BusinessDay 17 Feb 2020

businessday market monitor

Biggest Gainer Caverton N2.5

Foreign Exchange

Biggest Loser

Guinness 9.60 pc N28 27,755.87

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE Foreign Reserve - $37.297bn Cross Rates GBP-$:1.30 YUANY - 52.02

Commodities -10.00 pc Cocoa US$2,886.00

Gold $1,584.06

news you can trust I ** monDAY 17 february 2020 I vol. 19, no 500

₦3,723,787.87

N300

Sell

$-N 357.00 360.00 £-N 467.00 473.00 €-N 388.00 394.00

+0.41

Crude Oil $ 57.32

I

Buy

g

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate

364.76 306.95

Currency Futures

($/N)

N

igeria may be going about its revenue hunt in a way that it returns to hurt the economy and deprive the gov-

L-R: Richard Iweanoge, GM, brand and communications; Rahul De, chief marketing officer; Mazen Mroue, chief operating officer, all of MTN Nigeria; Hafiz ‘Saka’ Oyetoro, actor/MTN brand ambassador, and Omasan Ogisi, GM, corporate affairs, at the announcement of MTN Y’ello Star, a new music talent hunt platform

by MTN Nigeria unveiled in Lagos, yesterday.

Pic by Pius Okeosisi

ernment of the very cash it needs in the first place.

This is as consistent kickbacks to a host of government agencies have dug holes in the wallets of some companies and added to a

growing list of obstacles to doing business.

Nigeria, with one of the lowest government revenue to GDP in the world at less than 6 percent, has a reason to attempt to rake

3M -1.38 2.56

NGUS jan 27 2021 365.40

6M

5Y

0.00 3.45

-0.10

10 Y 0.09

30 Y 0.02

9.73

10.88

12.32

NGUS jan 29 2023 374.57

@

g

Nigeria’s desperate revenue chase turns into extortion of businesses LOLADE AKINMURELE

fgn bonds

Treasury bills

in more money, but some of that activity is violating the rule of law.

“There are cases where a court order was given to a gov-

Continues on page 46

NGUS jan 29 2025 379.81

g

FG gets 7-day ultimatum to disclose how recovered Abacha loot was spent ... late dictator stole over $5bn – SERAP FIKAYO OWOEYE he Socio-Economic Rights and Accountability Project (SERAP) has given the Federal Government a sevenday ultimatum to disclose the exact amount of public funds stolen by and recovered from Sani Abacha, a former military head of state who died on June 4, 1998.

SERAP is also asking the FG to disclose details of how the recovered loots were spent, details of projects executed with the funds Continues on page 46

T

Inside

Offshore security threats weighing on Nigeria’s P. 45 oil fortunes

2

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

3

4

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

5

6

Monday 17 February 2020

BUSINESS DAY

news

‘Gaps in NOGICD Act could be exploited to make it less effective’ olusola bello

A

legal practitioner and managing partner, Sefton Fross, Olayemi Anyanechi, says gaps in the Nigerian Oil and Gas Industry Content Development (NOGICD) Act could be exploited by some contractors and oil firms, which could be at variance with the Act’s objective.

Anyanechi made this assertion during a panel session on “In-Country Value” at the 2020 edition of the Nigerian International Petroleum Summit (NIPS) held in Abuja.

She cited some limitations in the Act like the definition of

a Nigerian company, which the Act defined as a company with 51 percent of its shares held by Nigerians, whereas what this requires was that legal ownership should be vested on Nigerians.

“This gives room for local fronting as the definition is not wide enough to capture trust or contractual structures behind the legal ownership, such as beneficial or ultimate beneficial ownership,” she said, adding that the definition prevents Nigerians from having a foreign holding company structure with ultimate beneficial ownership in Nigerians, which may be desirable for several reasons, including tax or estate planning.

“Also, there are serious infrastructure gaps in the country, with power being a critical one.

This affects the ability of Nigerians to optimise opportunities in areas like manufacturing and engineering. Due to these infrastructure gaps, as well as duties and taxes, the cost of importation may be lower than for in country goods.

“This affects the costs of projects. Local content development must be holistic in nature such that investors do not become discouraged,” she said, while calling for increased awareness, programmes, trainings, workshops and seminars to educate the public and investment community about local content.

Earlier, Legor Idagbo, chairman, Nigerian Content Development and Monitoring Committee, House of Representatives, revealed that the Act was undergoing review in the lower chambers of the National Assembly. The lawmaker agreed that the NOGICD Act as it was presently constituted has lots of gaps that need to be addressed.

“For example, the NCDMB currently do not have the powers to enforce. We need to work at strengthening the board with powers of enforcement. Secondly, the board presently does not cover the midstream and downstream. It should be able to cover those parts of the industry

as well,” Idagbo said.

He assured the gathering that the National Assembly would work towards ensuring the growth of indigenous capacity in the industry.

“While the oil and gas industry provides about 70 percent of government earnings, it contributes less than 10 percent of the Gross Domestic Product (GDP).

Meanwhile, in Angola, the oil and gas industry contributes about 50 percent of the GDP. So we need to make sure we make improvements,” he said.

In his own contribution, Wumi Iledare, African Region director, Society of Petroleum Engineers (SPE), tasked profes-

Media Rights Agenda calls on government to take advantage of media platforms to unite Nigerians Daniel Obi

M

edia Rights Agenda (MRA) has called on Federal and State governments to take full advantage of the attributes of radio and other media platforms in developing a comprehensive strategy for overcoming the religious, ethnic and other differences that have divided Nigerians and impeded the country’s social, economic and political advancement.

In a statement issued in Lagos to commemorate this year’s World Radio Day, the organisation noted that in Nigeria and elsewhere, radio remained the most powerful medium for reaching diverse communities and urged government to invest in and support the sector to enhance its effectiveness as a platform for uniting Nigerians across various divides.

In the statement, MRA’s programme director, Ayode Longe, called on governments in the country to work with radio stations operating in their areas of authority to promote and uphold diversity, both in their newsroom and on the airwaves, consistent with this year’s World Radio Day focus.

He urged stakeholders, particularly governments and radio stations, to reflect the three main sub-themes of the 2020 World Radio Day in their commemoration initiatives and activities, by: Ensuring pluralism in the radio sector, by initiating policy interventions and taking other steps that will lead to an adequate and proper mix of public, private and community radio stations in the country.

Longe said: “Given the size and population of Nigeria; the social, cultural and linguistic diversity of the country, and the fact that among the three tiers of broadcasters, community radios are closest to the people, the current number of community radio stations licensed to operate in Nigeria is grossly inadequate. www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

sional bodies to contribute to the development of local content by training younger professionals in the industry.

“Universities must also be utilised in building capacity in the industry. In addition, there must be continuous evaluation of the gap in the curriculum in a bid to upgrade it in line with current industry needs,” Iledare said.

The Nigerian Content Development and Monitoring Board (NCDMB) was established by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act that came into effect April 22, 2010.

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

7

8

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

9

10

Monday 17 February 2020

BUSINESS DAY

news

FG urged to cut cost of governance to check ballooning debt CYNTHIA EGBOBOH, Abuja

E

conomic experts have again decried the nation’s burdening debt service to revenue, noting its huge negative impact on the much needed development funding.

According to BudgIT numbers, Nigeria’s debt service to revenue stood at 45.2 percent in Q3, 2019, indicating that out of every N100 the Federal Government made within the period, N45 (almost half) of that was used to service debts, which experts say is not only worrisome but unsustainable.

Eze Onyekpere, lead director, Centre for Social Justice, in his response to BusinessDay concerns, pointed to the need for government to prune down the high cost of governance through cutting down on wastes, frivolities and unnecessary expenses

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

as well as improve domestic resource mobilisation.

“Nigeria is currently using almost 50 percent of its retained revenue to service debt, this is not only high but it is scandalous. It shows that our debts are not sustainable either in the short, medium or long term. No nation, community, family or business survives on this model,” Onyekpere said.

He said concentric policy formulation and implementation was needed to harness the inextricable links between various sectors of the economy to drive growth with a full understanding of the linkages.

For example, industrial, trade policy and human capital development are linked.

“I think the government should also learn how to select priorities and endeavour to improve domestic resource mobilisation.

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

11

12

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

13

14

Monday 17 February 2020

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Giving and misgivings (1)

Address delivered at the Rotary Foundation Dinner/Dance at the MUSON Centre, Marina, Lagos

Bashorun J.K Randle

L

et me start by commending Rotarians for their unique and monumental contribution to the moulding of character and institutionalisation of ethics together with integrity as the bedrock of civilized conduct of inter-personal relationships as well as virtually all aspects of human endeavour – through the Four Way Test: 1. Is it the TRUTH? 2. Is it FAIR to all concerned?

3. Will it build GOODWILL and BETTER FRIENDSHIPS? 4. Will it be BENEFICIAL to all?

As if this was not a sufficiently formidable achievement, you have added as your flagship project the worldwide eradication of polio in addition to the Cervical Cancer Prevention Project. May the Almighty reward you abundantly.

I consider it a special and inspirational honour to be invited to speak on the topic: “Satisfying your social conscience through impactful giving.”

The reference to “Giving and Misgivings” is my own addition on account of my having been a Rotarian (but fell by the wayside !!) in the past. Besides, after fifty years of practising as a Chartered Accountant in Nigeria and beyond, I cannot vouch that everyone whose path crossed with mine had a conscience at all, not to talk of “social conscience” which suggests an enduring commitment to abide by the

cannons of the “Four Way Test” in addition to giving back to society through impactful giving.

Permit me to share with you the experience and exploits of one of my ancestors – “Papai Gangan” who was the father of my paternal grandmother Maria. According to family folklore, during the endless tribal wars in Yorubaland in the 18th and 19th centuries Papai acquired vast fame and fortune on account of his dexterity as a soothsayer/fortune teller. Apparently, he correctly predicted the outcome of virtually every war. His speciality was water divining which he skilfully and tactically threaded into war strategy. Simply put, whichever army gained access to water supply would eventually prevail.

Anyway, what is relevant is that having established his credentials in the hinterland of Yorubaland, Papai relocated to Lagos which was then known as EKO. In next to no time he amassed a huge fortune and ended up with eleven houses - one for each of his children.

Then tragedy struck. His children started dying one after another until only my grandmother was left. In desperation, he abandoned his property acquisition and retreated to the forest where he was in direct communication with the spirits.

After seven days of fasting, the message delivered to him was blunt and cryptic: “You must give all your houses (except one) to the poor. Otherwise, even Maria will soon die.” He duly complied and my grandmother not only survived, she lived until 1954 when she was approaching the age of 90. That was almost nine decades after that “impactful giving” by her father. If you have any misgivings about that episode, that is your prerogative.”

On a more personal level, I must confess that I was for several years an enthusiastic Rotarian in Lagos and Kano

and did my best to be a good Ambassador for Rotary. Whatever excuse I dare to tender for falling aside is at best lame or even tendentious. What I suspect is that as I climbed up the ladder of my profession and the responsibility of being the Chairman and Chief Executive of KPMG Nigeria; Chairman of KPMG Africa; President of the Institute of Chartered Accountants of Nigeria [ICAN]; Chairman of Eko Hotels Plc; Pro-Chancellor and Chairman of the Governing Council of Lagos State University; time became a very scarce commodity.

With the benefit of hindsight, I now realise that rather than subsidiarise my commitment to Rotary to other responsibilities what would have been more appropriate would have been to further re-inforce my commitment to the ideals of Rotary and I should have supported Rotary Club activities locally and internationally with greater vigour.

However, I was not the only culprit.

Although some of my contemporaries advanced to being President of the Rotary Club in various locations while two became district governors, those of us who fell by the wayside nevertheless strove not to lie, cheat or steal – ever mindful that we would remain Rotarians in spirit.

I must add that the Rotary Club to which I belonged in Kano eventually produced the first President, John B. Majiyagbe.

Permit me to add that one of my Rotarian colleagues rose to the dizzy height of becoming an Executive Director in a leading bank (name withheld). This was a time of frenetic and aggressive banking – for big bucks. Acquisitions and Mergers amongst banks were the order of the day. His protestations against what he considered to be unwholesome and unethical practices fell on deaf ears.

He was isolated and eventually sacked unceremoniously – not for fraud or incompetence. The powers-that-be had

‘

On a more personal level, I must confess that I was for several years an enthusiastic Rotarian in Lagos and Kano and did my best to be a good Ambassador for Rotary.

Whatever excuse I dare to tender for falling aside is at best lame or even tendentious

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

Revitalising the manufacturing hub of Africa: The role of public policy

T

he Ford Foundation, TBWA and C&F Porter Novelli, in partnership with Nnewi Chamber of Commerce have begun a great and necessary initiative by sponsoring and organizing the first Nnewi Investment Summit to develop a pathway to the revitalization of Nnewi a major manufacturing hub in Nigeria and Africa. I am honored to have been asked to serve as the Keynote Speaker for this event.

Although I happen to be a “son of the soil” as an indigene of Nnewi, I was just as impressed by the sponsors/organizers of this summit, the Representative of the Presidency, Dr. Jumoke Oduwole, Special Adviser to the President on Ease on Doing Business, and the representatives of the Anambra State Government, by the creativity and drive of Nnewi manufacturers – against all odds, I must say – as we visited and toured various factories yesterday, the first day of this event.

Nnewi has been a famous commercial town since the 1920s, mainly for the generations of the lorry/bus transportation business (Ojukwu Transport, Ekene Dilichukwu, Chidi Ebere, Ekesons Transport, etc) and the auto and motorcycle spare parts trade. Nnewi indigenes also have a strong reputation for shrewdness and business savvy.

Hence the popular phrase in Eastern Nigerian society: “Nnewi sense”.

In the 1970s and 1980s Nnewi businessmen began a process of backward integration- a shift from trade, mainly in motorcycle and auto spare parts, into industrial manufacturing. While this was partly forward-looking business sense, it was also a response to government policy challenges, especially politically-associated difficulties with access to foreign exchange for importation in the early 1980s when oil prices were depressed and Nigeria’s economy was still largely a statist,

“command” one. (The situation today with forex access should leave us with a sense of deja vu, but I’ll get to that later on!)

Four decades later, alas, the promise and potential of manufacturing in Nnewi-Africa’s Taiwan- has not been fulfilled. Several industries are still standing, notably Innoson Vehicle Manufacturing (IVM), Cutix Plc (electric cables and electric switch gears), Ibeto Group (synthetic marble, brake pads and linings), Intercontinental Feed Mills (animal feed), Tummy Tummy (noodles), Chicason Industries and Ngobros Industries. But many other industries have shut down. Several manufacturers have resorted to importation, mainly from China, in order to survive as going concerns. These stresses are largely due to macroeconomic headwinds, crony-capitalist favoritism by successive Nigerian governments, and the absence of a policy-prioritization of Nnewi’s manufacturing potential.

Why manufacturing (still) matters Nigeria has made the consistent policy error of focusing largely on economic growth, but not enough effort has been made to achieve real human development and structural economic transformation. These are three different but interrelated concepts, and all three of them- economic growth, human development, and structural transformation- are necessary to achieve broadbased national prosperity.

Economic growth is the annual growth of the gross domestic product (GDP), the total sum of goods and services produced in a country in a given year. Human development is measured by factors such as access to quality healthcare, education and human capital (skills), availability of potable drinking water, and average life expectancy. Structural economic transformation means www.businessday.ng

the diversification of an economy away from reliance on subsistence agriculture and raw natural resources such as crude oil and minerals to one in which complex, value added manufacturing and competitive export of such products makes a significant contribution to national output and to global manufacturing.

Africa has 70 percent of the world’s strategic minerals but contributes only 1 percent of global manufacturing. More than 50 percent of world trade is based on manufactured products, while just 7 percent is based on agriculture. The strength of manufacturing as a component of the economy is measured partly by the ratio of manufacturing to GDP, but also by the quantum of economic output of whatever manufacturing takes place in a given economy, the nature of other economic activities that contribute to GDP (e.g. services, tourism and others), and by the percentage of global manufacturing such national manufacturing constitutes.

Nigeria has a manufacturing to GDP ratio of only 10 percent, despite the efforts by the government to support manufacturing – which has been largely ineffective for reasons we will discuss shortly. This is a low score in our national context because agriculture makes up about 30 percent of GDP. Our agriculture is mostly subsistence agriculture and not innovation and value-added agriculture. Besides, Nigeria’s contribution to global manufacturing is statistically non-existent.

It would have been for better if our manufacturing made up 30 percent of our GDP and agriculture made up 10 percent.

China is the world’s leader in manufacturing output ($2 trillion as of 2015 statistics), with manufacturing making up 27 percent of the country’s overall national output, and China has 20 percent of global manufacturing. The United States,

https://www.facebook.com/businessdayng

concluded that he was an obstacle to their mendacity and greed. The bank was savagely looted. Insider trading became the order of the day. Properties in prime locations were sold off cheaply to Directors and even the pension funds of staff were looted with reckless abandon. To cut a long story short, when I met him at a party last week he assured me that even though he went through hell – from the comfort of being a highly paid banker to being jobless (and almost destitute), he was at peace with himself and would remain eternally grateful for the difference the Rotary Club had made in his life and fortified his pursuit of what is just and what is fair – and transparently so.

However, what Rotary did not prepare him for was the volatile volcano which erupted and almost engulfed the entire banking sector when Nigerian banks were collapsing all over the place. The Governor of the Central Bank had ordered a “Stress Test” and a bank for which my Rotarian colleague was a consultant was a borderline case. A little bit of patient re-engineering and re-capitalisation by the shareholders would have stabilised the bank. Instead the bank was classified as “Distressed” and the name was changed overnight.

The Central Bank became the new owner and proceeded to install a new management team which struggled to keep the bank going for a couple of years. Then out of the blues, a bank that had four hundred and fifty branches nationwide was to be taken over by a much smaller bank with less than fifty branches - allegedly on the orders of the Presidency. In those heady days in the vortex of high-powered intrigues, my Rotarian colleague was utterly lost and he remains bewildered.

Kingsley Moghalu with a manufacturing output of $1.8 trillion, has manufacturing as 12 percent of its total national output, and that 12 percent of its national output is 18 percent of global manufacturing. South Korea, with $372 in manufacturing output (roughly Nigeria’s TOTAL GDP!) has that manufacturing output as 29 percent of its total economic output and 4 percent of global manufacturing.

Manufacturing matters. It has mattered for centuries of global economic history. It will continue to matter even with the rise of digital economies. We can therefore ignore the conventional wisdom that African countries should now skip aspiring to industrialization (on the assumption that its relative importance is declining) and jump to the “post-industrial” economy.

Speaking realistically, we are not yet competing with the already most-industrialized countries, but rather are seeking to build a sustainable and sophisticated industrial economy relative to our current stages of growth. In that context we must has an industrial economy before we can have a post-industrial one. We therefore need effective industrial policy to promote manufacturing in places such as Nnewi. A populous country like Nigeria, with millions of jobless youth, also cannot afford not to have a strong manufacturing component in its economy; with special attention to the efficient productivity of labour.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Moghalu is the former deputy governor of Central Bank of Nigeria

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

comment

15

comment is free

Send 800word comments to comment@businessday.ng

Love is in the air…for these stocks

Patrick Atuanya

I

t was Valentine’s Day last Friday which got me thinking about the stock market, often seen as sexy and exciting as opposed to bonds perceived to be somewhat boring, never mind the bit of role reversal that has taken place lately at least in the Nigerian markets.

It’s not an exaggeration to say that investors sometimes fall in love with stocks in their portfolios, something money managers often caution against.

Take the recent buying frenzy in electric vehicle maker, Tesla that has led to the stock price tripling in 6-months.

While a lot of speculators and momentum traders, no doubt contributed to the recent run-up in Tesla’s stock price, there were still the core holders or believers in the mission of its CEO Elon Musk, to save the planet and reduce greenhouse emissions, by not burning fossil fuels in an internal combus-

tion engine.

That love affair has enabled Tesla to raise about $14 billion over the last decade (according to Bloomberg estimates), with the latest offering which priced at $767 per share on Thursday (13th February) boosting Tesla’s market capitalization to $146 billion.

Back home to Nigeria the stock market could be forgiven for feeling like an unwanted step child, hardly loved by institutional investors (Pension Funds) or retail types (Man on the street).

Domestic Pension Funds with Assets under Management (AuM) of N10.2 trillion ($28 billion), had their exposures to equities equivalent to only 5.4 percent of total assets or N552 billion ($1.5 billion), the December data from regulator, PENCOM shows.

Underneath the headline numbers could be some stirrings of attraction pray even love for equities going by recent happenings.

In less than one year, 3 key transactions have helped to shore up the stock market and diversify options available to potential investors in addition to some bullish regulatory actions.

MTN Group kicked things off with the listing of its Nigerian subsidiary that added some N2.4 trillion in market capitalisation to the Nigerian Stock Exchange (NSE), this was followed up with a dual Initial Public Offering (IPO) by Airtel Africa, with primary listing in London and secondary one in Lagos, and finally BUA Group listed its consolidated Cement business on the NSE with a market capitali-

sation of N1.2 trillion as at Friday.

Moves by the Central Bank of Nigeria (CBN) late last year to ban most classes of domestic investors (except banks) from buying or trading its open market operations (OMO) securities, helped to push liquidity into stocks and a move by the NSE a self-regulatory organisation or SRO to demutualize and list itself on the exchange is generally positive for the market.

The latest NSE, foreign and domestic portfolio investment report for December 2019, also shows a gradual growth in domestic participation in the markets as foreigners pull out.

Foreign transactions which stood at 63.58 percent in October 2019, fell to 49.35 percent in December, while domestic transactions on the bourse rose to 50.65 percent in December 2019, from 36.42 percent in October.

In absolute terms these were equivalent to N103.73 billion in October for foreign transactions compared to N59.43 billion for domestic in the same time period, which flipped to N63.14 billion for foreign transactions in December and N64.80 billion for domestic.

Latest data (Feb. 14) from the bourse shows that while the main benchmark stock index NSE-ASI (which tracks the general market movement of all listed equities on the Exchange, including those listed on the Alternative Securities Market (ASeM), regardless of capitalization) is up +3.4 percent year to date (ytd) , the NSE Premium Index (only 8 stocks) is up +10.72 percent year to date, meaning that

‘

Underneath the headline numbers could be some stirrings of attraction, pray even love for equities, going by recent happenings

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

The red pill or the blue pill

I

am a big fan of The Matrix. Not the rectangular array of numbers in mathematics but the movie about machines who enslave humans and turns us into batteries while convincing us to accept it because we don’t really know believing that the world, we think we live in is real whilst in reality it is a dream. If you have not seen the movie then you really need to re-evaluate your life choices. One of my favourite scenes in the movie is the part where Morpheus (one of my favourite characters) offers Neo (the “actor” as we say in these parts) a choice in the form of two pills which he could choose to swallow. A blue pill and a red pill.

On the one hand he could take the blue pill and forget everything he had learned, waking up as if from a dream, and continuing to believe that the world he thought he lived in was the real world.

On the other hand, he could take the red pill and learn the truth about the actual real world. The world in which the machines had taken over and in which most humans had been turned into batteries.

For Neo there was no middle ground.

No delicate balancing act. It was a stark choice with consequences. Blue pill or

ECONOMIST

red pill.

In some sense policy makers, especially those at the central bank, face the same choice. Except that in this instance the choice is between the economy and the exchange rate. I know. I hate to be the one to write yet again about the exchange rate, especially since we still have not really gotten over all the debates, we had in 2015 and 2016. But it is what it is.

Policy makers have a choice between the economy and exchange rates.

On the one hand they could choose to forget about the exchange rate and let whatever happens to it happen. This in turn means that they do not have to set monetary policy for the exchange rate.

Things like raising rates to attract portfolio funds become redundant and policy makers can focus on keeping inflation in check. Keeping inflation in check is the ideal scenario when it comes to what monetary policy is best for the economy.

I know some of you will shout “but the exchange rate affects inflation” and yes it does but hold on. Are those big exchange rate to inflation spikes because of exchange rate changes or because of the failure in attempts to keep the exchange rates fixed? www.businessday.ng

some under the raider love affair is taking place between investors and select stocks, outside the broad aggregate NSE-ASI. Components of the NSE Premium Index include Access Bank with closing price of N9.70 per share on Friday, Dangote Cement (N170), FBN Holdings (N5.95), Seplat (N605), UBA (N7.70), Lafarge Africa (N15.50), Zenith Bank (N19.65) and MTN Nigeria (N116).

So which of these 8 names contributed to the year to date outperformance compared to the NSE-ASI? Access Bank shares have returned -3 percent in 2020, Dangote Cement +19.72 percent, FBN Holdings -3.25 percent, Seplat -8.03 percent, UBA +7.69 percent, Lafarge Africa +1.3 percent, Zenith Bank +5.65 percent and MTN Nigeria +10.48 percent.

The smart money investors are clearly showing love to Dangote Cement, UBA, Zenith Bank and MTN Nigeria, which have all outperformed the NSE-ASI so far this year.

A couple of catalysts remain for the markets to trade in days to come, including Full year 2019 earnings and potential dividend pay-outs, so money may yet move in or flow out of these stocks.

In the meantime if you want to love a stock in this season of love, these are your sure bets for now, keeping in mind that a heartbreaking sell-off may just be around the corner!

On the other hand, policy makers could choose the exchange rate. Choosing in this sense means doing everything to keep it stable. Raise interest rates to attract foreign capital. Sell special securities to foreign portfolio funds. Implement all sorts of policies to restrict access to foreign exchange. Implement all sorts of rules around the purchase or sale of foreign exchange. All with the goal of keeping exchange rates fixed. Of course, while all this may keep exchange rates fixed temporarily, they all tend to be bad for the economy.

And so, we have our own version of the blue pill versus red pill choice. Historically, we have usually chosen the fixed exchange regime choice. Not always but most of the time. Under the current regime we have chosen the fixed exchange choice for sure. I know the authorities will say there is no proof of them fixing the exchange rate, but they are not fooling anyone. That choice has of course been typically negative for the economy. To make matters worse we try to switch from blue pill to red pill and have occasional devaluations. But then we typically go right back to our choice of the exchange rate again. As the cen-

https://www.facebook.com/businessdayng

NONSO OBIKILI

tral bank’s reserves tumble towards the psychological 30 billion US dollar line the noise around devaluation is getting louder. Some are saying second half of this year while others suggest we may get to 2021. But perhaps the debate should not be about whether to devalue or not.

The debate, in my opinion, should be on if we should choose the economy or the exchange rate. That debate should be rather straight forward but once you add politics into the equation then it becomes a bit more problematic. Somehow, we always seem to end up at politics.

Dr. Obikili is the chief economist at BusinessDay

@Businessdayng

16

BUSINESS DAY

Monday 17 February 2020

EDITORIAL Frank Aigbogun

Complacency, incompetence of aviation authorities

editor Patrick Atuanya

There is an urgent need to fast-track airports concessions

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

P

eople must be held responsible for the abysmal failure to provide a service as ordinary as an instrument landing system at the international and local of the airports in Nigeria.

For most of last week international and local airlines either cancelled or diverted their Lagos-bound flights because the equipment needed to land safely in near-zero visibility had not been installed at the local and international wings of the airport.

The diversions and cancellations were needless, the reasons given by the authorities – the Minister of Aviation and the Nigerian Airspace Management Agency (NAMA), the agency responsible – for the flight disruptions are inexcusable. That both waited for an embarrassing and avoidable fiasco to happen before hurrying to install and calibrate the landing equipment in the airports shows how complacency and incompetence have become the hallmarks of gov-

ernance in Nigeria. This anyhow attitude has become so pervasive because there are no consequences, and specifically why drastic measures must be taken.

We daily lose whatever is left of our respect as a nation. Respect that is undermined every day by a government that is unwilling and unable to perform simple functions such as keeping a national database, securing its borders, or protecting its citizens from bandits, kidnappers and terrorists.

Whatever sense of self regard individual Nigerians have is dented daily through no fault of theirs.

Now, the lack of a basic equipment in any airport is almost cutting us off from the rest of the world. Low visibility is normal and expected. It’s an annual event.

It can be predicted and prevented, and the solution is available.

Instead the authorities charged with our airspace and airports is just carrying out “routine maintenance” and the equipment is undergoing installation”. This is abnormal and unacceptable. The period and duration of Harmattan

is more predictable than the outcome of a football match between Manchester United and Chelsea.

It is seasonal, occurs between November and March every year, and Harmattan haze, dust plumes that choke the clouds can occur for days, reduce visibility and cause flights to be cancelled or diverted.

Local and international travellers have been stranded for hours, international flights have had to be diverted to airports in Dakar, Accra and Cotonou and others cancelled indefinitely, all because none of the airports in Nigeria has a functional instrument landing system.

Passengers and airlines have borne the cost of these disruptions even though NAMA receives a percentage of ticket fees and airlines pay it monthly.

To avoid such disruptions in the future the airports responsible for most of the traffic in the country must be run as concessions – contracted to those who can run them professionally, safely and profitably. Three years ago, Hadi Sirika, the Minister of Aviation, started the process, it’s time to fast-track it.

Global expertise and best practice on how to run airports are not in short supply – Global Infrastructure Partners, the biggest infrastructure investment fund in the world, owners of Gatwick airport in the UK, was co-founded

by Adebayo Ogunlesi, a Nigerian.

The Bureau of Enterprises which lately announced plans to raise N266.8 billion from the sale of government-owned assets in mining, electricity and communications shows renewed appetite for getting government out of the business of business. Airports should be included among many others given how it has miserably failed in ensuring landing equipment at the airports were up and running.

Government shouldn’t be running the airports where bureaucrats just sit tight, deliver no service, and feed fat off fees and levies rather than buy equipment that can save millions of naira and lives. Such people in ministries, agencies and departments have frustrated past attempts to privatise state-owned companies. They must not be allowed to succeed.

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria.

01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven.

• The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests.

• Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Monday 17 February 2020

comment

17

comment is free

Send 800word comments to comment@businessday.ng

Presidentialism is not serving Nigeria well: It’s time to ditch it global Perspectives

OLU FASAN

T

he system of government that a country adopts can determine its political and economic progress. That’s why countries choose a system of government that best suits them, and why many readily change their form of government if it’s not working. My view is that the presidential system is not working for Nigeria, and, as such, the country should adopt the parliamentary system, which will serve it better. This view is supported by evidence of the failure of presidentialism in Nigeria, as well as by empirical analyses of the two systems.

First, it’s instructive to note that most of the world’s countries have prime ministers and not executive presidents. Of the 193 member states of the United Nations, only about 46 have a presidential system, where full executive powers are vested in one person. Out of the 50 sovereign states in Europe, 34 are parliamentarian; so are nearly 40 of the 54 member states of the Commonwealth, including the most successful ones, such as Canada, Australia, India and Singapore.

Furthermore, political structuring, whereby countries change their system of government, is common worldwide.

In their paper entitled “Determinants of constitutional change: Why do countries change their form of government?”, Bernd Hayo and Stefan Voigt identified 123 changes in the form of government in 169 countries from 1950 to 2003.

More recently, in 2015, Sri Lanka, which adopted a powerful executive presidency in 1978, introduced the 19th Amendment, described as “the most revolutionary reform ever applied to its constitution”, to dilute the powers of the executive presidency and move more towards a parliamentary system.

By contrast, Nigeria has moved in the opposite direction. At independence in

1960, Nigeria inherited the parliamentary system and practised it for six years until the military intervention in 1966. About thirteen years later, when General Olusegun Obasanjo decided to return Nigeria to civil rule, he set up a constitutional drafting committee to fashion a new Constitution for the country. But he so loathed the oppositional politics associated with the parliamentary system that he effectively instructed the “49 Wise Men” tasked with drafting the 1979 Constitution to shun the system, never mind the fact that one of the “perils of presidentialism” is political gridlock resulting from the competing claims for legitimacy by the president and the legislation.

But apart from Obasanjo’s preference, the committee itself favoured the presidential system. Chris Akor has explored this issue on the pages of this newspaper.

In a number of articles on Nigeria’s fondness for strongman politics, he cited the reasons the framers of the 1979 Constitution gave for opting for the presidential system. One of these was that Nigeria needed a strong president who could serve as “a symbol of national unity” and “a custodian of the national interest”.

Well, the so-called 49 Wise Men were utterly naïve. The truth is that you can’t govern a multi-ethnic country with a strongman mentality by vesting excessive powers in one person from one ethnic group. That’s why most ethnically-divided countries favour the parliamentary system, which is more representative and collegial.

Let’s face it, which president has united this country or really been the symbol of national unity? Instead of authoritarian utopia, where strong leaders bring people happily together, what we’ve had is totalitarian dystopia, where supposedly unifying leaders use excessive military force to suppress ethnic agitations. From President Obasanjo’s Odi massacre to President Buhari’s “Operation python dance”, Nigeria’s all-powerful leaders have been using military repression to enforce unity in the country. Such draconian rule is usually associated with presidentialism.

The truth is, comparatively, the parliamentary system was politically more successful than the presidential system in Nigeria. Think about it. Nigeria practised the parliamentary system for six years, from 1960 to 1966, and has now

practised the presidential system for about 25 years, first for about five years between 1979 and 1983 and then for 20 years from 1999 to date. While the seeming failure of the parliamentary system between 1960 and 1966 can be blamed on the inexperience of the immediate postindependence politicians, who suddenly found themselves running a country without a colonial oversight, what excuse can anyone give for the utter failure of the presidential system over the past 25 years? It was the 1966 military coups, not the parliamentary system, that provoked inter-ethnic tensions in Nigeria. But the past 25 years of presidentialism have been defined by political instability and ethnonational tensions. Presidentialism hasn’t guaranteed political stability for Nigeria.

But what about government effectiveness? Well, the evidence shows that Nigeria under a parliamentary system, with a prime minister that was first among equals and with powers devolved to regional governments, was better governed than under the presidential system, where excessive powers are vested in the hands of one person at the centre. Section 5(5) of the Constitution gives the president “executive powers” and section 148 says he “may, in his discretion”,assign any state responsibility to the vice president or any minister. In other words, the president can exercise executive powers alone without giving any responsibility to a minister or even the vice president. Indeed, last year, President Buhari stripped Vice President Yemi Osinbajo of virtually all the key responsibilities he had during their first term. So, despite his relative youth, intellect and energy, Osinbajo functions almost entirely at the behest of the president! That’s not good for effective government.

