY

39

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Auto groups launch direct internet sales Manufacturers increasingly bypass dealer networks as Covid and electric cars change the way customers buy Joe Miller in Frankfurt, Peter Campbell in London

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arlos Tavares’ quest to change the way cars are sold began when he tried to buy a pingpong table for his Portuguese country home.

The chief executive of Peugeot owner PSA went into a store and asked to buy an exact replica of the table on display sitting outside.

“I went to the sales person and he made the online selection of that store — I realised it was the same process that I could have enjoyed at home,” he told the Financial Times.

PSA has now copied the model, rolling out direct online car sales to customers, aiming to deliver more than 100,000 cars straight to customers’ homes without them ever entering a traditional showroom.

The industry’s flirtation with internet retailing has been turbocharged by the Covid-19 pandemic, when would-be customers spent lockdown trawling car websites, as showrooms were forced to close.

As consumers begin spending again, albeit slowly, manufacturers are grasping at the chance to bypass their expensive dealership networks and forge direct relationships with buyers.

“Clearly the Covid time has created a much stronger link and em-

Traditional manufacturers expect to increasingly copy Tesla, where prices are set by the company with dealers sidelined © FT montage

phasis on direct and online sales capabilities,” Volkswagen’s brand sales chief Jürgen Stackmann told the Financial Times.

The world’s largest carmaker is using its foray into electric vehicles to drive a simultaneous online push, in a multipronged attack on industry pioneers Tesla.

VW’s flagship electric car, the ID. 3, is due to be delivered to customers from September, the

first of at least 75 battery-powered models coming down the line over the next decade.

Spurred on by the changes wrought by the coronavirus pandemic, VW is also using the ID. 3 to transform the sales model that has underpinned most of the car industry for decades, and putting an end to haggling in the process.

Instead of allowing dealers to set their own prices, in what is

known as the franchise model, VW will sell the ID. 3 at a standardised price in Germany, regardless of whether it is purchased from a physical branch or online.

The Wolfsburg-based company hopes to employ this “agency model”, in which Volkswagen sets the price centrally, for all the upcoming electric vehicles in its ID range, paying a commission to dealerships merely to deliver cars

to customers.

German rival Daimler is following suit. The Mercedes-Benz maker, which already employs the direct sales model in South Africa and Sweden, is rolling it out in Austria next year, and intends to continue to expand in other countries, including Australia.

“By 2025, 25 per cent of our passenger car sales will be made via online channels,” said Daimler sales boss Britta Seeger. The company, she added, was investing a “triple-digit million-euro amount” in streamlining the shopping experience, and building so-called digital dealerships.

Previously, Ms Seeger explained, car buyers used to visit dealerships up to eight times before they purchased a vehicle.

“Now it’s more like only up to two times, because they research online beforehand,” a trend accelerated by Covid-19.

In Germany, the number of daily visitors to Mercedes’ sales websites increased by 70 per cent between April and June 2020, she added.

This puts the pressure on retailers to make radical changes as more business moves online.

In order to survive, “your service needs to be stellar”, warned Mr Tavares, who said dealerships had to justify their share of industry profits by leaving car buyers satisfied with their experience.

Hitachi seeks to resurrect Welsh nuclear plant plans Japanese industrial group wants clarity from UK ministers on financing model Nathalie Thomas in Edinburgh

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itachi is talking to the UK government about resurrecting plans for a nuclear power plant in north Wales, which were frozen at the start of last year.

Horizon Nuclear Power, a UKbased subsidiary of Hitachi, has been holding “detailed conversations” with the government in recent weeks to persuade ministers that the proposed Wylfa Newydd plant on Anglesey could be quickly re-mobilised if they can produce a new financing model for large nuclear power stations in Britain.

Hitachi suspended the £20bn Wylfa project at the start of 2019 after failing to reach an agreement over financing. The Japanese group decided at the time the project still posed “too great a commercial challenge”, despite the UK government offering to take a one-third equity stake and provide debt financing.

We are ready to go . . . but the funding model needs to be in place Duncan Hawthorne, chief ex-

The Wylfa nuclear power station on Anglesey in north Wales © Phil Noble/ Reuters

ecutive of Horizon But Hitachi has maintained a skeleton staff at Horizon and continued to pursue planning permission for Wylfa after the government launched a review into a “regulated asset base” funding model, which would see consumers pay upfront through their energy bills for a new plant and significantly reduce the construction risk for developers.

There has also been talk in the industry of the state taking majority stakes in nuclear schemes, www.businessday.ng

which could enable developers such as Horizon to become contractors. A decision on Wylfa’s planning application is expected by the end of next month.

Duncan Hawthorne, chief executive of Horizon, said: “What I’ve been trying to do over the last period is convince people that our suspension has not in any way undermined our ability to restart quickly.