The ideal constitutional arrangement is for President Buhari to be the ceremonial head of state, while Osinbajo is the prime minister and head of government. With that arrangement, Buhari can make the overseas trips he seems to enjoy and be as laid-back as he wants, while Osinbajo, as prime minister, gets on with running the government, as he did effectively on the two occasions President Buhari was on long medical vacations. At the moment, even though the president is at home, no one seems to be running the country. The presidential system has also not delivered effective government for Nigeria.

But the strongest argument against

‘

Let’s face it, which president has united this country or really been the symbol of national unity?

Instead of authoritarian utopia, where strong leaders bring people happily together, what we’ve had is totalitarian dystopia

presidentialism is economic. In a research paper entitled “Who does better for the economy? Presidents versus parliamentary democracies”, economists Richard McManus and Gulcin Ozkan argue that parliamentary systems produce superior economic outcomes than presidential systems. Using data from 119 countries across the period 1950 to 2015, they found that, on average, annual GDP growth is up to 1.2 percentage point higher in countries governed by parliamentary systems; inflation is 6 percentage points lower; and income inequality is up to 20 percentage points lower. They found that 91% of the best performers on growth and income inequality are parliamentary governments. By contrast, the study found that presidential regimes are consistently associated with less favourable economic outcomes, such as slower output growth, higher and more volatile inflation and greater income inequality.

But why do parliamentary systems deliver better economic outcomes? Well, the authors argue that this is because parliamentary systems consistently feature higher scores of democracy, more extensive media freedoms, a stronger rule of law and greater checks and balances. Robust legal, political and administrative institutions, which are more associated with parliamentary systems than presidential ones, explain why parliamentarism has produced greater democratic and economic progress than presidentialism. Of course, the US bucks this trend; it’s governed by a presidential system and yet economically successful.

The authors argue that’s because of its inherent checks and balances. As someone puts it, the US system “is checked and balanced to a fault”!

So, the evidence is clear. A country’s system of government can determine its political and economic progress. And the truth is that the presidential system has not served Nigeria well. Parliamentarism is a better route to political stability, government effectiveness and economic progress in Nigeria than presidentialism.

Thus, restructuring Nigeria must include returning it to the parliamentary system.

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

Firing the CEO

A

major responsibility of the Board is selecting the CEO. It must therefore ensure that it picks the right CEO and puts in place a succession plan that allows for smooth transition. With increased responsibilities. s and more stringent regulatory oversight, Boards need to ensure that they appoint CEOs who will allow them go to sleep with both eyes closed. The Board also has the responsibility of setting Key Performance Indicators against which the CEO’s performance will be measured and appraised. More often than not, the KPIs are tired to corporate performance and many Boards don’t have a formal framework for appraising the CEO’s performance. It is good practice for the Board to define robust KPIs for the CEO beyond corporate performance. These should include the CEO’s leadership of the team, client/customer relationship management, corporate culture, employee development, managing key stakeholders, etc.

Closely following the responsibility to select a great CEO is that of ensuring that a succession plan is in place. Oftentimes the Board does not pay sufficient attention to the senior leadership pipeline and delegates this responsibility to the incumbent CEO. The Board should ensure that there is appropriate capacity and competence at the level below the CEO and indeed across the organization. It should not take the CEO’s word for it, but sufficiently engage to ensure

it has comfort in this regard. With a healthy pipeline of senior leadership, the impact of sudden CEO exit can be minimized.

Firing the CEO is one of the most difficult tasks any Board will have to deal with. However, there are times it becomes inevitable to do just that.

Where the CEO persistently does not meet set KPIs, fails to execute strategy, delivers non-inspiring leadership or “puts the company in trouble”, the Board may be left with no choice but to let him/ her go. Firing the CEO could negatively impact the organization. For sure it comes at a significant cost. Some of the costs of firing a CEO are easy to measure. “Golden parachute” severance pay for example, are sometimes included in CEO employment contracts. Unless the CEO has been found complicit in some criminal or other underhanded matter, the company must pay up according to the terms of the contract. Some severance pay run into multiples of annual salary and bonuses.

Another cost is that of replacing the exited CEO. Great CEOs don’t grow on trees and the process of recruiting the ideal candidate is not cheap. Beyond the fees of executive selection firms (many of these firms charge a percentage – sometimes in multiples - of the CEO’s salary and bonuses), the sheer time and effort that go into an unplanned exit, cause the Board to give careful thought when taking a decision to fire the CEO. There could also be the cost of losing business relationships which the departing CEO brought on board and nurtured. Some clients/customers www.businessday.ng

may choose to take their custom elsewhere with the departure of the CEO who courted them. Depending on the depth and nature of business, the effects of these could be significant. The peculiarity of some businesses makes it difficult for the Board to mitigate the likelihood of this happening. Sometimes, the CEO’s personal connections constitute a large chunk of the patronage.

Non-financial but equally damaging effects of the CEO’s unplanned exit include the impact on employee morale, especially among senior managers, who may wonder if theirs will be the “next head on the chopping block”. If the CEO was fired for taking a “risky bet” which went awry, employees will be less willing to take risks – a situation that will inevitably stifle innovation and impact performance. There is also the possibility of mass exit – especially if the CEO was admired by his colleagues and goes on to either set up his own shop or to another organization from where he “poaches” his excolleagues. To be sure, some clients would also move with the CEO, particularly if the perception is that he/she has been unfairly treated.

There is also the cost of perception. If not properly handled, the CEO’s exit could send negative signals to the public. It could create the impression that the company is “in trouble” and inevitably affect the share price – at least in a mature stock market.

According to James McRitche in his article “When the CEO Really Must Go” (2011), there

https://www.facebook.com/businessdayng

Bisi Adeyemi is never a “good time” to act, “so do it when you make the decision”. Many underperforming CEOs think they are doing a good job. In this regard, the Board must tell the truth early on.

The CEO shouldn’t get a bonus he/she doesn’t deserve because the Board doesn’t want to “demotivate” them. If the Board is not getting the expected results, it should communicate this clearly to the CEO. Upon coming to a decision that firing the CEO is the best in the circumstance, the Board needs to handle the exit with great care. The CEO should be allowed to exit “with grace”, quietly so that both parties can move on without bad blood.

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

@Businessdayng

18

Monday 17 February 2020

BUSINESS DAY

In Association With

A united Ireland

Irish unification is becoming likelier Time to start thinking about what it might mean

F

OR MOST of the century since Ireland gained independence from Britain, control of the country has alternated between two parties. On February 8th that duopoly was smashed apart, when Sinn Fein got the largest share of first-preference votes in the republic’s general election. The party, with links to the Irish Republican Army (IRA), which bombed and shot its way through the 1970s, 1980s and 1990s, won with a left-wing platform that included promises to spend more on health and housing. Yet it did not hide its desire for something a lot more ambitious. “Our core political objective”, its manifesto read, “is to achieve Irish Unity and the referendum on Unity which is the means to secure this.”

Scottish independence has grabbed headlines since Brexit, but it is time to recognise the chances of a different secession from the United Kingdom. Sinn Fein’s success at the election is just the latest reason to think that a united Ireland within a decade or so is a real—and growing—possibility.

That prospect means something far beyond the island of Ireland. The Irish diaspora includes more than 20m Americans. Parties to ethnic conflicts across the world have long found common cause with Northern Ireland’s Roman Catholics, who contend that the separation from the south is an illegitimate vestige of 500 years of incompetent and often callous domination from London.

Ireland, source of pubs, poets, playwrights and too many Eurovision songs for anyone’s good, has soft power to rival a country many times its size.

Until today, however, unification has never been more than a Republican fantasy. Even as the IRA waged a bloody campaign in the 20th century, the north’s constitutional status was cemented by a solid Protestant majority and the financial and military backing of the British state. The Good Friday agreement of 1998 took the heat out of the struggle, bringing an end to the Troubles, which had claimed over 3,500 lives.

Many Catholics were content to have representation in Northern

A Balkan beViral slowdown

How China’s coronavirus epidemic could hurt the world economy Covid-19 brings many unquantifiable risks

W

HEN SHOCKS hit the global economy, Wall Street looks to history to see what will happen next. The outbreak in China of covid-19, a respiratory disease, invites a comparison to the last one, SARS. In that outbreak in 2003 China suffered a sharp hit to its growth, followed by a strong rebound. Although covid-19 has now claimed more lives than SARS, investors remain optimistic that its economic effects will follow a similar path.

On February 13th Hubei province, centre of the outbreak, announced 14,840 new confirmed cases, a sharp rise. That was because it suddenly started including CT-scan Ireland’s government thanks to that agreement, and to see their culture, flag and sports celebrated and subsidised. The Protestants have their terrorists, too, and a campaign for unification was thought to risk opening old wounds, with bloody consequences.

Brexit is one reason all this has changed. The north voted against, but the biggest unionist party and England voted for. Nationalists were not the only ones to be angered by the current home secretary, who suggested using the threat of food shortages to soften up the south in the negotiations, heedless of the famine in the 1840s when all of Ireland was under British rule. Brexit also creates an economic border in the Irish Sea, between Northern Ireland and Britain, even as it keeps a united Ireland for goods. Although services will become harder to trade with the south, trading goods will be easier than with Britain. In that the north’s six counties are affected more by what happens in Dublin, the value of having a say in who governs there will grow.

The pressure for unification is about more than Brexit. Northern Ireland’s census in 2021 is likely to confirm that Catholics outnumber Protestants for the first time. The

republic has also become more welcoming. The influence of the Catholic church has faded dramatically and society has become more liberal. Over the past three decades restrictions on contraception have been lifted and gay marriage has been legalised. All this explains why support for unification in Northern Ireland appears to have risen in recent years. In some polls respondents show roughly equal support for it and the status quo.

That leads to the last reason for thinking that unification is more likely. Even though the Good Friday agreement reconciled some Catholics to remaining in the United Kingdom, it also set out how the north could peacefully rejoin the republic (see article). A British secretary of state who thinks it likely that a majority favours unification is bound to call a vote on the north’s constitutional status. To change the republic’s constitution, another referendum would be required in the south.

The EU has already said that Northern Ireland could rejoin the bloc under Ireland’s membership after such a vote, meaning that for Northern Irish voters a referendum on Irish unity is also a second referendum on Brexit. Unlike an

independent Scotland, which would have to go it alone (at least until the EU agreed to admit it), Northern Ireland would immediately rejoin a larger, richer club, from which it could win big subsidies—if not, perhaps, as big as the subsidy it gets from Westminster today.

There are obstacles and uncertainties. Sinn Fein’s recent success may turn some in the north against unification. Brexit may turn out to have less effect than expected. A British secretary of state may use the wriggle room in the Good Friday agreement to hold off calling a referendum. Many British politicians worry that such a vote would be an administrative headache or, worse, provoke violence. So do their Irish counterparts (barring Sinn Fein), though they must always be seen to be fully behind unification.

Yet sooner than most people expect, the momentum for a united Ireland could come to seem unstoppable. If Scotland chooses independence, many in Northern Ireland would lose their ancestral connection to Britain. If the government in Westminster persistently refused to recognise that there was a majority in favour of unification in Northern Ireland, that could be just as destabilising as calling a referendum.

diagnoses, not just specific tests for the virus. Although the statistical fog is thick, indicators such as the fall in new cases outside Hubei and the total of suspected cases suggest that the rate of fresh infections may be trending lower.

Most economists have thus only nudged down their forecasts for fullyear global growth. Chinese stocks and commodities, which track economic prospects, have clawed back ground after initial falls. Global stockmarkets are higher than they were in January, when the severity of the outbreak became clear. We hope their optimism is justified. Yet the comparison makes two assumptions: in supposing that containing the virus maps neatly onto a better economic outlook; and in thinking that the world still works as it did when SARS was a threat.

There is an inherent tension between China’s apparent success Continues on page 19

Monday 17 February 2020

BUSINESS DAY

19

In Association With

Frustrated are the peacemakers

Why the United Nations cannot end wars in the Arab world

It’s not for lack of trying

E

VEN AFTER nearly a decade of carnage, Syria’s civil war still manages to shock. More than 700,000 people have fled a regime offensive in Idlib, the country’s last rebel-held pocket.

Shelter is scarce; with temperatures near zero, families sleep rough on the roadside. Desperate to keep millions of refugees from crossing its southern border, Turkey has deployed thousands of troops to slow the Syrian advance, risking conflict with Russia, which backs Bashar al-Assad, Syria’s dictator, with jets in the sky and mercenaries on the ground. At least a dozen Turkish soldiers have been killed.

Against this backdrop Geir Pedersen, the United Nations special envoy, is pressing ahead with a committee meant to redraw Syria’s constitution—a body Mr Assad has already said he will ignore. As the regime draws closer to Idlib, as another 1m civilians prepare to flee, the UN has staked time and prestige on an effort that was doomed from the start.

Since 2011, 13 UN envoys have tried to play healer in the Middle East’s civil wars: four in Syria, six in Libya and three in Yemen. None has succeeded. The war in Syria is winding down only because the regime has slaughtered its enemies. Libya and Yemen are failed states. At best the UN’s efforts have been ineffective. At worst, in Syria, they helped tip momentum towards one of the warring parties.

There is a large body of academic research on how wars end. One

study finds that including women in negotiations makes them more likely to succeed. Another posits a link between failed ceasefires and subsequent success, which seems a verbose way of saying that if at first you don’t succeed, try again.

Mostly, though, wars end when at least one party decides that the cost of continuing outweighs the possible benefits. That is a hard choice for the losing side to make in a civil war. Combatants cannot simply lay down their arms and go home. Defeat can mean annihilation. In 1997 Barbara Walter of the University of California analysed half a century of resolved conflicts.

She found that just 20% of civil wars ended in a peace deal, compared with 55% of inter-state conflicts.

“Groups fighting civil wars almost always chose to fight to the finish,” she wrote.

If outsiders want to broker a deal, they must change this calculation. The Dayton accords, which America negotiated in 1995 to end the war in Bosnia, are often cited. But America and its NATO allies were not mere negotiators.

They were also dropping bombs on one of the belligerents. In Syria, by contrast, “I’m conscious that I have almost no leverage,” says Mr Pedersen. Even when backed with weapons, diplomatic efforts often fail. America could not bring durable peace to Afghanistan or Iraq, despite its might.

In peacekeeping, unlike peacemaking, the UN has often succeeded. The territorial dispute in Cyprus, though still unresolved, has not

caused any deaths since the 1990s.

But there must be a peace to keep.

The UN has only rarely authorised outside countries to shoot their way in to impose one. Failing that, with one belligerent (like Mr Assad) on a roll, there is no incentive to stop fighting and let the blue helmets in.

So the UN set its sights lower.

The former special envoy, Staffan de Mistura, pursued local ceasefires— “freeze zones”, as he called them. A tally in 2018 by the Atlantic Council, a think-tank, looked at 18 such truces in the Damascus suburbs.

The median agreement held for just ten days; only three lasted longer than a month. They allowed Mr Assad to regroup. He did not have enough men to fight on all fronts, and the men he had were often bad at fighting. Though the regime could not tolerate well-armed rebels in the suburbs of Damascus, neither could it afford to throw troops into meat-grinder urban warfare. With the UN’s help, Mr Assad cut deals in the suburbs, then starved residents into submission.

A similar approach in Yemen focused on Hodeida, a strategic port that has seen a lot of fighting.

In December 2018 the warring parties struck a deal in Stockholm that called for an immediate ceasefire and a redeployment of forces. A year later, aid agencies reported that Hodeida was still the most dangerous governorate for Yemeni civilians, accounting for one-quarter of all casualties.

Though the UN focuses on creating safe zones, none of the Middle East’s civil wars is truly local. Iran

and Russia intervened to support Mr Assad. Gulf states sent arms and money to his rebel opponents and laid waste to Yemen with American support. The situation in Libya is so chaotic that even dirt-poor Chad has become a player.

But the UN looks powerless to halt such support. Syria is not subject to an arms embargo, while restrictions in Yemen apply only to certain groups, such as the Houthis (whose Iranian patrons ignore the edict). The Security Council, where America, Russia, China, France and Britain hold vetoes, would probably fail to impose a blanket ban on either state. UN members such as Turkey and the United Arab Emirates suffer no consequences for violating the organisation’s arms embargo on Libya.

Officials say they are doing all they can. At a conference in Rome in December, Mr de Mistura compared himself to a doctor working on a chronic case. “You cannot cure everything. Some diseases are difficult—but would you abandon the patient?” he asked. “You try to reduce the pain until the treatment is found.”

Yet the UN often fails to do even that. Unable to stem the flow of weapons, it is left to preside over talks ever more divorced from reality. It took more than a year just to agree on the members of Syria’s constitutional committee. Mr Assad said his delegation to its first meeting was not there in an official capacity. Still the talks lurch on—not even a palliative, in Mr de Mistura’s metaphor. More like a placebo.

How China’s coronavirus epidemic could hurt...

Continued from page 18

in containing the epidemic and its growth prospects. Though less lethal, covid-19 seems more infectious than SARS. China has slowed its advance only by severely limiting people’s movement and closing businesses. If the government were to relax these controls too hastily, progress could stall or even go into reverse. So far, officials have erred on the side of caution. Provinces accounting for more than 90% of Chinese exports have kept factories either shut or running at low capacity since January 31st, when the lunar new-year holiday was due to end.

It is hard to overstate the effect on the economy. Coal consumption is more than a third lower than the average for this time of year.

Property sales are down by more than 90%. After the holiday some 200m people usually leave their home towns to return to work. This year the trains that carry migrants have been nearly empty. Cities have warned outsiders that they might face 14-day quarantines. Nine out of ten companies surveyed by the American Chamber of Commerce in Shanghai have employees working from home. Couriers still zoom around on their electric motorbikes, but the takeaway trade is not saving restaurants because people fear eating meals prepared by strangers who may be infected. Grabbing a latte is a risk too far. Starbucks has shut half its 4,000-plus cafés in China.

The second doubt is over the relevance of SARS as a comparison.

The global economy has changed since 2003, when SARS struck.

China now accounts for 16% of global GDP, up from 4% back then.

And it is the world’s second-biggest importer, so any weakness, however temporary, is felt far and wide. Already, some of its firms are trying to get out of contractual commitments to import copper and liquefied natural gas. And its tourists, who spend $250bn a year on overseas travel, are staying at home.

20

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

21

22

Monday 17 February 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

CONSUMER GOODS

Key takeaways from Nigerian Breweries Q4 ’19 result OLUFIKAYO OWOEYE

N

ig er ia’s largest beer-maker Nigerian B re w e r i e s has released its result full year 2019 for the period ended 31 December 2019.

Here are the key takeaways from the result Amidst a strong double-digit inflation environment, the beer maker reduce cost of sales and administrative expenses by 2.9percent Year-on-Year and 6.9percent Year-onYear respectively to N191.8 billion and N19.4 billion apiece.

The moderation in administrative expense reflected declines in employee benefits such as salaries & wages and transportation allocations.

The company recorded N2.7 billion in origination and reversal of tem-

porary differences that reduced effective tax rate to 31.0percent in full year 2019 as compared to 33.9percent in 2018.

Net operating cash flow improved by N8.4 billion Year-on-Year to N38.7 billion in full year 2019.

Management maintained capital expenditure intensity at full year 2018 levels of 9.3percent in full year 2019, highlighting its intention to maintain market dominance.

NB is in the market to raise N45.0 billion as part of its N100.0 billion Commercial Paper (CP) programme. This move is likely to result in a reduction in effective interest rate in the current financial year given current yield levels.

The result however has some downside risks.

These include Aggressive competition and sin taxes continued to mute growth in revenue

in full year 2019 (-0.4% Year-on-Year at N323.0 billion). Marketing and

distribution expenses up 10.9percent Year-on-Year was pressured by advertis-

ing, sales promotion, and transportation. Although this marketing effort sup-

ported Q4’19 revenue, its impact was largely muted over the full year period.

L-R: Temitope Iluyemi, P&G government relations director for Africa; Magesvaran Suranjan, P&G president for Asia, Middle East and Africa; Yemi Osinbajo, vice president of Nigeria; Omar Channawi, P&G vice president for Asia, Middle East and Africa, and Adil Farhat, P&G managing director for Nigeria, during a high-level visit to the VP to discuss P&G’s plan to increase its investment in local manufacturing.

Services

KPMG outlines key focus for Audit SEGUN ADAMS

T

he Nigerian arm of global professional services firm KPMG has pointed out the critical areas that Audit Committee members must focus on in 2020 to enhance their effectiveness, strengthen governance and improve the overall performance of organisations.

According to KPMG, six considerations ranging from significant laws and regulations, cybersecurity and data privacy, formal evaluation of Internal Audit, internal control over financial reporting, the implication of the 2019 finance Act, to financial reporting standards are crucial for Audit Committee Members to ask this year.

“These are important questions Audit committee members must ask management,” said Dickson Magombedze, Director Financial Services Industry KPMG at

the firm’s Audit Committee Seminar in Lagos Thursday.

Discussions at the summit brought to fore the need for management to proactively monitor changes in laws and regulations impacting their companies due to increasing regulatory compliance risk and the need to avoid non-compliance

and consequent penalties.

Some of the recent changes management must track and implement include the Central Bank of Nigeria’s 65 percent loan-to-deposit mandate for bank (for those in the banking industry) and the recently signed Finance Act 2020.

“Management should

maintain a Regulatory Rule Book or Regulatory Compliance Dashboard as a way to monitor progress on implementation,” said Magombedze.

Other critical concerns for management would be the processes it has in place for managing cybersecurity risk and data privacy, KPMG said.

Periodic evaluation of

L-R: Elizabeth Oputa, manager of Champagnes and Wines Portfolio, Moët Hennessy, Nigeria; Tosin Ibitoye; Toluope Ayaji; Miriam Dera, winner of Short Film Presentation, Beverly Naya, and Deyemi Okanlawon, head of Silverbird Distribution, at the Night with Stars hosted by Moët and Chandon in partnership with Silverbird Distribution in Lagos.

Internal Audit function, effective internal control over financial reporting, and assessment of the impact of the current year impact of IFRS 9, IFRS 16 and IFRIC 23 on the financial statement is pivotal.

KPMG also advised auditors to ensure management assess the impact of the recently enacted Finance Act, 2019 and makes its findings accessible to the Audit Committee.

Speaking on the role of the Audit Committee in evaluating the effectiveness of the Internal Audit Function, Tolulope Odukale, partner Internal Audit Risk and Compliance Services KPMG, said there is the need to validate completeness and adequacy of the Internal Audit charter.

While the independence of the Head of Internal Audit must be established, an external quality assurance review of the Internal Audit func-

tion must be carried out once every three years.

Among other things, holding in-camera sessions with Head of Internal Audit excluding management from such meetings will ensure that reports are done without fear or favour.

The role of the finance function in today’s fastchang ing w orkplace means that talent loss in key finance roles would have significant implications on a business.

“The finance function has gone beyond reporting historic data as it is now required to interpret those data and provide strategic insights on a firm’s future based on the information,” said Yetunde Kanu, Partner Management Consulting KPMG. As a result, there is a need for Audit Committees to ensure that a succession plan is in place to ensure the right talents occupy key finance roles at all times.

C002D5556

Monday 17 February 2020

COMPANIES&MARKETS Services

Standard Chartered sponsors the Association of Corporate Treasurers (ACT) 2020 Workshop SEYI JOHN SALAU

S

tandard Chartered Bank was the main sponsor at the 2020 Association of Corporate Treasurers (ACT) workshop titled “Treasury Excellence as Standard” which held in Eko Hotel & Suites, Lagos, on February 5th , 2020. The event attracted a cross section of delegates from Local Corporates, Multinationals and Multilateral organizations.

The Presenter and Chief Executive of ACT, Caroline Stockmann led discussions with treasurers on some of the pertinent issues impacting Treasurers and Chief Financial Officers globally today. She also shared her insights into leadership, communication, strategic influence and the digital impact on treasurers Lamin Manjang, Chief Executive Officer, Standard Chartered Bank Nigeria, in his speech spoke about SCB’s collaboration with ACT in various

geographies on Treasury Thought leadership. He shared extensively on the Bank’s digitization proposition agenda and various projects and solutions being developed by the Bank’s global innovation entity- SC Ventures. He noted that SC Ventures acts as a platform and a catalyst for promoting innovation; investing in disruptive financial technology and exploring alternative business models. To date, SC ventures has developed over 40 proofs of concepts in the digital space, several of which are now being commercialised by collaborating with our clients either directly or in cocreation platforms with our technology partners to differentiate and grow their businesses.

Commenting on the event, Lamin said, ‘‘We are at the forefront of providing first in class solutions and services such as our automated award-winning Liquidity Management solutions which provides seamless

flows, cost saves, yield enhancements and reporting for our valued corporate clients. For us, this sponsorship serves as one of the many ways we continue to reiterate to our clients and stakeholders within the sector that we are committed to their business growth and here for good’’ O m o l a ra Ad e nu s i , Head of Cash SCB Nigeria, in addition, emphasied the importance of the evolving role of Treasurers as key partners in strategic decision making in organizations and highlighted the importance of digitalization in driving the transformation agenda for Corporate Treasurers. She noted that the Bank offers liquidity management solutions which are specifically tailored to the needs of organisations.

SCBN won Best overall bank for cash management in Nigeria 2018 and 2019 by Global Finance - A testament to its expertise in solutions and service delivery.

COMPANY RELEASE

Builditup Lands and Home deepens knowledge on land banking strategies …launches new e-book

I

n a bid to assist landed property investors and realtors with the right information on locating the right land banking investment properties, Ogunyemi Damilola, the founder Builditup Lands and Home Properties has launched his e-book.

Titled ‘How to Locate the Right Land Banking Investment Proper ty’ Damilola latest release comes with a range of resources that enlightens investors on how to determine where to find the best deals, at what price, how to ensure appreciation of price in the future, how to evaluate a property to know a fair price, the precise type of real estate that will ensure they have the best chance at cash flow and appreciation; amongst others.

Illustrating strategies for locating and acquiring the right land banking investment properties, this book is practical, highlyeducational and inspiring.

The author provides investors with a navigation and strategy that can be utilized when trying to locate the right land banking investment property.

The book also offers the investors proper guidance and expertise to understand what they are getting and why they are getting it, providing realtors and Investors with top notch representation they truly deserve.

He explained that thousands of people both at home and in diaspora have lost their hard earned money trying to buy lands for future purpose to resell or to build their dream homes by investing in the wrong property, company or family.

He said it has become night mare as they wonder if their dreams of owning property will ever come to life, adding that if people are able to implement the right strategies and tactics, they are just going to become a much better investor or realtor.

Damilola started out in real estate corridors by supplying doors to Providus bank before including the wide range of building materials and services that served a lot of real estate companies where he was able to build long standing relationships with the industry top players after which he consulted for real estate companies before he founded builditup lands with Cielo City Estate with 4 estates within one year.

Damilola the author and CEO of Cielo City Estate and Build It Up Lands, a Yoruba native and long-time Lagos resident brings years of on-the-job brokerage experience and real estate knowledge drawn from real life experiences.

In recent times, he has successfully carried out sales of real estate properties in the Ibeju-Lekki area of Lagos State. For well over a year, the agency has earned the trust and respect from quite a number of satisfied buyers, sellers, brokers and agents alike.

BUSINESS DAY

23

24

Monday 17 February 2020

BUSINESS DAY

Monday 17 February 2020

BUSINESS DAY

25

INTERVIEW

‘Many Nigerians are not aware of the opportunities in the Fixed Income Market’ In this interview, DIPO OLADEHINDE and BUNMI BAILEY speak with STEVE OSHO, Co-Managing Partner at Comercio Partners Limited and Managing Director at Comercio Partners Capital on the recently concluded Lagos State Series III Bond Issuance of N100 billion Financial Inclusion and TradeFi, an innovative online investment platform that not only allows investors access the fixed-income market with convenience but also educates them on investing.

C

ongratulations on the success of the new Lagos State Government Series III Bond Issuance. Can you bring us up to speed on the role Comercio Partners played in this series?

We were one of the Joint Issuing Houses appointed by the State Government to oversee the bond issuance. As a Joint Issuing House, we were part of the team that advised the State on the terms of issuance in line with market conditions and other relevant factors, the necessary approvals required by regulation for the success of the issue, and liaised with the regulators on behalf of the State throughout the bond issuance process. But our role did not only stop there, it also extended to distribution, marketing and educating the investing public on the issuance, it’s terms and the process from the day the book building opened on 31st December 2019 to the date it closed on 17th January 2020.

Our role was also complicated by the market expectation for higher rates at a time when rates were generally declining.

Lagos State wanted the 10-year bond to print within a range of 11.75percent to 12.25percent which was a major challenge to a lot of investors at that time. The reason was that investors wanted to get a higher premium over the sovereign security and at the time, a 10year sovereign paper was trading between 11.40 and 11.50.

As a result, there was a lot of pushback from the investors especially the Pension Fund Administrators (PFA) who were looking to get something far better than the maximum of 12.25 percentthat the State expected. There was also some resistance from some classes of investors as they expected Lagos State to revise the upper band of the return or interest rate of the bond upward to around 13 percent.

In addition, considering the fact that the issue was a first of its kind in terms of size (N100 billion) and no other sub-national entity had come up with an issue of that size before now.

The issue itself demonstrates the trust and market acceptance enjoyed by Lagos State among the comity of states in the country. So for Lagos to come to the market at that point in time and

give a rate guidance of 11.75percent to 12.25percent based on the advice of the Issuing Houses and the fact that they did not want to move above those levels, I believe it was quite audacious of them and at the same time the responsibility of us (the Issuing Houses) to ensure that the issue was successful, which we indeed achieved.

this development is good for us.

How will this new CBN decision affect financial inclusion?

I think the CBN has been doing a lot of things. If you look at the policy thrust that was rolled out last year by the CBN governor when his tenure was renewed, you will see that the apex bank has been trying to do a lot of things by using the monetary tools that is within its control to achieve results. We have seen a lot of credit extension to the agricultural sectors, adjustment to the CRR, policies aimed at reducing the borrowing cost of the government, restriction of non-bank investment in OMO, setting up committees to drive financial inclusion and engaging with a lot of banks and stakeholders to improve same. But I believe there are still some challenges because the number of unbanked population is still very high relative to the number of banked population.

This issue has continued unabated because of the high illiteracy level in the country. The solution is not just limited to the government but to the banks, investment banks and finance companies. If you look at the demography of Nigeria, 40 to 50percent constitute the young and we still have majority of them unbanked because a lot of them are illiterates, we also have the cultural issues and background issues. So, these are the things that need to be addressed to ensure that the financial inclusion drive actually improves in Nigeria.

And again the approval of the Payment Service Banks (PSBs) will help contribute more to how we can drive financial inclusion.

What is the significance of this Bond Series for Lagos-State?

There are a lot of gaps or deficits in terms of infrastructural development that Lagos State wants to finance. So, the bond will go into some projects under the Ministry of Environment, Water Resources, Education, and a lot more.

Nigeria’s Central Bank in its first monetary policy meeting for the year, raised the Cash Reserve Ratio (CRR) of banks, in what it says would help in mopping out excess liquidity in the system so as not to further add pressure on inflation which increased by 11.98 percent in December. Global rating agency Fitch, says the Central bank decision is credit negative for the sector. What’s your take?

I think it is a mixed bag of reactions. If you consider Fitch’s argument, it makes sense because what they are saying is that the Central Bank of Nigeria (CBN) has come out with a policy to increase the Loanto-Deposit Ratio (LDR) which means that the apex bank is trying to make banks lend more to the real sector. But at the same time, the apex bank is trying to draw up a policy to adjust the CRR upward as contained in the communiqué of the said Monetary Policy Committee (MPC) meeting where the committee voted to increase the CRR. In sum, taking a lot of credit from the banks who are expected to be pushing that same credit to the real sector is negative because it means you are putting them in a very tight position.

But if you consider the argument of the CBN regarding the inflationary pressure on the Nigerian economy due the excess system liquidity created by the policy that restricted locals (local investors except the banks) especially PFAs, HNIs and a lot of asset managers from invest-

ing in Open Market Operation (OMO) security, you will agree that there was a need to mop up the excess system liquidity. As a result of the policy, locals are forced to the Nigerian Treasury bills space which are borrowings by the Federal government.

If you look at the supply curve on that space, it has been within a range of N50billion to N100 billion, whereas you could have liquidity of as much as N200 billion in the market. That is why there has been a significant drop in interest rates across all securities.

We have seen a lot of credit extension to the real sector since the time they announced the policy to increase the LDR ratio. We have seen over N2 tril-

lion extended to the real sector which is good and makes it an opportunity for a lot of small and medium-sized enterprises (SMEs) to finance their projects and at the same time contribute to GDP growth. But there is also a need to manage the excess liquidity that comes into the system and the only tool available to the CBN is an increase in the Monetary Policy Rate (MPR) or other tools to tighten liquidity in the market and tame inflationary pressure. And from their own point of view, I think adjusting the CRR upward is one of the right tools to use to moderate inflation without too much of a negative impact on the economy. We need to see how this will play out, but

I think they are heading in the right direction.

How will it affect your ability to mobilize funds and the interest you pay on such funds?

I believe so far it is a good thing for us. Before the implementation of the new LDR rate and the restriction of access to the OMO market, funding usually flowed to banks and the OMO market. However, since the coming to light of the policies, funding flows have shifted to equities, bonds and other investments. We have seen PFAs, insurance companies, asset managers and HNIs looking for assets to invest in. The market for primary security issuance which is our playing field stands to benefit significantly through significant demands for new offerings. Accordingly, I think

New VAT Charges which started on February 1 affected Nigeria Stock Exchange (NSE) transactions with an increase of 7.5%. How will this new VAT regime affect investors’ appetite on fixed income securities?

I believe the VAT increase is for people that invest in equity so it will affect them more. For people investing in government securities, these securities are mostly tax-free. So, the only thing that increased is the charges or fee that CSCS or Nigerian Stock Exchange (NSE) will be paying. You know they factor charges like the debit alert charges, transaction alert charge and other charges into clients’ accounts. So, the increase in VAT will affect investors in the equities space more. But for a fixed-income securities investor, especially those investing in sovereign issuances and state bonds, most of these investments are mostly tax-free.

In terms of advocacy, do you think Nigerians are aware of

the benefits of investing in the Fixed Income market?

If we look at the number of educated Nigerians alone, I will say No. There are lots of people who are financially literate but when it comes to Fixed Income, they struggle to understand the space. I believe education is improving but we have to keep educating more people to know that there are other investments they can invest in apart from equities. We need to educate people that there are fixed deposit accounts that can give constant or better returns on investment over a period of time and most especially we need to inform people that its safe as well.

Also, with firms like Comercio Partners Limited coming up with investment trading apps that allow people to trade securities from the comfort of their homes, I think the education that the market needs is already being pushed out and a lot of information is getting out there.

TradeFi, your trading platform was launched last year, how has the participation of retail investors been on the platform?

Tradefi was one of the products launched into the market to bridge the gap between the institutional investors and retail

investors, which was a gap we saw in the market. Don’t forget the combined experience of the Partners that started the business (Comercio Partners) is over 40 years. The App can be accessed on IOS, Android and desktop and it gives prospective investors access to invest in government securities such as treasury bills and bonds. It further gives prospective investors an opportunity to price at a very competitive rate close to what is being obtained in the intra bank market.

The app provides investors the confidence that they don’t need to walk to their banks before making investment decisions, they can actually sit down and look at were bonds and treasury bills are trading in the interbank market on a daily basis because we have an alliance with few of the banks or few of the primary dealers who are quoting on those instruments.

We also have an arrangement with a Custodian where every transaction done is being held in custody for the client.

So when you log into the App, you can see your portfolio and also see the mix of portfolios you have either in bonds or treasury bills over a period of time.

Essentially, the platform creates an opportunity for a lot of people to learn more and also simulate a demo investment

before going to the live room. It gives people the liquidity and comfort to trade at any point or carry out transactions.

What is the current size of your customer base and what is the value of transactions carried out so far on the platform?

When we rolled out we started with family and friends, who were testing with a minimum of N100, 000, and over time we have registered over 1000 users on that platform with over 180 active users currently. Apart from that, we started from zero investment to the point we received our first N100, 000 investments and today, we have achieved a turnover of four to five billion naira. Almost every day we have about 10 to15 new users and the platform has been strongly supported by FMDQ which gives us a lot of bragging right.

What is the next big news we will receive from Comercio Partners? And where do you envision Comercio Partners in five years’ time?

We are working on quite a lot of stuff which I might not be able to share with you at the moment. In terms of the strategic

plan for the business, we are looking at opportunities in the financial space. Our mid to long term plan is to evolve into either a regional bank or a National bank.

We have seen a lot of gaps in the market and we are an institution that is driven by knowledge of the financial market and at the same time, we are product-driven. We also believe that in solving problems, we have to be very strategic in what we do most especially in terms of product innovation, service excellence, and at the same time, giving customers value for money.

What sets Comercio Partners aside from its competitors?

Our company started in June 2016 and it has been wonderful for us. We have been able to grow all the pillars of business that we set out to do.

For us at Comercio Partners, we know what we want, where we want to be and what we want to do to get there. This knowledge is the force that drives us to become who we want to be. For us, the most important thing is having a good structure in place and at the same time ensure we hire the right staff to drive the vision with us.

26

Monday 17 February 2020

BUSINESS DAY

real sector watch No reforms yet 3 months after inauguration of industry minister ODINAKA ANUDU

T

hree months after the inauguration of Niyi Adebayo as minister of Industry, Trade and Investment, the much-awaited reforms in the trade and industrial sectors of the economy are yet to take place.

Adebayo was inaugurated alongside other ministers in November 2019, but it seems there is no sunny side yet from his ministry.

At the moment, Nigerian products are not competitive locally or globally because of several internal factors such as multiple taxation, high cost of energy and poor infrastructure. Analysts say while all of these issues are not in the minister’s purview, the issue of export rejections must worry him as the Nigerian Export Promotion Council remains one out of many agencies under his ministry.

As at today, the European Union is yet to unban Nigerian beans and other crops which it prohibited from entering its domain since 2015.

After extending it in 2016 for three years, the ban was supposed to end in June 2019, but no serious engagement has been done by Adebayo’s ministry to ensure that the products are unbanned, say economic watchers.

The European Union funded the National Quality Infrastructure with about €12 million to better the standards of local and export products, but the country has failed to make use of that to standardise exports.

Degun Agboade, president of Nigeria Association of Small and Medium Enterprises (NASME), complained at the Nigerian Economic Summit in October 2019 that the infrastructure had been abandoned.

Africa’s most populous country has also failed to tap trade opportunities.

In 2000, the US opened its market for sub-Saharan African (SSA) countries through the AGOA. The idea was that countries like Nigeria would export up to 7,000 products to the U.S. without paying any duty or tariff.

The arrangement was supposed to end in 2015 but it was extended to 2025 to enable SSA countries, which

Niyi Adebayo

did not take full advantage of the first tranche, to do so.

Some of the products/ commodities eligible for export to the U.S. market are poultry, bees, meat of goats, fresh, chilled or frozen, turkeys, live ornamental fish, other than freshwater, mackerel and sardines.

Others are fresh or chilled swordfish other than fillets, milk and cream, yoghurt in dry form, butter, cocoa powder (sweetened or not), guava, apples, ginger, juice and pine apple, among many others.

Unfortunately, despite this opportunity, Nigeria is yet to take advantage of the market opening to ship its local products to the U.S. market. Only petroleum products have benefitted from this trade treaty.

In 2014, Nigeria’s non-oil exports to the U.S. were $2.6 million while South Africa exported in excess of $1.2 billion.

Brent Omdahl, former commercial counsellor, US Consulate, Lagos, told BusinessDay in an exclusive interview in 2019 that participating countries, including Nigeria, needed to understand the concept of AGOA. He said being a participating country and enjoying tax free did not mean not following due processes.

“It is the Nigerian industry that needs to organise itself,” he noted. www.businessday.ng

The organisation is still not happening today.

Secondly, the minister is yet to come up with policies that will trigger economies within the economy. Think about Aba, Nigeria’s leather hub. Many shoe and garment makers in the industrial city cannot afford mere machines needed to raise output. The machines many of them use are crude and much of their work is still done by human labour.

“We are already struggling to meet demands,” Ken Anyanwu, secretary of the Association of Leather and Allied Industrialists of Nigeria (ALAN), who produced Nigerian armed forces shoes in 2016, told BusinessDay recently.

“We in Aba have no good machines, and this is where the problem lies,” Anyanwu said.

“The Bank of Industry has done its best by giving some of us N300,000 each, but it takes $250,000 to N750,000 to set up a standard shoe factory. So, what can N300,000 do when the industry is capital intensive?” he asked.

There is yet little efforts by the Ministry of Industry, Trade and Investment to trigger this potential in Aba. Apart from shoes, many cocoa trees are old and need new investments. Cocoa may fall into the Agriculture Ministry, but it is mainly a cash or export crop and was the major non-oil export

commodity for Nigeria for years. Many cocoa farmers who spoke with BusinessDay recently complained about low level of investments, aging farmers and poor funding. Little wonder products like shea and sea foods are increasingly displacing cocoa as highest non-oil export earners. Up till now, the industry is yet to get the desired attention.

More so, many manufacturing companies are struggling to stay afloat. From brewers to pharmaceutical firms, recent financials of firms show the struggle is on. Analysis of Unilever’s financials for the 2019 full year shows that the firm recorded a series of declines year-on-year in both sales and revenue across its major segments, especially in home and personal care products. PZ Cussons has also recorded consistent drops in its margins. The biggest brewer Nigerian Breweries also suffered decline in margins in its 2019 full-year financials.

Many firms in Nigeria today are struggling as high poverty and unemployment rates continue their onslaught on consumer wallets.

However, with high cost of production necessitated by poor business environment, many manufacturers who deserve incentives are not provided with any lifeline.

https://www.facebook.com/businessdayng

The Pioneer Status granted to a few companies, which exempts them from paying income tax, has been one of the biggest achievements of Okechukwu Enalamah, former Industry, Trade and Investment minister.

“Now is time to expand the list to accommodate key manufacturers that are distressed, or those in other industries not covered at the moment,” Ike Ibeabuchi, ceo OF md Services, a manufacturing and services outfit, said.

In September 2019, Guinness Nigeria Limited, StrongPack Limited, Flexipack Ltd, Dangote Ibese Lines 3 and 4, Dangote Cement Obajana Line 4, Promasidor Nigeria Ltd, Daraju Industries Ltd, West African Packaging Ltd and Flour Mills of Nigeria Plc, among others, were denied pioneer status.

At the moment, the Nigeria-Benin border is still closed despite an earlier January 31 deadline for its re-opening.

While the closure favours some manufacturers who now raise their production and capacity utilisations, it disfavours exporters who can no longer move their goods to West Africa. Many manufacturers have halted exports to Africa owing to the closure.

Okhai Ehimigbai, export manager at Aarti Steel, which exports steel products and zinc ash, said his company had stopped export to the Economic Community of West African countries (ECOWAS) due to the closure of the border. He further said export to Ghana by sea would take one month as against two weeks or less through the land borders.

“We can’t export because we can’t get all the containers on time,” he said.

The implication of this on trade and non-oil inflows can be dire. As of the third quarter of 2019, Ghana was the biggest importer of Nigerian non-oil products. It imported 17.18 percent of made-in-Nigeria products within the period, beating the European Union and China, according to the NBS data. This is no longer a possibility. So, while one sector in Adebayo’s portfolio gains, another sector loses.

“Complete shut-down of cross border trade [im@Businessdayng

ports and exports] between Nigeria business and their counterparts in the West Africa subregion has grave consequences for investments and jobs,” the Lagos Chamber of Commerce and Industry (LCCI) said late last year, in a statement signed

by Muda Yusuf.

“Many industries have invested in products registered under the ECOWAS Trade Liberalisation scheme [ETLS]. These are investors whose business models were anchored on market opportunities in the ECOWAS. These investments have been completely disrupted and dislocated,” he further said.

The shut-down of the border is coming when the entire continent is planning to commence the African Continental Free Trade Area (AfCFTA) agreement.

More so, the Export Expansion Grant (EEG), which is a practice in Brazil, China and many European countries, was suspended since 2013 and it is yet to be fully reinstated. Even though there have been cases of abuse of the EEG by fraudulent firms, data have shown that export will rise when the EEG is given to genuine exporters. For example, non-oil export rose from a little above $1 billion in 2005 to $2.97 billion in 2013 when exporters enjoyed the EEG. Again, the logistics problem of manufacturers is still a big challenge, with many firms facing hiccups to import raw materials or export their product owing to the congested state of Apapa and Tin Can roads in Lagos. Currently, the minister has failed to engage in discourses around Nigeria’s seaports despite that it is one of the biggest issues in the manufacturing sector.

According to a report by the LCCI, about 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day, despite that access roads and the two ports were originally meant to accommodate only 1,500 trucks.

In the 2019 fourth quarter CEOs Confidence Index released by the Manufacturers Association of Nigeria (MAN) recently, port challenges ranked 3rd out 12 biggest challenges facing manufacturers in the country.

Monday 17 February 2020

BUSINESS DAY

27

real sector watch

Declining margins show NB operating in tough environment Gbemi Faminu

T

he financials of Nigerian Breweries (NB), a giant brewer in Nigeria’s manufacturing industry and a controller of 56 percent market share, have shown the impact of the country’s biting economy as margins fell, though marginally.

Analysis of the brewer’s 2019 full-year results show that its revenue declined by a marginal 0.4 percent to N323 billion, from the 324 billion realised in the previous year.

The company’s profit before tax fell to N23 billion from N29 billion, and after a tax deduction of N7.2 billion its profit for the year fell by 17 percent from N19 billion to N16 billion.

Earnings from its operating activities dropped by 4.6 percent to N35.2 billion from N36.9 billion recorded in 2018, and as part of its Corporate Social Responsibility (CSR) activities, NB disclosed that it made gifts and donations valued at N94 million in 2019.

Marketing and distribution expenses of the company increased by 10 percent due to higher costs of

advertising, sales promotion, and transportation.

Although this marketing effort supported revenue in the fourth quarter, its impact was largely subdued over the full year period.

On the Nigeria bourse, the company’s market capitalisation dropped by 31 percent to N471 billion from N683 billion in 2018, while it declared a dividend of N18 billion, representing 37 percent drop from the N29

billion declared in 2018.

According to the company’s reports, the decline in revenue was due to the country’s challenging environment which also affected it in 2018.

“The results of the company were adversely impacted by the increased excise duty rates which came into effect during the year coupled with a challenging operating environment,” it said.

Analysts say that going

L-R: Chikezie Nwosu, managing director/CEO, Waltersmith Petroman Oil Limited; Yvonne Lokko, industrial development officer, UNIDO; Danjuma Saleh, vice chairman, Waltersmith Petroman Oil Limited; Jean Bakole, UNIDO representative to ECOWAS and regional director, Nigeria Regional Office Hub, and Abdulrazaq Isa, chairman ,Waltersmith Petroman Oil Limited, at a strategic partnership meeting with UNIDO in Lagos recently.

A peep into Indorama Eleme Petrochemicals ODINAKA ANUDU

I

ndorama Eleme Petrochemicals Limited (IEPL) is responsible for the survival, growth and sustenance of many manufacturing companies in Nigeria today. A large number of plastic and allied firms depend on the Eleme-based company for petrochemical resins (or polymer resins) which serve as their raw materials.

The petrochemical company is just one of the several subsidiaries of Indorama-Nigeria Group, which also comprises Indorama Eleme Fertilizer & Chemicals Limited (IEFCL), Indorama PET Nigeria Limited, and Indorama Port Operations.

Since Indorama Corporation of Indonesia became core investor in the old Eleme Petrochemicals Company Limited (EPCL) in 2006 through privatisation programme of the Federal Government, the group has become a game changer in

forward, beer makers in Nigeria will face a tough year as the recent hike in Value added Tax (VAT) and excise duty, and the proposed increase in tariff on electricity are expected to keep consumer discretionary spend under pressure. The industry could also experience higher raw material costs stemming from sustained closure of the land borders.

However, as a manufacturing company, NB engages

the Nigerian economy.

The petrochemical company has solved the major challenge facing a number of manufacturers— poor access to raw materials. Rather than scramble for foreign exchange to import inputs, the company ensures that manufacturers have access to their critical raw materials, enabling them to save costs and improve margins.

The major resins used by plastic and allied companies are polyethylene and polypropylene. Indorama produces about 45 grades of these products for various industries. About 600 of such companies in Nigeria depend on IEPL for their survival.

They are estimated to have over 90,000 workers.

Recently, IEPL completed its 4th Turn-Around Maintenance (TAM), which it completed in record 24 days. This is the 4th since 2006 when it took over EPCL. This is remarkable considering the fact that in Nigeria, TAM is www.businessday.ng

regarded as almost impossible in the refineries and other sectors.

Another subsidiary, Indorama Eleme Fertilizer & Chemicals Limited (IEFCL), has a Train-1 world-class fertilizer plant in Port Harcourt, funded majorly by the International Finance Corporation (IFC). The plant produces 1.5 million metric tons of urea fertilizer, which has revolutionalised farming, boosted food production, helped to ensure food security and propriety for farmers.

Indorama sells about half of the urea production to Nigerian farmers and exports the rest to South America, Brazil, West Africa, Central Africa and other parts of the world, thereby earning foreign exchange which is badly needed by the Nigerian economy. The fertilizer company is one of the biggest non-oil exporters in Nigeria, according to the export records of the Nigerian Export Promotion Council (NEPC).

actively in local sourcing.

Its report states that “Local sourcing is a vital priority in our long-term sustainability agenda and we achieved 52.5 percent local sourcing of our raw materials in 2019. We continue to explore the use of locally grown raw materials in the production of our brands.”

The company is also working on the introduction of new sorghum varieties and the reinvigoration of our existing non-hybrid sorghum varieties with the potential of sustaining higher yields and improving pest and/or disease tolerance It revealed that it has loans which it is still paying to five Nigerian banks in deals signed in 2016 with a tenor of five years. The loan was used to finance its working capital ranging from N6 billion to N15 billion.

Analysts further say that the company’s revenue will experience better days as the brewer revealed in January that its Commercial Paper (CP) programme would launch the 5th and 6th series after concluding the series 1 to 4 of its N100 billion CP programme. It commenced on the 3rd of February 2020, with the se-

ries five existing for a tenor of 180 days, while the series six would be for 270 days.

The company aims to raise N45 billion to support its short-term funding needs. The CP programme is expected to continuously provide support to its cost management initiative with the overall aim of reducing its cost of fund as well as providing opportunity for non-equity investors to put money in the company. It added that it would also be a source of funding for the company.

Despite the drop in its revenue and bottom line, the company, in its report, said it is making considerations to pay its shareholders a dividend of N2 per share to its shareholders. “A total dividend of N16 billion for the 2019 financial year has been recommended by the board for approval,” it said.

The company also disclosed that its 74th Annual General Meeting (AGM) would be held on Wednesday 22nd April 2020 in Lagos in order to discuss the financial report for 2019, declare a dividend , elect members of its audit committee, as well as other issues that concern its growth.

How recycling can boost economy, improve lives, by Nwobodo ODINAKA ANUDU

L

uther Kington Nwobodo, researcher and CEO of Zeugnis International, has said that recycling of PET bottles and nylon is a gold mine and can boost the Nigerian economy.

In an interview with StartUp Digest, he said the country has the capacity to produce more millionaires if the citizens can understand the opportunity in the business.

“The business of PET recycling is very lucrative and the return on investment is over 100 percent,” he said.

Recycling is the process of converting waste objects into new materials. This big business is not yet popular in Nigeria as it is mainly done by few foreigners and multinationals.

Zeugnis International Limited is organising a train-

https://www.facebook.com/businessdayng

ing session for Nigerians of all ages about the potential in PET plastic bottle and nylon recycling.

The training will take place on 14th March at the Lagos Chamber of Commerce and Industry, Ikeja.

Nwobodo told said that after the training, Nigerians would be confident of going into the recycling business.

“PET bottles are littered everywhere and I felt that someone had to find solutions with them,” he said.

“I went to a dump site, stayed there for six months, learned plastics and its different types and I was able to see the gold in it. It is a goldmine, but many people do not know,” he explained.

He further said that recycling is a going trend and the opportunity is so huge that there are only three major participants in it.

“Ninety percent of our plastics are not recycled, @Businessdayng

unlike in Sweden where 95 percent are recycled. In fact, government will even pay you to bring PET bottled in that country,” he disclosed.

He stated that Nigerians need to learn and re-learn about plastics as it is capable of cutting down 23.1 percent unemployment rate in the country.

He said that participants in the training will have direct contacts of proven local and international vendors and could have access to funds/free export financing.

“They could also get onthe-spot demand-supply business deals,” he said.

He said Nigerians should begin to explore opportunities in recycling to lift many out of poverty, urging those who wish to avoid wasting resources in machine sourcing to attend the training.

He said intrested Nigerians can contact him via 08032810868.

28

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

29

30

Monday 17 February 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

‘Make presentation of insurance certificate precondition to participate in Govt. businesses’ Modestus Anaesoronye

T

he Federal and State Government’s have been urged to make presentation of insurance certificates, a precondition to participate in public sector business.

The insurers believe that contractors of government should show evidence that at least they have taken group life insurance for their employees as well as property insurance for their office premises against third party liability.

According to them, this is the only way government can help insurance industry to enforce some of the compulsory lines of insurance available in the law.

They believe that this en-

L-R: Mentees , Oatha Theresa; Margret Moore; Teniola Stuffman; The Founder, Funmi Babington-Ashaye Foundation, Funmi Babington-Ashaye; Tola Makinde and Patience Omoigiade at the launch of Mentors Program recently.

forcement mechanism of government involvement has enabled the pension industry

to grow astronomically in its less than 15 years of implementation, and significantly

Allianz Nigeria provides premium insurance to BRABUS car owners Modestus Anaesoronye

A

llianz Nigeria, local operating entity of global giant, Allianz, recently concluded a partnership to provide car insurance for the owners of luxury vehicle, BRABUS. This partnership made with Blackpace limited, the exclusive distribution partner of BRABUS in Nigeria is just one of the projects aimed at providing insurance solutions to premium class of vehicles says the executive director, Owolabi Salami.

“Aside this we are geared to also provide unique insurance solutions to every spectrum of the community.

This is one among other ini-

tiatives we have put together to target a larger spectrum of the community beyond our customer base”, he concludes.

Explaining the rationale behind the partnership, Opeyemi Jokanola, team lead for Motor Unit notes that the aim is to make car insurance readily available to all motorists. He mentioned that “having a car insurance easily helps to offset the loss of huge sums that maybe incurred in event of an accident especially to premium vehicles’’.

By providing bespoke insurance for any class of vehicle, we contribute our own quota to a more stable and protected community adds Bolade Odanye, deputy

www.businessday.ng

manager for activation and sponsorship.

The Allianz Group is one of the world’s leading insurers and asset managers with more than 92 million retail and corporate customers. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from Property, Life and Health insurance to Assistance services to Credit insurance and Global Business insurance. Allianz is one of the world’s largest investors, managing around 673 billion euros on behalf of its insurance customers - while their asset managers PIMCO and Allianz Global Investors - manage an additional 1.4 trillion euros of third-party assets.

contributed to economy of the country.

Eddie Efekoha, president,

Chartered Insurance Institute of Nigeria (CIIN) during an interview in Lagos implored the government to support the insurance industry by ensuring the initiative on issuing insurance compliance certificate is implemented.

Efekoha told an online media that there is need for force and compulsion to drive sales of insurance, stressing that until people begin to show evidences of insurance whenever they seek something from government, underwriting business would not attain the desired heights.

“The laws have not enabled us to enforce the compulsory insurances. This has handicapped all of us from taking the bull by the horns.

Enforcement of compulsory insurances remained a gap we are yet to unraveled,” he said.

He called on all stakeholders to support the executive bill on insurance and ensure it empowers and transforms insurance operations.

“As there is an executive bill as insurance is concerned, we all have to gather all the resources we have to ensure some bites are introduced in it. We really need enforcement.

“Presently, is there any contract in Nigeria that anybody wants to bid and he is told until you produce insurance on where you reside or as an evidence to show their employees are insured they would not be qualified for such contracts? Until we get to that point, people would not embrace insurance. We need some empowerment, force and compulsion for insurance to really work,” he said.

Insurance expert Funmi Babington-Ashaye launches Mentorship Programme Modestus Anaesoronye

F

unmi BabingtonAshaye, insurance expert and managing director/CEO, Risks Analysts Insurance Broker’s, and also founder of Funmi Babington-Ashaye Foundation has launched mentors program for young professionals to enable them make success in their careers and family lives.

The Funmi BabingtonAshaye Foundation founded five years ago was basically Ashaye’s little way of addressing some of the challenges faced by indigent but brilliant students through yearly payment of their school fees.

The Foundation is in part-

https://www.facebook.com/businessdayng

nership with University of Lagos, Lagos State Polytechnic, and Lisabi Grammar School Abeokuta Ogun State.

Speaking at the launch of Funmi Babington-Ashaye Foundation Mentors Programme, she said that over the years a lot of people have looked up to her for mentorship.

“This I have done in an informal manner. I also noticed

@Businessdayng

that I have God given talent in these areas, having seen the achievements of my mentees over the years in their career and family lives.”

She said specifically, that her involvement in this project is giving back to the society; personal satisfaction; learning opportunity; creating platform for networking activities; transfer of skills; sharing experiences as benefits to mentees, among others.

“My aim as the founder of FBA Foundation is to facilitate exciting, new professional and personal opportunities for everyone involved.”

“I believe you will make the most of this opportunity to build your business, skills, profile and networks, Babington- Ashaye said.

Monday 17 February 2020

BUSINESS DAY

insurance today

31

In association with

E-mail: insurancetoday@businessdayonline.com

Insurer looks at impact of Coronavirus, and how businesses can respond Modestus Anaesoronye

I

nfectious disease outbreaks like COVID-19 have two primary impacts on organizations: Operations and People Operations: Outbreaks can affect business continuity management, cause supply chain and business interruptions, demand effective crisis communications, test risk transfer strategies, cause losses and have a negative impact on business due to associated economic slowdowns. For example, businesses reliant on parts and materials from China are already confronting the threat of supply chain disruptions.

People: Organizations can experience the impacts of a disease outbreak in areas such as absenteeism, returnto-work issues, succession planning, employee communications and employee benefits.

In the face of such a health emergency, gov-

ernments can respond by suddenly imposing strict quarantine measures, such as the cordon around Wuhan. These responses can cause business interruptions and force organizations to slow operations or even cease them altogether.

The impacts of a global disease outbreak can be particularly severe for organizations lacking an adequate communicable-illness policies and response plans. The COVID-19 crisis highlights how organizations must update and expand their crisis management and business continuity plans with an emphasis on employees, customers, supply chain contacts, stakeholders and business assets.

Nancy Green, an executive vice president in Aon’s Commercial Risk Solutions business and coleader of Aon’s COVID-19 task force, reminds us that outbreaks do occur, and “while we can’t predict when one

L-R: Cathy Sanni, head, Human Resources, FBNInsurance; Sunday Ojo, head, Education & Social Services, Down Syndrome Foundation Nigeria; Elizabeth Agugoh, head, Marketing and Corporate Communications, FBNInsurance; Moyosore Ijale, Down Syndrome Foundation Nigeria; Rivers Khumalo, chief technology officer, FBNInsurance; Jackson Ikiebe, head, Information Technology Operations and Governance, FBNInsurance, at the gift presentation to the Down Syndrome Foundation Nigeria held recently.

happens or the scale it achieves – we can prepare for the impact.” In a connected world where global

AIICO strengthening capacity to play beyond the ordinary Modestus Anaesoronye

A

IICO Insurance Plc. is positioning to go above and beyond, leaving no stone unturned in its continued effort to creating and protecting its customer’s wealth and deliver value to its stakeholders. This has reflected in its year-onyear upward trajectory in performance in both life and general businesses.

The phenomenal growth of AIICO’s balance sheet has a direct correlation to its customer base which comprises of retail customers across the length and breadth of the nation and corporate/institutional businesses from both the private and public sectors.

In fulfillment of its obligation to its delighted customers, the company has paid out over N90bn in claims and benefits between 2014 and 2018, resulting in an annual aver-

age growth of 27 percent.

“We value the trust our customers have invested in us. This motivates us to continue to deliver value through our commitment to best practices and operational efficiency for superior customer experience” asserted by Babatunde Fajemirokun, managing director/CEO during a recent engagement with some members of the House of Representatives”

Babatunde Fajemirokun www.businessday.ng

According to a statement signed by SegunOlalandu, head, Strategic Marketing & Communications Department, AIICO Preparations are in top gear to meet the industry recapitalization requirements set by the National Insurance Commission (NAICOM).

Besides the private placements recently concluded with investments from LeapFrog (a leading private equity firm), an ExtraOrdinary General Meeting is scheduled to be held on March 5, 2020 to get shareholders’ nod to raise additional N3.5 billion through rights issue.

AIICO Insurance Plc., a leading life insurer in Nigeria, commenced operations in 1963. It provides life and health insurance, general insurance, investment management and pension management services as a means to create and protect wealth for individuals, families and corporate customers.

business and travel is the norm, worldwide disease outbreaks are inevitable.

Businesses must antici-

pate the threat and assess the economic and financial impact a pandemic or infectious disease might

have on their organizations.

Key steps include updating crisis management and business continuity plans as necessary as well as implementing employee contingency and communications plans for addressing an outbreak’s impact. Understanding the potential impacts on supply chains and mitigating them as necessary is also essential. In addition, organizations should consider how risk transfer methods such as insurance might respond to pandemic-related costs.

Finally, it is important to remember that during times of crisis, not everything goes according to plan. “When plans are tested by black swan events, such as a pandemic,” Green explains, “it can be a forcing mechanism that brings teams together to further develop capabilities, maintain a good decisionmaking environment during an evolving situation and ultimately prepare for the impact by building a path to resilience together.”

PENOP names Oguche Agudah CEO Modestus Anaesoronye

T

he Pension Fund Operators Association of Nigeria (PENOP) has appointed Oguche Agudah as its Chief Executive Officer. Oguche becomes the first CEO of the Association.

Prior to his appointment, he was Nigeria’s Regional Director for OurCrowd, crowd funding and venture capital firm with headquarters in Israel.

He was previously the Chief Investment Officer & Executive Director of a growing integrated real estate and alternative asset management company.

Prior to this, he worked as a Special adviser to Nigeria’s Minister of Industry, Trade and Investment. His portfolio was “Access to Finance”. In this role, he advised on and implemented policies, strategies and programmes that could help to increase access to finance for Nigeria’s entrepreneurs. This involved constant liaising with regulators, development institutions, foreign investors and commercial entities, including Banks, PE and VC funds and

https://www.facebook.com/businessdayng

Oguche Agudah

the stock market in order to removeroad blocks in getting access to needed finance to start and grow local businesses. Along with a team of others, he was also involved in the formulation and implementationof Nigeria’s most ambitious industrial revolution plan, christened- The Nigeria industrial Revolution Plan (NIRP).

Before this, he worked with Standard Chartered Bank as an Associate Director in their Lagos office, where he was in charge of the credit quality of a portfolio of assets worth $ 7 billion dollars.

This included various loan products and derivatives to banks, the government and @Businessdayng

sovereign owned enterprises (SOEs) in Nigeria.

In Standard Chartered, he had short term assignments in South Africa and London, working in the Risk management, Credit and Corporate Finance functions. In the fourteen years, he spent with Standard Chartered, he held various roles spanning operations, finance, Risk management & Credit, origination & client coverage and strategy.

He possesses a degree in Banking and finance from the University of Lagos and is a fellow of the Chartered Institute of Bankers Nigeria and an associate of the Chartered Institute of Stockbrokers Nigeria.

Speaking on his appointment, Ronke Adedeji, president of the association/CEO of Leadway Pensure, said Oguche brings a unique experience of working in the public and private sector with varied and extensive experience in the financial services industry. He will help drive the agenda and strategy of the industry as we move towards ensuring that all our stakeholders feel the impact of the pensions industry in a greater way.

32

Monday 17 February 2020

BUSINESS DAY

Start-Up Digest

In association with

Money flows into Nigerian start-up ecosystem as more opportunities open up ODINAKA ANUDU

N

igeria may be riddled with man-made challenges but opportunities abound in the country. Young entrepreneurs are tapping into these opportunities, raising millions of dollars to take their own slice of the cake.

2019 was, as usual, eventful for start-ups as different classes of investors and grantors showed confidence in the entrepreneurial ecosystem of Africa’s most populous nation, staking their money in the process.

Kobo360, a freight logistics start-up which links truckers to cargo delivery services via an app, raised $20 million and another $10 million in a funding round led by Goldman Sachs in August 2019.

Founded by Ife Oyedele and Obi Ozor, the start-up has over 10,000 drivers and trucks registered on its app. It was, however, a debt finance rather than equity. The start-up has raised more than $37 million since it started in 2016 and has provided value to those in the logistics sector of the economy. It has a product known as ‘KoboCare,’ which is targeted at selling diesel at discounted rates to Kobo drivers who purchase it at Total or Oando filling stations, and ensuring that drivers have access to fire services, law enforcement agencies and maintenance bays, among others.

Kobo360 is not the only start-up in this game. Kuda, a Nigerian fintech start-up, raised $1.6million in September 2019. Kuda believes in removing customers and borrowers from the shackles of what it calls ‘ridiculous charges’ by Nigerian banks and helps them to spend smartly. It got an operating license from the Central Bank of Nigeria (CBN) last year— which puts in pole position to tap into the retail banking space.

“Kuda is the first digitalonly bank in Nigeria,” said founder Babs Ogundeyi in 2019, saying that the firm was neither a mobile wallet nor a mobile app piggy bank.

In early 2019, an agritech start-up Framcrowdy raised $1 million from Cox Enterprises, Techstars and Ajayi Solutions after raising $1 million earlier in 2017 and $325,000 from GSMA Ecosystem Accelerator in 2018. The additional seed funding raised in 2019 was targeted at expanding the services of Framcrowdy across 18 states in 12 months, said

Abdulhakim Bashir

Onyeka Akumah

Obi Ozor (l) and Ife Oyedele (r)

Framcrowdy.

Onyeka Akumah, chief executive of the outfit, said Farmcrowdy was delving into the possibility of using drone services for field analysis and 3D mapping to improve farm yields.

Farmcrowdy links agric investors with farmers to increase high-quality food production and generate profits for investors.

Similarly, EZ Farming, another crowdfunding start-up, which allows app users to lend to smallholder farmers, raised $150,000 after participating in the Silicon Valley-based 500 Startups accelerator programme.

Adewale Oparinde, founder of this start-up, said he founded it to solve the unemployment crisis in the country.

In 2019, Sim Shagaya, a serial entrepreneur, returned with a new edtech start-up after raising $3.1 million seed round from TLcom Capital.

The platform, known as uLesson, integrates mobile platforms, SD cards, culturespecific curriculum and a www.businessday.ng

network of tutors to close educational gaps for secondary school students in West Africa.

“We are adding more babies in this country nominally than all of Western Europe.

Even if the government was super-efficient, it could not catch up with the educational needs of the young people that are coming up,” Shagaya said, while talking about his outfit’s solutions.

Despite the challenges faced by bike-hailing startups after the Lagos State government placed a ban on motorcycles, this segment of the economy attracted sizeable funds to the economy in 2019.

Max.ng, also known as Metro Africa Express, founded

by Chinedu Azodoh and Adetayo Bamiduro, raised $7 million from five investors from five investors in June 2019, led by Kenya-based Novastar Ventures.