“We are ready to go . . . but the funding model needs to be in place. We’ve got a competitively

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priced project that will generate jobs quickly and really fuel the economy in the region the plant is in. If we can’t make our transaction viable in this environment then it’s never going to happen,” he said, adding that Horizon was having “pretty detailed conversations right now” about its proposals.

Plans to resurrect Wylfa could help the government out of a political tight spot as rebel Conservative MPs question the involvement of the Chinese-state backed CGN in Britain’s nuclear sector.

Twice weekly newsletter Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forwardthinking analysis and insider intelligence. Sign up here.

CGN is a junior funding partner on Hinkley Point C, Britain’s first new nuclear power plant in a generation, currently under construction by France’s EDF in Somerset. And there are particular concerns over another proposed scheme at Bradwell-on-Sea in @Businessdayng

Essex, where the Chinese group hopes to install its own reactor technology.

But the clock is also ticking for Horizon, which has to submit a business plan to its parent company by December before its funding expires early next year.

It wants clarity from government on its nuclear strategy and a potential funding model by the autumn, when ministers had been expected to publish a delayed energy white paper and national infrastructure strategy.

If sufficient commitment isn’t forthcoming, Mr Hawthorne conceded it would be “easy” for Hitachi to “say we’re out of here” and sell the site, raising fears CGN could potentially move in.

Josh Buckland, who was an adviser to former energy secretary Greg Clark and is now a director for consultancy firm Flint Global, said the government will “want to create a viable model which means developers will put up some money and take some risk but also that taxpayers and consumers have a fair deal if they are having to provide a substantive amount of funding”.

Company IN FOCUS

BUSINESS DAY Monday 17, August 2020 www.businessday.ng

Okomu Oil plc: Reaping gains of consistent investment in Nigeria’s agribusiness value chain OLUFIKAYO OWOEYE

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here is hardly a shortage of stories on companies on the receiving end of Nigeria’s stuttering economic growth, more often than not, success stories of others who have weathered the storm manage to slip away.

One of such success stories is that of Edo-State-based, Okomu Oil plc, with principal activities in oil palm plantation, palm kernel processing, and development of rubber plantation Despite myriad of opportunities in Nigeria’s agribusiness value chain, few players have managed to survive the stifling challenges.

With a market capitalization of N72.97billion, and double-digit growth year-to-date, Okomu’s recent showings further reiterates the saying that fortune favors the bold.

Glimpse into Nigeria’s Oil palm industry Before the advent of crude-oil, agriculture accounted for more than three-quarters of Nigeria’s export income and almost half of its GDP. In the early 1960s, Nigeria was the world’s largest palm oil producer with a global market share of 43percent.

According to the United States Department of Agriculture (USDA), Nigeria is the 5th largest producer crude palm oil (CPO) with less than 2percent of total global market production of 74.08 million MT, in 1966 Malaysia and Indonesia surpassed Nigeria as the world’s largest palm oil producer. Since then, both countries combined produce approximately 80% of total global output, with Indonesia alone responsible for over half i.e. 53.3% of global output.

The years of underinvestment have seen industry production decline to a point where the country is now a net importer of the commodity. Nigeria’s palm oil output is estimated at 900,000-1.3 million MT, experts say. Import is estimated at over N500 billion annually. With national demand of 2.1 million MT, the supply gap is around 800,000MT. Meanwhile, Nigeria’s food manufacturing and household product industries, both of which are heavy users of the product have expanded greatly, creating significant opportunities for importers. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents, and even cosmetics are made from palm oil.

The Nigerian palm oil industry is very fragmented and dominated by numerous small-scale farm holders, which account for over 80percent of local production, while established plantations ac-

count for less than 20percent of the total market.

However, the two largest producers – Okomu and Presco - individually hold a sizeable market share, in terms of value - due to their combined capacity - compared to small-scale farmers. Local farmers produce roughly 80percent of the total production, while using approximately 1.6 million hectares of land. The dominance of small farm holders in the palm oil market has resulted in low output compared to the country’s production potential.

This is because local farmers’ manual harvesting techniques are outdated, which often results in significant wastages during the harvesting process. In Nigeria, lack of investment in palm oil extraction technology and technical incompetence/inadequate training have resulted in poor management of palm oil plantations over the years, causing some of them to cease operations.

Despite this, there has been renewed interest in Nigeria’s palm oil market with the entrant of major food manufacturers via backward integration strategies into the upstream and midstream segments.

For instance, in 2018, PZ Wilmar, a joint venture between PZ Cussons International UK and Wilmar International Ltd Singapore invested over $650 million in palm oil plantations and processing facilities.

The company also planted almost 26,500 hectares of palm oil in Cross river state and installed a 65-ton per hour palm oil mill, which translates to estimated annual capacity of ~40,000 tons.