Damilare Ogunleye, policy lead at Max.ng, told Start-Up Digest in the wake of bike ban in Lagos that the start-up had raised $10 million from

several investors, including Yamaha, Breakthrough Energy Ventures, Zrosk Investment Management and Alltheia Capital.

Opay, one of the leading bike-hailing companies, had earlier raised $170 million from several investors, including Meituan-Dianping, GaoRong Capital, and Source Code Capital, among others.

Many of these firms are now stranded owing to the ban.

“We expect the Lagos State government to tap into every opportunity to create jobs and not to destroy them,” Victor Daminabo, pilot ops manager at Max.ng, said at a press conference in Lagos recently.

“Investors are also deeply worried about the general regulatory stability in Lagos and in Nigeria and wonder whether they would continue to make investments in the state or whether the country is really ready for business.

They are watching how this would play out,” he further said. Gokada also raised $5.3 million in 2019.

But this may have opened

https://www.facebook.com/businessdayng

an opportunity for car-hailing companies as Lagos residents struggle with movements.

The United States African Development Foundation (USADF) said last Wednesday that it was ready to invest in Lagos State transportation system to ameliorate the plight of residents.

“We are looking at traffic challenges of Lagos State,” C.D. Glin, president and CEO of USADF, which is an independent US government agency that supports Africabased enterprises that improve lives, said at event in Lagos.

“We are looking at providing alternative funding to see how we can provide alternative transport solutions to Lagos State,” he further said.

Apart from debts and equities, Nigerian start-ups also won grants from various local and international organisations.

In November 2019, LifeBank, a Nigerian blood delivery start-up, won $250,000 in grant funding at Netpreneur Prize ceremony created by Alibaba founder Jack Ma in Ghana.

Founded in 2016 by Temie Giwa-Tubosun, the start-up works with hospitals to find lifesaving medical products.

LifeBank has saved many lives, providing blood and other health services during emergencies.

The start-up has distributed over 16,000 units of blood, registered more than 3,500 donors, and worked with over 400 hospitals to save more than 4,500 lives, BusinessDay found.

“I look forward to continuing my journey to solve problems and make a significant impact on the future of Africa,” she said after the prize.

DrugStoc, Thrive Nigeria, and Black Swan,all Nigerian start-ups, each won $65,000 at the contest.

Earlier in 2019, Chiniki @Businessdayng

Guard had won $10,000 at Dubai at a technology event known as GITEX last year.

The platform, founded by Abdulhakim Bashir, uses AI to prevent thefts in retail stores from employees and professional shoplifters. It does this by monitoring and alerting shop owners about shoplifting and suspicious behaviour in real time.

Virtue Oboro, who designed Crib A’Glow, a solarpowered, foldable phototherapy crib that uses LED lights to help treat jaundice in newly-born babies, was selected in September 2019 alongside other five start-ups on the continent by Africa Innovation Challenge (AIC) to receive $50,000 in funding and technical mentoring.

“It takes a lot of grit and determination to do business in Nigeria, and many young entrepreneurs are defying of all the odds,” Fola Adeola, chairman, Fate Foundation, at the 2019 Fate Foundation Annual Celebration held in December 2019 in Lagos.

Nigeria’s entrepreneurship landscape is growing and is attracting funding from various types of investors.

Nigerian start-ups raised $178m in funding rounds in 2018, according to Techpoint Africa. They further raised $17.6 million and $24.7 million in the first and second quarters of 2019. But the challenge of harsh business environment hurts the growth of many start-ups.

“Multiple taxation remains a major problem in Nigeria,” Toki Mabogunje, president of the Lagos Chamber of Commerce and Industry (LCCI), told BusinessDay in an interview.

“We keep hear ing of streamlining of taxes, but businesses are still on the receiving end of public officers who want to raise internal revenue,” she said.

Access to Nigerian seaports has become a major challenge as Apapa and Tin Can seem captured by trucks and containers.

“There is need to address observed port related challenges: dilapidated infrastructure, inadequate space, weak trade facilitation infrastructure, poor road network and the associated gridlock to enhance competitiveness,” the Manufacturers Association of Nigeria (MAN), said in a third quarter 2019 CEO survey.

Energy is the biggest headache as start-ups and small businesses face high running costs with 40 percent of their expenditure dedicated to fuelling their generators.

Monday 17 February 2020

BUSINESS DAY

33

Start-Up Digest

Ope Olanrewaju: Entrepreneur tapping opportunities in logistics space Josephine Okojie

E

very societal problem is an opportunity for entrepreneurs who can provide solutions.

For Ope Olanrewaju, founder of Kennie-O Cold Chain Logistics (KCCL), a start-up based in Kwara State, his focus is to help address Nigeria’s logistics challenge.

His business is currently helping farmers and processors transport their fresh fruit and vegetable produce to any part of the country, using excellent end-to-end cold chain logistics while preserving their natural nutrients.

Ope was inspired to establish Kennie-O Cold Chain Logistics (KCCL) after suffering a major loss from his investment in poultry production in 2013.

He started his entrepreneurship journey as an agripreneur in the poultry industry.

The business then suffered a major loss when an outsourced cold chain truck hired to transport his pro-

cessed chicken to clients outside Kwara State malfunctioned. This led to spoilage and eventual rejection of the products by customers.

It also led to a total collapse of the business, and that shifted his interest to the logistics industry.

He identified a huge opportunity in the industry and decided to venture into it. In 2014, he established his own cold chain logistic business.

“We were into the poultry business and I ran a broiler production and processing business,” he recalls.

“I supplied over five tons of frozen chicken per batch to major retail stores across the country,” Ope says.

“In 2013, we outsourced a cooling truck to deliver our products to customers and retail stores and it malfunctioned and the products got spoilt. Our customers rejected them and this led to the total collapse of the business then,” Ope says.

“We wanted to change the narrative of logistics business in the country and help farmers like me transport their products while ensuring that

Ope Olanrewaju

their natural nutrients are preserved,” he explains.

“Today we are actively promoting freshness and food safety in Nigeria as well as helping several businesses in the nutrition value chain to deliver fresh and nutri-

11 vocational centres get grants from LSETF, USADF to raise capacity of youths ODINAKA ANUDU

T

he Lagos State Employment Trust Fund (LSETF) in partnership with the United States African Development Foundation (USADF) has awarded grants to 11 Vocational Training Centres (VTCs) following the successful completion of the due diligence and project development phases of the ‘LSETF-USADF Employability Programme’.

The grant signing ceremony, which took place last Wednesday, was a follow-up to the Memorandum of Understanding (MoU) by LSETF and USADF earlier in May 2019. Through this partnership, LSETF and USADF will provide globally competitive, industry- and trade-relevant skills to 15,000 youths in Lagos State over the next five years (3,000 each year), equipping them to take advantage of employment and entrepreneurship opportunities.

“Today, we are here to take deliberate steps to fulfil our promise to our young and productive population with the award of grants to 11 Vocational Training Centres (VTCs),” Yetunde Arobieke, commissioner, Ministry of Wealth Creation and Employment, Lagos State, said at the grant-signing ceremony.

“I am glad about the robustness of this programme, as industries and sectors to be

covered under this initiative include, but are not limited to, technology, creative arts, agriculture value chains, transport and logistics, renewable energy, and construction,” she further said.

“We hope that beyond the total number of youths who will benefit from this programme, many others will be inspired to embrace self-development based on the positive impact of this initiative, which includes the increase in market attractiveness to gain access to employment, create jobs and generate income. This strategy aligns with Lagos State’s vision of providing opportunities for young people to thrive, soar, and break frontiers,” Arobieke noted.

In his remarks, C.D. Glin, USADF president and chief executive officer, said: “It is essential that the investments USADF makes in Nigeria, alongside partners such as LSETF, to address youth unemployment prioritise entrepreneurship, job creation and placement, and income generation. To the VTCs, I urge you to serve as guiding forces and mentors to these youths, impacting them beyond relevant skills, as we demonstrate that perseverance coupled with profitable skills produces great results.”

He further said the agency is interested in providing solutions to the traffic problems of Nigeria’s economic capital.

“We are looking at the challenges of Lagos in terms of www.businessday.ng

traffic,” he said.

“We are looking at providing alternative funding to see how we can provide alternative transport solutions to Lagos State,” Glin said.

USADF is an independent U.S. Government agency established by Congress to support African-owned enterprises which improve lives in poor and vulnerable communities in Africa.

Speaking on behalf of Teju Abisoye, acting executive secretary, LSETF, Rahman Akinwonmi, director, Finance and Corporate Services, said the board of Trustees is optimistic about the initiative’s impact as it aligns with the strategic direction of the Fund.

“I want to use this opportunity to reiterate that the LSETF Board of Trustees, in providing oversight to the Fund, will ensure strict adherence to our obligations and ensure that we provide the governance and accountability required for the sustainability of the programme, “he said.

The 11 awarded VTCs include: Field of Skills and Dreams Academy, Intermarc Consulting, LoftyInc Allied Partners Limited, Decke Vocational Academy Limited, HoneyTreat Trade Academy, Mods Salon/Body Refinement Limited, House of Tara International, Universal Learn Direct Academy (UDLA), AGDC Employability and Enterprise Limited, OSC College of Fashion, and Jenniez School of African Interior Design.

tious foods to their clients anywhere in the country,” he says.

To start the business, Ope sold all the equipment of his poultry business and used the proceeds to invest into the new business.

Since starting, he has not taken any loan from money deposit banks but has been able to secure some grants.

In 2018, Ope emerged as the SUN Business Network Africa nutrition winner and his business was given a grant, training and mentorship.

Since then, the start-up has become one of the fastest growing logistics businesses in the country as hunt for more nutritious food increases daily among the younger population.

“We have been able to acquire two cooling trucks and we recently got a fully automated packing house under lease. Our market has been well tested, proof of concept validated,” he boasts.

Answering questions on the organisation’s expansion plans, the young entrepreneur says that Kennis-O Cold Chain Logistics plans to purchase a solar-powered refrigerated mobile cooling truck.

He states that the goal of the organisation is to increase Nigeria’s food preservation rate and reduce wastages by

five percent within the next five years.

Speaking on the challenges confronting his business, the young entrepreneur says that the biggest challenge confronting his business is the country’s poor road infrastructure.

He notes that huge infrastructural gaps have continued to drive up the cost of production and increase delivery time, thus making it difficult for the business.

Similarly, he identifies poor power infrastructure as another major challenge.

“The main roadblock of growth in the cold chain industry is high energy consumption cost,” he says.

Ope urges the government to develop the country’s infrastructure to drive growth and industrialisation. He also calls for the stimulation of policies to drive and unlock economic growth and development.

On advice to younger entrepreneurs, he says, “Execution is everything. Always keep building, test it fast in the market, learn and restrategise.”

Stanbic IBTC trains youths on leadership skills, entrepreneurship Josephine Okojie

I

n a giant stride of contributing to the national development and as part of its yearly Youth Leadership Series (YLS), Stanbic IBTC has trained and inspired over 1,000 youths on business leadership skills and entrepreneurship.

The event, which was conducted to rouse the entrepreneurial spirits in young Nigerians while building the next generation of leaders, took place at Yaba College of Technology and had over 1,000 undergraduates in attendance.

“The Stanbic YLS is fashioned deliberately after our annual business leadership series to inspire younger people to become future business leaders,” said Demola Sogunle, chief executive, Stanbic IBTC. “We understand the future of any business lies with the youth and we need to help them get closer to the future that they desire,” Shogunle said.

He stressed the need for young people to be constantly motivated and inspired to enable them achieve their potential, saying that they account

https://www.facebook.com/businessdayng

for about 60percent of the country’s population.

He added that the t h e m e, ‘ Te c h Cu l t u r e ,’ which is the fusion of technology and agriculture, is very apt considering the opportunities that abound in both sectors.

“The tech and agricultural sectors are vibrant and profitable on their own but when you add tech to agric the outcome becomes excellent,” he said.

Also, successful young entrepreneurs in the agricultural sector, spoke on how they individually leveraged technology to build their agribusinesses, urging young people to see problems as opportunities to create wealth.

Samson Ogbole, CEO, Soilless Farm Lab, spoke on his adoption of hydroponics technology to grow his agribusiness.

He said he currently grows different crop varieties without the use of soil by simply leveraging technology.

He advised the youths to focus on proffering technological solutions to some of the challenges in the agricultural sector, while noting that opportunities still abound in agric.

Similarly, Yewande Ka@Businessdayng

zeem, founder of Wandieville Media, shared her experience on how she has leveraged technology to build her agric communication business.

Similarly, Seyi Abolaji, co-founder of Wilson’s Lemonade, advised the youths to always start small and grow their businesses gradually.

He spoke on how he failed in his initial business because he lacked the required skills needed to succeed in that space.

Ab o l aj i a d v i s e d t h e youths not to abandon their business idea owing to lack of sufficient capital but to start with whatever they have, saying that if the business is good enough to address problems, it will eventually attract its own capital.

In a recorded video, Sunday Dare, minister of youths and sports development, said that the government is ready to uplift the youths and set them on the path of progress and support them to embrace and seize opportunities.

“YLS is providing the young people the platform to equipped themselves with the needed skills and right information,” Dare said.

34

Monda 17 February 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Why businesses are murdered by innovation The Solid Wealth Messenger

Grace Agada

I

nnovation is the ability to set a new standard of value. That surpasses the industry’s highest standard. In ways that raise consumer’s interest, set consumers’ expectations and drive revenues. It is the ability of a business to raise the consumer’s taste to a new level of value. That puts a business at a certain level of advantage. And other businesses at a certain level of disadvantage. When businesses innovate, they gain massive relevance advantage that elongates their lifespan. But when they fail to innovate, there die. Three factors are responsible for the death of businesses.

The First is the inability of a business owner to innovate. Think progressively and stay ahead of consumer needs. The second is the resistance to change. And the third is the failure to execute change in a timely and costeffective manner. If businesses must stay alive, there must innovate. And raise their standard of value above the highest industry standards.

In every industry, there exists a set standard of value that is acceptable by consumers. Different businesses set their own value standards as they enter into the industry. When these businesses grow or improve, they increase their value standard in the bid to catch up with the highest industry standard. Yet, in every industry, only one business can occupy the leading position. This business is called the innovator and market leader. It is this business that offers the most value to consumers. In return there enjoy massive revenue advantage.

Gain the largest market share and occupy the first position in the mind of consumers. Consumers favor industry leaders, above everyone else and bless them with money in exchange for raising the bar of value. It is the ability of a business to innovate.

In ways that provide a unique, altered or superior value. That enlarges its ability to earn income. Businesses that are market leaders elongate their relevance, expand their influence and enjoy certain privileges that are close to other businesses. They enjoy these privileges until another business overtakes them in value. Innovation is thus the way businesses raise their value. Alters the interest of consumers to new heights. And commands the most revenue and profit for their business. Businesses must thus innovate. To keep head above water.

So what then can businesses do

to innovate?

To innovate Businesses must focus on the two sources of innovative ideas. The first source is Consumer Insight and the second source is Business Owner Insight. Consumer insight is information from consumers that produce innovative ideas. These include customer complaints, consumer pain, and consumer aspirations. Insights from consumers can produce innovative ideas. But these ideas are limited in scope and are short-lived. There are short-lived because these ideas already exist within the consciousness of consumers. Have a limited wow factor. And are most likely to be an improvement of exiting value standards. An Improved value standard is less impactful than a disruptive value standard.

Thus, the consumer insight is the weakest source of innovative ideas.

The most potent source of innovative ideas is the Business owner insights. When a business owner drives innovation. It is impactful, perceived as proactive. And outside the awareness of the consumer.

Business owner insight thus has the greatest innovative impact. There are three categories that make up the Business owner insights. The first is insight from the business owner’s experience. The second is insight from Outside perspective. And the Third is insight from a future perspective. These three insights are what business owners need to produce disruptive innovative ideas.

Insights from a business owner’s own experience. Consist of the business owner’s knowledge, skills, and expertise. And all the experiences a business owner has gathered over the year. No one knows the business like the business owner. His depth of knowledge and experience. And his ability to harness them is unbeatable. To extract the most value from the experiences of a business owner.

A business owner must think progressively. And reflect on three

important areas within his industry. The First is the inherent gaps or underserved areas within his industry. The second are key areas of frustration within the industry and business. And the third is the ideas that are working in other industries.

That a business owner can borrow to increase the perceived value in his own industry. These three areas are where a business owner needs to look. To extract the most value from his own experiences. It is the ability of a business leader to find inherent gaps within his industry.

Identify and end issues of frustrations. And borrow insights that are valuable from other industries. That will help business owners create innovative ideas. A business owner’s experience is thus valuable in the creation of innovative ideas.

But these ideas are limited in scope. There are constrained and streamlined by industry standards, regulations, and knowledge. Over time, Business owners develop a tunnel vision. That limits their boundary of thinking. They become blind to innovative ideas that are right in front of them. To make up for these blind spots. Business leaders must rely on an external eye to give them a certain outside perspective.

To get the right outside perspective. Business leaders must collaborate with competent Advisors. That is advisors that can easily identify and uncover blind spots within a business. Competent advisors have the ability to see quickly, clearly and logically innovative ideas that are begging to be found. And their thoughts are free from emotional bias. They have a diverse range of perspectives from working with diverse clientele and industries that can make the generation of innovative ideas simple. Within minutes a competent advisor can identify loopholes, gaps. And areas of opportunity within a business that can lead to innovation. Without their help, business owners lose a great opportunity to find a broad range of

‘

To get the right outside perspective.

Business leaders must collaborate with competent Advisors. That is advisors that can easily identify and uncover blind spots within a business

innovative ideas.

The third source of innovative ideas is insights from future perspectives. Future perspectives are insights gotten from a person’s ability to speed far in thoughts. It is the ability to travel far into the future and identify certain ideas that are relevant to the consumers of today.

The best people to travel far into the future are the people closest to the future. These people are the younger generation. The younger generation has amazing abilities to generate future insights than the older generation. They are closer to the future.

They are boundless in their thoughts. And are free from the emotional biases that limit business owners. Business owners must thus collaborate with the younger generation. To gain certain future perspectives. Understand future consumers and prepare their businesses for the future. The role of the younger generation in the innovative process is not to churn out sophisticated business ideas. They lack the capacity to do so. Their role is to generate seemingly foolish ideas that are boundless in scope.

Far-reaching in relevance and have a certain present and future value.

Business owners can test these ideas and use their depth of experience to refine these ideas. Combining the strength of a business owner’s own experience. The potency of an outside Expert perspective and the relevance of future insight. Give business owners the muscle they need. To innovate, lead industry standards and make the most profit for their businesses.

When businesses want to live for many generations they must innovate. Innovation is simply lifting up the standard of value in a certain industry. And setting the pace that drives industry standards. To lead innovation business leaders must find ways to surmount existing industry standards. This is the only way to soar in relevance and build a long-lasting business with nine lives.

Perhaps you need help to make your business last, stay fresh, relevant and profitable. We can help you. We will introduce certain systems of advantage to your business.

That will elongate your business life.

And preserve the most priced asset you have for up to ten generations.

If you need this kind of help send an email to info@createsolidwealth. com

Grace Agada is a Generational Wealth Advisor, Business Longevity Expert, and Author of the popular Solid Wealth Book.

She Consults and Coaches a private group of clientele comprising Family Business Owners, C-Suite Executives, and the Boards of multinationals.

She helps her clients prepare their businesses and leadership for generational relevance, competitive advantage and Goodwill with consumers. Her role is to help her client plan and execute Leadership succession, Business succession, and Consumer succession.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

Live @ The Exchanges Nigeria equities shed over N160bn in one week Stories by Iheanyi Nwachukwu

N

igeria stock investors lost N162billion in the trading week ended Friday February 14, 2020. The review week was filled with a mix of cherry picking and profit taking activities.

This happened comes despite that 19 equities appreciated in price, higher than 15 equities in the preceding trading week. Contrarily, 35 equities depreciated in price, lower than 49 equities in the preceding week, while 109 equities remained unchanged, higher than 99 equities recorded in the preceding week.

Amid this trend, market watchers say they still envisage a cautious trading strategy from Monday February 17 in anticipation of other earnings reports.

In the review week, the Nigerian Stock Exchange (NSE)

All Share Index (ASI) and Market Capitalisation both depreciated by 1.11percent to close at 27,755.87 points and N14.456 trillion respectively; as against preceding week’s high of 28,067.09 points and N14.618 trillion.

While sustained sell pressure pinned down the Nigerian equities market’s broad indicator amid weak activity in the last trading session of the week, FBN Quest analysts said they expect the market to maintain this trading pattern in the next session.

In the review trading week to February 14, all other indices finished lower with the exception of NSE AFR Div Yield and NSE Industrial Goods indices which appreciated by 0.11percent and 0.78percent respectively while NSE ASeM Index closed flat.

The market recorded total turnover of 912.175 million shares worth N12.126 billion in 17,083 deals, in contrast to a total of 1.478 billion shares valued at N20.295 billion

that exchanged hands the preceding week in 23,263 deals.

The Financial Services industry (measured by volume) led the activity chart with 624.219 million shares valued at N7.129 billion traded in 9,640 deals; thus contributing 68.43percent and 58.79percent to the total equity turnover volume and value respectively.

The Conglomerates followed with 93.204million shares worth N452.093 million in 861deals; and Oil and Gas industry, with a turnover of 59.267 million shares worth N124.638 million in 1,254 deals.

Trading in top three equities –Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc (measured by volume) accounted for 304.089 million shares worth N5.788 billion in 4,290 deals, contributing 33.34percent and 47.73percent to the total equity turnover volume and value respectively.

A total of 1,540 units of Exchange Traded Products (ETPs) valued at N137,421.20 were traded in the review week in 5 deals, compared with a total of 3,840 units valued at N12.029 million transacted the preceding week in 8 deals.

The bond market trading recorded a total of 23,923 units of Federal Government Bonds valued at N28.986 million done in 22 deals, compared with a total of 55,246 units valued at N63.094 million transacted the preceding week in 15 deals.

United Capital Research market commentary

Nigeria’s brewery sector: review and outlook

U

nsurprisingly, the performance of brewers in 2019 was driven by developments in the competitive landscape. The intense competition, especially from International Breweries Plc, created no room for other players to increase prices and pass on the impact of the graduated excise duty to consumers, which grew further in June 2019.

This was as International Breweries continued to flood the market with its regional and international premium beer brands, Trophy lager and Budweiser, while undercutting competitors market share.

However, Nigerian Breweries Plc was able to wrestle back some lost market share in second half (H2) 2019 as it rolled-back on previous product price increments and

embarked on a massive advertisement campaign around Heineken, Star, and Maltina brands.

Also, the rollout of Tiger brand late third-quarter (Q3) 2019 supported NB’s topline growth. However, Guinness Nigeria Plc (Guinness Nigeria) suffered the most, losing beer market share to the other two players while focusing on growing its high yielding Spirits segment.

In 2020, we believe competitive landscape for the domestic brewers will remain challenging. Specifically, we expect all three key players to continue their battle for market share.

However, pressures on cost line would remain a peculiar concern for International Breweries despite expected improvement in finance costs post-rights issue. Meanwhile,

Guinness’ performance may be supported by its growing Spirits line, but this may not be enough to boost top and bottom-line growth, especially as excise duty on Spirits is scheduled to graduate further in 2020.She said: “This kind gesture has enlisted this school amongst the best schools in Olambe community.”

Speaking on behalf of the Ministry of Education, Science and Technology and the Ogun State Government, Lasilo Temitope, Zonal Education Officer, Ifo, noted that the recipient school, Community Comprehensive High School, Olambe can only show gratitude to Stanbic IBTC by proper utilization of the facilities.

He further pledged that the school would use them as instruments for propelling the school into a citadel of academic excellence.

35

36

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

Access Bank Rateswatch

Market Analysis and Outlook: February 14 - February 21, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

36.48

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

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

26.41 2.20

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

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

11.98

Increased to 11.98% in December 2019 from 11.85% in November 2019

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

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

External Reserves (US$ million)

Oil Price (US$/Barrel)

37.23 56.09

February 13, 2020 figure — a decrease of 1.71% from February start February 13, 2020 figure— a decrease of 1.89% from the previous wk

Oil Production mbpd (OPEC)

1.77

January 2020, figure — an increase of 1.42% from December 2019 figure

Friday 14/2/20

Friday

Change(%)

28,067.09 14.62

(1.11) (1.11)

Volume (bn)

0.13

0.30

(56.36)

Value (N’bn)

1.28

6.39

(79.96)

Friday Rate

Change

(%)

(Basis Point)

MONEY MARKET NIBOR (%) 14/2/20

7/2/20

OBB

2.50

5.50

(300)

O/N CALL 30 Days

3.25 3.10 8.34

6.33 7.00 10.98

(308) (390) (263)

90 Days

8.29

9.94

(165)

FOREIGN EXCHANGE MARKET Market

Friday

14/2/20

Friday

1 Month Rate (N/$)

(N/$)

(N/$)

14/2/20

7/2/20

14/1/20

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

306.95 364.47 0.00

306.95 364.02 0.00

306.90 361.91 0.00

Parallel (N)

360.00

360.00

362.00

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

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

Tenor

Friday

Change

(%)

(Basis Point)

(%) 3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

14/2/20

7/2/20

0.00 7.96 9.73 9.83 10.95 12.32

0.00 8.25 9.91 9.74 11.08 12.32

0 (30) (18) 9 (13) (0)

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

(%)

57.15 1.82

1.89 (2.15)

(11.34) (40.45)

2887.00 106.55 68.54 14.87 547.25

0.77 8.56 0.88 0.95 (1.26)

49.12 (18.16) (11.56) (3.00) 26.24

1576.41 17.70 259.95

0.64 (0.56) 1.27

19.65 2.97 (20.70)

Friday

Friday

(%)

Change

(%)

(Basis Point)

14/2/20

7/2/20

1 Mnth 3 Mnths

3.14 3.26

3.00 2.88

15 38

6 Mnths 9 Mnths 12 Mnths

3.83 5.06 5.96

3.91 4.24 4.52

(8) 82 143

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

AVERAGE YIELDS Friday

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

1-week Change (%)

27,755.87 14.46

Friday Rate

Indicators

7/2/20

NSE ASI Market Cap(N’tr)

Tenor

Global Economy In the Eurozone, growth slipped in the final quarter of 2019 as the French and Italian economies both unexpectedly contracted.

Prolonged weakness in the bloc's industrial sector amid weak external demand, coupled with policy uncertainties at home have likely continued to constrain growth.

Consequently, annual economic expansion was revised lower to 0.9% in Q4 2019, from 1.2% in the previous quarter. According to Eurostat, this is the weakest rate since Q4 2013. GDP growth slowed in Germany, France and Spain. In a separate development, U.S. annual inflation rate climbed to 2.5% in January 2020 from 2.3% in the previous month. The rate was boosted by a jump in gasoline cost. Food inflation remained steady at 1.8% while Core inflation rose by 2.3%, same as the previous month.

Elsewhere, China's current account surplus narrowed to $40.1 billion in Q4 2019 from $54.6 billion in the same period of the previous year. For 2019 full year, the current account surplus widened sharply to $177.5 billion from $49.1 billion the year before, as the goods surplus increased to $462.8 billion, the services deficit declined to $261.4 billion and the net inflow of direct investment stood at $59.1 billion.

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

14/2/20

7/2/20

Index

3,799.15

3784.92

0.38

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

11.87 8.08 54.66 -1.15

11.83 8.05 54.08 -1.73

0.38 0.34 0.58 0.58

TREASURY BILLS (MATURITIES) Amount (N' million)

Rate(%)

91 Day

4,384.18

3.5

12-Feb-2020

182 Day

10,000.00

4.5

12-Feb-2020

Tenor

364 Day

140,000.00

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

6.5

Date

12-Feb-2020

Domestic Economy The President of Nigeria has asked the National Assembly to approve the sale of $3.3 billion in Eurobonds, marking the potential return of Africa's top oil producer to debt markets after staying out last year.

The Finance Minister said in December that the country was seeking funds for the implementation of the 2020 budget and will first talk to concessional lenders before considering fresh loans. Investors' appetite for high-yielding debt remains strong despite growing concerns about the impact the coronavirus outbreak could have on the economies of high-indebted African nations. In a separate development, the Central bank published a new circular titled “milk and diary products importation”. The banking watchdog noted that as parts of its effort to increase local production of milk, its derivatives and dairy products it has engaged with some companies in the industry who have keyed into the bank's backward integration program to enhance their capacity and improve local milk production. The companies include Frieslandcampina Wamco Nigeria, Chi Limited, TG Arla Diary Products Limited, Promasidor Nigeria Limited, Nestle Nigeria PLC (MSK only) and Integrated diaries limited.

Stock Market Indicators at the local stock exchange remained bearish for the week ended th February 14 , 2020.There was increased sell-off in mostly bell-weather counters.

Consequently, the All Share Index (ASI) declined 1.11% to end at 27,755.87 points from 28,067.09 points the prior week.

Similarly, market capitalization dipped by 1.11% to N14.46 trillion from N14.62trillion the prior week. This week, we expect that investors will position ahead of dividend news amidst profit taking.

Money Market Cost of borrowing declined as the market was awash with liquidity of about N1 trillion despite the retail Secondary Market Intervention Sales (SMIS) conducted at

the close of the week. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled lower at 2.5% and 3.25% from 5.5% and 6.33% The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) closed at 8.34% and 8.29% from 10.98% and 9.94% the prior week. This week, we expect rates to remain at single digits due to excess liquidity in the market.

Foreign Exchange Market The local unit was steady across most market segment except at the Nigerian Autonomous Foreign Exchange (NAFEX) where it depreciated against the dollar. The official rate and parallel market rate remained unchanged at N306.95/$ and N360/$. NAFEX lost 27 kobo to close at N364.02/US$ from N363.75/US$ the preceding week. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Bond Market The bond market was slightly bullish due to robust liquidity in the market. The market recorded demand for some select maturities particularly the 2049 and 2025 securities. Yields on the five-, seven-, and twenty-year debt papers finished at 7.96%, 9.73% and 10.95% from 8.25%, 9.91% and 11.08%. The Access Bank Bond index increased by 14.23 points to close at 3,799.15 points from 3,784.92 points the prior week. We expect mixed market sentiments this week following the current system liquidity and the anticipated February Bond auction Commodities Oil prices recovered slightly last week as investors bet the economic impact of the coronavirus would be short-lived and hoped for further Chinese central bank stimulus to tackle any slowdown. Bonny light, Nigeria's benchmark crude rose 1.89% or $1.06 cents to close the week at $57.15 per barrel. Precious metal prices went in varying directions as the price of gold went up while the price of silver declined. Gold prices increased as a mounting coronavirus death toll supported safe-haven buying while silver prices dropped due to low demand.

Consequently, gold gained 0.64% to $1,576.41 per ounce while silver declined 0.56% to $17.70 per ounce. This week oil prices might become bearish as the International Energy Agency (IEA) said that global demand was expected to fall in the first quarter of the year. This will be the first quarterly drop in more than ten years.

Precious metal prices might rise due to tensions in the Middle East. Last week, the head of the Iran's elite Revolutionary Guards said that the country is ready to strike the US and Israel if they give it any reason to do so.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Feb’20

Mar’20

https://www.facebook.com/businessdayng

Apr ’20

Exchange Rate (NAFEX) (N/$)

363

364

364.5

Inflation Rate (%)

12.01

12.06

12.1

Crude Oil Price (US$/Barrel)

57

58

60

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

www.businessday.ng

37

@Businessdayng

38

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

MARKETS INTELLIGENCE

39

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Vitafoam, Cadbury grow EPS faster than peers

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

BALA AUGIE

V

itafoam Nigeria and Cadbury Nigeria are growing earnings per share (EPS) at a much faster rate than their peers, which is why they have the lowest price to earnings growth (PEG) ratio and cheapest stocks.

Vitafoam has a PEG ratio of 0.80 percent while Cadbury’s ratio was 0.25 percent, which means they are trading at a discount to their growth rates and investors purchasing them are paying less per unit of earnings growth.

Vitafoam has the most attractive valuation based on earnings multiples as it has a price to earnings ratio of 1.76 times earnings, while EPS growth rate of 219.15 percent was recorded as at 2019 financial year the largest earnings expansion in the industry.

The PEG ratio is a valuation model that compares the price investors are willing to pay for expected earnings with how fast those earnings are expected to rise.

The exact equation is to divide the market’s price-to-earnings ratio by expected earnings growth, which is where the name comes from.

According to well-known investor Peter Lynch, a company’s P/E and expected growth should be equal, which denotes a fairly valued company and supports a

P.E

5

undervalued.

While these two companies are growing earnings at a blistering pace, investors have lost significant faith in the ability of consumer goods firms to churn out profit in the near future as they foresee future earnings drop.

This is because a myriad of challenges are undermining cash flow as stocks have become expensive or overvalued amid a stock market rout and macroeconomic headwinds.

in an industry beleaguered by intense competition, low beer volumes, and weak consumer purchasing power.

Guinness Nigeria has a PEG ratio of (0.25), while EPS reduced by 58.14 percent in the period under review. It has a price to earnings ratio (P/E ratio) of 13.09 times earnings.

Nascon Allied Industries Plc has a PEG ratio of (1.17), as EPS dipped by 14.28 percent as at December 2019, but it has a price to

review.

Nestle Nigeria has a PEG ratio of 1.87, percent which is more than the bench mark, 1. The company’s EPS increased by 11.24 percent for the year.

Dangote Sugar has a PEG of (0.45) while EPS fell by 17.45 percent, but its price to earnings ratio is relatively attractive at 7.63 times.

Unilever Nigeria, Honeywell, and international Breweries do not have PEG ratio because they recorded losses in the period un-

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

PEG ratio of 1.0. When a company’s PEG exceeds 1.0, it’s considered overvalued while a stock with a PEG of less than 1.0 is considered

Nigerian Breweries has a PEG ratio of (1.48), as EPS dipped by 17.28 percent as at December 2019. The company is operating

earnings ratio of 16.34 times.

Flour Mills Nigeria has a PEG ratio of (3.34) as EPS reduced by 5.15 percent in the period under

der review.

The industry has been beset by weak consumer spending, poor Continues on Page 39

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 BALA AUGIE - Analyst; 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 patrick.atuanya@businessdayonline.com www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

40

Monday 17 February 2020

BUSINESS DAY

MARKETS INTELLIGENCE Nigerian Breweries declares lowest dividend in 9 years BALA AUGIE

N

igerian Breweries Nigeria Plc announced on Friday that it declared final dividend of N12.08 billion or N1.51 for 2019 financial year, the lowest reward to shareholders in nine years in the face of declining profit.

The brewer had paid its owners N19.44 billion in 2018 (which was announced on the bourse in 2019).

The highest reward to shareholders was in 2013 when strong consumer spending and strong macroeconomic environment helped underpin earnings.

Nigerian Breweries has always been paying out nearly all its earnings as dividend (100 percent payout).

The payout ratio shows the proportion of earnings paid out as dividends to shareholders, typically ex-

pressed as a percentage of the company’s earnings.

A glimpse of the chart below shows some unusual

scenario. The brewer paid an interim dividend of N2.90 per share or N23.20 billion in two tranches (N1.90 and

N1.00) in 2008, which was higher than the final dividend of N0.50 or N4 billion.

Also, in 2009, it repeated the same policy by rewarding owners with interim dividend in 2 tranches, but earnings began to dip a few years later as the country economic fundamental changed following a precipitous drop in crude oil price.

The business environment has been tough for Nigerian Breweries and peer rivals as the intense competition brought on

by International Breweries spurred other players in the industry to hike prices and pass the impact of the graduated excise duty to consumers.

International Breweries continued to flood the market with its regional and international premium beer brands, Trophy lager and

Budweiser, while undercutting competitors market share.

Nigerian Breweries Plc (NB) was able to wrestle back some lost market share in the second quarter of 2019 (H2-19) as it rolled-back on previous product price increments and embarked on a massive advertisement campaign around Heineken, Star, and Maltina brands.

At the moments, Brewers in Africa’s largest economy are grappling with weak sales, low margins, and rising debt.

As at December 2019, International Breweries recorded losses while Nigerian Breweries and Guinness saw marked reduction in earnings.

Nigerian Breweries has a dividend yield of 4.52 percent while it shares trade at a multiple of 25.15 times.

Nigeria produced 12.5m barrels of oil below budget target in January …Lower crude oil production cost the country $771.9m in lost revenu …lost up to N3.5 trillion in oil revenue in 2019 to lower crude oil production IFEANYI JOHN

J

anuary headlines were largely taken over by news of fast spreading coronavirus which has taken the lives of more than 1,000 people in China and around the world.

However, little light has been shed on the economic loss that Nigeria is facing in the oil sector which could have catastrophic effect on the health of the country’s finances.

According Organization for Petroleum Exporting Countries (OPEC) monthly oil market report, Nigeria’s daily average crude oil production in January 2020 was only about 1.77mbp compared to the budgetary target of 2.18mbp. This translates to an average daily production loss of around 440,000 barrels per day.

Average crude oil price in the month of January was about $61.63 according to YCharts, thus translating to an economic loss of around $771.9m (N235.4b). To put this loss into perspective, the N235.4b lost in January

is enough to total government 2020 allocation for Health (N46b), Education (N48b) and Power (N127b) and still have a deficit of N14.4b which is significant enough to renovate parts of its 4 national refineries.

The poor production performance in January is hardly a surprise for analysts as Nigeria had consistently under produced her oil production target throughout 2019.

Average daily oil production in 2019 was 1.78mbp compared to the 2019 budget target of 2.3mbp, presenting an economic loss of around 520,000 barrels per day.

While the 2019 figure appears bigger, the performance is slightly better than January 2020 performance as production increased by around 10,000 barrels. The deficit is only larger because the benchmark target for production was decreased from 2.3mbp in 2019 to 2.18mbp in 2020 by the Federal Government.

Owing to lower production, Nigeria lost almost 190mbp in 2019 which www.businessday.ng

pro duce d an e conomic loss of around $11.7b (N3.56 trillion). To put this fairly into perspective, Nigeria suffered a budget deficit of around N3 trillion in 2018 and about N1.15 trillion in the first six months of 2018 according to data compiled from the Federal Government Budget office.

Revenues generated from crude oil account for the biggest since producer of cash for the Federal Government. In 2018, oil revenue contributed 58 percent of Federal Government revenue. In 2020, FG projects to generate 25.5 percent of its revenue from crude oil sales in a bid to continue the revenue diversification for the government to avoid financial problems during oil price shocks.

However, underproduction of crude oil products seems to be the single biggest problem our government is facing today rather than the overconcentration of revenue from crude oil.

Solving this problem will be critical for Nigeria to avoid creating a record fiscal deficit this year.

Vitafoam, Cadbury grow..

Continued from Page 39

job creation, border closure, and eroding impact of double digit inflation.

Analysts at CSL Stock Brokers say FMCGs, particularly businesses with product portfolio skewed towards personal care will to struggle with volume growth in 2020 as familiar challenges continue to bite.

The research house added that beverage producersparticularly cocoa related)would witness significant pressure on margins in 2020 as the cartel formed between Ghana and Ivory Coast (both of whom control 60 percent of world cocoa output) would keep cocoa prices

https://www.facebook.com/businessdayng

high, hence significantly impacting material costs.

Nigerians are getting poorer as over 50 percent of a population of 200 million live on less than $1.98 dollars a day, which means they have little in their pockets to go shopping.

According to data from Fitch solutions, household income is estimated to have grown by 8.8 percent year on year to $4,252 in 2019 from US $3,908 in 2018. 2019’s 8.8 percent years on year growth comes in lower than the 10 .7 percent year on year (y/y) growth in 2018.

Inflationary pressures and the hike in fuel price continue to hurt consumers’ ability to increase expendi@Businessdayng

ture which in turn continues to pressure consumer companies’ revenue.

Inflation for the month of December accelerated to 11.98 percent, the highest in 7 months as price of basic food stuffs skyrocketed on the back of border closure.

High level of unemployment at 23 .1 percent as at Sept 2018 and poor job creation continues to pressure expenditure levels as only one out of five of a new labour force can get a job.

The recent earnings released by some firms are disappointing, which underscores the tough and unpredictable macroeconomic environment they operate in.

Monday 17 February 2020

Harvard Business Review

BUSINESS DAY

MONDAYMORNING

41

In association with

Can Facebook’s oversight board win people’s trust?

MARK LATONERO

F

acebook is a step away from creating its global Oversight Board for content moderation. While there’s good reason to be skeptical of whether Facebook itself can fix problems like hate speech and disinformation on the platform, we should pay closer attention to how the board proposes to make decisions.

Decisions by Facebook to limit content and speech are often met with intense public criticism. Facebook wants the Oversight Board to take responsibility for these decisions.

However, since Facebook will select the board’s initial slate of international experts, it risks becoming stacked with members who would be too deferential to the company. A more central problem is baked into the foundational charter that states the board “will review content enforcement decisions and determine whether they were consistent with Facebook’s content policies and values.” If the board becomes an echo chamber for values dreamed up in Silicon Valley, it will hardly be trusted on the world stage.

The bylaws contain a possible path forward. They say the board will “be guided by relevant human rights principles”

and will provide an “analysis of how the board’s decisions have considered or tracked the international human rights implicated by a case.” While the language is slippery, if the board bases its decision-making more explicitly on international human rights, it could gain legitimacy. These rights aren’t defined by Facebook, but by the United Nations’ Universal Dec-

laration on Human Rights, international treaties and human rights courts.

Still, if the board were to agree to protect all human rights when making decisions, it could lead to novel opinions that could help others grappling with similar challenges. When I spoke with Noah Feldman from Harvard Law School, who came up with the Supreme Court for

Facebook concept and advises Zuckerberg, he imagined that other tech companies might one day bring their predicaments to the Oversight Board if they agreed the decision would be binding.

The more the board limits its scope, however, the more it will miss the big picture. The board should be fully empowered to make policy recom-

mendations, especially those that may directly challenge the inner workings of Facebook’s revenue models or News Feed algorithm. If the board fails to self-govern, it would leave one clear and extremely challenging message for lawmakers: Facebook must be regulated.

(Mark Latonero is a Fellow at the Harvard Kennedy School.)

We are nowhere near stakeholder capitalism shareholders, not its contribution to society. As far as the balance sheet is concerned, shareholders’ net worth equals book value of assets minus the book value of liabilities, not the value of ESG investments. While we admit that considerable progress has been made in developing theory, models and disclosure norms for ESG objectives, we believe that we are nowhere close to achieving “integrated reporting,” as some people might claim.

CEOs continue to be fired for missing earnings targets. The Fortune 500 list continues to be based on revenues, profits and assets. As we praise the efforts of the Business Roundtable and the World Economic Forum, let’s not ignore just how much more needs to be done.

VIJAY GOVINDARAJAN AND ANUP SRIVASTAVA

I

f you read the headlines coming from the 2020 World Economic Forum in Davos, Switzerland, you may start believing that public corporations have fundamentally changed their raison d’être: from creating value for shareholders to benefiting society at large. In our opinion, this conclusion is premature.

It is unclear how these praiseworthy objectives would be achieved without a unified framework for evaluating a firm’s performance that combines financial and nonfinancial measures. No such framework yet exists, while a few have been proposed. So, how likely is it that a CEO would get up one day and suddenly change his or her focus from revenues, profits and stock prices toward wider environmental, social and governance, or ESG, goals? Some CEOs might, but for most, the predominant objective would continue to be to maximize shareholder value

while keeping ESG objectives in mind, instead of the other way around.

Change also appears unlikely when you consider how businesses are funded and held accountable. Firms are funded by

entrepreneurs by way of ideas and capital; these entrepreneurs are later joined by second-stage investors, public investors and banks — all of whom expect to be rewarded with financial returns.

Government-mandated account-

ing systems, audits and financial disclosures are principally created with shareholders in mind.

The summary net income during a financial year is calculated based on the increase in a firm’s potential to pay dividends to

(Vijay Govindarajan is a professor at Dartmouth. Anup Srivastava holds a research chair and is an associate professor at the University of Calgary.)

42

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

43

news

Low visibility: Skeletal flight operations resume at MMIA after one week of diversion IFEOMA OKEKE

O

ne week after flight disruptions, cancellations and diversions to neighbouring countries as a result of low visibility, skeletal flight operations have resumed at the Murtala Muhammed International Airport (MMIA), Lagos.

Recall that the poor Instrument Landing Systems (ILS) at the airport made it difficult for airlines to land or take-off from Lagos airport amid weather condition.

For one week, most international flights were diverting to Accra, Ghana, due to inclement weather in Lagos.

BusinessDay’s checks show that while some airlines are still monitoring the situation at the airport, few airlines have resumed operations at the Lagos.

Hadi Sirika, minister of aviation, who confirmed the resumption of international flights to the airport in a statement signed by James Odaudu, his director, public affairs, stated that so far 12 flights had landed on the international airport Runway 18Right while 13 flights had landed on the domestic Runway 18Left.

While appreciating the understanding of those affected by the unfortunate

situation, he assured of government’s determination and commitment to the protection of Nigerian travellers at all times.

The minister also reiterated that the diversions and cancellations were as a result of highly inclement weather conditions, saying it was not peculiar to Lagos or Nigeria, but a global phenomenon.

He also noted that the weather conditions in Lagos, and indeed every airport worldwide was not something that was noticed at the point of landing, as pilots were regularly updated during the course of the flights and therefore in a position to decide on the most appropriate airport to divert to.

A c c o rd i n g t o S i r i k a , “Nnamdi Azikiwe International Airport Abuja, which has been in full operation, would have been the most appropriate for the affected airlines to divert to, if the overall interest of the Nigerian passengers was considered.

“The general public is once again assured of government commitment towards ensuring that full services that ensure the comfort, safety and security of air passengers are restored to normalcy, as all relevant authorities have been up and doing,” he said.

OMO sales rise by 19.38% to N1.54trn in January HOPE MOSES-ASHIKE

C

entral Bank of Nigeria (CBN) has continued to adopt Open Market Operation (OMO) as its primary tool in management of liquidity in the financial market, leading to a rise in the sale of the instrument by 19.38 percent to N1.54 trillion in January 2020 from N1.29 trillion in December 2019.

OMO simply means the buying and selling of government securities, which enables a central bank to control the supply of money in the banking system.

Last Thursday alone, the CBN sold a total of N214.87 billion out of N250 billion OMO bills offered to investors at the primary market.

The system liquidity last week stood at about at N595.3 billion, coming from OMO maturities and the Nigerian Trea-

sury Bills (NTB).

The CBN had in October 2019 directed banks to restrict individuals and local corporates from investing in OMO instrument.

The restriction crashed Treasury Bill rates. Treasury Bill rates for 91-day tenor declined by 7.3 basis points to 3.50 percent currently from 10.80 percent in October 2019.

Similarly, 182-day tenor Treasury Bill rates declined by 6.5 percentage points to 4.50 percent from 11.00 percent in October last year.

Following the continuous slump in Treasury Bill (T-Bill) yields, occasioned by the stoppage of individuals and nonbank corporates from OMO auctions, Northcourt, a real estate advisory firm, has called on investors to invest in real estate, shares and long-term bonds to reduce risk and realise

higher returns.

A breakdown of Thursday’s OMO auction showed that the CBN offered N10 billion for 89-day tenor, which matures on May 12, 2020, but the offer recorded no sales.

For the 180-day tenor, the apex bank also offered to N10 billion to investors who demanded an 11.60 percent bid range for N1 billion subscription.

The CBN, however, sold a total of N1 billion at a demanded rate.

The 362-day tenor was undersubscribed, as total subscription stood at N213.87 billion for a N230 billion offer. The OMO bill, which matures in February 9, 2021, recorded a total sale of N213.87 billion at a stop rate of 13.14 percent after the investors bid at a range bid of between 12.95 and 13.04 percent.

The TB market ended the trading session on a positive note on Friday, with average

yields declining by 24 basis points to 3.80 percent as against 4.04 percent previously. Buying interest was witnessed across short, medium and long tenor maturities, with average yields compressing by 28 basis points, 62 basis points, and 4 basis points, respectively.

Yields on the NTBs have declined to single digits from double digits at beginning of first quarter of 2019, according to analysts at FSDH Merchant Bank Limited.

The Overnight (O/N) rate declined by 0.11 percent to close at 3.25 percent on Friday. Also, the Open Buy Back (OBB) rate declined by 0.14 percent to close at 2.50 percent on the same day.

“Though there is always a risk of losing money whenever one invests, there is also the need to invest wisely,” Ayo Ibaro, chief operating officer/director of advisory, Nourtcourt, said.

ANLCA lauds son for impacting the economy through standardisation ENDURANCE OKAFOR

A

ssociation of Nigerian L icens e d Customs Agents (ANLCA) has commended Standards Organisation of Nigeria (SON) for what it described as the good job the agency is doing in Nigeria.

ANLCA national president, Iju Tony Nwabunike, made the commendation in Lagos, weekend, when he led a team of the association to the SON director-general in his office in Lekki, Lagos.

Nwabunike said the SON director-general had, not only built on the foundation laid by his predecessor, but had set a pace for his successors.

He said the ANLCA visit would mark the opening of a new page in the relationship between the two organisations, adding it was also to draw the attention of the Federal Government towards certain issues of concern to the agents.

He listed these to include, clarification on the borderline products between the SON and the National Agency for Food and Drugs Administration and Control (NAFDAC) on such products as diaper, engine oil, packing products and cotton buds, among others.

He also mentioned the issue of attendant delay in

cargo clearance and documentation with Nigeria Customs Service occasioned by server breakdown.

Other issues he mentioned included clarification as to whether product certificate (PC) was still used as an ancillary document to SONCAP for cargo clearance, as well as the issue of the presence of multi-unit government agencies at the ports.

In his response, Osita Aboloma, the SON director-general, said the SON commended the ANLCA for the visit and the role it was playing the in the economy, adding that if the campaign against substandard products was to be successful, there was need for stakeholders to collaborate.

He said the S ON was resolved to be just a regulator but a business facilitator supporting all key stakeholders in the economy, saying his office had taken note of the challenges itemised and would commit to finding a way of resolving them.

He said going forward, his agency would seek to reduce, as much as possible, human interference, and that was what informed the automation of its processes, and also promised to sustain the efforts aimed at reducing cargo waiting time before clearance. www.businessday.ng

Apongbon Market after the fire outbreak in Lagos, yesterday.

Imo: Uzodinma joins issues with Ihedioha, asks Supreme Court to reject request for review Felix Omohomhion, Abuja

I

mo State governor, Hope Uzodinma and the All Progressives Congress (APC) have formally joined issues with the sacked governor of the state, Emeka Ihedioha, seeking judicial review of the apex court’s judgment that had on January 14, 2020, ordered his (Ihedioha) removal from office.

In an application filed by Uzodinma and the APC, they prayed the Supreme Court to strike out Ihedioha’s request for judgment review.

The two respondents claimed that Ihedioha’s request for the review of the January 14 judgment that ousted him from office was a mere academic exercise and an affront on the 1999 Constitution.

The Supreme Court had on January 14, removed Ihedioha as Imo State governor and ordered that Uzodinma be immediately inaugurated to take over the reins of power in the state.

The Supreme Court after computing the excluded votes in

the 388 polling units came to the conclusion that Uzodinma and APC scored majority of lawful votes in the March 9, 2019, governorship election in the state.

In the unanimous judgment delivered by Justice Kudirat Kekere-Ekun, the apex court ordered that the certificate of return issued to Ihedioha be withdrawn and a new one be issued by INEC to Uzodinma.

However, dissatisfied with the apex court decision, Ihedioha through his counsel Kanu Agabi, returned to the same court with a request that the judgment be reviewed and set aside.

Uzodimma’s preliminary objection is against a motion dated February 5, 2020, filed by the Respondents/Applicants (Ihedioha and PDP), wherein they prayed the Supreme Court for an order setting aside “as a nullity the judgment delivered by it on the 14th of January, 2020 in Appeal No. SC.1462/ 2019 and Cross-Appeal No. SC.147Y0/ 2019.”

Uzodimma and APC’s

https://www.facebook.com/businessdayng

preliminary objection dated February 6, 2020, was brought pursuant to Section 6(6)(a) of the 1999 Constitution of the Federal Republic of Nigeria, as amended.

The objection raised and argued the competence of the motion and the jurisdiction of the court to entertain same.

In a 19 paragraphs affidavit filed in opposition to Ihedioha’s application, the governor and his party asserted that the 60 days allowed for the Supreme Court by the Constitution has since lapsed.

In the counter affidavit deposed to by one Mathew Joseph Mola, on behalf of the two respondents, the Supreme Court was said not to be in the habit of sitting on appeal over its own judgment, as being demanded

by Ihedioha.

The respondents claimed that since January 14, when the apex court delivered the landmark judgment that brought Uzodinma to power, the court had since seized to have the constitutional power to adjudicate @Businessdayng

on the declaration of Uzodinma as the winner of the March 9, 2019, governorship election in Imo State.

The deponent from the chambers of Damian Dodo, counsel to the two respondents, averred that by the rule of the apex court, the court is prohibited from reviewing its own judgment once delivered except to correct clerical mistakes or accidental slips.

“As the highest court in the land, the Supreme Court jealously guides its process against abuse by litigants,” he said, “and does not indulge in academic exercise or answer by hypothetical questions.”

The deponent asserted that contrary to the claim of Ihedioha in his application, the scores of all the candidates in the election as declared by the Independent National Electoral Commission (INEC) were clearly set out, adding that a petitioner whose votes were excluded from the declared results is entitled to compute the votes excluded in the presentation of his case.

44

Monday 17 February 2020

BUSINESS DAY

news

Sokoto to enhance sustainable development for economic transformation

S

Babatunde Fashola (3rd l), minister of works and housing; Yemi Oguntominiyi (2nd l), director, Highways, Construction and Rehabilitation; Nkereuwem Ukpong (r), Federal Controller of Works, Akwa Ibom State; Zhang Sihai, CGGC Global Project Nig. Ltd, project manager, and others, during the Hon. Minister›s inspection of the ongoing Rehabilitation and Dualization of Aba -Ikot Ekpene road in Imo State.

Dangote Group joins Airbus, Volvo, Ali Baba on global executive council of PMI SEGUN ADAMS

P

an-African conglomerate, The Dangote Group, has been inducted into the influential Global Executive Council (GEC) of the Project Management Institute (PMI), the first African business organisation to become a member.

The Dangote Group is joining over 80 other global businesses and organisations on the council, such as AB Volvo, Airbus, Ali Baba Group, Bank of England, BHP, Amazon, ABB, Boeing, Bosch Group, Australia Department of Defence, China Petroleum Engineering & Construction, Treasury Board of Canada, Microsoft, Wells Fargo, among others.

Dangote is thus the very first African company to be welcomed to this very powerful group of companies who are shaping the future of many industries globally.

Devakumar Edwin, group executive director, capital projects, Dangote Industries Limited, has, therefore, pledged the company’s

commitment to participate as a part of the PMI Global Executive Council.

PMI is one of the world’s largest not-for-profit membership associations for the project management profession with over 500,000 members and over 1,500,000 certification holders. PMI works closely with several multinational companies. They have led the work of project management advocacy for over 50 years.

The PMI Global Executive Council is a very exclusive partner network of some of the world’s most respected organisations.

Working together in synergy as thought leaders and influencers, these organisations improve efficiency, lead cutting-edge innovation and make transformative changes in society.

By this induction into the elite PMI Council, the Institute has shown confidence in Dangote Industries Ltd as a value-adding company with which it would like to have a collaborative relationship.

The Dangote Group would

participate as an equal stakeholder in this group of some of the world’s most respected organisations spread across different industries doing great things, changing the world, said Edwin.

The group executive director said the Dangote Group would have access to this group of top global businesses to gain insights into how market leaders are solving complex problems and also share how Dangote is solving problems in Africa.

The Dangote Group would also have access to exclusive site visits to major projects and innovation centres globally, as well as gain access to exclusive learning and research material including best-in-class assessment and benchmarking tools for best practices in organisational project management, he said.

Edwin said with Dangote Industries currently running some of the largest capital projects in the world, including a fertilizer company and the largest single train oil refinery, this is indeed great for Dangote.

Finance Act 2019 to make Nigeria business environment attractive to investors Seyi John Salau

A

s conversation on the recently signed Finance Act 2019continuestoelicitreactions from industry stakeholders, especially tax administrators and practitioners on the likely impact of the Act on businesses and individuals, some stakeholders have stated that the 2019 Finance Act is capableofmakingNigeriabusiness environmentfriendliertoinvestors.

This was the outcome of the Ascension Consulting Services breakfastmeetingonthe‘Practical Implications of the Finance Act 2019’ held in collaboration with Explorers Legal Practitioners and TESB Management Consultants.

Emeka Ofor, director, strategic communication, Nigeria Investment Promotion Commission, said the Finance Act 2019 was targeted at making Nigeria business environment more attractive to investors.

According to Ofor, the Finance Act will encourage investors to do business in Nigeria because it supports small and medium enterprises, which

to him are the bedrock of the economy since the bulk of Nigeria’s enterprises operate in this segment of the economy.

Azeez Olatoye, senior partner, Ascension Consulting Services, said the breakfast meeting was to review the Finance Act 2019 with the hope of bringing the review to all its clients and Nigerians. “We also want to look at the incentives that are in the act as well as some of the impact of the act on businesses and life styles of Nigerians generally,” Olatoye said.

According to Olatoye, there is a need for more stakeholders’ engagement on the effective tax rateinthenewFinanceAct,which has not enjoyed elaborate discuss among stakeholders before now.

However, speaking on areas of the Act that might require further amendment in 2020, Olatoye pointed at terms of payment, which according to him reflected in two separate sections of the Act. “…for instance, the terms of payment; we still have it there in one of the sections saying mode of payment would be on the transaction, while another www.businessday.ng

section is saying that the mode of payment is going to be on payment itself,” Olatoye said, stating that some of the areas would be fine-tuned in the 2020 Finance Act while other ambiguities in the 2019 Finance Act would also need further amendments.

Muhammad Nami, executive chairman, Federal Inland Revenue Service (FIRS), said the Finance Act 2019 set out to address issues in Nigeria’s tax laws that needed several amendments in order to be at per with peers and global best practice.

Represented by Femi Oluwaniyi, transition lead, Tax Operation Group for FIRS, Nami opined that the FIRS and other states revenue authorities must be on top of their game in order to make necessary changes to their procedure and processes to ensure that the intension behind the 2019 Finance Act was achieved from the tax payers. “It’s all about going towards perfection; perfecting the various acts. Those things will come up and they will be addressed in the usual manner too.”

NAMA staff apprehended over drug trafficking at Lagos airport Ifeoma Okeke

A

staff of the Nigerian Airspace Management Agency (NAMA) was early hour of Saturday apprehended at the Murtala Muhammed International Airport (MMIA), Lagos, for drug trafficking by Aviation Security (AVSEC) of the Federal Airports Authority of Nigeria (FAAN).

The suspect whose identity was not immediately made known was arrested in the official vehicle of NAMA at the airside of the airport when he attempted to courier the drug through that aspect of the airport.

The suspect was allegedly one of the official drivers of the airspace management agency. The drug, believed to be cocaine, was in big cartons and hidden inside the NAMA vehicle by the driver and his cohorts.

A source close to the scene of the incident disclosed that the driver was not the only culprit arrested for the attempted courier, as some members of the drug cartel were also apprehended by the AVSEC officials.

As at the time of compiling this report, the suspects had been handed over to the officials of the National Drug Law Enforcement Agency (NDLEA) at the Lagos Airport.

A s o u rc e c l o s e d t o NDLEA said the suspect had confessed to the crime and was assisting the anti-drug agency in its investigation. It was gathered that the initial forensic test conducted on the drug by NDLEA confirmed the suspect was carrying banned substance.

https://www.facebook.com/businessdayng

okoto State government, through its Ministry of Finance, has restated its dedication to promoting economic development within the ambit of the state through a multi-faceted approach. The plan of the government was unveiled to the general public at the management retreat of its Ministry of Finance in Lagos.

Aminu Tambuwal, governor of the state, who was represented by the state’s commissioner of finance, Abdulsammad Dasaki, revealed that the administration had consolidated its progress thus far and was now focused on a more inclusive and sustainable driven growth for the state.

Central to the objectives of the administration are human, remodelling of the state into an investment destination and establishment of tenable social infrastructure and institutions.

In the same stead, the commissioner reiterated that the proposed procurement of a N65.7 billion loan was aimed at expediting the economic advancement of the state via developmental projects. The loan, the commissioner stated, will be invested in critical projects such as agriculture, health and housing that will invariably contribute to the economic transformation of the state.

“Working with strategic partners, the state government would invest immensely in infrastructure across different sectors in the current year with a view to making the state economic environment more business friendly to attract and retain economic investment from the private sector.

“The additional funding portends an increase in budgetary capital fund from previ-

ous years. In addition, it is important to note that the facilities accessed for infrastructural projects across the state would be repaid during my ongoing second term in office.

“Understanding that the feats we have in mind to achieve are immense; we are consolidating the ongoing dairy project in collaboration with technical partners from South Africa. This is also geared towards our efforts at transforming the potentials of our state as a leading producer of agricultural produce in Nigeria and even on the African continent,” he said.

Furthermore, Dasaki pointed at the innovative steps the state was taking at ensuring constant improvements in the lives of indigenes, and maintained that the quality of life in Sokoto State was on the rise and the government could be credited for the work done thus far.

He further maintained that the expediency through which the 2020 budget was presented and passed augured well for the future of the state. It is also an indication that Governor Tambuwal has the machinery in place to maintain the drive for self-sufficiency in the state that is invariably expected to position Sokoto as a leading economy across the globe, he said.

“We understand also the pivotal place of infrastructure for all layers of the economy and so we are intentional in our effort to boost the infrastructure that would translate to real growth that can immensely impact the lives of our people. One of such areas in which we are boosting growth is Agriculture.

Lagos commits to leverage creative industry for wealth creation JOSHUA BASSEY & JOHN SALAU

L

agos State government has reiterated its commitment to leverage the creative industry for wealth creation, by harnessing the creative talents of young Nigerians in the art, fashion and entertainment industry to bridge the current unemployment gap in the state.

Yetunde Arobieke, the state commissioner for wealth creation and employment, stated this at the sixth edition of the annual fashion exhibition tagged ‘The Wave Edition’ organised in collaboration with Mac89 xperience at the weekend in Lagos.

According to Arobieke, fashion is a creative art skill, while creativity in the art of fashion and design is the principle upon which design of new fashion products are based. “It is a great profession to earn a livelihood,” she said.

The commissioner for wealth creation said fashion shows give designers and brands platforms to showcase their collections. This, she said, enables them establish point of view and communicate the rich stories @Businessdayng

for which the luxury world would depend, and in turn celebrate the vision of the designers and their work.

“Fashion is something that is very dynamic and in constant change, and especially in the globalised world we live in. Fashion sector employs a large group of people at all stages from production to design and marketing.

“I believe fashion is a form of universal language which allows constructing and deconstructing our identities, to play whatever role we want by sharing our look to show certain attitudes or values. It’s amazing how quickly a piece of clothing can change how you feel, hold yourself, and even how you act,” said Arobieke.

The fashion show equally witness the exhibition of several line of clothing designs by young designers and models who took the runway by storm for the catwalk sections.

For many of these young designers and models, the fashion show creates a platform for Lagosians to launch and showcase their creative ideas to a larger audience.

Monday 17 February 2020

BUSINESS DAY

45

news Domestic airlines explore alternative survival strategies amid economic squeeze IFEOMA OKEKE

D

omestic airlines operating in the country have continued to explore alternative ways to stay afloat in the midst of economic squeeze and harsh business environment.

Aero Contractors last week Monday announced its N200 million investment in automation of Maintenance Repair Overhaul (MRO) to help increase its MRO patronage from both local and foreign carriers.

Ado Sanusi, managing director, Aero Contractors, said the airline entered into partnership with RAMCO, a software company based in Chennai, India, to provide improved digital solutions on the airline’s MRO services.

He said the partnership is expected to be expanded to include the AOC RW operations in the near future.

As part of strategies to stay afloat, domestic airlines are also leasing out their aircraft and parts to competing airlines while some are investing in wet-lease arrangement, where the lessors provide their crew to run an aircraft operated by domestic airline.

“The airlines are now facing the reality of the business of aviation. They were not facing the reality before. They

didn’t know the commitment involved in setting up an airline. The only option that is available for them now is to wet-lease aircraft,” said John Ojikutu, member of Aviation Round Table (ART) and chief executive of Centurion Securities.

The aviation sector has failed to attract meaningful airline investors in the last five years. Rather, the number of operating airlines has continued to dwindle, BusinessDay’s checks show.

Between 2015 and now, about five airlines operating scheduled flights have closed shop. These include Discovery Air, First Nation Airways and, more recently, Medview Airline, IRS Airlines and Associated Aviation.

Ojikutusaidgovernmenthas been bailing the airlines out for more than 20 years but now that the government has stopped because it no longer has money, the airlines have to seek alternative means to survive.

The airlines have had difficulty leasing aircraft from Europe, America and other continents for about two years as a result of unofficial ‘blacklist’ over funding issues, low capital and infrastructural challenge.

•Continues online at www.businessday.ng

Nigeria grapples with formidable tax collection challenge Government seeks to increase revenue as debt repayments balloon Neil Munshi, FT

I

mproving crumbling infrastructure and poor services in Africa’s largest economy is one of the top priorities for Nigeria’s government. But with debt repayments ballooning to nearly two-thirds of revenues, it has struggled to find the money to tackle the problems and is ramping up efforts to boost tax collection.

However, the challenge will be formidable in a country with one of the lowest taxto-GDP ratios in the world, analysts say.

Economists point out that Nigeria’s public debt — which at 20 per cent of gross domestic product is low by emerging market standards — is not the issue. “It is not that interest payments are too high; it is government revenue that is too low,” Yvonne Mhango, sub-Saharan Africa economist for Renaissance Capital, said in her 2020 outlook report for the region.

The Federal Inland Revenue Service has said it loses $15bn annually to tax evasion and that it has roughly doubled the tax base since 2015, when President Muhammadu Buhari was first elected.

With the senate set to approve Mr Buhari’s plan to bor-

row $30bn for infrastructure projects in the coming months, the government wants to raise its tax take from roughly 6 per cent of GDP in 2017 to nearer 15 per cent, the threshold the World Bank says is necessary for economic growth and poverty reduction.

Despite being Africa’s biggest oil exporter, Nigeria is among the world’s poorest countries, with 87m of its 200m people living on less than $1.50 a day. Economic growth is stagnant at about 2 per cent, below the country’s population growth rate of about 2.6 per cent. Meanwhile interest payments swelled last year to 62 per cent of the revenues retained by central government after it distributed funds to the states.

In an effort to tackle the problem, the government this month raised the value added tax rate from 5 per cent to 7.5 per cent as part of a finance bill that aims to bolster revenue collection.

To encourage investment and draw more smaller businesses out of the informal economy, the bill also exempts companies with less than N25m ($70,000) in annual revenues from corporate income tax and cuts the rate for those making up to N100m

Continues on page 46 www.businessday.ng

L-R: Pat Utomi, founder/CEO, Centre for Value in Leadership; Abdussamad Dasuki, commissioner for finance, Sokoto State; Dahiru Abbass, deputy permanent secretary, Ministy of Finance, Sokoto State, and Musa Maccido, deputy accountant general, Sokoto State, at the Sokoto State Ministry of Finance Management Retreat themed ‘Building the Furture Together’ in Lagos.

Fresh hope as Russia, Afrexim Bank plan $1.4bn investment in Ajaokuta Steel

...FG intensifies surveillance on illegal minerals exports TONY AILEMEN & HARRISON EDEH, Abuja

T

here is fresh optimism in government circles that Nigeria’s moribund Ajaokuta Steel Company may soon be revived with the latest interest shown in the complex by the Russian government and AfreximBank.