Also, in 2019, Dufil Prima, manufacturers of Indomie noodles and

Power oil, finalized acquisition of 17,954 hectares of land in Edo State and a 1,040-hectare palm oil farm in Abia State.

According to the Central Bank of Nigeria (CBN), if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from cultivation and processing of palm oil as at today.

To meet the supply gap of palm oil, the country had to depend on importation over the years. However, in 2015, the CBN published a list of 41 items, including palm oil, as ineligible for forex through the Nigerian interbank market to encourage local production and manage foreign reserves.

Also, a duty charge of 35% was applied to crude palm oil (CPO).

While this seems good in the government’s effort at promoting local production of Crude palm oil, the closure of the land borders has largely supported local producers especially in the light of relatively high CPO prices.

Recent result buoyed by favorable operating environment Okomu and other oil palm makers benefited from the blacklisting of some 41 items including oil palm by the Central Bank of Nigeria in 2016 when dollar shortage fostered local demand of the agro-product.

The gains recorded following the blacklist of CPO importers from the import-export window were short-lived as local oil palm producers were faced with fresh challenges – robust dollar reserves following improvements in crude oil prices, and smuggling activities across Nigeria’s porous borders.

As a result of this, Okomu Oil Palm plc witnessed a 42.5 percent

decline in sales to N4.22 billion in the first quarter of 2019 from N7.34 billion, the trend was extended to the second quarter of the year with a 22.4 percent slump in revenue to N4.34 billion from N5.59 billion.

“In the first two quarters, we have a lot of problems in having to sell our products locally,” Graham Hefer, managing director of Okomu Oil Palm, said while reacting to Q2 result. These problems, which came as a result of illegal smuggling and imports of products are only related to rice as people may think, but also oil palm as well as other things, he said.

To curb the importation of oil palm, which was aberrantly affecting local producers, President Muhammadu Buhari in June directed CBN to blacklist any firm caught smuggling or dumping palm oil into the country from all banking businesses as well as the foreign exchange market. This pronouncement was followed up with a partial – and later graduated to complete – border closure in August and this rekindled local demands.

This led to local sales surging 89 percent to N5.95 billion in the third quarter from N3.14 billion a year earlier, while sales generated by exporting its products to other countries rose to N1.02 billion in the review period as against N598 million realized in the same period last year.

In its recently released halfyear 2020 result for the period ended 30th June and despite challenges posed by coronavirus pandemic, Okomu posted a decent performance with profit surging 58.73percent to N4.00billion in H1 2020 from N2.52 billion posted by the firm during the corresponding period of 2019, with a turnover of

N13.527 billion, a 57.94percent surge when compared with the same period in 2019 at N8.56billion.

The company’s cost of sales reduced slightly in H1 2020 to N1.08billion from N1.69billion.

Specifically, the market cost for oil palm stood at N996.342 million as against N1.405 million in 2019, while that of Rubber stood at N86.63million from N286.5million in corresponding period in 2019. Finance cost stood at N310.6million from N101.1million in first six months of 2019.

The company’s operating expense increased 67.44percent year on year from N3.962 billion in H12019 to N6.634 billion H12020.

Okomu’s fixed asset surged to N33.606 billion as at June from their aggregate valuation at N32.124 billion in December last year, and that of current assets standing at N15.885 billion relative to N11.472 billion in December last year; the company’s net assets value is put at N31.279 billion compared to N29.180 billion.

Okomu is majorly owned by SOCFINAF SA, a Belgian company with 62.69% controlling stake in the company’s 953.9 million ordinary shares. No Other shareholder owns more than 5percent of the company. SOCFINAF also owns several oil palm plantations across Africa especially in countries like Ivory Coast, Cameroon, Congo, Ghana, Liberia, and Sierra Leone.

It also has business interest in Indonesia and in Europe. To export rubber Okomu Oil relies heavily on its related company, SOGESCOL FR SA. It sells all of its rubber to SOGESCOL FR SA who then goes on to sell to buyers in the world market.

Meanwhile, the company recently told the investing public that it has intensified steps to improve collaborative arrangement with the Edo State Government in the agriculture industry through a partnership with local communities and indigenous farmers to boost job creation and enhance modern agricultural technique for an increase in production.

According to the release, the oil palm maker said it planned to cultivate 5,000 hectares for its oil palm production in the state with a determination to creating a more sustainable oil palm growth and practice.

Okomu Oil’s stock has recorded impressive returns to its investors, especially in 2020. The share price traded at N80.00 on Friday its 52 weeks high. A final dividend of N2 per 50 kobo share was recently approved for its audited financial result for the period that ended December 31, 2019. Its share price has gained more than 200 percent in the last 5 years and seems not slowing down on capital gains.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.