Olamilekan Adegbite, minister of mines and steel development, confirmed that the Russian government and AfreximBank have made investment commitments of $1.4 billion geared towards revitalising the steel company whose construction commenced about 42 years ago.

“Afrexim is putting in $1 billion for the project and the Russians are putting in $460 million on the line. We now have about $1.4 billion for the project,” Adegbite said in an exclusive interview with BusinessDay in Abuja.

“The beauty of this proposal is that it does not involve Nigeria putting money; the

project will pay for itself. It is taking a while because of government-to-government and the protocols and bureaucracies involved. It is worth it and we will get it right. Afrexim is bringing the money, the Russians are bringing in the technical expertise and we are bringing in the mineral resource which we have,” he said.

This is coming after several attempts made in the past to get the steel plant running failed to achieve the desired results, but Adegbite said the story is changing and that the renewed interest in the project is a fallout of President Muhammadu Buhari’s October 2019 visit to Russia at the Russia-Africa summit.

The minister, who said steel was produced from Ajaokuta in the past but with imported billets, expressed hope that the Ajaokuta Steel Company would start fullscale activities before the expiration of President Buhari’s tenure in 2023.

He said “activities have been ongoing” to keep the steel company afloat ahead of the new

investors’ takeover, adding, “We have been exchanging correspondences. In fact, there is a meeting coming up in March in Cairo at the headquarters of the Afrexim Bank who are the major financiers.”

This, he said, would be the first meeting after the president’s Russian visit in October last year.

“All the other materials that are required to make steel are available in Nigeria. Basically, what we have come to do is working with the Russians who are the original builders of the plant;we are going back tothem to help us complete,” he said.

Ajaokuta Steel Company Ltd (ASCL) was designed and built by the Russian steel company, TyazhpromExport, after signing a bilateral agreement with the Nigerian government on June 4, 1976. The steel plant was designed with a production capacity of 1.3 million tonnes of steel per year.

He said the deal essentially would have the Russian government nominate a body that has the engineering skills to complete the work and pos-

sibly, the same body would run and manage it for a number of years with a reasonable profit and revert it to Nigeria’s ownership on Complete, Manage and Transfer terms.

Adegbite said, however, that the Federal Government was mindful of the existence of some legal challenges, but assured that the legal challenges would be resolved before the company commences full-scale operations.

The Federal Government had been engaged in running legal battles with Global Steel Holdings Limited, an Indian firm involved in the botched concession of Ajaokuta Steel Company Limited, over the concession modification agreement which was said to have ceded the Nigeria Iron Ore Mining Company (NIOMCO) to the Indian firm.

Nigerian government has insisted that it would not surrender the country’s sovereignty and ownership of both the Ajaokuta and NIOMCO.

•Continues online at www.businessday.ng

Offshore security threats weighing on Nigeria’s oil fortunes DIPO OLADEHINDE

B

oasting huge hydrocarbons resources yet to be exploited, Nigeria’s offshore fields are burdened with increasing threats, casting a dark shadow on players’ operations and the country’s potential to attract investment into its vital oil and gas industry in 2020.

The waters of Nigeria’s oil-rich coast have been a hotspot for piracy incidents over the past decade, even though it dropped in the first quar-

ter of 2019, according to the International Maritime Bureau. Pirates often kidnap crew for ransom and sometimes siphon off the petroleum products.

“Nigerian waters remain risky for vessels,” the London-based International Maritime Bureau said in its first quarter 2019 report.

Nigeria’s offshore domain is one of the most fertile hydrocarbon provinces in the world. Current oil reserves in the country are estimated at 36 billion barrels and natural gas reserves at over 202 trillion

https://www.facebook.com/businessdayng

cubic feet.

But large-scale oil theft and other security challenges have prevented Nigeria, Africa’s top producer, from producing up to its optimum estimated capacity of 4 million bpd, depriving the country of potential revenue.

“We noticed more incidences on the waters, attacks on tanker vessels towards the tail end of 2019. We have also noticed increased firepower from the attackers showing that they are more coordinated and determined. The fact that they are show@Businessdayng

ing more determination shows that we should also display more determination as well,” a senior naval intelligence officer with knowledge of the matter told BusinessDay. Some major international oil companies operating in the country have suspended their activities and many have moved deeper offshore, where the risks are very minimal, according to sources.

French Total has more than 20 major assets offshore, alongside other oil and gas companies such Continues on page 46

46

Monday 17 February 2020

BUSINESS DAY

news FG gets 7-day ultimatum to disclose how ...

Continued from page 1

and their locations, details of

L-R: Gboyega Alabi, deputy governor, Osun State; Bisi Egbeyemi, deputy governor, Ekiti State; Noimot Salako, deputy governor, Ogun State; Rotimi Akeredolu, governor, Ondo State; Babajide Sanwo-Olu, governor, Lagos State; Muhammed Adamu, inspector general of police, and Rauf Olaniyan, deputy governor, Oyo State, during the Southwest governors’ meeting with the IGP and other stakeholders on community policing in Lagos.

Nigeria’s desperate revenue chase turns...

Continued from page 1

ernment agency over a

matter concerning one of our member companies but it acted outside of the law and did what it pleased,” Timothy Olawale, director-general, Nigeria Employers’ Consultative Association (NECA), an umbrella organisation of employers in the organised private sector, told BusinessDay in an interview.

NECA has some 5,000 member companies drawn from across various sectors of the economy.

“The operating environment has not significantly improved since the recession in 2016 and it is being made worse by infractions the government agencies are making in their desperation to raise revenue,” Olawale said in his Lag0s office, Friday.

Cash-strapped Nigeria, where oil receipts are dwindling and tax revenues are reflective of a sleepy economy, is aggressively pushing its key revenue agencies to earn more cash with businesses at the receiving end.

The Federal Government

earned a paltry N4.6 trillion in 2019, according to Central Bank of Nigeria (CBN) data, nearly 50 percent lower than the target. That has fed into a widening budget deficit which has swelled to a decade-high.

Nigeria exited a five quarter-long recession in 2017 but businesses must still contend with decayed infrastructure and falling purchasing power.

A Nigerian starch producing firm in Ondo, south-western Nigeria, was so haunted by some government agencies that it nearly closed shop.

Last December, the head of the Federal Inland Revenue Service was fired for failing to meet up with his agency’s revenue target each year since 2015.

The hammer fell on the FIRS boss despite steering the agency to recoup higher taxes every year in that period: a period that was marred by recession and slow growth in the economy.

The FIRS made N3.7 trillion, N4.2 trillion, N4.8 trillion and N6.7 trillion in 2015, 2016, 2017 and 2018, respectively, according to official data.

“The government’s body

Offshore security threats weighing on...

Continued from page 45

as Chevron, Mobil, Shell,

Agip, among others.

“Security in parts of the Niger Delta remains a major concern with persisting incidents of criminality, kidnapping and sabotage as well as onshore and offshore piracy,” Royal Dutch Shell plc, the largest international producer in Nigeria, said in a statement.

Experts say lack of a critical infrastructure protection policy and strategy, limited maritime domain awareness, inadequate naval presence, poor cooperation and coordination among maritime agencies, poor fleet support facilities and poor funding are major factors militating against the protection of offshore assets in the country.

“For offshore fields there is less threat to security and with the technology being developed daily, there will be

growth. But it also depends on some other factors because after drilling to a certain depth, it will be impossible to get anything from such fields and there are a couple of wells above such feet now which is a loss to government in terms of revenue,” Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), said.

Nigeria’s success in boosting offshore developments will, however, also depend on its efforts to make the regulatory and legislative backdrop more certain for investors, according to experts.

Nigeria’s deepwater assets hold the country’s livewire in the oil and gas sector accounting for 40.47 percent of the total production of 2.1 million barrels per day (bpd).

However, only seven out of the 87 deepwater oil blocks in Nigeria are producing, while six are at different phases of www.businessday.ng

language is that there’s no money, and so the agencies are ramping up efforts to make money but at a cost inimical to business,” one business leader said.

“The pain of investing in Nigeria is why the country is finding it difficult to attract deep-pocket Foreign Direct Investors or to even retain existing ones,” the person said on condition of anonymity. “The feeling is the government will come for you if you get big enough.”

The result of struggling to attract and retain private capital is a growing army of unemployed Nigerians who have no jobs and a poverty pit that is swallowing more people.

“To create jobs for our teeming population, the government needs to implement key reforms that will mobilise private capital because the government does not have the resources,” Olawale said.

The need to reform is hardly new counsel in Nigeria but the government has managed to trudge on largely dependent on unorthodox central bank policies.

The latest of such policies is the introduction of a longterm naira futures contract that helps foreign investors

hedge foreign currency exposure for up to five years.

The action has been lauded but still, long-term success would require fiscal reforms.

It is for the lack of fiscal reforms that investors are getting increasingly impatient with the government as tax increases and regulatory uncertainty scupper investments.

Patrick Pouyanne, chief executive of the French oil giant Total, speaking to Reuters in Scotland, said he took a forceful message to President Muhammadu Buhari, who holds the oil ministry portfolio.

“My message there was… please lift the uncertainty, because today operators in Nigeria are waiting, which is not good for the Nigerian economy,” Pouyanne said. “It is not good for investments in the country, so we are waiting.”

Chevron is selling assets in Nigeria. Total’s stake in the profitable Bonga offshore field is also on the block, while ExxonMobil is looking to shed Nigerian fields as part of a global retrenchment strategy.

Fiscal uncertainty has also delayed a decision on a multibillion expansion, known as Bonga Southwest, by Royal Dutch Shell and its partners.

development.

Assets with 13 billion barrels of oil equivalent resources remain untapped in Nigeria’s deep offshore area, a development which has raised huge investment concerns for the oil and gas sector.

“Nigeria is going to enter quite a steep decline in production,” said Lennert Koch, principal analyst of subSaharan Africa upstream with Wood Mackenzie. “In order to keep its revenue up...it needs to develop additional fields.”

Wood Mackenzie delayed its projected startups for the deepwater projects Bonga Southwest Aparo, operated by Shell, and Preowei, operated

by Total, by two years to 2027 and 2025, respectively, and for ExxonMobil’s Owowo by four years to 2029.

Total said Preowei is under study with a final investment decision scheduled for 2020 or a year later. Exxon did not immediately respond to a request for comment, while

Shell also declined to comment immediately.

Together, the deepwater fields hold an estimated 1.5 billion barrels of oil, and could add 300,000 bpd.

Kidnappings of crew members in the Gulf of Guinea during 2019 were up by more than 50 percent, according to the International Chamber of Shipping (ICS), driven by piracy stemming from Nigeria.

The region accounted for more than 90 percent of maritime kidnappings around the world, with the “vast majority” of the attacks from Nigerian territorial waters.

According to a statement from ICS, pirates are “bolder and taking greater number of hostages” and “levels of violence are high and deaths have occurred both during attacks and captivity of seafarers and military personnel”.

•Continues online at www.businessday.ng

https://www.facebook.com/businessdayng

companies and contractors involved in the execution of any of such projects, details of all the agreements on the loot, the roles played by the World Bank and other actors, as well as the implementation status of all projects since 1999.

“We are concerned that substantial part of the estimated $5 billion returned Abacha loot since 1999 may have been diverted, re-stolen or mismanaged, and in any case remain unaccounted for,” SERAP said in two Freedom of Information (FoI) requests sent to Zainab Ahmed, minister of finance, budget and national planning, and Abukabar Malami, attorney general of the federation and minister of justice.

“Publishing the details of projects on which Abacha loot has been spent would allow the public to know the specific projects carried and the areas of the country in which the projects have been implemented as well as the officials that may be responsible for any alleged diversion or mismanagement of the loot,” SERAP said in the FoI requests dated February 14, 2020 and signed

by Kolawole Oluwadare, its deputy director.

SERAP said according to information available to it, a special panel set up on July 23, 1998 by Abdulsalami Abuba-

kar, then military head of state, to probe Abacha stated that the late dictator stole over $5 billion between 1993 and 1998 when he was in power.

“Much of the stolen public funds have been returned to Nigeria,” he said.

Nigeria has so far recovered about $4.6 billion (1.4trn) of the Abacha loot, according to some estimates.

Some of these recoveries, according to BusinessDay checks, include $750 million recovered from the Abacha family by the military administration of Abdulsalami in 1998 and $64 million returned to the Nigerian government by the government of Switzerland in 2000.

In2002,duringtheOlusegun Obasanjoadministration,adeal was struck between the government and the Abacha family leading to the forfeiture of $1.2 billion to the government.

In 2003, $160 million was repatriated from Jersey, British Isles. In the same year, $88 million was recovered from the Swiss government, $461 million in 2005, $44 million in 2006, and $322 million in 2018.

The Nigerian government recovered $227m from Liechtenstein, a tiny, doubly-landlocked country tucked away between Switzerland and Austria and with mountain slopes, in 2014.

•Continues online at www.businessday.ng

Nigeria grapples with formidable tax...

Continued from page 45

from 30 per cent to 20 per cent.

Mr Buhari has also pledged to expand the economy and tax base by weaning Africa’s largest oil producer off its reliance on crude.

Shubham Chaudhuri, country director for the World Bank, said domestic revenue generation was one of the top three issues the government had asked him to help with when he arrived last year, along with power generation and job creation.

“This is clearly one of the things that Nigeria has to get its head round, and it has to be a concerted effort to raise domestic revenues,” he said. “The main challenge will be . . . broadening the [tax] base.”

This will not be easy, say analysts. According to the latest World Bank economic report for the country, “tax morale is low” in Nigeria because of the system’s complexity and because the population receives few services or infrastructure improvements from the tax the government does collect.

“Nigerians have essentially not been given public services . . . so there is tremendous resistance to trying to raise revenue where the social compact of paying taxes and receiving services is not functioning,” said Andrew S Nevin, chief economist for PwC Nigeria.

According to PwC, scores of levies, including state consumption, road and development taxes, cost more to collect than they generate. The top six taxes in terms of revenue raised — including VAT @Businessdayng

and corporate tax — provided 97 per cent of federal tax revenue, Mr Nevin said, adding: “So a bold but productive step would be to simply eliminate all the other taxes.”

Nigeria’s 36 states would also need to boost collection, Mr Chaudhurisaid.Nearly70percent of state revenue comes from the federalgovernment,andfewstates have been able even to pay public employeesthenewfederalmonthly minimum wage of N30,000, let aloneimproveservices.

“The fiscal needs are huge . . . for investments in infrastructure, and investments in people and human capital, basic services, healthcare, basic education, water and sanitation,” he said.

The Buhari administration has long made boosting non-oil revenues a priority, but after five years in office it continues to struggle. The administration’s 2017-18 tax amnesty programme — allowing Nigerians to bring undeclared income back into the country — met only 8 per cent of its target.

The oil industry still provides more than half of government revenues and 94 per cent of foreign exchange, according to the IMF. Diversifying the economy will take time, but there was one way the government could spur revenue collection and convince more people to pay taxes, said Mr Nevin: requiring government agencies to comply with all taxes and fees. “It is not possible to ask the private sector to be tax compliant if the [federal government] is not,” he said.

Monday 17 February 2020

BUSINESS DAY

47

abujacitybusiness Comprehensive coverage of Nation’s capital

FCTA arraigns 7 guardians over child abuse James Kwen, Abuja

A

Minister of State for Petroleum Resources, Timipre Sylva presenting Oil Service Company of the Year 2020 award to Obi Uzu, managing director/ chief executive, Global Process & Pipeline Services Limited (GPPSL), at the Nigeria International Petroleum Summit (NIPS) held in Abuja, recently.

FCTA targets 976,003 children for immunization against polio in 2020 James Kwen, Abuja

N

o fewer than 976,003 eligible children with potent oral polio vaccine would be immunized in the First Round of 2020 National Immunization Plus Days (NIPDs) in the Federal Capital Territory (FCT).

FCT Minister of State, Ramatu Aliy who stated this at the flag off ceremony of 2020 National Immunization Plus Days (NIPDs) at Dutse Makaranta in Bwari Area Council, also stressed that the exercise was part of the strategies aimed at vaccinating children against poliomyelitis.

The Minister disclosed that Nigeria, will in the next few months achieve

the Africa regional certification as a polio free nation, adding that the FCT, which has been polio free for over six years, should not be seen as creating an environment for the transmission of the wild polo virus in the country.

A l i y u a s s u re d t hat the FCT Administration was committed to this course and has ensured adequate support to the programme so that good quality implementation of the exercise is carried out in the FCT She also stated that in the last National Immunization Plus Days, FCT had a monitoring coverage of 97 percent which was above the minimum acceptable 90 percent coverage.

“As you are aware, Nigeria, in the next few

months would achieve the Africa regional certification as a polio free nation and the FCT, which has been polio free for over six years, should not be seen as creating an environment for the transmission of the wild polo virus in the country.

“FCT is expected to immunize 976,003 eligible children with potent Oral Polio vaccine using 1,631 teams. I therefore wish to reassure you that the FCT Administration is committed to this course and has ensured adequate support to the program so that good quality Implementation of the exercise is carried out in the FCT”, Aliyu said.

She, however, warned the task force that its activities are being monitored by partner and

donor agencies, the National Polio Emergency Operation Centre of the NPHCDA as well as the international community.

Aliyu urged the Chairmen of the six area councils and traditional leaders to take up the challenge and be part of tthe Polio end game, just as she equally urged stakeholders to be personally involved in support of polio eradication in their various area councils and communities in the country.

In his remarks, Chairman of Gwagwalada Area Council, Adamu Mustapha Danze, who spoke on behalf of other Chairmen commended the administration for taking proactive steps in the immunization of eligible children in the territory.

Revenue: FCTA to transform cultural sites for tourists destinations James Kwen, Abuja

T

he Federal Capital Territory (FCT) Minister of State Ramatu Aliyu has disclosed plans to transform all cultural sites in Abuja to tourists destination so as to serve as revenue generation ventures.

Aliyu stated this at the official flag off of the Aje’Sinda Cultural and Community Empowerment Scheme in Ushafa community in Abuja, where she pledged

her commitment to ensure the preservation of cultural heritage of the people of FCT. The Minister congratulated the women and youths of the community and promised to replicate same for all communities to ensure that the women and youths of the FCT can have a wider means of livelihood This, she said would create job opportunities which according to her is critical in the ‘Next Level’ agenda of President Muwww.businessday.ng

hammed Buhari administration.

“All cultural sites in Abuja will be made tourists destination for revenue generation as many nations have tourism has their mainstay”, Aliyu stated.

Also, President and Founder of Helpline Foundation, Jumai Ahmadu, who described Aje’Sinda as the unique cultural heritage identification of Ushafa people said “it’s gradually going extinct”.

“Since this man was identified as the only cus-

todian of how this fabric is been made, we then brought him out to teach others so as to preserve that unique one and also teach others on how to make it in a commercial quantity so as to make a living from it”, Ahmadu said.

Aje’Sinda is a project designed to empower women and youths through vocational training of the only indigenous clothing material of the Gbagyi people of the Federal Capital Territory.

https://www.facebook.com/businessdayng

t least, seven persons are standing trial before the Federal Capital Territory (FCT) Family Court for various child abuse offenses, according to the Gender Department of the FCT Social Development Secretariat.

Director of the Department, Agnes Hart, who expressed worry over the increasing rate of child abuse in the territory, regretted that the Department entertains an average of four assaulted cases a week.

Hart who stated this while interrogating some guardians alleged to have assaulted minors in their care, declared that the Administration has zero tolerance for any form of abuse on any resident.

She warned that the full wrath of the law will be applied to anyone found guilty

of abusing other people, particularly children.

“Here in the FCT we have a sexual and gender base response team, and we have zero tolerance to any form of abuse against any resident, let alone violence on a child.

No body in the FCT can molest a child and go scot free.

“The Child Right Act 2003 is very clear on that, every child has the right to life, right to quality education, right to healthcare and other fundamental human rights as enshrined in the constitution of the Federal Republic of Nigeria and we are here to protect the interest if the child to the later.

“This week alone we have received four cases of child abuse and violence against children and this has been the trend. Presently we have seven such cases in the FCT family court and we are going to follow through with all of such cases”, Hart.

Foundation sets p Call Centre to support cancer patients in Abuja Godsgift Onyedinefu, Abuja

A

s part of efforts to alleviate the plight of Nigerians suffering form cancer, the Strauss Foundation has announced plans to set up a 24hour help line in Abuja, where patients can call to share their problems and get the needed support.

The Founder of the Foundation and Director of the Strauss Preparatory School, Abuja, Golda Obi, disclosed this while sharing her 10 experience after being diagnosed with stage four breast cancer.

Obi noted that treating cancer is a horrible experience that comes with excruciating pain and most people give up because they could not endure it, but stressed that her dogged determination to survive among other things kept her going until she pulled through.

According to her, fighting cancer is a battle that must first be won in the head, hence patients can face cancer when the war is already won in their head.

This, she said, is the rationale for setting up a help line, so that patients, especially those in distress or passing through the excruciating pain of cancer treatment such as Chemotherapy can call in to share their burdens and get the support they need.

“We are looking to set up a call centre, where people who are undergoing treatment and are in so much distress can call in to share their problem. I have seen a cancer patient, who had so much pain through her bones. Cancer doesn’t cause pain, it only gives you pain when it spreads to your liver and causes inflam@Businessdayng

mation. The pain is caused by medication and treatment and it is a horrible thing to go through”, Obi said.

The Manager of Strauss School of Music also disclosed that cancer is one of the biggest causes of divorce, noting that most reason why people leave their marriages is because they could not deal with the fact that their spouse has cancer and all the reactions that comes with it, so they opt for divorce.

“Cancer is one of the biggest causes of divorce. Men do not know how to deal with problems and I remember giving a talk in the United Kingdom, UK and one of the panellists confessed to abandoning his wife because she had cancer and she died, because he could not deal with it.

“A lot of divorces happen from cancer , it may be difficult to understand her reactions and it may wear you off”, Obi noted.

She further revealed that she was first diagnosed of cancer in Nigeria, but had to seek treatment in the UK, not just because she was a British citizen, but also because she had no confidence in the Nigerian health care system.

“In Nigeria, the message is that cancer is a death sentence and I was not ready to die. I was advised to leave the country as it was my only chance of survival.

“When I was diagnosed here in Nigeria, I did not even know where to go for treatment...Nigeria is a funny place. But in the UK, it is very simple, there is a directory.

There is just so much in Nigeria that needs to change”, she said.

48

Monday 17 February 2020

BUSINESS DAY

news

Nigeria’ oil production could drop by 35% in 10 years - Wood Mackenzie … as three deep-water projects could see start-up dates delayed Olusola Bello, with agency report

N

igeria’s oil production could drop by 35 percent in the next 10 years as regulatory uncertainty and costs amid languishing oil prices may prompt oil majors to postpone final investment decisions on three major deep-water projects, Wood Mackenzie told Reuters.

OPEC member Nigeria is the largest oil producer in Africa and it pumped 1.776 million barrels of oil per day (bpd) in January 2020, according to OPEC’s secondary sources in its monthly report published this week. Adding condensate production, Nigeria’s total oil output exceeds 2 million bpd.

However, three deep-water projects offshore Nigeria, operated by oil majors Exxon, Shell, and Total, could see their start-up dates delayed by two to four years to the late 2020s, according to the research WoodMac shared with Reuters ahead of publishing.

The regulatory changes in Nigeria’s oil industry and the still pending final approval of a petroleum bill - after two decades of delays and wrangling - act as deterrents to the oil majors’ investment decisions, according to Wood Mackenzie.

Moreover, the three deepwater projects - which could add a combined 300,000 bpd to Nigeria’s production - are not profitable at current oil prices with Brent Crude below $60 a barrel, the consultancy noted.

Just last week, Nigeria assured foreign oil investors that the country is open to business and can guarantee high returns on investment, the country’s President Muhammadu Buhari told an energy conference.

Nigeria is set to finally pass a new bill regulating the petroleum industry by the middle of this year, after nearly two decades of delays, the country’s Minister of Petroleum Timipre Sylva said at the same event.

He said: “We are banking on the fact today to make that promise on the fact that there is cordial relationship now between the legislature and the executive.”

He said both the executive and legislature have all agreed that there is need for the bill to be passed, stating that for so long Nigeria has tossed around the PIB. The minister stated that for too long Nigeria has not been able to attract the much-needed investments in the oil and gas sector.

He cited the situation in which by 2000 the country oil reserve stood at about 20 billion

barrels, and between 2000 and 2007 she was able to grow that reserve to 37 billion barrels. This was within seven years. He stated that unfortunately from 2007 to now, since, Nigeria started tossing around over the PIB, she has only been able to grow her reserve from 37 billion barrels to 37,500 barrels in more than 10 years. Why?, because not much investment is coming to Nigeria.

He said if you are an investor and you are coming to invest in Nigeria and you see that the fiscal framework is shaking, uncertain, nobody knows what law would be passed tomorrow, of course, no investor would want to invest new capital in Nigeria.

This is why you see that the Nigerian oil and gas industry is almost being stagnant, he said. “We have retrogressed because some time ago, this country was producing up to 2.6 million barrels of crude oil per day, and a long time ago the target was three million barrels per day and by now we should have been producing up till four million barrels per day. Today, other countries have overtaken Nigeria including Angola which started the business long after she started even overtook Nigeria at some point because investments are not coming to Nigeria.”

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

49

50

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

51

52

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

53

54

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

55

56

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

57

58

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

59

60

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

61

62

Monday 17 February 2020

BUSINESS DAY

cityfile

ITF mulls skills sumner programme for youths HARRISON EDEH, Abuja

T

he Industrial Training Fund (ITF), has said that its Model Skills Training Centre (MSTC) will now run modular courses of between one and six months to enable more Nigerians acquire skills necessary for employment and entrepreneurship.

Director-general, ITF, Joseph Ari, stated this during the combined convocation of 316 graduates of the National Innovative Diploma (NID) and the National Vocational Certificate (NVC) of the ITF Model Skills Training Centre (MSTC), in Abuja.

Ari explained that the graduands were exposed to the best equipment and tools, especially for mechatronics and facility technology departments, that may not be found in any university, said the Fund’s training was carefully structured to equip the graduands with requisite skills to start-up on their own.

“From our tracking and monitoring system, we have largely succeeded in this regard as over 65 per cent of the graduates of the MSTC in the last six years are successful entrepreneurs,” he said.

He noted that the fund’s commitment to skills acquisition was because it remains the most viable and sustainable solution to combatting the rising unemployment and poverty in the country. To this end, he said the MSTC conducts up-skilling programmes for those who want to upgrade their skills or learn a new occupational trade.

He also hinted that the MSTC has introduced summer boot camp for children between the ages 10-15 to give them hands-on training in the areas of Nigeria cuisine, pastry, hygiene and safety, mobile robot technology, electronic circuit design and trouble shooting technology, programmable logic circuit, hardware, computer appreciation, computer fundamentals, and web design and networking.

Corps members participate in a road walk during a road walk against corruption, organised by Economic and Financial Crime CommisNAN sion (EFCC) in collaboration with the National Youth Service Corps (NYSC), in Calabar on Friday.

Ogiso-Osunde erosion control: Edo begins compensation payment to communities IDRIS UMAR MOMOH, Benin

E

do State Nigeria Erosion and Watershed Management Project (Edo NEWMAP) has commenced payment of compensation to persons whose property were affected by an erosion control project at Ogiso-Osunde community in Ikpoba-Okha local government area of the state.

At the presentation of cheques to the beneficiaries in Benin, Edo State governor, Godwin Obaseki, said the Ogiso-Osunde flood control project was among several other intervention

Oyo approves construction of classes in rural schools REMI FEYISIPO, Ibadan

O

yo State government has approved the construction of new blocks of classrooms at two rural public schools, Methodist Basic School, Adeyipo Olomi-Yeye and Union of Ratibi, School 2, Idi-iroko, in Oluyole local government, Ibadan.

Executive chairman, Oyo State Universal Basic Education Board, Nureni Adeniran disclosed this during an on-the-spot inspection of the rural schools.

Adeniran stated that the construction would be enlisted as part of its 2019 FGNUBEC/OYOSUBEB intervention project.

The visit was prompted by a viral post on the social media, which called for Oyo State government’s intervention in the sorry state of learning at Methodist Primary School, Olomi-Yeye, Ibadan.

Promising that the schools would also be provided with furniture and other facilities, the chairman said: “It is very pathetic to see these children learning under a bad condition like this.”

Adeniran appreciated the good intent of users of social media, who posted pictures of the schools online, saying this has assisted the state government in identifying such schools.

“When we saw this via the social media, we decided to visit this place promptly and see what we can do. We must sincerely thank the social media user who posted pictures of Methodist Basic School. That was what prompted our coming here today”, he added.

Adeniran reiterated the resolution of this administration to revamp the education sector, by strongly considering rural communities in the distribution of buildings and learning facilities.

He noted that the basic education sector is a component of development, which the present administration under Governor Seyi Makinde earnestly would change.

projects executed by Edo NEWMAP in the past 6 years.

The governor who was represented by his chief of staff, Taiwo Akerele, said the Community Oversight Committees, Grievance Redress Desk and other safeguard measures will be put in place to ensure smooth implementation of the project.

“The Edo NEWMAP will constitute community oversight committees that will assist in third-party monitoring of the project so they can escalate issues that might arise from the execution of the project,” he said.

Project coordinator, Edo NEWMAP, Tom

Obaseki, said the intervention was designed to permanently tackle the flood and gully erosion in Ogiso-Osunde community.

He added that the contractor handling the project would commence work as soon as the payment of compensation to affected persons is concluded, adding, “Engineering design has been done. The community has been briefed about the intervention and a contractor has being engaged to do the work.”

Tom explained that two major underground tunnels would take flood in OgisoOsunde through 3rd East Circular axis of Benin City to Ikpoba River.

EFCC, others to tackle illicit financial flows Innocent Odoh, Abuja

A

cting chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, the minister of Youth and Sports, Sunday Dare, minister of Women Affairs and Social Development, Paulen Tallen and the president of the Nigerian Labour Congress (NLC) Ayuba Waba, have vowed to collaborate in the fight the scourge of illicit financial flows and other forms of corruption in the country.

This was the crux of the walk against corruption tagged : “Nigerian Youth Walk against Corruption,” which started at about 7am on Friday from the EFCC office in Wuse 2.

The walk was organised by the EFCC to sensitise the youth of Nigeria on the dangers of corruption and the need to tackle the menace.

Addressing the crowd that turned out at the end of the walk at the Federal Secretariat, Magu said: “Nigeria will never be corrupted again.”

He admonished the women, youth and all stakeholders in the country to rise to the occasion and join the EFCC to defeat illicit financial flows and other forms of corruption in the country.

The EFCC boss said “we must do every thing to destroy corruption. We have taken a common position in assets recovery and returns and in the fight against corruption and illicit financial flows. Corruption is the

www.businessday.ng

greatest enemy of mankind. If we can address the issue of corruption, there will be no Boko Haram, there will be no banditry, there will be no kidnapping.

“Corruption is the source of all these evils.

So, we must put heads together and fight corruption and illicit financial flows because illicit financial flows from corrupt practices are used to fuel all the crises of insecurity in this country.”

Magu lamented that women and youth are the biggest victims of corruption, urging them to take ownership of the fight against corruption and illicit financial flows.

“You must learn to protect your future, so don’t wait. There are so many things you can do, you can help to sensitize the rest of Nigerians that there is evil in corruption. So it is our responsibility to kick away the evil,” he added.

Also speaking, the minister of Youth and Sports Development, Sunday Dare, said the huge turn out by was an indication that Nigerians are tired of corruption and have resolved to tackle it. “The message is loud and clear everybody now knows that the youths of this country commit themselves to be foot soldiers and ambassadors of the country against corruption,” he said.

On her part, minister of Women Affairs and Social Development, Pauline Tallen, who expressed solidarity with the EFCC and others said “as women and mothers of Nigeria we say

https://www.facebook.com/businessdayng

no to corruption.”

“If you love Nigeria you must fight and say no to corruption. Our women are dying in the hospitals at child birth because of corruption because there are no drugs somebody is responsible. Our children are sitting on the floor with no educational materials in the classrooms because somebody is responsible.

“We want to sanitise our education sector, we want to sanitise the health sector, we want to sanitise every sector and we must have the fear of God and fight against corruption. If we don’t say no to corruption and kill corruption, corruption will kill us . Let join hands to say no to corruption,” she added.

NLC president, Ayuba Waba, said “today we stand in solidarity with our youth that have made themselves available to support the crusade and the fight against corruption because we are doing it in our own enlightened interest.

The youth will not have a future in this country if we don’t address the issue of corruption. The youth will not be employed in this country if we don’t address the issue of corruption.

“So, the youth, it is in your own enlightened self interest to be good ambassadors of fighting against corruption. So let’s continue to support the EFCC and other anti-graft agencies to address this monster of corruption that has brought Nigeria to its knees. We are not having services because the money meant for it have been carted away.”

@Businessdayng

63

Monday 17 February 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Cries of despair from Ground Zero of the coronavirus outbreak

Horror stories emerge from Wuhan as city struggles to cope with health crisis CHRISTIAN SHEPHERD, XINNING LIU AND YUAN YANG

O

ne of the most haunting images to come out of Wuhan, the Chinese city at the centre of the coronavirus outbreak, is of a distressed woman in an upper floor apartment banging a homemade gong and wailing for help.

“There’s nothing I can do, please can someone come help us,” the woman, pleads from her balcony, in a video that went viral.

The plight of the woman, whose sick mother had been denied a hospital bed, is one of countless horror stories emerging from Wuhan and surrounding cities. Authorities have placed about 70m people in the area under lockdown to prevent the spread of the country’s worst viral outbreak since Sars 17 years ago.

Other videos from Wuhan have shown what seem to be bodies in a minibus outside a Wuhan hospital, makeshift quarantine centres in shopping centres and trucks using water cannon to spray clouds of disinfectant over the streets.

Faced with rising discontent with the local authorities’ handling of the outbreak, Xi Jinping this week fired the Wuhan and provincial Communist party heads in one of the most senior shake-ups of the Chinese president’s seven-year rule.

But the new party bosses will have their work cut out regaining the trust

Patients make do at an exhibition centre in Wuhan that has been converted into a makeshift hospital as authorities struggle to treat the thousands of victims of the coronavirus © AFP via Getty Images

of a deeply traumatised population.

The local government has not only been accused of covering up the early stages of the outbreak but also of providing inadequate medical care, with hospitals overwhelmed and those terminally ill with diseases other than the coronavirus neglected.

Following public anger over the persecution and death of a whisteblower doctor, Beijing has reluctantly allowed some reporting on the outbreak by officially recognised media.

But it has been cracking down on others — two citizen journalists who were covering the outbreak in Wuhan have disappeared.

“There is not enough medicine or healthcare, and a large number of patients have died because they weren’t treated in time,” said Zhang Renqiang, a Wuhan resident. “We just stay at home and self quarantine, waiting for the grim reaper.”

As of Friday, there were almost 64,000 cases and nearly 1,400 deaths in China, most of them in Wuhan and the surrounding Hubei province.

Since the Wuhan lockdown started on January 23, the number of patients has risen quickly, with the biggest increase coming this week when the government changed how patients are classified.

Just before he was sacked, Wuhan

Communist party boss Ma Guoqiang inflamed public opinion by claiming that “98.6” per cent of the city’s citizens had been checked to assess whether they needed treatment.

“Could it be that I live in a different Wuhan?” asked one incredulous blogger on WeChat. Below the post, a slew of commenters told how their family members had not been tested or given proper care.

With hospitals overrun by patients, some in Wuhan have become so desperate for treatment they are posting their medical histories online on Weibo, the Chinese microblogging platform, in the hope authorities will offer them help. At the end of

January, Weibo started a “Pneumonia Victims Seeking Help” forum, which featured over 1,400 posts and had 542,000 followers as of Friday.

One post said loved ones with ailments other than the coronavirus had died because priority was being given to virus patients.

“How can there be so many tragedies in this day and age? What is the Wuhan government f*****g doing?” one user commented below a post.

In Baibuting, a district of Wuhan where the government staged a now notorious lunar new year banquet for 40,000 families in the early days of the outbreak, residents said there was a lack of testing kits and proper checks in the area.

“We hope that the central government knows the situation. Please can you save those of us who live in Baibuting,” the user wrote.

Some have received help. The mother of the woman who banged the gong was rejected from a hospital after a laboratory test for the coronavirus gave a false negative, she told Chinese media outlet Caixin. But after the video went viral, authorities provided her with treatment.

To handle the overflow of patients, Wuhan has built 11 makeshift hospitals, adding about 10,000 hospital beds. The national health commission has said 11,000 nurses and doctors have been flown in to Hubei from across the country.

The online backlash has come as China’s censors are seeking to wind back independent reporting on the crisis.

Joe Biden events leave New York donors with sinking feeling Wall Street dealmakers hand over cheques but doubt the former US vice-president’s chances COURTNEY WEAVER, JAMES FONTANELLA-KHAN AND JENNIFER ABLAN

T

he menu was champagne, sliders and tuna tartare. The guests were polite, and the candidate upbeat. But whether Joe Biden left his Manhattan fundraising events with more Wall Street support than when he entered was anybody’s guess.

“We lost the first two primaries, but they make up 2 per cent of the delegates needed to get elected,” the Democratic presidential candidate explained to about 75 donors early on Thursday evening at Sarabeth’s restaurant on Central Park South.

A couple of hours later, he was making the pitch again, this time to a different well-heeled crowd of Wall Street dealmakers and lawyers, at The Wayfarer, one block south of Sarabeth’s.

“I feel really, really good,” Mr Biden said. “You’re putting me in a position to be able to be very com-

petitive in the next two primaries [in Nevada and South Carolina]. And then it goes from there.”

After blistering losses in Iowa and New Hampshire, Mr Biden’s campaign is scrambling to reassure donors that the former US vice-president — and one-time Democratic frontrunner — can win the race to take on Donald Trump in November.

A candidate is not a momentum stock, despite what Wall Street might think. You support them because you believe in them Jim Chanos, hedge fund manager and Biden supporter In public, Mr Biden’s biggest backers are responding — giving $800,000 at the two Manhattan events, according to his campaign.

However, in private, several donors expressed concern about his prospects — particularly with Michael Bloomberg, the billionaire former New York mayor, using his wealth to target the Super Tuesday primaries on March 3.

One donor who attended the www.businessday.ng

Sarabeth’s event said that while there are still optimists in the Biden camp, he and many others believed the former vice-president needed wins in the Nevada caucuses and South Carolina primary to be still viable.

“I think on paper he’s the best candidate. [But] there is not a tonne of excitement for him,” the donor said after giving the maximum $2,800 primary donation.

A senior banker at a boutique investment bank who has also backed Mr Biden, said the former vice-president’s days were numbered. “It’s hard to see him perform so badly but we need to get real about supporting somebody who can first beat the crazy socialist (Bernie Sanders) and then Trump.”

Last year, Mr Biden’s campaign raised $59.5m, but spent $50.6m of that by year’s end, much of it on boosting Mr Biden in Iowa in the hope that a strong performance in the first caucus state would aid his online fundraising.

https://www.facebook.com/businessdayng

By contrast, Mr Sanders, the winner in New Hampshire, raised about $96m in 2019 — much of it from small donors — and ended the year with $18.2m on hand. Pete Buttigieg, the former South Bend, Indiana, mayor who finished first in Iowa, raised $76m in 2019, and ended the year with $14.5m.

Mr Biden is also more reliant on high net-worth donors than his rivals. Roughly a third of his funding last year came from donors who had given $2,800 or more to him or his super PAC, according to an analysis by the Center for Responsive Politics.

By contrast, donors giving $2,800 or more accounted for 21 per cent of the money going to Mr Buttigieg, 18 per cent to Minnesota senator Amy Klobuchar and just 4 per cent to Ms Sanders and Massachusetts senator Elizabeth Warren — meaning they can all tap more of their backers for donations throughout the year.

Not all of Mr Biden’s donors were downbeat. Jim Chanos, the hedge fund manager who helped to raise @Businessdayng

$500,000 for Mr Biden last year at his Upper East Side home, said he was remaining loyal despite the former vice-president’s fifth-place finish in New Hampshire.

“A candidate is not a momentum stock, despite what Wall Street might think,” Mr Chanos told the FT. “You support them because you believe in them.”

Others said they were re-evaluating the field, taking calls from Mr Bloomberg and considering Ms Klobuchar and Mr Buttigieg, moderates who performed better than Mr Biden in New Hampshire.

Ms Klobuchar attended a Manhattan fundraiser on Wednesday with 150 donors. The previous week, she raised $3m in the 48 hours following her strong performance in a New Hampshire debate.

One major Biden donor outside of New York said he had already given money to Ms Klobuchar.

The donor said he had been disappointed by Mr Biden’s fundraising operation, especially compared with Barack Obama’s.

Monday 17 February 2020

BUSINESS DAY

64

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

How will the EU reshape fund managers’ regulations after

UK fund managers fear Brussels could shift goalposts and compromise third-country access SIOBHAN RIDING

B

rexit has worked some City of London fund managers into a frenzy about the prospect of becoming free from the reams of EU financial regulations that have been imposed on them since the financial crisis.

But the £9tn UK asset management sector’s large EU investor base means that fund rules emanating from Brussels will continue to plague most British investment groups.

As the UK and EU prepare to embark on negotiations to decide their future relationship, the big question for many British asset managers that operate in Europe is how far the EU27 will reshape regulations — and how damaging it will be for the UK. The UK’s stature as a financial services powerhouse gave it considerable sway over crafting regulations when it was part of the bloc. Britain is credited with curbing the protectionist inklings of some EU member states and driving through provisions that opened the market up to non-EU players. £1.7tn Assets of European investors managed on a delegated basis However, some fund managers fear that the EU will reverse this approach now that it is free from the UK’s influence. Brussels is due to review several of its flagship asset management directives in the coming years, giving it the opportunity to enact

crucial changes.

Any move to toughen up existing rules or roll back third-country access would have big implications for UK managers with EU customers, as it would make it harder for them to keep pace with regulations and potentially compromise their access to European investors.

Although the European Commission has vowed to limit itself to making targeted changes to its fund rules, individual member states eager to capitalise on Brexit to expand their asset management sectors, such as France, may have other ideas.

“The UK’s departure changes the balance of the debate on openness within the EU and gives countries like France greater weight,” says Denzil Davidson, financial services lead at advisory group Global Counsel. “It would be surprising if these countries didn’t

try to turn this to their advantage.”

FTfm examines the possible regulatory skirmishes affecting UK asset managers.

Delegation The ability to set up a fund in one country but manage it from another — known as delegation — is at the heart of international fund groups’ business model.

The practice essentially allows top portfolio managers operating from financial centres such as Hong Kong, Boston or London to run money for investors on the other side of the globe.

But the liberal approach to delegation under the EU’s main regulations governing fund management — the Ucits and Alternative Investment Fund Managers (AIFM) directives — has become a lightning rod for critics who believe this could allow UK managers to access the EU via the back door.

We do not want to end up in a situation in which UK asset managers are essentially running letterbox companies with EU licences Markus Ferber Three years ago, France led an attempt to overhaul the rules on these grounds. This failed after resistance from other EU countries.

However, regulatory experts believe delegation will come under attack again when the EU reviews the Ucits and AIFM directives in the coming years.

“Delegation is a constant political football: it will come up in every single piece of regulation that gets reviewed,” says former UK MEP Kay Swinburne, now vice-chair of financial services at KPMG. The fact that about £1.7tn of European investors’ assets are managed on a delegated basis from the UK — now a third country that is

not subject to EU oversight — is prompting some policymakers to echo France’s calls for a more robust system.

Markus Ferber, a centre-right MEP and an influential voice on the European Parliament’s monetary and economic affairs committee, says he would support moves to review fund managers’ delegation arrangements.

“This would help to establish what an EU asset manager is and under what circumstances and to what degree outsourcing of essential services to third countries is allowed,” he says. “After all, we do not want to end up in a situation in which UK asset managers are essentially running letterbox companies with EU licences.”

Any overhaul could result in asset managers having to deploy more senior staff in the EU and comply with more onerous procedures to be able to delegate.

The UK must weigh the costs and benefits of regulatory divergence

Some parts of the financial sector wish to diverge from the EU, while others want to stay aligned HUW VAN STEENIS The writer chairs the sustainable finance committee at UBS hat will Brexit mean for the City of London and UK finance? With the appointment of the new chancellor, Rishi Sunak, it’s a question that financiers are asking with renewed urgency.

Financial services account for 11 per cent of the UK tax take and more than 1m jobs, two-thirds of which are outside Greater London — a fact often overlooked. While the City will adjust to whatever is thrown at it, giving up these opportunities and tax income should be weighed up carefully.

The Brexit debate largely revolves around the type of access to European financial markets the UK will have and how much it will be able to diverge from EU rules. As Mark Car-

W

ney, Bank of England governor, said: “It is not desirable at all to tie our hands and outsource regulation and effectively the supervision of the world’s leading complex financial system to another jurisdiction.”

But the more the UK diverges, the less likely its access to the EU’s financial markets may become.

Firms have already set up hubs in the bloc as a contingency, moving almost £1tn of assets.

What could smart divergence look like? One possibility is a more proportionate regime for smaller banks. The EU currently has tough rules irrespective of size, partly because of concerns lenders could operate across borders without impediment.

However, the UK could consider a proportional scheme for smaller lenders to reduce the cost of finance to domestic UK customers, as in

Canada and the US. Now consider regulation. Much has been made of Britain’s potential destiny as a low-regulation “Singapore on Thames”. But in fact Singapore learnt a hard lesson from the Asian financial crisis of 1997. The tough regulatory regime it adopted subsequently is one of the reasons it fared so well in the 2008 crisis.

The real lesson of Singapore may be its concerted effort to make the system less bureaucratic. Singaporean regulators have embraced digital regulation and made a commitment to only ask firms for data once.

There is huge scope for the UK to be a world leader in digital regulation, too. Reporting for UK banks alone costs the industry £2bn£4.5bn per year, according to McKinsey. In January, the BoE and the Financial Conduct Authority announced proposals for data reforms

based on the Future of Finance report. The Treasury should back these plans and also consider adding “support of the government’s economic policy” as a secondary objective of the FCA. More broadly, the government should weigh up carefully the right balance of divergence sector by sector. Domestic insurers, for example, would like to make tweaks to EU rules known as “Solvency II”. But asset managers would like to remain aligned.

The UK could champion green finance more quickly outside the EU. Investors, regulators and companies need high-quality data to manage the transition to a lower carbon economy. Britain could become the first European country to mandate climate-related disclosures for all companies.

Divergence will not work every-

where. Proposals should be weighed carefully. The EU is currently considering allowing firms to count technology investments towards their regulatory capital — as they do in Switzerland and the US. Sam Woods, deputy governor of the BoE, told parliament last week that this is an area in which the UK may wish to diverge. However given the central importance of digital transformation to customers and competitiveness, it would be odd to disadvantage UK firms relative to most of their international peers.

Last, the chancellor should ensure finance works for everyone.

The transition from cash to digital payments is accelerating, but to do this without leaving anyone behind will require significant upgrades to broadband and mobile telephony networks. A national payments strategy should be a priority too.

65 BUSINESS DAY

FT

Monday 17 February 2020

ANALYSIS

‘It looks like judgment day’: Inside Syria’s final battle Trapped between a closed border and advancing forces, opponents of the Assad regime face a humanitarian crisis CHLOE CORNISH AND ASMAA AL-OMAR

T

he old airline tags o n t h e f i v e s u i tcases by the front door hint at a family holiday. But Muzna is not packing for a fortnight away; she is fleeing Syrian and Russian fighter jets. Bombs exploding in nearby Idlib city have convinced the 32-year-old mother of two that she needs to move — for the second time in two months — but this time she is not sure where to go.

“There is stuff we can’t take with us,” she says, things like crafts made by her sons, aged four and six. She has a photo of her youngest holding a collage — a number “4” made from glittery paper hearts, with three warplanes hovering above. They had already left that picture behind.

Outside her window, the cold streets of Maaret Misrin — a town 10km north of Idlib city — are jammed with loaded cars, families desperate to escape the bombing but with little option of where to go. After nine years of civil war, which has caused exodus after exodus from Syrian cities crushed to rubble, Muzna has seen this all before.

“If they could, they’d probably take the bricks [of their houses],” she says, “because they know once the regime forces come they will burn everything and leave our town without a single hut.”

Muzna, who asked not to give her family name, was like others interviewed in Idlib by the Financial Times, reached by telephone.

The women’s rights activist, her doctor husband and two sons are just four of some 3m civilians trapped in north-west Syria close to the Turkish border, where an intense bombing campaign and advancing ground assault by forces loyal to President Bashar al-Assad have forced more people to flee in a short period than at any other time since the conflict erupted in 2011. The UN says that in the past 10 weeks, 800,000 people have run for their lives. The vast majority — 80 per cent — are women and children.

A September 2018 agreement between Russia, Iran and Turkey — the Syrian war’s main international players — had until last spring slowed the regime’s advance on Idlib. Ankara, which backs many of the remaining militant groups opposing Mr Assad, had promised to separate out the opposition fighters they support from jihadis formerly linked to al-Qaeda. If Turkey could push the jihadis far enough away that they could not threaten Russian bases, Moscow pledged to restrain its ally Damascus.

But both eventually blamed

the other for failing to stick to the bargain, and by April 2019, the offensive was back on. Multiple ceasefires have since failed.

Home to hundreds of thousands of people who escaped other battles, Idlib is the final opposition-held enclave. It is now the scene of an unfolding humanitarian disaster and the dying days of Syria’s revolution.

The civil war has left at least 500,000 people dead, forced half the population from their homes and pushed millions to seek refuge in the Middle East region and Europe.

Idlib is “the last area where these people can be free”, says Jomana Qaddour, co-founder of the Syria Relief and Development aid organisation. “[That is why] the fate of Idlib is so important — not just to the people that live there but to all Syrians that went out demanding their freedom and dignity.”

The regime is pushing west, its warplanes emptying town after town before its tanks roll in. But with the Turkish border shut and towns along it already bursting at the seams, there is almost nowhere left for the trapped Syrians to run. Aid groups say space to erect tents in the rocky terrain is scarce.

Hospitals, schools, warehouses full of aid — even camps for the fleeing — have been hit in air strikes by pro-Assad forces.

Winter temperatures are below freezing.

Mark Cutts, the UN’s deputy regional humanitarian co-ordinator for Syria, says aid agencies sent 1,200 trucks of emergency supplies over the border into Idlib in January: “But do we have enough? No. Are we on top of things? No. The scale of the crisis is enormous.

Since 2017, the Syrian army and militias loyal to Mr Assad have reclaimed rebel-held cities and territories in the south and centre of the country. But the regime is not in full control of the north-east, governed by a Kurdish-led administration that

does not oppose Mr Assad but wants some independence from him. Nor does it hold a corridor of the north-west by the Turkish border, which Ankara controls.

But it has taken back most of the country — a scenario unthinkable before first Iran, and by 2015 Russia, threw their military weight behind Mr Assad, decisively turning the tide of war in his favour as he vowed to take back “every inch” of Syria.

He and Vladimir Putin, the Russia president, insisted they were fighting terrorists.

Through all this, a once obscure corner of north-west Syria, the province of Idlib and western parts of neighbouring Aleppo, eluded Mr Assad. Instead, the regime herded hundreds of thousands who refused to reconcile into the area, approximately doubling the size of Idlib’s population since 2011. A survey by the International Rescue Committee in Idlib last year found that families living there had on average moved five times since the start of the civil war — with 16 per cent reporting they had been displaced 10 times or more.

Those bussed into Idlib included rebels backed by neighbouring Turkey, which has been organising, arming and training anti-Assad forces since 2012.

Yet a former offshoot of al-Qaeda, Hayat Tahrir al-Sham, toppled Turkey-backed rebels and over-ran Idlib last year. Numbering as many as 10,000 fighters, according to the US’s Syria envoy James Jeffrey, HTS’s funding comes largely from levying tariffs at border crossings, land sales and local taxes.

The civilians who reluctantly live under jihadist rule include people like Muzna, who previously fled from the town of Maarat al-Numan — 33km south of Idlib city — before regime forces arrived a month ago. Protecting her sons is her priority.

But the boys “know the regime entered our house, the kindergarten and [our town],” she says.

“They would tell me, ‘mum, they

By the time Tarek turned 11, the Arab spring had ignited Syria’s civil uprising. “I joined the peaceful protests in 2012,” Tarek says. It would change his life, and his country, forever.

Alarmed by the scale and size of the demonstrations, Mr Assad decided to crush the uprising.

“I saw my friends, kids, falling [with our] bare chests, calling for freedom in front of the Syrian regime bullets,” Tarek says. The baker’s son says he was 14 when he first picked up a gun to fight the regime.

The Syrian civil war soon became an international proxy battle. While Iran and Russia backed Mr Assad, seeking to prevent regime change, Gulf states and western nations sent weapons and money to rebels.

Islamist extremist factions rose are burning [the drawings] now’.” out of the opposition melee She has reason to fear. “What’s and at times the factions fought happening now never happened among themselves. before. We can’t go anywhere,” After the Assad regime, says Aref Tammawi, a Syrian backed by Russian air power, photojournalist in Idlib who fled pummelled the rebels into subAleppo and has witnessed mulmission, the stronger jihadi tiple mass displacements during groups such as HTS came to the war. “It looks like judgment dominate Idlib. day.”

With more moderate factions Timeline eventually defeated, western Years of conflict and proxy war backers retreated, but one nation 2011 stayed: Turkey. Today, 20-yearCivil war breaks out. The US and old Tarek leads a group in the EU impose sanctions on SyrTurkish-backed National Libian regime over alleged human eration Front, one of the groups rights abuses. that make up the rebel Free Syr2012 ian Army.

Turkey and other nations opSome fighters, including posed to President Bashar alTarek, are agnostic about AnAssad begin to arm and train kara’s role. “There were a lot of rebel groups. arguments among us when it 2013 came to receiving foreign supSyrian regime accused of carryport,” he says. But Turkey and its ing out chemical weapons attack Syrian proxies — many of them in Damascus suburbs — but hardened Islamists — are deeply crossing Barack Obama’s “red entwined. They have fought line” does not lead to western alongside Turkish troops in three retaliation. separate military incursions into 2014 Syria since 2016. Ankara has Isis captures swaths of territory expended huge resources on in Syria and Iraq. capturing, holding and govern2015 ing territory, and lost scores of Russia deploys its air force to soldiers. Now President Recep help the Syrian regime. Convoys Tayyip Erdogan is trying to hold of refugees make their way to another Syrian front line, this Europe. time in Idlib.

2016 A key driver for Ankara is the The regime retakes Aleppo from desire to avoid a new wave of the rebels. Turkey establishes refugees. The country has won areas in north-west Syria under praise for hosting 3.6m Syrits control. ians but, as public opinion has 2018 soured, Mr Erdogan has warned Regime regains swaths of territhat it cannot accommodate any tory, including southern provmore. inces.

Yet countering Mr Assad is 2019 proving costly. Funerals were Isis loses its last scrap of land. held last week for five Turkish Turkey launches new offensive soldiers killed by Syrian regime against US-allied Kurdish forces. shelling. The attack — the secTarek, not his real name, was ond to target and kill Turkish born into a comfortable family in troops in just over a week — coIdlib in 2000, the year Mr Assad incided with meetings between succeeded his father Hafez to beRussian and Turkish envoys and come Syria’s president. The Britwas “a kind of declaration of ish-educated Mr Assad courted war against Turkey”, says Omer the west — but growing ecoOzkizilcik, an analyst at the nomic inequality and unpopular authoritarian rule led to unrest Continues on page 66 and eventually revolution.

66

Monday 17 February 2020

BUSINESS DAY

FT

NATIONAL NEWS

China’s president Xi Jinping knew of coronavirus Communist magazine contradicts timeline that blames local officials for virus spread TOM MITCHELL, CHRISTIAN SHEPHERD, ROBIN HARDING AND JOHN REED

P

resident Xi Jinping issued orders to contain the deadly coronavirus outbreak almost two weeks earlier than previously thought, according to an account that appears to contradict the narrative that local officials were to blame for allowing the epidemic to spiral.

The official Communist party magazine Qiushi’s account over the weekend says that Mr Xi met the party’s politburo standing committee, China’s most powerful decision-making body, and gave instructions on the virus response on January 7 — 13 days before the public was warned about the outbreak’s severity.

Previous state media accounts appeared to date Mr Xi’s earliest direct involvement to a January 20 statement made before transportation in and out of the city of Wuhan, where the virus originated, was formally cut off a few days later.

The magazine instead says that he was fully aware of and in charge of the response to the virus almost two weeks earlier, potentially implicating Mr Xi in the bungled early response to the outbreak that contributed to its rapid spread.

On January 18, well after it is now known Mr Xi was issuing an order on the outbreak, a banquet for 40,000 families went ahead in Wuhan with government approval. Officials there and the wider Hubei province also convened for their annual gathering as the authorities downplayed the severity of the virus, insisting there was no evidence it could spread between humans and announcing only a handful of new cases.

Despite this information, China’s leadership on Sunday escalated efforts to demonstrate that it was fully in control, with state

Xi Jinping gave instructions on the virus response on January 7 — 13 days before the public was warned about the outbreak’s severity © AP

media reporting that Saturday was the 12th consecutive day when new cases confirmed outside Hubei were fewer than the day before.

The total number of coronavirus cases in China was approaching 70,000 on Sunday, as 2,009 new cases were confirmed, most of them in Hubei. The number of new deaths climbed by 142 to reach 1,665 overall.

Taiwan’s health ministry on Sunday confirmed the island’s first death from the virus. Health minister Chen Shih-chung said during a news conference that the deceased was a man in his sixties, who had not traveled abroad recently and had diabetes and hepatitis B. Ryan Manuel, analyst at con-

sultancy China Official, said it was also possible that the timeline published by Qiushi allowed Mr Xi to be associated with early diagnostic and test development, which have been praised by the World Health Organization, while keeping him distanced from repeat failures to contain the outbreak in Hubei.

The spread of the virus has taken a heavy toll on China’s economy despite official orders that production should return to normal. The government is keen for workers to be at their posts on Monday, although passenger traffic numbers suggest workers are not all returning.

Separately on Sunday, passengers from a cruise ship that docked

on Friday in Sihanoukville, Cambodia, were sent into quarantine after a US woman who had been on the vessel tested positive for the virus in Malaysia while travelling home.

The Westerdam had been refused entry by five other countries before reaching Cambodia, and some passengers were on their way home after initial tests showed they were healthy. Holland America said 236 passengers and 747 crew remained on board the ship in Sihanoukville.

The belated positive test and continued outbreaks beyond China — including the first death outside Asia, in France — highlights the long incubation period of the virus, the challenges of testing and

the prevalence of cases that show no symptoms, all adding to the difficulty of controlling its spread.

Meanwhile in Japan, authorities said they had discovered a further 70 cases on the Diamond Princess, taking the total to 355 out of the 1,219 people tested.

There were around 3,700 people on board when the ship went into quarantine at the start of February.

The US, Canada and Hong Kong have said they planned to evacuate citizens from the ship, which is in Yokohama. A US evacuation flight for passengers is expected to leave Japan on Sunday. Only passengers showing no symptoms will be allowed to fly and they will have to enter a two-week quarantine on arrival in the US.

‘It looks like judgment day’: Inside Syria’s final battle Continued from page 65 SETA Foundation think-tank in Ankara, a message “that the [Assad] regime is willing to use military force”.

For Ankara, the risks are growing — no longer conducting war primarily through proxies, but increasingly committing its own soldiers. Mr Erdogan warned on Wednesday that the Turkish military would retaliate against Syrian attacks “by any means necessary”.

But Moscow and Ankara have a bigger strategic bilateral relationship to protect. “If the fighting in Idlib grows so bad that relations start to unspool, I think both Putin and Erdogan will be very concerned,” says Aron Lund, a fellow at the Century

Foundation.

Although Mr Assad badly needs Mr Putin’s help, Moscow’s power over Damascus is as constrained as Turkey’s to defang the jihadis. “Here Russia is in a very tricky position because by actually coming into Syria and deploying its air forces it got sort of trapped,” says Alexey Khlebnikov of the Russian International Affairs Council. “The only leverage Russia has is to increase or decrease the level of air support to Syrian army advancements.”

The Kremlin has said that it does not regard the situation in Idlib as a military battle, but as a justified act by Syrian troops against terrorists. “This is not about conflict,” Vladimir Putin’s spokesman Dmitry Peskov said www.businessday.ng

on Thursday. “We are talking about the fight against terrorism waged by the armed forces of the Syrian Arab Republic in their own country.”

But HTS is unlikely to back down. Taqi al-Din Omar, the group’s media official, accepts that it has lost territory but says “the will to fight remains strong within the sons of this revolution”.

“They’re going to put up the strongest fight they have,” says Dareen Khalifa, an International Crisis Group researcher who visited Idlib this year. “[For HTS] it’s going to be the last battle”.

In Akrabat near the Turkish border, Samih Kaddour is braced for the worst. “I think we are next in line if the regime continues to advance,” says the

https://www.facebook.com/businessdayng

softly-spoken medic, who fled Aleppo to work in the remote town’s hospital.

Civilians have grown used in recent years to dealing with armed groups who have tried to tax them or introduce more hardline Islamic rule. But, says Dr Kaddour, Hayat Tahrir alSham has not directly interfered with his hospital.

There are no good options for people like Dr Kaddour, who chafe against the jihadis but reject the regime’s return. More than 70 medical facilities in and around Idlib have suspended their work amid the violence.

A Syrian employee of Médecins Sans Frontières who visits camps in Idlib, says the shelter shortage is already so acute that tents are being used to accom@Businessdayng

modate up to three families at a time.

“We need an end to the violence immediately,” says Misty Buswell, Middle East policy director of the IRC. “But even with a ceasefire there is a humanitarian catastrophe that’s happening in Idlib right now.”

At this point, the best outcome the civilians stuck in Idlib can hope for is probably a permanent stalemate. The “hilly terrain up on the Turkish border where the majority of camps already are, that could be where more people flee to”, says the UN’s Mr Cutts. “That already is beginning to look more and more like a Gaza strip . . . people will be hemmed in, in a very small area, where the great majority are displaced.”

BD Money

Monday 17 February 2020

BUSINESS DAY

PERSONAL FINANCE

Cover Story

investing

EQUITIES

You can negotiate better salaries by doing these

Everything investors must know about Nigeria’s new long-term naira contracts

Opportunity for car owners as Lagos Okada/Keke ban earns e-hailing drivers 100% revenue jump

Stock market started year on steroids but lost flare.

Here’s what changed

There is a popular notion held by many that when a person does not graduate with a first-class and/or have the right connections, it is almost impossible getting the right job with good pay.

The Central Bank of Nigeria (CBN)’s introduction of longer-term contracts on the naira holds big implications for investors who can now hedge currency risk for more than a year.

Page 68

The transportation gap created by the recent ban of the motorcycle (Okada) and tricycle (Keke) in Lagos busy roads has created an opportunity for car owners, investors as the surge in demand have led to a 100 increase in drivers’ revenue.

Page 70 www.businessday.ng

https://www.facebook.com/businessdayng

The last few weeks have not been kind to investors in Nigerian stocks. In the last 15 trading days, the market has gained only three times and those have been marginala very tone for the market had its best start to a year since 2013 at least.

Page 72

Page 71 @Businessdayng

68

Monday 17 February 2020

BUSINESS DAY

Personal Finance

You can negotiate better salaries by doing these MICHAEL ANI

T

here is a popular notion held by many that when a person does not graduate with a first-class and/or have the right connections, it is almost impossible getting the right job with good pay.

With the rate of unemployment in Nigeria standing at a record high of 23 per cent as of third quarter of 2018, while underemployment is put at 20.1 per cent, according to NBS data, the above notion seems almost undeniable.

However, despite this popular belief held by many that the economy is hard and companies are laying off staffs, and are also not ready to take in new ones, there are still those changing different jobs and commanding jumbo pay within the six zeros rage.

These set of persons barely spend two years in a firm before eying to take up more challenging role that will fetch them higher pay. Meanwhile, there are some others who out of fear, stay many years in a firm where they earn lean salaries.

Sincerely, it is no magic, and one can negotiate higher pay from employers even without having connections or even graduating with the much sought after the first class or second class grades.

In this article, we will explore five basic things an individual should possess to be on the better end in terms of employment opportunities and/or commanding the right pay from an employer.

Develop soft skills: Having a B.SC or an M.SC is never a yardstick for one to be the preferred candidate to get a job in a prospective company. Although having such qualification is necessary but it’s not a sufficient criterion.

An employer would always prefer a candidate who has the right practical skills for a particular job, to another who the company would have to spend more resources and time training before they can be fit for such a job role.

Being able to work better on Excel, Microsoft Word, PowerPoint presentation, data analytics and several other skills, can give a job seeker an edge to getting that dream job.

Sites like Microsoft Excel help centre; edX, Khan Academy; Udemy, Coursera, Codecademy; MIT OpenCourseWare; excel exposure; excel central, excel easy; iTunesU free courses; Stanford online;

open culture online courses, and many others, can help one develop the right kind of skills that one needs in a workplace.

Many of these sites are free to users while some others would have to be paid for.

Read news and follow trends: it is never enough for one to say he is a graduate and have all the degrees, but do not know current trends that are happening both globally and domestically be it in politics, business, tech, secular gist, manufacturing, stock market and all.

Reading news helps in keeping one informed on things happening around which cane give one the boldness to contribute positively whenever a topic is raised. Employers are always on the lookout for people who have the charisma and boldness to forecast and solve problems.

It is not as if a person should spend all his time reading and scouting for news all in the name of trying to get employed but having an idea of some of the big news happening in various industries and the economy would help a lot in improving how a person relates to economic issues.

Credible news agencies such as BusinessDay, Bloomberg, Financial Times, Punch, Thisday, Nairametrics, Channels and many others can help a lot.

Be in the right circle: having the right

“

Job seekers must leverage the power of social media to get as many mentors they want. Through a platform like twitter, a candidate can get information from people that have in-depth knowledge of a particular industry they hope to work in

people around as friends go a long way in affecting a person’s zeal to learn and achieve more in life.

Being around these set of persons would expose one to information’s that can change one’s life. This would also propel and challenge one not to have content-

ment with one’s present status quo.

Have a quality Resume: Since the first stage in most employment processes is shortlisting candidates through their CVs, it is therefore important that information’s written in the Resume must to sell the candidate aspiring to work in a firm.

Employers want to see results and what a candidate has to offer, and the first line of contact is the CV. If the employer doesn’t see the candidate’s CV as impressive, the candidate would not be called upon for the next phase of the recruitment process.

A good CV must spell out achievements of the candidate in previous roles he/she handled before, and must also carry key characters of the job descriptions being applied for. For fresh graduates, it should not be more than two pages.

Sites like Resumonk, VisualCV, CVmaker, Resume builder, Zety Resume Builder, are some of the various sites that could help in reviewing a person’s resume for free.

Scout for jobs: Gone are the days when job seekers take their CVs to a company for employment, these days, and applications are channelled online, thanks to the advent of technology.

With these, a candidate might miss out his/her dream jobs if he/she is not on the look-out for jobs online.

Platforms such as LinkedIn, Jobberman, MyjobMag, Careerealism, Jibberjobber, JobBait and many others are good sites to scout for jobs.

Have a mentor: As a job seeker, you must have a mentor who is well-grounded in the particular industry in which you desire to work in.

The person doesn’t have to be a close friend or relatives. He or she could just be a person you admire and want to emulate probably in terms of knowledge.

Mentors are not difficult to find and one is allowed to have as many mentors as possible.

Job seekers must leverage the power of social media to get as many mentors they want. Through a platform like twitter, a candidate can get information from people that have in-depth knowledge of a particular industry they hope to work in.

Also, by following the various people, industry stakeholders and companies in which these mentor’s of them follow, they can have access to meeting other knowledgeable people who can add value to their lives and make them better prepared to clinch that dream job .

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

69

Personal Finance What SEC’s planned regulation on crowdfunding means for you SEGUN ADAMS

M

ariam, 25, has the biggest idea yet – a farming business that can rake in as much as N5 million per month as profit in as little as six months. Like is true for many other entrepreneurs, her business idea is only an idea without capital.

There is a wide range of options for Nigerian entrepreneurs to seek fund for their businesses, but in reality, these avenues do not easily accommodate start-ups.

For instance, until recently loans which banks reluctantly offered to start-ups cost more than 25 percent, and the mere process of application seemed designed to frustrate the entrepreneurs.

This is not a problem peculiar to startups alone as only 5 percent of SMEs said they have a loan even though 80 percent of them seek financing, according to a World Bank estimate in 2012.

The non-availability of credit from lenders made options like bootstrapping, angel investing, and love fund the pragmatic choice for start-ups.

Despite regulatory roadblocks, crowdfunding has also been a go-to for entrepreneurs.

For instance, Techpoints, citing the Nigerian Startup Funding Report 2018, said that three Nigerian startups collectively raised millions of dollars two years ago.

Crowdfunding is the pooling together of small amounts of capital from a large number of individuals who commit money to companies typically via the internet.

Some types are Peer-to-Peer Lending, Reward-Based Crowdfunding, DonationBased Crowdfunding, Equity Crowdfunding and Real Estate Crowdfunding.

The difference between the aforementioned is based on how the platforms operate. For example, Equity crowdfunding allows people to contribute money to be invested in a company or project in exchange for part ownership.

Popular crowdfunding platforms

worldwide are Kickstarter, GoFundMe, Indiegogo and Patreon.

According to a report by India-based research firm Valuates Report published last year, the global market for crowdfunding is estimated to be $10.2bn in 2018 and is expected to reach $28.8bn by the end of 2025.

In Africa, Europe-based CrowdfundingHub says as much as $83.3 million was raised by crowdfunding platforms 2015, although Nigeria accounts for just 10 percent of this.

CrowdfundingHub noted that a 2016 ban on equity crowdfunding by Nigeria’s Securities and Exchange Commission (SEC) was a drag on the alternative financing industry although it noted that “...ambitious entrepreneurs in Nigeria are utilizing innovative strategies to overcome www.businessday.ng

these obstacles when raising money from the crowd.”

These platforms include the likes of Naijafund, NaturFund, Fundanenterprise, and Farmcrowdy which have helped thousands of businesses raise capital and fund projects.

While SEC’s concerns have not been unfounded due to the prevalence of fraud in the country, a turnaround to regulate crowdfunding would likely be a win for all parties.

Regulation by SEC would increase transparency and safeguard investors’ wealth whilst giving legitimacy to crowdfunding.

“Crowdfunding helps deepen the market by providing an alternative investment opportunity,” said acting SEC Director-

https://www.facebook.com/businessdayng

General Mary Uduk.

A move to regulate crowdfunding might involve directing operators to maintain a capital buffer, limit the amount investors can commit to a type of crowdfunding venture, and set guidelines on best practice for all.

The effect would be an industry that would be strengthened to provide capital for the growing entrepreneurship ranks in the country.

Retail investors would also be able to diversify their portfolio without taking unnecessary risks in ventures not backed by any regulator.

Also, as more platforms emerge and public awareness grows, the cost of raising money for businesses will likely trend lower.

@Businessdayng

70

Monday 17 February 2020

BUSINESS DAY

Monday 17 February 2020

BUSINESS DAY

Investing

Cover Story

Everything investors must know about Nigeria’s new long-term naira contracts LOLADE AKINMURELE

T

he Central Bank of Nigeria (CBN)’s introduction of longer-term contracts on the naira holds big implications for investors who can now hedge currency risk for more than a year.

Private equity investors, fund managers, banks and the CBN all feature on our list of winners from the new initiative developed by the CBN in collaboration with FMDQ Holdings.

What has the CBN done?

The Central Bank, Thursday, launched long-dated FX Futures that extends the maximum contract tenor to up to five years, the longest period on record.

The longest tenor prior to this move was a 13-month contract, which the central bank has offered for more than a year. The 13-month contract meant buyers could hedge foreign FX exposures for only a year.

This implies that forty-seven (47) new monthly OTC FX Futures contracts, in addition to the existing thirteen (13) contracts have been introduced from February 13, 2020, bringing the total number of open OTC FX Futures contracts at any point to sixty (60).

Traders said the new naira-futures contracts were priced at N379.81 to the U.S. dollar.

That compares with the N399.73 at which the one year contract was quoted yesterday. This effectively means the latest five year contract is being offered at a discount of about N19.92 per dollar.

How the naira futures contracts work As the pioneer and sole seller of the Naira-settled OTC FX Futures contracts, the CBN, having successfully sold a total value of $34.83 billion so far on FMDQ Securities Exchange Limited (“FMDQ Exchange”), launched the one year product in June 27, 2016, to the relief of Nigerian corporates, foreign portfolio investors (FPIs), foreign direct investors (FDIs) and other investors, as the product served to minimise the disequilib-

rium in the Spot FX market and caused the exchange rate to moderate; attracting significant capital flows to the Nigerian fixed income and equity markets; and achieving exchange rate stability.

Since the product, administered via the bespoke FMDQ FX Futures Trading & Reporting System, was launched four (4) years ago, there has been no settlement default, with FX Futures contracts over the last 43 maturities, totalling $25.53 billion, successfully cleared and settled by FMDQ’s wholly owned clearing house, FMDQ Clear Limited.

In the global financial system, hedging products are market enablers, allowing businesses and investors around the world to invest freely across borders, effectively hedge their risks and invariably contributing to economic growth.

With the FX Futures contracts, the effective rate at which a counterparty will purchase (or sell) FX at any given time in the future is predetermined and fixed; essentially obligating the parties to the transaction which is consummated on FMDQ Exchange, to purchase or sell a currency (in this case, US Dollar) on a predetermined future date (the settlement date) for a fixed rate agreed on the date a contract is entered (trade date). www.businessday.ng

No obligation exists for the physical delivery of the currency and at maturity, clearing and net settlement which is effected by FMDQ Clear, is made in Naira based on the US Dollar notional amount, and determined by the difference between the agreed rate (on trade date) and the rate on maturity (on settlement date) as determined by FMDQ’s FX reference rate – the Nigerian Autonomous Foreign Exchange Fixing – NAFEX. What to expect from new long dated naira contracts Under the erstwhile OTC FX Futures market structure, the CBN offered 13 monthly contracts allowing market participants hedge FX exposures for up to a 1-year period. While this was a welcome development, a gap was identified where investors seeking to hedge FX risk longer than one (1) year were unable to achieve a perfect hedge using the FX Futures product due to the maturity mismatch. The resultant risk of unwanted variability in the product deterred investors from using OTC FX Futures market for long-term capital hedging as this was considered unsuitable for long-term investment and capital budgeting purposes, leaving the Nigerian financial markets struggling to attract much-needed

https://www.facebook.com/businessdayng

FPIs/FDIs and long-term foreign currency (FCY) denominated borrowings for sustainable development and economic growth.

The impact of the extension of the hedge curve by the CBN to up to 60 months can therefore not be overemphasised as this will greatly reduce potential FX exposures, encourage long-term planning and increase investments in the Nigerian financial markets.

Winners of the five-year naira contract By extending the period for which investors can hedge foreign currency exposures, the introduction of the five-year naira contract could attract more foreign inflows, shore up dwindling dollar reserves and reduce rising pressure on the naira, according to five investment bankers and fund managers polled in a Business Day survey.

Recently, fears over an imminent naira devaluation have been fanned by depressed oil prices and declining external reserves, causing foreign investors to suspend investing in Nigeria until there’s better clarity over the naira, which some analysts say is around 20 percent overvalued against the dollar.

With the introduction of the longer dated naira contracts however, investors can hedge against a devaluation within a five year period.

“The CBN has basically bought time for the naira in the face of mounting pressure on its stability to the dollar,” said Johnson Chukwu, an asset manager and Chief Executive Officer of Cowry Assets.

The move is positive for the economy in many ways, according to Chukwu.

“It helps the Central Bank achieve price stability with the exchange rate and inflation.”

Ayodeji Ebo, an investment banker and managing director of Lagos-based Afrinvest Securities lauded the initiative and said it would help attract foreign inflows.

“Before the introduction of the long dated naira contract, investors had a tough time deciding when to invest amid fears the naira could weaken in a short while, but that worry has been taken care of with the opportunity for long term capital hedging availed by the longer dated contract,” Ebo, who expects improved foreign inflows on the back of the policy, said.

“It’s especially positive for foreign private equity funds who invest in naira and could expand foreign appetite for local bonds,” Ebo added.

Losers?

There are no anticipated losers from this policy yet.

@Businessdayng

71

Opportunity for car owners as Lagos Okada/Keke ban earns e-hailing drivers 100% revenue jump ENDURANCE OKAFOR

T

he transportation gap created by the recent ban of the motorcycle (Okada) and tricycle (Keke) in Lagos busy roads has created an opportunity for car owners, investors as the surge in demand have led to a 100 increase in drivers’ revenue.

A survey by BusinessDay shows that the over 100 percent increase in the transportation fare on Uber, Bolt and OCar also means more revenue for the riders and investors.

Before the Okada/Keke ban, a driver that earned N1000 from driving in any of the ehailing platforms for example, now earns N2000, a 100 percent revenue increase resulting from the high demand for rides, checks by BusinessDay shows. “since the ban, my revenue has more than doubled, and unlike my expectation that the hike in price will lead to fewer trips, I get people requesting even when I’m completing another trip,” a driver with Uber who simply identified himself as John told BusinessDay. The fare offered by the e-hailing Uber, Bolt and OCar increased by over 100 percent a day after the enforcement of the Okada and Keke ban in Africa’s most populated city. The fare on the e-hailing platforms

showed that for a distance of 12km which attracted a fare of N2000 jumped as high N5000- N600.

“Fare is higher due to increased demand,” Uber said on its app. Bolt on the

www.businessday.ng

hand said, “price is higher due to high demand.”

As the city with the most population in Africa, the available transport options in Lagos state following the Okada/Keke ban are not sufficient to meet the mobility needs of the over 17 million people living the centre of excellence even worse as that number is expected to more than double in the nearest future.

The Commissioner, Information and Strategy Lagos state, Gbenga Omotoso said the government is aware of the effect of the ban on the residents and plans to announce soon, some measures to tackle the likely effects of the order, besides the programmes of various agencies, such as the Lagos State Employment Trust Fund (LSETF), Women Affairs and Poverty Alleviation, Office of Civic Engagement, Lagos State Parks and Gardens and others.

“With the Lagos Okada ban, we appear, as usual, to have gone for the option that involved the least thought & planning from a public policy perspective. If you are

https://www.facebook.com/businessdayng

introducing 65 buses & 14 new ferries from tomorrow, introduce them first and watch it work before announcing a ban,” Joe Abah, Country Director at DAI said in a tweet on Monday.

Announcing the restriction and ban of commercial motorcycles Okada and Keke in six local government areas of the state with effect from, February 1, the Commissioner said it was not surprising that the ban recently placed on commercial motorcycles and tricycles in Lagos State by the government was going to generate intense public interest and a seemingly endless debate. In fact, it was going to be a debate between the rich and the poor of the society and it is the more reason the debate is a sensitive matter.

“This is the first stage of the state government’s plan to sanitise our roads and protect Lagosians from the negative effects of these illegal modes of transportation.

The law is very clear. Okada and Keke are banned on all highways, bridges and listed roads,” he said.

@Businessdayng

72

Monday 17 February 2020

BUSINESS DAY

Equities

Stock market started year on steroids but lost flare. Here’s what changed SEGUN ADAMS

T

he last few weeks have not been kind to investors in Nigerian stocks. In the last 15 trading days, the market has gained only three times and those have been marginal- a very tone for the market had its best start to a year since 2013 at least.

A bullish run that started after the Boxing Day holiday stretched into 2020, helping the Nigerian Stock Exchange (NSE) record its longest gaining streak at the beginning of a year in over seven years.

The late “Santa Rally” was on the back of increased liquidity due to a policy by the Central Bank of Nigeria (CBN) to restrict participation in the primary and secondary Open Market Operation (OMO) as a way of getting domestic investors to diversify into other investment assets.

Barring local non-banking investors from buying or selling low-risk high-yield OMO bills crashed real returns on treasury bills below inflation and forced some investors back to the stock market.

This was not the singular cause, as investors took position in stocks that pay an attractive dividend (relative to share price) in anticipation of earnings reports, and oil price rose fuelled by a US-Iran tension.

Although many remained sceptical about the “cheerful” mood on the Lagos

bourse, that finished 2019 almost 15 percent lower and extended a full-year decline to the second-year running, year’s return in 2020 soared almost steadily to more than 10 percent in January.

On January 24, CBN’s Monetary Policy

www.businessday.ng

Committee (MPC) raised the mandatory reserve of banks (Cash Reserve Requirement) to 27.5 percent of all their deposits in a bid to rein on inflation flirting with 12 percent levels.

The policy triggered an immediate selloff on banking stocks as the market opened the following week.

Banking sector index lost 1.19 percent while the broader market dipped 0.26 percent. The sell-off persisted for eightstraight trading days paring year-to-date from as high as 10.38 percent to around 4.66 percent.

Investors were concerned that the CRR policy would further pressure the earnings of banks at a time lenders were struggling to meet the 65percent LDR target, minimum liquidity ratio 30.0percent, and facing shrinking income from interest income.

The downturn in the market also followed unimpressive earnings result announced by some firms in the period-many of which were consumer goods firms.

Weak corporate earnings which affect dividend payments also reminded the market that the macro-economic environment had not really changed from the previous year.

By February stocks hit a 3-week low as the outbreak of the coronavirus escalated and foreign investors sold off their stocks

https://www.facebook.com/businessdayng

to retreat to havens.

That was not the only concern in February, the transaction cost for equity market participant had jumped following the coming into effect of 7.5 percent VAT rate as mandated under the new finance Act. Only a few months back, there was zero VAT charge on NSE transactions.

The expiration of Order for exemption of VAT from all NSE transactions which was granted in 2014 by the Coordinating Minister of the Economy and the Honorable Minister of Finance meant Stockbrokers charged 5 percent VAT on all NSE transactions from July 25, 2019.

This rate was upped by 2.5 percent point more effective on February 1 2020, a move that made transactions more costly for investors.

Despite the turn of events, Nigerian stocks at 3.4 percent year-to-date return are still the best performing in Africa.

The outlook for the year doesn’t look bright but maturing bills which would coincide with the release of bank results in the coming weeks would lift the market temporarily.

For 2020, analysts say banking stocks will have to prove their resilience as recent policies by the CBN would weigh on their full-year interest and non-interest income.

Investors will have to take the chance.

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

73

Investing

Some of the biggest money myths you should rid yourself of (1) SEGUN ADAMS

B

elieving something untrue is what we all have done - Santa Claus, Tooth fairies, Nigeria’s 100-goal defeat to India are some of the myths we have outgrown. But Adulthood has not insulated us from many false assumptions about money.

Some of the biggest money myths you likely still believe cost you money, and they include the following: Myth 1: Saving money makes one rich Economists have argued that the above assertion is untrue. A concept called “The Paradox of Thrift” explains how an economy could actually get poorer if everyone saved and nobody consumed especially around a recession.

The same theory doesn’t apply to an individual but the conclusion is valid because nobody gets rich saving money alone.

Imagine setting aside N10,000 monthly from after an initial N10,ooo deposit in January 1, 2000. Assume the interest on saving is 10 percent per annum, you might be heading to the bank to cash your N7.55 million after 20 years but the fact is that you might in fact be poorer after all those years.

While saving money is better than spending all your income on consumption, in Nigeria inflation beats interest on bank savings so that if you had saved any amount at the beginning of the millennium, you have lost more than 50 percent of the value today.

This is definitely not a way to growth wealth and the implication is that saving your money in assets that beat inflation and can deliver good returns is the way to go.

Also purchasing properties with value that appreciate and doesn’t involve highmaintenance cost over time can be good investment decision e.g. land, art works, jewelleries.

Myth 2: Buying cheap to save money Another myth is that you can save yourself money by buying cheap. Nothing could be further from the truth!

Cheap items are often of low quality and would require replacement in as little time as possible.

For instance, if you bought a shoe that cost N10,000 but lasts two months instead of N100,000 shoe that lasts two years, in about a 20 months (I year and 8 months) you would have spent the equivalent amount

that could have bought you the better shoe.

This means the quality shoe would save you N40,000.

www.businessday.ng

Myth 3: Money is the root of all evil This misconception, which was borne out of a misinterpretation of the original

reference that has “the love of ” suffix, has been accepted generally by people who believe there is piety in being poor.

If you find yourself in that category, it might be difficult to grow your wealth as it contradicts your belief or value.

Money is not inherently bad or good.

Money is money-it doesn’t change one’s character.

Realising this and using your money to promote good cause will definitely be a plus to you and everyone else.

Myth 4: Debt is bad This is a matter of context. Debt is one of many ways companies around the world raise money to do business, make money and expand. This answers the question.

Many of the world’s richest people are indebted too because for people and corporations, debt is a relatively cheap capital.

This doesn’t mean you should go around borrowing because debt can also be a burden especially if used for wrong and unproductive purposes.

“Ideally, lenders prefer a debt-to-income ratio lower than 36 percent, with no more than 28 percent of that debt going towards servicing a mortgage or rent payment,” says Investopedia.

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

A

total turnover of 912.175 million shares worth N12.126 billion in 17,083 deals were traded thisweek by investors on the floor of the Exchange, in contrast to a total of 1.478 billion shares valued at N20.295 billion that exchanged hands last week in 23,263 deals.

The Financial Services industry (measured by volume) led the activity chart with 624.219 million shares valued at N7.129 billion traded in 9,640 deals; thus contributing 68.43 percent and 58.79 percent to the total equity turnover volume and value respectively. The Conglomerates followed with 93.204 million shares worth N452.093 million in 861 deals. The third place was Oil and Gas industry, with a turnover of 59.267 million shares worth N124.638 million in 1,254 deals.

Trading in the Top Three Equities namely, Zenith Bank Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc. (measured by volume) accounted for 304.089

million shares worth N5.788 billion in 4,290 deals, contributing 33.34 percent and 47.73 percent to the total equity turnover volume and value respectively.

The NSE All-Share Index and Market Capitalization both depreciated 1.11 percent to close the week at 27,755.87 and N14.456 trillion respectively.

All other indices finished lower with the exception of NSE AFR Div Yield and NSE Industrial Goods indices which appreciated by 0.11 percent and 0.78 percent respectively while NSE ASeM Index closed flat.

Nineteen (19) equities appreciated in price during the week, higher than fifteen (15) equities in the previous week. Thirty-five (35) equities depreciated in price, lower than forty-nine (49) equities in the previous week, while one hundred and nine (109) equities remained unchanged, higher than ninety-nine (99) equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week

NSE pares gains after best start to year since at least 2013

Week April – Limited Friday, 12th April, 2019) TheAhead FDMQ(Monday, Securities8th Exchange announced the introduction of long-term

monthly naira-settled OTC futures contracts, which provide an FX rate hedge of up to 5 years. The new longer-term contracts should ordinarily increase foreign inflows into the economy and shore up FX reserves Capital markets Weak sentiments continued to dominate the domestic equities market, as the All-Share Index plummeted by 1.11% to 27,755.87 points – the third consecutive weekly decline.

The trend witnessed this would likely persist, as weakening market sentiment and the absence of positive catalysts are expected to pressure market returns. Investors are to take positions in fundamentally justified stocks.

Money market Liquidity is expected to remain buoyant, supported by inflows from OMO maturities (NGN627.22 billion) on the 20th.

However, outflows for the upcoming bond auction, FX auctions and OMO auctions are likely to squeeze system liquidity towards the end of the week. In effect, we expect an expansion in the OVN rate.

Treasury Bills Activities in the treasury bills market turned bullish as the average yield across all instruments contracted by 26bps to 10.2percent amidst buoyant system liquidity. The average yield in the OMO segment of the market contracted by 28bps to 13.3percent.

With liquidity still buoyant, trading volumes to increase in the coming week, expectedly yields in the treasury bills market would contract.

Bonds The DMO will hold a PMA on the 19th of February wherein NGN140.00 billion across three instruments will be offered to investors, all through re-openings – 12.75% APR 2023, 14.55% APR 2029, and 14.80% APR 2049 bond. www.businessday.ng

Nigerian stocks started 2020 with the longest bull-run in over seven years but lost its mojo with negative sentiments now threatening gains made in the earlier part of the year.

A mix of CRR hike by the Central Bank of Nigeria, weak corporate earnings, new VAT rate even the coronavirus outbreak can explain the dampened mood on the market but most of what is happening reflects the poor economy in which firms have to operate.

On a positive note, NSE is still the best performing bourse in Africa and the coming weeks will see improved sentiments as banks publish their earnings report.

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

75

76

Monday 17 February 2020

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 17 February 2020

BUSINESS DAY

77

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 14 February 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 344,788.69 9.70 -1.02 99 2,512,981 UNITED BANK FOR AFRICA PLC 263,335.54 7.70 -1.28 188 13,866,163 ZENITH BANK PLC 616,941.10 19.65 -1.26 469 21,712,171 756 38,091,315 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 213,576.99 5.95 -0.83 280 7,598,518 280 7,598,518 1,036 45,689,833 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,361,123.51 116.00 - 58 331,373 58 331,373 58 331,373 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 67 120,678 LAFARGE AFRICA PLC. 249,670.83 15.50 -0.64 130 3,216,125 197 3,336,803 197 3,336,803 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 7 2,234 7 2,234 7 2,234 1,298 49,360,243 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,205.53 3.45 - 9 394,552 9 394,552 9 394,552 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 9 394,552 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 1 400 64,865.88 68.00 - 2 167 OKOMU OIL PALM PLC. PRESCO PLC 49,850.00 49.85 - 2 1,363 5 1,930 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,100.00 0.70 7.69 21 1,145,953 21 1,145,953 26 1,147,883 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 1 602 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 37,802.63 0.93 -4.12 45 2,089,760 U A C N PLC. 25,931.67 9.00 -3.74 121 21,238,615 167 23,328,977 167 23,328,977 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,700.00 22.50 - 43 904,638 ROADS NIG PLC. 165.00 6.60 - 0 0 43 904,638 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,338.56 0.90 - 4 27,500 4 27,500 47 932,138 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,594.61 0.97 - 15 131,555 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 -10.00 45 662,707 INTERNATIONAL BREWERIES PLC. 208,181.03 7.75 - 17 23,394 NIGERIAN BREW. PLC. 411,840.46 51.50 - 73 349,880 150 1,167,536 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 154,200.00 12.85 - 66 240,478 FLOUR MILLS NIG. PLC. 94,308.73 23.00 - 42 163,607 HONEYWELL FLOUR MILL PLC 8,485.31 1.07 - 4 49,880 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 17 250,236 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 129 704,201 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,091.64 9.10 - 16 70,203 NESTLE NIGERIA PLC. 984,479.06 1,242.00 - 28 14,214 44 84,417 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,991.54 4.79 - 13 50,947 13 50,947 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 19,852.39 5.00 -1.00 39 2,291,197 UNILEVER NIGERIA PLC. 86,175.08 15.00 - 28 145,240 67 2,436,437 403 4,443,538 BANKING ECOBANK TRANSNATIONAL INCORPORATED 128,446.86 7.00 - 42 468,529 FIDELITY BANK PLC 62,006.07 2.14 -1.83 34 1,812,061 GUARANTY TRUST BANK PLC. 879,992.26 29.90 -3.08 133 1,784,973 JAIZ BANK PLC 18,857.12 0.64 1.59 11 1,173,400 STERLING BANK PLC. 44,913.05 1.56 - 36 1,804,305 UNION BANK NIG.PLC. 205,301.31 7.05 - 50 683,133 UNITY BANK PLC 6,662.92 0.57 - 6 12,469 25,073.40 0.65 -2.99 12 321,091 WEMA BANK PLC. 324 8,059,961 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 5,544.16 0.80 - 12 111,350 AXAMANSARD INSURANCE PLC 21,000.00 2.00 - 5 135,858 CONSOLIDATED HALLMARK INSURANCE PLC 2,845.50 0.35 - 4 55,504 CORNERSTONE INSURANCE PLC 7,953.93 0.54 - 3 86,555 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 8.33 7 1,286,000 LAW UNION AND ROCK INS. PLC. 4,940.78 1.15 4.55 12 1,360,000 LINKAGE ASSURANCE PLC 3,680.00 0.46 -8.00 18 677,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 2 27,172 NEM INSURANCE PLC 10,772.23 2.04 - 3 17,421 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 3,175.71 0.59 - 1 1,000 REGENCY ASSURANCE PLC 1,333.75 0.20 - 2 15,000 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,416.30 0.33 -8.33 19 388,232 88 4,161,092 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,538.17 1.11 -9.76 10 500,000 10 500,000

www.businessday.ng

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 9,360.00 4.68 - 94 2,644,717 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 4 9,015 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 FCMB GROUP PLC. 37,031.07 1.87 0.54 30 2,337,746 ROYAL EXCHANGE PLC. 1,183.44 0.23 - 4 145,991 399,188.76 38.00 - 12 48,271 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 17,640.00 2.94 2.80 216 20,545,114 360 25,730,854 782 38,451,907 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 1 48,662 1 48,662 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,320.22 2.55 - 14 215,108 GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,979.38 5.00 - 11 35,145 3,484.97 2.02 - 9 61,968 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 854.62 0.45 -10.00 13 626,598 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 47 938,819 48 987,481 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 - 6 3,287,450 6 3,287,450 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 321.84 2.98 - 0 0 287.07 0.58 - 0 0 TRIPPLE GEE AND COMPANY PLC. 0 0 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 -9.68 8 647,862 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 8 647,862 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 1 2 1 2 15 3,935,314 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 5 123,942 BUA CEMENT PLC 1,212,343.88 35.80 -0.14 64 1,798,700 17,220.00 24.60 - 8 73,202 CAP PLC MEYER PLC. 244.37 0.46 - 0 0 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 77 1,995,844 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,395.40 1.36 - 7 47,773 CUTIX PLC. 7 47,773 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 5 3,928 GREIF NIGERIA PLC 388.02 9.10 - 0 0 5 3,928 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 2 35 2 35 91 2,047,580 CHEMICALS B.O.C. GASES PLC. 1,873.10 4.50 - 3 66,986 3 66,986 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 200 1 200 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 4 67,186 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 -9.09 30 2,688,113 30 2,688,113 INTEGRATED OIL AND GAS SERVICES OANDO PLC 42,888.37 3.45 -1.43 52 806,391 52 806,391 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 48,031.29 133.20 - 17 20,611 12,491.14 18.00 - 16 138,532 CONOIL PLC ETERNA PLC. 2,738.70 2.10 - 18 120,534 FORTE OIL PLC. 24,161.02 18.55 - 46 62,087 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 4 34,392 TOTAL NIGERIA PLC. 36,328.84 107.00 - 25 193,694 126 569,850 208 4,064,354 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 1 250 1 250 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 6 60,000 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 1.12 5 450,012 11 510,012 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 1 500 IKEJA HOTEL PLC 2,286.68 1.10 - 3 117,600 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,781.64 4.05 - 0 0 4 118,100 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 3 180,000 LEARN AFRICA PLC 956.60 1.24 - 8 133,025 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 539.26 1.25 4.17 9 678,440 20 991,465 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 563.62 0.34 - 1 48,050 1 48,050 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

https://www.facebook.com/businessdayng

@Businessdayng

Company IN FOCUS

BUSINESS DAY Monday 17 February 2020 www.businessday.ng

International Breweries’ gambit on market share pays off but profit lags OLUFIKAYO OWOEYE

T

he long-time strategy by International Breweries focusing on increasing the market share ahead of bottom-line growth may have paid off as it has seen it grown market share from single-digit to double-digit, moved up as the second-largest brewer by market share in the country, displacing Diageo-owned Guinness.

However, local investors continue to worry about costrelated issues around the company with many wondering for how long deep-pocket AB InBev-backed brewer continue to burn cash while profit drags.

After the brewer released its full year 2019 interim result for the period ended 31st December last week, shares of the brewer plummeted 8.82percent to N7.75, the heaviest loss since early November last year.

Although, sales in the last quarter 2019 slowed by 5.83 percent to N35.09bn, however, when combined with a previously announced N97.26bn for the first nine months of the year brings 2019 total revenue to N132.35bn compared to N120.61bn in 2018.

International Breweries had in its 9-month result posted a loss after tax of N16.44bn, combined with a fourth-quarter loss of N9.14bn, in total, full-year 2019 loss stands at N25.58bn which is, 562 times more than N3.87bn loss in 2018.

The intense competition, especially from International Breweries created no room for other players to increase prices and pass on the impact of the increase in excise duty to consumers as International Breweries continues to ramp up capacity at its new plant in Sagamu thereby flooding the market with its regional and international premium beer, Trophy lager, and Budweiser while undercutting competitors market share “Interbrew has always said

its priority right, for now, is gaining market share, they are more longterm,” Fola Abimbola, equity analyst at Lagos-based Fbnquest told BusinessDay last year. The gambit seems to be paying off as Interbrew cut into competitors’ market share in the first half of 2019.

“The positive top-line performance was buoyed by the management’s aggressive drive to grow volumes, leveraging on its larger capacities,” said analysts at Lagos-based United Capital in a sector report.

But growth for Interbrew comes at a cost as heavy debt on its balance sheet and repayment cost is telling on bottom-line numbers.

If cost is greater than the revenue, that raises the question of cost efficiency for the company, said an analyst.

Cost has been elevated since the 2017 merger with a surge in personnel cost across the three regions and 4 plants.

A rise in operating expenses and decline in other income meant Interbrew recorded an operating loss of N4.12bn in the quarter after it had recorded N8bn operating profit in the corresponding period of 2018.

There was no finance income

but finance cost rose 31.69 percent to N9.24bn which resulted in a loss before tax of N13.36bn versus a profit before tax of N1.14bn in the same period of 2018, driving the beer maker’s earnings per share into negative territories. As at September 30, 2019, the brewer’s total indebtedness stood at N244.9 billion.

The recently concluded N165billion rights issue program which was concluded in December last year by the brewer is expected to remarkably deleverage balance sheet, changed the brewer’s longterm debt replaced with equity, thereby easing the burden of interest payments, increasing management’s flexibility as well as removing volatility in earnings, this is expected to have full impact reflected in 2020.

Prior to the rights Issue, following the completion of the merger of Intafact Beverages and Pabod Breweries with International Breweries PLC in December 2017, the beer-maker continued the construction of the Gateway Plant to address the capacity constraint that has limited its growth.

The construction of the N90 billion plant was largely financed with debt, which led

to significant borrowings and altered the brewer’s capital structure from a debt-to-equity perspective.

Borrowings on the balance sheet increased from N12 billion at the end of March 2017 to N88 billion by year-end 2017, and N217 billion by year-end 2018, leaving the total debt as at the end of September 2019, at N244 billion.

International Breweries plc was incorporated in December 1971 by Late. Lawrence Omole (founder and first Chairman) as International Breweries Limited. The Company commenced production of its flagship product Trophy Lager in December 1978 with an installed capacity of 200,000 hectolitres per annum. Following increasing demand for products, in December 1982 the Company embarked on an expansion programme to increase its capacity to 500,000 hectolitres annually.

In 2016, AB InBev acquired SABMiller worldwide and by extension, their subsidiaries in Africa. AB InBev’s majority shareholding in Intafact Beverages Limited and Pabod Breweries Limited were merged with International Breweries PLC through a scheme of merger sanctioned by the Court and Regulatory authorities in order to provide for the optimization of efficiencies, leverage on economies of scale and shareholder value creation.

AB-InBev, controls over 70 percent of the larger International Brewery, with direct and indirect stake of 75.1percent representing the 47.4percent held by SABMiller Nigeria Holdings BV, and 27.7percent held by Brauhaase International Management GMBH. Also, Anam-

bra State Government holds a 4.7percent stake in the beermaker, while minority holding amounts to 20.0percent.

Prior to the merger, International Breweries, Pabod, and Intafact had established a strong footprint in terms of mainstream value brands in the Sout-West, South-East, and South-South regions of Nigeria respectively. Therefore, the consolidation of the three subsidiaries was a strategic move by AB-Inbev to challenge the continued dominance of Nigerian Breweries Plc (NB) and Guinness in the Nigerian market.

Until the merger, Intafact was incorporated in February 2007. The company’s principal activities included the manufacture, distribution and sale of a variety of alcoholic and nonalcoholic beverages. Its brewery plant is situated in Onitsha, Anambra State. In August 2012, it completed the construction of a 500,000-hectolitre greenfield brewery in Onitsha. As a result, production capacity was increased to 1.2mhl in 2013, and subsequently the current 2.7mhl in 2014. Its product portfolio included Hero lager beer (its flagship product), Eagle lager beer, Castle Milk stout, Grand Malt, Beta Malt, Chibuku, Miller Genuine Draft and Super Shake Yogurt drinks.

Pabod was incorporated in 1978 and situated in Rivers State. After operating for about 7 years, the plant became nonoperational for ten years from 1990 to 2000. In May 2000, a process of reviving the brewery commenced, with Brewtech Nigeria Limited acquiring majority of the shares held by the Rivers State Government. Its production capacity increased steadily overtime, product portfolio included Grand Lager, Grand Malt, Grand Malt Zero, Beta Malt as well as the distribution of Hero lager beer, Eagle Lager beer and Beta Malt, Miller Genuine Draft, Betamalt, Redds, 1960 Rootz, and Voltic Water Outlook Analysts believe that the brewer needs to tame its surging cost of production which it currently unable to pass to cash strapped consumers.

“The consumer market is huge with potentials, however, consumers are price sensitive and any increament would led to them going for cheaper brands,” Wale Adeoye a consumer goods analyst told BusinessDay. “There is a strong competition in the premium beer segement and this is making it difficult to sell more volumes on its Budweiser brand,” he added.

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.